Fred Wilson, WG’87, has made a career off being a contrarian. After Wharton, instead of Wall Street and investment banking like most of his classmates, he dove into the then-far-less-glamorous world of venture capital—perhaps the only person to do so in his class, he asserted. And instead of Silicon Valley, to this day he still operates out of New York City as managing partner at Union Square Ventures. Even his choice of smartphone operating systems—Android—reflects his world view (and his view that it will eventually dominate the market, not iPhones).
“Don’t do the thing to do,” he told an audience of current students during a recent campus presentation.
Wilson has always been a rebel. He surmises that perhaps his upbringing in an Army family has something to do with him getting tired of things quickly, of liking change and being bad in relationships with people who aren’t regularly within sight.
“My mom considered me a total pain in the ass my entire childhood,” he says.
To put his investing strategy another way: “Beat everyone to the punch,” he said. By the time something moves from “lunatic fringe” to mainstream, it is too late to invest in it.
For Wilson, this philosophy has led to success, fame in VC circles and the business media, and investments in such now-mainstream firms like Twitter, Tumblr and FourSquare.
It has meant that Wilson has not necessarily excluded investment opportunities just because the entrepreneurs in question didn’t have a business model or monetization schemes. Instead, they have known that their products would ultimately attract millions of people. Because of this, Wilson has been willing to live with uncertainty over time, a quality that has attracted entrepreneurs to him, he said.
Lately, his contrarianism has taken shape at Union Square Ventures through investments in more later-stage companies.
The world is awash in more seed and angel money at the moment, Wilson reported, yet the same amount of venture capital is available.
“It’s easier to get angel money. It’s hard when you need real money,” he said. “If you’re successful, you need to get real money.”
Startups eventually hit the “Series A crunch”—which for many early-stage ventures will lead to failure.
Getting back to Wilson’s strategy, contrarianism does not guarantee one will also be right. Union Square Ventures actually passed up on its first opportunity to invest in Hailo. The VC firm had to pay a higher price this year when it joined the latest round of financing for the taxi-hailing app, Wilson said.
Wilson spoke on Feb. 5, 2013, as part of Alpha Kappa Psi’s Aspire to Excellence Speaker Series. Alpha Kappa Psi is a business fraternity devoted to its members’ professional development.