Blog articles

The Siege of Venezuela–What are the facts, and who’s to blame?

Beyond Money - March 7, 2019 - 5:09pm

In 2018, the United Nations Human Rights Commission (HRC) sent its former Secretary, Alfred de Zayas to Venezuela to investigate the situation there. De Zayas is an American lawyer, writer, historian, a leading expert in the field of human rights and international law.

John Bolton, Donald Trump, Mike Pompeo (L to R)

In August of 2018, de Zayas presented his Venezuela report to the HRC but it was greeted with a shocking silence. The only mainstream media outlet that I am aware of that has covered the UN report is the Independent (UK), in an article titled, Venezuela crisis: Former UN rapporteur says US sanctions are killing citizens, published on January 26, 2019. I have not seen any similar coverage it in the United States, and I myself learned about the report almost by accident. Amidst the deafening drumbeat for regime change, one must wonder why such an official investigation has been ignored.

Despite this neglect by the mainstream media, several recorded interviews of De Zayas have made their way onto the Worldwide Web. In this video interview, the UN Investigator and human rights rapporteur gives a summary of his findings. De Zayas says that there is no humanitarian crisis in Venezuela, but“The government … through an external economic war is being asphyxiated.” He asserts that “the financial blockade has had extremely adverse human rights impact” and it has been the intention of the United States “to create a situation whereby the people or the military would topple the government…and then the one percent could again come in and again control the wealth of Venezuela.”

Among the facts that he presents are these:

  • The Venezuelan oil company Citgo has not been allowed to take it revenues, amounting to 9 or 10 billion dollars, out of the United States.
  • In July 2017 Citibank decided, without prior notice, to close the accounts of the Central Bank of Venezuela,
  • And again, in November 2017, Citibank blocked the transfer[of funds] for a shipment of more than 300,000 doses of insulin.
  • Also, in November 2017, “the company Euroclear, retained $1.65 billion that the government of Venezuela had paid for the purchase of food and medicine.

These and numerous other blocks of payment for essential medicines, he argues, are responsible for increased rates of child and maternal mortality, and increased deaths due to lack of insulin and anti-retroviral drugs.

National security advisor, John Bolton has arrogantly admitted on air to Fox Business host Trish Regan that the [Trump] administration had the goal of putting U.S. companies in charge of Venezuela’s oil production. See it on former Congressman Ron Paul’s Liberty Report.
The most recent developments in this matter have included new financial sanctions, the attempt to declare the Maduro presidency illegitimate and to impose a hand-picked puppet, and an attempt to provoke an incident by sending so-called “aid” to the border with Columbia. As Mr. De Zayas, puts it, “Juan Guaido is riding on the Trojan horse of the United States.”

We should be grateful to Mr. De Zayas for courageously reporting the truth of the matter in Venezuela. It is distressing to me to see such broad support by Western and Latin American governments for regime change in Venezuela based on trumped-up charges. Such blatant imperial overreach should have the US populace up in arms, especially after the obvious falsehoods that have been put forth to overthrow governments in places like Iraq, Libya, and others countries across the middle-east and North Africa, and the attempted overthrow of the Assad government in Syria. Truly, the world order today has all the hallmarks of a fascist super-state.

You can find Mr. de Zayas’ official report at https://documents-dds-ny.un.org/doc/UNDOC/GEN/G18/239/29/PDF/G1823929.pdf?OpenElement. I have excerpted the Conclusions and Recommendations from the report and you canfind them here. You might also want to visit Alfred de Zayas’ Human Rights Corner.
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Venezuela addendum
Here are some additional excerpts and links to articles about the current situation regarding Venezuela.

Another Failed Coup in Venezuela?
George Ciccariello-Maher dissects the failing US-backed coup in Venezuela.
From Venezuelanalysis

Underestimating the People
We’ve seen this all before: On April 11 of 2002, the Venezuelan opposition—according to the most credible accounts—unleashed snipers on its own supporters and used the ensuing deaths to justify a coup against Hugo Chávez. But the opposition dramatically overplayed its hand and underestimated the Chavista grassroots, who it routinely smeared as the blind followers of a populist strongman. When coup leaders abolished all branches of government and scrapped the constitution, hundreds of thousands of poor Venezuelans poured into the streets demanding, and eventually forcing, Chávez’s return to power.

Much has changed since 2002. A perfect storm of Chávez’s death, collapsing global oil prices, a mismanaged system of currency controls, ferocious aggression from the opposition and—more recently—U.S. sanctions, has thrown the Venezuelan economy into a tailspin. Many of the impressive accomplishments of the Bolivarian Revolution—in health care, education and poverty reduction—have quickly evaporated, producing frustration, confusion and desperation among even Chavismo’s most hardline supporters.

Read the rest of the article here
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Hands off Venezuela
By Pat Hynes,
From Traprock Center for Peace and Justice

Hope and US Aid at the Border, the title of a recent New York Times video, deodorizes the US attempt to overthrow President Maduro of socialist Venezuela and replace him with a hand-picked member of the Venezuelan elite, capitalist class.

As the major media presents it, the US is altruistically rushing to feed a people in economic crisis. And, of course, our government knows what is best for the Venezuelan people (just as we did for Afghani, Iraqi and Vietnamese peoples). Yet, photos of mass rallies reveal that millions of darker-skinned – indigenous and mixed-race Venezuelans, of poorer classes support their elected president, while smaller numbers of white descendants of early Spanish colonizers back the US-selected and designated new president, a legislator named Juan Guiado. Our troops and aid anywhere near Venezuela smell like regime change.


The enlightenment of another Iraq and Afghanistan veteran, Kevin Tillman, pierces the benighted world of Washington. “As one of the soldiers who illegally invaded Iraq…I know an illegal coup/invasion when I see one…if Venezuelans believe their president (their president) PMaduro has mismanaged the nation’s most valuable asset [oil], it is their right to seek change, but this is not a right enjoyed by Donald Trump, Nancy Pelosi or Elliot Abrams.”

Please read the full article.
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Financial Imperialism: the Case of Venezuela
by Jack Rasmus
From Counterpunch

The US Neocon-led strategy is increasingly clear: establish a ‘beach-head’ on the Colombian-Venezuelan (and Venezuelan-Brazilian) border under the guise of providing humanitarian aid. Use the aid to get Venezuelans on the border to welcome the US proxy forces to cross over. Set up political and military structures thereafter just inside the Venezuelan borders with Colombia and Brazil, from which to launch further similar efforts deeper into Venezuela.  Repeat this province by province, step by step, penetrating Venezuela space until enough local units of the Venezuelan military change sides and convince one or more of the Venezuelan military hierarchy to join them. Establish a dual state and government within and along the border of the Venezuelan state this way. A breakaway State and dual power within the country. Make it appear, by manipulating the media, that the Venezuelan people are rising up against the Maduro government, when in fact it is US proxy forces invading and using opportunist local politicians, military, and others in the ‘conquered’ zones, as the media covers for their invasion.

Read the full article.
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Can Venezuela and its neighbours survive the coming war?
by Thierry Meyssan
From Voltairenet

Thierry Meyssan is a French journalist, author and political consultant. He is founder of the Voltaire Network (1994) and has written numerous articles about the geopolitical power struggle.
In this article, Meyssan argues that:

If my analysis is correct – and for the moment, everything seems to confirm it – we have to prepare for a war not only in Venezuela, but throughout the Caribbean Basin. Nicaragua and Haïti are already destabilised.

This war will be imposed from the exterior. Its aim will no longer be to overthrow leftist governments for the profit of right wing parties, even if appearances will at first be confusing. The logic of events will make no distinction between one side or another. Little by little, the whole society will be threatened, without the distinction of ideology or social class. Identically, it will become impossible for other states in the region to shelter from the storm. Even those who believe that they can protect themselves by serving as a rear base for military operations will be partially destroyed. For example, even though the Press hardly ever mentioned it, entire cities were wiped out in the region of Qatif, in Saudi Arabia, even though this country was Washington’s main ally in the « Greater Middle East ».

You can read the entire article here.
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What the Press Hides From You About Venezuela
A Case of News-Suppression All Across the Mainstream Media
From NotSee America

By Eric Zuesse Introduction This news-report is being submitted to all US and allied news-media, and is being published by all honest ones, in order to inform you of crucial facts that the others — the dishonest ones, who hide such crucial facts — are hiding about Venezuela. These are facts that have received coverage only in one single British newspaper: the Independent, which published a summary account of them on January 26th. That newspaper’s account will be excerpted here at the end, but first will be highlights from its topic, the official report to the UN General Assembly in August of last year, which has been covered-up ever since. This is why that report’s author has now gone to the Independent, desperate to get the story out, finally, to the public. Read the full article here.
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Feel free to provide additional pertinent links, and your comments, by entering them in the Leave a Reply box below.

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Categories: Blog articles

The Business Model Pivot

A VC - March 7, 2019 - 8:25am

I saw Zuck’s post on pivoting to private interactions from public posts yesterday and I had a flashback to Bill Gates’s Internet Tidal Wave memo to his company almost twenty-five years ago.

I have always seen a lot of Gates in Zuck. They both have this incredible ability to see someone else’s product and realize that they need to build their own version of it.

But copying someone else’s product is a lot easier than copying someone else’s business model, particularly when you already have a fucking great one that makes you and your shareholders billions of dollars a year.

It will be interesting to watch Zuck do what Gates was ultimately unable to do – completely reboot the company’s business model to position itself to win the next wave in tech.

In the case of Gates, it was the pivot from paid software to free advertising supported software (aka – the attention economy that we are now paying for).

In the case of Zuck, it will be the pivot from monetizing attention to monetizing the protocol. The good thing is he is headed in the right direction, and surrounded some of the smartest people I know in crypto. The bad news is when you have this anchor called a legacy business model, it means making the right moves and making them quickly a lot harder.

Here is an example of one of those choices Facebook will need to make and make correctly:

If @facebook’s stablecoin goes the private blockchain route it will be to #crypto what @Microsoft’s Internet Explorer was to the Internet.

— Chris Burniske (@cburniske) March 4, 2019

In any case, it is game on. Being on the verge of 60 years old means I have seen this game play out at least once before and so I have a frame of reference to observe it. That’s really great. It is an exciting time again in tech.

Categories: Blog articles

Golden Handcuffs

A VC - March 6, 2019 - 8:57am

Daniel Olshansky asked me this question on Twitter:

@fredwilson Have you ever written about how to avoid "rest and vest" culture where there are employees who want to leave a company but are held down by golden handcuffs?

— Daniel Olshansky (@olshansky) March 4, 2019

I don’t believe I have ever addressed this issue here on AVC but I certainly have seen it inside of our highly valued portfolio companies.

Here is the issue. Employees join a high growth company, are issued options which become valuable as the company’s equity appreciates, and if they leave they have to exercise the vested part (and pay taxes) and walk away from the unvested part. So they stay even though they may not be happy at work. Maybe they are not in a challenging role or maybe they find themselves in a problematic management situation. This leads to “resting and vesting.”

Here are some thoughts:

1/ A four year option grant is not a gift. It has to be earned via performance over time, not just time. If there is no performance, then the employee should understand the vesting is at risk. Companies should be very clear about this when they issue the options and on an ongoing basis. This is a cultural issue and needs to be treated as such.

2/ Companies need to have performance oriented cultures where there are frequent checkins between managers and team members, with feedback going both ways, and where non-performance results in changes. These changes could be restructuring of teams, changes in management, or departures of employees. Companies that do not actively manage performance are likely to have lower morale and toxic issues like resting and vesting.

3/ Managers and company leadership must do their part to take ownership of these issues. Employees will adapt to the environment they find themselves in. If you have a rest and vest culture in your company, look in the mirror to see the problem.

4/ I would like to see a market emerge for financing of option exercises. There are companies actively working on this. I believe that departing employees ought to be able to borrow against their valuable equity at no recourse to them, so that they can exercise and pay the taxes. This would solve part of the problem, where employees can’t leave because they can’t afford the taxes (and, in some cases, the exercise price).

5/ I do not believe that the option programs are the problem here. I do think the taxation at exercise is bad public policy and I wish the US government would move taxation to a liquidity event, but I also think we can use the capital markets to address this problem.

6/ I think in the vast majority of cases, the golden handcuff problem is a result of poor management and a leadership team that is unwilling to address this issue head on and make unpopular and difficult decisions about people.

So there you have it Daniel. That’s what I think about this issue. Thank you for asking me about it.

Categories: Blog articles

Being Wrong

A VC - March 5, 2019 - 10:48am

Howard has a great (and short!) post on how blogging publicly gives you a timeline on how you were thinking at a given time. He’s right, it is awesome to be able to go back and see what you were thinking and evaluate it in hindsight.

Like my “What Is Going To Happen In 2019” post.

Sitting here two months and a few days into 2019, I could not have been more wrong about the first couple predications I made in that post.

The stock market has been on fire and the President is still firmly in charge.

Of course all of that could change.

It is still early days in 2019.

But going back and re-reading that post is super helpful in reminding me that my assumptions may be wrong and I need to re-evaluate the assumptions to make sure I am heading in the right direction.

And blogging (aka taking a stand publicly) is a great way to do that.

Categories: Blog articles

Getting Credit

A VC - March 4, 2019 - 5:13pm

Last night CBS 60 Minutes aired a piece about the gender gap in tech and left out a number of important efforts to close the gap.

My friend Rob Underwood tweeted this out about that piece:

I admire work of my friend @hadip & the org he started, @codeorg. But the incredible, brave (!) @reshmasaujani is absolutely right. Having had a chance to work a bit w/ #CSForAll movement, @60Minutes leaving out contribs of @GirlsWhoCode, @NCWIT, @BlackGirlsCode is unconscionable https://t.co/hKwXLSkVXN

— Rob Underwood (@brooklynrob) March 4, 2019

And while I completely agree with Rob that Reshma has built something amazing at Girls Who Code, I also feel that the results she and her organization are getting are what matters the most and so I responded with this:

What I have learned from watching my wife (@thegothamgal) work on gender equity in startups and my own work on equity in CS education is that you cannot worry about who gets the credit, you have to worry about the results. It makes it easier to stay focused and stay happy

— Fred Wilson (@fredwilson) March 4, 2019

Later today, a friend and fantastic entrepreneur sent me a private email arguing that credit is very important and that it is how organizations gain credibility, legitimacy, and support to keep going.

Of course she is right. Credit is important.

I also got an email from the folks I work with at the NYC public school system pointing out that the NYC public school profiled in the 60 Minutes piece was the beneficiary of the CS4All effort which I have been championing for almost a decade now and that was left entirely out of the story.

All of this is unfortunate. There is a very broad coalition of organizations doing incredible work making sure that we have gender and racial equity in STEM education. And we are starting to see the results of all of the work of these groups. It would have been nice to credit a much broader group of organizations and companies.

But this happens all the time. USV has been the seed and largest investor and a highly engaged board member in companies that are referred to in the press as an “Andreessen Horowitz backed company” or a “Sequoia backed company” or a some other such characterization. When I see that I flinch a bit but tell myself that it is the company, the founders, and the results that matters and not who invested in it.

Success has a thousand mothers and some will get more credit than others. That is the unfortunate truth of success. But if we focus on the success versus the credit then I think we will all be better off.

Categories: Blog articles

Karma

A VC - March 3, 2019 - 8:13am

A friend of mine sent me this the other day.

Two AVC posts were at or near the top of Hacker News.

But I did not go and read the comments as I have found the comments at Hacker News emotionally challenging for me.

As many of you know, I have also found the comments here at AVC emotionally challenging for me.

One of the suggestions I received when I blogged about that recently was to charge for comments.

I don’t want to charge for commenting because I want this to be an equal opportunity place for people to speak.

However, when something is free, it is abused. We have spam and trolls.

One mechanism that I like is Karma. You are given Karma when you join a system, and you may earn more Karma every month to replenish your supply. You spend Karma to make a comment. And if your comment is popular, you can earn more Karma. If your comment is deemed to be spam or against the community rules, you lose Karma.

Creating a native currency inside a social system is powerful. It allows you to start “charging” for things that should have a cost associated with them while still allowing the system to be “free to use.”

I am not planning on adding Karma to the AVC comments because Disqus doesn’t support this feature and I’m not eager to make any changes to the technology I use to put this blog out every day. I mean that. So if you email me or leave a comment suggesting I move to a new comment system, I am going to ignore it.

But this idea, combined with the ability to spin up a crypto-token simply and easily, is pretty powerful. A number of social platforms are doing this. Reddit is one that seems to be making a version of this work.

If I was starting over from scratch, I’d build on top of that idea. I think it would make things a lot better.

Categories: Blog articles

Audio Of The Week: Chris, Joel, Jesse, and Denis on Crypto

A VC - March 2, 2019 - 7:49am

One of our first crypto investments maybe five years ago was Mediachain, founded by Denis Nazarov (@Iiterature), and Jesse Walden (@jessewldn). They sold that company to Spotify and eventually landed at A16Z crypto. One of the USV analysts who worked on our Mediachain investment was Joel Monegro (@jmonegro) who later teamed up with Chris Burniske (@cburniske) to start Placeholder, a crypto VC fund.

So we know these four people very well and all of them are now deeply involved in funding early stage crypto projects.

This podcast is a great conversation among the four of them on how to design cryptonetworks so that they function well over the long term.

Full disclosure: USV is an investor in Placeholder and my wife and I are individual investors in A16Z crypto.

Categories: Blog articles

An Open Letter To Jeff Bezos

A VC - March 1, 2019 - 7:37am

This ran as a full page ad in the New York Times today. I signed it along with the top labor leaders in NYC, the top political leaders in NYC, top business execs, and the leaders of NYC’s higher education institutions. I believe it was a mistake by Amazon to pull out of NYC and I very much hope they will reconsider.

Categories: Blog articles

Token Summit IV

A VC - February 28, 2019 - 8:24am

Chris Burniske reminded me yesterday of something I said a while ago:

"The lesson I’ve learned in my career is to invest into the post crash cycle. When you do that, and do it intelligently, you are rewarded greatly" – @fredwilson 4 years ago (in the last #crypto bear market): https://t.co/Fwy1J8ydRr

— Chris Burniske (@cburniske) February 27, 2019

We are in the post crash cycle in crypto and that has made the sector interesting to me again. Prices are way down and there is a lot of great work being done on projects we are invested in and projects we want to invest in.

And no better place to soak up all of that progress than at Token Summit IV, run by our friends William Mougayar and Nick Tomainoon May 16th in NYC.

When William asked me if I thought they should do it this year, I said “hell yes” but also suggested that they dial it back in line with crypto prices. And that is what they have done.

They are capping the number of attendees at 550, about the same number they had at the inaugural Token Summit in May 2017. They are planning to do it at an intimate venue and keep the content and attendee list very tight.

The first 200 early bird tickets are available for purchase immediately at a price of $699. After 200, anyone can sign up but they will be “invite only” and they are selecting signups based on quality, experience and diversity of thought they bring.

This year’s Token Summit will focus on the following issues:

  • Cryptonetworks and open source blockchain protocols versus startups: what are the differences and similarities?
  • Open finance: what are the challenges to getting open, global financial products in the hands of millions of users?
  • dApp development: can next-generation dApp platforms be a catalyst for greater adoption?
  • Latest practices in extracting blockchain data for insight: what can we learn and why is this important now?
  • Are we decentralized yet? Is there an optimal criteria for decentralization, and how do we get there?
  • How do we quantify the value of blockchain protocols, and applications?
  • What are the success factors in deploying decentralized protocols?
  • Decentralized governance – what is working now versus what is experimental?
  • Tokens evolution- what are the best cases with real innovation, real users and real benefits?
  • The regulatory front: Is the US losing its position as the standard bearer? Is there a perfect jurisdiction?


Categories: Blog articles

Carbon-Offset Shipping On Etsy

A VC - February 27, 2019 - 8:11am

I don’t write a lot about Etsy here at AVC. It is a public company and I am the Chairman so I have to be careful.

But today Etsy is announcing something that makes me so proud. I have to tell you about it. Etsy is the first major online shopping destination to offset 100% of carbon emissions from shipping.

Here is Etsy CEO Josh Silverman’s blog post on this news.

Etsy has been committed to clean energy for a long time. They will power 100% of their operations with renewable energy by next year. But the company understood that they could not stop there and needed to think about the carbon footprint of their network of sellers shipping products to buyers. And so they have taken the next step of offsetting all of the carbon emissions related to shipping on Etsy. This initiative comes at no additional cost to Etsy buyers or sellers.

To celebrate the launch of carbon offset shipping on Etsy, they are going to do something tomorrow to make a splash.

To jumpstart our efforts and celebrate this milestone, tomorrow (February 28), we will also offset shipping emissions for the entire US ecommerce sector for the day. In the US alone, every day approximately 55,000 metric tons of CO2e are emitted into the atmosphere by delivering packages from online orders. Offsetting this impact for one day is the equivalent of protecting 100 square miles of US forests for one year.

https://blog.etsy.com/news/2019/on-etsy-every-purchase-makes-a-positive-impact/

I am a believer in doing well by doing good. There is a lot of that across our portfolio at USV and across our personal investments in tech and real estate. One of the good things we need to do for our world right now is reduce our carbon footprint. And we need to do that urgently. So I am thrilled and proud of Etsy’s leadership and work here. Well done Etsy.

Categories: Blog articles

Money, Oil, War and the Global Power Structure

Beyond Money - February 26, 2019 - 11:50am

Fascism should more appropriately be called Corporatism because it is a merger of State and corporate power. —Benito Mussolini (1883-1945), Fascist Dictator of Italy

The liberty of a democracy is not safe if the people tolerate the growth of private power to the point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism–ownership of government by an individual, by a group, or any controlling private power. — Franklin D. Roosevelt

The current attack by US and globalist forces against the Venezuelan government is the latest in a long series of regime change actions aimed at keeping or restoring control over essential resources, in this case oil, and preventing any significant departure from corporatization and elite rule. It should be clear by now that according to Mussolini’s definition, the present world order is not democratic, but fascist. Centralized control of money, banking, and finance have allowed the power elite to develop financial weapons that can be deployed to bring independent governments to heel, with military force being deployed if necessary.

In his recent article, Sanctions of Mass Destruction: America’s war on Venezuela,  journalist Garikai Chengu points out that, “American economic sanctions have been the worst crime against humanity since World War Two. America’s economic sanctions have killed more innocent people than all of the nuclear, biological and chemical weapons ever used in the history of mankind,” and highlights the obvious saying, “The fact that for America the issue in Venezuela is oil, not democracy, will surprise only those who watch the news and ignore history. Venezuela has the world’s largest oil reserves on the planet.”

Chengu goes on to say that “From the first moment Hugo Chavez took office, the United States has been trying to overthrow Venezuela’s socialist movement by using sanctions, coup attempts, and funding the opposition parties. …United Nations Human Rights Council Special Rapporteur, Alfred de Zayas, recommended, just a few days ago, that the International Criminal Court investigate economic sanctions against Venezuela as a possible crime against humanity perpetrated by America.”

 “Prior to American sanctions, socialism in Venezuela had reduced inequality and poverty whilst pensions expanded. During the same time period in America, it has been the absolute reverse. President Chavez funneled Venezuela’s oil revenues into social spending such as free+6 healthcare, education, subsidized food networks, and housing construction.”

Caitlin Johnstone reports that Psychopathic US Senator Openly Calls For Maduro To Suffer Gaddafi’s Fate.

Johnstone reports that, while the Maduro government has refused this “Trojan Horse” of supposed aid from the United States, he has not been refusing aid from other sources. “In reality, Maduro has been accepting aid from everywhere except from the government that is openly staging a coup in his country in gross violation of its national sovereignty. Just last week Caracas accepted 933 tons of food and medical supplies from China, Cuba, India and Turkey, and Russia has shipped in 300 tons of aid on its own.”

Florida Senator Marco Rubio posted this image in his recent tweet. The implication is clear that Rubio wants Maduro to be tortured, sodomized and murdered just as Gaddafi was in Lybia for defying the demands of the empire.

CNN’s Ana Cabrera reports that Florida Senator Marco Rubio has said that “no matter how long this takes,” the US and the international community are standing with the people of Venezuela, “until freedom is restored in Venezuela.”

Sure, freedom for U.S. corporations to plunder Venezuela’s oil resources, and once again dominate the Venezuelan people. We’ve seen this “ploy” so many times before, in so many different places; can anyone possibly take it seriously? Mr. Rubio, you call yourself (on your Twitter page) “a follower of Christ,” but your behavior is not at all Christ-like. Did Christ ever call for the violent overthrow of governments, or the torture and murder of another human being, or the promulgation of lies intended to justify such actions?  Even the United Nations has acknowledged that this so-called “aid” that you are trying to impose is a political ploy. “Humanitarian action needs to be independent of political, military or other objectives,” U.N. spokesman Stephane Dujarric told reporters in New York.

And it is not only the Trump administration that is beating the drums for this takeover of Venezuela. According to Johnstone, even so-called democrats like Bill and Hillary Clinton, Dianne Feinstein, Bernie Sanders, and Kamala Harris are calling for regime change there.

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Categories: Blog articles

Progress Is Ugly

A VC - February 26, 2019 - 11:26am

I walked out of my house in LA this morning and was greeted with this sight:

I thought “ugh” and debated picking it up and putting it where it belongs.

I am all for progress and understand that there are costs and benefits with everything.

This post explains how electric scooters can and likely will result in massive reductions in carbon emissions (and that Steve Jobs was a big fan of electric scooters).

With that electricity subtracted, the net amount of mitigated carbon equals 17,130 metric tons. Let’s reduce this number by 20% for people who would have walked and for chargers picking up scooters in their cars. Now we’re looking at a total amount of 13,700 metric tons of CO2 mitigated by not driving a car.That’s the equivalent of taking 105,000 cars off the roads around the world, each day.

https://medium.com/cleantech-rising/the-environmental-impact-of-electric-scooters-8da806939a32

That is a big deal. It is really hard for me to be against electric scooters when I see people riding them to work instead of driving or being driven in cars.

But the way electric scooters have been rolled out here on the west side of LA leaves a lot to be desired. I have counted at least five suppliers of electric scooters in my neighborhood. There seems to be no limit on new entrants. And the big product market fit innovation that unlocked electric scooters, the dockless network (which I’ve been a fan of on this blog), is also the cause of much of the “ugliness” of them.

I have no doubt that the electric scooter providers will innovate on the model and the product and figure out how to alleviate many or possibly all of this ugliness over time. But until then we will be picking up scooters from our lawns and sidewalks.

It is no wonder that large swaths of society are getting tired of tech companies, startups, and disruption and are starting to say “no mas.” We in startup land have learned that the winners beg for forgiveness instead of ask for permission. And you won’t find a bigger fan of and promoter of permission-less innovation than me and my colleagues at USV.

If we wait for those in power to grant permission to innovate we won’t get anywhere. Most everyone understands that.

So we end up with ugliness. And that is a big challenge for innovators. Can we innovate a little more beautifully? I don’t know but I hope that we can try. If we don’t, we will see even more backlash than we are seeing now.

Categories: Blog articles

How To Be A Good Board Member

A VC - February 25, 2019 - 7:44am

Mark Suster wrote a post this weekend laying out some rules for being a good board member before the meeting, in the meeting, and outside of the meeting. It is a very good list. I particularly like his rules for outside of the board meeting and agree with him that is the most important part of being a board member.

I try to follow these rules except “let others speak.” That is a joke but I am known for taking up a lot of airtime in meetings, not only board meetings. It is something I’ve been working on for thirty-five years and something I expect I will be working on for the rest of my life. I just get so into it and can’t help myself.

Which leads me to my rule for being a good board member.

It comes down to one word.

Care.

If you care, really care, deeply care, like the way a parent cares for a child, you will be a good board member.

Of course, you have to do a lot of work; preparation work, people time, relationship work, reading, studying, etc to be good at this job.

But all that comes easy if you just deeply care about the company, the people running it, and everybody in and around it.

Categories: Blog articles

The “Doubling Model” For Fundraising

A VC - February 24, 2019 - 8:25am

I was talking to a friend this past week who is looking at an early stage company and trying to figure out how to value it.

He pointed to a similar company that has a public market cap of $250mm.

I asked him how many rounds of financing or how many major milestones does this early stage business need to accomplish before it can get to the same place the similar publicly traded company is at.

He said he thought it was going to take three big steps after this financing to get there.

So I said, “it is worth roughly $30mm after this round.”

He said “how did you determine that?”

I said “If you assume the value will double from round to round or milestone to milestone, and after three more of those it will be worth $250mm, then it should be worth $30mm after this one.”

I then said “work back from $250mm, to $125mm, to $62mm to $31mm.”

I call this the doubling model and I’ve used it as a framework for thinking about value appreciation in startup financing for over thirty years.

Here is a simple spreadsheet that shows how this works. It does not include the impact of employee equity grants in it so the numbers would change a bit if I added that. Assume the employees would own 20% of the company at exit.


This is just a framework, nothing more.

But I find it is very helpful in thinking about what is fair and reasonable at various stages of a companies development.

You can also scale this back. If a company only needs ~$20mm to get to positive cash flow, but only has $150mm of potential value at exit, you would get something like this:

The two big assumptions that drive this framework is that a company should always target to double valuation round to round and never dilute more than 20% per round. That minimizes dilution and also gives the existing investors the comfort and confidence that things are going roughly to plan.

If things are going great, you can take valuation up more than that from round to round, but in my experience that often catches up to you and the next round is flat as a result, which is not a great thing for anyone.

And everything is ultimately governed by the total size of the opportunity (TAM), how the market will value that at time of exit, and the capital requirements to get there. Those are the fundamental drivers of value in startup land and this framework attempts to respect them.

Categories: Blog articles

Video Of The Week: The Currency Of Trust

A VC - February 23, 2019 - 11:07am

Trust is rising as a central issue in tech and the Internet. We spend a lot of time at USV thinking about trust and talking about trust. It is part of our current investment thesis.

Rachel Botsman is a writer who focuses on trust and her talk at DLD last month was quite good.

Categories: Blog articles

Funding Friday: Sphero RVR

A VC - February 22, 2019 - 7:48am

This is such a cool project. I backed it the minute I saw it.

Categories: Blog articles

NYC Is Savills’ Top Tech City

A VC - February 21, 2019 - 7:42am

Savills World Research, a global property agent, has been ranking the world’s top tech cities based on a bunch of criteria for years. In this year’s rankings, NYC tops SF to become the number one tech city in the world.

This is just one survey and I am certainly not going to assert that NYC has surpassed the bay area in terms of the best place to start a tech company.

But the bay area is absolutely struggling with some challenges. Labor and real estate costs have skyrocketed in the last decade. And from what we are seeing it is easier to convince someone to leave the bay area and move to LA or NYC than it has been in the past. The bay area is not an easy place to live and work anymore.

Truth be told, NYC has some of those same issues, but it has the benefit of five boroughs, a mass transit system that even with all of its problems moves 5.5mm riders a day, and a vibrant business community that is diverse and talented.

Another truth is that any of those thirty cities would be a fine place to start a company. Tech has gone global and so has tech talent. And investors are eager to fund innovative tech companies in many places around the globe.

USV has portfolio companies in about a dozen of those top thirty cities and, while we limit our investments to North America and Western Europe, we certainly hope to increase that number in the coming years.

But regardless of all of that, I am proud of what NYC has been able to accomplish over the last twenty-five years. In the mid 90s, I doubt NYC would have been a top ten city on this list. And now it is number one. Well done Gotham.

Categories: Blog articles

SoundCloud Premier Distribution

A VC - February 20, 2019 - 7:46am

Our portfolio company SoundCloud launched an important new feature today. Distribution.

There are plenty of services a musician can use to get their music onto the major streaming music services. There has been CDBaby, TuneCore, DistroKid, and many more. So why do musicians need another option?

Because if you grow up on SoundCloud, starting in your bedroom or parent’s basement, and you have all your music there, it is nice to be able to send some of it, or all of it, to Apple Music, Amazon Music, YouTube Music, Spotify, Tencent, and many more.

This service is free if you have a SoundCloud Pro or Pro Unlimited account.

Here’s the value proposition (from SoundCloud’s blog post):

With the first and only distribution tool built directly into a streaming platform, you can think of your SoundCloud account as mission control for your music: the only place where you can share tracks instantly, connect with your fans, manage your content, and get paid for your plays – everywhere. Simply choose from your uploaded tracks and albums and distribute to all major music services while keeping 100% of your rights and payouts (we take nothing) and getting streamlined payments directly from SoundCloud.

I am excited to see this launch as it is a key piece of SoundCloud’s position in the market, as the place creators go to start sharing their music, and stay to manage it as they grow their fan bases and careers.

Categories: Blog articles

The Weekly Email

A VC - February 19, 2019 - 7:53am

One of my favorite moves that I have seen founders do in the early stages of their company (think pre-seed, seed, and possibly into the Srs A stages), is the weekly email.

This can take a number of forms; a weekly email to the team, a weekly email to the investors, a weekly email to everyone, even a weekly email to yourself! It matters a bit who the audience is for the weekly email because it determines what the founder can put into the email.

But I am not sure it matters that much who the audience is. What matters more is a weekly cadence of what is on the founders mind, what happened in the last week, and what the objectives are for the coming week.

Early stage startups are hyper-changing environments. The founder needs to keep everyone aligned and on-board as he or she weaves and bobs around product market fit, the positioning of the company, the composition of the team, and a lot more. The weekly email does a good job of accomplishing that.

But more than anything, writing the weekly email is a tool for the founder to collect themselves, get grounded for the week ahead, and articulate what they and the company are doing and why.

I like Sunday evening for the timing of the weekly email best. It sets up the week to come. But any time over the weekend, or even monday morning, works fine.

If you are starting something new and want a routine that can help you get into a rhythm and stay there, consider the weekly email. It’s a great one.

Categories: Blog articles

A Small Change To The Comments

A VC - February 18, 2019 - 8:14am

David Steinberg, founder and CEO of Zeta Global, the owner of Disqus, saw my blog post last week expressing a desire to make this blog easier to manage. He reached out, asking how Zeta/Disqus could help.

I explained my frustration with the comments here at AVC and he asked the Disqus team to see if they could help.

And less than a week later, we have the first result of that assistance. AVC is running an experimental feature that Disqus is working on called “collapsed comments”.

One of the things that I find challenging with the comments is when a group of people decide to have a conversation with each other and it results in dozens of replies, one after another.

I don’t want to stop them from doing that, but I also don’t want that conversation to take up a ton of space on the page.

It is also the case that it is often in those rapid reply discussions where the flames come out.

So we are going to collapse the replies on multiple reply conversations here at AVC and it has been live since late yesterday.

It looks like this:

Behind that “Show More Replies” link are sixteen more comments, taking up four pages of screen real estate.

I am not saying that those conversations aren’t valuable. They are and people can still dive into them.

But they are not longer going to be the primary thing people see when they wade into the comments here at AVC.

I think that is a good thing and a small step to making it a bit easier to manage the comments here.

Categories: Blog articles
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