Would you highlight a couple of your favorite conversations when you were doing your research where you thought, “Wow, this is a really special moment. So you were able to take us and talk to people who we don’t often get access to. Despite often being well known, they’re often not on every single chat show. But before we get to those sorts of questions, one of the things you were able to do in your book was go off and talk to people who are extremely busy. And as we have our conversation, we’ll start to unpick whether that’s luck, whether that’s skill, whether that impact is real, whether it’s a problem of survivorship bias. And it’s remarkable that now it’s grown to a point where, when you look at all of the companies that have gone public in the United States since 1995, three quarters of the market cap derives from venture-backed companies.ĪZEEM AZHAR: So that in the sense gives us an idea, some idea of its impact, but of course the story is not as simple as that. And so from that point on, you’ve got six decades. I think it really came into its own certainly on the West Coast with the foundation of Arthur Rock’s venture capital partnership in 1961. So it’s that thing about inventing tomorrow, which is irresistible. And that’s what startup founders do, and that’s what their investing partners do when they get into the trenches with them. SEBASTIAN MALLABY: I think the act of building thing out of nothing is sexy and fascinating. What makes it so interesting, so sexy, so enticing a subject matter? SEBASTIAN MALLABY: Great to be with you, Azeem.ĪZEEM AZHAR: Venture capital is a really alluring subject, and the venture capitalists themselves have this mystique around them, an aura. Sebastian Mallaby, welcome to Exponential View. I’m thrilled to have him here to talk about one of my absolute favorite subjects. He’s had a storied career as a journalist and author, and is currently a senior fellow at the Council on Foreign relations. He writes about how venture capital came to shape our world, what makes it unique and why its best proponents play an outsize role in changing the way we live. My guest this week has spent five years researching and writing a book about that industry. A huge number of those innovations have been driven by venture capital, which I believe is one of modernity’s great transformational forces. In that time I’ve watched exponentially developing technologies change our world. As an entrepreneur, investor and analyst, I’ve been an insider in the technology industry for over 20 years. The Power Law: Venture Capital and the Making of the New Future – Sebastian MallabyĪZEEM AZHAR: Welcome to Exponential View with me, Azeem Azhar. Why venture capital is here to resource:.How an unknown Russian investing in Facebook changed the VC game forever.What sets the most successful VCs apart from the pack. Sebastian Mallaby, author of an excellent new book, The Power Law: Venture Capital and the Making of the New Future, joins Azeem Azhar to discuss the history (and future) of venture capital. But how did an obscure investment strategy become the engine of modern innovation and where might it go next? The higher profile partners primarily identify areas or specific businesses to invest in, approve deals (whether they be investments or exits), occasionally sit on the board of portfolio companies, and generally represent their VC firms.Seventy-five percent of the total value of US companies that have floated since 1995 has been created by venture-backed firms, including Alphabet, Facebook, and countless others. Principals are on a “partner track” that depends on the returns they can generate from the deals they make. Principals are also in charge of identifying investment opportunities for VC firms and negotiating terms for both acquisition and exit. They usually serve on the boards of portfolio companies and ensure that they operate without major hiccups. Although they do not make key decisions, associates may introduce promising companies to the firm's upper management. They also work with the companies in a firm’s portfolio. They tend to do more analytical work, analyzing business models, industry trends, and sectors. These individuals usually come to VC firms with experience in either business consulting or finance, and sometimes, degrees in business.
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