Midas Speaks: Sequoia’s Don Valentine at Stanford GSB

“We love recessions. Best time to invest in our experience.”

That’s Don Valentine, founder of Sequoia Capital and perhaps the greatest VC of all time. Today, I dug into a fascinating talk he gave in 2010 at the Stanford Graduate School of Business (GSB).

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Valentine breaks down Sequoia’s investment approach, which heavily emphasizes markets.

Sequoia only wants to bet on companies taking on the biggest markets. If the startup isn’t solving a huge problem, the odds of an outlier success are slim.

“If you don’t attack a big market, it’s highly unlikely you’re ever going to build a big company.”

Don Valentine

Valentine is wise to emphasize the size of the opportunity. After all, a tiny number of highly successful startups drive almost all the returns in venture capital.

I’m going to focus more on market size, based on Valentine’s advice.

An outstanding founder with a rapidly growing company is great. But if she doesn’t have a giant market to grow into, the company can only go so far.

Once Valentine finds a market he likes, he often makes numerous investments in that area.

He invested in Apple, which helped create the PC market. Then he invested in other companies to produce memory for the PC’s, peripherals, etc.

Presciently, Valentine mentions the opportunities in the mobile market in his talk. This was in 2010, just 3 years after the launch of the first iPhone.

Sure enough, Sequoia made a killing betting on the iPhone ecosystem. The firm invested early in Instagram, WhatsApp and others, netting billions.

At one point, Valentine shows a slide of some of the greatest founders he’s invested in.

What strikes me is how happy many of them look. They’re beaming, ear to ear.

This is the look of people who are building what they dream of and reaching their full potential.

Now, I’m off to find some entrepreneurs like that!

More on tech:

Managing a Crisis the Sequoia Way

John Doerr’s Biggest Mistake

The Power Law (Part One)

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