The Power Law

Last week, I reviewed The Power Law: Venture Capital and the Making of the New Future by Sebastian Mallaby for the Wall Street Journal. I've included the first two paragraphs and a link to the full review below.  

‘The Power Law’ Review: Chasing Unicorns

Venture capital is defined by its most brilliant successes. A few deals explain the majority of returns, a few wild ideas change the world. The average venture-capital fund launched in 2011 outperformed the S&P 500 by 7% per year. But that statistic understates the astronomical returns earned by a few top performers—and the mediocre returns earned by the rest. Between 1979 and 2018, the median fund underperformed the S&P 500, while the top 5% of funds nearly tripled the index’s performance.

The investor Bill Gurley, of Benchmark, describes venture capital as a “grand-slam business.” In “The Power Law,” business journalist Sebastian Mallaby argues that venture is defined by its most extravagant successes. A few deals explain the majority of returns, a few funds drive the majority of asset-class performance, a few wild ideas change the world.