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Movers & Shakers By Andy Reinhardt September 8, 1999


Michael Moritz: A Beacon for Net Venture Capital
The Sequoia Capital partner has a string of hits from Yahoo! to eToys. No wonder everyone wants to get in on his deals

In fast-paced Silicon Valley, continued success isn't assured. Michael Moritz knows all about that. Since 1986, he has been with Sequoia Capital, a venture-capital firm in Menlo Park, Calif., that soared in the 1980s from investments in such mega-stars as Apple Computer, Oracle, and Cisco Systems. In the '90s, though, Sequoia hit a dry patch. When the Internet began to grab center stage, it didn't look as if the firm -- or Moritz -- would stay in the vanguard.

That is, until 1995. That's when Moritz found a pair of Stanford University grad students with a homegrown directory of cool Web sites. The potential for tiny Yahoo! Inc. was far from obvious, but Sequoia's $2 million investment in the startup is now worth nearly $10 billion. On the strength of that and other successes, such as eToys Inc. and Agile Software, Moritz, 45, has emerged as a star of Net venture capital. Other VCs look to him as a beacon showing where the tech world is going, and they're eager to get in on his deals. "He has a remarkable track record," says David Witherow, chief executive of researcher VentureOne in San Francisco. "He was early on some really remarkable investments."

Sequoia has indeed racked up some eye-popping numbers. Four of its companies that went public this year -- Scient, Redback Networks, E-Loan, and MP3.com -- have a combined market cap exceeding $10.2 billion. And two more potential blockbusters, PlanetRx.com Inc. and Webvan Group Inc., are in the initial public offering pipeline. "The last year has been stupendous," Moritz says. "We're pinching ourselves to make sure it isn't make-believe." The secret to Sequoia's success, Moritz says, is investing in "aircraft carrier-class" companies -- ideas so big they can establish whole new industries around them.

 

The secret: Investing in "aircraft carrier-class" companies that can spark whole new industries
 

This isn't the first time Moritz has reinvented himself. Born in Wales and educated at Oxford University, he studied history before turning to business and attending the Wharton School. That was followed by a seven-year stint as a journalist, when he worked for Time magazine, wrote books about Chrysler and Apple, and co-founded technology newsletter and conference producer Technologic Partners. Drawn to the venture business, Moritz talked his way into a job at Sequoia. In a tongue-in-cheek gambit, he told founder Don Valentine that he qualified for the firm's minority hiring program because he didn't come from Intel Corp. or MIT. In truth, concedes Moritz, having such a background would have helped: It took him years to master the venture-capital ropes. "It can be very humbling -- and it never gets any easier," he says.

Since 1995, Moritz has made it look very easy. And now there's more opportunity for venture capitalists than ever before. Moritz quips that "every business east of Oakland is up for grabs." Yet he worries constantly about staying ahead of the pack: "You have to invest in tomorrow, not repeat yesterday's hits." That kind of attitude has Sequoia's investors shouting "Yahoo!"

Andy Reinhardt covers chips and networking in Silicon Valley.


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Sequoia Capital's Michael Moritz


WEB POINTERS
Click here to visit sites mentioned in the story:
Sequoia Capital
Yahoo!
eToys
VentureOne
Scient
Redback Networks
E-Loan
MP3.com
PlanetRx
Webvan




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