Sequoia’s Alfred Lin: Backing Founders Who Redefine Markets

1. Key Themes

Velocity Over Speed: Direction Matters More Than Motion

Alfred emphasizes that at Sequoia, they focus on velocity (direction + magnitude) rather than pure speed. Alfred Lin stated: "We don't love the word speed at Sequoia. We love the word velocity. Velocity is a vector. It has a direction and you want people aligned to that direction. Motion is not equal progress." This framework is particularly critical during turbulent times like the AI revolution, where it's easy to chase every shiny object but leadership requires keeping the company focused in the right direction.

AI Will Create Trillion-Dollar Markets by Expanding Into Services

The AI premium in valuations (30.9% higher for AI companies) is justified by market expansion, not just replacement. Alfred explained: "What AI has the potential of doing is looking at the services market, which is measured in tens of trillions of dollars." He compared this to how SaaS didn't just replace the software market but expanded it beyond its original size. Partners Pat Grady and Sonya Huang presented data at AI Ascent showing this expansion potential, suggesting current "ridiculous" premiums may be justified if AI companies can capture service market share.

Crisis Reveals True Leadership and Culture

Using Airbnb's COVID response as a case study, Alfred demonstrated that leadership and culture are only truly tested during hard times. He described: "Airbnb entered 2020 as the number one IPO candidate... from January, February, March, and then April, we saw the growth rate just steadily decline as COVID starts spreading around the world. And at some point, it went negative... losing 80% of its revenue." Brian Chesky's response showed three elements: purpose in the head (maintaining long-term vision), hope in the heart (staying optimistic), and discipline in the body (daily execution with weekly board meetings). Alfred noted: "Leadership is about making hard decisions in my opinion. And in difficult times, true leadership shows."

2. Contrarian Perspectives

Build for 8 Billion People from Day One, Not Your Local Market

Alfred pushes against the conventional "start small, scale later" wisdom by encouraging founders to think globally immediately. He explained: "Don't build for San Francisco, which has probably 800,000 people. You may start there... But you want to move beyond that... you want to be able to reach the world." He backed this with examples: "DoorDash started with University Avenue... then all of Palo Alto, then a few cities, then nationwide. And now they're trying to go internationally." The contrarian insight is that while you may launch locally, your vision and architecture should be global from inception.

Experience Becomes Less Important Than Innovation in Technology Shifts

Challenging the traditional value placed on domain expertise, Alfred stated: "We're seeing more innovation. We're seeing more younger founders get into the game because experience is not as important as just innovation." This is particularly true during rapid technology cycles like AI, where "the things that we're talking about today, we didn't talk about three months ago, which by definition we may not be talking about three months from now." Startups' nimbleness becomes more valuable than incumbents' experience.

High Valuations Are Rational If You Pick Right

While many criticize inflated valuations, Alfred offers a contrarian mathematical perspective: "If a company is going to be worth a billion or 10 billion dollars, whether I invested 10 million pre-money, 20 million, 30 million, 100 million, it really doesn't matter so long as I pick right." He continued: "If you double the valuation, that means you have half the number of shots that you can deploy, you just have to be twice as good." Using Nvidia's trajectory, he noted: "If we let Nvidia, which is worth 4 trillion today, compound at 10% for another decade, it's going to be worth more than 10 trillion. So if OpenAI could be worth 5 trillion, then it would be a good investment from here."

Exits Should Be an Afterthought, Not a Strategy

Contrary to typical LP and fund pressure for DPI, Alfred advises: "The exits is not something that I spend a lot of time thinking about or the founders I work with in general... if you focus on building a great business and a great company, then exit opportunities will abound." On IPOs specifically: "I always tell founders, an IPO is another fundraising round. It just happens that you're selling it to the public." On M&A: "You don't want to just merge with another company and then have the product get shut down. You want it to thrive inside of the acquiring company."

Most "AI Companies" Won't Be Called AI Companies in 3 Years

Alfred challenges the AI company categorization: "The one thing that I'm somewhat concerned about is many of these companies that we call AI companies, they're software companies, their security companies, their customer service companies. In probably two or three years, we won't call them AI companies. Just the same way that internet companies over time, there were native internet companies. But over time, every company became an internet company." This suggests the current AI premium may be temporary as AI becomes table stakes.

3. Companies Identified

Profound

Description: Category creator building brand presence in AI/LLM search results (AI SEO)

Quotes: Alfred described them as creating "this category of helping brands build their brand on AI. And if we start searching more and more on AI and trying to get more information, brands have to show up in foundation models and AI the way that they want to show up." He noted founder James has "a much, much broader vision for recreating marketing the way we know it. One of the things that over all of these sort of mega trends that I've been fortunate to live through is that the business models change... This is just new innovation."

Clay

Description: Go-to-market engineering platform that evolved from programming-for-masses to AI-powered lead generation

Quotes: Alfred explained their pivot: "Karim decided to use his own product for go to market. And then they developed this whole notion of go to market engineer. That was the first sort of thing that sort of made Clay into what it is today. But then, okay, well, we're in the world of AI. How do we automatically update these leads using AI? How do we use more AI tools to help users learn the product so that they can prompt Clay to do the things that they want? That gets built into the culture because they've constantly been an innovative and learning company."

Airbnb

Description: Travel/accommodation platform that survived 80% revenue loss during COVID

Quotes: Alfred detailed the crisis management: "Airbnb entered 2020 as the number one IPO candidate... losing 80% of its revenue." Brian Chesky "focused on the places that were still really positive in this business" including "short shorter distance stays... people leaving New York City to go upstate New York, leaving San Francisco to get to Napa." On capital strategy: "We decided to do it in debt" rather than "very punitive" equity. On the founder's vision: "He's always wanted to build Airbnb into so that everybody can belong and belong anywhere."

DoorDash

Description: Delivery platform that expanded from restaurant delivery to international markets

Quotes: Alfred cited them as an example of global thinking: "DoorDash started with University Avenue, which was much smaller. It was around the Stanford campus. And then all of Palo Alto, then a few cities, then nationwide. And now they're trying to go internationally. They have a strong presence in Europe. And they're going to want to build for the whole world."

Citadel Securities

Description: Market-making/trading technology company where Sequoia invested

Quotes: Alfred explained the deal: "Our partner Constantine met Ken at a conference and developed a relationship and over time, I think it's over like two and a half years where he kept asking, Ken, could we ever invest in Citadel Securities? And I think Ken said no many, many times and Constantine did not stop." The value proposition: "We may not know anything about market making, but we do know how to build technology businesses. And that's the type of help that Ken wanted around the table for Citadel Securities. Because fundamentally, it is a technology company. In some ways, it is an AI company. They've been using math to find ways to make money and calculate arbitrages and calculate risk."

Zappos

Description: Online shoe retailer that expanded into broader e-commerce (Alfred was involved operationally)

Quotes: Alfred referenced expansion strategy: "How does Zappos, which was just focused on shoes, go from