Thursday, January 29, 2009

union square ventures: super smart investors

"We are often asked if our strategy is to invest in specific markets, like media, or financial services, or specific technologies, like video, or wireless, or if we confine ourselves to one style or stage of investing, or if we invest only in consumer facing businesses. If you looked at our portfolio you could conclude that we invest in early stage, consumer facing, web services, in the media market. I am sure we are guilty of furthering this misconception by using this description of our firm as a short hand when we introduce ourselves. But it would not be true to say that our investment strategy is to invest in one stage, one type of business, one technology and one market. That would not answer the question - why do we invest in these things? It would not be arguing from first principles.

So why do we invest this way? We believe the web is fundamentally transformative (have we said this before). The global economy is defined by scarcity in resources, production, and distribution. On the web, the raw material is data. It is often shaped (produced) by volunteers, and it costs almost nothing to replicate and distribute the resulting product. This is profoundly different than the current industrial economy. Our investment strategy is to arbitrage the difference between the capabilities of the new medium and readiness of the existing economic and social structures to exploit those capabilities."

1 comment:

Anonymous said...

Amen a$$hole. Keep collecting your management fee.