Roelof Botha - Sequoia’s Crucible Moment - [Invest Like the Best, EP. 250]

My guest today is Roelof Botha, a partner at one of the world’s oldest and most successful venture firms, Sequoia Capital. A few days ago before I sat down with Roelof, he announced Sequoia’s boldest innovation since the firm was founded by Don Valentine in the early 1970s. Going forward, the firm will break from the traditional VC mould of fund cycles and instead restructure around a single, open-ended, permanent structure named The Sequoia Fund.

In our conversation, we first discuss the details of this change from all different angles and then dive into Roelof’s career. We talk about what’s changed over the past twenty years, his days at PayPal, what legendary investors he’s worked with have had in common, and what he’s learned from being involved in businesses like Square, YouTube, and Unity.

Please enjoy this great conversation with Roelof Botha.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes. 

Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.

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Show Notes

[00:02:53] - [First question] - What led Sequoia to change their structure

[00:05:53] - Parallels between their approach and the problem Square set out to solve

[00:07:36] - The mechanics of the new fund and how it’ll affect their clients

[00:13:11] - What the future looks like and how public securities could be a dominant force

[00:15:02] - Benefits and value-unlocks that the new fund offers that weren’t available before

[00:16:55] - Comparing their structure to the current crossover funds we see emerging

[00:18:21] - What alignment looks like in this new structure for LPs

[00:22:02] - Cost of capital, interest rates, and their impacts on rates of return

[00:25:39] - Changes in the industry and founders that he’s noticed

[00:28:56] - What matters to him when meeting with young companies for the first time

[00:31:47] - The importance placed on value creation over value capture in the early days

[00:33:09] - Things that would dissuade him from partnering with a company

[00:34:18] - What the growth and leadership at Square has taught him over the years

[00:35:44] - Things he’s most excited about for payments looking forward

[00:37:34] - How often a company lowering friction with technology appeals to him 

[00:38:38] - Thoughts on Unity and its role in the growing trend of the metaverse

[00:40:28] - Why the open and decentralized nature of the future is so beneficial

[00:42:05] - Lessons learned about content and internet from working with YouTube

[00:44:08] - The landscape of developers today and MongoDB's role in it 

[00:49:26] - Learning to identify and hunt for crucible moments

[00:50:50] - Curiosity is the key ingredient of a great investor

[00:52:05] - What makes for a fantastic investment memo

[00:53:20] - The most memorable investment memo he’s ever read

[00:54:07] - Honing his leadership as his role has changed at Sequoia these past years

[00:55:51] - Thoughts on Sequoia’s brand and the scope of his ambition

[00:58:05] - What he’s most curious about in the world today

[00:58:46] - What technology wants most from people today

[01:01:13] - The difference between an accountant and an actuary's mindset and when each one is appropriate to inhabit

[01:02:38] - Differences between talent and genius 

[01:04:12] - Closing principals about business building he finds important to consider

[01:06:17] - The kindest thing anyone has ever done for him