Little Sister Syndrome

🌈 Abstract

The article discusses the psychological phenomenon of the "anchoring effect" and how it can lead to inaccurate estimates and judgments, particularly in the context of venture capital and evaluating talent. It provides examples of how venture capitalists can be biased by their initial perceptions of people, and how this "little sister syndrome" can cause them to miss out on recognizing the true potential of individuals. The article also highlights Sequoia Capital as an example of a firm that has deliberately worked to overcome this bias and promote homegrown talent.

🙋 Q&A

[01] The Anchoring Effect

1. What is the anchoring effect, and how does it lead to inaccurate estimates?

• The anchoring effect is a psychological phenomenon where people's estimates are heavily influenced by an initial "anchor" value, even if that value is completely irrelevant.
• This can lead to underestimating or overestimating the true value, as people's judgments are biased by the initial anchor.
• Examples include being influenced by the original price of a product when evaluating a sale price, or being swayed by the last two digits of one's social security number when bidding on items.

2. How does the anchoring effect apply to judging people's capabilities?

• People often have heuristics or "rules of thumb" that act as anchors when judging someone's abilities, such as their initial impression or position at a firm.
• This can prevent them from accurately recognizing growth and progression in that person's capabilities over time.

3. What are some examples of venture capitalists being affected by the "little sister syndrome" due to anchoring?

• The article provides examples of VCs like Logan Bartlett, Erik Kriessmann, Sarah Wang, the Moore twins, and Grace Isford, who were not fully recognized for their abilities at their previous firms.
• This was because their former colleagues were still anchored to their initial perceptions of them, rather than updating their assessments as the individuals demonstrated greater capabilities.

[02] Sequoia Capital's Approach

1. How does Sequoia Capital stand out in its approach to promoting homegrown talent?

• Sequoia has a deliberate "engine" for enabling the progression and promotion of its own investors, such as the story of Doug Leone mentoring and shielding the younger Pat Grady.
• This allows Sequoia to recognize and capitalize on the growth of its own people, rather than being anchored to their initial roles or perceptions.

2. What is the "familiar pattern" that Sequoia follows in promoting its own talent?

• Sequoia has a history of taking "unknown and homegrown" investors and deliberately promoting them, as seen in the examples of Doug Leone, Roelof Botha, and Sonya Houang.
• This allows Sequoia to avoid the "little sister syndrome" and recognize the true potential of its own people.

3. What does the article suggest is the key to accurately judging people's capabilities?

• The article emphasizes that judging talent is about finding the right "anchor" by which to estimate a person's capabilities, rather than being anchored to their initial impression or position.
• Without understanding this nuance, one is doomed to lose their best people to the "little sister syndrome" and miss out on recognizing their true potential.