Are We What We Fund? Should VCs Only Back What They Believe is Morally Correct?

When I was 20, late Friday nights were about last call at the bar. Now they’re about Twitter threads. a16z’s Marc Andresseen shared some thoughts about the need for product designers to be morally responsible for what they put into the world. He didn’t call out any startups by name but the conversation ended up focusing on anonymous spaces and whether they always degrade into negative behaviors. It’s fair to suggest that Secret was one of the startups Marc was thinking about, or at least that’s what most readers suggested and he didn’t dissuade them from that view (but did stress he wasn’t talking about any one company).

One of the nice things about Being Marc is he can bring up topics that other investors or entrepreneurs might be afraid to mention for fear of blowback (ironically that’s one of the goals of Secret). To ignore power dynamics – real or perceived – is unrealistic. That said, I’d suggest we could all be more willing to say what we believe, in public and attributed. At least this is what I try to do, and while I might be more secure in my place than someone just breaking into tech, I’m certainly no Marc. But this post isn’t about the design of anonymous products. It’s about something Marc said towards the end of his tweetstream: investors need to consider the implications of what they fund. To me, as a first-year venture capitalist, this is a meaty topic.

When we raised Homebrew’s fund, I told our LPs that my hope was not just to return best of class results but back a set of companies we’d all be proud to support. It wasn’t a meaningless promise – it’s one of our principles in funding mission-driven founders who want to build a company that matters. But here it gets a bit tricky – what if the founder thinks it’s worthy and we agree, but the world disagrees? I’d say it’s obvious: fund that company. 100% by ourselves if necessary.

My moral compass is meant to guide my own behavior (and I will say “my” instead of “our” because I don’t want to speak for Satya on this topic, although our values are certainly shared). If a company would probably make me money but I felt it wasn’t defensible based on my own beliefs, I wouldn’t fund it. That’s MY problem, not the entrepreneurs. If I didn’t believe in the worthiness of their mission, I wouldn’t be a good financing partner. But if someone else wants to? Great, go fund them and let it play out.

The way I navigate this question – when I was in operational roles and now – is to ask “does this company create both value AND merit?” Value is a sustainable, highly profitable business which rewards the team, partners and investors who bet on it. Merit is fuzzier but I’ve generally reduced it to, “is the world a better place because this product exists?” Not “can this product be abused and utilized for negative purposes” but rather what is its primary use case, primary reason for being and can the team sustain that true north over time?

It was this question I asked and answered when I joined Second Life, AdSense and YouTube as an employee. These were all platforms which bet on people, their ability to create and the economic value of their creations. Yes, Second Life can be used for some pretty outlier behavior, not all of which always sat well with me (but where I thought our community guidelines and ability to enforce them progressed well). At times, AdSense powered a whole bunch of spammy sites in addition to the middle/long tail of original content, but Google teams were constantly pushing improvements to reduce abuses. And YouTube features videos that can sometimes make me uncomfortable (and comments that do too), but its overwhelming use is positive. [side note: twice during my tenure at YouTube we had plans to improve comments and both times resources/designs ended up being modified. I consider it one of my failures as a product leader that we didn't do more. It was a 'broken windows' situation to me - if YouTube didn't do more to show we cared about the neighborhood, it signaled to the residents they shouldn't either.]

So I’ve worked on projects that I believe make the world a better place – not in the ‘cure cancer’ sense but medicine wasn’t my calling. As an investor that’s the same heuristic I apply – does this create merit AND value. I believe this approach increases the probability of delivering great returns for Homebrew and being proud of everything we do. Anonymous social apps are outside of our focus area so I haven’t had to ask myself the question as an investor but I’ve done so about other investments – ones we’ve made and ones we’ve passed on.

17 thoughts on “Are We What We Fund? Should VCs Only Back What They Believe is Morally Correct?

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