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Re-Founding Incumbents for the AI Era with Sequence Holdings Co-Founder and CEO Michael Lee

Can AI transform legacy incumbents rather than replacing them? Sequence Holdings co-founder and CEO Michael Lee joins Sarah Guo to discuss how holding company structures and engineering integrations are reshaping market leaders from the inside out. Michael details Sequence’s $7.7 billion take-private transaction of Baldwin alongside Dell Family Office (DFO), and shares his thesis on why traditional consulting models and software sales fall short for real enterprise AI transformations. They also talk about why permanent holding company structures are good for long-term compounding, real-world results from applying frontier engineering to BankSouth, and Michael’s lessons from his time in public investing, private equity, and operating at the intersection of market incumbents and AI. Sign up for new podcasts every week. Email feedback to show@no-priors.com Follow us on Twitter: @NoPriorsPod | @Saranormous | @EladGil | @mjlee_2014 | @seqholdings Chapters: 00:34 – Michael Lee Introduction 01:03 – Sequence Holdings and Baldwin 01:54 – Idea for Sequence 04:36 – Incumbents in the AI Era 06:32 – Why a Holding Company 11:21 – Recruiting Top Engineers 13:08 – Investing in BankSouth 17:46 – Why an Insurance Brokerage 20:17 – Atlas Platform Explained 23:53 – Traditional Private Equity Limitations 27:23 – What Sequence Looks For in Management Teams 31:04 – Accomplishments at BankSouth 34:45 – Founder Lessons 36:08 – Story of Dell Partnership 37:10 – Career and Investment Approach 40:00 – Value of Exceptional People 42:23 – Conclusion

Michael LeeguestSarah Guohost
Sep 24, 202642mWatch on YouTube ↗

At a glance

WHAT IT’S REALLY ABOUT

Sequence buys incumbents and rebuilds them into AI-led market leaders

  1. Michael Lee explains why Sequence Holdings was created to acquire incumbent businesses and “refound” them for the AI era by pairing long-term ownership with frontier engineering.
  2. He argues that typical AI adoption (tools, vendors, or generic software) tends to optimize incremental productivity rather than reorganizing the firm around always-on machine labor and redesigned workflows.
  3. Sequence uses a permanent holding-company structure to align incentives and time horizon with sustained operational transformation, contrasting with traditional private equity’s fund cadence and exit orientation.
  4. He details Atlas, Sequence’s shared platform (data ontology, agent building, workflow orchestration, and app building) intended to be reused across portfolio companies.
  5. Early results at BankSouth—major reductions in underwriting effort and loan-cycle times—are presented as evidence that regulated, well-defined workflows are particularly amenable to agent-driven transformation, informing Sequence’s move into insurance brokerage via the Baldwin take-private.

IDEAS WORTH REMEMBERING

5 ideas

AI transformation requires a culture where engineers are the “celebrated persona.”

Lee argues that to truly capture AI-driven “alpha,” a company must structurally elevate engineers (decision rights, cultural status, and incentives), not just buy tools or hire consultants. This is a foundational reason Sequence is built to attract and retain frontier engineering talent in-house rather than relying on vendors.

A holding-company structure is designed to fund long-horizon refounding, not short-horizon exits.

Sequence uses a permanent holding company so capital duration matches the multi-year operational work of reorganizing workflows, data, and incentives. This contrasts with fund-driven PE incentives that often optimize for deployment cadence and packaging assets for exit within a few years.

Ownership is the mechanism that makes deep workflow redesign feasible and aligned.

Lee outlines three typical approaches (build internally, use services, buy software) and argues each has structural limitations: talent constraints internally, incentive misalignment with services, and “workflow lock-in” for SaaS that sells to today’s processes rather than redesigning them.

Sequence’s moat is a shared AI operating platform (Atlas) plus a repeatable deployment playbook.

Atlas is positioned as reusable infrastructure built first at BankSouth and intended to generalize: (1) data ontology to make the business “legible” to models, (2) agent builder grounded in enterprise truth, (3) orchestration (Lattice) to instrument workflows, and (4) application building (Artifacts). This platform approach aims to improve deployment speed, agent performance, and internal build rates across acquisitions.

AI agents can turn regulated, process-defined workflows into compounding operational leverage.

In BankSouth, Sequence targeted underwriting and loan-processing bottlenecks to decouple loan volume growth from back-office headcount. Reported outcomes include a 94% reduction in average time spent on consumer underwriting and shrinking end-to-end loan cycle time from ~30 days to 11 days as commercial underwriting rolls out.

WORDS WORTH SAVING

5 quotes

In a world where you believe that alpha comes from engineering and AI, you need to create a culture whereby the celebrated persona is the engineer, and that's what's required.

— Michael Lee

When the models came out or ChatGPT came out at the end of '22, you know, what became obvious to me at least is that the world had forever changed.

— Michael Lee

We think we're living through the equivalent of the next industrial revolution.

— Michael Lee

Services companies optimize for kind of three things: getting in your wallet, staying in your wallet, growing their share of your wallet. It is a path towards incrementalism.

— Michael Lee

Ideas are cheap, and execution is really hard.

— Michael Lee

Permanent holding company vs fund-based private equityIncumbent advantages in an AI-driven economyOwnership vs services vs buying softwareEngineering culture and talent incentivesAtlas platform: ontology, agents, orchestration, app buildingBankSouth underwriting automation and cycle-time reductionWhy insurance brokerage and the Baldwin take-private with Dell Family Office

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