RWH073: Unstoppable w/ Sir Michael Moritz

Sir Michael Moritz spent about 38 years at Sequoia Capital and helped lead early investments in Yahoo, Google, YouTube, PayPal, Airbnb, LinkedIn, Instacart and Stripe, as well as an early investment in Nvidia. William Green emphasized Moritz’s patience in holding successful investments and cited Charlie Munger’s view that his temperament helped explain his outperformance. Moritz argues that investors can sell for reasons unrelated to a company’s prospects and should judge it from where it stands now, rather than anchor on its past peak. Amazon’s roughly 30 years as a public company illustrates how often investors may give up before a company has finished compounding. Green quoted Munger’s estimate that Sequoia investors earned about 25% annually despite fees and profit sharing.

Moritz connects his determination partly to the experience of his parents, both refugees from Nazi Germany. His father was dismissed from German state service and sent to Britain for school in 1937; his mother arrived in Britain on the Kindertransport on April 20, 1939. Their fear that past horrors could recur, and his mother’s grit, shaped his resolve not to give up. Growing up in Cardiff, he felt like an outsider among Welsh classmates. He estimated that Wales then had 2.5–3 million people and only about 450–600 Jewish families, and recalled that his family was the only Moritz in the Cardiff and South Wales telephone directory. His book Auslander, German for “foreigner,” “outside” or “alien,” grew out of family documents and photographs his sister found after their mother died shortly before Covid. They helped him understand his upbringing; he also acknowledged that Britain’s welcome to Jewish refugees had limits.

Moritz says Oxford’s weekly tutorials taught him to investigate unfamiliar subjects and build reasoned answers from imperfect information, through essays of roughly 2,000–3,000 words. Reporting for Time Magazine reinforced that discipline. As San Francisco bureau chief from 1979 to 1984, he covered Bill Gates and Steve Jobs, despite arriving with little knowledge of Silicon Valley. He says the region was not then a technology center in San Francisco itself: newer companies were farther south, while Microsoft was an outlier in the Northwest. The work became an education in recognizing founders whose knowledge, intensity and commercial instincts might enable them to challenge established companies.

Moritz describes outstanding founders as intensely focused, curious and captivated by technology, with the ability to shut out distractions and a feel for business. Gates became obsessed with a computer in seventh grade in 1967; in 1972, he and a friend bought campaign buttons for five cents each and later sold them as mementos for $25 apiece. Moritz said Gates reported taking 15 vacation days in six years and described him removing his car radio and television tuner to limit distractions. Jobs stood out for joining technological intensity with aesthetic standards, storytelling and spiritual interests. He cared about details as small as the original Apple’s circuit-board wiring and pushed suppliers to meet his standards while still young. Moritz’s 1984 book The Little Kingdom grew from his interest in how Jobs and Steve Wozniak imagined starting a company.

Even extensive investigation cannot reliably identify which young founders will succeed, Moritz cautions. Some disappoint through weak product sensibility, inability to hire excellent people or neglect of stakeholders; Sequoia’s disastrous WebFan investment reminded him of his own limits. Sequoia backed Jensen Huang’s Nvidia in 1992, and Moritz said Huang was still leading the company with energy and determination 34 years later, after periods when it came close to oblivion. Investors must put aside vanity and let founders teach them about unfamiliar fields. Gates’s focus on personal-computer software helped Microsoft outmaneuver IBM despite IBM’s greater resources and established relationships, but Moritz stresses that success also requires deep knowledge, a strong management team and a sound business outlook. For every enduring company such as Microsoft, Nvidia or Alphabet, dozens fall by the wayside.

After leading or co-leading Sequoia for about 16 years, Moritz stepped down as its day-to-day leader. He took inspiration from Sir Alex Ferguson’s nearly 27 seasons managing Manchester United, particularly his relentless work, high standards, empathy and attention to individual players. Moritz’s leadership principles were to seek respect rather than love or fear, and never give up. He says great leaders persuade employees, customers and investors by making a possible future vivid; he cited Elon Musk’s ability to win government support for early efforts at Tesla and SpaceX. Moritz describes being an outsider as a lifelong condition, not a complaint, and says his wife, Harriet, and sons, Jake and Will, taught him he did not have to be like his parents.