Sunday, June 8, 2014

A Dozen Things I’ve Learned from Michael Moritz About Venture Capital

By Tren Griffin

I was introduced to Michael Mortiz only once many years ago during a visit to Sequoia.  I know of him only through stories told by others, his writing and what I have read in the press. His accomplishments are impressive, as is his insight on topics like the venture capital business.
1. “When we help organize one of these companies at the beginning, it never looks like the world’s greatest idea. I think it’s the marketing and PR department that rewrites history and tells you that it was always the world’s greatest idea. What they don’t say is that at the very beginning there was great uncertainty and a great lack of clarity.” “We just love … people who perhaps to others look unbackable. That has always been our leitmotif of doing business.” The best venture capitalists understand that success in the venture capital business is about buying mis-priced optionality. Something “not looking like the world’s greatest idea” is actually helpful since uncertainty is the friend of a wise venture capitalist. In other words, it is uncertainty that causes others to mis-price optionality.  

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