The Exchanges

Q I love that in terms of the advice you were given there. In terms of, like, building that relationship beforehand, the way that I'm seeing a lot of people Kind of, not hijack, that'd be the wrong word, but kind of get ahead, so to speak, is actually just through being very aggressive on preemptive rounds. How do you think about the prolific rate of preemptive rounds today?

A It's a mixed blessing. In some sense, it's a good thing that investors have to work very hard. I mean, sort of, if you take the other extreme view, I don't think it'd be good for founders if investors all just sat in their offices and waited for opportunities to cross the threshold. That would be too lazy and passive. So in some sense, if an investor has an intuition for a space, if they've done the landscaping work to have a A thesis on a particular category, and then a belief that this particular company is the winning company, and want to approach that company with an offer and insights to help them succeed, that to me sounds like a fabulous recipe. The downside, obviously, is if it's mostly mimetic behavior, the sense that this is a quote-unquote hot company, and so I should rush over with a term sheet without even doing diligence, and unfortunately, we do see some of that. We've seen a couple of instances where references are shallow or diligence is shallow, and so I do think there will inevitably be some casualties along the way. And then the other danger, obviously, is the money-burning-a-hole-in-the-pocket problem. That if a company is overcapitalized, does it end up diluting the company's focus on what matters most?

AI assessment note: “It's a mixed blessing. In some sense, it's a good thing”

Q Well, that is very kind of you, but I'm going to pretend to be blissfully ignorant and pretend that I haven't read and listened to everything you've done before, but in that vein, how did you make your way into the world of venture and come to be a partner at Sequoia today?

A Luck. I came to the US in 1998 to go to Stanford Business School, and candidly, I'd never heard of venture capital until I got here. Obviously got exposure to tech in Silicon Valley, being at Stanford in the maelstrom of the dot-com bubble. And ended up learning about venture capital. Joined PayPal straight out of school, and we can talk about that a little bit later, but the path to venture capital was quite accidental. At the time, PayPal got acquired by eBay in 2002. I wasn't quite sure what I would do next. Meg Whitman gave me an offer to remain a CFO of the company, and Mike Moritz gave me a call and asked whether I'd interviewed Sequoia, which is kind of strange because they were looking for a computer science major who'd done product management at an enterprise software company, and I was an actuary running finance at a Financial services company, and I left every interview thinking it was my last, but eventually they made me an offer to my surprise, and I guess they still haven't figured out that I'm not a good match.

AI assessment note: “Mike Moritz gave me a call and asked whether I'd interviewed Sequoia”

Q Well, that is very kind of you, but I'm going to pretend to be blissfully ignorant and pretend that I haven't read and listened to everything you've done before, but in that vein, how did you make your way into the world of venture and come to be a partner at Sequoia today?

A Luck. I came to the US in 1998 to go to Stanford Business School, and candidly, I'd never heard of venture capital until I got here. Obviously got exposure to tech in Silicon Valley, being at Stanford in the maelstrom of the dot-com bubble. And ended up learning about venture capital. Joined PayPal straight out of school, and we can talk about that a little bit later, but the path to venture capital was quite accidental. At the time, PayPal got acquired by eBay in 2002. I wasn't quite sure what I would do next. Meg Whitman gave me an offer to remain a CFO of the company, and Mike Moritz gave me a call and asked whether I'd interviewed Sequoia, which is kind of strange because they were looking for a computer science major who'd done product management at an enterprise software company, and I was an actuary running finance at a Financial services company, and I left every interview thinking it was my last, but eventually they made me an offer to my surprise, and I guess they still haven't figured out that I'm not a good match.

AI assessment note: “Mike Moritz gave me a call and asked whether I'd interviewed Sequoia”

Q Yeah, that's an important one. Tell me though, what would you most like to change about the world of venture?

A Posturing. I find it misplaced when investors crow about the success of a company as though they were the ones who were in the trenches every day. I think investors can have a big influence sometimes for the better in the outcome of a company. But there's a reason we have this phrase at Sequoia that we're the entrepreneurs behind the entrepreneurs. And our job is to support the founder and the founders and the management teams and the people in the building. They're the people who are doing the hard work. And I feel that way from my work at PayPal. Michael Moritz was a fantastic board member and influenced a bunch of our key decisions, but he also wasn't there on Saturday mornings when we had our management team meetings every single week. And so understanding your place and Is really important, and shining the light on the entrepreneur and the management team. That's the change I'd like to see.

AI assessment note: “Posturing. I find it misplaced when investors crow about the success of a company”

Q The velocity is at a rate that I haven't seen before. And in a lot of cases, it's due to the proliferation of capital. So I do want to talk about the market today. And it's like, do you agree that the market is as crazy as everyone says? And I guess, you know, you've seen multiple vintages now at Venture. How does it compare to prior vintages for you?

A It's crazy in the sense that the pace has accelerated, but I also wonder if that's just what's happening to so many other industries. And venture is not immune. If you go back 3040 years, investment memos arrive via the mail, and people would leisurely read them and call people back. There was no email at the outset, and the time span for an investment decision was long. And technology and communication, technology in particular, has really accelerated so many industries, including ours. And so we actually track for the investments we make the time between the first introduction, when we had a full partner meeting, and when we make a decision. And over the last 12 months, We've compressed our average time by more than a week from initial meeting to final investment decision, and I think it's partly a reaction to the environment where investments are happening very quickly, and people need to respond. I think it's a function of many investors doing a good job, honestly. Some investment decisions presumably are sloppy, and people are just making quick sort of gunslinging decisions, but what I see more often is a prepared mind, and we do a lot of that, especially during COVID. We've developed numerous landscapes where we think about a category, we go write a short investment memo internally, not about an A company, but about a sector. And we analyze all the companies in that secto…

AI assessment note: “It's crazy in the sense that the pace has accelerated”

Q is, like, when you think about developing juniors and rising team members, and especially those that are on board, What would you advise, and this is actually, I'm kind of using this for my own personal grace, but what would you advise me and others joining boards for the first times when it comes to really being the best partner to founders that they can be earlier in their career?

A Two things. Listen. One of the great things I took away from Don Valentine as well was his listening gene. Mike Maruts is the same way when I saw him as a board member at PayPal, and then when I joined Sequoia and I shadowed him on many boards, was listening and thinking as opposed to talking for the sake of hearing your own voice. Being willing to ask questions when you don't understand. It's so much worse to pretend that you know. It's so much easier to just ask a question. Hey, I don't quite understand this. Why are we doing this? Can you explain this product that we're building again? What does this acronym mean? Don't be shy about asking questions. I think it's the people who feign that they know and then get caught out. That's so much worse. And then finding good mentors. I think it's wonderful to learn and absorb from others who've acquired some of these skills over the years. So a lot of what we do at Sequoia when you join is you get to shadow and Several different partners on some of their boards, which gives you exposure to their unique styles, but also gives exposure to a variety of industries. So these, when I joined, I remember going to a semiconductor company board, enterprise software company board, I mean, the variety of company and industries I'd never seen before, and I started to see the different styles of the different Sequoia board members, and I sort of w…

AI assessment note: “Listen... Being willing to ask questions when you don't understand. And then finding good mentors.”

Q Snowflake, Sumo Logic. I mean, the pipeline moving forward is equally as exciting, to be honest. But, like, many gained hubris from such incredible positions and special opportunities. When I spoke to your partners, I was consistently told that at Sequoia we have the mindset, you're only as good as your next investment. Tell me more about this mindset, and how does one retain it when you have such success?

A Some of that comes down to who you recruit, the culture in the firm, how you provide feedback along the way. It's not something that we take for granted. Some of it stems from the way that Don set up the partnership originally, and he didn't call it Valentine Capital. At a time in the 19 seventies, almost every single professional services firm, whether it's an accounting firm, or law firm, or venture firm, had the names of the founders on the door. Don didn't. And it was a very deliberate decision. And it was no accident that he chose the name Sequoia. And for those listeners that aren't familiar with the tree, the Sequoia tree is native to California, and it's the longest lived tree, maybe in the world, but certainly in North America. It grows to be thousands of years old. And the reason Don chose that name is he wanted to build a partnership that would last and would outlive him. And it also was a signal for the sort of companies that he wanted to invest in. He wanted to invest in companies that would stand the test of time. And I think that part of what's been distinctive about Sequoia's history is There's so many of the companies we've backed over the decades that are still household names. Now, the reason this is important is when Don started to recruit people to join him at Sequoia, he was recruiting people to take over, people to succeed him, not people to work for him.…

AI assessment note: “Some of that comes down to who you recruit, the culture in the firm”

Q And I mean, there's no better than scores to test yourself. I do want to ask you, because I spoke to Pat before the show, and he said in particular, with regards to your time at PayPal, you went from MBA intern to CFO, and he said specifically, ask Roloff, how did that happen, and what were your biggest takeaways from that PayPal experience?

A Firstly, I joined in 2000, in March of 2000, and it was a third offer to join the company. I'd met Elon in 1999. And he made me an offer to join, but I couldn't because I had a student visa and I didn't have a work permit in the US. Made him again later that year. Again, I couldn't leave. And then in March of 2000, I'd run out of money. Necessity being the mother of invention. So if people remember in 1998, there was emerging markets currency crisis and the rand had lost 40% of its value on the eve of my departure for America. And my savings had dried up because of the decrease in the value of the dollar value of my savings. And so out of necessity, I took the job at PayPal in March and I Worked part-time and studied part-time until I graduated in June as a way to make a bit of money and pay rent. Now, obviously, I love the company. I'd done research on the company, and I was really enamored with the potential for this virally growing payments network. But that's how I ended up at the company. And when I was there as an intern, I helped the company build this financial model. The company had raised a hundred million at 500 pre at the height of the bubble. We literally closed the financing right at the beginning of April, 2000, I think, 1516 days before the Nasdaq started to slide. So it was incredibly lucky of us to have done that. But we didn't have a great business model at t…

AI assessment note: “when I was there as an intern, I helped the company build this financial model”

Q Every single VC says on the show when I ask them, what's the biggest challenge you face today? They all say time management. I completely understand that challenge. When you think about time management, how do you think about where you allocate and prioritize your time? And what's your thinking around that prioritization of what to do versus what not to do?

A Oh, that is such a difficult question. I feel like I'm trying to get better at that every single day as I try to juggle things. The first priority has to be to your partners. At least at Sequoia, we really play a team sport. And one of my partners needs my opinion on the company and would like me to have listened to a company this afternoon, or if one of them has an investment memo, I mean, I'll give you a concrete example. Last night at 10 p.m., one of my partners published an investment memo because we have a short fuse investment decision that we're making later this morning. And so I have less than 12 hours from the time a memo that was published to digest it, think about it, and get ready for an important decision meeting. And so it means that I got up earlier this morning and I made sure that I read it because I owe it to my partner to be prepared and to help us as a team Make the best possible investment decision we can. So you make those sort of sacrifices. I think you have to think about your team first. Probably next is thinking about the companies that you serve and being there for your founders, especially during the COVID crisis. I would get a call at 10:30 p.m. on a Sunday night from one of my founders who was really worried about the survival of their business, and I'll pick up the phone and I'll speak to them, and I'll try to help them through a sticky wicket, t…

AI assessment note: “The first priority has to be to your partners... Probably next is thinking about the companies”

Q but your words have such weight, both with founders and other board members. Do you ever worry that they can be weighted too much in terms of you're landing a question or an idea and founders will kind of change their perspectives or change their ideas based on that question or perspective? And you have to kind of caveat it. How do you think about the weight of your words?

A That is a great question. It applies in my leadership role at Sequoia too, where I think you've got to be very careful with what you say. Even an offhand comment, maybe a joke can be misinterpreted and take on far more meaning than you intended. So try to be circumspect about what you say and try to couch your words appropriately. So I'll often caution and say, listen, I know I don't know as much as you do about this particular aspect or this particular decision. I'm trying to ask a question in the spirit of Being a devil's advocate. I'll try to set up the question in a way that makes it clear that I'm not surreptitiously trying to guide it to a particular outcome, but I truly am asking a question. So I try to go out of my way to do that.

AI assessment note: “try to be circumspect about what you say and try to couch your words appropriately.”

Q references to ingest and accept and really run with versus those to not? Often people may not reference particularly well coming out of a large organization if they are so inherently founder-oriented themselves, and they have such strong opinions and views of the world that made them a brilliant founder, but a terrible employee. I struggle with, like, how do I know whether to accept it versus reject the reference?

A So when I first joined Sequoia, Don Valentine was still in our office, and he took me aside probably in the first month, and he said, Rudolph, there's a two-by-two matrix of people we invest in. On the one axis, it's not exceptional and exceptional. On the other axis, it's easy to get along with and not easy to get along with. Your job today is to figure out in which quadrant we normally make money. It was a very nice way for him to remind me that founders are different. These are people who don't just accept the status quo. They want to challenge the status quo. These are people who, unlike most of us, most people confront a problem and they just accommodate or avoid. Founders embrace that challenge. They look at a problem and they want to take on the world and change it for the better, and so you want to lean into that characteristic. So you've got to be careful with the references. I mean, things around integrity are the things that are bright lines, obviously, but around people that want to shake things up, I love those kind of references. I treat those as a positive data point, not a negative data point.

AI assessment note: “around people that want to shake things up, I love those kind of references.”

Q back to Sequoia as the firm, the industry has moved so seismically from even a decade ago, seeing the rise of solo capitalists, the rise of micro funds, the rise of mega funds, with so many different iterations in market. How do you think, and how does Sequoia think about ensuring the firm keeps the competitive edge that it has now? And what do you think is core to that?

A The core to that is to think about the customer first. And to steal a line from Bezos, you want to be competitor aware, but customer obsessed. And that's the key. So we obviously take note of what our competitors are doing. We have an offsite next week. I'm sure that we'll spend maybe a quarter of the time thinking about our competitors and trying to figure out if there are clever things that they're doing that we can learn from. But I think we've led the industry more than followed in coming up with new innovations. And that comes from being customer obsessed. And so more than a decade ago, we came up with this idea of scouts as a way of getting raw startups to Connected with contemporary founders who could help them get off the ground in a way that no venture capitalist could. The thing we launched three years ago, and it took more than a year in the making to get it off the ground, is a program we initially called AMP. It's now called Company Design Program. And the idea was to go from just providing what I call bespoke services. Our business is really a bespoke service. One-on-one, you join a board, you work with the founder and that team and that company to help provide advice. And yes, we leverage the rest of the Sequoia team, but it's really a very individual platform. High touch service. What could we do that's a little bit more batch oriented where we can share learnin…

AI assessment note: “The core to that is to think about the customer first.”

Q I know it's a tough one to generalize on, but I often hear on the show that startups die of indigestion, not of starvation. I often kind of think on the contrary, actually, in many cases, but how do you think about that? And would you agree with that commonly held suggestion?

A I don't entirely agree with that suggestion, but I do often see this. So I think the biggest challenge for companies, for startups is finding product market fit. That's the first challenge. Many fail at really nailing that Problem. And that leads to starvation, obviously, if you don't actually find a good market for your product. Once you do, and the great companies, once they do, usually have too many choices, and it becomes a prioritization problem, and hence the indigestion comment. It's a little bit like being at a spectacular buffet, and you run the risk of overeating, because there's just so many choices. And this is also where companies then can get into trouble when they spread themselves too thin, and take on too much, and spend too much money. And it may be better for them to prioritize and sequence some of the decisions and products that they build.

AI assessment note: “I don't entirely agree with that suggestion, but I do often see this.”

Q so much about venture. One way in which that's so much the case is also in kind of board memberships in particular. I'm really interested. You stand on some of the most kind of transformational company boards of the last 15 years. When you think about your own board membership, how would you describe your own style of board membership today? And I guess, has it changed over the years?

A I'm sure it's changed over the years, but it's one of these things that's probably quite gradual, so I may not be as aware. It might be good to ask somebody like Kevin Hartz, because I was on his board 15 years ago, and I'm at his previous company, Zoom, and Currently on his board at Eventbrite, you might be able to see the change over time. It's really important to understand that you're an invited guest at some level as a board member. And the responsibility of management lies with management, not with the board. And even if you are very steeped in a particular industry, the team that's on the ground working eight hours a day inside the building are so much closer to the details than you are. And so you've got to be very careful with being prescriptive. And I think much more about taking a Socratic approach. To being on the board, asking questions and truly asking questions, not asking questions that are really suggestions, truly asking questions, because even if you think that the company should turn right rather than left, you don't have all the nuanced details of what they deal with on a day to day basis. And so it's really useful for you to use the board interactions as a way to lift the team's focus from the very short range, immediate pressures that they feel inside the business to think a little bit long term and to challenge their thinking. One of the phrases I've com…

AI assessment note: “board members are also meant to be shock absorbers, not amplifiers.”

Q I love that in terms of the advice you were given there. In terms of, like, building that relationship beforehand, the way that I'm seeing a lot of people Kind of, not hijack, that'd be the wrong word, but kind of get ahead, so to speak, is actually just through being very aggressive on preemptive rounds. How do you think about the prolific rate of preemptive rounds today?

A It's a mixed blessing. In some sense, it's a good thing that investors have to work very hard. I mean, sort of, if you take the other extreme view, I don't think it'd be good for founders if investors all just sat in their offices and waited for opportunities to cross the threshold. That would be too lazy and passive. So in some sense, if an investor has an intuition for a space, if they've done the landscaping work to have a A thesis on a particular category, and then a belief that this particular company is the winning company, and want to approach that company with an offer and insights to help them succeed, that to me sounds like a fabulous recipe. The downside, obviously, is if it's mostly mimetic behavior, the sense that this is a quote-unquote hot company, and so I should rush over with a term sheet without even doing diligence, and unfortunately, we do see some of that. We've seen a couple of instances where references are shallow or diligence is shallow, and so I do think there will inevitably be some casualties along the way. And then the other danger, obviously, is the money-burning-a-hole-in-the-pocket problem. That if a company is overcapitalized, does it end up diluting the company's focus on what matters most?

AI assessment note: “It's a mixed blessing. In some sense, it's a good thing”

Q in the same space, say a healthcare opportunity, and you see that actually the incredibly challenging healthcare sales cycles mean that actually the company doesn't work out, and then all healthcare investments in your mind in the future completely hampered by the sales cycle. How do you keep a fresh mindset when you have a prior failure in the space, and they're open and plastic enough to accept new opportunities?

A That's hard. It's very, very hard, because you also want to learn from some of these things. Sometimes you learn appropriately about the risks of investing in healthcare, or maybe the challenge of being a Hardware business where you can't iterate as quickly as you can as with a software business, but if you redline a neighborhood, then that's also very dangerous, and you need to retain an element of naivete, a sort of childlike innocence and willingness to dream and imagine as you look to new opportunities. So the world is, especially since I'm trained as an actuary, I think about the world in probabilistic terms, and so try to think of those experiences as just shifting the probability distribution, but not making it binary. It's not extremes. It just slightly shifts your perception and your assessment of companies and opportunities.

AI assessment note: “try to think of those experiences as just shifting the probability distribution, but not making it binary”

Q in terms of being totally informed coming into the deal itself. In terms of the personal relationship building, I'm very much one for kind of the founder relationship and just ensuring the best kind of fit as partners for the long term. I guess my concern is with the compression of fundraising timelines. How do you think about building that relationship of trust and authenticity when they are so compressed?

A I think that's the biggest challenge. I think you're spot on. And one of the challenges is that in an online era, I don't know if you can truly replicate the trust you build through in-person meetings and in-person just getting to know somebody. Whether it's the subtleties of facial expressions that are lost, given the fidelity of online video, and obviously all the other body language that you miss entirely. I worry that trust level is shallower today. It'll come back, obviously, once COVID is over and we're able to meet people in person again. But that is a big concern. The best way we try to remedy that is to just be more thorough with Personal references probably than we have been in a pre-COVID era as a substitute for some of that trust building.

AI assessment note: “The best way we try to remedy that is to just be more thorough with Personal references”

Q in terms of being totally informed coming into the deal itself. In terms of the personal relationship building, I'm very much one for kind of the founder relationship and just ensuring the best kind of fit as partners for the long term. I guess my concern is with the compression of fundraising timelines. How do you think about building that relationship of trust and authenticity when they are so compressed?

A I think that's the biggest challenge. I think you're spot on. And one of the challenges is that in an online era, I don't know if you can truly replicate the trust you build through in-person meetings and in-person just getting to know somebody. Whether it's the subtleties of facial expressions that are lost, given the fidelity of online video, and obviously all the other body language that you miss entirely. I worry that trust level is shallower today. It'll come back, obviously, once COVID is over and we're able to meet people in person again. But that is a big concern. The best way we try to remedy that is to just be more thorough with Personal references probably than we have been in a pre-COVID era as a substitute for some of that trust building.

AI assessment note: “just be more thorough with Personal references probably than we have been”

Q a challenge for you? Because whenever Sequoia does a deal, there's such strong signaling around it. When it's announced that you do a Series A or a Series B, you're instantly going to have the next subsequent round investors jumping on that deal because Sequoia led that deal. Is that a challenge for you to manage that fundraising, that founder perspective around future fundraising, when suddenly they have that inbound?

A It is a bit of a challenge. I mean, what can you do about it? It is what it is at some level. But I think the biggest Drain is that it distracts the team from focusing on the business. I mean, in some sense, if you've just closed the financing, you've probably spent the last couple of weeks fundraising and having had to do a lot of fundraising when I was at PayPal. I can tell you every time we were done, I was so relieved because I just wanted to get back to actually building the company and managing my team and making progress. And so my fear is that as soon as you're through a fundraising process, you're yet again distracted and you're taking coffee meetings or you're speaking to too many other investors. And I'd rather have you focus on building the business. So that's a bit of a dilemma that is posed for these founders. But again, I don't know what one can really do about it.

AI assessment note: “It is a bit of a challenge. I mean, what can you do”

Q in the same space, say a healthcare opportunity, and you see that actually the incredibly challenging healthcare sales cycles mean that actually the company doesn't work out, and then all healthcare investments in your mind in the future completely hampered by the sales cycle. How do you keep a fresh mindset when you have a prior failure in the space, and they're open and plastic enough to accept new opportunities?

A That's hard. It's very, very hard, because you also want to learn from some of these things. Sometimes you learn appropriately about the risks of investing in healthcare, or maybe the challenge of being a Hardware business where you can't iterate as quickly as you can as with a software business, but if you redline a neighborhood, then that's also very dangerous, and you need to retain an element of naivete, a sort of childlike innocence and willingness to dream and imagine as you look to new opportunities. So the world is, especially since I'm trained as an actuary, I think about the world in probabilistic terms, and so try to think of those experiences as just shifting the probability distribution, but not making it binary. It's not extremes. It just slightly shifts your perception and your assessment of companies and opportunities.

AI assessment note: “think of those experiences as just shifting the probability distribution, but not making it binary”

Q I know it's a tough one to generalize on, but I often hear on the show that startups die of indigestion, not of starvation. I often kind of think on the contrary, actually, in many cases, but how do you think about that? And would you agree with that commonly held suggestion?

A I don't entirely agree with that suggestion, but I do often see this. So I think the biggest challenge for companies, for startups is finding product market fit. That's the first challenge. Many fail at really nailing that Problem. And that leads to starvation, obviously, if you don't actually find a good market for your product. Once you do, and the great companies, once they do, usually have too many choices, and it becomes a prioritization problem, and hence the indigestion comment. It's a little bit like being at a spectacular buffet, and you run the risk of overeating, because there's just so many choices. And this is also where companies then can get into trouble when they spread themselves too thin, and take on too much, and spend too much money. And it may be better for them to prioritize and sequence some of the decisions and products that they build.

AI assessment note: “I don't entirely agree with that suggestion, but I do often see this.”

Q hear, but you mentioned the accountability there in particular, and it's interesting, with accountability comes obviously extreme response And I spoke to Ravi before the show and actually before my show with him, he spoke about kind of quite an intense pressure that he actually felt before he made his first investment. How do you have that accountability, but also not kind of paralyze people with the fear of responsibility?

A It's a very tricky balance. And just like investing is about the balance between fear and greed in a partnership, you've got the same balance. You've got a dream with an entrepreneur and you have to be willing to take risk to be able to swing for the fences, to get these exceptional returns. Some of the returns we have It's a hundred or 200 XR initial investment, and with that comes the risk that sometimes it doesn't work out. And when I interviewed, Don actually told me one of his biggest fears for me was that I hadn't seen enough failure in my life by the time I joined Sequoia. Because even at Sequoia, 30, 35% of the investments that I've led for us have ended up losing us money. Sometimes we've lost all our money, and it takes enormous resilience to cope with losing money, to have led an investment and lost all of it. I remember the first time it happened at Sequoia, and I teared up in a partner meeting. I felt so ashamed. That an investment I recommended led to a complete loss, but you've got to accept that as part of the business. You know, you've got to learn from those experiences, but you have to be willing to go back out the next day and look for a new opportunity.

AI assessment note: “you've got to accept that as part of the business”

Q Snowflake, Sumo Logic. I mean, the pipeline moving forward is equally as exciting, to be honest. But, like, many gained hubris from such incredible positions and special opportunities. When I spoke to your partners, I was consistently told that at Sequoia we have the mindset, you're only as good as your next investment. Tell me more about this mindset, and how does one retain it when you have such success?

A Some of that comes down to who you recruit, the culture in the firm, how you provide feedback along the way. It's not something that we take for granted. Some of it stems from the way that Don set up the partnership originally, and he didn't call it Valentine Capital. At a time in the 19 seventies, almost every single professional services firm, whether it's an accounting firm, or law firm, or venture firm, had the names of the founders on the door. Don didn't. And it was a very deliberate decision. And it was no accident that he chose the name Sequoia. And for those listeners that aren't familiar with the tree, the Sequoia tree is native to California, and it's the longest lived tree, maybe in the world, but certainly in North America. It grows to be thousands of years old. And the reason Don chose that name is he wanted to build a partnership that would last and would outlive him. And it also was a signal for the sort of companies that he wanted to invest in. He wanted to invest in companies that would stand the test of time. And I think that part of what's been distinctive about Sequoia's history is There's so many of the companies we've backed over the decades that are still household names. Now, the reason this is important is when Don started to recruit people to join him at Sequoia, he was recruiting people to take over, people to succeed him, not people to work for him.…

AI assessment note: “Some of that comes down to who you recruit, the culture in the firm”

Q references to ingest and accept and really run with versus those to not? Often people may not reference particularly well coming out of a large organization if they are so inherently founder-oriented themselves, and they have such strong opinions and views of the world that made them a brilliant founder, but a terrible employee. I struggle with, like, how do I know whether to accept it versus reject the reference?

A So when I first joined Sequoia, Don Valentine was still in our office, and he took me aside probably in the first month, and he said, Rudolph, there's a two-by-two matrix of people we invest in. On the one axis, it's not exceptional and exceptional. On the other axis, it's easy to get along with and not easy to get along with. Your job today is to figure out in which quadrant we normally make money. It was a very nice way for him to remind me that founders are different. These are people who don't just accept the status quo. They want to challenge the status quo. These are people who, unlike most of us, most people confront a problem and they just accommodate or avoid. Founders embrace that challenge. They look at a problem and they want to take on the world and change it for the better, and so you want to lean into that characteristic. So you've got to be careful with the references. I mean, things around integrity are the things that are bright lines, obviously, but around people that want to shake things up, I love those kind of references. I treat those as a positive data point, not a negative data point.

AI assessment note: “I treat those as a positive data point, not a negative data point.”

Q And I mean, there's no better than scores to test yourself. I do want to ask you, because I spoke to Pat before the show, and he said in particular, with regards to your time at PayPal, you went from MBA intern to CFO, and he said specifically, ask Roloff, how did that happen, and what were your biggest takeaways from that PayPal experience?

A Firstly, I joined in 2000, in March of 2000, and it was a third offer to join the company. I'd met Elon in 1999. And he made me an offer to join, but I couldn't because I had a student visa and I didn't have a work permit in the US. Made him again later that year. Again, I couldn't leave. And then in March of 2000, I'd run out of money. Necessity being the mother of invention. So if people remember in 1998, there was emerging markets currency crisis and the rand had lost 40% of its value on the eve of my departure for America. And my savings had dried up because of the decrease in the value of the dollar value of my savings. And so out of necessity, I took the job at PayPal in March and I Worked part-time and studied part-time until I graduated in June as a way to make a bit of money and pay rent. Now, obviously, I love the company. I'd done research on the company, and I was really enamored with the potential for this virally growing payments network. But that's how I ended up at the company. And when I was there as an intern, I helped the company build this financial model. The company had raised a hundred million at 500 pre at the height of the bubble. We literally closed the financing right at the beginning of April, 2000, I think, 1516 days before the Nasdaq started to slide. So it was incredibly lucky of us to have done that. But we didn't have a great business model at t…

AI assessment note: “when I was there as an intern, I helped the company build this financial model”

Q had anything like that, and that I actually struggled with anything at all. And I think kind of the facade or kind of the presentation of oneself in public, and then actually what happens behind the scenes is always very different. In terms of like vulnerability, and do so if it's too personal, and you know, we can scrap it completely. How do you think about your own vulnerabilities today?

A It's a great question, Harry. And we spent time thinking about that as a team, by the way. So when we have Our get-togethers as an investor team, we start off with something called check-ins, which is something that Mike Vernal brought to us. It was something that the team had done at Facebook, and the idea of these check-ins is to just share a little bit about what's going on in your life, and it's both personal and work typically, and the expectation is that you really share what matters to you, and so people talk about illness in the family, relationship challenges they're having, people talk about their fears about their performance, companies of theirs that are struggling, and They might talk about how they haven't lit an investment in a while, and they're worried about whether they're in the best tributaries for interesting new deal flow. And we sit around and we have this conversation, and it's uncomfortable. It was very uncomfortable in the first few times we did it. But by showing that kind of vulnerability, you really build enormous trust. And comfortable as that is for us as a team, it means that we're all a lot more relatable, and we trust each other very differently. And so when we get to make investment decisions, I think we make them as impersonal as possible and make them as rational as possible for the sake of making good investment decisions. And people don't …

AI assessment note: “we spent time thinking about that as a team, by the way.”

Q hear, but you mentioned the accountability there in particular, and it's interesting, with accountability comes obviously extreme response And I spoke to Ravi before the show and actually before my show with him, he spoke about kind of quite an intense pressure that he actually felt before he made his first investment. How do you have that accountability, but also not kind of paralyze people with the fear of responsibility?

A It's a very tricky balance. And just like investing is about the balance between fear and greed in a partnership, you've got the same balance. You've got a dream with an entrepreneur and you have to be willing to take risk to be able to swing for the fences, to get these exceptional returns. Some of the returns we have It's a hundred or 200 XR initial investment, and with that comes the risk that sometimes it doesn't work out. And when I interviewed, Don actually told me one of his biggest fears for me was that I hadn't seen enough failure in my life by the time I joined Sequoia. Because even at Sequoia, 30, 35% of the investments that I've led for us have ended up losing us money. Sometimes we've lost all our money, and it takes enormous resilience to cope with losing money, to have led an investment and lost all of it. I remember the first time it happened at Sequoia, and I teared up in a partner meeting. I felt so ashamed. That an investment I recommended led to a complete loss, but you've got to accept that as part of the business. You know, you've got to learn from those experiences, but you have to be willing to go back out the next day and look for a new opportunity.

AI assessment note: “you've got to accept that as part of the business.”

Q a number of investments and being the timeframe that it's been, luckily none of them have gone under. Yes. I mean, it's only a matter of time. What advice would you give to me in terms of how to deal with it when the first one does happen and how to move on and be as productive and efficient as possible, given it's so cool to what we do actually?

A It's a great question. I've spent a lot of time thinking about this early in my career, because it is a business that tests you. As one of my partners used to say, the lemons drop early. So if anything, you're likely to see failure before success, which is another thing that eats at your self-confidence, but it is a game of confidence too. So the things I've tried to do, and it's not only for the investments you make that fail, but it's also the ones you said no to that end up succeeding. Both of those have valuable learning opportunities for you. And so you've got to think about the false positive and false negative decisions you make, and what can you learn from them? And I often try to go back to what it was at the time. Excellent. Anti. What did I miss? Because obviously, ex-post, you can select on the dependent variable and realize that it would have been a good investment. But what were the circumstances when I looked at it? What are the facts? What did I miss? Did I fail to recognize the market opportunity, the team, and their ability to iterate, the way in which the product would zig and zag? When I first met Twitter in 2007, it was a, smartphones didn't exist, and it was an SMS app. And your phone would buzz the whole time with people telling you that they're having cappuccino somewhere. I mean, it was nothing like what the service is today. And Maybe it was the right …

AI assessment note: “think about the false positive and false negative decisions you make, and what can you learn”