SPEAKER_00: When the idea for Yelp was just literally at a formation stage. Yelp was thinking about just doing email back and forth. The website hadn't launched. Again, smartphones didn't exist. And Michael said, I imagine in years to come, there'll be a Yelp sticker in a restaurant window right next to the Zagat sticker. Wow.

SPEAKER_02: He had that vision. Yeah. At the point that the company was being formed. And Zagat's gone. Yeah.

SPEAKER_04: Zagat's gone. But you do see Yelp stickers. Oh, they are everywhere.

SPEAKER_07: I mean, it's the number one bar. It's amazing. I mean, he sold the future before others did. This Week in Startups is brought to you by

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SPEAKER_12: All right, our next guest today on This Week in Startups is one of the greatest modern VCs.

SPEAKER_14: He was last on the show in 2015, but he's also been on the show in 2010. We get him every five years, apparently. Man, if you were to look at the companies he's invested in, YouTube, Instagram, Square, Unity, MongoDB, Tumblr, 23andMe, countless others. In fact, he trained me on how to write deal memos. If you don't know how to write a deal memo, go search for the YouTube deal memo written by Ruloff. And that was back in 2005. He created the Sequoia Scout program. That was the first one. At least that's what I'm told. And he created the Sequoia Fund, which we'll talk about. And last year, he took over Sequoia Capital as the senior steward. Basically, he's in charge of the firm now, succeeding Doug Leone, Michael Moritz, and I think Don Valentine before that.

SPEAKER_12: And today, he's taking a page out of my book. He started a podcast, like all VCs, must-have podcast in 2023. And Ruloff, both and Sequoia's new podcast is called The Crucible Moment,

SPEAKER_18: which we're going to talk about today, as well as all the other news headlines about Sequoia and the industry writ large. Ruloff, welcome back to the show.

SPEAKER_20: Thank you, Jason. It's great to see you.

SPEAKER_14: Yeah, great to see you as well. I see you're deep in the forest there with the Redwoods. So you got the new podcast. That's great. We'll talk about that in a minute. But so much has happened since we last talked.

SPEAKER_21: We went through an incredible boom-bust cycle. And maybe here we are 18 months after the cycle ended. Maybe things are coming back. I'm curious what you believe the state of the venture capital market is today in the second half of 2023 and then going into 2024. And any thoughts you have on the crazy three or four-year peak bubble,

SPEAKER_18: if we consider it that, that we went through in 2019 to 2021?

SPEAKER_23: There are a lot of questions embedded in there. Yes.

SPEAKER_25: I think maybe we start with the craziness, which is the combination of a pandemic, global pandemic, with incredibly loose monetary policy.

SPEAKER_28: Because at the end of the day, we had an era where the cost of capital was essentially zero.

SPEAKER_25: And that led to a lot of investment, also a lot of speculation. And honestly, a lot of companies did things that were quite rational. If the cost of capital is zero, there's no difference between something that pays off tomorrow or pays off in five years. So it was quite rational for companies to ramp up their burn rates, ramp up expenses, R&D sales and marketing to build for that future promise. And that obviously changed now that we have a more normalized interest environment and people are thinking much more carefully about payback periods. You know, where should you best spend your R&D dollars? Which channels of customer acquisition are the most profitable for you to pursue? So there's just a lot more discipline in the way that people are managing businesses. And one of the things I predicted at the beginning of the year is that we would see many companies outperforming expectations

SPEAKER_00: on earnings in 2023. And that's exactly what's happened because there was a lot of excess in the system and many companies have found religion around being cost conscious and being efficient. So I think you've seen that play out certainly with the public companies. For this, yeah.

SPEAKER_31: Well, I was just going to say on the cost cutting, that did seem to happen very quickly as opposed to the last time

SPEAKER_21: you and I went through this in 2008. Sequoia did a famous rest in peace, good times deck. And I'm curious what you think informed the very quick reaction from startups and even public companies

SPEAKER_34: this time around.

SPEAKER_35: Well, I think the global financial crisis in retrospect

SPEAKER_00: was quite short-lived. You know, it was very painful in Q4 2008, but the government's reaction both in fiscal

SPEAKER_25: and monetary stimulus in that era was swift. And things started to bounce back pretty quickly in 2009. That was different this time

SPEAKER_00: because the financial impact is just much broader across many different industries. And you combine that with continued lockdowns in China, the impact of a war in Europe, which slowed down a lot of demand for many of our companies in that region, and then a sell-off that was far more sustained. And candidly, there's no more room. You know, we're going in the opposite direction, both in, you know, the government doesn't have that much more room to do fiscal stimulus the way they did during the pandemic. And monetary tightening is happening. You're not having a loosening of monetary policy. So I think all those variables combine to something that is a lot more

SPEAKER_40: protracted. Yeah. And people are feeling that pain and the need to adjust.

SPEAKER_43: And what does that do

SPEAKER_21: ultimately to the ecosystem? Because we have a delicate ecosystem here in Silicon Valley. You and I have learned

SPEAKER_18: this over the last 20 years that we both, or over 20 years, you've been an investor and yeah, coming on 13 or 14 years, me being an investor.

SPEAKER_22: What is happening to the ecosystem? Because it is very delicate. You have founders

SPEAKER_18: creating these companies. You have the employees at the companies, you have LPs, and you have the venture capitalists, you know, arguably three or four different constituents. What is the state today and how do you look

SPEAKER_14: at it going forward at Sequoia?

SPEAKER_00: I'd say there was a period in 2022, especially in the second half of the year where it felt like most of the world was in shock and people were reassessing, trying to figure out what happens next because, you know, the sell-off was across every single asset class. It wasn't just tech, it wasn't just equities, it was bonds, it was real estate.

SPEAKER_25: It was just so broad-based and many companies basically just froze for a little bit and tried to figure out where do we go from here? Now, as you know, many of the greatest companies are born in these periods of dislocation because the sort of founders who start businesses or build businesses successfully during times like these are truly missionaries.

SPEAKER_00: They're not mercenaries. And so, you know, a lot of the marginal ideas don't work. A lot of the marginal companies are not going to make it. And that's sort of a very healthy, natural system that we have in technology in general. And, you know, talented people become redeployed. They start to work on other interesting projects. And so, that's part of what we've seen with the renewed enthusiasm around machine learning and then specifically some of the generative AI capabilities that are now creating another wave of innovation in Silicon Valley. And that's really sort of breathed fresh life into Silicon Valley

SPEAKER_52: in a way that I haven't seen for quite a number of years.

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SPEAKER_59: Yeah, you talk about that crucible moment and that's the name of the new podcast. Maybe you could explain and this is a good juncture to do that.

SPEAKER_18: What exactly is a crucible moment and obviously, you and I have seen this, that the founders who succeed, not the easiest to get along with sometimes, pretty strong-willed and they always go through some horrific passage in order to get to the new world. So, maybe you could explain a little bit your thoughts on that and at the crucible moment, I believe you did that in a blog post a couple of years ago, right? That's how you first manifested it.

SPEAKER_61: We've talked about it for a number of years. So, actually, your comment just now reminded me when I met Don Valentine

SPEAKER_00: a long time ago when I joined Sequoia, he was alive and he took me aside in my first couple of months at Sequoia and he said, Roloft is a two-by-two matrix people we invest in. On the one axis, easy to get along with, not so easy to get along with. On the other axis, exceptional, not so exceptional.

SPEAKER_25: We normally make money in one of those four quadrants. Your job is to figure out which. There it is. So, to your point, you know, founders are the people who see, you know, the world as it is and they don't accept it, they change it.

SPEAKER_00: They see a vision for the future. I mean, that's just incredible to harness all that energy from founders. So, the thing behind Crucible Moments that we've talked about is there's a tremendous

SPEAKER_25: amount of execution that goes into building a successful business. But in truth, there are one or two really important decisions, pivotal decisions that a company faces every year that have an enormous bearing on the ultimate outcome of the company. And we call these Crucible Moments.

SPEAKER_00: And these aren't decisions about, you know, what should we offer for employee lunches? That's not a Crucible decision, obviously. You know, there's a Crucible decision about international expansion. Do you add this next product? Do you make a bet

SPEAKER_25: on this key technology platform? Do you change your business model fundamentally? These are Crucible Moments.

SPEAKER_00: And the challenge is that they don't announce themselves. They don't come knock on your door and say, hey, I think you should think about this. Sometimes there's a crisis, so sometimes it is responsive. So if you think about what happened to Airbnb and Eventbrite during the pandemic, both companies lost 80% of their business in a matter of weeks because they both depended on live experiences. That's a Crucible Moment that hits you in the face. And you better figure out very quickly how to navigate through that, which both companies did, obviously. Some of the other Crucible Moments are things that you could choose to do.

SPEAKER_44: So you think about Netflix having to decide to move from DVD shipment to streaming. That's a Crucible decision.

SPEAKER_25: And getting those decisions right have a huge bearing on your success. And there's a wonderful parallel to one's personal life. Each of us have a couple of key decisions

SPEAKER_66: that have a huge bearing on what happens to your professional life.

SPEAKER_68: The sliding doors theory,

SPEAKER_25: right? The sliding doors theory. Your decision to move to Silicon Valley. That was a Crucible decision you made a long time ago. Your decision to sell Weblogs into AOL. That was a Crucible decision. Some of the key investments you've made in your life. Those were Crucible decisions. And so, you know, at the end of the day, we want companies to focus on these Crucible decisions because they don't always spend enough time thinking about them. And so the danger is that you miss a Crucible decision that could really lead you to something wonderful down the road. And then once you've identified them, how do you make the right decision? How do you harness all the best insights and perspectives to help you arrive at a great outcome and a great decision? And then there's a third one that I think is often missed. Honestly, it's one that I've made a mistake on quite a few times myself, which is you get the decision right and you don't realize all the consequences of that. If your business is moving in this direction, you've chosen to become a cloud-first company instead of being an open-source company. Well, now you're running a service. You're not shipping software. You have the right people. Do you understand how to manage a marketing funnel? Do you understand how to operate five nines reliability for customers who depend on you to run that cloud service on their behalf? So there are a lot of knock-on effects

SPEAKER_75: to actually how you operate under that new framework.

SPEAKER_59: So first of all, you have to understand if this is a crucible decision. Lunch in the cafeteria obviously doesn't make a difference

SPEAKER_18: where you locate the company. Maybe your work from home policy. These things could be crucible decisions at this moment in time

SPEAKER_59: or any moment in time. Um, making the right decision, number two, and then number three, hey, you made the decision. You're going to stop sending DVDs in the mail. What do you do now? And obviously doing quick star or whatever that was called was like a bad decision. They reversed it, but they seem to have made the right decision investing in content, right? They didn't just go online. They decided there was a second crucible decision in the Netflix case.

SPEAKER_76: That was a huge decision.

SPEAKER_59: Yeah. Do we even make our own IP? Do we keep buying IP from Disney? And it sounds like

SPEAKER_14: they made a really good decision because that's when the company went massively up in value. And that's something you and I have talked about.

SPEAKER_21: You know, you make these investments and, uh, as well as they do as private companies, often they go public and they do better. So, you know, Amazon, Netflix, and Google as private companies didn't even come close to what they did, I believe, as public companies. I wonder if that remains true today or if we just don't have a long enough arc for, you know,

SPEAKER_18: companies like Facebook, Uber, Airbnb, and some of the ones that came out on top, DoorDash, uh, Square in this sort of

SPEAKER_14: last cycle of public companies. What are your thoughts on that?

SPEAKER_65: In terms of how much the market value was created post IPO?

SPEAKER_14: Yeah. Pre versus post.

SPEAKER_28: You know, apart from companies that went public at the peak of the market in, in 2021, by and large, the vast majority of market cap accrued after the IPO.

SPEAKER_00: So in the case of Google, it's literally 98% of the company's market value today came after the IPO. In the case of MongoDB, the company went public at a share price of, I think, $23 a share. Today, the company's worth roughly $400 a share. So 95% of the company's market cap happened after the IPO and they only went public, I think, seven years ago, six, seven years ago. So there are many examples of companies that do that. Now, the funny thing, though, is that the median company, the average company trades below its lock-up expiry price. more than 50% of tech IPOs never recover the price they had six months after the IPO date. And the key is to identify which are the legendary companies, which are the ones that have that breakout potential,

SPEAKER_25: which have the management teams that are willing to go through re-founding moments to imagine an even better future for the company. And this is one

SPEAKER_00: of the phrases I love from Jack Dorsey who talks at Block, formerly known as Square, about how companies have multiple founding moments.

SPEAKER_25: Today, about half the company's revenue comes from Cash App, a service that didn't exist until about year five of the company. That was a brand new idea and they moved from being in the SMB business and they added something completely different, which is individual consumer financial services. There were lots of questions inside the company. Why are we doing this? This is a good test for a crucible moment, by the way, is how controversial is that conversation in your management team? That's actually a really interesting gauge for what is crucible and controversial.

SPEAKER_59: Yeah, no, certainly creating a consumer app after Square or Block,

SPEAKER_18: previously Square, everybody knew Square as a way for merchants to take credit cards at flea markets and cafes that previously didn't. It was an incredible product.

SPEAKER_14: I mean, Jack is a really great CEO, huh? He's created two huge businesses,

SPEAKER_18: Twitter and Square. You worked with him extensively. What's his gift? Because each founder is a little different, right? What's his zone of excellence? I'm curious, since you work with him.

SPEAKER_92: Creativity,

SPEAKER_93: calm, an ability to understand the long-term, great at spotting talent,

SPEAKER_39: empowering to those he works with.

SPEAKER_95: One of the things that I had a lunch with him before we invested in Square as a way to get to know

SPEAKER_00: each other and it was on a Saturday in San Francisco and he was wearing a short-sleeved shirt and I noticed that he had a tattoo in his one forearm and it's a tattoo of an integral sign and the fact that somebody would have a tattoo of a mathematical symbol in my mind sort of neatly summarized so many of his wonderful attributes, somebody who's technical and has all that prowess yet cares about design and cares about aesthetics

SPEAKER_101: and is creative and it's a wonderful summary in some sense of his personality. I'm curious

SPEAKER_102: what you think of mistakes

SPEAKER_18: within the framework of Crucible Moments and working with these companies. They also bought like a title that might have been a mistake music company. You have Facebook trying different things all the time. It copies a lot of people's products. They launch a Snapchat competitor. It fails, it fails, it fails, and they incorporate it into Instagram, et cetera.

SPEAKER_21: Where does taking big, bold swings and missing fit into the sort of crucible moment and just being successful in general?

SPEAKER_00: Well, I don't think anybody gets crucible moments right the whole time. Yeah. There are many mistakes people make and I think if you want to build a really successful business or if you want to have a successful career, you want to get more of them right than wrong but don't expect perfection. And when companies have made mistakes, I mean, I've been part of companies where we have made failed acquisitions, we bungled a business model transition, we thought about going international too early or too late. I mean, I've made my fair share of these mistakes. Can you learn from them quickly and can you course career? And while there are a small number of these decisions,

SPEAKER_28: most of the time they're not fatal but the real question is can you harness them to really achieve

SPEAKER_00: the scale of your ambition? Yeah. And it's difficult when you don't realize a decision correctly but, you know, you recover.

SPEAKER_28: I mean, that's, you know, winners never quit, quit and never wins, right? Yeah. You got to keep going. I mean,

SPEAKER_102: it is one of the great things when you're building these businesses is you can make mistakes but as you pointed out, are you nimble enough

SPEAKER_59: to correct the mistake or even know

SPEAKER_21: you're making a mistake? I mean, if you look at Airbnb, Brian went crazy building like five or six new products all at once and then I just had him on the podcast this year and I think he's one of your leading

SPEAKER_18: interviews with the new Crucible Moments series from Sequoia. Go search in your podcast player and subscribe now. Um,

SPEAKER_21: he told me he had to like get really focused on what got him here. Maybe you talk a little bit about founders maybe not being ambitious enough or maybe sometimes they have success and they just decide, you know what? I have the minus touch.

SPEAKER_14: Let me see if I can do two or three or four things at once. So how do you advise founders? Because we've seen this phenomenon over and over again, right?

SPEAKER_120: The advice into what is the well,

SPEAKER_21: the advice into not taking enough risk, not launching enough new things and then maybe launching too many and having to pull back

SPEAKER_14: the focus question, I guess, is how we would talk about it as investors.

SPEAKER_124: Yeah, that's tricky because the, I think the crucible moments I regret the most are the sins of omission rather than

SPEAKER_28: the sins of commission. But the sins of commission are when you maybe you've taken on a little bit more than you should have and you need to digest or maybe you need to divest take something off your plate and Brian certainly experienced

SPEAKER_25: that, you know, part of the crucible moment that was the pandemic really got the company to focus and he realized they needed to sort of declutter a lot of what they were doing in order to do that. But I'd say more often than not people settle. They've achieved a certain level of success and most people are risk averse in that situation and they don't reach for that next level game that they could be playing. You know, you've built a successful business doing this and there is this adjacency that you can move into. You're block and you've got the square business and you could go into consumer financial services too but you've got a great business as it is. You don't need to do this other thing and I think that's actually where people mostly squander the opportunity is going from good to great. It's much easier to respond to a crisis

SPEAKER_52: and identify those crucible moments because, you know, humans are just wired to be able to respond in that situation because the alternative looks so dire.

SPEAKER_102: Right. So basically burning the boats or just going for it, you know, you might figure it out

SPEAKER_21: whereas if you don't even try, man, somebody else is going to pick up that business before you even know it's there and that's

SPEAKER_137: what I worry about most honestly.

SPEAKER_21: Yeah. Interesting. And I'm curious what you think about sort of advice for the early stages

SPEAKER_59: versus later stages. In the early stages, it's a lot of advice today about, you know, building

SPEAKER_21: for a very narrow audience, very specific group of people. Sometimes people call it the ideal customer

SPEAKER_18: profile, a beachhead, just a very narrow focus build for one person, build for a small group of people, a title at a company versus, hey, we've got to build a platform here and you had a company like Unity which seems to have opened the aperture of their business widely, but they started, you know, very narrowly. So what's

SPEAKER_138: your advice there for founders? Are you supposed to start narrow or have a big vision? What's the best practice?

SPEAKER_28: I prefer the start narrow piece honestly. If your vision, the vision should be broad, but your launch should be narrow. If your launch is wide, I mean, think about it, you're competing then typically in a large market that is

SPEAKER_25: already served. They're a big incumbents. They have so many advantages over you. They've got capital and resources that you don't have as a little company. Much better for you to focus on a small audience who you could

SPEAKER_00: serve distinctly well. And then the key is, do you have an ability to extend that? So have you built

SPEAKER_25: something that can go beyond that to others? So if you think about the democratization of technology, Square started off literally with the merchants at flea markets, as you pointed out. And then they've slowly added more and more software capabilities that today you have merchants that have multiple locations or multiple restaurants that are able to use them because we've added more capability over time. But if we try to serve them initially, that would have been too difficult. So in the same way, Unity started off with indie developers with very lightweight games. And over time, they've improved the physics and they've improved the capability of their software. And now people can make AAA titles

SPEAKER_00: with Unity. But that's not something we could have done out of the gate. So that would be my advice. Start small and build. One of the canonical examples is Facebook, honestly, where

SPEAKER_25: initially they really satisfied the users who were on college campuses. And in 2006, a lot of people

SPEAKER_00: wondering, Facebook at that time was slowing in its growth and people were saying, wow, I don't think this thing will ever go beyond colleges. I'm not sure there's a value proposition for, you know, the middle age demographic. But Facebook made sure that that initial user base was,

SPEAKER_52: you know, had a very high net promoter score, that that user base loved the product. And from there you can extend and grow.

SPEAKER_144: What do you think the right

SPEAKER_21: temperament is? Because I've watched you add partners at Sequoia. I've watched people not be invited back maybe for another fund. Obviously, you have people who stayed there

SPEAKER_18: for a long time, decades, but you're now responsible for building the next generation of investors. A lot of controversy around what makes, or debate, I should say, what makes a great investor? Some people like operators, some people like analysts. What do you think makes

SPEAKER_14: for a great venture capitalist in technology?

SPEAKER_00: of being driven and having a heart of gold. And that's a recipe for success at Sequoia. And being driven means that you have the drive for excellence, the relentless pursuit of excellence. And that comes in two flavors. There's an element where drive means you show up every single day and you do the work every day because you love it. But you also have an extra gear and you have a killer instinct because you need to know that on this given Wednesday you've just met an absolutely fascinating company and you need to drop everything else and you need to prioritize. So and that's an important difference right? There's certain people who can show up every day but they never have that extra gear to know when to go for the kill so to speak. You know how can you win the you know who's the person you want to pass the ball to to score the winning goal in a game. That's

SPEAKER_25: that this person needs to play well as a team. That may not be necessary at other venture firms. So it's just the style that works for us at Sequoia. So we want people

SPEAKER_44: that are great partners to each other because we believe we win as a team.

SPEAKER_25: Now there are a bunch of other things you know intellectual curiosity breadth. I mean I'd say intellectual curiosity is one of the most important ones. Our business changes so much. The sort of companies that you and I first invested in 10-15 years ago those aren't around anymore. Mobile and

SPEAKER_00: cloud are now much more mature spaces and it's much harder for companies to find a foothold in those.

SPEAKER_25: And so you have to keep moving and you have to explore new types of entrepreneurs, new types of industries, new technology waves. And if you don't have that curiosity to learn

SPEAKER_130: and to grow and to repot yourself then you go stale very, very quickly.

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SPEAKER_18: paradigms do shift it feels like every 10 to 15 years we get one cloud and mobile being the last two before that broadband the internet itself and now machine learning AI we had a little diversion into crypto you guys tripped up there a little bit had some investments not go so at them what

SPEAKER_21: do they share in common and was crypto fools gold was it overhyped was there too much ability to I don't know you know moving money around without a license kind of situation what

SPEAKER_166: are your thoughts on the two booms we've seen right now one is you know obviously distinctly different than the other I

SPEAKER_23: said the

SPEAKER_25: one of these companies and actually part of what you see now some

SPEAKER_00: people who were in crypto now move into machine learning and AI because they often have very common deeply technical skill set so I think that's one thing in common for both

SPEAKER_25: of them the promise of crypto around decentralization is still incredibly powerful just in concept

SPEAKER_171: why do you think that

SPEAKER_00: because it removes centralized power structures the ability for censorship or freedom of speech freedom of movement of money and all those sort of things you know ultimately crypto is just fully decentralized but if you political dynamism of your country so that has a real value proposition so some of the other projects had value propositions that weren't maybe quite as striking and I think there was still some technology that needed to figure out because they weren't as easy to use so when I use some of the early crypto wallets or identity systems honestly they were a little clunky they just went

SPEAKER_177: easy to

SPEAKER_25: embrace but I think so many of those teams are still endeavoring on that and so I think that's actually one of the things

SPEAKER_00: that I would not be too early to declare judgment on

SPEAKER_25: distribution mechanism far more peer to peer and riding a different set of rails and distribution at the end of the day is one of the biggest stumbling blocks to business success so I think there's still some promise there I would say that many of the crypto founders that I've met over the years would describe the technical innovation without necessarily connecting that to a customer problem and that's the contrast

SPEAKER_00: for me with what I've seen with many of the machine learning applications because many of the people who

SPEAKER_25: listen to you many of the team members here at Sequoia have been studying statistics and machine learning for decades these are not new concepts part I would also say that what AI is keeps shifting because if I showed you a computer that could recognize objects five years ago you would have called it AI and now we relegate it and we call it computer vision yeah at one point a self-driving car was considered AI now it's just a self-driving car so humans will keep changing the definition of what AI is pretty

SPEAKER_193: quickly to like incredible experiences it's like we know what's in this photo now it's like we know what's in the photo how

SPEAKER_18: would you like to change it here is you know some incredible generative AI solution but I think it is the use

SPEAKER_59: case

SPEAKER_21: just seems to instantly become uh it just instantly becomes useful almost every pitch I hear I'm like yeah that would be useful to this customer and it was there was never a customer really I would say in four to five pitches in crypto customers never mentioned who would buy the tokens was mentioned a whole lot

SPEAKER_14: and with the with the fund you know in the public space we are subject to a lot of rules and regulations the sec is very very clear very detail oriented and you know takes enforcement seriously about what we do for a living I'm

SPEAKER_21: us and now they're kind of finding out SEC begs to differ and some courts beg to differ what should the United States do here because you want to protect consumers but there was a lot of fraud going on

SPEAKER_00: I think you need the right frameworks for this you need the right foundations and a regulatory system otherwise it will not flourish if it's too much the wild west bad takes over I mean this is talk about a crucible moment early in the life of our investment in YouTube literally I mean there were three founders in Chad's garage they moved into the Sequoia office right after the investment because they didn't have their first office and we faced a crucible decision

SPEAKER_207: early on what we

SPEAKER_00: and so we just made a very early very clear decision we needed to make sure that that kind of content didn't make it US economy grown so much why has the US GDP per capita grown so much

SPEAKER_25: faster than many other industrialized countries it's because of the institutions and frameworks in America that encourage wealth creation and business but for that you need the right frameworks you need property rights you need an efficient bankruptcy process all these sort of things go into building an efficient market system and so I think you need the same stifling that innovation but I just can't see a world where it flourishes

SPEAKER_101: without proper guardrails have

SPEAKER_21: you thought about what might work in terms of these token offerings and you know utility tokens

SPEAKER_18: you know they serve a purpose but if people are speculating on them that's not the purpose or you know that's the sort of anti definition of it what a framework might look like you have to register your crypto project maybe it can only be a certain size just like certain venture funds can only be a certain size before they become hedge funds or other devices and you know

SPEAKER_00: sorry to interrupt maybe you have this requirement for those who are permitted onto the platform to limit speculation for people who may not know what they're doing I shoot I mean

SPEAKER_208: that is incredibly sad when stuff like that happens if

SPEAKER_218: you're an ambitious startup you can't have

SPEAKER_219: an old sluggish banking service slowing you down no mercury is banking for ambitious companies and they will help your startup become the best version of that startups do from creating an account to wiring money a few clicks it's all it takes and mercury isn't just a place to hold and send money it's software that's built to help you scale with safety and stability whether you're a team of two or two thousand and mercury goes beyond banking to remove the roadblocks to your success by providing you with the connections network and guidance necessary to make mercury the powerful and intuitive way for ambitious companies to bank disclaimer mercury is a financial technology company not a bank banking services provided by choice financial group and evolve bank and trust members FDIC yeah

SPEAKER_18: know your customers pretty good when you did that at paypal and you faced my god you were one of the first systems to face massive

SPEAKER_14: fraud and manipulation and you

SPEAKER_25: your customer but then also some of it is as you know to invest in funds you need to have a certain minimum

SPEAKER_00: income level or minimum education level to know that you have to have to have to have to have to have to have to have to have people cash out on tokens based on an idea when nothing had yet been built and that to me is almost perverse and some adverse signaling

SPEAKER_229: in of itself and

SPEAKER_59: then why would the founder come back to work tomorrow if they just cleared $100 million in come up with another idea and don't execute on it whereas if you got rewarded for execution and we have a milestone based reward system in venture capital you make it to the next milestone you get friends and family accelerator seed series A series

SPEAKER_34: B that system has been refined over decades here and it

SPEAKER_18: I think maybe it's what you're alluding to is hey people can mark things up or maybe people who couldn't get in on series A's because they can't compete with a Sequoia benchmark you know whatever top firms there

SPEAKER_14: so I'm curious how you think about that and was that the sort of challenge in terms of the milestone based system you're referring to or was it something else well

SPEAKER_25: I think if a founder or management team sell some shares in financing like that

SPEAKER_00: at least the buyer is a sophisticated buyer

SPEAKER_234: so

SPEAKER_00: they know the risks that they're getting into so that to me is a good system and then I was another side of that at PayPal we actually did a secondary in 2001 wow you know a lot of people make it as though it's a very recent innovation it existed back then and it one PayPal I

SPEAKER_238: felt so rich it was an incredible feeling to not have

SPEAKER_25: student debt anymore you just paid it all down at once and I can go on vacation for the first time it was pretty liberating but the other thing it did was when eBay came knocking

SPEAKER_95: in August that year offering an acquisition it gave us more of a backbone because we'd

SPEAKER_35: all taken a little bit of money off the table and we weren't desperate

SPEAKER_00: and so I've been a big fan of companies now at that point PayPal was approaching profitability we probably had on the order of 50-60 million in revenue at that point annualized and so we were building a real business and it just gave us the confidence to keep going and for that reason I've been supportive of founders being able to take some secondaries because I pay for their family well

SPEAKER_39: being and things like that

SPEAKER_244: they're taking a small salary yeah makes total sense that's

SPEAKER_25: completely reasonable in my mind and then it better

SPEAKER_00: aligns our interests because it'll probably make them think a little bit long term because they don't have all their eggs in one basket anymore

SPEAKER_138: I'm

SPEAKER_00: totally cool with that

SPEAKER_138: when I came up as an entrepreneur and we got offered

SPEAKER_18: $30 million for Weblogs Inc and it was 18 months old it really wasn't secondary as a concept and so for me being negative like 20 or 30 thousand in my bank account at the time it was a no brainer to become a millionaire right like you had no choice and that we good yeah being a millionaire and not having to worry again and I can always build another business and have since then so yeah these are challenging decisions to make

SPEAKER_138: and so you took over after two decades I

SPEAKER_18: told you about five years into us being friends that you would pretty clear that you were going to take over at some point what did you learn from

SPEAKER_21: the previous stewards what was the training and why did they pick you

SPEAKER_28: thank you let me just say

SPEAKER_00: one other thing that's important is things are a lot more gradual on the inside that may appear from the outside so Jim gets and I started to take responsibility for the management of our venture business here in the United States in 2010

SPEAKER_253: yeah I

SPEAKER_00: some sort of sudden change in leadership and that's actually one of the big advantages we have at Sequoia you know as I mentioned earlier when I joined Don was still coming to partner meetings yeah even though he had stepped back I think seven or eight years before that and you know he was an advisor he was the founder of the firm and he would offer advice when called on but wouldn't interfere with the younger generation he would maybe

SPEAKER_25: quietly give them some perspective but respected them to run the business but we had this overlapping generations at the partnership and

SPEAKER_00: so even you now Doug continues to come to meetings I speak to Jim Getz from time to time we have this ability to draw on the experiences of people who've seen different cycles seen different waves and there's a wonderful partnership where you're not hiring a fresh team from scratch we benefit from each other's experience the other thing is it all harkens back to Don not calling it Valentine Capital in the first place he called it sequoia because he wanted to build a partnership that would outlive him nothing better than

SPEAKER_25: when I look at some of our younger team members they're not yet to work for me I look at them and I think do you have the potential to inherit this wonderful business and will you treat

SPEAKER_44: it with a sort of respect where you in turn will be a steward and turn it into a great partnership for future generations that will serve

SPEAKER_25: future generations of founders and serve our limited partners who you know they're foundations endowments non-profits will you be in that responsibility

SPEAKER_00: and I want to mentor you and teach you and empower you to develop into that role over time and that's a kind of mentality that we have at Sequoia that's what it means to be a

SPEAKER_18: so now you have your own crucible moments all this effort you put into working with founders and trying to understand their business Sequoia is a business you guys added a ton of products over the years venture changed a lot over the years lots of you know people raising funds quicker having multiple funds you made a bunch of decisions I think over the last couple years I don't know if

SPEAKER_166: moments yeah

SPEAKER_28: yeah there are crucible

SPEAKER_00: moments I I'd say if I recount a couple of the other ones it was a decision to build an integrated growth business alongside our venture business that was a decision we made in the 2006-7 time frame to actually build a dedicated team when I arrived we had no dedicated team members

SPEAKER_35: focused on the growth business it was an afterthought with the venture team

SPEAKER_59: wow so after making investments in the series A series B there are going to be series D E F you know bridges

SPEAKER_14: before things go public that's a different style of investing and it's two different teams that's going yeah and two different funds two

SPEAKER_28: different teams now we're one team and we you know we share

SPEAKER_00: one office we share one space we you know there's a tremendous amount of hand over between the two teams and non sharing so it's very important for me that actually one of the offsides we had in 2017 the jackets I had made for us for the event said team US this was before we had opened up and you want to be careful to not blur those lines because otherwise you're a little bit too forgiving a little bit too risk taking but just with larger check sizes and you think you're a growth investor just because it's a $50 million investment doesn't mean it really is a good growth investment it's maybe just a larger venture investment and so we learned

SPEAKER_140: what's the difference if you summarize it for folks so

SPEAKER_00: our mission is to help the daring build legendary companies from idea to IPO and beyond and so we invest from the idea stage and this is part of why another crucible moment we launched this catalyst program called ARC to teach company building right from seed and pre-seed stage businesses we have a venture fund we have a growth fund and then on the IPO and beyond we built and launched the Sequoia Capital fund last year to enable us to continue to hold on to great companies many years after their IPO where as we discussed earlier a lot of tremendous value creation can accrue and so we've structured our business around sort ecosystem fund as well where we have the scouts program so that we have you know this idea that we came up with in 2009 2010 where you know all these people who don't yet have liquidity but are in the midst of really interesting deal flow why don't we empower

SPEAKER_25: them and provide them with an ability to make small investments be advisors to these companies because they're on the field playing today in their own companies they don't yet

SPEAKER_00: have liquidity let's empower them to make small investments so we have that program as well so we sort of have a and that's really to double down in our network because at the end of

SPEAKER_72: so you

SPEAKER_00: asked about the different specs so when we make a seed investment we're looking for outlier founders and by outlier I don't mean one standard deviation or two standard deviations probably three standard deviations and it doesn't just mean IQ by the way it's not in that context just people who are exceptional people who will knock down walls to build their

SPEAKER_25: businesses people with grit and perseverance so we want outlier founders we want positive market dynamics doesn't mean a big market it's what we think will be a big market tomorrow are you on the right side of history that's you know those sort of questions the space that you're in and then for a seed stage investment we

SPEAKER_00: want to have a novel insight

SPEAKER_293: you

SPEAKER_00: can't just be great people you need to have looked at a problem space and you have an insight on something but you don't yet need to have built anything you may just articulate it and we listened to a company this morning we have

SPEAKER_25: to wait a week or two for them to find the right law firm and

SPEAKER_00: get everything set up we want to be there at the idea stage we love working with companies from

SPEAKER_25: at an idea stage there were two people with an idea sometimes there's a prototype and that

SPEAKER_00: might be a seed stage investment but by the time it's a venture investment that may be 6-7 million or 12-13 million in that order of magnitude usually there's some evidence and by evidence it might be that when we invested in LinkedIn that 21,000 registered users and there were seven people in the company when you invested in

SPEAKER_213: YouTube there were three people in the team and that 9,000 registered users that was it

SPEAKER_91: yeah sometimes people think Sequoia does Series A only and I think you have to keep

SPEAKER_14: correcting that in 6 million and that was 15 years ago or so maybe slightly more so you

SPEAKER_199: guys do the earliest possible so founders are clear

SPEAKER_00: shame on us in some level we didn't quite understand how interesting the company was but we kept on thinking about the company we kept on meeting with them and then we made a growth investment in the company and so when we make growth investments beyond evidence we would like to see it translated into what is likely a sustainable advantage and do we believe this company will be

SPEAKER_267: the leader of its category because can it be

SPEAKER_21: number one and is it defensible in some way it

SPEAKER_267: needs to have

SPEAKER_21: a network effect as we see with Airbnb

SPEAKER_166: Uber yeah um trying to think of who else is in that category

SPEAKER_00: we invested in Palo Alto Networks and they wow they're one of the most important security companies that was a

SPEAKER_14: pod is incredible yeah

SPEAKER_00: so we made a million dollar seed investments in uh near the founder of Palo Alto Networks back in 2005 or six wow um but we wanted to be in in the leader you know MongoDB is a leader in the database space YouTube became a leader in the video space it's you know Google is the leader in the search space where leaders accumulate power and power enables you to do really interesting things and profits are a source of power and for all audience members out there you know I realize that turning your idea into financials isn't maybe the first thing that comes to your mind but when you turn your idea into a great business with thriving financials that gives you the freedom to do more to explore other ideas to strengthen your product your value proposition

SPEAKER_93: and

SPEAKER_199: they were just investing in that business investing in it and then it turned a corner and my

SPEAKER_125: lord he's just throwing off cash flow with that business Airbnb started their cash flow last year

SPEAKER_00: and Tesla I

SPEAKER_199: Ubers right behind them I think they might get they need what what is it three quarters four quarters you need of

SPEAKER_322: something you need

SPEAKER_199: some amount of profitability there to get there okay other crucible moments for you creating the heritage fund

SPEAKER_14: and then disconnecting from China which seems like we're all being forced to do right now that's a separate jump off point for us and then disconnecting from India which people seem to be rushing to take those three crucible moments and whatever you like

SPEAKER_229: well it's actually in 2009 we decided to build two new businesses square capital global equities

SPEAKER_00: and square capital heritage fund and both of them had early setbacks by the way we lost some key initial hires and there was an easy reason to give up at that point and we kept on building and those are two crucible moments as launching in India and China where we built thriving businesses and earlier this year the different business leaders got together and we just realized it would be better for each of business unit made independent decisions anyway and so we were largely disentangling back office operations and finance and administration and things like that and some of the technology pieces so each business can thrive on its own and that was a crucible decision and these

SPEAKER_207: are people that I've worked with in some cases for 17 years people who I admire people who've built incredible businesses yeah

SPEAKER_106: I mean at some point

SPEAKER_21: things can get too big

SPEAKER_18: and be unwieldy and they might be better as verticalized I think Gary Tan our friend from Postress and now running Y Combinator I think the first thing he did was share of the growth fund

SPEAKER_331: yeah

SPEAKER_21: and so I was like well that's an interesting decision and yeah well listen if you want to compete with the people you're providing an inventory of startups to that seemed weird to me and also like you got

SPEAKER_18: to focus on something right like

SPEAKER_00: a load and you see this in many of the companies and industry as well you know there was a period of excess and I think it was a Jim Collins phrase the undisciplined pursuit of more we've done this let's add this let's add this let's add all these things and a lot of the companies that I see right now part of the reason they're able to make these fabulous earnings that you're seeing this year is many of them have realized you know it seemed sensible to do these five things you know let's prioritize the three that are the most important and needle moving and maybe we'll come back to the other two later but we just can't dilute our attention this much yeah gotta focus

SPEAKER_18: the feels like we're being driven apart and that seems like geopolitically not a great thing and not great for either group of citizens what are your thoughts on China US relations

SPEAKER_00: I hope we can stem the tide I think you're right that it's going in a certain direction right now it seems to be the one thing that politicians in this country agree on on both sides of the aisle I don't think it's in everybody's intellectual property rights and trade and subsidies and everything else to make sure that it's a fair game but it clearly is to everybody's collective benefit if we

SPEAKER_208: can find solutions right now it doesn't look as though that's on the cards

SPEAKER_47: yeah it's really depressing uh just

SPEAKER_18: as imperfect as it was it feels that imperfection imbalances and all IP that feels a lot better than the alternative uh clearly uh crucible moment uh with uh heritage uh I'm sorry sequoia fund not heritage sequoia fund

SPEAKER_21: that crucible moment you decide hey 98% of the market cap of Google is post uh these things going public uh and you help LPs the best ones in the world you know get to know these companies invest in them at the earliest stages why wouldn't you stick with those companies when they go public and capture that 98%

SPEAKER_14: and uh you have pretty good insight into those companies so walk us through that decision obviously timing wasn't perfect because you built like maybe the year or two before the market had

SPEAKER_00: as we've talked about the idea stemmed from first and foremost could we generate better returns for our LPs but because when we distribute shares to our LPs you know they run an endowment with many different asset classes they invariably sell the shares that are distributed to them because they have needs you know it's a university endowment or a foundation that's giving away money and so they sell the benefiting from that when we distribute too early but we don't have a mechanism for it because you know 50 years ago when the industry got going they created this idea of a 10 year fund life in venture capital and we've been operating under this I mean how many industries are still operating with the same rules that were designed 50 years ago even look at sports we keep changing the rules slightly so the games become more entertaining and there's dynamism to it but no one had done that for the venture industry and so the idea behind this equity capital fund was to revisit this why would we put an expiration date on our relationship with a great founder and a

SPEAKER_213: great company so that was part of the idea is can we generate better returns and you might have owned

SPEAKER_59: 5 or 10% of

SPEAKER_25: company that those LPs who wanted to take their shares because they needed to fund their operations or their great cause could do so but those who didn't could roll them into the Sequoia Capital Fund and we would hold those shares longer

SPEAKER_351: and

SPEAKER_25: benefit from that continued appreciation and we'd obviously maintain our relationship with these legendary founders and their companies it also offered enormous administrative

SPEAKER_00: simplification for us in terms of way just makes fundraising and all the logistics around operating our business simpler so that was a lot of the motivation for it now we had a record year for distributions in 2021 even though we knew the Sequoia Capital Fund was on the horizon we did make wonderful distributions for LPs and then when the fund launched in early 2022 we did start to move some of our better companies into the fund and obviously the fund had a rough year in 2022 as every single asset class on the planet seemed to drop precipitously overall

SPEAKER_95: the fund is doing very well year to date the fund is up

SPEAKER_00: very

SPEAKER_21: to have some things face headwinds I find because it makes you better at what you do test

SPEAKER_360: your resolve yeah

SPEAKER_00: certainly test your resolve and you know one of the things we have this lovely framework that one of our teammates here came up with which is four I's which is idea initiative iterate

SPEAKER_25: impact

SPEAKER_361: so

SPEAKER_25: because a lot of times I hear people say well but I had this idea two years ago yeah okay but did anybody actually take initiative and do something with that great idea it's not enough

SPEAKER_00: to have an idea you also need to take initiative then you need to iterate because it's never going

SPEAKER_25: to launch it we thought of a lot of things

SPEAKER_00: but we didn't think of everything and we keep on refining and learning and making it better

SPEAKER_18: well park how much has the venture business deployed during this last cycle and then what did you return I've heard some pretty outstanding numbers couple of

SPEAKER_354: sequoia or for the industry for

SPEAKER_18: sequoia yeah I think you guys have deployed like 2 billion in the venture business

SPEAKER_124: well for the I think

SPEAKER_39: the stat that you talked about was with the 2 billion but I will say one thing the motto we have we're only

SPEAKER_00: as good as our next investment nothing wills as fast as laurels that have been rested on yeah and so while we're proud of what we've done in the past

SPEAKER_39: we're obsessed at sequoia with what's next and the need to maintain our edge

SPEAKER_102: yeah it's it is amazing how this

SPEAKER_18: storied firm that just absolutely collapses just in their next fund after having some extraordinary

SPEAKER_138: performance it's hard to be consistent isn't it in life and in venture hard to be consistent it requires energy

SPEAKER_95: yeah energy you know it requires a lot of energy it requires a lot of discipline and I think you need to have

SPEAKER_00: a truly unique culture and team and that's part of the magic we have at sequoia and honestly part name for example the rational thing would be at some point probably to pull up the tent and accept you know that was a good run and move on and go do something else and retire whatever the case is

SPEAKER_44: but over here we have a different view and a responsibility the

SPEAKER_25: burden on my shoulders is to leave sequoia in a better place than I found it

SPEAKER_391: and

SPEAKER_25: to set up the next generation for success that is my mission right now

SPEAKER_166: the previous two stewards they lasted 60 65 until they were maybe 60 or so I

SPEAKER_193: well I think how do you think

SPEAKER_21: about yourself you've done pretty well you ever think about retiring and then what do you think is there like an age cap here we we got presidents and you know

SPEAKER_193: center we have politicians right now who are having a hard time with the retirement concept so I

SPEAKER_00: is a business where there is a lot of teaching to be done around how to build great companies that younger generations can benefit from and so that's part of the reason you wouldn't pack up too young because you don't have the benefit of being able to teach that next generation I

SPEAKER_35: also think there's a difference between

SPEAKER_25: whether you're in the leadership position or whether you're a part of the

SPEAKER_28: to me and to younger team members but he's given room to next generation and so I think there's a point at which my responsibility will be to create room for a new generation to take over and to innovate and to do things that I wouldn't have done and hopefully they'll do

SPEAKER_00: a lot of things better and you know maybe they'll make one or two mistakes in the same way that

SPEAKER_25: business with the next generation

SPEAKER_291: so I think that happens before one retires is the handing over of leadership responsibilities yeah

SPEAKER_59: it's such a good process and it's like you know the press you know

SPEAKER_18: especially in tech which kind of sad it went from being like too cheerleader in the 80s and 90s to being you know too bitter now it's got to be something in between the two but they report on everything happening at Sequoia under your tenure as if like these decisions were not 10 year processes and I think hearing directly from you and just you know listen I come down and I'm in

SPEAKER_00: joining board meetings engaging with management teams or I'll have to go visit companies so you know being desk bound as an investor is probably not the recipe for success but there's so much to benefit from being together in person I mean last week we had our annual offsite for the investor team and spending you know two days together in an intense environment and just talking through some of the issues and brainstorming on things that you could do and all the cues you

SPEAKER_408: last year that was actually the first time I played it was a lot of fun but we didn't have time

SPEAKER_25: for this year we

SPEAKER_00: do usually we like to

SPEAKER_02: a time you lift it up and it is a time run and different teams have to compete and you know

SPEAKER_230: the instructor at the end of it said

SPEAKER_412: now isn't it funny you guys think you've just had fun for two

SPEAKER_25: thinking about it it is not going to make you better you actually want reps

SPEAKER_416: which is

SPEAKER_25: an analogy in our business you want reps you want to meet companies you want

SPEAKER_44: to write investment memos you want to get through the reps I have

SPEAKER_18: taken so many notes from taken a very positive collaborative approach um

SPEAKER_138: and you know I've worked with other investors who are very anxious and they seem to operate out of fear this fear of failure and you have always been composed and I

SPEAKER_25: the investors we can all think about all the things that can go wrong and we can all think about all the reasons you shouldn't make every single investment

SPEAKER_40: opportunity that comes across your desk

SPEAKER_421: yeah

SPEAKER_40: the gift is understanding what can go right

SPEAKER_00: and imagining you know if it does what can this company turn into and dream with an entrepreneur

SPEAKER_199: yeah that and we were talking about uber

SPEAKER_18: and cloud kitchens and these amazing things he's done I just was remembering because I knew him through the two companies before

SPEAKER_138: that just remember 19 of 22 people who

SPEAKER_427: I introduced the company to saying no and the varied reasons they gave were all the reasons that

SPEAKER_138: in the real world because people are not doing oh you should just

SPEAKER_427: sell software they literally have some VC who said just convince Travis to make it enterprise software cab companies I just thought wow you don't understand how much more efficient it is when you take out the cab company it's

SPEAKER_324: taking 55% tax you just missed the entire point but yeah that is the

SPEAKER_207: most successful businesses were non obvious and right

SPEAKER_358: which was the biggest miss then for you

SPEAKER_138: biggest miss and the one you're so proud you got I guess YouTube

SPEAKER_21: getting YouTube right was really good well I'll tell you why because at the time the concept of using storage and bandwidth for free was the stupidest thing Mark Cuban came out and he's as smart as he gets and he did broadcast dot com and he said this can't work it economically cannot

SPEAKER_434: work and that's

SPEAKER_00: the danger of expertise by the way sometimes

SPEAKER_434: sometimes

SPEAKER_00: you know there was a movie with the man who knew too much yeah like sometimes there's a risk that you know too much about a particular sector

SPEAKER_436: but

SPEAKER_00: your knowledge may be dated

SPEAKER_436: I

SPEAKER_00: knew a lot about financial services at one point because can't transpose what I knew 20 years ago to what the industry is

SPEAKER_25: today

SPEAKER_293: and

SPEAKER_25: so that's I've often seen this people who knew a lot about security who missed the next security wave people knew a lot about broadband infrastructure costs who missed this who missed YouTube so I think one has to be really

SPEAKER_00: careful to think that your expertise sometimes is a curse when it

SPEAKER_213: comes to making investment decisions where you need a little bit of naivete

SPEAKER_439: because you

SPEAKER_213: need to to

SPEAKER_95: hustle yes the founders too and

SPEAKER_39: well this company that

SPEAKER_00: I mentioned Natera which was a bioinformatics company that provides genetic diagnostic testing and when we first invested it was a million dollar seed in 2007 was a person I'd known in high school in South Africa yeah I know

SPEAKER_443: he's very talented

SPEAKER_00: Matt yeah he's you know Stanford PhD you know switched in electrical engineering and then he went back to learn about biology and genetics started this company they deliver over 2 million tests a year in America they've branched from doing non-invasive prenatal testing to oncology testing to organ transplant rejection testing and just a phenomenal business that really impacts the lives of people and it started

SPEAKER_25: with such a small idea in a small market they were only addressing the IVF market initially back to your earlier point about the ICP that

SPEAKER_00: a very small market initially which is 150,000 IVF cycles in America every year or at the time that was the number and eventually they were able to get to broad based prenatal testing and about 4 million births in America a year so that was orders of magnitude more market opportunity now they've opened up the aperture and they've added oncology screening right so they took

SPEAKER_25: an initial market they

SPEAKER_18: that's a great one to be proud of biggest miss you had to have missed some things I know people don't like to talk about their anti portfolio but you got to have one that just still burns

SPEAKER_337: you introduced me in 2007

SPEAKER_124: to a little company called Twitter it was your introduction thank you very much this

SPEAKER_449: is what got me the job as scout by the way I think this was the origin scout program was my

SPEAKER_193: log email to you and more saying I think these guys figured something out it's

SPEAKER_452: really cool and I know the date because I looked

SPEAKER_95: the day when did I sign up for Twitter originally and she has your original sign update and that introduced me and that was 2007 the iPhone hadn't yet been released so it was SMS it

SPEAKER_456: still

SPEAKER_459: talking

SPEAKER_23: so and I didn't quite get it and I met Jack at that point and

SPEAKER_95: Ev was the person giving the presentation and we had an

SPEAKER_00: opportunity to invest early on and I didn't quite get it and I kept on thinking about that and trying to learn from my failure to imagine what Twitter could become at that time I think it was more obvious by the Series C in 2009

SPEAKER_25: Obama

SPEAKER_21: had gotten on at some point and it went beyond like me and Robert Scoble yeah

SPEAKER_95: it was the Arab Spring had happened and so at that point I think it became much more obvious and

SPEAKER_15: yeah

SPEAKER_00: we tried to engage but at that point the ship had sailed and

SPEAKER_21: and uh it's very I think it's more collegial than maybe people think you know like it's you remember these

SPEAKER_138: sharp elbow moments but there's so much great collaboration I

SPEAKER_199: big

SPEAKER_466: thinker

SPEAKER_00: we met with Jeremy Stoppelman and Max Lifchen when the idea for Yelp was just literally at a formation stage Yelp was thinking about just doing email back and forth the website hadn't launched again smartphones didn't exist and Michael said I imagine in years to come there'll be a Yelp sticker in a restaurant window right next to the Zagat sticker wow

SPEAKER_02: he had that vision yeah at the point that the company was being formed and Zagat is gone yeah

SPEAKER_04: but you do see Yelp stickers everywhere he sold the future before others did

SPEAKER_138: your

SPEAKER_18: three compatriots at Paypal Elon Peter and Saks also Stanford colleagues give me the one liner on what makes each

SPEAKER_28: for Elon I'd say it's first principles thinking and

SPEAKER_00: the ability to break things down first order issues thinking ground up work

SPEAKER_21: ethic too huh I mean that's something you only see over time

SPEAKER_208: that's a given

SPEAKER_21: but that's extraordinary I mean

SPEAKER_477: his ability to work you know having hung out with him

SPEAKER_39: David works Max works work ethic is so important I mean

SPEAKER_25: that I'm sorry I feel like at some point that's a necessary condition for success yeah it's not sufficient but it's necessary got

SPEAKER_481: it alright give me the next guy

SPEAKER_25: Peter is a strategist I mean part of what I thought was and talk about crucible moments it's

SPEAKER_00: actually one of the things that started me thinking about crucible moments was there were days where Peter might not be at the office on a given Thursday morning and so what's Peter doing today and I started to chat with him chess player thinking about what happens as the games evolve between us and Visa Mastercard or us and eBay or us and you know other financial services you know big banks that were trying to kill us at the time and Peter would take time to think not scurry around doing busy work running from really

SPEAKER_25: admire that he's such a strategist such a clear thinker about these issues yeah

SPEAKER_482: I agree with that

SPEAKER_44: for

SPEAKER_25: David

SPEAKER_44: the thing I admired most was his sensibility for great product and design

SPEAKER_487: interesting

SPEAKER_25: because he

SPEAKER_486: was an ops guy

SPEAKER_25: well he ran product before he became COO and I remember when I was interviewing at PayPal David was one of my interviewers and like part of what we

SPEAKER_00: did is he put up a mark of how he imagined the pages might look like for PayPal and he and I would brainstorm on what if the flow was this what would the next button do what did you ask for next what makes for good design and flow and David was also just so open minded at continuously thinking about what makes for a great user experience and end user experience and I think that's informed a lot of his success as an investor as well now that he runs his own investment firm and with other companies that he started was that empathy with customer first

SPEAKER_25: and what is the customer's experience

SPEAKER_491: fantastic yeah

SPEAKER_138: all right listen I kept you for over an hour I get you every five years so

SPEAKER_18: I'll see you in 20 28 I'll see you before that but we'll do another years not just for myself but countless founders and also countless investors I mean if you look at that sequoia scouts program I think there's been like hundreds of scouts over the years yeah

SPEAKER_493: yeah

SPEAKER_18: and it's one of the best performing funds and uh just remember those first

SPEAKER_138: meetings at the Rosewood and it was crazy concept to just give

SPEAKER_18: a bunch of lunatics you know 25 50 100 K checks and say go have fun really was uh and it

SPEAKER_495: really launched my

SPEAKER_18: no good deed she'll

SPEAKER_496: go unpunished

SPEAKER_497: now you've got all these crazy competitors out there but

SPEAKER_18: it no conflict no interest I mean it's really the great thing about the network in this industry you know if you the good will in this industry is so underrated hey people are so negative on tech and business and

SPEAKER_138: entrepreneurship right now which is so weird compared to how we grew up we celebrated entrepreneurs up until like 2000 now we just want to take them all down but the truth is like who else is going to innovate in the world and create all these amazing product services that push humanity forward and

SPEAKER_14: right everybody back to work

SPEAKER_91: rule off both uh the now

SPEAKER_14: the uh the steward the steward i'll take an iced tea if