Sequoia or other funds in terms of the dollars per year we would invest.
MHT: Does that include money reserved for follow-on investments, or is that everything you’re doing?
BM: The fund is only two years old, so we haven’t had a chance to struggle with that question yet.
Wade Roush, Xconomy: Can you talk about the basic philosophy behind the fund, and why Google thinks it’s important to have a venture wing? According to your website, you’re not necessarily looking for startups that have some strategic relevance to Google. And it’s not like Google, with its large advertising revenues, needs to earn lots of money on venture investing. So why do this?
BM: Fundamentally, we are looking at financial returns, number one. It is set up like a traditional venture fund in that sense, in terms of the incentive structure. And that’s important, because we think you are going to look at 1,000 ventures in a year, and maybe 50 are exciting, and you give a close look to five, and you invest in three. If you create a sieve that says we also need them to be strategically important to Google, that not only implies we know what we will be important to Google five or 10 years from now, which is really difficult, but it also means you might be narrowing the companies down to zero. Google has always had and continues to have a commitment to innovation and entrepreneurs and an optimistic view of the future. I think it is strategic to Google to invest in people doing exciting things. As far as the implication of your question, on moving the needle for Google’s revenues: If we were to invest in the next Google or the next YouTube or the next Facebook, that would be material to Google in terms of return, and so that is really our core mission.
X: Can you talk about the biography of the idea for starting Google Ventures? Where did it come from, who thought it was important?
BM: It’s Eric [Schmidt], Larry [Page], and Sergey [Brin] primarily [Google’s CEO, president of products, and president of technology, respectively]. There is a fundamental direction from those three toward…the idea of entrepreneurship. Larry and Sergey were venture-funded entrepreneurs. Chad [Hurley] and Steve [Chen] at YouTube [who are both advisors to Google Ventures] were venture-funded entrepreneurs. Eric teaches a venture course at Stanford, and David Drummond [Google’s senior vice president of corporate development] championed the idea as something that would not only be useful for Google but productive as well. We serve a lot of functions here. Financial return is our primary objective, but we also function in terms of an early-warning radar. That gets difficult as your company grows to 20,000 or 30,000 people, but its easier when you have a group of people whose job it is to be in touch with folks.
DK: One more comment on that. One thing that every employee at Google today shares in common is a passion and a common enthusiasm for startup companies and entrepreneurship. When we talk about how we’re different and the value that we can bring to our portfolio companies that is unique to Google Ventures, it is this backdrop of 20,000 people at Google who are permitted through their “20 percent time” to parachute into a bunch of different initiatives. Google Ventures is one such appealing opportunity for 20 percent work. We are able to leverage the excitement and enthusiasm for startups to our advantage.
BM: Just to put a finer point on that question of the biography of the idea: Eric and Larry and Sergey and David conceived this, and had it in mind for years before we launched it, but there were a lot of other priorities.
MHT: You’ve made nine or 10 investments, and they seem to be widely dispersed. Some of them are very early-stage companies and some are much later. Talk about your strategy with regard to stage and how that’s evolved and where that is going.
BM: We are stage-agnostic, in the sense that we are opportunistic, looking for great opportunities and companies we can add value to. Our commitment is that
