The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: The Sequoia Investment Process | Investing Lessons from Doug Leone, Roelof Botha & Alfred Lin | Sequoia's Framework for Analysing Founders | The True Benefit of Having Sequoia on a Cap Table & Sequoia's Biggest Threat with Pat Grady

Jul 8, 2024

Pat Grady, Head of Sequoia's growth investing practice, has shaped the venture landscape with his investments in influential companies like HubSpot and Zoom. He discusses the evolution of Sequoia's investment process, emphasizing transparency in decision-making. Grady shares his framework for assessing founders, highlighting the importance of founder market fit and team dynamics. He reflects on learning from successes and failures, and the unique advantages Sequoia brings to startups, including strategic mentorship and talent acquisition.

01:08:59

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Episode guests

Pat Grady

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Quick takeaways

Founder market fit and capabilities are pivotal for a company's success.

Effective decision-making during sourcing and picking drives investment success.

Investors like Sequoia can significantly benefit founders beyond just providing capital.

Deep dives

Founder Market Fit and Company Growth

Founder market fit and the founder's capabilities play crucial roles in a company's success. Understanding market opportunities and having a founder who can exploit them significantly impact a company's potential growth. Market size sets limits, while the founder determines the company's actual growth potential.

Understanding People, Markets, and Founders

01:27

Survivorship Bias in Investing

01:23

Embrace an apprenticeship model for investing

01:03

Experimentation and Focus

01:20

Intro

4min

Reflections on Upbringing and Success

6min

Navigating Brand Perception: The Pain of Self-Inflicted Wounds

2min

Learning from Investment Successes and Failures

5min

The Founder's Edge: Balancing Market and Capability

18min

Doug Leone: A Unique Approach to Venture Capital

13min

Navigating Startup Sales and Investment Decisions

14min

Lessons from the Investment Trenches

6min

A Heartfelt Farewell and Innovations in Venture Capital

3min

Pat Grady is one of the most successful growth investors of the last decade. As the Head of Sequoia's growth investing practice, Pat has invested in companies with a combined market cap exceeding $250BN. Among Pat's immense portfolio is Hubspot, Snowflake, ServiceNow, Okta, Amplitude, Zoom and Qualtrics. Pat is also one of the best acquirers of talent in venture hiring Andrew Reed, Matt Huang, Julien Bek.

In Today's Episode with Pat Grady We Discuss:

1. The Sequoia Investment Process:

What is the Sequoia investment process today? How has it changed over time?
What could be improved about the process? Where is it weak?
What is the biggest strength of the process?
How do Sequoia remove politics from the investment decision-making process?
Are the best deals "contrarian"? What does Pat mean when he says you do not "get extra points for being contrarian and right"?

2. What Sequoia Look for When Investing:

What is Pat's framework for assessing founders? How does it differ when investing early vs late?
Team, traction, TAM, how does Pat rank the three when investing?
What have been Pat's biggest lessons on market sizing? Does Pat take market timing risk?
How much weight does Pat place on "traction" when investing? How sustainable is PMF?

3. The Three Core Pillars of Venture:

Sourcing: What does Pat rank Sequoia for sourcing? Who is the best at sourcing in the firm?
Selecting: How does Pat rank Sequoia at picking? How has it changed over time? What could Sequoia do to improve their picking ability?
Servicing: What does Pat give Sequoia for their "value add"? To what extent does Pat truly believe that venture investors do add value?

4. Pat Grady: AMA:

Pat has hired some of the best in the next generation of venture investors; what are his biggest lessons in what he looks for when hiring investing talent?
What is his single biggest takeaway from working with Alfred Lin, Roelof Botha and Doug Leone?
What are his biggest takeaways from working with Hubspot, Snowflake and ServiceNow?

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The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: The Sequoia Investment Process | Investing Lessons from Doug Leone, Roelof Botha & Alfred Lin | Sequoia's Framework for Analysing Founders | The True Benefit of Having Sequoia on a Cap Table & Sequoia's Biggest Threat with Pat Grady

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Founder Market Fit and Company Growth

Investment Success and Learning from Failures

Impact of Investor Relationships and Value Creation

Key Insight 1: Importance of Hiring Process in Building Successful Teams

Key Insight 2: Sequoia's Role on Startups' Cap Table

Understanding People, Markets, and Founders

Survivorship Bias in Investing

Embrace an apprenticeship model for investing

Experimentation and Focus

Remember Everything You Learn from Podcasts