reSee.it Video Transcript AI Summary
I was 30, had never taken a business or marketing class, and I had never used PowerPoint. I bought a Mac to use Persuasion and tried to create a company presentation for venture capitalists. My first official day of work was my thirtieth birthday, February 17, and we got the company funded. We met every day, the three of us, in one founder’s townhouse in Fremont. There was nothing to do at first—just talking about what we did yesterday, what we had for dinner, or where to go for lunch. For several months, the big daily decision was whether to have Philly cheesesteaks or Chinese food, and eventually whether to put donuts in the fridge in the morning.
That period lasted a few months. I read books about starting companies and tried to figure out how to raise money and what a venture capitalist is. I then met a lawyer at Cooley Godward who helped us incorporate. He asked how much money we had in our pockets; I said $200. He took $200 and got 20% of Nvidia for it. I went back to the house, and my two partners each gave me $200, each getting 20%. And that’s how it worked, liberally. I never finished my business plan. I know it. We never finished a business plan, to tell you the truth. If I had finished that thick Gordon Bell book, How to Start a High-tech Company, I would have been dead now; we would have run out of money and time. I read the first three or four chapters, then had to go to work.
We incorporated, and they introduced us to two venture capitalists. I went to their office and explained what I wanted to do. The key to getting funded, I learned, is not a business plan; VCs don’t invest in business plans because business plans are easy to write. They invest in great people, and your reputation and history matter. Because I had done significant work with Andy Bechtolsheim, another Stanford graduate and founder of Sun, and because we had connections with the founders of Synopsys and LSI Logic, we were in a strong position due to our track record and relationships, even if my business plan writing skills were inadequate.
Another crucial factor is the vision. They want to know there is a market large enough to justify the investment. The market size matters: if the market is $20 billion, an investment of $10 million may not be justifiable; but if the market is $200 billion, the dynamics are different. The size of the market is important, and having a clever idea that the market has never done before is compelling. Yet, the last point, perhaps the least important, is the market itself—because you may need to reinvent yourself over time. If you’re going to reinvent yourself, you need great people, which is why great people are so important.