I spoke at Techcrunch Disrupt yesterday and several media outlets had crews there. I was asked to speak to a few of them and I said yes. I was on CNBC and ABC News yesterday morning. To my knowledge the ABC News clip is not yet up. But CNBC put up three clips that I believe, in their totality, make up my entire appearance. So here they are in order and sorry about the pre-roll videos in front of all three. I looked for a single clip for the entire interview but could not find it.
It’s easy to dismiss ideas after the first attempt fails, but I don’t think we should do that. Instead we should learn from what worked and what didn’t.
I saw the news that the Mayweather fight was watched on Periscope by many people and thought “that was the same thing that used to happen on Justin.tv.” Justin.tv failed, or actually pivoted into a big success, but Justin.tv did not work as a business. I’m not saying Periscope or YouNow (our bet in that sector) will be successful but if they have learned from what worked at Justin.tv and what did not, they will have a better chance of success.
I’m reading Nathaniel Popper‘s excellent history of Bitcoin called Digital Gold (out May 19, available for pre-order) and he goes all the way back to the mid 90s to tell the story of the development of Bitcoin. In 1997, Adam Back invented Hashcash as an early attempt to create a digital currency. It failed as a digital currency in its own right, but later emerged as the proof of work algorithm in Bitcoin.
It’s easy to look at Bitcoin and say “that came out of nowhere”, but the truth is Bitcoin emerged from several decades of work in cryptography, peer to peer networks, and digital currencies. Satoshi had some breakthrough ideas in his white paper, but much of it was inspired by earlier work done by others.
That’s the way it always is. In tech, in literature, in the arts, and in most everything.
Tomorrow, Ron Conway and I are going to kick off Disrupt NY 2015, with a fireside chat with Kim-Mai Cutler. We plan to discuss philanthropy and civic involvement. I’m looking forward to this talk. I think folks in the tech sector need to embrace philanthropy and civic involvement and I look forward to making the case for that.
I’ve been working in the VC business since the mid 80s. And for most of that time, I’ve felt that the tech sector was surprisingly uninterested and uninvolved in things outside of the tech sector. That’s a great strength of the tech sector, it’s is focused on innovation, making things, and building companies. And it does not get distracted by things outside of that realm.
But we know that the things we make and the companies we build have great impact on those outside of the tech sector. It can be for the good, like building cars that don’t use carbon fuels and showing the auto industry that it can be a good business to do that. It can be for the bad, like automating away jobs that once paid the way for a middle class lifestyle.
It feels to me that our economy and our society is now deeply entwined with technology and being significantly impacted by it. If that is true, I believe it is shortsighted to avoid getting engaged in the discussions and debates about what kind of world we need to work toward. I think one way or another the tech sector is going to get pulled into these debates. It will be one thing if that happens thoughtfully and positively and another if the tech sector is pulled into them kicking and screaming.
Regular readers of this blog know that my partners and I have been involved in these discussions since we started USV over a decade ago. We spend our time, energy, and capital in areas like policy debates, philanthropy, and civic engagement. There are others in the tech sector who do the same. Ron Conway comes to mind as someone who has spent a similar amount of time, energy, and capital on this stuff. And I am thrilled to share the stage with him tomorrow as we discuss these issues.
We go on stage at 9:05am eastern tomorrow. I’m hoping the talk will be livestreamed and you can watch it live. If it is, it will be somewhere like here.
The SEP (Software Engineering Pilot) Spring Showcase is today from 10am to 2pm at BRIC in Brooklyn. I’m still in Paris so will miss it but I encourage anyone in NYC to attend. Here’s a video from last year’s showcase so you can see what goes on at the SEP showcase.
Conveniently today’s SEP Spring Showcase is just a short walk from CrossFit South Brooklyn, where “Get Fit or Be Hacking” is happening at today at 2pm. As I blogged about several weeks ago, “Get Fit or Be Hacking” is the coding+fitness competition my friend Rob Underwood organized to raise money for CSNYC. The event is open to the public if you’d like to cheer on the teams. There is also an after-party at Three’s Brewing at 5pm that you’re welcome to stop by — Sean Stern, one of the star CS teachers from the Academy for Software Engineering, will be at Three’s among other friends and advocates for computer science.
If you’d like to support CSNYC and programs like SEP, think about supporting one of the teams competing at Get Fit or Be Hacking by making a donation on the “Get Fit or Be Hacking” fundraising page on Crowdrise. And if you enjoy watching amazing kids do amazing things with code, check out today’s SEP Spring Showcase.
As all of you know, I’m quite interested in how the Apple Watch is doing even though I don’t plan to get one.
So if any of you have one and have thoughts on it, we’d love to hear them in the comments.
1) do in-person product testing sessions to see users interacting with the product and develop an understanding of why users struggle with aspects of the product
2) use the company’s product (really all employees should do this)
I want to echo Albert’s point and suggestions. I feel like the companies we meet with and work with generally do a good job of instrumenting their products and collecting on data on what is working and what is not working. But they often don’t have good answers for why the behavior they are seeing is happening. It’s hard to fix something you know is broken unless you understand why it is broken.
A couple years ago, in early 2013, I started writing a lot about Drones. I have always thought that Drones represent the leading edge of a robotics age. There are a host of reasons for that but the main ones are that they are already being actively used in military and some commercial applications, they require less coordination with the “real world”, and they represent a 10x improvement in cost and speed over things they replace (helicopters and planes).
However, finding an investment in this sector that fits well into our investment thesis has been challenging. We’ve looked at quite a few Drone investments but until recently we have come up empty. However, last month that changed when we closed on a seed investment in Dronebase.
Dronebase is a marketplace for Drone services. This is not a consumer oriented marketplace. This is a business to business oriented marketplace. If you are in the construction industry and want to hire a Drone Service Provider to monitor or survey your job site, Dronebase is for you. If you are in the mining industry and want to hire a Drone Service Provider to measure inventory values in your stockpiles, Dronebase is for you. If you are in the real estate industry and want to hire Drone Service Provider to create aerial imagery for your properties, Dronebase is for you.
Dronebase is standardizing pricing and quality around two basic offerings to start; aerial imagery & video and more data-driven mapping & surveying (including the relevant analysis).
Like all investments, who is doing this is as important as what they are doing. Dronebase was founded by Dan Burton, a former Marine Infantry Officer, who saw the power of Drones firsthand in his time in Iraq and Afghanistan. He came back to the states and worked in a number of interesting jobs, but never lost the fascination for and the interest in Drones. So he started Dronebase to facilitate the commercial adoption of Drones.
This is a seed investment for USV. Dronebase is operating, but only in the Los Angeles market right now. They have big expansion plans which this seed capital will help facilitate. They are looking for software engineers and sales and operations people in the Los Angeles area. If you are interested in working at Dronebase, check out their careers page and apply.
The Gotham Gal and I flew to Paris last night and we arrived this morning. I’ve got meetings here the next few days and then we plan to enjoy Paris with some friends late this week and weekend.
I watched The Social Network on the flight over for the first time. The depiction of VCs in the film and the way the cap table got reconstructed was horrifying to me. I know stuff like that happens but it is not the way we do business nor is it the way many people in the VC and startup sector do business. So it is unfortunate that a popular film about the startup sector revolves around that narrative. It makes for a great story, and possibly is true (I don’t really know) but it does not paint our sector in a particularly good light. Otherwise it was an entertaining film with great performances.
I plan to post at my regular early morning hour so those of you on the west coast might see new posts going up before your bedtime this week.
When a disaster strikes, caring people all over the world seek ways they can help. Usually that means giving funds to a global relief organization like the Red Cross. But in the age of crowdfunding, giving to relief efforts takes on an entirely new flavor. You can see that in action on our portfolio company CrowdRise’s service this morning.
Crowdfunding means you can target your giving with more granularity.
You can give to this family in the US raising money to help their relatives in Nepal, who are now living in a temporary tent and are in desperate need for help.
You can give to this campaign that benefits a local relief effort.
The Gotham Gal and I have given to all of these campaigns and I hope you will consider giving to something as well.
All of the Nepal relief efforts on CrowdRise can be seen here.
On thursday of this past week, I attended a small gathering of academics and policy makers who follow the technology sector. During that gathering, the news came out that the Comcast acquisition of Time Warner Cable was falling apart due to regulatory opposition. The conversation turned to the reasons why this happened.
I surmised that the reason for both the failure of Comcast/Time Warner Cable and the success of the Title II debate several months ago is that regulators and policy makers now understand that markets have two sides and you can’t just look at the consumer facing side of a market.
Comcast was correct in its assertion that they have very little customer overlap with Time Warner Cable and therefore consumers were not being harmed by the consolidation of the two networks. But if you look on the other side of their networks, to the suppliers of applications (Amazon, Google, Facebook, etc) and content (Time Warner, News Corp, Netflix) you see that the consolidation was going to be very harmful. Netflix was going to have one company standing between it and possibly half of its customers in the US. Same with Facebook. And there is no way that was going to be good for them. They may not have come out publicly in opposition to the merger, but you can bet that they came out in opposition privately.
The same is true of Title II regulation of the last mile Internet access. This was not a consumer story either. Very few advocates of “net neutrality rules” believe that this is a consumer issue. Very few have advocated that Internet access prices should be regulated. The debate has always been about the supply side of the market. The side where applications and content live. And the decision to apply Title II regulation to last mile Internet access was essentially a recognition that both sides of a network matter and that it is bad for the economy, society, and innovation to have a network attain enough market power to control what happens on the supply side of a market.
I don’t know enough about communications policy and antitrust policy history to know whether the two sided market construct has played an important role in the past. I think it may well have been an important factor in breakup of AT&T’s monopoly on wired telephony. And I expect there have been other examples as well.
But the one two punch of Title II and Comcast/TWC is a reminder that both sides of a market matter and competition (or the lack thereof) will have an important impact on how these markets function. I am a fan of both decisions and believe that our regulators and policy makers are thinking about this stuff correctly.
My partner Albert gave this TEDx talk earlier this year. Somehow I missed it until this morning when I was looking around YouTube for something to post. I’ve heard Albert articulate all of these ideas for years. He’s influenced my thinking on them greatly and I’ve gone from dismissive, to skeptical, to supportive of experimenting with them. I suspect you will move in that direction too after watching this short (17mins) talk:
I have recently received from several sources word of a new monetary reform proposal. This one, commissioned by the Prime Minister of Iceland, is titled, MONETARY REFORM A BETTER MONETARY SYSTEM FOR ICELAND, and is authored by Frosti Sigurjonsson.
I’ve taken the time to read only the Overview and summary portion, but that is sufficient to discern the crux of the Sigurjonsson proposal, which is this:
The Central Bank will be exclusively responsible for creating the money necessary to support economic growth. Instead of relying on interest rates to influence money creation by banks, the Central Bank can change the money supply directly. Decisions on money creation will be taken by a committee that is independent of government and transparent in its decision-making, as is the current monetary policy committee.
New money, created by the Central Bank, will be transferred to the government and put into circulation in the economy via increased government spending, by reduction in taxes, by repaying public debt or by paying a citizen dividend.
The Central Bank will also be able to create money for lending to banks for onward lending to businesses outside the financial sector.
Sigurjonsson indicates that his proposal draws heavily upon an earlier proposal titled, A Monetary Reform for the Information Age, by Joseph Huber and James Robertson (New Economics Foundation (2001)), which I critiqued early in 2002. That critique, along with subsequent dialog between the authors and myself, can be found at http://reinventingmoney.com/monetary-reform-information-age/.
Since both the Sigurjonsson proposal or the Huber/Robertson proposal advocate the same basic approach, I strongly believe that any serious consideration of either, should also consider my above mentioned earlier critique and subsequent dialog.
While I agree with much of what Huber and Robertson (and presumably, Sigurjonsson) say about the defects in the present money system, I believe that their proposed centralized “solution” does not go nearly far enough in solving those defects. Continuation of the money monopoly in (presumably) different hands does not get to the root of the problem. It is my view that the key to achieving more equitable and sustainable economic interrelationships lies in liberating the exchange process from monopolized money and banking, enabling the creation of competing currencies and credit clearing exchanges, and allowing the needs of traders themselves to determine the supply of exchange media (money) in circulation at any given point in time.
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You know what is fun? It’s fun to show somebody how to do something powerful. It’s fun to give somebody the superpowers you have.
So if you know how to code, it’s really fun to teach kids how to do it.
And if you want to have that kind of fun, you should check out a program called TEALS. I’ve written about TEALS before here at AVC, but in short, you stop by a school on the way to work and teach a first period computer science class in combination with a teacher who works in the school.
There’s a bit more to it than that and if you want to learn more there are two upcoming TEALS information sessions that you can attend in NYC:
This Sunday in Brooklyn:
Sunday, April 26th, 2015
Brooklyn Public Library, Central
10 Grand Army Plaza, Brooklyn
Light lunch provided.
Register thru EventBrite
The Next Day in Manhattan:
Monday, April 27th, 2015
Microsoft 11 Times Square
8th ave, just north of W 41st St
Light dinner provided.
Register thru EventBrite
If you’d like a bit more information before deciding to attend an information session, read this volunteer guide, or watch this video.
One of the areas we are investing in and trying to build a portfolio around is next gen internet access. We have one investment and are close to another. We’d like to build a portfolio of a number of innovative and disruptive approaches to broadband internet access in the next few years.
So any new service that attempts to make internet access easier and better is of interest to me. AVC regular John Revay sent me an email today asking if I’m going to get a Project Fi account. I told him I was thinking about it. Right now it is invite only. I’ve put in a request for an invite and maybe this blog post will help me get to the front of the line.
Here’s what I like about the Project Fi offering:
1) it’s a network of networks. i get to roam on two mobile carrier networks instead of one.
2) it supplements the two carrier networks with over a million “free and verified” wifi hotspots
3) you can get mobile data internationally at the same cost as you pay for it in the US
It’s only available right now on the Nexus6, which happily is what I’m using right now.
So I’m hoping to give it a try as soon as possible. And when I do, I will let you all know how it goes.
I had lunch with Milton Pappas yesterday. Milton and his partners at Euclid Partners taught me the venture capital business in the mid/late 80s. We got to talking about mentors and I asked him who taught him the venture capital business. He told me General Georges Doriot of American Research and Development taught him a lot in the late 60s and early 70s. Milton and his partner Bliss McCrum started Euclid in 1971.
As we were talking about biotech, an area Milton loves and invested heavily in, he told me that he ran into so many people in that sector who were brilliant but could not communicate what they were working on simply and crisply. He returned to Doriot and told me that the General had advised him that “I don’t care how brilliant an entrepreneur is, I won’t back them if they can’t explain themselves simply and in a manner everyone can understand.”
That rings true to me. It is not enough to understand something that others don’t understand. At some point you have to convince people that what you are doing is important and they should join your company, buy from your company, invest in your company, and write about your company. I like to call this “dumbing things down” but it doesn’t have to involve simplification (although that is one way to do it). It could also involve creating effective analogies, describing a future state where the technology is in mass use, or some other technique that makes something complex easy to understand.
One of the essential techniques in bringing technology to market is simplification. Dumb things down. It’s super important.
This post is self serving to some degree as USV is an investor in eShares. But in the world of VC and startups there isn’t much that is more broken than cap table management. eShares fixes that by putting the entire cap table online and allowing your company to issue new shares and options directly from the platform. It’s kind of like writing checks directly from your accounting system. Everything gets recorded and there are no missing stock certs or broken promises.
I explained this to one of our portfolio companies last fall around the time we made our investment in eShares. One of the co-founders replied via email “we don’t need that, our cap table is all in a single spreadsheet.” A month or two later, as we were doing a round of financing, when the lawyers were doing their diligence, it came out that our cap table spreadsheet was missing some shares that had been issued but not recorded. I had a good laugh at that because it is always the case that something is not recorded. A perfect cap table is very rare, unless you are using a tool like eShares.
The VCs and angel investors aren’t hurt so much by this because our investments are large and mistakes made on our shares are easily caught. Employees are the ones who have the most to gain from eShares because they are the ones whose issuances are most often missed or not properly recorded on a cap table and these mistakes can go on for a long time before being caught. This causes issues in terms of exercise price changes and tax issues for the employee.
If you are starting a company, do yourself a favor and start building your cap table day one on eShares. If you have been managing your cap table in a spreadsheet for years and are tired of doing it that way, talk to eShares. They will help you “port” your cap table to their system. That’s part of the onboarding service they provide. And then you can start issuing shares the way you’d imagine it would be done in 2015. The way most companies is doing it is circa 1900. I’m serious about that.
If you want to learn more about eShares, contact them here.
The 2014 numbers for the VC category are out and it was a huge year, almost $50bn in total VC funding.
But look at the numbers for “deals” vs the numbers for “dollars”.
In 2014, there were 4,356 deals vs 4,193 deals in 2013, an increase of 3.8% year over year.
In 2014, VCs invested $48.3bn, compared to $29.9bn in 2013, an increase of 61.5%.
Basically, the average deal size went from $7mm in 2013 to $11mm in 2014. But averages don’t really tell the whole story.
What is going on is that the late stage market is going crazy. There was a $100mm+ deal on average every month in 2014 and the late stage market made up 1/3 of all deals.
VCs are all about what is happening now and are not focusing as much on what will happen in five to ten years (the seed/early stage markets).
None of this should be news to those who are paying close attention. Round sizes have gone up and burn rates have gone up, but so much of this is limited to a hundred or a couple hundred companies. The rest of the market is more or less where it has been for years. The rich are getting richer. The middle class is stagnant. And the people who can’t raise a round still can’t. Only the top end of the market has really changed over the past five years.
Kind of like the entire economy, isn’t it?
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We need to get beyond the confusions and obfuscations that surround the concept of money.
To do that we need to distinguish between what money is, i.e., its essence, and what money does, i.e., its functions. Conventional definitions of money, the ones that are universally taught in schools and universities, tell what money is supposed to do, not what it is.
The essence of money is credit. It is the issuer’s i.o.u. or promise to reciprocate, i.e. to provide real value to the market and accept his currency back as payment for it.
With that in mind, we can begin to make sense of money and effectively address the problems that arise from conventional forms of money.
Conventional thinking lists money as having these functions:
- Medium of exchange—what we use to pay one another.
- Store of value—what we use to save our temporary surplus.
- Measure of value—what we use to quantify the market value of all the things that we buy and sell.
But, as I have argued for almost 30 years, these are separate and distinct functions that need to handled by distinct and different means. (For more about that see my book, Money and Debt: A Solution to the Global Crisis, Part III).
Let’s focus on the exchange function, for this is the fundamental and proper role of money, and this is where attempts to solve our global financial and economic problems must begin. Anyone who has studied my work will know that I have thoroughly articulated these concepts in my books and my various presentations. But theory and practice develop together, each informing the other, and finding ways to improve the process requires that we look at both.
Over the past several decades, numerous innovations in the exchange function have emerged, including virtual commodities like Bitcoin, LETS systems, community currencies, and commercial trade (“barter”) exchanges.
Of these, the greatest market success has been achieved by commercial trade exchanges which enable their member businesses to buy and sell without using conventional money. Rather, trading is enabled by using the members’ own credit in a process called credit clearing which simply offsets debits from purchases against credits from sales. (For a more complete description of how this works, see my book, The End of Money and the Future of Civilization, especially Chapter 10).
Over the past 40 years, much has been learned from the operation of commercial trade exchanges, and while they have achieved some modest levels of success, they have barely scratched the surface of the potential market for credit clearing services. It remains for exchanges system designs and procedures to be optimized and standardized and for local exchanges to be networked together into a vast moneyless marketplace.
The trade exchange industry has two trade associations that have been instrumental in helping practitioners to share information and in promoting standards and best practices. These are the International Reciprocal Trade Association (IRTA) and the National Association of Trade Exchanges (NATE). But over the past year a new voice, Bartertown Radio, has emerged that seeks to disseminate the knowledge and wisdom of practitioners to a wider audience. Its mission is to provide an “Educational Program for Business Owners, Entrepreneurs, Barter Exchanges, Owners or New Owners of Barter Exchanges or anyone interested in Alternative Economies.”
Broadcasts are archived and can be accessed on demand at the Bartertown Radio website. Particularly relevant is the April 18 broadcast featuring Richard Logie, a man with 20 years of experience as a trade exchange operator and software platform developer. During that interview, Richard shared his experience and knowledge about a wide range of topics including the factors he considers in allocating credit lines to exchange members, how tax issues are dealt with, and ongoing efforts to establish and enforce good standards of operation. That interview with Richard will be continued next Saturday, April 25 at 11 AM Eastern time (UTC-5). Be sure to tune in at http://www.blogtalkradio.com/educate4barter/2015/04/25/richard-logie-part-2 .
Other archived broadcasts that may be of particular interest are the April 5 interview with industry leader, Harold Rice of the American Exchange Network, and the interview with yours truly from December 13, 2014. Besides operating his own trade exchange company for almost 40 years, Harold Rice has provided consulting services for entrepreneurs and other exchange operators. He is a fount of knowledge about the details of exchange operation and has special expertise in accounting and tax issues.
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So I got an email from a reporter on Friday. The note said “…. some emails from you to various Sony executives were part of the collection released on Wikileaks. I’m working on an article for [ ] about some of them—how they depict a behind-the-scenes look at Silicon Valley dealmaking. And I plan to include a few where you’re either the sender or recipient.”
If you are looking for a clever way to do a phishing attack, this would be it because I clicked on that link as fast as one can possibly do so. Fortunately the email was mostly tame, about the Gotham Gal and I looking for a ride to a conference from LA on someone’s plane. I didn’t insult anyone and no confidential information was revealed. Phew.
I replied to the reporter that I appreciated the heads up and I had nothing other than that to say.
If you want to look at all of my emails in the Wikileaks email dump, you can see them here.
This is the future for all of us, as I’ve stated more than a few times on this blog. When writing emails, assume they are going to end up on a site like this. Because they will. I’ve been changing my email behavior over the past few years and this latest incident has caused me to be even more cryptic. I think the vast majority of my emails will start looking like “my cell phone is [ ]. i’m free at [ ]. give me a call to discuss”