20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE

25:12And now a lot of these companies, I think, are ready. The days of Rule 40, you're going out at 60 negative 20, those are gone. You have to be a 30 and 10, 40 and zero kind of growing into a nice profitability curve in order to get public. And it took a couple years for the companies to get there. It also took a couple years, I think, for a lot of these companies to get to a level of predicted ability of their revenue that the public markets expect. Right? So if you're coming off COVID, you have all these just weird headwinds, tailwinds to your business that make it really hard to project. And so now I think we've rolled forward a couple years.

25:51The markets are more stable. These companies are more IPO ready. And so I do think that IPO market will open as we look into next year. Why would you? So if you are Starlink or your stripe or your any of these great firms, you can bluntly finance in private markets for as long as you need to. There is such a supply side if you're a great company and they've shown that, why would you go public even if you could? I think that's kind of the deal that you made with investors and employees. I mean, I don't know with secondary markets being as transactional as they are today. Are you? Many people are getting secondaries on all of that stakes.

26:32I think there are a couple companies that can do that, but do you think the $5 billion SaaS company that's a good, it's not maybe the best company in the world can really do that. No. Right, so I think there may be a certain set of companies out there that can pull off what you're talking about. Before 99 % of the companies out there, I think that's really difficult. So with this realization actually that right now we see more opportunity in public markets, okay, and we're going to stay away from late stage privates for now. What is that reshaping resizing of the portfolio look like in reality then?

27:08I think it's actually pretty natural and organic for us because we're at about a third of the portfolio that is private. That is probably more than I want to be steady state and that's a function of some of these companies just not going public in the in the time frame that we thought they would. What would you like to be steady state? Closer to 20 to 25 % would be more comfortable because then that gives us an opportunity to add. If we were focused primarily on the public markets, let's say if we had 50 % of the portfolio private, that would feel too illiquid to me. So 20 to 25 % feels like a pretty comfortable level.

27:42How do you think about position sizing on a per company basis? We've pretty concentrated portfolio, so about 15 to 20 longs. I want to make sure that the top longs can really move the portfolio in a major way. And as I mentioned, I think the power law still exists in the public markets, obviously, to a lesser extent than than the private markets, but we want to have the top side of the portfolio be pretty chunky. And so about 15 to 20 longs, about top five or about 35, 40 % of the portfolio. So it's pretty meaningful. And then what we'd like to do is to, you know, have the shorts just essentially fall out of that.

28:18Again, it's really how much more conviction do we want to express on our longs, albeit on the other side. We're not necessarily trying to solve for the short sign in a target a particular grosser net. Have you ever had it where both your long and your short were in Congress? And what I mean by that is, you know, if we said, hey, I'm just making it up here. I'm going to bet on Shopify and as a result, I'm going to short Amazon. And actually, you were right and you were wrong. Yeah. E -commerce just grew and both went up. So it's a really interesting question and this is a visualization that I like to give to everyone who joins our team.

29:00You have to be a pirate interpreting a treasure map. We need to sail to the right island and if we get there great for if we get there first great there is a massive amount of buried treasure. But if we're in the second ship there we're also doing pretty well. Even the third chip is going to do pretty well. So if we get AI right, there will be a lot of good ships. And Vidi is clearly the best ship today, but a lot of others are doing well also. Now, if we don't sail to the right island, it doesn't really matter which ship you picked. Those are just not good investments. So yes, we want to pick the best company, but we definitely better pick the right theme.

29:33And so for us, 70 % of our research process is actually upfront on the theme and only 30 % on the actual company. And so the example that you gave there, I think we'd be positive both Shopify and Amazon. I don't know which is the first ship to get there, but we are positive overall on that theme. You know, what we wanna avoid is we wanna avoid some of these themes that I don't think have legs where companies, whether or not you do a lot of great company analysis, it just doesn't matter. What theme did you swim towards, plant a flag, and the boat never came to that island? Honestly, we haven't.

30:09One, we spent so much time making sure the theme is actually working. And then two, we have pretty good insight from seeing what's happening at Sequoia. Doug likes to say, you got to look at what Wiggles, right? And you got to go hit what Wiggles. What does that mean? So being able to see what Wiggles be a company or theme early, I think is really important. And then being able to see, is that Wiggles becoming a tremor? Is it becoming an earthquake? Is it getting to be more than a wiggle? But if you don't see the wiggle, you could do great analysis, but if you never see the wiggle, you're not doing any analysis on anything.

30:47What did you not see that you should have themed? One of my bigger regrets and one of our bigger losers is in a company called Twilio. Twilio initially was a very good investment for us and actually ended up being a decent investment overall. It could have been a legendary investment. We held on for too long and as competition started to eat away at the business. And we actually saw some signs of it. So Gross Margin was off a few points here there, a couple questionable acquisitions, key executive departures. And I think each one of those things you can explain in a vacuum, right? You can pro -form an analysis for this Gross Margin, this specific quarter, or you could say this executive left for a really good opportunity.

31:31But I think when you take them all together, I think clearly something was a little off. And so again, that's why I think it's important to regularly rewrite these investments each quarter and have a discussion with the full investment team. And so again, I think that's where one of the ones where the devil's advocate point of view actually was really helpful to get a fresh, dispassionate perspective. I actually share your mistake on that. Oh, yeah. I did the same. Everything was good and then I saw Jeff Laffanol's like, right, I fucked it. I'm fucked. Yeah, good fuck. There's that moment when you're like, ah, bugger, that's the final nail.

32:04And you're like, yeah. But I remember one of my oldest mentors told me, Harry, be greedy when others are fearful and fearful when others are greedy. Do you buy that? I think it's really hard to do in practice. I think most people are fearful when other people are fearful and most people are greedy when other people are greedy. The best way to do it is just to be really long term about it. This really long term, let's not trade all the time. You know, there was that day, I think it was just last month where the Nique was down 12 % in a day. I mean, we just don't trade those days. Sit there, try to figure out what's going on, be long term about it, and not overreact.

32:43I think you're hard in those moments, but it's also hard to act in those moments, right? What do you mean you're just running around with your head cut off? Dude, this is why I think private and public at the same time you're a frickin' genius, because Harry sees crowd strike, you know, get hit to shit, and I'm like, down 20%, still a great business, still love the management team. Bye. Next day, legal lawsuits just like, just down another 20%. I'm like, maybe, maybe timing is important, you know? I think you'll be right there. I think you'll be right there by the way. Thank you, I'm still down.

33:15So I'll keep holding out for that one. Can I just go back to a really interesting element for me, though, which is actually the building of the business site? Which is, you know, you started, as you mentioned there, with like 50 million of partner money, I think it was. Can you take me to fundraising for this business? Yeah. How did that go in the early days? What's your favorite memory? It was difficult. The history of venture PE firms launching public funds has not been a good one. It was difficult to go convince LPs that we're going to go do this. We have fortunately some very supportive LPs, some of who will take the leap of faith with us because we've had such long -term relationships with them.

33:58but it was very difficult to be able to convince folks. It was a lot easier once we got a track record and got things going, but the initial, you know, $50, $200 million. What were you selling them? Consistency? Absolute returns. I think it's really just to be the best tech public private crossover firm in the world. And with our advantages, I think we can go deliver on that. We still got to go execute. The other thing that we're not selling though is we're not Citadel. Citadel, I have a ton of respect for Citadel and Ken Griffin. We're not selling a product that is not volatile. We're selling a long -term product because I think our advantages are long -term, right?

34:37It's seeing these long -term themes that will play out over the next 10 years. And so if we measure ourselves on a short -term basis, I don't think that is productive. One other thing that we did to set up the structure is because we have this long -term investment horizon, we have a long -term capital base, but we also have long -term incentives. And I think that's really important. So three or more year investment time horizon, three year minimum capital base, i .e. it takes LPs, three years to take your money out. And that is not standard. I'm sorry. That is not standard. That is not standard.

35:07And then the least standard part of what we have is we have also a three year incentive crystallization. And so what that means is most such ones, as you probably know, just take carry at the end of each calendar year. We take carry once every three years. And we also vest ourselves over a three year period. And so we have that 3333 type of framework here where I do think it helps us encourages us to think long -term. If you were a fund where you had monthly Redemptions and you had you paid your people an annual bonus. I think it'd be really hard to really truly be long -term I think you're really setting yourself up to incentivize your team to think short -term.

35:49I'm so sorry for such a naive question but I'm from the venture world. How on earth can anyone plan their business on a long -term horizon when you have monthly redemptions? I don't think you can. I think it's really hard to think about business building if you're making investments and you don't know what your capital base looks like in the next six months. How does the rest of the business do it then? I'm sorry, I'm just, I don't understand that. So I think that's why most hedge funds fail. It is really hard to go build a real business. If you are one of the large hedge funds like Citadel, you have strong LP relationships, you have lockups, you've got an incredible long -term track record.

36:24That makes it a lot easier when you have periods that are not up to your expectations. But if you are a $100 million hedge fund today, you don't know if you're gonna be in business in a year. It's hard to go recruit. It's hard to go spend money and say, we're gonna go build out a data science team. And you don't know how much time do I spend on recruiting, how much time do I spend on management, business building, LP relationships. and that's before you get to the investing. I think for us, one of the things that was most helpful actually in going through that period is that Sequoia does a great job of injecting Sequoia DNA while also allowing these individual businesses to grow up in a way that fits their specific area.

37:05So the Doug and Michael want to give them a lot of credit for this, the way they set up the various businesses. So SEG, Sequoia China, now Hongshan, Sequoia India, now peak 15, and Sequoia Heritage, was to give each individual team and set up partners full investment discretion. That's very different. So obviously we shared a brand, administrative functions, office space, leadership, so Doug's on the SCG, but was on the SCG board and now it's rule off and we collaborated closely. But the day -to -day management and investment process is up to that specific team. And I think what it was was a recognition that is really hard for an American investor to go make great investment decisions about Chinese startups.

37:44Similarly, it is very hard for venture investors to go make great decisions about managing a hedge fund or a family office. It's just not what you're spending every minute of every day thinking about. It's also really hard to recruit great talent if you watch over and second guess every single investment. But that said, there are also many aspects of running a first -class investment firm that do overlap. So for example, hiring the best talent. So instead, what Michael and Doug did was they were heavily and actively involved contributing through leadership and mentorship. So, Michael and Jim Gets joined our portfolio reviews for the first several years from inception and helped us refine our investment process every week.

38:23Doug and Jim have been critical with LP relationships. With recruiting, RUOF still interviews all our key hires. Michael has even come with me to meet public company CEO, management teams. We've taken multiple international trips together, including several to China. So they helped inject Sequoia DNA in a way that was very, very valuable for us. Now, when I speak to other VCP funds that have reached out to me over the years to get advice about launching a similar effort, they almost never want to give up control. They want to dictate the investing. And I just don't think that's a recipe for success.

38:59It's when the fundamental discipline is so different from what they're doing at the core. There are so many benefits to being tied to such great people and such great brand. What are the negatives? I think the biggest risk for us is being based here in Silicon Valley. You believe everything is going to happen overnight. Mobile or cloud and now AI are taking over the world. There's because we've all this destruction in the wake. And the reality is these things usually happen very fast, but also much more slowly than peak enthusiasm would suggest. As a hedge fund, we're trading off the Wall Street echo chamber for the Silicon Valley venture echo chamber.

39:39And that certainly got puts and takes. One thing that we try to do is to to combat that is to host outside voices to speak on occasion. And so I forget if it was Doug a rule off organized this, but we were organized for example, Charlie Munger before he passed to come in and talk to the partnership. We've had Stan Druckenmiller come in and talk to us. They think in a very different way than we do. And so you're saying the weaknesses you can think like a venture investor? Well, we get the benefit of seeing things very early on. We get really excited about AI, how it's going to take over the world.

40:12Maybe we put on a short, that it's just too early. It's going to take time for some of these things to actually happen. There are areas within AI where I do think it's very happening very fast. I think there is going to be massive disruption, for example, in call centers. And I don't think that's going to take a lot of time. There are other areas in AI. Now, there's this narrative that I hear now that software companies are going away, right? AI is going to write all software. And I just think that's a naive view. It may happen over the long term, but... Cloner are helping to make that happen.

40:42And Cloner is a very tech -forward company. 99 .9 % of the companies in the world are not Cloner. So I completely agree with you there. But I think there is still a tremendous amount of room to run. Is my ex -7 sustainable? It is carrying so much of this market. Is it sustainable? I think it is for some time. So when you think about AI today, productization of AI is a function of owning the customer and owning the data. We are not in a world where AI has created a new distribution methodology. And so if I think about some of the world gardens like a meta, you own the customer experience, you own the data.

41:20And so your ability to productize and roll out AI features and functionality to Instagram users very seamlessly is incredibly powerful and because meta has this auction marketplace for ads You also have the ability to reprice your AI features very quickly, right? All these merchants are getting a return on their ad spend and if someone is getting better return on ad spend the CPMs for these ads go up. So there's a massive moat for some of these largest companies. Now, what I worry about is this will start to disperse more broadly, but at least in the initial stages of AI where your data and distribution are so important, I think the Mag 7 will continue to do quite well.

42:03How does Zux, Cash Cow, not being cloud, impact his freedom and flexibility to act? If you think about Google Namaz and you've got Google Cloud cash, you know, AWS cash cow, and then Zuck is like Instagram is the cash cow. How does that change how he has? Because Google Namaz and Duel also have distribution on Google. I'd argue GCP is not the cash cow. It's search with search. I'm not sure. I'm not sure how AI is going to impact search where it is today. AI is really good at taking low signal data and translating into high value So in the case of meta taking what you're looking at on Instagram and figuring out, okay, you want to go buy this type of product That is incredibly valuable.

42:47Google has got an incredibly valuable machine in that you type in to the Google search bar Exactly what you want. You type in skiing in park city Well, guess what? I know you want to go skiing in park city. Your intentionality is 100 % known at that point for me Whereas I think for meta, I think the value of AI is at least on the ad matching side I look at a bunch of what you were browsing on Instagram and I say, okay, Harry wants to go skiing. He hasn't decided yet that he wants to go to Park City. Maybe he wants to go to Whistler. How do I then move you in, you know, that path to get you to a different location?

43:23Or maybe you're even earlier on in the funnel and you say, I just, Harry wants to go on vacation. And maybe I mean decide on skiing. Maybe you want to go, you want to go to the beach. So I think AI has a lot of value for that. I'm not sure as much for Google. How do you influence? How do you drive a material uplift and search when you have one of the most beautiful businesses out there? Ever. I tell you what I want. Would you be sure, or long Google say, just in a hypothetical world, you've got a plastic eating a lot of consumers fast? We're not either long or short Google, but I do think there are more threats on Google's business than there have been essentially ever in the company's history.

44:04I don't think it's just perplexity. In fact, if I were to say, who do I think is going to be the number two threat in search to Google, I think it's probably met up, right? You are going to have the number two chat bot in the world before your end, in your Instagram, your WhatsApp, your Facebook. Just go right now. just go search meta AI. I totally agree with you. You also have search GPPT, by the way, obviously from OpenAI, which will be a pretty common competitor, I think. A question that I am perpetually stuck by, will the infusion of AI into products lead to an increase in average revenue per user, or will it just lead to a better customer experience?

44:45I think it's already delivering incremental RPU. It will happen first in companies like Meta, like I said, because you have an auction marketplace, this gets reprised immediately. And so if I look at meta, we estimate that it's not just delivering revenue. I think it's already delivering about 15 billion of incremental EBIT, EBIT for meta, right? Just in the form of more content recommendation means you have more time on meta properties equals more adminatory and better ad matching equals higher CPMs. And higher CPMs is, you know, it's straight flow through to the bottom line. So it's beautiful already for meta.

45:21Now, I look at the software companies and I just think it will take more time because you have to go out to your customer and say, look, I'm delivering you this value. Here's the data. And when your contract comes up again, we're going to raise your prices. It's just a horror conversation. But what you have seen, even since you recorded the pod with David, Canva, which you mentioned, has raised prices on its enterprise plan by 3X. 3X? A lot of flow through, I think. Can I ask, on the infrastructure layer, do you agree with David in terms of the $600 billion question and the divergence between revenue and cap ex?

45:55What, how do you feel about that? I do agree with it. I think where I share his view is that there is a $600 billion AI problem in the sense that ultimately application companies need to deliver positive ROI from these massive investments. Where I'm probably more optimistic is in the pace that these application companies can actually realize that ROI. We've already talked about meta, we've already talked about Canva, I think ServiceNow will start to really flow through some of the ProPlus price increases later this year and into next year as well. I think you're starting to see, you know, the initial hints that AI is going to come through in terms of incremental RPU for a lot of these companies.

46:35Now, it's happened probably a little bit more slowly than I would have guessed. I probably would have been more first half this year as opposed to back half this year, but but I definitely think you are starting to see it. And I think you're starting to see it because you see the features that can be productized and the clarity from other companies. What do I mean by that? So if you look at what Meta has done is really just take what bite dance has done, right? With a recommendation engine now, like I'm plugging a bunch of GPUs into it, I'm copying the same thing and I'm just rolling out to my customers.

47:04Co -pilots, I think you will be able to use what you see at GitHub and be able to roll it out across many different companies. If you look at enterprise semantic search, if you look at case summarization, these are all features that have been proven to deliver ROI at certain companies and now you can just pull that into other companies, other products. I think that's going to deliver value. Now, what I don't know, and this is where I do agree with David, there is a massive amount of capital that's going into, not the productization side, but the model training research side. That is where all of the capital is going.

47:37Larry Allison yesterday said, how much do you think it is to the audience? How much do you think it is? I don't know if you saw this clip. Yeah, yeah, I saw it. And then he goes 100 billion just to play the game, just to enter. Yeah. What do you think that's right? I've been surprised at how the scaling has continued, how just throwing more compute, more data has improved these models. I don't know where that ultimately gets to, but I do think 100 billion, there are not a lot of companies out there that can spend 100 billion. What I do believe is you don't need 10 foundation models out there. I think you need certainly more than one just for the sake of humanity.

48:16China will have one, I think the Western world will have at least one. So maybe there's three to five foundation models in the world. It's not going to be 10, it's not going to be 20. And so I do think that the pool of spend is going to shrink in terms of the number of companies. but the amount that each individual company is going to spend is also going to go on. There is real over -investment risk, I think. The way that we've decided to invest in AI in the public markets, we have some investments that are semiconductor or hardware stocks that power AI, but we more so invest in the application companies that over time, I think, will profitably infuse AI into their products.

48:54So if you can buy a nice port business with a call option on AI, I think that is a very good way to play it. What's the result of that? ServiceNow is a really interesting way to play it. So it's got obviously a very good underlying core business. And I don't know that ServiceNow has necessarily the biggest opportunity in AI, but it's a very clear opportunity. IT ticket deflection is purpose built for AI. To be able to deflect tickets, to resolve them automatically, that is very clear, that is a very, very clear use case in my mind. I don't know if it will be the biggest use case right now with all the incremental innovation that there is in models.

49:29I think coding will obviously could obviously be a much bigger use case, but in terms of clarity, service now's opportunity, I think, is one of the most clear. Then I'd also argue that over investment in the semiconductor and foundation model layer actually should accrue to application companies over time in the form of more better AI capabilities that we can infuse at lower cost. The other thing that I stuck out to me at Larry Ellison's talk was when he said, it was me an Elon sitting down over with Jensen and we were both just trying to buy GPUs. And, you know, your natural takeaway is holy shit when you have Larry Allison, Elon Musk, begging a provider, please take my money, invest in the provider.

50:13Right. Put in a video's price is so high. I think in video's price is reasonable if you think it's going to continue to keep going. So in video trades at what, 25 times next year earnings, I think the bigger question is, what does 26 look like? You know, hyper -scaler CapEx is going up. I think it's going up at a rate that is surprising to us. It's grown what, 50 % you're over year this year. 25 grows another 30 % is 26 up another 30%. I spoke to one of them the other day who will run it, and it may not even as otherwise, I will literally be sued. But they were like, it's like the Manhattan Project, how are you?

50:46We can't back out now. Right. So 26 is gonna be higher. Is it 30 % higher? I mean, 30 % higher, I think would effectively we eat away every single dollar of Google EBIT. So what does happen? That is a great question. This is where being a hedge fund is actually helpful for investing in something like AI. So we can invest obviously, as I mentioned in the application companies, but the way we invest in the semiconductor hardware companies is we can be long and video because I do think Nvidia has the best position and whether or not Nvidia has 100 % market share in three years like it does today.

51:23I don't know, but it will still have very, very good market share. And so if you believe the market is growing, I don't know if data center, you know, GPU spend is 100 billion or 200 or 300 billion, but we can go long in video and then we can short a bunch of the companies that I think don't have the depth of modes that Nvidia has. So if you think about some of these server hardware companies, for example, where I think they're going to get beat up on gross margins because Nvidia now has a reference design. You have a smaller shrinking pool of customers that are getting more sophisticated. that are going to do their own server design.

51:54So that's how we've chosen to play AI. And I do think there is over investment risk, but we can be hedged on that. Have you gone into the infrastructure establishment category? Have you gone into really the data center deployment space? You know, we haven't, because I don't know that these ultimately are better businesses after. So what you know now is that there's an incredible amount a demand. That demand is growing at very high levels. But if I'm talking about a power electronics company or a construction company that builds data centers, let's say there's incredible growth over the next two years.

52:34That's going to attract incremental competition. Are these really great sustainable businesses with deep modes? I think they're okay businesses. I think the stocks may work over the next two years, but in year two or three, do I still want to own them? And I just want to think about these things as a long -term investor. I don't want to be trading in and out of stocks as quickly as I can. Can I ask you mentioned Klan several times. Everyone is beating the crap out of Europe right now. Degrowth, no growth, unbelievable regulation. How do you think about the long -term prospects of Europe and how you think about resource allocation?

53:09Does Europe even matter? That's a great question. For Clarner, I think Europe matters, but is incrementally mattering less because they have broadened the business. They did a terrific job of expanding the business into the US and other markets. Amazingly so. I mean, that is, you know, Ravalu tried, Monzo tried, different products completely, but that is a very hard expansion. So I think for Clarner, it matters less. But I do think if you are any company that can go global you start in Europe. Europe is a very nice prize But I think the best companies will want to go global and they want to go after the US opportunity It is you know, the US is still probably it is the largest opportunity for software companies It's probably the largest opportunity for FinTech companies You know if I look at most software companies you're probably two -thirds kind of US Canada in terms of of revenue contribution and then one third everything else.

54:08So you have to succeed in Europe. If you start out there, you're a European company, but man, the US is a pretty big prize. Do you worry that we're gonna go through a period of declobalization? I worry about this intensity, which is that we've spent the last few decades obviously globalizing incredibly well. And now we are more insular than ever before. I think it's already happened. It's already happened. Does that impact how you invest? I think it has to. It has been more difficult for us to say invest in Chinese companies. And it's not just the macro, right? These companies have been become less transparent with us over time.

54:46We appreciate less what's going on internally. So I think about a company like PDD, I think it's a great company. I don't know what's happening there in terms of why they decide to tank this dock because everything that we see on the ground is still very positive for PDD And so those things I think do give me pause in terms of not appreciating what's going on internally in those businesses We'll try to recover do you think it has to I mean the level of just pure Entrepreneurship the level just the founder quality house smart and the rest of they are it's just remarkable I just don't think that goes away.

55:25I mean, if you look at it doesn't but under the current administration That is clearly dissipated when you saw the net new company creation in the graph sure destroyed but but I think the best Chinese companies like the best European companies will also go global So PDD is gone global she and his gone global at final one and then I promise we'll do quick fire Everyone's so jacked up about India these days India is kind of a bit like Europe in my mind, which everyone's kind of always going, now's the time, now's the wait for it, wait for it, and we're still waiting. I'm optimistic, overall the market, what it has created is it's created, great consumer companies, great financials companies.

56:06I think what we haven't yet seen is great technology companies, in part because some of the best technology founders come to the US. But I'm optimistic, I just caught up with a couple of the GPs on the peak 15 team last week. I think what they're seeing on the ground, I mean, I've been impressed, for example, by what's a motto has done. The stock price chart there is incredible. And to be able to go from the level of burn that they were doing early on, to now really turning that into a profitable business, I think one of the things that we've seen in India is that that brutal level of competition that you saw actually in the US, right, too.

56:44you saw in the US in the zero interest rate environment, that has subsided in India as well. And so that's allowed companies like as a model just to become more profitable, better businesses. You have had the chance to work with Doug with Mike with Rodeoff before we do the quick fire. Yeah. What is your single biggest lesson from working with Doug? With Doug, first of all, Doug's an incredible human being. So he's so good at building trust. He's always generous with this time. I can get him on the phone no matter what continents are. He's traveled the world with me to meet with LPs so I can tell you what Doug likes to eat in every city.

57:20If you get him to Boston, he will absolutely crush cherry stone clams. He's just someone that you want to go with to war with on their side. Second, Doug has what he calls a great sniffer, just incredible commercial instinct. He's always listening out, keeping those ears open, looking for what's working and connecting the dot. Doug is exceptional at that. For Michael, as a Michael has superpowers that I will never possess. He's got incredible nose retound, he's a terrific communicator, he's even a accomplished painter now. So one thing that I've learned from him is to borrow his superpowers as opposed to trying to develop them on my own, right?

57:57Which is really a lesson and teamwork except that Michael is a star player at almost every position on the team. Michael still helps me write my quarterly letters to this day. I recall flying out to Ottawa to meet Toby be at Shopify with him. And Michael walks out of that meeting and he just says, look, Jeff, just squat in that investment and just set an alert for yourself if Toby ever gets hit by a bus. His nose retellent, I can borrow. The second, I'll tell you a quick story here. He's got a better nose for talent, Michael Doug. I think Doug probably has a better nose for enterprise talent and Michael for consumer talent.

58:29Good hedge. Sorry, I interrupt you. And so, quick story about Michael, and an important lesson that he taught me somewhat indirectly. So when I joined SEGE, obviously had the interview with Michael. It was intimidating interview. So Michael back then had an office where he actually literally had the wall and door removed from one side. So three walls, but one opens up to the entire floor. So I think he meant it as the ultimate open door policy. So some people have an open door policy, he had an open wall policy, right? But that meant that everyone on the floor could hear everything that was said in his office, so IE my entire interview.

59:11So I walk in, I'm in my suit, Michael's peering over my resume. And the first thing he says to me, and by the way, don't forget that the only thing that I've done up to this point is really technology bias. So he says to me, do you think private equity has poisoned you? Yikes! Right? Like the interview did not go well. I tried to answer the best I could, but it was not a good start. And I'm sure that people around his office within your shot were cringing for me. So... What did you answer? I don't remember. I don't think it was a good answer because I had to interview with Michael again. But I think his point and it took me a couple years to understand it was that just staring at the numbers isn't enough.

59:51Too much focus on ebit -down multiples or financial levers isn't healthy. You have to have the dream gene. And you have to be able to dream about what a founder or a company a team can become over time. And it's just not static. And so I deeply appreciate that lesson. And I'm not even sure that he intended it to be a lesson. Final one, Raelov. Yeah. Raelov. Now he's joined your board and replaced Doug in that lesson. I love how Ruloth has forged a new path to take Sequoia into the next 50 years. So first, it's not easy to transition from great investor to great leader, as you know. It's also not easy to take over for a legend like Doug.

1:00:25So Doug led the firm from 2012 to 2022. The venture world was very different back then. And so Ruloth led the development of the Scouts program. He supported the product team, data science team, ARC. This is quite capital fund. Is a good example of his long -term thinking. I'm also impressed by how focused he is on team and culture. So at our semi -annual, what we used to call these Stuart Council meetings. So it's like a management group. We provide business updates to each other. So everyone else, my self -included, who would come in with these long PowerPoint presentations. But Ruloff would walk in with this two -page word document.

1:01:00And yet somehow, he always put the most thought into the talents of both the investors and the functional leaders on his team and how to put them in the best position to succeed. And then at events like our holiday party where he makes a speech every year, he makes it a point to remember every single person with an all -of -sick way who had a baby that year and the name of their child. He memorizes it no cards. He's also super comfortable with the process of becoming excellent. So the idea that it takes time obviously that applies to Sequoia, but he just, it doesn't happen overnight. He doesn't get frustrated by it.

1:01:34You know, Sequoia and all the initiatives, but also applies to his personal life. So I've obviously got to know him a little bit personally, played ping pong with him, pick up all with him, golf with him, golf actually just last week. I've been playing the game for a lot longer than he has, Harry. As you probably know, it is a tough game. He is frustrating that he does not get frustrated. It's because he's hyper focused on that process of improvement. It's everything he does. It's from investing, to pick a ball, from leadership to golf. So it's frustrating that he doesn't get frustrated. I want to do a quick fire with you, Jeff.

1:02:08I can talk to you all day. What do you believe that most around you disbelieve? I think that optionality is the most expensive thing you can buy. So both financial options, but also more importantly, life options. So too many young people spend too much effort focused on preserving optionality in lieu of actually making decisions So I find this problem to be most acute the more accomplished you are because your talent opens so many doors And a lot of folks just waste too much time and effort keeping those doors open as opposed to just choosing one the walkthrough Which venture investor or investor do you most respect and learn from outside of Sequoia?

1:02:44I think on the venture side And I'd probably say Brad at Altimeter. He's also got the public private strategy. I think he's a little bit heavier than us on the private side, but I love the way that he can connect darts across stage industry, especially because he will go pretty early sometimes, and I think that flexibility of mindset is impressive. I actually spoke to him before this show. Oh really? Because I was like, right, who does private crossover that comes straight to my bright Brad, he was very helpful. What's been the most challenging moment in the SCG journey other than the 2016 transition.

1:03:17I think nothing comes close to the 2016 transition, but certainly there are moments in time where, you know, performance is down, you question your process, what would you rather... How do you not let a bad year hit your confidence and your investing mindset? I think the only thing that you can do is focus on the long term. I mean, a bad year will happen. We're fortunate to only have had one down year, but man, that was a tough year. It was tough... Which year was it? 2022. How do you rally a team in a down you? It is hard. It's really hard. I think so we do these surveys. It's every six months just to get a sense for how the and their anonymous for how the team is doing.

1:03:56And man, the the initial I'd say right post COVID the surveys were very positive. You know, everyone's super happy, you know, everyone's feeling fulfilled. They're doing good work. And then you can see the surveys is getting worse and worse. And then in 2022, they're just down right awful. And I think one of the things that I've learned is that your mentality is so dictated by performance. And that's just, you can't live that way. You can't manage your business that way. You can't actually go make decisions that way. You have to have state even killed and say, like, what about my process is not working?

1:04:31Let me go fix that. And this is the discussion about greed when, you know, your others are greedy. Fear when others are fearful, right? If you actually let that impact you in that that way, you are going to make the wrong decisions. And so I think those surveys are actually quite helpful because it gives you a sense for the team's mindset and how it's impact. You could probably almost draw a line on, you know, the NASDAQ and the team survey. The heaviest things in life are not iron or gold, but unmade decisions. What unmade decision rests on you most significantly? Probably not taking Google more seriously.

1:05:07So I was at Stanford at the time of its founding. I was even a section leader for Marissa Mayor for a computer science class where she was a lecturer And so I heard about it from her too, and I just thought to myself You heard of Yahoo, you're Info Seek, you know, and and so it's a good lesson in just not underestimating the disruption that can occur especially early on in an industry's development. How important is it to be the first? I think it's important to be early, but if I think about the public markets We're talking about not years, but months. Right? Because the public markets price something so quickly.

1:05:41If you figured out last year that hyperscaler CapEx was going to explode upwards and you're gonna buy a lot of GPUs, you could own a video at any point, you know, last year or even this year and you will have made money and you will have made very good money. So I think it's not important to be first, but it's important to be early. And again, it's months, not years. Have you ever seen a technology environment like this before? Yeah, it happens all the time. There's always a lot of enthusiasm. I say technology you've never seen the explosion of Capac. You've never seen that. That's not 100 billion.

1:06:12I thought you were talking about the markets. I agree you have never seen this level of Investment because I think if you if you roll back to 1999 for example, you didn't have this mag seven that was throwing off You know 150 billion of free cash flow and you can go invest gobs and gobs and money. I think that is truly different right now, the amount of capital that is going in. Okay, what concerns you most in the world, St. Jeff? The disillusion of the family structure in the world. And I worry about the negative impact it has on kids in the next generation. I get that everyone's life circumstances are different.

1:06:49I don't found on anyone who chooses not to get married or get divorced, but I do think it's healthy to think hard about it. So anyone on my team who's getting married, I give them a copy of a book, the meaning of marriage. It's by a Christian pastor by the name of Tim Keller, who's actually since past. It's been a big influence on our marriage. So I think that's really important. It's your marriage. It's wonderful to hear. So one of the key ideas is that marriage is not to make you happy. Right? And I think a lot of people approach marriage is like, okay, I'm going to get married. I'm going to be happier now.

1:07:21Well, no, marriage is hard. And what marriage does, one of the principal ideas is that marriage makes you more Christlike in that you have this other person who is in your life that you are sacrificing for and you develop hopefully over time a Christlike love for that person. I was with a dear friend the other day who's been married for 40 years. He said, how are you doing on the start of marriage? I said, no, I don't tell me. And they said marriage is not about happiness. No, no, no. It is about endurance who can survive longer. It's not a way to pick a guy. I was like, you know what, that's romantic.

1:07:55Thank you for that inspiring words of wisdom. Final one for you, Jeff. What question are you not often asked by your team, by your investors, by your partners? That you should be asked more. I'd say, what would you be doing if not a CGE? So it's one of my favorite questions to ask in an interview because you get to appreciate what else makes a person tick. So I love investing. I really enjoy it, but I think I'd also be very fulfilled in my career. If my career take in different turns, if I was building product that's a Instagram or Apple and just making things that touch billions of people, I think that would be also a lot of fun.

1:08:32So I'm going to turn the question back on you Harry. So what would you be doing if not 20 BC? It's kind of the same age, but not, which is I'd be a filmmaker. And the reason I'd be a filmmaker is because I love telling people stories. And I find people fascinating. And we kind of do that. Why am I so giant about our episode? Because you are a phenomenal talent, Jeff, that the world has not heard from. It gives me great joy to be someone who is able to tell a little bit of your story. Being a filmmaker, you're able to bring a light to previously -various opaque areas, which should be told. That's a different medium.

1:09:07I mean, maybe you should do that too. I think Dave Fialk has nailed it first before me. From Venture Invested to Filmmaker, Jeff, I've so enjoyed this. Thank you so much for making this your first podcast and honestly it's been fantastic. It's really been really fun for me too. Thanks a lot Harry. The first time Jeff has ever done a podcast, I thought he was incredible. If you want to watch the full interview, you can find it on YouTube by searching for 20VC. That's 20VC. But before we leave you today, I'd like to introduce you to one of my favorite brands, Atio. Atio is the next generation of CRM.

1:09:42Setting up Atio takes less than a minute, and in seconds of syncing your email and calendar, you'll see all your relationships in one place, all enriched with valuable data. Atio also lets you build Zapier -style automations, gives you powerful reports and works perfectly for any go -to -market motion from PLG to sales -led. Atio is designed for the next era of companies like yours, and companies like yours shouldn't have to deal with inflexible, one -size -fits -all CRMs. Join industry leaders like 11 Labs, Replicate, modal and more to scale your start up beyond the next level head to atio .com slash 20 VC and you'll get 15 % off your first year.

1:10:18That's atti .com slash 20 VC and talking about incredible companies I want to talk to you about a new venture fund making waves by taking a very different approach. It's a public venture fund anyone can invest in not just institutions and accredited investors. The Fundraise Innovation Fund is democratizing venture capital, which could have big consequences for the industry. The fund is already off to a good start with $100 million into some of the largest most in -demand AI and data infrastructure companies, companies like OpenAI, Anthropic and Databricks. Check out the Innovation Fund's impressive list of investments for yourself by visiting Fundrise .com slash 20VC.

1:11:00Carefully consider the investment material before investing, including objectives, risk charges and expanses. This another information can be found in the Innovation Funds Prospectus at fundrise .com slash innovation. This is a paid sponsorship. And finally let me tell you about UI Path. What do Henry Ford and AI have in common? Neither could change the world without automation. In the future there will be two types of businesses, those that have automated and those that wish they had. UI Paths new AI agents don't just follow rules. They think, make decisions and work alongside the world's most powerful software robots, already trusted by over 10 ,000 businesses, if a gentick automation sounds new.

1:11:40Just think of UI paths as your more growth, not more overhead platform, or your happier customers, happier employees' platform. Whatever you want AI to do for your business, a gentick automation with UI path will make it happen. Try UI paths new AI agents for free at uipath .com. The future of automation is both the genetic and robotic. Don't get left behind. As always, I so appreciate all your support and I cannot wait to bring you a fantastic episode on Friday with Owen McCabe, co -founder and CEO at Intercom.