Chapter 7-10
7 Growth Investing Softbank & Benchmark
When Moritz had first arrived at Sequoia, some of his colleagues had been skeptical. He was an Oxford history graduate, a magazine journalist, the author of two business books. He had no engineering or managerial background. Don Valentine had overruled these objections because he had seen in Moritz a versatile learner, and he preferred to hire a hungry upstart than someone who was coasting on experience. Now, serendipitously, Moritz’s unconventional background was about to prove its value.
Von老大还是慧眼，把没有工程和管理背景的记者、历史专业莫里茨招进了红杉，看到其快速学习能力、饥渴的内驱力。
Moritz could not recall a precedent for what Yahoo was intending: to raise money from venture capitalists while giving its product away for free. But a few seconds of lateral thinking told him that Yahoo’s scheme could work.
In April 1995, Sequoia duly invested $975,000 in Yahoo, taking 32 percent of its equity.The innovation of backing companies that charged little or nothing for products spread through the venture-capital business like wildfire. Startups came to be assessed not according to this year’s revenues or even next year’s, but rather according to their momentum, traction, audience, or brand—things that could, in theory at least, be monetized in the future.”
Yahoo的模式历史上从未有过，但莫里茨认为ok。看似简单，不是赌，是需要历史洞见的。估值体系从收入利润切换到趋势、点击量就是这个时候开始的，泡沫就这样生成了。
The dirty secret was that Yahoo had no choice but to build a brand, because it was not much of a technology company. It boasted no patents and not much of an engineering edge: its directory was put together by surfing the web and classifying sites, and much of the work was done manually. As a result, it presented a negative illustration of Tom Perkins’s dictum: because Yahoo entailed no technological risk, it involved a huge amount of market risk, because no technological moat protected it from competitors. What’s more, competition was bound to be especially ferocious because of the winner-takes-all logic of Yahoo’s business.
Yahoo的模式在投资人眼里还是清醒的，没有什么技术壁垒，市场风险巨大，只能去烧钱建立品牌。这种模式在国内很多人还认为是高科技，其实是典型的误判。只是模式竞争、市场竞争，不涉及技术竞争。
Anticipating the dynamics of future internet companies, a precarious circular logic took hold: the key to Yahoo’s growth was that it had to keep growing. As a result, Yahoo’s early success in generating revenues did not translate into profits. Every dollar of advertising income had to be plowed back into marketing expenditures to keep expanding the business. Indeed, recycling advertising income soon proved not to be enough. Eight months after securing $1 million from Sequoia, Yahoo set out to raise another round of capital.
循环逻辑开始成立，增长的关键是保持增值、保持领先，所以所有的收入都无法成为利润，只能不断地用于维持成长。这就是烧钱。
Traditional venture capitalists, observing a cash-burning business with no technological moat and nothing more substantial than a brand, might have refused Yahoo the lifeline that it needed. But by late 1995, tradition was passé.
这也是个范式转换的时刻，过去保守的投资体系正面临考验。今天实际又切换回来了。
Son invited Filo and Yang to say what they thought Yahoo might be worth. The founders tentatively suggested a valuation of $40 million, up from just $3 million when Sequoia had invested eight months earlier. Son said yes immediately, without hesitating. He was even readier to pay up than John Doerr at Kleiner Perkins.
Son arrived at Yahoo’s office looking as slight and uncommanding as ever. But he brought a bazooka. In a bid without precedent in the history of the Valley, he proposed to invest fully $100 million in Yahoo. In return he wanted an additional 30 percent of the company. Son’s bid implied that Yahoo’s value had shot up eight times since his investment four months earlier.
Asking Son to excuse them, the Yahoo team went off to speak privately among themselves. When they were alone, Moritz counseled the two founders that Son’s threat to back a rival had to be taken seriously. No Silicon Valley veteran would turn against a startup in which he had already invested: venture capital was a repeat game, and in order to earn trust, you had to honor your relationships. But Son was an interloper, ignorant of the unwritten rules. Silicon Valley convention was not going to constrain him.
孙正义在yahoo上的勇猛几乎改变了历史。Yahoo的估值从A到B轮8个月翻了13倍，Son没讲价直接ok；不到一年又提出10x的价格下重注，不服不行。为了确保投资成功，甚至威胁公司说你不要我就支持竞争对手，完全不是硅谷的套路，但管用了。也开启了一个成长期投资的新类别。
On April 12, 1996, Yahoo went public. Son had made an instant profit of more than $150 million. Years later, Moritz recalled the psychological impact of this spectacle. Until the Yahoo flotation, no single deal had earned Sequoia more than $100 million, the record set by Don Valentine’s bet on Cisco. But by buying into Yahoo on the eve of its flotation, Son had blown past the $100 million mark in a matter of weeks, and without any of the heartache of building a management team from nothing. The business of venture capital was forever altered. The alteration took two forms, the first flashy and obvious, the second slow-burning and subtle. The obvious transformation was in Son himself: he was famous now not just in Japan but everywhere. Leveraging his new reputation as a digital Midas, he followed the Yahoo bonanza with a dizzying investment blitz, barely pausing to sort gems from rubbish. To borrow the language of hedge funds, he didn’t care about alpha—the reward a skilled investor earns by selecting the right stock. He cared only about beta—the profits to be had by just being in the market. One young investor who managed Son’s funds recalls betting on at least 250 internet startups between 1996 and 2000, meaning that he had kept up an insane rate of around one per week, ten or maybe even twenty times as many as a normal venture operator.
Son raised a new kind of venture fund: a $1 billion war chest exclusively for late-stage stakes, or what became known as “growth investing.”
Yahoo项目上Son一下子赚了1.5亿，这是过往都完全没有过的，给红杉以巨大的心理冲击。关键是Son一点投后都没有！Son还利用这个项目的名气疯狂投资，每周1个的速度投资，收割市场，不追求alpha，只追求beta！募集了10亿美元的成长基金，有这段故事之后再看愿景基金的事情，就毫不意外了。
As we shall see presently, growth investing became a Silicon Valley staple from around 2009, and venture partnerships transformed “themselves from hyper-local businesses to more globally minded operations. It all followed logically from the shift that Yahoo marked. Branded internet companies faced an imperative to grow, creating an opportunity for investors to provide growth capital. Branded internet companies were not built on cutting-edge technology, so they could flourish far away from the tech hub in Silicon Valley. As often happens in finance, the player who first sees a shift in the landscape, and who has the ready capital to match the novel need, can make bumper profits before competitors wake up. By one reckoning, Son expanded his personal fortune by $15 billion between 1996 and 2000.
Moritz came to see the Yahoo experience as a tipping point for Sequoia. It coincided with Don Valentine’s retirement and Moritz’s emergence.
成长投资的开启，红杉也赶上Von退休，开始转向。
In the case of Cisco, he reminded them, the biggest gains had come after a few years: at its flotation in 1990, Cisco had been worth $224 million; by 1994, it had shot up to $10 billion. By winning this argument and cementing his authority within the firm, Moritz saw to it that the last distribution of Yahoo was put off until November 1999, when the company was trading at $182 per share, fully fourteen times more than the price at the flotation. Thanks to masterful procrastination, Yahoo generated more gains for Sequoia than all its prior investments, combined, and more than ten times as much as Sequoia had earned from Cisco. The secret, Moritz said laconically, “was just learning to be a little patient.”
退出是门艺术。红杉在yahoo上赚了超过Cisco项目的10x利润，市场向上的时候还是要有点耐心，但也要跑得快，否则就出不来了。
Benchmark’s strength was local rather than global: it was the anti-Softbank. Further, the Benchmark model was about being nimble rather than large: the partnership made a virtue of the deliberately small size of its first fund, which weighed in at $85 million, or less than a single check that Son might write to one company. “God is not on the side of the big arsenals, but on the side of those who shoot best,” Benchmark’s prospectus insisted. Benchmark’s founding partners believed that by staying lean and focused, they had developed a “fundamentally better architecture.” The small fund size meant that they would carefully evaluate each deal: they aimed for alpha, not beta. Small would also ensure that each partner sat on just a handful of boards, and so added value to each portfolio company. Small would promote camaraderie among the four partners: the venture industry was masculine and monocultural, but the Benchmark team exhibited an especially intense case of jocular male uniformity. Finally, small was emphatically not a sign of weakness. Benchmark could have raised more capital if it had wanted to, and to underscore their strength, the Benchmark guys announced that they would keep an aggressive share of their fund’s profits, more than the 20 percent industry standard.Benchmark also charged a relatively low management fee on the capital in its care.
Benchmark是和孙正义截然相反的做法，追求alpha，小而精，要给企业带来价值，而不是拿市场收益。这种方法可能只是市场高涨的时候表现差一点，长期看还是比较好的。VC还是艺术，规模化未必好。
Kagle was happy to back companies that had no connection to either. Before co-founding Benchmark, he had tried to persuade his previous partnership to invest in a Seattle-based coffee chain called Starbucks. After the launch of Benchmark, Kagle oscillated between technology bets and consumer ventures. Unlike Accel-type specialists, he refused to stay in a single industry lane; if there was a theme to his approach, it was that thing about humanity. In 1997, Kagle chanced upon a hybrid that combined all his interests. It was a technology firm that was simultaneously a consumer firm. It involved the human element, big-time. It was also the first illustration of what VCs would later call ownable network effects. Kagle offered to invest $6.7 million in eBay, valuing the company at about $20 million.
Kagle关注技术和消费，核心在人性，这个很有意思，这让他发现了“可持有的网络效应”，并投了ebay。
If Omidyar’s goal had been solely to get rich, he might have rejected Kagle. He had received a rival offer from a newspaper chain that proposed to buy him out for $50 million. But Omidyar had come to like Kagle as much as he had liked Dunlevie, and, rather like the Yahoo founders, he went with the venture guy who seemed to understand him. When the investment was concluded and Benchmark wired over the funds, Omidyar left them in the bank untouched. He wanted Kagle’s connections and counsel. He didn’t need his capital.
In September 1998, eBay duly went public, pricing its shares at $18. At the close of the first day of trading, they hit $47. Then, after some unnerving bumps, they hit $73 in late October. It was a more dramatic upward spiral even than Yahoo’s. Hype or not, Benchmark was making venture history. As far as anybody knew, Sequoia’s Yahoo deal and Kleiner’s investment in a cable startup called @Home were the biggest venture home runs to date, each delivering a profit for the VCs of between $600 million and $700 million. But Benchmark was on track to make well over $1 billion from eBay.
Later that month, Benchmark finally distributed part of its winnings. eBay’s share price gave it a market value of $21 billion; Benchmark’s stake was worth an astonishing $5.1 billion. This bonanza not only dwarfed the records at Sequoia and Kleiner; it far exceeded even Son’s biggest wins, and it had been achieved by risking a mere $6.7 million worth of capital. Benchmark’s cottage-industry style of venture capital suddenly looked inspired.
Ebay的创始人不需要钱，有人5000w收他都没动心，拿到投资人的钱也分文未动，人格魅力是关键。ebay给Benchmark带来了超过50亿美元的回报, 近1000x，创下了硅谷的新纪录，也证明了方法论！
In the summer of 1999, Dave Beirne broached the issue at a partners’ meeting. “I think we should raise a billion dollars. Seriously.“Rachleff sympathized. “SoftBank is raising more money,” he noted. “If we’re not prepared to fight, we’re going to get our clocks cleaned. You don’t go on the lacrosse field without a fuckin’ stick,” Beirne carried on. “You’ll get killed.” Kagle wasn’t sure. A big fund could cause trouble: if you gave founders too much money, they would lose focus, attempt too many things, and the resources would be wasted. “We might overcapitalize companies,” he said. “I don’t want to follow everyone else into big-check-dom.”
In the end, Benchmark went ahead and raised $1 billion for its 1999 fund, more than ten times as much as it had accepted for its first fund four years earlier. The partnership also experimented unsuccessfully with offices in London and Israel, and attempted a Son-style pre-IPO bet of $19 million on an e-tailer called 1-800-Flowers.com, quickly losing money. But while Benchmark could close its foreign satellites and give up on pre-IPO wagers, the dilemma about sizing persisted.
Bechmark最终也募集了10亿美元的大基金，没抵挡住诱惑，还设了外地办公室，结果是惨败。最终不得不放弃了海外基金、pre-IPO策略。是泡沫破裂的原因，也有其内在因素。
8 Google, Conway
In 1998, the year that Bechtolsheim backed Google, a prolific angel named Ron Conway went so far as to raise a $30 million fund to amplify his personal investing, and the “institutional angel,” or “super angel,” became the newest cylinder in the Valley’s startup engine
Conway开创了机构天使的新类别。
While the Googlers avoided the VCs, the venture business was booming. In 1998 venture capitalists raised the record sum of $30 billion, triple the commitments they received in 1995, the year that Son met Yahoo. In 1999, the boom turned wild: venture partnerships filled their war chests with $56 billion. The number of venture partnerships in the United States hit 750, up from 400 a decade earlier.
In ordinary times, the bubbly bias of the venture crowd is balanced by the stock market. VCs know that when startups seek to go public, they will face a tougher audience, less willing to pay up for dreams, freer to denounce a company or bet that its stock will tumble. This prospect disciplines venture behavior: it deters VCs from bidding private valuations up so high that public exits won’t be profitable. But in the late 1990s, the stock market stopped performing this disciplinary function.
90年代的股市疯狂带来了VC募资和机构的狂涨。560亿美元的募资额和750家机构比照国内当下的数量，显得微不足道。可见国内的过剩程度了。
The greatest mark of Doerr’s prowess was his investment in Amazon. In 1996, Doerr had snagged 13 percent of Bezos’s startup for $8 million; by the spring of 1999, Amazon was a public company with a valuation of more than $20 billion. But far from chasing after Amazon, Doerr himself became the object of a chase: his reputation was such that Amazon came after him. At first, Doerr was too busy to notice; the pager and the cell phone on his belt buzzed constantly. Eventually, after a CEO at a Kleiner portfolio company persuaded him to have dinner with Amazon’s marketing chief, the penny dropped: Doerr flew to Seattle, bonded instantly with Jeff Bezos, and stole the deal from under General Atlantic’s nose, even while offering a less generous valuation. Asked why he had accepted the lower bid, Bezos explained, Kleiner and John are the gravitational center of a huge piece of the Internet world. Being with them is like being on prime real estate.
亚马逊的投资让Doerr3年就翻了N倍，Doerr成了被追逐的对象，轻松偷走GA的交易。
Googlers did not strain themselves too hard: they showed up to see Doerr with a PowerPoint presentation consisting of just seventeen slides, three of which displayed cartoons and only two of which had actual numbers. Primed by Shriram, they had boiled their mission statement down to just eight words: “We deliver the world’s information in one click”.
Doerr loved nothing more than a bold, high-concept presentation. He was an engineer by background; he was a dreamer by vocation. Besides, Google had used the time afforded by the angel financing to develop traction: it was now handling half a million searches daily. Doerr privately calculated that if Google muscled its way into the top tier of search firms, it could attain a market capitalization of as much as $1 billion. Seeking to gauge the founders’ ambition, Doerr asked, “How big do you think this could be?”“Ten billion,” Page answered. “You mean market cap, right?”“No, I don’t mean market cap. I mean revenue,” Page declared confidently. He pulled out a laptop and demonstrated how much faster and more relevant Google’s search results were compared with those of its rivals. Doerr was flabbergasted and delighted. Revenue of $10 billion implied a market capitalization of at least $100 billion. This was fully one hundred times more than Doerr’s estimate of Google’s potential; it implied a company as big as Microsoft and much bigger than Amazon.
Doerr在Google上故事还是蛮有意思的，原来以为10亿潜力的项目创始人认为有千亿潜力。
By now, Moritz and Doerr were both hooked on the idea of investing in Google. But their logic was subtly distinct. In the unscientific world of venture, when two investors share an enthusiasm for the same deal, it’s not necessarily for the same reasons. For Doerr, an engineer who backed engineers, Google’s technical edge was the main attraction. Plenty of skeptics argued that with eighteen rivals jostling for position, search would be a low-margin commodity business. But Doerr had enough faith in technological advance to believe that a latecomer with a better algorithm could stand out from its competitors.
Using their angel investors as intermediaries, they let it be known that they would sell 12.5 percent of their equity to Kleiner and the same amount to Sequoia. If the VCs refused, Google would sell nothing to either of them. Kleiner and Sequoia huffed and puffed: neither Amazon nor Yahoo had treated them like this. But amid the euphoria of the bull market, it was evident that if they declined to come to terms, somebody else would provide Google with the capital it needed.
On June 7, 1999, the three parties signed a deal. For Doerr, the $12 million investment was the biggest bet of his career. Thanks to the emergence of angel investors, and thanks to the sheer amount of money that had flooded into the business, the balance of power between entrepreneurs and VCs had shifted.
Google是Doerr的最大一笔投资，也就1200w。VC和企业家的关系发生了变化，不再那么听VC的了，主要还是VC多了，机构天使、Angel也多了，竞争加剧了。创始人变得更加tough。
At the time of the venture financing, Brin and Page had agreed that a new CEO should be hired at an unspecified time in the future.A few months later, they informed Doerr, “We’ve changed our minds. You know, we actually think we can run the company between the two of us.”Doerr hustled for an alternative. He sometimes described himself as a “glorified recruiter.” “We’re not investing in business plans, we’re not investing in discounted cash flows, it’s the people,” he insisted, revealing how the essence of the venture craft remained unchanged since the days of Arthur Rock and Tommy Davis.
With the recruitment of Schmidt in 2001, the Googlers taught the venture-capital tribe the second of three lessons. The first had concerned the pricing of the deal: as Doerr had said, it was the most Kleiner had ever paid for a modest share in a startup. The second concerned the revolt against the Qume model: Schmidt was hired only after a long period of foot-dragging, and even then he functioned as just one voice in the triumvirate that led the company. The third lesson came in 2004, as Google prepared to go public. Defying Valley tradition, and ignoring protests from Doerr and Moritz, Brin and Page insisted on maintaining their power even after they sold shares to the public. Following a precedent set mainly by family-owned media firms, they decreed that Google would issue two classes of shares. The first, to be held by the founders and the early investors, conferred ten votes on big company decisions. The second, to be held by outside stock market investors, conferred only one vote. Collectively, outside investors would receive shares bestowing only a fifth of all votes. Insiders, chief among them Brin and Page, would retain control over the company.
Google也是VC史上很特别的案例，不在接受VC派出大CEO，而是小CEO，服从于创始人，改变了Qume公式；也创新了股权结构，给创始人超强的控制权。
But whereas Google’s experimental pricing mechanism did not become the model for later Valley IPOs, the dual-class, ten-votes-versus-one share structure was copied by companies such as Facebook. Google’s extraordinary growth after its flotation—over the next three years, the stock price quintupled—made the VCs’ objections to the dual-class structure look irrelevant. Evidently, investors were only too delighted to buy so-called second-class stock.
双重股票结构居然是个巧合，也是双方的选择，发明也没多久。Google创新了股权结构、也创新了IPO定价机制，但只有这个股权结构留下来了。
As of 2003, Sequoia was struggling to prop up a venture fund that had lost around 50 percent of its value; the partners felt honor-bound to plow their fees back into the pot to eke out a return of 1.3x.The equivalent Kleiner Perkins fund performed even worse, never making it into the black. Masayoshi Son, who had briefly become the richest person in the world, lost more than 90 percent of his fortune. At the peak in 2000, new capital commitments to VC firms had hit $104 billion. By 2002, they were down to around $9 billion.
泡沫破裂给VC的冲击是巨大的，红杉的基金一度跌了50%，2003年还是回到1.3x，相当不易。KP就只能亏了这期了。Son损失90%的身价。VC募资高峰从1000亿跌到了90亿，跌去90%。相比国内的这几波泡沫破裂，居然没有这么严重。
But as animal spirits roared back to life, the venture industry woke up to the echoes and extensions of the Brin-Page challenge. Young entrepreneurs no longer deferred to experienced investors. In fact, they often regarded them contemptuously.
Google之后的年轻人已经变了，一方面软件业务不再需要大量投资了，另一方面也有了各种Angel，不再接纳传统VC的Hands-on指导了。VC确实也到了改朝换代的时候了。
9 Paypal Peter Thiel & YC
Toward the end of 2004, Sequoia’s investment team assembled for an intriguing meeting. Roelof Botha, a thirty-one-year-old partner, had arranged for a visit from an even younger entrepreneur, a Harvard sophomore named Mark Zuckerberg. These days, Sequoia realized, startup founders could be very young; this Zuckerberg was only twenty.
Roelof 31岁出道时就很不错，直接拜访了Facebook。
Zuckerberg’s pajama prank marked a watershed for venture capital. By the time of his stunt, in late 2004, Google had gone public, and other young entrepreneurs were playing hard to get, following the Brin-Page playbook.
Zuck穿着睡衣去红杉标志着一个VC史上的分水岭。VC不再是一级市场里的单一玩家了，更早期的天使投资人出现了，后面的成长期投资也即将出现，天平在向创始人方向倾斜了。
He wanted to raise capital from angels. His first port of call was an entrepreneur named Reid Hoffman, who had coached him through the Plaxo denouement. Hoffman declined to lead an investment in Facebook; he had himself founded a social network called LinkedIn, and there might be some rivalry. So Hoffman put Parker in touch with a Stanford friend named Peter Thiel, the co-founder of an online payments company called PayPal. Pretty soon, Thiel agreed to kick in $500,000 in exchange for 10.2 percent of the firm, with Hoffman providing a further $38,000
FB的天使起步就是500w的报价。创始人已经不想要VC了，天使的钱少点，股份诉求也少，还不干预公司管理，确实是有优势的。特别是企业家背景的天使投资人，更好理解创始人的想法。
Given the currents of the times, this new cluster of entrepreneur-angels was naturally skeptical of the traditional venture community. The Googlers had shown how to stand up to VCs, and Paul Graham had emphasized the tensions between ever larger venture funds and the limited need for capital at software startups. There was a generational factor at work, too. The extraordinary VC profits of the 1990s had encouraged senior venture partners to stay on, and because the boom made everyone look good, nobody was forced into retirement.
企业家下场搞天使也有其特别的时代背景，一是VC基金越来越大，但软件类企业需要的启动资金越来越少，这个不平衡在加剧；二是互联网泡沫让基金业绩表现都挺好，VC的老人都不愿意退下来，新人只能重新搞一摊的。我猜的可能因素还有创始人和VC老人之间的年龄代沟也在拉大，不好沟通了。
反观国内2015年前后的天使浪潮则不太一样，仅仅是因为追逐高利润，觉得天使门槛低就进来了。
Partly by coincidence, and partly because success comes at a price, this general hostility to venture capital was concentrated on Sequoia. Sean Parker, as we have seen, had a particular resentment of Michael Moritz: Zuckerberg’s strange pajama act was Parker’s elaborate way of getting even after Plaxo. But Parker was not alone. Peter Thiel, the angel who had backed Zuckerberg, also held a grudge against Moritz.
红杉的成就也开始反噬自己了，这就是成功的代价，还好这样的事情影响没那么大。
Thiel took a second and a half to respond. Though only thirty years old, he had a grave, deliberate manner. “Well, I’d like to invest,” he said finally. Thiel promised Levchin $300,000—three times more than Bechtolsheim had risked on the Googlers. Then he told Levchin to find more capital elsewhere to launch his new company. If Thiel and Levchin had sailed onward to success, the history of Silicon Valley might have been different. But at the end of 1999, Confinity found itself battling a rival called X.com, led by an entrepreneur named Elon Musk. The two companies were close equivalents in many ways. Both had around fifty employees and 300,000 users. Both were growing fast, and for a while both had offices in the same building on University Avenue in Palo Alto. But X.com had one distinguishing advantage. Whereas Confinity had secured capital from Nokia, X.com had been anointed by Sequoia. None other than Michael Moritz had pumped $25 million into X.com, five times more than Confinity had raised.
Thiel 其实是Paypal的天使投资人了，30w相当于当年苹果天使的3倍。公司发展不错，只是遭遇了Musk作为竞争对手的X.com, Musk融了2500w，Paypal只有500w。
Musk informed the Confinity founders over dinner that if a merger were to go ahead, X.com’s shareholders should own fully 92 percent of the resulting company. That’s great, Levchin growled to himself. We’ll see you at the barricades. Thiel was less hotheaded than Levchin. “We’ll give it some thought,” he told Musk and Harris evenly. Over the next days, Thiel began to haggle. He pushed Musk until he agreed to cut the X shareholders’ share of the merged firm from 92 percent to 60 percent. On these terms, Thiel was tempted to settle. On a weekend in February 2000, Moritz showed up at the Palo Alto block where X and Confinity had offices. Finding Levchin, Moritz sat down in front of him. He leaned forward, placed his elbows on his knees, threaded his fingers together, and rested his chin on top of them. Years later, Levchin vividly remembered that Moritz had not removed his theatrical dark coat. Their faces were barely a meter from each other. Moritz told Levchin, “If you go forward with this merger, I’ll never sell a single share”—the implication being that a merged company would grow and grow forever. It was one of those classic VC call-to-greatness challenges. Levchin was suitably impressed. He dropped his objections to a sixty-forty deal, subordinating his coding pride to Moritz’s grand vision. The path to a merger was now clear. The bloodshed would be over. A day or so later, Levchin saw Musk. “This sixty-forty is too good for you,” Musk taunted him. “Just so you know, you’re getting a great deal. This merger of unequals is a steal for you guys.” Harris helped Levchin fold clothes and reconsider his decision. Ignore Musk’s sixty-forty insult, Harris pleaded; he and the X board had nothing but respect for Levchin. Indeed, to show it was sincere, X was prepared to sweeten its offer. It would do the deal at fifty-fifty. At last, Levchin swallowed his objections and the merger went forward. Musk’s gratuitous taunting of his adversary had cost him serious money.
这段合并的历史非常有趣，如果不是Thiel，估计92%-8%的合并都有可能，是Peter争取到了60-40，马斯克不靠谱的开玩笑又让这个数字变成了5-5。
A decade later, when Thiel reflected on the startup lessons he had learned in the Valley, avoidance of competition was a key one.“All failed companies are the same,” he reflected. “They failed to escape competition”
Peter的反思还是很有价值的，能够避免竞争很关键，很多公司死掉的原因就是逃不出竞争。
When eBay bought PayPal in 2002, Thiel negotiated secret terms that allowed him to leave the company. The conditions of the acquisition required others on his management team to stay at their posts, but Thiel sprang himself loose and cashed out to the tune of $55 million.Now in his mid-thirties, he quit Palo Alto and set himself up in San Francisco. He relaunched and rechristened his hedge fund, calling it Clarium Capital, bulking it up with $10 million of his own wealth, and pursuing the thesis that a global scarcity of oil would drive energy prices higher. Meanwhile, he hatched a series of projects that built on the relationships he had forged at Stanford and PayPal. In 2004 he recruited a PayPal engineer to develop national-intelligence software, Palantir. In July 2008, right after SpaceX’s third attempted rocket launch had failed, Nosek persuaded Thiel to bet fully $20 million on Musk, receiving in exchange about 4 percent of his company. One decade later, SpaceX had achieved a heady valuation of $26 billion.”
Ebay的收购让35岁左右的Peter获得了5500w现金，他退出了硅谷，回到旧金山继续搞对冲基金，投了1000w，剩余还不断地孵化各种公司，比如Palantir。后来他2008在5亿估值时投了SpaceX。
Naturally, given the fights that Thiel and Parker had been through with Moritz, Founders Fund explicitly ruled out the Qume formula of bringing in an outside CEO. Entrepreneurs should control their own companies, period. The Googlers had pioneered this path, accepting Eric Schmidt as one member of a triumvirate rather than as the outright boss. Facebook had gone further: Zuckerberg reigned unchallenged. Now Founders Fund set out to spread this kingly model to every startup that it backed. Thiel felt that all great startups had a “monarchy aspect,” as one of his lieutenants put it. “It’s not the libertarian part of Peter that made Founders Fund. It’s the monarchist part.”
Founders Fund旗帜鲜明地支持创始人掌权的君主制安排，而不是Qume公式的带个外部CEO进来，这点上从Google开始改变，Fackbook充分证明。只是后来的Uber和Wework上带来了些反思，但历史就是这样滚滚向前了。
Thiel was the first VC to speak explicitly about the power law. Past venture investors, going back to Arthur Rock, had understood full well that a handful of winners would dominate their performance. But Thiel went further in recognizing this as part of a broader phenomenon. Citing Vilfredo Pareto, the father of the “Pareto principle”—or 80/20 rule—he observed that radically unequal outcomes were common in the natural and social world. It was a sort of natural law; indeed, it was the law to which venture capitalists were
One survey in 2000 found that coaching and advising were growing more important, not less so: a venture partnership called Mohr Davidow retained five operating partners whose full-time job was to parachute into portfolio companies to provide managerial support, and Charles River Ventures in Boston retained no fewer than a dozen staff to help startups with executive search, equipment leasing, contract law, and other functions. Paul Gompers of the Harvard Business School described these developments as progress. “It’s the evolution of venture capital from an art into a business,” he suggested. The way Thiel saw things, this evolution was misguided.
The power law dictated that the companies that mattered would have to be exceptional outliers: in all of Silicon Valley in any given year, there were just a handful of ventures that were truly worth backing. The founders of these outstanding startups were necessarily so gifted that a bit of VC coaching would barely change their performance.“When you look at the strongest performers in our portfolio, they are, generally speaking, the companies that we have the least amount of engagement with,” one Founders Fund partner observed bluntly. It might flatter venture investors’ egos to offer sage advice. But the art of venture capital was to find rough diamonds, not to spend time polishing them.
Founders Fund是第一家公开阐述了幂律定律的机构，他们不在认为这是个现象，而是认为这就是早期投资的规律。因此，VC投资最核心的还是发现好公司、找到钻石，而不是去花时间打磨。这个观点和越来越重视投后的机构、以及和之前崇尚Hands-on的机构形成鲜明对比。
Entrepreneurs who weren’t oddballs would create businesses that were simply too normal. They would come up with a sensible plan, which, being sensible, would have occurred to others.Consequently, they would find themselves in a niche that was too crowded and competitive to allow for big profits.
创始人要有点个性，太一般的创始人拿出来的方案也比较一般，很容易就陷入巨大的竞争红海。
It was surely no coincidence, Thiel continued, that the best startup founders were often arrogant, misanthropic, or borderline crazy. Four of the six early PayPal employees had built bombs in high school. Elon Musk spent half the earnings from his first startup on a race car; when he crashed it with Thiel in the passenger seat, all he could do was laugh about the fact that he had failed to insure it. Such extremes and eccentricities were actually good signs, Thiel contended; VCs should celebrate misfits, not coach them into conformity. A few years into its existence, Founders Fund made an expensive error by refusing to invest in Uber; its bratty founder, Travis Kalanick, had alienated both Howery and Nosek. “We should be more tolerant of founders who seem strange or extreme,” Thiel wrote, when Uber had emerged as a grand slam.“Maybe we need to give assholes a second and third chance,”
Peter对于创始人的理解很特别，也很有道理：好的创始人经常很傲慢、不套近乎、有些疯狂。这些极端和古怪的表现实际是创始人好的标志，VC应该拥抱这中不合群的人，而不是让他们非要回归正常。
If Thiel opposed VC mentoring of founders lest it suppress quirky genius, he also disliked it for another reason. From the investor’s point of view, there was a hefty opportunity cost. Venture capitalists who spent their days mentoring portfolio companies would not be seeking out the next batch of investment opportunities. At one point, Luke Nosek allowed himself to be sucked into the troubles at a portfolio company called Powerset: the CEO had left, and the company was desperate to sell itself to an acquirer. “I put tons of effort into this and I made like $100,000,” Nosek remembered ruefully. And because he was preoccupied with Powerset, Nosek failed to “pursue opportunities elsewhere, including in Facebook and Twitter. “I was just too busy, and I never ended up meeting with the people.”
VC的主业应该是关注和找到好公司。所以时间的机会成本巨大，时间花在投后服务上，因此错过的好公司就是巨大的机会成本。这个判断也支持VC应该更多关注投资。
With his grave and almost ponderous manner, Thiel could come across as a detached armchair philosopher. He was given to breathtakingly sweeping statements, delivered in a tone of deadpan certitude that made few allowances for the messiness of reality. He liked to dabble philanthropically in eccentric causes: “seasteading”—the idea of building a floating libertarian utopia beyond the reach of governments—as well as projects to defeat aging or to encourage gifted kids to drop out of college. But, like George Soros, Thiel had the courage to connect his philosophical convictions to his investment practices. As a student at the London School of Economics, Soros had absorbed the notion that limits to human cognition prevent people from stably apprehending truth; it followed that Soros should speculate aggressively on the self-reinforcing booms and busts that imperfect cognition generated.[50] Likewise, having absorbed the implications of the power law, Thiel imprinted them methodically on his venture firm. Founders Fund resolved that it would never eject founders from their startups, no matter how strangely they behaved; fifteen years “later, it had stuck faithfully to this principle.[51] Indeed, Founders Fund never once sided against a founder in a board vote, and was generally content to do without a board seat. It was a bold reversal of the hands-on tradition established by Don Valentine and Tom Perkins.
Peter学以致用，坚持对创始人无限的友好，不要董事会席位、不反对创始人，和前辈们Hands on的做法截然相反。
Thiel acted on his faith in mavericks by recruiting investing partners who themselves tested convention. His first-ever conversation with Luke Nosek had been about how Nosek wanted to be frozen upon death in hope of medical resurrection. This did not stop Thiel from welcoming Nosek into his partnership. Likewise, Sean Parker had been in trouble with the law, not to mention with power brokers such as Moritz; Thiel nonetheless embraced him. To banish consensual thinking, Founders Fund broke with the industry practice of Monday partnership meetings, replacing the Sand Hill Road tradition of collective responsibility with radical decentralization. Founders Fund investors sourced deals independently, even writing some small checks without consulting one another. Bigger bets required consultation—the bigger the check, the more partners had to assent—but even the biggest investments did not require a majority to vote in favor. “It usually takes one person with a lot of conviction banging their fist and saying, ‘This needs to be done,’” one partner explained.
Founders Fund的投资决策体系也很有意思，高度去中心化，周一不开例会，而是散开找项目，小的投资自己可以说了算，即便是大的投资，也无需多数合伙人同意。
Like Soros’s, Thiel’s philosophical interests convinced him of the case for unusually aggressive risk-taking. Soros’s longtime partner and alter ego Stanley Druckenmiller observed that huge and well-timed gambles were the essence of Soros’s genius. Soros was right about the market’s direction no more often than other traders. What distinguished him was that when he felt a truly strong conviction, he acted on it more courageously. Likewise, Thiel had the guts to act on his understanding of the power law by betting big at the right moments. Because only a handful of startups would grow exponentially, there was no point getting excited about opportunities that seemed merely solid; in venture, the median investment was a failure. But when he encountered a potential grand slam, Thiel was ready to pile his chips onto the table.
Thiel liked to tell a story about Andreessen Horowitz, another upstart venture shop of which we shall hear more later. In 2010, Andreessen Horowitz invested $250,000 in the social-networking app Instagram. It was by some metrics a spectacular home run: two years later, Facebook paid $1 billion for Instagram, and Andreessen netted $78 million—a 312x return on its investment. And yet by other measures this was a debacle. Andreessen Horowitz made the Instagram investment out of a $1.5 billion fund, so it needed fully nineteen $78 million payouts merely to break even. To have backed a winning company was nice for the ego. But the brutal truth was that Instagram had been a wasted opportunity. In contrast, when Founders Fund got excited about a follow-on opportunity to invest in Facebook in 2007, Nosek went all in. He called up the Founders Fund limited partners and persuaded them to plow extra capital into a Facebook-only special purpose vehicle. Then he invested his parents’ entire retirement fund in the company.
Peter对幂律定律的理解很透彻，也深入研究了索罗斯，索罗斯的核心并不是胜率更高，而是每次感觉良好的时候敢下重注。VC也应该在遇到好项目时多次下重注进行投资，毕竟只有少数才能指数型增长，找到这些项目、下重注，才能获得极大的收益。这才是VC的真谛。相比于A16Z好不容易投资了Instagram，仅投了25w，虽然收益达300x，但19个这样的项目才能回基金的本，这就是把机会浪费了。相反2007年Founders Fund遇到Facebook的跟投机会时，Nosek选择了ALL IN。
In April 2005, Livingston, Graham, and the two Viaweb co-founders convened in a former candy factory that Graham had recently purchased. Coming on the heels of Masayoshi Son’s growth checks, the spread of Bechtolsheim-type angels, and Peter Thiel’s hands-off investing, Y Combinator represented yet another challenge to traditional venture capital. Having diagnosed the shortcomings of the venture incumbents, Graham was offering micro-investments on the theory that large checks were toxic for fledgling software startups. He had come up with the batch-processing idea and had invented a folksy, unsatanic way of turning hackers into founders. The way Graham saw things, his new investment formula was fundamentally different from conventional VC. He was not just meeting entrepreneurs and piggybacking on their talent. He was recruiting teenage coders and creating entrepreneurship.
YC批量创造企业家。
Graham described this alchemy in programming lingo: it was a hack on the world economy. Like a hacker who sees an inspired shortcut in a stretch of code, he had studied human society and realized that with a modest tweak it could be made to run more efficiently. “There are thousands of smart people who could start companies and don’t, and with a relatively small amount of force applied at just the right place, we can spring on the world a stream of new startups,” he wrote in 2006, a year after Y Combinator’s founding. A new stream of startups would be desirable not just because they would create extra wealth, but because they would signal a fuller freedom for young hackers. “When I graduated from college in 1986, there were essentially two options: get a job or go to grad school. Now there’s a third: start your own company,” Graham wrote. “That kind of change, from two paths to three, is the sort of big social shift that only happens once every few generations. It’s hard to predict how big a deal it will be.
In sum, Y Combinator’s example and the wider youth revolt signaled a new phase for venture capital. An industry that had initially consisted of generalist investors, and that later featured Accel-style specialists, was now dividing into seed investors, early-stage investors, and growth investors. Meanwhile, the capitalists were learning to defer to the founders; VC became less about Valentine-Perkins hands-on investing and more about Rock-style liberation. But there was a limit to the new ideas. Peter Thiel’s power-law-driven theories could be pushed too far. From Genentech to Cisco and onward, there had been plenty of cases in which hands-on venture capital had fueled the success of portfolio companies. Likewise, Paul Graham’s critique of overbearing, big-check venture capitalists was justified when he was talking about investments in small software concerns, which were simple to manage and required little capital. But companies that grew larger would still need guidance and money.
YC主要还是发现了软件创业不需要太多钱的新机会，但依然有需要更多钱的项目。实际情况就是投资人的竞争更激烈了，开始分阶段、分策略，而创始人非常稀缺。
10 China
Kuang had since returned to his native China and run an investment fund for Intel, and now he agreed to join Rieschel in launching a new China-focused venture firm, which they called Qiming.
启明是第一家。
Since the 1980s, when Silicon Valley had eclipsed its rivals in Japan and Boston, there had been countless attempts to imitate it, most of them sponsored by local or national governments. By the late 1990s, the United States alone featured Silicon Desert (Phoenix), Silicon Alley (New York), Silicon Hills (Austin), and Silicon Forest (in both Seattle and Portland, Oregon). Israel, Taiwan, India, and Britain launched similar efforts, and Egypt boasted the Pyramid Technology Park. But even the most successful silicon wannabes came nowhere near to rivaling the original. Thanks to a tradition of engineering excellence and clever government support for venture funds, Israel became the standout innovation center outside the United States, with breakthroughs ranging from instant messaging to car-navigation software. But because of the small size of Israel’s economy, the country’s startup cluster was more of an adjunct to Silicon Valley than a competitor. When their inventions showed promise, Israeli entrepreneurs’ first move was to seek U.S. venture backing and to target the U.S. market. In the process, many shifted their business headquarters to the West Coast. Far from challenging the Valley’s dominance, they reinforced it.
硅谷的成功不可复制，中国意外有了收获。光政府支持是没用的，必须产业跟上才行。
Except, in a way, they could be. For, as Rieschel’s presence hinted, China’s technology boom was forged to a remarkable extent by American investors, and the Chinese VCs who emerged alongside them were themselves quasi-American—in their education, professional formation, and approach to venture capital. They had studied at top U.S. colleges, worked at U.S. companies, and carefully absorbed the U.S. venture playbook: equity-only funds, stage-by-stage financing, sleeves-rolled-up involvement, and stock options for startup employees.
Because of the might of China’s Communist Party, both Chinese and foreign observers tend to ascribe the nation’s technology success to the country’s supposedly farseeing political leaders. But the truth is more surprising. Far from vindicating the industrial strategy of the Communist Party, China’s tech success was a triumph for the financial model created by Arthur Rock.
中国科技公司的发展是Rock Hands-on模式的胜利：股权基金、阶段性投资、亲自下场干活、股票期权。
Ma’s tone softened. He suggested a compromise: fifty-fifty ownership. Eventually, the two settled on the even split, a rough echo of the terms that Arthur Rock offered founders in the 1960s. Goldman would pay $5 million for its half of the company, which Ma called Alibaba. After all the sparring about ownership, the size of Goldman’s check was oddly uncontentious. “I pulled out a random number,” Lin said later.
Rather like Venrock, which landed the Series A deal with the pungent Steve Jobs and then gave away a chunk of the equity to Arthur Rock, Goldman duly gave up 17 percent of Alibaba, parceling it out among four other investment companies. Fifteen years later, Goldman could see what it had given up. Alibaba staged a triumphant IPO. That $1.7 million stake would have been worth an astonishing $4.5 billion.”
Lin proposed that SoftBank invest $20 million in Alibaba in exchange for a fifth of the company. The implied valuation of $100 million was ten times what Lin and her co-investors had paid three months earlier. Just as he had done with Yahoo, half a decade before, Son said yes immediately, without hesitating.“He just accepted the number I said,” Lin marveled later. “I was thinking, ‘He is crazy!’ It was like when somebody says yes to you in the most improbable way. You feel that total excitement.”
阿里的故事是国内说起来很传奇，但站在投资人侧，却很唏嘘。GS的林夏如当年坚持60%的股份被马云谈到了50%/500w刀，坚持下来就没有孙正义的事情了。1000w的估值融资后3个月，就敢去找孙正义按1亿美元融2000w，10x的估值增长，惊讶的是孙都没带还价的！真正的高手。
In 2005, Xu quit Hong Kong to establish Capital Today, her own Shanghai-based venture fund. She raised $280 million and went out to hunt for startups. Her plan was to make just a handful of investments, as few as five or six per year, and ride the winners for as long as possible. “There are not many great companies in the world,” she reflected, sounding like a Chinese version of Peter Thiel, who launched Founders Fund in the same year. “If you’re lucky enough to find one, hold on. That’s how you make money.” Xu’s company, Capital Today, duly invested $10 million in exchange for 40 percent of JD.com. Just as Arthur Rock had done at Intel, Xu designed JD’s employee stock-option plan. She adopted the standard vesting period of four years, conditional upon JD.com hitting its business goals. After just two years, however, the company had blown past its targets, and Xu happily released the payout early. Liu assembled his employees to announce the good news. His goal, he informed them, was to make everybody rich.”Not surprisingly, given this springboard, Xu raised a larger fund of $400 million in 2010 and then an even larger long-term fund of $750 million. Chinese venture capital was gathering momentum.
徐新的今日资本打法类似于Founders Fund，这其实是极高的赞誉。2005年的首期基金2.8亿刀，每年只投资5-6个项目，并不着急投很多。发现好公司，坚持拿住，这就是核心方法论。JD一单当年的1000w拿下了老刘40%的股份，一战成名，却并非偶然。
The mainland’s commercial culture was notoriously cutthroat. Entrepreneurs were sometimes known to use political contacts to have rivals harassed or arrested. U.S.-backed Chinese venture capitalists therefore found themselves straddling two worlds. As veterans of China’s business battles, their instinct was to fight their corner. But as bearers of a Silicon Valley brand, they would get in trouble if they cut corners.
Sure enough, in late 2008, Shen found himself facing an embarrassing lawsuit. The private-equity shop Carlyle sued him for $206 million, claiming that he had cheated it out of an investment in a Chinese medical research company. According to the complaint, Carlyle had signed an exclusive term sheet with the firm, but Shen had elbowed it aside by fraudulently backdating a rival bid so that it appeared to preexist the Carlyle one
红杉中国的早期并不顺利，新生源项目的事情起诉老沈2亿刀。新生源后来的发展也没那么好，2012年报了美股IPO，没发成，2019年前后卖给了亚太药业，价格也不高。
Landing in Hong Kong, Moritz spent time talking to the team at the Sequoia office. He soon picked up that Zhang’s first investments didn’t appear to be going anywhere. Meanwhile, Shen had backed at least two startups that were showing promise. If the two founders were at odds, Moritz knew which one to bet on.By the end of 2008, Zhang had resigned from the firm and the tension had ended. Sequoia was ready to push forward with its China investment.
莫里茨在张和沈之间的选择还是蛮理性的，结果说明一切。
Eventually, Wang relented, signing an agreement to part with a quarter of Meituan in exchange for a $3 million investment. But during the three months or so it took to prepare the Cayman legal structure, Meituan experienced a growth spurt. Ignoring his written agreement, Wang now demanded a fourfold jump in valuation. For a quarter of his company, Sequoia would have to pay $12 million. At this, a western venture capitalist might have walked away. But during his time at Ctrip, Shen had pulled a similar trick on an investor. Comfortable in China’s ruthless culture, he and Sun accepted Wang’s new terms, and the deal was completed.
王兴也是够猛的，说好的300w/25%股份，在三个月之后就变成了1200w，涨了四倍。哪怕这几个月主要是做VIE的时间，也不行，更难得的是红杉居然答应了，这个其实不是靠胆量，是靠判断和经验。历史上这样的事情反复发生，走开是不理性的。何况当年老沈也和老虎玩过这招，似曾相识。
To make sure that Dianping warmed to the idea, Lau promised that Tencent would invest $1 billion into the business on the condition that it merged with Meituan. With investors refusing to finance competition but pledging to finance its absence, the scene was set for a merger. VCs in China were now playing the coordinating role that they had long performed in the Valley.
合并背后的主要原因是双方都各自难以单独融资了，腾讯跳出来支持合并。