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Andreessen Horowitz to give half their earnings to charity

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131–140 of 194 posts

Re: Andreessen Horowitz to give half their earnings to charity

#131

The 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 the…

A beautifully written but easily misunderstood statement. Thanks for sharing. I have read it at least 3 times today.

I came here expecting the worst from what can be a youth-worshipping and wealth-worshipping crowd at times but was rather pleasantly surprised by this and other responses today. Perception altered.

Re: Andreessen Horowitz to give half their earnings to charity

#132

Earlier quoted context omitted.

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?

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?

The directors are fiduciaries. Shareholders aren't fiduciaries and don't owe a duty to other shareholders.

Re: Andreessen Horowitz to give half their earnings to charity

#133

Earlier quoted context omitted.

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?

The directors are fiduciaries. Shareholders aren't fiduciaries and don't owe a duty to other shareholders.

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.

Re: Andreessen Horowitz to give half their earnings to charity

#134
post #127
post #57

Earlier quoted context omitted.

Would you rather that they compete over who has the largest yacht or the most jets? Think of it as a positive form of conspicuous consumption. Just as a business can be good for both the owner and the customer, charity can be beneficial for both the givers and the recipients.

"positive form of conspicuous consumption" I don't see spending money on yachts or jets as negative and somehow the fact that "charity" is mentioned that's automatically positive. People earn a living staffing yachts and jets, they are built by companies employing people. That money circulates further in the economy and provides benefits and is paying for someone's health care and college education. So to answer your…

No. Just no.

Where do you think money GOES when it is donated to charity? It doesn't disappear. Are you seriously making the argument that it's better for the world that $X is used to purchase an expensive unnecessary item, than actually spending it on things that matter in the world?

"charity" is not some bullshit phrase that means "wasted money". There are a lot of people in the world who make really compelling cases for certain charity money being better spent, in terms of global well being, than almost anything else. See http://www.givewell.org and http://www.givingwhatwecan.org.

Re: Andreessen Horowitz to give half their earnings to charity

#135
post #119

Earlier quoted context omitted.

But aren't you ignoring a potential reason why it has no "basis in fact"? The reason why we can't find examples of "genius being wasted in poverty" is simple: how can we identify someone as a "genius" until they've actually produced something notable? How can someone with little to no resources produce something notable? It's possible, but the odds are skewed a lot . The statement was very necessary. If we operate on…

Genius manifests itself in many ways. It's foolish to think that simply by living in poverty, genius can be stopped. If you raise the living standards everywhere, the lowest living standard becomes the new poverty. Are we then to say that genius is being squelched in those new areas? > The reason why we can't find examples of "genius being wasted in poverty" is simple: how can we identify someone as a "genius" until…

Ah. I see where the disagreement lies. Your position is that they're still geniuses even if they "only" figure out how to fix cars on their own. I agree, they're still geniuses, but I would also agree that it is a waste.

If the genius had lived outside poverty, they might be inventing nanotech or getting us into space or performing on Broadway.

The opportunity of "genius" is to make an impact on the world, and that is why genius is wasted in poverty.

Re: Andreessen Horowitz to give half their earnings to charity

#136
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…

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…

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.

Re: Andreessen Horowitz to give half their earnings to charity

#137
post #95
post #42

Earlier quoted context omitted.

> 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.

Yes. Rand does not just think that forced redistribution by the state is immoral, but also that private charity is at best morally neutral, and often wrong depending on the nature of the charity (particularly if it is "sacrificial", or is given in response to the needs or shortcomings of the recipient, which in my opinion describes most of the charity in the world today). Her fictional works perhaps lend themselves t…

Libertarianism is about people being free to choose what to do with their money. If they choose to give to charity, light cigars with banknotes, spend it on blackjack & hookers, invest in space flight, etc., it's all their right to make that choice.

It isn't about the relative virtue of doing this or that.

Re: Andreessen Horowitz to give half their earnings to charity

#138

Earlier quoted context omitted.

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…

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 mo…

> ...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.

Re: Andreessen Horowitz to give half their earnings to charity

#139
post #63

Earlier quoted context omitted.

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.

> 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.

That is, of course, correct.

Re: Andreessen Horowitz to give half their earnings to charity

#140
post #63

Earlier quoted context omitted.

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.

Having capital to invest in more start-ups reduces risks and increases the chances of the VC earning bigger returns. In order to invest in more start-ups, the firm needs top-notch people (partners, associates, etc.). 1. The best people are not going to join a firm that's giving away 50% of their management fees and carried interest income. 2. Not enough people & capital means -Less investments, therefore more risks a…

> Having capital to invest in more start-ups reduces risks and increases the chances of the VC earning bigger returns.

That's true up to a point, but only up to a point. You hit the point of diminishing returns pretty early. I wish it were otherwise but there's 40+ years of history that support that theory.

It's not even that there aren't enough potentially great startups. It's that the venture business is a business that scales mostly with people. Each GP can credibly be a primary investor and board member in maybe 10-12 companies at a time. I don't think arbitrarily taking that number up to 20-24 would generate twice the returns, at least without the GP's head exploding in the process.

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