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Andreessen Horowitz to give half their earnings to charity

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Re: Andreessen Horowitz to give half their earnings to charity

#61

Post by tobtoh »

vibrunazo wrote: post #24
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…

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 seei…

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.

Re: Andreessen Horowitz to give half their earnings to charity

#63

Post by paul »

jimmyvanhalen wrote: post #50
paul wrote: post #41

It'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 opi…

it's not foolish. it's just not the most efficient way to spend capital. look at it from the point of view of the LPs. A VCs job is to deploy capital and maximize return to it's investors. they should reduce their management fee and carried interest income, and give them back to the LP, or re-invest them and fund more start-ups/create more jobs. My opinion on this would've been different if they said "I am personally…

The half they are giving away is money they would have otherwise taken as personal income, so it is in fact their own personal money.

The other thing you should understand is that top VC firms such as AH (or YC) are not capital constrained. Dumping in twice as much money won't produce twice as much innovation or profits.

Re: Andreessen Horowitz to give half their earnings to charity

#64

Post by rdl »

jcampbell1 wrote: post #28
danilocampos wrote: post #20

Earlier quoted context omitted.

> 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…

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.

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.

Re: Andreessen Horowitz to give half their earnings to charity

#65

Post by shazad »

jimmyvanhalen wrote: post #50
paul wrote: post #41

It'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 opi…

it's not foolish. it's just not the most efficient way to spend capital. look at it from the point of view of the LPs. A VCs job is to deploy capital and maximize return to it's investors. they should reduce their management fee and carried interest income, and give them back to the LP, or re-invest them and fund more start-ups/create more jobs. My opinion on this would've been different if they said "I am personally…

As far as I can tell that's actually what they did say:

"We are delighted to announce that the six General Partners of Andreessen Horowitz, with our families, are all committing to donate at least half of all income from our venture capital careers to philanthropic causes during our lifetimes."

http://bhorowitz.com/2012/04/25/our-philanthropic-commitment...

I think it's an extremely positive statement for them to make.

Re: Andreessen Horowitz to give half their earnings to charity

#66

Post by daenz »

zmitri wrote: post #17
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…

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 gar…

> 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?

Re: Andreessen Horowitz to give half their earnings to charity

#67

Post by paul »

daenz wrote: post #60
yesbabyyes wrote: post #58

Earlier quoted context omitted.

Now usually I don't do this, but: Who are you, jimmyvanhalen, to tell Paul Buchheit about "the most efficient way to spend capital", and how Marc Andreessen and Ben Horowitz should do their jobs? Since you apparently know so much about it, surely you top Paul's worth easily?

appeal to accomplishment, appeal to poverty, appeal to wealth http://en.wikipedia.org/wiki/List_of_fallacies

Capitalism is a system for transferring money from those who are bad at allocating capital to those who are good at allocating capital. That's the magic of it. It also implies that people like Andreessen most likely have an above average understanding of how to allocate capital :)

Re: Andreessen Horowitz to give half their earnings to charity

#68

Post by sethbannon »

paul wrote: post #41

It'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 opi…

Well said. Might we see a similar pledge made by YC soon?

Re: Andreessen Horowitz to give half their earnings to charity

#69

Post by rdl »

It'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).
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