5 ms·

I think some of this is a result of the startup rhetoric about all the companies trying "change the world". If that were actually true, that all the effort and

I think some of this is a result of the startup rhetoric about all the companies trying "change the world". If that were actually true, that all the effort and money going into startups was actually focused on changing the world, then wouldn't it naturally be better to reinvest the money into that system? Of course the reality, as we all know, is that it's only sometimes about changing the world, and sometimes it's a game to see if you can do it and win. And since that's the case, it probably is better to channel some of the money to people actually trying to change the world, assuming those organizations are as carefully selected as the startups that generated the money are.

larrys 15y ago
You have to understand though that "charity" is a word just like "education", "religion", "race", "child molester" that is a third rail. People will rarely speak out against the first 4 and nobody, with the exception of a defense attorney or possibly family will ever take the side of a person accused of the latter.
paul 15y ago
Some changes are best made via a for-profit venture, and some aren't. I'm interested in both kinds of change, and that means that I'm involved in both worlds.
- toomuchtodo 15y ago
  Zuck paid, what, a cool billion for Instagram? Elon spent $800 million, and has an orbital vehicle that can dock with the ISS. And SpaceX is actually profitable. So, yeah, you can be for-profit and change the world. Or be for-profit and help people share photos. Changing the world is a pretty big grey area.
  - paul 15y ago
    It's not yet clear which venture will have a greater impact on the world. People here consistently underestimate the significance of democratizing the media.
    - waterlesscloud 15y ago
      SpaceX is part of the first wave in its field, Instagram is at least second wave of democratizing media.
    - mkramlich 15y ago
      In general, I agree. In this specific case, I disagree. I'll confidently bet that Instagram will be "integrated" or forgotten in a few years, relegated to the dustbin of ephemeral "one feature" companies that briefly caught on with hipsters before winning the startup lottery. Meanwhile, SpaceX will still be going strong, revolutionizing private space travel and space cargo delivery, and possibly have achieved tangible milestones toward the first manned voyage to Mars. One company is not much more than an iPhone camera app with a web backend for sharing, is cheap to do, and something that many thousands of developers could do well. The other is doing rocket science, costs hundreds of millions plus, and is staffed by a team of folks of a kind where few can do it well, if at all -- and especially, it now appears, also do cheaply. Humans had tons of pre-existing ways to share photos and "apply cool filters" before Instagram came along. Humanity has very few ways of getting into space (ie, rocket companies), and now SpaceX is one of them. And I respect the significance of democratizing media -- but I felt it was very well democratized in dozens of ways before & without Instagram. And don't even get me started on Gmail. (kidding!)
      - amirmc 15y ago
        Well put. I think monetary value and impact don't necessarily correlate. One could have an amazing, long-term impact on the world without it being reflected in 'price'. Reminds me of some of the recent Valve stories, specifically the anecdote about Doom being the most installed piece of software [1]. [1] For those that didn't know this, see the post below and scroll down to 'Valve is different' http://blogs.valvesoftware.com/abrash/valve-how-i-got-here-what-its-like-and-what-im-doing-2/ http://blogs.valvesoftware.com/abrash/valve-how-i-got-here-w...
  - tptacek 15y ago
    I'm not sure what these two things have to do with each other. Elon Musk's goals with SpaceX are entirely different than Facebook's goals with Instagram. No business purpose of Facebook's would have been served by building orbital vehicles. Facebook hasn't even gone public yet; the money we're talking about isn't yet Zuckerberg's to spend randomly.
    - toomuchtodo 15y ago
      Zuckerberg has majority ownership of Facebook shares; he has defacto control of whatever capital Facebook has available to it, whether it's "his" money or not. Was there not discusion that he didn't confer with Facebook's board before completing the Instagram purchase?
      - tptacek 15y ago
        No: majority shareholders of corporations continue to owe fiduciary duty to the minority. This is obviously tangential to the real point, though. Google paid more than 12 SpaceX's for Motorola. Would docking with the ISS help with the Android patent problem?
        keithwinstein 15y ago
        The directors are fiduciaries. Shareholders aren't fiduciaries and don't owe a duty to other shareholders.
        anamax 15y ago
        While majority stockholders may not be fiduciaries, googling "duties to minority stockholders" suggests that they have some duties wrt minority stockholders, at least in some cases.
        nostrademons 15y ago
        IIUC corporate officers are fiduciaries as well; hence, shareholder lawsuits. As CEO of Facebook, Zuckerburg could be liable for wasting Facebook's money.
  - waterlesscloud 15y ago
    This line of argument the last week or so has made no sense to me. Whether you agree with him or not, Zuckerberg's motivation for Facebook buying Instagram was related to the business of Facebook. Elon didn't make PayPal or Tesla start a rocket division, he set up a completely separate venture with its own goals.
  - nikcub 15y ago
    Being in space isn't the be-all, it is rather just a very expensive government-backed hobby.
bksenior 15y ago
This seems a bit naive. One needs to continually generate resources to continue to be able to finically stomach bets on risky ventures (startups). It wold be the equivalent of a farmer giving away all his crops and not having money to fix the engine on his thresher the following harvest. Dependent on the details this should be applauded. Although I think it would be much more interesting if they took part of their money and created grants for companies doing good in the world that would have trouble sustaining profitability.
- pmarca 15y ago
  > ...it would be much more interesting if they took part of their money and created grants for companies doing good in the world that would have trouble sustaining profitability. That is a very interesting idea but I suspect hard to apply in practice. I'd love to see someone try. One example is that a number of local VCs support our local physical bookstore Kepler's in that way (it would have closed long ago if not for their grants) -- they feel its presence makes the community a better place.
pmarca 15y ago
First, thanks everyone for a fascinating debate on a complex set of topics! I thought I'd see if I can add some context to some of the questions particularly about our own commitment. I don't have a view that there's an either-or here on how money can be productively deployed. We have committed to contribute at least half of lifetime earnings from venture capital, in our lifetimes. This is similar to the Giving Pledge that Warren Buffett and others have signed (including John Doerr and Mike Moritz from our world). So there's no requirement that money be contributed to nonprofits now as opposed to later. Each of our GPs will make their own personal decisions, with their families, on timing. But this leaves open the opportunity for some of us to give more actively sooner (like for example Pierre Omidyar has done), whereas others might plow all of our earnings back into for-profit ventures now and for the forseeable future and become active donors later (as Warren Buffett himself did). So don't think of it as money coming out of the for-profit cycle sooner than it would otherwise -- necessarily. (We did announce a collective $1 million cash donation to six area nonprofits today, but that's hopefully a small part of what we will be able to do over the long run.) In my own case, my wife and I are active donors now, most notably to Stanford Hospital. But not at a proportion that prevents us from being major personal investors in each of our own venture funds, as well as investors in several other funds and various other kinds of businesses. I also agree with the commenter that it's not like money vanishes when it goes to a nonprofit. Nonprofits spend money just like any other kind of entity, and that money gets recycled right back into the capitalist system.

larrys 15y ago

You have to understand though that "charity" is a word just like "education", "religion", "race", "child molester" that is a third rail. People will rarely speak out against the first 4 and nobody, with the exception of a defense attorney or possibly family will ever take the side of a person accused of the latter.

paul 15y ago

Some changes are best made via a for-profit venture, and some aren't. I'm interested in both kinds of change, and that means that I'm involved in both worlds.

toomuchtodo 15y ago
Zuck paid, what, a cool billion for Instagram? Elon spent $800 million, and has an orbital vehicle that can dock with the ISS. And SpaceX is actually profitable. So, yeah, you can be for-profit and change the world. Or be for-profit and help people share photos. Changing the world is a pretty big grey area.
- paul 15y ago
  It's not yet clear which venture will have a greater impact on the world. People here consistently underestimate the significance of democratizing the media.
  - waterlesscloud 15y ago
    SpaceX is part of the first wave in its field, Instagram is at least second wave of democratizing media.
  - mkramlich 15y ago
    In general, I agree. In this specific case, I disagree. I'll confidently bet that Instagram will be "integrated" or forgotten in a few years, relegated to the dustbin of ephemeral "one feature" companies that briefly caught on with hipsters before winning the startup lottery. Meanwhile, SpaceX will still be going strong, revolutionizing private space travel and space cargo delivery, and possibly have achieved tangible milestones toward the first manned voyage to Mars. One company is not much more than an iPhone camera app with a web backend for sharing, is cheap to do, and something that many thousands of developers could do well. The other is doing rocket science, costs hundreds of millions plus, and is staffed by a team of folks of a kind where few can do it well, if at all -- and especially, it now appears, also do cheaply. Humans had tons of pre-existing ways to share photos and "apply cool filters" before Instagram came along. Humanity has very few ways of getting into space (ie, rocket companies), and now SpaceX is one of them. And I respect the significance of democratizing media -- but I felt it was very well democratized in dozens of ways before & without Instagram. And don't even get me started on Gmail. (kidding!)
    - amirmc 15y ago
      Well put. I think monetary value and impact don't necessarily correlate. One could have an amazing, long-term impact on the world without it being reflected in 'price'. Reminds me of some of the recent Valve stories, specifically the anecdote about Doom being the most installed piece of software [1]. [1] For those that didn't know this, see the post below and scroll down to 'Valve is different' http://blogs.valvesoftware.com/abrash/valve-how-i-got-here-what-its-like-and-what-im-doing-2/ http://blogs.valvesoftware.com/abrash/valve-how-i-got-here-w...
- tptacek 15y ago
  I'm not sure what these two things have to do with each other. Elon Musk's goals with SpaceX are entirely different than Facebook's goals with Instagram. No business purpose of Facebook's would have been served by building orbital vehicles. Facebook hasn't even gone public yet; the money we're talking about isn't yet Zuckerberg's to spend randomly.
  - toomuchtodo 15y ago
    Zuckerberg has majority ownership of Facebook shares; he has defacto control of whatever capital Facebook has available to it, whether it's "his" money or not. Was there not discusion that he didn't confer with Facebook's board before completing the Instagram purchase?
    - tptacek 15y ago
      No: majority shareholders of corporations continue to owe fiduciary duty to the minority. This is obviously tangential to the real point, though. Google paid more than 12 SpaceX's for Motorola. Would docking with the ISS help with the Android patent problem?
      - keithwinstein 15y ago
        The directors are fiduciaries. Shareholders aren't fiduciaries and don't owe a duty to other shareholders.
        anamax 15y ago
        While majority stockholders may not be fiduciaries, googling "duties to minority stockholders" suggests that they have some duties wrt minority stockholders, at least in some cases.
        nostrademons 15y ago
        IIUC corporate officers are fiduciaries as well; hence, shareholder lawsuits. As CEO of Facebook, Zuckerburg could be liable for wasting Facebook's money.
- waterlesscloud 15y ago
  This line of argument the last week or so has made no sense to me. Whether you agree with him or not, Zuckerberg's motivation for Facebook buying Instagram was related to the business of Facebook. Elon didn't make PayPal or Tesla start a rocket division, he set up a completely separate venture with its own goals.
- nikcub 15y ago
  Being in space isn't the be-all, it is rather just a very expensive government-backed hobby.

bksenior 15y ago

This seems a bit naive. One needs to continually generate resources to continue to be able to finically stomach bets on risky ventures (startups). It wold be the equivalent of a farmer giving away all his crops and not having money to fix the engine on his thresher the following harvest. Dependent on the details this should be applauded. Although I think it would be much more interesting if they took part of their money and created grants for companies doing good in the world that would have trouble sustaining profitability.

pmarca 15y ago
> ...it would be much more interesting if they took part of their money and created grants for companies doing good in the world that would have trouble sustaining profitability. That is a very interesting idea but I suspect hard to apply in practice. I'd love to see someone try. One example is that a number of local VCs support our local physical bookstore Kepler's in that way (it would have closed long ago if not for their grants) -- they feel its presence makes the community a better place.

pmarca 15y ago

First, thanks everyone for a fascinating debate on a complex set of topics! I thought I'd see if I can add some context to some of the questions particularly about our own commitment. I don't have a view that there's an either-or here on how money can be productively deployed. We have committed to contribute at least half of lifetime earnings from venture capital, in our lifetimes. This is similar to the Giving Pledge that Warren Buffett and others have signed (including John Doerr and Mike Moritz from our world). So there's no requirement that money be contributed to nonprofits now as opposed to later. Each of our GPs will make their own personal decisions, with their families, on timing. But this leaves open the opportunity for some of us to give more actively sooner (like for example Pierre Omidyar has done), whereas others might plow all of our earnings back into for-profit ventures now and for the forseeable future and become active donors later (as Warren Buffett himself did). So don't think of it as money coming out of the for-profit cycle sooner than it would otherwise -- necessarily. (We did announce a collective $1 million cash donation to six area nonprofits today, but that's hopefully a small part of what we will be able to do over the long run.) In my own case, my wife and I are active donors now, most notably to Stanford Hospital. But not at a proportion that prevents us from being major personal investors in each of our own venture funds, as well as investors in several other funds and various other kinds of businesses. I also agree with the commenter that it's not like money vanishes when it goes to a nonprofit. Nonprofits spend money just like any other kind of entity, and that money gets recycled right back into the capitalist system.