Being nice is easy. Being good is hard.

What's missing here is that powerful people are almost always transacting on behalf of many others who are not present at the bargaining table. By being nice, they may be trading other people's money for personal goodwill that they get to keep for themselves. This is "being nice" in some ways, but this isn't good for society and may be highly unethical. Would you want government regulators to be nice to the industry people they are regulating because in the long run they benefit from having good relationship with industry leaders? Would you want hedge fund managers who's managing your money to be nice to banks, that is, overpay for services, because fees come out of your pocket while they can monetize the relationship in the future? Would you want college admissions officers to be nice to their friends with college-bound kids? When you're applying for internships, would you want the hiring managers to be nice to all their church friends who may need something to do during the summer?

People in powerful positions being nice to personal acquaintances at the expense of strangers is a huge problem and the root of all corruption. I'm not saying that you shouldn't be nice - being ethical and balancing the interests of all parties involved is an extremely tricky proposition but I'm surprised at the amount of agreement here, because so much of what people complain about around here often comes down to other people being nice to one another at your expense.

Edit: I'm especially surprised that a VC would make such a comment because it's an industry where being nice for the sake of relationship can be highly unethical. You're always working with other people's money and whether as an investor or a board member, you're often responsible for making decisions that benefit people you represent even if it involves some kind of hit to your "nice" reputation. At the top level of management, big decisions are rarely easy and always have winners and losers.

Edit2: As another example, the recent non-poaching deal between SV companies was probably rationalized as "let's be nice to one another" while those that didn't participate were seen as not being nice or being too cutthroat. Niceness between natural competitors can quickly lead to a collusive agreement.

Edit3: I'm not advising any specific course of action, simply noting that the advice as given is far too vague and can often lead to rationalization of highly unethical activities. I'm sure Steve Jobs thought Google trying to recruit Apple employees was "Google screwing over Apple" and the consequent no-poach agreement is partners being nice to one another.

Edit4: Dreamweapon, I didn't downvote you (don't have the power anyway) but regulators work with executives, directors and employees who are people. Regulators have strong incentives to cultivate relationships with people in the industry so that they can transition into the private sector. Likewise, hedge fund managers aren't trying to be nice to the banks - they are being nice to specific salespeople, brokers and bankers because they can expect favors in return. Also favoritism to people you know is being nice to people you know - the gist of what's being advocated here is be nice to people you know, because relationship.