Sequoia Capital’s Alfred Lin in his first public interview since the FTX implosion (video) • TechCrunch
At an industry event in San Francisco hosted by this publisher last night, venture capitalist Alfred Lin of Sequoia Capital sat down for a one-on-one chat about the evolution of his famed company. investment firm, which enjoyed a largely unblemished record of stunning success – a record since marred by its roughly $200 million investment in cryptocurrency exchange FTX.
The investment, once a source of pride for the company, has tarnished not only Sequoia, but also Lin, who led the operation on Sequoia’s behalf and who also served as the company’s point of contact with CEO Sam Bankman-Fried for a year and a half. . He spoke thoughtfully yesterday about how he feels today about a bet gone so wrong.
When asked, for example, if looking back there were any signs Lin sees now that he missed earlier, he replied after a pause, “I thought [Bankman-Fried] was very smart. . . He answers the questions very logically and very succinctly. Could we have spotted tell? I do not know. There is what I know today and what I knew then. If I had known at the time, we would not have invested. So today, I think the thing that makes me re-evaluate is . . . it’s not that we made the investment. It’s the working relationship a year and a half later, and I still haven’t seen it. And it’s difficult. »
If it was particularly difficult for Lin given that a year earlier he topped Forbes’ annual Midas list, he didn’t say. But he suggested the experience remains unsettling for him because Bankman-Fried seemed to be taking hold of what the venture capital industry sees as one of its greatest strengths.
Lin explained, it’s “a trustworthy company.” And yes, we have to trust and verify, and we try to verify what we can. But we start from a position of trust, because if we don’t trust the founders we work with, why would you invest in them? »
Lin had a lot more to say about FTX, including whether he had sympathy today for Bankman-Fried. “I feel bad” for the disgraced founder instead of sympathizing, Lin said, suggesting he try to reserve judgment until all the facts are out. Lin said he believed Bankman-Fried was capable enough to have “legitimately raised funds or supported” the business.
Lin defended Sequoia’s decision to manage its positions in its portfolio companies well beyond their IPO.
Lin also confirmed at the event that in a gesture to its sponsors, Sequoia last year cut its management fees on two funds it launched a year ago – a $950 million ecosystem fund. of dollars that it uses to back funds from other managers and a $600 million fund of crypto funds. Lin said that instead of charging his backers on committed capital, which is industry standard, he charges them management fees on the invested capital alone.
On that front, he said only 10% of the crypto fund has been deployed, adding that Sequoia remains “long-term optimistic” about crypto, despite the uncomfortably close correlation between many of the biggest crypto outfits. (When asked if such co-dependencies had been a revelation since the FTX implosion, Lin replied, “The whole economy is interdependent.”)
Finally, Lin shared his perspective on how generative AI — one of the hottest areas of focus for the venture capital industry right now — is changing the opportunities for VCs and VCs. investors.
The full video of the conversation follows.