Common Investor Pitfalls and Failure Modes

My guest this week is Doug Leone. Doug led one of the world’s most successful venture firms, Sequoia, for over 25 years after he was given responsibility for the firm by its founder, Don Valentine, in 1996. Alongside Mike Moritz, the pair managed its expansion from a single $150m early-stage fund into an $85 billion global powerhouse. It was a privilege to sit down with Doug and learn from him. We talk about his tough start at Sequoia, get into the technicalities of great go-to-market motions, and survey his advice for other investors in the industry. A key theme that will stick with me from this conversation is Doug’s insistence on keeping things simple and clear. Please enjoy my great conversation with Doug Leone.

For the full show notes, transcript, and links to mentioned content, check out the episode page here.

-----

This episode is brought to you by Tegus, the modern research platform for leading investors. Whether it’s quantitative analysis, company disclosures, management presentations, earnings calls - Tegus has tools for every step of your investment research. They even have over 4000 fully driveable financial models. Tegus’ maniacal focus on quality, as well as its depth, breadth and recency of content makes it the one-stop, end-to-end research platform for investors. Move faster, gather deep research to build conviction and surface high-quality, alpha-driving insights to find your differentiated edge with Tegus. As a listener, you can take the Tegus platform for a free test drive by visiting tegus.co/patrick.

-----

Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes. 

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

Follow us on Twitter: @patrick_oshag | @JoinColossus

Show Notes

[00:03:21] - [First question] - What Don Valentine’s heart was like [00:06:30] - The most productive and unproductive parts of Don’s toughness 

[00:09:01] - Being the opposite of insufferable and how it was different when he was younger

[00:10:55] - Why it’s so important to understand someone’s core motivations

[00:14:18] - Questions or topics he returns to when getting to know people 

[00:15:31] - How much time he believes it can take to really get to know someone  

[00:20:37] - What venture looks like to him today relative to his prior career

[00:23:51] - His style of approaching emerging technology markets like AI as an investor  

[00:26:37] - Whether or not he’d go into venture today if he was in his late 20s 

[00:28:30] - Commonalities between the very best at going to market effectively 

[00:31:11] - The key components of great product positioning  

[00:32:10] - Helping companies circumnavigate mediocre positioning 

[00:33:25] - Generating demand and leads and doing it well 

[00:37:15] - How interacting with companies early on has changed over the ears

[00:46:14] - Sussing out the killer gene in somebody 

[00:47:25] - What high school was like for him when he first came to the US 

[00:49:04] - How successful people can instill the lessons learned from hardship into their children 

[00:50:45] - The most common failure modes he’s seen for investors 

[00:55:21] - The early 2000s clawback at Sequoia and what navigating that period was like 

[00:59:06] - What he’s learned about picking the right LPs and partnering with them

[01:00:40] - The most interesting question an LP has ever asked him 

[01:02:18] - Making sure that performance is on everyone’s minds all the time 

[01:04:04] - What the components of a fantastic investment memo are

[01:05:00] - Which dinner companions he’d pick to educate a newly successful founder

[01:05:29] - What first popped out at him as black magic when he started investing

[01:07:59] - The kindest thing anyone has ever done for him