Exclusive | Accelerate with caution, do not fall into bad habits of the past: Sequoia India’s GV Ravishankar

The news of the lockdown was on, maybe a week or 10 days before. So, it was not about the 24th or the PM, it was really the few weeks before that. It was clear to all of us that the world was going into a difficult time where mobility was going to be impeded. First, we banned travel in the early part of March, when it was very clear to us that it was not safe traveling. And second, we went to work from home pretty quickly, even before the lockdowns. We also started trying to figure out if we can get oxygen supplies for people in case they contract COVID-19.

And then we looked at the portfolio companies. We advised founders that this is a time to be careful.

But frankly, looking back, it has also been a tremendous experience, learning to deal with change and navigating through a tough environment. Sometimes you see the best parts of people in a crisis. I think, as human beings, we are very good at adapting to a new environment. I have only taken two flights in the last one year. It used to be 120 to 150 flights before. A big change, like this allows you to see the world a little differently and do things a little differently.

Right. Many start-ups effectively hit the reset button. But the famous Sequoia memo last year, warning founders of a Black Swan event, actually came out on March 5th, weeks before the lockdown. So, in a sense were you better prepared? And interestingly, Sequoia published another memo last week, which is optimistic. It asks founders to seize the moment, step on the gas, but be prepared for volatility. How would you interpret this memo for Indian entrepreneurs in your portfolio?

I think we have had the benefit of Sequoia being present in three different geographies. We are in the US, we're in China, which was the center of action in the beginning, India and Southeast Asia. So we were having discussions on what it means because the China business was feeding us information on what's going on in their geography and what to expect.

And, then, we started seeing numbers and then later India, so we knew we had to act. One year in, you're seeing that life has gotten a lot more normal than before. You know that this is the time to get out of the turn, you want to start accelerating. In India, there's probably a second wave of infection but hopefully it's a mini wave. So, there are uncertainties and we should be aware of that. But this is a reset opportunity.

There are pockets of opportunities that people should take notice of today, capital is available in plenty, India as a destination has arrived. So as founders, it is a great time to get access to that capital and try to accelerate.

But, that said, we should take the right lessons forward from this experience, and not fall into the bad habits of the past. It is incredibly hard, when you have access to a lot of capital to be disciplined about how you spend it. So, we do want to tell people to accelerate but with caution.

Sequoia India’s GV Ravishankar is one of India’s most successful investors

Overall, there is a lot of exuberance now in the public markets and the private markets, whether it is irrational or not, we still don't know. Internet IPOs are in the pipeline in India. We already have 4-5 unicorns 3 months into the year. There is talk on how deals are getting closed in minutes even in the early stages. How different is this from the 2015 period? Are you worried that perhaps some of this is frothy, and there could be pain in the months ahead? If the easy money stops flowing, so to speak?

Let's not make any mistake, right let's say this as it is- it is a frothy market and capital is available in plenty. But this is not 2015, we have come a long way since then, the depth of the market is significant, the quality of the founders is dramatically different.

And, people have gotten those experiences of how those times were when you just got funded with very limited proof points, and even today, some of that will happen. But for the large part, at least, there is some learning in the ecosystem. But, this is the nature of markets, right, it will swing up and down. So, you're probably seeing some overreaction, and some exuberance is linked to companies today.

Even though it looks like a great time to be a founder, it's a very difficult, difficult environment, both for founders and for investors, because you're not able to understand what all this interest means, because when you go raise capital, at potentially crazy prices, you're carrying the burden of the pressure of what you signed up for. The thing that we keep telling founders is, it's great, we have access to capital, but let's use it in the right way. don't you lose the economic shape you have created through COVID-19.

It is tough, when the world around you behaves in a certain way, your competitors may do something irrational, you may have to respond to that, and you may not always have the choice to not respond.

You have articulated what many investors are talking about, that they are trying very hard not to do stupid things. But how does one retain sanity in the current environment- both from an investor and founder’s perspective?

I am a little more philosophical. The price tag being put on a company should never be taken personally, by the founders. We attach too much meaning to valuation.

I think the right thing is to think about the long term. I think that some detachment is helpful. It is a tough thing to do. But it is the right thing to do.

Sequoia last July announced a new $1.35 billion fund to invest in India. So, where do you see the next set of opportunities, in a post-COVID-19 and Post vaccine world?

The acceleration of digital adoption is a big theme. Health tech will be a big thing. Similarly, agriculture is a huge area where we are seeing technology can make a tremendous impact. The world has become flatter. And if you thought about that a little bit, then you could argue that anybody sitting anywhere can attack any market, or any opportunity anywhere in the world.

You mentioned how things are frothy and how one needs to be careful. So, are you also being a little more cautious in the way you approach investments now?

We would like to think we are cautious, but we have been active. You can choose to not participate in a year, but you will also be choosing to not invest in the, once in a decade type companies that are taking off in that period.

So, that's why I said, it's a very difficult environment to be either a founder or even being an investor, because, you know, it's very hard in this kind of momentum to not be a part of it. But at the same time, it's incredibly hard to be a part of it, and know that you're making some mistakes in the process.

But, our business is not about acts of commission, we can make mistakes, it's about acts of omission, which are more expensive, which means, if you're not in those once in a decade, companies, then that is going to hurt you a lot more than making a mistake than by investing in something at a higher price.

Finally, is there a habit that you picked up during the lockdown that has become permanent for you?

I started reading and writing, I would say, very late in my life. And this is one of the changes that I hope is permanent, that I read and share. And hopefully it is helpful to people, and if I can touch a few lives in some form and be useful to them.