Michael Moritz

Moritz code: Inside the mind of the best VC investor ever

Michael Moritz made an unusual career change, from a successful journalist to the best venture capital investor in history. He was the first to identify startups that would change the world, from Google and Yahoo to PayPal and Skyscanner. In an exclusive interview, he talks about the Israeli mistakes that have helped Hamas control the October 7 narrative, the struggle on US campuses, and his predictions for the AI sector.

When it comes to Michael Moritz, it's hard to overdo the superlatives. Moritz (69) will be included in any international list of the best venture capital investors in history, and many in the field define him as the best of all, "the Michael Jordan of the industry." As managing partner at Sequoia Capital, Moritz was the first to identify and invest in giants that still dominate the world of technology in general, and the Internet in particular - from Google through Yahoo and PayPal, to Kayak and Skyscanner - all investments in the early stages, when almost no one knew their founders. In 2006 and 2007, Forbes magazine ranked him first in the "Midas List" list two years in a row, in 2008 and 2009 he was ranked second. His personal fortune is estimated at more than $5 billion, and among other things he is the owner of the title of Knight Commander of the Order of the British Empire.
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מוסף שבועי 2.5.24 מייקל מוריץ בכיר אמריקאי
מוסף שבועי 2.5.24 מייקל מוריץ בכיר אמריקאי
Michael Moritz
(Photo: S Capital)
Sequoia had a branch that operated from Israel for many years, and Moritz, a British Jew living in the United States, visited the country many times. But now, he says, "This is my first visit to Israel for non-business purposes since I was a 5-year-old boy."
What made you come?
"I came because the sentiment against Israel is so negative. I heard from my acquaintances and friends how abandoned they feel here, and I decided to come."
Is it related to being a member of an immigrant family?
"My grandfather fought in World War II, my grandmother was a nurse in the army, and both were murdered by the Nazis. My parents managed to escape this fate, my father escaped from Nazi Germany in the 1930s, my mother escaped on the children's train (a train on which 10,000 Jewish children were evacuated after Kristallnacht and were taken in by foster families in England)."
At a conference of Stanford graduates about five years ago, Moritz said: "When your family goes through such an experience, it paints everything in a dark cloud of fear and anxiety that one day your world will fall from under your feet. It had a decisive effect on my parents, who came as refugees to Wales, and on me as one of the only three Jews at the schools I studied in. I always felt like an outsider."
"My parents were refugees who settled in England," he says now, "and as a young man growing up in a home of refugees, I thought it could never happen again, that the period of the pogroms was over, but my parents always argued: 'If it happened, it could happen again.' October 7th proved that indeed that's right. It's actually a sad continuation of history."
Do you recognize a connecting line between Hamas and the Nazism of that time?
"Those who attacked Israel on October 7 feel a deep hostility towards Jews. Whether the reason is religious or economic, in the end the roots are the same: in both cases it is about those who prefer a world without Jews. From the point of view of the attackers, there is no difference between a Jew who lives in Tel Aviv and a Jew who lives in Berlin, London or New York. Yesterday, for example, I received hate mail in my mailbox in San Francisco. This does not happen often, and when you see the huge anti-Israel demonstrations in the United States, such mail in my box is enough for me to receive a reminder."
"Israel needs a minister of information"
Moritz holds a master's degree in history from Oxford University and a master's degree in business administration from Wharton University. But Moritz's success story actually started in the worlds of journalism and writing. He was a leading journalist at Time magazine, while at the same time he wrote two books about two huge companies that ran into difficulties - Apple and Chrysler - which focused on their legendary managers, Steve Jobs and Lee Iacocca. His unique connections and the deep knowledge he acquired led Don Valentine, the founder of Sequoia Capital, to make him a managing partner at the fund in 1986, a position he held until 2012.
In recent years, Moritz returned to his old love and founded the San Francisco Standard journalism website. He still considers himself a journalist at heart and a person who understands something about the way a story is told. And Israel's story, he believes, is being told in a completely wrong way: "Israel has not been able to control the narrative, which is controlled by Hamas," Moritz says. "The tragedy and horror of October 7th have been forgotten in the West because of two things: the visuals coming out of the Gaza Strip, and the statistics distributed by Hamas and widely quoted in the Western media. The numbers are enormous, there are many more dead in Gaza today than were killed in Israel on October 7th, and this looks bad for Israel.
"In the West there is no understanding of the history of this region. Israel is the David in the Middle East, not Goliath, but in the West it is perceived as Goliath. And the sentiment is always against whoever is perceived as the stronger force. That is the narrative."
Even after October 7, when Israel was the definitive victim?
"Yes, because the visuals and sophistication of Israeli weapons tell a story of superiority: Iron Dome, advanced missiles, drone strikes, American aircraft carriers in the Mediterranean. This concept of military power is amazing in relation to the fact that there are only approximately 7 million Jews here, and what is not taken into account is that those Jews live in an area surrounded by leaders and 450 million people who are mostly hostile towards them. The Israeli government has done a terrible, appalling job in presenting the country, and not just now, in the last six months, but for many years. Israel has failed in presenting an accurate image of itself, including a complete failure in all aspects of media in the West - and I'm not just talking about public relations."
Failure in diplomacy is too easy an answer for Israel.
"It could be an excuse, but today Israel must understand that it must break out of the deadlock and enter into this enormous task in all arenas with a thoroughly calculated plan."
Is it even possible to change a narrative in the current situation?
"I hesitate to say this, because the situation here is complicated. But it obviously does not help at all when right-wing extremists occupy important government offices and express themselves with hateful statements, which are contrary to everything that the majority of the population represents. The feeling is that the political leadership of the country has been hijacked by extremists, and of course people in the West have an aversion to this. I would like to be optimistic, but this is the work of a generation, and change will not happen quickly."
You also met here with abductees who returned from captivity. Was it important to you personally?
"There were so many victims on October 7 and my heart goes out to them. The least I can do is show them that they have not been forgotten. But I know that this is no consolation. The Israeli citizen has not forgotten them. Making the story and the voice of those 133 abductees known is part of the marketing problem of Israel".
As a person who understands something about narratives, what should be done differently to see a change in the perception of Israel in the world?
"First of all, understand that every citizen has a responsibility to help and influence Israel's image in the world. Second, the political leadership should work to establish Israel's position as a country that is respected. And there should be a massive, political education campaign on campuses throughout the West, to work to change the narrative on social media. This is a huge and not an easy commitment, and it is important at such a level that we need a minister who is responsible for the 'marketing' of the country in the world."
We had a minister of information, but her role served to arrange work for the purposes of domestic politics.
"In this position, you need someone that the country's leader believes in, and to a large extent the leader himself is the country's chief marketing officer. This is a big challenge. In the private sector, for example, the leader of a technology company tends to be its chief product manager. This is a position where you have to think about what the product is, about how it affects the market and what its virtues are."
Speaking about marketing a country like marketing a technological product, we liked to think of ourselves as the "start-up nation", we flaunted this expression. Are we really seen as such outside?
"I never really liked that phrase. It's a bit arrogant. There are a lot more startups in America than here. And even more so in China. So if there is a startup nation, it's the United States or China, not Israel. To Western ears, the saying that Israel is a 'start-up nation' sounds very arrogant. It doesn't really help Israel at the moment, it even worsens its perception as a Goliath. Israel needs to be more humble."
Is it better to be the underdog?
"Definitely. People do not understand that Jews are 7 million people who live among almost half a billion Arabs who surround them. No one in the West thinks about this, no one thinks about the tiny percentage of the land that Israel occupies in relation to the territories of the countries that surround it. People do not understand these statistics. They don't understand how vulnerable the citizens feel in this environment, surrounded by enemies from the north and the south, and despite this reality, Israel is still seen as Goliath."
Will what is happening now damage investments here long-term?
"I imagine that investors in the West believe that now, after October 7, there is an additional risk in investing in Israel. Will this prevent them from investing in it? No, but it constitutes another barrier. And we should hope that boycotts will not increase public pressure on public funds to avoid investing in Israel."
In Israel, cyber is a relatively strong industry.
"A country should go for its comparative advantage. The best companies that come out of Israel come from a field where leading figures in the field come from. That's where the highest chances of success are."
"I understand university presidents"
Moritz is one of the most prominent donors to universities in the United States. "It doesn't help that Jews are leading the accusation of anti-Semitism at the universities," he says.
Who should lead it?
"It is important that people other than Jews stand up and say that this is wrong, and I will give an example not from a university, but from a city. When very anti-Semitic things were said at several hearings in the city council in San Francisco, and none of the council members really opposed them, Mayor London Breed, a black woman, had the courage to stand up and say 'We would not tolerate such statements towards blacks, Hispanics, or Asians, therefore we will not tolerate such statements towards Jews.' It has much more power than when it comes from people like us. It should not be only a struggle of Jews. Bad things happen when most people are silent. Because silence speaks - it is what allows evil to penetrate and seep into the world."
That did not happen at the elite universities. At the congressional hearing, the presidents of the universities found it difficult to condemn anti-Semitism. What did you feel then?
"Mixed feelings. I felt that the way the discussions were conducted was reminiscent of the witch hunts of the 1950s. Things were too strict and too violent towards them, and I felt that the presidents of the universities received terrible briefings and preparation from their lawyers and PR people.
"I sympathized with them because I felt that they were caught in the crossfire between lawyers who gave them bad advice and politicians who wanted to please their audience. I understand that it was difficult for Israeli ears, but that's what I felt. It's clear that they are not anti-Semitic or racist. I have a feeling that if you talk with the presidents of these universities, you’d admire them. They were thrown into a situation they were not ready for, and I have sympathy for them. I will not judge them harshly."
But the atmosphere on campuses today is hostile to Jews. They turned out to be Hamas strongholds. What twisted logic brings the academia to such dark places?
"This is part of Israel's marketing problem. It is well documented how radical Muslim groups infiltrated universities in the last 40 years, while Israel remained silent. Today it is paying the price."
And yet, it is also a matter of boundaries that the university has to set. The chant of the demonstrators "from the river to the sea" means the destruction of Israel, but in universities this is a legitimate statement.
"It is very difficult to fight ignorance and prejudice. I don't know how most Americans feel, but there is a feeling that Israel has a problem with the lack of understanding of the younger generation in the West, who do not fully understand its place in the world. Many also do not understand the problem of the Jewish refugees before 1948, unaware of the fact that there were 800,000 Jewish refugees who lived in Middle Eastern countries, were thrown out of them and came here without any humanitarian support or aid from the United Nations. Nobody knows this history in the West, and this is also part of Israel's marketing problem."
"I missed Netflix"
Sequoia Capital operated in Israel since 1999 through a dedicated fund led by Haim Sadger, with a lot of backing from Moritz. It raised five funds that invested more than a billion dollars in companies at the seed stage, and benefited from exits such as Adallom, which was sold to Microsoft for $320 million, Lemonade, which was issued at a value of $1.7 billion, and Moovit, which was sold to Intel for a billion dollars. In 2016, Sequoia Israel was swallowed up by Sequoia Global, which manages its investments in Israel from the United States.
Moritz himself has long since retired from Sequoia Capital, after four decades. He is currently the chairman of the investment fund Sequoia Heritage, which mainly invests money from the partners in the fund. He came on his current visit to Israel as a guest of the S Capital fund, which is managed by Sadger and Aya Peterburg. During the solidarity visit he met, in addition to the representatives of the families of the abductees, Israel’s president Isaac Herzog, reservists and entrepreneurs in the fund's portfolio companies that hosted him.
Don't you miss the days when your job was to be the first to identify that an anonymous team of ten people would succeed in starting a huge company?
"Yesterday, together with Haim Sadger, I met the founders of 20 small companies, some of which don't have a product yet, and it was exciting. They all start as underdogs, like the ‘David’ we mentioned before, and they face a big fight to make their companies successful."
Is it like the sense of smell, the ability to recognize at an early stage the company that is going to be huge?
"No. When you invest in a company like the ones we met yesterday, you hope it will work, that the product will be enthusiastically received by customers, but you don't know that in real time. I have never been involved in an investment that became a very successful business, without fearing earlier that the business was going to fail, not even once."
Not even when you worked with the founders of Google in their early days?
"Not even then. The initial business model was very different from the business model we know today, and during the first eight months of the investment the company lost a huge amount of money and I was afraid we would run out of cash. In the end it didn't happen."
We are at the threshold of the AI ​​revolution. What do you think of the industry that has sprung up around it?
"There is a huge investment frenzy surrounding everything related to artificial intelligence today, and most of these companies will fail - just like the early Internet companies, which arose between 1998 and 2000. Except that out of all those companies some very significant businesses have grown, and the same will happen in artificial intelligence. So from the point of view of investors, many of them will not be very happy with their artificial intelligence."
And how will the revolution affect the general public?
"New waves of technology, such as the industrial revolution, are always seen as an acute threat, especially because of possible damage to jobs and the labor market. I don't know if the threat of job extinction is real. It is claimed that a wave of artificial intelligence software will make it possible to do things with fewer people, but the answer is complex.
"In countries where young people under 50 are a minority, it can be a blessing that machines enter such roles. In other countries, where there are large generations without education, it may be problematic. So there will be two types of people: those who work with AI and benefit from it, and those that are harmed. I just hope that the beneficial aspects of AI will outweigh the negative ones."
Which technologies will establish the giants of the future, in your opinion?
"I've learned to be very humble in trying to predict what the next big thing will be, because it always comes from an unexpected angle. And I'll give one example: in 2008 Sequoia invested in Airbnb. Today everyone knows Airbnb, but at the time it was unimaginable that it would develop into a company of such size, with the benefits it brings to so many people in different places around the world, and that millions of rooms will be booked on this platform every day, more than many large hotel chains. I never envisioned it, just as I never imagined that Tesla would produce 2 million vehicles a year."
You must also have missed investments in good companies at the beginning of their journey. In Uber, for example, you only invested in later stages.
"I was involved in a lot of investments that didn't work or failed, for various reasons. Uber was a company that was born after the arrival of the Internet, long after the dot.com bubble burst, and it was hard for me to imagine that it would bring many people around the world freedom of transportation. I didn't expect that, I thought it could be at most a high-end limousine service. Netflix is ​​another investment I missed. It started as a mail-order business, and at that point we chose not to invest in it."
Once a journalist, always a journalist
How did you evolve from being a journalist to managing one of the largest venture capital funds in the world?
"Already at Oxford I knew that I wanted to be a journalist working for the Daily Telegraph or the Guardian, which dominated the British press at the time. But because of the rules of the press union, it was not possible to hire someone in England before they had been employed for some time in a small newspaper first, and I wanted to reach the Premier League. When I met the editor of the Daily Telegraph at the time, he said to me: 'If I were your age, I would leave England and move to America'."
You did a very good job as a journalist, do you miss it?
"Once you're a journalist, you always remain one in some way, unless you've crossed the lines into public relations—then you forget about being a journalist again. Today, I still write occasional columns, and two and a half years ago I opened the San Francisco Standard. It's a site that aspires to be the most reliable source of news and information in San Francisco. I spend a lot of time on it and I like to be involved. Every day we discuss stories, trends, what to cover and what we missed. I love it. To be involved in the daily life of a city through journalism is amazing."
At the time, why did you leave the field?
"Because I was frustrated and I didn't want to grow old as a journalist. I founded with a partner a small company to publish newsletters in the industry (Technology Partners), which was later acquired. Through it I met a lot of people in the field of technology and venture capital. I moved to California. I made a list of five venture capital companies that I knew someone at, and I was rejected by four - and it's no wonder, because I was a journalist, with a degree in history and lacked experience in Silicon Valley. But then Don Valentine, who apparently wanted to improve the image of minorities, decided to hire history graduates like me. That’s how I got started in the investment world.
It seems to have worked out well.
"When you invest in such broad fields, there is no way you can be an expert in everything. That's why some of the skills you need are similar to those required in the press: knowing how to go through a lot of data and decide according to it which three young entrepreneurs will become a huge successful company."
You covered Steve Jobs for years and also wrote a book about him. What was it like to work with such an icon?
"In 1984, when we published The Little Kingdom: The Private Story of Apple Computer, the publisher was worried that Apple would collapse and disappear. When Steve Jobs was fired from Apple, they once again thought the company would disappear, but Steve came back. When IBM introduced the personal computer there were those who said: 'It's only a matter of time until Apple goes bankrupt', and today it is one of the three most valuable companies in the world. This is an example of the difference that one person's leadership can make in changing the direction of a company."
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סטיב ג'ובס 27.1.2010
סטיב ג'ובס 27.1.2010
Steve Jobs.
(Photo: AP Photo/Paul Sakuma)
Were you critical of him?
"No, I was a big fan. When they threw him out of Apple I thought it was a terrible mistake. But there was an article of mine about Steve that he really didn't like, and rightly so. He was hurt by it, and I wasn't happy either. It was edited very, very poorly and sensationally and unfairly towards him. The facts were true, but the things were presented in a mean way (including the mention of Jobs's unknown daughter, Lisa). Shortly after that I left Time.
"Looking back, since World War II there has been a short list of people in Silicon Valley of this magnitude. The founders of Intel (Bob Noyce, Gordon Moore, Andy Grove), Bill Gates, Larry Page and Sergey Brin (Google), Mark Zuckerberg, Jeff Bezos, Jensen Huang (Nvidia) and Sam Altman. And above all, Elon Musk.
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אלון מאסק טסלה ספייס X טוויטר
אלון מאסק טסלה ספייס X טוויטר
Elon Musk
(Photo: Jonathan Ernst/Reuters)
Elon Musk?
"It's hard for me to think of another person who has engineered two successful companies like Tesla and SpaceX, in completely different industries and against all expectations. No one else has done it on this scale in our era. No one."
What do you admire so much about him?
"He did two things: he set the world on a path of electric vehicles, and he completely imagined the future of space and made SpaceX the most important business in the field. We supported Elon with funding when no one backed him. In 1998 he ran a company called X.com, which merged with a company called PayPal. We had no idea what was going to happen, but we invested in it. Today it is a name that is recognized around the world no less than the leader of a country, and its influence is even greater than that of the leaders of quite a few countries."
We live in a world where companies like Google, Facebook and SpaceX inherently have enormous influence.
"The history of countries versus big companies is not a good history for the companies. The countries necessarily always win. Political leaders do not like very powerful companies that threaten their hold on the country, and this antagonism exists whether in the European Union, China or the United States. They simply do not like it.
"But at least in a way, political leaders should look at these companies and be ashamed that they haven't been able to achieve much, while these entrepreneurs have built Apple and Google and Facebook and Tesla and Nvidia and ByteDance (the Chinese parent company of TikTok). Most political leaders can't build two kilometers of a subway in the time it took Elon Musk to build Tesla."