It rained for three days here over the weekend in the Bay Area so by Friday night I was idly flicking through my Netflix recommendations to find something to watch. I found Something Ventured and I’m glad I did. I guess to most people a documentary about venture capital probably isn’t the top of their list but I learned quite a lot and it’s pretty well made.
I knew the basics – the area that we now know as Silicon Valley was fruit farms until the 1950s when William Shockley (one of the co-inventors of the transistor) set up shop and hired many of the brightest engineers of the time from across the world. The problem was that although Shockley was a genius (and justifiably won the Nobel Prize in 1957) he was a complete nightmare to work with and drove everybody to leave the company and set up on their own. The most significant group to leave was the so-called ‘traitorous eight’ who inadvertently were the recipients of what might have been the first ‘A Round’ in history.
Arthur RockÂ (pictured above)Â was a junior banker in New York who realised that financing new companies commercialising all the great science on the West Coast could be good business and certainly more exciting than his day job on Wall Street. The traitorous eight had written a letter to his bank asking to be hired but Rock convinced them to start their own company instead. He then went to every company he could think of to raise the capital they needed but nobody bit until he went to the owner of Fairchild Camera. Fairchild could see that silicon might just take off and financed the company. Critically though – Fairchild owned the company and the founders were just employees.
By this time another group of bored financiers in San Francisco who met for lunch every now and then had also spotted the wave of new companies starting up on the West Coast. At first they made investments together but one by one they started quitting their day jobs and starting venture capital partnerships (the term had recently been coined by Arthur Rock). Then there was Don Valentine (founder of Sequoia) who had seen what happend at Fairchild and wanted in on the new business of venture capital and Tom Perkins (co-founder of KPCB) had joined a partnership with one of the lunch club. The momentum had begun and as people left the original few firms to start their own, capital started moving in and technology started gathering pace. Venture capital was a thing and more and more people wanted a part of it.
The stories of the companies that those VCs funded which the film covers are quite well known – Intel, Apple, Atari, Cisco, Genentech and Tandem – although there are some stories I didn’t know. The bloody history between the VCs and the founders of Cisco for example or how Atari founder Nolan Bushell turned down a 33% stake in Apple for $150,000. Actually, given what you hear about Jobs and Wozniak in the film, it’s a miracle that they raised any capital given their standards of personal hygiene.
The sense you get from the movie is that these men (they were all men) profited from being in the right place at the right time but that some of that was by their own design. It’s only as the movie goes on that you start to notice quite how much they profited from the luxurious surroundings of the homes of the ageing VCs. At one point a sail passes behind Tom Perkins and you realise that the interview is being filmed on his yacht.Â It’s also interesting to see how different they are from some of the new generation of investors. That pioneering attitude and the love of entrepreneurs is there but so much of the strategy and way of going about it has changed. Anyway, if you’re interested in technology and startups, it’s well worth a watch.
Image of Arthur Rock from somethingventuredthemovie.comÂ
- For the New Generation of Venture Capitalists, Their Advice Is More Valuable Than Their Money (entrepreneur.com)
- Kleiner Perkins On The Past, Present And Future (techcrunch.com)
- Tim Draper’s Cycle of VC vs PE “The Draper Wave” (founders-club.com)