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The Making of the Digital Revolution

While the public tends to regard venture capital as the shadowy and selective money behind today's overvalued tech startups, VC has actually been at the forefront of innovation for 200 years. Like the American state, it is an essential ingredient of the secret sauce of American capitalism.

CAMBRIDGE – What are the roots of the digital revolution? The two books under review here have adopted a distinctive approach to this question. Yet, they are extraordinarily complementary, and all the more compelling when read in tandem.

In VC, Tom Nicholas of Harvard Business School reaches back almost 200 years and marshals a wealth of quantitative evidence to track the evolution of high-risk investing in America. And in The Code, Margaret O’Mara of the University of Washington describes how professional venture capital (VC) found its Valhalla in the San Francisco Bay Area. Focusing primarily on the two generations after World War II, her history weaves a rich tapestry of individual experiences and accomplishments, especially those of women whose contributions were historically overlooked.

Together, the two books provide deep context for understanding the sources of a digital revolution that is now redefining economic, political, social, and cultural life around the world. The common subject in both books is the setting from which “the entrepreneur” emerged as the heroic engineer of transformational technological innovation. Both authors provide detailed accounts of the entrepreneur’s dependence on two very different but equally essential partners. The first partnership, broadly recognized in the popular culture, is between the entrepreneur and his (it is almost invariably a male) financial backers – that is, the VC industry; the second is between the entrepreneur and the United States government.

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