Michael Moritz can pick ’em, but he isn’t afraid to share a few tips. During a recent interview with the UK’s Observer, the native Welshman and top venture capital dealmaker said he’s learned to avoid doing deals with “anyone wearing Armani T-shirts, loafers with no socks, or who uses words like ‘synergy,’ ‘no-brainer,’ or ‘slam-dunk.’” Moritz co-runs Sequoia Capital, the Silicon Valley VC firm whose investments include Google, Yahoo!, and PayPal (founded by fellow alumnus Elon Musk, W’97, opposite page), as well as technology luminaries Apple, Cisco, and eBay. Recently, Sequoia made an estimated $480 million in profit in less than a year by backing YouTube, the video-sharing business founded by two PayPal coworkers and acquired by Google, and sold Atom Entertainment in 2006 to Viacom for $200 million.
It’s not surprising, then, that Moritz tops the list of technology deal-makers produced by Forbes magazine in 2006 and 2007. Moritz joined Sequoia in 1986, after working as a reporter for Time, writing the 1984 book The Little Kingdom: the Private Story of Apple Computer, and co-founding Technologic Partners, a technology newsletter and conference company. When it comes to investing in Internet start-ups, Moritz has a preference for youth over maturity and looks for people with their own ideas for doing something better. Despite the bursting of the so-called tech bubble, Sequoia raised $455 million for Web 2.0 companies in the first three quarters of2006, according to The Observer. And with IPOs for companies like Zappos.com on the way, his outlook for the future looks good.
“There is a common thread running through Sequoia’s successful investments (Yahoo, Google, Apple) and a similar one running through the misses (Webvan, eToys),” Mortiz told Business Today, “The better investments are made from the place where the brain and the belly meet. The bad investments are those where the belly rules and the boring investments are the ones where the brain dominates.”