Movie review: Something Ventured (2011)

The documentary Something Ventured is an engrossing look into the rise of venture capitalism and Silicon Valley. Numerous venture capitalists and entrepreneurs such as Tom Perkins and Gordon Moore are interviewed, interspersed with still photos of entrepreneurs and VCs of the time as well as what became Silicon Valley.

It all started with the Traitorous Eight, the band of engineers that left Shockley. They decided not to leave one by one, recognizing that they were more valuable as a group. For some reason, they wrote to a bank on Wall Street, seeking funding to start their own semiconductor company, Fairchild. (Fairchild was the ancestor of all future semiconductor companies and kicked off the development of what became know as Silicon Valley.)

Arthur Rock, a junior banker, responded to the letter and sought funding for this group of engineers. And the role of the venture capitalist who funds companies was born.

My questions are: why did it take so long for venture capitalists to emerge? If companies have always needed capital to get started and banks were not apt to lend it to them (new companies have no assets), then how did companies get funded before? And why was 1957 the perfect time to start investing in what would be known as start-ups? And how did the Traitorous Eight even get the idea of approaching Wall Street banks for money?

Strangely, from a modern Silicon Valley perspective, the founders of Fairchild had no stake in the company; they held no options. Stock options were a West coast concept. Financing was coming from the East coast where all compensation was consolidated. In time, this took its toll and the members of Fairchild left one by one. VCs were moving to Silicon Valley and founders started to have a financial stake in their companies, though as the film points out, founders’ lives were not long-lived at their companies; usually founders lasted eighteen months before they were fired by the same VCs that helped bring their ideas to fruition.

Throughout the film, various venture capitalists recount influential companies they helped found, companies that had a profound impact but then faded away or others that remained strong: Intel, Tandem, Atari, Genetech, Apple, Cisco. The film is a fascinating history lesson into the beginnings of these companies, their initial business struggles, and the role of the VCs in the companies.

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