Buy, Lie, and Sell High: How Investors Lost Out on Enron and the Internet Bubble

Pressure to Spend

In America, why did so many VCs press the get-big-fast model on entrepreneurs? Were they not aware of its limitations? That's unlikely. For decades, venture firms and investment banks had cautioned entrepreneurs about trying to do too much too fast, had doled out money sparingly, and imposed long waiting for access to the public market, in order to limit the natural ambition of entrepreneurs. But suddenly this all changed. In the mid-1990s when entrepreneurs went in to see venture firms, they often found themselves being told that they were far too modest in their requests for funding and in the pacing of their business plans. One reason for this is that as VCs raised larger funds—much of the money flowing in from corporate ...