David Rosenthal: evaluation

Transcript context

…Yeah. One way to look at this is if the Kleiner Perkins in 1978, you are backing founders and outsourcing a lot of your judgment to them and you're just saying, obviously they weren’t hands-off, but you run the company and the reason I'm investing in you is because I trust you to figure out how to run this company. What Don was looking at is, you’re really onto something in this killer market. We’re going to go build this thing together and I’m going to help you do that. The downside to that that we haven’t painted yet is if you’re a founder that believes that you need to be the CEO of that thing forever and you’re in a market that deserves a team to really go and value maximize the way to tackle that opportunity, the terms of these investments, especially at this time were that often, firms would own 33%-51% of the company. They would have the right to buy the rest from you. They will have the right to replace you. All of these rights. Of course, much of this still exists today. The job of the board is to hire and fire the CEO, but it was much more prevalent back then especially within Don's view of the world is that I'm building this company with you right now. This company may outlast your leadership. Well, what we said earlier about management can be augmented is, management, of course, can also be replaced. There are upsides and downsides there. If your focus is building a great company, sometimes that's the right thing to do. Sometimes, of course, Don and Sequoia would get that wrong, but sometimes it is the right thing to do. Thinking back to our conversation with Trip and what attracted Trip and EA to Don was this knowledge that you were getting what you saw with Don and he was going to force you to build a big company one way or the other. With you or without you. Alright, we are in tech themes now, but to officially call it that and move through it here, the thing that really jumped out at me and of course being in this industry knowing folks funded by Sequoia, knowing folks at Sequoia, you know some of this tangentially, but it's worth taking a fresh look when preparing for these episodes to really ground yourself in what assumptions am I making. The thing that jumped out at me was Sequoia and all of their copywriting never says investments, but rather partnership. It's, “We decided to partner with that company.” They have a statement on their website called their ethos which says, “We’re serious about our work and carefully choose the words to describe it. Terms like deal or exit are forbidden and while we’re sometimes called investors, that is not our frame of mind. We consider ourselves partners for the long-term.” It immediately jumps out at me as, David, you so often say company builders. We are partners and the way that we do that is we’ve got this huge fund that we manage that of course we have a fiduciary responsibility to our LPs, to maximize the value. The way that we decide to partner is through investing in you but we are your partners in this business. Five, six, seven, years ago, I always thought that was, when I heard, we we're so excited to partner with this venture firm on this thing and I was like, “Oh God, here it comes.”…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.