Inside Sequoia's Investment Committee | How the SpaceX & Citadel Deals Went Down | Julien Bek

1. 0:00 – 1:11

   Intro

   1. JBJulien Bek0:00

      Everyone thinks that we're just waiting for the phone to ring for the next Anthropic to call us to invest. That's completely false. Everyone at Sequoia is a hunter. If you look at founders you like versus founders who make money as a 2x2 Matrix, your job is to figure out in which part of the quadrant we make money.

   2. HSHarry Stebbings0:16

      Now, I am so excited for the show today 'cause I get to welcome one of my oldest friends. Yeah, he's a partner at Sequoia. He's also an incredible human being. This episode is a behind-the-scenes glimpse into what makes Sequoia so special, how they find great companies, how they win them, how they pick them. This is Sequoia like you've never seen Sequoia before.

   3. JBJulien Bek0:36

      I think right now, if you're gonna invest in the new Neo Lab, you're basically investing, you know, in the Quora, in the Stumble Upon when Facebook X came about. Credits to Shaun when he brought in the SpaceX investment. We vote on companies. I think someone voted a one. The best investment in all the funds are always the companies where the sponsor had the highest conviction. We are only as good as our next investment.

   4. HSHarry Stebbings0:59

      Ready to go? [upbeat music]

2. 1:11 – 6:32

   What Everyone Gets Wrong About Sequoia

   1. HSHarry Stebbings1:11

      Dude, we have known each other ... I was trying to think. I think it's been, like, eight to 10 years.

   2. JBJulien Bek1:17

      Almost 10 years, yeah.

   3. HSHarry Stebbings1:18

      [laughs]

   4. JBJulien Bek1:18

      We were young back then. [laughs]

   5. HSHarry Stebbings1:20

      [laughs]

   6. JBJulien Bek1:20

      And now we're getting, like-

   7. HSHarry Stebbings1:22

      I remember. I-

   8. JBJulien Bek1:23

      ... aging.

   9. HSHarry Stebbings1:23

      I ... Yeah, you were at Accel, and you were at their very nice offices, and I was at ... Just joined Atomico, I think.

   10. JBJulien Bek1:29

       Mm-hmm.

   11. HSHarry Stebbings1:29

       And we were both, like, very young and we were like, "Wow, it worked." [laughs]

   12. JBJulien Bek1:35

       [laughs]

   13. HSHarry Stebbings1:35

       But I wanna start because I think a lot of people will hear you now and think, "Wow, Sequoia partner. Wow." But there's something in particular about the relationship that you have with your parents and how you look after your father, which I think is s- an embodiment of what a great human you are. So can you just tell me a little bit about that before we dive into all the intellectual nerdy shit? Because I want people to know you a little bit first.

   14. JBJulien Bek1:57

       Yeah, look, um, my, um, my dad is, um, suffers from a condition, um, neurological condition that showed up in my early 20s. Um, I, um, I have no siblings, so when it happened, um, you know, I started looking after him. He, he's very unusual, my dad. He, uh, comes from a family of four, uh, grew up in rural France. Um, stopped school when he was 13 and, you know, he did that to put money on the table for the rest of his family. Um, I saw him, uh, care for his parents when he was, uh, when they were aging, and I, I just looked up to that. Um, he's quite unusual. He's a, an astrologer. Yeah, not an astronomer. Astrologer. Uh, so I always saw him kind of take a different path than, um, when, when his disease started showing up. I, um, yeah, I, I was there for him. And I know you've done the same for your parents, so.

   15. HSHarry Stebbings2:55

       Do you know, I, I, uh, I specialize in binary statements that get me, you know, either loved or hated. Um, but I think one of the biggest pieces of bullshit advice is you've gotta do it for you.

   16. JBJulien Bek3:06

       Mm-hmm.

   17. HSHarry Stebbings3:06

       Everyone who says that I think is just talking out their ass. Uh, I do most of the things for my mother. I did. You know, I adore my mum, and I actually think you can achieve great things when you do it for someone else.

   18. JBJulien Bek3:17

       Mm-hmm.

   19. HSHarry Stebbings3:17

       And that should be hailed and lauded, not do it for yourself always.

   20. JBJulien Bek3:21

       My opinion is that if you have very clear values, everything else is easy. Um, it might be painful in the moment to stick to them, but it's just at least you have mental clarity about what you're doing. And it doesn't matter how much work you put in, um, you just know you're doing it for the right reasons.

   21. HSHarry Stebbings3:40

       Absolutely. And the core value that we have is liquidity. Uh, [laughs]

   22. JBJulien Bek3:45

       [laughs] I, I don't think that's true in venture capital. [laughs]

   23. HSHarry Stebbings3:48

       Dude, did you see, I tweeted the other day, um, when, uh, Pat and, um, Alfred were on TV-

   24. JBJulien Bek3:55

       Uh-huh

   25. HSHarry Stebbings3:55

       ... uh, and they said ... They were asked about Shaun Maguire's tweets. And I said Alfred's comment was the best I've seen, which is, "Well, we look at the balance sheet of Shaun." And I just thought when summarizing someone, we look at the balance sheet of X is, like, the greatest way to discuss, like, that person. Um, I got in a lot of trouble for that.

   26. JBJulien Bek4:15

       You did?

   27. HSHarry Stebbings4:16

       Yeah, yeah, yeah.

   28. JBJulien Bek4:16

       [laughs]

   29. HSHarry Stebbings4:16

       Oh my gosh. Um, anyway, uh, I wanna dive into Sequoia a little bit. Um, you joined from Accel. I wanna know what did you not know about Sequoia before joining that you now know having been there for several years now?

   30. JBJulien Bek4:32

       Yeah. Um, yeah, I've been there three years.
3. 6:32 – 8:14

   How Sequoia Won Citadel Securities

   1. JBJulien Bek6:32

      Everyone thinks that we're just waiting for the phone to ring for the next Anthropic to call us to invest. That's completely false. Everyone at Sequoia is a hunter. We're, you know, we were 11 people a couple of months back in the early team. Um, that's basically what a football team is, and everyone's just scoring on the field. It doesn't matter how long you've been there, um, everyone expects you to perform. In, in fact, the younger you are, the m- the more people expect experienced people to perform because you just need them more. Uh, it's very competitive out there. And we think that people need to behave exceptionally well as individuals, um, but win as a team. And that's, that's really important. I don't think that people understand that as much. I'll give you a story to illustrate it. Uh, Constantine Buhler, uh, my partner, um, helped us lead the investment in Citadel Securities, uh, Ken Griffin's company. They had never taken outside capital. Um, the reason we were able to invest is Constantine built a relationship with Ken since he was a student. Um, he had been his mentor for years and years, and Constantine never gave up and just kept asking, "Can we invest? Can we invest?" Until Ken kindly said yes.

   2. HSHarry Stebbings7:56

      Can I ask you, in that case, what does that deal look like? I mean this not super seriously or glibly, but, like, does Constantine come to IC on Monday and be like, "I have a new startup for us. It's called Citadel with Ken Griffin. [laughs] I think we should put in a $250 million check." Like,

4. 8:14 – 10:10

   Sequoia's $2.5B Anthropic Bet

   1. HSHarry Stebbings8:14

      how does that actually go down?

   2. JBJulien Bek8:15

      Yeah. I, I wasn't there for the Citadel investment, um, but I've seen it happen with, well, more recently with Anthropic, with special companies like that.

   3. HSHarry Stebbings8:25

      Yeah.

   4. JBJulien Bek8:25

      Um-

   5. HSHarry Stebbings8:26

      $2.5B billion.

   6. JBJulien Bek8:27

      Mm-hmm.

   7. HSHarry Stebbings8:28

      Do you know what I respect so much about that check? Is, like, I think the hardest thing to do is to turn down a company and then be willing to have the mental flexibility to pay multiples of it later and get over your own ego about turning it down. Do you know what I mean?

   8. JBJulien Bek8:45

      Yeah. Yeah, we call that revisiting our priors. It's very important that you update your priors if the environment's changed. And I think it came from the realization that if AI is gonna be so transformative, we are just on the foothill of this incredible exponential, and now we're three years into AI, and we've seen that exponential starting to play out, and suddenly we realize the mental... Like, the human brain's just not very good at dealing with exponentials. We, we can think very well linearly, but not exponentially. And in this case, I think we underestimated the company in the early days. Um-

   9. HSHarry Stebbings9:26

      Dude, I think we all underestimated outcome sizes being what they are.

   10. JBJulien Bek9:30

       Yeah.

   11. HSHarry Stebbings9:30

       Like Anthropic and OpenAI being $1 trillion as quickly as they have been, I don't think anyone anticipated.

   12. JBJulien Bek9:35

       Do you remember when it was about chasing the billion-dollar company?

   13. HSHarry Stebbings9:39

       Oh my God. Um-

   14. JBJulien Bek9:40

       10 years ago

   15. HSHarry Stebbings9:40

       ... wh- which, which is amazing, by the way. I get chastised for this. Um, [laughs] I get chastised for everything. [laughs] I do about fucking Corgi Cafe. "You're a hustle porn." It's a fucking cafe. Like [laughs] shoot me. Um, I agree, which is why I say something which gives most people, like, shivers, which is $1 billion could just be the new Series A. If you think about it, we used to do a $50 million post at Series A-

   16. JBJulien Bek10:03

       Mm-hmm

   17. HSHarry Stebbings10:03

       ... hoping it would become a billion. Now you do a billion, uh, and it becomes a $20 billion company. Same blunt

5. 10:10 – 12:03

   Investing in Neo Labs Today Is Like Backing Stumble Upon After Facebook

   1. HSHarry Stebbings10:10

      multiple.

   2. JBJulien Bek10:10

      That's extrapolating the power law, right? Um-

   3. HSHarry Stebbings10:13

      You have to be in the ones that matter.

   4. JBJulien Bek10:15

      Exactly. And picking has never been harder because you have just so much more volume of companies.

   5. HSHarry Stebbings10:19

      Push you on that one.

   6. JBJulien Bek10:20

      Mm-hmm.

   7. HSHarry Stebbings10:20

      I think when you are at, um, $1 billion in valuation, say, and you're doing 50 million in revenue, or 30 million in revenue, choose your number, you're significantly de-risked. You've got enterprise customers most often. There's real data. I'd much rather do that than the Series A where you're 3, 4 million in revenue priced at 3 to 500 million.

   8. JBJulien Bek10:44

      Yeah, absolutely. I, I think the, the difference is that some of these billion-dollar rounds happen before there's, there's anything else. Sometimes you have what the market, uh, wants you to pay, and then, um, I think founders are also looking for company building partners. So you can invest if, if you build trust with the founders, you can invest earlier.

   9. HSHarry Stebbings11:05

      Ha- have you done any of the Neo Labs?

   10. JBJulien Bek11:07

       Personally, I haven't. Uh, we, we invest in a bunch of them. Um, I think right now if you're gonna invest in, in the new Neo Lab, you're basically investing, you know, in the Quora, in the Stumble Upon when Facebook, uh, X came about. Uh, that, that's my opinion. Uh, it's not shared, um, you know, with, with everyone, but that's the way I, I think about it. Um, the only way you invest in a truly novel company is either if you back an N of one founder. Um, you know, recently we, we backed a company called Ineffable here in-

   11. HSHarry Stebbings11:44

       Yeah

   12. JBJulien Bek11:44

       ... UK with, um, a large seed round, as, as you mentioned.

   13. HSHarry Stebbings11:47

       David Silva.

   14. JBJulien Bek11:48

       Da- David Silva. And he's an N of one researcher, um, going after, uh, a, a very different type of architecture. So if it works, it's completely massive because they're not trying to do the exact same thing but

6. 12:03 – 14:00

   Is Series A the Hardest Place to Invest Right Now?

   1. JBJulien Bek12:03

      better. They're trying to be different. And that's the prerequisite now, I think, to be one of the successful Neo Labs

   2. HSHarry Stebbings12:11

      Do you agree with me that Series A is the hardest place to be investing today, given price to progress and then competition?

   3. JBJulien Bek12:20

      I think that that goalpost is moving. Uh, it depends on which sector you're investing. In, in hardware now, for instance, which is like the new thing, right, that's consensus, uh, physical AI, um, the, the time to get validation is just a lot longer.

   4. HSHarry Stebbings12:37

      Mm-hmm.

   5. JBJulien Bek12:37

      And so you have to invest early hoping that those companies can get through those phases of, uh, experimentation. Um, and so instead of measuring these companies of how quickly they get from zero to a million in AR, you have to look at how quickly they get to, you know, a working prototype. Um, but you're, you're moving atoms, not bits. This is just a lot harder. It takes more time, and they just need a bit more capital. Um, so I actually think that we'll see more collaboration because of that. Um, funds will wanna work with other capital partners to, uh, help those companies get to those milestones.

   6. HSHarry Stebbings13:16

      Are you less ownership-centric than you were before? You mentioned that the collaborative element.

   7. JBJulien Bek13:22

      Mm-hmm.

   8. HSHarry Stebbings13:22

      I find that we're able to work more with other people given outcome size is expanding. You don't need to have the 20% that you used to when it was a capped billion-dollar upside.

   9. JBJulien Bek13:32

      Yeah.

   10. HSHarry Stebbings13:33

       Are you less ownership-centric than you used to be?

   11. JBJulien Bek13:35

       No. [laughs]

   12. HSHarry Stebbings13:37

       [laughs]

   13. JBJulien Bek13:37

       No. No, I tell you why. It's simple. It is just the, the outcomes are growing. Um, it's also more capital intensive, but most importantly, it's your time. H- In your career, you can make 20 investments. Some people do more than that. That's just not my style. I partner with two, three founders a year, and so in my career, I can

7. 14:00 – 38:05

   Why Julien Won't Compromise on Ownership

   1. JBJulien Bek14:00

      expect to do basically be on the board of 20 companies. I'm not gonna short myself. I'm gonna work really hard for those founders. What I pitch them is that I'm gonna be basically their co-founder. Um, they decide how to run the business, but I'm, I sit in the passenger seat, and I help them close their first customers, close their top hires. I, I literally, I cannot do that with more than a handful of companies. If you look at Rillet, um, we met with 17 public company CFOs since the start of the year. Some of them have become customers. How do you do that when you have, you know, 200 companies with 2% in each of them? It just doesn't work. It's, it's a different model.

   2. HSHarry Stebbings14:41

      It's a totally different model. I completely agree with you. Um, yeah, we're very different, you see. [laughs]

   3. JBJulien Bek14:49

      [laughs]

   4. HSHarry Stebbings14:50

      Harry's like-

   5. JBJulien Bek14:51

      Yeah

   6. HSHarry Stebbings14:51

      ... "I think I've got 175 investments." [laughs]

   7. JBJulien Bek14:54

      [laughs]

   8. HSHarry Stebbings14:54

      "Do you know how you do it?" And last week I did, like, two. One was on Twitter DM.

   9. JBJulien Bek14:58

      Uh-huh.

   10. HSHarry Stebbings14:59

       One was 'cause Constantine messaged me. [laughs]

   11. JBJulien Bek15:01

       There you go. Well, there's different paths to Nirvana. [laughs]

   12. HSHarry Stebbings15:05

       I was having a dinner the other day, and this founder's like, "Hey, Harry." I'm like, "Hey, uh, hi." And he's like, "You led my seed."

   13. JBJulien Bek15:14

       [laughs]

   14. HSHarry Stebbings15:14

       And I was like, "I, I did, yeah. Remind me, w-which company?" [laughs] Turns out they'd changed their name.

   15. JBJulien Bek15:22

       Exactly.

   16. HSHarry Stebbings15:22

       And I was like, "Uh, I-"

   17. JBJulien Bek15:23

       Just blame the name change.

   18. HSHarry Stebbings15:24

       "How was I to know you changed your name?"

   19. JBJulien Bek15:26

       Exactly.

   20. HSHarry Stebbings15:26

       Um, there are many different personalities within Sequoia.

   21. JBJulien Bek15:30

       Mm-hmm.

   22. HSHarry Stebbings15:30

       Who is the best sourcer in the firm? Like, finding companies. They don't need to pick them. Do you ... Just who is the one who finds really interesting shit time-

   23. JBJulien Bek15:39

       Yeah

   24. HSHarry Stebbings15:39

       ... and time again?

   25. JBJulien Bek15:40

       Time and time again, if I have to pick, I'll pick Dean Meyer, my partner who sits in Tel Aviv. Um, but, well, basically lives on plane. He's just, um, a phenomenal human being. He was a professional football player for multiple years. Um, he ... So he has the competitive juices of Messi [laughs] but coupled with, like, the technical depth of someone who's been working in tech his whole career, and that's a very dangerous combo. Um, that I, I, I don't know where that comes from, but he's just amazing at reading people. Um, he's just got this ability to connect with founders, both like the very young, spiky people, but also some of the guys who sold companies for billions of dollars.

   26. HSHarry Stebbings16:26

       Yeah.

   27. JBJulien Bek16:27

       Yeah.

   28. HSHarry Stebbings16:27

       You know, people like Dean, he's been very, very popular. I agree. Um, who's the best picker? Who, when they have it in front of them, is able to deconstruct companies best?

   29. JBJulien Bek16:37

       That one's easy. Luciana Lisandru, um, my partner, um, who actually brought me into Sequoia. Uh, we worked together at Accel before, so I've worked with Luciana for most of my career now. Um, she, you know, when I met her, she had just invested in Deliveroo. Um, then she did Framer. Um, then she, you know, joined Sequoia, did PennyLane, uh, Stark more recently. It's just banger after banger, and if you look at the pattern, there's no pattern. It's just across categories. She's just been able to reinvent herself across the different, um, you know, from consumer to software to physical AI and defense. That would be my pick.

   30. HSHarry Stebbings17:20

       Does it get really tough when you're at Sequoia because the upside just needs to be bigger than other funds? Like-
8. 38:05 – 40:19

   How Julien Uncovered a Fraudulent Founder

   1. JBJulien Bek38:05

      you just have to ask why. Why did you do that? It's amazing. You, you got the grades to get accepted in one of the most competitive programs on the planet, and yet you decide to leave it to do something else. Why? And, and it may be very good reasons, right? But what's interesting is just seeing the body language, the tempo of the conversation accelerating, um, the founder being nervous, and just think, "Oh, okay, that's, that's strange." So you just register. You don't end the call. Um, you give them the benefit of the doubt. But it turns out a couple of days later that founder, uh, my partner George and I are, uh, on our way to the airport at, uh, 5:00 in the morning to go see that founder. And [laughs] on the way to the airport, he tells us that, um, he had something happen, um, and he had a family emergency, and he had to cancel our meeting. Um, later, uh, that day, we received messages from very respectable investors who were investors in the company who told us that he had come out as a fraud. Um, I remember that day I sent a message to all our competitors, um, about that because I, I do think it's important that, you know, in those times where, where there's so much opportunity, you also have people who would take advantage of it for the wrong reasons, and, uh, that was for me a clear case. You know, and they, it's exactly what you said. They know what to expect. They, they know what you wanna hear, and they're just gonna say it to you in a very programmatic way. So that's why ask why five times, and you'll get to the bottom of it.

   2. HSHarry Stebbings39:41

      It, it, it is hard-

   3. JBJulien Bek39:42

      Yeah

   4. HSHarry Stebbings39:42

      ... especially when we are as open as we are about what, what we look for. Um, so I totally get that. Is arrogance bad? It's one that I just, I'm not sure 'cause you can just ... This sounds awful, but sometimes the douches are actually really good. [laughs] Is it bad?

   5. JBJulien Bek39:58

      Uh, I'll go back to the Don Valentine quote. Um, if you look at, um, founders you like versus founders who make money as a 2x2 Matrix, uh, your job is to figure out in which part of the quadrant we make money. [laughs] And, uh, he, he used to tell that to many of our partners, and it's not because you don't like the founder that they won't make you money.

9. 40:19 – 41:07

   Arrogance Is Not a Red Flag — The Don Valentine 2x2 Matrix

   1. JBJulien Bek40:19

      Um, and arrogance might not be something you like, but it might make them very good at what they do. It's maybe the cost of their spike, but that's why you have to go back to their spike first. If there's no spike and they're using that to hide a weakness, that's the sign you wanna look for.

   2. HSHarry Stebbings40:36

      Can you tell me about a founder misread that you-

   3. JBJulien Bek40:40

      Mm

   4. HSHarry Stebbings40:40

      ... have which maybe changed how you think about founder reads? So, like, I got introduced to Chris at Granola-

   5. JBJulien Bek40:46

      Yeah

   6. HSHarry Stebbings40:46

      ... first ever investor that he met. Um, and honestly, he wasn't that articulate, and he wasn't a great salesperson.

   7. JBJulien Bek40:54

      Mm.

   8. HSHarry Stebbings40:54

      And it was a loose idea. The references were the most unbelievable ever from working with him, but I just couldn't get behind something where it was very loose, and there wasn't much of a sales-

   9. JBJulien Bek41:04

      Yeah

   10. HSHarry Stebbings41:04

       ... presentation or charisma or anything.

10. 41:07 – 44:20

    The Lovable Miss: What Julien Got Wrong on Anton Osaka

    1. HSHarry Stebbings41:07

       I learned to focus more on references than almost anything else at Preseed.

    2. JBJulien Bek41:11

       So first, I really agree with your last statement about references. We do that extensively. Um, I'll come back to that in a second 'cause I think there's an important point there.

    3. HSHarry Stebbings41:19

       Yeah.

    4. JBJulien Bek41:20

       On your question around a founder misread, I had lunch with Anton Osaka from Lovable before he founded the company, and I just didn't see it. And I'll tell you one thing that I learned from that is I didn't come to the meeting with a plan. I just had lunch with him, and it was three of us and him, and we were just chatting, and I was not intentional about asking the right questions to figure out what ma- made him special. And, um, and I underestimated him at the time.

    5. HSHarry Stebbings41:57

       It's hard. You know what's also hard though actually and which I think is important, he's Swedish, um, and he's a thoughtful Swede. [laughs]

    6. JBJulien Bek42:05

       Yeah.

    7. HSHarry Stebbings42:06

       And what I mean by that is, like, Max at Ligora, um, I know you're at Sequoia, so we're Team Harvey at Sequoia.

    8. JBJulien Bek42:11

       Uh-huh.

    9. HSHarry Stebbings42:12

       But, um, Max is, like, an aggressive Swede.

    10. JBJulien Bek42:15

        Mm-hmm.

    11. HSHarry Stebbings42:15

        He's like an American Swede.

    12. JBJulien Bek42:16

        Mm-hmm.

    13. HSHarry Stebbings42:17

        And Anton is a thoughtful Swede, a product-oriented Swede, and so he's less declarative in his opinions s- but this was earlier. How does your read change for country?

    14. JBJulien Bek42:29

        Mm.

    15. HSHarry Stebbings42:29

        French are not very good salespeople generally speaking. They don't push with the same marketing showbiz of Americans. How does your read vary by country?

    16. JBJulien Bek42:39

        Yeah. I think that that part is very important. I remember the first ever diligence I did at Sequoia, uh, was for a company called Tacto in our portfolio. And I called up a bunch of, um, their customers who were what we call Mittelstand, and, um, those are, you know, small businesses that compose most of the, um, company's, uh, economy, right? And, um, we always ask the NPS question at the end, "On a scale of 0 to 10, what do you think of the product?" [laughs] And they were just so consistently saying seven. And I remember asking, "Oh, why not more?" Uh, "Because we can always do better." You know, uh, very German. And I remember when the, the memo came out, um, one, uh, one of my partners said, "Oh, um, um, why do you think the references are not more positive?" And I said, "Well, they're German customers." [laughs] And basically, I remember telling my partners, "If they're French or German, um, you add one or two points. Um, if they're Americans, usually you wanna retract one or two points- [laughs] ... uh, on the other hand." And, uh, yeah, so that, that's also the beauty of investing here, is that, uh, you just gotta take the local nuances into account. Do you find any commonalities in childhood? Again, maybe I have a unhealthy tail bent towards, like, childhood trauma, broken relationships with family, fat kids. I was a fat kid. Uh, everyone loves Augustus Gloop. [laughs] Yeah, you ripped a dot. Yeah. [laughs] Um, and do you have any preferences?

11. 44:20 – 48:54

    How to Adjust Founder Reads by Country

    1. JBJulien Bek44:20

       The problem is i- if you're trying to pattern match people, you, you will just not invest in the right people. That's what I found. Y- your job is just to figure out where does this person sit on the intercept, and what is their future-looking trajectory? If you meet a very young founder, you cannot compare them to an experienced operator. That's apples and oranges. And the best thing you can do to figure out their future trajectory is understand on what trajectory they're on, so going back to their past. If you stop just at their professional history, you... You know, in some of these cases, they've been working two years. But you have so much richness if you go back, you know, the first 15 or 20 years of their life. And I'll, I'll give you an example. I met two founders, uh, French founders. Both went to Polytechnique, most competitive, uh, technical program in France. And, um, you know, I could have said, "Oh, these two guys are equally good." Um, what was interesting is when I start digging into their childhood story, one of them, uh, was the son of private equity tycoon who had also gone to Polytechnique, while the other one had been abandoned by his parents when he was born and spent his childhood going from, like, one care home to the other. Um, that's terrible, but at the same time, it just shows you how much distance that person traveled to get where they are. And it doesn't mean that they'll continue on that path, but at least it tells you a lot about their existing trajectory. And, um, and so your job is just to figure out if they're gonna continue on that path or not. I, I totally agree with you. Um, distance traveled, and, like, the shit they have to go through to get to where they were today is materially just more. Yeah. I totally agree with you. Mm-hmm. I always love it then when you check the kind of name of the library and you're like, "Oh, it's also your father's name on the library." [laughs] That, that helps usually. I did think, Jean Charles, that you, uh, were- Uh-huh. You know, whatever. Um, okay. Um, there's Doug Leone, there's Pat Grady, there's Alfred Lin, there's Shaun Maguire. I'm gonna choose one lesson from each. Start with Doug. Hmm. What's the one lesson you learned from Doug? The one lesson from Doug is a question he asks in interviews. He starts by asking, "Who is your best reference, and why?" What's interesting there is usually founders tend to say, uh, you know, "There's this person and this person," and they're, they're very happy, um, to share all the great things these people have to say about them. And as they finish, you ask the counter question, which is, "Who would be your worst reference, and why?" [laughs] And see their colors change. Do people answer that honestly? That honestly? What's interesting is how they answer the question. Um, I've had founders be very direct about who their worst references were, and what was amazing is then I called those people, and you just get a lot of texture. I'm not looking for perfection. I'm just looking for clarity. Do you know who your worst reference would be? Oh. [laughs] I have so many. [laughs] That sounded so, like, um, the GFC goes, "Ah, aha." [laughs] I think mine would be Nick Glass at Atomico. Oh, really? I think he'd say I was, like, useless. Uh-huh. [laughs] And I was, by the way. Like, when I was at Atomico- You were also 17 years old. I know, but I just couldn't understand- Uh-huh ... like, why am I on a call at midnight when it's not my firm? Like, this makes no sense to me. Exactly. But, you know, the, the worst employees make the best founders. You became a founder. Which is why references are really hard- Yeah ... actually, for me. Mm-hmm. Um, okay. I love that. I'm gonna steal that. Um- Ju- just, just on the reference point. Yeah. Um, well, actually I can u- y- you know, you asked me about Shaun. He has this ELO, um, methodology framework where if you've played chess, you know, ELO is the score you get attributed depending on how good you are. And it's exponentially harder to get, uh, to a higher score because you have to beat better and better people to get there. And so his point is that if, you know, you're a 2400-rated player, which is, you know, extremely good outlier territory, you're much more likely to be able to judge who another outlier is. Um, and I think in the case of chess, in 10 moves you can tell- A 2400-rated player can tell another one, um, but if you ask someone who's a 200, 200, uh, a 2000-rated player, uh, will be unable to tell the difference.

12. 48:54 – 1:14:57

    Lessons From Doug Leone, Pat Grady, Alfred Lin & Shaun Maguire

    1. JBJulien Bek48:54

       It's the same with references. Um, you wanna ask exceptional people if someone is exceptional, not good enough people, and that's often the problem with references.

    2. HSHarry Stebbings49:05

       I get you, but I'm ... I, again, y- I don't think these people will mind 'cause I'm saying they're so exceptional. But, like, when I speak to Torsten at Helsing or Alan at Fuse, they're obviously two exceptional entrepreneurs.

    3. JBJulien Bek49:17

       Yeah.

    4. HSHarry Stebbings49:18

       I've never met anyone they like. They're never anyone where they're like, "They're amazing. You have to do it." They're like, "At best, yeah, they were okay." That's really hard. Like, do you not find that? Where, like, the best people just have s- just, I don't know. I can't get it.

    5. JBJulien Bek49:33

       You have to untangle their personality from their accomplishments, and maybe in those cases, the personality got in the way of the accomplishments.

    6. HSHarry Stebbings49:43

       Okay.

    7. JBJulien Bek49:43

       Yeah.

    8. HSHarry Stebbings49:44

       Doug is great. Love that. What about Pat?

    9. JBJulien Bek49:46

       Oh, Pat has got this great framework. Um, people are like vectors, and vectors are the product of their direction and magnitude. Direction is why are you doing this? Um, why are you so motivated about that? Uh, where are you going? And, uh, the magnitude is how ambitious that person is. Um, are they gonna go through the pain to keep doing what they're doing? And I find that framework just so simple, uh, as always with Pat-

    10. HSHarry Stebbings50:18

        Mm

    11. JBJulien Bek50:18

        ... um, because if you try to understand the person's direction and their magnitude, uh, it's gonna help you a lot just to predict where they're going next in their trajectory.

    12. HSHarry Stebbings50:28

        I really like that.

    13. JBJulien Bek50:29

        Yeah.

    14. HSHarry Stebbings50:30

        You know one thing I always remember Pat telling me? He's like, "People think that we're so great. Every single company that goes public we have seen at some point in their journey."

    15. JBJulien Bek50:40

        Mm-hmm.

    16. HSHarry Stebbings50:41

        "That just shows you how many we've missed. We must always bring energy, bring preparation to every single company meeting we have. It's never enough." I, I just love that humility. Like, this is, this fucking Pat Grady-

    17. JBJulien Bek50:53

        Yeah

    18. HSHarry Stebbings50:53

        ... like, leads Sequoia now. To have that humility, I just thought it was awesome.

    19. JBJulien Bek50:58

        Um, a- again, my first day at Sequoia, uh, we [chuckles] were all asked to, uh, write this one sentence, "We are only as good as our next investment," and we have that printed on the wall now. Um, it was very intimidating to write that the first day at Sequoia and very humbling. Um, so th- that's the focus, and I, I think you can just see it in the way people behave.

    20. HSHarry Stebbings51:23

        God, you'd be pissed if you're Shaun Maguire and you're just being like, "I just did SpaceX."

    21. JBJulien Bek51:27

        [laughs]

    22. HSHarry Stebbings51:27

        "Come on. Give me, give me a break. Come on." [laughs]

    23. JBJulien Bek51:29

        He's definitely not on the break.

    24. HSHarry Stebbings51:31

        Yeah. [laughs]

    25. JBJulien Bek51:32

        Yeah.

    26. HSHarry Stebbings51:32

        Uh, uh, Alfred Lin.

    27. JBJulien Bek51:34

        Alfred Lin, uh, the latest piece of wisdom that I loved from Alfred was do not mistake an outlier operator for an outlier founder, and that's very easy to make. You think someone did really well at this company. They've done s- so many things. They've launched these new products. Everyone liked them. Um, that might make them an outlier operator. Um, it might not make them an outlier founder.

    28. HSHarry Stebbings52:05

        Very difficult when the CV is as gold-plated as your OpenAI, your DeepMind, and I think we're all falling for the CV trap in a lot of ways today-

    29. JBJulien Bek52:14

        Yeah

    30. HSHarry Stebbings52:14

        ... especially with a lot of the heavy AI players like that. Final one. Is Shaun the ELO one, or is there another one?
13. 1:14:57 – 1:15:55

    Why Julien Won't Back Traditional Businesses "Bolting On" AI

    1. JBJulien Bek1:14:57

       that's kind of travesty into an AI company. They might have data, but not necessarily the data because it's just really hard to harness the right data, uh, to make these businesses work. So I actually think you should just build it from first principles. The best founders always figure out how to get distribution. Um, they will have the talent. So if they can build the best product, customers will vote with their money and buy that product.

    2. HSHarry Stebbings1:15:22

       You sit in Europe, but you work with a US partnership in a lot of ways. Um, do you see the promiscuity of US employees in terms of their willingness to move? You said about people wanting to work at X or Y. I find US employees incredibly promiscuous in terms of jumping hot, hot company, hot company, hot company. In Europe, I think we're much more loyal.

    3. JBJulien Bek1:15:45

       Certainly in the labs, I think there is a lot of jumping around in the labs. Um, yeah, people have very short tenures. And yeah, we, we just don't

14. 1:15:55 – 1:28:17

    Quick-Fire Round

    1. JBJulien Bek1:15:55

       have that in Europe as much.

    2. HSHarry Stebbings1:15:56

       It must be so confusing for your email.

    3. JBJulien Bek1:15:59

       Yeah. [laughs]

    4. HSHarry Stebbings1:15:59

       Do you, do you update your Netflix every time? Like what?

    5. JBJulien Bek1:16:02

       I, I think-

    6. HSHarry Stebbings1:16:02

       It's exhausting

    7. JBJulien Bek1:16:02

       ... they probably keep the emails just in case because some of them come back.

    8. HSHarry Stebbings1:16:06

       Might come back.

    9. JBJulien Bek1:16:06

       As you see... Yeah.

    10. HSHarry Stebbings1:16:07

        "Can you keep Karen at OpenAI just in case?" [laughs]

    11. JBJulien Bek1:16:11

        [laughs]

    12. HSHarry Stebbings1:16:11

        Like what the fuck?

    13. JBJulien Bek1:16:12

        Exactly.

    14. HSHarry Stebbings1:16:12

        Uh, is traditional private equity fucked?

    15. JBJulien Bek1:16:15

        I actually think they m- might do very well by investing, um, in those companies that have the data and so on, and won't be able to hire frontier talent, but they'll build very fine businesses. They just also, they're not seeking the same outcomes that we seek. Um, we wanna back the next trillion dollar company. Um, I think it's unlikely that's a private equity-backed company.

    16. HSHarry Stebbings1:16:37

        It's true. I think the only thing that will vary is just like, do they have the ability to, uh, do more deals? 'Cause so many of them underwater with shit deals. [laughs]

    17. JBJulien Bek1:16:47

        Yeah, yeah.

    18. HSHarry Stebbings1:16:48

        Like-

    19. JBJulien Bek1:16:48

        Yeah, that's true

    20. HSHarry Stebbings1:16:49

        ... when, when you're dealing with five T- Titanics, are you really willing to, like, let another flower blossom?

    21. JBJulien Bek1:16:54

        Yeah.

    22. HSHarry Stebbings1:16:54

        Tough.

    23. JBJulien Bek1:16:55

        Yeah.

    24. HSHarry Stebbings1:16:55

        Um, listen, dude, I wanna do a quick fire with you. So I say a short statement, you give me your immediate thoughts.

    25. JBJulien Bek1:17:00

        Sure.

    26. HSHarry Stebbings1:17:01

        What's the most overfunded category?

    27. JBJulien Bek1:17:03

        Um, probably, um, legal. I think there's n- you know, there are just so many me-tos in this category, uh, whereas I think that the w- winner is already in existence. Um, I'm obviously biased, but I think Harvey is very well positioned because they have the widest distribution. Um, and yeah, I, I just don't understand investors' willingness to invest in the nth competitor. [laughs]

    28. HSHarry Stebbings1:17:33

        Ah, so naive. Uh, no, I, I, um, I will naturally say I think Lagora is obviously-

    29. JBJulien Bek1:17:42

        [laughs]

    30. HSHarry Stebbings1:17:42

        ... gonna win. Um, but I think-

Episode duration: 1:28:27