Blog articles

New York’s Climate and Community Protection Act

A VC - June 25, 2019 - 7:39am

The lawmakers in Albany have passed legislation known as the Climate and Community Protection Act (CCPA) and it is sitting on the Governor’s desk awaiting signature.

There is plenty of debate on whether CCPA is good policy or bad policy. All you need to do is Google “New York’s Climate and Community Protection Act” and read the NY Post (against) and the NY Daily News (for) and you will see the various sides of the debate.

What this bill does is commit New York State to some of the most agressive goals of any city, state, or region:

This is a legally binding legislative act to achieve an 85% reduction in greenhouse gas emissions by 2050 and a goal of net zero.

My view is that we need ambitious goals like this and penalties for not reaching them (the stick).

But we also need new policies and new funding/investment to allow us to reach them (the carrot).

Most of the “green new deal” style legislation that is getting passed in NYC, NYS, and elsewhere, and being proposed in many other places, is long on sticks and short on carrots.

I believe CCPA is a good first step for NYS and I hope the Governor signs it into law.

But legislators and activists and the business community should not stop there. We need to follow these goal setting/penalty setting laws with more work around how we get there and there are many good ideas floating around on how to do that.

As hard as if has been to get CCPA done, I think the hard work is just starting because reaching these goals will require creativity, innovation, new technology, and a massive amount of investment and the willpower to see it through.

We really don’t have a choice. So let’s go.

Categories: Blog articles

Understanding Gender Bias In Venture Funding

A VC - June 24, 2019 - 7:09am

USV portfolio company goTenna‘s founder and CEO Daniela Perdomo and USV analyst Dani Grant did some number crunching on VC funding and published the info last week.

After 4 rounds of VC, I ran my own data analysis to see if my experience is unique. Women founders in female-focused sectors raise equitable VC, but women in non-female sectors raise 54% less than their fair share. In deep-tech, women raise up to 75% less! https://t.co/4Fvfor3DXD

— Daniela Perdomo (@danielaperdomo) June 18, 2019

The good news is that in business sectors where women are well represented in the customer set, women founders are raising more (on a pro-rata basis) than their male counterparts.

The bad news is in the rest of the business sectors, women founders raise a lot less (on a pro-rata basis) and in “deep tech” the numbers are particularly bad.

These conclusions ring true to me based on what I see in the market.

I believe women founders have made a lot of progress in the last decade in raising VC. There are many more of them approaching VC firms for capital and many more of them getting funded. But it seems most of the progress has been in sectors where women are well represented.

The progress in sectors where women are not as well represented is almost non-existent. We in the VC sector need to understand the conscious and unconscious biases at work when we meet with a women founder working in one of these under-represented sectors and fight them off.

Founders like Daniela, when they are successful, will help a lot. There is nothing like success to change people’s opinions, conscious and otherwise.

Categories: Blog articles

Pixel Slate RIP

A VC - June 23, 2019 - 5:33pm

I got a Pixel Slate last December and wrote several blog posts about it at the time.

I use it when I travel and just spent two and a half weeks with it as my only computing device other than my phone.

It is fantastic on an airplane as it is equally great for watching video and doing work (on or offline).

At the tail end of that two and a half week stretch I read that Google has decided to stop making Pixel Slates. It will continue to support the current devices but will not come out with a new model.

This means the Slate is a dead platform and that I will need to find another answer for my travel tablet needs. I’m not eager to get an iPad Pro and will probably continue to use the Slate until I find a better answer.

This bums me out. I like the Slate. It has its issues. But I think Google could have easily addressed them over time.

We need competition to the iPad in the tablet market and Google was on its way with Slate.

Categories: Blog articles

Audio Of The Week: Libra On The Unconfirmed Podcast

A VC - June 22, 2019 - 2:52am

I posted earlier this week on Libra and USV’s involvement in this project

Laura Shin had Dante Disparte of the Libra Association on her Unconfirmed Podcast yesterday.

This is a good and relatively quick way to get up to speed on Libra and how it has been structured.

Categories: Blog articles

Reboot: Leadership and the Art of Growing Up

A VC - June 21, 2019 - 12:27am

Jerry Colonna‘s book, Reboot, came out this week.

He had given me the manuscript to read so many months ago that I had to go back and read it again before I could write about it.

So I bought the book yesterday and read it again over the last twenty four hours.

AVC regulars don’t need any introduction to Jerry. I’ve been writing about him, citing him, and telling stories about him since the very start of this blog.

Jerry is my friend, my former partner and co-founder of the first business I ever started, Flatiron Partners, and one of the best people on planet earth.

Jerry’s book is about two things that are really the same thing, himself and his work to help people, mostly entrepreneurs, discover themselves.

Jerry describes this work as “radical self inquiry”:

But the most challenging piece of the formula—indeed, the most important—is the notion of radically inquiring within. I define it as the process by which self-deception becomes so skillfully and compassionately exposed that no mask can hide us anymore. The notion is to recognize that, if things are not okay, if you’re struggling, you stop pretending and allow yourself to get help. Even more, it’s the process by which you work hard to know yourself—your strengths, your struggles, your true intentions, your true motivations, the characteristics of the character known as “you.” The you behind the masks, the stories, the protective but no longer useful belief systems that have been presented for so long as the “you” that you would like everyone to see.

Invariably such inquiry involves getting to know, as the poet Adrienne Rich says, “not the story of the wreck but the wreck itself.” With help, patience, courage, and guidance, we explore the wreck and retrieve the treasure. Knowing how to survive and understanding what it takes to thrive are skills that come from our childhood. Take any random group of entrepreneurs, for example, and do a quick unscientific survey by asking them to raise their hands if they grew up in an environment where at least one parent had disappeared or left or was never present. Most hands will shoot up. Early promotion into adulthood is often painful and equally often a sign of an early promotion into leadership. Probe a bit further and you may find that leaders who have built their company may have unconsciously stacked the team with other folks who experienced such early promotion.

Radically inquiring within allows us to step back and see the patterns of our lives not as random acts of a willful or even vengeful God but as forces that shape who we are. It’s this understanding that will make us not only better leaders but better, happier, more resilient people.

Reboot, the book, is about Jerry’s radical self inquiry to discover who he is and then his work to help others do the same.

He tells his own personal story over the course of the book and also weaves in the stories of others who he has worked with along the way to explain what the work of radical self inquiry is and why it must be done and the rewards that come from doing it. He is teaching by example.

Jerry started his career as a writer and he is a wonderful one. It is a joy to see him go back to those roots and exercise those muscles again.

Let me put it to you this way. You are reading AVC for a reason. Maybe you are an entrepreneur. Maybe you want to be one. Maybe you work for one. Maybe you are investing in entrepreneurs. Or maybe you are married to one. Or maybe your daughter is one. No matter what the reason, you are here at least in part because you are interested in entrepreneurs and the work they do. And so as part of that interest, I would recommend you pick up Jerry’s book and get inside the head of one. It will flip some switches on for you.

Categories: Blog articles

32 Ans

A VC - June 20, 2019 - 8:04am

Thirty-two years ago, the Gotham Gal and I got married.

We had been together for five years at that time.

We have now been together for thirty-seven years.

A relationship that has lasted almost four decades is a special thing.

There is a comfort, a deep friendship, a mind melding, that develops.

At least three or four times this week, one of us uttered something that the other was thinking but just had not said yet.

We are celebrating the day in Paris, one of our favorite places, and pretty much doing nothing, but of course doing everything. Together.

Categories: Blog articles

The Cloudflare Ethereum Gateway

A VC - June 19, 2019 - 9:15am

Last year, during its annual “crypto week”, our portfolio company Cloudflare shipped an IPFS gateway. I wrote about that then.

This year, they have shipped an Ethereum gateway.

It is great to see a very large Internet infrastrcuture provider build and ship crypto gateways.

If you are a small developer looking to create decentralized applications, having a web-scale provider offering IPFS and Ethereum gateways is really helpful.

I expect to see Cloudflare continue to extend the number of crypto protocols they support with their gateways.

And that will be part of what needs to happen to get to a world of truly decentalized applications.

If you are interested in developing on the Ethereum protocol and want to understand how the Cloudflare gateway works, this blog post explains it well.

Categories: Blog articles

Why USV is Joining the Libra Association

A VC - June 18, 2019 - 4:28am

A new blockchain & cryptocurrency project, Libra, was announced today. Libra has been incubated by Facebook. USV will be one of the founding members of the governing body, the Libra Association. Libra is a stable, fiat-backed cryptocurrency that will launch inside some of the world’s largest consumer-facing applications. We believe Libra has the potential to be the catalyst that brings the entire cryptocurrency and cryptoasset market into the mainstream.

When USV invested in Coinbase in early 2013, our rationale was that digital currencies and digital assets (like Bitcoin and beyond) were a breakthrough technology, similar to TCP/IP, HTTP and SMTP. But we also knew that it would take significant investment in the surrounding infrastructure to make them useful for businesses and consumers, just like it did with the Web back in the 80s and 90s. At the time of that investment, we wrote:

“There is much that must be built on top of of these digital currencies to make them work well enough to support real business at scale”

This has proven to be true. If we look back at the past 10 years since the invention of Bitcoin, we have seen a lot of infrastructure built to support an increasing variety of use cases. But there is still a long way to go.

We think about the crypto sector as the intersection of Finance 2.0 (“Money Crypto”) and Web 3.0 (“Tech Crypto”), and what we have seen is that the “Money Crypto” use cases have been the earlier to materialize, especially “slow money” use cases (those that don’t require high throughput):

For consumer use cases (including both Finance 2.0 and Web 3.0 use cases), the biggest barrier to date, beyond technical scalability, has been the rollout of crypto wallets to mainstream consumers. As of today, there is still no mainstream web browser with crypto built-in, no mainstream phone with crypto built-in, and relatively few mainstream applications with crypto built-in. As that changes, crypto assets have the potential to move from being curiosities for enthusiasts to being default internet and financial infrastructure.

Once we have crypto-compatibility built-in to applications, browsers, and phones, many new behaviors and use cases will emerge. The financial system, in general, will become more accessible (smartphone adoption is outpacing bank account adoption globally). Payments can become faster, more reliable and less expensive. Magical new user experiences will be possible due to interoperability and reduced friction, the same way that the Web’s native interoperability unlocked countless new use cases and experiences. And, perhaps most importantly, we will open the door to self-sovereign digital identities (private keys) that are the underpinnings of user-controlled privacy and control of data.

So as we think about the potential drivers for mainstream crypto adoption, a simple, fully-collateralized, cryptocurrency used inside the world’s largest applications, touching hundreds of millions or billions of consumers, is perhaps the most promising one. It is our hope that Libra will serve as a major on-ramp to cryptocurrencies and cryptoassets, to the benefit of the entire ecosystem.

USV will be joining as a founding member of the Libra Association, the governing body that will manage both the Libra technology and the Libra Reserve. As one of the initial 20 members of the Association, we will have the opportunity to participate in design and policy choices that will shape the network. It is worth noting that Facebook will be just one equal member of the Association, which was an important factor in our decision to join.

This will be a large and complex undertaking, as there are many unresolved and challenging questions, involving the technology itself (security, privacy, path to decentralization), the regulatory environment, and the nature of the ongoing governance. In some ways, the initial Association resembles a constitutional convention, where the main goal is to draft the long-term governance mechanisms themselves.

To be clear, we view this as both an ecosystem investment and a financial investment. In addition to participating in the governance process at the Libra Association, USV plans to invest in the Libra Reserve, which will provide the stability for the currency. This is an unusual type of investment for us, but we have learned that investing in the crypto sector requires us to explore a variety of new investment structures.

We appreciate that Facebook invited USV to be an initial founding member of the Libra Association and we take our role in that seriously. We will advocate for those things that USV values most: openness, transparency, decentralization, and permissionless innovation. We think that those features will help accelerate adoption within the entire crypto ecosystem — including our many existing investments in the space — and also help Libra succeed in its goals.

This has also been posted on usv.com.

Categories: Blog articles

LowImpact.org, working toward a new economy and a new society

Beyond Money - June 17, 2019 - 12:57pm

We need to change direction urgently, by building a new kind of economy and society, and there are 4 ways that we can do this:
1. By changing the way we live – https://www.lowimpact.org/topics-2/
2. By changing the way we spend our money –
https://www.noncorporate.org/
3. By changing the exchange medium – https://www.lowimpact.org/why-join-ne…
4. By federating and growing the non-extractive economy

Watch the video

Categories: Blog articles

Secrets Of Sand Hill Road

A VC - June 17, 2019 - 1:31am

One of the many great things about vacations is reading books. Vacation is the one time that I can really prioritize reading books (as opposed to everything else I read).

I just finished Scott Kupor‘s Secrets Of Sand Hill Road, a book for entrepreneurs about rasing capital from venture firms.

Scott makes the point numerous times in the book that the capital raising process is asymmetric for entrepreneurs in that they do it a few times in their career and VCs do it every day.

That is true for the pitch meetings, the negotiation process, and the post financing relationship too.

What Scott does in this book is break down every part of the process and explain it in plain english so that entrepreneurs can understand what’s going on and why it matters to them.

That last part is important, this book is written for entrepreneurs, not VCs.

Scott uses real world examples, mostly investments made over the last decade by his firm A16Z, to make the lessons he is delivering more “real.”

And he uses spreadhseet examples in one chapter and shows how various events can change the cap table for everyone.

It’s very much a “how to” book, more practical than theoretical.

There have been other books written about this topic, I like Brad Feld and Jason Mendelson’s Venture Deals, which is on its third edition now.

Jeff Bussgang’s Mastering The VC Game is also great.

You could teach an MBA or undegraduate course on capital raising for entreprenuers with these three books.

It would be a great course.

If you plan to be raising venture capital for your startup and don’t have the benefit of experience or a fantastic course on the topic, I would strongly recommend you pick up Scott’s book, or all three books, and spend some time reading them now or on your next vacation.

Categories: Blog articles

Mobile Ticketing

A VC - June 16, 2019 - 12:45am

The Gotham Gal and I walked into the Musee de l’Orangerie yesterday and found a line of about 20 people waiting to purchase tickets to enter. The Gotham Gal whipped out her phone, went to the Orangerie website, and bought two tickets that were sent to her phone. It took her less than a minute to do it and we walked in. As we were leaving we noticed the ticket line had almost doubled. We shook our heads and made our way to our next stop.

The mobile phone we all have in our pocket or purse can do so many things but one of its superpowers is a point of sale terminal. Increasingly there is no reason to wait in line for tickets to anything. You can just get them on your phone.

I really like just in time ticketing with the phone. I have the NYC East River Ferry app on my phone and whenever I want to take a boat to Brooklyn or Queens, or back, I open up the app, provision a ticket or two if I’m round tripping it, and I’m good to go. I am seeing more and more mass transit systems adopt this approach.

And then there is the NYC subway system which has started to roll out new turnstiles which you can tap and pay at:

I remember the days of carrying metal tokens in my pocket. It wasn’t that long ago!

The smartphone is twelve years old at the end of the month. It is remarkable to step back and think about how much it has changed how we live and work.

Categories: Blog articles

Video Of The Week: Peter Kafka’s Interview With YouTube CEO Susan Wojcicki

A VC - June 15, 2019 - 1:22am

Peter Kafka interviewed YouTube CEO Susan Wojcicki at the Recode Conference last week.

It’s an interesting discussion about many of the issues facing YouTube and the Internet at large right now.

Categories: Blog articles

Funding Friday: A Window Pane Solar Panel

A VC - June 14, 2019 - 1:16am

I saw this project earlier this week and backed it immediately. Solar energy is not easy to adopt. But I have found that once you start, you get into it and keep going.

This might make it easier for some to start down that path.

Categories: Blog articles

Cloudflare’s Galileo Project Turns Five

A VC - June 13, 2019 - 8:49am

Our portfolio company Cloudflare provides a suite of mission critical security services, and increasingly other services too, in the cloud to their customers. Among the most well known of these security services is DDOS protection (aka denial of service attack protection). A DDOS attack is a massive traffic burst aimed at a website to take of offline.

Among the most vulnerable and attacked websites are those belonging to non-profits and other organizations doing work that upsets those in power.

So Project Galileo is Cloudflare’s effort to provide security services to these sorts of organizations for free so they can stay online and continue to do their work.

And Galileo turns five years old this week.

Matthew Prince, Cloudflare’s CEO and co-founder, wrote this blog post yesterday celebrating five years of Galileo and he explains why this is so important to Cloudflare, the Internet, and the world.

Categories: Blog articles

Helium

A VC - June 12, 2019 - 11:05am

One of the areas of blockchain innovation I am most excited about is building open, permissionless, and decentralized technology infrastructure.

The three areas that seem most obvious to me for decentralized infrastructure are compute (code execution), storage (storing files, etc), and bandwidth (network infrastructure).

And today, we are excited to announce that USV has made an investment in a decentralized network infrastructure project called Helium.

My partner Nick, who led this investment for USV, wrote about Helium on the USV blogand explains why we made the investment (as is our practice with all new investments). I would encourage you to read that blog post as it explains a lot about how Helium works, how the token economics builds the supply side of the network infrastructure, and why it fits so neatly into our investment thesis.

I would just like to point out how cool Helium is.

Anyone can run a Helium hotspot in their home:

And then they can earn Helium tokens for doing so.

You can run a hotspot in your home/apartment and do the equvalent of bitcoin mining for network infrastructure.

Helium is optimized for very long distance, low power communications. It is ideal for Internet of Things (IoT) devices. Think about electric scooters needing to “phone home” over long distances. Think about your dog’s name tag. Think about figuring out when the school bus is going to arrive at the bus stop.

We plan to run a Helium hotspot or two at USV and it would be great to see people powered Helium networks popping up all over the place and providing very low cost, low power, highly reliable long range network infrastructure.

Categories: Blog articles

Turning Streetlights Into EV Charging Stations

A VC - June 11, 2019 - 7:23am

Owning an EV in a dense urban city is challenging. Most people don’t have their own garages and so they park on the street or in large parking garages. We do the latter.

About five or six years ago, I walked into our parking garage and saw that the garage operator had installed a ChargePoint charging station in the garage.I literally walked back across the street to our apartment and bought our first EV. We now own three.

But charging with ChargePoint is not ideal. There are a limited number of these charging stations in our parking garage and more and more EVs. They are often filled up. And the rates that ChargePoint supplies electricity at are borderline gouging. They have a monopoly on our garage and price accordingly. I believe the rate we pay in our parking garage in NYC is literally double the rate we buy electricity from ConEdison in our NYC appointment.

In our homes in Los Angeles and Long Island we charge off our solar panels on our roofs and basically don’t pay to charge our EVs other than the depreciation on the solar installation costs. That is absolutely the way to go if you can afford the cost of a solar installation.

But back to dense urban areas like NYC. If we want more EVs and less gas powered cars on our streets, we need better charging infrastructure.

In Paris, where we have been for the last few days, they are trying an experiment with putting EV charging stations on street lights.

 

If the city makes those curb locations only available for charging and not parking, that could be a great option for encouraging more city dwellers to buy or rent EVs.

I believe the availability of charging options, whether it is a rational fear or not, is holding back a lot of people from moving from gas to electric. So anything that can change that dynamic is a good thing in my view.

Categories: Blog articles

Seven to Ten Years

A VC - June 10, 2019 - 1:41am

I have worked in three venture capital firms over the last thirty-three years and am intimately familiar with the performance of the fifteen (ish) venture funds raised and invested by these three firms. Much of what I have written about fund management and investment performance here at AVC over the last sixteen years comes from my observations of these funds and firms.

Starting in the mid-00s, The Gotham Gal and I started investing in other venture capital funds, always limiting these investments to firms where we knew the partners well and had sat on boards with them.

And The Gotham Gal started angel investing around the same time, often writing the first check into startups. She has made something like 140 angel investments over the last dozen years, mostly into companies founded by women.

We keep good records on these personal investments and I now have another data set to observe.

Across these three sources of data (my firms, other firms, angel investments), there are well over 1000 individual angel, seed, and early stage venture capital investments over four decades.

I have no plans to publish this data. It is not in a single database and there is a ton of confidential information in it.

But I can observe things about this data and have been doing so and will continue to do so.

One of the great truths about early stage investments is that you have to be patient with them. The losses come early and the winners take longer to realize.

It takes seven to ten years to get to real liquidity in a portfolio of early stage venture investments. You can’t short cut it. It just takes time. But come years seven, eight, nine, and ten the returns will start coming in.

I am not sure why seven to ten years and not five to seven or not ten to fifteen. It’s seven to ten. That’s how it has always been and seemingly always will be.

Categories: Blog articles

Low (No) Barriers To Entry

A VC - June 9, 2019 - 1:33am

There are a dozen electric scooter companies operating in Paris right now. There are so many that the Mayor just announced that she will reduce that number to three with new rules for electric scooters in Paris.

But before we get into the new rules, I want to stare at that first sentence for a bit.

In less than a year, twelve companies have started operating electric scooter services in Paris.

Paris is the largest electric scooter market in the western world right now.

To enter this business, you need capital to purchase the scooters from China, you need a mobile app on iOS and Android to allow users to locate, unlock, and pay for the use of one, and you need a small team to handle the local logistics.

Apparently those are not significant barriers because a dozen different companies have been able to do it in less than a year.

There are many things that are attractive about the electric scooter business. It has taken off as a transportation option for consumers and is the fastest growing new transportation technology in terms of revenues in history.

Electric scooters also are a much cleaner way to travel than cars or other gas powered technologies.

So there is a lot to like about this business.

But if anyone can open up shop and compete with you with little to no differentiation and your only defensibility is the time it takes to download a new mobile app and put in your credit card, well then one has to ask if this is or will be a good business.

And that is where the Mayor of Paris comes into the picture. She wants to limit the number of scooter providers to three, by requiring licenses and issuing only three of them.

That will sufficiently lower the competition in Paris, lead to a triopoly which may stabilize pricing and margins, and possibly reduce the number of scooters littered all over Paris.

Winning a license will be a political process and there are many issues with that. And the three companies that win a license will become acquisition targets for the big players which are increasingly the ride share companies (who themselves have very low barriers to entry but now have public currencies to buy with).

There are many who have wondered whether ride share will ever be a good business. The public market caps of Uber and Lyft suggest that it will be or that there are plenty of people who currently think it will be.

Scooters are ride share on steroids. Even easier to get into the game with possibly a larger market opportunity.

It will be quite interesting to see how this plays out and how much regulation will be needed to tame this market.

Categories: Blog articles

Video Of The Week: The State (or Stalemate) of Regulation?

A VC - June 8, 2019 - 10:13am

Given all of the discussion of SEC regulation of the crypto sector on this blog over the last week or two, I thought I’d post a video of a discussion of the topic at last month’s Token Summit in NYC.

Categories: Blog articles

Funding Friday: DefendCrypto.org

A VC - June 7, 2019 - 3:16am

As expected, the SEC sued USV’s portfolio company Kik this week. Here is Kik’s response to the news:

This part of Kik’s response explains that the SEC is stretching the interpretation of the Howey ruling (from almost a century ago) in its efforts to claim jurisdiction of crypto token regulation:

For the reasons set forth in our Wells Submission, the SEC’s complaint against Kik is based on a flawed legal theory.  Among other things, the complaint assumes, incorrectly, that any discussion of a potential increase in value of an asset is the same as offering or promising profits solely from the efforts of another; that having aligned incentives is the same as creating a ‘common enterprise’; and that any contributions by a seller or promoter are necessarily the “essential” managerial or entrepreneurial efforts required to create an investment contract. These legal assumptions stretch the Howey test well beyond its definition, and we do not believe they will withstand judicial scrutiny.

https://www.prnewswire.com/news-releases/kik-responds-to-sec-complaint-300862114.html

I believe that crypto networks are different than companies and that crypto tokens are different than securities. I look forward to seeing these issues debated in a court of law instead of the basement conference rooms in DC.

If you are interested in supporting Kik’s case, you can do so by contributing crypto tokens to DefendCrypto.org.

Categories: Blog articles
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