The Stupidest Answer In The World

There’s a great article in the NY Times Magazine section today about Obama’s quest to win the white male vote which was written by Matt Bai. In it Obama addresses the "bitter quote":

“That was my biggest boneheaded move,” Obama told me recently. We were
sitting across from each other on his plane, the one with the big red,
white and blue “O” on the tail, flying some 35,000 feet above Nebraska.
“How it was interpreted in the press was Obama talking to a bunch of
wine-sipping San Francisco liberals with an anthropological view toward
white working-class voters. And I was actually making the reverse
point, clumsily, which is that these voters have a right to be
frustrated because they’ve been ignored. And because Democrats haven’t
met them halfway on cultural issues, we’ve not been able to communicate
to them effectively an economic agenda that would help broaden our

I made a boneheaded move this week as well with this quote to Chris Snyder of Wired which he reported yesterday:

“It’s like the stupidest question in the world: How’s Twitter going to
make money?," said Union Square Ventures’ Fred Wilson, another
investor. "It’s like ‘How was Google going to make money?’

The minute I said it, I wanted it back. But it reflects my weariness with getting this question every time anyone asks me about Twitter (as well as the fact that I had flown back from SF the night before and gotten up at 6am to do a board call to London that day). Rule #1, don’t talk to the press when you are tired and irritated.

It is not the stupidest question in the world. It’s a terribly important question. But I don’t think it’s the most important question facing Twitter right now. Twitter has yet to cross the chasm to mainstream usage. It’s not immediately obvious to anyone why they should use Twitter. Search and discovery doesn’t work well on Twitter yet. There are a host of issues about the API and the developer ecosystem. Will recent reliability success continue? Can Twitter’s architecture scale now? All of these questions loom large in my mind.

As I said in the post I wrote on the Union Square Ventures blog when we first invested in Twitter,

The question everyone asks is "What is the business model?" To be completely and totally honest, we don’t yet know.

The capital we are investing will go to making Twitter a better,
more reliable and robust service. That’s what the focus needs to be
right now. We’ll have plenty of time to figure out the business model
and there are many options to choose from.

That’s not entirely true anymore. Twitter has plenty of ideas on how to make money and as my friend Bijan Sabet, the other Twitter VC board member, told Chris (he handled himself a lot better than I did):

“I think it’s very normal and expected for people in this economy,
saying ‘when is Twitter going to show us how it can generate revenue,’
and the answer is ‘stay tuned, and they’re working on it,”

Twitter is working on the revenue question. And I expect we’ll all see at least one and possibly more revenue initiatives in the next year. I am not going to say more than that because it’s not my place to talk about Twitter’s business publicly.

But I do want to take back that quote. It was the stupidest answer in the world and I am sorry that I said it.

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Comments (Archived):

  1. Jeremiah Owyang

    Fred, don’t beat yourself up out there, I’ve got quite a few silly quotes in mainstream press too. Context if everything.

  2. jondillon

    To be honest your quote struck me as odd when I read the article. Once again thanks to the times we live in you get to readdress the quote and say what you really feel. You should maybe post a link to this on the wired piece for those that don’t follow you on twitter

  3. vengroff

    You make a mistake, you admit it, you learn from it, and you move on. It works for you, it works for me, and it works for Obama.I’ve never understood why some people consider changing your mind after making the occasional bad decision to be a sign of weakness or, worse yet, a character flaw. Our recent political culture in particular has embraced this view. As a result, we’ve had to endure a digging in of the heels on some of the worst decisions in recent memory.

  4. Ed

    If I weren’t so busy with personal life right now, I’d write an essay as to why this brilliant group of creators at Twitter, and more importantly for this concern, the brilliant, educated, connectedattuned VC’s (Yes, let’s face it- I mean Fred and Bijan),are surprisingly out of it.Twitter has yet to cross the chasm to mainstream usage.[Because]It’s not immediately obvious to anyone why they should use Twitter.[And it could be glaringly obvious!]{Sorry, late for Little League-will be back}

    1. Ed

      Fred, I’d like to apologize, sincerely, for the brash tone I used above. Especially in light of Jack’s […….].But I get excited about Twitter, as though I’m in investor who is intrigued with their fundamental concept before anyone else. I was around when they were sending emails ‘Hows that look?’ I think there were 400 hundred of us-total. {If AOL wasn’t so rotten with their encrypted data even for premium paid members,I’d have archival snapshots of Twittr’s infancy to share!}Over the past year alone, I have had so many ideasabout exploding Twitter’s growth [and] with an instant allurethat makes monetization easy. With growth, comes the ability for any business to createsustainable revenue models.Thank You,Ed

      1. fredwilson

        As howard said in his commentLong twitter, short aplogiesI love that lineI need to live by it

  5. Perry Hewitt

    Commenting on the question and even answering the question as stated (as most of us were trained to do as students) can get you in deep fast. “What a question! I have never beaten my wife” is a quote some reporters would love to elicit.For this particular question, reporters are in the echo chamber of their readers — it’s what virtually every senior marketer I’ve mentioned Twitter to has asked me. “Stay tuned” and a reference to potential power of building on the API seem to work, FWIW.

  6. Chuck Westbrook

    I’m sure it’s a question that you’ve fielded a billion times. Those have a way of driving us to stupid answers, eventually.

  7. direwolff

    I’ve heard worse fred 😉 to be honest, the question irritates me a lot more because every company actively faces and works hard to address the issues of business models and revenue generation. the fact that it’s not immediately obvious or that the strategy or tactics aren’t shared w/outsiders, doesn’t make mean it’s not happening. frequently the question resembles that which is asked of every sporting team before their game or at half time, “what do you need to do to beat {name your team here}?”…or when military folks are asked “how are we going to take out the enemy?”. i see all of these falling into the same stupid question category. perhaps that makes me an elitist or more ignorant from being so intolerant. oh well, it’s just easier to think that everyone is stupider than me 🙂

  8. AndyFinkle

    I don’t think your answer was stupid at all – What might be stupid is the question, since most who ask it have no vested interest in Twitter financially. I have (on my blog) blogged over 15 different methods Twitter can use to monetize. I suggested yet another one in an email to Jack this past week. Twitter’s ultimate value is in its network, and the ubiquity of it all (both users as well as different plumbing such as email/sms/IM etc).Try this… I just now discovered that I will be moving to Phoenix in a few months from NYC. Using the Twitter network and one of their API partner’s products I was able to build my own little social network on the fly (Link will show you everyone Tweeting from within 20 miles of Phoenix)… . Now tell me, where else can you build a social network on the fly? As GPS enabled smartphones become even more prevalent, this will increase Twitter’s value as the underlying network exponentially. And it’s not even just about geographic. Using Twitter one can build a network around anyone, anything, any place (look at Twitter’s election board as an example, or Stocktwits as another).People should start looking at Twitter for what it is… Twitter is the railroad tracks (railroad infrastructure) of the 21st century. How much is that worth?

    1. themaria

      Wow! “Railroad tracks of the 21st century.” Very very well said. It’s actually quite twitterable!

    2. Ted Murphy

      Wow. That is absolutely awesome, no lie. Thanks!

  9. kevindewalt

    The stupid question is “how will Twitter make money in the long run?” There are tons of opportunities, and Twitter’s growth and the network effects will quickly lock-out anyone else in the space once the models emerge.A better question is “how will Twitter survive the downturn and get to profitability in the next 24-36 months?”The ideas that truly change the world are often the ones most difficult to explain. The fundamental shift is too much for anyone to understand, and as I’ve written recently Twitter has the power to become the universal platform for developing, organizing, transmitting, and aggregating memes.Kevin(who wondered why we needed another search engine in 1999 and thought YouTube would never make money due to storage costs)

    1. Nate

      Some ways Twitter could make money:”Pro” accounts with analytics: built-in tinyurl click tracking, geographic trends of followers, popularity of individual tweets and topics, mutual and non mutual relationships, “social graph”, tools that help companies use it for customer service, and a great “dashboard” for all this data.Advertising: The most blunt solution would be ads sprinkled into the tweetstream. The free iPhone Twitterific client does this and it doesn’t bother anyone. Much could be done to put relevant, non-annoying ads in Twitter, especially on the search page.Data mining: Sell aggregate data of what’s hot right now and how things are trending. Nothing is more timely than Twitter.Corporate Version: See Yammer. Email doesn’t scale, and it actually makes big companies less efficient because of the social conventions and 1-1 nature of email. Get the hive mind out of email and into Twitter. High value clumps of people in companies would begin to emerge. This would be a competitive edge for companies that “get it”.Note that 3rd parties are already doing most of the above.So a better question than “how will Twitter make money?” is “why are 3rd parties having all the fun?”I’m not sure why Twitter hasn’t done more to monetize. They’ve got passionate, influential users who would love to see Twitter thrive.

      1. awilensky

        A monitoring API that integrates with BI and CRM solutions that specifically detects issues of redress. You could start selling the service tomorrow. Integrate with systems to predict demand and inventory against retail program stocking incentives for multiline distributors and retailers of high-end durable goods which are subject to floor planning finance programs and cooperative advertising.

        1. Nate

          Good idea. Companies are already using Twitter this way, but they’ve got humans doing a lot of the robot work.

  10. awilensky

    I under stand that the top man moved out of CEO spot wanted to steer a sub version of Twitter into a message routing application for professional markets, and that the team got tired of hearing about it. Nasty rumor, or just more blindness across the entire patch of Web20 for anything resembling real, paying, blue collar markets.

  11. AGORACOM - George

    When Twitter first started out, it was pitched as a social tool for people (teens) that wanted the world to know what they were doing (having coffee, going to the movies, etc.). As such, I thought it was an utterly useless tool. In fact, if that remained its purpose, I’m confident it would be joining the deadpool today.However, Twitter has now unexpectedly turned into a business, PR and intelligence tool for many verticals. Yes, I’m sure a lot of kids are still using it (and you can sell ads beside their tweets) but its big revenue future lies in its business/PR/intelligence uses and charging a subscription fee (i.e. $5/month or $50/year) to commercial users. I know I would pay it.I’m not sure how you would describe “commercial users” but I’m certain the number of following and followers is a good initial filter.Twitter has a lot of possibilities and advertising will add a nice bump – but the sooner they start thinking about Twitter as a business tool and adding some extra features to create a true offering, as well as, creating verticals (i.e. small-cap stocks) the faster it can become a real business itself.The Greekp.s. We are generating 7-digit revenues and profits by using Web 2.0 tools to create a real business offering for the small-cap stock world. As such, I know the possibilities.p.s.s. Fred, if you would like to discuss our business model further, kindly EM me.

  12. howardlindzon

    it would be cool if we could make markets in private companies like Twitter and trade around the buzz with some kind currency.

    1. awilensky

      I have two Indian head pennies and a skate key.

      1. howardlindzon

        skate key has more value. lets start with that

  13. howardlindzon

    btw long twitter, short apologies

    1. dick costolo

      i love it when people do long/short abstractions. Really, you should do a long/short daily video. Wallstrip for ideas.

      1. howardlindzon

        Good idea 🙂

  14. daveschappell

    I’ve recently received some feedback as well about my misuse of hyperbole — I also find excessive use of it when I’m tired, and when I’m answering questions for the nth time — I just need to remember that the person on the other side is usually asking/hearing it for the first time.Twitter’s obviously focused on the right set of problems, IMO — making the product more stable, while simultaneously working to make it more understandable to the everyday user. I know they’re not there yet, because I find myself having difficulty explaining to teenage cousins why it’s a much better service for them vs. their 1:1 IM tendencies — my hunch is that Twitter’s one- or two- degrees separated from mass adoption, but that they have the right team (internally, and backers/investors) supporting them, and that they’re going to get there, in a big way.

  15. Randy

    Hey, as long as Obama and Fred don’t have a “peace in our time” moment like say 70 years ago in Britain”, these are forgivable “stoopids”… and that from my 2 decades growing up in the “bitter” south and midwest, and 2 decades in the brie-munching bay area (where, yes, people do still have guns and eat taco bell on occasion)

  16. rah33ls

    you’re a victim of a mindset, which will change – you’re just ahead of your time. i wouldnt worry about setting the wrong expectations Fred. Intuitively, EVERYONE knows the (potential) value that twitter can provide.What we’re witnessing now is a natural consequence of an outside-in innovation shift (obv in its infancy) – as the balance of power tilts increasingly in the customers favor – it will take time before we see more and more of these types of monetization strategies become mainstream. Think about it. Twitter is configuring how to extract economic value – after first, jointly creating value, (and building an audience at the same time) and on top of that the multitude of business models that (*will be) available to choose fromTwitter’s value life-cycle is being ironed out – and for such services – revs can be captured in so many different ways – and picking the right one (which you know first hand more than me) is crucial.I think in time (esp w/ twitter because it encourages participation) they’ll be heaps of business model experimentation to be done – and there will not be just one model one rev model – in the long run. The reason for this is because – by its nature – twitter as a service is an agent for value chain exposition (SCM/CRM etc) across so many different verticals and touchpoints.However, to accomplish this (and this is where the other twitter enterprise clones fail) – twitters ubiquity needs to be proven – for which its doing a great job.It may not seem like it now to everyone, but as twitter creates more and more value – rev models will drop out of the sky – and picking the right one will (in hindsight), as with google) seem obv.I give it under two years before twitter becomes mainstream – w/ the “RIGHT” bus model to follow shortly after.

  17. James

    Now that Verizon is charging for companies to send text messages, should twitter be afraid that other cell carriers will follow and then they will face the same problem they did internationally with message costs? It seems like a main attraction is the IM/SMS function and unless twitter can partner with carriers I think it could become prohibitively expensive, especially at this stage.

    1. fredwilson

      That’s not a done deal, they may be backing away from that stance. Time willtell.

  18. Brett Tilford

    Thanks for your transparency Fred. I am interested to see which direction twitter takes for their revenue model 🙂

  19. ChangeForge | Ken Stewart

    It’s OK, Fred… been there and done that – and will probably be there again 😉

  20. Geoff

    Many twitterers I meet in the UK stand in amazement that Twitter has never offered a premium version with a certain level of texting built in.

    1. fredwilson

      I’d like to see that happen

    2. MattKane

      Too right. Utterly baffling. People have already shown themselves willing to spend billions on premium SMS services. It seemed like such a no-brainer.

  21. Guest

    “Words ought to be a little wild, for they are the assaults of thoughts on the unthinking.”John Maynard Keynes

  22. NYCStartupfiend

    It seems that you are being a little bit harsh on yourself but I would argue that you’ve missed the point. It’s not that you gave a bad answer that’s the issue, it’s that you talked about it at all. What good could possibly come of talking about any aspect of Twitters – or any portfolio company’s – business model? When Twitter decides to make money or how strikes me as a deeply private matter that should be off limits for any officer or board member associated with the company to talk to the press about.

  23. john

    Fred. Your best post to date. I love a VC that understands the improve, pivot, iterate necessities of a start-up. And I like one even more that can fall on the sword. In the big scheme of things we’re all pretty down to earth people. The ones that remember that and aren’t afraid to express it are the ones I admire the most.From a start-up guy, not a VC. On #2. #1 was a huge fast hit and #2 has been a long ride where we have rolled with the punches. I’ve always said that most (almost all) start-ups are a series of failures punctuated by success. This one has definitely fit that bill!!!

  24. Jay Cuthrell

    Stupid question? Stupid answer? Meh.Twitter would not be hiring the staff in areas related to addressing lopsided economics (spam) of the platform unless there was a plan to draw down to a payment scheme for use. While the movement into such hires might be not a 1:1 correlation, it does show that the service provider shell is forming.If Twitter can execute on this, consider that the margins on SMS in the world market are staggering. As SS7/IP shifts to more IP orientation this means a company like a Tekelec and other SMS offload oriented companies might snuff out the what could be by seeing Twitter as a way to get “hip” on the cheap. Product companies don’t by service providers by in large — it’s a potential conflict with the existing base of customers usually.So, I’m just hoping Twitter doesn’t become another Netscape Server Products incarnation — limited but visible successes and innovations punctuated with an exit that draws it into another life as the remnants of a $4.2B buy that is worth about $25M once the dust settles.Or, put a less obtuse way, it would be interesting to see Twitter avoid the business focused packaging scenarios of a Yammer and instead focus on being a functional part of the message transactions that haven’t been created, yet. Users won’t care as long as the use case scenarios envisioned by others just works. If they did that, the suitors would move from media to infrastructure — Google, Microsoft, or even AT&T (telecoms in general).I just think Twitter is more survivable the longer they are not gobbled up and ruined by someone that thinks they fit into a block in the grander product design as just a product based on a valuation that can only see 1 year of execution as a product.Or, I could be full of it. 🙂

  25. gregorylent

    nah, it is a good quote … and twitter will make money, if not home-run money, then steady singles money … all is right with the world

    1. Aruni S. Gunasegaram

      Steady single money is alright in the rest of the world but in the world of venture investing, they typically aim for a home-run because they have to hope each will make it to result in the desired returns to their investors. This economic downturn, however, might make modest returns more acceptable/understandable.

  26. max

    hey Fred, I have ti disagree with you. I think your original answer was not stupid at all.I think the real challenge is to create services that get traction and reach out to masses. Once you have the critical mass I think the business model will come out naturally. And at least it will be ad-funded. Of course depending on how effectively the business model will be structured that will determine the health of the Company and its valutation. But as you know the key thing is to create something the reach the critical mass. And of course the twitter guys have done it dramatically well. I am sure they will figure out how to make money.bestmax

  27. Aruni S. Gunasegaram

    I don’t believe it was a stupid answer but a defensive one. That’s what happens when we are tired and repeatedly asked something over and over. And we can’t seem to get our point across. I’ve been there done that. You can’t convey everything in your head and people sometimes just want people to ‘stop already and leave them alone.’As far as twitter being mainstream…seems to me it’s getting close. I’ve seen them on CNN telling people to tweet their comments to them during shows which is one big step closer to going mainstream. They listed Twitter on top, then facebook, then myspace as ways to send their comments. Might be a revenue model in there somewhere.An interesting question to ask is also “What if there is no sustainable revenue model, then what?” I believe we are in the middle of a mindshift in economics, global finance, etc. There’s no question that twitter is a valuable tool in my experience but what if the way people pay for it is not constrained by the traditional way we’ve come to understand how people pay? Then what? If you haven’t already done it, you might want to try an exercise where you bring in people/users who are outside of the day to day of the VC/high-tech/Wall Street mindset…get them to help you throw up ideas on the wall. I’m happy to contribute (as an avid user).It was good to wake up to see that Colin Powell endorsed Obama today. If this is part of Obama’s campaign strategy in the last few weeks, it was a good one.

  28. VCMike

    Fred, as an investor in a handful of “Web 2.0” or “Social Media” who have yet to demonstrate a sustainable business model, I share alot of your sentiment, and I tend not to rank revenue generation as the top question/challenge for any of those companies. That said, however, I do think business model is THE question for the sector as a whole. My guess is that when we look back in 5 years there will be a couple large and highly profitable businesses that emerge from the current social media wave and that introduce an important area of online business, just as Google and search did in the first half of this decade. If true, there is a lot at stake in being early to identify the winning companies and revenue models, much more than is at stake in riding the wave of social media services that become popular but not a source of large profits. So while I am with you in terms of your perspective as a Twitter investor/board member, I actually agree with the article that the right question from the bleachers for Twitter (and for other socialmedia startups) is what its business model will be.

    1. fredwilson

      Thanks MikeI am with youI suspect the best social media business models may be thought of outsidethe companies with the biggest social media user bases, just like overtureinvented the killer search business model

  29. shareme

    I face the same problem right now..There is chance and opportunity to me to make a customize Mobile LInux OSes play as that is still growing. But the companies entering to upset Apple iPhone and Google’s Android usually have already spent most of seed capital on the hardware part..The business model I have come up with is choose some quality OEMs with bleeding edge hardware and offer a mix of small cash upfront and huge stock equity. We know that one bet will pan out or maybe several as I use methods to get ahead of big OEM player launches of new devices.The problem is always application and execution of limited resources.. for example my seed capital is somewhat dangerously small.However, the business is there and I have my first client..Mobile Operators and OEMs are really lookign for better choices than Apple iPhone and Google Android lock-ins to bring devices to consumers..Fred, if you know anybody who might be interested in Web 2.0 cellphone investment adventures please give my contact info to them.Yes, over long term I need a more complex business model mix..working on it.

  30. dzohrob

    Fred, I think a lot of us in the tech world (and the rest of the world) could learn from your ability to be humble and self-aware.

  31. lebousquet

    When economic crisis strikes, biz journalists often default to the “show me the money” question for the same reason investors scramble for higher ground. Namely, fear, and an urgent wish to see what’s over the horizon. As a reporter or editor, the fear is that the companies one publicized as important are suddenly revealed as shams. The wish for clarity emerges in a renewed focus on concrete benchmarks of progress, like sales and profits. Also worth noting that this latest crisis raises the hackles of media folks, many of whom were rightly lambasted for hyping dot-coms and telecoms during the last bust.Everything is topsy-turvy now. “Good” banks are bad, “smart” guys are dumb, a “strong” financial system is shown to be weak. I’m a financial journo, and like everyone else I’m struggling to figure out wth is going on. In assessing the impact of the financial crisis, I latch on to the concrete–how’s Twitter going to make money (and soon)–rather than explore less tangible measures of its worth that may not emerge for a long time and, btw, may be a function of a Web environment that’s in serious flux and difficult to envision.I think Chris Snyder’s question a good one. He’s doing his job and trying to gauge how the most prominent emerging Web companies are coping with an epic economic convulsion (as journalists, we get punished–by competitors and our bosses–for not asking these sorts of questions.). That was his context for asking it. By the same token, your context, as an investor in Twitter and other early-stage Internet startups, naturally encompasses broader concerns. Thus the disconnect. And until the financial world resumes a measure of stability, the biz media will appropriately, if arguably too narrowly, continue to fixate on questions about which companies will survive and which ones are headed for the bone-yard.Hope that doesn’t come off as pedantic, but that’s my take.

    1. fredwilson

      Good take

  32. liza

    Why not call it what it is? A research and development investment.Remember Lucent? Where are they now? Mega-corporations used to have these divisions. Companies like AT&T, IBM, used to plunk millions annually in projects they didn’t expect to see a profit anytime soon. For technologists, the days of working in an R&D lab are virtually gone. Now you need to create your own venue, your own company and hope to hook in the right people with the right VC money in order to tinker in an R&D lab of your own making.Twitter has been that. In a way, YouTube was that and before them Google.We need to bring back the respect and recognition that R&D labs used to have before tech companies abandoned them for the quick buck.I agree with you that Twitter has many income potentials (I can think of a variety of features I’d pay to have). The issue is that the right answer to “When are they going to make money?” should be “Why would it matter right now for what is for us an investment in an R&D lab”.Liza Sabater,

  33. auston

    I definitely have to disagree with you. I find twitter’s search and discovery to be awesome and useful in more ways than one.

  34. Tony_Alva

    I read yours and countless other blogs everyday. I have my own blog and find myself on Facebook more than I ever wanted too. Yet, here I stand before you asking this question…

  35. Roger Toennis

    Fred,That was not a stupid comment about Twitter, IMO.Re: “How as Google going to make money??Google was always going to make money because it was, from the day of it’s conception, on a path to provide something to humanity that it desperately needed and wanted; “easy access to information”; Instant knowledge; instant inquiry and immediate illumination. Google is as impactful to the history of humanity as the discovery of fire; as impactful as the creation of written language, as impactful as the invention of the printing-press.As such; in the very moment of it’s creation as an idea in the minds of Sergei and Larry, it was on a clear and undeniable path to being able to make money. The demand for instant knowledge is insatiable. You cannot help but make money if your solution directly meets that desire.No such thing thing can be said of Twitter. Twitter is for a finite period of time, that varies for everyone but remains nonetheless finite, a trifle that is fun to fiddle with. It may get purchased and founders and investors may make money. But it will not in its current form become, on its own, something that delivers *net new* and significant value to the human race. It is not an enabler of net new wealth, insight or industry.I’m all for the excitement and reality of venture ideas that are world-changers. But I’m quite comfortable with the statement that Twitter is not one of them.Cheers,Roger

  36. mrclark411

    Fred,Have you looked at Peldi @ Balsamiq’s proposal for monetizing Twitter?$$ tag for Twitter ads? I want to pay for Twitter!…He talks about it some here on a podcast: http://startuppodcast.wordp…I’m long on Twitter.

    1. fredwilson

      Hadn’t seen thatThanks

  37. John Hussein Smith

    Why isn’t it your place to talk about Twitter’s business publicly? Does your fund receive money from LP’s that manage the retirement fund of citizens of this country? Does your fund have public LP’s, like major state retirement funds? Obama, who you quote above you, is calling for TRANSPARENCY. It’s time for hedge funds and private equity, which hold the capital of ordinary American citizens and charge high management fees to do so, to become a lot more public about their investments.Twitter is being funded by public money. Maybe indirectly, but public money none the less. As a public, we have a right to know what our money is funding with respect to future prospects for the investments, the executive compensation, and more.I also hope that you’ll show your support for Obama’s call for transparency by either opting out of the NVCA, or ordering your powerful, elite lobby group to stop being obstructionists when it comes to policy that demands transparancy from your industry.

    1. fredwilson

      Great comment1) I’ve gone on record on the Obama regulation issue supporting more transparency and reporting. See my comments in The Deal’s article on that issue2) We do report on Twitter’s progress, its numbers, and the things that are going on in the company to our public LPs. But that information is contractually protected from FOIA and should not be available to everyone. Small companies need some things to be private. If you were twitter, would you, for example, want your compeitors to know your cash balance or burn rate? I am sure you would not. And so twitter won’t take money from us without a confidentiality agreement and we won’t take public money without a similar one3) We don’t need public money to do what we do and many top VC investors refuse to manage public money for exactly the reasons you articulate. Our firm has chosen to work with public investors but with the proper protections in place4) If twitter chooses to go public, it will have to disclose all that info. Most companies don’t want to be public anymore. Its too hard and too risky. Too much regulation is bad. There has to be a balanceHope that clarifies my position on this issue

      1. John Hussein Smith

        So, Twitter’s wants come before the public? It’s taking public money, and I bet these days people who have their retirement funds invested in an non-liquid asset want to know what the cash balance and burn rate is! Hello, are you aware that we’re in economic meltdown because of lack of transparency – you’re creating a whole new toxic asset pool.So, put your money where your mouth is. Or, more to the point, put your money BACK where your mouth is. Contractually obligating public LP’s from releasing information under the FOIA is on par with the Bush administration doing the same.You’re an Obama supporter when it’s convenient for you, but when it comes to subjecting your industry to regulation, you’re cashing in your donations for favors with his administration just like others who you deride for doing the same.

        1. fredwilson

          I am for more transparency, probably on the outer edge of my industry on that oneBut here’s the thing. I don’t need public money to do what I do. And twitter doesn’t need my money to do what they do.There’s a market to invest in my fund, and there’s a market to invest in twitter.If public investors want to invest in my fund, and if they want to invest in twitter through me, they will do what twitter wants, not what I want or what you want.Twitter (and every entrepreneur out there) holds all the cards in this marketplace because they are the scarce asset that everyone wants to be part of.

          1. John Hussein Smith

            – Give back your public money- Don’t take money from any institution that has benefited from the bailoutOR, if you continue to take public money (which does benefit you, because if you refused your other LPs would have less competition and could require stiffer terms of their arrangement with you)- Notify companies you invest with that you will make public and transparent your knowledge of their company performance- Limit your salary to no more than 250k limit your bonuses to a % of salary, not to exceed 100%Anything less is means you don’t walk the walk of Barak