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

by Sebastian Mallaby

selling it in 1998 to Yahoo for $45 million worth of stock: it was a classic hacker-makes-good story. Then Graham had turned his hand to writing, expounding on everything from the virtues of the programming language Lisp, to popularity in high school, to the challenges of entrepreneurship. His essays, which celebrated coders and disparaged business types, appeared first on his blog and then, in 2004, as a book. The fact that Graham hailed from Cambridge, Massachusetts, underscored the significance of his teachings. The rebelliousness of the Google founders was part of a nationwide phenomenon. Graham’s first advice to younger hackers was to be wary of venture capitalists. “Spend as little as you can, because every dollar of the investor’s money you get will be taken out of your ass,” he told his readers. At Graham’s own company, one of the angel investors had been a fearsome metals trader who “seemed like the kind of guy who would wake up in the morning and eat rocks for breakfast.” When Graham’s startup had hit a bump, another of his investors had tried to seize his equity. As a result of such experiences, Graham had figured out how to stand up to rich guys. “You’re doing them a favor by letting them invest,” Graham told his disciples. Thanks to the Brin-Page example, the moneybags would always be thinking, “Are these guys the next Google?”[68]