What venture capitalists do best

Which brings us back to Vinod Khosla. In the two decades he spent at Kleiner Perkins before starting his own venture firm, he learned not to worry about the bets that went to zero. All he could lose was one times his money.” What Khosla cared about were the bets that did pay off, and in the mid-1990s he fastened on an especially audacious and contrarian notion: that, with the coming of the internet, consumers would not be satisfied with a mere doubling or tripling in the capacity of traditional phone lines. Rather, they would clamor for a step change in bandwidth, involving routers that handled data flows a thousand times larger. While the telecom establishment snickered at this sci-fi babble, Khosla set out to kick-start the companies that would make the step change possible. The startups that Khosla backed are largely forgotten names: Juniper, Siara, Cerent. But they illustrate what venture capitalists do best and how they generate both wealth and progress.

–The Power Law: Venture Capital and the Making of the New Future