I sent this out last night. In case you missed it, I thought I’d share it with all of you this morning.[View the story “Twitter Tweetstorm” on Storify]
A book that has really stayed with me since I read it is The Prize, the story of the attempt to reform the Newark public school system.
And there is a particular scene in that book that really sums it up for me.
The author is at an anti-charter school protest and meets a woman who had spent that morning trying to get her son into a new charter school that had opened in Newark. The author asks the woman how it is possible that on the same day she would spend the morning trying to get her son into a charter school and the afternoon at an anti-charter protest.
The woman explains that most of her family are employed in good paying union jobs in the district schools and that the growth of charters is a threat to those jobs.
As I read that story I was struck by how rational the woman was acting. She was helping to preserve a system that provided an economic foundation for her family and at the same time opting her son out of it.
In some ways that story is a microcosm of what is happening in the economy right now. Many people in the US (and around the world) are employed by (and trapped in) a system that no longer works very well. And although they realize the system is broken, they fight to support it because it underpins their economic security.
My partner Albert argues for a universal basic income to replace the old and broken system so we as a society can free ourselves from outdated approaches that don’t work anymore and move to adopt new and better systems.
I think it is worth a shot to be honest.
I saw Joe Fernandez‘ tweet a few days ago and thought “he is making an important point.”
too many young entrepreneurs talk about vc’s like they’re heroes and their blog posts are scripture
— Joe Fernandez (@JoeFernandez) August 19, 2016
VCs are not heroes. We are just one part of the startup ecosystem. We provide the capital allocation function and are rewarded when we do it well and eventually go out of business when we don’t do it well. I know. I’ve gone out of business for not doing it well.
If there are heroes in the startup ecosystem, they are the entrepreneurs who take the biggest risks and create the products, services, and companies that we increasingly rely on as tech seeps into everything.
VCs do have a courtside seat to the startup world by virtue of meeting and getting pitched by hundreds of founding teams a year and sitting in board meetings for many of these groundbreaking tech companies. We get to see things that most people don’t see and the result of that is that we often have insights that come from this unique view we are given of the startup sector.
Another thing that is important to know about VCs is that we operate in a highly competitive sector where usually only one or two VC firms are allowed to make a hotly contested investment. So in order to succeed, VCs need to market ourselves to entrepreneurs. There are many ways to do that and the best way is to back the most successful companies and be known for doing that. There is a reason that Mike Moritz and John Doerr were invited to lead Google’s initial VC round. By the time that happened, they had established themselves as the top VCs in the bay area and their firms, Sequoia and Kleiner Perkins, had established themselves as the top firms in the bay area.
Another way that VCs market ourselves to entrepreneurs is via social media. And blogging is one of the main forms of social media that VCs can use to do this. And, given that VCs have this unique position to gather insights from the startup sector, we can share these insights that we gain from our daily work with the world, and in particular entrepreneurs. If anyone has played this blogging game well enough to get into the top tier, it is me. I know of what I speak.
So how should entrepreneurs use this knowledge that is being imparted by VCs on a regular basis? Well first and foremost, you should see it as content marketing. That is what it is. That doesn’t mean it isn’t useful or insightful. It may well be. But you should understand the business model supporting all of this free content. It is being generated to get you to come visit that VC and offer them to participate in your Seed or Series A round. That blog post that Joe claimed is not scripture in his tweet is actually an advertisement. Kind of the opposite of scripture, right?
But you should also know that there is data behind that blog post, gained from hundreds (or thousands) of pitches and dozens (or hundreds) of board meetings. If VCs are good at anything, we are good at pattern recognition and inferring what these patterns are leading to. And so these blog posts that are not scripture, and are in fact advertising, can also contain information and sometimes even wisdom. So they should not be ignored either.
What I recommend to entrepreneurs is to listen carefully but not act too quickly. Get multiple points of view on important issues and decisions. And then carefully consider what to do with all of that information, filter it with your values, your vision, and your gut instinct. That’s what we do in our business and that is what entrepreneurs should do in their businesses.
If you are at a board meeting and a VC says “you should do less email marketing and more content marketing”, would you go see your VP Marketing after the meeting and tell them to cut email and double down on content? I sure hope not. I hope you would treat that VC comment as a single data point, to be heard, but most likely not acted on unless you get a lot of similar feedback.
VCs are mostly not idiots and can be quite helpful. But we are not gods and our word is not scripture. If you treat us like that, you are making a huge mistake. And I appreciate Joe making that point last week and am happy to amplify it with this post.
The New York Times has a piece today about how bay area tech companies are giving the Phoenix Arizona economy a boost.
I think this is a trend we are just seeing the start of.
A big theme of board meetings I’ve been in over the past year is the crazy high cost of talent in the big tech centers (SF, NYC, LA, Boston, Seattle) and the need to grow headcount in lower cost locations.
This could mean outside of the US in places like Eastern Europe, Asia, India, but for the most part the discussions I have been in have centered on cities in the US where there is a good well educated work force, an increasing number of technically skilled workers, and a much lower cost of living. That could be Phoenix, or it could be Indianapolis, Pittsburgh, Atlanta, and a host of other really good places to live in the US.
Just like we are seeing tech seep into the strategic plans of big Fortune 1000 companies, we are seeing tech seep into the economic development plans of cities around the US (and around the world). Tech is where the growth opportunities are right now.
A good example of how this works is Google’s decision to build a big office in NYC in the early part of the last decade and build (and buy) engineering teams in that office. Google is now a major employer in NYC and the massive organization they have built has now spilled over into the broader tech sector in NYC. My partner Albert calls Google’s NYC office “the gift that Google gave NYC.”
We will see that story play out across many cities in the US (and outside of the US) in the next five to ten years. It is simply too expensive for most companies to house all of their employees in the bay area or NYC. And so they will stop doing that and go elsewhere for talent. That’s a very healthy and positive dynamic for everyone, including the big tech centers that are increasingly getting too expensive to live in for many tech employees.
This is a talk that João Barros, founder of our portfolio company Veniam, gave at the Hard Wired event in NYC a few months ago. The talk is about the power of putting internet connectivity in vehicles. It is about 20 minutes.
I am fifty five years old today.
I have always loved having a birthday in late august.
It’s a time of year when things slow down.
It’s a time of year to be surrounded by friends and family.
It’s a time of year that begs for reading a good novel on the beach.
And I am doing all of those things.
What I am not doing is letting the aging process get me down.
I am enjoying getting older.
I particularly enjoy watching things I helped create grow into amazing things.
I am mostly talking about our three children.
But I am also talking about the companies we helped get started over the past twenty years.
And I am also talking about philanthropic and civic efforts we have helped get off the ground.
Time has a way of revealing who you are and what matters to you.
And, at age fifty five, I have put in enough time on planet earth to have those revelations.
And that feels great.
It’s funding friday. Time for some crowdfunding. Here are three projects I like:
- American Red Cross fundraiser for Louisiana Flood Relief on Crowdrise
- Greycork (low cost home furniture for millenials) convertible note on CircleUp
- The New York Fabric Convenience Store on Kickstarter
I have backed the first and last projects and think the Greycork deal looks interesting.
I went for a bike ride this morning and while I was riding I thought of something I need to do today. I didn’t want to stop, take out my phone, remove my sunglasses, and type in the “to do” into my calendar.
So instead, I took out my phone, opened up a calendar entry, hit the microphone button, and spoke into my phone, then hit save. I did all of that in about three or four seconds. When I got home and looked at my calendar, the entry was perfect.
But you know what? I rarely, if ever, do that. I could do it all the time. But I don’t. I think I use voice input on my phone a few times a year.
I am not sure why that is. The voice input on Android is very good. I suspect the same is true on iPhone. And I am increasingly using our Amazon Echo for information. So why don’t I talk to my phone more often? I am not sure.
So I started a Twitter poll this morning to see what others do.
Here it is:
Do you use voice input on your phone?
— Fred Wilson (@fredwilson) August 18, 2016
Please participate in the poll and/or leave a comment. I am curious to see what people are doing these days with voice input.
Four months ago, I blogged about our portfolio company Kik’s chat bot platform.
If you believed the hype around chat bots, you would have expected every mobile developer to quit developing for iOS and Android and start developing for these new new chat bot platforms.
But that has not happened.
I would be hard pressed to name a super popular chat bot on Messenger, Kik, Slack, and Telegram.
It is not for a lack of trying. There are over 300 chat bots listed on botlist right now. Many from well known companies. And over 20,000 chat bots have been built on the Kik platform since it was launched.
So what is going on?
Kik CEO Ted Livingston addressed some of that yesterday with a post describing what has not worked and what has.
His big takeaways are that AI driven chat bots have underwhelmed and that conversational UIs are not what users are looking for.
He suggests that developers should look at bots as a low friction way to get new users to try out and use their service instantly:
When you look closely at WeChat, the chat app that has completely taken over China, you see that its success as an ecosystem of services comes down to the same things: low-friction access to apps; sharing-related discovery (as well as QR codes); a common interface; and messaging as the front door to a world of digital experiences. In fact, there’s no major conversation-based service in WeChat. Instead, there’s just a whole lot of instant interactions.
I think chat bots will find their place in the mobile user’s daily habits. I have encouraged several entrepreneurs who have pitched me on new projects to consider starting with chat bots instead of mobile apps. And we have seen at least one of our portfolio companies move from a native mobile app to a chat bot as their primary go to market strategy.
New user behaviors take time to develop and sometimes require a breakthrough app to get things started. That’s where we are with chat bots. The hype phase is over and we are now into the figuring it out phase. That’s usually when interesting stuff starts to happen.
ScriptEd is a non-profit organization that equips students in under-resourced schools in NYC with the fundamental coding skills and professional experiences that together create access to careers in technology. It brings its tuition free program directly to schools, where classes are taught by software developers on a volunteer basis. Classroom volunteers commit to teach for the entire school year (late September through late May) two times a week. Each volunteer is part of a four-person team, and is supported by ScriptEd’s staff members.
As the end of summer approaches, ScriptEd is gearing up for the 2016-2017 school year. The organization is looking for software developers in NYC to help to serve 900 students in 37 under-resourced high schools.
Volunteering with ScriptEd is a great way to meet like-minded people while increasing inclusionary access to the tech work force in NYC.
If this is interesting to you, you can apply to volunteer at this link: bit.ly/ScriptEdVolunteer.
A ScriptEd staff member will reach out and schedule a time to discuss the volunteer commitment further once an application is submitted.
The Jewish Museum in NYC, which is a terrific art institution, is doing a show next month in which forty contemporary artists will create over 400,000 artworks that visitors will be encouraged to “take away” with them when they visit the show.
This exhibit was inspired by a similar show that took place at the Serpentine Gallery in London in 1995.
To help fund the production costs of all of this takeaway art, the museum has launched a Kickstarter, which the Gotham Gal and I both backed yesterday.
Backers can select from a number of these takeaway art works as rewards. There are also some great in person talks with the show’s curators in the rewards.
Here’s the project video in case this project interests you like it did us.
If you want to participate in the funding of this show, you can back the Kickstarter here.
I asked my kids this question last week. And I got three different answers.
One of my kids said “Absolutely. I do pay for several news apps and I like them a lot.”
One of my kids said “It depends on the user interface. I really like Pocket and do most of my news reading in that app.”
And one of my kids said “No way. News should be free. I get all of the news I need online for free.”
I have asked a number of other millennials this question this past week and got a similar set of responses.
The “no way” answer was stronger with the men. The “absolutely” answer was stronger with the women.
The answer that interests me the most is the user interface issue. I like to read in a mobile browser on my phone. I can follow links most easily that way. And I can share links most easily that way. And reading news is, for me, an interactive and social experience. I really like sharing links and getting shared links. So I want a least common denominator user experience that most easily facilitates that.
But I know a lot of people who use “read later” apps like Pocket and Instapaper. Clearly the user experience question looms large in the news business.
And there is also the question of what is news. Almost everyone told me that they value “long form news content” but not “headlines.” And so it is not surprising that we see news organizations like The New York Times and Washington Post investing more in long form content.
I am curious how the AVC community thinks about paying for news.
Greece Workshop Report
During the last week of June I conducted a weeklong workshop and colloquium on Innovation in Exchange and Finance at the Alexandros campus of the Kalikalos Holistic Summer School on the beautiful Pelion peninsula overlooking the Aegean Sea in Greece.
I had planned this to be a collaborative, interactive and problem-centered workshop that would bring together skilled and accomplished people to produce significant innovations in the areas of exchange, finance, and economics. We were fortunate in being able to draw together an excellent cohort of participants having diverse knowledge, skills and experience. Nine of these were full-time and several more participated in various parts of the workshop, particularly the June 25-26 weekend when we had a number of Greek participants from Volos and Athens. The Volos contingent shared their experiences over the past four years in creating and operating the Volos TEM trade exchange. It was very useful for all of us to hear about their difficulties and false starts and the lessons they have learned which will be applied as they move forward into the next phase of their project.
In addition to the registered workshop attendees who came from Australia, India, Ireland, Serbia, Sweden, the US and the UK, several Kalikalos staff members participated in some aspects of the workshop. We were disappointed however that one registrant from Saudi Arabia was unable to attend because his entry visa was denied by the Greek government.
Our work sessions were loosely structured to allow space for each person to share not only their questions but also their experiences and insights, and for the spontaneous emergence of ideas action plans. In addition to my presentations of foundational concepts using slide shows and videos, the format included a number of participatory exercises. Participants had opportunities to showcase their ongoing or planned projects and receive feedback from the group, and as is usual in any such gathering, informal discussions and networking were an important part of the experience.
Kalikalos has invited me to return again next year to conduct another similar workshop on monetary and financial innovation. It will be scheduled in the general timeframe of the second week of June (exact dates to be determined soon). My colleague Matthew Slater, one of this year’s participants who has particular expertise in IT, crypto-currencies, has agreed to assist me in that workshop, and over the coming months we will be working to further develop the format and the program.
I am hoping to once again attract participants who are ready, willing and able to put their knowledge and understanding into action. As Malcolm Gladwell points out, it takes mavens, connectors, and marketers working together to make a project successful, but most of all I think it takes entrepreneurs who are able to bring harmony to the mix, to hold the vision and to dedicate themselves fully to its realization.
As the time approaches, we and the Kalikalos team will be asking you to help us get the word out to our target groups— trade exchange operators, social entrepreneurs, local government officials, serious students, and enthusiastic agents of change.
In the face of the ongoing global economic and financial crisis and increasing political uncertainty, the creation and deployment of innovative decentralized mechanisms for reciprocal exchange and equitable finance are becoming ever more urgent and the opportunities have never been greater. We are now on the brink of ushering in a new more just and sustainable economic paradigm that will enable small producers and local enterprises to thrive, and communities to gain more control over their own destiny and quality of life.
Before and after my workshop I spent an additional three weeks at Kalkalos living in community at the Kissos campus. That in itself was an enlightening and enjoyable experience.
Upcoming presentation – Malaysia
In October I’ll be presenting at the International Forum on Inclusive Wealth (http://www.ifiw.my/) in Kuala Lumpur, Malaysia. I’ll be outlining my revolutionary plan for a decentralized global exchange network based on direct control of credit by producers.
“IMF admits disastrous love affair with the euro and apologises for the immolation of Greece“
In a July 29 article in The Telegraph, journalist Ambrose Evans-Pritchard dissects a recent report by the IMF’s Independent Evaluation Office (IEO). He says the report, “goes above the head of the managing director, Christine Lagarde. It answers solely to the board of executive directors, and those from Asia and Latin America are clearly incensed at the way European Union insiders used the fund to rescue their own rich currency union and banking system.”
He concludes that “The injustice is that the cost of the bailouts was switched to ordinary Greek citizens – the least able to support the burden – and it was never acknowledged that the true motive of EU-IMF Troika policy was to protect monetary union. Indeed, the Greeks were repeatedly blamed for failures that stemmed from the policy itself. This unfairness – the root of so much bitterness in Greece – is finally recognised in the report.” Read the full article here.
Recommended reads and views
Michael Hudson interview: The new global financial cold war
Basic Income gaining ground:
- Europe: 64% of People in Favour of Basic Income, Poll Finds
- Canada Is About To Start Giving Away Free Money
General Wesley Clark, former Supreme Allied Commander of NATO, testifies in this 2-minute video that the US planned to overthrow seven countries after 9/11.
Wishing you a relaxing and enjoyable summer,
William suggested this to me last night and I was dismissive, but like many things, a good night’s sleep changed my mind.
There’s been a meme going around Twitter called #firstsevenjobs, in which you list your first seven jobs.
These are mine:
- Test taker. Yes, I got paid $5 to take a standardized test on sat afternoons in fourth grade. Practice makes perfect. I’m a fantastic test taker.
- Hot dog vendor at Michie Stadium, the home of Army Football. You had to buy them and then sell them. You could end up “eating” that last one if you weren’t careful.
- Caddie. Usually for the women golfers. But I did get to caddie for the club pro in the NYS Open once. That was great.
- Hot dog vendor at Palisades State Park. I know hot dogs.
- Product quality analyst for Gillette Cricket Lighters. They sold the business a couple years later. Quality, it turns out, was a big issue.
- Lab Assistant, MIT Water Tunnel. This is where I learned to maintain, and then write, software.
- C0-manager, Lobby 7 Coffee/Donut shop. I made so much money doing this. And had a free breakfast every day too.
What were your first seven jobs?
The blockchain sector continues to entertain, amuse, impress, and inspire me.
Last week one of the biggest cryptocurrency exchanges, Bitfinex, was hacked and was reported to have lost around $65mm of bitcoin it was storing for its customers.
So what did they do in response? They told every customer that they had lost a portion of their assets (36% to be exact) and that they were issuing crypto-tokens to them in proportion to the amounts they had lost.
I have not done business with Bitfinex so I was not directly involved in this affair. However our portfolio company Coinbase competes with Bitfinex so I am most certainly an interested observer and maybe even an interested party.
What is interesting is that it is not entirely clear what these crypto-tokens will be exchangeable for. Will Bitfinex treat them as liabilities that they will eventually pay off (debt)? Or will they ultimately be paid back with equity in Bitfinex? Will there be a traditional bankruptcy or will this be settled out of court? And who is going to represent the creditors?
But maybe the most interesting thing of all is that a market is being made in these crypto-tokens. If you hold them and want to sell them for dollars or bitcoin, you can do that.
They have tokenized the claims their customers have against them. Talk about the dogs eating the dog food. It is impressive in many ways to watch the blockchain sector encounter traditional business problems and address them in a native blockchain way. And it will be interesting to see if the legacy system intrudes or not.
Nine months ago, I wrote a post saying that opening up Twitter’s Moments would make it a way better product.
The news came out yesterday that Twitter has now opened up Moments to certain users and plans to open up to all users in the coming months.
I am not sure why it took Twitter so long to do this. Maybe the curation tools were not that good and they needed to improve them before opening it up.
Maybe they hadn’t figured out how to keep spam, porn, abusive content, etc out of Moments.
Maybe they hadn’t figured out the discovery issues once there are hundreds of thousands of Moments being created every day.
Whatever the reasons for it, I think this is great news for Twitter and Twitter users.
Moments are a super easy way to get a quick glimpse of something that is happening right now. I use it every day, many times a day. Opening it up will make it deeper, richer, and better.
Yesterday’s post on streaming the Olympics vs watching them on TV produced some great comments.
But the more interesting conversation to me was about the business model for streaming the Olympics on phones, tablets, and smart TVs. A number of readers pointed out that the streams use the same business model (advertising) as broadcast TV and so the ad loads will be the same and just as annoying.
But I think the broadcasters like NBC have an opportunity to take a page out of the playbook of the streaming music companies like Spotify and SoundCloud and offer both free ad supported streams and subscription streams that are ad free and offer offline sync (record and playback later).
Would you pay for a $19.99 in-app upgrade on your NBC Sports app to remove ads and get offline sync for the entire 17 days of the Summer Olympics? I know I would but I also know that I am less price conscious than most AVC readers. Please weigh in on that in the comments.
The broadcast television companies have been advertising supported businesses for the most part. In recent years they have been able to get retransmission fees and start getting paid for their programming from the cable operators but I think the subscription opportunity in the streaming world is significant for them, particularly when it comes to big events like the Olympics.
I looked around for a subscription based app for NBC Sports and found something called NBC Sports Gold but that looks like an experiment that doesn’t support the main events like the Olympics. I hope we will see the main events make it onto something like that in the coming years. I think it would be great for viewers and for the broadcasters as well.
My friend Patrick told me yesterday that I should check out Team Handball. He said its a lot of fun to watch. I immediately thought “I should find out when they are streaming a Team Handball match.”
My daughter posted on social media that she can’t deal with the non stop advertising that NBC is running on their main channel. I can’t either.
The combination of being able to watch when you want and how you want with the incredibly annoying experience of the main NBC broadcast tells me that this may be the Olympics that streaming starts to beat TV.
So when I saw this Variety headline this morning, NBC Universal’s Olympic Upset: Streaming Trumps TV, I clicked on it and read it.
There isn’t enough data in that article to conclude that streaming has, in fact, passed TV as the dominant way we watch the Olympics.
But I can tell you that the streaming experience definitively has.
Winning a medal at the Olympics is a big deal for athletes all around the world. Obviously a gold medal is better but silver and bronze are pretty awesome too.
In startup land, it works out pretty similarly. In each and every big “winner takes most” market there is one big winner (the gold medal winner) and a few other big companies (silver and bronze) and then not much more.
If you look at web search, Google won the gold medal and has a $550bn market cap to show for it.
In social, Facebook won the gold medal and has a $360bn market cap to show for it.
In ridesharing, Uber won the gold medal and has a purportedly $60bn market cap to show for it.
You can do well with silver and bronze. Twitter is worth $13bn. Lyft is supposedly worth $5.5bn. But coming in second or third in a big market is generally an order of magnitude (or two) less valuable in the long run.
And you had better get on the stand and get a medal if you are working in a big “winner take most” market because fourth or fifth or sixth is rarely worth much, if anything.
These are high stakes markets where winning is everything and losing is nothing. And things play out pretty quickly. Within five years, we generally know who won, who placed, who showed, and who whiffed.
It is possible that with the emergence of decentralized networks these dynamics will change and we will be on to a very different market dynamic. But for now this is how it goes. Go big or go home.