Lessons from Pat Grady, partner at Sequoia

On Founders and Leadership

On the two most important things when assessing founders: "There are kind of two things that I care most about when assessing Founders so one is founder market fit and two is the vector that describes them. The market determines how big a company can get and the founder determines how big the company will get". [1]
On founder-market fit: This is the "tight alignment between a founding team's lived experience and the urgent pain of the market they're serving—creating unfair insight, faster iteration, and easier customer trust". [1]
On the importance of a founder's motivation: "Founders that focus on solving a customer problem (like Eric Yuan from Zoom or Fred Luddy from ServiceNow) tend to outperform those with money or status motivations". [2]
On the founder's trajectory: It's about the "slope, not intercept," meaning their potential for growth is more important than where they are at a single point in time. [2]
On authenticity: "One of the biggest things we look for is just authenticity in a founder... you might not have the same level of passion in attacking business number 37 as you do when you attack a problem that like you've actually experienced and it really ticks you off that that problem exists". [3]
On habits of exceptional CEOs: Pat Grady highlights several, including Frank Slootman's intellectual honesty, Todd McKinnon's exceptional listening skills, Eric Yuan's obsession with customer culture, and Brian Halligan's use of mental models. [2]
On the most critical factors in investment decisions: "The most critical factors in investment decisions are the founder and the market. Exceptional founders can overcome modest markets, while average founders struggle even in large markets". [4]
On what he would advise someone starting a company: "Crystallize your thesis, stress-test it frequently and have the courage to use your own understanding. When I say thesis, I don't mean your pitch to investors—I mean your pitch to yourself!". [5]
On the importance of the 'why': "Starting a company will be painful. Unless you're crystal clear on why it's worth it, you'll lose your nerve when the going gets tough". [5]
On the founder's role in culture: "Culture and vision are the two essential roles of a founder. You can hire for any other aspect of a business, but those can't come from outside. They determine who you are and why you exist". [6]

On Company Culture

On the definition of culture: "I used to think culture was a fluffy thing people talked about when they didn't have anything better to say. Boy, was I wrong. Culture is everything. It's the most scalable system you have". [6]
How culture is defined: "Cultures are defined by making tough decisions in 'crucible' moments". [2]
On assessing a company's culture: Sequoia assesses culture through the consistency of employee answers about it. "Different ideas of the same company's culture signal chaos and a low likelihood of achieving employee alignment". [2]
On the founder's influence on early-stage culture: "Early-stage culture is defined by the Founder". [2]
On building a strong culture: "Sequoia Capital believes that a strong company culture is essential for attracting and retaining top talent, and for creating a positive work environment". [7]

On Fundraising and Venture Capital

On getting a VC's attention: "Cold email works. Only if it is clearly targeted to him. Blasted, generic emails do not work". [8]
On the role of associates: "Disregard the conventional advice to ignore associates. Build relationships with junior investment professionals, who can become your champions within the VC firm". [8]
How to convince VCs: "'Sell the problem' – if the VC can understand the underlying customer issue you are solving, there is a much better chance of alignment". [8]
On focusing your pitch: "Focus on the believers, not the skeptics". [8]
On the fundraising process: "Treat fundraising as a strategic process with a view to where you want to be in 5 or 10 years". [8]
On a struggling fundraising process: "If things are not moving fast and you do NOT have to hold off investor interest, your fundraising process is struggling". [8]
On the existence of the venture capital industry: "The best reason for the venture capital industry to exist is to take founders who have these wild ideas for how they can solve an important problem and build a better future and to wrap around them all the resources they need to turn crazy ideas into enduring impact". [9]
On the nature of VC: "Venture capital is not an asset to be managed". [9]
On Sequoia's investment process: "The theory of our process is as simple as crystallize an investment thesis and then stress test it". [10]
On conviction in investments: "The positive of conviction is that investments are never obvious, and you really need somebody who sees something special to step up and have conviction and make an investment". [10]

On Business Strategy and Growth

On the importance of product-market fit: "Find the magic of product market fit and and kind of iterate from there". [3]
On the shift in the market: "Today there's just more competition... we're kind of back to the basics of like find the magic of product market fit". [3]
On the importance of focus: "Instead of trying to be perfect across every dimension, I've learned to concentrate on the handful of things that really matter". [5]
On the power of storytelling: In the early days of a company, being "masterful at storytelling and community building" can give you "a lot of breathing room to figure out what the exact right product is". [4]
On Dunbar's number and company growth: Around 150 employees is where the "inherent ambient knowledge of what's happening disappears begins to dissipate". [3]
On avoiding nostalgia during growth: A key piece of advice for growing companies is to "not get caught up in nostalgia" for how things used to be. [3]
On the value of data: "Data is the new oil". [11]
On building a moat: Startups can build a moat to mitigate the data incumbency advantage of larger companies. [11]
On targeting big markets: Following the wisdom of Don Valentine, "Target Big Markets". [3]
On the importance of solving a problem: "Companies exist to solve a problem. Answer this first principle question: What is the problem you are solving?". [3]

On Personal Philosophy and Learnings

On decision-making: "As my dad used to tell me, 'When your values are clear, decision-making is easy'". [5]
A guiding question for tough choices: "I try to zoom out and ask, 'What kind of person do I want to be?'". [5]
On the importance of values in hiring: "When you're searching for a new executive and you find someone who seems great but there's one little thing that feels out of sync... you should absolutely pay attention to it, because more often than not it's a window into who someone really is". [5]
On perspective: "It is really important to be able to traverse each unit. To zoom in and out. At one extreme is a moment... At the other extreme is a lifetime". [5]
On his greatest fear: "My greatest fear... is probably irrelevance. Just kind of feeling like you are living a life that is worthwhile". [7]
On the meaning of life and happiness: "For some people the greatest happiness comes from some feeling of productivity or some feeling that you've contributed something to the world around you". [7]
On the drive to win: Growing up in a small town gave him a "desperate need to figure out what else was out there," which translated into the "desperate need to win that is inculcated at Sequoia". [4]
On Sequoia's hiring spec: "The hiring spec is quite literally hyper-competitive with a heart of gold". [4]
On the hierarchy of doing right: "If you do right by founders you'll do right by LPs if you do right by LPs you'll do right by the partnership... you have to keep it in that order". [4]
On long feedback cycles: "We're in the ultimate long feedback cycle business and I think one of the mistakes that people make is they try to lunge for outcomes instead of just taking pride in the quality of the inputs". [4]
On recognizing opportunity: "You might not recognize the one opportunity that really matters when it presents itself to you... you got to drop everything and pounce on it". [4]
On humility at Sequoia: "When a company is a wild success and you don't see us in the cap table chances are at some point we screwed it up". [7]
On the importance of people in uncertain times: "The more uncertainty in the world the more the people themselves are the key ingredient that's going to determine the outcome". [8]
On the future of venture capital and AI: "If AI is eating the world it's probably going to eat us at some point too... we wanted to try to figure out what that looked like and to be the AI or software enabled venture firm versus getting killed by somebody else who does it". [12]
On the potential of AI for building businesses: "I think the capabilities today are enough to build just trillions of dollars worth of new businesses". [12]

Learn more:

Lessons from Pat Grady, partner at Sequoia

On Founders and Leadership

On Company Culture

On Fundraising and Venture Capital

On Business Strategy and Growth

On Personal Philosophy and Learnings

Written by Antoine Buteau

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