Blog articles

But Why?

A VC - June 8, 2017 - 3:09am

Being an investor and board member means that you are close to the companies you invest in but not “in them.”. This near and dear relationship creates some interesting challenges for both the management and the investors. One of them is understanding the difference between information/reporting and a real understanding of what is going on in the business.

I often find myself saying “but why?” at board meetings:

  • “Revenues are soft this quarter” – but why?
  • “MAUs are up 150% over last quarter” – but why?
  • “We are going to miss our ship dates” – but why?
  • “We expect to decrease our hosting costs by 50% next quarter” – but why?
  • “We can’t seem to get any interest in the next round” – but why?
  • “We are getting a lot of inbound interest from investors” – but why?
  • “We have a lot of turnover in our engineering organization” – but why?

The beauty of working with investors who see a lot and have seen a lot is that they can often help you diagnose the disease by looking closely at the symptoms. But you have to be willing to engage in that exercise and be open to hearing “but why” and be prepared to answer it.

Categories: Blog articles

What in the world is going on? — Part 2

Beyond Money - June 7, 2017 - 11:00am

Paul Craig Roberts has been inside and outside of the U.S. Government. He served under President Ronald Reagan and was a colleague of Zbigniew Brzezinski at the Center for Strategic and International Studies, where Roberts occupied the William E. Simon Chair in Political Economy. He has had a unique vantage point from which to observe over his long career the dynamics of power and global developments. His website is a treasure trove of commentary that provides clear insight into what in the world is going on.

His recent post, Washington’s Empire Is Not Unraveling,  argues that despite president Trump’s recent actions, the military-industrial-financial complex remains firmly in control and the agenda of “full spectrum dominance” is still on track.

He points out that, with the help of the mains stream media, “Americans and the world are blinded to the fact that there are power centers that constrain a president and are capable of substituting their agendas for the agendas on which the president campaigned.”  Read the full article here.

And for insights into how the global financial system is malfunctioning, in addition to David Stockman, whom I mentioned in Part 1, you also need to follow Chris Martenson via his website, Peak Prosperity. In this video, https://youtu.be/E1g57mjGcGc he talks about the massive inflation of money that has characterized recent actions by three major central banks, the Federal Reserve, the Bank of Japan, and the European Central Bank. All three have been furiously “printing money” which they use to buy securities, thus creating asset bubbles–not a good sign for long-term prospects.


Categories: Blog articles

Being Transparent About Your Long Term Strategy

A VC - June 7, 2017 - 12:21am

Elon Musk famously posted Tesla’s long term strategy in 2006 and ended the post with “don’t tell anyone.” That has led may entrepreneurs around the world to follow suit and be transparent about what they are up to and why. I think its a great practice for companies to follow. It helps the outside world understand your company and it helps with recruiting as potential employees can better decide which companies they want to work for and why.

Our portfolio Coinbase has been doing that for a while now and Founder/CEO Brian Armstrong just posted the latest version of their “secret master plan” to use Elon’s words.

You should go read the post as I think it does a nice job of explaining where they have been and where they are going. But if you want the quick summary, here are the four steps:

  1. First, we will make it easy for consumers to invest in digital currency by building a retail exchange (Coinbase). The differentiators for this product are trust (security, compliance, etc) and ease of use (access to convenient payment methods, intuitive interface, etc). This will allow more people to own digital currency, especially non-technical people.
  2. Second, we will enable professional traders and institutions to trade digital currency (GDAX). This will support the investment use case in step one, but also scale it by driving larger trading volumes. More liquidity in the markets will reduce volatility of the underlying assets, which is important to enabling the payment network. The differentiator for this product will also be trust (security, compliance, etc) to encourage larger, traditional investors to enter the market.
  3. Third, we will create a mass market consumer interface for people to start getting value from the payment network (Token). Now that a critical mass of early users have been drawn in by the investment use case, the industry is ready for its “Netscape moment”. This product will make it dramatically easier for consumers to use digital currency as a payment network, and for developers to build applications that utilize the payment network.
  4. Fourth, by lowering the barrier to create new digital currency applications, we’ll see an explosion in the number of ideas tried. We’ll invest in, partner with, or build a number of new applications in this space, including replacements for many of the services people use in finance 1.0. Some examples include merchant processing, remittance, loans, fundraising, venture capital, escrow, credit scores, and more.

If you have a secret master plan for your company, think about posting it publicly. I think it will do a lot more good than bad for you and your company.


USV TEAM POSTS:

Bethany Marz Crystal — June 15, 2017
If You See Something, Say Something: My New Mantra on Working in Tech

Nick Grossman — June 15, 2017
For web platforms: cryptocurrency vs. dollars?

Categories: Blog articles

Crypto Token Reading List

A VC - June 6, 2017 - 2:53am

Chris Dixon put this reading list together.

Instead of reading something from me today, maybe everyone can pick one or more posts from Chris’ reading list and learn a bit about tokens.

I believe I have read all of these posts over the past year or so and I agree with Chris that they are all quite good.


USV TEAM POSTS:

Bethany Marz Crystal — June 15, 2017
If You See Something, Say Something: My New Mantra on Working in Tech

Nick Grossman — June 15, 2017
For web platforms: cryptocurrency vs. dollars?

Albert Wenger — June 14, 2017
Uncertainty Wednesday: Entropy and Communication

Categories: Blog articles

There Is No Free Lunch

A VC - June 4, 2017 - 11:13pm

I am reminded time and time again that things that sound too good to be true almost always are. There really is no free lunch, in business or in life.

Here are a few examples of things that seem so tantalizing to entrepreneurs and the companies they create but turn out to be just as costly (or more) than the alternative:

  1. Taking on debt instead of equity in the hope that it will be paid off in the future with equity sold at much higher prices. Or convertible debt that converts in the future at a much higher price, which is basically the same thing. I have seen this go badly so many times that I now almost throw tantrums when our portfolio companies choose to do this.
  2. Raising another round to buy more time to figure out the business model vs figuring out the business model now. “Buying time” is one of the greatest free lunch fallacies of all time. I strongly believe that now is almost always a better time than later to do something.
  3. Hiring a service provider (lawyer, accountant, PR firm, etc) who will do your work for free in return for your company’s business later. This sounds great but unfortunately locks you in to using this firm later on when others may be a better choice for your company.
  4. A big enterprise company will pay you to modify your software to work “better” for them. Sounds great now, when you need the revenues/cash so badly, but little did you realize that you just outsourced your roadmap to a big company.

I could go on and on, but hopefully I’ve made my point. I encourage everyone to make the hard and painful choices when they have to be made and avoid the free lunch fallacy. It mostly leads to indigestion.


USV TEAM POSTS:

Albert Wenger — June 13, 2017
Optimal Token Sales

Albert Wenger — June 11, 2017
Monetary Policy for Crypto Tokens

Categories: Blog articles

Getting Hacked, Lessons Learned

A VC - June 4, 2017 - 12:19am

I read Cody Brown’s blog post about getting hacked on Thursday of last week. I feel very badly for Cody and plan to send him some BTC once I get access back to my account. His post helped me avoid his fate.

I woke up Friday morning (central european summer time) and saw a bunch of emails in my inbox suggesting that suspicious activities were happening in my personal gmail account, my mobile phone account, and my two factor service.

I immediately thought “that’s the same attack pattern that Cody wrote about” and I was able to get to Coinbase and have them lock down my account immediately. The good news is nothing appears to have been taken from my Coinbase account although I don’t currently have access to it right now and thankfully nobody else does either.

Without getting into the specifics, I would like to tell everyone five things I learned from this awful experience:

  1. Call your cell phone provider and put a “do not port under any circumstances” hold on your phone number. I did this about six months ago and I think it may have saved me. It is way too easy to port a phone number and once a hacker has your number, they have access to two factor codes coming via SMS.
  2. Put two factor on everything you can. I did not have it on my old and dormant gmail account which is partially why it was vulnerable. Obviously I have it on there now.
  3. Check your password recovery settings on all of your accounts (even old and dormant email accounts) and make sure they are secure accounts (locked down phone numbers (#1) and secure email accounts (#2)). Once a hacker has access to one of your old email accounts, they can impersonate you digitally.
  4. Use Google Authenticator for two factor on your phone. I have used SMS and Authy in the past and my research yesterday suggests that Google’s Authenticator is the most secure of the two factor options out there right now.
  5. I keep almost all of my Bitcoin in Coinbase’s vault service which requires 48 hours and multiple approvals to make a withdrawal. If the hacker had gotten into my Coinbase account, they would have been able to take my Ethereum and a small amount of Bitcoin, but not most of it. I believe Coinbase should evolve their vault offering to handle all of the crypto assets they support, or possibly make the two day withdrawal/multi-sig feature available to all of their wallet offerings.

I am still a bit shaken up from the experience and a fair bit more paranoid from it. Which is a good thing I’m sure.

I hope my sharing this with all of you helps you make your online life a bit more secure because there are a lot of bad people out there working hard to hack into your accounts and do bad things.


USV TEAM POSTS:

Albert Wenger — June 13, 2017
Optimal Token Sales

Albert Wenger — June 11, 2017
Monetary Policy for Crypto Tokens

Categories: Blog articles

Video Of The Week: Ted Livingston Interview At Token Summit

A VC - June 3, 2017 - 10:13am

I realize this blog is dangerously close to becoming A Coin Fund instead of AVC, but what can I say? It’s what I am thinking about most of all right now.

Here’s William’s interview with Ted Livingston, founder and CEO of Kik, on the plan to decentralize Kik around a new token called Kin.


USV TEAM POSTS:

Albert Wenger — June 11, 2017
Monetary Policy for Crypto Tokens

Categories: Blog articles

How to Bring Liquidity Into an Economy, Free of Interest, Inflation, and Boom and Bust Cycles

Beyond Money - June 2, 2017 - 11:52am

Abstract
Most economies suffer from a lack of liquidity, especially outside the large corporate and government sectors. This lack of means of payment (liquidity) is a fundamental cause of unemployment and failures of small and medium sized businesses (SMEs). It generally derives from flaws that are inherent in the centrally controlled systems of money and finance and the increasing indebtedness of both the private and public sectors. The surrender of monetary sovereignty by national governments to central banks, and to currency unions, such as the Euro, and their increasing indebtedness, as in  as in the case of Greece, have made it virtually impossible for their economies to thrive.

This article describes how domestic or community liquidity, i.e., means of payment, that enable the process of reciprocal exchange of value, can be created by various entities at various levels, from communities and business associations, to municipal governments and agencies, to national governments. The main obstacles to their implementation are not economic, but organizational and political, yet there is still considerable leeway within which the value of local production can be monetized in the form of circulating private currencies and trade credits created within associations of buyers and sellers. This article describes how that can be done.

Read the complete article here.

This subject will be the main focus of my upcoming workshop in Greece, 16-23 June. You still have time to register and space is still available.


Categories: Blog articles

Fun Friday: More Cavs Warriors

A VC - June 2, 2017 - 4:08am

Last week on fun friday we discussed the NBA Finals. I went out on a limb and predicted Cavs in seven. The comments were full of predictions, with a slight preference for the Warriors but not a landslide by any measure.

Last night the series kicked off with a drubbing as the Warriors won by 22 points and took every quarter and blew the game open in the third quarter.

It sure makes it clear how good this Warriors team is. My prediction of a Cavs victory looks worse today than yesterday for sure.

Does last night’s drubbing change anyone’s view of how this series will go?

Categories: Blog articles

ICOs and VCs

A VC - June 1, 2017 - 12:06am

The Brave browser team concluded an ICO for their Basic Attention Token yesterday in about thirty seconds. This led to this tweet:

The Basic Attention Token (BAT) ICO just raised 30 million dollars in 24 seconds. VC’s didn’t even have time to put on a sweater vest.

— briantobal (@briantobal) May 31, 2017

Of course folks will see ICOs as the end of the hated VC era of startup funding. And there is some truth to that.

But I see it a bit differently:

  1. Brave was VC funded prior to doing their ICO. We talked to Brendan when he was doing his seed round. He’s a great entrepreneur and technologist and he has assembled a terrific team. Although we are not investors in the company, we are sympathetic to the cause they are addressing. VC has had role in the Brave story. It helped them launch a product and get to the point where they could do a highly anticipated ICO.
  2. USV has a number of portfolio companies that will do ICOs. I have mentioned Kin and Filecoin in a previous blog post.  There will be others. Like Brave, it often makes sense for a company to raise VC to build the team and tech and get to a place where it can do an ICO.
  3. Not every company can do an ICO. Contrary to the hype machine working on ICOs right now, they are not simply a funding mechanism. They are about an entirely different business model. The token that you sell in your ICO is the atomic unit of your business model. You are selling some of it to raise capital but the main purpose of the token is to monetize your product or service.
  4. The investors who bought your token, like public market investors, may be gone tomorrow, next month, or next year, having moved on to the next big thing, leaving you with little to show for it other than the money you raised. VCs, at leas the best ones, are there for your company in good times and bad. There is a difference, trust me.

So, while ICOs represent a new and exciting way to build (and finance) a tech company, and are a legitimate disruptive threat to the venture capital business, they are not something I am nervous about and they are not something USV is nervous about. We are excited about them when they are the right thing for our portfolio companies and we are encouraging those companies to use this new approach. We are also investing in tokens, through token funds, and directly on or own.

Now I need to go put on my sweater vest.


USV TEAM POSTS:

Albert Wenger — June 9, 2017
Mobile OS Duopoly: Apple and Google Extending their Power

Categories: Blog articles

The Token Summit Talk Between William And Me

A VC - May 31, 2017 - 12:06am

William and I did the wrap-up at the end of Token Summit.

Here is the video of it:

And here is CNBC’s take on it.

I’d love to know if you all think she captured my views accurately.

I don’t think so and tweeted this when I saw her piece.

sometimes i read a reported piece and i think “how did my words end up being reported in this way”? this is one of those times. https://t.co/gWpe3444uf

— Fred Wilson (@fredwilson) May 26, 2017


USV TEAM POSTS:

Albert Wenger — June 9, 2017
Mobile OS Duopoly: Apple and Google Extending their Power

Jacqueline Garavente — June 7, 2017
My Inbox Is Getting Weird

Categories: Blog articles

A Man For All Markets

A VC - May 30, 2017 - 2:25am

I have had this book, A Man For All Markets, on my kindle for the past year. I can’t recall who recommended it, possibly my friend Jeremy, but I can’t be sure.

A couple weeks ago, I had lunch with my friend Harry and he again suggested it to me. I decided to put it at the top of my to read pile (a virtual pile) and have been reading it for the past week.

It’s a terrific book, nominally the life story of Edward Thorpe, the math professor, blackjack card counter, and hedge fund manager.

The book is a reminder that math, particularly the highly agile mathematical mind, is a very powerful thing. But it is also full of amazing insights on risk and return, from gambling to investing.

I particularly liked this observation that Edward makes after testing his “ten count” system with the the backing of some less than reputable characters:

For the second time, the Ten-Count System had shown moderately heavy losses mixed with “lucky” streaks of the most dazzling brilliance.

My person experience with investing includes plenty of moderately heavy losses and the occasional “dazzling brilliance.

I am pleased to know that pairing is common in all sorts of risk taking ventures.

If you like math, cards, and/or investing, I am sure you will enjoy this book as much as I am.


USV TEAM POSTS:

Jacqueline Garavente — June 7, 2017
My Inbox Is Getting Weird

Albert Wenger — June 7, 2017
Uncertainty Wednesday: Entropy (Cont’d)

Nick Grossman — June 7, 2017
My talk from The Next Web conference: Purpose, Mission & Strategy

Categories: Blog articles

Tokens

A VC - May 29, 2017 - 1:54am

Our friends Balaji and Naval penned a really nice primer on crypto-tokens. 

AVC readers have been hearing me talk about this new form of business model and fund raising mechanism for a while now and so it won’t be new to all of you. But even so, I think the way they lay it all out is really well done and I’ve sent it around to a bunch of people I know who are still trying to make sense of tokens.

If you want to give it a read, click here and check it out. 


USV TEAM POSTS:

Albert Wenger — June 6, 2017
The Biggest Danger of the Trump Presidency: Abandoning Science and Rationality

Categories: Blog articles

Central European Summer Time (CEST)

A VC - May 28, 2017 - 3:11am

The Gotham Gal and I have been married for thirty years this June and we are spending the next month in Europe celebrating that and all that has come from it.

Blog posts will be arriving central european summer time (CEST) until the end of June. 

And they will be about all sorts of things that may or may not have anything to do with technology and startups.

Now off to breakfast


USV TEAM POSTS:

Albert Wenger — June 6, 2017
The Biggest Danger of the Trump Presidency: Abandoning Science and Rationality

Categories: Blog articles

Video Of The Week: What Is Kin?

A VC - May 27, 2017 - 9:12am

Our portfolio Kik announced last week that they plan to decentralize their messenger app and monetize via a cryptocurrency called Kin. Here’s a video they put together explaining how it will work and why it is important:


USV TEAM POSTS:

Nick Grossman — June 3, 2017
A little better every day

Categories: Blog articles

Fun Friday: Cavs Warriors

A VC - May 26, 2017 - 4:28am

Well we finally got to the matchup that it seems like we have been waiting all season to get to. It really wasn’t even close. These are the best two teams in the NBA by a lot and have been for three years now.

So, who is going to win, in how many games, and why?

I will go out on a limb, like I enjoy doing, and say Cavs in seven because LeBron’s will to win is simply greater than any other person playing basketball right now.


USV TEAM POSTS:

Nick Grossman — June 3, 2017
A little better every day

Bethany Marz Crystal — June 1, 2017
Fighting Climate Change Through Bottoms-Up Community Building

Categories: Blog articles

Kin

A VC - May 25, 2017 - 6:51am

Our portfolio company Kik announced some big news today.

They are going to decentralize Kik and use a new cryptocurrency called Kin to build a business model around a decentralized Kik and, hopefully, attract other developers to build decentralized communities using Kin as well.

All of this is outlined in the Kin Whitepaper that was published this morning.

Here are the main parts of this plan:

Kin is a cryptocurrency designed to bring people together in a new shared economy.
Envisioned as a general purpose cryptocurrency for use in everyday digital services, Kin will be used for all transactions within the Kin Ecosystem. Implemented on the public Ethereum blockchain as an ERC20 token, Kin will serve as the basis of interoperability with other digital services in the Kin Ecosystem.

Kik will be the first digital service to join the Kin Ecosystem.
Kin will power a digital economy inside of the Kik app. With millions of users, Kik will drive mainstream consumer adoption of Kin, establishing fundamental value for the cryptocurrency. By natively integrating the Kin wallet into the app, it will instantly become one of the most adopted and used cryptocurrency wallets in the world.

The Kin Rewards Engine is an innovative cryptoeconomic structure intended to promote the use of Kin as a common currency.
Through the Kin Rewards Engine, Kin will be introduced into circulation as a daily reward, to be distributed among stakeholders by an algorithm that reflects each community’s contribution to the overall ecosystem. This economic structure will create a natural incentive for owners of other digital services to adopt Kin and become partners in the Kin Ecosystem.

The Kin Foundation will act as the non-profit governance body for the Kin Ecosystem. to build, enhance and monetize those services.
Over time, the Kin Foundation will ensure the delicate transition of the Kin Ecosystem into a fully decentralized and autonomous network.

As I said in the release that went out this morning, we believe cryptocurrency is the next important business model innovation in tech and Kik will be the first mainstream application to integrate a cryptocurrency. This could be a watershed moment for the blockchain sector.


USV TEAM POSTS:

Nick Grossman — June 3, 2017
A little better every day

Bethany Marz Crystal — June 1, 2017
Fighting Climate Change Through Bottoms-Up Community Building

Categories: Blog articles

I Paid $22.38 For This

A VC - May 24, 2017 - 5:26am

This is a virtual good, called a Rare Pepe. I blogged about it a few weeks ago.

Hawkeye tweeted this at me a couple days ago:

@aweissman @fredwilson Add to your art collection with PEPEBASQUIAT. Who knows, maybe someday a Japanese Billionaire will buy it. https://t.co/BgPokE3C8y pic.twitter.com/m9E0KPHwep

— Hawkeye (@nathanhawkeye) May 22, 2017

And I liked it so I went into the Rare Pepe directory, found the card, and offered 1000 Pepe Cash for it.

1000 Pepe Cash goes for $22.38 right now in the cryptomarkets.

So I paid $22.38 for a virtual card that has no utility other than I can collect it (on my computer or phone), I can send it to someone else, I can sell it, and I can blog about it.

But the one thing I do know is that these are “rare”. There are only 391 issued right now. And that is verified on the blockchain.

Something to think about as it relates to digital media/digital art/digital music/etc which has been suffering from no scarcity value since the invention of the Internet.


USV TEAM POSTS:

Bethany Marz Crystal — June 1, 2017
Fighting Climate Change Through Bottoms-Up Community Building

Nick Grossman — June 1, 2017
Entering the world of smart contracts

Nick Grossman — May 31, 2017
Mechanics of the token sale

Categories: Blog articles

Blockstack – A New Internet

A VC - May 23, 2017 - 8:55am

The founders of our portfolio company Blockstack are ambitious.

What they have built and are announcing today is effectively a new Internet, powered by the blockchain.

This is what the Blockstack team is after:

A new internet needs to have security and safety as a core of its DNA. Applications and services cannot be owned and controlled by remote third-parties. We can build a digital world of truly peer-to-peer internet utilities not maintained by corporations, but collectively, by the people. We can build a digital world that encodes property rights, where we can own our data, and where the people are powerful.

Here is their blog post announcing the Blockstack Browser.

And here is my partner Albert’s blog post on the USV blog explaining why this is important.


USV TEAM POSTS:

Nick Grossman — June 1, 2017
Entering the world of smart contracts

Albert Wenger — May 31, 2017
Uncertainty Wednesday: Entropy

Nick Grossman — May 31, 2017
Mechanics of the token sale

Categories: Blog articles

Writing and Speaking

A VC - May 22, 2017 - 4:24am

I got a lot of comments about the two videos I posted last week suggesting that I have nailed the art of public speaking.

I don’t know about that, I am my harshest critic.

But I do believe that writing regularly makes it so much easier to speak publicly in unscripted situations.

Writing forces you to work out your views and articulate them clearly and concisely.

Then when you are asked a question related to those views, you have already worked out the answer.

It is in the brain, waiting there to come out crisply and concisely.

I’ve been writing daily for going on fourteen years so that is a huge body of work, opinion, thought, and insight to be able to pull from.

My views have evolved over the years and so not all of that content is relevant at this point, but most of it is.

So if you have to speak publicly a lot, particularly in unscripted situations, I would suggest you write publicly regularly as well.

They work incredibly well together.


USV TEAM POSTS:

Albert Wenger — May 30, 2017
Basic Income: The Potential of Cryptocurrency

Nick Grossman — May 30, 2017
Open source leadership vs. corporate leadership

Nick Grossman — May 29, 2017
Regulating source code

Categories: Blog articles
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