Sequoia hits rewind, undoing 20 years of expansion

Sequoia Capital posted a memo to X on Wednesday morning titled “The Sequoia of Tomorrow” that’s full of surprises. The firm has raised roughly $10 billion in new funds, it says. It is also closing its London office, shutting down its Arc accelerator and its Scouts program, merging its early-stage and growth teams into one, flattening its partnership, and killing the Monday partner meeting.

The framing is forward-looking, but the messaging is very much about rewinding to an earlier time when the team was smaller and focused more narrowly on Silicon Valley.

Sequoia says as much itself. The firm describes coming out of a roughly 20-year expansionary phase during which it built multiple businesses in multiple geographies and says an unintended side effect was hierarchy. Nearly everything being undone here was built during that stretch, under a succession of stewards running from Doug Leone through Jim Goetz to Roelof Botha.

One of the most surprising developments here is that the firm is killing two programs that put Sequoia closest to young founders. Scouts, which Sequoia launched around 2009 and, anecdotally, half the industry has since copied in some form, gave small checks to founders and operators to invest on the firm’s behalf; it was a way to see deals through people closer to interesting new founders than any partner could be. Jason Calacanis famously pointed Sequoia to Uber through the program. Sam Altman brought Stripe to Sequoia as a scout, too. Other early scouts included Airbnb CEO Brian Chesky and Dropbox founders Arash Ferdowsi and Drew Houston.

Arc, launched in March 2022, was Sequoia’s answer to Y Combinator: a batch accelerator for pre-seed and seed founders, running several cohorts a year for seven weeks, with admitted companies getting $500,000 to $1 million up front.

Both were bets on being early and being everywhere. Both are now gone, as Sequoia says it wants to put more energy behind fewer people and things.

So is London, which Sequoia opened in 2020 and is closing six years later. Several people will leave the firm. “We simply don’t see the need for a local presence,” the memo says, adding that Europe will keep producing outlier founders and that Sequoia can support them from the Bay Area. (If founders didn’t already feel pressured to move to the Bay Area or open an office in the region, they will now.)

Luciana Lixandru, hired from Accel in 2020 as Sequoia’s first partner in Europe, says she was offered a move to San Francisco and declined. (“Europe is where my family is, and where I want to build,” she wrote on X.) She says she remains a partner and will keep her board seats while investing personally in European founders.

For European founders, the message is going to be particularly difficult to digest, especially as it follows Andreessen Horowitz closing its London office last year and Coatue retreating in 2024. Sequoia didn’t say it won’t fund Europeans, but it’s definitely reinforcing here that the center of gravity is once again in the Bay Area.

The rewind extends to people too. The memo notes that Carl Eschenbach, the former Workday CEO, is very much back in the fold (he returned as a full-time partner in March). It also says the team has “reinvigorated the GOAT,” Doug Leone.

Though the nomenclature at venture firms is all over the place — including Sequoia — the memo makes clear there are now seven general partners who primarily own and operate Sequoia: Alfred Lin and Pat Grady — who are the firm’s co-stewards — along with Andrew Reed, Shaun Maguire, Konstantine Buhler, Sonya Huang, and David Cahn, who joined the firm in 2023.

And there are other changes. Jess Lee, the firm’s first female partner and an early-stage investor who oversaw its Arc program, is no longer shown on Sequoia’s investor page but rather as an operator; she remains with the firm as its chief product officer. Stephanie Zahn, an investor who had joined Sequoia in 2015, has meanwhile left the firm entirely, announcing last month that she is launching her own new firm.

Sequoia rarely lets anyone go entirely. Founder Don Valentine kept turning up at partner meetings for roughly a decade after handing over the firm. Goetz, who stepped back from his management responsibilities in 2017, is still featured on the firm’s site. Botha is the exception. He was voted out as senior steward last fall in a surprise shake-up — the firm framed it as a handoff to Lin and Grady — and he cut his remaining ties with Sequoia this summer, around the time he joined SpaceX’s board.

The changes are sure to make waves. Still, none of them are completely out of character. Sequoia iterates routinely, and sometimes that has meant retreating. Most notably, in 2023, it separated from its China and India/Southeast Asia arms, which became HongShan and Peak XV, ending a two-decade run as a global franchise under one name.

The rest of the memo is structural. It says the team has decided to dispense with its “early” and “growth” team approaches and operate as one. It also notes the Monday partner meeting — a ritual at Sequoia and at nearly every firm — is finished on the theory that founders operate around the clock and their investors should, too. (These may be going away more generally. At least, in a sit-down with TechCrunch at Disrupt last month, the entire Benchmark team suggested it now mostly uses Monday meetings to socialize.)

Sequoia acknowledges the moves come at some cost. “It is scary to break something that’s already working just fine,” the memo says, and painful to say goodbye to good people. Still, it’ll be a while before anyone knows if these were the right calls.

Here is Sequoia’s post in full:

We live in a world of accelerating change. The best founders reinvent themselves over and over again. We must do the same.

It’s been a year since our generational transition. We’ve been busy! We’re no longer evolving the Sequoia of yesterday; we are now building the Sequoia of tomorrow.

Here are a few of the changes we’ve made, and what they mean for founders.

Focus We are best at high-conviction, highly selective venture capital investing. This is our focus. We have removed much of the complexity associated with the Sequoia Capital Fund, sunset our batch accelerator (Arc) and Scouts programs, and streamlined both operating and investing teams. Putting more energy behind fewer people and things means better support for the founders we back.

One Team There is no more “Early & Growth”. There is only Sequoia. We are one team, operating under one shared mission. This should make things more seamless for founders as they go from stage to stage.

London We are closing our London office, which means several people will be leaving Sequoia. This is not about the team – they are excellent. We simply don’t see the need for a local presence. We believe that Europe will continue to produce outlier founders and companies, and that we can continue to provide world class support from our home base in the Bay Area.

Partners We are coming out of a ~20 year expansionary phase, during which we built multiple businesses in multiple geos. One unintended side effect was hierarchy; it required real management to run the operating side of our business, and this crept over into the investing team. We’ve made several internal changes that have the effect of flattening the partnership. This allows every partner to flourish, and every founder to receive the full benefit of Team Sequoia – regardless of who your lead partner happens to be.

Firepower We’ve welcomed two rising stars (Liam and Sonali) and one transcendentally talented founder & operator (Dev). We’ve reunited with a legendary leader (Carl) and reinvigorated the GOAT (Doug). We’ve elevated and empowered killer operators: Hem, Natalie, Rishi, Stacey, and Theresa. We’ve raised ~$10Bn in new funds. Talent and capital are two of the key ingredients in building legendary companies. Our talent density and capital base are stronger than ever.

24/7 There is no more Monday partner meeting cycle. Founders operate 24/7, and so do we. Founders shouldn’t have to adhere to our process – we will do our best to adhere to yours.

Reinventing Ourselves

Some of these changes were obvious. Others less so. Many were hard. It is scary to break something that’s already working just fine, and it is painful to say goodbye to great people. We ask founders to do the right thing even when it is hard, and we are committed to doing the same.

Some things remain unchanged. Our mission is to help the daring build legendary companies, from idea to IPO and beyond. Our objective function is not scale, but quality: delivering the best possible returns to LPs, and being the best possible partner to founders.

The Sequoia of Tomorrow

Excellence is a moving target, so we will always be changing. But for now,

this is Sequoia.

We have seven General Partners who own and operate our organization, and we are on offense: building our business so that we can support you in building yours. We are true believers, and as we enter a golden age of multiple tectonic shifts in parallel (AI, space, biology, reindustrialization, and perhaps more), we are so fired up for what’s to come. Let’s build something legendary together!

– Alfred, Andrew, David, Konstantine, Pat, Shaun, and Sonya, on behalf of Team Sequoia