Sequoia's Leone: In Venture, Big is the Enemy of Great

"Complete warfare" is how Sequoia Capital's Douglas Leone sees the contest to stay atop of the venture capital heap.

"The venture model is not broken for the partnerships that know what they're doing," Leone told the 15th Annual MIT Venture Capital Conference Saturday in Cambridge, Mass. This is Sequoia's best year ever and it has companies in its portfolio that are growing faster than Facebook, he said, but Sequoia and firms like Greylock Partners and Benchmark Capital, like the best entrepreneurs, can never rest.

"Every two or three years we do something that completely risks the franchise," he said. "We went to India [and] China in a decentralized fashion. We empowered people in India and China to make investment decisions, hire and fire…

"We have co-opted seed funds. You know, Y Combinator, that was completely our money. We have secret handshakes with a whole bunch of people. Very dangerous, because word gets out that so-and-so's money is Sequoia's money, that would not be a good thing.

"This is complete warfare. You have to have the Green Berets in the back line, you have to take the frontal approach, you have to do seeds, you have to do investments. You have to be willing to risk things, otherwise somebody else will put you out of business."