#97 Sequoia's Strength In Numbers (Insights from The Power Law Book)

Hi Everyone! 👋 Welcome to the new members of @TheFundCFO crew! We recently launched a paid tier and released our VC Fund Playbook + Models @ Streamlined.Fund! Re-linking some top 2023 posts: #67 Top VC CFO Posts & References & #65: WTF is Going On in VC (+ New Fund Model Data).

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VC Deep Dive Recaps & Links

Dear readers, thanks for all the great feedback on our recent VC deep dives! We’ve gone deep on some notable VCs & unpacked some insights around building generational firms (#95 Footwork + 20VC, #93 VC DPI & Power Laws - What They Mean Today, #91 VC Deep Dive: Fresh Takes From Top VCs, #89 Brad Gurley (Benchmark) + David Sacks (Craft), & #87 Building Generational Firms).

There’s a lot of great content from notable VCs, LPs, and CFOs/finance pros on the internet. Here, we’re focused on pulling out the insights out that really matter, as well as finding the most current content that overlays historical lessons with current market dynamics, which are changing faster than ever.

Recently, we’ve been going deep on VC history by reading The Power Law: Venture Capital and the Making of the New Future by Sebastian Mallaby. Mallaby is the New York Times bestselling author of More Money Than God. The book is described as a frank and intimate story of Silicon Valley’s dominant venture-capital firms—and how their strategies and fates have shaped the path of innovation and the global economy.

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Sequoia's Strength In Numbers (Ch.13 in The Power Law)

The book highlights notable moments in the history of venture capital, culminating in an analysis of one of the most successful venture capital firms, Sequoia Capital, in one of the final chapters that spans more than 10% of the book.

We’ve gone deep on Sequoia before, both in this blog and via podcasts such as this one from 20VC: Sequoia’s Doug Leone on What Has Been Instrumental To Scaling Sequoia Over Generations, How Sequoia Think About International Expansion and What They Learned From China and India & Why When You Lose Pre-Seed You Become Private Equity.

Below we share our Top 20 Takeaways on Sequoia Capital from The Power Law.

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Top 20 Takeaways for LPs & VC GPs, CFOs, and Finance Pros

1. VC boom times. VC boomed in the decade after the financial crisis (2009-2019), led by Sequoia. Michael Moritz remained bonded to Doug Leone, who provided the engineering savvy and ability to read people that complemented Moritz’s grand strategy. They avoided older celebrity executives in exchange for younger, hungrier talent. In 2021, Sequoia occupied the top two and three of the top ten spots on the Forbes Midas list.

2. Sequoia culture: “I would show up at Sequoia at 8:30am for an appointment and see top partners in conference rooms, meeting with startups. I would swing by for coffee at 4pm and see the same partners still there, still meeting with startups.” Jason Calacanis

3. External investment hits flow from an internal quest for excellence. “Challenges include recruitment, team building, setting of standards, questions of inspiration and motivation, avoiding complacency, the arrival of new competitors, and the continual need to refresh ourselves and purge under-performers.”

4. Roelof Botha background: hired from PayPal (CFO), mentored, and led Sequoia’s Series A investment in YouTube, which was sold to Google in 2006 for a 45x return. Passed on Twitter, missed Facebook (the dark days). He is now the Managing Partner of Sequoia Capital.

5. Proactive approach: Jim Goetz trained at Accel and pushed the top-down, anticipatory approach at Sequoia to avoid being reactive. They mapped out tech trends to anticipate which startups would find success.