Fred Wilson & Brad Burnham (Union Square Ventures)
Mar 20, 2025
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Fred Wilson and Brad Burnham, founding partners at Union Square Ventures, share their journey through tech investment since 2003. They discuss their unique investment thesis focused on open networks and the evolution of their approach amid different tech cycles. The duo reflects on missed opportunities, like rejecting Airbnb, and the early promise of Bitcoin. They also explore the implications of AI and the tension between decentralization and market consolidation, all while maintaining a commitment to intellectual curiosity.
Venture capital fosters continuous learning by allowing investors to engage with founders, enhancing their understanding of complex domains.
Fred Wilson and Brad Burnham highlight their partnership's unique investment philosophy, blending practical opportunities with theoretical insights for better decision-making.
USV focuses on the potential of AI and blockchain to create decentralized ecosystems, advocating for collaboration while addressing challenges from market consolidation.
Deep dives
The Learning Advantage of Venture Capital
Venture capital serves as a valuable avenue for continuous learning, allowing investors to gain insights from founders deeply immersed in specific problems. This dynamic fosters a unique opportunity to engage directly with innovative thinkers and rapidly understand complex domains without extensive preparatory work. By sitting across the table from entrepreneurs, investors can focus their inquiries and hone in on areas where they may lack understanding, thereby accelerating their learning process. The interplay between curiosity and the privilege to invest creates a rich learning environment that remains invigorating and engaging over time.
The Journey of USV's Founders
Fred Wilson and Brad Burnham, co-founders of Union Square Ventures (USV), emphasize the importance of partnership in shaping their investment philosophy. Each founder brought a unique perspective—Wilson from a practical, opportunity-driven angle and Burnham from a theoretical framework grounded in information flow and market dynamics. Their diverse approaches facilitated a rich dialogue that led to more well-rounded decision-making and a shared vision for the firm. This collaboration allowed USV to navigate the complexities of venture capital while developing a strong focus on investing in the applications layer of the internet.
Analyzing the Market Cycle: Lessons Learned
The startup landscape is influenced heavily by the market cycle, as seen during the dot-com bubble and its aftermath. In the early 2000s, Wilson and Burnham recognized a shift away from applications towards hard tech, leaving valuable opportunities in the applications layer wide open. This insight allowed USV to focus on smaller investments in companies that embodied emergent, social, and open application principles despite initial skepticism from the investment community. The understanding and timing of their investments played a crucial role in the firm’s growth and success during that period.
Challenges and Missed Opportunities
Reflecting on past investment decisions reveals several missed opportunities; one notable instance involves the decision to pass on investing in Airbnb and Stripe. The founders recognized their biases, believing their personal preferences were representative of broader market sentiments, only to find later that potential customers were fundamentally different. This experience underscored the importance of investors understanding their own positions and refraining from projecting personal tastes onto investment decisions. These lessons encourage a more open-minded approach, especially in recognizing the potential of disruptive ideas and innovative entrepreneurs.
The Future Landscape: AI, Crypto, and Decentralized Innovation
USV's focus has shifted towards harnessing the powers of AI and blockchain technology to create a more decentralized and innovative ecosystem. The founders explore the potential for AI-driven applications to transcend traditional silos, fostering greater collaboration and accessibility in technology. They emphasize the need to balance the benefits of openness with the challenges presented by larger, consolidated players in the tech space, advocating for a future where decentralized models thrive. This vision reflects a commitment to empowering individuals and entrepreneurs, nurturing innovations capable of transforming industries and society.
In this special episode of the Slow Hunch, I sat down with Fred Wilson and Brad Burnham, founding partners of USV.
Since founding USV in 2003, Fred and Brad have backed companies like Twitter, Etsy, Cloudflare, and Coinbase while developing an investment thesis focused on enabling new forms of value creation through open access to networks, capital, and knowledge.
Fred and Brad bring decades of investment experience, having seen multiple tech cycles from the early internet to mobile, cloud, crypto, and now AI. What makes their partnership unique is how they've maintained their intellectual curiosity and drive to understand emerging technologies and business models, after 20+ years of working together.
I've been lucky enough to have a front-row seat to their approach, and it was really special to have this conversation over multiple mugs of tea in my living room in New York City.
In many ways, USV has been their collective slow hunch - an exploration of how emerging tech intersects with the world and how to be part of it.
Hope you enjoy this conversation!
Chapters:
00:00:00 Cold open
00:10:40 How USV was formed
00:17:16 Fred and Brad on their investment philosophy
00:24:01 Overcoming early challenges
00:27:43 The emergence of web2
00:30:59 The initial promise of social media
00:34:04 Investing in Twitter
00:39:11 The early days of Bitcoin
00:45:55 The risk of market consolidation in AI
00:49:39 Fred and Brad reflect on their mistakes
00:57:18 The Impact of AI
01:07:23 The future of technology
01:09:50 What keeps them going after 30+ years
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