I think the point he's making is that they are going to try to figure out your actual real-world social graph based on who you associate with and where. I'm sure that was the killer part of the pitch.

If you forget about the photo sharing app for now, and imagine they do manage to create such a graph - it seems to me that it would be a lot more valuable than what Facebook calls a social graph - which is really more like a social game.

Imagine being being able to identify the people who are 'hubs' and 'influencers' in real life as opposed to online. Now imagine you can predict where they are going to be hanging out so that you can promote things to them, and then track the fanout as they meet people in real life. That is what Sequoia think their $41M might get them.