I mentioned a few weeks ago that I was going to give the first annual Georges Doriot Lecture at MIT.
I traveled up to MIT on April 13th and gave this talk. I really enjoyed doing it and I want to thank MIT for doing it.
What an awesome talk Fred!
Great talk. The other legal way to make 100x your money used to be in the commodity business. You can still do it but you need a lot of money behind you, and you need to be able to program. Game has changed.The Venture business has changed slightly, but I bet Gen Doriot would be able to figure it out today.
Invest in: “Long-haired entrepreneurs”As a VC, have: “Enthusiasm and appreciation”
Hurrah! Long-haired means women have an advantage!!!Or is “long-haired” the same metaphor as those with startup wounds and cut knees and hands that have healed.THIS: “Willful and talented children with unsatified souls who want to build better tools.”Schopenhauer’s “World as WILL and idea.”
A-ha, thanks, get it now.
Really enjoyed this, Fred. Especially the phrase “unsatisfied dreamers” to describe these entrepreneurs you have worked with. [Look for an email from me later today w/ a quick request.]
Thanks for sharing Fred, very informative & well presented 🙂
What a timeline!!! From Doriot to Digital to Blockchains. I love the idea of apprenticeships. This is right up there in your best talks/blogs.
There was a good section in the post by Jerry Neumann over the weekend.”..Anyone can learn to invest well in startups. But you do have to learn how to do it and then you have to work hard to do it right, every time. Like any job, you show up and you do the work and you notice your mistakes and you try to do better and you improve over time. It requires thinking and trial and error and trying to be rational and asking yourself if you’re thinking about this right and asking other people how they did what worked and what they think about this one you’re thinking about. Figuring out the nos from the maybes is, more than anything else, like solving a puzzle. The puzzle is different each time. Your job is solving the puzzles.Good puzzle-solvers have all sorts of strategies they use to solve puzzles, but the main way they become good puzzle-solvers is by solving puzzles. Good puzzles are never the same as other good puzzles. There is no generic puzzle solving process. If you ask a good puzzle solver what makes them so special, they would ask for a puzzle to solve, and solve it. What makes them special is that they solve the puzzles. They do the job..”http://reactionwheel.net/20…
Great perspective overall, especially your comments on VC’s treating the entrepreneurs as customers. Thanks for sharing.
Best bits:”The best time to invest is when you believe in something when nobody else believes in it””VC is a local business” <— did not understand this. Thanks Fred, awesome talk!
“VC is local business” Fred is answering to the question, why he don’t invest in developing world like Asia, I think what Fred mean is ‘in order to be a good effective VC, you have to be near your Entrepreneurs, seeing them often, advising often and cheerleading, you won’t be an effective VC just by living halfway around the world by just giving only Money’
Yes I understand – This makes a lot of sense to me now, but I previously imagined VC was just allocating money – I didn’t understand the amount of investment in time and advice to entrepreneurs.
Great talk and Q&A. Very high quality recording which made it a pleasure to watch. Highly recommended, every time I hear Fred talk i learn a few more things!
I let you inside my head during an early morning workout Fred.My best takeaway beside the graciousness of your poise was the #1 characteristic of an entrepreneur–which btw is the same for great marketers and salespeople–to be able to suspend disbelief around their ideas.Thanks!
Enjoyed the talk..and the right length.Good lecture-questions ratio – 20 mins talk, and leaving upto 30 mins for questions.
Classic talk. Loved your thoughts on attracting, nurturing and retaining women in entrepreneurship and VC business. Quite frankly, very few talk about this in great detail and candor.
I love that Fred credits his wife being the secret of his success from the start.And that learning from “f***ing up royally” and FEELING when things are wrong is really invaluable.Also knowing WHY we’re believing in and investing in something matters.
There’s always a lot of “piling on” in investments which leads to stampedes when things turn south!!
As a strategic investor, I wrote an investments policy paper for UBS that stated: NO me-too investments. That portfolio was $1+ billion in value.That was my position in my mid-20s because in my teens (17 onwards) I’d delivered product innovations in the chemical industry to market, and my managers had taught me how vital product differentiation is and how it symbiotically feeds into marketing. I’d pitched 6 new drink products to our Global Head of Marketing when I was 19.Fast forward to present-day SF, I’m approached every week by folks who want me to help them build yet another me-too app. Someone recently suggested a clone of Snap — except with video and machine learning.This w/e, I led a team to 1st place at IBM Cognitive Builder Faire. So could I make such a Snap clone and have it up and running in 2 weeks without outsourcing any part of the production? Sure but me-too doesn’t inspire someone like me.Every time I project manage (do product, engineering and branding from origination to execution) … my team wins.The two times I took a supporting role and helped someone build a me-too app, we didn’t even place in Top 20.Fred rightly mentioned “integrity”. For me, it’s about team and product integrity and autonomy.The IBM judges commented on how our product “was so creative and integrated so many technologies … and art+heart into AI” and how the pitch was “so authentic” with “a LOT of business opportunities”.It is easy to join stampedes. It’s better not to — lest your team and product gets trampled on.It’s better to take a different direction and go where that product hasn’t yet been built but should exist.The investors who go out of their way of the mad stampedes to find your team+product? They’ve passed your intelligence test, at the very least.
Great talk Fred and love hearing your timeline. What I found quite insightful was your comment for someone in their mid 30’s getting into the VC business, the advice that they should move to do VC in an emerging market.
SV does have significant advantages. The training and learning is unparalleled.
Great quote. “The best time to invest in something is when nobody believe’s in it except you.”
Don’t forget you have to totally believe it and be able to explain WHY you believe it.
Bumper sticker “Frogging up royally is great IF you learn from it” … aka people who mature with age vs people who age
“Experience is what you got when you don’t get what you wanted” – Howard Marks.
I have a copy of Mr Nice. Seemed like a decent and talented man who chose the wrong pathway. Being in prison was a tax on his time.
Was referring to Howard Marks of Oaktree Capital.
I live in my world. It’s a bit broader than venture capitalism.
Great talk Fred !!!!Awesome definition for Entrepreneur “Willful and talented children with unsatisfied souls who want to build better tools.”
Thank you, Fred. This was worthwhile. Many talks are droll TedX wannabe’s or boring. But a lot of value in this.
Go where no one else wants to go: advice that has defined my career success, too.Also: serve others. That’s a growth secret few know. An inspiring, touching and poignant talk – from a VC? Only Fred Wilson.Bravo! And thanks.
Excellent talk and Q&A. Wish I could have made that lecture – right in my backyard but was away.
Great talk. Thanks Fred
I’m surprised that what Fred described in that lecture and did with USV worked as well as it has. E.g., before a lot of traction, I would have passed on Twitter. For Etsy, I would never have had any confidence. My guess is that the explanation is a secret ingredient — Fred’s judgment.Maybe with enough investments in the better looking cases of bright, determined, hard working founders we should expect some big successes if only because (A) lots of routine businesses stay in business and (B) having bright, …, should be enough of an advantage to enough better than (A) to have “some big successes” drop out of the mix somewhere.Still, I’d want more advantages to bet on: Since I did see how the US DoD did get some big results from betting on some applied math and applied physics with some really good engineering as strong advantages, I’d look for much the same — both in solid evidence that the solution would work and also in the good recipe for how to make it work — but to get good solutions for problems in business, that is, commercial instead of military. One lesson to draw from is that the US DoD often was so far ahead in the math, science, and engineering that the resulting systems had big technological advantages and were far ahead of any competition — being ahead of any competition can also be very valuable in business.Alas, information technology venture capital doesn’t look for being ahead and getting big advantages from advanced math, science, and engineering. Apparently biomedical venture investing is quite different and does look at the science and wants to see some strong advantages.But maybe the information technology investing concluded that computing and later the Internet were so new and powerful that the best startups in computing and the Internet would no doubt do well, so for an investing strategy just look for and invest in the best looking cases, wait, hope, and, with a big, diversified portfolio, be fairly sure of high ROI. So, ignore the details, invest broadly in the best, relax, and in a few years look and observe that have some opportunities for some exits with 20X gains. Yup, but evidence is that such a simple, simplistic, strategy is not good: On average ROI from venture investing looks poor: Kauffman had a report athttp://www.kauffman.org/new…I have a copy, but that URL no longer works. Fred had such a post still athttp://www.avc.com/a_vc/201…Whatever strategy, I’d still want to see the details; as an entrepreneur, to me the details are just crucial.Also on “suspending disbelief” and”convincing others”, I can’t have much confidence in the role of either of those two. Instead, I want rock solid, objective evidence that the project will work, evidence so solid I don’t have to “suspend” anything and can’t expect others, unwilling or unable, both common, to look at the evidence and understand it. I have to accept that, for some of the best evidence, nearly no one else will be able to understand it. By evidence that the project “work”, I mean that the technical parts are essentially guaranteed to work and, then, that the technical parts of the project works will be so powerful in the market and that the rest of the project is so designed that when the technical parts work, there is very little chance that the rest, to business success, won’t work. I want all the high risk well OUT of the project before writing even the first line of software. Or, in a medical analogy, I want to know, before the first pill is produced, that I will have a safe, effective, cheap, proprietary, protected one pill taken once that will cure any cancer — with such a pill, the rest of the steps to business success will be easy and low risk.On competition, I want essentially none: I want to be so far ahead in the proprietary, protected crucial core technology that essentially no one else can duplicate or equal my solution.I want high financial return, but, after the first, early steps in the project, I want very low risk for the rest of the project or just stop after those early steps and pick another project. I’m not into risk, flying off “on a wing and a prayer”, “suspending disbelief”, “damn the torpedoes; full speed ahead” — nope, no way.E.g., yesterday while in a group waiting for a clerk, I discussed Trump’s goal of putting a man on Mars: I wouldn’t try to do that. Instead I’d try to send a lot of robots and supplies to Mars. The robots would use the supplies to build a good base, for both humans and robots, and build good transportation back to earth. Then some of the robots would use that transportation actually to return to earth. When the robots had made lots of safe round trips and the base looked really solid, then and only then send the first human. And wrap the humans in enough lead or whatever to protect them from the horrendous cosmic ray flux, to, from, and on Mars (Mars may not have enough atmosphere to protect humans well enough from cosmic rays, although the robots should be able to settle this question on Mars in rock solid terms long before any humans left earth).”Suspend disbelief”? No way! No walking out on thin ice. No chance of having to carry 20 pounds in a five pound bag. Instead, I want the project to look good, measure twice and saw once, have both belt and suspenders, maybe the plans call only for carrying five pounds in a 20 pound bag, and rock solid, after full skepticism and the most severe rational criticism possible, from the end of the planning onward.The amazing DoD projects I saw, no one seriously involved with the project was doing any “suspending disbelief”. Anyone could have a lot of confidence in the project just by being willing and able to read carefully the project planning documents.Sure, since nearly no one else will be able to evaluate the solid project plans, I’ll have to be a solo founder, 100% owner, self-funded, no BoD, no equity investors. “Co-founders”? A great way to get into co-founder disputes; such disputes are a terrible risk; and I don’t want any co-founder disputes . Equity investors won’t “suspend disbelief” and won’t consider or even be able to consider any good evidence before good traction, but with such traction there will already be so much revenue and earnings that a self-funded, solo founder won’t want or need equity investors.All evidence is that the strategy of suspending disbelief and walking out on thin ice is on average not a very good way to make money and in most particular cases a way to fall into icy water. No thanks.It really is possible to fly across the Atlantic at 35,000 feet at 0.8 Mach safely — both amazing and safe. But doing this took one heck of a lot of good math, physics, and engineering.Fred mentioned what he likes to see in a new investment; he omitted “traction”!For a solo founder, the “traction” the VCs want to see can mean that the founder is past wanting or needing an equity investment.
Great talk and great insights. Always concise and to the point. Spoken with insight and passion.
I listened to your Doriot lecture… it moved me to tears… and looks like it did for you too. I hope we can meet one day.Take care
This may be one of your best talks ever.I just emailed it to my 20 year old son. I know for certain he’ll find it heartening that you got a zero on your first test at MIT. He and I talk a lot and he had a tough transition from high school to college because he was used to not studying and being the smartest person in the room too.Thank you for sharing in such a personal way.
Great talk – I wasn’t familiar with the general. Sounds like a fascinating guy.
I’ll pose this as a question. Its a nice talk. So, you and I are about the same age. I speak in public alot too. Somehow, I never got to a place where I feel comfortable dropping F bombs in front of an audience, and with respect, at MIT? So let me pose it like this, when and how did the culture get to the place where you and many others do feel comfortable that way?