The traditional power of venture capitalists to influence founders has been eroded by an “increasingly rebellious youth culture”, says Mallaby, recounting how Facebook’s Mark Zuckerberg deigned to show up late for a meeting with the venerable firm Sequoia wearing a T-shirt. and pajama pants. But Mallaby also points to a structural change. He says the balance of power has swung in favor of the most wanted entrepreneurs because they now have a choice among suitors who are clamoring: there’s more money than ever chasing the next big thing.
The book includes many granular details about deals made, phone calls made, meetings arranged and rescheduled. Banal snippets of conversations are told, even when they seem to serve only as narrative clutter. (“What are you doing tomorrow morning?” “I’m not doing anything.” “Great, how about we meet for breakfast?”) Some of Mallaby’s metaphors don’t make sense; he writes that a VC, learning of a happy surprise, “digested that lightning from heaven”. Another VC, also triumphant, “indulged in a single low-key celebration, like a man pumping his fist and screaming a shout of victory, but in silence.” So this VC screamed but didn’t scream – and since he’s only “like” this tortured image, he didn’t raise his fist either?
Such is the stuff that stuffs this overstuffed book, which never quite delivers the case it painstakingly tries to make. Mallaby’s main argument is that venture capital funds disruption, and disruption is generally beneficial. Innovation begets more innovation, delivering us from a stagnant status quo.
Mallaby has clearly done a lot of research, and it’s not as if he’s oblivious to venture capital’s “alleged shortcomings”; he simply decides that they are overshadowed by “industry attractions”. A death sentence allows all the money poured into Uber to ‘blitzscale’ and decimate competition may have forced existing taxi operators to ‘compete on a warped playing field’, but these ‘taxi operators in place,” Mallaby says, were also comfortable with municipal regulators anyway. There is no indication of how utterly calamitous the dominance of apps like Uber has been for these “incumbents” (a dirty word among disrupters) – financial ruin, suicides; there is only the cold (and questionable) conclusion that “cheap venture capital dollars served to balance out this unfair advantage”.
Among the spectacular extinctions of the founders of Uber and WeWork, Mallaby’s apology is something to behold. Their ‘responsible’ VC backers may have kept silent, recording any qualms ‘politely’ and privately until embarrassing information became too public to ignore, but real blame, he says, lies not to those adults in the room but to “careless, late-stage investors” – even though the same venture capitalists were happy to see their wayward founders taking money from those “careless” investors.
There is only one criticism of venture capital that Mallaby says is deserved – the need for the industry to diversify beyond a “monoculture” that is “too white, too masculine, too Harvard/Stanford”. That’s a fair assessment, but at this point it’s not exactly telling truth to power. Venture capitalists love to talk about boldness, but we imagine they’ll appreciate the tone of deferential restraint in this funder-friendly book; better to get a familiar call for more diversity than anything that might challenge their results.