SV Icons: Shaun Maguire, Sequoia
Crypto international
Shaun Maguire is a partner at Sequoia Capital, where he led investments in companies such as Vise, Watershed, and SpaceX. He also invests in Web3 companies and led rounds in Magic Eden, LAYERZERO, and Privy.
Shaun traveled most of the world and understands the value of crypto from seeing how broken the world financial system is - and crypto is here to solve it.
Thoughts on the current “crypto bubble”:
It’s the 4th time the “crypto/blockchain bubble has exploded. Shaun was a big fan of public market investment wizards when he was a kid. He advises students not to get emotional when investing. Shaun believes in investing when others are fearful and getting out when everybody is greedy. AI today has a lot of potential, but it is poor timing to invest at the peak of hype.
On luck in life & career:
Shaun stumbled into investing while doing a Ph.D. During his Ph.D. at Caltech, he was recruited by the US Defense Advanced Research Projects Agency. They raised 10.5 million for a DARPA program, and this success enabled him for the subsequent entrepreneurial successes that led him to Sequoia. Luck and timing in life are fundamental, and that’s why he believes first impressions are crucial. Shaun got into VC by chance (after a heated conversation at a party about quantum physics, he ended up befriending one of the partners of a VC firm).
Irrational motivation and traits of successful founders:
Shaun looks for the “irrational motivation” of founders, and the most challenging part of VC is saying no to people. He rarely invests in companies when he’s known the founders for less than a month. He wants to know the founders for at least three months, but it’s usually a year or longer. A strong founder bond is essential (whether college roommates or friends who have traveled together, etc.).
Future of decentralization:
For Shaun, it’s hard to predict where Crypto will go. After a peak in the space industry, the 2-3 categories that got more developers/talent flourished. For Crypto, it will take 3-4 years until great ideas emerge (Defi to Open Sea, for instance). In the last tech peak, there was a lot of talent going into gaming, so likely, there will be exciting innovations in the gaming space in the next 3-4 years. The utility of DAOs is an example of an area with compelling use cases. For instance, starting a company remotely with a few Stanford MBA students takes a million dollars and one year. With a DAO, you can get it funded and organized in 24 hours. DAOs are suitable for small-scale, not large-scale investing (you want legal protection and security). Identity on the internet also has a great potential use case for decentralized operations (Crypto-based identity).
Sequoia and seed investing:
Many believe that “Sequoia does not do seed [rounds], save Sequoia for Series A.” However, Shaun argues that this is a narrative that competitors try to create to attack Sequoia’s position. It is not valid, as Sequoia invested in Stripe when they had 0 lines of code, and Doordash is another example. Sequoia does seed rounds since they want to get in the companies’ capital term sheets before other funds give bad advice. They look for outliers in their companies: an outlier can be a super genius, an insane work ethic, an outstanding PMF, etc.
Portfolio construction and running Sequoia:
Roelof Botha, another partner at Sequoia, pushed for the Berkshire model for Sequoia’s portfolio construction (permanent capital fund vs. fundraising every x-number of years). As a result, Sequoia invests in the best individual company at any given moment, a benefit of being a generalist investment firm.
Shaun had a few final remarks on the characteristics of a successful career:
Keep an open mind for your career. Doing things you love is great (don’t do things for social prestige, which is excellent in the short term but not in the long term). Don’t chase the hot thing. Go for the meaningful something you like: you’ll end up in a better place.
Organizer: Georgi Koreli
Editor: Jacky Lin
Host: Shaun Maguire