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

by Sebastian Mallaby

Thiel saw in the power law an additional lesson. He argued, iconoclastically, that venture capitalists should stop mentoring founders. Venture investors from Rock onward had taken great pride in coaching and advising startups; for a firm like Benchmark, this was the bread and butter of the business. One survey in 2000 found that coaching and advising were growing more important, not less so: a venture partnership called Mohr Davidow retained five operating partners whose full-time job was to parachute into portfolio companies to provide managerial support, and Charles River Ventures in Boston retained no fewer than a dozen staff to help startups with executive search, equipment leasing, contract law, and other functions. Paul Gompers of the Harvard Business School described these developments as progress. “It’s the evolution of venture capital from an art into a business,”