20VC USV's Albert Wenger on What Elon Musk Should Do with Twitter The State of Crypto Today; The Impact of SBF and Why Now is the Best Time To Invest in Crypto Are We Too Late to Save The Climate and Why Civil Disobedience is Required Will TikTok b

Summary Notes


In a dynamic conversation with Albert Wenger, managing partner at Union Square Ventures, the discussion delves into humanity's transition from the industrial to the knowledge age, the importance of attention allocation, and the need for a universal basic income to establish an economic floor. Wenger critiques the current state of social media, emphasizing the need for programmability to shift power dynamics, and shares his views on climate change, advocating for transformative rather than incremental solutions. Additionally, he reflects on the recent crypto bubble burst and the lessons from past downturns, while also offering advice to founders navigating the current investment climate. The conversation also touches on the implications of central bank digital currencies and the potential and pitfalls of platforms like Twitter and TikTok.

Summary Notes

Attention as Humanity's Constraining Factor

  • The primary limiting factor for humanity is not physical capital but attention.
  • Attention determines what individuals and societies focus on.
  • Societies need to prioritize where they allocate attention since important issues may not have market prices.

"The constraining factor on humanity isn't how much physical capital there is. We can do amazing things. So the rate limiting factor for humanity really is attention, which is what are the things that we pay attention to both individually and collectively as societies and hyper collectively as all of humanity."

Albert Wenger emphasizes that while humanity has the capability to achieve remarkable feats due to sufficient physical capital, the true bottleneck for progress is where attention is directed, both on a personal and collective level.

Albert Wenger's Background

  • Albert Wenger is a managing partner at Union Square Ventures.
  • He was previously the president of Delicious and an angel investor.
  • Wenger's journey into venture capital was not straightforward, involving various endeavors and learning experiences.

"Before joining USV, Albert was the president." "Of delicious through the company's sale to." "Yahoo and was also a prominent angel." "Investor with investments in the likes of Etsy and Tumblr."

This quote outlines Albert Wenger's roles before joining Union Square Ventures, highlighting his leadership at Delicious and investments in companies like Etsy and Tumblr.

Transition from Industrial to Knowledge Economy

  • Wenger discusses the shift from an industrial age to what could be a knowledge age.
  • The transition requires conscious choices by humanity.
  • Attention allocation is critical, and markets alone cannot guide it due to the value of non-priced activities.

"The book talks about this transition out of the industrial age into a new age that could be, if we do it right, the knowledge age."

Albert Wenger refers to his book, "The World After Capital," which discusses the transition from the industrial age to a potential knowledge age, emphasizing the need for deliberate choices to guide this shift.

Income Inequality and Mental Health

  • Income inequality and mental health are symptoms of the transition between economic stages.
  • Wenger advocates for a balance in income distribution and supports a universal basic income (UBI) to provide a societal floor.

"I just think you can take things too far so you can have a healthy degree of inequality, you can have an unhealthy degree of income inequality, and we have entered the unhealthy territory in this."

Albert Wenger expresses concern about the current state of income inequality, suggesting that while some inequality is acceptable, it has reached levels that are detrimental to society.

The Role of Technology in Society

  • Technology expands possibilities but also challenges existing societal structures.
  • The transition to a knowledge age is profound and can be traumatic, echoing past societal shifts.
  • Misguided political efforts to maintain the industrial age could exacerbate the transition's challenges.

"My view of why I think this is a dangerous transition, it is a profound transition."

Wenger points out the gravity of the transition to a knowledge age, likening its potential impact to previous historical shifts, and stresses the need for a clear vision to navigate the change.

Concerns about Technological Impact on Wealth Distribution

  • Technological advancements can exacerbate wealth inequality.
  • Robotics and cryptocurrencies may concentrate wealth further, despite the potential for decentralization.

"It's actually just further concentrating wealth into the hands of even fewer."

Albert Wenger acknowledges the concern that despite the democratizing promise of technologies like cryptocurrency, wealth may become even more concentrated among a select few, which could worsen income inequality.## Dual Nature of Technology

  • Technology brings about both positive and negative possibilities.
  • The example of fire illustrates the dual nature of technology: beneficial for cooking and metallurgy, detrimental when misused for destruction or torture.
  • Robotics and automation have historically benefited humanity by reducing the need for manual labor in fields such as agriculture.
  • The transition from manual labor to automation has allowed a significant portion of the population to engage in other activities beyond agriculture.

"Like the earliest doom and technology was fire. And fire is great. It lets you cook, it lets you melt things and make metals, but you can also use it to burn down somebody else's village or to torture."

This quote highlights the dual nature of technology, using the example of fire to demonstrate how technological advancements can have both beneficial and harmful applications.

Economic Sphere vs. Non-Economic Sphere

  • The goal is to shrink the economic sphere, where activities are incentivized by prices, and expand the non-economic sphere, which includes activities not driven by economic incentives.
  • Non-economic activities include spending time with friends, caring for children, nurturing nature, creating art, and conducting fundamental science.
  • The proper transition to the knowledge age could allow humanity to focus more on the non-economic sphere, similar to how the agricultural sector was minimized with the advent of machinery.

"I'm just trying to shrink the economic sphere and create more room for the non economic sphere."

This quote emphasizes the objective of reducing the dominance of the economic sphere in people's lives to allow for more time and resources to be dedicated to activities that do not have direct economic incentives but are still valuable to society.

Three Freedoms for Transition to the Knowledge Age

  • Albert Wenger discusses three freedoms necessary for a successful transition to the knowledge age: economic freedom, informational freedom, and psychological freedom.
  • Economic freedom can be achieved through measures like universal basic income.
  • Informational freedom concerns who controls computation and the flow of information.
  • Psychological freedom addresses the need for mental health in an information-saturated environment, suggesting practices such as mindfulness to cope with the deluge of stimuli.

"In the book, I talk about three freedoms that I believe we need to invest in so that we can make this transition."

This quote introduces the concept of three essential freedoms that need to be fostered to navigate the shift from the industrial age to the knowledge age successfully.

Psychological Freedom and Mental Health

  • Our brains are not evolved to handle the current information environment, which can negatively affect mental health.
  • The overabundance of information, much like the overabundance of high fructose corn syrup in diets, requires new practices for healthy living.
  • Mindfulness and the ability to disconnect from technology are crucial for maintaining psychological well-being in the modern age.

"We are maladjusted to this information environment."

This quote points out the mismatch between our evolutionary adaptations and the demands of the modern information environment, highlighting the need for strategies to maintain mental health.

Education System Reform for the Knowledge Age

  • The current education system is outdated and not fit for the knowledge age.
  • Learning needs to be reimagined to cater to individual differences rather than a one-size-fits-all approach.
  • Companies are emerging that offer new ways of learning, signaling a shift away from traditional education models.

"The existing education system is not fit for purpose. It's an industrial age system, and we don't live in the industrial age anymore."

This quote criticizes the current education system for being antiquated and misaligned with the needs of the knowledge age, suggesting that significant changes are necessary.

Responsibility and Leadership in the Context of Power

  • With the advent of powerful technologies, there is a heightened need for responsible leadership.
  • The current political climate may seem to lack responsible leaders, but there are emerging movements and initiatives that show promise for positive change.
  • The transformation from within, such as in homeschooling, indicates a shift in how people are learning and adapting.

"With great power, obviously comes great responsibility."

This quote, referencing a well-known adage, underscores the importance of responsible leadership and action when dealing with powerful technologies and their impact on society.

Venture Capital and Investment in Transformative Forces

  • USV focuses on investing in companies that are aligned with large transformative forces rather than specific technologies.
  • The climate crisis is seen as a transformative force that is disrupting markets and creating opportunities for innovation.
  • The approach to investing is disciplined, with specific theses guiding each fund to ensure alignment with overarching goals.

"The way we've always approached investing is to think about what are large transformative forces that are changing markets, market dynamics, the look of the power."

This quote explains USV's investment philosophy, which is based on identifying and capitalizing on broad transformative forces that have the potential to reshape markets and create new opportunities.

Climate Fund and the Future of Sustainability

  • The climate crisis is viewed as both a significant threat and an opportunity for innovation and change.
  • There is a belief that with the right leadership, significant portions of GDP could be allocated to climate and sustainability efforts.
  • The transition to a sustainable future requires a departure from incremental approaches and a commitment to comprehensive change.

"I think it can be done if and when we get the right kind of leadership."

This quote expresses optimism that with the appropriate leadership, substantial resources can be directed towards combating the climate crisis and fostering sustainability.## Climate Change and the Need for Transformational Change

  • Albert Wenger discusses the necessity for radical change and massive resource reallocation to address climate change.
  • He emphasizes that incremental change is insufficient and transformational change is required.
  • Wenger argues that people desire purpose and can rally behind a vision that addresses climate change.

"Being that we need dramatic, radical change and we need massive resource reallocation for some time period to get to a new age, and leaning into the idea that the time for incremental change has come and gone, that this really is about transformational change across the board."

This quote highlights the central thesis of Wenger's argument for a transformative approach to tackle climate change, rather than incremental steps.

Public Perception and Political Will

  • Wenger believes people want to be engaged and given a purpose, countering the idea that they are not smart enough to understand the need for significant changes in climate policy.
  • He refers to the success of Trump as evidence that people are open to radical change, even if it's not the type of change Wenger advocates for.

"What leadership ultimately is about is to craft the kind of visions that people can rally behind. And that opportunity exists today."

This quote explains Wenger's view on leadership and its role in shaping public perception to create support for major policy shifts.

Leapfrogging Opportunities for Developing Nations

  • Wenger suggests that developing nations have the opportunity to leapfrog to newer, cleaner technologies.
  • He uses Africa's adoption of mobile banking and potential for decentralized energy production as examples.
  • Wenger also addresses the responsibility of developed nations to support sustainable growth in developing countries without exploiting their resources.

"I actually think there's a huge leapfrogging opportunity."

Wenger is optimistic about the potential for developing countries to bypass outdated, polluting infrastructures and adopt cleaner technologies directly.

Misconceptions About Climate Change

  • Wenger points out that many people underestimate the severity of the climate crisis and wrongly believe the private sector has it under control.
  • He uses a striking analogy of nuclear bombs to illustrate the amount of heat trapped by greenhouse gases.
  • Wenger criticizes the notion that we are on a path to fixing the climate problem, stating that even the goal of limiting warming to 1.5 degrees Celsius is no longer attainable.

"What's flat wrong is that people seem to think that this is like a nuisance problem and that the private sector somehow has got it covered."

This quote reflects Wenger's frustration with the common underestimation of the climate crisis and the lack of appropriate action being taken.

Global Collaboration and Individual Action

  • Wenger stresses the importance of individual countries taking action on climate change, even if their impact is smaller compared to larger polluters like China or India.
  • He highlights the role of entrepreneurs and venture capitalists in initiating change rather than waiting for a global consensus.
  • Wenger is encouraged by the adoption of electric vehicles in India as an example of positive change.

"Waiting for everybody else is not how entrepreneurs work, it's not how venture works, and it's not how the world works."

This quote emphasizes the need for proactive action from individual countries and businesses to address climate change, rather than waiting for a collective agreement.

Civil Disobedience and Climate Action

  • Wenger argues that civil disobedience has historically been a crucial part of effecting significant change, citing examples like the suffrage and civil rights movements.
  • He believes that keeping climate change in the news through civil disobedience is essential for maintaining public awareness and pressure.

"The history of making big changes is applying pressure to the existing system."

Wenger sees civil disobedience as a necessary tactic to push for substantial changes in climate policy.

Misconceptions About Crypto and Inflation

  • Wenger addresses the belief that crypto is not a good hedge against inflation, pointing out that it depends on the country's currency.
  • He suggests that crypto has been an effective hedge in countries with devalued currencies.

"I mean, if you live in a dollar denominated country, it probably wasn't a very good hedge. But there are many other countries where there was an amazing hedge."

This quote indicates that the effectiveness of crypto as a hedge against inflation varies based on the economic context of different countries.

Central Bank Digital Currencies (CBDCs)

  • Wenger discusses the potential dangers of central bank digital currencies if they lead to increased government control over personal finances.
  • He advocates for a system that balances the need for transparency with individual financial privacy and security.

"If you wind up with a central bank digital currency that is totally centrally controlled and anybody's balance can be turned off at a moment's notice, and there's no concept of people having custody or a chain of custody where I think it will make it far too easy to circumvent law and to use finance as power."

Wenger warns against the possibility of CBDCs being used to centralize control and circumvent legal processes, emphasizing the importance of maintaining a balance of power.

The Role of Crypto in the Financial System

  • Wenger discusses the misconception that all crypto transactions should be secret or that governments should control all financial transactions.
  • He argues for a middle ground where some level of privacy is preserved without enabling untraceable, potentially illicit financial flows.

"I don't want to go to the other extreme where all payments are secret all of the time either, because there's a failure mode in both directions."

This quote reflects Wenger's nuanced view on the integration of crypto into the financial system, seeking a balance between privacy and transparency.## Impact of FTX on Crypto Ecosystem

  • Albert Wenger believes the FTX collapse will be a short-term issue in the grand scheme of things.
  • The burst of the crypto bubble is seen as a net positive, as it flushes out scammers and bad actors.
  • Historical examples like Webvan and fluze.com are mentioned to illustrate similar past events.

"I think it'll be a blip in the long term, and it'll be a blip much, I don't know. Webvan imploding or fluze.com or whatever."

This quote draws a parallel between the FTX situation and past market bubbles to suggest that the crypto ecosystem will recover and move beyond this event.

Optimal Time for Crypto Investment

  • Albert Wenger asserts that the best time to invest in crypto was at its inception in January 2009.
  • He also suggests that the current time, January 2023, is the second-best time for investing in crypto.

"I was just at a crypto conference, and I said the best time to have been in crypto was January 2009. And the second best time is January of 2023."

Wenger is promoting the idea that despite market fluctuations, there are optimal times to invest in crypto, and he believes now is one of those times.

Twitter's Challenges and Opportunities

  • Twitter was criticized for trying to implement all features internally instead of being programmable.
  • The blue check program and content moderation strategies were poorly executed.
  • Albert Wenger sees potential in Twitter if it adopts a steward ownership model and becomes programmable again.

"I think what was wrong with Twitter was that it was trying to provide all the features inside of Twitter itself instead of making Twitter more programmable."

This quote criticizes Twitter's lack of openness to external development and suggests that making the platform more programmable could resolve some of its issues.

The Blue Check Fiasco

  • The blue check mark on Twitter conflated identity verification with perceived importance.
  • Albert Wenger argues that the verification should have been solely about confirming identity.

"It completely confounded two things. It confounded the identity thing with the importance thing."

Wenger is highlighting the flawed approach of Twitter's verification process, suggesting it should have focused on identity alone.

Advice to Elon Musk on Twitter

  • Wenger would advise Elon Musk to transition Twitter into a steward ownership model.
  • He suggests creating a golden share for a foundation to ensure Twitter's mission and vision.
  • The focus should be on making Twitter programmable and fixing the verification process.

"I would say, move this to a steward ownership model. You create a golden share. You put the golden share with a foundation."

This advice is directed at making Twitter more community-driven and less dependent on advertising revenue or corporate control.

TikTok and Consumer Data

  • Albert Wenger believes social systems like TikTok should be programmable to empower users.
  • The balance of power needs to shift from the platform to the individual users.

"As long as I am basically reduced to my thumbs and the widthware between my ears while somebody else on the other end is operating millions of servers, that's just the wrong balance of power."

Wenger is concerned about the power imbalance between users and platform operators, which he believes should be corrected by making platforms programmable.

Investment and Startup Advice

  • Founders are warned to aim for cash flow positivity, especially after raising at high valuations.
  • Down rounds are difficult to execute due to the psychological toll on stakeholders.
  • The importance of having a clear investment thesis is emphasized.

"If you have raised at a high valuation and you have a lot of money in the bank, you have to get cash flow positive."

Wenger advises founders on financial prudence, highlighting the security that comes from being cash flow positive in uncertain economic times.

Personal Insights and Wisdom

  • Albert Wenger values continuous growth and exploration in marriage.
  • In venture capital, generational transitions are successful by sharing economic opportunities.
  • He acknowledges the role of failure in personal development.
  • Wenger appreciates the challenge to comfort zones provided by experiences like Burning Man.

"Still working that out all those years later? I think it's not being static."

This quote reflects Wenger's belief in the importance of dynamism and continuous discovery in maintaining a successful marriage.

Outlook for the Future

  • Albert Wenger is hopeful about the transition to the knowledge age within the next five years.

"Our embarking on the path to the knowledge age."

Wenger expresses optimism about the societal shift towards valuing and leveraging knowledge, indicating a positive future direction.

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