Sequoia Capital

Cloud Security Goes Skyhigh

Wed, 22 May 2013 08:18:00 -0700

Walk into any Starbucks during business hours and you are likely to find smartly-dressed people on their phones or iPads, reviewing documents in Dropbox, looking up accounts in Salesforce.com, or pounding out messages in Gmail. It’s the kind of everyday activity that makes people much more productive – but it also gives IT departments heartburn. That, in a nutshell, is why we are thrilled to partner with Skyhigh Networks.

Many of us at Sequoia Capital spend time with CIOs and their IT security teams. We find that most are supportive of the “bring-your-own-device-to-work” movement. They also want employees to take advantage of the latest cloud applications. At the same time, CIOs feel a duty to make sure that none of this puts their companies’ data at risk, which is no small task in a world full of professional hackers and state-sponsored theft of corporate secrets.

Let’s think again about those people working at Starbucks. They are not using a corporate device, or a corporate-owned application, or the corporate network. But the information they are accessing does belong to the company, and that creates a problem that did not exist until now. If one of those people – say, a sales person – were to download her company’s entire customer database from Salesforce.com immediately before quitting to join a competitor, IT would be none the wiser. If she were to upload a file with confidential information to a file-sharing service, IT would have no way to protect that data.

What’s a company to do?

That’s where Skyhigh comes in. In the space of little over a year, the Skyhigh team has developed a service that skillfully blends analytics with security. It gives IT the visibility and selective controls it needs to provide security in a way that’s invisible to the user. There’s no app to install on personal devices, and no limits on what users can do.

As more and more applications move to the cloud, we see every company needing something like Skyhigh to help IT secure corporate information. But it’s not just the market opportunity that attracted us to the company. First and foremost, it’s the team.

Founder and CEO Rajiv Gupta, a PhD from CalTech in computer science, has that rare blend of technical depth and strong commercial instincts, married with a burning desire to build a world changing company. He’s a man who exudes urgency, inspires trust and, as we learned from the company’s T-shirts, loves Pink Floyd.

His co-founders, Sekhar Sarukkai and Kaushik Narayan, match his passion for building great technology and a strong company culture. Concurrent with our investment, Kamal Shah, formerly an Entrepreneur-in-Action at Sequoia Capital and advisor to Dropbox, has joined to head up products and marketing, making a strong leadership team even stronger.

It’s rare to see an enterprise company that, within its first year of existence, can release a product, sign some top tier customers, and generate revenue — all on a modest amount of startup capital. Yet that’s exactly what Skyhigh has done, largely because it addresses a huge problem with meaningfully differentiated technology.

We could not be happier to partner with Rajiv and team. It’s also a pleasure to again be in business with Asheem Chandna and our friends at Greylock, who were already investors.

Needless to say, our expectations for the company are sky high.

-Aaref Hilaly, on behalf of Sequoia Capital

When We First Met David

Mon, 20 May 2013 09:48:00 -0700

David Karp first visited Sequoia in October 2010, when Tumblr was a 12-person blogging startup. Fred Wilson of Union Square Ventures described David as an inspiration and told us we had to meet him.

What followed was one of the fastest decisions in our firm’s history.

David sat down with a few of us at 11 a.m. It was clear he had identified a problem that he knew about firsthand and he knew how to solve it.

His first objective was creating an easy-to-use, aesthetically-beautiful place for people to express themselves, and to build a network around it to allow people to follow and share what they love.

His presentation said: “Total freedom of expression. An identity you’re truly proud of. A network of people sharing and following the things they love.”

Beyond that, though, it was his passion and sincerity that hooked us.

When our meeting ended at noon, we corralled the rest of the partners and brought them into the room so they could meet David. By the dinner that night, we were the ones courting him.

(David was the unnamed founder I was referring to in this post from back then.)

The Tumblr vision is a simple one. It gives people a place to showcase their work, whether that work is landscape paintings, commentary on architecture, or photos of cats with things on their heads. And it provides a connective tissue between these creators and their audiences.

While there were plenty of ways online to follow your friends or personalities you like, there wasn’t a good way to follow things you were interested in.

Tumblr is technically elegant and visually beautiful. It’s often been compared to a work of art, which isn’t far off.

So it’s no surprise that Tumblr became one of the premier places for topics like fashion, technology and travel.

There was a lot of effort to get there, of course. Soon after we started working with Tumblr, its website crashed for about eight hours. The company struggled to handle the infrastructure demands of its exploding popularity. And at the time, a contractor was doing its mobile development.

It’s a credit to David and his team that in relatively short amount of time they’ve built a service that has more than 300 million unique visitors a month.

Their willingness to embrace mobile has also yielded wondrous results. The Tumblr app is among the most downloaded and most positively reviewed in the app store.

Tumblr resisted traditional Web advertising. Always the visionary, David felt that there must be a way to make the ads as visually appealing as the rest of the experience. They eventually hit upon a unique approach that, in David’s words, gave agencies “space and a canvas to create ads that win awards.”

The result allows for creative brand advertising that hasn’t had a place to live on the web to date, not targeted links. The first ads sold out almost instantly. David and his team managed to pull that off while staying true to what Tumblr is all about.

We’re excited that Tumblr will operate independently within Yahoo!, right down to its own letterhead. It will still be based in New York, which is a big win for the city’s burgeoning tech scene. Tumblr has the potential to become an anchor company that creates jobs and spurs entrepreneurship for years to come.

We see parallels to the PayPal and YouTube acquisitions. In both instances the companies were granted the autonomy they need to thrive while benefiting from the resources of eBay and Google, respectively.

Tumblr will still be about passion and interest. It will remain the preeminent destination for creators who want to showcase their work. And it will remain the way to follow what you love. Even more so going forward as Yahoo!’s technology helps people discover new creators and content.

Congratulations to David and everyone at Tumblr. This isn’t the end by any means, but it’s a momentous day and a wonderful time to pause and celebrate everything they’ve accomplished.

- Roelof Botha

Photo: TechCrunch

Tumblr Staff: News!

Mon, 20 May 2013 07:41:30 -0700

Tumblr Staff: News!:

staff:

Everyone, I’m elated to tell you that Tumblr will be joining Yahoo.

Before touching on how awesome this is, let me try to allay any concerns: We’re not turning purple. Our headquarters isn’t moving. Our team isn’t changing. Our roadmap isn’t changing. And our mission – to empower creators to…

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David, Roelof and Derek at Sequoia, totally Tumblr worthy.

Thu, 31 Jan 2013 14:33:22 -0800

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Perspective on Apple amid the clamour

Tue, 29 Jan 2013 09:46:00 -0800

This article was originally published by The Financial Times and is now available on ft.com.

It is ironic that both Dell and Apple shared big news last week.

Back in 1998 Michael Dell, then the crown prince of the personal computer industry, recommended that Steve Jobs shut down Apple, which was in dire shape, and distribute the proceeds to shareholders. By contrast, reflecting the turmoil now afflicting all PC makers, Mr Dell is negotiating to borrow money to make his company disappear from public view. Apple, meanwhile, announced that its shareholders would receive a Valentine’s day dividend of $2.5bn – a tiny portion of its $137bn cash pile.

But Apple earnings announced on Wednesday, and the subsequent fall in the value of its stock, grabbed more headlines than Dell’s prospective leveraged buyout. Moments after the financial figures were released, which showed a slowing growth rate, soothsayers took their gloomy predictions to the Twittergraph. The hordes who bought Apple stock in the past few years stampeded for the exits.

Lost amid the mewling and mindless pandemonium was any sense of perspective. In the first quarter of Apple’s fiscal year – the crucial period from October to December in which the year’s highest-earning holidays fall – the group’s revenues for the first time topped $50bn, and it earned more than any other business. Sales were $8.2bn higher than in the same quarter of the preceding year

This jump in quarterly sales – just the gain – is more than one-and-a-half times the revenue Facebook is expected to record for all of last year. Were Apple a nation, its gross domestic product would rank about 45th in the world – well ahead of Pakistan and New Zealand. It is almost enough to make you think Apple should have a seat in the UN.

The television sound-biters were aghast that Apple’s sales growth was “only” 18 per cent and that management was forecasting slower growth. Everyone seems to have forgotten that it is hard for any company to grow quickly – and even harder when it is already massive. For comparison, during their most recent fiscal years Microsoft grew about 4 per cent and Cisco about 6 per cent – although the first is only about half Apple’s size, and the latter about a third. IBM shrank about 2 per cent to $104bn in sales.

Apple’s results, unlike those of Microsoft, Cisco and IBM, have not been boosted by sizeable acquisitions; rather they are the result of a handful of products that, as the label says, are designed in California. This makes its achievement even more remarkable. No company of a similar size has grown at Apple’s pace.

Between September 2000 (when it had sales of about $8bn) and September 2007, Apple grew – largely thanks to the iPod – at an average rate of 17 per cent. In the past five years, propelled by the iPhone and iPad, growth accelerated to almost 45 per cent. If that preposterous rate were to continue, annual sales would top $3tn by 2020, leaving it lodged between the current GDP of France and Germany. Even the devotees who camp outside its stores before a product release would have a tough time believing that Apple will occupy a place between the Maginot and Siegfried lines. If growth were to slow to 5 per cent it would have sales of $231bn in 2020 (compared with $156bn in 2012). At 10 per cent a year, sales would be a flabbergasting $335bn.

Everyone knows the business will face stronger competition in the future. This is because almost every company in the world suffers from acute Apple envy. Apple has thrown several mainline industries, including music, movies, television, publishing, cameras and 35mm film, into convulsions. The entire Japanese consumer electronics sector, bereft of the software that helps distinguish Apple’s products, has been hopelessly outpaced, as have Finland’s Nokia and Canada’s RIM.

Others – chip suppliers, wireless carriers, specialised glassmakers, outsourced manufacturers and hundreds of thousands of app developers – watch every twitch with hopeless admiration and silent apprehension. Anyone with their wits about them has been galvanised into action by Apple’s success.

More importantly, Apple has set a lasting example for entrepreneurs and professionals worldwide. Millions of young engineers and programmers scrutinise every moment of a product announcement. Hip students in art and design schools are imbued with Apple’s sensibility. Marketers and advertisers try to mimic its creative approach. Manufacturing hands seek to unravel the mysteries of its supply chain. Old-time retailers wonder how it can possibly attract more than 120m visitors in a 12-week period, garnering sales per square foot twice those of Tiffany and four times those of Michael Kors, the luxury retailer of the moment.

It is difficult to think of a company of the past 50 years whose influence and ingenuity have been as profound or widespread as the one formerly known as Apple Computer, Inc. Whatever happens to Apple in the future, consumers everywhere will be far better off because of the bolts of energy that have emerged from One Infinite Loop, Cupertino, California.

-Michael Moritz

Join the Conversation at ft.com (registration required)

Immigration Reform: Stop Ejecting the Brightest Minds From America

Mon, 28 Jan 2013 11:21:00 -0800

Let’s hope Congress does not flinch as it begins the debate about immigration reform because the future is passing through security – in the wrong direction. It leaves the United States on every departing airplane carrying a foreign born student who has graduated from an American university with an advanced degree in the sciences, technology, engineering and math. The majority of these people want to stay in the United States but because of existing immigration laws, they have no choice but to leave.

In Silicon Valley, which has always been blind to any attribute other than ability, everyone knows that the remarkable achievements of the foreign born have led to the formation of companies such as Google, Intel, Sun Microsystems, nVidia, Yahoo! PayPal and scores of others that are less well known. Of the last eleven early stage companies that have allied themselves with Sequoia Capital, seven have had immigrants among their founding lineup. This is not a sudden or recent phenomenon; it has been the leitmotif of our business since the 1970s. However, the number of startups would be even higher if we weren’t ejecting foreign-born students and if we welcomed their contemporaries who have been educated overseas. Today, it is impossible to satisfy Silicon Valley’s appetite for engineers and scientists with people born in America.

The xenophobia underlying current immigration policy has three consequences for the U.S. technology industry. First, the know-how for all sorts of new companies is being expelled from America. Second, it makes it even harder to fill the job vacancies at existing U.S. based semiconductor, biotech, networking and software companies. Third, it means that University labs, which have sown the seeds for so many commercial breakthroughs of the past seventy-five years, are deprived of the young faculty members who can be counted on for bursts of inspiration and originality. In the massive global IQ competition, the United States is shooting itself in the foot.

Today – while the Internet has made it simple for companies to identify the most capable prospects anywhere in the world – it is harder than ever to obtain the necessary paperwork. At Stripe, a young payments company in San Francisco (where I am a Board Member), the founders are a pair of Irish brothers, the senior business executive was born in Honduras and 14 of its 23 engineers were born outside the United States. Stripe’s engineering department would be at least twice as large if we could get working papers for the programmers we are eager to hire. Unless we do something quickly, our nation’s hiring problem will get more acute as U.S. educational standards continue to decline while they improve elsewhere.

Other countries are making it easier, not harder, for talented immigrants to enter. Canada will kickoff a ‘Startup Visa’ program in April and its Immigration Minister has vowed to come to California to tell foreign entrepreneurs and engineers that they can gain permanent citizenship north of the border. Even Chile – in its effort to compete for highly educated immigrants with other countries such as Singapore and Israel – has a special visa program to lure programmers.

This year, three in ten students at MIT and four of every ten of its graduate students are either not U.S. citizens or permanent residents. These ratios are echoed at the best engineering and medical schools in the country. Our universities brim with opportunity for America and it would only take a few modest tweaks to improve the situation. This is a case where a small number of people bring a disproportionate benefit to millions.

In 2010 – the most recent year for which data is available – U.S. universities awarded doctorates to about 13,000 students in all disciplines. (The largest number study in California, New York and Texas.) This is a tiny proportion of the roughly 1.1 million people who were granted legal residency each year between 2009 and 2011.

In the immigration debate that’s getting underway it would be useful to consider a few things. It would be wonderful to provide foreign-born students with advanced degrees in STEM subjects from U.S. universities a clear path to permanent residency. It would be good to massively increase the percentage of green cards given to foreigners with advanced degrees and special skills. And it would also make a big difference if the per country caps on green cards were removed.

The United States is still luring and educating many of the best and the brightest from foreign countries. We just must keep them. We also need to make it easier for their soul mates who have been educated overseas to pass through security – in the right direction.

Michael Moritz

Join the conversation on LinkedIn

originally published on LinkedIn

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