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Alfred Lin

lines on the record: 36
first: 2021-01-27
most recent: 2021-01-27
sittings or episodes: 1
sources: podcast

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“And Maituan from the very early days as well about how exactly they were able to sort of pivot. So you learn from that, you applied it here, you got the restaurants to stay open, he helped the restaurants get their menus on DoorDash. It's like, hey, we've uploaded your menu. Do you want to be on DoorDash? Just so that they can get the whole open for delivery sort of campaign going. He didn't care whether it was on DoorDash or was on Uber Eats or on his competitors on Postmates. He wanted to keep the restaurants open. He slashed commissions for a period of time that totaled over a hundred million dollars during that time. And he made sure that dashers got PPE, did content list deliveries, and he knew that the customer side would take care of itself. And so I'm really, really proud to be associated with this company that was firing on all cylinders in 2019 and then took it up a whole nother level when the pandemic happened.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Good people had the right team, Tony had surrounded himself with great board members as well. And then I saw him take 2020 up a whole nother level. We were preparing to go public. Things were all great because of what had been done before to make 2019 a great year. We're preparing to go public. And when the pandemic happened, he went into a whole new level. And the team rallied to go to a whole new level. It wasn't clear when the pandemic happened that business would be good or bad. You could have a situation where with all the restaurants are closed and there would be no food delivery. So he worked hard to get the restaurants open. He looked around the world and saw exactly what had happened in different parts of the world and there are parts of the world where they decided to shut down the restaurants to keep them open. And then other parts of the world where they learn quickly, like in China, like with Maituan. And we obviously are also industrial.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Important because you're selling a small portion of the company when you're raising money and you personally as a founder you're not selling any shares so it's not like you're selling at this price that you think is bad but the series C that sequoia decided to lead was quite hard. I think the company had thought that because it had doubled or tripled GMV and the union economics was getting better that the valuation from the B to the C would be double or triple and in fact it ended up being a slightly flat round to slightly down round and he just did it and moved on and his focus was on the future and so it's a story of resilience that was the first story of resilience and I really want to share the second story about working with the company that I really really enjoy which is the second story was in 2019 I thought this company was just on fire firing on all cylinders working very very efficiently had hired”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not a happy story. It's my favorite story because it talks to Tony's having optimism and with a plan. I think when we, you know, he had a hard time raising the seed because people didn't, there's no like richness of data. Is this going to work everywhere? He had a fairly easy series A raise, in my opinion, because he had five term sheets and we were competing with five term sheets and I had a jump on the competition, but it happened fairly quickly. He had a very easy series B-rays in the series C in the series D were quite hard to raise. But I never saw Tony ever be dejected. He was like, my business is growing. I know the underlying metrics of my business is good. And he gained more conviction about the need to focus on inputs and rather than outputs. And in some sense, the company valuation is a vanity metric. It's an output metric. It's not that.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the unsung heroes, there are many. I think the early operations team were a bunch of unsung heroes. They launched a bunch of cities. They went from market to market trying to assess what was going on. They took a first principles approach to how each market is different from the others and try to sort of get the seating conditions right to get the markets up and running.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“The pre-mortem was pretty straightforward here, like the sort of downside is this is a company that is loved by their consumers because there is a consumer value proposition, but they're not willing to pay for it. And merchants are going to grovel about the take rate. They can't invest in it. And we were also very concerned about intense competition that drives the business to what we always talk about, which is economic profit of zero or worse. And you don't make great investments at the economic profit of the entity is zero. And so you could have this middling hyper local business that's great in only certain nice, wealthy markets, but not a dominant player nationwide and work very hard to make sure that that wasn't the case.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Pre-parade is the dream case. So it's pre. Amazon has this thing where they write this press release about the success of this beta product that they're about to launch, write these pre-parade around investments. If all things go right, what are we going to celebrate 10 years from now? That's the pre-parade. And we want them in memos because we want the sponsor to sort of articulate exactly why this is a company of importance 10 years from now.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, he certainly has grown a lot as a leader, and I think the sort of thing I saw was I often find hard for a lot of founders is to figure out how to work collaboratively as a founder and a founding team to sort of take the mantle of being a seat.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so we had great data from our expansion that like in Palo Alto, we get to a certain sort of number of customers, and Palo Alto is profitable. And then you do that again and again and again across the cities. And it was quite replicable across the nation. The sort of genius of the nationwide strategy is one of these merchants would be your dominant sort of volume for a period of time. And you knew that you could see that market quite quickly because you had a national merchant that was telling their own customers that now they can order on DoorDash. And so it was a seeding strategy that was quite ingenious when they started doing this, probably five years ago.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“National merchants as possible because that was what the customer wanted. That actually was the market pull, expanding to get these originally all their merchandise acquisition were local restaurants. The reason they expanded into national selection was because the customer asked them to. That national brand selection and wanting to get a deep selection of those was actually one of the things that pulled DoorDash nationwide. If you wanted to work with Cheesecake Factory, they wanted you to deliver not just in Palo Alto, but all of their cheesecake factory restaurants. I was quite an interesting way to acquire customers because you could acquire customers through a partnership with the top 100 merchants.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“And then, hey, do you want to sign up with us? And so that was a differentiated strategy in most of their restaurants now are partner restaurants. And it was really, really important for Tony because he had a heart for merchants having grown up in the restaurant business that they do write by the merchant. And that was really, really important. And on the customer side, I think to build this kind of business, you need to sort of have both a really creative way of acquiring customers like they did in the early days of just blanketing the neighborhood that they deliver to doing things that at scale that were interesting. And one of the examples of that is a national merchant strategy, which was lots of customers wanted to order one of the top merchants. And their strategy was not to get just McDonald's. They wanted to get a hundred of these or as many of the top 100 merchants.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, at the beginning, they had a differentiated strategy with driver acquisition. It was people who wanted to be a driver for a service, but they couldn't drive for that service because they didn't have the right car. So you can take all those people. And then the other example is there are drivers who don't actually want to drive other people. They actually prefer to deliver packages. And so in the early days of Doordash, they were focused on a different set of drivers than everybody else. On merchant acquisition, there was a lot of talk about how they would go down to the strip in the suburbs and try to understand the dynamics and the sort of the market power of each restaurant and who are the influencers and try to get the influencers on board. And then there was the partner versus non-partner sort of what method of acquiring them. It's like, we're going to send you a bunch of orders and we're going to show you how many orders we can send you.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“The input metrics and the things that they needed to work on, but we felt like that those were doable things, like quality, right? Sometimes when you say that it's going to take 30 minutes, it took 45 minutes, or you showed up and the order has everything except the fries. And those type of things are going to happen. This is an Adams business. It's not a Bits business. There's no error correcting code on the other side. So you have to develop your own error correcting code to make sure that the order doesn't have any errors. And, you know, sometimes you actually have to be quite creative. Some of the people who are good process people in a BITS world, they create these like great sort of academic processes, but then there's a human involved. And so you have to create processes where there is a certain level of human error or human and take that into account and to correct for that.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Invested in the business saw that. It was the thing that sort of gravitated a lot of investors to like, wow, I've never seen this before.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“You saw, Mamma, we broke it down into from GMV to retention to the cohorts, and the cohorts were just really sticky, even at the early days. We don't see that very often. I've seen that in very few companies where that's the case. You either want large AOVs that happen infrequently, but when you're top of mind when it happens, or you want the opposite. Whereas like, okay, the orders are small, but you want a lot of frequency and a lot of use. This is going to be a small AOV business with a lot of frequency and a lot of use, but you know it's going to be small AOV. You just need to make sure that that second statement of lots of frequency and the third statement, lots of views, stickiness happens. And so when we broke down the business at the Series A, you could see that. That remained to be true from the A to the B to C to D. Everybody who”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I would never disagree with Sarah, and the way she phrased it, I think, is a very true statement, which is chasing. Chasing GMV, and it will lead you in the wrong direction because it'll lead you to the wrong behaviors. I think that that is something that I would like every founder to understand. You should figure out ways where the customer pulls you as opposed to chasing the customer down to force them to use your product. Look, you need GMV, right? Like in some sense, GMV for a marketplace, for commerce company, for a consumer company is a sign of usage, right? Like if you don't have GMV in a marketplace, there is no usage. I always tell founders to break down their GMV into smaller and smaller pieces until they get into their input metrics. You know, when I was at Amazon and at Zappos, we always talk about the difference.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“It's true if people are rational. And so I say that as the statement of if people are irrational, then that's not going to be the case. And you're asking a very, very good question, right? Like when I worked at Dapos, every single marketing dollar had to pay back on the first order because we didn't have a lot of access to capital. Well, if that works with a little bit more money, you can allow the payback period to take one month. Okay. So at some point, everybody just pushes it from zero months to one month to six months to 12 months to 18 months. But at some point, if it's going to be 10 years, it doesn't work. This is not the transitive property so that you could go from zero to one, one to two, two, three, you should go for infinite. At some point, it has to pay back. And so there has to be some level of rationality to it.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Constant sort of cyclical cycle of wanting to experiment and learning how to do things more efficiently. The other thing that is quite interesting to me is that the best companies also know that if they run the business more efficiently, they can actually outspend their competitors. I mean, so if you are more efficient, then I can outspend my competitors because my competitors at some point will not be profitable. And that was always something we talked about is like, make sure you have a much better unit economics because rationally we should be able to spend more than our competitors to grow.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“The church is always a bunch of like, you know, it's like sailing, you like tick and tack, you go, you sometimes sail sideways if you want to talk about cap. The early days of DoorDash, they printed out flyers and when they deliver an order, they just blanket the neighborhood with flyers about DoorDash. And that was actually quite cheap to get consumers. That's not scalable. So, you know, that's scalable to a point. That's not super scalable. They have to find other ways. You're always looking for new ways of finding a channel that allows you to scale and scale efficiently. And then that channel gets used up by either you or your competitors. And then you have to move on to the next channel. And then maybe everybody goes away from the channel that looks like it's super saturated. And then finally that becomes more normalized and you can go back to that old channel that you thought was super saturated in some ways it never ends.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Back to Tony having founder MarketFit. He worked at a restaurant when he was younger with his mom. He knew every single part of how a restaurant works. The unit economics, not of his business, but also of a restaurant. And the issues at a restaurant where they have more capacity in the kitchen than they have capacity in the front of the house to seat people, you can only turn to restaurants maybe two times for a meal, but you have more capacity in the kitchen. Therefore, they can actually make food for delivery. So those are all the sort of kind of things where like, huh, well, unit economics doesn't actually have to get worse because there are a whole bunch of things. There are puts and takes. Like, yes, maybe it'll cost more to acquire the next user, but there are a whole bunch of other levers that you can pull to improve the unit economics.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Think about it from the standpoint of the unit economics may actually get worse and how much worse you have to sort of think through and be prepared for. And those are conversations you have with the founders to see how scrappy they are, how thoughtful they are, and etc, etc. But at the beginning, like if you ask me about unit economics, it's really mostly about AOV. It's mostly about how often someone orders, it's about retention, it's at the higher level. It's about the GMV before you can talk about your take rate, before you can talk about gross profit, before you can talk about contribution profit. But you ask these questions and see whether person you're thinking about partnering worth quite early, whether you can riff with them, work with them, et cetera. And I've always found working with Tony, riffing with them on these ideas to be quite intellectually stimulating and we can build on each other. That's the dynamic that you want to see.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think that what is happening at the time, and then there's the reality of the situation is going to look very, very different. The unit economics at the time at a seed or a series A is a sort of just a check on how thoughtful the founders are and the management team is on exactly how they think about the business. If you see that the unit economics is all messed up, they don't really quite understand what's going on, and it's very, very sloppy. Then you kind of question whether they're operating the business at the lowest level, they're good operators, they're focusing on operational excellence. And of course, it's always messy at the beginning. But it's just a magnitude of how things are going to play out later. And you also have to understand that the customers that you have at the beginning are, they're the early adopters. They're more likely to pay you more, order more, etc. So you also have to”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“About how you route your customers, et cetera, et cetera. And DoorDash was always very much focused on making sure that they were routing orders properly, estimating time properly so that they can bash properly, et cetera.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Differentiated strategy around merchant selection is just having the largest selection. There's always these debates about like I always hear about the paradox of choice. The paradox of choice is an individual issue, not a population issue. And on the population level, you and I might both love sushi, but our favorite sushi restaurants could be very different. And that's multiplied across all of your customers. So some people fail to see that the largest selection always wins. And having selection was quite important from the very, very beginning for DoorDash. The other thing is like how far are you willing to go? So maybe there's a great sushi restaurant in your local neighborhood. Are you willing to expand the radius so that you can take that sushi restaurant to a place a little further? That was also a differentiated strategy, but you can only do that if you're more efficient, if you can batch more efficiently, if you have good projections.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Strategy to win. And I think Door Dash won because they did have a differentiated strategy, which is focused on the suburbs. They had a differentiated strategy on focusing on the merchants as well and on selection. So those were two-pronged on the strategy that were quite different. And then they just had better retention and better unit economics. And so when you have that, all of those things right, then capital becomes fuel. And so when you have a hot burning fire pouring fuel on it just accelerates and leverages it. When you don't have that hot burning fire and you just pouring gasoline, it's kind of wasted money.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“You're asking specifically about this market? I think the market evolution was probably a lot more competitive than we expected. I don't think great companies ever are built by focusing on the competition. We tell our companies to be competitor aware but customer obsessed. So if you just focus on the customer, what do you do to sort of improve the customer experience and continue to sort of retain your customers in an increasing advantage? I think the level of competition was assigned too much money in the system. Back to the be competitor where you can't compete in a marketplace if a bunch of your competitors raise a bunch of money and you do not. And while we think capital is secondary, it is needed in competitive market situations. The primary thing though always to me is making sure you have a differentiated business model, secure unit economics, and a differentiated”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Why I start with the notion that what's the scale of your ambition just in your core business? Like, are you leaving your core business because it's not that interesting to you? Or is the business not as big as you thought? Like, why do we need to expand? If you can just do this well, why do we need to expand? And then the other sort of question I ask them is how much increasing advantage do you gain? Like I think if you go into an adjacent market that is pretty close and you leverage all of your strengths, that is a much better way of expanding into a new market than to go to a new market where there is you have no advantage from your core business. And then the other thing, which is why I talk about customers pulling you, is like, is it actually better for the customer experience? If you're expanding a slightly different category or market, is it a better customer experience? If it's a better customer experience, the flywheel will carry you into that expansion as opposed to saying,”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“That. If you're being pulled by the customer or pulled by the market, that is a great sign. If you're pushing because you have aspirations of building an empire that is less good of a sign.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“These things are always both an art and a science, right? We started in Palo Alto, we then expanded almost all of the Bay Area, we then go into San Jose. And so there's the geographic expansion. And today we are in more than food, but the majority of the business is still in food. I sometimes tell founders like the sort of desire to expand into other categories is sometimes a sign that you don't love your core business. I mean, if you think about great companies, they've scaled with their core business for a long, long period of time. And it's always much better that your customers pull you into a different area than if you just want to go into a different area. And so that's the balance that we sort of tell management teams. Like you don't want to be success sort of breeds a desire to expand and Jim Collins talks about the undisciplined pursuit of more. We try to dissuade.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Think about like well, is the initial market big enough and is it growing? And I think we're not attracted by just large markets. We're attracted by the market dynamics. And it's more important for us that you think about the wedge into this larger market called restaurants or food in general, but specifically where are you going to go attack? And remember, Tony's whole notion was not just food delivery, right? He wanted to build the FedEx. His initial pitch was the FedEx of local, and he wanted to deliver almost everything, but he was going to start out in food because if you can deliver a pizza before it gets cold or an ice cream before it melts, and he used that all the way back at the seed, then you can see your way into delivering almost anything.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the memo just briefly talks about the takeout volume as of today, and only 15% of that was delivery. And I think the reason we sort of laid that out was, you know, you can dream about markets in different ways. You can start with the initial market that you're going to address, or you can talk about the sort of restaurant market, which is closer to $600 billion or something in that range. You can't address all that. So as a startup, you have to figure out what is the market that you're addressing at the beginning. We think about that and the takeout market is the delivery market is the delivery market, so it's pretty easy to go size and find out, and there are other companies that have gone public like Grubhot in their S1, how big their takeout volume was and how much was being done on delivery. But the notion was that if delivery was more efficient, then the delivery market would be as big, if not bigger than the takeout market. And so you just need to sort of”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think that the most important thing at the seed level is to find great founders attacking a large market. And we are looking for sort of founder market fit. And we found that in the seed, and we were bogged down by things that you need to prove out later in the Series A or the Series B or the Series C. We're bogged down by questions. Is this a service for rich people? Would it actually work in the suburbs versus in the cities? Those kind of things, you can have a conversation about them, but you're not going to know the answer. And we did have conversations about this stuff. And part of the reason I was so attracted to Tony and his sort of attention to detail was that, well, actually, it's way more competitive in the cities, but the cities are not as laid out nicely as they are in the suburbs. And I was like, wait a minute, what do you mean by that? Well, if you go to New York City, like the restaurants are all over the place.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“and I was struck by just how observant and detailed oriented Tony was as he was systematically breaking down the restaurant that we were at. It was his chef chews in Los Altos and systematically breaking down why they're so efficient. And then he did the same thing about DoorDash's operation into, you know, what are the simple, repeatable tasks that you have to get right. So after that dinner, I just went back to Sequoia and got the team spun up and we went into High Gear to pursue the opportunity. And a week later we led the series in. We missed the seed, but we made it up by leading the series A and we invested in every single round after that.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, we met Tony right after, so a few of us were doing office hours at YC. For lunch, we got to order from DoorDash. I really enjoyed ordering from a variety of restaurants rather than dining at the typical unappetizing buffet line. So we met Tony and Andy and Stanley, and Evan later that afternoon to listen to their pitch. And their pitch was to become the FedEx of Local. We met them in 2013. This is around 2013. We took a few meetings after that, but unfortunately, I guess we failed to dream with them and we passed on the seed round in 2013. And so that was kind of unfortunate, but we stayed in touch. So I kept in touch with Tony and had got updates from him every few months. And in 2014, I was sitting next to him at a dinner, a networking dinner. This is an Asian American founder and VC networking dinner that Eileen Lee had sort of organized and Sequoia was sponsoring. And it happened to sit next to Tony.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Because I was fascinated with this space, we pass on each of those opportunities not partly because we're somewhat concerned about market size, but more importantly, we felt like we didn't find the right founder market fit for this opportunity. And we wanted to look for founders who were obsessed with the operational details of the business and pursuit operational excellence. And we found that when we met Tony and we realized that there was founder market fit here.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, happy to do that. But let me take you back a little bit further than that because my fascination with food delivery goes back earlier than me meeting the team. I joined Sequoia in 2010, in late 2010, and I was trying to come up with a differentiated investment theme. Early 2011 at the TED Global Conference, I listened to a talk by Jeffrey West about the mass migration to cities. Due partly because cities are just more efficient than other parts of the world. So growing up in New York City, I was always frustrated that services like that I saw in New York weren't available in the Bay Areas, whether it was a good public transportation system, reliable taxis, or basic delivery services, including restaurant delivery. And I love food, and I've always been annoyed that food delivery wasn't more available. And actually between 2011 and 2013, we evaluated opportunities to invest in Grubhub, in Caviar, in Postmates, in TaskRabbit.”
2021-01-27 · The Twenty Minute VC · 20VC: The Memo: Sequoia's Alfred Lin on Why Chasing GMV Leads To Bad Behaviours, How To Approach Competition and Capital Efficiency & The Core Importance of Understanding the Difference Between Input and Output Metrics · IDENTIFIED FROM THE TRANSCRIPT · source