The Power Law: Venture Capital and the Making of the New Future

by Sebastian Mallaby

Yet behind this fable of the hunt and the seduction, there was another story. As part of his focus on proactivity, Goetz had conceived a system he called “early bird”: seeing in the advent of the Apple App Store a trove of useful investment leads, Sequoia had written code that tracked downloads by consumers in sixty different countries. It was this exercise in digital sleuthing that alerted Goetz to WhatsApp: the messaging service was the first or second most downloaded application in around thirty-five of the sixty markets. Even though the service was not yet famous in the United States, it seemed only a matter of time before that changed, so Goetz made it his business to get to WhatsApp before his rivals spotted it. Of course, this early-bird system was not directly the cause of Goetz’s investment, but it boosted the chances of its happening. If you ballparked that boost in probability at, say, 10 percent, the value of creating the web crawler ran into the hundreds of millions, because Sequoia’s bet on WhatsApp generated $3.5 billion for the partnership.[34] Thanks to this coup and several others, Goetz occupied the top slot on the Midas List for four years in a row, until, in 2018, his Sequoia China teammate Neil Shen took over.