Ferguson and Moritz: Leadership Lessons for Sequoia

One author of this book is Manchester United’s legendary manager Ferguson; the other is Michael Moritz, chairman of Sequoia Capital. Venture capital is particularly concerned with helping talented business leaders around the age of 30 grow. ---- For Sequoia Capital, the lessons learned from leaders in other fields or organizations fall into two categories. The first applies to our own internal investment partnership. We face organizational challenges that trouble any company or institution pursuing the highest standards. Like other organizations, we must deal with recruiting, team building, setting standards, inspiration and motivation, avoiding complacency, new competitors, continual renewal, and removing underperformers. The second applies to the companies in which we invest. We are often the first significant business partner of brilliant entrepreneurs in their thirties whose plans can sometimes turn an entire industry upside down. In the first situation, after internal debate and pressure, we can always put the relevant lessons into practice. In the second, we are minority shareholders. The people who found and run these companies are extraordinarily intelligent, imaginative, and self-motivated; at times they can also be emotionally sensitive and volatile. We must help them act and make decisions through persuasion, encouragement, sensible advice, and good humor. The wisdom involved may not become apparent quickly. ---- Leaders often devote a great deal of time to their opponents. This is especially true in football, particularly among club owners who covet their rivals’ success. I am not suggesting that Sir Alex never paid attention to his opponents. Like other managers, he spent considerable time making sure he understood their lineups and tactics, and he was perfectly happy to borrow sensible strategies from others. But he refused to define Manchester United by its opponents and always believed that the team’s destiny was shaped inside Old Trafford, not elsewhere. He therefore remained indifferent to the arrival of oligarchs, Middle Eastern princes, or other wealthy foreign owners at rival clubs. For Sir Alex, although expensive contracts could sometimes cause a stir, money could not buy success. The same is true in Silicon Valley. Although ignoring developments elsewhere would be foolish, no organization has become great by continually reacting to its competitors’ moves. You cannot become a leader by following someone else. Leaders of companies destined to remain mediocre often do not know what they want. By contrast, the leaders of the few companies destined for greatness understand what they want, even if that initially takes the form of knowing what they dislike. That was certainly the case when Larry Page and Sergey Brin founded Google. They were not interested in the search services offered by Yahoo, Excite, Lycos, Infoseek, or AltaVista, so they pursued a more powerful search engine. The same was true when Apple’s veteran design team set about creating an MP3 player they could accept—the iPod—or a phone they liked—the iPhone. The secret of success in Silicon Valley is to concentrate on what you control while staying off your enemies’ radar for as long as possible, because those enemies can destroy you. Stealth is an entrepreneur’s most powerful weapon. There is nothing to be gained by arousing those beasts’ anger or alerting them, especially when they are outright monopolists capable of launching ferocious attacks. Many companies, including Novell, Lotus, AOL, Adobe, Borland, Netscape, and Symantec, came to understand the risks of attracting Microsoft’s attention at the height of its power. Google owed much of its success to the consistently low profile of its management. By the time Microsoft noticed it—with the threat of government investigations also looming—it was too late to respond or undermine Google’s business.