Blog articles

The Management Rights Letter

A VC - January 21, 2020 - 6:52am

A friend asked me over the weekend “why do VCs ask for a management rights letter when they make an investment?”

A management rights letter is a short agreement between a company and an investor to allow them certain “management rights.” These are typically the ability to attend board meetings, the ability to have access to financial reports on a regular basis, and the ability to advise and consult with the management of the company.

While it is nice to have these “rights”, the need for this letter actually has very little to do with how venture capital firms want to work with a portfolio company.

The existence of these letters has everything to do with where the venture capital firms get their funds from. If a VC firm has pension fund investors who are subject to ERISA regulations (as USV does), then they need to be a “venture capital operating company (VCOC)”. And one of the best ways to make sure you are considered a VCOC is to have management rights letters for all (or most) of your investments.

This post on Startup Lawyer explains it well:

Venture funds request these rights in order to obtain an exemption from regulations under the Employee Retirement Income Security Act of 1974. Absent an exemption, if a pension plan subject to ERISA is a limited partner in a venture fund, then all of the venture fund’s assets are subject to regulations that require the venture fund assets to be held in trust, prohibit certain transactions and place fiduciary duties on fund managers. However, a “venture capital operating company” is not deemed to hold ERISA plan assets. To qualify as a VCOC, a venture fund must have at least 50% of its assets invested in venture capital investments. In order to qualify as a venture capital investment, the venture fund must receive certain management rights that give the fund the right to participate substantially in, or substantially influence the conduct of, the management of the portfolio company. In addition to obtaining management rights, the fund is also required to actually exercise its management rights with respect to one or more of its portfolio companies every year.

http://www.startupcompanylawyer.com/2007/12/03/what-is-a-management-rights-letter/

So as annoying as these letters are, it really doesn’t make a lot of sense to try to negotiate away these agreements as the venture capital firm that is asking for it really does need these rights in order to be in business with their limited partners.


USV TEAM POSTS:

Albert Wenger — Jan 20, 2020
More on Facial Recognition Regulation

Nick Grossman — Jan 17, 2020
Digital Bearer Assets

Bethany Crystal — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

Peak Decade

A VC - January 20, 2020 - 9:53am

I read this post on Bloomberg about a theme this week at Davos (never been) about the 2020s being a “Peak Decade”:

  • Peak Globalization (tighter borders in the coming years)
  • Peak Capitalism (the emergence of “stakeholder capitalism”)
  • Peak Inequality (the rich getting poorer, relatively)
  • Peak Youth (an aging world population)
  • Peak Climate Change (I sure hope so)
  • Peak Oil (I sure hope so)
  • Peak Cars (I sure hope so)
  • Peak Central Banks (go crypto!!!)

Even if some (most?) of these predictions are wrong, the very fact that leaders at the highest levels of business and government are having this conversation is encouraging.

We are leaving the industrial age behind and moving into the knowledge age and we need to leave some things behind as we make that transition. My partner Albert’s book is a good read if you want to dig deeper on this topic.


USV TEAM POSTS:

Albert Wenger — Jan 20, 2020
More on Facial Recognition Regulation

Nick Grossman — Jan 17, 2020
Digital Bearer Assets

Bethany Crystal — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

New Year’s Newsletter — January 2020

Beyond Money - January 18, 2020 - 10:46am

cool art8

The dirty secret of capitalism — and a new way forward
In this TED talk, billionaire businessman, Nick Hanauer debunks the assumptions of neo-liberal economics and shines light on the path toward a new economics that promotes a more sustainable, Hanauer_biz_tedtalks_0517prosperous and equitable society. Hanauer argues that neoliberal economic theory has sold itself to us as “unchangeable natural law, when in fact it’s social norms and constructed narratives, based on pseudo science.” He says that “If we want a new economics all we have to do is choose to have it.” Watch it here.

Of course, implementing that choice depends on “we” having enough power to tilt the political landscape back toward something closer to level. I continue to argue that E. C. Riegel had it right when he said:

We have not even made a beginning in democracy by merely putting at the westPointAdjdisposal of man an occasional ballot to choose who should he his governor under a system that is inherently paternalistic and autocratic. Man must have untrammeled command of a daily – an hourly ballot which he casts in the market place to support the things and services he desires and which he withholds from others and which he transmits to the state or denies it according as it merits his patronage. He must have the power to create this money ballot in a measure commensurate with his power to produce and serve his fellow man without hindrance from his servant, the state. The moment we limit or thwart or bias this money power, which is natural to man, and the very criterion of his sovereignty, we pervert democracy beyond the power of any political ballot or any parliament to remedy. Money power cannot be separated from democratic power without miscarriage and ensuing frustration – political and economic. Democracy implies the sovereignty of man; and, since man cannot be sovereign without the money power, there cannot be democracy under the political money system.

Until, through the assertion of his money power, man can requisition from industry all he produces, and put government under his direct patronage, human aspirations will be unattainable.
— From Private Enterprise Money.

How to assert our “money power” has been the substance of my work for more than 40 years. See my books, articles, presentations and interviews at my website, https://beyondmoney.net
__________________________________
Presidential Debate
I took a pass on watching the January 14 Presidential debate which pitted Bernie against five establishment candidates in what was a predictably bland rehash that Tulsiwas limited in scope. I chose instead to watch the discussion between Tulsi Gabbard, Dennis Kucinich, Lawrence Lessig, and Stephen Kinzer which was live streamed on YouTube. The discussion focused on the key policy issue, the US interventionist foreign policy, and the fact that most Senators and Representatives of both parties in Congress are beholden to the military-industrial [and banking] complex, and are complicit in the immoral, illegal, and wasteful pursuit of global domination. If you missed it you can still see it at https://tulsi.to/discussion.
__________________________________
All Wars Are Bankers’ Wars
Anyone who wishes to be well informed and understand civilization’s present predicament would do well to watch this video. I may not agree with all the specific details but the basic story is correct and well documented, and congruent with my argument that the global interest-based, debt-money regime that centralizes power and concentrates wealth is the primary obstacle to social justice, economic equity and peaceful relations among people and nations, and indeed, an existential threat to civilization itself. View it here.

Wishing all a happy, productive, and peaceful year,
Thomas H. Greco, Jr.

Categories: Blog articles

Funding Friday: The Thinker Lamp

A VC - January 17, 2020 - 8:21am

I love this project and backed it instantly when a friend showed it to me last week.


USV TEAM POSTS:

Albert Wenger — Jan 20, 2020
More on Facial Recognition Regulation

Nick Grossman — Jan 17, 2020
Digital Bearer Assets

Bethany Crystal — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

USV’s Climate Thesis

A VC - January 16, 2020 - 7:35am

My partner Albert wrote a bit about how USV is investing in the climate/sustainability sector today.

The high-level summary is “not very differently than we have and are investing in other sectors”. At USV, we like certain businesss models, go to market approaches, and product types and that won’t change as we add climate/sustainability to our focus areas of wellness, knowledge, and capital.

Albert’s post mentions the two investments in climate/sustainability that we have made so far and they will look familiar to those who have followed USV’s investments to date.

Leap is an API for connecting smart devices to the energy markets. Kind of like Twilio, Stripe, etc for markets like demand response and more.

Wren is a community and funding platform for carbon sequestration and more, using offsets as the incentive for consumers. Kind of like Kickstarter, GoFundMe, etc for getting carbon out of our environment.

I am excited about this extension of our thesis 3.0 and have been working with the USV team to identify appropriate sectors of this market for us and interesting companies to meet and, possibly, invest in.


USV TEAM POSTS:

Albert Wenger — Jan 20, 2020
More on Facial Recognition Regulation

Nick Grossman — Jan 17, 2020
Digital Bearer Assets

Bethany Crystal — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

The Crucible Of Leadership

A VC - January 15, 2020 - 8:19am

Yesterday evening, the Gotham Gal and I went to see Jerry Colonna do a reading from his recent book, Reboot: Leadership and the Art of Growing Up.

As we were standing around chatting waiting for Jerry to go on and start reading, Jerry mentioned that he once wrote a guest post for AVC. So I went back and read it this morning.

It is great and I am reposting it for all of you to read this morning.

—————————————————-

The Crucible of Leadership

Work is difficulty and drama, a high-stakes game in which our identity, our self-esteem, and our ability to provide are mixed inside us in volatile, sometimes explosive ways…Work is where we can make ourselves; work is where we can break ourselves. David WhyteCrossing The Unknown Sea: Work as a Pilgrimage of Identity.

Fred started this series inspired by Bijan who urged folks to “invest in your team, help them become better managers.” The topic, said Fred with his flair for understatement, “is very important.” Over the weeks, different people looked at the process of building the capacity to actually lead—putting the team in place, scaling people, everyone argued may be the hardest part of building the company.

To me, the hardest part of scaling people is learning to lead your self.

The Crucible

They often come to me, their coach, because they don’t have any place else to put the feelings. They’ll sit on my couch, or pace while they talk on the phone, pausing as we grapple with issue after issue after issue. The common denominator is always people. When I first take on a client I warn that I don’t have a magic wand. Nevertheless their wish for some elixir to mend their relationships is heart-breakingly visceral.

When they start, they often think the hardest part is figuring out what to do but they’re inevitably knocked on their ass by the task of leading.  And when they make mistakes–when they fail to lead–their identity, self-esteem, and ability to provide—as David Whyte notes–sometimes explode.

We all too often break ourselves in the work of becoming a CEO, a manager, a leader.

The only answer, the only balm against the inevitable existential pain of becoming the leader we were born to be is to see the lessons implicit in the practice of becoming.

“In the course of studying how geeks and geezers became leaders,” writes Warren Bennis in the introduction to his classic, On Becoming a Leader, “…I discovered that their leadership always emerged after some rite of passage, often a stressful one. We call the experience that produces leaders a crucible…the crucible is an essential element of the process of becoming a leader…Some magic takes place in the crucible of leadership…The individual brings certain attributes into the crucible and emerges with new, improved leadership skills. Whatever is thrown at them, leaders emerge from their crucibles stronger and unbroken.”

The magic, the alchemy, occurs when what we do mixes with who we are and is cooked by the heat of what we believe.

Take as an example a client I worked with intensely over the last few weeks. She and a co-founder have been killing each other (okay, I have a flair for the overstatement…still, they have both been getting sick with a host of ailments—migraines and stomach problems). The arguments had gotten so bad that neither could stand to be in the same room with the other. Even I was exasperated. During one late night call, I asked my client to forget, for a moment, whether her co-founder was right or wrong. “I don’t care who’s right,” I said with my voice rising. “The only thing we have to focus on is what are you supposed to be learning from this.”

There was a long silence. I thought, “Okay. You’ve really pushed her too far. You and your woo-woo ‘lessons in the pain’ crap.” But then: alchemy. She opened up. “This is really shameful to admit,” she began, “but I know I’m a pain in the ass because I have to be right, all the time. I know it’s wrong but I can’t stop myself.”

And with that we had something to work with. I pressed her: Given this tendency, what do you really believe? What values do you hold? What kind of company do you want to build? And what kind of adult do you want to be?

Over the next few weeks, on guard for her need to be right, we carefully went to work changing her approach to the co-founder. For her, the crucible moment came in facing her shame, acknowledging who she really has been and as a result she got to choose how she wanted to manage and who she wanted to be.

We forge our truest identity by facing our fears, our prejudices, our passions, and the source of our aggression.

The Buddhists teach that for the steadfast warrior to emerge, we’ve got to break open our hearts to what is.

Eat Me If You Wish

“One day,” begins a story re-told by Aura Glaser in the latest issue of Tricycle Magazine, “[the Buddhist saint] Milarepa left his cave to gather firewood, and when he returned he found that his cave had been taken over by demons. There were demons everywhere! His first thought upon seeing them was, ‘I have got to get rid of them!’ He lunges toward them, chasing after them, trying forcefully to get them out of his cave. But the demons are completely unfazed. In fact, the more he chases them, the more comfortable and settled-in they seem to be. Realizing that his efforts to run them out have failed miserably, Milarepa opts for a new approach and decides to teach them the dharma.

“If chasing them out won’t work, then maybe hearing the teachings will change their minds and get them to go. So he takes his seat and begins… After a while he looks around and realizes all the demons are still there…At this point Milarepa lets out a deep breath of surrender, knowing now that these demons will not be manipulated into leaving and that maybe he has something to learn from them. He looks deeply into the eyes of each demon and bows, saying, ‘It looks like we’re going to be here together. I open myself to whatever you have to teach me.’

“In that moment all the demons but one disappear. One huge and especially fierce demon, with flaring nostrils and dripping fangs, is still there. So Milarepa lets go even further. Stepping over to the largest demon, he offers himself completely, holding nothing back. ‘Eat me if you wish.’ He places his head in the demon’s mouth, and at that moment the largest demon bows low and dissolves into space.”

Surrendering to the demons that torment your organization does not mean abdicating your responsibilities to manage. You are still responsible for dealing with the reality of what is. In some cases, the demon is the wrong vision for the company. In others, it might be that you’ve hired the wrong people. In still others, it might be your own failings—like an inability to admit that you’re wrong.

But in all cases, allowing your self to be eaten by the demon that remains—acknowledging the ways you contribute to the problem without descending into pointless self-flagellation–adds to the heat beneath the crucible. Without heat, there is no alchemy.

On Becoming Your Self

When I was a young Padawan, I remember lamenting to my therapist about my own fears as a manager. After a series of infuriating questions, she got me to admit that I was trapped by my own beliefs about success. I finally admitted I would never be satisfied until I was as successful as Bill Gates.

Being myself was never good enough and, as a result, being comfortable in my own leadership was impossible.

“If you bring forth what is in you, what you bring forth will save you. If you do not bring forth what is in you, what you do not bring forth will destroy you.”  Jesus, Gospel of Thomas

It was only later, after allowing myself to bring forth what is in me, that I emerged not only as a leader but a Jedi master.

Joel Spolsky, in his guest post for this series, tackled what I hear all too often in my workshops. He takes the Steve Jobs Question head on.

He writes:

“And yes, you’re right, Steve Jobs…was a dictatorial, autocratic asshole who ruled by fiat and fear.” But, importantly, he points out “you are not Steve Jobs.” Just like I am not Bill Gates.

Indeed, I think what Jesus taught was a simple truth: the only choice that doesn’t destroy you is to be the leader you were born to be. The alchemy of becoming your self is the ultimate act of leadership.

Listen close enough and you’ll hear echoes of this from every conceivable source.

Phil Sugar, tells us who he is and what he believes in the simple statement that, “My biggest legacy is the network of people I’ve hired and what they’ve gone on to do.”

Matt Blumberg, having gone through his own crucible challenged conventional wisdom (and the advice of Fred), choosing instead to invest in his team. “We consistently work at improving our management skills,” he notes adding that, “We learn from the successes and failures of others whenever possible.”

JLM writes:

“Develop a philosophy of management. Write it down. Try it out on some folks whose wisdom you admire. Put it to work…” and, my favorite, “Live it.”

I read in all these thoughts a steady, consistent wisdom: the wisdom of knowing yourself, your own beliefs, and living them.

Enduring the alchemical crucible requires developing the capacity to reflect, to turn the pain of the everyday life as a leader into lessons. Every wisdom tradition I’ve ever encountered—from Fred’s blog to the words of sages—ultimately demands the same thing: we must go inward.

That’s often the biggest obstacle to becoming your self. The frenzied, frenetic, do-it-now, answer-the-email-now-or-the-company-will-die-even-though-it’s-3 a.m. attitude is precisely the wrong process of becoming your self.

Joseph Campbell, writing in The Power of Myth, says,  “You must have a room, or a certain hour or so a day, where you don’t know what was in the newspapers that morning…a place where you can simply experience and bring forth what you are and what you might be.”

Call that room, at that hour, the crucible of leadership.


USV TEAM POSTS:

Albert Wenger — Jan 20, 2020
More on Facial Recognition Regulation

Nick Grossman — Jan 17, 2020
Digital Bearer Assets

Bethany Crystal — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

The AVC Daily Email

A VC - January 14, 2020 - 9:46am

Most of you read AVC via email.

Today, all of you will see a refresh of the look and feel of the daily email to match the refresh we did to the website last week.

I want to thank Phil Hollows of Feedblitz who made this happen for all of us. And Kirk Love who created the new look and feel and helped a bit with the email work too.

A few stats: There are about 29,000 email subscribers to AVC. The daily open rate hovers around 40%. So roughly 12,000 people a day read AVC via email. That compares to an average day when about 6,000 people stop by the website and several thousand more who subscribe to and read the RSS feed on a daily basis.

I hope you all enjoy the new look and feel.


USV TEAM POSTS:

Albert Wenger — Jan 20, 2020
More on Facial Recognition Regulation

Nick Grossman — Jan 17, 2020
Digital Bearer Assets

Bethany Crystal — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

Marketing

A VC - January 13, 2020 - 6:57am

I used this title for possibly the most regrettable blog post I have written on AVC back in 2011.

My friend Alex’s post on the topic this weekend has made me revisit my thoughts on the subject of marketing.

Alex starts off his post with this assertion:

2019 was the year when VCs and startup founders soured on paid acquisition.

I am not sure if that is true, but if it is, it suggests a dramatic change in the startup playbook.

Back in 2011, I wrote:

He said “every company needs a marketing budget.” It seemed like a strong reply but in truth not one of our top performing companies had a marketing budget in their initial business plan.

That is certainly no longer true. The 2010s were a decade in which startups mastered marketing and channels like Facebook and Instagram emerged to satisfy their demand.

But what if that game is over? What if that well has gone dry?

Alex suggests we have to go back to virality and customer to customer marketing in his post.

I think we are more likely headed to something new and I am not entirely sure what that is.

And the Google/Facebook/Instagram well has not exactly “gone dry”. But it sure feels like steady-state to me now. It is a must-do but you can’t beat the competition there anymore because everyone is there.

So here we are. At the cusp of something new because we need it. Now we need to figure out what it is.


USV TEAM POSTS:

Albert Wenger — Jan 20, 2020
More on Facial Recognition Regulation

Nick Grossman — Jan 17, 2020
Digital Bearer Assets

Bethany Crystal — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

Funding Friday: Make 100

A VC - January 10, 2020 - 6:55am

Kickstarter kicks off the new year with a campaign called Make 100. The idea is to stimulate a lot of smaller projects where the creator makes 100 of something.

It’s a hodgepodge of creativity in the best sense of the word. Here are the current crop of Make 100 projects live on Kickstarter.

I just went and backed a bunch of them. It’s so much fun.

My favorite is this project where the creator, JJ Chuan, is going to make 100 city maps out of old cassette tapes. I just love that.


USV TEAM POSTS:

Albert Wenger — Jan 20, 2020
More on Facial Recognition Regulation

Nick Grossman — Jan 17, 2020
Digital Bearer Assets

Bethany Crystal — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

AVC 3.0

A VC - January 9, 2020 - 2:14pm

Welcome to the new AVC. This is the third “iteration” of this blog.

The first iteration (AVC 1.0) was the Typepad era during which I redesigned AVC a number of times using Typepad’s tools. That lasted from September 2003 to February 2014.

About six years ago, we moved AVC to WordPress and did a significant redesign (AVC 2.0) and very little has changed since then.

AVC 2.0 had a nice long run and served its purpose very well. 

But for most of the last year, I have wanted to make a number of changes to AVC:

1/ I wanted to move to a new host. I have been struggling to maintain the hosting infrastructure by myself and that has resulted in a number of outages, some only visible to me, some visible to all of you. 

2/ I wanted to get a professional developer team involved that I can rely on from time to time to help me with technical issues.

3/ I wanted to improve search so that we can all find those old blog posts that we know exist but are no longer on the front page.

4/ I wanted to move to a more minimalist design where the blog posts are the main thing you notice when you come here.

5/ I wanted to find a way to continue to allow discussions without having to manage/maintain/moderate a full-blown comment community.

I am happy to report that I was able to do all of that with AVC 3.0:

1/ AVC is now running on Siteground. We continue to use Cloudflare for security and caching. We now use AWS for backups of the WordPress data.

2/ AVC is now supported by Storyware who will help me manage the hosting infrastructure and will be available to make tweaks to the UI when/if necessary.

3/ AVC search now runs on Algolia which will allow me to tweak and improve search relevancy over time to make it easier to find older blog posts.

4/ AVC has a sleek new design, made by Kirk Love, which is minimalist and copy centric.

5/ Comments are gone, replaced by a very cool WordPress/Twitter plugin developed by my colleague Nick Grossman which was built on top of this existing WordPress plugin.

Those are the big changes. Many things remain the same.

1/ You can continue to subscribe to AVC by email and RSS. We continue to use Feedblitz and Feedburner, respectively, to power that.

2/ We continue to maintain an archive of old blog posts by date and category and a specific archive for MBA Mondays.

3/ We continue to show full blog posts on the front page in reverse chronological order.

4/ We continue to run the USV Team Posts widget so you can see what my colleagues at USV are blogging about.

There are two important changes that I would like to talk about a bit more.

I have typically blogged every day, including weekends. I tend to post audio or video on Saturdays and write a regular blog post on Sundays. I am going to move to optional blogging on the weekends. I will sometimes write on Sundays and I will sometimes post audio or video on Saturdays. But I will not commit to doing that every weekend. I have already started to do this and some of you may have noticed it. You will notice this change in the About page.

AVC has always had comments. Initially on Typepad’s comment system. Then powered by Disqus, a former USV portfolio company. Disqus is a fantastic product, built and maintained by a terrific group of people. It is the best commenting system in the market by a very long shot. But managing, maintaining, and moderating a comment community is something that you must actively work on. I have done that assisted voluntarily by a number of AVC regulars, most notably William Mougayar, and also Shana Carp. I very much appreciate all the work they have done on this over the years. But I have tired of the work and I imagine that they have too.

So we have moved to hosting the discussions of AVC blog posts on Twitter. You will see two buttons at the bottom of a post. The first button allows anyone to easily post a comment as a reply to the @AVC tweet announcing a new blog post. The second button will allow you to see the entire comment thread on Twitter. 

Kirk initially suggested this approach of using Twitter to host discussions to me. My colleague Nick developed the functionality and it has been running on his blog for a few weeks now. He built it on top of this existing WordPress to Twitter plugin.  The “Discuss On Twitter” functionality is now running on USV.com in addition to Nick’s blog and AVC.

I think Twitter is a fantastic place to host discussions and I hope that other bloggers that use WordPress will adopt Nick’s plugin. And I plan to show this plugin to Jack and others at Twitter in the hopes that they will adopt it and make this a feature of Twitter than can run on all blogging platforms.

I hope you like AVC 3.0 as much as I do. And I hope that you will continue to get as much value out of it as I do.


USV TEAM POSTS:

Albert Wenger — Jan 20, 2020
More on Facial Recognition Regulation

Nick Grossman — Jan 17, 2020
Digital Bearer Assets

Bethany Crystal — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

What Is Going On With AVC? (continued)

A VC - January 8, 2020 - 6:52am

I have received a bunch of questions from AVC regulars about this temporary design and what is going on with AVC.

As I wrote in the first post in this series :), a couple of files in my WordPress configuration got deleted during the year-end holidays, messing up the look and feel of AVC pretty badly.

At the same time, I have been working with Kirk Love (a longtime friend) and a WordPress design firm called Storyware to design and build an entirely new AVC.

I am pleased to let all of you know that this shiny new AVC will launch tomorrow with a blog post from me talking about the new design and what we are trying to do with it.


USV TEAM POSTS:

Albert Wenger — Jan 20, 2020
More on Facial Recognition Regulation

Nick Grossman — Jan 17, 2020
Digital Bearer Assets

Bethany Crystal — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

Mass Transit In LA

A VC - January 7, 2020 - 12:52pm

This is the sixth winter we have spent in Los Angeles. One of the things I have had the hardest time getting used to about life in LA is all of the driving.

But starting last year, I found myself using the LA Metro system a bunch. The catalyst was going to Lakers and Clippers games at the Staples Center. I just could not stomach sitting for up to 90 minutes in traffic to attend a basketball game. Instead I would hop on the Expo line in Santa Monica and arrive at the Staples Center 35-40mins later. On the way home, I would grab a ride with a friend or Uber or some combination of both as traffic heading west at 10pm is almost non-existent.

But then I suggested to The Gotham Gal that we Metro it downtown for dinner and Uber it home. We did that once or twice.

This winter, I have already taken the Metro half a dozen times and I am writing this post on the Metro as I’m taking it to Pasadena from Santa Monica today.

The Metro is not as convenient as the NYC Subway. There are fewer lines, six in total, and I still need to drive to get to it from our house.

But being able to read, work, text with my children, and whatever else I might want to do instead of driving, is fantastic and makes LA a bit more like NYC for me. Which is a good thing in my book.


USV TEAM POSTS:

Nick Grossman — Jan 17, 2020
Digital Bearer Assets

Bethany Crystal — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Albert Wenger — Jan 16, 2020
USV and the Climate Crisis

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

Turning It Off Vs Dialing It Down

A VC - January 6, 2020 - 9:27am

Today is one of those days when everyone gets back to work after a time off. This holiday break was a particularly long one given that Christmas and New Years came in the middle of the week. So many of us are getting back to work after a particularly long break.

I am a huge believer in down time. I think everyone needs a break to step away from work and rest a bit. I also believe that time away from work clears the head and reveals things that are not always clear in the thick of things.

But I have struggled over the years between the choice of turning everything off vs dialing things down.

It is hard to get real rest and a clear head that comes with new insights if you don’t turn everything off and really disengage.

But coming back from time off when you truly disengaged is harder. There are more emails to answer, more people waiting at your door for answers, and so on and so forth.

I tend to dial it down when I take time off. I try to stay on top of important emails, memos, decks, presentations, scheduling efforts, and the like. I can usually keep that to an hour a day in the morning and another hour at the end of the day.

That makes days like today, when everyone gets back to business, a bit easier for me.

It does come at a cost as I don’t truly disengage, but I have found it to work better for me over the years. That said, I appreciate it when colleagues and others take the opposite approach and really disengage. There is real value to that approach too.


USV TEAM POSTS:

Zapier Bot — Jan 16, 2020
Explaining the rules of a game? Start with the goals

Nick Grossman — Jan 16, 2020
Leap

Albert Wenger — Jan 16, 2020
USV and the Climate Crisis

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

What To Work On

A VC - January 5, 2020 - 8:59am

My partner Brad likes to ask about the distinction between doing things right and doing the right thing. His observation, which I totally agree with, is that many people and companies do things right but don’t do the right thing. Taking the observation one step further, I have seen that doing the right thing the wrong way can actually result in something important and successful whereas doing the wrong thing the right way rarely does.

So that begs the question “what should I work on?”

First and foremost, I believe we should all work on projects that interest us, where we have insights that others don’t have, and that motivate and inspire us and others.

I also think that working on something that meets this first test is necessary but not sufficient.

Beyond that test, which is a must, I believe we should be working on something that can have a large impact. Coming from a venture capitalist, I am sure many people will read that as “make a lot of money.” But that is not what I mean. Impact can be measured by money. But it can also be measured by the number of people that will use your product or service. It can be measured by how it changes the way people think and how they react to your product or service or innovation. Even if Tesla fails as a company (which I do not think will happen), they have changed the way the automobile industry operates forever. That is an example of impact.

And then a third very important thing is how you are going to address the problem, how you are going to market, how you are going to make money (the business model), and how you are going to defend your market position and business. This is often where the magic is. Let’s say you have an insight on how to use video to deliver education to young people to significantly improve learning. You could build a business that delivers that technology to the existing school system. Or you could build a business that goes directly to the students and bypasses the existing school system. These are two very different “go to market” strategies, they imply two very different business models, and they will result in very different long term market positions. Your choices on “how” will ultimately define your work more than anything and getting this right is so critical.

A lot of entrepreneurs ask me for help in figuring out what to work on. I tell them that I can’t tell them what to work on. That has to come from within and nobody can give it to you.

But I can give you a framework because choosing what to invest in is a lot like choosing what to work on. One is an investment of money (and time). The other is an investment of time and yourself. The latter is such a larger investment and the risks are much higher. But the framework is similar.

You must work on something that inspires you and others, you must work on something with a significant impact, and you must do it in a way that makes getting where you want to go as easy as possible and keeps you there as long as possible.


USV TEAM POSTS:

Nick Grossman — Jan 16, 2020
Leap

Albert Wenger — Jan 16, 2020
USV and the Climate Crisis

Dani Grant — Jan 16, 2020
Wren

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Categories: Blog articles

Funding Friday: Monster Preschool

A VC - January 3, 2020 - 7:12am

I love the cross cultural/language/regional aspect of the Internet. We can find, experience, and support things all across the globe. Ultimately, it should bring us closer to each other.

This project, a children’s book about sharing, is exactly that and I backed it with a thousand yen just now.


USV TEAM POSTS:

Nick Grossman — Jan 13, 2020
Form, Storm, Norm, Perform

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Albert Wenger — Jan 10, 2020
Calling All Billionaires: Fund Fusion Now

Bethany Crystal — Jan 5, 2020
My 2020 Mantra: Lead with Compassion

Categories: Blog articles

Managing Multiple Twitter Handles

A VC - January 2, 2020 - 6:54am

Like Mitt Romney and Kevin Durant, I manage multiple Twitter handles. Although neither is a secret handle.

I use @fredwilson for my personal tweets and I use @avc for this blog. I have done that since I joined Twitter in the spring of 2007.

The idea is to keep AVC blog discussions on @avc and leave @fredwilson for other things. That isn’t how it plays out however and on a day with a lot of discussion about AVC posts (like the last two days), I get reactions on both and engage actively on both.

Moving back and forth between Twitter handles on the Twitter mobile app is a breeze. You just add a second profile to the mobile app and you can switch back and forth in the profile view.

I have not found that to be as easy in a desktop browser and so I run two browsers, one where I am logged in on @fredwilson and the other where I am logged in on @avc. If there is a better way to do this, I would love to know what it is.

I know most people manage multiple email addresses, one for personal, another for business, and possibly a few more. I do not do that and use my main email address for everything. So I can’t explain why I don’t do the same on social media, but I don’t. And both approaches seem to work well for me.


USV TEAM POSTS:

Nick Grossman — Jan 13, 2020
Form, Storm, Norm, Perform

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Albert Wenger — Jan 10, 2020
Calling All Billionaires: Fund Fusion Now

Bethany Crystal — Jan 5, 2020
My 2020 Mantra: Lead with Compassion

Categories: Blog articles

What Will Happen In The 2020s

A VC - January 1, 2020 - 8:39am

It’s 2020. Time to look forward to the decade that is upon us.

One of my favorite quotes, attributed to Bill Gates, is that people overestimate what will happen in a year and underestimate what will happen in a decade.

This is an important decade for mankind. It is a decade in which we will need to find answers to questions that hang over us like last night’s celebrations.

I am an optimist and believe in society’s ability to find the will to face our challenges and the intelligence to find solutions to them.

So, I am starting out 2020 in an optimistic mood and here are some predictions for the decade that we are now in.

1/ The looming climate crisis will be to this century what the two world wars were to the previous one. It will require countries and institutions to re-allocate capital from other endeavors to fight against a warming planet. This is the decade we will begin to see this re-allocation of capital. We will see carbon taxed like the vice that it is in most countries around the world this decade, including in the US. We will see real estate values collapse in some of the most affected regions and we will see real estate values increase in regions that benefit from the warming climate. We will see massive capital investments made in protecting critical regions and infrastructure. We will see nuclear power make a resurgence around the world, particularly smaller reactors that are easier to build and safer to operate. We will see installed solar power worldwide go from ~650GW currently to over 20,000GW by the end of this decade. All of these things and many more will cause the capital markets to focus on and fund the climate issue to the detriment of many other sectors.

2/ Automation will continue to take costs out of operating many of the services and systems that we rely on to live and be productive. The fight for who should have access to this massive consumer surplus will define the politics of the 2020s. We will see capitalism come under increasing scrutiny and experiments to reallocate wealth and income more equitably will produce a new generation of world leaders who ride this wave to popularity.

3/ China will emerge as the world’s dominant global superpower leveraging its technical prowess and ability to adapt quickly to changing priorities (see #1). Conversely the US becomes increasingly internally focused and isolationist in its world view.

4/ Countries will create and promote digital/crypto versions of their fiat currencies, led by China who moves first and benefits the most from this move. The US will be hamstrung by regulatory restraints and will be slow to move, allowing other countries and regions to lead the crypto sector. Asian crypto exchanges, unchecked by cumbersome regulatory restraints in Europe and the US and leveraging decentralized finance technologies, will become the dominant capital markets for all types of financial instruments.

5/ A decentralized internet will emerge, led initially by decentralized infrastructure services like storage, bandwidth, compute, etc. The emergence of decentralized consumer applications will be slow to take hold and a killer decentralized consumer app will not emerge until the latter part of the decade.

6/ Plant based diets will dominate the world by the end of the decade. Eating meat will become a delicacy, much like eating caviar is today. Much of the world’s food production will move from farms to laboratories.

7/ The exploration and commercialization of space will be dominated by private companies as governments increasingly step back from these investments. The early years of this decade will produce a wave of hype and investment in the space business but returns will be slow to come and we will be in a trough of disillusionment on the space business as the decade comes to an end.

8/ Mass surveillance by governments and corporations will become normal and expected this decade and people will increasingly turn to new products and services to protect themselves from surveillance. The biggest consumer technology successes of this decade will be in the area of privacy.

9/ We will finally move on from the Baby Boomers dominating the conversation in the US and around the world and Millennials and Gen-Z will be running many institutions by the end of the decade. Age and experience will be less valued by shareholders, voters, and other stakeholders and vision and courage will be valued more.

10/ Continued advancements in genetics will produce massive wins this decade as cancer and other terminal illnesses become well understood and treatable. Fertility and reproduction will be profoundly changed. Genetics will also create new diseases and moral/ethical issues that will confound and confuse society. Balancing the gains and losses that come from genetics will be our greatest challenge in this decade.

That’s ten predictions, enough for now and enough for me. I hope I made you think as much as I made myself think writing this. That’s the goal. It is impossible to be right about all of this. But it is important to be thinking about it.

I know that comments here at AVC are broken at the moment and so I look forward to the conversation on email and Twitter and elsewhere.


USV TEAM POSTS:

John Buttrick — Jan 13, 2020
CoverWallet, now an Aon company

Nick Grossman — Jan 10, 2020
The Discuss on Twitter WordPress Plugin

Albert Wenger — Jan 10, 2020
Calling All Billionaires: Fund Fusion Now

Bethany Crystal — Jan 5, 2020
My 2020 Mantra: Lead with Compassion

Categories: Blog articles

What Happened In The 2010s

A VC - December 31, 2019 - 7:00am

My friend Steve Kane suggested I take a longer view in my pair of year end posts this year:

What, no decade end/decade ahead posts? 😕

— Steven Kane (@stevenkane) December 26, 2019

And so I will.

Here are the big things that happened in tech, startups, business, and more in the decade that is ending today, in no particular order of importance.

1/ The emergence of the big four web/mobile monopolies; Apple, Google, Amazon, and Facebook. A decade ago, Google dominated search, Apple had a mega hit on their hand with the iPhone, Amazon was way ahead of everyone in e-commerce, and Facebook was emerging as the dominant social media platform. Today, these four companies own monopolies or duopolies in their core markets and are using the power of those market positions to extend their reach into tangential markets and beyond. Google continues to own a monopoly position in search in many parts of the world, has a duopoly position in mobile operating systems, and controls a number of other market leading assets (email, video, etc). Apple owns the other duopoly position in mobile operating systems. Amazon has amassed a dominant position in e-commerce in many parts of the world and has used that position to extend its reach into private label products, logistics, and cloud infrastructure. Facebook built and acquired its way into owning four of the most strategic social media properties in the world; Facebook, Instagram, Messenger, and WhatsApp. Most importantly, outside of China, these four companies own more data about what we do online and also control many of the important channels to reach us in the digital world. What society does about this situation stands as the most important issue in tech at the start of the 2020s.

2/ The massive experiment in using capital as a moat to build startups into sustainable businesses has now played out and we can call it a failure for the most part. Uber popularized this strategy and got very far with it, but sitting here at the end of the 2010s, Uber has not yet proven that it can build a profitable business, is struggling as a public company, and will need something more than capital to sustain its business. WeWork was a fast follower with this strategy and failed to get to the public markets and is undergoing a massive restructuring that will determine the fate of that business. Many other experiments with this model have failed or are failing right now. When I look back at the 2010s, I see a decade during which massive capital flowed into startups and much of it was wasted chasing the “capital as a moat” model.

3/ Machine learning finally came of age in the 2010s and is now table stakes for every tech company, large and small. Accumulating a data asset around your product and service and using sophisticated machine learning models to personalize and improve your product is not a nice to have. It is a must have. This ultimately benefits the three large cloud providers (Amazon, Google, Microsoft) who are providing much of the infrastructure to the tech industry to do this work at scale, which is how you must do it if you want to be competitive.

4/ Subscriptions became the second scaled business model for web and mobile businesses, following advertising which emerged at scale in the previous decade. Startups that developed the skills to execute a subscription business model with positive unit economics delivered fantastic returns to investors and capital flowed into this sector as a result. This was a very positive development as subscriptions better align the interests of the users and the developers of mobile and web applications and avoid many of the negative aspects of the free/ad supported business model. However, as we end the decade, a subscription overload backlash is emerging as many consumers have signed up for more subscriptions than they need and in some cases can afford.

5/ Silicon Valley’s position as mecca for tech and startups started to show signs of weakening in the 2010s, largely because of its massive successes this decade. It is incredibly expensive to live and work in the bay area and the quality of life/cost of life equation is not moving in the right direction. The physical infrastructure (transit, housing, etc) has not kept up with the needs of the region and there is no sign that it will change any time soon. This does not mean “Silicon Valley is over” but it does mean that other tech sectors will find an easier time recruiting talent to their regions and away from Silicon Valley. And talent is really the only thing that matters these days.

6/ Cryptography emerged in the 2010s as a powerful technology that can solve some of the web and mobile’s most vexing issues. Cryptography and encryption have been around for a very long time, well before the computer. Modern computer cryptography came of age in the 1970s. But the emergence of the internet, web, and mobile computing largely did not integrate many of the central ideas of cryptography natively into the protocols that these platforms were built on. The emergence of Bitcoin and decentralized money this decade has shown the way and set the stage for cryptography to be built natively into web and mobile applications and deliver control back to users. Credit to Muneeb Ali for framing this issue for me in a way that makes a lot of sense.

7/ Technology inserted itself right in the middle of society this decade. Our President wakes up and fires off dozens of tweets, possibly while still in bed. We are all hostage to our phones and the services that we rely on. Our elections are conducted using machine learning technology to segment and micro-target important voting groups. And bad actors can and do use the same technologies to interfere in our elections and our public discourse. There is no putting the genie back in the bottle in this regard, but the fact that the tech sector has such a powerful role means that it will be highly regulated by society. And there is no putting the genie back in the bottle in that regard either.

8/ The rich got richer this decade. Axios wrote in a recent email that:

“The rich in already rich countries plus an increasing number of superrich in the developing world … captured an astounding 27% of global growth.”

But the very poor also had a great decade as Axios also reported:

The rate of extreme poverty around the world was cut in half over the past decade (15.7% in 2010 to 7.7% now), and all but eradicated in China.

The losers in the 2010s were lower middle class and middle class people in the developed world whose incomes stagnated or fell.

Technology played a role in all of this. Many of the superrich obtained their wealth through technology business interests. Some of the eradication of extreme poverty is the result of technology as well. And the stagnation of earning power in the lower and middle class is absolutely the result of technology automation, a trend that will only accelerate in coming years.

9/ This a post publish addition. A huge miss in my original post is the emergence of China as a tech superpower and a global superpower. There are many areas (digital money for example) where China is light years ahead of the western world in technology and that will likely accelerate in the coming years. Being a tech superpower is a necessary condition to being a global superpower and China is already that and getting more powerful by the day.

I will end there. These are the big mega-trends I think about when I think about the 2010s. There is no doubt that I left out many important ones. You can and will add them in the comments (wordpress for now), emails to me, and on Twitter and beyond. And that is what I hope you will do.


USV TEAM POSTS:

John Buttrick — Jan 7, 2020
Juro

Nick Grossman — Jan 6, 2020
Automated Personal Finance

Bethany Crystal — Jan 5, 2020
My 2020 Mantra: Lead with Compassion

Albert Wenger — Jan 1, 2020
An Agenda for the 2020s: Inventing the Knowledge Age

Categories: Blog articles

Adversarial Interoperability

A VC - December 30, 2019 - 8:43am

As I’m gearing up for two big posts tomorrow and wednesday, I will simply give you a link (courtesy of Nick) to read.

Cory Doctorow’s EFF post on Adversarial Interoperability explains the move we need to make to fix what’s wrong with big tech, monopolies, duopolies, etc, etc. Basically everything that is wrong with the Internet, mobile, and web.

If I was able to issue required reading to everyone who is regulating tech or running for offices that are in a position to regulate tech, this would be it.


USV TEAM POSTS:

John Buttrick — Jan 7, 2020
Juro

Nick Grossman — Jan 6, 2020
Automated Personal Finance

Bethany Crystal — Jan 5, 2020
My 2020 Mantra: Lead with Compassion

Albert Wenger — Jan 1, 2020
An Agenda for the 2020s: Inventing the Knowledge Age

Categories: Blog articles

What’s Going On With AVC?

A VC - December 29, 2019 - 7:37am

As Jason Wright said in the comments to yesterday’s post:

This blog is rendering like it’s 1998 in Safari and Chrome at the moment.

The theme that renders AVC in WordPress got messed up somehow and we are having a hard time getting it back to normal.

I am planning on relaunching AVC with a entirely new theme and design in the New Year and so I’m not particularly motivated to address this issue right now.

I’m open to feedback on why I should or should not bother, but my feeling is we can live with this bare bones design for the next ten days.

Categories: Blog articles
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