Listen to Michael Moritz about starting a business

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When I was a journalist, I visited the VC industry's top figures Michael Moritz, who was young and foolish, only to have his reputation as a Yahoo, Paypal, Google, Zappos, Kayak and other companies. Hindsight, his ideas on entrepreneurship is really incisive, it is a profound impact on my understanding of entrepreneurship, excerpts from the next.

In the first paragraph, interviews were made at the end of 2006:

Zhang: You said in our interview: "There is no next Google, like no next Cisco, Next Yahoo, next Apple, next Intel, next Microsoft." Companies are different, and great companies have their own unique business path, with their own imprint and logo. "How do you find their value from companies with different imprinting?"

Morritz: To tell you the truth, I don't know why companies with different technologies have the same advantages. But every company will have cells from previous companies, and we choose entrepreneurs who have unique judgment in a fast-growing market. Apple's Steve Jobs, for instance, had great insights on how big the PC market would be. But I don't think it was the first day he started the company, but he was able to understand the potential of the market very quickly. Cisco's founder, Sandy Lenar, is very accurate in judging how big the Internet market will be. And Larry and Sergei of Google, they must have realized earlier than I did about the opportunity to organize information. But I also have to say that the 3 founders of these 3 companies are so unusual that in the past 30 years, you can only count up to 10 groups of founders who have the right to know some unique opportunities like them. In the United States, people often use the word visionary (visionary), but as far as we know, the visionary is very very, very little, a word that has been abused. Sequoia was fortunate enough to meet a few people who deserved the word.

Zhang: But Google's story doesn't seem to be just the story of finding two geniuses and succeeding. Its two founders are very intelligent, but also very personality, your quarrel and contradictions, so that you and Kleiner John like into the eye of the storm. Will you invest in this perverse startup company?

Morritz: One of the hallmarks of a different company, I think, is that the founders and early teams want to be different from all the other companies, they don't want to be normal, they want to be maverick. One of the characteristics of those very successful companies is to question everything, they don't want to be disciplined, they want to do everything in their own way, even if their own ways may be too unconventional or uncomfortable. Over the years, I have learned not only to accept this quality, but also to appreciate it.

Zhang: Referring to the character of a start-up, or DNA, I thought you said: "A company's DNA was formed within 18 months of its inception ...

Morritz: I want to be shorter, at very, very early.

Zhang: 12 months or 6 months?

Morritz: Early. If you're a tech company, I think the 3 and 4 engineers you hired initially decide what kind of company this company is. If you hire the most outstanding people, they will hire outstanding staff. If you hire people who are mediocre, it's too late. I think the first 30 days, 60 days, 90 days, everything will be clear. Cisco can thrive early, and Google can thrive early, because the founders hire the best employees, not just their friends.

Zhang: Why are early hires rather than founders deciding whether or not a company is developing?

Morritz: You know, for a small company, if you hire the wrong person to manage your sales, hire the wrong person to manage your product development, and your closest competitor chooses the right person, you're in a passive position in between two things, because you're going to fall behind unconsciously. It looks like you're hiring the wrong VP for sales, and it's not a big deal. But that means that your opponent may get the right people, your opponents may have customers, your opponents will have ad revenue, your opponents will be more profitable than you, and your opponents will have more capital expansion than you ... Suddenly, a small error is magnified. So we have to bring the right voice to everyone.

People tend to say that Yahoo was able to survive the last dotcom boom because it was the first portal site. I don't see it that way, there are portals that were set up earlier than Yahoo but failed. I think the real conclusion is that Yahoo has not made as many mistakes as its competitors.

Zhang: After Google, you are investing in a large number of startups that are different in technology, such as the weather forecast website WeatherBug, such as mobile gaming company Digital Chocolate, and even a one-time camera company pure Digital. Can they be the next Google?

Morritz: For a small company, the only way to become the next Google is not to advertise, to try to provide valuable products that users need, you have to be able to convince users that the services from you are better than the services they get from anywhere else. Otherwise people have no reason to use you.

The second paragraph, an excerpt from an interview at the beginning of 2009, was the worst of the global economic crisis:

Zhang: What can today's entrepreneurs learn from Google?

Morritz: I think it's "to do something different" (Act differently). The apple slogan, called different, is a very wise summary.

Zhang: How do you tell people who just want to get rich and who really want to start a business?

Morritz: The former often lacks depth. Those who wish to get rich are often those who float on the surface, those who have a great interest in understanding things, those who have too much superficial knowledge, that is the problem. We've had a lot of investment in technology companies, especially people who have a very, very deep understanding of their technology and business. In fact, whether you're investing in a technology company, or a restaurant, or a consumer service company, in all industries, the entrepreneurs we adore are the ones who are immersed in the details of their fields.

Zhang: Is this what you found on Google's founder Larry Page and Sergey, Yahoo founder Jerry Yang and Filo, founder of YouTube Chen and Chad Heli?

Morritz: I think that's the trait of all the winners. We also have investment cases in China as evidence, I think this is the quality of successful entrepreneurs in the world, no matter what language he uses, what country they live in, and they try to figure out the details of a complex area that is more complicated than others can imagine, especially for startups, Sometimes the details look too trivial. The details are difficult for most people to be interested in, and may even be considered marginal, not popular, never heard of the topic, but it makes them excited.

Zhang: When you meet an entrepreneur, what do you ask yourself when you look at him?

Morritz: It's hard to judge people. In this we also often make mistakes, with people different from dealing with the market data or the development of products, can not be quantified, doping a lot of subjective factors. So you can only speculate on one person: what kind of person is he? What does he know? What is he really good at? What is he not good at? What will happen to him in 5-7 years of working closely with him? What problems might be encountered? What is his quality as a manager? How does he perform in recruiting? Is he good at expressing his views? How does he communicate with others? Does he have a very clear sense of purpose? Can he set the right example? Wait, wait. All you have to answer is almost every problem you encounter with a person for a few years.

Zhang: You don't ask yourself: Can the company make Google-style success?

Morritz: Come on, think about this. You set a standard and then give yourself an answer. For example, can you count how many startups can get more than 1 billion dollars in sales? or 5 billion dollars? Or 10 billion? If you don't like the sales target, then 1 billion dollar profit? 2 billion? Or, 30 billion or 40 billion market capitalisation? In human history, like Intel, Microsoft, Cisco, Apple, Google is a handful of companies. You just have to throw out a few 1% of Google-scale companies, even if it's very successful. So when people ask me where the next Google is, I often say: they don't fall from trees. If Silicon Valley were to have a Google every decade, it would be a great achievement.

Zhang: You didn't even try to find the next Google?

Morritz: No. Because in the beginning, when you have only two or three or fewer employees, the future is very ambiguous. You can only make sure that the site is operational, that the product is not returned by the consumer, or that you hire more engineers, or achieve a slightly larger financial goal. No one can predict a great future for a company with only 5 or 10 employees. It would be ridiculous for others to predict that they could become a global brand when they were in the start-up of Apple, Google and Cisco.

Zhang: So how do you see it when you're in touch with a startup?

Morritz: Every company is different. But if you're a start-up and you're the first and just starting a journey, and we've invested for years, seen a lot of sailing, screened some good ships, some bad ships, we can offer two suggestions. First, how to avoid the reef on the sea, and second, how to make your company run as fast as possible. I will observe and think: How can we help you recruit technical team? How to introduce the company to the customers? How to deal with the problems in competition? How to find a clear positioning for the company? How to solve the problem of supply chain ... All these things are particularly important in the first year or 18 months.

Zhang: It makes me feel like you're different from many investors and even entrepreneurs, and you're focused on the simple issues that any company in any field needs to consider. But usually people like to talk about the fashionable words (buzzword), such as Web 2.0, SNS, cloud computing ...

Morritz: I agree with your opinion of the fashionable words, we do not like "investing in words", fashionable words are often dangerous. People can talk about it when they think about whether to make an investment, but what really matters is focusing on what the product offers and what can be done for the customer? This is the most important question. Entrepreneurship is not about finding a buzzword that suits you, the core issue of starting a business or what you can do for your customers.

Zhang: But in any case, being a VC like you seems to have to be very sensitive to the trend of technological development. It seems you have to be able to figure out what the next big trend is, and find out what you call the best entrepreneur.

Morritz: Or you can just figure out why a new technology or new product can provide customers with some unique value. It's hard for an investor to become an expert in many areas, so what you really need is a holistic understanding of the business. In fact, when the enterprise start-up, it is normal to judge the error. What you are doing is that no one has ever done it, it is in a new frontier that no man has ever dabbled in, and the way ahead is not clearly marked or guided. You can't get all the information. So you want to see the future is not possible, it is difficult to see the milestones ahead.

Zhang: So entrepreneurs need to set a lot of goals for their journey?

Morritz: I like step. I think it is a dangerous thing to set too many goals for too distant a future that you may never reach. If you're starting a company, the first thing you need to do is make sure you survive for one months, then a quarter, then all year, and then worry about the next year, and that's one step at every stage of the effort. Like mountaineering, you know the highest point, the peak in front, this is good, but first you must have your own camp.

Zhang: You once said that the best investment opportunity is often "when people are afraid to lie under the table," Sequoia will be in the financial crisis to increase investment?

Morritz: I don't know if we'll invest more. Because there are a few things that are changing. One of them is that, like other industries, we have competitors out. Second, funding becomes increasingly difficult to obtain. The competitive pressure on investment is not as big as it used to be, but startups need less money. In the past, a company could spend one year's money, now it can use 18 months to two years, and the demand for financing has been reduced. But we are still open to investment. Especially in the US, a technology company that usually takes a year or 18 months to develop a new product is a good time, because everything is cheap.

Zhang: Google is like a fork in the road, after which some people no longer invest in internet companies. Because it is believed that Google on the internet, perhaps as Microsoft's computer industry, is an unshakable ruler. For example, Kleiner will adjust his investment direction to green technology. What do you think of the future of the internet industry?

Morritz: I think there are always unique opportunities, but you have to choose carefully. For example, Dell Computer, this is not the company that Sequoia invests. Dell Computer was founded in 1984, which is about 44 years after the birth of the first personal computer. You might say: "Bad, it's been 14 years, is it too late to start a personal computer company?" Yes, many times the bad answer is the right answer, but there is always a chance to create a new company. We invested in a company called Kayak in the United States, a travel service website. Why? Because there are many possibilities to provide better travel services to consumers than existing websites. To be fair, the first generation of companies in this field are entitled to be uncomfortable with us, and we have to be very careful about that, but in any big market or industry, opportunities always pop up. I remember 25 years ago, it was said that there was not much value in the semiconductor industry, that all the important semiconductor companies had been created, and then there were hundreds of semiconductor companies in the next 10 years. I remember in the 1985-1986, the industry was gloomy, you talk about the creation of a new semiconductor company, people think: "Bad, in all those industries where the company is alive, where can there be opportunities?" but you always find your own chance. Of course, it is necessary to be careful. There are certainly huge opportunities on the internet, but they are mostly occupied by existing Internet companies, and you are not prepared to compete with them. No matter what kind of business it is, I think it is important for you to show that you can do something special for your customers, make them feel unique and feel better service.

Zhang: But compared to the Red Sea, people seem to prefer blue ocean.

Morritz: What is this?

Zhang: You don't know the Boston consulting firm had a book called Blue Ocean Strategy in the last few years? The market is not competitive.

Morritz: We've never seen Blue ocean. Every field we invest in is full of competition. Think about Google, founded in 1999, when there were hordes of rivals. Cisco was founded with 20 competitors. Yahoo is also the industry's backward entry when it was founded. We've never tried to invest in a company that doesn't have a competitor, and I think if you invest in a company that has never had a competitor, it means you're in a bad business. (Red Sea, Blue Ocean) is the consultant's way of thinking, not investors.

Zhang: But it should be said that when Google was founded, people's attention to search engines is not as it is today, so it should not have a strong competitor.

Morritz: It's totally different to look back and be in that world. Let me give you an example, we invested in Cisco in 1988, and some people asked Sequoia, why are you investing in Cisco? It has so many competitors, IBM, DEC, 3com, and 20 other companies ... It was also forgotten that when Compaq was founded-Sequoia did not invest in Compaq-when the company was founded in 1981, there were 25, 30 or more PC companies in the market.

Zhang: But Compaq was the first laptop company, wasn't it?

Morritz: No, there was a company called Osbourne. But, you're right, you have to have a unique entry point. It's a competitive world, and in some ways it's like a scientific study. Someone is busy working on a problem in a lab, and in the other corner of the world, there are more people busy working on the same subject. They don't know each other. This is similar to starting a business, you always have competitors, may be large, medium, small, or even you have never heard of competitors appear.

Zhang: I agree, but I'm still curious, without Larry Page and Sergey, will the search engine be so important today?

Morritz: Without Bill Gates, without Steve Jobs, there would be no Microsoft or Apple in the world. But there will certainly be a PC company, which may not call Microsoft or Apple, but rather name it. Because there are still enough other people working on this goal, that means other choices. Imagine that when IBM used Microsoft's operating system in the early 1980, they had a choice, and they could choose another two companies instead of having to choose Microsoft.

Zhang: But there aren't many people like gates and jobs who have a great sense of the future.

Morritz: I agree. But think about what happens if someone else has the same luck. Because you have to go back to these people when they were 18 or 19 years old, Gates had only one language called basic, and jobs had only one single board computer. Things are connected by cause and effect. When Bill Gates sold basic languages in the 1975, or when Jobs was selling his veneer computers, it was impossible for them to see the world today. What should be counted as their grades is that they develop products that are amazing, and they understand more thoroughly than others where their path leads. But let's make a hypothesis, for some reason, that they didn't exist, and there are other people on this path, because the outstanding individuals are not just gates and jobs. There are a lot of great people in this world.

Zhang: You've been a journalist, and in recent years you've invested in Sugra Inc. and HealthCentral, two media companies. It may be the most turbulent period in the global media industry, and are you still optimistic about the future of the media industry?

Morritz: I don't think there is a good business. If you go back to 60 and you worked in the newspaper 60 years ago, you also have a lot of competitors. The evening papers were faced with a huge existential threat, and many of the old evening papers were closed because of the birth of television. Magazines like life or the pictures and mail are abandoned by the times because of the development of radio, newspapers and television. So I think there is no doubt that the situation of the media that cannot adapt to the changing times will become difficult. Being a newspaper publisher is no longer as interesting as it was 40 years ago. But the media companies that keep up with the times are always alive. See how Disney is evolving.

Those who are in charge of media companies in Europe and America will certainly encounter challenges, but I am still very optimistic about the future of the media, entertainment, and information communications industries. Now we have the Internet, and perhaps more importantly, we have mobile phones, so the future market will be far more than today's. You can talk about whether this is a good thing or a bad thing, but just from a business perspective, think of the billions of people around the world who can entertain themselves, spend time and get information because of a mobile terminal. People can read, listen to music, watch video, play games at any place, any time, what a change Ah! Again, I am not saying whether this is good or bad for human society, but for music companies, for example, they are losing money because of the difficult market environment. But all the people who ran the record company 40 years ago were selling music to people with Gramophone records, and now you can sell music to billions of people who own the phone, so stop complaining and adapt.

Zhang: When someone sees a challenge, a great risk investor sees the opportunity.

"It is true that there is a challenge and there is a chance," Murray said. It's not about whether you're in a VC company or running your own business. You have to recognize and embrace change, not fear it. Don't resist the change.

Zhang: What do you think of green technology investment?

Morritz: It's obviously an important area, but you still need to be careful not to get your feet kicked off by the heat of the media coverage. In the final analysis, the rules of investment will not change because you are investing in PCs, or the Internet, or green technology. When you're passionate, don't forget that the investment rules don't change.

Zhang: How to tell the heat and enthusiasm of the brain?

Morritz: When you start a company or invest in a company, it's important to be enthusiastic because it's going to be a difficult adventure, so it's best if you really want to do it. But a hot head is a dangerous thing.