The traditional power of venture capitalists to influence founders has been eroded by an “increasingly rebellious youth culture,” said Mallaby, recounting Facebook’s Mark Zuckerberg’s commitment to late to a meeting with the venerable company Sequoia wearing a T-shirt. and pajamas. But Mallaby also points to a structural change. He says the balance of power has tilted in favor of the most sought-after entrepreneurs because they now have a choice among those calling for marriage proposals: More money than ever to find the big thing. next jump.
The book covers a lot of the specifics of transactions made, phone calls back and forth, meetings scheduled and adjourned. The banal dialogues are narrated, even if they seem to serve only as a jumbled narrative. (“What are you doing tomorrow morning?” “I’m not doing anything.” “Great, how about we meet for breakfast?”) Some of Mallaby’s metaphors make no sense; he writes that one VC, upon learning of a pleasant surprise, “digged this spark from the sky.” Another VC, also triumphant, “allowed himself only to celebrate discreetly, like a man raising his fist and shouting a victory shout, but in silence.” So, this VC screams but doesn’t scream – and since he just “likes” this tortured image, he doesn’t even punch?
It is the cushioning material for this overstretched book, which never fits the case it so elaborately tries to make. Mallaby’s main argument is disruption to venture funds, and disruption is often for good. Innovation creates more innovation, taking us out of stagnation.
Mallaby has clearly done a lot of research, and it’s not like he’s ignorant of the “supposed shortcomings” of venture capital; he just decided that they were being drawn to “industry appeal.” A passing sentence allowing all the money to be poured into Uber to “boom” and destroy the competition might have forced existing taxi operators to “compete on a distorted playing field,” but ” incumbent taxi operators,” said Mallaby, cozying up to city regulators anyway. There is no mention of how the complete dominance of apps like Uber has plagued “incumbents” (a dirty word among disruptors) – financial ruin, the suicidal; only the cold (and questionable) conclusion is that “cheap venture dollars are used to balance that unfair advantage.”
Among the founders of spectacular success at Uber and WeWork, Mallaby’s apology is a remarkable one. Their “responsible” VC advocates could have kept quiet, registering any apprehensions “politely” and privately until the embarrassing information became too public to bear. ignored, but the real fault, he said, was not with the adults in the room but with “not paying attention, late stage investors” — though venture capitalists alike were delighted. when their wayward founders take money from those “inattentive” investors.
There is only one critique of venture capital that Mallaby says is deserved – the need for the industry to diversify beyond “monoculture” is “too white, too male, too Harvard/ Stanford”. This is a fair assessment, but at this point it doesn’t exactly tell the truth to power. Venture capitalists love to talk about boldness, but one imagines that they will appreciate the tone of respectful restraint in this sponsor-friendly book; much better to get a familiar call for more variety than anything that might make them question their bottom line.
https://www.nytimes.com/2022/01/31/books/review-power-law-venture-capital-sebastian-mallaby.html ‘The Law of Power’ is a sponsor-friendly look at the venture capital world