A VC - Latest Comments in The Stupidest Answer In The World

Re: The Stupidest Answer In The World

John Hussein Smith — Sat, 18 Apr 2009 14:51:23 -0000

- Give back your public money
- Don't take money from any institution that has benefited from the bailout

OR, if you continue to take public money (which does benefit you, because if you refused your other LPs would have less competition and could require stiffer terms of their arrangement with you)

- Notify companies you invest with that you will make public and transparent your knowledge of their company performance
- Limit your salary to no more than 250k limit your bonuses to a % of salary, not to exceed 100%

Anything less is means you don't walk the walk of Barak

Re: The Stupidest Answer In The World

fredwilson — Mon, 06 Apr 2009 07:03:09 -0000

I am for more transparency, probably on the outer edge of my industry on that one

But here's the thing. I don't need public money to do what I do. And twitter doesn't need my money to do what they do.

There's a market to invest in my fund, and there's a market to invest in twitter.

If public investors want to invest in my fund, and if they want to invest in twitter through me, they will do what twitter wants, not what I want or what you want.

Twitter (and every entrepreneur out there) holds all the cards in this marketplace because they are the scarce asset that everyone wants to be part of.

Re: The Stupidest Answer In The World

John Hussein Smith — Mon, 06 Apr 2009 02:49:01 -0000

So, Twitter's wants come before the public? It's taking public money, and I bet these days people who have their retirement funds invested in an non-liquid asset want to know what the cash balance and burn rate is! Hello, are you aware that we're in economic meltdown because of lack of transparency - you're creating a whole new toxic asset pool.

So, put your money where your mouth is. Or, more to the point, put your money BACK where your mouth is. Contractually obligating public LP's from releasing information under the FOIA is on par with the Bush administration doing the same.

You're an Obama supporter when it's convenient for you, but when it comes to subjecting your industry to regulation, you're cashing in your donations for favors with his administration just like others who you deride for doing the same.

Re: The Stupidest Answer In The World

fredwilson — Sat, 04 Apr 2009 08:43:20 -0000

Great comment

1) I've gone on record on the Obama regulation issue supporting more transparency and reporting. See my comments in The Deal's article on that issue

2) We do report on Twitter's progress, its numbers, and the things that are going on in the company to our public LPs. But that information is contractually protected from FOIA and should not be available to everyone. Small companies need some things to be private. If you were twitter, would you, for example, want your compeitors to know your cash balance or burn rate? I am sure you would not. And so twitter won't take money from us without a confidentiality agreement and we won't take public money without a similar one

3) We don't need public money to do what we do and many top VC investors refuse to manage public money for exactly the reasons you articulate. Our firm has chosen to work with public investors but with the proper protections in place

4) If twitter chooses to go public, it will have to disclose all that info. Most companies don't want to be public anymore. Its too hard and too risky. Too much regulation is bad. There has to be a balance

Hope that clarifies my position on this issue

Re: The Stupidest Answer In The World

John Hussein Smith — Thu, 02 Apr 2009 14:02:12 -0000

Why isn't it your place to talk about Twitter's business publicly? Does your fund receive money from LP's that manage the retirement fund of citizens of this country? Does your fund have public LP's, like major state retirement funds? Obama, who you quote above you, is calling for TRANSPARENCY. It's time for hedge funds and private equity, which hold the capital of ordinary American citizens and charge high management fees to do so, to become a lot more public about their investments.

Twitter is being funded by public money. Maybe indirectly, but public money none the less. As a public, we have a right to know what our money is funding with respect to future prospects for the investments, the executive compensation, and more.

I also hope that you'll show your support for Obama's call for transparency by either opting out of the NVCA, or ordering your powerful, elite lobby group to stop being obstructionists when it comes to policy that demands transparancy from your industry.

Re: The Stupidest Answer In The World

fredwilson — Sat, 15 Nov 2008 14:08:45 -0000

Hadn't seen that

Thanks

Re: The Stupidest Answer In The World

mrclark411 — Sat, 15 Nov 2008 11:27:55 -0000

Fred,
Have you looked at Peldi @ Balsamiq's proposal for monetizing Twitter?

$$ tag for Twitter ads? I want to pay for Twitter!
http://www.balsamiq.com/blo...

He talks about it some here on a podcast: http://startuppodcast.wordp...

I'm long on Twitter.

Re: The Stupidest Answer In The World

fredwilson — Tue, 21 Oct 2008 05:49:11 -0000

As howard said in his comment

Long twitter, short aplogies

I love that line

I need to live by it

Re: The Stupidest Answer In The World

Roger Toennis — Mon, 20 Oct 2008 13:16:37 -0000

Fred,

That was not a stupid comment about Twitter, IMO.

Re: "How as Google going to make money??

Google was always going to make money because it was, from the day of it's conception, on a path to provide something to humanity that it desperately needed and wanted; "easy access to information"; Instant knowledge; instant inquiry and immediate illumination. Google is as impactful to the history of humanity as the discovery of fire; as impactful as the creation of written language, as impactful as the invention of the printing-press.

As such; in the very moment of it's creation as an idea in the minds of Sergei and Larry, it was on a clear and undeniable path to being able to make money. The demand for instant knowledge is insatiable. You cannot help but make money if your solution directly meets that desire.

No such thing thing can be said of Twitter. Twitter is for a finite period of time, that varies for everyone but remains nonetheless finite, a trifle that is fun to fiddle with. It may get purchased and founders and investors may make money. But it will not in its current form become, on its own, something that delivers *net new* and significant value to the human race. It is not an enabler of net new wealth, insight or industry.

I'm all for the excitement and reality of venture ideas that are world-changers. But I'm quite comfortable with the statement that Twitter is not one of them.

Cheers,
Roger

Re: The Stupidest Answer In The World

Tony_Alva — Mon, 20 Oct 2008 10:31:06 -0000

I read yours and countless other blogs everyday. I have my own blog and find myself on Facebook more than I ever wanted too. Yet, here I stand before you asking this question...

Re: The Stupidest Answer In The World

auston — Mon, 20 Oct 2008 00:16:08 -0000

I definitely have to disagree with you. I find twitter's search and discovery to be awesome and useful in more ways than one.

Re: The Stupidest Answer In The World

Ed — Mon, 20 Oct 2008 00:12:19 -0000

Fred,
I'd like to apologize, sincerely, for the brash tone I used above.
Especially in light of Jack's [.......].

But I get excited about Twitter, as though I'm in investor who is intrigued
with their fundamental concept before anyone else.
I was around when they were sending emails 'Hows that look?'
I think there were 400 hundred of us-total.
{If AOL wasn't so rotten with their encrypted data even for premium paid members,
I'd have archival snapshots of Twittr's infancy to share!}

Over the past year alone, I have had so many ideas
about exploding Twitter's growth [and] with an instant allure
that makes monetization easy.
With growth, comes the ability for any business to create
sustainable revenue models.

Thank You,
Ed

Re: The Stupidest Answer In The World

fredwilson — Sun, 19 Oct 2008 20:08:18 -0000

Good take

Re: The Stupidest Answer In The World

liza — Sun, 19 Oct 2008 18:20:13 -0000

Why not call it what it is? A research and development investment.

Remember Lucent? Where are they now? Mega-corporations used to have these divisions. Companies like AT&T, IBM, used to plunk millions annually in projects they didn't expect to see a profit anytime soon. For technologists, the days of working in an R&D lab are virtually gone. Now you need to create your own venue, your own company and hope to hook in the right people with the right VC money in order to tinker in an R&D lab of your own making.

Twitter has been that. In a way, YouTube was that and before them Google.

We need to bring back the respect and recognition that R&D labs used to have before tech companies abandoned them for the quick buck.

I agree with you that Twitter has many income potentials (I can think of a variety of features I'd pay to have). The issue is that the right answer to "When are they going to make money?" should be "Why would it matter right now for what is for us an investment in an R&D lab".

Liza Sabater, Publisher
www.culturekitchen.com

Re: The Stupidest Answer In The World

lebousquet — Sun, 19 Oct 2008 17:16:40 -0000

When economic crisis strikes, biz journalists often default to the "show me the money" question for the same reason investors scramble for higher ground. Namely, fear, and an urgent wish to see what's over the horizon. As a reporter or editor, the fear is that the companies one publicized as important are suddenly revealed as shams. The wish for clarity emerges in a renewed focus on concrete benchmarks of progress, like sales and profits. Also worth noting that this latest crisis raises the hackles of media folks, many of whom were rightly lambasted for hyping dot-coms and telecoms during the last bust.

Everything is topsy-turvy now. "Good" banks are bad, "smart" guys are dumb, a "strong" financial system is shown to be weak. I'm a financial journo, and like everyone else I'm struggling to figure out wth is going on. In assessing the impact of the financial crisis, I latch on to the concrete--how's Twitter going to make money (and soon)--rather than explore less tangible measures of its worth that may not emerge for a long time and, btw, may be a function of a Web environment that's in serious flux and difficult to envision.

I think Chris Snyder's question a good one. He's doing his job and trying to gauge how the most prominent emerging Web companies are coping with an epic economic convulsion (as journalists, we get punished--by competitors and our bosses--for not asking these sorts of questions.). That was his context for asking it. By the same token, your context, as an investor in Twitter and other early-stage Internet startups, naturally encompasses broader concerns. Thus the disconnect. And until the financial world resumes a measure of stability, the biz media will appropriately, if arguably too narrowly, continue to fixate on questions about which companies will survive and which ones are headed for the bone-yard.

Hope that doesn't come off as pedantic, but that's my take.

Re: The Stupidest Answer In The World

dzohrob — Sun, 19 Oct 2008 14:10:28 -0000

Fred, I think a lot of us in the tech world (and the rest of the world) could learn from your ability to be humble and self-aware.

Re: The Stupidest Answer In The World

shareme — Sun, 19 Oct 2008 13:42:35 -0000

I face the same problem right now..

There is chance and opportunity to me to make a customize Mobile LInux OSes play as that is still growing. But the companies entering to upset Apple iPhone and Google's Android usually have already spent most of seed capital on the hardware part..

The business model I have come up with is choose some quality OEMs with bleeding edge hardware and offer a mix of small cash upfront and huge stock equity. We know that one bet will pan out or maybe several as I use methods to get ahead of big OEM player launches of new devices.

The problem is always application and execution of limited resources.. for example my seed capital is somewhat dangerously small.

However, the business is there and I have my first client..

Mobile Operators and OEMs are really lookign for better choices than Apple iPhone and Google Android lock-ins to bring devices to consumers..

Fred, if you know anybody who might be interested in Web 2.0 cellphone investment adventures please give my contact info to them.

Yes, over long term I need a more complex business model mix..working on it.

Re: The Stupidest Answer In The World

fredwilson — Sun, 19 Oct 2008 13:24:12 -0000

Thanks Mike

I am with you

I suspect the best social media business models may be thought of outside
the companies with the biggest social media user bases, just like overture
invented the killer search business model

Re: The Stupidest Answer In The World

fredwilson — Sun, 19 Oct 2008 12:45:13 -0000

That's not a done deal, they may be backing away from that stance. Time will
tell.

Re: The Stupidest Answer In The World

Aruni S. Gunasegaram — Sun, 19 Oct 2008 11:51:13 -0000

Steady single money is alright in the rest of the world but in the world of venture investing, they typically aim for a home-run because they have to hope each will make it to result in the desired returns to their investors. This economic downturn, however, might make modest returns more acceptable/understandable.

Re: The Stupidest Answer In The World

VCMike — Sun, 19 Oct 2008 11:48:38 -0000

Fred, as an investor in a handful of "Web 2.0" or "Social Media" who have yet to demonstrate a sustainable business model, I share alot of your sentiment, and I tend not to rank revenue generation as the top question/challenge for any of those companies. That said, however, I do think business model is THE question for the sector as a whole. My guess is that when we look back in 5 years there will be a couple large and highly profitable businesses that emerge from the current social media wave and that introduce an important area of online business, just as Google and search did in the first half of this decade. If true, there is a lot at stake in being early to identify the winning companies and revenue models, much more than is at stake in riding the wave of social media services that become popular but not a source of large profits. So while I am with you in terms of your perspective as a Twitter investor/board member, I actually agree with the article that the right question from the bleachers for Twitter (and for other socialmedia startups) is what its business model will be.

Re: The Stupidest Answer In The World

Aruni S. Gunasegaram — Sun, 19 Oct 2008 11:48:30 -0000

I don't believe it was a stupid answer but a defensive one. That's what happens when we are tired and repeatedly asked something over and over. And we can't seem to get our point across. I've been there done that. You can't convey everything in your head and people sometimes just want people to 'stop already and leave them alone.'

As far as twitter being mainstream...seems to me it's getting close. I've seen them on CNN telling people to tweet their comments to them during shows which is one big step closer to going mainstream. They listed Twitter on top, then facebook, then myspace as ways to send their comments. Might be a revenue model in there somewhere.

An interesting question to ask is also "What if there is no sustainable revenue model, then what?" I believe we are in the middle of a mindshift in economics, global finance, etc. There's no question that twitter is a valuable tool in my experience but what if the way people pay for it is not constrained by the traditional way we've come to understand how people pay? Then what? If you haven't already done it, you might want to try an exercise where you bring in people/users who are outside of the day to day of the VC/high-tech/Wall Street mindset...get them to help you throw up ideas on the wall. I'm happy to contribute (as an avid user).

It was good to wake up to see that Colin Powell endorsed Obama today. If this is part of Obama's campaign strategy in the last few weeks, it was a good one.

Re: The Stupidest Answer In The World

max — Sun, 19 Oct 2008 09:30:51 -0000

hey Fred, I have ti disagree with you. I think your original answer was not stupid at all.
I think the real challenge is to create services that get traction and reach out to masses. Once you have the critical mass I think the business model will come out naturally. And at least it will be ad-funded. Of course depending on how effectively the business model will be structured that will determine the health of the Company and its valutation. But as you know the key thing is to create something the reach the critical mass. And of course the twitter guys have done it dramatically well. I am sure they will figure out how to make money.

best
max

Re: The Stupidest Answer In The World

howardlindzon — Sun, 19 Oct 2008 02:35:01 -0000

skate key has more value. lets start with that

Re: The Stupidest Answer In The World

howardlindzon — Sun, 19 Oct 2008 02:03:09 -0000

Good idea :)