Sequoia Capital reposted this
My mother once told me you know the measure of a man by what they do when there is nothing in it for them. I met Pat Grady when I was 19, I had done 15 eps of 20VC and had very few followers. Pat gave me his time, mentorship and friendship when there was nothing in it for him. He is the GOAT of growth but also one of the best people in this business. My 9 key takeaways 👇 1. The Sequoia Capital Investment Process and the Mistake Everyone Makes It’s as simple as crystalizing the thesis then stress-testing it to make sure it’s real. Common mistake is people launch into diligence before they figure out what they want. Your thesis doesn’t have to be complicated - it just has to be crystal clear. 2. You Will Never See Anyone at Sequoia Fired for a Bad Investment You will never see anyone at Sequoia applauded for a good investment. We’re in the risk taking business & one data point doesn’t make a trend. We look at the activities & behaviors because the feedback cycle is long. 3. Why the Founder Is More Important Than the Market The market determines how big a company can get. The founder determines how big the company will get. I will take a modest market with a spectacular founder over a gigantic market with a mediocre founder any day. 4. Framework for Analyzing Founders Two ways: - I assess the founder-market fit & the vectors describing them. - Founder-market fit: You need to have a problem & solution variable accounted for. Vector: Consistent track record & motivation; building a startup is hard AF. 5. The $BN Revolut Mistake Peter @ Segment and Nikolay @ Revolut both pitched their story within ten minutes. The ideas were so simple & I didn’t have any further questions for them. We ended up passing on both. 6. We Lost $29BN of ServiceNow by Selling too Soon We distributed it a year after their IPO. It was the first $1BN gain we had in the growth business. If we held onto it, the gain would have been $30BN. 7. Do Sequoia Get Pricing Power? Most companies pay more for our “premium product” in Seed/Series A. The difference between starting a company with and without Sequoia can be pretty big. We don’t get massive discounts at a later stage because companies are more established. 8. Is VC a Young Person's Game Senior investors have experience which compounds over time. BUT we’re in the details business & younger investors are more detail-oriented. We look for mid-career investors who have a bit of both. 9. What is the Pre Mortem for Sequoia It won’t be the markets or platform shifts, but from losing our sense of desperation. We need to stay hungry & humble. If we don’t go out there and earn it, tomorrow we are irrelevant. (links in comments) #founder #funding #business #investing #vc #venturecapital #entrepreneur #startup #seed #funding
This post is thought-provoking, especially on the emphasis on founder over market size. Pat Grady's insight that founders can elevate a modest market, challenges conventional wisdom. Peter Thiel's concept in "Zero to One" argues for the importance of finding founders with unique abilities to see through and solve unique problems. This suggests that investor focus should be on the problem-solving capacity and resilience of founders over sheer market potential. I have seen where the right person can redefine market boundaries. Let’s go!
And when the manure hits the fan, there is no mention of how much their Founder focus is worth. "Reviewed unaudited financial statements" ( on a 214 mill investment they wrote down to zero) and "We were misled." By the Founder and team they spent most of their time "vetting" as it is in their DNA and that is how they make investments. So it turns out their focus is really on the opportunity and cannot see a billion somehow flowing between unrelated companies during financial due diligence. I love the "recommend portfolio companies to use Big 4 in the future". Relying on auditors to find issues ahead of a major investment is a problem if you ever read the letters attached to the annual audit report for a firm operating in multiple jurisdictions and the exceptions to the audit. All the ex post profiling of SBF indicates a problem, but that is what 20/20 hindsight is. The question, though, is how these "all about the Founder" people could not see the crook in SBF and the incompetence at Alameda. When they make big mistakes, knowing how good they have been known to be in general, that seems the most interesting experience they could share. https://finance.yahoo.com/news/sequoia-capital-regrets-backing-ftx-222240151.html
Subject: Revolutionize Africa's Ride-Hailing Industry with Esmart Rides Dear Sequoia Capital, I hope this message finds you well. My name is Douglas Baryeh, Founder and CEO of Esmart Rides Africa. I'm excited to introduce you to a billion-dollar project that's poised to transform the ride-hailing landscape in Africa. Our mission is to provide a premium, sustainable, and tech-enabled mobility experience for the African market. With your investment, we'll kickstart this moonshot business and create a paradigm shift in the industry. Here are the key highlights: - Investment: $160 million - Projected Revenue: more than $1 billion over 6 years - Growth Potential: Exponential - Market Opportunity: vast and untapped Our pitch deck and detailed business proposal are ready for your review. I'd be delighted to schedule a call to discuss this opportunity further and answer any questions you may have. Let's revolutionize Africa's ride-hailing industry together! Please feel free to reach out to me directly on LinkedIn or email at your request. Thank you for considering Esmart Rides Africa as a potential investment opportunity. Best regards, Douglas Baryeh
Jay Singh
2w
I love the story of him going on the pod when you were just getting started. Those early supporters mean even more as you find more success in your work :)
Suhail Ahmad
2w
A strong founder market fit is the best way to determine the probability of success for an early stage venture. It's essentially the alignment between a founder's skills, experience, personality and passion with the needs of the target market. Investors often get caught up in the founders passion overlooking the founders experience and deep understanding of the market.
Being Mr Nice Guy you did not ask about FTX and the "stellar team" and the due diigence they did not do for their LPs. https://www.sequoiacap.com/companies/ftx/
"The market determines how big a company can get. The founder determines how big the company will get. I will take a modest market with a spectacular founder over a gigantic market with a mediocre founder any day."
Sathish S
2w
he anecdotes about passing on Revolut and selling ServiceNow too soon serve as important reminders that even the most experienced investors can make mistakes, and that patience and a long-term view are essential in this industry.
Founder @ 20VC
2wSpotify 👉 https://open.spotify.com/episode/08BsfEQnxt8D0bIvcCLL9j?si=875ef14ec9e946a5 Youtube 👉 https://youtu.be/e79QcKYsHSY