Blog articles

Fun Friday: Summer Vacation

A VC - August 4, 2017 - 5:13am

It is that time of year that most of us take a week off and go somewhere to rest and relax.

I am on the East End of Long Island. Where do you plan to go for your summer vacation?


USV TEAM POSTS:

Albert Wenger — August 12, 2017
Preparing for Superintelligence: Living the Values of Humanism Today

Categories: Blog articles

A Range Not A Price

A VC - August 3, 2017 - 3:35am

Entrepreneurs often struggle with how to signal their valuation expectations to investors.

Investors rightly want to know what the entrepreneur’s price expectations are before investing significant time on the opportunity.

But entrepreneurs don’t want to negotiate against themselves and certainly don’t want to undervalue themselves.

So what I always recommend to the entrepreneurs we work with and, frankly, anyone who asks is to “give a range, not a price.”

Let’s say you are raising a Series A round and have an aspirational valuation in mind of $30mm pre-money, raising $6mm.

But you know that is an aggressive valuation and you may have to accept something materially less in order to get a deal done.

Then I would tell investors “we want to raise $4mm to $6mm and don’t want to dilute more than 20% including any increases to the pool.”

An investor could read that as you would accept $4mm at $16mm pre-money but you have signaled that $30mm post-money is where you are aiming.

And, because you said “don’t want to dilute more than 20%”, you have left some room for your aspirational valuation of $30mm pre-money in which $6mm would dilute the company roughly 17%.

Try this the next time you are asked for a valuation from an investor. It works well.


USV TEAM POSTS:

Albert Wenger — August 9, 2017
Uncertainty Wednesday: Risk Aversion (Jensen’s Inequality Cont’d)

Categories: Blog articles

Time Will Tell

A VC - August 2, 2017 - 8:52am

There is a lot of excitement about Bitcoin Cash. It became a thing yesterday and is up almost 100% in the last 24 hours according to Coin Market Cap.

It reminds me of the way hot IPOs trade. Snap went public at $17/sh, traded up to north of $24/share on it’s first day, and is currently trading at just under $13/sh.

I am not comparing BTC Cash to Snap. I am just saying that time will tell whether BTC Cash, or frankly any ICO, is going to be valuable long term.

But one thing is for sure, hard forks create something from nothing and we will see more of them as a result.


USV TEAM POSTS:

Albert Wenger — August 9, 2017
Uncertainty Wednesday: Risk Aversion (Jensen’s Inequality Cont’d)

Categories: Blog articles

Creating Tech Apprenticeships For Military Veterans

A VC - August 1, 2017 - 7:47am

AVC community member Bill McNeely is doing a Kickstarter to create tech apprenticeships for military veterans.

I backed it this morning and I thought all of you should know about it too.


USV TEAM POSTS:

Albert Wenger — August 9, 2017
Uncertainty Wednesday: Risk Aversion (Jensen’s Inequality Cont’d)

Categories: Blog articles

Unrelenting Stress

A VC - July 31, 2017 - 3:39am

I saw this Elon Musk tweet yesterday:

The reality is great highs, terrible lows and unrelenting stress. Don’t think people want to hear about the last two.

— Elon Musk (@elonmusk) July 30, 2017

What he describes in that tweet is the life of an entrepreneur. And also, to some extent, the life of a VC who cares.

The unrelenting stress is the hardest of the three in my opinion.

Stress is part of life, we all have it.

But starting and running companies brings stress that seemingly never stops.

Managing that so that it doesn’t eat you up and mess up your relationships is super hard.

Some things that I have seen work well for people are regular (daily?) workouts, eating and drinking healthy, having a coach, and most of all, having a spouse who keeps it all in check.

There is no better work, from where I sit, but it comes at a cost, particularly if you let it.


USV TEAM POSTS:

Albert Wenger — August 9, 2017
Uncertainty Wednesday: Risk Aversion (Jensen’s Inequality Cont’d)

Categories: Blog articles

Human self-domestication or human extinction?

Beyond Money - July 30, 2017 - 4:34pm

The final segment in today’s episode of Radio Lab (New Normal?) on NPR Radio was a fascinating report on domestication of wild animals, specifically foxes. By selective breeding of the few foxes who did not exhibit avoidance behavior (fear) when approached by humans, a Russian scientist was able, in ten generations, to produce docile domesticated foxes.

This naturally raises the question about the possibility of domesticating human to be less aggressive and more empathetic. In fact, the anthropological evidence suggests that since we began living in settled groups, the human species has long been undergoing a process of self-domestication, this perhaps as a necessary adaptation for living together in harmony. That idea, together with Steven Pinker’s argument that humans are becoming less violent (The Better Angels of Our Nature: Why Violence Has Declined), gives me cause for hope that humanity will not extinguish itself from planet Earth.

On the other hand, the fact that power is today so concentrated in the hands of a global elite who, by their threatening behavior and objectives of domination, seem not to have sufficiently evolved in that way, is cause for worry. That raises other questions: how can they be prevented from acting irrationally or how can the levers of power that they control be disabled or overridden?–t.h.g.


Categories: Blog articles

On Forks

A VC - July 30, 2017 - 5:23am

Last year Ethereum forked and we got a new crypto asset called Ethereum Classic. I own Ethereum. I don’t own Ethereum Classic.

I could buy Ethereum Classic but I have not been interested in doing that as of yet. That may change.

Next week Bitcoin will fork. If you hold your Bitcoin directly, you will get Bitcoin Cash, the fork of Bitcoin, in addition to your Bitcoin.

If you hold Bitcoin at a hosted wallet or exchange that will not support the fork, like our portfolio company Coinbase, you will not get Bitcoin Cash.

I am going to keep my Bitcoin at Coinbase and pass on the opportunity to get some free Bitcoin Cash.

If, over time, Bitcoin Cash becomes interesting, I could buy some and maybe I will do that. Like I might buy some Ethereum Classic.

Yes, passing on the opportunity to get some free crypto is a missed opportunity.

But I am not sold on Bitcoin Cash, like I am not sold on Ethereum Classic. I would like these crypto assets to prove themselves in the market before I take ownership of them.

All of that said, I think forks are valuable. They allow for innovation. They allow for others to try a different model. They allow for the market to decide what is valuable and what is not.

Forks are a pain for the companies that provide the infrastructure for these crypto assets. Forks introduce instability for a period and the Ethereum fork last year is a good example of what can happen.

But all in all, I think forks are a feature not a bug in the blockchain sector. There is more good that comes from them than bad.


USV TEAM POSTS:

Albert Wenger — August 6, 2017
The Fallacy of Biological Determinism

Categories: Blog articles

Video Of The Week: Shipping As A Competitive Advantage

A VC - July 29, 2017 - 4:37am

Our portfolio company Shippo is helping ecommerce companies compete with Amazon by making shipping easier and less expensive to offer.

In this short(ish) video, Shippo’s founder and CEO, Laura Behrens Wu explains how they do that and why it is so important.


USV TEAM POSTS:

Albert Wenger — August 6, 2017
The Fallacy of Biological Determinism

Categories: Blog articles

Funding Friday: Restore Historic Mission Control

A VC - July 28, 2017 - 5:01am

This is so cool. I just backed it.


USV TEAM POSTS:

Nick Grossman — August 4, 2017
Learning by doing

Jacqueline Garavente — August 3, 2017
ARKit: a game-changer for the Metaverse

Categories: Blog articles

Startup Churn

A VC - July 27, 2017 - 2:25am

We encourage all of our portfolio companies to measure their churn rates by cohort. It is very revealing.

I saw this tweet by Liad this morning that shows startup churn by cohort.

No Cake Walk.
Not for Entrepreneurs.
Nor for Investors. pic.twitter.com/pRCLD3dfRy

— Liad Shababo (@L1AD) July 26, 2017

I don’t know the source, but the data is sobering.

Some of the churn is companies getting sold. Some of the churn is companies getting profitable. But most of the churn is companies failing.

We have looked at our portfolio this way and our portfolio has performed much better than this. Some of that is selection. Some of that is support. And some of that is tenacity of the founders.

But, as Liad says in his tweet, startups are no cake walk.


USV TEAM POSTS:

Nick Grossman — August 4, 2017
Learning by doing

Jacqueline Garavente — August 3, 2017
ARKit: a game-changer for the Metaverse

Categories: Blog articles

The SEC Speaks On Tokens

A VC - July 26, 2017 - 4:16am

Yesterday the SEC issued a report of investigation finding that DAO Tokens are securities under U.S. law. This report sent shock waves across the crypto sector leading to roughly 10% declines in the major cryptocurrencies. I must have received a dozen or more emails from people saying that “ICOs are over.”

I don’t think ICOs are over. I think regulatory clarity is going to be good for the crypto sector long term and while this report does not give us total regulatory clarity, it does give us some very valuable insights into what the SEC is thinking about tokens.

Specifically, we now know that:

  1. The Howey test is the regulatory framework through which to evaluate whether a token is a security.
  2. A token that return profits to holders will be considered a security.

We likely know a lot more regarding jurisdictional issues and what the SEC is going to regulate and what they are not. But I will leave it to the lawyers and other SEC watchers to weigh in on that. I am not a professional and don’t want to pretend to be.

At USV, we have been urging our portfolio companies and others in the crypto sector to get good legal advice before embarking on an ICO, investing in ICOs, and more. That legal advice, given as far back as several years ago, more or less anticipated much of what was in this report.

You could see this coming if you did your homework. None of this is surprising to me and to most of the folks in the crypto sector who have sought legal counsel on these matters.

In fact, if you look at all of the regulatory actions that have been taken in the US over the life of cryptocurrencies, you will see that it has mostly been straightforward application of existing laws, on AML, KYC, taxes, securities, etc. Almost all of this could be, and in many cases, was anticipated by those who took the time to consider what the regulators might do and would do.

None of this means that the crypto sector in the US (or elsewhere) won’t be harmed by bad regulations. That has always been a big risk to the sector and remains one. Regulators must be careful to “do no harm”, here in the US and elsewhere. To date, I would say they have done a good job on that. I encourage them to continue that track record.

But mostly I would encourage all entrepreneurs, investors, and others who are actively participating in the crypto sector to get good legal advice before doing anything significant. The regulators are watching. Closely. So know the rules and play by them.


USV TEAM POSTS:

Nick Grossman — August 4, 2017
Learning by doing

Jacqueline Garavente — August 3, 2017
ARKit: a game-changer for the Metaverse

Nick Grossman — August 3, 2017
Keeping it simple

Categories: Blog articles

Zemanta – From SeedCamp to Outbrain

A VC - July 25, 2017 - 10:00am

In the summer of 2008, I attended the SeedCamp in London and the winner of that class was a company called Zemanta, out of Ljubljana Slovenia. I was taken with everything about Zemanta; a small team (three founders), out of a place that I had never been to and had barely heard of, winning the SeedCamp with a really smart blogging tool that I just had to have on my blog.

USV invested in a seed round that summer that was led by the SeedCamp folks and Eden Ventures. Zemanta was USV’s first European investment. Today, we have ten out of sixty-seven active portfolio companies (~15%) based in Europe.

The seed investment in Zemanta led to a nine year journey with Bostjan and Andraz, who founded Zemanta along with Ales.

The blogging tool is amazing. It recommends links and images in real time as you type into your blogging tool. I still have it running in my WordPress web application. It looks like this right now.

Zemanta sold the blogging tool to a company called Sovrn a while ago and refocused on the native advertising market. They understood how to place related content into a content feed as well as anyone and they decided to focus the company on that. Bostjan and Andraz recruited Todd to lead the new business opportunity. Over the course of the last three years, Zemanta DSP has become the leading buying tool for native advertising.

And the largest company in the native advertising market, Outbrain, became their largest customer. So a few months ago, Outbrain asked the Zemanta founders to join their team and help build some important new technology for Outbrain. After haggling for a few minutes, the deal was sealed and Outbrain now has an office and a team in Ljubljana.

Like every investment, Zemanta taught me a few important things. I learned how to work with founders from a different part of the world, I learned that Ljubljana is a lovely little city with wonderful cafes and restaurants along a gorgeous river, I learned that you can keep a company alive for almost a decade on less than five million dollars if you have a crack team of product managers, data scientists, and software engineers in a place that most people don’t know about, and I learned that tenacity wins, always.

I am pleased that Zemanta has found a home inside a larger company with a bigger opportunity, I am pleased that Ljubljana has a startup success it can point to, and I am pleased that USV is now a shareholder in Outbrain, an investment I mistakenly passed on a decade ago. But mostly I am pleased that Bostjan and Andraz, with a lot of help from Todd, were able to go all the way, from startup to exit, never losing that which makes them special. That’s a big win in my book.


USV TEAM POSTS:

Jacqueline Garavente — August 3, 2017
ARKit: a game-changer for the Metaverse

Nick Grossman — August 3, 2017
Keeping it simple

Albert Wenger — August 2, 2017
Uncertainty Wednesday: Jensen’s Inequality

Categories: Blog articles

What can history teach us about the present?

Beyond Money - July 24, 2017 - 12:47pm

Is there a science of history? Are there patterns in human affairs that tend to repeat themselves? Can we understand what is happening in our time by studying the past? These are questions that have intrigued me for a long time. Based on my study of systems, networks, political economy, and human behavior, my conclusions tends toward the affirmative in each case.

Based on his book, 1177 BC: The Year Civilization Collapsed, Prof. Eric Cline, in this fascinating lecture, looks back more than 3,200 years to describe the collapse of an earlier “global” civilization.  He presents evidence of an elaborate trading network around the Mediterranean which was composed of what he calls “the G8 of the ancient world.”

Here is a portion of the description from the YouTube channel:
“From about 1500 BC to 1200 BC, the Mediterranean region played host to a complex cosmopolitan and globalized world-system. It may have been this very internationalism that contributed to the apocalyptic disaster that ended the Bronze Age. When the end came, the civilized and international world of the Mediterranean regions came to a dramatic halt in a vast area stretching from Greece and Italy in the west to Egypt, Canaan, and Mesopotamia in the east. Large empires and small kingdoms collapsed rapidly. With their end came the world’s first recorded Dark Ages. It was not until centuries later that a new cultural renaissance emerged in Greece and the other affected areas, setting the stage for the evolution of Western society as we know it today. Professor Eric H. Cline of The George Washington University will explore why the Bronze Age came to an end and whether the collapse of those ancient civilizations might hold some warnings for our current society.”

On the same general topic, Ian Morris, Professor of History at Stanford University, in his lecture Why the West Rules — For Now: The Patterns of History, and What They Reveal About the Future, points to the same primary factors that lead to the collapse of civilizations.

Mass migration
Epidemic diseases
State failure
Famine
Climate change

Historically, each collapse had been followed by a “dark age.” Is that what’s in store for us in our time? View the full lecture at https://youtu.be/wnqS7G3LmMo.


Categories: Blog articles

Comment Policy

A VC - July 24, 2017 - 4:04am

Our portfolio company Disqus, the company that makes the comment system we use here at AVC, released a new feature last week.

This new feature allows a blogger/publisher to put their comment policy above the comment thread.

You can see it here, at the end of yesterday’s post, above the comment thread.

For those of you who use the Disqus comment system on their blogs and/or publications, here is a knowledge base post detailing how to use this new feature and containing some advice on how to set a comment policy.

As always, we encourage comments here at AVC. But please be nice or leave. It makes everything so much better.


USV TEAM POSTS:

Albert Wenger — August 2, 2017
Uncertainty Wednesday: Jensen’s Inequality

Nick Grossman — August 1, 2017
What’s your medium?

Categories: Blog articles

SegWit2x Update

A VC - July 23, 2017 - 4:28am

I posted last week about the debate between the SegWit2x Bitcoin update and the threat of a soft fork.

Since then a number of important things have happened.

BIP91 locked in on Thursday and and yesterday BIP91 enforcement was activated.

That means that SegWit is now active on the Bitcoin network.

This is a big deal because the most contentious protocol change in the history of Bitcoin, the introduction of SegWit, has finally happened.

The SegWit2x road map is not complete yet, as the next step will be to introduce a block size increase.

Jeff Garzik, who has been leading the SegWit2x implementation, has a good interview up on Coindesk explaining all of this and more.

Bitcoin has a lot of great things about it. As Jeff says in the interview, it is by far the most secure blockchain. But it’s developer community has had a hard time finding consensus and moving forward together.

SegWit2x is an opportunity for that to change. And I am encouraged by that.


USV TEAM POSTS:

Nick Grossman — August 1, 2017
What’s your medium?

Categories: Blog articles

Video Of The Week: Mesh Networking For Wireless Connectivity

A VC - July 22, 2017 - 6:03am

Daniela Perdomo, founder and CEO of our portfolio company goTenna recently gave a talk at the New York Times about how mesh networking can improve wireless connectivity in urban environments.

It’s a short talk (~7 mins) and explains how mesh networking technologies can (and will) solve urban wireless connectivity issues in the coming years.

Also, goTenna launched a map of its mesh network yesterday. Here is what it looks like as of today:


USV TEAM POSTS:

Albert Wenger — July 31, 2017
VPNs and Informational Freedom

Categories: Blog articles

Funding Friday: Token Filings

A VC - July 21, 2017 - 3:44am

Public market investors who like to buy into IPOs have Edgar, a database of SEC filings that they can browse through to learn important information on upcoming IPOs.

Investors in token offerings have not had the same thing. Until yesterday.

AVC regular William Mougayar has launched TokenFilings.com which is essentially Edgar for Tokens.

Yesterday we got Coindexter. Today we get TokenFilings.

The crypto community is building stuff that makes this sector more interesting every day.

Reminds me of what the Internet used to be before the big guys took over.


USV TEAM POSTS:

Nick Grossman — July 29, 2017
Speaking page

Categories: Blog articles

What in the world is going on? — Part 3

Beyond Money - July 20, 2017 - 9:20am

George Friedman, professional geopolitical analyst, founder of STRATFOR and author of The Next 100 Years: A Forecast for the 21st Century seems quite knowledgeable about history and the current status of military and economic power around the world.  In the following presentation he talks about U.S. strategy over the past 100 years and “the real interests of the United States.” He argues that the powers that control U.S. foreign policy have one overriding fear, which is “a united Eurasia”–“Our primary interest is to make sure that Russia and Germany do not form an entente,” neither by conquest nor agreement.

He observes that “Eurasia is now in complete chaos,” Russia and China are both weakening, and that Japan, Turkey, Poland are on the rise. He admits that “We staged the coup in Ukraine.” Regarding the Middle-East, he says “it will come down to Israel, Iran, Saudi Arabia, and Turkey to work it out.”

He believes (or claims to) that the U.S. intervention in Libya was ethically motivated, but I find that hard to believe. The evidence of the past century of U.S. interventions around the world shows quite clearly that ethical and humanitarian motivations provide mere cover for quite different  objectives. In the case of Libya, I believe that the attacks by the U.S. and NATO forces, and the murder of Muammar Gaddafi, had more to do with keeping Libya within the global debt money regime than with rescuing the Libyan people from the clutches of a “brutal dictator.”–t.h.g.


Categories: Blog articles

Coindexter

A VC - July 20, 2017 - 4:47am

Our former USV colleague Jonathan Libov finally took the covers off a side project he’s been working on since he was at USV.

It is called Coindexter and it’s “a collaborative library for long-term investors in decentralized, blockchain networks.”

You can contribute to Coindexter, like a wiki, or dive into research areasthat interest you. Feel free to ask a question if there’s something you’re looking to learn.

Check it out if you are into token/crypto investing.


USV TEAM POSTS:

Albert Wenger — July 28, 2017
Putting People First on Healthcare

Bethany Marz Crystal — July 27, 2017
Beyond Coding: Gamifying the Link Between Education and Industry

Categories: Blog articles

USV Team Posts

A VC - July 19, 2017 - 4:19am

If you are reading this blog via email, you are missing out on a great new feature.

At the end of the first post on AVC, there is a widget that shows other blog posts by USV team members.

This is what it looks like today, featuring three posts by my colleague Bethany. I suspect she added her blog’s RSS feed to the widget yesterday.

This is a classic old school link sharing network. A number of my USV colleagues, including Nick, Albert, and Jacqueline also participate in this.

So we’ve added a little bit more USV to AVC. And that’s a good thing. And long overdue.


USV TEAM POSTS:

Albert Wenger — July 28, 2017
Putting People First on Healthcare

Bethany Marz Crystal — July 27, 2017
Beyond Coding: Gamifying the Link Between Education and Industry

Categories: Blog articles
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