Eugene Kleiner

Venture capitalist for Silicon Valley
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The Independent Online

Eugene Kleiner, engineer and venture capitalist: born Vienna 1923; founder, Fairchild Semiconductor 1957; partner, then partner emeritus, Kleiner Perkins Caufield & Byers 1972-2003; married 1947 Rose Wassertheil (died 2001; one son, one daughter); died Los Altos Hills, California 20 November 2003.

Eugene Kleiner was a founding partner of Silicon Valley's leading venture capital institution, Kleiner Perkins Caufield & Byers. Since it was formed in 1972, the firm has provided start-up funds for more than 300 high-tech ventures, from the world's most successful PC chip maker Intel in the 1970s to Amazon.com and Netscape Communications in the Internet era.

Kleiner was born in Vienna, but his family fled Austria in 1938 after the Anschluss, eventually settling in New York. Kleiner served in the US Army during the Second World War, and after demobilisation took advantage of the GI Bill to obtain a degree in mechanical engineering from Brooklyn Polytechnic (now the Polytechnic University of New York).

In 1956, following a spell with Western Electric, he was hired along with several other young engineers by William Shockley, who had established Shockley Laboratories in Palo Alto, California. Shockley, the Nobel prizewinning inventor of the transistor - later famed for his irascibility and right-wing views - had established the laboratory for the commercial exploitation of the transistor.

After a few months, unable to tolerate Shockley's regimen, Kleiner, along with Robert Noyce, Gordon Moore and five others, left to set up on their own. Ever after, Shockley called them the "traitorous eight". It proved very difficult to get start-up funds for the new enterprise. Eventually Kleiner contacted his father's stockbroker, a man by the name of Arthur Rock - later a pioneer of venture capital, but who then worked for the New York brokerage firm of Hayden, Stone & Co.

Rock talked one of his clients, Sherman Fairchild - heir to an IBM fortune and founder of the Fairchild Camera and Instrument Company - into investing $1.5m in the enterprise. Named the Fairchild Semiconductor Corporation, the firm began operations in 1957, and within six months it was turning a profit in the new technology of microelectronics.

The original agreement with Fairchild enabled him to acquire the founders' shares for $300,000 apiece if the venture proved successful. After Fairchild exercised this right the founders, who no longer held any equity stakes, peeled off to form new firms. Most famously, in 1968 Noyce and Moore formed Intel. Several other spin-offs from Fairchild Semiconductor - sometimes called the Fairchildren - led to California's dominance of the early microelectronics industry.

In 1972, Kleiner decided to form a venture-capital firm in partnership with Thomas Perkins, a veteran of Hewlett-Packard. The partners invested money provided by wealthy individuals and corporations to fund start-up ventures in the high-technology industries. One of their first investments was in Intel, which today is valued at over $200bn.

It is often said that nine out of 10 high-tech start-ups go bankrupt, but the successful few can produce spectacular profits overall. In order to minimise the number of unsuccessful investments, Kleiner and Perkins provided much more than money. They sat on the boards of young companies and helped them to find seasoned managers who could turn their ideas into successful products. Historians agree that, without the venture- capital industry, Silicon Valley would never have grown into the crucible of the electronics and computer revolution.

In the mid-1980s Kleiner became partner emeritus, retiring to his home in the exclusive area of Los Altos Hills, overlooking Silicon Valley.

Martin Campbell-Kelly

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