Michael Lee
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No Priors: Artificial Intelligence | Technology | Startups · Re-Founding Incumbents for the AI Era with Sequence Holdings…
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Can AI Re-found an Incumbent Instead of Replacing It?
Michael Lee says an incumbent can be re-founded for AI from the inside, and neither a software purchase nor a consulting contract does that work. A Fortune 500 chief executive who tries to re-found the company is stuck with three options, and each one stalls.
Doing it alone fails on talent. Recruiting and keeping the people who can re-found a company is close to impossible when the celebrated persona is the investor, as at Blackstone, rather than the engineer, as at Palantir. Alex Karp would dislike that description of Palantir. Palantir gathered world-class engineers and sells that capacity to organizations that cannot hire it. A services firm such as Accenture or McKinsey celebrates the e
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Why Use a Holding Company to Add AI to a Company?
Michael Lee says a permanent holding company is the way to add AI to a market leader, because the work needs shared engineering, capital that stays, and a culture that is not built to deploy funds.
Sequence wants to partner with strong organizations, bring a frontier engineering team, and share one platform across the companies it owns. A holding company lines up the life of the capital with the years of investment and operating work a full transformation takes. The culture has to aim at forging market leaders, not at deploying capital. Retained earnings then have a place to go: support the companies already owned, and fund the next ones. For that job, a holding company was the only structu
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What Matters Most in Private Investing?
Michael Lee says betting on exceptional people is the only thing that matters in private investing. If he ever went back into private markets, which he will not, he would look for exceptional people working on hard problems in big markets. Ideas are cheap and execution is really hard. Truly exceptional people always figure out how to make something work. He leaves open whether they do it by bringing someone on board who highlights a weakness, or by persisting until the right people support a plan everyone else calls crazy.
The greatest idea and the hottest traction over a short period are important signals, and early on the work is still a people business. Highly ambitious people on really
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How Did Sequence Cut Consumer Underwriting Time by 94%?
Michael Lee says that about six months after investing in the bank in March, Sequence built a system that can take on all consumer loans, and average consumer underwriting time has decreased by 94%. Commercial underwriting has rolled out over the last few months, and the average loan that used to take 30 days now takes 11 days.
The tools let the organization handle far more loan volume with the same headcount. Loan volume in Q2 doubled relative to Q1, purely by luck, and Sequence did not cause the jump. Historically the bank turned business away because the middle and back office ran out of bandwidth. The new systems let the bank take all the loan volume, leave underwriting standards unchan
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Is Hiring Engineers Hard for Private Equity Firms?
Michael Lee says recruiting world-class engineers to come work at a private equity firm is really difficult. A typical private equity firm has designed itself to celebrate the investor. Great engineers want to be in the room when decisions are made and want a say in whether a business is good or bad. A 25-year-old engineer with any say in the investment profile at a typical large-cap buyout firm would be highly unusual.
A prior job at Apollo left a lot of admiration for the big private equity firms, which will continue to do great. A typical firm sits in a fund structure whose economics incentivize deploying capital: find great assets, price them attractively, put the right capital structur
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Why Is Insurance Brokerage Hard for Startups?
Michael Lee says insurance brokerage is a very difficult industry for startups to get into. The customer does not pay the broker. The carrier does. Gross retention rates are 90%. The business is relationship-centric, and a broker does not really compete on price.
Sequence has spent time in brokerage since the founding because the market fits what the firm looks for. The work at Sequence does not scale, so each investment has to count, and the aim is companies that can be built into $100 billion plus businesses rather than a pattern repeated 10 times a year. Brokers sit on $2 trillion plus of premiums a year going to carriers and take a vig on that flow. The industry has minted dozens of lar
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Why Does Sequence Holdings Acquire Incumbents?
Michael Lee founded Sequence on the idea that acquiring the right incumbent, then inheriting its brand, scale, network effects, and regulatory advantages, forges the market leader in the biggest technological shift of a lifetime.
The idea came in early 2023. A handful of people tried to get him to leave Lone Pine and start then, and the timing was wrong. On a walk with his wife in 2024, he told her it is rare to be in the middle of the most important technological change of a lifetime while holding an idea he felt strongly he could staff and pull off. At Sequence, AI today is the equivalent of the next industrial revolution. Most enterprises, and many software companies producing AI agents,