Bob: So Bill, it seems to me that there is this logical progression that we're in-- maybe it's not logical progression-that we're seeing of entrepreneur/techies, whatever you call yourselves becoming venture capitalists. You're now VC after 20-25 years of something else?
Bill: Well, 30.
Bob: Thirty years of something else.
Bob: How does it feel?
Bill: Well it's 30 years of several other things.
Bill: You know I was programmer writing UNIX. I went to Sun; started the company. Did both hardware and software architecture, language design with Java. Was the external spokesperson for Sun. But then for the last few year-
Bob: You were the first RISC processor.
Bill: RISC processor-well you know there was MIPS and the first RISC processor were the 801 from IBM. But one of the first commercial RISC architectures but for the last few years at Sun I incubated stuff. I got tired of traveling and decided to start things. And did some angel investing. In going to Kleiner-Perkins I had a lot of friends there; they invested in Sun in 1982 so it was really coming home to work with friends in a way. And I'm continuing to help great entrepreneurs start great companies. It's a great pleasure to work with such great people.
Bob: Can you sense when a great entrepreneur walks in a room? Are there three questions you can ask an entrepreneur that measures their greatness?
Bill: Passion is the first thing. Big ideas, passion and also an ability to make it real. I know it's a long path with a lot of steps towards realizing a great idea. You gotta have the high and the low, you gotta have the great vision but you gotta have the rolled up sleeves, dirty fingernails to really go and get started. The passion is easy to sense but sometimes it's hot air too. So what takes a little more time to judge I think is how practical and real that part of the entrepreneur feels that spirit puts the thing together and really gets it going.
Bob: And so are there instances where you would recommend walking away from a deal because you sense hot air rather than--?
Bill: Absolutely. We see a lot of, we don't call them deals we call them investments or opportunities or entrepreneurs. A deal I think is as John Door has said that's a word which kind of degrades what is really going on. I'll be careful not to say the word. I know it's hard. It's one of these things like like. It's like this and it's like that. People are saying it all the time but-
Bob: So take it as our challenge in this show to not use the word deal again.
Bill: Okay. There are context in which it might be the appropriate word but you can often tell yes.
Bob: And so as an entrepreneur turned venture capitalist you probably spend more of your time saying no than saying yes.
Bill: Oh, inevitably we see several thousand entrepreneurs' business plans come through every year and invest in perhaps 20. It's a low hit rate.
Bob: In your position you could probably just phone it in by just saying no to every thing.
Bill: Oh there is a lot of great ideas that come through that almost make it. I mean it isn't always easy. And you don't get to pursue every opportunity that you want to; there's competition out there. There are a lot of people who are very resourceful. You find out things you get a look at it but they decide to fund it along for themselves. Many of the great investments have had only a single round of financing and so if you miss that round, whether it's an A round which would be the really early round or what we call a B round which is really the first real capital. If you miss that one round you don't have a shot at it.
Bob: This is always the story about any company, any successful company you can name went to 20, 40, 50, 100 venture capital firms before someone signed on and it seems like that's inevitable. What is about a potential opportunity that makes you even look at it when you know that 68 other people saw it and decided against it?
Bill: Well thanks to Google we don't have that situation all the time anymore. I had an entrepreneur, had a very exciting technology, it was very early, the slides that he brought said that he'd have a first commercial product in 2014. Of course this was sort of with the starvation level in terms of funding he had in the organization he's in now which doesn't quite fit in their mission. And what he said to us was how did you find us. And the answer was we were looking for something vaguely similar and just stumbled across his link on the web. And it took us awhile to track it down, track him down. I mean we had a reference to it without a complete reference and I had asked my administrator to try to track it down and she did and he was very surprised to be talking to us.
Bob: So the idea we have of entrepreneurs knocking on doors, sometimes it's venture capitalists who do the knocking.
Bill: There's no shortage of people coming and knocking on the door but we also incubate new ideas and also go outbound looking for things. But probably the majority of them are incoming.
Bob: Now if you have a situation where you need an entrepreneur or come across an idea and you try to package it somehow, maybe the entrepreneur needs a better idea or the IT needs a better entrepreneur and how-my guess is that often you'll go pretty far down the path and still decide against it.
Bob: What happens to those opportunities? Do you hand them to someone else? Or just write them off?
Bill: Well sometimes you send people to a different kind of money shall you say. I mean people don't come to Kliner-Perkins for money as much as they come to for relationship leverage. We like to say we do not only venture capital but relationship capital because people need introductions to employees, to partners, to other businesses that become their channels. But it's possible people come when they don't have the possibility of venture size returns so something that has an upside of in five years of being five times the money would look perhaps to a lot of people as a good investment. But that's not the kind of investment we would normally put in the portfolio if it doesn't have a chance of a larger return because there's enough risk in our investments that a portfolio without opportunities of more upside would be not well constructed.
Bob: What kind of upside do you look for?
Bill: Well if it's gonna be a $5 or $10 million business in five years that's not interesting. If it's $100 million business in five years it has a potential for that. That's a more interesting. So you need to have a reasonable size market because you have to put a lot of energy in to try and make the venture successful. And if you do make it successful you would like it to become a sustainable and significant enterprise. We like to build significant companies and have invested-and over the years I've known the partnership and speaking more in companies that have become significant like Sun, Lotus, Amazon, Intel, Genentech, Compaq and so on.
Bob: Well they/you seem to be succeeding. How is it different to be on your side versus the other side that you were on for so many years?
Bill: Well it's much harder work than I thought it would be. It's more exciting than I thought it would be. There's more interesting things to look at. Overwhelming. And the process is much more rigorous than I thought it would be. So it's kind of surprised on the upside in every way.
Bob: So we don't have just a bunch of partners fighting over the checkbook to write something?
Bill: No. It really is a partnership. It's non-hierarchical in which case it's a democracy of ideas and argument. I mean you have to convince your partners that it's a good opportunity to pursue. That it's not only worth the money but it's worth the time and that the vision is big like I said but also the practical aspect is there that the team can be completed. I mean very few teams come in that are complete; whether they need engineering or marketing or whatever missing piece-often money but more often it's the putting together the other pieces and guiding the team to understand the things that they don't. To come to an understanding of the things that they don't, of other investments that are in the portfolio.
Bob: You're early in this process of being a general partner. You just joined earlier this year.
Bill: At the beginning of the year, right.
Bob: Yeah. Have you have to fire anyone yet?
Bill: In a company?
Bill: No. I haven't made an investment where I'm the lead partner yet. I was told that it was a good idea to take your time. I'm kind of co-partnering or whatever you'd call it on several new investments. And so I joined and I am also assisting on some preexisting investments. We work across the whole-everybody works on whatever they need to work on. So I'm working on the whole portfolio. I'm not afraid to help make the changes that are necessary. It's better for, often both for the company obviously if the change needs to be made and it's often better for the people who leave because it's not necessarily there's anything wrong with them it's just there's a lack of a fit. And it's better to admit it and take the pain upfront and get on with doing something else.
Bob: You know I figured out awhile back that I've been fired from every job I ever held.
Bill: Well that's quite amazing.
Bob: And I thought for a moment that that was bad but I realized that every time I got fired it was really probably a better thing.
Bill: I got fired from the International House of Pancakes.
Bob: How did that come about?
Bill: I was going to college and cooking to make money to go to graduate school. I'd work there for two weeks and if I'd been there for one more day I would have been in the union so they fired me. I think that was there strategy of because you could pay people less so they just kept using temporary people to fill in.
Bob: So everyone they hired they knew they were hiring for two weeks but you thought you were working.
Bill: There seems to be an infinite supply of college students and the job didn't require a lot of skill.
Bob: I don't know. You have to know just when to flip those flapjacks.
Bill: Yeah, that's about right. It's a temp agency. It was a temp agency optimization of the pay scale.
Bob: What opportunities are you looking for right now? And I ask that basically I wanna get into this idea of where is technology going.
Bob: So do you see any waves appearing or on the horizon that we ought to be aware of?
Bill: Well we have a broad partnership and we have a life sciences group, Brook Beyers, the main partner is our senior person in that area. But the number of other people including some new partners in the life sciences and we have a larger group in what you'd say generally are the information technology which includes not only the internet but also electronics, software/hardware companies and so on. And we also have some investments in energy and materials areas. So I'm not working on the life science opportunities in general. I sometimes when life science opportunity will come by and it will be adjacent and applicable also with a different market. So there's investment presentation in a couple weeks of a company who has a technology applicable to medical devices but I can see that there might be a government application for the same technology so I'll go to that meeting.
So I'm on the non-life sciences side of the house and a generalist really. I'm looking at networking ventures, software ventures, energy ventures, materials ventures, all the whole range of things. There's a few of us, John Door is another person who I'd consider to be a generalist. Other people are more specific. Ted Schlein has mostly done security related investments and has a very nice portfolio of investments in that area so he's more specific.
Bob: I guess I'm wondering about areas that are emerging technologies that are interesting. And in every technical era we say oh that's client server computing, that's network computing, that's workstations, that's wireless. What are we just leaving and what are we just entering into?
Bill: We're leaving an era where it was relatively simple. There was electronics burst on the scene where as law and things changed very quantitatively. So we had a mini computer then a big personal computer. And the personal computers kept shrinking and/or getting more powerful for very long period, maybe 20 years. And then suddenly what happened was we passed a threshold where the miniaturization allowed suddenly a phone, cell phone had the power of what your computer used to be but now if fits in your pocket and a little tiny keyboard, little tiny screen and is always connected. That's very different. So the computers on the information side are becoming less recognizably kind of morphologically, kind of the same shape just shrunk and slightly altered as they were 30 years ago. They're becoming more invisible. They're having different ways of interacting with them by talking to them or touching them or having them always with you as opposed to something that's in your bag which you don't always have with you. So we've gone from a kind of a single trajectory, the Microsoft Intel personal computer wave trajectory with some life science, early genetics sighted to now having new sciences and materials, whole range of new opportunities and energy. Much, much broader set of opportunities than the life sciences and really a confluence of software with all the sciences that makes new things possible.
Bob: Wow. And can we trace that, it sounds like we can trace every bit of that just back to Moore's law.
Bill: Well we talk about it nanoscale, nanotechnology. What would really happen is it's not so much the measure, I mean a nanometer or angstrom or getting to that scale it's that we used to design things by kind of chipping away at them. Once we start to understand and manipulate at the atomic level we're building things up through understanding from the bottom instead of sort of shaping and planning and carving and chiseling and sanding.
Bob: Growing up instead of carving down.
Bill: Exactly. And that requires understanding as opposed to observing properties. And so you see it in the biological sciences you can start to manipulate and understand what's going on in a drop of blood. Take that apart. Look at all the proteins that are in there, infer something. It's an enormous amount of data. Or take and design a new material from an understanding of the chemical properties of the atomic structures; you know carbon nanotubes and all their interesting properties and so on.
Bob: So I just have to tell a couple of weeks ago I met for the first time Ray Kurzweil. We were on the same program. He spoke before me. I spoke after him. He offered terrific opportunities to ridicule and I did. But here's a guy who's essentially extended some of the logo rhythmic functions that we have in these materials areas and technology in general and extrapolated them into the future and in doing so declared perhaps human labor is no longer necessary. That leap from here to there is one I'm not sure is capable of even being made. But the thing that he said the other day that struck me was that he said in 2029 we would have for $1,000 you could buy a computer that was 10,0000 times as smart-smart, whatever that means-as a human being. Okay. Is that possible?
Bill: If you look at his graphs it appears to be. I think the thing is first of all we don't know quite how human beings are smart. Jeff Hawkins has a new book that's very interesting on intelligence and talks about his theory of this and if his theory's correct that would be an advance. But simply having a fast computer doesn't mean we'll know how to make it intelligent. It certainly helps to make a smart computer if it can go faster. You're sort of limited in what you can do. You think about having a conversation and I say something you tend to respond-you're thinking ahead and anticipating what I'm going to say. You're formulating the next thing I'm gonna say. You can typically start talking in a fraction of second.
Bob: Well, I'm vacant.
Bill: It's not true. Any ways, so a computer can't process in a fraction of a second. Think of all the music on your hard disk. If I played you a song you could probably think of another song that was like it very, very quickly. Maybe you could be a build a database for the computer so that it could do that but you can do that without having to decide in advance to build the database. In other words, you've got your memory organized in some sophisticated way so you can recall. And we don't know quite how to organize a large mass of information so that's-true, as marvelous as Google is it's not the same as talking to somebody who really knows what's going on in an area. But of course nobody knows everything that's going on in an area so sometimes its better. More often than not it's worse than talking to a person who's really knowledgeable.
Bob: You know I was reading a book the other day called "The Wisdom of Crowds". Have you read it?
Bill: I'm familiar with it but I haven't read it.
Bob: What it basically says is that somehow we do know everything only we just don't know we know it.
Bill: Well in some sociological sense maybe we do but in a scientific sense I don't think that's true.
Bob: No, probably not. I found it fascinating that this idea that perhaps the mask that data mask that you're talking about applying to my music collection. I know it in so many different facets and I'm able then to sort of after the fact apply the filter. Whereas the computer system would have to go back to the data and apply the filter.
Bill: Well there's certain kinds of questions and certain of things that crowds can do or that intuition, you know Malcolm Gladwell's blink, you know there's certain kinds of things that work but I don't-And those things might have economic value in a consumer society but there's other questions, other problems, other truths to be sought that I don't think that applies.
Bob: What of the global problems, perhaps technological problems, perhaps not, but what are the problems you that you worry about?
Bill: Well, helping my kids grow up to be responsible and happy citizens-
Bob: How many kids do you have?
Bill: My partner and I have four.
Bob: That's a bunch of kids.
Bill: Two teenagers and 11 and nine-year-olds. So kids are growing up faster than before. You know trying to help people who can do great things, significant and important things, solve important problems in my work. Have a good relationship. Live a good life. You know but from the work perspective that's one of the reasons I'm looking at the energy and materials area because those are clearly pressing problems.
Bob: Well yeah, we're pumping the earth dry of oil and burning it up in ways that aren't environmental responsible.
Bill: We're doing an experiment without precedent. There's an article in the paper today about how the oceans are getting more acidic. Just kind of break down the shells of the reefs. It's a non-controlled experiment. It'd be better not to do it-The economic forces are driving us in that way so it's not necessarily practical to just wish it to change because people will do pretty much what they want to do. So the best thing to do is find some profitable way to alter the course. If you can find a way to not use so much energy or to make the energy more efficiently or find an alternative source of energy that doesn't produce so much CO2 that would be a very positive thing. And so we looking at an invest in areas like solar and fuel cells, other innovative new technologies that might address this issue.
Bob: Do you worry about the kind of political-?
Male: Sorry. Repeat that question over again.
Bob: Do you worry about the political context and repercussions of these things as well as just technology and -
Bill: I'm not looking to the politicians, at least the current class of leader in this country at least to really address these issues. So we're trying to do it on the entrepreneurial side.
Bob: Is that a simpler world where it's let's make some money doing good?
Bill: I don't think--the government can lead but ultimately we need new ideas to solve these problems as well. A less backwards looking, less distractive strategy from the government would help. But if that's not forthcoming I think there's still an opportunity to make a lot of money by doing better. So we can hopefully achieve and make progress in that direction without waiting for political change.
Bob: This orientation on energy and materials, as a guy whose background is primarily in information technology does that-I'm hearing that maybe that means that the IT opportunities are not what they used to be.
Bill: No, I'm looking at lot of IT opportunities but you have to remember that energy and materials are also related. See material's related to how software used to understand and mold the design of those. And in the energy is using fine grain structures often built using some of the same equipment we use to build microchips or very thin layers of materials with interesting properties similar to what we were dealing with when we were designing say high performance processor or memory chips. So I've had familiarity over the last ten or 15 years in helping Sun design some of the advanced processors with some of these techniques and there's and extension of that into then applying thin films say to energy.
Bob: Are you nostalgic about Sun?
Bill: No. Twenty years is a long time. I'm glad to see Andy Bechtolscheim go back to the company. He's one of the founders of Sun and went off to Cisco and did a couple startups and he's come back. He's got some great new products that Sun just acquired his company and I think we'll really-I believe that they'll have one or more hits from the products he's brought back hopefully this fall. And it'll put them on a more positive course than they've been on for the last few years.
Bob: Andy has a touch?
Bill: He's an incredible touch not only as an inventor but as an investor. The person who wrote the check to the Google guys.
Bob: The $100,000 that they had to form the company in order to cash.
Bill: Yeah, exactly. Well that's a story that-That $100,000 had a very high rate of return. One of the most fabulous investments of all time.
Bob: That's for sure. He's smart and lucky too I think.
Bill: Well what do they say? Luck is when opportunity meets preparation. When opportunities come along Andy has learned to really recognize the great opportunities so he's one of the best new venture investors in the history of the valley. And that's a story that's not fully told. If you look for him-not much of the story of all the things he's invested in is written.
Bob: Oh really. There's more to come?
Bill: I think he's done far more than people generally recognize.
Bob: I believe that. Andy is unique.
Bill: He really is. He's a great hardware designer and an incredible asset. It doesn't matter what the size of the company and he can just tell very, very quickly if an opportunity has many of the characteristics we talked about earlier.
Bob: Sure. And the other thing is of course when you had the success that he's had $100,000 is a lot of money but if he lost it it wouldn't hurt him.
Bill: Yeah but he doesn't write a $100,000 check to everybody who knocks on his door. If he did he'd be broke because everyone in the world would be lined up. I mean there's some filter on who gets to talk to him but in general he's shown himself to be very perceptive about which things have the big potential. In the same way that we do at Kliner-Perkins; we're looking for big ideas but also people are very practical. And I think he saw in Larry and Serge and their ideas about search and the web not only a big vision of indexing all the world's information but a very practical, from the computer science department at Stanford kind of algorithm that would get them started. And so he saw both the passion and the practicality that are two essential ingredients.
Bob: Are the people who are starting these companies any different than you were when you were starting Sun?
Bill: Younger relative to me.
Bob: Well that's sad but true, isn't it?
Bob: I mean same background, same approach? Or is there something different about them?
Bill: Well they grew up and there are more of them. They grew up in the age of personal computing. They know less about-this is on the IT side-they know less about what happened before 1975 say in the earlier days of computing, mini computer mainframe era. On the other hand the energy presentations-I saw on an energy presentation in the last few weeks where somebody was saying well here's the timeline for this technology, the first prototype was in 1896 and then there was some more work in 1950 and then in 1975 and in 1993. And the reason is that a lot of these things are ideas with roots in chemistry, physics or mathematics where the material science didn't exist. And that's really what has changed is our ability to engineer some of the materials that we needed to make these old ideas practical. So we expect to see longer historical stories like that.
Bob: How do you lead a team?
Bill: Lead a team?
Bob: How do you lead a team? I mean how do you put one together and then how do you effectively take it to the destination that you want it to be? I think some people are good at it and some people aren't good at it.
Bill: Well the team has the have the passion. I mean sometimes it's possible to incubate a project and find people. Say if I have a passion I can go find some people who share my passion and see them with that passion and maybe they'll find a slight variant of what I want or a substantial variant of what I want and they'll take it and run with it. I'll get some version of it to go.
This was the case with the Java project. I mean I didn't have the original vision but I was in there with them the whole time and they ended up somewhere. I managed to help them find a successful place to go but it wasn't exactly the way I would have used the technologies. So the same thing is true when people come in with new ideas. They have some passion. You can direct it a little bit but you can't change it all that much so it's generally incomplete. They don't know how to market it. They don't know what their first customer should be. They have their big vision but the vision is a big circle and somewhere within that circle is something that is very much more practical. You try to steer them to something within their big circle because if you try to take them too far out of the circle it's just not gonna work. So you can't lead. You can only steer, guide, nudge I think.
Bob: Sort of herd.
Bill: You need to create-yeah you don't want a group that's a bunch of cats. I mean they're not a herd animal, right. And you don't wanna group that's a bunch of buffalo those are not farm animals, right. You need something that will stay inside the fences and work together. More of a herd kind of a thing.
Bob: Is there and ideal size of a group?
Bill: Yeah. In the formative stage it should be the number of people who can have lunch. Above about six is it's hard to have one conversation. Maybe eight is the maximum. It has to be at a rectangular table not a round one because you don't end up with one conversation at an eight round so it has to be a rectangular eight table. That's the limit. Six is better. So the ideal is to find a group of six or less people who have enough to have a big vision, somebody to make sure everything is working and to put a prototype of something together. If you add to that you start to really need management. And it's much harder to change direction because you can't change direction by just having a conversation sitting at a modest size table where everyone can have some airtime.
Bob: So the difference between the six can come to a consensus that they've made a mistake or they've made progress-
Bob: --whereas when you get more than eight or ten or 20 someone has to have an edict.
Bill: Well it's also the case that somebody's probably not there that day or somebody has to be somewhere else. Now it starts to slow down. And the ability to make the corrections, to do the nudges, to achieve a gradual turn as a sequel of gradual nudges is much more limited. And if you get too small, you get down to four or three you start to get to the point where there isn't a broad enough perspective from the group to be able to get past the problems. You can stay with one or two or three people for a while but you need more people just to get the work done. There's just not enough hours in the day. There's enough facets to most of these things; you need a collection of people with different skill sets.
Bob: Do you find that as you get older and are having different roles in these different kinds of groups that you're gaining or losing patience?
Bill: I'm patient as long as people listen. In other words if I go to a meeting with someone and I tell them what I think and I believe they're listening, even if they don't act on it, then my patience will be pretty long standing. But when you get to the point where people aren't listening and then it's either not worth your time or you lose your patience or make a change or just decide you're not the right person to help them.
Bob: I can understand that. So now you're a venture capitalist and you were-you still consider yourself a technologist?
Bob: And are you pursuing any personal interest in that area?
Bill: In the area-
Bob: Are you hacking some codes somewhere? Or?
Bill: No. I'm designing a sailboat.
Bob: Really. Tell me about your sailboat.
Bill: Well it's an attempt to be, in doing integrated systems design the idea is that a modest number of people living on a sailboat-you know a larger sailboat-is something say more than 100 feet long. Looks like a little island. You have a crew, six, ten crew, five, ten guests. You know ten to 20 people. You're in a salt water environment and so you have to make fresh water and you have to heat it and keep the place cool and move yourself around and cook and clean and do sewage clean up and pump the bilge and not put oil overboard and create power and not have too much emissions and try to be quiet and not too noisy living right next to your power generation, sewage and all the other treatment plants. So it's like an island. And so it's an opportunity to study energy efficiency looking at all the kinds of technology that are available. So for example, if you want to move it around rather than just getting a bigger engine try to figure out a way to make it move with less power and quieter. And rather than putting a big air conditioner try to use better insulation because if you put in a bigger air conditioner you gotta have a bigger generator to run it and bigger fuel tanks to power it.
So you start to see the balance between insulation and so on. And so we started this project about a year ago and looked at all the advanced technologies, looked for insulation, windows, heating, cooling, secondary heat recovery fuel cells, bio-medic ideas in propulsion, aerodynamics, plastic teak decking instead of real teak to try and minimize maintenance, lower more energy efficient water making. So basically a survey on the consumption side because really it's not a factory for much of anything but on the consumption side and the utility side like a water treatment or water making plant, a sewage plant, an electrical plant looking at all those sets of technologies and how they can be done in a more integrated and energy efficient way. So that's been a pretty big project and we're almost complete with the design.
Bob: Now, five or six years ago what immediately came to mind was Jim Clark built a big sailboat.
Bob: And he was founder of SGI and Netscape-
Bill: This is being built at that same yard that Jim's boat was built.
Bob: Okay. And so with-perhaps your goals are slightly different and certainly the time frame is different. You have the advantage of it's ten years later or five years later, whatever it is; how is your boat different than his boat?
Bill: Well he focused-a friend of mine built a boat and focused on making it feel really comfortable to gather people together. And I love his boat and it's a beautiful place to go to get a group together and have a wonderful-and really be with people because you're in a such a small space. Jim came along and added a lot of automation and really improved on the electronics side of it. I hate fan noise and smells, I'm sensitive to bad smells and have always been interested in-
Bob: Did it bother you visiting your grandmother's house?
Bill: Those smells are familiar but I have been interested and worked and talked over the years with Ingrid Logens over at the Rocky Mountain Institute with all these ideas of how we could do more with less. What they call Factor Four. With a quarter amount of the resources input we could have better amenities. So for example-
Bob: So __ straw bail sailboat?
Bill: No but for example if you can have a smaller amount of electricity consumed then you can maybe run the boat on batteries instead of on the generator at night so it will be quiet when you sleep. And so people think that generally if you use less, if you have to save energy you gave to give something up but that's actually not true. In this case every energy and resource efficiency we get brings an amenity so it makes things better. And also this is a good segway into doing investment into this area at Kliner-Perkins because we've been looking at all the most advanced technologies in all these areas for our project. So I have a full time person researching technologies that might be applicable to sailboat and he feeds a lot of things in his investment opportunity. That's a lot of the people say how did you find us. It's because my research assistant found them for the sailboat project.
Bob: Oh that's funny. That's really interesting. As a venture capitalist with this approach you're not living five years in the future but you're thinking five years in the future.
Bill: Well it's actually you have to think a long time in the future. It has a 25-year service life.
Bob: The boat?
Bill: Yeah. Okay. And it has a five-year refit and ten-year refit and we're already trying to track when the technologies will be refittable. We designed the platform to accommodate fuel cells. If we can do secondary heat recovery and fuel cells we can over a course of a year we can save almost 40%, given a certain electric load profile, we can save almost 40% of the fuel that we use in an operating year. But the fuel cells don't quite exist for the launch date in late 2008 because there's too much sulfur in the worldwide diesel supply. So we've become very aware of the nuances of where fuel cells are, where the fuel supply is, the energy content of different fuels, the opportunities for secondary heat recovery. And many bizarre technologies that people have proposed in all these areas that are not commercially viable. But we can make a roadmap going out ten or 15 years of how we might apply these technologies in the future and try to make the boat as a platform open to improvement in this way.
Bob: So how will your boat change the lives of future boaters? What are you archetyping?
Bill: Well the idea was that it would be more applicable to say-the ideas are more applicable probably to a third world community than even to a yacht because being an island, a civilized island in an unfavorable environment with no fresh water on it it's not that dissimilar to being somewhere where you have to take water out of the ground that you have to purify, live off hopefully sunlight. You make yourself-
Bill: Well you have to make yourself habitable in an inhospitable climate. In fact if you move around you can't even assume the temperature and humidity profile is in general because you could be in north latitudes, you could be equatorial. So you have to make the balance between how you create a habitat for the people on board using a minimal amount of resources. That involves using advanced glass, advanced insulation, trying to understand creating that profile within a certain-with a minimal amount of energy.
Bob: I mean you're building a boat with 25-year service life that implies that you're optimistic about the future.
Bill: Oh yeah.
Bob: Are you?
Bill: Well there's promise and peril. I think we're more aware of the peril after 9/11 before which if there was danger we'd say well people won't do X because they haven't done X which is not a very good defense. For example in the area of bio-terrorism the standard defense was nobody's done it so no one will probably do it. That was not a good, that's not a good approach. But we have some challenges ahead but we also have opportunity; danger-opportunity two halves of the same thing.
Bob: After-post 9/11 in the venture community suddenly there were people knocking on the door with security devices? Technologies for sniffing stuff out? Was there an increase in that kind of stuff?
Bill: Oh I think that anything that was claimed to be security or Homeland Security got you a much better chance of funding. People at a lot of the national labs could only get funding for their project if they claimed to be working on that. But people will gain that system too. But certainly there's been a lot more investment in that area. It's one thing to sniff something and something else to cause the public health and civil defense or whatever apparatus to respond in a way that makes a difference to people. So the high-tech can only go so far. A lot of this is investment an infrastructure that we've been cutting back on as Laurie Garrett pointed in her book about the decline of global public health.
Bob: Let's say you made a real bonehead move and woke up tomorrow poor how would you start again?
Bill: Well I would be happy to have the job I have now. I could also-if I was doing a new company?
Bill: I'd probably do a software company. If I couldn't be an investor I'd probably do a software company because I'm still a pretty good programmer I just haven't been doing it. So I'd write some software for either science or the web. I don't know which. And science probably the life sciences because that's where I think is an enormous opportunity for new software to make a difference.
Bob: It's all software that's the -
Bill: Well it is. It's becoming less a wet science. It's still the case that the interactions are too complicated for us to do in a closed forum and a computer but a combination of robotic or instrumentation and then software is the way the genome was sequenced; cut it into a lot of pieces and have the computer put it together.
Bob: You and I have talked a little bit in the past about the problem that I perceive that we have in this country of not enough people entering science and technology careers. It's not as popular as it once was and maybe it's too long-Sputnik was too long ago, I don't know, for whatever reason. Does that really matter? Is it enough to have 12 really, really, really smart people and you don't need 100,000 pretty smart people to support them?
Bill: Silicon Valley would suggest otherwise. The real strength of the Valley is in the cross-play between the people. The existence of the infrastructure to go out and get new problems solved, to set out things so that you don't have to make your enterprises so large to do great things. So I think we are not on a good trajectory with education and training.
Bob: How do we fix that?
Bill: Well I think we have to recognize-I've often said that you know smart people are uniformly distributed.
Bob: Not all smart people work at Sun?
Bill: Not all smart people work for you and there is many smart people in other countries as there are here on a per capita basis. Now whether that's - genetics or also the environment part, whether they get the training and education to meet their potential is another thing but if China and India have two billion, two and a half billion people, whatever the number is, and we have 500 million, they have five times as many people. If every body is educated there's gonna be five times as many smart people there as there are here that are trained. So we can't expect that given the same environment that we will have as much creative productivity as five times as many people equally empower. For the moment at least we have a different culture, more entrepreneurial culture. We also have the strong legacy of Silicon Valley and all the companies and information and biotech that are here in this active web of free relationships. There's no better place to do new entrepreneurial activity than here, not even a close second. But that advantage will weaken over time if we don't continue to train the best and the brightest that we have. And to the extent that people who are the best and the brightest from elsewhere will choose to go home.
Bob: I mean immigration is vitally important to this.
Bill: And it's not fun going through US Customs because you're not treated-you feel kind of slightly abused. I mean why are we taking our shoes off? It's a joke. I mean one guy tries to bomb a plane with his shoes so everybody has to take their shoes off for the next how long. There's lots of other places to stick things other than in your shoes. I don't quite know why the shoes have to-why doesn't my whole body have to go through the X-ray machine?
Bob: I guess that's a good point.
Bob: Okay, great. So we're not on a great trajectory.
Bill: I think from an educational standpoint no. I think we need to train more people in science and engineering. Odeem came and has got this organization trying to get people more excited about science and school. But we just don't take education as seriously. We don't pay our teachers well. We haven't been investing in public education. Tom Friedman had an article in the New York Times just a couple days ago where in Ireland a number of years ago they let everybody have free college education and now they've got the highest per capita income in Europe. And obviously there's a lot of other investment profile changes as well but that was certainly a key to changing the nature of the work force. We're going in the opposite direction from that right now in my judgment. I mean the net effect anyways. It seemed to have some political deadlock on how to change to improve our education but we've got to do something.
Bob: What would you do?
Bill: I think President Clinton proposed and I would agree with basically letting everyone have a college education who wants to go. I mean obviously you'd have to have some tests. If you're goofing off you lose the right but if you wanna go you should get to go. We should make that investment in our own future.
Bob: Hell yes.
Bill: It's a no brainer.
Bob: And we're running out of time so let's talk while we can about are there any other no brainers?
Bill: I think we need to stop spending money that we don't have. We're over consuming. We have to find things to do other than just buying things. That's a pretty deadly-learning things would probably be a better past time. That's a hard thing for a culture to change. But I certainly find learning things and solving problems the most challenging thing. If we're gonna compete in this thing that Tom Freeman calls a flat world we're gonna have to get more interested in solving problems and being entrepreneurial and less into materialism that we've become. The consumer emphasis that we have in this country.
Bob: You feel that we're sort of riding out 200 years of momentum? In the sense that we did things in the 19th and 20th centuries that enabled us to be floating where we are now.
Bill: Well the world was in tatters roughly after the Second World War. We didn't have any war on this continent so we had a big advantage. Also John Door pointed out 100 years ago we changed our patent system and made our entrepreneurial invention environment more favorable than it was for Britain, was the previous world power. So we gotta be careful. We got a lead; we're under invested in education so we're out gunned numerically. If we let the climate front inertia also worsen such as for example taking away stock options for all ____. This is a way of incenting people to work real hard to create new wealth and new jobs. We take that away we'll lose some more momentum. And that's that clear and present danger.
Bob: How long is your sailboat?
Bill: Fifty meters, 58 meters. It's very big.
Bob: So you're a guy building this really huge boat.
Bob: And talking about how we should reduce consumption and live within our means-I'm sure it's within your means but so you know you can say but we're learning about new materials and I'm improving my energy efficiency and my-It feels a little disingenuous to me. On the other hand you've worked hard for 30 years.
Bill: Well I hope that there's gonna be some payback out of the boat project in understanding integration of energy technologies and that's part of the payback. But you're right. It is an indulgence.
Bob: Feels good doesn't it?
Bill: It's a lot of work putting the project together. Actually if I hadn't been a scientist or an engineer I probably would have been an architect. And so to the extent that the project is architecture I like architectural projects.
Bob: We have just another minute. You know what are you excited about in the future?
Bill: I'm excited about the people who come through the office everyday with great plans that will make positive change in the world. And to work with the entrepreneurs that are bringing this change and hope that their stories inspire more people to do the same. I find the story of for example a company that KPBC Factories and Google, very inspiring. Larry and Serge are I think a great role models compared to some of the role models that we've had in the past for business success. They wanna do good. You know they have a vision that's good vision, great vision, a vision of good things. To be able to back entrepreneurs like that is a very great pleasure.
Bob: And do you see yourself, you talk about how you admire architects, do you see yourself as an architect in shaping this?
Bill: I really am an architect in the sense of software architecture or hardware architecture. I used to be more a builder as well because you get involved in more things. It's harder and harder to be the builder. In fact when I was at Berkeley 25 or 30 years ago I was-
Bob: You could build it all.
Bill: Well I was doing Unix and doing most of the programming myself. Now there's Linux and Linux community but there weren't so many people with so many computers at the time so it was a lot of-it was great fun but it was also kind of lonely. I think its' probably more fun to be in the kind of communities that we have today.
Bob: God people will hate me for not even mentioning Open Source.
Bob: Well I mentioned it now.
Bill: Right. We did Open Source back then a long time before even before we knew what it was called. But the idea was that people ought to be able to build on each other's work. And that's true in academia where you publish your papers and people can learn about what you've done so they can do better. That was the idea of the Open Source. It's become more than that to some people and has a lot of flavors now. It's a whole big movement but the basic idea is that people can stand on the shoulders of each other instead of on each other's toes.
Bob: Nothing wrong with that.
Bill: No it's a really good thing.
Bob: Not only that but we've got to the end of this without using the word deal.
Bill: John will be very happy.
Bob: Thank you.
Bill: My pleasure.
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