The Question Every Entrepreneur Has To Answer

Sequoia Capital is among the best VCs in the game. And they ask (almost) every entrepreneur one (very) important question.

If you're an entrepreneur or thinking about becoming one, you should pay attention to the questions that VCs ask, especially when it's perhaps the biggest name on Sand Hill Road: Sequoia Capital.

Writing at PandoDaily, Jason Calacanis talks about the question he hears most frequently from Sequoia investors when they're offering coaching and feedback to startups pitching for funding: "Why now?"

In startups, timing is everything

Calacanis says that when they get asked the question, you can see their wheels turn.

"They start reflecting on perhaps one of the most important questions in the age of the insta-startup," he writes, "What has changed that makes this the perfect time for this startup to exist?"

Looking into recent startup successes, Calacanis counts the ways:

  • YouTube: Bandwidth costs dive, video cameras go digital, and these things called smartphones—and their Internet-ready cameras—start appearing everywhere.
  • Uber: Smartphones, again, are everywhere—and it turns out they have awesome GPS. That, and mobile apps are mature enough to not collapse all the time.
  • Twitter: Everybody gets jealous of WordPress and Blogger's intellectualizing, but the format had too much of creative and technical barriers of entry. In 140 characters, Twitter pithily dissolved them. (Also: Remember when they called it "mini-blogging"? Cute!)
  • Dropbox: Web storage gets hella cheap and rises in quality, and broadband, once the domain of the nerds, richies, and the companies they work at, becomes broadly available.
The question, then, is what are the whys happening now? If you know, tell us in the comments. Or start a company. Or both.

Pitching Sequoia? Here’s the big question you’ll need to answer.

Drake Baer covers leadership for Fast Company. You can pitch him on Twitter.

[Image: Flickr user Rolf Venema]

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4 Comments

  • Ara ohanian

    There’s an old saying in the stock market – if it’s in the press, it’s in the price. A crucial part of starting a successful business is understanding the trends and how to capitalize on them before anyone else does – but not too early. History is littered with great ideas that came before their time. The smart guys catch the wave at just the right moment.

  • Jason Denenberg

    These are ridiculous examples. You're telling us "smartphones started appearing everywhere" in 2005 when YouTube was created (i.e. could have been pitching Sequoia)? Or that it was obvious Twitter was going to dissolve the growing Blogger's format? How did the revenue/expense ratio look for the first 10 yrs? The reason these became the names they did was because of innovation and execution, not spotlighting the obvious.