Letter #134: Michael Moritz and Robert Lacher (2023)
Partner at Sequoia & Senior Advisor at Sequoia Heritage and Founding Partner of Visionaries Club | A Conversation with Sir Michael Moritz
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Today’s letter is the transcript of a conversation between Michael Moritz and Robert Lacher. In this conversation, Robert asks Michael about the crucible moments of his personal journey, what "looking for the unexpected“ really means, and his perspective on the state of global tech. The pair discuss what drove Michael as a young boy in Wales, Michael’s journey to leading Sequoia Heritage, which foundational step was most critical in building an enduring VC firm, raising capital for Sequoia Heritage and getting it off the ground, Michael’s entrepreneurial journey and reinventing himself and Sequoia to stay on top of the venture ecosystem, and what he looked for when hiring people like Roelof and Alfred at Sequoia. They then discuss if Michael would ever write a book about Sequoia and what made them so successful (hint: he already did — only it’s told through the lens of football), what gets him excited about entrepreneurs at the people level, what obsession means to him, Bill Gates and Steve Jobs, the importance of storytelling, the state of global tech, what keeps him hungry, the city he’s building in Solano County, and advice for 30 year olds in Europe who embarking on the startup journey.
Michael Moritz is a Partner at Sequoia Capital and Senior Advisor of Sequoia Heritage. His investments include: Alphabet (Google), Instacart, Kayak, Klarna, LinkedIn, LinkExchange, PayPal, Stripe, Yahoo, and Zappos. He started his career as a journalist, and has written five books, four of which have been published [insert Bernie Sanders meme where I once again ask if anyone can get me a copy of DTV]. In 2023, he stepped down from Sequoia Capital to focus on Sequoia Heritage.
Michael is one of my favorite investors, and someone I’ve learned a tremendous amount from. He’s also one of the greatest investors of all time—but don’t take my word for it. Here’s what some of his peers have said about him (taken from my 642 page compilation of Moritz’s work):
Paul Graham (YC): I’ve met a few VCs I like. Mike Moritz seems a good guy. He even has a sense of humor, which is almost unheard of among VCs. (2005)
Dick Kramlich (Arthur Rock & Co., NEA): Mike Moritz is about as good as anybody, and that’s not just because he’s around today. I really think he’s pretty exceptional. He has a way of thinking that’s just great. It’s very unusual. Always at the corner. He was with Time Magazine when I met him. He’s a smart man. (2006)
John Doerr (Kleiner Perkins): He’s such a smart guy. I mean, the way he uses language, and he doesn’t talk a lot either. I’m getting a lot out of him in front of us all, but in a board meeting he says relatively few things and people really listen. And I admire that [he] can offer advice in the form of stories, storytelling, as opposed to you should do this, you should do that, you should do that. I certainly and I think many of us here wish we enjoyed [his] intellect and command of the language. (2008)
Keith Rabois (Founders Fund, Khosla Ventures): He is the best VC of all time. (2010)
Elad Gil (Investor): He is like the Michael Jordan of investing. (2010)
Bill Gurley (Benchmark): Saying “other than Moritz” is like saying who hit home runs excluding Babe Ruth? (2016)
Doug Leone (Sequoia): Mike Moritz is a Brit, strategic, man of few words, thinks 14 steps ahead. (2020)
After joining Sequoia in 1982, Michael helped grow Sequoia into one of the premier venture capital firms in the world. They’ve invested in companies including Apple, Airbnb, Block, ByteDance, Cisco, DJI, DoorDash, Electronic Arts, Figma, Google, Hubspot, Instagram, Layer Zero, LinkedIn, Meituan, Nvidia, Palo Alto Networks, PayPal, Pinduoduo, Snowflake, SpaceX, Stripe, Unity, WhatsApp, YouTube, Zappos, and more. They’re also investors in Loom, Noom, Rec Room, Xoom, Zoom, and Zūm. In aggregate, the companies they’ve invested in have created over $6tn in market cap (for reference, today, the market cap of the S&P 500 is ~$33tn).
Even famed value investor Charlie Munger has praised Sequoia, saying “The most remarkable investment firm in America is probably Sequoia. That venture-capital firm absolutely fanatically stays right on the cutting edge of modern technology. They have made more money than anybody and they have the best investment record of anybody. It's perfectly amazing what they have done” and “The best venture capital operation probably in the whole world is Sequoia’s and they are very good at this early stage investing. And I would hate to compete with Sequoia in their field. I think they’d run rings around me.”
Robert Lacher is a Founding Partner of Visionaries Club. Before that, he has invested in more than 30 early-stage companies via his seed fund La Famiglia. Robert is also a Founder of the fashion platform AMAZE which he sold to Zalando in 2016.
I hope you enjoy this conversation as much as I did!
(Transcript and any errors are mine.)
Relevant Resources:
Sequoia Capital
Letters
Compilations
Michael Moritz Compilation (642 pages)
Don Valentine Compilation (347 pages)
Others
Linked in intro above
Transcript
Robert Lacher: Michael, thank you so much for joining us today. You have been one of the biggest shapers of global tech for almost four decades, having been an early investor in some of the most enduring companies that we have, such as Google, LinkedIn, PayPal, Stripe, so many that's changed our daily lives. But you've also been a great entrepreneur, having led Sequoia Capital since the late 1980s and building one of the most enduring and best performing venture capital firms globally. I think you're also a great artist. So when we had the last call, you were doing some painting in the background. And we thought there was no better person to discuss about the craft and art of enduring than you. So thank you so much, again, for joining us.
Michael Moritz: Well, it's nice of you to have me here and delighted to. I'm not great at anything, so let me just correct...
Robert Lacher: So let's look a little bit into the time before you have been knighted by the Queen. When you were a boy in Wales, when you were 19 years old, what kind of guy would I have met? What drove you? What was your avocation back then?
Michael Moritz: I wasn't a particularly good student. I mean, I was okay, but I wasn't a distinguished student. I always wanted to play cricket, I always wanted to play football, but I was never very good at any of that stuff. I was interested in writing and a devourer of newspapers and those sorts of things, but, probably, just like a lot of other kids growing up in Cardiff and South Wales.
Robert Lacher: When speaking about what drives some of your most successful founders, you once said, The germ of a breakthrough idea does not come from a business school. It comes from an avocation you have as a teenager. How do you start studying history in Oxford, then becoming a journalist, and then turning into VC? There must have been an avocation or something in you that led you to take this very unusual journey.
Michael Moritz: I've never planned anything. I think a lot of the founders, and you mentioned some of the companies that we have been fortunate enough to be investors in over the years, the people who started those businesses--you mentioned Airbnb, and Nate is here--I mean, they had the germ of the idea, I think, while they were at Rhode Island School of Design. And that propelled them into business. I didn't have an idea about much of anything. I mean, Cardiff in the 1960s, early 1970s, wasn't exactly a hotbed of technology. And I've never planned my life. I really have never planned my life. It's just I've followed my instincts. And one thing has led to another. Growing up in Cardiff, I probably wouldn't have been able to say where California was on the map. When I eventually moved to the United States, if somebody had talked about Silicon Valley--it was sort of premature to talk about Silicon Valley anyway--but I wouldn't have been able to pinpoint that on the map. It's just been following the breadcrumbs of life that get strewn on the road along the way.
Robert Lacher: Speaking a little bit about passionate, when you get to asked about your most favorite investment, you often say Sequoia. Can you elaborate a little bit on that, and which foundational step has been most critical in building such an enduring VC firm?
Michael Moritz: Well, it's not just the venture, it's also... and importantly, for me these days, it's Sequoia Heritage, which is something that we developed from the ground up, as well. And I think when most people look at a... and ask the question about what's your favorite investment, which is a good and obvious question to ask, the most important thing is the entity from which you make the investments. Because that is what allows you to be able to invest in whatever it is--Airbnb or Instacart or Stripe. And without that, you don't have anything. So that's the real thing to focus on. And I understand it if you're an entrepreneur and you've started a company and all investors are alike, you never think, quite understandably, about what is the business that the people who are investing in my company have built. Some haven't built businesses. They may be by themselves or just a two person or three person outfit. Others will have been more deliberate and develop something that endures. But, for example, the Sequoia Heritage Fund, which is--you know about-- we started it in 2008. We came up with the idea in 2007. Well, we underwent an entrepreneur's journey there. And today it looks large, and it's successful, and it invests around the world in a variety of different things. But we started with a blank sheet of paper. At the beginning, it was one or two, three people. We didn't have any money. We had a reputation for other sorts of businesses. We went out and talked to--we must have had 100 fundraising meetings where everybody said No. Around the world. We went all over the world.
Robert Lacher: That was 2008. I mean, when you had all the track records, Google, kind of everything from the... [crosstalk].
Michael Moritz: It didn't matter. People said you don't know what you're doing, you're straying too far, you don't have a track record, which was understandable. So we put our own money up to get it off the ground. But we couldn't raise a penny. And we couldn't raise a penny for--I mean, we had a few small investors at the beginning, who were friends of ours, but nothing significant. And it took--Oh, I would imagine, four to five years before people began to understand what we're building. In the meantime, you go through the team building exercise and early mistakes and all the rest of it. And today, obviously, it looks... it's very success--Airbnb started in about 2008, 2009 as well. They went through all their travails. And in this particular business, which is one of several that we've developed, it's a very similar story. And it's something that, if you're an entrepreneur, and you look at an investor, you never think about.
Robert Lacher: It's great to look at your entrepreneurial journey, because if we look at venture capital in general, since the 70s, even though VCs invest in disruption, I think it has been maybe the least disruptive industry itself. And you've basically, out of Sequoia, you've built Sequoia Heritage, which is massively successful today, global equities, the internationalization. How did you... did you make sure to reinvent yourself so often and stay on top of the ecosystem for such a long time where... [crosstalk].
Michael Moritz: We used to have, in the days when people had business cards, on the back of it... I persuaded everybody to write: We're only as good as our next investment. And I've always felt that. I've always felt whatever I'm doing, we're only a day away from going out of business. It doesn't matter--it's why I have never had those little IPO trinkets that you used to get, or all those other bits of booty about the successes of the past. I have never had them, in the days when we had walls, never had them on the walls, never had them on my desk. That's about yesterday. I remember Steve Jobs telling me once he'd been to Hewlett Packard, it was a long time ago, and you'd gone into the lobby of Hewlett Packard, and it had all their old devices from the 1930s, the 40s, the 50s, the 60s. And he said it was like walking into a museum. And he said he was never going to have that. And I think you've got to look to the future, you've got to worry about what is going to disrupt you, you've got to carve your own path, but also be mindful of what others are going to do. And you have to have a sense of where you want to be 20 years from now.
Robert Lacher: Speaking a little bit about company building, which is all about the people that you're bringing on board, you wrote a great book that you coauthored about Sir Alex Ferguson building Manchester United and about leading. When you were building your organizations, what did you look for when you hired new people? If we look at, Roelof, Alfred, all those partners you brought on board who are today leading it, what were you looking for back then?
Michael Moritz: Well, the book that I wrote with Sir Alex, when I showed the draft copy to the person who ran communications for Sequoia, the fellow said to me, Well, I can't tell what you wrote and what Sir Alex wrote. And I said, You got the point. Because, first of all, it's very easy to be a ghostwriter, let me tell you.
Robert Lacher: Was that own your biography, actually... you put into is Alex Ferguson kind of...
Michael Moritz: So that was the issue. People have been after me to write a book about Silicon Valley or Sequoia. I didn't want to write another book about Silicon Valley or Sequoia. I had no interest in doing that. But I was really interested in what were the distinctive characteristics of organizations that had been winners, consistent winners, through all sorts of ups and downs and over multiple decades. And I looked around in Silicon Valley thinking about, Oh, what company can I look at in Silicon Valley. This is now, we wrote the book some eight, nine years ago. So maybe, maybe Intel. Maybe Apple. But Apple had had a near death experience. But you went back 30 years, you couldn't find any. That's the sad and sorry truth of it. And then I got interested... and then I'd always been interested in football. And so Sir Alex had coached this club for 26 years. And I want...
Robert Lacher: Which is massive for soccer. The lifetime in Germany is, on average, one year.
Michael Moritz: Which is extraordinary, where the lifetime of some of these coaches and managers in the Premier League is measured in weeks. And so I was really interested in how this came about. And so to me, when people said, What's this book about leading and football and Manchester United all about? I said, It's about Sequoia.
Robert Lacher: What is so special about it? So what is the key message that made Manchester United so successful? And what is kind of the actual key message that made Sequoia so successful in leading?
Michael Moritz: I don't think it's very complicated. I think it's grit, persistence, tenacity, determination, never/refusing to give up, not tolerating low performers, insistence on team, very simple goals, and showing up for work every day--which, in the venture business, gives you a competitive advantage. A profound competitive advantage.
Robert Lacher: Well, switching a little bit from building Sequoia and so much more to backing some of the most epic founders of our generation. In your email signature, it says Anything is possible. I think it's even trademarked, so maybe you have a monopoly on this. But what does it mean? When you look into new founders, new entrepreneurs, what are you trying to look for? What are the things that they get you excited about entrepreneurs on the people level?
Michael Moritz: I think there are two things, one of which is--and it's hard for investors to do because investors aren't built this way, congenitally--is for someone to open your eyes to something you didn't really understand. And give you an education. Number one. Number two, it's suspending disbelief for a little bit and saying to yourself: Can I imagine, if everything goes right--and right now, in the moment, you're talking perhaps to two people who are still in their teens or in their very early 20s, and that's it--can I imagine, if everything goes right, that together, somehow or other, we'll be in business 15-20 years from now. Those two things, that's it. People have a habit of complicating the venture business. For me, it's those two things.
Robert Lacher: And you've worked with many of those very rare founders who have managed to build companies that sustained for 20, 25, 30 years, like Steve Jobs, Larry Page, Elon Musk, John and Patrick Collison, Nate from Airbnb, who we also have later today. It's almost funny to read through this list because it's such impressive people. Which personality that you've worked with, and I know it's not an easy question to answer, has impressed you the most and why?
Michael Moritz: I'm not going to do that. As soon as I do that, I irritate too many people.
Robert Lacher: Okay, then I'll try to ask again in another way...
Michael Moritz: You'll get the same answer.
Robert Lacher: Let me try one or two times.
Michael Moritz: You can come from the left, you can come from the right.
Robert Lacher: What does obsession mean to you and do you have an example of obsession?
Michael Moritz: The thing I always think about when talking about obsession... many decades ago, I was a journalist and I worked at Time Magazine and I was working at Time in the very late 1970s and early 1980s, and this was at a time where major companies of today, Genentech was still private, and there was this little company in Seattle called Microsoft that was still private, it was 1980 or so, I think the company was doing maybe, oh, maybe $600k, $1mn a year in business--those numbers being bigger then than they obviously, then they are today, and I went up there to do a story about Bill Gates and Microsoft. And we were going back to the airport, he drove me to the airport, we were in his car. This was back before he had retinues of a phalanx of security and helicopters flying overhead and all the rest of this stuff. But he was driving this Mercedes, and there was a hole in the dashboard. I said, Bill, so what happened? Did your radio get ripped off? He said, No, no, I took it out. I said, Why'd you take it out? He said, Well, it stopped me concentrating. What do you mean it stopped you concentrating? Well, whenever I was in the car, if I'm driving to the airport, or if I'm driving home, or if I'm driving to the office in the morning, and the radio's on, I'm not thinking about Microsoft. I thought, That's obsession.
Robert Lacher: Man, that's pretty amazing example about obsession. I don't know how many people got an airport lift by Bill Gates or one of those category-defining people.
Michael Moritz: And the other real obsessive, I think--well, there are lots of obsessives. I think you've got to be an obsessive if you start and run a company. And caring about everything. Caring about the details. I mean, obviously, one of the great aesthetic obsessives of all time was Steve Jobs.
Robert Lacher: Steve Jobs is a good example because he did this Stanford commencement speech where he said, Follow what you love, follow your passion, follow what you love doing. What do you think separates passion from obsession? Or, why is obsession...
Michael Moritz: Well, I think they're probably closely connected. But I think most people in life, unless you're an entrepreneur whose got a particular idea about building something, obsessives tend to be people who discover something very early on--maybe they're very good at math, maybe they have a gift with a crayon, maybe they've plucked some strings and that's led them to a lifelong avocation behind a canvas or playing a musical instrument. I think most of the rest of us struggle to find that early identity.
Robert Lacher: What does storytelling mean to you and why do you think it's so important with founders? Keith, actually, the CEO of Sequoia Heritage, mentioned to me that when you interviewed him, you were just looking for kind of how good he is at selling. It's something that stuck with him, that he's... trying to be good at storytelling, at selling, and trying to invest in people and find people who are able to communicate the mission and the vision that they have. Why do you think it's so important?
Michael Moritz: Look, if I was a dean of a business school, the most important class would be a storytelling class. It wouldn't be Accountancy 101 or all of this other stuff. And I think it's vital, if you're building a business. Because think about what you have to do. You have to convince the world--well first of all, you've got to tell the story to yourself to make sure that you want to go to the end of the story and it's not a frigging nightmare. But more importantly, you've got to convince the rest of the world to come and believe your story. You've got to convince a cofounder or cofounders, you've got to convince the early employees, the engineers that you want to bring on to your team, to believe that the story that you're telling them is actually possible. And then when you're in front of customers or investors, it's a similar thing. And being able to do that in a convincing manner that is genuine, that you believe in, will gradually bring people along. But I don't think there's any great company that doesn't have that sort of scaffolding in its overall evolution. I just don't think so.
Robert Lacher: Great insights on obsession, on storytelling, things I think that if we look at founders, there's a difference if you have a 25 year horizon, if you have a passion since childhood, if you have this dedication to detail to just make something happen that excites you versus just being at business school thinking about the next idea and trying to execute on it. Thank you so much for these learnings. If we look a little bit at global tech, since you were a journalist, you are a journalist, maybe now even more again, if you had to write a headline about the state of global tech, what what would it be?
Michael Moritz: "Worlds Apart. Two empires invent their futures." Obviously the analogy is--the comparison is obvious. But, look, I think the opportunities today are better than they've ever been. The menu of investing is longer. Look, when I joined Sequoia, we had... everytime a business plan--this was in the days when people dropped off the business plan and it was typewritten or it came in an envelope, there's pretty much a bell rang in the office everytime we got a business plan, it was fairly rare. Because the investment menu was so limited. And it was just in the Bay Area, basically. There was some business in Boston, around Boston, but very little elsewhere. The menu was so limited to semiconductors, hardware, little bits of software, but nothing more... price of computing obviously was very high. And what's happened over the years, and this is why I think people in the venture business generally have been very successful, is that as the price of computing has come down, and with the evolution of different platforms, whether it's the personal computer or the smartphone or now, the distributed net, absolutely everywhere, the number of places that can get infused with technology has just gone like that. And the result is a profusion of investments into sectors--doesn't matter what it is: could be hospitality, could be media, could be entertainment, could be finance, could be a whole raft of things--that were never on the menu in the 1980s. And that menu is only expanding. So whether you're in Asia, whether you're in the US or in Europe, Yes, the geography in which you're located, the leaders of it may have different agendas from what they perceive as their competitors in the world, but your investment menu as an entrepreneur is bigger than you've ever had at.
Robert Lacher: What still keeps you hungry? Because you have had so many successes in life over such a long time. And you always kept reinventing, not only yourself as a person, the companies that you were building. What is the core that drives you? What keeps you hungry to achieve...
Michael Moritz: Well, I think it's curiosity. I'm also in the really fortunate place of being able to go back to school. And that doesn't usually happen to somebody of my vintage because... I'm now pretty involved with Sequoia Heritage. It opens up a world of invest--I know very little about the world of investments. I know a little bit about the stuff that we've done over the last 30 or 40 years, but in the greater scheme of the world of investments, I have had a very cloistered life. So now I'm back at school with some of the best investors in the world at what they do. And I'm getting educated in a whole bunch of things I'd never thought about, never contemplated, never imagined. So actually, it's pretty damned interesting. And then there are a bunch of sort of extramural interests. Started a media business with a buddy, ex-Stripe guy, in San Francisco, which is an effort to talk about Anything is possible, to do the impossible, and demonstrate that you can have a thriving, profitable, local media business. And a variety of things like that. But Sequoia Heritage is my main focus in life.
Robert Lacher: Speaking of us acquiring heritage and what's next for you and kind of the investment menu, it's great to see how it's increasing from just digital venture capital to basically now anything that you want to do that could be within the scope of Heritage, whether it's tech, whether it's real estate. We've read about this great project building a new city in Solano County, 50 months from San Francisco. And it sounds pretty visionary. It sounds a little bit too exciting. Can you speak about it or is it something...
Michael Moritz: Well, I... look, the very
Robert Lacher: And I'm not trying to ask the question in a different way, so...
Michael Moritz: No, it's fine. I was somewhat astonished--well, I was astonished by two things. One of which is that we've been able to keep it quiet for six years. And the second thing was the amount of publicity it got when the New York Times, bless their clever little hearts, got wind of the story. And I think the intentions are very clear. Jan Sramek, who's actually orchestrated all of this, and is an Eastern European who relocated to Silicon Valley, has been very clear that we want to do what's right for the community there, that brings prosperity to the community, that will be mindful of all the stakeholders. But the number one problem facing California is housing. And this is very close to San Francisco. And with any luck, I realize that there are skeptics and cynics, but I think eventually, actions will speak louder than words. And when people understand where we're heading, people will--people certainly in that area, will come to believe that it's one of the very best things that ever happened.
Robert Lacher: I love that vision and I'll be very curious to follow that. And I think it's interesting how you're taking things just from the digital ecosystem to any entrepreneurial investments or endeavors. It's something we always get fascinated by our old economy entrepreneurs. Many of our investors have built companies fully bootstrapped, organically, so there are maybe 1000 ways to be a great entrepreneur and 1000 business ways to build something. Throughout this whole journey, has there been one lesson you really really had to learn the hard way?
Michael Moritz: Well, it's true today. I mean, I didn't realize it as much 40, ,50 years ago, but I certainly do today. And this isn't an attempt at false modesty or anything, is about how little I know about stuff. And I think that would have served me well a long time ago as well. But that's the lesson that I take away more than anything.
Robert Lacher: Thank you. If you allow me one last question, since we have so many founders here, entrepreneurs, but also VC entrepreneurs, which one piece of advice would you give a 30 year old in Europe starting a company on the journey?
Michael Moritz: You waited too long. You're 10 years late.
Robert Lacher: Sir Michael Moritz, thank you so much for joining us today.
Wrap-up
If you’ve got any thoughts, questions, or feedback, please drop me a line - I would love to chat! You can find me on twitter at @kevg1412 or my email at kevin@12mv2.com.
If you're a fan of business or technology in general, please check out some of my other projects!
Speedwell Research — Comprehensive research on great public companies including Constellation Software, Floor & Decor, Meta, RH, interesting new frameworks like the Consumer’s Hierarchy of Preferences (Part 1, Part 2, Part 3), and much more.
Cloud Valley — Easy to read, in-depth biographies that explore the defining moments, investments, and life decisions of investing, business, and tech legends like Dan Loeb, Bob Iger, Steve Jurvetson, and Cyan Banister.
DJY Research — Comprehensive research on publicly-traded Asian companies like Alibaba, Tencent, Nintendo, Sea Limited (FREE SAMPLE), Coupang (FREE SAMPLE), and more.
Compilations — “A national treasure — for every country.”
Memos — A selection of some of my favorite investor memos.
Bookshelves — Your favorite investors’/operators’ favorite books.
As a side note, upon rereading this letter, I found out that John Doerr's remark on Mike Moritz can be interpreted as a way to trade verbal barbs obscurely. The background of such remark was in 2008's VC summit or something like that, and both Mike and John were invited to ask questions to each other. Mike, later on knowing for disliking noble descendants with names with roman numbers (which can be inferred in his book Leading), asked how John got his III in his name. Which is why John specifically focused on praising Mike's command of language.
That being said we can all agree that Mike's command of language is indeed first class.