Sequoia Capital's Doug Leone on Luck & Taking Risks | Summary and Q&A

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November 7, 2014
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Stanford Graduate School of Business
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Sequoia Capital's Doug Leone on Luck & Taking Risks

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Summary

This video features a conversation with Doug Leone, a partner at Sequoia Capital. He discusses his journey as an immigrant coming to the US, his leadership at Sequoia, the Silicon Valley ecosystem, and the success of the firm in emerging markets like China and India. He also touches on the topics of gender inequality and the current funding landscape in the Valley.

Questions & Answers

Q: Can you tell us about your experience coming to the US as an immigrant and how it drives you today?

Leone reflects on his experiences as an immigrant and how seemingly small moments played a pivotal role in shaping his mindset. From starting at the bottom by cleaning bathrooms to experiencing a challenging high school, Leone's drive to succeed and prove himself pushed him to achieve his goals. He shares the importance of his background in shaping his life and career.

Q: Why did you choose to work at Sequoia after having a sales background and what drove you to come back to the West Coast?

Leone shares how luck played a role in his career trajectory, starting with learning about the Arpanet while working in sales in New York City. This led him to a job at Sun Microsystems, where he discovered venture capitalists and decided that he wanted to become one. He pursued further education and reached out to venture firms, ultimately landing a job at Sequoia Capital through a candid interview with Don Valentine.

Q: What sets Sequoia apart from other firms and allows it to maintain success for so long?

Leone attributes Sequoia's success to the leadership of its founder, Don Valentine, who emphasized the importance of understanding markets and recruiting non-conventional people. Sequoia continues to hire individuals from diverse backgrounds and experiences who have both IQ and EQ. The firm's secret is to take these diverse individuals and teach them how to work as part of a team, taking responsibility for failure and sharing in successes.

Q: How do you recruit the best talent for Sequoia?

Leone emphasizes the importance of looking for highly imperfect human beings who are smart, have taken risks, and have achieved some level of success. Sequoia looks for individuals who have knowledge in their domain and a strong desire to solve a problem they have personally experienced. Crystal clear thinking, self-awareness, and a willingness to learn and listen are also qualities that Sequoia seeks in entrepreneurs.

Q: Is the current valuation of tech companies an overvalued bubble?

Leone acknowledges that there are different opinions on the current valuation of tech companies. He points out that the public markets generally reflect the transformation caused by technology across various industries. However, the private markets can sometimes be in a bubble due to a high level of risky investments and a lack of realistic evaluation of companies' worth. Leone emphasizes the importance of being cautious and not falling into the belief that "this time is different."

Q: How do you think about and approach the funding landscape and the role of angels and seed funders?

Leone discusses the rise of angel investing due to the lower costs of starting companies in the internet and mobile era. Sequoia sees the value in angel investors, especially for internet and mobile companies, but cautions founders not to sell too much equity in the early stages. Leone advises founders to raise as little money as they can to reach the next milestone and protect their equity. He also emphasizes the importance of being generous with early engineers and surrounding oneself with top-tier talent.

Q: How does Sequoia approach women entrepreneurship, and are you missing out on women entrepreneurs because you don't have a female partner?

Leone states that Sequoia has no issues in backing women entrepreneurs and has worked with several successful women-led companies. However, he acknowledges that Sequoia's lack of women investor partners is an abject failure on the firm's part. Sequoia recognizes the importance of having a woman's point of view and the need for more women investors. Leone encourages women founders to come to Sequoia and assures them that the firm is open to backing them.

Q: Can you increase your chances of being lucky, and do you have any habits or ways of doing so?

Leone shares that hustling, leaning forward, and listening are ways he increases his chances of being lucky. He emphasizes the importance of actively seeking opportunities and being open to discovering new things. Leone also attributes some of his success to being in the right place at the right time and taking risks.

Q: What are your thoughts on the next big cycles or trends in the technology landscape?

Leone refrains from making predictions about the next big trends, stating that if he could predict them, they wouldn't be "hot." He cautions against getting caught up in trying to identify the next big thing and advises being open-minded and willing to explore opportunities that may be unconventional or unexpected.

Takeaways

Doug Leone discusses his journey as an immigrant and how it has shaped his drive for success. He shares insights into Sequoia Capital's success in the Silicon Valley ecosystem, particularly in emerging markets like China and India. Leone acknowledges the gender gap at the firm and expresses a commitment to hiring more women investors. He also shares his thoughts on the current funding landscape, cautioning against overvaluation and advising founders to raise as little money as possible in the early stages. Finally, Leone emphasizes the importance of hustle and openness to luck in increasing one's chances of success in the technology industry.

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