Sequoia Capital

For years the concept of green power was seductive—who wouldn’t want to help the planet while saving money? The reality, however, often revealed itself to be a nightmare: too expensive, too risky, too difficult to set-up, and too much government hassle.

In February of 2007, two entrepreneurs looked at the same problem, but saw it in a different light. Sunrun co-founders Lynn Jurich and Ed Fenster noticed how the landscape was shifting to create a very real opportunity for solar. Three factors came together to change the game. First, the costs of production would be greatly reduced over time. Secondly, government incentives were moving into place to help convince homeowners to go green. Finally, they had a key business model insight—instead of asking homeowners to pay for the entire cost of installing a system, which might run as high as $40k per household, they figured out a way for homeowners to “lease” the equipment, and then for Sunrun to make money by selling the electricity back to the homeowners at below market prices. This would create a sustainable win-win. Solar-as-a-Service was born.

Putting these insights together, Lynn and Ed started Sunrun at a time when nearly everyone else still saw solar as risky, impossible or deeply unprofitable.

Armed with a dogged determination—Lynn and Ed took up the challenge to change the way homeowners consume energy. The challenges were many: the crash of 2008 mixed with shifts in government incentives made for tough times. Others might have given up, but Lynn and Ed kept at it. Lynn had experience on the frontlines of selling Sunrun’s solar service to consumers and her first-hand customer research pointed directly to the validity of their product – homeowners wanted this.

Lynn and Ed knew they were on the right path because they had unpacked the core of what motivated their current and potential customers. A more timid pair of founders would have fled. Lynn and Ed stuck with it.

Today Sequoia is proud to congratulate Sunrun on their IPO. Not only have they created a successful business, but they have grown to be the second largest residential solar company in the U.S., with solar panels installed on 75,000 customers’ homes across 15 states.

If there is a single message in their success for future founders to ponder, it’s this: when traditional thinking dictates that something can’t be done, approach the problem from a different point of view. Having a unique perspective may lead to tough times at the start, but in the case of Sunrun, a bright outcome.

Congratulations to Sunrun on their vision and this next phase in their business.

What makes a company great? And why do some companies succeed while others never get off the ground? Over the last four decades, we’ve noticed a pattern of a few of the elements that seem to be consistent across enduring companies.

As we take a moment to congratulate Natera on their IPO, we thought we’d share a few of these elements and relate what we saw in Natera and why we invested.

Element 1: Market Element 2: Underdog Maverick Element 3: Unique Insight Element 4: Flexible Mind

Element 1: Market

A founder can only be successful if there is a burning need that their product solves and that need is shared by a healthy market. New markets emerge from a confluence of forces—technological, cultural, political and economic. Without a market, a product can’t thrive.

For Natera, the market was clear: helping people have healthy babies. Initially the focus was on couples struggling with fertility, which extended more broadly as a breakthrough for prenatal testing. Building on the company’s core scientific breakthroughs, Natera is now extending to applications in cancer.

Element 2: Underdog Maverick

Matthew was the gold medalist in South Africa’s National Science Olympiad, number one physics undergrad at Stanford, earned his PhD in Electrical Engineering from Stanford, worked in satellite signal processing and a few other areas. He is an irrepressible, effervescent genius.

But even with all his intellect and drive, he wasn’t invulnerable—when a family medical issue brought tragedy into his life, he fought back by returning to Stanford to learn everything he could about biology and genomics to start a company with the goal to help people have healthy babies. Just think about that for a second, when life deals him something terrible, his response was to roll up his sleeves and tackle the problem head on.

His co-founder, Jonathan was a software engineer and together the two started working to apply 21st-century informatics and signal processing techniques to the problems of genetics and diagnostic testing.

“The marriage of biology with engineering and data science just needed to happen. The data available to healthcare providers is growing massively, much faster than Moore’s Law, and the world wasn't equipped for that. It was clear that data and biology were on a crash course.” 

—Jonathan Sheena

Element 3: Unique Insight

Matthew and Jonathan wanted to find a way to do non-invasive prenatal testing. The old way of amniocentesis involved a long needle and a lot of risk. Others had already discovered that there was fetal DNA floating in mom’s blood, but Natera was on the vanguard of analyzing it in such a way that could differentiate between fetal and maternal DNA. This unique insight led to significantly better product performance and improved patient outcomes.

Element 4: Flexible Mind

Real solutions come when you think about a problem from a new point of view. The Natera team uses techniques typically reserved for electrical engineering and physics to solve some of the trickiest problems in genetics. They expanded the field of medicine to include new techniques of statistical analysis, but they are more than quants. They are not just looking at data—they specifically focused on using data science to improve outcomes.

A Special Team

Beyond just the founders, Natera has a special team. Everyone at the company focused on helping to create better patient outcomes. The questions they ask themselves everyday revolve around how to use this genetic information to make it clinically relevant.

Congratulations

Everyone at Sequoia extends their warmest congratulations to Natera for their IPO. This is a huge milestone for the company, but the real impact isn’t what you see on Wall Street. The real impact is happening in people’s homes across America.

If you go into the company headquarters, you’ll see all the photographs that are posted from people who've had healthy children and have used their technology. They tested nearly a half a million pregnancies to date—helping parents have healthy children. And what matters more in this world to a parent than the health of their child?

Mark Gilreath took aim at a noble cause: to serve the GI caregivers who daily help patients.

Every year, roughly 50,000 people die from colorectal cancer in the United States. This makes colorectal cancer the second leading cause of cancer-related deaths in the country. Colonoscopy is widely recognized as the gold standard in colorectal cancer screening.  

However, colonoscopies performed with standard endoscopes can’t provide more than about a 170° field of view, which means that doctors have a hard time seeing everything. If you can’t see the potential abnormality, it’s hard to know if it’s there.

EndoChoice’s solution for GI caregivers was to find a way for doctors to see more during the exam. This meant designing a whole new approach to the endoscope to widen the field of view. EndoChoice partnered with the technologists at Peer Medical to find a better solution. Sequoia’s teams in the US and Israel were able to help bring the two companies together.

The result is the Fuse® Full Spectrum Endoscopy®; it provides a panoramic 330° field of view, allowing the endoscopist to see nearly twice as much anatomy at time as traditional endoscopes.  

The approach is working: according to the results of a company sponsored and funded tandem clinical trial published in The Lancet Oncology, GI specialists using Fuse® during colonoscopy identified 69% more pre-cancerous polyps than when using standard endoscopes.  

Fuse® and EndoChoice’s full suite of GI products currently serve over 2,500 GI departments in the United States and throughout the world.

Sequoia’s teams in the US and Israel are pleased to congratulate Mark and everyone at EndoChoice for their IPO and more importantly, for the work they are doing for GI caregivers everywhere.

-Scott Carter on behalf of Sequoia

When we first met and partnered with David Ulevitch in 2009, OpenDNS was already well known and profitable, having grown to tens of millions of users in its first few years. It was clear there was so much potential there: a deeply technical founder, fantastic team, loyal and growing userbase, and globally-distributed network that could be used to deliver lots of different types of services.

OpenDNS was perfectly positioned for two of the biggest market shifts of our time: the impact of smartphones and the move to the cloud.

When we partnered with OpenDNS, David was not CEO. He had previously stepped aside from the role of CEO—even though he had been successful—based on the hope that a ‘pro CEO’ could do an even better job. But we saw in David what Sequoia has consistently seen in our most successful founders—a unique insight and the drive to make it happen. Shortly after our investment in the company, we brought him back to the role.

The next step was to shift the business away from advertising and toward enterprise subscriptions. When we invested in the business, 100% of its revenue came from advertising. Today that number is 0%. When we invested, the company was exclusively consumer focused. Now it's focused on the enterprise and secures some of the largest companies in the world. One day I hope David shares some of the near-death experiences the company faced over the years as it made these transitions, and how he led his team to rally and overcome them not just to survive, but to thrive.

David’s goal for OpenDNS was the same back in 2009 as it is today: build the world’s largest Internet security network. And with the sale of his company to Cisco Systems for approximately $635 million announced today, we’re excited to see the vision he's made real has been recognized not just by employees and customers and his investors, but now by Cisco, the largest networking company in the world. We’re also excited that his vision for the future of security will now continue as a key part of Cisco’s ambitious security strategy. I encourage you to read David's post on the announcement and learn about how OpenDNS delivers security to more than 65 million people around the world, and why more than 10,000 organizations pay them today, from small businesses to Fortune 50 organizations.

Congratulations to David and the OpenDNS team on this incredible milestone. As your customer and investor, we couldn’t be more excited for you and your terrific team.

It’s hard to imagine now, but when Bob Tinker, Suresh Batchu and Ajay Mishra first walked through the doors at Sequoia in January 2008, building a business around enterprise mobility seemed like a pipe dream. Blackberry’s position looked unassailable. The iPhone, which had shipped a few months earlier, was dismissed by everyone in corporate IT as a toy for consumers. The iPad and AppStore did not exist, and the letters “BYO” (“Bring Your Own”) were more likely to be followed by a “B” for “Bottle” than a “D”  for “Device”.

Yet the founders’ conviction was unshakeable. Bob, Suresh and Ajay had spent the prior six months talking to customers. They saw the emerging gap between an employee’s desire to work efficiently on a device of her choice, and a company’s need to secure corporate data. They realized iOS and Android would inevitably make their way into the workplace, creating a new and complex world for corporate IT to manage — and the opportunity for a new kind of company to help them. It was hard not to be impressed by the combination of Bob’s vision, Ajay’s product instincts, and Suresh’s technical depth. We quickly decided to partner with them, and joined Storm Ventures and Norwest Venture Partners as MobileIron’s first investors.

As often happens with the most visionary companies, MobileIron initially struggled to find its footing. The financial crisis was at its height; purchase orders were sparse and, the few that did materialize were smaller than expected. In retrospect, this was a blessing. Those challenging early days helped Bob shape the culture around his values of frugality and resourcefulness. They gave him time to build out the management team, and allowed the technology to mature.

It was not until 2011 that the world started to catch up with MobileIron’s vision. That’s when smartphone shipments surpassed feature phones, and mobile devices out-shipped PCs.  More importantly, apps and devices available to people at home overtook what was provided to them at work. Employees’ expectations changed and everyone from the CEO on down started using their personal iPads and storing files in “consumer applications” like Dropbox. IT departments could not keep up, and suddenly mobility became the number one priority for almost every CIO.

In the space of several years, MobileIron had sold to over six thousand customers, grew revenue to over $100m in 2013, and built a team of more than 500 people. Looking back over the company’s remarkable journey, two key things stand out:

First, Bob and team got the big decisions right.  In our very first investment memo about the company in January 2008, MobileIron describes its business as “enterprise mobility management”. That's exactly the same term as Gartner uses today for its Magic Quadrant. From the beginning, Bob and team saw the bigger opportunity beyond Mobile Device Management (MDM), and built a platform for applications and content. As the space has evolved, and customer needs grown more sophisticated, MobileIron has moved with it, maintaining its leadership position in a very dynamic and competitive market.

MobileIron’s second standout quality is its unassailable belief in its own destiny. Bob and team have always focused on the long term, and were never distracted by the acquisitions of competitors, or the technical fad of the day (anyone remember "telecom expense management"?). All the founders have stayed with the company, and are as energized today about the future opportunity as they have ever been. Today’s milestone is just the latest in a series of events that demonstrate the company’s long-term commitment to building a lasting company. 

We are fortunate to have had the opportunity to partner with Bob and team as they build such a transformational business. We are also thankful to have shared the journey with Tae Hae Nam at Storm Ventures, Matt Howard at Norwest Venture Partners, Frank Marshall, Tim Danford, and Paul Holland at Foundation Capital. Finally, we owe a particular debt of gratitude to Gaurav Garg, our former partner and now founder of Wing Ventures, who led Sequoia’s initial investment and remains intimately involved with the company today.

Huge congratulations to Bob and the entire team at MOBL. We could not be happier for you.

We're delighted to add our voices to the growing choir shouting words of admiration and congratulations to Sam Altman on his new role as president of YC.

We were fortunate to have gotten to know Sam when he founded Loopt, where we became an early business partner and investor. He was still underage when we proposed going out for celebratory drinks after signing the term sheet. Even from the beginning, it was clear to us that Sam is whip smart and possesses a keen understanding of how technology will change our lives. That's why we weren’t at all surprised when years later, after Greendot acquired Loopt, it added Sam to its board.

WhatsApp Co-Founders Jan Koum and Brian Acton

Earlier today, Facebook announced its acquisition of WhatsApp for $16 billion. It’s a spectacular milestone for the company’s co-founders Jan Koum and Brian Acton, and their remarkable team.

From the moment they opened the doors of WhatsApp, Jan and Brian wanted a different kind of company. While others sought attention, Jan and Brian shunned the spotlight, refusing even to hang a sign outside the WhatsApp offices in Mountain View. As competitors promoted games and rushed to build platforms, Jan and Brian remained devoted to a clean, lightning fast communications service that works flawlessly.

This approach has served WhatsApp well and its users better. WhatsApp has done for messaging what Skype did for voice and video calls. By using the Internet as its communications backbone, WhatsApp has completely transformed personal communications, which was previously dominated by the world’s largest wireless carriers.  

For the past three years, it’s been our privilege to work shoulder-to-shoulder with Jan and Brian as their close business partner and investor. It’s been a remarkable journey, and we could not be happier for these talented underdogs whose unshakeable beliefs and maverick natures epitomize the spirit of Silicon Valley.

In July 2009, Varun Mehta—a first-time founder—was driving toward a courageous decision: giving up a sure success for a long shot at disrupting a major category.

Giving away $30 billion is hard—at least if you want to do it well.

Bill Gates, the world’s greatest active philanthropist, has not only given away that much, but he’s built a foundation that is capable of making sure that money is spent on projects that will make a big difference in the world.

At Sequoia, we've long worked with nonprofits and other philanthropic organizations. These groups make up most of our investors, meaning the profits generated by the companies we partner with support their work. So we were thrilled when Bill agreed talk to members of our extended community about philanthropy.

The event took place last month at Airbnb’s new San Francisco headquarters in front of an audience of about 200.

In a wide ranging conversation, Bill and Sequoia's Sir Michael Moritz discussed which problems are best left to the market and which require philanthropic intervention, the political and geographic problems that often prevent scientific breakthroughs from reaching the people who can benefit from them, and how to get involved in philanthropy even as you work full time.

Exceptional entrepreneurs can still succeed in a market that already seems saturated, especially if they combine a simpler product with a better business model. That’s the lesson from Barracuda, which is going public Wednesday. 

Dean, Michael and Zach in 2000 founded Affinity Path, a white label ISP for universities, churches and other nonprofit organizations. Email spam was just becoming a big issue. They would have needed to spend 10 times as much on its infrastructure to handle all the unwanted messages. 

Companies like Postini and IronPort were already trying to stop spam. But Dean, Michael and Zach concluded they were too costly and complex. 

Smartphones have redefined people’s expectations for how and where they work. These days, you can respond to an email from an airplane and update a website from the beach. 

But don’t you dare get a glass of water when you’re expecting an important call on your office line.  

The modern shopper looks very different from the consumer of just a decade ago. Not only can she buy just about anything she wants from any number of online stores, but now that she has a smartphone, she can buy those things from anywhere and at any time she chooses.

U.S. consumers spent over $4 trillion at retail last year, 95% of it at traditional brick and mortar stores. But each year, consumers shift more and more of their spending online. 

The proliferation of smartphones has so far contributed to that shift, most notably with the rise of showrooming, when people find an item they like in a store and order it at a discount from an online retailer.

But smartphones can also fuse the online and real-world experiences in a way that makes in-store shopping better. There’s a large opportunity to help retailers influence shoppers as they’re considering purchases.  

In September 2004, Ashar Aziz took up residence at Sequoia, working by himself out of a windowless office that’s since become a server closet.

He had recently shared with us his vision for how computer attacks were likely to evolve and an innovative way for detecting them that took advantage of virtualization—the first time we’d heard anyone consider the technology for something other than simulation or efficiency gains. It made a lot of sense to us, so we provided him with seed funding and invited him to work out of our office in Menlo Park. He stayed here for nine months.