How to Dominate for Decades | Doug Leone, Sequoia Capital

Allright, we were just talking before recording, and you just said something that was very interesting. We were talking about people that dominate for decades; you're one of them that's done so. And you said an interesting question is to ask how and why somebody would dominate for decades.

What's your answer to that?

My partner in India said there are many roads to heaven, and so there are many ways to dominate. Take Steve Jobs: he had really one job, and he dominated in that domain for a lot of years. Or Jensen Wang.

Those are more linear. Those are gifts where you find yourself in the middle of the hurricane and you just want to keep on going because as the world changes, your job changes. What's more interesting is: how do you dominate when you have to remake yourself over and over again?

And why do you dominate? Starting with the why, I think it's a deep, insecure need to remain relevant and prove to yourself that you're not getting old and you're not going to be out of date. I mean, if I look back on my career, each time I remade myself, it wasn't really done out of vision of greatness.

It was done out of fear of just being gone. Even a few minutes ago I asked you, "Let's not make the interview be about yesterday. Let's make it about all tomorrow." And I still have that fear. At the age of 69.

And the how: I think you have to be willing to let go of your ego. I think you have to assume you know nothing each time, and you're willing to start at the bottom. So when I came back to Sequoia, they gave me this fancy title of chairman.

We were in front of our LPs, our investors, the first time, about 6 months ago, and someone asked me about chairman. I told them, "It's a bunch of bullshit." What I really am is an analyst. I'm a low-level analyst, and I have to prove myself.

I just got back from vacation just this morning. I've had 90 days of getting all calibrated, and my partner has asked me, "How do you feel after 90 days?" I said, "I feel like I'm good for nothing. I feel like I've entered and AI has gotten further away from me than when I first started 90 days ago."

And so I'm terrified. I told one of my partners just an hour ago that if 9 months from now, which is the 1 year since I return, I feel just as irrelevant, I'm going to take myself out. And so I don't know if I can do it yet another time, and therein lies the fun, and therein lies the answer to your question.

Do you know who Jimmy Iven is?

No.

Okay, Jimmy Ivene, he's another guy who dominated for decades. He was in the music industry for 50 years, but a lot of people know him because he had the insight to start building businesses with his artists. So he co-founded Beats with Dr.

Dre. They wound up doing Beats music and the headphones, and they sold to Apple.

I think he's the guy that was involved with the Beatles at the very end.

Yeah, John Lennon.

Yeah, John Lennon.

He was an engineer and a producer for John Lennon.

And he just showed up on a Saturday, and next thing you know, yes.

You'd love him. He's fucking Italian from New York.

Yes, yes, I know who he is. I forgot his name.

He's awesome. I did an episode with him, but now we've become friends. We talk all the time. He's a very extraordinary character. But there's two things that where you were talking that he said the same thing. He's like, "I don't have a rearview mirror."

He said the same thing when we sat down. He's like, "I don't want to fucking talk about the past. I want to talk about what I'm doing now."

Yes.

He's like, "There's no trophy room in my house."

Yes.

"I can't even tell you what I did 5 years ago because I forgot. I'm worried about tomorrow." That was very interesting. But then my question, you brought up being terrified, and then you said fear before that. What's your relationship like to fear?

Because he gave me some of the best advice. He's like, "Most people, when they feel fear, they let it be a headwind." He's like, "I train myself to make it a tailwind. As soon as I feel it, that means I have to fucking go forwardright now."

Yes.

Right now. "Do not think, step forward."

Yeah.

What's your relationship with fear? How do you deal with it?

Throughout my life, I felt an awful lot of fear, and it's always been the challenge in front of me. I was afraid of public speaking. I made sure I became the very best. I was afraid of heights. I worked on sailboats.

I made sure I was up 96-foot masts. That whenever I feel it, I face it head-on. It's almost a challenge. Look, there's a story that my partners know. I had to get a tooth removed. I actually drilled

a tooth drill for a root canal, and I had to go to a meetingright after that, and I told the dentist, "Drill without any Novocaine." And he says, "You're out of your mind." And my whole life, I wanted to see if I was a badass or not.

In other words, am I a fake badass that has this envelope nobody could tell, or am I really a badass on the inside? And I told the dentist, "Take it out with no Novocaine." And he drilled, and I jumped.

And I told the dentist, "I won't move again." And I didn't move again. And I used the trick of thinking, "What it must be like to go to war and lose an arm or two legs." That's pain with consequences.

Mine was pain with no consequences. And so I just said, "It's just nerve endings from there to my spine to my brain. Fuck it, I'm not moving." Now, I had to go home and change my shirt because I was a puddle of sweat, but I didn't move.

And so I love fear. It does wonders for me. It gives me the challenge to overcome. That gives me then a sense of security.

You mentioned working on sailboats. I read something about you. You were doing this when you were a young kid,right? We were in high school. We started working on boats.

Yeah. High school and college.

And it was across the street from, or across the river from, a country club.

No, it was in a country club.

Okay.

A country club has the yachts in the water and the pool on the side.

Do you remember what you said about this?

Yeah, I know exactly what I said.

Can you repeat it?

I said, "I'm going to get those fuckers later." You know, it was all the rich kids.

What does that mean?

Well, it was all the rich kids, you know, being the lifeguards, talking to all the girls at the age of 16, 17, by the pool, having the times of their lives. Kind of having the life that some of my kids have now.

And I was crawling in sailboats, running wires through, sweating like a pig, working overtime, and just looking over at kids my age having the times of their life. And I said, "I'm going to get you all fuckers later."

And I did.

That is such a reoccurring theme throughout history of entrepreneurship.

Yeah.

I felt it that way. Like, my people are like, "Oh, I'm the first person to go to college." It's like, no one in my family even graduated fucking high school.

Yeah.

And I remember going to public school, and there was this kid that would drive. He had like $130,000 car, this was like 20 years ago. And he was in one of my classes, and his dad owned like a shit ton of Domino's franchises, which I had no idea were phenomenal businesses.

The insight that he had phenomenal businesses, he did like, "Yeah, me and my dad just went to lunch." He took a helicopter like 200 miles to lunch. I was like, "What are you, I'm working full-time at 15. Like, what are you talking about?"

And that's exactly how I felt. I'm working on this other for my other podcast, Founders. I'm starting to read about Mike Tyson a lot. And Mike Tyson has a video where he talks about the difference, what you just mentioned, the way he grew up compared to the way his kids.

And he says his kids would be like, they're like 15 years old, and they're like, "Look at the star athlete at school." He's like, "Wow, look at Tracy. So amazing." And he goes, "I wasn't like that." He goes, "What I thought when I saw these people is, wait till I get my shot."

Yeah.

"Wait till I get my chance. I will show you."

Exactly.

"When I come around, what that actually means."

Now, what the trick is, though, is to use that as a motivator by not being an asshole when you're later in life. Don't do unto others as it was done unto you. So how do you take this incredibly negative experience, make it a positive experience, and then as you mature, use it in a positive way for the benefit of not only for yourself, but everybody else around you?

Point one. Point two.

Before you get to point two, how have you done that?

My need to get them back, then, kind of ended by the time I got 50 or so on. I mean.

50?

Yeah. Well, yeah. It seems like a long time, but it's not. It took a good 30 years. It took a good 30 years to overcome that weakness. Because in some ways, it is a weakness. Because it's a false narrative.

Those were not bad kids, and I don't want to live in a false narrative. I finally outgrew it. But the other point, which is more important for me anyway, is what you do with your kids. To give your kids that level of life is not necessarily a good thing.

Because what they're going to be missing is the drive that Mike Tyson, or you, or I, or many people that we know had. And that's not the best thing ever. I think you have to inject some misery in your kids' lives so they have that hunger.

It can be fake because they know it, but you can't give them everything. Because otherwise, they won't be hungry.

How many people that grew up wealthy have that drive that you know?

A good amount of kids that grew up wealthy have drive. Drive can be caused by many things. We have a partner who I'm sure grew up with means that his drive came from competition with his twin brother. They both attended the same college.

They both were wide receivers on opposite sides of the fields. They adore one another, and they love nothing more than beating the shit out of one another. So drive comes in many ways. I have a son-in-law who is driven like crazy.

Older brother, I'm sure they fought. He cannot stand cheese because his older brother loves eating cheese. I mean, it shows you these little things. You know, we had a session at Sequoia where we checked in, and one of my partners suggested for the check-in to say, "What is the vignette in life that made you who you are?"

And one partner said, and he cried when he said that. A lot of us cried. He got on a bus when he was 11 or 12, and a girl that he thought was cute looked at him and said, "Boy, you're fat."

Now, to you and I, that sounds like a minor thing. To him, it changed his life. 40 years later, 30 years later, he still wakes up at 4 o'clock to work out. I mean, the stories were in some ways ridiculous, but in some ways, it's really amazing to see how a little kid is affected and how long that vignette carries someone through life.

What was your vignette?

It was the beach club. It was being ridiculed in high school because I couldn't speak English. It was being made fun of in a classroom. It was being called pasta in high school. All the things that, you know, because I was an immigrant, all the things that when you're not strong enough, you survive, you endure, and then you try to overcome.

And doing it while remaining a good human being.

I want to tell you about the presenting sponsor of this podcast, Ramp. I have been reading a lot about SpaceX lately. SpaceX is one of the most valuable businesses in the world, and one of the main themes in the history of SpaceX is constantly attacking and questioning your cost.

Ramp helps many of the most innovative businesses in the world do exactly that. The median company running on Ramp cuts their expenses by 5%. And one thing SpaceX has demonstrated is that a religious dedication to controlling costs can help actually increase revenue because you can pursue opportunities you couldn't otherwise.

And we see that in the Ramp data too. The median company running on Ramp also grows their revenue by 16%. So when you're running your business on Ramp, and your competitors are not, you have a massive competitive advantage that compounds over time.

Ramp is the only platform designed to make your finance team faster and happier. Many of the top founders and CEOs I know run their business on Ramp. I run my business on Ramp, and you should too. Go to ramp.com to learn how they can help your business save time, save money, and grow revenue.

That is ramp.com. You mentioned inducing the importance of inducing misery into your kids' lives. Do you still induce misery into your own?

Yeah. No, I've gone full cycle and have spoiled myself with material things. Realized they don't make me happy at all. Got rid of a whole bunch of material things. I sold my fancy cars. Like, great discount. I just wanted them gone.

It was one day I woke up, I just didn't want to have cars with vowels at the end of the name. I just got rid of them. I just wanted a more simple life. I wanted to start to enjoy the little things in life.

Now, having said that, I do have toys. I don't want to make it sound like I'm leading the life of a monk, but I have shed assets on purpose just to simplify my life. And if you will get down to the really important things in life, which are really, at the end of the day, is your family and friends.

That's really the most important thing.

Not just shedding material, like inducing pain or misery into your life at this time, at this point in your life.

Well, I think going back to work, definitely, that was not the easiest move I've ever done, and I'm in the middle of thatright now. I'm quite miserable at Sequoiaright now, not because of what anybody else does, because I feel that three months into it, I'm really good for nothing.

Let's say when you were building,right, your first few decades there. Did work always feel like work, or is it something like you just like you were addicted to doing it, you were obsessed with doing it?

No, it felt like an overwhelming challenge that I didn't know how to conquer, and I felt that until the day I stopped working at 65.

You got to spend time with Jimmy Iovine, dude. I'm telling you, I think you would love him. He's been around some of the greatest, you know, people, the most talented people in history. You know, worked with John Lennon and Bruce Springsteen, Dr.

Dre, Eminem, just like crazy people. And he's like, everybody great has a bend in the pipe. There's just something wrong with them that just makes them different. And also, like, the same side of their genius is also their dysfunction.

Yeah.

And he's like, for himself, it's the same thing. He's like, it was never fun to me. It was work always felt like work. And he goes, my bend in the pipe was that it has to be. And what he meant by that is like, if I'm taking on this business, if I'm taking on this project, if I'm telling you I'm going to do something, I will do it to the point where I almost kill myself before I give up.

I have to succeed at it. Very similar to like the vibe I'm getting off of you.

Yeah. Look, failure was never an option in my life. I had no plan B. I remember when I was made a partner at Sequoia, I was down to zero money. I actually, I have never said that to anybody, but there was a time in my first month where I became a partner that I was homeless.

I slept in my car for a week. I showered at 3000 Sandhill Road. I was down to no money. I was down to zero, zero money. Sequoia back then would buy you a car when you made partner. I bought a car.

I didn't have a home. I slept in my car for a week, and then I had some money, and I started getting a rental and so on.

What was going on in your life that you were homeless?

I went through a divorce when I was 30 years of age, and I gave my ex-wife everything. And I was living on my car allowance of $400 a month. So I didn't have a home for a month. And so for a week or so, I slept in my car, and then one of the other associates let me live with him for about three weeks, and then I had enough money to go buy a rental apartment.

So I chuckled for a week that I was a partner at Sequoia, and I was homeless. I was the only homeless partner at Sequoia I've ever had. I don't think I've ever told that in a public setting.

I mean, at this point, you can't go any lower than you already are.

Oh, no, you can go a lot lower. First of all, I was healthy. So you can get a lot lower than that. You can be sick with a disease.

Good point.

And second, I was a partner at Sequoia. Are you kidding me? My present value, my future earnings were going to be terrific. So I was in panic. I just knew it was only an inconvenience. And I saw the humor in that for about a week.

I mean, clearly, it would not have been funny to be homeless for a lifetime. And if you're truly homeless, that's not funny. But in my case, it was I was a partner at Sequoia, showering at the shower on 3000 Sandhill Road, parking my car a little bit further away from the office, and sleeping in my car.

So go back to you're saying the level of discomfort that you felt when you cameright now that you're currently experiencing. Why did you retire to begin with, and then why did you wipe that out?

Well, I didn't retire. If you found a company, you have seasoned seats. You can stay as long as you want. You can take a public. You can sell it. It's your gig. I didn't found Sequoia. I was a hired gun.

So it seemed to me theright thing to do is to get out of the way and let the next generation have their turns at bat. Don Valentine found that if he stepped away at around the age of 63, I figured 65 was the natural age, and on my 65th birthday, I stepped down.

I chose a successor.

Did you want to step down, though?

It wasn't a matter of whether I wanted it or not. It was theright thing to do for Sequoia. And so I chose Roeloff. I was the old king. He was the new king. It seemed to me that being the old king with a new king around, you shouldn't be around.

You should be removed. And so I stepped out. I was on 10 boards, and I thought that would keep me busy. I founded a biotech company. I thought, 10 boards, biotech company, I'm going to be busy as heck.

Not even close. Because I had the curse that all my companies were working. When a company's working, there is nothing to do. And so I had a great backlog of companies, and I wasn't busy. So I started taking drum lessons, and guitar lessons, and piano lessons, and that took me for about a year.

And after a year, I thought I was going to lose my mind. It turned out that Roeloff stepped down. Pat and Alfred took over. They weren't the kings I chose. And 30 days into it, they came to my house, and they said, would you like to come back?

You're not on 10 boards anymore. You're on six boards. We sold four companies. There were companies like Wiz and so on. And I said, sure. And we cut a little deal in an afternoon, you know, on a single sheet of paper that we scrabbled.

Did you see that coming?

They always wondered to me publicly for the two years before, why aren't you around anymore? And my answer was, it seemed to me that it's best to stay away and let the new king just do his thing. And when the old king, new king dynamic went away because Roeloff was gone, it was much easier for me and for them.

And so they came over, surprise visit. I don't know whether they wanted to see me. And I said, sure,right on the spot. It wasn't that long a conversation.

Yeah, that's why I asked if you saw it coming, because you.

No, it was, of course. And we agreed that I would attend partners' meeting. I would be in the inner circle. I would help them spot crucible moments, as we say, to figure out how to navigate them and make a couple of investments.

And I've done everything but make a couple of investments. I told them I wanted to do nothing for 90 days. I want to get calibrated. And here I am now, day 91, panicked.

Yeah, but I mean, you obviously know this. Like, we're going through this massive technological revolution, this technological shift. Somebody with decades of experience that has seen so many things come and so many different companies and founders come and go, like, that's invaluable wisdom to have inside the company.

Yeah, except that the world changes, and it's changed more dramatically through AI.

Yeah, but how many different changes have you been through?

I understand, but this is the most radical change. This is an industrial revolution kind of change. And so, as I said, I'm 90 days into it. I feel further away now than when I got into it. I mean, look, we're looking at a company.

I came back from vacation over the weekend. I saw a memo, I won't tell you the name, of a startup company that wants to raise money without anything, a $10 billion pre. You know, it gets my head spinning.

I didn't know if it was a joke. I didn't know if the partners wanted to do that to make fun of me. No, because they would do that.

Yeah.

And it wasn't a joke. And so I've never seen revenue growth at this pace. I've never seen prices like this. One could say all you have to do is add three zeros. It's the same type of business, but it's more complicated than that.

And so I've seen a lot of changes. I have good instincts, but I don't want to rely too much on the past. I want to use the past as a little corner here that I check things against. And I have my heuristics, my three or four questions I ask myself with each investment.

I can discuss those, but I'm focused on what the world's going to look like.

I would love to know these questions and these heuristics that you ask. I'm very skeptical because I read history for a living,right? And every time throughout history, you hear, this time is different. This time is different. And it's never different,right?

But this time actually might be different. So it's like, well, who could I talk to that could actually answer this question for me that's seen a lot more? And so I was talking to Michael Dell about this.

Yeah.

And I asked him, I was like, is this time actually different? And he's like, yes. And then he gave like this, we had like this 30-minute talk where he actually went through why he thinks that actually business is being rewritten and this time is actually different.

What are the heuristics that you were mentioning earlier?

I have two or three of them. One of them is would I put my kids' money into it? Second, if I only make 20 investments in my life, is this one of the 20? Third, can I return the whole fund with this investment?

And if I don't pass those three, I'm not going to make the investment. And the reason I put my kids, it gives me the judgment of quality, the reason for the 20. It raises the bar of it could be investable, but is it really the home run, which is the same thing as the third?

And those are questions that I've always asked myself.

Say more about the bounding of only having 20.

There's probably 200 investments that you can make in your lifetime. And a lot of them are going to return 2x your money, 3x your money. I only want the ones where you can return 100 times your money. That's all I'm interested in.

I want the outliers. I want the ones that really drive tremendous return. That in my lifetime, where first it was 100 million, then 500, then a billion, then 5 billion, then Alfred hit 10 billion, and now Sean hit 20 billion.

I told Sean, you fucker, you kind of ruined it for me. I'm not going to show up now with a $4 billion gain.

Was that SpaceX or what was that?

Yeah, it's SpaceX. Now, we haven't cashed out yet or whatever, but you know, there's a shot of a $20 billion gain or more. And so he ruined it for all of us.

The ones that your best performing investments, I'm always curious if, like, you can actually see it back then.

They always surprise you on the upside.

Right?

Always. They never surprise you when they fail because that was always one of the scenarios you had thought about, or mostly is. But when they run, they surprise you. And every venture investor has made the mistake of selling too early their winners.

Every single venture investors. Because if you look at the great companies, they've compounded 20 years after the IPO. NVIDIA or Google or Meta, if you add a little sniffer that this thing had essentially an unbounded market for many years, you should never sell a share.

And you can make way more money holding those. Because if you're compounding a $5 billion gain, that can turn into a $50 billion gain. If we held Google and had sold Google, that'd be worth, or NVIDIA, that'd be half a trillion dollars.

You know, and there's no investments that can give you that. And you know, we own 20% of NVIDIA. Think about that. I mean, you know, we own 10% of Google. And there's many others. You know, Apple, are you kidding me?

We were the first investor of Apple in Apple. Cisco, we owned a quarter of Cisco systems. You know, those are big ownership in very big companies. But we all made that mistake.

Yeah, sometimes the best financial decisions are not financial at all. So if you look at, like, if you think about the wealth created by Sam Walton, obviously he gave it away before it accumulated to his kids. But if it come, you know, if it was still in one person, it'd be worth, you know, half a trillion, whatever the number is now.

And you realize, like, he wasn't making a financial decision. He just liked Walmart. It goes back to what Nick Sleep said. Nick Sleep has this great quote where he's like, the best investors aren't investors at all. They're entrepreneurs who never sold.

Yeah, exactly. That's exactlyright.

You mentioned a few times, I've heard you in other places where you're like, hey, I'm on boards of cybersecurity companies. I don't know anything about cybersecurity. I'm on board of financial services company. I don't know anything about financial services.

What does that mean?

It means that I'm interested in the business and the building the business of a company, not in shaping the technology of a company. Meaning that I'm not a product manager type. That's what founders are. In some cases, that's the only thing they know.

The only thing, they're getting younger and younger. They're 23 years old or 22. They're engineers, and they know that domain. If they have to rely on me to help shape the product 10, 20%, we're in big trouble. OK?

But then you have the business. You have the selling of shares, not the selling of product. And in the selling of shares, you have to wrap everything into it, which is the analysis of market, the product marketing of the final 10% of the product so it's saleable.

I can help with that. The product marketing and messaging, the demand gen, the lead gen, and the revenues. And then you've got support and accounting and so on. Oftentimes, companies break or they suboptimize that. That's what I get involved in.

And in order to do that, I don't have to be an expert in the technology. In fact, I'm only partially interested in technology. I'm much more interested in helping founders build a business.

Say more about that.

So how do you take a 22-year-old that when he comes to us is an outlier in something in life, probably IQ 150 or above, all the adjectives that venture guys use in a negative sense, I use in a positive sense, irreverent, shithead, they don't listen, love it.

Give me those founders all day long.

You got to say more about that. Why do you like.

Oh, because who wants a founder that changes his or her mind depending on who they last spoke to? I want a founder who for the last five months has gone to sleep and has woken up three hours into his sleep, just thinking about the problem, thinking about a solution, crystal clear on what they want to build.

No one can detract them, driven like crazy, and so on. That's what I want. But now we got to build a business. And so who do you recruit as the first 10 engineers? What does your first salesperson look like?

Do you want people that are up and comers? No one that's established and great is going to join you as a startup. That means you have to have an eye for these up-and-comer people in sales and marketing because the made people are going to play it out a little safer.

And so to help navigate all those sets of issues, that is what we at Sequoia, I think, are the very best in the world at.

Can you give me some examples of the founders that you partnered with that you feel you had the best partnership with that responded to this, that you helped mold and shape and build their business with them?

With David Vélez of Nubank. And the reason I choose him for this example is that he was an associate at Sequoia, so I knew him well. I hired him out of Stanford Business School. And I had to give him the bad news that we were not going to open a Brazil office.

After he moved to Brazil, he committed to Sequoia. He moved to Brazil. We made two investments, and we finally figured out there are no engineers. A few engineers come out of Brazil, and everything coming out of Brazil was, we are the Uber of Brazil.

We are the DoorDash of Brazil. No real novelty. And one, we had to make the call, hey, David, we're not going to open the Brazil office. We offered him a job in California. And he had a notion of a financial services business, a credit card business in Brazil.

Minor problem. He wasn't from Brazil. He knew nothing about financial services. But he had a heart of gold. He had a heart and a heart of a lion. So he was a good man with driven like crazy, and no one could stop him.

And so we seeded him. And I remember the call one night. I was at the Crow's House. I still remember. I get a call at dinner. It's him. We committed to a million dollars. He says to me, what do I do next?

And I was in the men's room. I took the call from the men's room. And you know, we talked it through. He knew what to do next. He was just all alone. What do I do now? It was more a, I viewed it more as a psychological assistance call than a call on what to do next.

He wanted some support, and we made a plan of the first two or three things, and he didn't miss a beat. He didn't miss a single beat for the first two or three or four years. And we built a company now worth, I mean, it was big numbers a few years ago.

It's $60 billion now. Like I said, I just saw a startup that wants to raise money at $10 billion pre with no code read. So I don't know what things are worth anymore.

Well, Dave has a fantastic reputation. There's a ton of people that have come on the show or people that want to come on the show. And I was asking, like, what are the founders I talk to? It's like, this guy's incredible.

Yeah.

This is surprising. So an associate at a venture firm then becomes a world-class founder.

Yes.

Is there other examples that you can think of that follow his pattern?

I've seen it the other way. I haven't seen too many associates becoming founders.

Yeah. You're actually one of the few, I think most VCs are full of shit when they say, oh, the founder is the star and the founder is the most important. You use this thing where like zero to one is the black magic.

And like, that's the founder's job. I can't help with that. If you need me to help with that, then we're all fucked.

We're all fucked.

And he's like, if the VC could do that, they'd be founders then?

Yes.

And I'm like, you know Devesh from Iconic?

Yes.

So I just.

He's a killer.

I just had a fucking crazy lunch with him.

He is a freak shit.

You should sit in our conversations.

He is a killer.

I wish we just recorded that. I literally just came straight from there.

Yeah, yeah, yeah, yeah.

And I was talking to him about you. And because I'm like, I actually think Doug believes us. I think when other VCs say this shit, like they're full of shit, they actually want to be the guy. And they're very uncomfortable, you know, not saying, no, I'm actually assisting them.

I'm in the service business.

We are the service business.

I think you actually fucking believe it.

No, we are. And what the trick is, is to retain that founder in the company forever if you can and for as long as possible. Because once you lose that founder, you do lose the soul of the company.

A company has many refounding type moments, and we saw with Meta. Think of what Meta would be without Instagram. That company might be gone. And who pulled that off? Who bought that company on the weekend? We closed the investment in Instagram on a Thursday, and he sold it on a Sunday.

Great IR, but we didn't make any money, really.

Yeah.

And so you want that founder in the building for as long as possible. Think of the refounding of Apple.

Your partner, I quote this on my other podcasts all the time. Moritz has that great, so he wrote obviously The Little Kingdom in whatever, the '80s or '70s, whatever it was. And then he updated it in, I think, 2009 to The Return of the Little Kingdom.

Yeah.

Updated forward. Again, Moritz is a crazy writer. Like, his writing is incredible.

He's incredible. You should have seen his memos internally, his reports to the limited partners were funny as heck.

It kills me because I read biographies for a living.

Yeah.

And that 60-page, you know, all these obscure ones that are not, people are not supposed to have, they all come to me anyways because I do this for a living. And I sat down and read the Don Valentine one that he wrote in one sitting.

And then somebody that's mentored by Moritz that I'm friends with, I backed down. I was like, dude, I got to fucking do a founders episode on this. And it came back absolutely not. I'm like, goddamn it.

I remember that when I was, there's Mike and I, you know, we both ran Sequoia. A cold-blooded strategic Brit and a tactical Italian, gregarious Italian. We had no business being partners, but we made it work for 25 years.

But I remember I had a dictionary in my desk, a little black dictionary. Because Mike in a partners meeting, he would use a word that you had to know the meaning of because it was the key to the sentence.

I remember faking like I'm going to the bathroom, going and looking it up. Like, what does that mean?

Well, the writing that he put in there, I think he said, you know, turnarounds are difficult no matter what. In technology business, they're doubly difficult. They're almost unheard of. He's like, when has there ever been essentially a refounding of a technology company in the middle of a turnaround?

And then he has a great line. He was like, and the first time, you know, he had a partner, he had a co-founder. The second refounding, he was by himself.

By himself, yes.

That even if people don't read the entire book, which I'd highly recommend reading, just buy The Return of the Little Kingdom and read the forward that Michael Moritz wrote.

Yeah, yeah.

It gives you an insight into the psychology and just how rare of a talent that Steve Jobs was.

One could argue that NVIDIA had a refounding moment. That was a graphics chip company. And no company up to then had made it through two cycles in graphics chip. And already it achieved the two-cycle thing, which shocked all of us.

And then we all fell asleep. They came up with a GPU for many years. OK, it's a faster CPU. And one day we all woke up and NVIDIA was an AI company. That was a complete refounding by the same founder.

I found one of my all-time favorite quotes when I was reading the book Zero to One. The quote says, "The single most powerful pattern I have noticed is that successful people find value in unexpected places. And they do this by thinking about business from first principles instead of formulas."

That is exactly what AppLovin has done with their advertising platform. AppLovin connects you with over a billion potential new customers inside mobile games. AppLovin allows you to capture undivided attention. AppLovin ads are full-screen video ads that are watched for an average of 35 seconds.

That is retention that blows other ad platforms out of the water. And you can launch on AppLovin in minutes. You set the goal and AppLovin achieves it. There's no complex setup, no expertise needed, and AppLovin scales quickly. They can put your ads in front of over a billion potential customers.

Other businesses have seen immediate results, have scaled to hundreds of thousands of dollars of spend per day and increased their revenue by millions. So you want to get started quickly before all of your competitors are on AppLovin. And you can do that by going to applovin.com.

That's applovin.com. When I asked you if you induce any misery into your life, like you were saying you should induce it to your kids, I was thinking about Jensen because there's this book by Tay Kim called NVIDIA Way, which is kind of a company history of NVIDIA, but it gives you enough biographical background.

You can function as a biography of Jensen. And he says something in there where he's like, you know, I don't like giving up on people. I'd rather torture them into greatness.

Yes.

You get to the end of the book, it's like, oh, he does that to himself.

Of course he does.

He tortures himself into greatness. He wakes up in the morning, looks in the mirror, and asks why he sucks so much.

And if you're willing to do that to yourself, people will follow you. And people will torture themselves all the way until the goal's met. But you have to be able to do, you have to be willing to do that to yourself.

And people see that.

Did you torture yourself?

Absolutely. My whole life. That's all I know.

So your inner monologue's negative?

I'm kind of a miserable soul on the inside.

Say more about this.

I'm always a little unhappy. My instincts are to be unhappy. And I carry a positive vibe and people see me as fun to be around. It's not an act, but when in my private moments, I'm pretty unhappy. Always.

I'm pretty miserable.

And nothing changes that.

My kids. I have had reprieve when I'm with my kids or my grandkids or some good friends on a golf course. I play golf. I suck at golf. It's the same three guys, so we can laugh for four hours.

I'm going to interrupt you real quick. Does this start when you come to this country? You go from the, you tell the story of being like this precious, like.

Precious? I don't know.

A positive boy at 10.

Sweet boy.

Sweet little boy. And then at 15.

Yeah, yeah, yeah.

So that this divine, Dave Ogilvy has this great way to put this. He says all great people do great stuff.

Yeah.

Are divinely discontent.

Yes.

It's like just never satisfied.

A word I've always hated that I've learned to like is content. I hated that word until about two or three years ago. I hated the word content. It felt like settling for something. I hated it. Now, as I get older, it's OK to be content at this point.

Maybe I'm over the hill because I've accepted that word.

And stop talking about yourself that way. You're not over the hill.

No, I'm serious.

And you're not quitting either. I don't like this attitude I'm getting from you.

No, I have it.

You're 91 days in. You're not giving up nine months from now.

I'm not giving up, but maybe it came through that I'm scared shitless.

Good.

Yeah.

That means you're fucking doing something.

I haven't done anything yet. I want to see if I can do it.

Dude, you're not ready to be out of the game.

So I was never out of the game.

Exactly. That's my point.

I was never out of the game. Well, one of them I don't think of it as a game. I think of it as a business where people are employed. 70% of our capital comes from nonprofits, charities. So I never thought of it as a game.

In fact, when I ran Sequoia, I made sure we used all theright words. It's not a game. It's not money in the ground. None of that bullshit. It's a business where we're trying to help founders build great companies so we can have great returns for our limited partners.

That's the business we're in. But if I take myself out, it won't be done out of fear. It'd be out of good taste and kindness for my partners. It's not out of fear. I'll never give up out of fear.

But if after a year, I'm not good for anything, I'm going to be the one that's going to have a look in the mirror and say, you're done, that you couldn't do it this last time. Now, I've done a whole bunch of good things in the last couple of years that I don't want to get into, including starting a company and so on.

I happen to think I'm at tip top of my game. But in this one, I have to show it. I haven't shown it yet. And it's all in performance. It doesn't matter what you do, it's the results at the end.

Have you seen anybody in your business stay too long?

Stay too long? A million people.

Did Don?

No. Don, Don stepped down in 1993. I believe, I'm going to guess, he was probably 58 to 60 years of age. He didn't stick around for too long.

Why did he stop?

I think he had enough. I think he had enough. He had two guys and Mike Moritz and me that he thought could take over. He had older people that wanted to take over. And it's interesting how Don told us we were the guys.

There wasn't a big conversation. It was a yellow sheet of paper. Don always wrote in green pen on a yellow sheet of paper. One day we get a little note that said, Mike, 1.1. Doug, 1.1. The other name, another young man, I don't want to embarrass anybody, 1.0.

The older guys, 0.7, 0.6. That was the vision of the carry for the next fund. DTV, Don, question mark. You figure out what you want to give me. And that's how Mike and I knew we were the two guys that were chose.

There was not even a conversation?

No conversation.

So I'm a big fan of the way he thinks. He gave a few talks.

Maybe he talked to Mike Moritz. He didn't talk with me. I just saw the sheet of paper.

To me, when I think about him, he's like a simple genius to the way he thought and operated. Would that be an accurate way to describe him?

I think part of it was accidental. You know, look, I love Don Valentine. And there's not a bad thing I could say about Don Valentine. But Don also made a ton of mistakes, as we all did. We sold our Cisco shares for cash.

For the total gain of 90 million, we owned a quarter of Cisco systems.

How big is that mistake in dollar terms?

What's Cisco's market cap at its height might have been half a billion. So like, what's a quarter or half a billion?

A lot more.

No, no, sorry. Not half.

Half a trillion.

Half a trillion.

Yeah, I understood what you meant.

Half a trillion. A lot of money.

A lot more than 90 million.

But look, we all make mistakes. How many of the distributions I push for at ServiceNow, I left a 10Xer on a table. 10X. You know, it's crazy. We've left billions upon billions of dollars, as we all did in the venture industry.

But you know the story. I'm sure that you've heard a story of my review from Don Valentine.

I don't know.

So I came out of a presentation with a, it was Don, me, and two other guys and a founder. And I guess I asked some questions, maybe too aggressively. There was a note on the table when I got up.

Doug, dash, not fit to listen to founders. He left that on the table for me to see. I love whenever I hear young guys, I like some feedback and I get a three-month review. That was my reviewright then and there.

And so, you know, it was a school of hard knocks. It was the semiconductor days. Of course, we evolve through time. Founders are the most important person in our business. Founder first, our client second, and us third. It's not that we're boy scouts.

It's not we're third. But we know if we doright by founders, we'll have great returns of which we'll share. So Don was wonderful. Don was the one when everybody wanted me out of Sequoia because I was insufferable. Don was the one that said, give the young guy a little more time.

So he saved my ass.

Back to this mistake of selling early. I just finished reading this book. It's essentially a biography published in 1966 on all the merchant bank families. It's called The Merchant Bankers. And at that time, they're all family businesses. And there's one of my favorite quotes in the book.

It's this guy bitching because they own like, whatever, 20% of some company like DuPont or something back in the day. And they're like, do you understand if we didn't sell this? And he's saying this is like 1915. He's like, we'd be billionaires in 1915.

Yes, yes, yes.

So that's a very common mistake.

Yeah, but most companies, if you hold them too long, go away because technology changes. But if you have a sniffer for one of these, that happens maybe five or ten a cycle, maybe it'll be a lot more in this cycle.

If you can sniff one of those and hold onto it for 20, 25 years, there's really nothing else you have to do in life.

Are most of your friends investors or entrepreneurs?

Most of my friends are neither. Most of my friends are people that I've met in my early days of life who have blue-collar jobs,

who are nowhere near the techno world. I have maybe two friends in this world.

Most of my friends are from high school and maybe college, completely, or maybe from Italy.

Even further back?

Yeah, even further back. You know, I just came from Italy a couple of days ago. I spent a couple of days with a friend of mine who's a cop at the airport in Genoa, Italy. You know, he's one of my closest friends.

So you still are able to relate to people even though.

Still, just the notion to relate to people, I find that kind of weird.

OK.

It's like me relate to people. It's almost as if, ah, you're there. I can relate to you.

No, but you know how this goes.

No, I get it.

Yeah, people start out with nothing. They get really successful. It's like they kind of isolate themselves.

No, no. I have, thankfully, and that's maybe one of my few good traits, I'm still normal. I make sure that I lead my life with no handlers. Look, I have everything in life that somebody needs. But I have no handlers.

I have no personal assistant. I don't have anybody who, you know, who cleans up after me. I still take my water glass down in the morning, put it in the dishwasher. I cooked yesterday afternoon. I washed all the pans and everything on my own.

Those are the things that keep me grounded in this crazy world of ours in which we live here in Silicon Valley. In a way, I think of myself a fairly simple man who found himself in theright place at theright time, didn't screw it up, whose only true skill

is a sniffer.

You keep saying sniffer. What is a sniffer?

Sniffer on people, sniffer. I have an ability to walk in a room in a business meeting and kind of know what everybody's thinking, kind of know what everybody wants to hear. You know, I really haven't lost an investment in 30 years in Silicon Valley.

People have beaten me because of price, but I haven't lost otherwise.

But relate, relate not losing an investment to a sniffer.

Because I can see it. I have a sniffer of what people want. And that same sniffer takes me through what business is like, what's a real business and what's a dream and what's a pipe dream, even though I do not know much about the technology.

Maybe a way to say it, it's EQ. That is really my main skill. And the other thing that I pride myself is I'm a very good soul. In fact, the Sequoia spec of people we want to hire has changed.

We had this complicated spec. It's now down to a hypercompetitive person with a heart of gold. That has become our spec in the people we hire. We want people not like me, but that are willing to do theright thing when it's highly inconvenient for the person doing it.

And it's willing to walk through walls in order to win in an ethical kind of way.

How does the people you want to hire differ from the founders you want to back?

Same thing. Same. They need to be outliers. The founders you want to back have to be extreme outliers in something. IQ, drive. It's kind of the same thing in the people. We have all these adjectives when you walk in a Sequoia office.

They reverence the outliers. And I look at that. And to me, they're the same adjectives in people that we want to back and people we want to hire. I think we look a lot like our founders. We don't give up.

So when we go back to this idea that you said earlier where it's like, hey, you know, some of these other traits that other venture people don't like in founders, I love. I'm very attracted to them. Going back to the founder of Nubank, did he have those founder traits?

He had a combination of smarts, drive, clarity of thought, toughness, goodness, judgment, mature way beyond his years. Look,

here's what I have to tell you. We interview people. And Mike Moritz had a great line. He called them half pagers or full pagers. You interview someone, you write a half page. There's nothing else to write. You're there 30 minutes.

You look at it and you watch. God, I can't believe it. You know, I'm done. And then you have people that you look at your watch and it's an hour has gone by and you can't believe it. And David was one of them.

And I remember talking to him. The hour flew by. And it was clear to me that we loved this person. And he tells the story to show you how Sequoia works. I said, yeah, there's somebody else that wants you to meet.

He makes it to his car and his phone rang. And it was Mike Moritz. He didn't make it out of the parking lot. That's how fast we move. We pulled himright back in and Mike met him. And within two minutes, Mike and I knew that we're going to hire this kid.

And I had interviewed 10, 15 people from Brazil. They all looked the same. There were all these super smart, fine, wonderful guys and girls. They all went in consulting because that's how you self-select in these new markets. I saw it in India and so on.

But they all looked the same. I couldn't tell them apart. And then I met David Vélez. And within one hour, I knew for sure that he was going to be the person we were going to hire.

Who are some other great founders besides him that you partnered with?

Fred Luddy of ServiceNow. He was older, but he made everything simple. He came to Sequoia to present. And he told us everything that was fucked up with his company. It was the wildest person.

That's how he started?

Yeah, everything that he screwed up. I mean, if you didn't want to sell shares, of course, you knew what he was doing. But if you didn't want to sell shares, that would have been the type of pitch. Now, we all still saw through that and so on.

But he was terrific. Complete clarity of product. He simplified this thing called workflow where I ask for something and you respond and you answer back and you ask for something. He simplified workflow to the most basic of ways that people can communicate.

And that was the foundation to ServiceNow. That was incredible. Incredible. And then you get into the Israeli founders, which I adore. They are tough. You know, keep in mind, they think incoming missiles are kind of everyday type of occurrences.

And so they're naturally tough. They don't take any shit. They're smart as hell. Somehow, they know what America needs way over there when they work at 8,200, which is one of the units in a government, you know, in Israel.

They're very trustworthy. They're terrific. I love. And they're tough as hell. And the conversation with one of these, usually men, no, actually, there's a woman that she used to be a spy in Iran. She's tough as hell.

And that's just a founder?

Yeah, she's a founder.

What does her company do?

It's a cybersecurity company. But not with her, although a little with her. It's almost when you talk to these founders, have you seen those, I don't know what that sport is where you smack the shit out of one other guy's smacks?

We had a founder on the show. Dana White's company.

And you take it and then the guy, no, it's not quite that bad with an Israeli founder. But there are no holds barred. They will tell it to you straight. You'll give it to them straight. It's productive. It's not personal.

It leads to an outcome. It leads to an agreement. And it takes 15 minutes. It's just terrific.

How do you build trust with the people that you want to invest in?

It doesn't start with trust. It always starts with fear. We had the big bad venture guys who in their minds want to own their whole company. In fact, I love to tease founders when they ask me, how much do you want to own?

I said, we usually start being happy at about 100%. But we can go from there. And I do that on purpose to almost take the nervousness out of the room. The way you build trust is first to go in and explain to them, we don't want to screw it up.

It all starts with that. And then having the look or the conversation with them that begins to show them you might know something about their business. And then paving the way for them to ask you the first question, which may come in an email.

The first little bind they find themselves in. And if you rush in and you help them and you take no prisoners and you don't make it painful. And when they're down, you help them. Don't turn the screws when they're down.

If you're going to turn the screws, do it when their ego's up here because they beat the quota by 30% or something. When you help them out when they're in a jam, slowly by slowly, you build trust, which usually takes about a year.

It's not done immediately. There's usually lots of fear at the very start. Oh, no, I got Doug Leone in my board. It's almost they want Doug Leone, but they're scared as shit to have Doug Leone.

The reason I ask is because you have one of the greatest quotes I've heard where you said, trust is the grease that makes all business run.

It's accelerant. I created the tenets of Sequoia. One was performance, two was teamwork. And the other eight, I said, if you don't have the first two, the other eight don't matter. And after I wrote those and I published them, I said, shit, I forgot the zeroth one, which is trust.

Yeah.

With trust. Trust, if you have trust in an organization, you can fly. You can make decisions extremely quickly. Trust is interesting, though, because it has both knowledge and intention. In other words, I can trust your intention, but I think you're a putz, which case I'm not going to trust you.

Or I can trust your skill, but I don't trust your intentions, which case I run the other way. And so I've taught my partners early on to make sure they understood trust as having those two components.

That's interesting. I've never heard it broken down like that. What came to mind when I read, when I heard that quote from you, it's like a quote from Charlie Munger, who said something very similar where he said that trust is one of the greatest economic forces on Earth.

Yeah. It's necessary in order to have a business. And you see these companies with broken culture where no one trusts one another. And you can't get shit done. And you know, and by the time someone here that knows something makes a decision, which is theright decision, to the time it gets to the VP or the CEO, forget it.

It's a whole different thing.

I'm glad you just said that because I had dinner with at his houseright before he died. And he told this story where he's like.

Who's this?

Munger.

Charlie.

And.

Theright page of 99 years of age.

I know. And then I had another dinner scheduled after his 100th birthday. Obviously, he passed away that November, the previous November, unfortunately. He told us a story where it was during like the Enron blowup.

Yes.

And him and Buffett would like, they knew all the assets they actually wanted. And they had decade-long relationships with a lot of people.

Yes.

And they wanted to, they saw this, I think it was like a pipeline business that Enron owned. Guy Buffett trusted called on Friday and said, hey, this is happening, but you have to wire the money like now. And it was like a couple hundred million dollars, I think.

I forgot what it was. Let's call it 400 million. And the Berkshire's lawyer is like, you can't do this. Like, we have to check it. You're going to be liable if this thing blows up or whatever. And Munger goes, we wired the money without even an email.

And then I think food was dripping down his mouth, if I remember correctly. And he's like, we made a couple billion on that risk-free.

Yeah.

Because he's like, why? Because Buffett trusted the guy that was on the NFL.

It's quite interesting because I'm a trusting soul by nature. And I've never been screwed in business. I've never pre-wired money, if you will, as a metaphor, and paid the price.

This is why I wanted to read about the merchant bankers because there's just something very appealing to me. Like, they have an old school, like gentlemanly way of doing business where in many cases, there's no paper at all.

Yeah.

It's just, you said you're going to do this. I said I'm going to do this. There's not, we don't write anything down.

Yeah, yeah.

And just do it.

Yeah. Well, it's a value of a term sheet. A term sheet is not worth the paper it's written on. But once you sign it, both sides, I think you have to honor it. You know, many times where I'm on a board of a company and we signed a term sheet with an investor.

And then three days later, someone's interested at a much higher price. There's no way. There's no way. No, no. We shook somebody's hand. And people say, well, you have a fiduciary duty to take the higher price. No, I have a fiduciary duty to make sure the culture of the company is a clean culture.

And we do business the correct way.

Yeah, at the end of the day, you have to be comfortable with your own self.

Yeah, absolutely.

Yeah, 100%.

Absolutely.

I'm actually surprised that you're trusting, like default trusting.

Yes. I have a round head, a deep voice. And people are scared shitless of me. And you know, and no, I'm serious. And then people find just the opposite. I will bust my ass to help you more probably more than anybody else you've ever met.

It makes me feel good. It's a very selfish thing on my part. I don't do it for you. I kind of do it for myself.

What do you mean?

I really like helping others. It makes me really, really happy.

Yeah, one of my closest friends is kind of like an advisor and older brother. He says he finds it intoxicating to be dependable for his tribe.

Yeah.

Is the way he puts it.

Yeah, yeah. Look, I ran Sequoia for 26 years. I never viewed it as running Sequoia. I viewed it as working for all the other people. I used to tell them, we have a, you all have a backwards. I work for you guys or gals.

Like, it'll work for me. I mean, yes, I get to make a decision here and there, but the decision I make is so we could all win. But you tell me what you need and I'll do whatever I can just to get it done.

Deal is how the best founders turn the world into their talent pool. I've been studying how history's greatest founders operate for a decade. And one thing they all have in common is they understand that recruiting and hiring the very best talent is your most important priority.

A players recognize other A players, which is why top companies like Ramp, Shopify, 11 Labs, Uber, and DoorDash all use Deel. Many of the top founders I know have personally invested in Deel after using their product. And what they discovered is that Deel is the best company in the world at building infrastructure for global hiring.

Deel will help your business hire, pay, and manage any worker anywhere in the world so you can retain the best talent anywhere and spend the rest of your time focusing on what you do best, delivering value to your customers.

The founder of 11 Labs has a great description of the value Deel can give your company. He said, we built 11 Labs to break down language and communication barriers, with Deel enabling us to hire and support exceptional talent anywhere.

We can accelerate our innovation and bring more voices, stories, and ideas to every corner of the world. Deel is trusted by over 40,000 businesses. Learn how they can help your business today by going to deel.com/senra. That is deel.com/senra.

So looking forward, you're on day 91. Like, what are you, what's going to, you think, occupy most of your time in the next 30, 60, 90 days? Like, what is on your mindright now? If you're not looking backwards.

Looking for investments. Because at the end of the day, it doesn't matter if it helps Sequoia during a crucible type moment and so on, as I said, it's going to matter what's on that sheet of paper or what I've done in the first year.

So we have a little thing we do on Mondays called MIT, the most important thing for the week. And everybody talks about, I've got to do this. And my was, I have nothing going on. I just came back from vacation.

I don't think I have, I don't think anybody ever said they have nothing going on. I mean, it takes guts to say in front of nine people, I have zero going on. My MIT is to go scrounge. I use that word for deals.

And that means getting on the phone, calling people I know, networking like crazy, and try to intercept some kind of very nice investments. It's one of the 20 or one of the 30 that I want to make in my lifetime.

But is that process today different for you than it was when you were at Sequoia previously?

It was because I was more in the deal flow of my generation. In fact, it's very different because the founders of the super interesting companies are 23 years of age. I don't have a network of 23-year-old age friends.

This is very interesting to me. I want to hit on that. Before I forget though, I really, I remember setting a friend of mine up with one of the smartest people I know. He had two businesses running, trying to figure out which business he should give his attention to.

For like 15 minutes, my smart friend just identified in the core of the issue. And so the guy that I hooked him up with texted me, he's like, man, this guy was just fucking nailed it. He understood it.

And I sent him a text back. I go, he's my favorite type of person. Very hard to get to. Hard outer shell, but once you break through, he'll do anything for you. I think that's very similar to what you were saying.

It's like, don't be confused by the round head and the booming voice and the fucking everything.

Yeah, the bald round head.

Yeah, the bald round head. The other thing, it's very interesting to me. I've had a couple, like I don't hang out with venture capitalists. Like I just hang out with founders. Like I have no friends that are not entrepreneurs.

Like I work on founders podcast during the day, hang out with founders at night. And.

Well, I'm so proud that I'm a founder of a company. I actually, I actually love that.

Well, no, the reason I bring that up is because it, there's been happened on a few occasions, but this happened recently where there's another venture capital firm that's like, hey, we have an issue with like our story and everything.

Can you just like meet with my partner and like talk to us about us? We'll have lunch. It's like, I fucking like you. We'll just have lunch. I don't even give a shit about you. Really give a shit about your business, but let's talk.

And then I would ask this guy who's been in venture his whole life, which was interesting to me, you know, like who he thinks, like if you're a young founderright now, like who's the first person you're going to call?

You can pick anybody and they're going to be your first investor. And he starts naming off all these firms. So I go, how could you work in this business and not understand it? I go, you're hanging out with too many venture capitalists and not enough founders.

It's nobody on that list. It's exactly what you're talking about. It's these young kids are identifying a vastly different group of people than they, than the previous generation has done. So that is an interesting problem.

I mean, in the ideal world, a 25-year-old says, let me get some experience. Let me go call Doug Leone. It's not, it doesn't work that way.

So then how's the solution?

I have to find out.

Yeah, what's the solution to that?

I think you have to hustle just like everything else in life. It's what you're doing in your business. You know, like you hustle like crazy. All the books you read, all the people you meet, all that you're doing for your business.

Yeah, but like, here's the thing. I just talked to Devesh about this too, where it's like,

I have this fucking uncontrollable obsession. Like I can't tell you why, since I was a little kid, all I want to do is fucking sit in a room and read books. That's never stopped,right? And then once I found podcasting, I just can't stop fucking thinking about it.

I get sad. This whole crew that you see here, all these fucking cameras and stuff, they didn't tell me that somebody on the team was getting married. They went to Italy. They took two weeks off. I was like sad as fuck.

I went to Italy for like what, three days? Rob, how long was I gone? They're like, I'm like, I'm going back. I got shit to do. Like I want to get to work. So it doesn't even feel like a hustle to me.

It's just like this compulsion.

I think it's the best kind.

Yeah.

I mean, it can feel like a hustle because then you're exhausted. Then you need, you know, Friday, Saturday, and Sunday off. No, it's your love.

Yeah, but one thing that did change, you know, Brad Jacobs, you've spent any time with him?

Mm-mm.

I mean, it's in a beautiful way. Weird cat.

Yeah.

Unique. Can just read his book, How to Make a Few Billion Dollars. Half of it's on his like, his mind, his like, not hypnotism, his meditation practices, like his, it's all about his mind. But he's like an unbelievably joyful human.

Yeah.

And he's the one that changed this for me because I was just like you and like all these other founders and anybody else, these divinely discerned people. It's like my inner monologue. I just wake up every day and I'll focus on what I did.

It's like, that wasn't good enough. You could have done it better. Like it's just super negative. And until he sat me down one day and he's just like, this doesn't serve you anymore. It's like that got you to where you started, to where you're now, but now your drive is generative.

Your drive is that you fucking love what you do. So stop being mean to yourself. And it was weird, you know, he's 68 years old when I had this conversation with him. Overnight, overnight, it changed my inner monologue.

No, the things I think about is not all the success I achieve, but all the opportunities I let slip. All the screw-ups I made as an investor. You know, I don't think too much about rebuilding my life or redoing my life, I should say.

But all I think about, oh my God, the community, the venture community and I have screwed up so badly. We, I could have done so much better. Look, I've done fairly well.

No, that's an understatement.

No, no, both. I'm not, I'm not saying just financially, but you know, in things I've done. But all I can think about is how much better I could have done it. As I think about my next board or two, I think about it the same way.

I mean, all the other boards I've done, I've done a decent job, but I've got a lot of room to really go. I can't wait for my next one to exercise yet another time all my learnings for yet another next founder for his benefit or her benefit.

We should actually talk about that because you have a ton of experience with that. So many of my founder friends just have completely fucked up their boards, don't know how to run one, don't like the one they have.

Like what advice do you have on this?

Choose to architect your board the same way you architect your product. You know, a lot of people choose boards like they choose, like to find a girl or a guy kind of in a bar. You know, she talked to me, let's go out Friday night.

You know, he talked to me, let's go out. It's no more complicated than that. And then I'm putting a thought into it. You know, a board is like a mate, a lifetime mate. There you mate for the next five, seven years.

I bet your most marriages last probably five, seven years these days. Be extremely careful. And it's not about the first term sheet. It's about who do you need, who has the skillset and the temperament you need to complement what you have.

And complement means a bit of discomfort. Because if both of you have the same background, there's probably a little more comfort. And you want to find a little bit of discomfort. You want to find someone with a very different set of experiences, which means that initially you're going to talk like this.

Initially, you're not going to understand what he or she is telling you. But that's where the learning comes. And so I find people, they don't do it at all. I got a term sheet. How many times I've heard, I got a term sheet.

I got a lead term sheet. So what? Who cares? Of course, you got a lead term sheet. Everybody gets a lead term sheet.

So talk about some of the mistakes you've seen in board construction, man. Is it just that? It's just like this person volunteered and I took them?

So there is domain skills, there's level of knowledge, and then there's personal traits. So early on, when you're building a business, I don't think it helps you at all to find a board member who's an engineer. You're an engineer yourself.

That's not the skill you need. That's what I mean by domain skill. And experience, you have no experience to put a board member with no experience. I don't think it helps you at all. It doesn't mean you have to find someone who's 68 years old, but find someone who's been through the cycle.

And then there's personal needs. Out of 10 venture folks, and I've said this and I've taken a shift for it, maybe 30% are incompetent. They don't know what they're doing. Another 40%, I call them no ops. No damage, no anything.

They nod, you know, they nod with a group. And maybe 30% or fewer, maybe 20% know what they're doing. And that's one overlay. The other overlay is, you know, managing their firms, their stature or their status in the firm.

I need a win. I need an exit. What's my partner's going to say? So you don't really have the board member there. You have the shadow. You have the interpreter of what he thinks, he or she thinks the firm wants.

If you take a combination of lack of experience, duplicate type domain, covers your ass with the partnership and incompetence, that's the worst of all kind. I see that all the time. I see that all the time. Just completely, let me put it in your terms, completely fucking clueless.

Completely fucking clueless. To a damage, not a no ops stage, a damaging stage.

The best boards that you've been on, are the board meetings contentious?

No. But issues are put on the table. Real conversations are put on the table.

But you're willing to argue, forcefully.

You're willing to have the real conversation. The argument implies, implies a tonality, a combative stage. I don't view it as that. I view it as a supportive stage to come up with the answer, the founder needs. So we're willing to get the real job done.

I won't concede the word argument.

Interesting.

It's the same thing at partners' meeting. We don't argue, but we have the real conversation. At times at Sequoia, we have to take a five or ten minute break. Five or ten minute break. We walk around, we go back in a room, the temperature has cooled down by 10 degrees.

We have the conversation, we come up to an answer, we're all in, we're all agree, no more conversations when we go out, it's done. And it's the same thing about board meetings. And it's okay to disagree. It's okay to disagree.

I would say that one of the most interesting things I learned this year from doing the show, Ed Capitol was nice enough to let me come to his house and record a conversation with him. And he was like, hey, you know, a lot of people don't know that in the 10 years that Pixar was a public company before, you know, the acquisition from Disney, that Steve Jobs fired two of our board members.

And they might know that he fired them, but they don't know why he fired them. And so I asked him one day, like, why he fired them? He's like, because they didn't disagree with me. He was like, they always agree with me.

They serve no purpose.

Yeah.

And he was saying that, you know, a lot of people say they want to get to the truth. And I think Ed on the episode said, most people that say that are actually full of shit.

They're full of shit.

Steve actually wanted to get to the truth.

They're full of shit. Here in California, more than the East Coast, people don't like the direct conversation. I had to learn that first coming, you know, I went from Italy to New York City, which was halfway to America, and then to California, where everybody told me, yes, give me the feedback, the honest feedback.

Nobody wants to hear the honest feedback. Who are you kidding?

Yeah.

You know, everybody's full of shit.

But the best founders have to.

They have to, and you have to figure out a way to do it in a fashion that it's understood, received, accepted, and acted upon. It's almost an art. It's not just giving it, it's giving it in theright way, at theright time, with theright tone, with theright words, with examples, and so on.

Look, it's like telling a founder, your VP of sales sucks. You're not getting anywhere. But about if you said, there's a couple of VP of sales I'd like you to meet, just so you can gauge yourself, he'll meet or she'll meet two people that know what they're doing.

Suddenly they'll say, holy shit.

Okay, this is like inception.

Well, I don't know about inception.

Okay, so I just, I'm a big fan of Christopher Nolan. I just reread his biography for the second time. And one of my favorite lines in Inception is like, what is the most resilient parasite? You know, is it, you know, bacteria?

Is it a worm? It's like, it's an idea. And the whole thing is like, but it can't be an idea that somebody else gave you. You can't say, Doug, you should believe this. You have to incept them with the idea so they believe that they came up with it.

Yeah, it's like your kids. What are you going to tell your kids? All the things they shouldn't do. Good luck.

Yeah.

Forget it.

Are you familiar with the shit sandwich?

The shit sandwich.

On how to give feedback. I don't know if this is, this is the art you were talking about, but shit sandwich is like, compliment, the negative feedback, and then another compliment.

Yeah, yeah.

That's why they call it the shit sandwich.

Yeah, yeah, well. I don't know how to do that. If anything, the mistake I make is I'm too direct. I remember there was a venture guy, Jim Breyer. I heard him turning down an investment once, and I said, oh my God, the founders are going to walk away from this, thinking he won the freaking lottery.

And I don't know how to do that. And I was always admirers of how he could do that. And

I'm more direct. I hear people talking on the phone for 20 minutes, 30 minutes. My conversations are three, four, three, four minutes at most. You know, hi, what do you need? This and that. Done. Okay, yes, I got it.

Allright, I'll let you know.

30 seconds, not even three minutes.

Yeah, most of my conversations are less than three minutes long.

Yeah. You know, what you think is interesting that you don't like hang around with other venture capitalists?

Why?

I don't know. Founders hanging with other founders.

I think it comes to the fact that I grew up from dirt and the inside of me that's still mostly dirt. I really think that's it. You know, I really think that's it. I'm not an intellectual. I don't find, to me, technology is terrific.

It's interesting. It changes every day, but it's not my lifeblood. I think humanity and one-on-one relationships are probably the most interesting thing for me.

Are you introverted?

I'mright on a line. According to Myers-Briggs, I'mright in the middle. I do not like meeting new people in general. In fact, every time I have to meet somebody new, the thought, and it's kind of nasty, that goes through my mind is, shit, another asshole I got to meet.

Where I remember talking, where the extroverts, I'm told, find energy.

Oh, they get energy.

They love it. They love it to meet new people. Oh my God, another person I have to meet.

Yeah.

And yes, I do it. I can turn the charm gene on. I can fake it. I can be a cocktail party and know to walk around the network with everybody. But I get home and I'm exhausted from that.

Yeah, you're definitely introverted.

Yeah.

I am too. And I think there's a very similar, like, you know, I think about the opportunity cost. Again, I always quote Munger, where he's like, you know, the way intelligent people make decisions today, it's all opportunity cost.

And for me, it's like, I'm going to spend two hours with somebody new. That's very expensive to compare to maybe the five true friends that you have in your life, the cop in Italy or your friends back in New York or whatever.

It's like, I'd rather just deepen that relationship that I have than go out and.

But I realize though, that putting myself out there and meeting new people makes me happier later. In other words, if I let my instincts of going to the same three restaurants or hanging with the same people, if I do that all the time, I'm less happy that if I put myself out there, I dare take these minor emotional risks, I find myself happier because I feel more well-rounded at the end of the day.

I feel like I've done something.

Could you even be in the business that you're in, but not meeting new people?

No, absolutely. Although it's not a social setting,right? It's work. It's presentation, present, help, assist. You know, I think the closest friend I have as a founder is Velez. All the other founders are pure business. I don't socialize with spouses or any with any of the founders.

But you do with Velez.

Yes, because he was an associate. I hired him. We had kind of a paternal, you know, son relationship.

Yeah, yeah. Is there any venture capitalist that just made, like, maybe one or five or 10 investments and then that was it?

Cross Point Ventures had a hell of a run for seven years and they went away. It's a name you may not remember. Look them up. Now, they still exist, but it's all the partners left after just making a whole bunch of investments.

There was a venture firm called TVI. You may not remember. Technology venture investor.

That's the one that bought Microsoftright before the IPO?

They didn't buy Microsoft, but they Marquard was on a board of Microsoft.

Yeah, they got 900.

It was a couple of one guy started Benchmark with two other persons from another firm.

But Dave did, I think, if I remember correctly, from this book called Hard Drive.

He was on a board of Microsoft. He was the only venture investor in Microsoft.

The year before Microsoft went public, I remember, they were doing 140 million in revenue, 38 million in profit, and they sold 995,000 shares for a million dollars to him.

No, I don't think, I don't think, I don't know what they did.

We're going to put this in the show notes.

But it was a venture firm that had the keys to the kingdom.

Yeah.

And somehow didn't last as a venture firm. Where Cross Point, they just called it in and they all went their merry way. This is a firm that just couldn't coexist even though they had everything.

Yeah, there's something interesting about that. So I can't name who, but it's one of the best entrepreneurs living. And he's like, actually, you know, they were talking about the greatest seed investors of all time. He's like, greatest seed investor is my dad.

He made one investment. He made $40 billion.

That's it.

Didn't invest in anything else.

That's it. That's it.

That's awesome. So I asked you, if you're introverted,

I want to ask you something that I think more is definitely introspective. You don't strike me as introspective at all.

Morris taught me how to listen. Morris taught me how to listen to the exact word that said, the timing of that word, you really can understand about a human being by just listening to the adjective and so on.

I took the Morris basic training that I got and I used it and I expanded on it. I love listening to people speak and.

Wait, what do you mean you can learn by listening to the adjective they use?

Oh, when they use when they describe a situation, humans can help by letting it out, by showing themselves. And how they use the word I versus we when they describe it. I can sell you this. I'm thinking to myself as he's presenting, I said, fuck that.

You can't sell me shit. You know, that's what I think during the presentation. You know, as I have that stupid grin in my face. But just listen to the specific words that are said when they say it. We often choose a founder without a line of code, without anything, based on a presentation, clarity, vision.

But we also want to get the interpersonal traits. And you can learn a lot if you just pay super careful attention. I mean, Morris used to do it to me all the time. He used to re-quote my words back to me or the way I said them.

You know, it would drive me nuts. It drives me nuts enough that I learned.

What was happening there? Why would that drive you nuts?

We used to write memos at Sequoia. And the memo were from and to. And Mike pointed out to me that the from puts myself first and the to, the recipient second. And Morris was the first that wrote the memos to and from, to put the other person first and yourself second.

I understood that putting the from first and the to second as being a somewhat egocentric move where it comes from you. You got to put yourself first in that memo. And that's one of the minor little things that I learned from Mike Morris.

And there were hundreds of things like that.

What else did you learn from him?

So Mike was brilliant. Let me tell you, he was a very painful cohead. And I, you know, he knows that. I was painful for him. He was painful for me. Like I said, it's a badge of honor for me anyway that we made it work.

But Mike had the ability to dream broadly in ways that I've never seen before. He could answer the question better than anybody I've ever known. What if everything goesright? Not, oh, we're hedges and that. No, what if everything goesright?

What can this business look like? And if you look at the companies he's been an investor in, it's a spectacular list. You know, look, he had his faults and we're not going to talk about all his faults here.

But on that dimension, he was by far the best in the world.

Allright, Doug, I appreciate you doing this. We're going to run this back because a year from now, you're still going to be doing this. I have faith that you're not going to quit nine months from now.

Yeah.

And if when you're still around, nine months and one day from now, let's run this back. I appreciate you taking the time.

Thank you.

Allright.

Bye-bye.

I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work.

Most of the guests you hear on this show first found me through founders.