The Business of Venture Capital. Mahendra Ramsinghani

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СКАЧАТЬ placed in me, first as a Sequoia-backed entrepreneur, later as co-lead of the venture business, and more recently as a Sequoia Steward. Implicit in that arc is an obligation to pay it forward to the next generation. That time has come.

      During the coming week, I plan to step aside from my leadership responsibilities. I do so with great confidence in this next generation of leaders. They represent a gifted cohort who bleed Sequoia, and their fresh ideas will spur the next wave of reinvention. More to come on these well-deserved changes from Doug.

      To ensure a smooth transition and encourage change, I am going to decamp from the Menlo office for a few months. I will remain a GP in existing funds and continue to represent Sequoia on boards. When I return, I intend to sponsor new investments, but I plan to reduce my workload, so that I can start saying “yes” to some of the other aspects of my life that have been on hold over the past twenty years.

      Forever grateful.

      JJG

      (Jim Goetz)

The first wave of establishing its brand and superior performance, and the second of successfully expanding globally, now enters the third inning for Sequoia. And for Sequoia to stay ahead in the game, it has to constantly innovate and reinvent itself. “Our partnership will be a reflection of the future that we all want to live in. If we lose our edge, it's over — we are dead. But we are working to make Sequoia a firm that is beloved,” says Pat, as he mulls about the future. “We reflect on how we can democratize access to capital, so that any founder can win, not just someone with a Stanford degree and a warm intro. We look around the table and wonder how we can build a partnership that is representative of all groups of founders — our customers — not just diversity of thought and experience.

      Christy Richardson, director of Private Investments, Hewlett Foundation, has been a Sequoia LP for over two decades. “The best indicator of a well-executed succession plan is when the senior partner wants to leave, but the younger partners ask them to stay and continue to share their knowledge and experience. We have often watched for how the leaders are building the next-generation team, and stepping away at the right time. Sequoia works hard to help their next-gen and newest partners succeed,” she says.

      We'll Turn the Lights Off When We Leave

      “At Foundry Group, we have no succession plan. We will turn the lights off when we are done, and leave.”

      —Brad Feld, Foundry Group

THE ART OF LETTING GO

      While the transition for teams at Sequoia was a planned move, for Jerry Colonna, author of Reboot and a CEO coach, the exit from the world of VC investments was abrupt. He was co-leading investments for a fund with $23 billion under management. His prior partnerships include stellar names like Fred Wilson, of Union Square Ventures, and JP Morgan. He volunteered to help the New York City Olympic bid in 2012. Indeed, Jerry was at his peak. And then the Twin Tower attacks occurred. “My home had been attacked,” Jerry said. “I came out of an Olympic bid committee meeting and I stood across the street from the pile, as they referred to it — Ground Zero, which was still smoldering. It all felt like it was falling apart. It felt like there was a complete charade.” At that moment, Jerry contemplated suicide. He called his therapist, who urged him to “get in a cab and come see me,” and that was a pivotal point, which led him to spend years in reflection. He emerged from all the hurt and ashes as a mensch and a mentor to startup founders.

“Doing yet another deal will not help me grow. VC business is always there — it's not going away, and I can always come back to it,” says one investor, who walked away from an investment role after nine years to try something different, something new. Author and angel investor Tim Ferris stepped away, taking a hiatus investing, because the noise simply wasn't worth it. The cortisol-fueled, unnecessary hurrying associated with that culture was causing more harm than good.¹

Igor Taber left Intel Capital after a decade of making investments in Silicon Valley startups. “I loved to see multiple flowers bloom,” he said. Growing up in Ukraine, he was the first in his family to go to college and get a formal education in the United States. “I spent 10 years in Intel in a business development role and another 10 as investor in the VC arm — no one should stay in one company for 20 years — it feels like a lifetime,” he quips. “My transition out of venture was driven by a great CEO and a phenomenal opportunity — it was just too good to pass.” Igor had invested in a machine learning platform and served on the board for four years. “The CEO's determination, work ethic, vision, and importantly a team builder of giants got me excited,” and he joined Datarobot, heading up corporate strategy and acquisitions. At Intel Capital, Taber had funded and served on boards for more than 20 companies, but one caught his eye.

      For Paul Holland, the role was reversed. He started his career in an operating role after a chance meeting with Reed Hastings, founder of Netflix. “It was at a hot tub party 30 years ago,” recalls Paul, and he ended up working with Reed, shaping the trajectory at Netflix. After eight years of investing at Foundation Capital, and as a GP for six funds, Paul plans to transition out of the fund. “The third generation of management is coming in at Foundation. We need to make it easy for them. Transitions need to be structured and respectful for both sides. At 35, you don't know what it is like to be 58,” he says. And on his way out, he did a parting favor to a junior partner. He helped shepherd a particularly risky seed investment that the junior partner would work on. As he heads off to his next phase in life, Paul has made some lasting contributions, not just to his LPs but to the industry as whole. He produced a documentary — Something Ventured — which memorialized the views of some of the legends of the first generation — these include Arthur Rock, Don Valentine, and even the late Tom Perkins, founder of Kleiner Perkins.

      For some that got out, it was triggered by a life-event, for others, boredom. And we should ask of ourselves, as Don Valentine did, can we leave behind a better firm — a better society or a better tomorrow? Or did we try to enrich ourselves one last time as we head out that door? In one of the Silicon Valley firms, a retiring GP presented an elaborate NPV calculation and a payment stream that the junior partners had to commit to pay to the retiring GP. The departing partner planned to collect a “royalty for using his name” for several years, and after all that, he even retained a percentage of the GP. The new members of the firm were bonded labor, albeit Tesla-driving Stanford-graduates.

Paul Holland, who has designed his own transition at Foundation Capital, says, “As an industry, we can certainly do better — for the most part, it has not been done right.” To which we say, true, and read aloud, one more time Shakespeare's Sonnet 60:

       “Like as the waves make towards the pebbl’d shore,

       So do our minutes hasten to their end;

       Each changing place with that which goes before,

       In sequent toil all forwards do contend.”

NOTE

      1 1. The Tim Ferris Show #373: Interview with Jerry Colonna.

Part Two Raising Your Venture Fund

      It's easy. It's not easy.

      The СКАЧАТЬ