As I sit here this morning, it is impossible to ignore the import of the Facebook IPO. It is everywhere online. In fact, anyone writing or tweeting about anything else this morning might as well be talking to himself. The story, the only story today, is Facebook.
It is impossible to ignore the economic impact of the Facebook IPO. It will make many people very rich. And it secures what has been known for a long time -- Facebook is the best Venture Capital investment in the history of the industry. The individuals who made that investment deserve a huge amount of credit for seeing the value that could be created there. That certainly includes the angel investors (Peter Thiel, Reid Hoffman, Mark Pincus), but there are three groups of investors who deserve massive credit for their foresight here.
First was Kevin Efrusy. Kevin not only saw the potential of Facebook, but he spent the time and effort to build a relationship with the team and convince them to take venture capital. Kevin's partner, Jim Breyer, certainly deserves credit for helping to steward the company from a tiny organization to a massive global powerhouse. But if it weren't for Kevin, Accel would never have had a chance to invest in Facebook. If there were a VC hall of fame, the first guy inducted as a result of the Facebook IPO would be Kevin.
Second was David Sze. While David wasn't the first guy to see the potential of Facebook, the possibilities were not lost on David and he and his partners invested at what was considered a monumental price relatively shortly after the first Facebook investment. David realized that the value of Facebook dwarfed the price he was paying and bet well ahead of the curve on a team that was just getting started. David went on to do the same thing in LinkedIn and Pandora, so it has been a pretty good year or so for David and his partners. Investing alongside David and Greylock were the guys at Meritech. The Meritech team have long been in the late stage investing game and they too knew a great opportunity when they saw it. Their investment was not only a testimony to their foresight but a testimony to their model.
Third was Yuri Milner. I remember clearly when Yuri's investment in Facebook was announced. It was during the All Things Digital conference and Yuri was at the conference being shepherded around by Sheryl Sandberg. No one had heard of Yuri and everyone thought he was nuts. He was paying a price never before thought of. There was a sense that Yuri was playing fast and loose -- taking a spin of the wheel -- to inject himself into the Silicon Valley power structure. It turns out that could not have been further from the truth. Yuri had done the math, was deeply immersed in the European Internet world, and with a great deal of work and thought, had extrapolated out a value for Facebook that well exceeded the high price he was paying. He was obviously right. And he went on to do the same with Zynga, Twitter, Groupon, etc. He literally created a new way of thinking about late stage investment and will make a phenomenal return as a result.
Since Yuri's investment, there have been a number of investors who have glommed on to the Facebook phenomenon. Some bought shares directly from the company. Most bought shares on the secondary market. They will all put Facebook on their websites and tout themselves as Facebook investors. But they are not the guys who deserve the recognition. Kevin, David and Yuri are the guys who should be in the VC spotlight today. Congratulations! This is an amazing day for all of you and your firms. And it is a great day for Venture Capital.
The Facebook IPO is a reminder that the Venture Capital industry is the most optimistic industry in the world. We bet on the idea that amazing people with amazing ideas can change the world. The Facebook team has proven that. And I will join the rest of the industry today in celebrating the most successful Venture Capital investment ever. But then I will get back to the job of talking with the next set of amazing entrepreneurs with amazing ideas because somewhere out there is the next Mark Zuckerberg, hatching a company that will change the world. And I can not wait to sit along side them helping to build something as important and transformational as Facebook.