VentureBeat

Updated

John Doerr and Michael Moritz, the most prominent venture capitalists in the world, just squared off at the annual meeting of the National Venture Capital Association. Largely on the basis of their investments in Google, the two men have spent the last few years jockeying for the top spot on Forbes’ annual Midas List — Moritz (pictured, below) topped the list in 2007, with Doerr (pictured, above) at number two, but this year, their positions were reversed. For all their success, the VCs — described in the program booklet as “the titans” — were genial and even sounded rather humble while sharing the stage together.

Doerr, for example, emphasized his vision of venture capital firms as service organizations for entrepreneurs. They’re trying to help entrepreneurs realize their dreams, which is one reasons why Doerr says he abhors trivializing their work by calling investments “deals”. (Moritz agreed, but said it’s even worse to refer to a company as “a project”.)

When Doerr asked Moritz what one thing he would change about the industry, Moritz responded, “I think there’s a lot of hot air and arrogance in the business that we would all be better off without.”

VCs could stand to do less talking and more listening, he said. There’s a risk of making decisions based on emotion, rather than “a ruthless evisceration of the facts.”

Moritz took his own advice at the end of the interview, when an audience member asked for thoughts on Microsoft’s failed Yahoo bid, and Moritz (an early Yahoo investor and friend of chief executive Jerry Yang) decided it was best not to say anything.

Those comments seem to match Mortiz’s personality — Doerr confirmed that when the two men serve together on company boards, Moritz tends to say very little. With his focus on careful observation and wanting facts, not opinions, is it any surprise that Moritz used to be a reporter at Time Magazine?

Moritz said he looks for similar qualities in an executive, who should be a “calming, level influence who doesn’t wear his emotions or her emotions on his or her sleeve.”

(Doerr gave a more flippant answer, noting that the founders of successful companies “all seem to be white, male nerds who’ve dropped out of Stanford or Harvard and have no social life.”)

Moritz also asked Doerr to share personal memories of high-profile Silicon Valley entrepreneurs. Among the tidbits offered: Netscape cofounder Marc Andreessen has a soft spot for the Creamery restaurant in Palo Alto. Also, Doerr recalled that many of Amazon’s first orders tended to bundle programming books with how-to sex guides, which should tell you something about the company’s early customer base.

Not only have Doerr and Moritz worked together in the past, but their two firms — Kleiner Perkins and Sequoia Capital, respectively — have a long history of collaboration. In fact, Moritz said the firms have partnered for a total of 50 investments. The company names have started with the entire alphabet except for H, J, Q, V, X, Y and Z, and Moritz hopes to eventually cover all 26 letters. Maybe that news will help prospective entrepreneurs who are still searching for a company name …

Update: Jennifer Jones has sent us a link to her audio recording of the panel. It’s definitely worth a listen.

Google has invested $1 million in Comsenz, a Chinese provider of social network software. It’s yet another move by Google to gain a foothold in China.

The investment occurred in July as part of Comsenz’s second round of venture funding, and it was recently revealed in a regulatory filing (see p. 39). Rumors about the investment previously pegged Google’s portion at $5 million. The news follows a report that Google is preparing to launch a joint music download venture in China, largely to take on Chinese search engine Baidu.com, which has been beating Google by offering free music.

As for Google’s American competition, Microsoft has a direct presence in China, while Yahoo owns a large stake in Chinese online marketplace Alibaba.com.

Beijing-based Comsenz provides bulletin board and social networking software, as well as hosting services, to Chinese websites. (We don’t have any more details — not surprisingly, the company’s website is in Chinese.)

Comsenz is backed by former Google board member Michael Moritz. Moritz is a non-managing member at Sequoia Capital China, which owns more than 10 percent of the Chinese company. He left Google’s board last May.

Separately, Google revealed it acquired Peakstream, a company that makes it easier to run applications on multiprocessor systems and thus should help Google boost its internal server architecture, for about $20.3 million (see p. 39). That means Peakstream’s investors lost money on the deal. Peakstream soaked up $23 million over two years (our coverage) from venture firms Foundation, Kleiner Perkins — and yes, there’s that connection again — Sequoia Capital. Kleiner and Sequoia, both original investors in Google, each took in about one-fourth of the acquisition proceeds. Kleiner’s John Doerr also sits on the board of Google.

Matt Marshall contributed to this article.

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Mahalo.com, the latest company from entrepreneur Jason Calacanis, launched, with a stripped-down search engine designed to handle only the most popular requests in widely appealing categories.

Focused on areas such as travel, music, television, movies, cars, food, health, news and sports — and filtered with the help of a team of 40 employees in Santa Monica, Calif. — the limited results are meant to avoid the spam and other junk results that clog up the other search engines. They aim to fulfill the Web’s most repeated requests.

By cherry-picking only the most popular 10,000 search terms, it can organize results in the form of a more organized, thoughtful list about your search term’s attributes.

The challenge here, though, is that dozens of other search engines have launched to tackle specialized search already, including shopping search engines, job search engines, travel engines and engines like Hakia that organize results in similar ways to Mahalo. Moreover, there are other sites that provide real people to help assist in searches, such as ChaCha.com. Finally, Mahalo forces people to change their searching behavior, requiring them to calculate when to use Mahalo versus say Google or other engines — all things that make this a long-shot for quick, big success.

However, Calacanis, who co-founded Weblogs, a blogging network, sold to AOL for $25 million in 2005, says he has enough cash to tide him over for four or five years without turning a profit. Mahalo is backed by Sequoia Capital’s Michael Moritz, News Corp., CBS Corp., Dallas Mavericks owner Mark Cuban and Elon Musk, co-founder of online payment service PayPal.

It has completed 4,000 of the 10,000 planned pages. If you search for something Maholo doesn’t have the answer to, it defaults to Google’s results.

More details here.

Example for search term “Porsche 911″ below:

Updated

Alibaba, the large Chinese company that owns Yahoo China, is preparing to file another hard-hitting suit against competitor Qihoo and its leader, Zhou Hongyi (pictured above).

Yahoo China has already filed one suit against Qihoo, saying the search engine start-up’s software notifies users that Yahoo’s toolbar is malware and prompts deinstallation, and that it’s hurt Yahoo’s market share.

The coming suit, which VentureBeat learned about early this week, will go much further. It will attempt to take out the man at the center of the stand-off: Zhou Hongyi. He is the founder of Qihoo, and is backed by the aggressive venture capital firm, Sequoia Capital. Zhou embittered Yahoo China since he was forced out of that company last year. Yahoo China will claim that Zhou has embezzled from Yahoo China and defrauded it, according to a source familiar with the lawsuit being prepared.

This isn’t helping Qihoo, which is reportedly trying to raise another round of funding at a high valuation of about $80 million. Its main backer, Sequoia Capital, had a few conflicts in China too. Sequoia was a big backer of Google, which is now a competitor to Qihoo. It was also an original backer of Yahoo. However, it’s not clear how much the U.S. Sequoia team is involved in the Qihoo deal. Sequoia’s Chinese office has been the main liaison with Qihoo.

Meanwhle, a separate source says Yahoo’s co-founder Jerry Yang is actively seeking to dissuade investors from backing Qihoo. A Yahoo spokeswoman declined comment. VentureBeat has contacted Qihoo, but was unable to reach Zhou by the time of this writing (Update: See our story here for Zhou’s response). A spokesman for Yahoo China did not respond to a request for comment.

Qihoo’s Zhou is controversial. He was the founder of 3721, China’s first search engine, which Yahoo bought for $120 million in 2003 to help it gain a significant foothold that had eluded it in China since it entered in 1999.

But 3721’s software had become popular by lodging itself in computers as spyware. It introducing pop-windows, bedeviling its users — and some would say it introduced spyware into China.

Things went down hill after Yahoo’s acquisition. Zhou, who took over Yahoo China’s operations came to loggerheads with Yahoo’s US headquarters. Zhou has subsequently blamed Yahoo China’s arrogance for the fallout. But Alibaba’s suit will claim Zhou initiated illegal behavior long before he was pushed out. Yahoo China says it first became upset with his performance: He refused to hire English speaking employees, and had become distant from his U.S. owner. Meanwhile, he was biding his time until he qualified for the earnout under the Yahoo China acquisition contract.

Then, last year, Yahoo invested $1 billion into Alibaba. Alibaba, under that agreement, took over the operations of Yahoo China. Alibaba’s leader Jack Ma forced out Zhou. Zhou then vowed to some his executives that he’d do anything he could to make sure Yahoo China never succeeded, according to the suit to be filed.

Yahoo China will claim Zhou was already using his position before the Alibaba acquistion to steal partnership and investment opportunities away from Yahoo China, preparing the groundwork for his exodus to Qihoo. He also offered money to key Yahoo China staff if they left the company, the suit will allege. He even launched press releases through front PR firms, saying in one case that a Yahoo China deal with MSN had expired when in fact it hadn’t, the suit will claim.

Qihoo is now reportedly raising another round, asking for a $80 million pre-money valuation. Our source said Sequoia’s Michael Moritz planned to meet Yahoo’s Jerry Yang this week to sort things out, something VentureBeat wasn’t able to confirm. Sequoia did not respond to a request for comment. According to the rumor, Qihoo wants to raise $10 to 20 million and is projecting $3 million in revenue for 2006, and $18 million for 2007.

In Qihoo’s first round, Sequoia joined CDH Investment and IDG Ventures to invest $20 million.

Michael Moritz (pictured below), venture capitalist with Sequoia Capital, and backer of Google and Yahoo, is apparently funding a blog company called Sugar Publishing, which runs four popular blogs, including flagship PopSugar, that caters to young, hip women.

The San Francisco start-up, which has a social networking component, says it is already getting 13 million monthly page views (or so it said in August), and 1.5 million unique visitors.

Rumor of the investment appeared here first. The amount is $5 million, as reported by Om Malik this evening, though we haven’t confirmed any of this.

Sugar Publishing was founded in April by 32-year-old San Francisco software entrepreneur Brian Sugar with $250,000 of his own money.

It doesn’t expect to earn any money until the end of next year, but just two months after it was founded, it was already getting a bountiful offer from a Boston VC firm in the $10 million valuation range, or so the company said. So this investment from Sequoia should be a bit higher, if the rumor is true. Banana Republic bought out the company’s entire ad inventory for a week in July, the company said.