The Difference Between Large Funds and Small Funds

I have always been a “small fund” oriented investor. Both models work if executed well, but they are different.

With small funds, you only need to find a few good ideas a year to get behind. That is true in hedge funds, private equity, venture capital, and probably many other asset classes.

With large funds, you need to get behind every good idea every year.

There are some investors out there than can execute the large fund model. I imagine you can list them and so can I. But there aren’t many who can.

There are many investors out there that can execute the small fund model. You can do it with a geographic focus. You can do it with a sector focus. You just need to know a few things really well and then select the best among what you know and ignore everything else.

That is essentially what we do at USV. Because we only manage funds in the $150mm to $200mm range, we only need to invest in 6-10 new companies a year and we only need a third of them to work. So that means 2-3 good investments a year and we are doing well. Given how much opportunity is out there, 2-3 good ones a year is doable. Even if we miss on lots of great opportunities.

I don’t lose a lot of sleep over missing good deals. We can afford to do that.

But imagine if you had a $1bn fund to invest. Then you’d need 10-20 good investments a year. If good investments are defined as billion dollar exits or better, then that would require getting a meaningful percentage of them. Maybe you would need to get 33% to 50% of all good deals every year. I couldn’t sleep if I had to do that.  Because I know I couldn’t do that sustainably. Very few can.

#VC & Technology

Comments (Archived):

  1. Matt A. Myers

    Time being the most precious thing there is, having less companies you’re working with or trying to bring into your portfolio, will allow you to focus more on less and so you’ll become more nuanced in those areas, evolving theory, etc.. I think USV has proven that has benefit when it comes to investing based on theory and for the long-tail.

  2. JimHirshfield

    The $1B funds get more partners, principals, and associates. Then they get more partners, principals, and associates. And then some more. Divide and conquer.

    1. William Mougayar

      But if each partner isn’t equally additive and valuable, then the whole fund could suffer.

      1. JimHirshfield

        FOR SURE! Putting more bodies behind the scaling doesn’t mean it will succeed.

      2. Matt A. Myers

        Indeed you’d need someone who is good at understanding people and therefore better at seeing and hopefully fostering talent.

  3. Jeremy Baksht

    It seems that your ability to shape a focused vertical allows you to add deep value and influence to your investments. Also you don’t have to fear chasing everything.

  4. JimHirshfield

    You won’t lose sleep over it, but you will dream about missing that big deal with the serial entrepreneur. 😉

    1. Matt A. Myers

      Something something $140MM

    2. fredwilson

      That was all about relationships. Not returns

      1. JimHirshfield

        Right, I recall that that’s what pissed you off in the dream.Keep posting your dreams here. It’s fun.

        1. Matt A. Myers

          I sent Fred an email once telling him a bizarre dream I had that he was in …

          1. JimHirshfield


          2. Matt A. Myers

            He responded kindly … 😛

  5. awaldstein

    Picking one out of three as winners is no easy job description Fred.The power of your blog community in making this possible I bet can’t be understated.

    1. Richard

      One of the smartest investment themes by USV is Fred’s “platforms with large groups of highly engaged users”. If it takes off, your investment’s ” i.e. twitter” call to action ” i.e. tweet” becomes a verb. That has to make the road show a lot easier.

  6. William Mougayar

    From a VC role perspective, what are the differences? Isn’t picking companies more difficult with the smaller fund, because you need to be target shooting more precisely, no?

    1. Matt A. Myers

      Perhaps that added pressure is what is needed to not make investments that don’t feel as good.

    2. fredwilson

      The hard part about good deals is getting in them. The more you need to get in them the harder it is

      1. JamesHRH

        I first learned the Lesson of Obviousness’ from a car dealer.Only two type of cars, he said ‘ Shit nobody could sell to anybody & cars everybody can sell to anybody.’Applies almost everywhere…..

      2. John Revay

        My sense is that it is easier getting in the good or “hot” deals if you come from a shop w/ USV’s reputation.

  7. howardlindzon

    Sadly or luckily I guess, few funds can resist the urge to chase the fees which means, chase the funds.

    1. William Mougayar

      Doesn’t success make them stop chasing them?

      1. JimHirshfield

        Sure. But until then, they gotta pay the bills (and then some). So they raise big funds and take their 2% management fees.

        1. Matt A. Myers

          That’s boring. I’d rather just build a $1B+ company.

          1. JimHirshfield

            Go for it. Keep me posted.

          2. William Mougayar

            He won’t need to. You will read about it on TechCrunch 🙂

          3. JimHirshfield

            But I won’t be able to have a conversation about it over there.

          4. Matt A. Myers

            Ha. Yeah, I’m going to have a hard time using other commenting systems too.. maybe I won’t …

          5. Matt A. Myers

            Launching first stage May 1st! :)Perhaps I should give you sneak peak to crowdfunding campaign page to get some feedback – and share it with some other AVC friends. Hmm..

          6. JimHirshfield

            Fire away!

          7. Kirsten Lambertsen

            I vote Yes.

          8. Matt A. Myers

            I asked for your email via Twitter. 🙂

    2. William Mougayar

      You don’t get rich on fees. It keeps the lights on, more or less.

      1. awaldstein

        Lights in Canada then are pretty expensive to keep on then my friend.

        1. Mark Essel

          agreed wholeheartedly with you and Charlie, I must have a misers perspective on keeping lights on. Now diodes make them even cheaper.Heck I’m pretty damn wealthy now. just need a few more + pushes to get full control of my schedule.

          1. awaldstein

            I’m all about making money.But I’m not about lionizing the sector honestly nor holding up an idea that bringing home $500K is peanuts.

    3. fredwilson

      Big carry gains help resist that urge

  8. William Mougayar

    Another point about the larger funds, is that these funds have the added challenge to pick partners, in addition to picking companies. Sometimes partners also don’t work out or perform.

  9. Jorge M. Torres

    Today’s post shows why self awareness is so critical in the VC business. Knowing what you do well and what you don’t helps you focus. More importantly, self awareness helps an investor resist the temptation to do things that are outside his or her wheelhouse, whether that’s investing in a hot startup operating in a space about which he or she knows absolutely nothing or trying to raise a billion dollar fund when he or she really shouldn’t.

    1. Matt A. Myers

      Self-awareness is critical for a happy and productive life. If you happen to have a mind for entrepreneurship and VC, then you’ll likely end up there – but it’s important for everyone to constantly be improving their self-awareness.

  10. Jan Schultink

    Maybe big funds should carve themselves up in smaller units each with their own expertise and erect walls between them. Investment decisions could be decentralised, but the micro funds can leverage the brand of the big fund for fund raising purposes and maybe offering a career path to staff that small funds can’t.

    1. Liban Mahamed

      Good suggestion erecting wallsEasier said than done Greed and urge to get new business will probably rule the dayMany firms destroyed the credibility of their research dept. in order to drum up business and please clients

  11. Tom Labus

    I would imagined large fund returns start to mimic the S&P return. And the time to manage?

    1. pointsnfigures

      no way

      1. Tom Labus

        They retain their nimbleness and good returns? Hedge Funds move toward the S&P return

        1. pointsnfigures

          Hedge funds and VC funds are different. If the long run return on the S&P is 8%, both alt asset classes need to do better. Hedge Funds don’t have the duration or lock up of capital that VC does, so it can afford to do slightly worse. VC has to give a double digit IRR to attract money. Also, volatility of returns is far greater in VC. That also means they have to make a lot more return because of the risk. If we compared the three asset classes to betting at the race track, VC is putting it all on a horse for a Win. More risk than the Show bet.

          1. Tom Labus

            Excellent, thanks.

          2. sigmaalgebra

            I have to suspect that the LPs are looking for alpha and know that they can diversify away beta and, for this last, like returns independent of everything else in their portfolio — independence implies zero correlation.

  12. Guest

  13. pointsnfigures

    Small funds usually can use the optionality approach to investing as well. Investing early, and in smaller amounts is like buying an out of the money call option. It measures risk reward and allows beta to work for you. As the call option looks like it might get closer to “at the money”, you press and then if it goes “in the money” you can win big.

  14. Vineeth Kariappa

    Come to India. There are very few people building decent stuff here n those who are, know you n will agree to any price. result; u sleep better 🙂

  15. Richard

    The IPO continues to be the best (ROI) exit for a VC. The IPO Bankers don’t exactly have a reputation for taking care of main street investors. Whats the relationship like between VCs (long term focus) and the IPO bankers (short term focus)?

    1. JLM

      .Similar to a call girl and her John?JLM.

      1. Peter Beddows

        You always express what you mean so beautifully @JLM:disqus Love it. 🙂

      2. JamesHRH

        Lol – nice to have you off the mountain.

  16. William Mougayar

    What do you think about solo funds, like at the $20-25M range or micro-VC funds like $50-60M?

    1. fredwilson

      i am seeing more of them. i don’t have a strong opinion on them.

  17. pointsnfigures

    Sometimes supply meets demand. In the Valley where the big funds are, there is a lot of supply in which to invest. They get more at bats, and thus more chances for success. They also have acquihire in their ecosystem, which allows funds to get out of losers and limit losses. If you had a $1B+ fund in NYC, and stayed with USV current investment thesis and size, could you reasonably deploy it in a risk/reward metric that you are used to? I doubt it without adding a lot of firepower to your team.Funds sometimes are about balance.

    1. kidmercury

      maybe the next bubble is in the rat extermination market so nyc can have its big fund heyday

  18. Dave Pinsen

    If you read Peter Lynch’s first book, it seems pretty clear he burned himself out running a large fund.

  19. Semil Shah

    Oftentimes (not all tho), this just boils down to greed that comes with larger funds (vis a vis fees), but also the LPs enable it.

  20. JLM

    .Every business and every entrepreneur has a “sweet spot” at which opportunity, skill, comfort are all in balance.When you are landing a plane or sailing a big boat, there is a moment when everything comes into balance and it handles itself perfectly comfortably.People need to strive for just this balance in their lives and their endeavors.Just having come back from a second month of skiing this year — hey, I’m doing work up there — I can say it is a chore to find that balance but you can. I work more in SBS than I do in Austin (well, OK, sometimes).Whenever I got to approximately 500 employees, I was OK. 501 and I was thinking Pay Window. I had reached the limit of my comfort zone.Don’t buy into the notion that BIGGER is BETTER.BETTER is BETTER.JLM.

    1. PhilipSugar

      This is such a great comment. Better is better. It goes for VC funds it goes for building companies.

    2. LE

      Don’t buy into the notion that BIGGER is BETTER.I don’t disagree with what you are saying.Otoh we are living in a world where to get any attention you have to be big or be doing something big. All the rewards of notoriety go to him who swings the biggest you know what. To some people that notoriety or recognition is important for sure.That said I just saw a picture of Jeff Imelt in the WSJ. He looks like shit for his age.

      1. JLM

        .There is a level of personal satisfaction which is worth the effort and a level of attainment which is not worth the effort. I am not talking about a modest level of attainment.We all want too much. Every once in a while we should take catalog of our lives and see if there is really something we want enough to make that extra effort.In almost every aspect of my life — except writing, I am content and peaceful. I call it the “How Many Fucking Tacos Can You Really Eat” peace.JLM.

      2. JLM

        .Following Jack Welch is a very tough job even if you knew what you were doing and had the economy at your back.JLM.

  21. Kevin

    Fred, I completely agree with and support this view when it comes to VC. But I’m not sure it always translates that well to PE and hedge funds. I’ve spent time as an investor at both PE firms and hedge funds. A larger PE fund often means acquisitions of larger companies without necessarily increasing the number of deals. A larger hedge fund can simply mean taking larger positions, also without increasing the number of deals.However, there are a lot of people who are very successful playing in the small to mid cap world for hedge funds and due to their success end up with larger and larger funds but then find themselves unable to reproduce the same results with large caps (or, as you say, they have to increase the amount of small investments they make). Same goes for PE funds that excel in the lower middle market. If you’re making top tier returns playing there, fight the urge to grow and enjoy what you have. You may not make it into the WSJ regularly, but I find the work is much more enjoyable (you get to be more hands on with the companies) and you have a lot more free time.

    1. Mark Essel

      Great comment, thanks Kevin

  22. Liban Mahamed

    Fred the economy of scale generates efficiency to a certain point, then you ran into bottlenecks, inability to do proper due diligence as fund grows and you have same hours in the day, within a single firm you may end up having all kinds of bureaucratic obstacles, and fiefdoms.Small funds beat large funds all the time as long as they don’t succumb to the urge of taking more money.Extractive and commodity industries are probably the only industries where a larger size can give a big comparative advantage.In this case bigger firms can lower per unit cost and pressure smaller outfits.

  23. Mark Essel

    From that perspective if a billion dollar fund operated like 5-7 smaller funds there’d be no more pressure, a bit more competition and a healthy reservoir for follow on late stage investingIf same number of operators are involved I’d agree with the premise. At the very least if market is saturated it requires much higher presence in each intervals (5year chunks?) MEGA wins.Larger firms may have deeper resources for easing acquisitions (closer relationships to acquirers / knowledge of acquisition plans), and assisting their larger successes going public (not sure how off hand)Smaller firms may find better alignment with entrepreneurs who succeed with an earlier exit, while large funds may drive a successful company further (perhaps with some later rounds that take money off the table). May be reaching here.

    1. davidu

      You have just described why funds of funds exist. There are a number of growth-stage VCs that also invest in funds, and thus are a fund of funds. The remuneration issue gets complicated, but in general, it’s a decent model.

  24. David

    I think you guys should consider changing the model. This whole 2-3 investments a year defensible networking effect thing is clearly just not working.

  25. Tony Banks

    I recently graduated out if school with an MBA degree and am interested to pursue in this line if field. Any books you would recommend me buying on these topics ?Thanks for your help in advanceTony

  26. Mike Ma

    Ideas spring everyday. I feel the contrary. VC, PE, and Hedge Funds are actively managed, in conceiving a higher return to shareholder. Large Mutural funds are relatively passive (in comparision, not passive in absolute sense), they employ lots of modern portfolio practices and computer statistics. The formers rely more heavily on guts and business senses. Of course, hedge funds also employ lots of statistic and business analysis. That makes the difference in fund return. It is a dilemma and illusion sense.

  27. Bruce Croxon

    wonder how many large funds would be small funds if fees were budget based rather then a %

  28. Austin Clements

    Implicit in “needing to get behind every good idea every year” is the tendency to overpay, or at least the willingness to take the highest valuation. You think large funds are driving valuations too high? Or is it okay so long as you have willing buyers that will acquire a company at that high valuation and public market investors hungry for accelerated growth?

  29. Lee Blaylock

    Fred or others can confirm, but my understand is there wasn’t a single VC fund over $750mm that returned 2x capital until Facebook. Now with Whatsapp and a select few other fund I’m sure that is changing, but the only venture economics that work for large funds are the 150 to 200 basis points of fees, not really the returns to the LPs.Move conversation to PE or hedge funds and that is an entirely different discussion on many levels, but with some parallels.The last company I started before Who@ is Annandale Capital, a $500mm AUM RIA that focused on alternative asset classes with several Forbes400 members as clients so I’ve got a bit of experience as an allocator. A very interesting business.

  30. Teddy Duchampe

    Fred, once you identify your [annual] strategy, do you create a list of targeted companies and go after them? Or do you make your network aware of your goal, and let opportunities come knocking? In other words, when are you actively reaching out to specifics…versus passively evaluating things opportunistically?

    1. fredwilson

      a little of both

  31. Dan

    Just wanted to say I really enjoyed the post. That being said, you separate this into two distinct areas, but I feel like there is a big gray area to this.There are a quite a few big funds out there (Sequoia , A16Z) that have billion dollar funds but still invest in a style similar to smaller funds. They still bank on individual massive exits to make up most of their returns, but also have growth equity components that are similar to the large fund investing style you mentioned.How large do you think a fund can get before it has to convert its primary investing strategy to one of a large firm?Also, are there any instances where funds will downsize in order to change their investing style?

  32. Max Motschwiller

    Why can’t a large fund just find 2-3 good deals per year and put more capital behind them? Look at DST? Be patient, pick your spots and when you bet, bet big!

  33. pointsnfigures

    but in big funds, there are a lot of moving parts to feed.

  34. William Mougayar

    But that’s spread across several partners + operating costs. It’s the billion dollar+ exits that make you really rich.

  35. awaldstein

    Curious–if you know–distribution of assets for exits aside, how much do VCs pay themselves out of that carry?Takes a bunch of years for exits to happen and I’m guessing that they are not on a hand-to-mouth entrepreneurial type salary.

  36. pointsnfigures

    By the way, on exits, the 2% gets returned to the LPs. It’s more like a draw at an investment bank. Compare a few: USV is 12 people drawing income off the 2%. Add in travel costs, office costs and the costs to run a business. My gut tells me they run pretty lean. They have a $250M fund, so that’s $5M a year to run the ship. NEA has 64 people working for them, in 7 locations. The break even operating costs are well over USV’s draw. My gut tells me no one at NEA is getting rich off the mgmt fee either.Add on to that the amount of dedication and work it is to work with each portfolio company; Board time, prep, research, networking, mentoring etc etc, and there is only so much capacity one fund can have.

  37. Aaron Klein

    Well, in fairness, it depends on the model.It sure looks to me like A16Z has $20MM worth of moving parts, and they’re driving that value to the entrepreneur.The key is for the entrepreneur to align with a VC whose model fits their goals the best.[1] There are many good reasons to only accept VC from small funds.(As well as many good reasons not to put rocket fuel in your Gulfstream V in the first place.)[1] Edited for clarity.

  38. awaldstein

    not shabby at all.

  39. William Mougayar

    I don’t believe that math is correct. $4mil/partner for what size fund?

  40. kidmercury

    and that’s standard 2/20, paul tudor jones runs a 17 bn dollar fund and charges 4/23. PTJ is legendary, hedge fund hall of famer for sure, but that’s a stiff price.

  41. LE

    I agree with you..02 * 1,000,000,000 is a shit load of money.$20,000,000 per year gross for partners and expenses.Enough to keep you in a nice office building, with support staff and plenty left over.

  42. JLM

    .That is a lot.Most folks make nowhere near those numbers.One of the lures of private business, particularly entrepreneurial businesses, is the ability not to “receive” but to “earn” extraordinary returns.This is why when the average middle class income drops $7K over a 6-year Obama presidency, folks should be concerned. It is a huge loss of buying power which is tantamount to using leeches to bleed us stronger.JLM.

  43. JLM

    .We have so sorely missed the economic statistics and basics as it relates to our country as to be laughable. I agree, the long term trends warrant a very exhaustive study to ensure we know how the “average” person is living.Presidential terms are natural dividers because they also typically represent inflection points in governing philosophy.In that regard the coincidence of a bad recession, ineffective response, complete failure at job creation coupled with increasing costs mandated by government programs AND only then the loss of average incomes of huge proportions makes it worthy of a bit of extra credit inspection.It is inexcusable not to mention that the US Treasury has enjoyed RECORD HIGH REVENUE receipts in both FY 2013 and the first half of FY 2014.The slightest spending control — entitlement reform — would create a better set of financial outcomes. It is like a guy running 10 miles a day who decided to forego two cheeseburgers a day. He cannot fail to lose weight and get into better shape. Can he?Even Ryan’s “shit sandwich” budget only cuts the RATE OF SPENDING from a projected 5.5% to 3.5%. It doesn’t really cut anything.If we actually reformed entitlements for guys like Fred Wilson and JLM, the results would be incredible.JLM.

  44. Peter Beddows

    Well said.

  45. PhilipSugar

    My biggest disappointment with George Bush was when he got off the message only in government do we call a cut, when you cut the increase. Went downhill after that.

  46. Matt A. Myers

    We can look at what systems exist and how they put pressure or influence people depending on what their socieconomic status, along with other factors like health – and then we can manage systems to improve all of those – which will lead to increased happiness, and more importantly for economists, increased productivity.

  47. JLM

    .Nice to see you about, friend.JLM.

  48. JLM

    .Fries? No thank you, Charlie. Have an engineering degree, thank you very much.Jobs since the inauguration of one Pres Obama are still not what we had on Inauguration Day — his watch has been a disaster.Other forces at play? You bet. Take a look at everything. I could agree to everything — everything — that you posit with glee and still Pres Obama is a miserable and woefully unprepared President who will have done immeasurable damage to America, the world and the American economy when he gets on that helicopter.Further he personally is a fakir, a poseur, a miserable and unrepentant liar and unworthy of America.We are paying and will continue to pay for a long time for his inadequacies and fecklessness.He was simply not up to the job. Somewhere affirmative action must end and competence be required. He find that junction and failed on almost all accounts.JLM.

  49. JLM

    .BTW, I would be so tough personally on the military budget if given a chance. We could reduce military spending by 50% if someone who knew what he were doing got their hands on the “big project” book.We need more tooth, less tail and to delay or cancel about 75% of all multi-year weapons development projects while sorting out duplication amongst MI, DIA, CIA, NSA, DHS, FBI and any organization involved in intelligence gathering and action.We would dramatically reduce staffs, hardware/software requirements and improve efficiency.JLM.

  50. sigmaalgebra

    > Military budget, not to mention financing two wars for a total of $1.3 trillion, off book.But, but, but, we were fighting for truth, justice, and the American way, getting rid of criminal dictators, bringing modern, honest, democracy to downtrodden peoples, and making the world a better place. Then the whole world will sing Kumbayah.In the face of our grand gifts of democracy, all the religious fanatics trying for power will melt away! All the terrorists who hate America will become happy goat herders! All the girls will become liberated, shed their burkas, go to school, and become doctors and lawyers! McDonald’s will be able to sell McRib sandwiches in Baghdad and Kabul!That’s what we were doing, right?

  51. William Mougayar

    Exactly. There are lots of operating expenses. The compounded costs of running a fund is about 20% of its size over its lifetime but that money is deducted from the carry.

  52. Mark Essel

    Right on Charlie. Assume there’s a little voodoo, that large firm insiders could (but likely won’t) clear up

  53. LE

    The question is how much of an organization you need to build to productively put a billion to workYou are not building a factory to make solar panels. You can easily estimate how many bodies you need and how much office space is needed (and pencil sharpeners/computers) and the math works out very well.That said you are not going to go on collecting 2% or be in a position to raise a large fund if you don’t get results obviously. Nor will you hold on to people who want the larger dollars from the big payout. But the 2% is a nice cushion and most definitely covers your nut.

  54. PhilipSugar

    I respect your experience. But you say this like it is fact. I have definitely seen funds where that is not the case. I have seen funds where the number is less than 2% as well.So you are telling me unequivocally that is what happens?

  55. JLM

    .It is not a given that mgt fees are subsumed in the distribution of a carried interest and credited back as distributions are made.JLM.

  56. PhilipSugar

    Seriously, lets cut through the bullshit. I have seen the monthly salary check of many VC’s. It dwarf’s the pay of any of their CEO’s.

  57. JLM

    .The cost of the wars, the DHS and the Medicare drug benefit were nuts. The guys who were whispering the Iraq war could pay for itself by confiscating Iraqi oil revenue should be shot.Bush was a very, very, very good Texas governor but of course we certify the available funds before the Lege gets to town, we have a balanced budget, we only meet for 90 days every other year. Damn good system.JLM.

  58. JLM

    .Once you are as old as us, it doesn’t make any difference what you majored in, you have overcome it. And, yes, in that spirit, I accept the fries and apologize for my boorish behavior. Bit of sea salt, please?As to the facts, we really do not want to go there. The facts are a road map of dependency and incompetence. Again, we have fewer jobs today than when he had his hand on the Bible.I’m not going to mention the LF Participation Rate or OBAMAcare.Yes, Bush’s fault. Compare yourself to the worst man in the world — even if not true — is not running the high hurdles.We expected something from this guy and he failed to show up for work.JLM.

  59. JLM

    .Too funny for words.Well played.The McRib is a lousy sandwich even in Austin. Might be an act of war actually?JLM.

  60. JLM

    .EVERY time the US has ever cut taxes, revenues have gone UP.Other than that, you are entitled to some traction on everything you mention.Criticizing Pres Obama does not imply praise of Pres Bush.Finding fault with Pres Bush does not somehow absolve Pres Obama of accountability for his actions, his incompetent actions.The elections are over.JLM.

  61. JLM

    .The inflection point of a change in the White House is a big deal. I agree completely the economy is whatever it is when the new guy takes charge and it may take a year to get one’s fingers around the steering wheel.So what?We are talking 6 years of governance not 6 months. Pres Obama owns this economy as he does the war in Afghanistan.At some time, you’ve got to get in the batter’s box and take a few cuts and be responsible for the outcomes.This is not a close call as it relates to the data. Not even close.It is even worse when one divines the words — you can keep…etc.Really neither GHW Bush nor BC were great Presidents. Care takers at best.It is also fair to look to the makeup of the Congress in evaluating a President’s efficacy. Much of what is laid at Bill Clinton’s feet — not including an intern on her knees in a blue dress — was Gingrich’s Republican Congress’s doing.JLM.

  62. John Revay

    Doesn’t turn like a PT boat – could not agree w/ you more.

  63. pointsnfigures

    You might be right. Each fund is different. But, the fact remains, no one gets rich off management fees

  64. pointsnfigures

    No, that’s my experience. Each fund might be different. My point is, no one is getting rich of the management fee. It’s the cost LPs pay to run the fund for the expectation of future return.

  65. sigmaalgebra

    She was earning her Presidential knee pads!

  66. sigmaalgebra

    > Further he personally is a fakir, a poseur, a miserable and unrepentant liar and unworthy of America.Gee, good to see that you like him much more than I thought!High praise from such faint damnation!> We are paying and will continue to pay for a long time for his inadequacies and fecklessness.Who expected something else?You’re not paying attention to the whole story here and, thus, are missing some of the upside: Millions of White liberals now feel much less guilty!> He was simply not up to the job. Somewhere affirmative action must end and competence be required. He find that junction and failed on almost all accounts.Yes, yes, yes, I know; I know: We believe in free enterprise and equal opportunity until we see the outcomes and then we have to step in to correct the obviously unfair situation!The problem isn’t doing too much but doing too little! Look at some places we are going really wrong! E.g., look at obviously highly biased situation in the NBA! Now, surely there just must be plenty of NYC Jewish boys who could play in the NBA. No, I mean on the court, not as lawyers for the league, teams, and players!If we would just make the NBA fair, then there just have to be plenty of NYC Jewish boys able to play with LeBron James, Dwyane Wade, Michael Jordan, Magic Johnson, Shaq, etc. All we have to do is give a little helping hand and then make all of the NBA fully fair! So, we should start with some limits on height, weight, a speed limit on running a 40 yard dash, and a height limit on jumping! We could put a GPS device on each player with a penalty for running too fast or jumping too high!We just have to get the NBA back to rewarding equal ability and accomplishment equally instead of the obviously biased situation currently!

  67. PhilipSugar

    Let’s talk brass tacks. For a fund of over $100mm and less than $500mm what do you think each partner makes in salary? A google search comes back roughly $1mm a year, which is about what my gut tells me from a small sample.You say yes?, you say no? Everybody sets their own definition of rich.

  68. JLM

    .We can either make compensatory payments to identifiable groups of “victims” — America has become expert at identifying victimhoods; or, we can provide training, incentives and tough love to fashion outcomes.There is a huge difference between a hand out and a hand up.We need to focus on equal opportunity outcomes and not so much on equal outcomes.In the final analysis, we need more folks contributing to making the pie than we need taking a free slice of the pie.The psychological implications are even more profound.JLM.

  69. Peter Beddows

    Completely agree with you on this: You’ve got my vote.

  70. Peter Beddows

    We seem to have gone off down a tangential stream versus the blog topic here but nonetheless, I could not agree more with you on the points you’ve been making. Now, if only that was all it would take to get some measure of intelligent design back into our governance. We seem to have given up democracy for oligarchy

  71. Matt A. Myers

    Not going to start an in-depth discussion on this with you. Your thoughts on this are more narrow than I focus. If you look at all of the efficiencies we have from automation, everyone can have access to food, water, shelter – which is needed to give someone time – the time to build relation and connection with others, the time to learn to improve oneself. There is nothing further that needs to be dissected here – unless you don’t believe or understand the epic efficiencies machines have brought. The issue that society exists in today and why there are poor, uneducated people – some who suffer more than others – is because those efficiencies from automation weren’t passed onto everyone, they were hoarded through control mechanisms. If you unlock those controls then full abundance exists. We will have access to the whole universe full of resources, and sooner than people will realize – if the controls aren’t in place preventing and delaying innovation and productivity – creating friction instead of fostering fluidity.… and… which I link to at the bottom of the previous blog post link.

  72. JLM

    .In a macro view of things you are absolutely correct. The problem with a macro view of things is that in the long run, we are all dead.If you are a former textile worker in Greenville, SC whose job was shipped to China, the macro view is neither useful nor helpful.Regardless of the degree of automation, that textile worker in Greenville was betrayed by a government which let his job be exported to a country that did not have the same labor safeguards or child labor laws or pick one’s particular ax to grind — I personally have many in this situation — and it’s never coming back.If you want to sell goods into the American market then there must be some obligation to hire Americans.It is not a macro point, it is direct and has to do with short term policies which are unsound.JLM.

  73. Matt A. Myers

    Are you kidding me? Hyperbole much? As I said, discuss this with you won’t go anywhere – this will be my last response – and what I said doesn’t need to be dissected any further – and it is something you agreed on is true, yet you won’t let that be “right” and be okay with that.Read that first link and think through the exercise — what if all people in the world were part of an organization that generated $100 trillion in profits annually. Where would that organization spend its money?You’re conflating with your arguments, perhaps sourced from anger and not able to let go of that to see why if we just start taking care of people now – perhaps with compassion and forgiveness to let go of that anger – then everyone can be taken care of very well and you’ll see the situation in a different light and not as betrayal that was allowed because of an unmanaged holistic capitalist system. How about instead we properly manage that system? You’re correct in that it has to do with current policies, but conflating that by bringing in anger and feelings of betrayal or being wronged will keep your thinking shallow and narrow – because it will be locked up from anger.

  74. LE

    Moving parts get added on as the amount of money available to buy those parts is available.As I have said before it must be nice to be a company like Apple spinning off all that profit. Profit (and this is important) made after they piss away tons of money that they probably don’t have to spend if times get lean.Look at all the money that you spend in your life when things are going well. Then think about how you might skip this or that if you really had to or if times got tight.So the fact that certain funds spend a certain way doesn’t mean that they have to spend that way.

  75. pointsnfigures

    Apple is the world’s largest hedge fund with all that cash on the balance sheet!

  76. JLM

    .There is not an iota of anger in anything I have written. What there may be is a bit of pragmatic reality.What you have written is arguably naive and unrealistic.What is real is the guy in Greenville, SC who has been put out of work because of government policies which did not take him into consideration. That is a tragedy.Folks disagree all the time as it relates to facts and motivations. That does not conjure up anger.JLM.

  77. John Revay

    “The three most harmful addictions are heroin, carbohydrates, and a monthly salary.”

  78. PhilipSugar

    I am sure that the company pays for using that team, so that doesn’t count against management fees that is a use of funds.That has always been a hidden conflict of interest btw. You take money from a fund and sometimes they will push advisor.Now that can be a total benefit. The advisor might do a better job, might understand this is not a one time deal, was vetted on other jobs, not just a random person etc.It also can be a conflict. Seth Levine writes about this:

  79. Aaron Klein

    I’m not sure we’re talking about the same thing.A16Z has done a huge amount of hiring to build out suites of services they give to their portfolio companies for free — a hiring network that tracks and sources the best engineers, a PR network to drive coverage, a CEO network to drive enterprise deals, etc.It’s not the right fit for every company but it’s a VC model that is definitely working for some.

  80. PhilipSugar

    Ok, I searched and found the Forbes article. You are right and I am wrong. Says the 45 people come out of management fees and they pay themselves low to mid six figure salaries. It says most just pay all of that money to GP’s. Snap, that must hurt if you are a big fund.

  81. Aaron Klein

    Yep. It’s a very different VC business model and an interesting one.Horowitz says “if the whole VC game was ‘who has been in the business the longest and can see the best deals’ we had to find a way to change the game, so building a different model worked.”