Regional Oral History Office University of California the Bancroft Library Berkeley, California

Regional Oral History Office University of California The Bancroft Library Berkeley, California

GIBSON S. MYERS

EARLY BAY AREA VENTURE CAPITALISTS: SHAPING THE ECONOMIC AND BUSINESS LANDSCAPE

Interviews conducted by Sally Smith Hughes, PhD in 2008

Since 1954 the Regional Oral History Office has been interviewing leading participants in or well-placed witnesses to major events in the development of Northern California, the West, and the nation. Oral History is a method of collecting historical information through tape-recorded interviews between a narrator with firsthand knowledge of historically significant events and a well-informed interviewer, with the goal of preserving substantive additions to the historical record. The tape recording is transcribed, lightly edited for continuity and clarity, and reviewed by the interviewee. The corrected manuscript is bound with photographs and illustrative materials and placed in The Bancroft Library at the University of California, Berkeley, and in other research collections for scholarly use. Because it is primary material, oral history is not intended to present the final, verified, or complete narrative of events. It is a spoken account, offered by the interviewee in response to questioning, and as such it is reflective, partisan, deeply involved, and irreplaceable.

*********************************

All uses of this manuscript are covered by a legal agreement between The Regents of the University of California and Gibson Myers, dated March 1, 2009. The manuscript is thereby made available for research purposes. All literary rights in the manuscript, including the right to publish, are reserved to The Bancroft Library of the University of California, Berkeley. No part of the manuscript may be quoted for publication without the written permission of the Director of The Bancroft Library of the University of California, Berkeley.

Requests for permission to quote for publication should be addressed to the Regional Oral History Office, The Bancroft Library, Mail Code 6000, University of California, Berkeley, 94720-6000, and should include identification of the specific passages to be quoted, anticipated use of the passages, and identification of the user.

It is recommended that this oral history be cited as follows:

Gibson S. Myers, “Early Bay Area Venture Capitalists: Shaping the Economic and Business Landscape,” an oral history conducted by Sally Smith Hughes in 2008, Regional Oral History Office, The Bancroft Library, University of California, Berkeley, 2009.

iii

Gibson S. Myers, 2009 iv

Gibson S. Myers

Gib is emeritus partner of Mayfield Fund, a private venture capital partnership located in Menlo Park, CA, and has been a Mayfield general partner since 1970. Prior to joining Mayfield, Gib worked for Hewlett-Packard for four years as manager of computer systems and later as manager of inter divisional sales.

Gib is the Chairman of the American Prairie Foundation, a non-profit that whose mission is to develop an enormous prairie based wildlife reserve in Eastern Montana, an American Serengeti. He is also the founder of the Entrepreneurs Foundations (EF), an organization with the mission of channeling the energy, wealth, and innovation of the entrepreneurial sector to continuously enhance the quality of the community. In the Bay Area, over 200 companies have joined EF and are actively working with local non-profits.

Gib is co-founder of the Center for Social Innovation at the Stanford Graduate School of Business and was a member of the Stanford Graduate School of Business Advisory Board. Gib holds an AB degree in Engineering Science from Dartmouth College and a Masters of Business Administration from Stanford Graduate School of Business. vi

vii

Discursive Table of Contents—Gibson S. Myers

Interview #1: September 9, 2008

[Audio File 1] 1

Birth in 1942 in St. Louis, decision to leave St. Louis and study engineering, starting Dartmouth in 1960—last minute application to Stanford Business School, move to CA—graduation in 1966, interviewing at 30 companies, choosing Hewlett-Packard—impression of William Hewlett and David Packard—draft notice, serendipitous contact with Mr. Mortimer and admission to reserves at the Presidio—four month reserve service in Texas and Arizona: “It wasn’t too bad”— back to HP just as they began to get into the computer business—interest in computers—the Fairchild Semiconductor tree—elaborate testing of machines— thoughts on Tom Perkins as a division manager—1970 decision to leave, conversations with Bill Lowe, phone call from Wally Davis—meeting Wally Davis and Tommy Davis—starting job with Mayfield, learning the venture capital business, vetting companies—history of Davis and Davis partnership—pursuit of Stanford’s endowment for investments—Dean Fred Terman, endowment investment in bonds, venture capital considered too much risk—investing in Stanford—1972 or 1973 raising Mayfield II Fund, Phil Horsley and Kevin Koeph of University of Rochester begin investing endowment funds in venture capital— venture capital climate in the mid 1970s: $7.5 million was a large fund—the changing role of intuition at Mayfield—Mayfield culture and reputation as a firm entrepreneurs liked to work with—1970s monthly lunches at the Fairmont, “in contrast to the nineties where it’s so highly competitive”—influx of money has increased competition—early stage investment—sharing deals, bringing in partners—decision to leave Mayfield in 1998.

[Audio File 2] 22

The process of building companies, hiring people to fill niches, working with Bill Unger—evolution of angel investors—the importance of familiarity with a company’s technology—Mayfield process of discussing possible investments— Myers’ role as a managing partner at Mayfield—unusually friendly relations among Mayfield partners—mid 1990s beginning of competition in Mayfield— thoughts on the Mayfield motto: “We view ourselves as the entrepreneur’s partners.”—the difficult process of management change—some thoughts on the Entrepreneurs Foundation program.

viii

Interview #2: September 22, 2008

[Audio File 3] 31

Evolution of requirements for aspiring entrepreneurs from 1970s to 1990s, impact of growing competition—in-house support for entrepreneurs in the early days— the importance of personal contacts: “It’s all about the people, so unless you get that personal connection started, you don’t get started.”—Mayfield Fellows Program, presence at UCB and Stanford—the Stanford and UCB venture capital connection, working with A. Richard Newton—venture capital’s relationship to innovation: screening potential and fostering growth—changed in venture capital industry over Myers’ career: greater expectations for new hires, faster pace— trend toward increasing specialization within firms—changes in ownership, attaining partner status—more on Mayfield partners’ congenial relations, eventual competitiveness reflecting industry changes—decision to leave Mayfield—the process of taking Mayfield public—thoughts on the dot-com boom and the IPO frenzy of the late 1990s—Mayfield investment in Genentech, 1977-1978, relationship with Bob Swanson—the evolution of the relationship between venture capital investment and academia—greatest strength: managing and building a cohesive team—reflections on the origin of venture capital: the confluences of Stanford, Terman, West Coast culture: “Sure we can do it.”— venture capital in other parts of the world.

[Audio File 4] 51

Simplex Systems, CAD technology, Richard Newton, Cadnetix—early Mayfield policy of staying in-state, later expanding to East Coast, etc—SpectraLink with Bruce Holland—MIPS—Latitude Communications—working to manage and salvage failing investments and personnel crises—changing benefits of IPO vs acquisition as an exit strategy—acceleration of time to market cycles-the biotech exception: clinical trials and FDA approval take time—investing in the community: Entrepreneurs Foundation in 1998—working to change the venture capital culture to include philanthropy—effects of 2000 stock market collapse on Entrepreneurs Foundation’s holdings, focus shift from grant-making to building companies—founding of Entrepreneurs Foundation branches across the US and Israel—the struggle to sell the idea to boards—Mayfield Foundation—Mayfield partners personal joint philanthropy—George Pavlov’s support of Stanford’s hospital—involvement with Stanford’s Venture Investment Group.

Interview #1: September 9, 2008 Begin Audio File Myers 1 09-09-2008.mp3

01-00:00:00 Hughes: Mr. Myers—it is September 9, 2008 and this is our first session of maybe two. Would you start with what it was like to grow up in you family, and then go into your education?

01-00:00:24 Myers: Born in 1942, grew up and raised in St. Louis, went to high school there and then left in 1960 to go to Dartmouth and studied engineering at Dartmouth.

01-00:00:44 Hughes: Why engineering?

01-00:00:46 Myers: I’ve always loved engineering and so that’s kind of always been on the agenda. My choices were Dartmouth and Princeton. I kind of liked the liberal arts orientation of Dartmouth and so I went there. And I must say from the time I left St. Louis, I knew I’d never go back. It was a great place to grow up and it was kind of one of these Old South things where for Labor Day and Memorial [Day] weekend, three generations would get together, a crowd of fifty or sixty, which was magnificent. But it was also St. Louis, and it was hot in the summers and cold in the winter, and I just knew that wasn’t for me.

01-00:01:26 Hughes: What did your parents do?

01-00:01:28 Myers: My dad was [in] the insurance business and my mom raised us.

01-00:01:35 Hughes: How many of you?

01-00:01:36 Myers: Two. I have a brother who is five years younger.

01-00:01:41 Hughes: And what happened at Dartmouth? Anything that set a career direction?

01-00:01:47 Myers: Well, yes. I liked Dartmouth, studied engineering, as I said. Dartmouth engineering was a five-year program. You get an AB after four years and a BS after five. So it was May of my senior year, someone just said, “You know— you’d be great at business. Why don’t you go to business school?” And you don’t know how these things happen, but it just clicked like, “You’re right! That’s what I should be doing!” And so I quickly applied to Stanford, the only place I wanted to go, to see if I could get in, but May, obviously, was late to get into business school. My backup was to study English at Newbury Upon 2

Tyne in England. That was the craziest thing in the world, because I’m not an English person! [laughter]

01-00:02:39 Hughes: Why did you even think of that?

01-00:02:42 Myers: Just to do something totally different and crazy. And I got accepted there. So I applied to Stanford to go in the following fall. I hadn’t taken the boards; I hadn’t done anything. I took the boards in July, did okay, nothing special. I was waitlisted, and then in August, a good friend and I were traveling around the West, camping, and we got to California. Actually, I’d been here once before to San Francisco. We came out here to this area and stayed with a friend and I said, “Well, I’ll go by Stanford. I haven’t heard from them. I wonder if I got in.” So I went down, and they said, “We just sent you a letter. You got in.” [chuckling] So this was the end of August.

01-00:03:22 Hughes: Not much notice.

01-00:03:24 Myers: Yes. I went back to St. Louis and I packed up my things and came out to Stanford.

01-00:03:29 Hughes: Now did Stanford Business School have a good reputation? Why did you choose Stanford?

01-00:03:34 Myers: It was so-so. It was okay, but it wasn’t where it is today. It was a much smaller school. Ernie [Ernest C.] Arbuckle was the dean at that time. A great guy. But anyway, it was growing in reputation. The main reason was that I wanted to come to the West Coast. I’d had it with the East Coast, both in terms of mentality and how the East Coast people look at things sometimes, and as well the cold weather. Also, Dartmouth was very isolated then, so dating was just impossible at Dartmouth. The nearest girls’ school was a one- hour drive or two-hour drive. Boston was four hours then. Today it’s like an hour and a half. So anyway, I just thought this is an abnormal environment. I want to go someplace where there are women, and so my only choice was Stanford. I got in somehow.

01-00:04:28 Hughes: Very serious objectives.

01-00:04:29 Myers: Yes. [chuckling] A number of sort of serendipity things happened in my life. Like, how did I make a decision on the spot to go to business school and then at the last minute to get in, and so forth. 3

01-00:04:50 Hughes: Do you have any idea why that idea clicked?

01-00:04:56 Myers: No, I don’t. [chuckling] Well, it’s a totally different subject, but I think we’re very much guided by energies and forces that we don’t have much touch with. So I think part of one’s ability to flow with life and not be swimming upstream, not be fighting life all the time, is to somehow find a way to make those decisions. When something comes along, it’s just there for you. You just know it. That’s the right thing. I don’t know why. It was very clear to me. That was the thing to do.

01-00:05:47 Hughes: I’m guessing that this may feed in a little bit to your later career?

01-00:05:59 Myers: My venture capital story, yes. How I got into venture capital is unlike anybody else, I think.

01-00:06:05 Hughes: You went to Stanford Business School. Did you have any particular direction in mind?

Myers: There’s a good reason why you don’t go directly from college to business school, because you have no clue what you’re doing and where you want to go. I mean, I really didn’t. I went through business school kind of like college, but I didn’t really get it, because I hadn’t worked in business. I’d had summer jobs as a laborer in St. Louis. That’s all I’d done. So it’s too bad. It was a great school and many good connections, and so forth. But there’s a good reason that you spend two or three years working before you go back to business school.

01-00:06:48 Hughes: Yes.

01-00:06:49 Myers: So when I looked for a job after business school, I think I interviewed thirty companies. All the way from insurance to oil to retail—all over the map! Because I didn’t know. I ended up going to Hewlett-Packard, because it did resonate with my background—they wanted an engineering background. They brought people into a product management kind of role, where you could use some of your new business skills but also use your engineering skills. So I thought, Oh fine, that makes sense to me. I could sort of grab it, because I didn’t really know. Hewlett-Packard was great. That was a fabulous choice.

01-00:07:27 Hughes: Are we now in the late sixties? 4

01-00:07:30 Myers: Yes. I graduated in ’66. So Hewlett-Packard right after business school, in the engineering development group. I was there for a couple of years—

01-00:07:44 Hughes: Well, since [William] Hewlett and [David] Packard are such huge names, did you have personal encounters with them?

01-00:07:57 Myers: Yes, it was a small company then. I remember Bill Hewlett coming on the PA system and announcing that they had just crossed $300 million in revenue. That’s kind of where they were. They had a few other facilities in Boston and Pennsylvania, but most of it was right here. They hadn’t gotten into the computer business yet, at that time.

01-00:08:22 Hughes: Oh really.

01-00:08:23 Myers: So this was oscilloscope spectrum analyzers and a lot of test equipment—the original Hewlett-Packard business. Actually I didn’t interact much. We were located in a laboratory called One Upper, this new group of MBAs, and we were given a variety of projects, two-month projects. But it was right adjacent to what they called HP Labs, the main labs. They were developing the HP calculator, which in its first version was about the size of a typewriter. It was quite big; this was Bill Hewlett’s pet project. So he would be there every night at 9, 10, 11 o’clock in the lab, just him working on this calculator. And so occasionally we were there late, not that often; we would see him, but I didn’t get to know him there.

The Vietnam War was going on, and I thought that Hewlett-Packard, as a military supplier, would be able to get a deferment for me. Well, it turns out, they never processed the deferment; they didn’t do it properly, and so all of a sudden, I got a notice to sign-up for basic training and go to war, which I didn’t want to do. Another piece of serendipity is that when I was interviewing after business school, I went to interview at Fireman’s Fund Insurance. I don’t know why. My dad was [in] insurance, but I couldn’t care less about insurance. I met a man; I can’t remember his name. And we had a nice talk and I mentioned the war and deferment. He said, “Well, if you ever need to get into reserves at the Presidio, use my name.” The name might pop in my head in a minute.

This happened at Hewlett-Packard and I thought, Oh my God. So at that time, the reserves were all closing, because everybody was running to the reserves to get out of the war. And this Presidio had closed. So I called—it was Mr. Mortimer. So I called the head guy there who turned out to be the commander of the West Coast; I didn’t know that. I said, “Mr. Mortimer said for me to 5

call you, that he wanted me to get in the reserves.” He said, “Okay. Show up tomorrow; you’re in.”

01-00:10:45 Hughes: Just like that.

01-00:10:46 Myers: So I went up there and signed up and got in the reserves, I guess, by the skin of my teeth. It was weeks later I would have been drafted, so another one of those fortunate turns of life.

I left pretty quickly and did the reserve thing for four months. It’s normally six, but we went down to Texas and then to Arizona, Fort Huachuca and different places. It was kind of a fun group. In our group everybody had a graduate degree and we were the typing pool. Everybody knew why we were there—we were there to avoid the war. So they did the typing thing and get out and get on with things. But we had a good time; it was a great group. We were the best typists, the best athletes. The best at everything we did there. I brought my car down to the base, and we’d go off base every weekend and party and drive around, so it wasn’t too bad. After four months they let us out. I went back to Hewlett-Packard.

What was happening then was that HP was getting into the computer business, because Digital Equipment [Corporation] a couple of years earlier had started their small computer business. IBM had the big things, but [HP had a] small computer business. And so it really was very much Hewlett and Packard who led HP into the computer business.

01-00:12:04 Hughes: Why did they think that the time was right to get into it?

01-00:12:11 Myers: Well, I just didn’t know them well enough to [know why they might] think that way, but they were both forward-thinking people. I think Bill Hewlett had been working on the calculator and saw the computing power that was coming along, and DEC was already out there with the PDP-8, which was very successful. They had, I think, $25 million in revenue their first year or two. So it was kind of like, this is going to be important. So they started a new division called the Dymec Division then, which was down on the intersection of El Camino and Page Mill. I wanted to go to that division, so I transferred out of this project management group down to the—

01-00:12:59 Hughes: Why did you want to go?

01-00:13:02 Myers: The computer. Computers are important. I’d used the computer a lot, and computers were pretty new. When I was at Dartmouth in engineering, there was one computer on campus, an IBM 1410. 6

01-00:13:14 Hughes: Was that one of the huge monsters?

01-00:13:16 Myers: Yes, big as a couch. It was a small computer for the day, and you put punch cards into it. I did a lot of my engineering projects on that computer, so I knew a lot about computers and believed in computers. So when that division was started, I said, “I want to go down there.” So I went down as the manufacturing manager. Actually it was called manufacturing tests. They were just starting to build the first computers, HP computers, which were big refrigerator-size things. So our group would meet the Fairchild [Semiconductor] truck at the door and get the chips and load them on the boards and do the testing. I had a test group of about ten people working for me.

01-00:14:00 Hughes: Did you have the feeling then that you were on a frontier?

01-00:14:05 Myers: Yes, yes.

01-00:14:06 Hughes: That this was the beginning of a big thing?

01-00:14:07 Myers: Yes. I didn’t know how big, but absolutely. I wanted to be there. Jack Melchor, who was running that division at the time, had a heart attack, and Tom Perkins, who was the marketing person, took over as the division manager. And he ran that division I don’t know how long, but five or six years at least and built it up to $50 to $100 million. We’ll come back to that, but out of that division, a whole tree of people went into the Valley as entrepreneurs and venture capitalists. There’s a whole semiconductor tree that people put together out of Fairchild. But then there’s another one coming out of Hewlett- Packard of people, all over the Valley, that came out of that computer group at that time.

01-00:14:56 Hughes: I’ve read about the Fairchild tree—historians love that. But I hadn’t heard much about the Hewlett-Packard tree. In the industry, it’s well known?

01-00:15:09 Myers: I don’t know. I’m not sure.

01-00:15:10 Hughes: You should write a paper! [chuckling]

01-00:15:12 Myers: You can write a paper! [laughter] Anyway, the Fairchild guys were obviously computer people, but the HP—these were the two computer kind of things out here and so that’s kind of where it all started. 7

01-00:15:28 Hughes: Is IBM in the picture yet?

01-00:15:30 Myers: IBM is already there with big computers, so IBM and Burroughs [Corporation] and Scientific Data [Systems], so there were a bunch of big companies with these big monster machines. But nobody doing these smaller computers with this kind of technology.

01-00:15:45 Hughes: Was HP already thinking this is going to be for domestic use? This is going to go into people’s homes?

01-00:15:53 Myers: Well, I don’t know about homes. I think the early computers were very much, I don’t know—sort of business and production oriented. I forgot what they sold for, but they were way too complicated for a home. The home computer didn’t really come along until Apple’s Steve Jobs thing in the mid-seventies. That’s the first one that the home even thought about. These were bigger.

01-00:16:22 Hughes: And we’re still in the late sixties?

01-00:16:23 Myers: These are late sixties. And you fed these things with punch paper tape and it was a whole different world. Everybody’s watch vastly exceeds the power of these computers today. But I was down there in the manufacturing group.

01-00:16:42 Hughes: And what exactly were you doing?

01-00:16:44 Myers: Well, we were building—I don’t know, ten or twenty machines a month. And so there was a manufacturing organization that put them together, and my group would test them. Testing was actually a fairly elaborate process.

01-00:16:57 Hughes: Each one?

01-00:16:59 Myers: Yes. They had to be tested and heat cycled and all kinds of things which you don’t even bother with today. We built a big heat cycling thing, and we had programs written that would exercise them and make them do all different stuff to make sure that they worked properly. And so I had, whatever, half a dozen people working for me doing this sort of final assembly and test portion. I don’t know what the revenues were, but it was a few million at the very beginning. And then that division moved down to Cupertino with Perkins running it in a new building. It became the Cupertino division, and that’s when the computer group really took off, and they brought out a number of new models. That’s kind of where it all really took off. 8

01-00:17:47 Hughes: Now before Perkins left [to co-found Kleiner & Perkins, you stayed—?

01-00:17:52 Myers: I was there until 1970, so Perkins was still there. I’ve forgotten our size, but I moved into marketing and sales support. And I enjoyed that, but anyway, I just felt like leaving. I thought it was sort of getting big enough—I don’t know exactly the reasons, but it seemed like a time to leave.

01-00:18:15 Hughes: Do you have any observations to make about Tom Perkins in that particular job?

01-00:18:24 Myers: He’s a brilliant guy. And he was a fantastic division manager.

01-00:18:30 Hughes: In what way?

01-00:18:34 Myers: I didn’t know. I was sort of twenty levels below him! But he seemed decisive. He had a very good team he put together. He’s got a marketing orientation. I guess I’ve always admired Tom for his incisiveness and so forth, and venture business.

01-00:18:56 Hughes: So some of the characteristics that he later used as a venture capitalist you can look back and see he was using as a division head?

01-00:19:08 Myers: [noncommittal]

01-00:19:11 Hughes: [laughter] I’m pushing you.

01-00:19:12 Myers: You can sort of turn it around. He had an operating background from Spectra Physics and then with Hewlett-Packard. And so, there’s nothing like running something, hiring people, making decisions, building a company, when he built that division. That is one of the things that made him great in the venture business. He knew operations; he knew how to assess entrepreneurs; he knew how to help entrepreneurs, how to criticize entrepreneurs in a way that [at] the time most venture capitalists did not understand. So he brought an operating expertise to the venture business that had not been there.

01-00:19:52 Hughes: And Eugene Kleiner had that background, too, did he not? 9

01-00:19:54 Myers: Yes, from the Fairchild side, exactly right. I think that’s been the hallmark of Kleiner Perkins from the very beginning of hiring operating people into the venture business.

01-00:20:07 Hughes: And that was new.

01-00:20:11 Myers: Yes, that was new.

01-00:20:12 Hughes: Okay, 1970. Were you just getting restless? Were you saying to yourself, I’ve done this long enough?

01-00:20:21 Myers: Yes, I’ve been here for four years, [in the] division for two-and-a-half years, and I was restless. You know, I guess I wasn’t quite clear where my career was going. The sales/support thing was interesting, but what next? So I guess I felt sort of uncertain or impatient. So I talked to Bill [William L.] Lowe, who was the head of placement at Stanford Business School. He’d become a friend over the years; he [has since] passed away. And I just said, “Bill, I’m looking around. I don’t know what to do, but if something should come along, let me know.” It was a very casual sort of thing. I hadn’t told anybody; I was just kind of poking around.

And so, a number of months passed, and actually in the meantime Bill Lowe talked to Wally Davis. Tommy [Davis] and Wally started Mayfield in 1969. I guess I’ll come back to how they started it. They started it in 1969 and they needed a computer person. Tommy has an English/law background and Wally has an engineering background but from the military side. So they need a computer person and so they were looking. So Bill Lowe said, “Why don’t you call Gib Myers?” Wally lost my name. And so another couple of months went by and Wally called Bill Lowe and said, “Hey, I haven’t heard from you,” or, “I lost the name,” or some such thing, and Bill gave him my name again and maybe many others. I guess I learned later, many others. So anyway, Wally called me and I remember it so clearly, because I was walking to my apartment in Mountain View, [arms] full of groceries, the phone’s ringing, pick it up. Wally Davis has a sort of a distinct gruff, short sound, [imitating Davis], “Hello? This is Wally Davis.” “Okay, hello?” [chuckling]

01-00:22:12 Hughes: Did you know who he was?

01-00:22:13 Myers: No, no clue. He said, “Bill Lowe gave me your name. We’re looking for someone to interview. Do you want to talk to us? We’re in venture capital.” Well, I didn’t know what venture capital was. I’d never heard of venture 10

capital! Okay. You know, I just said, “Okay.” So that’s when I went and had lunch with Tommy and Wally Davis. They had a very small office in the Ladera Shopping Center out on Alpine Road. They had, maybe, a thousand square feet. So anyway, [I] went out and had lunch. Let me see, 1970, so I must have been twenty-eight. And gosh, I’m sort of guessing, but Tommy and Wally were twenty years older, so they looked horribly old to me! [chuckling] Mid-forties, like, Oh my God! These two guys talking about venture capital.

It seems weird, almost embarrassing to say this, but I didn’t know what venture capital was. I’d never even heard about it. I know about starting companies and all, but in terms of an investment venture process—I mean, no one else was doing it. We’ll come back to that, but in this area, there was Draper Fisher; Bill Edwards, that group—Bryan and Edwards, a couple of groups, but that was it.

So anyway, I had lunch with them two or three times. I liked them both a lot. I understood as they described what they were doing, but I hadn’t heard of it. I didn’t have a network to seek out who they were. And maybe I’ll come back to that too. Davis and Rock was the most successful venture fund ever in history, and I think it took a few million dollars and made it a hundred million in the 1960s in a very short length—eight or nine years. So it was a huge success. But I didn’t know anybody that knew him.

01-00:24:16 Hughes: Now were Davis and Rock calling what they were doing venture capital?

01-00:24:21 Myers: Yes.

01-00:24:22 Hughes: So some people knew the term.

01-00:24:29 Myers: Yes. The Davis and Rock partnership. Exactly right. So anyway, as I say, for reasons that sort of dumbfound me, I said, “Okay. I’d love to do this.” In fact, I remember at one point asking them—this sounds so silly— Because they seemed so old to me, I said, I don’t know what my words were exactly, but, “Are you guys really serious about this? Or is this kind of a gentleman’s hobby? Are you really serious about it? I mean, this is my career!” [laughter] “Are you trying to build a business here, or not?” Of course, they were, but it was one of these things when you’re so naïve, and you don’t know someone’s reputation, you can ask questions that you normally would never ask or have the guts to ask. So anyway, I joined.

01-00:25:26 Hughes: What do you think they saw in you, other than here’s somebody who seems to know about computers? You probably were not the only person they’d taken to lunch. 11

01-00:25:44 Myers: I later learned that there was a long list of applicants who really wanted the job! I barely wanted the job, like “Okay, I guess I’ll do it.” [chuckling] I don’t know. It’s hard to say. I assume others had some engineering or computer background. Tommy Davis’s philosophy was 120 percent on your chemistry with the people. That was his thing. Many people say that, but Tommy was just a wonderful, congenial individual that related well to people but then also was a great assessor of people. He had confidence in that. Wally was less that way, more of an engineer. But anyway, we got along really well. Maybe it was my naïve questions, or some such thing. [laughter]

01-00:26:32 Hughes: Do you think they checked you out?

01-00:26:35 Myers: I don’t know; I never heard.

01-00:26:42 Hughes: So now what happens? You’re hired.

01-00:26:45 Myers: Yes, I’m hired.

01-00:26:46 Hughes: Are you even clear what you’re expected to do?

01-00:26:48 Myers: Not very clear. Well, they were getting business plans. So first of all there’s this tiny little office. It’s a room with a secretary. You walk in the door, the secretary is straight across. My desk was right by the door, right in front of the secretary. Tommy and Wally each had a closed-door office to the side. So there we were. It’s like, “Here are some business plans people have sent in. Why don’t you go visit these people and see what you think?” “Okay.” [chuckling].

And one of my friends, a roommate, had joined Wells Fargo in the venture capital business. And so I called him and I said, “Well, I’ve got this job, but what do you do?” Things like—“How do you do the capitalized value of a company.” When I was in business school a lot of these things you kind of hear, but what does it really mean? So anyway, I went back to Dan Tompkins and said I would—so I just sort of bumbled along. But it was also a different kind of business then. I mean, if you made two or three investment per year, that was a big year. Not a big year, a normal year. Not like today, you make one a month or two a month. Some years we’d make one or zero. It was a whole different style of investing. So it was a much slower pace. Obviously, it gave me the ability to get my feet on the ground.

Tommy and Wally were both very supportive. We just got along famously from the very beginning. I was living in San Francisco and commuting down, 12

but both of them lived in Woodside and Atherton. But after a month or so I got invited to their house for dinner and we became friends. I’d spend the night at Wally’s house and do stuff like that, so we became better and better friends in the whole process.

01-00:28:56 Hughes: Do you remember the companies that you were sent out to vet when you first arrived?

01-00:29:06 Myers: Oh I guess sort of vaguely. I actually have a list. I could go down them. One [is] Storage Technology [Corporation], which was a tape drive company in Boulder. So that’s one I related to well. I was the young kid. They made the investment decision, but I went along, and I was the one to go back and visit and meet with them a number of times. Alza Pharmaceuticals was an investment. I really wasn’t involved in that, but that was very successful, with Alex [Alejandro] Zaffaroni—that was when they first started.

01-00:29:38 Hughes: Presumably you were going to look at the firms, make some kind of assessment and then report back to the two Davises. But what sorts of things were you looking at and bringing back to them? By then had you picked up what were the important things to be watching for?

01-00:30:05 Myers: No. Who knows! [chuckling] It was sort of a learning process. The basics of: Is there a market for this thing? Is this an entrepreneur that can do something, that can build something? I had a brief operating background at Hewlett- Packard, but that really was helpful in trying to make assessments—is this just an inventor with an idea? Now where do we go with it?

And that was also a time where you didn’t build companies as much as they’re being built today or in the eighties and nineties. If there was somebody there that maybe had a good idea but needed marketing strength, or maybe it was an engineer but [he] needed more management, you might say, “Hey, look, we like you, you have a great idea, but you need this [prospective company] to have a full team. Go out and find that person and come back to us.” Today it’s different. You kind of glue things together and hope it sticks. But back then it was like, Let’s keep in touch. (It wasn’t a competitive environment.) “You need to find a really good manager. If we have an idea, we’ll tell you, but anyway, go find somebody.”

01-00:31:29 Hughes: They were calling their operation the Mayfield Fund?

01-00:31:35 Myers: That was Mayfield Fund, right. 13

01-00:31:37 Hughes: Why not Davis and Davis?

01-00:31:43 Myers: Well, yes, let me give you some background to that. After Davis and Rock, Tommy kind of semi-retired, went to work for Blythe and Company, a brokerage firm at that time. He and Wally weren’t related and hadn’t known each other. I [don’t] quite remember how they met, but they met through a common bond at Stanford, a Stanford connection. And they both had the idea that Silicon Valley is going to be really important. Stanford’s endowment ought to be part of Silicon Valley. And so they started Mayfield on the premise that we’ll get Stanford’s endowment money to be the fund, because Stanford’s just got to be part of what’s happening. That’s why we’re going to do this. And so as they got that going. They also put together a Stanford scientific advisory board. So there were about six or eight Stanford professors who were advisors.

01-00:32:46 Hughes: Representing different disciplines?

01-00:32:50 Myers: Yes, chemistry, electronics—different disciplines over there. First the [Stanford] endowment said, “No, this is silly. This isn’t a good use of our funds.”

01-00:33:05 Hughes: Was it perhaps also that universities are ivory towers, and we don’t deal with these business folk?

01-00:33:14 Myers: Well, no. Stanford, I think, has always been unusual.

01-00:33:17 Hughes: Yes, it has been.

01-00:33:20 Hughes: [Frederick E.] Terman.

01-00:33:21 Myers: Dean Terman had always felt that there should be collaboration between the university and the corporate business world. So that goes way back as I mentioned before we started taping, Tommy worked with Dean Terman in the fifties and the companies that were started out of Stanford. So the issue really was just the endowment. Endowment funds didn’t give money. Horsley Bridge gave us money—or Horsley Keogh—in the late seventies, and it really didn’t catch on until the mid-eighties as the thing to do. So this was the late sixties. This is a foolish way to use your endowment funds [Stanford believed]. 14

01-00:34:04 Hughes: Why did it take so long? Why didn’t universities get it?

01-00:34:10 Myers: Because they didn’t relate that to Silicon Valley. It was just a financial management job. It should be invested conservatively and probably was invested mostly in bonds, which was the conservative strategy way back then.

01-00:34:23 Hughes: So it was the risk that scared them.

01-00:34:25 Myers: Yes, they didn’t want to take the risk. And venture capital, you know, always has been considered a high-risk business in spite of its success. And so it wasn’t till the eighties that they said, “Okay, well, we can take 3 or 5 or 6 percent of our endowment and give it to venture capital, and it’s part of a balanced portfolio.” But those concepts didn’t exist then at all.

01-00:34:46 Hughes: I see.

01-00:34:46 Myers: So anyway, the endowment said no. So Tommy and Wally said, “Well, we still think this is important.” So they went out to raise money, and the first fund was, I think, $3.5 million, which of course is nothing compared to today.

01-00:35:03 Hughes: And that was just going to private investors?

01-00:35:07 Myers: Yes, to private, well, Blythe and Company was an investor, and some insurance company was, and then a bunch of individuals. But what they did which was so unusual: they agreed [that]15% of the profits you get as a limited partner you have to give to Stanford as a donation. So their core theme here was: Let’s support Stanford. Stanford’s got to be part of Silicon Valley. That’s why we’re doing this fund. So they didn’t get the endowment money, but the rest of you guys, you’ve got to make a contribution to Stanford.

01-00:35:45 Hughes: Was their thinking, well, the university is where the knowledge base is located? We’re going to profit from that intellectually and also maybe financially by building companies around this knowledge?

01-00:36:05 Myers: Well, no, it wasn’t quite that sophisticated back then. I think they just believed some might come from Stanford, but we didn’t spend a lot of time mining Stanford for stuff. That’s being done today but not back then.

01-00:36:21 Hughes: So it was more just an investment. 15

01-00:36:24 Myers: Well, Silicon Valley is going to be a big deal. One way or the other, wherever it comes from. And Stanford’s right here in Silicon Valley. They’ve got to be part of it. So even if the endowment won’t help us, we’ll give money back to Stanford in the process.

01-00:36:38 Hughes: Was it obvious that Silicon Valley was going to be a big deal?

01-00:36:46 Myers: I don’t think so. It was mostly apple orchards and there was no 280 and all the rest. [chuckling]

01-00:36:52 Hughes: So they were just perceptive? They saw where this whole region was going to go?

01-00:37:00 Myers: Well, I think so, but I actually hand a lot to Tommy. Tommy in the fifties [was] with Kern County Land Company. He came out here and worked with Dean Terman, and that’s where Tommy’s eyes were opened up and they started two companies out of Stanford that say, wow, there’s technology, and what you can do with developing companies around it is going to be really important. So I think he got his eye-opening then. Then Davis and Rock invested in—I don’t know how many companies, ten or fifteen. But their big hit was Scientific Data Systems, a computer company in L.A. So he’d been exposed to what could happen. Scientific Data Systems was sold to Xerox for a billion dollars in the mid-sixties. A billion dollars is unheard of! A huge number! So, Tommy was pretty savvy at that point [about] what was happening. Wally had more of an operating background but had been around. So that was very much their inclination.

01-00:37:58 Hughes: What happens next then? They got the Stanford money—

01-00:38:08 Myers: Oh no, they didn’t get the Stanford money, but they raised outside funds.

01-00:38:12 Hughes: Oh right, yes, I’m sorry.

01-00:38:14 Myers: And gave 15 percent to Stanford. It was a little $3.5 million fund with a Stanford advisory board still involved. So anyway, we proceeded off. It was a pretty unsuccessful fund. [chuckling] We ran into the ’72 depression— actually, ’72-’73 things were really bad. I printed out some lists of investments and we could talk about a few of them. But the fund really wasn’t very successful, but it was a $3.5 million fund and people sort of made a couple of percent kind of thing, but for the times it was okay. Nobody was too unhappy. 16

It was in ’72 or ’73 we started to raise Mayfield II, which was going to be a $7.5 million fund. And that was in the midst of the market downturn. I remember this because Tommy—Tommy was our chief fundraiser—spent a year looking for money, and he could not raise— He went to insurance companies in all these small towns and all around and he was having a heck of a time raising the $7.5 million.

01-00:39:19 Hughes: Were you getting worried?

01-00:39:20 Myers: I don’t know. It didn’t matter to me. I was young, whatever happened kind of thing.

01-00:39:27 Hughes: You didn’t have a family to support?

01-00:39:33 Myers: Yes—I got married in ’76. So Tommy finally met Phil Horsley with the University of Rochester. There was Phil Horsley and Kevin Keogh, the two investment officers, and they’re the ones that said that they would give Mayfield II, the second fund, money.

01-00:39:55 Hughes: Now who are they?

01-00:39:57 Myers: They were endowment managers at the University of Rochester. They might be the first endowment managers, ever, to invest in venture capital. Someone could check that out, but real close. They’re wonderful people; they hit it off with Tommy. We all flew back; we all spent a lot of time with them. And I think they gave us—I’d have to look, I don’t remember—just half the fund, or a big amount. And then with that we got some money from the Ford Foundation and some others, and the whole fund came together. But it was really the Phil Horsley/Kevin Keogh [fund]. They later left and started the Horsley Bridge firm in San Francisco which is a $20 billion fund of funds. So they’ve been enormously successful on their own, and they’ve also been a continuous investor in all the Mayfield funds through all those years. So the relationship goes way back.

01-00:40:53 Hughes: So you really started something back then.

01-00:40:54 Myers: Yes, absolutely right.

01-00:40:56 Hughes: Now was $7 million—

01-00:40:59 Myers: Seven and a half million was the size—

01-00:41:01 Hughes: Seven and a half—was that a respectable fund?

01-00:41:05 Myers: That was a pretty big fund. There was somebody in Chicago, I can’t remember, who maybe had a $10 million fund—which seemed awfully large. And Reid Dennis was starting IVP [Institutional Venture Partners] right around that time. He had $7 to $10 [million]. Kleiner Perkins I don’t think had quite started. This is ’73-’74. But anyway, that was considered a pretty respectable size fund.

01-00:41:30 Hughes: And Pitch Johnson was around.

01-00:41:35 Myers: Was Pitch on his own then? I didn’t know him then. There was Sutter Hill, because shortly thereafter Dave [David L.] Anderson joined Sutter Hill as their young person kind of thing.

01-00:41:55 Hughes: And so does Bill Draper.

01-00:41:56 Myers: And Bill, of course, was there, and Paul [A.] Wythes, I’m sure. That was a time when, as I said, you would make two or three investments per year. You’d invest $100,000, $200,000, $300,000. You’d do tons of due diligence. My main thing was just checking out the management. I’d spend days researching a CEO. I talked to everybody he’d worked with—and for him, above him—mountains of information! We just did tons of homework. And I’m not sure it was all valuable or not. Today we wouldn’t do that. But it was a time—

01-00:42:39 Hughes: How did you do that? By picking up the phone?

01-00:42:42 Myers: Yes, right.

01-00:42:43 Hughes: Why did you do that much due diligence?

01-00:42:56 Myers: It was just a slower pace.

01-00:42:58 Hughes: So you had the time. 18

01-00:43:00 Myers: You had the time, and the philosophy then was very much management, management, management. And it’s shifted some. But back then it was totally that. So you spent almost all your time on the management pieces and getting to know them and spending time with them and all that kind of thing—really, really a big [deal]. It’s still a big deal, but what would sort of come later has now been balanced by markets and all kinds of other factors that go into making a successful company. Back then those things weren’t emphasized in the way they are today.

01-00:43:34 Hughes: How much were you yourself going on the facts as opposed to your intuition, your reading of the people that you were considering investing in?

01-00:43:58 Myers: Well, you can’t avoid your intuition. It’s always there.

01-00:44:01 Hughes: But some people weight it more heavily than others in making a decision.

01-00:44:06 Myers: I think we were very much a firm that weighted our intuition heavily, and then we’d do a lot of homework. Was there a fly in the ointment here? Was there a problem—some things we didn’t know about? Because obviously intuition doesn’t tell you everything.

01-00:44:21 Hughes: Well, I read that Mayfield tried to move—I guess it would be the two Davises—towards a less intuitive, more process-oriented way of going about business, by at least having meetings. You said that Tommy Davis made a lot of his decisions on the base of his reading of people, on the basis of intuition.

01-00:45:14 Myers: Oh, yes.

01-00:45:15 Hughes: Did you think there might be a harder core way of going about it?

01-00:45:22 Myers: Well, yes, it’s sort of an evolution. Tommy was, just what you say, very intuitive and would just like someone, some situation, and want to do it. Wally was more of the engineer, and like, “I don’t believe that. I don’t like that.” And I was kind of the in-between person, the younger one. And so as the years went on and we added a few more partners— Glenn [M.] Mueller was an important new addition, and he had a consulting, strong business background.

So as the young people sort of gained strength, we began to put in more process like, “Let’s have a partners meeting to talk about these things.” [laughter] There was none of that [before]. You’d walk in the office, let’s do 19

this, let’s do that, okay fine kind of thing. And I was the young person, so I could be ignored or listened to when they wanted to. But then we come into the late seventies—I guess they had a bit more confidence in me, we added more people, and then we began to do a little more of this process stuff. I think intuition continues to be important, but you’ve got to back it up. That’s not sufficient.

01-00:46:29 Hughes: Would you say that today Mayfield perhaps leans more towards the intuitive side than other venture capital firms?

01-00:46:43 Myers: I can’t—you know, I’ve been out of Mayfield for ten years. And Mayfield struggled badly. The 2000 fund, the 2001 funds—everybody’s funds were bad. Mayfield’s were really bad. And so Mayfield stumbled. I think they’ve picked it up now; they just finished raising some money; they’ve changed a bunch of partners. But they’ve gone through some tough times, and I think they’re coming back real strong.

01-00:47:08 Hughes: As a spin-off from the bubble?

01-00:47:11 Myers: Let me see—I left Mayfield in ’98 and started the Entrepreneurs Foundation and just zoomed out doing that. I think we had some management issues; we had some hiring problems in part because that was a time when everybody was growing, hiring lots of people. So some of the people brought in weren’t the right people. Everybody was running a hundred miles an hour, so I think Mayfield kind of lost their way for a couple of years there. I’ve heard criticism and concerns and all that sort of thing. I think they’ve got it back now. They have addressed some of the management issues and hired some different people, and I think they’ve got a really good team. It’s hard for me to say what it’s like now.

I would say more in general though, Mayfield was characterized [as] a firm that the entrepreneurs liked to work with. We were always on their side. They never had to look over their shoulder that they’d get knifed in the back or taken advantage of. We were very fair, and we were good people to work with. I think then, and this is eighties and nineties, we weren’t as good as Sequoia [Capital] in marketing. I mean Don [Donald T.] Valentine’s a marketing genius. His imprimatur was: Let’s get a huge, fast-growing market that’ll make up for a lot of sins. We’ll also think about management and other things, but fast-growing market was his mantra, which was very good. And then Kleiner Perkins was here with a strong operating thing, and so they would operate or they had the insights to operate.

I don’t think Mayfield—we had some of these characteristics. We hired Yogen Dalal and some operating people and so forth. Mayfield was much 20

more a great firm to work with. Everybody liked us: we want Mayfield part of the deal. But then they’d get some other kind of expertise from a Kleiner Perkins or a Sequoia that we weren’t giving them. So maybe that’s one way.

But just to go back to one piece in the mid-seventies, which I always remember well in this smaller business: every month the venture industry of the Bay Area would get together for lunch at Nob Hill, at the Fairmont. There were only twenty in the room, and it was a very different time because it was open. Everybody talked about what they were looking at, what their opinions were. If you weren’t looking at it, they’d say, “Well, you can look at it. Come on, come on.” There was no competition. Everybody was sharing, working together, and actually, much to the detriment of the entrepreneurs, we were working together like, “Okay, we’ll offer them a buck a share. I’m sure they’ll take it. There’s nobody else around,” kind of thing. But in complete contrast to where we are now in the nineties, where it’s so highly competitive, and so forth. That was just the antithesis. It was very much a gentleman’s business. That’s what it evolved from.

01-00:50:19 Hughes: And what is that a function of? Expansion? You’re now no longer an intimate little club? You’re a huge industry.

01-00:50:32 Myers: It’s money. It’s tons of money that’s come into the business, a huge amount of success, and then the general growth of the business. You could sort of say that almost any business when it becomes successful and gets surfeited with money, it becomes more competitive. And now it’s become ruthlessly competitive. For at least fifteen years [venture capitalists have] had vastly more money to invest than they knew what to do with. The downturns have never shrunk the pool of money available much, in fact, frankly, at all. So there’s always been far too much money available, and it makes it now, and has since the mid-nineties, so competitive, because we’ve all got too much money. We’ve got to get the deal; we’ve got to control the deal; we don’t want to share it. On and on.

01-00:51:26 Hughes: Another thing I read is that, at least in the early days, Mayfield focused on early stage investment. What was the rationale there? And was it ever a serious consideration to do later stage investing?

01-00:52:03 Myers: It’s always been early stage. Later stage investing wasn’t a term, you know.

01-00:52:15 Hughes: [chuckling] I wondered if it was.

01-00:52:17 Myers: It wasn’t segmented. It becomes sort of semantics. Early stage back then would be the first dollars, but you had more of a team. There was more around 21

it. There was the expectation that the team would have left their [former] company, would have worked in their garage, would have built a prototype on their own. More would have happened on their own. And so now we’re ready, which would almost be today’s second-stage investment. That was just expected then. So we were all kind of in this same realm of investment, and a company would need another round or two of capital and the same group would put that money up. Maybe someone new came in, but you didn’t distinguish among stages. There weren’t that many players and there weren’t the different funds that thought about it that way. That didn’t come in till the eighties, I don’t think.

01-00:53:18 Hughes: Mayfield would pull in other VCs and investors?

01-00:53:25 Myers: Yes.

01-00:53:26 Hughes: It wasn’t doing this all on its own.

01-00:53:28 Myers: Oh no, not at all. No one would think of it. I don’t think anybody did it by themselves. Everybody worked together.

01-00:53:33 Hughes: It was too much of a risk and you probably didn’t have the capital.

01-00:53:36 Myers: Well, you’d invest a few hundred thousand. Maybe the financing was a $1 million, and there’d be four or five groups in it. There’d be a lead investor, somebody on the board.

01-00:53:47 Hughes: Did Mayfield worry about whether it was a lead investor or not?

01-00:53:54 Myers: No, it just wasn’t part of the lexicon.

01-00:53:59 Hughes: Was this part of the old-boys’ network?

01-00:54:02 Myers: Yes.

01-00:54:04 Hughes: If you had a deal, you would call up Joe Blow at another firm. Was that the way it was done?

01-00:54:11 Myers: Yes, share it, put it together. Exactly. Remember, it was Bill Edwards, this whole group—part of it was what people were doing. Back then, if you were 22

on four or five boards, it was considered—five boards was heresy! You can’t possibly do a good job and be on five boards. That’s crazy! I remember Bill Edwards being on five boards. People just thought: What’s wrong with him? Of course, today, you can be on ten or twelve boards and get by.

01-00:54:40 Hughes: And that is impossible, isn’t it? Can you be doing a good job on ten boards?

01-00:54:47 Myers: Well, maybe not, but everybody’s doing it. That’s hard to say. So Bill Edwards might be on a bunch of boards. He’d have a new deal that maybe he’d found, so he’d call Mayfield or Sutter Hill or somebody and say, “Look, I can’t do it, go on the board—I’ve got too much to do, but why don’t we all do this one if you pick up this.” It was very much of a sharing, let’s work together, you do this one, I’ll work on this one kind of thing. There was relatively little, almost no competition.

01-00:55:15 Hughes: Well, aside you wanting to spend more time on the Entrepreneurs Foundation, did you leave Mayfield because you see that venture capital is becoming a different thing and you’re not as anxious to be part of it for all those reasons that you’re talking about?

01-00:55:52 Myers: No, hmm. Maybe a little. At that point it had been twenty-eight years, and I was tired. My role had been managing partner since the mid-eighties. Tommy was ill and inactive in ’83 or ’84. Wally left in around ’86, and so from ’84, ’85, I was the managing partner. I spent a lot of my time on managing and growing people and hiring people and building the firm, and I feel that was one of my contributions. And I was also on boards and did that. I frankly feel my legacy is almost more with the quality of the firm that we built up until I left. So anyway, I was tired and it’s just one of these things where you go to work at 8 or 9:00 and you go in a meeting and you fall asleep right away, like, why am I falling asleep? [chuckling] Another business plan! The same old routine I’ve heard a thousand times. I’m tired of this. And there’s so much to do in the world. So many different opportunities. I’ve always felt that there’s just a hundred things to do. And so I was tired and I felt, okay, time to leave. I didn’t expect to leave quite as quickly. That sort of gets to the Entrepreneurs Foundation story. I thought I’d have the usual two- or three- year transition and all that, and then I just dove in to get this thing going.

01-00:57:36 Hughes: Well, we’ll definitely talk about that.

[Begin Audio File 2 09-09-2008.mp3]

02-00:00:00 Hughes: You’ve mentioned in passing the tough years of the early seventies, what the external economy is doing [that is] is going to shape how things are going for 23

you. It’s those contextual things that tend to fall out of the stories people tell. One of the reasons that I try to throw rather a broad net is that you can’t anticipate accurately what will interest future historians, sociologists, whoever is looking at this oral histories!

02-00:01:19 Myers: [chuckling] That’s very interesting, yes, right.

02-00:01:19 Hughes: So it’s great what you’re doing. [brief interruption for microphone adjustments]

02-00:01:59 02-00:02:46 Hughes: You mentioned in passing building companies. Am I right in thinking that that’s a big part of what Mayfield is trying to do? It’s not just a matter of finding the money and investing it, it’s building a company to be productive. Talk about that part of the process, please.

02-00:03:22 Myers: I think that evolved in the seventies. It was a little more of a passive investor—on the board but not as proactive—as we evolved. In the seventies, Glenn Mueller, Grant Heidrich, our team sort of evolved and we became much more active about how to help a company, which is kind of very much the theme. But back then, that was somewhat new—all the things you might do as a venture capitalist, whether on a board or not, to build a company.

One huge thing is hiring people. And so, actually, I hired a guy named Bill [William D.] Unger in the mid-eighties who had a search background. My thought was maybe a search guy can not only assess people better, but he has a search process, he has a search network, so he can speed up the process of getting people into these companies. The faster we get good people in, the better. Bill was a good guy, he has been with Mayfield until I left or beyond. But the point was to look for a variety of ways where you can get the best people in there quickly. And then whatever else you can do—like a Don Valentine had marketing expertise, and he’d bring that to bear, and we didn’t have much of that operating expertise. We had some, but I think if anything, it was how you get good people in the company as fast as possible. So actually, I was saying it was a very proactive process, and as we went on, we spent more and more time on it. It was obviously an important part.

02-00:05:12 Hughes: When you were looking for new people, were you looking for a person to fill a particular niche?

02-00:05:20 Myers: Yes. You fired a CEO and you’ve got to replace him with somebody. But more often the team, the company is growing, and you need a new marketing person or sales or a new executive in the team. Often the existing executives 24

are so busy a) they don’t maybe recognize it quickly enough, they don’t want to take the time to work on it—kind of like it’s hard to get to these things. So I think one of the things that we were good as was to flag this early, get their attention on it. For many years, that’s where if I was on the board I’d bring Bill Unger in, and Bill was really good at talking about: How do we get a new person in here? What are the characteristics? How do you define what you want; what [are] the must-haves, like-to-haves. All that. And then we’d help them find search firms; we’d help them direct the search firm. So we were very proactive; we’d interview most of the candidates. It was a really very active process of getting people in.

02-00:06:26 Hughes: You’re putting it in the past.

02-00:06:28 Myers: Well, only because I’m past. [chuckling] Actually, I don’t even know today what [Mayfield does]. I presume there’s some of that, but the investment pace is so high, like at least one a month, maybe two a month, that, for all the venture firms, you just don’t have time for any of that. And there’s also arguments today—pretty much I’m just out of touch—that the funds have gotten bigger. Well, they got real big, the bubble, up to a billion dollars and now they’re back to $300 or $400 million. But see, if you’re putting $300 to $400 million to work in four or five years, [it] is very difficult. You’re so busy putting that money to work, and finding the next new investment, and then being on some boards that the proactive process I just talked about was much more of the eighties and early-nineties. We’d make five investments per year, and we’d have a team of six or eight people, so we could do that. I’m not sure how much that’s done today.

02-00:07:36 Hughes: You make it sound as though it’d be very difficult to give that kind of attention.

02-00:07:39 Myers: Well, yes.

02-00:07:42 Hughes: Were you starting to say something?

02-00:07:44 Myers: Well, what’s evolved also is a group of seed investors—there’s another word for them. It’s individuals that have made money; I’ll think of it in a second. And so there is now another subgroup, usually not as well organized, that sometimes does this seed round investments.

02-00:08:04 Hughes: Angels? 25

02-00:08:05 Myers: That’s it—angel investors that do some of the really early-stage stuff that I’m not sure how many venture funds do these days.

02-00:08:16 Hughes: Would the tendency be for Mayfield to work intensely with a company until the IPO? Or only dip in when there seemed to be a need?

02-00:08:34 Myers: Well, you know, you kind of prioritize. If things are going well, you don’t have to work quite so hard. And then when you get to the IPO, if it’s a good company, often then— In the eighties and nineties, the strategy would be, if it’s a good company, you want to stay on that board at least for a few years. Well, first of all, we still held stock in it, so if you think you can be helpful— But it also added to the [company’s] reputation.

So as the business got more competitive, and it swung more from around where the entrepreneurs had the upper competitive advantage, the entrepreneurs would say, now what kind of venture fund do I want? Then they’d look at you and say, “Well, you were on the board of so-and-so microwave or a fiber optic company. You must know a lot about that. I want to work with that person at Mayfield,” or at Kleiner, whatever it was.

So in the mid- and toward the end of the nineties, the entrepreneurs very much called the shots. We were, everybody was running around trying to puff themselves up and make the venture capitalists look attractive to the entrepreneurs. We didn’t have to bother with all of that in the eighties, luckily.

02-00:09:51 Hughes: How important did you feel it was to be familiar with the basic technology of a company? Did that factor in?

02-00:10:01 Myers: I think it’s essential. You’ve got to understand their business. So I think that’s absolutely essential.

02-00:10:11 Hughes: Does that explain why a Tommy Davis—I forget what his background was.

02-00:10:21 Myers: He was an English major and law, and then he did the oil exploration and all that.

02-00:10:27 Hughes: I shouldn’t make it an either/or, because I’m sure a lot of it was his personality. But if he didn’t have a strong technical background, wouldn’t he have been thrown into a more intuitive way of going about this? In contrast to you with your engineering and your HP experience. 26

02-00:10:49 Myers: Absolutely. Aside from his phenomenal personality, Tommy wouldn’t have been very competitive in the mid-nineties. That’s when your marketing and technology, or business, or whatever—all the venture capitalists were trying to hone up, like a bird putting their feathers up: here’s what we have here; here’s what our firm has; here’s the expertise of our firm, so we could attract the entrepreneurs. And Tommy would have had a harder time with all that, that’s for sure.

02-00:11:56 Hughes: The information about your wanting to have more of a process came from The New Venturers: [Inside the High-Stakes World of Venture Capital], which is a book by John [W.] Wilson.

02-00:12:12 Myers: I don’t know if I’ve looked at it or not.

02-00:12:13 Hughes: I wondered if you could pick out, once there was more of a process at Mayfield, a prototype meeting in which the partners got together and discussed the possibility of an investment. Please give me a picture of how the discussion might go.

02-00:12:42 Myers: [chuckling] I don’t know. It was never that formalized. Well, we’d have a weekly partners’ meeting. It used to be all morning on Monday, and eventually it became all day on Monday. We’d have a lead partner, and we’d always have a second partner that was working with them. There’s always a hopper full of stuff. So you’ve got four or five things that you consider hot and important that people are actually working on. So the lead partner would report on those particular deals they’re working on, what had come up, what were the issues. Others in the partnership would chime in and raise their questions and review prior questions that had been raised.

And so that would be a process that, until things got feverishly competitive, at least in the late eighties and nineties where we’d go on for a number of weeks. And if someone wasn’t happy, was concerned, not happy, they might join the team. And so, we kept track of who was on a team and who was doing what and working on what deals. That was part of the organization of the whole process. But out of that, we’d begin to peel off what the issues are with a given company and where we kind of [were] working through them. I don’t know. Something like that. It’s hard to say it’s so structured, but it was very much of a process, and we had little charts and keeping track of who’s working on who and what was going on.

02-00:14:37 Hughes: I read that you’ve been involved in something like 300 deals. 27

02-00:14:47 Myers: No. Me? I don’t know. That many? Could be. I don’t know how many.

02-00:14:50 Hughes: I found three articles on the Entrepreneurs Foundation, and that’s where I saw that statistic.[laughter]

02-00:15:10 Myers: Beats me!

02-00:15:11 Hughes: You don’t keep track, obviously.

02-00:15:14 Myers: I think Mayfield made over 500 investments over its lifetime, but that’s just a gross number—it doesn’t mean much. It’s a marketing number. [laughing]

02-00:15:28 Hughes: Even if it’s half of that, it’s an impressive number. Did you have a role that was distinct from the other partners?

02-00:16:10 Myers: Well, I was very much the managing partner. People have different personalities. You get to know each other. One person may be kind of sloppy on their homework or gets real excited about something, so you’ve got to do the balancing with every person, sort of get the right information, make sure the rest of the partnership’s coming along. So a big part of my role was keeping that balance, so the stronger partner, maybe more senior, more forceful, more outspoken, didn’t overwhelm the process and not have other people speak up or get their input. And vice versa for someone who wasn’t as strong but maybe had good ideas. And so I spent a fair amount of time drawing out or balancing—“Last week you said this. Have you had that resolved?” kind of thing.

But then I also spoke up for myself, and just by dint of time, age, or whatever —somehow for some reason [people] listen to you more when you get older. It probably isn’t appropriate, but it seems to work that way! [chuckling]

02-00:17:32 Hughes: Well, you probably had a track record that they recognized.

02-00:17:35 Myers: I don’t know. There are times in a meeting where you just say, “Come on guys. This doesn’t make any sense. Why are you kidding yourself? This is fundamentally wrong. What are you thinking about?” And luckily, I think we had unusually good partner dynamics. In fact, I’ll come back to that—so that no partner would dominate, and I didn’t dominate. But some would push back and say, “Gib, I don’t care what you think. This is it. I’ll do some more work.” Or, “I’ll prove it to you.” And so I think one of the strengths we had is how the group would work together. 28

In fact, we so liked each other—there was a period of fifteen years when if we were having a party, we’d say, “Let’s invite the Mayfield partners. Who else should we invite?” We were just the best of friends and the wives were best of friends. It was just a wonderful, cohesive group. Not everybody was as strong as others, and some people were performing much better than others. But— we’re all on one team, let’s work together and not worry about one person having substantially more good deals than somebody else.

02-00:18:50 Hughes: Do you suspect that that’s unusual?

02-00:18:54 Myers: Very unusual. Now that fell apart after a while. Appropriately—I don’t know appropriately or not. After a while you sort of say, “Let’s start to keep track of things.” And we hadn’t tracked carefully how many good deals a, or b, or c person brought to us, or evolved into all these characteristics: what they brought in, what they supported, what boards they were on. But anyway, there are lots of ways you can track these. We started tracking, and it all became more divisive. [chuckling] Well, wait a minute, so and so has had half the good deals in this partnership—shouldn’t they have more ownership? Shouldn’t they be paid more? And this person hasn’t done a thing for the last two years! They shouldn’t be paid as much. I don’t know how you avoid that, but that was the beginning of the end. [chuckling]

02-00:19:44 Hughes: What era was that happening in?

02-00:19:46 Myers: Oh, starting in the mid-nineties. I don’t know.

02-00:19:50 Hughes: Are you painting a picture of Mayfield when it was working well as still being somewhat the exception to the rule?

02-00:20:01 Myers: Oh, I think so. Those were times when our arch competitors were Sequoia and Kleiner Perkins. They were very competitive within each partnership; they didn’t like working with each other; partner meetings were very rough and tumble—a whole different atmosphere. It’s hard to say that was any better or worse. We had a certain style that we really liked and worked well for us. They obviously did really well themselves in that time. But I think the Mayfield partners would not have fit into those partnerships.

02-00:20:40 Hughes: No, it doesn’t sound that way.

02-00:20:41 Myers: So we kind of made it work with what we had. 29

02-00:20:43 Hughes: On the Mayfield Website, which maybe has changed in the ten years [Myers laughs] so it may not apply, but I quote, “We view ourselves as the entrepreneur’s partners.”

02-00:21:09 Myers: Yep, that goes back. They kept that. I’ll be darned. That’s very much how we felt. Entrepreneurs would say that they first and foremost really liked working with us, and these other firms they didn’t trust or they would get a knife in the back or something would happen. They couldn’t trust them. Now, those other firms also brought things that they liked, so it balances, but this was our hallmark. I guess it maybe still is. [chuckling]

02-00:21:42 Hughes: And was some of this confidence just about money? I mean by that, if you invested in a firm, was there some kind of understanding, unless things went terribly wrong, that you would be there for x number of years?

02-00:22:06 Myers: Oh absolutely. That was expected of everybody. You wouldn’t be a good venture firm, because in any given round, others have come in, so maybe you’re the lead and you’ve just raised a bunch of money, maybe one more person joins the board, but you’re kind of representing a bigger group than just yourself.

02-00:22:31 Hughes: I see.

02-00:22:31 Myers: And so if you don’t do your job, you won’t be asked next time. You won’t be as attractive to work with, because you don’t follow through, you don’t support the deal. On the other hand, from the entrepreneur’s point [of view], sometimes though, the venture capitalists were always gunning for them or quick on the trigger. The personal dynamics between the board member and the entrepreneurial team—that’s where we kind of won the game, because we always had good dynamics. They liked to work with us; they’d have confidence in us; we’d have dinner with them. We’d do lots of things in a partner relationship, and other firms didn’t have that kind of relationship.

02-00:23:13 Hughes: You’re painting a vivid picture of a friendly relationship. Is there also an emotional component to this? Meaning do these companies become to you more than just an investment?

02-00:23:48 Myers: Yes, sure. It sort of varies with the kind of relationship, but particularly, as you get to know a management and you work with them. First you’ve got a performance pressure. You do feel the pressure of your company’s doing well. Sure, yes, absolutely. Not all. Some. But absolutely true, yes. 30

02-00:24:18 Hughes: And what about—I imagine that one of the crises in this trajectory of a young company is when there has to be a management change. Does that represent a crisis for you too? To have to tell somebody, “Okay. You’re out.”

02-00:24:45 Myers: Well, I don’t know. I guess I haven’t felt that. A)You always wait too long, so that by the time you’re having the sit-down talk, you know you should have done it six months ago. But then six months ago you couldn’t have done it. The other employees in the company are coming by your home at night and saying, “You know, I’ve got to talk to you about this person. This is just not working. We’re about to leave. The company is going to coll[apse]—you’ve got to fix this.” So I go, “Okay.” [chuckling] So—you know—wake up! We’ve gone through the process so many times. It’s just that it always seems to get to that point.

So by the time that happens, you know you’ve got to do something. It’s in the best interests of the company, and it’s in the best interests of that person, because that person’s going to fail horribly, or they’re going to swallow hard and get it over with now, and let’s move on with things. We felt we had, in most cases, very good personal relationships with management. And so, it wasn’t easy, but they would trust us in not saying we’re trying to pull a fast one or, “Oh, you never liked me anyway. I knew you were always against me.” We didn’t have that kind of thing, so we’d engineer the process. But that engineering was quite complicated. You often had to get other board members to go along. Some of the management team had already taken sides, and so you’d meet with this group or that group. It was often a very laborious process of engineering a CEO change, even later, when there was a problem. Anyway—that was a big part of it. A lot of time.

02-00:26:23 Hughes: What about social impact or lack thereof of a company? Does that enter into the mix of things you consider?

02-00:26:46 Myers: No. [chuckling] I tried to change it for ten years, and I almost—it’s a complicated question. It’s like raising children: if you raise them with the right values, the community and a sense of value by the community can fit in even at the early stages. You might not do much, but you set the seeds. I could elaborate on the EF [Entrepreneurs Foundation] program, but nevertheless, I felt that was a culture that does fit with early—I believe firmly it does. But people are so focused on, and working so hard to do, what they’re doing, that they can’t squeeze it in very well.

So EF has worked with 180 companies, and at least two thirds of them have been very successful. They feel it’s added a lot to their culture and made them a better company, and so forth. But I’d really hoped we’d reach kind of a tipping point, where every venture capitalist and every lawyer just said, “This 31

is the thing you ought to do. The community is part of where we live. You will be a better company, a stronger company, for the community being part of your culture,” even in a small way—it grows later. And I just cannot get widespread adoption from that community.

02-00:28:15 Hughes: Because of—

02-00:28:17 Myers: They’re just totally focused on what they’re doing. They’re spending twenty- four hours a day; they’re getting divorced. We don’t want to fit one more thing in. So there are some entrepreneurs that do believe that, and we have great spokesmen that think it’s the best thing. I mean, everybody works to build a culture—they have company meetings, they have beer gatherings, they have all kinds of things they do for the culture. So why isn’t some community stuff, some volunteerism, maybe then a variety of things could be part of that culture. Some believe it, but I haven’t gotten it to be everybody. So EF, actually, has broadened our strategy. We now work with larger companies, public companies, all kinds of companies, because we’re kind of the pre- eminent group in terms of how to do community involvement with your company. But we can’t stick just with the early-stage companies, because each one continues to be too hard to fight.

02-00:29:21 Hughes: Well, let’s stop there for this time.

Interview #2: September 22, 2008 Begin Audio File Myers 3 09-22-2008.mp3

03-00:00:00 Hughes: Well, I thought that we’d start this time with some more general questions about venture capital, and then end up with your community-related work. Some of these questions will probably sound really basic to you, but I’m assuming that eventually this whole interview series will get a wide viewing and not everybody’s going to be up to speed with venture capital. So the question is: What are the key things that you look for when an entrepreneur comes to you?

03-00:00:51 Myers: Hmm. Well, you actually have to parcel it by time frame. It shifted.

03-00:01:05 Hughes: All right. That’s good.

03-00:01:06 Myers: In the seventies and early eighties, particularly the seventies—I think I said some of this before—you’d have an entrepreneur or an engineer/inventor type come, and as a venture capitalist, we all knew we had to have a team to make this happen. So in those days, you might well tell them to go away and go find 32

a marketing person, or a CEO, or somebody to run it, or whatever the right combination was. It was a less competitive world, and I think that’s, frankly, a better system, where they go out and they struggle, they find the right person to work with, that they can get along with.

Then as they had team members, you invested, and you helped them build the team. But there, in that case, we were looking for highly unique products with only a few people in the world [who] know how to make them, addressing large markets that you can get to. Pretty simple stuff. But that’s where a lot of the technology came in. Back then, at that point, you really had the opportunity for doing truly unique things, and there was only a handful of people in the world that would know something about this or that kind of technology.

Then came the eighties and even more in the nineties as it sort of progressed, or as the business got more and more competitive, you’d work with an entrepreneur at the very beginning that you knew couldn’t run the company, and you’d hopefully have an understanding they were going to bring in management at the right time. And so then your role as a venture capitalist, a very important role, was to begin to help build that management team, which was always risky. It doesn’t always work when they don’t like your choice. And so lots of issues come up. But it’s kind of evolved to that.

Then [it] evolved even further, where in the nineties, with all the things going on, is the venture capitalists who were out looking for technology and looking for somebody at Stanford or some place that they could back and build the company around and then add all the rest of the pieces, which is inherently an even riskier strategy, but the competitive pressures of the whole business forced people [to that]. We used to have incubator space here. In fact, half this floor that you walked through were small companies. We’d put them in our offices and work with them and help them to get going in this kind of formative stage.

03-00:03:33 Hughes: And was that a very desirable thing for an aspiring company to do?

03-00:03:43 Myers: Well, for an aspiring company it’s very desirable; it’s a good deal. They can start early and they get the support systems of Mayfield and everything else. We also had entrepreneurs in residence. We’d have a CEO or someone that we liked a lot and we wanted to hold onto him, we’d give them an office, pay them something to do homework, help us do due diligence. So sometimes, not always but sometimes, that entrepreneurial group would either support the engineering group, those with the ideas and sometimes they’d match up and some would come across. I can’t think of examples right now. So it was great for them. 33

I think it was inherently a more risky strategy for us, but a number of companies came out of it. The MIPS Computer Systems that I’ve mentioned. This was three people from Stanford—John [L.] Hennessy, the president of Stanford, among them, who had an idea of a new processor design. One of our partners, Grant Heidrich, knew John and said, “Why don’t you come to our offices. We’ll help you develop it.” It was just kind of like they had proved it in prototype over there. That’s all they’d done. So they came over and spent a year with us, and then we helped build a management team around it. It was a company that was successful for us, went public, acquired by—so forth. And in the biotech field we had a number of those, so it definitely worked. It’s an awful lot more work and lots of them don’t work, but it sort of evolved to that.

03-00:05:08 Hughes: In the MIPS case, it was personal contact, but is that the usual way that a budding company or an entrepreneur with an idea came to Mayfield?

03-00:05:28 Myers: Yes.

03-00:05:29 Hughes: He knew somebody at Mayfield or she knew somebody?

03-00:05:32 Myers: Absolutely. Everybody jokes, but we have never funded a company from a business plan that was mailed to us.

03-00:05:43 Hughes: Never!

03-00:05:44 Myers: No. That would be kind of like—what’s this? It’s all about the people, so unless you get that personal connection started, you don’t get started.

03-00:05:56 Hughes: Well, I guess if you don’t open the envelope you will never know, but what if there was just a really hot new idea? It would seem that you might be losing out on things.

03-00:06:07 Myers: Well, we opened all the envelopes. We always did. But you know, it’s part of the process. Part of how Silicon Valley works is that the person that wants to start a company, has to find a way. You mail your resume around for a job and you almost never get a job. It’s some connection that happens. The entrepreneur needs to find those connections. That’s part of the process.

On the other side, as we got more competitive, we made ourselves more and more visible, easier to find, and so we looked to have press in the papers and talk about our expertise. We had people at Stanford and Berkeley all over the place visiting the engineering schools, meeting people, saying, “Here we are. 34

We’re looking for projects. We’re looking for things to do.” And so as I said, it got more competitive. We were out there looking ourselves to make those connections easier and earlier.

03-00:07:06 Hughes: Right. I have noticed at Haas [School of Business] the corporate presence there, the number of quasi-social occasions in which budding business students can meet companies.

03-00:07:26 Myers: Well, we started the Mayfield Fellows Program. And there’s one at Haas now. Both the engineering school and the business school are part of it. And there’s one at Stanford. We put up, I don’t know how much—millions of dollars, quite a bit of money to get these programs going, and then they become a Mayfield Fellow. They’re still doing what they’re doing, but they get a fellowship award. I don’t check all that happens now. I’m out of date on it, but we end up with a real presence in the program, and then the fellows come over here and spend time and this and that. These are great people that we want to have them know about us, kind of thing.

03-00:08:06 Hughes: That’s part of the program? They come to Mayfield to spend a period of time?

03-00:08:14 Myers: Yes. They do some dinners, they might do a half-day conference for fellows and bring in speakers. I’m out of date, but in most respects, these are people that are in places that are important to us, in some of the key engineering areas and working with really great professors. They often have their eye to doing something of an entrepreneurial nature, and so we want to know who they are.

03-00:08:44 Hughes: Do you have any statistics about how those fellowship programs actually pay off?

03-00:08:50 Myers: No. I think people here would, because they’re still active and have now been going for about eight or ten years, but I’m out of date.

03-00:09:11 Hughes: Is Mayfield in any way unusual in sponsoring fellowships of that nature?

03-00:09:20 Myers: I’m not sure. I know back when we started this, I was transitioning. We were anxious to put our name on it, which forced us to put some more money up to do it. So there may not be. But other venture capitalists find their own way, and I can’t rattle them off, but you know, Kleiner Perkins, Sequoia. They’re all around. All of these schools, just going back to a prior conversation, have integrated themselves to the community, the corporations that come in there they use that as part of the outside classroom, so they’re all very open to it. So the venture capitalists are all around, one way or the other. 35

03-00:10:15 Hughes: The historical literature gives Stanford pride of place in being venturesome in terms of reaching out to industry. Berkeley is regarded as slower on the draw. Do you have enough contact with the Berkeley campus to know who might have been behind pushing for greater interaction with the business community?

03-00:10:58 Myers: Not really. One of our advisors was [A.] Richard Newton, who was dean of the engineering school at Berkeley. And he died, unfortunately, a year and a half ago. He had been with us for fifteen years. He was a professor at Berkeley and then he worked his way up. Great guy. I don’t know who was there before or what happened, but he had that foresight.

He raised a few hundred million dollars, built a corporate computer-aided design center and brought corporations into it and venture capitalists. He was thinking that way, and so I think they very much have a presence, but prior to that they were very quiet. I don’t know why or who was there. And Stanford was in our back yard. It was much easier. We all had the Stanford connections, and so forth.

03-00:11:58 Hughes: Back to the general venture capital questions. I think I know how you’re going to answer this. Would you say that venture capital is a spur to innovation? That it has a good process for selecting firms or entrepreneurs that are likely to be innovative, or is it more due to management developing a firm so that it is productive.

03-00:12:53 Myers: Both. [chuckling]

03-00:12:56 Hughes: That’s what I suspected you were going to say! [chuckling]

03-00:12:59 Myers: Yes, it is both. First is the screen—is this thing any good, addressing a big enough market, can you build a company around it, can you attract capital? All those kinds of questions. And often the entrepreneurs aren’t in a position to answer those very well. They might have a great idea, but they don’t have a broader perspective.

03-00:13:19 Hughes: And you don’t expect it of them?

03-00:13:24 Myers: Not necessarily.

03-00:13:26 Hughes: That’s your role. 36

03-00:13:26 Myers: Yes, exactly. Somebody used to say is, “One way to become a really good venture capitalist is to see all the business plans there are.” And so we would actually try to measure what percent of all the plans, or all the opportunities that we see—80 percent, 90 percent—because if you see most of them, after some time you begin to figure out—Hey this is some good stuff, this isn’t so good. Just a simple piece of the equation. So you don’t expect entrepreneurs to know that, so it very much is a screen where the venture capitalists hopefully have some perspective knowledge. Right, all that, but they do have the perspective to screen it and say, “This has a chance.”

But then once you’ve done that, that’s the start of a long process. That’s where I think the venture capitalists really have their added value, [which] is to help build the team. And I think I mentioned before being—I think we sort of specialized on helping build a team. Other venture capitalists did too. Sequoia was really good at the marketing side of things, because that was Don Valentine’s background, and Pierre’s [Lamond]. Kleiner Perkins had the operations stuff, so they were very operational, very hands-on. They would be chairman of the board and almost running things at the time, which others didn’t. But in all regards, it’s just kind of like each person is trying to find a way, or each group find a way, to build this thing and make it successful. So that’s why it’s both.

03-00:14:50 Hughes: I read somewhere that—and I can’t even tell you what stage in Mayfield’s history it was—it had a reputation for being very strong in communication.

03-00:15:06 Myers: You mean communication sector?

03-00:15:09 Hughes: No, I meant being very interactive with entrepreneurs.

03-00:15:22 Myers: We worked at that. Kleiner might be the operations people; a little unpleasant to be with and you didn’t want to necessarily go to a party with them. Sequoia kind of that way too, but fantastic marketing. We were the friends of the entrepreneurs. That’s how we positioned ourselves. We fired our share and had our differences, but we really felt like we were in a partnership and we’d work with a team and with the chief person to make this so they’d have trust in us and if we say, “It’s time to step aside, and here’s why. Here’s what we should be doing,” that we wouldn’t fight about it too much but like, “Okay, I understand.” Have a relationship that we could talk it through. So that’s very much how we positioned ourselves.

03-00:16:08 Hughes: Were you a little unusual in having experience in a high-tech company? Tommy Davis, as we talked about, was in land management. 37

03-00:16:26 Myers: Right, exactly. And then, you know, Institutional Ventures, IVP [Institutional Venture Partners]—Reid Dennis started that—although some of the partners did [have high-tech experience]. But it’s a mixture, but by and large you’re right.

03-00:16:38 Hughes: But did you stand out in the early Mayfield because you had been at HP and consequently knew a) about high tech, and b) about working at and managing a Silicon Valley company. Did that distinguish you in any way?

03-00:17:01 Myers: I don’t know! [laughing] Beats me. It was just such a different time then. I didn’t become a partner till the second fund. Back then, it was very much the two of them, and I was the associate. I wasn’t equal to them at all, in terms of stature or my accomplishments or anything else. I remember talking to Tommy in the mid-seventies saying, “You guys are always on all the boards. I want to go on a board. I want to get more involved.” “Oh, young man, your time will come. You’ll have more boards than you can deal with.” Which happened, but that took ten years. Now today it doesn’t, because there’s a demand, and it’s a whole different deal. But back then, it was kind of a club. The type of person’s changed. I never could get a job today. [chuckling]

03-00:18:37 Hughes: Why do you say that?

03-00:18:39 Myers: Well, because—because the demands are that the person step in, be productive very quickly. You don’t have five years to see how it’s going. There are a whole bunch of dynamics. First of all, everybody’s paid more. You’re expected to get some ownership in the firm almost from the beginning. I didn’t get ownership until five, six years into it. And then I was loaned some money, and so forth.

03-00:19:09 Hughes: And that was standard from firm to firm?

03-00:19:11 Myers: No, they hadn’t hired young people. It was a brand new thing. I may have been one of the earlier associates. I don’t know who else had associates. Kleiner Perkins, all had principals, but no associates at the time. So I was kind of a new category.

So today, the expectations are very high, so you hire people—typically they’re people that have had ten years of industry, and they’ve done spectacularly well: they’ve led this, they’ve led that, they’ve started this, they’ve started that. And they’ve done it in areas that you’re looking for. So if Mayfield needs somebody that’s in the Internet space or communications space, you look for the ten-year entrepreneur that’s done all this stuff and they’ve been really 38

successful. Then you hire them, you pay them a lot of money, you give them a lot of ownership, and they’re expected to, day one, bring in deals, know how to assess deals, and help companies. So it’s a whole different model today.

03-00:20:13 Hughes: How is it working? Because I’ve done a fair amount of interviewing in the biotech industry, and I’ve been struck by how many of those people, as they age, move into venture capital.

03-00:20:32 Myers: From biotech?

03-00:20:34 Hughes: Yes.

03-00:21:17 Myers: Coming from an operating background is kind of the way—it’s been that way for the last ten or fifteen years. That’s very important. You’ve got to know the technology, you’ve got to know the players. It’s just a given that they’ve got to come out of the Genentechs or the technology companies around, otherwise [they] don’t know the players and [they] don’t know what [they]’re dealing with.

To be able to invest successfully, there is a learning curve. There are two aspects to that: some people are just operating people. It’s a whole different world to go to work, make things happen, be tangible, grow this, it’s really yours. And those people don’t transition to venture capital very well, because they want to operate. And venture capital, you’re one or two steps removed from that, and you’re advising. You have a relationship. You have a bunch of companies. You can’t spend the time, so some just don’t like it for that reason, or don’t make it as a venture capitalist.

But the second thing is, if you brought someone over, what you hope is that as they—you’ve got the whole partnership then working, so when you sit around the table, and there are five or six or eight partners, you might be the new person, but your naiveté on the investment side is sort of compensated by the rest of the group. And so you might think this [proposal] is spectacular and it’s got to go through, or that you like an investment, but the other partners say, “But you haven’t thought of this, this, and this.” “Oh, really, well, wait— I never thought about those things.” And so that’s where it sort of comes together.

But it’s much more important today to have the fundamental knowledge of what you’re investing in, which has become more complex, more fast- moving, et cetera. You’ve got to have that or it’s a non-starter.

03-00:23:02 Hughes: Doesn’t that lead to a lot of specialization within firms? 39

03-00:23:08 Myers: Oh yes, definitely.

03-00:23:10 Hughes: And is that yet another change from the way things started out?

03-00:23:13 Myers: Oh yes. There were generalists, and generalists did fine for a long time, but in the late eighties we hired Yogen Dalal out of Apple. He’d been at Apple and then at one of their spin-offs, and he’s a software guy. So he was one of the early designers of the Internet at Stanford with PARC [Palo Alto Research Center] and all that. It was obvious—you had to have this expertise that knew the networks, knew where the people were, knew where the deals were. And so that’s continued to go on. Biotech is just as specialized. Highly specialized.

03-00:23:52 Hughes: Let’s go back to your story about ownership.

03-00:23:58 Myers: Well, when I joined, I didn’t understand the company. I was so naïve I didn’t know about ownership. But they hadn’t hired young people. So Tommy and Wally were the general partners, having most of what they call the carry in the fund.

03-00:24:16 Hughes: Which is a given percentage?

03-00:24:19 Myers: Yes.

03-00:24:19 Hughes: And is it usually the same from firm to firm?

03-00:24:21 Myers: It moves around, but back in those days, or even today—it used to be 20 percent—so 20, 25, or 30 percent. And that meant that the general partners would get that percentage of the profits of the firm when liquidity occurred. Actually that’s a whole different story, but anyway, at some point in time, you would get 20, 25 percent of the profits. So the early firms were 20 percent, 25 [percent], and then Kleiner Perkins and we and others went to 25, and then they went to 30. Now some people are back at 25. But anyway, it’s around 25 percent.

03-00:24:59 Hughes: It that a recent escalation?

03-00:25:01 Myers: No. That all happened in the early nineties, 30 percent. But when I joined, the senior two, Tommy and Wally, had that ownership for themselves. And I think they shared a little bit with Stanford or somebody else. After being there for a few years I said, “Well, you know, I understand how this works, so can I 40

have some ownership?” And that was an unknown concept. There was no vehicle to do that.

Now, all the legal work’s been figured out. It’s very easy to do. [Then] it was like, “Oh God, I don’t know how we do this.” And so Tommy lent me $30,000 to invest as a limited partner. Now that was very nice of him, but that’s really not the same thing. It’s a loan. I owe him $30,000; I was paying interest on it, and if the fund didn’t do well, I still owe him $30,000! Whereas, if you’re a general partner, you have to put up some money, but basically it comes almost for free. And if the fund goes away, you haven’t lost any money. I mean, it’s not quite that simple, but almost.

And then that first fund wasn’t particularly successful. I think it just had about a 4 or 5 percent return. This was in ‘76-’77—I wasn’t even sure I could pay Tommy back. I didn’t have any money. And then luckily, kind of at the last minute, Storage Technology and a few companies did really well, and I paid him back and made $10,000.

So anyway, that whole concept of ownership was not well established. As we began to add partners and others did, then we figured out the legal mechanism for taking an existing carry and splitting it up in different ways. And today it’s just expected. If you’re a pretty senior person joining a venture firm, you’re expected to get ownership in the firm.

03-00:27:01 Hughes: What about becoming a partner then and now?

03-00:27:06 Myers: Same thing. It was just slower then. I became a partner in Mayfield II, a little, itty-bitty partner. But that was five, six years into it. And today a senior person would come in, probably, as a partner. You might have some other junior and some interns—not everybody in the firm is a partner today. There are twenty people out there, twenty-five, so not everyone is a partner, of course, but they do—there are tiers and you figure it out. But at least there’s a vehicle.

03-00:27:48 Hughes: Is it very much performance-based how you move into partnership?

03-00:27:55 Myers: Well, if you’re senior in what you’ve done, accomplished a lot, then you can come in as a partner right away.

03-00:28:02 Hughes: Right. But if you haven’t?

03-00:28:04 Myers: If you haven’t, we’d start somebody with a fairly small partnership interest, and if they really did well—I mean, some of the companies were very 41

successful, then—now they were getting only a small portion of those profits because they had a small interest. So we also had—we would do a couple of things: occasionally within a fund we would change their ownership, which was fairly complicated to do, but we’d increase their respective share. Or certainly in the next fund then, because their portfolio had done well, we’d increase the ownership in the next fund.

03-00:28:42 Hughes: I see. And presumably it can also move the other way.

03-00:28:44 Myers: Down. Yes, that happened some.

03-00:28:47 Hughes: Probably less common?

03-00:28:52 Myers: Yes. It’s such a fuzzy business. Even measuring performance is—over time you can for sure, but who’s doing well, who made a critical hire, who helped somebody else. Maybe my partner was the key man on the deal, but I did something that it might not have survived without it. So what’s what, you know? So we tried very hard to not dice it up and figure out exactly who did what and who was better. Inevitably we did that, because you just kind of have to recognize the differences.

03-00:29:26 Hughes: Well, you spoke last time, and maybe congenial wasn’t quite the word you used, but I definitely got the impression from what you said that Mayfield was a cooperative group, and there wasn’t a lot of backbiting until fairly recently.

03-00:29:46 Myers: Right.

03-00:29:49 Hughes: You were looking after each other’s interests to a degree.

03-00:29:52 Myers: Oh yes. No, it was a very congenial group, and then we prided ourselves on that and it was one of these things where we felt that the group would be greater than the whole—or however you say that. [The whole is greater than the sum of the parts.]

03-00:30:04 Hughes: And would you consider that to be a distinguishing characteristic of Mayfield?

03-00:30:13 Myers: Yes. Now we lost a lot of that in the late nineties, but certainly during that period that was definitely true. I think we had some partners who did just a few deals. I think I mentioned last time, we hired Bill Unger to do search work and headhunting for the company. So he made huge contributions, but 42

he had ownership, but you couldn’t say that it was his deals, and so forth. So we liked that. Other firms had gone more on the superstar model, and once again, competitive pressure—we saw we had to go that way too. And there’s still quite a bit of that where a person has a fiefdom—the John Doerr, Brook Byers fiefdom. They did it their own way and got what they wanted. We avoided that as long as we could, but then in the late nineties—that’s when it happened.

03-00:31:13 Hughes: And the discord, if that’s the word, that began to appear in the 1990s, was that, at least in part, a function of the greater competitiveness within the field itself?

03-00:31:28 Myers: Oh yes, I think so. Absolutely right.

03-00:31:30 Hughes: And more so than just the mix of personalities?

03-00:31:34 Myers: Well, the personality mix didn’t change much until the late nineties. So, I don’t know what the answer is exactly. Say it again? I’m kind of lost.

03-00:31:50 Hughes: Well, I was wondering how much of it was circumstance, the fact that venture investment had become more competitive, consequently the individuals within it were forced to be more competitive. Or was it just that you happened to have a certain set of individuals at Mayfield who were more aggressive than the group before.

03-00:32:13 Myers: It’s a little of each. Clearly it became more competitive. I’m thinking of one or two people that we hired that were really good, and they did really, really well. And then they stood up and said, “Hey, look what I did! I made this enormous contribution, so I really want a lot more ownership. I don’t want to just go by the old measures, I want a lot more.”

And that began to be a problem. And then we started measuring everybody more carefully. Oh okay, well, this person hasn’t done anything useful or hasn’t made any money for five years, so is that person no longer useful? Should their ownership be reduced? What do you do with it? You get into very complicated issues, and that went against the culture that we developed—Hey, let’s all work for the common good.

03-00:33:02 Hughes: What turned it around?

03-00:33:04 Myers: Oh, it didn’t really get turned around. I think we went to the competitive culture. I left Mayfield not because of that, but that’s kind of where it was 43

going. Mayfield had some hard times, because they’ve had some personalities here that were really conflicts and difficult to deal with and that, frankly haven’t—well, they’re sorted out now, but it took ten years to sort out.

03-00:33:31 Hughes: Was your departure premised largely on that?

03-00:33:37 Myers: Oh no, not at all. No, I was just ready to leave. I wanted to leave, that was it. I’m out of here. I think, in hindsight, I left too fast. Maybe if I’d stayed another four or five years or part-time and all that, I could have been more helpful in smoothing this transition or figuring out some of these things. But the leadership changed, I zapped out, and then there was all these market pressures. The stock market was going crazy, the dot-com boom and all this, and it became very complicated. [chuckling]

03-00:34:10 Hughes: Would you talk about the process behind taking a company public?

03-00:34:52 Myers: Well, today there’s no relationship to then, so I guess my frame of reference was eighties and nineties, because after the dot-com boom the investment banks collapsed or reduced, and there were very few IPOs for four or five years. There are a few more recently, but now the regulations on going public are so complicated that many companies are being acquired. And then we have the current financial mess. So I can’t really speak to today, except that they almost don’t go public.

03-00:35:26 Hughes: Yes, well speak about back in time.

03-00:35:32 Myers: Well, the ultimate goal in those days was to go public. Being acquired was okay, but you didn’t get as good a return. That’s shifted now, today. But anyway, then, to go public, you just had a huge responsibility, because the company had to perform, and if you didn’t, then the Milberg Weiss group and other lawyers were out there to sue you.

And so there was just a lot of scrutiny as a public company. So we were very careful, as I think most people, until the boom of 2000 where everything was going public. We were very careful that we were ready; we had a complete management team, the holes were filled, the company was doing well, all the numbers were lining up, there was a backlog. We see where we’re going—all the characteristics were lining up. So that was the main thing: is your company really ready? Do you have a real business here?

03-00:36:36 Hughes: And does that mean profits and product? 44

03-00:36:39 Myers: It may not quite mean profits, but they’re around the corner or they’re next year. It clearly means that you have product and you have real customers that are buying, and buying increasing amounts. Your revenues are doubling every year or some such thing, so you’re really growing. And you may or may not have profits—and that profit criteria would come and go. In boom cycles it would go and in down cycles it would come back, kind of thing. And then in 2000 everything went away—didn’t have to have revenues, didn’t have to have anything—just go public.

But nevertheless, in those earlier times, we really wanted a quality company that we thought could be there for the long term, and that includes a good board of directors. And then after that you go to the investment bankers, and there’s a whole process that I didn’t personally do, but the more you’re involved—

03-00:37:31 Hughes: But somebody at Mayfield did?

03-00:37:35 Myers: No, the banker work—we had relationships. We knew the bankers, the Frank Quattrones and Eff Martins and all the rest. So we might start it and say, “Eff, I’ve got a company I’ve been working with and I think you really ought to take a look at it.” “Okay.” They’d go down and talk, and the company would put on their show, would talk about it, and we’d begin to see if they were interested. Once again, it was part of the network the venture capitalists would bring to bear, because sometimes the company wouldn’t know these people. So we’d have those relationships and bring them to the company.

03-00:38:07 Hughes: Do investment banks tend to be more heavily into one technology, one industry than another? Or are they just simply looking for what they feel is a good business?

03-00:38:24 Myers: Pretty much good business and can they make money. They make all their money when they go public, but then they—

03-00:38:34 Hughes: Because they take—do they call it a carry?

03-00:38:37 Myers: Yes, they take a percentage of the sales. So if they go to raise $100 million dollars, I forgot what it is, they take 4 or 5, 6 percent as their commission for doing the deal. So that’s where all the money was made for them. But then, in those days, when they went public, they did have to support it, which meant that they had to have an analyst, analyst reports, and educate the public, and often there’d be a core group that would buy the securities in the beginning. But then you had to spread out the ownership, and they would help do that in 45

the old days. And that all fell apart, but that’s the way it used to be. Anyway, there was a whole process that they had to go through.

03-00:39:16 Hughes: What happened when it fell apart?

03-00:39:23 Myers: You mean when the dot-com boom fell apart?

03-00:39:27 Hughes: Yes. All that due diligence, if you can call it that, went out the window? Were investment banks as guilty as the entrepreneurs?

03-00:39:39 Myers: Oh yes, oh absolutely. Well, it’s just like the mortgage cycle. In a way, when it’s happening you don’t see it or you are not so aware. But the public was so anxious to buy these technology shares that everybody that went public would go up like double or triple the next day, and that was incredible—it’s found money.

And so once that started, it was like a gold rush. It was like, “Oh my God! That’s really cool.” And so more and more people wanted to play that game. So it sort of starts with a very small group, but then others want to get—and so anyway, there’s a group spread. Finally, in the boom times, you had all the public through retail brokers, all wanting to participate in these huge stock gains and make their money and flip it and turn it out. And then they would do that, but it went on for a long time. So there were more of them and more of them. After a while you say, “Wow. This is the way it’s going to be! This is really great and look at all the money we’re all making.” And that’s a boom. That’s how these bubbles are created.

And all of a sudden someone would say, “Hey, the emperor has no clothes. There’s nothing here.” And then companies weren’t performing. They’d say they have some new technology, a new whiz-bang; they’d go public. All of a sudden it wasn’t there, or it would be a year before it was there. So it just got way, way overpriced, like a hundred times, two hundred times.

03-00:41:15 Hughes: Genentech must have been in the first Mayfield fund, right?

03-00:41:27 Myers: That was actually the second fund.

03-00:41:29 Hughes: Kleiner Perkins was the original investor, but I thought that Mayfield came in in the second round, and I thought it was 1977.

03-00:41:46 Myers: I think it was ’77-‘78. 46

03-00:41:49 Hughes: Do you have anything to say about that investment? Here you had a company with an entirely new technology, no products, no profits. It must have been a terribly speculative and risky thing.

03-00:42:16 Myers: I knew Bob Swanson. We were venture capitalists. He was at Citibank. We played tennis, and all that. And then he left and he started working on this project, I think it was at MIT.

03-00:42:35 Hughes: Well, he went, of course, to Kleiner Perkins. It was Kleiner and Perkins in those days.

03-00:42:41 Myers: Right. He went there. And so that’s how that relationship started. I don’t remember the story all that well, but when Bob had the idea of the DNA and then—and so he did start that with Kleiner Perkins. To seed something in your offices and then do that was pretty unusual.

03-00:43:22 Hughes: Because you knew him, were you the connection with Mayfield? In other words, a quicker way of saying it is why did Mayfield get involved with Genentech?

03-00:43:32 Myers: I don’t remember how exactly. Tommy Davis had more of a relationship with the company, and he introduced Corning to it. Corning Glass, which was a critical introduction; Corning put in a lot of money, went on the board, and really helped them in those early days. We never went on the board. And so Tommy worked on that more than I did.

03-00:43:56 Hughes: Well, Corning was later. Corning was the early eighties.

03-00:44:01 Myers: Oh, I thought it was earlier. I don’t remember exactly.

03-00:44:03 Hughes: Of course, that was a tremendously successful investment achievement.

03-00:44:12 Myers: And it really has been one of those companies built to last, unlike most. Most venture companies are gone. They get acquired or they just pfft, go away.

03-00:44:23 Hughes: Do you credit Bob Swanson for that?

03-00:44:25 Myers: Yes, Bob was really good. Bob was a great guy. 47

03-00:44:30 Hughes: Did you keep in touch with him over time?

03-00:44:31 Myers: Yes. We were friends, just friends over time.

03-00:44:39 Hughes: Were you talking back and forth in the days when he was trying to make up his mind whether to go with recombinant DNA or not?

03-00:44:51 Myers: No.

03-00:44:52 Hughes: Do you have anything more to say about the relationship between venture capital and universities? How important is academia in the whole equation of venture capital investment?

03-00:45:52 Myers: Well, it’s very important today. It’s evolved. At the beginning it wasn’t very important, because what comes out of academia usually is a long ways from being able to commercialize it. So in the seventies and a good part of the eighties, it was interesting and you’d go look. You’d go over to SRI [Stanford Research Institute], same thing, and you’d look at what they had and [go], “Oh that’s interesting.” But we don’t have anybody to run it and [get] this technology even to a prototype stage. And so, da, da, da, you didn’t have much interest.

It got more competitive in the mid-eighties, and I think that then that all began to change. So two of the Mayfield [investments]—Silicon Graphics and MIPS both came out of Stanford. Now at the same time, Stanford was doing things that were more commercially applicable, unlike a lot of university research. That probably goes back to Terman and relationships in the Valley, so that the Silicon Graphics terminal concept was a real-life thing that people could use and work on, so it wasn’t just research. And that allowed [them] to form the basis for pulling that out, and MIPS the same thing.

So it evolved. And we backed other things out of Stanford. We backed a projection system that went nowhere. It wasn’t ready.

03-00:47:17 Hughes: A projection of what?

03-00:47:19 Myers: For digital theater projections. It’s like these gadgets, but much earlier, that we thought would be interesting. So I think it’s clear today that universities are very important. They’re doing some of the, in fact, some of the research left in the country are being done at universities, so— 48

03-00:47:43 Hughes: And university administrations are much more proactive, are they not, in forming relationships with industry?

03-00:47:50 Myers: Oh yes. Well, and they’ve got their licensing act together, which no one had together [earlier]. For years, Stanford got nothing out of all this technology coming out, which was not right somehow.

03-00:48:06 Hughes: And UC, my understanding is, was even behind Stanford.

03-00:48:10 Myers: Oh yes. Well, they all were. It took a long time to figure this out. I don’t even know how they do it today, but they’re aggressive. [laughs]

03-00:48:18 Hughes: [chuckling] They get their money, that’s for sure!

03-00:48:20 Myers: This is our stuff. We’re paying for it. We want part of it. As they should have.

03-00:48:25 Hughes: What do you consider to be your greatest strength?

03-00:48:41 Myers: Hmm. I don’t like these things. [chuckling] I don’t know what my strength is! I guess at Mayfield, I thought my contribution was mostly the team, and building a team, keeping the team working together, keeping a culture that was productive. I thought I was an okay venture capitalist, but I thought as a manager of a team—that was my greater strength.

03-00:49:09 Hughes: And you liked that best?

03-00:49:11 Myers: Yes, I did. I liked it a lot. I liked the company thing, too. But I spent a fair amount of my time as the managing partner, trying to make that part work too.

03-00:49:24 Hughes: Why did venture capital originate in this country, and why has it been most successful in this country?

03-00:50:21 Myers: Well, it really is Silicon Valley. All the rest—well, or in Boston. I don’t know what the numbers are now, but for a long, long time, what happened in Silicon Valley eclipsed everything else in the country by a long ways. And I think it was the confluence of these things—it goes back to Dean Terman, it goes back to Stanford, it goes back to a West Coast approach to life versus the rest of the world. It’s the Wild West—sure we can do it—not the Wild West analogy exactly, but it’s “Sure we can do it.” It’s a big world; it’s a positive 49

outlook. It’s like—“I don’t really care what your background is—so you failed at three companies. If you can do this, you’re on, and I’ll give you a shot at it.” Still today you can’t do it on the East Coast much. Still today—it’s like—[imitating a condescending person] “Well, you didn’t work here. Your resume doesn’t look very good. Why should we hire you?” It’s a whole different attitude.

03-00:51:23 Hughes: And that still holds on in the east? Even with the West Coast as a model?

03-00:51:25 Myers: Oh absolutely. You can’t over generalize on these things, but I have some friends that are in the investment business. They don’t want to work on the East Coast. It’s just too snooty and what kind of racquetball court do you belong to, and which club, and what’s your resume—it’s all this sort of gobbledygoop.

Out here, it’s like—“Take off your tie. Let’s get to work and get something done.” So it’s a whole different approach to life and attitude and, “Let’s try something new. Let’s try alternative medicine.” Let’s do this, let’s do that. So it’s that attitude of: We can build something.

A lot of the entrepreneurs, you look at their backgrounds—Nolan Bushnell— and many others have no apparent background for doing what they’re doing. [chuckling] In fact, somebody [may] wonder: How did we ever get here? How did we back them? I don’t [have] all the words for it. I haven’t thought about it for a while.

You throw in a kind of attitude, almost a culture of, Let’s just do it. We can get things done. And the technology and the Stanford and smart people. So it was here and then it went to L.A. and Boston a little bit. The rest of the country tried to do it. Not very successfully at all, and now people are trying to do it all over the world. Obviously, it must work in some ways, but I think it’s also because of the interconnected flat world and all the rest of that stuff that you can do these things today.

I haven’t thought about how to integrate what’s happening in China, India, and all these other things. They’re very entrepreneur[ial] cultures. When you go visit, you’re really impressed by it. But they didn’t have the university background, they’ve got a technology background and all that stuff.

03-00:53:24 Hughes: Well, the things that you’ve been talking about I think you could put under the culture umbrella. What about some of the more boring things, like tax structure, that may have been a boon to getting new enterprises off the ground? 50

03-00:53:49 Myers: You know, it probably did, but back when this all started, we had our 70 percent tax structure, and capital gains got some break, but it wasn’t as big of a break. Clearly taxes accelerated it, when they made the big differentiation, the capital gains differentiation, and then we and others found a way to set up these partnerships. So it’s two pieces—it’s the huge tax benefits, setting up partnerships so that the general partners could have the ownership position I talked about and have their profits taxed as capital gains. That was a very, very tricky thing in the early seventies. That was kind of a legal breakthrough how to do that. But that was just for that side.

On the entrepreneurial side, I don’t really know the history, but the fact that the stock options—same thing—you get all that appreciation of the options and taxed as capital gains—I don’t quite when that came in. The stock option was a phenomenal incentive, phenomenal incentive. So yes, it played a big role, probably the biggest one.

03-00:55:01 Hughes: In the areas of the world, China and India, et cetera, that are beginning to develop venture capital, have they introduced tax laws that are also—

03-00:55:21 Myers: Good question. I have no idea. [chuckling] I will ask that. That’d be very interesting to know.

03-00:55:38 Hughes: Can you say anything about how venture capital has affected, impacted the U.S. economy? Is that just too general a question?

03-00:56:04 Myers: It’s too general. It’s made an enormous impact, it created thousands of jobs. It’s been the best thing ever! [laughter]

03-00:56:09 Hughes: Touché!

03-00:56:13 Myers: Lots of fantastic companies have come out of that, a lot of really quality companies and a lot of jobs. They still collect, I’m sure, these numbers for Congress and other people. I’m not up to date on the meaning of it all.

03-00:56:30 Hughes: You’ve certainly done a good job of commenting on how venture capital has changed during your career. But have we left anything out? Is there more that you would like to say about the changes?

03-00:56:46 Myers: I don’t think so.

Begin Audio File 4 09-22-2008.mp3

04-00:00:02 Hughes: You kindly this morning sent me the names of a handful of companies that we might discuss. So I will just simply go through your list, which started with Simplex Systems. Why that investment, and is there anything particular that you’d like to bring out about it?

04-00:00:49 Myers: Well, that was an example of an investment of two entrepreneurs, two technical people out of the University of Illinois with a CAD, computer-aided design system or technology. It really came to us through Richard Newton, who was the Berkeley person, and that was his specialty area, so he knew about their technology and how they were doing it, thought this was important. I thought they were purchased in the mid-nineties, anyway, ’95- ’96.

04-00:01:44 Hughes: Oh that late?

04-00:01:45 Myers: Yes, a little later. And I guess I thought of that only because it was sort of what we were doing then. We had some technologists that were very good, didn’t know how to run a company. We agreed to give them money on the proviso that we’d bring in a CEO at the right time. We funded them for about a year or so, and Rich was on the board, and I went on the board and in fact, a few other people. But as the technology began to evolve, we needed a CEO. And then what so often happens is the key guy didn’t want to—said, “No. I don’t want to do that. I want to be CEO now. I’m here. I don’t want to dilute my stock—this and that.

I mentioned it because I felt good about it in that I had a good enough relationship with Rez Salek to convince him to open the door, by getting to know him and spending time and all that, allowing us to go look for somebody. We found a woman named Penny Herscher to come in and run it, who was a fantastic person and she built the company and sold it to—

04-00:02:55 Hughes: Cadence?

04-00:02:55 Myers: Cadence. But I guess I just think of that because that’s where, I think, the venture capitalists play a really important role. If they’d been left to their own devices, it would have been a disaster. But we got the door opened and got their confidence and Rez later thanked me. He said, “God, thanks for doing that.”

04-00:03:16 Hughes: Well, then there was another CADcompany— 52

04-00:03:27 Myers: Cadnetix.

04-00:03:31 Hughes: Any connection there?

04-00:03:33 Myers: No, none at all. That was the early eighties, Cadnetix.

04-00:03:36 Hughes: Was CAD a new thing then?

04-00:03:39 Myers: No. CAD’s been around. Doing a chip layout and board layout and all that. It’s been around for a long time, but it’s evolved, and it’s in itself critical to underlying technology to all of this stuff, because no longer can mortal human beings figure this stuff out. So the computer programs that do this were led a lot by Richard; that was his specialty at Berkeley. And Berkeley is a center, it still remains a center for the cutting-edge technology of getting all this stuff on a chip so it all works. So that was one of his specialty areas. But we didn’t know Richard then.

04-00:04:12 Hughes: So not necessarily just CAD on chips, but general systems on chips.

04-00:04:22 Myers: Well, it’s getting all the components of a semiconductor chip to all go in the right places and interact and work together. So you might have a little thingamajigger, and it’d have a few million parts on it. So how do you get all those interconnected and working and multi-layer? It’s very, very complex.

04-00:04:40 Hughes: And that was what Newton was—

04-00:04:43 Myers: That was his specialty. In fact, his PhD students—he had design teams; he had relationships with major companies all around that subject. He was also on the board of Synopsys and a number of the companies in the Valley doing this. So he was the kind of guy we wanted to have part of us because he knew all this stuff. And so Simplex was just one example of a technology company he brought to us for that.

Cadnetix was totally different. That was in Boulder, Colorado, and we had an affiliate we worked with in Boulder. Bruce [M.] Holland, the CEO of that company. So our affiliate found Bruce; we invested with Bruce, and then that was sort of a different deal. And then, actually, Bruce started another company called SpectraLink which we also, in fact, invested in.

04-00:05:31 Hughes: Was that unusual for you to have investments out of the state? 53

04-00:05:36 Myers: Well, not over time. Up until the mid-eighties, we definitely stayed in California.

04-00:05:45 Hughes: Was that was a deliberate decision?

04-00:05:47 Myers: Yes. We didn’t want to travel and, once again, when you’ve got a hands-on, go to board meetings, get to know the people, if they’re far away, you can’t do it. Once again—lots of competition [and] it changed. So there was a lot happening in Boulder, and so we had an affiliate there which was our first step in that direction. So another partnership that we helped them raise money and I was on the advisory board. This was the Hill Partnership, and so they were investing in their local area. I’d go there once a month and we’d look at everything they were looking at. They found a number of things. This was one—Cadnetix, that they had a local relationship—they knew the entrepreneur and then we got involved on the board.

04-00:06:32 Hughes: If you have an affiliate in the picture, I would assume that that cuts down on the profit that Mayfield might have made.

04-00:06:43 Myers: Yes, but for an early stage, there was room for everybody. Well, there was then—today there probably isn’t. So they had, I don’t know what it was—$3 or $4 million funds. They’d put up $200,000 or $300,000, and back then we were putting up $0.5 million or so. Burt McMurtry came into that. I don’t know quite how he came in, but he was part of that. So anyway, you’re right, but otherwise we wouldn’t be there.

04-00:07:10 Hughes: Is Mayfield now all over the show?

04-00:07:18 Myers: Oh yes, they evolved. So then we started some biotech companies in the East Coast, and certainly down in southern California, and now we’re in Indiana. Yes, so everywhere.

04-00:07:30 Hughes: For a company that, at least in the early days, was emphasizing personal relations—that must have changed.

04-00:07:48 Myers: Oh, it did. It’s not as good. That’s why we resisted for so long, because—well, first of all, it’s impossible to do a pure startup, some really early-stage technologies, you just can’t do that at that distance.

04-00:08:05 Hughes: Because it takes so much hands-on? 54

04-00:08:06 Myers: It’s hands-on, you’re there a lot, you’re seeing them a few times a week and everything else, and you’re helping them build the team. And then when they’re far away, you just can’t do those things. So we evolved that by just working with others. So the biotech team here, led by Grant Heidrich and a few others, they had relationships in the Boston area. So a Boston venture capitalist would maybe find the deal and get something going, and then we would come along with them. We’d still go on the board, but they would spend more local time than we were able to spend. That was true all over. We did this Hill Partnership in Boulder because they were there all the time. I mean, the lion’s share. But it just gets harder and harder. They’re still doing it.

04-00:09:02 Hughes: Another one is SpectraLink?

04-00:09:07 Myers: Well, that came out of Cadnetix, so that was Bruce Holland, the same entrepreneur in both cases. SpectraLink was making essentially a wireless telephone system, commercial grade.

04-00:09:24 Hughes: Way back?

04-00:09:25 Myers: No, this is ’93, I think. He did this after Cadnetix. It was the early nineties that Bruce started this company, and then it actually did go public and then got merged a few years ago. But that’s another company where we got to know Bruce Holland. He was starting a new company and we had a good relationship, so he said, “I’m starting a new company. Let’s get going.” Here’s a proven entrepreneur, which is really easy, because we knew him, we liked him a lot, he built good teams. So anyway, that was just all I wanted with that.

04-00:10:14 Hughes: Good illustration of the importance of personal relationships and experience. How do you pronounce M-I-P-S [spells].

04-00:10:26 Myers: MIPS. MIPS Computer Systems.Well, what was interesting about that one is simply, as I mentioned earlier, that was John Hennesy and group spinning out of Stanford to do that. That was also one of the earlier ones where we incubated them at our offices, so they were in our offices for six months or more developing their business plan. And then two of us, Grant Heidrich and myself, both went on the board. We went and found a president—that initial founding group from the beginning knew they wouldn’t be president, so we helped them find Bob [Robert C.] Miller, the president. So it was a company that was big ownership; we put a lot of time into the same kinds of things— building a team, working on strategy, helping do fundraising rounds, that sort of thing. 55

04-00:11:13 Hughes: The last one on your list is Latitude Communications.

04-00:11:22 Myers: That company was sold to Cisco [Systems, Inc.] a few years ago. They were making a telephone conferencing system. It goes way back. It’s a group we had been following; I was on the board. I don’t know what to say about it. I don’t know what to draw out. These were all fairly early stage; we had large ownership positions. You work with the team, you help to build people. You critique it. One thing I haven’t mentioned much, but another thing you try to do is help them introduce new customers. [We] had the credibility they often don’t have, and promote their product and so forth.

04-00:12:08 Hughes: And how do you do that?

04-00:12:09 Myers: Well, when we know customers, we have relationships, so if we knew somebody at Cisco or some other company—it’s a fledgling startup. You look for help from every direction. And so if we have a relationship with a larger company, or Hewlett-Packard, then we’ll sort of make the connection, “You ought to consider these guys,” So as a venture capitalist, you just try to help in every way you can in building the company.

04-00:12:37 Hughes: What about a failure or two? Maybe with some lessons to learn from that.

04-00:12:54 Myers: I didn’t go over the list thinking about failures. Well, there’s one East Bay company—I also don’t like to talk about it, because the people are still around.

04-00:13:11 Hughes: You don’t have to name names.

04-00:13:12 Myers: The East Bay company with a computer product for companies. The problem was the CEO, who didn’t hire very well, was stubborn, and we couldn’t get him out. He was an articulate guy, he kept raising money somehow, but he wasn’t performing.

04-00:13:41 Hughes: You mean by performing he wasn’t making money?

04-00:13:47 Myers: Wasn’t making his plans, where he’d said we’d sell this many systems. It was a computer printing product—and we’d sell this many systems, and he wouldn’t do that; he’d sell one instead of five and then have an excuse for it. And then the next quarter and the next quarter. So when that begins to happen, Okay, what’s wrong here? And it’s usually some part of the team isn’t right. 56

And the CEO was a pretty good guy, but he just didn’t hire well, and so he didn’t have good sales people, didn’t have good marketing people, and they couldn’t execute on the plan. And so after several attempts at him trying to— not hiring well, then you say, “Well, okay, then you’re the problem, because we’ve got to get these people in here.” And then he fought not to get pushed out, and so this was actually very exciting. It doesn’t happen very often where you have a shareholder vote to actually push a guy out. That’s really unusual.

04-00:14:43 Hughes: Which Mayfield had to orchestrate?

04-00:14:45 Myers: Yes, exactly right.

04-00:14:48 Hughes: How do you go about doing that?

04-00:14:49 Myers: Well, there are not so many shares—it’s not a public company, so you know who all the shareholders [are]. But you’ve got to go to other venture capitalists. And in this case, there were a lot of individuals that had stock from earlier days before we got involved, and they sided with management. We had the major investors siding with us. You actually get into a fight where people are organizing votes and a shareholder meeting, and you’re going to vote for this or vote for that. We brought in another guy over other people’s objections and installed him, and he didn’t do a very good job, and so now we had mud on our face.

When that happens it’s like you’re spending twenty-four hours a day working on one mess. It probably won’t come out very well in the end, so it’s a—I shouldn’t say it’s a complete waste of time, but usually when it gets into a mess like that, you would have been better off to walk away at the beginning. But you can’t walk away. You’re the lead investor, there are other investors investing with you, so you can’t just say, “I’m tired of this. I want out of here.” You’ve got to work it through and try to make the best of it, but sell it if it goes anywhere.

04-00:16:02 Hughes: If you could organize all the venture capitalists to get out—what would that big process be? They’ve invested their people’s money—how do you get out of a deal that’s going bad?

04-00:16:23 Myers: You don’t get out of it. As I said, sometimes you just feel like you’d like to walk away, get off the board, not put all the time into it because that’s just wasted time. But you can’t do that, because at the beginning you think you can help or fix it, or if we did this or did that. So you go down that path. And then the investors don’t always agree; some agree, some don’t. 57

And so now you need to raise some money, because usually this happens about the time they’re running out of money. So we want to raise money— well, some investors want to put up money and some don’t. So now what do you do? You make it more and more attractive, and so you say, “All right. For those that put up money, you get a larger and larger ownership. If you don’t put up money, it’s being more and more punitive. There are all kinds of mechanisms people figured out to make it this way. But then, the ones that don’t want to put up money, put up a fight—“Oh, you aren’t being fair.” And maybe they have a lawsuit or do something else because they haven’t been treated properly. And it just turns into a nightmare of gobbledygoop and mess.

04-00:17:26 Hughes: Situations like that I hope are not too common.

04-00:17:31 Myers: No, they’re not too common.

04-00:17:32 Hughes: Did they keep you awake at night?

04-00:17:34 Myers: Oh yes, exactly, because you’re the lead person and you’re trying to juggle all these things and trying to make something of it. That’s why you’re doing all this. And so yes, it just totally consumes you for weeks while you’re doing this, and it usually doesn’t go anywhere in the end.

04-00:17:51 Hughes: And is that company still stammering along?

04-00:17:54 Myers: No, the CEO is stammering along. He’s actually started another company and some people are, “Maybe he’s doing better this time around.” I haven’t followed him much. We didn’t part the best of friends.

04-00:18:05 Hughes: [laughing] I can well imagine!

04-00:18:09 Myers: The more typical thing, though, is that you’ll sell a company. You’ll say, “You know, the market isn’t as big, the product doesn’t work as well as we thought, so the opportunity just isn’t what it was here.” So you’re sitting down with the CEO [saying]— As a lead investor, part of your job is to raise money, so [you say], “I don’t think we can raise the money. I don’t think there’s the interest. We don’t have a good enough story. So let’s try to sell it.” And that’s another whole process where often a venture capitalist is pretty helpful in the sales process. Maybe the venture capitalist would know people to go to, or you hire an investment bank that does the more formal research. 58

They used to say—well, I don’t know if it’s still true or not—but you’d make ten investments and might only have one failure. Then you’d have two or three that were maybe sold and made a little money. Then you had the one or two that made all the money. In between you might have the living dead. The companies that go on for ten, fifteen years. They were lucky enough to get to self-sustaining capital so they didn’t have to raise more money, but they didn’t really grow, never went public. So really it’s only two or three companies out of ten that really do all the work.

04-00:19:27 Hughes: People accept that that’s just what happens.

04-00:19:33 Myers: Yes, exactly right. You’d like to change the odds, but it just doesn’t work that way usually.

04-00:19:39 Hughes: Well, you said something just now that reminded me of a statement you made earlier, that the IPO, rather than an acquisition, is the way to go as far as the venture capitalist is concerned, because of making more money. Could you explain that?

04-00:20:00 Myers: Well, it’s a function of the times. So in the eighties and nineties, particularly the nineties, the public market was paying very high prices, and the technology companies weren’t paying when they acquired companies. They just wouldn’t pay as high a price, for whatever reason. Today, with no public market, you can’t do that, and so the main exit strategy is through acquisition. I’m told that companies are paying pretty high prices. It’s so competitive today, the time-to-market window is so short, that if they need a technology— they don’t have time to develop it themselves, they need to acquire it, and it’s worth it to pay a high price. So that’s the main exit strategy today. So it sort of depends on where the markets are which way works better, but traditionally public has been the better way.

04-00:21:00 Hughes: It seems a puzzle to me to say that time to market is shorter. I would think that would be very contingent on the technology that you’re talking about.

04-00:21:14 Myers: Yes, but all the cycles are just going faster.

04-00:21:17 Hughes: Everything is revved up.

04-00:21:18 Myers: Everything is revved up. Well, everything is more competitive, not on a venture capital, but on a technology market. I have to sort of think—I’m out of the current loop. Our early premise I said was unique technologies. Only a few people in the world knew how to do it, and if you made this product work, 59

you wouldn’t have competition for a year or two or three. And today that just doesn’t happen. I don’t know of anything that has those conditions. So you have competition in six months or three months, and so you’ve got to get that product on the market. You’ve got to execute. You’ve got to be successful at it. And that’s true for the big companies and small companies across the board.

04-00:22:07 Hughes: Is biotech perhaps an exception? Considering all the stages that a potential product has to go through—clinical trials, the FDA, and all of that—does venture capital just put biotech in a slightly different category?

04-00:22:52 Myers: Yes. It’s just different dynamics. We had three people here in biotech. I wasn’t involved with much biotech at all. So all my comments are electronic comments, because biotech is a different world.

04-00:23:06 Hughes: That’s fair.

04-00:23:08 Myers: But you’re right. It takes an enormous amount of capital, far more. The technology risks are far, far greater. They take longer to resolve, huge amounts of capital. I was just talking to a biotech friend, and he’s been doing biotech for fifteen years and he said, “I’ve had it. It just takes too long.” He’s doing devices now, which are more akin to electronics. They have some FDA approvals, but they don’t have all the human stuff involved in it.

He likes devices because they’re more tangible. Now traditionally they haven’t gotten as good a multiple, as good a price on devices. Maybe that’s changed today. I don’t really know. And then the pharmaceutical companies have no research going on, I’m told. So everybody is just looking to be bought by a pharma company for a new product or some new technology.

Grant Heidrich led that group here, and Grant did a really, really good job. He didn’t join us until I think ’82, but in a biotech way, he would be certainly one of the earliest people around. Genentech was earlier. But as a venture capitalist, Grant was really good, and he got recognized as Mayfield having one of the best biotech track records of anybody up until at least the late nineties, including Kleiner Perkins, in terms of their number of companies and quality. Grant would be a great historian on that, and he still remains pretty active in a number of companies.

04-00:25:00 Hughes: I definitely want to talk to him.

04-00:25:02 Myers: He would be good to cover that side. 60

04-00:25:05 Hughes: Well, is that enough on venture capital?

04-00:25:13 Myers: [laughter] Sure!

04-00:25:13 Hughes: We’re running out of time, and I don’t want to leave out this community work. To make sure that we get it in, start with the Entrepreneurs Foundation?

04-00:25:25 Myers: Okay.

04-00:25:28 Hughes: How did the idea came to you, and how did you set up the foundation, and were you using a model of some kind?

04-00:25:36 Myers: OWell, this was early ’98, and I had announced to Mayfield that I was going to transition out but anticipated spending three-quarters time or something for the next few years. But I also, as I said earlier, was tired of the business, ready to leave, and falling asleep in meetings. So my very simple thought was, it seemed to me, we were having very successful IPOs. So the entrepreneurs and venture capitalists wake up the next morning, and they’d made millions of dollars. It’s magic. [laughter] So why can’t that magic work for the community?

So I started off with just the simple thought that what if some small piece of their stock in these IPOs or these companies were given to the community, and then they benefit? And that’s when I talked to Peter [deCourcy] Hero who was running Silicon Valley Community Foundation and Sterling Speirn who was running the Peninsula Community Foundation, a number of friends. It was Kirk [O.] Hanson, another friend, who said, “Well, that’s important. Money’s always important, but the real thing is we’ve got to change the culture. If you don’t change the culture of the Valley, nothing’s going to really change.”

And at that time there was nothing happening. Hewlett-Packard and a few companies contributed to the Valley, but not much activity. And even those people making money, at least in my observation it was, [they’d] start a new company, and they would get around to the community later.

So anyway, I spent a year working on this idea and evolving it. The very simple concept is that we’d take a small amount of stock in a company. Also, we have a program to change the culture and incorporate the community as part of the culture of the company. And so both together would make both a stronger company and a stronger community. 61

I worked on that here, and Mayfield was very nice. I was doing almost no Mayfield work, but I had an office and a secretary and a nice place to look at. I worked on that here for a long time. We hired our first executive director, Patty Burness, and Mayfield paid for that. I think that’s about the time that Mayfield set up a foundation. Actually I should come back to that. And so Patty and I began to work on this, and it was a pretty new idea. A lot of companies didn’t think this was the right thing to do. So we started off with Mayfield companies, and with the six Mayfield companies it was kind of a beta test site to see if I could sell this thing. And we got them going on it. And that’s sort of how it got started.

But the fundamental thing was that this whole community—venture capitalists, entrepreneurs in large companies, were doing nothing for the local community at all, almost nothing. They might be supporting their kids’ schools, but even kids’ schools— I went to help kids’ schools raise money, and people that I knew that had a lot said, “Well, why should I give money to the school? They charge tuition. What else is there?” So it was unlike the East Coast, which is very oriented toward supporting schools, these entrepreneurs out here had no clue, and it wasn’t part of their culture; it wasn’t part of their upbringing apparently. It was like, “What’s this?”

04-00:28:58 Hughes: Do you think some of your motivation is because you had grown up outside the Bay Area, and you saw that businesses had more community spirit?

04-00:29:09 Myers: Well, I saw it peripherally. I grew up in St. Louis. My family was a middle income family, but we made church contributions. So no, I didn’t grow up with that environment. I don’t know why it is. It’s almost like I went into venture capital, and I don’t quite know why. I don’t know quite why I did this, but as I got into it I felt completely compelled to do it. Just like this is something that has to happen. I started the foundation as a nonprofit. Mayfield put the initial capital in it. We had offices downstairs, but I worked harder during that three years than I’ve ever worked in my life. Much harder. Obviously more like an entrepreneur. I’ve always felt the venture capitalists had it easy. Entrepreneurs do all the hard work, and venture capitalists take credit for it sometimes. Anyway, so that was how it got started.

04-00:30:07 Hughes: How were you working hard? Did this mean going around and trying to sell your idea to specific companies?

04-00:30:17 Myers: Well, it took a surprisingly long time to get the idea refined, so you could talk about it—and talk about it in a convincing way that people would say, “Oh yes, that really makes sense.” And it seems so simple today, and we’re having our tenth anniversary on Wednesday. 62

04-00:30:34 Hughes: Well, spell it out a little. As I understand it, you’re talking about companies that have not gone public yet and are offering a percentage of their private stock.

04-00:31:03 Myers: The idea started—it was just that—to take fairly early stage companies; we were shooting for 1 percent of the stock, which turned out to be outrageously too much. But we would get a ¼ percent or a ½ percent. It would come out of the employee stock option pool which, when it worked, was generally okay because the pool was large enough, or the board would refresh the pool to make up for what little bit we took. So it didn’t impact employees. It wasn’t as if it came out of the employees’ side.

So we’d take that, and the initial version was that that stock would all come inside Entrepreneurs Foundation. We’d help with our community programs and the rest, and then when they went public and the stock became liquid, we would use part of it to fund our operations. But then the majority of it we’d make a grant back to the community, and so we’d support schools or other community organizations.

04-00:32:04 Hughes: The foundation made the decision of who was supported?

04-00:32:09 Myers: Exactly right. I don’t know how much detail you want. The thinking there was, the companies were too busy; they didn’t want to bother with grant making and all that. So we would support the community by doing this, and then later, obviously, or at the same time, we were helping the company to develop volunteer programs and integrate with the community. We’d help them find an organization that was nearby that they could work with, maybe they’d like to volunteer with. They’d help them raise money, maybe go on their board. So we were doing the whole cultural thing along the way. When they went public, then we had the stock.

At one point we had almost $10 million of stock from all these IPOs, but it was a flawed strategy. First of all, the companies—they saw that as their stock. [chuckling]. It’s like, “Why do we give it to you?” And so pretty quickly we changed to fifty-fifty. So 50 percent of what you give us—you give us the whole thing, but when you go public, 50 percent will be put into a donor-advised fund with a community foundation so you can then direct that money where you want. The other 50 percent will support our operations. And that flew pretty well for a while.

But even then we were doing grant making, it turns out, obviously in hindsight, but grant making in doing our cultural thing, our two different businesses, totally. And there was a rationale that you could talk about, but the board was confused, and some people liked the grant making; some people 63

liked the change the culture and like—but what are we doing? So when the market collapsed in 2000, a lot of our stock was somewhat illiquid—it basically went away, so we were out of money.

So we’d made some grants and that’s a whole different story, to a venture fund grant. We’d done some of that. But the market went down, the money went away, pffftt, let’s get rid of that. So we got rid of the grant making totally and have since focused on building the company part of it. And we still went, for many years, with a model of 50 percent. The story gets more complicated. When talking to pre-public companies, we’re up to about 180 companies that have joined over the years.

04-00:34:30 Hughes: All local?

04-00:34:33 Myers: A hundred and eighty local companies, and we’ve probably returned, I don’t know—$5 [million], $10 million back to the community from the stock from those companies. At the same time, places in other parts of the country and the world thought this was a pretty good idea. So an Entrepreneurs Foundation was started in Austin, Dallas, Atlanta, Boston, Denver, Seattle, Oregon, and Israel.

Now each of these were started using our concept, and at first we began to license them to use the name, and this and that, but we ran out of time and we didn’t have any resources, to speak of. So they each have a slight variation on the theme, but they’re pretty close. We’ve tried to be helpful, but as I said, we didn’t have the resources. So we’re kind of the mother ship, but we haven’t done much. There are over 700 companies that have joined an Entrepreneurs Foundation; there’s $10 [million] or $15 million gone back to the community, and hundreds of thousands of employees have—I don’t know what the number is now—have participated in our volunteer programs.

04-00:35:41 Hughes: That’s pretty impressive. Over what time period?

04-00:35:46 Myers: Ten years ago. It started in January of ’98.

04-00:35:48 Hughes: That’s fabulous.

04-00:35:53 Myers: But then how it has evolved is that it continued to be too hard. My original dream was that we’d reach a tipping point where people would say, “You know, this is such a great thing for everybody. It’s good for the company; it’s good for the community. Everybody should be doing it. So the way we all do business in Silicon Valley is to join the Entrepreneurs Foundation, and every 64

lawyer, every venture capitalist, would just expect that of their company to take a sliver of stock and do these things.

That’s where I wanted to get; we didn’t get there. It proved continually too hard to sell to the companies in several regards. Many CEOs liked it; I would say most CEOs thought it was a really cool idea. But to get that stock they had to go to the board of directors. Going to a board of directors is terrifying for most executives—I shouldn’t say terrifying—they have a lot of agenda items and things they want to get through the board, and so they are very careful how they manage their board. And getting stock for a fuzzy thing like the community is like really low on the list.

So what would happen is they would not make the agenda, “Oh, you know, we just had too many things. We didn’t get to do it. So next meeting, next meeting we can do it again.” Or an entrepreneur would bring it up and say, “This is something that we’d like to talk to you about and get a little sliver of stock.” And there’d be some venture capitalist on the board that said, “This is stupid. We’re not going to do this.” Well, when someone says that on a low- priority item, nobody’s going to fight for it. The CEO’s not going to go to bat.

So for the period of time I was running all this, I knew a lot of the board members. I’d call every board member; I’d go to the board meeting. You just kill yourself. I’d get everybody lined up behind this to say, “Okay, we’ll do it.” But then when I stopped running it, and we have a great person running it that has been there for ten years, but she isn’t a venture capitalist that knows all these people. She kind of does now, but nevertheless, she can’t go to a venture capitalist partner meeting and go to parties and say, “Brook—why didn’t you do this? You’ve got to be in this thing. Tomorrow when you vote, I want you to back this thing!”

And so we worked like crazy over the years to get more and more support. We’ve got a council of venture capitalists. There are about sixty venture capitalists that have all signed up, helping us find other companies. Diane [Solinger] has done a great job of organizing volunteer groups. And we have attorneys that back it; we have attorneys that put us in term sheets. We have done all this stuff. But it’s still so hard.

So we evolved just a few years ago to say on the stock thing, “We really don’t need much stock. Let’s think about emulating the Google Foundation and the eBay Foundation. We actually will help you set up your foundation and we’ll do the volunteer work.” So at least on the stock, it didn’t look like they were giving the stock to us. And that was helpful for a while, but it’s still so hard. We’re going to be announcing the night after tomorrow where we are. What we have been experimenting with for the last year is that we’ve become, probably, the repository of corporate/community knowledge, better than anybody else in the world, probably. We are really good at it, the team. We 65

have twenty ways you can do it; we know how to implement it; we know the legal issues; we know all about how to do it.

And so, what’s been happening is we’ve been involved in more and more mature companies, clearly ones that are pre-public, we try to go there and get that stock when we can, but now we’re going to larger companies that are already up and running. They don’t give us stock, they just pay a fee, but we work with their HR [Human Resources] groups. So in those companies they might have a little bit going, or nothing, but they know that—they have more time, they’re larger companies, the HR knows this, so they’re coming to us now and saying, “How do we get this started? How do we get this kind of program going? How do we do a school program?” Or, “How do we do paid vacation days off?” And so we now have these larger companies are starting to join us.

We’ve put together a group, conferences of this group, and now we’re just starting a new whole Web service where we’ll reach out all over the country to hundreds of companies in terms of sharing what we know about corporate/ community arrangements, how to make it work.

So it’s evolving. I think in some respects it didn’t get as far as I would have liked, but it’s done pretty darn well. And I think, appropriately, we’re moving into a new phase I think actually will be pretty neat.

04-00:40:56 Hughes: A hundred and eighty companies! I think that speaks for itself. [chuckling]

04-00:41:01 Myers: Yes, that’s pretty good, yes, that’s pretty good.

04-00:41:05 Hughes: Shall we then talk about the Mayfield Foundation? Which you think was founded around the same time?

04-00:41:12 Myers: Around the same time. This was also a time frame with all the companies going public—you’ve probably read about this. If you were friends with a broker at a Robertson Stephens or one of the hot investment banks, the broker would get an allocation of this hot IPO stock. And so they’d say to you, “Do you want 100 shares of this stock? It’s really hot!” And so, “Great, thanks.” And you’d buy the stock on the opening, it would double or triple, and you’d sell it an hour later or the next day. And you’d made three times your money.

So as part of their marketing, they would go to venture capitalists and say, “Do you want this stock?” And some venture capitalists would put up thousands and tens of thousands and buy a lot of stock and then flip it the next day or a couple of days later and they’d make $10,000, $100,000, $1 million 66

dollars in a day or two! And then it got to be where you wouldn’t put up any money. It all happened so fast no money changed hands. Pretty neat!

We thought that wasn’t really a good idea. So from the beginning we felt that—it wasn’t dishonest, but it just wasn’t they way it’s supposed to be. So we would get these allocations of stock, like everybody else, particularly if one of our companies— We had another variation: if one of your own companies is going public, or you’re on the board, then you’d be given a big allocation for your firm to use in this way and make all this extra money. And that’s part of their marketing.

So that’s when we set up a foundation. We said, “Well, we don’t want to play that game.” So we’d take that stock; we’d put it in our foundation. And then when it would go up we’d liquidate it in the foundation. So our foundation had many millions of dollars in it from all this free stock we got, and then we’d use that. We began to do community programs. And so we had a committee here and we’d make grants, and like anything, it was sort of hard to get it all going, but many years we made grants of $0.5 million or $1 million, the end of the year, to local community organizations.

Then that foundation also started to fund Entrepreneurs Foundation in terms of hiring our first executive director. We had to rent more office space and we hired another person. In fact, Diane Solinger, who runs it now was hired back then. So anyway, the foundation was used to do that. I’m not aware, and it might not be true, but I’m not aware of any other venture capitalists that did that. But I thought it was pretty cool.

And then we actually set up giving groups, where among the partners who were then starting to do philanthropy in their own way. It’s always an issue— what do you support. Everybody’s busy; they don’t have time to go look for things. So I started this thing saying, “Well, if Yogen [Dalal] or Kevin or somebody else is involved with something, maybe we ought to just support what they’re involved in,” kind of thing. So we set up monthly meetings. So if one of the partners was involved in something, which meant on the board, the partners would all come to the dinner, and the respective nonprofit would come and make a pitch. The idea was everybody would pitch in—I forgot what—but they would walk away from the meeting with $100,000. And we did that for many months. That was pretty cool. That wasn’t the foundation; that was personal money. But just—support each other’s programs. And really cool.

Our CFO at the time, George Pavlov, his wife had a baby at Stanford, ended up having a really unique kidney disease, and Stanford didn’t have a mass spectrometer department to test for it. And it took almost a week to get the test done. The baby almost died, and if they’d gotten the test, they could have known right away what the issue was. It was a very obscure thing, and there was only one place in the U.S. or California. So George decided to help set up 67

that department. So he raised, among us, the first 0.25 million dollars to get the department going. And then the foundation I think—various things happened. Well now, it’s a full-fledged department, staffed, funded, at Stanford, doing unique diseases that they never tested for before. And George started this whole thing, got it going, and the foundation started it. So anyway, I just thought that unique among venture capitalists for sure, were some of the things we were doing at that time.

04-00:45:51 Hughes: Impressive. Another thing, I read that you were chairman of Stanford’s Venture Investment Group.

04-00:46:08 Myers: Was I? Oh I know—there were several of them. The Engineering School had a venture investment group—they got venture capitalists. I was chairman of the Stanford Business School one. There’s another one at the Engineering School. The concept—brilliant concept on Stanford’s part—was, “Let’s get a bunch of venture capitalists to all be on this little team, and so whenever they’re doing a deal, you can have Stanford’s money. So Stanford’s endowment can invest whatever you’ll let in—$0.25 million, $1 million, whatever you want. No questions asked. If you want the money, it’s there.” And it was brilliant. [chuckling] So they got the best venture capitalists in the Valley, that cared about Stanford. So we’re raising $10 million, and we’ve just allocated $1 million for Stanford. They didn’t get it every time, but lots of times. Stanford made gajillions on that. That was in the boom time. Stanford sold a lot of those stocks when they went public—it was just a brill[iant].

04-00:47:17 Hughes: This is the nineties too?

04-00:47:17 Myers: The late nineties, 2000. So I chaired the business school one doing the same thing for a number of years. Right. I forgot all about that.

04-00:47:30 Hughes: Is that now just a common appurtenance?

04-00:47:36 Myers: I don’t know if it even continued. I kind of doubt it because the deals got so competitive that I think at the end, you couldn’t get Stanford in. Venture capitalists said, “I want $2 million or nothing.” And so you couldn’t pry them back and get Stanford in. So I think it deteriorated at the end of the boom cycle, and I don’t know what’s happened today, if it’s still going on. They had one for the athletic fund; they had two or three of these going. Berkeley tried to get one going, but it was too late. I don’t know if they did or not. It was a great thing.

04-00:48:17 Hughes: Well. I’m now at the end of my questions. 68

04-00:48:22 Myers: Okay, good! [laughter]

04-00:48:25 Hughes: Now, it’s your turn!

04-00:48:26 Myers: My turn! I don’t have any questions!

04-00:48:28 Hughes: What should we talk about that we haven’t talked about?

04-00:48:34 Myers: I don’t know! [chuckling] You’ve been good with all your questions.You’ve covered a lot, I guess. I hope it’s helpful.

04-00:48:44 Hughes: Well, I can’t thank you enough. You were extremely articulate, and I learned a lot.

04-00:48:59 Myers: Well, you’re welcome.

[End of Interview]