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Consumer Tech Played Out?

Curious comment from famous VC Michael Moritz of Sequoia Capital, he who invested
heavily in Google in 1999. He also got a piece of Yahoo and Paypal — also Webvan and
eToys, it has to be said. He’s listed as number 1 in the 2006
Forbes Midas List
(via Jeff Clavier).
Interesting then to note that Moritz thinks the
consumer tech fad is “played out” (Forbes’ words):

“Consumer-tech businesses, he says, are a pit of “muck and mire.” They have low
margins, require massive marketing budgets, compete with monster retailers’ house brands
and face Asian copycats. Though he has helped fuel the consumer craze, he laments the
rise of handheld gadgetry: “The march of consumer technology will spell an end to
tranquility,” he says. “Most of the venture money going into consumer-related companies
will be squandered, and the rest will be lost. It will be brutal.”

These days Moritz is focused on less flashy investments such as newfangled batteries
(via an outfit called A123), training software (Saba) and 24/7 Customer, a tech
outsourcing shop in India.”

I’m not sure what to make of this, because near the end of the same article two other
VCs are quoted as being very bullish on ‘consumer tech’.

Kenneth Lawler, a partner at Battery Ventures and number 41 on the Midas list, says:
“The driver of tech innovation has moved drastically from the enterprise to the consumer.
It’s all about enabling the digital lifestyle.” And then David Chao, number 10, says “If
there is any one engine that is going to drive the next bubble–good and bad–it will be
those billion handheld devices that will be sold in 2007.”

I suspect Moritz is being disingenuous with his statement that consumer tech is played
out. But he could also be saying that the real value has gone ‘up the stack’ (to use a trendy
term). In other words, the value won’t be in the consumer tech devices – but what is
built on top of that platform. Another interpretation is that Moritz thinks consumer tech is just too mainstream amongst VCs now and so he’s looking to the ‘next wave’. He’s obviously a very clever and forward-thinking fellow, as evidenced by this quote from
a Feb 2004 Harbus Online article
(dredged up via a bit of Googling):

“Harbus: What could you tell us about Google and the excitement around the

MM: I could tell you a lot, but then I would have to shoot you!”

NB: he said that two years ago, before the Google IPO and Gmail and lots of other
Google innovation surfaced.

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