Fred Wilson is “A VC” in more ways than one. Wilson is the managing partner of two venture capital firms, and the blogger behind avc.com, where he posts what he calls the “musings of a VC in NYC.” As a matter of fact, he’d prefer to be called an industry expert and blogger than a VC investor, and doesn’t like the media profiling him as a VC.But that’s hardly going to stop people from writing about the guy who’s behind Union Square Ventures and Flatiron Partners, and oversaw investments in Tumblr (acquired by Yahoo! for $1.1 billion); GeoCities (acquired by Yahoo for $3.5 billion); Del.icio.us (acquired by Yahoo for $30 million); and FeedBurner (acquired by Google for $100 million).
Not to mention investments that include Twitter, Foursquare, Etsy, Indeed, Zynga, Kickstarter and SoundCloud, among others. So what’s the story behind this man who is one of the top tech investors on the Forbes Midas List?
Army spirit present right from childhood
Fred Wilson was born August 20, 1961, and grew up as an army brat moving to a new place each year. After getting a Bachelors Degree in Mechanical Engineering from MIT, Wilson enrolled into the Wharton School of Business at the University of Pennsylvania for an MBA.
In the summer of 1986, in between his first and second year at Wharton, he convinced one of the partners of NYC-based VC firm Euclid Partners to sit down with him for lunch. Wilson walked out of that lunch with an offer to join the firm for the summer, and continued working Mondays and Fridays during his second year.
For the next ten years, Wilson learned about the investing side of the venture capital business – how to find deals, set the pricing and structure them, what to do on the board, how to manage a portfolio and how to get exits. The 10-year stint at Euclid still lacked a sector-specific focus because they were involved in all kinds of investments in life sciences and information technology.
Height of the dot-com era became a boon for Wilson
Wilson says he finally found his calling in 1994-95, when he convinced Euclid to invest in a few Internet deals and got to know the entrepreneurs running these startups. In 1996, Wilson teamed up with Jerry Colonna to start Flatiron Partners, supported by $150 million from Chase Capital Partners and SOFTBANK. The timing was perfect, and their $150 million grew into $750 million within a span of three years, at the height of the dot-com era.
Then the bubble popped and Flatiron Partners stopped making new investments in 2001. In his own words, Wilson says “Yeah, boy, we screwed up a bunch of things.” For the record, Flatiron Partners did pick winners such as GeoCities, and Wilson still manages what’s left of the Flatiron portfolio.
In 2004, Fred Wilson teamed up with Brad Burnham to launch Union Square Ventures. At about this same time in late 2003, he also started his own blog. Their investment strategy was focused on something that was considered very novel at that time – Web services that added an application layer.
First big success for him was Del.icio.us
Their first big success was Del.icio.us, acquired by Yahoo! for $30 million. USV’s big year was 2007, when Tacoda and Feedburner were sold to AOL and Google, and USV led a $5 million funding round for Twitter, which was then valued at $20 million. Twitter’s impending IPO puts the company’s value at around $15 billion. USV got a 5,000 percent return on Tumblr when it was acquired by Yahoo. Another big success was Zynga’s addition to the USV portfolio in 2008.
For the past two years, USV has been on what Wilson calls a “schneid (a hitless streak if you aren’t familiar with that term).” They’d been tending to the 14 companies in their portfolio, and broke the schneid to make a $5 million investment in Coinbase, one of the new wave of digital currency startups that Bitcoin has triggered.
You could arguably make the case that USV’s string of hits can be attributed to Wilson’s two decades of experience in the VC business, first as an associate and then partner at Euclid Partners, and subsequently through the investments made by Flatiron Partners.
But Fred Wilson has a different take. He explains his post-MBA fortunes in a blog post on avc.com, in which he says that “I did it all wrong and got lucky. I don’t recommend anyone reading this to try it the way I did it. If you choose to get an MBA, get a real job out of business school. Help to build a few businesses in an industry sector you really like. Become an expert in that industry. Then try your hand at venture capital. You’ll be much better at it than I was my first ten years in the business.”
Blogging helped him grow as a learner
Actually, he gives a lot of the credit to his blogging habit. In his latest blog post, he talks about a discussion he had with his daughter Jessica on the value of reading and writing. Wilson says he told her that “I toiled in the VC business for close to twenty years before I hit my stride and the reason I found my stride was my adoption of blogging.”
Wilson says he wanted to do away with the walls that traditional VCs put up between themselves and entrepreneurs. The solution was blogging, used as a tool to have conversations with entrepreneurs that wouldn’t take up all his time.
He says he gets 50 or so comments which he can reply to. Some of them turn into email exchanges, and a few of them will then show Wilson what they are doing. By using his blog to engage the tech community, Wilson is able to have 5,000 such conversations a year.
Fred Wilson and his wife Joanne live in New York City. They have three children – Jessica, Emily, and Josh. All of them are bloggers, with their own blogs.