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I 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 i

I 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 15y ago
These 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 15y ago
I concur. I think you expressed my thoughts on this better then I did myself.
zmitri 15y ago
It'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.
- vibrunazo 15y ago
  I think you've misread his post. He's talking about donating what they have now VS donating more money after they get richer in the future. He's not talking about donating to charities VS donating to kids from top universities. The second would just be a consequence of the first.
  - _delirium 15y ago
    When do you stop, though? If you take the "first I'll get rich, then work on charitable causes" route, and Andreessen Horowitz aren't yet rich enough to qualify, what level is rich enough? Does it have to be $100 billion or something before you're allowed to decide it's time to start diverting some money to charity?
    - SamReidHughes 15y ago
      This is especially true assuming that the economy gets better over time, that the poor of today are worse off than the poor of tomorrow will be.
- daenz 15y ago
  > It's unbelievable how much genius is wasted in poverty. Examples of genius that didn't thrive because of poverty? The example you gave is about kids learning to sell vegetables. Are their studies about geniuses that didn't achieve their best work because they were poor?
  - shantanubala 15y ago
    That's not a very good question -- how can we know someone is a "genius" unless they have the resources to thrive? We can debate on the meaning of genius, but regardless of how you view it, a person simply cannot reach their full potential if they have to constantly worry about feeding themselves or a family. Before we can even identify someone as a genius, they have to have been successful in some way. For them to be successful, they have to have access to at least some basic resources (there are "rags to riches" stories, but I'm not sure it's even possible to argue that those are the norm). So how would you even begin answering your question? How do we identify someone as a genius even before they've actually succeeded at something? Isn't there some massive selection bias there? Since the only difference between a wealthy person and a person raised in poverty is income/upbringing (poverty doesn't change your genes, does it?), I think it's a safe assumption that we're missing quite a few "geniuses" because of poverty.
yesbabyyes 15y ago
You are saddened by other people giving money to charity? As in, that makes you sad? As stated in the fine article, this is their management fees. So e.g. when they invest $1.5 billion, they will give about $15 million to charity. It saddens me that you rally on these friggin' aces instead of people not putting their money to work, nor giving it to charity.
- leot 15y ago
  ... this is the untold story of the quietly wealthy; the millions of smart, capable people with vast reserves of capital who do their darndest to make sure they don't have to do anything at all.
danilocampos 15y ago
> when the charity doesn't deliver great results, they will feel like they are half-working for little results. What information do you have about their decision making process that makes you believe that they will select charities that don't deliver great results? What about success in venture capital, in your view, would prevent these individuals from successfully selecting/starting/advising philanthropic endeavors? I have a hunch, for example, that Marc Andreessen isn't going to roll up and pour a bag full of money out into the little jar the Salvation Army Santa runs outside of Macy's.
- jcampbell1 15y ago
  Getting results from charities is hard. Bill Gates quit his job to solely focus on this. Warren Buffet pledged all his money to Gates because he doesn't think he would be particularly good at it. My point is, why pledge earnings rather than wealth? I think pledging earnings is risky, and the world is better off because Warren Buffet did not do it.
  - rdl 15y ago
    a16z isn't short on LP money. This is basically money which would traditionally be spent on consumption by GPs (since they can't invest outside the fund, and 50% of crazy upside is more than enough to buy their stakes in the next fund). Even if you view this as pure consumption, I respect Ben Horowitz more for a $100mm charity contribution than adding an extra $100mm extension to his house. Due to how the funds are structured, it is different for a VC to donate carry/management fees vs. someone like Warren Buffet to liquidate equity to donate to charity.
  - pmarca 15y ago
    Sorry, we did not intend to draw that distinction. I described this in detail in another comment, but we made a commitment of half of lifetime earnings/wealth/whatever you want to call it from venture capital to nonprofits, over our lifetimes. So there's no presumption that each year we give half, as opposed to at some later date.
vibrunazo 15y ago
I generally agree with the whole "wait till you get rich then donate to charity" sentiment. But it's hard to tell when you're rich enough. It would be a risky bet either way. You can't be sure how much more you'll be able to make your earnings grow in the future, just as you can't be sure if your charities will pay out. And the longer you wait, the longer those charities you could have been investing on, are not seeing any benefits. So you have two balance these two: Wait too long and charities of today don't see much benefit. Wait too little and you might be unable to grow your money and do less overall charity in the future. How do you know what's the right point in your career? Ideally, you wanna start donation when you're at the top of your career. And don't wanna risk falling from where you are. After the recent investments maybe Andreessen Horowitz think they got to that point. They've got more money than ever and it's getting riskier to wait longer. So they considered that balance and judged it was the right time to donate to charity. You might disagree with their timing. But hey, remember they're pretty good at this stuff, so maybe they're right :)
- tobtoh 15y ago
  There has been research done (by Alumni organisations) that show that the people who 'wait till they get rich' never donate. The 'wait till I get rich', despite the best of intentions, is just an excuse. The other related excuse is that 'I'll wait until I can make a sizeable and therefore meaningful donation'. The research (and I don't have a link sorry) showed that if an Alumni made a donation, even $1, within 3 years of leaving, there was an 80% chance of them donating again. If they didn't make a donation within three years, the chance of them donating again in the future was very very small. ie donators donate now. Everyone just makes excuses. The fact is, you're always 'rich' enough to donate. Give up that coffee or muffin you were about to buy and donate a couple of bucks a week, or a month, every six months or whatever. If you can't do that, donate some time/your expertise to help out at a charity. If people are serious about donating money to charity, there is zero reason they can't start right now.
  - rdl 15y ago
    That seems like you might be measuring something other than total donation -- just donation to one specific charity. Sure, if I pass on donating to MIT today (IMO they have enough money already), I might not get around to it ever. But, given that I am unlikely to have kids, if I die, my money will all be going to some charity or set of charities eventually. (I do donate now, mainly to groups like MAPS and EFF, but my income and liquid net worth are pretty insignificant compared to my goal.)
etrain 15y ago
From a purely financial perspective, the net present value of AH's future earnings is almost certainly much higher than the net present value of the money deployed elsewhere, assuming their hot streak continues. Two things mitigate this: 1) The likelihood that they can keep doing return >25% a year on their whole portfolio is very very small. It's much easier to earn $25m on $100m than it is to earn $25000m on $100000m. See, e.g. Warren Buffett - still a great investor, just too much money to invest efficiently. 2) There are incredible tax advantages to money given to charity, because the charities are usually tax exempt. That is, a charity that's allowed to grow the money at 10% a year with no taxes, does better in the long run than someone who can make 12% a year with 20% in taxes.
tobtoh 15y ago
As someone who has done some work in the Alumni area, there is research (sorry, I don't have a reference at the moment) which stated something like: If an alumni doesn't make a donation (even $1) in the first 3 years of leaving their organisation, the chance they will ever make a donation is a small percentage. If they donate something (no matter how small) in the first three years, the chance they will donate again is 80%. (I can't remember the exact figures). ie Donators donate - no matter what their circumstance. Everyone else just promises to 'in the future' and never do. So kudos to them for committing to donate and not just waiting to do it sometime in the future.

rdl 15y ago

These 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 15y ago

I concur. I think you expressed my thoughts on this better then I did myself.

zmitri 15y ago

It'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.

vibrunazo 15y ago
I think you've misread his post. He's talking about donating what they have now VS donating more money after they get richer in the future. He's not talking about donating to charities VS donating to kids from top universities. The second would just be a consequence of the first.
- _delirium 15y ago
  When do you stop, though? If you take the "first I'll get rich, then work on charitable causes" route, and Andreessen Horowitz aren't yet rich enough to qualify, what level is rich enough? Does it have to be $100 billion or something before you're allowed to decide it's time to start diverting some money to charity?
  - SamReidHughes 15y ago
    This is especially true assuming that the economy gets better over time, that the poor of today are worse off than the poor of tomorrow will be.
daenz 15y ago
> It's unbelievable how much genius is wasted in poverty. Examples of genius that didn't thrive because of poverty? The example you gave is about kids learning to sell vegetables. Are their studies about geniuses that didn't achieve their best work because they were poor?
- shantanubala 15y ago
  That's not a very good question -- how can we know someone is a "genius" unless they have the resources to thrive? We can debate on the meaning of genius, but regardless of how you view it, a person simply cannot reach their full potential if they have to constantly worry about feeding themselves or a family. Before we can even identify someone as a genius, they have to have been successful in some way. For them to be successful, they have to have access to at least some basic resources (there are "rags to riches" stories, but I'm not sure it's even possible to argue that those are the norm). So how would you even begin answering your question? How do we identify someone as a genius even before they've actually succeeded at something? Isn't there some massive selection bias there? Since the only difference between a wealthy person and a person raised in poverty is income/upbringing (poverty doesn't change your genes, does it?), I think it's a safe assumption that we're missing quite a few "geniuses" because of poverty.

yesbabyyes 15y ago

You are saddened by other people giving money to charity? As in, that makes you sad? As stated in the fine article, this is their management fees. So e.g. when they invest $1.5 billion, they will give about $15 million to charity. It saddens me that you rally on these friggin' aces instead of people not putting their money to work, nor giving it to charity.

leot 15y ago
... this is the untold story of the quietly wealthy; the millions of smart, capable people with vast reserves of capital who do their darndest to make sure they don't have to do anything at all.

danilocampos 15y ago

> when the charity doesn't deliver great results, they will feel like they are half-working for little results. What information do you have about their decision making process that makes you believe that they will select charities that don't deliver great results? What about success in venture capital, in your view, would prevent these individuals from successfully selecting/starting/advising philanthropic endeavors? I have a hunch, for example, that Marc Andreessen isn't going to roll up and pour a bag full of money out into the little jar the Salvation Army Santa runs outside of Macy's.

jcampbell1 15y ago
Getting results from charities is hard. Bill Gates quit his job to solely focus on this. Warren Buffet pledged all his money to Gates because he doesn't think he would be particularly good at it. My point is, why pledge earnings rather than wealth? I think pledging earnings is risky, and the world is better off because Warren Buffet did not do it.
- rdl 15y ago
  a16z isn't short on LP money. This is basically money which would traditionally be spent on consumption by GPs (since they can't invest outside the fund, and 50% of crazy upside is more than enough to buy their stakes in the next fund). Even if you view this as pure consumption, I respect Ben Horowitz more for a $100mm charity contribution than adding an extra $100mm extension to his house. Due to how the funds are structured, it is different for a VC to donate carry/management fees vs. someone like Warren Buffet to liquidate equity to donate to charity.
- pmarca 15y ago
  Sorry, we did not intend to draw that distinction. I described this in detail in another comment, but we made a commitment of half of lifetime earnings/wealth/whatever you want to call it from venture capital to nonprofits, over our lifetimes. So there's no presumption that each year we give half, as opposed to at some later date.

vibrunazo 15y ago

I generally agree with the whole "wait till you get rich then donate to charity" sentiment. But it's hard to tell when you're rich enough. It would be a risky bet either way. You can't be sure how much more you'll be able to make your earnings grow in the future, just as you can't be sure if your charities will pay out. And the longer you wait, the longer those charities you could have been investing on, are not seeing any benefits. So you have two balance these two: Wait too long and charities of today don't see much benefit. Wait too little and you might be unable to grow your money and do less overall charity in the future. How do you know what's the right point in your career? Ideally, you wanna start donation when you're at the top of your career. And don't wanna risk falling from where you are. After the recent investments maybe Andreessen Horowitz think they got to that point. They've got more money than ever and it's getting riskier to wait longer. So they considered that balance and judged it was the right time to donate to charity. You might disagree with their timing. But hey, remember they're pretty good at this stuff, so maybe they're right :)

tobtoh 15y ago
There has been research done (by Alumni organisations) that show that the people who 'wait till they get rich' never donate. The 'wait till I get rich', despite the best of intentions, is just an excuse. The other related excuse is that 'I'll wait until I can make a sizeable and therefore meaningful donation'. The research (and I don't have a link sorry) showed that if an Alumni made a donation, even $1, within 3 years of leaving, there was an 80% chance of them donating again. If they didn't make a donation within three years, the chance of them donating again in the future was very very small. ie donators donate now. Everyone just makes excuses. The fact is, you're always 'rich' enough to donate. Give up that coffee or muffin you were about to buy and donate a couple of bucks a week, or a month, every six months or whatever. If you can't do that, donate some time/your expertise to help out at a charity. If people are serious about donating money to charity, there is zero reason they can't start right now.
- rdl 15y ago
  That seems like you might be measuring something other than total donation -- just donation to one specific charity. Sure, if I pass on donating to MIT today (IMO they have enough money already), I might not get around to it ever. But, given that I am unlikely to have kids, if I die, my money will all be going to some charity or set of charities eventually. (I do donate now, mainly to groups like MAPS and EFF, but my income and liquid net worth are pretty insignificant compared to my goal.)

etrain 15y ago

From a purely financial perspective, the net present value of AH's future earnings is almost certainly much higher than the net present value of the money deployed elsewhere, assuming their hot streak continues. Two things mitigate this: 1) The likelihood that they can keep doing return >25% a year on their whole portfolio is very very small. It's much easier to earn $25m on $100m than it is to earn $25000m on $100000m. See, e.g. Warren Buffett - still a great investor, just too much money to invest efficiently. 2) There are incredible tax advantages to money given to charity, because the charities are usually tax exempt. That is, a charity that's allowed to grow the money at 10% a year with no taxes, does better in the long run than someone who can make 12% a year with 20% in taxes.

tobtoh 15y ago

As someone who has done some work in the Alumni area, there is research (sorry, I don't have a reference at the moment) which stated something like: If an alumni doesn't make a donation (even $1) in the first 3 years of leaving their organisation, the chance they will ever make a donation is a small percentage. If they donate something (no matter how small) in the first three years, the chance they will donate again is 80%. (I can't remember the exact figures). ie Donators donate - no matter what their circumstance. Everyone else just promises to 'in the future' and never do. So kudos to them for committing to donate and not just waiting to do it sometime in the future.