Ben Waber reviewed VC - an American History by Tom Nicholas
An Incredible History of an Important Industry, Despite Its Booster-ish Tendencies
5 stars
Rather than starting with ARD as is traditional when examining the history of venture capital, Nicholas goes back to the New Bedford whaling industry and then the Lowell textile mills to demonstrate how these early examples of risk capital look extremely similar to modern VC and set the stage for its emergence. This book is at its best when it sticks to macro trends and quantitative analysis - particularly startling was the similarity of the return distribution of whaling voyages and VC investments, indicating that returns are much more likely to be driven by probability than by any inherent differences in intermediaries. The neoliberal bent in the book can be distracting (e.g. was the Ford corporation really an unalloyed good for the US?), and I would've loved an examination of why productivity growth in the US slowed precisely when VC emerged as a significant market force if it actually promotes …
Rather than starting with ARD as is traditional when examining the history of venture capital, Nicholas goes back to the New Bedford whaling industry and then the Lowell textile mills to demonstrate how these early examples of risk capital look extremely similar to modern VC and set the stage for its emergence. This book is at its best when it sticks to macro trends and quantitative analysis - particularly startling was the similarity of the return distribution of whaling voyages and VC investments, indicating that returns are much more likely to be driven by probability than by any inherent differences in intermediaries. The neoliberal bent in the book can be distracting (e.g. was the Ford corporation really an unalloyed good for the US?), and I would've loved an examination of why productivity growth in the US slowed precisely when VC emerged as a significant market force if it actually promotes innovation better than alternatives. I also found the individual cases, a staple of HBS classrooms, not useful since without a macro perspective to validate observations on the cases I had no way to discern if these investors were actually right or just rich and lucky (counterfactuals also remain unexplored here). Still, the historical perspective on why the VC industry has taken on its current form - both in terms of business model and geographic distribution - are essential for understanding the finance and tech industry and the arc of the US economy more broadly. Highly recommend