Venture Capital Wuxia

This book adopts the narrative style of a Wuxia. The company everyone already knows is portrayed, after its introduction, like a lone hero stepping into the world to uphold justice.

Living in the startup scene, I traced the origins of the cultures and codes I frequently encountered. The so-called “burning money” growth strategy—accepting deficits and pouring ever larger sums into marketing and revenue expansion—began with Masayoshi Son and the Yahoo he backed.

What became known as the VC approach (exemplified by firms like Altos Ventures)—advancing a company to its next stage without appointing a professional manager once it had reached a certain size, instead trusting the founder—actually stems from the attitude of angel investors such as Peter Thiel.

It’s fascinating that the emergence of unicorns is a natural outgrowth of the venture-capital timeline. Over more than fifty years, VCs steadily reduced their attempts to exert tight control over companies. In Silicon Valley, experiments began in the 1990s to trust founders and move forward without installing outside executives.

From the very start, Mark Zuckerberg received significant angel investment, and those angels did not demand large equity stakes. Growth investors like Yuri Milner—who arrived a bit late in 2009—helped earlier backers to exit without insisting on board seats.

Although founders raised immense sums and inflated their companies’ valuations, they delayed IPOs and thus escaped exit pressure. In this way they effectively invented the unicorn: a highly valued company that didn’t have to go public.

People often say they’ll throw money at any promising opportunity, yet many top-tier companies simply aren’t open to investment. Just as it’s difficult to invest in private giants like OpenAI or SpaceX, some bets require immediate deployment of resources the moment opportunity knocks, rather than protracted analysis and strategy adjustment.

Masayoshi Son is depicted almost as an alien invader. It’s no wonder Silicon Valley was stunned: imagine the heir to a Korean conglomerate—on the scale of Samsung or Hyundai—arriving with Korea’s capital in hand and plunging it into ultra-risky tech ventures.

Paul Graham’s early-2000s admonition reminds us of a fundamental truth for any IT venture’s survival.

He wasn’t merely preaching belt-tightening; he defined venture capital—more bluntly, outside capital and its stakeholders—as potential exploiters, urging founders and developers to build for themselves. That lesson resonates for today’s Korean startups, facing a much smaller investment landscape.

One more notable point is the author’s distinctly positive stance toward venture capital.

Despite closing the book by mentioning Theranos—the worst fraud in Silicon Valley history—and WeWork, which on closer inspection had no real business value and posed enormous owner risk, the author ends on an upbeat note.

This book doesn’t delve into investors’ social responsibilities or the accountability that follows investment failures. Curious about those topics, I sought out the documentary The Inventor: Out for Blood in Silicon Valley, which covers the Theranos saga. Team Draper—cited in the book as an early investor in Baidu—also appears in that film. I’ll explore “Power Laws and Accountability in Investment Failures” in my next post.