Sequoia, Don Donald, Mike discussed on Acquired

Acquired
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Automatic TRANSCRIPT

It's Koya for almost thirty years and then this is incredible he moves to Khosla ventures and joins Vinod over Rick Khosla in the mid two thousand and then he goes and he joins formation and he's now after formation clips. He is still an active general partner making and leading investments today. He just turned eighty nine years old. This is incredible. He was born. I believe in nineteen thirty in France he he is a true true legend in the industry but that's the kind of folks that Don is looking for is people who are literally going to die in the seat because their their lifeblood is building technology companies and peer absolutely fits that to a T. so then in the late eighty s two very very important people joined sequoia from interesting backgrounds so in one thousand nine hundred eighty six a gentleman that you gentlemen by the name of Michael Moritz now Sir Michael Moritz who was from the UK and had come over to America and had become quite famous journalist for Time magazine. I believe he he wrote book on Apple while he was still a time right the little kingdom I think it was called sounds right and that's how he gets really interested in Silicon Valley and technology and sort of people behind apple and venture capital he leaves time and he starts at VC newsletter letter with the goal of he wants to break into the venture capital industry. I remember is new again. You know other than this newsletter companies never built a company worked technology at his life but remember Don's Licken for these mavericks and he has a soft spot for people. They kind of do things their own way. Don Decides to take a chance on Mike and invite him into sequoia and to join the Partnership and tab that ends up being just incredibly incredibly prescient decision that leads the two Yahu and Google and other companies count as how to hack your way into as the first example of starvation Jason Yeah that actually probably will work today. I think there's a quote about Moricz which is he had. The journalist instinct linked to go for the jugular and not hold back and a friend said that about him David. We've started a podcast and have a love for media but I have this sort of reverence for for really good journalists who not only are able to to really tell a great story but sort of get the truth out there. It's a special talent for someone to be able to cover IT industry street and yet have their respect in this way you know we talked about the socratic method of questioning the Dan hold so dear and I think this is what he saw and Mike like and we'll save a lot of this for part two of our sequoia journey here too but but that's what Mike was so great at as a journalist and don on actually says he says the two people that he's met in his life who are the best questioners are Mike and Steve Jobs High Company the other. You're very important. person who joined sequoia capital in the late eighties is a relatively young brash sales guy comes from Hewlett Packard and son that also is an Italian immigrant decides that he wants to work in venture capital is called up one day cold calls them and says hey I want to join sequoia and if you know anything about the person that we're talking about this is exactly in character and this gentleman is Doug. Leoni who today of course is runs all of sequoia in all their operations globally and I I believe we'll be the person that ultimately advocated for and took sequoia into becoming a global double firm. We're GONNA talk much more about both Mike and dig next time on part but just to wrap up part one to get his really the story of Don and yeah I mean you can't extricate Don Donald from sequoia but from venture capital and the whole industry in total in Nineteen ninety-six after it had become clear earlier that that Mike and Doug were amazing investors and not only amazing investors but had internalized all of these things that it meant to be sequoia foyer and then built on them themselves. Donde something pretty amazing he literally hands the keys of Sequoia over to Mike and Doug Doug talks about this in an interview with with Dan primarily axios. That's I don't have the exact quote here but he says don one day in Nineteen ninety-six. Wchs invited Mike and Doug into a conference room. He sat them down and he said I'm giving this firm to you and there are three things one. You're going to run the firm. I'm not going to run the firm anymore to you. Get to decide what I do. You can keep me around. I can continue making investments or I cannot. It's completely up to you and then and three if you do want me around here's the things willing to not willing to do but one of the things I'm not willing to do as run the firm so like you guys make all the decisions about what's going to happen from now on and that's dislike even today that so rare I mean this is the first very successful what not the first in the industry but the first successful generational transfer its Koya most venture firms and most founders venture firms. Don't have the ability to do this. and it's so hard. I mean don created all of this and he's willing to say you guys as of the future changes part of not only what we invested in but part of the venture industry to and like you guys are the people that are going to lead the change. It takes a lot to do something like that. It reminds me a lot of another great venture firm that we may also cover benchmark who has a very different way of doing this very different. Yes but you know equal partnership. There's a greet sort of interview with Andy Rackliff and Patrick o'shaughnessy on invest like the best where Andy talks about how at the peak peaking power the original partners handed us the keys and I think it's a while done very differently there. There's there's definitely common elements between both of these these great firms yet. If you look at the firms that have managed to survive generation after generation wave after wave of you know the technology industry and and venture capitals evolution all excited. It's the firms that do this well the firms that don't don't make the transition and Donna's agreed when sequoia was started the positioning fishing was to LP's was we're going to deliver vastly superior returns to anything else. You can get out there and that proved well. We'll talk about it in grading but I think that pre true true but the positioning of sequoia is now two things and he says this. It's this stability that comes with generational transfers. The stability is part of why we have had had the same limited partners for almost forty years went down saying this now almost fifty years stability and returns is how sequoias positioned for the type of LP's that they're trying to attract witter patient very very long term capital. You actually need both of those. Things returns isn't enough. You need the stability that accompanies those returns so that people will have have confidence that like hey you can get great returns but if the firm blows up then you're you're useless to me. Do we want to go into what would have happened otherwise yeah. Let's do it all right to listener is the way that we WANNA do this. Section on this unique episode is what would the world be without sequoia and there is a very sequoia centric view of the world which is all of the technology industry looks very different and without building this sort of aircraft carrier strategy around Apple and financing all of that in a very scarce capital environment like there was then we we may not have you know the apple that we have today. We may not have some of the other tech giants that we have today day. There is a alternative you that you could take to that that says look capital is capital and the the the ninety nine percent of the value or maybe maybe one hundred and ten percent percent of the value that comes from receiving investment from venture capital firm is the capital itself and everything else is either. Hullabaloo or valued attraction and capital will always expand spend fill all attractive opportunities exactly exactly that we despite some friction points we live in an efficient market and if it's truly a great opportunity than capital will flow tube up to go and fund that thing and so the world would look no different today if a if there was no sequeira. I think I fall slightly toward the former part of that scale that I'm not willing to say that we you know we wouldn't have some of these amazing technology innovations without sequoia but I do think in just pouring poring over the hours and hours of reading that you know that we found about don and really learning about the history of this firm. Don played a very active role in in building building a lot of the companies that they invested in and deserves credit for that well listeners. Let us know how you like this type of episode focusing on venture firms we of course I love it as as venture ourselves but we've been talking all about sequoia in this episode there is really along the exact same time line there is a perfect example of what would have happened otherwise and that is Clayton Perkins which over this time frame that we're talking about was equally if not arguably Ghibli more successful than sequoia but what's really interesting and we'll dive into when we ultimately do an episode on on Kleiner. Their philosophy was quite different aren't and was a lot more interested in the entrepreneurs and the backgrounds of the entrepreneurs then necessarily downs Koyo were so I think to my mind would have happened otherwise of course silicon valley what happened of course the modern technology modern venture capital industry in startup industry would have happened even even though don helped catalyze all of it somebody would have and certainly Kleiner would've did kind of did but I don't think there would would have been as many chances taken opportunities given to you know the quote unquote not men's out there that sequoia was willing to fund and you know it wasn't in just in those days. I mean look at Airbnb in their early days and sequoias extremely prescient early investment investment in you know the three airbnb founders they then look lake what you know a prototypical founder looks like at the time far fire from it you know I think it's sequoia and Don's. DNA coming from a true incredible marketing background and Markets Focus that you know maybe wouldn't have developed helped in the same way without sequoia yeah and one way to look at this as like if you're the Kleiner Perkins in nineteen seventy eight. You know you are backing backing founders and outsourcing a lot of your judgment to them and you're just saying you run..

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