20VC: The Sequoia Investment Process | Investing Lessons from Doug Leone, Roelof Botha & Alfred Lin | Sequoia's Framework for Analysing Founders | The True Benefit of Having Sequoia on a Cap Table & Sequoia's Biggest Threat with Pat Grady

The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

The Twenty Minute VC

Finance, Venturecapital, Tech News, News, Siliconvalley, Technology, Investing, Startups, Business

4.4 • 637 Ratings

🗓️ 8 July 2024

⏱️ 69 minutes

🔗️ Recording | iTunes | RSS

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Summary

Pat Grady is one of the most successful growth investors of the last decade. As the Head of Sequoia's growth investing practice, Pat has invested in companies with a combined market cap exceeding $250BN. Among Pat's immense portfolio is Hubspot, Snowflake, ServiceNow, Okta, Amplitude, Zoom and Qualtrics. Pat is also one of the best acquirers of talent in venture hiring Andrew Reed, Matt Huang, Julien Bek.

In Today's Episode with Pat Grady We Discuss:

1. The Sequoia Investment Process:

What is the Sequoia investment process today? How has it changed over time?
What could be improved about the process? Where is it weak?
What is the biggest strength of the process?
How do Sequoia remove politics from the investment decision-making process?
Are the best deals "contrarian"? What does Pat mean when he says you do not "get extra points for being contrarian and right"?

2. What Sequoia Look for When Investing:

What is Pat's framework for assessing founders? How does it differ when investing early vs late?
Team, traction, TAM, how does Pat rank the three when investing?
What have been Pat's biggest lessons on market sizing? Does Pat take market timing risk?
How much weight does Pat place on "traction" when investing? How sustainable is PMF?

3. The Three Core Pillars of Venture:

Sourcing: What does Pat rank Sequoia for sourcing? Who is the best at sourcing in the firm?
Selecting: How does Pat rank Sequoia at picking? How has it changed over time? What could Sequoia do to improve their picking ability?
Servicing: What does Pat give Sequoia for their "value add"? To what extent does Pat truly believe that venture investors do add value?

4. Pat Grady: AMA:

Pat has hired some of the best in the next generation of venture investors; what are his biggest lessons in what he looks for when hiring investing talent?
What is his single biggest takeaway from working with Alfred Lin, Roelof Botha and Doug Leone?
What are his biggest takeaways from working with Hubspot, Snowflake and ServiceNow?

Transcript

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0:00.0	If you have Sequoia on your cap table, chances are your life just got a lot easier.
0:05.6	There are kind of two things that I care most about when assessing founders. So one is founder
0:10.6	market fit. Two is the vector that describes them. The market determines how big a company
0:15.5	can get. The founder determines how big the company will get. I'd say on sourcing, we are eight or nine
0:21.8	out of ten. On picking, I think we're maybe a six out of ten, when a company is a wild
0:27.3	success and you don't see us in the cap table, chances are at some point we screwed it up.
0:31.1	This is 20 VC with me, Harry Stebbings, and the show state is an immensely special one for me
0:35.5	personally. I met this guest nine years ago. I was
0:38.6	19, I had no real following, and we'd only done about 20 episodes of 20 VC. He gave me time,
0:45.0	mentorship and friendship, and he's been really my adopted big brother in venture for close to
0:49.4	a decade. Pat Grady, one of the most successful growth investors of the last decade. As the head of
0:54.7	Sequoia's growth investing practice, Pat has invested in companies with a combined market cap
0:59.3	exceeding a quarter of a trillion dollars. Among his incredible investments include
1:03.7	HubSpot, Snowflake, Service Now, Octa, Amplitude, Zoom and Qualtricks, to name a few. But before we
1:10.3	dive in today, I want to talk to you about a new venture fund making waves
1:14.4	by taking a very different approach.
1:16.5	It's a public venture fund anyone can invest in, not just institutions and accredited investors.
1:22.2	The Fundrise Innovation Fund is democratising venture capital, which could have big consequences
1:27.2	for the industry.
1:28.4	The fund is already off to a good start with $100 million into some of the largest, most
1:33.2	in-demand AI and data infrastructure companies. Companies like OpenAI, Anthropic and
1:38.9	data bricks, check out the Innovation Fund's impressive list of investments for yourself by visiting
	...

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