Once upon a time, a group of eight researchers from Shockley Semiconductor walked into the offices of a young San Francisco banker named Arthur Rock. The “traitorous eight” had a proposition; they wanted to start a rival firm. Rock saw something in them, perhaps the particular fury of the brilliant and underused, and set about helping them secure financing for what would become Fairchild Semiconductor, the company generally credited with seeding Silicon Valley. This is the story of how Rock, the group’s first believer, became the first modern venture capitalist.Rock’s conviction, which he repeated for decades, was that backing people was the core of venture capital. A great management team, he liked to say, can find a good opportunity even if they have to jump from the market they currently occupy.His contemporaries saw things differently. Tom Perkins at Kleiner Perkins trained his eye on technology, asking whether it was proprietary and meaningfully better than alternatives. Don Valentine, who had run marketing at Fairchild before founding Sequoia, became obsessed with the market. When Sequoia considered an early investment in Cisco in the mid-1980s, most of his peers passed; the founding team was considered weak. Valentine invested anyway, reasoning that the networking market was so large that even a mediocre team would sell a great deal of equipment.The three men gave rise to three distinct philosophies of American venture capital; but Rock’s has won the cultural war. Not only does “venture capital is a people business” make an excellent slogan, it also puts the founder at the center of the story. And if you’re in the business of selling capital to founders, that’s exactly what they want to hear.But is it really that simple? And what does a “people business” actually look like? Today, virtually every venture capital firm presents itself as founder-first. In 2016, four economists (Paul Gompers, William Gornall, Steven Kaplan, and Ilya Strebulaev) surveyed 885 vent