Last month I wrote a post mentioning that we have an activist in residence at USV. And I write a lot here at AVC about the policy stuff we have been working on. It might seem to some that we are more like policy think tank or adovacy organization than a venture capital firm. I think that is somewhat true. We make a lot of early stage investments and we work hard with those companies to help them succeed. But if you hung out at USV, you would see that we spend a lot of time on policy stuff. And that begs the question "why do you do that?".
The short answer is that Brad, who I founded USV with a decade ago, has felt from day one that policy and governance will be as important as technology in shaping what the market looks like in the coming years. And that, of course, will shape how impactful our portfolio companies are, and that will ultimately shape our returns. And we are in the returns business.
The longer answer has to do with the power of networks, which are central to our investment thesis, to be an economic force in society. These networks will reshape markets, lower costs, bring efficiencies, and disrupt the ways that things are done. And those who are incumbents in today's model will fight these networks tooth and nail, because they threaten their incumbency. And that will lead to policy fights. We want to get out ahead of all that as much as we can.
I have not seen much written about this coming change. So I was pleased to see a post by Om Malik yesterday that laid all of this out clearly and succinctly. Om says:
the challenges of the connected future are less technical and more legislative, political and philsophical. The shift from a generation that started out un-connected to one that is growing up connected will result in conflicts, disruption and eventually the redrawing of our societal expectations.
This redrawing of societal expectations is likely to be the political battle of our time. Om goes on to talk about this in the context of the labor issues that Uber is having in San Francisco. That is a good example of what happens when networks and the data they produce reshape a market that has been operating in a traditional framework.
We are at the start of this battle between incumbents, be they black car drivers or cable companies or government itself, and the network driven upstarts. And we have many of those upstarts in our portfolio. So our policy work is ultimately an investment in the success of our portfolio companies. And that is why we spend so much time on policy stuff.
