What Sequoia sees coming next, with Roelof Botha | TechCrunch Disrupt 2025

Oh, our pleasure to have you here again.

Thank you so much for having me. You know, we first got involved with Techrunch in 2007, and it wasn't called Disrupt, it was called Techrunch 40. There were 40 companies competing in the battlefield. The winner that year was mint.com and the seed investment we made in a company called Dropbox launched at that particular event, just to give you a sense of time. Then there were two other Techrunch 50s, and then you started what you now call Disrupt maybe in 2011. So we've been a part of this firmament for a long time. Actually, I think of it as being analogous to what we do in our business. We find these young companies very early on and then we stay with them for a long time as they build enduring businesses, and the same we've done here. Kudos to you for what you've built at Techrunch. I look at the audience that is here today and I remember how small the first event was, almost 20 years ago.

So we just launched our latest seed and venture funds. They're essentially the same size as the funds we launched six or seven years ago, and the team we have at Sequoia is the same size as it was back then because we're in the business of backing outliers. We have a small team that wants to pursue the founders that want to build truly daring companies, outlier businesses. To give you a sense, in the last 12 months we've invested in about 20 seed-stage companies. Nine of them we partnered with them at the point of incorporation. They were literally at the inception stage of the company. There's nothing more than partnering with founders right at the beginning that we love.

Not always. Sometimes it's a group of people with whom we've had a longer term relationship. Sometimes it's somebody we met recently. Sometimes it's a couple of days to make a decision because things move fast in our industry and you have to have a prepared mind. Sometimes it's something we've nurtured over the course of many weeks.

Sure. There's a phrase that I came up with that a lot of people have latched on to, which is the return-free risk. Investing in venture is a return-free risk. Anybody who's studied a capital asset pricing model understands the joke in that. The reason I came up with this is if you look at the history of venture capital, it's an asset that's uncorrelated with other asset classes, and so the thinking for many allocators was you should allocate a certain percentage of your portfolio to this and more money should flow to venture capital. But the truth is there are only so many companies that matter. In my opinion, throwing more money into Silicon Valley doesn't yield more great companies; it actually dilutes talent. It makes it harder for us to get the small number of truly special companies to flourish. It doesn't scale with the amount of money. If you take out the top 20 or so venture firms out of the industry's results, you actually underperform investing in an index fund. There are 3,000 venture firms now in America. There were a thousand when I joined Sequoia 20 years ago. I just don't think it makes sense for most people to invest in venture as an asset class. That's the reason.

Oh, there are more winners. For all the founders out there, this is a fantastic time to be building, and there are definitely more winners today than there were 20 years ago. I think the scale of the outcomes are significantly different. I remind people of this: when I joined Sequoia in 2003, there were no mobile devices. Cloud computing didn't exist. The majority of Americans were on dialup. There were maybe 300 million people on the planet that had access to the internet. So the scale of the opportunity today is completely different. If you look clinically at the numbers, I think for the last 20 years, there've roughly been 380 billion-dollar-plus outcomes in the industry. That's a significant number. But I don't think it'll continue to scale just with more money going into the industry.

I think secondaries are fantastic. At PayPal, people pretend as though this is a new phenomenon. In 2001, we did a small secondary at PayPal. I graduated from Stanford in 2000. I was in deep debt, and we did a secondary. I was able to sell $50,000 worth of my PayPal shares six months before the IPO. I suddenly was debt-free and I felt so liberated. That summer in 2001, eBay approached us with an acquisition offer, and I think the fact that we took a bit of secondary gave us the resolve to keep going because we took a little bit of pressure out of the system. I've always been a huge fan of providing secondaries for founders and for early investors if they need it. The goal is to build a great company long term, and with that objective, if you can better align incentives, I think it's always a good decision.

Yes. I'll take a step back. In 2010, we launched the scout program. We were the pioneers of this particular program. Back then, you had this phenomenon that there were talented people who maybe thought about starting a company, but they couldn't afford to not have a living. Even $100,000 might just be enough for them to leave their full-time job and start a company. We realized that there were a bunch of our contemporary founders that were in the flow of meeting with up-and-coming entrepreneurs or people who were thinking about starting companies, but typically they didn't have the capital to make individual investments. That's where the idea came from for us to launch the scout program. It's been a huge success and copied, as ideas are copied. It's a reminder for us that we always have to keep on innovating if we're going to stay ahead of our competition. Right now we have about 70 or 80 folks in our scout program. We continue to refresh it every cycle. Every year we actually have a new group. Sometimes people turn out to not be particularly active or their networks maybe stage out and they move on to other opportunities. Backstage just before we came on, I ran into one of our Sequoia scouts and we talked about one of the investments she's working on. It was great timing.

They tend to be people within our networks, but we're also purposeful about extending our networks. This is one of the key insights that we had a long time ago. We may have invested in what we call one of the aircraft carriers. We were an early investor in Airbnb, seed investor in Airbnb a long time ago. Some of the people who come out of Airbnb might think about Sequoia or they may turn out to be scouts. In Uber, we were a scout investor in Uber, but we didn't make a venture investment. If we have somebody from Uber who's a scout, they may have a good nose for some of the people who come out of Uber to start new companies. It's a way for us to strengthen our existing networks, but also to broaden into new ones. It's generally an invite-only program, but obviously we're open to ideas. If somebody feels that they're a great candidate, feel free to send us an email.

Well, we just had a partner meeting this morning, so it's fresh. In your specific question, the process: one of the things that we really celebrate at Sequoia is just the different viewpoints people have as we make an investment. Our investment conversations are fierce debates, huge disagreements. Part of what we do as a team is spend a lot of time at offsites and just culturally building trust so that people understand when we have those investment debates, it's not about any individual friction; it's about the merits of the idea. Our goal on a Monday is not to win an argument; it's to make a great investment. I'll often walk into a Monday partner meeting having read the material over the weekend thinking we will or will not invest, and then I'm surprised because I listen to the flow of the conversation, the arguments and counterarguments that people make, and it reshapes my thinking. That's the goal for us on a Monday. We typically have an anonymous poll at the beginning of the meeting for everybody in the room so we can really surface the spread of opinions. Is somebody a three out of 10 on this and somebody's a nine out of 10 on this? This is after they've spent the weekend looking at the materials. Yes, everybody has to read the material beforehand. We discourage sidebar debates; you can surface questions to the sponsors of an investment over the weekend, but we really don't want sidebar debates. The last thing you want is alliances to form. 'Will you vote for my company on Monday?' That's not healthy. Our goal is great investment decisions, and then we have a full-throated debate. I think sometimes newcomers are surprised at how full contact our conversation is. I remember one meeting where we walked out of the room and somebody thought that there was real disagreement between two of the partners. It was myself and my partner Jim Goetz, and we walked out as though nothing had happened because we just had a fierce argument about the company, but it's about the merits of the investment. Part of the reason for that is that when you get an investment from Sequoia as a founder, the phrase we have is: when you get one of us, you get all of us. We make investment decisions on a consensus basis, which really surprised me when I joined Sequoia. I thought that committee-based decision-making is the last thing you would want, but there's something magical about that for us. We're all in it together. It means it's our investment, not your investment. If you need help three months down the road, even though you might be the person on point for the company, everybody is going to help you or help the company. That's the kind of team approach we bring to our business.

As you can imagine, we spend a lot of time analyzing our decision process and trying to figure out which companies we missed altogether. We never even saw it. Why did we not see it? Did we not have a prepared mind? Did we not have somebody on our team who took an interest in a particularly new interesting category? Did it not make it through to a Monday? Did we have a midweek decision with three people and maybe they just didn't quite click with the founder? Did we have the right person in the room? Were we too busy, running from one meeting to the next, and you don't pause and think very carefully about whether this is a company that will matter? And then obviously, do we get Monday decisions right? We spend a lot of time analyzing that, and there's always room to get better.

You can revisit it. There was an investment I was involved with. We were an existing investor, a venture investor in this particular company, and there was a later-stage growth opportunity to invest in the company. I couldn't quite convince my partners of it. Honestly, the arguments they had were sound. I just kept on thinking, I need to do a better job of convincing them and finding the right information to back up my arguments. It took me six months until we eventually got to a yes decision. Unfortunately, the price had gone up by about 30% in the intervening period, so it was a little more expensive. But I think we need to stay true to that. You need to convince people with logic. No one, not even me, can force an investment through our partnership. I think it's a very healthy dynamic that we have. The other thing we'll sometimes do is, by the way, some of the most interesting investments for us from the founders out there are the controversial ones, the ones that are non-obvious. Those are the ones where typically there are one or two people in the team who don't necessarily understand the potential of this investment. So we'll just take a time out. Sometimes we've literally stopped and dispersed, come back 30 minutes later, let people just simmer on it. Sometimes we've come back a week later, a day later, and just revisit a decision again with the goal of making great decisions.

Well, if it's the way it's perceived, the perception is your reality. I think we tend to focus on our founders. Our business is about finding those great founders and helping them build great businesses. We want to put the spotlight on them rather than ourselves. One of the taglines we used to have is 'We're the entrepreneurs behind the entrepreneurs' because we really want to make sure that the founders are the ones that deserve the spotlight and our attention is on them. Internally, we celebrate a diversity of opinions and we need spiky people inside Sequoia because in some sense there's this impedance match we need between the person on our team and the founder that they're partnering with. Sean has a specific profile. He's a physics PhD who dropped out of high school because he was playing Counter Strike competitively in high school, just as an interesting anecdote. He appeals to a certain set of founders, very technical. We have other people that just have a different approach. Maybe they write blog posts or they're at events, they have a different style, they go to hackathons on weekends, and they have a different approach of identifying founders and working with them. We celebrate that variety within our partnership.

Well, I think it's a different era. I don't think it's quite accurate. If you go back in history, Michael was very outspoken in his opposition to Trump in his first election, and Doug was outspoken in his support for Trump. We had two different partners, senior partners at Sequoia, who were on completely opposite ends of that particular debate. We actually have a tremendous breadth of opinion within our partnership and we celebrate that. Some people just choose to express it differently. We have some of our partners that are very active in philanthropy or in their private dealings, and they're just not as vocal as Sean might be on social media. We've always honored the right to free speech of each of our individual partners, and we will uphold that.

Well, let me answer the first one first. Just as a matter of routine, we don't comment on personal matters, so I can't delve into that. Somaya did great work for 5 years, and I really appreciate everything she contributed to us at Sequoia. On Sean, I think he has made it clear what he stands for. There's a particular group of founders for whom it is very appealing that he's been firm in his opinion. Does it come with trade-offs? Yes, it does.

I think we're in a period of incredible acceleration. What this technology today, what AI technology is enabling us to do is to build real businesses more quickly than ever before. I think there's a real challenge for us as investors to understand which ones are going to endure and which ones are relatively thin layers on top of the foundation models where they'll either be competed away or the foundation models themselves, as they improve so significantly, will end up subsuming them. We've seen that happen in a couple of categories. Copywriting was a category two or three years ago, and I think it no longer is. It's either provided by the foundational models or it's now being provided by other software vendors like HubSpot or Salesforce that can integrate copywriting into their standard offering. So it's an exciting time to look at company formation. Financial bubbles are ones where asset prices go up and down and have nothing to do with the real world economy. What's different here is the tension on AI is concentrating enormous amounts of resources and talent on something that is incredibly real. Having been here for a long time, Silicon Valley attracted a lot of entrepreneurial spirit in 1998 and 1999, but the internet was too small and the technologies were really challenging for them to build. Even if you had the right business idea, unless you had a very strong technical team, you just couldn't make it. Today it's so different. We see so many founders that are building solutions to in-market problems that they understand. Sometimes they have great technical skills, but sometimes they do not, but the technology is propelling them in a way that I haven't seen before. The use cases we're seeing, whether it's Winston and Gabe at Harvey attacking the legal domain, or Britt and Clay at Sierra attacking customer support, or Umesh, who is the founder of Copilot originally within GitHub, who's building a company Expo that's in the penetration testing space. There are all these myriad of applications that wouldn't have been obvious three years ago that now are possible with these technologies. It's hard to discern all the winners honestly, but the solutions being delivered today are just breathtaking.

I'm very optimistic about Harvey. Let me say that first. I think in many of these cases, it's going to come down to traditional business fundamentals. Just because there's the pixie dust of AI doesn't change the basics of investing and building companies and thinking about market structure and competition and what are the moats that you build around your business. Those are truisms that don't fade.

I feel a real sympathy for founders as you wrestle with this issue. We actually had a debrief this morning on a company that didn't quite work out the way we had hoped. Part of the dilemma was this company raised money in 2021 where the valuation ran up from $150 million to $6 billion in 12 months, and ultimately came back down. The challenge inside the company for the founders and the team when you feel as though you're on this rocket ship and then you end up being successful, but it's not quite as good as you'd hoped at one point, there's some sense in which maintaining positive momentum and sustaining it is actually really valuable. It's very hard to argue against raising an additional round. The environment is healthy right now for fundraising. I'd argue if you as a founder don't need to raise money for at least 12 months, you're probably better off building because your company will be worth so much more 12 months from now relative to what the market may do in the intervening period. If you need to raise money 6 months from now, you should probably accelerate your fundraising timeline to today because I think the market is just very healthy and there's a good chance that the market may not be as healthy in six months. It really depends how much progress you can make with the business. I know it sounds self-serving for an investor to say be careful about raising successive rounds at ever-increasing prices, but unfortunately I have seen the downside of that, so just be mindful. I studied Latin in high school, the inner nerd in me. I had to read the story of Daedalus and Icarus in Latin. That stuck with me, this idea that if you fly too high, too fast, your wings may melt. Just be careful, please.

I think it's one of the important reasons we have a small team and a small number of investments that we make every year. Part of the reason we have a seed and a venture fund that's distinct is that we think the needs of a seed stage and a venture stage founder are different. We want to make sure that literally this morning we approved two seed stage investments at the incorporation stage. In one case there's a solo founder, in the other case there's a team of two. We need to make sure at that seed stage that we provide them with the right resources they need to get plugged into the right customer networks, to get help with recruiting their first talent, they probably need a first office. We need to make sure that we serve their needs. By virtue of concentrating on a smaller number of companies, and this is a bit of a strange analogy maybe, but we're more mammalian than reptilian. We don't lay a hundred eggs and see what happens. We have a small number, just like mammals give birth to a small number of offspring and then really give them a lot of attention. That's our approach to investing at Sequoia. We have a small number of investments and so we stick with you. That's the compact that we have with you at Sequoia: we'll help you get through the other side. We're not fair-weather friends that duck when there's the first headwind. Just to give you a sense, in the last 20 to 25 years, when I looked at the data, 50% of the time that we made a seed or a venture investment, we failed to fully recover capital, which is humbling. It's really humbling. It's still much better than the industry. I think we do better than the industry. Our business is about striving for the outliers. If you look at all the companies that have had an outcome of $5 billion or more since 2011, so the last 15 years, we're an investor in 30% of those companies, an early investor in 30% of the true outlier companies. But in order to strive for those, you have to accept that sometimes you don't quite get there. We take it very personally. The first time I helped us make an investment that was a complete write-off, I literally cried in the partner meeting. I was so embarrassed and I felt so guilty that I'd lost money. But unfortunately, that is part of what we have to do if we want to strive for those outliers.

Well, I don't know if I'm the best qualified to comment on this. I'm sort of a libertarian free market thinker by nature. I think industrial policy generally only has a place if it's in response to things that are of national interest. The only reason the US is resorting to this is because we have other nation states with whom we compete who are using industrial policy to further their industries that are strategic and maybe adverse to the US's long-term interest. When I take a step back and think about that game theory, it probably makes sense for the US to do something. But generally speaking, what's one of the phrases? The most dangerous words in the world are 'I'm from the government and I'm here to help.' So I genuinely don't know if it's a great idea.

Well, we operate as a team. My title is 'Steward' for a reason. It's just a notch above 'Usher' if you go look in the dictionary. It's mostly because 'Global Supreme Leader' wasn't available. But you really have an incredible team. I look around the partners we have: Alfred Lin, Pat Grady, Luciana who leads our efforts in Europe, Andrew Reed who's had a fantastic year with Figma and Klaviyo both going public recently. I think about the rest of the team that we have. We have incredible depth at Sequoia and we really operate as a team. Every person's vote counts the same on a Monday partner meeting. That's an important part of getting to good decisions: we want the triumph of ideas, not the triumph of seniority.

Yes. Nice move. Stay humble and grounded. It's in our individual handwriting, by the way. Every time you go to the restroom or you go get a cup of coffee or a snack, you see your own handwriting and a reminder of what we're here to do: to serve founders and to help partner with them and to help them build great companies.

Thank you.