Opportunities in Robotics

0:00 How does the public market fit into the private market from your perspective right now? Well, Caroline, thank you for having me on the show. This is a great honor to be here. You know, to answer your question directly, we just think about building great companies and partnering with great founders and helping them from idea to IPO and beyond. And so in terms of thinking about the public markets, we just think about much, much longer term. We work with founders at the idea stage. You know, in a decade that company can then be worth 1 to $10 million. In two decades, that could be worth 10 to $100 billion in three decades. Like in for invidious case in Google's case, in Apple's case that we backed very early on, they become potentially $1,000,000,000,000 company. And so, yes, markets can go up and down.

0:45 There might be, you know, sort of bumps in the road. But I would just encourage your viewers to think about the long, long term. And when you're behind a megatrends such as A.I., it can last for a long, long period of time. But that megatrend needs infrastructure and it needs electricity and power. That's one of the key anxieties of Andy Jassy, for example, at Amazon saying his constraint on us is power. Is it something that your CEOs are contending with how to ultimately sustain that growth path? I think it's something that they think about and it's something that we we need to work on and there are a lot of great minds working on it. It's not something that I'm an expert in. But you're right.

1:18 Power is something that we need in data centers and that the bigger the data centers we've built, the more powerful the models we were able to build, the more powerful the applications. And so I'm sure it'll get solved. What's so interesting is, of course, you mentioned how Sequoia was early into Jensen Huang's vision for AI. You're now thinking about not just sort of moving away from lessons, but going into application layers and also going into physical. I know that that's really important to you at the moment, the application of robotics.

1:45 Where is the next growth story in this long term megatrend? Well, I think let's break this up. I think there's still lots to do on the foundation layer model. They're not done. These companies like opening AI that we backed early on, they're still continuing to build a foundation model there that allows the application founders to build applications that we have not seen before. And we will continue to see innovation there. When you continue to see private rounds for those sorts of companies, is there ever a point at which they just raise too much money in the private markets but it goes up and down?

2:16 But the the point is that over time, these companies are always surprising us in the long run on what they're capable of doing. Sure, in the short term they may surprise us and the technology tends to surprise us in the opposite direction. But in the long run, it always surprises us in the positive direction. And in terms of many of the companies we work with, they're just providing automation to a lot of workflows today. That's what we see today. So companies that we work with, such as clay, they're trying to help salespeople with their leads and automatically enriching their leads so that the salespeople can focus on actually growing the business and contacting the right leads.

2:58 And with camera or their ambient scribe is helping doctors focus on care, not the administrative work. They listen in the background, take notes, and yes, they take the notes. It seems like something small, but then once you take the notes, they can code the medical codes properly for insurance claims, and that just allows the doctors to focus on care. And we're going to see more and more innovation because we are left to do some of the more interesting things that humans do better than machines.

3:26 So you're looking at still a limb still when looking at the application there. What's been interesting is we have had this FOMO fail in still and the latest alumni from Openai going up and starting their own company, EYLEA, for example, potentially raising it $30 billion without even really a product out there or any revenue stream. Would you still back him at that sort of valuation all you doing following an investment? I think that's the interesting thing is if you think that something could be worth $1,000,000,000,000, whether it's what the entry price today is important but not as relevant as what you think the order of magnitude is in the future.

4:04 And I think the order of magnitude that we think about today will surprise us in the long run. And don't forget, a decade ago, two decades ago, we didn't think $1,000,000,000,000 company is possible. If you compound were trillion dollars 20% year over year, for the next decade, we will have $1,020 trillion companies. So, you know, you just have to think about the order of magnitude that is possible. And we need to change our mind space around that to help change our mind space, because you have been seeing around these corners longer than nearly anyone. How can you see that earlier as someone to back? How can you see that a founder isn't an individual You want to see the vision of and think that they're going to build $1,000,000,000,000 company? Yeah, I think that it comes down to the founders, and we've been very good at picking founders that are known by their first names. Jensen Adam Video.

4:54 Steve at Apple. Larry at Google. Sam at opening our Sam at open air and today. His founders are Alia and Brian at Airbnb and Tony at DoorDash, and the list goes on and on. So these founders are special because they have a vision of the world that the world has viewed the world as. The world has solve a problem incorrectly and they want to go change it. Yeah, and we get a front row seat to see how they want to go change the future. Is Mira going to be a name that we know and one that you're going to love? You already know.

5:30 Are you backing her? We're talking to her. You're talking to Mira. You're talking to Alia on his latest funding round. Where are investors in last number? I know. Do follow on because he's building something of big vision. We'll consider that too. Tell us about the thesis when it comes to alums and then application layers and then the robotics and physical. What for you is going to be pushing us forward in terms of the next iteration of value coming from these companies?

5:56 Is it going to all we get into the stage that we'll see 1 trillion across all of those spaces, do you think? I believe that to be true. And if you sort of go back in time when I started my career, we thought that all the value will accrue to the software layer. That's why we invest in software companies. Yeah, but over with today, The Magnificent Seven, all of them are both hardware and software companies and some of them in the physical world.

6:21 I think the physical world is going to be the next foundry that we're going to break, which is why I'm very excited to be here with Brad Porter from Collaborative Robotics. And it's interesting, of course, you've backed X A.I. when it comes to A.I. Elon himself busy looking at robotics from his Tesla perspective as well. How are you thinking about who wins in the robotics space, or is there going to be countless winners and applications? As you know that there are many, many winners when there when there's a Megatron.

6:48 And so I believe they're going to be many winners and robotics. And yes, Tesla is building robots. They were building cars before. They also build software. And Elon is someone that we back across a variety of companies such as SpaceX, US and Boring Company. And the physical world is something that we will continue to attack and make progress over the coming years. How frustrating or how illuminating is it when your founders are having arguments in public like Sam versus Elon? Does that bother you that you can ask them that those questions?

7:21 But no founders have a particular view of the world and they like to be they like to express those views. So it's good that people sort of talk about what they believe and how they're going to change the world through that. And I believe that discussion is always a positive thing. Who and where are they going to be from is changing the world at this moment when you think about China versus the US Deep Sea. Q wrote a very thoughtful blog about the impact of deep sea and the opportunities for learning from these powerful, generative AI models that are common.

7:57 The innovation and the data and the efficiencies we're going to see. Are we going to see a so-called winners on either side and around the world? Well, I believe in humanity instead of one country over the other. I am an immigrant to this country and I believe that the way we operate and build businesses here is much more innovative. And so I'm rooting for the United States, but more but even more than I am rooting for humanity to continue to progress.

8:24 And the more progress we make here, the more progress the people in China want to make and the more progress they make there, the more we want to continue to make progress. And so that just is is the thing that I'm most focused on, which is we're going to just make each other better. Competition has always made us better. And I believe in the United States and its ability and its free society to do things in much more innovative ways than almost any other country in the world. It's our innovation, it's our free spirit, and it's also our capital markets.

8:54 If you think about our place in the world, we have, what, approximately 4% of the world's population. But we have a disproportionate number of the amazing companies, the most valuable companies in the world. We have a disproportionate amount of capital that we have and control and are able to invest is why your viewers listen to you and the show, because Bloomberg is the place where a lot of information about capital is talked about often. Thanks, but they're listening to you and they're listening to thinking about how the money comes back ultimately to your LPs. And it's going to be about exits.

9:33 How you thinking about the IPO market, how you think about M&A? Boy, we just had ServiceNow move Wework's M&A still getting done. Yeah, so I think that's a great question and lots of people ask that. But I just want to emphasize that that Sequoia over the last five years we've distributed over $43 billion back to our peers. And so this is a business that, if done right, can generate a lot of returns for anyone at partners. On top of that, I just kind of.

9:59 All our founders. It doesn't matter what's going on in the public markets or in the M&A markets. Just focus on building a long term great business if you do that. As did Tony at DoorDash and Brian at Airbnb and many others are doing today. You will always have options and that option may come in at M&A and that option may come an IPO. I would contend that the IPO market is always open for great companies. What's interesting is we first saw a guy come into existence almost in a not for profit mentality, and now we think Opening Eye, thinking about trying to restructure and become a for profit entity more clearly.

10:35 Is that something that you backed, that you support, that you want to see clear a division of for profit or not? I think that I think if you go back in history, air has existed for way longer than what you're talking about, which is open air. I mean, Jansen was building ships way longer than what we're talking about today. And the first the first set of applications that were that were air applications were something like AdWords that Google built or trading platforms.

11:02 And many of your viewers and that work at large institutions have been using those were called machine learning. We just changed that term for profit non-profit. Those are just structures for accomplishing what the mission of the company wants to do. And I'm I'm supportive of whatever the right model is to do that. But as an investor, I want to make sure that the equity that we invest has appreciation. And that's that's that's separate from the mission.