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TR: How about spam-or maybe we should say, anti-spam?

MM: I think we can count on the infinite creativity of nefarious characters around the world to keep this lively. It’s like the antivirus market: everybody thought that would go away in the late 1980s, and obviously it’s been an enduring business. We have investments in a couple of companies, including Corvigo; it does a filtering appliance for enterprises.

TR: Authentication, online identity?

MM: Again, there are a lot of big companies lurking around, and one of the questions a little company has to solve is how to become a trusted entity. We have one company in particular that’s working on that, but we haven’t even talked about it yet. It’s early days. There are a lot of big players out there who want to own this.

TR: Speaking of big players, Bill Gates is very keen on Web services. A lot of people still don’t understand what that means.

MM: Well, join us: we don’t understand it either. It used to be everybody was supposed to have an artificial-intelligence investment. Right now you’re supposed to have Web services in your quiver.

TR: But what is it?

MM: At the moment, it seems to be anything you want it to be. But there are certainly companies that will make their living based on the coming trend toward XML [Extensible Markup Language, a protocol for organizing data on the Web]. That sounds very bland-“doing real things for the customers.” The good news might be that I haven’t heard the phrase “Web services” for some time now. I think it’s last year’s wallpaper.

TR: How about security?

MM: Absolutely, in all shapes and forms. For us, it’s security in the enterprise; it’s security around wireless devices; it’s securing major Web sites. We have an investment in a public company called Netscreen, and also in some private companies, Netscaler and RiverHead. It’s a very complicated area, and again, it looks as if it’s going to be one of these things that will be with us for a long time.

TR: One more: “social networking”-the whole Friendster craze. Maybe we’re missing something, but it’s hard to see people swapping friends the same way they swap DVDs on eBay.

MM: Community areas-if they do something real for the community-have been good places to invest. We were happy investors years ago in LinkExchange and eGroups. But all of these companies have to build businesses, and none of them have yet shown that they can do that. We’re invested in a company called LinkedIn, which is focused on the professional marketplace.

TR: Could you give a hint about where you’re looking for ideas?

MM: I never answer that. It’s like expecting a product company to announce its future products.

TR: Sequoia’s Web site says you look for “the marriage of extraordinary passion with an enormous market potential, preferably billion-dollar-plus.” That’s a pretty high bar.

MM: Internet advertising was a zero-million-dollar advertising market in 1995. Last year it was probably $12 billion. Outsourcing manufacturing services is a hundred-billion-dollar business that didn’t exist in the mid-’80s. The trend you latch on to may only be a $50 million marketplace today, or it may not even exist. But you’ve got to feel convinced that the dynamics are there so that it can blossom. Otherwise it’s just not worth the effort.

TR: It also says you “prefer a simple product with lots of prospective customers over patent-protected devices.” Not exactly encouraging words for someone in a top university lab.

MM: That’s a bit of hyperbole. Obviously, if you can have a product that you can sell to lots of people that you can have technology barriers around, that’s a wonderful thing. But lots and lots of customers probably afford your business better protection than a few patents.

TR: Do you see any shifts in the relative importance of what we’ll call “pure” technology ideas-an innovative bit of hardware or a software application-and the more services-oriented plays?

MM: Not really. Advances at the component level still fuel everything that happens further down the food chain.

TR: Can you see a time when the Internet ceases to be a “technology” area and becomes just another business? Once upon a time, light bulbs and automobiles were the bleeding edge.

MM: For the better companies, making headway on the Internet has always been a business.

TR: We don’t hear much these days about “Internet time.” Is that still a valid idea?

MM: The only time that matters is time to market.

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