hackNY 2022 Speakers

6/7 Fred Wilson.

main
- studied cs at mit in 70s, went into ventures
- started usv in 2003 and only invested in usa companies. 2008 started in eu west.
- there is a climate fund and a core fund.
- usually sit on the boards of said companies.
- 2/3rds of their investments are in series A rounds
- likes to invest in companies that are: young
- do a lot of work to set up a company profile, then go find the best teams and invest
- 19 people total at usv. 10 actually make the investments (8 analysts, 2 partners). finance / legal / admin
- and the rest are on the network team. they support the companies we partner with (recruiting, events, etc)
- these are 10-year funds, though it almost always takes longer. companies either go public or get acquired.
- credits usv's success to their thesis-driven approach and their work on identifying good markets. 5-25x ROI
- climate fund is 200M but that is relatively small. since pandemic, fred invested in middle east and india and australia bc it's all over zoom.
- other vc "climate" funds can be big though, it's not like climate funding is considered risky.

q+a
- sakib: are there any "waves" or trends that you feel like you've missed? some we knew were right and didn't make the right bets. for example, location-based services on phones. when iphone came out, partner albert said phones are computers that know where you are. they missed out on foursquare and ride-sharing. thought travis was a sociopath but he ended up being the right person in that sector at the right time. he likes working in small funds because power-law distribution: one monster investment, few ok, most fails.
- moody: we see a tech recession rn. whats your view as a vc? fred says its not just in nyc. they don't see the small companies doing poorly, only the big ones are slowing down. small companies see this an opportunity to get access to talent that would normally fly to google/fb.
- bricken: whats your thesis on crypto and web3? fred says in the beginning they didnt have a thesis-driven approach, they read satoshi's whitepaper, their first investment took a year since looking, one per year slowly. they eventually learned more about the blockchain sector and started investing in filecoin in 2014 and layer 1 blockchains in 2016 and nfts in 2017. he collected a lot of rare pepe's on a niche blockchain with his partner.
- paulin: is web3 decentralized if vcs own it? fred says there is an unspoken law that vcs can only own < 40% of a given item. average % of a token they own is 2-4%, average % of a company they own is 10-15%. so investments in web3 are not as dystopian as they are in web2. he predicts we will see web3 go mainstream via the vehicle of gaming/entertainment.
- moody: is startup pitching becoming more serious, since groups of tech bros in hoodies in garage? fred says that in 80s everybody wore suits. you had to have an MBA to work in vc. says its becoming less stiff and corporate, it's become a lot easier for founders to raise capital.
- katie: tips on specific companies to join? fred says to treat it like an investment of your time/energy/ideas, like they do. pick a sector, have a thesis about that sector, meet with as many companies as you can in that sector, and pick the team/culture/product you like the most.
- sarthak: what are startups' biggest deficiencies? fred says it's usually finding proper talent. they have trouble finding people and keeping them away from competitors. the web3 companies are worried about regulations, financial services and climate services have different needs, etc. usv has to support 120 portfolio companies. common is hiring/raising
- pearl: re: his blog, thoughts on his writing process? fred says #1 thing to improve your writing is to write more. 2003 he was a bad writer and he kept going. write in plain english with few buzzwords to a wide audience. condense your point. "if I had the time I would have made it shorter"
- viv: what makes you feel motivated about what you do? fred says it feels good to be right, especially when other people think you're wrong. he has a competitive streak due to a chip on his shoulder. he likes to prove people wrong. follow-up q: what thesis are you most excited about now? fred says we have gone from big mainframes to client/server to phones. he sees big networks of personal devices as more resilient, and is interested in applying that to different markets, such as energy. can we iterate on big energy grids? "why can't we all have nuclear power generators?" they invest in Radiant (making a nuclear power plant that fits in a shipping container, aimed at mining facilities and military bases, then small farms, etc).
- erin: is there one company he is particularly proud or upset about? fred says he is upset about missing on airbnb in the beginning, mainly b/c their pitch was air mattresses on living room floors. they are most proud of etsy because he has been there longer than any employee, mostly women creating a 2nd income for their families.
- rachel: have you found a common denominator in unicorns / "monstrous home runs"? fred says it's often companies who create new large markets, for example airbnb, the idea that many people would stay in homes not hotels.
- mariel: can you speak more about your philosophy on philanthropy re:education? and how do you envision web3 revolutionizing education/healthcare? fred says cs ed is very important, we all need to know how to instruct a machine. it's a little brittle, it doesn't work perfectly, etc. he noticed nyc only teaches cs in 5 public schools. he met with nyc public school system and they said "we only teach cs to kids who are capable of learning it" and he got angry and put up a school to prove them wrong. 1/3rd of schools are great, 1/3rd are tracking well, 1/3rd are failing because of systemic issues like kids going to school hungry. he took eric adams to a spanish speaking classroom in brooklyn and they watched a kindergarten teacher: kids played hopskotch by laying down hop/skip/jump on a hopskotch field so everyone followed individual instruction sets. his friend told em to get em young (mit scratch). also they're not investing in web3 -> education/healthcare yet, because they haven't developed a thesis yet. (how does decentralized ownership of education/healthcare work? what does it look like?)
- yamini: more advice around how to choose a company? fred says, again, treat it like an investment, ask them how they will help you in your personal development, if they can't, then don't join them.
- kevin: what is your thesis around investing in climate? fred says they're not treating it like a social-good mission. they held off on setting up a fund until there were enough catalysts to make it a good business (3-4 years ago). pick companies that you can root for them making it.
- bricken: ycombinator sometimes bets on a company not because of the product but because of the team. hbu? fred says they don't do that because they are thesis investors. it's a 2-step process: they decide on the thesis areas, then find the best places to invest. it hasn't worked well for them when they have gone away from this model.
- paulin: what's something you would have liked to know when you were our age? fred says he didn't start writing until 2003, when he was 43. he wishes he had started in high school. writing something down causes you to think about something in a way you wouldn't have otherwise. make it an every day work practice. especially important for his job which is in the business of taking chaos and outputting a set of discrete instructions. also, follow your personal path and don't care about what others think.
- pearl: asking again about web3 and gamification in the metaverse. something something... fred says their most successful online learning investment is duolingo because they are at the intersection of gaming and education, they made it fun, and their ai makes an individualized lesson plan per person. if they saw the right thing, they would invest in metaverse / education / gaming right now. 99% of the things built in web3 are shit. even the things that are kinda good are not experiences. boom/bust cycles are bad because it drives investors away. so somehow we have to work around that to drive real sustained engagement.
- moody: how do you feel about web3 things that are predatory? how do you stop that? fred says you stop them by getting a down market: no one does that in a down market, a bust.

q: any theses now or prior around brain/computer interaction systems? new ways to instruct machines?
q: when do you negotiate ROI with your client companies?
q: thesis-driven approach: do you have a different company profile for domestic vs. eu west vs. eu east? due to different regulations and salaries and ???
*** q: being a vc doesn't immediately come off as an accessible career path. what was your path into it and what would someone's be now? ***