Nicholas. History of VC

  • Greyloft spun out of ARD
  • ARD returns were 5% IRR ex DEC from 1946-~1970. Including ARD = near 20% returns. validated the long tail
  • First 3 vcs. Dga (Draper ghaither Anderson). Draper left for Sutter hill. Greylock. Started off generalist but had to specialize. Venrock Rockefeller family. Venrock rode apple from $500k to $289m in contemporary dollars…in 3 years
  • JD rockefeller “if you want to succeed, you should strike out on new paths rather than travel the worn paths of accepted success”
  • Core vc industry growth drivers: LP structure, increasing number of proof points for long tail outcomes (venrock Apple), decreasing capital gains taxation
  • Arthur rock (people) Tom Perkins (tech) sequoia (markets)
  • Terman. Head of Stanford engineering. Encouraged docs and post docs to start companies but also come back and teach. Encouraged university and industry relations, uncommon vs east coast schools
  • “the regions culture encouraged risk and accepted failure”…”there were no boundaries of age, status or social stratum that precluded the possibility of a new beginning”…”it appealed to individuals interested in technology, many of them uninterested in the brutally cold winters and more structured orders associated with the east coast
  • East coast ARD, Greylock, Venrock. West coast Davis and rock, Sutter hill (forms dga) and angels. Perkins sought to systemize investments in high technology.
  • Valentine. Yonkers, Fordham. National semi, Fairchild. Capital group sequoia. Market sizing.
  • Key banks / “four horsemen”: Alex brown (Baltimore), Rothschild (new york), robertson Stephens (SF), hambrecht and quist (sf)
  • Law firms: Cooley. Wilson sonsini.
  • Venture debt. SIVB
  • Kpcb. Sequoia. Greylock. Mayfield. Then battery, matrix. Accel (of Adler & co), DFJ
  • Nea. Newhall, t Rowe. Doriot”
  • Anndreesen. Netscape.
  • Kpcb. Recruiting and networks as a competitive advantage.
  • PayPal. Thiel levchin. musk x.com. PayPal mafia
  • Hotmail. User acquisition w trivial marketing costs
  • yahoo was passed on bc people didn’t believe in making money on a free product