Kleiner’s descent was especially striking because of the path dependency in venture performance. VCs who back winning startups acquire a reputation for success, which in turn gives them the first shot at the next cohort of potential winners. Sometimes they get to buy in at a discount, because entrepreneurs value the imprimatur of renowned investors. This self-reinforcing advantage—prestige boosts performance, and performance boosts prestige—raises a delicate question. Is there really skill in venture capital, or are the top performers merely coasting on their reputations? The story of Kleiner
...more
