Friday, March 30, 2007
Interview with Mark Stevens, General Partner, Sequoia Capital
Mark Stevens is a venture capitalist at Sequoia Capital, and the person behind the newly unveiled University of Southern California's Stevens Institute for Innovation, which is focused on bringing innovation and ideas from the University to the market. The Stevens Institute for Innovation, which was named for a $22 million dollar gift Mark and his wife Mary gave to establish the center, is the first time a major research University has created a central center like this for technology transfer and coordination. The center is now staffing up to 30 people to focused on licensing, educational programs, mentoring, and cross functional teams working to bring projects out of the University. Ben Kuo spoke with Mark at the unveiling earlier this week about his background, and his opinion on the state of venture capital, and his views on Southern California as a place for investment.
How'd you manage to get into venture capital and Sequoia?
Mark Stevens: In some ways it was by accident, but it was also being prepared with the right career, background, and being in the right place at the right time. I graduated from USC, and went to work at Intel. That was in 1982, when Intel wasn't exactly the household name that it is today. I worked there for five years in a variety of technical, marketing, and technical sales positions, most of the time here in Los Angeles. While I was at Intel, I actually got a masters in Computer Engineering from USC. I left Intel in 1987, and wanted to get an MBA to complement my engineering background. I went to Harvard to get my MBA, was in Boston for two years, and came back to California. I was offered to go back to Intel, had offers from consulting firms, and other high tech product management offers, but I took a wild stab at venture capital. I sent twelve letters to West Coast venture firms that invested in electronics, semiconductors, and computers. And, Sequoia called me, said they were looking for an associate this summer, and said why don't you come in during spring break. So I flew up to Menlo Park, interviewed with the partners, they liked me, I got the job, and joined Sequoia three weeks after graduating from Harvard business school. I've been there every since--seventeen and a half years. It was the right place at the right time, but I also had several years of working experience and four degrees, by the time I started at Sequoia.
There's been a lot of talk about another bubble and overinvestment again, what are you seeing at Sequoia?
Mark Stevens: There are always entrepreneurs who have great ideas, who start great companies. The problem is, there's a finite supply of really, really truly great entrepreneurs with great ideas each year in the U.S. We have a situation now we've probably got too much money in the venture capital and throughout the private equity market, because large institutions with lots of money see venture capital sees it as a way to get outsized returns. But what they sort of forget, is that it's a fragile ecosystem. You can flood the market with too much money, and too many me-too companies get funded. Are we at that point? In some sectors it feels like that. Does it feel like 1999/2000 again? Again, to some degree. There are some IPOs--Sequoia has had two IPOs in the last four months, we had one yesterday called Aruba Networks--so there are some nice exits happening in the technology world. But nothing like 1999 and 2000. So, we have a bit of what I call an impedance mismatch--you have a lot of money coming into the system, into startups, but you don't have a lot of highly valued exits. Is there a bit of a bubble? Yes, we're concerned about valuations going up and too many companies being financed in certain categories. There's definitely concern.
As a Bay Area VC, what is your impression nowadays of Southern California as an area for investment?
Mark Stevens: We think there are tremendous opportunities down here. At Sequoia we've actually stepped up our investments in Southern California in the last couple of years. I don't have the exact number, but we have something like seven or eight investments in Southern California. A lot of that is centered around Internet commerce, Internet services, and we think there's a lot of opportunities around digital media and the Internet. There's also a lot of opportunity around wireless communications, especially in the San Diego area. So we're seeing very good deal flow from Southern California. It's better than it's been for ten years at Sequoia, so we're going to continue spending more time here in Southern California.
What drove you as a venture capitalist to put money in the institute, which some might say is very unusual for someone in venture capital?
Mark Stevens: I love USC and I wanted to give back, because I had great years here. I wanted to do something different, something that would leverage my interests, my background, which is helping entrepreneurs get started and starting up companies. So I though that this would be a great blend of those interests, talents, and needs. I think USC has lots of great innovations and innovators but it's been sort of a well kept secret, versus other large, American research universities. I think USC and this institute can really help get on the map in terms of getting innovations out there into the marketplace.