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The Twenty Minute VC

Sequoia Leaves London, Close Scout Program & End Evergreen Fund | NASDAQ Loses $2.5T in 24 hours

Jason Lemkin is one of the leading SaaS investors of the last decade with a portfolio including the likes of Algolia, Talkdesk, Owner, RevenueCat, Saleloft and more.

Jason LemkinguestHarry StebbingshostRory O’Driscollguest

Nov 12, 20261h 7mWatch on YouTube

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CHAPTERS

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Chapter summaries

Sequoia’s restructuring: London exit, Scouts shutdown, and merging early + growth
Harry frames Sequoia’s week of structural changes: leaving London, ending the Scout program, and combining early and growth into one team. The group sets up the discussion as less about personnel churn and more about what these moves imply about focus, coverage, and how modern venture firms want to operate.
- •Harry lists Sequoia’s announced changes: depart London, end Scouts, unify early and growth teams
- •Jason downplays partner movement as normal churn inside institutions built to generate returns
- •The panel tees up which changes matter most strategically versus operationally
- •The conversation positions the moves as a deliberate simplification and tightening of the partnership model
Why Sequoia is winding down the Evergreen idea
Jason argues the most important (and confusing) change is winding down the Evergreen concept—holding assets for decades. Rory explains the logic behind Evergreen while also unpacking why it created friction and complexity for LPs.
- •Jason questions why a firm would abandon a decades-long holding strategy for “generational assets”
- •Rory explains the Evergreen premise: the largest gains often occur after IPO if holdings are retained
- •Rory notes timing risk: implementing around a downturn made enforced holding feel especially painful
- •Rory says LPs dislike constrained liquidity because they have their own needs and decision-making preferences
- •Rory highlights incentives and complexity: partners can hold individually, but forcing LPs to do so is fraught
Alternative structures and the reminder that VC institutions rotate people
Jason and Rory discuss ways to achieve long-duration ownership without locking everyone in, such as continuation funds. Jason broadens it into a founder takeaway: venture firms may be durable, but individual partners and executives often aren’t.
- •Jason references Ho Nam’s approach of using continuation funds so LPs can choose to exit or stay
- •Rory reiterates the tension: LPs being forced to hold after the firm has already earned carry
- •Jason emphasizes founder/CEO longevity compared to VC partner longevity as a practical reality
- •Rory agrees that constant change is normal and credits Sequoia for actively reinventing itself
Can Sequoia cover Europe from the U.S. without London?
Harry argues Europe has great companies but suggests Sequoia believes it can cover them from the States. Jason adds that top European founders travel frequently, potentially reducing the need for a local office—especially outside pre-seed.
- •Harry cites Sequoia-backed European/London successes as evidence the region has strong assets
- •Harry interprets the London exit as a belief that coverage can be handled from the U.S.
- •Jason notes many elite European founders are frequently in the Bay Area, making access easier than it seems
- •Jason distinguishes stages: local presence may matter most at pre-seed, while later-stage access is easier via travel and brand
Why Sequoia might end Scouts: secrecy, management load, and partnership focus
Harry is surprised Sequoia ended Scouts, calling it low-lift and high-advantage. Jason and Rory argue the advantage eroded once the model was cloned, and that running Scouts (and related programs) can be a distracting operational burden for a tight partnership.
- •Harry expresses surprise that Scouts was shut down given perceived strategic leverage
- •Jason says Scouts worked better when it was a secret and before competitors copied it
- •Jason frames the decision as energy and management bandwidth: operating programs can become “too much”
- •Jason contrasts this with a model where partners deploy large checks with high conviction, reducing need for programs
- •Rory agrees the model’s edge flattened once broadly copied
Founders Fund as the counterexample: concentration and fast deployment
The conversation shifts to Founders Fund as a model of deploying large amounts of capital with few investing professionals. Rory outlines a strategy of diversified early experiments followed by later-stage concentration into winners.
- •Jason describes confusion at how few partners could deploy so much capital, but notes it works with conviction into winners
- •Harry cites rapid deployment into high-profile outcomes as evidence LPs tolerate compressed timelines when assets are strong
- •Rory describes a pattern: many small early bets, then aggressive concentration later in a growth vehicle
- •The segment reinforces why some firms might simplify structure and avoid side-program complexity
Nvidia scandal: personal fallout vs national-security and compliance risk
Harry introduces reporting about Jensen Huang and a suspected Chinese spy, triggering government scrutiny. Rory focuses on why the investigation is framed as compliance and security rather than personal conduct, and why the consequences could be serious for Nvidia and the AI ecosystem.
- •Harry introduces the allegation and the opening of an investigation
- •Rory separates personal drama from corporate and regulatory risk, calling the situation messy and consequential
- •Rory says the investigation focuses on compliance/security questions rather than the relationship itself
- •Rory argues losing Jensen would matter because Nvidia’s CEO role is unusually central to the company’s trajectory
- •The group flags that scrutiny could broaden into multiple lines of inquiry and become prolonged
Does Jensen ‘need a pass’? And why China may be the biggest loser
Jason argues Jensen should get a “pass” because of Nvidia’s importance, while Rory pushes back that a pass is not guaranteed given national-security context. Jason concludes the broader effect will be tighter restrictions, making China worse off—especially around cross-border hosting and workarounds.
- •Jason argues the U.S. and AI ecosystem need Jensen in place, even if the situation is a ‘bummer’
- •Rory says a pass is harder here than other corporate scandals because national-security scrutiny invites second-guessing
- •Rory notes Jensen’s public posture has been consistently pro-selling GPUs broadly, independent of any entrapment narrative
- •Jason predicts increased enforcement: harder to sell GPUs to China and harder to host them just across borders
- •Jason frames the outcome as strategically negative for China
Board investigations: how outcomes can be shaped—and why scrutiny raises the bar
Jason shares experience with board-led CEO investigations and warns that investigator selection can influence outcomes. Rory responds that when external oversight is likely, boards and counsel tend to run more rigorous processes to avoid being discredited later.
- •Jason says who is hired to investigate and how the scope is set can shape the eventual outcome
- •Jason urges being thoughtful about the investigation’s inputs because they can predetermine outputs
- •Rory argues scrutiny from Congress or regulators increases professionalism and diligence
- •Rory points to Nvidia board composition and the presence of experienced legal leadership as factors raising rigor
- •The panel expects the process to be extensive and second-guessed, limiting the ability to “make it go away”
NASDAQ drops $2.5T: AI trade cracking or hedge-fund deleveraging?
Jason asks what caused the massive one-day decline and whether it signals the AI trade breaking. Rory argues the move looked reactive and positioning-driven rather than a deep re-think of AI fundamentals, emphasizing that demand signals (ARR) matter more than supply-side noise.
- •Jason describes widespread investor anxiety after a sharp one-day market value loss
- •Rory calls the market reaction inconsistent and reactive, suggesting little deep analysis behind it
- •Rory attributes the move to nervous, leveraged hedge-fund pods and forced risk reduction
- •Jason asks if the selloff is early evidence the AI trade is cracking
- •Rory insists the AI trade hinges on demand (ARR), not supply-side issues like data center permitting or chip competition
Anthropic IPO setup: pricing low, capital access, and why being public beats ‘begging bowl’ funding
The discussion turns to Anthropic’s IPO dynamics, including pricing strategy and why public status changes financing options. Rory argues Anthropic is playing the process well by starting conservatively and letting demand lift the price, while contrasting its position with OpenAI’s continued private fundraising.
- •Jason expresses concern about capital fatigue and notes confusion around round size and valuation adjustments
- •Rory says the company is intentionally setting a modest initial range to build momentum rather than risk a downshift
- •Rory explains why public vs private valuations can look different due to how options are counted
- •Rory predicts strong interest as a rare “pure play” next-gen AI company, beyond picks-and-shovels exposure
- •Rory argues being public enables converts/secondaries and large-scale capital access, unlike ongoing private fundraising pressure
Will Anthropic pop or trade flat? And is there enough capital for the next $100B?
Harry pushes for predictions on IPO performance and the panel splits: Rory expects success while Jason expects a flatter reception due to investor fatigue. Harry relays allocator concerns that the next tranche of massive funding may be harder than the current raise, while Rory points to the advantages of scale and public-market tools.
- •Harry asks for a forecast; Rory says he expects a successful offering and upside in normal conditions
- •Jason predicts the stock will trade flat, citing market fatigue and fundraising constraints
- •Harry shares an allocator view: current funding is fine, but the ‘next’ huge capital layer is thin
- •Rory argues public-company financing flexibility reduces existential capital risk if growth continues
- •The segment emphasizes that IPO structure and post-IPO financing options are strategic advantages
OpenAI reaccelerates and the coming token-price elasticity battle
Harry cites OpenAI’s reported growth and enterprise becoming the majority of revenue, noting stronger public communications from Greg Brockman. The group discusses rapid competitive switching among developers and how falling token prices will test whether usage grows enough to offset lower pricing.
- •Harry cites OpenAI’s annualized revenue growth and enterprise becoming a majority of revenue
- •Rory says reaccelerating growth would be stunning and acknowledges the strength of the signal
- •Harry frames token pricing as the key experiment: price cuts vs usage elasticity and net revenue impact
- •Jason says developer loyalty is low and switching is increasingly trivial, making share hard to predict
- •The group expects continued “ping pong” competition even as both companies grow materially
Agents and unit economics: persistent consumer agents are powerful but expensive
They debate whether compute-heavy agent products can reach sustainable economics soon. Jason argues persistence is crucial for value but currently costly, while Rory believes costs will decline over time, with the key uncertainty being how many years it takes.
- •Harry raises concern that agent products are expensive and compute-heavy before mass adoption
- •Jason says he underestimated costs and argues full persistence is central to the promise of agents
- •Jason notes broader compute constraints and rising GPU prices as near-term headwinds
- •Rory differentiates short-term price pressure from long-term cost declines and says it will work out eventually
- •Both converge on uncertainty about timeline: whether the economics improve in a couple years or closer to five
Investment Committee: choosing between Zipline, fal, and Revolut
The panel runs an ‘investment committee’ style comparison of three large private opportunities. Jason likes all three but leans toward fal as a near-term trend bet, Harry prefers Revolut as a long-term compounding asset, and Rory weighs risks: Zipline’s story-driven valuation, fal’s durability, and Revolut’s demographic tailwinds.
- •Harry presents the three options and their pricing context as the week’s decision set
- •Jason says all three are high-quality but flags concentration strategy and durability tradeoffs
- •Rory highlights Zipline’s U.S. expansion and Walmart relationship but worries about revenue per delivery and scaling math
- •Rory describes fal as benefiting from inference-market growth but vulnerable as industry dynamics evolve
- •Rory and Harry argue Revolut’s customer base can age into broader banking needs, positioning it as a potential dominant European bank
Security: API key theft, bot swarms, and why security M&A is accelerating
Jason uses Fireworks’ breaches to explain a rising wave of attacks focused on stealing AI API keys for costly inference usage. Rory categorizes security and coding-agent acquisitions as logical incumbent responses to new threat surfaces, and the group notes the return of meaningful venture M&A activity.
- •Jason says API keys for inference are a prime cybercrime target, with bots trying to steal OpenAI/Anthropic keys
- •Jason describes the economics: stolen keys can be exploited extremely quickly, making the attacks highly lucrative
- •Jason argues many companies are underprepared and that bot swarms are difficult to mitigate
- •Rory explains why CrowdStrike and Palo Alto are buying agent-security capabilities as the new platform need
- •Rory frames the broader M&A as incumbents acquiring adjacent products to keep up with shifting technology markets
Older SaaS vs ‘AI-native’ speed: why many incumbents can’t adapt fast enough
Jason laments that many non-AI-native companies are still operating with pre-2024 pace and structure, even if they ‘bolt on’ LLM features. Rory agrees the world has become ‘march or die’ for older SaaS, and they discuss why fast-growing AI-native companies typically don’t buy slow incumbents despite tempting customer bases.
- •Jason argues many established companies can’t change operating cadence and product shipping speed fast enough
- •Jason treats some acquisitions as ‘soft landings’ rather than true exits when liquidity is limited
- •Harry suggests this operational gap is so severe it could be monetized as CEO coaching for large portfolios
- •Jason and Rory explain why AI-native companies rarely buy slow incumbents: growth mismatch and inherited problems
- •Rory concludes the shift is now obvious: adapt quickly or become irrelevant
Agent boom winners vs seat-based SaaS pressure: Cloudflare/Twilio up, Atlassian/Figma questioned
They contrast companies benefiting from agent-driven spend with seat-based licensing models facing pressure as agents, not humans, become the primary users. Jason argues markets will reward agentic beneficiaries and remain skeptical of seat-based businesses unless they reinvent their value proposition.
- •Harry cites efficiency gains and market outperformance in companies that cut headcount and grew faster
- •Jason claims agents are driving renewed growth in Cloudflare and contributing to agentic spend at Twilio
- •Jason argues agents don’t care about traditional UX/UI in the way humans do, undermining seat-based value capture
- •Rory frames Atlassian as stabilizing but facing a trend shift as agents reduce dependence on engineer seats
- •Jason predicts seat-based companies may remain in the doldrums if markets believe agents bypass their monetization model
Figma’s post-blocked acquisition reality and the roadmap to ‘agentic design’
Jason returns to Figma’s valuation decline and argues antitrust blockage may have cost a unique liquidity window. Asked what to do as CEO, he argues Figma must go all-in on agentic design that delivers high-quality end-to-end experiences, and Rory agrees that agent-driven workflows feel materially faster for creatives.
- •Jason worries antitrust makes large exits harder and calls the missed acquisition window a lasting IRR hit
- •Rory notes Figma’s strong growth and cash flow, but acknowledges the painful valuation reset despite execution
- •Jason describes morale and retention challenges when employees experience prolonged valuation malaise
- •Pressed by Harry, Jason proposes a strategy: fully commit to agentic design that rivals best-in-class outputs, even at gross margin cost
- •Rory supports the product-first angle, citing observed creative workflows that are faster in agentic tools than in older flows
California wealth tax rejected: political signal and fears of founder flight
Rory interprets the wealth tax rejection as voters resisting a policy they believed would backfire economically, even amid broader political shifts. Jason argues it mattered because successful builders—not just passive wealthy individuals—might have left California, hurting the AI ecosystem and talent concentration.
- •Rory says the wealth tax failed while a measure preventing future attempts passed, making the rejection emphatic
- •Rory attributes the outcome to voter skepticism of proposition-driven legislation and concerns about losing taxpayers
- •Jason notes spending imbalance in the campaign and suggests it can influence proposition outcomes
- •Jason argues founder relocation would be damaging because California benefits from builders and ecosystem density
- •Rory adds that even if companies stay put, individuals can move for tax residency decisions, reinforcing the flight risk theme

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