This series profiles the most prominent and influential venture capitalists in the country. They talk about how they broke into the industry, what drives them, and what they have their eyes on, among other topics.
In this episode, I sit down with Mitch Kapor of Kapor Capital.
Background information on Mitch:
The Interview:
Early Years
Every pioneer has had a turning point, or a spark, in some shape or form. Mitch’s happened in the summer of 1966, when he was 15. He encountered a summer program that allowed him to get his hands on a real computer - he witnessed the ability to write programs and see them run in real time. As odd as It sounds today, such wasn’t a common occurrence 50 years ago. Such an inconsequential seeming event back then played the path for his future.
Mitch grew up in the 60s, a time of great social disruption. The decade “featured” the Summer of Love, the band “The Grateful Dead,” and other icons. Mitch immersed himself in the era. On the music side, he was on his college radio station and was a professional disk jockey playing progressive rock, as his first job out of college. He also began meditating and got very involved with a meditation group, eventually becoming a teacher.
I just wound up drifting through a good part of the 1970s, and then I bought an Apple II computer - it was brand new. Nobody took PCs seriously, only a few hobbyists had them. But something clicked for me overnight and I actually found that I had some consulting business - I was writing programs for people. I’m pretty much self-taught as a programmer. And I felt, along with a few other people, that personal computers were going to be big. Everyone was going to have one! They were going to take over the world! I got myself organized and together in a way I hadn’t been before and over a period of just a few years, in my late 20s and early 30s, it all kind of came together and I started a company called Lotus that built the spreadsheet everybody use before they used Microsoft Excel.
I prodded Mitch on, asking him to explain the transition from buying an Apple II to beginning his consulting business:
I was in a computer store - I had just bought my Apple II. I didn’t know what to do with it - And I was just playing with it; I stayed up half a night. And I saw this other guy, well-dressed guy in his 40s, wearing a suit, and I’m eavesdropping. (I’m unemployed, so I’ve got all the time in the world). He was a doctor, he was fascinated, and he didn’t know what to do with it - maybe he could use it in his practice. And I’m thinking, ‘Well this is a pretty affluent guy. I could program in BASIC.’ I went up to him and said, ‘Sir, I'm a consultant (which I wasn’t) and I think I can help you with your problem.’ And he hired me to write programs that he could use in his professional practice to do certain calculations about fitting into ocular lenses. That was the beginning…It was almost magical.
VisiCalc
The big thing that changed everything was this program called VisiCalc because it was the first spreadsheet. I didn’t invent it - some friends of mine did. And the reason it was such a huge deal was for the first time, there was a practical reason that a regular, ordinary, non-technical person might want their own computer.
This was inspirational for Mitch, so he wrote something that went alongside it that could take the numbers from VisiCalc and turn them into graphs, which became VisiPlot. He received royalties on it, and the publisher who was licensing the software from Mitch bought him out. Mitch struck it rich. Wisely, he turned around and put half back into his “next thing,” which went on to be Lotus - a company that in 1983, it’s first year, did $53 million in sales.
Bill Gates and Steve Jobs
Mitch talked about how “the big deal” in the computer revolution was the IBM personal computer because it signaled seriousness to the business community. Corporations were willing to buy something that had the IBM logo slapped across it. At the time, “Steve Jobs - nobody knew who he was. He was a hippie with long hair, at that point”
I interjected to ask whether Mitch knew Steve, and also Bill Gates, to which he responded, “We were contemporaries. I knew [Steve] pretty well. We all started out around the same time. At a certain time, Lotus was bigger than Microsoft, but they made the technology landscape be what it is and in the early days…they had genius and talent for building big business - duh - and I liked starting things. I didn’t like running things, Having a lot of employees actually made me nervous - I felt responsible for them. And so my career was much more getting involved early, as I did with not only personal computer, but in the early days of the internet.”
Angel Investing
Mitch had been investing as an angel since the 80s, but more recently, within the past 10 years, Mitch’s wife Freada, who has a long career in helping companies be better workplaces and achieving more diversity, urged Mitch to think about the social impact of the companies he was funding - “not just were they making money, but were they making a world a better place, and if so, for whom?”
We decided to do something radical, which was to try to build a whole investment portfolio entire out of companies that very specifically and explicitly were going to close a gap for some group that was underserved or underrepresented
Mitch’s investment philosophy has changed from his earlier days of angel investing by adding an element that realizes that not everyone has an equal shot of starting a company - currently its overwhelmingly white and asian men. Women and people of color are underrepresented and get almost no venture capital funding
We are trying to reimagine angel investing and venture capital, and really the whole tech ecosystem, genuinely as a level playing field - not as a meritocracy in principle, but a meritocracy in practice.
A thoughtful quote by Mitch that I read earlier is: “IQ is distributed evenly among zip codes, whereas opportunity isn’t”
Deal Flow
Mitch points to his network of entrepreneurs who he’d worked with for referrals to potential investments. Mitch knew Garrett Camp, the cofounder of Uber (an company Mitch invested in), because he has invested in Garrett’s previous startup, StumbleUpon.
Because networks are so important, it’s doubly important to make sure that people who are not already part of the inside clubby world of Silicon Valley have an opportunity
On the topic of finding diverse companies:
If you want to build a portfolio with a diversity of entrepreneurs, the best thing to do is have a diverse team who is doing the investing
Mitch talks about how at Kapor Capital, Freada and himself are the only white people. Mitch reasons that if you’re an entrepreneur from an underrepresented background and look at Kapor Capital’s team webpage, you’ll most likely find someone who looks like you and you can trust to understand “Who I am, where I come from, what I’m trying to do.”
We give credit for something we call ‘distanced traveled.’ If we see an entrepreneur, we’re very interested in what hurdles have they already overcome in their life: where did they started from and how did they get to where they are - because the more they’ve demonstrated the kind of persistence, and grit, and ability to overcome obstacles and hurdles, that’s one of the good indicators of someone whose likely to be successful in business. Of course, the idea matters, the market matters - I’m not trying to reduce this down. We really planted a flag in the ground around social impact, around diversity.
At first, Mitch thought there was a risk to doing this - perhaps this would prevent the firm from seeing the next big unicorn, but it turns out that it’s been the best thing for deal flow because “people really feel like we take them seriously - whoever they are - and that we’re interested in people with a different kind of lived experience and different problems: that means they see different opportunities”
Donating $40 million
Mitch and Freada made a $40 million pledge over 3 years to spend it across three organizations:
- Kapor Capital: invest in gap-closing companies that produce social impact and diversity in the tech ecosystem.
- Kapor Center for Social Impact: increase diversity in the tech ecosystem through research and education.
- Level Playing Field Institute’s SMASH (Summer Math and Science Honors Academy) program: try to increase the number of high school students going to college for STEM from low-income communities of color: Atlanta, Detroit, etc.
Images from the Kapor Center for Social Impact and Kapor Capital:
