Sequoia Capital

David Senra · Aug 30

How to Dominate for Decades | Doug Leone, Sequoia Capital

Leone ran it for 26 years and owns about 20% of Nvidia and 10% of Google. Its order of priority is founders first, clients second, partners third, with trust as the zeroth tenet, and about 70% of its capital comes from nonprofits and charities.

Tips

• Doug Leone filters every investment through three questions before he will back it▶ 22:15He says he has used these questions on each investment, and claims he has not lost a competitive deal in 30 years except on price.
• Doug Leone only wants investments that can return 100 times the money▶ 23:11Sequoia's biggest gains rose from 100 million to 500 million, a billion, five billion, ten billion, and now a SpaceX gain of $20 billion and more.
• Sequoia sold winners too early, and Leone says every venture investor does the same▶ 24:12Sequoia owned about 20% of Nvidia, 10% of Google and a quarter of Cisco, whose value Leone puts around half a trillion dollars at its height.
• Doug Leone helps founders turn a product into a business, not shape the technology▶ 25:50He says Sequoia is the best in the world at helping founders navigate these issues.
• Doug Leone says early hires must be up-and-comers because established stars will not join a startup▶ 28:00
• Doug Leone stepped down at 65 to make room for his successor, then returned▶ 16:57Don Valentine had stepped down at around 60 in 1993, and Leone followed the same logic.
• Doug Leone made trust the zeroth tenet of Sequoia and split it into two parts▶ 54:01
• Doug Leone builds trust with founders by helping when they are down, which takes about a year▶ 52:52He says trust usually takes about a year to build.
• Doug Leone says a signed term sheet must be honored even when a higher price appears▶ 56:48
• Doug Leone's hiring spec shrank to hypercompetitive people with a heart of gold▶ 47:17
• Doug Leone tells founders to architect their board the way they architect their product▶ 1:06:09He estimates only about 20 to 30% of venture investors know what they are doing, and others act as a shadow for their firm's wishes.
• Sequoia runs real conversations, takes a short break, then leaves fully aligned▶ 1:10:01
• Doug Leone gives hard feedback so founders can act on it, such as introducing better sales leaders▶ 1:11:30
• Don Valentine put founders first, clients second and Sequoia third▶ 43:13Valentine chose his successors with a yellow sheet splitting carry, with Mike Moritz and Leone at 1.1 each.
• Doug Leone learned from Michael Moritz to ask what happens if everything goes right▶ 1:21:11Moritz and Leone ran Sequoia together for 25 years.

Acquired · Jun 29

Google Part I: Origins of Search. How the Best Business in Human History Happened

Split Google's $25 million round with Kleiner at a $100 million valuation, and Michael Moritz took a board seat. It had doubts when revenue did not show up.

Lenny's Podcast · Mar 6

Notion's lost years, near collapse during COVID, staying small to move fast, building horizontal

Zhao notes it is known for investing in the seven sins, contrasting with his preference for shaping users toward the better part of themselves.

Lenny's Podcast · Jan 9

Behind the founder: Drew Houston (Dropbox)

Angel investor Pejman Nozad brought the founders to Sequoia at Demo Day, and Mike Moritz was in their apartment the next day.

Acquired · Oct 15

NVIDIA CEO Jensen Huang

Don Valentine invested after LSI's CEO called him, and warned Huang he would be killed if he lost the money. Mark Stevens of Sequoia is still on Nvidia's board, and Huang believes it is one of Sequoia's best investments.

Tips

• Jensen Huang survived 80% stock drops during the CUDA bet with strong belief and a support system▶ 1:24:15Nvidia went through two, if not three, drawdowns of more than 80%.

Lenny's Podcast · Jul 13

M&A, competition, pricing, and investing | Julia Schottenstein (dbt Labs)

It won the 2020 dbt funding deal over Julia's fund, which had also tried to invest.

Lenny's Podcast · Mar 26

Taxi mafias, cash vaults & 100% MoM growth: The story of SEA’s biggest startup | Kevin Aluwi (Gojek)

Sequoia called Gojek's growth after the 2015 launch the craziest growth story they had heard.

Tips

• Expect very fast adoption in developing markets once product market fit exists▶ 53:11After the 2015 app launch, Gojek grew more than 100 percent month on month for the first 16 to 18 months, which Sequoia called the craziest growth story they had heard.

Acquired · Mar 28

Nvidia: The GPU Company (1993-2006)

Don Valentine funded Nvidia on a referral despite a botched pitch, in a $2 million round at a $6 million post-money valuation. It was wrong about the plan but right about the investment, which grew to one of venture's best returns.

Tips

• Sequoia and Sutter Hill backed Nvidia on the founder and a referral rather than the plan▶ 28:29Nvidia went public in 1999 at a $600 million market cap, a 100x return from the first round.