Eugene Kleiner: the world’s greatest investors

Eugene Kleiner was born in Vienna, Austria in 1923. In 1938 his family fled the Germans, reaching the US in 1941. After World War II, Kleiner studied engineering at both Brooklyn Polytechnic and New York University. Following a stint as an engineer, he moved to California to work for Nobel Prize winner William Shockley.

Kleiner then moved to Fairchild Semiconductor, earning him $250,000 when it was bought out in 1959 ($2.03m in 2015). After investing in several companies, Kleiner set up venture capital firm Kleiner Perkins (along with Tom Perkins) in 1972, and remained involved right up until his death in 2003.

What was his strategy?

Like other venture capital firms, Kleiner Perkins (now Kleiner Perkins Caufield & Byers) invested in technology companies, mainly in what would become known as Silicon Valley. Kleiner remembered how Shockley's inability to manage people had driven staff away, and consequently he placed a great deal of emphasis on the quality of the prospective management.

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His firm aimed to be a builder of companies, rather than merely catering to passive investors. As a result, it took an active role in the firms it invested in, including taking seats on the boards of directors. However, Kleiner also believed investors should be sure that customers actually want the product on offer.

Did this work?

The first Kleiner fund started out with $8m in 1972, half of which came from Pittsburgh steel tycoon Henry Hillman. A decade later its value had exploded to $400m, a return of 48% a year. Another fund, set up in 1978, would do even better, growing from $15m to $468m by 1983. By the time Kleiner Perkins (KP) celebrated its 25th anniversary, and while Kleiner was still involved with the company, it had been responsible for founding companies with a combined market cap of $100bn.

What was his best investment?

Before he founded KP, Kleiner put $100,000 of seed money into Intel, which was founded by his former co-workers Moore and Noyce. Shortly after Kleiner's death, Intel was worth $220bn. However, the best investment that KP was involved in was the biotechnology firm Genentech. The value of their $250,000 seed money (invested in 1976) increased 640 times to $160m when the company went public in 1980. At the time, the science behind Genentech's technology was so complicated that KP commissioned two research laboratories to analyse it before it committed to the investment.