Coauthor of the new book. Thank you for joining us. You wrote this book with another , sir alex ferguson, the legendary former manager of manchester united. One of the most revered names in football, soccer. What do you to this project as a journalist turned tech investor . I always followed united, not as a raving fan, but i follow them through the years. Working in Silicon Valley, working hard to build support, i was very curious about organizations that had succeeded for a very long time and performed at an extremely high level and particularly those organizations that had been run by one individual, and there are just not that many of them. You have been passed with picking undervalued assets and making them possible. He grew up in scotland, and i grew up in wales. Both of us having outside mentality and also a fair amount of a big work ethic. He is credited with transforming this faltering club into a 3 million public company. What was key to his success, what are the lessons for men and women in business here . Sir michael i wish i had done this, or thought about all these topics 30 years ago. Because i know i certainly would have been far more effective. One is patience. Two is a longterm view. Three is developing people inside of the organization, particularly young people, and bringing them along. Because if you are successful doing that, you build great consistency, loyalty. And it is easier to instill the sort of levels of performance that you want. Emily you boil down the traits to a distinctive leader to just two. One is obsession. And two, capacity for dealing with people. Sir michael you might look at jeff bezos, or larry page, or mark zuckerberg. These people are obsessed with, at the beginning, the products that they want to build, and then their company. And i think the very successful people are great at building teams around them. Microsoft, for example, in its heyday, had a very stable management team. The same has been true at apple. Emily you are so well known for your time chronicling the early days of apple. You spent time with jobs. You were in favor with him, you were out of favor with him. I wonder what you learned by watching steve so closely about what makes a good leader and what makes a bad leader . Sir michael for steve, the product was never good enough, whether it was a computer or a phone or a tablet. He was always thinking about the next thing. I think that is the distinctive hallmark of a truly great leader. Is that great is never great enough. Emily there were a lot of qualities about steve that, you know, are so controversial. Is the jobs model a good one . Sir michael i am a huge admirer. Was a huge admirer, am a huge admirer of steve. And it is very easy for people to sit and snipe. I am no psychiatrist or shrink, but i dont think any of us really understand the emotional consequences of being put up for adoption, and how that affects your life afterwards. And what people also do not see about steve and i am not trying to whitewash the fellow is that this was an individual, very capable, when he wished, of showing great empathy and compassion. Steve is the most remarkable person that i have met. Emily just out of curiosity, where did you leave it with him . Sir michael sadly, unfinished. Polite on business terms, but that was about it. Emily you wrote the famous time cover story about the machine of the year. And you were a journalist at the dawn of the pc revolution. I want to talk to you about some upandcoming leaders in technology. The sort of archetypes. Brian chesky. You are an investor at airbnb. And Travis Kalanick at uber. Sir Michael Brian exemplifies the wonderful traits of a leader. He is obsessed with his company. For him, there is always another hill, mountain to climb. He pushes his team very hard to do the impossible. He has a very longterm view of his business. And he has got a lot of energy. Hes got a lot of optimism. About the prospect. He is a fantastic leader. Emily what about Travis Kalanick . Sir Michael Travis is somebody i do not pretend to know well. Emily he is so controversial. Sir michael controversial have you met anyone who is not controversial that has done interesting things . Emily having known three decades of leaders in Silicon Valley, do you think you have to be arrogant to be successful . Sir michael four decades. Emily four decades. Excuse me. Sir michael lots of leaders have to make decisions about going in directions that may be is not popular in the organization. And sometimes, it spills over into arrogance. Im different from how i was in my 20s. Bill gates, who is in his 50s, is very different from what he was in his 20s. Everybody learns a lot in their pursuit. So, the understandable energy and enthusiasm sometimes spills over to arrogance, and some people in their 20s tend to get softened over time. Emily you wrote this book before jack dorsey was named ceo of twitter. And you say the only Silicon Valley company that grew from strength to strength, as you say, as it swapped ceos, was intel in their first 30 years. So, do you think twitter can become the second in history . Sir michael i think it is far better to bring a founder back who still feels a real sense of dedication and ownership with the company then going out and hiring an outside hand. Jack has not been bashful about saying that the product of twitter needs improving. That is where his strengths lie. As the product improves, presumably, Consumer Satisfaction and the business will improve as well. Emily how do you see this playing out . Does this bubble burst . Or is there a soft landing . Emily as you said, you grew up in wales and you somehow made it to Silicon Valley. What kind of kid were you and how did you get here . Sir michael i got here through no grand plan. I went to college in britain, and this was the britain of the mid1970s. It was not a particularly enticing place if you were a young graduate looking for opportunity. So, i came here and was very lucky to get a scholarship to come and study here. And then after that was lucky again to get a job at time magazine, who eventually sent me out to Silicon Valley. Im a history major, knew nothing about technology. Eventually, through a stroke of great luck, a fellow who had started sequoia, don valentine, took a risk on me. Emily what are the qualities that you think you had as a journalist that made you a good investor . Sir michael i am not sure that i am a good investor, because we always keep making mistakes. The Investment Business, the venture business, some of the other businesses we are in in sequoia, it is a very humbling pursuit. As soon as you think you are good at it, you get chopped off at the knees. Journalism, though, was very pretty helpful. Because you are often parachuted into stories that you know absolutely nothing about. You have to get your bearings extremely quickly. Youve got to deal with imperfect information. And then you have to have a point of view, if you are a journalist, or you make an investment decision, if you are investor. You are trying to read people. You are trying to gauge sentiment. I found the fact that i had been trained to make up my mind about a confusing set of information extremely helpful. Emily Andreessen Horowitz has really perpetuated this idea that good vcs need to be former founders or former ceos. Of which you are neither. Sir michael i think its difficult to tell from someones background whether or not they will be successful in the venture business. We have a lot of Company Founders at sequoia. But there is also room for lots of other people to succeed as well. Being in the Investment Business is also different from running a company. People like us, we are not running the company. We are trying to help these companies as much as possible. The other thing that people miss is that we are working very hard on building our own organization, because unless you have that at the heart of everything, you cannot make consistent investment. Emily you say in the book that the minute you think you are winning, that is dangerous. And sequoia may be the most successful Venture Capital firm in history. What do you do from within to evolve the firm and stay on the edge . Sir michael it begins with consistency. Showing up for work every day. I know emily a lot of people show up for work every day. They are not sequoia. Sir michael it is true, but it sounds simple. It is easy to start easing back and not working quite as hard. And not seeking the same level of success, not having the same hunger, getting arrogant, becoming complacent, believing that you are as good as your press clippings, which are never true. We still act like this in the belief that we are only as good as two things. One, the next person that we hire to become part of sequoia. And the second is our next investment. Emily if the headline of sequoias slide deck was r. I. P. Good times during the financial crisis, what would the headline be today . Sir michael gravity has not been repealed. Emily what do you mean by that . Sir michael that things eventually will fall down to earth if they are not properly constructed. Emily so how do you see this playing out . Does this bubble burst . Or is there a soft landing . Sir michael it is a more rational time than 1999, because i dont think there is a sort of universal feeling that every company is going to be a massive success, and people are a bit more discriminating. And some of them are going to come a cropper. Emily come a cropper. Is that a british phrase . What does that mean . Sir michael they will fail. Emily they will fail. Sir michael it is the law of corporate and business evolution. If people get too big for their britches, if the company is run poorly, if the money is wasted, is the product or service does not really fulfill its promise, the companies deserve to fail. Emily how protected are late stage investments in this environment . Sir michael many late stage investments are not investments. They are just welldisguised forms of debt. Many of them are very well protected because of the terms that investors have put around them. Emily the ratchets. Sir michael the ratchets, the liquidation preferences. These are not really equity investments, they are debt. Emily but is that a dangerous trend . These ratchets and the guarantee that investors will get a certain amount back . Sir michael if the companies do not perform, yes. It is highrisk poker. Emily what about the risk of down rounds and high ipos . And delayed ipos . Sir michael it depends on the performance of each company. But we have gone through this period where the valuations in the private market are far in excess of what they are in the public market, so you have one bucket of bubbling water and another bucket of fairly cool water. If those two buckets are commingled, the temperature will even out. Emily what kinds of businesses do you see will be the first to go belly up, and what trends do you see that will last . Sir michael the businesses that go belly up are the ones that are run by people who deny reality. And do not use the money that they have raised very wisely. And think that there are a whole bunch of shortcuts to success. Those things will come a cropper. But companies that are run prudently, that have got really good discipline about them, that have the right ethical compass from the top, and also that have very distinctive products. Those are going to flourish. Emily lets talk about ondemand economy. You were an early investor in webvan. Youre an investor in instacart. There are questions about the model. Sir michael the one thing we got right about webvan, although we made a lot of horrible mistakes, was the consumer demand for this service is just through the roof. Which is what young instacart is finding today. Instacart, for example, it does not have huge factories or distribution centers. It does not have its own vans. It does not have all of the Capital Infrastructure that was required to build webvan. And it can manage a workforce through these incredibly powerful smartphones. And it is incumbent on instacart and its wonderful founder and ceo to make sure all of the economics makes sense, which it will. But the company is providing a fantastic service to consumers, who just swear by it. Emily any concern about competition from uber . Sir michael we are always aware of competitors, particularly a company as successful as uber or amazon. But you cant define yourself by them, or run afraid. Because then you are following. Instacart is a very complicated business that is very difficult for any company to mimic. Emily how bullish are you now about alibaba and Chinese Internet Companies . Emily i know you were really bullish on alibabas ipo last year. How bullish are you now about alibaba and Chinese Internet Companies . Sir michael despite the bedlam that we all read about, i will Say Something that will strike you as odd. I dont think anything has changed about china. The underlying consumer demand is very strong in china. The Internet Companies there, their business is very good. It is strong. It is healthy. It is vibrant. And we have built our own business there over the course of the last 13, 14 years emily quite a robust business. Sir michael a very robust business, run by some wonderful people. And its no accident that seven of the 20 most valuable Internet Companies today are chinese. Because over the next 20 years, there is going to be far more Business Done between the Technology Companies that get started in china and get started in the u. S. Than there has been over the last 20 years. Emily what does Silicon Valley have to learn from china . Sir michael im always struck by how eager people running Chinese Companies are to learn about their american counterparts. How frequently they come to the United States, how jammed their schedules are when they come here. I wish that the ceos and founders of Silicon Valley companies did the same thing in china. Because i think we could learn a lot from them. And in mobile in particular, the products are different. The services are different. If any Silicon Valley company aspires to be a global company, china is going to be a very big part of their future. Emily now we are seeing airbnb start its own chinabased company with a chinese ceo. Sir michael and linkedin as well. Emily linkedin as well. What does it take for u. S. Tech companies to succeed in china . Sir michael we try not to make the mistakes that we watched others make. So, the first thing that you need to do is go there and admit you know nothing. You need to understand the market is different, and you definitely dont staff your company in china with people from america or europe. You also need to understand that there is a very different work ethic in china. People just happen to work a lot harder. So, its a whole new level of competition. Emily sequoia is very successful, but you have no women partners. What do you think your responsibility is there . Sir michael we think about it a lot. I like to think, and genuinely believe, that we are blind to somebodys sex, to their religion, to their background. We probably have more different nationalities working at sequoia than pretty much its a very cosmopolitan setting. The fact that we have embraced china, we have embraced india, we have operated in israel for a long time, i think shows that. The real question i think that you might have is why, for example, are there not more women . We have many more women working in our China Business than we do in our u. S. Business. Why is that the case . I think the issue begins in the high schools. And where women, particularly in america and also in europe, tend to elect not to study the sciences when they are 11 and 12. So, suddenly the hiring pool is much smaller. Emily so you think it is a pipeline problem . Because some would say, well, you are not looking hard enough. Sir michael oh, we look very hard. In fact, we just hired a young woman from stanford, who is every bit as good as her peers, and if there are more like her, we will hire them. What we are not prepared to do is to lower our standards. But if there are fabulously bright, driven women who are really interested in technology, very hungry to succeed, and who can meet our performance standards, we will hire them all day and night. Emily 2012, you took a step back from daytoday operations. How are you doing . We are seeing you taking on new boards. Sir michael yes, it is great. Emily what has it been like for the last two or three years . Sir michael ive enjoyed it. I did so for a variety of reasons. That i talked about at the time, which we dont need to revisit. And i act as, i hope, a helpful team member. I am not involved in the management of the business at all. I am involved in several companies, some of them very young. And whenever somebody wants some help, at sequoia, i am more than happy to do it. Go to india, go to china. We have a couple of investments in europe i am engaged with. But i also have a bit of time to do things like write a book with a wonderful man who managed a fantastic soccer team. Emily yeah, you could be sitting on a beach right now. Sir michael i cant imagine anything more boring than sitting on a beach. I think the vibrancy of life comes around new experiences and being around young people. Emily so, what is next for sir Michael Moritz . Sir michael i have no idea. [laughter] sir michael something will show up. Emily sir michael, thank you so much for joining us today on the show. It has been really great to have you here. Sir michael good. Thank you for having me. Emily thank you. Our world today is will appear than ever, but not everyone shares in the wealth. Today the young Business Leaders is challenging. Changing the way we think about money, power, and purpose. This is a new generation. This is the new philanthropy. , you dont things half. His father is one of britains richest men. His family controls one of the countrys biggest steel companies. Largerre three times than the next competitor, we have about 300,000 employees. At 39 he is responsible for the finances of a truly global company. Vision, consistency, being the first at the top and leading by example. I think he has those qualities. Now he has his sights set on some of the worlds biggest problems. Which he knows will require big money and smart thinking to solve. If a child is malnourished in the first thousand days of their life they cannot achieve full development. The philosophy is for us to make a Lasting Impact on Childrens Health care for starters. I have been at the company for 17 years now. Steel is the foundation of the world economy. Can you imagine a World Without buildings, without cars, without roads, without airplanes, without schools . Steel is beautiful. In many aspects. This is a beam. Historically it you looked at a beam it was rectangular. We realized that if we introduce these curvatures that actually would be stronger and more versatile. Once we did that and we repainted it we named it the angelina. The angelina beam got an award. The beauty of it is not only is it stronger but when you go to an airport and you see a roof and the roof has these rectangular structures. It is curved it is painted, it just gives a better aesthetic. It is multipurpose, showing how steel is beautiful. I first met him in 1996 when he joined Credit Suisse as an intern in the m a department. I remember him telling me stories of when he was a child in indonesia where his father had built a steel plant. He would play in the scrapheap outside while the father was inside mending machinery. The family revolves around activities that involve running a business. Mittal i was 23, i graduated, i was working in new york as an investment banker. My father kept pestering me to join the business. I put all these conditions in front of him thinking he would never accept. One day he accepted all my conditions. He called my bluff. I have no arguments left. 18 months later, the Steel Industry had a massive crisis, bigger than what we are facing today because of the russian devaluation and the Asian Financial crisis. One third of the u. S. Steel industry filed for bankruptcy. Our stock price had tanked. Here i was in the company and going through that first crisis was the best learning experience for me because it made me realize what actually built a good company, what you need in the Steel Company to survive the test of time, and one of the Key Attributes of a good steel business also in a downturn. Arcelor and mittal found that they could save billions of dollars by combining. He was effectively the ringmaster. There had never been a transcontinental deal of this scale ever before in this industry. Mittal the whole world doubted we would be able to integrate these two companies. I would say that he probably was the chief strategist and the deal. There were a number of countries involved. It takes a lot of skill for a person that young to deal with potentially confrontational circumstances with political leaders in europe. Mittal the company was based on the idea of globalizing Steel Industry. If you look at the global Steel Industry 10 or 15 years ago, it was not matching its customer requirements. Customers were becoming global and they wanted to have one steel part available whether they were operating in china or the United States or europe. There was no company that could actually do that, so we thought that was the foundation and would be a vision of our company. It provided us a scale as well is the first real global and the leading Steel Company. The merger has defined this company for the very long run. It is the most american thing that has happened in my career. Dealmaking is actually a lot of fun for me. I enjoyed it tremendously because it is a very challenging experience. It is a very demanding experience. You know at the end of the day you know what you are trying to create is Something Better and something bigger. The great thing about doing these acquisitions or growing the company, is that you have this feeling of success and a bad thing is that it is momentary. You will move onto the next thing. Immediately, i think everyone in the organization had forgotten about the merger and the focus on how do we make it an even bigger success. He is very focused on the numbers. He also has an instinctive grasp and sense of value. That is very unusual. He is very quick to identify the potential in terms of the synergies and the opportunity to create value that the target represents. It is inherent to the way he approaches steelmaking. Mittal the catalyst of doing something was when i became a father, or when we became parents, because it is a huge responsibility taking on the experience and no one can explain it to you. It is just there. You realize you want to provide, you want to care, you want to make sure your child is healthy. There are millions of parents out there who have the same sentiment. Aditya mittal was in his 30s when he helped orchestrate the takeover of a company, and he helped create the Worlds Largest Steel Company. The business had been guided by his father. The steel magnet Lakshmi Mittal. Mittal i was born in india but moved out of there when i was a small boy. He set up a facility in indonesia. He was in many ways a startup entrepreneur with all the energy and excitement the startup entrepreneur has. As a child growing up in that house, i would hear stories about his failures and his successes. Not being far from the facility i would see where he was going and later on in life i had the chance to actually visit and see exactly what the plant does. I was blown away by what i saw. You melt steel at 1400 degrees. It is very loud. It is very fiery. There are fireworks, sparks flying across. What you are doing is you are taking iron ore coal or recycled steel and melting in. Then you cast it. This molten product is being cast. This whole process is quite fascinating, and for a 12yearold child, it was incredible. I was drawn to the steel business from a young age. Ross Lakshmi Mittal is a very impressive figure and kind of a legendary man in the industry. He took calculated risks that other people would not even imagine. Mittal when i was at wharton studying business he would call me every other day, or once or twice a week, and say, what did you learn today . How can i deploy it in my business . That is a fascinating way to have a relationship because it was two way by day one. He was saying what can you offer . How can you help further improve . I think he also made it exciting. He has this level of crazy passion as well, so it is very exciting for me. I was always drawn to him as well as to the steel business. He was mainly buying businesses that were being privatized in emerging markets. One great example was in kazakhstan. It was a huge Steel Company but it was in such Poor Condition that lakshmi took it over simply by paying the next months payroll. Since then he has put a lot of money into it and he has taken billions of dollars of cash flow out of it. That is a pretty challenging thing. They have mutual respect. That is unusual. Often, our experience has been with fathers and sons in business together, often there is a kind of a lovehate thing, a complicated relationship. As far as i can tell over the years with them, it is not like that at all. Each one makes the other. Each one has a lot of respect for the other. I have not seen any signs of emotional or for that matter, true professional disagreement between them. Mittal clearly my father had a tremendous impact on my business career. We both are strong in our views. Very clear in our views. Very persistent. And so there is a requirement to convince. That creates a better decision. It doesnt create a weaker decision, creates a better decision because you have to argue the pros and cons. Maybe there is frustration at the end of the call. Maybe there is a point at the end of a call, it happens in meetings as well. Then we know both of us understand it. We can resolve that. Because i think at the point in time where we are, is not an environment in which you can take a decision without consulting me or i take a decision without consulting him. We are in sync, we share the same vision for the company. We have the same values. Traits they share our tremendous drive, tremendous focus on what they are actually doing. Down to the most minute detail. The focus is really unusual for people running such a big company. It is hard to imagine how they are able to keep all that much detail in their minds. The third thing is, they are perfectly prepared to take calculated risks. Mittal leadership is to do Something Different to change the name of the game, change the status quo, but you have to be innovative. We live in a world that is all about technology and if you are not innovative as a leader, i dont think you can succeed in the long run. You really have to be passionate if you want to do something big. When i say passionate, you have to be crazy passionate. There has to be an element of craziness in you. You cannot be sane and passionate, or sanely passionate. It has got to have craziness. I remember going around looking for opportunities to expand the business. People thought we were crazy. We went to kazakhstan for the first time and we made our offer, we did not think so. But for the outside world there was a crazy passion there. It was well thought through. It was very clear what our competitive advantage was. We wanted to globalize and consolidate over the Steel Industry. We were focused on creating something that was stronger than what existed today. Over time, what people may perceive as craziness actually becomes very sane. He has seen poverty firsthand. Frequent visits back to india during his childhood. And indeed now, so wealth is not taken for granted. The good things in life are not assumed as given. I think he has therefore gravitated to the notion that it is important for him to support where he can, causes that are relevant to him and make sense. Mittal being indian and living in london and being educated in the states, you are shocked and surprised by the level of poverty that exists in india. You cant escape it, it stays with you as you grow up. It is very evident and becomes even more evident as you grow older. Aditya mittal has devoted his life to his familys business. But he has been thinking about more than dollars and cents. And, just as with his business career, his ambition is big. Childhood nutrition is a huge problem. About a quarter of the children under five years old in the world are suffering from some kind of malnutrition and that has devastating longterm consequences on their health and their education and their life chances. It has a devastating effect on the economies of whole countries. In india for example, were talking about a potential impact of 3 nearly of the Gross Domestic Product of the country. Which is a huge impact. Not only on the malnourished children themselves but on the entire society, the entire economy. Malnutrition is one of the biggest injustices of our time. It is completely preventable if treated correctly. In what we call the first thousand days of a child life, from conception to the second birthday, it is absolutely crucial that those children receive the nutrition they need. If they do not, they will not only be adversely affected physically in terms of being a low birth weight, but they will also be irreversibly damaged in terms of cognition. I think one of the things that is most refreshing about working with him is that he really applies the same logic to his philanthropy that he does to his business interests. He is solutionoriented. Mittal you have to look for the root cause and address that. In india we wanted to address the root cause. The root cause is actually very different. I would never have imagined it. I would never have imagined this from the outside, but the problem is lack of data. We want to create a strong data set and then work on that date set to redirect programs. Data is incredibly important. People think perhaps it is a bit of a boring subject, but data is crucial and it is something we have to invest in. Through the Data Collected in the survey, we were able to identify that a high proportion of women were severely anemic through pregnancy. One other quick interventions we were able to do was to offer iron deficiency tablets to women during their pregnancy. We have seen an absolutely incredible drop in the rates of chronic malnutrition and that is from about 39 to 22 . An astonishing drop in a short. In a short period of time. Mittal it was a much bigger success than i thought. What we did after that program, was we had now rolled out the same diagnostic study to identify the root cause across the country. This covers 30 states in india, more than 200 million children from the ages of zero to 18. Hopefully through this program, we can further improve the governments programs at improving Childrens Health. That is what we are trying to achieve in india. It is very expedient to spend money on tangible things as a government. A new hospital, more food. Rather than say, lets put our resources into a study or survey. That is just as critical as spending resources on providing direct benefits. We live in the united kingdom. We are from london. We are doing something in india, but it is important to give back to where we are. Sets our focus is Childrens Health care, the right place to begin was the ormonde street hospital. What we do here is very personal, it is something that my wife and i do, and there is big implications. There is a strong emotional aspect to anything you do with Childrens Health. As we look out here you can see pretty well the two parts of the mittal Childrens Health center. The part on the left is completed, which is holding a lot of cardiac surgery operating rooms and neuroscience areas. This is the second half of the center, which is currently being built. It is really hard to overestimate the impact that the mittals have had in this industry. This area has made a revolution for the patients who were in it. Each child had just a very small amount of space. In modern medicine we have moved on to such an extent that they are often surrounded by a lot of equipment and nurses and their families. The amount of space they need has grown. The building that you have provided for us has made that possible. Giving back to the children their dignity and privacy and allowed some space for the parents to look after their children. Mittal we had very poor facilities historically, going back to the mid19th century, so being able to modernize these facilities that are appropriate for the 21st century, the morale has greatly gone up. We are able to do our work in an environment that is appropriate for the modern era. I think the face of philanthropy has changed considerably in the past couple of years. This new wave of philanthropists are really looking for a way to have a deeper engagement and involvement with the causes that they support. Not only offering support in the monetary value, but also offering their business acumen and their experience. His Business Life is extraordinarily busy. What is unusual at his time of life is the ability to find time to devote to other causes other than his career. And yes, that is impressive. Mittal i think my lifes work will be in steel but i hope i can have a Lasting Impact on philanthropy. I spend most of my time in the steel business. I have not migrated to the point where you dedicate your life to such causes. I hope to one day. Francine welcome to leaders. Santander is one of the oldest and biggest banks in the world. With a footprint in spain, the u. K. , and the United States, it is a truly global bank with more than 100 million customers. Now recently, the spanish lender had undergone several big changes, most recently when emilio botin, the executive chairman, passed away in4
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