Don Valentine founded Sequoia in 1972, before the terms “Silicon Valley” and “venture capital” had been coined. His earliest investments included Atari and Apple, and he credits Steve Wozniak—who gave him an early “homebrew” Apple at a time when the cheapest commercially produced computers were $250,000—as his first technical tutor.
To listen. People in the venture community often get distracted by their phones or their laptops, even when they’re meeting with a founder who’s traveled hundreds of miles to see them. When you ignore someone, it makes it difficult to build a relationship. That’s why we agreed decades ago that we would not be guilty of inattention.
I’m a stickler about it. I once saw a Western movie in which the sheriff confiscated everyone’s weapons at the town entrance, and I decided to take the same approach at a board meeting. I put a small table by the door, made everyone leave their phones and laptops on it and told them they could take a pencil and one piece of paper.
Listening is an art form, and a number of companies over the years have complimented us on our commitment to listening. That one word is the basis of much of our reputation.
The same piece of advice I’ve been giving for nearly 50 years—go after a big market. Since Sequoia’s inception, we’ve focused on building exceptionally large, exceptionally valuable companies, and you can’t do that without a large market. It’s a message we have to deliver carefully, because many founders think it’s all about good technology, good partners or good luck.
I had a hell of a time finding the right partners when I started out. I made bad choices for years. One problem was I couldn’t find people who had the confidence to be wrong in front of their peers. We make collective decisions at Sequoia, and we spend a lot of time talking about our mistakes—what we missed and why we missed it. Those are highly painful but highly useful conversations, because they allow us to learn from what we get wrong, whether it’s passing on a company we should have partnered with or partnering with a company we shouldn’t have. Our partners have to be comfortable taking positions that turn out to be wrong and discussing those failures.
The other problem was I kept choosing people who were like me, when I needed people who saw the world differently and had the courage to stand up and say so. Once I realized that mistake, I hired two people who were very different from me and from each other—Michael Moritz and Doug Leone.
I wish I knew more about what makes health care companies successful. It’s one of the largest markets in the world, but health care startups usually fail because they face incredible challenges. The big pharma companies have so much leverage, and federal regulations dramatically increase the costs and the time things take. Companies also tend to start with high overhead—expensive teams, laboratories and equipment.
It’s still possible to build a very successful company in health care, but it often requires a radically different approach. A project I started a few years ago with Stanford is a good example. We gave doctors the ability to see scan results for stroke patients immediately, from their smartphones. We didn’t need to provide the scanner or the drug, just the software. The company is massively profitable now, and we have a great relationship with the FDA.
I’m a big Dan Brown fan; I read about one of his books every month. Origin is next on my list. I like his books because they’re compelling and full of riddles. They’ve taught me to read more slowly. I’ve always been a fast reader—I took a speed-reading class when I was in school and had a bunch of things I just wanted to get through. But with Dan Brown, I realized I was missing terrific riddles I might have caught if I hadn’t been moving so quickly.
I didn’t always understand the power of storytelling. Before Sequoia, I was as at a startup called Fairchild Semiconductor. We had superstar people—the phones and laptops we have today are the result of that company’s work on microprocessors—but we could not raise money. Eventually, an investor took a chance on us, and he also did me the enormous favor of explaining that I needed to perfect my storytelling.
Telling stories is a big part of our world. It’s a skill we try to develop in members of our team, and it’s something we look for in founders. When a founder first comes in, they know everything about their business and we know very little, so they need to be able to explain why we should partner with them. I remember we once had a guy giving a pitch who was at 20 million feet when he should have been at ground level. We just were not getting it. Eventually I suggested we take a 10-minute timeout and told him to write out what the company was on the back of a business card. He came back with a card absolutely filled with the tiniest letters you’ve ever seen, which wasn’t exactly what I had in mind—but he was then able to tell the story of his business in terms we could understand.
Exactly twenty-one-and-a-half months. Just kidding. Really, it varies by company. The time it takes us to get through the storytelling, establish the partnership and set up meetings to address the founder’s immediate needs; and then there’s forming the board of directors, product development, customer development, hiring—all the things it takes to build a business.
The unit of time that matters most is however long it takes us to feel like we’re on the same side of the table as the founders—that we’re truly partners. It won’t always happen right away, because you have to earn each other’s trust. But we try to get there as soon as possible.
- Perfect your storytelling
- Listening is an art form
- Go after a big market