Albert Wenger on technology, progress, and the power of networks


 

Rohan: Albert is one of those people whose wonderful personality shows from his writing. I have been following his blog for a while now and it was wonderful to spend 30 minutes with him learning about his background and understanding his view on how technology is changing the world we live in.

I hope you enjoy it as much as I did.

About Albert

wengerAlbert is a partner at Union Square Ventures. Albert combines over 10 years of entrepreneurial experience with an in-depth technology background. As an entrepreneur, he has founded or co-founded five companies, including a management consulting firm (in Germany), a hosted data analytics company, a technology subsidiary for Telebanc (now E*Tradebank), an early stage investment firm, and most recently (with his wife), DailyLit, a service for reading books by email or RSS. Albert also served as the president of del.icio.us through the company’s sale to Yahoo. His technology background goes back to winning the German national computer science competition at age 18. Albert graduated summa cum laude from Harvard College in economics and computer science and holds a Ph.D. in Information Technology from MIT. He has managed technology projects for organizations as diverse as Tacoda (startup) and Telebanc (leading Internet bank).


Interview transcript

(00.50)

Rohan: Albert, it would be lovely to get a sense of your story – where you are from, why you are doing what you are doing, how you landed here, and the major milestones of the journey so far.

Albert: I grew up in Germany. I was fortunate to have lived in a relatively small village – it had a few thousand people. One of the residents was a computer science student, who was much older than I was. I was maybe 14 – 15, and he must have been in his 20s. He took me under his wings, gave me his used books and used software. My parents were super supportive too – they got me a very early Apple II (which I still have!) And I fell in love with computers.

When I was 16, I landed in Rochester, Minnesota as an exchange student. I had a great time with a wonderful host family (that I am still in touch with!). I had been very impressed with all the teenagers I had met in Rochester. They were all making money, they had cars, and they were in jobs. After coming back to Germany, I decided I should make some money using my programming knowledge. 

This was very unusual in Germany. In fact, I did not know anyone else in my entire school (it was a reasonably large school for a bigger district) that was working to make money. I applied to a couple of different places and a small software company hired me. I worked on an accounting system build in BASIC, which was my summer job. During my school year, I got a job in a small branch of Siemens. I think I had my first inkling for the entrepreneurial thing because these were just paid-by-the-hour jobs.

I wrote a program for the driving school that I got my license from – to manage the student roster and assignments. These guys turned around and sold that program to other driving schools. That’s when I realized that I should have been the one who should have done that.

I went up to college in the States and studied Computer Science and Economics. I mistakenly thought economics would teach me about business. I learned a lot about economics but not necessarily about business. After getting out of college, I again mistakenly thought that I should get into management consulting to really learn about business. I spent a couple of years there. You don’t really learn much about business, certainly not about start-ups. Eventually, I quit that place and joined a couple of folks who started a consulting firm from scratch. That was my first true startup experience. There were 5-6 of us and I was the youngest. We had no clients and we had to develop competencies. It turns out consulting businesses are not very scalable. They scale linearly with your headcount.

We sold to a bigger consulting business and I made a tiny bit of money. I went back to the States to go to graduate school at MIT. Again I studied Economics and Computer Science.  Growing up in Germany, I was very good in school. And there was a sense that if you are good in school, you must pursue an academic career. (We are now in 1993-94 when the web started to happen).

By 1996, I was convinced that the web was going to be the biggest thing ever and I was instead spending my time working on my dissertation – which nobody would ever read. So, I started a company with two MIT professors. We made pretty much every mistake that has ever been made in a startup. I did finish my dissertation on weekends (I am German and hence anal about these things). I somehow also managed to get married and not have my wife go entirely crazy.

It was going really well until we got sued by a much larger company. I came away from that experience realizing that while I really loved startups, but I was not a very good manager of people. I was a little too much on the ADD side to focus on a single startup. That made me realize my best bet was to be on the investing side.

Now we are in about 1999. I teamed up with two partners and we raised 25 million dollars in about 6 weeks of the height of the Internet bubble. With our experience, we had no right to have that kind of money. The good news is that we didn’t blow it all. We set up an incubator and were judicious in our use of funds. After the bubble burst, it took us a while to unwind everything. 6 weeks to raise it and 2 years to unwind it all. We returned 95 cents on a dollar, which is still losing money – but, for the Internet bubble, it put us in the top 5%.

I realized that I really enjoyed the investing side. In the aftermath, I tried to raise funds with my now partner, Brad Burnham and a third friend Tim. We didn’t succeed. It was 2001 and the market for venture capital was nonexistent. I went off and did something else for a while. That’s when Brad hooked up with Fred Wilson. They raised funds in 2003 and started to invest in 2004 under the Union Square Ventures umbrella.

I was extremely close to buying a software company then but the deal fell off at the 12th hour. I had spent three years of my life finding that company and that was pretty devastating, but it turned out to be one of the best things that had ever happened. In a few months, I started working with Brad and Fred. I did some consulting work with Tacoda in return for some equity. It was then sold to AOL. I also worked for Joshua Schachter from Delicious (funded by USV) and then became the President of Delicious. Yahoo bought the company and I made a little bit of money on that. Then, I joined USV as a venture partner. After a couple of years, I became a general partner in 2008. I have been enjoying what I am doing ever since. That was the story I guess. I tried to pack in the highs and the lows.

 

(10.28)

Rohan: What were the defining moments or the biggest defining moment? What was the ‘ahaa’ that came out of it?

Albert: It is not a single big defining moment. A close friend and business partner has a great saying, ‘You never know when you had a good day’. In my first startup, the Internet healthcare startup, we brought in a very experienced management team. I thought that was a great day. Subsequently, it turned out that team, which was very experienced, made some decisions that ultimately led to the demise of the whole thing. It turned out not to be a good day.

Conversely, when the deal to buy a software company fell apart, I thought I had a terrible day. I had worked intensely on something for 2 years and it fell apart. That, though, turned out to be one of the best things – I wouldn’t be here doing this with you if the deal had happened. I would be in Cleveland working with that company. One of the things I have come to learn is that you shouldn’t get too depressed on the downside, or too excited on the upside – just keep plugging away. Eventually, good things happen.

 

(12.15)

Rohan: I really enjoy your blog where you often think about what the future would look like – from the flood initiative you were supporting on Kickstarter and your thoughts on jobs. I think I want to ask you a blue sky question. What does life look like 10 years form now in your eyes? What role does technology play in all the things we are doing right now?

Albert: As Yogi Berra said, ‘Prediction is very hard, especially about the future’. The thing I am most focused on right now is the future of how we organize ourselves and how we organize our social and economic activity; all this in the face of two very dramatic changes.

One – the Internet. It’s not like anything that has come before. For the first time it has put all of humanity in touch with each other instantaneously and for free. By free, I mean this call we are having right now is free on the margin.

Two – the incredible rate of progress (I disagree with Peter Thiel on this). Its all around us and has resulted in our ability to supply anybody with food or facilities on the other side of the planet, for example. It does not exceed our technological capabilities and natural resources to provide living to everybody. If anything, that proves our capability for accelerating. 

A lot of the old ways for how we think economic activities are organized are breaking down. The thing that has worked very well for us is some form of capitalism. There are subtle differences between capitalism in Germany and the US. The basic idea that individuals have some kind of work through which they generate income – they spend that income on things and experiences. The problem with that model is that we are getting good at getting machines to do what we were doing historically. This machine is not human – it is not a buyer or consumer of the things it produces.

These twin forces – being able to communicate, share ideas, organize ourselves, and the force of technological acceleration are enablers. These seem good for the long run, but disruptive in the short run. People who had a job don’t have a job, hence falling incomes, etc. My interests are in using the internet to use this technological force for positive outcomes. That’s more of an outline of the forces I think we should think about.

 

(17.43)

Rohan: Hans Rosling predicts that the world population is going to saturate at 10 billion. At this point, machines are very quickly eliminating jobs. Some of the huge companies of today have huge market capitalizations but employ very few. One part of me wonders how we will keep 10 billion people employed with the seeming number of cuts. 

Albert: If you’ve got population decelerating, and if you’ve got technology accelerating, it’s very clear what these two curves do to each other. We are going to have to figure out how to use the resources wisely for all these people and stay above global warming. The social challenge would be around what we spend our time on; I think that will be the biggest challenge. I do think there are positive forces such as cultural production – ways to undo some of the damage we have done to the environment. Fundamentally though, our belief in the fact that we will strive to consume more, own more and have more seems broken.

 

(19.42)

Rohan: 10 years later, I wonder how we are going to define value. It’s moved from silk to coffee and I think it interesting to find out what it is going to be. Will it be food, for instance?

The next question is on a personal level. What are the few things you do to run your life? Are there any hacks?

Albert: The single biggest productivity gain comes form doing small things immediately as opposed to adding them up to a list of to-dos. When I think of an e-mail I should be sending, I try to send the e-mail, right then. Even when I am talking to someone and I think of a to-do, I do it right then instead of keeping it for later. That I think I found to be the single biggest productivity improvements.

The other thing is to have habits. I blog everyday because it is a great habit. I don’t need to think about whether I need to blog or not – unlike Fred who blogs everyday though, I blog every weekday. I miss some days because I am sick or travelling, but it’s a great habit. These kinds of things become very cumulative. I just noticed on Tumblr that I am approaching my 1000th blogpost. When you first see that, you think wow that’s a big number. Turns out it is just less than three years of writing.

So, habits and getting stuff done quickly has worked very well for me. 

 

(22.32)

Rohan: What is that one idea or a few ideas you would like to share?

Albert: Here’s an idea that inspires me and one I will blog about hopefully. I think that we can build an open diagnostic database. I think that’s one of the things we can use the web for. Imagine something that works like Wikipedia, but that’s really a machine processable database of symptoms and diseases; that’s freely available. . Physicians all over the world could construct this by working together.

You can type in any set of symptoms and it will provide a diagnosis. It can probably tell you what the best test available is to differentiate between the possible diagnoses. It could cut down costs and improve access to healthcare. I think it’s a very powerful idea and I hope people will work on it.

 

(24.08)

Rohan: Great! Do you also have a thought that you’d like to share, something that you put on your desk perhaps?

Albert: I don’t believe in quotes that just come and go. I keep this thing on my desk though (a 3D crystal made out of a 3D printer from Shapeways – a USV portfolio company). It is a 3D visualization of the relationships we have on the Internet. It’s shaped like a crystal – that’s something you find in nature. The underlying data comes from a social system. I think it’s a powerful reminder of how lightweight ties can provide powerful interactions – like our little interview here.


Thank you, Albert, for a very thoughtful interview. The 3D object was a favourite view/metaphor you shared!

Real Leaders Team