Everyone's A VC

As Tim O'Reilly and I were walking on stage last night at Web 2.0 Expo, I said to him "I've got the best job in the world. I get brilliant and creative people walking in our door every day and spending an hour teaching me about something new."

It can be exhausting to have that much creativity coming at you in a firehose. But I wouldn't trade it for anything else.

If you look at the comment thread on yesterday's post, it is clear that you all like to evaluate new ideas too. Your feedback on that list helped me a lot. I was able to give a quick look at each website and then read the comment thread and I was very up to speed on the entire group of companies by the time I showed up on stage with Tim.

Then we went into a room full of entrepreneurs with laptops pitching their wares. It was like a trade show or expo except instead of pitching for customers, they were pitching for investors. And everyone got to be a VC along with me and Tim.

It was a great format. I loved it and judging from the amount of enthusiasm in the room, so did everyone else who was there.

An evening like that makes me think that the crowdfunding model has legs. I've been tapping into your collective wisdom for over seven years now. It has made me a much better investor. But that is not a crowdfunding model. Our firm is capturing most of the value in this system.

A true crowdfunding model, like Kickstarter, is a much better approach. In fact, a startup crowdfunded by Kickstarter, Diaspora, was in the group of companies we evaluated last night.

The part of the crowdfunding model I have not figured out is the investment management part. I spend less than half of my time looking at new opportunities. I spend the majority of my time working on the companies we have already invested in. That is not something you can crowdsource. Not everyone has the experience and leadership skills to be a strong and valuable board member.

So I can't currently see the picture of the crowdsourced VC firm. But I certainly can see the seeds being sown that will enable it.

#VC & Technology

Comments (Archived):

  1. RichardF

    This might be on a video but what was your pick of the three and why?

    1. fredwilson

      glympse because i wanted to talk about the obvious issue which is google could easily add this feature to maps

  2. brendangbaker

    I don’t think it’s a direct crowdsourced model for post-investment support that is best. Investment is more of a yes/no question, whereas ongoing support is more nuanced and contextual. That may not lend itself as much to the wide blast (or would it?). Maybe the model more like rapid collaboration with a wider group of trusted people. People with the appropriate background, who can quickly be given enough context to offer meaningful advice or support.In screening hundreds of pitches for AngelList, I’ve often wanted this – pushing the in-house conversation out to a wider group, who have domain or functional expertise where I don’t. But I think we’d see decreasing returns as the group grows beyond 15-20 people, we wouldn’t need hundreds.It’s a good discussion.Brendan

  3. LIAD

    Whilst the cash is a definite plus, the most exciting part of being a VC for me would be the “creative firehouse” element. Spending time every day with passionate, intelligent, ambitious people – and knowing you can help make their visions and dreams a reality – is simply wonderful.Re: Crowdsourcing investment management.I think you could federate out a significant part (60%+?)of the investment management process to a group of 20-30 trusted lieutenants each with expert skills in varying areas. They could act as executive managers to you as benevolent dictator

    1. mrcai

      Totally agree. I’d love a job where I could spend my whole day meeting people with new ideas, listening to those ideas and throwing ideas right back at them.

    2. Mark Essel

      Interesting republic structure, but the ideal is the best person is handling each position (marketing, product, partnerships).

    3. Donna Brewington White

      “I think you could federate out a significant part (60%+?)of the investment management process to a group of 20-30 trusted lieutenants each with expert skills in varying areas.”Was thinking something very similar. VCs have such a great opportunity to influence the success of companies that it seems they would bring in more expertise in particular areas! I think that the success of portfolio companies would be exponentially greater if they had these resources available to them beyond what the VC offered (granted this is significant in itself).Seems like some private equity firms do this to an extent.I know there is a cost factor involved — but I’m thinking that some functions could be turned into a profit center within the firm — perhaps as a consulting service offered beyond the portfolio. Association with the VC firm would lend credibility, but also a wealth of ongoing experience that would be valuable to others outside the portfolio. Oh, well, I think about this at times.

  4. Harry DeMott

    We already have crowd sourcing – it’s called a mutual fund.Investors come and go – but the manager stays on and works the portfolio and makes decisions.What the investors don’t do – is spend a lot of time talking with the managers about securities – it is pure outsourcing.A much better model is where you can have investor input – and the more the merrier – but someone has to act as the point person.I do think the angel model is somewhat of a crowd sourced model – although it is a smaller crowd. There’s no way Dave McClure can invest in that many companies and spend any real time managing them – so the management part is divied up between the consortium’s of angels (or not at all). Someone has to take the board seat – but the angel crowd from Bin 28 is vetting and voting.

    1. Dave Pinsen

      Mutual funds aren’t investing in start-ups. There are a couple of publicly-traded venture capital firms though, but with the one I’m familiar with, nearly all the financial benefits have accrued to the management, not the shareholders. Management gets its vig regardless of how the portfolio does or how long the firm’s stock languishes.

      1. Harry DeMott

        Isn’t that always the case?The question is – can you change that model?

        1. Dave Pinsen

          Which model — mutual funds or publicly-traded venture capital firms?I don’t think the structure of an open-end mutual fund (i.e., what you’re probably thinking about when you think about a mutual fund) would work for VC investing.If you’re asking whether a publicly-traded venture capital firm could be run for the benefit of its shareholders — in theory, sure. So could most other publicly-traded companies. That many aren’t is a real problem.

          1. Harry DeMott

            Yes I was thinking about publicly traded open ended mutual fund companies.The problem with venture capital and publicly traded (or crowd sourced)models for that point is a mismatch in duration.The more investors you have – the more hoops (regulatory) you need to jumpthrough – and the more liquidity you need to give – in a world where venturedeals are taking more and more time to incubate.What you need is a closed end fund – or series of funds (perhaps classes)with a group of energized and active investors (think of a BerkshireHathaway for venture capital) – so that the capital is trapped – but peoplecan trade in and out.Managers pick the investments and sit on the boards and fund companies – andthere is liquidity in the form of trade-able shares.

          2. Dave Pinsen

            An open-end mutual fund wouldn’t work because that requires daily valuation and liquidity, neither of which you’d have in VC investments.The Berkshire Hathaway for VC model you describe already exists — that’s the publicly-traded VC firms I mentioned before (e.g., TINY).

  5. falicon

    I could see crowdsourcing a small fund to power something like TechStars or Y Combinator.

    1. Mark Essel

      For angel rounds yeah, that’d be cool. Founders already have access to amazing mentors with those groups.

  6. andyswan

    I’d rather bet on one highly-skilled, intelligent and passionate person than a crowd that compromises or votes to a solution.I do like the idea of companies that are funded by their users/customers, who in turn become stockholders. Too bad the nannies in DC have decided that “regular people” shouldn’t be allowed to invest their earnings as they see fit. (Also known as “sticking up for the little guy”, in the mind of the Statist).

    1. Aviah Laor

      AWESOME Andy.These regulations rob people from the great opportunity to get rich easily, with their wit and insight. Then we are pushed to the “safe” and “regulated” public markets to buy expensive stocks that everybody on the chain value has already made his profits, waiting for the last layer in the pyramid to buy.Since the “nannies in DC” are elected by crowds funding, it probably proves your point.

      1. Healy Jones

        Am I the only person who has ever seen an episode of American Greed? There are countless con artists waiting to take money from unsuspecting people. I agree that our current securities regulation are onerous and probably keeps some great potential angel investors from helping startups grow. But I’m even more sure that if there were no regulations then many, many people’s grandparents would lose their retirement savings to the hucksters.

        1. Aviah Laor

          The bubble in 2000 evaporated 8 Trillion dollars. Can you see any hucksters achieve that? The alleged “regulated” and “safe” financial markets do it again and again, meanwhile a whole class is deprived from opportunity to invest it’s OWN MONEY correctly. And we are talking about money which is painful to loose, but does not have a lifetime impact on the household.To avoid scams, you can request that those investments will be approved with a third party lawyer, limit the sum etc – but not block it completely.If you consider Wall Street as the safe and fair alternative, the question remains: “Where are the customers’ yachts?

          1. Healy Jones

            Yes, I can see hucksters causing that level of economic destruction… which is why congress created the securities acts in the first place.I don’t think most of the people who will fall victim to hucksters will be knowledgeable enough to hire an experienced third party lawyer or limit the amount of $ they will invest in “the opportunity of a lifetime.”

          2. Aviah Laor

            we will have to agree to disagree…Just consider that there is ALWAYS a trade-off. When you protect one side of the equation, you screw the other.When people loose a legit opportunity to profit, it’s also an economic destruction. It’s hard to conceive it as real money loss, some bug of the human mind, but more often than not it’s more detrimental to the household life-long income.When the established financial markets have no real competition for the public assets, they invent all kinds of “derivatives” which rips you off – legally.And I’m sure there are factors to mitigate risk for personal investments. If you have a college degree, it’s OK for you to do invest in early stage startup instead of buying a new car? Probably yes. etc.

          3. Healy Jones

            I completely agree with you that there is a trade off. I would prefer regulation that is simpler and that makes it easier for small businesses to raise capital! It would not only be better for startups, but also for people who want to invest and for our economy. I’m also going to agree with you that the line seems to be currently drawn too high for what makes a “sophisticated” investor – the current regulations seem like a pretty crude cutoff.But I guess I’m afraid of no regulation. Having interacted a little with Wall Street, I’d worry that some of the people who you don’t like on Wall Street might migrate to whatever environment was the least regulated and where there were the largest number of potential suckers. There seem to be a lot of Wall Streeters who don’t mind taking money from others if those other people are “stupid.” If some hedge fund folks are able “out trade/structure” money from big pension funds and banks, I just don’t think Grandma stands a chance.

          4. Aviah Laor


          5. Donna Brewington White

            A stunning post. Had to tweet it. Thanks for sharing.

          6. Aviah Laor

            Indeed. It’s actually a derivative of the irrationality studies (you know, the fact that people spend the same time to save 20$ on a shirt when doing shopping, and to save 10,000$ on the kitchen when buying a house: time spent relatively to the total deal and not the actual value), but Paul Graham is great to explain complex issues in clear and concise way. The deeper the understanding, the simpler the explanation.

          7. Donna Brewington White

            Will have to look in to this. Seems fascinating — especially if that particular post is indicative. Thanks, again.

          8. awaldstein

            Aviah…I’m going to start a signature campaign for you to get a picture in your avatar! It’s time.

          9. Aviah Laor

            OK. first task for the new year.

          10. Matt A. Myers

            You can borrow one of my photos if you want..

          11. Aviah Laor

            I’m afraid you suggesting a much better alternative 🙂

          12. Tereza

            I’m trying to remember my Poetry Day limerick for him. I think it went:There was a man named Aviah Laor.We never have seen him before.He seems very smart;His comments — pure art.A PICTURE!!!!…. we all do implore.

          13. awaldstein


          14. Donna Brewington White

            Maybe Aviah is Kid Mercury…

          15. Mark Essel

            Was thinking the same, awesome comments. More face.

        2. andyswan

          Meanwhile the same government (that you’re so willing to hand freedom over to) sells, and advertises scratch-off lotto tickets with a 50% payback rate…..mostly to poor people. The arrogance of limiting people’s freedom in the name of protecting them is depressing.

        3. JLM

          The obvious and unspoken challenge w/ regulation is that crooks are not folks who follow the rules to start with. More rules do not discipline those who intend to ignore them in the first place.A bit of discipline — like public beheadings on the steps of the NYSE — is what is required.

          1. CJ

            Agreed. The same reason applies when you talk gun control. The crooks who intend to use guns don’t care if the act of owning or possessing the gun is criminal, they likely have bigger crimes on their mind anyway. It only stops those who are more inclined to obey the law.

          2. Peter Beddows

            True that: Very well said. Works well for the most part as a deterrent to crime in Saudi Arabia.

          3. Aviah Laor

            For a start, put a Guillotine on the entrance to Wall St. with a big sign:”This is not a financial advice. Just an advice”.

    2. Dave Pinsen

      The nannies’ restrictions on angel and other investment in privately-held companies by regular folks makes absolutely no sense. Instead of reducing risks for regular investors, it increases risks by forcing them to invest where few of them are likely to have any information advantage (i.e., in publicly-traded securities). You had a great post a while back about one of your angel investments in a local start-up where you wrote,I expect to make good coin off of this deal, but if I don’t…at least I know where the CEO drinks. Regular investors would be better off with some of that sort of local connection too.

      1. Mark Essel

        Nice catch Dave, and I agree that when it comes to buying stocks I’m a sucker for a company I believe in. I bought NVidia at ~$30 and got roughed up, but man their graphics cards and parallel processing setups are sweet.

      2. fredwilson

        a lot of my wife and my angel investments are “hyper local” meaning they are in businesses in our neighborhood. not all of then, but a lot of them.

        1. AR

          Fred,How about a post on how you and Gotham Gal develop deal flow for your local angel investments? I take it most of these are non-tech, restaurants, retail, and so on.

    3. Harry DeMott

      I’ve never quite understood why the government feels it is necessary to protect people from using their own minds and making their own decisions. If people can’t make good decisions – so be it. Should the government really arbitrate who can and cannot use their own mind?

      1. andyswan

        They won’t hesitate to sell a scratch-off lotto ticket to the lady that just cashed her welfare check though.It’s about power and control.

        1. johnmccarthy

          All you need is a dollar and a dream….and no understanding of statistics or probability

          1. andyswan

            LOL. That said, when powerball hits $200m I usually drop a c-note ontickets. I don’t think the after-tax returns are greater than theodds…..but at some point it’s “f-you” money and I’ll take the math hit.

          2. CJ

            “but at some point it’s “f-you” money and I’ll take the math hit.” – Amen.

          3. johnmccarthy

            I do the same thing a few times a year. “Hey, you never know” as the ads say.

          4. JLM

            A friend of mine, Hollywood Henderson late of Dallas Cowboys fame, won $18MM having bought his ticket at Nau’s Drugstore on W Lynn in Austin by God, Texas.He was broke.It COULD happen to you. I’ve seen it.Still………………………………..

          5. fredwilson

            crazy comment threads on AVCsomehow crowdsourcing VC turns into a conversation about lottery ticketsi’ve never bought a lottery ticket. even when i had nothing.i guess i just can’t get past the fact that its a ripoff

          6. Matt A. Myers

            I’d say your decision making skills have served you well overall. 😛

          7. Abe / Outlier

            Putting any substantial part of your income/wealth into the lottery is of course mathematically dumb. But the math argument falls completely apart when you start talking about turning pocket change into life changing money. Odds of turning $1 into 100 million by playing the lottery are low but they are still a whole lot higher then the odds that the $1 will turn into 100 million in the bank overnight…

        2. CJ

          True, and speaking of welfare why isn’t it a requirement that you work for it? I can name a hundred things that would benefit this country immediately if people were required to do community work for their ‘welfare’ check. Trash collection should be a job for the unemployed on the welfare rolls, graffiti cleanup and keeping our streets and highways clean is another that should be a requirement, anything that’s labor intensive, not skill restricted and financed by the government should be the job of the people who collect welfare. If you are able mentally and physically to work, you should have to work for any welfare the government pays you.

          1. Matt A. Myers

            And if they don’t work, what then? Jail? Kill them off?You also then in your model are taking away the full-time jobs with benefits from workers – and currently there are unions to prevent that.However, the thinking you have (which I’m not saying I agree with, nor disagree with) becomes a possibility when finances will become as tight as they will in America once things tumble down.One thing I do agree with in what you’re saying is that getting people to be active and productive is healthy, and simply collecting money will lead to unhealthy behaviours and habits that can only cost or drain society more.

          2. JLM

            We all do what we HAVE to do. When you have teenagers — your own flesh and blood, DNA from the deep end of the gene pool — you will learn how adaptable people are when faced with no alternatives.Extending unemployment benefits and increasing welfare assistance has the reverse impact than the desired outcome — people will still not act until they HAVE to act.It is even worse psychologically as men are literally defined by their work.When asked what one does — the answer is always their WORK. Work is important as it defines us and it enhances our own sense of self worth. “I am a carpenter or a lawyer.”Once upon a time when I had hit a very good lick, I did almost nothing for about 3 years. My then 6 year old daughter, when asked what Daddy did, used to tell folks — “Daddy, is unemployed.”Technically correct but not really so much. I was just taking a rest and could more than afford to do so. Still, I did not like the many soulful glances and clucking sounds of empathy. I did not like being unemployed.

          3. CJ

            LOL – JLM I have to admit, I never thought I’d here the phrase ‘hit a [very good] lick’ on AVC. Well played. I hope to hit a lick soon so my kids can tell everyone I’m unemployed while I’m a stay at home dad for a while.

          4. ShanaC

            JLm I am going to have to disagree with you about unemployment for a bit- no cusionb is problematic because it can push families over the edge. We need a little one. It’s not designed for you.

          5. JLM

            I am not suggesting that unemployment insurance should not be a vital part of America’s social safety net. Remember employees and employers PAY for it and it is supposed to be INSURANCE not a hand out.I would be the first in line to defend the employee’s receipt of an insurance benefit for which he has PAID his hard earned money. We forget it is an insurance program sometimes.What I am suggesting is that the unfettered extension of “benefits” is inconsistent with the financial nature of real insurance and that when extended to over 2 years — the current situation — it is simply de-motivating.Again, like the spice analogy, a pinch is perfect and a handful is destructive.

          6. ShanaC

            Correct, although I wonder if we do too much or not enough depending on theindustry and place in the country

          7. CJ

            If they still don’t work, don’t pay them. It’s simple. Welfare exists or should exist to help those who CAN’T, not those who WON’T. If you won’t that’s fine but don’t expect my tax dollars to prop you up because you made a choice to not work or not get an education to make yourself available to work.

          8. Aviah Laor

            Leaving motivation and psychology aside, working for welfare can – and probably will – create no-cost alternative to low-income jobs. Suddenly many organization will suggest “welfare” jobs instead of paid jobs, increasing unemployment and the welfare costs.

          9. Matt A. Myers

            That’s also a possibility, but maybe it needs to happen. But honestly, if the certain systems are in place that need to be for everyone to be self-efficient at taking care of themselves (or in a group / community setting) then people won’t see it being so bad, they just need to see examples of people being healthy and happy with less — and psychologically not feel / learn to not feel like you’re getting a shorter straw — maybe that everyone’s holding onto the same straw?

          10. CJ

            While that’s a possibility, I don’t see it as likely. I’d say keep it restricted to jobs that the government would typically pay for but don’t require any skill. Garbage collection, neighborhood cleanup, etc. “welfare” jobs would just be a euphemism for slavery if we allowed corporations to hire ‘welfare’ jobs instead of minimum wage jobs.

          11. Matt A. Myers

            Crime and violence can increase then — but still, that probably takes more effort — unless they want the ‘comforts and security’ of jail.

        3. ErikSchwartz

          The lottery is a tax on people who were not paying attention during math class.I don’t have to pay it.

      2. Peter Beddows

        Absolutely: People should be brought up from the earliest age to recognize that they have responsibilities and that their actions have impact and consequences.However, reality strikes; isn’t this tendency for Government to “be the parent” just another (intended/unintended?) consequence of the dulling down of our educational system which consequently emasculates those passing through it leaving them in need of “parental guidance” to “save them from themselves”?Have we not now seen numerous examples – including in “Waiting for Superman” – of how our schools are more and more becoming educational resources of limited options and restrictive choices that are, for the most part and with rare exception, now churning out students who are barely graduating from participation in very much reduced curriculum scope that does not even include options either for teaching critical thinking or for fostering development of critical thinking abilities?So why would we be surprised that, in fact, we now can see a burgeoning proportion of our population coming into adult responsibility yet with a level of immaturity and inability to make cogent decisions?I’m not one to support the notion of conspiracy theories existing at the highest level of government yet perhaps, through what would appear to us to be a completely irresponsible regard for addressing our national education needs, we are unwittingly being surreptitiously moved by an oligarchy towards being a nation such as was depicted in the movie “Galatica” where everyone is ultimately Government controlled?

        1. Harry DeMott

          I sure as hell hope that Galatica scenario is not the case.Actually, I really think that politicians are just there to get re-elected -so they do what they can to mollify the greatest mass of people possible. Sothey make sure that “No Child Gets Left Behind” and put together programsthat keep teachers rolling along in tenured positions – the whole system isthere to propagate itself as opposed to pushing out students that meet theneeds of society.We leave people behind in all aspects of life – you never see a program thatsays all children will get a medical education – or all children will becomeNBA players at $3M per year – so why can’t we deal with everything in thesame way. Work hard to advance people – and to make their familiesaccountable to some degree for their success or failure –

          1. Peter Beddows

            While “hope” is not a strategy, I fervently agree with you Harry: The Galactica scenario is not one that any of us would want in our right minds and we would commit our very best efforts to avoid it if we had any awareness of such impending possibility. However, our evident complacent disregard for taking responsibility for things that need to change in order for that eventual scenario outcome to be avoided is discouraging and incredible. The fact that we have been embroiled in two totally asinine wars for the past decade is proof enough of that ~ refer to Dave Pinsen’s comments above for details.We seem to be acting like frogs not noticing the rising temperature of water coming to the boil: When put into a pot of cold water on a stove and then having the water being brought slowly to a boil, the frog stays put not noticing it is being slowly killed by the rising temperature until it is too late but if the frog is put into hot water, it jumps out immediately. (Mark Suster posted in his Both Sides Of The Table blog about this phenomenon but in reference to impact on us of slow changes in technology.)As to the politicians, we have allowed a system to be created wherein we now have governance of the people not by the people for the people but of the people by those dependent upon the vested interests for the benefit of those vested interests. We can, and do, talk about needing change all we want but in reality in our system as it now stands the only change we get is a different body occupying the seat that someone else occupied before the election ~ meanwhile the wheels of the system itself grind inexorably on regardless. What is even worse is that we have some people so confudled that they will even elect people of dubious distinction: So much for “critical thinking”.BTW: I think this MSNBC Countdown report by Keith Olbermann is very revealing and informative. http://www.msnbc.msn.com/id/39317328/ns/politics/ Watch the included videos for fullest revelation.

        2. Donna Brewington White

          My 15 y.o. son (whose intelligence you doubted after witnessing his latest stunt via Twitter/YouTube) almost daily tries to convince me that I should send him to public school because it isn’t nearly as demanding, his friends there don’t study nearly as much and his GPA would automatically go up a point.And, I think to myself “Exactly!” and happily make the next tuition payment. (He also makes the argument that we’d have more discretionary income.)Some of my motivation has to do with what you described.

          1. Peter Beddows

            Donna: I do hope you realize that I was teasing you? Boys and, for that matter, a good many grown men will be boys no matter what! Comes back again to the issues of XY versus XX: Take note Tereza. {grin}My own son gave us moments of heart in mouth anxiousness when he was young and I know I rapidly aged my own parents with some of my own more hair-brained schemes. Marie told me of one of her own sons in his teen years coming into the house once offering her flowers after he had experimented in her car and caused the dashboard to catch fire completely destroying it.But aside from that, as I posted in the previous AVC about “Waiting for Superman”, the mother of my own children and I chose to send our own daughter to a very highly regarded private school: That turned out to be an extraordinarily good investment for her and for us. Full medical scholarship to Rutgers, which she quit after completing 2 years in favor of getting married and then moved on in favor of joining a VC company, getting her MBA and, after 13 years of that, returning to medical just recently securing her RN degree at Johns Hopkins. She is now contemplating going on to the next level of certification so we are delighted, relieved and proud of her but also confident that she could never have accomplished all this from within the US system without our commitment to getting her the best level of education available.So, in our view, your motivation to ensure your son’s best possible level of education is perfectly directed: He will not suffer if Disneyland or Six-Flags Magic-Mountain visits are not in the agenda but certainly will suffer if his schooling is not the best you can offer him. Congratulations on your persistence and perspicacity.

          2. JLM

            I think money spent on middle and high school education is probably better spent than on a prestigious college. Both of my kids have breezed through college because they were so well prepared by a very good middle and high school.Last week I totalled up what I spent on middle and high school and it is substantially more than their college education. Money well spent.

          3. Peter Beddows

            Completely agree JLM: The need for high quality education really begins from the time of kindergarten, if not even earlier than that (parents attention, etc) but certainly is a must during middle and high school. I attribute the successes realized by both of my children to the tremendously valuable foundation they gained by having been schooled under the UK system before coming to the US and then entering middle school here, in NJ actually, where they aced the curriculum.

          4. panterosa,

            I tend to agree with Peter on adding elementary school into the priorities, and I would add preschool. I find patterns and responses regarding learning are formed then, whereas in middle school and farther on you are talking curriculum, and studying.Having school be cool, having smart be awesome, is a culture which builds from the bottom up, so best start early. Especially with girls, and especially if they go coed.But I am working on designing learning tools to start in preschool through to college, so I am figuring in getting my user ‘hooked’ early with fun stuff, and I may be biased. I want their minds early to be able to lay down the foundations of natural sciences in a way which doesn’t lose the interests of early childhood. I want them when they are still fun and full of wonder and to thrill them with learning. I love teaching young kids, it is the bomb.Alternatively, I will say that I have a first class education since the age 4 and the amount of things I wish I had learned, and still need to know, still floors me. For this I design toys/games/learning. For this I build what I seek but which does not exist. I suppose some might call this my revenge if I am successful. I just want these kids to have what I should have and didn’t, at top dollar back then, because it didn’t exist then. But can now for a price which is doable, actually more choice than price.

          5. Peter Beddows

            Panterosa: And I in turn agree with you.In talking about making education ‘fun’ and getting the user ‘hooked’ early, you have reminded me of a recent TED presentation about kids having opportunity to learn in unconventional ways. You may find this interesting if you have not seen it before now.http://www.ted.com/talks/sugata_mitra_the_child_driven_education.html“TED Talks Education scientist Sugata Mitra tackles one of the greatest problems of education — the best teachers and schools don’t exist where they’re needed most. In a series of real-life experiments from New Delhi to South Africa to Italy, he gave kids self-supervised access to the web and saw re…” see the link for more information.

          6. panterosa,

            Sorry to come back to you late – busy day.Thanks for the link. I had it in my cue to see Mitra and I am glad to have seen it now.I think the main problem Mitra deals with and seems adverse to, and which also I object to, and also disagree with, is that children don’t know any better. His experiments, which I adore – especially for his hands off, “I don’t know……… I’m going now” philosophy, which free them to do what they will – have shown that actually children do know better and are very resourceful, clever and innovative. Children are not stupid, they are young, uneducated and lack knowledge, but they are actually quite smart. Somehow this country’s education model is based on children not knowing any better, as if they were stupid.The times I teach, I give kids power to tell me what they know, and I ask what they don’t know so we can explore. Each time I am pleased with the result. I trust them, they sense that, and so they trust me. Our public educational system in general seems not to trust kids innate smartness, and I find that very sad. I look forward to seeing Waiting for Superman”.I will tell you the feeling of walking in the door to a bunch of four year olds and have their faces all light up and then say “Yay!’. They really did that. You can’t imagine the high. My making their day made my day.

          7. JLM

            Perhaps the only real regret on the direction my life has taken was the educational opportunities I failed to capitalize upon and I am a fairly well educated person thanks to the GI Bill. I could actually see myself going back to school in my late 60s or 70s.On the other hand, I have never really stopped learning and it is just plain damn fun and curiosity fulfilled.I just wish I could live to be 425 years old.

          8. Peter Beddows

            The GI Bill has been a God-Send to so many people and you, JLM, have clearly capitalized upon having had that really wonderful opportunity: I’m inclined to add that this strategy just goes to show how really smart you are.I think the GI Bill is one of the very best things that we can offer our children resulting from their commitment to duty in our military. In fact, the combination of military training followed by being able to have first rate college education gives us a cadre of excellent candidates as potential recruits for any business venture: Like you, I would always choose a retired, educated military person before any other simply because of the generally higher overall quality, breadth and depth of experience inculcated into most of them by the time they are ready for industry.Of course, I could be a trifle biased since my own son joined the US Marines and subsequently earned his engineering degree from Rutgers on the GI Bill … naturally thus saving me a boat-load of cash! Gotta be proud of him for all he has accomplished since coming to the US.

          9. JLM

            Small world, my Dad was stationed at the ROTC unit at Rutgers in the 1950s. I was born at Camp Kilmer close by Rutgers. I shot the first M1 I ever fired at the Rutgers indoor rifle range.My Dad was friends with John Paul Vann of VN CIA fame and the author of the Bright Shining Lie. Vann was stationed at Rutgers at the time. He was a weird duck.I just hired three West Point/Marine MBAs and am in the process of hiring three more ex-military types. I was reading one of these guys’ OERs (officer efficiency reports) and he was cited for his platoon having killed more Iraqi terrorists than any other platoon in the Division. It is an odd experience when reading a resume and then an OER and then a citation for a medal for bravery. These are very fine young men.

          10. Donna Brewington White

            I am determined to have my son meet you before he graduates high school, if you are open to that. Maybe you can reinforce the idea of college BEFORE Marines, if you are so inclined.Anyway, sometime in the next year or so…I will revisit this idea with you.

          11. Peter Beddows

            If you’ve had time to read my own reply to JLM by now, you will have noticed that my son went to the Marines BEFORE going college and I think that really worked out well because it knocked some sense of reality and responsibility into him that has stood him in good stead ever since.Remember, as if I need to say that, that you are his mother and thus will have anxiety about letting him scoot the coop. However, boys are far better off getting a taste of reality as soon as possible rather than later in my own experience.I’m sure JLM would be open to meeting your son but I’d be surprised if he did not tend towards agreeing with my view on this difficult issue for any parent.

          12. JLM

            I really think that kids should serve their country for at least 2 years between HS and college. For the boys, it is essential to just plain grow up. But we all need to be reminded that America was created by ordinary folks who rose to extraordinary circumstances by simply doing their duty.When I was at VMI, I tutored a VMI dropout back from VN to complete his degree. He had been an Infantry Captain and had won a SS, BS and a couple of PHs. He was an impressive guy. Intimidating almost.When I was tutoring him on calculas, I was in charge. When we were talking about the Army, he was in charge. It was a delightfully funny role playing exercise. The roles were reversed in seconds. The fact that I was tutoring him conveyed some special seal of approval on me amongst my Brother Rats.I wanted him to be an inspiration to fire me up to soldier well but he was a calming and leavening force in my life. Like an older, wiser big brother. A few years later, I understood exactly why.I nursed him through engineering and he got his degree and passed his EIT. I went into the Army filled with piss and vinegar but with just a smidgen of caution. A measure twice and cut once kind of caution.When I left, he gave me a great big knife (GBK) and told me to be careful and not get my ass killed. Good advice.Once when dropped into the water underneath a wet silk parachute, I used that knife to cut my way out and save my own life. I still have it.I will see him every couple of years and he gives me an embarassingly big hug. It is actually kind of sweet. It gets pretty close to making my wife jealous.That strange bond has never changed. It is as if he initiated me into the brotherhood of healthy skepticism of war and all that it entails while not making me jaded about the necessity of being good at soldiering.I learned everything I ever needed to succeed in business as a platoon leader.

          13. Peter Beddows

            I totally agree with you that “kids should serve their country for at least 2 years between HS and college” and you are absolutely correct that “it is essential (for boys) to just plain grow up”. In this day and age, allowing girls to likewise participate and also have this experience in such a program would most probably also be quite beneficial all round.Many countries actually do require such service do they not. Is it not the case that this applies in Israel? I remember that some time ago when in Finland, I observed that they had such a program; don’t know if it still runs.I also think that, for many of our kids, there ought to be some program that requires them to see how the rest of the world lives so that they can a) do helpful service where most needed and b) really understand just how well off they are by having been born in America.Your memory of your VMI experience is also very significant. By extending yourself to help someone else while you yourself were still at a very impressionable age not only left an indelibly positive mark on your consciousness, you also ended up with what was clearly invaluable learning and guidance that helped save your life and that most likely could not have been gained in any other fashion.I have no doubt that your military experience gave you everything that you would ever need to succeed in business: That’s been the basis of my own preference for ex-military types when I’ve been in the situation to recruit staff: Usually the best of all available candidates if they have had a well rounded education and in the trenches leadership experiences.

          14. JLM

            Send me your e-mail address and I will share my thoughts w/ you. [email protected]

          15. Peter Beddows

            It truly is a small world: Rutgers was a really terrific opportunity for both of my children even though my daughter changed her course along the way. However, I shot my first gun on the farm in the UK chasing rabbits and my first .303 rifle while on the college rifle team in Birmingham, UK.We arrived in New Jersey in the first place almost more by accident than by design. I was there to start up a new business division in, of all places, Robbinsville, just outside of Trenton and Princeton and thus my children went from being schooled in Wales to being schooled in NJ: One heck of an alien world for both of them but, as you will have gathered, they survived with flying colours. Perhaps the funniest part of this transition from Wales to NJ was that it was a consequence of my “mad business” idea!! When I suggested the idea to the American executive team, board and VC’s they all thought it was “Typically mad British”. However, after more time went by they decided to give me the chance to put my money where my mouth was … gulp! Offered to transfer me and the family to do that and the rest, as they say, is history.But while I just missed the draft by days back in the UK (Korea and, I think, Suez though my memory is now vague in that time frame) I ended up involved in developing missile systems and working very closely with the UK and US Navies where I learned how to do “REAL” Project Management and also learned that Project Management, as now promoted by the American Project Management Institute for their PMP/PMI certifications, actually originated from the demands of those ICBM programs because of the complexity of managing all of the resources, budgets and schedules integrating across 3 continents and military systems (UK, US and AU) so I really got to know and understand “how to manage projects” in ways that most so called Project Managers of today have no way of comprehending. I was then the UK Logistics Manager complete with my James Bond leather padlocked brief case emblazoned with Her Majesty’s coat of Arms while being told to “keep a low profile” and not draw any attention to myself! Only the Brit’s would be so daft yet so real.Anyway, enough reminiscing for one night I think: Would love to have a few jars with you some time soon and learn more about your own experiences.

          16. fredwilson

            i read Bright Shining Lie and i have no doubt that John Paul Vann is a strange bird

          17. panterosa,

            JLM,I respond here, rather than further through this thread, but this comment applies to the below thread as well.My father was a Marine in WW2, Pacific, between Harvard at 15 in 3 years and Harvard Law after in 2 years. I can tell you it was not easy keeping up with his standards, but they were worth striving for, and still are though he died years ago.My best friend at Exeter went ROTC being 4th generation army (and 4th generation Exeter) and no one got it at Exeter, why he would do this. He was stationed abroad a few times, Field Artillery. I will tell you that he brings so much experience to the table that he outweighs the heavier intellects around him, even though he has always been intimidated by their intellects. He is is practical, pragmatic, a realist.I will also tell you that an MBA boyfriend from Babson got me reading Sun Tsu’s Art of Strategy at 21 and it remains my favorite book of all time. Now for an artist/designer to be reading this is very outlier, but so be it. I completely relate to your evaluation of our current war strategy, since I feel it is so counter to Sun Tsu, hence not making any sense – one is only supposed to fight as a last resort, and only in that case to win. I feel we are piddling in our current war efforts.I wonder if you have read The Art of Strategy (aka The Art of War). I am so curious to know.

          18. JLM

            Read Sun Tsu? I went to a military school, darling. I memorized Sun Tsu.If you want a great read that is a balance to ST, read some of the German military philosophers from before and after WWI — they designed the Prussian General Staff which the Americans modeled all their staff work on from battalion up.Also read all of the “tank” visionaries who saw the role of the tank in WWII coming.The reason these guys are so important and relevant to today is because they were deep thinkers before the nature of warfare changed to a highly mobile, combined arms type of offense.Today, we are fighting a very different type of war. We are still thinking about the last war unfortunately.Remember that guys like Petraeus were too young for VN and thus they have either no relevant combat experience or no blind spots, take your pick.BTW, your Dad — wow! This summer I went to Italy and traced my Dad’s combat exploits through the center of Italy. What tough terrain. I spoke w/ him today for about an hour going from hilltop to valley to road. At 92, he still remembers every encounter and his mind is as sharp as a tack.We are lucky to have a country which has produced such men. Very lucky.

          19. panterosa,

            Of course you memorized Sun Tsu, how silly of me not to connect the military background education. I will look into your suggested readings.My fathers letters to his mother and sister from WW2 are all in a trunk waiting to be read. I have read a sampling of them. I was terrible at history, so reading them will require a lot of background. He died when I was 16 so his service was not raised much due to my age. But he was a good writer and prolific, so I will have a chance to meet him again in this way.I have a plan to read the letters and plot them on a map with a chronology. I am reading Edward Tutfe for my current endeavors and I will use his favorite of Minard’s graphic charting Napoleon’s march on Moscow.My mother was in London at 6 when the war broke out there. The Lion, The Witch and The Wardrobe is of endless fascination to my daughter who started watching it when she was my mother’s age when war broke out, which is also Lucy’s age in the story. She has the luck and luxury of questioning my mother and internalizing the story and it’s lessons. Integrating these stories into cohesive visualization really promotes many levels of connections.

          20. Donna Brewington White

            That is awfully dang old, JLM. I let my “hell bent on becoming a Marine” 15 y.o. son read your earlier comment about war. He loved it — said “That guy is really smart.” As you know, coming from a 15 y.o. that’s high praise.BTW, the plan at this stage is to sandwich the Marines between college and law school. We’ll see. He’s got a great business brain.

          21. Donna Brewington White

            This is so encouraging, JLM! Means a lot to hear this coming from you.

          22. fredwilson

            that’s my experience too

          23. Donna Brewington White

            I am so telling my kids that you said this! You actually have clout with my middle-schooler and high-schooler — they think that AVC is very, very cool!(They don’t read AVC except for a few comments I pass their way from time to time, but I regularly share anecdotes with them and they are fascinated by the idea that we do this — the content that emerges from the discussion and the people who participate. They think of it as a kind of Facebook.)

          24. Peter Beddows

            Isn’t it interesting how often our kids do not trust what Mom and Dad have to say but will swear by the input from a friend or from a friend’s Mom and Dad? Some external to family figure seen as an authority! At least you are in good hands with participants here such as JLM and Fred amongst others.

          25. Donna Brewington White

            “Isn’t it interesting how often our kids do not trust what Mom and Dad have to say”Especially since I’m always right!

          26. Donna Brewington White

            Thanks for the encouragement, Peter, both directly and through the very impressive story about your daughter. And, yes, I knew you were teasing about my son. It is amazing how he can be so incredibly smart in some ways and a total spaz in others! Oh, wait, he’s 15……and how nice to have the word “perspicacity” used to describe me. May be a first!

          27. Peter Beddows

            15? and an XY? Nuff said!We have a “just arrived at 18” years old grand daughter …. Straight A’s student and accomplished in so many ways, however @!#*&^ you do not want to know what she has just upped and done to her distraught mother’s dismay – and for that matter, neither do we.I still remember the wonderful catch phrase: “Hire a teenager while they still know it all!” I should have included that in my blog about “Meritocracy and Diversity” that Mark Essel mentioned.BTW: So relieved you have obviously forgiven me about the tease. lol Thank you.

        3. JLM

          Take a quick read of what Gov Christie in NJ is trying to do to reform education.It is quite intriguing and he is probably a determined enough fellow to get it done. My hat is off to him.If competiton for advancement can be created between new teachers operating under a meritocracy and older teachers operating under a feudal union system, it may just be possible to break the “machine”.Flight instructors have to be tested, undergo recurrent training and demonstrate competence to teach flight training — why not educational instructors?It is one part horse sense, one part business sense, one part union busting and one part plain old competition. I hope it all works.I like this guy Christie.

          1. Peter Beddows

            Not sure if you were referring to this item in today’s press http://www.newjerseynewsroo… or possibly a previous statement (apparently Gov Christie made two this week) but, having read the one attached to this link, I agree heartily with you JLM and my hat also is off to him.I also highly support the notion of competitive advancement and recurrent training and re-certification as is currently applied to many other situations aside from Flight Instructors. Heck, even CA Real Estate people have to undergo continuing education and that business is a far cry below the educational standards and expectations that we have for our children’s teachers.What Christie is proposing is extraordinarily ambitious but nothing less than what seems to be desperately needed not only in NJ but also here in CA and elsewhere.I hope he can accomplish these changes: At least one of our grand children stands to gain if he can: Like you I would now say “I like this guy Christie”.

    4. CJ

      I dislike that I can’t invest unless I’m ‘qualified’, I dislike that I can’t play poker at home on the internet but I can play as much as I want at the casino. I hate that I can’t buy a bottle of bourbon on Sunday morning but I can buy as much as I want Saturday night. Can we get common sense in government before we get anything else? For every law that restricts something we should make our government pass two that gives something back to the people.

      1. Peter Beddows

        Agreed: Unfortunately, that is probably never going to happen but it is a great suggestion!Such absurdity in laws is not restricted to our nation however and regardless, there will always be enterprising people who will look for ways around the restrictions just as Wall Street and the banks are so doing now with the recent FinRegs bill and as boot-bootleggers and mafia did around prohibition. For some it is simply a case of rising to beat the perceived challenge presented by implementation of the law. For others, it is just another business opportunity.Back in the UK, there was a time that certain counties in Scotland were “dry” but, if you knew where to look, you could actually find many of the locals in some out-of-the-way barn enjoying their beautifully aged whiskey. As a kid in Wales, remember parents going to the local hotel on Sunday (no drinking allowed on Sundays) via the kitchen door along with other locals. Local Copper would also come in via same back door around 11 for a quick drink then leave and go to the front door and bang on it demanding everyone leave or he would book them for illegal drinking ~ appearances are everything! In the Lake District during college days, we all carried sleeping bags with us and would bring them into the pub after hours because, if you were staying there, you could drink all night: The sleeping bags “proved” we were sleeping there!Point is that laws themselves will never ensure safety or intelligent choice nor prevent scams, avoid ill-preparation for major oil-spills or prevent dot-com or housing market bubbles when there are so many ways that human ingenuity will find to defeat their purpose driven simply by the insatiable need for seemingly selfish gain and selfish advantage reasons.

  7. kagilandam

    “creative people walking in our door every day and spending an hour teaching me” … I donno whether you really mean what you wrote. But that is the humblest sentence i have heard from a VC or LP.With kind of de-risking and shrinking of funding levels and decreasing confidence… crowd funding and sourcing is the next logical step.

    1. fredwilson

      it’s how i think about my job

  8. JimHirshfield

    Crowd sourced funding? I think we call that the “marketplace”. Launch the product and let’s see if people buy it.

  9. Aviah Laor

    Yesterday’s thread was a valuable lesson (and fun):1. I missed all three. Now I will never wonder again about Bessemer anti portfolio or how other “obvious” startups were passed early.2. Funny, but I after I saw the results it immidiatly made sense: So the most successful investment strategy is RetrospectFunding.3. It seems that there WAS some consensus here, apparently not shared by the chief (maybe Hour.ly?). But there was some coherent view here: lifesta, you did won the avc favorite prize which should not be taken easily.4. Some people differentiate between what they liked and what they thought would win, some didn’t.Can you tell what other people will like? not sure.Thanks for sharing the opportunity for all that, Fred.A note about Hour.ly. Can understand why it won, and this is the work market trend, but we should not be happy about it. Read “The Slack”. http://www.amazon.com/Slack… There is value in hiring people full time, build teams (you can’t give birth in one month with nine women).

    1. Eran Davidov

      We’ll see if we can turn that into some funding, Aviah 🙂

      1. Aviah Laor

        Katan Aleychem 🙂

    2. Donna Brewington White

      I agree — yesterday’s exercise was fun! Thrilling even. And humbling!And while I certainly am not ready to stack my wisdom in this arena against Tim’s or Fred’s, I will say this — the jury is still out.Also, while there were only three startups selected, there is ample room for many of them to become successful. And they will. I’m willing to put money (or pappy) on that.BTW, appreciate the insightful review of the day’s events — now, if only you had a face. 😉

      1. fredwilson

        we didn’t try to pick winnerswe picked companies where we could have interesting discussions in front of the audience

    3. fredwilson

      lifesta is probably the safest investment opportunity of the bunchbut we didn’t think it would make for a fun discussion on stage

      1. Aviah Laor

        Just watched the video. You picked great founders. None seemed like the expected “founder cookie cutter”. Inspiring, for the rest of us, the non-superman founders. Especially enjoyed how the glimpse founder had to jump from in two minutes from grand market/Google strategy to battery life. And I thought funding is easy! :)In short human, intelligent and fun to watch.ps. reg Hour.ly, they said that “freelance stinks” and they hope it will turn to full time job – while building a tool that actually encourage the opposite IMHO, maybe this deserved a bit more attention.

  10. Michael Dizon

    I thought about this after seeing Diaspora raise all that money. If the offering is being made to the general public, how would regular people, or non “qualified investors” be able to legally participate?

    1. johnmccarthy

      Kickstarter-funded projects aren’t “investments”, in the financial instrument sense of the word. Project Funders don’t get any equity in the project or any promise/expectation of a financial gain. So no SEC or investment related issues. Therefore anyone with an Amazon payments account can fund a Kickstarter project.If you haven’t done so already, check out the wide variety of projects you can fund on Kickstarter. While you won’t see an equity return, there is definitely a Karmic-return realized when a project is funded and then completed. And you can often get a t-shirt, CD, slab of meat or other tangible fruit of the project.

      1. Michael Dizon

        That was my point about Kickstarter, it’s not an investment. Karma is cool and all, especially for art projects. I’m all for supporting that, and I’ve done so already on that site. But I’d like to have the same thing for tech startups, and have the opportunity to be a part of something in the very beginning, in exchange for equity.

        1. David Geertz

          Get in touch if you’d like a tour of what we’re doing for tech start ups in crowdfunding.

  11. Aviah Laor

    Crowds funding will be hard until regulations will let people take stocks early.The question is if great minds do, or don’t, think alike.

  12. Pascal-Emmanuel Gobry

    It’s not one way to think about it but I think you remember that ARD, the first “venture capital” firm started by Georges Doriot, got financing on the public markets. That’s one form of crowdfunding where the crowd isn’t the GPs but the LPs, and picks the GPs who pick and help the companies.It’s hard to imagine publicly traded VC firms in the internet sector but maybe in the greentech/cleantech/healtchare/etc sector where the capex needs are much larger and the upside more obvious, that might be interesting.

    1. JLM

      I would have naturally agreed with you until I contemplate the Blackstone and KKR deals. They are one step removed from VC.The nature of public companies is often focused on predictable, increasing streams of earnings while companies like B’stone and KKR and VCs, in general, are just deal shops.It is very difficult to put a “projected P/E” on a non-recurring earnings stream.

  13. Pascal-Emmanuel Gobry

    Also, it seems I’m the first one to ask: is there/is there going to be a video of the event? I’d love to watch it.

      1. Pascal-Emmanuel Gobry

        Thanks. I actually just saw it by chance. Fred should put it in the post.

        1. fredwilson

          didn’t know it was taped. i’ll watch it now.

          1. Pascal-Emmanuel Gobry

            I watched like 15 minutes of it, interesting but mostly harmless.PEGhttp://card.biz/peg

  14. ErikSchwartz

    You can crowdsource the capital.You can crowdsource the investment decision.You can crowdsource the valuation.I have no idea how you would crowdsource the advice, mentorship, and ass kicking (the good kind of ass kicking) after investment. That’s a relationship and relationships are between people, not between crowds.

    1. kagilandam

      That is simple. Take a simple structure of a company1-CEO, 1-CFO, 1-CTO, 1-Director (more directors that is well and good).Assign 1-ass for 1-mentor…crowd kicking is done!!!

      1. ErikSchwartz

        What do you do when the CTO mentor kicks the ass of the CTO for not building and hiring fast enough at the same time the CFO mentor kicks the ass of the CFO for spending too much on headcount?These are not discrete silos.

        1. kagilandam

          Sorry. I think you took my words seriously … i was joking on crowd kicking.What i said was not practically doable…that was a fun comment.We definitely cannot crowd-everything. Crowd will start behaving differently when they have vested interest (democracy works when people don’t have any vested interest in the outcome)… and personally i don’t think crowd VCing thing will work. What they can do is collect money from the crowd and then manage them (little different from bank with more openness and may be asking for opinion polls on major decisions if required).

          1. ErikSchwartz

            Oops. :-)HTML5 really needs a sarcasm tag.

    2. fredwilson

      there is a fine line between good ass kicking and bad ass kicking

  15. Sebastian Wain

    I think it’s naive to think about crowdsourcing VCs, even is naive to think about crowdsourcing: two people make a successful company but ten of thousands not, thousands of scientists don’t make an Einstein or a Feynmann. Some (scarce) small teams or some individuals has interesting characteristics working in a smaller scale.But with more information, specialization, formalization, automation and community driving some VC processes/products can be reduced to a compact core, so more people can be involved but key people will be impossible to replace (like in every organization)

  16. Think Ezy

    That was nice.Staying in India, it may not help.I am working on a project to create a meeting place for doctors and patients to help crowd-sourcing medical diagnosis.

    1. Aviah Laor

      good luck. It can save life. But estimate 132 pages of terms of service?

  17. baba12

    When USV invests in a company, do you give a weight to what the impact of the company will be on society.I think that so many startups today in the Web 2.0 space that you primarily invest in have a serious disconnect with the rest of the society.I wonder if USV may invest in companies that are trying to solve fundamental problems in fields like bio sciences or energy.I don’t think any of the startups pitching at this event were solving fundamental problems.

    1. Mark Essel

      If you see USV’s investment thesis they’ve been pretty focused on large growth potential web architecture investments. Bio/Energy are out of their scope, but there are plenty of other investors who specialize in these fields.

      1. baba12

        I know others who invest yes.I just was wondering if USV thinks of the impact the startups have on society.As Peter Theil was stating, Silicon valley may be booming and USV investments maybe doing extremely well, but in large swaths of our country, there is a huge disconnect.What I was wondering was at these events for pitching, do USV’s of the world are targeting startups that are trying to solve those problems.I should look into what the role of Web 2.0 is in improving society not just a few small pockets.I know that Federal State and local governments that implement public policies are wedded to solutions that have required huge costs. I am not sure if lobbyists or the IT departments are responsible but I see very small niche amounts of new web 2.0 technologies being used in that sector.Wonder if there is a role for venture funded startups in those areas.

        1. Mark Essel

          Investors strive and are measured by their ROI. Nonprofits and altruism have more social focus, but don’t always have fiscal responsibility.Improving society’s problems fall on all of our shoulders. Contributing to the complexity is each of us has a different view of an ideal society. My utopia is different than your utopia (note to self to blog up my utopia), and we continually diverge over differences in identifying the most pressing problems.But we can agree on major problems (large unemployment, heavy government taxing/spending). I suspect that’s why we see massive political rifts and party clusters for good enough pack representation.

    2. fredwilson

      we think about that for sure but it is only one of many considerations

  18. Dan Lewis

    One of the big problems with “crowdsourcing” a company to invest in is that a lot of successes are counter-majoritarian early on. If 90% of the people don’t like something, and the 10% are slaves to their will, then really interesting, innovative ideas are going to whither on the vine.

    1. Tereza

      This is where the composition of your crowd is critical and must be somewhat engineered.Some people are highly creative and intellectually facile in an abstract, white space realm. You want you group of idea-generators to have a lot of these people.Then others are good at knowing why something will not work. These are usually not the same people.To create a robust crowdsourcing process my #1 advice would be to have someone head it who has a strong background in qual and survey research and complex facilitation.This is a high pay-grade skillset but it exists and it would be a critical success factor to getting the right dynamic.In a crowdsourced process that’s actually gonna get something done, you must surgically carve out the “open” aspects and the “closed” aspects and how the inputs and outputs flow for optimization of end result.

  19. MartinEdic

    I think a critical difference with crowdsourcing funding is not exchanging equity for the cash. Instead these models offer something like a product, a subscription or a public pat on the back in exchange for your financial support. The onus falls on the start-up to manage the money they raise but they do not have to deal with regs on raising investment.In essence, you can structure this as a pre-purchase of a product or service with no guarantee of delivery, which is actually a fairly common fund raising model for mom and pop businesses like service businesses.We’re playing with a launch offer in which we offer all the products we launch with and all those we introduce in the first year in exchange for a one time purchase. It’s a surprise box- you know what the first ten or so are but the next 20 just show up in your inbox (they’re a hybrid of eBooks). Even if we close down right after launch the crowd has still received their minimum subscription.No idea if it will work…

    1. Mark Essel

      So you replace fiduciary responsibility to investors with customer satisfaction. I guess reputation will be a key factor in making that model work. One way to see it succeed is to start really small and superbly over satisfy each customer/client.

      1. MartinEdic

        Mark,Absolutely, it is all about reputation and social traction. If I expect someone to take a leap of faith on my promise to deliver a product or service, then I better over-deliver. We’re looking at a hybrid model though- they get something right away and the promise of more during a defined time period.The interesting thing here is that there is still a risk model for the crowd- they take a risk in that they send money and may not like what they get or we fail to deliver. You have the same risk with an investment except it is much larger, so the faith factor is even more critical. I think that is why Fred and other investors put so much emphasis on the people they’re investing in.Risk sending $100? Small. Risk investing $1m, not so small but you get participation.You can go around and around on the whole crowdsourcing concept. I think it is a part of the whole new financial environment that start-ups are operating in these days.

        1. MartinEdic

          And one other thing- that social traction I mentioned? Successful crowdsourcing is going to be an indicator to equity investors that there may be something going on here. So the two things probably mesh together.

    2. fredwilson

      that’s right Martinthat is how Kickstarter works

  20. William Mougayar

    We also learn from other commentators,- would that be called peer-to-peer crowdsourcing?But you’re right that crowdsourcing may have its limits or boundaries for management, where clarity, decisiveness and execution are paramount to brainstorming and analysis/synthesis. As they say, at some point, too many cooks in the kitchen will spoil the sauce.

  21. aweissman

    What Nivi and Naval are doing at Angel List is getting closer. http://angel.co/

    1. fredwilson


  22. Mark

    This is a bit tangential, but this got me thinking: In a sense, aren’t early adopters investors? They spend time and effort with an expectation that the gains will be amplified by the service succeeding.Preferentially rewarding those early adopters (‘investors’) is probably a point of traction that isn’t considered enough.I’d love to pitch to a crowd. -It’s not a binary reaction!

    1. David Geertz

      We’re going to experimenting with this within our new application Mark. Crowdsourced sweat should be allowed a return and there’s nothing that says you can’t do it. Its not financial capital nor is it passive so it passes the howey test.get in touch if you want to see what we’re doing.

  23. Senith @ MBA tutor

    For the investment management portion, you can get the crowd (who paid the money) to vote the directors (or a portion of the board) too. Maybe the CEO puts up a list or the crowd can suggest nominees and the people who invested can vote with proportionate voting rights. Not sure how Kickstarter does it.

  24. awaldstein

    Fred…event format was a great one. I got there late but was able to get a half dozen pitches in a half hour. Just watched a bunch of aggressive, sometimes brutal onstage questioning of companies at TechCrunch in SF. I really liked the insistent but supportive tone that you and Tim used on stage. No reason why you can’t get the same info in a positive fashion.

  25. giffc

    We had a lot of fun yesterday meeting tons of people, answering great questions, and sharing our vision for Aprizi – a personalized discovery engine for the long tail of ecommerce. I *do* wish the organizers had actually tried to stick with the plan of 6 minute pitches, where you can give a short demo and answer a questions from a group, and then do it again with a new group. I can see why they might have decided the logistics were too tough in the end, but it would have been a worthy experiment.I’m skeptical about a crowdfunding model for startups. I think it would be very faddish. The real crowdfunding happens when people vote by using a product, but of course one doesn’t have that proof point when you are investing at the very earliest stage.

    1. fredwilson

      aprizi is a beautiful website Giff

      1. giffc

        Thank you Fred. We have a lot of tech to build still but always want it to be invisible to the user.

  26. Mark Essel

    Should have run the competition of AVC votes through a fork of @Preditter.It’s hard to predict disruption of legacy investment models because they fuel the disruption. It’s like asking big oil companies to invest in alternative power. It would be a contrarian investment. Just gotta figure out the best way to scale board members with experience and expertise.

  27. David

    OpenStarts is creating site that allows micro-equity investments ($50 and up) for web-based startups, which is similar to crowdsourcing but where real equity changes hands. (To get around regulatory issues, companies have to register in the EU.)The problem with investment management is handled via the site. It’s a match.com for all stakeholders in a startup: the founders, advisers, investors, and they can designate an investment manager.Innovation is naturally distributed. I think the tide is turning on the support for that innovation, and it’s finally also becoming distributed.

  28. Eran Davidov

    It was a fun event. We got to pitch to a lot of people in a very short while and it certainly hones your pitching skills. I’ts a shame we barely got to talk to the other companies before the crowd came in though.

  29. hud

    for revenue sharing of ideas alone, you might be interested to check out this ad agency: Victors & Spoilshttp://www.victorsandspoils…

  30. J. Anthony Miguez

    On the regulatory hurdle I see the need for regulation but using wealth, as the current accredited investor regs do, as a proxy for investment ability is ridiculous. This plainly states that the Beverly Hillbillies are better prepared to make a personal investment decision than a Harvard grad. Regulations are needed (how about an “angel license” that required education and continuing education) but wealth as the proxy is unfair.On the crowd funding side there was a recent twitter meme about how some VC’s require unanimous partner approval and some prefer a dissenting vote (good to have a skeptic in the mix? if everybody likes it is it too obvious?). I wonder how USV views this and whether you saw more value from the confirming comments or the critical ones?

    1. fredwilson

      good idea for my post todaywill get on it now

  31. Jan Schultink

    Hard. Maybe you could set up a mutual fund where a seasoned investor picks 30 companies and subscribers can allocate different weights of their $1,000 to the ones they have most confidence in.But, it might work for the crowd posting here, but not sure about a random subset of retail investors…

  32. daryn

    Did anyone collate/publish the results of the AVC readers’ predictions for yesterday?

    1. Satish Mummareddy

      I don’t think anyone got all 3 correct. I got all 3 wrong. So I’m publicly campaigning that I need the bottle of pappy to improve my prediction that next time. But I seem to be failing miserably in my campaign. any one supporting me??????

    2. fredwilson

      lifesta was the clear favorite

  33. Tereza

    So I’m really intrigued by this, from the XX angle, and I’ll tell you why.I think it could be tested toward underfunded businesses focused on women’s markets.I increasingly am of the mind that, past a number of (not insignificant) hurdles around market size/team/idea, early stage investing is in essence the investor I vesting in something they personally feel passionate about. They’re investing money in a super-cool toy they can play with.And so it follows that — how can a guy be passionate about something he doesn’t use, that he doesn’t personally relate to? Frankly, I don’t blame him. He is taking a big risks, and the immediate “value” is in the fun and the passion.For women-targeted businesses, the problem is that there are not many women doing similar investing. Few are high-wealth enough, and ones that have ‘made their money’, at least in the NY area, not in entrepreneurship (esp. tech or media), but in finance — which is an extremely conservative mindset to be evaluating early stage businesses. The skill set does not match so well.And now I’m going to drop a bombshell….I hear this but no one wants to say it. Women are extremely slow to write the check….if they ever do. We’re just very very tight. A guy plausibly could write a check at the end of a 45-minute meeting.A crowdfunding site where women can invest very small amounts. And at the same time providing market feedback that bears some correlation to how this consumer segment might respond — it could just crack the code.It can include community where women contribute feedback and ideas publicly. Incorporate them into the process. You’re basically doing market research and microfunding at the same time.If there’s one thing I hear a lot from the guys is, “go get market proof, and come back when you can demonstrate traction.”Couldn’t that be a good proof-point, while also putting some gas in the entrepreneur’s tank?Maybe this already exists. If it does, it needs to be bigger, badder, bolder.It needs to be a very cool, addictive, amazing place to be — that attracts tons of women to care and participate how they can, so both the feedback and the funding achieves meaningful critical mass.I don’t think that the entrepreneur needs to be a woman by any means; but the market they are addressing should. The cardinal rule is it all has to drive from market needs.

    1. Satish Mummareddy

      Tereza, I think after beating around the bush, you finally identified the real problem. The problem is not funding women founders, it is funding women focused businesses. I don’t want to get into how to fix that problem.But I think you need to take an unconventional path to fund raising and who you raise the money from. Maybe you can convince 5 women to let you video tape them explaining their problem and show that to people. that should be your pitch. “I’m 40 years old, I had 3 kids. I used to be 125lbs and wore a swim suit every year. after my kids & 30lbs i just didnt feel confident anymore. i always worried if even my husband found me attractive. I rely on my friends to reassure me that my dress looks good and i dont have to worry about xxxxx showing off prominently. Honestly now lets my friends help me with xxxx even when they are not right with me.” Video trying out different things etc.Get 100 user. local TV. Then get some video and then get on Oprah, Martha Stewart, tyra banks, rachel ray, . 🙂 get oprah to put in 100K. 🙂

      1. Tereza

        Oh believe me, we’re workin’ on the great Lady O….and others.Actually one of my advisors launched all of Martha’s magazines and websites. She pretty much created the wedding category, among others, and is probably the country’s leading expert in lifestage marketing.Anyway through a mutual acquaintance she heard about what I was doing and cold e-mailed me a few months ago saying, “Honestly Now is going to be a huge success and I’ll tell you why when we meet.”So we indeed met (btw turns out she lives in my town…also random and goes to show you never ever know whom you might meet through random personal connections).She tells me that in all her years at Time Warner and MSLO and then Wedding Channel, and when she hosted a weekly wedding segment on Good Morning America, she paid gazillions for market research and talked to thousands of women. The one theme that came up over and over again is that women yearn for feedback and validation. It is a key ingredient to their confidence, and a need that is evergreen. And that Honestly Now hits the nail on the head.There didn’t use to be technology to enable them to get it on the go, but now there is.It is challenging to find the individuals who have both best-in-class domain value-add AND the capital. It’s a bit of a needle in a haystack. But I am a heat-seeking missile. If it’s there I’ll find it.But putting that aside, we are ultra-lean. My current investors are awesome and loving what they see. We’re building this to not need the money!And today was a great day. Meeting by meeting, brick by brick, good things happening.

        1. Satish Mummareddy

          I agree with building this to not need the money. One way to do that would be to put together a consortium of manufacturers of makeup, cosmetics, designer etc and get them to put in some money and use that to build it out too. 🙂 Give them tools etc. Well you probably already are doing it. 😛

        2. Donna Brewington White

          Good for you, T. BTW, when I was trying to describe Honestly, Now to my son he first asked, “Like ‘Hot or Not’?” and I asked him to describe it — because honestly had never heard of it. As he explained it, he complained that when he and a friend looked at Hot or Not it was obvious that people weren’t being honest, weren’t telling the truth. He said, “people were being too nice.” To him it was useless.Personally, one of the things I appreciated about being on Honestly, Now is after a couple of times nixxing something and it turned out the majority had nixxed it, I felt more empowered in my honesty. So, then I didn’t mind so much when my yea or nay was in the minority.When I shared this with my son, he really liked that people were really being honest. That’s when he said, “This is going to be REALLY big!” I could see the lights going on for him and the possibilities expanding.People are craving safe, honest feedback. Plus, you’ve added a gaming aspect and this makes it even more fun.Of course this is all from the user perspective. The other side of this is pretty cool too — in terms of monetizing.

        3. JLM

          I love the ruthless zaniness of Martha Stewart. She is one tough bitch and I admire her for it. I’d love to have a beer and talk business w/ her.If she had a brain, she would never have gone to jail for securities fraud and insider trading. She should have had a better lawyer.But then she makes her jail time into a summer camp coming out w/ lots of great creative ideas.She almost makes you want to go to jail to “refresh” your creative side.

        4. JLM

          OK, so God was getting pretty tired with creating the world and was looking at the sketches for “man” and “woman” and just couldn’t get the designers to finalize them.So, He said — “screw it, make them and I’ll finalize the details on the fly.”So, of course, the designers said: “OK, God, you are after all…………………………God.”So God was winging it and looking at his creations and said — “OK, I’ve got to finalize a couple details pertinent to body parts and sex.”He called in Adam and Eve and said — “OK, one of you can have a wonderful sex organ which will allow you to piss in the weeds and play with yourself; and, the other can have multiple orgasms.”The rest of the world since then has been defined by that decison and wisdom — the guys are pissing in the weeds and playing with themselves and the women are not content with a single orgasm.The guys think they got the better end of the deal. The women are looking for that next thrill.

    2. Dale Allyn

      Tereza, I’ve been watching your project, “listening” to you here at AVC and sort of snickering. (I’m male, by the way.) I mentioned your project to my wife and we both smiled with self-validation (in a tongue-in-cheek way), You see, several years ago we were having a glass of wine on our patio with our neighbor and our conversation swerved into a project similar to yours. It never went beyond the wine, but we always thought it had a chance if executed properly and we joked about it in coming years.I think it started because were discussing how sales clerks (or are they “associates” now?) at a department store will almost always say “oh, that looks so cute! blah, blah, blah”. My wife was saying that one thing about shopping with me is that you’ll the strait answer – like it or not. “Do these pants make my butt look big?” Sales clerk: “no, they look great” Dale: “yes, they are not flattering because the pockets are too widely spread and positioned at an angle”. I hate going, especially nowadays, but my wife prefers to shop with me over going alone or with a friend.We talked about putting up a website that provides blunt and brutally honest feedback via webcam. It was all in fun, but my point is that it comes up outside of your personal environment and I hope that adds to your confidence and courage.I read you generalize about men not getting your product (no criticism of you) and I suspect that in some circles you are quite correct. But there are those (and several here in the AVC community, based on some comments) who do or will get it. It shouldn’t be a gender thing, it’s a business thing. And women are BIG business.The “go get traction” is not a gender-specific recommendation, by the way. It’s frustrating for all of us to hear. Traction is the safety net for the VC. I see the point from their side, but as a businessman I also see it as a less gutsy move as well (in some cases). It suggests that their vision is not perfect either (how could it be). But from the VC’s point of view, why make it harder by trying to be clairvoyant? Traction suggests that a project has legs, or that a team can execute. It’s a frustrating conundrum of the process.

      1. Tereza

        +1Lots to love about your comment. Thanks Dale!Smart wife you have, BTW. Sounds like she picked a great guy!

        1. Dale Allyn

          Oh, I surely got the better end of the deal. She puts up with a LOT.With regard to your project, honest feedback is the only feedback that should be offered in my opinion. And that pertains to non-spouse replies to what might be hard questions. Woman have asked my opinion of something they’re trying on (while I was waiting for my wife to try the next item, etc.) and they get the same honest feedback (in the form of my opinion). Clerks don’t always love it, but buyers do. Politely delivered honesty is a form of respect. Great sales people do the same, but may sacrifice commissions in the short-term while building a loyal clientele. Those more short-sighted just go for the sale.Cheers!

    3. nakisnakis

      Hi Tereza,Just read your comment and wanted to share with you a program I’m launching this fall. The Fund, a Pipeline initiative, has three goals:- Convert women philanthropists into angel investors- Increase the number of women on boards- Provide funding to women-led triple bottom line for-profit startups in the range of US$50k-US$500kOur theory of change -> Provide women with another way to make a positive impact through money: become angel investors.

      1. Tereza

        Awesome Natalia. Let me know what I can do to help.

      2. Donna Brewington White

        Really, really cool. ‘Will look for this!

      3. JLM

        Your idea will succeed when Barbie is an investment banker or a VC and little girls think it is OK to succeed in guys’ undertakings.Seek out women who can fish, hunt and fly an airplane. They are out there.When I was a real estate developer building high rise office buildings in Texas, I used to hire the top finance undergrad at the Univ of Tx. They were available, unappreciated and killers.I used to favor SMU woman biz grads for leasing agents. These sorority girls were ruthless.When women think that calculating IRRs are as cool as vintage Chanel purses, your time will have come.Great luck.

        1. JLM

          BTW, who did Michael Dell marry?A ruthless SMU marketing major, Trammell Crow leasing agent named Susan who put him through the most impressive personal makeover in the history of mankind. She was good.Then what did she do with all her new found wealth?OPEN A FANCY DRESS SHOP which promptly failed. Sheesh!She should have opened the largest women only real estate development shop in Texas and built 50-story buildings.

    4. Aviah Laor

      After the Moleskine and the pay window, this can be your best solution. The timing is perfect, isn’t it?http://sethgodin.typepad.co

    5. Donna Brewington White

      This makes sense on so many levels, T. I love so much about the world of men! But I do believe that the world of women offers so much that is missing from the grander scheme of how things are done. I know, I know someone is thinking “And let’s keep it that way!”I don’t think the answer is necessarily in trying to divide up an existing pie into even smaller slivers. We need new pies. What you are describing — I won’t repeat it all here — but essentially creating new models — well that sounds to me like creating new pies; new investment models, new investment opportunities, new businesses serving existing markets in different and more effective/meaningful ways — which equals more profitability for someone.I love the vision you bring to this!

  34. ErikSchwartz

    Totally random question…Did the black helicopters finally track Kid Mercury down? I have not seen him online recently.

    1. Dave Pinsen

      He mentioned a while back that he was looking for a job and would be toning down the Truther stuff as 1) it would probably be unhelpful in that regard; 2) he was reaching a point of diminishing returns, essentially, in attracting new people to the cause.I thought about him last week when the president of Iran sounded like a Truther in his speech at the UN in New York. Maybe Iran’s hiring.

      1. JLM

        Maybe Kid Mercury IS the President of Iran?

    2. Donna Brewington White

      You can look on his Disqus profile for the comment that shared about his (quasi?) retirement of the Kid Mercury persona. For all we know, he’s still here among us under a different name…

  35. Dale Allyn

    I think “crowd-sourced funding” has a place, and probably even an important roll in the startup ecosystem today. But supporting Diaspora’s choice of names suggests to me that even the committee of such a crowd as Kickstarter can get it wrong some times. ;-)Perhaps I communicate with a small set, but I have yet to find anyone who thinks the name is a good choice, and in this case, the name matters. Because of it’s cultural connotation I won’t say what some feel the name does for them (don’t want to be offensive), but in this case the “collective” should have guided towards a new name if “Facebook” was the target. It’s a business move, and being clever or “deep” isn’t always best.I do wish the people involved well, I just think the name hurts their efforts.

  36. smartone2

    I would imagine that there isn’t really any investment management – but people will vote with their pocket booksIf Kickstarter had a Dutch Auction mechanism then Dispora could have sold a percentage of the company for whatever price per share the Kickstarter users decided.After the inital funding then a secondary market (SecondMarket.com?) could sell those shares in these startups.

  37. nakisnakis

    The solution the Fund, a Pipeline initiative, proposes is adding educational and mentoring components to the crowdfunding piece.The Fund trains women philanthropists to become angel investors. For our pilot, we will accept a class of ten women who will each invest US$5k, US$50k collectively, into a business they will select after going through a six-month program (modules include: board governance, valuation, due diligence, etc.). We’re also matching participants with experienced angel investors to serve as mentors.

    1. fredwilson

      great idea Natalia

  38. Volnado

    I was talking with entrepreneurs in New Orleans about starting an Entrepreneurs Seed Fund where the money all goes to companies vetted by a large pool of Entrepreneurs… kinda like how the Grammys and Oscars are given out. Selection criteria be narrowed down to just 1 pagers so entrepreneurs would only have to spend say an hour a week looking at these plans. But like the Grammys to be eligible to vote you have to be an entrepreneur and to be active to receive a vote you have to already be an entrepreneur not someone working for the man and wanting to quit their job.

  39. rich caccappolo

    Congratulations to the Dixons who won the audience choice award for hour.ly – they might be the best husband and wife team I know, aside from the Lazerows of Buddy Media

    1. fredwilson

      and we got to talk about the challenges of the husband/wife team up on stagethat was great

  40. Bill Clark

    The internet is finally giving the common investor, or sophisticated investor who doesn’t have access to startups the ability to finally see some deal flow. When we started going though the approval process to become a broker/dealer at microventures.com we had a lot of regulations to figure out to ensure that our end product was in compliance. We are seeing many investors coming to our site that will in a sense be starting their own venture fund. They can invest 1,000 or even 10,000 in 10 companies and track them on our site. I like to think of us as the prosper.com for venture capital. I am sure that there will be many more companies like us in the next few years which will give entrepreneur another way to access capital.Bill

  41. Michael Lewkowitz

    I think crowdfunding is interesting but not where we should be looking for thinking about restructuring professional investment capital. Neither is the ‘super-angel’ approach. Each is interesting for what it is, but in between I think there is an opportunity to shift how we pool and redistribute capital for investment.Great investors are people who have developed an instinct for what will work in a certain space, where it’s going and who can make it happen. And they can move fast when they need to. Faster than a fund, and faster than a crowd-funded process.What if we created ‘small’ co-investment pools around them as individuals. Pools that would co-invest in their deals. What if I, as someone who wants to focus on building things myself, could invest some personal venture capital in a number of different pools in the areas I’m interested in? Intelligence and support from the network/crowd can always be layered on top, but I’m a lot more likely to put money into a ‘portfolio’ of angel pools than a single venture/super angel fund. And certainly a lot more likely to do that then wading through a mess of crowd-funded noise.I roughly sketched out some alternatives from some conversations a couple of years ago. In case they spark anyone’s thinking you can find them here: http://www.flickr.com/photo

  42. Keenan

    “I’ve got the best job in the world”Yes you do Fred. Good for you!

    1. RichardF

      On the other hand Jim I think you might have the best job in the world when you are ski instructing – so good for you 😉

      1. Keenan

        Ya know Richard, you have a great point. How easy it is to forget when the grass is still green! 🙂 Think snow!Thanks for the reminder.

  43. JLM

    Leadership is almost NEVER following the dictum of the masses.After one has collected all the wisdom one can process, it is time to make a decision.Leadership requires decisions to be made.Leadership is the single most important element in making one’s way to the pay window.And, after all, isn’t that what this is all about?

    1. fredwilson

      leadership requires decisions to be madethat is the line of the day for me JLMit hits home big time for me today

  44. JLM

    There are rights which are routinely handed out by the government based upon one’s ability to demonstrate some specific skill — carry a concealed handgun, fly an airplane, drive a car.These are rights or licenses or behaviors which are arguably well within the government’s responsibliity to regulate potentially dangerous actions.In my view, the ability to invest one’s own money absent a well intentioned but sometimes misguided set of rules, may be a similar right. If you can demonstrate that you can afford to lose it and will not otherwise become a ward or dependent of the state, then have at it, my friend.An “accredited investor” operating in an environment in which the existing regulatory scheme — replete with all kinds of required securities licenses and designations — should likely be both comfortable with and empowered to jump into the ring.I do think that there is a legitimate screen that government should apply to ensure that obvious bad actors are prevented from getting into the same ring. We are not talking the high hurdles here — felons, frauds, unlicensed, unregistered.I do also think that there is an useful purpose for investments to be registered with the appropriate securities regulators on a state or federal basis. Not a huge hurdle to issuance but simple registration so that a reasonably intelligent chap could perform a bit of due diligence and protect themselves and perhaps a BBB clearinghouse of unfavorable information and record of dispute resolution.Regulation is like spice — a pinch makes the taste a bit more savory and too much ruins the flavor. The challenge is to define that pinch.

  45. Donna Brewington White

    “I’ve got the best job in the world.”The best and probably one of the hardest. Yesterday gave me new appreciation for that.Can’t tell you how much I appreciate your letting us have a peek in at what you do. Great fun.

  46. Keith B. Nowak

    While the devil is in the details, I think the idea of having potential users and customers have an impact on funding decisions, or even provide some of the capital, is incredibly exciting. To me there is a lot of potential in finding a way to tap into the collective intelligence, experiences, and preferences of the community in the context of venture capital. I believe though that such a system would not be self-sufficient. That is to say, as you mentioned, there would still need to be highly-skilled and intelligent people running the show and mentoring companies.I came across this Venturebeat article a few months ago and thought it posed some interesting thoughts (particularly in the presentation) about crowdfunded VC – http://venturebeat.com/2010….

  47. vruz

    I think you can split the investment management part in two. (and it doesn’t have to be split in equal parts, could be 80/20?)One part (hopefully the 80% part) you can manage it through standarised metrics The other part (hopefully the 20% slice) is the fine tuning only a professional can provide.Of course it’s not going to be 80/20 at first, more like 20/80 but any work in that direction will be good progress. As your “crowdvestors” become more sophisticated, this can only get better, and ultimately you will sign off in major decisions only.It’s bound to happen that every Luke becomes an Obi-Wan in the end. 🙂

  48. Peter Beddows

    Fred: I always find it fascinating how you so effectively throw open a small stable door which, initially at least, draws many very cogent, thoughtful, informative and interesting observations and comments completely on topic yet, perhaps when the topic has been effectively flogged from all angles of consequence, the door inevitably becomes a barn door and the conversation diverges into a multi-tentacled mass of sub conversations.There is never an end to the possibilities offered within any one of your blogs except that our attention perforce must be re-directed to the next blog once you have published that because there are still, even with all of our technology, only 24 hours in any day and some of that time most of us have to take time out to sleep if not to do anything else.For myself, I do not recall recently having had so much enjoyment and learning anywhere else (apart from reconfiguring our own web business) as I do when here simply browsing through, absorbing and contributing to your posts. Thank you and thank you to all of the other participants here that acknowledge and add to my own observations.

    1. fredwilson

      thanks Peteri was non stop in meetings yesterday from the time i posted to the time i went to bed and never got to engage with this onecoming to it today after it is fully formed is an interesting experiencethis was one wild conversation

    2. JLM

      Brilliant insight and my sentiments exactly.You can never tell where Fred’s initiation will propel the conversation and that is the fundamental attraction to the Salon Fred.

    3. Donna Brewington White

      AVC. Is. A. Phenomenon.

  49. paramendra

    Crowdsourced management is when a company already has a product out and is constantly iterating, listening to the firehose of feedback from users. No? 🙂

  50. Fred Hutchison

    Fred — Another Fred who KNOWS from personal experience what IHTFP means… I may be TOTALLY dense, but I’ve just spent 20 minutes scouring your blog look for the three finalists and ultimate winner. Can you perhaps post that in a separate entry? Thanks!

    1. fredwilson

      they were not winnersthey were picked as good candidates for 10 minute questioning by Tim and methey wereGlympseFood52hour.ly

      1. Fred Hutchison

        Thanks. It’s like the Oscars. I missed that part. It would have been VERY difficult to winnow the good candidates down to three for questioning.

  51. Si Chen

    Kickstarter is great! My friend raised money to write a book on it.One question though: does raising money for a business venture on kickstarter or other online venues constitute a form of “security offering”, and would you have to abide by the “qualified investor” requirements, Blue sky laws, and general rules for private placements?

  52. andyswan

    If denying access to the masses is the “logical result” of dealing withscams….let’s hope people don’t get scammed buying food.

  53. Dave Pinsen

    Invest local. Makes sense.

  54. JLM

    I suspect a time will come when companies will sell their stock directly to the public — in a way, that is already here with dividend reinvestment plans and direct sale programs; and, will oversee the market made in their own stocks. I am suggesting something a tad broader.If you ponder it just a bit, companies went “public” by joining an exchange in which the issuers of stock made the rules. Over time the issuers lost control and the exchange began to make the rules and you had to conform to the exchange’s rules.This is where short selling, naked short selling, repeal of the uptick rule devastated markets. Obviously no issuer wanted such abuses to be created but they had lost control of the markets.It would be as easy as pie for a company to oversee an exchange/market/auction in only their own stock or different classifications of stock.

  55. Harry DeMott

    True, but somebody has to keep their eye on it – particularly if they are investing other peoples money – isn’t that your fiduciary duty. If it is your own cash – then so be it – do what you want – but if it is others, then I figure you owe a duty of monitoring – board seat or not.

  56. Harry DeMott

    I have two Latin words for your: caveat emptor. If you can’t afford to losemoney – you should not invest – period. If you don’t understand what you areinvesting in – you should not invest. When things are too good to be true -you should not invest. Of course – I do this for a living and the vastmajority of people don’t – but knowing how difficult it is when you do thisfull time – I would seriously caution people against most investments. Thatsaid – I don’t think you are going to get ripped off at Fidelity or any ofthe large mutual fund companies – you may not get a great return – but youwill not get ripped off in any way – no scams there.

  57. JLM

    I must say that the sheer magnitude of the bad actors and scams out there is beyond belief.I once was pitched a financing scheme for a substantial sum of money to be borrowed under terms which were interesting but did not seem to be just right — my BS meter was starting to tingle on the low setting.It had to do w/ the issuance of LCs from a AAA bank to be used to backstop a borrowing, having the debt instrument rated BB or better thereby making it of interest to corporate treasurers looking to park some excess money at better than average rates.The LC was to be obtained by a high net worth individual — the mythical Dutch billionaire — who would receive a reasonable fee for the accomodation and 25% of the profits.Still attractive as it was funding 100% of a very good sized deal.My BS meter went to high alert when it was mentioned that there was a non-refundable upfront fee.The guy — a regular church goer at my church, lovely large family, expensively dressed attractive wife — ended up in Federal prison for 7 years and served his entire term.I attended Sunday School with him and his wife for years and his kids went to the same expensive private school as mine.

  58. Mark Essel

    If you can convince someone to pay, they’re much more likely to use the product, and give you feedback. I’d love to create a useful app I could sell. Free stuff is left on the vine, without any relationship or investment.

  59. Mark Essel

    Then “level up” follow on investing advisers that are interested into board members?

  60. andyswan

    “Discretionary”…..lolMilitary Defense is one of the very few functions of limited government thatthe founders ascribed to the Federal Government….and then they wrote the10th amendment on top of that.Defense spending should be 75-80% of a much much smaller federal spendingtotal. And 100% of it should be “discretionary”.

  61. awaldstein

    True…more ‘reality’ theater though.And since it is reported on and broadcast almost immediately, it’s unedited reality TV also..

  62. Mark Essel

    You’re going after a hard and exciting challenge Charlie. Folks need space and disconnection from distractions but they don’t want it. They want the result of that silence and concentration.I jotted down some notes on emptiness and information addiction, as it’s stuck on my mind this week (links got flagged by disqus, you may see a double post later)

  63. CJ

    I love fresh and local but I also love availability and convenience. Why isn’t there a store that exists simply to allow local farmers a place to sell their fresh and local food? Sorta like a permanent farmer’s market setup, except it’s indoors, has cashiers and all the other luxuries you get at Krogers with decently priced locally produced food. I’d shop there year round. Farmer’s markets annoy me because of the ‘swap meet’ feel, the fact that I need to have cash, I have to bring my own basket, etc…just feels too low-tech. Let someone else worry about that stuff, I just want some veggies.

  64. Peter Beddows

    We used to have places where multiple vendors did business within a single covered store like setting rather similar to that, except for the central paying/cashing option, in parts of the UK. Perhaps some of them still operate. Certainly a plethora of ‘markets’ of all types around London though not necessarily store oriented, but I guess the commute just to get good food would be a bit challenging!For example, I remember a couple of farmers-market type places held in purpose built buildings in towns such as Kidderminster and – if I remember correctly – Bridgnorth in the Midlands plus Covent Garden and Spitalfields amongst others in London. They were simply referred to as ‘markets’ and operated 6 days a week – Sundays closed. Some of these go back to the days of Dickens and Oliver Twist and beyond.

  65. Keenan

    Very interesting idea

  66. Dave Pinsen

    Whole Foods prominently features local food vendors.

  67. CJ

    That’s awesome, I’d love a place like that. As it stands, I do occasionally visit a farmer’s market but I don’t do much serious shopping there, I’d like to replace the chain grocery store if possible.

  68. Donna Brewington White

    Love it! I realize by your location that you literally mean the “mule team.”I’ve been fascinated by an Amish guy in your area running an organic food business (Miller Farm) — finally had to install a phone and refrigeration but everything else still within Amish standards.I think if he’s doing this without technology — what more can be done to get truly good food out there.Apologies if I’ve already shared this:http://bit.ly/9at19J

  69. CJ

    We still have them here, just not for food. Which is OK for the deals but when I’m grocery shopping I’m not really in a haggle mood, I just want fresh and convenient. Seattle has something similar on the pier, it’s really cool and the best that I’ve seen as it’s same time, same place all the time and the guys there know how to put on a show.

  70. Aviah Laor

    The emptiness post is brilliant. Tried to re-load it since the YouTube video or SlideShare presentation didn’t load. Oooops….We became so used to the clutter.

  71. Mark Essel

    One friendly link deserves another, this was a lengthy and well thought piece by Peter: Team Meritocracy & Diversity

  72. Peter Beddows

    Very kind and considerate of you Mark: Greatly appreciated.

  73. CJ

    Childcare is a factor for me and I’m employed.

  74. Dave Pinsen

    “not including running two wars, neither of which have anything to do with defense.”If George W. Bush were commenting here, he might argue that those wars at least made moral sense if not economic sense (in that they deposed two odious regimes)*. If he did, he’d be making a similar argument to the one you made for inviting desperately poor Fourth World refugees to your already economically struggling community of Lancaster, PA — refugees who will place further burdens on our federal entitlement programs. And as I’m sure you know, entitlement spending comprises a bigger chunk of the federal budget than defense and the wars combined, and it’s growing at an unsustainable rate. Granted, inviting poor people to this country doesn’t lead to the death and destruction associated with invading other countries, but the moral impulse in both cases is similar, and one could argue we can’t afford to do much of either at the moment, given our enormous deficits and our debt rapidly growing to a level where it will cause economic stagnation at best for years to come. “Less than $50 billion on education, which is typically 30%-40% funded at the local level…”Actually, we spend over an order of magnitude more than that on education (taking into account local, state, and federal government outlays) — about 7% of GDP, versus 4% for defense. We spend more per student on primary and secondary education than Japan does. *He’d probably argue as well that they were vital to our national defense, which is admittedly implausible. A strictly punitive expedition against the Taliban and Al Qaeda certainly made sense after 9/11, but sticking around for 10 years trying to turn that perennial backwater into a democracy has been a colossal waste of blood & treasure.

  75. Dave Pinsen

    Gotta stick up for (fully-clothed) shorts here: Short investors such as David Einhorn were among the only ones raising red flags about the problems at companies such as Lehman Brothers before 2008 turned into a complete train wreck. Shorts (including pseudonymous Short Screen member Hesperian) were also among the first to raise red flags about the colossal waste and fraud associated with the for-profit education sector.

  76. PhilipSugar

    Shorting stocks (fully clothed) is great.All the other tricks selling but not providing actual delivery, selling a security to mimic the performance of a stock, etc, etc, are nothing better than playing craps or betting on sports with somebody else’s money, except for the fact when you blow up instead of having your legs broken if you don’t pay up, you cry you’re too big to fail or have the company blow up and go onto to clean up the mess because only you know how big it is.When you don’t have people put their own houses up for risk you get people like the AIG guy from MIT sending out a letter saying how much money he made. HIM, HIM unless he was pulling it out of his butt in the middle of a field it was the stockholders of AIG and the triple AAA rating that enabled him to make the money not him.

  77. JLM

    I guess where I part company with you in regard to the issue of “short selling” is at the inflection point of why public exchanges exist and who founded them.Exchanges do not exist for people to “make money” through any scheme than direct ownership of a share of common stock. They do exist for a company to provide an orderly market for the buying and selling of their shares amongst their shareholders. In that manner, they exist to serve a function which the company has defined and which can most effectively be farmed out to others.The default position in an exchange traded stock is to actually “own” the shares. In this manner, exhanges are a service to owners — not to gamblers who having divined the future trend of the stock decide to “make money” by posing as an owner and borrowing someone else’s stock.The basic covenant between the company issuing the stock and the stock holder is that the stock is freely trading. The company did not issue the stock to be “lent” but rather to be “owned”.In this manner, when a stockholder decides to “loan” a share of stock to a short seller, it violates the compact between the company and the stockholder using the very exchange created by the company to the detriment of the company itself and other shareholders(?)This is not different than the legion of business compacts which we enter into which limit our ability to do something with some security or right we own — e.g. rental cars. You can only rent a car for personal use and not for re-hire or re-rental.It is a fundamental element of the business compact.Further, it is not necessary to sell a stock short in order to make a “bet” on one’s view of the future. The options market provides tons of mechanisms and strategies to make the same bet without confusing the issue with common stock ownership.

  78. Donna Brewington White

    Sounds like you are in a great place in more ways than one, Charlie.

  79. Mark Essel

    Glad you enjoyed the refreshing emptiness. It’s surprising how much we take content filled pages as the norm. More space is considerate of attention.

  80. JLM

    Whole Foods does a damn good job of it too. They charge full boat, don’t make any mistake.

  81. Dave Pinsen

    They aren’t called “Whole Paycheck” for nothing, but their stores are on a different level. I look forward to taking the paper and having lunch there once or twice a week. Would never do that at a regular supermarket.

  82. JLM

    There are very few people more militant than me and few who are so opposed to the prolonged conduct of war. Or who abhor it so much.By definition, a war should be an extremely violent SHORT term enterprise which is conducted on the best possible piece of terrain and which allows our power, firepower, Air/Land/Sea expertise, massive weaponry and combined arms (infantry, artillery, armor, engineers, air power) to put an ass whipping on our enemies of such a permanent and final magntiude that it would literally be generations before anybody contemplated sending us a post card.That is the problem w/ Iraq and A’stan — they are lousy pieces of terrain upon which to fight and we crept in with an “incremental” frame of mind. The lesson of Viet Nam is — don’t get sucked into a long war by getting involved in a small war. Go big, go quick and go home.I just saw the documentary Resperto — great film. In the first ten minutes of the film, I realized what a God foresaken crappy piece of terrain A’stan is. It is not where a smart guy would pick to fight anybody.Now don’t get my wrong, I identify with and I worshp those soldiers and the Captain reminds me of a million other Captains but the terrain is impossible.Eisenhower had it right — Korea is not where America should fight communism. The terrain is lousy.The picking of a piece of terrain to fight on is the fundamental skill of a soldier — witness the outcome of Gettysburg which was decided by a Union Cavalry BG who snatched the high ground right from under Robt E Lee’s nose (Lee was a combat engineer officer out of West Point and knew something about picking the best terrain features to defend.) No amount of effort or sacrifice could overcome this fundamental advantage.

  83. JLM

    In Austin, you can go to the seafood department, buy a fish or some scallops or some shrimp — walk about 20′ and they will cook it for you and charge you $4.99 for two sides.You pay for the seafood. The cooking is free. The sides are $4.99. You can buy a glass of wine.It is a great picnic.I love it.

  84. Donna Brewington White

    I have even chosen them over room service a few times when traveling for biz. Would never do that at a regular supermarket!

  85. JLM

    I generally agree w/ everything you say but also observe that the FINRA arb docket is crowded with cases revolving around big firm stockbrokers recommending technology stocks for folks in their 80s.

  86. Dave Pinsen

    Here in NJ they sell wine at the store but they won’t let you drink it there.________________________________

  87. JLM

    NJ, TX — very different places, no?

  88. Dave Pinsen

    The South in general seems to have a more relaxed attitude toward adult beverages, in my experience. An example of the legal touchiness about liquor up here: Whole Foods closes at 10pm, but like most stores, if you’re in already shopping at 10pm, they’ll give you time to finish up and checkout. So you can buy a quart of milk from Whole Foods at 10:05 or 10:10pm or whatever. However, by law, if you get to the register at 10:05 or even 10:01pm, they will not let you buy a bottle of wine. They make announcements to this effect every night as 10pm approaches. You also can’t buy any wine before 9am. I found that out recently when I went to Whole Foods for breakfast and while I was there, picked up a bottle of wine to bring to my mother’s that evening. I stood around chatting with the cashier for 10 minutes until she could legally sell me the wine. Ridiculous.

  89. Dave Pinsen

    Room service is a little depressing anyway (as is eating in most non-Whole Foods supermarkets).

  90. JLM

    I have known John Mackey since he was a pot smoking hippie w/ a single store on Lamar Blvd. I walked by that old store — two blocks north on Lamar from the big, new Whole Foods.That store got flooded regularly when Shoal Creek flooded and that is how he first got interested in building new stores.John is an amazing guy who won the lottery but at his core he is still a dope smoking hippie and happy with it.

  91. fredwilson

    my dad says the exact same thing about war. long wars are not good.

  92. fredwilson

    yupit is the hard part of my job and i take my board responsibilities very seriously

  93. PhilipSugar

    I’ve got to think about that one. Without being able to short a stock you can’t write an option. I also believe that the direct person that owns the shares should receive the interest payment. Naked shorting is outright fraud no different than selling shares you don’t have (which is exactly what you are doing)I don’t have a problem with options if you own the underlying securities. I.e. hedging fuel is not a bad thing if you are Southwest….speculating on fuel where the result is heads I win (I take home a huge paycheck) tails you lose (I go bankrupt and get bailed out) is bullshit.From the corporate side I think the biggest area for improvement is in executive comp. At a company controlled by relatively few shareholders executive comp is always fair. When its a huge company and you see the golden parachutes, no shareholder would vote for that versus paying a dividend.

  94. JLM

    “Without being able to short a stock you can’t write an option.” Hmmm, I must be missing something as I often write covered call options and never get involved w/ a “short”.I am not sure I undersand your point in regard to the writing of options. I view the options market as being separate and distinct from the stock markets. Options markets are not the same as stock/equity markets and they are institutional casinos IMHO by design. I am OK w/ that as long as it doesn’t require active involvement by the public company.I don’t see the options markets as being the spawn of public companies.As it relates to futures contracts — ala SW Airlines — I am quite content to differentiate them from equity markets also. After all, when SW writes a futures contract, there is a huge likelihood that they will take delivery of the commodity.I likewise don’t see the futures markets as being the spawn of public companies.I think that executive comp is a huge, huge, huge problem. I think that corporate boards are a cess pool of interlocking and good old boy networks. The amount of comp taken by senior management and the obscene golden parachutes are just criminal.Of course, the compensation of corporate boards is also a problem.This is a difficult problem to solve when the Board’s Comp Committee is setting the CEO’s compensation and then the CEO is involved in setting the Board’s compensation.However, that is a different discussion.

  95. PhilipSugar

    On the first point that is why they are named “calls and puts”:If you are writing a call, you should own the underlying security and when somebody “calls” you to sell it to them at a lower strike price than the current value you deliver your stock at the “call” amount.If you write a put, you should have the underlying security borrowed and sold short and when somebody “puts” the stock to you at a higher strike price than the current price you take the stock share “put” to you to close out the position.They both serve legitimate hedging strategies and do provide liquidity no different than the futures market for commodies.Where I take issue is when you are not covering the underlying position. I.e. willing to take delivery of the fuel, hold the debt, have the stock borrowed etc.Then the position becomes nothing more than gambling an issue near and dear to both our hearts. Why can’t we just call the outcome on the result of a sports game? Seriously its no different with all of the same issues. If I’m naked short on your company, I have a SERIOUS reason to try and manipulate the outcome, and its even worse than gambling because bookies lay off the bet so there is somebody on the other side. So when I’m betting against your bonds or stock and I’m naked or there is now such a thing as a synthetic share derivative that just follows the price of the stock without owning it WTF how did the SEC allow that???I’d rather see you go tits up than workout your problem. No different than if I’m your A&P and I’m buying life insurance on you (wouldn’t that add a wrinkle to pre-flight inspections).As to the board issue the main problem is that we don’t allow shareholders to vote and that would be requiring mutual funds to allow their holders to vote in pro-rata to how many shares they own. The problem is if the two of us owned 99% of our favorite Mexican restaurant we sure as hell wouldn’t let the GM make $2M a year unless the made Al Pastor Tacos so well that we couldn’t replace them and we were making money hand over fist.Best regards.

  96. Jeff Fountain

    Well, Maybe. I live in a “dry” county in the south. And this year (November) we get to vote on whether the county stays that way. It’s been dry here for more than 60 years.I will vote, and will vote to keep the county “dry.” Not necessarily for any moral objection, because I don’t know that there is one, but because I like it that way. It’s that simple for me.I will have a glass of wine here and there, and condemn no one for their own opinions regarding alcohol. But on a public vote, I get to make my opinion in the booth.It will probably be wet come next year, and that’s ok. But I certainly like it the way it is.

  97. JLM

    I think we are within about 5 angels on the pinhead count.Don’t get me started on derivatives.This is organized crime with complicity amongst the Congress, the SEC, the investment banks and the 20-somethings with mousse in their hair.The whole lot of them should be buried neck deep in the sand at the surf’s edge on a rising tide.