How will external market changes and internal restructuring affect one of the most storied venture capital firms in the world?
BRIAN KENNY: In her 2013 blog post titled, “Welcome to the Unicorn Club,” venture capitalist, Aileen Lee, coined a term that has come to define the benchmark for investors the world over. Unicorns, that is privately held startups that are valued at $1 billion or more, are more common today than they were in 2013 when there were just 39 firms that met that definition.
CHRISTINA WALLACE: I think anyone who’s been paying attention to the venture capital world in the last few years has noted the roller coaster that has been VC. We go from a boom cycle, where valuations are insane and there’s money to flow everywhere, to very quickly that money drying up and people getting a little bit more tight-fisted. And Sequoia, obviously one of the behemoths in this industry, so everyone is keeping an eye on what Sequoia is doing.
CHRISTINA WALLACE: Atari is the OG video game company, right? Anyone who grew up loving gaming first learned the company named Atari. And I think what’s so notable here is Don Valentine, he was a working class guy. He grew up, his father was a truck driver, his mom was a homemaker. He got a degree in chemistry, went off to the Navy, and then kind of made his way. And has a working history in the go-to-market side of a firm.
BRIAN KENNY: Well, if you look at the companies that you rattled off before, that they’ve invested in some of those unicorns, the leadership of those companies are known as hard drivers. People who are action-oriented, who are doing anything that they can to make the firm successful. So, that sounds like a successful partnership there.CHRISTINA WALLACE: I think the flip side of that coin is simply that is a very specific way of seeing the world, of looking at opportunity.
CHRISTINA WALLACE: Yeah, I think one of the really notable things about their culture is this teamwork. They have this history of saying, “I don’t care if it’s not your portfolio company, if you can help, step up. I don’t care if you’re not on the board, if you’ve got an idea or a relationship, or if you’re the better partner to take this deal, I’m going to hand it off, because we’re all economically benefiting from us being one big team.
BRIAN KENNY: Well, and there’s a character, a person in the case who seems to fit that mold. It was one of the investors in China who developed the hot hand, as you say, and sort of became known as the person that was driving the success of the firm in that region, right? CHRISTINA WALLACE: COVID was tricky, because it was… For anyone paying attention, I think, it seemed very clear this is a short term, hopefully, extreme change of behaviors across the board. Consumer behavior, business behavior, government behavior, all these things. We saw the uptick in remote work, food delivery, grocery delivery, all of these things overnight. The adoption of technologies like QR codes that were not having a moment until suddenly they did.
CHRISTINA WALLACE: Yeah, but I think one of maybe the key difference in venture versus something like a legal firm or a consulting firm that also has these partnership models is venture is a 10 to 15-year time horizon. You put money into something and you don’t know for a decade or more where it turns out. And you take a board seat, you’re signing up to be a partner with these entrepreneurs, you’re an LP.