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Fintech Leaders
Sequoia's George Robson: An Inside Look at Sequoia and What it Takes to Build Generational Companies
00:47:46
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- [00:00]
A
Particularly financial services companies, there are lots of laws of gravity that show up in the business. So many of those laws of gravity are being rewritten. In financial services you basically have like two variables. You get to control in what order you build stuff. And Nick had that strong intuition around starting as a travel card. And then the second variable is how quickly, which is basically cultural. And Nick was like driving that to the max. If you think about you're trying to be a CEO of a business, your job is not to see Elon Musk speak on us on stage and then emulate that culture and how you want to operate. And actually your job is to find the best team, put them on the field and build a culture that is authentically yours. If you think about our business, you hope to partner with one of these generational companies, but the reality is even meeting a generational company or a generational founder at any point in the journey is hard because of how rare that is. And the risk is of course that you do it and you don't realize you're uncalibrated. So how do you sort of get up the curve right as a new investor or a prospective investor along that? The answer is basically storytelling.
- [00:56]
B
Welcome to Fintech Leaders. I'm Miguel Armaza and over the last six years I' recorded nearly 400 conversations with the top leaders in fintech. I also co founded Gilgamesh ventures, a fintech VC where we've backed almost 50 companies around the world. In this show we extract how the best builders and investors in fintech think what they've learned and how you can apply some of these lessons to your own work. If you enjoyed this conversation, I invite you to leave a review or on Apple, Spotify or YouTube. I sat down with George Robson, investor and partner at Sequoia capital. Founded in 1972, Sequoia has built one of the best franchises in venture capital and they have backed some of the best tech companies in history including Nvidia, Apple, Nubank, Google and Stripe. George is one of 19 investment partners at Sequoia and was previously previously a product manager at Revolut. We discussed how Revolut built a multi product machine that treats every team like an individual startup. How Sequoia uses storytelling to train their team and investors on what a great founder looks like and why the next wave of fintech winners will probably be full stack companies that that internalize the technology rather than selling it to incumbents. George, welcome to Fintech Leaders. Welcome to the brand new studio.
- [02:34]
A
Yeah, thank you for having me.
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B
What a Place and welcome back to New York.
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A
Yes.
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B
I know you're a frequent visitor at this point.
- [02:40]
A
Yeah, frequent visitor. It's normally a little bit warmer than this time of year, but it's great to be here.
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B
Absolutely, absolutely. George, let's get started a little bit. With your background. You were an investment banker briefly.
- [02:54]
A
That's right.
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B
For just a few months. Then you went to Revolut as a product manager. Right. And you've been investing at scoia for over five years now.
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A
Yeah.
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B
Tell us a bit about kind of how you landed at Revolut because I understand it's, it's a fun story.
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A
Yeah.
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B
And whether building in a. Within a startup or specifically in Fintech was always part of the grand plan.
- [03:20]
A
Yeah, I think so. As you say, everybody finds their own route. Right. To different companies, I think for myself. So I'm obviously British. I grew up in and around London. I studied at a university called the London School of Economics. And when I was there I did a whole bunch of different projects. But the most important project that kind of brought me to Revolut was I set up this funny accelerator with some of my friends in my final year. And I was on a panel talking about this accelerator on my university campus in Austrian Union where actually one of the people sat next to me on our panel was a guy called Alan Chang who was like, I think first or second employee at Revolut. Revolut was still a pre seed company. You know, he'd effectively just joined out of university. And it was the first time I'd heard of the company. It was the first time I really thought about the reality of building in financial services because, you know, not many people wake up necessarily thinking they want to work in retail banking. Right. It's not most people's north stars like a young person trying to get out in the world. But I think what really stuck with me was firstly the initial product was around traveling. I love traveling. Seeing the world, reducing those frictions. But more than that, actually it was this notion of like I knew I wanted to work on a project where I had a lot of agency and I wanted to be part of this small exceptional team trying to take on some behemoth. But the reality is finding that is much harder. Right. And I remember seeing kind of Alan and then later on joining the company about a year later, as you say, after my brief 10 months dinner, whatever it was at Morgan Stanley, but kind of getting to know the business. And I remember this pretty important moment in time looking through the profiles, you know, some of the people on LinkedIn who are at this tiny company called Revolut, and people like Dan Westgarth, you know, well, Richie Stocker and people like this and be like, oh, this is interesting. I mean, going and meeting Nick, who's you know, the founder, CEO of the company. And Nick basically put it to me that coming here is like going to the gym. If it doesn't hurt, you're not doing it right. I remember thinking like, you know, who would say that in an interview and realizing that I'd kind of found my people right because of that level of sort of demented intensity. And that was what really took me to the company is this notion that actually in financial services you basically have two variables. You get to control in what order you build stuff. Because generally when you build something like a consumer neobank, the list of features are typically known for the lifetime of the company. You get to decide again in what order you build stuff. And Nick had that strong intuition around starting as a travel card, going from there. And then the second variable is how quickly, which is basically cultural. And Nick was driving that to the max. And if I think about things that will de risk taking on something as crazy as taking on a JP Morgan Chase or things like that, really getting those two variables right and most of the inputs and I saw that in this team, so that was very important to me.
- [05:40]
B
Is LSE where Mick Jagger spent a few years or is that LS?
- [05:44]
A
Yeah, that's a great fact. Yeah, LSE's had a pretty distinguished list of very different alumni, I would say.
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B
You know why he didn't graduate?
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A
I do not. Well, he found more fun entertainment to do.
- [05:56]
B
He could not get any satisfaction. Sorry, stupid joke. So, okay, so that's, that's Revolut. You mentioned that you can only control very few things at a financial services company. Right. And another way to look at it is financial services are finite technology and the way you deliver them can be infinite.
- [06:21]
A
Yeah.
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B
Let's zoom in on the building of Revolut. How is the company structured? I mean today it's completely on mainstream worldwide 70 plus billion dollar valuation. The expectations are that this is easily going to be a multi hundred billion dollar company if things continue in this trajectory. But take us behind the curtain. How are business units structure? What's special about it?
- [06:51]
A
Yeah, I'd say I'd maybe call out two pieces which I think are important. One is that so at Revolut, product is effectively a horizontal layer and all these different functions report into it. So I can't actually remember what my job title was when I joined. But effectively what I ended up doing was building the consumer subscription business. And I remember kind of that role in traditional company you'd effectively be like a product manager or a pm. But Nick had this dislike of that notion of being a pre em because effectively it was an excuse in his mind for many people saying I, I care about the product metrics or maybe I care about the operational metrics, but I don't care about the financial metrics. And we are a financial company, we're building a financial services. So you need to have a more holistic view. And if you think about like a PM who has P&L ownership, you're not a PM really, you're like a GM for a business unit, right? Do you have this full level of accountability? But the way to run that business, obviously if you're a GM so you have responsibility across both, is actually to staff a team with the full set of functions such that you can own all of those different characteristics. So what actually happens is as you build that team there, yes, you have full stack engineering and design. Like in my team we had like data analysts, a data scientist, we had a product marketing manager, we had business development and partnerships inside of our team. And if anybody, what that meant was the social contract between someone like myself or somebody else in the company. And Nick was saying you could agree a KPI every 6 months, but you had all of the resourcing you needed in your team to be self sufficient in going out and creating projects to achieve that KPI. And if you think about that problem statement, that is pretty similar to a seed stage company, right? As an entrepreneur, you raise some money for some Runway from your first investors. You go out and recruit ideally a cross functional team to achieve that. And if you run out of time, you don't always meaning you run out of Runway, you don't always get more time to be able to go and keep building. And Nick actually had a similar ethos of effectively hit your KPI with the resourcing you have, the Runway you have. If you hit your KPI, that sort of little part of the universe may expand. If it doesn't, that may be a problem. And it needs to be a problem. So you have a carrot and a stick in a meritocratic culture that is being built that way. And Nick was incredibly consistent and I would say incredibly fair in terms of how we ran the organizations. That was the first piece having product as a horizontal layer. But I think the second piece which is important is there aren't many fintechs really at let's say $10 billion plus scale that are truly multi line revenue. If you think about companies like even a business like a stripe, which is remarkable in what it's been able to achieve, or even companies like a coinbase or equivalence of this, they have multiple products. But if you think about the way the P and L is structured, often one product is still dominant in terms of what is driving the company. If you think about businesses that are truly multi line revenue, you've got to look at blocks. Is it a good case study? Actually, even though Robinhood is just an investing, it's been very quick to move on to new innovations that come to market, diversify the revenue. Revolut in many ways is an extreme example of that because as a consumer product, which is very well mixed, but it has revolut for business, it now has a payments product and acquiring product. All these different pieces and being multi product and multi line revenue actually is a culture. And my observation would be, you know, many companies that leave that too late and they always believe that they're going to be able to introduce it later in time, they kind of calcify around this idea that they have a cash cow and it's very hard to add things relative to that cash cow. I think Nick was a very early believer in that and therefore very aggressive in making sure that was not going to happen.
- [10:00]
B
So last week I believe it was, I hosted Mike Calvi. This guy's a legend. He built Baron Vostok in Russia. Actually early stage investor in Revolut. But he's been the most involved with Tinkoff and Caspian and a few others. And he talked about this concept that you can have companies focus on completely different KPIs but has arrived to the same result. So in the case of Caspian, just focus on net promoter score.
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A
Yeah.
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B
On the case of Tinkoff is actually profitability, right. But they arrive to 80% net margins plus what was that? If I were to ask Nick, which I hope I do in the future, if I were to ask him what is one KPI that you care about at the macro top level, what do you think would he say?
- [10:57]
A
So Nick was, I'd say very focused on, on two. One was like daily downloads or daily activated downloads. And it was quite fascinating because I was very new to building consumer product and it wasn't necessarily obvious to me that when you release a new product, yes, you would see a bump right around the press release, but that you would actually get to a new normal. Right. And There would actually be some level of persistence. Right. Post those bumps and that idea of like layering on these different products and said differently, just believing in compounding. Right. Was incredibly powerful and something that I really underappreciated. And the second thing, he was always very focused on ARPU and profitability, as you say, because again, that belief that we're a financial services company. And I think that what was interesting at the time is people would often Contrarian Compass Revolut vs Monzo as being a company that was very NPS focused, in Monzo's case, very community driven, but was at the time struggling to build a business. Obviously fix that now. But it was interesting to always see those comparisons. And I think it was funny because it was also somewhat reflected, I think, in some of the media narrative around the companies and in many ways how, at least I perceived anecdotally the customers. Because many people would come to Revolut because they were saving money. Right. It was a wonderful example of like not charging for fx. That meant that if you were going on holiday next week and we were in the pub back in London, no brainer, it would be rational for you to download this app. But I could make that case to you and advocate for it, by the way.
- [12:13]
B
That's how I found out about Revolut 2015 at a London publisher.
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A
That's a great, amazing story for another time, but I think that we saw lots of little mini cycles like that where the value we were saving for our customers was measurable and it could be defined.
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B
That makes sense. And we'll talk about your investing portfolio and your criteria and all that. But when you are looking at a new company, advising a company from within as a board member or not, do you find yourself biasing towards a Revolut type of structure?
- [12:48]
A
Yeah, that's a very important question. And in some ways it gets to a sort of deeper question of like, what is a George company? Which is actually something that internally at Sequoia, we always push each other to have a definition of right. And over time that definition evolves. What I realized when I actually joined Sequoia, unconsciously the bias was the Revolut mold. It was people that moved with the intensity. And in some ways the aggressiveness of the Revolut culture sort of put product velocity at the core, I would say were like very able to respond quickly to the world changing. Right. They were very agile in that way. And the reality is I sort of tried to impose that archetype, I think, on lots of different types of founders. That I invested in. I think there were sort of two mistakes there for me. One is, obviously there are many paths to nirvana, right? Not everybody needs to be a Nick. There's a Brian Chesky, there's a Patrick Collinson, there's all these different archetypes of people that build their domain expertise and frankly also build the culture right inside of the company in different ways. And then two is it meant I probably was negatively biased against people who didn't have that. But actually, again, you know, if you think about you're trying to be a CEO of a business, your job is not to, you know, see Elon Musk, you know, speak on us on stage, or, you know, read a book about someone like that and then emulate that culture and how you want to operate. Actually, your job is to find the best team, put them on the field and build a culture that is authentically yours. And I think I misunderstood that for a period of time.
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B
Makes sense. Now, I understand you were fundraising for a company, but instead you found a job.
- [14:15]
A
Yeah, yeah. It was one of these honestly, jiu jitsu moves in my life. And then effectively I didn't know anyone on Sequoia. Sequoia had been investing in Europe for 10, 11 years before we opened the office. But always long range from San Francisco companies like Klarna and Unity. And yeah, it was at a point where we were in a position where we could close our, effectively our seed round for the company, our pre seed round for the company. And somebody said, hey, do you want to come and speak to Sequoia? And of course I was like, that's interesting. I'd heard of Sequoia. I didn't know anyone there. Why not? I got to meet, you know, a couple of my now partners and actually it was our partner Ruloff Bota, who is invested in many things, you know, Fintech, financial services, et cetera, but also a lot in healthcare and the company was in healthcare. Who basically spent the time speaking with me, sort of explaining why the market dynamics were not quite right, educating me a little bit on why that business might not be the best business to build. And that's something that actually really resonated with me at the time because for myself, I always thought about my big life decisions as there's like George and then there's counterfactual George. Right? The George who chose the opposite route. And in many ways what I'm trying to do as I move through my life is sort of beat counterfactual George, right. As he's navigating the world. And this is one of those crucible moments where he really shone a light on the mechanics of that business and sort of explain that, like, Sequoia can be a great place to learn about some of those mechanics because we only care about the very best companies in the world and helping those entrepreneurs to succeed. And, yeah, that was the final decision. And then here I am five and a half years later, having truly been educated multiple times over, and I'm sure I will be multiple times more in the future. But it kind of started in many ways from that conversation.
- [15:46]
B
What have you learned at Sequoia or where have you change your mind in the last five years since, you know, pre joining to now five plus years?
- [15:57]
A
So I think that as a team and as an organization, I think Sequoia does like many things. Right. I think one of the things which is probably appreciated more internally because it's more visible, is I think Sequoia is very good at making things explicit. Right. I think we recognize that actually, you know, humans are not very good with ambiguity. You know, it creates some level of chaos or misunderstanding. And it shows up in lots of different bits of our culture in that we're a very specific example around how we communicate about entrepreneurs, around decision makings for investments, around our internal culture. And when we think about making investments, we have effectively specs that we evaluate companies against. And those specs are not arbitrary things or yardsticks of market size is greater than X. They're more like properties of good markets or emerging properties of interesting businesses. I think there's a level of clarity that comes from that. I think the more resonant thing, honestly though, is companies have so many lives. You are an entrepreneur who's going out with little resources, no product, no customers, potentially no team when you go out and form the company. And in every case that is a heroic journey. The reality is you're doing it because you see a version of the world where the future is here, but it's not evenly distributed. And you have those levels of convictions that come from somewhere. And a lot of the best entrepreneurs ride that conviction, which is generally a contrarian belief, which is ultimately right. And they ride it to the market timing right in some ways. And I think there was a level of persistence and frankly, like, heroic effort that I had underappreciated. I've seen it through Nick, but I hadn't seen it in so many different contexts. Right. And now the education you get working at someone like Sequoia or of course, other funds, you see it Every day.
- [17:31]
B
So how does investing look like? Take us, maybe give us an example, maybe give us some of our friends. I reached out ahead of this interview and they suggested the one example could be the Aspira. Yeah, Investment. How did that come about? How does the AC work? Can you make the decision by yourself?
- [17:49]
A
Yeah, yeah. So I think so. I'll start by saying a few things. One thing that was important for me, understanding what it would mean to come to Sequoia, was understanding, you know, the types of investments we want to make and you know, obviously what that looks like. The reality is, so per partner, per year, we probably make two or three investments.
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B
Right.
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A
Which is a relatively small end, as you know, like in the context of our business. And effectively what that means is the push to ask is like, is this one of the 10 to 15 decisions you want to make that will define your career? Right. Which is obviously lower conviction than being a founder, but still pretty high conviction in terms of the end of variables. You have to make it go. Right. And there's something that feels aligned with that because effectively we're a fund that probably invests more at seed and precede than any other stage still. But we have all these multi stage funds. We invest out of one pool of capital from Israel to San Francisco. So I'd say the waterfront is broad. The end of companies is very large. That sort of call to arms means you should only work on things that you think have generational potential. So it sets a very clear standard in terms of what we care about. I think the reality of that is that's obviously the minimum yardstick in terms of where that conviction comes from, if we take the Espora example. So Espora was introduced us by one of our friends, David Depiciotto, who kindly connected me. And then we got also introduced by Hummingbird, who'd invested in their seed round. And again, when the company was doing something wildly different when Parth was coming out of Stanford, I think what really stood out from meeting Parth as an entrepreneur was kind of a few pieces. One is his story. I think every entrepreneur assumes that they have to have grown up on a desert island and swum to safety to have an interesting story that's not true. You should really tell us about your whole arc for you as a human being. In Parth's case, he grew up in Abu Dhabi. He was torn between playing cricket for Abu Dhabi, being a. Trying to be a child actor and going to Stanford to study physics. Made it to Stanford to study physics. And I think for Somebody who can do that from that part of the world from pretty modest means is already impressive enough. But for somebody who arrives on campus with that kind of story and decides to drop out after basically six months to try and found a company, that's interesting because then you have someone who has achieved the prospect of greatness but decided there is something else that they want to go out and seek. That level of agency is very, very important and I think you see that in Parth because he lives with that level of intensity. He's always trying to work out where that price can come from. What was interesting to him is he made it through forming the company with his previous co founder and you may have heard the story, but basically six to 12 months after founding the business, his co founder decided the company had no prospects and he flew back from India, which is where they were running the business, back to the U.S. sent an email to all of their investors before he got on the plane to explain that they were going to return capital and shut the company down. And Parth was like, what is happening? Where has he gone? I didn't know this was going to take place. And that is still the company and still the entity that is now a spora and is now just raised this great series B round. So I think seeing that level of grit and perseverance and just comfort with ambiguity combined with in their case, a very interesting technical unlock of using stablecoins for remittance and attacking these different diasporas around the world, I think that was what kind of came together. But it starts with the entrepreneur and it starts with that very high slope, very high intensity approach to the world.
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B
How did you make that decision to actually invest? How did you take it through? I see. I hear that you flew to Dubai on a whim.
- [21:01]
A
Yeah, we flew to Dubai to spend time. I mean spending time in person is critical with entrepreneurs. Again when you're making that end of decisions. In their case, even though the company was initially formed in India, their sort of center of gravity was around Dubai and they do these things called sort of hacker houses in Espora where they take a bunch of the team away and they work in these different spaces. So we went to this pretty small apartment in like one of the suburbs around Dubai. The plan was to do this deep dive session effectively in a kitchen on bar stools, surrounded by a bunch of the team who were working with headphones on to actually like part. I'm not sure this is going to work. So we went and took him somewhere else, you know, to make it happen, but you see the, like, rawness of the intensity from that story. So that was definitely an input. And then obviously, outside of that, references are critical. I would always, you know, encourage entrepreneurs. Investors are always going to reference you, always prime your references to know they're coming. But I think Parth did a great job on sort of activating people from different parts of his life to tell his personal story. And then finally it was the market. I think we see you put it well that in financial services, you can often describe pretty clearly the jobs being done today and the amount of money throwing inside the system and what the status quo is. You need to sort of project what that world can look like using technology, which requires a real art. But even more than that, you're trying to explain what the why now or the dislocation is in that market opportunity for them. A combination of, you know, regulatory changes, the possibility for stablecoins to make moving money more seamless, and then the customer experience and the value that delivers was just undeniable for us.
- [22:28]
B
How does information sharing work at Sequoia? Because, I mean, you. You and I have talked about this before. It's an apprenticeship business.
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A
Yeah.
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B
It's critical for the partnership to find a way to pass down information across the board. I know that's a critical piece of Sequoia.
- [22:48]
A
Yeah, I think it's a great question. I think one of the pieces which is appreciated, if you think about our business, you hope to partner with one of these generational companies, but the reality is even meeting a generational company or a generational founder at any point in the journey is hard because of how rare that is. And the risk is, of course, that you do it. And you don't realize you're uncalibrated because by definition, you don't get the chance to meet these generational people every day. So how do you sort of get up the curve, Right. As a new investor or a prospective investor along that? The answer is basically storytelling. Right. Is the only way you can lean on it. So I think one thing that the firm and like my partners spend a lot of time and energy on is telling. It's mainly like two flavors of some of these stories of some of these companies. And it sort of mainly focuses on the different arcs of those business. One is on the business itself, because obviously some companies have these great starts and then there's this crucible moment which is good or bad. If it's bad, how did they rebound? What. What were the really important decisions around, you know, entering a new market? Launching a second product, changing decisions. It might be a new hire that brought onto the management team. How do those crucible decisions actually shape the company? So there is the business, but there's also a different flavor of it just on the entrepreneur. Because obviously if you're going to go out and found a company that you hope will grow exponentially, implicitly, you need to believe that you as an entrepreneur will grow at least as quickly. Right. To be able to be the best person running that business at every level of scale. And there is an immense amount of pain and again, intensity that goes into that. So actually explaining the stories, these founders, some of which have, you know, they were exceptional to the Series A. Between the Series A and the Series B, they were drowning, right? It was so difficult. They felt overwhelmed. But then how did we fix that? How did the people around them, you know, rise up and support them? So how can we learn from that experience that even though that person is struggling today, it's sort of about the setup, it's not actually about, you know, their intrinsic abilities in entrepreneur to continue succeeding. So these stories are told routinely, actually, and we, you know, record them and we share them with our future partners who join in other characteristics like that. And I think that really serves the foundation because you get this plus the shared language that I described leads you to this level of sort of like consensus understanding on many of these different great chapters.
- [24:48]
B
So every partner is leading. Yeah, every so often, one of these
- [24:53]
A
stories, effectively Friday story time. It's like something that anchors the culture maybe.
- [24:58]
B
When was the last time you led one of those?
- [25:00]
A
Yeah, I told the Revolut story, of course, which was important. We made an investment in a company in Europe a couple of years ago called Trade Republic, which I think is like a wonderful story for a variety of reasons, but not least because when Christian, Thomas and Marco went out and formed the business when they were effectively coming out of university, some people start with a very micro insight. They started with a macro insight, which is quite non consensus. They started with this idea that there is a pension gap in Europe that needs to be solved by private savings and private enterprise, which is very again contrarian. But they had this insight that they would look at the P and L of all the incumbents, all the revenue and cost line items, and work out what licenses they needed to acquire and what infrastructure they needed to build to internalize that. And again, that is a very contrarian way of thinking about building a company. So like A plus B sort of equals Trade Republic many years later. So I think Sharing these little inserts into how different people think about the world is very valuable.
- [25:55]
B
How about the tools, internal tools? Because I think it's critical for information sharing to have a really good software stack. It's just like a company for a fund. It's the same thing. Have you found the internal tools that Sequoia builds to be particularly good for that? Your CRM?
- [26:17]
A
Yeah, yeah. So we took a decision, or the team took a decision a number of years ago to basically make the transition from what we called kind of law firm to tech company. So it's this notion of like really trying to be much more tech enabled in how we operate. Yeah, I think what was most contrarian about that decision was actually most of that is built in house. So CRM, built in house, all of these things built in house. I think the crucial thing to call out there is investing is such a personal business that even, you know, every firm obviously does it differently, but like, every partner at every firm also does it differently. So the thing that is most important in the workflow is being able to adjust to those different preferences. And those preferences show up in how you work. It also shows up in the kind of companies that you would like these tools to be able to surface. So that's been a pretty key area of focus that has made our lives meaningfully more efficient. I think the other ways that actually it's really helped us, we build a bunch of tools that we externalize to our founders. You think about questions like, we are scaling from being a seed to a series A company. We think we want to increase headcount. What percentage of the engineering team for companies that look or total team was in engineering for companies that look like us. And like, if you think about stripe at the series B, what was the like senior seniority distribution among that engineering team? Those are questions where the data exists. Right. So wouldn't it be great for you to be able to access benchmarks around that? We built that. We have an app that has, it's called Ampersand that has all of our founders on it, which is somewhere between like Reddit and Slack. You know, it has threads of conversation. I want to hire a cto. Should I hire a head of engineering or a cto? And it has all these different, like DM channels between these different groups of people. So I think it's not just about us. It's about being able to share sort of tribal wisdom effectively among the wider community.
- [27:52]
B
Let's talk a bit about the picking. Right. Like you, I'm sure, get bombarded with deal flow and I'm sure you get a borrowed with really, really good deal flow. How do you go through the sifting and the picking an absolute great team and sometimes you're picking between two or three amazing teams, right. What makes one stand out?
- [28:19]
A
I'll start by saying I think one of the core competencies of particularly early stage teams is storytelling. Storytelling shows up in obviously how you sell to your first investors, first hires of the company and your first customers. And we look at storytelling as a competency, but we also look at it as a way of being able to demonstrate your value or your differentiation in the world. We have this notion internally that you need to be not just better, but different. Right. It's very important for you to carve out your own space. So it starts from like the first interaction, right. Which can often be, you know, it's great of course, if you can get a warm introduction to someone like a Sequoia, but it's not important. We have like our emails are on our website. I've made investments from cold emails. It's just like it is a thing that actually happens. But when people send you a note, it's sort of trying to get a sense of do they get it right? Do they understand how competitive this world is? Is there a way of expressing very succinctly this is why we exist, you know, who are we? Why do we have a right to win? What is interesting and or differentiated about our solution? What is the why now around our technology? How is that going to convert to? Or how is it converting to early traction if not, you know, revenue? Because typically it's not revenue at that point. It's more evidence of customer love and some like dislocation of unfair customer love. So it's seeing do they really get it and if they really get it, honestly, what we combine that with is, you know, our appraisal of the business, which is some combination of assessing the outlier characteristics of that team, specifically accessing depending on the insights and the materials are in our interactions with them. Do they have a unique and compelling insight? Unique implying different, implying gross margin. Compelling implying better, implying revenue growth. I know they operating in a market that has positive market dynamics, which again for us is not about total TAM today. It's very much about is this market on the right side of history? Are there market trends that will support a small number of very large companies with a pretty clear why now for that opportunity exists?
- [30:06]
B
Is it important for you to get along in a friendly way with a founder? What kind of relationship do you want to have with the founders?
- [30:15]
A
I think it varies a lot actually, depending on the entrepreneur. Because I mean, it's important that there's levels of respect. And I think it's very important that founders are coachable in the same way that we are coachable. Right. Because we're all on some journey. Right. Of building our expertise. I think that those are the two most critical variables. I think being friends is definitely a nice to have. It's obviously great to have a great working environment, but I think having that environment where you can be truthful and be direct and sort of accept conflict in a constructive way, I think are definitely the most critical pieces.
- [30:51]
B
I've asked this question a couple times and I get different answers. Have you found some processes that work better for you when it comes to board management?
- [31:01]
A
Yeah.
- [31:02]
B
As a board member, what have you found to be most helpful and useful?
- [31:05]
A
We have an internal cultural value of Sequoia which is basically praise in public, critique in private. And I think that that is important. I think it extends to the board. Right. Board is a pretty pivotal moment and it's a bit of an odd one because obviously you speak to your entrepreneurs, you speak to founders you work with more than four times a year. Right. So in some ways the board if run perfectly, should focus on, yes, the like governance aspects of running the company and some of those, you know, internal important decisions, functional things around setting a budget, but more importantly some of the more big strategic investments, big strategic bets we want to take. So it should ideally have that tension of like, you know, yes, backward looking governance but certainly forward looking, positive path to market dominance. That's the perfect board meeting. Reality of that is, you know, those open conversations should be pretty fluid and you should be able to disagree. The most important piece though is that everybody has the same set of information when they go into those conversations. And I think a lot of the stuff that actually is most impactful, particularly for first time founders who are not used to teeing up those pretty big decisions to people that have different amounts of information, is making sure they are level setting everybody in the right way so that when you get to the board meeting you, everyone who has to help contribute to that decision isn't receiving new information to help them do it. They are discussing the merits of the information they already have. I think that's the biggest life hack.
- [32:23]
B
Do you have a process for onboarding a new investment after you've made the investment? Is there something within Sequoia that is shared as a best practice or is
- [32:35]
A
it a so we like and it varies a little bit by investor. But I think one structure that I think is useful is having a 90 day plan. And I think that that is a two way 90 day plan. Right. Because some of the 90 day stuff for them might be like for the entrepreneur, might be get clarity on xyz, work out how we're going to price the product. We know what the product is, we think we know who the customer is, we want to work out how to price it. It might be something as an output metric of like we want to have two design customers, blah blah, blah. But it sort of reorientates the engine because obviously when you're building a company, there's many competing priorities in many ways. The question again is how do you stack rank those priorities? So it helps on the entrepreneur side. On our side, Sequoia, we have this great partnership. We have wonderful relationships with entrepreneurs. We have obviously relationships with companies and industry in many ways. The problem is how do you prioritize that to making sure you're getting things right? So actually a lot of it is focusing things like our talent team, we have a customer partnerships team who make introductions to enterprises and corporates. How should you think about orientating great operating teams like that or you know, the fundraising announcement, whatever it may be. So it's a two way conversation. And then for some companies, they like that so much that we then keep refreshing the 90 day plan and there's kind of like pretty good precedent for businesses multiple years later still using it because it holds us and the entrepreneurs accountable.
- [33:51]
B
I mean a lot of US Presidents are judged on their first hundred days.
- [33:56]
A
Totally.
- [33:57]
B
Right?
- [33:57]
A
Yeah.
- [33:57]
B
So it kind of makes sense to take it, to bring it down.
- [34:00]
A
Yeah.
- [34:01]
B
I don't know if you can talk a little bit about this, but I know that beyond investing you also like incubating a little bit, maybe share about that angle because I think that's less advertised.
- [34:13]
A
Obviously entrepreneurs own getting the company to product market fit. And in many ways for us as investors, there are definitely parts of the market or certain opportunities we get made aware of where we can build a pretty opinionated view on the problem that is being exposed in that particular industry. We may not, and we often will not have the answers on the solution. Right. So our job in many ways is to like shine a light on that. Right. To go out and maybe find or help activate entrepreneurs or prospective entrepreneurs who may not be aware of that problem. And I call that out because I think in today's world that's actually become a little bit More common. Because if you think about AI, AI has sort of increased the end of venture backable markets faster than the domain expertise of founders. Right? Because domain expertise takes a long time for you to develop. So what it means is you have many people coming out of the great companies who I'd say are like very deep, functional experts. They know lots about the technology, how to build technology, apply to interesting problems. They are potentially very new to the domain, Right. Or maybe they're repeat entrepreneurs who are leaving their first business, having run that company for a decade and now their threshold for the kind of thing they want to work on is even higher. Right. So they have this like level of ambition that is important. So say a lot of what we're trying to do is fix that problem, exposure problem. We're trying to make sure that we orientate towards people, towards these interesting opportunities, at least as we see it. What we then will often do with those entrepreneurs is we will work with them for like three to six months. I made an investment last year where we wrote a memo. The entrepreneurs had a sort of different memo on a different problem. And we spent probably six months arguing about each other's, the merits of each other's memos and sort of converging on something that looked and sounded like a business that was in the same zip code as both ideas. We would not call that an incubation, but we would call that like definitely an inception level of investment where we're like very, very involved in getting that company off the ground. And crucially, we're very involved in helping those founders get to the right level of conviction that this is the thing they want to do. Which means we can put them in front of customers where if you message the guy on girl on LinkedIn, they may not respond to you because you're an unknown. Maybe we can help you to put you in the rooms so you can ask the tough questions, so you can make your own decision.
- [36:14]
B
You mentioned AI. Maybe it's a good segue to start talking about kind of the future of fintech. And there's many different takes on this since I think most of your coverage or a lot of your coverage is in fintech, maybe share, where are you spending your time later? Where's your head at when it comes to the next five, ten years of our industry? Because essentially that's what we're investing in, right? It's what's going to be big in a decade.
- [36:42]
A
It comes back a little bit to the earlier point of like, what is a George company, right? In some Ways I think the answer that I've only really sort of found an articulation of maybe in the last year or so. I tend to like businesses that are going after very big markets that I'd say are sort of naturally quite low talent density. And often there are entrepreneurs that come from outside of that industry who by nature of that have sort of unnatural expectations for the intensity that they're going to go and attack that market. The reality being that that can show up in, you know, product velocity, can show up in aggressiveness, the level of like technology edge they're able to build. And I was kind of thinking about it because in some ways that's why I joined Revolut, right. I knew it was a large tam. I knew you could build a very large business. But I also knew that Nick was like a total outsider. He is not the traditional retail banker. And in many ways the edge of Revolut is cultural alpha. Right? But think about the investments that we've sort of announced over the last kind of weeks and months. A business like anterior setting into health insurance plans, doing prior auth with coverage we announced last year, that's building an insurance business, taking on companies like Marshall Nevis, right? Building in the wealth management space. The guys just moved to New York, et cetera, et cetera. They're all different businesses. They all sell some amount of workflow automation in some industry, et cetera, et cetera. But I think really the unifying force is the team is high talent density, going after markets that are pretty low talent density and they can drive alpha through cultural alpha technology, Alpha to make it improve. So to come back to your question, what does that mean? I think there are plenty of markets where selling infrastructure into those incumbents, recognizing that like for you to get paid a lot of money by a large bank or an insurance company, they obviously need to like, the technology needs to be great and they need to be good enough at using your technology such that you can drive some transformation in their business. And typically that's the piece that falls down. It might fall down for cultural reasons, you know, risk reasons, other characteristics. When that happens, you can form one of two views. You can either decide it's worth going and just pushing and waiting and hoping it will change, or sometimes you should actually take that technology and you should vertically integrate, right? You should actually think about, well, popping up a level and instead of trying to like use like cell compliance automation into a bank, hoping their compliance team will be smaller and they'll have higher margins, you should just build a bank with less employees. Right. Or you should actually think about it as like insurance is bigger than like banking, payments, credit combined. But the reality is it's pretty low talent density. But why not build an insurer? Why not build a full stack insurer, right. And actually take all of these technologies, internalize it and go and be more efficient. So I think what we're starting to see is a pretty big shift towards people taking what is definitely a higher pain threshold route, but being able to do it in less time, often with less capital because of the efficiency gains, with less complexity, you know, less hair around it. And when you start to think about the world that way, combined with that talent, you know, cultural alpha point, I think it opens up loads of markets. So we're spending lots of time in insurance. As I mentioned, I'm spending a lot of time in commodities. I think commodities is a wonderful market, you know, 100 billion EBIT market, again that runs on emails and PDF. So I think this is really like opened up the tapestry, the things that are interesting to us.
- [39:36]
B
Yeah, put it differently. Rather than going after the tech spend as your tam, go after the entire
- [39:42]
A
industry, go after it and take that core competency and instead of trying to convince other people to adopt it, internalize it.
- [39:49]
B
Yeah, yeah, completely agree with this. Now you can only do that if you have sufficiently great technology that can be truly deflationary, which is the hope that tech has always promised, not always delivered, arguably, but it always promised to be deflationary. Does that unlock happen thanks to the AI tooling of the last couple of years?
- [40:21]
A
I think it, I think it does, or I think it should, rather, because the way I think about companies, and I think particularly financial services companies, is there are lots of laws of gravity, right, that show up in the business. And some of those laws of gravity are like financial because you may be carrying a balance sheet. Some of them are regulatory, frankly, of like you need certain functions, you need to start those functions. But a lot of it is about lots of different levels of productivity inside of those companies that sort of ladder up to an output of like, how big is your customer support team or how big is your compliance team, or how obviously how quickly are you able to like release products that generate revenue versus the size of your engineering base, etc. Etc. So many of those laws of gravity are being rewritten. The reality is doing that, you know, from a clean room, start with no, you know, technical debt, cultural debt, other pieces is meaningfully easier. But you need to make sure you're balancing this tension of like Speed and innovation.
- [41:14]
B
Right.
- [41:14]
A
Which always exists in our regulated industries. But if you can navigate that well, the prizes are ginormous because now you now have to earlier point, you now have like logos of companies that trade on stock markets that are worth hundreds of billions of dollars that are being meaningfully impacted by pretty existential questions of like what will AI do to my business? And I think that now is the first time where that you should be very excited about taking on those logos because it's now realistic, you can actually go out and achieve it.
- [41:41]
B
So you're from London. A lot has been said about entrepreneurship and fintech in Europe. What is the state of tech building in Europe today?
- [41:51]
A
I'd say energy levels are very high. I think what has been important if you look at the last five years versus probably the previous 10 years, is just the distribution of unicorns that are being built. Someone will have a better stat than me. But it's like 100 cities plus that have unicorns that have been founded across Europe now. And I think that that is pretty unique if you think about it. It's a very different characteristic to what for example, you see in the us, right, or bits of Latin America, as you know. I think that that's to be celebrated because it means there's like a distribution of talent. I think there's a complexity that comes from that if you don't always have information sharing at like the super low latency level as you might find in a San Francisco, because that fragmentation shows up somewhere. I think what is interesting about European tech is many of those different markets are at different points of maturity and have different competencies. You see different types of businesses. Like if you think about London, as you say, wonderful history obviously in heritage, in fintech, we are waiting to see how that might convert into crypto and it very much depends a little bit on the state of the regulation. But similarly, Germany had historically a great legacy in consumer. But actually what is really driving German tech today is really around AI applied to manufacturing, industrial problems, real world industries. You have all these different shapes of these different markets. And it means as an investor, and particularly investor that like looks across the full geography. You need to find a way to appreciate sort of the full beauty of all of that. And crucially, you also need to find a way to understand what exceptional talent looks like across those many different industries. And there's many different archetypes. So it just makes our job more complicated. But it's great for the entrepreneurs.
- [43:19]
B
That said, you are investing in companies all over the world.
- [43:23]
A
Yeah.
- [43:24]
B
Just Europe.
- [43:25]
A
Yeah, yeah, yeah. We. Well, and that's sort of a little bit core to our ethos of we have one team across US and Europe with our wonderful partner Dean in Israel. The reality is, you know, we want to match people on sort of like sector stage. Founder fit, not on geography. So our US based partners invest in Europe and vice versa. I have a number probably more companies actually here in New York than any other city. Funny. Funny enough just kind of how it's shaken out. So it's that fluid in terms of how we think about it. Our job is to make the best call and support these people.
- [43:53]
B
That makes sense.
- [43:54]
A
Yeah.
- [43:55]
B
Go into some rapid fire before we run out of time, please. So, favorite book or book that you recommend often?
- [44:04]
A
I think if you haven't read Sapiens, it's worth reading Sapiens because it's just very humbling. I think it puts a lot of our life decisions in context. I think another slightly different recommendation outside of this podcast that I love, very different one. Thank you. Which is book related, is like business breakdowns. I think in our world you can get sucked into just learning about companies that were built in 24 months that are rocking. Many of the best companies in the world were built over generations and decades. And again, I think it's important to be humbled. Right. As an entrepreneur and you learn about these industries that are. You've seen but you never thought about.
- [44:37]
B
What gets you excited in the first five minutes of a conversation with a founder?
- [44:42]
A
I think energy presence. I think if you go on a first date with someone and you're not thinking about eye contact and leaning in when they seem interested in something and double clicking, it's a red flag. The same is true when you're coming to pitch. So that level of engagement is very important.
- [44:56]
B
Why would surprise people to know about the inner workings of Sequoia?
- [45:01]
A
I think it's very small. There are only 19 of us. Right. Investing, which I think is we do more at seed and pre seed than any other stage. And I think that there's this intense focus on where is only as good as our next investment. We want to leave Sequoia in a better place than we found it.
- [45:16]
B
Is there a pass that haunts you?
- [45:18]
A
A pass that haunts me. Eleven labs.
- [45:21]
B
Oh God.
- [45:22]
A
I mean Matty have done an incredible job with that company. I think I underestimated and misunderstood how quickly the texture of usage for that technology would change. Yeah, yeah.
- [45:35]
B
Not for investing, but for being a user. I have an email from them when the company was a couple Months old.
- [45:41]
A
Yes.
- [45:42]
B
And I was like, you know, I don't have time, you know.
- [45:45]
A
Yeah, yeah, yeah, totally, yeah, yeah.
- [45:48]
B
Metric that you track most frequently amongst your portfolio companies.
- [45:55]
A
A lot of people will put forward like DAU numbers or sometimes like dau, a percentage of MAU. What is more interesting is like per five days in the working week, how many active days are they using it? And you get a sense of, you know, you can't be selling a critical system of record tool and people not using it every day.
- [46:13]
B
Who's a leader that you deeply admire and why?
- [46:17]
A
This is a Sequoia answer, but it was, but it was honestly very important for me seeing Daglioni in action. He's someone who in many ways is the American dream. Right. He came to Italy as like an early teen. Sorry. He came to America as an early teenager from Italy, didn't speak great English and sort of has this like burning intensity. Even today as a 68 year old, incredibly successful investor that is exactly the same. He shows up as someone who still remembers tough times in his lives, keeps pushing to make new investments. You know, he's full of life and is just this person who is both kind and fierce. Right. And I think some of the best people in the world are like that. There is that ferocity and competitiveness combined with a heart of gold.
- [46:57]
B
He's also one of the mentors and idols of David Bellas of Nubank. So that just tells you a lot. If someone like David looks up to.
- [47:05]
A
He's. He's like a son. Yeah. Yes, yes. Right, yes.
- [47:08]
B
Well, George, thank you. This was amazing. I'm so glad we got it done in person at this new studio.
- [47:14]
A
Yes.
- [47:15]
B
And while you have a residency in New York, a one month residency.
- [47:20]
A
Yeah, yeah. I appreciate you for having me. Thank you.
- [47:22]
B
Thanks for tuning in and I hope you enjoyed this great episode with George from Sequoia. If you want more interviews, make sure to subscribe, follow and leave a review on Apple, YouTube or Spotify. It helps and truly means a lot. And if you have any suggestions or thoughts about the show, just drop me a line on LinkedIn. See you next time.