Albert Wenger: Elon & Twitter; Impact of SBF; Income Inequality; Will they ban TikTok? | 20VC #969

1. 0:00 – 2:06

   Who is Albert Wenger?

   1. HSHarry Stebbings0:00

      Albert, I have been so looking forward to this. I think it's been like four or five years since we last did this, so thank you so much for joining me again.

   2. AWAlbert Wenger0:07

      Happy to be here.

   3. HSHarry Stebbings0:08

      Now, I would love to start, for those that missed our first episode, which to be fair, Albert said, four or five years ago, how did you make your way into the world of venture and come to be at USV in a short two to three minutes, my friend? (laughs)

   4. AWAlbert Wenger0:19

      Yeah. (laughs) It is actually a long and circuitous road, but, um, suffice it to say that I was at MIT, uh, in the sort of '93, '96 timeframe, uh, getting a PhD and the web was exploding. Uh, and I thought, "What am I doing here writing a dissertation about it when everybody else is building?" And so I decided to launch a company with two MIT professors. Uh, it ultimately didn't go anywhere, but I loved the process. I also learned about myself that I wasn't gonna be a good operator, um, but I loved startups. And so I was like, well, if I'm not gonna be a good operator-

   5. HSHarry Stebbings0:51

      Why did you learn you weren't gonna be a good operator?

   6. AWAlbert Wenger0:53

      Because, um, to be a, a good operator, you have to really stay on one thing, um, with a kind of a singular focus for a prolonged period of time, and you also have to deal a lot with people, and I'm not really a people person at the end of the day. So, um, so the fact that my mind kind of, um, likes to, you know, go between different things, and the fact that I, uh, like to, you know, um, not have to deal with people, uh, for the most part. You know, I have lovely c- uh, relationships with entrepreneurs, don't get me wrong, but that's a very different relationship from, um, having a reporting relationship, you know?

   7. HSHarry Stebbings1:29

      Yeah.

   8. AWAlbert Wenger1:29

      From there, I decided I should get into venture capital, and it took me, you know, a variety of false starts. I won't bore you with all the details, but, uh, it, it along the way included an incubator at the height of the dot-com bubble. (laughs)

   9. HSHarry Stebbings1:42

      (laughs)

   10. AWAlbert Wenger1:42

       Uh, Brad and I tried to raise a fund after the... you know, in the nuclear winter after the implosion of the dot-com bubble, uh, and then eventually Brad and Fred raised the fund and, uh, they launched in 2004 and I joined in 2006. In between that, I, I briefly worked with Joshua Shechter, who had, uh, started Delicious and I kind of became the president of that, and Yahoo acquired it shortly thereafter. And then I started hanging out in the USB

2. 2:06 – 3:23

   How did the dot-com crash compare to today?

   1. AWAlbert Wenger2:06

      offices.

   2. HSHarry Stebbings2:07

      Albert, can I ask, you saw that bust. We're now going through a downturn of sorts. I've never been through a downturn. Many listeners have never been through a downturn before. How does it feel? What's different? What's the same?

   3. AWAlbert Wenger2:19

      I think that the dot-com bubble bursting, it felt somewhat dreamlike in the sense because it was such a short and super intense period of a few years. You know, the hangover was, um, pretty dramatic. Now we're coming off a very prolonged period of time. I also think that when the dot-com bubble burst, um, there was in fact a lot of opportunity. I think what's different now is that we've actually had a prolonged period of, uh, exploring and building and lots of opportunities, and I'm not sure, you know, it's not to say that there aren't opportunities in software left, there always are, but it feels very, very different. Now, um, contrast that with crypto for a moment. Um, crypto, we've just come out of a bubble as well. Um, but in crypto, it feels like there's a lot of opportunities, there's a lot of building, there's a lot of things, um, and this new cycle, you know, feels like the beginning of that c- it, it feels very similarly to me where we are in crypto today, feels very similar to me where we were in the web post-implosion

3. 3:23 – 5:14

   The Transition to a Knowledge Economy

   1. AWAlbert Wenger3:23

      dot-com bubble.

   2. HSHarry Stebbings3:24

      I have to be honest, I was so excited for the show today because, um, it was a little bit different in terms of topic type to what we normally do on 20VC. And so I wanted to start on World After Capital and, and actually you've spoken before about the transition, in particular from industrial to knowledge economy. I wanted to ask, for those listeners, just providing context, what does this transition mean between the two stages?

   3. AWAlbert Wenger3:45

      You're referring to a book that I've written and that people can find it online, it's called The World After Capital. Um, there's also now finally a lovely printed version of it available. The book talks about this transition out of the industrial age into a new age that I think could be, if we do it right, the knowledge age. It doesn't... this isn't like, there isn't some deterministic mechanism that will get us there, we have to make a set of choices. Uh, we, as here the collective we of humanity to get us there. I think the fundamental differences, and this is why the book is called The World After Capital, is that the constraining factor on humanity isn't how much physical capital there is. We can do amazing things. I mean, look at Germany. Germany just built a whole bunch of LNG terminals in like a few months, right? These are projects that people were like, "Oh, this will take years." And... but like, what was the decisive factor? Well, the decisive factor was finally they put enough attention to it saying, "We need this and we need it now," right? 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? Uh, and the book makes the argument that some of the most important things that, um, we should be allocating attention to, um, don't have prices associated with them, and cannot have prices associated with them. And so as a result, we cannot be relying on the market mechanism to guide our attention. We have to come up with other mechanisms. That's sort of the gist of the book.

   4. HSHarry Stebbings5:12

      Okay. So I love that as a starting point.

4. 5:14 – 11:54

   Income Inequality

   1. HSHarry Stebbings5:14

      I saw one of your other interviews and you said, kind of two symptoms of the transition is one, income inequality or wealth inequality, and then two, which is mental health. My question to you is, do you believe that like the unequal distribution of wealth is the single greatest problem of the transition? And how do you assess like income inequality today as a broad statement?

   2. AWAlbert Wenger5:34

      I should be clear that I don't...... uh, I'm not arguing for that we should have equality of distribution. Um, I, I think that's, uh, not a desirable, um, type of society to live in. Um, I just think, you know, you can take things too far, right? So you can have a healthy degree of an income (laughs) inequality, and you can have an unhealthy degree of income inequality. And I think we have sort of entered the unhealthy territory in this. The reason I think it's unhealthy is because we wind up paying too much attention, through various mechanisms, to the people who, um, have a fair bit of capital. Part of it is that they can, um, have large influence operations, right? (laughs) Uh, directly by contributing to political campaigns, indirectly by funding think tanks through personal foundations that pursue agendas largely outside of the democratic process. So I think that's sort of a problem. And then there's a problem at the other end of the distribution where we just don't have a floor, right? So we just make it so that you... especially in the US, you can just completely fall, um, off. And, you know, we have a huge, um, problem with people being unhoused. We have a huge problem with medical debt. People can't afford access to healthcare. My view of society is, uh, sufficiently technologically advanced societies, such as the US, oughta provide a floor for everybody. And, and Susan, my wife, and I have been long-term advocates for a universal basic income. We are funding a universal basic income trial in the City of Hudson in the State of New York. Um, and we've contributed to other universal basic income campaigns and trials. Uh, and so that's a floor.

   3. HSHarry Stebbings7:07

      I'm really worried. I just think there's gonna be civil unrest. Like, you walk the streets in, like, not-nice parts of town, it... I, I sound awful here, but it, it's, it's scary.

   4. AWAlbert Wenger7:16

      (laughs)

   5. HSHarry Stebbings7:16

      And this is in London. This is in New York. You, you name it.

   6. AWAlbert Wenger7:20

      I think there's a couple of points to that, that income in- inequality has something to do with that. Um, but I also think that a lack of a kind of a North Star for society has something to do with it, right? So politicians are very far behind in understanding the nature of the transition that we're in. And so as a result, they are promoting sort of incremental change and continuing to promote incremental change. Uh, and there are growing parts of the population that are rightly saying, "Look, these incremental changes that you're proposing, they seem to only make you better off, but they don't seem to be doing anything for me." And so we have this, um, lack of a North Star, um, lack of a vision for what a knowledge-age society might look like and how everybody might, um, have a purpose, uh, in such a society. Instead, what we've been telling people for a couple hundred years now is that, like, your purpose is, is your job. Um, and then, of course, inevitably, after you, you know, pursue that narrative for some time and then you take people's job away, people are rightly wondering what their purpose is. My view of why I think this is a dangerous transition is because it is a profound transition. And if you think of the prior transitions from the hunter-gatherer age to the agrarian age and then from the agrarian age to the industrial age, you know, they were really, really traumatic for humanity and brutal. Um, I think it's politicians misreading where we are and trying to keep us in the industrial age, trying to fix the industrial age that is going to make this transition bad. Um, because, as you pointed out, I think, increasingly, the industrial age is not working for a larger and larger fraction of population. It's not working because it's not providing kind of resources, and it's not providing purpose. And that's a very dangerous combination.

   7. HSHarry Stebbings9:15

      My question is technology not make this worse? When we think about the rise of robotics replacing many low-level jobs, and then we think about, you know, uh, new level technologies like, you know, NFTs and forms of crypto, which actually a lot of the wealth, despite theory being decentralized, is concentrated to a load of bluntly male crypto nerds. (laughs) Um, it's actually just further concentrating wealth into the hands of even fewer. Is that not, like, a concern that tech just makes this worse?

   8. AWAlbert Wenger9:41

      Technology... The way I talk about it in the book is what it does is it, it kinda grows the space of the possible. So meaning, a lot of new things become possible, some of which are good and some of which are bad. Like, the earliest human technology was fire, and fire is great. It lets you cook. It lets you, you know, melt things and make metals. But you can also use it to burn down somebody else's village, you know, or to torture, right? So, like, it makes n- new things possible. Um, robotics makes amazing new things possible. And let's face it. Automation has been very good to humanity to date, right? So, like, the reason you and I can have this conversation on all this high-tech gear is because we're not working the fields. And why are we not working the fields? Because we have big tractors and other machines that do a lot of the agricultural work. If you go back not that long, 80-plus percent of the population was engaged in agriculture so that 20% couldn't. Today, in advanced economies, it's under 5% that's engaged in agriculture, and so 95 is... percent of society is doing something else. So I believe that if we play our cards right when it comes to AI and robotics and crypto and everything else, that we can get to a place where we will look back at the current time, and we'd be like, "Oh, my God. 80-plus percent of humanity is engaged in what I think of as the economic sphere," meaning where things are explicitly incentivized with prices, right? So, like, your labor is incentivized with prices. Your consumption is incentivized by prices. And we can get to a place where the economy still exists... So I'm not talking... it's not called the world after capitalism. I'm just trying to shrink the economic sphere and create more room for the non-economic sphere. And the non-economic sphere are all the things that we do that aren't economically incentivized, like, you know, spending time with friends, taking care of children, taking care of nature, you know, uh, making art. There's a million things that are non-economically... doing fundamental science. Like, there's a million things that humanity needs that are not... And what I believe we can do, if we take the transition from the industrial age to the e- eh, knowledge age the right way, is that just like we shrunk agriculture...... we can shrink the economic sphere and make room for the non-economic sphere. That is the goal of the right transition to the Knowledge Age.

5. 11:54 – 14:40

   The State of Mental Health Today

   1. AWAlbert Wenger11:54

   2. HSHarry Stebbings11:54

      My question is, you, you mentioned obviously the second being, you know, mental health and the state of mental health-

   3. AWAlbert Wenger11:59

      Yeah.

   4. HSHarry Stebbings12:00

      ... today. Uh, I'm fundamentally pretty terrified about (laughs) this too. Um, how do you evaluate this today, and is this not only getting worse? (laughs)

   5. AWAlbert Wenger12:09

      Well, in the book I talk about, uh, kind of three freedoms that I believe we need to invest in so that we can, um, make this transition. I call them economic freedom, we t- mentioned that briefly, that's universal basic income, informational freedom, which we can maybe come back to, which is about who controls computation, and then I talk about psychological freedom. And it's very much the case that our brains didn't evolve in this kind of information environment, right? I mean, our brains evolved in an environment where when you saw a cat, that was a cat, right? And now the in- internet can produce an infinity of cat pictures for you, uh, and w- we are maladjusted to this information environment, just a bit like we're maladjusted to an environment that has a lot of, um, high fructose corn syrup in everything, right? So that means we need to develop practices that allow us to live in this kind of environment and to live healthily in that kind of environment. That means some type of form of mindfulness, which is a much-abused term, but really what it means is, you know, being able to recognize that you can turn your phone off, that you can set your phone to do not disturb, that much of what you see online isn't real, never was real.

   6. HSHarry Stebbings13:20

      Can I be blunt, Albert? Do you not think this is slightly idealistic? Which is something-

   7. AWAlbert Wenger13:23

      Oh, no, I don't think it's idealistic. I think it's entirely doable, and I think we've done it before. I mean, you know, whenever we've had new media emerge, we've had to go through a period of adjustment. You know, I grew up in Germany. There's a very famous story around, uh, a g- work by Goethe called Thesaurus of Young Werther, which, you know, describes a young man who, um, is unhappily in love and commits suicide. When that book came out, it spiked suicides because kind of people didn't really realize that Goethe wasn't kind of, you know... that this was a book (laughs) essentially. And, you know, you have War of the Worlds, the Orson Welles radio broadcast, basically suggesting it's, you know, an alien invasion. And, and I think we, over time, figured out how to, um, live with these, um, mediums, uh, and how to adjust our individual practices, our market structures, our legal frameworks to get good things out of these and keep the bad things at bay. Uh, that, I think, is fundamentally what it means when I call myself a technology optimist. I don't mean that technology is gonna solve all problems. I mean that over time, we have the opportunity to make technology work

6. 14:40 – 16:36

   Modern Education Needs to Change

   1. AWAlbert Wenger14:40

      for us as opposed to against us.

   2. HSHarry Stebbings14:42

      Okay. But today's media compounds intellectually. It gets better and better and grips us more and more. The more you play the game, the more they understand your habits, the more they retain you. The more you watch TikTok, the better accuracy of the content, the more they retain you. Books, radio, it doesn't personalize, it doesn't compound intel-

   3. AWAlbert Wenger15:01

      It's the most difficult environment we've been in. I'm not gonna deny that. Um, but I do think that it is possible to develop the right set of habits. And it's possible, and people do it all the time. Now, is our education system set up to help people with this? Absolutely not. Right? So when I talk about this transition and I talk about the need to change everything, I really mean everything, things as profound as, as learning and where learning happens. Look at Unisqua Ventures. We have continued to invest in companies that are essentially paving the way towards a new way of learning, you know, companies like Quizlet and Duolingo and Brilliant and SkillShare and you name it. Um, we now have a company called Sora Schools that's doing a new type of school. And why is that? Because 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. So, so I do think we need to change everything.

   4. HSHarry Stebbings15:55

      Wh- why, why is, why is it not fit for purpose? Just 'cause it's-

   5. AWAlbert Wenger15:57

      Well, because, because... Look, there's a wonderful book by a guy named John Taylor Gatto called The Underground History of American Education. Gatto was a teacher in the New York school system. And that book documents how we got to the system that we have today, a system that, you know, teaches everybody the same thing at the same time. We're treating kids by manufacturing date essentially, and that's an industrial age system. You know, there's a wonderful quote variously attributed, but "Education is not the filling of buckets, it's the lighting of flames." And that's what we've totally forgotten. Like, we are in a bucket filling system, um, by manufacturing date, and that's not gonna survive this

7. 16:36 – 19:15

   Where Politicians are WRONG

   1. AWAlbert Wenger16:36

      transition.

   2. HSHarry Stebbings16:37

      So, uh, y- you mentioned, you know, like education there. You mentioned kind of politics earlier. You mentioned a couple of values in the book, which are really important for us to remember. You talk about the second value being responsibility. And you say, "With great power obviously comes great responsibility," the quote. Politically, Albert, we've never had such morons running countries. You know, I'm delighted that dear Boris is gone, but that was an interesting chapter. You know, you have Biden. Like, this is not a great time of great responsible leadership.

   3. AWAlbert Wenger17:04

      Uh, y- you can always choose to look at the sort of things that are not working (laughs) , and you can also try and look at the green shoots of new developments, right? And so what are some green shoots of new developments? I was just, uh, in Germany speaking at a conference, and I basically spoke on stage with a young entrepreneur who is now, um... you know, she sold her company, and she entered German politics. We have a whole new slew of candidates that have been motivated, um, by the lack of quality of leadership to go o- run for politics. And so there's sort of, uh, one way of looking at it where you're like, "Oh God, it's terrible. It's only gonna get worse," and then there's another way of looking at it and saying, you know, "Look, we have... Look at the Climate Front. We have..."... a new wave of climate movements that are much more determined than the old ones were, that are much more working in kind of a civil disobedience, uh, mode, and that's much more, h- historically speaking, much more likely to lead to success. So I think that it's easy to be pessimistic, and I have bad days, and on those bad days, I'm very pessimistic. But I think there's also signs of new things. Uh, a- and then you've got far-out things like Balaji and the Network State, you know? So there's a lot of, you know, things that one could be unhappy about and pessimistic about, but there's also a lot of things that are promising and that are beginnings of, of transformation from within. That's like the example of this young woman, Verena Hubertz, who ran for the German Bundestag and got elected and is now the vice-leader of the party inside the, inside the Bundestag. So there's examples of that, and there's, you know, examples of people doing interesting things outside of the system, like all the things I was talking about in education. What's happening in homeschooling today is, like, it's a transformation of how people are learning. So I think you've got both people working in the system and people building new systems, you know, Balaji's Network State, et cetera. And so I- I think there's a way of, you know, looking at the world and going, "Yeah, change is coming," too."

   4. HSHarry Stebbings19:05

      Yeah, Albert, I told you to be more positive. God, just bringing this negative attitude to me. Uh (laughs) I love that. But I do want to understand. You say kind of about the positive mindset

8. 19:15 – 34:35

   Investing in Climate Change

   1. HSHarry Stebbings19:15

      and taking a proactive approach. Talk to me. We saw the second climate fund raised at the end of last year, I think it was December, 200 million dollar fund, very exciting. Like talk to me about the internal discussion around a new product being a climate fund, 'cause what I love about USV, and I- I'm sorry, I didn't mean to just talk, but like what I love about USV is how focused you are. You are the craftsmen of venture, and women, craftsmen and women in venture, who just absolutely nail the boutique strategy. So I'd just love to understand the internal discussion on expanding a new product with climate.

   2. AWAlbert Wenger19:47

      The way we've always approached investing is to think about, what are large transformative forces that are changing markets, market dynamics, the locus of power? Our theses that we've had over the years were never around a specific technology, you know? We didn't have, like, an iPhone fund, let's say, or we don't have a crypto fund either. These are technologies, and it's really, for us, about understanding how do those shift the structure of markets, the nature of competition? How do they create opportunities for new companies or new projects to, uh, come into the world and to make a difference? So climate is one of those forces where the nature of how energy's being produced, the nature of how products are being produced or, and also end of life for products, where raw materials come from, all of those things are up for grabs because they have to change fundamentally in order for us to get on top of the climate crisis, and that creates opportunity. Markets that had not seen opportunity in a long time are s- being shaken up fundamentally, and the structure of those markets is being disrupted. You know, electricity, for example, is going from a very centralized system to a very decentralized system. And so it is a fit with the way we've always thought. It's not a departure from fundamentally USV, it's just applying the USV-style thinking to a new force in the world.

   3. HSHarry Stebbings21:15

      I spoke to a, like a top fund the other day, and they said, "The reason we don't have a climate fund, Harry, is we don't think there will be enough winners in climate to justify a separate climate fund. We think there will be a couple, may- 5, 10, 15, whatever that is. But there's not enough venture scale returns in climate to purely do a climate fund." Would you disagree with that?

   4. AWAlbert Wenger21:36

      Well, I'm thrilled to hear, um, other people think that way. (laughs) It's at least more room for us. No, actually, um, actually, we need more cli- more capital pointed at climate, so I actually, um, that's, um... But, you know, at USV, we've, um, always taken the approach of, um, being very clear about what our thesis with a specific fund is. We don't have a growth fund, for example. We have a fund that we call the Opportunity Fund. And why do we call it the Opportunity Fund? Because things that we put in there need to feel like they're actual opportunities. And so it doesn't have any revenue requirements. It's not a chase-the-hot-deal kind of fund, throw money at companies we miss. Um, it's an opportunity fund. And so people sometimes say, "Why do you have three separate funds?" Because it enforces discipline. Like, if you raise one big fund, you can be less disciplined than if you have three vehicles where you have a very specific thesis for each vehicle, and each time, you can ask yourself, "Does this fit with the thesis, or am I just, you know, I have too much money and so I'm chasing things?"

   5. HSHarry Stebbings22:35

      I- I totally get you. How do you align on timelines for fundraising? I think that's what a lot of managers feel in terms of having multiple different buckets. "Oh, I'm gonna have to come back every six months." How do you think about fundraising timing?

   6. AWAlbert Wenger22:46

      No, I mean, look, um, I think, um, we have brand-new 2022 funds. Um, we have a new opportunity fund, a new core fund, a new climate fund, and so we're probably not gonna be in market for a while. Because we've kept our funds very small, uh, and because our returns have been good to date, knock on wood, fundraising hasn't been a problem for us. So it's not something we, um, we're in a very fortunate position not to have to s- to worry about that.

   7. HSHarry Stebbings23:14

      Albert, you've said before in terms of, like, climate, it's about shifting attention, which you mentioned earlier. And you said before about putting 50% of GDP to climate and sustainability, and I read this and I was like, "Wow, geez." Um, is that even possible? We're at 5% today, I think you said. How can 50 be done?

   8. AWAlbert Wenger23:32

      I think it can be done if and when we get the right kind of leadership. Certain types of topics go from being kind of a losing proposition to being a winning proposition, and...... I believe that climate will be that kind of thing. It'll go from suddenly where politicians feel, "Oh, I can't really talk about it. There's not enough voters. I'm not going to get elected," and so forth. I think it's going to go from that to something where somebody will run and say, "No, this is both the biggest threat and the biggest opportunity that we've had in a long time, and so we're going to lean into it. We're gonna lean into it hard." And once that happens, and s- somebody gets elected somewhere in a big way on that program, I think that'll make a lot of things possible that aren't currently possible. You know, when I look at the set of technologies that we have on the table, if we deploy them the right way, we can wind up with very cheap, almost free electricity. I think we can wind up with very clean cities. I think we can wind up with less land being used for agriculture, more land being available for biodiversity, for recreation, um, and some combination of the two. I think there's an incredible, amazing future that we can get to once we develop the will to, to, to do it. And I think there's another related misunderstanding, and it goes back to what we were talking earlier about transitions. As long as you're caught in this idea that this is an incremental transition, your approach to the climate crisis will also be incremental. But it's not a problem that can be solved with incremental approaches. So, I believe this is, you know, in a way, a leadership opportunity. It's an opportunity for politicians to run on a different platform, and I believe that will happen.

   9. HSHarry Stebbings25:12

      When you say run on a different platform, you mean with the central thesis being climate protection?

   10. AWAlbert Wenger25:17

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

   11. HSHarry Stebbings25:37

       So if you're a politician, yeah, and you say 50% of GDP is going to climb, or 30%, or 20%, there's the opportunity cost of budget, and respectfully, one of my mentors, I didn't say this, re- always reminds me something. People are always bluntly less smart or intelligent than you think. Um, and 90% of people will be going, "Hey, what are you doing? You're taking away from my budget. You're taking away from my budget." You would never get elected. It's, it's, uh, l-

   12. AWAlbert Wenger26:05

       I, I, I, you know, I, I, oh, I, I, I don't think so. I think that, um, people want to actually be called upon. People want to be given purpose. Um, uh, you know, this ties into the earlier part of the conversation where a lot of people feel they don't have purpose. A lot of people feel they don't have, uh, hope, uh, kind of a positive outlook in their lives. What leadership ultimately is about is to craft the kind of visions that people can rally behind, and I just think that opportunity exists today. And, uh, I believe, um, we will see people leaning into this. You know, in a way, the success of Trump, which took some people by surprise, was a version of that. Not the kind of version I'm excited about, but it was somebody saying, "Look, I will take you to a great place." I mean, it was an imagined place in the past, but it was about making radical changes, not about making incremental changes. It shows that there is an appetite for that. So, I just think this idea that people somehow don't get it, or people aren't smart enough, I think that's wrong. I think people do get it. I think people do understand that the thing we've been doing for the last 10 to 20 years of incrementally trying to fix Industrial Age is not in fact working.

   13. HSHarry Stebbings27:21

       I- I'm really just like asking all the questions I want to hear, I, 'cause I, I very much actually said the same as what you were saying to a friend the other day. Uh, and the friend, uh, actually in Pakistan said, "Harry, like, how privileged. You know, your countries have like, you know, bluntly squandered our countries for years on resources, and now we're just getting to some form of standard of living that's really attractive to anyone, and now you wanna like make that more challenging with climate change?" Like climate change-

   14. AWAlbert Wenger27:49

       I, I think it, I think it's the opposite actually. I think that, um, developing nations can leapfrog. They don't have much of an existing infrastructure that needs... Like, if you look in big parts of Africa, they don't have a grid. They can lean right into decentralized energy production. Just like, you know, why does Africa have better adoption of mobile banking? It's because it didn't have banking banking. So, I actually think there's a huge leapfrogging opportunity, and a lot of the framing of this I just think is off. Now, I do think it's our responsibility to help. Like, if all the solar panels are gonna be produced outside of Africa, and then it becomes extractive where we're basically like harvesting African solar energy to make green hydrogen to pump to Europe, and not growing the African economy, yeah, well that's definitely on us. Um, but to say that we cannot have growth in places like Pakistan or Africa, um, unless we, um, ruin the climate, I just think is flat wrong. It's flat wrong.

   15. HSHarry Stebbings28:44

       What else is flat wrong about how we think about climate that you often hear?

   16. AWAlbert Wenger28:48

       Well, what's flat wrong is that, that people seem to think that this is like a nuisance problem, and that, you know, the private sector somehow has got it covered. I just think people have no understanding of the actual physics of this crisis. To put this into perspective, the concentration of greenhouse gases in the atmosphere was very, very constant for about a 10,000-year time period. That 10,000-year time period coincides with the rise of the Agrarian Age. And then, you know, the last 100 years, we've been radically changing that balance during the Industrial Age. And so, in climate-speak, we call this, uh, the pre-industrial baseline, we call this 10,000 period, year, y- year period where the concentration of greenhouse gas in the atmosphere was roughly constant. And so the question is, how much energy, how much heat are we now retaining in the Earth's system that used to go out into space, right? So, what greenhouse gases do is they let the sunlight in, so stuff warms up, and then they keep the heat here. They trap the heat instead of the heat radiating back out into space. And so the question is, how much heat is that?... and obviously the right unit to express that is joule, but no- nobody has an idea what a joule or petajoule or, you know, is. So one way to express it is in terms of Hiroshima-sized nuclear bombs. And so I do this often as a survey in, like, large rooms of people, and I put it up as a live survey and I sort of say, "Well, how much heat do you think it is? Do you think it's, like, one Hiroshima-sized nuclear bomb per year or, you know, one per month?" I give them options, you know, all the way down to, you know, one per second. And basically, you know, the, the mode of the distribution winds up being somewhere around, like, one per hour, you know, and some groups maybe one per minute. But the reality is it's four to seven per second, right? So of every second of every minute of every hour of every day, it's, like, four to seven Hiroshima-sized nuclear bombs worth of heat. Now, I wanted to imagine for a moment a very different setup. Imagine alien spaceships hovering about Earth, above Earth and throwing four to seven Hiroshima-sized nuclear bombs into our atmosphere every second. What would we do?

   17. HSHarry Stebbings30:53

       Shoot them down?

   18. AWAlbert Wenger30:54

       Yeah, we would drop everything. We'd be like, "There's nothing that matters. They're here to kill us. They're trying to overheat the planet." Like, I mean, we made a movie about it. It's called Independence Day, right? So, like, we would drop everything, except it isn't aliens. It's ourselves. And it's not bright explosions that you can see. It's just the molecules in the air, especially the molecules in the ocean wiggling harder because that's what e- what heat is, right? So, but the amount of energy is absolutely mind-boggling. It, it's, it's totally extraordinary. And so I think where people are flat wrong is that they think that this is, like, some, you know, problem that, you know, can easily be sort of... That we're on a path to fixing this problem. We are not on a path to fixing this problem. You know, I mean, the economists recently said, "Oh, yeah, uh, give up on one and a half degrees because it's gone." They're right. But the answer isn't, like, "Oh, let's give up on the whole thing." The answer's, like, "No, we're so far behind that even one and a half degrees of warming at this point is, you know, we're, we're, we've already blown through it, and we're gonna blow through it."

   19. HSHarry Stebbings31:52

       I'm, I'm a control freak, and so I like to feel like we, we can take action and we can make a difference (laughs) or control as much as we can moving forwards. Trouble is I saw a, a brilliant stat... Well, not a brilliant, but a stat the other day that said that, uh, if Canada hit their climate change targets in the next 25 years, it wouldn't be as much as China hitting theirs for the next year. And I thought, "Wow."

   20. AWAlbert Wenger32:15

       Obviously, the climate crisis is a global problem, and one country doing the right thing isn't gonna solve the problem. But you gotta start somewhere, right? The opportunity to transform economies for the better is in the here and now. The threat is in the here and now. And I believe that by leaning into it, we can change, not just transform our economies, but show what's possible. And I think that will get emulated. So it's not like i- f- for some time period, I was, I was actually less concerned about China, to be frank, because I think the Chinese understood the climate problem. Um, I was more concerned about India. But it's very encouraging, we made an investment in India in a company called Bolt that, uh, deploys, uh, charging networks for two-wheelers and three-wheelers, EV two-wheelers and three-wheelers and now also four-wheelers. And, um, I just had a board meeting with them earlier today, and, uh, the network utilization is growing rapidly, and India is leaning into EVs. So I believe that what we do, um, in economies, even if these economies aren't as big, um, or aren't as polluting today as let's say China or India are, it matters because it sets a clear path and a direction, and I believe that's important. Waiting for everybody else is not how entrepreneurs work, it's not how venture works, and it's not how the world works. You don't wait until everybody is on the same page. You start doing the right things, and then others will come along.

   21. HSHarry Stebbings33:41

       You know, you take action, Albert. You take action.

   22. AWAlbert Wenger33:43

       Yes.

   23. HSHarry Stebbings33:43

       And I saw you say that civil disobedience is compulsory to climate action, and I thought, "What? The Just Oil people hanging off a bridge? (laughs) That's, that's compulsory?" Albert.

   24. AWAlbert Wenger33:58

       No, here, here's what I think. What I think is that the history of, um, making big changes is one of applying pressure to the existing system.

   25. HSHarry Stebbings34:08

       Mm-hmm.

   26. AWAlbert Wenger34:09

       That was true for women's right to vote, the suffragette movement. Um, that was true for the Civil Rights movement. That was true for the AIDS crisis. Um, it wasn't until ACT UP started with civil disobedience that enough attention was being paid to HIV and AIDS. Uh, and I think the same is true for climate. I mean, people may be upset about the tactics, uh, but the reality is it's keeping the topic in the news day after day after day, and that is absolutely crucially important.

   27. HSHarry Stebbings34:34

       Yeah. No,

9. 34:35 – 40:23

   The State of Crypto

   1. HSHarry Stebbings34:35

      I, I do totally agree with you in terms of the importance of it being in the news. Y- you mentioned kind of there about things that people think that are maybe wrong about climate. In terms of things that people think that are wrong about crypto, everyone that I speak to is like, "See? Tsk. Harry, I told you. Crypto is not a good hedge against inflation."

   2. AWAlbert Wenger34:51

      (laughs)

   3. HSHarry Stebbings34:51

      And I've seen that you say before, "Um, I think it was, actually." Why do you think maybe it was a good hedge against it?

   4. AWAlbert Wenger34:57

      Yeah, I mean, look, if you live in a dollar-denominated country, probably wasn't a very good hedge, but there are many other countries (laughs) where it's an amazing hedge, right? So, like, I mean, there are other countries that, that, whose currencies have, you know, devalued massively over the same time period. So I think it's a little bit of a perspective of where you live.

   5. HSHarry Stebbings35:15

      Why have central banks abused their power through quantitative easing?

   6. AWAlbert Wenger35:20

      Well, there's actually a really interesting new paper that was just published about this. Um, i- it's because central banks aren't these entirely benevolent, above-it-all policymakers. Cantillon wrote about this in, like, the 1700s, that when you print money, basically the people who are closer to the money benefit more. Closer to the money meaning people who have good relationships with banks, people who are already wealthy. And so, uh, this isn't a new idea. This is a actually well-understood, longer-running idea. And the reality is that central bankers, too, are people who have friends who have their own finances, and I think they not only saw this as doing their job, but they also like, "This seems to be working well for me and my friends." (laughs)

   7. HSHarry Stebbings36:07

      (laughs)

   8. AWAlbert Wenger36:08

      So... (laughs)

   9. HSHarry Stebbings36:08

      How, how do you think about central bank digital currencies? We've seen a lot in Europe, but now you have your digital passport post-COVID. Now we see Rishi Sunak talking about a central bank digital currency. Uh, how do you think about these?

   10. AWAlbert Wenger36:21

       I believe that a lot depends on the specific features of these, right? So 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, you know, custody, um, or a chain of custody where... I think it will make it far too easy to circumvent law and to use finance as power. I mean, I thought it was a very, very bad precedent for Trudeau to freeze the, uh, accounts of the truckers during the sort of trucker demonstration. And if central bank digital currencies take that form, I think they're very bad because, uh, they will, um, further shift the balance of power from the citizens away to the state. So I'm a fan in the US, I think, that if we got the right stablecoin legislation, let a lot of stablecoins bloom, allow these stablecoins to, you know, have multiple tiers essentially where, you know, the government, if it wants to freeze somebody's assets, needs to take serious steps to do so and needs to go to multiple people in order to be able to do it. And potentially, there's some amount of cash equivalent, digital cash equivalent, that cannot be frozen by government just to strike the right balance of power. So a kind of a Chinese style central bank digital currency where the center really does control everybody's balances, I think, is the wrong kind of allocation of power.

   11. HSHarry Stebbings37:54

       When you think about crypto being a viable alternative to fiat and, like, there's stablecoins for different tiers, which I totally agree with you, and I would like to see a future when that happens, but genuinely, I'm, I'm, I'm naive here, do governments allow for a loss of control in this way? You know, they, they centralize-

   12. AWAlbert Wenger38:09

       Well, it's not so much a loss of control. I think it's, like, a lot of what's currently planned is a further increase and shift of control to government relative to a, a world of, you know, traditional banking and cash and so forth. So I don't want to go to the other extreme where all payments are secret all of the time either, because, you know, I gave a talk at Blockstack Berlin few years back where I'm like, "There's a failure mode in both directions." There's also failure mode where anybody can be bribed that, you know, and you can never trace any money, and that's bad.

   13. HSHarry Stebbings38:42

       Mm-hmm.

   14. AWAlbert Wenger38:42

       I don't think, you know, you want to live in a society where there are these vast movements of money that nobody knows where they're going. I don't think that's good. And I don't want to live in a society where somebody with a button in Washington can control everybody's bank balances. The answer is somewhere between those two.

   15. HSHarry Stebbings38:58

       Yeah. No, no, I... Listen, I totally agree with you there. I think, you know, the other thing that, um, I'm hearing is, you know, bluntly, "Ugh, we always knew crypto was for scammers. Look at FTX." Uh, like, you've been in crypto for so many years. Like, how damaging is FTX, do you think, for the crypto ecosystem?

   16. AWAlbert Wenger39:15

       Uh, I think it'll be a blip, um, in the long term, and it'll be a blip in... much like, you know, Webvan imploding or Flooz.com or whatever, you know, pick your favorite .com, you know, thing that imploded. I just think there were, you know, we've been through two crypto bubbles essentially, and whenever you go through a bubble, it attracts all sorts of, you know, people. Some people f- from the beginning are scammers, some people bumble themselves way into being scammers, you know, uh, uh... And I'm not trying to pass judgment on which one SBF was. I'm just saying when the bubble bursts, all those people get washed out, and, uh, that's net positive. And I think a few years back, nobody will care.

   17. HSHarry Stebbings39:59

       What do you think in terms of now being the best time to be investing in crypto? I, I, I made two crypto investments in the Q4 and my LPs were like, "What? What are you doing?" And I actually said, like-

   18. AWAlbert Wenger40:09

       I mean, I, I, I was just at a crypto conference and I said, "The best time to have been in crypto was January 2009." That was when the Bitcoin network launched. And the second-best time is January of 2023.

   19. HSHarry Stebbings40:18

       Yeah. No, I, I, I totally agree. I think your words might carry more weight than mine

10. 40:23 – 43:49

    What should Elon do with Twitter?

    1. HSHarry Stebbings40:23

       though. Uh, (laughs) um, I, I, I do have to ask you, we mentioned kind of, uh, dissemination of information. We mentioned kind of political power, social networks and media control more than ever. Um, what do you think of Elon's acquisition of Twitter? I saw you tweet a couple of times about it.

    2. AWAlbert Wenger40:39

       Well, look, I mean, I think there was a lot wrong with Twitter. Unfortunately, I don't think Elon has made it better. (laughs)

    3. HSHarry Stebbings40:46

       What, what, what, what, what, what do you think was wrong with Twitter?

    4. AWAlbert Wenger40:47

       Well, 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. Um, that was my, my number one misgiving. And my number two misgiving was that I think really basic things had been botched. Like, the blue check program was just a complete, utter fiasco. And then I also think, uh, a lot of the approaches that Twitter took to content moderation, I think were... started with good intention, but were not executed very well at all. I do think there were a number of important things wrong. I also think it was wrong how heavily dependent the company was on advertising and so forth. I still believe that there's an opportunity today, even after all the damage that has been done, both by the prior, uh, regime and by the current one. Uh, I still think it's not too late because Twitter is hard to kill. It's a network of networks. I do wish very much that, um, Elon would basically sort of say, "Look, we're moving this to a steward ownership model, and we're going to basically make it so that it becomes fully programmable again, and we make it so that, you know, the verification makes sense." I think that's not too late, but you know, it's, it's an... it, it is going to be too late at some point. Now, whether or not it's possible to do this for him given the financial structure he's created, that I don't know, but that would be the right thing to do. And I think if he were to do it, I think it would change, uh, the perception of why he acquired it and the perception of whether he can take any kind of feedback or not.

    5. HSHarry Stebbings42:18

       Why has the blue check mark been a fiasco?

    6. AWAlbert Wenger42:21

       Well, because the blue check mark, it completely confounded two things. It confounded the identity thing with the importance thing. And the importance thing, I think, was complete BS, always. Like who's supposed to say who's important, who's not important? It should've always just been like, "We have verified that the person tweeting from this account is who they say they are." Period. End of story. It would have been really, really simple. And instead, they made it about all sorts of other things, and, and that was a terrible, terrible idea.

    7. HSHarry Stebbings42:44

       I totally get you. I totally understand. If you were to sit down with Elon today, in an armchair, nice fire, little, you know, coffee and tea, whatever we want to do, what would you advise him?

    8. AWAlbert Wenger42:55

       I would say move this to a steward ownership model. A steward ownership model means, you know, you take up, you create a golden share. You put the golden share with the foundation, so Twitter can't be acquired. You really have a clear vision and mission about that's enshrined with this golden share about being this network that's a globally accessible network. And then, you know, making it programmable. So, you know, making it going back to letting third party Twitter clients flourish instead of shutting them off. And then, you know-

    9. HSHarry Stebbings43:22

       How, how about he would respond, "I can't do that. I'm up to my eyes in debt. I've got financial providers who are crushing me. I'm selling Tesla stock."

    10. AWAlbert Wenger43:29

        Yeah. No. I mean, l- look, I mean, that's tough noogies for you, but you're still one of the world's richest people and you still could basically give any debt provider an out, and you could still basically just take a bunch of your wealth and sort of say, "Look, we're, we're doing that." He has the financial wherewithal to do it. The question is, you know, will he want to do it? It's not a question of does he

11. 43:49 – 45:00

    The Future of TikTok

    1. AWAlbert Wenger43:49

       have the financial wherewithal to do it.

    2. HSHarry Stebbings43:50

       Okay. A final one, I promise. TikTok, what, what are your thoughts on TikTok? Uh, like I'm in the UK, so I don't have such exposure. Like how do you think about it? How do you think about like Chinese intrusion on US consumer data and the future for TikTok?

    3. AWAlbert Wenger44:05

       Like any other system, I believe the same to be true here, which is that, uh, I believe these large social systems need to be programmable, um, so that I can have a third party client. Uh, if they're not, we're being programmed by them. It's sort of a very stark choice. Either we're being programmed by the system or we can program the system. And so I don't feel different about TikTok than I feel about Twitter or Facebook for that matter. These systems need to become programmable. If they're not programmable, we're being programmed by them.

    4. HSHarry Stebbings44:33

       So you, the fact that TikTok's already Chinese-owned and they have very different rules around data sharing with their governments doesn't change?

    5. AWAlbert Wenger44:41

       Uh, look, I think it's about shifting the balance of power, you know. As long as, um, I am basically reduced to, like, my thumbs and the sort of wetware between my ears while somebody else on the other end is operating millions of servers, that's just the wrong balance of power.

    6. HSHarry Stebbings44:57

       I, I totally get you and agree in

12. 45:00 – 46:45

    What do you advise founders on fundraising in 2023?

    1. HSHarry Stebbings45:00

       terms of the wrong balance of power. Um, final one, my friend, I promise, and then a quick fire. Uh, you tweeted before, speaking of Twitter, "It boggles your mind how many founders think they will be able to raise in 2023 on meh metrics with high valuations." I was literally like, "Thank the Lord someone else agrees with me." Um, so what do you advise them? What should they do? I'm a portfolio founder in USV's portfolio. What do you advise me?

    2. AWAlbert Wenger45:23

       Well, I mean, we, we, we held a call early in 2022 for all of our portfolio founders. And we had some of the veterans who had managed through the dot-com bubble implosion, and we were like, "If you have raised at a high valuation, you, and you have a lot of money in the bank, you have to get to cashflow positive." It's the only safe place. Literally, the only safe place is cashflow positive. You know, some people took that advice, and some people immediately implemented, um, you know, Riffs and other things, and they're on a trajectory to being cashflow positive, and I think those companies will do well. And some other companies are going to run into a wall, um, at some point where, you know, I've been doing this for nearly 30 years and I've done like three down rounds in that entire time period. Down rounds are incredibly hard to pull off. You know, people will try to paste over it with structure and so forth.

    3. HSHarry Stebbings46:06

       What, why is it so hard-

    4. AWAlbert Wenger46:07

       And some of that stuff will get done, but-

    5. HSHarry Stebbings46:08

       Why, why are they so hard to pull off? I'm naive.

    6. AWAlbert Wenger46:10

       Well, it's hard to pull off because people would rather move on and find out some new thing than, um, incur the brain damage of having lots of people be mad at them. (laughs)

    7. HSHarry Stebbings46:21

       (laughs) And you don't think we'll see pay-to-play come back?

    8. AWAlbert Wenger46:23

       No, no. We will see all sorts of things come back. We'll see all sorts of structure and pay-to-play and everything else. But we'll also just see some businesses just blow up and people will be like, "You know what? I've got better things to do." I think that's unfortunate, by the way. Just to be clear, I'm not endorsing that attitude. I'm just saying that's the reality of the attitude that we will see.

    9. HSHarry Stebbings46:41

       Albert, I could talk to you all day. Um, I'm gonna move into a quick fire round. So I say a short statement,

13. 46:45 – 47:07

    Strong Opinions Weakly Held

    1. HSHarry Stebbings46:45

       you give me your immediate thoughts. Does that sound okay?

    2. AWAlbert Wenger46:47

       Sounds great.

    3. HSHarry Stebbings46:48

       So why is strong opinions l- weakly held a corrosive attitude?

    4. AWAlbert Wenger46:53

       Uh, because it puts the burden on others to talk you out of it instead of, like, trying to get smarter yourself. (laughs)

    5. HSHarry Stebbings47:02

       (laughs) What is the kindest thing anyone's ever done for you?

    6. AWAlbert Wenger47:05

       Told me they love me even when I've been

14. 47:07 – 48:48

    Secret to a Successful Marriage

    1. AWAlbert Wenger47:07

       a complete fool.

    2. HSHarry Stebbings47:08

       (laughs) That was one of my questions, which is, you know, I'm unmarried, but you have a wonderful marriage. What's the secret to a successful marriage, Albert?

    3. AWAlbert Wenger47:16

       Uh, still working that out all those years later. So, um, you know, I think it's not being static. I think that's, you know, static is bad for anything. It's, it's, you know, exploring new things, discovering new things about each other, discovering new things in the world.

    4. HSHarry Stebbings47:31

       How do you make generational transition work in venture when no one else does?

    5. AWAlbert Wenger47:37

       Uh, by not hogging the economics.

    6. HSHarry Stebbings47:39

       (laughs) Yeah. I think every other GP will hate you for that one. Uh, tell me, best investment advice you've received and why it stuck with you.

    7. AWAlbert Wenger47:48

       Best investment advice is to, um, have one clear thesis about an investment. Like why, like what is the one sentence thing why this investment makes sense?

    8. HSHarry Stebbings47:59

       Cold showers. Why? When? How? Take me.

    9. NANarrator48:04

       (laughs)

    10. AWAlbert Wenger48:04

        It beats cocaine, it beats, beats cocaine in the morning and it's just a, stimulating. (laughs)

    11. HSHarry Stebbings48:09

        What did you say? (laughs)

    12. AWAlbert Wenger48:10

        I said it beats cocaine in the morning and it's just a stimulator. So...

    13. HSHarry Stebbings48:15

        (laughs) Well, you know what? It's the first time we've had coke mentioned on the show, so this is great.

    14. AWAlbert Wenger48:20

        (laughs)

    15. HSHarry Stebbings48:20

        Um, tell me, what's the most common investment mistake you see VCs make today?

    16. AWAlbert Wenger48:25

        Well, until recently, it was just FOMO-based investments. I don't know what it'll be in this new period.

    17. HSHarry Stebbings48:30

        What's the most painful lesson that you've been through, but you're also pleased to have been through?

    18. AWAlbert Wenger48:35

        You know, just failing. Um, I just... I've failed repeatedly at, at, at things, and that's painful, and I'm very glad for it because I think that people where the very first thing that they ever did became a monster success,

15. 48:48 – 49:41

    What’s so special about Burning Man?

    1. AWAlbert Wenger48:48

       uh, I think that's really warps you.

    2. HSHarry Stebbings48:51

       What's so special about Burning Man? That one's from Cindy.

    3. AWAlbert Wenger48:55

       (laughs) Um, you know, it, uh, was my first time there. It's a weird place. It's full of contradictions, but it, uh, I guess it takes you out of your comfort zone and challenges certain ideas, and that's good.

    4. HSHarry Stebbings49:10

       Tell me, penultimate one. Single best, biggest lesson from working with Fred?

    5. AWAlbert Wenger49:14

       Just be a good person and work hard.

    6. HSHarry Stebbings49:17

       Final one for you. What are you most hopeful for and optimistic about in the next five years? Let's end on a note of positivity.

    7. AWAlbert Wenger49:25

       Our embarking on the path to the knowledge age.

    8. HSHarry Stebbings49:29

       Albert, I love talking to you. Thank you so much for putting up with my incredibly negative tone today. You've been a joy to work with (laughs) on this. So thank you so much, my friend.

    9. AWAlbert Wenger49:39

       Love it. It's great talking to you, Harry, as always.

Episode duration: 49:41