20VC Sequoia Partner, Carl Eschenbach on Building and Scaling High Performace Teams and The Common Mistakes In Scaling A GoToMarket Strategy

Summary Notes


In the latest 20 Minutes VC episode, host Harry Stebbings interviews Carl Eschenbach, a partner at Sequoia Capital and former president and CEO at VMware. Eschenbach shares insights from his career transition from operations to venture capital, emphasizing the importance of people and culture in building successful companies, and the necessity of embracing failure as a learning opportunity. He also discusses the competitive nature of VC, the significance of being a supportive and engaged board member, and the value of maintaining technical expertise in sales roles. The conversation also touches on Eschenbach's recent investment and his belief in the power of the Sequoia partnership to support portfolio companies.

Summary Notes

Introduction to Sequoia Capital and Carl Eschenbach

  • Sequoia Capital is one of the world's leading venture capital funds.
  • Carl Eschenbach is a partner at Sequoia Capital with a notable history at VMware as president and CEO.
  • Carl has also worked as a CFO and transitioned three CEOs.
  • Sequoia Capital has investments in major companies such as Google, WhatsApp, PayPal, and Stripe.

"Now Carl is a partner at Sequoia Capital one, the world's leading funds with investments in the likes of Google, WhatsApp, PayPal and Stripe, just to name a few incredible companies."

The quote emphasizes the prestige of Sequoia Capital and introduces Carl Eschenbach as a significant figure in the venture capital industry, highlighting his current role and Sequoia's notable investments.

Carl Eschenbach's Career Journey

  • Carl did not initially aim to be a venture capitalist; his background was in operations.
  • His career spanned 29 years, with the last 14 at VMware.
  • He began as an engineer and transitioned into sales, eventually becoming president and chief operating officer at VMware.
  • Carl left VMware to spend more time with his family, as his job required extensive travel.
  • He joined Sequoia Capital to bring his operational experience to the fund and its portfolio companies.

"I've just been very blessed to have a lot of diverse experiences. And then I decided to finally step away from an operating role so I could be home and spend more time with my family."

This quote summarizes Carl's career path, motivations for transitioning from an operational role to venture capital, and his desire to have a more balanced family life.

Building a Culture of Performance at VMware

  • Carl believes that people are the foundation of a company, not the other way around.
  • He advocates for a "bottom-up" approach, focusing on the people and culture first.
  • A strong culture and value system are essential for execution and realizing the company's vision.
  • Carl emphasizes the importance of prioritizing people and culture in company building.

"So always believe if you have a culture and value system that is strong, they will be able to execute, and then your vision can come true."

The quote reflects Carl's philosophy on the importance of culture and people in a company's success. He believes that a strong foundation in these areas is critical for effective execution and achieving the company's goals.

The Role of People in Later Stages of a Company

  • Carl disagrees with the notion that people matter less in later stages of a company's growth.
  • He argues that a company can only progress to later stages if there is a market opportunity, but success still relies on the people.
  • People are essential from the beginning to the end, and a great culture attracts great talent.

"Right? So it starts and stops with the people. And people want to work at companies that have great culture and have a great value system."

Carl counters the argument that markets are more important than people in later stages by reiterating the continuous importance of people and culture throughout a company's development.

Importance of People and Culture in Addressing Market Opportunities

  • Success in a large total addressable market (TAM) requires the right people to execute.
  • Companies need a strong culture and values to attract great people.
  • People and culture are inseparable from market opportunity.

"It all starts and stops with people. And as you go forward, a lot of people say, you know what? You don't have to focus on the culture. Just like you articulated. You need to focus on the market and the market opportunity. I don't think they're inseparable. They're one and the same to me."

This quote emphasizes that having a capable team is as crucial as having a market to serve. Culture is not secondary to market opportunity; both are fundamentally linked and vital for success.

Recognizing and Addressing Go-to-Market Mistakes

  • It's important to acknowledge mistakes quickly and be willing to pivot.
  • Incremental changes may not be enough when a strategy is not working.
  • The pace of change inside a company should match or exceed external changes.

"Just recognize your challenges or mistakes and make those changes fast."

Carl Eschenbach suggests that swift recognition and correction of mistakes are key to maintaining momentum in the market.

Focus on Productivity and Management in Scaling

  • Overhiring can be detrimental if productivity per hire is not optimized.
  • Success is contagious and can help scale an organization efficiently.
  • Management should be lean to ensure leaders are actively involved rather than merely reporting.

"Focusing on getting people successful, success breeds success, helps you scale and grow an organization very quickly."

The quote conveys the importance of not just hiring, but ensuring each team member is productive and contributes to overall success.

Approach to Failure

  • Failure can reveal true character and is an integral part of success.
  • Consistent failure is problematic, but occasional failure is a sign of pushing limits.
  • Embracing failure can lead to significant improvements in leadership and performance.

"Failure is a way of life. And if you're not failing at all, you're probably not pushing the envelope on you and your team enough."

Carl Eschenbach expresses that failure should be viewed positively as it indicates striving for growth and improvement.

Transition from Operations to Venture Capital

  • The transition involves adapting from a short-term, quarterly focus to a long-term perspective.
  • Venture capital requires more analytical and strategic thinking.
  • Influencing in VC differs from leadership in a large company with direct execution control.

"So that was the biggest change initially, was just to slow down, think more, and understand we're playing for the long game, not the short game."

Carl Eschenbach reflects on the need to adjust to a different pace and mindset when moving from an operational role to venture capital, focusing on long-term growth.

Transition from Execution to Influence

  • Moving from an execution-oriented role to one of influence requires a significant shift in approach.
  • In an operational role, one can directly implement decisions and hold people accountable.
  • As an influencer, the approach is to guide entrepreneurs with experience and suggestions.
  • Entrepreneurs must trust, believe, and be willing to execute on the guidance provided, without being forced.
  • The transition involves relinquishing direct control and relying on persuasion and trust.

"So here you have to go in and be more of an influencer. You have to instill upon them your experience and give them guidance on what you think might work or not work."

This quote emphasizes the need to shift from direct control to influencing others by sharing experience and guidance, highlighting the importance of persuasion in the influencer role.

"They have to trust you and believe in you and what you're sharing with them, but they actually have to go do the execution."

This quote underlines the necessity for trust and belief in the relationship between the influencer and the entrepreneurs, as well as the entrepreneurs' responsibility to execute on the advice given.

Core Components of a Good Board Member

  • A good board member should be supportive and actively care about the company.
  • Being present and providing feedback beyond just attending board meetings is essential.
  • Effective board members bring their experiences to the table to help the company grow.
  • The most successful board members work with the company outside of board meetings, almost like part-time employees.
  • Board members should avoid being overly critical or acting like they know everything.

"The most successful board members are the ones who work with the company outside of the board meeting itself on more of a day to day kind of operating model."

This quote highlights the importance of board members being involved with the company beyond formal meetings, contributing regularly to the company's growth.

"They're the most successful ones, not the ones, and I've seen them both, just sit there and question everything you're doing and try to pretend they're the smartest man or woman in the room."

The quote contrasts effective board members with those who are overly critical and self-important, indicating that humility and supportiveness are more valuable traits in board members.

Venture Capital Insights and Surprises

  • Venture capital requires patience and a willingness to adjust to a new environment.
  • Sequoia Capital's global presence and flat-world approach are impressive.
  • The partnership at Sequoia fosters a strong team atmosphere and support system.
  • The venture capitalist community is competitive, but building relationships with other firms can lead to collaboration.
  • The competitive nature of acquiring venture capital was somewhat underestimated.

"My biggest surprise is just how powerful of a partnership Sequoia is, and how much they have to offer our portfolio companies."

This quote expresses the speaker's surprise at the strength and resources of Sequoia Capital, emphasizing the value the firm provides to its portfolio companies.

"It seems like money is pretty cheap and you can get it quite easily. So maybe I didn't understand or really grasp the competitive nature of the venture community."

The quote reflects the speaker's initial underestimation of the competitive landscape in venture capital, acknowledging the ease of obtaining capital and the importance of competition.

VC Differentiation and Deal Competition

  • Despite the strong brand and platform of Sequoia, deal competition remains a challenge.
  • Sequoia's strategy focuses on leveraging past success, experience, and pattern recognition.
  • The firm's brand and history of helping companies achieve successful outcomes are instrumental in its approach to competition.

"Because Sequoia is... it is a very competitive business that we're in."

This quote acknowledges the competitive nature of the venture capital business, even for a well-established firm like Sequoia.

"I think the brand, the experience and the resources that we have are what really differentiate us in this competitive market."

The quote outlines the key differentiators for Sequoia in a competitive market: its brand, experience, and resources. These factors contribute to the firm's ability to compete for deals.

Favorite Book and Its Impact

  • Carl Eschenbach's favorite book is "Halftime" by Bob Buford.
  • The book emphasizes the importance of reflecting on one's life at the midpoint to determine the impact made and to plan for the future.
  • It has influenced Carl's perspective on how he wants to live the second half of his life, focusing on the legacy and impact he wishes to leave.

"One of my favorite books of all time is a book called Halftime, which is written by Bob Buford, and it's this book that talks about as a middle-aged male... you should stop and reflect to think about what happened in the first half of your life and the impact you've had on the world, and then stop at halftime and say, okay, great, I'm going into the second half of my life. What do I want to be remembered as? How do I want to impact the world?"

The quote explains the premise of Carl's favorite book, "Halftime," and its relevance to his personal growth and future aspirations.

Mentorship from Family

  • Carl Eschenbach's biggest mentor was his father.
  • His father prioritized family, worked hard without a college education, and taught Carl to value the heart and family above all else.
  • His father's approach to life and business, focusing on love and dedication to family, significantly shaped Carl's values and life choices.

"My mentorship goes back to my father... He taught me to live my life to the fullest, focus on my family, and always follow my heart first, because it's the only thing that matters at the end of the day."

The quote describes the profound influence Carl's father had on him as a mentor, emphasizing the importance of family, hard work, and following one's heart.

The Role of a Sales Engineer

  • Carl Eschenbach found his role as a sales engineer at Net exciting due to the blend of engineering and sales.
  • The position allowed him to leverage his technical expertise while developing business acumen.
  • This experience taught him the importance of maintaining technical knowledge in customer-facing roles to provide comprehensive solutions and not just sales pitches.

"It basically became a one man band job where I was the engineer and a sales rep, simultaneously supporting customers and selling solutions and products and goods to the customers."

The quote highlights the dual nature of Carl's role as a sales engineer, where he had to combine his technical skills with salesmanship to succeed.

Recent Public Investment

  • Carl Eschenbach recently participated in a Sequoia-led investment deal.
  • The company involved is set to go public and is expected to disrupt a market segment that has not seen innovation in years.
  • Carl is excited about the potential to help the company grow and is taking a board seat to contribute to its success.

"I've been here eight months, and just two weeks ago, I was part of a sequoia led deal myself and Pat Grady into a very exciting company that is not public... I really hope we can help this company accelerate its growth and drive deep into the enterprise to revolutionize a market segment that hasn't been disrupted in years."

The quote conveys Carl's enthusiasm for a recent investment and his commitment to aiding the company's growth and market disruption.

Gratitude and Acknowledgements

  • Carl expresses gratitude for being part of the podcast and offers support to Harry Stebbings.
  • Harry thanks Carl for his kindness and contributions to the show and acknowledges Pat Grady for introducing Carl to the podcast.
  • Harry also promotes his social media channels and blog, inviting listeners to engage with the content.

"Thank you, Harry, for having me, and I'm always here to answer any questions or help you along your journey too."

The quote reflects Carl's appreciation for the opportunity to participate in the podcast and his willingness to assist Harry further.

"You what an incredible guest, and Carl has been so kind to me. So I want to say a huge thank you to him for that and for all he's done for me and the show."

Harry's quote expresses his gratitude towards Carl for his contributions and kindness, emphasizing the positive impact on the podcast.

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