Doug Leone Sequoia Capital: Unlocking Italy's Potential at Italian Tech Week

And if I may say, we kept the best for last. We have our last session of the morning, and I'm honored to welcome to the stage Doug Leone, former managing partner and current partner at Sequoia Capital. He's widely regarded as one of the most influential investors in Silicon Valley, and I've heard some call him the godfather of venture capital. So we'll take the stereotype and welcome Doug to the stage. It's a long catwalk.

Great to see you.

Sit down. I'm sure the stage will start rotating in a second. And I will leave you to the stage. You will speak to Christian Hecker, the CEO of Trade Republic, about how to scale a great company. But before, I wanted to keep 10 minutes for myself and end this morning, which was focused on the Italian ecosystem, with you and ask you a few questions on, say, your insights or your views on the Italian ecosystem from an outside perspective, because you spent your career in Silicon Valley. You've invested in many ecosystems around the world, but not necessarily in Italy. And you've actually told me a tough fact, which is the fact that Sequoia has never made a trip to meet with an Italian founder.

Actually, we've made one trip.

You've made one trip, which is not a lot of trips for a fund as big as Sequoia Capital. And so I wanted to ask you why. Why do you think Italy is still maybe a little bit lagging behind in terms of attracting large international investors?

So the very first thing I'd like people to understand is that it's not about the money. The money follows the talent. There's plenty of money here in Italy. Someone told me there's $2 billion of capital, so it's not about the money. I think one of the reasons is that a lot of the companies in Italy solve a local problem. Maybe they get a number of customers, but that problem is solved in other countries by other companies. So when we come to invest, we see a company that maybe has half a dozen customers, but competition all over in the other countries. So my advice to founders is to solve a pan-European problem. Forget about America for a starting point. If you solve a pan-European and an American problem, that's a little too difficult.

But you've got to solve a bigger problem because that will address the competition aspect. And while I have the floor, I will tell you the best way to start is to solve a very simple problem, not a big stack, not a big platform. Platform is tough for a startup. Solve a very specific point problem, but it's got to be broader than just Italy. You've got to stand up to the scrutiny of European competition. Otherwise, you don't have a chance. And then, of course, there's all the other issues that we see in Italy and some of the other countries, which is the culture. Government will make things tougher for you as opposed to easier for you. Those are issues outside of your control. But if I can give you one word of advice, it's solve a pan-European problem.

Not an Italian problem.

And it's a big wake-up call for founders. I know there are lots of them in the audience, that the ball is in their court, right? Like, if they do the right thing, the money will follow, as you said. And at Sequoia, you follow the best ideas and you find the best founders in terms of that. What do you—I've had the chance to talk to you about this a little bit more, but I wanted to share it on the stage as well. What do you look for in a founder? So if you were to sit down with the second Italian founder, what would you look for?

Yeah, two or three things. We have found that we need a founder to be clearly smart, to be an outlier. Outlier—let me make it easy for you—half crazy in some good way. Overdriven, over-needy, over this, opinionated as heck. All the terrible adjectives some investors will say, to us, they're assets, so we want an outlier with a huge amount of grit. We know that grit is correlated with never saying no, pushing, pushing. But there's one more thing. Can you answer the question of how did you get the insight for the product? What is your firsthand experience with the pain that allows you to have an insight to the product? What we don't really want to hear is, 'Oh, four of us got in the room, we looked around, we thought we'd build this.'

I know one company that did that, it worked, it's called eBay. But that's one time. In most cases, most founders, they work someplace, they saw a pain and they went home and for the next two months, they couldn't fall asleep. They just had this crazy need. There's a hole in the market, I've got to do something. And as I said, make sure that hole is a pan-European hole, not an Italian hole.

Yeah, and that's the struggle with Italy, that it's a big enough market that you can feel comfortable in it, but not big enough to build the next billion-dollar startup.

Or a non-market. You know, the best companies address markets that didn't exist. You create a market. Once in a while, you'll get a replacement market. Think of ServiceNow—replacement market. But most of the time, they're new markets. Think of Airbnb. Was that a replacement or was that a new market? A little bit of both. But think of the crazy idea of someone who's going to sleep in your house. The moment I say, 'Well, I'm not going to let anybody sleep in my house,' 'You wouldn't let anybody sleep in my house.' I do remember, though, that when I was a poor boy in Genoa, mia mamma affittava una camera a Genova per fare un po' di soldi, and that little thing that happened in Genoa gave me a little insight of Airbnb.

So you gotta bring your experiences and so on.

And I know you have a specific vision on this, so I wanted to ask you the direct question, which is that in Italy, we're known for world-class universities. We've heard a lot on the stage talk about how great our technical talent is. We have great designers, great engineers, but somehow they don't all make it out to be great founders or work in great startups. So what do you think the Italian system could do better to spur that talent and push them towards maybe more of a business side rather than just academia?

So you gave me a system-level question now, not an individual-level question. We have a Consul General in San Francisco, and he calls me—and you know politicians, I never know what they're talking about, let me just be very clear—'You gotta meet this guy, 14 titles, blah, blah, blah.' There only should be one job for that Consul General: to go to the tech companies in Silicon Valley and tell them, 'Open an engineering center in Milan, in Turin,' where the two best universities are, 'Genoa a little less,' and so on. Because the lesson I learned from India, that had a lot of developers, you need product-minded people. And so that would be the home run. Second, some accelerators so that, you know, and all you young people like to network, so that's great, but network with people outside of Italy.

That's what I would recommend. Don't be insular with just among yourselves. Travel across Europe, get a sense. So for a system-level company, get product companies in here and get your wonderful new president—well, not new, she's been around for a year—to loosen whatever regulations she can loosen so you guys can hire, fire, move, you know, because you only have two advantages as a small company: stealth—quiet, don't tell everybody what you're doing—and speed. And if you remove speed, it's like cutting off one of your legs. And so from a system-level standpoint, that would be my advice.

I'll keep it to the system level. We've heard from other investors who brought to the stage lessons from France, from Germany, what they saw work in other countries. I know you have firsthand experience in Brazil, in India, in other markets where the startup system sort of was born out of nothing and grew to become something bigger. So looking at those other systems that you know better, what do you think are some of the things that work? I know you've mentioned a few in your answer now, but anything else that you think it's important for Italy to look at and learn from?

In America, we have two coasts. We have Boston and we have Silicon Valley. And very few companies come out of Boston. And a lot come out of Silicon Valley. Why? Boston has MIT or Harvard. Silicon Valley has Stanford. It is a complete risk-taking mindset. It is the people that make it in California. Think of the old days on horse caravans. They leave their family behind. And they just take risks. As we say, "burn the ships." There's no ship to take you home. It's that mindset of "burn the ships." No safety net, nothing to go back to. It's either this or nothing. And so I would advise you, as tough as that is, to have that mindset. I should tell you, my mother went nuts obviously when I did that. But it's that kind of mindset.

Burn the ships, take the shot, travel across Europe, and from a system level, I would ask somebody to create on one page what's happening in Paris and what's happening in Munich that has a lot of trips from guys like us going to visit there. I would want to know that very clearly on one page and to emulate that here in Italy.

Great. Thank you, Doug. I wish I could stay on the stage with you for another 10 minutes, but I got to go. And I'll ask Christian Hecker to come to the stage so he can have his fireside chat with you. And thank you so much. Thank you.

Grazie mille.

Grazie.