Today at TechCrunch Disrupt, Michael Arrington sat down with Sequoia’s Doug Leone. While he’s been with the venture capital firm since 1988, not many people know who he is because he keeps a low profile. But he’s also a guy who has been vital to Sequoia returning something like $15 to $20 billion to investors over his time. It was a great talk.
Of note, Leone said that he doesn’t take photographs. Why? Because he hates the idea of being chained to the past in any way. Hardcore.
Having said that, when Mike asked him about the past, he obliged. Leone noted that things were very different back in 1988. Back then, the average entrepreneur was something like 45 years old. It was a different time — startups were focused on the infrastructure layer. Today, entrepreneurs are 22 or 23 or even younger, and they’re focused on the application layer.
Leone noted that Sequoia has never had a fund that has lost money. There was one time when things were looking like they may go that way in 2002, so the Sequoia partners got out their checkbooks so that no one could say that they lost money investing with Sequoia Capital.
The $15 or $20 billion returned so far has come from something like $5 billion raised. Leone noted that 90 percent of of their capital comes from endowments and foundations, so these billions returned are going towards good causes and making the world better.
Leone also used his time on stage to make it clear that Sequoia is not just a late stage investor. To the contrary, their goal is to be the first dollars invested in a company. “We wanna be the first business partner that a young entrepreneur has,” he said, noting that the DNA of a company is often set in the first 30, 60, or 90 days. “We want to assist in creating the best DNA Silicon Valley has ever seen.”
When Mike asked Leone for advice for his recently launched CrunchFund (in which Sequoia is an LP), Leone indicated he may have some learning to do. In Leone’s view, startups have two advantages: stealth and speed. But Mike comes from a world (TechCrunch) where speed is important but there is no stealth. He said Mike would have to learn to advise startups to “avoid cocktail hour” and stay away from press.
Yeah, that won’t be easy.
On the topic of “what’s hot now”, Leone was honest. “I have no clue,” he said. But he said that’s an advantage. Over the years, the hottest companies they’ve seen: YouTube, Yahoo, Zappos — were flying under the radar before they surfaced. Those are the deals Sequoia loves and he thinks they’re attuned to find those things by now worrying about “what’s hot”.