David Rosenthal: belief

Transcript context

…I’ll make two points. The first thing is I will add, I agree with everything you said and to get there as early as possible, to be the first dollar. Second, if we said we are only an A firm, no company has a linear trajectory. Remember your Google question. They all have a little bump. What happens when that company has a little bump and you have to invest in that questionable round? If you’re an only “A firm” or only “C firm” and you own 20%, where’s your capital to show to the new investor that you believe? Because it’s never linear, because it’s never slam dunk from day one, by being there, you can support the companies at times where there are darker clouds in the sky which helps attract other investors to then get to the sunny skies. This is the perfect time (since I know we’re running out of time) to switch over to playbook. I’ve got two questions I really want to ask you in playbook. Let’s abstract out some of the themes of this conversation to what’s applicable to entrepreneurs running their businesses, to us as we think about partnering with companies. The first one is, it just struck us and doing part one of the Sequoia history, would actually, the core makes Sequoia successfully is some pretty simple things. It’s focus on the market, founders come first, listen to what entrepreneurs tell you, don’t run your mouth, be a business partner, not an investor. How have you guys and you’ve thought about staying disciplined on those core things as you’ve grown so much? I’d imagine it takes a lot of active focus and effort. Yes. There are many answers. I think our little secret is our culture. When I was young in business, I used to hear CEOs talk about culture, I used to think it was a talking point handed to the CEO by marketing. Nothing could be more incorrect. The culture at Sequoia, if I could spend 10 seconds on it, is finding these quirky individuals who’ve had shock to their systems, who have something to prove, who as I say, “We’re not the quarterback of the football team in high school,” and you know what I mean about that. They were the shunned ones, if anything, maybe a couple IQ points high or something to prove, maybe something happened in the family. Put them in an environment of teamwork and trust. We’re relatively flat at Sequoia. We’ve taken comp off the table, letting them know it’s okay to make mistakes and instilling a culture where we’re looking for the truth. Not your truth, not my truth, the truth in the middle of the table that helps the founder. A number of times I said in the partners meeting after proclaiming a point, I hear one of our young partners making a point. I say, “Hold that on a second, I didn’t think of that. His point is better than my point. I change my mind.” So, applying that to everything that we do. Realizing that we’ve done nothing, realizing our worst enemy is the success that we had, realizing that by virtue of our market position, not because people hate us, because who else are you going to attack? Not the number 14 firm, not the number 3 firm. It’s just more fun to attack the number one first. It’s what I would do. It’s just more of a sport.…

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