An Interview With Technology Review

Technology Review was once MIT's alumni magazine. It's now "MIT's Magazine Of Innovation." Whatever they call it, I have a soft spot for this publication and agreed to sit for an interview with them last month.

Here's the result. I talked mostly about the venture capital business, what ails it, and where it might be headed.

I hope you like it. But please come back here to comment. They use LiveFyre which I don't approve of.

#VC & Technology

Comments (Archived):

  1. Ciaran

    “They use LiveFyre which I don’t approve of.”Care to explain?

    1. Emmanuel Bellity

      i’m suspecting something about data privacy / web regulation ?

    2. bfeld

      He’s likely being “tongue-in-check” since USV is an investor in Disqus.

      1. Ciaran

        I did wonder if it was something as simple as the Disqus connection…

        1. Fernando Gutierrez

          I was thinking the same. Fred isn’t usually as blunt with other competitors of portfolio companies.I didn’t knew LiveFyre before, but they look seems pretty similar to Disqus’. I don’t know who was there before, but I understand someone may be pissed off.

          1. Ciaran

            Well, LyveFyre are apparently doing $10m in *new* bookings this year ( http://www.businessinsider…. )off of $5m in funding. Disqus has had $10m (both figures from CrunchBase) but I can#t find anything reporting any earnings – they only seem to have launched their paid product earlier this month.Does Fred not approve of a company going straight to a paid model?

          2. JimHirshfield

            Disqus has had a paid service for premium publishers for a least 4 years.

          3. Ciaran

            Fair enough, I was going from an article about the launch of Disqus VIP

          4. JimHirshfield

            Sure thing. There have been different names, packages, and prices over time – just part of the market testing to figure out product/market fit.

          5. Fernando Gutierrez

            No idea! I guess that is a question for him.

          6. fredwilson

            i don’t care what business model they use. i care that they lie about themselves and disqus in the market

      2. jason wright

        Competition is inconvenient.

        1. JimHirshfield

          Bring it on!

          1. karen_e

            I love your perky attitude, Jim. I’m sure you’re great at what you do. And we know you’re fueled by things like tofu and tempeh, so it’s an all natural high!

          2. JimHirshfield

            Ha. That’s one of my favorite comments. Ever!

          3. ShanaC

            and kale!

          4. ShanaC

            note to self: do not get into a fight with Jim – he’ll definitely bring it on….

          5. JimHirshfield


        2. awaldstein

          Competition is a sign of market proof.

          1. LE

            Excellent point. Not only that but this is actually good for disqus. More “feet on the street” create more knowledge and more aggregate demand for your product.Imagine for a second you are going door to door selling a new product (something that the local chinese restaurant might use) a hypothetical service that brings them more business.First salesman comes in and doesn’t get an appointment but leaves sales literature. Mr. manager looks at it, is confused, throws it out.Second salesman comes in does the same. Salesman came in at the wrong time of day.Third salesman comes in and Mr. manager says “hmm, something up with this I take look!!!”. He meets with that salesman (they were smart enough to hire an asian) but still doesn’t bite. Next he gets a direct mail piece from company 4 and finally makes a buying decision. He feels comfortable at that point. The groundwork has been laid by the competitors.Of course the first salesman could have also done a few other things such as point out to the manager that some of the most admired restaurants use the product (that tends to work very well with small businessmen and in fact I’m sure Greycroft’s decision to invest in livepyre on 10/11 was influence by USV’s decision a few months earlier to up their investment in disqus.)

          2. JimHirshfield

            Oh, Facebook Comments is the bigger example of that phenomenon. Raised the awareness of soooooo many publishers that commenting is a social behavior, a community building experience. Thanks Zuck!!!

      3. kenberger

        Not Fred’s style. He would have made that conflict clear. I think he means livefyre is not open and cross-platform enough, and maybe another distinction or 2, regardless of a stake in disqus.

        1. bfeld

          I wasn’t being critical – I was being cute. We’ll see what he says – it felt like “cute” on his part rather than something else.

          1. kenberger

            I hear you and know that was the spirit you meant, Brad. And I’m on a limb saying I’ll take that bet! Let’s see if we learn the truth on this one.

          2. William Mougayar

            That’s how I read it too. I thought Fred was taking a reverse cue from the political Ads “I approve this message”.

          3. Abdallah Al-Hakim

            it read very weird!! Got the feeling that the message was not complete

          4. John Frankel

            @bfeld:disqus I think it is simply that 9 months out of beta that livefyre is now bigger than Disqus and USV is an investor in Disqus. I continue to hear from various sources that that Fred hates livefyre with a vengeance, but have never heard the reasons discussed in the open. My presumption is that his dislike of livefyre goes beyond the support that we all as VC’s give our portfolio companies, but for reasons that are unclear. Fred: can you lay out the reasoning here?

          5. fredwilson

            john – the reason i hate livefyre is they lie. just like the one you just dropped. disqus is 10x bigger than livefyre. look at the alexa numbers below

          6. John Frankel

            @fredwilson:disqus The true measure of size is in the size of the network and not the number of hits on the homepage ~ which is irrelevant. That being said, I overstated the size of livefyre, and for that I apologize. I was using year end projections and not current actuals. Let’s recheck the claim in six months. Happy to buy you dinner at the restaurant of your choice in NYC if I am wrong then.

          7. fredwilson

            year end projections? come on that is nonsense. i project disqus is bigger than facebook at year end.and calling what i wrote blasphemy on twitter is bullshit too. i take offense to that.

          8. fredwilson

            oh and maybe it might be useful for folks here to know why you are trolling for livefyre. are you an investor in them? if so, it would be good measure to disclose that fact.

          9. John Frankel

            @fredwilson:disqus You can see at that we are an investor in livefyre, I am not trolling for them. Likewise i presume you are not trolling for Disqus (…. I am fine commenting on Disqus or FB comments without feeling that I am doing something wrong. I use the competitive products of companies I invest as I find it makes me more open-minded. There is no comment here or anywhere else where I have said anything negative about Disqus – inn public or in private. I talk about my companies, not the competition ~ I do not think that is how a gentleman should behave.PandoDaily, an investment of yours, I believe, wrote: “If LiveFyre is playing dirty, it’s great at hiding it from customers. And if true, it seems to me that Wilson has more than avenged his company in continually tarring LiveFyre’s tactics from a huge and influential megaphone.”…It is this I take offense to. You are a highly respected and feared investor and when you bad-mouth a company, continually, voraciously, in public and in private, without a full explanation it feels like dirty play to me and I was calling you out on it. We invested in @cac2ad2999d829c8671723e4cc28e4f8:disqus more than we invested in livefyre as he is a remarkable entrepreneur and individual and we think great things of him. He has done a remarkable thing in growing the company in such a short period and has a vision that goes well beyond commenting. If you were to get to know him I suspect you would like him a lot.Re your comment below I did not use the term “blasphemy” (which would just be weird), but as you have taken offense to the tweet I have taken it down – the intention has never been to offend, just to encourage you to explain your position and ask that you be careful when you use your “huge and influential megaphone” about issues that others will not dig into about competitors to companies you have invested in.If you feel less of me for shining a light on the matter, then that is up to you, but I generally feel a good discussion is the best way to understand other’s perspectives, and that is what I am trying to do. Is that not what you want from your community here?

          10. fredwilson

            I have no involvement whatsoever with Pando. Please get your facts straight. You are a fountain of misinformation!

        2. fredwilson

          wrong. it’s all about disqus. they are not competing fairly with them in the market. see my other replies on this thread about this.

          1. kenberger

            My point was you’re not the type to diss a competitor just to be cute. You must have had a serious beef about them, something that would irk you even if you didn’t have a stake in the game.

          2. fredwilson

            yup. a serious beef.

      4. fredwilson

        not tongue in cheek. i hate them. they lie.

    3. fredwilson

      they are liars. they lie about their features. they lie about the accounts they have. they lie about disqus. they copied every single feature from disqus. they are your classic fast follower copycat and i hate that.

      1. Ciaran

        Wow. Lie? Seriously? That’s a really strong statement (I should add I have no affiliation with them in any way).

        1. fredwilson

          strong but true

          1. bridgetwi

            Survey of one Fred, but I recently met with LIveFyre. We have our own commenting system at BI (ahem) so we are a prime target. There were zero negative statements made about Disqus. Of course, companies tout growth and new features and I always take that with a grain of salt. But my experience was, if anything, they went above and beyond to paint Disqus in good light. Obviously, you have personal info that says otherwise, but telling you this so maybe will make you feel better that it’s not rampant in marketplace. And no, no one asked me to do this. πŸ™‚

          2. fredwilson

            i think they may have decided to stop doing that. if so, i am pleased.

          3. fredwilson

            have you met with Disqus?i intro’d them to Henry and he said he was going to take a meeting

          4. bridgetwi

            Monday! Don’t you worry, Jim was on the case.

      2. Billy

        @fredwilson:disqus I think the gravity of your statements requires you to use some specific examples. What features did livefyre and @cac2ad2999d829c8671723e4cc28e4f8:disqus copy from Disqus, i.e. on what date did Disqus have it and on what date did Livefyre have it? What is an example of a lie they have told to customers? Which account did they claim to have, but did not? What is an example of a lie they told about Disqus in the market, but was not true?

        1. fredwilson

          i don’t want to turn this into a public pissing match. we’ve taken this conversation offline which i think it best for everyone involved

          1. Billy

            Makes sense. Thanks for the reply.

  2. Carl Rahn Griffith

    Nice concise interview.Is it a case of there are too few truly innovative game-changing ideas out there and it seems we are at something of a IT crossroads with no-one quite sure where/what the next big thing may be – compounded by the fact that consumerism is having something of a hiatus – ethically and fiscally.Strange times.

  3. jason wright

    LiveFyre – odd name. It doesn’t sound like a dialogue.

    1. LE

      They are trying to be unique, distinct, and create a brand around an invented word.Unfortunately it would have been just a easy to do that with something that didn’t require using a “y” where an “i” is expected. Or at the least secure to catch the typos. And I can almost guarantee that emails to people at that company and ending up in /dev/null or much worse someone is reading them.This is always a problem.Even your presumed last name, “wright” could be typed “rite” or “right” or heard as such.So “” should have “” “” and well as those names with “associates” spelled out and a few others.I would have also suggested and at $10 each it doesn’t require much thought to cover that base.

      1. JimHirshfield

        We don’t have that problem at Disqus. πŸ˜‰ <–sarcasm

        1. Abdallah Al-Hakim

          good one!!

  4. JimHirshfield

    “I think there’s too much money in too few hands. So when six white guys in suits control two and a half billion dollars, that’s not a good thing. Instead of being allocated just to one firm, it would be better if that two and a half billion dollars was allocated to 25 firms at $100 million each. It would lead to more diversity or people trying more things: data sciences, urban sciences, transportation, energy, materials science, and many others.”Love that quote!

    1. karen_e

      I was thinking about concentration of wealth this weekend while visiting a lakeside resort town. The houses get bigger and yet seemingly emptier every year. I guess that’s because those same six guys — or the 63,000 people globally worth $100m or more — enjoy owning multiple houses, yet they can’t live in them all at the same time. It’s a similar problem.

    2. andyswan

      Then why don’t they allocate it out as they think it should be allocated? What’s stopping Fred from backing new VC’s that want to invest in those areas?I don’t understand why you would complain about a practice you are actively and voluntarily engaged in (and incidentally, one which I think is perfectly valid and need no defense!)

      1. JimHirshfield

        You’re suggesting Fred/USV back other VC firms? That’s deferring the investment decisions to others…and therefore why would an LP put money with USV if USV is just going to put the money elsewhere?

        1. andyswan

          Exactly. I don’t understand why we’re wringing our hands over something that we are not willing to change. Everyone is acting in their self-interest here….it’s nothing to be ashamed of and to suggest we “should” be doing something else while NOT doing something else is silly.

          1. JimHirshfield

            So, you never say, “I should be exercising more” or “I shouldn’t eat so much” or “why did I do that?”We’re human. We complain. Have the means to change. But we don’t. We’re human.

          2. andyswan

            Well yes I do and then I either eat less or STFU. I thought we were onto the solution phase here πŸ™‚

        2. fredwilson

          i do it personally

      2. fredwilson

        i do

  5. bfeld

    You gracefully make the point of too much money being concentrated in too few hands. It’s such an important point about diversity of innovation that so few people are willing to address.

    1. Carl Rahn Griffith

      ’twas ever thus.

    2. jason wright

      Why the unwillingness to address it?

      1. bfeld

        I wish I knew. I’ve stopped wondering and just started to try to consistently take action.

    3. William Mougayar

      Was that statement addressed to early stage VCs or more to the mid/later stages of investing? It strikes me that the diversification is a bit Bette at the early stages.

    4. Wavelengths

      AMEN! Yet, if the same “six white guys” are still making the decisions, without significant input from far more diverse sources, won’t we continue to see more of the same old same old?

    5. howardlindzon

      crowding always happens which is what creates momentum and what I have heard Fred call ‘exit velocity’. The GREAT investors recognize crowding for what is it…’momentum’, learn to ride it and harness it and create companies that work within the wave and along with the wave, but know when the wave is getting too big and dangerous to ride with everyone else. The great investors and entrepreneurs get a feel for this and manage expectations around satarting and funding busimesses that have moved away from the wave to a derivative or something completely unrelated to te existing trend.

      1. andyswan

        home run

      2. CJ

        Says the trend master. Well said. Enjoyed your book on the subject BTW.

    6. CJ

      To quote JLM “I agree more with you than you agree with yourself.”

    7. Matt A. Myers

      This is the problem with government too, at least when they put it in things you don’t agree with – like war and killing people, and supporting industrial complexes, etc..

  6. William Mougayar

    So what you are saying is that in a perfect world, there would be a lot more angels investing in a lot more seed staged startups and that would generate more deals to VCs.Β How are the current dynamics working between Angels & early stage VCs? Aren’t the lines blurring a bit and is that good or bad?

    1. bfeld

      There is, and will not ever be, a perfect world.

      1. William Mougayar

        πŸ™‚ How are you enjoying the Eastern edition of AVC? I’m suspecting you’re in NYC.

        1. bfeld

          I’m in Keystone – just up early today (like most days).

          1. William Mougayar

            Sorry, I thought I read you were headed to NYC for TechStars but I was wrong.

          2. ShanaC

            Well, I hope your weather is as lovely as NYC weather (which is lovely)

      2. Carl Rahn Griffith

        Alfred Russel Wallace, 1898 …

  7. Rich Edwards

    On your benchmark for returns -> 3 times money in 10 years, is that returning a total of 3X (implying 11.6% CAGR) or returning the initial investment and then 3 times (~15% CAGR)?

    1. bfeld

      Total of 3x (your money back + 2x). But it’s important to realize this also means “net of fees” which includes “net of carry”. So the absolute returns have to be meaningfully higher than 3x to get to a net of 3x.

    2. fredwilson

      the money comes into a VC fund in roughly 20% increments over the first five years and comes back in roughly 25% increments in the last four years. when you model that out you will get much better returns

      1. Rich Edwards

        So assuming a total investment of 100 here, with the draw and 3x return phased as you suggested you’d get ~22% return:

        1. fredwilson

          after fees and carry, yes

  8. kidmercury

    “They use LiveFyre which I don’t approve of.”hahahahha! for now at least… never how things will pan out. at one point you probably didn’t approve of posterous. it’s pretty cool now though, right? πŸ™‚

    1. Fernando Gutierrez

      πŸ™‚ In fact I think I remember him calling them Tumblr followers and the founder dropping by to defend his product.

    2. LE

      “They use LiveFyre which I don’t approve of.”Well I don’t approve of their name. Swimmers shave body hair to win races. My car doesn’t accelerate as fast with my wife in the passenger seat. [1] Getting an appropriate name just isn’t that hard.[1] Feel free (anyone) to reply with the usual suspects who made out with atypical names and let me know if you get to more than .000001 of the successful companies that did it the right way.

    3. fredwilson

      is it?

      1. kidmercury

        i do love posterous, i assumed you would like it now since it’s part of twitter…..

        1. fredwilson

          but does it exist anymore?

          1. kidmercury

            lol i’m not sure where you’re going with this matrix-like style of questioning but i’m enjoying playing along :)……i assume it exists since i still use it, though perhaps given the acquisition one could argue it doesn’t exist as its own entity…….

          2. fredwilson

            oh. i thought twitter shut it down. i guess i was wrong.

  9. kidmercury

    the wealth concentration problems are a result of inflationary monetary policy, and they will continue until the macro problems are fixed. government’s appraoch thus far is only magnifying the problem.with the end of bubble 2.0 and the coming onslaught of niche ecosystems i think the opportunity for VCs in web/Internet apps is pretty much gone. i think the opportunity may have actually left several years ago, although goldman’s pump and dump on bubble 2.0 helped conceal that. plenty of other areas where significant capital is still required, though (energy, transportation, biotech). crowdfunding for equity is already underway and someone will crack the formula for making that disruptive so as to provide the majority of web/Internet apps the increasingly minimal funding they need.

    1. Carl Rahn Griffith

      Barriers to entry (ie, meaning ever more competition and fragmentation of markets) with regard to the web/etc are minimal and ever diminishing. Which is a good thing, but not an attractive VC proposition, all in all. Me too, meme, gravy train, plagiarism, etc, abounds…The most elusive sectors now involve people actually bloody MAKING things that add value/change the game, as you describe, above.

  10. Jorge M. Torres

    I think the “flight to quality” alluded to in the interview also has implications for the way VCs learn about the craft and science of early stage investing. VC has traditionally been an apprenticeship business, but with fewer firms around, there are going to be fewer instituons to support the transmission of knowledge from experienced practitioners to more junior people who have put in less time into the business.Fred and AVC community, do you have a view on venture capital education, how it’s happening now and what’s needed to adapt to a changing environment?

  11. Client

    Because you are an investor in Disqus or because LiveFyre is completely flawn?

    1. fredwilson


  12. Avi Deitcher

    My favourite line: “At first blush, you might think that more capital means more competition. But I think what more capital really means is more entrepreneurs.”I love it when someone is smart enough to realize that what seems threatening in the short term can be a massive blessing in the medium- to long-term.Never forget the day my MBA macro econ prof showed *both* logically/formulaically *and* empirically that an increase in labourers in the market actually means even more jobs than before, not a “taking away” of jobs. Just need to be smart enough to see it and patient enough to wait it out.

    1. ShanaC

      what was the name of the professor? I also wonder if I should fear the robots taking the jobs of humans – what will we all do?

      1. pointsnfigures

        Stuff that we haven’t thought up yet.

        1. ShanaC

          I know.But still, there is a reason why I am a paternalistic liberatarian versus a socialist. And I think the change all this computing and interneting is creating is going to be one of the biggest social shifts humans have gone through in a while. Change can be very complicated and doesn’t always have the responses we want.Also, if you are a believer in cliodynamics as a way of understanding history (… we’re going to be in for a whopper of a change sometime soon.

          1. Avi Deitcher

            I will read that cliodynamics article as soon as I finish my 10:30am client meeting.On the speed of change, I agree with you there. I think all of this change eventually leads to good, but the bumps to go through often depend on the speed of the change. Which is ironic, as the upheavals wrought by various 19th-20th century “isms” – socialism, communism, fascism (which were all from the same philosophy) – were wrought by people being impatient with the rate of improvement in the free societies.

          2. ShanaC

            that is because technological improvements don’t immediately cause social improvements.If I could speed up social improvements to the rate of technological improvements, I would.

          3. Avi Deitcher

            Would you? Social improvements are disruptive (in the literal sense, not the Christensen sense). Societies are made of people, who can only handle a certain rate of change.

          4. ShanaC

            Yes – because the waiting with baited breathe for those changes is even more painful – in that sense I’ve always agreed with the late 19th-early20th century “ism” crowd.

      2. Avi Deitcher

        Let them take the jobs, we will all move up-market. Know anyone nowadays with the job of “washwoman” or “carriage operator” or “horse groom”, other than tiny niches?His name was John Coleman

        1. ShanaC

          Hmm, this is ny, people do send out their laundry….But no I don’t know many horse grooms these day.I still worry about the day there are only robots assembling – what will average person do? How are they going to get the skills needed to do whatever that thing yet.

          1. Avi Deitcher

            True, but the laundromat sticks it into a machine, no “washwoman” doing by hand. And other than your local apple tree, how many farms use hand-picked fruit? Fruit-picker belongs to a special type of combine harvester nowadays… but lots of high-paying jobs at Caterpillar designing those things.The average person will move up, and the skills will grow incrementally. We didn’t go from runners on the field of battle to sat-phones in one day, we went through phases and learned as we went.

          2. ShanaC

            Every strawberry you’ve eaten is still picked by hand.And no, there have been times where the change was much more rapid change. One of the best observations about a moment in history was ww1 – how the armies came in as ancient but left as contemporary armies.I think we’re about to inflect with that level of social and technological change – and despite the yiddish curse, I really don’t desire to live in interesting times.

          3. Avi Deitcher

            I even like to pick my own berries! :-)During war is one of those moments of acute rapid change. You could say the same of the Civil War: they started as (pre-)Napoleonic and left as modern (for the late 19th/early 20th century).Personally, I love military history and its impact on broader global development for that reason. Add anything by John Keegan to that reading list.And I thought the curse was Chinese?

          4. ShanaC

            we’re definitely heading into a period of unrest though. I feel like I am sitting in the quiet of the eye of a storm.

          5. Avi Deitcher

            Why? Any indicators? Or just a sense (which I do not belittle)?

          6. ShanaC

            Combo of a sense plus that I see hiring for young, new graduates still as very slow. So many of my friends packed up to grad school, and still have nothing really to by. I’m also nervous about the fact that I keep getting offered contract type gigs/intern to hire even after graduating and taking a bunch of those gigs. Sign of not willing to settle down and price people to the markets they are in.I also am still worried about Greece and the drought.

          7. andyidsinga

            fixing robots? Lot of people working on that mars Dad works on robots (in the auto industry) involves a bunch of electronics, programming and mechanical skills.oh.. and my step dad works on programmable logic in heavy industry too (pulp mills, facilities etc).

      3. Avi Deitcher

        I should probably write a short blog post explaining *why* having more labourers actually means more jobs (and more high-paying, IIRC), and similarly why Fred is right that more capital in entrepreneurship means more entrepreneurs, shouldn’t I?

        1. ShanaC

          100% I would read that.

          1. Avi Deitcher

            Will try to get to it over the next day or two. Just write a short critical piece on FreshBooks marketing, and positive one last week on Starbucks and trust. Linked to from my disqus profile or @avideitcher on Twitter.

          2. Cam MacRae

            I liked your “peer trust zone” thesis.

          3. Avi Deitcher

            Thank you. I wish I had a deeper understanding of the psychology/sociology of “why”, although I have long learned that asking the right questions, and being very observant, are far more important than the actual answers.

          4. Dan

            Second that. I’m a bit of sucker for this type of an argument. I buy it theoretically and would like to see how you’ve empirically arrived at the conclusion. Don’t hold back on the economics!

        2. JamesHRH

          Restaurant Row economics… resto on a street is OK, but no where near as good as 6….now your street is a resto desto!

          1. Avi Deitcher

            In our case, “Sand Hill Road economics”? :-)I wasn’t actually referring to the brand effect, just the pure economic feedback loop. But that is a really nice insight to add.

          2. Avi Deitcher

            And I want to reference it in your name in the short post I do, but your disqus profile has no URL.

          3. Wavelengths

            Like the car dealerships lining up in one part of town. More choices from one destination, more cars sold.

        3. Dave Pinsen

          Supply & demand applies to the labor market too. All things equal, increasing the supply of workers reduces the demand for them (i.e., lowers their wages). In a post last year (“How Not to Fix America’s Broken Jobs machine”) I quoted Harvard economist George Borjas on this:It has been estimated that the wages of native workers in a particular skill group will decline by about 3–4 percent for every 10-percent increase in the number of workers that can be attributed to immigration.

          1. Avi Deitcher

            I will write it up in detail later this week or earlier next.The short answer is that you are right, in the short run. In the medium to long term – in today’s economies, especially where labour markets can adjust rapidly (the American or Israeli tech sectors, US finance sector, nothing in Greece or Italy), even in the short run – the increase in labour, and resultant short-run drop in cost of labour, causes a higher return to capital, which leads to more capital investment, which requires more labour, which increases demand, and drives the price (wages) back up.By the time you are done, all of the increased labour is absorbed, and real wages are where they were before… assuming no increase in productivity (higher wages), limited capital (lower wages), too much capital (higher wages), or regulatory distortions (law of unintended consequences).Wow, I sound like an economist, and I am just a practical guy in business. This is a little frightening.

          2. Dave Pinsen

            Before you write that post, please look at the actual data on US wages over the last few decades. Average earnings have been declining in real terms since the mid-1970s.

          3. Avi Deitcher

            Happy to look a it, but after I write. To really make sense of it, we would need to see wage growth by sector, which sectors did/didn’t exist over the time frame, longitudinal studies, regulatory changes, union changes, restrictions on changes in the workforce, and of course immigration, which is the main source of surges of new entrants into the work force.If I can find a few weeks to do a serious study (in my next lifetime πŸ™‚ ), I would find it interesting to analyze it and see what I get.

          4. Dave Pinsen

            Write first, examine the data second? Why examine the data at all in that case?

          5. Avi Deitcher

            There *is* a difference between explaining economic systems (or any system) and a detailed analysis of complex data that should take, at the very least, months, and more likely years, to perform.By this logic, Fred should not have made his comment about increased investment should mean increased entrepreneurship until 10 years later, when there is large amounts of data and plenty of researchers to analyze the results.

          6. Dave Pinsen

            I would question whether what you plan to write should be called an explanation. It’s more like a statement of belief. You believe that, despite evidence to the contrary, and despite the logic of supply & demand, increasing the number of workers will eventually lead to their real wages recovering to where they were before the influx of new workers drove them down.By this logic, Fred should not have made his comment about increased investment should mean increased entrepreneurship until 10 years laterThe difference is Fred’s comment makes intuitive sense, and seems consistent with current reality: it makes intuitive sense that if there is more capital chasing entrepreneurs, more people will take the leap to become entrepreneurs to take advantage of it. And, in the last few years, the proliferation of tech startups has coincided with the rise of new sources of capital for them (more angel investors, incubators, etc.). That doesn’t prove causation, but it seems like a likely possibility.Your statement, on the other hand, is counterintuitive, and seems inconsistent with current reality. It’s counterintuitive because it goes against the logic of supply and demand. And it’s inconsistent with current reality because we’ve had an influx of job seekers in this country over the last few decades via immigration (both legal and illegal), and over the same time frame we’ve seen rising unemployment and declining real wages.

  13. DonRyan

    The money quote: “Too much money in too few hands”. Absolutely true.

    1. pointsnfigures

      That can be solved. Create the right economic incentives and more money will flow.

  14. btrautsc

    the biggest issue facing VC “firms having a tough time raising money”… this should be seen as a huge concern for all of us (startups)… early sign that the recent trend of ‘everyone can be a startup’ and every one needs a series A could be waning quickly.**also – is anyone having trouble connecting to discuss with twitter? ive tried/ retried like 5x.. anyone from disqus interested in trouble shooting let me know btrautsc [at] gmail – ironic because of all the livefyre discussion today.

    1. ryanv12

      Thanks for the report, we should have this fixed shortly!

  15. andyswan

    I’ll take the other side of “too much money in too few hands”.The fact is that wealth is created disproportionately. Always has been, always will be. Therefore, it will be concentrated in the hands of the few who have created it (hopefully) or taken control of it (tyrannically).As luck and liberty would have it….those with high concentrations of capital tend to do exactly what you’re doing: Invest the capital into the dreams and sweat of others. This creates more wealth in total: a slightly wealthier poor, a significantly wealthier middle and an “obscenely” wealthier top — with single-generation mobility up and down the entire ladder….repeat and the obscenely wealthy continue to back the ambitious as well as the downtrodden (as every private charity in the world will explain).The undeniable beauty of mutually-agreed, self-interest based transactions.Wealth creation and its disproportionate distribution is how the world gets better and problems get solved. False/forced distribution schemes destroy wealth, incentive and Stop projecting guilt….it’s baseless and unbecoming of someone who is changing the world.

    1. Avi Deitcher

      “The inherent vice of capitalism, is the unequal sharing of blessings. The inherent virtue of socialism, is the equal sharing of miseries.”- Sir Winston Spencer Churchill

      1. fredwilson

        quote of the day!

    2. pointsnfigures

      agree. we need to create economic incentives so that more wealthy people are willing to part with some of their capital and stick it in funds, or directly into start up companies. right now, the risk/reward isn’t right for a lot of them.

      1. Avi Deitcher

        @008ef499ce5a7646e8ec043e0bcec322:disqus what kind of incentives did you have in mind? I would think that the incentives are already there: return on investment. You could make it completely risk-free by having the govt guarantee it, which is equivalent to the government taxing it and investing it, but that removal of risk also removes incentives to invest intelligently (see: Solyndra and many others).Are there some barriers that exist to wealthy people investing in high-risk fast-growth privately-held firms that do not exist for their other potential investments?

        1. pointsnfigures

          Obvious one is taxes. Either create tax incentives to invest (write offs) or just lower marginal tax rates. The second is better than the first I think. The other one is regulation. Why only accredited investors? Allow the common guy to invest. We need to work on BOTH of these. I saw later in this stream some stuff on income inequality. It’s a silly stat. We will always have that and most of it can be attributed to education or immigration.

          1. Avi Deitcher

            I like the second better than the first, mainly because the first makes a mess of the tax code (which everyone agrees we have) and creates all sorts of perverse incentives. Central planning (government or any type) is rather poor at figuring out what kinds of activities are worth more than others. Just let the individuals figure out where to put their money.

    3. ShanaC

      Too much money concentrated in too few hands and what you get is actually large segments of people who are afraid to invest in the future which does actually prevent innovation.Although this example is about healthcare in the US…It turns out making sure that most people have a cash cushion of some sort allows more people to take risks, pull themselves out of poverty.Considering that you and I have No Idea where good ideas really come from (excusing kevin kelly for a moment), it seems to make sense to me that we should have a system in place that allows more people to feel that they are cushioned enough to take risks to start a company so they can be innovative.

      1. andyswan

        Sounds great but most people blow their cushion on cigs/lottos/phones/etc. Every. Single. Month.There’s a huge difference between providing a cushion for the downtrodden and providing dependency-handcuffs to the poor.I suppose that’s where our disagreements might begin πŸ™‚

        1. LE

          “Sounds great but most people blow their cushion on cigs/lottos/phones/etc. Every. Single. Month. “Also sneakers. Nike just came out with a $300 model and sent out announcements that stores can’t open at midnight lest riots are incited.…Last December, Seattle police arrested one man and used pepper spray on another 20 customers who began fighting outside of a mall, as 1,000 shoppers lined up for the 4 a.m. release of $180 retro Air Jordan XI Concord sneakers.This is all so sad.

        2. kidmercury

          “Sounds great but most people blow their cushion on cigs/lottos/phones/etc.”lol…..most people don’t have a cushion, because it is taken from them via perpetually rising prices.

          1. Wavelengths

            When gas prices were $5/gallon four summers ago, who did it affect? The folks who had to drive 20 or 30 miles to get to work because they couldn’t afford to live closer. Oh, and did those fuel prices add to the cost of groceries? Clothing? Anything that had to be transported?I agree with you.

        3. ShanaC

          I’m not so sure the phone is a cushion. And yes there is a difference between dependency and cushion. The problem is we’re definitely not helping with the cushioning as opposed to dependency.

    4. Russell

      What about the next generation of the family… who haven’t had the ideas or put in the work to make the money? Some families have done quite well at engaging and reinvesting in the world, and others seem to have pulled back and tried to build a (physical and emotional) wall between themselves and the rest of the world.

      1. andyswan

        They are free to decay as they wish.

    5. LE

      ” Stop projecting guilt”Fred’s been ddx’d with “Take your jack and shove it” syndrome.He is going to should seek treatment.”it’s baseless and unbecoming of someone”(That’s not really representative of the caring and nurturing environment needed to recover.)

      1. andyswan

        Well I’ve never been accused of being nurturing so you’re probably onto something there.

    6. kidmercury

      this is a nice fairytale, though the reality is far more perverse. extreme income inequality is a result of monetary policy that steals from the poor (largely through inflation) and gives to the rich. i.e. everyone pays rising food, energy, transportation prices, those fortunate to be close enough to goldman cash out for billions in facebook/groupon/zynga. inflation is the catalyst.

      1. andyswan

        Agree those redistribution policies are awful but also think you underestimate power of tech efficiencies and distribution advancements. At least we can agree that tax policy has almost zero impact

        1. kidmercury

          it is obvious that income inequality has risen since we entered the statist/inflationist paradise some 40 years ago. if technology was so great, how come income inequality is so high? how come extreme poverty is up 50% since 2000?… extreme poverty means less than 50% of the poverty line. you are not having a smartphone with 4G data if you are at those levels. you have more mundane concerns, like food, water, or not freezing to death. those are the people who are paying for billion dollar valuations. they are the people who are trapped in poverty because food prices go up significantly (as do internet stock share prices!)this is not to condemn those who profit from such share price appreciation, as on a global scale, much of the world in poverty subsidizes dollar holders as well. but we no longer live in a capitalist world so capitalist ideals are not the story of what is happening. fascism is the dominant political and economic paradigm.

          1. andyswan

            Technology advancements help create income inequality. Efficiency and distribution create extreme wealth opportunity while utilizing less manual labor and capital. When people can do dramatically more with less, those that do most will do even more most. (sic)

          2. kidmercury

            yes, i am familiar with the theory, though that’s not what happens in reality. what happens is government prints money and gives it to banks. because this is low-risk/risk-free money, and because government policy keeps interest rates artificially low, the invest the money. but this expansion of the money supply distorts the playing field so bubbles emerge, which are extremely inefficient. as a bonus, the inflation effect creates a transfer of wealth from the poor to the rich, thus widening income inequality without creating any real economic gains.the view you espouse is one valid in a capitalist economy. tragically, we do not live in such an economy.

          3. andyswan

            we agree then

          4. kidmercury

            glad we agree that capitalist arguments are no longer applicable in the context of current economic conditions

    7. Kirsten Lambertsen

      Just to clarify: are you defending dramatic concentration of wealth as being healthy for society and the economy?

      1. andyswan

        I’m not defending anything any more than your science teacher in high school was defending that apples fall to the ground. These are economic laws.I do oppose measures to thwart those economic laws, because they necessarily lead to tyranny and/or the destruction of wealth.

    8. fredwilson

      investors don’t create capital. entrepreneurs do.

      1. andyswan

        Investors absolutely create wealth. If they didn’t, entrepreneurs wouldn’t deal with them.

        1. pointsnfigures

          Fred’s correct in many respects because successful companies create wealth. But what about traders? They create wealth too. But they aren’t creating successful companies. Maybe we ought to say, Capitalistic enterprises create wealth.

  16. Ricardo Diz

    @Fredwilson, really glad you agreed to do this interview. Thanks! MIT being my alma mater, I have a soft spot for this publication as well :PHaven’t really had time to read the interview, but will for sure!Cheers

  17. takingpitches

    This comment seems to tie directly into the point of yesterday’s post — why you need to take money off the table and return it to the investors so the asset class does not contract:TR: What is the biggest issue facing your industry right now?I think a lot of venture capital firms are having a tough time raising money.Why?Because the returns haven’t been very good in the venture capital industry for a long time. I think if you talk to the investors in venture capital partnerships, they’ll tell you that they’re very much on the fence on venture capital, and if venture capital continues to put up mediocre returns, they’re not going to stick with it forever.

  18. Steven Kane

    Do those six white guys really still wear suits?

    1. ShanaC

      I wouldn’t be surprised.

    2. fredwilson

      no, they do not

    3. JamesHRH


    4. Carl Rahn Griffith

      A few years ago at a meeting in California I thought I should wear the (my perceived) ‘uniform’ of beige/tan chinos and a blue shirt. Upon arrival I was, to my relief, told no need for such attire, nowadays – next day I was in jeans and t-shirt πŸ™‚

  19. ShanaC

    How do you stop concentration within funds?

    1. $27180517

      It’s a tough task…especially when you see Sequoia easily raising another $1B over three funds recently. The follower effect has put more pressure on VC’s to make returns for investors with increasingly more dollars on the table to invest… however that money has remained saturated in only a handful of industries and ideas…perhaps we will see some of the partners at larger firms break from pack and start their own funds to help broaden the perspective of the VC market

    2. kidmercury

      you stop having a government that prints money and gives it to banks

    3. fredwilson

      i don’t know

  20. Tom Labus

    Trickle down economics or theory is neither economics nor theory but rather worn out republican gibberish.

    1. kidmercury

      agree 100% it is a total lie/scam, although both parties embrace it in practice, if not overtly.

      1. Wavelengths

        Look at how much of the TARP money went straight into acquisitions, paying down debt, etc., and how at the same time the “lending” institutions tightened all lending policies so they could comfortably sit on the cash and say “no” to the struggling business owners. (And homeowners.)

    2. andyswan

      And so is redistributionist nonsense. Here’s an idea….keep force out of it and let markets (and their participants) be, create and keep what they wish.

      1. Tom Labus

        I’m a market guy but I still have to pay taxes on winning trades. Taxes aren’t going way. We will need to pay more of them if we are to survive.I just have an aversion to tired scams run out during presidential elections. They could at least have the decency to come up with something new.

      2. Aaron Fyke

        Well, there are known areas that break down with a market-based approach. I think government should provide these services. However, in almost all things, I’m a huge fan of setting market signals, and letting people go to work (the cap and trade solutions to acid rain, for example, were market-based, and seemed magical compared to what a ham-fisted top-down regulatory approach might have produced).

  21. disqus_GmsXRtHHvJ

    “venture capital firms are having a tough time raising money” Never thought of it like this. I wonder how do VCs raise money compare to entrepreneurs.

    1. fredwilson

      more slowly

  22. Eunice Apia

    Great article. I don’t know if the Venture Capital world is in trouble but I do believe that it should be easier for people with good ideas to have better access to VCs. There is this annoying velvet rope that makes it hard to meet investors and pitch ideas. There are lazy business minded people like myself who get overwhelmed with protocols.I don’t have the coordination to hop, skip and jump in order to meet investors. So if investors made it easier for people to link up with them and talk about ideas, more companies will get discovered. I loved the idea you made a while back about teaching classes. That would be a great avenue to discover and develop new talent. VCs can teach the classes and discover companies along the way. It won’t be an incubator, but a free or cheap course to discover and develop the future entrepreneurs.I think you were onto something when you spoke about teaching classes. My generation is suppose to be the Tech generation. I am not on facebook, twitter because those platforms do not address my needs.The question is “Are companies successful when they address a need, have a large user base or both?”

    1. Wavelengths

      “I am not on facebook, twitter because those platforms do not address my needs.”Do you envision an alternative that might meet your needs?

      1. Eunice Apia

        Yes, I do. I am working on a concept currently. It’s a company called Alltruism. I lack self-discipline. I believe with development and the right mentors I can be motivated to create a good company that addresses needs as well as change how people view most social media platforms. I think companies are looking to take social from 2D (where you are staring at a computer screen all day) to 3D ( where you stare at a computer screen, go out and do something, then report back to the screen what you’ve done).I want to take the best elements of social media and put them together. So at the end of the day users don’t feel bored, lonely or empty after spending hours staring at a computer screen.

        1. Wavelengths

          Interesting. Creative. Good for you.

          1. Eunice Apia

            Thank You. Encouragement is always a great motivator. :-))

  23. Wavelengths

    Fred, I think your comment here speaks directly to the issue of diversity in innovation:”I don’t think there’s too much money sitting around. I think there’s too much money in too few hands. So when six white guys in suits control two and a half billion dollars, that’s not a good thing.”If Necessity is the Mother of Invention, then perhaps innovation is already struggling to emerge in places that the VCs don’t generally look, and from people who may not have any idea how to access capital, and who don’t — at least on the surface — look fundable.Also, people tend to feel more comfortable with other people who “look” like them: similar socioeconomic class, similar education, similar houses, similar home lives, etc., etc. This is basic for most people at least in the US. Ever wonder why those housing developments, all painted variations of “developer beige” were so instantly populated, back in the day? (Before 2008.)If six guys are looking at risking any portion of 2.5 $B, on a subconscious level, at least, they probably would feel more comfortable if the venture had a look and feel that was more familiar to them.Perhaps diversity in fundable innovation might start from adding diversity to the teams making the investment decisions. (I don’t know the look and feel of the inside of your business, so this is no critique of you and yours, but rather a general observation.)

  24. JamesHRH

    I think your point – that large funds are breaking into Angel & ’boutique’ VC firms in order to provide more coverage for innovation capital – is too subtly stated.

  25. jason wright

    I’m in the middle of rereading (yet again) ‘The Media Lab: Inventing The Future At MIT’ by Stewart Brand. It’s now 25 years (before the web) old but still it captures so many of the fundamental issues of computer tech and its relevance to us mere mortals. Through it I can see today much more clearly. No buzz, no hype, no feeding frenzy.

  26. bvoleti

    Just curious: Why do you not approve of LiveFyre?

    1. Jkretch

      Because he’s an investor in disqus

      1. fredwilson

        yup and because they lie about themselves and disqus in the market. i am all for fair competition. but i hate cheap shot artists.

  27. CJ

    I love how you’re not afraid to express a view, even when it might seem controversial. No way 90+% of the VC’s or even entrepreneurs out there touch the lack of diversity at the top. Just one of the many reasons you’ve earned my respect and admiration.

  28. andyidsinga

    Fred – enjoyed the interview. Re this Q/A—Q: Why is venture capital necessary to foster technological innovation?A: The reality is, venture capital has always been a place where high-risk ventures can get funded. I think it still is the best kind of capital for somebody who’s building a company that has a lot of risk but has a lot of upside as well—..Do you think investing software companies in general is becoming less risky ..and therefore the upside might be smaller across the board.PS. I totally love your statement : ” it would be better if that two and a half billion dollars was allocated to 25 firms at $100 million each. It would lead to more diversity or people trying more things: data sciences, urban sciences, transportation, energy, materials science, and many others.”

    1. fredwilson

      i think less risk may equal less reward. we will see.

  29. Abdallah Al-Hakim

    Good interview Fred. I think there is a lot of advantages for both entrepreneurs and investors of having multiple small funds versus few big funds (I am talking about early stage here). Another point – why don’t you approve of livefyre? is it something specific or is it because of your involvement with Disqus? – just curious!!!

    1. Jkretch

      It’s because he’s an investor in disqus.

      1. Techman

        I don’t think that it is just that. If I’m not mistaking, Fred interpreted LiveFyre as a Disqus clone. And to a certain extent, it can be. Disqus does have a lot of features that LiveFyre just lacks.

        1. John Frankel

          If that were the case then why is Disqus losing customers to livefyre?

          1. fredwilson

            because livefyre is telling lies about their abilities and trashing disqus in the market. but what goes around comes around.

    2. fredwilson

      both but i am all for fair competition. livefyre doesn’t compete fairly. they lie about themselves and what they can do and do do and they also lie about disqus. see john frankel’s comment below that livfyre is bigger than disqus. that is complete bullshit. disqus is 10x bigger than livefyre.

  30. Aaron Fyke

    Here’s a question, and maybe this might help me understand some of the industry dynamics – What is best for the LPs? If an LP funds ten VC firms with $10m each, rather than putting $100m to work in one VC, then what happens when those 10 VC firms are all competing with each other for the same deals, driving up valuation? Isn’t the LP better off concentrating the money in a smaller number of funds? Or is this more relevant only in smaller markets?

    1. sdefor01

      Good point Aaron. I suspect that a $100m and a $10m fund may not compete for all the same deals. The $10m fund would probably look more towards seed and early-A rounds whereas the $100m fund would be in a tough spot to fund those $250k to $1m deals efficiently and still provide non-financial value to the startup.

    2. fredwilson

      LPs prefer to write one big check not ten smaller checks. that is one of the causes of capital concentration

  31. Techman

    Speaking of Livefyre, I don’t even know what they are doing right now. Disqus pretty much owns the game imo. πŸ™‚

  32. Juliano Polimeno

    I’d like to add a point of view from someone that is trying to raise money in Brazil.What i mostly see in VCs here is a “copy cat investment strategy”. They’ll put money in IT projects/ideas that – supposedly – are doing well in US/Europe.So the capital flow to areas like Online stores (for babies, handcraft, pets, etc), Payment (copies of PayPal, Square, etc), Social Network, Games…you know.So i’m wondering what “innovation” really mean. It’s just a nice word for PR people? It’s really flowing trough the roots of VC’s money? It’s an adjective or substantive?



    1. Carl Rahn Griffith

      Is that the same as a pivot? 😐

  34. Jason Pontin

    Fred, I am editor in chief and publisher of MIT Technology Review. why don’t you like Livefyre?

    1. Carl Rahn Griffith

      This should be interesting … πŸ™‚

    2. fredwilson

      they misrepresent themselves and their competition in the market. they bash Disqus which is the dominant market leader and tell lies about them. and they blatantly ripped off Disqus’ features, UI, and functionality.

      1. Carl Rahn Griffith

        Bashing the competition. Urgh/Ouch. Cheap trick. Brings back memories of the good (sic) old FUD school of sales…

    3. Universal_Mind

      it’s ugly

  35. MartinEdic

    I’m sure this has been commented on ad nauseum (can’t read all of this!) but the Kauffman report on VC verifies the central premise- very large funds have returned poor results while small funds have done better.The big change I see is how companies are created and identified for potential in the marketplace. We’re seeing this at Innovocracy where we help fund commercial products in academic research. $5-10k raised through social funding won’t start a company but it might build a prototype. However, in the process we’re already seeing which products can be companies and taking the next step to help them get there. At that point they become candidates for equity investors, including us. In our very early stage world we’re already breaking a broken model in tech transfer by fast tracking the best prospects. I think we are seeing this everywhere else these days.

  36. $24622695

    I hate this kind of crap. Six white guys, as if there are no rich black, oriental, hispanic or any other kind of guys. Why don’t six black guys pool their freaking wealth together and fund VC projects? Why is race ALWAYS brought into this kind of thing. Before the recession, there were more truly rich people in America than any time previously, and while it has dwindled under the Messiah’s reign (no surprise that a socialist leader would deplete wealth), the number of rich people is still incredibly high compared to historical numbers. You want to say that the field is more competitive? Fine. You want to say that people are reluctant to go after big ideas these days (who wouldn’t be unless you’re well connected to the Messiah)? Fine. But “six white guys?” Give me a break. Only an idiot comes up with crap like this – and that can be a rich idiot too.

    1. $24622695

      And even there I blew it – 6 white guys. Are there no rich women?

    2. fredwilson

      i am one of the six white guys. i am self aware.

      1. $24622695

        So – why exactly don’t 6 black guys pool their resources? Or one black guy, 2 asian women, 3 hispanic lesbians, and 1 white guy pool their money to become VCs and fund projects? Is there some law in American jurisprudence or some law of God or Nature that prevents it? Self-aware or not, you have not made your case. My harsh tone isn’t aimed at you in particular. I just despise political correctness in general, and you feed THAT meme.

        1. fredwilson

          i have seen a number of teams like this try to raise a fund. they have not been successful.

      2. $24622695

        One more thought – and then I’ll just assume there’s no common ground here: are you saying that your position in this industry UNFAIRLY sucks up all the oxygen in the room? If so, who’s holding a gun to your head to make you act in ways that you consider unethical? If you’re NOT doing anything unethical, then my other questions still stand. Why don’t other people – as rich or richer than you (Oprah comes to mind, as well as Kathy Ireland, Barbara Streisand, etc.) get into the VC world? If you’re not doing anything unethical, why are you saying this stuff about “six white guys.” Or “guys.” Why not just “people?” Maybe there’s a problem with six PEOPLE controlling lots of stuff? Why must it bog down in PC and race? By the Gods, I hate PC.

        1. fredwilson

          it is hard. try it yourself. it is almost impossible to raise a fund these days unless you are one of the big names.

          1. $24622695

            But that only says that you have to be a big name. It says NOTHING about your or anyone else’s RACE or gender. Why did you have to inject “6 WHITE GUYS” into that discussion. And I don’t have a problem with you being a move and shaker. Movers and shakers make the world progress, and if you’re doing good stuff, that raises everyone’s boat. My objection is to your apparent world view that seems to support what Obama is doing, dividing everyone into little groups that can then feel resentment toward each other. Am I the only one in the room who sees the folly in this? You may be rich, but if you don’t see this as a problem, then your wealth isn’t doing nearly the good that it could be doing. Leave your white guilt behind and just do good. How come that’s such a difficult thing for so many people to get?

          2. fredwilson

            where did Obama come into this conversation? because he is half black? hmmm.

          3. $24622695

            no – not because he’s half-black, but because he panders to the different fault-lines in our society – much as you did when you spoke of “six white guys.” You STILL have not been responsive to my key question – after how many times have I asked? So I’ll ask one last time: why did YOU bring race into this? How is it even remotely relevant to the problem with raising money. You nearly acknowledged race is irrelevant and that it’s your “big name” and not the fact that you’re white that makes it work for you. So again – why this racial crap? I lump you in with Obama because NEITHER of you answer questions like this straight up. But go ahead – think of me as a racist all you want – I don’t care. You race baiting me means nothing. I would expect better of a self-proclaimed “self-aware” person, but whatever. Can you be responsive or not?

          4. fredwilson

            I didn’t bring race into it. I used industry vernacular. You are reading race into it. I could care less about race. Apparently you care a lot about it.

          5. fredwilson

            and by the way, there was as much gender in that comment as anything. where is your outrage at that?

          6. $24622695

            Reread my replies, Fred. I did comment on gender as well as race. And what I care about is political correctness. YOU are the one who said “6 white guys” when you could simply have said 6 people. I recommend that you think about it. Or don’t. I really don’t care at this point. You’re an American and have a 1st Am right to say what you want. I am an American and have a right to despise what you said. And you can go ahead and despise me right back. And so it goes. See you at the polls in November.

          7. fredwilson

            this has nothing to do with the polls. it has to do with the venture capital business. you are the one who brought obama and the election into it. and i do have the right to say whatever i want. i do it every day on this blog. you have to right to never read it. maybe you should do that.

    3. Carl Rahn Griffith

      I don’t even notice someone’s colour or gender when I am dealing with them.It’s their humanity that matters. Nothing else.

      1. $24622695

        Carl – EXACTLY! You said it well in far fewer words. Well done.

  37. andrewparker

    TR post has zero comments. Fred’s link to the TR post has 251 comments… Amazing!It’s interesting how this same concentration of capital issue affects the non-profit space too. When Warren Buffett committed a very substancial portion of his wealth to the Gates foundation, the result was a mega-foundation of a size without precedent. No one would disparage Buffet for his generosity, but now the Gates foundation has incredibly influence in determining the allocation of capital amongst worth causes, and I worry that fringe causes will starve if they do not capture Gates attention.Albert saw this concern too (lack of attention for fringe causes), and began to put together as a result, but I don’t know what became of it.

  38. paramendra

    Probably my favorite online tech magazine to read.

  39. Maria Dawley


  40. bfeld

    How does either Fred or I control 2.5b in aggregate?The white guy comment is fair – and although there is plenty of diversity on USV’s associate ranks (we don’t have associates).Capital is much smaller. Each firm has kept their fund size small even thought we could each raise a much larger amount. That’s part of the equation.Regardless – the point is still very valid, and I think Fred and I each – in separate ways – think about it a lot, and take a lot of direction actions around it that have long term potential impacts on the diversity of innovation.

  41. fredwilson

    we are five white guys and we only control about $600mm. but your point is correct and i told the reporter that. she decided to leave that part out. that was unfortunate.

  42. Carl Rahn Griffith

    Maybe VC and PE will just become one and the same …

  43. bfeld

    Total Mobius remaining assets are under $400m. And this is a legacy venture capital firm – it stopped actively investing at the end of 2005. My partners at Foundry Group and I are still managing out the firm, but the investments were decided a long time ago.Foundry Group’s assets are well documented. We have two funds – one raised in 2007 that is $225m and one raised in 2010 that is $225m. So $450m there. And we have a total of four partners, not six.

  44. Carl Rahn Griffith

    Universal Banking, kind of. And look how successful that has been.

  45. Carl Rahn Griffith

    Physician, heal thyself …

  46. andyswan

    I can’t figure out what the color of participant skin has to do with “diversity of innovation” anyway.

  47. Richard

    Id say what Foundary and AVC are each doing is working. Stay focused. Let’s not forget what forest we are in: annual R&D budgets for DOD 76 Billion, NIH 29 Billion, HHS 27 Billion.

  48. bfeld

    It’s a metaphor for the patriarch syndrome which is a problem that stifles innovation. I talk about it in my upcoming book Startup Communities: Building an Entrepreneurial Ecosystem in Your City (

  49. CJ

    Because there is still a culture of fear the ‘other’ in this country. That’s as truthful and succinct as I can make it. People trust those who are like them on a subconscious level in this country. Everyone else is subject to enhanced scrutiny and THAT can lead to a homogeneous, rather than diverse, application of ideas and innovation. Race is just one part in that cycle but it’s the most visual and it has the most negative connotation.

  50. pointsnfigures

    I’d like to push back on the white guy comment. I think there is a different point to be made about diversity. Ignore the “white” in that comment. Instead, think of it in terms of centralized versus decentralized capital resources. Who makes better decisions? A few guys in a room, or a thousand people interacting in a market? Fred’s correct that if more people could have access to investing at earlier stages, we’d have more innovation in more places.I don’t find that many people in entrepreneurship care about skin color etc-they just care about good ideas. I am a libertarian, and the only time I worry about politics and investing is if one of the entrepreneurs goes off the rails publicly and uses the company as a platform for their political beliefs. They shouldn’t do that if they are a right or left winger.Brad and Fred are a lot more deliberate in speaking about diversity of sex and skin color-and that’s neither bad nor good. It’s important to note that no one has the market cornered on good ideas. It’s also important to note that if we really are going to solve the social problems of our time, Brad’s efforts and Fred’s efforts of investing in entrepreneurs is going to achieve it a lot more efficiently and a lot more effectively than any government program. The important thing is that entrepreneurship is for all of us. It’s merit based.I’d much rather create economic incentives to draw more capital into start ups than create government programs that try and solve problems that could be better solved by people and technology.Brad has done yeoman’s work in creating community and investing in people. His success is drawing more people in of all persuasions. That is a good thing.The other facet of entrepreneurs that I find exhilarating is their constant optimism. Makes me feel really good when I am around them.

  51. andyswan

    @bfeld:disqus thanks for that I look forward to the book…loved the last one.You’ve got quite a task ahead of you to convince me that skin-color is relavent to innovation….but you’ve given it more thought than I have so carry on!

  52. Wavelengths

    Absolutely looking forward to it. Yes, my comments are about the patriarchy metaphor, not about skin color or gender in particular.When I was looking at the chaos in Haiti after the earthquake, (also Hurricane Katrina) I did a lot of thinking about a very simple computer solution that even someone who was marginally literate, or who spoke some different language or dialect, could use to communicate, broadcast position, ask for help, find resources and other family and friends … We didn’t have tablets then, but the developers still don’t consider solutions for that end of the user spectrum.This is just one thought on the type of innovation I don’t see.

  53. Cam MacRae

    “Six white guys in suits” is a rhetorical device.

  54. bfeld

    I’m not asserting that skin color is the specific driver. But I do believe strongly that diversity of thought impacts innovation, especially over a long period of time. And I believe that diversity of thought only comes from incorporating people into the thought process who have diversity of experience, perspective, backgrounds, educations, and philosophies. Gender, ethnicity, and age all contribute to this.

  55. andyswan

    Agreed 100%….just think skin/gender/etc is often used as lazy-man’s approach to evaluating instead of actually creating truly valuable diversity. Thanks for explaining.

  56. Wavelengths


  57. Matt McNaughton

    Great point on diversity impacting innovation; I couldn’t agree more. In my opinion, many of the greatest innovations in recent society have been the result of the combination of diverse people and fields of thought that are often considered unrelated. As Steven Johnson talks about in his book “Where Good Ideas Come From”, innovation is often the result of combining two previous products or ideas in a new way. It would be logical to assume that with a diversity of ideas and experiences, the collection of possible things to be combined is amplified, and the potential for innovation is that much greater. If anyone is interested, I talk about this idea a little more on my blog:http://mattmcnaughton.blogs

  58. andyswan

    Maybe not…that’s possibly just the context I’m used to when I hear a _____ in control complain about _____ being in control

  59. Kirsten Lambertsen

    Yes. Thank you.

  60. bfeld

    Oh – don’t worry. We are deep believers in our strategy. Our next fund with be $225m, we’ll never add anyone to our team, and while our themes evolve, they will still be deeply rooted in software / Internet per

  61. Avi Deitcher

    Intellectually, I accept that as a possibility. Emotionally, I have a hard time with it. I don’t give a whit for a person’s colour, ethnicity, religion, background or anything else. I really believe most people I know are the same way. I recognize that my acquaintances, like most people’s, are a minuscule sliver of society at large. But is the rest of the world – nay, America – really like that?

  62. Wavelengths

    Hear, hear! Most unfortunately, this is true.

  63. JLM

    .”Otherness’ triggers fear or curiosity. It depends on how well you know yourself.I think that America is very race conscious and, yes, very racist. The issue is whether it is an informed or mindless racist view.I don’t really care what a Florida Panhandle dentally challenged cracker thinks about anything but I want him to exist in his comfort zone neither paying attention to me nor bothering me. Fester in his own juices so to speak. Mindless racism.I am pissed with places like Augusta National and its admission policies as it relates to race and gender. Golf is a democratic game. If I out drive or out putt you on the first hole, nobody cares what is in my DNA.As the Holy Grail of golf in America (and the heirs to the vision and genius of Bobby Jones) they should be as democratic as the game itself.Having grown up poor and having escaped society’s sentence — through education primarily — I find myself, like a 5th columnist, infiltrating all kinds of institutions while maintaining a unique identity as the person who I originally was.Both because that is true and because I desire to be that person. In some ways it is quite fun. Many a chuckle had by me.I do not want to be defined by others — why I recoil at being called a Republican when I think of myself as having a particular theory of governance which from time to time coincides with Republican thought on some things. On others I am widely liberal beyond all ability to even recognize me.There is no question that white American male Ivy League grads invest in others who look like them. No question.Now the question becomes what about that “curiosity”? How curious can one become? I am talking the kind of curiosity that gets you to try dog when you are in Korea? That was me. I ate dog. Of course, I did have a prodigious number of San Miguel’s before I took the first bite.I do not have the answer but I understand and applaud the question..

  64. CJ

    America IS really like that and it sucks when I bump into it. It’s not nearly as prevalent as it was in the past but we are not yet post-‘other’ in this country. Applies oddly and almost semi-equally to all races from what I’ve observed.

  65. Wavelengths

    Yes. I also consider myself “color-blind,” along with noting but having no particular prejudice about ethnicity, religion, wealth or poverty. But these prejudices absolutely exist, and prevail in this society, even if they lurk within some people on a subconscious level.Here’s a trigger word for you: Homeless.Now, that word has no color, religion, ethnicity or whatever associated with it, but what words and images do you conjure to associate with that word? Would you have a homeless person among your friends or trusted acquaintances?

  66. Avi Deitcher

    “Applies oddly and almost semi-equally to all races.” Why oddly? It seems to be a human nature element, or perhaps a cultural element, and would apply equally.

  67. Avi Deitcher

    Probably because most of us affiliate homeless with “ill” and “smell” (i.e. physically repulsive), and do not use the term homeless for those who are temporarily out of sorts but have family and friends to support and help through.Not every prejudice is bad. After all, if I say, “drug gang member,” is it so wrong that you react to that as a bad person you wouldn’t want to hire?

  68. JLM

    .Every homeless person I see I think immediately — there but for the grace of God, go I. In that regard, I am more than a bit insecure.At my corporate HQ, I had for a couple of years a man who slept on the front porch. I had senior employees who reported it to me. I would say to them — if the worst thing we ever do is to allow a tired man to sleep on our front porch, well, that isn’t too damn bad.”Our” homeless guy was quite interesting. He had a radio and a cell phone. He was a reader. I would see him at dusk settling in for the night.One bitter cold winter evening, I went to Sam’s and bought him a sleeping bag, a huge quilt, a thick fleece jacket, a watch cap and gloves. I left them for him at his sleeping porch location. I did not see him in person.Later I saw him using all of them. At that instant I felt better about myself. I really felt good because I had told nobody only much, much later telling my wife. I was quite happy with myself but I also thought — that could easily be me.I learned that our homeless guy was a veteran and that he was very intelligent and articulate. Once he called me on my cell phone and told me that someone was trying to break into our corporate HQ.He said: “Hey, this is the homeless guy. Someone is trying to break into your office building.” I told him to call the cops and he did. He disappeared so the cops would not roust him.My heart breaks that a great country like ours has hunger and homelessness. We should be able to solve those problems. Now.There but for the grace of God, go all of us..

  69. Wavelengths

    To quote a statistic from here within the last couple of days, “5 million foreclosures” in the US and still going up.Where do you think those people went? If those homes were lost, probably many of the homes contained families, so we’re talking far more than 5 million people.I recall learning several years ago that Jefferson County, Colorado, school system had had to add a new category to their student enrollment form: homeless. Perhaps the children were living with family in motels, perhaps piled into someone’s spare bedroom, but many were living in cars. In Colorado.I recall reading a story about a homeless woman living with her two dogs in her car in Venice, CA. She had been on the streets for a few months. She had formerly been a closing agent with a title company — a job that requires responsibility and credibility.None of my examples include “drug gang member.”I find it interesting that you instantly assigned negative connotations to the word “homeless.”

  70. Avi Deitcher

    Yep, I did. Freely admit it. Although it is clear you were looking to show how people do instantly assign it, despite the fact that it isn’t always fair. I was explaining why.

  71. Wavelengths

    Thanks for owning up.Unfortunately all those prejudices that may be just swimming around in our subconscious minds, operate to isolate people from working in real community. The “six guys in business suits” are unlikely to open the conference room door to an oilfield trucker in West Texas.Speaking of homeless, I heard yesterday about a man living in a 1970s camping trailer (no bathroom or shower) in someone’s backyard in Odessa, TX. He apparently has an extension cord running from the house for electricity. He is paying $900 a month for the privilege. Is he homeless?All throughout the Permian Basin, apartments, houses, and RV slots are at full capacity. I saw a newer 5th-wheel trailer in the farther-out parking lot next to the hospital. The “resident” may be a medical intern, a newly-arrived doctor — who knows? But I asked someone about it, and it was clear the person was needed at the hospital and this was the best solution anyone could come up with.Companies are hiring, paying well — but there is no housing, and we’re talking as much as 100 miles in any direction.Anyone want to come up with a business solution for this?

  72. Avi Deitcher

    You tell me. If there is no housing, why isn’t an investor building? There is demand, supply should grow to match it. Unless there are regulatory or other market-distorting realities going on.

  73. JLM

    .I own two business units in Odessa and Midland. Unemployment is 3-4% which is to say zero.Your insights as it relates to housing are right on the money.When I catch my breath, I may just go build some apartments or other multi-family housing in W Texas.This is where the recovery is starting..

  74. Wavelengths

    As someone would say, “Well played.”I had a cricket as an appetizer in a stunning Japanese restaurant in Kuala Lumpur. It was offered so graciously, as an unordered gift, that I simply could not refuse without committing an unforgivable faux pas. Then I dove into the sushi and sake.

  75. ShanaC

    the fact that Dr. Wright got admitted to Augusta should have been non-news….

  76. johndefi

    JLM, great comment, as usual. There is one especially poignant remark: “There is no question that white American male Ivy League grads invest in others who look like them.” I agree and believe there is a perpetuating cycle that may, unfortunately, shut or barricade doors to those who are not so apparently (obviously) talented. Starting a company is so much hard work and requires a certain strength in personality. However, I theorize there are many would-be successful entrepreneurs “in wait” who have the potential to promote change if given the right resources and attention.

  77. JLM

    .Ahhh, there was a day in my military training when a handful of insects with a warm tot of piss was a meal.Not to be too revolting but one can drink their own urine for about 3 passes before killing themselves..

  78. ShanaC

    how was the cricket?

  79. Wavelengths

    I learned that from Wilbur Smith in one of his novels about Africa.

  80. Wavelengths

    Consider that communities like Kermit, Ft. Stockton, Pecos, Crane, La Mesa, Gardendale, Pyote, and so on, are not designed to absorb all these people. A town of 4000 or 7000 doesn’t have infrastructure, gathering places, a movie theater, or an open social environment to handle this influx of “strangers.”It goes even further than just housing. People need to be closer to their work, so someone might move from Odessa to Monahans or Pecos. But there are no activities that allow people to mingle and form friendly relationships. Other than joining a church, which doesn’t suit everyone or even address the need for casual social interaction.Bingo, perhaps? (BTW, much as I enjoy Mexican food, we don’t need another Mexican restaurant.)

  81. JLM

    .As you well know, BINGO is the answer to much of what ails the world. Our bingo halls in Odessa and Midland are crushing it. I may open another one in each community.Just for the record, if we could get the entire Middle East to sit down to a nice evening of bingo with some tacos, fried gizzards and a bit of Treasure Hunt, Bonanza, double action paper — well, the threat of war in the Middle East would evaporate.If Ahmadinejad won the damn coverall — the Ayatollahs and the Rabbis would be dancing in the aisles.That, my friend, is the power of bingo — a 2000 year old game played at the Roman Coliseum..

  82. Wavelengths

    I’d be lying if I said it tasted like chicken.

  83. Wavelengths

    New answer: It was the very best cricket I ever ate!

  84. Wavelengths

    I just saw your question. The locals with the ability to build housing are remembering the last oil bust (20 or 30 years ago?) and are standing on the sidelines. They are probably also suffering from the “other” syndrome as well. The people causing this housing crunch are strangers.Consider, too, the population base and the local mentality. These are “cities” of 100,000, and in this locale in communities of this size, people with money, or access to development money, are not typically risk-takers.La Quinta just opened a new motel to supplement the one they already had in town. It is fully booked into September. At $160/night, plus taxes, that doesn’t do anything to solve long-term housing, although it does help the businessperson flying in for a few days. The Motel 6 (discount motel) on the highway, has rooms at $99/night.

  85. Universal_Mind

    I notice that nobody uses livefrye ? Also , the colors and logo are very un appealing to me. this is just an opinion.Disqus is one of the best designed -platforms i’ve ever seen. I’m not affiliated with them, just a common man, who loves tech.