Alfred Lin - The Future According to Sequoia: AI & $10T Winners

[00:00] The simple narrative is AI is going to kill SaaS. I just don't think that's the case because I lived it. When I dropped out of my PhD program in statistics, I made this proclamation that I needed to drop out of grad school because the internet was happening and I didn't want to miss it. The simple narrative I made was e-commerce was going to destroy brick and mortar, that Amazon was going to kill Walmart. And that just didn't happen. Founders have this vision of this world that doesn't exist today because they have this vision of the world. [00:30] the world than it is today. Your job as a founder, a founding team, a management team is to connect the dots along the way between these two states and these two worlds. The companies that are most vulnerable have very similar characteristics. It's the companies that don't embrace change, the companies that don't understand that they're in a paradigm shift. They think that what they did yesterday was going to work tonight. [00:59] Hello. Okay. This will be a [01:02] Quite the shift in tone. Just a disclosure. [01:07] Right before we came up, Alfred and I just had the great decision and idea to take a shot [01:13] So we'll see how spicy this guy. I do whatever Molly tells me to do. [01:18] Whenever I prepare for a Sequoia interview, I... Was it different than the KOTU interview? It was. It was. [01:25] Yeah. [01:27] The thing about Sequoia is when you try to look up their AUM, you can't find it. And so I wanted to ask you,

[01:36] If everyone's measuring their funds in AUM, what are you measuring Sequoia? [01:40] What is 8U amp? [01:41] . [01:43] No, seriously, I mean, one of the things that we talk about at Sequoia is just the funds that we invest in today. We're just focused on today and the future. And so, actually, I don't actually know what our AUM is. We obviously file it with the SEC at the end of the year, but we're just focused on the seed fund that we're investing in, the venture fund, the growth fund, the expansion fund, and our public pool in SCF. And that's what we're focused on, the investments that we're making today. [02:13] The thing that we measure is being a net liquidity provider to our LPs. So we believe in alignment of interests, and we think about founders first, then LPs, then Sequoia, then our team, and then ourselves. And when you do that, we actually measure how much we've distributed. [02:32] versus what our AUM is. And when you distribute, your AUM actually goes down. So we're giving money back to our ILPs and I think that's very, very important to our limited partners. Many of whom are universities, endowments, great causes. They're trying to do good in the world and I think it's a very, very important thing that we do that. [02:53] To put a number behind that, when I last interviewed you, it was around the launch of your new two funds. And so with that announcement, it was noted you distributed money.

[03:06] 43 billion to investors since 2020. This was October 27th, 2025. Yes. [03:13] What were the companies? [03:15] What were the companies? Yeah. Airbnb, DoorDash, Unity, Snowflake. I'm sure I'm missing a few others. Mongo. Mongo. [03:24] Square. [03:25] I don't know. [03:27] I don't remember those. We're focused on the future. We're only as good as our next investment, so we're focused on the future. [03:36] - As someone who-- - We have the luxury of having a 53 year history. It's great to stand on that platform, stand on the shoulder of giants. But we're only as good as our next investment. That's what investment firms are about. It's about the future. It's about generating returns in the future. And if you think about it, I joined Sequoia 15 years ago. Pat's been there for a long time. [03:57] a little longer than me, maybe 18 years, and the two of us are more excited than ever before because we're [04:03] this world of accelerating change and AI is the biggest mega trend that has [04:09] that is around since our career. And you could probably say that about every previous [04:16] Megatron. We probably thought that the internet was bigger than anything that we had saw before. [04:22] But this is why it's exciting. When I joined Sequoia, [04:27] The largest market cap company was probably $300, $400 billion. Today we have companies that are worth $4.5 to $5 trillion. If you give it another five to 10 years,

[04:38] those companies continue to compound, it will be worth 10 trillion or more. And so what we're doing is a moving target. [04:47] what is exceptional performance is a moving target. We have a wall at Sequoia, which is the wall of legendary companies, in our Valentine conference room, our main conference room, named after Don Valentine. [05:01] And those companies [05:03] also keep changing. [05:04] What we consider legendary keeps changing. And so yes, there are companies like Apple and NVIDIA and Google that have been there for a long, long period of time. But when I first got here, [05:15] So Sequoia, what was required to get onto that wall was $100 million gain. Today it's in excess of the billion dollar gain. And I'm sure in a few years we'll be looking at $10 billion gains or more. [05:32] And so... [05:33] It's a really, really exciting time to build because what is possible was not possible before. [05:40] investing across different cycles, what exactly is different about this cycle? [05:46] Well, things are just moving a lot faster. You can do things with fewer resources. And yes, a lot of the resources go into compute. But you can start a company with way fewer resources and get started much, much faster. And the revenue ramp and the revenue retention are just much faster than in previous generations. We used to talk about how long it takes to go from zero to one. And zero to one...

[06:11] Most often we refer to that as product. You go, you find product market fit. [06:17] Then we rename 0 to 1 as 0 to 1 million in ARR. But you see companies today going from 0 to 10 million in ARR in very, very fast... [06:27] timeframes which we have not seen in the past. So this is very very exciting to see how quickly companies can develop and [06:38] I think one of the things that [06:41] we forget is that when we become more productive, we just do more. And so there's a lot of dystopian messages about how [06:49] we might have high unemployment, there's going to be a shift. There's going to be some things that are going to be out of favor or in favor or out of favor for some period of time. But if you look over the long period of time, what we've done is just we continue to be able to do more and more with computers, with software, and that's not changing. And right now there's this big... [07:16] narrative that AI is going to do to SaaS what SaaS did to software. Well, don't forget, all of that is software. [07:26] AI is a lot of software. SAS is a lot of software. Traditional software still exists. Oracle, the last time I checked, still exists. If you think that they're a legacy company, I don't know why OpenAI would want to leverage their balance sheet and their-- [07:40] Um,

[07:41] and their tools to be able to run data centers. [07:46] The people who, there are going to be some... [07:49] people who are gonna be disrupted, there's some companies that are gonna get disrupted, but the people who embrace change, embrace the new tools, the companies that do that, [07:59] do survive over the long period of time. And we, it's just, it's so cool that we don't have to do mundane tasks. [08:06] We get to do much more of the strategic work, the more creative work, the more human work. [08:11] And that's why we're very, very optimistic at Sequoia. And I think the world should be very, very optimistic about AI. [08:18] You recently went viral on X for two things. One of them was an article you wrote [08:24] on the paradigm shift underway. Could you unpack that a little bit more for the audience? [08:28] You know, every time we go through one of these paradigm shifts, I think there's this [08:34] desire to have very simple narratives. And the simple narrative, as we just talked about, is AI is going to kill SaaS. And I just don't think that's the case. And the reason why [08:45] I know that that's not going to be the case is because I lived it when I graduated. [08:50] When I dropped out of my PhD program in statistics, it was 1997. I made this proclamation that I needed to drop out of grad school because the internet was happening and I didn't want to miss it. The statement I made, the simple narrative I made was that e-commerce was going to destroy brick and mortar, that Amazon was going to kill Walmart.

[09:17] And that just didn't happen. Walmart is 20 times larger today than it was in 1997. Now, if you had to pick one stock, yeah, sure, Amazon's a better investment. But it's because Walmart embraced the change, and they changed with the time. There are just as many companies disrupted in e-commerce by the technology, and those companies were disrupted and went under because they ran a poor business. [09:47] were disrupted and went out of business. [09:50] But if you embrace the change, embrace the technology, [09:54] Many of the companies that we shop from today have both physical and [09:59] an electronic digital website. [10:02] And so I think that the same will happen here. We're going through a paradigm change here, and some of the things that we believe to be true [10:11] are not true. And so it's this tension and this balance of, OK, what were moats in the past? [10:18] What are most in the future? Those things are not going to be the same. And [10:24] The very obvious statement is every single line of code that's generated has a marginal cost of zero. So therefore software lines of code is no longer a moat. [10:35] That's probably overstated. If some company has written 10 years of code, can it be replaced faster than 10 years? Yes, but that's always been true. A copycat competitor is going to be able to come after you and do it faster than you.

[10:53] With coding tools, maybe you can do it much faster. But even then, there's so many aspects of the business. What is the moat? How about distribution? How about your customers? How do you keep them on, etc.? And I think these are the questions that we have to struggle through. And I think people want to snap to the endgame all the time. The end state is all [11:18] where all these companies that are going to survive, whether it's traditional software companies, SaaS companies, or native AI companies, [11:26] all of them are going to embrace AI. [11:29] - That's the end state. All these companies that shift will embrace AI. [11:33] And so we know that that's to be the case, but who wins, who doesn't win along the way? We get paid and we get joy out of working in the mid-game. [11:46] And the MIG game is so fun because we have to figure out our ways through [11:50] this world. Sorcery is brought to you by Brex, the financial stack trusted by more than 30,000 companies, including one in three venture-backed startups in the U.S. Nearly 40% of startups fail because they run out of cash. Brex is literally built to help founders avoid that. Unlike traditional banks that let your money sit idle, chipping away at it with fees, Brex is designed to help you spend smarter and move faster. Their all-in-one solution combines checking, [12:20] into one powerful account. You can send and receive money globally at lightning speeds, get 20 times the standard FDIC coverage through their partner banks, and even high yield from day one. With same day and even same hour liquidity, access your funds anytime. Companies like Scale AI, DoorDash, Service Titan, HIMSS, Anthropic, Flexport, Robinhood, and Plaid trust and use Brex.

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[14:20] description. [14:21] Founders ship faster on deal. Set up payroll for any country in minutes, hire anyone anywhere, get visas handled fast, and get back to building. Visit deel.com slash sorcery. That's deel.com slash s-o-u-r-c-e-r-y. [14:38] Speaking to the endgame and the midgame, you recently commented on this on X, but what's happening in [14:45] What are the conversations? [14:47] I think a lot of the board conversations, because we're board members, we just snap to the end states. What does the end state look like? How do we navigate there? I think the plan to navigate there is just as important as stating what the end state is. I think it's probably easier to state the end states and much, much harder to understand [15:08] the path from where you are today to where you want to get to in the end state. And I often talk about this with founders and their vision. They have this vision of the world of this world that doesn't exist today because they have this vision of the world. And we can all agree that that's a better state of the world than it is today. But you have the realities of where you are today and your job [15:30] as a founder or a founding team, a management team, is to connect the dots along the way between these two states and these two worlds. If you don't, how do you know you're on the right path? Yourself, for yourself. And then if you don't know it for yourself, how do you communicate that to your employees to make sure that they're aligned along the way?

[15:52] I think we've always learned from the best founders. They just are maniacally good at making sure that they're [16:00] companies [16:02] are completely aligned on the mission and where they are and how they get there. That is true for Elon, that is true for Brian Chesky, that's true for Tony Hsu, that's true for almost anyone that you know that has been a successful founder and have navigated a company from [16:19] their start to what you consider to be success, which may look like an overnight success, but it's at least a decade long journey. [16:28] And maybe it'll be faster. Things are accelerating. But we keep moving the goalpost. [16:36] So it will still probably be a 10-year journey, a decade or two decades or three decades, because the goalpost keeps moving. When I joined Sequoia, the term unicorn [16:51] was not even created. I think Aileen Lee created that term in 2012, 2013. I joined in 2010. But today we have a lot of unicorns. And yes, you go from zero to being a billion dollar company, that's great. But that's not the end game anymore. [17:07] It's a billion dollar exit is not what it used to be. [17:11] - Which companies are gonna fail? [17:13] I'm not in the failure business. I'm in the success business. [17:20] It's true.

[17:22] Which are most vulnerable right now? I mean, I work in a business where our most successful fund had a 50% write-off rate. I think you might have heard us mention that. So we don't dwell on the companies that are most vulnerable. I think the companies that are most vulnerable have very similar characteristics, I can tell you that. It's not exactly the companies. It's the companies that don't embrace change, [17:46] the companies that don't understand that they're in a paradigm shift, [17:50] They think that what they did yesterday was going to work today. One of the things that is really interesting to me about what was a moat yesterday and what is a moat today is that [18:01] I think if you are stuck in your ways, you cannot see that at the limit of every paradigm shift, the next shift has a completely different perspective. [18:12] system of moats. So legacy software, the moat was your ability to get [18:21] your software sold and embedded. And once it's embedded, because one person made the decision, which is the CIO, [18:31] and they can force the whole organization to use it. That was the way to stay in. So you took them out to dinner, you'd wine and dine them, et cetera. SaaS had a completely different way of selling. It was bottoms, often it was bottoms up, it was to the user. I mean, in some cases, the user started using them, and then the sales team inside of Slack would say, hey,

[18:57] Mr. CIO, you have like 30 employees using it. Oh, actually, that was last year. You have 200 employees now. Maybe you should buy an enterprise version of this. [19:07] That's a completely different way of selling. [19:09] And the mode is usability. [19:13] and not your ability to know who the CIOs are. And that's a very, very different way of going to market. I think in the world of AI, the same will be true. Like, I think a lot of things are shifting right now, and I think it's incumbent for founders to sort of think through some of these things. The shift from traditional software to [19:32] um, [19:33] to the internet, to the cloud, to mobile, there was a shift in development that most people don't really talk about, which is from waterfall development, where releases were two to three years old, [19:44] And probably not all of you are old enough to remember, but I used to remember Microsoft having to update their OS every two or three years. And I have to go buy it because it was a new OS. They would release their Office every two or three years. And then in the cloud, [19:59] The two or three years became one year between, became a quarter between monthly, became daily, and became whatever patch time that they needed because there was a security hole. Now you don't even... [20:13] You don't have to go to the store to buy these CDs and download new software. You don't have to buy the new software even through the cloud. It just automatically updates to your phone. And so we've moved... [20:26] And we've pushed Scrum development to

[20:29] its natural limit where the teams are much, much smaller. Waterfall development teams are much larger. Scrum, you heard [20:37] Bezos talked about the two pizza teams. It's usually a small number of developers, engineers, some small number of product managers, or maybe one or two, and a designer. That's why it's called EPD, engineering product design. And maybe they add [20:53] Data science now because the data informs how the product is going to be. All right, so you're talking about four to eight, maybe ten people on a, that's why it's called a two-pizza team. Well, now, [21:05] With all these coding agents, a developer can develop and [21:11] use Figma and use everything else that they need together to [21:17] to [21:17] launch a product. [21:19] If a product manager who doesn't code anymore can now [21:23] Just prompt... [21:25] Cloud code to code. [21:27] A designer can come up with the creative design and then embed all the things and launch a prototype. So every single person now can be their autonomous... [21:37] And in that world, what is the new world development [21:42] paradigm, that's gonna significantly change. [21:46] I was at a board meeting last week where they looked at [21:53] how many people were using these tools, and there's some correlation, it's not perfect correlation between the number of people who utilize a bunch of tokens and the people who utilize less. They looked at the productivity of their top engineers, the top 5-10 percent of their engineers,

[22:12] shipped three times more than they did last year. That is a significant change. But now, since they're shipping so much, those people are bottlenecked [22:23] coordination and communications and things that we haven't figured out yet, because those people think that they can move even faster, but they still have to get the rest of the organization behind and aligned. We have to solve those problems. Every problem has a solution, every solution creates new problems. And so [22:44] So long as we have more problems to solve, we will all be employed if we embrace the new problems. If you don't want to embrace the new problems and you just want to solve yesterday's problems that's already been solved, [22:57] I'm sorry. At least I got a laugh. Well done. So Sequoia has invested in a plethora of AI companies. What is the strategy there? [23:10] I wouldn't say a plethora. We're very selective. We each-- Invested into all of the LLMs, pretty much. [23:17] Each partner only makes one or two investments per partner per year. [23:24] We have a seed fund, a venture fund, a growth fund, an expansion fund. And some of these investments are in the expansion/public portfolio. And those tend to be much larger public buys. [23:38] ish kind of investments. [23:41] I think the reality of the situation is, you know, if you ask

[23:45] what people are using. They're using everything. [23:48] And yes, the sands are shifting and there's a lot of leapfrogging. [23:53] And because there's a lot of leapfrogging, [23:56] There's just a strong desire for all these tools. [24:00] I think there are a lot of companies that are just paying for all the tools because it's making their employees way more productive than without them. And so instead of choosing, they're choosing to buy all of them. [24:12] And the question is, does that last forever? [24:15] Or do you start standardizing on one or two or three? [24:19] Our view is that it's not a zero-sum game. And part of that is there is really no price on intelligence. If you're more intelligent, [24:31] If your system is more intelligent, if your product is more intelligent, is your company more intelligent and makes better decisions, [24:39] you're gonna make more money. And so, so long as that's true, you're gonna continue to consume more and more of these tools. [24:47] From the investor perspective, after our interview, I asked you, how do you manage context switching? You have a portfolio of a very wide range of companies, from Citadel Securities to Airbnb, Nominal, Clay, Calci, Commure, and [25:03] and more. So how do you manage context switching between all of them? [25:07] Are you speaking for myself or my partners or Sequoia? You. Oh, me. I have ADD, so actually, context switching is easy. It was really hard when I had to stay in class. I suspended a few times in school. So context switching is fine.

[25:24] I think it's less... [25:26] It's really, it's an interesting question because if you love the businesses that you're working with and the founders that you work with, there's a through line. [25:36] across all of them. [25:37] And these [25:40] People are just outliers and they're fascinating to me. They're all out of distribution. They would never be cast. They don't fit what we call central casting because we're in LA, you know, whatever. [25:53] . [25:54] They're just so different. They're so spiky. And the reason why it's easy to context switch is like every time I spend time with them, I'd learn something new. [26:02] And I, you know... [26:06] I think I have one of the most... [26:09] enjoyable, [26:11] Um, [26:12] Lives. I don't really call this a job because it doesn't feel like a job. [26:17] Um, [26:18] I get to choose... [26:20] who I invest in, [26:22] I get to choose who I take meetings with. [26:25] And [26:26] I get to be on these journeys with these fascinating people for a long period of time. And they're just in it. They want to change the world. They want to put a dent in the universe. And that's very, very inspiring. And even when I take meetings where I have to say no, because I don't have enough context switching hours in the day to take on another investment, [26:48] It's still invigorating and exhilarating to hear how a founder wants to change the world.

[26:57] How does it feel to be the co-steward of the fund? [27:03] I'm sorry. [27:08] - You know, it's really funny. I make this joke all the time, and it like falls on deaf ears. Like everybody congratulated me and Pat from the outside, and everybody internally is like, oh my condolences. You have to deal with all of us. And Sequoia is run as a partnership. And there's two people's names that are now called co-stewards because we signed all the SEC documents. So if we screw up, we go to jail. Everybody else is like, great, you get to do that. [27:34] You get to hear us complain, and it's your problem. [27:39] Okay, it's not a... [27:41] It's a privilege, obviously. I never wished upon that. It's not something I sought out. [27:50] But it's fun working with Pat to do this together because both of us [27:54] want to stay on the field. The most fun part of our job is to find the next investment. It is not signing SEC documents. Figuring out what our AUM is. And not telling you because it has to be audited first before we tell you this year's number or last year's number. [28:11] I could tell you, but Valerie's sitting right here, so she'll kill me. Who is the spiciest partner at Sequoia? [28:19] I don't know. You don't know? Depends. On Twitter, Sean McGuire. In partner meetings, there are a few contenders. I mean, I thought I was going to be fired a few times. I had to write three memos for DoorDash investments. I wrote four memos and got four no's for Akashii investments.

[28:46] Um... [28:47] So. [28:48] I don't know. I think that a lot of us are pretty spicy. [28:52] Okay. [28:54] - Especially after a shot of, what'd you give me? [28:57] I talk way more now than I usually do. I'm usually a very introverted person. [29:03] I'm trying to think of like every possible question I can ask you that might get you in trouble, but I don't [29:11] I'm going to respect Valerie over here. Wait, are we over time right now? No, we've got one and a half minutes left. It's red. [29:18] It was bread the entire time. [29:22] I'm not paying attention, obviously. [29:25] Oh God. [29:29] Okay, so to bring it back, what are you most looking forward to for the next year? What will this room look like? Okay, I think one of the principles I have for my life and hopefully for Sequoia and hopefully for my family and especially my son is try to make every year better. [29:47] better than the previous year. Not necessarily going to make that happen each year, every year in, year out. [29:55] My hope for all of you here is to continue building and [29:59] Through the work, we'll figure out the direction. I think the most uncomfortable thing right now is the sands are shifting. And it's like, should I... [30:09] Should I use this tool, but the following year this other tool like leapfrogs it? Just use all of them. Just try to stay in touch with all the change that's going on. And

[30:21] Eventually, some of these [30:24] things will settle. Like over time, there was a period where there were all these data centers being built, and some of them didn't last. But then there was AWS, there was GCP, and there was Azure. [30:38] The fact was that cloud computing was going to happen. The fact is that AI computing is going to happen. The fact of the matter is a lot of our [30:48] Most mundane tasks will get automated away. That is great. See it as an opportunity to do the things that you are uniquely good at. I mean, one of the things that we look for at Sequoia is [31:01] I think it's a good question. [31:02] sort of the founder's journey. How did they get here? What makes them tick? But one of the things we look for is this, what is your spike? [31:12] Why are you different than everybody else in the world? And we try to magnify that spike because there's no one else like you [31:20] with that spike. Discover what that is. Because everything else, you're [31:26] Many of your weaknesses, I often tell founders, whatever your spike is, magnify that, but make sure your weaknesses don't become a liability. [31:38] this AI that's coming around is making a lot of our [31:42] Weakness is not a liability. [31:45] So the world is shifting, but it's a good thing. [31:48] Thank you so much, Alfred. Thank you, Molly. Thank you for giving me a shot of mezcal.