The Disruption Talk

A few weeks ago this community helped me put together a talk on Disruption that I delivered at Google a week and a half ago. I've posted the slides twice (draft and final) and now the talk is live on YouTube. Here is it. I'd love to hear what people think. It's long, about 55 minutes.

#VC & Technology

Comments (Archived):

  1. Mark Essel

    Phones not being friendly even with wifi, woman & bro are giving me the evil eye for staring into my iPhone instead of cleaning next room.Can’t get away with 55min in front of pc, could be hazardous to my making it to 36 a year from now

  2. samfjacobs

    I found the ‘Hacking Education’ part really inspiring. As people’s transcripts shift to the Internet, I wonder if society in general becomes a bit more tolerant of weirdness or playfulness in people’s lives as they engage in production. You can’t expect that somebody’s Twitter feed will be completely ‘buttoned up’ the whole time and either people will become more careful (which defeats the point) or norms evolve so that we’re more tolerant of diversity, youthful indiscretion, etc.

  3. Jason

    i don’t think it’s selfish, i would like to see Google focused on big game changing fundamental platforms and problems too. thanks for sharing this with us.

  4. David Semeria

    Very coherent.Your explanation of how the talk was improved by the community nicely encapsulated the key ways in which the disruption itself is occurring.Side note: why did they stick you in some sort of bloated corridor? All those comings and goings must have been quite distracting.

    1. fredwilson

      not really. the only person i noticed “coming and going” was eric schmidt who walked by as they were asking me about disrupting the VC business

  5. joe essenfeld

    Listening to you discuss your shift in focus to investing in companies that forecast less revenues with higher profit margins I thought that point was also relevant to Wall Street, as they are in dire need of increasing their capital deployment efficiency without resorting to creating bubbles.I thoroughly enjoyed your presentation, appreciate the share. Only critique was that your sport jacket appeared to be a bit cape like but that just might have been the Google cameras.

    1. fredwilson

      it was a funny angle for sure

  6. alan Levy

    A very compelling presentation and highly recommended for any web entrepeneur looking for guidance. My favorite slide was the seven words defining a successful web company. Global, Social, Open, Playful, Mobile, Instantaneous, Intelligent.Thanks Fred, I sent it to my team.AlanFounder BlogTalkRadio

  7. Adam Hudson

    Great post. I very much enjoyed your ideas around disrupting financial services. I believe transparent, independently audited services such as Covestor are great examples of the future of disruption in that space. Your comment regarding making your business something that competitors don’t necessarily want to disrupt by adding value to the consumer was very insightful. Thanks for sharing.

  8. gregg

    Dunno. Luv “open, mobile, global, social”, but you could be explaining how to turn newspapers into google stock and I’d still find the lack of eye contact and ums and ahs and slides a complete turnoff.

    1. fredwilson

      Good critique. I will work on the delivery

  9. Ben Berkowitz

    Hey Fred,Excited that I finally got to see the speech. You mentioned in the speech that google and you are interested in how you can help bring SeeClickFix to more communities. Would you have time this week to chat by phone about this? I can be reached @[email protected] again for the kudos. -Ben

  10. Tony Bain

    For those entrepreneurs outside of Silicon Valley, and to a wider extent outside of the US, gaining finance for starting technology companies has always been more difficult. Even during the .com boom days it wasn’t easy to raise capital in places like Australia, New Zealand and to a lesser extent the UK. Even so many start up’s continue to be started, most bootstrapped using the founders own funds or are formed as a spin off for an existing company who provides financial support (+ some private equity and limited venture capital).My experience has been that lower levels of funding weren’t really inhibitors to developing new technologies or even getting new offerings to market. Especially in the Web/Web 2.0 space as good ideas tend to the application of existing technologies in new and interesting ways, rather than the result of highly capital intensive operations such as R&D. Good ideas and smart people are a global occurrence and instinct rather than finance tends to motivate these ideas to market. Instead the difficulties are more on supporting the go to market. Without comparative funds everything around branding, advertising, partnering and forming big deals with existing big companies proved very hard to do. As such many of the successful overseas start-ups tended to be those which focused specifically on the local markets and had quick paths to revenue and some level of self sustainability (and of course there are exceptions).Twitter if started 5 years earlier may have had 200+ people at this point in its lifecycle, the ~50 (not sure if this is accurate) people it has now is probably replicable in many economies (although it would still be difficult to get funding for a company with no revenue plans in its first 3 years). While I am certain the tech capitals will remain indefinitely (and they should, I love the vibe of visting SV), I also take an evening out of the capital playing field as a positive sign that geography is becoming somewhat less relevant.

    1. fredwilson

      I agree that geography is becoming less relevant in tech startups

  11. Matt Lee

    To disrupt education courses etc, check out Moodleshare, let me know how you can help!

    1. fredwilson

      i see what you are trying to do with moodleshare but the service feels a little empty to me. how long have you been up and running with it?

      1. Jon Fila

        Its been up for a while but I haven’t been able to devote my full attention to it. I am actively seeking partners in the educational field to start posting their moodle courses. The fear of sharing is a big hurdle, as well as scrubbing their course content of copyrighted materials. All of which need to be touched on the site in FAQs and help docs that have yet to be created. Once we have a critical mass of educators who want to actively share and comment, I see it the content exploding very quickly.

        1. fredwilson

          That’s always the issue with markets. Getting to critical mass

          1. Jon Fila

            True dat.

  12. APSamuels

    I was excited to see peer-to-peer lending was on your radar, but surprised that you covered it so briefly (and only really noted Prosper in the space). I think you are spot on with the idea that it is the next generation of players that can take the basic idea and apply it to more interesting and fruitful spaces in the financial services marketplace – but with the SEC oversight, it has quickly moved to something that needs careful legal, financial and operational leadership to excel. Does that make it more or less interesting to a VC?Alan SamuelsChief Product Officer, People CapitalHow Education Finance Should Work

    1. fredwilson

      Its always less interesting to VCs if its regulated (at least this VC)

      1. aalper

        Wouldn’t you consider the “oversight” a pre-vetting tool to weed out less determined, more shallow concepts and organizations, thereby giving you a more viable base from which to select an investment from?Al AlperPresident | COO, People CapitalHow Education Finance Should Work

  13. Donna Brewington White

    Fred — Listening to this talk was time well spent. Thank you. The concepts you presented were accessible even to someone who is not anywhere close to being an expert in the subject matter (albeit extremely interested). Given the current state of affairs and surrounding events, the topic of “disruption” seems especially relevant. At the risk of sounding simplistic, I would go so far as to suggest that our “sustainability” as a nation depends on it. Perhaps, things that can be shaken should be shaken with the result of maximizing (as opposed to exploiting) our resources — to accomplish the greatest good. I’ve latched onto the vision of “reinvention” because I believe that the radical nature of our financial and economic shake-up points to the need for nothing less. By necessity, disruption must accompany reinvention. Although I like the type of disruption you describe much better than that which was forced on us this past year. However, if we’ve learned anything, I hope it is that if we don’t choose disruption, a more devastating version will eventually be forced upon us.Fred, I continue to appreciate your accessibility and generosity. I learn so much by what you are willing to share. Thank you.

    1. fredwilson

      Reinvention and disruption are basically the same thing. Reinvention is a less threatening word though

  14. kidmercury

    killer presentation. glad to see you ditched the gig as fedex salesman and have returned to your roots as a VC. thanks for keepin it real, boss!a few points:1. a recurring theme was how much regulation is f’ing up all your investment opportunities. i expect this trend to continue until people do something about it.2. i dont think any virtual currency solution can happen until people examine how money is currently created and how central banks manage its value.3. the carbon credit stuff is phony, you know they are trying to create carbon-backed currencies and that is one angle the NWO may take to create their global currency (though there are other angles for getting the world currency/global govt scam in place). this is all admitted, when i showed it to the AMEE guy all he could say is that some people lie. hahaha. well, i suppose that’s one thing we agree on!4. regarding crowdsourcing VC, i think it would be great if you could raise money from your community, microfinance style. for instance if i could give you a small amount (smaller the better), i would def do that — not only because i think it would be a worthwhile investment but even more so because it would make participating in this community more fun, it would be like i’m rooting for the same stuff. of course there are nightmare-ish regulatory issues (see point #1) but IMO something like this is one element of the future of finance, and i view it as a natural progression of what you are already doing (i.e. crowdsourcing presentations)

    1. fredwilson

      Hmm. Turn avc into a venture fund. Good idea. But I’ve got obligations to my partners and investors. Still, its a very intriguing idea and the logical conlusion to this awesome experiment we are participating in

  15. val_popov

    Great post! Very interesting thoughts on Finance. A friend once told me that banks are in the business of buying and selling money. The buying part (holding deposits and transacting payments) is definitely just bits and I believe it is totally open to disruption and innovation. Plus, there is a huge payoff – brick and mortar deposits come with a huge cost overhang and transactions generate a tremendous revenue stream.However, the selling part (lending and investing) is not really bits! It is far more proprietary, very capital intensive and subject to tremendous regulation. I would think that in order to create the unbank, you first need to separate the buying of money from the selling of money.

    1. fredwilson

      Bingo. I totally agree. The unbank doesn’t lend money. The depositors do

  16. Rainmaker

    Fred – Great content. Not so great delivery as you have acknowledged. Also, very, very self-promoting.

    1. fredwilson

      Self promotion is part of success in business. But you have to mix it in with promoting other stuff as well

  17. Mark Essel

    Finally got a chance to watch the talk, pretty awesome stuff Fred. Glad to have put the charts with the talk. Maybe we can get a sample pre-talk for the next presentation to give our own questions/feedback/input if it’s not too time intensive. Hearing your thoughts on the slides altered my first impressions of the material.As to why corporations sometimes pursue venture capital investments:1) they’re qualified (they have the capital)2) some corps realize that other smaller groups can do a job better than they can in house 3) when they get it right they can potentially profit greatly from the new frameworks/disruption created by leveraging their technology in new (now open) areas, much more than the cash payoff4) by providing venture capital in specific areas of their choosing (to their favorite entrepreneurs) they can have broad reaching influence into markets they could normally have no effect onMaybe those reasons aren’t good enough based on the BIG problems corporations could potentially be chasing.I’m hoping they’ll be less of a need for venture level initial funding due to 1) diminished startup costs for most new great ideas2) some type of peer investment architectureLike you said in the talk, they’ll be an ongoing need for the support/guidance that is offered by venture fund managers. They can act as hubs that leverage connections, experience, and spins on direction to allow startups to best prosper/profit as sustainable entities.

  18. Michael R. Bernstein

    A comment on the ‘misalignment of interest’ in the last bit.Corporate VC arms can have a couple of other aims besides the purely financial. Intel’s seems to be pretty interested in finding stuff that soaks up CPU cycles, for example. IOW, they are trying to stimulate the growth of their products’ complements, and are willing to spend money to run these experiments in parallel.Google is accomplishing the same thing by providing platforms for cheaper startup experimentation, though.Another historical aligned interest is to keep an ongoing relationship with employees exiting to create startups that is more arms-length than intrapreneurship (Lucent sought to do this, as I recall) as a sort of alumni network. This was never really necessary in SV, and has probably been obsoleted elsewhere too, given ubiquitous social networking.

  19. jeremystein

    i think that the bank you are looking for is actually an ewallet.the american public has largely lost confidence in the banking system. slowly, consumers will look to transfer funds out of their checking and savings accounts to other institutions. brokerage accounts will suffer as well. the retail investor will realize that banks trade against security order data (stop losses, limit orders, etc). additionally, how many brokers/financial advisors employed by banks helped their clients minimize damage during this downturn? few and far between. the institution that holds your money picks your pocket daily. banks are in total control of the stock market. it sickens me that the individuals in charge of fixing and regulating the system have incentive to keep banks in a position of money slowly flows out of banks, their power will dwindle. retail investors and even hedge funds will move to independent brokers such as interactive brokers. he professional money management industry will also undergo a significant change. instead of pooled funds, we will see managed accounts. nvestors can remain in complete control of their accounts while monitoring progress at the same time. ransparency is key. think covestor but on an institutional scale. (i actually think there are a few funds setting up this exact model on ibkr. ill have to check on that)if digital money is data, and data can be transferred at a negligible cost, we are about to witness the rise of the ewallet. ewallet’s have been around for a long time. although Paypal is widely regarded as a payment processor, its true function is an ewallet. i can withdraw money from my bank account and deposit on Paypal. the money is stored there and i can transfer it at my discretion. there are tons of these institutions throughout the world, most notably, banks and thrifts dominate the cash market. i agree that in the not too distant future, we will transition from a currency to digital economy. while amazon and itunes may be able to dominate internet transactions with the vast amount of credit cards they store, ewallets will play a large role in facilitating mobile payments and transfers between discretionary and investment the united states, payment intermediaries are not regulated by the government. no regulation will allow ewallets to partner with the proper services to make all in person transactions digital, not to mention instant and hassle free collections. there are already iphone apps that allow people to make and accept payments and the adoption of smart phones will accelerate this movement.ewallets will be able to digitize payments and provide hassle free movement of money. re-engineering the banking system isn’t practical, nor is it an option. building and intermediate layer right on top of it will really make things interesting.

    1. jeremystein

      ewallets are attractive because there is no lending. if individuals feel the need to lend they can transfer out of an ewallet to a service that will allow them to do that.

      1. fredwilson

        That’s the idea behind the unbank

    2. fredwilson

      That certainly is my thinking as well. But the paypal thread is worth reading and learning from. Banks still give the consumer more confidence