为AI时代重建传统企业：Sequence Holdings联合创始人兼CEO Michael Lee

Every company on the planet has a famous person. In a world where you believe alpha comes from engineering and artificial intelligence, you need to create a culture where the person of note is the engineer. That's what's needed. If you think about your typical fund investment, you're usually trying to figure out how to start packaging to sell this thing in 3 years.

It's just a completely different formulation of how we think about technological transformation and what kind of investment you're willing to bring here. What we do is rare. We try to do 1 deal a year. That's all. Our job is to conclude 1.

Today I'm here with Michael Lee, co-founder and CEO of Sequence Holdings. They just announced the largest private AI acquisition to date: the Dell family office's $7.7 billion acquisition of Baldwin. We're talking about this, the Sequence story, how the AI transformation will actually permeate the economy, and what moves from public investment to private equity and operations. Welcome, Michael.

1. Conclusion

Thank you for that. Thank you for inviting me.

2. Sequence Holdings and Baldwin

You founded Sequence Holdings, a perpetual holding company that works with management teams to acquire and recapitalize their businesses to become market leaders in artificial intelligence. We should talk about this. That's a very exciting model, but you also announced this big deal with Baldwin. Tell us about it.

We founded the company 20 months ago with the goal of partnering with world-class companies and management teams, working closely with our Frontier engineering team to build market leaders. The insurance brokerage industry is an area to which we've devoted a lot of time since founding the business. We met with dozens of insurance brokers, and Baldwin was truly 1 of the best insurance brokers we met with.

It's been a privilege to spend a lot of time with Trevor Baldwin and the management team over the past few months, and we couldn't be more excited about the journey that lies ahead between us, the Baldwin team, and the Dell family office that supported us on this deal.

3. Idea for Sequence

I want to talk a little bit about you and your co-founder, Alex, and how the idea for Sequence came about, because you were an investor and are now a hybrid investor and operator. Tell us how you came up with this idea.

When I first joined Lone Pine in 2017, 1 of the first areas I was asked to cover was artificial intelligence. It was quite early. You remember, it was around the time AlphaGo came out. Actually, that's when the first paper on transformers came out, and there was a lot of hype about what would be commercially viable if you scaled these architectures. At that time, it was convolutional neural networks, GANs, LSTMs, and so on.

I think we all know how the story ends, which is that we've obviously seen a lot of exciting things, but as these architectures scale over time, there are degrading effects. I share this context because when models like ChatGPT appeared in late 2022, it became obvious to me that the world had changed forever. Finally, we had an architecture that we knew could scale infinitely. Whether it was possible or what would come of it was unclear, but we knew we could scale with compute, which would improve this architecture.

As an investor, I started thinking about what impact this would have on the world. I was convinced that AI would have an uneven impact on the economy. There are certain areas of the economy that, in my opinion, AI will not affect at all. Take restaurants, golf courses, and so on. There are certain industries in which, in my opinion, a startup will win. Take coding, for example. For example, Conviction and Sequence are going to buy an outsourcing coding business, which seems like a terrible idea, but you would give money to Cognition or Anthropic.

But as a business student, I always felt that the incumbent leader had all the advantages. It could be brand, scale, network effects, or regulation. Given what would be the biggest technological shift of our lifetime, I was very convinced that if you could find the right incumbent leader and inherit the benefits of being that leader, you could create a market leader. The core of this idea is what Sequence is actually based on.

I came up with this idea in early 2023, and several people tried to convince me to leave Lone Pine to do this. It just wasn't the right time for me. Then I remember going for a walk with my wife in 2024 and saying to her, "Hey, it's pretty rare in life to find yourself in the middle of the most important technological change of our lifetime, having an idea that I'm really excited about, and feeling very strongly that I can put together a team to make it happen."

4. Incumbents in the AI Era

That's why we created Sequence. I couldn't be more excited about what we've been able to accomplish to date and what we see ahead.

This is a super-principled approach to thinking about what macro changes are happening in technology and how they will affect the economy. A lot of investors, at least venture capitalists, would say, "The existing players have a bunch of advantages. I guess it's just not for us." How did you think about the scale and the idea of being able to interact with or even own existing players? This could be something to do, but isn't that an ambitious premise?

I think it's more of a business model that fits the opportunities today. If you take a giant step back, at least at Sequence, when we think about what's happening with artificial intelligence today, we think we're experiencing the equivalent of the next Industrial Revolution. What we typically see in most enterprises, and what I typically see from a lot of software companies that are building AI agents today, is this giant push to put little machines in every person on the human assembly line and speed up the work.

There's nothing wrong with that. It's great. But when you have machines that can run 24/7, that can scale with electricity, and that can do things that no single person or group of people can do, the right response is to think: How do you start to reorganize what an organization should be to accommodate the capabilities available to you through technology?

This is the context in which we find ourselves. For the first time, we have a real opportunity to partner with amazing companies with amazing leadership teams, combining that with our platform and our engineering team, and really thinking critically about how we reengineer the organization. How do we build on what's best in terms of what these technologies can do? What can people do? How do we rethink how we can compete in these different industries?

I think it's more an opportunity than an ambition, because I just think it has to happen, and I don't see a natural path for it to happen unless you do it through our approach.

5. Why a Holding Company

Can you tell us a little about the company structure? Why a permanent holding company? Do you know what ownership allows you to do that being a supplier or a partner doesn't allow you to do?

6. What Sequence Looks For in Management Teams

I think this question has 2 parts. In terms of the holding company structure itself, when I was thinking about what it takes to achieve what Sequence Holdings wants to do—which is, how do we partner with world-class organizations, how do we apply advanced engineering, and how do we create a platform that we can use for all of our portfolio companies?—the only natural way to do this is through a holding company.

How do we create a business that can help us create market leaders? How do we reconcile the duration of capital with the sustained investment and operational commitments that will be required to fully advance the transformation? How do we create a cultural orientation that is aimed at creating market leaders, not at attracting capital? Finally, how do we create the right structure to leverage the business's retained earnings to rethink how to support existing companies and attract new investment?

When I think about the opportunities that lie ahead, the only natural way to do this would be to create a holding company.

Regarding your second question, on ownership, let's look at it with an example. Let's say we're a Fortune 500 company with unlimited resources. If I challenge you and say, "Hey, you're the CEO of a Fortune 500 company today, and your job is to reinvent yourself," you have 3 options.

First, you do it yourself. The structural problem associated with this—and it's not a bad one—is that it's impossible to attract and retain the talent needed for this restructuring. The reason for this is actually much more obvious than people think: every company on the planet has a person of note.

Take Blackstone, for example. It's an incredible organization that I really admire. In fact, I make every person read King of Capital. But Blackstone's person of note is an investor, and that is why they're able to unite the largest investors in the world.

In a world where you believe alpha comes from engineering and artificial intelligence, you need to create a culture where the person of note is the engineer. And that's exactly what's needed.

Is this the reason why Palantir exists?

I'm sure Alex Karp would hate for me to describe it this way, but this is essentially an organization that has brought together world-class engineers and honors engineers. Essentially, what they're doing is creating a wrapper to sell that talent to other organizations that can't get it.

That brings me to my 2nd point. If you can't find the talent to do it yourself, then this huge, multitrillion-dollar industry called the service industry has formed.

These are great companies: Accenture, McKinsey, and Palantir. They respect engineers and respect changes in technology. But the challenge you face when you partner with a service provider to reimagine and transform your business is the issue of incentives.

Service companies optimize their costs for three things: getting funds into your wallet, keeping them in your wallet, and increasing your wallet share. This is the path to gradualism. On top of that, service providers can’t really change what you need to fit the moment: how to change the way people are organized, who works in these organizations, and what the incentives are.

So, if you can’t do it yourself, you can’t use vendors, and you have a third option that a lot of people do, which is to buy software. The problem with purchasing software is twofold. The obvious one is that it is a beta version. If it is available to everyone, then it is available to everyone.

I think the more nuanced part, which people often overlook, is that if you and I were running a software company, we would be optimizing a workflow that is pretty uniform and exists in a lot of places. Then we would have to implement it fast enough, but deeply enough, so that we could sell a lot of it and make it sticky.

This is Structurally genetics, yes, it sounds very appealing. That would be the genetics of what we are looking for. However, this means that you will always be selling the workflow as it is designed today.

People today are tuned into this human assembly line. This is the only way to sell the product. You can’t sell a product on a new human assembly line that doesn’t exist today just because you think it should.

And so, when we think about why our model works, it’s important that you have ownership and are therefore aligned. How do you create an organization like Sequence Holdings that celebrates the engineer and applies cutting-edge engineering?

And third, how do you manage the long-term horizon and the economic model in a way that aligns us with management on how we think about building the best possible version of this company based on the technology available today? That’s exactly how we think about our business model. That’s why we think it works.

The early data from BankSouth and what we saw in the industry today prove that thesis.

7. Recruiting Top Engineers

I want to talk a little bit about BankSouth. You have a team that includes a bunch of the same specialists as Palantir, and you try to keep the bar for quality very high. What is attractive about the team of engineers working at Sequence?

I think it’s a bunch of things. First of all, it’s really an opportunity to work on companies that are actually the capillaries through which people interact.

Companies working with artificial intelligence models are phenomenal. We wouldn’t be here today if it weren’t for Anthropic, OpenAI, xAI, and others. But the reality is that the impact on each person’s daily life will really depend on the companies that serve them today.

For us, this is an opportunity to collaborate with really important companies that play a major role in the economy and really think about how we can apply world-class technology to provide a unique experience for our customers. I think that mission is quite powerful.

When I think about the two engineers that we typically hire, I call them front-end engineers. What attracts them is the ability to be really aligned with the value that they’re creating. I think that’s an incredibly rewarding experience, and it’s the ability to manage the kind of change that wouldn’t be possible if you were a service provider. That’s quite attractive.

On the other hand, which venture capitalists probably don’t care to think about, when I talk to application software developers, they say, “Hey, we’re one of the few business models in the world that’s completely independent of what this model is going to do.”

As the model’s performance improves, we celebrate it here at Sequence, and it gives us more tools that we can use in the companies we work with. There is no real existential risk as to whether our business will exist. I think those are the things we like.

The mission is probably what drives it ultimately, but there are tangible things we talk about with candidates that are pretty attractive about what we’re trying to build.

8. Investing in BankSouth

I remember the first time you said to me, “Hey, we’re thinking we’re going to buy part of the bank and partner with the BankSouth team.” I probably reacted with a little horror at the complexities and regulatory issues involved. I thought, “Michael, you probably know that there’s a reason why banking has traditionally not been a popular private equity sector.”

Tell us a little bit about how you chose financial services and what you’ve learned from partnering with BankSouth so far.

I think it’s worth taking a step back and thinking about how this investment came about, and then maybe looking at how and why this was the perfect place for us to start our business.

When we started this business, let’s say in March of last year, when you first wrote the first check, we had a cold-start problem, right? The holding company model is a strange business. Without money, you can’t make a deal. If you don’t have a deal, you can’t hire engineers. If you can’t hire engineers, then no one else will give you money.

Fortunately, you were ready to support us. We managed to get a few engineers to work with us, but we were still stuck with the cold-start problem when we really had nothing to do.

One of the questions we discussed at the time was: should we just buy something to prove to the world that we can buy something and make a difference, or should we wait for the right asset? As you know, we’ve always had a bias toward scale and entrepreneurship.

Unfortunately, there aren’t many investors in the world who are willing to give you hundreds of millions of dollars to buy a company and see if your technology works. So we decided to reach out to the client.

We called a dear friend, Jamie Reynolds, who is one of the co-founders of Avenir. We essentially said to him, “Hey, here’s the problem I’m facing.” Luckily, his family owns a bank in Georgia, and that’s how he became our first client.

It started in August of last year. In fact, it was August 4th—it was my anniversary. I remember missing it. It was an incredible experience.

From August to November, around the end of November last year, we worked in the service area and started to address key workflows that existed in the bank. Fortunately for us, the family asked us at that point if we would become a permanent partner. That’s how it became our first investment.

We ultimately closed the investment in March. It took us some time to get everything aligned, as well as to get approval from the Fed and the OCC.

I’m sharing this whole context to say that, having worked in the service industry and then being an investor, we saw a night-and-day difference. There are a lot of things.

First of all, from an engineering perspective, you know you’re going to be here for the long haul. The level of complexity and depth you are willing to take on, compared to working as a service provider and knowing that you will eventually leave and have to leave behind programs that other people have to maintain, is noticeably different.

Second, there is a great enthusiasm among employees: “Hey, these people are here to support us for the long term. So how do we push the most ambitious version of this forward?”

And third, can we form a long-term orientation around what we want to see this bank become in 3 years, 5 years, and 10 years? How do we lay the technological foundation in such a way that we always benefit from the efficiency of the model? That’s what we managed to do.

In a strange way, the bank was the perfect pilot project for what we needed to do to test our business model. It was an opportunity to acquire a minority stake—a test of our ability as a venture to operate in a real corporate environment.

Strangely enough, the regulated nature of the bank was a feature, not a bug. One of the nice things about a regulated institution is that the way it operates is clearly defined. Data hygiene is excellent. There are clearly defined rules about how your business should operate.

If you think about it in this context, it actually works extremely well for agents. That’s one element. Another element that was really important for banking, and a pretty valuable lesson for us, was its centralized nature.

From the perspective of our understanding of investing, that was a really valuable lesson. When we at Sequence talk about the companies we’re looking for, we talk a lot about organizational physics. We like organizations with a fairly dense structure and centralized activities. Therefore, everything you create can be amortized over a large base.

For example, let’s take a bank that may have a bunch of different branches, but all underwriting is done centrally. Anything we create at headquarters can simply be amortized across all the branches they work with.

You can compare this to a lot of the mixed-use projects we see in the market today, which I think is a great strategy, but there are a lot of complexities associated with it. You need to integrate different systems, send engineers to different locations, and standardize operating procedures. You have to standardize culture.

For us, a nice feature of the bank is that although it is a large organization with sales of over $100 million, the physics of the business is quite dense. That’s why we’ve managed to make significant progress in a short period of time.

There is a central nervous system. There is an accounting book. There are some key processes. There are levers that can be used economically.

9. Why an Insurance Brokerage

Absolutely true. Why an insurance broker?

The brokerage space has been an industry that we've spent a lot of time in since Sequence was founded. It fits a lot of the things we're looking for. What are we looking for overall when we work as an organization? We think about the scale of the market.

What we do here at Sequence doesn't scale. So if we're going to make an investment, we need it to be consequential. We want to work with companies that we believe we can turn into companies worth over $100 million. You won't do this 10 times a year. No. We are not an investment shop. We partner with great companies to build leaders.

The second thing we were really concerned about was whether this was an industry where the incumbent has all the advantages. I'll be happy to go into this in more detail. And third, if we think about what the organization does and what artificial intelligence is good at today, and think about the intersection, can we create something special?

The brokerage industry largely meets all of these criteria. That's over $2 trillion in premiums per year going to insurers. Brokers take on this role, and it is an industry that has, over time, created dozens of very scaled, large companies. Plus, it's just a great industry that has been very difficult for startups to compete in, for reasons that are less obvious than you might think.

If you think about the insurance value chain, it consists of 3 parts. You have insurance companies, distribution partners, and then the customer. An insurance company makes money in 2 ways. You have underwriting, meaning I assess the risk, I hope to pay out less in claims than I receive in premiums, and the rest of the business is investing.

The insurance industry has made almost no money from underwriting since the beginning of time and earned the bulk of its money through investing. So this encourages asset accumulation. Getting a high-quality growth business is the main reason, and that's why the brokerage industry is so powerful.

Another interesting feature of the brokerage industry is that your client doesn't actually pay you. This is done by the insurance company. If you think about the nature of the business, which is very relationship-oriented, the retention rate is 90%. When you consider that a broker can't really compete on price, it's a very difficult industry for startups.

If you think about what's perfect for Sequence, it's this: a huge market with companies that are largely insulated from the risk of startups. But what if we could partner with the right company? That's exactly what the opportunity at Baldwin provided: a scalable asset with a centralized technology foundation and a world-class leadership team that is ambitious, but also extremely passionate about what's possible with cutting-edge technology today.

10. Atlas Platform Explained

What can you say about what can be generalized or shared in terms of platform technology between different companies?

If you take a step back, we look at our shared platform capabilities as 2 broad areas. One of them is Atlas, which is our platform, which I'll tell you more about here in a second, and then our engineers and our playbook for how we work with companies.

This is an art, not a science. I often joke to myself that we have 2 problems at Sequence. We have an engineering problem and a human engineering problem, and the human engineering problem is much more complex than the engineering problem.

If we think about the engineering problem, we think about Atlas. So what is Atlas today? Atlas is our platform that we built at the bank, which we expect to generalize to all industries over time. Part of it is an observation that some of our engineers had from their previous lives at Scale AI, Palantir, and elsewhere: if you break down a business into its atomic units, 80% of them are largely homogeneous and 20% are vertically specific.

If you think about what Atlas is, Atlas is essentially our platform that does a number of things. First, it helps improve deployment speed, improves agent performance, improves build rates for our own engineers, and ultimately, it's a developer platform that allows the operating company's engineers to build on top of it.

It has 4 levels. The first level is the data ontology. Think about how we simply define the organization and the movement of this business in code. This is extremely important. This is about how to make a business understandable to models. How does an agent know that this customer is the same as this customer in this system? And how do the properties of this customer relate to the requirements or credit policies that are associated with it?

The top level is our agent builder, which essentially explains how we build high-performance agents based on fundamental data, so to speak—the kind of stuff we seem to hear and read a lot about. The third component is what we call the lattice, which is our orchestration mechanism: how do we actually instrument the workflows using the agents that we have created? On top of that is what we call artifacts, which is essentially our application builder that sits on top of everything we've built.

If you think about what we've built from an Atlas perspective, and what we've built here at the bank, fundamentally all of the core infrastructure that we've built is reusable across Baldwin and any future company that we build. This is, in fact, a key component of what we have created today.

From a scripting perspective, that part is an art, not a science. One of the nice things about having talented engineers from places like Scale AI and Palantir is that they've developed a skill set. But what we do is different.

One of the lessons that we learned in the case of the banking business is how much more hypersensitive we need to be to what the employees are feeling. This, while exciting, is also very worrying: What does this mean for us as an organization?

The key for us as a company is how we make people feel good about what we're doing. How do we apply that? How do we elevate what you're doing here at work? How do we use the best aspects of being human? How do we think about making your work more interesting by removing monotonous rote work from your workflow, and how do we create a sense that your organization is winning?

11. Traditional Private Equity Limitations

This playbook is something we will continue to improve. I think we learned a lot here at the bank. We expect to learn a lot here at Baldwin, and that will be a key component of what will eventually come together for us at Sequence.

What do you think will be special for you guys over time that will be very challenging for, say, more traditional big buyout shops? I don't know anyone who doesn't think it's worth at least thinking about AI transformation today.

A lot of what they do in terms of profitability is probably dominated by underwriting, consolidation across platforms, multiple expansion, and some financial engineering. But I think people have, let's say, portfolio operations teams. So how can you make a clearer distinction between why we're not an investment shop and what we think other people are still struggling to do without us?

I really admire all the big private equity firms.

You used to work at Apollo.

I used to work at Apollo. I have many friends who still work at all these different companies. I think they'll continue to do just fine. But I deeply believe that we have a completely different business.

If you think about your typical private equity firm, they sit in a fund structure. The economics of the fund structure are such that it incentivizes you to invest. They are engaged in finding great assets and pricing them attractively by setting the right capital structure, doing enough value creation to earn the required rate of return to satisfy their LP base.

Our business is very different. Our business is: How do we find world-class organizations led by exceptional people, and given an extremely long-term horizon, how do we create a market leader? What we do is different in that respect.

Now, I think there's a pressing question here that you're addressing: Can private equity firms, over time, bring about a radical transformation of artificial intelligence through their actions? I think that many will definitely make significant progress in this direction. I certainly think that private equity firms have the incentives, the resources, and the capabilities to start moving and make significant progress in this direction.

However, I think there are a number of limitations that they face, and I think many will find ways to address some of them. Someone might ask themselves: How do you attract world-class engineers to work for your company? This is really hard to do.

Your typical private equity firm is designed to celebrate the investor. When I look at my wonderful engineers, they want to be present when decisions are made. They want to have a say, like, “Hey, is this a good business or a bad business?”

I think if you go to a typical large-cap buyout firm, it would be very unusual to find a 25-year-old engineer who has any say in the investment profile. I think that will be difficult. I think the second difficult part is simply the time horizon, isn't that right?

The reality is that if you think about your typical fund investment, they'll tell you that it's a long-term horizon.

You're usually trying to figure out how you're going to start preparing packages to sell this thing in 3 years. It's just a completely different formulation of how we think about technological transformation and what kind of investment you're willing to bring here.

I really think the last thing is that we have an extremely high emphasis on the quality of the business and the team. That's not to say that other private-equity firms don't do it, but what we do is rare. We try to do 1 deal a year. That's all. We have no deployment cadence.

I don't have an investor group, and the investment partners are telling us, “Hey, it's like you guys haven't invested enough this year.” Our task is to do something similar. If that means we don't do anything this year, that's great. This is a very focused and thoughtful approach that's completely different.

We're going to touch a very small surface area of the world, and I expect all of these other private-equity firms to continue to deliver great results. But I think there are key differences in terms of the genetics of the companies that we've built. I hope to hold Sequence Equity for the rest of my life.

Just another question about your own underwriting and deficit. It seems like every CEO has talked about AI during their earnings reports over the past few years. People are aware of the changes, and they genuinely want to invest in these opportunities for their companies.

What are you looking for in management teams where you say, “We can help you become a leader, or even a more dominant leader”?

You can learn a lot about a management team just in terms of how they play the game in the industry in which they grew up. That's a key part of what we're looking for. Ultimately, Sequence has great engineers and a very talented team of investors, but I have no experience managing a broker. I have no experience managing a bank.

We rely heavily on the management team to be the best in their field, competing in their respective industries. This is a key component of how we evaluate management teams.

The 2nd element, which is more central to what we do, is that what we do is complicated. Change and transformation are difficult. As I mentioned earlier, the human-engineering element is the most difficult problem we will be working on.

When we think about the management teams we want to work with, they are teams that have been passionate about technology and have already started to lay the groundwork to drive change. These will be small teams working in the cloud. For example, they may have centralized their data infrastructure.

This probably means they have already started implementing OpenAI or Anthropic across their organization. They are making this effort, and that says a lot about a person who is willing to go ahead and do it at a moment when it's not yet obvious.

There's a lot of talk about whether there's any real return on investment in AI today.

Yeah, and also a lot of anxiety and worry about how you can engage your employee base with the fact that this is the direction the world is heading and that we're going to be on the front lines.

Baldwin is a great example of that. You have Trevor Baldwin, an exceptional CEO. He was at the beginning of someone who completely ran Entropic at Baldwin. They're working on a single instance of Applied Epic, which is their AMS—the insurance broker's primary operating system.

These are not easy things. They require a lot of effort, investment, and change to make them happen. When we think about what we look for in management teams, that's exactly what we're looking for: Are you well-versed in what you do in practice? And secondly, have you already led the change in terms of technology adoption and built on what's possible today?

I remember when we first started talking about the consistency thesis, I was a little confused about the idea of asset aggregation. I said something like, “Hey, there's the technology part, there's change management, there's management of the company itself, and then there's underwriting, and then there's dealmaking, right?”

There are many components to the way in which huge companies can change and win industries. I think it's a lot more complicated than people think, and I think it's better at scale.

I remember you and Alex describing it to me much more clearly. You said, “Actually, we think that managing change and running the business is going to be the hardest part. We need to put together a team to attack it, but we're also going to be working with people.”

As someone who's been trying to build a venture business from scratch, I said, “Oh, with existing managers.” But I now believe that's the right way to go, with the right management teams, of course.

12. Accomplishments at BankSouth

What have you actually accomplished at the bank, if anything? And what gives you confidence that you can do this at scale?

As I mentioned earlier, after the investment in March, we took a giant step back and thought, looking ahead to the next decade, what does a leading community bank look like?

If you break down a community bank into its simplest parts, it has 3 parts to the business. You have the part of the organization that seeks deposits. You have the part of the organization that's looking for loans. And then you have the core apparatus in the middle, which is closely tied to how we underwrite loans—deeply underwrite them and make sure that we're not only making loans to the right people in the community, so that we're serving the community properly, but we're also creating the right economic model for the banks.

If you think about what we've done today, historically, loan volumes at the average bank have grown linearly with the number of middle- and back-office staff. That's for no other reason than, for example, processing a loan is a complex task, and it requires a lot of people to be involved in that process.

We've spent a lot of time since working with the bank thinking about how we not only improve underwriting, but also make sure that everyone in the organization is focused on what they do best. How do we get the underwriting team to stop spending time inputting numbers and spend a lot more time on loans with exceptions?

Since we started working with the bank, which is about 6 months since our first investment, we've built a system that can take on all of the consumer loans in the organization. The average consumer loan underwriting volume today is down 94% since we started in March.

Another good example of what we've done is the timeline. This is a really powerful tool. We started implementing commercial-loan underwriting in the last few months, and we've functionally taken the average loan volume at the bank, which used to be 30 days, down to 11 days.

Why is this powerful and important? What we've done with the tools, essentially, is allow the organization to take on significantly more loans than ever before with the same number of staff.

It's pure luck. I'm not going to say that Sequence has anything to do with it, but in the 2nd quarter of this year, the bank's loan volume doubled compared to the 1st quarter. Historically, the bank has actually turned away customers. The middle and back offices, even though everyone is working very hard, have a limit to how much bandwidth they can take on.

Given the systems that we've put in place, the bank has actually been able to handle all of the loan volume without changing its underwriting standards at all. In fact, we've been able to do it with a much smaller team of underwriters than we had before our investment.

The reason the underwriting team is smaller is because 1 person retired and 1 moved to the front office. I think that's just an example of what we do: How do we make sure that we have the right people in the right places? How do we get them working on what they love? And how do we enable the organization to do more with less?

As a result, it's been possible for each person at the bank today to spend time doing what they do best. Loan officers spend more time in the field than they do writing loan letters. Loan underwriters are working on the most complex loans instead of thinking, “How do I figure out if we should give a loan for a boat when the person clearly has enough money already?”

That's what we've done at the bank so far. Looking ahead, we think we've laid the groundwork for what's going to be a really exciting roadmap for developing new products and new businesses, giving loan officers and relationship managers new tools so they can sell more products, and thinking about how we start delivering a differentiated customer experience that no one else in the industry can provide.

13. Founder Lessons

When we met, you were leaving private equity at Lone Pine, a career investor. What's the biggest surprise or realization since starting the company?

I get asked that question by my friends in the investment business. If you took a giant step back, maybe it's the level of empathy that I have for founders today compared to when I was running a private business. Lone Pine is like night and day.

It's great to see people take an idea and build something from nothing. It's not easy to get people to join you on your journey. It's not easy to get capital to join you on that journey. But it's incredibly fun and rewarding.

I have huge gratitude for the people who supported us early on, like you, Joe and Drew from EVC, and all of our early employees.

And you know, I would say that the highs are the highs, and the lows are the lows. There were days when it was extremely, extremely lonely, but I couldn’t have had more fun. All I can say is that everything Elon and Jensen talk about as being extremely painful is extremely true. But it was a lot of fun.

14. Story of Dell Partnership

I love this partnership of equals between Sequence Holdings and the Dell family office. Tell me about how that came about. It’s a great story.

As you can imagine, in a private buyout scenario, you need a capital commitment. As ambitious as we are, and as amazing as our partners are, most people don’t have billions of dollars to back up an equity commitment letter for a private buyout. So we started spending time with a number of partners in the market to think about approaching Baldwin together and explore the thesis that we had put forward.

We met with the Dell family office, and I have to give a huge thank-you to Michael Dell and Dan Betar, who is the head of global private equity, for working so closely with us to underwrite the deal, underwrite our technology platform, underwrite our drive for technology transformation, and support us in this transaction. They’ve been great partners for us. We’re going to co-manage Bolden One together, and we expect to be partners for a long time.

15. Career and Investment Approach

So you’ve been a private investor in the markets, a public investor, an operator, and, I guess, someone who’s taken a company private. How do you think your career has impacted how you forecast the markets, how you look at the markets, and the deployment of this technology?

I’ve been very fortunate in my career to have the opportunity to play a lot of different roles and learn the different, so to speak, crafts of investing. After college, I worked at Goldman Sachs. I went to work at Apollo, which was just an incredible experience: learning how to structure deals, how to think carefully about capital structures, how to understand credit agreements and documents, how to develop management incentive plans, and actually learning about blockchain and private equity management.

The opportunity to go to Lone Pine was really an opportunity to start studying the best companies in the world. What’s amazing about Lone Pine, and working in an organization where I can get exposure to the entire world of public companies and have the challenge of figuring out which companies are the best in the world, is just an incredible opportunity to learn more. What makes NVIDIA great? What makes Microsoft great? What makes Visa great? I think you get—and this might be an overused term these days—a real taste of what a great business is.

You also learn to appreciate the benefits of long-term compounding. It was a really powerful 5 years that I spent at Lone Pine studying the best companies in the world and realizing very deeply that the best companies in the world compound interest at rates that no one had ever thought of.

Being able to go and build a private equity business at Lone Pine was really an opportunity to start spending time on the cutting edge of technology. It meant spending time with founders who are working on really hard problems that other people didn’t really understand, seeing that it takes someone wanting something, not going from nothing to something, and going really, really deep into understanding where technology is taking the world.

If I think about how and why I think about the world the way I do, it’s a combination of that experience—which is how I think about ownership and the benefits of ownership—with a taste of what a great business is and a real understanding of the benefits of long-term compounding. When you combine that with world-class engineering and cutting-edge technology, that’s what’s possible.

I think that’s what defines our approach to investing here at Sequence Holdings: how we combine all the skills in what I think are the key areas of my investing career.

16. Value of Exceptional People

You’ve never officially been an early-stage venture capitalist. What do you think this class of asset manager is missing?

If I were to take a giant leap back and reimagine my approach to private equity today, if I ever went back to it—which I won’t—I’d look for exceptional people working on complex problems in large markets. If I’ve learned anything from my experience at Sequence, and from talking to other founders today, it’s that ideas are cheap and execution is very difficult.

Truly exceptional people will always find a way to make something work. That’s probably because they bring in someone who highlights their weaknesses. Maybe they’re able, with enough persistence, to find the right people to support them in something that everyone else thinks is crazy.

So if I were to go back and do it again, I think betting on exceptional people is the only thing that matters. I just think that the vast majority of other things, whether it’s the best idea I’ve ever seen or the hottest breakthrough you’ve seen in a short period of time, are important signals.

But at the end of the day, it’s a business about people, especially in the early stages. People who are working on really hard problems in really big markets should be supported all the time, even if it seems crazy. I think the upside of supporting those people pretty much makes up for the rest.

Isn’t that the purest approach to venture capital?

I think that’s absolutely right.

Mr. Michael Lee, a private equity and public markets specialist, says that you have to support great people in big markets.

That’s absolutely right. I think that’s the essence of the game. I think that’s also true in public markets.

If I think about the best investments we’ve made at Lone Pine, and if I think about the best companies I’ve worked with in the market today, it was something like, “Find exceptional people.” I think the best example of that is meeting Jensen Huang in 2017. It’s a little crazy to think about that at that time, today, that things weren’t like they are today.

He was extremely consistent: the clarity of thought, the incredible execution. He was able to surround himself with the smartest people in the world who are incredibly committed, and he was constantly finding ways to reshape his business to compete in an ever-changing market.

He found exceptional people who are working in big markets, and I think whether it’s early stage or late stage, most people would be surprised how that always happens.

That’s a great note to end on. Thank you so much, Michael.

Thanks for inviting me.