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Fred Wilson: It's 'Absurd' To Expect Users To Pay For Facebook, Twitter

The Huffington Post   First Posted: 04/29/11 03:36 PM ET Updated: 06/29/11 06:12 AM ET

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Venture capitalist Fred Wilson of Union Square Ventures, known for its investments in startups such as Twitter, Foursquare, and Kickstarter, among others, took a strong stand on the ways Internet companies could monetize their platforms--and couldn't.

During a panel at the Guardian's Activate conference in New York, Wilson argued that most online companies could support themselves entirely on advertising and that it would be unthinkable for social media companies to ask their users to pay.

For services like Facebook and Twitter where the user "provides all the value," it's "absurd to expect users to pay. They're the ones creating value," said Wilson. "To ask them to pay is the most ridiculous assertion ever."

He noted that he asked his son, an avid Facebook user, whether he'd still use the social networking site if it started charging. Wilson said his son answered he'd be "gone in a minute."

When it comes to monetizing websites that offer content and services for free, Wilson touted the potential for ads to sustain their business.

"I reject the assertion that it can't all be done with advertising," Wilson said, adding that the television and radio industry were all "free" and ad-supported, a remark that was contested by others on the panel, who pointed out that cable subscribers pay for access to TV channels.

Wilson also highlighted Google co-founders Larry Page and Sergey Brin as exemplars for how entrepreneurs should work to safeguard company culture in the face of IPOs. Ahead of Google's IPO, Page and Brin notoriously wrote a letter to potential investors warning them that Google "is not a conventional company" and "we do not intend to become one." As Steven Levy wrote in In The Plex, Page and Brin were asked by the SEC to "revise or delete" statements in their "Owner's Manual" about their intent to have a "greater positive impact on the world," and "[make] the world a better place," and more. The Googlers refused.

"That's the right attitude," explained Wilson, noting that companies often lose the distinctive culture that helps them to be successful once they've gone public. "That's the only way to run a public company."

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