Zuck's Giveaway

A letter to our daughter

While headlines often focus on what's wrong, in many ways the world is getting better. Health is improving. Poverty is shrinking. Knowledge is growing. People are connecting. Technological progress in every field means your life should be dramatically better than ours today. ..... Medicine has only been a real science for less than 100 years, and we've already seen complete cures for some diseases and good progress for others. As technology accelerates, we have a real shot at preventing, curing or managing all or most of the rest in the next 100 years. .... Today, most people die from five things -- heart disease, cancer, stroke, neurodegenerative and infectious diseases -- and we can make faster progress on these and other problems...... Once we recognize that your generation and your children's generation may not have to suffer from disease, we collectively have a responsibility to tilt our investments a bit more towards the future to make this reality. ...... one day, you or your children will see what we can only imagine: a world without suffering from disease....... Can we connect the world so you have access to every idea, person and opportunity? ..... We must build technology to make change. Many institutions invest money in these challenges, but

most progress comes from productivity gains through innovation

. ...... Our generation grew up in classrooms where we all learned the same things at the same pace regardless of our interests or needs. ..... Your generation will set goals for what you want to become -- like an engineer, health worker, writer or community leader. You'll have technology that understands how you learn best and where you need to focus. You'll advance quickly in subjects that interest you most, and get as much help as you need in your most challenging areas. You'll explore topics that aren't even offered in schools today. Your teachers will also have better tools and data to help you achieve your goals. .......

students around the world will be able to use personalized learning tools over the internet, even if they don't live near good schools.

..... personalized learning will not only help students in good schools, it will help provide more equal opportunity to anyone with an internet connection. ...... Many of the greatest opportunities for your generation will come from giving everyone access to the internet. ...... for the majority of people in the world, the internet can be a lifeline...... personalized learning, curing disease, connecting people and building strong communities ..... We will give 99% of our Facebook shares -- currently about $45 billion -- during our lives to advance this mission.

Stunned and grateful for @finkd's foundation announcement today. What a beautiful and unprecedented way to welcome a child into the world.

— Chris Sacca (@sacca) December 1, 2015

When I'm a billionaire I'm not giving away a dime. Not worth the bad press.

— Matthew Panzarino (@panzer) December 2, 2015

How to look at the Chan Zuckerberg Initiative

American tax code so aggressively encourages the formation of these kinds of foundations by the ultra-rich, but some such foundations have been effective. ..... the default dispensation of the money will be to waste it. For example, Zuckerberg donated $100 million to Newark schools to almost no effect, in a gift that was revealed to have been explicitly managed by Sheryl Sandberg to be timed to offset the negative publicity surrounding the release of the movie The Social Network. ...... the greatest threat to those intentions: The culture of Silicon Valley. Many of the loudest, most prominent voices within the tech industry, people who have Zuckerberg’s ear, are already thoughtlessly describing smart critique of the Initiative as “hating”, absurdly dismissing legitimate concerns as jealousy. ...... No matter how good their intentions, the net result of most such efforts has typically been neutral at best, and can sometimes be deeply destructive. The most valuable path may well be to simply invest this enormous pool of resources in the people and institutions that are already doing this work (including, yes, public institutions funded by tax dollars) and trust that they know their domains better than someone who’s already got a pretty demanding day job.

People are inexplicably upset about Mark Zuckerberg's decision to give away 99% of his fortune

setting up the organization as an LLC allows it to spend money on lobbying, earn money to reinvest in the organization, do joint ventures with fewer restrictions, and lets them give away money at a pace they determine rather than the mandatory 5% per year for non-profits. ...... billionaires in the U.S. who give their money away are implicitly saying that they know better how to help society than government does ..... What legitimacy do these people have to decide where massive sums of money will flow? ....... the white savior industrial complex has never been more pervasive in global culture.

@sama I think the reason you're surprised is that not being a loser yourself you underestimate the power of envy.

— Paul Graham (@paulg) December 2, 2015

@paulg @sama All those zeros at the end are scaring some people --- not me. Zuck, what's up with that final 1%! That's my gripe! ;)

— Paramendra Bhagat (@paramendra) December 2, 2015

Sheryl Sandberg




No, Mark Zuckerberg is not donating 99% of his Facebook stock to charity

The Chan Zuckerberg Initiative, which has a mission of "advancing human potential and promoting equality," will indeed be able to donate to nonprofit organizations. But it will also be able to make investments in private companies. ....... profits it makes from any investments it makes "will be used to fund additional work to advance the mission."

'Dear Daddy...' Max Zuckerberg’s Letter back to her Father

there’s also 1.6 billion people on the planet who don’t have access to electricity, while 2.8 billion people rely on smelly and noxious biomass for cooking and fuel. How about we get them modern electricity grids and cheap reliable energy first?

Why a German billionaire says that pledges like Mark Zuckerberg’s are really bad

In 2010, Bill and Melinda Gates announced that they would commit 95 percent of their wealth to charitable work. Together with Warren Buffett, they also created the Giving Pledge, which asks the richest people in the world to devote half or more of their fortunes to philanthropy. ...... Taking a page from the Gates family, they will use the money to pump up their nonprofit ...... The private foundation is an especially American style of charitable giving. Nonprofit groups in the United States play a disproportionately large role in public life, in part because American tax laws make it attractive for the rich to donate. Much of their wealth could otherwise be captured by capital gains and estate taxes. ...... Private spending on social welfare in the United States is four times the average in advanced economies ...... German shipping magnate Peter Krämer is one of the most vocal detractors of the pledge, and the American tradition of government-sponsored charity. ...... I find the US initiative highly problematic. You can write donations off in your taxes to a large degree in the USA. So the rich make a choice: Would I rather donate or pay taxes? The donors are taking the place of the state. That's unacceptable. ...... It is all just a bad transfer of power from the state to billionaires. So it's not the state that determines what is good for the people, but rather the rich want to decide. That's a development that I find really bad. What legitimacy do these people have to decide where massive sums of money will flow? ....... On average in well-off countries, private social spending accounts for 2.6 percent of the gross domestic product. In the United States, private social spending is 11 percent. ..... Americans are some of the most charitable people in the world in part because there is a centuries-old tradition of private nonprofit groups helping people in lieu of the government. ........ Even Alexis de Tocqueville observed the trend in the 1830s, writing: “In every case, at the head of any new undertaking where in France you would find the government, or in England some great lord, in the United States you are sure to find an association." ...... He wrote that when the government taxes and gives to the poor, people feel slighted. When people voluntarily give to the poor, they feel better about themselves. ...... "One of the most significant consequences of this tax treatment of charitable giving is to give to the wealthiest taxpayers a disproportionate role in allocating public resources and influencing the direction that institutions will take." ....... In his book "Capital in the Twenty-First Century," economist Thomas Piketty proposed a wealth tax as one way to address rising inequality — and transfer wealth from individuals to the state. In the United States, estate and gift taxes achieve some of that function by prodding people to donate their wealth instead of bequeathing it to their children. (Economists like Piketty tend to regard those measures as too modest.)

Mark Zuckerberg Will Donate Massive Fortune to Own Blinkered Worldview

It sounds angelic, but it will probably end up being, mostly, a big waste. ..... In other words, this multi-billion dollar estate will go to Zuck’s own organization, rather than, say, OxFam International or something. .... What does advancing human potential mean? What does promoting equality mean, exactly? Your guess is as good as mine, because Zuckerberg doesn’t really say, despite providing many bullet points ..... Some of this is just patently hellish—does anyone really want to experience “100 times more than we do today,” whatever that entails? Do you want to be “connected” to literally every “idea” and “person” in the world? This is a technocrat’s dream and an actual normal human being’s nightmare. But what do you expect from the man who made his fortune creating humankind’s greatest repository for racist memes and life-commodification? ...... Bill Gates, at least, has devoted his post-Microsoft life to the more tangible goal of eradicating Malaria. But Mark Zuckerberg, who struggles to grasp the basics of humanity and has become unfathomably rich by commodifying his deeply weird theories of social interaction, has a different idea of charity. ..... “Micro-schools”? Putting Facebook software in public schools? Software, software, more software. If you have a headache, take a software. Jimmy can’t read? Give him software. The conceit that code can solve all social ills and free the species from the chains of aging, illness, and flatulence is the height of Silicon Valley bullshit, and Zuckerberg’s massive giveaway will clearly be predicated on that conceit. ...... And perhaps we should also wonder whether instead of letting the mega-rich put their estates into “charities” of their own design, and thanking them profusely for it, we wouldn’t be better served by just taking it from their corpses...... With a 99% estate tax, would our public schools need saving from the likes of Mark Zuckerberg? ...... Update: BuzzFeed’s Alex Kantrowitz confirmed with Facebook PR that The Chan Zuckerberg Initiative is not even an actual charitable organization, but rather structured as an LLC. Unlike a charitable trust, which is compelled to spend its money on charity, Chan Zuckerberg Initiative, LLC will be able to spend its money on whatever it wants, including private, profit-generating investment.

Wary Of The “Next Warby” via @RedGiraffe

"If a product can be sold on Amazon, you can be sure the margin will asymptote toward zero."

-- @micahjay1

After Walmart started uprooting small towns of small stores, Sam Walton suggested that it might be true that it is hard for small stores to compete with Walmart on price, but they could beat Walmart on value add. What can be the value add for products that can be found on Amazon?

Can your product be custom made for individuals? Amazon could not do that. Can your product be made integral to some service only you can provide? Body oil might be cheap on Amazon, but Amazon does not do massages. Or therapy, for that matter. Amazon sells yoga mats, but it does not give yoga lessons.

When manufacturing itself is customized to each individual, Amazon is totally out of the picture. One size does not fit all. Not always. Maybe never, given the chance.

Well said: "if a product can be sold on Amazon, you can be sure the margin will asymptote toward zero" @micahjay1 https://t.co/iDpHJL3D31

— Sapna Shah (@RedGiraffe) November 16, 2015

Wary Of The “Next Warby”

I fear that many of the more recent consumer product-oriented startups put too much stock in their ability to build a brand, or — even worse — their ability to hire an agency to build the brand for them. Strong marketing is certainly necessary, but not sufficient for building venture-scale businesses. ..... Slick messaging and innovative industrial design capture consumer attention, but it’s the founder’s focus on outsize profit margins that captures VC interest. ....... Eye care in the U.S., and most of the world, is dominated by a Swiss company called Luxottica. You’ve probably never heard of them, but they control 80 percent of the market for eyeglasses. ...... Like Apple, Luxottica has vertically integrated to such a degree that it’s very difficult for anyone else to compete. ...... The $9 billion U.S. mattress market is essentially controlled by two private equity firms who bought up the most valuable brands in the market. The companies that ran these businesses cost-engineered the products to make them cheaper to produce, for instance, by making mattresses singled-sided — which forces more frequent replacements. ........ Mattresses are big and bulky, and rely on specialty retail locations staffed by salespeople that make used-car salesman look honest. Still, limiting competition and channels meant margins were protected. Until Casper came along. ...... Casper cuts through this knot by shipping a full-sized mattress in a conventional box via UPS or courier. ....... Casper has been able to create a differentiated product at a low cost, figure out a better way to sell and deliver, all while keeping margin along the way. ..... Like the market for glasses and mattresses, the $3 billion U.S. razor market is huge and concentrated, with Gillette and Schick accounting for 70-90 percent of sales. ....... Razors have never been better, but that fanaticism for follicle removal comes with an obscene price tag. ..... Basically, if a product can be sold on Amazon, you can be sure the margin will asymptote toward zero. ..... Founders should bathe themselves in the nuance of an industry by attending trade shows and talking to insiders. .......

VCs and founders can act a bit like lemmings.

...... Mattresses were comfy or cost-effective before Casper, but they were never cool.

25K Becomes $110 Million In 5 Years

Secretive, Sprawling Network of ‘Scouts’ Spreads Money Through Silicon Valley
Sequoia Capital has funneled millions of dollars to scores of well-connected entrepreneurs and academics, who invest and look for ideas

Startup investor Jason

Calacanis took a $25,000 gamble five years ago on a company almost no one had heard of called UberCab. That investment in what is now Uber Technologies Inc. has ballooned to roughly $110 million.

..... Most of Sequoia’s scouts are entrepreneurs whose startups were funded by the firm. That means they know a lot about what Sequoia is looking for and will recommend the firm to other entrepreneurs. ....... Forging tight relationships that generate new deals for venture-capital firms is more important than ever as the cost of creating startups falls. The resulting acceleration in company launches has made it harder for venture-capital firms to identify the best opportunities as startups emerge. And competition is growing as new investors who are flush with capital invade the technology world. ...... Sequoia made early bets on many of today’s tech titans, including Apple Inc., Google Inc. and Cisco Systems Inc. ...... It was the only venture firm that backed messaging company WhatsApp, sold to Facebook Inc. last year for $22 billion. Sequoia invested about $60 million for a stake valued at $3.5 billion in the deal. Sequoia now owns stakes in 33 private, venture-capital-backed companies valued at more than $1 billion apiece, more than any other venture-capital firm. ...... If a scout’s investment is successful, the vast majority of gains are shared by the scout and Sequoia’s limited partners, Mr. Botha says. Other scouts and Sequoia partners themselves get a small piece of the gains. ..... Sequoia says it instructs scouts to tell startups in which they invest where the money is coming from. But the firm tries to hide the investments from rivals by making them through limited liability companies with odd names. The names include Dragonsteed LLC, Vermillistock LLC and Rocketbooster LLC. ...... In addition to a small number of professors who are scouts, a separate team of unpaid students at Stanford, Harvard University, Columbia University and other elite colleges is on the lookout for promising ideas and entrepreneurs. ...... “VCs want their brand names on campuses,” says Daniel Liem, who says he was a Sequoia scout while studying computer science at Stanford. “They want to find the next Zuckerberg or Spiegel,” Mr. Liem adds, referring to the founders of Facebook and Snapchat Inc. ...... Sequoia’s scouts usually invest about $30,000 at a time and are given initial access to about $100,000 a year. Mr. Botha says the amount can grow if scouts identify even more hot ideas. ..... For scouts, the appeal is membership in an elite club and free money to make seed investments, which they might not be able to afford. .... Scouts are a “very early warning system, like having a bunch of little satellites installed across the Valley, picking up blips on the radar,” he says.