39: Andrew Reed - Don't Flinch

[00:00] But it's February 2014 was when the... [00:02] WhatsApp, Facebook deal was announced, and that was like a $4 billion-ish dollar gain for Sequoia. That's the bar. Welcome to the company. Yeah, and it was obviously that was amazing, and then literally, you know, an email goes out saying, you know, meet in the [00:17] We were in this dingy office. It was like Sequoia's longtime office. We'd be in the lobby at noon for like a champagne toast. It's like, oh, champagne toast. It was literally five minutes long. And then everyone goes back to their desk and just keeps working.

[00:30] That was an interesting moment. I don't know what to take from it besides Jim Getz is a legend. [00:35] And also that like, yeah, greatness is sort of expected, you know. [00:38] opportunities that you're really excited about reveal themselves highly infrequently and never at opportune times. I grew up around New York City. I had dreams of facing, and I graduated high school in 2008. I remember I read the big short right when it came out, and I had to go, how am I going to react to a crisis in finance?

I picture myself on Park Avenue, wheeling and dealing, going to a boardroom, making a deal happen when things were blowing up. And then [01:08] I imagine myself in the moment so many times. [01:11] What it actually looked like was [01:13] I just bought a house. It had a pool outside. There was no furniture in the house. [01:17] We were locked down because of COVID. I was doing circles around my pool, talking to Vlad and Basio about his investment when [01:26] You know, the market was gapping down five points every single day.

But Robinhood was like, you know, this is back when you could double your money on Boeing in, you know, 16 minutes. We did a $200 million check right that first week of COVID. You know, the app was down for a whole day. It was chaos and felt so proud that, you know, just. [01:42] not being scared of that moment, you know, in part because I prepared myself for it for so long. Like, what was... [01:48] What would the guy you want to be do in this moment? [01:51] I think you just can't let yourself down.

I think all of us... [01:54] like to imagine how we'll react in these like really high stress, high stakes moments. Yeah, don't flinch to me. It just means like just do the thing you know you should do. Welcome to Dialectic episode 39 with Andrew Reid. Andrew is a growth investor at Sequoia Capital, where he has invested in a number of world changing companies, companies like Robinhood, Figma, Klarna, Phantom, and many others. And he's quietly one of the best growth investors out there. [02:24] about how Andrew invests the founders he works with, what makes them so special, how he thinks about the quantitative and the qualitative side of things, what it's like doing so at a place like Sequoia and how Sequoia's culture of performance and teamwork influences so much of his work.

And we also talked about how he brings humanity into a job that on the surface might seem quite quantitative. [02:45] He is a deeply competitive dude and loves to win and is quite good at making money. But he also brings a element of craft and care and taste and attention that, [02:56] really stood out to me as I was preparing for this conversation and certainly [03:01] as I had it. We also talked about Sequoia Capital and some of the legendary people who have come before him and how he has worked with them and learned from them, as well as people he's working with now and who are apprenticing under him.

This is certainly a unique and special institution, and it was fun to hear Andrew's perspective on it. I think investing is such an interesting discipline because there are so many different ways to do it and to be good at it. But I think [03:31] him to pull apart the details and show me how some of the magic is made. I hope you are inspired by his level of deep attention and care and fierce competitiveness that he puts into doing this job so well. And ultimately, as I think he would say, to serve great entrepreneurs trying to change the world.

Before we get into the conversation, I'd like to thank Dialectic's presenting partner, Notion. Notion is a collaborative workspace for teams and ultimately a tool for people doing [04:01] the things I love about Notion's approach to AI and to agents is that they are quite attuned to allowing you to focus on the work that deeply matters, allowing you to collaborate with you, you need to, and then delegate the rest of the work to agents and to AI. I found even with Dialectic, whether it be preparing for interviews or on the other side of them, being able to throw all of my ideas or the transcript or whatever else into Notion and have Notion AI pull out [04:31] even find kind of weird corners of research I might not have uncovered.

It's just a tremendous amount of leverage. And yet it isn't about automating the part of the work that I really care about, which I think is deeply important. Notion is a brand, as I've talked about in the past, that has imbued craft and care and soul into every piece of it. And I think you can see that whether you're using Notion solo or in a giant team. It's no coincidence that all kinds [05:01] their worlds and their businesses on Notion. If you don't use Notion, you can check it out at

com slash dialectic. And if you use it, I hope you use it to make something really wonderful and full of crafting care. If you do, let me know. Thanks again to Notion for presenting dialectic and thanks to you for listening. With that, here is my conversation with Andrew Reid. [05:21] So, [05:22] All right, Andrew Reid, we're here. Thank you for having me on your podcast. The first timer. It's truly an honor. Breaking my podcast celibacy. Yes, we are going to jump right in. I want to talk a lot about investing, but before we do...

[05:35] There are a couple of themes... [05:37] or like little kind of sentences I had about you that I think are worth talking a little bit about before we go into all the work stuff. I think the first is you're someone who is... [05:49] like an elite performer. You are super competitive. You're a growth investor. You started at Goldman. You played high school football and college football. And so there's like a... [05:58] maybe a tinge of like hard on us on, on one end. And yet, [06:03] I think both in your work and personally, there's also like a deep amount of humanity.

I'd be curious for you to reflect on how you've leaned into humanity over time, both in your [06:13] in your job as Sequoia and also more broadly. - Yeah, I was, you know, growing up, I think that was a, kind of dichotomy that existed at every point in my life. [06:26] I played... [06:27] I played sports in high school. I also used to do the musical. [06:32] My best friend in high school was not on the football team. Actually, besides my twin brother, who is my best friend, he was on the football team.

[06:42] I've always had this two sides of the brain, like I love playing the piano, and... [06:47] When I started my career at Goldman, I was definitely the... [06:52] behind the spreadsheet with your headphones on late into the night analyst. I was actually the semiconductor analyst on our team on the TMT team back in the day, which was very out of fashion for a long period of time. I wish I actually studied harder back then because it would have been good to know the last few years. [07:08] When I got to Sequoia, similarly, I was very quantitatively bent for probably the first four or five years of my career.

[07:17] And... [07:18] I think one thing you learn with startups is your spreadsheet is always so wrong. You know, it's usually wrong in the bad direction. And when you're lucky, it's wrong in the good direction. [07:30] And the biggest difference between when it's wrong and the bad direction and the good direction is the person running the company and the team that they build. So naturally, you know, you learn that, you know, it really is all about the people. [07:42] And obviously like, [07:43] parallel to your [07:44] work life is your personal life and, you know, changed a lot from high school to college to San Francisco to kind of being an adult and kind of growing up around a lot of people here in San Francisco.

[07:54] So to introduce like [07:56] new interests and new concepts. And that's reflected both in terms of the things I've done in investing and also just how I spend my time. [08:03] Maybe a [08:05] sort of orthogonal, but I think also kind of a double click on this, which is... [08:10] Another element of that is that [08:12] a lot of parts of you are like kind of like in central casting, uh, for what you're like a good looking white dude who works in venture capital and worked at Goldman again, kind of same theme football player.

And, [08:25] I talked to multiple people who know you. One thing our mutual friend and former colleague, Matt Huang said is like, he's like the football player who's also like a hardcore Redditor. And there's like a, there's clearly a good amount of weird. And so I'm curious how that, and my sense is, is that's part of what makes you, [08:42] You're not... [08:44] sure finance guy. And that's part of what makes you a great venture capitalist is like your nose for this slightly strange or the contrarian. And so I'm curious to how, [08:54] how you think you've maybe to the extent you've gotten weirder or how you've fed that.

[08:59] I think going back to my childhood, there's this major... [09:04] Thank you. [09:05] Like my main trauma in life was I grew up with a very bad stutter. And actually when I first interviewed with, [09:12] with Doug Leone. I gave him my resume and he looked at it for [09:17] you know, 20 seconds and he goes, oh, yeah, you went to Amherst. You got this GPA. You play sports like Martin Goldman Sachs or [09:24] 200 people just like you get hired. Why would we go hire you? [09:29] In a very kind of like antagonistic Doug Leon interview way.

[09:33] And... [09:34] I think the two things that... [09:36] really motivated me. First is [09:37] I was having a twin brother and we've competed our whole lives. There's something hard and some competitive drive in me. And, [09:44] I spent basically my entire childhood just [09:47] observing, you know, like it's very hard to jump into conversations and do public speaking and, um, [09:53] Raise your hand in class even. I just spent a really long period of my life just listening. [10:00] It's definitely gave me a lot of empathy for the outsiders.

[10:08] people who are in low moments and also people who just don't feel like they fit in totally. [10:11] And then... [10:13] amazingly like in college I did speech therapy from when I was in a kid up through when I graduated from high school in that same summer and I went to college and I stopped doing speech therapy and [10:24] you know, like got laid and then all of a sudden everything gets fixed itself. And, uh, like within six months, I didn't have a starter anymore. And, uh, [10:32] Now, you know, I do host the LP meeting and I go on TV and do these things and like, you [10:38] no one sees that side of me because it's literally like hard to, [10:41] you know, it's like hard to find.

[10:44] Um, [10:44] But I think that that element of just like weird really does come from that, you know, like the personal feeling of just sort of. [10:51] I think like watching things, uh, [10:54] And I think when you talk with people who are building companies, a lot of the founders who I worked with, [10:59] are maybe now successful and famous and everything else, but deep inside them is the same thing that was deep inside me. [11:07] People who meet them for the first time today don't see it, but I feel like I have a...

[11:11] Kind of a unique way of like seeing the... [11:14] little kid inside people sometimes. And I think that helps with... [11:20] Just like trust, you know? Yeah. Yeah. [11:22] Yeah, it's interesting how... [11:25] I'm sure it's different for everybody, but becoming the version of yourself you want to be, it doesn't sound like that happened through a lot of striving. Or at the very least, the striving and the speech therapy or whatever. A ton of effort towards that doesn't necessarily... Yeah, well, another thing just in terms of the striving, you mentioned Matt Huang.

I feel like [11:43] Uh, [11:45] Um, [11:46] So many points in my career, I've just gotten extraordinarily lucky being surrounded by people who are... [11:52] So good. [11:55] Like my, the person introduced me to Pat Grady, who was my first introduction to Sequoia, was Sarah Guo, who was in my class at Goldman. Sarah and Pat are now married. [12:06] And Sarah's obviously like an extraordinary talent who's has been and will continue to dominate her corner of Silicon Valley. And then I started as a class of two associates at Sequoia. It was me and Matt Huang.

And could you imagine like a more talented counterpart to be pushing you every day? Also, like very much a startup guy at the time. Yeah. Like you are not a startup guy. No, no. And that was the. [12:30] Like, I think the... [12:32] Associate class of me and Matt Huang, I hope, is going to go down in history as the greatest bang for your buck associate class ever hired. But we started on the same day, February 18th, 2014. And I remember... [12:46] reading that for the first time and, you know, [12:49] He was on the growth team at Sequoia, and we do a lot of spreadsheet math and cohorts and things like that.

And I had never done an in-person meeting in my life with a founder or had never... [13:00] didn't really have a network in Silicon Valley. And we really leaned on each other for a period of years. [13:05] in a way that was extraordinarily collaborative, and to this day, like... [13:10] There are a small number of people who I genuinely feel like are superior investors than me. And like Matt's one of them. I think Pac Beatty's one of them. And like Pat was my direct manager, you know, for my all my one on ones when I joined Sequoia.

[13:23] Matt was the person who sat next to me for five years. Kevin Kelly at Square Heritage, who... [13:30] Joined, I think, six months after that on the heritage side. Same age, like also just an exceptional investor. [13:36] And then obviously being surrounded by my initial death, Gatsukwe, was actually on the same... [13:41] open floor plan on the same desk as Doug Lione. [13:45] It's almost like you could have put... [13:47] an idiot in that situation and they would have found a way to at least make some good investments. Well, you could take it the other way.

You could take it as like wild that they threw you to the shark. Yeah. Like it was both. Yeah, no, I think there's a way in which – [14:00] I think this is kind of how we think about developing younger investors at Sequoia, too. [14:05] I think what we lack in... [14:07] structured feedback process, et cetera, which we lack a lot. We more than make up for the culture of really investing in each other, and especially in the next generation. [14:18] I think some people really like that environment, you know, the sort of having lots of freedom to, you know, like sink or swim.

But even if you end up swimming, you're like feel like you're sinking for a long time. You know, you're like struggling to stay on top of the water. [14:32] Well, I think you said somewhere like your second day. [14:36] WhatsApp was acquired or something. Yeah, I was in it. I used to check the dates. I think it was February 19th then, or maybe it was February 20th. But it was February 2014 was when the WhatsApp Facebook deal was announced, and that was, I think, a $4 billion-ish gain for Sequoia. That's the bar.

Yeah. Welcome to the company. Yeah, and it was, you know... [14:55] Obviously, that was amazing. And then literally, there was a... [14:59] You know, email goes out saying, you know, meeting the... [15:03] We were in this dingy office. We were [15:05] [redacted address], second floor, building for suite 250. It was like Sequoia's longtime office. [15:12] I'd be in the lobby at noon for a champagne toast. I was like, "Oh, champagne toast." It was literally five minutes long, and then everyone goes back to their desk and just keeps working. [15:24] Uh...

[15:26] That was an interesting moment. I don't know what to take from it besides Jim Getz is a legend. [15:31] And also that like, yeah, greatness is sort of expected, you know, and that definitely still feels like this case. [15:38] Thank you. [15:38] Maybe a lead into the last thing I had pulled out before we talked specifically about investing, which is competition. Obviously, it sounds like it starts with Will, your twin brother. [15:50] It's a lot of competition growing up. I think what I'm interested in, and maybe it goes back to what you're saying about Matt and Pat and maybe Sequoia's culture broadly is like – [15:58] There is...

[16:00] this deep competitiveness, [16:02] that I sense you have. You clearly, I don't know how much you like to win, but you do a lot of winning. [16:07] And I think competitiveness can be channeled in really great ways or really unhealthy ways. [16:12] And so I was curious for how you relate to... [16:16] that aspect of it and like what that source of energy, like is it, to what extent it can be good fuel or bad fuel? And then maybe beyond that, [16:24] how competitiveness can still sit right next to positive some outcomes,

g. you're sort of competitive with Matt and also collaborative or vice versa, or even with Will, who does a very similar job at a different firm. [16:39] Yeah, I try my best to exude California cool. [16:44] I think for anybody who's ever been in a trivia competition with me or any sort of a board game or chess or anything else, like, [16:52] I hate losing. I think my brother actually hates losing worse than I do. Or maybe we hate losing the same, but I've somehow gotten to a point where I can at least pretend like I can deal with it, you know, where he's at a point where he definitely can't pretend.

[17:05] And I think what's interesting, I... [17:07] I think there was a period of my life when I definitely felt... [17:11] maybe it was an insecurity or otherwise around like when people did – [17:16] well and I wasn't doing so well, I felt jealous or, you know, sort of like the anxiety that brings – [17:23] But I think Matt's a really good example of this, where [17:27] Like he is... [17:28] Or like Dylan Field of Figma. Some of the people I met really early in my life who have gone on to just do incredible things.

[17:35] Number one, like... [17:36] you knew the entire time that they were incredible people, you know? And number two, they are the same level of, like, good and exceptional and kind and caring and looking after you now as they were when you were nobody's, you know? [17:50] And, [17:51] I think in the Valley, obviously... [17:53] Number one, great people can win, and watching great people win is actually rewarding in its own way. [17:59] Number two, it's decidedly not zero-sum. I think one of the... [18:05] One of the funny moments is when you make an amazing investment gain on a company, it's a growth investor.

More often than not, there's some Series A investors making more. So it's like you kind of have to accept that the... [18:16] you know, like, [18:17] The job you've done well is worthy, you know? It doesn't have to be the most money. Yes. Or even multiple, too. You might be making more money, but their multiple is better. Yeah. But it's like, you know, we have a job and our job is, you know, at some level, it's like the fund management business. And if our funds are doing well, then we're doing well.

[18:37] And similarly, like, we're not going to be perfect. And we... [18:40] Nobody is more into self-flagellation than Sequoia Capital. Like our off-sites are just like a death march through the sins of the past. And there's good learning in that, you know. [18:52] But I think the right frame of mind is you need to accept that you're going to make some mistakes and just try to get better. If you end up dwelling on your mistakes as an investor, especially in venture where the world's moving so quickly and it's always about the next rock you're turning over, you're going to end up totally stuck.

[19:05] Hmm. [19:06] Let's talk a little bit about investing. [19:10] I think... [19:12] I'm most interested to start with... [19:15] There are lots of ways to be a good investor. I think that's probably what draws so many really smart people to it. Maybe there aren't. [19:22] lots of ways to be a truly great investor, but there are lots of ways to be a good investor. [19:26] I'm curious how you would describe... [19:29] your style, like how you invest and why you think you're good at it. [19:33] - Okay. [19:34] I think it starts from...

[19:37] uh, [19:38] a place of like genuine curiosity and excitement about companies. I think I, [19:44] At my heart, I'm a finance person. I love companies. We used to do this thing where we would throw up the numbers of a company on the whiteboard on a Monday morning, and you had to guess which company it was. And that was one of the trivia games that I love dominating. And the world is full of these wonderfully interesting businesses and uncovering some new... [20:04] some new theme or some new founder or some new business that you haven't heard of and it like completes some mosaic that's just some corner of the broader mosaic of how the world actually works like that's such a compelling feeling and and [20:16] I'm consistently still uncovering new things.

[20:19] And then obviously the world's changing so quickly. New things are constantly like cracks in that mosaic are... [20:24] opening and then being formed by and being filled by something else. Yeah. So it's definitely for me comes from like initial place of this curiosity about business. [20:32] And then I think like just by nature of where I am in Silicon Valley doing, you know, private company equity investing, like you end up trying to find like what are the most interesting companies? And those are often led by the best founders. And then when you're actually doing your reward analysis, like it comes down to the best people matter.

[20:48] the most. And I think there's one thing I've done really well is I like, [20:53] And then because I joined Sequoia so young, I was... [20:55] 23 when I started and I didn't, [20:57] The first investment that I put my [21:00] I was neck on the line for, the first investment I sponsored was in Robinhood. That was... [21:06] I think four years after I joined. So I did four years in the salt mines, you know, like just similarly, you know, just observing. Right. I was doing all the memos, you know, doing all the models, crunching a lot of numbers, crunching a lot of numbers.

And, you know, I'll have opinions. [21:19] But I wasn't ultimately the one who was responsible for that investment, filling out the portfolio review software form and giving the update. Yes. [21:27] And then... [21:28] I think Robin Hood was obviously an instructive and amazing and crazy experience in a bunch of different ways. [21:36] But I think it's really important and really lucky to get like a – [21:39] a banger out the gate as an investor, because then all of a sudden your model is trained on what great looks like. Really positive feedback loop.

Yeah. And it's both in terms of your own learning and in terms of your reputation and otherwise. And I think with that experience of working with Vlad, and now I'm working with Vlad again on Harmonic, his second company. It's like the AI math company. Yeah, the AI math company. [22:02] I just like, oh my goodness, I can find these and identify these really outlier people, and [22:09] like, [22:10] I think starting with Vlad and then... [22:13] you know, going through to like Vlad in two to round two, like, I think I've just picked the best set of founders.

Like I would not, you know, trade my team competing against the Space Jam aliens, you know, for anybody, like for literally anybody. I think I have the best set there is. And, um, [22:30] And then once you get used to that, [22:32] you know, your Bardis gets raised so high, you know, [22:35] like, [22:37] I think it just keeps you focused on the main thing, which is identifying amazing people. And then obviously having a team like that working on your behalf is really helpful too. Was there opposition to the Robinhood investment?

Was it like a fairly consensus type thing amongst your partners or peers? Or were you kind of pounding the table? [22:59] It was... [23:00] So ultimately consensus, obviously, like contentious, it's a very... [23:05] you know, divisive company and still is to this day. [23:08] um, [23:09] Charlie Munger went to his grave... [23:13] you know, railing against Robin Hood. He actually had this, and obviously, you know, bless his soul and rest in peace and Charlie Munger, like, we... [23:20] I love Charlie Munger. [23:22] Yeah, he did an interview where he said...

[23:24] Sequoia... [23:26] is the best investment firm ever. [23:29] In the world. [23:30] but I can't believe they invested in Robinhood, the company's evil. And imagine being like an associate at Sequoia. That guy in Reed screwed up. You know, it's like your only company, and Charlie Munger is, you know, going on the record, just railing against it. [23:45] That's not the most comfortable place to exist, you know? [23:48] but [23:49] It's actually amazing. If you look at just the, um, we can get talking with Robin Hood for much, much, much longer.

Obviously that was like the, probably the, one of the few formative investment experiences in my life. And just the rollercoaster, um, [24:01] It continues to this day. [24:03] But the initial entry into the investment was... [24:08] not super comfortable, and it didn't stay comfortable for very long. [24:15] You have this model of Vlad today. [24:18] Um, and let's say that's like whatever, 99% knowledge or conviction of his greatness or whatever. Like, was that a critical part of your initial conviction or did that come later? Was it, was your conviction in something else about the business?

[24:33] Well, first I would just like [24:34] I'll often just mention Vlad as shorthand for Vlad and Bijou as co-founder. I'll do that with Figma. Dylan and Evan is co-founder, right? You sort of often shorthand to the guy who's running it now. But so much of the DNA of these companies comes from the full set of not just co-founders but early employees. But co-founder, so central. [24:55] I think that [24:57] Uh... [24:58] I was actually thinking about this this morning. [25:01] I think the degree to which the best founders... [25:05] change and grow over the course of their company's life is [25:09] extraordinary like Vlad today versus Vlad 10 years ago is borderline unrecognizable.

[25:15] And it was both the successes and failures of Robin Hood that sort of like made him – [25:21] change so much. And it's not obvious to me whether it's, you know, the companies that grow so much, like force change upon the person running them, or if it's the fact that the founders changing so much that creates the, you know, the success of the company, um, [25:35] But I think there's this one common trait around... [25:38] like a genuine growth mindset. And I think like, [25:40] It's the... [25:42] I am capable of learning anything.

And when the job requires me to go learn that thing, I'll just go do it. [25:48] I think Vlad back in 2016 was, they did such a good job hiring engineers out of Stanford and building incredibly compelling products across onboarding into a FinTech app, across the infrastructure. They built the first self-clearing company. [26:03] system built in America, I think in 30 years, took over a year to develop. Like it was, you know, one of these like really hardcore fine finance infrastructure projects. And like Vlad spearheaded a lot of that. And then Beiju was a lot of the creative energy, some of the kind of countercultural elements that like made Robin Hood so unique and special.

And they both did, you know, both of that. [26:22] But the Vlad now of like standing on stage and like being like a true spokesperson for an industry and a movement – [26:28] That is not the person he was then. And I think now he's so capable and mature, and he still has, he can still recruit amazing engineers. The people that Harmonic hire is amazing. [26:39] blow me away. [26:40] But also he can, you know, stand at Cannes in front of the ocean with his amazing outfit and, you know, like, yeah, like speak to a whole, speak to the whole world.

[26:51] I guess I have two questions off that, which is... [26:53] I still wonder, like, did you... [26:57] Ultimately, was there a seed that you saw or were you like... [27:01] excited about Robin Hood for some other reason and like got to. Oh yeah. I, I forgot to answer the question you asked. Um, [27:08] One of my things I used to say, I feel like you kind of go through these things where you learn something and you say it a zillion times to different people when you have some insight, and then after six months, you get tired of saying it, so you go on the next thing.

[27:21] Um... [27:22] Thank you. [27:23] One of the things that [27:24] I was saying a lot back then. I was like, [27:26] you can't find the companies with the 90th percent metrics cost every dimension because the 90th percent [27:33] Startup. [27:34] doesn't go anywhere, you know? You have to find companies where [27:39] There is a summary. [27:40] outlier dimension and I think for Robin Hood the thing I saw back then is [27:46] like I wasn't the first to it, was... [27:49] They were just [27:50] uncannily great at... [27:53] dominating the, um, [27:56] the front end of that business, which was, you know, their share of new account openings in the

, even when they were small and irrelevant, was north of 60%. Like, they were... Those are some crazy wait lists. Yeah, out the gate, they jump at the big wait list. But also, it's like, reliably, even when, like, the industry was slow and equity markets were, you know, [28:16] boring for people like they were still just the vast majority of new account openings in the s and they're doing it without blasting the world with you know e-trade advertisements and everything else it was just like it is such a superior product um [28:29] Back then in 2014, the idea of, you know, this is back when you used to like log into your desktop to do serious banking tasks, you know, like even the fact that your people would be holding like big balances on their mobile phones was a little bit outlandish.

[28:43] And then they just like... [28:44] continuously, like, [28:45] Just [28:46] kept people engaged. And that was the thing that I really... [28:52] really stuck with me was the first was this, the, [28:55] And it wasn't a lot of FinTech apps aimed for the underbanked and try to provide financial services that are available to one class of people to other people who are less well served. What Robinhood did was just like they found this platform. [29:07] like big profit area for incumbents, which was commissions. And they said, this doesn't need to exist, right?

Like if you don't have branches and you have like a, like genuinely low cost operations, you could just, [29:20] like remove commissions and you can make enough money through payment forward flow and stock lending, other mechanisms that you can just, you know, [29:28] you know, grow a business here. - By the way, then you throw everybody into a crazy innovators' llama. - Exactly, and the things that, you know, people rub it up, oh yeah, but they're just like, [29:35] They're doing payment for order flow and not commissions. And people fail to realize that.

[29:41] You know what EJ was doing? Both. It was strictly better for people, besides Fidelity. Everybody else was doing both. And they just wiped that category out. And companies found, I think, in 2013. [29:56] September 2018, September 2019 was when Schwab, E-Trade, and Fidelity all white Christians to zero on the same day. And, you know, that's like the George Bush, like, mission accomplished banner, right? Like, literally the point of, like, the initial, like, one of the initial impetuses of the company was just, like, to monetize finance for all. And the first mission was to, you know, eliminate commissions.

And within five years, literally, that's no longer a thing that exists. Crazy. You know, and that was in some ways just the beginning, you know. [30:25] Huh. [30:27] When it comes to seeing sort of like the blads of tomorrow, [30:30] Like how has, again, maybe to go back to like, if you, if you have him modeled like 90% or 95 or 99%, when you meet somebody today, you know, you're going to be a good person. [30:38] And maybe there's also something that's pulling you in, g. the approach to the product or the technical competence or whatever.

But you're modeling that at 10% or 20%. [30:48] How have you thought about [30:50] being able to see the seed that is going to grow into that kind of exceptionalism. And clearly you've been able to do it across lots of people, given your Space Jam comet. Yeah, there's like, I think there's sort of two... [31:02] There's like two ways that I can develop conviction on a person. [31:06] I think sometimes you are lucky to [31:09] have met somebody for months to years before this investment opportunity, and you like watch them develop and execute and run their company.

[31:17] I think with Dylan from Figma is a good example. I met Dylan... [31:22] riding shotgun to one of our early stage partners for one of the early stage rounds of Figma, and saw what the company was then. [31:29] and [31:30] Solio Cuervo, who was one of the early Facebook product designers and a highly relevant figure at Dropbox and otherwise, was also in my ear about Dylan. I followed the company, and it was 500K of revenue, and most of whom were on Windows machines, and Sketch was only on Macs, and it was hard to see.

And that was the round that Mamoon from Kleiner did, which is absolutely one of Mamoon's many iconic investments. Yeah. [31:57] And, you know, kept falling into space. [32:00] And then when it came time for like the series C, which is one that we did, the company had grown from 500 K to 4 million in revenue, which, you know, [32:08] On paper, it feels like it's still a very small company. But I could not have been more sure about doing, you know. You also paid it. [32:15] if I, [32:16] remember correctly, a pretty obscene price.

$400, yeah, which was, yeah, that was viewed as ludicrous, you know, unhinged. [32:26] And obviously, you know, Dylan's only continued to develop. So that's one, you know, I'm going to put similarly, the most recent board I've joined is Eleven Labs, the AI audio company. And [32:39] Same sort of dynamic, like we invested in 11 Labs two years ago. I didn't join the board, but just like watch Madi, who's the founder there, as a like young Polish kid living in London, building a company at the absolute like most competitive bleeding edge foundation model, creative tools, AI agents, like on paper.

[32:58] that guy is never going to win that race, you know? Right. [33:00] And then all of a sudden, you just watch him... [33:02] month to month and quarter to quarter, 'cause they grow and develop and change, the company just becomes this winning machine. And so the question was, would you do the 11 labs for? Would I want Motti on my Space Jam team? Like absolutely, 100%. And that's a very comfortable way of, I think, developing conviction on somebody. Or when you get down to the rubber meet the road, should I pay this price?

The answer is an unequivocal yes in your gut. [33:30] I think there's a smaller category of investments that I've done where it's like, you're at a shotgun wedding. Is this person... [33:35] that good, you know? [33:37] Probably my favorite example is Cristina Casciapo, who runs Vanta. [33:42] Which is... [33:43] now a very large and very dominant security company here in SF. [33:51] This was in 2021, Jan 2021. [33:55] You know, a couple rounds happened in like 16 seconds and... [33:58] I got introduced to Christina by Dylan actually, and I checked our like notes in SMS, which is SMS is our internal data science CRM type product.

[34:10] Sean McGuire, I've been tracking the company for a long time. He was like, this is the company I would invest in if I had the chance to. [34:17] Uh, and then like Dylan was like, you gotta do this investment. And then, um, like Patrick Carlson called me, so you just gotta do this investment. And then Christina, and within about 14 seconds, uh, [34:27] I decided that [34:28] I should do this investment, you know? And, um, yeah, it was like instant. And then actually, [34:35] We had Christina talk at our LP meeting.

[34:37] two years ago, and her memory of our first meeting was that I was rushing her through her pitch deck. The reason I was rushing her was I was like, "I know it's good. Let's get to the part where we try to figure out what the terms are." That's funny. [34:51] And she never told me that, but she told all of our LPs. Yeah. [34:56] And for that, it's really like the sparks fly sort of moment, you know, where... [35:00] And it helps when the company's growing really fast and profitable.

Right. Like, I guess that's my thing I'm wondering is, like, [35:07] Well, one backdrop for all this that's interesting is typically – [35:12] Early stage investors love to talk about people. And later stage or growth investors love to talk about other things, other types of momentum. And so I guess like how much of this is... [35:21] all this people stuff you're saying with the backdrop that also the thing is starting to rip. Yeah. Like maybe that's the given. [35:27] Thank you. [35:28] Yeah, I think if you divide the world into like [35:30] founders who are obviously amazing to you, which is a taste thing, and then numbers that are obviously amazing to you, which is also a little bit of a taste thing, right?

Like different investors certainly weight different metrics in different dimensions. And I'm probably more comfortable with like some metric screaming red if enough other ones are screaming bright green. Okay. Okay. [35:50] But if you divide the world into... [35:52] you know, amazing founder to you and amazing numbers to you and like don't deviate from that, you'll maybe find three companies a year that meet your bar, you know, [36:00] And then of those, like one will be priced so ridiculously, you're not going to do it. And the other two, you do. And that's basically like what I've done for the last 10 years.

[36:06] Yeah. [36:07] If you could... [36:09] to keep doing your job [36:11] You either had to... [36:14] Well, actually, I'll split it up. If you had to do your job without ever meeting a founder ever again... [36:19] how would it affect your returns? And then if you had to do your job without... [36:23] Maybe this is stupid, but like ever using Excel ever again. [36:26] How do you think it would affect your returns? [36:28] Oh, there's a great... [36:31] I will keep talking about... [36:32] Charlie Munger, despite his criticisms of me, because he's obviously, you know, the goat.

There's a great back and forth between Warren Buffett and Charlie Munger where, you know, Warren Buffett's talking about how if you like, you know, are doing a DCF on a company and it says... [36:45] And Mugger interrupts him and is like, you know, you've never done a DCF. And he's like, no, if you have to actually do the math, it's too close. [36:56] You know, it's like, [36:58] You just do a quick DCF in your head, and if the company's good enough, the math just takes care of itself. And if you have to resort to doing data analysis, you're in trouble.

And I think that's probably... [37:09] true. Like I think there's like the occasional corner case where you have to do some sophisticated analysis around cohorts around usage to get to like the ground truth of a company. [37:19] But... [37:20] More often than not, like the output metrics sort of take care of themselves, you know? [37:25] And it's like almost like don't get cute. Yeah. And yeah, exactly. And [37:30] And then even if there are situations where you have a company that's growing really fast and the issue is, like, what's the churn?

You know, like, you can get to that pretty quickly. Yeah. Um... [37:38] I think the no founder thing would be impossible. I wouldn't even know. I'd just buy an index. Maybe that's the fundamental difference between the work you do and other parts of finance or private equity or whatever. Yeah. Or even public equities. Yeah. [37:52] I found this, actually a friend sent me this, [37:55] Hilarious thing. Green Oaks has... [37:57] quite literally trademarked, uh, [38:00] jaw-dropping customer experience, unquote, breaking trade-offs. And so I'm curious if there's anything that you would trade off or trade off, trademark, in terms of like the style or the things you're looking for or the – maybe a lighter version of it is just like what's on the Andrew Reid Sequoia website.

[38:18] vision board. Yeah. [38:20] Yeah. [38:21] You know, um... [38:23] I don't think I'm innovating on any dimension. Like the... [38:29] And what's interesting about, you know, working with someone like Pat, and I'll talk about Pat for a minute because – [38:33] He is... [38:35] like definitely the most influential person on my career. And, um, Pat and I, you know, co-led the growth business at Sequoia together for a number of years. And, um, [38:45] I've been his... [38:48] His associate, I've been his partner, you know, it's like, [38:51] he and I disagree about investments so often.

And the specific thing that often happens is Pat brings in... [38:59] a company. [39:01] And [39:03] you know, my humanities taste element, you know, just isn't clicking for some reason. And the thing that Pat hates, Pat hates... [39:10] when he feels like people, because of his track record, aren't telling him the truth. So I always try to tell Pat... [39:16] my absolute truth on the companies he brings in, which sometimes is like, dog, what are you doing? You know? And, [39:24] The reason why Pat's like that is he's got this...

[39:27] You know, whereas I don't have anything I would trademark in terms of, you know, frameworks otherwise, I feel like you could, you know. [39:34] freeze Pat's brain and like chip off a little corner and it's got some framework that he hasn't even told you about that, you know, unless you ask him, you know, it's like the whole thing is this Rube Goldberg machine of, you know, like frameworks and processes and... [39:46] I think if you are 90th percentile frameworky, you're not going to be a great investor. If you are 100th percentile frameworky, you can actually be extraordinarily creative because a lot of people are just doing shorthand on things and just miss incredibly obvious opportunities.

[40:01] Probably my two favorite examples. One is our investment in open evidence, which is the leading AI app for healthcare professionals. And this was a company that had... [40:12] No revenue. It was, you know, selling a free... [40:18] AI service only for licensed medical professionals. [40:23] that looked a lot like JotGPT, but it was up to date with the most current [40:26] a medical literature, uh, [40:28] And [40:30] It comes in, the founder had a really good reputation. He started a company called Kensho, which he sold for, I think, $700 million, $200.

[40:39] But he was living in Malibu, and the team was working out of his house in Malibu, and it had like 10 people and no revenue and, you know, [40:47] A few of us have like doctors as relatives and none of them ever heard of this thing. And literally that was like, you know, I think we should do this investment. [40:56] You know, it's like... [40:58] why? You know, it's like it was just it seemed just so and, you know, it had raised no venture capital and they were going to raise a hundred million dollars and, [41:06] And it's just a [41:07] I don't even know where to begin on criticizing this idea.

Maybe I'll start with no revenue, just to get the conversation going. And just point by point by point. [41:18] Pat. [41:19] Just like... [41:20] explained exactly what he saw and... [41:24] I think they just raised it like $12 billion, and it's backed by just incredible... [41:28] incredible numbers. In this sort of framework-y, system-y type... Yeah, it's like, just systematically piecing apart your argument. You know, and just like... [41:36] you know, like, [41:37] Oh, like... [41:39] Yeah, I guess, you know, they got to the point where at the end of the process, like we were all [41:42] really enthusiastic about investing, you know, Pat's got a strange brain.

So he really wanted to win this investment. And, you know, we get to give the issue, the term sheet and Pat's working late at night. And he's the kind of guy like he won't ask. [41:54] the finance team to do a term sheet late at night if, you know, he can just do it himself on his computer. But he really wanted to get it signed because he wanted to, you know, get it over with and move on. So, Pat. [42:07] logs into like the DocuSign portal and like creates the DocuSign for this term sheet, which you've never done before.

And I also have never done before. [42:15] And he sends it to the founder. And then they go back and forth and the founder loops in the lawyers. [42:26] and Pat's like, when's this guy going to sign a term sheet? And then the founder invites them on this company off-site in [42:32] Bora Bora or something. And Pat, he's like, "Okay, yeah, of course. I'll be there tomorrow." He comes with the only goals. I can't leave the office to go to Bora Bora and come back with that term sheet signed. So he spends the whole two-day offsite talking to 11 employees of this company, really trying to find the right moment to get this thing signed.

[42:55] And then he realized that when you are the one who puts in the DocuSign, you don't actually get the email back that says the guy signed it. The guy signed it immediately. And Pat's been like 10 days of his life so stressed out, literally flying to Bora Bora, stressed if I got his term sheet signed. He's like, we're already working. Yeah. Yeah. Anyway, that's Pat, you know. [43:14] Ha, ha, ha, ha. [43:15] maybe, maybe I guess to come back to you, like, [43:19] This business is one of... [43:24] sort of continually finding exceptions, [43:27] And yet, [43:29] Sequoia and seemingly you have done quite a good job of doing it over and over and over again.

And so like, [43:35] If Pat is on this 100% framework, highly structured, [43:41] way of doing things, do you feel like you're continually pulling rabbits out of hats? There are some... [43:49] Clearly, you've developed an instinct on the people side. Maybe this gets into taste in even numbers, which I'd like to talk about, but I'm curious, what is this tension between consistency and consistency? [44:02] exceptions. [44:04] Well, I think one of the ways that, [44:06] I think one of the ways you learn how to do this job, maybe the only way is to watch the people you work with do the job and figure out your own way from there.

[44:14] And I think one of the things that Jim Getz used to always talk about is people who can repot themselves as investors. You know, Jim... [44:21] you know, help put together that seed of Palo Alto networks with Ashim from Greylock, you know, and it was one of like the leading cybersecurity investors. [44:29] early stage cybersecurity investors. [44:32] And then he turns around and does this kind of growthy round in WhatsApp, you know, and... [44:36] I think that, or like Mike Moritz, you know, who obviously did Yahoo and Google and PayPal and then lost money on Webvan, then turned around on Instacart and did Stripe.

You know, it's like, or Doug Leoni, who's like the most famous enterprise investor of his generation at the tail end of his career just kicks in the new bank seed in Series A and, you know, biggest return of his career and one of the biggest ever in venture. Like, there's this kind of this... [44:59] The track record of people who just don't get bogged down by, I am a SaaS investor. I'm a Series B investor. It's people who are consistently willing to reinvent themselves and take the risks on their reputation or their knowledge, understanding, etc.

I think that's one of the... [45:18] Key lessons from Sequoia is you just can't keep doing things the same way, and that applies at the system level, right? Like, what businesses are we in, how we set up our teams and everything. And at the individual level, we don't have swim lanes in the same way some people do, you know? [45:32] Like imagine, [45:33] Let's just say like every investor does. [45:35] two or three deals a year. [45:37] um [45:37] Imagine entering 2021 or entering 2022 and [45:43] You have like... [45:44] of your 10th person investment team, two people on AI, right?

That means maximum you have six AI investments, right? And people aren't perfect, you know what I mean? That would be crazy, right? So you kind of want to have like, [45:54] You'd rather have a team of curious people who... It's a little bit... I mean, I'm sure you'll back down from the comparison, but it's kind of how you were describing Vlad, which is this just like default, I can... [46:06] I can figure it out. I can figure it out. Yeah. I've always, I mean, to me, it's like if hedge funds can have TMT analysts, why can't we have TMT analysts?

I can be a TMT analyst, right? Like it's, um, and obviously there's some people who bring like really specific domain expertise, um, [46:20] Like I was lucky enough to wingman Sean McGuire on our SpaceX investment. [46:25] You know, like Sean's got big ideas and, you know, he's very vocal about sharing them. [46:31] And [46:32] when we went to SpaceX, [46:35] and his friend was like a quantum physicist and like worked with rocket companies and, but you know, in his past life, we're like walking through this factory floor where they're, you know, making spaceships.

And he just like notices that, you know, one of the, [46:48] I don't even know how to describe this thing. I'm like, one of the things that moves the satellite in space, they're using some gas that you wouldn't have assumed that they were going to use because of, like, the label on this tank. And then he asked the question to the guy, and the guy explains why they, you know, why we use this gas and not that gas. [47:06] And I was like... [47:07] I didn't even realize that was a satellite yet.

I'm not even in the zip code, right? So there is this dimension of you do want people who have, if you complement that with people who have real domain expertise and can really up-level your thinking, that's how I think you get really exceptional investments. But all of us are always trying to learn and trying to just try new things. [47:30] Yeah. [47:30] I think there is a underrated lesson there. [47:34] amongst great investors, which is that they are [47:37] Maybe this is much more obvious in the growth side of things, but they are not only right, they are right with size and with extreme conviction.

Maybe to start, what is different for you between investing – [47:50] at least maybe not for Sequoia's first investment, but for your first involvement in a company versus doubling down. [47:55] So, [47:57] I think in general, Sequoia has invested over a billion dollars at cost into, I think, three companies now. [48:04] And in general... [48:07] The way we've gotten there is starting very, very small, you know, and... [48:12] doubling down and tripling down and, um, [48:15] Stripes, a great example. We first invested in 2010, and our first investment was a million bucks or something like that.

[48:22] I think the biggest source of unfair advantage in evaluating investment opportunity is... [48:26] Being on the inside. [48:28] Both in terms of, like, obviously being in the board and seeing the pipeline and seeing how things are developing and watching the founder execute. Yeah, all the people stuff you were talking about, Vlad. You're not going to get that lens. Yeah. And it's funny. It's actually not universally... [48:42] I think the hardest round is the next round after you invest. [48:46] It's actually quite straightforward to do. [48:50] make the investment and then...

[48:52] seven years later when you have like extraordinary conviction and the company's marked up [48:57] eight times from when you invested, but they've grown the business 30-fold or something. Make that investment. The hardest one is you invest [49:06] Six months later, there's a term sheet in at... [49:09] five times the price you just invested in. Very little much, like not more data. Yeah. Like the data is, in fact, you just joined the first two board meetings and like the things you didn't realize. You didn't see the bodies. This person's leaving the company, you know, like, [49:21] and other people are really excited to invest, [49:24] in part because Sequoia invested and in part because the company is obviously interesting.

[49:28] Like that's the investment that probably like time and time again, [49:32] Like I and we have screwed up, you know, it's just, it's just really, really hard. Yeah. And it's like, [49:37] Yeah. [49:38] the first explanation is, oh, you're price anchoring, right? It's like, you know, how do you reevaluate [49:43] But it's not just that. It's like across all these different dimensions, you know. [49:46] It's the validation of getting somebody else is going to pay a big price for this company. Yeah, now you're getting a markup. [49:55] If I could just solve that problem on my investments, that would be the...

[50:01] snap my fingers. Um, and I try so hard, you know, like, [50:05] Change your process. Change how you think about things. Ignore the board deck. Study the board deck. You're like manipulating your own psychology. Trying to, yeah. And so far it had a little effect, but I'm only 3'5", so I can figure it out. [50:17] You wrote some lessons from your first 10 years at Sequoia, and one of them was Don't Flinch. [50:23] Can you talk more about what you mean by that? [50:25] Thank you. [50:26] Yeah, I think opportunities that you're really excited about, [50:30] reveal themselves highly infrequently and never at opportune times.

[50:37] And I think... [50:38] For me, my... [50:39] My proudest moment as an investor was... [50:43] Yeah. Seeing Dylan at the New York Stock Exchange, that was the coolest thing ever. And just [50:48] I was just so happy for everyone at Figma, given the acquisition and the antitrust and the whole thing, and just seeing them there and just like... [50:57] That was my proudest moment as a investor. Second proudest was this investment we did in Robinhood in 2020, the first week of COVID, which was – [51:06] I grew up around New York City.

I had dreams of