Nice interview in today’s FT with Sequoia’s Mike Moritz. Among other things, writer Richard Waters perceptively notes (for the first time of which I am aware) that many of Moritz’s comments are calculated for effect.
Nevertheless, Moritz is a thoughtful fellow, so here are some excerpts:
…the lessons he draws for building a business from scratch sound disarmingly simple. One is to pick the right market – and the right basis for competition. And being in a fast-growing market is essential…
Consumer internet companies such as Google and Yahoo held another attraction: freedom from the sort of narrow customer base that can make a company too dependent on a small number of users. “You want to be in business where your customers aren’t too concentrated,” he says, since that robs a supplier of “manoeuvring room or pricing flexibility”.
Another lesson Mr Moritz has learnt is to think big – and don’t be put off. “You need unrealistic expectations,” he says. “If you don’t have unrealistic expectations, you’re going to fall short.” The paradox for any start-up is that its financial projections can seem hopelessly unrealistic – until sudden success shows them to be too cautious.
There is always another “next big thing”. Despite Silicon Valley’s track record in creating new fortunes in the technology business, “I can’t remember a time when people haven’t said, I don’t know what’s next, all the big ideas have been thought about,” says Mr Moritz. “It’s a rather odd refrain coming from a community like this.”
…”I have no idea what the next big thing is, but I am pretty convinced that someone in our general community will have another,” he says. “It’s a perpetual stroll into the fog – anyone in our business who says otherwise is being deceitful.”
And this ….
Such success has fed on itself, giving a handful of [venture] groups the pick of the best investment ideas coming out of Silicon Valley. “It’s the law of any marketplace,” Mr Moritz says. “In any category or any segment, the top three or four participants will garner 80 per cent of the profits.”