Sequoia Capital / Escape
I started working at Sequoia Capital a little over a year ago, when the company was experimenting with a new type of fund that was intended to attract investors that were willing to contribute small amounts to low-risk start-ups. That is to say, we needed people who could chip in a bit of money to companies that were almost guaranteed to succeed. You know how people were talking back then, as if another Great Depression was about to descend upon us. We had to get creative to survive the times.
I'd just moved to the Bay Area from the Kansas City area, where I'd lived my entire life. I remember thinking it was colder than I was expecting for California, though plenty of people warned me that it could get quite cool there in the middle of winter. I arrived at the end of January. I packed everything I could into a van and made the trip in a about a day and a half. I spent a night in a motel off of Interstate 80 in Nevada near the border with Utah. I had the continental breakfast there the next day and was eating at a little table by myself in the corner when a tall, thin fellow in a dark suit came and introduced himself as Casey. "Do you mind if I join you?" he asked.
I cleared off a spot for him on the other side of the table, dropping the newspaper I was reading on the floor. "I don't like eating alone when I'm on the road, " he continued. "Though some people do, so if you want me to leave you alone, just say so."
"I'm fine either way, " I said.
"Where are you coming from?" he asked me.
"Kansas City, " I said. "Independence, I should say. But some people haven't heard of it."
"I've been to Independence, " he told me. "For a real estate conference a while back. That was years ago, though. I'm sure it looks a lot different."
"It's probably about the same, " I said. "At least the parts of it I know. Probably I'm just not paying enough attention. You're probably right."
"I had some money in a development out there, " Casey said. "I sold it off before the market started to go bad."
"The good old days, " I said.
"Some people say things are going to get better now, " Casey told me. "But don't believe them. I know people who are up to their necks in this thing and they tell me that it's only going to get worse. They don't even know how bad it's going to get."
"So are you still into real estate?" I asked him.
"Among other things, " he said. "But that's why I'm out here, actually. I'm looking at an investment opportunity that's come up in the area."
"I find that hard to believe, " I said. "We're in the middle of nowhere. I don't even know the name of the town we're in."
"It's going to be built from the ground-up, " he said. "It's sort of a resort type idea. Except that we're going to have people living there permanently."
"Is this a new casino, then?" I asked him.
"We'll probably have a casino, because this is Nevada and people expect you to have a casino, " he said. "But that's not the main focus of this thing. What we're trying to promote is the idea of escape."
"Escaping what?" I asked. "The world?"
"That's one way of putting it, " I said. "We're looking for people that want to live simply. That's one of the main aspects of this. You won't need a lot of money to invest in one of our properties. And there will be opportunities to cut down on living expenses. We'll give people a discount on solar power equipment. That's what actually spurred this whole idea. One of my partners managed to get a company that sells this stuff to give us a big discount if we can buy in bulk. They're a small outfit in Vegas that's just getting off the ground, so they could use the publicity we give them."
"So this is one of those off the grid kind of things, " I said. "I've heard about those."
"Not quite, " Casey told me. "We're not promoting ourselves that way, anyway. The idea is that the times are uncertain, but we'll be a safe haven. You know, come join our community and feel safe."
"So how are these people going to find work all the way out here?" I asked him. "Or is this a sort of retirement community?"
"We'll go after the senior market for sure, " Casey told me. "But we'd like to get a nice collection of people who are self-employed. You know, folks who can work anywhere. I have a friend who runs a hedge fund and spend most of his time in Croatia just because he likes the place. And there are writers and programmers and people like that. And we'll have office space for small businesses."
"The world hasn't changed as much as people think it has, " I said. "I think you still need to live in a real place to make a living."
"That's where you're wrong, friend, " Casey said. "Times are changing. That's what people don't understand. They look at this economic crisis and they think either that's it's going to go away or that the whole country's going to collapse. But they're wrong on both counts. The fact is that this is the future. People living modestly and making a good living and getting away from the cities and towns that are no longer relevant. You want to move to New York? Have fun with that. You'll commute two hours to work for some company that was founded a hundred and fifty years ago and behaves accordingly. But all of that is going to be wiped away. You watch. Remember it was me that told this to you."
"I will, " I said, getting up from the table. "Good luck with everything."
Casey shook my hand. "Be safe, " he said.
I've heard since that encounter that Nevada is filled with people like Casey. It's that kind of place.
The thing is that I was reminded of that conversation a few months into my job, when I was out in Santa Clara talking to the manager of the head of an investment firm that had partnered up with Sequoia several times before getting skittish when the economy started to sour. His name was Daley and he wasn't too happy to see me when I arrived at his office. "I only agreed to this meeting because you people wouldn't leave me alone, " he said.
Daley was in his fifties, and had been running his firm for about a decade. He had framed prints of various paintings of Venice by Canaletto on his walls. "I went to Venice after I finished college, " I told him, hoping to get on his good side. "I remember it was paintings like these that really made me want to see the place. I didn't spend that much time in Italy, overall, but I was in Venice for nearly a week."
"Interesting place, " Daley said. "Though the more I read about it the less I like it. It was quite an elitist city, you know, especially when it started on its long decline. You couldn't get anything done unless you were from an important family and had connections."
"You can't idealize the past, I suppose, " I said.
"That's right, " Daley said. "And the present isn't looking too good, either."
"That's why we're changing things up at Sequoia, " I told him. "We understand that these are difficult times."
"I've had people come in here day after day giving me speeches like this, " Daley said. "As if I'm supposed to be impressed that you understand that these are 'difficult times', as you put it. Isn't it you job to understand what the times are like?"
"I'm new at this, " I told him. "I'll admit it."
"How long have you been at Sequoia?" he asked me.
"Only a few months, " I said.
Daley shook his head. "You want my money and you send a newcomer to try to sweet talk me, " he said. "I don't mean to sound insulting. But doesn't that sound a little strange to you? I've been dealing with your firm for years, and this is how they try to win my business back?"
"There was supposed to be someone else here with me, " I said. "Someone with more experience. But they had to go on another assignment at the last minute."
"So there's someone with even more money that you've sent him off to, " Daley said.
"It wasn't my choice, " I told him.
"Of course it wasn't, " Daley said. "I know I'm not exactly making things pleasant for you. You have to understand how this looks from my end. I mean, where did you even come from?"
"Independence, Missouri, " I said. "I was in marketing. I mostly wrote promotional materials. I didn't do this sort of thing often. Meeting with clients, I mean."
"You're not so good at it, " Daley said. "Again, I'm only trying to be honest."
"Maybe I can leave you with some of the information I've brought with me, " I said.
"So you're trying to make your escape now, " Daley said.
"We obviously got off on the wrong foot, " I said. "I can put you in touch with someone else at the firm."
"They used to send this guy out here, " Daley said. "His name was Brandon. Do you know him?"
"I don't know many people, " I said. "I'm on the road a lot."
"Brandon was the guy they sent here for years, " Daley said. "He'd always come here with lunch that he'd get from one takeout place or another. You know, he'd just come in and show up with all this food in brown paper bags. And it was different place each time. I knew that if I had a meeting with him that I wouldn't have to bring a lunch that day. I don't know what he was thinking. It made no difference one way or the other if he brought food. I invest when and where I want to invest. But we were going a lot of business in those days, and I think Brandon thought that these offerings were greasing the wheels. I never told him otherwise, of course. I'm not going to turn down a free meal."
"Maybe he was on to something, though, " I said. "I didn't bring food and look how well this meeting is going."
"I'm just not interested in putting up seed money at the moment, " Daley said. "I know that you're repackaged your funds to make it easier for me to do so. Someone gave me the sales pitch before they even sent you out here."
"I didn't know that, " I said.
"That's the way things work at Sequoia, " he told me. "You'll learn that. The thing is that these are crazy times. Crazy times. Do you understand that?"
"People keep telling me that, " I said. "I had a conversation with this real estate investor on my way here. On my way to California, I mean. He was trying to build this development in the middle of nowhere out in Nevada. He said that people were going to move there because they'd want to escape from the world. He thought he could build a new society out there in the desert."
"Maybe he was right, " Daley said. "You shouldn't be so dismissive of people like that."
"I suppose not, " I said.
"There is something happening, " Daley said. "Who can say what? But you better watch out. Because things will change quickly at some point. They'll change before you even know what's going on."
"I'll remember that, " I said.
"Please do so, " Daley said. "Now you can go."