Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: Bloomberg Tech is live from the heart of Silicon.
Speaker 3: Valley with Ed Ludlow in San Francisco.
Speaker 4: This is Bloomberg Tech, coming off another megabond sale. Alphabet
Speaker 4: looking to raise as much as twenty five billion dollars
Speaker 4: from its latest offering, a deal that will test investor
Speaker 4: appetite for AI related debts, plus a rough day for
Speaker 4: Western Digital or WD. The storage giant slides after a
Speaker 4: disappointing outlook despite the broader AI infrastructure boom, and Sequoia's
Speaker 4: leaders Alfred Lynn and Pat Grady join us on the
Speaker 4: future of the storied venture capital firm. It is a
Speaker 4: debt day, That's what we're talking about. Today's big number
Speaker 4: eighty nine point five billion dollars. That's how much Alphabet
Speaker 4: debt has been sold globally since twenty twenty five. Looking
Speaker 4: at shares of Alphabet, the Google parent in the equity market,
Speaker 4: the stock is flat but had been under some pressure
Speaker 4: in the last twenty four hours about a wave of departures.
Speaker 4: Will bring you that story later on. I want to
Speaker 4: zero in on AI debt and get more in Alphabet
Speaker 4: with Robert Schiffman Bloomberg Intelligence Senior credit analyst. This is
Speaker 4: a twenty five billion dollar dollar denominated offering.
Speaker 5: Ten parts, right.
Speaker 4: But it's the latest in a sequence of bond market activity.
Speaker 4: You write borrowing fears question mark, answer your question mark.
Speaker 6: Yeah, the answer right now is no. I think the
Speaker 6: second quarter prints that we saw for the biggest hyperscalers
Speaker 6: actually prove to people that all the money that they're
Speaker 6: spending is being monetized and the confidence levels improved. You're
Speaker 6: seeing that with share prices and you're seeing that with
Speaker 6: bond prices. The demand for this deal, I think is
Speaker 6: going to be substantial. Heard already was that the books
Speaker 6: were at sixty five billion. I think they're only going
Speaker 6: to issue twenty five billion dollars, so not raising its positive. Obviously,
Speaker 6: their cost of capital is going up a little bit,
Speaker 6: but after increasing their capex guidance by twenty billion just
Speaker 6: a week or so ago, there shouldn't be a surprise
Speaker 6: to anybody. And quite frankly, I think they're actually front
Speaker 6: running a lot of next year's borrowing and this may
Speaker 6: actually help technicals going into twenty twenty seven versus hurt them.
Speaker 5: On a US dollar basis.
Speaker 4: You know, alphabet it's forty two point five billion dollars
Speaker 4: since twenty five Amazon's seventy seven billion dollars. You know,
Speaker 4: you have done a really good job shift of explaining
Speaker 4: to the blombog tech audience why it's different in here
Speaker 4: and now to say that the dot com bubble, the
Speaker 4: financial crisis, Like, what do the balance sheets of these
Speaker 4: companies and their top line growth outlooks differ from that
Speaker 4: period in history.
Speaker 6: Well, these are real businesses that are generating cash, that
Speaker 6: are just spending more money these days to make more
Speaker 6: cash down the line. We're starting up with a tremendous
Speaker 6: amount of balance sheet flexibility. I'll will be trade at
Speaker 6: double A plus at S and P. They're one notch
Speaker 6: away from the highest potential rating that you can have.
Speaker 6: And the raider said this morning they have two hundred
Speaker 6: billion dollars of net debt capacity within their current ratings.
Speaker 6: That means just to fall a notch to mid mid
Speaker 6: double A, they would have to issue another two hundred
Speaker 6: billion dollars a debt and spend it. So I think
Speaker 6: the flexibility that you see from we've set a time
Speaker 6: and time again these amount rushmore of credits enables them
Speaker 6: to borrow as much as they want. And the concerns
Speaker 6: that people have been having that they're not going to
Speaker 6: be able to fund themselves as Capex budgets go up
Speaker 6: by fifty or one hundred percent next year, it's just
Speaker 6: not true. They can borrow, they can raise the money.
Speaker 6: The demand is there, the balance sheet flexibility is there,
Speaker 6: and people are now getting paid for it versus two
Speaker 6: or three years ago, when you've got basically no spread
Speaker 6: to own any of these names.
Speaker 4: Robert Schiffman, Bloomberg Intelligence, senior credit analysts, Thank you very much.
Speaker 5: I mentioned that the news story for Google, which is.
Speaker 4: Google is undergoing its biggest AI leadership shake up in years.
Speaker 4: Longtime AI executive Jeff Dean is leaving to launch a
Speaker 4: startup with several senior DeepMind researchers, while DeepMind CEO Demisasabs
Speaker 4: is stepping back from day to day operations to become
Speaker 4: chairman of deep Mind but also Alphabet's chief scientists. The
Speaker 4: changes come as Google faces mounting pressure to keep pace
Speaker 4: in the airas race, with investors basically questioning whether the
Speaker 4: company can retain top talent and turn its AI research
Speaker 4: into commercial success. That was the stock story of yesterday
Speaker 4: let's stick with Alphabet. Joining us is Natie Gallager, Princeville
Speaker 4: economist and director at Board. I want to go very
Speaker 4: briefly back to Alphabet, going back.
Speaker 5: To the bomb market.
Speaker 4: What does that signal about where we are in a
Speaker 4: capex cycle?
Speaker 1: You know, it really signals that we'reking continuing to mature
Speaker 1: in the capex cycle.
Speaker 2: We have had the.
Speaker 1: Hyper scalers, you know, largely following a similar playbook that's
Speaker 1: to utilize internal cash flows, keep leverage low. Right, when
Speaker 1: you do look at the balance sheets more holistically, solvency
Speaker 1: really isn't an issue, and so I really see no
Speaker 1: cause for concern when we talk about Alphabet specifically. They
Speaker 1: just had their first quarter of negative cash flows since
Speaker 1: they went to IPO in two thousand and four. So
Speaker 1: I'm not surprised to.
Speaker 7: See it.
Speaker 4: The economists view of seeing companies of Alphabet scale, and
Speaker 4: they're not unique in that respect entering negative free cash flow.
Speaker 4: Does that go into the economic model?
Speaker 2: Ye know it.
Speaker 1: It speaks more holistically to the commitment of spending by
Speaker 1: these hyper scalers on AI, right, and they're absolutely spending
Speaker 1: with the belief that future cash flows are really going
Speaker 1: to validate that level of spending. Now, you know, we've
Speaker 1: talked about this before, but really the question becomes not,
Speaker 1: you know, can they continue to do so It's very likely,
Speaker 1: you know, they're in very strong positions balance sheet wise.
Speaker 1: The real conversation is around the risk and what capital
Speaker 1: misallocation looks like if the bet doesn't pay off.
Speaker 4: I want to go back a little bit to Federal
Speaker 4: Reserve Chair WASH's first meeting and press conference because he
Speaker 4: discussed capex, the Capex boom and paraphrasing, but what he
Speaker 4: said is that kapex boom is driving up prices of
Speaker 4: AI infrastructure, right, That was his analysis. Is there an
Speaker 4: inflationary impact elsewhere in the economy from what's happening in AI?
Speaker 1: You know, there is a broader conversation happening right now.
Speaker 1: How much of the economic growth we are experiencing is
Speaker 1: it because of AI? And there's really you know, multiple
Speaker 1: areas in the economy that this can come out. One
Speaker 1: is capex by these companies directly. The other is actually
Speaker 1: an asset price valuations. Right, so, think of all of
Speaker 1: the gains that have really happened in the stock market
Speaker 1: right now, very strong argument that that is in fact
Speaker 1: inflationary because when people have more money, what do they
Speaker 1: do They spend more money longer term. And Warsh has
Speaker 1: come out and said this sort of historically, there's a
Speaker 1: belief system that because AI increases productivity, it's actually disinflationary
Speaker 1: in the long term, which is why as a Federal
Speaker 1: Reserve chairman he's very or has shared comfort with having
Speaker 1: a lower neutral rate in the future.
Speaker 4: Every day was trying to understand the impact of AI
Speaker 4: on the real economy, Like, if you look at labor
Speaker 4: productivity where it runs now relative to pre pandemic, is
Speaker 4: there any tangible evidence in front of you that AI
Speaker 4: is in some way impacting that data.
Speaker 1: Yeah, it's a great question because, I mean, you know,
Speaker 1: when we talk about the overall implication of AI and
Speaker 1: making it all worth it, right, we have to talk
Speaker 1: about productivity. When we look at a pre pandemic sort
Speaker 1: of productivity growth rate, average growth rate, we were at
Speaker 1: about one point five percent pandemic. We've been closer to
Speaker 1: two point five to two point seven five percent on
Speaker 1: like an annualized basis.
Speaker 2: Now on the front.
Speaker 1: That looks really great, right, You get a lot of
Speaker 1: people that are saying, hey, that's happening contemporaneously. With AI
Speaker 1: story done right, we have the AI productivity story, But
Speaker 1: what we actually can do is a lot better. Right,
Speaker 1: we can look deeper and look at metrics like total
Speaker 1: factor productivity utilization adjusted, and that helps us really tease out, okay,
Speaker 1: out of productivity growth, how much of this is really
Speaker 1: coming from innovation, and that on a four quarter basis
Speaker 1: is trailing at aboutzero point seven percent, so that's essentially
Speaker 1: flat quarter one twenty twenty six. The data is of
Speaker 1: its delayed Quarter one twenty twenty six actually came in
Speaker 1: negative two point seven six percent. Now there's contemporary contemporaneous
Speaker 1: impacts with the straight of hormose closure, so we can't
Speaker 1: perfectly extrapolate. But I share all of this to really
Speaker 1: say that at this point in time, we don't have
Speaker 1: the macro evidence that AI is meaningfully impacting productivity.
Speaker 4: I appreciate that because I feel like it connects the
Speaker 4: dots from the data points that a lot of the
Speaker 4: software companies gave in earnings on how AI is actually
Speaker 4: being used. Nacy Gallagher of Board, thank you very much. Indeed,
Speaker 4: another big story, take a look at shares of SpaceX
Speaker 4: which are behaving Interestingly, they're up three percent in the session.
Speaker 4: There was a heavy decline yesterday. Reminder that they there
Speaker 4: is a lock up expiration on around nine hundred million shares,
Speaker 4: which was a complicated structure for lock up post IPO
Speaker 4: from mid June. Right now, the stocks are hire three percent.
Speaker 4: Will continue to track it coming up. We are still
Speaker 4: in a thick of earnings, and this time it's all
Speaker 4: about hardware WDCO earning.
Speaker 5: Tan joins us. Next the s is Splimberg Tech.
Speaker 4: Let's take a look at some of the storage stocks, Sandy, Seagate,
Speaker 4: Western Digital differing performance Sandist to the downside, Seagate higher
Speaker 4: on earnings performance. Western Digitals down nine percent at one
Speaker 4: point in the session, have been down more than twenty
Speaker 4: percent and on track for its biggest drop since the
Speaker 4: year two thousand.
Speaker 5: That has turned around somewhat.
Speaker 4: Let's stay with WDWDCEO Irving ten joins US. Now we're
Speaker 4: getting back to the AI hard disk drive story. Irving,
Speaker 4: it's great to have you back on the show. You know,
Speaker 4: like investors still believe in that story AI hard disk Drive.
Speaker 4: Your stock is under some pressure. Just reflect on the
Speaker 4: moment that you try to outline in this in this
Speaker 4: earnings print.
Speaker 8: Yeah, well, first of all, thank you very much for
Speaker 8: having me back. If you look at the results that
Speaker 8: we delivered in Q fourth it's called twenty six, they
Speaker 8: were very strong. We had over forty percent revenue growth,
Speaker 8: grass margin was above fifty four percent, very strong cash
Speaker 8: flow generation as well. If anything, probably the expectations were
Speaker 8: very high in terms of the increased amount of exerbikes
Speaker 8: that we could supply into the market. But if you
Speaker 8: take a step back, really the fundamental for ongoing revenue growth, margin, expansion,
Speaker 8: cash flow generation remain very strong. On the demand side,
Speaker 8: demand from hyperscalarists, neo clouds, physical remans very robust, and
Speaker 8: we continue to see over twenty five percent KEIG or
Speaker 8: demand from a demand perspective over the next five years. Similarly,
Speaker 8: on the supply side, we have a very robust roadmap
Speaker 8: that we have put in place that will be able
Speaker 8: to meet this demand. And so it's pretty much a
Speaker 8: function of just quarterly transitions that we're going through.
Speaker 4: I think what you're touching on there is, you know,
Speaker 4: storage is distinct in many ways from what's happening in memory,
Speaker 4: in some ways highly analogous. Right, there is a pricing
Speaker 4: story there there is a demand outpacing supply story and
Speaker 4: your industry facing the balancing act of expanding output manufacturing
Speaker 4: capacity on a permanent basis or not.
Speaker 5: How are you managing all of that?
Speaker 8: Yeah, So, first of all, thank you for highlighting that
Speaker 8: it's a clear distinction between memory, which is like nan
Speaker 8: and d RAM versus storage, right because memory and like computer,
Speaker 8: is being recycled all the time for different workloads, but
Speaker 8: the data that's being generated continues to be stored.
Speaker 9: It isn't getting deleted.
Speaker 8: So the amount of data storage requirements is just compounding
Speaker 8: over time, which puts a lot of more demand on
Speaker 8: our products on an ongoing basis. And how we're trying
Speaker 8: to solve for that is really to technology. We're not
Speaker 8: investing in increasing the number of drive units we're producing.
Speaker 8: We continue to invest in technology to increase the amount
Speaker 8: of hits and media that we produce because that's the
Speaker 8: big driver of capacity in a drive. So we're currently
Speaker 8: shipping a thirty two terer By hard Drive as on
Speaker 8: top of the line drive, but starting this quarter will
Speaker 8: be shipping a forty terrer byke Drive. So that's an
Speaker 8: ability to drive over thirty percent capacity to customers without
Speaker 8: adding any unit capacity.
Speaker 4: Could you go into how that works, you know, bring
Speaker 4: a forty terabyte drive to market, the engineering complexity of it,
Speaker 4: and how much do the customers have to sort of
Speaker 4: re architect their infrastructure to accommodate for that new generation
Speaker 4: of HDD.
Speaker 9: Yeah, well, hard drives.
Speaker 8: Actually, as an engineer, I always use hard drives as
Speaker 8: a model of engineering. We use tutors or the periodic
Speaker 8: table in our product, so as we move from capacity
Speaker 8: point to capacity point, there's a lot of re engineering
Speaker 8: that goes on into the recipe of our media designs,
Speaker 8: the recipe of our hit design. So it's quite an
Speaker 8: engineering feed. Obviously, we have great teams that have years
Speaker 8: of experience doing that. At the same time, we work
Speaker 8: very closely with our customers to make sure we go
Speaker 8: through very robust qualification processes because customers are very sensitive
Speaker 8: to the quality and reliability of their data storage capability.
Speaker 4: The other sort of highly analogous factor that's in front
Speaker 4: of you is long term agreements with the memory market.
Speaker 4: We see long term agreements coming in as well, so
Speaker 4: you have these in place, like twenty twenty nine, twenty thirty,
Speaker 4: twenty thirty one, how do you know how to price
Speaker 4: an agreement today going that far into the future, It's.
Speaker 9: A really good question.
Speaker 8: We do have ltas in place locked in till twenty nine,
Speaker 8: We have customer demand. Customers are coming us to put
Speaker 8: ltas in place to support demand from twenty nine, thirty
Speaker 8: and thirty one. They have really good visibility in terms
Speaker 8: of the storage requirements that they need because they're looking
Speaker 8: at their entire AI infrastructure stack, everything.
Speaker 9: From GPUs, CPUs to.
Speaker 8: HBMS to storage, and they realize you have to take
Speaker 8: a much longer term time horizon in terms of how
Speaker 8: they plan.
Speaker 9: So we are working very closely with them.
Speaker 8: We're definitely locking in the sort of exerbyte supply that
Speaker 8: they need, but what we're working through with them is
Speaker 8: still the commercial construct or how we would price something
Speaker 8: further out into right.
Speaker 5: So let me look at it another way.
Speaker 4: Somebody comes to you and says, serving I'm a big
Speaker 4: customer and I want to lock you in till twenty
Speaker 4: thirty one. Why might you say no.
Speaker 8: Well, what we were saying, ed is if you need
Speaker 8: six hundred exobytes of storage in twenty thirty one, we
Speaker 8: will deliver that to you. How we actually price it.
Speaker 8: We're still in negotiations with them where we might have
Speaker 8: a base price for a percentage of that volume, and
Speaker 8: then atop tip pricing structure as we increase the capacity
Speaker 8: we deliver to them.
Speaker 4: I don't mean to trivialize this in any way, but
Speaker 4: you know, like it's the hard dis drive moment, you know,
Speaker 4: make hard dis drive great again. What's that been like
Speaker 4: for you to put the technology at the forefront of
Speaker 4: discussion at the moment?
Speaker 9: Well, it's really exciting.
Speaker 8: I mean, people thought that hard drives were a thing
Speaker 8: of the past, but it's shown to be a fundamental
Speaker 8: piece of the AI infrastructure. Steck with eighty percent of
Speaker 8: all storage in the cloud, and AI is continuing to
Speaker 8: recite and hard drives both today and going forward.
Speaker 9: So it's a very exciting time for us.
Speaker 8: It's a great challenge and I always tell my teams
Speaker 8: there's a great responsibility that we have to deliver to
Speaker 8: the industry to enable this once in a lifetime opportunity
Speaker 8: that AI is creating.
Speaker 5: So go back to the stock again.
Speaker 4: It's down about eight or nine percent right now, was
Speaker 4: down twenty one percent, its biggest drop on paper since
Speaker 4: December of two thousand a lot of the analysts are
Speaker 4: talking about your comparison against Seagate, what Seagate's doing on
Speaker 4: margin expansion, et cetera. You know, how would you answer
Speaker 4: those those analyst reports on how you are performing relative
Speaker 4: to your peer.
Speaker 8: Yeah, as I mentioned in the beginning, there'll always be
Speaker 8: quarter to quarter variations at you know, we were the
Speaker 8: first album one out for thirty two terabyte.
Speaker 9: We gain on them.
Speaker 8: They have a new platform coming out, so they're a
Speaker 8: bit of hit in terms of the exobyte storage they
Speaker 8: can deliver that drives cross margin expansion. We have the
Speaker 8: forty terabyte coming out in Q three of our fiscal
Speaker 8: year and we expect it by that period of time. Sorry,
Speaker 8: we have a forty terabyte out right now. It's going
Speaker 8: to cross fifty percent of all the bits with ship
Speaker 8: by fiscal Q three and that will.
Speaker 9: Give us another driver of exobitte growth.
Speaker 8: So this constant evolution of technology and the transition points
Speaker 8: that we introduce them will result in some time shifts
Speaker 8: in terms of results and performance.
Speaker 5: Right w dco eving ten back on Bloomberg Tech, Thank
Speaker 5: you very much.
Speaker 4: Indeed, Okay, coming up, we're going to stay with earnings
Speaker 4: and it's Figma, Pigma CEO didn't Field joins us this
Speaker 4: is Bloomberg Tech.
Speaker 10: Time now for talking tech, I'm your hira anand first up.
Speaker 10: Deep Zeek says it prints a quote significant price hike
Speaker 10: for its AI products. While the changes weren't specified, the
Speaker 10: announcement is an unusual shift from the Chinese AI companies
Speaker 10: that haven't emphasized low cost models. Plus Metta's recently released
Speaker 10: muse Spark one point one breached an outside firm system
Speaker 10: and access the intranet drink cybersecurity testing. This comes just
Speaker 10: days after similar incidents from models by Open Ai and Anthropic,
Speaker 10: and Pigma CEO decided to forfeit forty six million dollars
Speaker 10: in company stock awards in an effort to ease investor
Speaker 10: concerns over AI. Dylan Field made the forfeiture voluntarily and
Speaker 10: no replacement awards were issued. Looking forward to the interview.
Speaker 5: Ed Yeah, thank you, Hira, Let's stick with Figma.
Speaker 4: It comes as the company reported it's second quarter sales
Speaker 4: and profits that exceeded analyst expectations. Shares are on track
Speaker 4: for their biggest drops since September, down seventeen percent or so.
Speaker 4: A lot of that is the guide for the third
Speaker 4: court of the current period. Figma CEO Dylan Field is
Speaker 4: with us. I think, you know, beyond the numbers themselves, Dylan,
Speaker 4: someone are looking at this and saying, well, there's lots
Speaker 4: of new Figma products. Is Dylan being conservative in guiding
Speaker 4: how those new products are showing up in the in
Speaker 4: the latter part of this year.
Speaker 5: Well, first of all, going to see you again and
Speaker 5: thanks for having me on.
Speaker 11: Yeah, I mean, I think that as we look at
Speaker 11: forecasting in general, our guidance does not always price in
Speaker 11: potential upside of efforts that have not proven themselves yet,
Speaker 11: and we tried to make sure that we guide based
Speaker 11: on what we can observe and what we did observe.
Speaker 11: This quarter was very strong revenue growth year over year,
Speaker 11: revenue grew by forty eight percent, and this is our
Speaker 11: third consecutive quarter of accelerated growth. It's also our first
Speaker 11: full quarter of IU modernization, and our NDR was about
Speaker 11: one thirty six percent. So overall, we felt very strong
Speaker 11: and we are very much investing for what's ahead.
Speaker 4: How are the customers behaving, like, what's the story in
Speaker 4: the fields that you sell your software into?
Speaker 11: Dylan, Yeah, I would say that customers have been on
Speaker 11: definitely a journey as they look to figure out how
Speaker 11: do we integrate AI into the workflow. And some of
Speaker 11: those customers that journey, they really understood where they're at
Speaker 11: and what they're doing even end of last year and
Speaker 11: we're doubling down on Figma. Then others, I think, have
Speaker 11: those maybe the early adopters, others have been working through
Speaker 11: that process of figuring it out throughout the last six months,
Speaker 11: and they're also coming back to double down on Figma fully.
Speaker 11: And I think that as workflows change, what we're trying
Speaker 11: to do is meet customers where they are.
Speaker 5: So what we see.
Speaker 11: Our customers sometimes starting with design, sometimes starting in code,
Speaker 11: and with our MCP, they can pull their work into Figma,
Speaker 11: or they can read from Figma to go build and
Speaker 11: more of that will be fully encompassed in the Figma
Speaker 11: workflow with our agents in the future.
Speaker 4: Dylan, A lot of people today are reading the story
Speaker 4: Pigma CEO four fits forty six million dollars in stock
Speaker 4: after share decline.
Speaker 5: What was your thinking on that?
Speaker 11: I did a while back, so it wasn't linked to yesterday,
Speaker 11: but yeah, I mean, look, dilution is something that I
Speaker 11: feel just like our shareholders feel and given that this
Speaker 11: is an investment period right now, that felt like the
Speaker 11: thing that made sense to do. And yeah, I mean
Speaker 11: mostly I've just been My entire head is in how
Speaker 11: do we invest for the future because we have so
Speaker 11: much we can grow right now?
Speaker 4: Is still trying to bail firms? Yes, we just have
Speaker 4: thirty seconds, Cinema. What are you most focused on building
Speaker 4: right now?
Speaker 5: I'm focused on a few things.
Speaker 11: First, our Figma Agent, making it so you can we
Speaker 11: already have this out, but gain that to monetization, and
Speaker 11: also making it so that we're able to serve customer
Speaker 11: needs and workflows better. Also focused on code layers, bringing
Speaker 11: code into the canvas and making it so that as
Speaker 11: code becomes more of a commodity. Design is the operating
Speaker 11: level and layer that you're able to work in in
Speaker 11: order to find with your team is doing and able
Speaker 11: to make it. Said, people build a great software from there,
Speaker 11: and I think that if we can capture that and
Speaker 11: make us the Figma Agent can support these worflows, then
Speaker 11: you'll be able to build out from the design layer.
Speaker 11: And from there, I think there's so much that's possible,
Speaker 11: and you can really have designers steering.
Speaker 4: Pigma CEO didn't feel back on Bloomberg Tech. Appreciate your time,
Speaker 4: Thank you very much. Indeed, coming up in the show,
Speaker 4: Sequoia partners Alfred Lynn and Pat Brady, the firm's latest leaders,
Speaker 4: the new titles of co stewards, join us. We're going
Speaker 4: to discuss what's changing at the firm, what the tech
Speaker 4: companies of tomorrow are, and what the future holds. This
Speaker 4: is Bloomberg Tech. Welcome back to Bloomberg Tech. Last November,
Speaker 4: longtime Sequoia partners Alfred Lin and Pac Grady became the
Speaker 4: firm's co stewards. For more than fifty years, the Silicon
Speaker 4: Valley firm has back some of the biggest winners in technology,
Speaker 4: from Apple and Google to Nvidia. Today it manages more
Speaker 4: than eighty billion dollars, but as detailed in Bloomberg Business Week,
Speaker 4: it recently raised another ten billion across its growth and
Speaker 4: expansion funds. Since then, the Sequoia partners have made a
Speaker 4: risk the franchise investment in Nanthropic, They've returned to investing
Speaker 4: in chips, and continue to hold onto one of the
Speaker 4: firm's greatest investments, SpaceX. With us now on Bloomberg Tech
Speaker 4: Alfred Lin and Pac Grady to discuss what's changing as
Speaker 4: Sequoia the technology companies of tomorrow. I want to start
Speaker 4: with our Sequoia. You published what reads to me is
Speaker 4: like a mission statement. It outlines principles of the firms
Speaker 4: held for quite a long time, and I think some
Speaker 4: new ones that you are trying to m for size.
Speaker 5: Alfred, is that fair?
Speaker 2: Well, First of all, thank you for having us.
Speaker 3: It's really fun to be here with my CoA Stewart,
Speaker 3: and we get to do this together.
Speaker 2: And it's because it's our Sequoia.
Speaker 7: It's not.
Speaker 3: It was never done Sequoia when he named it Sequoia Capital,
Speaker 3: and it wasn't any fifty four years ago, and so
Speaker 3: Pat and I wanted to make sure that everybody at
Speaker 3: Sequoia thought of it as our Sequoia.
Speaker 2: That's principal number one. Principal number two.
Speaker 3: If you take care of the founders, you will they'll
Speaker 3: do right by our LPs. We do right by LP's,
Speaker 3: we'll do right by Sequoia. We do right by Sequoia.
Speaker 3: We can take care of the team and then we
Speaker 3: can take care of every single person at Sequoia. That
Speaker 3: is principle. That is a principle that has been at
Speaker 3: Sequoia for a long, long period of time. And also,
Speaker 3: we are only as good as our next investment. And
Speaker 3: that is not a risk your franchise. It is what
Speaker 3: makes us.
Speaker 5: To quo the smile.
Speaker 4: When I read out the line, we will get into
Speaker 4: how that manifests. I mean they it's a close steward title.
Speaker 4: You regard yourselves as partners as part of a partnership.
Speaker 4: You are not managing partners. Correct you, As Sean McGuire
Speaker 4: outlined me in a telephone call, you know, you reject
Speaker 4: the notion that your boss is you are partners in
Speaker 4: a partnership, but to lots of people that like, how
Speaker 4: would that work?
Speaker 7: Well, so we first off on this boss thing.
Speaker 12: We had a funny conversation with one of our partners
Speaker 12: a couple of years ago. We're here, referred to somebody
Speaker 12: as a supervisor, Like, you're a supervisor? What are you
Speaker 12: talking about? He's like, well, here's my boss, he's my supervisor.
Speaker 12: Like no, no, no, no, no, this is a partnership. The
Speaker 12: only way that we're going to bring out the best
Speaker 12: in all of our partners is if it feels like
Speaker 12: a real partnership. So one of those principles that you
Speaker 12: mentioned with with our sequoia is this idea that influence
Speaker 12: should be awarded to expertise and reason and not too
Speaker 12: tenure in hierarchy. And what that means practically is, in
Speaker 12: any given conversation, if we're going to make an investment decision,
Speaker 12: Alfred and I might have less of they say, than
Speaker 12: our other partners like Sean or Andrew or Sonya or
Speaker 12: David or kind because they might actually have more expertise
Speaker 12: on a particular topic than I do. In fact, they
Speaker 12: have more expertise on most topics than we do. And
Speaker 12: so this idea that influencer go to the people with
Speaker 12: the expertise, not that people who happen to have been
Speaker 12: around for a long time. That's what makes it a
Speaker 12: partnership and that's what allows us to play at our best.
Speaker 5: There's no tie breaker.
Speaker 4: Essentially that you two get awarded you participate under the
Speaker 4: same rules as the rest of the partnership.
Speaker 5: Correct, I mean this with full respect.
Speaker 4: What does the term co steward communicate that any other
Speaker 4: title doesn't?
Speaker 5: You know why?
Speaker 4: I think you both don't want to get bogged down
Speaker 4: in administrative duties. You want to participate in the partnership.
Speaker 3: That's part of the reason why it gets to do
Speaker 3: this together, there's no and part of that is we
Speaker 3: are partners across the board and we get to help
Speaker 3: lead the organization. In part of leading the organization has
Speaker 3: to deal with making sure that we have structure and
Speaker 3: we signed SEC documents. A lot of it is administrative
Speaker 3: and we get to split that so that both of
Speaker 3: us can stay on the field.
Speaker 12: I try to make sure that Alfred signs all the
Speaker 12: SEC documents.
Speaker 2: But literally that this is the part that is really
Speaker 2: good about this. This is a partnership.
Speaker 3: We want to show the value of partnership and we
Speaker 3: wanted to be a team effort and not everybody has
Speaker 3: to do everything.
Speaker 7: And this idea of stewardship.
Speaker 12: If you go back to the original generational transition, which
Speaker 12: was in Don Valentine and handed the firm off to
Speaker 12: Dougleyoni and Michael Morritz in the late nineties, the standard
Speaker 12: at the time was to have the younger partners buy
Speaker 12: out the departing generation.
Speaker 9: Right.
Speaker 12: Don instead gave it to them for free and said,
Speaker 12: your only job is to leave it better than you
Speaker 12: got it. And so that's become a very core part
Speaker 12: of the sequa continue that tradition, yes, this idea, that
Speaker 12: stewarding it for the next generation as opposed to there's
Speaker 12: no concept of ownership at Sequoia. All of the partners
Speaker 12: own the partnership together. Our job is to make it great.
Speaker 4: We're sitting here talking, but you know you're eight months
Speaker 4: in essentially as co stewards. But in that time quite
Speaker 4: a lot of things have happened. I want to get
Speaker 4: to what you've you've enacted or chained that's different in
Speaker 4: that eight month period to the history of the firm.
Speaker 4: And one of the things outlined in the Business Week
Speaker 4: article is if you are a partner that is interested
Speaker 4: in an investment, you can propose it anytime through a
Speaker 4: various meeting mechanism. So traditionally in Silicon Valley venture firms
Speaker 4: you have your Monday morning meetings. You guys have said
Speaker 4: basically seven days a week anytime.
Speaker 5: Wellt's talk about it's.
Speaker 2: Talk about like being a customer of SUS.
Speaker 5: We are through your customers exactly.
Speaker 3: It's founders, and so we should work on the founder's
Speaker 3: time frame. If the founder wants to make a raise
Speaker 3: of fundraising, they have a timeline we should abide by
Speaker 3: their timeline, not the other way around, right, And this
Speaker 3: notion that we get to like have every decision happen
Speaker 3: on a Monday is kind of a little backwards. Are
Speaker 3: we the customer to the founders where the founders are customers?
Speaker 3: And for us, we want to make sure we want
Speaker 3: to send a clear message that the founders are our
Speaker 3: customers and work smurts us.
Speaker 12: And there's a second concept here, which is outlier founders
Speaker 12: want to work with outlier people. And so our partner
Speaker 12: Rubb has this idea of playing free. You know, everybody
Speaker 12: should play free. And we don't want Luciano or Andrew
Speaker 12: or Constantine or Sean or David or Sony. We don't
Speaker 12: want them to become another Alfred or to become another path.
Speaker 7: We want them to be the best version of themselves.
Speaker 12: And the only way we can do that is if
Speaker 12: they feel like they can play free, like they have
Speaker 12: rope to just go at one hundred percent velocity all
Speaker 12: the time. And then our job is to help enable
Speaker 12: them not to get in the way.
Speaker 7: And so we.
Speaker 12: Are tight on principles, and we are tight on values.
Speaker 12: We're very flexible on process.
Speaker 4: So some people that might sound chaotic, just it literally is.
Speaker 4: How does it work mechanically? Somebody will send a WhatsApp
Speaker 4: to the rest of the partner saying, guys, got a
Speaker 4: great up. We have to meet now and talk about it.
Speaker 4: And what happens.
Speaker 12: A couple of days ago, an email came out recommending
Speaker 12: an investment, controversial investment. We go into a document. There's
Speaker 12: a lot of commentary in the document. Here's what's good,
Speaker 12: here's what's bad. Here's what I like, Here's what I
Speaker 12: don't like. What are we going to do? We had
Speaker 12: six people on Red Eyes to New York a couple
Speaker 12: of nights ago.
Speaker 5: We spend next week. This this a week day, and I'm.
Speaker 12: Back Tuesday night. We had six people on Red Eyes
Speaker 12: to New York. Randomly were on five different planes. I
Speaker 12: don't know why we took five different planes to get
Speaker 12: to New York.
Speaker 5: But he was a spur of the moment decision.
Speaker 12: It was a spur of the moment thing. We spent
Speaker 12: two hours of the company yesterday morning. Yesterday afternoon we
Speaker 12: signed a term sheet. So gag tackle get everybody in.
Speaker 5: Front of Juicy bound to ask you which company? Oh,
Speaker 5: I know, I'm sure you would, but yeah, and the
Speaker 5: answer is I don't comment.
Speaker 12: Company probably a monster, probably one that's going to be huge.
Speaker 5: Was it a big check? As in the stakes? Will hi?
Speaker 2: Come on now?
Speaker 12: Hang on our jobs the smallest possible dollars for the
Speaker 12: largest possible or there is so much.
Speaker 3: Job is to put small dollars some work and make
Speaker 3: them large dollars.
Speaker 4: There is some case studies we're going to get to
Speaker 4: you later in this conversation that would say slightly otherwise,
Speaker 4: let me ask you this.
Speaker 5: Let me say ask you this.
Speaker 7: We could do the big dollars if we have to.
Speaker 4: Conviction over consensus. So in lots of partnerships, be there
Speaker 4: aventure firm or law firm. You know you vote, yeah,
Speaker 4: your structure is very different. Things are not achieved by consensus.
Speaker 4: How does it work?
Speaker 5: We vote?
Speaker 3: But the point about conviction is that it's unique conviction
Speaker 3: to be committed for a company for a long period
Speaker 3: of time. We love building companies and helping founders build companies.
Speaker 3: We want to be an early believer and compound with
Speaker 3: them into the future. And that requires real conviction by
Speaker 3: the person who has the most expertise. And so when
Speaker 3: we debate, we are trying to get to truth. We
Speaker 3: are a truth seeking organization, and there's much better conversation
Speaker 3: where there's a debate than when everybody is oh, yeah,
Speaker 3: I agree, and then it's it's usually a met investment.
Speaker 12: And let me give you an example on that stage.
Speaker 12: Twenty nineteen. Okay, twenty nineteen, Shah Maguire joins Sequoia Capital. Yes,
Speaker 12: he joins the early stage team. Okay, twenty nineteen, Zoom
Speaker 12: had just gone public. We just got into business with
Speaker 12: Dylan Field of Figma.
Speaker 7: Who I know, I guess.
Speaker 12: Just on the combined market caps of Tesla and Nvidia
Speaker 12: were approximately the same as the market cap of Salesforce.
Speaker 12: So to set the stage in twenty nineteen, the thing
Speaker 12: on the menu was software. Yes, software was consensus. We
Speaker 12: love software, every we love software. Sean, a brand new
Speaker 12: early stage investor, shows up and says, I think we
Speaker 12: should invest in a rocket company at twenty billion. We
Speaker 12: thought that was insane, but Sean had conviction. He had
Speaker 12: done the work. He painted the picture. This is pre
Speaker 12: star Link, right, This is when it was a launch
Speaker 12: company and the main customer was the government.
Speaker 6: Right.
Speaker 12: Sean painted the picture of what this thing had a
Speaker 12: chance to become, and it's become one of the best
Speaker 12: investments talking about SpaceX, and so that was that was SpaceX. Yeah,
Speaker 12: so that was that was conviction at work. That was
Speaker 12: twenty nineteen.
Speaker 4: But what I'm trying to get to is the idea
Speaker 4: that in any number of voting partners, the majority might
Speaker 4: say I have a lower conviction, I have a four.
Speaker 5: You guys don't on a scale zerias ten.
Speaker 4: You don't count five, but just two might say we
Speaker 4: are eight, soor we had nine.
Speaker 2: We love those kinds of investines, and you.
Speaker 5: Do with the investments.
Speaker 12: We've been recording the data since twenty fourteen, so we
Speaker 12: now have twelve thirteen years of data on this. And
Speaker 12: we thought that contentious investments would actually be the best investments.
Speaker 12: And it turns out it actually doesn't matter whether it's
Speaker 12: contentious or consensus. Yes, all that matters is presence of conviction.
Speaker 4: I want to get to Sean because it's outlined in
Speaker 4: the BusinessWeek article, and Sean has been on this program
Speaker 4: and I've spoken to him somewhat regularly.
Speaker 5: Right. The idea is that.
Speaker 4: Sean has made, let's say, in cendiury posts on social media.
Speaker 4: He has said things that are divisive, but you regard
Speaker 4: him as being unique, right. He has a unique background
Speaker 4: and set of interests that you believe put Sequoya into
Speaker 4: opportunities that you would not otherwise have. I don't want
Speaker 4: to speak on your behalf, but you know, let's talk
Speaker 4: about that.
Speaker 3: I think we should just talk about the balance sheet
Speaker 3: of Sharan like a lots of.
Speaker 2: The balance sheet of Sean, the positives and negatives.
Speaker 3: I see you just about a bunch of negatives, and
Speaker 3: I just want to make sure that people understand the pauses.
Speaker 3: The guys was one of the top ten counter strike
Speaker 3: gamers when he was in high school. He was a
Speaker 3: day trader in high school. He then went and got
Speaker 3: a PhD in physics in quantum theory. Much if you
Speaker 3: took regard physics is hard, quantum theory is one of
Speaker 3: the hardest. He when he joined Sequoia, he put together
Speaker 3: a hardware manifesto. He led us into hardware. He led
Speaker 3: us into SpaceX with a lot of conviction and a lot
Speaker 3: of courage because there was there was votes by GPS
Speaker 3: that was a one on scale of ton it was
Speaker 3: a one, and he.
Speaker 2: Kept pushing and pushing him. He was a ten out
Speaker 2: of ten.
Speaker 7: And that has to be the zero or attend okay,
Speaker 7: really binary.
Speaker 3: Very binary person. And so you know, in terms of conviction,
Speaker 3: he has strong conviction. He's been right a lot. He
Speaker 3: helped let us into crypto. And I don't want to
Speaker 3: talk just about the negatives because I think people need
Speaker 3: to understand the.
Speaker 4: SpaceX is one of the biggest returns that this firm
Speaker 4: in its history.
Speaker 12: And I also go back to the thing we're talking
Speaker 12: about earlier. We want everybody to become the best version
Speaker 12: of themselves. Now again, we are strict on values and principles,
Speaker 12: and so we need to believe that when people behave
Speaker 12: they're doing so with the best possible intentions, and they're
Speaker 12: doing so with a standard of excellence that we expect
Speaker 12: of all of our partners. If they are doing that,
Speaker 12: and if we happen to agree or disagree with the output,
Speaker 12: the agreement of the disagreement doesn't necessarily matter.
Speaker 7: It's the inputs that we tend to focus.
Speaker 4: I would say for the record that you know Sean
Speaker 4: told me that he would not work anywhere else, and
Speaker 4: you know he believes in the principles that you outlined.
Speaker 4: Also that you know his belief is that his intentions
Speaker 4: were never to have a net harmful effect on the.
Speaker 3: First His intentions are always pure, and that's another thing
Speaker 3: I was going to mention. But he also has great courage.
Speaker 2: There's conviction.
Speaker 3: There's people with conviction and they don't have courage, and yeah,
Speaker 3: you can talk all day long and then you don't
Speaker 3: sort of make the investment when you push.
Speaker 4: The discourage look like, what's the action that you're looking
Speaker 4: for the partners to take.
Speaker 3: If you have a GP and you're not a GP
Speaker 3: and there's a vote of a one by a GP,
Speaker 3: but you still keep pushing forward, that is courage. You're
Speaker 3: willing to get fired for something that you believe is
Speaker 3: going to be a great investment and that turns out
Speaker 3: to be one of the best investments that's in Sequiah history.
Speaker 12: We have a list that we keep of all the
Speaker 12: different failure modes that we can run into on investments,
Speaker 12: and there are forty or fifty of them, one of
Speaker 12: which is called wimpy sponsor. Wimpy sponsor is you say
Speaker 12: you love something and then you get a know and
Speaker 12: you just go away.
Speaker 7: You just won't.
Speaker 12: You probably didn't love it. If you got one no
Speaker 12: and you went away. If you actually love it. You're
Speaker 12: going to keep pushing and keep pushing, and keep pushing
Speaker 12: and keep pushing and keep pushing.
Speaker 7: And that's what courage looks like.
Speaker 4: I want to get some of the investments you have made.
Speaker 4: So what we're going to do is take a quick break.
Speaker 4: We'll be right back with Scoy Partners, Alfred Lyne and
Speaker 4: Pat Brady, and we'll talk about the big one, which
Speaker 4: was anthropic.
Speaker 5: This is blon bag Tech.
Speaker 4: We're back with Sequoiet Partners and CoA Stewards Alfred Lynn
Speaker 4: and Pat Grady. I'd like to talk about the anthropic investment.
Speaker 4: It's detailed in the BusinessWeek article, but essentially it was
Speaker 4: something a bit new. It was an example of risk
Speaker 4: or franchise risk or risking the franchise. Where should we
Speaker 4: start with what happened? I mean, you were, along with
Speaker 4: Sonya right at the sponsor on that opportunity.
Speaker 3: So there have been multiple sponsors of this. We work
Speaker 3: as a team. There are no multiple sponsors on the company.
Speaker 3: Ravi had sponsored it for a period one round, Sonya
Speaker 3: had sponsored it with him for another round, and then
Speaker 3: we kept passing. Part of it was because we wanted
Speaker 3: to sort of be We were early investors in open Ai,
Speaker 3: and we thought, well, we can invest in both, and
Speaker 3: for a period of time that was our mode until
Speaker 3: we checked with all of our founders and they were
Speaker 3: using both companies.
Speaker 5: And they were using the technologies of both.
Speaker 7: Both for different things exactly.
Speaker 3: And so obviously open Ai started with the consumer app
Speaker 3: and finding information and Anthropic had cloud code and it
Speaker 3: was much much more focused on coding.
Speaker 2: And so over time we got greater and greater conviction.
Speaker 3: Our own our own engineering team was telling us how
Speaker 3: good the.
Speaker 2: Clock co product was working.
Speaker 3: So we gained more and more conviction over time that
Speaker 3: we should make an investment in Anthropic on this billion
Speaker 3: dollar round, this last round that we made an investment.
Speaker 3: It came together because we had just been following the company,
Speaker 3: and three months before we had made an investment in
Speaker 3: the company.
Speaker 5: That was January of this year, yes, yeah.
Speaker 3: It was actually November and then it was closing, yeah,
Speaker 3: And so we've been following the company. The revenue ramp
Speaker 3: continues to grow up, and we decided that we're going
Speaker 3: to make a fairly large investment in this round.
Speaker 5: Investment initially was a billion but.
Speaker 3: That ideagional recommendation by Sonya and I that we invest
Speaker 3: a billion, and we were like, where we're going to
Speaker 3: get the money, Well, we have plenty of places we
Speaker 3: can invest from, right, And I was pleasantly surprised, first
Speaker 3: with a call from Sean and then a call from Pat,
Speaker 3: and then in the in the room, we started with
Speaker 3: a number that I thought was like, huh, interesting, where
Speaker 3: we're going to get that number from?
Speaker 9: Right?
Speaker 2: And the number started at five billion.
Speaker 4: And then you work backwards, then, yes, to come in
Speaker 4: and explain your takeout on the events that transpired.
Speaker 12: Well, I mean the simple, the simple explanation for the
Speaker 12: investment is, this is the tectonic shift of our lifetime.
Speaker 12: In a perfect world, we would have backed the Tropic
Speaker 12: many years ago. We didn't, and so the best thing
Speaker 12: we can do now is to come in at the
Speaker 12: most scale that we can muster. And so five billion
Speaker 12: was kind of a theoretical number mentioned to be provocative.
Speaker 12: We ended up in two and a half because we
Speaker 12: can't really do a five billion across all of our
Speaker 12: different funds, and so two and a half is kind
Speaker 12: of the most we can do.
Speaker 4: And that's sort of how is it fair to go
Speaker 4: as far as to say, like how much money can
Speaker 4: we deploy without putting the firm at risk.
Speaker 12: That was part of the conversation. Two and a half
Speaker 12: or five would be comfortable numbers as far as that goes.
Speaker 12: But one thing we've never done SPVs. We're not in
Speaker 12: this SPV business where you speak for something I think
Speaker 12: we have.
Speaker 5: Not time today to talk about it.
Speaker 7: Yeah, so we don't do that stuff.
Speaker 12: And so two and a half billion was what we
Speaker 12: could do out of the core funds committed capital.
Speaker 4: Let me ask you this or give some background growth
Speaker 4: early stage. Since twenty seventeen, you've led the growth co led,
Speaker 4: you've co led early stage, but you SaaS consumer. But
Speaker 4: there's a lot of overlap, right, you have made significant
Speaker 4: growth stage investments and join boards. You've made early stage investments,
Speaker 4: particularly in AI. Just talk a little bit about how
Speaker 4: the two of you see that progressing, you know, forward looking.
Speaker 3: I think it's very very simple, which is like, if
Speaker 3: you in this business long period of time, you know
Speaker 3: what a good early stage investment looks like. You know
Speaker 3: what a good growth investment looks like. So Pat has
Speaker 3: been traditionally a growth investor. He made the early investment
Speaker 3: in Harvey. I've I've seen how early stage companies grow
Speaker 3: and advocated for growth investments in Airbnb and DoorDash when.
Speaker 2: They grew up, and over time.
Speaker 3: I think if you've been in this business long enough,
Speaker 3: you'll make both early investments and growth in that. Since
Speaker 3: we have Constantine that champion Citadel Securities and Waymo, we have,
Speaker 3: we talked about Sean, we have, we have David that
Speaker 3: is invested in a neo lab that's relatively early. We
Speaker 3: have Sonya who's recently sort of flew with me to
Speaker 3: uh to London to advocate for the investment in Flable.
Speaker 3: So these are this Our team is much more fluid,
Speaker 3: and we don't just going back to like most of
Speaker 3: our partners don't like being.
Speaker 2: Put in a box. We don't want none of us
Speaker 2: want to be.
Speaker 4: You also regard the partner's sorry, Pats to interrupt you
Speaker 4: to say that these partners, if you stack them up
Speaker 4: against any venture firm in the world, they would be
Speaker 4: in the top ten of the list of partners all
Speaker 4: the time.
Speaker 12: I genuinely believe that we have the best partners in
Speaker 12: the world. If Alfroma got hit by a bus and
Speaker 12: we'd be fine. If whoever came next got hit by
Speaker 12: a bus, we'd still be fine, right, But this idea
Speaker 12: of being able to go beyond early in the growth
Speaker 12: growth in an early consumer in the enterprise, enterprise and
Speaker 12: a consumer. I think one of the things you realize
Speaker 12: over time is that there are two core primitives in
Speaker 12: our business. It's people on markets. And if you develop
Speaker 12: a good understanding of what outlier potential looks like in
Speaker 12: a person, and if you develop a good understanding of
Speaker 12: where a market has a chance to go, over time,
Speaker 12: those two ingredients kind of transcend the stage at which
Speaker 12: you happen to intersect that company. And so that's what
Speaker 12: we see out of the folks on our at Sequoia.
Speaker 12: You know, as they progress, they can kind of go
Speaker 12: across stages.
Speaker 5: I have to ask you both.
Speaker 4: Bloomberg reported this week that Sequoia was one of the
Speaker 4: firms approached by Situational NS as they tried in the
Speaker 4: reporting to offload some private stakes. You know, we've seen
Speaker 4: what's happened in public markets. An opportunity to comment on
Speaker 4: that and how you see the situation, it.
Speaker 12: Would be delighted to comment on that. We were aware
Speaker 12: of that situation, and it has been reported that we
Speaker 12: were talking with them about the anthropic stake. You know,
Speaker 12: King Griffin showed up with what was a better solution
Speaker 12: for Leopold at that moment in time, then he went
Speaker 12: with the better solution. I think that our observation is
Speaker 12: that there is this game on the field over the
Speaker 12: last couple of years investing the AI supply chain, Leopold
Speaker 12: is one of the first people to recognize that that
Speaker 12: was the game on the field, and on balance, he
Speaker 12: played it pretty darn well. And so our suspicion is
Speaker 12: that he's going to be a fixture in Silicon Valley
Speaker 12: for a long time to come.
Speaker 4: I wanted to get to the ballot case study we've
Speaker 4: so it's been about short on ahead.
Speaker 2: On situation awareness.
Speaker 3: He did just wire four hundred million dollars to a
Speaker 3: company that we invested in, so.
Speaker 4: Oh could you we actually report did on the four
Speaker 4: hundred minion, but I haven't got clue the company.
Speaker 2: Is Yeah, no comment on that.
Speaker 7: But he's not a good one.
Speaker 2: He's not. He's going to be. He's really good. He's
Speaker 2: going to be around.
Speaker 4: We just have sadly two and a half minutes. I
Speaker 4: found what happened with valo Atonics really interesting. Again, we're
Speaker 4: going over history, but which you just kind of explain
Speaker 4: how that happened. Sean was the sponsor, he made a
Speaker 4: really big proposal.
Speaker 12: Then what happened, Well, we have a partner named Liam
Speaker 12: Corgan who joined us just six months or so ago.
Speaker 12: Liam physics undergrad at Harvard, happens to be an Olympic
Speaker 12: gold medalist, but he actually came from the nuclear industry
Speaker 12: before joining Sequoia. And so we have this person in Liam,
Speaker 12: who understands the market to a great degree of detail.
Speaker 12: And then we have this partner in Sean Physics PhD.
Speaker 12: As Alfred mentioned, who deeply, deeply, deeply understands the technology.
Speaker 12: So the two of them together were working on this investment.
Speaker 12: And generally speaking, things that have multiple layers of technical
Speaker 12: risk remaining with a business model that is many years
Speaker 12: in the future, those are scary investments, right, and so
Speaker 12: we're happy to take risk, but usually we do so
Speaker 12: with smaller check sizes. And so when the recommendation came
Speaker 12: out for a three hundred million dollars investment, you know,
Speaker 12: some eyes popped out of some skulls and I said, boy,
Speaker 12: that seems like a lot of money for a company
Speaker 12: with this much risk in it. But Shawn and Liam
Speaker 12: made the case. We decided to get on a plane.
Speaker 4: We went to you go on a plane Outfred, you
Speaker 4: were in New York, right security coordinating.
Speaker 12: Yeah, a few of us got on a plane. We
Speaker 12: went to visit them. We spent the whole day with them.
Speaker 12: We got to know Isaiah and his team. Isaiah is
Speaker 12: truly a one of one force of nature, exceptional founder
Speaker 12: who are now delighted to be in business with. I
Speaker 12: think we started to appreciate exactly how many of the
Speaker 12: different pieces they've put together, how novel their approaches, and
Speaker 12: how well they're executing. And at the end of the day,
Speaker 12: like Shawn and Liam, we think they are right and
Speaker 12: we rode with their conviction.
Speaker 4: We have that she thirty seconds and I'm sorry to
Speaker 4: do this to you, but let's end it with your
Speaker 4: White Swan memo.
Speaker 5: What the tides would be a p to west one.
Speaker 3: I just think that there is a lot of negativity
Speaker 3: around AI and it's really just misplaced. So if we
Speaker 3: have a teconic shift in AI, we have a technic
Speaker 3: shift in hardware, tectonicish shifts and sammis, we have a
Speaker 3: tectonic shift and industrialization of America the future is very bright,
Speaker 3: and if I had to write a memo today, it
Speaker 3: would be a white Swan memo, not a Black Swan memo.
Speaker 4: Sequoia Partners, Alfred Lynn, Pat Grady, thank you both very much.
Speaker 4: Thank you for sending conversation. That's it for this edition
Speaker 4: of Bloomberg Tech. One last look at shares of Google
Speaker 4: Alphabet drew about one hundred and fifteen billion dollars of
Speaker 4: orders for a twenty five billion dollar debt offering. There's
Speaker 4: also the background of those departures we covered twenty four
Speaker 4: hours ago. Recap all of that on the podcast You
Speaker 4: know where to find it, Beautiful day here in San Francisco.
Speaker 5: This is Wimberg Tech