Open and Closed

At Union Square Ventures, we pride ourselves on our transparency and openness. Wednesday's Airbnb post and Paul Graham's followup posting of our email thread on that opportunity is a good example of where being open benefits everyone involved, from Airbnb, to Y Combinator, to Union Square Ventures, and mostly to entrepreneurs out there who have always been curious what really goes on.

But there are plenty of times when we are not open. If an entrepreneur comes in and pitches us on an investment, we don't blog about it. We have all sorts of things going on in our portfolio right now that we'd love to talk about but obviously we can't and won't. And when we make an investment that the people involved decide should be kept quiet, we are fully capable of doing that.

Today, I wrote a short blog post on about our portfolio company Kickstarter. We've been an investor in Kickstarter since the fall of 2009 but are only talking about it now that everyone involved is comfortable with making the investment public.

We prefer to be open and transparent, but that is not always the appropriate or desired posture. And when we are expected to be discreet, we are fully able to do that.

#VC & Technology

Comments (Archived):

  1. DGentry

    Is there ever a concern expressed of “will Fred blog about this?” Do you suspect it makes people hold back from telling you things? Or have you established enough history of discretion that it simply doesn’t come up?

    1. falicon

      My guess is 99% of the time people are hoping for the opposite…ie. “I hope Fred blogs about this”…and in the other 1% they probably know enough to just say “please don’t make this public yet” (something I actually hear all the time in my conversations around the NYC tech. scene — keeping secrets until people are ready to reveal them is one of those never talked about, but absolutely required skill if you want t be an early stage startup developer)

      1. DGentry

        It seems like it would be difficult to keep track of what you’re at liberty to talk about.

        1. falicon

          It’s not too bad for me…first I’m not *that* popular so for me, I’ve only got maybe 10 secrets at any given time ;)Second…I mostly associate ideas, projects, or topics to people…and then secrets to the people…so in my head I just have to think if the person is open or not and act accordingly in the rest of the world…Third…I always have *plenty* of things I can talk about publicly…and so there’s more than enough good meat I can spam the 7 people who pay attention to me with at any given time! =D

      2. Dave Pinsen

        “My guess is 99% of the time people are hoping for the opposite…ie. “I hope Fred blogs about this…”Well, Fred has blogged about Kickstarter on occasion before (e.g., here). He just didn’t mention that USV was an investor before today. So Kickstarter did get some of the benefit of an AVC mention before this.

        1. falicon

          true…and to be fair, kickstarter is an awesome service…making it near impossible not to want to talk about it (especially if you had a stake in it’s success).as a random side note…maybe people should get the sound ‘kick’ in their domain somewhere if they want USV attention (kik and kickstarter are both portfolio companies). =D

          1. Dave Pinsen

            I blogged about Kickstarter on my old blog last year, after they passed on an idea of mine (“Sex beats stocks”).Interesting observation about the sound “kick”.

          2. RichardF

            I liked that post Dave.I had assumed that sex usually beat most things on the net until I saw that Facebook is more popular than porn in the UK now according to the BBC… (although maybe Facebook is the new porn)It’s made me re-evaluate Facebook’s value anyway!

          3. fredwilson

            Real sex beats fake sex?

          4. fredwilson

            Real sex beats fake sex?

          5. RichardF

            ha….every time !

          6. Dave Pinsen

            Thanks, Richard.Interesting about Facebook too.

          7. fredwilson

            Or start with t and end with rOr start with tw

          8. ShanaC

            Actually, there is a whole study of how we think of sound – there are phonemes we are more likely to remember and have what we think are “pleasant” sounds. I’m surprised more people actually don’t think about it when naming startups

    2. fredwilson

      I think it still happens. One reason but not the only reason I wrote thispost

  2. falicon

    So now that you can talk about it…can you share any insight into why they wanted to keep it quiet until now? Is it just because they were worried about users thinking the service or the personality or focus would change with funding?DISCLOSURE: I’ve known for awhile that kickstarter raised money as I’m friends with a handful of the people involved in the action…(though I don’t think I knew USV was involved – never bothered to ask who else was in the deal because I didn’t question the intelligence of doing the deal)…I never thought about the fact that it wasn’t really publicly mentioned either…

    1. fredwilson

      I’m not going to talk specifically about Kickstarter but I will say thatthere are plenty of founders including some of the very best in ourportfolio who prefer to operate below the radar for a while

      1. Satish Mummareddy

        I am one of those guys who likes to operate below the radar.Soooooo, maybe I am working on a stealth USV company. Maybe, Maybe not. Maybe……. 🙂 And considering that Fred said, yest that he would fund an awsome entrepreneur irrespective of the idea…………………. It’s might really be true. :)Jokes aside, I get what you are talking about. Some people just want their work to speak for them rather than hype created by media including their star investors.

        1. Guest

          Fred has posted and tweeted about Kickstarter before. That is hype being created by a star investor.

          1. Satish Mummareddy

            I agree that Fred has posted about Kickstarter before, but he also posts about other stuff he hasn’t funded.So for an outsider its just another thing Fred is playing around with until he says he invested in it (which means Fred thinks it is one of the top 8/10 companies in that year).

          2. Guest

            Or you don’t know if he’s funded them 😉

        2. fredwilson


      2. whitneymcn

        I actually just Twittered about this the other day: one of the things that impresses me most about the Kickstarter crew is their obsessive focus on tending their own garden, rather than getting caught up in their position as a “hot startup.”A lot of people would (quite reasonably) have wanted to shout from the rooftops that USV had backed them: for bragging rights, for the perceived validation of you guys backing them, for the press that follows these announcements, or any number of other totally valid reasons.But Kickstarter as a company seems centered enough and confident enough in what they’re doing that they avoided that route and just kept building out their ideas.I love those guys, despite the fact that Kickstarter has started to become a significant drain on my checking account. 🙂

        1. fredwilson

          You nailed it whitney

        2. Matt A. Myers

          I like your phrase of tending to their own garden. 🙂

      3. ShanaC

        I’m not surprised, not everyone wants to be in the spotlight

      4. William Mougayar

        What are the key reasons for staying below the radar? I assume competitive factors is one of them, but there must be others?

        1. fredwilson

          Keep your head down and execute. Less distraction

  3. Andrew Brown

    Thanks for letting PG post that email thread. As an entrepreneur just out of school it really helps to see how investment decisions actually work. That email exchange (and your whole blog) really helps de-mystify the investment process.

  4. Aaron Klein

    Hashable’s discovery that people didn’t want to publicly disclose every meeting is a very similar point. There are a variety of reasons why discretion is valuable and needed in our world.Open vs. Closed is a balance between protecting your strategy and creating new opportunities by showing people how your world works.And thanks for allowing PG to post that thread…it only made my opinion of USV rise.

  5. Dan Epstein

    Kudos on the Kickstarter investment. I think it’s really started to enter the mainstream. Anecdotal evidence 1) I’ve heard a couple startup ideas pitched as Kickstarter meets XYZ. 2) A few friends (band, filmmaker) are excited to use it to fund their next album/film.On the topic of what goes on behind the scenes, and being brought deals, what % of the pitches you hear are ideas brought to you (e.g. AirBNB) vs. ideas you find on your own? Is that ratio about the same when you look at investments made?

    1. fredwilson

      I’d say its about 50/50 but there’s a gray area in the middle and that’swhere a lot of our investments come from

  6. David Noël

    I love Kickstarter. May I just recycle one of my tweets as today’s comment:To me, @Kickstarter is one of the most magical stories of the social web and deserves much more exposure

    1. Dave Pinsen

      It’s worth noting that it has competitors in the crowd-funding space — including one co-founded by a member of the AVC community (Vladimir Vukicevic): RocketHub.

      1. David Noël

        I didn’t know RocketHub – thanks Dave!

        1. Dave Pinsen

          No problem. Vlad’s a sharp guy as well. Too bad he doesn’t comment here more often.

          1. Vladimir Vukicevic

            Thanks Dave P. – it’s always fun and exciting being the David in the “David vs. Goliath” battle :)Dave N: please feel free to reach directly to me at [email protected]

          2. Dave Pinsen

            No problem. For a Vladimir you make a good David.

          3. Vladimir Vukicevic

            I’m usually around – it’s tough to comment freely here, since I’ve known about the USV/KS deal for a while now.

      2. fredwilson

        All of our portfolio companies have had competitors at some point. And thecompetition changes over time. Our goal is to invest in the categorycreator/innovator/leader

        1. Vladimir Vukicevic

          I love and respect what Fred and KS have built. It’s given our team at extra inspiration to keep hustling, to focus, and to constantly improve & intelligently evolve.

        2. Dave Pinsen

          I get it, Fred. Just wanted to give some recognition to Vladimir for what he’s done with RocketHub.

        3. FAKE GRIMLOCK


    2. vruz

      Agreed, it’s awesome.Did you see the guy who made a circuit board add-on for Arduino?or the guy who made a short film about indie videogames.Those were my favourite projects, but there’s so many interesting going on at Kickstarter, and they’re spreading so much love that one can only want them to succeed.

      1. David Noël

        (only saw this now, Disqus ate my email notifications again) – will check them out.If YCombinator or TechStars are the accelerator for tech entrepreneurs, Kickstarter is the accelerator for real people. 😉

  7. kirklove

    Nice. Kickstarter rules. Congrats to the team and USV. Good match.

  8. Austin Clements

    Well you guys did a great job of keeping it a secret. I’ve been curious for the last few months to see who backed Kickstarter… to no avail. Obviously Google searches like “who backs kickstarter” or “kickstarter venture capital” return results about projects that users create on the service or articles comparing the service to VC. Glad you solved that riddle for me.Kickstarter is the most exciting company out there right now. I’ve watched a few videos of the founders presenting the concept and always feel it’s such a great idea and such excellent execution. The subtleties are what set it apart. If I had the opportunity to back one company in the last several years it would be Kickstarter. Probably even over Twitter.Much luck and success to you and the kickstarter team as you continue building on a great product.

    1. fredwilson

      Wow. That’s a very encouraging comment!

  9. Fernando Gutierrez

    Whenever someone says that he can’t blog because privacy is very important in his sector I always mention your example. If a VC can blog without causing severe problems for his firm and investments, almost everyone can do it if they work hard enough.

  10. RichardF

    The airbnb exchange was great.I hadn’t really given too much thought to the fact that a VC could be secretly invested in a company, sort of makes it a waste of time filtering a VC based on their online portfolio.Obviously I wouldn’t come and show you the Twitter competitor that we are working on 🙂

    1. fredwilson

      We have been approached by no less than half a dozen Kickstarter competitorsover the past 18 months. In every case we told them we had an unannouncedconflict and deleted the email and attachment and told them we did that. Itis critical to handle this stuff right

      1. RichardF

        fantastic answer

  11. leigh

    Kickstarter is one of my favorite new companies that has come around in a long long time. It’s such a simple idea and yet so powerful feeding a clearly unmet need in the funding ecosystem. Congratulations. Another very very smart investment.

  12. andyswan

    Err on the side of closed.

    1. fredwilson

      But be open when possible

      1. andyswan

        Always possible to be open. Not always a good idea.”Does this outfit make me look fat?”

        1. Tereza

          It’s all in the ask.She should be asking, “which one looks better?”

    2. kidmercury

      incumbent? err on the side of being closed. underdog? err on the side of being open. problem is, if you’re an incumbent who doesn’t think like an underdog, you won’t be an incumbent for very long…..

      1. andyswan


  13. Satish Mummareddy

    I guess most people on know this, but its not just the open (& sometimes closed) blog (or essays) that Fred & Paul that are helpful. The email responses that they write when you ask for specific help is amazing.I once asked Fred for his opinion on something that I wanted to learn more about. I am not working on a startup now and the email i sent to Fred was not helpful to him. But i needed his opinion. he took the time to write his thoughts, dug up an old blog post he wrote on the topic and sent it to me. That was an amazing. Paul was the same way about something I wrote him about.If they have the time to help they really help you. And that is Open. 🙂

    1. fredwilson

      This is a source of stress for me. I want to do that all the time and Ican’t

      1. Mark Essel

        Doing it when you can, is much better than never doing it. It’s a decision that makes sense.

      2. Satish Mummareddy

        I have seen the amazing amount of comments you replied to over the years, watched this blog’s traffic grow 3 fold over the last 4 years and your posts about email bankruptcy multiple time.It has made me more careful in asking anyone of their time. Be respectful. Ask only specific pointed help after doing homework and only when I am prepared to leverage the input I get. 🙂

      3. kidmercury

        people turn on their computers and they see the screaming fans, the videos, the awards…..but they don’t know the stress of being a blog star. i sympathize boss

      4. ShanaC

        So lean on us.

      5. vruz

        Maybe Jon Postel’s Law applies here?”be conservative in what you do, be liberal in what you accept from others”It did wonders for the build-out of the internet.

  14. aweissman

    I find that sometimes being translucent is more appropriate than being transparent

    1. fredwilson

      Oh man. Reblog time. Seems to be reblog andy day

    2. daryn

      agreed, translucency == storytelling.

    3. Leo C Reilly

      please clarify

  15. Siminoff

    I love Kickstarter and it was awesome to wake up and see that you are a investor. It is a company that is not only going to make a lot of money but really change the world in a awesome way in the process.Congrats and thanks for funding the company that made my favorite new watch possible.

    1. fredwilson

      If I wore a watch that would be the one I wear

  16. awaldstein

    Business first is what business people should always do.I do like though Fred, that when you do talk about a portfolio or an investment you always state it out front.No discrepancy here in my mind.

  17. Matthew Crossett

    This is definitely an important topic to bring up, I was just commenting on another blog that was talking about developing your voice to your customers as well as your employees. It is very important to be transparent in your dealings with both, but there are definitely topics that do not need to be talked about. You can still be discreet about these things while being upfront and transparent as a whole. It is only unethical to withhold information about the true nature of your business, not to do so on a client to client basis for confidentiality reasonsplease check out part 3 of my series on Biztakes, the top ten mistakes made by entrepreneurs as from 100+ interviews,

  18. Tereza

    Open for the sake of teaching and learning is invaluable. Also for sorting out our thoughts on a topic.Open for the sake of marketing….sometimes works, sometimes doesn’t.Announcements generally are strong ‘teaching moments’ and have the dual purpose of marketing (Fred Wilson bump, anyone?). :-)But indeed there are so many topics that, if you’re cmpeting to win, or want to maintain long-term relationships and respect in a fishbowl business environment, need to be closed or translucent. Personality and personnel complexities, legal issues, and competitive detail. Deals before they’re closed. So many topics require a level of detail that is simply TMI, but yet required for outsiders to ‘get it’.And those are where post-mortems are the appropriate medium (with names and identifying details removed), not play-by-play callouts.

  19. David Smuts

    I am blown away by this level of transparency Fred! Paul Graham’s insightful email just made me feel like I could touch this deal. What a fantastic insight into this process.Fred, you can’t have all the winners- that just simply would not be fair! 🙂

  20. Jeremy Black

    I have no idea what the relationship is between Fred and Paul (ie. how long they’ve known each other, how close they are, how right they’ve been when debating each other) however this was a really insightful email thread.It helps to understand how the two of them think, especially in circles that are normally closed. Much appreciated Paul (and Fred).

  21. Dan

    This is especially important to people pitching ideas because I assume you guys typically don’t sign NDAs.

  22. paramendra

    I did not realize USV was invested in Kickstarter.

  23. kidmercury

    crowdfunding is supposed to play a huge role in how we rebuild the world’s financial markets and monetary system. the big winner here is going to be whoever can pull that off. this will require some political maneuvering.

  24. ShanaC

    First off, thank you for your transparency.Second, congrats on the new investment – I have friends from college who have used it successfully, and depending on what is next, I might.Third – how do you decide how to not be transparent? What strategies are approriate ones when you need to not let people know something, politely?

  25. Douglas Crets

    Funny story. today I was having tea with my friend from Beijing in Union Square Park and a kid and his buddies came up to me and asked me if I wanted to buy a duct tape wallet.I thought about it, but didn’t have cash, but I told them they should put that s**t on Etsy.”What the xxxx is Etsy?” he asked.I described it to him. “you’ll get a much better audience for your product on Etsy, and more national attention then among all these bums out here.”He thought about it. “Niiiiice.” And then he and his buddies went off to find a wifi hotspot, I think.

    1. fredwilson


  26. vruz

    I’m curious, what are the main reasons these startups don’t want to publicise funding events?

    1. fredwilson

      They want to keep a low profile

  27. Matt Myrtle

    Cool, the whole concept of crowd-funding is only going to grow as more people get internet access and have access to help others out with their creativity. I came across crowd-funding for small startups which seems badly needed as one person put it ,” Kickstarter meets tiny VC’s” check out

  28. danisman

    Kickstarter is amazing. It can get as big as YouTube. The long tail of funding. Awesome.

  29. AlexHammer

    You have good judgment, and that contributes to your success.

  30. fredwilson

    It’s all about hustle