Don Valentine

Don Valentine, Sequoia's visionary founder, relentlessly focused on market size and cash flow, not just tech, embodying a pragmatic approach that shaped early Silicon Valley. His internal memoir, now accessible, offers crucial lessons on founder relationships, operational rigor, and the discipline required to build enduring companies from the ground up. Understanding his "market over tech" philosophy and "brutal honesty" management style is vital for anyone navigating the demanding landscape of early-stage ventures.

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Focus relentlessly on market size and the potential for disruption; technology is secondary to who *needs* the solution.

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Prioritize high gross margins and robust cash flow above all else, as they provide the essential buffer for operational missteps.

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Embrace brutal honesty and direct feedback in your dealings with founders and within your firm, as it's critical for building strong, resilient companies.

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Understand that true long-term success for a firm comes from building a sustainable culture and fostering distributed leadership, not from individual dominance.

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Value practical, on-the-ground learning from experienced operators – the "Fairchild University" approach – over theoretical business education.

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In 2019 Don Valentine the founder of Sequoia Capital passed away. early 2020, Mike Moritz, the then steward of sequoia capital wrote an internal memoir of Don Valentine. It was intended to serve as a way to memoialise the founder the storied venture firm.

I found the short 70-page book insightful. Very rarely do you get an inside view on the mind of a legend like that.

Unfortunately that book was internal and there are only pictures of the pages of that book. So i wanted a better way to read that. Converted the pictures to markdown using the power of AI. Here’s a better, readable version of that book.

Below are some key highlights and takeaways regarding Don Valentine and the founding of Sequoia Capital:

1. Investment Philosophy: Markets Over Tech

The “Socratic” Method: Influenced by his Jesuit education at Fordham, Don’s due diligence wasn’t about technical details but about aggressive questioning: “Who cares?” “Who needs it?” “So what?”
Market Size is King: Don believed you couldn’t build a large company in a small market. He focused entirely on the size of the market and the potential for a product to disrupt it, rather than the “idiosyncrasies of engineers.”
Financial Skepticism: He ignored financial projections in business plans, joking they might as well be published by “Marvel Comics.” Instead, he calculated burn rates by simply doubling the cost of the engineers.
Margins and Cash Flow: His mantra for business success was simple: High gross margins and cash flow. He believed high margins provided a “cushion for management mistakes.”

2. The “Fairchild University” Influence

Don famously said he didn’t go to business school; he “attended Fairchild.”
Fairchild Semiconductor was the progenitor of Silicon Valley. It taught Don everything he knew about speed, hiring, firing, and the dangers of East Coast management styles.
He learned that equity/stock options were essential to keeping talent, a lesson learned after watching Fairchild crumble when it failed to reward its employees.

3. Iconic Deal Stories

Atari: Sequoia’s “first” big story (actually their second investment). Don met Nolan Bushnell and saw engineers lining up at a bar to play Pong. He realized the power of the microprocessor in entertainment.
Apple: Don initially passed on Steve Jobs. He refused to back a 19-year-old with a “Ho Chi Minh beard” and no business plan. However, he introduced Jobs to Mike Markkula, who became Apple’s first backer and chairman.
Cisco: Described as Don’s “grandest accomplishment.” Sequoia bought a third of the company for $2.5 million. Don was instrumental in professionalizing the company, eventually siding with new management over the founders (Sandy Lerner and Len Bosack) to ensure the company’s survival. He famously forced them to raise prices to improve margins.

4. Management Style & “Green Ink”

The Green Pen: Don was famous for writing short, brutal notes on business plans and memos in green ink. He once circled a company’s cash balance and wrote, “6 months of cash left.”
Brutal Honesty: He was not a “back-slapper.” Praise was rare (“Well done” was the highest compliment). He was known for withering one-liners. When a founder accidentally hit him with a binder clip, Don smiled and said, “Don’t you know it isn’t a good idea to hit the source of capital?”
Anti-HR: He despised Human Resources, calling them “the destroyers of companies” and bureaucratic creators of binders.
Frugality: Sequoia’s early offices were spartan. He refused to pay for fancy furniture or filing cabinets (he believed filing was a waste of time).

5. Sequoia’s Culture and Longevity

The “Parish”: Don believed in investing locally (the “408 area code”). He wanted to be able to ride his bike to the companies he backed. He felt that going east of Denver was entering “technical oblivion.”
No “Kings”: Don ensured the firm survived him by not selling the management company to himself or taking it public. He transitioned power to the next generation without demanding a buyout, recognizing that “Kings in this business… are a pain in the ass.”
Equality: He insisted that after the first few funds, senior partners (himself, Pierre Lamond, Gordon Russell) were paid roughly the same, avoiding the ego battles that destroyed other firms.

6. Personal Quirks

The License Plate: He drove a Mercedes with the plate TAIPANV, a reference to the James Clavell novel Tai-Pan about the ruler of a powerful trading company.
Pessimism: Despite being a venture capitalist (a profession requiring optimism), Don was a natural pessimist, always preparing for the worst-case scenario.
Background: The son of a milkman and a Teamster, he paid for college in cash. He hated unions and government interference, identifying as a Libertarian who admired Ayn Rand.