Invest Like the Best with Patrick O'Shaughnessy

Pat Grady - Relentless Application of Force - [Invest Like the Best, EP.378]

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Jun 18, 2024

Pat Grady, a seasoned growth investor at Sequoia Capital, shares insights from his extensive portfolio, including giants like Snowflake and Zoom. He discusses the unique culture of 'healthy peer pressure' at Sequoia, emphasizing relationship-building with founders. Grady also highlights the importance of clarity over perfection in investment evaluation, using vivid examples. The conversation delves into the role of AI in transforming investing and ends with reflections on mentorship, kindness, and the pursuit of excellence in business.

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INSIGHT

Sequoia's Stewardship

Sequoia Capital's culture of stewardship and internal pressure drives performance.
This stems from Don Valentine's decision to hand over the firm without demanding a buyout, fostering a sense of responsibility.

ADVICE

Self-Imposed Pressure and Flattening Hierarchies

Create personal long-term plans and annual OKRs that cascade down to daily tasks for self-imposed pressure.
Flatten hierarchies to ensure that expertise, not tenure, drives investment conversations.

ANECDOTE

Early Career Pressure

Pat Grady, initially the youngest person at Sequoia, felt immense pressure to perform.
He commuted daily, spending the drive home reflecting on his perceived shortcomings.

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My guest today is Pat Grady, a longtime growth investor at Sequoia and one of the firms senior leaders. Pat has been a part of a long list of legendary investments, ranging from Snowflake, Zoom, ServiceNow, Qualtrics, Okta, Hubspot, Notion, and OpenAI, among many others. There aren't many investors who reference as well at Pat, both inside and outside of his firm. We talk about investing, building an investing firm, and building enduring companies. Please enjoy this great conversation with Pat Grady.

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

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

Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.

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Show Notes:

(00:00:00) Welcome to Invest Like the Best

(00:05:48) Doug Leone's Leadership and Changes

(00:06:54) Creating Internal Pressure and Structure

(00:10:46) Sequoia's Team Values and Family Influence

(00:13:40) Assessing Founders and Investments

(00:20:28) Winning Competitive Investments

(00:24:45) Pat’s Early Career at Sequoia

(00:29:38) Memo Writing and Investment Criteria

(00:35:20) Evaluating Companies Through Three Business Criteria

(00:40:15) Building Sustainable Competitive Advantage

(00:47:48) Turning Bad Numbers into Good Investments

(00:51:20) The AI Frontier: Market and People

(01:01:13) Harvey: The AI Legal Assistant

(01:05:33) Sequoia's Platform Strategy

(01:17:16) The Importance of Teamwork and Performance

(01:26:07) Legendary Potential: Relentless Application of Force

(01:28:37) The Kindest Thing Anyone Has Ever Done for Pat