Alfred Lin: observation

Transcript context

…Alfred, to kick things off, can you give us a little bit of the history of how this idea at Sequoia of wanting to have a prepared mind going into markets and investments and meeting teams came to be? I think it all started with Don thinking about the market. The thing that we look for is a combination of a great founding team and a great market. Great founding teams find great markets, or they find a wedge into that market, or they find what’s wrong with the market, then they discover that there’s a problem that the world has gotten wrong, and they want to fix that problem. We’ve always had to listen to founders because they come from the problem of solving their own pain. They may not be thinking about the market per se; they’re thinking about the problem that they have. To pair up, work with, and partner with these great founders, we have to come prepared thinking about the market and thinking about what the market can become. Nobody’s going to wake up one day and suddenly know, oh yeah. Lots of people are going to share their bedrooms or couches with a total stranger. Nobody’s going to think that if you don’t have density in the suburbs, that you can actually make a delivery service work. You do have to think about this from a perspective of having been prepared, and thinking about both the market and the ability of the market to grow and change. We often talk a lot about the prepared mind because “Chance favors the prepared mind,” as Louis Pasteur would say. When Jim Goetz joined Sequoia, he had identified a lot of interesting areas to invest in. He pioneered some of our thinking of having landscapes and having a prepared mind for the mobile landscape, for the rise of the developer. He would work and try to understand the landscape of what it was possible—where were the white spaces, where were the places that you can actually build a company—because the incumbents, the legendary companies of the past were not so much focused on those areas. 08:39] have been thinking about timeshares and vacation rentals for a long time, because it was weird that hotels were slowly being aggregated onto global online travel platforms. That wasn’t quite true what timeshares and vacation rentals to the same extent. It didn’t lead necessarily immediately to an investment, but it gave us a prepared mind on localized listings didn’t really exist, VRBOs and HomeAway made most of its revenue from advertising rather than booking and the transaction itself. When we saw Airbnb, it’s a completely different vector and a different way of thinking about the business. In DoorDash’s case—since you asked about DoorDash—between 2011 and 2013 with the rise of the on-demand economy, we actually evaluated a variety of investment opportunities in the space. We met with Grubhub, we met with Caviar, we met with PostMates. Each time, we pass. Not because we are uncertain about the market size. We actually noticed that this required a very, very operational founder. This business is going to be won by both having a differentiated strategy but also a person and a team that was going to be very, very focused on operations. When we met Tony that was a combination we saw. He had a differentiated approach. The differentiation for him was the strategy of focusing on the merchants and in the suburbs. The thing that he also brought was his keen eye for operations. Unfortunately, we decided to pass on the seed. That’s my fault. It took time for us to understand that Tony was a different character. He had both the strategy side as well as the operational side that brought what we consider founder market fit. We invest in their series A and in every single round after that.…

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