If you’re trying to raise capital and you’ve never heard the name Don Valentine, you’ve got some homework to do. Although he passed away in 2019, he’s still known as the “grandfather of Silicon Valley,” which is perfectly fitting considering he founded Sequoia Capital and financed many of the largest tech companies in the world – think Apple, Cisco and Google (no big deal, ha).
There’s a great video of Mr. Valentine lecturing to a group of Stanford graduate students about his experience in the venture capital industry. The whole presentation is about an hour long (highly recommend listening all the way through!), but I want to focus on the first 5 minutes.
The VC Legend explains how he helped recruit and train new employees at the firm. and He would often ask them, “why do you think we’re successful at Sequoia?”
Side bar – can you imagine Don Valentine asking you something like that?! I’m sweating just thinking about it.
Anyways, he details many of the typical assumptions from the young and eager analysts that Sequoia invested in the best and brightest entrepreneurs, hence their high returns and overall success. Makes sense, right?
Wrong.
The real answer to Sequoia’s success lies not in exceptional founders (although important), but rather their focus on targeting big markets. In Don’s words, “Sequoia’s objective was to build big companies. If you don’t attack a big market, it’s highly unlikely you’re going to build a big company.”
I hop on and off Zoom calls all day long with terrific founders all over the world. As I’m sure you can imagine, one of my first questions to them has always been, “how have you thought about market size?” My rule of thumb is that if the addressable market doesn’t start with a ‘B’, it’s not a good fit for venture.
So what does all of this mean for you? Don’t be afraid to go after a massive space with a sizable problem. Spend an inordinate amount of time considering all of the different applications of your product. Think of the number of people or businesses you could impact. Consider how life will be 5, 10, or even 20 years from now. Will you be able to expand your reach to a much larger market? How will the industry you’re addressing continue to innovate? The more credible data you can collect coupled with first-hand knowledge, the better. Go big or go home.
When you have a minute to come up for air, have a laugh and remember these wise words from Mr. Valentine…
“I like opportunities that are addressing markets so big that even the management team can’t get in its way.” 🙂