A quick start guide to building an enduring company - In conversation with Doug Leone
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- Опубликовано: 6 авг 2024
- Doug Leone has led Sequoia Capital for over 25 years, overseeing the firm’s international expansion. Throughout his time at Sequoia, Doug formed partnerships with companies like Nubank, Medallia, ServiceNow and Wiz. He’s seen thousands of pitches and worked with hundreds of founders as they grow and scale their startups. On this episode of Moonshot, Doug chats with Sequoia India Managing Director Rajan Anandan about some of the insights he’s gained over the past two decades working with startups, common pitfalls founders should look out for, and what it takes to build a truly enduring company. The conversation took place during an AMA at Surge - our rapid scale-up program for early-stage startups.
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Doug is a true legend in this space. I could listen to him all day long. Every word is extremely powerful for thos looking to scale a business.
Doug could be one of my favorite finance people in the world! Great show, thank you from Sweden!
These are great! Thank you for sharing.
Fantastic discussion! Always looking forward to new interviews and legendary insights from Doug. Many thanks for sharing!
This was brilliant.
So good.
How can a founder or a startup approach you ? Pls. Guide.
3:36 Product market-fit (PMF) is black magic
4:20 When there's no revenue, it's always easiest to fire the VP of sales. 9 times out of 10 it's not the VP of sales. Something's wrong in that chain.
7:50 In a world of rapid change and novelty, we need people that believe they can change the world. Spiky, non-linear, sometimes injured in life people - pissed off and have something to prove. Competition with an older brother, a girl telling you something when you were 12 that really hurt you. Spiky founders who have the courage and the vision to do something. Tend to be loners.
9:30 Your true skill as a founder will not only be to build a product and achieve product market-fit, but to bring as many people along for the ride as possible, because you need BOTH of those things to win.
10:05 Do the right thing when no one's looking. It starts at the top. If you do one little thing wrong, it gets magnified through the organization. You're going to be judged by the way you look at people.
11:04 The greatest risk for a firm like Sequoia is the success they've had. *Always trying new things, always trying to put themselves out of business. How would they kill Sequoia? That's the topic. And let's go do it. That's the mindset it takes for you as you build your business.*
12:30 Performance starts with you. It starts with clarity - and clarity where you want to head, and focus. Hire terrific people who can break some glass and get things done. People who aren't bound by organizational norms and who just have a need to do things. NO COMPROMISES on engineering, you want to start with AA+. If you start with B+ when you're young, you don't have a lot. You've got to be ultra focused and SUPER ENTHUSIASTIC about what you're building. You have to ooze EXCITEMENT and believe it in your heart, because that's how you convince people to bring along. Expect a lot, pay them fairly, and if they don't perform excuse them immediately and move on.
14:05 You have to shift and become and execution machine and run as fast as you can. The shift from leader, to manager / executioner and executive. From idea person to execution machine.
16:00 Your job as a CEO is to remove as many roadblocks as possible, to facilitate great people being able to flow and to produce.
16:39 Architecting the company like you'd architect the product. Dilution, how much you’re willing to give up for caliber of investor, figuring out who your first employees are and in which roles are most important.
18:18 Enduring companies live and die by product market-fit (PMF). If 100 companies fail, 99.5 of will be because of no product market-fit. You threw a party and nobody shows up. Failing fast / no product market-fit is is better than okay, decent product market-fit. Because now you're iterating and spending money.
19:05 The companies that get it right have a crystal clear vision and they just build a beautiful product - EVEN in the early days. A product that solves a singular need, not a Swiss Army knife. People buy a product for ONE reason.
19:50 B2B businesses = Bottom-up platform businesses are some of the best products. 1,000 customers @ $50,000/ea > 5 customers @ $10 Mn/ea. You want lots of customers, lots of virality, lots of people talking about it, simple minded product scales over time & turns into a platform.
21:00 The companies that have made it have had super aggressive founders. They play ALL OUT. If you've got product market-fit, what is the reason for your plan for the next 12 mo's? Why can't you 2X that, and why don't you try to do 2X? Great, super aggressive founders shift into that execution mode and are great executors.
22:40 The great companies have product market-fit, usually bottom-up, not top-down, and they all have a viral component - they all spent little in marketing and sales.
23:15 Early VP's of sales get the title 'National sales manager' (he's called a regional manager at another company, this is his shot)
24:15 Vision -> Product Marketing -> Demand Gen -> Revenue
24:55 The GROSS MARGIN line is the tell-all line in the P/L. In some ways, you can fuss any line in the P/L, but you can't fuss gross margin. You want to grow revenue, you can spend a ton of money in sales and marketing - what have you paid for that growth. Or you can show a lot of profitability by stalling growth. *Gross margin is the line that says how unique your product is, and how much does somebody want it* (differentiation). It doesn't lie, it's the reality of your business. Great businesses have wonderful gross margins. (Amazon is one of the few exceptions, low % and make it up on margin. Software is cheap, $0 COGS)
27:10 Hiring mistakes in the early stages of a company = hiring friends, not hiring world-class people in engineering, hiring suits, hiring for experience > smarts. Make sure to hire someone who can break apart a problem and reason based on first principles. Make sure he doesn't come to you with the answers before he understands the questions. Go with the BRAINS and lesser experience. Give lesser experience anyway > somebody who has a playbook hardwired.
28:20 Failing fast is great. Most founders have never managed people yet. You must have HIGH CONVICTION and a bit of SALES SKILLS as you convince another human being to bet their career and to join you.
30:05 Failing fast is painful to the ego and painful to the soul, but it's not as painful as failing slowly. Recoup the time and go do something else!! After 2-3 years, the market has spoken and you've got
30:40 *You are the CHIEF CULTURE OFFICER as a CEO.* Since Covid, Sequoia USA has daily 30min check-ins because they're not in the office. You have to figure out how decentralized you want to be. Engineers tend to be able to work remotely, sales people like to be in groups as they're more social. The farther apart you are [geographically] the less able your company is able to handle a bump. If you're far apart, make sure you get together a couple times a year, so you have that connection. There's no easy trick to [maintaining culture], you HAVE TO WORK AT IT ALL THE TIME - by *your action, your behavior, reminding people, leading by example, being generous and kind. Servant leadership. Basically, you work for all of them - they don't work for you. It's your job. If you really want to win, you enable all of them. That's how you really win.*
32:15 Servant leadership = means maturity on the part of the leader to understand that his job is to FACILITATE the job of everybody that works for him, so they can go faster and execute. Freeing people from working hierarchically, give them the confidence to go across geo's and functional areas - that people have their heart in place, not swimming in their lane. Coaching people, helping people, saying when you're wrong, holding them to a standard, take to prisoners but be there to help. I'm here to HELP ALL OF YOU GUYS - THAT'S MY JOB.
33:15 The #1 reason for companies failing is lack of PMF
34:15 His favorite question to founders the moment he meets them is, "How did you get your insight for the business?" 9 out of 10 times, great founders have a personal relationship with the problem. Most times, you have firsthand knowledge, and that gives you insight on the solutions.
34:55 PMF = CUSTOMER'S PAIN, virality in the product, usage by customers. You know it when you see it.
35:40 When the customer starts trusting you to the point where they're willing to buy a product from a new company. The only way to do that is if you're unique in your product and you solve a real pain. If you don't solve a real pain why bother? If you aren't unique, then why will I risk my life, my career to look stupid in front of my boss? (B2B / enterprise purchasers)
36:20 The greatest checkpoint is a customer. Figure out what the real problem is. If it takes a customer awhile to get it, it means the positioning is off.
38:00 Early on, forget about strategy. It's a business school term. Throw it out the window. It's raw execution.
39:15 For Swiss-Army knife customers, what looks like revenue is really a cost center.
40:15 "Founder friendly" phrase is akin to someone calling you "buddy." Should cause your antennae to go way up.
40:44 Business is war. We're fighting for a finite pile of goods.
41:30 "If we were being shipped off to war, you would not give a darn if I was sweet or not. You'd care if I was trustworthy, if I have your back, and if I have any special skills to help you win."
You are a gentlemen & a sholar sir 👏
Those are lies. I was seeing someone and he became angry because I decided not to see him anymore. So, they (him and his organization) stole the picture from my email account and posted it to a fake website. They don't care enough to take it down.
The VC's preference for businesses with potential of 100,000 customers with $ 100 revenue per customer instead of businesses with 1,000 customers with $1 million revenue per customer, encourages businesses with easy to build and mass market products / solutions with low entry barriers as anyone with sufficient interest and deep pockets can replicate and improve the product at yet more affordable prices eventually drawing the market away from those who pioneered the model (product/ service) in the first place.
100's of Fintech companies now provide mobile payment services in several geographies among which customers can quickly switch but when you want enterprises ERP for your company, you want SAP or when you want to fly overseas you won't trust a garage company aircraft over Boeing or Airbus. Enterprise tech may be cost and time intensive and take long time to nurture but it is what pushes the human race forward.