The Internet Creates Buzz (Traffic Focus)
The story that doesn’t quite add up:
When Yahoo started, it was a portal site. There were several other internet companies around at the time. Yahoo asked for $2 million, and some investors hesitated—only two young guys coming for that kind of money seemed like too much back then. But Sequoia doubled down quickly.
Wang Huiwen asked Sequoia why they moved so fast on Yahoo. A Sequoia partner explained that most VCs have lengthy processes that take one or two months just to complete. But Sequoia believed the industry was still in its early stages, where the gap between founders might only be a matter of weeks. If they spent two months deliberating, the landscape could shift dramatically. By investing early, they could create a buzz:
“Sequoia backed two college students with a big check.”
That narrative alone would generate enormous attention, driving massive traffic to Yahoo’s site. It would also create a halo effect, making other investors prioritize Yahoo’s resumes and giving them a talent edge. That advantage would help Yahoo secure its next round of funding quickly, setting off a virtuous cycle.
In short, first-mover advantage makes it easier to seize the market.
Further reading: Why do the strong grow stronger? Is it sustainable?