The Power Law: Venture Capital and the Making of the New Future

by Sebastian Mallaby

The greatest mark of Doerr’s prowess was his investment in Amazon. In 1996, Doerr had snagged 13 percent of Bezos’s startup for $8 million; by the spring of 1999, Amazon was a public company with a valuation of more than $20 billion. But what was most remarkable was the way that this had come about and what it said about Doerr’s stature. Founded in 1994, Amazon was already going gangbusters by the time it sought venture funding. Would-be investors were calling so often that the company joked about resetting its voice mail: “If you’re a customer, press ‘one.’ If you’re a VC, press ‘two.’”[23] General Atlantic, a respected technology investment house in New York, pursued Amazon especially assiduously, presenting Bezos with a formal term sheet. But far from chasing after Amazon, Doerr himself became the object of a chase: his reputation was such that Amazon came after him. At first, Doerr was too busy to notice; the pager and the cell phone on his belt buzzed constantly. Eventually, after a CEO at a Kleiner portfolio company persuaded him to have dinner with Amazon’s marketing chief, the penny dropped: Doerr flew to Seattle, bonded instantly with Jeff Bezos, and stole the deal from under General Atlantic’s nose, even while offering a less generous valuation. Asked why he had accepted the lower bid, Bezos explained, “Kleiner and John are the gravitational center of a huge piece of the Internet world. Being with them is like being on prime real estate.”