Jul 11, 2016 · 26m · 20vc
20VC: USV's Albert Wenger on Automation Replacing Humans, The Universal Basic Income and The Instalment & The Deployment Phase
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The 20 Minute VC, host Harry Stebbings interviews Union Square Ventures partner Albert Wenger on USV's deployment-focused investment framework, market dynamics, and network effects. Wenger also makes a compelling case for Universal Basic Income and open technology standards as necessary adaptations to widespread software automation.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 23.9% of the talking time here. How this is scored →
Harry as informed peer 3.5 Guest teaching 4.3 Guest disagreement 1.1 Harry pushing back 2.1
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 19:09 Reframing work vs paid labor
Albert firmly rejects the common premise that humans will not run out of things to do, dissecting the confusion between passionate activity and paid market labor.
Hardest push from Harry ▶ 18:45 Keynesian workweek counterargumentHarry actively challenges Albert's thesis on automation freeing labor by pointing out Keynes' failed 1930 prediction of a 15-hour workweek.
Biggest teaching moment ▶ 5:09 Carlotta Perez cycle breakdownAlbert educates the audience and host on Carlotta Perez's economic frameworks, explaining how speculative financial bubbles in installation phases pave the way for real utility in deployment phases.
Harry holds his own ▶ 10:39 Highlighting portfolio contradictionHarry demonstrates strong preparation by questioning whether Albert's critique of dominant network effects hypocritically contradicts USV's own foundational investments.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Albert Wenger's Path into Venture Capital | 1 | 1 | 0 | 0 | Harry welcomes Albert and asks a straightforward open-ended question about his career path into venture capital. Albert answers in a friendly, conversational manner detailing his early operating experience and transition to USV. | |
| Understanding Installation vs. Deployment Phases | 4 | 5 | 0 | 0 | Harry introduces Carlotta Perez's technological deployment framework. Albert provides a detailed educational breakdown of the installation phase versus deployment phase, using historical examples like railroads and current tech like VR and self-driving cars. | |
| Managing Risk and Returns in Frothy Investment Environments | 3 | 5 | 2 | 2 | Harry pushes on when frothy markets turn into irrational exuberance. Albert reframes the question by distinguishing macro-societal benefits of capital deployment from individual venture returns, using 3D printing as a case study. | |
| The Double-Edged Sword of Network Effects | 6 | 5 | 2 | 6 | Harry directly challenges Albert by asking whether limiting network effects contradicts USV's own investments in massive network platforms like Twitter and Tumblr. Albert acknowledges the inherent tension between venture returns and broader societal impact. | |
| Building Contestable Markets Through APIs | 3 | 5 | 1 | 1 | Harry prompts a discussion on contestable markets. Albert details how reducing switching costs via open APIs creates contestability, referencing the legal battle between Google and Oracle. | |
| The Case for Universal Basic Income in an Automated World | 2 | 5 | 1 | 1 | Harry invites Albert to explain his advocacy for Universal Basic Income. Albert delivers an extended thesis on how UBI establishes an economic baseline, using historical agricultural automation to show how technology frees labor for knowledge creation. | |
| Re-evaluating Labor, Passion, and Keynesian Workweek Predictions | 7 | 6 | 3 | 7 | Harry challenges Albert's automation perspective by citing John Maynard Keynes's incorrect 1930 prediction of a 15-hour workweek. Albert counters by clarifying the crucial distinction between passionate, unpaid human effort and paid labor. | |
| Quickfire Round | 2 | 2 | 0 | 0 | Harry guides Albert through a rapid succession of quickfire questions covering books, board governance, and recent investments. The tone is light and completely cooperative. |
Statements from this episode (18)
Wenger had multiple failed attempts entering VC before joining USV
“I first tried to start a venture capital arm for Telebank, and then Telebank got acquired by E-Trade, and then I started my own incubator with very bad timing at the sort of height of the bubble, just before the bubble burst, and then I tried to start a ventur…”
Wenger angel invested in Tumblr and Etsy before bringing them to USV
“Started making some angel investments, some of which became USV investments, and some of which were USV investments, so it's an angel in Tumblr, and it's an angel in Etsy, and I brought that deal to Union Square Ventures”
USV focuses investments on the technology deployment phase rather than installation
“The bulk of our investment Investing tends to be in the deployment phase, which is the phase of all the things that become possible once you have the infrastructure of the new technology installed.”
Wenger: VR and AR are still in the installation phase in 2016
“We are in the installation phase for VR and AR. You know, people are pouring lots of money into Both handset headsets, displays, other periphery software tooling and distribution but we are, it's not yet broadly deployed, and so it's not yet that there's an in…”
Wenger: Speculative tech bubbles benefit society by rapidly funding foundational infrastructure
“These sort of frothiness in the installation phase is good from a social perspective, because it means that A lot of capital is allocated very rapidly to a sector, and then subsequently you can build interesting things on top of that.”
Wenger predicts only a small number of self-driving car companies will survive
“If you think about self-driving cars, how many self-driving car companies will there ultimately be? It's probably not a large number, and so if you're in the installation phase, you know, you have to get very lucky to pick the winner, and then even within pick…”
Wenger: Dominant incumbents have stifled innovation in search and social media
“I think, you know, we've seen less innovation than we would probably like in the search space. I think we're seeing less innovation than we might like in the social space. And that's one of the effects of having A incumbent that has very, enjoys very strong ne…”
Wenger: Google's re-implementation of the Java API created healthy market competition
“In that regard, it's very positive that in the Oracle versus Google lawsuit about the definition of Java it was made pretty clear that the API wasn't as protectable as Oracle claimed it was. And it's a good thing because as we've seen, you know, Google re-impl…”
Wenger: Anti-scraping laws reduce market competition by legally blocking custom APIs
“One is we could, by law, require companies to have proper APIs and the other would simply be to empower end users more to construct their own APIs, and at the moment, however, most of the laws run the other way, which is if you're trying to hack together your …”
Wenger: Universal Basic Income is essential to unlock future economic innovation
“The basic income, which is the idea of everybody getting enough money to be able to cover basic needs such as food, clothing, shelter I believe is what's necessary to make people free economic actors in the labor market, and I think that's essential for innova…”
Wenger: Service automation will shift human work toward knowledge and caretaking
“And now I think we can automate a lot of, not just industrial production, but also a lot of services whether that's shopping services or insurance services or transportation services. We can now automate those and that will free us up to participate more in kn…”
Wenger: UBI raises manual labor costs and forces automation of dirty jobs
“And one of the criticisms that people raise is, well, who will do these sort of dirty jobs? And I think the answer to that is it means that the price that has to get paid for somebody to say clean bathrooms will go up. And that's a good thing because when the …”
Wenger: Cultural and intellectual inertia is the biggest barrier to UBI
“I think the biggest challenge to getting to basic income is purely a intellectual and cultural challenge that has to do with Having constructed a system for over a hundred years or so, or several generations that, you know, has a specific perception of how the…”
Wenger: Passionate pursuits will remain infinite, but paid labor will not
“No, absolutely. We will never run out of things to do. We'll never run out of things that we will pursue passionately, but that's very different from being able to get paid for it.”
Wenger: Smartphone owners subsidize extended compute power for centralized tech platforms
“On mobile, it's a lot less clear, because on mobile, you're downloading these apps that are controlled by the companies, and you're downloading them onto a phone, where nominally you control the But because you don't control the apps, you're really, by buying …”
Wenger refuses to use an iPhone due to Apple's centralized gatekeeping
“My primary phone is, is not an Apple phone because I think that the idea that I could have a supercomputer in my pocket that's connected to the entire world through the internet, and in order to install software on it, I really have to go through a single comp…”
Wenger: A board member's top duty is helping founders recognize personal weaknesses
“I think the best board member is somebody who can help the team be the best team that it can be. That has many aspects to it, but one of the crucial aspects to that is helping founders and the management team, but especially founders and CEOs, understand what …”
USV backed Clue because smartphones will outscale traditional birth control access
“Invested in a company called Clue, based in Berlin, an app that lets women track their health and their fertility, and said yes because there are more women in the world who will have smartphones than have access to traditional birth control, and there's a hug…”