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Follow the Money: Kleiner Bets on Green Tech, Mobile, and Web 3.0

May 12th, 2008 by Max Gladwell · 6 Comments

Peering into the crystal ball that is Kleiner Perkins Caufield & Bryers

Silicon Valley VC firm Keiner Perkins’ prescient ways led them to back Amazon, Sun Microsystems, and Google to name a few. Its success is practically unrivaled in the tech space. While the firm’s portfolio is diverse, it is placing increased emphasis on green energy, mobile computing, and Web 3.0 technologies. And we’ll all be in on the big payoff. From our POV, we see some incredible overlap between these three tech categories, as they are highly complementary. There’s a big picture to be explored, where each plays a key role.

Back in November, KPCB announced that Al Gore, who also sits on the boards of Google and Apple, joined the firm as a partner.

After “a conversation that’s gone on for a year and a half,” according to Gore, he has decided to join his old pal John Doerr as an active, hands-on partner at Kleiner Perkins, Silicon Valley’s preeminent venture firm. Gore is joining the firm as Kleiner makes a risky move beyond information technology and health-care investing into the fast-growing and increasingly competitive arena of “clean technology.”

Just a couple weeks ago, “the firm announced the creation of a $500 million “Green Growth Fund,” which will be invested in somewhat more mature, green-focused companies.” And in this recent Business Week interview with partner Bill Joy, we gain some key insight into the firm’s strategies and reasoning.

MARIA BARTIROMO: The sluggish economy has a lot of companies holding back. Is that the attitude in the VC world? Or is there still a vigorous investment climate?

BILL JOY: We’re seeing an enormous number of business plans from people who have ideas for the iPhone and for green. And we’re also looking for green ventures and using Google and other modern tools to find innovators. So it’s as good a time to invest as we’ve ever seen.

The overall takeaways are that we’re seeing the smartest investors putting their capital to work in two fundamental and interrelated areas: clean energy and connectivity. How are they related? First and foremost, they share basic principles of decentralization and placing power (both literally and figuratively) in the hands of people. Secondly, there are ways we’ll use web and mobile technology to stay more in tune with our energy consumption. An early example of this is the Twitter energy house mashup. Indeed, we’ll see the web and energy grid integrate in ways we can’t imagine. So let’s give it some thought.

According to Joy, Kleiner is putting $100 million into its so-called “iFund”, which is devoted entirely to developing “software for the new iPhone and iPod touch platforms.” This, too, is where we’re placing our mobile bets, as we’re avid iPhone users and Brightkite beta testers. According to eMarketer, mobile social networking will grow from 82 million users today to 800 million worldwide by 2012.

“This population will comprise current online social networkers who are extending their digital lives to mobile as well as a growing number of mobile-only social networkers,” said John du Pre Gauntt, eMarketer senior analyst and co-author of the new report, Mobile Social Networks. “Early reports suggest strong user demand for mobile social networks.”

mobile social networking trends

Taking social networking (by extension, social media) into the real world via mobile will only enhance its power and reach. Our ability to organize and access relevant information in real time–unplugged, if you will–brings the power of the social web to bear on everyday life. Granted, you may not be as pleased to meet random people in person as you are through a web browser, but the possibility is there. And whereas social shopping is well-established on the web, most of us make a majority of purchases in the real world. With a social web phone, you’ll be able to scan a bar code and get immediate user reviews from multiple sources, not to mention the carbon footprint and CSR data of each product, pursuant to making more informed and conscious buying decisions.

On the energy side, renewables are not a luxury or a convenience. They are an absolute necessity. It is also essential that we use energy more wisely, which means making the process of producing and delivering it more efficient. A big part of this is enabling people to produce their own power.

Just as it took personal computers combined with the internet and then software and social media technologies to enable large numbers of non-technical people to use blogs and social networks effectively, it will take the same evolutionary process to enable this technological shift in energy. Just as social media required broadband connections, the new power grid demands an interconnected, two-way system of sending and receiving (producing and consuming) energy. Plus, the economics are similar.

Consider how much you’ve spent (or will spend) on computer equipment, software, internet service, and related costs. For many, this is a business expense with a certain return on investment. For others, it just makes life easier. Well, that’s how you’ll look at various types of solar installations or wind turbines, complete with electric cars to store and deploy excess supply. All of a sudden, you’ll become an energy producer. Just as we no longer rely on the nightly news, we’ll no longer rely on local utilities. This isn’t to say there won’t be large-scale renewable energy facilities, such as geothermal and wind farms. Solving the energy and carbon crisis require a patchwork of innovative solutions. Giving people the tools to produce their own energy is one of them.

As the grid opens up (open source energy?) and these technologies mature, we’re sure there will be ways to monitor and control how you’re consuming energy, whether from your desk or through your iPhone. Because efficiency is truly the greatest untapped source of energy. We’re looking for negawatts instead of megawatts.

Finally, though it wasn’t described or acknowledged this way, Joy addressed Web 3.0 technologies in the context of an answer about the Yahoo-Google connection:

Would you like to see Google do something with Yahoo?
If Google wants to do something with Yahoo, that’s fine. I’m much more interested in going to the next level of having information on the Web organized. First we were excited because we could get at tons of stuff. Now we need it to be organized better so we can learn and explore more conveniently. I use Wikipedia a lot. I’d love to see some tools for creating order out of chaos in the same way for the larger Internet. I’m hoping Google—as well as small companies—will come up with some great innovations for organizing knowledge.

To some it’s Web 3.0. To others, it’s the next Holy Grail. Stay tuned.

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Tags: Technology