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Andreessen Horowitz to give half their earnings to charity
- igorsyl 14y agoShould there be a charity helping struggling entrepreneurs?
- scottilee 14y agoThis is great news. Another idea would be to put aside funds for philanthropic startups.
- sethbannon 14y agoA stellar example of living your values. I hope this swings more deals their way (it would certainly affect our choice of VC) and creates pressure for the entire industry to adopt similar pledges.
- jgmmo 14y agoBah! Entrepreneurs should reinvest their profits into more businesses. Profits are the reward you get for serving society effectively. Society would probably be better served if Bill Gates, etc. reinvested their cash instead of donating to charities. If charities actually cost-effectively served society than they would be a business instead!
- amirmc 14y agoHave you looked at the kinds of things Gates is actually funding? It's the kind of stuff most people overlook as there's little to no profit in it. "... we think an essential role of philanthropy is to make bets on promising solutions that governments and businesses can’t afford to make." http://www.gatesfoundation.org/about/Pages/bill-melinda-gates-letter.aspx http://www.gatesfoundation.org/about/Pages/bill-melinda-gate...
- yesbabyyes 14y agoHow about you decide what you do with your money, and Bill Gates and Marc Andreessen decide what they do with their money?
- jgmmo 14y agoWell of course I'm not suggesting we forcibly make them do anything with their money. I am just saying, in terms of societal net benefit, we are probably much better off if our most successful investors continue investing in more businesses rather than charities. Not a fan of thought experiments?
- yesbabyyes 14y agoI assure you that there are lots of wealthy people who reinvest their money into more businesses, so I'm not sure of the value of your thought experiment. There seem to be fewer wealthy people giving half their fortune to charity. Not a fan of real-world experiments?
- zfran 14y ago>I am just saying, in terms of societal net benefit, we are probably much better off if our most successful investors continue investing in more businesses rather than charities. Not a fan of thought experiments? Exactly, WE. Thing is, there are millions of people that aren't included in that "we" and the benefits they get (i.e. saving lives) FAR outweights the benefits we'd get.
- deleted 14y ago[deleted]
- jcampbell1 14y agoI am frankly a bit saddened by this. These guys are some of the best in the world at deploying capital. Humanity would be better served if they continued to invest their own money. Now these guys half-work for some charity, and when the charity doesn't deliver great results, they will feel like they are half-working for little results. It is a mistake for the best capital allocators to pledge future earnings. They should pledge their future wealth, not earnings. This way, the harder they work and the more earnings they successfully redeploy, the greater the contribution to charity.
- rdl 14y agoThese guys are brilliant, and a lot of people respect them. Do you really think they're going to go from being amazingly smart about investing money in companies to being morons about using the capital for charity? I suspect they'll act like Bill Gates, not like the UN, in how they deploy their capital for charitable purposes. They will invest in things which have huge returns, just not necessarily returns they can directly monetize. Ending polio, malaria, etc. probably creates bigger returns than even their Instagram investment. It's just that the returns go to to a billion poor people, vs. being concentrated in a company.
- jgmmo 14y agoI concur. I think you expressed my thoughts on this better then I did myself.
- zmitri 14y agoIt's unbelievable how much genius is wasted in poverty. What if those charitable dollars helped someone in an absolute destitute situation, who later turned out to be a success? Let me give you an example. In New York there is a non profit called "East New York Farms." If you aren't aware, East New York is one the roughest places you can come across in Brooklyn. They provide kids with the chance to run an organic garden from both the operational/agricultural side and the business side of things. And on top of that, they sell it in the local neighborhood. I talked to a girl who didn't know what broccoli was before she did this program. Her parents just gave her honeybuns from the corner store for dinner. Now they have Whole Foods quality vegetables in the middle of a destitute area for cheap, and it services the community. https://goodkarmaapp.com/np/enyfarms https://goodkarmaapp.com/np/enyfarms Think of the marginal increase a dollar creates there vs going to a kid from a top university.
- daenz 14y agoThough I'm not religious, there's a specific set of bible verses I think of when I see news of someone being publicly charitable: 1 Take heed that you do not do your charitable deeds before men, to be seen by them. Otherwise you have no reward from your Father in heaven. 2 Therefore, when you do a charitable deed, do not sound a trumpet before you as the hypocrites do in the synagogues and in the streets, that they may have glory from men. Assuredly, I say to you, they have their reward. 3 But when you do a charitable deed, do not let your left hand know what your right hand is doing, 4 that your charitable deed may be in secret; and your Father who sees in secret will Himself reward you openly. --Matthew 6:1-4 I think it means that the spirit of charity is purest when it is anonymous.
- wdewind 14y agoWhat about when your deed might inspire/put pressure on people of similar stature to do the same? Ie: Gates or AH?
- daenz 14y agoPersonally I believe that the purpose of charity is to give unyieldingly and without reserve or provocation, without any personal gain to you...not to look good to others, not tax breaks, whatever. Anonymous charity is irrational from a survival perspective. It makes no sense to help someone unless you have something to gain. So therefore helping others at the expense of yourself is the purest form of selflessness. > What about when your deed might inspire/put pressure on people of similar stature to do the same? Ie: Gates or AH? Depends on your goals. If your goal is to increase the amount of donations to a charity, then by all means, do it publicly...inspire and/or pressure others to do the same. If your goal is a personal exercise in selflessness and giving, then do it anonymously.
- aaronbrethorst 14y agoOf course, there are also tons of verses exhorting you to lead by example: http://www.openbible.info/topics/lead_by_example http://www.openbible.info/topics/lead_by_example
- rjshade 14y agoThis is great. Something people often disregard, but which is hugely important, is charity effectiveness. This boils down to measuring the impact that you can make with a given donation: it turns out some charities are literally thousands of times more effective than others. A lot of people don't realise how much good they can do with modest donations to the right charities -- until a year ago I really had no idea myself. There are a couple of groups which I know of which do analysis of charity effectiveness: * Giving What We Can (http://www.givingwhatwecan.org/ http://www.givingwhatwecan.org/) are an Oxford, UK based organisation who estimate that you can save a life for ~£300. * GiveWell (http://givewell.org/ http://givewell.org/) are a US group who do similar research They both publish lists of the most effective charities they've researched, and Giving What We Can have a calculator which shows you how much you can achieve by donating 10% of your income each year: http://www.givingwhatwecan.org/resources/what-you-can-achieve.php http://www.givingwhatwecan.org/resources/what-you-can-achiev... I think these stats are astonishing and it's really changed my approach to charity. Worth checking out if you're interested at all in philanthropy!
- jimmyvanhalen 14y agoclearly a PR ploy. it's a waste of capital imo. Reduce your management fee and carried interest income and return them to your LP. or re-invest that capital in start-ups to create even more jobs. edit: it's their money and what they do with it is their business. but they're in the venture capital business, not in the charity business. their job is to deploy capital and maximize returns to their investors (they create jobs and companies in the process). Horowitz shakes off the potential for such troubles at Andreessen Horowitz, saying that half of firm earnings will be more than enough to satisfy its partners' lifestyles. "We don't play polo," he says. "And our skills are better suited for doing this than working full-time at a non-profit... I think this works out better for both us and the nonprofits." Again: If they think they're earning too much. reduce their management fee and carried interest income and return the money to their LPs.
- lotharbot 14y ago> "they're in the venture capital business, not in the charity business" They're in the business of being human. As is true for any of us, that means something complex, multidimensional, and personal. It's not some sort of affront to venture capitalism to use the profits it generates for something other than more venture capitalism. It's not a "waste of capital" to use your own capital for whatever you find important.
- paul 14y agoIt's sad to see so much misplaced cynicism here. If the partners had decided to keep 100% of their carry (as is typical) and used it to buy a bigger house or jet or something, nobody would comment or care. Instead, they've pledged to give half to some of their favorite charities, and some of you are acting as if it's a crime against humanity. Put away your Ayn Rand books (or whatever it is that drives you to such opinions) and go make some money of your own. Perhaps you'll discover that Andreessen and friends aren't as foolish as you imagine.
- daenz 14y ago> Put away your Ayn Rand books ... and go make some money of your own. Does Ayn Rand have similar opinions? I'm trying to figure out what you mean by that.
- lhnz 14y agoShe was against people feeling like they had an obligation to self-sacrifice, but she wasn't against charity as the projection of one's own values [1]. A lot of people misunderstand Ayn Rand. [1] http://aynrandlexicon.com/lexicon/charity.html http://aynrandlexicon.com/lexicon/charity.html
- PKop 14y agoOne of the best interviews I've seen with Ayn Rand, in her own words if anybody cares to read: http://ellensplace.net/ar_pboy.html http://ellensplace.net/ar_pboy.html
- josephjrobison 14y agoIt's important to actually see it in context. I may not agree with her whole overall worldview, but there are parts that are good, and reading her actual words in context shows she's not really a lunatic or savage.
- deleted 14y ago[deleted]
- davemel37 14y agoAccording to the Talmud, "The highest form of charity is helping people earn a livelihood." So, regardless of motivation, these guys are good folks.
- rdl 14y agoIt's interesting to note that Sequoia's LPs are themselves largely charities, so money Sequoia makes goes to charitable causes, too. (and I find it unlikely GPs at other top-tier VCs, like Sequoia, don't donate a lot of wealth already...probably not 50% of income, but a lot of famous investors have endowed huge foundations).
- pmarca 14y agoYes, and that's also true of us, and at least several of the other top venture firms. And it's worth noting that Mike Moritz is already a signatory to the Giving Pledge.
- lukifer 14y agoThis is why wealthy individuals are better for society than shareholder-owned corporations. If the latter made a move like this, the entire board would be fired immediately.
- gwern 14y agoIf 90+% of the shareholders voted to distribute that quarter's profits to charity - the equivalent scenario to the general partners so voting, no? - who would be firing the board?
- meric 14y agoA substantial portion of those a funds that are responsible for investing their member's money. Are you asking me to invest half my profits in my superannuation fund to charity? To me, my fund will give me more benefit by maximising the profit from investments, hand me back my share of profit, and let me choose MY choice of charity!
- lukifer 14y agoHas this ever happened, ever? On the scale of 50% of a very large sum? Altruism is a kind of positive irrationality; the more stake-holders are involved, the more exponentially unlikely such irrationality becomes.
- netrus 14y agoI don't see how altruism is more irrational than luxory consumption. Doing charity will make you happy and fulfilled - quite a smart move to do so ;) (yes, I know that charity != altruism. But this is a very theoretical discussion)
- lukifer 14y agoI mean "rational" in terms of being able to justify it to others, and have it be rational to them too. I can convince the board why a moderate donation to Charity X is good PR, or why funding Product Y is a sound investment. It's much harder to justify why the company should give away half its profit with no direct return.
- Blocks8 14y agoGiving is great. I wonder if down the road they will consider helping incubate these non-profits to make the return on their charitable investment even greater. They have the expertise of helping companies grow, why not give the money and brain power to help the charities too. A side question, any idea if the contributions are from the firm or the individual partners? I'm curious about the tax break breakdown. If the company is the vehicle for donation, there is a larger ability for a full tax break on the money donated. However, it seems that for an individual, there is a maximum: "Only if you contribute more than 20% of your adjusted gross income to charity is it necessary to be concerned about donation limits. If the contribution is made to a public charity, the deduction is limited to 50% of your contribution base." - http://www.charitynavigator.org/index.cfm?bay=content.view&cpid=31 http://www.charitynavigator.org/index.cfm?bay=content.view&#... So, if 100,000 was donated by the company, the tax break would be 100,000. $100,000 goest to the charity and the company has no tax on that income. But for the individual, if the maximum tax break is 50%, then $100,000 goes to the charity but $50,000 was taxed at the individual's income tax bracket (likely 35%+ for these guys) so the 'cost' was really $117,500 to give $100,000. Check my math here, I'm not a tax expert but curious about they are looking at maximizing their contribution at the lowest cost.
- pmarca 14y ago> A side question, any idea if the contributions are from the firm or the individual partners? From the individual General Partners.
- mukaiji 14y agoBRAVO!
- poorpointofview 14y agoThe emotions of man are stirred more quickly than man’s intelligence; and, as I pointed out some time ago in an article on the function of criticism, it is much more easy to have sympathy with suffering than it is to have sympathy with thought. Accordingly, with admirable, though misdirected intentions, they very seriously and very sentimentally set themselves to the task of remedying the evils that they see. But their remedies do not cure the disease: they merely prolong it. Indeed, their remedies are part of the disease. They try to solve the problem of poverty, for instance, by keeping the poor alive; or, in the case of a very advanced school, by amusing the poor. But this is not a solution: it is an aggravation of the difficulty. The proper aim is to try and reconstruct society on such a basis that poverty will be impossible. And the altruistic virtues have really prevented the carrying out of this aim. Just as the worst slave-owners were those who were kind to their slaves, and so prevented the horror of the system being realised by those who suffered from it, and understood by those who contemplated it, so, in the present state of things in England, the people who do most harm are the people who try to do most good; and at last we have had the spectacle of men who have really studied the problem and know the life – educated men who live in the East End – coming forward and imploring the community to restrain its altruistic impulses of charity, benevolence, and the like. They do so on the ground that such charity degrades and demoralises. They are perfectly right. Charity creates a multitude of sins. There is also this to be said. It is immoral to use private property in order to alleviate the horrible evils that result from the institution of private property. It is both immoral and unfair. ~ Oscar Wilde You would think smart men as these would want to cure the disease instead of curing the symptoms.
- creamyhorror 14y agoThis is a subtle comment, with the key statement being "The proper aim is to try and reconstruct society on such a basis that poverty will be impossible." I'm not so sure socialism is the answer there, but it's definitely a goal to have for the long term.
- pmarca 14y agoThe only part I don't like about the idea of trying to reconstruct society on a basis that poverty will be impossible is that previous attempts to do that tended to result in millions of people being killed. Funny how that works :-).
- mlinsey 14y agoThis is fantastic! Many investors donate heavily to charity already, but making this the policy of the firm sends a very strong message.
- mrgn 14y agoThis makes me (even more) happy to work for an a16z portfolio company. Though in a long-term and indirect way, more of the product of my work will go toward a great cause.
- bootload 14y ago"... This seems to be the first time that venture capitalists have made such a pledge ..." The way Andreessen disrupts continually surprises me.