Startup success stories and the investors in them. How Kleiner Perkins Caufield & Byers got rich on Google

In 1999, Google raised $12.5 million each from Kleiner Perkins Caufield & Byers and Sequoia Capital in a Series B round. A year after Google's 2004 IPO, the two investors' shares were worth about $4.3 billion each - a 300-fold return.

#VENTURE

#INVEST

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30000%

total yield

Yield:

The total is invested:

Share in the company after the IPO:

$12.5 million from each

$4.3 billion each

The recipe for success for Kleiner Perkins Caufield & Byers and Sequoia Capital was to be involved in management and to be unwaveringly confident that it was the right choice. Part of the deal's terms of entry from Kleiner Perkins was that Google co-founders Larry Page and Sergey Brin bring in an outside CEO to run the company. They initially refused, and the deal almost fell apart because Kleiner Perkins partner John Doerr wanted out of the deal, but in the end he was the one who convinced the founders that they needed a CEO. Eric Schmidt was hired as Google's CEO in 2001, and under him revenues grew to $1.42 billion by the time of the IPO and to more than $30 billion by the time Schmidt retired in 2011.
They invested in Google in 1999, while the IPO was as far back as 2004 - during which time the Nasdaq index peaked and then plummeted fourfold. Kleiner Perkins and Sequoia survived the turmoil and waited for Google's IPO no matter what. By 2004, Google had become a company worth $23 billion - an absolutely astronomical sum for those days.

Founders often think they know best how to build an owl business, but sometimes it's important to convince them to share the power. Ultimately, it was Schmidt's insight that was absolutely essential to guiding Google through the dot-com crash, the most traumatic period in Internet history.