Sequoia Capital responds to cover story

Your cover story about Sequoia Capital that appeared in the January issue of Venture Capital Journal was greeted with chuckles in our offices. We were amused by the fact that you printed this story without any of our assistance. It also made us appear much better than we actually are. Thank you for not mentioning fiascos such as WebVan, Celion or Velio. It was charitable of you not to allude to these or the other disasters that give us perpetual night sweats.

Your story may leave readers with the impression that we have changed the way we think about our business. Far from it. We remain devoted to the idea that tiny groups of people and very small amounts of money can, to quote Steve Jobs, put a “ding in the universe”. Witness the fact that the entire YouTube company was housed in our offices for several months during which our requirements for Red Bull and Doritos rose mysteriously. We continue to have little interest in raising large amounts of money for either our funds or our companies. Our aim remains simple. We would like to be very long term shareholders in companies of merit.

Now, the following recitation may seem pedantic, but we would choose different words to describe some of our activities. You said that Sequoia Capital “put(s)” money into a company, has placed “bigger bets”, “plays in the public markets” and has “charge(d) into China”. In our parlance, “put” is roughly equivalent to “give”. We prefer to say, “invest”. Similarly, we do not “bet” (at least during working hours); we try not to “play” anywhere but we do like to “participate”; and we are trying to “build” in China rather than mimic the arrival of the Light Brigade. Finally, if anyone at Sequoia Capital used the phrase “leverage the brand”, we would suggest he seek political asylum in the steppes of Mongolia.

While we understand the impulse to assign names to columns and keep a tally of our personal activities it does not represent the way we operate or think. When Don Valentine started Sequoia Capital he consciously chose not to name the outfit Valentine Partners. Thus, no family name appears above our front door and it never will. You cannot have an enduring Partnership if you have a cult of personalities or a collection of individual portfolios. Nobody at Sequoia Capital, no matter how little hair they have, can make an investment by themselves and often the choice of who is assigned to a particular portfolio company is accidental. So your personalized investment score sheet, while appealing to gossip-hounds, has little import here. The pronoun favored at Sequoia Capital is “we” not “I”.

Your story also failed to mention one member of Sequoia Capital—Doug Leone. That omission is like forgetting to put the stars or stripes in a painting of the flag of the United States. Doug has been an indefatigable part of Sequoia Capital for twenty years. Many of our investments bear Doug’s stamp and he spent much of 2006 deeply occupied with seven brand new investments—both startups and later-stage companies. It is Doug too who has selflessly led and orchestrated our moves in China, India and our late stage business. None of these would have happened without him. If you are still wondering about Doug, just remember that he is the only person from Italy who works at Sequoia Capital.

P.S. Two other things. Fortunately we did not lose $50 million in an investment in Malibu Networks. We actually did not invest a cent in that company. We also did not invest $69 million in Flextronics Software—it was a much smaller number.

P.P.S. You are right—we strongly prefer to stay in the background.

The Members of Sequoia CapitalJanuary 2007