Jess Lee: Sequoia VC Changing the Startup Game | Legends & Losers Podcast

Have you outgrown QuickBooks? Is it time to move your business to the cloud, or are you just ready to turbocharge your growth? Whatever the reason, we'd like you to go to netsuite.com legends right now. Welcome to this episode. It's an amazing one. Today we have Jess Lee. She's one of the newest investors at Silicon Valley's legendary Sequoia Capital, and she's going to share with us what it's like to be the CEO of a Silicon Valley startup at a very young age. How to bet on your potential, other people's potential, and a company's potential, and why losing is the feeling of learning. All right, all right, all right. Hey, ho. Let's go. Hello, my legendary friends. Man, am I ever stoked you've joined us for this episode of Legends and Losers. We have got a great dialogue, a real dialogue with somebody that is as open and candid as I think you can be in a business conversation. Now, if you're new to Legends and Losers, I want to welcome you. And if you've been with us for a long time, I want to thank you so much. I want to thank you so much for sharing the show. It means a lot to us that you share the show, that you write reviews and you spread the good word. So thank you so much. Now, if you're new, I gotta warn you, some people don't like this show. And the reason is we're a new category, and that can be a jarring thing to listen to. We're what you could call a dialogue show. So on a traditional podcast, traditional TV show, radio show, etc. When there's a guest, what you and I are subject to, for the most part, is this interview paradigm. And with an interview paradigm, you typically have a super accomplished person like Jess, who's been media trained. They have their talking points. And you have a professional host or a journalist, neither of which I am. And what you and I get subjected to is the collision of talking points and. And prefabricated narratives. These discussions are cut up into pieces to only give you the super valuable parts and spoon feed us, feed us like we're, you know, we can't take it. And that's what you and I get. And to me, there's just something fundamentally inauthentic about that. And, you know, it's great if you want to catch some sound bites here and there, but for the most part, they don't leave us with anything. So we aspire to have real conversations. There's this word called conversationalist that you never hear like, oh, Jimmy's a great conversationalist. You know, back in the day people used to sit down without their devices, look each other in the eye and actually over a beer or a coffee or a nice walk or whatever it is, talk to each other. That's what we try to do on Legends and Losers. Have real conversations, capture lightning in a bottle and give them to you. And that's what we did today with Jess Lee. And I'll tell you all about her in a second. Now I also want to mention our sponsor, NetSuite. We are stoked to be working with NetSuite by Oracle. Oracle is one of the largest technology companies in the world and NetSuite shares a big part of our mission which is to empower and support entrepreneurial growth businesses around the world. And they offer growing business as a cloud based management platform that gives you real time visibility into all of the critical operations of your business. Every company has challenges as they grow. You got to update manual processes, you got to replace old systems, you got to get a handle on cash flow, you got to be able to scale, you got to be able to do business globally, multi country etc, Etc. With NetSuite you can save time, money and get rid of the headaches associated with the growth so that you can focus on the awesomeness associated with growth by managing sales, finance, accounting, order management and even HR from your desk, from your laptop and your smartphone. And you'd be surprised. But NetSuite is incredibly affordable so I'd encourage you to go to netsuite.com legends right now our friends at Netsuite are offering our listeners a one hour personal consultation on breaking the barriers of growth and really trying to look for ways to scale your business up so you could have a free one hour discussion with a growth expert in your industry. Because netsuite is purpose built to serve companies in different industries on how you can really turbocharge your growth using the cloud and other key strategies. So go to netsuite.com legends netsuite.com legends and schedule your one hour growth consultation right now while you listen. Okay, now in Legends and Losers we talk about a wide ranging set of things and of course you could think that by inviting legendary people on that we would mean people who are far down the path of their career or their life and they're reflecting back and we certainly do some of that, if not a reasonable amount of that. But the truth is we're all on our journey and it's interesting to talk to if you will, legends in the making. And one of the things that really annoys me, you know, you hear this, this discussion about, oh, it's not about the. It's not about the destination, it's about the journey. Right? It's not about the reward, all of that stuff. Here's the big aha I've had. The destination is the journey. That is to say, the gift in life is that we have one and we get to design our life and our business the way we want. I heard somebody say this recently. I wish I could remember who. I love to give credit, but you'll have to excuse me. I listen to a lot of podcasts, I read a lot and I drink a lot and sometimes I forget a lot. But I heard somebody recently say, at the end of your life, your life will be summarized this way by two dates and a dash. The date you were born, the date you died, and there's a dash in between. And so we're all trying to maximize our dash, aren't we? Well, our guest today, Jess Lee, is off to an amazing start with her dash. And it's cool to shine a light on legendary young folks, entrepreneurs, and in her case, now an entrepreneur turned venture capitalist. She graduated from Stanford with a B.S. in computer science. She went on to become a product manager at Google, ultimately responsible for Google Maps, legendary product. She trained there under Marissa Meyer, who ultimately became the CEO of Yahoo. And then after Google, she left and joined a very early stage company called Polyvore. And after she'd been there for a while, she got promoted to be the chief executive, which is pretty fascinating given obviously she had no experience. She was very young at the time and had no experience being a CEO. After eight years, she successfully sold Polyvore to Yahoo, interestingly enough. And now she's been a partner at Sequoia Capital, one of the granddaddies of venture capital in Silicon Valley for about a year. She's also a co founder of this new organization called Allrays. A L L R A I S e. You can check them out@allrays.org and it's an outfit founded by some of the leading female venture capitalists. And they say that they believe in a world where the tech industry is driven by a diverse group of leaders and they're trying to drive diversity amongst founders, amongst investors and amongst the startup community in Silicon Valley overall. If you want to check her out on Twitter, she's Jess Kah J E S S K A H She's been in Fortune, business insider, Los Angeles Times TechCrunch. And with 12 other powerhouse female VCs, she's on the April 30, 2018 cover of Forbes. But right now, Jess Lee is on Legends and Losers.

Well, this week has been a pretty exciting week. You know, my full time gig is partner at Sequoia and I do investing and I help founders build amazing companies. But this week I launched, together with 36 women in VC, my side hustle, which is a nonprofit called All Raise. And Forbes very kindly wrote a little bit of a behind the scenes story on us. And All Raise.

All raise, yeah.

Allrays.org they wrote a nice behind the scenes story on us and put us on the COVID of Forbes, which is crazy.

So you're on the current cover of Forbes. Forbes. Is that what's going on, Jess?

Not just me, me. And you know, I think the first time, the second time, only Forbes has put a group of people on the COVID And this week it's a group of women, the women of all race, who have been working to try to affect diversity, to increase diversity amongst funders and founders in the tech industry.

And who else is involved with All Raise? Who's working on it with you?

So Aileen Lee from Cowboy Ventures is our leader, our fearless leader. And other folks like Kirsten Green at Forerunner and Mira Ko at Floodgate. Kara Nortman from Upfront, Jenny Lescort from Freestyle. Basically a group of of 36 senior women investors in venture capital. But there's really only 170 women in venture capital at the top firm. It's a pretty small group, but we've got a lot of them.

100 and how many? 100 what?

170 by our count.

Out of how many partners in the.

Total pool, we comprise 9% of the industry.

Wow.

And so have we started?

Yeah.

Oh, sorry, I thought you were just chatting. Oh, man, I'm not on. Okay.

That's what Legends and Losers is like.

You don't. Can you edit this part out? Wait, can we start over?

How about we just keep going? How about that?

All right. All right.

Yeah. And so what does it feel like to be part of the 9%?

It is both an incredible challenge and an incredible opportunity. I feel like I've never had a job before where anybody cared if I was going to be successful or not, other than my mom and my dad. But now I feel like I represent more than just me. I'm also doing this for, for the sisterhood. And if I'm successful, that means something for women in tech. And I've Never felt that as strongly in any other role other than in venture. And I guess it's true of being a female founder too, but I never thought about that on a regular basis the way I do in venture.

So what is it about being a Sequoia partner that kind of maybe not makes you, but has you thinking about this in a way that it's sounds like you didn't when you were a founder CEO?

I think last year something shifted when there was a bunch of very brave women who came forward to talk about what had happened. And they shone a light on all the bad things that were happening in tech that were sort of baked into the culture. And I think they created a window of opportunity where it felt like change was really possible because we saw firms like, we saw venture firms fall apart, we saw CEOs have to step down. And for the first time it was when a woman came forward, change actually happened. So it felt like there was sort of a window of opportunity to make a difference.

And so was it a sort of a carpe diem kind of a feeling?

Yeah, kind of. Aileen sent a note to a bunch of women she knew, including me, women, Adventure, and said, hey, I think we have the opportunity to do something here. Why don't we get together for dinner? We got together for dinner and it was an amazing brainstorm and we had so many ideas and we walked out of that room three hours later, four hours later, with a list of goals, a mission and five working groups, each staffed with two co captains and five or six working group members. And then the first thing we shipped was this effort called Female Founder Office Hours, which was one on one mentoring sessions for female founders. And then we shipped a community event for women in venture and we got 100 women together in one room who are all investors to just chat and share advice, exchange, deal flow, the type of thing I think that happens naturally for a lot of men in venture, but just happens a bit less for women. And then we shipped Founders for Change, which was a movement and a commitment where 700 founders posted signs of themselves holding up a sort of a commitment of a sign that said I am a founder for Change, which committed to diversity on their team, their board and on their cap table. And these included the founders of Airbnb, Warby Parker, Eventbrite. 700 pretty amazing founders came forward. So I think that was a moment where I, I really felt like, wow, this next generation of founders genuinely cares about diversity and there's something different going on with this new generation. They grew up this way they care about it. And it's time to things are different.

And now let me ask you maybe a provocative question. I have my own answer, but I would love to know yours, Jesse.

Sure.

You know, the discrimination thing we can talk about if you want. That's a very clear thing, I think, to everybody. I think maybe the one that's less clear is, well, so why does diversity matter? Like, what's wrong with a bunch of white dudes in a room together? Bad khaki pants?

Well, the research does show that diverse teams actually do better. Like when you need. When in a high intellectual capacity kind of job where there's collaboration, certainly in the tech industry, diversity actually produces performance. And like I said, this younger generation genuinely cares about diversity. And you have to the end of the day, you have to, as vc, like your customers are the founders, right? Like you serve the pleasure of founders. You help them build their company. There's a lot of capital out there right now. And at the end of the day, you have to be able to convince the best founders who want to work with you, and then you have to actually make a difference in their trajectories. So if they care about it, you have to care about it, and it leads to better performance and outcomes. So this is not about just being woke, this is about return. Like, I think the big thing that I wanted to see change and I think is actually shifting is much of the conversation last year was about fear. People, people were making changes because they were scared. They were fearful of being caught of their companies imploding. I think going forward, I would like to see more of the conversation be about greed. You know, at the end of the day, we have to make returns. Our founders want to make returns.

Are you quoting Gordon Gecko to me here? Is this a greedy. You're saying good thing?

I've never seen that movie, actually.

You've never seen the movie.

I've never seen Walsh come on.

For long enough. It's a great. You have to see it. It's a. It's. I hate to say it's a classic now, but.

Yeah, yeah, that speech he gives, the.

Greed is good speech is the speech.

Well, yeah, I mean, diversity, I think is actually good for greed. Women are perfectly capable of building amazing companies, right? Like Stitch Fix or D and Co or Eventbrite or houzz. And women VCs are perfectly capable of driving massive return. So it lifts all boats, right? It. It's good for everyone.

More return isn't the, you know, the greed is good thing? The libertarian side of this, I look at it and go, if you're focused on returns, I mean, this double bottom line. And I think that's a very interesting and powerful conversation. And I know you know Sequoia's history well and have interacted with, you know, the firm for way longer than I would like to admit. But, and so Sequoia has always been a firm that's cared about more than just returns, but returns. Right. It's that this paradigm that it doesn't necessarily have to be a trade off. And so the interesting thing is to me about this is if what we see is diversity produces better returns and some percentage of founders, executive teams are going to be, I don't know what the right term is anymore, Jess, maybe you could tell me anti diverse and sort of fuck them because we're just going to kill them in the marketplace with what is clearly a better way to operate a business. And, and so the kind of libertarian capitalist in me thinks that if we can open our minds a little bit here and access to your point, this discussion, then you're actually going to produce better returns. So if you give a shit about returns, like who gives a shit? Hire legendary people, focus on a legendary opportunity with giant potential and go at it. Is that what's going on here?

Yeah, yeah, I know I do. That is exactly what's going on. Yeah, I agree.

So in your mind then I'm curious how, if that's where your head's at, how do you think about, you know, because I've heard people say, oh well, maybe, maybe they don't use the word quota, but there should be some ratio of men to women or people of color or people, you know, whatever. The people have different. And then there's models and best practices and you can hire consultants and they can tell you. And essentially they could tell you how many people of what? Fill in the blank characteristic you're supposed to have if you're a good person. So if you think about the sort of politically correct picture you're supposed to show in the annual report, maybe say it that way, versus fuck the picture. What we're trying to do here is build a category, queen or king business that dominates, a giant category that matters. And we're going to be open minded and create equal opportunity for the best people to show up and help us do that and sort of let the diversity land where it should. How do I, how do you think about sort of those either ends?

Well, I think I'm, I'm in that second camp of like, let's build legendary companies, right? Let tap into pools of talent of all colors and races and genders and find the great people. Right? But there are inherent biases that people have. Like, if you recruit solely through your personal network or where you know more people who look like you natural, or you, like, don't realize that your job descriptions actually have inherent bias written into them. Or, like, if you don't take into account, like, the distance traveled. Right. Like, if you rely solely on prestige, like, you know, you went to Harvard, right? It. That is a badge of honor.

I got thrown out of high school.

Right? But, you know, the distance traveled from getting thrown out of high school to run it, being a founder and entrepreneur and running a legendary podcast, like, that distance traveled maybe matters more than the absolute point at which you've achieved if you were already that close to it, like, if you were, like, I don't know. So I do think looking at.

Are you saying it's okay that I turned out a loser? Is that what you're telling me, Jess?

I said alleged. I think what I said. Yeah. Anyway, that's my perspective.

Yeah. And so. But you said something interesting. And do you know Coco Brown by chance from the Athena Alliance?

No, I don't.

I met her through Bruce Cleveland at Wildcat Ventures. Anyway, they're an organization who is sort of designed to find senior executive women who are good candidates to go on boards of both private and public companies and then kind of put them on a path to do that and then kind of figure out companies who are interested in that and sort of put everybody together. And so it's kind of an interesting and interesting outfit. And one of the things she educated me on that I'd never thought of in this way, because in my mind, I just thought, well, I want a level playing field. I want a. And the word I had always associated with that was a meritocracy. And when I said it to her, actually, I should go back and ask her, it was almost like I pushed an electric button or something that I had no idea, by the way I was pressing. And my interpretation of her feeling about that word was, well, yeah, it's a meritocracy. If you're looking for somebody on your board and you say, well, we're looking for somebody who's been the CFO of a Fortune 25 company, you know, etc, etc. And so the spec equals, like, not much of a chance it's going to be a woman. And so she sort of tried to blow apart in my head this notion of a meritocracy and you sort of mentioned it a little bit on when you talked about the job description or how people think about the job requirements. So I'm just curious to a your reaction to that and anything you kind of have to unpack on that.

Yeah, I mean, I think meritocracy is totally the ideal. The problem is that people don't always start on that even playing field. Like if everyone started the same way, then you could evaluate like how far they went. Right. But that's really what I meant about the concept of distance traveled. Like, it's more about where you started and how far your journey has gone versus, you know, if someone starts with a huge head start and then gets to that same point. Like that honestly is not the same. I think when we think about meritocracy, we think about this absolute bar and there has to be a little bit of taking into account like that distance travel.

Now, you know, in this context, I can't help but think, Jess, of your own career. And, you know, when you left your big job at Google to go to your eeny weeny little startup, you were not the CEO of that little eenie, weenie little startup, were you?

No.

And then with the group of the original founders, ultimately. And I really enjoyed your discussion, by the way, with Peter Fenton, your Stanford discussion. It's a great one. And you brought that story to life. And so are you the benefactor? Is that the right word? The beneficiary of a meritocracy in that situation?

Yeah, I mean, I think that. So the story there is, I started as a user of Polyvore, who wrote in the complaint about it, and my complaints were, I don't like this. So but maybe here's a suggestion for how you fix it. I don't like this. And here's a suggestion. And it was, I guess, interesting enough of an email that Pasha Sadri, the CEO and founder, wrote back and said, hey, these are great suggestions. Why don't you just come here and work on them and fix all that stuff yourself? And so I did. Be careful what you wish for, right? Yeah. I mean, I wasn't trying to get a job, but it turned into. And turned into a job.

Did you not?

Yeah, I was the PM of Google Maps and I was having a blast, but I didn't feel like I was learning as much anymore. And that's kind of a. That's one of the frameworks I use to evaluate whether it's time to move on or not. Is, am I learning? Am I still learning? Do I still Feel like I have no idea what I'm doing and it's great and I'm learning like all this stuff new on the job. But yeah, I wrote in, I became the first TN did a little bit of everything. A lot of it I did not know how to do. So I would subsequently like start a new department like marketing and figure out just enough to figure out I was not good at it and then hire someone else. That's not true. She's a brilliant marketer. And so, you know, at some point I had started a bunch of the different departments and the founders came to me and they said, hey, we've always thought of you as a founder and you've always acted like one and we would like to make you an honorary co founder and we would like to give you some of our shares. So incredible, incredible generosity. And I think it really says something about the culture of the company and the founding DNA. And then I became sort of an official co founder and then we kept going, kept going. And then at some point I became CEO. And I think the fact that they were willing to give me a shot even though I didn't have an illustrious like background, I had never done any of that before. I think that that's important, right? People hiring people on potential, not just performance and track record and taking into account that distance traveled, like I think is important.

So let's unpack that a little bit. How do you identify, of course, people hire on track record and prior performance for obvious reasons. Right. How do you identify potential, particularly in someone who's a first time CEO? Like, what is it that gets a guy like Fenton and the rest of the board, who I'm assuming were not exactly schmucks either, to say, Jess is our gal and she has no experience in this. She's a PM by background. You weren't that far out of school really. And we're just gonna, we're not gonna go hire some big ding dong person that heidrichton Struggles finds or whatever. It's Jess. How do they identify that potential?

Well, I think they knew that I had a little bit of a track record inside the company, having started a bunch of the different departments. By the time we made the CEO transition, all the departments in the company were reporting to me, except for engineering because like I said, I started a lot of the departments and then hired someone to run them. So they ended up just reporting to me. So I think there was a track record. But also just being willing to take a shot on someone who hadn't done the job before. Right. And I think men and women should get that shot. I think there's research that shows that men are more likely to be promoted on potential, whereas women are tend to be held to like a performance. More likely be held on a performance. This is like research. But they were willing to take the shots and I greatly appreciate it. I've had many male mentors and supporters and sponsors who gotten me where I am as well.

Interesting that you say that. I'm trying to think in my own life. I was always hired on potential until my last CMO gig. And maybe I was a little bit there too. But I had, you know, with all due modesty, a pretty good track record at that point. And I'm now trying to think for myself. I don't know for sure, Jess, because I don't know that I ever quite thought about it the way you put it. So I'm replaying some things, but my spider senses say for most of the, you know, jobs of consequence, for me it would have been at least 50, 50 and probably more like 60, 40. And then there were times where for one reason or another, you just go, this might be the dumbest fucking thing I ever did, but there's something about this person. Yeah.

Yeah. I mean, a lot of things are like that. It's like a 51, 49 and that couple of percentage points of margin of error where you like pattern match against something that, you know, you're like, well, there's no, there's some potential. It could be terrible, it could be great. But have I seen this pattern before? Right? Have I seen someone like this succeed before? If the answer is like, I've never seen an Asian female CEO ever succeed, then I mean, you just kind of lose those points. So, you know, it's so funny you say that.

Maybe I'm just a little naive. I don't know. I never would have thought about it were I on your board. For me, the conversation would have been, who's the right CEO? Or is Jess the right CEO or not? It wouldn't have been, is this Asian female person the right CEO? I'd love to know how many people think which way I just grew up.

No, I don't think it's explicit at all. It's not an explicit thought. The whole point is that it's sort of an unconscious pattern matching thing that we do and just making ourselves aware of our pattern matching and it doesn't even necessarily apply to race or gender. It could be like, well, I don't think introverts are usually very good CEOs. I'm used to seeing a classic ENTJ. So that might not work. It's just like, you know, you build patterns into your brain and some of them make sense in the fart. Who knows, right? Yeah, there are many molds of leadership.

Exactly. You know, the other sort of category, a big category you fall into, of course, is you're a millennial. And, you know, your generation, of course, gets thrown under the bus for being the opposite of what you are. And so how is it you're this millennial that's driven to do all this stuff when the stereotypical millennials at your age probably still lives at home? Which is probably not fair, but.

But, you know, I think I'm like, technically the oldest possible millennial.

Are you all going to show that?

Maybe. Yeah, yeah.

I'm kidding. By the way, I know legendary entrepreneurial millennials, some of whom I work with.

Yeah, yeah, yeah.

But I mean, how do you think about yourself in the context of your generation? I guess is my question.

You know, I think they have that whole classic, like, helicopter parents who coddled you and gave you, like, the trophy for trying the hardest. Like, I will say, my parents did not do that. I grew up in Hong Kong. I went to a pretty competitive high school, and my parents were like that. You know, there's that funny meme, Asian expectations father, where it's like, why you learn c, why no a plus plus. And that's not too far off. Only a 97%. What happened to the last 3%?

Yeah. Is that really how it was for you?

Yeah, I think. Yeah. My dad was pretty. Yeah. I mean, they were. They were tough on me. Yeah.

And so, you know, I'm intimidated by you, right? Yeah. I mean, like, it's going well for you, Jess. Do you know that? You know, life's working out for Jess. You know that, right?

You know, it's funny, it has never felt that way. Eight and a half years of running a startup is not all glamorous. I felt. Yeah, I felt like I was failing for that entire eight and a half year.

Is that real? You wrote a blog a while back and I loved it. And it was. You'll forgive me for not remembering the exact headline, but it was something like, why Company Founders Are Always Miserable, or something like that. What was it called?

Yeah. Why Startup Founders Are Always Unhappy. And I hypothesize that success is a up and down roller coaster. You're going up and to the right, but it goes up and down. And unfortunately, humans Are not good at remembering. Like, okay, today I'm here, and one year ago I was here, so technically that's better and I should be happy. You tend to remember, okay, I'm here, and two weeks ago or one month ago, I. I was here. So you, you only remember the last peak and trough. And so what happens is happiness is really the first derivative of success. So even though you're going up like this, you feel like this. They're in the trough a lot when you're doing. When you're decelerating or doing slightly better, less good than you were like a week ago. So you just, you know, you reset, right? You. You don't remember that you used to. To, like, eat ramen noodles and you had, like, nothing at your startup. All you can think about is the next hill you have to climb and how you're not there and how things are. Traffic is down week over week.

Yeah, it's funny, you know, this, this legend loser thing. One of the things I'll always be fascinated by is at least I grew up in a paradigm, and I think many of us did. It felt like the rest of the world was being taught this, that like, you start off a loser beginner, you fail a bunch, you learn, hopefully, and you acquire skills and you get taught and mentored and all the good stuff, and then you produce your own results, yada, yada. And then you get to this place, you get to the top, you're the champion of the world, you're a sequoia partner, you're whatever it is, whatever the mountaintop thing is. And then from there, baby, that's it. It's champagne, it's cigars, it's moonlight and canoes, it's, you know, kitty cats. It's just whatever, whatever. Your definition for me would be a lot of scotch, you know, and that's what it is. And the funny thing about life, of course, is we're always in that, we're always going back and forth.

Yeah.

Benjamin, you're never, you're. I mean, I don't know, maybe when you're dead, you're done. I don't know.

No, that's a great point. You know, I guess I never thought about it as, like, feeling like a loser versus a legend. I've always thought about it in context of do you feel like you know what you're doing? Like you know exactly what you're doing and you've got it handled right? And if you are constantly pushing yourself to do something new that you haven't done before or you're learning something. Like, if you're learning, then you kind of feel honestly like a loser, because you're like, I should. This is what I'm supposed to do, but I have no idea how to do it. And I'm trying things. I just. Oh, my God. I don't even know if it's possible. And you. If you constantly put yourself in that position, then you will inherently feel like a loser all the time, and it's really uncomfortable. And then you figure it out, but then you push yourself again to try to go to the next, Take the next pill, and you feel like a loser again. So I don't think you ever feel like a legend.

I know I don't. And I, you know, I remember when my first book, Play Bigger, was coming out, and I remember exactly the same thing. Like, I remember feeling like, now we got to go out and evangelize category design of the world. Like, I, I. I'm creating a new category for creating categories, and I gotta go, like, get the world. Like, I gotta go do.

Yeah.

Everything say in the book, I now have to go do to make the book go in the world. Right?

Yeah. Yeah.

And then I, you know, did it all over again with the podcast. And of course, I couldn't create a podcast that was like any other podcast. It had to be a new category of podcasts, you asshole. And so you got to explain what the fuck it is and why it's not, you know, what they're used to. Listen, I'm like, and so do you feel this way? I feel this way. I'm 50 now, or just I'll be soon, and. And I just feel like my whole life is this struggle to bring new things to the world that sometimes the world, at least in the beginning, may not quite think it wants. And. And you feel like you're just. Why am I always bashing my head against this fucking wall?

Yeah, yeah. No, I agree. It's interesting. Play bigger. It's like, that's so true. Like, every single time you want to play in a, you know, a bigger pond, like, do something bigger, like, raise the stakes. And then what that ends up doing is making you feel like you're hitting your head against the wall and maybe feeling like a loser, which is really the feeling of learning, and it just. The struggle. The struggle continues. I mean, I've been at Sequoia for a little over a year. Right. It's an amazing job. It's such a privilege to be at this firm. It's such a special firm. The team around me is amazing and inspiring. Like, I get to see the hopes and dreams of all these, like, entrepreneurs or aspirations. It's such a privilege to be in this building. But, you know, I haven't returned the fund. I haven't driven any performance. So that, that feeling of learning and not having delivered yet, I mean, that. That's again, yet another struggle. And the funny thing about Venture is you don't even know if you're good for seven to 10 years because that's how long it takes to build a great company. And company can fall off a cliff. Right. Like so.

And you don't many bets. Right. How many bets are you going to.

Play to a year? Yeah, exactly.

So you got 20 trips to the plate.

Yep, yep.

Plus or minus.

Yeah, yeah, yeah. I remember when Sequoia was interviewing me, I couldn't quite figure out what they were looking for. Like, I got a lot of different questions, like psychological, behavioral, like track record. And finally, I think Jim Getz said to me, he was like, look, the hardest part of this job is managing your own psychology. Right? Because you just don't know if you're good for such a long time and if you're one of those overachiever types and you've done well the rest of your career, can you handle that? And I think my answer. And which maybe that helped get me hired, I think I said, look, I was a founder for eight and a half years. I felt with 100% certainty that I was terrible at my job. Certainly seven years of not knowing if I'm good at my job, it's got to be better than that. And in hindsight, I don't think I was actually that terrible of a CEO. We had a reasonable outcome. I love my team. I think they respected and liked me. But I definitely felt that whole time that I must suck at this compared to everyone else. Everyone must know exactly what they're doing, and I do not. And so that certainty of being terrible. Yeah, I mean, I think a lot of people do and they want to admit it or they think it's not okay to talk about it in public. I don't think that's true.

You know, it's interesting that you would say that because. And this is why I love this dialogue, Jess. And I'll always be fascinated by this dialogue. It would be so easy for someone to consume that Stanford thought leadership session with you and Peter. And to think this woman has never had a moment of insecurity in her life. Right. I mean, you are. You are a shooting star. I Mean, you know, Fenton says it, and that was that. That. That conversation you had with him was several years ago now, was it not?

Yeah. But at the same time, I was probably in the bottom 25%, the bottom quartile of his portfolio for many, many years.

Yeah. I love how hard you are on yourself.

It's true. It's true. You can ask Peter. I guarantee you will say that, and you'll say, I'm surprised that you made it work in the end and turned around and exit. Like, that's honest. That's the honest truth. Right. I think we built a fantastic culture. We built a product that many people love, but, you know, we, We. We miss the mobile wave. Right. We built a great desktop product, and we did not make the transition to mobile, and that almost killed us.

Yeah. And so would you consider it a base hit or what do you consider it?

Well, at the time. So at the time of our acquisition, I think it's very easy in Silicon Valley to get totally wrapped up in the mythos of, like, I have to be. I have to make a billion dollars, I have to ipo. That's the only route to success. Like, that's what I'm shooting for. And so I. When we were working on our acquisition, I felt like I was really disappointing our team with our acquisition price. And I was so worried about it that I stayed up all night and I. The day before the acquisition announcement, I printed out Excel spreadsheets for every employee with how much it was going to be worth to them in the acquisition. And I put them in a little envelope, manila envelopes, and I wrote a note on every envelope because I was like, maybe, maybe if I do this and they'll know how hard I work, like, maybe they'll forgive me. And I felt super bad about the acquisition. Like, I just felt like I totally failed. Right? And then I remember when I had to go and give the announcement to the team, I was so worried that they would boost, and then instead, everyone erupted into tears, Right. And they were really happy and it was like a great day. And I got to give out the envelope, and it just suddenly dawned on me that as the founder, you are so wrapped up in, like, what your valuation should be and, like, whether or not you achieve, like, the dream that you hope to, like, disrupt the fashion industry. And not everyone in the company feels that way. Like, a lot of people want to see it work, right? But to a lot of people, it's still, to some extent, a job, and they care more about do I love the people that I work with every day. Do I care about our mission? Do I feel like there's a shot, right? Am I getting paid well? And they were really happy. I just realized like, oh my God, I've been so hard on myself.

And you had fallen short of your ultimate dream or ultimate goal?

Yeah, yeah, yeah.

I mean I had the same exact experience at Mercury. You know, we had set a goal of being one of the top five software companies in the world. And I can tell you the whole story if you care, but the net of it is.

I would love to hear it.

Well, you know, the company was on fire. We were cresting to north of a billion with a, with about a $5 billion market cap. We had redefined and created a new category and put the entire space on its heels and we were crushing everybody. We had a salesforce that was incredible when an engineering team that was just meat eating competition crushing the most aggressive sort of customer and market savvy engineering organization you could imagine. Just incredible culture. Like an amazing company. The most amazing company I've ever been a part of. And so we had set this goal and then we got caught up in the securities and Exchange Commission stock option backdating examinations. We got caught doing it. I was the cmo. I didn't even know what stock option. I never even heard of it. Right. I failed grade 10 math. Like I don't even know what you're talking about. But anyway, when all that happened, the net net of it was we did an internal investigation, there was an external investigation by the sec and we had to shoot our CEO CFO NGC on the same day. And our stock went from 47.

Devastating.

And that was on November 11th. That quarter just. We delivered the biggest fucking quarter in the history of the company, the company. And end of the story was we sold the company for five and a half billion, 55 bucks a share the following June, early July. But to your point, when we were writing the announcement and we knew that we were all going to have to get up and say this, there were moments where I cried and there were moments where I thought I was the guy as much as anybody who stood in front of all these people and said we're going to build a top five software company. And now I'm going to be one of the guys that said we just sold this place to HP and I thought they're going to kill me.

Yeah, yeah, yeah, yeah.

And of course the opposite was true. But I know, I know that I've had that, I've been to that exact place yeah.

Yeah. It's amazing the pressure we put on ourselves and our own, like, expectations. Right. And. Yeah. So was it a basic hit? At the time, I felt it was, like, not great, and I'd failed everyone. Over time, I've come more to terms with it, and now that I'm on the other side, I've seen, you know, I've seen the numbers in one of the greatest portfolios of all time, and I feel like, you know what? It wasn't so bad.

Maybe I don't suck that much, but.

The grit you formed from feeling like you're terrible and, like, just having to deal with it, just the pain tolerance, I think, prepares you. Prepared me for Venture.

I heard this recently, and I'm trying to remember. I think it might have been a UFC fighter. Shit. I can't remember who said it. I hate when that happened. But I heard this recently, which is, I want to be exceptional amongst exceptional people.

Yeah, I love that. Yeah. I also think about it as. Do you want to be a small fish, a big fish in a little pond, or do you want to be. Try to, like, upgrade where you are and then be. You know, it sucks to feel like a little fish in a big pond, but that's the only way you'll grow.

Yeah. No, I really want to get to why you decided to go to Venture in Sequoia, but just quickly, before we go there, you said something a little earlier when we were talking about losing, and I want to make sure I heard it right. Did you say, jess, losing is the feeling of learning?

Yeah. Yeah. It's that feeling of, like, I do not know how to do this. I have no idea what I'm doing. I don't even know if the thing I've been tasked with is possible to achieve. I feel like I'm hitting my head against the wall, like nothing's working, and then eventually it clicks and you figure it out. But during that entire time where you don't know because you haven't learned the thing yet, you feel like a loser.

Yeah. Yeah. It just keeps going.

Yeah.

Going. And when they. Then they put you in a box, and after that, I don't know, maybe it keeps going after that. So you really, you know, doing my homework on you and knowing you a little bit by reputation, you really struck me as somebody who was as passionate. What? My friend, Eddie Yoon. The category grew to the Fortune 100 calls. You are a missionary, not a mercenary. And there's a huge distinction. Right. So you seem to me to be the quintessential Missionary, you know, on foot, fire, kind of incredible startup CEO that, that, that, that kind of a person. And so for you now to be a vc, it seems a little peculiar. So was my interpretation wrong or what was it like for you to go from.

Right.

So I thought for dudes.

Right. So I thought, you know, maybe if I understand that consumer just a little bit better by virtue of being here, maybe I'll see this like missed opportunity. Right. Like the next stitch fix or the next house. Right. Maybe that'll be a competitive advantage.

And so how do you think about, you know, if we, if we just sort of assume for a second roughly, is 20 a good number in 10 years to think about? 20 trips to the plate for Jess Lee?

Yeah, I would say so. Yeah.

So how do you think about making those, you know, those trips to the plate really mean something?

So I would say core sort of Sequoia requirements to start with are certainly like, you have to be a category king, a market leader or the potential to do that. Obviously you don't really know if the seed stage or the A stage or the B stage is who I play.

There's no question in your mind, this person has got, this company has got to figure out how to dominate and take the vast majority of economics in some big new category, big new niche, big new space. However you want to think about that.

Yeah. The potential for a huge outcome has to be there. So the problem you're solving, the market can't be a small one. Right. Even if it's the most interesting market in the world to me, like that that's not going to work for our LPs and our LPs are actually endowments and charities, which is pretty cool. So that's another sort of missionary piece of what I love about being at school. And then personally I really like to think about distance traveled and grit with founders because I know from personal experience how hard the journey is. And I look for people who have high, a lot of grit, which is basically like that high pain tolerance and the maybe tolerance for feeling like a loser for a long time, which is what we were talking about. The learning capacity, that's another one. And then I have a soft spot for people who are good storytellers because I think if you can tell a story, like the story of your company, your personal story, you will do better at recruiting. And at the end of the day, like you have to like convince people to come with you along this journey where it's like basically irrational to join you because startups like fail 99% of the time you have to have a little bit of storage, storytelling ability and pull. And that helps also with fundraising. Right. And with crafting, like, and pitching a customer, whatever it might be. So I have a. I have a soft spot for founders who have a little bit of ability there as well.

Yeah, that's great. Well, Jess, it's been fantastic spending time with you. I'm. I think your story is a. Is a very inspiring one. And the other thing I wanted to say to you just. And I want to know if there's anything else on your mind as well, but what strikes me about you is it would be very easy for you to act cool, you know, like, act like better than other people, right? I mean, rock star, student at Stanford, Rockstar, Google founder, entrepreneur, CEO. And, you know, regardless of how you might have felt at the time, like, hey, like you said, not so bad after all, right? And now, you know, you were at one of the younger, you know, when we had Pat and Matt on, we called them the young guns, you know, and Sequoia has done a pretty extraordinary job of moving the firm from generation to generation. I mean, an inspiring job. And I know, I know Jim. And you know, I don't know Leonie as much by any stretch, but I certainly, I know how deep the commitment to continue that is, and I know what that means about what they think about you. And so I guess with all that said, it'd be very easy for you to act like, cool because you, you know, you have this rock star, rising star career and yet you're the opposite.

I've definitely never felt like a rock star. I've. I think I've always felt like a bit underestimated and kind of a little bit annoyed at it. So I have to prove myself again even harder. I mean, look, I'll share one experience, right? Like I here in Venture, right? Like, I go to conferences and everyone has a name tag, right? A little name tag on. And there's this thing where you walk around and you like, look at someone and you look down at their name tag, just if they're like, important and worth talking to. And in Venture, I've been to venture events with other investors and people just look at my face and then they don't look at my name tag because I think they just think I couldn't possibly be an investor or something. And I've never had that experience in tech. But it's partly. Yeah, and I think, I think it's partly because there are just so few women inventor and you Know, I've just never felt that way before. So that gives me even more drive to, like, I gotta prove myself. So, you know, I am super grateful to Sequoia for taking a chance on me. Right. Like, this is one of the best firms to learn at. You're 100% right. That generational transfer is really hard to get right. And Sequoia has gotten it right multiple times. I feel so privileged to be in the building and to have, like, be able to shadow at board meetings that it would take me four years for my company to get to that stage. Right. And to feel like the warm embrace of the partnership and the true investment in training, like, it's such a privilege. But, yeah, I have never felt like a rock star, and I certainly don't feel one. Feel like one right now. Yeah.

Well, you are. And thank you.

But we'll see. Wait for my return.

As a dear friend of mine said, what the goal in life should be, to be a humble warrior.

Yeah, I like that.

All right, Jess, is there anything else before we kick out of this wave?

No. Thank you for having me on the show. I really appreciate it.

The honor is all mine. You're absolutely spectacular, and thank you so much.

Thank you. Take care.

It just amazes me, and I know I've said this before about many of our other guests. It would be very easy for Jess to play cool, particularly given her extraordinary track record of success at an extraordinary young age and for her to be as open and candid and real as that. The word in my head is refreshing, but I don't know, somehow that doesn't seem to do it justice. An extraordinary conversation. If you know somebody who would get a lot out of this conversation with Jess, why not share with them right now? And we would love you just a little bit extra if you shared this episode on all of your social media channels right now. When you do that, it helps us grow the show and we really appreciate you doing that. Now, to get your free growth review, I must remind you to go to netsuite.com legends netsuite.com legends we would like to thank allrays.org dedicated to improving access and success for women and all types of people in the founding, funding and building of tech companies. Check us out at allraise.org sequoia capital@sequoiacap.com we help the daring build legendary businesses. Sequoia cap.com Verve Coffee they're the leader in west coast artisan coffee. That stuff tastes so good. My favorite Verve. I'm not a big Mixed coffee drink Guy I normally just drink black coffee, but man do I love a whiskey. Almond latte at Verve you can check them out in Santa Cruz, San Francisco, Los Angeles, Tokyo, and always@vervecoffee.com HarperCollins Instant Classic Play bigger. Why not pick up a couple hundred copies wherever you buy Legendary books right now. Equity Directory.com if you're in the startup ecosystem and you want to connect to legendary startups, check out equity directory.com and if you are leading a startup and you're looking for people who are willing to connect with you and work with you for primarily equity, that's the place to go. Equity directory.com onelifefullylived.org, the nonprofit dedicated to helping you dream, plan and live your best life. Check us out. Onelifefullylived.org second flight consultancy these are the folks that help you growth hack your way to new heights. They are the official growth hackers of Legends and Losers. They're this is the outfit run by my buddy Nick Cullen and you can check them out at second all one word flightconsultancy.com pursuingresults.com they produce legendary podcasts and they also produce this one. Check them out. Interviewvallet.com if you're a thought leader, get your leading thoughts on podcasts. You be the guest, they do the rest. Interviewvallet.com now are you planning a wonderful vacation to beautiful Maui? Do you have some rugrats you want to take with you? And maybe you want the rugrats around part of the time and maybe you don't want them around part of the time? Check out islandangelcare.com on Maui professionally trained nannies who will take care of your little angels. And one of my favorite podcasts with my friend and collaborator Jamie J. Check out Stop Riding the Pine wherever you get amazing podcasts and our friends@kiva.org this is the nonprofit providing micro loans that make a difference to small e entrepreneurs all around the world. Check out kiva.org now we must remind you that this oddcast is a sole property of the Legends and Losers Oddcast Network and we would love you just a little bit extra if you'd share the shit out of it. We must tell you all rights do remain disturbed and we must warn you that this oddcast is clearly produced in a studio that does contain nuts. Please teach entrepreneurship practice diversity hey man, careful. There's a beverage here. I don't feel tardy. Thank you Dandy Candy. I love you mom and dad and hey Colin, this Oddcast really ties the room together, doesn't it? Today, our deepest apologies go out to Harvey Weinstein. Sorry, Harv, we just ran out of time for you. That's it. Thank you so much for investing part of your life with us. And we look forward to having you again on another episode of Legends and Losers.