Jess is an investor at Sequoia Capital. Prior to that, she was co-founder & CEO of fashion app Polyvore (acquired by Yahoo in 2015) and a product manager for Google Maps.
What are the three main criteria you look at when investing in a startup?
Grit. The number one thing I look for in founders is grit. Startups are really hard, and founder life can be a roller coaster of agony and ecstasy. You need to be incredibly tenacious and have a high tolerance for pain. The struggle continues even when your company is doing well because hypergrowth is also painful. Grit has many sources. It could be a deep passion for your mission, a chip on your shoulder, a fierce competitive streak, or a desire to prove yourself because you’ve always been underestimated.
Example: When I first met Kate Ryder, founder & CEO of women’s/family health benefits platform Maven, I was immediately impressed by her grit. She had been through tough fundraising cycles in the past because VCs often underestimate the size of the women’s health market. Despite that, she was fiercely committed to improving the lives of working moms because as a mom of two she had felt the pain herself. The Sequoia team could tell that she would walk through walls to make it happen. We led Maven’s Series B.
Growth mindset. My partner Roelof Botha often says “we prefer slope over y-intercept”, which I love. I look for people who want to grow, who have the capacity to learn quickly, and who are unafraid of surrounding themselves with the best people they can learn from. Running a company is too hard to do it any other way.
Example: I first met Selene Cruz of Re:Store at the pre-seed stage through Female Founder Office Hours, my side hustle. At the time, her idea was a Powerpoint deck and a concept she’d started in her apartment. Selene wowed me with her incredible slope though. She came from outside of tech, but is a sponge for new information, is incredibly inquisitive, incorporates new ideas quickly, and doesn’t hesitate to ask for help. Sequoia co-led her pre-seed round.
Giant (or growing) market and big dreams. Sequoia is in the business of partnering with founders who want to build legendary companies as early as possible. Over our 45+ year history we’ve backed companies like Apple, Google, Airbnb, Dropbox, Stripe, Instagram, and WhatsApp. So an important criteria for us is the size of the problem you’re trying to tackle. At the earliest stages it might be a smaller wedge into a larger market, or a market that’s nascent but has the possibility of becoming big. But you need to have that dream gene.
Example: Jason Boehmig and Cai GoGwilt at Ironclad are building a contract management platform. At first glance, one might think of legaltech as not a very big market. However, the truth is that contracts are the atomic unit of commerce, and every company uses contracts. The opportunity is massive. Sequoia led Ironclad’s Series B.
(Bonus) Good storytelling. Being able to tell a good story authentically is helpful for building a brand, for closing customers, for recruiting great people, and for raising money. So I love it when founders are good storytellers.
Example: Yong Kim at Wonolo has an authentic personal story and tells it in the most genuine way. He moved to the US when he was 15, barely spoke English, and found it hard to get a job. Now he runs Wonolo, which helps blue-collar workers find jobs. He also speaks very authentically about the Wonolo worker community because he does Wonolo jobs on the weekends in his spare time. We led Wonolo’s Series B.
What is your advice for startup CEOs?
Startups are hard. Prepare for pain. It isn’t all glamorous. Don’t do it unless you’re passionate about the problem you’re solving. Better to be a missionary than a mercenary.
Do a few things well. It’s better to do a few things well than many things poorly. Focus on the few things that truly matter and move the needle. This is true of your company strategy, your team, and your own personal time.
Play to your strengths. Be self-aware of your strengths and your weaknesses. Align your role with the things you’re good at, hire to complement your weaknesses.
Personal example on this one: When I was Polyvore’s CEO, I had to come to terms with the fact that I was strong at vision and evangelism, but not the greatest operational leader at scale. It was tough to admit because I had prided myself on being a PM who was good at project management and organization. But I realized rather than banging my head against a wall and trying to become great at process and making the trains run on time, it was better to hire a great COO who could do it in their sleep, and focus my energy on what I excelled at. One of my mentors Cheryl Dalrymple told me you can only move 3 points on a 10 point scale, so focus on where you’re a 7–10, not on where you’re a 2.
Don’t believe the hype. Every company has its warts. Every CEO has their insecurities. You’re not the only one.
Find your founder community. Find a good support network of other founders you trust that you can turn to for advice, support, and just someone to vent to.
What’s the most common start-up failure problem?
The path to greatness is paved with failure. There are many common mistakes that startups make, but some are easier to overcome. For example, hiring execs that don’t work out, over-promoting your earliest employees who end up not scaling with the company, shipping a bad feature. The mistakes that can kill a company are founder drama, platform shifts that destroy your business (e.g. desktop → mobile, everyone moving to cloud, etc.) and running out of time/patience/money.
Most startups fail, so this happens a lot. I think you can tell a lot about an investor by how they handle the failures and the tough moments. Some investors abandon you when you’re no longer clearly in the top quartile of their portfolio. Some hit the panic button and ask for incessant updates that distract you from fixing the problem. Some try to step in and micromanage the problem themselves.
IMHO the best kind of investor is a “shock absorber in the lows and a sparring partner in the highs”. That’s a phrase I learned at Sequoia from Alfred Lin. It means when things aren’t going well, investors should help absorb the blow and surround the founder with the support they need to get through the tough times. And when things are going well, investors should not just be
BCJ Spotlight section brings you interviews with successful entrepreneurs. We share their insight, experience and expertise. So that you can learn, get inspired and stay motivated with these insightful stories, told by great leaders.