Sequoia’s Roelof Botha: Why Venture Capital is Broken & How Great Companies Are Built

What if patience, not pace, is the secret ingredient of modern venture?

Sequoia’s story often reads like Silicon Valley mythology: early checks, outsized hits, and founders who become household names. But Roloff Botha’s remarks reveal a quieter, less glamorous truth behind that mythology—an insistence on long horizons, an almost monastic discipline around capital deployment, and a willingness to resist the noise that seduces so many investors.

Too much capital, too few exits

There’s a striking line that hangs over the whole industry: venture capital today feels like a return-free risk. Put bluntly, the industry is deploying between $150 and $200 billion each year while the number of companies that can create true, large exits remains limited. That math forces uncomfortable conclusions. Even generous return assumptions require an implausible number of billion-dollar outcomes to make the aggregate numbers work.

Hearing that analysis felt like a cold splash of water. It reframes the boom in new funds and new managers not as virtuous growth but as an arms race for scarce winners—an arms race that can drown sensible returns in an ocean of capital.

The Scout idea: sourcing opportunities through relationships

One of the clever moves Botha describes is the Scout program, launched to harness founders’ networks at a time when many rising talents lacked the balance sheet to invest independently. It was a pragmatic solution: give promising founders capital and, in exchange, gain early line-of-sight into nascent companies. The payoff has been real—some Scout-backed deals wound up in massive winners.

There’s an undersold takeaway here: access matters more than pedigree. Let someone on the inside introduce you to an idea, and sometimes that introduction is the difference between a generic deal flow and a transformational one.

Technology meets institutional rigor

Sequoia didn’t just scale by hiring more people. They built infrastructure—apps that surface deal history, AI summarizers for business plans, and data on hiring and engineering quality at a tap. Those tools compress decades of tribal knowledge into usable formats for partners on the move.

I found that detail surprisingly modern. It’s one thing to preach Intuition; it’s another to augment it with engineering that sharpens decision-making rather than replacing it.

Culture: consensus, curiosity, and the veto

The firm’s approach to decision-making is almost old-school: consensus with teeth. Everyone must agree. One partner can veto a deal. That level of mutual accountability forces partners to sharpen arguments and own their judgments. It also makes the room a crucible where personal conviction meets peer scrutiny.

Botha’s admission that he once voted against a company that later thrived was strikingly candid. It illuminated the real cost of veto power: responsibility and regret, but also humility and the requirement to show up prepared every day.

Global separation and the China chapter

Sequoia’s China story reads like a parable of geopolitical realism. What began as cross-border optimism shifted into strategic separation as political winds changed. The data is startling: new company formation in China collapsing from 51,000 in 2018 to 1,200 in 2023. That’s not just a statistic; it’s a warning about regulatory uncertainty chilling entrepreneurship.

Botha noted entrepreneurs simply relocating—Singapore, Japan, Europe—echoing a truth I keep coming back to: talent migrates swiftly when conditions harden. Policy shapes markets as much as capital does.

A structural bet on patience: the Sequoia Capital Fund

Perhaps the most revealing strategic choice was Sequoia’s willingness to sit on public shares. By creating a vehicle that retains certain post-IPO stakes, the firm captured additional compound gains—$6.7 billion since launch—by simply not distributing shares prematurely. That approach treats IPOs not as exits but as inflection points in a longer growth arc.

It’s a contrarian posture in an industry obsessed with speed. It’s also a reminder that compounding happens to investors who can think in decades instead of quarters.

Talent, temperament, and the founder quadrant

Don Valentine’s two-by-two chart—exceptional versus not, easy to work with versus difficult—still matters. Botha relishes the paradox that the founders who change the world are often the hardest to cozy up to. Vision, stubbornness, and an unwillingness to compromise are messy virtues; they create tension but also extraordinary outcomes.

I left that segment feeling oddly reassured: success rarely favors the polite and conventional. It rewards the relentless and imaginative.

Where Sequoia won’t bend

Sequoia’s private partnership model matters. They’ve structured the firm to preserve stewardship across generations rather than chasing scale or public listing. That’s a cultural stand as much as a corporate one. It’s a commitment to a particular kind of long-termism, even when market fashions push the opposite direction.

Life sciences: humility beats bravado

Finally, there’s a grounded confession: Sequoia likes diagnostics but largely eschews biotech without domain expertise. That restraint is refreshing. Success in one domain doesn’t automatically translate into authority in another. The lesson is simple and easy to forget—respect the limits of your competence.

Reflection: What stayed with me most was not the list of hits or the boastful metrics, but the quieter commitments: to patient capital, rigorous teamwork, and institutional memory. In an industry that prizes velocity, Sequoia’s counterintuitive choice to slow down—hold shares, insist on consensus, and preserve generational stewardship—feels almost radical. It suggests that the real competitive advantage may be the rare capacity to wait, to be humble, and to act like a steward rather than a speculator.