Building Great Businesses from the Inside Out: A Night Out with KPCB’s Eric Feng

Eric Feng, Partner at Kleiner Perkins Caufield & Byers, is a builder, a tinkerer and a founder at heart. With a background in computer engineering, Eric has always been drawn to creation, and found his niche in consumer tech businesses, having been the first head of engineering and product at Hulu, and since then going on to found a number of content and commerce platforms himself. It’s not often that you find investors who have found success as CTO, founder and investor alike, but Eric has done just that, and it’s that rare combination that gives him such a unique outlook on what it takes to build successful consumer businesses. Last week, we brought together a group of would-be founders in NYC to hear about Eric’s career path, tips for startup founders, and his take on the current tech landscape.

Eric knows the tech world from all sides of the equation. He began his career as a software developer, first at Trilogy Software and then at Microsoft, and even within those corporations, he found himself creating and running his own smaller divisions. He had his first formal stint as a founder when he launched Mojiti, a company that developed online video annotation and personalization technology. After just one year, the company was acquired by Hulu, where he went on to become the company’s founding CTO and head of product. Fun fact: Eric was the one who came up with the name Hulu, which is the Chinese character for a gourd, that in ancient times was hollowed out to store precious things. It was a big step up from Clown Co., Google’s original moniker for the company.

With founder aspirations always in his heart, the venture capital path was not originally on Eric’s radar. But he was approached by the KPCB team in 2010 with a unique opportunity that was too interesting to pass up. The firm had recently brought on Al Gore as a partner to push forward their clean-tech investment strategy, and they were looking for someone to serve as his Chief of Staff in the sustainability and digital practice. Eric jumped at the opportunity to work for one of his personal heroes, and counts that time as one of the most valuable experiences of his life.

But Eric’s founder’s instincts drew him back into creation mode. Between 2012 and 2016, he led three KPCB-backed consumer and media companies: social platform Erly (which he founded and sold in 2012 to Airtime); KPCB portfolio company Flipboard (where he served as CTO and led strategic partnerships); and mobile shopping app Packagd (which he founded in 2016). In his “downtime”, Eric picked up his investment activities at KPCB again in 2015, where he led the firm’s recent investments in Handshake and Hollar, among others.

Eric’s experience as a founder and investor in the consumer space has greatly informed his perspectives on the future of the industry, which all boils down to finding a way to stand out in the market. For one thing, he says, opportunities for huge consumer outcomes are far more limited now because the last major platform shift — to mobile — has now matured and the winners have emerged in dominant positions. We’re talking here about the Facebooks, Twitters, Instagrams and Snapchats of the world, which haven’t left much room for competition given their huge scale and network effects. Eric is equally pessimistic about opportunities around ad-supported business models that drove the previous generation of consumer hits. The advertising market is now a duopoly between Facebook and Google, with those two companies capturing 95% of the growth. There are still plenty of startup wins on the horizon, Eric says, though he predicts that those will leverage transaction-based models that generate meaningful revenue off of much smaller users bases. Examples include marketplaces, FinTech and, of course, ecommerce, which has generated some of the biggest consumer wins in the past two years (e.g., Dollar Shave Club, Jet, Chewy, Stitch Fix).

For entrepreneurs just starting out, Eric’s most important bit of advice is that once they’ve established product-market fit (always the first step), their focus should shift to product-marketing fit, with the goal of finding innovative distribution models to get ahead of the competition. Here, he offered up the example of coupon company Honey, which built a loyal following via its Chrome extension — a much smarter play than relying on the app store or other traditional acquisition routes to try to stand out in a crowded market. Another example is Eric’s portfolio company Handshake, which has onboarded millions of students onto its college recruiting platform by partnering with universities for distribution, rather than by directly targeting students.

While Eric’s career has blossomed on the West Coast, New York has certainly caught his eye. His recent NYC-based investments include retail community Bulletin, furniture subscription service Feather, and The Wing, a co-working network and community for women. Eric is excited about expanding opportunities in New York, which he believes will continue to produce great consumer companies because of the unique dynamics of the city. Consumer entrepreneurship is all about combining an understanding of technology with an understanding of popular culture, Eric says, and New York’s ready access to both makes it a breeding ground for successful companies.

Having driven a number of great outcomes, both as a founder and as an investor, Eric knows what it takes to build great companies. We’re thrilled to have folks like him — equal parts builders and investors — recognizing the great talent coming out of NYC and shifting more of their focus to our city’s rising stars.