Sequoia Capital’s Jim Goetz might have declined the Governor’s offer at today’s CED Tech Venture Conference to move to North Carolina, but the world’s top venture capitalist according to Forbes had no qualms naming the Triangle as the second most important area of the United States behind his native Silicon Valley.
Sequoia’s Jim Goetz: RTP is Already 2nd Most Important Area of U.S.
And if the forward-thinking innovation happening within the universities, startups and Research Triangle Park continues, he thinks we could snag that top spot in coming decades.
“You have unfair advantages in the state, with terrific school systems and leadership and important fields that will eventually go global,” he told a crowd of nearly 1,000 gathered for the annual event.
His biggest advice for realizing that potential: “You are truly world class and superior in so many ways to what we have in the Valley. Embrace and embellish that rather than try to emulate the practices of Silicon Valley.”
Goetz didn’t want to talk about the success of his firm, which has a 40-year history of investing in the world’s top technology companies. He also didn’t want to talk about his own accolades—he earned the Forbes title two years in a row in part for making the first bet on WhatsApp, a Ukrainian immigrant-founded messaging app that eventually sold to Facebook for $19 billion in 2014.
But he happily lauded the homegrown team behind Carbon3D, a Silicon Valley startup based on 3D printing technology developed in chemistry labs at UNC and NC State. Goetz and team led series A and B rounds in the startup, which now has $141 million in venture capital fueling it. He told the crowd it’s the first startup in the Sequoia portfolio to achieve “unicorn” status (or >$1 billion valuation) within 24 months.
He also shared that Stanford University President John Hennessy isn’t looking to Harvard, MIT or other Ivy Leagues for research talent. He sees the Triangle as most competitive. Specifically, he wants the entire chemistry department from UNC. Another globally admired tech leader from the Triangle is Duke behavioral psychology professor Dan Ariely, he he says is a key advisor to Google (it acquired Ariely’s company Timeful earlier this year) and Facebook.
Goetz had plenty of other insights for the Triangle too, things that if done correctly could make his prophecy come true in decades to come.
Goetz is a big proponent of teaching computer science at an early age. He applauded Stanford University for requiring beginning level computer science courses that were easy enough not to be intimidating to a biology or chemistry major. The effort has been so successful that 60 percent of students at Stanford are either major or minor in computer science.
Though passion is most important for the next generation of startup leaders, technical skills are next. He argues they’re as important as English.
Goetz made a call-out to the universities in the room to find out if Android or iOS development were offered as courses. No hands raised. This region has some work to do to make computer science top of mind for every student.
Goetz doesn’t necessarily recommend starting a company at a young age, but he doesn’t believe young people should go to work for big corporations either.
Carbon3D had two high school students on the team when Goetz invested. While both sons of the founders, they were given experience and responsibility and the opportunity to grow skills quickly. That’s critical for a young person getting started in a career and interested in entrepreneurship.
Goetz spent more than a year meeting with WhatsApp founder Jan Koum before making an investment. He got to know that Koum wasn’t motivated by the financial gain but by making it easier for immigrants in various countries to stay in touch with family and friends. The connection to his mother, who died of cancer, was critical too. Many times during the VC courtship, Koum walked Goetz to the social security office in Mountain View and showed him where he and has mother waited in line for food stamps when they came to the U.S.
Koum only made the deal after a walk back to that place so he could share the moment with his mom. It was critical for Goetz to get to know Koum, his motivation, goals and passions before becoming his VC partner.
While Goetz admits that the male-female ratio in the money management and VC world is sorely lacking, he says its critical for that to change. A specific example of the impact of low diversity was Sequoia’s decision to pass on Pinterest. There were seven men around the table when the deal came around, and none of them could get their arms around the value for women.
Goetz calls the lack of women “a deep personal frustration” and “something I find embarrassing.” Of the 12 teams in his portfolio today, four are led by female CEOs and he hears frequent commentary around their aggressiveness and bluntness (as if men aren’t this way). He calls for more women to be comfortable being role models in the technology industry.
Goetz also admires companies that have made it a goal to have 50 percent of their engineering team female and have had success in getting there. Carbon3D is one of those, having recently reached 40 percent within its team.
Sequoia is however, aggressive about investing in immigrants. More than 50 percent of founders in the portfolio came from another country. Goetz says most are “willing to move heaven and Earth” for academic prowess, a better life or the American Dream.
“Those individuals are willing to make sacrifices and have energy and ambition that is somewhat unique,” he says.
Goetz doesn’t have a set type of entrepreneur in which he invests. They are all different. He calls the Sequoia process artisanal. It’s about the balance sheet of the individual and not embellishing it, but addressing the weaknesses and building teams around them.
Most of the founders he’s invested in are driven, with strong character and “qualities about some you might characterize as assholes.”
Many “aren’t great human examples on all dimensions and our role is to make the best possible culture and leadership dynamic out of that,” he says.
Goetz encouraged the funds in the room to invest in the Triangle. There are too many funds out in Silicon Valley (700, he says), and the companies out there don’t need your money. In North Carolina, there are opportunities. And those investors should also mentor and support young entrepreneurs.
Goetz wants to know the bullseye customer, not the entire size of the market a company is tackling. He wants to know exactly who will buy a product you’re building. And even if it’s a small segment to begin with, it could be a “category creation” opportunity. For help determining “the essence of a company”, he suggests using Geoffrey Moore’s positioning statement.
“You can start with a tiny market or no market and if the pain point is large enough and market compelling, you can build a very large business,” he says.