What’s Inside Your Dragon Scroll?

Inspiration and insight can come from many places. Kung Fu Panda, for one, is full of invaluable life lessons.

Consider the scene where Master Shifu, dejected after months of trying to train Po, tells Grand Master Oogway that the bumbling panda will never become the Dragon Warrior who’s destined to beat the evil Tai Lung. Master Oogway advises Shifu to let go of the “illusion of control” and tells him that if he can “guide, nurture and believe” in Po, the panda will eventually defeat Tai Lung. The panda is eventually given the Dragon scroll, which is believed to contain limitless power, only to discover that the scroll is nothing but just a reflection of the person opening it.

I don’t watch a ton of movies but this one, which is full of profound messages, hit home. Kung Fu Panda is all about believing in yourself and putting in the hard work it takes to get where you want to go. I saw the film in 2018, about 10 years after it came out, which turned out to be super timely. As they say, when the student is ready the teacher arrives!

A few weeks later, on a hot summer day in 2018, the Sequoia India/SEA investment teams were assembled for our annual strategy session. The Indian startup ecosystem, which had seen a huge upswing in 2015 and early 2016, was well into bear territory. Some of India’s most storied startups had gone through tough down rounds in 2017, and others had to shut down as they couldn’t raise follow-on capital with the exit of several global funds from the market. Some market watchers were raising questions on how much value India’s tech could generate. Our team had seen some changes, the external environment looked grim, and there was an understandable sense of apprehension.

I had the unenviable job of designing this strategy session, and spent a lot of time thinking about what message might rally the team. We had to do something to release the stress people felt and shift their mindset. The senior leadership got together to perform a funny skit to lighten things up. Then, with Kung Fu Panda in mind, we looked at some data. I knew we had all the key ingredients to succeed – the long term India/SEA story was intact, we had a strong portfolio and we had amongst the best teams in the market. The only missing ingredient, particularly in the younger investors who hadn’t seen a cycle before, was self-belief. We had to get them to stop over-indexing on some of the misses and losses, and understand that the venture business works on the power law: the big wins make up for some of the smaller losses and acts of omission are usually way more expensive than acts of commission. The data suggested clearly that we were seeing the power law at work in Sequoia India’s portfolio too! The movie became the teacher that brought me the insight. I needed the team to understand and believe that despite the market conditions, we were in a good place; there were more than enough winners in the portfolio to deliver the performance we all aspired to, on behalf of our LPs. I knew that’s what was inside our Dragon scroll!

Cut to 2022, as we stare at a very tough financing market for tech and tech-enabled companies, with public markets in the US having corrected significantly and without a bottom in sight. At a time like this, founders can easily become mired by stress and self-doubt. Our Twitter feeds are full of doom and gloom stories – of shutdowns, down rounds and market corrections. It’s hard to not get distracted by all the noise. But none of this should shake your self-belief and conviction in the problem you are solving, and in your startup’s vision and mission.

Of course if the data tells you that you don’t have PMF or you can’t make the economics work, that’s a different story. But if your customers love what you do and are willing to pay enough for your product to allow you to build a self-sustaining business, then we should choose to ignore the noise, put our heads down and focus on the core mission. Make no mistake – this does not mean you don’t adapt to the environment. This is a great time to shape up – just like pruning some old leaves leads to improvement in the overall health of a plant, cutting out inefficiencies and distractions, and focusing our resources on the core value proposition of the business will help us come out of this difficult period better and stronger!

Since it’s one of my favorite movies, I am sharing a couple of quotes I thought are relevant to where we find ourselves to allow us to reflect and internalize.

“You gotta let go of that stuff from the past because it just doesn’t matter. The only thing that matters is what you choose to be now.”

Po

Companies may have received high multiples in 2021 in a frothy valuation environment. It is important to not let this part of your past cloud the current actions needed to navigate the new environment – if capital is offered at less attractive terms it may still be best to take that if the business needs it. Do what you think is right to pursue the mission that you passionately care about. 

“Your real strength comes from being the best you, you can be. So who are you? What are you good at? What do you love? What makes you, you?”

Po

The concept of focussing on core competencies had somewhat gotten missed in the last few years with cheap capital and expanding ambitions. It is a good time to reflect on what is the best version of your startup – the unique thing that your company alone is the best at and to channel your resources towards that.

At Sequoia India and Southeast Asia, we are believers. We believe that whether in bull markets or in bear markets, founders will continue to start and build companies that solve real problems. We are always happy to partner with such founders to build enduring businesses. We recently announced a new set of funds for India and Southeast Asia, underscoring our continued belief in the potential of the region. As founders, you have employees who believe in your vision and shareholders who believe in the pain point you are solving. What you need to do is to believe in yourself, do what it takes to strengthen your company during these challenging times – and emerge stronger than before.

“Promise me you will believe! You must believe!” – Master Oogway

Recommended Reads

Here are three articles I read over the last few weeks that I found interesting:

For those of us who can’t or don’t want to fast despite all the evidence that caloric restriction and intermittent fasting lead to better health, there is good news. A recent MIT news article titled ‘Fasting boosts stem cells’ regenerative capacity’ details how researchers have found a molecule that can flip a metabolic switch to get intestinal stem cells to burn fat instead of carbohydrates for energy production, which results in better intestinal cell regeneration and repair. So in a few years there may be new drugs that could mimic the benefits of fasting – exciting!

Keep It Going, a post by Morgan Housel – one of my favorite writers – is an eye-opening summary of the research into professional athletes – runners, swimmers, cyclists and skiers. The article makes the case that even the most accomplished athletes train at low intensity versus at high intensity. In fact it looks like they train at high intensity only about 5% of the time. In a world where we want to show up with our best game all the time, this is a good reminder that greatness is achieved through consistency and longevity vs high intensity.

If you are one of those people who, like me, is sometimes forgetful (in fact I used to believe my memory had a fixed capacity and if I put something into it, something else pops out!), then this article on the importance of forgetting will make you feel better. The author argues that forgetting is actually an essential feature of the brain and not a bug! So now I have a strong excuse for being forgetful – it’s just my brain working well!

If you have time for a longer read, here are two books I’d like to recommend:

As you know I believe in serendipity; I was reading the first book when my friend messaged me asking me to read the second book in this list. Both happen to be simple and fun to read books with deep philosophical messages.

The Tao of Pooh by Benjamin Hoff 

This is a book on Taoism and its key messages are delivered through characters of the children’s book, Winnie the Pooh. For a beginner like me this was a nice introduction to the philosophies of Taoism. I think there is no better time to read it than now in order to contextualize (and not fret) about the happenings around us!

The Dalai Lama’s Cat by David Michie

Told through the voice of a stray cat which moves from the streets of Delhi into the monastery of the Dalai Lama in McLeod Ganj, this novel offers a peek into key Buddhist principles and philosophies. As His Holiness’ cat, the protagonist in the story gets to see and observe the Dalai Lama and his interactions with his guests, providing fresh insights on finding happiness and meaning in life.

Do write in at gv@peakxv.com if any of my interests intersect with yours! Click here to read more articles on Sequoia’s blog. I’m also on LinkedIn and Twitter.