A couple fridays ago, I walked down Broadway to the AOL building and met up with Chris Dixon and we talked for about thirty minutes in a small TV studio they have there. The result was a couple episodes of Founder Stories on

You can watch both of them here. They are both good discussions. I particularly like this one about failure and investing when nobody else wants to. It's about 5 1/2 minutes.


#VC & Technology

Comments (Archived):

  1. LIAD

    We’ve all got chips on our shoulder. Psychologically worrying but hugely motivating.I thought the GeoCities pay bonanza came out of Flatiron – how could raising the next fund have been problematic?

    1. fredwilson

      geocities was a $500mm gain for Flatiron and our investor partners at Chaseand we had plenty of others. we made a total of $1.7bn in gains before themarket turned upside down.didn’t stop our partners at Chase from walking away from Flatiron when themarket blew upi learned that you are only as good as your last deal, investors are notloyal when there is blood in the streets, and banks are the worst investorsyou can haveas for raising the first USV fund, most of the investors we talked tothought that any money made in Internet in the 90s was a scam. they didn’tgive us any credit for that.

      1. baba12

        Very interesting. These investors who claimed the money made on Internet related stocks was a scam, wonder if they also invested in the Bernie Madoff;s and in the Credit Default Swaps scams of the world. Everyone is ok with scams as long as it is profitable for them. If you participated in the scams if they are that, I am guessing you never thought of them being that and you got in and out at the right times before the crap hit the ceilingYou mention in the videos not wanting to use the term “bubble”. Is that something you feel from just how you read the tea leaves or is there some legal issues you want to avoid.with investors if things do blow up and these same investors come after USV or you for not warning them of the “bubble” so to speak. I am guessing the valuations for Twitter at $8-$10B is not frothy or bubbly, though your investors would not complain one bit. How ironic you state about loyalty, wonder if you take that into account when you go raise funds for USV?

      2. JLM

        Fred: “GeoCities was a long ball with men on base and a chauffeur driven trip to the pay window! But those Chase boys were no more loyal or virtuous than a Dallas prom queen with her panties in her teeth.”


        People always view the past through the lens of the present — whatever the present may be.One comforting fact is that the present is always changing.

  2. RichardF

    I like the point you made about not getting the deals you could get a year ago. I think that’s likely true going forward, froth and “we are the Quora for dog food” type companies apart. Broadband penetration and mobile internet usage is so much higher than in 2000 and it’s only going to increase, its the dawn of the internet now.

    1. Dave Pinsen

      Would “the Quora for dog food” be the Web 2.0 equivalent of

      1. RichardF

        that was my line of thinking yes Dave

        1. Dave Pinsen

          Interesting difference though: your parody is at least an info-only business whereas attempted to defy physical reality (ignoring that the weight-to-price ratio of dog food means shipping costs eat up any online cost advantage).Same with another Web 1.0 start-up, (and it’s bike delivery competitor, whose name I forget). I remember some analyst saying the population density needed for that business to be profitable didn’t exist even in places like NYC.

          1. RichardF

            very true Dave – in fact I have tried to buy dog food online but it’s a waste of time for the very reason you mention.Really my parody was just that whether physical or info only both probably defy reality to make any money.Andy makes a very good point above about the number of truly successful, profitable businesses that will emerge from the current period we are in and I think that’s correct.What I do think is going to happen is that there is going to be a big fallout in the “social” class of internet investment but that more mainstream, “boring”, areas like education, healthcare, government and finance offer potential for disruption. In the real world everyone is looking to save money at the moment.

          2. Dave Pinsen

            I definitely think there’s room for disruption in finance. I’m surprised though that a lot of money and attention so far has gone to businesses that just seem to peddle the conventional wisdom through flashier user interfaces.

          3. Graham Siener

            There’s a great “Entrepreneurial Thought Leaders” podcast about Tom Conrad [1]. He talks about and how someone in Alaska tried to order so much dogfood that it would’ve been $2M in shipping costs.[1]

          4. Dave Pinsen

            Heh. It would have probably been cheaper for the Alaskan to manufacture it himself.

  3. Dave W Baldwin

    Good interview. Sticking with the product that will be useful 2-5 yrs. out, no matter what the market and/or big product intro’s from the carrier/vehicle companies, you’ll be okay. Then pivots are more of a strategic decision rather than desperation.

  4. J.R. Sedivy

    You had referenced a book in the video about technological cycles which impacted your business – Do you still recommend this book and if so could you provide the title?I enjoyed the parts about investing (or building a business) in areas which haven’t become popular yet or that people do not have the vision to understand the potential – the whole concept of “zig” while others “zag”.The collapsing of the old world was also an interesting comment – I believed at the time, and still continue to believe that the Great Recession was a product of discontinuous change, a clearing of the old to make room for the new.

    1. fredwilson

      Technological Revolutions and Financial Capital by Carlota Perez…it’s a bit dry but very good

      1. Dan

        I wonder what the sales of that book are going to look like today.

  5. awaldstein

    Fred. You and Chris have great chemistry.You should consider doing something like this over coffee now and again. I watched it like a morning web TV wakeup moment over my coffee this morning.The analogy about its darker before the dawn as a metaphor for when to raise funds/invest/build the next gen app will stick with me.

    1. fredwilson

      Mike and the Mad Dog for startups?i guess then that i would be the mad dog

      1. Dave Pinsen

        Maybe more like an “All things considered” for startups.

  6. Neil Braithwaite

    It is interesting that not so long ago investors were showing you the door when you mentioned the Internet, and now you warn of VC’s rushing to fund questionable start-ups and the over valuation of internet companies.So tell us Swami Fred, is there a bubble, and when will it burst?

    1. fredwilson

      financial markets come and goend user markets do notchris’ points were largely about end user markets and he is right about thelong term health of the consumer internet market

      1. Neil Braithwaite

        As they continue to grow, do you think end user markets will have a stabilizing effect on financial markets? What roll will they play in helping get our economy back on track?

        1. fredwilson

          financial markets aren’t stable by definitionfear and greed are not stable emotions

          1. Neil Braithwaite

            So is greed starting to rear its ugly head in the end user markets – your industry? A la heavy buying of private stock, huge influx of VC cash to yet to be profitable companies, and exponential valuations of those same companies.

          2. fredwilson



            curious — what emotions would you consider to be the most stable?

        2. JLM

          The greatest stabilizing force on financial markets is the relentless stream of 401K money flowing into the markets each and every quarter. The fund managers don’t know what the hell to buy with it so they just keep buying the market.Have you changed your IRA or 401K allocations?Neither has anybody else.

          1. Dave Pinsen

            “Have you changed your IRA or 401K allocations?Neither has anybody else.”Sure they have. The Investment Company Institute tracks long term fund flows. There were net outflows from domestic equity funds last year. Since 1/12 of this year, though, there have been strong inflows again. If you follow the odd lot theory (i.e., that the small investor is usually wrong), you might consider that a contrarian indicator and hedge.

          2. JLM

            I am not talking about specific actions taken in apparent response to the stock market retreat but rather that after the initial shock, folks are continuing to invest in the market through their 401K and IRA funds and in equities which creates the necessity for fund managers to continue to invest in the predictable stocks and thus the upward bias on the stock market.Most company sponsored 401K programs require an annual review of allocations and nothing much has changed.This immediate, predictable and constant flow of cash into the stock market creates a reactive upward bias for stocks as the money floods back.

          3. Dave Pinsen

            JLM,Responding here because it looks like we went to deep in this thread.”folks are continuing to invest in the market through their 401K and IRA funds and in equities”The flows the ICI tracks include those too, and the fact is for most of ’10 folks were doing the exact opposite of that. It hasn’t been average 401k & IRA investors bidding up the market.An additional data point: I spoke with the CEO of a 40lk record keeper last year that tracks the assets of thousands of small-to-mid sized 401k plans across the country. I had called him to discuss a hedging idea for his participants’ equity ETFs, but he told me that hardly any of the participants in the plans his firm administers were in equity funds or ETFs; most were in money market funds.

  7. kagilandam

    You are raising the alarm about ‘bub’ for quite sometime … but never complete the word.

    1. fredwilson

      it’s a loaded wordi don’t like it

  8. NS47

    When you are driven by a fear of failure as much as a desire to succeed and go into a period of darkness, how do you come back from it ?Your experiences and behavior during those times are the most significant take-aways for budding entrepreneurs like us. Maybe you could recount some of them as a seperate blog post. Thanks.

    1. fredwilson

      i worked with a coach to help me figure out a bunch of stuffi am a huge fan of CEO coaches and life coachesmany of the most successful CEOs and entrepreneurs I work with have usedcoaching at some point in their careers

      1. JLM

        A smart CEO and a smart person is like a golfer asking a swing coach — hey, coach, take a look at my swing and tell me what you see.One is not a slave to the observations but one is “informed”.The brilliant thing you said is “used”. Coaching is a tool to be drawn out of the tool box from time to time.In the end, the most thoughtful CEOs become their own coaches and mentors because it is lonely at the top but it is great fun to make the journey.

  9. ShanaC

    A) Why do you think there are so much better deals during downturns? Are those companies more likely to survive?B) If you had one regret with Flatiron what would it be?C) You are definitely a blue sweater kind of guy.

    1. fredwilson

      Have you read the blue sweater by Jacqueline Novagratz? Great book and anamazing story about a blue sweater

      1. Dale Allyn

        Glad to hear the book is good, Fred. It’s sitting in my carry-on bag right now, for my trip overseas in several days. Looking forward to reading it.Acumen Fund is a very cool project.

      2. Asef Anwarzai

        Hi Fred – could you please repeat the name of the book you mention in the video? Thank you.

        1. fredwilson

          Its in the comment thread. In a reply to a similar comment

  10. Pablo Osinaga

    Fred, I think your frustration with ‘crazy’ valuations is at least in part something that belongs to “a new normal”It is only natural for a small lean/capital-efficient driven fund to be confronted with these situations. If your agree you don’t need a huge (e.g., $600M) fund, that means that you can make nice returns for your fund investors by investing in many startups a little amount.This fundamentally means that you believe that startups can get a lot done (i.e., significant risk reduction/lowering their cost of capital) without much investment.So why should a startup that has made a lot of progress “give away” returns to investors that justify their returns on the basis of investing in risk?Maybe it is normal now for VCs to have to invest at big valuations in small startups that have taken off without much capital. On the other side, investing in 2 guys in a garage + an idea would get better valuations for VCs – that’s where the risk is, and therefore the returns.I can see how entrepreneurs can get a lot done in the application layer of the web rapidly, without much capital. And things will progressively continue to move in that direction. VCs getting the returns will be those that can operate on risky investments (i.e., very early/seed). Banks/growth capital/etc give loans/make less risky investments (at lower expected returns) – and that may involve startups that would’ve been considered very early/seed only a few years ago.All I have to say is these are great times for entrepreneurs.

    1. fredwilson

      There’s much truth to what you say. We have adapted and will adapt moreBut I have also learned that when people say ‘it is different this time’ youneed to be on your guard. Some things change and some things don’t

      1. JLM

        Ever since God, Adam and Eve hooked up back in the g’den every generation thinks they have discovered and then re-invented sex.The fundamentals of investing, like sex, are not changed by each generation regardless of how everyone might profess to the contrary.A flop sweat failure and a near miss have at their core fundamental errors in judgment which are immutable.What has never, ever, ever changed and will not is good judgment.Markets ebb and flow but market vagaries do not trump good judgment. Often markets are wrong.Tulips anyone?

        1. CJ

          Super Like!

      2. Dale Allyn

        “… when people say ‘it is different this time’ you need to be on your guard. Some things change and some things don’t.”This should be on a poster in some folks’ offices as a reminder. It applies to many businesses and economies. One of my businesses (my primary up until a few years ago) has seen many such cycles due to global economies, natural supply shortages, natural supply abundances, etc. This statement of yours has been a mantra of mine, and not always a popular one, but so far a correct one.

      3. Pablo Osinaga

        My ‘Kurzweilian’ perspective is it is different this time. We project linearly in our minds, but changes happen exponentially.Check out this graph: costs for activities associated with getting to a point of ‘low cost of capital’ are decreasing exponentially.On the R&D side we all know the story, open source, cloud, etc etcOn the Marketing & Sales side, there are social networks, increasingly sophisticated/cheaps ad analytics etc etc. These technologies will continue to exponentially advance, making it exponentially more affordable and effective.If you agree, the big question is what is the role of VC investment going forward in this sector?

        1. Pablo Osinaga

          (a radical perspective) maybe the future of VC investment in this sector is recruiting exceptional talent from corporations/etc and supporting their ventures.

          1. Sebastian Wain

            Entrepreneurs in residence is a similar alternative.But, IMHO, this changes the VCs focus and the exceptional talent can organize itself without external forces.

          2. Pablo Osinaga

            In the very long run, I agree with you. In the mid-run, it’d be fantastic to get exceptional talent (not traditional entrepreneurs, but rather, just general talent) and put them in a situation that is the same as a fantastic job. Say, it is like going to HBS or working at McKinsey. You get paid well and have an upside in the business you develop. The organization only provides that (i.e., salary). Institutional knowledge gets created, a fantastic network of alumni, etc etc etc. I am talking Y Combinator but for the mases. Going out and recruiting talent and putting them in a low-risk situation like any other job.


        I would disagree with that — everything changes. Just at varying rates.

    1. fredwilson

      thanks dayna. you were there. curious if you think i represented it correctly

  11. andyswan

    Disagree with many here. The idea of a “new normal” always seems very naive to me.TWO years ago we were hearing about the “new normal” of Democrat control for a generation to come (“look at that youth turnout!”)…..In December 1999 we were hearing about the “new normal” of valuing companies based on website hits.The idea that top-tier firms get crowded out of the best deals is a “new normal” is just as silly. They’re probably just getting crowded out of bad deals. Applications that think they are businesses, valuations that assume incredible success, etc.The most likely scenario is a return to the “old normal”. Likely to occur through the failure of many funded applications to turn into highly successful businesses….which will both deplete new player (angels like me) funds and decrease the euphoria surrounding those new investments. In stock terms this is a cycle of death— decreased earnings along with contraction of multiples. Ouch.The pendulum swings. Fred will once again have an advantage with proven teams running real businesses close to a tipping point.Personally, I’m looking forward to it. There’s no edge in a market that treats ALL entrepreneurs and startups as “excellent”.

    1. JLM

      I agree with you more than you agree with yourself!This is because you are not 24 years old and actually possess a few scars and some life experience.Life and business are graded exercises and not everybody gets an A.This ain’t T ball, folks.

      1. Dale Allyn

        “Life and business are graded exercises and not everybody gets an A.This ain’t T ball, folks.”Ain’t that the truth! Couldn’t agree more with you and Andy on these points.

    2. sigmaalgebra

      “Normal”? Old, new, or anything else …. Let’s see: If anything “normal” led to a lot of business success, then such success would be normal. Tilt! The economic pie is not big enough for large slices to be “normal”. So, “normal” can’t be a way to business success.Fred’s story is ‘telling’: He got laughed at. But he was right. Hmm …. So, can’t take such laughter too seriously. If the laughter is “normal”, then it likely does not ‘cover’ where business success is. Uh, don’t join large groups of laughing people. Accept that success will be lonely; necessarily early on only a small fraction of people will ‘get it’. Necessarily the flip side of a good direction is a lot of people laughing. The laughter is not sufficient for success, but it is nearly necessary. So, if no one is laughing, then pick another direction!So, where’s the success and the path to it? Okay, I’ll take the LOL up front. Done LOL now? Okay, in two steps:First, in general, to innovate, automate. That is, we already know what people want in the famous one word answer, “More.”. For very much in ‘more’, we also need more ‘productivity’, that is, more output per input. As we’ve known now for over 100 years, can’t get there just by speeding up the line. Instead, automate. Or, machines should work, and people should think.In the past, the working machines were big, expensive, noisy things from mechanical engineering and metal cutting. Now we can get machines based on processor cycles, storage bytes, bandwidth bits, and software platforms, middleware, and tools, and a lot of all of these for a total of less than $1000. They will do just what we tell them to do although we do have to speak slowly and carefully in their language. E.g., recently Tiger Direct was selling a 1 TB drive and a copy of Windows 7 Professional 64 bit, the bundle, for about $60, now less than a tank of gas for my SUV. Am I the only one who sees this as amazing, as powerful inputs, cheap?Second then for the automation, we need to think of something good for it to do. What good? “More.”.An old answer, and I believe still a good one, is, in the context of the Internet, find a problem that some hundreds of millions of people would very much like to have solved. Then get an especially good solution and for that borrow from the ‘paradigm’ well illustrated by the US DoD from early in WWII to the present — use some new, advanced, difficult to equal or duplicate technology, likely standing on appropriate advanced results from the research universities, to get more powerful means of solving the problem and, thus, delivering a solution the people like better.So why say so here? The laughter is so loud there is little danger in quieting it!So, how to know that the laughter is wrong? To have some solid evidence we are correct is just why we went to college, studied math were we could prove we were correct, studied physics where we could often prove we were correct, and studied engineering where we could take ideas proved correct and convert to solid, practical solutions. At the end of class, there may have been some laughter in the halls outside the class, but when proof of the martingale convergence theorem was being finished there was no laughter inside the class: The result and proof were correct; we knew they were correct; and there was no doubt, laughter outside not withstanding. It’s good to have some ways to know are correct.How’d I get into such things? Sure, laughter: In the elementary grades, there was no way I could hope to please the teachers anywhere nearly as well as the girls. So, I gave up trying. A recent movie about some middle school students has, “Boys’ handwriting sucks; no offense.” is correct: In the eight grade my handwriting was sloppy and ugly — suckage. So, in long division, my chances of a correct answer were not good. So, at the end of eighth grade math, the teacher took me aside and warmly advised me never to take anymore math. Fortunately my father, who knew more about education, and math, than any of my teachers, laughed. So, in the ninth grade, the teacher sent me to the state math tournament. At the end of the tenth grade, I showed the teacher how to inscribe a square in a semicircle. She said I was wrong. No, she was: I’d just reinvented and shown her ‘simitude’, an advanced construction technique. I thought I was correct, and I was. After the eleventh grade, I was sent to an NSF math and physics program. My math SAT was over 750, both times. I just didn’t bother to take freshman calculus and started with sophomore calculus. My math honors paper was on group representation theory, a subject important in molecular spectroscopy. My Ph.D. dissertation was on the applied math of stochastic optimal control.All along I wanted to make darned sure I knew in solid terms just what the heck I was doing, very solid terms so that I knew that all the laughter was wrong.For anything good, early on there will always be people laughing. So, one crucial purpose of a good education is to have means to separate wheat from chaff and, for the wheat, know that the laughter is wrong.At least the eighth grade math teacher had a daughter my age, really sweet, a little round, but very pretty.Uh, who else thinks that the Rostropovich, Serkin performance of the second movement, ‘Adagio affettuoso’, of the Brahms second, opus 99, piano-cello sonata has, by Rostropovich, among gorgeous, lyrical, ‘compelling’ melodic lines, the two longest in all of music?

      1. Dave Pinsen

        Sigma,IMHO, too long a comment for most folks to read. I took a stab at it, because I’ve known you to write some sharp stuff in the past, but even I got demoralized a few paragraphs in.

        1. sigmaalgebra

          No, it’s worth reading. If I write more succinctly, then I get misunderstood!I value your feedback (“see ourselves as others see us”); I just don’t think or write like many other people in venture funded entrepreneurship, and there are pros and cons here.At the end of my post is a reference to some music — listen to it; you might like it! If Fred hasn’t tried anything like that, given how much he likes music, he should try it. Not listening to some highly recommended Rostropovich is a, uh, ‘mistake’!

          1. Dave Pinsen

            OK, I’ll give it another shot after I have some coffee.OK, read it. Meh.

          2. sigmaalgebra

            Sorry you didn’t like it. I don’t have an easy way to make the intended points more impressive.

          3. JLM

            Even if you just broke up the paragraphs a bit would help. I love reading your stuff but I have to eat more frequently than that allows.

          4. sigmaalgebra

            To improve my writing for less technical purposes is the main reason I post. So, I want the reactions and the feedback.My first writing of any meaningful content was just pure math, and I evolved only from there.Two ways to make non-technical writing easier to read:First, for each few sentences, announce the point at the beginning. So, don’t provide all the support and then only at the end state the intended point.Second, if have a paragraph and it is, say, specific and long with detail, then just be more general and omit the detail.But these ways are not welcome in highly technical writing.Fredland is a special place and seems to illustrate a curious point: One approach to quality is just focus.

          5. kidmercury

            IMHO disqus needs to pull a twitter and put some caps on max characters in a comment (cap to be specified by blog star).

  12. Ronnie Rendel

    It’s always so good to hear you speak, Fred. Yes, the collapse of 2008 was a paradigm shift, from large and wasteful behemoths, to nimble companies providing specialized services.When you think about it, business is changing very much in accordance with how technology evolves. Internet and Mobile applications providers today are focusing on smaller “niche” value, providing a “piece” of the overall value chain. This is just like the shift to web services in the early 2000’s, and web apps today.Another thing that never stops to amaze me is how the marketing and sales cycle has shifted. I actually work for a financial technology firm where a typical “Proof of Concept” can cost us anywhere between $50,000 – $200,000! We need to run 5-10 PoCs at a time to meet our earnings expectations.Compare that to some kid writing a cool app that does one small thing really really well and markets it with well written value added articles or video. He (or she) has an almost automated sales channel providing residual income while building their network/user base and creating a marketing channel to sell (or resell) other services.So why am I still in FinTech? The truth is I really like my boss who is the founder and CEO…

    1. Dave Pinsen

      the collapse of 2008 was a paradigm shift, from large and wasteful behemoths, to nimble companies providing specialized services.I’m not sure where you’re getting that from. Most large companies were pretty efficient before 2008 (it’s tough to survive long enough to get big if you’re wasteful), and well-run large companies (e.g., AAPL, XOM, JPM) are thriving today.

      1. CJ

        Huge companies are time-wasteful. Look at HP, WebOS tablets should be in store today, the Pre3 should be on world class hardware and they should be embedding it into their line of computers but that’s at least 6months out after a purchase that closed 6 months ago with software that was already feature complete.If WebOS was a startup trying to disrupt the industry, the thing would be out in stores now and they would be working on the point release.

      2. JLM

        This is the irony of the recent Obama – Chamber of Commerce summit in which the President deployed his charm to get the Fortune 100 to start producing more jobs.The top companies in the world are quite content to have laid off 20% of their workforces because their productivity went UP!They used the recession as a screen to get rid of the lowest quartile and to weep while doing it.They are all doing just fine. Good products, excellent efficiency and lots of $$$ in the bank.

        1. Dave Pinsen

          The reason many of the biggest American companies are untroubled by high domestic unemployment is that they do so much of their business overseas. It is a real drag on the U.S. economy though, which remains week despite having been propped up by massive and unsustainable fiscal and monetary stimulus since ’08.

          1. JLM

            I think it would be fair to say that by any objective standard the Stimulus did not actually stimulate anything. They simply funded every liberal wet dream imaginable.

    2. CJ

      An application can support a person but a business can support a company. Don’t confuse the garage coder with $2M in iPhone sales as a sustainable business. He’s a hobbyist who was able to cash in and probably can’t reproduce it. And until he does reproduce it, over and over again, he’s not a business he’s a coder and that’s probably good enough for him but it won’t be good enough for investors or co-workers.

  13. Kevin

    More. Give me more. Watched both of the clips on TechCrunch. Enjoyed them both, wish they were longer. Thanks for spending the time to do this.

  14. kidmercury

    the whole industry is missing the big picture. what is happening in silicon valley is a symptom of larger issues. understanding the connection between egypt, the startup bubble, and the rising price of gold is essential. otherwise it is just investing in the dark.lots of people going to get embarrassed this time around. just as housing bubble was more brutal than dot com bubble, the dollar/war/treasury bond bubble will be the biggest of all.only the truth can set you free of the endless cycle of bubbles.

    1. fredwilson

      I’m so glad you hang out here Kid. I don’t always agree with you but youmake me think hard enough to create brain pain. And no pain no gain

      1. kidmercury

        thanks boss! and of course credit to you for creating an environment where we can have fun and have important discussions too. MANY of your fellow blog stars do not have such an attitude, unfortunately. many kooks say the bill of rights should have been called the bill of responsibilities instead, which i agree with 100%.

        1. CJ

          I like the Bill of Rights, but I also think that there are certain responsibilities that should be enforced as well. But the establishment, loathe as I am to use the term, doesn’t want it that way. They’d rather we rely on the State which means that they maintain power and that’s why our democracy is in the shape that it is now.My favorite example and the most invisible example IMHO is The Civil Rights Era. It finally ended when Washington caved and abolished segregation in all forms, Civil Rights leaders applauded their methods and took all the credit but the unsung heroes were the hippy white kids protesting the Vietnam War.See, they studied under King and his crew and learned the power of protest, sit-ins and non-violent resistance and they turned that on the Vietnam War. THEY are the ones who threatened the establishment, the war effort and profit, not the black people attempting to gain equality. In order to kill the antiwar protests and the empowerment of the youth, they killed the training ground for them, the Civil Rights movement. And now, decades later, we have a society of entitled lazies. Even when we win, we lose.

    2. JLM

      Very insightful stuff. I had lunch today with a very, very, very spooky guy who knows shit that ordinary people would have their heads explode if they knew. He made some very interesting observations about Egypt and its long term impact on the world.First, he thinks that the American democratization of Iraq is the seed which has emboldened the Middle East to think they might just be entitled to a bit of personal freedom. He says that in 50 years that will be GWB’s legacy.He opines that it will be a set of dominoes which will go from Tunisia, Egypt, Jordan, Kuwait, Yemen >>> the entire region is going to become democratic because the people are so comparatively mobile. He thinks the Internet is the conduit through which the disease is spreading.He also says that the next big threat is war w/ Israel because the existing despots see that as a way to distract folks. Egypt had the western flank of Israel protected.He also says he would not put a lot of $$$ on free elections in Egypt. The military has picked the last 4 leaders — Nasser, Sadat, Mubarak and now the new guy — all generals. They are not going to give up that power and they are very close to the US military.Only in the Middle East could a military coup be considered the advent of democracy.He also says that the biggest US interest is the break up of OPEC. He says the first OPEC tyrant who calls for assistance from the US will have to puke up a “break the cartel” card to get help. He wonders if the Obama administration is tough enough and calculating enough to see the opportunity. He says the Chinese will be pulling on the same string.If we could divide up the OPEC cartel, oil prices would plummet as they went back to being competitors rather than co-conspirators.He says that it is insane that the President of the US is getting his info from CNN. You and I have the same intelligence access as the President. That is scary.Interesting stuff.

      1. CJ

        I don’t see Democracy permeating the Middle East as long as oil drives the world’s economy. There is simply too much money to be made exploiting a people that are used to being controlled and exploited. And the U.S. has proven over and over again that we only pay lip service to standing for Democracy, in reality, we stand behind whatever government that we judge to be in our best interests. The people in Egypt staged a grand event, but they left the military in charge and a VP who is loyal to the old guy. Screw the ‘Muslim Brotherhood’ or whoever they are, you still haven’t gotten rid of the old government, just the appearance of it.There will be some change, a what I like to call ‘Surface Democracy’ where you have the illusion of freedom and the illusion of the vote but real power rests with people who are appointed rather than voted into office and as long as that is the case they will never be free, they will just be slaves with invisible bonds.

        1. JLM

          I feel no obligation to defend my friend’s utterances so I observe from afar that the US has a pretty good record and a pretty bad record on the issue of democracy.Some incredible triumphs and some great flops.We in the US have a well developed democracy which perhaps has developed a bit too far. We have institutions which seem to me to be overdeveloped in many ways, so yearning for a US style democracy is likely not within the grasp of many newly emerging countries.You can live a pretty damn good life without the ACLU.Having said that, the US does have a tendency to leave a more orderly and freer society in its wake — witness Germany, Japan, S Korea. Of course you have to be the victor to impose your will.I am just cynical enough to say that many of the idiots in the US who vote, should be both stripped of the vote and neutered — but that might just be me.The world is changing and the spread of democracy on an individual and collective basis is going to become a powerful force.Once they’ve seen Paris, you can’t keep them on the farm.Color me as a Jeffersonian democrat wanting only those who pay taxes to be able to vote to impose taxes.

          1. CJ

            I don’t think you should, I was just offering my two cents which opposes in some cases but not all. I think we have a good track record of leaving functioning societies in the event of all out war. Where we don’t excel is when we start king making via the CIA and other clandestine means. There are a lot of countries that would have been better off had we stayed hands off like Venezuela, Panama and Iran where Japan, Korea and Germany are obvious examples of our success.I’m fond of saying that Democracy has to be earned not given if it’s to be successful and I think that continues to be the case. I think Egypt is a good example of this even though I think the people put too much stock in the military to create a Democracy and not enough in themselves…but then maybe they know something we don’t. I think Iraq is a contrary example because we forced it. The people didn’t want our interference and truly didn’t want democracy, I expect that regime to change to something more totalitarian within the next 10 years. I could be wrong but I think all things worth having are worth fighting for, unless the people are willing to bleed for freedom, it can never be obtained and isn’t really deserved.

          2. JLM

            I agree with you as it relates to the diametric and opposite poles. You missed the most obvious — Viet Nam where we completely screwed it up resulting literally in millions of deaths in the region.I tend to agree with you in regard to the nobility of democracy being earned by the investment of the blood of patriots though I am also of the mind that folks today have a — “Ooooh, that looks so fun. Could I have one of those?” attitude.Egypt is a complete illusion of gargantuan proportions. The military put Nasser, Sadat, Mubarak and the new guy on the throne. Mubarak wanted to have his son succeed him and this is where the entire mess came from. The military did not agree.And having put the ruler on the throne why should they have?Only in the age of CNN and MSNBC could a modestly bloody military coup be considered the “dawn of democracy”!There will never be free elections — rigged ones maybe — as long as the military is the kingmaker in Egypt. Why should the military cede power when the US President is willing to accept a military coup as an act of democratic upheaval?

        2. Dave Pinsen

          “I don’t see Democracy permeating the Middle East as long as oil drives the world’s economy.”Oil isn’t the reason for the lack of democracy there. Canada and Norway are both big oil exporters, and of course are also democracies.Relatedly, it always irks me when someone says that when I fill my tank I’m supporting some despotic oil exporter. Canada is our biggest supplier of foreign oil; why am I not supporting Canada when I fill up?

          1. CJ

            No, oil isn’t the root cause but it is now the continuing cause. Dictators love money and power and tend to use violence to keep it. Oil brings both, if you already have a totalitarian regime with huge amounts of oil you are more likely to do more extreme things to protect it. That’s my logic. Canada and Norway are different as they are starting from different points, neither are dictatorships.

          2. JLM

            I think you may be over thinking the issue.Despots do not care how — oil or otherwise — their most successful citizens make their money.Despots simply decide who the winners are going to be and then take their cut.If you fail to cooperate with the despot, he declares you a LOSER. Anoints a new winner. And unfortunately, you disappear. Look at Russia.Who do you think owned the Caribbean? The Prince of Wales. And if you operated in the Caribbean, then the Prince of Wales got his 15%.

      2. LIAD

        Was at a global security conference this week and heard an interesting presentation by ex-CIA Director – James Woolsey, on OPEC, Oil, Fanaticism and Terrorism.Won’t recount it here for fear of your hair falling out.Suffice to say its a travesty that the general public doesn’t know what the majority of their gas dollars end up financing.

        1. JLM

          I have always wondered why an ex-spook is allowed to make any public utterances after having been exposed to such secrets.It seems like if you take that job you should have your tongue cut out when you leave office.One of the truly dumbest things that has been perpetrated is to allow the magnitude of money circulating in the Middle East due to our inability to foster nuclear power.We are literally funding folks who could care less about terrorism as long as it is not in their country.

      3. Dave W Baldwin

        Cannot believe that Panetta admitted his gaffe was due to relaying what he heard on the news instead of intelligence. He shoulda’ known to rephrase what we was thinking into more of a, “There is a lot of speculation happening on the news front, but at this time we would be smart to let things play out….”No wonder whatever forces can move things, according to conspiracy theories, around in front of everyone….amazing.

      4. kidmercury

        glad to be in agreement with much of what your source is saying. i see all these people celebrating a liberated egypt…..i don’t see how a military coup constitutes liberation. webster tarpley is one of my favorite journalists/historians/conspracy theorists, and he suggests that US powers that be were done with mubarak and needed to replace him, and this is what is really happening. i don’t know enough about egypt/middle east history, though that seems interesting and worth considering to me.i actually think we have better intelligence than soetoro. with the interent there are tons of leaks. now military insiders can and do blow the whistle and do it via independent journalists on the web. if soetoro is just getting his info from CNN, we are likely one step ahead of the game. though not like outperforming soetoro is much of a challenge! lol

      5. Bibirito

        @JLM Brother…stay with the tech industry because you have no idea how the oil industry works. The break up of OPEC will not sent prices plummeting. Lifting cost is much higher these days and there is a lot more demand than 20 years ago. Not to mention the role of speculators. OPEC is just one piece of a very complex puzzle. Do your homeworl first

        1. JLM

          Brother, I worked for a Fortune 5 oil company CEO/Chmn as his personal assistant when you were not yet a gleam in your Daddy’s eye.Back when the 7 Sisters did not include Aramco or Gazprom.Back when the likes of Socony bought up an entire sovereign nation’s output for a fixed long term contract.OPEC provides an artificial floor to prices which is not dependent upon lifting cost or demand.While I am not in the biz and haven’t been for some considerable time, I will be drilling a couple of wells myself — little shallow wells — in the next month.But, hey, thanks for the advice, Brother.

  15. William Mougayar

    You said this is different than ’99, and I agree. Can you elaborate / maybe worth doing a post on what’s different and what’s not?The difference between a smart person and a brilliant one? The smart person only believes half of what others say. The brilliant one knows which half to believe.

    1. JLM

      Damn, that’s …………………………………………………………………………….good!

    2. sigmaalgebra

      Naw, don’t have to be “brilliant”! Just insist on a proof as solid as in, say, I mean just to pick a name, Bourbaki. That should do it!Bourbaki shows lots of things are false that nearly everyone would believe are true, but they aren’t! And he shows lots of things that are true that nearly no one would believe could be true, but they are! He puts the wheat over here and the chaff over there where nearly everyone else would get all of the cases wrong and do better flipping a coin.Right: Bourbaki doesn’t answer all important questions, but he provides one heck of an example of what you call “brilliant” separation of wheat from chaff. And there are now two points about Bourbaki: First nearly no one, and much more rare in information technology entrepreneurship, have read even a single page of Bourbaki or even know who he is. Second, some of what he has can be close to magic bullets for some big problems to be solved on the Internet now.And, close even to some Rostropovich, Bourbaki is some of the most gorgeous stuff in civilization so far. But, yes, Rostropovich is much easier to appreciate!If find Bourbaki a bit too severe, then try some Dieudonne, Rudin, Halmos, or just von Neumann directly.Fred recently commented on the difficulty of building a team. Okay: One member of Bourbaki was Choquet. He had a student with a wife, and in either case it was easy to see the lion just by the paw. She was quickly liked by the editor of ‘Math of OR’ and the NSF. On the side, quickly, she picked up C++. I’d hire either right away. Build a team? Look for people who’ve read and understood some Bourbaki. How ’bout that! Heard that anywhere else? Check it out? Try James Simons; I don’t know him and can only guess what he’d say, but I’d put a decent Pommard on it.If a lot of Bourbaki readers were in information technology entrepreneurship, then I’d actually have some serious competition. But then, also, the economy would be at about Mach 20 above the stratosphere instead of slogging along in the mud, and we’d all be much better off. Read some Bourbaki; start with, say, his book on point-set topology.

    3. Jose Paul Martin


  16. Sebastian Wain

    Flatiron Partners invested outside US and in Latin American companies such as Patagon and StarMedia. Did you change your philosophy with USV regarding investing on companies in Latin America or outside US/Europe/Israel?Since you have this experience what’s your suggestion for evolving companies in the region?My humble experience tell me that we need to always have a leg in US or Europe to evolve.

    1. fredwilson

      we had about seven or eight latin investments at Flatiron. one worked big time, mercado libre. patagon was sold for a lot of money. starmedia went public and then blew up. the rest were failures. as a group we made money but i did not feel great about the experiencewe are investing in europe a lot right now. but not latin america. might be a case of “been there done that”

      1. Sebastian Wain

        I didn’t know that Flatiron invested in Mercado Libre, obviously you know that they are now public, so you had one of the most successful web companies in your portfolio.I understand your point.

  17. CJ

    I’ll tell you what has me worried, as I was watching the SuperBowl the ads felt like they were ripped out of the late ’90s, .COM this and .COM that. There were more internet company ads than anything else and that gave me a bit of deja vu. When tech starts to invade mainstream like a German blitzkrieg rather than a gradual assimilation like Facebook, I know someone somewhere has way more money than product on his hands.

    1. fredwilson

      that is what both of my partners said to me on monday morning after the super bowl.

      1. CJ

        Glad I wasn’t the only one who caught it.

    2. Dave W Baldwin

      All that $$$ spent and the best message (which could of been done in a 30 sec instead of 60) was ‘Imported From Detroit’.And the biggest promotion with risk attached was via Salesforce….otherwise everything was a rerun.

    3. kidmercury

      oh snap…..malcolm lloyd 1, youngsters droppin’ millions on superbowl ads 0

  18. Kevin Burton

    Great video… interesting to see Chris Dixon doing the interview too. It’s hard to get high quality people on both ends of the camera.


    hindsight is always 20/20people tend to live in the moment. It takes faith and wisdom to look beyond present circumstances and see what will be.

  20. sigmaalgebra


    1. fredwilson

      much easier to read when you space it out like this

  21. Carl Rahn Griffith

    One should never underestimate just how powerful and positive a force the sense of ‘a chip on the shoulder’ can be – used wrongly it can be corrosive and negative, but harnessed correctly it can provide one with an incredible inner force, for good.

  22. Philip Baddeley

    Not sure who is interviewing who? Even Scoble needed to learn to listen and now is interviews are great Perhaps one interview by Chris Dixon and one of Chris Dixon……….but a mashup is confusing:) But it is great to see the real Fred pop out now and then. A very driven man and so impressed by the 5am starts.