Last night, at an industry event hosted by the editor in San Francisco, Sequoia Capital venture capitalist Alfred Lin sat down for a fireside conversation about the evolution of his famous investment firm. It has since been undermined by a nearly $200 million investment in cryptocurrency exchange FTX.
The investment, once a source of pride for the company, hurts not just Sequoia, but Lynn, who led the deal on Sequoia’s behalf, was the liaison to CEO Sam Bankman-Fried for a year and a half. I was. And yesterday he thoughtfully talked about how he feels today about the gambling debacle.
For example, in retrospect, when Lynn was asked if he was now seeing signs he had previously missed, he paused and replied: [Bankman-Fried] I was very smart. . . He answers questions very logically and very concisely. Could he have found Tell? Do not know. What I know today and what I knew then. Had I known then, I wouldn’t have invested. So what I’m re-evaluating today is… not that we invested. After that, I have been working for a year and a half, but I have not seen it yet. And it’s hard. “
Even if it was especially difficult for Lin, considering he was at the top of Forbes’ annual Midas list just a year earlier, he wouldn’t say so. But Bankman-Fried seemed to have grasped what the venture industry sees as one of its greatest strengths, so he suggested the experience was still unsettling for him.
Lin said it’s a “trust business. Yes, we have to trust and check and we try to make sure we can. If you don’t trust people, why invest in them?”
Lynn said more about FTX, including whether she sympathized with Bankman-Fried. He defended his Sequoia decision to manage portfolio company positions well beyond the point at which portfolio companies go public.
In a gesture to limited partners, Lin also confirmed last year that Sequoia has reduced management fees for two funds it launched a year ago. Million Crypto Fund. Lin said the industry does not charge backers for standard commissioned capital, but instead charges administrative fees only for commissioned capital. (On that front, he said only 10% of the crypto fund is deployed, adding that Sequoia remains “long-term optimistic” about crypto.)
Finally, Lin shared his perspective on how generative AI (one of the hottest areas for the venture industry right now) is changing opportunities for both VCs and investors.
Here’s the full video of the conversation: