204. Fred Wilson, Of Union Square Ventures

Key takeaways

There are four major technological revolutions currently converging: AI, synthetic biology, energy transition, and crypto, shaping the future landscape.
Fred Wilson’s involvement in venture capital was motivated by a passion for technology and finance, with roots in engineering and an MBA from Wharton.
The New York tech scene evolved from the 1980s with influences from industries like finance and media, growing significantly during the dot-com boom and recovering resiliently after the crash.
Key successes such as GeoCities and Etsy exemplify the potential of internet-based startups, but also highlight lessons learned about sustainable growth and business models.
Building engaged user communities and authentic passion remain crucial signals of success in tech startups.
Current technological innovation is driven by the intersection of multiple revolutions, offering immense opportunities but also requiring resilience through bubbles and downturns.

Summary

The Current Landscape: Multiple Technological Revolutions in Parallel

Fred Wilson discusses the unprecedented convergence of four major technological revolutions happening simultaneously: AI as programmable knowledge, synthetic biology as programmable biology, the energy transition as programmable energy, and crypto as programmable money. He emphasizes how these revolutions are interacting and transforming the tech landscape at a pace he describes as both intoxicating and sobering, unlike any previous period in his venture capital career.

Fred Wilson’s Journey and Foundations in Venture Capital

Starting with a background in naval engineering and mechanical engineering, Fred Wilson transitioned into venture capital after an MBA from Wharton. He initially worked at Euclid Partners, investing in early tech companies in the late 80s, mainly in PC software and network hardware. Influenced by mentors and entrepreneurs, he learned the craft of startup investing and working with founders, eventually founding Flatiron Partners during the dot-com boom, focusing on internet startups.

Rise of New York’s Tech Scene and the Dot-Com Era

Wilson describes the evolution of New York City’s tech scene from the early 90s, driven by its industry sectors like finance and media, which spawned tech startups. The late 90s saw the emergence of a digital media scene with ventures like GeoCities and early internet companies. The dot-com bubble led to spectacular successes with GeoCities, eBay of Latin America, and others, but also resulted in a crash that taught hard lessons about sustainability and the risks of hype.

Post-2000 Recovery and New Investment Strategies

After the crash, Fred and his partners focused on rebuilding. They emphasized the importance of building products with mass appeal and authentic user engagement, rather than short-term profits. The narrative covers their pivot to funding social media applications, blogging platforms, and marketplaces like Etsy. During this period, Fred also learned about the importance of supporting founders’ passion and community-building as a predictor of success.

The Modern Era: Innovation, Investment, and Ecosystem Growth

Fred reflects on the rise of the New York tech ecosystem in the 2010s, noting its resilience post-dot-com and aftermath of 9/11. He highlights key investments like Coinbase, Tumblr, and MongoDB, and describes how the internet's focus shifted towards interactive, user-driven platforms. Fred’s own blogging and public sharing attracted founders and helped shape his investment thesis around networks of engaged users. He underscores the importance of technological convergence and the rapid growth of new waves like AI, biology, and energy. He also discusses the dynamics of bubbles in innovation, emphasizing the value of inflated investing in fostering breakthroughs, and the importance of patience and resilience when confronting downturns.

Show notes

For my entire career in tech and startups, Fred Wilson has been like the god-level VC in the New York City ecosystem. Fred got his start investing before the dotcom bubble, rode the bubble investing in the earliest internet companies to great success, and then turned Union Square Ventures into the premier venture capital firm on the east coast. Hear the story of Fred’s investments in Geocities, Etsy, Coinbase, MongoDB among others. When I first started this podcast almost 12 years ago, Fred was one of the top 5 people I wanted to talk to.

Chapters

00:00 The Four Technological Revolutions

11:08 Fred Wilson's Journey into Venture Capital

21:34 The Rise of New York's Tech Scene

34:53 Founding Union Square Ventures

48:00 The Evolution of Web 2.0

57:16 Current Technological Intersections and Future Outlook

Takeaways

There are four major technological revolutions happening simultaneously: AI, synthetic biology, energy transition, and crypto.

Fred Wilson transitioned from naval engineering to venture capital due to a passion for technology and finance.

The New York tech scene began to emerge in the early 90s with digital media and online services.

Flatiron Partners was founded to focus on internet investments during the dot-com boom.

Investing in companies like GeoCities and Etsy showcased the potential of the internet.

The dot-com crash taught valuable lessons about sustainable business models.

Union Square Ventures was founded during a challenging economic period, emphasizing the importance of the application layer of the internet.

The rise of social media and user engagement became central to investment strategies in the 2000s.

Fred's blog became a platform for sharing ideas and attracting founders to his firm.

Current technological advancements are driven by the convergence of AI, biology, energy, and crypto.

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