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jerryking : don_valentine   11

Venture capital investors should harpoon more whales
February 3, 2020 | Financial Times | by John Thornhill.

*VC: An American History by Tom Nicholas.
* The worry for Silicon Valley is that the impulse for creative destruction is now fading
* It is easy to be rude about the venture capital industry. So here goes. The criticism runs that the VC sector is full of too many over-funded, ill-disciplined chancers who pass off hype for reality, groupthink for insight and luck for good judgment.....What’s more, a staggering 95 per cent of VC firms fail to make a decent enough return to justify the risks their investors run......the current mindset of the VC industry is responsible for the slowdown in new business formation and lack of economic dynamism in the US. All too often, addicted to capital-light, metric-heavy software businesses, VCs are failing to bet big enough on the breakthrough technologies that tackle our biggest challenges, such as climate change or cancer.........Katie Rae, chief executive and managing partner of The Engine, a Boston-based “tough tech” venture fund, says that many VCs have lost sight of their original purpose......VCs were all about funding tech breakthroughs but that has got lost,” ...... “A lot of VCs look more like private equity companies that do not want to lose any money so they end up backing dog-walking apps rather than quantum computing.”......Historically, the best venture capitalists have performed a vital capitalistic function: turning seemingly outlandish ideas and transformative technologies into everyday realities. Semiconductors, recombinant insulin and internet search engines have all come to market largely thanks to VC backing........“The VC industry is cut-throat. .....It provides the capital and expertise for start-ups to succeed.”.......In VC: An American History, Tom Nicholas traces VC’s high-risk, high-reward mentality back to the 19th-century whaling industry, which developed a novel form of venture financing. The idea was to back an expert captain who could fit out a robust ship, hire the best crew and endure an average of 3.6 years at sea. On landing a whale, the captain would return investors’ money several times over. But many ships returned empty-handed or sunk.........the pattern of financial returns made by Gideon Allen & Sons, the smartest backers of whaling ventures, were almost identical to those achieved by Sequoia Capital, one of the best VC firms operating today..........one of the striking features of the subsequent evolution of the VC industry.......was how contingent it was on time, circumstance and people. The west coast model of VC investing, owed an enormous amount to massive government investments in technology during the cold war, the expansion of world-beating universities in California and the emergence of some remarkable entrepreneurs and visionary investors, such as Arthur Rock, Tom Perkins and Don Valentine.......The worry for Silicon Valley is that some of that Schumpeterian impulse for creative destruction is now fading. One argument has it that Silicon Valley is becoming increasingly “corporatised” with Big Tech firms, such as Google, Facebook and Apple, championing the mantra that “big is beautiful” in the face of emerging competition from China.

The benign view is that Big Tech may be internalising much of the innovation once carried out by start-ups; the malign interpretation is that Cupertino, California [JCK: that is, "Big Tech"] is snuffing out smaller rivals.......

“Silicon Valley is overdue a disruption. It is not a hotbed of start-ups any more,” ..........Metaphorically, at least, the VC industry needs to get back in the business of funding wildly ambitious entrepreneurs intent on harpooning some more whales.
19th_century  Arthur_Rock  big_bets  Big_Tech  books  breakthroughs  broad-based_scientific_enquiry  cancers  climate_change  creative_destruction  disruption  Don_Valentine  entrepreneur  finance  financing  fundamental_discoveries  funding  HBS  high-risk  high-reward  innovation  investors  Joseph_Schumpeter  moonshots  public_investments  semiconductors  Sequoia  Silicon_Valley  thinking_big  Tom_Perkins  tough_tech  unimaginative  vc  venture_capital  visionaries  whaling 
8 weeks ago by jerryking
Don Valentine, Founder of Sequoia Capital, Is Dead at 87 -
Oct. 25, 2019 | The New York Times | By Erin Griffith

In 1959, when Don Valentine joined a silicon company, “the word ‘Silicon Valley’ hadn’t been created yet,” he said in an interview at a technology conference in 2013.

In 1972, Mr. Valentine established Sequoia, and it soon became one of Silicon Valley’s most successful and enduring firms. Sequoia backed companies including Oracle, Microchip Technology, Linear Technology and Network Appliance. Several tech giants, including Electronic Arts and Sierra Semiconductor, were created in Sequoia’s offices.

Mr. Valentine invested in Atari in 1975, and three years later, he wrote a $150,000 check for Apple Computer. He also invested in Cisco Systems and was the networking equipment company’s chairman for three decades.......Unlike other venture capital investors at the time, he played an active role in the companies he backed....Venture capital is often called a “people business,” and many top firms have stumbled as they have tried to pass the reins from one generation to another. But Sequoia survived that transition when Mr. Valentine handed control to Michael Moritz and Doug Leone in the mid-1990s. He continued to attend partner meetings for the next decade. Mr. Valentine evaluated start-ups by their ability to answer the question “Who cares?”.........Mr. Valentine explained one element of his success. “The key to making great investments is to assume that the past is wrong, and to do something that’s not part of the past, to do something entirely differently,” he said.
Don_Valentine  founders  Michael_Moritz  obituaries  Sequoia  Silicon_Valley  start_ups  vc  venture_capital 
october 2019 by jerryking
Michael Moritz, the tech investor backing books
March 1, 2019 | Financial Times | by Richard Waters.

Michael Moritz, the biggest individual investor in funds managed by Sequoia Capital, the blue-chip venture capital firm where he has worked since 1986. Forbes estimates his wealth at $3.4bn, but Moritz himself puts it “a bit higher”.

Some of that wealth was put to work this week when Crankstart, the charity he set up with his wife, Harriet Heyman, agreed to provide financial backing for the Booker Prize, one of the top awards for English language fiction, for the next five years......Moritz continues to court controversy, writing approvingly in the Financial Times of the relentless pace of Chinese tech start-ups, where workers put in so many hours they barely see their children. He contrasted them with “soul-sapping” debates about work/life balance in the US, calling them “concerns of a society that is coming unhinged”.

It is tempting to ascribe his success as an investor to tireless networking, luck and timing....entrepreneur Randy Adams tipped him off to Yahoo, which was creating one of the first web indices. That led him to Google. He took over leadership of Sequoia from Don Valentine — one of Silicon Valley’s first start-up investors — in the mid-1990s.

The firm then moved well beyond its venture capital roots, setting up arms to manage family endowments and handle public market investments. While he was at the helm, it became the most successful foreign start-up investor in China. “We understood that the world had changed and that Silicon Valley was not going to be the centre of the universe for the next 50 years,”....he still works full time making investments and sits on 10 corporate boards.

Through Crankstart, Sir Michael and his wife have made substantial gifts to education, including £75m in 2012 to fund scholarships for the poorest students at Oxford university, where he was an undergraduate. He said that the financial support his father had been given after fleeing Nazi Germany as a teenager was his motivation.....After funding some of the world’s most disruptive companies, it might seem perverse that Sir Michael is now backing something as traditional as a literary prize. But he says: “Like music and video, I think the future is brighter than the past.” Printed book sales are rising again, and audio books allow readers to consume them in new forms. “The novel is the underpinning of many forms of entertainment,” he says. “I don’t think anyone’s lost their appetite for good storytelling.”
books  charities  contrarians  Don_Valentine  fiction  Google  investors  Man_Booker  Michael_Moritz  Oxford  novels  philanthropy  prizes  Richard_Waters  Sequoia  sponsorships  venture_capital  vc  Yahoo 
march 2019 by jerryking
ASAP Interview_Don Valentine
Forbes ASAP | by Rich Karlgaard.

The great thing about evaluating markets first is that usually there are very poor data sources. So you have to create these scraps of information and most people don't do that--they prefer to make a judgement on some other basis, whether the product is patentable, whether the technology is differentiated, whether the people are world class. To us, you can scrape and push and dig and find out tidbits of information which when you put them together, you get a conviction about when something will happen. You talk to people in distribution, you talk to all the sources of information that you can, and you make a judgment....Are you solving a problem? Are there great installations of incompatibility that need to be linked? Who cares about this product? and do they care with a time frame that's important to us--eight years, the length of a fund?...To me, the most important person in management beyond the president has always been the sales manager. I want to meet and get comfortable with the guy who is going to create the backlog. This is different that marketing. Marketing runs the company, as it should, but it is the sales department that creates the orders and creates the cash-flow. So the sales manager is always a very important character to me, much more important that a log of other people. They must be relentless, driven and have enormous energy. Winning is terribly important to them, Where we've had great successes with companies, we've had great sales managers. Where we've had mediocre success with companies, we've had mediocre sakes managers. Nothing happens if you don't get a backlog.
Sequoia  Don_Valentine  Rich_Karlgaard  due_diligence  sleuthing  information_sources  sales  tacit_data  scuttlebutt  incompatibilities  primary_field_research 
june 2012 by jerryking
Don Valentine, Venture Capitalist - Forbes
12/09/2005 @ 10:59AM |149 views
Don Valentine, Venture Capitalist
Rich Karlgaard Rich Karlgaard,

Most VCs say they invest, first and foremost, in people. Technology and markets are secondary considerations. The thinking goes: “A” people will know how to find “A” technology and “A” markets.

Valentine rejects that. He bets on markets that are ready to explode. Deep in his salesman’s bones, Valentine knew the market for microcomputers (Apple), databases (Oracle) and routers (Cisco) would go nuclear before other investors did.
Don_Valentine  Rich_Karlgaard  Sequoia  large_markets  teams  high-growth 
june 2012 by jerryking
Trip Hawkins Blog: DON VALENTINE
September 3rd, 2009 | blog.digitalchocolate.com | by Trip Hawkins
Don_Valentine  Sequoia  Kleiner_Perkins  Apple  Steve_Jobs 
may 2011 by jerryking
The Internet Report
February 1996 | Morgan Stanley U.S. Investment Research pg. 41 |
by assorted writers. When looking for investment ideas in new markets,
we default to our favorite maxims from Don Valentine of Sequoia Capital,
who is known as one of the toughest and smartest technology venture
capitalists in Silicon Valley. Don follows several simple rules in
choosing early-stage tech investments: (1) Find “monster” markets that
can be really big, like the Internet; (2) find good technology and good
technologists who can stay ahead of competitive threats; (3) find
outstanding leaders/management teams that can drive the technologies and
markets forward; and 4) buy companies, not products, and try to find
companies that have achieved critical mass with their products — or can
achieve it, and can create some form of “barriers to entry.”
barriers_to_entry  buying_a_business  critical_mass  Don_Valentine  engineering  good_enough  high-growth  investors  large_markets  leaders  Mary_Meeker  Morgan_Stanley  rules_of_the_game  Sequoia  teams  technology  vc  venture_capital  filetype:pdf  media:document 
february 2010 by jerryking
VC Confidential: Wisdoms of Sequoia's Don Valentine
November 15, 2007 | VC Confidential | by Matt McCall.
"The trouble with the first time entrepreneur is that he doesn’t know what he doesn’t know. After a failure he does know what he doesn’t know and can beat the hell out of people who still have to learn."

"That's easy. I just follow Moore's Law and make a few guesses about its consequences." (on his success investing in semiconductor plays)

"I got to Silicon Valley in 1959. Nothing is revolutionary; it's evolutionary. Look the sequence of Intel microprocessors. It's all predictable. The nature of silicon and software and storage go hand in hand. In the case of software, you just have to be more clever about the nature of the application. So all these things kind of tick along, feeding off each other"

“All companies that go out of business do so for the same reason - they run out of money.”

"Why did you send me this renegade from the human race?" (comment after meeting Steve Jobs)

"Great markets make great companies."

"I like opportunities that are addressing markets so big that even the management team can't get in its way."

"One of my jobs as a board member has been to counsel management to avoid distraction and to execute with constructive paranoia."
boards_&_directors_&_governance  distractions  Don_Valentine  failure  large_markets  Moore's_Law  paranoia  pretense_of_knowledge  quotes  Sequoia  Steve_Jobs  vc  venture_capital 
january 2010 by jerryking
Google's Banker
May 3, 2004 | Fortune | By Adam Lashinsky.... Valentine also
took a different approach on making investments: He bet on the
racetrack, not the jockey. "... you build great companies by finding
monster markets that are in transition, and you find the people later,"
says Valentine...."But in Moritz, Valentine saw a resemblance to another
precocious go-getter he had observed at close range: Steve Jobs.
"They're both incredibly aggressive questioners," says Valentine. "And
our business is all about figuring out which questions are relevant in
making a decision, because the people who are starting a company (i.e. the founders) don't
have a clue what the answers are."... Valentine's principles: only
targeting businesses with fat margins; avoid capital-intensive
businesses; take measured steps; never underestimate the difficulty of
changing consumer behavior; don't begin a rollout until you're sure the
recipe is working; avoid any business Wall Street is prepared to throw
hundreds of millions of dollars at.
behavioral_change  capital-intensity  consumer_behavior  disequilibriums  Don_Valentine  founders  large_markets  margins  Michael_Moritz  precociousness  questions  rollouts  rules_of_the_game  Sequoia  Steve_Jobs  vc  venture_capital  Wall_Street 
october 2009 by jerryking

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