Sand Hill Road. Sleepy suburbs, extensive immaculate lawns and Mediterranean vegetation. Small, mostly two-storey buildings hold vast financial resources and influence in the world of new business. Office space costs more per square metre here than on Manhattan’s Fifth Avenue. Since the 1970s, this unassuming and essentially isolated place has been where people seek funding to bring their boldest visions of the American dream to life.
A new Wall Street for the bold
Just as Wall Street became synonymous with public markets, the shared brand created by Sand Hill Road's firms is associated with private equity. The key difference is that, whereas the New York Stock Exchange was built from the outset by representatives of financial and commercial interests, California's PE/VC industry developed alongside and closely connected with the technology revolution, first focusing on hardware and increasingly on software.
Without overgeneralising, many more contrasts can be found. Wall Street focuses on trends, phenomena, commodities, investment homogeneity and predictability, mathematical market models and a macro scale reflected in individual transaction sizes and impressive architecture. Sand Hill Road operates on a human scale: an investment often rests on confidence in the talent, knowledge and energy of just a few people laying the foundations of a new venture.
Spectacular beginnings
Kleiner Perkins Caufield & Byers (KPCB) was the first private-investment firm to arrive on Sand Hill Road in 1972. It was founded by engineers with degrees from East Coast institutions — Eugene Kleiner from New York University, Thomas Perkins from MIT and Brook Byers from Georgia Tech in Atlanta — who had participated in key information-technology projects as co-founders or senior managers.
Kleiner, born in Vienna before the war and sharing with his family the experience of many Jewish immigrants who helped build America's scientific strength, came to California at the invitation of transistor inventor and 1956 Nobel laureate William Shockley himself. As one of Shockley's former employees known as the 'traitorous eight', he co-founded Fairchild Semiconductor, a pioneer in modern integrated circuits. Its later decline prompted a mass exodus of talent in one of Silicon Valley's earliest startup waves, reflected in Fairchild's somewhat ambiguous slogan, 'we started it all'.
Intel was founded in 1968 by Robert Noyce and Gordon Moore, both previously associated with Fairchild Semiconductor. Eugene Kleiner was not an Intel co-founder. These stories illustrate connections between engineers, entrepreneurs and investors, but should not be merged into a single biography.
Sand Hill Road's financial fuel and essential know-how came largely not from bureaucrats or bankers, but from people directly from the industry who had already undertaken their own business ventures and experienced entrepreneurship's highs and lows first-hand.
Synonymous with talent and innovation
From time to time, the press and experts predict the end of Sand Hill Road as it has been known for more than forty years. The industry is globalising, and growing competition puts investors under pressure to work closer to the places where new ideas, activity and ferment emerge. Yet the brand and legend of Sand Hill Road's funds seem durable enough to continue setting industry standards and attracting the most promising projects and people for years to come.
