Response to the Genius (Jim Goetz)

Image from public domain

Dear Jim,

“All of us look up to these legendary founders, and in a way, it creates a level of intimidation. But every one of them started out as an unknown underdog.”

Reply: Mark Zuckerberg. Steve Jobs. Jeff Bezos. All human beings make mistakes, but these entrepreneurial stars had special qualities from the beginning: vision, leadership, execution and a great curiosity and willingness to learn.

Like attracts to like, so world-class entrepreneurs require world-class investors. A fish simply cannot swim out of water.

“What’s really interesting to us is new categories where there is no market. There’s no TAM, there’s no SAM, and it’s all about those early beachhead customers.

Reply: It is famously said that the best way to predict the future is to invent it. Great entrepreneurs are visionaries — in fact alchemists, creating something from nothing, or as Peter Thiel says, going from zero to one.

In our work, we believe that the ability to most powerfully monetize AI will in fact be such a disruptive force - transforming markets and creating new ones.

Reinventing the IT stack is the here-and-now opportunity. So whether it’s storage, or compute, or software architectures, the post-PC delivery methodology — they’re all going to shift.

Reply: Successful Artificial intelligence implementation provides the opportunity to merge platforms that are previously thought of as discrete. The convergence of Amazon, Google and Facebook in regard to big data problems and solutions (and increasingly Microsoft, Apple, Tesla, Uber and others) indicates that innovations across platforms and industries is accelerating.

This is how I’ve described it:

“The Internet is becoming like electricity or the air, it will just be everywhere as a utility or unseen presence in the background. Wearables will put the Internet on us, nanotechnology will put the Internet in us, robotics will put the Internet next to us and the Internet of Things will embed us within the Internet all around us.

And there’s more.

VR will create an Internet of our thoughts, visions, ideas and fears. Technological implants in humans and genomic/genetic alterations will create new types of experience beyond our current understandings in an already Internet connected world.”

Enterprise vs. consumer is an extremely real distinction today, but these forces bode for the convergence of these also over time as well.

Enterprise startups — they have one competitor typically, maybe two, and those are the incumbents. They’re large, slow, flat-footed. So it’s almost blue-ocean.

Compare that to consumer: The categories that are interesting often have a couple dozen companies, and they’re well-funded. It borders on the Malthusian.

Reply to both: There is only competition through a lack of differentiation. Innovation and customer obsession led to Amazon’s dominance. “Move fast and break things” obliterated all other social networks. PageRank and AdWords contributed to Google becoming a different type of search engine.

I was raised in the Midwest, studied as an engineer, and gave up on a PhD to start my career as a rookie product manager.

Reply: There is — famously — a difference between twenty years of experience and one year of experience twenty times.

The great running backs use instinct tempered by experience to hit the hole.

Mark Zuckerberg understood that his future lay in Facebook, not Harvard.

When you correctly see the future, you can reverse engineer the process, starting with the end in mind to complete steps from the beginning.

I was raised in Maine. We’re in the Northeast but we have Midwestern values.

The common thread through Sequoia’s most legendary founders: Misfits. Unknowns. All focused on personal pain. All willing to put something out early and iterate.

Reply: Problem solvers focused on finding solutions rule the world. Self-discipline is freedom. The key is to condition oneself to look at each situation with fresh eyes and have the courage to do what is required at each step — not what worked yesterday or in accordance with how one would like the world to be.

Constant iteration and self-improvement (MVP, lean startup principles) boils down to success-oriented self esteem. All that matters is keeping one’s head down (and that involves primarily product development but also rapport with one’s true investor), innovating (which does involve also an understanding of principles and contributions in the world) and incorporating customer feedback.

Focus is key. Warren Buffett says that diversification is an average strategy employed by average people who want to be average.

How are you going to build long-term competitive barriers? We’re not comforted by patents, I can tell you that. Patents are fine, but it’s more of a defensive tactic.

Reply: Out-innovate by understanding the realistic vision, reverse engineering the steps along the way, and iterating.

Think about this: Ultimately Jeff Bezos is the moat (barrier to entry) enjoyed by Amazon and Mark Zuckerberg to Facebook. Culture scales these advantages and leverages the contributions of the entire team.

If you’re an engineer, and I was guilty of this, you love talking about technology. But as an investor it’s more about understanding how that technology or business process creates an unfair advantage.

Reply: Benefits, not features.

Repeat this any time there is this source of confusion.

It’s very easy to convince yourself that an idea is unique and compelling if you’re not intellectually honest.

Reply: Self-awareness is the master success characteristic.

Probably one in 15 entrepreneurs who walks through our doors can really convey their initial marketing position in under five minutes. If you can get to that stage, boy, are we interested.

Reply: Our AI-driven content-based Ecommerce flattens customer acquisition costs, which is the main pain point in Ecommerce (shifting Ecommerce from a low ROI industry into a high ROI one).

This is accomplished by leveraging the transition (in Ecommerce and generally) from a push to a pull technology — specifically utilizing the interest graph to capture intrinsic interest.

Thirty seconds.

It’s the details which make the model work (or not), but that’s what we do.

We get tingly when we meet with a bunch of engineers who just knocked out some fabulous code. They may not talk a lot in the meeting, but that lends a great deal of credibility.

Reply: Execution is king.

Famously, great teams defeat great ideas or even great products, because the great team will iterate and find the great product or business model, but the great product cannot build the great team.

You see these stacked founding teams and — where are the times-ten programmers? Where’s that wonderful architect? Where’s that individual with the fabulous sense of simplicity and market expertise?

Reply: Industries are transformed by great gifts mastered into disruptive excellence.

Pedigree is not important at Sequoia. It’s not part of our criteria.

Reply: “Be so good that they can’t ignore you” — Steve Martin

I loved the years I had as an entrepreneur.

Reply: As Gary Vaynerchuk says so well — and it is the same for me — being an entrepreneur is his oxygen.

He also says that being an entrepreneur is like being continually hit in the face (eating broken glass is another metaphor used to describe entrepreneurs). It is very true that resiliency (along with self-awareness noted earlier) is the differentiator between success and failure in entrepreneurs.

It’s that team dynamic. The cadence of the weekly, the monthly, the quarterly successes. Competing in the marketplace. Taking the hill together.

Reply: Leaders inspire GREATNESS.

Famously, “there is no I in team” (but there is individual empowerment merged with the team’s success).