John Doerr is one of the country's pre-eminent venture capitalists, having helped back Google, Amazon, Netscape, and many other companies during their infancy. Now he's investing in clean energy, which he says is both a tremendous financial opportunity and a moral obligation to the next generation of Americans. Doerr was recognized as a 2009 U.S. News Best Leader (read story here), and he recently spoke with U.S. News about his plans. Excerpts:
How did you get started on this track?
Three people were really seminal influences on me. The first two were [New York Times columnist] Tom Freidman and Al Gore. Third was my business partner, Bill Joy, who many people say was the Thomas Edison of the Internet. Bill said, "John, there is a profound revolution underway in the science of the small" that is going to allow us to do really disruptive things. You've got to pay attention to it when you see investments. It was against that context and background that I was having dinner with family and friends one evening. We were talking about global warming.
And someone said something that sparked your interest?
I have a good, bipartisan group of friends. Some agreed climate change was happening but weren't sure it was man-made. My more progressive friends felt, of course, it was. At the table was the next generation—my daughter. I asked her what she thought about it. And she said, "I agree with everything that's been said. I'm scared, and I'm angry."
So your interest is part business, part personal?
I'm a raging capitalist. My job is to make a lot of money. I'm a technology junkie. I'm also an American, I'm a very lucky kid from St. Louis, and I'm worried.
You come from the private sector. What's the proper role for the government in the energy world?
Government is inextricably involved in every element of our nation's energy policy. Anyone who would say that government should not be involved is not being realistic. Our energy policy to date is the sum of all lobbyists. We have three crises when it comes to energy. We have an energy security crisis, the economic crises, and a climate crisis. I'd add a fourth to it.
Let me go back to where we began. With the Internet, it was win-place-show for America. American companies dominated every important facet: search, commerce, communication, media. Yahoo, Apple, Google, Netscape, Amazon—they were all American companies. Today, if you look at the top 10 companies in wind and top 10 in solar, only one of the top 10 in solar and only one of the top 10 in wind, GE, is American. Only two of the top advanced battery companies are American. That's four places out of 30.
So we have an innovation problem?
We need much more research and development funding. It's appalling how little we spend on research and development, given how vital this field is. We need more venture capital work in the field. That's why I've been very vocal.
Are there any energy opportunities that stand out, areas that you're focused on?
Some areas are more active than others. I would say solar is far more active than biofuels, than geothermal. But all three possess disruptive innovations that invariably need to be scaled. Whether these ventures succeed in a decade depends on the government of America deciding that green technologies are an essential part of our future prosperity.
Which brings us back to federal policy.
We need climate legislation. If we don't put a price on carbon, if we don't adopt renewable portfolio standards to kick-start demand in the Untied States of America, the companies that are going to lead—those companies are not going to be here.
When you're checking out a company, what are you looking at?
We have a very disciplined framework. The formula for doing this is deceptively simple. You look for three things: proprietary leadership technology; a large, new, rapidly growing market; an outstanding management team. That's the secret formula to venture capital.
Has the recession affected what you do?
The answer is profoundly. Were it not for the policies in the stimulus bill, America would be out of the energy business. The capital markets to fund new solar—the capital markets are terrible. What has happened is Congress has said, "We want to see this kind of work funded."