The legendary Silicon Valley venture capitalist Michael Moritz has been sounding the alarm about high valuations of “unicorn” startups for months, and this week he even invoked the late Apple CEO Steve Jobs to take those companies to task.
In a post on LinkedIn (LNKD), which originally ran as an op-ed in the Financial Times, Sequoia Capital chairman Moritz implored the unicorns—private companies with valuations of $1 billion or more—to “count the nickels,” and to demonstrate the Apple (AAPL) founder’s scrappy hunger for success if they hope to follow in his footsteps.
“It is easy to forget that, when he was a student, the man who brought us the Macintosh, iPhone and iPad (and, with his little finger, Pixar) collected bottle caps to make ends meet,” Moritz wrote. “It is on that spell, rather than the enormous public profile commanded by Steve Jobs in his later years, that would-be emulators should dwell.”
Consider, Moritz wrote, that Apple was valued at $1.2 billion when it went public in 1980 (or about $3.6 billion in today’s dollars). Jobs, along with his co-founder Steve Wozniak and then-CEO Michael Scott, owned roughly 40% of the company “largely because they had been so efficient (and parsimonious) with the small amount of outside capital they had raised.”
While praising the value of hard work as illustrated by Jobs, Moritz also warned that today’s startups will have to work even harder, because “at least in Silicon Valley, it is also more difficult and expensive to build a company up than it was at the end of the 1970s and early 1980s.”
Moritz cited a slew of obstacles, from intense competition for talent to the high cost of rent. Here is an excerpt:
The fact that there are more technology behemoths—Amazon, Apple, Google, Facebook, Microsoft—than at any time in history makes life tougher for the start-ups. These companies, together with a raft of smaller, rapidly growing, profitable ones (and, increasingly, several Chinese businesses with Silicon Valley outposts) are run by people eager to conquer new frontiers. That has had a dramatic effect on the cost of start-up labour.