Jul 1, 2019 · 37m · 20vc
20VC: Sequoia's Pat Grady on What Sequoia Is Focused On Today, How Sequoia Think About Investment Decision-Making Processes & Why It Is Important To Trade A Few Points of Efficiency for Culture When It Comes To Attribution
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In this episode of The 20 Minute VC, host Harry Stebbings interviews Sequoia Capital partner Pat Grady to discuss Sequoia's investment strategy, team-centric firm culture, diligence framework, and founder relationship building. Grady provides rare insights into decision-making at one of venture capital's most prestigious firms and offers actionable advice for founders and investors alike.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 31.8% of the talking time here. How this is scored →
Harry as informed peer 4.0 Guest teaching 4.0 Guest disagreement 0.9 Harry pushing back 1.4
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:18 Dismissing signaling risk as overblown
Pat directly reframes Harry's premise about signaling risk, stating it is a rational fear for founders but something Sequoia has never actually seen harm a company in practice.
Hardest push from Harry ▶ 24:59 Challenging compressed fundraising timelinesHarry pushes back on the modern fundraising environment, questioning how thorough diligence can occur when founders demand decisions within compressed one-week windows.
Biggest teaching moment ▶ 25:00 Proactive vs reactive deal sourcing reframePat educates Harry on growth investing dynamic by illustrating how Sequoia spent over two years getting to know Eric Yuan before investing in Zoom, showing that compressed deal timelines only apply to reactive investors.
Harry holds his own ▶ 22:28 Introducing acceptable vs unacceptable risk frameworkHarry articulates a clear investment taxonomy from his own fund practice, distinguishing acceptable risks like market depth from unacceptable founder conviction risks.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Pat Grady’s Background and Journey to Sequoia | 3 | 3 | 0 | 0 | Harry asks a standard background question and jokes lightheartedly about Pat's early days at Sequoia. Pat shares a humorous anecdote about being so intimidated in partner meetings that he was advised to see a voice coach. | |
| Sequoia's Mission, Fund Strategy, and Ownership Dynamics | 5 | 5 | 2 | 3 | Harry demonstrates industry knowledge by bringing up European signaling risk precedents and citing NEA partner perspectives on ownership. Pat gently reframes signaling risk as an overblown topic that rarely harms founders in practice. | |
| Venture Capital as a Team Sport and Firm Culture | 5 | 4 | 1 | 2 | Harry probes how Sequoia handles deal attribution compared to First Round Capital's team-centric model. Pat explains that Sequoia deliberately sacrifices efficiency points for firm culture by removing individual names from CRM records. | |
| Evaluating and Selecting Partners at Sequoia Capital | 4 | 4 | 0 | 1 | Harry frames partner selection by quoting Josh Koppelman on picking partners over investments. Pat lays out Sequoia's three partner selection criteria and highlights how LP returns fund impactful non-profit causes. | |
| Decision-Making, Diligence Rigor, and Proactive Founder Relationships | 6 | 5 | 2 | 3 | Harry introduces a structured framework separating acceptable from unacceptable risks and presses on compressed fundraising timelines. Pat counters the timeline pressure argument by explaining how Sequoia builds proactive founder relationships years before funds are raised. | |
| Pat Grady AMA: Board Advice and Life-Work Integration | 2 | 4 | 0 | 0 | Harry asks for personal mentorship on handling his first institutional board seat. Pat offers core advisory principles focused on listening and building foundational trust. | |
| Quick Fire Round and Recent Investment in Embark Trucks | 3 | 3 | 1 | 1 | Harry runs a rapid-fire session touching on media recommendations, Silicon Valley culture, missed deals, and recent investments. Pat offers thoughtful commentary on Silicon Valley needing to relax and details the thesis behind Embark Trucks. |
Statements from this episode (15)
Roelof Botha recommended Pat Grady get a voice coach early at Sequoia
“When I was about a year and a half into my time at Sequoia, my partner Ruloff took me aside and with the best possible intentions in mind, recommended that I get a voice coach.”
Three-quarters of Sequoia's 2018-2019 investments were Seed or Series A
“Three quarters of the investments that we've made in the last 12 months were seeds or series A's”
Venture signaling risk is an overblown founder concern, says Pat Grady
“Signaling risk is this funny thing because most founders are worried about it, but we have never actually seen a situation in which it hurt. The context in which most people worry about it is they say, well, if I receive this round from Sequoia, but then for w…”
Sequoia historically made the mistake of being too greedy on ownership
“I think one of the mistakes we made historically was to be a little bit too greedy, quite frankly, on ownership.”
Ego and economic demands tear apart most VC partnerships, says Pat Grady
“The natural way of things for venture capital firms is for one or two people to have a couple of nice investments and that makes them relatively more attractive to the next set of founders, and those benefits start to compound into the point where they allow t…”
Sequoia would operate unaffected if any individual partner left, says Grady
“Any one of us could disappear tomorrow and Sequoia would go right on and be fine.”
Sequoia replaced individual partner names with 'Team Sequoia' in its CRM
“In one fell swoop, we actually changed all of the names in the database from individuals to the singular name Team Sequoia, and the point is that every prospect we're talking with, every company with whom we're in business today, they don't belong to an indivi…”
Sequoia is the Ford Foundation's largest institutional investment relationship
“We are the longest standing and largest relationship for the Ford Foundation in terms of where their money comes from with the returns that we generate for them.”
Sequoia investment decisions always end with full partner consensus
“And so at Sequoia, rarely do investment decisions begin with consensus. It's usually a couple of People who see something special, but they always end with consensus because by the time we invest, we want it to be a team Sequoia investment, not an individual's…”
Okta had just $3M ARR when Sequoia invested in its Series C
“So when we did invest in Okta, it was the series C and Ben Horowitz and Anil Bushri were already on the board. So we were a little bit late to the party, but even at the series C, they had three million of ARR versus consensus for this year says 500 plus.”
Qualtrics was Sequoia's most expensive software deal at the time
“That was a scary investment for us because at the time it was the most expensive price we had ever paid for a software company.”
Founder risk is the only unacceptable risk in venture capital
“And so anyway, I think almost every risk is an acceptable risk. Founder risk is not.”
Sequoia spent over two years courting Zoom founder Eric Yuan
“We spent more than two years getting to know Eric Yuan at Zoom before we finally had a chance to get into business with him.”