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, discusses Sequoia's investment process, founder assessment framework, and the three pillars of venture. Highlights include removing politics from decisions, lessons on market sizing, and the importance of team, traction, and TAM in investing.

01:08:59

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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.

Frameworks To Assess Founders: Founder-Market Fit + Vector

01:42

Accountability and Culture at Sequoia Capital

01:22

Analyzing Exceptional Picking Skills and Learning in Venture Capital Investing

01:41

Commitment and Understanding Lead to Successful Business Relationships

01:37

Intro

4min

Exploring Childhood Influences and Adult Fears of Irrelevance

2min

Personal Scoring in Life and Success in Venture Capital

5min

Understanding the Sequoia Investment Process and Internal Evaluation

2min

Analyzing Investment Strategies and Founder Dynamics

16min

Venture Capital Competition and DNA Hires

17min

Lessons on Timing and Value in Venture Capital

16min

Lessons Learned from Jim and the Power of Trusting Instincts

4min

Gratitude for Friendship and Mentorship, Fund Promotion, SecureFrame, and Cooley Law Firm Support

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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