Omidyar's Flexible Approach

Matt Bannick (Managing partner at Omidyar Network) recently wrote a blog post for the Harvard Business Review outlining ON's flexible investment approach. They define their bottom line as driving "societal value" and utilize grants and for-profit investments to support their mission.

Since 2004, ON has invested +$350M in over 150 companies. 57% of those dollars have funded grants and 43% for-profit investments.

Omidyar has pioneered this space -- utilizing philanthropic capital to drive large scale, catalytic impact. Some of the organizations they've supported include: Digg, Wikipedia, MeetUp, DonorsChoose, Creative Commons, Code for America, among others.

But as Matt illuminates in his post, Omidyar Network is an anomaly. Less than 1% of the capital U.S. foundations disbursed in 2007 (the last year of complete data) supported for-profit ventures. Moreover, only 4% of that 1% was invested in equity — precisely the kind of risk capital than can nurture businesses.

With hundreds of billions of dollars flowing into philanthropy over the next few decades, a big question (and opportunity) will be: How can we best deploy these funds?

More to come on this topic...

Investment strategy

Theory: Forget the market (up or down)... cost averaging great companies over a sustained period of time will produce great results.

Action: Buy 100 shares of Amazon ($AMZN) and Netflix ($NFLX) on the first of each month for the next 10 years. (starting September 1st 2010 -- September 1st 2020)

Jeff Bezos and Reed Hastings are great entrepreneurs. They are on the right side of the macro shift towards digital consumption and commerce; well capitalized, and haven't enjoyed the spotlight Steve Jobs or Eric Schmidt have.

I am long digital. I am long great products. I am long great leaders.
Below is a chart looking at the past 10yrs.

Google.org and the 1/1/1 formula

Stanford Social Innovation Review recently penned a comprehensive piece about Google.org - documenting their ups and downs since launching in 2004.

Two passages I found particularly interesting include:

Google’s three-part approach is similar to the integrated philanthropy model developed a decade ago by Internet software company Salesforce.com Inc. Salesforce.com Foundation applies a 1/1/1 formula to social change, with 1 percent of staff time, 1 percent of equity, and 1 percent of profits going to advance the mission of qualified nonprofits.

[Google's] first philanthropic innovation was its structure. Google established Google.org as a unit within the corporation, allowing it to invest in for-profit as well as nonprofit ventures. Under the DotOrg umbrella sat the smaller Google Foundation, a more traditional 501(c)(3) organization. This hybrid structure, unusual for corporate philanthropy, has a parallel in private giving. Omidyar Network, established in 2004 by eBay founder Pierre Omidyar and his wife, Pam, invests in both nonprofits and for-profit enterprises that offer social benefits.


Despite Google.org & Omidyar Networks great efforts - I see an opportunity to innovate in this space. I am working on something now towards that end and will be talking about it shortly!

NYC Early-Stage Investor Ecosystem (by David Lerner / @davidblerner)

URL: http://bit.ly/cinKta

The Macro Flow of Ad Dollars

Key take-away: Newspapers = Down / Internet = Up (as is Direct Mail)

Conway featured in the LA Times

Since 1995, Ron Conway has invested in 500 start-ups, including Google, PayPal and Twitter. He puts his money down before the large venture capital firms show serious interest, and his stake is relatively small, about $200,000 or less. But his investment gives a company instant credibility and an unrivaled network of contacts.

via LA Times

Venture Firms with a Strong NYC Presence, by Size of Newest Fund

Googlers Are Planting Seeds

More than 40 ex-Googlers have invested in about 200 companies including Twitter, Tesla Motors, Mint, Foursquare, Tapulous and more.The most active Google angel thus far is Aydin Senkut, a 40-year-old native of Turkey who has invested between $25,000 and $150,000 in more than 60 startups. Senkut joined Google in 1999 as its 63rd employee.

more: http://bit.ly/bvGNPK (Business Week)