The myth-busts, hot takes, explainers, and tools worth keeping.
◆Hot Take· 1
◆Hot Take1:26:00
Why Sequoia says 'partnership,' never 'investment' or 'deal'
Sequoia's official ethos forbids words like 'deal' or 'exit,' reflecting a philosophy of long-term company building rather than transactional capital allocation.
Sequoia's website ethos states terms like 'deal' or 'exit' are forbidden internally
The firm frames itself as a long-term partner rather than an investor seeking a return multiple
Greg McAdoo's insight that great early-stage venture is fundamentally about long-term alignment between GP, LP, and founder
“Terms like deal or exit are forbidden. And while we're sometimes called investors, that is not our frame of mind. We consider ourselves partners for…”
“doing venture extremely well and at the highest levels, early stage venture, it's all about alignment.”
#Sequoia ethos#alignment#long-term investing
✶Explainer· 2
✶Explainer25:00
National Semiconductor offshores production and sparks a price war
Charlie Sprock at National Semiconductor pioneered offshoring chip manufacturing to Asia, crashing silicon prices and enabling the PC revolution.
National Semiconductor poached talent from Fairchild including future CEO Charlie Sprock
Sprock offshored actual chip production to Asia while keeping design in California
This move massively lowered the cost of silicon, enabling the personal computer wave that followed
“That creates a huge price war in the industry and massively lowers the cost of silicon, which then ends up enabling all the things that…”
Building the firm: Sequoia's early hiring philosophy
Don deliberately hired partners with operating experience and confrontational personalities rather than conventional finance pedigree, including Gordon Russell and Pierre Lamond.
Don prioritized functional startup experience (engineering, product marketing, sales) over conventional business school credentials
He explicitly wanted partners who thought differently than him and were comfortable being publicly challenged
Pierre Lamond joined in 1981 from Fairchild/National and remained an active investing GP for decades, still investing at nearly 90 years old
“I look for people that are as far different as possible than I am, because we do things here on the basis of consent among…”
#hiring#firm building#Pierre Lamond
❝Story· 11
❝Story05:30
The Traitorous Eight and the birth of Silicon Valley
Eight engineers leave the toxic, brilliant Bill Shockley's lab in 1957 to found Fairchild Semiconductor, planting the seed of Silicon Valley.
Bill Shockley co-invented the transistor and won the 1956 Nobel Prize but was a terrible, difficult manager
Eight employees including Gordon Moore and Bob Noyce left Shockley Semiconductor in 1957 to start Fairchild Semiconductor
This group became known as the 'Traitorous Eight' and is considered the founding moment of Silicon Valley
“So 1957 in all the best ways.”
#Silicon Valley history#Fairchild Semiconductor#Shockley
❝Story08:00
How Fairchild got financed by an East Coast camera company
Unable to raise conventional financing, the Traitorous Eight ended up structured as a division of Sherman Fairchild's East Coast camera and instrument company.
Fairchild Semiconductor wasn't independent -- it was the West Coast division of Fairchild Camera and Instrument Corp on Long Island
Sherman Fairchild was the largest shareholder in IBM and agreed to finance the group via proto-VC Arthur Rock
The deal: a $1.5M loan in exchange for an option to buy all company stock for $3M
“So the way it happened, they loaned one and a half million dollars to the company in return for which they got an option to…”
Before venture capital existed as an industry, the handful of California investors met monthly for lunch and none came from a technology background.
The entire 'venture capital industry' in California was a handful of individuals meeting monthly at the Mark Hopkins Hotel
None of the early investors -- Arthur Rock, Pitch Johnson, Bill Draper, Tommy Davis -- came from a tech or startup background
Even the most talented engineers in the world (the Traitorous Eight) struggled to get financed
“That was that was it, that was the entire industry.”
#venture capital history#Arthur Rock
❝Story13:30
Don Valentine's path from Yonkers to Silicon Valley
Don Valentine's working-class Catholic upbringing, military service, and early sales career at Fairchild shaped the man who would found Sequoia.
Born 1933 in Yonkers, NY to uneducated working-class parents; attended Catholic schools and Fordham University
Disliked the military's regimentation but fell in love with California after transferring to the Navy
Joined Fairchild Semiconductor as roughly employee #40-50 and took the company's Southern California defense sales from a couple million to over $150 million in a few years
“He comes out to California and he steps off the boat and he's like, I have reached the promised land.”
“business was so good that we had more opportunities than we had engineers.”
#Don Valentine#Fairchild Semiconductor#biography
❝Story22:30
Fairchild's board rejects Don's idea -- so he invests his own money
When Fairchild's conservative East Coast board refused to invest in customer/application companies, Don started privately investing his own small checks in them.
Don proposed Fairchild invest in the application companies integrating its chips to accelerate ecosystem growth
Fairchild's board flatly rejected the idea
Don began personally investing small amounts in these startups, though he lacked enough capital to fully fund them
“Well, screw it. Like, if the board's not gonna do this, I'm just gonna start doing this on my own with my own money.”
#Don Valentine#early angel investing
❝Story27:30
How earnings calls led Don to Capital Group -- and Sequoia's founding capital
Because CEO Charlie Sprock hated public speaking, Don ended up leading National Semiconductor's earnings calls, which connected him to Capital Group -- the eventual backer of Sequoia.
Don moved to National Semiconductor as head of sales and marketing after sensing Fairchild's decline
He ended up leading National's earnings calls because CEO Charlie Sprock was terrified of public speaking
Through those calls he met Capital Group, a massive mutual fund manager that had already backed Intel and AMD, who offered to fund his private investing full-time
“If Don hadn't made this move, I'd seriously doubt that there would be a Sequoia Capital.”
Raising the first Sequoia fund: rejected by Solomon Brothers
It took Don nearly three years to raise Sequoia's first independent fund of just $3-5 million, facing rejection from institutions unfamiliar with venture as an asset class.
Don pitched Solomon Brothers, who dismissed him for not having gone to Harvard Business School
He argued this wasn't the investment business, but the 'company building business'
It took nearly three years of fundraising to close a first fund of only $3-5 million
#fundraising#first-time fund#venture capital history
❝Story53:30
The Apple investment and the painful early exit
Sequoia backed Apple in 1977 but sold its $150K stake for $6M in 1979 -- before the IPO -- to satisfy LP tax needs, missing out on massive future upside.
Don knew Steve Jobs from Atari but sent Mike Markkula (a former colleague) to help run the company instead of investing based on the founding team alone
Sequoia invested $150,000 in Apple's first ~$500K+ round, with the majority coming from Venrock
Two years later Sequoia sold its stake for $6 million to make a tax distribution to LPs -- a decision that pushed Sequoia to only raise from tax-exempt LPs going forward
“Two years later though, and this is this is the David's sigh there comes.”
“his quote on Steve Jobs was that he looked like Ho Chi Minh.”
#Apple#Don Valentine#Sequoia mistakes
❝Story1:05:00
Cisco: betting on 'we network networks' with an unconventional team
Don invested $2.5M for 30% of Cisco, founded by a married IT couple with no traditional founder background, because the market for routers was enormous and undefined.
Cisco was founded by Sandy Lerner and Len Bosack, a married Stanford IT couple who built the first router to send messages to each other
Don invested $2.5M for 30% of the company despite an unconventional team
Sequoia held the stock through and beyond the IPO, staying on the board into the mid-1990s
“We network networks.”
#Cisco#networking#unconventional founders
❝Story1:12:30
Michael Moritz talks his way from journalist to venture partner
Former Time magazine journalist Michael Moritz, who'd never built or worked in a company, started a VC newsletter to break into the industry and Don took a chance on him.
Moritz was a UK-born journalist who wrote a book on Apple ('The Little Kingdom') while at Time
He left journalism and started a VC newsletter specifically to break into venture capital
Don hired him despite zero operating background, a bet that led to Yahoo, Google, and many other landmark investments
“the two people that he's met in his life who are the best questioners are Mike and Steve Jobs.”
Don hands Sequoia's keys to Moritz and Leone in 1996
In a rare act for a founder, Don sat Mike Moritz and Doug Leone down in 1996 and gave them full control of Sequoia Capital.
Don told Moritz and Leone they would run the firm and decide his future role entirely
This is described as the first successful generational transfer at Sequoia and rare across the venture industry
Doug Leone later described the moment in an interview with Dan Primack at Axios
“I'm giving this firm to you.”
#succession#Doug Leone#Michael Moritz
▲Takeaway· 1
▲Takeaway1:41:00
Grading Sequoia: an A+ against public markets over 15 years
The hosts estimate Sequoia's early funds returned 50-60% IRR versus the NASDAQ's roughly 6.5x growth from 1975-1990, awarding the firm's first 15 years an A+.
NASDAQ grew about 6.5x from 1975 to 1990 with a significant drawdown in the middle
Sequoia's early funds are estimated at 50-60% IRR, far outpacing public markets even net of carried interest
Notre Dame's CIO called Sequoia the single best performing manager across their entire portfolio, all asset classes, for 30+ years
“Sequoia is the single best performing manager that they have had in their entire portfolio for the last 30 plus years.”