Jeff Wang
Appearances
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I do think there are more threats on Google's business than there have been ever in the company's history. I think Nvidia's price is reasonable if you think it's going to continue to keep going. For us, 70% of our research process is actually upfront on the theme and only 30% on the actual company. You have to be a pirate interpreting a treasure map. We need to sail to the right island.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So there is a portion of our business that our portfolio that is prior or existing Sequoia portfolio companies, right? That's maybe about a third of the portfolio is that there's a lot of our business that is not there. We own, for example, Shopify was not a Sequoia portfolio company. It's a company that we admired in the private markets, but we did not invest in the private markets.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And our first chance to invest is when they go public, right? So that is a very different discipline. And then also having the discipline to go know when to buy and sell specific companies. You know, I was talking to Pat Grady about this the other day. We're not just judged on, okay, did we sell this company at the right time? But then did we go buy something else because we sold this company?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
that outperformed this company when we sold at that time, right? I mean, you have to be deploying capital all the time. It's not just... Is that not a dangerous mindset to take?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Yeah. And so our bias is definitely, I'd say to keep something because you just know it best, you know, the team, you have a lot of confidence in what they're doing. I think it is really hard to say, sell something that's 10% too expensive, hope to buy it back. when it comes down 10% and then continue to ride it. That is a very hard discipline. And so I don't focus on the short term.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think that those are the small dials. I tell my team, don't tell me if service now is 10% too expensive. If we have a three to five year investment hold period, 10%, if you get six months ahead yourself in terms of the pricing, it's not going to impact your IRR that much.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Where we have to be careful though is if it's now 18 months ahead in a three to five year investment time horizon, because now it really starts to impact your IRRs. And then we have to really think about trimming it back and maybe potentially rotating into something else. But if it's 10% too expensive, I don't sweat those details. I think about the big dials and the big dials are really...
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Are you making the right investments? Is your investment process working? Is this company going to be a much bigger company over the next five years?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think most of the time it's 10% and it doesn't matter. I think 2022 was a period where a lot of these stocks got ahead of themselves. We had to trim, we trimmed a bunch, but we should have trimmed more. I mentioned the Shopify example where Shopify from the 2022 price is still back to, I think about halfway to the peak, right?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Whereas, you know, you have other companies say a ServiceNow that is now above the peak. So you do need to make those choices very actively.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
We've looked at this and it's surprisingly consistent. I'm not really sure why that's the case, but it's surprisingly consistent. The area where we have done really well actually are some of these private companies where we can partner with the growth team primarily and co-invest alongside early on. And so I'm I think the private portfolio has done really nicely.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And then you write it into the public portfolio.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think a couple of reasons. So I think one, the crossover thesis of investing in late stage private companies, getting to know them well, and then having a better view on whether to own them into the public markets is still fundamentally very sound. Do you really get to know them better? And if so, what do you get to know? So I'll give you an example. So NewBank is a Sequoia portfolio company.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
As you know, Doug is on the board. David and I joined Sequoia at around the same time. SCG led an investment in a secondary round in 2019. We participated in later rounds again at the IPO. We even bought shares in post IPO in the straight public markets. That's now a top five position in the portfolio.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And if we were doing our jobs right, I think we should know that company better than anyone else in the world.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think it still helps. I mean, I've known, for example, I've known Daveed, but I've also known the CFO Wago for a long time before he was the CFO at the company. There's only so much that Doug can say, look, go help this person or go help that person, go make these connections. There's a part of it that just has to be organic, right? Right.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So I think also having a perspective on these companies from a competitive standpoint also helps us inform public market investing and vice versa. And then we're also able to allocate between publics and privates based on where we see the best opportunities at that specific moment. And so right now, for example, we do not see for SCGE as many opportunities in the private markets.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so most of our attention is actually on the public markets. And so we can flex between those depending on where we see the opportunity set. One other thing is over the last few years, there have been a lot of tourists, as you know, a lot of tourists, mostly on the hedge fund side who have dabbled in private markets and they've gotten burned. Those tourists are out of the market.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
We don't see them anymore. And so I do think the crossover market is getting more attractive and it's getting more attractive as this one tourist exit and two, as the IPO markets open up again.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I'm not sure because the public markets are still the biggest. I mean, they're the biggest capital markets. It is freely tradable. Liquidity is important for a lot of institutions. And I do think there is still for companies still a big branding event when you go public. There will be value to companies going public.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I don't know when some of these big companies that have stayed private for a long time are going to go public. But look, I look at, say, Aclarna. I mean, Sebastian clearly wants to go public. There are a lot of reasons for that. And I think employees want these companies to go public, right? They're excited about it.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I'm not sure if continuation funds are a permanent or a cyclical feature. Right now, the IPO markets have not been open. We have not gotten a lot of liquidity. I don't know what it looks like when the IPO markets do reopen. And I mean, right now, we are still well, well below, obviously, the 2020, 2021 levels for the IPO markets. We're also well below the pre-2020, you know, 2021 levels, right?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I mean, I think these continuation funds exist. Some of them exist today because there's no liquidity. And so it's effectively a way to get some of these LPs liquidity at a time where the IPO markets are shut. I do expect the IPO markets to open, say, back half of this year into next year. We'll see. But, you know, we have a number of companies on file.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Sebastian, as you know, has been very vocal about going public. I think there will be a number of other companies that test the public markets. And one of the things that we've seen over the last couple of years is that it took a couple of years for these companies to write the ship in terms of the financial profile. Right. And now a lot of these companies, I think, are ready.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
The days of rule 40, you're going out at 60, negative 20. Those are gone. You have to be a 30 and 10, 40 and zero kind of growing into a nice profitability curve in order to get public. And it took a couple years for the companies to get there.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
It also took a couple years, I think, for a lot of these companies to get to a level of predictability of their revenue that the public markets expect, right? So if you're coming off COVID, you have all these just weird headwinds, tailwinds to your business that make it really hard to project. And so now I think We've rolled forward a couple of years. The markets are more stable.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
These companies are more IPO ready. And so I do think the IPO market will open as we look into next year.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think that's kind of the deal that you made with investors and employees.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think there are a couple of companies that can do that, but do you think the $5 billion SaaS company that's a good, it's not maybe the best company in the world can really do that? No. Right. So like, I think there may be a certain set of companies out there that can pull off what you're talking about, but for 99% of the companies out there, I think that's really difficult.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think it's actually pretty natural and organic for us because we're at about a third of the portfolio that is private. That is probably more than I want to be steady state. And that's a function of some of these companies just not going public in the timeframe that we thought they would. What would you like to be steady state?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
closer to 20 to 25% would be more comfortable because then that gives us an opportunity to add. If we are focused primarily on the public markets, let's say if we had 50% of the portfolio private, that would feel too illiquid to me. So 20 to 25% feels like a pretty comfortable level.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
We have a pretty concentrated portfolio, so about 15 to 20 longs. I want to make sure that the top longs can really move the portfolio in a major way. As I mentioned, I think the power law still exists in the public markets, obviously to a lesser extent than the private markets, but we want to have the top side of the portfolio be pretty chunky. About 15 to 20 longs, about top five or about
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
35, 40% of the portfolio. So it's pretty meaningful. And then what we'd like to do is to, you know, have the shorts just essentially fall out of that. Again, it's really how much more conviction do we want to express on our longs, albeit on the other side, we're not necessarily trying to solve for the short sign in a target, a particular gross or net.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So it's a really interesting question. And this is a visualization that I like to give to everyone who joins our team. You have to be a pirate interpreting a treasure map. We need to sail to the right island. And if we get there, great. If we get there first, great. There is a massive amount of buried treasure. But if we're the second ship there, we're also doing pretty well.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Even the third ship is going to do pretty well. So if we get AI right, there will be a lot of good ships. NVIDIA is clearly the best ship today, but a lot of others are doing well also. Now, if we don't sail to the right island, it doesn't really matter which ship you picked. Those are just not good investments.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So yes, we want to pick the best company, but we definitely better pick the right theme. And so for us, 70% of our research process is actually upfront on the theme and only 30% on the actual company. And so the example that you gave there, I think we'd be positive both Shopify and Amazon. I don't know which is the first ship to get there, but we are positive overall on that theme.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
You know, what we want to avoid is we want to avoid some of these themes that I don't think have legs where companies, whether or not you do a lot of great company analysis, it just doesn't matter.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
One, we spent so much time making sure the theme is actually working. And then two, we have pretty good insight from seeing what's happening at Sequoia. Doug likes to say, you got to look at what wiggles, right? And you got to go hit what wiggles. What does that mean? So being able to see what wiggles be a company or theme early, I think is really important.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And then being able to see is that wiggle becoming a tremor? Is it becoming an earthquake? Is it getting to be more than a wiggle? But if you don't see the wiggle, you could do great analysis. But if you never see the wiggle, you're not doing any analysis on anything. What did you not see that you should have seen?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
One of my bigger regrets and one of our bigger losers is in a company called Twilio. Twilio initially was a very good investment for us and actually ended up being a decent investment overall. It could have been a legendary investment. We held on for too long. And as competition started to eat away at the business, and we actually saw some signs of it.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So gross margin was off a few points here or there, a couple questionable acquisitions, key executive departures. And I think each one of those things you can explain in a vacuum, right? You can pro forma analysis for this gross margin, this specific quarter, or you can say this executive left for a really good opportunity.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
But I think when you take them all together, I think clearly something was a little off. And so, again, that's why I think it's important to regularly underwrite these investments each quarter and have a discussion with the full investment team.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so, again, I think that's where one of the ones where the devil's advocate point of view actually was really helpful to get a fresh dispassionate perspective.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Oh, yeah.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think it's really hard to do in practice. I think most people are fearful when other people are fearful and most people are greedy when other people are greedy. The best way to do it is just to be really long-term about it. This really long-term, let's not trade all the time. You know, there was that day, I think it was just last month where the Nikkei was down 12% in a day.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I mean, we just don't trade those days. Sit there, try to figure out what's going on, be long-term about it, and not overreact. I think it's hard in those moments, but it's also hard to act in those moments, right? What are you trying to do? You're just running around with your head cut off.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think you'll be right there. I think you'll be right there, by the way.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Yeah.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
It was difficult. The history of venture PE firms launching public funds has not been a good one. It was difficult to go convince LPs that we're going to go do this. We have fortunately some very supportive LPs, some of who will take the leap of faith with us because we've had such long-term relationships with them, but It was very difficult to be able to convince folks.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
It was a lot easier once we got a track record and got things going. But the initial, you know, $50, $100 million.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think it's really just to be the best tech public-private crossover firm in the world. And with our advantages, I think we can go deliver on that. We still got to go execute. The other thing that we're not selling though is we're not Citadel. Citadel, I have a ton of respect for Citadel and Ken Griffin. We're not selling a product that is not volatile.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
We're selling a long-term product because I think our advantages are long-term, right? It's seeing these long-term themes that will play out over the next 10 years. And so if we measure ourselves on a short-term basis, I don't think that is productive.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
One other thing that we did to set up the structure is because we have this long-term investment horizon, we have a long-term capital base, but we also have long-term incentives. And I think that's really important. So three or more year investment time horizon, three year minimum capital base, i.e. it takes LPs three years to take your money out.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
That is not standard. That is not standard. And then the least standard part of what we have is we have also a three-year incentive crystallization. And so what that means is most hedge funds, as you probably know, just take carry at the end of each calendar year. We take carry once every three years. And we also vest ourselves over a three-year period.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so we have that 3-3-3-3 type of framework here where I do think it helps us, encourages us to think long-term. If you were a fund where you had monthly redemptions and you paid your people an annual bonus, I think it would be really hard to really truly be long-term. I think you're really setting yourself up to incentivize your team to think short-term.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I don't think you can. I think it's really hard to think about business building if you're making investments and you don't know what your capital base looks like in the next six months.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So I think that's why most hedge funds fail. It is really hard to go build a real business. If you are one of the large hedge funds like Citadel, you have strong LP relationships, you have lockups, you've got an incredible long-term track record. That makes it a lot easier when you have periods that are not up to your expectations.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
But if you are a $100 million hedge fund today, you don't know if you're gonna be in business in a year. It's hard to go recruit. It's hard to go spend money and say, we're gonna go build out a data science team. and you don't know how much time do I spend on recruiting, how much time do I spend on management, business building, LP, relationships, and that's before you get to the investing.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Now, if we don't sail to the right island, it doesn't really matter which ship you picked. Those are just not good investments.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think for us, one of the things that was most helpful actually in going through that period is that Sequoia does a great job of injecting Sequoia DNA while also allowing these individual businesses to grow up in a way that fits their specific area. The Doug and Michael, and I give them a lot of credit for this, the way they set up the various businesses.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So SEG, Sequoia China, now Hong San, Sequoia India, now Peak 15, and Sequoia Heritage was to give each individual team and set of partners full investment discretion. That's very different. So obviously we shared a brand, administrative functions, office space, leadership. So Doug's on the SEG, was on the SEG board, now it's Ruloff, and we collaborated closely.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
But the day-to-day management and investment process is up to that specific team. And I think what it was, was it was a recognition that is really hard for an American investor to go make great investment decisions about Chinese startups. Similarly, it is very hard for a venture investor to go make great decisions about managing a hedge fund or family office.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
It's just not what you're spending every minute of every day thinking about. It's also really hard to recruit great talent if you watch over and second guess every single investment. But that said, there are also many aspects of running a first-class investment firm that do overlap. So for example, hiring the best talent.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Oh, thank you so much for having me on the pod. By the way, I did see your tweet the other day about your frustration with folks going on the podcast circuit. This is my first podcast ever, and I don't expect to do them regularly. So I've been listening to your pod for a long time. Sequoia folks have had such good things to say about you. And so I'm super excited to be on.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So instead what Michael and Doug did was they were heavily and actively involved contributing through leadership and mentorship. So Michael and Jim Goetz joined our portfolio reviews for the first several years from inception and helped us refine our investment process every week. Doug and Jim have been critical with LP relationships. With recruiting, Ruloff still interviews all our key hires.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Michael's even come with me to meet public company CEO management teams. We've taken multiple international trips together, including several to China. So they helped inject Sequoia DNA in a way that was very, very valuable for us.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Now, when I speak to other VCP funds that have reached out to me over the years to get advice about launching a similar effort, they almost never want to give up control. They want to dictate the investing. And I just don't think that's a recipe for success. It's when the fundamental discipline is so different from what they're doing at the core.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think the biggest risk for us is being based here in Silicon Valley, you believe everything's going to happen overnight. Mobile or cloud and now AI are taking over the world. They're just going to leave all this destruction in the wake. And the reality is these things usually happen very fast, but also much more slowly than peak enthusiasm would suggest.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
As a hedge fund, we're trading off the Wall Street echo chamber for the Silicon Valley venture echo chamber. And that's certainly got puts and takes. One thing that we try to do is to combat that is to host outside voices to speak on occasion.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so I forget if it was Doug or Ruloff who organized this, but we organized, for example, Charlie Munger before he passed to come in and talk to the partnership. We've had Stan Druckenmiller come in and talk to us. They think in a very different way than we do.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Well, we get the benefit of seeing things very early on. We get really excited about AI, how it's going to take over the world. Maybe we put on a short that it's just too early. It's going to take time for some of these things to actually happen. There are areas within AI where I do think it's happening very fast. I think there is going to be massive disruption, for example, in call centers.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And I don't think that's going to take a lot of time. There are other areas in AI. Now there's this, there's a narrative that I hear now that software companies are going away, right? AI is going to write all software. And I just think that's, that's a naive view. It may happen, you know, over the longterm, but
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And Klarna is a very tech forward company. 99.9% of the companies in the world are not Klarna.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Yeah.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think it is for some time. So when you think about AI today, productization of AI is a function of owning the customer and owning the data. We are not in a world where AI has created a new distribution methodology. And so if I think about some of the walled gardens, like a meta, you own the customer experience, you own the data.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so your ability to productize and roll out AI features and functionality to Instagram users very seamlessly is incredibly powerful. And because Meta has this auction marketplace for ads, you also have the ability to reprice your AI features very quickly, right? All these merchants are getting a return on their ad spend.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And if someone is getting better return on ad spend, the CPMs for these ads go up. So there's a massive moat for some of these largest companies. Now, what I worry about is this will start to disperse more broadly, but at least in the initial stages of AI, where your data and distribution are so important, I think the Mag7 will continue to do quite well.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
On Google, I'd argue GCP is not the cash cow. It's search. With search... I'm not sure. I'm not sure how AI is going to impact search. Where it is today, AI is really good at taking low signal data and translating into high value output. So in the case of meta, taking what you're looking at on Instagram and figuring out, okay, you want to go buy this type of product. That is incredibly valuable.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Google's got an incredibly valuable machine in that you type into the Google search bar exactly what you want. You type in skiing in Park City. Well, guess what? I know you want to go skiing in Park City. Your intentionality is 100% known at that point for me.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Whereas I think for Meta, I think the value of AI is, at least on the ad matching side, I look at a bunch of what you are browsing on Instagram and I say, okay, Harry wants to go skiing. He hasn't decided yet that he wants to go to Park City. Maybe he wants to go to Whistler. How do I then move you in that path to get you to a different location?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Yeah. So it sounds like, Harry, you're asking me why I made the decision to join a hedge fund that hadn't even launched yet. Pretty much. So we started SCGE or Sequoia Capital Global Equities in 2009. And it was really hatched actually by Jim Getz originally. So he worked with Michael, Doug, and Ruloff to really get it off the ground.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Or maybe you're even earlier on in the funnel and you say, I just, Harry wants to go on vacation. And maybe you haven't even decided on skiing. Maybe you want to go, you want to go to the beach. So I think AI has a lot of value for that. I'm not sure as much for Google.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
How do you influence, how do you drive a material uplift in search when you have one of the most beautiful businesses out there ever?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
We're not either long or short, Google, but I do think there are more threats on Google's business than there have been essentially ever in the company's history. I don't think it's just perplexity. In fact, if I were to say, who do I think is going to be the number two threat in search to Google? I think it's probably Meta, right?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
You are going to have the number two chatbot in the world, you know, before your end in your Instagram, your WhatsApp, your Facebook. You just go right, right now, just go search Meta AI.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think it's already delivering incremental ARPU. It'll happen first in companies like Meta. Like I said, because you have an auction marketplace, this gets repriced immediately. And so if I look at Meta, we estimate that it's not just delivering revenue. I think it's already delivering about 15 billion of incremental EBIT, EBIT for Meta. Right.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Just in the form of more content recommendation means you have more time on meta properties equals more ad inventory and better ad matching equals higher CPMs and higher CPMs just, you know, it's straight flow through to the bottom line. So it's, it's beautiful already for meta.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Now I look at the software companies and I just think it will take more time because you have to go out to your customer and say, look, I'm delivering you this value. Here's the data. And when your contract comes up again, we're going to raise your prices. It's just a harder conversation.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
But what you have seen, even since you recorded the pod with David, Canva, which you mentioned, has raised prices on its enterprise plan by 3x. 3x.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I do agree with it. I think where I share his view is that there is a $600 billion AI problem in the sense that ultimately application companies need to deliver positive ROI from these massive investments. Where I'm probably more optimistic is in the pace that these application companies can actually realize that ROI. We've already talked about Meta. We've already talked about Canva.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think ServiceNow will start to really flow through some of the ProPlus price increases later this year and into next year as well. I think you're starting to see the initial hints that AI is going to come through in terms of incremental ARPU for a lot of these companies. Now, it's happened probably a little bit more slowly than I would have guessed.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And I joined a year later in 2010 before we externally launched and raised money from LPs. I think I joined for the same reason that most people join a startup. I believed in the mission, and this was to build a world-class public equities business, partnered with Sequoia Capital, which I believed at the time and still consider to be the best venture capital firm in the world.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I probably would have been more first half this year as opposed to back half this year. But I definitely think you're starting to see it. And I think you're starting to see it because you see the features that can be productized and the clarity from other companies. What I mean by that, so if you look at what Meta has done is really just take what ByteDance has done. Right.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
With a recommendation engine now, like I'm plugging a bunch of GPUs into it. I'm copying the same thing and I'm just rolling out to my customers. Co-pilots, I think you will be able to use what you see at GitHub and be able to roll it out across many different companies.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
If you look at enterprise semantic search, if you look at case summarization, these are all features that have been proven to deliver ROI at certain companies. And now you could just pull that into other companies, other products. I think that's going to deliver value.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Now, what I don't know, and this is where I do agree with David, there is a massive amount of capital that's going into not the productization side, but the model training research side. That is where all of the capital is going.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I've been surprised at how the scaling has continued, how just throwing more compute, more data has improved these models. I don't know where that ultimately gets to, but I do think a hundred billion, there are not a lot of companies out there that can spend a hundred billion. What I do believe is you don't need 10 foundation models out there.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think you need certainly more than one just for the sake of humanity. China will have one. I think the Western world will have at least one. So maybe there's three to five foundation models in the world. It's not going to be 10. It's not going to be 20. And so I do think the...
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
pool of spend is going to shrink in terms of the number of companies, but the amount that each individual company is going to spend is also going to go up. There is real overinvestment risk, I think.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
The way that we've decided to invest in AI in the public markets, we have some investments that are semiconductor or hardware stocks that power AI, but we more so invest in the application companies that over time I think will profitably infuse AI into their products. So if you can buy a nice core business with a call option on AI, I think that is a very good way to play it.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
What's the example of that? ServiceNow is a really interesting way to play it. So it's got obviously a very good underlying core business. And I don't know that ServiceNow has necessarily the biggest opportunity in AI, but it's a very clear opportunity. IT ticket deflection is purpose built for AI. To be able to deflect tickets, to resolve them automatically, that is very clear.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
That is a very, very clear use case in my mind. I don't know if it will be the biggest use case right now with all the incremental innovation that there is in models. I think coding could obviously be a much bigger use case. But in terms of clarity, ServiceNow's opportunity, I think, is one of the most clear.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Then I'd also argue that overinvestment in the semiconductor and foundation model layer actually should accrue to application companies over time in the form of more better AI capabilities that we can infuse at lower cost.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so I joined as an early employee. We had 50 million of internal capital. We now manage about 9 billion of mostly external LP capital, but that internal capital amount is also now about a billion. The portfolio is about two thirds public and then one third private. And that one third private is almost exclusively co-investments with Sequoia.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think Nvidia's price is reasonable if you think it's gonna continue to keep going. So Nvidia trades at what, 25 times next year earnings. I think the bigger question is what does 26 look like? You know, hyperscaler CapEx is going up. I think it's going up at a rate that is surprising to us. It's grown what, 50% year over year this year. 25 grows another 30%.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Is it 30% higher? I mean, 30% higher, I think would effectively eat away every single dollar of Google EBIT. So what does happen? I think it's a great question. This is where being a hedge fund is actually helpful for investing in something like AI. So we can invest, obviously, as I mentioned, in the application companies.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
But the way we invest in the semiconductor hardware companies is we can be long NVIDIA because I do think NVIDIA has the best position. And whether or not NVIDIA has 100% market share in three years like it does today, I don't know. But it will still have very, very good market share.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so if you believe the market is growing, I don't know if data center, you know, GPU spend is a hundred billion or 200 or 300 billion, but we can go long Nvidia. And then we can short a bunch of the companies that I think don't have the depth of moats that Nvidia has. So if you think about some of these server hardware companies, for example,
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
where I think they're going to get beat up on gross margins because NVIDIA now has a reference design. You have a smaller shrinking pool of customers that are getting more sophisticated that are going to do their own server design. So that's how we've chosen to play AI. And I do think there is overinvestment risk, but we can be hedged on that.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
You know, we haven't because I don't know that these ultimately are better businesses after, right? So what you know now is that there's an incredible amount of demand. That demand is growing at very high levels. But if I'm talking about a power electronics company or a company, a construction company that builds data centers, let's say there's incredible growth over the next two years.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
That's gonna attract incremental competition. Are these really great sustainable businesses with deep moats? I think they're okay businesses. I think the stocks may work over the next two years, but in year two or three, do I still want to own them? And I just want to think about these things as a long-term investor. I don't want to be trading in and out of stocks as quickly as I can.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so when the SEG opportunity came along, I was super intrigued because it was a chance to go build a public equities business that had true ecosystem advantages in technology. And I believe those advantages would translate into the public markets. I was also encouraged by the support and backing that SCG had from Sequoia's most senior leaders like Jim and Doug and Michael and Ruloff.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
That's a great question. For Klarna, I think Europe matters, but is incrementally mattering less because they have broadened the business. They did a terrific job of expanding the business into the US and other markets.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So I think for Klarna, it matters less, but I do think if you are any company that can go global, you start in Europe. Europe is a very nice prize, but I think the best companies will want to go global and they want to go after the US opportunity. It is, you know, the US is still probably, it is the largest opportunity for software companies.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
It's probably the largest opportunity for FinTech companies. You know, if I look at most software companies, you're probably two thirds kind of US Canada in terms of revenue contribution and then one third everything else. So you have to succeed in Europe if you start out there, you're a European company. But man, the US is a pretty big prize.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think it's already happened. It's already happened.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think it has to. It has been more difficult for us to say invest in Chinese companies. And it's not just the macro, right? It's these companies have become less transparent with us over time. We appreciate less money. what's going on internally. So I think about a company like PDD. I think it's a great company.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I don't know what's happening there in terms of why they decide to tank the stock, because everything that we see on the ground is still very positive for PDD. And so those things, I think, do give me pause in terms of not appreciating what's going on internally in those businesses.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
It has to. I mean, the level of just pure entrepreneurship, the level of just the founder quality, how smart and aggressive they are, it's just remarkable. I just don't think that goes away. I mean, if you look at...
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
But I think the best Chinese companies, like the best European companies, will also go global. So PDD has gone global.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I'm optimistic. Overall, the market, what it has created is it's created great consumer companies, great financials companies. I think what we haven't yet seen is great technology companies, in part because some of the best technology founders come to the US. But I'm optimistic. I just caught up with a couple of the GPs on the Peak15 team last week.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think what they're seeing on the ground, I mean, I've been impressed, for example, by what Zomato has done. The stock price chart there is incredible. And to be able to go from the level of burn that they were doing early on to now really turning that into a profitable business. I think one of the things that we've seen in India is that that brutal level of competition that you saw
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Actually, in the US, right, too, you saw in the US in the zero interest rate environment that has subsided in India as well. And so that's allowed companies like as a model just to become more profitable, better businesses.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
On the flip side, though, I was taking a 70% pay cut and there was a real risk of failure, right? Most hedge fund launches don't survive. And so my career prospects, if it failed, wouldn't have looked very good. And so I took the plunge to try to build something special.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
With Doug, first of all, Doug's an incredible human being. So he's so good at building trust. He's always generous with his time. I can get him on the phone no matter what continent he's on. He's traveled the world with me to meet with LPs. So I can tell you what Doug likes to eat in every city. If you get him to Boston, he will absolutely crush cherry stone clams.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
He's just someone that you want to go with to war with on their side. Second, Doug has what he calls a great sniffer. Just incredible commercial instinct. He's always listening out, keeping those ears open, looking for what's working and connecting the dots. Doug is exceptional at that. For Michael, I'd say Michael has superpowers that I will never possess. He's got an incredible nose for talent.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
He's a terrific communicator. He's even an accomplished painter now. So one thing that I've learned from him is to borrow his superpowers as opposed to trying to develop them on my own, right? which is really a lesson in teamwork, except that Michael is the star player at almost every position on the team. Michael still helps me write my quarterly letters to this day.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I recall flying out to Ottawa to meet Toby at Shopify with him. And Michael walks out of that meeting and just says, look, Jeff, just squat in that investment and just set an alert for yourself if Toby ever gets hit by a bus. His nose for talent, I can borrow. The second, I'll tell you a quick story here. Who's got a better nose for talent, Mike or Doug?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think Doug probably has a better nose for enterprise talent and Michael for consumer talent. Good hedge. Sorry, I interrupted you. And so, so quick story about Michael and an important lesson that he taught me somewhat indirectly. So when I joined SEG, he obviously had to interview with Michael. It was intimidating interview.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So Michael back then had an office where he actually literally had the wall and door removed from one side. three walls, but one opens up to the entire floor. So I think he meant it as the ultimate open door policy. So some people have an open door policy, he had an open wall policy, right? But that meant that everyone on the floor could hear everything that was said in his office, so i.e.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
my entire interview. So I walk in, I'm in my suit, Michael's peering over my resume, and the first thing he says to me, and by the way, don't forget that the only thing that I've done up to this point is really technology buyouts. So he says to me, do you think private equity has poisoned you? Yikes, right? Like the interview did not go well.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I tried to answer the best I could, but it was not a good start. And I'm sure that people around his office within earshot were cringing for me. What did you answer? I don't remember. I don't think it was a good answer because I had to interview with Michael again. But I think his point, and it took me a couple of years to understand it. was that just staring at the numbers isn't enough.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Too much focus on EBITDA multiples or financial leverage isn't healthy. You have to have the dream gene and you have to be able to dream about what a founder or a company, a team can become over time. And it's just not static. And so I deeply appreciate that lesson. And I'm not even sure that he intended it to be a lesson.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Yep. I love how Ruloff has forged a new path to take Sequoia into the next 50 years. First, it's not easy to transition from great investor to great leader, as you know. It's also not easy to take over for a legend like Doug. Doug led the firm from 2012 to 2022. The venture world was very different back then. Ruloff led the development of the Scouts program.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Yeah.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
He supported the product team, data science team, Arc. The Sequoia Capital Fund is a good example of his long-term thinking. I'm also impressed by how focused he is on team and culture. So at our semi-annual, what we used to call these steward council meetings. So it's like a management group. We provide business updates to each other.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So everyone else, myself included, would come in with these long PowerPoint presentations. But Ruloff would walk in with this two-page Word document. And yet somehow he always put the most thought into the talents of both the investors and the functional leaders on his team and how to put them in the best position to succeed.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And then at events like our holiday party where he makes a speech every year, he makes it a point to remember every single person within all of Sequoia who had a baby that year and the name of their child. He memorizes it, no cards. He's also super comfortable with the process of becoming excellent. So the idea that it takes time, obviously that applies to Sequoia, but it doesn't happen overnight.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
He doesn't get frustrated by it. Sequoia and all the initiatives, but also applies to his personal life. So I've obviously got to know him a little bit personally, played ping pong with him, pickleball with him, golf with him, golf actually just last week. I've been playing the game for a lot longer than he has, Harry. As you probably know, it is a tough game.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
He is frustrating that he does not get frustrated. It's because he's hyper-focused on that process of improvement. It's everything he does. It's from investing to pickleball, from leadership to golf. So it's... It's frustrating that he doesn't get frustrated.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think that optionality is the most expensive thing you can buy. So both financial options, but also more importantly, life options. So too many young people spend too much effort focused on preserving optionality in lieu of actually making decisions. So I find this problem to be most acute, the more accomplished you are because your talent opens so many doors.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And a lot of folks just waste too much time and effort keeping those doors open as opposed to just choosing one to walk through.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think on the venture side, I'd probably say Brad at Altimeter. He's also got the public-private strategy. I think he's a little bit heavier than us on the private side. But I love the way that he can connect dots across stage, industry, especially because he will go pretty early sometimes. And I think that flexibility of mindset is impressive.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
The way we short is a bit different from how other hedge funds do it. So we are not looking for frauds. We are not looking for valuation arbitrage. We're looking to further express a disruptive thematic viewpoint that we hold on the long side, albeit on the short side. So it's really important to see these trends early.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think nothing comes close to the 2016 transition, but certainly there are moments in time where, you know, performance is down, you question your process.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
How do you rally a team in a down year? It is hard. It's really hard. I think, so we do these surveys. It's every six months just to get a sense for how, and they're anonymous, for how the team is doing. And man, the initial, I'd say right post-COVID, the surveys were very positive. You know, everyone's super happy, you know, everyone's feeling fulfilled, they're doing good work.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And then you can see the surveys is getting worse and worse. And then in 2022, they're just downright awful. I think one of the things that I've learned is that your mentality is so dictated by performance. And that's just, you can't live that way. You can't manage your business that way. You can't actually go make decisions that way.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
You have to stay even keeled and say like, what about my process is not working? Let me go fix that. And this is the discussion about greed when others are greedy, fear when others are fearful, right? If you actually let that impact you in that way, you are going to make the wrong decisions.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so I think those surveys are actually quite helpful because it gives you a sense for the team's mindset and how it's impact. You could probably almost draw a line on, you know, the NASDAQ and the team survey.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
probably not taking Google more seriously. So I was at Stanford at the time of its founding. I was even a section leader for Marissa Mayer for a computer science class where she was a lecturer. And so I heard about it from her too. And I just thought to myself, you heard of Yahoo? You heard of Infoseek?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so it's a good lesson in just not underestimating the disruption that can occur, especially early on in an industry's development. How important is it to be the first? I think it's important to be early, but if I think about the public markets, we're talking about not years, but months, right? Because the public markets price something so quickly.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
If you figured out last year that hyperscaler CapEx was going to explode upwards and you're gonna buy a lot of GPUs, you can own Nvidia at any point, you know, last year or even this year, and you will have made money and you will have made very good money. So I think it's not important to be first, but it's important to be early. And again, it's months, not years.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so the view into the private ecosystem is actually quite valuable for that. So for example, if you hold a positive view on SpaceX and Starlink, what does that mean for other satellite businesses? What does that mean for rural telcos? If you are bullish on AI, what does that mean about call centers?
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20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Yeah, it happens all the time. There's always a lot of enthusiasm.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I agree. You have never seen this level of investment because I think if you roll back to 1999, for example, You didn't have this mag seven that was throwing off, you know, 150 billion of free cash flow and you can go invest gobs and gobs of money. I think that is truly different right now, the amount of capital that is going in.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
The disillusion of the family structure in the world. And I worry about the negative impact it has on kids and the next generation. I get that everyone's life circumstances are different. I don't frown on anyone who chooses not to get married or get divorced, but I do think it's healthy to think hard about it.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So anyone on my team who's getting married, I give them a copy of a book, The Meaning of Marriage. It's by a Christian pastor by the name of Tim Keller, who's actually since passed. It's been a big influence on our marriage. So I think that's really important.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So one of the key ideas is that marriage is not to make you happy, right? And I think a lot of people approach marriage is like, okay, I'm going to, you know, I'm going to get married. I'm going to be happier now. Well, no, marriage is hard.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And what marriage does, one of the principal ideas is that marriage makes you more Christ-like in that you have this other person who is in your life that you are sacrificing for and you develop, hopefully over time, a Christ-like love for that person.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I'd say, what would you be doing if not SCGE? So it's one of my favorite questions to ask in an interview because you get to appreciate what else makes a person tick. So I love investing. I really enjoy it, but I think I'd also be very fulfilled in my career.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
If my career had taken different turns, if I was building product at say Instagram or Apple and just making things that touch billions of people, I think that would be also a lot of fun. So I'm going to turn the question back on you, Harry. So what would you be doing if not 20 BC?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So R-Shorting is really expressing further conviction in the longs, albeit in the other direction.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
That's right. I think you would take risk in different formats, right? So if you are... If you are Citadel, if you are another hedge fund that takes a lot of leverage, I do think you need to have low volatility because you're amplifying with, say, 6x leverage. In our model of the world, we don't take a lot of leverage.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so what we're trying to do is express more of a specific viewpoint with low leverage.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
You can take leverage, but then you're taking more volatility. And I just don't think in technology where you already have a lot of beta, you already have a lot of volatility. You don't need to take a lot of leverage, especially because there is the power law.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And even in the public markets, if you get a stock right, there should be a power law that helps you deliver and drive great returns over time without a lot of leverage. It's not that we don't take any, but it's that we take low leverage.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
There are definitely moments in time where the markets will say, we used to love growth. We now love value. And if you think about how we are positioned as a fund, it's generally long growth and short value, right? The value companies are in general, the ones that the growth companies are disrupting. So there are moments in time where the markets rotate and that's
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
typically a function of say rates or maybe macro scares where you want to be in more defensive companies. And that's tough for our portfolio. But that's why I think about performance over the longterm. Those, those rotations are very painful, but they happen in a pretty short period. Let's say it's three months.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
We may have a very rough three months, but if I look out over the span of now we've been in business now 15 years, We've had one down year over that 15-year timeframe, and you build your business in a way that you can weather these storms. So one of the key things for us is we partner with an LP base that is long-term oriented. A lot of them, as I mentioned, are Sequoia LPs.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so they know how we invest. They know our product. They know that technology can be volatile.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think it's hard. I think it's hard to know. And this is part of the being emotional and attached or not. I think it's really important to be dispassionate and look at the data in a way that synthesizes it for what it is. So if it's good, we have to really call it good. If it's bad, we have to really call it bad.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so one of the things that we've done is we've actually pulled in our data science team as an extension of the investment team. They join our weekly pipeline meetings. We have them very tightly integrated with our investment team to make sure that I think we have that data science angle in all of our processes.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
What we have as investors is a thesis. On the private side, you can get a lot of data to go verify that thesis, right? You're under NDA or you're on the board and you have depth of information that you can then go verify a thesis. We don't have that in the public markets. The data that you have in the public markets is the same as every other investor. That's Reg FD, right?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So the smallest investor to the largest investor in a company, you don't have any different information. So to the extent that we can, from the outside in, verify a thesis, that is very helpful for validating how big do we want to make that position. Is that thesis actually still holding true? Has something changed? Has competition come in and knocked us off the top seat?
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So I think that is very helpful for our investment process.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
Shopify has been one of our biggest winners. It is also one of my bigger regrets in terms of post COVID. Coming out of COVID, we simply modeled a baseline that still had the post COVID trend continue to go up and to the right. And that was the case for a lot of e-commerce companies, right? So one thing that we got wrong is a lot of things return back to pre COVID.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
humans don't really change that much or they change more slowly. And so e-commerce really returned back to the pre-COVID trend line. Shopify is still continuing to gain share against the total e-commerce and the total retail pie in a very nice solid way. But to model this, 800 basis points step up in a year and to say that that was going to continue from that trend, that was obviously incorrect.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
We started to see that in the data and, you know, being detached to a company, really liking the management team there, having it be one of our biggest winners. I think it's, you have to be dispassionate when you see the data changing. And we held out hope for longer that, okay, this is just a blip in the data. It's going to get better again. It's It stepped down. It's still a great business.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
It still continued to grow against a very positive trend in e-commerce taking, you know, share from overall retail spend. But that trend line was simply lower than we thought.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
It just makes you focus on being dispassionate in a way that I think if I can get help from data science, if I can get help from my partners, I think that helps us be better. One of the things that we do is we have a quarterly review of the entire portfolio where we do a re-underwrite of every single position. Because unlike the venture world, we can buy and sell every day, every minute.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so typically the re-underwrites driven by the team, the individual partner and the analyst who are supporting a particular investment. In the controversial investments, one thing that we will do is we will have a fresh underwrite from a different partner where you have a devil's advocate position. I think that's important for helping us be dispassionate.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
So you've probably listened to the Sequoia Crucible Moments podcast where Ruloff dives into these difficult moments in a company's journey that require a lot of fortitude, but ultimately set the company in a better direction. That was 2016 for SEG. I'm not a founder, but I did help guide SEGE through what I call a refounding moment. So Sequoia had hired an original portfolio manager for SEGE.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
You know, in 2009, he was a smart, hardworking guy, but didn't really unlock the synergies that we should have within our ecosystem. So really, he had the same playbook at his prior hedge fund. And so in a lot of ways, he was trying to recreate his prior hedge fund, even invest in non-tech areas, for example, as opposed to building something special and unique to Sequoia.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And so performance was good. It was not great. And so there's this crucible moment in 2016 where Sequoia decided to part ways with the original PM and actually consider shutting down the business entirely. So as the senior most partner remaining on the team, I was asked to come up with a business plan and convince the broader partnership why version two would be better.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And for us, it was an incredibly unifying moment because we were really fighting for our survival, right? The team actually, we actually all left the office. We rented some coworking space down at the Hana House in downtown Palo Alto, just to get some space and clarity for clarity of thinking. And ultimately the prescription, the strategy was pretty simple.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
It was just simply focus on the areas where we have an advantage. That is investing in growth tech with a meaningful thematic overlap with broader Sequoia and co-investing alongside in late stage privates. So gone were the days of investing in lodging companies, port infrastructure. We even invested in an airline miles program. Yeah. And so we were just focused on the Sequoia sweet spot.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
And when you look at the pro forma analysis of those returns, it was actually very strong if we just removed all the non-tech areas. And so what we did, we pulled together a 50-page PowerPoint strategy presentation, and I had to sit down in front of the partnership in the Menlo Park office in the main Ford conference room in the hot seat for founders and present to the partnership.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I was terrified. I was terrified. And I didn't really know if it would really work. I give Mike Moritz all the credit for this. The way he suggested framing it was, yes, this is a leap of faith to invest behind this team and this strategy now.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
But it is way less of a leap of faith than back in 2009 when we didn't have a team, we didn't have any capital or LPs, no back office function, no clarity on whether we would have any ecosystem advantages in the public markets. And now we have all these things and we have a team that's bonded together that believes in it.
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
20VC: Sequoia Capital's $9BN Global Equities Fund on The Future for NVIDIA, Google & Meta | How to Play AI in the Public Markets | China & Europe: Is the Future Bleak | The Opportunity for Crossover Funds with Jeff Wang, Managing Partner @ SCGE
I think the public markets, especially when you're trading actively like we do, is actually a very different discipline from a continuation fund. So in a continuation fund, what you're typically doing is saying, this company that I've known for a long time, do I sell it or distribute the shares over time? And I think that most venture funds can be very good at that. What we do is different.