--- title: "Sequoia’s Roelof Botha: 60% of Our Capital Went into AI Over the Past 12 Months" author: "Unique Research" sourcePublication: "Unique Research (FFCAP English library)" originalPublishedAt: "2023-10-24T17:30:00+08:00" canonical: "https://ffcap.cn/en/research/20231024a07mw900" source: "https://ffcap.cn/en/research/20231024a07mw900" language: "en" cnSourceUrl: "https://view.inews.qq.com/a/20231024A07MW900" --- # Sequoia’s Roelof Botha: 60% of Our Capital Went into AI Over the Past 12 Months _Unique Research · Insight · October 24, 2023 · Interview with Sequoia Capital steward Roelof Botha (host Emily)_ ## Core takeaways - **Fundamentals first:** build the business and serve customers — the only things founders control. Some companies should revisit product–market fit to unlock more potential. - **Macro:** the easy-money era is ending, but great companies were built in high-rate and recession environments alike (Apple, Cisco, PayPal as Sequoia examples). - **Sequoia’s horizon:** long-term company potential over short-term stock marks; selective post-IPO hold via the Horizon / “durable capital” structure. - **Europe:** ~1/3 of global software talent; more founders spinning out of platforms with ambition to build globally; Sequoia optimistic; met UK PM Sunak. - **AI:** Sequoia is a large AI investor — **60%** of capital deployed in the past 12 months around AI; many still “stealth”; potential compared to internet, cloud, and mobile. - **Beyond AI:** bioinformatics, personalized medicine, defense tech; conviction on X (ex-Twitter). - **Where to start:** Silicon Valley still #1 for funding concentration (~50% of VC), but talent is distributed — build anywhere. ## Market message: “focus on fundamentals” **Emily:** Sequoia’s market memos are famous — 2008’s “R.I.P. Good Times,” more recently “adapt” and “endure.” What’s the signal now? **Botha:** Focus on fundamentals. At PayPal in early 2000, after the crash, they had about seven months of runway and zero revenue. The only controllable lever was building a business that served customers. That is still Sequoia’s advice. A twist: some portfolio companies have incomplete PMF or untapped potential — they should go back to first principles and ask if a different path unlocks a higher ceiling. ## Macro and the racing-line metaphor Jamie Dimon’s 7% rate worry: Botha agrees easy money is over. Sequoia’s 50+ year history: Apple (1978) when 10-year yields were >8%; Cisco (1987) similar; PayPal and Google (1999) above 6%. Today’s 10-year around ~4.5%. Great companies get built in all rate regimes. On the racing metaphor: approach the apex, then accelerate out. Botha thinks they are near the apex — leading companies are pressing the advantage and flooring it. ## Instacart, post-IPO hold, and “stewardship” Sequoia invested in 2013 at a ~$29M valuation when the team was <10 people. Pre-pandemic 2019 revenue ~$214M; last year ~$2.5B; H1 free cash flow already exceeded all of 2019 revenue. The 2021 late-stage mark (~$39B then, ~$8B around IPO talk) was underwater — but four other financings were highly profitable. Only two prices matter: entry and exit. Public marks bounce daily; Sequoia underwrites the long company. On criticism (e.g. Fred Wilson) of holding post-IPO: Sequoia’s Horizon / durable capital structure put ~95–96% of available capital into vehicles that can hold longer. MongoDB IPO’d near what would be ~$23/share in today’s terms and later traded near $350 — >90% of value created after listing. Google went from ~$23B IPO market cap toward ~$1T+; Nvidia was a Sequoia seed in 1993 at ~$300M IPO and is now a trillion-dollar company. Hold selectively where long conviction exists. Botha on being called “steward”: Sequoia was named for trees that live 2,000+ years — leave the partnership better than you found it; recruit so juniors inherit the firm, not just work for you. ## Europe, China separation, AI allocation Europe: one team, one fund searching Western market leaders — Romania or Copenhagen alike. ~1/3 of software developers live in Europe; platform spinouts (e.g. from Revolut’s ecosystem) plus rising founder ambition. High-level EU regulation, Botha argues, doesn’t really change seed founding or young founders’ global ambition — like rates don’t stop good ideas. On formal separation from China/India franchises: independent businesses by region; more cousin-style collaboration than sibling rivalry. **AI:** “We’ve been very active at seed. Over the past 12 months, **60%** of our investments have been around AI.” 1990s internet boom → trough of disillusionment ~2002 → internet mattered more than anyone imagined. AI may rhyme. Compared to internet, cloud, mobile. Possibly a record number of stealth AI bets — five deals this year where Sequoia found the team and agreed terms before the company even incorporated. Beyond AI: healthcare, bioinformatics, personalized medicine, defense tech. On X: Elon gave Botha his first U.S. job offer 23 years ago at x.com; Sequoia is “passionate” about cost structure, faster product cycles, record usage, business-model reset, and transparent moderation — early days (<12 months since acquisition vs Sequoia’s usual 10–15 year hold). Best place to found today: Silicon Valley still ~50% of VC dollars last 12 months, then NY/LA, then London, Paris close. What matters most is assembling talent — PMs, designers, finance people who understand tech companies — not capital alone. Sequoia wants great founders everywhere. **Next era label:** after move-fast / year-of-efficiency — back to fundamentals: serve customers, clear line of sight, build a great business model. --- Editorial English edition published on UniqueCapital: https://ffcap.cn/en/research/20231024a07mw900 On-site reading page: https://ffcap.cn/en/research/20231024a07mw900