How Sand Hill Road Became the Main Street of Venture Capital
Like Hollywood, Sand Hill Road is a metonym for an industry based on dreams: VCs gathered in low-slung office buildings funding startups that aim to change the world (sometimes they even succeed). Like Chernobyl, though, it’s also a proxy for some cataclysmic flameouts. Here’s how a sleepy 5.6-mile stretch of roadway in Menlo Park, California, became a genuine rock star.
Grant Heidrich: I visited Stanford University in high school with [Stanford’s former head of real estate] Tom Ford, in 1969. We’re bumping along a dirt road—Highway 280 was not even complete at the time—and Tom points up to this hill covered with briars and weeds and says, “I have a vision. This will become one of the most sought-after places to work, because it’s right between San Jose and San Francisco and has access to Stanford.”
Brook Byers: The venture capital industry would never have existed without great entrepreneurs to back, which is why it was important that the semiconductor and computer industry was within a 15-mile radius of Sand Hill Road.
Heidrich: Tom Ford knew who all the venture capitalists were.
Byers: He also put in a restaurant called the Sundeck at 3000 Sand Hill, which became kind of a hangout for entrepreneurs and venture capitalists.
Heidrich: If I got a deal, I could walk down the hall and go to Brook Byers and say, “Hey, Brook, take a look at this deal.” Or vice versa, ’cause in those early days there wasn’t enough capital in any one fund to fund a startup. You had to collaborate.
Ben Horowitz: In the ’70s and ’80s venture capital started off as a relatively boutique thing, with people like Tom Perkins and Gene Kleiner who had built really significant companies like Fairchild Semiconductor and Hewlett-Packard.
Heidrich: Then, with the internet economy in the ’90s, people saw how quickly some of these companies could grow—how it didn’t take vast amounts of money to get entrepreneurs started.
Byers: That’s when you started seeing cover stories on venture capitalists in Fortune or Forbes or Businessweek—and WIRED. WIRED sprung up in the ’90s, right? [It did, in 1993. —Editor]
Isaac Stein: There was an annual Sand Hill Derby Challenge that went on for about five years. As you might guess, it turned into a high tech contest with Olympic bobsled athletes helping get the soapbox derbies started.
Theresia Gouw: It was definitely an exciting time. I remember being in a Stanford computer lab with two classmates and downloading the first Mosaic web browser. Two of us are now venture capitalists.
Vivek Wadhwa: I was an entrepreneur then, and those guys who worked on Sand Hill Road were arrogant as hell. It was an alpha male culture. You know, “Bow down to us, we know more than anyone else.”
Gouw: VC has its share of alpha males, but I actually think the tech culture of 2017 is more bro-like than it was in the ’90s. The industry was smaller then. A Babson College study showed that the number of female investing partners dipped from 10 percent to 6 percent between 1999 and 2014.
Wadhwa: In the last year or two, because of the scandals, venture capitalists have gotten a reputation for sexism. Now they’re like investment bankers.
Byers: Back when we started in the ’70s, there were 50 to 100 venture capital firms. Today there are thousands. One certainly doesn’t need to be on Sand Hill Road anymore.
Horowitz: But from an entrepreneur’s standpoint: “I’m going to raise money, I’m going to go see Andreessen Horowitz and Sequoia, they’re on Sand Hill Road. Who else should I go see? Oh, those guys are in San Jose? [Laughs] I’m not driving to San Jose. I can see all the VC people I need on Sand Hill Road.”
This article appears in the September issue. Subscribe now.