YouSaid · the spoken record

Roelof Botha

lines on the record: 130
first: 2022-08-31
most recent: 2022-08-31
sittings or episodes: 1
sources: podcast

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“Tell me why you chose this job. How did you find this opportunity? What else were you thinking about? And what is it about this particular opportunity that attracted you? What did you go to the school? And why did you not go to that school? Those are the more interesting questions. They're also indisputable because it's what you actually did. You can't tell me that. What am I good at? Oh, I'm a perfectionist. Okay, great. A glib answer to the question. So for me, the crucible decisions, one of them was to join McKinsey when I qualified as an actuary. I took a 50% pay cut relative to what I would have been earning as an actuary to join McKinsey. And I had to pay back the bursary that I'd gotten from the insurance company. So it was a double whammy financially.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“And my partner Jim Gates actually is the one who came up with that. I'm not going to claim credit. He deserves credit for the phrase. And we applied to business context, by the way. So I'll answer your question, but I think it's really important for companies to think about crucible moments because often they don't even identify them. They don't realize that they face a crucible decision, whether it's geographic expansion, product expansion, a key shift that the business must make. And I'm not talking about pivots where what you try doesn't work. It's something really different. At MongoDB, the decision to become a cloud business was a crucible decision. At Square, the decision to build cash app as a personal individual product rather than an SMB product. That was a crucible decision. Very difficult to pull off within the company. But these decisions end up having a huge bearing on the ultimate outcome of a company. And so do they with careers. And so when I interview somebody, for example, I don't focus on tell me everything that happened while you were at this job.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“I love exercise. Absolutely love exercise. And I love snowboarding, by the way, which is something I didn't know. I had not touched snow until I was 24 when I first came to the US. And a friend of mine at Business School convinced me to go up to Tahoe for a weekend. I went for five days thinking I would figure it out in five days, but I was sore that I couldn't go on days two and four. I could only go every other day. It was in pain. But now I can get up to about 60 miles an hour on a snowboard, which is fun and dangerous.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“You sort of sustain the heart rate at 140, 145, and you're just spent at the end of that and drenched. No more energy to be angry. And then I work, you know, part of the beauty is honestly of what's happened with COVID, obviously terrible humanitarian disaster, but the side effect has been that there are all these trainers that are available on Zoom now. And so I'll pop up an iPad in the gym and train with a trainer who just changes the workout routine and a lot of functional training.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“If I'm watching a game, I'll alternate between a treadmill, a rowing machine, and an assault bike, one of those airbikes. And I'll spend 20 minutes on each and I'll just keep rotating. But...”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“I exercise at least four or five times a week, an hour or more each time, if I can on a weekend, especially if I'm watching a rugby match, I'll burn a thousand calories doing all sorts of different things, which is very helpful, by the way, because if your team loses, you're too exhausted to be angry at the end of the workout.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“That's fun. Maybe just to digress that for a second when I was a kid in primary school, I was starting to do well academically and playing chess and doing these sort of things. And I had a teacher who pulled me aside and really encouraged me to play rugby. He was worried that I was going down a path of doing things that were very academic and individualistic. And he encouraged me to play rugby. And I played all the way through high school and grew to love the sport, but part of it was a way to bond with people from every demographic in my school. I didn't go to an academic school. I went to a public school in South Africa and so we had people who were not academically gifted. But I play with them. They'd be my teammates and I had very little in common with them if we weren't playing rugby, but it enabled me to form relationships and bonds with people. And the sport itself is not about individual attribution. It's all about the team winning. No one cares who's called the try. Everybody cares that the team won. And so it had a lot to do with my approach to business and the way”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“I was playing for Stanford and I got a spear tackle right on this spot, and I was knocked on conscious 911 Ambulance showed up. I woke up two hours later and I was inside a CT scanner and I had no idea where I was. And after three, four months of persistent headaches. Realized that was the end of my non money making rugby playing days, but I'm certainly an enthusiast as a spectator.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“I really love rugby. I think it's one of those because I grew up in South Africa, it's the Africana sport of choice. At some level, I think when I moved to the United States, it was one of those anchors back to the country for me. It was something for me to talk about with my brothers and my dad and my grandfathers. Gave me an excuse to keep in touch with the country. And so it's an unnatural and unhealthy obsession, I realize, but I do love the sport. And I used to play until I got a pretty bad concussion. If you see this little gray patch over here.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Probably genetics, really fascinated by what's happening in the field of genetic engineering. I mean, we happen to have a company in this space that's helping with delivery of CRISPR, but I mean, the point is not about investing. It's about programmability of biology. And it's the reason I got interested in having us invest in a Terra a long time ago is I was starting to read about genetics, not having studied biology at college because I went in a different direction. But when the human genome project concluded, it really opened my eyes to what was possible with the information that we have in genetics. And so whether that's for diagnostic purposes, but now the ability to engineer, to treat disease, and there was just the drug approved today actually for treating blood-borne cancer disease that is reliant on genetic engineering. So this idea that we can treat human disease with precision genetic engineering absolutely blows my mind. So that's the field that I'd want to study if I had infinite time.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“But it was actually fun, by the way, my daughter ended up running experiments with them. So you get white ones and you get zebra ones. We call them zebra ones. They're white with little black stripes. And my daughter ended up running experiments where she segregated them to see how the genetics would line up. So she was doing her own little controlled experiment, which was probably a clue that she wanted to be in biology eventually.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“In my typical eyes bigger than my mouth fashion, we ended up with a complete mess because we had thousands of silk to the point that the little mulberry tree we had in our garden couldn't provide enough trees. So I was driving around the neighborhood in Los Altos and I would try to find mulberry trees that had overreached the boundaries or people, fences and I would go there with bags because steel leaves.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Last time I checked, I came from Asia anyway. Yeah, I read it. I don't know who, you know, I mean, there was a secret in China, right? They had all these walled of gardens because they didn't want Western traders to understand where silk actually came from. So it was hidden secret from the West for a long time. So I guess when I was a kid, we It's just one of the things you do is you learn about Silkworms and you buy a couple of eggs from somebody in primary school and there are enough mulberry trees around so you can feed them and you actually observe the full life cycle and eventually they become moths.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“So the end of high school, unlike the US, where you write standard SATs and ACTs, I'm now learning because I have kids that are eventually needing to go to college. So all these new things I have to learn about. But in South Africa, you're right. standardized exams at the end of high school. So if you're doing math, everybody writes the same math paper and it gets graded by people that are not affiliated with your school for neutrality. And so it was difficult because I was doing English as a first language, even though I was an Afrikaan speaker and you put languages. You've got, I knew I could do well in math and science and things like that, but it was a bit of a crapshoot to know if you'd get number one. And they only published the top 20. But I thought I could make the top 10. So that I thought was realistic. When you get to university, you know, you could choose your subjects a little more purposefully. And I knew that, you know, within that cadre of studying actual science, maybe I knew who the individuals were and I became maybe I became too cocky. Maybe it was...”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“So I chose to go to an English university, the University of Cape Town, purposefully. And just to give you a sense of the challenge, I got a, I remember in first year math, I got a problem wrong because I literally didn't know what the word iscelies meant because I'd done math in Afrikaans in high school and we had a completely different word to describe an isosceles triangle and I could solve the problem but I didn't know what the word meant and these are the sort of little things that you trip over when you try to switch your principal language.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Was that kind of an environment? There were always people around, always people visiting. But then my mom remarried and we moved to another town that was about a thousand miles away from Pretoria where I had been born. Hence, I needed to start to speak English because I moved to a city that was predominantly English, not having spoken it before. But it meant that I grew up in a different place. And I was a bit of an outsider. I was prejudged, especially in a community that viewed itself as more liberal, there was a sense in which my grandfather was viewed as being very conservative because he served the national government. And so I faced an enormous amount of prejudice where I always felt as though people judged me before taking the time to get to know me and that I had to earn their trust and sort of show who I was over and over. And that was daunting in some respect. But I definitely felt like a bit of an outsider when I moved to a new city. I went to an Afrikaans high school and then I realized that if I wanted to live abroad eventually, I needed to improve my”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“So, at a family level, I guess started off with a bump. My mom was 16 when I was born. My dad was 18. So I doubt I was planned. She finished high school with me. And needless to say, they were young and in love, but probably not compatible. So a couple of years later, they got divorced and my mom moved back with her parents, who by then were in their early 40s. So they were in some sense also an extra set of parents for me. And they had a huge influence in raising me. And my grandmother in particular was just an incredibly warm, gregarious person. Everybody knew who she was and maybe some of the loyalty that I exhibit in the way that I operate came from her, either genetically or through living with her. So it was a very warm family. It was a sort of family where if a friend or a distant relative showed up on a random Thursday night, you just assumed that you had enough food to cook for them and that you were going to have a dinner to get.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“I said talk I listened to from Esther Perell. I don't know if you know her Met her a couple of years ago and she talks about how you sometimes grow up in a society or in a family where this is the balance around relationships or transactions. You can imagine some cultures of very transactional and you're fearful and you're out on your own or you're in a society or in a family or a culture that is more nurturing and it's more about relationships. And I think I grew up with relationships. And so I think it's part of the way I grew up that I value those. So I think it's informed the way that I behave in business too.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Hours and hours over the last 12 months, helping me with a close family member who has a medical situation. And what was my heart to see somebody who is so busy running a company make that kind of a sacrifice? I didn't even ask. He just volunteered. So, you know, through loyalty and being involved with people for a long time that you can build those sort of relationships to me is deeply meaningful. The heart is who run Eventbrite and Kevin was the founder of a company called Zoom with an X, not with a Z, that we'd invested in as well. They've become close personal friends and I don't know, just it makes life so rich when you can have these sort of relationships with your founders. And that to me has been a big part of the job, honestly, that I've enjoyed.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Several. I think it's interesting. One of my partners actually pointed this out that when he first got into the business, he had this impression that you should always maintain the delineation between your professional and your personal life and that you shouldn't mix the two and that he found it interesting that I seemed to be doing something different because I was very close to the founders I work with and I'd help them with a pediatrician recommendation or have dinners with them on weekends or sometimes travel with them for family vacations and things like that and so maybe it's just my style. I've ended up really enjoying the long-term relationships I formed with founders. So we spoke about matra benefits earlier, the person I'd met in high school. He's become a very dear friend given his background in genetics.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Primary issuance of shares is when a company sells equity in the business as part of raising capital. So the company sells a million shares at $10 a share and they actually raise $10 million that goes into the coffers of the company to help the company pay for payroll and for helping to grow the business. A secondary transaction is where the money doesn't end up in the company's balance sheet, but instead it's just a secondary transaction between two individuals that are unrelated. an employee of the company, a founder of the company sells shares to somebody outside who's interested in owning shares in that company. And so the company doesn't raise money. It's just the founder sells $100,000 worth of shares to an investor might be an example.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“That has happened. And it's part of you. I mean, that's part of what we try to do, just given our experience, is try to shepherd the conversation and to let people know, look, we have this front row seat to hundreds of portfolio companies. I've got the unfair advantage that I've seen many, many more companies unfold than you have, the founder obviously personally seen many companies. And so I can't give you a perfect prediction, but I've got to tell you, you're in this outly category. You're in this one in 10 companies that we see that really just has outsized potential. And I think you're going to regret letting go. And sometimes it's not the case. We're valiant. We made an effort. We thought the company had a shot and sort of it's ended up where it's ended up. And I think this is a good acquisition offer. It'd be a good home for your team and your technology will end up flourishing with somebody else at the helm. And that's happened sometimes where the companies have very flourished being acquired because that company has the right distribution maybe for their technology. And that also is gratifying for the entrepreneur.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“I felt rich. I mean, it was transformative. I could actually travel and I could stay in a hotel and it was really amazing to have this experience. But the reason I mention this is in the summer of 2001, eBay made a run at us in August. And I think part of what stiffened our backbone was that we'd all taken a little bit of money off the table. We were such a young team and none of us worried about making rent next month. And it was a really important, I think, ingredient to us pursuing the IPO and getting a far better price. We got triple the price that they offered that summer 12 months later. So it was a wise decision to have done that. So I love being able to provide secondaries for people. And then there's a conversation with people about the meaning going back to Viktor Frankel, you know, just what is it that you want to do? Do you really think having the money and having the beach house is going to make you happy or buying this fancy car? Because then what we often do is we'll put them in touch with founders who've been in that prediction.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“And you alluded to it, secondaries are so important. PayPal, we did a small secondary in 2001. People talk about it as though it's a recent invention. It was around 20 years ago. And I remember going from having been a student still paying off student debt. My net worth was negative in 2000. We did a secondary, and I think I got $50,000.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“And eventually meeting often. And they may not have thought about it. And it's not to be critical. Often when you're a founder, you just found a problem that you're passionate to solve. But I'm still interested to understand where do you want to take it? Trying to build a small company, which is, and again, that's fine if you want to do that, but we're looking for outliers who want to build really, really big businesses. That's the business we're in. And I want to make sure that there's an alignment and that we're on the same page, that your ambition matches what we're looking for So that is the scale of ambition question”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“So, the question I asked founders is my partners tease me because they know that this is my question, and it's what's the scale of your ambition? Are you aiming to achieve? Are you interested in a company that gets to 100 million in revenue? And that's the end of your ambition, or do you want to get blow past 100 million in revenue on your way to a billion in revenue?”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“So, to your question about holding after the IPO window, it's not just that even if it's 50 50, whether it goes up or down, it's what's the asymmetry. The ones that keep compounding, look at the scale that has been achieved by a company like Google over time. That's the kind of compounding potential that exists. Not with all businesses clearly. There aren't too many trillion dollar companies out there, but when you get them right, they can make a big difference.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“And the key is that the ones that get to 10x sometimes run and they become 55x, they become 100x, they become 200x returns. And so when you have a YouTube, an Airbnb, a Unity, a snowflake, Pala Alto Networks, WhatsApp, Stripe, Square, you have these companies. They completely blow it out on the right-hand side. And so you get a power low curve. If you look at mathematically, it's just a very steep curve where a small number of investments really account for the majority of our returns. So in our history, between 5 and 15% of the investments we make account for over 80% of the returns.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Second, the recommendation. The reason he chose the title for the book is that our industry follows a power law curve. In our Sequoia funds, I can just cite some of the parameters roughly. In a typical venture fund that has, let's just say, 35 to 45 companies in a given vintage, in a given fund, we probably have a third of the companies that fail to recover capital, which may mean there's a complete write-off or it may mean we only realized 50 cents on every dollar we invested. But, you know, it's not a success. There is a whole group of companies that have modest success. Maybe you get your money back, maybe it's a 2x or a 3x. But what really drives the performance of the fund is the typically five to eight companies that end up being 10x companies, 10x returns.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“I was just wondering the overwhelming majority, I should say. That's the case. Obviously, you know. Pass has no guarantee of the future, you know, disclaimer, disclaimer. But the thing that's even more important, and I know if you've run across this book by Sebastian Mallaby called Power Law, of course, was recently published.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“And part of what we observed, we did other analysis, which is if we'd waited 12 months longer than we actually did to distribute, what additional return would we have generated for our LPEs? And that was a lot of what informed the decision to form this fund. I'll give you a concrete example. At the point that Square went public, the gain for our limited partners was about $140, $150 million. And we waited. We waited several years in that case to distribute. And we ended up generating well north of a billion dollars for LPs in that case by being patient because I was on the board, I'm still on the board, I'm involved with the company, I understand their prospects, and I just had a different view that the company's share price eventually was going to catch up with its performance.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“So, the reason we ended up with the structure, because it's a fair question. We talked about it. Let other people decide why should we hold the shares, cure XYZLP? You can take the shares and decide. If you're an endowment or a foundation somewhere, you're managing a couple of billion. Maybe if you're a big university endowment, you have 20 billion or something like that, you don't know this latest company that we've just distributed. And so what we found is that our LPE is almost exclusively sell as soon as we distribute.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“We are very happy with what we earn, and we appreciate that the majority We're proud that these are the people we work for. Because we've had such a long history with them, we invited them to roll into the Sequoia Capital Fund. And 95% of the dollars that were eligible to roll into the Sequoia Capital Fund did. So they are the same investors that have rolled into the structure. And we've had decades of experience with them. We have clients that have been clients of ours longer than I've been alive. And there'll be clients long after I've gone. And that's the way we want it. We want our LPs to outlive our GPs. GP is the general partner, the people who work at the partnership. And we really care about that. That's part of this long-term orientation we have at Sequoia. So to answer, you're going to go to the other question.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“True, the typical structure is to charge a management fee as a function of the fund size. So typically it's 2 to 2.5% of whatever the fund size is that you charge to pay for salaries and rent and research, all that sort of stuff. And then there's carried interest, which is a share of the profits, if any, that we generate. And the carried interest varies between 20 and 30% based on a firm's history and their performance history. So let's just say that if you invest at 100 million and you turn it into 200, and let's just say your carry was 20%, there's 20 million, so only 100 million of gain, obviously. 20 million would go to the partners and the limited partners would get 180 million in that scenario, in that example. So that's how a fee structure works. So we actually talked about whether we should raise our fee structure because people were still going to invest in us. And we actually made an affirmative decision to not do that because”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Because we capitalists, we teach our companies that they should figure out the right price for their product, and we have excess demand for people wanting to invest in our funds. So why don't we raise the prices? Why don't we charge even more?”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, maybe you should spend a second just on who our clients are. And Sequoi, we work for what we call great causes. So, if you come to visit our office, our conference rooms are actually named after our longstanding limited partners. So the Ford Foundation, the Wellcome Trust, Stanford University, MIT, Harvard, Denafaba Cancer Institute, Boston Children's Hospital, these are the people we work for. We put their names in the door as a constant reminder that when we generate returns, they are the ones who benefit. And there was a period actually, as a short digression, a couple of years ago, we thought about whether we had the right fee structure for our business.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“So, the structure we created is essentially an open ended fund that will become the sole investor in all our future private funds. So we'll keep organizing private funds. And part of the reason is what we described earlier. If we have a single pool of capital, it dilutes attention and focus. So we'll still organize a seed fund of venture fund and a growth fund. And those will be time-bound, have dedicated teams a certain amount of money and it's accountable for the returns that it generates in a given vintage. But all the capital comes from a main Sequoi Capital Fund where we have cash, but we also have some of the longstanding positions of our enduring businesses, where we believe the companies have an ability to compound for many years after the IPO. That's the spirit of the investment structure.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“The truth is that many of the great companies endure and they keep compounding. And so with most of our companies that have gone public, the majority of their market cap accrued after the IPO, not before the IPO. Square Today is worth 10 times what it was worth at the IPO, so almost definitionally, 90% of its market cap was created after the IPO. So why sell after the IPO? Why leave the board? What about all the other fun company building to be done? I mean, that's the thing that really floats my boat is working with entrepreneurs to help them build businesses. And for me to have the founder call me and say, listen, I'm resting with this issue. Can you please help me? That's one of the most gratifying things that I have in my job is being able to help on that journey.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Last year, we conceived of and launched this thing called the Suquoi Capital Fund. And for a long time, I'd been frustrated that the venture capital model was built on this idea of a 10-year closed-end fund cycle. And it was first invented in the late 60s, early 70s, and no one had questioned it. And there's this presumption that because you have such a short-lived fund life, that when a company goes public, you should distribute and move on to the next thing.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Definitely celebrate it a little bit, but it's not over because there are other interesting companies to be built. And even more importantly, for those companies, I'm still on the boards of those companies. Because they're still so early in their own innings that there's so much more to be done at these companies. I think it's one of the, I don't know if we have time to talk about this core capital fund, but this is part of the thing all the time in the world.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Probably can't get you the precise year, but it was probably about five, six years ago when I'd reached that, I think it was after the IPOs of MongoDB and Square now called block. I think after those two IPOs and ATERA's IPO had achieved that milestone. Sorry, what was the other question?”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“And maybe you can borrow from analogies of athletes, often the peak of their careers when they're 28 or 32, whatever the case is, but they peak relatively early in their life. And then, oh, you're the person who once was that, as opposed to what you are now. And I think that's very hard to deal with. But I've seen the Instagram founders who I worked with got involved with them very early, and they're just incredibly well adjusted. company was acquired it's been a huge success massive impact on the world and the two of them are just building and having fun and they've found all sorts of other pursuits to keep them engaged and they clearly haven't suffered from what i described because they found another outlet for meaning for themselves”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“No, absolutely. I think the people that I found who ended up getting unhappy wasn't because they were still in pursuit of something. It's actually that the pursuit was over. The getting, not the having that makes you happy. And so, unfortunately, I've seen founders where they've had a big exit and maybe the company was acquired. And what do you do then?”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“I mean, it's why people say, oh, Silicon Valley's did, innovations did. Really, like, there's so many problems to be solved. As long as they're problems, they're opportunities.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Of this idea that whatever it is that motivates you, your purpose might be your company, it might be your family, it might be your hobby, whatever it is, but identifying what it is that really motivates you and leaning into that and not pretending that you're actually motivated by fame or fortune or some other superficial motivator. I think it's just incredibly clarifying.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Introduced very clearly the need to think about what motivates you. The fact that he was in a concentration camp, you've obviously read the book, and it's not a story about the life in a concentration camp, which is horrific, but the fact that he wanted to live, he wanted to survive because he wanted to recreate his work, his manuscript was taken from him when he was sent to Arswitch in the first place. And part of what he learned when he was in the concentration camp was that some people gave up. And that even though the population in the prison was Jewish, the mortality rate actually increased around Christmas in New Year because it was a marking of time and a reminder for people that they maybe had no more hope or if they knew that their family members had die, they gave up”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Two different ones for meaning by Victor Frankl Invariably shows up on these lists of 100 books you should read before you die, which really had a big impact on me, spoken about it at Sequoia Founder events. I've given it to many people. I just think the book is amazing in terms of helping clarify what it is that motivates you and what drives you. Like what is your purpose? Because we're not really driven by monetary rewards or pleasure by itself. So that to me is a fantastic book. The other one is an annual series called America's Best Science and Nature Writing. And it's a collection of about two dozen articles from American publications written for a lay audience across a range of topics. It could be what's the latest insights from physics and astronomy to what's happening in genetics, what's happening with anthropology or things like that. It's absolutely fascinating.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“That is an incredible achievement, and it means that we're a magnet for other opportunities, often because of sector expertise or experience, so because I'm the board of unity, I might disproportionately get people who work in VR and AR because they're developing on the Unity ecosystem. And so that gives us access to this. So there is a way in which the industry success begets success for sure. But it can also be a curse because if you have a lot of inbound, are you spending enough time thinking critically about where you want to spend time? with opportunities for tomorrow might lie. And so there's a danger there that you may spend all your time just taking inbound opportunities instead of pursuing the best founders and the best company. So there's a balance there.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“Think it's true we're blessed by the history we do. So the companies that we backed when they were private today account for over 25% of the total value of the Nasdaq. Over a quarter of the Nasdaq were companies that we backed when they were private. No other venture firm comes close.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT
“So we have separate teams focused on different areas. And the key is to look at the multiples. It's not about the input. Many of these small investments we've made have turned into very large gains. It's not about how much you invest. It's about the impact it can have. In terms of the competition, by the way, I actually think it's fantastic that there's this much competition. Because what used to be a cottage industry in the 1980s and 90s, because that's just, it wasn't a big market. I'm not saying that dismissively. It was just, it was a smallish industry. The industry has had to professionalize. The beneficiary of that ultimately are the founders. And we've had to up our game. Yes, we had a talent team when I was still at PayPal. Sequoea had a talent team, but it was one or two people. Now we have 15. And we're just delivering many more services to startups to help these companies succeed, to give them an unfair edge and a chance of outside success. So I think it's really in service a founder.”
2022-08-31 · The Tim Ferriss Show · #618: Roelof Botha — Investing with the Best, Ulysses Pacts, The Magic of Founder-Problem Fit, How to Use Pre-Mortems and Pre-Parades, Learning from Crucible Moments, and Daring to Dream · IDENTIFIED FROM THE TRANSCRIPT