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The Tim Ferriss Show
#618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream
Aug 31, 2022
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02:12:54
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Quick takeaways
- Having a deep and authentic inspiration that drives us forward is crucial in finding purpose in our lives.
- Founder-problem fit is essential for successful entrepreneurship, as it lays the foundation for building exceptional companies.
- Using the pre-mortem technique helps strategize and maintain a long-term perspective, avoiding hubris or complacency.
- Sequoia Capital Fund's open-ended structure enables long-term support to entrepreneurs beyond the IPO stage.
- Being open to changing one's mind and learning from failures is valuable in the venture capital industry.
Deep dives
The Impact of Victor Frankl's Book
The book 'Man's Search for Meaning' by Victor Frankl had a significant impact on me. It highlighted the importance of identifying what truly motivates us and finding purpose in our lives. Frankl's personal experience in a concentration camp demonstrated the power of having a deep and authentic inspiration that drives us forward. It clarified the significance of focusing on what truly matters to us, rather than chasing superficial motivators like fame or fortune.
Founder Problem Fit
The concept of 'founder problem fit' has proven to be a critical factor in successful entrepreneurship. It involves founders authentically connecting with a problem that inspires them to take action. This genuine identification with a problem and a unique and compelling value proposition for solving it lays the foundation for building exceptional companies. The ability to persevere through challenges and maintain a relentless pursuit of their goals sets successful founders apart.
The Pre-Mortem Technique
The pre-mortem technique, where we envision potential challenges and failures before they happen, has been a valuable tool in our decision-making. By thoroughly considering all potential risks and roadblocks, we can better strategize and focus on the most important actions and outcomes. This exercise also helps us maintain a long-term perspective and avoid the pitfalls of hubris or complacency.
The Sequoia Capital Fund
The Sequoia Capital Fund was created to challenge the traditional venture capital model and enable a long-term focus. The fund is an open-ended structure that holds the shares of all future private funds managed by Sequoia. By rolling their capital into the Sequoia Capital Fund, our clients, which include foundations, endowments, and universities, benefit from continued exposure to Sequoia's enduring companies and the potential for long-term compounding. This structure ensures that we stay at the forefront of company formation and can provide ongoing support to entrepreneurs beyond the IPO stage.
Changing the Mindset of Investment
The podcast episode discusses the importance of being open to changing one's mind in the venture capital industry. The speaker shares personal experiences of initially saying no to investments, only to change their mind later and invest in those same companies. They talk about how changing one's mind takes effort and how their partners at Sequoia supported them through difficult times. The episode emphasizes the value of being rational and open to new information in the investment process.
Creating a Culture of Learning
The podcast explores the importance of creating a culture where learning from failures is prioritized. The speaker discusses how post-mortems on failed investments used to hinder the team's confidence, leading them to abandon the practice. Instead, they focused on praising team members who changed their minds and revisited previous investment decisions. The episode highlights the need for a supportive and collaborative environment to encourage learning from mistakes.
Professionalization of the Venture Capital Industry
The podcast touches on the professionalization of the venture capital industry over the years. It discusses how the industry has evolved from small teams of investors to larger organizations that offer a range of services to portfolio companies. The episode mentions the expansion of team sizes, the inclusion of diverse perspectives, and the development of various specialized functions, such as marketing, data science, and talent services.
Taking a Chance on Silicon Valley
The podcast episode discusses the speaker's decision to move to Silicon Valley in the late 90s due to the high number of opportunities and companies being formed. Despite initially considering a more methodical career path, the speaker was drawn to the potential of business school and joining a startup in the tech industry. They ultimately decided to take a chance on a speculative startup offer from Elon Musk and joined PayPal, intrigued by the combination of financial services and technology. The speaker acknowledges the challenges and uncertainties faced during the early years, including a major market correction, competition from established players, and fraud challenges. However, they emphasize the importance of perseverance, teamwork, and the ability to learn from failures as crucial factors in their success.
The Role of Dreaming and Imagination in Entrepreneurship
The episode highlights the significance of dreaming and imagination in entrepreneurship. The speaker encourages individuals to take chances and pursue interesting opportunities, even if they have a low probability of success. They stress the importance of not getting stuck in safe, conservative decisions, but rather embracing the spirit of dreaming and imagining what the future could hold. The speaker also reflects on the value of revisiting assumptions and maintaining a balance between individualism and teamwork. They share personal experiences of investments that went to zero and missed opportunities, emphasizing the need for imagination, curiosity, and a willingness to take calculated risks in order to thrive in the startup world.
1.
Introduction
2min
2.
8sleep Pod Cover Review
3min
3.
The Tim Ferriss Show - Rollif Botha
2min
4.
How Do You Pronounce Your Full Name Properly?
2min
5.
What Was the Notepad Used For?
2min
6.
Do You Still Use Reminders?
2min
7.
The Headline of Your Grandfather's Life
2min
8.
What I Love About Actuarial Science
2min
9.
Is UCT the University of Cape Town?
2min
10.
Is It a Good Career Choice?
2min
11.
Don Valentin - The Father of Silicon Valley
2min
12.
What Is the Founder Prototype?
2min
13.
Sequoia Founders - What's the Key Starting Condition?
3min
14.
What Do You Learned From Don Valentin?
2min
15.
The Value of Pre-Mortems and Pre-Perades
2min
16.
Sequoia - The Longevity
4min
17.
Earn 2% APY With Wealthfront Cash Account
5min
18.
Sequoia Founders - What's Your Purpose?
3min
19.
What Really Motivates You?
4min
20.
The Sukwak Apple Fund - What Did You Do?
2min
21.
The Structure of the Koya Capital Fund
3min
22.
Sequoia Capital Fund - What Is the Fee Structure?
3min
23.
The Overwhelming Majority of the Time With Your Portfolio Companies
3min
24.
Do You Still Feel That Was a Wrong Decision?
3min
25.
Scale of Ambition
2min
26.
Secondaries Are So Important
2min
27.
What Are Secondary Transactions?
2min
28.
Building Long Term Relationships With Founders
2min
29.
How Did You Grow Up Speaking English at Home?
4min
30.
Did You Go From Top 10 to Number One?
2min
31.
How Did Your Kids End Up Raising South African Silkworms?
2min
32.
TED Talk - What Would the Runner Up Be?
3min
33.
Rugby - A Great Way to Build a Team in Sequoia
2min
34.
What Are Your Current Physical Routines?
2min
35.
What Are Crucible Moments?
4min
36.
What Is an Engagement Manager?
3min
37.
You Gave It a Shot and Got Rejected?
2min
38.
I Loved the Business Model
2min
39.
How Did You Deal With the Fraud Challenges?
2min
40.
Why Never Thought About Quitting?
2min
41.
The Sins of Commission and the Sins of Omission
4min
42.
Are You a Curmudgeon in the Venture Business?
2min
43.
Changing Your Mind About Venture Capital
4min
44.
Change Your Mind, Mentors
3min
45.
Is There a Component of It That's Inherent?
4min
46.
The Mistakes of the Past
2min
47.
Is There a Difference Between a Venture Firm and a Private Equity Firm?
2min
48.
Is the Professionalization Really Working?
4min
49.
Day to Dream, Take a Chance
2min
50.
The Day to Dream, Get Over It and Go Do It
5min
51.
Shopify - The Ultimate Game Changer
4min
Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream | Brought to you by Wealthfront's high-yield savings account, Eight Sleep’s Pod Cover sleeping solution for dynamic cooling and heating, and Shopify global commerce platform providing tools to start, grow, market, and manage a retail business. More on all three below.
Roelof Botha (@roelofbotha) has spent over 20 years building companies in Silicon Valley. He began within the walls of nascent PayPal, which he joined in March of 2000 while completing his MBA at Stanford. He became CFO in 2001 and led the company through both its IPO in early 2002 and subsequent acquisition by eBay. Roelof joined Sequoia Capital in 2003 to help founders build enduring businesses. He leads the US/Europe business as Managing Partner and serves as Senior Steward of the global Sequoia Partnership. Roelof is a director of 23andMe, Bird, Ethos, Evernote, Inside.com, Landis, mmhmm, MongoDB, Natera, Pendulum Therapeutics, Square, and Unity Technologies. Previously, he was a director of companies that include YouTube, Tumblr, Xoom, Assurex, and Eventbrite. He also led Sequoia’s investment in Instagram.
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[07:25] What’s the right way to say Roelof Botha?
[08:14] 10 to the ninth: motivation in the margins of a Monday meeting notebook.
[11:16] The Ulysses Pact.
[13:38] Who was Roelof’s grandfather?
[15:47] What is actuarial science, and why did Roelof choose it as his major?
[20:05] Advice for young, aspiring entrepreneurs.
[21:44] Don Valentine and his 2×2 matrix.
[24:59] The founder-problem fit.
[27:33] Don Valentine’s succinctness writ green.
[29:46] Pre-mortems and pre-parades.
[32:40] Why Sequoia is aptly named.
[36:38] Keeping the team small can be such a big deal.
[41:34] Book recommendations.
[44:07] Finding balance in the relentless pursuit.
[46:37] What it was like for Roelof to finally achieve his “10 to the ninth.”
[47:40] The Sequoia Capital Fund.
[49:40] How Sequoia’s fee structure maximizes value for clients and keeps the company strong.
[58:15] Failure? It all depends on the scale of your ambition.
[1:01:37] How Roelof guides founders who wants to sell too soon and for too little.
[1:06:48] Founders Roelof considers influential.
[1:09:39] Growing up Afrikaner.
[1:12:43] How Roelof set his sights on graduating school in first place.
[1:14:24] Silkworms.
[1:16:40] What Roelof’s TED Talk about a secondary interest would entail.
[1:18:05] Rugby.
[1:21:26] Roelof’s physical routines for staying in shape.
[1:24:17] Crucible moments.
[1:27:18] How Roelof wound up in the world of Silicon Valley startups.
[1:34:01] Early days (and challenges) at PayPal.
[1:38:05] Memorable failures and the lessons they imparted.
[1:44:32] Coping with VC’s high rate of failure as someone who hates to lose.
[1:48:01] In case of doldrums, please present homemade pesto.
[1:49:15] What Peter Thiel taught Roelof about changing his mind.
[1:56:01] How professionalization in VC has developed over time.
[2:02:25] Roelof’s billboard.
[2:04:58] Parting thoughts.
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