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“WHEN I WAS trying to break into the venture business in the mid-1980s I went to meet the leaders of six firms. All, bar one, told me they did not know what to do with a history major and journalist who had never worked in a technology company, was poor at math and couldn’t tell a voltage regulator from an amplifier. The exception was Don Valentine to whom I owe the opportunity for joining and, eventually, helping build what is now known as Sequoia.”

“By the time I met him, Don had spent decades refining his interviewing technique. He was not one to put young candidates at ease. He conducted his interrogations at a small, round, wooden table in the corner of his large office at 3000 Sand Hill Road where the morning sun blinded anyone sitting opposite him and the view looked towards California’s coastal range.”

“Don retrieved a lined yellow pad from his desk and unclipped a thin ballpoint pen bearing the original, multicolored Apple logo from his shirt pocket and sat down at the little round table. But the preliminaries had barely begun. There was then a tea ceremony since Don disliked coffee and was an aficionado of loose-leaf teas, all of which were stacked in an imposing wall of pale yellow cans, organized like an ammunition depot, in our small galley. Don placed the tea-infuser in the cup, stirred the water slowly, extracted the infuser, held it above the cup until it dripped dry and then placed it on a small, cork mat. Several sneezes and the unfurling of a large handkerchief followed the tea preparation, for Don was often plagued by allergies. He ran a hand through the thick thatch of hair he maintained until his final breath, locked his blue eyes on me, and played his opening one syllable gambit ‘so.’ This was accompanied by the faint hint of a question mark. That was my introduction to Don. like all of us, Don was a creature of his heritage.”

“After the Army he joined Sylvania in 1957, which mainly supplied manufacturers of consumer electronics, and after that Raytheon where he got a taste for military and aerospace customers. He moved to Los Angeles in 1960 to join the company that came to change every aspect of his existence – Fairchild Semiconductor. Photographs of Don from that era show a tanned, handsome man with a crewcut who looked as if he had just stepped out of the astronauts’ training program.”

“When asked whether he went to business school, Don would usually answer that he did and, after a suitable pause, would declare, ‘I attended Fairchild.’ You cannot know Don and how he approached small companies and venture investing, without understanding the significance of Fairchild Semiconductor. Now, more than sixty years after its formation in 1957, the same year the launch of Sputnik advertised to Americans the importance of advanced technology, it is impossible to overstate the influence Fairchild Semiconductor played in Don’s life.”

“Fairchild Semiconductor was California’s first very fast growing technology company. If you are ever inclined to think the problems we encounter today are new, examine the history of Fairchild, which shows us that the challenges in developing companies are the same as ever – it’s just the people, the dates, and the numbers that are different. Fairchild Semiconductor was the first company to design and produce integrated silicon circuits and laid the foundation for the hundreds of billions of units that subsequently have made their way into computers, rockets, airplanes, pacemakers, traffic lights, phones, watches, washing machines, automobiles, door-bells, lightbulbs, missiles, fridges, microwaves, sprinklers, and every muscle, tissue, and sinew of everyday life.”

“It was Fairchild that paved the way for the decline in the cost of computing which made it possible for firms like Sequoia to invest in young technology companies. It was Fairchild that helped set the world on a path which every year has brought about a decline in the cost of computing so that now we don’t think twice about ordering a pair of heated ski socks that can be controlled by an app. If you ever wondered how Sequoia came to invest in short-form video or food delivery companies in China, cancer detection or genetic matching companies in the United States, streaming martial arts competitions and online education lessons in India and Asia, online payments and curated tourism in Europe – all of these businesses can trace their roots to Fairchild.”

“No company in the history of the industrial world has had the impact of Fairchild Semiconductor and, if there was an economic version of 23andMe, Fairchild would be in a class of its own – the progenitor of all the succeeding generations of Silicon Valley companies. Fairchild Semiconductor’s employees, towing their friendships, rivalries, feuds, and animosities, went on to start or play important management roles in dozens, if not several hundred, Silicon Valley companies and venture firms between the end of the 1960s and start of the 1990s.”

“Don joined Fairchild Semiconductor because he understood from his background in chemistry that the silicon favored by the Fairchild engineers allowed electronic devices to operate at far higher temperatures than the germanium that had previously been in vogue. He joined a company whose financing from its parent company, Fairchild Camera and Instrument, had been organized by a 31-year-old New York investment banker, Arthur Rockaman who became the only venture investor ever to appear on the cover of time.”

“‘I could see the future,’ a gift for clairvoyance he attributed entirely to Bob Noyce who had helped him comprehend the role that silicon devices and, a couple of decades later microprocessors, would come to play.”

“Fairchild Semiconductor was formed by a team of eight led by Bob Noyce, the inventor of the silicon integrated circuit whom Don considered the smartest person he ever met. Years afterwards, when Don used to explain the advantage he held over others in the venture business, he used to proclaim,”

“Fairchild Semiconductor taught Don about the importance of large markets, technology, hiring, speed, aggression, frugality, outsourcing, marketing, and, as he used to say, ‘The two things in business that matter: high gross margins and cash flow.’”

“If anyone thinks that hiring is taxing today, consider the note circulated in the mid 1960s at Fairchild Semiconductor which described recruiting as, ‘probably absorbing as much energy as new product development.’”

“As for the idea that manufacturing in Asia as a competitive advantage only became apparent in the late twentieth century, Fairchild Semiconductor began assembly operations in Hong Kong in 1963. Finally, and perhaps most importantly, if you ever wonder why large companies fail you have to look no further than Fairchild Semiconductor.”

“While at Fairchild Semiconductor Don, unwittingly, was given a lesson in the basics of venture investing: he had to gauge the relative prospects of customers to help determine which were worthy of special treatment. This required evaluating the markets they were attacking, the competitive merits of their products and the capabilities of their managements. As he gravitated towards marketing he figured out the destiny of a company fell between a marketing department that could figure out what customers needed and an engineering department capable of designing them. Don”

“While Don harbored no truck for the management of the parent company, headquartered on Long Island, he found the character and quirks of Sherman Fairchild, its founder, irresistible. Sherman Fairchild’s father had been the first president of ibm and had left a fortune at his death. He thus bequeathed to his son a fascination with technology and a taste for the high life. Fairchild started a business to make aerial cameras and, in the 1920s, founded an aircraft company.”

“One Sherman Fairchild idiosyncrasy Don relished came from encountering his employer at a conference table dressed in a blazer and a shirt and tie while, out of sight beneath the table, he was wearing shorts and old shoes. Fairchild’s explanation was that while he was sitting or attending cocktail parties he had observed that nobody looks below the waist. (Sequoia’s Fairchild connection lives on via The Sherman Fairchild Foundation which has now invested in 48 separate Sequoia funds.)”

“When I encountered Charlie in the early 1980s he was direct and blunt, still driving an old pick-up truck and smoking cigars in the office. In popular lore nothing epitomized the frugality for which National was renowned more than the sheep that one day was employed to trim the fringe of lawn outside its headquarters.”

“AFTER A DECADE in the semiconductor business, Don grew restless, feeling that he had learned what it took to build a startup and engage in a turnaround and that, for him, there were no more mountains to left to conquer within the industry. At National he had started making small investments in young companies. Equally important, he had become acquainted with the community of stock analysts since Charlie Sporck had delegated investment relations to the member of the management team who had the quickest tongue – Don. (Go to YouTube and look at videos of Johnny Carson from the 1950s or Ronald Reagan from the early 1960s, to get a sense for the pace of Don’s wit.)”

“The sale within Capital was contentious and protracted and some of the senior people mounted active opposition to the entire idea. Don joined Capital to manage its venture program in early 1972 with the understanding that Capital  would help him raise the money. Capital employees were forbidden from investing their clients’ money in the fund and could only participate by writing personal checks which, when pooled with the firm’s own money, amounted to $1 million. At the time Don joined Capital, he was unaware of the ‘Prudent Man Rule.’”

“It was Bob Kirby, too, who penned the line that I have often thought should be repeated every time we contemplate a stock distribution at Sequoia: ‘You can make more money being passively active than actively passive.’”

“It was against this backdrop that Don, with Bob Kirby providing introductions and coaching, raised the $19 million that became Sequoia Capital II – enticing prospective investors with the prospect of annual net returns between 20% and 25%, at least double what they expected from their staple 60/40 selection of publicly traded stocks and bonds.”

“The most significant addition to Sequoia was Pierre Lamond. Born in Paris in 1930, Pierre spoke English by the age of nine and developed an early interest in the electronics of radios through listening to Radio France Libre broadcasts from London during World War II. Pierre, who found the war painful to discuss for understandable reasons, survived the Nazi occupation of France partly by finding refuge in Italy. He first heard of the invention of the transistor in 1948 while still at high school. He studied engineering at university in Toulouse, a discipline viewed half-heartedly by the prestigious Parisian Polytechniques.”

“After graduation Pierre was drafted and spent three years in the French army (an experience that taught him ‘not to volunteer for anything’) where he translated for high-ranking officers at nato headquarters (then located just outside Paris) and used his spare time to advance his knowledge of the physics of transistors.”

“Among the people who reported to Pierre was Andy Grove, who attended the classes Pierre gave on transistor electronics to all new recruits. Grove joined Intel on the day of its formation and he subsequently helped build it into the most important semiconductor company in the world.”

“He was a man for whom immediate was never soon enough and he took pride when he heard that the nickname applied to one of the more forbidding buildings erected for National was ‘Fort Lamond.’”

“‘Man in a White Shirt’ by Lucian Freud”

“Don was quite comfortable in the limelight, saying ‘No one has ever accused me of underestimating myself”

“Pierre, who preferred not to draw attention to himself, was quite content playing second fiddle.”

“While Don channeled his own formative influences, Pierre contained strains of his countrymen Fourier and Robespierre. Don would brood silently, was rarely, if ever, profane, and operated – unless matters were grave – with an open office door. Pierre, who occupied an adjoining office, was more of a firecracker and preferred his door closed.”

“Behind this door, since Pierre disapproved of Don’s interior decorating skills, were an elegant oval table, Eames chairs' and a pair of black-and-white, abstract paintings by Robert Motherwell. Pierre was always immaculately attired, believing that to be well-dressed was ‘a competitive advantage,’ and whenever Don appeared in one of his more garish outfits, Pierre would announce, ‘I see you got dressed in the dark.’”

“As investors, Don and Pierre reflected their circumstances. Don was drawn to companies addressing large markets and, though he admired idiosyncratic engineers, was not particularly interested in understanding the technical particulars. Pierre, on the other hand, liked deeply technical undertakings and was less comfortable investing where, at the outset, he did not detect a pronounced technology advantage. At one point, while we were trying to invest in biotech companies, both Don and Pierre attended weekly evening classes at Stanford. At the end of the class it was Pierre, not Don, who would linger behind to grill the professor about an obscure detail of the lecture.”

“It was Pierre who became the active tutor for the four people who have since played leadership roles for Sequoia in the private markets business in the United States – Doug, Roelof, Jim (on whose startup board he sat), and myself. That was fine with Don since his own training program consisted of seeing whether people could swim in the deep-end of the pool. He would say to newcomers, ‘You can attend partners meeting, but we don’t want to hear you unless we ask you a question.’”

“He was a devotee of the writings of Ayn Rand, the author of a pair of novels, The Fountainhead and Atlas Shrugged, that gained a devoted following of conservatives and libertarians during the 1940s and 1960s. Rand rejected faith and religion in favor of fact and reason and was an ardent supporter of energetic capitalism. (Don signaled his attachment to these ideas by making Ayn his daughter’s middle name and later supporting the Ayn Rand Foundation.) Don was a believer in the economic theories of creative destruction advanced by Joseph Schumpeter, and was a ‘small c’ conservative who identified himself as a Libertarian. He viewed government with suspicion and sometimes traced the beginning of America’s troubles to the passage of the G.I. Bill. The only politician he openly admired was Lee Kuan Yew, the founder of modern Singapore, yet despite his feelings, he made occasional contributions to Republican candidates.”

“His expectations of success were always low.”

“business settings Don could be withering. ‘I almost never have trouble with smart people,’ he once said, ‘but I have a lot of trouble with dumb people.’ He felt the same about many people in the venture business and proclaimed, ‘Not all venture capitalists are smart – a lot of them are pretty dumb.’ Although his excitement about an investment would always be difficult to discern, heavy sighs during a presentation signaled his displeasure.”

“Don was not inclined to extend pardons. An investment banking semiconductor analyst, assigned to provide coverage for Sierra Semiconductor, discovered this the hard way after he moved to another bank on the eve of Sierra’s IPO. Some time later he visited Don to enquire whether he could wheedle back into his good graces. Don’s response, ‘Do you believe in reincarnation?’”