Blog articles

Video Of The Week: The Nitty Gritty Podcast

A VC - 17 hours 50 min ago

Bond Street, a startup company that makes small business loans, has started a podcast to tell stories about small business entrepreneurs and the companies they create and run. They call it the Nitty Gritty Podcast.

The first episode features an entrepreneur who is also a friend of ours, Gabe Stulman.

Gabe is a restaurant operator in the west village of Manhattan, where we live. We started our relationship with Gabe as regulars at his first restaurant and we have gone on to be investors in all of his current restaurants, as well as good friends with him.

Here is Gabe’s story. It’s a good one.

Categories: Blog articles

Funding Friday: Three Noteworthy Projects

A VC - April 29, 2016 - 4:15am

It’s funding friday again. Here are three projects I thought you all should know about.

Black Medicine Iced Coffee – This is an equity raise on CircleUp for a new iced coffee brand. Not only does the product look great but you can get a $1.3mm pre-money valuation for a product that did over $300k in sales last year and is growing rapidly.

Black Medicine

To learn more about this equity crowdfunding opportunity, visit the Black Medicine CircleUp page.

 

Blue Sky Lab – This is a charitable crowdfunding project on Crowdrise. Xibei Li is running a marathon at the North Pole to raise money for a non-profit that works on reducing urban pollution in China.

Blue Sky Lab

To learn more about this fundraise, visit the Blue Sky Lab Crowdrise page.

 

In Search Of Truth – This is a Kickstarter project in which the creator, an artist named Hank Willis Thomas, proposes to take his “Truth Booth” to all 50 states in the US.

Truth Booth

To learn more about this project, visit the In Search Of Truth Kickstarter page.

Categories: Blog articles

The “Losing Jobs To China” Discussion

A VC - April 28, 2016 - 5:04am

I am bothered by the ongoing discussion about how the US has allowed China (and other lower cost countries) take our manufacturing jobs. That is true, of course. But it does not address the larger context which is that manufacturing is becoming more and more automated and many of these jobs will not exist at all anywhere in a few more decades.

We are now well into a transition from an industrial economy to an information economy. It seems to me that part of that transition was the move of industrial jobs to lower and lower cost regions in an ongoing march to reduce costs. But that march may end with massive automation and very little labor in the manufacturing process. That means that these low cost regions that “stole our jobs” will also lose these jobs eventually.

The US and a number of other countries around the world are building new information based economies. That is the long term winning strategy.

So while we can critique our leaders (business and political) for giving up on the manufacturing sector a bit too early, I think the US has largely played this game correctly and will be much better off than the parts of the world that have taken the low cost manufacturing jobs from us.

But we don’t hear any of our political leaders explaining this. I wish they would.

Categories: Blog articles

The New Boss

A VC - April 27, 2016 - 4:39am

I got an email from a friend who is starting a CEO job. He said to me “I’d love any thoughts or advice you have as a new CEO joining a company.”

I have reached out to a number of CEOs I know who have taken over companies recently and am compiling a list of suggestions.

But given the number of great CEOs in the AVC community, I would be remiss if I didn’t pose this question to all of you as well.

What are the one or two pieces of advice you would give a friend who is taking over as CEO of a new company?

I suspect this is going to be a great comment thread.

Categories: Blog articles

Generally Accepted Accounting Standards (GAAP)

A VC - April 26, 2016 - 4:43am

I understand and appreciate the need for rigorous accounting standards and I appreciate that our financial system and our capital markets in the US enforce the use of generally accepted accounting standards (GAAP) for the reporting of company financial information. Without standards rigorously applied, investors would not be able to understand what is going on in the companies. That would be awful.

But when I read Gretchen Morgenson’s recent article in the New York Times accusing companies of “spinning losses into profits” my eyes rolled.

The truth is the the accountants who run the accounting standards have forced companies into reporting their financials in a certain way that neither the companies nor the sophisticated investors who own many of these companies’ shares believe accurately represents the financial condition of the reporting companies.  Gretchen quotes this stat in her piece:

According to a recent study in The Analyst’s Accounting Observer, 90 percent of companies in the Standard & Poor’s 500-stock index reported non-GAAP results last year, up from 72 percent in 2009.

That sure feels like the market speaking. When 90% of your customers order the scrambled eggs differently than you normally serve them that tells you something.

My pet issue is stock based compensation. When a company issues options to an employee, accounting standards require that the option be valued (usually by a formula called Black Scholes) and expensed over the vesting period. That sounds reasonable. But the truth is that that option may end up being worth nothing. Or it may end up being worth 10x the value that it was expensed at. By taking out the stock based comp expenses and reporting an “adjusted EBITDA” number that does not include it, companies are giving investors an idea of what the earnings power of the company is without this theoretical expense. And that stock based compensation expense is a non-cash expense meaning that even though it theoretically costs the company something, it is not paid in cash but in dilution of the total number of shares outstanding.

This is not a cut and dried issue. Different investors will approach it differently depending on whether they care about cash flow, long term dilution, or something else. But the accountants who control the accounting standards board require a certain way of presenting these numbers and that is that.

So investors and the reporting companies offer other ways of looking at these accounting issues. That is not bad. That is not spinning. That is transparency and it is good.

Categories: Blog articles

Bitcoin, Blockchain Technology, and Crypto-Currency

Beyond Money - April 25, 2016 - 11:40am

There has been lots of chatter lately about bitcoin, blockchain technology, and crypto-currency. Everyone, including me, is trying to wrap their head around it all. This is what I’ve come up with so far:

  1. Bitcoin is a virtual commodity that is created by running some obscure algorithm. The people who get rewarded are the “miners” who burn up enormous amounts of computer time and electricity to create Bitcoin. That makes it akin to mining gold or silver—not a very useful pursuit, and like any commodity, people will prefer to use it as a savings medium or hedge against inflation rather than circulating it as a currency. Bitcoin is NOT the answer to the money problem.
  2. The important thing about blockchain technology is what it can do, what functions it can perform. You hear a lot about “smart contracts” and a secure trail of transactions. It seems to be something that is needed when using digital forms of contracts and transactions conducted over the internet, but provides no new functions compared to what has always been done with paper trails and records, but maybe I’m missing something.
  3. The term “crypto-currency” is ill defined and there is much confusion about the characteristics of such a currency and what it can achieve.
  4. The fundamental principles of reciprocal exchange still hold. The substance of a currency or payment medium is CREDIT. Claims still need to be authenticated and promises need to be guaranteed.

My grand, audacious vision is this:

TO ENABLE ANYONE, ANYWHERE TO USE WHAT THEY HAVE TO PAY FOR WHAT THEY WANT.

What they might have is skills, abilities, products, services and credit that is advanced by a circle of people who know them and trust that they are ready, willing, and able to deliver value on demand in the near term.

I have argued that the truly disruptive technology of exchange is a global network of small credit-clearing circles that provide “a means of payment that is locally based and controlled yet globally useful. It makes money and banks, as we’ve known them, obsolete.

My talk in Malaysia in October at the International Forum on Inclusive Wealth (http://ifiw.my/) will be on that topic and will build upon the framework that I laid out in my book chapter, https://beyondmoney.net/excerpts/chapter-17-complete-web-based-trading-platform/. –t.h.g.

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Categories: Blog articles

Help Teach A High School Computer Science Class

A VC - April 25, 2016 - 3:39am

I have written about TEALS here many times. TEALS is a program where software engineers volunteer and support high school teachers who have limited or no computer science background so that their schools can offer computer science, and eventually continue the program without volunteer support. In its third year in NYC, TEALS supports 20 teachers in 19 high schools in Manhattan, Brooklyn, The Bronx and Queens. Last year, 7 NYC TEALS teachers reached “hand off,” a milestone indicating they can continue teaching independently or with diminished support. To learn more about TEALS, visit their website.

If you are interested in doing this next year (Sep 16-Jun 17), you can attend an info session. The next one is in Brooklyn on Wednesday, May 11th:

Brooklyn, NY:
May 11th, 2016 6:30 – 8:30pm
Williamsburg Preparatory High School
257 North 6th Street (Brooklyn)
REGISTER HERE

Many AVC readers have done this over the last three years. And I’ve heard from many of them that it is a very rewarding way to give back and help build a more diverse pipeline of software engineering talent here in NYC. I hope you will consider doing it this year.

Categories: Blog articles

An AI First World

A VC - April 24, 2016 - 4:25am

Sundar Pichai said this last week on Alphabet’s earnings call:

In the long run, I think we will evolve in computing from a mobile-first to an AI-first world

That statement got a lot of pickup and attention and deservedly so.

It explains how the CEO of one of the most important tech companies thinks about where tech is heading and where his company is heading.

What does an AI first world look like?

It was easier to think about a mobile first world. That’s a smartphone centric computing environment. That is very much where we are right now.

Does an AI first world suggest we will move beyond carrying around devices? Does it suggest that computing moves into the ether and is just there when we need it “on demand”? Does it suggest that voice will emerge as the primary user interface?

I do believe AI is the most important next big thing and have been saying that here and publicly for the past few years.

I am running into AI technology more and more in my daily life. It feels like this AI first world is arriving. That’s big.

Categories: Blog articles

Video Of The Week: The Cast Of Hamilton Remembers Prince

A VC - April 23, 2016 - 7:57am

We lost one of my favorite musical artists this week. We’ve been listening to Prince non-stop for a couple days now to remember him.

I really enjoyed watching the cast of Hamilton celebrate his life and music.

Categories: Blog articles

Fun Friday: What To Do With Your DNA Information

A VC - April 22, 2016 - 5:22am

I got my 23andme DNA report back this week. I shared it with my family (parents, siblings, wife, children) and participated in the “DNA Relatives” program that shows me likely relatives who have done 23andme. I found the information that came back to me from this sharing to be really interesting and potentially quite valuable.

I had lunch yesterday with a friend who I am not going to name to respect his privacy who spent many years trying to find his mother and finally tracked her down using public DNA records. It was an incredibly moving story and I am still thinking about it today. Stories like his make me feel that we ought to be more public with our DNA so that matches like his can be made. The DNA match he made was not to his mother. It was to his aunt, who then got him to his mother.

Obviously there are reasons not to be public with your DNA. The one most commonly mentioned is potential impacts on life insurance.

I started a Twitter poll to see how my Twitter followers feel about this issue. Feel free to participate in it and let’s talk about this issue today in the comments.

If/when you get your DNA sequenced, would you …..

— Fred Wilson (@fredwilson) April 22, 2016

Categories: Blog articles

Don’t Kick The Can Down The Road

A VC - April 21, 2016 - 3:32am

I’ve been using this term a lot lately – “don’t kick the can down the road”. There is always a desire to push the hard decisions out. I find myself urging entrepreneurs and CEOs to make that hard call today and take the poison and move on. It’s hard for leaders to make this choice largely because of fear of the other things that will come along with that hard decision.

Bill Gurley, who I find myself agreeing with as much or more than anyone else in the VC business, has a fantastic post up about the danger of the “structured financings” that are increasingly common in the later stage VC market today. In it, he says:

Many Unicorn founders and CEOs have never experienced a difficult fundraising environment — they have only known success. Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees. Their own ego is also a factor – will a down round signal weakness?  It might be hard to imagine the level of fear and anxiety that can creep into a formerly confident mind in a transitional moment like this.

This is so true. I have sat in and on countless meetings and phone calls with leaders who are afraid that the whole thing that they just spent three, four, five years (or more) building will come crashing down because they take a down round. I have been through dozens of down rounds in my career. At least thirty and maybe fifty if I really took the time to count them all. They are no different than a public company’s stock price taking a big hit. It is painful to be sure. Some people will leave but they are either weak in the knees or were half way out the door anyway. But I have never seen a down round destroy a company. And I have seen many down rounds save a company.

Another place where leaders tend to want to kick the can down the road is with talented but difficult employees. They cannot bring themselves to remove the person who is providing a ton of individual contribution but is also poisoning the culture. A founder of one of our portfolio companies once told our entire USV CEO group the following story. I am not saying who because I don’t want to expose him to any issues.

We had an engineer who was the most talented and productive engineer on our entire team. But he was also incredibly difficult to work with and everyone disliked him. We couldn’t let him go because we were fearful of creating a “hole” in our organization. Finally, the complaints got so loud that we were sure we were going to start losing people over him. So we did what we were afraid to do and let him go. And we did just fine without him. The morale of the story is you are better having a hole in your organization than an asshole.

Man I just love that one. It is so true and everyone who hears it shakes their head and chuckles and groans at the same time.

There are certainly many more examples of where leaders take the easy way out and defer a difficult decision because of fear of the consequences. My message to all of you out there is “don’t do that”. Kicking the can down the road is more harmful than helpful. Take the pain today and fix your issues and deal with the consequences. You will be better off for it and so will your company.

Categories: Blog articles

A NSFW Content Recognition Model

A VC - April 20, 2016 - 5:19am

Last week our portfolio company Clarifai released a NSFW adult content recognition model.

If you run a web or mobile service that allows users to upload images and videos and are struggling with how to police for NSFW content, you should check it out.

Ryan Compton, the data scientist at Clarifai who built this NSFW model, blogged about the problem of nudity detection to illustrate how training modern convolutional neural networks (convnets) differs from research done in the past.

We are excited about the possibilities that modern neural networks open up for entrepreneurs, developers, and scientists. Our investment in Clarifai is based on our belief that AI/machine learning/neural networks/etc have reached the point of mainstream adoption and usability. And we are seeing more and more use cases for this technology every day.

Solving the problems of content moderators and trust and safety teams at scale, as we discussed here at AVC this past weekend, seems like a particularly good use of this technology.

Categories: Blog articles

Voting

A VC - April 19, 2016 - 7:43am

It’s primary day in NYC today. I got up early and voted.

My daughter sent me this photo. She voted too.

I Voted

Walking around NYC this morning, I saw a lot of people wearing those stickers.

I like the idea of showing pride in an act of civic responsibility.

We can complain about the options, the rhetoric, the process, the corrupt system, and we should work to change all of that. Voting is a good way to do that.

Categories: Blog articles

Newsletter—Spring 2016

Beyond Money - April 18, 2016 - 11:07am

Upcoming AgendaIMG_5014

Europe. I’ve booked my flight to Europe. I’ll be landing in Milan, Italy on 31 May, will remain there for 2 or 3 days, then travel onward to Athens, Volos, and Pelion.

As I mentioned in my January newsletter, I will be conducting a weeklong course in innovative finance, exchange, and economics from 24 June thru 1 July at the Alexandros campus of the Kaliklos Holistic Summer School. This collaborative and problem-centered course titled, Exchange and Finance for the New Economy: Principles and Practice, is intended to stimulate the development and deployment of community currencies, moneyless exchange system, and equitable finance, and is designed especially for social entrepreneurs, enthusiastic agents of change, government officials, and serious students who are ready to co-create a new sustainable and convivial economy from the bottom up. Besides learning and co-creation, courses at Kalikalos also provide participants with opportunities for community building, personal growth, and recreation.

I am excited to be returning again this year to Greece and to be working with course participants to achieve some truly revolutionary outcomes. We’d be pleased to have you join us.

Details about the course, fees, and booking are at http://www.kalikalos.org/exchange-finance. One or two bursaries may be available to qualified low income participants.

Greek participants are being offered (1) a discount of 33% on the full course, or (2) for those who are able to participate only on the weekend of 25/26 June, an invitation to do so on the basis of a free will offering.

Malaysia. I’ve accepted an invitation to speak in October at the International Forum on Inclusive Wealth (http://www.ifiw.my/) in Kuala Lumpur, Malaysia. The subject of my presentation will be a revolutionary plan for the creation of a global exchange network based on locally controlled credit clearing exchanges. This will be an elaboration of ideas I first laid out in a chapter of my 2009 book, The End of Money and the Future of Civilization.

_____________________________________________________

The Panama Papers: The secrets of dirty money

The rich and powerful have for a very long time used shell companies and secret numbered bank accounts in tax haven countries to not only avoid taxes, but to hide their gains from illegal and immoral activities. Now, thanks to yet another courageous whistleblower, the general public is getting a glimpse into this world of hidden wealth and malfeasance.

The so-called Panama Papers that have recently been disclosed by the media were first delivered by an anonymous whistleblower about a year ago. Since then additional documents have been provided and the trove of data now consists of 11.5 million documents that total 2.6 terabytes of digital files. This leak is said to be a bigger bombshell than even Edward Snowden’s revelations of U.S. government’s spying on citizens and allies.

It will take a long time to sift through all that material but a few startling revelations have recently been made. I have to wonder though, why it has taken so long for any of the contents to be reported in the mainstream media, and why the initial focus has been on Russia, Iceland, and FIFA? Why have we not heard about names of any Americans turning up in these documents? Surely we have more than our share of crooks in the USA, the greatest of all tax havens. MSNBC has something to say about that, which you might want to read. I wonder, might something in these documents have implications for the 2016 Presidential election? Hey, you journalists, let’s get cracking on that.

If you wish to dig deeper into this matter, a good place to start is on the website of Süddeutsche Zeitung, http://panamapapers.sueddeutsche.de/en/.

_____________________________________________________

Geopolitics—Why was Qaddafi murdered?

The US-NATO attacks on Libya and the overthrow of its government is by now old news, but very few people are aware of the real reasons behind the intervention. Ellen Brown, in a recent article, Exposing the Libyan Agenda: A Closer Look at Hillary’s Email, has done a good job of exposing the real agenda in Libya, and to the rest of the world for that matter. She concludes, “violent intervention was not chiefly about the security of the people. It was about the security of global banking, money and oil.” The fact is that anyone who is perceived to be a threat to the dominance of the global money and banking regime will be ridiculed, discredited, or eliminated.

_____________________________________________________

Living in Community

As I grow old(er) I’m feeling the need to be a bit more settled than I’ve been in recent years. Although I’m in pretty good health and still independent, my nomadic lifestyle is becoming more difficult. I’m seeking to connect with others of like mind to invent new ways of aging together and supporting each others’ independence and whatever good work we still hope to accomplish. To that end I recently posted an ad on the Fellowship for Intentional Communities website. Here’s what I said:

We are seeking to organize a group of independent seniors (and maybe a younger or two) who are still actively engaged and working in various ways to make a better world. We don’t like, or cannot afford retirement homes. We think a better way is to cooperate and share in a cooperative household where we can have the privacy we need while working together and providing each other with companionship and support.

The community might be located anywhere but our focus right now is on Tucson and southern Arizona which offers a delightful climate, a relatively low cost of living, and all the amenities that one might desire. Large houses in this area can be leased for quite reasonable rents.

If you have any interest, please let me know at thgreco@mindspring.com.

Spring flowers and fragrant blossoms refresh my spirit, I hope they do the same for you,

Thomas


Categories: Blog articles

The New Entertainment Un-Bundlers

A VC - April 18, 2016 - 6:47am

Last month I wrote a post called “The New Entertainment Bundlers” in which I talked about the emerging group of companies that are bundling subscription entertainment (and other services) into an offering that makes it easier and less expensive for consumers to acquire streaming entertainment services.

But something has happened on the way to the forum. Amazon has decided to unbundle its streaming video service and sell it in the US for $8.99/month. Amazon’s Prime service remains a massive player and bundler of entertainment in the market but the decision to unbundle video suggests that bundlers like Amazon and YouTube will also unbundle and compete on multiple dimensions. That makes sense.

Of course, it remains to be seen if a bundler like Amazon will allow another bundler, like Verizon or AT&T, to bundle their unbundled services. From a consumer perspective, that would be best. The more options and the more competition in the market, the better for consumers. It’s nice to see the market evolving in that direction.

Categories: Blog articles

Community Moderation

A VC - April 17, 2016 - 4:57am

The Verge has an incredible post up about “content moderation.”

I have always felt that the hardest part of running an Internet business was insuring the trust and safety of the users and I am thrilled to see some light being shone on this part of the business.

There is always so much talk about the product and engineering parts of the business and so little about the extremely difficult work that goes into policing the product. And yet when you look at churn, so much of it in a scale Internet business is a result of users running out of patience with spam, trolling, and worse. This comment by Dick Costolo from the piece is telling:

“We lose core user after core user by not addressing simple trolling issues that they face every day, We’re going to start kicking these people off right and left and making sure that when they issue their ridiculous attacks, nobody hears them.” 

Well as the post points out, that is not so simple. And, of course, there are free speech issues too. I constantly hear people criticizing Twitter for blocking users.

But trolling, as bad as it is, is not the worst part of this work.

A trust and safety team has to deal with the most awful kinds of people and actions imaginable. I often suggest that everyone should sit in a trust and safety organization for a week. Then a lot of the conversations we have about free speech, privacy, and the like would get a lot more nuanced. There are bad people out there doing bad stuff.

Sadly, as I have seen again and again, startups don’t understand how challenging these problems are going to be until some sort of situation forces them to react. Then they throw people at the problem but never their precious “engineering resources.” When trust and safety, fraud, compliance, and moderation teams start getting their own engineering resources, something that often takes years to happen, then you know the company is finally acknowledging the importance and seriousness of the work.

The people profiled in this Verge story are heroes in my book. They do hard work, are not paid as much as they should be, and they are working in incredibly difficult and dangerous (for their mental health) situations. It is high time we start acknowledging them and their work and investing in it.

Categories: Blog articles

Video Of The Week: Kobe’s Last Game

A VC - April 16, 2016 - 6:33am

Steph Curry is the future of the NBA, but Kobe Bryant was the best player in the league for most of the past twenty years and the way he went out this past Wednesday was pretty special.

If you are an NBA fan and haven’t seen it, take five minutes out of your weekend and watch this highlight reel.

The most amazing part is he had to hit two free throws at the end to make 60 and I am sure he was feeling the pressure of needing to make them. He did.

Enjoy.

Categories: Blog articles

Feature Friday: Fingerprint Phone Access

A VC - April 15, 2016 - 4:23am

One of the things that I was sad about losing as I moved from iPhone to the Nexus 6P was the ability to unlock my phone with my thumb.

But it turns out that the Nexus 6P also has fingerprint phone access. It’s not a thumb on the home button, it’s your index finger on the upper back of the device.

So I’ve been using the Nexus 6P for about a week now and I have to say that the index finger on the back of the phone is in many ways a more natural place for the fingerprint scan. It’s easier when you have the phone in your hand than reaching over with your thumb.

There are a few situations where the back of the phone is less desirable, most notably when the phone is lying on a table. And I haven’t yet purchased a case for my phone but I wonder if the Nexus 6P cases have an opening for the fingerprint scan. I would hope they do.

If your phone doesn’t have a fingerprint scan device for unlocking your phone and your high security apps, then you should really get one that does and check it out. It’s a great feature.

Categories: Blog articles

Forevery and Dropbox

A VC - April 14, 2016 - 5:45am

I blogged about our portfolio company Clarifai‘s Forevery app a while back.

Forevery is an iOS app that lets you search your photo library and do a bunch of other cool things.

One feature I really wanted was Dropbox integration. I back up all my smartphone photos to Dropbox and have been doing that for years. But searching for the one that I want has been really hard.

Now with Forevery’s Dropbox integration it is drop dead simple.

Here’s the blog post from the Forevery team explaining how this works.

If you want to download and try Forevery, you can do that here.

Categories: Blog articles

Conversation with General Keith Alexander

A VC - April 13, 2016 - 4:07am

I follow Emily Chang’s Studio 1.0 podcast on SoundCloud. It’s very good.

She recently sat down with Former NSA Director General Keith Alexander to discuss privacy vs. security and why there needs to be more collaboration between Washington and Silicon Valley in the on-going encryption debate.

I enjoyed the conversation and you may too.

Categories: Blog articles
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