Let’s solve a problem. Imagine you’re a partner at a venture capital firm, and you’re presented with this funding proposal: The other party is asking for $600,000 in exchange for 10% equity, implying a $6 million valuation. However, the company’s profit last year was only $60,000. This is a deal with a 100x P/E ratio. About the founders: One is 22 years old (just dropped out of college), the other is 27. They have no experience managing large companies and dress sloppily. The truth: This was Apple Computer in 1977. The 22-year-old founder? Steve Jobs. The firm that faced this decision and ultimately took the deal? Sequoia Capital, which was just five years old at the time. Even Don Valentine, the founder of Sequoia and known as the “Father of Venture Capital,” was filled with doubt when signing this deal. In an internal memo, he wrote: “This is an extremely expensive deal.” “Management capabilities are questionable.” Despite the doubts, Sequoia decided to “place their bet.” But here’s the twist: Sequoia didn’t hold onto their shares. Just a few years later, for various reasons, Sequoia sold off their stake for $6 million. Fast forward to today, with Apple’s market cap surpassing $3 trillion, that 10% stake would now be worth approximately $370 billion.