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Andreessen Horowitz to give half their earnings to charity

finance.fortune.cnn.com

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Re: Andreessen Horowitz to give half their earnings to charity

#31

Post by aaronbrethorst »

daenz wrote: post #16

Though 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 m…

Of course, there are also tons of verses exhorting you to lead by example: http://www.openbible.info/topics/lead_by_example

Re: Andreessen Horowitz to give half their earnings to charity

#32

Post by rdl »

jcampbell1 wrote: post #10

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 sh…

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.

Re: Andreessen Horowitz to give half their earnings to charity

#34

Post by jimmyvanhalen »

rjshade wrote: post #18

This 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 my…

clearly 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.

Re: Andreessen Horowitz to give half their earnings to charity

#35

Post by etrain »

jcampbell1 wrote: post #10

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 sh…

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.

Re: Andreessen Horowitz to give half their earnings to charity

#36

Post by daenz »

wdewind wrote: post #30
daenz wrote: post #16

Though 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 m…

What about when your deed might inspire/put pressure on people of similar stature to do the same? Ie: Gates or AH?

Personally 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.

Re: Andreessen Horowitz to give half their earnings to charity

#37

Post by hprhpr »

rjshade wrote: post #18

This 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 my…

Agreed about the importance of making sure you donate to the right charities, which is why I was disappointed to read this: "And, to begin, they have sprinkled $1 million on Silicon Valley nonprofits that focus on everything from urban forestry to homeless families."

Another good essay about this stuff is here: http://lesswrong.com/lw/3gj/efficient_charity_do_unto_others...

Re: Andreessen Horowitz to give half their earnings to charity

#38

Post by jessriedel »

rjshade wrote: post #25
rjshade wrote: post #18

This 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 my…

Oh and this is similar to the approach that the Gates foundation is taking. As far as I can tell Gates approached this as an optimisation problem: given that he has X billion dollars to give to charity, how can he maximise the effect that his donations have? How many lives can he save* with that money? * lives saved is of course the wrong metric: no-one has ever saved a live, just prolonged it, but it's a convenient…

All good stuff, but I'd want to emphasize that directing your philanthropy based on doing the most good does not require you to be a utilitarian, nor (if you are) does it require the utility function be denominated in QALYs.

Re: Andreessen Horowitz to give half their earnings to charity

#39

Post by SamReidHughes »

_delirium wrote: post #29
vibrunazo wrote: post #27

Earlier quoted context omitted.

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.

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?

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.

Re: Andreessen Horowitz to give half their earnings to charity

#40

Post by daenz »

aaronbrethorst wrote: post #31
daenz wrote: post #16

Though 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 m…

Of course, there are also tons of verses exhorting you to lead by example: http://www.openbible.info/topics/lead_by_example

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.
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