Special: Sequoia Capital's Investment Playbook (with Alfred Lin)

**Ben Gilbert** (0:00)
I'm Ben Gilbert, and I am the co-founder of Pioneer Square Labs, a startup studio and venture capital firm in Seattle.

**David Rosenthal** (0:07)
Oh, that's me. And I'm David Rosenthal.

**Ben Gilbert** (0:22)
Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert, and I'm the co-founder of Pioneer Square Labs, a startup studio and venture capital firm in Seattle.

**David Rosenthal** (0:36)
And I'm David Rosenthal, and I am an angel investor based in San Francisco.

**Ben Gilbert** (0:42)
And we are your hosts. Sequoia Capital needs almost no introduction. When we did the comprehensive two-part series on their history, we noted that they had invested early in companies that went on to be worth over $3.3 trillion. At the time, the market cap of the entire NASDAQ was about $10 trillion. I'm sure both of these numbers are dramatically higher right now, as we record this in January of 2021 At the end of last year, we saw a Sequoia double header in the two enormous IPOs of DoorDash and Airbnb. Alfred Lin, a partner at Sequoia, sits on not one but both of these boards. And as pointed out by Dan Primack at Axios, these were his first two IPOs after his decade at Sequoia. It certainly pays to be patient. So after that, we couldn't help ourselves, but reach out to Alfred to have him back on Acquired and ask the questions. How does Sequoia identify these investment opportunities? What is the internal playbook for creating their famous prepared mind to evaluate such opportunities when they come along?
And today, we dive in to what this all means in practice at Sequoia, and we take a few lessons from what they've learned in over 49 years of finding and building great companies. So David, who is Alfred?

**David Rosenthal** (1:59)
49 years! That's incredible. So Alfred, as we covered with you on our Zappos episode, Alfred, you were the CFO of Link Exchange and TellMe Networks, the co-founder of Venture Frogs with Tony Hsieh, and then of course, the COO and Chairman of Zappos until its sale to Amazon. Today, Alfred is a partner at Sequoia, where he manages the early stage business in the US and sits on the boards of Airbnb, DoorDash, Fairhouse, Instacart, Reddit, ZipLine, and more. And of course, I know Alfred, you're going to shrug this off and use the Robert Louis Stevenson quote that you love about judging each day by the seeds you plant, not the harvest you reap. But we have to congratulate you on those two IPOs, DoorDash and Airbnb, last month. Truly amazing.

**Alfred Lin** (2:53)
Well, thank you and thank you for having me on the show. I would point out that this is a team effort. Many of the companies that we work with, I may represent Sequoia on the board, but it is the whole partnership that brings the weight of Sequoia to the table and helps those companies become legendary companies and we couldn't have done that without the spectacular founders that we partner with. So, the kudos goes to them for having the courage to start those companies and wanting to put a ding in the universe.

**Ben Gilbert** (3:22)
Love it. Well, that is everything that we are going to talk about here today. This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (3:32)
So, Crusoe, as listeners know by now, is a clean-compute cloud provider, specifically built for AI workloads. NVIDIA is one of their major partners and literally, Crusoe's data centers are nothing but racks and racks of A100s and H100s. And because Crusoe's cloud is purpose-built for AI and run on wasted, stranded or clean energy, they can provide significantly better performance per dollar than traditional cloud providers.

**Ben Gilbert** (3:58)
yes, we talked about that on our ACQ2 episode with Crusoe's CEO, Chase Lockmiller.

**David Rosenthal** (4:03)
The other element that makes Crusoe special is the environmental angle. Crusoe, of course, locates their data centers at stranded energy sites. So think oil flares, wind farms that can't use all the energy they generate, etc. And uses that power that would otherwise be wasted to run your AI workloads instead.

**Ben Gilbert** (4:21)
Yep. Obviously, it's a huge benefit for the environment and for customers on cost since Crusoe doesn't rely on the energy grid. Energy is the second largest cost of running AI after, of course, the price you pay NVIDIA for the chips. And these lower energy costs get passed on to customers.

**David Rosenthal** (4:38)
It's super cool that they can put their data centers out there in these remote locations where quote-unquote energy happens, as opposed to the other hyperscalers, such as AWS and Google and Azure, who need to build their data centers close to major traffic hubs where the Internet happens because they are doing everything in their clouds.