Sequoia Capital’s Doug Leone on Luck & Taking Risks


[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]

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