Masters in Business

Sebastian Mallaby on How Venture Capital Made Silicon Valley

Feb 25, 2022
Join Sebastian Mallaby, a two-time Pulitzer Prize finalist and senior fellow at the Council on Foreign Relations, as he delves into the dynamics of venture capital and its profound impact on Silicon Valley. Discover the historical roots of this transformative industry, including Arthur Rock's role in launching Fairchild Semiconductor. Mallaby contrasts the innovative spirit of West Coast investors with their East Coast counterparts, discusses how California's legal landscape nurtures creativity, and shares insights on mentorship that shape careers in finance.
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ANECDOTE

Liberation Capital

  • In 1957, Arthur Rock financed eight scientists leaving Shockley Semiconductor, known as the "traitorous eight."
  • This act, liberating talent from large corporations, marked the start of West Coast venture capital and Fairchild Semiconductor.
INSIGHT

East Coast vs. West Coast VC

  • East Coast venture capital was risk-averse and diversified, prioritizing modest gains and downside protection.
  • West Coast venture capital embraced risk, aiming for home runs and significant returns, even accepting multiple losses.
ANECDOTE

Non-Competes and Talent Mobility

  • California's ban on non-compete agreements fostered a culture of talent mobility in Silicon Valley.
  • This allowed for quick hiring and the rapid circulation of talent within the tech ecosystem, boosting innovation.
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