Invest Like the Best with Patrick O'Shaughnessy
00:36:38 · Patrick O'Shaughnessy, Michael Moritz
[00:36:38] S0: What's the role of monomania in all of these character studies? And I'm curious to tie it back to this idea of the outsider, the survivor. [00:36:47] S2: You see it now. This goes in generations. The monomania, when it comes to creating anything of value, it could be a piece of music, it could be a book, it could be a painting, it could be a company, complete obsession with the topic at hand and locking out the rest of the world, eliminating every unnecessary distraction. There are downsides to this, people get hurt along the way. There isn't enough time for families or others or friends because of the monomania that you referred to. But then great things sometimes come out of it. [00:37:23] S0: Is the primary cost of monomania relationships typically? [00:37:28] S2: I suspect the answer is yes, or maybe for some of these people feeling that they may have lived life differently if they had to live it over again because there were consequences to this monomania. But yes, clearly relationships. Evelyn Ward, people don't really know him today, but a very famous British author who was capable of writing 10,000 words a week with ease, 10,000 good words, not rubbish. He said, The greatest enemy to good art is the sight of the pram. The stroller in today's parlance is the sight of the stroller in the hallway. What about Frank Auerbach, the painter? [00:38:12] S0: Wasio Mano Maniacal? Frank Auerbach
00:38:16 · Michael Moritz
[00:38:16] S2: has never got the recognition in this country that he deserves, although there's a retrospective of him coming here in the next two years to very significant museums around the country here. He was a refugee from Nazi Germany. He died maybe five years or so ago. I didn't know him well, but I got to know him a little bit. And he was a complete obsessive, completely obsessed with this art, painted every day, except he treated himself to a day, one holiday. For many, many years, he treated himself to one day off a year. And every year he'd go to Brighton where there's a famous pear, it's on the South Coast Of England, and take the day off on Christmas Day. Every other day of the year he worked. And I remember once talking to him, his wife had a house out on the English Coast. And I asked him once at a dinner, I said, so do you ever go out and visit Julia, your wife? He said, I've never been to the house. Now this is probably ten years ago, we were chatting and New York came up, And he said, I love New York City. I just love it. It's so bustling with energy and going to Times Square and all the rest of it. And so this conversation was maybe in 2012, 2013. Frank, were you just in New York? Yeah, I went there in 1967. And he had this routine where he had, and I knew some of these people who posed for him or know some of these people, that all of his subjects are still alive. They posed for him once a week. He had this regular coterie of sitters, and he painted these same individuals for his figurative work over the course of thirty, forty years. And there's one of the subjects who lived in Venice of all places, who once a week flew to London for his session with Frank, because I think the sitters found it like therapy sitting for Frank. But he'd go into an utter meltdown if the sitter was late. And then similarly, with his landscape paintings, he painted the same landscape over and over and over again, interpreting it. But he lived for art. Really, was no time for... He had a son, Jake, but there was no time for anything else.
00:40:39 · Patrick O'Shaughnessy, Michael Moritz
[00:40:39] S0: Do you get more energy from monomaniacs? You spend a lot of time around them. Do you prefer being with them over dilettantes like yourself? [00:40:48] S2: It's nice to have a mixture of friends and acquaintances, some of whom have tied themselves to a particular mask to others who are prepared to wander around and live life more casually. But I've always found it more difficult to be around people who, and I like them and enjoy being with them, but who appear to be doing nothing. [00:41:10] S0: What did Don Valentine see in you and what did you see in him?
00:41:14 · Michael Moritz
[00:41:14] S2: So Don was the founder of Sequoia. He took a risk on me around 1985, hired me to join Sequoia when Sequoia is a very small firm. We're sitting around this table here in your studio. It's probably large enough to accommodate all of the people who work for Sequoia at that point. I was a journalist, I've been a journalist, but wanted to get into the venture business because I've become interested by it. And had met some of the people who were running these firms, all of which were very small at the time, and had written to five of them. This was in the days when you didn't send emails, you actually wrote letters. And had gone to see each of them, they were kind enough to give me some time. All save Don said, we don't really know what to do with you because you don't have a technical background, you don't have an engineering degree of any sort, You don't really have any technical knowledge. You don't have any work experience in a Silicon Valley kind of company. You've been a journalist. So maybe you should go and find a role in public relations or marketing or something like that, which is not exactly what I wanted to do. And Don was more willing to take a risk. And the reason was fairly straightforward because he had seen people that he expected because they had big operating backgrounds in technology companies, a few of them come into the venture business and not be very successful. And then he was aware of some who had carved out very successful lives as investors. There was a fellow called Tommy Davis, I think, who started a a fund called the Mayfield Fund. There was another guy who'd been an insurance actuary, but the one that Don pointed to more than anybody else was a gentleman called Arthur Rock who just celebrated his hundredth birthday. He was an investment banker at a small boutique here in New York called Hayden Stone. This is back in the 1950s. He had had the moxie to organize the original breakout and financing of Fairchild Semiconductor. And then in the 1960s, people won't know the names anymore, but he had helped finance Teledyne
00:43:30 · Patrick O'Shaughnessy, Michael Moritz
[00:43:30] S0: Finite of Henry Singleton, right? [00:43:32] S2: Henry Singleton. Henry Singleton who later became one of the early board members, our first board members at Apple, scientific data systems, and then became the chairman, original investor in Intel, day one. And then a few years later, backed Apple. Don said, look, there's nothing in this background that would have suggested to be successful. That was the main reason. [00:43:54] S0: And what did you see in him in the early days? [00:43:57] S2: A job. [00:44:00] S0: What did he teach you? [00:44:01] S2: Don didn't believe in teaching. He had a survivalist instinct. So he just believed in tossing people into the deep end and see if they drowned. But I learned a lot by observation and listening, good things and bad things. There was another gentleman at Sequoia named Pierre Lamond who played a huge role in the rise of the semiconductor industry. And he too was something of an influence, but it was being in the middle of that meteor watching good things happen and bad things happen, gradually trying to form my own opinions about things. [00:44:41] S0: What do you think it teaches us about early stage investing that a journalist with no technical ability and no work experience can be one of the best investors of that type ever?
00:44:52 · Michael Moritz
[00:44:52] S2: The venture business that I got into way back when is very different from the venture business today. There aren't many parallels. I don't know that I would flourish in today's venture business. It's for a whole variety of reasons. Why not? I think it's become much more difficult. We had a variety of benefits back in the 80s and 90s, I think that began to dissipate maybe fifteen, sixteen years ago, that don't exist today. One of them being imperfect information. The pre internet, unless you were very close to things, you didn't know what was happening. Today, because the internet and some of the stuff that we're talking about earlier, everybody around the world knows exactly what's happening. Everybody's got access to the same information, or you know, more or less the same information. So that's number one. Number two, there are just so many more entities of all stripes, individuals, two or three people banding together in a small firm at the other end of it, huge mutual funds pouring money into it, that the very early stage private market is very, very different. Forty years ago, thirty years ago, it was possible if you were an individual to form a relationship, a real relationship, close relationship with the people that you were getting into business with. That doesn't exist today, particularly for a venture firm. There are just too many intermediaries in between. I'm not sure that the luck that I had back then, and I was also catapulted right into the middle of the one place in the world where all of this stuff was happening. So that's a huge competitive advantage too. I'm not sure that any of that translates today. Think moderately intelligent 14, 16 year old who had his or her wits about him would have been able to succeed in the venture business in the mid eighties.