After 30 years, Valentine's still picking winners

Some think of Don Valentine as the grandfather of Silicon Valley venture capital.

Since founding Sequoia Capital in 1972, he's helped nurture some of the Valley's biggest successes, including Apple, Cisco, Electronic Arts and Oracle. In all Sequoia, which now manages a $3bn fund, has helped start and finance more than 500 companies.

Valentine's impressive instincts for good business plans once earned him the title of "the man with the golden gut" from Forbes magazine. But he's not immune to the occasional stinkers: Sequoia has also backed dot-com duds Webvan and eToys.

Nevertheless, Valentine is feared and revered among entrepreneurs pitching their ideas on Palo Alto, California's famed Sand Hill Road. And for good reason. Valentine could also be called the man with the sharp tongue among those he dislikes. Valentine recently spoke with ZDNet UK sister site CNET News.com about the past, present and future of Silicon Valley.

Which technology or company is most overhyped at the moment?
Nanotech anything, probably in part because of the huge amount of technology press coverage of what is sort of a lab fascination with the chemical process. People don't talk about particular applications, like making Pentium chips 50 times faster or curing diabetes.

So it's the media's fault?
The press has become fascinated with the concept and the scientists and investors and all the peep show surrounding the phenomenon. They have been interviewed to death. If there is an application for nanotechnology, it's going to be the later part of our lifetimes. You have this huge amount of press coverage and no market problem that needs solving.

What new Internet trend most fascinates you now?
I think the first phase of the Internet is established. We think of it here as the Internet, phase two.

What is phase two?
To us, it's merely the reality phase of something that happens that's over-hyped, like nanotech. Now we're really into solid applications, problem solving and business. Look at how much advertising is moving to the Web portals. It's a reconstitution of the way Madison Avenue needs to play best.

The biggest thing that is making the Internet and all those things more interesting is broadband. It makes the Internet an even more powerful platform in which to buy and sell things -- as a media platform and a market. To me it's an issue of patience. [Cisco chief executive] John Chambers was talking recently about broadband and indicated that the US is fifteenth in the world at implementing it.

Should people be alarmed by that statistic?
Possibly, for national pride reasons. Or for business-efficiency reasons. I really think it's sort of embarrassing for South Korea to have an intrinsically greater disposition in broadband than California.