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When news broke this week that Roelof Botha was slipping into the top job at Sequoia Capital, it came with the low-key inevitability that has become a hallmark of what is considered by many to be Silicon Valley’s top venture capital firm.
That the 48-year-old South African, who was already head of Sequoia’s US and European funds, had also assumed global leadership was a surprise to no one. The formal decision among partners was settled within 30 minutes, said Doug Leone, the outgoing head.
But for Silicon Valley Kremlinologists, there was still plenty to chew on. Botha was named Sequoia’s “senior steward”, dropping the “global managing partner” title that had always gone with the job.
Leone brushed off this change as a simple “tidying up”, but another insider confirmed that it is a sign that, behind the scenes, Sequoia has been adjusting to a new global power balance. These days, the people running Sequoia’s newer funds in other regions have equal standing — especially China, where local head Neil Shen has built Sequoia into the country’s leading venture investor, winning him recognition as the firm’s only other “steward”.
Botha will have explicit responsibility for global operations such as finance and compliance. Beyond a loose agreement for the new leader to set “the overall tone” for the firm, however, Silicon Valley does not call any of the shots.
Botha, like the firm he heads, projects an air of self-effacing competence. At a time when Twitter has become a place for star venture investors to tout their expertise and settle scores, he affects the kind of old-fashioned probity you might once have expected from a corporate banker.
A grandson of Roelof “Pik” Botha, the last foreign secretary under South Africa’s Apartheid regime and later a member of Nelson Mandela’s first government, Botha says he always “felt a burden of expectation to live up to the name”. After he was awarded the highest marks in his province for his high school finals, Botha says he overheard people speculating about whether the results were rigged.
The sting is still there. “I’ve been driven to prove that I can do it on my own, and I didn’t ever have to live in the shadow of somebody else,” he said.
Talk to people who know him, and they are likely to mention his humility. He has a self-effacing chuckle that he uses to deflect too much personal attention. But it masks a fierce competitiveness.
Unprompted, he brings up that he came top in his university undergraduate class in South Africa “with the best grades in history”, set a record on his early career path as “the youngest actuary in the history of the country”, and came top in his class at Stanford University’s Graduate School of Business. “I’m pretty sure my grandfather had no hand in my grades to be valedictorian.”
Botha decided on a route out of South Africa when he left high school, concerned that the end of Apartheid would lead to political chaos, perhaps even civil war. Becoming an actuary, with a qualification recognised in the UK, looked like an insurance plan.
In the event, he spent two years at McKinsey before moving to California to study at Stanford, never to look back. Elon Musk pursued him to join PayPal and he signed on as head of corporate development in 2000, before moving up to become chief financial officer a year later. A year after that, PayPal was sold to eBay and a short time later, Botha joined Sequoia.
Entrepreneurs who have worked with Botha list his strong financial and strategic sense as valuable assets for young companies that often lack both. Sarah Friar, a former chief financial officer of finance company Square, points to his “intellectual horsepower”. Phil Libin, a former CEO of Evernote, praises his “pattern recognition” — experience built up from years of studying different businesses
Behind the scenes, Botha is clearly not averse to wielding more direct influence. He claims to have been influential in getting Square, recently renamed Block, to move into consumer finance. Its Cash app now claims 44mn users.
When the situation demands, he is also ready to help steer founders aside to make room for more professional management — a difficult balancing act in Silicon Valley, where VC firms compete to be seen as the most founder-friendly.
“When these things happen, it’s with consent and agreement that it’s in the company’s best interest,” he insists. “It’s not a coup.”
Some of Botha’s most notable investments came early, though the returns were not as spectacular as they might have been. They included YouTube, which sold out to Google for $1.65bn, and Instagram, which was bought by Facebook for $715mn.
Along with PayPal, which was bought by eBay for $1.5bn, Botha says these deals were a “painful lesson” in selling out too soon. He adds: “I’d say, with the benefit of hindsight, all three would have been better off as independent companies.”
It’s no surprise, then, that Sequoia these days sometimes sits on the stock of companies it has backed well after they have gone public (it puts its public stock holdings at $45bn late last year.) Botha was also the brains behind a plan last year to create a more permanent structure to house capital for the firm, removing the need to sell out when its funds expire.
Such adjustments might suggest that Sequoia is on the brink of more profound change, particularly as the flood of money washing over Silicon Valley and the incursion of outsiders like SoftBank and Tiger Global have brought new competition to the VC industry.
Botha, however, suggests Sequoia will stick to the more gradual evolution that has seen it through previous tech and financial cycles.
He quickly rejects any suggestion that the firm would consider going public, as other private equity firms have. “To the extent possible, within the limits of the law, we’ve structured ourselves to be a partnership in perpetuity,” he says.
He also rebuffs the idea that Sequoia is morphing into a different type of financial institution — perhaps one to rival Wall Street’s investment banks — as it seeks a more enduring role in the lives of the companies it helped create. Instead, he anchors it firmly in the start-up world where it originated — even if it hopes to stay close to the entrepreneurs it has backed for far longer.
This story has been amended to clarify the decision-making role of Sequoia’s US arm
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