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.
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.
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.
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!)
Reminds me of some of the recent Valve stories, specifically the anecdote about Doom being the most installed piece of software .
 For those that didn't know this, see the post below and scroll down to 'Valve is different'
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.
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.
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.
Does Ayn Rand have similar opinions? I'm trying to figure out what you mean by that.
I know many libertarians are in favor of private charity and consider it a virtue, and many of these same people are also fans of Rand, but they should realize that she disagrees with them on this point.
It isn't about the relative virtue of doing this or that.
How much cynicism are you seeing in this thread?
For the record I think this is a really positive move.
My opinion on this would've been different if they said "I am personally giving 50% of my money to charity in perpetuity..."
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.
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 and less return.
-Less due diligence and monitoring of portfolio companies (again more risks)
-investors hate risk and low 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.
I agree which is why I brought up the topic of management fees and carry. You need them both to pay for additional people in order to scale your business. (which you addressed in your other comment).
True, but that's not what we're saying. We're saying that the GPs as individuals are going to do that, for the income we would have received in any event. This doesn't affect how the firm allocates fees and carry, and doesn't reduce the incentive for anyone to join the firm who would have joined before.
"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."
I think it's an extremely positive statement for them to make.
The only way I can read your argument, is that the investment company should stop being generally profitable for the owners, and return more money to the investors. How does this make business sense? It would be like saying "Apple makes profit from selling iPhones, and just gives it away to shareholders. They should really bow to the customers and lower the costs and socialist bullshit to the shareholders". Unless of course Apple share holders are magical unicorns who deserve it, and the partners in a VC firm don't.
Re-read yesbabyyes comment. It makes no argument other than "who are you", "they are famous and accomplished" and "they are rich." It's a poor argument.
Not really. It's like Michael Phelp's 14 gold medals should carry no weight in a discussion of whether or not his butterfly stroke has room for improvement.
No one is arguing that Andreessan is not good at making money. If people were, then your analogy would be correct. People are arguing whether or not his money was put to efficient use in this specific instance (by donating to charity).
Having 14 gold medals does not prove to anyone that your butterfly stoke technique could not be better. Nor does earning a lot of money prove that you always make good decisions with money. Take my $100 toilet paper example. Earning a lot of money through good investments does not make using $100 for toilet paper suddenly unassailable to criticism. Does this make sense?
Having 14 gold medals means that though his butterfly stroke might or might not need improvement, a random punk on the internet doesn't have the authority to make a judgement call.
> Nor does earning a lot of money prove that you always make good decisions with money. Take my $100 toilet paper example. Earning a lot of money through good investments does not make using $100 for toilet paper suddenly unassailable to criticism. Does this make sense?
No it doesn't make sense. Your $100 for toilet paper example is pushing the boundaries of ridiculous which doesn't have anything to with the topic under discussion.
People who haven't earned through investment preaching people who have made a fortune about efficient use of money, money which happens to be their personal money, is just sad.
This criticism should be valid regardless of my identity and credentials?
>> Having 14 gold medals means that though his butterfly stroke might or might not need improvement, a random punk on the internet doesn't have the authority to make a judgement call.
>>> the "random punk" is probably a swimming coach ;)
That's the point. The defense should be valid whether or not the identity of the critic is known.
>>>>> "Michael Phelps sucks. He doesn't know shit about swimming."
This criticism should be valid regardless of my identity and credentials?
>>>>>> That's not what I said. I said that the defense should be valid regardless of the identity of the critic.
I don't know what defense you are talking about, and who are these critics defending themselves from, and why are they talking about things they have no fucking idea about, and why do they think "I sometimes drown in my bathtub but my opinions on swimming are as valid as Phelps' because fuck, you can't appeal to authority Even PG agrees with me about appeal to authority being invalid."
All I am saying is:
Does winning 14 gold medals mean Phelps technique is perfect? NO
Does it mean a random punk on the internet can critic him? YES. Freedom of speech and stuff.
Will the opinion mean anything? FUCK NO.
Will it mean anything if the random punk happens to be a swimming coach? FUCK NO.
Will it mean anything if the random punk happens to be a former olympic champion or an olympic coach? IT MIGHT. There are no rules of thumb. Different things work for different people.
The critics are not doing the defending. Let me break it down for you.
jimmyvanhalen criticized Andreessen Horowitz use of money as being a relatively inefficient, compared to re-investing or lowering their fees. That was the criticism.
yesbabyyes defended with "you are a nobody in the investment world" and "you don't have as much money as Andreessen Horowitz, so you don't know what you're talking about." That was the defense.
The defense to the criticism is invalid because (aside from other logical fallacies), it hinges solely on the identity of the critic (jimmyvanhalen) and his personal accomplishments, relative to the entity being criticized (Andreessen Horowitz).
A defense with substance, one that works regardless of identity or accomplishments, would have been an argument as to why donating all the money to charity is helping people more people than re-investing.
If a wealthy self-made person says something about how to make money, that's stronger Bayesian evidence for that actually being a good way to make money then if some random person says it.
It may not make it better, but I think I did it because jimmyvanhalen's argument was, to me, so... Preposterous. As I understand him, he is basically arguing that if you feel that you have money to give to charity, you should give that to whomever gave you that money. I wonder what he feels about my, admittedly ridiculously small, donations to charity. Am I, too, wrong to give? Should I lower my fees and "give" that money to my clients instead?
I just wanted to add that I actually think wealth and investment accomplishments are somewhat relevant in this discussion, regarding your comment on fallacies. Especially given jimmyvanhalen's very strong opinions on what "a VCs job" is, what a16z "should" do, and his confused ending statement on that what they did would be fine by him if they did... Exactly what they are doing.
Don't you agree?
I don't really have an opinion on the actual thing being discussed though, other than my comments back and forth with "paul"
I.e., trolling. Yeah, I know.
Seems that over the last several years or so there has been an uptick in wealthy people using peer pressure to get other wealthy people to give away their money according to some rule of thumb that one groups thinks is right or fair. Wealthy people always gave away money and pressured others at charity events of course. But I don't remember it ever being so public.
I have an objection to this type of peer pressure. Just like I have an objection to Warren Buffet and his "Buffet Rule".
It seems that one of the most downvoted comments below is one where "PR" was mentioned. Was this done for PR reasons. No not entirely. But it also wasn't done anonymously either.
But honestly, how many of them were going to do that with the money, anyway? I agree that charity is better than 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 question "Would you rather that they compete..." I would rather they do whatever they want to do with the money they have earned without some kind of movement played out in the press which makes it looks like donating 1/2 to charity is the noble choice to make.
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.
For example, if AZ said "Hey users of instagram (or users of AZ product that just sold), we're going to let you decide which cause some of this money goes to," would that create a delta in value from the original proposition?
"Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community." - Andrew Carnegie
I said "Seems that over the last several years or so there has been an uptick in wealthy people using peer pressure to get other wealthy people to give away their money"
Did you miss this?
Sadly, we do not live in a perfect world. The resources and opportunities we take for granted are the same ones others do not have. Giving others a chance at the life and opportunities that were given to us is probably the wisest investment of all. The returns are deeper than dollars.
I don't know anything about this particular case, but in general many businessmen are complicit in bad philosophy, and sometimes even pay to promote it. That's shameful and harmful.
Business people trade for mutual benefit. That provides value to society even if they never give a dime to charity. And even if they do give a dime to charity, their actual business activities provide more value, both for themselves and others. Businessmen should be proud.
You can find this sort of opinion in the Ayn Rand book _Why Businessmen Need Philosophy_. You might want to read it, and make some effort to reply to its arguments, before dismissing it as wrong enough to dismissively insult in passing.
The mistake being made by many here is concluding that since business can be good for the world, therefore everything that isn't a for-profit business must be a waste. Not all good things are profitable.
OK... fine. But if you aren't going to fully understand Ayn Rand's work, then you don't need to preach to us about how misguided you think it is.
The whole point of discussions like this is to have an intellectual discussion. To dismiss people who disagree with you by accusing them of "preaching" (when they aren't) has no place on HN. (As I'm sure you well know.)
I don't really see this as far off, though. Rand really did believe that it was unethical to be altruistic. Not because it led to negative outcomes, or was inefficient, but because it was, in her view, inherently unethical to be altruistic. The altruistic sentiment was a character flaw at best. She did approve of philanthropy in some circumstances, such as foundations that were set up to advance their founders' views. But it had to be for reasons other than altruism, and it would ideally take into account whether the recipients were "worthy" of the help, not be Christian-style unconditional charity.
Her answer wasn't the consequentialist one that Adam Smith and other market-economy defenders proposed: that self-interest produces the best overall outcome. It was instead somehow more metaphysical, that somehow self-interest is the highest good, and putting any other goods above one's own good is corrupting the greatest good. I see it as a kind of take off on Nietzsche's master-morality/slave-morality dichotomy, except, unlike Nietzsche, she ties it to the free market and commerce. (Nietzsche believed in great people putting their own self-development ahead of the masses, in the elitist sense that if you're better than everyone, you should focus on your own development first... but he considered business and money-making to be a dirty, mass occupation that in no way qualified as "great" or "elite".)
> Her answer wasn't the consequentialist one that Adam Smith and other market-economy defenders proposed: that self-interest produces the best overall outcome.
One thing that might be helpful is to understand Rand's view on compromise. She said you can compromise on concretes when you agree on a principle, but you must never compromise your fundamental principles.
For example, if you agree on the principle of trade, you can compromise (haggle) on the exact price or contract terms, and you're still both following a good principle and can both benefit.
But you must never compromise between collectivism and individualism, capitalism and socialism, life and death, freedom and slavery, rationality and irrationality. Those sorts of compromises between opposite principles amount to sacrificing some good that one shouldn't give up, and allowing in some unacceptable evil. Nor should you compromise your values in order to get something that you don't value or value less. That isn't a reasonable compromise, it is surrendering your values and principles for the benefit of others.
Given this sort of view of compromise, it's no good to ever compromise your own life, no good to ever sacrifice yourself. Anything that asks you to do that is evil. If there is a rational trade to make, then make the exchange and benefit, but don't sacrifice yourself for unspecified or vague future benefits which no one is accountable for providing to you.
This is why I find it so interesting that Rand ended up accepting social security and medicare from the government. You seem to know a lot about Rand -- do you have any idea how she justified her accepting government benefits?
She actually wrote at length about this issue . That people keep puzzling over it shows that they don't understand AR (which is perfectly fine if they don't claim to understand her), or just want to smear her.
The problem with using her novels as an argument for the position is that they only really work in an affective, sense, imo, as implying consequentialist arguments, sort of along the lines of a morality tale or fable: look what could happen if things are done this way, or alternately, if they were done that way. And I think a lot of people do read them that way; the famous "going Galt" plot, for example, is commonly taken as a parable for why bad things will happen if you institute too much regulation and burdening of productive individuals. But she explicitly disclaims "things will turn out better/worse" as a reason to accept or not accept her philosophical/political views, so her novels aren't supposed to be read that way. But they're actually more effective that way! Which is why I think it's so common for fans of Rand to ignore Objectivism and instead read her as more of a general pro-free-market, libertarian author.
(By "principles" here, I mean correct ones.)
That there is really no nuance or context in her novels (or other work) follows fairly directly: these are idealized, metaphysical types, and an empirical or inductive methodology is nowhere in sight. She occasionally claims something about induction, but does not actually follow any such methodology, certainly not in any rigorous fashion.
Can you point to one actual claim made by AR that is in common with Nietzche? I seriously doubt there is one.
Going away from actual claims to mere generalities, yes, AR and Nietzche were both "individualists" in a sense - but in a totally different one. Nietzche in a predatory way, AR in a "mutual trade for mutual benefit" way.
she does not deduce principles from reality, but from metaphysical first principles
She doesn't decduce, she induces, and she does not do it from metaphysical first principles at all. Her core metaphysics is axiomatic, but the rest of her philosophy is inducted from reality. Most of her philosophical essays are just summaries of the results of this process. There is no work that "competely induces" Objectivism. There are a couple of works by Leonard Peikoff that talk about the Objective process of doing this. Until recently, they were only recorded lectures, but "Understanding Objectivism" was just released as a book.
That there is really no nuance or context in her novels
A lot of people don't "get" the novels. Just a few days ago an Objectivist was telling me how mind-blowing Atlas Shrugged is, because there are about "12 layers" (quoting him) of meaning in any given chapter. You would be surprised. It does not appear to be this way on the surface.
Like a lot of people here, I read Rand as a teenager. As a slightly older teenager, I concluded she was an extremist who I think would have hated living in the world that her philosophy would have led to had she been wholly successful (Hobbes' phrase "nasty, brutish, and short" comes to mind).
The point about business transactions being mutually valuable and societally value-add is generally (although not always) true, in my mind, but that doesn't eliminate the need for either government or philanthropy if one wants to live in a civil society.
But, to each her own...
How do you make this leap? It's utterly baffling to me. Giving something away doesn't imply that it was bad to have in the first place.
One could, but one would be wrong :-).
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 myself. There are a couple of groups which I know of which do analysis of charity effectiveness:
* Giving What We Can (http://www.givingwhatwecan.org/) are an Oxford, UK based organisation who estimate that you can save a life for ~£300.
* GiveWell (http://givewell.org/) are a US group who do similar research
They both publish lists of the most effective charities they've researched, and Giving What We Can have a calculator which shows you how much you can achieve by donating 10% of your income each year:
I think these stats are astonishing and it's really changed my approach to charity. Worth checking out if you're interested at all in philanthropy!
* lives saved is of course the wrong metric: no-one has ever saved a live, just prolonged it, but it's a convenient shorthand for maximising the number of quality adjusted life years (QALYs) that a donation could buy.
Another good essay about this stuff is here: http://lesswrong.com/lw/3gj/efficient_charity_do_unto_others...
For my part, I don't know as much about this as some people, but my wife teaches philanthropy at Stanford and has studied, written about, and taught the topic of effective giving for her whole career, so that works out nicely for me. (Can't resist plugging her recent book "Giving 2.0" for people interested in the topic.)
This sort of topic brings out high emotions on both sides, and it's good to bring the rhetoric level down a bit. Certainly it's the way to win people over to your way of thinking and have even more of an impact.
I'm curious, has your wife written about the sorts of topics raised here? Would she do so on the web, if she hasn't already? There's a notable portion of the entrepreneurial community that has these sorts of legitimate questions and it would seem like she'd be in a unique position to discuss them and sway hearts and minds.
For example, if a16z said "Hey users of instagram (or users of a16z product that just sold), we're going to let you decide which cause some of this money goes to," would that create a delta in value from the original proposition?
Basically no one would say (or is allowed to say in polite company) that they care more about having art available locally than the lives of a thousand people in some third-world country that they'll never meet. Yet, it seems pretty obvious that donations to local art save fewer lives than the anti-malarial mosquito nets, and should be obvious to the people donating.
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.
They're in the business of being human.
As is true for any of us, that means something complex, multidimensional, and personal. It's not some sort of affront to venture capitalism to use the profits it generates for something other than more venture capitalism. It's not a "waste of capital" to use your own capital for whatever you find important.
If you're going to donate to charity, do it personally and without all the media hype.
Media hype can be a good thing or a bad thing. If it's about your own ego, I agree, STFU and give privately. But hype can also convince others to change their behavior. Consider the use of "matching funds" as an incentive to increase charitable giving. Various publicity techniques (such as somebody famous emphasizing philanthropy) can increase giving or help direct it to where it can do the most good.
Altruism is a kind of positive irrationality; the more stake-holders are involved, the more exponentially unlikely such irrationality becomes.
(yes, I know that charity != altruism. But this is a very theoretical discussion)
A side question, any idea if the contributions are from the firm or the individual partners? I'm curious about the tax break breakdown. If the company is the vehicle for donation, there is a larger ability for a full tax break on the money donated. However, it seems that for an individual, there is a maximum: "Only if you contribute more than 20% of your adjusted gross income to charity is it necessary to be concerned about donation limits. If the contribution is made to a public charity, the deduction is limited to 50% of your contribution base." - http://www.charitynavigator.org/index.cfm?bay=content.view...
So, if 100,000 was donated by the company, the tax break would be 100,000. $100,000 goest to the charity and the company has no tax on that income. But for the individual, if the maximum tax break is 50%, then $100,000 goes to the charity but $50,000 was taxed at the individual's income tax bracket (likely 35%+ for these guys) so the 'cost' was really $117,500 to give $100,000. Check my math here, I'm not a tax expert but curious about they are looking at maximizing their contribution at the lowest cost.
From the individual General Partners.
So, regardless of motivation, these guys are good folks.
The way Andreessen disrupts continually surprises me.
They try to solve the problem of poverty, for instance, by keeping the poor alive; or, in the case of a very advanced school, by amusing the poor.
But this is not a solution: it is an aggravation of the difficulty. The proper aim is to try and reconstruct society on such a basis that poverty will be impossible. And the altruistic virtues have really prevented the carrying out of this aim. Just as the worst slave-owners were those who were kind to their slaves, and so prevented the horror of the system being realised by those who suffered from it, and understood by those who contemplated it, so, in the present state of things in England, the people who do most harm are the people who try to do most good; and at last we have had the spectacle of men who have really studied the problem and know the life – educated men who live in the East End – coming forward and imploring the community to restrain its altruistic impulses of charity, benevolence, and the like. They do so on the ground that such charity degrades and demoralises. They are perfectly right. Charity creates a multitude of sins.
There is also this to be said. It is immoral to use private property in order to alleviate the horrible evils that result from the institution of private property. It is both immoral and unfair.
~ Oscar Wilde
You would think smart men as these would want to cure the disease instead of curing the symptoms.
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.
I'm not so sure socialism is the answer there, but it's definitely a goal to have for the long term.
To be honest, some charities do annoy me, but not the idea of charity in and of itself.
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 may have glory from men. Assuredly, I say to you, they have their reward. 3 But when you do a charitable deed, do not let your left hand know what your right hand is doing, 4 that your charitable deed may be in secret; and your Father who sees in secret will Himself reward you openly.
I think it means that the spirit of charity is purest when it is anonymous.
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.
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.
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
Think of the marginal increase a dollar creates there vs going to a kid from a top university.
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?
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.
The statement he made is unnecessary to his overall point, which is that charity can help people. His claim about the "unbelievable" number of geniuses being squandered has no real basis in fact.
The statement was very necessary. If we operate on the assumption that a person's ability is largely defined by their upbringing (and from what we understand so far in the social sciences, this is a pretty fair assumption to make!), it's essential to point out that poverty prevents people from achieving their full potential, and the number of people it affects is in the billions.
Just because it can't be accurately measured doesn't automatically make the point invalid: if you're trying to argue that the population of (over a billion!) people without ready access to food or clean water doesn't contain the same number of potential geniuses as our population, then you have the burden of proof because every bit of understanding we have about nature vs. nurture indicates that improving a person's upbringing allows them to accomplish more.
In other words, he doesn't have to prove with hard statistics that poverty prevents genius from emerging, because our existing knowledge of human behavior and development clearly demonstrates this without having to answer: "exactly how many geniuses were lost?"
> 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?
Poverty does not prevent the identification of. I've lived in a poor community. Yet I've seen genius in people who can fix vehicles, in people who can track animals to hunt, or in just retelling amazing stories. Those people are geniuses. Just because they don't invent some new-fangled iBullshit, or get on the NYT best seller list, does not diminish their genius. It does not mean that it did not exist. And it does not mean that a cash infusion would have made them any "more" of a genius. Open your eyes. Geniuses are not resources to be exploited by people who want to make a good return on an investment.
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.
-In the North America there are n% recognized as super talented people and have some profound impact on society.
-In Africa there is m% recognized super talented people and have some profound impact on society.
For some reason m <<< n, and on top of that, there are many more people in Africa. So that seems like a huge waste of potential in my opinion.
Now think of how much is lost just by missing one Einstein, or one Feynman... Even one of those would be an unbelievable amount of genius squandered.
You're right, statistically it's possible nobody is missing out, but it's kind of unlikely.
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.
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.
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 :)
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.
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.)
If you have committed to donating your estate to charity by putting it into your will, good for you! But if you haven't already committed to this by putting it into your will, then you (at this point in time) reinforce the research - which is people always promise/intend to donate, but they have excuses to delay donating till some point in the distant future which result in them never donating in the end (so in this case, I'll donate my estate when I die).
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.
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.
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.
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.
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.
"... we think an essential role of philanthropy is to make bets on promising solutions that governments and businesses can’t afford to make."
Exactly, WE. Thing is, there are millions of people that aren't included in that "we" and the benefits they get (i.e. saving lives) FAR outweights the benefits we'd get.
Donations like the one outlined in this article give me faith in humanity. It's nice to see us looking out for one another.
As for me, I strive to build business(es) so I can do the same, whether the most effective way to raise the standard of living for everyone is donating, building, or most likely both.