Letter #207: Pat Grady (2023)
Partner at Sequoia Capital | 15 Years at Sequoia
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Today’s letter is the transcript of Pat Grady’s Loomstorm sharing 15 lessons from 15 people over 15 years at Sequoia. Listed directly below are the lessons and who he learned each from, with Pat’s commentary on each lesson in the body of this letter.
1/ Eric Yuan: Simplicity Scales
2/ Roelof Botha: It’s Not About Figuring Out What’s Wrong, It’s About Figuring Out What’s Right
3/ Jess Lee: Become the Best Version of Yourself, Not of Somebody Else
4/ Elon Musk: The Output of an Organization is Equal to the Vector Sum of Its Individuals
5/ Michael Moritz: Don’t Put a Ceiling on Greatness
6/ David Cancel and Elias Torres: Slow is Smooth and Smooth is Fast
7/ Michelle Bailhe: If You See a Problem, Solve It
8/ Ravi Gupta: Bring Joy
9/ Frank Slootman: Push to the Extremes
10/ Alfred Lin: Effort Compounds
11/ Don Valentine: Winning Creates Culture
12/ Doug Leone: Lean In!
13/ Sarah Guo: Suck the Oxygen Out of the Air
14/ Jim Goetz: Have the Courage to Use Your Own Understanding
15/ Luciana Lixandru: Every Day is Game Day
Bonus/ Andrew Reed: The Main Thing is Keeping the Main Thing the Main Thing
Pat Grady is a Partner at Sequoia Capital focused on growth investments in software and services. Pat’s first job was as a roofer in high school and college. He then interned with Citigroup’s Healthcare team before joining Summit Partners as an inside sales, making 50 calls a day and having 200 conversations a month. At Summit, Pat was involved with investments in the software, financial services, and healthcare sectors. After two years at Summit, Pat joined Sequoia Capital as one of their first Growth Team hires. At Sequoia, Pat has invested in companies including HubSpot (market cap: $30bn), Medallia (acq. by Thoma Bravo for $6.4bn), Okta (market cap: $16bn), Qualtrics (acq. by Silver Lake for $12.5bn), Snowflake (market cap: $47bn), and Zoom (market cap: $18bn). Other investments include OpenAI ($100bn), Notion ($10bn), and Hugging Face ($4.5bn).
I hope you enjoy these lessons as much as I did!
[Transcript and any errors are mine.]
Related Resources:
Sequoia Capital
Letters
Compilations
Michael Moritz Compilation (642 pages)
Don Valentine Compilation (347 pages)
Transcripts
Intro
Saturday was my 15 year anniversary Sequoia... one of the things I love about Sequoia is getting to learn new things from amazing people, so here are 15 lessons from 15 people over 15 years... hope you enjoy!
Eric Yuan: Simplicity Scales
All right. This is the lesson from Eric Yuan of Zoom. And the lesson is: simplicity scales.
So, the first time I met Eric was back in 2014. I was introduced to him by a good friend, a guy named Sangeen Zeb. And I met Eric probably once a quarter for a couple of years, leading up to late 2016 when we were finally able to get into business with him. And so we've been in business with them ever since.
So the thing that stuck out to me in that first set of meetings with Eric, we never--there was never a slide deck, there was never a set of financials. It was just a conversation. But there was just incredible clarity from one conversation to the next. And anytime he did mention a priority or a data point or anything, there was this continuity across those meetings, and there's line of sight across those meetings, that just made it really clear he had this picture in his mind of what it was they wanted to achieve. And part of that is he's just an extraordinarily clear-thinking individual. Part of that also is I think he is excellent at simplifying things. And that's why the lesson is simplicity scales.
And I would apply that in two ways to Zoom.
So one is in the product. There's this idea--there's a law of physics called conservation—that deals with conservation of energy that says energy can be neither created nor destroyed. Similarly, when you're building a product, there's this concept of conservation of complexity, which says the complexity required to do a certain task can be neither created nor destroyed. The question is who bears the burden of that complexity? And so when Eric built Zoom, he decided that he would bear the burden of the complexity because doing so would make things simpler for the customer and result in a better customer experience. And so to get Zoom right, and to build a product that just works across all the different end points and network conditions that you could possibly imagine is very tricky. But over a period of many, many years, they eventually did it… resulting in the delightful experience that everybody is now so overwhelmingly familiar with. So that's one part of the simplicity is in the product.
The second part is in the culture, or in the organization. And this whole idea of delivering happiness wasn't original to Zoom. It was a concept from Zappos many years before. And Eric was very much inspired by Zappos when he started to define the culture of Zoom around customer happiness. But the simplicity of that concept, and the number of times that Eric repeated it, which is a very high number of times--ask him a question, the response to the question begins with, Well, we want to make our customers happy, so therefore what we do is… just hammering that concept of customer happiness over and over and over and over again led to pretty high clarity of thought and alignment within the culture.
And so, the lesson from Zoom: simplicity scales on the product side, internalize the complexities so that your customer gets the benefit of simplicity, and on the people side, stick to very simple messages so that everybody really understands them and has a clear line of sight to what it is you're trying to achieve.
So that is one lesson from Eric Yuan: simplicity scales.
Roelof Botha: It’s Not About Figuring Out What’s Wrong, It’s About Figuring Out What’s Right
All right, here's a quick Roelof Botha story. And again, this is one of many, many stories that I could tell about my partner Roelof.
When I joined Sequoia, March of 2007, I had come from a private equity firm where a lot of what we did in evaluating an investment opportunity was trying to kind of go through the list of everything that could go wrong. And if we got through the list of everything that could go wrong and we felt like we were okay on all that, that was a pretty good setup to invest.
And so when I got to Sequoia, we'd start looking at these early stage companies or these kinds of early growth stage companies, and I would immediately go after all the things that were going wrong or all the things that could go wrong. And, as you can imagine, that made me very popular with my partners and with founders--to the point where my nickname became Dr No.
So within a couple of months, Jim Goetz was calling me, Dr. No, and it kind of caught on to the point where we had a Sequoia summer picnic thing and we made t-shirts for every to go play softball. And everybody had funny names on the back of the t-shirt. My t-shirt said Dr. No on the back--I still have this T-shirt. Says Sequoia on the front with the old logo, Dr. No, on the back.
Anyway, probably a year or two after I got to Sequoia, Roelof pulled me aside after a partner meeting and sat me down and said, Look, you understand that our job is to invest.
I said, yes.
And he said, And you understand that any smart person can come up with a very long list of reasons why we shouldn't invest.
Then I said, Hmm, okay.
Then he said, The hard thing is coming up with the reason to invest, knowing that there are so many things broken and so many things wrong.
And so the trick, and the magic, and the job for an investor--and maybe this is true of operators too, I'm not sure--but the job is to figure out like, What is it that is so overwhelmingly great, or so tantalizingly promising, that it's worth dealing with all the stuff that's broken.
And that stuck with me--14 years later or whatever--not just because it made me a better investor, but also because I think it made me a better person. Like I hadn't realized it before that, but I think because of the way I would systematically look for the flaws in investments, I would systematically look for the flaws in people.
And I think when I made that transition to trying to find the thing that is so right, that went from investing to people. And when I meet a new person, I try to think, What's special about this person? What can I learn from this person? Like, what is the thing that makes this person special?
And again, I think it's made me a better investor, and I think it's made me hopefully a better, and certainly a happier, person.
So that is a lesson I learned from Roelof. It's not about figuring out what's wrong, it's about figuring out what is so right.
Thank you Roelof.
Jess Lee: Become the Best Version of Yourself, Not of Somebody Else
This story is about my partner, Jess Lee. And the lesson is: become the best version of yourself, not somebody else.
So, Jess joined Sequoia--I don't know, probably six or seven years ago, thereabouts. And before that, she'd been the founder and CEO of this company called Polyvore, which was a community driven e-commerce business.
And the thing that she has always loved is community. So she has this incredible kind of human centric view on everything that we look at, and it's always rooted in community, and who are these people, and how do they operate, and all that stuff.
And so this whole idea of community has always been one of her superpowers. When she got to Sequoia, going from being an operator to being an investor, it's a very different world. And so she did the thing that most people did, which was, she asked, Okay, now I'm an investor. What should I do?
And the advice she got was kind of the normal advice, Well, you should go talk to founders and go talk to other seed investors and try to develop different sort of channels, so to speak, to find interesting opportunities. And so she would do this, she'd go have these coffee meetings with other investors and try to cultivate these relationships. And it wasn't necessarily getting her anywhere.
And so probably about six months in, she said, All right, I'm going to do this my way. What is something that I really know? Community. What is a community that I really care about? Female founders and female investors. And so--not because she really thought that it was going to yield disproportionate benefits to her personally, but just because it was the thing that she cared about and wanted to be involved with, she helped to start All Raise, she helped to start female founder office hours, she volunteered to do the work required to get these things off the ground instead of just asking somebody else to do it.
So she put in a ton of time and effort, but the result of that was these unbelievable relationships and this unbelievable community that continues to pay dividends to this day. And so--and by the way, she's extended that. The other thing she likes to do is build product. And so today, she helps to run the product organization inside of Sequoia, which is building products for founders, which are starting to provide real benefits to founders, which I think will eventually provide benefits to Sequoia.
And so the moral of the story is just: We tell people when they join Sequoia: we don't want you to become a better version of one of us. We want you to become the best version of yourself. And I think Jess is living proof of that, because the methods that she has used are completely new versus methods that we've used in the past. And as a result of her becoming the best version of herself, and not the best version of somebody else, she's made Sequoia a better place.
So that's my lesson from Jess: Become the best version of yourself, not of somebody else.
Elon Musk: The Output of an Organization is Equal to the Vector Sum of Its Individuals
Okay, this is a lesson from Elon Musk. And that's about the name droppiest name somebody could possibly drop, so let me just disclaim that I am not buds with Elon Musk. I wish I was. I do admire him. I have met him maybe once, but we're not buds.
He did come to a camping trip that we do with founders. The first one we did was, I think, 2015. And he came to that one and was kind enough to speak to the audience for a few minutes.
One of the things he said that really stuck with me, and this is the lesson: he's trained in physics, and so he tends to think about things from a physics perspective, including organizational dynamics. And so when he views the output of an organization, he likens it to a vector sum, and a vector sum has both a magnitude and a direction. The output of the organization is the vector sum of its individuals.
You can hire individuals with great magnitude, but unless they’re all pointed in the same direction, you're not going to get the best output out of the organization.
I think this is an incredibly important lesson, because I think it's very intuitive to founders that you need to hire people with great magnitude; I don't think it's obvious exactly how much time you need to spend getting everybody pointed in the same direction. And so that's been a really big unlock for us internally at Sequoia. I actually think since then, our flow as an organization has got better.
And it’s one of the things that we try to work on with our founders and try to help them get better at. Dharmesh Shaw at HubSpot was also at Base Camp, and he liked this analogy so much that he dedicated the first part of his keynote at HubSpot's INBOUND conference to this concept of the vector sum and aligning people within an organization.
And so the lesson would be: The output of an organization is equal to the vector sum of its individuals. Finding people of high magnitude is not something that you need to be reminded of--making sure that all those vectors are pointed in the same direction is something you can't possibly do too much of.
Michael Moritz: Don’t Put a Ceiling on Greatness
So this is my Michael Moritz story. It was 2010 and we were in Stockholm with a guy named Chris Olson who now runs Drive Capital out of Columbus, Ohio.
So in 2010, Klarna--which I believe is currently the highest valued private company in Europe--in 2010, Klarna probably had 80% or 90% of its business in Sweden, nobody really knew of it in the United States, it had maybe 20 million or so of revenue that year, and it was pretty off the beaten path.
Chris Olson found out about Klarna, had the courage to convince Michael Moritz to jump on a plane to go over there and visit Klarna. And we ended up with an investment opportunity and I was lucky enough to tag along. Chris was point, Moritz was the sponsor. I was basically the model monkey, but I was just happy to be there.
And Chris and I spent three days asking all of the detailed questions we could possibly ask about the financial model and the interest rate and the revenue lines and all the different things that we thought were important.
And keep in mind, this was 2010. So this is the wake of the financial crisis in 2008 and 2009. And most of our first first order issues--or what we thought were the first order issues--revolved around the balance sheet and the stress testing of the balance sheet.
And so Chris and I did all this work, and Moritz was there with us every step of the way, but Moritz just kind of sat there and observed. And so finally on the third day--and by the way, Chris and I at the time were in our twenties, and we were the energetic young investors, and Moritz at that time was already a legend many times over, to give you a sense for the dynamics. So anyway, by the end of the third day, Chris and I were just dying to hear what Moritz had thought.
And so we go to dinner, and Moritz has been quiet the whole time. We said, Michael, tell us what you think. And he kind of pauses in a very Moritzian way, and he goes, Sigh… the question is: will this company ever have a few hundred million of net income? And it will all come down to the quality of the engineering team.
Now to put that in perspective, Chris and I, in our wildest dreams, couldn't even see 300 million of revenue, much less 300 million of net income. So the scale of Michael's ambition was dramatically beyond anything that Chris and I had dreamed about.
Secondly, for all the questions that we had asked over the course of the week that we were in Stockholm, at no point did we really try to understand the quality of the engineering team. We kind of took it for granted that there is an engineering team and they were building some stuff and that stuff worked and customers liked it, but we really didn't drill in on the quality of the engineering team.
And sure enough, Moritz was absolutely right. For the years that followed, it was the quality of the engineering team that would determine exactly how frictionless they could make the product, because this is a checkout product that's getting embedded in merchants’ websites, and there are lots of different content management systems and e-commerce systems and other things that they have to integrate with, and they have to figure out how to deal with that combinatorix in a way that is still incredibly simple and pleasing to the end consumer.
So the quality of the engineering team did end up being probably the most important thing in the business. Sebastian, the special founder, was the most important thing in the business, but under him, the quality of the engineering team.
And then secondly, Klarna is a monster business these days. And we have not sold a single share. In fact, we've bought more over time. And so 12 years on, Klarna has turned out to be the scale that Moritz had imagined, not the scale that Chris and I had imagined.
And so for me, there were two lessons there. One was around scale of ambition. And the other was around, What are really the first order issues? It's probably not the details of the financial statements. It's probably the quality of the organization that's building the product.
So that was my Michael Moritz story.
David Cancel and Elias Torres: Slow is Smooth and Smooth is Fast
This lesson comes from my friends David Cancel and Elias Torres, who we have had the pleasure of being in business with twice. First at HubSpot, and then again at Drift.
So we got to know David and Elias back in 2011, when HubSpot acquired their prior startup Performable. And they joined the team to lead the middle of the funnel part of HubSpot's product, which eventually grew into being the whole product. So they actually rebuilt the core HubSpot platform during the three or so years that they were at HubSpot. They then left to start Drift.
And so we stayed in very close touch with them. And originally Drift was an HR business--little known fact--but it quickly pivoted into being a conversational sales and marketing platform, which is something they knew very well.
And the early days of Drift were just magical. Like every metric you could possibly imagine was going in the right direction. The customers love the product, they were hiring great people. David used to run around saying, This isn't normal. And just kinda saying that. Like, we can't figure out what's going to break and when it's going to break, but this isn't normal. Like, everything is working.
And what we ended up discovering was--one of the greatest strengths of Drift ended up being the issue. So one of the greatest strengths was, their product velocity was just incredible. And so every month, they would build like a needle-moving new feature or product, and then they would release it. And the marketing cadence was built around these monthly product releases. And so everybody would get excited about the new thing, and then they'd release the new thing, and people would sell the new thing, and everybody would be excited.
The problem is, after maybe 18 months of that, everybody had indigestion. Like the customers weren't really sure what they had bought, the salespeople weren't really sure what to sell, the support people weren't really sure how to support everything. And they basically had to slow down and spend a year, year and a half refactoring everything, combining all these disparate applications into this cohesive platform in this logical flow, and really kind of cleaning up the way the product was built and delivered.
And then once they did that, they were off to the races again. And so the lesson that I learned was: Slow is smooth and smooth as fast.
So you think in a startup, the more hyper kinetic energy you have and the faster you go, the better off you are, but it turns out that sometimes, you're going faster than your customers can keep up with, or you're going faster than your own employees can keep up with, particularly when you're adding new people to the team all the time.
And so in the case of Drift, the lesson was: Slow is smooth and smooth as fast. And there are lots of other great lessons from David and Elias, but that is the one I chose to share for now.
Michelle Bailhe: If You See a Problem, Solve It
All right. This is the lesson from my partner, Michelle Bailhe. Michelle has been with us for about two years now.
And the lesson is: If you see a problem, solve it. And actually, the way Michelle articulates this lesson--I remember she probably told me this, maybe even in our interview, and if not, shortly thereafter--when she was growing up, apparently they had this kind of saying in her family, which was, If you walk by the kitchen and see a mess, don't ask if you can help. Just grab a dish and start washing it.
And so I think the generalized version of that would be: If you see a problem, solve it. And the story is--so Michelle studied bio in college, and then she went to McKinsey and worked largely with healthcare clients. And then she went to Google because she discovered that the solution to a lot of problems had to do with technology, so she wanted to see how technology worked. And then she went to a place called Hellman and Friedman, which is this incredibly high quality, high class private equity firm.
So Michelle's background was largely around bio with a little bit of tech and some software in the mix. And when she got to Sequoia, she started, not surprisingly, working on those fields. And so she did a lot in bio, she did some software, she did some stuff in insurance, and these other areas.
And early in 2021, after she'd been at Sequoia for maybe six months, it was clear that crypto, which had already been a big theme for us for the better part of a decade--but it was clear that we just didn't have enough energy focused on crypto. And there was talk of going out and hiring more crypto natives. At the time we had one, a guy named Sean Maguire. Now we also have a couple others.
But Michelle, instead of waiting for somebody else to go hire a crypto native, she saw a problem and she went to go solve it. And so she dove in headfirst to the crypto world. Ended up leading to a bunch of interesting investments. She's now friends with SBF and some of the other kind of top influencers in crypto. And in the span of literally 12 months, went from somebody who's never really had any specific knowledge about crypto to somebody who's pretty darn well-respected and well-known within the field. And that turnaround, to me, going from zero to world-class in a span of 12 months, is pretty extraordinary.
And I think it's just an outgrowth of that mentality If you see a problem, solve it. And there's nothing better than having people on your team with that sort of mentality. And whether you are a founder or an operator or an investor or anything else, I can't recommend that highly enough.
Anyway, my lesson from Michelle Bailhe: If you see a problem, solve it.
Ravi Gupta: Bring Joy
All right. This story is about my partner, Ravi Gupta, who is as delightful human being as you will ever meet.
Ravi joined us about two years ago. And before that, spent four or five years as the COO and CFO of Instacart, taking it from like literally thousands of shoppers to hundreds of thousands of shoppers, so a pretty like amazing operational task.
Ravi--so we have an open floor plan at Sequoia, we're in pods of like four or six desks, and my desk has been catacorner to Ravi’s. And so when Ravi joined, we're in this nice little pod that was me on one corner, him on the other corner. We can kind of see each other through the computer screens. So we're like pod buddies.
Anyway, I ended up walking past Ravi’s desk a million times a day, and noticed this little 3x5 notecard sitting on the corner of his desk. And it was there the day he joined, and it is still there today. And this little notecard, on the back of it, says just two words: Bring joy. That's it.
And I asked him about it. I was like, Oh, this is nice. What is this? And he said, Well, a friend once told me that at some point you gotta stop auditioning for your life, and start living your life.
And that doesn't quite map into the concept of Bring joy. But it's a way of saying like, The time you spend is precious, no matter where you spend it.
And so whether you're at work, or you're at home, or you're in that a morphous gray area that's maybe a little bit of both, which has become particularly pronounced over the last couple of years of work from anywhere—no matter where you are, be there with intention, and be there with purpose, and bring joy. Because you only get one life. Might as well have fun.
So that is my lesson from Ravi Gupta: Bring joy.
Frank Slootman: Push to the Extremes
All right, here's a story about Frank Slootman. And this is also kind of my first impression of Frank Slootman.
So if we go back to late 2010, we're in business with a man named Fred Luddy, who is the founder of ServiceNow, which is now $125 billion in market cap or thereabouts. And Fred is a coder's coder. Dropped out of high school to code. And has just been writing code his whole life. And with ServiceNow, he had this company that was off to the races, and he was kind of gradually realizing that being a coder and being a CEO are two very different things, and he didn't want to be a CEO.
So late 2010, Fred said, Hey, let's go find a CEO. And he was point on the whole process that eventually resulted in Frank Slootman coming in as CEO. I was sort of peripherally involved in that process. I was getting updates every now and then, but I had never actually met Frank until the first board meeting where Frank was there as CEO.
So this is probably like early to mid 2011. And Doug Leone, my partner, was actually on the board of ServiceNow. I was the one who sort of carried his water bottles and took notes and stuff like that--that's a joke. He didn't actually ask me to carry his water bottle. Doug is wonderful. He would never do that.
But anyway, I was the junior person in the room, so to speak. Anyway, board meeting begins, we're probably 5 or 10 minutes in, and Doug has some piece of advice for Frank. And you have to understand--in my eyes, particularly then, and still today--Doug is like, God. Like, Doug is this all knowing, all powerful force. And I was used to seeing founders and CEOs lap up every word that came out of Doug’s mouth.
And so my first impression of Frank--5 or 10 minutes into the board meeting, Doug has some piece of advice or some tidbit to offer to Frank, and Frank's response is: Doug, thank you for that. Now I would like to tell you my philosophy on boards and CEOs: the job of a board is to hire and fire the CEO. If you think I'm doing a bad job, you should fire me. Otherwise, I'm going to have to ask you to stay out of my way.
And that was about a shocking of a comment as I could imagine anybody making to Doug, or any board member for that matter. And it stuck with me to this day because Frank was not being a jerk. There was nothing about that that had bad intentions or any malicious intent behind it. Frank believes in extreme clarity. And so the point that he was making, that he wanted to establish upfront, is: Let's be super, super clear about whose role is what. And it is my job to make sure that this company is successful. It is your job to shoot me if I can't do that.
And so that lesson I think generalizes--so that was extreme clarity. The more general lesson is Push to the extremes. Whether it's a product, whether it is going after a customer, whether it is hiring, somebody, Frank has this philosophy that he borrowed from Steve Jobs, which, I think the way Steve Jobs said it, or Frank said it, There’s insanely great, and there’s total shit, and there’s nothing in between.
And so the general philosophy: Push to the extremes, push for extreme clarity, push for insanely great, do not compromise on things that are important. And so that was a first impression, and an early lesson, and a persistent lesson, from Frank Slootman.
Alfred Lin: Effort Compounds
All right, this story is about my partner, Alfred Lin. Alfred has been at Sequoia for probably 10 or 11 years now. And when he joined, he had already been the COO, CFO, President, Chairman of Zappos, and was kind of a legendary operator from that experience. He'd also been part of the Tellme Networks business earlier in kind of the late nineties, which is a pretty notable business.
So anyway, Alfred, it was a little bit of a legend when he joined Sequoia. At that point, I was probably four or five years in, so I was still relatively early on in my time at Sequoia.
And so he and I worked on an investment together right off the bat. And we had to do, at one point, a red-eye to the east coast. So we took a red-eye to the east coast, and then went straight into a full day of management meetings. Just back to back. Straight into dinner, straight into the company. And some of the employees wanted to come out after dinner, which is not something that we really do a lot of. Me personally, it’s not really my thing.
But anyways, so we went out after dinner, had a couple of drinks, and it ended up being a much later night than I think either one of us had had anticipated. The next morning, we had to get up at something like 3:00 in the morning to get back to the airport for a 6:00 AM flight back to San Francisco. And so neither one of us got any sleep whatsoever.
And we get into the car, to go toward the airport, and I'm exhausted. I probably had two hours of sleep. I just want to sleep in the car. And Alfred is fresh as a daisy, cleanly shaven--having just showered and everything. I'm probably wearing like sweatpants and a hoodie and trying to hide. And Alfred just launches into a dissection of the investment thesis, and What did we gain elevation on, What did we lose elevation on? And I was sort of listening and half responding, and it was in that moment that I just thought, Man, this guy is built of something different.
And so if you look at Alfred and what he's been able to achieve at Sequoia and elsewhere in his life, to me, it's a function of effort compounding. He is always on. There is no time when he is resting. And I wouldn't recommend that for everybody, but I think Alfred, to me, is a great example of the idea that effort just compounds. Like the work you do today will have outsized benefits tomorrow.
And I don't think he's cut a corner in his entire life. And I admire that about my partner Alfred. And that is my lesson from him.
Don Valentine: Winning Creates Culture
So this is a lesson from Don Valentine. And this lesson actually begins with Jim Goetz. So Jim Goetz was a founding investor in Palo Alto Networks, where he is still on the board.
I think Palo Alto Networks today is $50 or $60 billion in market cap. Back in probably, I don't know, 2013-ish, the company had gone public, and the stock had performed okay. But there was a lot of drag on it and the company morale was kind of taking a hit. And so Jim recruited me to help put together kind of a rally the troops presentation. Like he had been invited to speak at an all hands for Palo Alto Networks and he wanted to put together 10 or 15 slides that were sorta like, Keep your head up, the best days have yet to come--that sort of thing. And for whatever reason, I thought, Okay, well, I'll go like figure out what it is that really creates great culture in the really great companies.
And so I thought, Okay, where can I learn what creates culture in really great companies? Aha! Don Valentine. Don Valentine was on the board of Cisco for 25 years. Don Valentine was one of the first investors in Apple, and Atari, and Electronic Arts, and Oracle, and all these amazing companies. And so I thought, Okay, Don Valentine. Man, he's seen a lot. Surely he'll be able to tell me what it is that creates a great culture.
And so I went and found Don, and I sat down--and I even recorded this, because I wanted to make sure I didn't lose any of the wisdom--and so I turned on the recorder and said, Okay, Don, here's what we're trying to figure out: what is it that creates great culture? And Don, in classic Don Valentine style, kind of looked at me, kind of laughed, and said one word: winning.
And I said, Okay. Care to unpack that, Don? And he basically said, Look, there are only so many things that move the needle in a business. If you have a killer product that is winning in the market, you're most of the way there. And--now I think there's a lot of nuancing to be done around the edges of that, because there are winning cultures that go off the rails, and there are winning cultures that sustain for decades to come. But the gist of it was, if the product is winning in the market, everything else is kind of noise, or everything else becomes a heck of a lot easier.
And so I've always remembered that as pretty important. When companies start to put the cart before the horse, and morale is low, therefore we need employee engagement events. No, no, you don't. That's actually gonna hurt. Because morale is low because a company is not winning in the market. The more time you take away from fixing the product or selling the product or doing whatever it is that's actually gonna move the needle, the worse you might actually end up.
So, anyway. Wisdom from Don Valentine: What is it that creates culture? Winning in the market.
Doug Leone: Lean In!
All right, this is the lesson from my partner, Doug Leone. And it is hard to pick one because I've learned an infinite number of things from Doug over the years. But the lesson is: Lean in. And anybody who knows Doug would say, Yeah, that makes sense, given Doug's personality.
Doug is the ultimate lean in investor and lean in human being. His background before Sequoia was in sales, and so of course in sales you're always leaning in, trying to chase down customers and that sort of thing. At Sequoia, Doug has been a lean in investor and a lean in operator, always willing to try new things, always willing to turn over another card, always willing to break things that are working to see if we can make them better. And that's been part of the magic for him as an investor and as an operator.
I come from a very different sort of natural set point, meaning prior to Sequoia, I worked at a private equity firm, which is a fairly conservative place that focuses a lot more on risk than on the return.
And so when I got to Sequoia, I was a fairly lean back investor, matched up with Doug, who was a fairly lean in investor. And Doug was--when I joined Sequoia I was 24 years old, and so of course I was a junior guy, and Doug was almost 50. He actually turned 50 a few months after I joined Sequoia. But at the age of 49, he was already a legend in the venture capital business. So there's a big gap between me and Doug. But we worked together on a ton of stuff because our growth team was only four or five people at that point.
So, I could think of a million stories. The one that I will tell is actually a recent one.
So if you go back to early 2019, our partner Sonya Huang found this company in New York called Attentive Mobile. And the company was clearly working. The founders, Brian and AJ were clearly very backable founders. But it wasn't totally obvious to us what had had a chance to become.
And so Sonya found it, she and I met it, and we were kind of thinking about it. And then we had Doug meet it.
And Doug--I remember Doug called my cell phone as soon as he got out of the meeting and said, Hey dummy, what are you waiting on? Get on a plane to New York.
And I said, Oh, okay. And so me, Sonya, and Doug got on a plane to New York to go see Brian and AJ, who were gracious enough to meet us at like, I think 6:30 in the morning New York time. And they actually got bagels, which was great. So they had bagels, and cream cheese, and it was actually a pretty fun meeting.
So we spent a couple hours with them. And by the end of that meeting, we decided that we wanted to be in business together. And thank goodness we did, because I think Attentive is now positioned to be an incredibly important company. And I hadn't understood immediately the real long-term potential for that business. I don't think Doug did either, but he saw that it was clearly working. And so his instinct was: lean in. Had we not done that, we wouldn't be investors.
And so, my lesson from Doug: With most things in life, just because you don't fully understand at a time zero doesn't mean you should wait for it to come to you. Just lean in.
Sarah Guo: Suck the Oxygen Out of the Air
So this one is a little bit of a different one. This is about my partner, not at Sequoia, but my partner in life, Sarah Guo, who happens to be a partner at Greylock, which is a competing venture capital firm.
And of course there are a million things that I could say about Sarah, and this is not going to be a love letter. This is going to be very sort of work relevant. Even though it's a competitor who happens to be my wife. Anyway, the lesson from Sarah is: Suck the oxygen out of the air.
And the story is, we were going up to wine country one weekend, and we had something to do up there, and I forget what it was, but we had like three or four appointments, we were looking at something or other. And we lived down in south bay, so to drive up to wine country is like at least an hour and a half drive, probably two hours on a Saturday.
And so we left in the morning, and we're driving up there, and I'm driving, she's sitting in the passenger seat, and about five minutes in, she says, Hey, do you mind if I make a phone call?
I said, Yeah, go ahead. We've got two hours. Might as well.
So she gets on the phone, and for the whole two-hour drive, there was one phone call, then another phone call, then another phone call, and then another phone call. And we have a pretty like strict Chinese wall between us when it comes to work stuff, because otherwise we get into way too many issues. And so she was actually being a little bit vague in like her saying the name of the company and that sort of thing, but I could tell that she was working on something, and I could tell that she was chasing something.
And anyway, so we went to an appointment, and then she jumped on the phone again before the next one, and then she jumped on the phone again before the next one, then she was on calls again the whole way home. And then that night she ended up staying up all night to write a memo, and then the next morning she was on the phone with her partners, Blah, blah, blah, blah, blah, blah, blah.
But anyway, the point is, on this nice weekend where we could have just like relaxed and hung out in the wine country, she had something going on, and she activated. And I found out, maybe a week later, and I forget what company it was, but I found out maybe a week later that it turns out we, Sequoia, and Andreessen Horowitz and Benchmark and whoever else--everybody was sort of looking at this company, and Sarah won.
And she's super talented and charming, good at what she does, and she's a great partner to founders, and so there's no surprise that a founder would choose her, but the thing that I observed, which I think is an amazing attribute of her and other people who are truly great at what they do, and also a humbling thing for me and for everybody else at Sequoia, and something that we have to keep in mind--the thing that she did was she sucked the oxygen out of the air.
All those phone calls were with the different members of the founding team, of the management team, and of all the people around them, such that she was a hundred percent top of mind for them. And by the end of that weekend, they had spent so much time together, and such like intensity of time together, that they couldn't imagine going with anybody else.
And so I mentioned that's humbling for us at Sequoia because we have every benefit in the world, but like we can lose to anybody on any given day if somebody puts forth a heroic effort. And she put forth that heroic effort.
So anyway, the lesson is: Don't take anything for granted and just suck the oxygen out of the air. If you suck the oxygen out of the air, there is nothing left for anybody else to breathe. And when you are in a competitive situation and that killer instinct kicks in, that is almost always the right thing to do.
Jim Goetz: Have the Courage to Use Your Own Understanding
My lesson from Jim Goetz--and there are many--but the one that I've chosen for this is also the same as Kant’s motto from the enlightenment, which is: Have the courage to use your own understanding.
In the case of Jim Goetz, he has two superpowers. One of them is his incredible ability to understand people. I'm going to put that one aside for the moment.
The second one, which is the subject of this conversation, is his ability to see the future. And the story that comes to mind for me is back in 2007--I joined Sequoia on March 5th, 2007, and I had come from Summit Partners in Boston, which had the world's most dialed-in, on-prem Siebel system to use as the CRM. So we had four Siebel administrators sitting in the building alongside everybody else, and you could just keep your hands on the keyboard and you could really crank through that thing. And so I was a big believer in the value of on-premise software in 2007.
Now I came to Sequoia, and we had just implemented salesforce.com. And even though Salesforce was founded in ‘98, went public in 2004, by 2007, the product itself was not that great and internet bandwidth was such that there was just a lot of latency and if you're trying to use it all day as a power user, it just didn't get the job done.
And so from a user standpoint, I was not a believer in SaaS, I was not a believer in cloud. This is mid-2007, again. And I remember Jim Goetz was looking at a cloud investment, and I was pretty skeptical. And he pulled me aside and he said with the most unbelievable degree of conviction, Grady, everything's going into the cloud.
And then I pushed back and said, Well, not everything. This is not going to go in, this is not going to go in…
He said, No, no, no, you're not listening to me. Everything is going into the cloud.
This was 2007. Fast forward 15 years, that is now an obvious point of view. But even 15 years later, not everything has gone into the cloud. He was a decade plus ahead of his time in terms of really understanding where the world was going. And he had done so with only the smallest data points pointing in that direction, but with a broader understanding of the arc of history.
And so that was an important lesson to me, because it sort of gave me permission to dream about where some of the early trends are going versus just looking at the data. If I just looked at the data, I would have said, Well, geeze, I don't know. That on-prem Siebel system was pretty good relative to this cloud-based Salesforce system.
But if I'd paid attention to where the trends were going, maybe I would've gotten to the right answer like he did. It wasn't until a couple years later, even working with Jim, that I really saw what he saw and I really believed what he believed.
And so have the courage to use your own understanding. Jim Goetz’s ability to predict the future is one that has amazed me.
Luciana Lixandru: Every Day is Game Day
This is a lesson from my partner Luciana over in Europe. So Luciana joined Sequoia about a year and a half ago, but before Sequoia, she was an investor at another venture capital firm for the better part of a decade.
So when Luciana joined Sequoia, she already had this unbelievable track record. She led the Series A in UiPath, she led the Series A in Deliveroo, she led the Seed round in Miro. Just an unbelievable track record that has resulted in a really nice position within the European ecosystem.
And from the US, I was on plenty of Zooms with Luciana, and she always asked good questions, and she always had insightful comments in the partner meeting. And so I was trying to figure out, How did Luciana become so good? Like she's truly an excellent investor. How did she become so good?
And it wasn't until last fall when I finally took a trip over to see our London office--we'd been waiting for COVID to get a little bit better. So last fall was sort of post-vaccine, pre-Omnicron. Last fall, I spent a week in our London office, and I got to shadow Luciana and just kind of see every minute of every day, what is it she does, and why is it that she's so good?
And the thing that really stood out to me was--and this is why the lesson is every day is game day--there was no downtime. Not meaning that her calendar was just packed every minute of every day, but meaning when she was in a meeting, she was on.
And for those of you who don't necessarily know what our calendars are like, we might be in 10 or 15 meetings a day. And so even the best-intentioned investor is going to get a little bit fatigued at some point, and we'll probably have lower energy levels in one meeting versus another. Not Luciana. Every single meeting, a hundred percent on, a hundred percent listening, a hundred percent thinking, a hundred percent moving the ball forward. Just unbelievable.
And so that was instructive to me because it made me realize like, Yes, she is very smart and she has good judgment and she works hard and all that good stuff, but every single meeting, she leaves somebody with a good impression, regardless of what the outcome of that meeting is. And those good impressions start to compound over time.
And it doesn't just mean that when she finally meets the founder who's going to be the next amazing founder--it doesn't just mean that she's on her game for that person--she's on her game for everybody else too. And so they remember her, and they think positively of her, and it creates this virtuous cycle around everything that she does.
So anyway, the lesson for me, from spending a week watching our partner, Luciana, is: Every day is game day.
Andrew Reed: The Main Thing is Keeping the Main Thing the Main Thing
All right, this lesson is from my partner, Andrew Reed. Andrew, if you don't know the name Andrew Reed, I promise you, you will.
Andrew's been at Sequoia for about eight years and has assembled an unbelievable portfolio of companies ranging from Figma and Loom to Robinhood and Snapdocs and Productboard and a whole bunch of others.
So, the lesson from Andrew is: The main thing is keeping the main thing the main thing--which I'm pretty sure is something that we took from a basketball coach, but I forget which one--I'm sure a bunch of people may tell me who. Anyway, the main thing is: Keep the main thing the main thing.
How does that apply to Andrew? If you look at his calendar, it's not empty, but it is pristine. Like there is no waste on his calendar.
We have open calendars at Sequoia, so we can go calendar snoop to our heart’s content on anybody else and see what they're up to.
Andrew's calendar is pristine. And when I say pristine, it is the highest quality founders, the highest quality people that you can imagine him meeting with. And everybody at Sequoia has an infinite number of people that we could go meet with. All of us kind of struggle with how to say yes and how to say no.
And Andrew somehow has figured out how to just like limit it to the things that are absolutely essential. Now, what he gets for that is he has unlimited time for those people. And as a result, his relationships with founders are very strong, the quality of the thinking that he can do on the opportunities that he chooses to pursue is very high, and the level of service that he can provide to our portfolio is very high.
And I have studied the way he does it, and I've tried to replicate it, and I've tried to keep my calendar clean, and I've tried to turn 30 minute zooms into two minute phone calls, and I've tried to handle things asynchronously when we can--I've tried all those little tricks, but I cannot quite pull it off the way that he can.
And so the thing that I admire about him--well, there are a lot of things I admire about him--one of the things I admire about him, and one of the lessons that I've learned from Andrew is: The main thing is keeping the main thing the main thing.
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Wrap-up
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