Welcome to the podcast, Michael. Taking a bit of a walk down memory lane, back in 1999, you met—
You're assuming I have a memory.
You met Larry Page and Sergey Brin, and you gave him 25 million, which was one of the best venture—
Okay, invested. Invested 25 million, one of the best venture returns of all time. At the time, you made a comment that the product had the real potential to turn millions of internet users into devoted Googlers, which was a very prescient comment in many ways. What did you see in them and the company that others didn't? Because there were a lot of search engines at the time, and you really picked the one.
A friend of mine said, "Never has anyone paid so much for so little when we made the investment," because you're exactly right. There were probably eight or nine different search engines at that point, and Google was perceived as a very late entry into the market. We had an advantage because Sequoia had been an investor in Yahoo from the very beginning of Yahoo. Yahoo began as a directory service. It cataloged all the sites that were on the internet and then organized them into a compendious directory that grew.
Then the need for searching the contents of that directory came along, and so Yahoo licensed search technology from third-party companies. They hopped from search engine to search engine because by that time, Yahoo had a very large customer base. And so for a search engine to break through, it was very important they get in front of the eyeballs, and the eyeballs at that point were controlled by Yahoo and AOL. The reason we became investors in Google was because Jerry Yang, who was one of the founders of Yahoo, asked us to consider investing in Google.
Yahoo was a public company, and it couldn't afford to switch search engines if the search engine went up in smoke, was undercapitalized, didn't have management, and all the rest of it. And Yahoo had decided that now by far and away the very best search engine that they could find was Google, and that was what led us to become an investor in Google.
That's interesting because that's very much about the business and the commercial constructs around it, and not so much about the founders. Was it very much because you genuinely believed they had a structural advantage and about the business, or was there something about the founders?
Yes. Look, it's always—people always ask, "Well, is it the product? Is it the founders? Is it the market? Is it the fact that the sun rose in a different part of the galaxy?" It's always a combination of those sorts of things. Founders without wit and intelligence don't create great products, so the two tend to go together. And if you have a very distinctive product, it's certainly because the people behind it had a really good idea and were capable of developing and building a great product. So it was about the product closely associated with the founders.
But you know, when somebody's very young—and over the years we bet people who've been very young: 18, 19, 20—you never quite know how they're going to work out as managers of companies, or what they're going to be like 10 years hence.
Do you try and figure that out, or—
Yeah, I try and figure it out, but it's very imperfect and very, very difficult to, I think, predict how somebody is going to mature or not mature. And I've been involved with companies that have been examples of where people who started the companies at a very tender age far exceeded anybody's expectations, and then others who severely disappointed.
What kind of questions did you ask and do you ask to try to get to the truth of whether someone is exceptional?
Well, you try to find out—for me generally in everything, it doesn't really matter how old somebody is. It's all about the first 15 or 16 or 17 years of life.
Yeah. I think those are the most important things to understand, because that's when you develop your character. It's when you're around the environment and people that shape you. It's perhaps where you develop a particular interest or obsession in the case of many founders.
And often times when I've become involved with companies, it isn't as if the founders had started a previous company. It's their first company. And so what else do you have to go on? Yes, the college professor whose program they dropped out of might have said that these people are brilliant, but then who are they? How are they going to react in circumstances? You try and find out as much as possible, but obviously you get to know somebody much better as the relationship develops and as the years go by.
And you've backed the Collisons at Stripe, Sebastian—
See, they were very young when we backed them, Patrick and John Collison. It's a long time ago now; it was 16 or 17 years ago. And I think—maybe I may be wrong, but I think Patrick was maybe 21, maybe he was even 20, and John 18 or 19. So, they're incredibly young, but it became very clear to me when I sat down with them that they were a pair of rather extraordinary characters.
And that was very, very evident?
Yeah, a 2-year-old could have figured that out.
Because I did what I explained earlier, which was trying to understand where they came from.
And they came from—it isn't every day that a pair of brothers from a tiny little hamlet outside Limerick roll up in San Francisco. In that case, it was Palo Alto at the beginning. And so I began to understand who they were. Again, it's not very often that you have a pair of brothers, one of whom dropped out of Harvard because he found it tiresome and the other dropped out of MIT because he found it tiresome. It was clear that they had unusual intellects, and also they'd had a tiny little company before, whose product I forget. But they're very entrepreneurial characters from the very beginning. And this is another interesting aspect about founders: they were a creative duo. They were better because they came as a package.
Do you look for that often?
I think if you go and look at companies that have started, there are obvious examples of a single founder, Elon Musk being the prime example in the last 25 years who occupies a place in the greater terrestrial sphere of things that nobody else occupies, who is a lone wolf. But many others—and I think it spans all forms of creativity, particularly in music—
—you often think of duos. I mean, in contemporary music, it may be Bono and The Edge, or Jagger and Richards, or Lennon and McCartney, where the two individuals combine to create something special and somehow or other make each other better.
It's interesting that you mentioned childhood there and the importance of shaping these exceptional people. In the book that you wrote with Alex Ferguson, the greatest football manager of all time, there's a really interesting passage where it's talking about him often signing players who came from very difficult childhoods: Ryan Giggs with his dad, or some of the South American players who grew up in favelas, and talks about the resilience that it bred in them, basically. Do you think there's something there about overcoming trauma and difficulty and building resilience?
Grit, persistence, tenacity, toughness, steel in the backbone—you need all of those attributes if you're building a company. And there are examples, obviously two great examples of people who, if you use that as the sole criteria, the only criteria for success, there goes Bill Gates, there goes Mark Zuckerberg, there go probably a whole bunch of other founders whose names don't spring to mind, but they grew up in comfortable circumstances. But most of the founders that I've been involved with, they may have grown up in material comfort perhaps, but they've had pretty tough childhoods. That wasn't true for Bill or for Mark, but many of the others in some form have.
Tell us about Bill Gates, and specifically tell us about his car radio and what that told you about obsession.
Well, this goes back into ancient history. I began earning paychecks as a journalist. I grew up in Wales, but had left Britain and had become a journalist for Time magazine, and had got interested—eventually I'd moved to the West Coast. This was a very long time ago, 1980, '81, and '82, and I got interested in—I didn't know anything about young companies growing up in Cardiff. I had no idea that anybody really could start a company. And if you're going to start a company, you probably had to be 58 years old to start a company, and it was probably a carpet distributor or something. So I had no idea that 18, 19-year-olds could start companies, but I got interested in it.
And so Microsoft was still a private company. It was beginning to emerge because it was making this software for personal computers. So I went to Seattle to interview Bill for a profile that eventually appeared in the magazine. We spent some time together, and like all founders who are working 24 hours a day, 7 days a week—people who are in their 30s, 40s, 50s, and older forget how hard people in their 20s work—
Yes. And for a whole variety of different reasons: energy, lack of distractions, no family, nothing but what it is they're working on, whether they're writing, or whether they're painting, or whether they're in some dreary job at an investment bank or working at a startup.
So, I'd interviewed Bill, and I was flying back to California, and he actually was going down to see Intel. I remember he was going to go and see Andy Grove, and it was because Microsoft at that point was working quite closely with Intel on the features of the microprocessors that would be very useful for the operating systems that Microsoft was building. So Bill said, "Do you want a ride to the airport?" So I said, "Yes."
And he had a Mercedes. Even at that time, even though I think the company was probably at that point still doing less than a million dollars in sales—
—it had cash, and he had never taken outside investors, and he owned a huge portion of the company, so he had cash. So he had this Mercedes, but it had a gaping hole in the dashboard where the radio goes. And I said, "Bill, what happened? Where did your radio get ripped off?" He said, "It didn't get ripped off. I had it removed." "Why do you have it removed?" "Well, I found that when I drove from my home to the office or vice versa, or came down here to the airport, I'd have the radio on and it was a distraction and I wasn't thinking about Microsoft. So I had it taken out."
And he disabled—I remember he disabled his television tuner at the same time. I think back then that was still the era of video cassettes, so you could watch video cassettes and absorb knowledge, not be distracted by whatever silly stuff was on television. But he was married lock, stock, and two smoking barrels to his company.
Amazing obsession. Michael, you very kindly are working with Chad Edwards, the founder of Kusp, helping him out a bit, and we've seeded his business and invested five times in it. Kusp is doing great. Another Welsh founder we've backed called Andrew Hopkins, who previously did Exscientia, which was the largest ever European biotech IPO, is now doing a new business called Zephyr. Seems to be two examples there of brilliant, brilliant Welsh founders amidst a sea of what feels like to us a real inflection point in European technology, particularly actually here in the UK with AI. In the past, you've been a bit critical of Europe's ability to produce truly iconic and truly big technology companies. Have you updated your view in the last year or so?
