Photo: Sequoia Partners
Sequoia Capital partner Doug Leone just hit archrival Kleiner Perkins below the belt.Specifically, he dinged Kleiner in an interview with Bloomberg for making expensive, late-stage investments in Internet companies—he didn’t name names, but Bloomberg pegged Facebook, Groupon, and Zynga as obvious ones that Sequoia didn’t invest in—after they had already hit the big time.
Here’s how Leone talked about the investments he’s glad he passed on:
There’s a number of companies clearly that we wish we had invested in either at the early or at the moderate stage. And there’s a whole bunch of companies that we’re glad we did not chase at the very high stages, either to buy a poster for our website or because we actually thought that investing in those stages would generate a return that would satisfy our own investors.
If that sounds mild, you have to read between the lines. The trash talk on Sand Hill Road, the clubby epicentre of Silicon Valley’s venture-capital industry, veers towards the genteel.
Sequoia Capital and Kleiner Perkins Caufield & Byers are archrivals, duking it out for the top deals. They occasionally coinvest—most famously in Google—but for the most part, they’re at each other’s throats, fighting to get the hottest startups and the best talent in the Valley.
Kleiner’s “poster” investments—Facebook and Groupon in particular—performed poorly after going public. Those haven’t delivered good returns for Kleiner. Zynga has also struggled, but Kleiner got into Zynga at an earlier stage.
Meanwhile, Leone can pound his chest about Sequoia’s 2003 investment in LinkedIn. Sequoia and other investors put in $4.7 million. LinkedIn is now worth $11 billion.
That’s how venture capital is supposed to work.