Thomas Perkins (January 7, 1932 – June 7, 2016), was a pioneer in the venture capital industry, and also co-founder of Kleiner Perkins Caufield & Byers. Perkins received a B.S in Electrical Engineering and Computer Science from MIT in 1953, and then went on to earn an MBA from Harvard University in 1957. At Harvard, Perkins studied under Professor Georges Doriot (September 24, 1899 – June 2, 1987). For those not familiar with Doriot, he is considered the Father of the Venture Capital Industry [Read more on him [HERE]. Perkins’s most important mentor was David Packard (September 7, 1912 – March 26, 1996), co-founder of Hewlett-Packard. Perkins worked for Hewlett-Packard during the 1960’s helping to lead the new Laboratories division which created and launched successes like the electronic calculator and the computer.
In the interview below, Tom Perkins provides an oral history of his past, and in it he talks about his mentors Doriot and Packard. I’ve included this transcribed portion below the video.
“I was always planning to be an engineer or physicist, and it wasn’t until I got to Harvard Business School where I met Professor Georges Doriot. That is when the light really went on. Doriot was an extraordinary man. He was very controversial at the time. He didn’t follow the case method which Harvard was built upon. Instead he just lectured, and his lectures were just amazing. We became quite friendly. I really respected him. When I graduated, he offered for me to be his assistant for a year which was an honor, but I already agreed to come to California. Then many years later he asked me to run American Research and Development, but I was too engrained in Silicon Valley by that time. He was a big influence. But just sticking on the topic of mentoring, the most important of all was Dave Packard of Hewlett-Packard. It was the combination of all of that, that made me think I wanted to be an entrepreneur.”
Perkins tells a personal story about Doriot the teacher:
“Early in the term, you had to organize yourselves into groups. And you had to pick a leader of your group. My group picked me. Doriot then said, ‘Alright tell me why you picked your leader?, no, let me tell you why you picked your leader. You picked your leader because that is who you would trust with your own money. If you didn’t, then you made a mistake.’ So, we had assignments to analyze a couple companies in the Boston area. That was very interesting. We did a good job. We invited Doriot to dinner with the managements of these two companies. One of was a rather button down food manufacturer and the other made men’s suits for all different labels. And they were a wild bunch of guys and it was fun. But the serious thing was this assignment, which was the major project for the group. It was to write a report on some process or new technology, or something we thought was important in an industry to report on. When we started, there was this new technology called vacuum melting. It had to do with improving the quality of steel. If you melt steel in a vacuum. All the gases evaporate out, and you are left with a ultra-pure steel with higher strength. Turbine blades are now made this way but back then it was a new thing. We told Doriot that this is what we would work on. He didn’t think [Doriot] it would be a good project because it was new and there wasn’t much information on the process, it was new at the time. But we thought we could do it. Doriot called me into his office, and said ‘I don’t’ want you to do this, I want you to do something else.’ I said, ‘Well, I think we can do it.’ Doriot said, 'Ok, I’ll make a deal with you. Everyone in your group will get the grade I think they should get on what they’ve done. But if I don’t like the report I’m going to fail you, but if I like it I’ll give you an A+.’ I told him to “get the A+ ready.’ And that was the answer he wanted. He challenged me and wanted me to rise to the challenge. And we got the A+.”
Perkins talks about his first encounter with Bill Hewlett and Dave Packard:
“At the time, Hewlett Packard was only a $25 million revenue business. I was working for competitor of Hewlett-Packard’s called General Radio. General Radio management wanted me to test the accuracy of the HP instruments because they were less expensive. The management of General Radio thought that HP had to be junk so they wanted me to prove it. In every case HP was as good or better than they claimed. In many cases, better than General Radio. So, I was very impressed with HP equipment. I knew it was a very small company. I wrote Dave Packard a letter if I could interview for a job. He wrote back and said absolutely. He said meet me in NY at the IEEE convention and we can chat. I went to NY. This is a famous story, so I went to NY and I went to the armory, 67th street armory I believe, and there was Dave Packard and Bill Hewlett literally assembling their booth. I walked in and helped and while we were doing it they were interviewing me. We finished setting up and Dave Packard said they were going to make me an offer and to stand by. A week later I received the offer and it was acceptable, and that was it. I was so intrigued with those two individuals. Again, they were having fun, and putting that booth together was an example of that.”
“Both Hewlett and Packard were the ultimate entrepreneurs. They weren’t able to do what they wanted to do within the divisions (new projects/R&D) and still hold the division managers accountable for profitability. The managers would never do anything new. They decided they needed to create a laboratory that was separate to do new projects. They transferred various engineers into the laboratories. They put Dr. Barnie Oliver in charge of it. He was the Chief Scientiest of HP. He was a true genius. However, he couldn’t manage his way out of a wet paper bag. He was totally bored with anything that wasn’t technical. David and Bill put me as the administrator manager of HP Laboratories. The two most important things that came out of the Laboratories was the electronic calculator and the computer.”
When did you have the aha moment when you decided you had a knack and interest in building these business concepts? Did that happen at Harvard or somewhere else?
“That happened rather late. I had already been working for Hewlett Packard. I had an idea on how to make a fool proof laser inexpensively. It would be like a lightbulb, it either worked or it didn’t and you would throw it away. Dave Packard gave me permission to do this while I was working at HP on nights and weekends on my own. The company, Universal Laboratories, took off rapidly and became very successful and I made a lot of money, this was all while I was working at HP. It reached the point where I had to quit HP, which I didn’t want to do, and run the laser company full time, because it was a lot of employees and multimillion dollar a year business. It was one or the other, and fortunately an opportunity came along to merge with another company Spectra Physics, and afterword I’d just be a director of that company, which didn’t require me to leave HP. It was the perfect outcome. After the transaction occurred with Spectra Physics, He [Dave Packard] came into my office, put his arm around me and said, ‘Nice Going’, How many executives, then or now, would have done something like that?. Everythign I had ever learned about venture capital, I learned from that man [Dave Packard]”.
“After it (Universal Laboratories merged with Spectra Physics) was all finished, I realized I had been a venture capitalist. I had the idea, I put the money in, I supervised it, I reaped the profits of it. And that’s what venture capital is. The idea occurred to me if I could do that once, I could do that over and over again. Why stop with the laser company? Looking back, I would have never become a successful venture capitalist unless I did that laser company first.”
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