On Europe Time This Week

The Gotham Gal and I flew to Paris last night and we arrived this morning. I’ve got meetings here the next few days and then we plan to enjoy Paris with some friends late this week and weekend.

I watched The Social Network on the flight over for the first time. The depiction of VCs in the film and the way the cap table got reconstructed was horrifying to me. I know stuff like that happens but it is not the way we do business nor is it the way many people in the VC and startup sector do business. So it is unfortunate that a popular film about the startup sector revolves around that narrative. It makes for a great story, and possibly is true (I don’t really know) but it does not paint our sector in a particularly good light. Otherwise it was an entertaining film with great performances.

I plan to post at my regular early morning hour so those of you on the west coast might see new posts going up before your bedtime this week.


Comments (Archived):

  1. William Mougayar

    Isn’t it also illegal under Section 409A of the Internal Revenue Code to do that?

  2. Marissa_NYx

    Yep, it’s 1.16am on the west coast & your post has just landed. Enjoy Paris!

  3. Jermiah Dylan

    Coincidentally I also watched The Social Network this morning for the first time. It’s crazy that $FB was valued at $25b only 5 years ago.

  4. kenberger

    just missed you: CDG->Berlin yesterday, here for a huge nerdy 3D printing conf.The Europe time thing works fairly well when your connections are mostly in the US. I get a lot of productive work done in the mornings here in Europe. And then late in the afternoons, people on the east coast, then west coast, start responding to emails.Biggest adjustment is for phone/video meetings in the evenings (which often clash with dinner plans).

  5. Hcharlanes

    Welcome to Paris 🙂 Hope you’ll feel how vibrant the Tech scene is there !Tip : Something is also happening in Lille (2 hours from Paris, North) @Euratechnologie Tech Campus (100+ Startups, 300 Companies, Schools, Research centers are all emulating there!)Enjoy !

  6. Andrea, Team Up Start Up

    I’m sure you guys are super busy, but if while in Paris you feel like getting a coffee with one of your reader from overseas let me know!On an unrelated note, I was expecting a comment about this: http://www.wired.com/2015/0…which may be an obvious application of the blockchain, but it is the first time someone does it.Enjoy Paris!

    1. fredwilson

      You gotta love how into bitcoin the founder of Overstock is

    2. Russell

      Likewise, wish there was a meet up while you were here! I’m visting Paris until Wednesday. One suggestion is http://www.musee-moyenage.fr, a beautiful building from the 15th century with a great collection of beautiful things – and the Finnish cultural center is just across the road for a post visit coffee and snack.

  7. James Ferguson @kWIQly

    welcome to europe>> it does not paint our sector in a particularly good lightThe job of an entrepreneur is to break the mould (at least to get people to change the way they do things). To do this they must see the world differently.The job of the VC is to find and support massively different world views, to buy into them, and help others buy into them. In short to impose (or encourage change).The explicit goal is to modify significant behaviours of the populous. Whether this is done with a sick, a carrot or the recognition of a beating tambourine – it will put some peoples noses out of joint.Pleasantness and ethical behaviour are virtues but what the others think, and how they may paint you are wholly irrelevant.VC and Entrepreneur alike need thick hides – This is not a popularity contest.I think this is a very significant reason why both VC and Entrepreneur needs to have a well established personal “true north” to their moral compass, because many people along the way will try to pull them off this course.I have seen no study but I imagine childhood solitude and weirdness correlate to entrepreneurial success. After all when you grow up – if you are seen to be happy walking your own path, others tend to follow.

  8. Halley Suitt Tucker

    “… it does not paint our sector in a particularly good light.” that’s for sure.

  9. Guesty McGuesterson

    I watched that film shortly after I was more or less cut out of a startup so it stirred up unpleasant stuff for me for sure. It’s actually nice to see someone cut straight to that part of it when posting thoughts about it.

  10. RichardF

    execution trumps a good idea

  11. Tom Labus

    Nets. YEESS

    1. fredwilson

      Deron Williams had a huge game last night

  12. JimHirshfield

    So it didn’t do for VC what The Godfather did for the mafia biz? Hmm. 😉

  13. pointsnfigures

    I saw that when it came out. My takeaway was younger generations will see it and want to be entrepreneurs. That’s 180 degree swing from our generation.

    1. fredwilson

      That has very much happened

      1. pointsnfigures

        At Chicago Booth, #1 major in the MBA program is entrepreneurship, not finance.

        1. Matt Zagaja

          Are there statistics about how many of them actually go on to build companies or work for entrepreneurs versus how many are just start-up tourists? I was disappointed at how many people that participated in the banner entrepreneurship program at a place where I worked then just decided to go work in middle management at a Fortune 500.

          1. LE

            If I had to guess I would say they are startup tourists with great grades and who look good on paper and who are nudging out the people who were hustling a buck in elementary school and high school and knew that they always wanted to run a business. This was even the case back when I was in college but to a lesser extent since back then law and medicine were very strong careers that siphoned off the tourist talent.

      2. Matt Zagaja

        Just curious why this view does not jive with the BLS data:

        1. Matt Kruza

          Small business not being equal to VC / high growth. VC’s only fund 2k new companies a year, and this chart is talking about 150k a quarter, so overall 600k a year (by other definitions I have seen even a few million “businesses” started ayear. I think its a matter of if the entity has employees or is incorporated). But basically small business down from 800k+ a year to 600k, VC up from 1500 to around 2000 or so. Also, mattermark has had some data showing that the number of startups is not up that much (even that 2,000 or so) but rather just WAY bigger rounds (ie Series A now 10 million vs 2 million, late stage $100M vs 20 million etc)

        2. Sam

          Matt, BLS has more recent data, and births are consistently back on top since Q4 of 2010. http://www.bls.gov/news.rel

          1. Matt Zagaja

            Great to see/hear. Clearly I missed that.

    2. aweissman

      That’s a great point. I’ve long thought that there was a serious turning point in our culture (esp because it was nominated for Best Picture too) – at least US, maybe the world – pre Social Network movie, and post Social Network movie

    3. Kirsten Lambertsen

      I think that phenom was already well under way, by the time this movie came out. But maybe I’m just too deep inside the industry to see what you’re talking about.

    4. LE

      That’s 180 degree swing from our generation.Ha! Speak for yourself there are many people that knew they wanted to be entrepreneurs back when I was at Wharton (’81) (and it had the first well noted entrepreneurship program run by Dr. Shills and Dr. Zucker).

    5. BillMcNeely

      Seeing a lot articles of late that young people are more risk averse and starting less businesses

  14. Salt Shaker

    The Social Network falsely created visions of grandeur for far too many. Nothing wrong w/ following one’s dream, as long as one understands the stakes. The Social Network def inspired entrepreneurship, but at the same token it created a misperception of the risks, challenges and opportunity costs. It’s high stakes poker that many young individuals perhaps are in a position to play, but they need to pursue w/ reasonable expectations, and frankly many don’t.

  15. mikenolan99

    I listened to 20+ elevator pitches from our Innovation class students yesterday. What struck me was the variety of the ideas – from manufactured non-tech inventions, to apps, and several social causes as well. Entrepreneurship is alive and well, at least here in Minnesota!

    1. Russell

      nice what innovation class?

      1. mikenolan99

        I work at Minnesota State University, and run the Small Business Center – a faculty member is teaching an Innovation class as part of our new Entrepreneurship minor on campus – and she asked me to come and coach the students on their elevator pitches.This Friday is our Big Ideas Challenge – $10,000 in prizes for business ideas. I love that Nursing Students, Business Students and Engineering Students are all represented in the final five.

    2. Matt Zagaja

      Cool to hear that. Any notable successes? One of the big challenges the entrepreneurship and start-up community has faced in Connecticut is that our home runs seem to take off in the way we hope they won’t.http://www.newhavenindepend

      1. mikenolan99

        On the student side, no BIG home runs yet – on the Small Business Side we helped launch 35 businesses last year – all brick and mortar. We have a pretty good track record – 92% of the businesses that start with our assistance over the past 5 years are still in business. I don’t think it is all due to our consultants expertise, I think it is due to a couple of factors: 1) People who ask for help are more likely to succeed. 2) Part of the process is to have people realize that now isn’t the right time/the idea isn’t viable. A bit of survivor bias in the sample!If the problem is economic development – keeping the business in town, for example – I find it tough to advocate for a business and a community simultaneously.

        1. LE

          Part of the problem is the focus on home runs. Home runs are about gambling. Business involves gambling but not to that extent.Entrepreneurship has become more like the entertainment and sports business (pyramids where a few at the top make out well) rather than a way to earn a good living.

          1. Matt Kruza

            Yep. To some degree I believe it embodies what economists call a “tournament theory” of economics where disproportionate share of the economics go to one or a very small number of “winners”. Sports are the classical example of this, combined with CEO pay etc. The scary thing even more so in my opinion in when does it cross over to straight “gambling” with the entry ticket being a $50million+ “bet” from investors being the only way to win. I think we are getting perilously close to that, and policy changes and/or changes from the entrepreneurial system are needed.

          2. LE

            The only thing to fear is fear itself (or something like that). This entire charade is in the eye of the beholder. If you are a young person and you see that system as the only way to win then you are brainwashed in the same way that a musician feels that the only worthy thing to do is to play music in a concert hall or as a rock star or an actor to appear in movies or on broadway. The point being is that there, in theory, shouldn’t be that much difference in the appreciation one gets from appearing in local theater vs. broadway other than the smoke that gets blow up one’s ass by being on broadway (or getting written up in the NYT) and the resulting feeling of self importance and/or accomplishment (which is considerable I will agree and probably quite addictive in itself).The good news is that in life and in business things can be pretty good even when you fall far south of the huge win. People miss that point so they only go for the brass ring perhaps. You can still vacation, buy nice things and eat out at nice restaurants by starting any number of businesses that would never be funded by VC’s who are making a big bet. Send your kids to good schools have nice friends all of that. Let’s not pretend that having a bit of money doesn’t bring happiness in many ways (by avoiding pain not because material goods bring happiness).My point is this is all in the eyes of the beholder and not some rigged system that needs to be broken up or addresses in any systemic way.

          3. Matt Kruza

            Hmm… partly agree. Personally, I know I and other young people can be successful and plenty wealthy in other ways. However, my bigger concern is the effect that the current system has on society writ large. The VC and overall financial system is one of the primary causes of huge and ever increasing inequality in my estimation, and from that angle it truly is systemic and needs reformed (if my hypothesis is correct etc.). And I will do my part to succeed and also hopefully affect the system, but I do think it matters to call out financial systems that are intentionally or unintentionally rigging the game for the broad swath of society. Many firms view a big raise as a way to essentially “freeze or eliminate” the competition. That is DECIDEDLY not free market and at least should be cause for concern or some thought. Not sure if you agree but wanted to elaborate that its less about if I or another entreprneuer can make it, but rather if the system is just and sustainable.

  16. Joe Cardillo

    This interview from 2004 pretty much sums it up for meDid it inspire young folks to get into building tech platforms? Yep.Did it paint a picture of startups as a 20yo white male fraternity party and limit the perception of who could work on / in them? Yep.Does FB represent the vast majority of entrepreneurs’ journey? Nope. Not even close.https://www.youtube.com/wat

    1. Jess Bachman

      This is from 2004 when it was still “The Facebook”. A classic interview. Dustin Moskovitz doing a keg stand.Best moment… Interviewer: “So where do take it at this point, you are going to expand to other schools you are at, and then what”Mark: “I mean.. there doesn’t necessarily have to be more”…”I really want to see everyone focus on college and create a really cool college directory product, that is very relevant for students, and has a lot of information that people care about when they are in college”Keg cup in hand, under a Scareface and Pulp Fiction poster. Awesome.

      1. Joe Cardillo

        Ah woops, yep good point on the date…brain was on autopilot. And seriously doesn’t get much more trope-esque than that. Makes me cringe every time I re-watch.

    2. Kirsten Lambertsen

      Great comments and contribution :)I think non-white non-male people already understood that most industries aren’t particularly welcoming to them, tech included. This film is basically the industry talking to itself. All of us “outsiders” are already accustomed to ignoring images like this (if we want to get anything done).On the other hand, someone I know who’s pretty high up at FB says that Zuckerberg is “the real deal,” and that he absolutely loves working there. (And I personally find this person to be the “real deal”, so there’s that.)

      1. Joe Cardillo

        True, and to the point Matt Z. made, it’s a moment in time. Certain parts of how FB / Zuckerberg have handled things are disturbing (internet.org propaganda, privacy, misrepresenting reach to advertisers etc) but on the other hand they’ve made an admirable effort to deal with bullying.

      2. LE

        “non-white non-male people already understood”I think it’s also age and/or maturity before beauty actually. I’m white and male (and even jewish like Zuckerberg) and in no way would I fit in with that particular crowd. All of that bro stuff (the keg etc.) is distonic to me (and it was when I was younger as well). I know who’s pretty high up at FB says that Zuckerberg is “the real deal,” and that he absolutely loves working there.Of course he likes working there. One of the benefits of being someone like Zuck (or anyone in a power position) is that you get smoke blown up your ass all day every day (for lack of a better way to put it) by all of the people you come in contact with who stand to gain something from you and recognize your power. [1] That is of course balanced with the tremendous pressure of living in a fishbowl and having your every movement scrutinized and not being able to go out in public without being noticed and bothered.[1] In a small way I even recognized this when I started a company out of college. I had employees and they were always nice to me and listen intently and with obvious interest to every word that I said. If I wanted to go on and on in my office talking to them they listened and never told me to stop, ever. Why would they?

        1. James Ferguson @kWIQly

          Funnily enough Smoke blown up your ass in GermanIs “Zuckerblasen” – sugar blowing – Makes you wonder with a name like Zuckerberg – Sugar Mountain !

    3. Matt Zagaja

      Interesting video, I had never seen it. Very much a snapshot of someone’s thinking at one point and time. I wonder what this Zuckerberg would say to today’s Zuckerberg after seeing what Facebook has become.

      1. Joe Cardillo

        That’s nicely put, and a great question. As the movie suggests that snapshot illustrates the limited perspective he had to begin wtih, which no doubt has changed a lot since.

      2. JLM

        .How one’s view of life evolves over a lifetime is one of the wonders of life — it is the story arc of our lives. What, hopefully, doesn’t change is the foundation of our character.The story of life IS change. Change is the norm, not the exception. Just like in a novel, the protagonist is the character who changes the most in the course of the story.I first started keeping notebooks — Moleskine notebooks mostly — when I was a cadet in the 1960s. That’s right, the freakin’ 1960s when America was on fire and at war.I kept a little hardcover green notebook for five years of soldiering — every order I received, every order I gave, the results of every mission I was assigned to.Some of it is so desperate — literally haunted by the ghosts of men whose death was memorialized for all time on those pages. It is haunting. I have nine such notebooks — one for every six months of service not including schools.Sometimes, I cannot remember who that kid was. At other times, I am still that same Lieutenant and Captain and I learned everything I ever needed to know about life and myself in those five years.JLMwww.themusingofthebigredcar…

        1. Joe Cardillo

          Beautifully said. I have a few notebooks and scraps of paper from over the years myself.I was thinking this a.m. about something that Mark Suster wrote (http://www.bothsidesoftheta… )…there’s that embedded question in his post, and I think your comment, of “how do we know who we want to be, and what in ourselves should remain constant over time?”Obviously the answers are different for each person, but it’s essentially a question of the heart, brain, and of ethics / values. We may be able to exploit something temporarily in ourselves, or in others, but who we want to be and are capable of being is usually there all along. Comes out with experience, willingness to learn, and humility.

          1. JLM

            .I have the highest opinion of the potential of all men.Sometimes I am disappointed and sometimes I am delighted. More delighted that disappointed.Inside each man is the character of the entire human race. What is different is whether we are exposed to the friction of life which rubs the surface raw and which exposes that character.The bravest amongst us jump into the propwash and challenge the world to see what what we are really made of. That is, in essence, all one needs to know about being an entrepreneur — do you have the courage to go where the road is not marked and where you will have to grow to survive?The big advantage serial entrepreneurs have — they know what is ahead. They have been there before.We all have character, it takes a little friction to expose it.JLMwww.themusingsofthebigredca…

    4. Matt Kruza

      Please let this put to rest that zuckerberg is some kind of genius. You can say this is jealousy / “hating” whatever, but this was simply a matter of lucky timing that led his company to where it is. Not saying they haven’t made good decisions since (most notably being willing to acquire companies at what seemed like ridiculous prices but have been mostly validated), but it was 99% luck how the company started. Many reasons why it is important to note that, but I will share those later. I have always maintained there really was no great vision, but this interview 100% confirms. Luck + a little skill + insanely fortuitious timing and there you go.

      1. Joe Cardillo

        I think it’s complicated. I suspect the original idea and execution can be summed up as “find out who those hot chicks are across the quad.” There are dozens of messaging apps on a similar track as we speak just because messaging is the new thing.On the other hand, to your point, he’s helmed the thing pretty steady in the last few years, especially through IPO. That’s quite rare for a tech company, much less anything that goes public. I couldn’t say who the driver(s) are but being CEO of something like FB isn’t about the product, it’s about the team building it and who they are building it for. As FB has gotten less white, young, rich, and male, it’s improved its ability to serve end users. I hope that trend continues, and that they balance properly against advertising.But did it start out and get funded by and for tech bros and their hangers on? Pretty hard to argue against that. That’s also a separate point from, would you take the money if it were offered (and that’s a whole other topic, no doubt).

      2. JLM

        .There are a lot of things which are driven essentially by luck. It is what you do AFTER you win the lottery that is important to focus upon.In that regard, when Z realized what he had stumbled upon, he gets very high marks for how he capitalized upon what he had wrought. He caught lightning in a bottle and then instead of putting it on his shelf, he went out and lit the world.There is an analogy as to what is happening in the world today — it is easy to pick regions of the US that will prosper disproportionately over the next 50 years. Nobody is retiring to Illinois, as an example.Luck is also a bit about being awake when it comes calling and knowing enough to speak back when it speaks to you.Like Sun Tzu said: “Exploit the advantage.”JLMwww.themusingsofthebigredca…

        1. Matt Kruza

          Very true point. His best decision was buying instagram. $1 billion with 13 engineers… a ton questioned him.. but many reports think it could be worth over $40 billion on its own, and most importantly he realized (I think) that the sharing of pictures was a huge key / secret to success for facebook and knew he didn’t want a true competitor. So in that regard HUGE props on that and probably whatsapp as well. Not as sure on Occulus (I think I am messing the name) as I am a skeptic of Virtual reality being nearly as big, but it was basically a $2 billion option that if pays off will be worth tens of billions. So lucky that facebook became big, but has done a great job of making it huge, that I would agree with.

          1. JLM

            .He may have bought Instagram more because his IPO would have been priced substantially lower — much more than the pittance he paid for I’gram — if he was not the “next big thing.”He bought the next big thing.Supposedly, he did it without even conferring with the Board. He controls all the voting stock, almost.JLMwww.themusingsofthebigrecar…

          2. Matt Kruza

            I knew that about the voting stock but very interesting to learn he did that without letting the board know. He learned quick. A few people had a chance to buy them at $1 -2 billion and then $10 billion… they may have made a mistake 🙂 He won’t make that mistake

    5. ShanaC

      he grew up – now he is married. I wonder when he will have kids.

      1. Joe Cardillo

        Makes me wonder too…not quite youtube teen sensation level spotlight, but insane to manage in its own way (which he’s done quite well, considering).

  17. Kirsten Lambertsen

    Nobody would go to see a movie about a bunch of ethical VC’s. No drama!I don’t know if thoughtful people see this as representative of the industry any more than they think “Shattered Glass” represents all of journalism, or “The Hoax” represents all of publishing, or “Catch Me If You Can” represents all airline pilots ;)For me, it was hard to watch because I got burned by unethical players in tech right around that time. So it hit home. But it didn’t make me lose my faith in people or the industry.

    1. Matt Zagaja

      Too much knowledge and investment in an area can really make it difficult to enjoy the entertainment.

      1. Kirsten Lambertsen

        Well said, heh. Everyone I know in fashion detests “Project Runway.”I did think it was a really well-done movie, though.

  18. David Barnes

    Beautiful city, always on strike.

    1. Bernard Desarnauts

      such a cliche

  19. Chris Phenner

    Favorite quote from The Social Network:’Who is Eduardo Saverin?’

    1. BillMcNeely

      He is the guy that the kept the whole thing a float long enough to get wings. Don’t discredit him the judge didn’t

  20. Matt A. Myers

    If the major points weren’t true then Mark Zuckerberg should have sued for defamation of character – he didn’t.

  21. bmathes

    I’m glad you don’t partake in any of the more onerous terms that some VCs try to fight for during down markets.But I’ve definitely heard horror stories from founders of Big Deal companies that raised after the dot-com burst with funding rounds that had 2-3x liqpref, participating preferred, multiple tranches, and recapitalizations.A couple of founders were completely wiped out, but only own anything because of some earn-out provisions that gave them a couple percentage points if the company ended up exiting for hundreds of millions.I can’t share their stories because, well, breaking trust and all that. But VCs are humans, too, and if a market will let some bad actors abuse their leverage in the short term, some of them definitely will.

    1. mike

      Liq prefs, participation, recaps, etc. has nothing to do with “bad” VC actors, rather, it’s what happens to “bad” companies or companies that may not be bad, but their valuations got ahead of them. Obviously the ideal is one class of common shares, but shit happens.

      1. bmathes

        Yeah, agreed. Suppose my real objection to onerous terms is “Why dick around with terms? Just changing the fucking price.”

        1. fredwilson

          because someone, usually not the provider of money, doesn’t want to change the price

          1. bmathes

            My most recent comment wasn’t only directed at funders, but at opaque terms in general. Granted that wasn’t very clear, especially in light of my grandparent’s comment.

  22. Pete Griffiths

    I think it is pretty rare for anyone to see their life depicted accurately in film.

  23. Dasher

    What do you folks think about the way VCs are portrayed on Silicon Valley show? In particular the VC roadshow episode? I thought it was hilarious and funny in a caricature way, but has some truth in it.

    1. fredwilson

      i have never seen that show

      1. Dasher

        Fred, you may enjoy it. Unlike ‘the social network’ it is not based on any real company or people (though a character or two may have some possible similarities to some people) and is a good way to laugh at our own industry if we don’t take ourselves too seriously (at least for me). Many times you will nod and say I have seen that before and chuckle. I am huge fan of Spinal Tap. This Spinal Tap for Startups world made by the same guy.

  24. george

    Love this line from the movie, “in the scheme of things, it’s a speeding ticket.”I think this movie truly inspired many young people to really go after it, pursue their dreams!

  25. Donna Brewington White

    So is this today’s post or yesterday’s post?

    1. Vasudev Ram

      Maybe late or off because he’s in Europe.

      1. Donna Brewington White

        I’m messing with him. (i.e., kidding)Or at least I was until realizing that it is now noon in LA and still no Fred. Peut-être qu’il dort?

        1. Vasudev Ram

          Pas trop probable.Si la phrase est mal français, blâmer Google Translate 🙂

          1. Donna Brewington White


  26. KJM

    Make sure to grab a long lunch one day at L’Avenue Restaurant 41 avenue Montaigne 75008.