Venturing Forth: The Exponential Center Launches a Venture Capital Initiative

I've always said that our job was seeing around corners. And if you want to see around a corner, you have to stand on the corner.” Dick Kramlich, Cofounder, NEA

When legendary venture capitalist Arthur Rock first met the young Steve Jobs, he was turned off by his beard, long hair, and cut-off jeans. But Rock recognized that Jobs was bright, and perhaps more importantly he trusted the judgment of Mike Markkula, the chairman of Apple’s board. Rock invested and joined the board and he and Jobs eventually became friends. They went skiing and to the theater and Rock and his wife hosted Jobs for dinner at their house on several occasions. After Jobs had been ousted from Apple, he sought out Rock in Aspen to ask for his advice, taking the opportunity to assure his friend that the board’s decision had been the right one.1

The Exponential Center’s inaugural Distinguished Scholar, award-winning journalist and author Sebastian Mallaby, cites this anecdote as an example of the growth of a relationship over time. Stories about connections between founders and funders illuminate why tech companies succeed . . . or fail. For the past 50 years, venture capitalists and entrepreneurs have built legendary companies, fostered the rise of Silicon Valley, and fueled a fast-growing tech economy in the United States and beyond.

The Exponential Center at the Computer History Museum is leading an ambitious program to capture and share the untold stories of pioneering venture capitalists and their partnerships with disruptors and innovators that extend from idea to IPO and beyond. The companies they have created have led to new industries and jobs, generated tremendous wealth, and changed the way we live. Through a variety of activities that capitalize on the Museum’s core strengths, the center will explore what the industry does, how it works, and what happens when venture capitalists and entrepreneurs join forces to create a company.

Research Venture

Exponential Center Distinguished Scholar Sebastian Mallaby.

Exponential Center Distinguished Scholar Sebastian Mallaby.

Sebastian Mallaby joined the Exponential Center in June 2018 as its inaugural Distinguished Scholar and it promises to be an exciting partnership. Born in Britain, Mallaby is a Senior Fellow at the Council on Foreign Relations who has served as a columnist for the Washington Post and Financial Times. His work has appeared in publications such as the Wall Street Journal and the Atlantic and he has been a guest on radio shows such as NPR’s Morning Edition, Marketplace, and Planet Money. Previous books include The Man Who Knew (2016), More Money Than God (2010), and The World’s Banker (2004). Mallaby’s new book project, to be published by Penguin, is aimed at a broad audience and explores venture capital’s role throughout history. To uncover how venture capitalists finance and create products that change our lives, Mallaby has so far interviewed about 100 VCs. During his time as a Distinguished Scholar, he will continue his research in the Museum’s renowned oral history collection and partner with the Exponential Center on key interviews that will expand the collection.

Voices of Venture

Capturing the voices and stories of key figures in venture capital is one of the Exponential Center’s important ongoing initiatives. Video oral histories create new content for researchers like Mallaby as well as for events and educational programs designed to share key insights with those who want to learn about the industry.

Venture investors provide first-person accounts of their backgrounds, motivations, strategies and methods for approaching their roles and work as well as insights into the growth of the industry and changes over time. In the very early days of the industry in the early 1960s, Pitch Johnson, cofounder of Silicon Valley firm Draper and Johnson, describes how he and Bill Draper drummed up business:

We would drive around the Valley and look for promising names that looked like they might be technology or might be something that we'd be interested in. So we would simply just knock on the door blindly and they would let us in. And we would say, “We'd like to see the President. We were investors in young companies.” Well, that's really a door opener. So we almost always were welcomed in and got to tell people about what we did, even what venture capital was, and that we invested money in companies.

The oral histories provide a window into venture capitalists’ thought processes, what they’re looking for when they invest, and how they partner with founders to build companies. For example, Alan Patricof, New York venture capital pioneer says:

I think the best thing a venture capitalist can do is to help open doors for young companies at a level that can make decisions because the hardest thing for a young company is access to a decision maker. They can get in the door but they’re getting in at a very low level and they have to kill themselves going up through the ranks to get someplace. ... we spend a lot of our time at my current firm, Greycroft, doing exactly that, arranging for companies whether it’s product or service, to get access to the right people and then to help them on structuring deals.

Don Valentine notes that at his firm, Sequoia, the strategy is to “fill in the blanks” for entrepreneurs by providing experts in any area necessary to build strong and effective management teams.

Peter Barris, then managing partner of New Enterprise Associates, being interviewed at his office in Washington, DC, for an oral history by the Exponential Center’s Marguerite Gong Hancock.

Peter Barris, then managing partner of New Enterprise Associates, being interviewed at his office in Washington, DC, for an oral history by the Exponential Center’s Marguerite Gong Hancock.

So far, 30 oral histories of pioneering venture capitalists have been made freely accessible on the CHM website with many more to follow. They include founders of legendary firms such as Bill Draper (Draper & Johnson, Sutter Hill Ventures), Dick Kramlich (New Enterprise Associates), David Morgenthaler (Morgenthaler Ventures), Tom Perkins (Kleiner Perkins), Charlie Waite (Greylock Partners), and others. To explore the relationship between specific iconic companies and their funders the Museum also conducts oral histories with investors and their entrepreneurs and executives. For example, the Cisco oral history panel pairs legendary VC Don Valentine of Sequoia with CEO John Morgridge, who shares, among other insights, four elements necessary for an IPO: revenue, customers, profits, and “the vision thing,” which he believes is necessary to help investors understand the size of the market.

In November 2018, the Exponential Center signed a definitive agreement to transfer copyright ownership of 17 oral histories from the National Venture Capital Association (NVCA) to CHM in return for our commitment to preserve and make this valuable collection available to the public. Included are audio recordings and final transcripts. This collection is particularly noteworthy in that it includes some of the very earliest venture capitalists, such as Walter Curley of JH Whitney and Paul Wythes of Sutter Hill, both of whom are deceased. The Exponential Center will continue to work with the NVCA to transfer as many as 35 additional oral histories and additional opportunities for fruitful collaboration are currently being explored.

Innovating Venture Stories

Taking an innovative approach, the Exponential Center is also pursuing oral histories that capture the full scope of the venture firms and venture investors who have experienced the most financial success and/or made the largest impact in terms of the companies they have backed. One of those firms is New Enterprise Associates (NEA). Founded in 1978, NEA has raised 16 different funds, the latest of which is over $3B, with $20B under management. To capture NEA’s evolution and impact, its three founders and a two key partners were interviewed.

Just as NEA is a bicoastal firm, so was the task. Two of the oral histories were recorded at CHM’s headquarters in Mountain View, while the three others were taken in Maryland and Washington, DC. Five oral histories were recorded in nine sessions, totaling nearly 17 hours of interviews. Hundreds of pages of transcriptions, videos of first-person stories, and new materials are now available online. Insights include Dick Kramlich’s prescriptions for building sustainable business models, Frank Bonsal’s insistence that finding good partners is the key to success, and Chuck Newhall’s description of the “reality sandwich” he has to give to founders who are failing.

The Exponential Center traveled to the mid-Atlantic last year to capture oral histories of New Enterprise Associates venture capitalists Peter Barris, Chuck Newhall, and Frank Bonsal.

Collecting Venture

To provide the rich context necessary for an in-depth understanding of venture’s history and impact, the Exponential Center is actively adding unique artifacts and documents related to the venture capital industry to the Museum’s collections to ensure their long-term preservation. They include key documents, photos, videos and ephemera, such as: founding charters, original names and initial logo designs, pitch decks, business plans, product plans, early product prototypes, key deals, public offering documents, and advertisements. Collections are made available to the media, authors, researchers, and the general public and are used to create compelling exhibits as well as provide context for events and live programs at the Museum.

DEC’s 1957 business plan proposal to the American Research and Development Corporation and Apple’s Preliminary Confidential Offering business plan from 1977.

DEC’s 1957 business plan proposal to the American Research and Development Corporation and Apple’s Preliminary Confidential Offering business plan from 1977.

Talking Venture

The Computer History Museum’s events onsite and online reach audiences across the US and around the world. Past venture capital events at the Museum explored the early years of the industry, post-mortems of failures, generations of change in the industry, the evolving relationships between founders and funders, and China’s rise in VC and tech. Most recently, the Exponential Center hosted a wide-ranging discussion with LinkedIn cofounder and Greylock Partners VC Reid Hoffman, who shared his formula for how to make fast decisions in an uncertain environment while “blitzscaling,” the title of his new book published in November 2018.

Venture capitalists Hans Tung of GGV Capital and Carmen Chang of New Enterprise Associates in conversation with CHM Exponential Center Executive Director Marguerite Gong Hancock at the Museum on June 20, 2018.

Venture capitalists Hans Tung of GGV Capital and Carmen Chang of New Enterprise Associates in conversation with CHM Exponential Center Executive Director Marguerite Gong Hancock at the Museum on June 20, 2018.

It is often said that there is no better teacher than experience. The Exponential Center aims to capture the collective experience of leaders in the venture capital industry and share it with the entrepreneurs, executives, and venture investors of tomorrow. We venture to hope that we will both inform and inspire the next generation of changemakers.

The Exponential Center would like to recognize the critical role of advisory board member Ray Rothrock, former partner at Venrock, for his work on the venture capital initiative and thank the following members of the venture capital community for their generous support of the Center: L. John Doerr, William H. Draper III, Irwin Federman, William J. Harding, Franklin “Pitch” Johnson, Gary Morgenthaler, Charles Newhall III, Robert Pavey, Richard Redelfs, Ray Rothrock, and Scott Sandell.

Notes

  • 1 From interview footage of Arthur Rock filmed November 20, 2013, for Silicon Valley: The Untold Story, courtesy of Kikim Media.

About the Exponential Center

The Exponential Center at the Computer History Museum captures the legacy—and advances the future—of entrepreneurship and innovation in Silicon Valley and around the world. The center explores the people, companies, and communities that are transforming the human experience through technology innovation, economic value creation, and social impact. Our mission: to inform, influence, and inspire the next generation of innovators, entrepreneurs, and leaders changing the world.

ABOUT Heidi Hackford

Read all posts by Heidi Hackford

Heidi Hackford is the content and curriculum director for the Exponential Center at the Computer History Museum. She is responsible for leading the development of educational materials focused on innovation and entrepreneurship. Heidi previously worked at Monticello, where she edited Thomas Jefferson’s family letters. At the Woodrow Wilson Presidential Library, she established a digital archive and conducted teacher workshops on incorporating digital history resources in the classroom. After moving to Silicon Valley, Heidi directed the start-up of a new foundation promoting wilderness conservation through art.

Read all posts by Heidi Hackford