

Sequoia's Michael Moritz on how he picks companies - ksvs
http://www.mercurynews.com/ci_12531654

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ajju
Summary: The recession is acting as a great filter that keeps out non-
passionate founders. Also, Sequoia does some of its best investments in
recessions.

The interesting thing is that this recession is acting as a filter not just
for founders but also for VCs. See WSJ's "VCs head for the door" [1]

My favorite part though was this line from Mr. Moritz:

"Oddly enough in recessionary times, customers are prepared to take more risk
with a young company if they believe that that company offers them a
tremendous advantage that will help them become more efficient or lower their
costs."

I have one data point in support of this at my start up but would love to hear
if y'all are seeing more.

[1] <http://online.wsj.com/article/SB124416376153487535.html>

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jpwagner
"Oddly enough in recessionary times, customers are prepared to take more risk
with a young company if they believe that that company offers them a
tremendous advantage that will help them become more efficient or lower their
costs."

I don't think I understand the significance of this statement. You always buy
a product that 'offers a tremendous advantage that will help [you] become more
efficient or lower [your] costs.'

Is the significance that in a recession a prospective customer is _less
likely_ to buy 'the standard'?

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ajju
Yes, Moritz is suggesting that companies (at least some of them) are _more_
willing to take the risk of buying from a stratup, if it offers them a
tremendous advantage.., during a recession.

I am wondering if there are entrepreneurs who can corroborate this theory
based on their experience.

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jpwagner
You just used nearly the exact terminology from the original quote. Sorry, I
do not think the concept is clear.

Since the advantage over 'the standard' changes depending on what product and
what startup we're talking about, this seems to be more of a comment on the
likelihood of the buyer to stick with 'the standard'. (additionally, the
wording (and paraphrasing) are not making this clearer...some companies...more
likely...tremendous advantage...etc)

I'm attempting to make "his theory" concrete in wording so that it's
comprehensible. I think you can boil "his theory" down to:

 _Buyers' preference for 'the standard' is inversely proportional to the
current economic state._

What do you think?

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ajju
I think his theory is more like:

Buyers' appetite for 'the non standard' is inversely proportional to the
current economic state.

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qhoxie
The interview is disappointingly light. Not that I was expecting to read a
bunch of Sequoia's secrets, but given their previously good judgment in tough
times, more specifics would have been nice.

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stevenjames
Another read (though, it discusses the "Talent Scouts" -- not just Moritz):
[http://www.sequoiacap.com/news/the-secrets-of-the-talent-
sco...](http://www.sequoiacap.com/news/the-secrets-of-the-talent-scouts-/)

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pclark
I would have thought there'd be _more_ startups looking for funding: "I can't
get a job elsewhere so I'll start my own company."

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zackattack
What companies has Sequoia funded that haven't succeeded?

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rfreytag
Excellent question - is this survivors bias? We need the negative information
to get a sense whether their technique works better than random luck applied
to good times.

