EVERY SPOKEN WORD
85 min read · 16,659 words- 0:00 – 3:17
How to Dominate for Decades
- DSDavid Senra
[intro music] All right, we were just talking before recording, and you just said something that's very interesting. We were talking about people that dominate for decades. You're one of them that's, uh, done so, and you said an interesting question is to ask how and why somebody would dominate for decades. What's your answer to that?
- DLDoug Leone
My partner in India said there are many roads to heaven. Uh, and so there are many ways to dominate. Uh, take Steve Jobs. He had really one job, and he dominated in that domain for a lot of years, or Jensen Huang. Those are more linear. Those are gifts where you find yourself in the middle of the hurricane, and you just wanna keep on going because as the world changes, your job changes. What's more interesting is how do you dominate when you have to remake yourself over and over again, and why do you dominate? Starting with the why, I think it's a deep, insecure need to remain relevant and prove to yourself that you're not getting old and you're not gonna be out of date. I mean, if I look back on my career, uh, each time I remade myself, it wasn't really done out of vision or greatness. It was done out of fear of just being gone. Even a few minutes ago, I asked you, "Let's not make the interview be about yesterday. Let's make it about all tomorrow," and, and I still have that fear at the age of sixty-nine. And the how, I think you have to be willing to let go of your ego. I think you have to assume you know nothing each time, and you're willing to start at the bottom. So when I came back to Sequoia, they gave me this fancy title of chairman. We were in front of our LPs, our investors, the first time about six months ago, and someone asked me about chairman. I t- I told them, "It's a bunch of bullshit. What I really am is an analyst. I'm a low-level analyst, and, uh, I have to prove myself." I just got back from vacation just this morning. I've had 90 days of getting all calibrated, and my partners asked me, "How do you feel after 90 days?" I said, "I feel like I'm good for nothing. I feel like I've entered, and AI has gotten further away from me than when I first started 90 days ago, and so I'm terrified." I told one of my partners just an hour ago that if nine months from now, which is the one year since I returned, I feel just as irrelevant, I'm gonna take myself out. And so I don't know if I can do it yet another time, and therein lies the fun, and therein lies the answer to your question.
- DSDavid Senra
Do you know who Jimmy Iovine is?
- DLDoug Leone
No.
- DSDavid Senra
Okay, Jimmy Iovine, he, another guy who dominated for decades. Uh, he was in the music industry for 50 years, but, um, a lot of people know him because he s- uh, had the insight to start building businesses with his artists, so he co-founded Beats w- with Dr. Dre. They wind up doing Beats music and the headphones they sell to Apple.
- DLDoug Leone
I think he's the guy that was involved with the Beatles at the very end.
- DSDavid Senra
Yeah, John Lennon.
- DLDoug Leone
Yeah, John Lennon.
- DSDavid Senra
He was an engineer-
- DLDoug Leone
Yeah
- DSDavid Senra
... and a producer for John Lennon.
- DLDoug Leone
He just showed up on a Saturday, and next thing you know, yes.
- DSDavid Senra
You'd love him. He's fucking Italian-
- DLDoug Leone
Yeah, yeah, yeah
- DSDavid Senra
... from New York.
- 3:17 – 5:40
Turning Fear Into a Tailwind
- DLDoug Leone
Yes, yes. I, I know who he is. I, I, I forgot his name.
- DSDavid Senra
He's awesome. I did an episode-
- DLDoug Leone
Yeah, yeah
- DSDavid Senra
... with him, but now we've become friends.
- DLDoug Leone
Yeah, yeah.
- DSDavid Senra
We talk all the time. He's, he's a very interesting character.
- DLDoug Leone
Yeah.
- DSDavid Senra
But there's two things that, where you were talking that he said the same thing. He's like, "I don't have a rearview mirror." He said the same thing when we sat down. He's like, "I don't wanna fucking talk about the past. I wanna talk about what I'm doing now."
- DLDoug Leone
Yes.
- DSDavid Senra
He's like, "There's no trophy room in my house."
- DLDoug Leone
Yes.
- DSDavid Senra
"I can't even tell you what I did five years ago-"
- DLDoug Leone
Yes.
- DSDavid Senra
"... 'cause I forgot. I'm worried about tomorrow."
- DLDoug Leone
Yes.
- DSDavid Senra
It was very interesting. But then my question, you, you brought up being terrified, and then you said fear before that. What's your relationship w- like to fear? Because he gave me some of the best advice. He's like, "Most people, when they feel fear, they let it be a headwind." He's like, "I train myself to make it a tailwind. As soon as I feel it, that means I have to fucking go for it right now."
- DLDoug Leone
Yes.
- DSDavid Senra
"Right now. Do not think. Step forward."
- DLDoug Leone
Yeah.
- DSDavid Senra
What's your relationship with fear? How do you deal with it?
- DLDoug Leone
Throughout my life, I've felt an awful lots of fear, and it's always been the challenge in front of me. I was afraid of public speaking. I made sure I became the very best. I was afraid of heights. I worked on sailboats. I made sure I was up 96-foot masts, that whenever I feel it, I face it head on. It's almost a challenge. Look, there's a story that my partners know. I had to get a tooth removed. I actually drilled, um, I had a tooth drilled for, for a root canal, and I had to go to a meeting right after that, and I told the dentist, "Drill without any Novocaine." And he says, "You're out of your mind." And my whole life, I wanted to see if I was a badass or not. In other words, am I a fake badass that's, has this envelope nobody could tell, or am, or am I really a badass on the inside? And I told the dentist, "Take it out with no Novocaine." And he drilled, and I jumped, and I told the dentist, "I won't move again," and I didn't move again. And I used the trick of thinking what it must be like to go to war and lose an arm or two legs. That's pain with consequences. Mine was pain with no consequences. And so I just said, "It's just nerve endings from there to my spine to my brain. Fuck it. I'm not moving." Now, I had to go home and change my shirt 'cause I was a puddle of sweat-
- DSDavid Senra
[laughs]
- DLDoug Leone
... but I didn't move. And so I love fear. It does wonders f-f for me. It gives me the challenge to overcome that gives me then a sense of security.
- 5:40 – 12:19
Immigrant Drive, Hard Work & the Beach Club
- DSDavid Senra
You mentioned, uh, working on sailboats. I read something about you. You were doing this when you were a young kid, right? You were in high school when you started working on boats?
- DLDoug Leone
Yeah.
- DSDavid Senra
And it was like-
- DLDoug Leone
High school and college.
- DSDavid Senra
And it was across the street from or across the river from a country club.
- DLDoug Leone
No, it was in a country club.
- DSDavid Senra
Okay.
- DLDoug Leone
The country club has the yachts in the water and the pool on the side.
- DSDavid Senra
Do you remember what you said about this?
- DLDoug Leone
Yeah, I know exactly what I said.
- DSDavid Senra
Well, can you repeat it?
- DLDoug Leone
I said, "I'm gonna get those fuckers later." You know, it was all the rich kids.
- DSDavid Senra
What, uh, what does that mean?
- DLDoug Leone
Well, it was all the rich kids, you know, being the lifeguards, talking to all the girls, uh, at the age of 16, 17, by the pool, having the times of their lives, kind of having the life that- Some of my kids have now. Uh, and I was crawling in sailboats, running wires through, sweating like a pig, working overtime, and just looking over at kids my age having the times of their life, and I said, "I'm gonna get you all fuckers later." And I did.
- DSDavid Senra
That is such a re- like a reoccurring theme throughout like the history of entrepreneurship.
- DLDoug Leone
Yeah.
- DSDavid Senra
I felt it that way. Like m-my... People are like, "Oh, I'm the first person to go to college." It's like no one in my family even graduated fucking high school.
- DLDoug Leone
Yeah.
- DSDavid Senra
And I remember going to public school, and there was this kid that would drive... He had like a $130,000 car. This is like 20 years ago. And he was in one of my classes, and his dad owned like a shit ton of Domino's franchises-
- DLDoug Leone
Yeah
- DSDavid Senra
... which I had no idea were-
- DLDoug Leone
Yeah
- DSDavid Senra
... phenomenal businesses. The insight that he had phenomenal businesses, he's like, "Yeah, me and my dad just went to lunch." They took a helicopter like 200 miles to lunch. I was like, "What are you... I'm working full-time at 15."
- DLDoug Leone
Yeah.
- DSDavid Senra
"What are you talking about?" And that's exactly how I felt. I'm working on this, uh, this other... for my other podcast, Founders. I'm starting to read about, uh, Mike Tyson a lot, and Mike Tyson has a video where he talks about the difference, what you just mentioned, the way he grew up compared to the way his kids... And he says his kids would be like, they're like 15 years old, and they're like, "Look at the, the, the cute, the star athlete at school."
- DLDoug Leone
Yeah.
- DSDavid Senra
It's like, "Wow, look, it's-"
- DLDoug Leone
Yeah
- DSDavid Senra
... "Tracy. He's so amazing." And he goes, "I wasn't like that." He goes, "What I thought when I saw these people was, 'Wait till I get my shot.'"
- DLDoug Leone
Yeah.
- 12:19 – 14:37
Simplifying Life & Choosing Discomfort
- DSDavid Senra
You mentioned inducing, the importance of inducing misery into your kids' lives. Do you still induce misery into your own?
- DLDoug Leone
Yeah, no. I've gone full cycle and have spoiled myself with material things. Realized they don't make me happy at all. Got rid of a whole bunch of material things. I sold my fancy cars at great discount. I just want them gone. It was one day I woke up, I just didn't wanna have cars with vowels on at the end of the name.
- DSDavid Senra
[laughs]
- DLDoug Leone
I just got rid of them. I just wanted a more simple life. I wanted to, uh, to start to enjoy the little things in life. Now, having said that, I do have toys. I don't wanna make sound like I'm leading the life, I'm leading the life of a monk. But I've shedded assets on purpose just to simplify my life and, if you will, get down to the really important things in life, which really at the end of the day is your family and friends. That's really the most important thing.
- DSDavid Senra
Not just shedding material, like y- inducing pain or misery into your life at this time, at this point in your life.
- DLDoug Leone
Well, I think going back to work-
- DSDavid Senra
Do you think it-
- DLDoug Leone
... definitely that was not the easiest move I've ever done, and I'm in the middle of that right now. I'm quite miserable at Sequoia right now, not because of what anybody else does, because I, I feel that three months into it, I'm really good for nothing.
- DSDavid Senra
Let's say when you were building, right, your first few decades there. Did work always feel like work, or is it something like you just like you were addicted to doing or you were obsessed with doing it?
- DLDoug Leone
No. It, it felt, it felt like an overwhelming challenge that I didn't know how to conquer, and I felt that until the day I stopped working at 65.
- DSDavid Senra
You gotta spend time with Jimmy Iovine, dude. I'm telling you, I think you would love him. He's been around some of the greatest, you know, people or the most talented people in history. You know, worked with John Lennon, Bruce Springsteen-
- DLDoug Leone
Yeah
- DSDavid Senra
... Dr. Dre, Eminem, just like crazy people. And he's like, "Everybody great has a bend in the pipe. There's just something wrong with them that just makes them different." And also, like the same side of their genius is also their dysfunction.
- DLDoug Leone
Yeah.
- DSDavid Senra
And his whole... He, and he, he's like, for himself, it's the same thing. He's like, he's like, "It was never fun to me. It was work always felt like work." And he goes, "My bend in the pipe was that it has to be." And what he meant by that is like, "If I'm taking on this business, if I'm taking on this project, if I'm telling you I'm going to do something, I will do it to the point where I almost kill myself before I give up. It ha- I have to succeed at
- 14:37 – 16:49
The Homeless Sequoia Partner With No Plan B
- DSDavid Senra
it."
- DLDoug Leone
Yeah.
- DSDavid Senra
Very similar to like the vibe I'm getting off of you.
- DLDoug Leone
Yeah. Uh, look, failure was never an option in my life. I had no plan B. Uh, I remember when I was made a partner at Sequoia, I was down to zero money. I actually, I have never said that to anybody, but there was a time in my first month where I became a partner that I was homeless. I slept in my car for a week. I showered at 3000 Sand Hill Road. I was down to no money. I was down to zero, zero money. Sequoia back then would buy you a car when you made partner. I bought a car. I didn't have a home. I slept in my car for a week, and then, and then I had some money, and I started getting a rental and so on. It was-
- DSDavid Senra
What was going on in your life that you were homeless?
- DLDoug Leone
I, I went through a divorce when I was 30 years of age, and I gave my ex-wife everything. And I was living on my car allowance, so $400 a month. So I didn't have a home, uh, for a month. And so for a week or so, I slept in my car and then one of the other associates let me live with him for about three weeks, and then I had enough money to go buy a, uh, to go rent a, to go rent an apartment. So I chuckled for a week that I was a partner at Sequoia and I was homeless. I was the only homeless partner Sequoia's ever had. I don't think I've ever told that in a public setting.
- DSDavid Senra
[laughs] I mean, at this point you can't go any lower than you already are.
- DLDoug Leone
Oh, no.
- DSDavid Senra
Yeah, yeah.
- DLDoug Leone
You can go a lot lower. First of all, I was healthy.
- DSDavid Senra
Mm-hmm.
- DLDoug Leone
Okay? So you can get a lot lower than that.
- DSDavid Senra
Mm.
- DLDoug Leone
You can be sick with a disease.
- DSDavid Senra
Good point.
- DLDoug Leone
And second, I was a partner at Sequoia. Are, are you kidding me? My, my present value, my future earnings were gonna be terrific. So I was in panic. I just knew it, it was only an inconvenience, and I saw the humor in that for about a week. I mean, clearly it would not have been funny to be homeless for a lifetime. And if you're truly homeless-
- DSDavid Senra
Yeah
- DLDoug Leone
... that's not funny. But in my case, it was, I was a partner at Sequoia showering at the Sun, uh, uh, at the shower on 3000 Sand Hill Road, parking my car a little bit further away f- from the office and sleeping in my car.
- 16:49 – 20:04
Stepping Down, Coming Back & Starting Over
- DSDavid Senra
So go back to, you're saying the, the, the level of discomfort that you felt when you came, or right now that you're, that you're currently experiencing. Why did you retire to begin with, and then why did you come back?
- DLDoug Leone
Well, I didn't retire. If you found a company, you have season seats. You can stay as long as you want. You can take it public. You can sell it. It's your gig. I didn't found Sequoia. I, I was a hired gun. So it seemed to me the right thing to do is to get out of the way and let the next generation have their turns at bat. Don Valentine, he founded it. He stepped away at around the age of 63. I figured 65 was the natural age, and on my 65th birthday, I stepped down. I, I chose a successor.
- DSDavid Senra
Did you want to step down, though?
- DLDoug Leone
It wasn't a matter whether I wanted or not. It was the right thing to do for Sequoia. And so I chose Roelof. Uh, I, I was the old king. He was the new king. It seemed to me that being an, the old king with a new king around, you shouldn't be around. You should be removed. And so I stepped out. I ha- I was on 10 boards and, uh, I thought that would keep me busy. I founded a biotech company. I thought, "10 boards, biotech company, I'm gonna be busy as heck." Not even close, because I had the curse that all my companies were working. When a company's working, there is no [laughs] there's nothing to do. Uh, and so I had a great backlog of companies, and I wasn't busy, so I started taking drum lessons and guitar lessons and piano lessons, and that took me for about a year. And after a year, I thought I was gonna lose my mind. Uh, it turned out that Roelof stepped down. Pat and Alfred took over. They weren't the kings I chose, and thirty days into it, they came to my house, and they said, "Would you like to come back? You're not on ten boards anymore. You're on six boards. We sold four companies." You know, companies like Wiz and so on. And I said, "Sure." Uh, and we cut a little deal in an afternoon and a, you know, on a single sheet of paper that we scrabbled-
- DSDavid Senra
Did you see that coming?
- DLDoug Leone
You know, that we scribbled. They always wondered to me publicly for the two years before, "Why aren't you around more?" And my answer was, "It seemed to me that it's best to stay away and let the new king just do his thing." And when the old king, new king dynamic went away because Roelof was gone, it was, uh, much easier, uh, for me and for them. And so they came over, surprise visit. Uh, I don't know why they wanted to see me. And I said, "Sure," right on the spot. It wasn't a longer conversation.
- DSDavid Senra
Yeah, that's why I asked if you saw it coming, 'cause you-
- DLDoug Leone
No, it was, it was, of course. And we agreed that I would attend partners meeting, I would be in a cir- in the inner circle, I would help them spot crucible moments, as we say, to figure out how to navigate them, uh, and make a couple investments. Uh, and I've done everything but make a couple investments. I told them I wanted to do nothing for ninety days. I wanna get calibrated. And here I am now, day ninety-one, panicked.
- DSDavid Senra
[laughs]
- 20:04 – 22:13
Why AI Is Different From Every Previous Technology Shift
- DSDavid Senra
Yeah, but I would... I mean, you, you obviously know this. Like we're going through this massive technological revolution, this technological shift. Somebody with decades of experience that has seen so many things come and so many-
- DLDoug Leone
Yeah. I have
- DSDavid Senra
... different companies and founders come and go, like that's invaluable, invaluable wisdom to have inside the company.
- DLDoug Leone
Yeah, except that the world changes, and it's changed more dramatically to... through AI than-
- DSDavid Senra
Yeah, but how many... How many different changes have you been through?
- DLDoug Leone
I understand, but this is the most radical change. Th- this is an industrial revolution kind of change. And so, as I said, I'm ninety day into it. I feel further away now than when I got into it. I mean, look, we're looking at a company... I came back from vacation over the weekend. I saw a memo, I won't tell you the name, of a startup company that wants to raise money without anything at ten billion pre.
- DSDavid Senra
[laughs]
- DLDoug Leone
Uh, you know, it gets my head spinning. I, I didn't know if it was a joke. I didn't know if the, the partners wanted to do that to make fun of me.
- DSDavid Senra
[laughs]
- DLDoug Leone
Uh, no, because they would do that.
- DSDavid Senra
Yeah.
- DLDoug Leone
Uh, and it wasn't a joke. Uh, and, uh, so I've never seen revenue growth at this pace. I've never seen prices like this. One could say all you have to do is add three zeros. It's the same type of business, but it's more complicated than that. And so I've seen a lot of changes. I have good instincts. Uh, but I don't wanna rely too much on, on the past. I wanna use the past as a little corner here that I check things against, and I have my heuristics, my three or four questions I ask myself with each investments. I can discuss those, but I'm focused on what the world's gonna look like.
- DSDavid Senra
I would love to know these questions and these heuristics that you ask. I'm very skeptical because I re- I read history for a living, right? And every time throughout history, you hear, "This time is different. This time is different." And it's never different, right? And but this time actually might be different, so I was like, "Well, who could I talk to that could actually answer this question for me that's, that's seen a lot more?" And so I was, uh, talking to Michael Dell about this.
- DLDoug Leone
Yeah.
- DSDavid Senra
And I asked him, I was like, "Is this time actually different?" And he's like, "Yes." And then he gave, like this... We had like this thirty-minute talk where he actually went through why he thinks that actually business is being rewritten, and this time is actually different. What are the heuristics that you were mentioning earlier?
- 22:13 – 23:52
Doug's Three Investment Heuristics
- DLDoug Leone
I have two or three of them. One of them is, would I put my kids' money into it? Second, if I only make 20 investments in my life, is this one of the 20? Third, can I return the whole fund with this investment? And, uh, if I don't pass those three, I'm not gonna make the investment. And, uh, the reason I put my kids, it gives me the judgment of quality. The reason for the 20, it raises the bar of it could be investable, but is it really the home run, which is the same thing as the third. And those are questions that I've always asked myself in each of them.
- DSDavid Senra
Say more about the, the, the bounding of only having twenty.
- DLDoug Leone
There's probably two hundred investments that you can make in your lifetime, and a lot of them are gonna return 2X your money, 3X your money. I only want the ones where y- you can return 100 times your money. That's all I'm interested in. I want the outliers. I want the ones that really drive tremendous return, that in my lifetime were... First it was 100 million, then 500, then a billion, then 5 billion. Then Alfred hit 10 billion, and now Sean hit 20 billion. I, I told Sean, "You fucker, you kinda ruined it for me."
- DSDavid Senra
[laughs]
- DLDoug Leone
"I'm not gonna show up now with a $4 billion gain."
- DSDavid Senra
Was that SpaceX, or what was that?
- DLDoug Leone
Yeah, it's SpaceX. Now, we haven't cashed out yet or whatever, but you know, there's a shot of a, of a $20 billion gain or more. And so he ruined it for all of us.
- DSDavid Senra
The ones that your best performing invest- investments, I'm always curious if, like you can actually see it
- 23:52 – 25:39
The Cost of Selling Great Companies Too Early
- DSDavid Senra
back then.
- DLDoug Leone
They always surprise you on the upside.
- DSDavid Senra
Right?
- DLDoug Leone
Always. They never surprise you when they fail because that was always one of the scenarios you had, you had thought about or, or mostly is. But when they run, they surprise you, and every venture investor has made the mistake of selling too early their winners, every single venture investors. Because if you look at the, at the great companies, they've compounded 20 years after the IPO. NVIDIA or, uh, or Google or Meta, if you had a little sniffer that this thing had essentially an unbounded market for many years, you should never sell a share. And you can make way more money holding those, 'cause if you're compounding a $5 billion gain, that can turn into a $50 billion gain. If we held Google and had Soogle, that'd be worth... Or NVIDIA, that'd be half a trillion dollars, you know? And there's no investments that can give you that. Uh, and you know, we own 20% of NVIDIA. Think about that.
- DSDavid Senra
[laughs]
- DLDoug Leone
I mean, you know, we own 10% of Google. And, and there's many others, you know? Apple, are you kidding me? We were the first investor of Apple, in Apple. Cisco, we own a quarter of Cisco Systems, you know? Those are big ownership and very big companies, but we all made that mistake.
- DSDavid Senra
Yeah, sometimes the best financial decisions are not financial at all. So if you look at, like, if you think about the wealth created by Sam Walton, obviously he gave it away before it accumulated to his kids.
- DLDoug Leone
Yeah.
- DSDavid Senra
But it co- you know, if it was still in one person-
- DLDoug Leone
Yeah
- DSDavid Senra
... it'd be worth, you know, half a trillion, whatever the number is now.
- DLDoug Leone
Yeah.
- DSDavid Senra
Um, and you realize, like, he wasn't making a financial decision.
- DLDoug Leone
No, no.
- DSDavid Senra
He just liked Walmart.
- DLDoug Leone
Yeah.
- DSDavid Senra
It goes back to what Nick Sleep said. Nick Sleep has this great quote where he's like, "The best investors aren't investors at all. They're entrepreneurs who never sold."
- DLDoug Leone
Yeah, exactly. That's exactly right.
- 25:39 – 28:28
Helping Founders Turn Products Into Businesses
- DSDavid Senra
You've mentioned a few times, uh, I've heard you in other places where you're like, "Hey, I'm on boards of cybersecurity companies. I don't know anything about cybersecurity. I'm on board a financial services company. I don't know anything about financial services." What does that mean?
- DLDoug Leone
It means that I'm interested in the business and the building the business of a company, not in shaping the technology of a company, meaning that, uh, I'm not a product manager type. That's what founders are. In some cases, that's the only thing they know. The only thing... They're, they're getting younger and younger. They're, they're, they're 23 years old or 22. They're engineers, and they know that domain. If they have to rely on me to help shape the product 10%, 20%, we're in big trouble, okay? But then you have the business. You have the selling of shares, not the selling of product. And in the selling of shares, you have to wrap everything into it, which is the analysis of market, the product marketing of the final 10% of the product so it's saleable. I can help with that. The product marketing and messaging, the demand gen, the, the lead gen, and the revenues. Then you've got support and accounting and so on. Oftentime, companies break or they suboptimize that. That's where they get involved in. And in order to do that, I don't have to be an expert in the technology. In fact, I'm only partially interested in technology. I'm much more interested in, in the, in the helping founders build a business.
- DSDavid Senra
Say more about that.
- DLDoug Leone
So how do you take a 22-year-old that when he comes to us is an outlier in something in life, probably IQ 150 or above, uh, all the adjectives that venture guys use in a negative sense, I use in a positive sense, irreverent, shithead, they don't listen. Love it. Give me those founders all day long.
- DSDavid Senra
You gotta say more about that. Why do you like-
- DLDoug Leone
Oh, because who wants a founder that changes his or her mind depending on who they last spoke to? I want a founder who for the last five months has gone to sleep and have, and has woken up three hours into his sleep, just g- can... Just thinking about the problem, thinking of a solution, crystal clear on what they wanna build. No one can detract them, driven like crazy, and so on. That's what I want. Uh, but now we gotta build a business. And so who do you recruit as the first 10 engineers? What does your first salesperson look like? Do you want people that are up-and-comers? No one that's established and great is gonna join you as a startup. That means you have to have an eye for these up-and-comer people in sales and marketing because the made people are n- are gonna play it a little safer. And so to help navigate, uh, all those sets of issues, that is what we at Sequoia, I think, are the very best in the world at.
- 28:28 – 32:25
David Vélez, Nubank & the Psychology of Founder Support
- DSDavid Senra
Can you give me some examples of the founders that you partnered with that you feel you had the best partnership with, that responded to this, that you helped mold and shape and build their business with them?
- DLDoug Leone
With David Vélez of Nubank, and the reason I choose him for this example is that he was an associate at Sequoia, so I knew him well. I hired him out of Stanford Business School, and I had to give him the bad news that we were not gonna open a Brazil office. After he moved to Brazil, he, he committed to Sequoia, he moved to Brazil. We made two investments, and we finally figured out there are no engineers. A few engineers come out of Brazil, and everything coming out of Brazil was, "We are the Uber of Brazil. We are the DoorDash of Brazil." No real novelty. And one, we had to make the call, "Hey, David, we're not gonna open the Brazil office." We offered him a job in California. And he had a notion of a financial services business, a credit card business in Brazil. Minor problem, he wasn't from Brazil. He knew nothing about financial services. But he had a heart of gold. He had a heart... A- and a heart of a lion. So he was a good man with driven like crazy, and no one could stop him. And so we seeded him. And I remember the call. One night I was at Pico House. I still remember. I get a call at dinner. It's him. We committed to a million dollars. He says to me, "What do I do next?" And I was in the men's room.
- DSDavid Senra
[laughs]
- DLDoug Leone
I took the call from the men's room. Uh, and, uh, you know, we talked it through. Uh, he knew what to do next. He was just all alone. "What do I do now?" It was more a... I, I viewed it more as a, as a psychological assistance call than a call on what to do next. He wanted some support, and we made a plan of the first two or three things, and he didn't miss a beat. He didn't miss a single beat for the first two or three or four years. And we built a company now worth... I mean, it, it was big numbers a few years ago. It, it, it's $60 billion now. Like I said, I just saw a startup that wants to raise money at $10 billion pre with no, uh, code writ. So I don't know what, what, what things are worth anymore.
- DSDavid Senra
Well, David has a f- uh- Fantastic reputation.
- DLDoug Leone
Yes.
- DSDavid Senra
There's a ton of people that have come on the show, or people that wanna come on the show, and I always ask them, like, "What other founders should I talk to?" It's like, "This guy is incredible."
- DLDoug Leone
Yeah.
- DSDavid Senra
This is surprising. So an associate at a venture firm then becomes a world-class founder.
- DLDoug Leone
Yes.
- DSDavid Senra
Is there other examples that you can think of that, that, that follow his pattern?
- DLDoug Leone
I've seen it the other way. I haven't seen too many associates becoming founders.
- DSDavid Senra
Yeah. You're actually one of the few... I, I think most VCs are full of shit when they say, "Oh, the founder is the star, and the founder is the most important. You use this thing, or, like, the zero to one is the black magic, and, like, that's the founder's job. I can't help with that. If you need me to help with that, then we're all fucked."
- DLDoug Leone
We're all fucked.
- DSDavid Senra
And he's like, "If the VC could do that, they'd be founders then."
- DLDoug Leone
Yes.
- DSDavid Senra
And I'm like, I... Do you know Devesh from Iconic?
- DLDoug Leone
Yes.
- DSDavid Senra
So I just had, I just-
- DLDoug Leone
He's a killer
- DSDavid Senra
... uh, I just had a two fucking crazy lunch with him.
- DLDoug Leone
He, he is a freaking-
- DSDavid Senra
Dude, you should sit in on our conversations.
- DLDoug Leone
He is a killer.
- DSDavid Senra
I wish we would've just recorded that. But I literally just came-
- DLDoug Leone
Yeah
- DSDavid Senra
... straight from there.
- DLDoug Leone
Yeah, yeah, yeah.
- DSDavid Senra
And I was talking to him about you, and 'cause I'm like, "I actually think Doug believes this. I think when other VCs say this shit, like, they're full of shit. They actually want to be the guy, and they're very uncomfortable, you know, not saying, 'No, I'm actually assisting them. I'm in the service business.'"
- DLDoug Leone
Yeah. We are the service business.
- 32:25 – 36:13
Why Founders Must Remain the Soul of the Company
- DLDoug Leone
on a Sunday.
- DSDavid Senra
[laughs]
- DLDoug Leone
No, great IR, but we didn't make any money really.
- DSDavid Senra
Yeah.
- DLDoug Leone
Uh, and so you want that founder in the, in the building for as long as possible. Think of the refounding of Apple.
- DSDavid Senra
Your partner, I, I quote this on my other podcast all the time, uh, Moritz has that great... So he wrote, obviously, The Ret- uh, The Little Kingdom in whatever, the-
- DLDoug Leone
Yeah, yeah
- DSDavid Senra
... '80s or '70s, whenever it was.
- DLDoug Leone
Yeah.
- DSDavid Senra
And then he updated it in, I think, 2009 to The Return of Little Kingdom.
- DLDoug Leone
Yes.
- DSDavid Senra
And that updated forward.
- DLDoug Leone
Yes.
- DSDavid Senra
Again, Moritz is a crazy writer. Like, his writing is phenomenal.
- DLDoug Leone
He's, he's incred- you should have seen his memos internally. His reports to the limited partners were funny as heck.
- DSDavid Senra
It kills me because I read biographies for a living.
- DLDoug Leone
Yeah.
- DSDavid Senra
And that 60-page, you know, all these obscure ones-
- DLDoug Leone
Yeah
- DSDavid Senra
... that are not, and people are not supposed to have.
- DLDoug Leone
Yes, yes.
- DSDavid Senra
They all come to me anyways-
- DLDoug Leone
Yes
- DSDavid Senra
... 'cause I do this for a living, and I, I sat down and read the Don Valentine one that he wrote-
- DLDoug Leone
Yeah
- DSDavid Senra
... in one sitting, and then somebody that's mentored by Moritz that I'm friends with, I, I backchanneled. I was like, "Dude, I gotta fucking do a founder's episode on this."
- DLDoug Leone
Yeah.
- DSDavid Senra
And it came back, "Absolutely not." I'm like, "Goddammit."
- DLDoug Leone
I remember that when I was... There's Mike and I, you know, we both ran Sequoia. A cold-blooded, uh, strategic Brit, and a tactical Italian, gregarious Italian.
- DSDavid Senra
[laughs]
- 36:13 – 39:57
Torturing Yourself Into Greatness
- DSDavid Senra
When I asked you if you induce any misery into your life, like you were saying you should induce it to your kids, I was thinking about Jensen, because, uh, there's this book by Tay Kim called The NVIDIA Way, which is kind of a company history of NVIDIA, but it gives you enough biographical background. You can, you can function as a biography of Jensen, and he says something in there where he's like, "You know, I don't like giving up on people. I'd rather torture them into greatness."
- DLDoug Leone
Yes.
- DSDavid Senra
You get to the end of the book, it's like, oh, he does that to himself.
- DLDoug Leone
Of course he does.
- DSDavid Senra
He tortures himself into greatness. He wakes up in the morning, looks in the mirror, and asks why he sucks so much.
- DLDoug Leone
Yeah. And if you're willing to do that to yourself, people will follow you And people will torture themselves all the way un- until the goal's met. But you have to be able to do... You have to be willing to do that to yourself, and people see that.
- DSDavid Senra
Did you torture yourself?
- DLDoug Leone
Absolutely. My whole life. It's all I know.
- DSDavid Senra
So your inner monologue's re- negative?
- DLDoug Leone
I'm kind of a miserable soul on the inside.
- DSDavid Senra
Say more about this.
- DLDoug Leone
I'm always a little unhappy. My instincts are to be unhappy. And I carry a positive vibe, and people see me as, uh, fun to be around. It's not an act, but when in my private moments, I'm, I'm pretty unhappy, always. I'm pretty miserable.
- DSDavid Senra
And nothing changes that?
- DLDoug Leone
My kids. I have a reprieve when I'm with my kids or my grandkids or some good friends, on a golf course. I don't... I play golf. I don't-- I suck at golf. It's the same three guys, so we can laugh for four hours.
- DSDavid Senra
I'm gonna interrupt you real quick. Does this start when you come to this country? You, you go from the... You tell the story of being, like, this precious, like-
- DLDoug Leone
Precious? I don't know
- DSDavid Senra
... positive boy.
- DLDoug Leone
I don't know if I'm precious.
- DSDavid Senra
Well, a positive boy-
- DLDoug Leone
Sweet
- DSDavid Senra
... at 10.
- DLDoug Leone
Sweet.
- DSDavid Senra
Sweet boy at 10.
- DLDoug Leone
A sweet little boy.
- DSDavid Senra
And then at 15-
- DLDoug Leone
Yeah, yeah, yeah
- DSDavid Senra
... so that this divine-
- DLDoug Leone
Yeah.
- DSDavid Senra
David Ogilvy has this great, um, way to put this. He says all great pe- people who do great stuff-
- DLDoug Leone
Yeah
- 39:57 – 44:28
Don Valentine, Succession & the Sequoia School of Hard Knocks
- DSDavid Senra
Have you seen anybody in your business stay too long?
- DLDoug Leone
Stay too long? A, a million people.
- DSDavid Senra
Did Don?
- DLDoug Leone
No. Don, Don stepped down, uh, in 1993. Uh, I believe, I'm gonna guess he was probably 60, 58 to 60 years of age. He didn't stick around for, for too long.
- DSDavid Senra
Why did he stop?
- DLDoug Leone
I think he had enough. I think he had enough. He had, uh, two guys in Mike Moritz and me that he thought, uh, could take over. He had older people that wanted to take over, and it's interesting how Don told us we were the guys. There wasn't a, there, there wasn't a big conversation. It was a yellow sheet of paper. Don always wrote in green pen on a yellow sheet of paper. One day, we get, um, a little note that said, "Mike, one point one. Doug, one point one." The other name, another young man, I don't wanna embarrass anybody, "One point oh." The older guys, "Point seven, point six." That was the vision of the carry for the next fund. DTV, Don, question mark. You figure out what you wanna give me. Uh, and that's how Mike and I knew we were the two guys that were chose.
- DSDavid Senra
There was not even a conversation?
- DLDoug Leone
No conversation.
- DSDavid Senra
So I'm a big fan of the way he thinks. Uh-
- DLDoug Leone
Yeah
- DSDavid Senra
... the talk, he gave a few talks, you know, on YouTube.
- DLDoug Leone
Maybe he talked to Mike Moritz. He didn't talk with me. He, I, I just saw the sheet of paper.
- DSDavid Senra
[laughs] That's, that to me, when I think about him, it's like a simple genius-
- DLDoug Leone
Yeah
- DSDavid Senra
... to the way he thought and operated.
- DLDoug Leone
Yeah.
- DSDavid Senra
Is it, would, would that be an accurate way to describe him?
- DLDoug Leone
I think part of it was accidental. You know, look, I love Don Valentine, and there's not a, a bad things I could say about Don Valentine, but Don also made a ton of mistakes, as we all did. We sold our Cisco shares for cash for the total gain of ninety million. We owned a quarter of Cisco Systems.
- DSDavid Senra
How big is that mistake in dollar terms?
- DLDoug Leone
What's Cisco's market cap at its height might have been? Half a billion. So like, what's a quarter of half a billion?
- DSDavid Senra
A lot more than-
- DLDoug Leone
No, no, sorry. Uh, not half.
- DSDavid Senra
Half a trillion.
- DLDoug Leone
Half a trillion.
- DSDavid Senra
Yeah, I understand what you're saying.
- DLDoug Leone
Half a trillion. Uh, a lot of money.
- DSDavid Senra
A lot more than ninety million.
- DLDoug Leone
But, but look, we all made mistakes. How many of the distributions I pushed for at ServiceNow? I left a 10 Xer on a table. 10 X, you know? It's crazy. We left billions upon billions of dollars, as we all did in the venture industry. Uh, but you know the story. I'm sure that you've heard a story of, of my review from Don Valentine. Uh-
- DSDavid Senra
I don't, I don't know.
- DLDoug Leone
So I came out of a presentation with a, um... It, it was Don, me, and two other guys and a founder, and I guess I asked some questions maybe too aggressively. There was a note on the table when I got up. "Doug dash not fit to listen to founders." He left that on the table for me to see. I love whenever I hear young guys, "I'd like some feedback," and I get a three-month review. That was my review-
- 44:28 – 47:46
Staying Grounded & Developing a Sniffer for People
- DSDavid Senra
Are most of your friends investors or entrepreneurs?
- DLDoug Leone
Most of my friends are neither. Most of my friends, uh, are people that I've met in my early days of life, uh, who have blue-collar jobs, uh, yeah, who, uh, who are nowhere near the techno world. I have maybe two friends in this envir-- in, in this world. M-most of my friends are from high school, uh, and maybe college completely, or maybe from Italy. Um-
- DSDavid Senra
Even further back?
- DLDoug Leone
Yeah, even further back. Uh, you know, I just came from Italy a couple of days ago. I spent a couple of days with a friend of mine who's a cop at the airport in Genoa, Italy. He, you know, he's, he's one of my closest friends.
- DSDavid Senra
So you're still able to relate to people even though-
- DLDoug Leone
Still... Just the notion relate to people, I, I find that kind of weird.
- DSDavid Senra
Okay. So why?
- DLDoug Leone
What do you mean relate to people? It's almost as if, ah, you're there, I can relate to you.
- DSDavid Senra
No, but you know how this goes, like-
- DLDoug Leone
No, I get it, I get it
- DSDavid Senra
... yeah, people started with nothing, they get really successful.
- DLDoug Leone
Yeah.
- DSDavid Senra
It's like they kinda isolate themselves.
- DLDoug Leone
No, no.
- DSDavid Senra
Yeah.
- DLDoug Leone
I have, uh, uh, thankfully, and that's maybe one of my few good traits, uh, I'm still normal. I, I make sure that I lead my life with no handlers. Look, I have everything in life that somebody needs, but I have no handlers. I have, I have no personal assistant. I don't have anybody who, you know, who, who cleans up after me. I, I still take my water glass down in the morning, put it in the dishwasher. I cooked yesterday afternoon. I wash all the pans and everything on my own. Uh, those are the things that keep me grounded in this crazy world of ours in which we live here in Silicon Valley. In a way, I think of myself a fairly simple man who found himself in the right place at the right time, didn't screw it up, whose only true skill is a sniffer. Um-
- DSDavid Senra
You keep saying sniffer. What is a sniffer?
- DLDoug Leone
Sniffer on people, sniffer... I have an ability to walk in a room in a business meeting and kinda know what everybody's thinking, kinda know what everybody wants to hear. You know, I really haven't lost an investment in thirty years in Silicon Valley. People have beaten me because of price, but I haven't lost otherwise in thirty years.
- DSDavid Senra
But relate, relate not losing investment to having a sniffer?
- DLDoug Leone
Because I can see it's, uh, I have a sniffer of what people want. Uh, and that same sniffer takes me through what businesses like, what's a real business and what's a dream and what's a pipe dream, even though I do not know much about the technology. Maybe a, a way to say it, it's EQ. That is really my, my main skill. And the other thing that I pride myself is I'm a, I'm a very good soul. In fact, the Sequoia spec of people we wanna hire has changed. We had this complicated spec. It's now down to a hypercompetitive person with a heart of gold. That has become our spec in the people we hire. We want people not like me, but that are willing to do the right thing when it's highly inconvenient for the person doing it and is willing to walk through walls in order to win in an ethical
- 47:46 – 50:13
Hypercompetitive With a Heart of Gold
- DLDoug Leone
kind of way.
- DSDavid Senra
How does the people you wanna hire differ from the founders you want to back?
- DLDoug Leone
Same thing. Same. They need to be outliers. The, the founders we wanna back have to be extreme outliers in something: IQ, drive. It's kinda the same thing in the people. We have all these adjectives when you walk in a Sequoia office, the reverence, the outliers, and I looked at that, and to me, they're the same adjectives in people that, that I w- that we wanna back and people we wanna hire. I think we look a lot like our founders.
- DSDavid Senra
Okay.
- DLDoug Leone
We don't give up.
- DSDavid Senra
So, so when we go back to this idea that you said earlier where it's like, hey, you know, some of these other traits that other venture people, you know, don't like in founders, I love, I'm very attracted to them. Going back to the founder of Nubank, did he have those founder traits?
- DLDoug Leone
He had a, a combination of smarts, drive, clarity of thought, toughness, goodness, judgment, mature way behind, way, way behind his years, his, his years. Look, um, here's what I have to tell you. We interview people, and Mike Moritz had a great line, called them half pagers or full pagers. You interview someone, y-you write a half page, there's nothing else to write. You're, you're there thirty minutes, you look and you watch, "God, I can't believe," you know, "I'm done." And then you have people that you look at, you watch, and an hour has gone by and you can't believe it, and David was one of them. And I remember talking to him, the hour flew by, and it was clear to me that we love this person. And he tells the story to show you how Sequoia works. I said, "Yeah, there's somebody else I want you to meet." He makes it to his car, and his phone rang, and it was Mike Moritz. He didn't make it out of the parking lot. That's how fast we move. We pulled him right back in, and Mike met him, and within two minutes, Mike and I knew that we're gonna hire this kid. Uh, and I had interviewed 10, 15 people from Brazil. They all looked the same. They were all these super smart, fine, wonderful, uh, guys and girls. They all went in consulting because that, that's how you self-select in these, in these new markets. That's I, I saw it in India, uh, and so on, uh, but they all looked the same. I couldn't tell them apart. And then I met David Vélez, and within one hour, I knew for sure that he was gonna be the person we're gonna hire.
- 50:13 – 52:28
Fred Luddy, Israeli Founders & Radical Directness
- DSDavid Senra
Who are some other, other of the great founders besides him that you partnered with?
- DLDoug Leone
Fred Luddy of ServiceNow. He was older, uh, but he made everything simple. He came to Sequoia to present, and he told us everything that was fucked up with his company. It was the wildest pitch.
- DSDavid Senra
That's how he started?
- DLDoug Leone
Yeah, everything that he screwed up. The... I mean, if you didn't wanna sell shares, of course he knew what he was doing, but if you didn't wanna sell shares, that would've been the type of pitch.
- DSDavid Senra
[laughs]
- DLDoug Leone
Now, we all still saw through that, and, uh, and so on, but he was terrific. Complete clarity of product. He simplified this thing called workflow where, where I ask for something a- and you respond, and you answer back, and you ask me something. He simplified workflow to the most basic of ways as, so people can communicate, and that was the foundation to ServiceNow. That was incredible. Incredible. And then you get into, into the Israeli founders, which I adore. They are tough. You know, keep in mind, they think incoming te- missiles i- are d- are kind of everyday type-
- DSDavid Senra
Yeah
- DLDoug Leone
... of occurrences. Uh, and so they're naturally tough. They don't take any shit. Uh, they're smart as hell. Uh, somehow they know what America needs way over there when they work at 8200, which is one of the units in a government, uh, you know, uh, in Israel. They're very trustworthy. They're terrific. I love... And they're tough as hell. And the conversation with one of these, usually men, no, actually there's a woman that I'm, uh, she used to be a spy in Iran. Uh, she's tough as hell.
- DSDavid Senra
Now she's a founder?
- DLDoug Leone
Yeah, she's a founder.
- DSDavid Senra
What does her company do?
- DLDoug Leone
It's a cybersecurity company. But not with her, although a little with her. It's almost when you talk to these founders, i- if you've seen those, uh, I don't know what that sport is where you smack the shit out of one another, a guy smacks.
- DSDavid Senra
We had, we had the founder on the show.
- DLDoug Leone
Yeah.
- DSDavid Senra
Dana West, Dana White's company. [laughs]
- DLDoug Leone
And you take it, and you take it, and then the guy... No, it's not quite that bad with an Israeli founder-
- DSDavid Senra
[laughs]
- DLDoug Leone
... but there are no holds barred. They will tell it to you straight. You'll give it to them straight. It's productive. It's not personal. It leads to an outcome. It leads to an agreement, and it takes 15 minutes. It's just terrific.
- 52:28 – 59:57
Trust Is the Accelerant of Business
- DSDavid Senra
How do you build trust with the people that you wanna invest in?
- DLDoug Leone
It doesn't start with trust. It always starts with fear. We had the big bad venture guys who in their minds wanna own their whole company. In fact, I love to tease founder when they ask me, "How, how much d- do you wanna own?" I said, "We usually start being happy at about 100%-"
- DSDavid Senra
[laughs]
- DLDoug Leone
"... but we can go up from there." And I do that on purpose to almost take, take the nervousness out of the room. The way you build trust is first to go in and explain to them, we don't wanna screw it up. It all starts with that. And then, uh, having the look or the conversation with them that begins to show them you might know something about their business, and then paving the way for them to ask you the first question, which may come in an email. The first little bind they find themselves in. And if you rush in, and you help 'em, and you take no prisoners, and you don't make it painful, and when they're down, you help 'em. Don't turn the screws when they're down. If you're gonna turn the screws, do it when their ego's up here because they beat the quarter by 30% or something. When you help 'em out when they're in a jam, slowly by slowly you build trust, which usually takes about a year. It's not done immediately. There's usually lots of fear a- at, at the very start. "Oh, no, I got Doug Leone in my board." It's almost they want Doug Leone, but they're-
- DSDavid Senra
[laughs]
- DLDoug Leone
... scared as shit to have Doug Leone.
- DSDavid Senra
The reason I ask 'cause you have one of the greatest, uh, quotes I've heard where you said, "Trust is the grease that makes all business run."
- DLDoug Leone
It's accelerant. I created the tenets of Sequoia. One was performance, two was teamwork, and the other eight I said, "If you don't have the first two, the other eight don't matter." And after I wrote those and I published them, I said, "Shit, I forgot the zeroth one, which is trust."
- DSDavid Senra
Yeah.
- DLDoug Leone
With trust, trust, if you have trust in an organization, you can fly. You can make decisions extremely quickly. Trust is interesting though because it has both knowledge and intention. In other words, I can trust your intention, but I think you're a putz, in which case I'm not gonna trust you. Or I can trust your skill, but I don't trust your intentions, in which case I, I run the other way. And so I've taught my partners early on to make sure they understood trust as having those two components.
- DSDavid Senra
That's interesting. I've never heard it bro- broken down like that. What came to mind when I read, uh, when I heard that quote from you is like a quote from Charlie Munger who said something very similar where he said that, "Trust is one of the greatest economic forces on Earth."
- DLDoug Leone
Yeah. It's necessary in order to have a business. And you see these companies with broken culture where no one trusts one another, and you can't get shit done. And, and, you know, and by the time someone here that knows something makes a decision which is the right decision to the time it gets to the VP-
- DSDavid Senra
Wait
- DLDoug Leone
... or the CEO, forget it. It's, it's a whole different thing.
- DSDavid Senra
I'm glad you just said that 'cause I, I had dinner with, at his house right before he died, and he told this story where he's like-
- DLDoug Leone
Who, who's this?
- DSDavid Senra
Munger.
- DLDoug Leone
Charlie.
- DSDavid Senra
And, um-
- DLDoug Leone
At the ripe age of 99 years of age.
- DSDavid Senra
I know. And then I had another dinner scheduled after his 100th birthday.
- DLDoug Leone
Yeah.
- DSDavid Senra
And obviously, he passed away-
- DLDoug Leone
Yeah
- DSDavid Senra
... uh, that November.
- DLDoug Leone
Yes.
- DSDavid Senra
The previous November, unfortunately.
- DLDoug Leone
Right before.
- DSDavid Senra
He said, he told us a story where it was during like the Enron blow-up.
- DLDoug Leone
Yes.
- 59:57 – 1:05:59
Starting From Zero & Hunting for the Next Great Founder
- DSDavid Senra
backwards, looking-
- DLDoug Leone
Looking for investments, because at the end of the day, it doesn't matter if it helps Sequoia during a crucible-type moment and so on, as I said, it's gonna matter what's on that sheet of paper or what I've done in the first year. So we have a little thing we do on Mondays called MIT, the most important thing for the week, and everybody talks about, "I've got to do this, and my wa- uh, I have nothing going on. I just came back from vacation." I don't think I have... I don't think anybody ever said they have nothing going on.
- DSDavid Senra
Mm-hmm.
- DLDoug Leone
I mean, it takes guts to say in front of nine people, "I have zero going on." My MIT is to go scrounge, I use that word, for deals, and that means getting on the phone, calling people I know, so networking like crazy, and try to intercept some kind of very nice investments. It's one of the 20 or one of the 30 that I want to make in my lifetime.
- DSDavid Senra
But is that process today different for you than it was when you were at Sequoia previously?
- DLDoug Leone
It was because I was more in the deal flow of my generation. In fact, it's very different because the founders of the super interesting companies are 23 years of age. I don't have a network of 23-year-old age friends.
- DSDavid Senra
This is very interesting to me. I, I, I wanna hit on that. Uh, before I forget, though, I really, uh, I remember setting a friend of mine up with an- one of the smartest people I know. Uh, he had two businesses running, trying to figure out w- which business he should give his attention to. Then like 15 minutes, my smart friend just identified in the core of the issue, and so the guy that I hoo- hooked him up with texts me. He's like, "Man, this guy was, just fucking nailed it. He understood it." And I sent him a text back. I go, "He's my favorite type of person. Very hard to get to, hard outer shell, but once you break through, he'll do anything for you."
- DLDoug Leone
Yeah.
- DSDavid Senra
I think that's very similar to what you were saying. It's like, don't be confused by the round head and the booming voice and the fuck everything-
- DLDoug Leone
Yeah, the bald, round head
- DSDavid Senra
... yeah, the bald, round head. Um, the, the other thing Um, it, it's very interesting to me, uh, I've had a couple, like I don't hang out with venture capitalists, like I just hang out with founders. Like, I have no friends that are not entrepreneurs. Like I-
- DLDoug Leone
Yeah
- DSDavid Senra
... I work on founder's podcast during the day, hang out with founders at night. And-
- DLDoug Leone
Well, I'm so proud that I'm the founder of, of a company. I actually-
- DSDavid Senra
[laughs]
- DLDoug Leone
I actually love that.
- DSDavid Senra
Well, no, the reason I bring that up is because it, uh, there's been, it happened on a few occasions, but this happened recently where there's another venture capital firm that's like, "Hey, we have an issue with like our story and everything. Can you just like meet with my partner and like talk to us about this? We'll have lunch." I was like, "I fucking like you. We'll just have lunch. I don't even give a shit about what you're, really give a shit about, about your business, but let's talk." And then I would ask this guy who's been in venture his whole life, which is interesting to me, uh, you know, like who he thinks, like if you're a young founder right now, like who's the first person you're gonna call? You can pick anybody, and they're gonna be your first investor. And he starts naming off all these firms. So I go, "How could you work in this business and not understand it?" I go, "You're hanging out with too many venture capitalists and not enough founders." It's nobody on that list. It's exactly what you're talking about. It's these young kids are identifying a vastly different group of people than they, than the pre-
- DLDoug Leone
Yeah
- DSDavid Senra
... previous generation has done. So that is, is, is, is an interesting
- DLDoug Leone
I mean, in the ideal world, a 25-year-old says, "Let me get some experience. Let me go call Doug Leone." It's not, it, it doesn't work that way.
- DSDavid Senra
So then what's the solution to that?
- DLDoug Leone
I have to find out.
- DSDavid Senra
Yeah, what's the solution to that?
- DLDoug Leone
I think you have to hustle, just like everything else in life. It's what you're doing in your business. You know, like you hustle like crazy. All the books you read, all the people you meet, all, all that you're doing for your business.
- DSDavid Senra
Yeah, but like here's the, I mean, I just talked to Devesh about this, uh, too, where it's like I, I have this fucking uncontrollable obsession. Like I can't tell you why. Since I was a little kid, all I wanna do is fucking sit in a room and read books. That's never stopped, right? And then once I found podcasting, I just can't stop fucking thinking about it. I get sad. This whole crew that you see here, all, all these fucking cameras and stuff, th- they didn't tell me that somebody was, on the team was getting married. They went to Italy. They took two weeks off. I was like sad as fuck. I went to Italy for like, what, three days, Rob? How long was I gone? They're like... I'm like, "I'm going back. I got shit to do. Like, I wanna get to work." So it doesn't even feel like a hustle to me. It's just like this compulsion.
- DLDoug Leone
I, I think it's the best kind.
- DSDavid Senra
Yeah. Yeah.
- DLDoug Leone
I mean, it can feel like a hustle because then you're exhausted. Then you need, you know, Friday, Saturday, and Sunday off. No, it's your life.
- DSDavid Senra
Yeah, but one thing that did, did change, you know Brad Jacobs?
- DLDoug Leone
Mm-hmm.
- 1:05:59 – 1:10:24
Architect Your Board Like Your Product
- DLDoug Leone
or her benefit.
- DSDavid Senra
We should actually talk about that because you have a ton of experience with that. So many of my founder friends just have completely fucked up their boards, don't know how to run one-
- DLDoug Leone
Yeah
- DSDavid Senra
... don't like the one they have.
- DLDoug Leone
Yeah.
- DSDavid Senra
Like, what advice do you have around this?
- DLDoug Leone
Choose to architect your board the same way you architect your product. You know, a lot of people choose boards like they choose like to find a, a girl or a guy kind of in a bar. You know, she talked to me, let's go out Friday night.
- DSDavid Senra
[laughs]
- DLDoug Leone
You know, he talked to me, let's go out. It's no more complicated than that, and they don't put any thought into it. You know, a board is like um, a mate, a lifetime mate, aren't they? [laughs] They're your mate for the next five, seven years. I bet you most marriages last probably five, seven years these days. Uh, be extremely careful, and it's not about the first term sheet. It's about who do you need, who has the skill set and the temperament you need to complement what you have? Uh, and complement means a bit of discomfort because if both of you have the same background, there's probably a little more comfort, and you wanna find a little bit of discomfort. You wanna find someone with a very different set of experiences, which means that initially you're gonna talk like this. Initially, you're not gonna understand what he or she's, is telling you. Uh, but that's where the learning comes, and so I find people, they don't do it at all. "I got a term sheet." How many times have I heard, "I got a term sheet. I got a lead term sheet"? So what? Who cares? Of course, you got a lead term sheet. Everybody gets a lead term sheet.
- DSDavid Senra
So talk about some of the mistakes you've seen in board construction then. Is it just that? It's like-
- DLDoug Leone
So, so-
- DSDavid Senra
... this person volunteered and I took them?
- DLDoug Leone
So there i- there is domain skills, there's level of knowledge, and then there's personal traits. So early on when you're building a business, I don't think it helps you at all to find a board member who's an engineer. You're an engineer yourself. That's not the skill you need. That's what I mean by domain skill. And experience, uh, you have no experience and put a board member with no experience, and I don't think it helps you at all. It doesn't mean you have to find someone who's 68 years old, but find someone who's been through this cycle. And then there's personal needs Out of 10 venture folks, and I've said this, and I've taken shit for it, maybe 30% are incompetent. They don't know what they're doing. Another 40%, uh, I call them no-ops. No damage, no anything. They nod. You know, they, they nod with the group. Uh, and maybe 30% or fewer, maybe 20% know what they're doing, and that's one overlay. The other overlay is, you know, managing their firms, their, their stature or, or their status in the firm. "I need a win. I need an exit. What's my partners gonna say?" So you don't really have the board member there. You have the shadow... You, you have the interpreter, what he thinks, he or she thinks the firm wants. If you take a combination of lack of experience, duplicative type domain, covers your ass with the partnership and incompetence-
- DSDavid Senra
[laughs]
- DLDoug Leone
... that's the worst of all kind. I see that all the time. I see that all the time. Just completely, let me put it in your terms, completely fucking clueless. Completely fucking clueless to a damage... Not a no-op stage, a damaging stage.
- DSDavid Senra
The best boards that you've been on, are the board meetings contentious?
- DLDoug Leone
No, but issues are put on the table. Real conversations are put on the table.
- DSDavid Senra
But you're willing to argue forcefully?
- DLDoug Leone
You, you, you're willing to have the real conversation. The argument implies, implies a tonality, a combative stage. I don't view it as that. I view it a supportive stage to come up with the answer the founder needs, so we're, we're willing to get the real job done. I won't concede the, the, the word argument.
- DSDavid Senra
Interesting.
- DLDoug Leone
It, it's the same thing at, at partners meeting. We don't argue, but we have the real conversation. At times, at Sequoia, we have to take a five or 10-minute break. Five or 10-minute break. We walk around. We go back in a room. The temperature has cooled down by 10 degrees. We have the conversation. We come up to an answer. We're all in. We all agree. No more conversations when we go out. It's done. And the same thing about board meetings, and it's okay to disagree. It's okay to disagree.
- 1:10:24 – 1:13:43
Truth, Disagreement & the Art of Difficult Feedback
- DSDavid Senra
I would say that, uh, one of the most interesting things I learned this year from doing this show, uh, Ed Catmull was nice enough to let me come to his house and record a conversation with him, and he was like, "Hey, you know, a lot of people don't know that in the 10 years that Pixar was a public company before, you know, the acquisition from Disney, that Steve Jobs fired two of our board members, and they might know that he fired them. They don't know why he fired them." And so I asked him one day, like, "Why he fired them?" He's like, "Because they didn't disagree with me." And he's like, "They always agree with me. They serve no purpose."
- DLDoug Leone
Yeah.
- DSDavid Senra
And he was saying that, you know, a lot of people say they wanna get to the truth, and, and I think Ed on the episode said most people that say that are actually full of shit.
- DLDoug Leone
They are full of shit.
- DSDavid Senra
Steve, Steve actually wanted to get to the truth.
- DLDoug Leone
No, they are full of shit.
- DSDavid Senra
Yeah.
- DLDoug Leone
Here, here in California, more than the East Coast, people don't like the direct conversation. I had to learn that first coming. You know, I, I, I, I went from Italy to New York City, which was halfway to America, and then to California-
- DSDavid Senra
[laughs]
- DLDoug Leone
... where, where, where everybody told me, "Yes, give me the, give me the feedback, the honest feed..." Nobody wants to hear the honest feedback. Who? Who are you kidding?
- DSDavid Senra
Yeah.
- DLDoug Leone
I mean, you know, are you... Everybody's full of shit.
- DSDavid Senra
But the best founders have to.
- DLDoug Leone
They have to, and you have to figure out a way to do it in a w- in a fashion that it's understood, received, accepted, and acted upon. It's almost an art. It's not just giving it. It's giving in the right way, at the right time, with the right tone, with the right words, uh, with examples and so on. Look, it, it, it's like telling a founder your VP of sales sucks. You're not getting anywhere. But about if you said, "There's a couple of VP of sales I'd like you to meet, just so you can gauge yourself," he'll meet, or she'll meet two people that know what they're doing. Suddenly they'll say, "Holy shit."
- DSDavid Senra
Okay, this is like Inception.
- DLDoug Leone
Well, I don't know about Inception.
- DSDavid Senra
Okay, so I just r- um, I, I'm a big fan of Christopher Nolan.
- DLDoug Leone
Yeah.
- DSDavid Senra
I just reread his biography-
- DLDoug Leone
Yeah
- DSDavid Senra
... for the second time, and one of my favorite lines in Inception is, like, what is the most resilient parasite? You know, uh, is it, you know, bacteria? Is it a worm? It's like, it's an idea, and the whole thing is like, but it can't be an idea that somebody else gave you. You can't say, "Doug, you should believe this." You have to incept them with the idea-
- DLDoug Leone
Yeah
- DSDavid Senra
... so they believe that they came up with it.
- DLDoug Leone
Yeah, it's like your kids. What are you gonna tell your kids? All the things they shouldn't do. Good luck.
- DSDavid Senra
Yeah.
- DLDoug Leone
Forget it.
- DSDavid Senra
Are you familiar with the shit sandwich?
- DLDoug Leone
The shit sandwich.
- DSDavid Senra
On how to give feedback? I don't know if this is, this is the art you were talking about, but shit sandwich is like compliment, what you a- the negative feedback-
- DLDoug Leone
Yeah
- 1:13:43 – 1:18:18
Humanity, Introversion & the Value of Relationships
- DLDoug Leone
minutes long.
- DSDavid Senra
Yeah. You know what you think is interesting, that you don't, like, hang around with other venture capitalists?
- DLDoug Leone
Why?
- DSDavid Senra
I don't know. Founders hanging with other founders.
- DLDoug Leone
I think it comes to the fact that I grew up from dirt, and the inside of me, there's still mostly dirt. I really think that's it. You know, I really think that's it. I'm not an intellectual. I don't find- To me, technology is terrific. It's interesting, it changes every day, but it's not my lifeblood. I think humanity and, and one-on-one relationships are, are probably the most interesting thing for me.
- DSDavid Senra
Are you introverted?
- DLDoug Leone
I'm right on the line. Uh, according to Myers-Briggs, I'm right in the middle. I do not like meeting new people in general. In fact, every time I, I have to meet somebody new, the thought, and it's kinda nasty, that goes through my mind is, "Shit, another asshole I gotta meet."
- DSDavid Senra
[laughs]
- DLDoug Leone
All right? Where I remember talking, where, where the extroverts, I'm told, find energy-
- DSDavid Senra
Oh, they get energy. It's so gross
- DLDoug Leone
... they love it. They love to meet new people. Oh my God, another person I have to meet.
- DSDavid Senra
Yeah.
- DLDoug Leone
And yes, I do it. I can turn the, the charm gene on. I can fake it. I can be at a cocktail party and know to walk around and network with everybody, but I get home and I'm exhausted from that.
- DSDavid Senra
Yeah, you're definitely introverted.
- DLDoug Leone
Yeah.
- DSDavid Senra
I am, too. And I think there, there's a very similar, like, you know, I, I think about the opportunity cost. Again, I always quote Munger, where he's like, you know, "The way intelligent people make decisions today, it's all opportunity costs." And for me, it's like I'm gonna spend two hours with somebody new. That's very expensive to, compared to maybe the five true friends that-
- DLDoug Leone
Yeah
- DSDavid Senra
... you have in your life, the cop in Italy or your friends-
- DLDoug Leone
Yeah
- DSDavid Senra
... back in New York, whatever. It's like, I'd rather just deepen that relationship that I have than go out and meet somebody new.
- DLDoug Leone
But I realize, though, that putting myself out there and meeting new people makes me happier later. In other words, if I let my instincts of going to the same three restaurants or hanging with the same people, if I do that all the time, I'm less happy than if I put myself out there. I dare take these minor emotional risks. I find myself happier because I feel more well-rounded at the end of the day. I feel like I've done something.
- DSDavid Senra
Could you even be in the business that you're in w- not meeting new people?
- DLDoug Leone
No, absolutely. Although it's not a social setting, right? It's, it's presenta- it's work. Uh, it's presentation, present, help, assist. Uh, you know, I, I, I, I think the closest friend I have as a founder is Vélez. All the other founders are pure business. I don't socialize with spouses or anything with any of my, with any of the founders.
- DSDavid Senra
But you do with Vélez.
- DLDoug Leone
Yes, because he was an associate. I hired him. I was-
- DSDavid Senra
Yeah, yeah
- DLDoug Leone
... we had kind of a paternal, you know, son relationship.
- DSDavid Senra
Yeah, yeah. Is there any, um, venture capitalist that just made, like, maybe one or five or 10 investments, and then that was it?
- DLDoug Leone
Crosspoint Ventures had a hell of a run for seven years, and they went away. It's, it's, it's a name you may not remember. Look them up. Now, they still exist, but it's all the partners left after, after just making a whole bunch of investments. There was a venture firm called TVI, you may not remember it, Te- Technology Venture Investor.
- DSDavid Senra
Is that the one that bought, is that the one that bought Microsoft right before the IPO?
- 1:18:18 – 1:22:16
What Doug Learned From Michael Moritz
- DSDavid Senra
if you're introverted. Uh, I wanna ask you something that I think Moritz is definitely introspective. You don't strike me as introspective at all.
- DLDoug Leone
Moritz taught me how to listen. Moritz taught me how to listen to the exact word that's said, the timing of that word. You really can understand about a human being by just listening to the adjective and so on. I took the Moritz basic training that I got, and I used it, and I expanded on it. I love listening to people speak and-
- DSDavid Senra
Wait, what do you, what do you mean you can, you can learn by listening to the adjectives they use?
- DLDoug Leone
Oh-
- DSDavid Senra
What does that mean?
- DLDoug Leone
... the way they use when they describe a situation. Human- humans can let, can, can't help but letting it out by, by showing themselves. And how they use the word I versus we, uh, when describing, "I can sell you this," I'm thinking to myself as this pre- he's presenting and say, "Fuck that. You can't sell me shit."
- DSDavid Senra
[laughs]
- DLDoug Leone
You know? That, that's what I think during the presentation-
- DSDavid Senra
Mm-hmm
- DLDoug Leone
... you know, as I have that stupid grin on my face. Uh, but just listen to, to the specific words that are said, when they say it. We often choose a founder without a line of code, without anything, based on a presentation, a clarity vision, but we also wanna get the interpersonal traits, and you can learn a lot if you just pay super careful attention. I mean, Moritz used to do it to me all the time. He used to re-quote my words back, back to me, uh, or the way I said them. You know, it would drive me nuts. It drove me nuts enough that, that I learned.
- DSDavid Senra
What was happening there? Why would that drive you nuts?
- DLDoug Leone
We used to write memos at, at Sequoia, and the memo were from and to, and Mike alwa- Mike pointed out to me that the from Put myself first and the to the recipient second. And Moritz was the first that wrote the memos to and from to put the other person first and yourself second. I understood that putting the from first and the to second as being a somewhat egocentric move where it comes from you. You had to put yourself first in that memo. And that's one of the minor little things that I learned from Mike Moritz, and there were hundreds of things like that.
- DSDavid Senra
What else did you learn from him?
- DLDoug Leone
So Mike was brilliant. Let me tell you, he was a very painful co-head. And, uh, you know, he knows that. I, I, I was painful for him. He was painful for me. Like I said, it's, it's, uh, it's a badge of honor for me anyway that we made it work. Uh, but Mike had the ability to dream broadly in ways that I've never seen before. He could answer the question better than anybody I've ever known, what if everything goes right? Not, "Oh, we're hedges and that." No, what if everything goes right? What can this business looks like? And if you look at the companies he's been an investor in, it's a spectacular list. You know, look, he had his faults, and we're not gonna talk about all his faults here. But on that dimension, he was by far the best in the world.
- DSDavid Senra
All right, Doug, I appreciate you doing this. We're gonna run this back 'cause a year from now you're still going to be doing this. I have faith that you're not gonna quit nine months from now.
- DLDoug Leone
Yeah.
- DSDavid Senra
And if when you're still around nine months and one day from now, let's run this back. I appreciate you taking the time.
- DLDoug Leone
Thank you.
- DSDavid Senra
All right.
- DLDoug Leone
Bye-bye.
- DSDavid Senra
I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review, and make sure you listen to my other podcast, Founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through Founders. [upbeat music]
Episode duration: 1:22:17
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Transcript of episode NR9NI51D7ek
