• DOI:10.4324/9780203126677-16
• Corpus ID: 167920321

Entrepreneurship and Venture Capital in the Age of Collective Intelligence

@inproceedings{Laubacher2012EntrepreneurshipAV,
  title={Entrepreneurship and Venture Capital in the Age of Collective Intelligence},
  author={Robert Laubacher},
  year={2012}
}

• Robert Laubacher
• Published 2012
• Business

Draft 03/07/11 During the first half of the 20th century, the locus of innovation was the corporate lab, housed inside the research and development departments of large corporations like General venture capital firms came into being, which allowed entrepreneurs with promising ideas to establish start-up companies in the absence of involvement by established corporations. In recent decades, start-up companies funded by venture capitalists have been responsible for most of the key innovations in emerging sectors of the economy, most notably information technology and biotechnology (Gompers and Lerner 2001). The semiconductor shows the transition between these two modes of innovation. The device itself was developed at Bell Labs in the early 1950s. One of the inventors, Gordon Shockley, founded his own firm, Fairchild Semiconductor in 1957. Arthur Rock, a New York banker, provided the initial financing. Rock was a transitional figure between the world of early 20th century corporate finance and the venture capital-based practices that later became prevalent. Alumni of Fairchild went on to found more than forty Silicon Valley technology companies, and the success of Fairchild spurred the development of the first venture capital firms in the San Francisco Bay area (Florida and Kenney 1988). 2 With the rise of venture capital, the innovation function, for emerging industries at least, moved outside of the large corporation and instead came to be undertaken by the new venture sector, comprised of decentralized, external networks of entrepreneurs, university researchers, and financiers, all linked by venture capital firms. This externalization of innovation was part of a larger trend, beginning over the latter part of the 20th century, toward more distributed forms of business organization (Powell 1990, Malone 1997). For example, during the 1980s and 1990s, many large corporations reorganized into smaller and more autonomous business units (Bartlett and Ghoshal 1993); came to rely more extensively on far flung supply chains (Simchi-Levi et al. The past decade has seen the emergence of new, even more radically distributed ways of organizing work, enabled by the global expansion of the Internet. Prominent examples include Linux, Wikipedia, and Google. In Linux and Wikipedia, volunteers from all over the world work together to develop software and write encyclopedia articles. Google is perhaps an even more interesting example, when one considers not just Google the firm, but the entire system invoked every time a person types a query into the Google search box. This system takes advantage of the …