(Founder Stories) Fred Wilson Explains Why He Wouldn’t Invest In Groupon Or Pandora

Few VCs have a hotter hand right now than Fred Wilson. His firm, Union Square Ventures, is an investor in Twitter, Zynga, Foursquare, Tumblr, Etsy, Clickable, and more . In this episode of Founder Stories , he talks to host Chris Dixon about Union Square's investment thesis has changed from going after all web apps to companies that are "building a large networks of engaged users." (Watch the video above). It has to be be both a large network and engaged users. By that requirement, he says he wouldn't invest in Pandora (which just f iled for an IPO yesterday, although this was taped a couple weeks ago) because Pandora listeners just sit back. The users aren't doing anything in Pandora," he says, "even though Pandora is a great company." Similarly, he wouldn't invest in Groupon. Not because he thinks it's a bad business, it's just not his area of focus. "Groupon is an ad network," he says, "we wouldn't invest in that." Within ecommerce, he feels that marketplaces (like Etsy) do fall under his definition, but things like Diapers.com or Zappos would not. Wilson also mentions some companies that got away which he wishes he had invested in: AirBnB and Bump , which he lost to Sequoia.