“So, Mr.
Moritz.
What brings you here?”
“I’ll get straight to the point.
Have either of you considered selling your Yahoo shares?
My firm is prepared to purchase them directly, at a premium.”
“What?” Zach sat forward, unable to contain himself.
“Mr.
Zach.
Are you surprised?”
“Oh.
No.
It’s nothing.” Zach caught the look John Leighton gave him from across the room, a single steady glance that said calm down, and pulled himself back.
He replied evenly and said nothing further.
He thought to himself that even a child was better at this than him.
Though John Leighton was not an ordinary child.
Not even close.
If John Leighton had heard that thought, he would have told Zach plainly that he was not a child, and that Zach’s entire family were the unusual ones.
Yahoo’s growth had clearly drawn the attention of serious capital.
That much was now obvious.
“If both of you are willing to sell, my firm is prepared to acquire your combined position at a valuation of one hundred million dollars.
Based on your shareholding, that comes to twenty five million dollars for the two of you.
Congratulations, gentlemen.
Your initial investment has returned fifty times its value in under two months.”
Michael Moritz said it with a touch of genuine envy.
The two people sitting across from him had put in five hundred thousand dollars and were being offered twenty five million.
That kind of return, in that kind of timeframe, was the sort of thing that made even experienced investors pause.
At this point in 1995, Moritz’s own net worth did not exceed what these two were being offered.
In a capitalist society, it was impossible not to feel it.
What he did not know was that Zach’s excitement was simple enough to explain.
His shares were worth real money.
John Leighton’s calm, on the other hand, came from a different understanding entirely.
He knew Yahoo’s actual valuation was already well above one hundred million, and that the final number would depend on negotiations that had not yet happened.
“I’m sorry, Mr.
Moritz.
Neither of us has any intention of selling.
We are both committed to Yahoo’s future.”
“The valuation isn’t sufficient?” Michael Moritz asked, visibly surprised.
“It isn’t about the valuation.
Mr.
Moritz, since you’re here, you’re likely already aware that the major shareholders met at Yahoo this morning.
There is a comprehensive financing and development plan already in place.
Sequoia Capital will be receiving the formal proposal shortly, and I hope to hear good news from you when that time comes.
In the meantime, selling our shares is not something we’re considering.
Yahoo’s next chapter is going to need the support of firms like Sequoia, and people like you.”
Michael Moritz looked at the young man across from him for a moment. This chapter was taken from g.com without permission.
The certainty in his expression left no room for further persuasion.
The acquisition was not happening.
“A genuine shame.
Very well.
I hope we find a way to work together going forward.”
“As I said, we need capital for what comes next.
Sequoia’s involvement would be welcome.” John Leighton left the door open clearly and without ceremony.
“I’ll be honest with you.
I went to Stanford some time ago specifically to find Jerry Yang.
By the time I arrived, I was already too late.
Angel investment had already closed.
I considered reaching out directly, but the moment passed.
It seems the second round of financing is where I come in.”
“Your timing gives me confidence, Mr.
Moritz.
If someone with Sequoia’s instincts is this interested, we must be doing something right.”
“Yahoo’s trajectory speaks for itself.
A functioning commercial profit model in the internet space, at this stage, is genuinely rare.
Anyone paying attention to the internet has noticed what has happened since the revamped site went live.”
“That credit belongs to the American internet environment and to Jerry Yang’s team.”
Michael Moritz looked at him.
John Leighton looked back, expression entirely composed.
Moritz shook his head slightly.
“The people inside Yahoo call you the Son.
Looking at you now, I begin to understand why.
You don’t carry yourself like a fifteen year old.”
“Many people say that.
I don’t think an ordinary fifteen year old would put his entire net worth into a single investment.” John Leighton shrugged.
“No.
They wouldn’t.
Lucky boy.” Michael Moritz stood, and the two parties exchanged their farewells with mutual courtesy.
“I look forward to the financing negotiations, Mr.
Son.”
He left.
…
The moment the door closed, Zach let out a long breath and then burst out laughing.
The visit had made one thing extremely clear to him.
His five percent was real.
It was worth something.
It was worth a great deal.
“John.
Thank you.” He said it seriously, the laughter gone, looking directly at John Leighton.
“There’s no need for that between us, Zach.
You’re my guardian, remember.” The source of this chapter is g.com.
“The best thing that ever happened to me was meeting you.
Look at this.
I’m a millionaire.
Just like that.”
“Millionaire is just the beginning.
Next comes multi-millionaire.
Then further than that.” John Leighton said it plainly, as a statement of fact rather than encouragement.
He was not exaggerating.
Based on what he knew of Yahoo’s eventual public valuation, Zach’s five percent, even after dilution through future financing rounds, would be worth well over a hundred million dollars by the time the company listed.
“In that case, should we celebrate, Mr.
Multi-Millionaire?” Zach asked, slipping back into lightness.
“Celebrate what exactly?
The valuation is a number on paper.
We haven’t received anything yet.
Look at our actual bank balance, Zach.
We are, at this precise moment, two of the poorest multi-millionaires in California.”
Zach considered this and deflated slightly.
“You’re right.
Two tycoons with almost nothing in the account.”
The idea of celebrating quietly dissolved.
John Leighton’s assessment was accurate.
A high valuation meant nothing until it converted into something real, and that moment had not yet arrived.
…
Zach went quiet.
John Leighton’s thoughts, however, were moving in a different direction entirely.
Yahoo was secured.
But 1995 was not a quiet year for the internet.
Netscape was going public.
Amazon was about to be founded.
The internet boom was not a single event.
It was a wave of events, one after another, and he had no intention of watching them pass from the shore.
He had already invested in Yahoo.
But Yahoo would not list until 1996.
Between now and then, there were other opportunities, and he had been thinking about how to reach them.
Michael Moritz’s visit had given him an idea.
Sequoia Capital.
Michael Moritz.
If the relationship with Sequoia could be cultivated properly through the Yahoo financing round, there might be a way to access the pipeline of opportunities Sequoia was seeing.
His development capital for the coming year did not have to come only from waiting for Yahoo to mature.
There were other paths.
John Leighton looked out from the balcony at the Silicon Valley skyline and thought about Michael Moritz, somewhere on his way back to Sand Hill Road.
He thought: I hope you won’t disappoint me.
Somewhere across town, for reasons neither of them could have explained, both Michael Moritz and his colleague felt a sudden, inexplicable chill pass through them.