Des-Engineering

Doug Leone was the Sequoia Capital’s managing partner that led its expansion to China and India.

In an interview at Stanford in 2014, “Luck & Taking Risks”, he shared some of his experience in developing Sequoia’s successful VC businesses in China and India, among other topics.

Further on, in the Q&A section the following question was brought in:

— “From the exterior it seems you did not have as much success in Brazil as you did in China and India. Could you give the reasons for that and what lessons did you get from the Brazilian experience?”

“We had a notion that we were going to go to Brazil. And we traveled to Brazil probably six, seven times. We made two investments.

And the more we traveled down there, the more it became apparent that there were very few engineers coming out of Brazil. And we understood that we would have to go into other lines of business. Like the consumer industry, supermarkets, restaurants.

And we want Sequoia Capital to really be an IT first partnership. What we did not want to do is to go to Brazil and back a whole bunch of look-alike startups.

We opened an office and then we pulled back. We have no intention of planting a flag in Brazil mostly because of the number of computer science engineers.

I met with a gentleman from Gartner (a research company) that lives in Brazil, he monitors the software industry through the US. I asked him what the leading software companies in Brazil were. He could only name one or two. It was very clear; it was too early to go to Brazil from an IT non-look-alike approach. So, we backed off”.

In another part of the interview Leone stresses the importance and criticality of engineers for startups:

“Be very generous with the early engineers that you hire. Those are the ones you should invest in. Because the first two or three engineers, if you get those wrong, you are done. A+ engineer will help you to recruit an A engineer. If your first two or three engineers are B engineers you are done, because you will never surround your company with the A+ talented people”.

Conclusion

People follow incentives.

For instance, most of my engineering colleagues – and we graduated from IME (1982-86), one of the top engineering schools in Brazil – ended up working for government bureaucracies or state-controlled companies.

Moreover, when I worked at Estácio de Sá University turnaround project – at the time (2006-08) the largest in Brazil with 120K presential students – around 1/3 of them were studying to become lawyers.

Sadly, it seems that the wrong type of incentive has been in place forever. Richard Feynman (no introduction needed), in his delicious “Surely You’re Joking, Mr. Feynman!”, lambasted the engineering education in Brazil after his teaching experience in Rio de Janeiro (1949):

“All the work they did, intelligent people, but they got themselves into this funny state of mind, this strange kind of self-propagating “education” which is meaningless, utterly meaningless! … no science is being taught in Brazil!”

If incentives do not change radically, we can only continue to expect a small throughput of demotivated and ill prepared engineers and, consequently, mostly look-alike startups in Brazil.

In the meantime, invest in engineer-built startups through Fabrica Ventures.

Enjoy carnival, I will be in São Paulo thereafter.