Sequoia, USA

Bet on the track, not the competition Operator

　　American thinkerEmerson once said: "An institution is an extension of one's influence ". In Sequoia, this person is founder Tang Valentine.

The so-called wallentan style can be summarized as one sentence: "Investing in a company with a huge market demand is better than investing in a company that needs to create market demand ". Because of its too much emphasis on the significance of the market for a company, this sentence has been extended to a more popular "bet on the track, not the competition player" for many years ".

This is perhaps the most famous methodology dedicated to the venture capital industry on the Sand Dune Road. It is also the most controversial famous saying in the industry. On the surface, it seems that this sentence is too much light on the value of entrepreneurship for start-up companies, and it seems quite self-experienced: Before wallentan founded Sequoia, he once held a sales role in xiantong semiconductor and National Semiconductor, and is considered good at interpreting market changes and knowing how to deal with these changes. His personal venture capital education also comes from the experience of the National Semiconductor period: because of its small scale, limited resources, and even insufficient products for all customers, someone must determine which customers have a bright future, which are worthy of long-term cooperation, and which customers need to be decisively rejected. The wallentan responsible for this decision must constantly make predictions based on the Market Prospects of the other company and the commercial value of short-term products.

However, it should also be pointed out that wallentan is not an improper technique. In 1960, when he was a sales manager at xiantong semiconductor, he recruited a group of people from Silicon Valley. For example, the AMD founder Jerry Sanders and the Maxim founder Jack jardd and Apple's first CEO, Mike markula.

In this case, why have wallentan's personal preferences become the style orientation of a venture capital company for 30 consecutive years?

Basically, this is a differentiated effort. Although all venture capitalists acknowledge the importance of the market, even in the United States, because data on market conditions is always scarce, most people prefer to change their perspectives on the company, answer the seemingly important questions: Is technology unique? Is the management team good enough? Can a product be patented? These questions are not unimportant, but they can only provide one-sided support for one judgment, and when investors try to answer multiple questions at the same time, it is easy to lose focus.

For example, some Insiders pointed out that sequoia investment is even more amazing than Yahoo and Google investment. When a number of investment companies saw it well, it suddenly experienced a collective resignation of employees, which discouraged other investors. However, Moritz has not changed his mind and eventually sold it to eBay, making a huge profit.

In his question about Moritz, the most direct answer was: "We still believe in the market prospects ". According to his judgment at that time, the open e-payment market exists and has a huge space for development. The only problem is that it is in a fierce competition with PayPal, which is just one street away, consuming a huge amount on both sides. This makes it face an uncomplicated choice: the company will merge the two companies at will to gain a leading position in this market.

Another reason for "betting on the track" is that talented entrepreneurs are rare. Wallentan once said that he saw two entrepreneurs with Superman insights in his life: Intel's Robert noisy and Apple's Steve Jobs. Even so, when Steve Jobs found wallentan in 1977, he was only 22 years old and only half a year old. He loved to shoot barefoot, and the image seemed to be clear. His experience and identity were hard to convince investors.

The same problem occurs in Yahoo. Yang Zhiyuan, the founder of Yahoo!, once told this magazine: "The key skill of Moritz is to look at people. I was a student and two founders of Google and I didn't bet on my own success."

But for Sequoia, this is actually not a problem. When Moritz discovered Yahoo, it was still in its infancy with only two founders, and it was almost impossible to judge its future achievements from the talent of two people. Therefore, this is not the primary consideration of Moritz. The real problem is that most investors are confused: if all the information on Yahoo is free, how can it make money?

This ultimately depends on Moritz's judgment on the market. Having worked in times weekly for a few years, he knew that broadcast and television are also free, but they can still achieve great commercial success. This should also be Yahoo's future. It was he who delivered his vision of the future to Yang Zhiyuan and David Ferro, turning a classification information retrieval page into a portal and eventually becoming the first media empire on the Internet.

Of course, it doesn't mean that sequoia doesn't care about the quality of entrepreneurs.

Looking at the founder's lineup in the Sequoia portfolio, it is not difficult to find that, although sequoia is rarely looking for entrepreneurs who are "pretty slick" and able to solve various problems from technology to management, however, the most successful projects are usually built by teams with complementary features. For example, the founder of Cisco is a couple, and Sandy Rena is a very aggressive, savvy, and powerful female scientist. Her boyfriend Lin bosake is cheerful and prefers to let go of management, there are also some theories. Yahoo's Yang Zhiyuan is outgoing and fond of thinking about business affairs. He is introverted and focuses on technology. Google's Larry pages liked to think about how things happened, and sergib Blin liked to improve the fact that it was born ...... They are all aware of their advantages and disadvantages and the contributions that another person can make to the company.

Moreover, Sequoia seldom invests in entrepreneurs who have had great success, but are more willing to invest in entrepreneurs who have experienced setbacks. In Sequoia's view, those who continue to succeed often do not objectively understand the cause of success. They are easy to fall into personal heroism and ignore the trend, timing, others, and luck. Those who have failed can better examine themselves if they are still eager to succeed. For example, Wilf coregen, who was in the late 1970 s, had a great promotion experience at Motorola, but he was not doing well for several years when he went to xiantong semiconductor. When wallentan met him again, he had learned from his mistake what was invalid, which gave him access to Sequoia's investment in its LSI
Opportunities for Logic companies. On the contrary, when Steve Jobs was swept out by Apple and founded NeXT, Sequoia did not invest in him. This is just because it is a "revenge-oriented" Company.

This is again the problem of the relationship between the contestant and the track. As Moritz joked: "judging from the chance of survival, are you willing to gamble on the second floor to jump off the cliff, or are you willing to gamble on the second floor ?".