Doug Leone - Lessons from a Titan - [Invest Like the Best, REPLAY]

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0:25 Operate smarter and stay ahead of the curve. See what Ridgeline can unlock for your firm. Schedule a demo at ridgeline.ai. Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at joincolosis.com.

1:00 Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum or O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum or O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast. My guest this week is Doug Leone.

1:34 Doug led one of the world's most successful venture firms, Sequoia, for over 25 years, after he was given responsibility for the firm by its founder, Don Valentine, in 1996. Alongside Mike Maritz, the pair managed its expansion from a single$150 million early stage fund to an eighty five billion dollar global powerhouse. It was a privilege to sit down with Doug and learn from him. We talk about his tough start at Sequoia, get into the technicalities of great go-to-market motions, and survey his advice for other investors in the industry.

2:04 A key theme that will stick with me from this conversation is Doug's insistence on keeping things simple and clear. Please enjoy my great conversation with Douglione. Doug, I've heard you interviewed elsewhere, and I wanted to start our conversation somewhere a little bit more unique. I'd love you to talk about the heart and mind of Don Valentine. I've learned a lot about him, obviously someone that was influential on you. and a key figure in the history of this style of investing of our style of investing.

2:30 Maybe start with his heart. What was his heart like? It truth be known, for the first twenty years I did not know whether he had a heart. It was all pure business. It was all for the cause. Of generating returns

2:46 for our clients, most of which are endowments and foundations. So For the first I would say fifteen, twenty years. He was Visionary. But extremely tough.

2:57 And certainly Dedicated to the cause. At his eulogy I was very amused and interested to find out from his kids. that they spoke of him as having his huge heart when he went home. And it was Really interesting how he segregated his work life from his home life.

3:13 As he got older and develop a sense of history and put himself in perspective of other leaders. There were certain things he did not want to do. He did not want to be One of the Older folks that stuck around too long.

3:29 He had images and knowledge of other leaders his age or a little younger, they were falling asleep in meeting and there's starting to be a drag on their partnerships. And he was very cognizant Of not wanting to do that. And the other thing it was very cognizant of is Boy.

3:45 How do we leave Sequoia in the best possible place? or the next generation. And it was interesting That he chose And I say it shows as if he's pointed us out. He had his own subtle way of choosing. A signing carry.

4:00 Maybe two of us at ten percent more than the other folks. That's how he chose leadership. That he chose younger folks that he was willing to mentor And I would just say that the heart showed up. And it was a transformation.

4:14 На трансформаці натов. But a transformation out of wisdom. And you get to see his heart and how much you deeply cared. And how much she care to mentor and how much she love youth and how much you love new ideas. And so on. So very, very, very interested.

4:30 Very interesting. human being. For the time in which he lived. He would sell shares at two billion, not buy shar at two billion. Back in his day, the

4:41 If you reach two billion or three billion, there was a huge exit. So there was the learning curve of А волда вас чингін а рапід пас. He understood that he wasn't gonna adjust to that world. He got out of the way. He never asked.

4:56 A question Unless he was asked. The only comments he made once he stepped down. comments when he was asked for his opinion. I found that extremely interesting. He was the ultimate of what the

5:09 If you will, the old king should do. In fact. I model my behaviour. Now being the old king, to his Never intrusive, always helpful, always ready to assist.

5:20 But never second guess. You mentioned his toughness in the earlier years. Maybe draw the spectrum for me. In terms of what was the most productive part of his toughness, and if there was any unproductive part. Of his toughness.

5:34 It feels like this is an era where that word toughness might become important again. I remember attending a meeting with a founder. And as we walk out of the meeting, Don only wrote in Greening. Yellow pads and green ink. And in green ink he left the note on the table said Doug

5:51 Not fit to listen to founders. And he just left it there. For me to see. And in this new day and age, everybody wants weekly feedback. Why should I do better? And this and that. Let me tell you. You read that note from down Valentine, that's all the feedback you need for the next twelve months.

6:07 You have to Break the feedback down. What does he say that you certainly don't go in his office and say, Don't What do you mean by that? You know what you mean. And you understand maybe you were too aggressive, the wrong style.

6:19 The other side of being too tough is He was tough on founders, but keep in mind we were dealing at a time where we're investing in semiconductors, the founders were not the twenty two year old who created new industries. Because of the internet of mobile. There were engineering managers at a chip company that started a new company, maybe ages forty to fifty.

6:39 Those founders Once they misbehave or something goes wrong, they really can't be saved. They're too opinionated, too big. As opposed to a twenty two year old. That you certainly can Makehead of products.

6:51 Or ahead of strategy or ahead of something. So it was a different time where The aggressiveness to founders was far greater, which if you implement the that in twenty twenty three would ruin your reputation. That's both the good side and the bad side of being tough. I think you have to overlay

7:09 The issue of time. Maybe that was appropriate for Nineteen seventy eight, it certainly would not have been appropriate in twenty twenty. But internally

7:20 He knew how to get you going. And it wasn't the same style for everybody. He happened to know that I needed a good bash on my head. To reprogram myself. He knew what I needed, but on the other hand, just to give you a a little sense. When everybody wanted me out as an associate because I was insufferable.

7:38 It was Don that saw something and said, quote, give the kid more time. So within that toughness Frontally. There was enormous support when you were in looking. And boy, I think that's the best way to lead and manage.

7:53 I've gotten a bit of feedback on your style now that is sort of the opposite of insufferable and that you weren't fit to listen to founders. I've heard that you're actually a great interviewer. I want to come back to that. And not that you're insufferable, but that you're quite caring. What cause the change and maybe to begin What did insufferable and not fit to listen to founders mean?

8:12 When you were young. To answer the second part of your question, it meant essentially being an unguided Missile.

8:22 It means Overcompetitiveness Do what it takes. Doug, go take that hill. I went and took that hill. Because that was the mission and the cause. And nothing else really mattered.

8:36 And immaturity plays a role, lack of experience plays a role. And quite frankly, Lack of track record. So you are a no track record, abrasive pain in the ass. Young man. With a New York accent.

8:50 And clearly a kid from the street. Well that doesn't play. That's really not the best marketing message. Now some people saw through that and they saw a genuine human being. They work well in those cases. Contrast that with now.

9:07 I have a bit of a track record. I am a little more mature. A little smoother. You know, a coat of paint. Not to mislead, but that's the way you lead your life.

9:18 A little more wisdom. Suddenly I went from insufferable to charming, and I'm aware of that. And I chuckle because I was not as insufferable then as I was viewed, and I'm not as charming now as I'm viewed. But I'm very well aware of the Markam.

9:33 Transformation. And I find it amusing just understanding what human nature is. Everybody tries to position things. And now the world is full of baloney. And three quarters of stuff you read and is not true, blah, blah, blah, blah, blah, blah.

9:47 I spent a lot of time talking to your partner, Ravi, about Demons. And the demons that are in certain people for whatever reason And the ways that those demons

9:58 can motivate or drive entrepreneurial type people. to enormous success. And one of the things that Ruby told me was that You are extremely good.

10:07 It's sussing out. A person's core motivation. via listening, ironically. Given Don's know to you. And I'd love you to talk a bit about that skill and why you think it's so important to understand.

10:19 Someone's core motivation. First of all. Well, we look for founders. We also look Or Sequoia Partners, investors, young people. The same set of traits

10:31 Use the word insufferable. Use the word He doesn't listen, she doesn't listen. Or It's belligerent. She's belligerent.

10:39 Those that other people may view as a negative, we actually view as a positive. Because in order to get something done in life. You can't just walk down Main Street and be a sweetie pie. We look for outlier people, whether it's founders or investors, and outlier people Do extraordinary things.

10:58 Outliers. What do I mean by that? Extra Driven for whatever reason. Maybe Daddy told them they weren't good enough and they want to show Daddy how good they are. Maybe they have a twin brother. twins of where we have competing with one another. They love one another, but they compete one another.

11:14 Maybe they fail miserably in their first startup, they're embarrassed and so on. So we look for those things. And sometimes, believe it or not. Genetics I've actually met some people that I'm now convinced They were just wired that way.

11:28 And I try to look for that. For the simple reason that I view that to be The greatest advantage But could be the greatest weakness if not channeled appropriately. So wanna look for it to see if it's there. 'Cause I like to be up there.

11:43 Then I look to see what it is. And whether it's a new Right side. Of this good versus bad trade. And thirdly, because once we understand it and then that's the good side, then how do we channel it?

11:56 Compliment. And make sure this incredibly wonderful, insecure, scared, because that's what we all are when we're coming up. А до ви As if we were their brothers to achieve Maximum type of success.

12:13 So I dick for that. I just really want to understand what makes this person tick. And to me the greatest question is why? Why, why, why. When someone says I was recruited by I hear I was lazy ass.

12:29 sitting down, I got a call from a recruiter, I was nothing better to do. I got sucked into listening to something. I got sweet talked. Then I talked to a company that made me an offer. I wasn't too happy with my job or a little bored and I went. To me, that's what I was recruited by sounds like. The converse to that, of course, is

12:48 I was sitting on a job, I saw an opportunity in a market segment that I didn't know existed. I call seven or eight companies. I realized this is the leading company. I call called the companies, I found a way to get a meeting. I saw my way in, I got an offer, I negotiated, I took a job and I went. Whoa, what an answer.

13:06 So those are little things I look for. When I interview people. In addition to asking why in lots of different ways, are there other favorite questions or topics. that you find yourself returning to over and over again as you're getting to know people.

13:20 I wanna know The upbringing. I wanna know what kind of kids they were. their journey through life, their maturation through life, I love to ask Whether they have a sibling to describe three adjectives.

13:34 For their sibling. The close cycling. And three adjectives that describes them by comparison. I don't really care about the sibling. But you start learning, right? I love asking the setup question of

13:47 Where would you get your best reference? And they're eager to tell you that. Complete setup question. 'Cause the next question is where would you get your worst reference? And why?

13:56 And again, I'm not looking to nail anybody. We've all had journeys that are up and down. Very few of us have had a linear up journey. But just understanding, looking for self awareness. Because self awareness means breaking problems down to first principles.

14:11 And meaning using your experience to solve a new problem. While we love best athletes, if we find best athletes with little of experience And first principle thinking, that's a home run. And we look for that. How much time do you think it takes on average to really

14:27 Understand somebody. I hate when they set me up for thirty minutes interview. I said, forget it. The first thirty minutes is all make will be. Gotta let people let their guard down. And then if you really want to understand someone, I think it probably takes Two to three hours.

14:43 Including a dinner. When people do relax. and start showing you things. You know, and you wanna see how people place orders and you want to see what things they say, you know, I always like to put salt on my food. Well that tells me you're highwired and you're not open to new ideas. The old classic how you treat a waiter or waitress, boy, that

15:03 Really drives me crazy. The questions I asked. That's not asking me. Well, Doug, I'd like to ask about your journey. Why would you ever want to ask me? You're in a job interview. You gotta want to learn anything about the role who you're gonna be reporting to, where you're gonna be doing every day. If you succeed, why will you succeed? If you fail.

15:21 But the last question's Doug, let me understand about journey. That's a made up question. Who cares? That's certainly a question I wouldn't ask somebody if I had ten, fifteen minutes to ask about a new job. So I think maybe the answer to your question is

15:33 Maybe one or two meetings and a dinner. What were the most formative experiences that you had? prior to becoming an investor that you think most Impacted. how you functioned as an investor. I know you were an excellent salesperson.

15:47 at early jobs at HP and Sun and Prime. But what specific experiences stand out in memory as the most impactful on you? So I remember when I had my first job at Hewlett Packard. And two guys They looked like they were six years old, maybe they were forty, and I was twenty two. They said we'll split Man and

16:07 And two thirds. And you don't have to be in the medium when we split. And you know, as a naive young guy, oh I'm gonna get third of Manhattan. Well, I got north of ninety sixth Street of Manhattan. North of ninety six now is cool. Let me just tell you, North of ninety six in nineteen seventy nine was not cool.

16:23 And The formative part is that for me, I didn't give up. And you always ask yourself, how do you turn a negative into a positive? And I was lucky, you know, luck does play a little bit of role. I was lucky that There was Columbia.

16:36 The university up there. And there was a head of computer science called Troub that just came from Carnegie Mellon. And he was big in open systems and Unix. And he drew me a graph of the ARPANET. I never knew where the ARPANET was, which was the predecessor of the internet.

16:52 So a little negative turned into a little positive. And with a little bit of success. And then Joining sun microsystems or in some ways were shooting ducks in a barrel. And just

17:04 coming up with a business plan that we could be successful on Wall Street, one of the biggest market segment for Suns, all the trading stations. and breaking that market down and learning to use the we pronoun. Here's what being smart and not greedy. Whenever I sold something and somebody helped I insisted on commission splits and those things.

17:23 And I understood management took an eye that well, not only is this kid selling A look. Everybody loves it. He's taking care of other people, and next thing you know They had an eye. And boy, I took note of that, right? Okay. Ooh, that's how you do things.

17:40 And the other thing is the mistakes that you make. When you're too aggressive, when you're too hardcore, and you say, Boy, I don't want to do that. And the people that you meet. You meet two kind of people that teach you The one that teach you what to do? And the ones that teach you what not to do.

17:55 And the trick for me, I never understood when the Father's an alcoholic. Or is an abuser and the son becomes an abuser because I have to tell you, I've had some tough rides. But I Made a promise to myself.

18:09 That if I ever became someone I would not do unto others as I was done to. I thought that was disgusting. I thought it was very upsetting. And when you've come to Sequoia When I was running it, I made sure everybody respected the people that feed us.

18:25 You better put your plate away. You better say thank you. And so on, because it starts at the foundational layer. And if you do that right. Then the culture starts being right. And if you share your winnings, and if you just don't talk to talk, we are team. We have this

18:41 No. You have to share the dough properly. And in my case, I never called this a family. I thought family's bullshit. I've got members in a family I have to endure. Forever. And get rid of them.

18:52 I told people we are high performance. And pick your noun. Right performance team, if you don't believe in sports, production, a movie. And maybe the investors are the actors, maybe the investors are the goal scorers. But you know what we need? We need trainers. We need coaches. If you're a movie, we need a director, a producer, a makeup artist. And it takes everybody.

19:12 And so just believing internally. That's what we need. And incorporating into the investment business into what I think is the most fabulous culture of any partnership. In the investment area. Is really our secret sauce.

19:28 You and a unique perspective having been A part of Sequoia across four different Decades, more than thirty years. So you've seen an enormous evolution. of this industry.

19:39 feels very institutional. It's big. There's lots of norms. It's a career path for lots of people. And I think that's probably different from when you started. I'd love you to reflect on what Venture looks like to you.

19:51 Today. relative to the perspective of all the time you've worked in the business. Well, first of all, in my opinion it's gone from a high margin cottage industry to A lore of margin. Mainstream business.

20:05 And when you see that you see all Type of people's Coming in. You start having all these cycles, momentum cycles, down cycle in a momentum cycle. You hear things From people that have never

20:17 made a dime, don't know what they're doing, raise as money as you can, screw the venture guys, give them as little equity as you can, and without being self serving, I think those are the wrong types of messages. The messages are Raise as little money as you can to get to the next milestone. Find an investor in the same way you'd find an engineer. It's not

20:37 I just got a term sheet. Ачів баланс. on your board or in your company. So that you are in some ways a force to behave correctly.

20:46 And In the momentum cycles and we've seen them before, where there was Ninety seven to ninety nine, or oh six to oh eight, or twenty to twenty two, all these horrific habits. got involved where COs Wan it.

20:59 I want to be a unicorn. And rancha guys were fighting all over that were stepping over their feet to try to do that. And what we have right now is a bit of a shit show. You know, a whole bunch of companies. There's companies with five hundred million in a bank.

21:14 A billion in a bank, I heard of one. With maybe an eighty million dollar run rate and no growth perspective. They don't know what to do. Bad habits all over the place. And that's what happens during

21:25 Quote wonderful time. All these lousy habits. I build. In times like these Where I'm much more optimistic. You have real founders coming out.

21:35 There's a lot more balance between investors and founders. I'm a That helps founders. It doesn't hurt founders. There's still people that are willing to invet, you know, now it's AI. We'll invest in every AI. There is a lease in the water a little more of a restraint, a little more thought process. Oh.

21:52 Who do I want to bring as my next ten year partner? Not I got a term sheet last Thursday. Very different. Got a term shursday is I walk into a bar And the first male or female that talked to me, I got married. As opposed to No, I met and dated someone for A year, six months, or whatever it is, or three months. Got to know'em a little bit. I decided our value system was gonna be aligned.

22:15 We decided to get together and build a company. These are much healthier times and like everything else in life. Reality is usually the opposite of what it seems. Tough times. Healthier times.

22:28 Some of the greatest companies. got created during times like this. Whether it was Cisco Whether it was PayPal and Google Whether it was stripe and square, those companies with terrific DNAs. Got built during very difficult times.

22:43 We're seeing right now a harder market for sure, but with AI as a subsector of the technology market. One that is very red hot and still seeing prices for deals that seem crazy from the outside without investigating the company's I'm sure you've seen countless

22:59 Little mini cycles like AI is today. So What is your style of approaching One of these new Thermonuclear

23:07 Technology markets. As an investor. I actually think But AI is the next platform shift. in the same way that mobile was the one before, internet was the one before

23:19 infrastructure, the hardware software layers that allow the internet to be overlaid over that. So I think AI is real, but I said earlier We're going to overestimate it in the short term. We're going to invest in everything in the same way that in nineteen ninety nine we invested In everything. But then Google came out of that.

23:37 Facebook came out of that. So I think you have to have A good head on your shoulder. Where you don't practice FOMO, where you don't chase every Company.

23:48 And you make the investments that you think are appropriate. Where if it doesn't make sense to you, you know, a lot of things don't make sense and you see every Five venture firms. Wanting to invest. And the thought process, if you're a young investor said

24:02 Well, I don't really get it, but they get it. It must be great. Let me go in. And there's a lot of that, believe it or not. I think one of the benefit of being around for fifty years is that Well two, we have the fear of foam. Of course we do, right? We're humans. We have a little more perspective. Of how deep to jump in.

24:19 AI is real. AI is the next platform. But how do we not invest in everything that walks? How do we make certain investments based on market maps based on thought processes. That

24:32 Are more rational. And not do every investment just because every other venture firm is doing every investment. So that's how we're gonna be participating. We are gonna be for real, whether it's with our art program, a C program. Venture program growth. We have

24:46 Many ways. In which to invest in companies. But we're not gonna jump in indiscriminately as we never had. Now. We drank our load of Kool Aid, whether it's nineteen ninety eight or twenty eighteen, twenty nineteen.

25:01 But in both cases I'm happy to report. We drank a Carafe full of Kool-Aid. Not a garbage cat full of Kool-Aid. So of course you're gonna drink Kool Aid because it's uh

25:12 private investment business. It's a 6040 type of business. We two got caught a little bit in momentum investing. But I'm proud to say that by comparison, it's not even close to some of the things we've seen in the background. And you know who suffers at the end from all this? Found us. If you were twenty eight today and of similar gumption and interest. Do you think you'd be going

25:34 Into venture. Given that What you described as the more mature Nature of the business. I think I would go into venture, but not out of a green

25:44 It's a nice way to make money. I think a goat and venture if I had a passion For If I didn't know how to start a company because if you think about venture and capital. It's the large supply side, the scarcity side.

25:58 It's talented founders. So If I have a choice and if I thought I was a talented founder. A venture versus be a founder. In fact I always laugh when These super smart great people say, I wanna go into venture. I said, Why do you want to go on a commodity side?

26:13 Stay where you are and do something great. At the end of the day. It's a preference. As to whether you're a builder If you will, a player.

26:22 Or if you are A coach. Now I wanna use that coach term because coach implies I know more than a builder. I don't mean it that way. I mean coach As not being in a field on a day to day basis. It's not a hierarchy of knowledge, okay? Whether you want to be on the sidelines, maybe it's a better way to say it.

26:38 You want to be on the field to be in the sidelines. And that's a personal choice. There are people That are inherent builders. Elon Musk, he's a builder. And there is people

26:48 That just love to help companies Go to market and look. My knowledge has been the go to market side. I love helping founders figure out How to sell something from the customer standpoint.

27:00 And then scale that sales force. Maximum speed. That's my passion. So I'd be uh lousy type of builder. So it's not an easy one or the other. What you shouldn't do and say

27:11 Does money venture I want to cushy life. I want to go into venture. That would be the wrong choice. Both in nineteen ninety nine. And in twenty twenty three. Speaking of your passion for go to market.

27:24 Describe What you've seen the very best. at that do consistently? Is it working from the product towards the customer's need? Is it working backwards from the customer? Are there other things that you've seen and recommend over and over again? Of the very best at this.

27:38 So I've actually have given a name for this cycle called The merchandising cycle. And I explained this to founders. It starts with product management. What exactly we build it.

27:50 It should be known as such a vision. But if the vision's wrong, we're all going up. Assuming we're someplace in a ballpark. It's also product management. What are we building? to product marketing, how do we position it? How do we tell the story? How do we have the three words for describing where we do? How do we have the thirty seconds, two minutes, and everybody can do the ten minutes. Very few people can do the three words.

28:13 And then how do we do the demand, Jen? Now do we do the sales? And wherever that cycle's broken, it looks like a bad salesperson. This guy can't sell. Actually the truth of the matter is if you've got product market feet Even shitty salespeople.

28:28 Cancel. When we first invested in service now, we had the B team. prior to Frank Slotman coming in in sales and they were selling like crazy. So that was my lesson. And so for me as a board member, I have to debug the merchandising cycle. Product can't sell wide, there's not enough leads.

28:44 Oh well, I know to fix that, why don't we get some more BDRs? Then you could talk to the BDR guys. Here, you can have another five BDRs. Well, then they'll start fussing up. Well, you know, it's not really a BDR account. It's that the message isn't playing right. Uh huh. Well, I knew that, but it's nice to admit it. Let's go back to product marketing. What's the message?

29:04 Is that the right mess that the wrong message? And that's based on the product we're building. This is product management. And so I work very hard at debugging. Upstream.

29:15 This merchandising cycle so we can figure out where the real problems are and as I think about it, take these rocks out of the river so that damn water can flow as fast as possible. And once you do that, and once you know that Two or three sales reps. Can sell something. And you had your first four or five sales that don't include the seal, those are telltale sign that you can start ramping. And so that's what we do. That's what I do.

29:39 As a board member. The thing I can't do is the black magic. If you don't have the right vision If you are not close to product market fit, I will tell you

29:50 Doug Leone or any other People in venture. I'm not gonna help you. Black magic is reserved for founders. Everything else is mere mortal stuff. That's all we can do.

29:59 And we're probably the very best in the world at Sequoia in doing that. What are the components of great Positioning. For a product. Simplicity.

30:09 Crystal clearness. Something a mere mortal can understand? If you can describe it and you can understand it, you're out to lunch. Singularity of purpose. When I go to the store I buy a pencil because I wanna write. I don't buy a pencil because I wanna write or scratch my back with a tip. It doesn't work like that.

30:29 Singularity of vertical market early on, because you want to be narrow, you have no resources. You've got to be narrow. Oh, we're chasing these four vertical markets. It sounds good. But in order to do that, you have to have marketing that talks four different languages for four markets. And maybe you have to have engineering that develops different features from. A little company can't do that. So

30:50 Be at the bullseye. As sharp as you can, and then starts to expand in concentric circles when you get your legs. on the U in that vertical market. That's what I look for in position. If you think about The

31:04 What I'll call mediocre positioning. You'll know if there's amazing positioning because Yeah, just see the thing flying off the shelves. And you'll know if there's terrible positioning. And that the danger is

31:14 Somewhere in the middle, like it's kind of working. What have you done historically when you see that and you see founders start to build Upstream the demand gen and the sales orcs on top of mediocre positioning. That seems like a very dangerous spot for a company to be in.

31:29 So keep in mind that we as board members our job Is to make these founders Very capable. And successful. You lose the founder, you lose the soul of a company.

31:42 There's no question about that. Okay. And telling the founders Cuts a little bit of the pinky. And you wanna found us with

31:50 Ten fingers and ten toes. But there are certain times where the thing is so off the rails that it's worth uh Small piece of the pinky to get back in the right direction. First what I try to do instead of telling I like showing. So Let me give an example.

32:05 Your VP of marketing stinks. If I say that. means nothing to a founder. But if I say that. I'd like you to meet these three VP of marketing from other companies.

32:16 Let me tell you what happens nine times out of ten. They come back and they say, Holy shit. The guy we have or the gal we have is nothing like this guy. Uh So try to show not tell. Build trust which doesn't get built day one.

32:29 He really gets billed with the first time the seal founder's in a pinch and he understands you're there to help him out. So once you have trust, which is really the foundational layer It's the grease that makes all business runs. And once the founder understands maybe you have a little of experience, that compliments his incredible talent. And once you show the founder without telling the founder.

32:51 And once in a while you have to tell because maybe you don't have the time to show, but you better do that once a year. It's very rare. That's what you do. Those are the actions that you take. And you want to come out of that in the win-win. You want to come out of that.

33:05 with an enlightened founder who's extremely happy and better in his role Rather that having achieved your goal of a new VP of marketing with a founder Feels like his knees were cut off. Assuming we've got a company that has a fantastic Positioning

33:21 Story. The next stop upstream is demand generation, which I assume by which you mean the proliferation or the propagation of that message through a bunch of different channels. Leads. Getting leads. Getting leads. What are the great components of demand generation? Well, the first thing to understand, is it a broad product, is it a widget?

33:40 If you have a widget it's simplicity. If you have a widget You do less account based management. Because you've got ten thousand accounts that you can call. So that becomes a volume play.

33:52 You build something a little more complex. With a little more of a solution cell versus a widget cell. A pencil is a widget. A solution is you've got to tell a story. few accounts, you better have your story right per account. So you have to understand where that is. You have to make a guesstimate of

34:10 What percentage of the leads comes from BDR versus salespeople? I will tell you That early on. It's a role deck of the sales person. First you gotta make those decisions, then you have to find the optimal curve With the optimal leads.

34:23 You don't have too few because the greatest sacrilege is to hire an expensive sales rep If you go the direct sales route. If you go PLG's a whole different game. Because the worst case is to hire expensive people with not enough fleets. And so to find that balance.

34:37 To figure out where that slope curve is. in the ability to close account, you over invest And you have too many people. Ward gets around. Your salespeople cannot make money in your company. Nobody's gonna want to join you. So you have to make them very successful. If you will overpay.

34:53 Because word gets around this is a place to make money. And then At some point figure out the optimal curve and Be fearless in that growth. You also have to understand for each product you sell.

35:05 How much drag is it on the back of the company? If I sell you pencil, there's no drag on the back of the company. If I sell you a solution that everyone requires six months implementation plan. Three features for each one, then you can go as fast as you can because your bottleneck is no longer the front end, it's the back end. Which sometimes goes back to cash. 'Cause now it's a lot of people. So getting that soup right.

35:28 Getting that right and figuring out that optimal point and doing it in the linear growth so you can readjust. reforecast every quarter and not hire the thirty two people in Q one and then no one for the rest of the year. So the seal Has room to maneuver Along a back up plan of what if I don't do X, I do point seven X. It is back pocket from the CFO that I always ask him.

35:52 Please on the seal with that. should give the chief executive officer And the knowledge of everything I just told you. That in many cases, I have to tell you, it's the first time they hear this. Should give him the armament.

36:04 To begin to learn. How this thing is done. If you think back to your early days, you mentioned earlier a lot of investing in highly technical companies and founders. And maybe as Sequoia's grown and as the world has grown.

36:18 More founders who are less technical. But nonetheless can still build huge technology businesses. How does that change over your career manifest in the way that you interact with companies early on. Is it a different set of people that you're looking for? Is it a different set of attributes or characteristics?

36:35 Talk about that shift. So as usual What happens outside the building dictates what happens inside the building. So if you do a marketing strategy, don't just talk to me about a marketing trend. Talk to me about the dynamics in the market first. That's the reality you can't change.

36:54 And then you apply the strategy. Based on those. Same thing to the question you answered. So when we're building technology and now with AI we may build in tech again. There are these cycles. But I think of technology, semiconductor systems, software The founders were older because

37:11 You're the one first time founders. You wanted people that have done it before. Suddenly the internet Connects us all, mobile connects us all. With

37:21 As we move around. New business model. It turned out people who were twenty who had never seen a business model. We're more creative.

37:30 And they're the ones. That did that. And it also happened that you can build a prototype Whether it's open systems or whether it's hosted services or low cost of computing coming down. You could build a prototype.

37:43 In ninety days. Thus the advent of seed and busting. Seed investing didn't happen, we're building ships because what would a million do? It wouldn't do anything. And now you have this competitive nature, all bunch of seed funds. Try to get in front of you, trying to position Sequoia's.

38:00 Go to them later. I. e. we went our own twenty percent and U left the coil and ten percent for working for the next ten years. Just so you know. It changes everything. It changes your strategy.

38:11 You better have a C fund. You better get there as early as you can, because you also get to affect the DNA of the company. In what I believe to be the right way. Because you've had thirty, forty years of experience. And the DNA said in the first thirty, sixty days. So everything changes. Your approach to the market changes.

38:29 Your ability to move changes, you have to create a spec for what is a seed investment. Is it really the same type of due diligence as you do in a series A? Or is it just a spiky super talented founders, here's a million dollars. Everything changes. Your strategy changes. And when that happened, we did a few things. We did three things actually.

38:48 We're vertically integrated. From a hundred K, fifty K investment. to our biggest investments are billion dollars. We had written twice a billion dollar dust. Second.

38:58 We uh Gone across geos. Why? Because all companies in the US go to Europe, all your companies go to the US. We know the world irrespective of everything you're reading is more globalized now than it's ever been. India

39:12 India founders in the US. There are certain companies we can't tell if they're in the US. We went into China. As you know. Now China has to build their own tech stacks. Which is a smart thing, we have to build our own. So there's some issues there.

39:25 For sure. We went into Israel. So we went across geos because companies want to grow across geos, we're vertically integrated. And the last thing we did We threw technology at our business. We can't run like a law firm structure.

39:38 We can have Five six partners quote looking for deals, same way the lawyers are. Technology in every aspect of the business to help us look, to help companies assess. Not just for us, but for our founders. And

39:51 We know we have to be at tech companies. And that is the transformation that we've done over the last three, four years. All of it. To look for When

40:00 And then help. Those are the three goals. It sounds like in that description. One of the things that Whether this was the goal or not.

40:08 I guess it doesn't really matter, but one of the things that's happened is that Sequoia itself has built Serious enterprise value. It's a private company. But unquestionably, if you were to float it. in the public or go to a firm that wanted to buy gold and wanted to buy a piece of it, the price would be really high.

40:24 And that's probably quite distinctive from the older school law firm like cottage industry partnership. You think that's

40:31 the right orientation for new entrants. into the venture space that they should be trying to build a firm that has enterprise value? I think that is the kiss to death. Let me explain. One

40:44 You want to be competitive. You want it. Hey well, you want to get the best people. The moment you build enterprise value, what you're really asking You're not asking about enterprise value. What you're asking is To monetize the enterprise value. That's what you really are asking.

40:57 Boy, now we can sell Sequoia. Selling a piece of that firm. means that the people in the building today By getting richer. But the pie.

41:08 to be shared for the next generation is smaller. We looked around Mike Mritzanao in the early two thousand. We looked around and we wanted to see what the enduring Firms did and how they Worked it. And our favorite was the capital group. They managed a trillion dollars. Public vehicles.

41:26 I think the founders are one percent. And they have a way. True. Have the people in the building enjoy, maybe have a little tale on the way out. But the bulk

41:37 ownership, the money that returns is the people that are working in the next generation. Sequoia was given to us by Don Valentine. Given. I wanna use the word given. Mike and I didn't write a check to Don Valentine. Zero. We were not the founders.

41:52 Our job Is really to make it a better place. How do you do that? By being helpful with founders, by understanding founders are first. Second. Our clients, seventy percent are mostly charities. I want to make sure you know that. And we are thirds, not because we're boy scouts.

42:10 Because we know if we do right by founders, right by clients, of course we'll do right by ourselves. But we can't put ourselves first. And leave it a better place. But the next generation. So I created a constitution with my words. I said I had to leave at sixty five.

42:24 On my sixth is his birthday. I left. I'm not a partner in a new fund. I have zero carry in e funds. If I make an investment, I'll get some carry. It's in a hands on the generation who are extremely motivated'cause they're the owners.

42:39 They think creatively. They can move. It is their partnership. I have no management, no ownership in a management company. Zero. And I ran Sequoia, co ran it with Mike since nineteen ninety six.

42:52 And I ran it since twenty twelve on my own. And I have zero ownership in a management company. I'm a partner in twenty eight funds, that's plenty. And the pride, at least in my case, of knowing

43:03 that the next generation, young, they wanted the same way I wanted it. They can make money the same way I made money and have a right To greatness. If they execute. Is the biggest thrill for me. Maybe to sum that up, I would say stewardship.

43:17 Over ownership. You got it. You got it. In what I'm sure is just incredibly fruitful and colorful partnership with Mike Moritz all these years.

43:26 When have you and he most disagreed on something? We disagreed a lot. Keep in mind Mike is a very introspective Right. Strategic.

43:37 And I am a Gregarious Italian. And I am More Let's take the hill.

43:46 When Mike and I were in business While we were peers, it was the effect CEO. And that was the effective C O O. And Mike might point to hills and not go execute.

43:59 Now, China and India were my ideas too, so it wasn't black and white. And I would tell you honestly that seventy percent of the time we did what Mike did. But there were twenty, thirty percent of the time that I said no freaking way. And

44:12 Mike might say with retrospect, Doug held me back. And with retrospect, I'd say I kept Mike out of trouble for some things. And I think the truth is somewhere in between. But We were very different cats. And we survived.

44:27 And we excel. We made it up as we went along. We had guts the like of which you've never seen. We were killers. I wanna make sure you know that. We were killers, not killers to make the most money, killers to get the job done. With one another from ninety six to twenty twelve.

44:44 And so it worked. Mike and I are friendly. But we're not friends. I don't go to have dinner with Mike. If I see my You know, hey Mike, what's going on? We'll have a drink together kind of thing.

44:56 But we're not Buds we're just two different characters. And that's just the honest assessment. I respect them a great deal. How do you suss out The killer gene.

45:06 And somebody. You look what they've done, have they taken risks in life early on? Have they That's on a line.

45:16 I tell Candidates with children. That It's okay if you choose a parallel track life, i.e. you want to become a bank or a consultant, and it's okay if you want to take risks. What's not okay is do one and always spend your life thinking you did the other.

45:30 And the killer gene for me is stay away from the parallel tracks. Just put yourself out there. With no net. And usually people that are little desperate in life, that only have one way to go and that's up or forward, they tend to have the kilogene.

45:46 And I've also come to learn that I call American competitors. I'm an immigrant. I didn't know about this athletic go to college. Schools in Europe don't work like that. But these Americans that had this inbred competitiveness, sometimes brought to sports, sometimes brought by family reasons.

46:05 That I never knew existed. With my Italian brain. But I've certainly learned to appreciate With my American brain. You were ten or eleven when you came to the States, is that right?

46:15 I was eleven. What was high school like for you? I'm on record, it was abusive. Keep in mind that I didn't go to high school. Don't use that word. It was the high school.

46:25 that it would not be unusual for someone to pick you up in lunch and throw you upside down into a garbage can. And you certainly didn't go complaining to a teacher. And I happened to after high school that had knives and guns. We were ahead of our time. And that really teach you to survive, it teaches you respect, it teach you what you shouldn't, it teaches you street smarts, because you are surviving every day in high school. It was that kind of experience.

46:49 But it's formative. It was formative. It was, you know, oh Oh mommy, some guy did that. There was none of that. Yeah, just went back the very next day.

47:00 And survive and hope and zig and zag. If there was a big red button on your desk that if you pressed it You would have gone to a pristine Super nice school instead of the one you went to? You wouldn't press it.

47:11 No chance. Not a chance. In fact, I worry about my grandkids. I do worry about my grandkids. I hate to say it, but there's too much comfort. There is The semi year birthday party. It's a half birthday. I wanna shoot myself.

47:25 And my kids know that. My kids know I want to shoot myself on that. In fact, I refuse to attend those. I actually refuse. I fight my own battles. I love my kids. I love my grandkids. I did doing a fabulous job as parents. I wanna make sure I'm on record to say that terrific parents with terrific children. But you know, all the soft things.

47:45 It takes hard times. It makes strong people. Strong people don't make it from easy times. How can successful people with means that have kids and love them and want the best for them.

47:58 Take heed of that advice and do something with it. I think you expect a lot. And you don't let the kids you know, kids are smart. They start blackmailing you. At the age of six months.

48:09 Just understand that loving'em sometimes means not catering. Letting them struggle. I told my kids. How do you inject some Misery.

48:19 Because it's not about the kids yeah, if you unquote very happy kids. That's fine, but I'm not sure you want very up kids. I think you want kids That are happy And they wanna do something. I think

48:32 Doing something, achieving something in life. Is a key to Later happiness. Those are the conversations we have. To expect a lot.

48:41 Give jobs, give reward. A lot of love. But know that something has to be delivered. And tell them the truth. Oh, nice try when he shoots a basket and you're four feet from the rim. One of the things I never did. I never bullshitted my kids. I always told them that was a crap shot.

48:59 Try it again. I remember my son playing basketball. I told him I will never let you in. And I will never be happier. Than the day that you beat me.

49:09 Because you'll have earned it. And he's beaten me. And he knows I meant it. The other thing you should know there are many ways to have There's not just one way to have it.

49:19 I'm calling my partner Sharlandra in India that tends to be A philosophical man. There are many ways to have it. There are many ways to do it right. I don't think catering and making things easy all the time is one of them. The corollary is probably that there are many ways to hell to what are the most common failure modes that you've seen for investors? So investors that either you've employed and worked with at Sequoia or seen and observed.

49:43 That just do a bad job. What are the most common reasons why? The careers and investors are fake. The founders has no idea of that. And they do certain things that are contrary to the founder's best interest. They're

49:57 Wonderful analysts. But can't seem to be. To make an investment. They get enthralled by the technology. Never asking where's the beach, where's the business, who's the buyer.

50:09 It has to be a simple solution. It's so wonderful. I can't really explain it. Then you run the other way. It comes down to a human being issuing a purchase order. For something that he or she understands. To which I have to

50:22 Convince their managers and their peers to go by. With single use. Oh, that is really cool. Cool is the enemy of reality. Those are the failure modes.

50:33 Fibbing Lack of Business sense. When one of our partners or associates They describe a company or the issues facing a company.

50:42 And the founder comes in the next Monday. And what we heard the week before has nothing to do with what the founder says. That's a huge warning sign. There are many, many things. At the end of the day, you gotta have this spidey sense. You have this amorphous early stage.

50:57 Five, six people Would you really go and spend the next ten years with them? Not understanding you're investing somebody else's capital. and play the laws of percentages. You know, if I just make twenty investments, two will work. really not giving a shit about

51:13 Your investors, founders, and so on. Those are the failure modes. As you're we're building Sequoia and as you watch founders build companies, do you think that competitive advantage can be architected Ahead of time. Or is it something that emerges and then gets fostered after the fact?

51:30 I've seen it both ways. Think of Google. Competitive advantage was architected in a product. Think of Many companies

51:40 Think of service now. It was simple workflow. You asked me to do something that you need a PC. It goes to someone, I fill that workflow, I give you a PC. Couldn't be any simpler. Clarity of thought or what the easiest way to do workflow. But that got built upon a built upon built upon and there's a history. Of the simple utilities. becoming platform because the founder has a vision how to do that.

52:05 So I've seen it both ways. Look, sometimes you build a utility and you're stuck that There's just no way to go. But these little seemingly simple utility for which you get purchase orders for, which allows you to now have a two way conversation with a customer. What else do you need? These bottom up things

52:23 tend to be for me way more interesting than these top down monolithic big solution for a million dollars. I like these. twenty five thirty K quick and solve a point product. Now we've got a hundred customers. I love those the best. Has your view on competitive image changed or evolved?

52:42 A lot. Over the years. I remember in the days Of the consumer type internet. A competitive advantage.

52:49 Was a thirty day head start. Competitive Anish was a founder who can run like crazy. So yeah, it's change. It's not always technology. Sometimes it's the first one in. Sometimes

53:01 There's many lay market entrants that I've come in. And I said I've seen all the mistakes. So all these rules you've gotta be first, you better write in pencil. All your principles

53:12 Ethics. Careful due diligence. Those get ridden, pen. But all these other things, competitive advantage, should you build an imperfect product and get to market early? Sure. Should you build a perfect product that takes longer?

53:26 Sure. If you look at what Steve Jobs did, everything you put in your hands That was not some rev one sheep shit. So there's many ways to have him. There's many ways. The trick is to understand

53:38 Where you are. And break it down. If I'm not going to be able to do Hardware software product with a cost of goods. to millions of people, I probably don't want a very shitty first product.

53:51 If I'm selling a simple utility and I need customer feedback I want to get that out, especially in a consumer marketplace. piece of software, I want to get that out as quick as possible, as imperfect as possible, knowing that Rev1 Is the wrong product, but at least we're talking. So

54:06 Don't have a textbook. Something in the history of Sequoia that sounds incredibly stressful was the early two thousands and the word clawback comes to mind. Can you talk about that story and coming The terms of What that term meant in the fun doc and what you did to work through it.

54:23 Don turns the core in his own way to Mike Grits and me. We have never managed a fund. Everything is up and to the right. Suddenly These non companies go public nineteen ninety nine. There is the stocks. That we either hold on.

54:39 Or we distribute that we hold personally. Everything else goes to zero. These gains are not real, but in the meantime, we have paid ourselves stocks that at some point had value. value that was real, the millions of dollars. Well, those go to zero. There's no money in the bank.

54:56 And because we distributed money at some point, now we owe money back into the funds. So I remember looking one night and I said I am in a hole from a net worth standpoint. To real money in the many millions of dollars. Meaning I was negative. I was broke. So were all the other folks. Within panic.

55:13 We started have evening things and we said, What's the right thing? And the right thing is to completely cut our carry, completely cut our fees. Writing checks personal checks to the individual investors because We had to now recycle fees. But the individual investors were in paying fees. There was no money for them to restart. How do you make them whole even if you make future investment? They can't participate. So we wrote checks and we made everybody

55:37 Can you believe it? We were like a hundred checks. Nobody was gonna lose money at Sequoia Camp from our personal accounts. And then we took What little gains we're gonna have and all the fees And we said, those fees are not ours anymore. We're gonna reinvest them and reinvest them and reinvest them on behalf

55:53 Of our nonprofits. And we turn point three X funds point three, meaning If a fund is three hundred million, it's not worth ninety million. And we turn'em to one point nine X and one point five X fine. Because we refuse to give up because we gave a shit.

56:09 In a world where every other venture firm started using the words These are the Mulligan funds. If you play golf, what Mulligan is is your first golf shot, that's no good. You do a do over. This is a do over fund. We're just gonna forget about nineteen ninety nine. And we didn't. And

56:25 I say it again, that might be my proudest moment of Sequoia. That deserves a chapter in a Sequoia book. You learn most in misery. You want to talk about united. I night. How to do that.

56:37 Mike really took the leadership on that. Mike was a senior I was a little younger, he was a partner a couple of years beforehand. And I watched.

56:45 I watched the calm hand, I watched the long term strategy, and I learned. And we worked as a team, don't get me wrong. I also had a lot of companies on boards that own money. But we got it done. And I'm incredibly proud of that. If I were to do like a return attribution

57:00 Going from point three to one point nine is a big swing. What were the literal components of that that were influenced by what you did? What did you literally do to make that change happen? I wish I could tell you it was one company. It was all the partners contributing. A few gains.

57:15 We would take a company public or sell it. And we wouldn't take any car, eh? And we would just Reinvest everything. So for the next ten years

57:24 Even though we're investing new funds, we took a little piece. And we told the new funds LPs Yeah, we're taking little piece of yours to put back in your funds. But one day you may be caught in that. And it wouldn't be nice that you're in business with partners that care a lot.

57:39 Enough so that investors not only never lose money, but make money. They were completely supportive of that, because they knew one day the shoe might be in the other foot. I'm happy to report. Twenty years later in the US the shoe's never been any other fun. But it could happen. As you think about your LPs, who you've mentioned already are predominantly foundations, charities, endowments, et cetera.

57:59 Even just constraining to that world. What do you learn about picking the right LPs? Even if I was only going to sell the foundations, let's say What have you learned about the right? L P partners and finding them and

58:10 partnering with them. I would say long term thinkers with business sense. The thing we don't want to do is get a call. Of an LP, I hired a new analyst. Please give us all the investments you've done. In odd year, every Tuesday of the month.

58:24 We're not gonna give you that. The other thing I tell LPs Ask the tough questions because I've learned from sales a customer was talking, a customer's asking a tough question is then engaged customers. Sometimes they're a little more pissed, sometimes less, but they're talking. It's a customer that doesn't talk.

58:41 That you have to be terrified. You don't know what they're thinking. And sometimes LPs don't talk. They're afraid of upsetting Sequoia, getting fewer allocations, and I remind them. You are the client. So you are the important side. And we build great L P relationships where

58:57 We have no turnover. We have more and more than want to come in. I'm fortunate the funds are closed now. We have most large endowments, most foundations. And we have schools, schools that your friends I don't know if you have kids I want to go to. That twenty percent of the endowment

59:12 Not on the private equity side. The whole endowment is Sequoia. You want to talk about responsibility because These people have scholarships. They have to hand out they have operating budgets and so on. So we feel that huge burden.

59:26 Huge. What stands out as the most interesting question that an LP has ever asked you? Let me give you a little secret. Our culture of Sequoia is not to Spit Shine things. Our culture sequoia.

59:39 So first of all, any Sequoia pitch. As returns. On slide one. Not slide twenty eight where you bury it. Sly one, welcome, here's returns. And then net returns.

59:52 Not gross returns. Before fees. No, it's the money you get back. Slide two is probably the lowlights. Not the highlights, the lowlights. Let me tell you everybody that's screwed up. So once you have that conversation.

1:00:05 First of all, they're blown away. The newbie's a little scared. Oh my God. I didn't know they're all these problems. But that builds trust. Because then they go to all the other meetings and they're Sold a pile of shit. Here's the returns before marketing expenses.

1:00:19 Like what does that mean? So to me the questions are the drill down questions. Are you doing too many things? when we went into China, oh what do you guys do in China? Of course they made a ton of money in China. When we vertically integrated, are you doing too many things well?

1:00:34 We've heard it's integrated. But we have very small teams. A family office maybe has eight oh nine investors a hedge fund in the US Seven or eight or nine investors, a venture team, about ten.

1:00:46 So we decentraliz things. to empower the local people that know something. So even though it may be bigger It's made up of very small team. That are accountable.

1:00:58 to one another. At the end of the day We will not put up with unperformance teams. We will shut down lines of business. Yeah, I've heard you say elsewhere that performance, maybe there's a lot of values, but ultimately performance is the cultural

1:01:12 thing that matters most Which makes a ton of sense, obviously, given everything we've talked about. How do you make sure that that is on everyone's mind all the time? What are the actual behaviors that you've engendered in the firm.

1:01:23 that make sure that performance is the thing at the top of that. Blessed for everyone. First appreciate that we are in the latency business. If you're in a hedge fund, you mark everything mark to market at the end of the day. We're in a business where cancers can grow and you may not see'em for three years. Just think about that.

1:01:43 So how do you drill down so you don't have to wait for two, three years? to me is establishing very clear norms of what performance is for someone who just joins us. Performances for someone for two or three years. Someone just joins us. They have to figure it out with the bathrooms. It's a metaphor, but you know what I mean.

1:02:01 Two or three years. Can they source anything? Can they hold a meeting? Partner. Some a little older. Are they the right side of an argument? Do they have the courage to have an opposing Point of view when six people have another point of view.

1:02:14 You're about to be partner. Do you have a history of being right? When you're on five boards, can you point to Two That We are going to generate. No, we all made the investments, but you were the one that pushed it.

1:02:26 That's how we measured it. Are you a good human being? G use the we pronoun a lot. Are you likable to founders? Can you win situations? You have the smarts to ask for help because we don't care.

1:02:39 If you win and ask for help, that's a win. That's an everybody win. But you know what's terrible when you lose by yourself because you had the ego or you didn't read the tea leaves, right? Those are the things we look at. And we look at'em quite often. Speaking of the argument piece, what are the components of a fantastic memo?

1:02:57 A fantastic investment memo. I asked Rulov the same question, I loved his answer. Complete clarity. Here's the thesis. Here's

1:03:07 One or two reasons why one of us not seventeen reasons. Here's the supporting data. Here's the opposing data. An intellectual honest memo that gives you both sides. But then argues at the end that in spite of both sides you think. side A is more important for the following threes and therefore we recommend that investment.

1:03:27 with an appendix with a reference checks that either are the full reference or summary two lines on top,'cause not everybody's gonna read the whole reference. And you do that in three pages. Not in thirty two pages. Not in these Investment banking, let me show you How hard I work, thirty five pages that nobody reads. Nobody reads.

1:03:45 A two to three page memo. We all read. I can't imagine the number of people that you've encountered of extreme skill level. If you think about a dinner where you're taking a founder that you've just invested in who's beginning to see some success, but is still early.

1:04:00 And you could pick any three dinner companions. to impress upon that founder some of what they've learned. And these people could be living, dead. Whatever people you've encountered. Which three people would you bring? To that dinner and

1:04:12 What about them? Frank Slootman. Who's When you net it out. The execution is ninety percent of the goal.

1:04:20 Execution is strategy for breakfast. And He execute take no prisoner. Don't give me this below knee that you need. Cappuccino on nine fifteen to be productive. No crab.

1:04:32 Everybody buys in. Go, go, go. Because if you want a great culture. Nothing builds a great control like winning. And all the other things are.

1:04:42 Irrelevant. David Veles. New bank. probably the second best COVID been in business with after Frank. Frank has great execution.

1:04:53 David Veles has vision. And very strong execution. And the blend of the two. And then I probably Bring Elon.

1:05:04 If he's serious. We're not talking about should I be C of Twitter? Elon on point. To discuss Scale of ambition.

1:05:14 Those would be my three. Then a guest. What black magic. popped out at you most powerfully when you first met a founder. If you think back on just someone where it's just

1:05:25 Instantaneous recognition of black magic, who pops to mind. Let me give you the Investment thesis on new bank. The best investment thesis are very simple.

1:05:36 Let me give you the new bank investment thesis. Thirty seconds. The seven largest market care company in Brazil are all banks. I went to see four banks on every corner. Let's go try to get a credit card.

1:05:49 You wait on line outside, you finally get let in. Six weeks, he says. We think we can upend us with technology. So when he came to us, we only gave him one word of advice. Don't build a fintech company, build a technology company that does fintech. We were gonna beat him on fintech. That was to me the clarity.

1:06:08 Of the opportunity. Or Drew Houston. Who told us? Who explain

1:06:16 There were these Sixteen products and why they all suck. And let me tell you what a great product. Just total clarity. You and I would have understood it. Look, I'm assuming you're a smart guy. I'm a smart guy. Yes, I program a few languages, but you just understood it.

1:06:30 You came out of that meeting, of course they're gonna be investors. It's never something You scratch your head, you have to go to Your AI expert and say, what does this mean? It's never that. It's always the other.

1:06:42 Simplicity is a wonderful core theme of the conversation. Exactly. I've loved your talk. I've learned so much from you and your partners. And watching and learning from the firm, I ask everyone that I speak with the same traditional closing question. What's the kindest thing that anyone's ever done for you? I can think of a couple of things.

1:07:00 There was this popular, good looking athletic kid in high school, unfortunately committed suicide. Much later. Who when people were abusing me. For no good reason.

1:07:12 It was sticking up for me. And I always wonder why does Steve Weiss Always Protect me. I wasn't particularly his friend.

1:07:21 If we get to the real world I say Don Valentine. Who in a world where I will tell you with total certainty. that the other four partners wanna me out.

1:07:32 After two years. And He wasn't kind. Business. He just understood

1:07:39 That I was making progress. And that I need a time. I wouldn't be here if it weren't for Don Balant. There's no doubt about that. Why do you think Steve stood up for you?

1:07:50 Maybe because remember, you committed suicide. There was a side of him that had pain that I never began to understand. That thought what was happening to me was very unfair. Pretty powerful. Doug, thank you so much for your time.

1:08:04 My pleasure. If you enjoyed this episode, check out Join Colossus.com. There you'll find every episode of this podcast complete with transcripts, show notes, and resources to keep learning. You can also sign up for our newsletter, Colossus Weekly, where we condense episodes to the big ideas, quotations, and more, as well as share the best content we find on the internet every week.

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