Lessons from David Cheriton

David Cheriton, the Stanford professor who famously wrote one of the first checks to Google, is as well-known for his astute investment philosophy and deep technical expertise as he is for his remarkably frugal lifestyle. His teachings, often delivered with a characteristic directness, offer a wealth of knowledge for entrepreneurs, investors, and anyone interested in building things of lasting value.

On Investing and Value Creation

"I tend to look at potential investments from the standpoint of whether it is a valuable contribution to society." [1][2] Cheriton's primary investment filter is whether a company is solving a genuine problem and adding real value to the world.
"I am a believer in Adam Smith, who says that if you look at something that really contributes value to society, and you can deliver it at a reasonable price, then society will recognise that at some point because rational behaviour will come into play." [1][3] He has a fundamental faith that good ideas that benefit society will eventually be rewarded.
"Never invest in something you can't explain to your mother." [4][5] This rule of thumb emphasizes the importance of clarity and understanding the fundamental business proposition.
"Never invest in a startup that only exists for one reason, because I've seen so many cases where the one reason goes away." [6] He advises looking for companies with multiple reasons for being, suggesting a more robust and adaptable business model.
"Don't worry about being first. Often the first mover is the first loser." [4][5] Execution is far more critical than simply being the first to market.
"I'd rather be lucky than smart and I think I have been pretty lucky." [5] A dose of humility and acknowledging the role of fortune in success.
"I look for opportunities where I can add real technical value. It becomes a competitive advantage." [5] Cheriton prefers to be an active investor, contributing his expertise to the ventures he backs.
"Rather than spray and pray I invest time and money in the company to make sure it's successful. I treat it as my baby rather than one of the horses I'm betting on." [5] This highlights his focused and deeply involved investment style.
"Search is an important problem, and it's been an important problem forever in computing." [7] His reasoning for investing in Google was based on the fundamental and enduring nature of the problem they were solving.
"If you look at all the options for using one's financial resources, I think education is the best investment." [8] This belief is reflected in his significant philanthropic contributions to universities. [9][10]

On Entrepreneurship and Building Companies

"The success of a company is similar to the French Revolution... it's all about execution." [6] A powerful analogy emphasizing that ideas are only as good as their implementation.
"You have to look at a marketplace like a battleground." [1] This suggests a need for strategic thinking and understanding the competitive landscape.
"You can't do things without good people that have the right background." [4] He consistently stresses the importance of a talented and knowledgeable team.
"It's an enormous challenge to grow a company that quickly and not go off into the weeds, so to speak." [11] Acknowledging the inherent difficulties of managing rapid growth.
"What you kill off and what you keep and how you go about doing it" is crucial. [4] The ability to make tough decisions about what to pursue and what to abandon is a key to success.
"Choose your friends well." [4][5] This simple advice underscores the importance of the people you surround yourself with in business and in life.
A startup is "like one of the scariest roller coaster rides you can go on where it's a lot of fun but it's pretty scary at times." [6] A realistic and candid take on the entrepreneurial journey.
"Entrepreneurs think about how do I earn the customer's business." [12] A focus on earning, not entitlement.
He dislikes waste, believing it "leads to bloated organizations, complacency, and distraction from core goals." [13] This philosophy of frugality is a cornerstone of his personal and business life.
"Great companies are not built by riding hype cycles, but by delivering technologies that stand the test of time." [13] A call for focusing on substance over fleeting trends.

On Technology and Innovation

"There are two kinds of researchers: those that have implemented something and those that have not. The latter will tell you that there are 142 ways of doing things... The former will simply tell you that 141 of them don't work." [3][14] A classic Cheriton quote that champions practical experience and implementation over theoretical pontification.
"My research interest is in the plumbing level of computers, helping to run complex applications better." [8] His focus has often been on foundational technologies that enable broader innovation.
On the "public cloud": "What does public mean? It means that if you pay for it you can use it. Well, by that definition I claim Disneyland as a public park." [4] A critical perspective on industry terminology and a warning about vendor lock-in.
"I think there's still some amazing technical challenges... the technical challenges are the things that excite me and get me up in the morning." [15] His passion for solving complex problems remains a driving force.
"In-memory processing leads to dramatically faster computers—in some cases speeding up applications by a factor of 100,000. It changes the complete nature of how a business can run." [8] An example of his focus on game-changing, fundamental technologies.
He believes in empowering technical talent, stating that "the best ideas often come from the engineers, the scientists, and the builders, not from the executives." [13]
"The thing that I've enjoyed the most is all the people I've worked with... it's just very exciting to build a team where you pull off something that you realize no individual could do by themselves." [15]
"I must admit that I don't really understand social networking models that well, and I haven't tried to because I have just not been enthused about this whole thing." [1][3] An admission that even brilliant investors have their areas of focus and disinterest.
He saw an opportunity in networking because "Your whole company runs on the network. If the network fails your whole company fails." [4] This highlights his ability to identify critical infrastructure needs.
"I think of this as the operating system problem, how do you operate complex computer-based systems and the answer can't be manually." [15] This points to his interest in automation and creating more efficient systems.

On Life and Learning

"True success lies in the pursuit of knowledge, a desire to contribute to the world, and a commitment to lifelong learning." [16] A summary of his core values.
Despite his immense wealth, he is known for his frugal lifestyle, driving an older vehicle and living modestly. [9] This is a testament to his focus on substance over appearance.
"I think I have always enjoyed Mathematics. In public school, I found it amazing how things worked and fit together." [17] His early interest in the elegance of systems.
On switching from music to mathematics: "I met very, very talented people and came to the realization that no matter how hard I tried I would not have been in the same league as they were." [17] An example of his rational self-assessment.
"The goal is to get students to think like experts." [8] His aim as an educator at Stanford.
"People are what make a university tick and good people create opportunities." [8]
"Yesterday's entrepreneurs mentor today's entrepreneurs who mentor tomorrow's entrepreneurs." [8] The cyclical and supportive nature of the Silicon Valley ecosystem.
"There is something about military history that fascinates me." [1] An interest that informs his strategic thinking.
He believes the best leaders "are not the ones who tell people what they want to hear but the ones who can calmly assess reality even when it's uncomfortable." [13]
"I don't deserve a lot of credit for Google overall. I am happy I had some small part." [17] A humble perspective on his role in one of the world's most successful companies.

On Google and its Founders

Recalling his initial investment in Google: "I didn't think raising the money should be a problem." [7][18] His confidence in the idea and the team was immediate.
"If you'd ask me even a few years back, I would have thought Sergey [Brin] would have been the more obvious CEO than Larry [Page]." [7][11] An interesting insight into the co-founders' early dynamics.
He feels "redeemed" that his six-figure investment in Google worked out. [11]
"I think Google is doing very well... they have, you know, maintained an amazing capability in search." [7]
He notes that innovations like Google's instant search are "a pretty amazing innovation in many ways, but it's really not that hard to do technically... if you can bring enough cycles to bear." [7] A technical perspective on a popular feature.
On whether the Google founders still seek his advice: "No, they haven't for some time... I'd be more inclined to go to them for advice at this stage." [7][11] Acknowledging their growth and expertise.
He notes that major search engines at the time, like Yahoo and Excite, had turned down the opportunity to license Google's PageRank algorithm. [11][18]
He gave Larry Page and Sergey Brin "useful help and guidance in the early days." [17]
He and his friend Andy Bechtolsheim provided the initial $200,000 in seed money for Google. [11]
"So many times what showed up when you searched for something wasn't what you were after." [7][11] This was the clear problem that Google was solving so effectively.

Learn more:

Lessons from David Cheriton

On Investing and Value Creation

On Entrepreneurship and Building Companies

On Technology and Innovation

On Life and Learning

On Google and its Founders

Written by Antoine Buteau

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