Early VC Backers Exit Twitter's Board -- a Bad Sign for Innovation
The big news on the Internet start-up front is that two board members were leaving Twitter. What made this particularly interesting -- and, when you think about it, chilling for start-up business model innovation -- was that they were Fred Wilson and Brian Sabet.
Both men were early backers of Twitter and had championed the company, even when many jeered about its lack of a business model. It was their faith that helped sustain Twitter in the early days. But the founders are gone, Wilson and Sabet are out, and you have to wonder whether an interesting experiment in business and technology has gone sour, to the detriment of entrepreneurs and the entire industry.
For the greater glory of profit
According to Nicholas Carlson at Business Insider, the decision was mutual and has far more to do with getting ready to go public. That is probably the case. But it's still a bad sign.
Both men are unusually experimental for the VC industry. Wilson, specifically, has mentioned how he had faith in the non-traditional advertising models that Twitter, Tumblr, and Foursquare have pursued. His patience also stands out in remarks he made in April 2011:
"We'll wait ten, twenty years if we have to to see the company's we invest in realize their dream," he said during the panel. It's a statement that might bring comfort to USV's smaller investments, but cause for concern to those that have invested in Wilson and his partners at USV. Especially during the so-called Bubble 2.0--or "greed mode," as Wilson prefers to call it.What Wilson so clearly gets is that business must be about more than just making a profit. You need bigger ideas, loftier goals. Steve Jobs was able to help turn Apple into a giant because he wanted to change the world.
Even when it comes to selling stock, Wilson wants to align what he does with the founders, as he said at a TechCrunch conference in May. That even includes selling stock. He wants to stay even with the founders, because they're the real base of a company. Plus, if you don't think they're doing something new and important, why get involved in the first place? And if you do, why screw the people who make it possible?
Stop the world, I want to get off at the bank
Most VCs, however, don't want to change the world. They want to stir up enough interest that investors will line up and a company can get a big multiple by going public, or through an acquisition, if necessary.
Clearly, things have changed at Twitter. The original founders are all gone. Twitter will now push ads in news streams, which is about as typical an advertising play as you could expect.
The people who put in the biggest sums of money don't have a new view of venture capital. They want to invest and then cash out. Changing the world has nothing to do with it.
Although neither Wilson nor Sabet have said much about the change, each had an interesting blog post this morning. Wilson mentioned a lean and personal approach to venture capital:
I do not believe that venture capital scales. I believe you need a small team of highly engaged partners and not much else other than great relationships with entrepreneurs. We do have a small team of non-partners at USV. Dorsey runs the office. Christina runs the investment stuff. Gary runs the portfolio engagement stuff. That's it. It works really well. We've kept USV lean and I believe that has allowed us to focus on what matters most, to react quickly to opportunities, and to be focused externally as opposed to internally. And when I look at most of the VC firms I admire, I see similar lean approaches. It's a winning model.Sabet simply had a quote from Twitter co-founder Biz Stone:
Whatever your role is at the company you work for--whether you're an executive with many reports, or an individual contributor on a team, practicing regular, daily mindfulness and compassion will make you a healthier, more productive person. Additionally, the people you work with are going to respond better and do better work. The outcome is going to be a superior product or service, a happier user or client, and in the best case--a positive global impact.In the bigger scheme of investment and business, I suspect they will remain with early stage start-ups ... and that traditional approaches to venture capital will push them out when a company gets big enough. And that's a shame. VCs are happy to press new clay into old familiar molds. And that's a great way to kill innovation and leave business, and life, as it always has been.
Related:
- Wait a Second -- Facebook Actually Missed Its Revenue Projections by $500M
- Twitter and Facebook Must Really Be Hungry for Revenue
- Twitter Rents Itself Out -- Selling to Come Later
- Biz Stone Quits Twitter -- the Last Co-Founder to Go
- Twitter: More and More People Use It Less and Less
- Twitter Adds Instant Follow Button to Lock In Its Audience
Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.
Twitter FacebookDisclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
