Sebastian Mallaby: recommendation

Transcript context

…Why isn’t that skill replicable if the returns to replicating it are so high? I think there’s an inefficient-markets thinking. There is a notion that you can assume away skill, and that if skill is good, you can just make more of it. That would mean you would compete the returns down. I think some of the skill is so far off in the tail of the distribution that it’s quite hard to replicate it. A really good venture capitalist combines technical knowledge of what he or she is investing in — whether that’s biotechnology or computer science — plus business feeling, plus the skill of networking with people and putting teams together. And a phenomenal energy, because you’ve got to be out there getting up in the morning for one breakfast with one potential person you might invest in, and then doing 14 cups of coffee before you go to bed, and being that wired, you still sleep. It is tough to find enough people like that. Maybe we’re going to discover that the last four or five years of boom have sucked in so much talent that it will be competed away. That could be true, but so far, it hasn’t happened. What do you think of the view that in recent years, there’s been a huge consumer retail tech boom? Basically FAANG stocks, right? And when that is over — it might be over now — the excess returns to VC will go away. If you look at venture capital for biotech, which has been hammered lately, as we’re speaking here, late January 2022 — and maybe venture capital is a limited model for one period of time, and otherwise, it just does okay. True or false?…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.