Interview with Michael Moritz
One of the most iconic investors of all time on patience, storytelling and China.
Sir Michael Moritz is a Partner at Sequoia Capital, and one of the most iconic venture capitalists of all time. Having joined the firm in 1986, he has led investments in companies like Google, LinkedIn, PayPal, Yahoo and Kayak, as well as younger businesses such as Instacart, Klarna and Stripe.
A Welshman by origin, he studied at the University of Oxford and Wharton School of Finance, before turning into penmanship as a journalist for Time magazine. He was knighted by the Queen of England in 2013.
Playing the long game
The world of early-stage venture capital can be seen to pride itself on speed. Perhaps surprisingly then, in describing his investment thesis, Michael emphasizes patience.
“There’s no substitute for it. Success, particularly great success doesn’t come quickly if it’s real. It might appear suddenly, but if it does, the chances are that it will melt away. Anything of great value takes a very long time to materialize.”
Sequoia has certainly shown clairvoyance and patience when making early investments in companies such as Apple, Cisco, YouTube and Airbnb.
“Since the early days, our goal at Sequoia has been to be the shareholder of choice for tomorrow’s most interesting companies, and to become that shareholder as early as possible.”
These early commitments have also meant that Sequoia have put their faith in a lot of extremely young founders. Michael, now 65, approaches that fact with excitement.
“One of the things that goes underappreciated in our businesses, is how much you can learn from an individual who is decades younger than you. Those are the people who may well go on to do unusual things; they understand something in considerable depth, are independent thinkers and obviously smart and gifted.”
A former journalist for Time, and known as a crisp and pithy communicator, Michael puts narration above all else in entrepreneurs and investors alike.
“Making investments in a particular company, you have to be able to convincingly argue the merits of the investment to yourself. Additionally, and much more importantly, you have to convince others that your investment premise holds true. To do that you have to be able to tell a story.”
“Storytelling is the backbone of what we do.”
According to Michael, this same ability is indicative of a great founder.
“Great entrepreneurs can usually tell a story well.”
An increasingly international landscape
Thirty-three years at one of the most iconic venture capital funds gives quite the perspective on how the industry is changing. Needless to say, the world of VC looks very different now than in 1986.
“When I joined Sequoia in the early 1980s, the vast majority of young tech companies were in California or clustered around Boston. Certainly not outside of the United States. We used to be able to conduct our business within a bike ride from the office, to use a famous tongue-in-cheek metaphor. And as all of us know, that’s not true today.”
As the funding landscape has diversified geographically, so have the big American funds. Michael spearheaded Sequoia’s expansion into China in the early 2000s. What started out as a heavily criticized effort in an uncharted market has turned into one of the firm’s most lucrative arms, as well as into one of the very top funds in the country. The trailblazing expansion of Sequoia has been driven by an inevitable need for intimacy when evaluating early-stage ventures.
“We obviously can’t make investment decisions regarding a company in China, Singapore, Indonesia from Menlo Park – we need to be close to the market in order to make intelligent judgements. Equally, close proximity is necessary for us to build the sort of relationship with the company that we want. It’s very hard to have long-distance affairs.”
And the scales won’t tip back anytime soon.
“Opportunities within China over the next 15-20 years are going to be absolutely wonderful. One of the things people in the West miss about China is approaching the opportunity with an appropriate degree of humility. The capabilities of people in China are tremendous, ambition is massive, devotion is intense. It is truly a fantastic concoction for durable, important companies.”