The other

aspect, you know, let's listeners think this is just about reallocating fees or whatnot. It's that you had a lot of work to do with those companies because you still had those investments. It would have been easy to say, yeah, these are zeros. We're just going to, you know, do whatever. But you roll up your sleeves and say, no, we're we're going to turn these into returning capital at a minimum.

So Mike Moritz is a Brit, strategic, man of few words, thinks 14 step ahead. I'm a gregarious Italian. And I'll tell you, it hasn't always been easy. Mike would say the same thing. But we made it work for 20 years. And I'll tell you, during those times, we thought exactly alike. You can burn us cigarettes in our arm and we're not going to flinch. We're going to bring these funds home. And it was amazing how two different cats with two different backgrounds, with two different styles, who got along a lot and really argued some, as you would imagine, which is terrific because that means we pour two different views on issues. That is a strength. During those times, there was no question what we were going to do. I don't think we ever had the conversation. I don't think we even said, should we do this? I just think we had to. That's

a special thing to be able to get in that lockstep with another person. Do you feel like that's sort of that rare thing that happens once or twice in a person's life? And how do you attribute Sequoia's success to you two being in lockstep like that?

On that issue? Look, it happens sports teams. It happens when people go to war. They never again feel, why do people keep on going to Afghanistan? The reason they do that, they miss that sense of camaraderie. I don't know if you study situations like that. That was wartime. Make no mistake. It wasn't our lives. I don't for a second, I love and respect the people that serve our country. The things they do are far more important, far more courageous than what Mike and I did. I want to make that crystal clear. We should be grateful to them. But it was a similar sense of camaraderie. It was your business lives. No, nothing to do with business lives. It was the fact each one of ourselves in our body could not do that. Nothing to do, we got to save our career, our money, none of that. It had to do with being a badass and doing what nobody else would do. That's what it has to do with. Do the right thing when it's inconvenient

to you. Yeah. Yeah, that's because, yeah, it would have been so many other firms did throw in the towel, get them all again. Their business lives were fine. We're

talking about this era right around Google's founding and we're talking about your partner, Michael. There's a quote that I've heard you mention in the past, right? It's something along the lines of Michael telling you a few months after making the Google investment, we've never paid so much for so little. I

think that quote is what John Doerr told Mike Moritz. We didn't know what Google did for a long time. We knew we had smart founders. We knew we were aimed at the internet and we just knew we had to be patient. Sometimes patience sit on your hands. You know, I had a similar but a smaller story in Meraki. Smart founders couldn't figure out which way to go. And if you talk to them, what did Sequoia do most? They left us alone and let us figure it out. We hear that from so many founders on this show that have

partnered with you guys, that that's one of the biggest differentiating factors is let us, you know, we're in the driver's seat. Let us figure it out. If it's creation time,

the founders create. Now, there could be execution time where they don't execute as well, in which case you help them. But the thing I tell founders, you get to do product market, product market fit. We can't help you there. If you got product market fit, we can help you with everything else. And so when founders are meandering their way early on and focusing on something that's going to work later on, you just let them create. They're the creators.

I think this is actually a perfect transition to want to make sure we dive deep into what you and presumably you and Michael created here at Sequoia in your time and stewardship here, which is, you know, Sequoia was, I think the phrase that Don at least used to use was you invested in companies that were a bicycle ride away from headquarters here. The decision to expand, not just geographically, but also product-wise in terms of investment products you offer.

How did that initiative happen? So the first thing, I don't like the notion of you and Michael. It is we're all standing on each other's shoulders. Michael stood on Don's shoulders. I'm standing on Mike's shoulders and Jim gets his shoulder and rule of shoulders. So it is really we, it is really a we effort. And the other thing, when confused, there's only one curve I look at for the decisions I have to make. It's the exponential curve of accelerated change. It's not linear. It increases through time. Which means, if you believe in that, which means that doing nothing is the worst thing you can do. It's the riskiest thing you can do. And then we also know that in the early days of the curve, you over-fore because you're a linear thinker. In the later days of the curve, when the curve is steep, you under-forecast. So I'm not that smart a person, but I know these simple principles. And I know that doing, you know, do stuff, take the shot, and we'll talk more about what that means. But turn the clock back to 2003, 2004. Mike and I are both immigrants. There's other immigrants here. Founders we look at are immigrants, more and more founders. And so I started wondering what happens if the world becomes globalized? They're going to go home. And I thought of NEA's offices with posters from India companies in India and the US-India founder coming here. And we don't have those posters. I thought, oh my God, defense. But defense alone should make you do things. And then you think of the world that's more globalized. The world is flat, blah, blah, blah. And I thought maybe we should go there. I learned that other firms were doing flyover, going there and flying and flying and making investments. Dropping the brand. Yeah, or making investment, dual brand. And so a few brain cells said, if we're going to do something, where are the large and growing economies? That brought us to China and India. As I say, it didn't bring us to Vietnam because it grows, but it's small. It didn't bring us to Europe because it's big, but not growing. So those were the two geos. So we started making trips and trying to meet teams, trying to figure out how to get there. Investing teams or founding teams? Investing, founding investing team. And I'm very mindful of a line from an old sitcom, from a scene. The sitcom is Hogan's Heroes. Oh, yeah. You know Hogan's Heroes? Oh, yeah. So Colonel Klink is the commander of a POW camp. And he's a putz, obviously, in the show. And Colonel Hogan is the American who's very smart. And Hogan and Klink have a safe. And if you turn the handle one way, you open a safe, and there's money. If you turn the handle the other way, it blows. It blows up. And Hogan looks at Klink and says, Klink, which way? And Klink goes left. And Hogan pulls it right, and it opens. And Klink goes, how did you know? And Hogan says, I wasn't sure whether I'd get it right, but I was sure that you would get it wrong. And believe it or not, that scene is the scene that caused me to say, I know for sure Mike Moritz and I, if we make investments in China, we'll get it wrong. We didn't know if the team we found would get it right, but we thought that was the least riskiest thing to do. And so we're shopping for teams and we came across, it's funny, I made 20 trips to China and then the team were introduced, what was introduced to us by a founder of Billpoint, which was a predecessor to PayPal, sold to eBay. She introduced us to two Chinese nationals that grew up in China, had gone to school here, which is exactly where they wanted, had moved back to China, had served on the board of the same company, Focus Media. One was an investor at DFJ. One was a founder, a co-founder of a company called Ctrip. We met him on a Tuesday. We met him again on a Thursday. And on a Friday morning, in a conference room at Sequoia, we did a handshake deal. No contract, no anything. They were going to another venture firm in the afternoon. They canceled that meeting. By Monday morning, Mike Moritz, God bless him, had a PPM, private placement, for Sequoia China one and gave it to them with a notion that you want to delight your partners. When people do a deal, after the deal's done, you always find out it wasn't as good as you thought. We love doing the opposite. We want people to be blown away. Holy cow. Wow. Sequoia culture. Of course, the second person there was Neil Shadden. It was Neil Shadden. There were two founders. One of them was Neil Shadden. And so we went fundraising. We still didn't have a signed contract. And we raised $160 million fund. We were ridiculed by limited partners. We held the annual meeting in Beijing in a brand new hotel where the heat broke. Everybody was freezing. We were slightly abused. That has turned out to be a spectacular fund. And the rest

is history. Yeah. What are some of the companies that Sequoia China has invested in?

Pindodo, Alibaba, Meituan, ByteDance, dot, dot, dot. We've had somewhere near 50, 60 IPOs. And so I had the idea on a one-page sheet, but if I tell you that, that would leave you with the wrong impression. At critical times where we needed, and this is kind of funny, when we needed operational's move, it was Mike that had the insight that we needed to make those moves. It was Mike that made the move. So I've never told Mike this. I was incredibly grateful that Mr. Intuitive, as I had him slotted in my brain, became operational at key times, even better than I was, if truth be told. And so it wasn't me, it wasn't Mike, it was also Koi, because as we were doing this, other people were carrying the load in America. You know? Right. And so it was a team it was truly a team effort so

while you were and you and mike were sort of championing hey hey we should be doing this because we think that the rest of the world's going to hit this inflection point or at least these areas did you have this this is sort of a bezosism that's more recent but was there this sort of disagree and commit mentality for anybody who was here that knew that they had to hold down the fort even if they weren't pounding the table like you were? How did that go?

Look, for many years, there was sniping in the troops. Why are we doing this? Why are we wasting time? Because keep in mind that this is not about money. No one's making any more money because we all contribute the same amount. China contributes. We contribute. You know, it is not

incremental money. The mid-2000s when, you know, Tencent and Alibaba exist. But, like, it's not clear that they're going to be, that China's going to be what it is.

It's about building a dominant, world-class, global powerhouse that at the same time can act very local because the foundation of our business is seeds. If you lose seed and venture, you become, as I say, private equity firm because later on, all you have to compete is on price. And so how do you at the same time go global while not losing an inch on the local side? And some of the best seeds were made during those days. And so we somehow managed to pull that off by isolating. Well, the thing, I initially became the global person. Nobody else had to do that. Somewhere along the line, Mike and I reverse roles where he was Mr. International. I spent more time in the US. And in 2012, when Mike stepped down due to health reasons, we thought about, should three of us run it? And we made the decision that I should run it, but we should have second in command. And the logical one was someone from the U.S., Jim Getz at that time, and Neil Shen. Yeah.

That

makes an incredible

story. Thank you for sharing all this. At the same time that you're expanding geographically, you're also expanding the suite of funds in each geography, right? In terms of adding the growth funds, then ultimately the global growth fund. How did you think about that decision and doing that as separate funds versus one fund together? And obviously, the company needs were evolving with Stay Private Longer and everything. So the most

important thing, as I said, is to be the first $100,000 to help that founder. So whatever we did, we understood that is the strategic part of the house. We've always done seeds, but we thought both for clarity of thought, marketing, we should do a C fund because we're starting to have a lot of C programs, such as a scout fund and a whole bunch of others we don't really talk about. Then the world continued to change. And while it's never been cheaper to start a company, and by the way, I think the world changed with Netscape. At least it had a major change, which meant that we went from being deep technology investors, where we really only invested in technology pre-Netscape, to being application layer investing across many market segments, travel, shopping, iPhone, internet being part of the reasons. So a thing started to happen. It's never been cheaper to start a company, i.e. Seed Investing. When you're doing deep tech investing, there's no need for seeds. It takes you two years, a little bit of product. The Airbnb seed was 600,000, I think. The Dropbox was 1.2 million. But that's because an app can be built in a month. At the same time though, it's never been more expensive to launch a company. Why? You've got businesses that have the words you in that economics, the O2O, online to offline, Uber, DoorDash, Instacart, and so on. And then if you don't have those businesses, turn the clock back 20 years ago, we used to launch the US, let's say in B2B, we used to be profitable. Five years later, we we used to go to Europe. You can't do that anymore because if you wait, you have to, but you can't do that. You launch the US. Six months later, you launch Europe because if you wait, by the time you get to Europe, there'll be 20 competitors, half of which want to come to the US. So you've got to run fast, which means you have to spend a lot of money, which means it's bigger and bigger rounds. So we were seed and venture when we understood the companies needed more money. And keep in mind, we're the folks carrying the suitcases. We're there from day one. We're carrying the luggage. And we thought to ourselves, yes, we want partners, but why are we letting other people come in and take terms to our companies? We were vulnerable and weak. So we got deeper into the growth business. We vertically integrated. And then when rounds became even larger, and we have this incredible portfolio today of maybe five, six, 700 companies, we launched a global growth. The global growth is a global vehicle to double and triple down in the best company in the Sequoia portfolio. And yes, we partnered with other firms and so on, but we're able to enjoy the full ride. I view those as being more tactical product versus C being more strategic. That's the most important one. And then we also had a hedge fund because we realized that it's way tougher to go from zero to a hundred million in revenues from zero to five billion in market cap than from five to 25. And

so- We talked about this a lot in part one of this, our Sequoia history. The vast majority of the magnitude of gains of returns happen late post, post IPO. And

so we learned to distribute shares to our clients carefully, not the week after the IPO or the week after the lockup. We learned that a public investment vehicle would help us many ways, including how to look at these companies retrospectively. If you're in a hedge fund, you look back to youth and you explain how youth can grow up. Most of us that invest in C&A Venture look up. We look from zero to something. The hedge fund guys look from a lot to something. So we were able to have deeper conversations about companies and what companies could become. Dare to dream of what companies could become. And so we found that to be quite useful. And then we launched the heritage business, which is to make it easy. It's a family office, endowment style. And the reason for that, we have founders and friends at Sequoia who had done quite well. And wouldn't that be a terrific way to maintain a relationship for another 30 years? And so that's why we did it. These were just to try to build a global powerhouse, which is what we want, where we can serve founders from idea to IPO and beyond to personal needs. I'll go so far beyond when they have the personal needs so we can have these relationships that will last a lifetime. We all take an equal percentage of our profits. The venture group is walnuts. China is peanuts. The Heritage Fund is cashews. We blend them and then we redistribute them so that we all get a share of mixed nuts, but no one gets more nuts. It's just different kind of nuts that financially intertwine us. I see. But nobody makes more money. But we all have bought in that we're part of this team, this global team, where we help one another while doing the very right things for the founders. Because it is all about the founders. Founders come first, by far. Limited partners, most of ours are nonprofits, come second. And we come third. And it's not because we're altruistic, because if we achieve that, then it's the way to run the business for the next 100 years.

An interesting takeaway here is as it became more and more expensive to get to your IPO or to get to be a scale global company, because you have to do things exactly like you're talking about, launch new geos faster, grow more quickly to get ahead of your competition in these winner-take markets. You know, a major takeaway is a lot of firms took the specialization route, where they say, we're purely Series A, and they stay smaller, or we're dedicated seed, we're this new asset class, we're pre-seed, we're growth, or, you know, these large public equity institutions come private and just stay growth capital. But what Sequoia said was, look, we're just going to grow with the company the entire life cycle and take a very different approach rather than specialization, exactly what you're saying, to follow them and have the right products for them along their entire growth curve. It's just a very different approach than a lot of people took. And certainly there are other people doing something similar today, but it feels five, 10 years later than when you did it at Sequoia. I'll

make two points. The first thing is I will add, I agree with everything you said and to get there as early as possible to be the first dollar. Second, if we said we're only an A firm, what happens when, and no company has a linear trajectory. Remember your Google question. They all have a little bump. What happens when that company is a little bump and you have to invest in that questionable round? If you're an only, quote, A firm or only C firm and you own 20%, where's your capital to show to the new investor that you believe? And so because it's never linear, because it's never slammed down from day one, by being there, you can support the companies at times where there are darker clouds in the sky, which helps attract other investors to then get to the sunny skies.

This is the perfect time, since I know we're running out of time, to switch over to Playbook. I think there are two questions I really want to ask you in Playbook for listeners and for you, Doug. Playbook is we talk about, let's abstract out some of the themes from this conversation to what's applicable to entrepreneurs running their businesses, to us as we think about partnering with companies. The first one is, it's just struck us in doing part one of the Sequoia history. What actually like at the core makes Sequoia successful is some pretty simple things. It's focus on the market, founders come first, listen to what entrepreneurs tell you, you know, don't run your mouth, be a business partner, not an investor. How have you guys and you thought about staying disciplined on those core things as you've grown so much? I imagine it takes a lot of active focus and effort. Yes,

there are many answers. I think our little secret is our culture. And when I was young in business, I used to hear CEOs talk about culture. I used to thought it was a talking point handed to the CEO by marketing. Nothing could be more incorrect. And the culture at Sequoia, if I can spend 10 seconds on it, is finding these quirky individuals who've had shock to their systems, who have something to prove, who, as I say, were not the quarterback of the football team in high school, and you know what I mean by that. They were the shunned ones, if anything. Maybe a couple IQ points high or something to prove. Maybe something happened in the family. Put them in an environment of teamwork and trust. We're relatively flat at Sequoia, so we've taken comp off the table. Letting them know it's okay to make mistakes instilling a culture that we're looking for the truth, not your truth, not my truth, the truth in the middle of the table that helps the founder. A number of times I said in a partner's meeting after proclaiming a point, I hear one of our young partners making a point. I say, hold on a second. I didn't think of that. His point is better than my point. I changed my mind. And so, and applying that to everything that we do and realizing that we've done nothing, realizing our worst enemy is the success we had, realizing that by virtue of a market position, not because people hate us, because who else are you going to attack? Not the number 14 firm, number number three firm. It's just more fun to attack the number one firm. It's what I would do. It's just more of a sport.

Nolan Bushnell told us sometimes, or no, it was Trip Hawkins, sometimes you don't want to be number one because then there's people sniping at you from behind. I'm perfectly happy being two.

I actually argue that Don used to say that. Don Valenti said, let's let somebody else be one. It's better to be two. And so how we do that is making sure we have a mindset that we've done nothing. We have a mindset that we are here from going out of business. If you're Amazon, you've got customers, you've got billions, you've got relationship. If you're Sequoia, you have 20 chickens walking in the back. That's all you have. 20 chickens and a reputation. So I tell people, take the darn shot. Everybody at Sequoia would know we'd rather go out of business in a week than in five years, for sure. And so it's just have the mindset of take no prisoner, do the right thing when it's painful to do so, help the founders, recognize when there's no product market. It's not always helped. It sounds so wonderful. At some point, there's no product market fit. The market has spoken 19 times, then you've got to have a different conversation with the founders. Or five VPs come see you, and they say it's either him or her or all of us. Those are tough times, but that happens once out of 20 times. Some firms do the calculus that says, oh, we don't want to ruin a reputation, let bygones be bygones. We can't do that. It just goes against, remember the 1999 thing? It goes against every bone in our body. You have to help as much as you can.

It's interesting that you talk about how it's a negative, all the previous success. And I've heard you talk before about how you pulled down all the posters on the walls here of all these IPOs that you've had. Look at this room. Barron. No posters in this room. It's very true. It's still very lovely. It is lovely. Some would argue that the way that the venture model works, a firm like Sequoia has massive benefit from this momentum of you've made great investments, which then in hindsight make you sort of look like a kingmaker. And so then you get all the best deal flow now because everybody wants to be a part of this aura that you've created. Do you think there's truth to that? Or do you think that's total? There's a modicum

truth to that, but success is a drug, and you can't fall prey to that. We've had investors here that have been successful, made some money, and didn't work as hard. We have 10 tenants at Sequoia. Number one is performance. The other nine are important, but you're missing one. The other nine don't matter. You could have clarity of thought. You could have teamwork, but you're not performing. You're not here. And I tell people, we are not a family. Make no mistake. We are a team. If you don't like teams, we are a show, a production. Maybe the investors are the actors, but you know, the actors don't look so good without a script, without the lighting person, without a director. And so everybody matters as a team, especially the people that make us lunch and breakfast. They are the ones we have to treat with the most kind of dignity. They are our team members. They are the ones that make this place run. And that's how Sequoia

works internally.