Sebastian Mallaby (@scmallaby) is the Paul A. Volcker senior fellow for international economics at the Council on Foreign Relations and a contributing columnist for The Washington Post. He is the author of five books, including most recently The Power Law: Venture Capital and the Making of the New Future. He joined Olga Serhiyevich, head of investor relations, for this conversation.
Takeaways:
- Sebastian wrote a book about hedge funds prior to The Power Law and he contrasts VCs and hedge fund managers by saying that VCs are much more extraverted. VCs and others around the startup world are eager and willing to make introductions and actually follow through where others say they will make an intro and don’t follow through.
- Venture is a fun and exciting business to be in because you’re dealing with bold visions of the future, highly talented and optimistic founders, and you get to see the progress and outcome of each startup that is trying to do something novel and ambitious.
- Sebastian says that bubbles are inevitable in venture capital because of the nature of the business. He says there’s no “off switch” or equivalent of shorting a company. There are also so many connections among venture capitalists that no one is willing to say anything negative about anyone else’s investments.
- He predicts a significant expansion of startup funding outside of Silicon Valley post-pandemic. Being able to deals over Zoom significantly expands the scope of where a VC can invest.
- He is bullish on Europe especially because it has a consumer market that is even bigger than the US and the entrepreneurial mentality is growing among prospective startup founders in Europe.
- Sebastian says that AI is the biggest development on earth since humans first developed the capacity for abstract thought. Some compare it to the printing press and he says it will be way bigger than that.
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