David Cummings on Startups

Sequoia – We Don’t Choose People, We Choose Markets

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David Cummings

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The Stanford Graduate School of Business has a great series of technology startup videos on YouTube with talks from a number of famous people. Recently, I watched Don Valentine, the founder of Sequoia, tell his story and share his philosophies: A Dream and a Way to Solve a Problem Are the Path to Sequoia Capital’s Door.

My biggest takeaway from the video is that Sequoia chooses markets, not people. Of course, the people that they back are super smart, but it’s the size and scope of the market opportunity they’re most interested in. When you hear him talk of their investments in Apple, Yahoo, Google, Zappos, etc it’s amazing to think of how they analyzed the markets and made bets that turned out even more impressive than imaginable. Sequoia’s goal is to build big businesses, and that’s only possible with big markets.

What else? What are your thoughts on choosing markets, not people?

Bonus: Don makes a great point that he doesn’t accept questions of more than 20 words from the audience — he wants concise questions and not speeches.

Comments

4 responses to “Sequoia – We Don’t Choose People, We Choose Markets”

  1. Arif Avatar
    Arif

    Choosing market is strategic but choosing people is branding yourself! & for long term growth

    Reply
  2. bebraw Avatar
    bebraw

    This is a very valid point for smaller businesses as well. And in fact it happens to be one of the core points of Customer Development. In that case it is more about is there an opportunity at all rather than size of it.

    People make a difference. You can definitely lose a great opportunity with a couple of bad choices on this department. Team dynamics is an entire problem itself.

    From investment point of view Sequioia’s approach sounds very valid. I agree with the premise that it is a good idea to start with the market regardless of what you are doing.

    Reply
  3. Steve Beshara Avatar
    Steve Beshara

    This is a simple and fundamental point for anyone in start ups, the size of the market opportunity is directly proportionate to the size of any investors interest.

    Another excellent movie to watch that amplifies this point – “Something Ventured”. In the movie infamous investor Perkins states, “we would always look to the last page of the proforma and see if the numbers were BIG enough to warrant our interest.”

    Pick markets that you are passionate about. Yes. But to win for you and your investors, pick markets that have BIG opportunities.

    Reply
  4. Jeff Anop Avatar
    Jeff Anop

    I fully believe in this concept as well. I think the killer combination is great people(with some market knowledge) + market that is growing(so you have some wind at your back) = best chance for success.

    This concept can even be applied to entreprenuers that are focused on having a small or mid-sized company. You can focus on capturing new market share and the inflow of customers as opposed to market share swapping with existing competitors.

    Reply

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