Lessons from Pat Grady - Sequoia's Newest Partnership Steward
On measuring yourself, desperation/irrelevance, understanding people, and working with Doug Leone and Roelof Botha.
Pat Grady joined Sequoia in 2007. 15 days ago he was promoted as one of the next partnership stewards. This short post makes his wisdom more accessible.
At 24, Grady became the youngest person Sequoia ever hired. His investments include OpenAI ($300bn), ServiceNow ($177bn), Snowflake ($86bn), and Zoom ($25bn), among others including HubSpot, Notion, Qualtrics, Okta, OpenEvidence, and Harvey.
Relatedly, I previously created a podcast titled The Almanack of Keith Rabois.
Desperation & Irrelevance
Grady grew up in Gillette, Wyoming—a coal mining town—desperate to find out what else was out there.
In high school, his greatest fear was boredom. Today, it’s irrelevance.
Different people have different answers to the question, what is the meaning of life? I think 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. When I say irrelevance is my greatest fear, it would be the point at which I am not a good husband, not a good father, not a good partner, not contributing to the world around me.1
This thinking pervades everything at Sequoia.
The default is if we don’t go out there and earn it, tomorrow we are irrelevant.1
Doug Leone became senior steward in 2012. He discovered only he was safe—nobody could vote him off. He changed the legal documents so he could be fired like anyone else.
As soon as you’re safe, you start to get a little bit complacent. And as soon as you get complacent, you start to become mediocrity.2
Look for What’s Right
When Grady joined the partnership he systematically looked for flaws in investments and in people. Roelof Botha told him: the hard thing is coming up with the reason to invest, knowing there are so many things broken. The job is to figure out what is so overwhelmingly great or tantalizingly promising that it’s worth dealing with all the stuff that’s broken.3
When I meet a new person, I try to think, what’s special about this person? What can we learn from this person? I think it’s made me a better investor and hopefully a better and certainly a happier person.3
Understanding People
The biggest mistake in sales is telling people how awesome you are. They don’t care how awesome you are. They want to know how awesome they have a chance to become.2
The thing we really want to do is understand who are you, what do you want to become, and what is it you want to build? If we can understand those things, and we can feed that back to you to show you that we understand those things, and we are interested in those things, and we want to be a part of those things—the main thing is not our resources. The main thing is your vision and your dream.2
Doug Leone’s method: 30-40 minutes of rapid-fire questions. A perfect 2-minute summary capturing what the founder hopes to build, acknowledging every flaw in the business, gently suggesting how Sequoia could help, and reaffirming the vision. Ninety-five percent of the time, the founder would be desperate to work with them.4
The most powerful thing you can do is to make a founder feel like they’re seen. You understand them and try to validate their ambition through the way that you describe their business.2
On negotiation, Doug was unbelievably transparent. Grady recounts a typical negotiation: “You’re going to want to pay X, we’re going to want to pay one half X. Why don’t we just call it 0.75X and call it a day? The whole thing would take 30 seconds.”2
The simpler you can keep things, the more straightforward you can be, the more transparent you can be, the more people are going to trust you, and the more people trust you, the easier life becomes.2
Grady applies this to all communication. The objective isn’t to impress. It’s understanding.2
My objective is for them to understand. The thing you’re optimizing for is clarity and understanding, not trying to impress upon people how smart you are.2
When assessing an opportunity Grady thinks about two variables:
The market determines how big a company can get, the founder determines how big the company will get. Market in some ways establishes the ceiling on an opportunity. But you could have the biggest market in the world, if the founder is just not that good, you’re not going to get anywhere. I will take a market of modest size being attacked by a spectacular founder over a market of gigantic size being attacked by an okay founder.1
Personal Growth
Grady creates scaffolding around himself to maintain pressure.
I have my personal long-term plans and then my personal annual OKRs, which cascade down into my quarterly OKRs, which cascade down into what I’m doing this week, this day, this minute.2
When asked to rate Sequoia on winning deals, Grady answered: “We don’t give 10 out of 10s.” Even for an area where Sequoia excels, he rated them a nine.1
He joined at 24 as the youngest person they’d ever hired. He recounts:
Pretty much every single day on the drive home, I was berating myself for not having done enough that day. When we did our annual reviews, I’d probably spend 48 hours on my self-review. It was almost like a self-therapy session where I was just constantly tearing myself apart for not having done more and not having lived up to the name Sequoia better that year.2
Infinite work capacity kept him in good standing. A heart of gold; true dedication to doing the right thing.4
Michael Moritz told Max Rhodes, founder of FAIR, what separates legendary companies: relentless application of force. Grady agreed.2
Love this!