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[Music]
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Sequoia is the most soughta name in the
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venture capital business.
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The firm has made over a thousand
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investments now worth in the trillions
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in public market value.
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There's a list of five VCs who I think
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can really transform a company and
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you're one of those five.
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When I joined Sequoia, it was clear that
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if I wanted to make it as a partner, you
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needed to produce meaningful games.
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YouTube, Instagram, Square. This is a
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list of amazing amazing startups. Our
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ambition is to build a partnership that
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endures and that means we need to leave
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it in a better place than we found it.
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Ladies and gentlemen, please welcome
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Seoia Capitals Rolloff Botha.
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See you. See you. What's up, bro? How
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are you? Good to see you.
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Welcome,
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Ralph. There's a question.
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What's that? Where did Saxs go?
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Get to pee pee. He had to make a weiw
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wee.
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Come on.
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You Yeah, exactly. You guys did work
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together
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for 25 years ago and he just abandons us
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right now.
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He's had enough of you. Um, everybody
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wants to know who's your favorite
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Sequoia scout of all time.
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Let's go through it.
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Jason Calakanas.
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It is hilarious. Um, when you think
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about it, you came to me, gosh, 15 years
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ago, and you said, "I have an idea for a
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program. It's called Sequoia Scouts.
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We'd like to, um, have you go around and
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invest in some companies."
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And, uh,
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no good deed shall go unpunished.
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Absolutely. Created a monster. Um, but
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that program
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Sorry, before you ask your question, how
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far are you going to insert your head up
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Roloff's ass?
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[Applause]
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We sat him that far away for a reason. I
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mean, um, sorry, bro. Jesus Christ. Go
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on with your question.
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That's
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Let me land the question.
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What's your question, D?
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That program, um, had some that first
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cohort of individuals
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um, wound up being a pretty interesting
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group of folks. Maybe you could tell
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everybody just a little bit about that
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program you conceived of and then who
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were some of the first folks in it and
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the first investments. We conceived of
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this program as you mentioned in 2010
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when we launched it and the idea was
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that there were a bunch of contemporary
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founders who had very interesting access
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to upand cominging founders who are
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turning to them for advice but these
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founders didn't yet have money at the
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point that you became a scout. You
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didn't have the net worth you have now
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where you could write a check on your
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own. And so we thought it'd be a great
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program for us to provide the capital
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for founders like yourself to be able to
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invest in those companies and hopefully
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we would get an introduction to those
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companies for us to be able to make an
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investment too. So uh you were in that
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program you helped us with the
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investment in Uber. Sam Alman was in
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that group as well. He helped with an
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investment in a little company called
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Stripe.
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They did. Okay.
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So at this point that that fund is a 26x
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fund at this point.
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Wow. That's up there in the
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It's pretty good. What's the best fund
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in the history of Sequoia? Was it the
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Google fund, the WhatsApp fund? Which
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one has the highest multiple in history?
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Uh the highest multiple in history is uh
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I think Venture 12, which has Airbnb,
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Dropbox,
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Nera,
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ADM Mob and a couple of other companies.
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And then venture 13 which is the fund
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right after that has stripe and square
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now called block and a bunch of
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other companies. So those were both
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north of 20x funds. Tell us about the
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venture industry actually. So we're at a
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point in the cycle where there's been a
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lot of specialization both maybe at the
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stage level at the sector level. There's
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been all kinds of experimentation and
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approaches in strategy. Can you just
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level set on
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what you've learned and what the
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industry's learned and where we are?
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I'm glad you called it an industry, not
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an asset class. Um, I listened to one of
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the shows you guys had recently and I
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think there's a huge problem with the
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venture industry that there's too much
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money and you guys have talked about
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this before. Uh, venture industry as a
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whole invests right now between 150 to
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$200 billion a year was the last numbers
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I saw. If you think about reasonable
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assumptions for returns, let's just say
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12% peranom net, which isn't great.
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Might as well invest in an index fund,
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the math basically implies that you need
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three and a half to 4x funds to make
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that math work over a reasonable time
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frame. So if you're investing, let's
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just say $200 billion a year. The
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industry needs to give back 7800 billion
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a year. VCs don't own 100% of the
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company last time I checked. So that
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means that the aggregate exit value is
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north of a trillion a year.
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So Figma went public recently. They're
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worth 25$26 billion. You need 40 Figmas
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a year for the industry to make the
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returns work, which means that they
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don't. So in my opinion, investing in
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venture is a returnfree risk. You
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shouldn't. They're basically only about
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20 companies.
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You said return
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return free risk.
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risk.
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Exactly. If you look at every single
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decade, there are only about 20
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companies that end up getting exit
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values north of a billion dollars.
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Actual IPOs or M&As north of a billion.
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Not the paper writeups, only 20
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companies. More money doesn't create
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more great ideas or more great founders.
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So, I think there is way too much money
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in the industry. The industry does
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provide a lot of value. It provides some
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of the knowhow for entrepreneurs to
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succeed and obviously leads to job
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creation and all the attendant benefits
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for America. But there is too much money
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and too many people who want to be
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investors.
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How does the money get level set then
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and right sized for what is needed?
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I've been wondering that for 20 years.
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Uh this problem is a problem 20 years
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ago. It is only
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it's an incredibly sexy asset class. I
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mean look, Jason writes a bestselling
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book. It doesn't, you know, dissuade
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people. It incentivizes more people to
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say, "Oh, I can try this. I'll be like
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it." I mean, it's just a self-fulfilling
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prophecy. The more successes there are,
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there's just um
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Yeah. Everybody wants to go to Vegas
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and, you know, strike it rich. It
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doesn't happen.
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Yeah.
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That's part of the dynamic is that you
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get a firm that has one success in their
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fund and then they attract more capital
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because people think it's repeatable and
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it's not.
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And you don't know you don't know that
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till fund three or four. Like often they
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raise fund three before they've even
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oh they've raised fund two, three, four,
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and five before even fund one is really
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fully distributed a lot of times. So
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what could change for one one of the
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things that I thought was transparency
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but nobody wants to publish their
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returns. You could publish your returns.
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I publish my returns but you know I'm
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not taking outside capital but would
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that help? Like is it working with
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people like Cambridge so that these
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things become more public and more
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understood? It seems like there's an
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education element here that's missing on
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behalf of the industry to the potential
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LPS. I think people will still hide
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behind the J curve effect and they'll
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say yeah my fund is only at 1.5x right
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now but it's only four years in and you
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know the winners are going to emerge and
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so I think this this hope springs
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eternal dynamic and such a long time
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period of gestation before the companies
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get realized that I don't think that uh
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will change that dynamic unfortunately
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there's also been this really
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interesting effect where it's been this
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industrialization of venture capital I
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will call it so if you look at the
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organization that has built the
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organization that General Catalyst has
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built. It's about this girthiness,
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right, across many different things.
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How has Sequoia reacted when they've
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seen those movements? And I'm sure
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you've had to sit down as a partnership
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and say, are we matching this? Are we
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copying this? Are we going to do the
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same thing? Are we doing something
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different?
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That is a great question. The industry
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has changed a lot since I got into
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venture just over 20 years ago. If you
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go back to the proverbial 1990s venture
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firm, it was, you know, a dozen people
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sitting around a table making investment
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decisions with very lightweight staff.
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Uh, and it was much more of a cottage
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industry. I think the industry is
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professionalized and really the founders
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are the ones who benefited from it
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because all these firms have built
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larger operating teams to be able to
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help those founders with talent, with go
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to market and so I think it's really
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helping founders. That's probably the
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main takeaway I have from that. We've
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decided to not build as big an
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organization. Most of the operating
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teams we have at Sequoia help us. So we
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have about as many developers at Sequoia
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as we have investors and they're
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building products for us so that we are
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much more effective and productive than
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we might have been 20 years ago.
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What's an example of that that they're
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building for you?
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Uh so you know my phone I can pull up an
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app that I if you give me any company
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name I'll be able to tell you who my
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team last met, how we rated it. I'll
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give you uh data on what's happening
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with their hiring. Uh how many vouched
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employees they have, how good do we
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think their engineering team is based on
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their history, their academic profiles,
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etc. All this information is at my
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fingertips. Uh if we get business plan
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submissions, we have an AI system that
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will summarize it for me. So I get a
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very quick read on the company, a quick
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summarization of the quality of the team
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and a very quick analysis of the
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competitive dynamics and the other
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companies I should consider alongside
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them. So these are just small examples
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of the things we do. We just had Joe
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Saiion on. We're talking a bit about the
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relationship between America and China.
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You had a fabulous business in China for
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two decades, I believe,
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with Neil.
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Yeah.
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And it did absolutely fantastic. But
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then the government of the United States
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said, "Hey, we cannot as venture
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capitalists invest in China anymore."
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So, what are your what's your take on
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the the opportunity in China? Will that
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return? and and just the the experience
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you had with all those incredible hits
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at the time.
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When we first went into China, it was
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2007 I think. Uh the world was flat was
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the moniker at the time. China gained
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admission to the World Trade
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Organization in I think 2001
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and we all believed that it would
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integrate into the global economy. That
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premise proved wrong. And so we had a
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period where it was really interesting
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to be able to share knowledge and share
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ideas and sort of figure out how we can
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build a globally interconnected set of
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systems and companies. Uh and life just
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got too hard for that honestly and we
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saw just more division between the two
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countries. So we embarked on global
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separation just over 2 years ago and
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what used to be China is now an
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independent business called Hongchan and
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they're off to the races. I think
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there's a real challenge in China right
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now. Uh some stat I got recently in 2018
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there were 51,000 companies started in
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China. In 20123 it was 1,200.
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Wow.
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How many?
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1,200. You had a 98%
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reduction in the number of companies
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founded in China. Cuz if you're an
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entrepreneur in China, why would you
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want to start a company when the
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government regulations are so uncertain?
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Which by the way is an interesting
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warning sign for me for us in America as
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we think about AI policy and AI
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regulation. The more uncertainty we
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create for founders, the more difficult
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it is for them to actually take that
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risk, take that leap to start a
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business. So, but Chinese
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entrepreneurship is still strong. So,
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you see many Chinese entrepreneurs now
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operating in Latin America, they move to
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Singapore, they're in uh Japan, they're
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moving to Europe. I mean, you can't
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repress that spirit. Rolof, there's a
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interesting dynamic that I observed
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which is you have the early early stage
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venture companies who have had an
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incredible track record. you guys,
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Benchmark, Kosla,
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and then what happens is you have these
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latest stage firms, but many of the
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companies that they fund need so much
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money that the latestage firms can't
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service them. So, you have to go direct.
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You go right to Saudi, you go right to
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the Qataris, you go right to the
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Amiradis, you go right to Norway, you
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know, these sovereign wealth funds that
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are writing these big checks. And so, it
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creates this really weird dynamic where
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you almost become this kind of glorified
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placement agent almost. So there's this
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part of the curve and then there's all
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this money that goes over here. How do
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you adapt the business in the face of
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that dynamic?
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Well, we stick to our knitting. Uh the
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funds we operate today, our seed venture
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and growth funds today are no bigger
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than they were 5, six, seven years ago.
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We we realize that there's money to be
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made for some people writing very large
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checks and very latest stage companies.
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But uh our aspiration is to be the
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number one investment manager for our
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limited partners. We literally want to
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be the best net IRRa and net multiple
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for our LPS and we're not interested in
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maximizing fees or maximizing share of
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industry value creation.
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That's the game we've chosen to play.
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And so there's no path where Sequoa for
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example tries to go public or take the
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you know that's like it's just not in
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the strategy of the business. No,
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actually we've structured ourselves to
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be a private partnership in perpetuity
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to the extent possible under California
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law. We have the sense of stewardship.
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You have to leave the partnership in a
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better place than you found it. Don
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Valentine didn't call it Valentine
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Ventures when he started it. He handed
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the partnership over to a next
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generation with Mike Meritz and Doug
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Leone and Jim Gett. And you know, we're
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now part of a third generation, our team
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currently running the partnership. We
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didn't have to pay to get the
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partnership from the previous generation
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and nor will we charge the next
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generation. That's that's our motto.
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How would you describe the culture
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that's driven the success rolloff? So
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when you select partners, what do you
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look for? How do you value those
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partners? How do you assess the
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performance of those partners? And how
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do you guys operate that kind of defines
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the culture?
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So I think the probably the most
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important characteristic we look for is
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an insatiable curiosity in the
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individual. We look for people who are
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extremely driven, but they need to have
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a heart of gold. So one of the things we
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talk about at Squay is um we cherish
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individualism and teamwork. You need an
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individual to be able to have a keen
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insight and propose an investment but
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you've got to work with a team and that
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the whole teamwork aspect is really
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important for us. So when you make
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investment decisions at Sequoa it's a
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consensus decision which blew my mind
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when I first got there. I
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meaning everybody has to agree.
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Everybody has to agree.
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So if one person says no it doesn't
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happen.
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Correct.
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So one person can veto an investment.
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Correct. And that happens often or
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it has. Sometimes it was a good decision
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and sometimes not.
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What do the statistics tell you?
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What's the worst uh thing somebody
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killed?
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Oh jeez.
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It's okay. We're all friends here.
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What is that list called when you have
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that?
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Yeah, you would call it your anti
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portfolio.
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Anti portfolio.
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But in this case, somebody
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wasn't just an anti portfolio. It's like
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everyone agreed we should do it except
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the one.
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Yeah. Yeah. And so you think about that
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responsibility uh
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and it weighs on people,
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but it means that you need to show up
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with your best game every single day.
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And you know, part of what we've done is
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we look at the vote distribution these
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days and look, if somebody shows up and
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everybody's really positive, there a
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bunch of people that are eight nines out
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of 10 and there's one person who clearly
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woke up at the, you know, in a bad mood
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and is a three, you know, at some point
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that person will probably say, "Listen,
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maybe I just don't get it."
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This actually happened to me. We
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listened to a company in late November.
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This company is thriving right now.
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They're in the it's pretty sax isn't
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here because this company's benefiting
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from stable coins with the genius act
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that he helped put in place is really
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benefiting from that and I didn't quite
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get this company at the time and I was
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the only person who was below the line
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and I said listen there's something I'm
00:15:12
missing in this particular company. I
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think we should proceed with the
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investment even though my intuition
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walking in was that we shouldn't
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and I'm really glad that we proceeded.
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So
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can you tell us about the holding
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company transition that you underwent
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and the role of being a venture
00:15:25
capitalist in making an exit decision?
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So we did this conversation on the show
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a few weeks ago. Pulled up some
00:15:32
analysis. The biggest winners continue
00:15:34
to compound as public companies. 99% of
00:15:37
the returns are as a public company or
00:15:38
whatever it is. So it looks like an
00:15:40
amazing exit goes public.
00:15:42
But that's not the end of the value
00:15:43
creation. True compounders compound for
00:15:46
decades. Especially founders are still
00:15:47
in the seat. Amazon, Nvidia was a
00:15:50
Sequoia investment. I think Google, I
00:15:53
mean, these are multi-trillion dollar
00:15:55
companies that if you guys held your
00:15:56
position to today, I'm assuming things
00:15:59
would look a little bit different.
00:16:01
It would. Yes. So, so we backed a bunch
00:16:03
of very interesting companies over our
00:16:05
50 years. Uh, the companies in which we
00:16:07
were private investors when they were
00:16:09
little companies
00:16:11
today account for over 30% of the total
00:16:13
value of the NASDAQ.
00:16:15
Wow.
00:16:16
There's no other 30%
00:16:18
over 30% of the combined value of the
00:16:20
NASDAQ.
00:16:21
Apple, Nvidia,
00:16:22
Apple, Cisco, Nvidia, Google, Pala
00:16:25
Network, Service Now, uh I mean the list
00:16:28
goes on. So
00:16:28
pretty pretty good.
00:16:30
So So one of the things we realized,
00:16:32
what you're alluding to is in 2022, we
00:16:34
launched something called the Sequoa
00:16:35
Capital Fund. And so we realized that
00:16:37
the great companies continue to compound
00:16:39
as you talked about in that episode. It
00:16:41
was it was an excellent episode
00:16:42
obviously. Um, and by the way, even in
00:16:45
more recent memory, if you look at the
00:16:46
last 10-ish years, Palto, Service Now,
00:16:49
HubSpot, MongoDB, these companies have
00:16:52
all been 10 X's as public companies. And
00:16:55
so, we've realized that when we
00:16:56
distribute shares prematurely to LPs,
00:16:59
they don't know any better because, you
00:17:00
know, they run a big endowment. They
00:17:01
suddenly get $5 million worth of company
00:17:03
ABC. They don't know any better. They
00:17:05
sell the shares. So, what we've decided
00:17:06
to do is for the companies that we
00:17:08
believe have the ability to compound
00:17:09
longer term, we have a different fund
00:17:11
structure. And so 6 12 18 months after
00:17:14
the IPO, we can move those shares into
00:17:16
this fund called the Sequoa Capital
00:17:18
Fund. And this now becomes the vehicle
00:17:20
through which we fund all our next
00:17:22
underlying investment vehicles. Now to
00:17:24
give you a sense, since we launched this
00:17:26
3 and a half years ago, we've
00:17:28
accumulated another 6.7 billion in gains
00:17:32
by doing nothing except being patient.
00:17:35
$6.7 billion in gains that our LPs would
00:17:37
not have seen if we had just distributed
00:17:39
those shares outright.
00:17:40
Yeah, you're making him moan. He's
00:17:42
moaning.
00:17:42
I like it. I'm getting I'm getting
00:17:44
getting warm and he's getting emotional.
00:17:46
But what is but what is the So the
00:17:48
counterargument is as a public company,
00:17:51
you as venture capitalists who are
00:17:53
excellent at interrogating early stage
00:17:55
technology, early stage metrics, founder
00:17:58
personalities, all the things that might
00:18:00
make a good venture capital investor.
00:18:02
Maybe as a public company, quarter to
00:18:03
quarter, are they growing 12%, 14%.
00:18:06
There's a different analytical skill set
00:18:07
some might argue like you know that that
00:18:10
belongs in that investment domain and
00:18:12
frankly very hard to beat the indust
00:18:15
indices doing that. What's the argument
00:18:17
to be made to the counter and why would
00:18:21
you counter that argument?
00:18:22
So see one of the things for us is that
00:18:24
the I mean most of these cases we're
00:18:26
involved with these companies literally
00:18:27
at inception. I mean Palo Alto Networks
00:18:30
was incubated inside our office with one
00:18:32
founder and my partner Jim Gates. So,
00:18:35
we've known these companies since the
00:18:36
earliest of days. Why should that
00:18:39
relationship end at the IPO?
00:18:41
And in most of these cases, as you
00:18:43
pointed out, the founders are still
00:18:44
there and there's so much more
00:18:45
innovation taking place. Um, Jack
00:18:48
Dorsey's one of Jack Dorsey's favorite
00:18:50
quotes to me was companies have multiple
00:18:52
founding moments. And so when you're in
00:18:55
a company where the the founder keeps
00:18:56
reinventing the business, you know, a
00:18:58
company like Square, half the revenue
00:19:00
today comes from a product called Cash
00:19:02
App that hadn't launched for the first 5
00:19:03
years in the company's life. And so if
00:19:06
you can find these companies, these
00:19:08
special companies where the founders
00:19:09
keep pushing the boundary on innovation
00:19:11
and they are relentless, then it works.
00:19:13
Google buying YouTube.
00:19:15
Don't remind me.
00:19:17
Do you think it would have been the
00:19:18
same? Would YouTube still have had the
00:19:20
same outcome if it wasn't acquired? To
00:19:23
be clear, RUF wrote in his first year or
00:19:26
two at the company, the deal memo to
00:19:27
invest in YouTube and it got bought for
00:19:31
1.6 billion. Standalone business today
00:19:34
would be worth 400500 billion.
00:19:37
And then Google then invested quite
00:19:39
significantly in infrastructure and
00:19:41
enabling scalability and building out a
00:19:43
team and building out an ad revenue
00:19:44
system, etc. We've got Neil here
00:19:47
tomorrow to talk about the current state
00:19:49
of YouTube, but do you think it could
00:19:52
have taken the same? It's hard to say.
00:19:53
Hard to say. Uh I think a lot of credit
00:19:56
should go to Google for the way that
00:19:57
they managed YouTube after the
00:19:58
acquisition, both in the resources they
00:20:00
provided, the leadership um and they've
00:20:03
enabled it to thrive. This is one of my
00:20:05
favorite things that Peter Thiel says is
00:20:07
uh you know when you make it when an
00:20:09
acquisition like this happens one side
00:20:12
was orders of magnitude off like it was
00:20:15
just a zero or it was 100 more than what
00:20:18
they paid. Something is always off.
00:20:19
Anyway,
00:20:20
Don Valentine um the founder of the firm
00:20:23
drew a four quadrant chart at one point
00:20:25
to explain the founders
00:20:28
that uh perform extremely well in terms
00:20:30
of returns. Maybe you could explain that
00:20:32
to the audience.
00:20:34
Yes. Uh Don pulled me aside in the early
00:20:36
days when I joined Sequoia and he said
00:20:38
2x2 matrix uh people are exceptional not
00:20:42
exceptional easy to get along with not
00:20:45
so easy to get along with. Ruof we
00:20:48
normally make money in one of those four
00:20:50
quadrants. Your job is to figure out
00:20:52
which one
00:20:54
and it's the exceptional people who are
00:20:56
not so easy to get along with.
00:20:59
Uh so then let's talk about the next
00:21:01
generation.
00:21:02
I'm sorry. Can we just double click on
00:21:03
that? Why do you think that is?
00:21:05
These people change the world. They
00:21:07
don't take no for an an for an answer,
00:21:08
right? They are
00:21:09
How does it Why does that make them hard
00:21:10
to get along with, per se?
00:21:12
Well, I think he was he was saying that
00:21:13
a little bit tongue and cheek, right?
00:21:14
But this is a guy who backed Steve Jobs
00:21:16
when Steve would walk around Sand Hill
00:21:18
Road without shoes. He'd come back from
00:21:20
a trip to India. Allegedly, he didn't
00:21:22
smell too great. Um, and he was unusual
00:21:25
and nobody wanted to back him. And you
00:21:27
know, Don wanted to find these
00:21:28
underdogs, these unknown
00:21:30
Atari.
00:21:31
Well, apparently some of the Atari board
00:21:34
meetings took place in hot tubs.
00:21:36
Yes.
00:21:36
Uh he told,
00:21:37
by the way, that's how he got to Steve
00:21:39
because Steve had worked at Atari.
00:21:42
That's how Don got the introduction to
00:21:43
Steve. So, so I think part of the point
00:21:45
he was trying to make is don't look for
00:21:47
the people that, you know, went to all
00:21:48
the right schools and wear the right
00:21:50
clothes, all the conventional stuff.
00:21:51
Founders are unconventional. These
00:21:53
people change the world. I mean, most of
00:21:55
us encounter challenges every single day
00:21:57
and we accommodate. you know, this thing
00:21:59
isn't quite to your liking, you adapt.
00:22:01
Founders don't. Founders see things and
00:22:03
go, hm, I think the world can look
00:22:04
different and then they go and try to
00:22:06
fix it. They just don't take no for an
00:22:08
answer.
00:22:08
So, let's fast forward to your two
00:22:10
mentors, Michael Moritz and Doug Leone.
00:22:12
Two very different characters when the
00:22:15
story gets told, maybe a rivalry there
00:22:18
um between the two of them. What did you
00:22:20
learn from each?
00:22:21
Sure. From Doug, I learned heart.
00:22:25
Unpack it. Doug has an incredible heart.
00:22:29
When did you see that most? What was the
00:22:31
moment that's coming to your mind right
00:22:32
now that you probably shouldn't talk
00:22:33
about?
00:22:36
Well, the I'll give you two examples.
00:22:38
One was in 2009 when I was in a funk. I
00:22:40
nearly quit the business. Um
00:22:41
I didn't know this really.
00:22:43
Well, we'd had the YouTube was a great
00:22:45
success. Uh and I felt very good about
00:22:47
that. And then you in venture after a
00:22:49
few years you val you walk through the
00:22:51
valley of despair and you start to
00:22:53
realize the things you should have
00:22:55
invested in that you didn't and the
00:22:57
lemons start to drop the things that you
00:22:59
did invest in that are not working out.
00:23:01
So yes there was the one great quick
00:23:02
exit but then a bunch of other things
00:23:04
and I was really having a lot of
00:23:06
self-doubt and Doug showed up at my
00:23:09
house with a homemade pesto jar
00:23:13
and he didn't need to. It was on a
00:23:14
Saturday afternoon. He knocks on my
00:23:16
door. Who's this person at my house? and
00:23:17
he just wanted to tell me that he was
00:23:18
there to support me through this dark
00:23:20
period. That was one example. Another
00:23:22
one was when uh my son was in hospital
00:23:25
and Doug showed up.
00:23:28
Didn't have to. Um that meant a lot to
00:23:30
me. So,
00:23:32
and Michael,
00:23:33
Michael's imagination.
00:23:36
Michael just has an unbelievable ability
00:23:37
to imagine how a company can succeed.
00:23:39
And when I thought about my mistakes as
00:23:41
an investor, by the way, every single
00:23:43
time it comes down to a failure of
00:23:44
imagination, that I didn't think big
00:23:46
enough. I didn't think about how this
00:23:47
company could uh progress from where
00:23:50
they were. You first introduced me to
00:23:52
Twitter 2007.
00:23:53
I have the emails
00:23:55
before smartphones launched and it was
00:23:57
an SMS app. I got tired of getting all
00:23:59
your I'm having cappuccino messages on
00:24:01
Twitter at the time. I remember
00:24:02
on your Blackberry. Yeah.
00:24:04
And I didn't quite imagine that it could
00:24:05
be what it is today. And so that to me
00:24:07
was an example. Uh, I remember an early
00:24:09
meeting with Yelp with Jeremy Stppleman
00:24:13
and Max Lechin in our offices and I mean
00:24:16
Yelp hadn't launched a web app that were
00:24:18
going to be an email newsletter thing
00:24:19
and Michael in this meeting said I
00:24:21
imagine that one day restaurants will
00:24:24
put a Yelp sticker in the window just
00:24:26
like a Zagat or a Michelin star. And he
00:24:29
saw that.
00:24:30
He saw that.
00:24:31
He saw that. I mean 10 years before that
00:24:32
became a reality he had the imagination
00:24:34
to think about that. That to me is
00:24:36
amazing. So now Doug is still there and
00:24:38
Mike has transitioned out. Is that the
00:24:40
what is
00:24:41
Yes, Michael has transitioned out
00:24:43
completely. Doug has stepped back from
00:24:44
day-to-day investing. So he's no longer
00:24:46
in partner meetings routinely, but he
00:24:47
continues to serve on several boards.
00:24:49
And you're in charge.
00:24:51
I'm the leader of a team and I think of
00:24:53
more like being captain of the team. You
00:24:55
play team sport. We play team sport at
00:24:57
Sequoia and you know we are equal
00:24:59
partners and you know it's
00:25:01
Was it hard to see those two guys go
00:25:03
just seeing how legendary they were?
00:25:06
to succeed them? No.
00:25:08
Well, both to succeed them, but also
00:25:09
just to see them walk out the door.
00:25:10
Like, is there a tendency to want to
00:25:11
keep them around as long as possible? I
00:25:13
understand the question. Um, well, well,
00:25:15
firstly, it is very hard to succeed
00:25:16
them. I think every single person in
00:25:18
Sequoia feels this enormous burden and
00:25:20
responsibility to try to match the
00:25:22
performance that we've been known for,
00:25:24
you know, but we have this great
00:25:26
generational transition at Sequoa. So,
00:25:28
Michael stepped back from day-to-day
00:25:29
activity in 2012
00:25:32
and he was
00:25:33
Morris did in 2012. of Michael stepped
00:25:35
back. He had personal health reasons and
00:25:36
he stepped back. He continued to serve
00:25:38
on the boards that he was on and we we
00:25:40
had him for another decade where I would
00:25:43
ask him for advice. You know, as we were
00:25:44
going through global separation that we
00:25:46
talked about earlier, I would ask Doug
00:25:48
and Michael, you know, what do you think
00:25:49
should we you know, what should we be
00:25:51
doing here? Do you have advice for me?
00:25:52
And so it's a we have this benefit of
00:25:54
intergenerational uh knowledge transfer.
00:25:57
Uh Doug was on a call earlier today.
00:25:59
Actually, we had a difficult
00:26:00
conversation. I wanted his input on an
00:26:02
important question and it's not because
00:26:04
he has the authority to tell me what to
00:26:06
do. It's because I seek out his advice.
00:26:08
You were investing in traditional
00:26:10
software, internet services for years
00:26:13
and then a couple of years ago you
00:26:14
started investing in some life sciences.
00:26:17
Does life sciences kind of work as a
00:26:19
venture investment today? And what's
00:26:21
been the challenge in biotech and life
00:26:23
sciences investing generally over the
00:26:24
last few years? There's a lot of
00:26:26
notoriety about the collapse of the
00:26:28
market and even Dave Ricks today was
00:26:29
saying most public biotech companies are
00:26:31
trading below cash. What's your
00:26:33
observations on the business model, what
00:26:35
you've seen, the types of businesses
00:26:37
you've invested in there? So,
00:26:38
so the business we invested in uh that
00:26:39
has done really well is a company called
00:26:41
Nater. Uh and we made a seed investment
00:26:44
of a million dollars in 2007 in this
00:26:46
company.
00:26:46
It's 20 billion now, right? Market cap.
00:26:48
$22 billion market cap. It was a million
00:26:50
dollars. two people uh with a a very raw
00:26:53
idea and today they're the leading
00:26:54
provider of prenatal testing, oncology,
00:26:56
recurrence monitoring, organ transplant
00:26:58
projection testing. And so that
00:27:00
company's been a huge success.
00:27:01
Diagnostics, genetic diagnostics, has
00:27:04
been a huge success. And you think about
00:27:05
the the dividend we're still collecting
00:27:08
from the human genome project 25 years
00:27:09
ago. It's incredible. And you've
00:27:11
obviously seen that in some of the
00:27:12
businesses that you've helped build as
00:27:14
well. uh we did make an investment in a
00:27:16
company called Bridge Bio which is
00:27:17
helping with rare genetic disease drug
00:27:19
development. Uh but other than that I
00:27:21
think we're we just don't have the
00:27:22
expertise for biotech. You know we don't
00:27:24
have any M
00:27:25
but there are still winners.
00:27:26
There are still winners but we have no
00:27:27
MD PhDs on our team at Sequoia. And I
00:27:29
think you know it's very dangerous when
00:27:31
people think that your success in one
00:27:32
domain just naturally makes you uh gives
00:27:34
you the right to compete in other
00:27:36
domains. I think I have tremendous
00:27:37
respect for the people who understand
00:27:39
that. I do not.
00:27:40
I learned that one the hard way.
00:27:44
Ladies and gentlemen, Roloff.
00:27:47
Thank you.
00:27:49
Thank you.
00:27:50
Thank you so much. Thank you, sir. I
00:27:53
appreciate you coming out. Thanks.
