Latest / Giant Ideas / Former Sequoia Chair Michael Moritz on Assessing Founders: "It's All About the First 15 or 16 Years of Life"

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Former Sequoia Chair Michael Moritz on Assessing Founders: "It's All About the First 15 or 16 Years of Life" · Giant Ideas

• 0:00
  SPEAKER_00: Grip, persistence, tenacity, toughness, steel in the backbone.
• 0:05
  SPEAKER_00: You need all of those attributes if you're building a company.
• 0:08
  SPEAKER_00: Most of the founders that I've been involved with may have grown up in material comfort, but they've had pretty tough childhoods.
• 0:17
  SPEAKER_04: Welcome back to Giant Ideas.
• 0:19
  SPEAKER_04: Today we welcome Sir Michael Moritz, who is arguably the best venture investor of all time.
• 0:24
  SPEAKER_04: He's backed Google, PayPal, Yahoo, LinkedIn, Klana, and Stripe.
• 0:30
  SPEAKER_04: The list is just incredible.
• 0:31
  SPEAKER_04: And I'm very excited to speak to Michael about his investing, but also his journey building Sequoia into one of the most legendary venture firms.
• 0:38
  SPEAKER_03: So Michael's also a journalist and a writer.
• 0:41
  SPEAKER_03: He started life actually writing for Time magazine.
• 0:43
  SPEAKER_03: He wrote the first definitive history of Apple before becoming an investor.
• 0:46
  SPEAKER_03: He's originally from Wales and he has written some brilliant books in his life, including a new one about his family history, which we're going to come to in part two.
• 0:54
  SPEAKER_03: But here in part one, we're also going to dive into a book that he wrote with Sir Alex Ferguson, the greatest football manager of all time, the manager of Manchester United.
• 1:01
  SPEAKER_03: And Michael and Alex Ferguson teamed up to write this amazing book, which I really recommend to you about leading.
• 1:08
  SPEAKER_04: Welcome to the podcast, Michael.
• 1:10
  SPEAKER_04: Thank you.
• 1:10
  SPEAKER_04: So taking a bit of a walk down memory lane back in 1999, you're assuming I have a memory.
• 1:16
  SPEAKER_04: You met Larry Page and Sergey Brynn, and you gave them 25 million as one of the best venture returns.
• 1:23
  SPEAKER_04: Give okay, invested, invested 25 million, one of the best venture returns of all time.
• 1:28
  SPEAKER_04: At the time, you made a comment that the product had the real potential to turn millions of internet users into devoted Googlers, which was a very um priscient comment in many ways.
• 1:39
  SPEAKER_04: What did you see in them and the company that others didn't?
• 1:42
  SPEAKER_04: Because there was a lot of search engines at the time.
• 1:44
  SPEAKER_04: And you really you picked the one.
• 1:47
  SPEAKER_00: A friend of mine said, Never has anyone paid so much for so little when we made the investment.
• 1:53
  SPEAKER_00: Because you're exactly right.
• 1:54
  SPEAKER_00: There were um probably eight or nine different search engines at that point, and Google was perceived as a very late entry into the market.
• 2:06
  SPEAKER_00: Uh we had an advantage because uh we've been Sakai had been an investor in Yahoo from the very beginning of Yahoo.
• 2:16
  SPEAKER_00: And um Yahoo began as a directory service.
• 2:20
  SPEAKER_00: It catalogued all the sites that were on the internet and then organized them into a compendious directory that grew.
• 2:29
  SPEAKER_00: And then the need for searching the contents of that directory came along.
• 2:37
  SPEAKER_00: And so Yahoo licensed search technology from third-party companies.
• 2:43
  SPEAKER_00: They hopped from search engine to search engine because by that time Yahoo had a very large customer base.
• 2:53
  SPEAKER_00: And so for a search engine to break through, it was very important that they get in front of, quote, the eyeballs.
• 3:01
  SPEAKER_00: And the eyeballs at that point were controlled by uh Yahoo and AOL.
• 3:05
  SPEAKER_00: The reason we became investors um in Google was because Jerry Yang, who was one of the founders of um Yahoo, asked us to consider investing in Google.
• 3:19
  SPEAKER_04: No way.
• 3:19
  SPEAKER_00: Yahoo was a public company, and it couldn't afford to switch search engines if the search engine uh went up in smoke and was undercapitalized, didn't have management and all the rest of it.
• 3:35
  SPEAKER_00: And that was and Yahoo had decided that now, by far and away, the very best search engine that they could find was Google.
• 3:48
  SPEAKER_00: And that was what led us to become an investor in uh Google.
• 3:53
  SPEAKER_03: That's interesting because that's very much about the business and you know the commercial constructs around it, and not so much about the founders.
• 3:58
  SPEAKER_03: Was it very much, you know, because you genuinely believed they had a structural advantage and about the business, or was there something about the founders?
• 4:04
  SPEAKER_00: Yes.
• 4:05
  SPEAKER_00: Look, it's always a combined people always ask well, is it the product, is it the founders, is it the market, is it the fact that the sun rose um um in a different part of the galaxy?
• 4:17
  SPEAKER_00: Um it's always a combination of those sorts of things.
• 4:21
  SPEAKER_00: And um founders without wit and intelligence don't create great products.
• 4:30
  SPEAKER_00: So the two tend to go together.
• 4:33
  SPEAKER_00: And if you have a very distinctive product, it's probably because the people behind it's almost it's certainly because the people behind it had a really good idea and were capable of developing and building a great product.
• 4:48
  SPEAKER_00: So it was about the product closely associated with the founders.
• 4:54
  SPEAKER_00: But you know, when somebody's very young, and we, you know, over the years we've met people who've been very young, 18, 19, 20.
• 5:03
  SPEAKER_00: You never quite know how they're gonna work out as managers of companies or you know what they're gonna be like ten years hence.
• 5:11
  SPEAKER_04: Do you try and figure that out?
• 5:14
  SPEAKER_00: Well, yeah, I try and figure it out, but it's very imperfect.
• 5:16
  SPEAKER_00: Yeah.
• 5:17
  SPEAKER_00: And very, very difficult to uh I think predict how uh somebody is gonna mature or not mature.
• 5:24
  SPEAKER_00: And we've had, you know, I've been involved with companies that have been examples of where uh people who started the companies at a very tender age far exceeded anybody's expectations, and then others who severely disappointed.
• 5:39
  SPEAKER_03: What kind of questions do you what did you ask and do you ask uh to try to get to the truth of whether someone is exceptional?
• 5:46
  SPEAKER_03: Well, you try to find out.
• 5:48
  SPEAKER_00: For me, generally and in everything, doesn't really matter how old somebody is.
• 5:56
  SPEAKER_00: Uh it's all about the 15, 16, for first 15 or 16 or 17 years of life.
• 6:02
  SPEAKER_02: Really?
• 6:02
  SPEAKER_00: Yeah.
• 6:03
  SPEAKER_00: I think those are the most important things to understand.
• 6:07
  SPEAKER_00: Um the stuff that because that's when you uh develop your character.
• 6:18
  SPEAKER_00: It's when you're around the environment and people that shape you.
• 6:24
  SPEAKER_00: Um it's perhaps where you develop a particular interest or obsession in the case of many founders.
• 6:32
  SPEAKER_00: Um and you know, oftentimes when I've become involved with uh with companies, um it isn't as if the founders had started a previous company, they it's their first company.
• 6:48
  SPEAKER_00: And so what else do you have to go on?
• 6:51
  SPEAKER_00: Yes, the college professor uh whose program they dropped out of might have said that these people are brilliant.
• 6:59
  SPEAKER_00: But then who are they?
• 7:01
  SPEAKER_00: How are they gonna react in circum you try and find out as as much as possible, but obviously um uh you you get to know somebody much better as the relationship develops and uh as the years go by.
• 7:17
  SPEAKER_04: And you've backed the Collinsons at Stripe, um Sebastian.
• 7:21
  SPEAKER_00: See, they were they were very young when we backed them.
• 7:23
  SPEAKER_00: I think um Patrick and and John Collison.
• 7:27
  SPEAKER_00: So it's a long time ago now, it's sixteen years, seventy, sixteen or seventeen years ago.
• 7:34
  SPEAKER_00: And I think maybe I may be wrong, but I think Patrick was maybe twenty-one, maybe he was even twenty, and and John eighteen or nineteen.
• 7:46
  SPEAKER_00: So they're incredibly young.
• 7:48
  SPEAKER_00: But it became very clear to me when I sat down with them that they were a pair of rather extraordinary characters, and uh that was very, very evident, extremely evident.
• 8:02
  SPEAKER_00: Um the intelligence.
• 8:05
  SPEAKER_00: Yeah, a two-year-old could have figured that out.
• 8:08
  SPEAKER_00: How was it obvious?
• 8:10
  SPEAKER_00: Uh because I did what I explained earlier, which was trying to understand where they came from.
• 8:16
  SPEAKER_00: Got it.
• 8:17
  SPEAKER_00: And they came from uh i it isn't every day that a pair of brothers from a tiny little hamlet outside Limerick roll up in San Francisco.
• 8:32
  SPEAKER_00: In that in that case, it was Palo Alto at the at the at the beginning.
• 8:36
  SPEAKER_00: And um so I began to understand who they were, how they uh uh uh and uh again it's not very often that you have a pair of brothers, one of whom's dropped out of Harvard because he found it tiresome, and the other dropped out of MIT because he found it tiresome.
• 8:54
  SPEAKER_00: And uh uh it was clear that they had uh unusual intellects, and also they'd had a tiny little company before whose product I forget.
• 9:08
  SPEAKER_00: Um, but they're very entrepreneurial characters from from the very beginning.
• 9:13
  SPEAKER_00: And um a creator, you know, this is another interesting aspect about founders.
• 9:19
  SPEAKER_00: They were a creative duo.
• 9:22
  SPEAKER_00: They were better because they came as a package.
• 9:25
  SPEAKER_00: Do you look for that often?
• 9:27
  SPEAKER_00: I think if you go and look at um companies that have started, i i there are obvious examples of a single founder.
• 9:36
  SPEAKER_00: Elon Musk being the prime example in the last 25 years, who occupies uh a place in the um in the greater terrestrial um sphere of things that nobody else occupies, who is a lone wolf, but many others.
• 9:58
  SPEAKER_00: And I think it spans uh I think it spans all forms of creativity, um, particularly in in music.
• 10:06
  SPEAKER_00: Yes.
• 10:07
  SPEAKER_00: Um you often think of duos, I mean, in contemporary music, it may be um Bono and Edge, or um Jagger and Richards, or Lennon and McCartney, where the two individuals combine um to create something special and somehow or other make each other better.
• 10:33
  SPEAKER_03: It's interesting that you mentioned childhood there and the importance of shaping these exceptional people.
• 10:38
  SPEAKER_03: In the book that you wrote with Alex Ferguson, the greatest football manager of all time, there's a really interesting passage where it's talking about him often signing players who came from very difficult childhoods, Ryan Giggs with his dad, or some of the South American players who grew up in favelas, and talks about the resilience that it bred in them, basically.
• 10:58
  SPEAKER_03: Do you think there's something there about overcoming trauma and difficulty and building resilience?
• 11:03
  SPEAKER_00: Grit, persistence, tenacity, toughness, steel in the backbone.
• 11:10
  SPEAKER_00: You need all of those attributes if you're building a company.
• 11:14
  SPEAKER_00: And there are examples of obviously two great examples of people who, if you use that as the sole criteria, you know, the only criteria for success, there goes Bill Gates, there goes Mark Zuckerberg, there go probably a whole bunch of other founders whose names don't spring to mind, but they grew up in comfortable circumstances.
• 11:38
  SPEAKER_00: And uh, but most of the people that um I've been involved with, most of the founders that I've been involved with, they've had they may have grown up in material comfort, perhaps, uh, but they've had pretty tough um childhoods.
• 11:55
  SPEAKER_00: Yes.
• 11:55
  SPEAKER_00: I mean I mean, you know, that wasn't true for Bill or for Mark, but um many of the others in some form have.
• 12:02
  SPEAKER_03: Tell us about Bill Gates and specifically tell us about his car radio and what that told you about obsession.
• 12:09
  SPEAKER_00: Well, this goes back into uh ancient history.
• 12:13
  SPEAKER_00: I uh I began my life uh, or I began earning paychecks uh as a journalist.
• 12:21
  SPEAKER_00: And um I'd left um I grew up in Wales, but had left Britain and had become a journalist for Time Magazine.
• 12:29
  SPEAKER_00: And um had got interested, and eventually I'd moved to the West Coast.
• 12:34
  SPEAKER_00: And I had uh this is a very long time ago, it's 1980, 81, and uh 82.
• 12:42
  SPEAKER_00: And I got interested in uh I didn't know anything about young companies.
• 12:48
  SPEAKER_00: Growing up in Cardiff, I had no idea that anybody really could start a company.
• 12:52
  SPEAKER_00: And if you're gonna start a company, you probably had to be 58 years old to start a company.
• 12:56
  SPEAKER_00: And you're gonna start a company, it was probably a a carpet distributor or something.
• 13:01
  SPEAKER_00: And uh so I had no idea that 18, 19-year-olds could could uh could start companies.
• 13:09
  SPEAKER_00: But and I got interested in it.
• 13:11
  SPEAKER_00: And so Microsoft was still a private company.
• 13:17
  SPEAKER_00: It was beginning to emerge because it was making this software for the you know, personal computers.
• 13:25
  SPEAKER_00: So I went to Seattle to interview Bill for a profile that eventually, you know, appeared in the magazine.
• 13:36
  SPEAKER_00: And uh we spent some time together.
• 13:38
  SPEAKER_00: And like many founders that like all founders who are they're working 24 hours a day, seven days a week, people who were in their 30s, 40s, 50s and older forget how hard 20 people in their 20s work and can work.
• 14:01
  SPEAKER_00: Yes.
• 14:01
  SPEAKER_00: And for a whole variety of different reasons.
• 14:04
  SPEAKER_00: Energy, lack of distractions, no family, nothing but what it is they're they're working on, whether, you know, whether they're writing or whether they're painting or whether you know they're in some dreary job at an investment bank for um uh working in a startup.
• 14:24
  SPEAKER_00: So I'd interviewed Bill, and uh I was flying back to California, and he actually was going down to see Intel.
• 14:34
  SPEAKER_00: I remember he was going to go and see Andy Grove.
• 14:38
  SPEAKER_00: And um it was because Microsoft at that point was working quite closely with Intel on the features of the microprocessors that would be very useful for the operating systems that uh Microsoft was um building.
• 14:55
  SPEAKER_00: And um so Bill said, Do you want to arrive to the airport?
• 15:00
  SPEAKER_00: So I said, Yes.
• 15:01
  SPEAKER_00: And he had uh he had a a Mercedes.
• 15:05
  SPEAKER_00: And uh because uh even at that time, even though the company, I think the company was probably at that point still doing less than a million dollars in sales.
• 15:14
  SPEAKER_00: Oh right.
• 15:15
  SPEAKER_00: Um it had cash and he'd never taken outside investors and he owned a huge portion of the company.
• 15:22
  SPEAKER_00: So he had cash.
• 15:22
  SPEAKER_00: So he had this Mercedes, but it had a gaping hole in the dashboard.
• 15:27
  SPEAKER_00: And where the radio goes, and I said, Bill, you know, what happened?
• 15:30
  SPEAKER_00: Where did your radio get ripped off?
• 15:32
  SPEAKER_00: He said, I didn't get it ripped off.
• 15:34
  SPEAKER_00: It didn't get ripped off.
• 15:36
  SPEAKER_00: I had it removed.
• 15:37
  SPEAKER_00: Why do you have it removed?
• 15:39
  SPEAKER_00: Well, I found that when I drove from my home to the office, or vice versa, or came down here to the airport, I'd have the radio on.
• 15:48
  SPEAKER_00: And it was a distraction.
• 15:50
  SPEAKER_00: And I wasn't thinking about Microsoft.
• 15:52
  SPEAKER_00: So I had it taken out.
• 15:55
  SPEAKER_00: And um he disabled, I remember, you know, he disabled his television tuner at the same time.
• 16:01
  SPEAKER_00: So I think back then that was still the era of video cassettes, so you could watch video cassettes and absorb knowledge, not be distracted by whatever silly stuff was on television.
• 16:12
  SPEAKER_00: Um but um he was um married lock stock and two smoking barrels to his company.
• 16:23
  SPEAKER_00: Amazing obsession.
• 16:25
  SPEAKER_03: Michael, you very kindly are working with Chad Edwards, the founder of Cusp, um, helping him out a bit.
• 16:30
  SPEAKER_03: And we've uh seeded his business and invested five times in it.
• 16:33
  SPEAKER_03: Cusp AI is doing great.
• 16:34
  SPEAKER_03: Um, another Welsh founder we've backed called Andrew Hopkins, who previously did Excientia, which was the largest ever European biotech IPO, he's now doing a new business called Zyme.
• 16:44
  SPEAKER_03: Seems to be two examples there of brilliant, brilliant Welsh founders amidst a sea of what feels like to us a real inflection point in in European technology, particularly actually here in the UK with AI.
• 16:55
  SPEAKER_03: In the past, you've been a bit critical of Europe's ability to produce truly iconic and truly big technology companies.
• 17:02
  SPEAKER_03: Have you updated your view in the last year or so?
• 17:07
  SPEAKER_01: Um, I'm not really current with the data.
• 17:14
  SPEAKER_00: Um and obviously, you know, there are some companies now in Europe with very significant market caps.
• 17:21
  SPEAKER_00: Um and obviously things are so much better generally in this part of the world for technology than they were many, many years ago.
• 17:30
  SPEAKER_00: Um but it's still a long way behind Silicon Valley.
• 17:38
  SPEAKER_04: Yeah.
• 17:39
  SPEAKER_00: And it's still a long way behind some of the Chinese companies, and a tremendously long way behind some of the Chinese companies.
• 17:47
  SPEAKER_00: So far, far better, clearly, but you also have to keep it in perspective and not get carried away.
• 17:54
  SPEAKER_04: You know, one of the one thing I wanted to ask you is about decision making, because in many ways, a life is a series of decisions, and I think we probably don't talk about it enough because if you made good decisions in your life, you'll probably have a pretty good life.
• 18:08
  SPEAKER_04: Um, you've made some great decisions from an investment perspective.
• 18:10
  SPEAKER_04: What have you learned from We made a lot of bad decisions?
• 18:13
  SPEAKER_04: We've made bad ones too, yeah.
• 18:14
  SPEAKER_04: So what have you learned about decision making, I guess, from your journey in the Sequoia partnership?
• 18:19
  SPEAKER_04: And when do what are kind of some reasons that people decide to invest for good reasons or for reasons they regret?
• 18:29
  SPEAKER_01: Well, the you could write a book on mistakes, I suppose.
• 18:35
  SPEAKER_00: I have a hat that I've kept and wear every uh every now and again.
• 18:43
  SPEAKER_00: Um, and you know how every company seems to produce a t-shirt or a hat or something like that.
• 18:49
  SPEAKER_00: So the hat I wear, it's the only company hat I wear.
• 18:54
  SPEAKER_00: Forget about all the successful ones, is a company called Web Van, where Sequoia lost the greatest amount of money in its history.
• 19:03
  SPEAKER_00: We lost 44 million dollars in that investment.
• 19:08
  SPEAKER_00: This is a long time ago, it's 25, 26 years ago.
• 19:11
  SPEAKER_00: And that particular investment was uh a colossal mistake.
• 19:17
  SPEAKER_00: And I suppose you know it's commonplace to say if you've made a mistake, you know, the secret is not to repeat it, but people tend to repeat their mistakes.
• 19:27
  SPEAKER_00: They get too optimistic, they get sloppy, they overlook something pretty obvious.
• 19:33
  SPEAKER_00: They pay an absurd valuation.
• 19:36
  SPEAKER_00: Um they don't do their homework properly, um and and wind up making uh making a bad decision.
• 19:47
  SPEAKER_00: I think some bad decisions are of also made, and this is probably the more important point, by um one of two things.
• 19:59
  SPEAKER_00: First, trying to ensure that you have that you have perfect data and find it very difficult to uh make a decision uh based on imperfect data.
• 20:21
  SPEAKER_00: And then the second thing is and therefore miss an opportunity.
• 20:25
  SPEAKER_00: Second thing is to overcomplicate things.
• 20:28
  SPEAKER_00: Um there aren't that many questions you need answered to figure out whether or not to make an investment.
• 20:36
  SPEAKER_00: And particularly in a very early stage venture business where the if there is a business plan and if there are projections, you certainly know that one thing is really true about the projections, they'll be missed.
• 20:53
  SPEAKER_00: So they're pr and they're not worth the um spreadsheet in which they're etched.
• 21:00
  SPEAKER_00: And uh so I have very and it's a little different later on when a company is more mature and there's a lot of data, and you can analyze the data and try to discern trends and uh project the future from the trends because you suddenly now have a lot of data.
• 21:16
  SPEAKER_00: But at the beginning, I think those are the mistakes.
• 21:19
  SPEAKER_00: People tend to get paralyzed because they don't feel they have enough information at their fingertips, or they drown uh you know, drown themselves in the data suffocating.
• 21:31
  SPEAKER_04: On the webband point, though, you led that investment, I believe, but then 20 years later, you also came back to the Sequoia Partnership and suggested an investment in Instacart, which is essentially the same idea.
• 21:41
  SPEAKER_00: Right.
• 21:42
  SPEAKER_04: 20 years later, how was that discussion?
• 21:45
  SPEAKER_00: Well, Patrick Collison at Strite had asked me to go and meet the founder of Instacart, who had asked for an introduction or something.
• 21:53
  SPEAKER_00: And I thought I said to Patrick, look, I'm happy to go and do it, but there is no way.
• 22:00
  SPEAKER_00: That we're ever going to talk about shipping carrots to anybody ever again because of this.
• 22:08
  SPEAKER_00: I just about come out of rehab after web van.
• 22:11
  SPEAKER_04: You've just been forgiven.
• 22:13
  SPEAKER_00: And uh and out of the doldrums.
• 22:17
  SPEAKER_00: And I thought that there's absolutely no chance.
• 22:22
  SPEAKER_00: And so I talked to the founder at considerable length.
• 22:26
  SPEAKER_00: And he was very, I, you know, when I talked to him on the telephone before I went to see him, I said, look, I don't want to set false expectations here because I think it's extremely unlikely that we're going to invest.
• 22:37
  SPEAKER_00: And so I went to talk to him and he explained why Instacart was very different, and the business model at Instacart and the underpinnings of the technology at Instacart were very different from what existed when we financed or became investors in WebVam.
• 22:59
  SPEAKER_00: And eventually we became an investor in Instacart.
• 23:04
  SPEAKER_00: And so why, you might ask?
• 23:06
  SPEAKER_00: Well, one, WebVan was very capital-intensive business.
• 23:19
  SPEAKER_00: And obviously that sucked up a huge amount of capital.
• 23:24
  SPEAKER_00: Second thing was, this was in the era, believe it or not, before mobile telephony.
• 23:34
  SPEAKER_00: So you couldn't organize a distributed workforce because you had a short of beepers, or you had no way of organizing anybody or scheduling routes or doing things on the fly.
• 23:48
  SPEAKER_00: And the third thing was the overall technology foundation that had been built up in the interse, you know, in the interceding 15 years or something, which allowed for um rapid loading of image-intensive pages uh extremely quickly, just because of the development of um uh of underlying computing infrastructure.
• 24:16
  SPEAKER_00: So all of that stuff was uh was different.
• 24:19
  SPEAKER_00: And then Instacart, unlike Webban, was partnering with retailers, supermarkets, not trying to establish a separate distribution center.
• 24:33
  SPEAKER_00: So it was a radically different.
• 24:37
  SPEAKER_00: We were right about one thing with web van.
• 24:40
  SPEAKER_00: We were wrong about absolutely everything else.
• 24:43
  SPEAKER_00: The one thing we were right about was that consumers will eventually want to buy groceries online.
• 24:50
  SPEAKER_00: That's the only thing we were right about.
• 24:52
  SPEAKER_00: But that became Instacart in a different way.
• 24:54
  SPEAKER_00: It became DoorDash.
• 24:56
  SPEAKER_00: We were investors in both companies.
• 24:58
  SPEAKER_03: Michael, we want to talk about building institutions with you a little bit.
• 25:01
  SPEAKER_03: We'll come back to Sequoia, but I can't resist asking at least one more question about Manchester United.
• 25:05
  SPEAKER_03: You've done this work with that, Alex Ferguson.
• 25:08
  SPEAKER_03: What does what does it tell you about the great decline, immediate decline of Manchester United as soon as the great man left, Alex Ferguson left?
• 25:17
  SPEAKER_03: What does that tell you about enduring institutions?
• 25:20
  SPEAKER_03: And then secondly, if you could buy Manchester United right now and take over, what would you do differently?
• 25:26
  SPEAKER_00: Well, the second is very easy.
• 25:28
  SPEAKER_00: I'd never it's so much cheaper to buy a ticket.
• 25:31
  SPEAKER_00: So I'd never ever consider uh buying a football club, especially in Britain because the uh it it poisons.
• 25:38
  SPEAKER_00: A sporting franchise in America is a very different business proposition from a Premier League football club or a championship um uh club.
• 25:47
  SPEAKER_00: Um I think it tells you about um the importance of the individual um and the quality of a particular uh individual to uh to lead.
• 26:07
  SPEAKER_00: Um it tells you about the importance of planning for succession.
• 26:18
  SPEAKER_00: Um and the important you know, the vital importance of getting that right, particularly if you're gonna hire from outside your organization.
• 26:31
  SPEAKER_00: Really, really difficult thing to do.
• 26:33
  SPEAKER_00: I think those are the two things.
• 26:35
  SPEAKER_03: Is there anything now that you would advise the new ownership what they should do?
• 26:40
  SPEAKER_00: Uh no, because I'll only put my foot in my mat and not get into trouble.
• 26:44
  SPEAKER_00: And uh I'm just hoping as a fan that um the uh successes of the last four or five months are gonna continue when uh play resumes in August.
• 26:57
  SPEAKER_03: Amen.
• 26:57
  SPEAKER_03: Amen.
• 26:58
  SPEAKER_03: What about Sequoia?
• 26:58
  SPEAKER_03: Tell us about Sequoia and what has made Sequoia, in your opinion, such an enduring institution.
• 27:03
  SPEAKER_00: I don't know.
• 27:04
  SPEAKER_01: I you know I haven't run Sequoia for quite a long time.
• 27:07
  SPEAKER_00: So I'm uh whenever anybody mentioned the word institution to me, I uh always shivered.
• 27:21
  SPEAKER_00: Um why?
• 27:23
  SPEAKER_00: Well, I always felt we were never a day away from going out of business.
• 27:28
  SPEAKER_00: So that uh um, you know, for a time we in the era when one had business cards, I had uh on the back of business cards, we had this motto that I put on there called uh we're only as good as our next investment.
• 27:43
  SPEAKER_04: I think that one stuck, by the way.
• 27:44
  SPEAKER_00: Um yeah, well, a few things stuck.
• 27:48
  SPEAKER_00: Um you just can't rest on your laurels.
• 27:53
  SPEAKER_02: No.
• 27:54
  SPEAKER_01: That's the lesson of Man United as well.
• 27:57
  SPEAKER_00: After all those victories that Sir Alex um racked up.
• 28:03
  SPEAKER_00: Wasn't he he took a moment to celebrate, but the next morning he was working and worrying and uh trying to figure out next season and who to sign and uh and uh he was obsessed.
• 28:16
  SPEAKER_04: What?
• 28:16
  SPEAKER_04: He was obsessed, he was obsessed, and he set the culture exactly.
• 28:19
  SPEAKER_04: So how so if you have an individual, and I think most companies are built by brilliant individuals, once that individual um is moving on or less involved as as was with Alex Ferguson, how how did you try and manage the succession at Sequoia to make sure that you didn't lose lose the momentum and lose the culture?
• 28:39
  SPEAKER_04: How do you do that?
• 28:41
  SPEAKER_00: Well, it was a little different with me.
• 28:43
  SPEAKER_00: I I I left for health reasons, and we had somebody inside who I'd worked with closely for a long time.
• 28:54
  SPEAKER_00: Very different sort of wiring and personality.
• 28:59
  SPEAKER_00: Um but he'd been there, and Doug Leone had been there for a a long time.
• 29:04
  SPEAKER_00: So really really, he was the only person who was there who had the background, the experience, the length of time there to do it.
• 29:16
  SPEAKER_01: So there weren't choices.
• 29:22
  SPEAKER_01: But the big advantage over United We didn't have to go to the outside.
• 29:28
  SPEAKER_01: Right.
• 29:30
  SPEAKER_04: You think it's better to choose the next generation leader from within.
• 29:33
  SPEAKER_00: I think it's very difficult if you've got an existing business that's really working.
• 29:39
  SPEAKER_00: I mean, there are examples of people being brought in from the outside to business.
• 29:43
  SPEAKER_00: The New Kleiner Perkins.
• 29:44
  SPEAKER_00: What?
• 29:44
  SPEAKER_00: The New Kleiner Perkins.
• 29:46
  SPEAKER_00: Yeah, I don't really know enough about it to to comment.
• 29:50
  SPEAKER_00: Um but think about Microsoft.
• 29:56
  SPEAKER_00: So after Bill stepped down, Steve Balmer ran the company for a long time.
• 30:02
  SPEAKER_00: They then did a big search when the business began running into headwinds.
• 30:11
  SPEAKER_00: They finally picked somebody from inside the business, Satch.
• 30:17
  SPEAKER_00: Having talked to, and I know some of the people that they talked to, a bunch of people on the outside, and I remember talking to one of the finalists who said they were always gonna pick somebody from the inside, and that was the right thing to do.
• 30:33
  SPEAKER_00: And because certainly for a business of that scale, you're gonna spend years you're gonna spend a very long time learning how to run the thing.
• 30:46
  SPEAKER_00: And especially in the fast-moving technology business, you can't spend a year going on a listening tour.
• 30:53
  SPEAKER_00: Uh, you've got to get to work.
• 30:56
  SPEAKER_00: And obviously, Satir has been a brilliant steward of um of Microsoft and a technologist, uh, someone interested more in the product and the sales and distribution and marketing, which was what Steve's forte was.
• 31:12
  SPEAKER_00: So I think that's that's one of the lessons.
• 31:15
  SPEAKER_00: And obviously at United, they had to go out, like all football clubs, really.
• 31:21
  SPEAKER_00: You they try and think of a Premier League football club that's promoted from within.
• 31:26
  SPEAKER_00: They only promote from within when they've fired the person that they hired from outside.
• 31:32
  SPEAKER_00: And then it's only on a temporary basis.
• 31:35
  SPEAKER_03: Uh, Michael, we could go on and on talking about your amazing career in investing, but that's it for part one.
• 31:39
  SPEAKER_03: We're going to be back next week to talk about your book and the amazing family history that it describes and what it speaks to for the for the new world.