Thursday, February 26, 2009

BusinessWeek: Michael Moritz: Lessons from a Long-Ball Hitter

"There's some talk about the dearth of innovation today. Is Silicon Valley dead?

Things get overblown in the Valley. As the obituaries are currently being penned, those are overstated, too. Last time I checked Stanford hasn't stopped producing wonderful 23-year-old graduates. And Silicon Valley houses many companies with frustrated engineers. Good ideas and brilliant people will find us very willing to step out into the cold with them.

So what has changed?
What has changed is that there are more smart people elsewhere. Good ideas spread more quickly.

Are there any benefits to building a business in a downturn?
There's less frenzied money. There's more time to think. The hiring environment is a lot easier and the money goes a lot further.

Do you still do seed-stage deals?
We do seed stage. Thirty percent of the companies we finance were incubated here. We are very selective. We are doing it with a few rather than a lot. My guess is more of it happens over the next few years because of the dearth of financing.

What about Google? Didn't they crack their business model during the downturn?
The chilly aftermath of the Internet bubble was a big benefit to Google. It helped with hiring. It made it difficult for startups to get financed. Its larger competition had to tend to the home fires. There was not a clamor to go public so it helped them stay out of the crosshairs of the competition."


Opher said...

With the stock market on the ropes for over a year now, I wouldn't be surprised if some investors prefer to invest in a small start-up with a great idea and a good business plan rather than try to find a stock market bottom.

Anonymous said...

great article. ipo market is dead. m&a market is dead. private companies will die before they get sold for big exits. say hello to % of invested capital