On the whole we've had the incredible benefit of having been investors in a whole slew of companies over the years. And if you're an investor and you remain awake and alert to the possibilities of tomorrow, those companies inevitably wind up as lamplighters that illuminate the future.
...if you're an investor in Apple Computer, to knowing what the shortcomings were to using cassette tape as a storage mechanism for personal computers in the late 1970s, to understanding the implications of what disk drives could do for personal computers.
So Sequoia went ahead and invested in a couple of disk drive companies. And if you invest in a disk drive company, why, you're alert to the importance of the magnetic heads inside a drive company, so you invest in those. And if you're an investor in a PC company and disk drive company, you knew you had to have software running on top of it, so you went off and invested in a software company like Electronic Arts. And once you had your PC software enabled all over the place, you kind of understood that you needed to connect the computers, so you invested in an Ethernet company like 3Com. 3Com in turn led to Cisco.
So all we're trying to do, in a way, is stay awake. Staying awake is probably the secret in the venture capital business. That's all you need to do, to be fortunate enough to be an investor in a company like Google—stay awake and inevitably it will illuminate the new market horizons and segments that are opening up. I think that's all we've done for 25 or 30 years, we just stayed awake.
Sequoia's investment in Yahoo was the "lamptlighter" to the Google investment:
Well, we had a big advantage, that Larry Page and Sergey Brin, the cofounders of Google, had originally been introduced to us by a guy called David Filo, who is one of the cofounders of Yahoo. David had liked Larry and Sergey, knew them from Stanford, was trying to help them. And maybe in 1996 or so, both of them were still working on some thesis project at Stanford and had come by and visited. We had a nice sort of inconclusive meeting and they disappeared and we didn't hear anything more for a couple of years. Then word got around that they were thinking about starting a company.
The Yahoo guys were very encouraging, thinking that it would be beneficial to everybody if we were to become investors in Google, because search, and having a healthy panoply of different search vendors, was a very important thing for Yahoo. Yahoo had used AltaVista, Yahoo had used OpenText, they'd used Inktomi. They were interested in having a really fertile field of healthy suppliers from which to pick. And it was pretty obvious, too, even a few years ago, that along with mail, finding stuff on the Internet—which was part of the original policy of the Yahoo investment that we made—was going to be an ever more important part of the business.
So the Yahoo investment acted as a lamplighter. David and Jerry were extremely helpful and supportive and encouraging us to become partners with Larry and Sergey, and one thing led to another.
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