Invest Like the Best with Patrick O'Shaughnessy
00:46:44 · Patrick O'Shaughnessy, Michael Moritz
[00:46:44] S0: Do you think the ecosystem is healthy today? [00:46:46] S2: I think it is if you're a founder. [00:46:50] S0: Pretty good. I like the quote that you've [00:46:52] S2: said often that your favorite investment was Sequoia. What was going through your head as you took it over? Not to screw it up. The Sequoia that was around in 1995 was very different from the one that was around when I sort of stepped down in twenty twelve, twenty thirteen. Number one was not to screw it up. Number two was to ensure that everybody who worked there felt that we were only as good as our next investment and that we couldn't rest on the laurels of the past. And then number three, take advantage of the new market opportunities that began to occur, whether it was eventually going overseas as Silicon Valley's share of startup activity, though still obviously the best place to be, became smaller. So first of all, we went to Israel, then we went to, most notably to China, Started another business called Sequoia Heritage, which is a very different business. [00:47:54] S0: I know Kevin Welly has some incredible talent.
00:47:54 · Patrick O'Shaughnessy, Michael Moritz
[00:47:54] S0: I know Kevin Welly has some incredible talent. [00:47:56] S2: Yes. And Keith and our small and mighty heroic investment team there. I don't want to sound like Joan of Arc here. I felt doing right by our investors was really important. Most of our investors were not for profits. I think making sure that we perform well for them. I didn't want to be in that business where if we didn't perform well, we still got paid very handsomely. I think that's part of the problem with a lot of the aspects of the financial service providers of all sorts of different forms. And it has been for a long time, which is the firm that provided us well, but their clients may not may have done as well just investing in an index fund. [00:48:44] S0: I did this with Doug, he told me the story of that one fund that you fought so hard to get back to par over ten years or something like this. Right, [00:48:52] S2: we could have said to investors, well, look, you've had a lot of good times with us and you just got to accept the fact that you've got a fund here that isn't gonna make any money. I certainly wasn't wive like that, it was a matter of pride. [00:49:08] S0: What did you learn about working with someone like Doug that was so different than you, but you had such a fruitful partnership? Tolerance and more.
00:49:08 · Patrick O'Shaughnessy, Michael Moritz
[00:49:08] S0: What did you learn about working with someone like Doug that was so different than you, but you had such a fruitful partnership? Tolerance and more. [00:49:17] S2: I think you have to adjust. When you're trying to work in a team, you have to try to understand what the other people around you need, what's important to them, and feed that need with people who are wired, as you said, very, very differently. I think that's the most important thing I've learned about building a team or leading a team. I think today I'd be much better at it than I was twenty five years ago, thirty years ago. And I learned a lot of that actually from the way that I did this book maybe ten, eleven years ago with a famous soccer manager. [00:49:52] S0: Was just gonna ask about [00:49:53] S2: Alex Ferguson. Think one of his great skills was the ability to understand what motivated each of his individual players. [00:50:04] S0: How did you see him do that? I know he was famous for preferring players with tough upbringings.
00:50:04 · Patrick O'Shaughnessy, Michael Moritz
[00:50:04] S0: How did you see him do that? I know he was famous for preferring players with tough upbringings. [00:50:08] S2: He's got this reputation, which is an unfair reputation of being very hard and harsh. That was certainly an aspect of the way that he managed. But he was a man who didn't want to be loved, he didn't want to be feared, he wanted to be respected by the individuals who played for him. So he was there for them, which people don't understand in their bleak dark times when they needed support, when they were feeling lower than a snake's belly, he was there for them. None of that really gets written about. There was an incident I remember, I forget which year it was, but David Beckham had been playing for England in a World Cup competition where he got sent off, and the British press was merciless about Beckham's perceived stupidity. And Alex went to meet him at the Apple because he knew he needed an arm around his shoulder. Those sorts of things, little things that happen out of sight. People aren't aware of them. There are no cameras around. [00:51:11] S0: Do you think you were so interested in him for almost like autobiographical reasons? That description He kinda sounds like
00:51:18 · Michael Moritz
[00:51:18] S2: was much more skillful at it than I was. The reason the book came together was this. People, for whatever reason, had been badgering me to write a book about Silicon Valley, and I was always very interested through the Sequoia lens of what it took to build two things, one of which was a business that endured for ourselves for Sequoia because there are all these tales of venture firms that had a period in the limelight and then blew up for whatever reason, the founders killed each other, all the partners killed each other and they all split up and it all became ugly. And then also the byproduct of it being what it took to have an enduring standalone company that a firm like Sequoia could invest in. And I didn't wanna do that through a Silicon Valley lens. And there are enough books about Silicon Valley. So I was casting around for the company or for an organization that had flourished over the course of multiple decades. I'd been a bit of a fan of Manchester United Football Club since I was a kid. It was this manager who took them over, I think in 1986 and retired in 2013. Wendy took them over when they're in bad shape, and then established a record over multiple seasons, twenty six seasons of astonishing success that'll be almost impossible for anybody to duplicate. We had a PR guy who worked, or communications guy who worked for Sequoia, and I'd shown him at that point when I finished the book, and I showed him a draft of the book, and he said, Well, I can't tell because I ghosted the book, ghost wrote the book. And this fella sent to me, I can't tell what's you and what's Sir Alex, I said precisely.
00:53:02 · Patrick O'Shaughnessy, Michael Moritz
[00:53:02] S0: Do you believe in the great man theory of history? I'm asking this question because I'm very interested by institutions that endure and what you've learned about how the ones that have endured have pulled that off like Sequoia. And I'm also pulled to people, of course, like Elon, who you were an early backer and partnered to in x.com, how they shape history. And it seems like we might have a few world historic figures alive and operating today. What do you think is the balance of shaping history between these world historic people, great men and women, and enduring institutions? [00:53:37] S2: The short answer to the question is I'm a great believer in the great person theory. All these people that we've talked about, well, you just referred to Elon or we were talking about Li Iacocca or Steve Jobs, or you go into the political realm or the field of battle, it is about great leaders. Great leaders. And obviously there are some terrible authoritarian figures that have cast black shadows over tens of millions of people and over multiple decades in different countries around the world for hundreds of years. And so for good and bad, I think the individual has an enormous impact on what is around him or her capable of, on the good side of it, not the dark side of it, persuading others to achieve what's perceived as impossible. I'm a huge acolyte of that theory. [00:54:34] S0: Do you think Elon is the great exemplar of that today? [00:54:37] S2: Yes. He may well be the greatest industrialist in the history of America. [00:54:44] S0: What would you say about him?