Venture Capital

Another Winner in Google's $3.2 Billion Purchase of Nest: Kleiner Perkins's Randy Komisar


Randy Komisar’s name is deeply intertwined with Silicon Valley history. A partner at venture capital firm Kleiner, Perkins, Caufield & Byers, Komisar is a former attorney who once worked for Apple (AAPL), co-founded its software spinoff Claris, and was chief financial officer of the failed pen-based computer company Go Corp. He also authored the business philosophy book The Monk and the Riddle, a paean to infusing one’s career with missionary purpose.

Another Komisar pursuit just made the news: He’s lead investor and board member of Nest, the connected-thermostat company that was sold this week to Google (GOOG) for a staggering $3.2 billion. The sale ends what appeared to be (to the outside world, at least) a long winless streak for Komisar and Kleiner Perkins, one of the most storied VC firms on Sand Hill Road.

In his first interview since the deal, Komisar recalled that the appeal of Nest and of building devices such as thermostats and smoke detectors was not immediately apparent. Komisar and Tony Fadell, Nest’s co-founder and chief executive, were cycling buddies who took long weekend rides in the foothills above Silicon Valley. Komisar said he was eager to see what Fadell, a lead contributor to the iPod and iPhone, would do in his post-Apple career.

But when Fadell finally sat down in his office and told him? “Frankly, I was surprised,” Komisar says. “A thermostat was not a natural idea for someone working in consumer devices and consumer media. It seemed like a small idea compared to what I knew was Tony’s potential.”

Komisar says several factors changed his mind. He met Matt Rogers, Fadell’s co-founder, a former Apple intern whom Fadell had promoted at Apple to run an important part of Apple’s device business. Fadell also showed him the Nest prototype and delivered his pitch. “He said, ‘I’m going after all the unloved products in people’s lives,” Komisar recalls. He was quickly persuaded. “You look around the office and see all these dumb devices, and you say, why? They have all been made to be as cheap and unobtrusive as possible. What happens when you add intelligence and the magic of networking? Suddenly it was an interesting proposition.”

Komisar teamed up with Trae Vassallo, another Kleiner partner who had already been researching intelligent thermostats at the firm. While Komisar joined the Nest board, Vassallo worked with Nest for more than a year in business development, helping to coordinate outreach with local utilities, among other things.

Kleiner invested $20 million in two fundraising rounds and was Nest’s largest investor, according to a person familiar with the firm’s position. The investment will return at least $400 million to the firm. It’s a big win for Kleiner, which has endured a string of bad bets on clean tech and a sordid lawsuit from a former partner that included allegations of gender discrimination and has made tabloids buzz.

Komisar downplays the significance of the Nest deal to the firm, pointing to Twitter’s (TWTR) initial public offering and the sale of security firm Mandiant to FireEye (FEYE) late last year. (Kleiner had invested in both companies, though at later stages of their development.) But the Nest deal is a much bigger victory and is most likely a morale boost for its partners and investors. “The reality is, when we focus our attention and go back to business in the consumer and enterprise space, we can compete with anybody,” Komisar says.

Stone_190
Stone is a senior writer for Bloomberg Businessweek in San Francisco. He is the author of The Everything Store: Jeff Bezos and the Age of Amazon (Little, Brown; October 2013). Follow him on Twitter @BradStone.

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