Some of the best findings sometimes happen purely by accident.  I was checking a web page to see if there were any updates to FCC Chairman Michael Powell's blog, and ended up coming across a great interview while browsing the AlwaysOn site.  In the two-part article, Michael Moritz, the Sequoia Capital guru, and Eric Schmidt of Google were asked by moderator Guy Kawasaki about the relationship between the VC and the CEO (as part of the Silicon Valley 4.0 conference - granted, it's been a while back, but the articles were only posted in late August)

Here are the two links for Part 1 and Part 2.  These articles are definitely worthwhile reading.  I particularly enjoyed the following words of wisdom:

On the secret behind Sequoia (from Moritz):


My partner, Don Valentine, who started Sequoia, offered this example very frequently. This is way before I was at Sequoia, but Don was in 1977 or so an investor in Apple Computer. And it was a fairly natural progression, if you're an investor in Apple Computer, to knowing what the shortcomings were to using cassette tape as a storage mechanism for personal computers in the late 1970s, to understanding the implications of what disk drives could do for personal computers.

So Sequoia went ahead and invested in a couple of disk drive companies. And if you invest in a disk drive company, why, you're alert to the importance of the magnetic heads inside a drive company, so you invest in those. And if you're an investor in a PC company and disk drive company, you knew you had to have software running on top of it, so you went off and invested in a software company like Electronic Arts. And once you had your PC software enabled all over the place, you kind of understood that you needed to connect the computers, so you invested in an Ethernet company like 3Com. 3Com in turn led to Cisco.

So all we're trying to do, in a way, is stay awake. Staying awake is probably the secret in the venture capital business. That's all you need to do, to be fortunate enough to be an investor in a company like Google—stay awake and inevitably it will illuminate the new market horizons and segments that are opening up. I think that's all we've done for 25 or 30 years, we just stayed awake.


On what gets Sequoia's pulse moving about a company (from Moritz):

Moritz: Losing our money.

Kawasaki: On the upside?

Moritz: The stuff that makes the venture business an incredibly invigorating place to be is back to what Eric was saying about why he was attracted to Google. Imagine every day in your life working with 25, 26, 27-year-olds who've got a fabulous idea, who see no boundaries, see no limits, see no obstacle that they can't hurdle—it is the most stimulating environment that you can ever be in. 


And on how passion (and not necessarily age) is really the key element for success (from Moritz and Schmidt):

Moritz: No, no, no. I just want to point out that we were fortunate enough to play a part in hiring Terry Semel, who runs Yahoo today. He's 60 years old but has the metabolism of somebody in his 20s. You can have some old 20-somethings and some young 60-year-olds, but the passion is the enduring theme.

Schmidt: About motivating people, you say that people want to make a difference. During the bubble, everybody thought they wanted to become executives or rich people or whatever. But if you actually think about human nature, people really want to matter.

So if you can come up with something that really matters, you can build a great company around it. You just have to explain it that way. You have to literally believe, in your own heart, and convince the other people that you can change the world. There are numerous such opportunities here in the Valley. And those companies will be built based on that passion. And all these other details somehow get sorted out.


David Hornik made the same point above in an article on VentureBlog back in July.  Except, he egregiously used a more emphatic word than enthusiasm: fanaticism.

Regardless of whether you call it enthusiasm or fanaticism, it is important to add the qualifiers that mathematicians often use: this zeal element is a necessary but not sufficient condition for a successful startup.