David Rosenthal: evaluation

Transcript context

…Which is basically, by today's standards, saying it has to be a unicorn, because in general, an early stage, call it a Series A investor is going to get diluted to around 10% ownership by the time there's an exit. It’s sort of the finger in the air way you would think about this stuff. Sequoia’s had some examples where they've bought up more, think of Dropbox, and there's also examples that we're about to go into where the terms were much different and you didn't just by 15%-20% of a company, you bought much more in these early days. These companies, most of them weren't raising multiple rounds. Sequoia was financing, that was the only private capital that they're raising, and then they were achieving profitability and going public. But still, if you think about it today, people talk about, “Oh, VC investing. You got under 8X-10X returns. ” Even from day one, Don’s underwriting to 20X plus returns. And still to this day, I think one of the things that Sequoia is really known for is they will only attack markets that truly have the potential to be large like $1 billion market is not enough for them. You need a multibillion dollar, ideally 10 plus billion dollar market, because again, they're aiming for each of their investments to make 20X plus. I love this. The final item on the checklist for Don’s criteria for investing is, must be positively responsive to our active participation, which is great. Obviously, Don has developed quite a reputation as we talked about with Drip on the EA episode. Being very active and being very [...], not only governance, but influencing management of the companies.…

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