John - Disclosure that Pierre invested in my company. Sergei Brin just popped over and we talked about how he got to where it is. Sergei and Larry are still very active but you stepped back. Why did you make that choice?
Pierrre - From the very beginning Ebay was something that I was doing on the side. I knew I would build it to a certain point and then turn it over. It wasn't about whether I thought I could scale it but I wanted to bring in new blood and professional management so that they could take over the core and put it in new directions. I'm a big believer in bringing in people with reverse points of view. I don't need to be in every decision.
At the same time how do we take the learning from Ebay and put it in other areas.
John - You started a foundation like all young moguls. Tell us about that.
Pierre - We did a lot of learning. We started a foundation and invested in non-profits. We started thinking that if you want to have an impact, why do you think you can only do that by working in the non-profit sector. Really had this notion that when you look at Ebay when you think about it after 10 years, in the most generous terms there are 150 million people who have learned to trust each other. Helps people have bigger degree of trust.
We re-organized to Omidyar network to help find business opportunities. It's a little different than VC business but we're a mission based fund.
John - What is the mission? There are cynics in the room.
Pierre - We are about self empowerement. Political, business etc. Ebay put tools in people's hands to put things in a level playing field. There's skin in the game. Economic empowerment that is unprecedented.
John - What are the contours of the fund? Money? Who from? Who's been invested in?
Pierre - $400M of my money. Treating it like a new VC fund that will be deployed in 5 years. 30M in the last year. A third in for profit companies. Looking for businesses that can only be successful if they foster individual self empowerment. Business can be a force for good.[Crowd applauds]. What the people in the room are doing is that. You're building tools to create technology that brings tools to individuals.
I think about Adam Smith and how he thinks about economies. I was struck by his analysis. Given the right environment, the pursuit of self-interest leads to an increase in the general welfare. You can look at the profit that is generated is a way of looking at improving general welfare.
[He talks about why business is good]
What is the enviroment that needs to exist for this to be true?
John - How do you tell if the company will be consistent with those values?
Pierre - Is there a level playing field? Is it open access? Does it foster communication and connection? Do the participants have a sense of ownership in what is going on?
Then look at the business model. Is it a model that can only be successful if it maintains those values. If you're trying to create a business about trade and it requires trust and is predicated on that, then the business can only be successful with a social benefit.
John - How long have you been doing this?
Pierre - A year and a half.
John - Depending on the investor there can be a little rigor or a lot of rigor. Where do you fall on that line?
Pierre - Very rigorous. It has to be a mission fit for us. It naturally limits the raw # of investment opportunities.
John - How do you measure the social impact?
Pierre -there's a lot of work on measuring social impact. How many people did we feed is an easy measure. Unfortunately it's hard to measure the big impact things. If the environement is right and the business can only be successful if there is a social impact then evidence of the success of the system is profit.
John - Are we getting to another bubble? Joe Kraus is saying that he's seeing bootstrap fratricide. Perhaps there will be venture fratricide. Everyone will compete for the niche.
Pierre - I think what's really interesting about the environment now is that tech has advanced to such a point that they can invent innovative things they need less capital to do that. That will mean that there are more people after the same opportunity. The more people that are engaged the better the result will be.
John - Can you invest as much as you want?
Pierre - Because of our constraints it is a challenge to invest as much as we want.
John - As an investor, entrepreneurs are concerned that Google will be akin to Microsoft that Google might go do it and cut off the VC funding. Do you ask this question? Are you concerned?
Pierre - If you're any company like Google you do have to be careful. We want to foster innovation. The best way to address that is to talk about Ebay does. There is an API program with 20k individuals who are part of that program. 45% of listings comes from that program. Ebay is trying to foster innovation outside of the company's walls.
It's great that we're really bright but there are people outside who are innovating as well. We want to foster more and more.
John - Are you pleased with how Ebay is doing as part of the criteria you have?
Pierre - absolutely. It's been 10 years and people have found that there are more things in common than different with people. If I went to a non-profit they couldn't accomplish increasing trust.
Question - You talked about your criteria around. Do you invest in multiple teams that go after the same concept?
Pierre - we look at ability execute in management team. I have less concern about we can only invest with one in this space. It might concern you if your investor is investing in your competition. There are some practical concerns around that. The reason that we're doing it though is that we believe that you're going to make the world better.
Question - What about the environment that exists?
Pierre - I think it's critical that there has to be competition for things to improve society. There have to be no externalities that are not priced into the product. The commercial sector can make the world a better place. Public sector must properly regulate to make sure that commercial sector does their job.
We want to work with government to help make that clear to them.
Question - I'm fascinated by companies that can do good as part of the business. How does it scale? how does social good scale with money?
Pierre - An org that focuses primarily on social good instead of ROI has more difficulty scaling than for profits. That's why I've chosen to focus on finding a business that can maximize profit only by doing the social good. There's the full confidence that as they are providing return to share holders that they are making the world a better place.
Question - What do you do about disasters?
Pierre - haven't looked at disaster preparedness. I think there are great challenges there.
Question - John a lot of people want to know about what business is starting. Pierre - how does that investment jive with teh social impact.
Pierre - I'm going to let management speak.
John - Aggregate high quality blogs. Like a music label. 4 people. I won't hype it. I think it'll be fun and I am very pleased that Omidyar network would agree. It's a very small amount of money that will stretch.
Pierre - Web 2.0 is about putting tools in people's hands. Making the tools widely accessible. Let people share and collaborate. Collecting people together is fantastic. More rich connections than ever before. This will change the world. I applaud all of you for making that happen.
Question - I founded a social enterprise to build online social networks. There is whole ecology around networks building around open source platforms.
Pierre - There's an ecology of business around communities of interest. People can pursue their self interest and it's really exciting. I'm a big fan of markets and competition. I want to focus on create the right kind of environments and rules that have the right characteristics. It will inevitably lead to really great results.
Chris
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