10 Learnings from Off The Record with Pat Grady of Sequoia Capital

With nearly a full hour of Q&A with a phenomenal communicator as our guest, our “Off The Record” interview with Pat Grady (Partner at Sequoia Capital) surfaced a number of actionable insights for Founders.

We’ve excerpted 10 key highlights from our interview below:

#1 – Habits Of Exceptional CEOs

Given Pat’s track record that has consistently backed unicorns and decacorns, he has had a unique window into the habits of high-performing Founders and CEOs. He shared 4 examples:

  • Frank Slootman (Chairman & CEO of Snowflake, previously Chairman & CEO of ServiceNow): dealing with reality and his intellectual honesty, which leads to addressing company issues as they appear
  • Todd McKinnon (CEO & Co-Founder at Okta): exceptional listening skills. While quiet in meetings, his careful listening leads to very accurate decisions.
  • Eric Yuan (Founder & CEO of Zoom): consistently re-inforcing a culture of customer obsession
  • Brian Halligan (CEO of Hubspot): by using frameworks, mental models, and analogies in his conversations, he creates “building blocks” that can positively impact decisions made throughout the entire company

Takeaway: The best habits are ultimately specific to the individual leader and their company.

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#2 – Building Cultures That Scale

As shown by his biography on the Sequoia website, his investment approach prioritizes company culture and values.

On the topic of “building cultures that scale”, Pat noted:

  • Cultures are defined by making tough decisions in “crucible” moments
  • How Sequoia assesses culture through the consistency of employee answers about culture. Different ideas of the same company’s culture signal chaos and a low likelihood of achieving employee alignment.
  • Early-stage culture is defined by the Founder
  • Using Alex Rodrigues (a 26-year-old CEO of Embark) as an example, how a Founder’s trajectory (“slope, not intercept”) and potential for growth will define where a company’s culture ends up

Takeaway: To achieve operational scale, make a culture a real priority.

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#3 – Founders That Scale

While reiterating the importance of the Founder trajectory (“slope, not intercept”), Pat emphasized the importance of the underlying Founder motivation for starting a business.

Takeaway: Founders that focus on solving a customer problem (like Eric Yuan from Zoom or Fred Luddy from ServiceNow) tend to outperform those with money or status motivations.

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#4 – What Traction Does Sequoia Need To See To Invest?

Summary: Go watch the video excerpt – his answer that covers Sequoia’s investment in Stripe and his view on “betting on the Founder or the end market?” is a “must watch.”

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#5 – Investing In “Non-Obvious” Businesses + Sequoia’s Investment in Notion

Summary: Going back to 1979 and the history of VisiCalc, Pat uniquely frames his investment in Notion and the importance of a “killer feature.”

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#6 – How Should Founders Approach Fundraising

Summary: Treat fundraising as a strategic process with a view to where you want to be in 5 or 10 years. He covers the impact of valuation on your ability to hire and uses an example of a recent portfolio Series C fundraising process.

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#7 – How To Get His And Any VCs Attention. Hint: Associates Matter.

Summary:

  • Cold email works. Only if it is clearly targeted to him. Blasted, generic emails do not work.
  • Disregard the conventional advice to ignore associates. Build relationships with junior investment professionals, who can become your champions within the VC firm. In fact, make relationship building with associates an explicit part of your strategy.

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#8 – How To Convince VCs About Your Story

Summary:

  • “Sell the problem” – if the VC can understand the underlying customer issue you are solving, there is a much better chance of alignment
  • Focus on the believers, not the skeptics

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#9 – How To Run A Fundraising Process Today

Summary:

  • If things are not moving fast and you do NOT have to hold off investor interest, your fundraising process is struggling.
  • His experience with “not raising fundraises” – meaning situations where relationship-building meetings lead into an actual financing round.
  • Be transparent in your motivations

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#10 – How Doordash Overcame A Tough Series C Fundraising

Summary: This is another “must watch” excerpt where Pat shares some candid details on Doordash’s battle with UberEats and how they ultimately re-accelerated.

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Published on November 18, 2021

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