Sequoia Capital is one of the most successful and influential venture capital companies in Silicon Valley history, but it has come under pressure from global economic uncertainty, geopolitics and boardroom battles. Can Sequoia adapt in a fast-changing world?Produced, directed and edited by Greg Bobillot. Filmed by Gregory Bobillot. Additional camera: Tom Griggs. Graphics: Russell Birkett. Executive Producer: Joe Sinclair.
TABBY KINDER: Sequoia Capital is one of the most venerated venture capital firms in Silicon Valley. It's 50 years of investing expertise, investing in early stage companies, and betting that some of those companies will become unicorns worth over $1 billion or become even more successful listed companies.
ORTENCA ALIAJ: And it has the good sides, which is that it's fueling this new technology. But there are also the bad sides, not just of Sequoia, but of VC investing, which encourages this sort of fake-it-until-you-make-it attitude amongst entrepreneurs. And that's where you can have big problems like Sam Bankman-Fried and FTX.
TABBY KINDER: The question after FTX failed was, really, how a firm like Sequoia, with so much experience, 50 years of investing expertise, some of the best venture capitalists in the business working at that firm, how they could have got it so wrong and what that says about the diligence done by VC funds over their investments more generally.
GEORGE HAMMOND: They made the decision to split the firm. It's a major decision. This was a venture capital firm who was more globally expansive than any other, who was more successful at being globally expansive than any other. They're retrenching in a very meaningful way. REPORTER 2: The area also supports a variety of light and heavy industries. Investment capital from the city and other parts of the country supports hundreds of pioneering high technology companies in the so-called Silicon Valley, just south of the city.GEORGE HAMMOND: Conceptually, it emerged in the 1970s. And it's called Silicon Valley because of the enormous amount of silicon required to power the semiconductor industry.
And, moreover, I mentioned the ERISA Act, which, effectively, allowed pension fund money and then other money to flow in into riskier assets. And, by the way, from the very beginning, it was not just in Silicon Valley. It was also in Massachusetts. ORTENCA ALIAJ: Sequoia Capital was started in the early-1970s by Don Valentine. He was sort of seen as this very kind of humble person. He is amongst the few who hasn't named his company after himself.
And so he was able to look at these crazy founders in the eyes and say, listen, you're going to take it from me. You're doing something wrong here. Do it this way, not that way. So he pioneered a hands-on model of venture capital investing, which became central to the model later on. He had an unbelievable work ethic. He was famous for just relentlessly following up, doing calls at 5:00 in the morning, at midnight at night, getting on planes to China the whole time.
And, in many places, it's been quite bumpy. It's complicated. That doesn't mean they won't come through with great success. It's just generational change is awkward. ORTENCA ALIAJ: You almost have the physicality of the old guard, the new guard butting heads. And, of course, this spills out into the open. And it also emerges that Matthew Miller did this with the knowledge and backing of Sequoia, which stings even more for Moritz. And, eventually, I think Sequoia see that this has become a public relations disaster.
GEORGE HAMMOND: Sequoia struck gold on a number of early investments. So its first investment was Atari, some other very notable investments Apple, Google, these companies which became absolutely huge and, in quite short order, returned huge amounts of money for Sequoia and its own investors. And once it had done that, particularly in the world of venture capital as it was, which was more of a cottage industry 30, 40 years ago, certainly, Sequoia had an incredible brand on which to trade.
It's a nice stamp of credibility on your vision. It helps you with recruiting. And it helps you with finding co-investors, right? Everyone wants to do a deal with Sequoia, so you're going to have a lot of other choices and options as a founder if you've got Sequoia on your cap table or leading around.