Mike Moritz – The Knife –

Most venture capitalists look for the same thing when sizing up an entrepreneur – experience, a track record of success and sterling references. Mike Moritz, co-founding partner with Sequoia Capital, looks for people who are hungry and poor.

He steers clear of self-promoters, the guys with the plaques hanging on their office walls. “We look for people who other venture firms would probably vote least likely to succeed,'” he says.

In other words, he seeks out hungry first-timers who are willing to subsist on a bare-minimum investment “Mini-Mikes” who share his values of hard work and thrift. “With too much money, they go soft,” he grumbles.

As successful as he has been, Moritz is probably best known for his gruff demeanor and telling it like it is. He cuts through BS like a hot knife through butter.

Like his mentor, Sequoia founder Don Valentine, he comes from the school of bluntness and tough talk. He once dismissed a prospectus as “reading like an issue of MAD Magazine.” But he is equally harsh on himself, with comments like: “you’re only as good as your next investment.”

Moritz gained a place in Silicon Valley lore when he discovered Stanford students David Filo and Jerry Yang, whose idea for a web search engine became Yahoo! Later, he joined forces with Sergey Brin and Larry Page, who cofounded Google. John Doerr, a partner at Kleiner Perkins Caufield & Byers who sits on Google’s board with Moritz, calls him “one of the smartest VCs on the planet.”

Of course, that doesn’t mean he’s perfect. He hit it big with the likes of Agile Software (NASDAQ: AGIL), Flextronics International (NASDAQ: FLEX), and Yahoo! (NASDAQ: YHOO), an PayPal looks to be a big success, but he also felt the sting of failure with eToys and WebVan.

Moritz, 47, says being a venture capitalist doesn’t get easier over time. He says that he’s still on a learning curve “I’m about at the knee right now,” because building a small company “is the single most grueling thing you can do in commerce. It’s us and the entrepreneurs against the world. You have to have a very tough constitution to endure the battles.”

When asked where he’s putting his money these days, Moritz is uncharacteristically silent. But only for a split second. Then he turns into Mike the Knife: “As soon as we say where we are investing, the riff-raff will come back – every quick-buck artist and Johnny Come-Lately will return.”

When Moritz is on a role, it’s hard to stop him: “Every time we enter a period of prosperity in Silicon Valley, the riff-raff comes back,” he fumes. “A new generation of them will come back again, but they, too, will eventually disappear in tatters, bloodied and beaten.”

The way he sees it, the venture capital landscape hasn’t looked this good in a decade. As he starts to breathe his own fumes, Moritz starts to mix reality with the way he’d like things to be. Blueblood firms like Sequoia have reclaimed Silicon Valley as the wannabes “are down the fire escape, at the exit door, or about to leave town,” he says.

He may not like to admit it, but Moritz himself was a wannabe at one time. He spent the first half of his life as a writer and editor. A graduate of Oxford University with an MBA from Wharton, he authored two books (one on the auto industry and the other on Apple Computer) and was a bureau chief for Time magazine. After 10 years at Time, Moritz was introduced to the rough-and-tumble world of venture capital by Valentine in 1986. Today he says his only regret is that he didn’t become a venture capitalist earlier in life.

A Sequoia spokesperson said the firm does not keep track of each individual partner’s performance. That is in keeping with the team concept that has been built over the last 10 years, during which more than half of the partners have remained with Sequoia. Initially reticent about doing this interview, Moritz said his greatest achievement in venture capital is in the team development at Sequoia, not in any homerun deal like Yahoo! “The [team development] blows away any deal we’ve done, it’s not even close,” Moritz says. “Any one of us could be a director of a company.”

While he won’t say where he plans to invest next, Moritz shares a bit of his investment philosophy. Specifically, don’t become a prisoner of your past, where previous failures deter you from future investing.

“Today, you are not supposed to make money in the dotcom advertising business, and therefore you are supposed to stay away from it,” he says.

“But, there are companies like Google that prove it can be done. If you pick your spots and keep an open mind to potentially new ideas, you can successful.”

Mike Moritz

Founding Partner, Sequoia Capital

Investment focus: Software, services

Biggest hits: Yahoo! (NASDAQ: YHOO), Agile Software (AGIL), Visigenic (acquired by Borland), Quote.com (acquired by Lycos)

Board seats: Flextronics, Nightfire, RedEnvelope, PayPal, Yahoo! (8 total).

Years as a VC: 15

Did you know? As a bureau chief for Time Magazine he voted for a PC as the magazine’s “Man of the Year” during the 1980s.