Ben Gilbert: belief

Transcript context

…Exactly. Well, I think of course they're going to relate it and like all investing, it is early stage investing. It is about both the market and the team. I think this is the key. The market is the important thing, but you need a team. This gets back to Don’s last point on this checklist of must be receptive to our active participation. You need a team that's going to be focused and able to quickly get the right solution into the market. He has this really great quote that I think encapsulates this. “Our view has always been preferably, give us a big technical problem, give us a big market when that technical problem is solved, so we can sell lots and lots and lots of stuff. Do I like to do that with terrific people? Sure. Are we willing to invest in companies that don't have them? Sure. You can augment management. You can help them with more people that are highly qualified. We invest in the size and the dynamics of the market. I don't care of Genghis Khan is running the company. We’ll give Genghis Khan some help. Give me a giant market always.” Steve Jobs is going to come up in a minute here, but I think his point about Genghis Khan is that Genghis Khan may be Genghis Khan, but he was focused on winning, speed, and conquering. That's what they're looking for. And to just beat this metaphor to death, Genghis Khan also has weaknesses, and therefore must have a team that surrounds and compliments. I think Don has some quote, I don't have it exactly, but about how the most critical thing for an entrepreneur when listening to these questions, what you're listening to is really this self-awareness of what they're good at and what they're not, and exactly point number six, how receptive they're going to be to being helped with those weaknesses. Yeah. Think back to this moment in time. The people that were starting these companies were engineers. They were scientists by and large, and Don’s super power which he was able to augment these companies and these teams with folks like himself who are able to do sales and marketing, and go to market, and then Sequoia could help augment with finance, accounting, and everything around that, and the outsourcing of all that. What he couldn't have was folks who thought they knew everything. What actually did they end up investing in once they closed the Sequoia Capital fund in 1975? It turns out, Don makes its first investment in indeed quite a giant market enabled by semiconductors, but a little off the beaten path and certainly different than the defense contractors that he started his career selling to, and that was Atari. We're going to talk much more about Atari later in the season here on Acquired. It was the very first independent Sequoia Capital investment. Don invests $600,000 in the company in 1975. The very next year, the company ends up getting acquired by Warner communication for $28 million and Sequoia makes a quick 4X return which is great IRR, but does fall short of the 20X that Don is hoping to underwrite to.…

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