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Posted: Mon, May 17, 2004
Google GambleBy Robert AndrewsThe Welsh money man behind the Google empire is set for one of the biggest pay days in Silicon Valley history. Cardiff-born venture capitalist Michael Moritz invested around $12.5m in the zeitgeist search site in 1999, just as Google started out. Now, with the quirky Californian firm ready to go public in a record-breaking float on the US stock market, the Valley's most revered investor could make billions back from the biggest business buzz since the dot com gold rush.  Documents filed with financial regulators revealed the 49-year-old former journalist holds 24 million shares in
Google - just one of the tech Davids he has grown into
industry Goliaths over two decades of high-tech dealings.Across the Atlantic, the industry observers call him "a legend", "the hottest venture capitalist on the planet" and a "consummate alchemist of the information age2. But Moritz, who grew up in Cardiff's Pen-y-lan suburb and whose first job was as a waiter, has had to reinvent himself several times over to land that adulation. Schooled at the capital's Howardian High School before reading history at Oxford, he left Wales in the 1970s for an MBA at Pennsylvania's Wharton business school, later becoming a journalist at Time magazine and writing seminal business books on Chrysler and Apple. He staked out his tech credentials in 1982, when he made the unprecedented suggestion that Time's Man of the Year Award should go not to a man, not to a woman, but to a computer - an article said to have riled Apple chief executive and leading contender Steve Jobs. Four years later, switching to business proper, he joined successful west-coast venture capitalists Sequoia Capital. There, at the height of the computer revolution, he developed a talent for talent-spotting, funding little-known start-ups with the potential to become moneyspinners. With Moritz on board as a partner, Sequoia has helped start, nurture and finance some of the world's hottest computer properties, providing some of the original cash which got Yahoo!, PayPal, Cisco and Apple Computer off the ground and into the premier league. For a mere $2m investment in leading portal Yahoo!, Moritz got Sequoia a third of the portal which was valued at $10.7bn at its height. But it wasn't to be his shrewdest investment.  In 1999, in a meeting held around a ping-pong table which doubled as a conference table,
he signed a cheque which gave a total $25m to Larry
Page and Sergey Brin, bright-eyed students who had developed a simple way to let people search through the web in seconds; Google.The site had just 12 employees and had only just changed its name from BackRub. In return for his investment, which was made for Sequoia, Moritz was appointed director of the company's board and given an estimated 16% stake. Thanks to continued innovation under his financial stewardship and its trademark user-friendly approach, Google has become the search tool de jour for most internet users and last year turned in a $105.6m profit. Success at the Googleplex has prompted the long-awaited announcement of a public share issue which, it is hoped, will yield a $2.7bn warchest for the company and which Moritz has decreed be held by a unique and, he says, "fabulous" public auction. Some reports have him pressing a reluctant Page and Bring to take Google public despite differences of opinion over how their baby should grow up. But it is a move which will also catapult the founding pair onto the rich lists. "He paid in the order of 50 cents a share for 24 million shares," Ken Anderson, finance editor at the Dow Jones news service, says of the Cardiffian. "It is not clear quite yet what percentage stake that translates into but, if Google prices at $10 per share, he will have a return that is 20 times greater. That is likely to go up much higher as the stock trades." Indeed, some expect the site to debut later this year at around $20 a share on its way to a $20bn valuation, giving Moritz an even greater sum. He could pull in anything either side of $2bn if he cashes in his stock, according to estimates. Already, it has been called the most successful venture investment ever. The Welshman - who lists painting and cycling as hobbies and who is thought to have bought a village in Tuscany with some of his spoils - said strict US regulations governing stock market debuts prevented him talking to itwales.com about the flotation. But there are plenty of others lining up to blow his trumpet. "Moritz's record is quite remarkable for what venture folks here call home-runs", says San Jose Mercury News technology correspondent Dan Gillmor, a veteran Valley watcher, "- that is, investments in companies that turn into mega-winners. "A lot of people in the business consider just one of those to be a career-making achievement." But the wily Welshman has racked up deal after gravity-defying deal, expertly pulling the strings of companies which grow from mere ideas to multi-billion dollar enterprises. "I can think of only two words to describe Michael Moritz - clinical and rational," says Matt Marshall, a venture capital reporter in the Valley. "Those are good qualities for a venture capitalist. He's been incredibly successful." And he keeps on adding high-profile directorships at promising start-ups to his CV. Debutante contact-sharing site Plaxo and hotly-tipped weather forecaster WeatherBug were the latest to be blessed by Moritz's millions. Moritz has said he was drawn to America after reading the story of immigrants flocking to the US in the Normal Mailer book The Naked and the Dead. His own mother fled her native Germany for England during World War II. The area in which his parents live, Pen-y-lan, means "top of the hill" in Welsh. Now, Moritz finds himself at the top of the Valley. He recalled his life back Cardiff for a 1997 interview with business magazine Forbes: "It's difficult to imagine a place moreremoved from Silicon Valley and information technology than south Wales. "Access to technology there seemed as remote as access to the back side of Mars. My first step was to come to America. It was like a homing instinct. I was attracted to the west coast and gravitated there, right near the time when the first personal computer was introduced. I had no idea how big this would all become." A reliable bellweather for the internet sector, Moritz, who coined the term "B2N" ("Back to Normal") for the withering New Economy, was never fond of some of the boom's mindboggling valuations, likening the crash to "watching lemmings fly out of the window". But, if the industry happens to grow "big" again, who would bet against him leading the charge? |
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