Pat Grady - Relentless Application of Force

**Patrick O'Shaughnessy** (0:00)
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**SPEAKER_2** (2:07)
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**Patrick O'Shaughnessy** (2:36)
My guest today is Pat Grady, a long-time growth investor at Sequoia and one of the firm's senior leaders. Pat has been a part of a long list of legendary investments ranging from Snowflake, Zoom, ServiceNow, Qualtrics, Okta, Hubspot, Notion and OpenAI among many others. There aren't many investors who reference as well as Pat, both inside and outside of his firm. We talk about investing, building an investing firm and building enduring companies. Please enjoy this great conversation with Pat Grady.
Pat, I'm lucky in this conversation and that I know a lot of your partners have interviewed them, understand the business and I'm fascinated by Sequoia's history and the way that you invest, but I've spent less time on the growth side and so I'm really excited to do this with you today. I thought a fun place to begin would be to talk about the nature of internal healthy peer pressure at Sequoia, how it's created and maintained in a way that is on that line of healthy and overly intense.
I would love to hear as much detail as you can manage about where this internal pressure comes from and how you tend to that flame.

**Pat Grady** (3:47)
I'll start with where it comes from. And the simple answer is Don Valentine. Don Valentine is the founder of Sequoia Capital. One of the many brilliant things that he did to build an organization that would endure is when the first generational transition happened in the mid 90s.
The standard at the time would have been for the new partners to buy out the old partners. And instead Don didn't ask for any money whatsoever. He just handed it over. And in doing so, he imbued the partnership with this sense of stewardship, which is actually a big part of what drives us. We feel like we've been given this wonderful gift that is Sequoia. The only thing that's been asked of us in return is to make sure that we leave it in a better place than we found it. And so I think a lot of the drive for performance comes from that inherited sense of responsibility. I think a lot of it also just comes from hiring for people who have that DNA. Whatever caused the chip on their shoulder or whatever the demons that drive them might be, it is something that we try to select for in the interview process. But I'll give you an example of how it plays into the day-to-day decisions that we make. So in the mid-90s, Don Valentine handed the partnership to Michael Moritz and Doug Leone, and it was Michael one, Doug two. Michael was the visionary, Doug was the execution machine. In 2012, Michael stepped back, and Doug became the number one, both the visionary and the execution machine. And he was complimented, of course, by Jim Goetz and a real lot of other people like that. But in 2012, when Doug became our senior steward, one of the things he did was went through all the legal docs that govern Sequoia and try to make sure he understood them, just to make sure we had a clean house.