Doug Leone: evaluation

Transcript context

…Okay, so right when this happens, the transition to Sequoia Fund VII, the whole world is changing, because Sequoia originally and Don came from the semiconductor industry, and then there was the PC software wave, but now the internet is here. Well, not yet. There are actually a few parts. First of all, Sequoia V was $67 million because of a truly lack of ability to raise more money. We had raised the growth fund for $165 million that we don't know what to do with. In fact, we invested the growth fund and the average check size on that fund was $2 million. That turned out to be a 4.5X net fund, which is a terrific performance because we invested like a venture fund. When we raised Sequoia VI, which turned out to be the Yahoo fund, the returns from V were not yet visible. When Mike and I went out fundraising Sequoia VII, the limited partner said, “Who the heck are you guys?” and we lost some clients. We lost some big clients. Sequoia V turned out to be a fabulous fund, Sequoia VI an incredible fund, Sequoia VII a spectacular fund, Sequoia VIII—the Google fund—an amazing fund. Mike, I, and the other partners got an incredible start. Then 1999-2000 happened. We did not know the meaning of the word clawback. For you listeners, what clawback means is when your funds are doing so poorly that now you owe a lot of money back to your limited partners. We had war room meetings here at Sequoia in 2000 where we owed more than our net worth, and how do we get ourselves out of that. Is that of the fees that you’ve already taken as compensation?…

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