The Power Law: Venture Capital and the Making of the New Future

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by Sebastian Mallaby

"Experts" are rarely the source of new ideas. Elon Musk was not a "electric car guy" prior to founding Tesla. A prominent tech VC once told Sebastian Mallaby that when it comes to implausible inventions, the future cannot be foretold; it can only be discovered. Most attempts at discovery fail due to the nature of the venture-capital game, but a few few succeed on such a large scale that they more than compensate for everything else. That extraordinary success-to-failure ratio is the power law that drives the venture capital industry, all of Silicon Valley, the broader tech sector, and, by extension, the globe.

In The Power Law, Sebastian Mallaby has parlayed unprecedented access to the most celebrated venture capitalists of all time—key figures at Sequoia, Kleiner Perkins, Accel, Benchmark, and Andreessen Horowitz, as well as Chinese partnerships like Qiming and Capital Today—into a riveting blend of storytelling and analysis that unravels the history of tech incubation, first in Silicon Valley and then globally. We hear the unvarnished truth, often for the first time, about some of the Valley's most iconic triumphs and infamous failures, from the comedy of errors at Apple's inception to the avalanche of venture capital that nurtured hubris at WeWork and Uber.

The continuous pursuit of grand slams by venture capitalists breeds an infatuation with the notion of the lone entrepreneur-genius, and firms viewed as potential "unicorns" are granted dizzying levels of power, often with devastating repercussions. On a broader level, the necessity to make large bets on untested talent promotes bias, with women and minorities remaining underrepresented. This has ramifications beyond social justice: as Mallaby points out, China's domestic VC industry, having learnt at the Valley's feet, is expanding, with more women VC luminaries than America has ever had. Nonetheless, Silicon Valley venture capital remains the world's leading incubator of business innovation—it is not so much where ideas originate from as it is where they go to become the products and businesses that shape the future. The Power Law lets us think about our own destiny through the perspective of VCs by immersing us so fully in their game.

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— Sebastian Mallaby, The Power Law: Venture Capital and the Making of the New Future