セコイアキャピタルのDoug Leone、運とリスクを取ることについて (Sequoia Capital's Doug Leone on Luck & Taking Risks)

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[MUSIC]
Well we're all really happy to have you here today.
Welcome to the GSB.
>> Thank you.
>> I remember one of the first times that we spoke when you
were talking about coming here and
you asked me if this was a forum where you could be, quote unquote, provocative.
And so while recognizing that, some members of your family are in
the audience today and we don't wanna get too far across the line.
I wanna make sure we give you a chance to push the envelope a little bit.
So, over the next 40 minutes or so we're gonna cover a, a few topics.
I wanna talk about your leadership at Sequoia and
how it's gotten to the point where it is today.
And about the Silicon Valley ecosystem as a whole.
As you mentioned before there's a lot of ecos,
there's a lot of confusion out there about it.
But first I wanna touch on what makes you who you are, your background.
The Dean talked a lot about you coming over here as an immigrant at the age
of 11.
Working blue collar jobs and vowing to succeed in business.
Forbes wrote Leoni still carries himself like a hard luck striver, scrambling for
his first decent break.
And you said a lot of what keeps you going is fear.
So tell me a bit more about that experience coming over here as
an immigrant, and why that drives you today and
how that makes you a, as a person today.
>> Well you know, it's quite amusing when I think back of all the seemingless,
very small things that really played a pivotal role.
I remember in my first job,
when the CEO of a small company said, go clean the bathrooms.
And I read, and I heard that boy, it starts at the bottom.
It starts by cleaning the bathroom.
And I remember cleaning the bathrooms that day and
saying, I got you now because you led me into the business world.
So that's a vignette that says, I'm now in and now I'm gonna get you all.
And get you all I didn't mean in a bad way now,
you know, now I only have one place to go but up.
The other thing, as I look back that was quite formative, being an only child,
lots of love around my family.
No means, but lots of love.
And that was a blessing.
But a pretty rough high school, three or four, four years.
You know, the high school years are tender years.
It's the first time that girls come into play and so on.
And those were not easy years.
And to this day, I have to catch myself.
I have to catch myself from letting my ego and
my insecurities get the best of me as I want my high
school friends who I haven't seen for 40 years realize how wrong they were.
And I think it's humorous that at the age of 57,
I still think about the high school friends.
So, those are the little things that really, really,
really push me to want to, to want to achieve.
And my life really wends into, into three different groups.
In the first few years, it was about making it.
Can I make it, can I make it, can I make it?
From the age of 35 to 50, I just wanted to be the very best.
That really, really drove me.
From 50, 55 to this point of 57 and hopefully through the end of my career,
the thing that really, really drives me is working with younger people.
It's a kind of a rude line, but I don't wanna hang out with people like me.
I don't wanna hang out with old people.
I wanna hang out with people like you.
And so at Sequoia Capital, finding a young,
talented partner, investor, employee, and
helping them in the greatest way possible is really what keeps me going now.
>> That's great. Well I
wanna get to how you recruited Sequoia.
Cuz I know a lot of our classmates may be interested in
that right now given that it's recruiting season.
But just backing up a bit to okay.
So you're a New York immigrant.
You vowed to succeed,
but the path to success is one that I think is not an obvious one.
You graduated from graduate school in the East Coast and decided to
come back to the West Coast and work at Sequoia after having a sales background.
You know, why, why'd you make that choice?
Silicon Valley was something-
>> Yeah. >> Then but it's not what it is today.
Sequoia was good but it's not what it is today.
What drove you to come back here, what did you see?
>> So I think luck played a great role.
So my first job in sales was selling north of 96th Street in New York City.
Now it's cool to be north of 96th street.
Let me tell you, 1979 it wasn't cool to be north of 96th street.
It was unsafe to walk north of 96th street.
And, but, but that location had one important thing,
it had Columbia University, where someone explained to me what the Arpanet was.
And that caused me to get a job at Sun Microsystems.
Again, that crappy sales territory, and
you could say I made my own break because I asked some questions.
But that unlucky break led to a lucky break.
Sun Microsystem employee number 50 something, I can't remember.
And I really thought I was a big shot.
I was 26, 27, selling you know, a boatload of computer.
Got promoted, and then I met Vinod Costla.
Holy Cow.
This guy's as old as I am, he's a board member.
Scott McNeilio came here.
Holy cow.
This guy's, [UNKNOWN] I mean, he's the president, the CEO.
And then I learned the words venture capitalist.
I had no idea what that was, but it sounded pretty good to me.
And so, I just figured out what a venture guy was, and
I decided that I wanna be one of them.
And I figured that I should get a masters, learn a little more, need to get a second
masters, and then I wrote 80 letters to venture firms, letting them know,
I'm gonna be in California, trying to sweet talk all the assistants.
I got an interview with Don Valentine at five o'clock on a Monday,
who took me to his office and asked me, what's important?
[LAUGH] Of course, I knew what's important.
I spoke for about seven, eight minutes.
I gave it, I, I mean, I gave it all.
30 seconds of silence, and he said, what else?
[LAUGH] I, I'd just given it all and
I said, Don, I gave you everything I know I can't give you any more.
But the fact that I was so candid, and the fact that I told it like it is, and
the fact that I had a sales background caused me to be hired but
to make a long story short, it was a lucky break to sell at Columbia.
It was a lucky break to ask a few questions, it was a lucky break to learn
about Sun Micro Systems where I wrote a, a letter and
got a cold call interview and so in some cases I think you make your own break.
But make no mistake.
A great deal of the reason as to why I'm here has to do with luck.
I firmly believe that.
>> If you if, if you hadn't come back to Silicon Valley,
do you think you'd still be in sales or what, where, what was your vision?
>> So about six, seven years ago I was in New York City.
And I got a call from someone, there's an HP reunion in
New York City in some restaurant on 22nd Street.
And back in Hewlett-Packard, back in 79, it was the Italian mafia.
John Colucci, Tartaglia, I mean all these guys,
the same names as The Godfather in some ways.
[LAUGH] And, and so I decided to attend this gathering.
And it was one of those scenes from movies that you
occasional see where your life would have been.
And let me tell you, it would not have been a bad life.
I think everybody was a lifer, everybody had a home, their kids were happy, but
they got up and started singing song the HP way to Bill and Dave.
This is the two fantasy packet.
And they gave me a snippet of what life might have been, and
it completely freaked me out.
And so that's what it could have been.
I doubt it would have been that, but that was a very eye-opening ex, experience.
>> Interesting.
Well, I want to I wanna move now to what people have no doubt come here to
hear about, which is your leadership of Sequoia and the success you and
your partners have had over not only recently but over the last few decades.
>> Yes.
>> it's, it's obviously been an incredible year.
And it's been an incredible decade, for a few decades.
And I'm wondering what about Sequoia separates it from the others,
that's allowed it to maintain success for so long.
What's in the secret sauce as, as you've put it, and, and
how've you stayed on top for so long?
>> Well, I think it all started with Don Valentine, who's the founder at
Sequoia Capital who had two lessons that were pivotal in my mind.
One was really an appreciation for markets, and
second an ability to recruit non-conventional people.
So he recruited Mike Morads, whose name you probably know, who was a writer.
Had written a book at Apple, was the San Francisco Time Magazine bureau chief.
And he recruited him to be an investor.
Now you may wonder, how does, how do you recruit him to be an investor?
Because he liked the way Mike thought, he liked the way Mike asked questions.
Right after he recruited Mike, he, he hired me.
And he hired me because of my view of a business from the customer in,
versus from the product out.
And Mike and I could not be more different.
Mike is a, is a thinking man of few words, Brit.
I'm an Italian, a few too many words and so on.
But Mike and I learned to work together for 20 something years, but
it's to, to Don's credit.
And we kind of kept that going.
So we continue to hire people mostly from modest means,
people that have not followed a preset set of tracks.
People that have taken risks,
people that have achieved some kind of success early on.
People that are smart, but that goes without saying.
People that have both IQ and EQ.
And then our spec has product management, technical background,
has all these conventional lines.
And that has a line at the end that says, doesn't meet spec, but he or
she is special.
And it's the last line that's the most important line of the recruit.
And so, we meet a lot of people, we're always looking for people.
We're looking for people right now, both in the venture business and
in the growth business.
We get to know them quite well.
And then we asked them to listen to companies with us.
We just wanna see how they think.
And we look for highly imperfect human beings,
the type of people that were probably individual contributors early in life.
The quirky kids if you will, not the quarterback, or the football team, or
you know, the female equivalent of that.
But people that have a bit of an edge, people that have something to prove,
people that need to win, and
people that are not asses when you peel a few layers, because life is too short.
And we ta, and our real secret is take these heterogeneous individual
contributors, and showing them on how to work as part of a team.
To start using the we pronoun.
Take full responsibilities for failure, and share the successes.
And if there's one reason why we've lasted for 43 years near the top or
at the top of our business, is because of this.
The, this leads to a high performance culture that has only one goal.
A team-oriented spirit to help founders build great companies.
>> So you brought up Mike Morris and you two have led the firm for some time.
And he had a quote not too long ago where he said about Sequoia that quote,
we're always outgunned by companies that are far larger than us,
who have threatened us and the founders with extinction.
It's incredibly thrilling to prove everyone wrong.
You can't get a bigger rush than that.
Now you talked about your talent recruitment and recruiting hungry people.
But there's gotta be more to it to keep you hungry as a firm.
To keep you from resting you on your laurels,
to keep you from resting on your laurels.
How do you think about continuing to motivate yourself and motivating people?
What kind of Things do you implement with, as a,
as a firm wide culture to, to make sure that happens?
>> There's a few things.
First of all, I think we're paranoid as heck.
We're always one or two new investments alone from becoming a second tier firm.
And that is very clear in our minds.
Second, we have a different view towards risk, than most other people.
People hate to do things because they view them as risky.
We actually think that if you're a crystal clear thinker, doing nothing is risky.
So we're always changing and implementing.
And the old adage that if it ain't broke,
don't fix it does not apply to Sequoia Capital.
It is the exact opposite.
If something is working like a dream, break it,
because you know there are some competitors out there who are looking at
you from the outside and are trying to push you out of business.
So the last thing we've done in the last four or
five months, we've taken all the posters down.
We had all these posters, 200 IPO's, 20% of the NASDAQ blah, blah,
blah, take them all off the walls.
Take them all off the walls and let's act as if we haven't had one single win.
And so where we, screwing around, messing with the formula, trying new things,
we went into China, we went into India because we asked ourselves a question.
Where are the most valuable companies gonna come from in the next 20 years?
It was no longer clear.
They would come from the US.
So we went into India and China, and we did in a decentralized fashion.
We met some people over a period of 90 days and
we told them, we'd like you to be Sequoia Capital China.
You make all the decisions, not us.
No other firm has done that.
So always taking risks because taking risks is the only way to keep on going.
>> I wanna get to your success in China a little bit later, but first I
wanna ask something that I think a fair number of my classmates are interested in,
which is about how you pitch the VCs and how you pitch people like Sequoia.
The web is filled with stories of how difficult it is to pitch you, and
pitch Sequoia.
And I was gonna share some stories, but I,
there are a lot of words that I can't actually use on stage here.
So I'll just say there, there's some, there's some aggressive.
It's an aggressive pitch made in usually.
And so I'm wondering what you look for in pitches.
What what sets the best ones apart?
And what tips might you have for people that wanna come in and pitch you?
>> So, let me set it up, up first.
We're very cognizant that when somebody comes to Sequoia.
They prepared, we are very cognizant of the fact that in many case, it's their
big day, one of many large days, maybe they are going to [INAUDIBLE] and
maybe they are going to bench mark, so we did.
So we take that quite seriously.
The meetings at Sequoia start exactly on time,
they end on time and no one has their iPhone on, it goes against.
All our culture, no ones doing any else, just to be straight.
Now, we also don't have flower children at Sequoia Capital.
We do ask questions.
And, and I will tell you there are some partnerships who are afraid of
asking questions for ruining their reputation.
No we'll ask questions.
And we try to treat people the way we would treat someone in our living room.
But if you have a question about the market size,
if you have a question about some issues, we're gonna ask it.
And unfortunately, because we ask three or
four questions, once in a while, we have a founder who we realizes.
Oh my god, I, I just started a company that, that,
that's chasing a $42 million global market.
That does not feel good.
But it's not meant to be rude, it's meant to understand the person's business.
So, some of the best pitches.
Drew Houston who was gonna
launch a company in a crowded market, and yet could clearly articulate.
Why none of the existing products were gonna make it.
Crystal clear thinking is one of the things we look for.
Not a fancy slide pitch.
[COUGH] But crystal clear thinking and we pay careful attention to little words.
To the pronoun being used.
When someone says, I can ship you this thing.
It's a little warning flag.
What do you mean you can ship us?
You're not shipping us anything.
It's your company that's shipping us.
So we pay really careful attention to everything.
Or Fred Leddy who had a company that was growing like a weed and
all he told us was all the mistakes he made.
Those were the great pictures.
Those were people that were self aware.
They were crystal clear thinkers.
They were willing to learn, willing to listen.
And in some cases, willing not to listen,
because founders tend to not be the greatest listeners.
And in many cases they're right because they're doing new things,
trying new things.
>> On your on your investment philosophy, you,
you referenced this earlier that you look for investors who come from modest means.
And I think you also look for
entrepreneurs who come from from modest means.
You said, we want people who come from humble backgrounds, and
have a need to win.
So what types of entrepreneurs make the best founders?
You know, wha, in particular if, say, someone who had an MBA
from the Stanford Graduate School of Business walked into your.
Into your office wh, wha, what profile do you look for?
>> So I think entrepreneurs, like investors,
come in different flavors, and I will tell you, and
as I told my kids, that if you're desperate, it's a great asset.
If you have too many choices in life.
It clouds your thinking.
When you only have one way to go and that's forward, it's very easy.
You just go, go, go.
Failure truly's not an option.
Now, what we look for in entrepreneurs is people that have not followed the,
the same tracks.
People that, that have done quirky things.
That have taken risks.
We look for that we look for people that have knowledge in the domain.
Not so much the best of minded of business,
because they wanna make some money.
We actually look for people that are very interested.
And their product or service being used by the next ten, 20 million people.
And we also look for
people their little secret that solve a problem that they have.
And it just so happened, they don't know it,
we don't know it, but they're the proxy for the next 20 million users.
So Jan of WhatsApp understood privacy and low cost messaging.
He had that need.
He started WhatsApp.
Well, the founders of Yahoo from Stanford couldn't find anything on
the internet, so they built a search engine.
They built a yellow pages.
Or something as simple as Zappos.
The founders helpers couldn't find a pair of shoes, and so we looked for
people that l, that are trying to solve problems.
That they themselves have and hopefully a new problem.
And if we see that, that's a little tell for
us that we may be on to something, because we may find our first beta site.
The founder for the next generation.
>> Looking at, looking at Sequoia more broadly and
one issue that impacts Sequoia and the Valley as a whole is a gender gap.
>> Yes.
>> That there aren't a lot of women in, working in tech,
or engineering and so Sequoia itself has no female partners.
>> Yes.
>> And this is something you have spoken about before, but
it would be interesting to hear your thought son why there aren't more women in
the bell in general and Sequoia, what is the reason for that?
>> So look, clearly I can make a lot of excuses,
not a lot of women engineers and so on.
But all we need is one or two.
[COUGH] So I think that's just an excuse.
And I will tell you that our inability in the U.S we
have women investors in India and China.
Our inability to have [COUGH] women investors at
Sequoia U.S is an abject failure on our part.
Let me be crystal clear.
We have a heterogeneous.
Set of talents at Sequoia.
We have engineers, sales, marketing, CFO,
Italians, Chinese, Indian.
But we don't have the woman's point of view.
And if you just think about consumer internet investing,
half of the population is women.
So it is in our interests, both as good citizens and as selfish foun, and
as selfish investors to have that point of view.
We're, we have been looking and we will continue to look for women investors.
We actually hired someone from the GSB a couple of years ago,
spent the summer with us, and then she decided to become an operating person.
Now, yes but we do have some women partners.
Blair our marketing partner, came from Stanford.
Our global CFO is a woman, but you're absolutely right,
we do not have a woman investor partner and
that is a huge failure on our part and by the way we're looking.
>> [LAUGH] All right, well.
Maybe you'll get some resumes this afternoon.
So I, I wanna take us to the,
a bigger picture discussion here, about the Valley as a whole.
Maybe then we could talk about Sequoia all day.
You know, times in the Valley are, obviously, very good.
Sequoia had a notable success of WhatsApp.
But there are a number of big acquisition going on right now.
The WhatsApp acquisition at 19 billion makes it
worth more than the following companies.
Southwest Airlines, which flew me across the country last month.
Ralph Lauren, ConAgra Foods, which employs 26,000 people.
And even Chipotle which feeds me three to four times a week.
[LAUGH] The list goes on.
Harley-Davidson, I have a whole list here.
You know, you know this.
And, and, I'm not questioning the value to Facebook.
What I am questioning is whether these companies are really worth that much.
Peter [UNKNOWN] has a quote that says, we wanted flying cars and
instead we got 140 characters.
I'm wondering how you think about that.
Is this an overvalued bubble?
Are these companies really creating the type of value that
they're being estimated at?
>> Boy that's a lot of questions.
>> Yeah well. >> You asked me
if What'sApp is worth 19 billion.
>> Well no right.
>> You've asked me is there a bubble.
So a few answers.
Let's start with What'sApp.
Let me ask all of you, if you owned 100% of Facebook, and
you have 190 billion market count, and you have a huge
unprotected flank called Mobile, what is it worth to you,
to shore up that plan, that flank, is it worth 10% of your market cap or not?
It wasn't just What'sApp, it was Instagram as well.
That, that we sold them.
With those two properties,
no one talks about Facebook any longer being weak and mobile.
So the value of property is in the eyes of the buyer and the seller.
I can tell you from the eyes of the buyer.
It was definitely worth ten percent of their market cap to shore up
that plan, that flank.
Next. Whether we live in a bubble.
In I think the public markets are rational and
reflect the transformation caused across U in this, the,
the industries the US, and healthcare, manufacturing, so on, by technology.
As we're seeing the number of new Fortune 1000s,
the percentage of new Fortune 1000s every decade increasing and increasing.
40 years ago 30% of the Fortune 1000 changed.
The last decade, 70%.
So think of that rate of change.
And you're, and
you're seeing it reflected in what some of these technology companies mean value.
Things are nutty in a private market.
And the one rule, that's the most fundamental rule of investing,
is that we live in cycles.
And every time you hear it's different for
this time, it's the first time this is gonna happen, that's all crap.
We live in cycles.
And the more time you hear, the, the, the words billion dollar market cap,
the more you know you're approaching a top of the cycle.
In 1999 there were a lot of companies with no business model, zero.
What we're seeing now is a whole bunch of companies that deserve to have, private
companies that deserve to have wonderful market value, and a whole bunch of others.
That if I hid the name of the company and I showed you the financials, you would not
ascribe the value that the private markets are ascribing to these kinds of companies.
Which is a long way to saying that as long as you have that,
as soon as you have a hiccup in a public market.
The hedge funds are gonna go away.
The latest stage money gonna go away.
The billion dollar funding's gonna go away.
And a whole bunch of companies with horrific business model.
Maybe revenues, but
terrible unit economics are not gonna be able to raise money.
And that's when it's, and then it's gonna turn ugly real quickly.
I think things in a private market, for
a large number of companies, are in Lala Land.
Because the companies are not worth anywhere,
near what the private market is describing to them.
Now why is all this occurring?
Because first you have the investors and
then you have the tourists that say oh my god we're missing out.
And so you have more and more money coming in that's investing at higher and
higher level of risks, but they don't realize that's happening.
And then something happens like, at this location in the public market,
an adjustment 500 point correction, all the money tends to disappear, and
all these companies that are used to burning 50 billion cash a quarter in
the private markets, are gonna be hurting.
That is what a forecast is gonna have.
>> So we are in somewhat of a bubble, you say?
>> We are, we're approaching the top of the market you know
in private market investing.
>> Okay, [LAUGH] so on the on the funding landscape.
You we, we spoke back stage a bit about some of the confusion that is out there
there's, there seems to be in the shift in the funding landscape.
People are talking about Angels and SIIDE funders you know increasing in power and
dis intermediate vcs.
What's your take on the, is it a trend, is it a real trend, what's you take on it?
>> So look it's quite simple.
With the advent of internet and mobile.
We saw the birth of what I call application, layer, and dusting.
Where, now you can buy a computer for $1,000 or less, or store your files on
Amazon, or use open source, and you can create a product for $200,000.
So the cost to start one of these companies is a lot less.
Remember, it's the cost to start, not the cost to launch.
And so for the first time we've seen the growth of Angel investing,
which is necessary, because there's so many founders and entrepreneurs.
We could not make all the investments that we see.
But at the same time, we've also seen these things called party rounds,
where instead of raising $250,000, or 500, or a million.
Money's being thrown at these founders, and
they're raising these four, $5 million rounds before they have a product.
Without calculating what that means,
keep in mind the Angels spend this much time with a founder in a company's life.
If a company's life is that long, the Angels spend that much.
And as a founder you have to figure out how much equity do
you wanna sell to a asset class, that category of partners.
Think of them as partners that will spend maybe the first nine months with you.
Then the venture guys come to spend the next seven years, and you have to
figure out, how much equity do you want to sell to a partner that's next seven years.
Then the public market will do the rest.
So in my mind, the Angels are necessary, especially for
these application level company.
If you're gonna go in the lab and build IP for 18 months before you come out
with a product, then Angel's not gonna do much for you.
But in these internet mobile companies,
the Angel play a productive role as long as you don't sell a ton of your equity.
And after the first round you've sold 62% of your company.
It's just nuts!
You oughta be totally selfish with the early shares,
including the shares with the venture guys.
Raise as little money as you can to get you to the next milestone,
the value goes up and then when you have got market power and you have got three,
four, five, ten, $15 billion value, Uber, 18 billion or in our case, on Airbnb,
ten, 12 billion, then go raise a lot of money, but you should guard those shares-
With your life, and you should architect your investors the same way you
architect your product and your engineering team.
>> How should founders think about raising money then?
Should they, you know if you wanna protect their equity but
they wanna raise money as fast as possible.
>> Raise as little as you can to get you to something that you can show,
plus maybe a quarter or two, so you have a little bit of cushion.
And then raise some more money.
Raise as little, not as much, as little as you can.
Because that's the most expensive equity you're gonna sell.
>> Raise as little- >> And, and
conversely be very generous with the early engineers that you hire.
Those are the ones you should invest in.
Because the first two or three engineers, if you get those wrong, you are done.
[LAUGH].
>> So we all should become engineers is what you're saying?
[LAUGH].
>> No, no, because if you're building a technical product,
an A plus engineer is gonna help you to recruit an A engineer.
If your first two or three engineers are B engineers, you're done, because you'll
never surround yourself wi, with the, you know, with the A plus talented people.
>> Got it. Well it's good to be at Stanford then.
We got some good engineers here.
We only have time for about one more question before we move to the audience,
and I just wanted to touch on Sequoia's success in emerging markets.
You know, you have,
have found success in Israel, India, and particularly China where others have not.
I'm wondering, you know, is this just another secret sauce kinda thing?
You hire the best people and
they do good things or what, what has led to success there?
>> A little luck, we found good people.
but, but we looked for a while.
And I think the courage and foolishness, because I think in retrospect with,
I mean, that we can believe that we did this, is to hire people and
work the attack side of the house,
which is the money making, the investing, the hiring, to have that decentralized.
To not have every decision go through California, because what do I
know about what goes on in China, what do I know about what goes on in India?
I traveled to India and China four to five times a year, but
at the end of the day, I don't really know what goes on there.
So we decentralize the attacks out of the house, and we centralize the defense.
The stay out of jail compliance.
The financial reporting.
No one has had the courage to do what we did.
To completely decentralize and have relationships and
trust be the things that really hold us as one firm.
It's not a franchise opportunity, we are one partnership.
It's not Sequoia Capital China, it's Sequoia Capital in China,
to show you how carefully we even use our words.
And essentially we are,
we're held by a whole bunch of strings, compensation is a small piece of it.
A lot of it is culture.
When we send email to a partner in China, we get a response right back the same way
that when I send an email to my partner here in the US.
And we view our partners in China and India and
Israel the same way as the partners in the US.
So having that patience, that courage, that foolishness to organize that when
investing all the time, I think has been the secret to our success.
>> Interesting.
Well I wanna save some time for questions here.
We have mics in the front rows here, so please start raising your hands.
If you're in the top deck you can tweet questions and
we'll have someone read a few of those.
And we have time for about ten, ten -15 minutes of questions.
So.
We got one right.
>> Right in front.
We'll go right over here.
And please stand up and introduce yourself.
>> Hi, my name is-
>> Yep, just hold it close.
>> My name is Federico Anthony part of the faculty here at Stanford GSB.
I have a question regarding Brazil.
So from the, the exterior it seems that you didn't have as
much success in Brazil as you did in China and India.
I don't know if you could speak to the reasons for that and
what learning did you get from that experience?
>> So, we hired about three years ago a terrific GSB graduate.
We hired him in October his first year to work with us through year one,
through the summer, and through year two.
And we had a notion that we were gonna go to Brazil.
And we traveled to Brazil probably six, seven times.
We made two investments.
And the more we traveled down there, the, the more it became apparent
that there were very few engineers coming out of Brazil.
And we made and
we understood that we would have to go into other lines of business.
Like the the consumer industry, supermarkets, restaurants.
And we want Sequoia Capital to really be a IT first partnership.
What we didn't wanna do, is go to Brazil and
back a whole bunch of look-alike companies.
So, we hired a gentleman, he opened an office,
we've made two investments, and then we pulled back.
Now there is a second part to that story.
So, we did the right thing.
At Sequoia, we pride ourselves at doing the right thing.
A young person.
We full invested in a fund, including the what's up funds.
So he's very happy.
And he wanted to start a company, and
we gave him a bit of a throwaway million dollar seed.
Not throwaway because that's a belittling term, but in a long shot startup in
Brazil, and he wanted to start an online credit card company.
So we helped him, board meetings over the phone for the first year.
And then at a million dollars, he launched.
A credit card company in Brazil, there's a whole bunch,
there's a line out the door of users who want to get the credit card.
They changed the law in Brazil, so
now if you wanna launch a competitor, it takes three years.
And we just invested $11 million on a series A,
I have to just throw away a million dollars.
Of course, we now have three investments in Brazil, but
we have no intention to planning a flag in Brazil,
mostly because of the number of computer science engineers.
The last thing I'll tell you is, I met with a gentleman, a gardener,
lives in Brazil.
He he does software monitoring throughout the US, he's the one that writes all the,
all the graphic software, and I asked him,
what were the two three leading software companies in Brazil?
He could only name one or two.
It was very clear that it was too early to go to Brazil from an IT,
non-look-alike internet company market.
And so we backed off and that's the real story.
[BLANK_AUDIO]
>> All right, I think we have one more question over here.
>> Well, my name is Nam, Nama.
I'm an MBA class of 2016.
And I think by now my classmates are, already know what I'm about to ask.
We already touched a little bit about gender inequality in your firm.
I wonder how, how it affects how the firm addresses, women entrepreneurship.
Are you missing out on women entrepreneurs because you don't have a female partner?
>> Well I, I, you know, we have no way of knowing if we're missing out.
So in the last 10 years I have served in half a dozen boards
where the lead founder, CEO, is or was a woman.
So we have no fear of backing women.
Right now in one of my best companies, the president, founder, is a woman.
House, another company where I'm not aboard.
The CEO is a woman, so we have no issues in backing women.
I think we're missing out as investors mostly because as, as I said earlier,
we're missing a point of view that represents half of the population.
And if you do any studies on high performance team,
high performance team have heterogeneous point of view, and
we're missing half of the population of the U.S..
But we, we have been in business with numerous women and
we look forward to being in business with even more women.
So if you wanna start a company, come to Sequoia we'd love to hear your pitch.
>> There we go.
We're gonna take one from Twitter, but please keep your hands raised so
they can give you the mic, but we'll go to a Twitter question now.
The Twitter question.
>> I'm not sure [UNKNOWN].
>> Have they, great, thank you.
The Twitter question I wanna ask is, you contribute a lot of your success to luck.
Do you have any habits or ways of increasing your chance of being lucky?
>> [LAUGH] Yeah I think I do and
my partners sometimes get upset at me.
I lean forward, not in writing checks but in listening.
So I remember being on a panel with another venture person who said,
I won't tell you his name, he said, well, we like our business plan to
come from screen sources, lawyers and so on.
And then, and then it was my turn to answer the question,
this is a little before email, I said 854-3927, meaning our phone number.
And so I, I the thing I like to do, I like to go look in all the nooks and
cranny's, where it's not hip to go look.
Or when I hear something something's really crappy,
the this is really a bad time.
My brain works, it's about time, terrific, I wanna go look.
And then just it's from my sales days.
I, I guess now if you're in sales they hand you leads.
When I was in sales, nobody ever handed me a lead.
It was lot of cold calling.
And in one company, especially the company where the lady's the president,
I am terrifically proud that I co-called it myself.
Is that luck?
No, I think hustle, luck, and clearly lo, look.
There's a lot of people as talented as I, that could be sitting right here.
I don't have any special talents, I wanna make that crystal clear.
There's a lot of people that could be sitting over here and yet
I'm the one sitting here so luck has something to do with it.
But I will tell you, hustle has a great deal to do with it as well.
>> I think we have a question on this side.
>> Hi Doug.
>> Thanks.
You, you can just talk into it.
It, it's turned on.
Yep.
>> Hi Doug, my name is Yeme, I'm from Qualcomm.
And you said you are seizing in cycles.
Like as you mentioned the mobile applications we're approaching.
And can you please share with us in your mind what's the next things.
The cycle is about to start or maybe next several things you can see that.
Thank you.
>> So it, look.
People always ask me what's hot.
And here's my answer.
If I could tell you by definition, it's not hot.
>> [LAUGH] >> The, the day before I came
across Google I would not have told you,
a new market entrant in search, there were 20 search company, is hot.
Or the day before YouTube when, when video and
that had failed consistently, I would have never told you.
That's hot.
We have market maps, but market maps by definition look at the status quo and
extend the line, and once in a while we find the company that fills the hole.
But the best investments we make are the things we haven't even thought of.
Imagine Air B and B.
Imagine you asking me that question the day before NBNB and
I'm gonna tell you" You know I'll tell you what's odd.
some guy is gonna (There were three guys in that case.) three guys are gonna show
up and they're gonna tell me that that's how it is a situation where I'm gonna rent
rooms in my house to strangers.
We're gonna create a global two sided market place in that.
And I want to say come on, that's nuts.
So, that is a question that by definition you cannot answer.
Now I will tell you, than in the last fund.
[UNKNOWN] Capital, it's a three year fund.
We have fewer consumer internet mobile companies than we had in the fund before.
I can't tell you if it's because we're missing something or
we're reaching a saturation point.
I can tell you we have more.
Healthcare company.
We have three cancer addressing company.
We didn't have three of those in a fund before.
Am I gonna tell you that cancer curing is hot?
No, I'm not gonna tell you that.
But, but, but it's the impossible question to ask.
And the only way to learn is to have big Dumbo ears, listen to everything and
don't dismiss crazy ideas.
Now once in a while I will admit that we make investments like air B and B.
And 90 days afterwards we're saying to ourselves what the heck were we thinking?
but, you know, it takes flexibility in the brain to say would do air B and B?
Now the latest thing is would you share your car?
Would you let somebody else drive your car.
From point.
So you can drive from point A to point B and
they can drive from point B to point A.
Or drop your car at the airport,
when somebody lands they can take your car and use that as a rental.
You know, I can tell you that the use of my car feels pretty personal to me but
I'm open minded because I wanna know what you do.
Male and female, what your point of view would be.
>> [LAUGH]
>> I have, I think we have one on this side.
Stand up. Yeah, there you go.
>> Hi, I am Javier Salerno.
I come from Chile.
And you mentioned that your early years in the US.
At high school with some kind of needs made you who you are.
And you're looking people like you.
And I agree with that.
It's kind of easy to be determined when you're needy.
But how do you stay hungry when you get some degree of success?
>> It's not something I do consciously.
So, back [LAUGH] this, this is kind of funny to admit, so,
once every ten years, that we do a Myers-Briggs at Sequoia Capital, you know,
we, because, things are going well, so obviously let's have a look.
And the last time that was negative thing I got is the fact I mentioned
that once a week I have a nightmare that I'm being fired by support capital and
people told me, boy, if you feel like that imagine how we feel.
Now no one's threatening me,
support capital is a weak place, we want people to succeed.
It's actually a really fun place on the inside to be.
But to me is just raw, raw fear.
I remember walking in the Stanford Mall in 1988,
making 67 thousand dollars and not really having enough money to buy presents.
I remember those days, and they didn't feel very good, so I have this.
I still have this fear that I'm going to be poor.
I still have this fear that they're going to throw me out of Sequoia capital.
I still have this fear that I'm gonna, really mess up a founder.
I, I have a great fear, you know, I've been on thirty boards and
I have to admit, I messed up one company really good.
Now, thankfully, I helped a whole bunch of others, but
I fear that I have a huge sense of responsiblity.
I think fear would be, would be my number one thing.
And it's not something I do, it's not a little game I play with myself,
I actually, it kind of really gets me going.
And, and, it drives me.
I think it's a character fault actually, but you know, that's what it is.
[LAUGH]
>> So I think I'm gonna take the last question here.
And you've been very personal today, and we appreciate that, but I, I still want to
ask you the question that all GSP students have to answer when they apply here.
Which is something we have to put on our application.
And it's what matters most your want, and
I want to ask you that question.>> Well I clearly got the answer wrong being that I
was rejected twice from Stanford Business
>> [LAUGH] >> So, so
>> seems to have worked out for
you>> laugh on. >> [SOUND] Let me start with that.
So, look, you're all young.
You wanna achieve.
And you're in that first third part.
You know, I describe my life in these three thirds.
You're in the first third part.
But if I would give you some advice.
And I'm gonna, I'm gonna take some poetic license.
I'm not gonna say one thing.
Please. >> I'll say two or three things.
Here's my view of things now that I'm a little older dog.
Number one.
Choose to have kids or not, but if you choose to have kids, invest in your kids.
That to me is the most important thing.
Second.
Go for it.
Have success.
But bring others along with you.
If I look at my professional success,
it was when I was in sales, if I shipped a computer to somebody else's territory.
I would send an email saying I think you should get half,
versus the managers having to be, be involved, I remember it, it started then.
If we knew something well at Sequoia, it's a we win.
Take as many people with you for the ride as possible.
If you come across a jerk, let them rot in their misery, just,
just get away from them.
And number three.
Bring it every day.
Get up, you know.
I'm, I'll tell you there are some days I go home and I am just beat.
Oh my God, how much more can I do this?
A good night's sleep, I get up in the morning and
you bring it again, fearlessly.
Just go, go, go.
Those would be not the most important but that's how I view through life.
And you've heard it before, think of life when you've got a half hour left to live.
You're not gonna think about oh boy my net worth is
X it really should have been 1.2 X.
I doubt you're gonna think that.
Oh boy I only became COO or VP.
Man I wish I became.
EVP, you don't need to think about that.
Now clearly you have to achieve success because that's why you're here,
because you're motivated, and I don't wanna short sell that one bit, but
I think in that order, take care of your kids, your family
bring as many people as you can on a ride with you and get away from the jerks.
And get up in the morning with a good night's sleep and just bring it.
That would be what's important.
>> That's great advice.
Please join me in thanking Doug.
That was great.
Thank you. All right.
>> [SOUND]