Definitely a book worth reading. However, do you think that VC eliminates the need for larger firms to do large scale R&D? I know the goal of all portfolio companies is usually not acquisition. But some firms built on a singular technology, where acquisition as the end game only seems logical.
Venkat
· 1 year ago
Hmm.. I would say venture capitalism is an integral part of a broader socio-techno-cultural history of the region, and ought not be analyzed as a stand alone thing.. Curiously, this broader organic understanding of innovation is what Richard Florida calls creative capital, and I like that more sweeping use of the term. In my mind, venture capitalism too (like a lot else) ought to be laid at the door of Vannevar Bush, via his student Fred Terman. Some credit also due to the Robert Taylor-PARC route (which ALSO has its roots in V. Bush's work). I guess you can tell I am a Vannevar Bush fan.
But yup, this is an interesting attribution too. I'd heard of, but not thought much about, Doriot.
Bob Warfield
· 1 year ago
Here and I thought it was Queen Isabella funding Chris Columbus.
Cheers!
BW
gregory
· 1 year ago
thag loaning his club to thorg
Spencer Ante
· 1 year ago
Hey folks, Spencer Ante here. I wanted to offer my two cents on the comments.
Wisaac: VC definitely does NOT eliminate the need for larger companies to invest in R&D. Tech companies, especially ones with one product or a few products, need to keep investing in R&D because the VCs are unlikley to build products/services that will help them innovate. At the same time, big companies like Cisco have been pretty smart about using M&A to help them accelerate their rate of innovation, by more quickly allowing them to enter new or adjacent markets.
Vgururao: Your point is well taken, and my book actually does take a broader view of VC that situates the industry within a wider societal context. Other factors that I consider contributing to the birth of creative capital include: World War II, advances in technology, changing attitudes toward risk and wealth, competition from abroad (i.e Sputnik) and capital markets/financial innovation.
Lastly, I talk about the role that Fred Terman played in the Valley, but I argue that Terman owes credit to the East Coast because he essentially stole the playbook at MIT, where he studied under Vannevar Bush, and transferrred it to the West Coast from his perch at Stanford. But I argue Doriot was more influential and important because not only did he teach like Terman, but Doriot also ran a VC firm and proved that creative capital was a viable idea. So Doriot was the rare bird who was a thinker AND a doer.
I highly recommend the book "Risk and Reward: Venture Capital and the Making of America's Great Industries" by Tom Rivkin and Jack Doerflinger. It will seem quaint to some because it predates the Internet (published in 1987), but it's a terrific history of venture capital going all the way back to the railroads. Though the term venture capital didn't exist then, a lot of important companies (e.g. Bethlehem Steel) could not have been created without an enormous, organized investment of private capital.
I read it in the early 90s when VC was still a secretive business (no VC bloggers spilling their guts online back then) and it really gave me a lot of insights into the basic economics of how VC works.
fredwilson
· 1 year ago
Is that what I am doing "spilling my guts online" :)
Derek Scruggs
· 1 year ago
Relative to 1993? This is practically a confessional. :) Back then a VC was a near mystical figure who could only be reached through connections, and it was incredibly difficult to get much visibility into how they evaluate deals, what sectors they like etc.
Dustin
· 1 year ago
How is modern vc different than vc?
fredwilson
· 1 year ago
Modern VC means post world war II ³institutional² VC as opposed to rich people funding good ideas which has gone on forever, or certainly for a long long time
All Comments
But yup, this is an interesting attribution too. I'd heard of, but not thought much about, Doriot.
Cheers!
BW
Spencer Ante here. I wanted to offer my two cents on the comments.
Wisaac: VC definitely does NOT eliminate the need for larger companies to invest in R&D. Tech companies, especially ones with one product or a few products, need to keep investing in R&D because the VCs are unlikley to build products/services that will help them innovate. At the same time, big companies like Cisco have been pretty smart about using M&A to help them accelerate their rate of innovation, by more quickly allowing them to enter new or adjacent markets.
Vgururao: Your point is well taken, and my book actually does take a broader view of VC that situates the industry within a wider societal context. Other factors that I consider contributing to the birth of creative capital include: World War II, advances in technology, changing attitudes toward risk and wealth, competition from abroad (i.e Sputnik) and capital markets/financial innovation.
Lastly, I talk about the role that Fred Terman played in the Valley, but I argue that Terman owes credit to the East Coast because he essentially stole the playbook at MIT, where he studied under Vannevar Bush, and transferrred it to the West Coast from his perch at Stanford. But I argue Doriot was more influential and important because not only did he teach like Terman, but Doriot also ran a VC firm and proved that creative capital was a viable idea. So Doriot was the rare bird who was a thinker AND a doer.
P
I read it in the early 90s when VC was still a secretive business (no VC bloggers spilling their guts online back then) and it really gave me a lot of insights into the basic economics of how VC works.
people funding good ideas which has gone on forever, or certainly for a long
long time
fred