Holden & NetSquared

Holden is wicked smart. He and I both spent part of our lives living in Boston, so we both know that “wicked” is the most appropriate adjective with which to describe his intelligence. Holden attended Harvard University, where his senior thesis was entitled [Sean: Embargoed until Friday, sorry] (ergo, don’t expect me to win an argument with him). He currently works at one of the world’s largest hedge funds. His firm doesn’t hire anything but the smartest people in the world.

When I first wrote about Holden’s GiveWell project, I was essentially putting my chips down on an unknown commodity. But what I saw in GiveWell was an intolerance for the status quo, the intellectual capital needed to challenge the current reality, and the willingness to risk everything. I backed him strongly even though he was openly mocking Network for Good, one of the most widely respected projects of the new web based philanthropy initiatives. When an NTEN blogger said that Holden “sucked”, I explained how important I thought his work was. I invited Holden to enter his project in NetSquared.

If you are even vaguely aware of this year’s NetSquared Conference, you’re aware that Holden is really frustrated with how things played out. And you’re aware that I think NetSquared, even though it hasn’t actually occurred yet, is already a success. I think that the difference between my view of NetSquared and Holden’s view really boils down to how we benchmark events. I benchmark events against reality as it exists today and Holden benchmarks it against the reality he wishes existed. Neither approach is better or worse than the other, but they lead to dramatically different worldviews.

I think that NetSquared is already a success because they did something completely new and the thing they did (assist small, widely disbursed change agents co-create the social sector that they seek to support) is a key step in my concept of The Second Great Wave of Philanthropy. Within my worldview, the fact that NetSquared sought 40 nominees, and got 152, sought 500 or so votes, and got 3,700+ is proof enough of success. Against a backdrop of a reality where money flows from large philanthropic entities to social change agents without the input or even awareness of the “crowd”, NetSquared is already a success.

But Holden benchmarks the world against the reality of which he dreams. To him, the fact that NetSquared’s voting process was flawed (and I agree to some extent) destroys any and all measurement of NetSquared’s value. To him, NetSquared needed to have picked the 20 best projects in a rigorous, transparent process that involved hours and hours of committed, informed discussion amongst the electorate. Never mind that this was the first example of an open, user generated content, user voted upon, social enterprise capital funding event. If the process wasn’t as good as it could have been, the event was a disaster by any measure.

Look, let me be frank. I think NetSquared is one of the most exciting events and THE most intriguing community working towards social good. But it’s not perfect. Not even one of the projects that I voted for made the finals. There is room for improvement in the voting process for next year. But to me, the voting process is minor compared to the cultural significance of the NetSquared event.

I’m not the only one to note that something special is going on at NetSquared. Cisco Systems, Yahoo, Microsoft, Symantec, the W.K. Kellogg Foundation, and the Surdna Foundation have all ponyed up their support (as has my own firm, Ensemble Capital Management). The list of Advocates includes… [I started typing out the All-Stars on the list and it was too long. You can find them all here. Just know they include names like: Ford Foundation, Case Foundation, Network for Good, Charles Stewart Mott Foundation, Jed Emerson, The William and Flora Hewlett Foundation…]

The ironic thing about this whole debate is that Holden’s project is all about transparency. NetSquared is all about letting “the people” decide what projects should be funded. Both of them area fighting to challenge the closed arena within which philanthropy operates today. I think Holden should be publicly supporting NetSquared and privately letting the powers that be know how he thinks it should be changed next time. I find the core concept of GiveWell to be powerful enough that I have generally ignored the various faults I see in the details. But that’s not Holden’s approach to the world. That’s OK. Fringe players like Holden are actually the real change agents. Remember the quote I published two weeks ago?

“I have always felt that the action most worth watching is not at the center of things but where edges meet. I like shorelines, weather fronts, international borders. There are interesting frictions and incongruities in those places.”

Anne Fadiman
The Spirit Catches You and You Fall Down

We need people like Holden shouting at the wind and telling us we should be more than we think we can be. The fact is GiveWell should be at NetSquared. But that’s OK. Holden is going to do just fine on his own.


  1. Holden says:

    I did NOT call NetSquared a failure. I am in agreement with Daniel Ben-Horin that it is “the first step on a long journey.”

    I have no idea why you think I have called it in a failure. You can look anywhere on the web, at anything I’ve written, and you will not find this anywhere. You will find me calling it an “exciting idea” on my blog. You will find the first paragraph of my getting-notorious “Frustrations” post filled with praise for the idea and the preliminary signs.

    What I object to is calling it a success. A success, to me, does NOT mean something that is “perfectly executed” or “as good as it could be.” It means something that has a good OUTCOME – i.e., the purpose for which the project was started has been accomplished to at least some degree. NetSquared was started to promote great projects. That hasn’t happened yet. It may, with or without perfect execution, but it hasn’t happened yet. As for democracy, the extent to which this poll serves as an example of what democracy can do, vs. an example of where it falls short, is still under debate … but when you guys started calling it a “watershed,” we literally didn’t even have a result to look at yet.

    When I look at my favorite charities, I don’t think they’re as good as they could be … but I have seen enough evidence that they improve people’s lives to call them “great.” When I look at Bill Gates’s decision to attack the world’s biggest problems, I don’t think he’s doing it as well as he can (for example, he could be more transparent), but I would definitely call the establishment of his foundation a “watershed event” because it has changed the way people think about charity – where “changed the way they think” is a result, separate from and beyond “was a good idea.”

    What I’m insisting on here is not that “success” means “perfection,” but that it means “results.” What I’m harping on is not the chasm between what is and what could be, but the chasm between idea and outcome. What I advocate is not that we call NetSquared a “failure,” but that we wait and see what happens before making any grand declarations. That isn’t a product of my idealism – quite the opposite, it’s a product of my realism, and my personal experience that words, plans, and ideas are cheap, and execution and results are a whole different ballgame.

  2. Holden says:

    Cliffs Notes:

    NetSquared is exciting and cool, but it is not yet a success.

    I would say the same of GiveWell.

    The difference between “cool idea” and “success” is not semantic or trivial. To be overly general for a moment, it’s a difference that I think the for-profit sector recognizes way better than the nonprofit sector.