8 ms·

Pretty much every single comment so far is cynical. "No one really wants to know how the sausage is made", lots of money is tainted anyway, it's just PR fluff,

Pretty much every single comment so far is cynical. "No one really wants to know how the sausage is made", lots of money is tainted anyway, it's just PR fluff, etc etc. The classic HN Middlebrow Dismissal in full effect. Counterpoint: cynicism is too easy. Actually giving a shit is harder, it's uncomfortable, it involves compromise. Yes, if you refuse investment from any country that has ever violated a human right, you will raise $0. But that doesn't mean all money is created equal, or that Fred Wilson's effort here isnt worthwhile. He's simply calling for VCs to a) refuse money from the worst offenders and b) be transparent about who their LPs are. He's also calling on startups, founders, engineers etc to demand this transparency, to care who they ultimately working for. It's a simple ask.

barrkel 8y ago
I think a better ask is to create self-sustaining processes that ratchet to improve the system over time. In a word: regulation. You can't be sure you're consuming ethical meat through consumer pressure alone. You need more eyes in the system, with enough force to be able to see through the veils that the profit motive will put up.
- downandout 8y ago
  Not everyone in the world can afford "ethical meat" but they still need to eat nonetheless. This is one of the things I have never understood - people that are into concepts like "ethical meat" tend to be left leaning, and people on that side claim to be compassionate toward the poor. Yet it appears from your comment that if you had your way, you would use regulation to force the costs of eating up, which would dramatically affect the ability of poor people to eat. You can’t simultaneously claim to have compassion for poor people and advocate for regulations that will make their lives more difficult and expensive than is absolutely necessary.
3pt14159 8y ago
The problem with the global system cracking is that it's pushing this work onto low-information people with mismatched incentives. If the Sauds have routine trouble getting money into funds they'll resort to tricks that will get them exposure in one way or another. They can acquire a company, they can create their own VP that doesn't list investors but co-invests. It's a never ending battle and one that we're not capable of fairly judging. This should be a Nato / EU / US or UN thing where we have real tools to enforce sanctions.
- stephengillie 8y ago
  Just because they have other options doesn't mean the fight is lost before it's begun. We can make this more and more work for them, and keep sending the message. And yes, we can also work to place sanctions on investment from nations that ignore human rights. If we make better and best into enemies, there's no end to what we can't accomplish.
  - 3pt14159 8y ago
    I usually agree with this line of thinking, and even personally I wouldn't take money from some people like Peter Thiel because of his political actions, but I don't try to get others to do the same. I advocate for systemic or political changes or—if those are hard because of mismatched incentives or low information voters—propaganda, think tank funding, and lobbying to try to fix things. Take plastics use, for example, it's better to focus energy on banning them completely than to check each and every shampoo personally for microbeads. Better and best are only enemies in situations where better is multiple orders of magnitude less effective than "best" which I wouldn't even classify as "best" I would call it "a real solution that might not be optimal but fundamentally sees to address the problem in a meaningful and efficient way" because I don't think of things in terms of better and best. I think the reason I don't is that I studied both software and structural engineering separately. In structural engineering the design goals for non-emergency buildings are 1/10k failure rate over 100 years, with visible signs of failure before collapse. We need steel girders to deal with illiberal states, not popsicle sticks.
    - Baeocystin 8y ago
      >Take plastics use, for example, it's better to focus energy on banning them completely than to check each and every shampoo personally for microbeads. The vast majority (>90%) of the plastic waste in the world's oceans comes from a few rivers in asia that run through countries that have minimal to no garbage collection/sanitation services for the cities that border the rivers. Investing in appropriate waste management infrastructure in the countries that need it is the solution to work towards. Plastic bans don't address the fundamental problem. https://cen.acs.org/materials/polymers/Fighting-ocean-plastics-source/96/i16 https://cen.acs.org/materials/polymers/Fighting-ocean-plasti...
baxtr 8y ago
I tend to agree. I don’t get why people don’t value someone who starts to raise the bar. Even if that’s not high enough, why not see it as something that needs to develop over time?
- TAForObvReasons 8y ago
  > I don’t claim to have entirely clean hands in this regard. When we sold our Twitter stock before the IPO many years ago, it turned out the buyer was fronting for gulf interests. I found that out after the fact but that doesn’t absolve me of anything. I could have asked the questions before executing the sale. ^^ That's why. He's "raising the bar" after making money through means that he would find despicable now. "Ends justify the means" is what got us into this mess, and unless he is willing to give away the gains from the arguably tainted money he's just posturing.
  - swsieber 8y ago
    People do change. Calling it posturing is premature judgement.
    - TAForObvReasons 8y ago
      Until he comes out and says "we made $X from doing business with questionable entities, and here's how we gave back $X without lining our pockets", it's posturing.
      - y4mi 8y ago
        You don't have to address every wrong you did in order to start doing right. It's never black and white with people.. and you're not actually looking at the real problem if you're unable to see the nuances.
        TAForObvReasons 8y ago
        > It is time for all of us in the startup and VC sector to do a deep dive on our investor base and ask the question that the CEO asked me. Who are our investors and can we be proud of them? And do we want to work for them? I would extend that question even further: Can we be proud of the gains we've made by working with the investors we've dealt with in the past? If not, how are we addressing the problem? You can't be forward looking without addressing the past. This is why the moral pleas never really gain traction. If Fred was honest he'd address the elephant in the room by accounting for and giving back the gains. Until that happens, this is empty posturing. Politicians will do this, this isn't some crazy ask. For example, Cuomo put his money where his mouth is and "returned" the $110K donated by Weinstein through the years: > “My message to everyone who has current accounts with money from Harvey Weinstein is, ‘Give that money back,’” the mayor added. “Give it to charity. Get the hell away from it.” https://www.nytimes.com/2017/10/12/nyregion/andrew-cuomo-harvey-weinstein-campaign-contributions.html https://www.nytimes.com/2017/10/12/nyregion/andrew-cuomo-har...
almostdeadguy 8y ago
Saying "giving a shit involves compromise" is exactly the kind of thing that venerates the idea that conscious capitalism is impossible. The irony of this post is that he lists the pension fund of the police, who are responsible for some of the most brutal human rights violations in the US, as a wholesome LP, when for some of us it's just the opposite. Fundamentally everyone in the business community is worried more about ass-covering as it pertains to their bottom-line, not to any real concern about the implications of who they enrich. That's not to say that there's nothing to be done, but anyways... I won't talk about that here since HN has a pretty nasty reflexive response when you talk about the S word.
detcader 8y ago
Totally agree. I just hope people will take this sentiment and make it more formalized. But people will have to be up to that task. An explicit movement to refuse money from US allies who violate human rights would have to include Israel -- so, a big ask. A centralized outlet that reports who funds who, like we have for political campaigns, requires sweat and tears. Hopefully we'll see more grass-roots organizations made up of tech workers like Tech Solidarity to take this work on. I can't act as a leader for change like this in the tech startup sector, but I would be very interested and engaged with any leaders who step up.
jaypeg25 8y ago
We're at a point now where VCs are going to have to start refusing money from nearly everybody foreign thanks to the new CFIUS rules. They're so overly broad in identifying high-tech industries that I think there's going to be a lot of issues over the next couple years of implementation.
- adventured 8y ago
  > VCs are going to have to start refusing money from nearly everybody foreign thanks to the new CFIUS rules That isn't going to happen at all. The point of CFIUS is selective enforcement, not broad, strict enforcement. It's the exact same reason anti-trust laws are vague, so they can selectively go after anyone at any time if they so choose. The point is to be able to further control the economy, whenever that is desirable, and to target a given nation for restrictions if it's viewed as politically advantageous. The point is absolutely not to clamp down on all foreign investment.
  - jaypeg25 8y ago
    The point of CFIUS used to be selective enforcement. But the new rules require mandatory disclosures of any foreign investment into a high-tech company.
golemiprague 8y ago
Who are the "worst offenders"? That's the big question and it really depends on your political point of view.
AnthonyMouse 8y ago
> Pretty much every single comment so far is cynical. "No one really wants to know how the sausage is made", lots of money is tainted anyway, it's just PR fluff, etc etc. It seems like a deeper problem than that, which is that money is fungible. It's the same thing as saying we shouldn't buy Saudi oil. If the only result is that you buy some other oil and the people who would have bought that oil buy the Saudi oil, nothing meaningful has changed. To get a meaningful result you need one of two things. One is solidarity (i.e. market power), but you never have that in a diffuse competitive market. The other is to do something that isn't fungible. For example, if you actually use less oil (buy an electric car and solar panels, or support nuclear etc.), it makes a proportional difference even at the individual level, because then it isn't a matter of everyone having to act together to accomplish anything, it's a matter of each person doing their share adding up. Then the cost to them is in proportion to how many people act rather than the cost being effectively zero unless you reach a critical mass you can't achieve. But there isn't any obvious equivalent to that for venture capital. For oil, basically all of the foreign exporters are antagonistic, and burning oil itself is harmful regardless of the source, so everything lines up for that working as a mechanism of retaliation. But if solar/wind/hydro/nuclear/etc. are the alternatives to oil, what is the alternative to money supposed to be? To get anywhere on that front you need market power, which essentially means something like government sanctions. But we don't do that because we still need their oil. So it seems like we're right back to stop burning oil.
- ericjang 8y ago
  Investment opportunities (which VC firms get the money, what deal flow they have, what investment opportunities the VC has) are most certainly not fungible. So I think it's helpful to think of the deal flow in reverse - even though "someone else can take the Saudi money", that "someone else" most likely does not represent exactly the same investment opportunity to the LPs. FWIW - I do think your assessment of oil is correct (since oil and money are both fungible). But for venture capital, one side of the investment (startup talent, VC skill and network, etc.) are not fungible. (elaborated a bit more in a twitter rant: https://twitter.com/ericjang11/status/1054115724996694016 https://twitter.com/ericjang11/status/1054115724996694016)
deleted 8y ago
[deleted]
tomasien 8y ago
Exactly! It's not about "tainted" vs. "untainted", it's about setting some limits and trying to be a part of the solution. Doing so puts in progress something that WILL start to shift things. You don't have to be money trail inspector, you just need to be your own ethical link in an otherwise ethically unknown chain. You're responsible for making a reasonable effort where you think it's important not for the actions of everyone who has ever touched a dollar you're now touching.
downandout 8y ago
be transparent about who their LPs are That would be a deal breaker for many potential LPs, and not because all of them are criminals or despots. Some people just don't like others to know what they are doing with their money. The bottom line is, if enough VCs take this stance, any bad actor that wants to invest will simply put their money into clean shell companies and invest that way, or partner with other, clean LPs. That isn't cynicism, that is reality. If people want to throw money at VCs, they'll do it - one way or another.
snowwrestler 8y ago
Company leaders don't even necessarily have to decide for themselves. They can just discover the facts and communicate them clearly. If it really doesn't matter where money comes from, they won't object to doing so. If it really doesn't matter where money comes from, it won't affect their recruiting or marketing. On the other hand, if company leaders resist the idea of being so transparent, well, maybe that it is a hint.
addicted 8y ago
We will never be perfect. There will be mistakes made, both intentionally and unintentionally. However, cynicism which demands that we do nothing unless we have a perfect solution prevents us from making any progress and further makes it impossible to get any closer to the perfect state. Simply asking about where the money you’re getting is coming from is in itself a huge first step that can be built on. One small step at a time is pretty much the approach that developers and entrepreneurs advocate on HN for nearly every other problem. It should be the approach that we take towards resolving non technical challenges as well.

barrkel 8y ago

I think a better ask is to create self-sustaining processes that ratchet to improve the system over time. In a word: regulation. You can't be sure you're consuming ethical meat through consumer pressure alone. You need more eyes in the system, with enough force to be able to see through the veils that the profit motive will put up.

downandout 8y ago
Not everyone in the world can afford "ethical meat" but they still need to eat nonetheless. This is one of the things I have never understood - people that are into concepts like "ethical meat" tend to be left leaning, and people on that side claim to be compassionate toward the poor. Yet it appears from your comment that if you had your way, you would use regulation to force the costs of eating up, which would dramatically affect the ability of poor people to eat. You can’t simultaneously claim to have compassion for poor people and advocate for regulations that will make their lives more difficult and expensive than is absolutely necessary.

3pt14159 8y ago

The problem with the global system cracking is that it's pushing this work onto low-information people with mismatched incentives. If the Sauds have routine trouble getting money into funds they'll resort to tricks that will get them exposure in one way or another. They can acquire a company, they can create their own VP that doesn't list investors but co-invests. It's a never ending battle and one that we're not capable of fairly judging. This should be a Nato / EU / US or UN thing where we have real tools to enforce sanctions.

stephengillie 8y ago
Just because they have other options doesn't mean the fight is lost before it's begun. We can make this more and more work for them, and keep sending the message. And yes, we can also work to place sanctions on investment from nations that ignore human rights. If we make better and best into enemies, there's no end to what we can't accomplish.
- 3pt14159 8y ago
  I usually agree with this line of thinking, and even personally I wouldn't take money from some people like Peter Thiel because of his political actions, but I don't try to get others to do the same. I advocate for systemic or political changes or—if those are hard because of mismatched incentives or low information voters—propaganda, think tank funding, and lobbying to try to fix things. Take plastics use, for example, it's better to focus energy on banning them completely than to check each and every shampoo personally for microbeads. Better and best are only enemies in situations where better is multiple orders of magnitude less effective than "best" which I wouldn't even classify as "best" I would call it "a real solution that might not be optimal but fundamentally sees to address the problem in a meaningful and efficient way" because I don't think of things in terms of better and best. I think the reason I don't is that I studied both software and structural engineering separately. In structural engineering the design goals for non-emergency buildings are 1/10k failure rate over 100 years, with visible signs of failure before collapse. We need steel girders to deal with illiberal states, not popsicle sticks.
  - Baeocystin 8y ago
    >Take plastics use, for example, it's better to focus energy on banning them completely than to check each and every shampoo personally for microbeads. The vast majority (>90%) of the plastic waste in the world's oceans comes from a few rivers in asia that run through countries that have minimal to no garbage collection/sanitation services for the cities that border the rivers. Investing in appropriate waste management infrastructure in the countries that need it is the solution to work towards. Plastic bans don't address the fundamental problem. https://cen.acs.org/materials/polymers/Fighting-ocean-plastics-source/96/i16 https://cen.acs.org/materials/polymers/Fighting-ocean-plasti...

baxtr 8y ago

I tend to agree. I don’t get why people don’t value someone who starts to raise the bar. Even if that’s not high enough, why not see it as something that needs to develop over time?

TAForObvReasons 8y ago
> I don’t claim to have entirely clean hands in this regard. When we sold our Twitter stock before the IPO many years ago, it turned out the buyer was fronting for gulf interests. I found that out after the fact but that doesn’t absolve me of anything. I could have asked the questions before executing the sale. ^^ That's why. He's "raising the bar" after making money through means that he would find despicable now. "Ends justify the means" is what got us into this mess, and unless he is willing to give away the gains from the arguably tainted money he's just posturing.
- swsieber 8y ago
  People do change. Calling it posturing is premature judgement.
  - TAForObvReasons 8y ago
    Until he comes out and says "we made $X from doing business with questionable entities, and here's how we gave back $X without lining our pockets", it's posturing.
    - y4mi 8y ago
      You don't have to address every wrong you did in order to start doing right. It's never black and white with people.. and you're not actually looking at the real problem if you're unable to see the nuances.
      - TAForObvReasons 8y ago
        > It is time for all of us in the startup and VC sector to do a deep dive on our investor base and ask the question that the CEO asked me. Who are our investors and can we be proud of them? And do we want to work for them? I would extend that question even further: Can we be proud of the gains we've made by working with the investors we've dealt with in the past? If not, how are we addressing the problem? You can't be forward looking without addressing the past. This is why the moral pleas never really gain traction. If Fred was honest he'd address the elephant in the room by accounting for and giving back the gains. Until that happens, this is empty posturing. Politicians will do this, this isn't some crazy ask. For example, Cuomo put his money where his mouth is and "returned" the $110K donated by Weinstein through the years: > “My message to everyone who has current accounts with money from Harvey Weinstein is, ‘Give that money back,’” the mayor added. “Give it to charity. Get the hell away from it.” https://www.nytimes.com/2017/10/12/nyregion/andrew-cuomo-harvey-weinstein-campaign-contributions.html https://www.nytimes.com/2017/10/12/nyregion/andrew-cuomo-har...

almostdeadguy 8y ago

Saying "giving a shit involves compromise" is exactly the kind of thing that venerates the idea that conscious capitalism is impossible. The irony of this post is that he lists the pension fund of the police, who are responsible for some of the most brutal human rights violations in the US, as a wholesome LP, when for some of us it's just the opposite. Fundamentally everyone in the business community is worried more about ass-covering as it pertains to their bottom-line, not to any real concern about the implications of who they enrich. That's not to say that there's nothing to be done, but anyways... I won't talk about that here since HN has a pretty nasty reflexive response when you talk about the S word.

detcader 8y ago

Totally agree. I just hope people will take this sentiment and make it more formalized. But people will have to be up to that task. An explicit movement to refuse money from US allies who violate human rights would have to include Israel -- so, a big ask. A centralized outlet that reports who funds who, like we have for political campaigns, requires sweat and tears. Hopefully we'll see more grass-roots organizations made up of tech workers like Tech Solidarity to take this work on. I can't act as a leader for change like this in the tech startup sector, but I would be very interested and engaged with any leaders who step up.

jaypeg25 8y ago

We're at a point now where VCs are going to have to start refusing money from nearly everybody foreign thanks to the new CFIUS rules. They're so overly broad in identifying high-tech industries that I think there's going to be a lot of issues over the next couple years of implementation.

adventured 8y ago
> VCs are going to have to start refusing money from nearly everybody foreign thanks to the new CFIUS rules That isn't going to happen at all. The point of CFIUS is selective enforcement, not broad, strict enforcement. It's the exact same reason anti-trust laws are vague, so they can selectively go after anyone at any time if they so choose. The point is to be able to further control the economy, whenever that is desirable, and to target a given nation for restrictions if it's viewed as politically advantageous. The point is absolutely not to clamp down on all foreign investment.
- jaypeg25 8y ago
  The point of CFIUS used to be selective enforcement. But the new rules require mandatory disclosures of any foreign investment into a high-tech company.

golemiprague 8y ago

Who are the "worst offenders"? That's the big question and it really depends on your political point of view.

AnthonyMouse 8y ago

> Pretty much every single comment so far is cynical. "No one really wants to know how the sausage is made", lots of money is tainted anyway, it's just PR fluff, etc etc. It seems like a deeper problem than that, which is that money is fungible. It's the same thing as saying we shouldn't buy Saudi oil. If the only result is that you buy some other oil and the people who would have bought that oil buy the Saudi oil, nothing meaningful has changed. To get a meaningful result you need one of two things. One is solidarity (i.e. market power), but you never have that in a diffuse competitive market. The other is to do something that isn't fungible. For example, if you actually use less oil (buy an electric car and solar panels, or support nuclear etc.), it makes a proportional difference even at the individual level, because then it isn't a matter of everyone having to act together to accomplish anything, it's a matter of each person doing their share adding up. Then the cost to them is in proportion to how many people act rather than the cost being effectively zero unless you reach a critical mass you can't achieve. But there isn't any obvious equivalent to that for venture capital. For oil, basically all of the foreign exporters are antagonistic, and burning oil itself is harmful regardless of the source, so everything lines up for that working as a mechanism of retaliation. But if solar/wind/hydro/nuclear/etc. are the alternatives to oil, what is the alternative to money supposed to be? To get anywhere on that front you need market power, which essentially means something like government sanctions. But we don't do that because we still need their oil. So it seems like we're right back to stop burning oil.

ericjang 8y ago
Investment opportunities (which VC firms get the money, what deal flow they have, what investment opportunities the VC has) are most certainly not fungible. So I think it's helpful to think of the deal flow in reverse - even though "someone else can take the Saudi money", that "someone else" most likely does not represent exactly the same investment opportunity to the LPs. FWIW - I do think your assessment of oil is correct (since oil and money are both fungible). But for venture capital, one side of the investment (startup talent, VC skill and network, etc.) are not fungible. (elaborated a bit more in a twitter rant: https://twitter.com/ericjang11/status/1054115724996694016 https://twitter.com/ericjang11/status/1054115724996694016)

deleted 8y ago

[deleted]

tomasien 8y ago

Exactly! It's not about "tainted" vs. "untainted", it's about setting some limits and trying to be a part of the solution. Doing so puts in progress something that WILL start to shift things. You don't have to be money trail inspector, you just need to be your own ethical link in an otherwise ethically unknown chain. You're responsible for making a reasonable effort where you think it's important not for the actions of everyone who has ever touched a dollar you're now touching.

downandout 8y ago

be transparent about who their LPs are That would be a deal breaker for many potential LPs, and not because all of them are criminals or despots. Some people just don't like others to know what they are doing with their money. The bottom line is, if enough VCs take this stance, any bad actor that wants to invest will simply put their money into clean shell companies and invest that way, or partner with other, clean LPs. That isn't cynicism, that is reality. If people want to throw money at VCs, they'll do it - one way or another.

snowwrestler 8y ago

Company leaders don't even necessarily have to decide for themselves. They can just discover the facts and communicate them clearly. If it really doesn't matter where money comes from, they won't object to doing so. If it really doesn't matter where money comes from, it won't affect their recruiting or marketing. On the other hand, if company leaders resist the idea of being so transparent, well, maybe that it is a hint.

addicted 8y ago

We will never be perfect. There will be mistakes made, both intentionally and unintentionally. However, cynicism which demands that we do nothing unless we have a perfect solution prevents us from making any progress and further makes it impossible to get any closer to the perfect state. Simply asking about where the money you’re getting is coming from is in itself a huge first step that can be built on. One small step at a time is pretty much the approach that developers and entrepreneurs advocate on HN for nearly every other problem. It should be the approach that we take towards resolving non technical challenges as well.