Sequoia Capital's Doug Leone on Luck & Taking Risks

Well, we're all really happy to have you here today. Welcome to the GSB. Thank you. I remember one of the first times that we spoke, when you were talking about coming here, and you asked me if this was a forum where you could be, quote-unquote, provocative. And so, while recognizing that some members of your family are in the audience today and we don't want to get too far across the line, I want to make sure we give you a chance to push the envelope a little bit. So over the next 40 minutes or so, we're going to cover a few topics. I want to talk about your leadership at Sequoia and how it's gotten to the point where it is today, and about the Silicon Valley ecosystem as a whole. As you mentioned before, there's a lot of confusion out there about it.

But first, I want to touch on what makes you who you are and your background. The Dean talked a lot about you coming over here as an immigrant at the age of 11, working blue-collar jobs and vowing to succeed in business. Forbes wrote, 'Leone still carries himself like a hard-luck striver, scrambling for his first decent break.' And you said a lot of what keeps you going is fear. So tell me a bit more about that experience coming over here as an immigrant, and why that drives you today, and how that makes you as a person today.

Well, you know, it's quite amusing when I think back of all the seemingly very small things that really played a pivotal role. I remember in my first job when the CEO of a small company said, 'Go clean the bathrooms.' And I read and I heard that, boy, it starts at the bottom. It starts by cleaning the bathroom. And I remember cleaning the bathrooms that day and saying, 'I got you now, because you let me into the business world.' So that's a vignette that says, 'I'm now in, and now I'm going to get you all.' And 'get you all,' I didn't mean in a bad way. Now I only have one place to go but up. The other thing, as I look back, that was quite formative, being an only child, lots of love around my family.

No means, but lots of love. And that was a blessing. But a pretty rough high school, three or four years. The high school years are tender years. It's the first time that girls come into play and so on. And those were not easy years. And to this day, I have to catch myself. I have to catch myself from letting my ego and my insecurities get the best of me, as I want my high school friends, who I haven't seen for 40 years, realize how wrong they were. And I think it's humorous that at the age of 57, I still think about the high school friends. So those are the little things that really, really, really push me to want to achieve. And my life really went into three different groups. In the first few years, it was about making it.

Can I make it? Can I make it? Can I make it? From the age of 35 to 50, I just wanted to be the very best. That really, really drove me. From 50, 55 to this point, to 57, and hopefully through the end of my career, the thing that really, really drives me is working with younger people. It's kind of a rude line, but I don't want to hang out with people like me. I don't want to hang out with old people. I want to hang out with people like you. And so at Sequoia Capital, finding a young, talented partner, investor, employee and helping them in the greatest way possible is really what keeps it going now.

That's great. Well, I want to get to how you recruited at Sequoia, because I know a lot of our classmates may be interested in that right now, given that it's recruiting season. But just backing up a bit to—okay, so you're a New York immigrant. You vowed to succeed. But the path to success is one that I think is not an obvious one. You graduated from graduate school on the East Coast and decided to come back to the West Coast and work at Sequoia after having a sales background. Why did you make that choice? Silicon Valley was something then, but it's not what it is today. Sequoia was good, but it's not what it is today. What drove you to come back here? What did you see?

So I think luck played a great role. So my first job in sales was selling north of 96th Street in New York City. Now it's cool to be north of 96th Street. Let me tell you, in 1979, it wasn't cool to be north of 96th Street. It was unsafe to walk north of 96th Street. But that location had one important thing, at Columbia University, where someone explained to me what the ARPANET was. And that caused me to get a job at Sun Microsystems. Again, that crappy sales territory, and you could say I made my own break because I asked some questions, but that unlucky break led to a lucky break. Sun Microsystems employee number 50-something, I can't remember. And I really thought I was a big shot. I was 26, 27, selling a boatload of computers, got promoted, and then I met Vinod Khosla.

Holy cow, this guy's as old as I am as a board member. Scott McNealy came here. Holy cow, this guy's as old as me. He's the president, the CEO. And then I learned the words venture capitalist. I had no idea what that was, but it sounded pretty good to me. And so I just figured out what a venture guy was, and I decided that I wanna be one of them. And I figured that I should get a master's, learn a little more to get a second master's. And then I wrote 80 letters to venture firms letting them know I'm gonna be in California. trying to sweet-talk all the assistants, I got an interview with Don Valentine at 5 o'clock on a Monday, who took me to his office and asked me, what's important? Of course, I knew what's important.

I spoke for about seven, eight minutes. I gave it all. Thirty seconds of silence. And he said, what else? I'd just given it all. And I said, Don, I gave you everything I know I can't give anymore. But the fact that I was so candid, and the fact that I told it like it is, and the fact that I had a sales background caused me to be hired. But to make a long story short, it was a lucky break. to sell at Columbia. It was a lucky break to ask a few questions. It was a lucky break to learn about Sun Microsystems where I wrote a letter and got a cold call interview. And so in some cases, I think you make your own break, but make no mistake, a great deal of the reason as to why I'm here has to do with luck.

I firmly believe that.

If you hadn't come back to Silicon Valley, do you think you'd still be in sales? Or what was your vision?

So about six, seven years ago, I was in New York City. And I got a call from someone. There's an HP reunion in New York City in some restaurant on 22nd Street. And back in Hewlett-Packard, back in '79, it was the Italian mafia. Gianni, Colucci, Tartaglia—I mean, all these guys, the same names as The Godfather in some ways. And so I decided to attend this gathering. And it was one of those scenes from movies that you occasionally see where your life would have been. And let me tell you, it would not have been a bad life. I think everybody was a lifer, everybody had a home, their kids were happy. But they got up and started singing some song, 'The HP Way,' to Bill and Dave. These are the two founders of Hewlett-Packard.

And they gave me a snippet of what life might have been, and it completely freaked me out. And so that's what it could have been. I doubt it would have been that, but that was a very eye-opening experience.

Interesting. Well, I want to move now to what people have no doubt come here to hear about, which is your leadership of Sequoia and the success you and your partners have had over, not only recently, but over the last few decades. It's obviously been an incredible year, and it's been an incredible decade, or a few decades. And I'm wondering what about Sequoia separates it from the others that's allowed it to maintain success for so long—the secret sauce, as you've put it—and how have you stayed on top for so long?

Well, I think it all started with Don Valentine, who's the founder of Sequoia Capital, who had two lessons that were pivotal in my mind. One was really an appreciation for markets, and second, an ability to recruit non-conventional people. So he recruited Mike Moritz, whose name you probably know, who was a writer—had written a book on Apple, was the San Francisco Time magazine bureau chief. And he recruited him to be an investor. Now you might wonder, how do you recruit him to be an investor? Because he liked the way Mike thought, he liked the way Mike asked questions. Right after he recruited Mike, he hired me, and he hired me because of my view of a business from the customer in versus from the product out.

And Mike and I could not be more different. Mike is a thinking man, of few words, a Brit. I'm an Italian, a few too many words, and so on. But Mike and I learned to work together for 20-something years, but it's to Don's credit. And we've kind of kept that going. So we continue to hire people mostly of modest means, people that have not followed a preset set of tracks, people that have taken risks, people that have achieved some kind of success early on, people that are smart—but that goes without saying—people that have both IQ and EQ. And then our spec has product management, technical background, has all these conventional lines. And that has a line at the end that says, 'Doesn't meet spec, but he or she is special.'

And it's the last line that's the most important line of the recruit. And so we meet a lot of people. We're always looking for people. We're looking for people right now, both in our venture business and in our growth business. We get to know them quite well. And then we ask them to listen to companies with us. And we just want to see how they think. And we look for highly imperfect human beings, the type of people that were probably individual contributors early in life, the quirky kids, if you will—not the quarterback of the football team or the female equivalent of that, but people that have a bit of an edge, people that have something to prove, people that need to win, and people that are not asses when you peel a few layers, because life is too short.

And our real secret is taking these heterogeneous individual contributors and showing them how to work as part of a team, to start using the 'we' pronoun, taking full responsibility for failure and sharing the successes. And if there's one reason why we've lasted for 43 years near the top or at the top of our business, it is because of this. This leads to a high-performance culture that has only one goal: a team-oriented spirit to help founders build great companies.

So you brought up Mike Moritz, and you two have led the firm for some time. And he had a quote not too long ago where he said about Sequoia, 'We're always outgunned by companies that are far larger than us who have threatened us and the founders with extinction. It's incredibly thrilling to prove everyone wrong. You can't get a bigger rush than that.' Now, you talked about your talent recruitment and recruiting hungry people, but there's got to be more to it to keep you hungry as a firm, to keep you from resting on your laurels, to keep you from resting on your laurels. How do you think about continuing to motivate yourself and motivating people? What kind of things do you implement as a firm-wide culture to make sure that happens?

There's a few things. First of all, I think we're paranoid as heck. We're always one or two bad investments away from becoming a second-tier firm. And that is very clear in our minds. Second, we have a different view towards risk than most other people. People hate to do things because they view them as risky. We actually think that if you're a crystal-clear thinker, doing nothing is risky. So we're always changing and implementing. And the old adage that if it ain't broke, don't fix it, does not apply to Sequoia Capital. It is the exact opposite. If something is working like a dream, break it. Because you know there are some competitors out there who are looking at you from the outside and are trying to put you out of business.

So the last thing we've done in the last four or five months, we've taken all the posters down. We had all these posters, 200 IPOs, 20% of the NASDAQ, blah, blah, blah. Take them all off the walls. Take them all off the walls and let's act as if we haven't had one single win. And so we're always screwing around, messing with the formula, trying new things. We went into China, we went into India because we asked ourselves the question, 'Where are the most valuable companies gonna come from in the next 20 years?' It was no longer clear they would come from the US. So we went into India and China, and we did it in a decentralized fashion. We met some people over a period of 90 days, and we told them, 'We'd like you to be Sequoia Capital China.'

You make all the decisions, not us. No other firm has done that. So, always taking risks, because taking risks is the only way to keep on going.

I want to get to your success in China a little bit later, but first I want to ask something that I think a fair number of my classmates are interested in, which is about how you pitch the VCs and how you pitch people like Sequoia. The web is filled with stories of how difficult it is to pitch you and pitch Sequoia. And I was going to share some stories, but there are a lot of words that I can't actually use on stage here. So I'll just say they're some aggressive pitch meetings, usually. And so I'm wondering what you look for in pitches. What sets the best ones apart, and what tips might you have for people that wanna come in and pitch you?

So let me set it up at first. We're very cognizant that when somebody comes to Sequoia, they're prepared. We're very cognizant of the fact that in many cases, it's their big day, one of many large days. Maybe they're going to Andreessen, maybe they're going to Benchmark. So we take that quite seriously. The meetings at Sequoia start exactly on time, they end on time, and no one has their iPhone on. It goes against all our culture. No one's doing emails, just to be straight. Now, we also don't have flower children at Sequoia Capital. We do ask questions. And I will tell you, there are some partnerships who are afraid of asking questions for fear of ruining their reputation. No, we'll ask questions. And we try to treat people the way we would treat someone in our living room.

But if we have a question about the market size, if we have a question about some issues, we're gonna ask it. And unfortunately, because we ask three or four questions, once in a while we have a founder who realizes, 'My God, I just started a company that's chasing a $42 million global market.' That does not feel good. But it's not meant to be rude, it's meant to understand the person's business. So, some of the best pitches: Drew Houston, who was gonna launch a company in a crowded market and yet could clearly articulate why none of the existing products were gonna make it. Crystal-clear thinking is one of the things we look for. Not a fancy slide pitch, but crystal-clear thinking, and we pay careful attention to little words, to the pronoun being used.

When someone says, "I can ship you this thing," it's a little warning flag. "What do you mean you can ship us? You're not shipping us anything; it's your company that's shipping us." So we pay really careful attention to everything. Or Fred Luddy, who had a company that was growing like a weed, and all he told us were all the mistakes he made. Those were the great pitches. Those were people that were self-aware, that were crystal clear thinkers, that were willing to learn, willing to listen. And in some cases, willing not to listen, because founders tend to not be the greatest listeners. And in many cases, they're right, because they're doing new things, trying new things.

On your investment philosophy, you referenced this earlier that you look for investors who come from modest means. And I think you also look for entrepreneurs who come from modest means. You said, "We want people who come from humble backgrounds and have a need to win." So what types of entrepreneurs make the best founders? In particular if, say, someone who had an MBA from the Stanford GSB walked into your office, what profile do you look for?

So I think entrepreneurs, like investors, come in different flavors. And I will tell you, and as I told my kids, that if you're desperate, it's a great asset. If you have too many choices in life, it clouds your thinking. When you only have one way to go and that's forward, it's very easy. You just go, go, go. Failure truly is not an option. Now, what we look for in entrepreneurs is people that have not followed the same tracks, people that have done quirky things, that have taken risks. We look for that. We look for people that have knowledge in the domain, not so much the business-minded because they want to make some money. We actually look for people that are very interested in their product or service being used by the next 10, 20 million people.

And we also look for people, a little secret, that solved a problem that they have. And it just so happened, they don't know it, we don't know it, but they're the proxy for the next 20 million users. So Jan of WhatsApp understood privacy and low-cost messaging. He had that need. He started WhatsApp. Well, the founders of Yahoo from Stanford couldn't find anything on the internet, so they built a search engine, they built the Yellow Pages, or something as simple as Zappos. The founder of Zappos couldn't find a pair of shoes. And so we look for people that are trying to solve problems that they themselves have, and hopefully a new problem. And if we see that, that's a little tell for us that we may be on to something, because we may find our first beta site, the founder for the next generation.

Looking at Sequoia more broadly, and one issue that impacts Sequoia and the Valley as a whole is a gender gap.

Yes.

That there aren't a lot of women working in tech or engineering, and Sequoia itself has no female partners.

Yes.

And this is something you've spoken about before, but it would be interesting to hear your thoughts on why there aren't more women in the Valley in general and in Sequoia. What is the reason for that?

So look, clearly I can make a lot of excuses—not a lot of women engineers and so on—but all we need is one or two. So I think that's just an excuse. And I will tell you that our inability in the US—we have women investors in India and China—our inability to have women investors at Sequoia US is an abject failure on our part. Let me be crystal clear. We have a heterogeneous set of talents at Sequoia. We have engineers, sales, marketing, CFO, Italians, Chinese, Indian, but we don't have the woman's point of view. And if you just think about consumer internet investing, half of the population is women. So it is in our interest, both as good citizens and as selfish investors, to have that point of view.

Where we have been looking, and we will continue to look, for women investors. We actually hired someone from Stanford GSB a couple of years ago, spent the summer with us, and then she decided to become an operating person. Now, yes, but we do have some women partners. Blair, our marketing partner, came from Stanford. Our global CFO is a woman, but you're absolutely right. We do not have a woman investor partner, and that is a huge failure on our part. And by the way, we're looking.

All right, well, maybe you'll get some resumes this afternoon. So, I want to take us to a bigger-picture discussion here about the Valley as a whole, even though we could talk about Sequoia all day. You know, times in the Valley are obviously very good. Sequoia had a notable success with WhatsApp, but there are a number of big acquisitions going on right now. The WhatsApp acquisition at $19 billion makes it worth more than the following companies: Southwest Airlines, which flew me across the country last month; Ralph Lauren; Conagra Foods, which employs 26,000 people; and even Chipotle, which feeds me three to four times a week. The list goes on—Harley-Davidson, I have a whole list here. You know this.

I'm not questioning the value to Facebook. What I am questioning is whether these companies are really worth that much. Peter Thiel has a quote that says, 'We wanted flying cars, and instead we got 140 characters.' I'm wondering how you think about that. Is this an overvalued bubble, or are these companies really creating the type of value that they're being estimated at?

Boy, that's a lot of questions. Yeah, well, you asked me if WhatsApp is worth $19 billion. Well, no, right? You've asked me, 'Is there a bubble?' So, a few answers. Let's start with WhatsApp. Let me ask all of you, if you owned 100% of Facebook and you have a $190 billion market cap, and you have a huge unprotected flank called mobile, what is it worth to you to shore up that flank? Is it worth 10% of your market cap or not? It wasn't just WhatsApp; it was Instagram as well that we sold them. With those two properties, no one talks about Facebook any longer being weak on mobile. So, the value of a property is in the eyes of the buyer and the seller. I can tell you, from the eyes of the buyer, it was definitely worth 10% of their market cap to shore up that flank.

Next, whether we live in a bubble. I think the public markets are rational and reflect the transformation caused across the industries in the U.S. in healthcare, manufacturing, and so on by technology, as we're seeing the number of new Fortune 1000s, the percentage of new Fortune 1000s every decade increasing and increasing. 40 years ago, 30% of the Fortune 1000 changed. The last decade, 70%. So, think of that rate of change. And you're seeing it reflected in what some of these technology companies are being valued. Things are nutty in a private market, and the one rule that's the most fundamental rule of investing is that we live in cycles. And every time you hear, 'It's different for this time,' 'It's the first time this is gonna happen,' that's all crap.

We live in cycles. And the more times you hear the words 'billion-dollar market cap,' the more you know you're approaching the top of a cycle. In 1999, there were a lot of companies with no business models—zero. What we're seeing now is a whole bunch of companies that deserve to have—private companies—that deserve to have wonderful market value, and a whole bunch of others that, if I hid the name of the company and I showed you the financials, you would not ascribe the value that the private markets are ascribing to these kinds of companies. Which is a long way of saying that as soon as you have a hiccup in a public market, the hedge funds are gonna go away, the late-stage money is gonna go away, the billion-dollar funding is gonna go away.

And a whole bunch of companies with horrific business models, maybe revenues, but terrible unit economics, are not going to be able to raise money. And then it's going to turn ugly real quickly. I think things in the private market for a large number of companies are in La-La Land, because the companies are not worth anywhere near what the private market is ascribing to them. Now, why is all this occurring? Because first you have the investors, and then you have the tourists that say, 'Oh my God, we're missing out.' And so you have more and more money coming in that's investing at higher and higher levels of risk, but they don't realize that's happening. And then something happens, like a dislocation in the public market, an adjustment, a 500-point correction, all the money tends to disappear, and all these companies that are used to burning $50 million cash a quarter in the private markets are going to be hurting.

That is what I forecast is going to happen.

So we are in somewhat of a bubble, you'd say?

We are approaching the top of the market in private market investing.

Okay. So on the funding landscape, we spoke backstage a bit about some of the confusion that is out there. There seems to be a shift in the funding landscape. People are talking about angels and seed funders increasing in power and disintermediating VCs. What's your take on that? Is it a trend? Is it a real trend? What's your take on it?

So look, it's quite simple. With the advent of the internet and mobile, We saw the birth of what I call application layer investing, where now you can buy a computer for $1,000 or less, or store your files on Amazon, or use open source, and you can create a product for $200,000. So the cost to start one of these companies is a lot less. Remember, it's the cost to start, not the cost to launch. And so for the first time, we've seen the growth of angel investing. which is necessary because there's so many founders and entrepreneurs. We could not make all the investments that we see. But at the same time, we've also seen these things called party rounds, where instead of raising $250,000 or 500 or a million, money's being thrown at these founders and they're raising these four or $5 million rounds before they have a product without calculating what that means.

Keep in mind, the angels spend this much time with a founder in a company's life. If the company's life is that long, the angels spend that much. And as a founder, you have to figure out how much equity do you want to sell to an asset class, a category of partners—think of us as partners—that will spend maybe the first nine months with you. Then the venture guys come to spend the next seven years. And you have to figure out, how much equity do you want to sell to a partner that's the next seven years? And then the public market will do the rest. So in my mind, the angels are necessary, especially for this application-level company. If you're going to go in the lab and build IP for 18 months before you come out with a product, an angel's not going to do much for you.

But in these Internet and mobile companies, the angels play a productive role as long as you don't sell a ton of your equity. And after the first round, you've sold 62% of your company? It's just nuts. You ought to be totally selfish with the early shares, including the shares with the venture guys. Raise as little money as you can to get you to the next milestone when the value goes up. And then when you've got market power and you've got $3, $4, $5, $10, or $15 billion in value—Uber, $18 billion, or in our case, Airbnb, $10 to $12 billion—then go raise a lot of money. But you should guard those shares with your life, and you should architect your investors the same way you architect your product and your engineering team.

How should founders think about raising money, then, if they want to protect their equity but they want to raise money as fast as possible?

Raise as little as you can to get you to something that you can show, plus maybe a quarter or two, so you have a little bit of cushion, and then raise some more money. Raise as little, not as much, as little as you can. Because that's the most expensive equity you're going to sell. And conversely, be very generous with the early engineers that you hire. Those are the ones you should invest in. Because the first two or three engineers, if you get those wrong, you are done.

So we all should become engineers is what you're saying?

No, no, because if you're building a technical product, an A-plus engineer is going to help you to recruit an A engineer. If your first two or three engineers are B engineers, you're done because you'll never surround yourself with the A and A-plus talented people.

Got it. Well, it's good to be at Stanford then. We got some good engineers here. We only have time for about one more question before we move to the audience. And I just wanted to touch on Sequoia's success in emerging markets. You have found success in Israel, India, and particularly China, where others have not. I'm wondering, is this just another secret-sauce kind of thing? You hire the best people and they do good things? Or what has led to success there?

A little luck, we found good people, but we looked for a while. And I think the courage and foolishness, because I think in retrospect that we can't believe that we did this, is to hire people and work the attack side of the house, which is the money-making, the investing, the hiring, to have that decentralized, to not have every decision go through California. Because what do I know about what goes on in China? What do I know about what goes on in India? I travel to India and China four to five times a year. But at the end of the day, I don't really know what goes on there. So we decentralized the attack side of the house, and we centralized the defense, the stay-out-of-jail, compliance, the financial reporting.

No one has had the courage to do what we did, to completely decentralize and have relationships and trust be the things that really hold us as one firm. It's not a franchise opportunity. We are one partnership. It's not Sequoia Capital China. It's Sequoia Capital in China, to show you how carefully we even, uh, use our words. And essentially, we, we're held by a whole bunch of strings. Compensation is a small piece of it; a lot of it is culture. When we send email to a partner in China, we get a response right back, the same way that when I send an email to my partner here in the US. And we view our partners in China, India, and Israel the same way as the partners in the US. So having that patience, that courage, that foolishness to organize that when investing all the time, I think, has been the secret to our success.

Interesting.

Well, I want to save some time for questions here. We have mics in the front rows here, so please start raising your hands. If you're in the top deck, you can tweet questions, and we'll have someone read a few of those. And we have time for about 10, 15 minutes of questions. Got one right?

Right in front.

We'll go right over here. And please stand up and introduce yourself. Hi, my name is— Yep, just hold it close.

My name is Federico Antoni, part of the faculty here at Stanford GSB. I have a question regarding Brazil. So from the exterior, it seems that you didn't have as much success in Brazil as you did in China and India. I don't know if you could speak to the reasons for that, and what learning did you get from that experience?

So we hired, about three years ago, a terrific GSB graduate. We hired him in October, his first year; worked with us through year one, through the summer, and through year two. And we had a notion that we were going to go to Brazil. And we traveled to Brazil probably six, seven times. We made two investments. And the more we traveled down there, the more it became apparent that there were very few engineers coming out of Brazil. And we understood that we would have to go into other lines of business, like the consumer industry, supermarkets, restaurants. And we want Sequoia Capital to really be an IT-first partnership. What we didn't want to do is go to Brazil and back a whole bunch of look-alike companies.

So we hired a gentleman. He opened an office, we made two investments, and then we pulled back. Now, there's a second part to that story. So we did the right thing. At Sequoia, we pride ourselves in doing the right thing. A young person, we forward-vested him in a fund, including the WhatsApp funds, so he's very happy. And he wanted to start a company, and we gave him a bit of a throwaway million-dollar seed. Not throwaway because that's a belittling term, but you know, long-shot startup in Brazil. And he wanted to start an online credit card company. So we helped him, board meetings over the phone for the first year. And at a million dollars, he launched a credit card company in Brazil. There's a whole bunch, there's a line out the door of users who want to get the credit card.

They changed the law in Brazil, so now if you want to launch a competitor, it takes three years. And we just invested $11 million in a Series A after this throwaway million dollars. We now have three investments in Brazil, but we have no intention of planting a flag in Brazil, mostly because of the number of computer science engineers. The last thing I'll tell you is I met with a gentleman at Gartner, lives in Brazil. He does software monitoring throughout the US. He's the one that writes all the graphs of software. And I asked him, what were the two or three leading software companies in Brazil? And he could only name one or two. It was very clear that it was too early to go to Brazil from an IT, non-look-alike internet company market.

And so we backed off. And that's the real story.

All right. I think we have one more question over here.

Hello, my name is Naama. I'm an MBA, Class of 2016. And I think by now my classmates already know what I'm about to ask. We already touched a little bit about gender inequality in your firm. I wonder how it affects how the firm addresses women entrepreneurship. Are you missing out on women entrepreneurs because you don't have a female partner?

Well, we have no way of knowing if we're missing out. So in the last 10 years, I have served on half a dozen boards where the lead founder, CEO is or was a woman. So we have no fear of backing women. Right now, in one of my best companies, the president, founder is a woman. Houzz, another company where I'm not on the board, the CEO is a woman. So we have no issues in backing women. I think we're missing out as investors, mostly because, as I said earlier, we're missing a point of view that represents half of the population. And if you do any studies on high-performance teams, high-performance teams have heterogeneous points of view. And we're missing half of the population of the US. But we have been in business with numerous women, and we look forward to being in business with even more women.

So if you want to start a company, come to Sequoia, we'd love to hear your pitch.

There you go. We're going to take one from Twitter, but please keep your hands raised so they can get you the mics. But we'll go to a Twitter question now.

The Twitter question I want to ask is, you attribute a lot of your success to luck. Do you have any habits or ways of increasing your chance of being lucky?

Yeah, I think I do, and my partners sometimes get upset at me. I leaned forward, not in writing checks, but in listening. So I remember being on a panel with another venture person who said, I won't tell you his name. He said, well, we like our business plan to come from screen sources, lawyers and so on. And then it was my turn to answer the question. This is a little before email, I said 8543927, meaning our phone number. And so the thing I like to do, I like to go look in all the nooks and crannies where it's not hip to go look. Or when I hear something is really crappy, this is really a bad time, My brain works, it's a bad time, terrific, I wanna go look. And then just, it's from my sales days.

I guess now if you're in sales, they hand you leads. When I was in sales, nobody ever handed me a lead. It was a lot of cold calling. And in one company, especially the company where the lady's the president, I am terrifically proud that I cold-called it myself. Is that luck? No, I think hustle, luck, and clearly, look, there's a lot of people as talented as I that could be sitting right here. I don't have any special talents. I want to make that crystal clear. There's a lot of people that are sitting right here, and yet I'm the one sitting here. So luck has something to do with it. But I will tell you, hustle has a great deal to do with it as well.

I think we have a question on this side. Thanks. You can just talk into it.

Hi, Doug. My name is Ying Ming. I'm from Qualcomm. And you said things are in cycles. Like, as you mentioned, the mobile applications, we are approaching the top. And can you please share with us, in your mind, what's the next things? The cycle is about to start, or maybe next several things you can see. Thank you.

So look, people always ask me, 'What's hot?' And here's my answer: if I could tell you, by definition, it's not hot. The day before I came across Google, I would not have told you a new market entrant in search—there were 20 search companies—is hot. Or the day before YouTube, when video on the internet had failed consistently, I would have never told you that's hot. We have market maps. But market maps, by definition, look at the status quo and extend the line. And once in a while, we find the company that fills the hole. But the best investments we make are the things we haven't even thought of. Imagine Airbnb. Imagine you asking me that question the day before Airbnb, and I'm going to tell you—I'll tell you what's hot.

There were three guys in that case. Three guys are going to show up, and they're going to tell me that what's hot is a situation where, 'I'm going to rent rooms in my house to strangers. We're going to create a global, two-sided marketplace in that.' And I would have said, 'Come on. That's nuts.' So, that is a question that, by definition, you cannot answer. Now, I will tell you that in the last fund of Sequoia Capital—it's a three-year fund—we have fewer consumer internet, mobile companies than we had in the fund before. I can't tell you if it's because we're missing something or we're reaching a saturation point. I can tell you we have more healthcare companies—three cancer-addressing companies. We didn't have three of those in the fund before. Am I going to tell you that cancer curing is hot? No, I'm not going to tell you that. But, but it's the impossible question to ask, and the only way to learn is to have big, dumb ears, listen to everything, and don't dismiss crazy ideas.

Now, once in a while, I will admit that we make one of these investments like Airbnb, and 90 days afterwards, we say to ourselves, 'What the heck were we thinking?' But it takes flexibility in the brain to say, 'Would you do Airbnb?' Now, the latest thing is, would you share your car? Would you let somebody else drive your car from point—so you can drive from point A to point B, and they can drive from point B to point A? Or drop your car at the airport; when somebody lands, they can take your car and use that as a rental. I can tell you that the use of my car feels pretty personal to me, but I'm open-minded because I wanna know what you do, male and female, what your point of view would be.

I think we have one on this side. Stand up. Yeah, there you go.

Hi, I am Javier Solano. I come from Chile. And you mentioned that your early years in the U.S. at high school with some kind of needs made you who you are. And you're looking for people like you. And I agree with that. It's kind of easy to be determined when you're needy. But how do you stay hungry when you get some degree of success?

It's not something I do consciously. So back—this is kind of funny to admit—so once every 10 years that we do a Myers-Briggs at Sequoia Capital, because things are going well, so obviously let's have a look. And the last time, the most negative thing I got is the fact I mentioned that once a week I have a nightmare that I'm gonna be fired by Sequoia Capital. And people told me, 'Boy, if you feel like that, imagine how we feel.' Now, no one's threatening me. Sequoia Capital is a 'we' place. We want people to succeed. It's actually a really fun place on the inside to be. But to me, it's just raw, raw fear. I remember walking in a Stanford Mall in 1988, making $67,000 and not really having enough money to buy presents.

I remember those days, and they didn't feel very good. So I still have this fear that I'm gonna be poor. I still have this fear that they're gonna throw me out of Sequoia Capital. I still have this fear that I'm gonna really mess up a founder. I have a great fear. I've been on 30 boards, and I have to admit, I messed up one company really good. Now, thankfully, I helped a whole bunch of others. But I fear—I have a huge sense of responsibility. I think fear would be my number one thing. And it's not something I do. It's not a little game I play with myself. I actually—it kind of really gets me going. And it drives me. I think it's a character fault, actually, but that's what it is.

So I think I'm going to take the last question here. And you've been very personal today, and we appreciate that. But I still want to ask you the question that all GSB students have to answer when they apply here, which is something we have to put on our application, and it's, 'What matters most to you and why?' And I want to ask you that question.

Well, I clearly got the answer wrong being that I was rejected twice from Stanford Business School.

Let me start with that. So look, you're all young, you want to achieve, and you're in that first third part. I describe my life in these three thirds. You're in the first third part. But if I would give you some advice, and I'm gonna take some poetic license, I'm not gonna say one thing. I'll say two or three things. Here's my view of things now that I'm a little older, though. Number one, choose to have kids or not, but if you choose to have kids, invest in your kids. That, to me, is the most important thing. Second, go for it, have success, but bring others along with you. If I look at my professional success, it was when I was in sales, if I shipped a computer to somebody else's territory, I would send the email saying, 'I think you should get half,' versus the managers having to be involved.

I remember it started then. If we do something well at Sequoia, it's a "we" win. Take as many people with you for the ride as possible. If you come across a jerk, let them rot in their misery. Just get away from them. And number three, bring it every day. Get up—I'm gonna tell you, there are some days I go home and I am just beat. "My God, how much more can I do this?" A good night's sleep, I get up in the morning, and you bring it again. Fearlessly, just go, go, go. Those would be not the most important, but that's how I go through life. And you've heard it before. Think of life when you've got a half hour left to live. You're not gonna think about, "Oh boy, my net worth is X. It really should have been 1.2X."

I doubt you're gonna think about that. "Oh boy, I only became COO or VP. Man, I wish I became EVP." You're not gonna think about that. Now clearly you have to achieve success because that's why you're here, because you're motivated. And I don't want to short-sell that one bit. But I think in that order: take care of your kids, your family; bring as many people as you can on the ride with you; and get away from the jerks. And get up in the morning with a good night's sleep and just bring it.

That would be what's important. That's great advice. Please join me in thanking Doug. That was great. Thank you. All right. Thank you.