The Power Law: What led to Accel's Facebook investment

• Kevin Efrusy's Arrival : Joined Accel post-tech bust, a challenging time in venture capital. The firm, led by founders Arthur Patterson and Jim Swartz, remained committed to long-term investment and developing young talent.
• Empowerment from Day One : New hires were expected to participate in decision-making immediately.
• Junior Partner Responsibility : Junior partners could propose and vote on investments, promoting accountability and a yes/no decision-making mindset under uncertainty.
• Casa Madrona Retreat : Accel’s “prepared mind” exercise in Sausalito revealed a need for recalibration, having completed only four deals that year.
• Recognition of Missed Trends : The firm noted missed opportunities in "Internet 2.0" and social networking, prompting a conscious pivot towards these emerging areas.
• Missed Deals : Failures with investments in Skype, Tickle, and Flickr underscored the need to:
  
  Look beyond traditional, engineer-led startups.
• Focus on user data and engagement metrics.
• Embrace high-growth opportunities, despite unconventional founders.
• Kevin Efrusy’s Persistence : Efrusy pursued Facebook through initial rejections, recognizing its potential. He bridged generational dynamics to win the deal, valuing Facebook at $70M pre-money ($80M post-money).
• Cross-Generational Teamwork :
  
  Efrusy (30s) led the pursuit.
• Jim Breyer (40s) leveraged connections.
• Arthur Patterson (60s) provided support.
• Financial Impact : The Facebook investment alone yielded over $12 billion at its IPO in 2012.
• Sustained Wins : Accel generated seven additional investments with $500M+ profits, each led by different partners.
• Promotion of Women Leaders : Women rose to senior partnership roles, maintaining a culture of inclusivity and mentorship.
• Talent and Training : Consistent focus on empowering young investors, creating a sustainable leadership pipeline.
• Team-Based Approach :
  
  
  
  Cross-generational collaboration on deals.
• Strong culture of mentorship.
• Adaptability :
  
  
  
  Adjusted investment criteria to market dynamics.
• Learned from missed opportunities and refined strategy.
• Talent Development :
  
  
  
  Empowered young partners with decision-making authority.
• Created an environment for junior success and leadership continuity.
• Cultural Consistency :
  
  
  
  Retained a collaborative ethos as the firm scaled.
• Successfully transmitted culture across generations.
• Balanced innovation with disciplined decision-making.

Accel's sustained success contrasts with Kleiner Perkins' decline, emphasizing a model of adaptability, strong culture, and talent development. Their ability to balance risk-taking with disciplined strategy underscored their long-term resilience in venture capital.