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

by Sebastian Mallaby

From the day he attended his first Accel meeting, Efrusy was expected to participate in the decisions. He could propose an investment to the partnership, and if he convinced colleagues of his case, the investment would go forward. He could vote against proposals from others; even if the project was not in his wheelhouse, he was supposed to have a view on it. Nor was it enough to comment usefully; he was required to express a verdict, yes or no, and take responsibility for it. “There is a saying in our business, ‘If you are treated like an analyst, you are going to act like an analyst,’” Efrusy explained later.[2] An analyst could point out the arguments on both sides of an issue, but that was different from taking a stand, and this difference defined the psychological gulf between being a venture capitalist and not being one. In the end, venture investing came down to that scary jump from messy information to a binary yes-or-no call. It came down to living with the reality that you would frequently be wrong. It was about showing up at the next partners’ meeting, rising above your wounded pride, and mustering the optimism to make fresh bets on a bewildering future.