Sequoia's Doug Leone on Building Enduring Companies in the AI Era | ElevenLabs Summit London 2026

Please welcome Doug Leonei from Sequoia Capital joined by 11 Labs co-founder Matty Stanvski. [music] Thank you so much for staying through the day towards our final session and it's an absolute pleasure to have Douglani with us here. someone I got to watch online, I got to watch as an audience member and today um pleasure to be able to interview Zag. So maybe a quick introduction to Doug. Dag for last 30 years has been building and leading one of the most influential venture firms in the world, Seoa. He has seen the multiple technology transformations and waves, semiconductors, internet, mobile, cloud, and now AI. You've been behind some of the iconic investments service now in Eubank Wiz and expanded Seoia globally something that's so familiar keen for for so many of you here as well. Um so there's no one better than you to help us understand how we should prepare for that next era. But before we do that, let's kick off with a very different question. What's the biggest screw-up you ever did as an investor? So I chuckled that you mentioned semiconductors. like you might as well gone back to the Adam and Eve. That's how old you made me. I was in high school during this summer, Dr. Faze, but it's funny how history gets rewritten. Uh so the biggest screw up. Well, first of all, thank you for the nice question to start. Um my number one mistake was not to dream enough. uh founders dream and when you come to us with these tales and I use the word tales because that's all they are at the beginning there's no proof um the courage to ask yourself what happens if everything goes right uh we've learned to do that over the years but I've always been a person that likes to see a little bit of order and I've learned over the years that entropy chaos is really what you need in the early days. So my number one arrows would be not to dream with the founders early enough because the thing I've learned since when the companies work, they surprise you on the upside. The companies become far more than you could ever imagine. We were the first investor in Nvidia. Would I ever imagine that a graphics chip company would become an AI company? Would I have imagined that a search engine company where we didn't know what it was good for turned out to be Google or that this little company with a processor Apple uh would turned out to be what it is. Those were all companies where we had the pleasure of being the first institutional investors and yet we didn't dare to dream as much as the founders. So that's the biggest mistake I think I've made over my career. Thank you Doug. There's a lot of dreamers here, but you have one concept that many people I spoke with attribute to a lot of the work of how you think about investment and business, which are the laws of physics. Can you unpack this a little bit more? What are those laws of physics? So first of all how that started we had a China operation an India operation but now I want to focus on the China operations where it was first generation Chinese running at a pace you've never seen raising money at a pace you've never seen and I used to argue with a then leader argue I used to have conversation of what are the principles you want to write in pen that never change through generation through cultures uh through geographies and what are the principles you write in pencils the things you write in pencil things like strategy and I thought we had to get those right because if we got those wrong we would get a lot of other things wrong so I'll tell you what they were in investing and then for corporation I'll give you just one or two for example in investing a law physics was the bigger the fund the lower the returns the the the multiple it's very easy to do a 20 times fund on a 10 million ion dollar fund. It's almost impossible to do a 20 times fund in a $2 billion fund or quality of due diligence versus return or speed of decision versus return. And then I translate those into corporations. Jeff Bezos talked about uh type one decisions, type two. The the [clears throat] type ones are the one that you should really take a long time in making. Type two are the ones that you better make quickly. Well, if you get those wrong, that's a little physics. If you go too fast in a type one, too slow in a type two, or if you're if you're a control freak and you control everything centralized, you're not going to move fast enough. Or if you don't align compensation uh with uh with the role uh or if you're doing a right goal down at the micro level as opposed to the centralized level, I think you violate a laws a law of physics. [snorts] I've learned a painful lessons and this won't sound too good but it often comes down to follow the money. It often comes down to the money. I'm not happy to say that I wish the world worked quite differently but for example when a vice president says my husband or my wife doesn't really want me to work so hard. I found that's all That's a money conversation. And so that's another law of physics. Follow the money trail. And the most important one for me over the years is align interests. And nobody aligns interests in business. Let me explain to you what aligning interest is. You hire vice presidents. He or she wants severance if it doesn't work. You know what what uh the alignment of interest was? How about this, Mr. Miss Vice President, you come in, it doesn't work, and you give me all the money back I gave you. Or investor. you raise a billion dollar fund from your clients. A line of interest is put out all your net worth down dollar by dollar. And I've learned in life if you align interest, laws of physics, you never have to look. There's implicit trust in that. And so I have these little ground rules. We got to align interest. We have to follow laws of physics. And most importantly, we've got to be crystal clear why we write in pen which is a principle in deling and why we write in pencils which is strategy and tactics and so on. This is great and we'll bring it into a concept. Of course, one of the biggest transformation that's happening is AI. You described it that this might be a bigger transformation than the industrial revolution steeper adoption curve. The cycle from hype to adoption is shortening. um how should companies be thinking about that shift? Are the law of physics changing and does it change um for what you would look into as an investor? No, I don't think the laws of physics ever change. Once in a while we learn you go from Newtonian physics to quantum physics. You it gets broader, but I don't think you give up on Newtonian physics. If I drop this glass, it's going to break 9.8 meters/s acceleration. That's not going to change. But the world is changing. I wasn't as far back as semiconductors. Uh but I was far back as the year of the land. And the year of the land took five six years to come around. I was around when Netscape went public in 1995. And we saw at least two great companies being built in 1997 called Amazon and Google maybe in 1998. And then we saw the valley of death for many years. Then we came to mobile. Suddenly from technology to reality instead of being five years on land, three years in internet, it became one or two years. And I'm seeing that time shrink in AI because we're all interconnected. Once upon a time when we helped build a company to f with founders would have to be profitable in the US before we came to Europe. If you do that right now, you're dead. venture capital startup companies was this microcosm of the US economy or maybe the British economy or maybe the global economy. It is now a big part of the global economy. If you want to stay relevant, you have to be in technology and you've got to be in AI. So things are moving a lot faster because we're interconnected and AI is is the first time we run into a technology can that can not only replace us but be smarter than us. So, we have no choice but to move as fast as heck to invest before you've got clear data. The good news is that the capital is there these days. And so, as you build a company, you now know the limiter to your growth. If I can go there for a second, the limit of growth are the capital you have, the size of your market, the unit economics you have in deploying go-to market um resources, and the founder capability and manager companies. And all the founders these days tend to be your age, 28, 27. How old are you? 31. 31. An old man. One day you'll be said like you were there for semiconductors. I hope someone says that with you. Uh uh but it's usually come down to it usually comes down to the last issue the founders's ability to manage this explosive growth and you have to run as fast as you can hitting the imprudence curve which if you cross it you do violate the laws of physics but no longer can you relax. I'm sure you look you've raised how many hundreds of millions at 11 billion right now? 500 $500 million. And so the world changes. You go from Newtonian physic to quantum physics, but you still have to adhere to some basic laws of physics that says you cannot go past those boundaries. Well, age isn't defining. I had the pleasure of speaking with Andrew Reed who will be joining the board of of 11 as part of this round and um and he told me about this question which in your 50s you took and had the courage to invest in new bank uh which is a very untraditional bat that's a Brazilian uh credit card company now of course one of the leading companies in the space. How did this happen? How did you decide to make that that that investment? So I'm going to be brutally truthful with you. I have two engineering degrees. I know nothing about engineering. Uh when they build a system at Sequoia, they call it the design for Doug, DFD. Meaning, if Doug can figure it out, everybody else can figure it out. I'm not joking about this. I know I'm on a board of five of four cyber security companies. I know nothing about cyber security. I'm on a board of two financial services company. One is worth about 80 billion, one 15 billion. Those are small numbers these days. I don't know much about financial services. But let me tell you what I do know a lot about. I know a lot about go to market. I know a lot about business. I know a lot about people. I know a lot about staying around corners. I know how to build a board. I know what the role of a board member with a young founder is. You're a shock absorber. When they're too high, you hold them back. When they're too low times to support them. I know never to add stress when times are tough. Because imagine the pressure that a young man feels when times are tough. Those are the things I know. So to me, reparting myself was no effort, was no problem. I had a great founder, a former Sequoia associate had an had an idea for a Brazilian bank. He had no banking experience. It wasn't even a Brazilian, but he had a great idea. Uh and we invested a million dollars for 15%, which these days is sacriiggious. probably makes you twitch when you when you hear that. Uh and then we invested in every round up to 10 billion. Uh and the sky's is the limit. And so I don't want to get caught up in the product and technology. I believe that's the domain of the founders. Zero to one is black magic. If venture guys are smart enough to do zero to one, they would do zero to one. What we do, the good ones anyway, help you go from once you go from zero to one to build a business around it. Who do you plug in at which stage and believe it or not the answer is often the opposite of conventional wisdom. And that's what we do. And I think at Sequoia Capital, we're the very best in the world in doing that, which is why we have the most IPOs and so on. It's not because we invest in anything because we don't. Uh it's because we have learned over 53 years. We have that generational knowledge of what it's like to build a business. So let's move there. So many of us here want to create an enduring company. We want to make the 11 billion be of course a good investment for SEOA and and build a generational impact, transform how we interact with technology and um and let's shift to what it takes to get there. What do you think are the qualities that will differentiate the company's building today in this period to succeed? I'll start with a founder. To me, the founder is the core of the company. It's both the heart and the soul. When you lose the founder, you lose a lot. Now, it doesn't mean the founder has to be the CEO. In B2B, it's it's a tougher company to run. And you see a number of founders not running B2B. A lot more founders seem to run these B2C companies. B TOC companies are easy to run but the founder should control product uh because that's the soul of the company. So the first one it starts with that um once you have the and that founder has to be not only an outlier tremendous outlier but he or she has to have tremendous grit uh just never giving up sometimes like never giving up to a fault when the market has spoken 15 times we should give up go do something else but but we prefer the founder doesn't give up uh and then uh uh in B2B you want to get to market as fast as possible possible to get the customer interaction uh with, if you will, the thinnest utility that you can build, the simplistic thing that you can build. Aim probably not at the high end. Aim somewhere in the mid-market because it's easy to go up, it's impossible to come down. And you want that two-way feedback in B toC, which tends to explode and be in the hands of a million user. I don't think he wants something too buggy because you might develop a bad reputation. So just send and standing those tradeoffs and then look simple things like what does your V your first VP of sales look like? Your young company a great VP of sales one will wait you out two sometimes those guys are suits or those girls are suits meaning they don't know what it's like to go get the first 20 customers. I can't tell you how many people we've hired over the years that could sell $20 million a year for Cisco, Google and they can't sell $300,000 for for a startup. And so plugging in the right people, know how to scale, how do you go fast but not too fast. What is a sales productivity model? How much saleover assignment? You probably, a lot of you probably don't even know what I'm talking about. Those are the non blackmagic things that we can help you do at the end of the day. building their company is putting one foot in front of the other. I've said strategy is later right now. Execution, execution, execution, execution. You know what a great strategy is? Get to 500 customers. That's what a great strategy is. And then we can come over the top with marketing early on. All marketing needs to do is get you leads, leads, leads, leads. Sell, sell, sell. Once you get to 500 customers, we'll talk about the overlay coverage, the, you know, the little tighter type of positioning, the Super Bowl ads and all that stuff. [laughter] I I the the the team and especially Daily people is probably one of the things that we are the most proud of that define a culture and now enable us to scale in the way that that we can. Um, you mentioned of course the valuation changing so heavily in the private markets. Um the you mentioned the numbers that could make me Twitch. I wonder if they make you Twitch and are we in AI bubble? You know I tell founders because I've earned their right to a sense of humor. Founders will ask me, "So tell me how much a company like like would you like to own?" I usually tell them, "Well, usually not more than 100%." And you should see how you know how how they lose their minds when they say that, but they know I'm kidding. Uh look um the trend line is incredibly positive but there are bubbles within that and not every com there's usually in every year there's a few thousand companies but there's only about 10 companies that drive all the returns and you've got to be in those tens and there's some venture firms that come in during the early stages of the market and and they invest in everything and actually pays off for them and there's some venture firms nameless less as they will be. They come off the tail end of a market like in SAS and they invest in everything and they lose their shirt. I think right now it's lean in time but not in everything. Not every company's going to be worth a trillion dollars. So I think you got to pick your spots. We are in a bubble. Uh but history shows that if you pick the right companies, uh you'll be rewarded even if you paid the higher price. And maybe you'll be out of the money for one or two years, but you'll do just fine. And so it's all a matter of picking them. And so it's a pick them business. AI hasn't quite figured out how to pick them. Thank God. Uh but it's a pick them business. Well, let's shift now to a little bit of an informal conversation. Some of the questions I would love to ask you if it was effectively behind uh behind in the room behind the cameras. Um we're of course thinking about the future as 11 Labs are thinking about hopefully building the generational company and IPOing one day. the primary markets are uh where they are. What in your mind uh companies should be thinking about when they make this decision between staying private or going public? Let me take it one step before then. I believe nature hates a vacuum especially when we're all interconnected. If you don't go get it, somebody else will. So when I see an operating plan for next year, we're going to do 732 million. I ask them why is that the number? What are the limiting factors to that growth rate? Why not 8:32? Why not 632? And my metaphor is of a river with rocks in a river and his job and a board's job is to remove all those rocks. And so you've got to go towards maximum growth subject to a payback level you want to live with, subject to your cash, subject to a lot of things. R, you know, I sometimes draw a line no more than twoyear payback because then you're way out there. You burn too much cash, you're out of control. And so, you've got to hit that growth rate and the public markets will reward you for growth. Even when there's a little bit of hiccups, suddenly they want value. Don't fall for foot for that trap. Go get the business. Second lesson is even when there are bumps, don't give up in R&D. In other words, continue to invest in R&D. That for me was a lesson in in08 uh during during the bump. We cut back sales, we cut back marketing, but we're smart enough not to cut back in R&D. Maybe we slowed it a hair, but you're building that core. And so you've got to put those in place. The other thing which is somewhat sacrilegious and I will tell you make the company a little uglier before you go public so your metrics can improve. The issue with that though is are you going to develop? Are you going to inculcate ugliness into the business that you can't remove? And so you have to figure out what you can make uglier. Maybe you hire a few too many salespeople early on. You get prepared for that growth, but not so much that you develop all these bad habits. And so that's a fine line. And the other thing, you've got to have a predictable sales model. You have to have a board plan. Uh this is the way I I would do it. I would have a board plan that's X and I would have an internal plan that's X plus.2 and can you meet the extended plan with the board plan headcount and when you start meeting those numbers you know you're ready to go public and you should start planning which I know you're going to ask me next because I saw some of the questions. You ought to you ought to stop planning for this 18 months before because you've got to by law you got to hire all these people on a board. You have to have audit committee members. You don't want to hire them all in in the last week. Keep in mind that most board members and now this is going to shock you and it's not a kind line. Most board members are no ops. You're lucky if you get no ops board member. They do no damage. They add no value. Zero. You think I'm joking. I am not joking. If you get one or two good board members, usually in the domain that that's relevant to you, like for example, you came from tech, right? So, if I were on your board and I'm not on your board and I don't know who's on your board, I want to put a C on a board that has built a business from whatever your run rate is to five times your run rate. Someone who can you can go have lunch and dinner with. You probably don't know much about go to market. How could you? You came from product. I'd want to go get maybe a board member that grew in go to market to complement you. So those are the people we want to surround these fragile geniuses called founders because they'll communicate with the operating people a lot more they'll communicate with us the venture folks. So even though after a year they after six to nine months they start to trust us and so on. And so you want to plan about 18 months before. Um, and then when should you go public? Whether you should go public to me going public is a must because it's an implied contract you have with the investors and with the employees. So at some point you want to go public. Uh second you don't want to go public too early. Uh third uh you've got to have repeatable sales model. And what is the IPO for you? Is is it a financing event? No, there's money all over the place. You know what it is? It's a branding event. When you start getting large customers and you want to get a customer to pay $25 million a year and you'll get there one day, they want to know they're not the only schmucks playing $25 million a year. They want to know that you're a real company. So for B2Bish company, and you're a B2Bish company, going public is a branding event. It's a statement to the market that we've arrived. going public is also a real pain in the ass. And so you have to make sure you have a CFO whose job really is to play defense when you're out there slaughtering, you know, lions and tigers because that's what you're going to be doing. And so when you have all that in place, it's time. Doug, was there an IPO that left a lasting impression on you? I've learned a lot from a lot IPO. I I think I was screwed more. Well, that wasn't me. is the board I was on got screwed more in an IPO than anybody in history where the bankers at this IPO argued we were in a fight whether the price should be 20 or $22 a share. The stock opened at 310. Think of all that money that now wasn't on a balance sheet of the company but is in a balance. It was in the pocket of the investors that were offered shares of $22 a share and rode it to 310. That left a mark on me. I am You should see me on these pricing calls. I am the bank's worst nightmare. Now, not every IPO is like that. I won't mention name. There's IPO. I I look at the book. I look who's buying. Maybe it's 10 times subscribe, but I don't like the looks of it. Maybe we go with the price. But usually I put the price up because that's in the interest of the company. So, it's not to me it's the pricing calls. Uh talking of new bank, we were the last company to go public in whatever it was 2021. And if we didn't go public, we might not have a company because there it was a financing event. It was a bank. Uh but so that left a lasting impression. Sometimes luck helps. Uh but you know, there there's there's all of them. To me, the interesting are the pricing calls. You'd be amused if you heard the back and forth. It's entertaining to say the least. Don't worry, we're not putting the prices up at 11 laps. You could invite me on your pricing call. [laughter] I'm happy to come. Thank you. What's What's the What's the actual conversation that you wish or you think should happen earlier in those board conversations and and it rarely does. So, think about this in the early days. It's a it's not a strategic conversation. It's a functional conversation. We have a young CEO, young VPs. As I said, you can't get the experienced VP sales. You may have a V pre-product management co-founder. You have a director of marketing that when you hire them, they want the VP title, blah blah blah. So, the conversations early on are all functional. You know, what's marketing doing? What's sales doing? Should we hire a marketing person that messaging? Should we add a lead genen person? Those are the conversation. To me, I'm I'm not going to answer your question. to me is when do you start transitioning these conversation from zero strategy to 50% strategy to 70% strategy? When do we stop talking about the tactical issues the one foot in front of the other? That's the growth of the company and keeping an eye on that because it's it's very easy once you start in tactical conversation uh to remain there for the next five years and instead I look for a time when we can start shifting the conversation like like for example I I I talked about to having the thin layer to start off with. You always want to you always want to start off there, but you want to end up with a platform and you want to build your product in a concentric circle. First you have this little utility, then you go and you go and you go to get to the $25 million. And one day you want to be Amazon. You have a full pillar. What's the next pillar? You know, think of books, books, records, blood, you know, everything you can possibly buy AWS. And so those are strategic conversation. At some point the conversation has to get there but not in the first two or three years as you're trying to make these quarters and trying to build this management team and try to get this engine going. [snorts] Luckily we have amazing investors on the board of Jennifer Seth and now Andrew who are pushing us and I think helped us hire some of the incredible talent as as we think about that future. Um for founders building today and we have number of those in the rooms but also builders in some of the established companies. what's some of the hardest truths they need to internalize if they want to build something that that will last? Uh, so a few lessons. I notice we're almost out of time. I would tell you to architect your cap table the same way you architect a product. Don't give this of I got two term sheets, you know, oh, I met a firm, I got a term sheet, who cares? It's like going to a bar and said this this girl, this guy talked to me. I'm I'm going to get married. You know, it's irrelevant. Architect it. Look for certain skill sets even from day one. Make the decision. Do I want a seed investor who will not be there? I love seed investors. We have a seed funds. But when you're reaching scale, you and you bump a little and you need two million to raise 20 or 30 or you need five million. Seed investors don't have that. So figure out if you want to go with the seed investors. Many good reasons to go with seed investors. or if you want us a bigger firm early on. So be very very very careful of how you architect the first few steps. All negotiations are lost in the first few steps. The other thing is if you have two or three co-founders align the equity. You know how many times we're 90 days into a business and two founders want to take out founder third who doesn't do anything? Well founder third now is a third of the company. And look how much you've wasted. And then when you hire an engineer, you're arguing over a tenth of a point. Have the conversation with your co-founders. Hey, you're a world-class architect, you're a world-class product marketing guy, you're a finance guy, not going to be a third, a third, a third. Have that conversation because that will ensure stability. If you are in la da land, we all get the same kumbaya. All you're going to do is create a mess. Last question. If you were to start a company today, what would you build? Um, let me tell you what I've told my daughter-in-law. Go figure out a problem you experience firsthand. Zapos couldn't find shoes. Uh, well, there are PhD projects. Google that that was a PhD project, but often time you have a founder or set of founders that have firsthand experience of the product. You know, I can take you to Airbnb. Yahoo. Airbnb. They needed money. They laid some freaking mats on the floor. Yahoo. Go go go go go experience a problem. If you want to scare the out of me as investor, tell me that you and two of your friends got in a conference room and wanted to start a company and decided to talk to five CIOS to figure out what their problem was. That is not what I want to hear. Go experience a problem. I'm not answer your question, but I'm give you the directional answer. I go figure out a problem that I have an inherent feel for and I'd go that way. Doug, don't leave just yet. This was absolute pleasure. If I can ask for a a round of applause of learning for Dag and [applause]