Despite an incredibly successful and intense visit to California last week, certainly in terms of academic outcomes for the University of Wales and links for Welsh businesses, the highlight of the trip was the hour spent with one of this nation’s most successful business exports, Mike Moritz.Michael Moritz was born in Cardiff in 1954 and, after being educated at Oxford and Wharton, started working for Time Magazine, where he wrote a seminal book on the history of Apple.
In 1986, he joined Sequoia Capital, one of Silicon Valley’s most successful venture capital companies which subsequently invested in a range of companies that have epitomised the internet revolution during the last fifteen years, including Yahoo!, Google, PayPal and YouTube.
The initial public offering of Google in 2004 catapulted Mike Moritz into one of Wales' richest men and a position as one of the most influential dealmakers in the World. Therefore, this sixty minute meeting was an opportunity to learn from a man who is widely seen as one of the leading gurus of the internet age.
One of the reasons I wanted to meet with Mike Moritz was to discuss his philosophies regarding the development of knowledge-based industries, especially following his speech to Cardiff Business Club in 2007 when he stated that “I invest in people who are under 30, do not have a history degree and have a surname I can’t pronounce”.
As a result of this declaration, the University of Wales was inspired to establish the Prince of Wales Innovation Scholarship programme to bring in the best of young graduates from around the World to support Welsh businesses.
Therefore, it was not surprising that the main topic of our discussion was talent, and how access to that talent is critical to the success of Silicon Valley.
During an animated discussion, Mike emphasised the need to identify the best young people, nurture them and give them the opportunity to make the most of their talents.
He specifically mentioned the day that the two founders of Google, Larry Page and Sergei Brin, came in to pitch their idea.
Unlike others looking for funds, there was no business plan and no elaborate powerpoint presentation, just enthusiasm, an enormous intelligence and a working prototype search engine that was based on the combined research of both these Ph.D students from Stanford University.
Arguing that making investment decisions is more of an art rather than a science, Mike recognised real scientific talent when he saw it and the two fledgling science entrepreneurs were subsequently backed by Sequoia.
Within a few months, an internet revolution was born that has changed the way that hundreds of millions of people across the World accessed information. Not only that, Sequoia's $12.5 million investment into Google was, within five years, worth just over $2 billion, cementing Mike Moritz’s reputation as one of the sharpest investors in the venture capital game.
Of course, the question is whether such an environment for rapid and commercially successful innovation can be repeated elsewhere and quickly outside of Silicon Valley?
In Mike’s opinion, there is only one other place where this has recently happened, namely Israel.
In the space of 20 years, a country of seven million people where oranges were once the main export is now second only to the USA in technological innovation in telecoms, microchips, software, biopharmaceuticals, medical devices, and clean energy.
In 2008, Israel produced 483 venture-backed companies with just over $2 billion invested. Not surprisingly, Sequoia has recently opened an office in Israel to take advantage of the opportunities being created, a rare event for venture capital firms which tend to stick their own backyards.
Therefore, it is all about scientific and entrepreneurial talent.
Like Silicon Valley and the Route 128 developments around MIT in Boston, Israel has partly succeeded because it has invested in the talent of its young people over a generation, both those born in Israel and those who have subsequently emigrated from Russia in the 1990s.
It currently has the highest number of university degrees relative to the population and more scientists per capita than anywhere else in the world. Additionally, Israel has the highest number of start-up companies in the world outside of the United States.
As Mike Moritz suggested throughout our discussion, nurturing, developing and attracting the best talent is the key economic strategy that Wales should focus on.
Indeed, he was adamant that, despite being an advocate for his own industry, the lack of venture capital isn’t the problem as good ideas will always get funding from somewhere.
If there was a simple message for government, it was to encourage the import of global scientific talent whilst, at the same time, providing the resources necessary at the primary and secondary school level to nurture the home grown scientists, engineers and technologists of the future.
For example, by stimulating and supporting science within Welsh schools, Mike Moritz believed that you could develop a whole new generation of idea-driven young people that could help develop the industries of the future.
It is a simple message but again one that has been largely ignored by policymakers and politicians.
All of a sudden, it was 330pm and the meeting was over. We gave Mike a copy of the Encyclopaedia of Wales, a bottle of Penderyn and I managed to get him to autograph a copy of his updated book on Apple Computers.
Like J.P. Morgan before him a hundred years earlier, Michael Moritz has utilised the world of money to change the industry landscape around him and it is incredible to think that the two financial giants of their respective eras both have their roots in Wales.
And the simple message for Wales from this polite, thoughtful and highly intelligent man who has become one of the most influential business exports this country has ever produced?
Nurture, develop and attract young talent within science, engineering and technology and surely as day follows night, venture capital will follow that talent to create the industries of the future.
Comments
How the hell did you get to see Moritz as he notoriously difficult to get access to.
A great and insightful interview that does far more than all these renewal and recovery strategies dominating the news.
From the way you project Moritz's views, recognition of which talent to promote (and, by implication, of where NOT to waste money on talent that is either not there or wrongly directed) is very much down to 'hunch' rather than any spotting of pre-identified criteria...and sometimes it won't work, of course. Fair enough. A gamble.
A few rich people are able to gamble with their own money on this, but not on a scale that meets the entrepreneurial needs of a modern growing world.
A bigger slice is achieved by people who instead collectively take a punt via entrepreneurial backers (investment funds; hedge funds etc)
But the vast majority of capital of ordinary people is tied up with banks, insurances and pensions funds who are all currently being encouraged to eschew undue risk, after the events of the last 2 years.
This then leaves government support, and yet the key principles behind spending PUBLIC money are generations of accountability, caution, risk-assessment - i.e. all the things that leave entrepeneurs dead in the water.
Can a government ever create and nurture enterprise, then, other than by creating a benign social climate in which we can ALL grow?