The $100K Check That Became $10 Billion

In 1998, two Stanford doctorate students sent out emails hoping to raise money for their new idea, a better way to search the 15-year-old internet.

Most ignored their emails, but a few didn’t.

Those few made what is now considered the greatest angel investment of all time.

This is the story of Google’s first investors who turned small checks into hundreds of millions or even billions. Their stories are fascinating. And they hold powerful lessons for doctors considering startup investing.

Lesson 1: The Best Investors Don’t Wait for Perfect Clarity

Andy Bechtolsheim, co-founder of Sun Microsystems, met Google’s founders, Larry Page and Sergey Brin, in a parking lot.

After a quick demo, he immediately wrote a check for $100,000 to "Google Inc."

But there was a small problem. Google Inc. didn’t even exist. The founders hadn’t registered the company yet.

Not only that, but they hadn’t even agreed on a valuation when he wrote the check. Meaning he didn’t know how much of the company he was buying. But for Andy, it didn’t matter. It was the best idea he had seen and he wanted to get in before anyone else did.

The best investments will not be completely bullet-proof or “de-risked.” By the time they are, a lot of the upside, and opportunity for angels to invest, are gone.

Lesson 2: Proximity Is Power. Get in the Right Circles

David Cheriton, who, funnily enough, lives just a few blocks away from me, wasn’t a professional investor. He was a Stanford professor who casually heard about Google from Andy.

He wrote a $100,000 check. Today, he’s worth over $10 billion from that investment. He is known as the Billionaire Professor. He has also gone on to make a few billion in other tech investments and companies.

Despite Cheriton’s immense wealth, he still lives a very humble life. He prefers to spend his money donating to education. He rides his bike around Palo Alto, and has never meaningfully upgraded his life.

Physicians often surround themselves with other physicians. But if you want to invest in startups, you need to be in rooms where startup founders gather. Y Combinator and other accelerators’ demo days, AI conferences, tech-physician groups.

Proximity is power. For many investors, that even means moving to Silicon Valley. For physicians, it’s probably smarter keep a higher-paying job elsehwere while maintaining access to the network here.

Lesson 3: Bet on Founders, Not Just Ideas

Ron Conway, one of Silicon Valley’s most successful investors, heard about Google when he ran into David Cheriton at a holiday party.

He had an understanding of search engines, but more importantly, he understood people. He saw two geniuses with a ton of confidence and made a decision to invest immediately.

However, it took him a lot longer to convince them to take his money. By the time they met Ron, they already got enough checks from angel investors and wanted to work with a big venture capital firm. But Ron knew a good deal when he saw one. He was relentless til he got his allocation, largely by helping them orchestrate their next VC round.

Physician investors need to understand the best startups rarely stick to their first idea. All that matters is who’s executing.

When evaluating founders, focus on:
- Grit – Have they achieved or built against the odds before?
- Agency - Do they take matters into their own hands?
- Speed – How quickly do they iterate?

Notably, it was Ron’s own grit, agency, and speed that got him into the Google investment.

This is part 1 of a 2-Parter.

In Part2 , I’ll share about how some very unexpected people got in on the investment of a lifetime, and lessons from their stories.