"The game of venture capital" series: the combination of entrepreneur and wind investor

"The game of venture capital" series: choice of discerning partner Chinaventure Editor Note: The author of this book is William · H. Draper III, published by Citic Press. The combination of entrepreneurs and venture capitalists lets us start our unusual journey from a unique restaurant, which is the proud Buck restaurant near the California Silicon Valley's Wood Derby (5 352 people).　　Yes, the word "unique" has been overused, but I assure you that Buck's restaurant has been uniquely renowned for years. The appearance of Buck's restaurant is bland. Of course, in addition to the row of dirty trees close to the end of the parking lot, a 20-foot-long wooden fish, woody, is very uncoordinated, drifting a few feet from the ground. The restaurant itself looks no different from the upscale shops in any small town in the western Rockies; the intricate veneer of wood that protects the sidewalk from bad weather. There are few long wooden ceilings with such weather effects here, and restaurant names are embossed above the lintel.　　What is missing is a horse-tied pile and one or two water troughs.　　But into Buck's restaurant, everything was different. The first thing that might catch your eye is a life-size statue of Liberty: The Goddess is light green, with a thorn-coloured crown on her head, but it seems something is not right to hold the torch aloft. Closer look, the original torch was replaced with a full of fresh cream and hot chocolate syrup "chocolate sundae." Today the goddess happened to have a stethoscope and a Hawaiian wreath.　　But these accessories are often traded, and sometimes people hang their clothes on the crown of the goddess (I am one of them). Now look around the place: it looks like the warehouse of the Smithsonian Museum, which has been sorted out by the crazies since the tornado hit. Treasures, tattered, outdated murals, and small antiques cover every inch of the walls and ceilings. In the hall, a scaled double-winged plane hangs from the roof, suspended in mid-air. On the ceiling is a 6-inch-long tiger shark that is becoming a spaceship.　　Two pairs of cowboy boots with a green, pink and yellow hue hung over the bar. There are two of shallow wooden cabinets next to the front door, so you should never expect to relax your nerves. One of the cabinets is labeled with an extensive label that says "Thank you", which is a collection of silicon chips that have been produced over the years by AMD (the Ultra Micro Semiconductor company, founded in 1969, Usenniver $100,000).　　Another display cabinet is 12 kinds of breakfast cereal sample popcorn, wheat circle, biscuit crisp, etc., they are carefully put into shape, to foil the display of the chip. If time happened, you may also encounter the Jemis-Mcnivin, the owner of Buck's Restaurant, which has been in a state of constant renovation since he (and his forever Patient wife Margaret) founded the restaurant in 1991. He was tall, amiable, with bushy gray hair combed neatly in the back of his head. In my mind, cheerful, eccentric, talkative, good moving Mcnivin is always the most creative in the worldThe entrepreneur candidate for the power of creation. Besides running a restaurant, he is a writer and a co-owner of a ship. Mcnivin created a Silicon Valley soap car race Dune Road Challenge, which is a spontaneous competition between local entrepreneurs and venture capitalists to raise money for the fight against drunken driving and other meaningful things. Contestants will accept the challenge of racing on the legendary Dune Road, and the government is serious about the race and is agreeing to seal the road during the game. The futuristic yellow car hanging from the ceiling of Buck's restaurant is one of Silicon Valley's most successful venture capitalists, Moore Davidow, who designed and piloted the car, which took Davidow and his team 1 100 hours. According to Mcnivin in his book "Buck Restaurant Breakfast," the other contestants are less serious: the DFJ Venture Company's team is always full of ideas. DFJ investment in original science, including nanotechnology, micro-devices and other fields. One year they put up a pressure-resistant tent, and all of them wore lab overalls to display their nano-car electron microscope photos. It was a car that was said to be only one out of 10,000 inches long and had a micro-mechanical driver who could drive along the track. It's actually a quantum mechanics car, so there's a rule of limitations: because it's so fast, it has to run 1 000 times around the track. Team members take a pair of tweezers and walk up to the front, Tim Draper the car into the track through a plastic pipe. The audience and the engineering magazine that specializes in nanotechnology are all madly in love with it.　　The micro-era immediately wrote and issued a press release, as if the car was the first in science. I've been eating at Buck's for years. My son Tim (the founder of DFJ Venture Capital, the proud Nano-car sponsor, the third-generation venture capitalist of the Draper family) is also. If I told you that I was a venture capitalist's father, General William Draper also had dinner at Buck restaurant, my story would be easier, but this is a little unrealistic. (My father died in 1974, and 17 years later there was a buck restaurant.)　　But as fathers helped to plant the seeds of today's Silicon Valley, and because Buck's restaurant is a quirky, peculiar, and charismatic synthesizer of Silicon Valley, where a great idea meets investment capital, I think our Father's soul should be with us when we sit at Buck's restaurant. "Creative encounters with money" is another layer of meaning that I said was unusual in Buck's restaurant. Like other pubs in Silicon Valley, Buck restaurant is not just a restaurant with quirky décor, creative bosses and food-for-money, it is a place for future entrepreneurs to meet venture capitalists, "Angels" and other people with huge funds and extensive networks. Or, conversely, it's a place for future corporate funders to pursue good ideas.　　[Page] "Money chasing promising ideas" is exactly what Tim and I did when we winter Dongmochunchu in 1995. In the spring of 1994, the Electrical Engineering Department of two Stanford University was calculatedComputer aided integrated circuit design in the PhD 25-Year-old Yang and 27-year-old David Ferro, found himself a lot of time to free control. Their mentors were on vacation that year, giving them more free time than ever before. Then they wrote their own (in the third person): it is commendable that David and Jerry (Jerry Yang) did not like their brothers to waste time. They did not participate in countless Frisbee competitions, did not exercise rock climbing skills on the sandstone structures of the Stanford campus, and did not join the home Brew Club (a computer enthusiast). Nor did he go to see the horror movie.　　Instead, they have a strong interest in the World Wide Web, which is becoming the deepest bottomless hole in the universe. More specifically, Jerry Yang and Philo are collecting lists of their favorite websites. Of course, today you let any pupil to explain what is a website, he can answer pretty, but at that time completely different. In 1990, the U.S. Department of Defense funded the establishment of a disaster prevention communications network for Research, after many years to build the country's only more than 10 computer network nodes. These nodes are all located in government agencies and universities, and only the highest level of academics are eligible for entry. However, the successful development of the 1993 mosaic "browser" has broken this situation. Its graphical user interface makes it possible for people who are not technically literate to roam freely in a virtual new world.　　In the same year, Philo, who was in the doctoral semester, found mosaic and began to look for and collect sites of interest. In the spring of the following year, Yang and Ferro took a more important step. As a first step, they wrote a software program to find new URLs. In the second step, they came up with an indexing pattern that, as more and more URLs entered their "folders", extended their URLs to classes, subclasses, and subclasses. In the third step, they uphold the spirit of freedom and self-creation, and make a decision to share the results free of charge to all interested people. Because the database exists in Jerry Yang's computer, people call it "Jerry's World Wide Web Guide".　　When more and more people noticed the new resource, Jerry Yang renamed it "David and Jerry's World Wide Web guide" because he thought it was not just a person's credit. This long name has not been used for too long. In thinking about a simpler alternative, they thought of a lower-than-human animal in the book Gulliver's Travels, "Yahoo" 's Jonathan Swift.　　Their after-school work has led to the cramped of the central computer room in the electrical engineering department, and Stanford University has presented a trailer for them to use, a legendary "place full of overheating terminals, pizza boxes, dirty clothes and golf clubs". April 1994, the formation of Yahoo site Broken Hundred, weekly click-through thousand. September, the site rose to 2 000, the daily hits reached 50 000 times. By January 1995, the number of sites reached 10 000, the daily hits as high as 1 million times. In the meantime, however, StanfordThe "Yahoo stuff" as a hobby for the two graduate students has taken up too much resources to end their support.　　So Jerry and Ferro began to find alternative ways to support their budding careers. So, in a real sense, the need to move Yahoo away from school has driven Jerry Yang and Ferro to commercialize their obsession. To be sure, they have the same entrepreneurial aspirations as other Internet-related companies that have no immunity to commercial temptation, but they created Yahoo for free and grassroots. They are not well-trained businessmen; in fact, two people have never officially been in the class before.　　They reluctantly invited a friend named Tim Brady, Harvard's second-year MBA, to write a business plan for Yahoo. The proposal was released in March 1995. It describes a business that is free for end users to advertise on the top 5 pages of the largest number of visits. The expected revenue for 1996 is USD 4.15 million (the actual figure is close to 2 0 dollars).　　It identified Ferro as the company's president, and Mr Yang's appointment as chairman of the board and chief financial officer was perfunctory because they knew they had no plans to run the business. March 5, 1995, Yahoo Co., Ltd. was founded. This portal has a feature of a deep core architecture, that is, its ability to track users ' access to the site.　　Although Ferro and Jerry Yang initially envisioned using tracking to improve the ability to classify and index, discerning eye is acutely aware that this important feature can also be used for targeted advertising. Potential buyers and investors are starting to surround Yahoo. For example, Steve Keyes of AOL (his intention is obvious, if they do not sell Yahoo, AOL will be the development of competitive products to kill Yahoo) to Jerry Yang and Ferro made a 2 million dollar bid.　　Venture capitalists are also beginning to visit the Stamford trailer, including Michael Moritz of Sequoia Capital, the agent of Draper International, and the agent of our Family Fund Draper fund (my son Tim). In fact, I happened to be involved in the Battle of Yahoo. Robin Richards, a partner of Draper International Limited, has an understanding of this emerging internet phenomenon. Jerry Yang, who went to Stanford at the same time, felt strongly that Jerry was doing a great thing. Of course, I believe Robin's judgment. At that time, we were working together on the first venture capital operation in India, so I called Tim to give him a second look.　　Because my focus in the future is on venture capital in India, so I simply told him it was an exciting new opportunity. When I had breakfast in Buck's restaurant in Wednesday, I introduced Tim to Jerry Yang. Everything I heard in my ear amazed Tim and me. To be honest, even though I was a partner with Suthershire venture Capital 1979 years ago, I invested and helped to create one of the world's earliest software companies, the Gaming Development Corporation (ACTivision), but I have left the West Coast for more than 10 years, so Tim knows more about the emerging internet world than I do.　　In the next Saturday, Tim rode his bike to the trailer to see a demo, and immediately realised that it might be a home run. Tim invited the two smart and visionary PhD students to the Draper Joint Fund office, asking them to sell themselves and impress his partner John Fisher with their investment potential. "Marketing" is nothing more than a sales demo of the future entrepreneurs in order to win and impress interested investors.　　In the latter article I will discuss in detail how to promote what marketing is effective, what kind of ineffective. Given the possibility of helping Tim, I attended the special promotion. At the meeting, Yang and Ferro looked a little nervous, but they showed a high degree of confidence in their skills. I remember Fisher's polite skepticism about their ability to manage the company with almost no business experience. Yang and Philo embraced the review and asked Tim and Fisher to recommend an appropriate CEO for the inexperienced company. [Page] Perhaps this idea may surprise you: a creative person is willing to even eagerly expect to hand over the day-to-day management of the crystallization of their efforts to a group of investors appointed by the CEO.　　In fact this is always the case, only sometimes until the end of the enterprise development. But it's not easy. Finding the right combination between dreamers and dream managers is never easy. Tim began searching the list of his personal networks. (The Internet is critical to successful venture capitalists.)　　He is trying to find a man who has the ambition to turn Yahoo from a creative to a great company, with plenty of risk-taking and a willingness to try for an almost unprecedented future. Tim decided that the best candidate was his friend, Jay O ' Connor. When Jay was about 35 years old, he had a good record of helping to develop business success. A sunny afternoon in late March, Jay and I came to a trailer visit. We were guided to experience the journey of Yahoo, as Tim had experienced a few days ago. The environment of the trailer is really not flattering. I remember we had to bypass the bike of Philo and cross his skateboard to see what was on the little computer screen, but the demo was still amazing. Ferro asked me to ask a question I wanted to know, so I was a director at Yale University and asked him to tell me what the current tuition was for Yale. He typed in a few keywords, and a bookshelf appeared on the screen almost instantaneously, with the words "Yale University" spelled out on a thick spine with blue and white letters. (This is Yale's first home page, 1995 spring release.) After knocking a few more keyboards, a number bounced out: Yale University's tuition fee is 21 000 dollars a year.　　It's amazing! Jay finally did not accept Tim let him in charge of Yahoo's proposal. (Tim predicted to Jay, "If you run Yahoo, you will earn 1 0" after that it proved to be an overly conservative estimate.) )Where the intuition, Jay's career is still successful, he helped QuickBooks become a small enterprise financial management system in the field of advantage enterprises.　　If he has looked back, I believe that his heart must be regret and joy and Chen. Jerry Yang and Philo had one months of talks with interested investors, including Tim, and had been in contact with Steve Kelly. Finally, in April 1995, Yahoo announced the acceptance of Sequoia Capital 1 million dollar venture capital fund, in return, the Sequoia fund has a 25% stake in Yahoo. As part of the deal, Sequoia Capital must ensure that Tim Kugel is the CEO of Yahoo. This is the first investment of Sequoia Capital in the Internet field, by Michael Moritz, we didn't know he had visited the trailer.　　Tim called Sequoia Capital to join the deal as a joint investor, but Sequoia Capital declined to dilute the stakes they held, rejecting Tim (and other potential joint investors). A year later, April 12, 1996, Yahoo listed, the day of the share price closed to 33 U.S. dollars per share, so that Yahoo valued up to 850 million U.S. dollars. That means, at least in theory, that Jerry Yang and Ferro are already worth $130 million trillion, while Sequoia Capital's 1/4 stake is worth more than 212 million dollars.　　Of course, none of them sold their shares at the time, and Yahoo now has a market capitalisation of more than $20 billion trillion. Why elaborate on a "unfinished investment" story? After all, three generations of Draper everyone has a lot of success stories to tell, why not tell the success stories? Because I think that Yahoo's story contains many elements of real-life venture capital, which is part of what this book involves. It encompasses the devotion of great entrepreneurs to their products or services. It is filled with the pain, joy, suspicion, frustration and ecstasy that VCs feel in the process of reaching a deal or failing to reach a deal.　　It highlights a basic fact: in venture capital, you win something and you lose something. In short, the story is a primer that leads to the key elements that we will continue to explore in the following article. What is driving the world of venture capital? What motivates entrepreneurs to work hard? How does the entrepreneur and the National economic engine support each other? I will reveal the mystery to the reader.