Sequoia's Roelof Botha Sounds Alarm on Sky-High Valuations

Sequoia Capital's global steward, Roelof Botha, cautioned founders at TechCrunch Disrupt in San Francisco last week about the dangers of chasing sky-high valuations, particularly in light of the Trump administration's decision to take direct equity stakes in American companies as a permanent fixture of industrial policy. Botha expressed his concerns about the implications of having the White House on a company's cap table, stating that one of the most dangerous phrases in the world is "I'm from the government, and I'm here to help." Botha's comments drew knowing laughter from the packed house, but his wariness of government involvement in the private sector was unmistakable. As a self-described libertarian, free market thinker, Botha acknowledged that industrial policy has its place when national interests demand it. However, he attributed the U.S. government's decision to take direct equity stakes in companies to the need to compete with other nation-states that are using industrial policy to further their strategic interests. "China's playing the game, so the U.S. has to play along," Botha said. The Trump administration's move to take direct equity stakes in American companies marks a significant shift in industrial policy, raising questions about the implications for the private sector. Botha's comments highlight the concerns that many founders and investors have about the potential risks and consequences of government involvement in the private sector. "We have to be very careful about what we're getting ourselves into," Botha warned. In the context of the current economic landscape, Botha's warnings are particularly relevant. The tech industry has seen a surge in valuations in recent years, with many companies achieving sky-high valuations through venture capital investments. However, the Trump administration's decision to take direct equity stakes in companies has raised concerns about the potential risks of government involvement in the private sector. Botha's comments also highlight the need for founders and investors to be cautious about the implications of government involvement in the private sector. As the tech industry continues to evolve and grow, it is essential to consider the potential risks and consequences of government involvement in the private sector. "We have to be very careful about what we're getting ourselves into," Botha warned. In the coming months, it will be interesting to see how the tech industry responds to the Trump administration's decision to take direct equity stakes in American companies. As the industry continues to evolve and grow, it is essential to consider the potential risks and consequences of government involvement in the private sector.