Sequoia Capital's Alfred Lin in his first public interview since the FTX implosion (video)

Last night at an industry event in San Francisco hosted by this publisher, venture capitalist Alfred Lin of Sequoia Capital sat down for a one-on-one conversation head on the evolution of his famed investment firm, which enjoyed a largely unblemished record of stunning successes — a record since tainted by his roughly $200 million investment in the cryptocurrency exchange. FTX.

The investment, once a source of pride for the company, has tarnished not only Sequoia, but also Lin, who ran the operation on Sequoia's behalf and who was also the company's point of contact with CEO Sam Bankman-Fried for a year. and half. Yesterday he spoke thoughtfully about how he feels today about a bet gone so wrong.

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 any tells? I don't know. There's what I know now and what I knew then. If I had known at the time, we wouldn't 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 her. 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 hinted that the experience remained unsettling for him, as Bankman-Fried seemed to capture what the venture capital industry sees as one of its greatest strengths.

Lin explained that it is "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?"

Image credits: Dani Padgett

Lin had a lot more to say about FTX, including whether he has any 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 company.

Lin defended Sequoia's decision to manage its positions in its portfolio companies long after they went public.

Lin also confirmed at the event that, in a gesture to its sponsors, Sequoia last year reduced its management fees on two funds it launched a year ago: an ecosystem fund of $950 million which it uses to back funds from other managers. and a $600 million crypto fund. Lin said that rather than charging his funders on committed capital, which is industry standard, he charges them a management fee on 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 outfits. of cryptography. (When asked if such co-dependencies had been a revelation since the FTX implosion, Lin replied, "The economy as a whole 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 opportunities. for VCs and investors.

The full video of the conversation follows.