David Rosenthal: belief

Transcript context

…I think if it had gone a lot longer, then Facebook would have had to pay a lot more in the dozens of billions of dollars to acquire purely because there is a very, very high user account social network that is a threat to them. However, do I think that Instagram would develop the business that they have today that is billions of dollars of revenue flowing through them by advertisers? Maybe, but that's not a sure thing. A lot of that is because of what Facebook had done funneling all their existing advertisers there. I think that's true and certainly they helped accelerate it more quickly, but at a minimum, Instagram should have waited longer and then had a WhatsApp-like acquisition at a bare minimum. I get it. It's easy to armchair quarterback this now and hard to be sitting in the seat of Kevin and Michael, and they have a $1 billion offer in front of them, but this is the value. Sequoia has learned these lessons over so many decades and seeing it time and time again. The other lesson that they take from Apple is what Don and Sequoia call an aircraft carrier approach that they start taking to these big markets. Don realizes that Apple has created this PC market. It’s not just going to be Apple it's going to succeed in the PC market, they're going to usher in all of these other enabling companies that you need around the PC. Apple is the aircraft carrier but you need all the destroyers, the ships around it, all the planes, all the ships, and all that stuff. They started financing component companies around the PC industry. Apple and Don helped start a company called Tandon Corporation that makes disk drives. They are the first investors in Tandon. Tandon goes public after a couple years, reaches a market cap of over $1.5 billion. This is in the early 80s. A company called Printronix that makes printers, a company called Priam that makes disk drives, a company called Dyson that makes magnetic disks for the disk drives. All told I believe Sequoia ends up making about 15 investments in this aircraft carrier strategy around Apple and it drives much of their returns in these early funds. Some other notable investments that they make during the 70s and 80s, in 1981 they invested in a company called LSI Logic which makes, again around PC and computing. They make storage and networking products. In 1983, just two years later, LSI goes public in the largest IPO on the NASDAQ in history at that point, raising $153 million in the IPO which Don made $153 million. That’s a solid Softbank size around today. This is two years after Sequoia invested in the company. Yeah. Inflation adjusted, that's in the $500,000-$1 billion range and the way to think about how much they raised.…

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