Blog articles

Email Bankruptcy

A VC - January 2, 2018 - 6:19am

I saw this tweet in my timeline yesterday and thought “what a great way to start the new year.”

1st day of the year has to be inbox 0

I’ve declared email bankruptcy.

If I owe you an email, please send again no vex. Blame @fredwilson na im teach me the beauty of email bankruptcy.

— Oo Nwoye (@OoTheNigerian) January 1, 2018

I had 1,625 unread emails in my inbox this morning.

I have archived all of them that came in during 2017.

If you sent me an email in 2017 and did not get a reply, you won’t.

I am starting the year fresh. It feels good. Thanks for the suggestion OoTheNigerian.


Nick Grossman — January 11, 2018
The weakest link

Nick Grossman — January 10, 2018
From a labor mindset to a capital mindset

Categories: Blog articles

What Is Going To Happen In 2018

A VC - January 1, 2018 - 8:49am

This is a post that I am struggling to write. I really have no idea what is going to happen in 2018.

  • Will the crypto markets continue in their bull cycle? I have no clue. I was showing my daughter’s friend an app that helps people save and invest and he said to me “I don’t need that, I just buy some ETH every week.” I said “that’s a good plan until it isn’t.” I just don’t know when buying crypto will stop being a good idea. It was a great idea in 2017.
  • Will the economy extend its eight year expansion? I have no clue. The longest post WWII economic expansion was 10 years from 1991 to 2001. Can this one beat that one? Maybe. Will this one also burst over the collapse of another tech bubble? Maybe. But again, I have no idea when that might come.
  • Will the corporate tax cuts that are coming from Trump’s tax bill lead to increased hiring and investments, or will companies simply hoard that cash or pay it out in dividends? Likely a bit of both. But I think Wall Street has largely priced in the increased earnings so I’m not sure the tax bill will be a boon for the stock market in 2018.
  • Will the current Internet oligopoly (Amazon, Apple, Facebook, Google) continue to take share from the rest of the sector, or will one or more start to falter? I’d like to see the latter, but I suspect it will be more of the former.
  • Will the rise of massive growth funds (SOFTBANK, Sequoia, etc) lead to the best and brightest tech companies delaying IPOs even longer? The logical answer is yes, but I think the answer may be no. We see an increasing desire of founders in our portfolio to take their companies public.
  • Will the tech backlash that I wrote about yesterday continue to escalate? Yes.
  • Will we see more gender and racial diversity in tech? Yes.
  • Will Trump be President at the end of 2018. Yes.
  • Will the GOP lose control of Congress in the midterm elections. Yes.
  • Will we avoid war with North Korea? I sure hope so.

So there you have it. Ten questions. A few predictions. A lot of unknowns. That is how I am going into 2018.

Happy New Year Everyone.


Nick Grossman — January 10, 2018
From a labor mindset to a capital mindset

Categories: Blog articles

What Happened In 2017

A VC - December 31, 2017 - 9:30am

As has become my practice, I celebrate the end of a year and the start of a new one here at AVC with back to back posts focusing on what happened and then thinking about what might happen.

Today, we focus on what happened in 2017.


I went back and looked at my predictions for 2017 and I completely whiffed on the breakout year for crypto. I did not even mention it in my post on New Year’s Day 2017.

Maybe I got tired of predicting a breakout year for crypto as I had mentioned it in my 2015 and 2016 predictions, but whatever the cause, I completely missed the biggest story of the year in tech.

If you look at the Carlota Perez technology surge cycle chart, which is a framework I like to use when thinking about new technologies, you will see that a frenzy develops when a new technology enters the material phase of the installation period. The frenzy funds the installation of the technology.

2017 is the year when crypto/blockchain entered the frenzy phase. Over $3.7bn was raised by various crypto teams/projects to build out the infrastructure of Internet 3.0 (the decentralized Internet). To put that number into context, that is about equal to the total seed/angel investment in the US in 2017. Clearly, not all of that money will be used well, maybe very little of it will be used well. But, like the late 90s frenzy in Internet 1.0 (the dialup Internet) provided the capital to build out the broadband infrastructure that was necessary for Internet 2.0 (the broadband/mobile Internet), the frenzy in the crypto/blockchain sector will provide the capital to build out the infrastructure for the decentralized Internet.

And we need that infrastructure badly. Transaction clearing times on public, open, scaled blockchains (BTC and ETH, for example) remind me of the 14.4 dialup period of the Internet. You can get a taste of what things will be like, but you can’t really use the technology yet. It just doesn’t work at scale. But it will and the money that is getting invested via the frenzy we are in is going to make that happen.

This is the biggest story in tech in 2017 because transitions from Internet 1.0 to Internet 2.0 to Internet 3.0 cause tremendous opportunity and tremendous disruption. Not all of the big companies of the dialup phase (Yahoo, AOL, Amazon, eBay) made a healthy transition into the mobile/broadband phase. And not all of the big companies of the broadband/mobile phase (Apple, Google, Facebook, Amazon) will make a healthy transition into the decentralized phase. Some will, some won’t.

In the venture business, you wait for these moments to come because they are where the big opportunities are. And the next big one is coming. That is incredibly exciting and is why we have these ridiculous valuations on technologies that barely/don’t work.

The Beginning Of The End Of White Male Dominance:

The big story of 2017 in the US was the beginning of the end of white male dominance. This is not a tech story, per se, but the tech sector was impacted by it. We saw numerous top VCs and tech CEOs leave their firms and companies over behavior that was finally outed and deemed unacceptable.

I think the trigger for this was the election of Donald Trump as President of the US in late 2016. He is the epitome of white male dominance. An unapologetic (actually braggart) groper in chief. I think it took something as horrible as the election of such an awful human being to shock the US into deciding that we could not allow this behavior any more. Courageous women such as Susan Fowler, Ellen Pao, and many others came forward and talked publicly about their struggles with behavior that we now deem unacceptable. I am not suggesting that Trump’s election caused Fowler, Pao, or any other woman to come forward, they did so out of their own courage and outrage. But I am suggesting that Trump’s election was the turning point on this issue from which there is no going back. It took Nixon to go to China and it took Trump to end white male dominance.

The big change in the US is that women now feel empowered, maybe even obligated, to come forward and tell their stories. And they are telling them. And bad behavior is being outed and long overdue changes are happening.

Women and minorities are also signing up in droves to do public service, to run for office, to start companies, to start VC firms, to lead our society. And they will.

Like the frenzy in crypto, this frenzy in outing bad behavior, is seeding fundamental changes in our society. I am certain that we will see more equity in positions of power for all women and minorities in the coming years.

The Tech Backlash:

Although I did not get much right in my 2017 predictions, I got this one right. It was easy. You could see it coming from miles away. Tech is the new Wall Street, full of ultra rich out of touch people who have too much power and not enough empathy. Erin Griffith nailed it in her Wired piece from a few weeks ago.

Add to that context the fact that the big tech platforms, Facebook, Google, and Twitter, were used to hack the 2016 election, and you get the backlash. I think we are seeing the start of something that has a lot of legs. Human beings don’t want to be controlled by machines. And we are increasingly being controlled by machines. We are addicted to our phones, fed information by algorithms we don’t understand, at risk of losing our jobs to robots. This is likely to be the narrative of the next thirty years.

How do we cope with this? My platform would be:

  1. Computer literacy for everyone. That means making sure that everyone is able to go into GitHub and read the code that increasingly controls our lives and understand what it does and how it works.
  2. Open source vs closed source software so we can see how the algorithms that control our lives work.
  3. Personal data sovereignty so that we control our data and provision it via API keys, etc to the digital services we use.
  4. A social safety net that includes health care for everyone that allows for a peaceful radical transformation of what work is in the 21st century.

2017 brought us many other interesting things, but these three stories dominated the macro environment in tech this year. And they are related to each other in the sense that each is a reaction to power structures that are increasingly unsustainable.

I will talk tomorrow about the future, a future that is equally fraught with fear and hope. We are in the midst of massive societal change and how we manage this change will determine how easily and safely we make this transition into an information driven existence.


Bethany Marz Crystal — January 9, 2018
Thank you for sharing this!

Categories: Blog articles

Video Of The Week: Token 1.0 vs Token 2.0

A VC - December 30, 2017 - 6:55am

AVC community member William Mougayar sent me a video of a talk he recently gave in Moscow.

I really like the framework he articulates about half way through the talk regarding token 1.0 (where we are now) and token 2.0 (where we need to be before we will see real sustainable disruptive value creation with blockchain technologies).

Here is that bit:

If you’d like to watch the entire talk, you can do so here.


Bethany Marz Crystal — January 7, 2018
Spending New Year’s (Alone) in Paris

Categories: Blog articles

Funding Friday: The Merry Merkle Tree

A VC - December 29, 2017 - 10:36am

Our friends at TrueBit are trying to raise $250k to support Covenant House Toronto.

They have built a virtual Christmas tree and are accepting donations in Ethereum here.

The Gotham Gal and I have donated 5.5 ETH. Our donation may take a few days to show up on the leaderboard.

I am hoping those of you out there who are holding a lot of ETH might part with a little bit of it to help a great cause.

You can do that here.


Bethany Marz Crystal — January 7, 2018
Spending New Year’s (Alone) in Paris

Categories: Blog articles

The Digital Advertising Duopoly

A VC - December 28, 2017 - 8:57am

This chart from eMarketer really brings it home.

We have a digital advertising duopoly.

The difference between second and third place is massive.

I don’t want nor do I expect any governmental response to this market failure.

I want to see the technology industry adopt new approaches to monetization, ideally not attention based models, to combat this.

I don’t think subscriptions are the only answer here, as many do.

We need models that support free consumption of media for many reasons.

I think the crypto sector has some answers for us but I am also looking elsewhere.

We need new approaches and we need them now.

Categories: Blog articles

A Fun Way To Learn To Create Dapps In Solidity

A VC - December 27, 2017 - 8:00am

One of the reasons I am rooting for the Ethereum community to address many of its current issues (scalability being the big one) is that there is a clear developer platform opportunity for Ethereum. The Ethereum programming language Solidity is relatively easy to learn and Ethereum was designed from the ground up as an application platform. Ethereum applications, called Dapps (for decentralized apps), are starting to launch pretty regularly.

If you want to learn how to create a Dapp in Solidity, you might try out this interactive coding game called Cryptozombies:

CryptoZombies is an interactive code school that teaches you to write smart contracts in Solidity through building your own crypto-collectables game.

Thanks to AVC community member William who showed this to me yesterday.

There is a lot of naysaying out there suggesting that public blockchains and crypto aren’t good for anything other than speculating on token prices.

That is dead wrong, but it is true that the immature state of the technology has made building useful things on top of this technology very hard.

What we need to look for are efforts to make public blockchains more reliable, faster, and easier to build on. Those projects are out there and the fruits of all of that labor will come in due course.

In the meantime, it might be a fun and productive use of your time to learn to build a Dapp in Solidity and have some fun at the same time.


Albert Wenger — January 4, 2018
Meltdown and Spectre are Good ... for Innovation

Categories: Blog articles

The Second Quartile

A VC - December 26, 2017 - 7:46am

As I have written about here on AVC many times, early stage venture portfolios produce a wide range of outcomes. A few investments produce the vast majority of the returns while many investments return nothing. Managing a portfolio with power law dynamics is a challenge.

At USV, we tend to make 20-25 investments per early stage fund.

The best four to five investments per fund will usually produce greater than 80% of the total returns of a fund (the top quartile). This is where you might imagine that we spend all of our time, but the truth is that these investments generally go well and while we certainly do everything we can to help these companies, they often do not demand a lot of our time. When they do require a lot of our time, it tends to be situational.

There will be roughly ten investments per fund that will return maybe 5% of the fund (the third and fourth quartile). We spend a lot of time on these investments and it is difficult work that I have written a lot about over the years. The time and money we spend on these investments is not rational but we do it anyway.

And then there is the second quartile that will produce roughly 15% of the returns of the fund.

I find that it is this cohort of investments that is the most challenging to manage. The companies in the second quartile are usually very good companies but they lack the explosive value generation characteristics of the top quartile. They tend to have a harder time attracting top talent and financing their businesses at attractive valuations. We often do insider-led rounds for companies in the second quartile as the venture industry is hard wired to invest in the top quartile, particularly the later stage/growth investor community.

But there is a lot of value in the second quartile. The exits in the second quartile tend to be in the $100mm to $500mm range which is not a small amount of value to anyone other than a VC managing a billion dollar fund. The founders and management teams that are building these companies stand to make a lot of money if they execute the opportunity well. And an early stage VC can make a lot of money too. At USV, we tend to own between low to middle teens and twenty percent of our portfolio companies at exit, so the proceeds at exit to us of an investment in the second quartile cohort can be $50mm or more. A few of those and that is the difference between a 3x fund and a 5x fund for us. So managing the second quartile is super important.

But the second quartile will try your patience and your conviction. These investments often take longer to realize. And you will have to take endless calls from friends in the VC passing on the investment for all sorts of good reasons, but always come down to “it’s just not exciting enough to us.” You will have to talk your management team off the ledge countless times. You will work harder to recruit new talent. You will put more money into them than you want to. You will struggle to get the business profitable. You will wonder if you have lost your objectivity.

And then one day, you will get an offer from a buyer to acquire the company for hundreds of millions of dollars. And then all of that effort and conviction will have been worth it.

The tech sector’s obsession with the billion dollar companies emerging from startup land is irritating to me. That narrative ignores a lot of great companies and terrific work being done by founders and management teams. And it makes it harder to build a company that isn’t in that top cohort.

I understand why the attention is focused on the big winners to the detriment of everything else. But I can assure you that is not how we operate at USV, and it is not how the best early venture capital firms operate. When you start a company, you want to find an investor who will be there with you through thick and thin. Do yourself a favor and look at how the firms you are talking to behave toward their second and third quartile portfolio companies. That will tell you all you need to know.


Albert Wenger — January 4, 2018
Meltdown and Spectre are Good ... for Innovation

Categories: Blog articles

Happy Holidays and Merry Christmas

A VC - December 25, 2017 - 8:46am

I am publishing my annual year end playlist as a holiday gift to the AVC community.

I did 21 songs last year but 2017 was a great year for music, so I thought I would double that to 42.

And then I threw in Man’s Not Hot at the end for kicks.

It starts with a great Chance The Rapper holiday song and goes on from there. It’s hip hop in the beginning, moves to electronic, indie, folk, and R&B in the middle, and finishes with the big hip hop songs on SoundCloud this year.

There are a few SoundCloud Go+ tracks on it and if you aren’t a subscriber, you will get 30 second previews. I’m sorry about that but most of the songs are free and clear.

Happy Holidays Everyone


Albert Wenger — January 4, 2018
Meltdown and Spectre are Good ... for Innovation

Categories: Blog articles

Putting The Year In The Review Mirror

A VC - December 24, 2017 - 1:47pm

I’m in the process of going over all of the songs I favorited this year and putting my top ones into a playlist and then culling that list. I’m planning on posting it at some point this coming week, maybe as soon as tomorrow as a Christmas gift to the AVC community.

That’s a precursor to a larger effort of looking back on 2017 that will result in a What Happened post on New Year’s Eve followed by a What Will Happen post on New Year’s Day.

This stuff is fun for me but it is also a great mental exercise to go through. It forces me to reflect, think, and focus on what is/was most important.

There is so much that blogging does for my brain. I am not sure how I would do my work without it. The daily routine of writing something for public consumption is a discipline that brings clarity in a confusing time. The bigger posts that come every now and then, and the year end ones, are particularly valuable to write.

So I am looking forward to spending the coming week reflecting on the year that is ending and looking forward to the year that is about to begin. I will do that while celebrating the year end holiday with our family skiing in the rockies.

And the year in review thing is already in swing in VC blog land. Semil Shah posted his year in review a few days ago and it is a good read.

There won’t be much in any of these year in review posts that you don’t already know. But it is the context and reflection that comes with them that are so valuable.

Categories: Blog articles

Video Of The Week: The Token Summit Conversation

A VC - December 23, 2017 - 8:47am

As I start thinking about 2017 and what happened this year in the world of startups and tech, I am going back and watching and reading things that stayed with me this year.

This talk between William and me at Token Summit captures much of what I have been thinking about the blockchain/crypto sector this year (and beyond).

It was fun to watch it again six months later. It is about 30mins long.

Categories: Blog articles

Feature Friday: Quote Retweet

A VC - December 22, 2017 - 7:28am

One of my favorite features on Twitter is the ability to retweet something with added context.

Like this:

This is a terrible idea

— Fred Wilson (@fredwilson) December 22, 2017

I do this a lot:

“NYC Female Founders Office Hours”

— Fred Wilson (@fredwilson) December 7, 2017

There is a lot to be thankful for this year

— Fred Wilson (@fredwilson) November 23, 2017

“This was to prove they belong, that they really can play with anybody.”

— Fred Wilson (@fredwilson) November 23, 2017

You get my point.

There are a lot things Twitter can do to make Twitter better but getting rid of the Quote Retweet is not one of them.

Categories: Blog articles

NYC Open Source FinTech Meetup

A VC - December 21, 2017 - 5:07am

Open source software is a critical part of the tech stack for many organizations, both large corporations and early-stage startups alike. For various reasons, the financial services industry, one of the dominant industries in NYC, has lagged other sectors in adopting and contributing to open source.

That is changing, pushed partly by the strategies and success of high-growth fintech startups, as well as a broader recognition of the benefits of an open source strategy. A number of financial services and fintech companies here in NYC play significant roles as contributors and maintainers for open source platforms, tools, and languages popular in the industry.

To better connect people in NYC working with open source software in financial services, my friend and AVC community member Rob Underwood of TTM Advisors has teamed up with the Symphony Software Foundation to create the NY Open Source FinTech Meetup. Its inaugural meetup is January 8th at 6:30pm at Rise NY. Aaron Williamson of the Symphony Software Foundation will be moderating a panel discussion with John Stecher of Barclays and Mazy Dar of OpenFin on the 2018 outlook for open source projects in the finance industry.

If you’re working at the intersection of financial services and open source you should check it out.

Categories: Blog articles

How To Deal With Trolls

A VC - December 20, 2017 - 6:25am

I have dealt with social media trolls a lot over the years.

I have found that these things work best:

1) Ignore them

2) Don’t mute or block them

3) Let their ridiculous comments/tweets/etc stay up to show how crazy they are

4) Ignore them

5) Ignore them

6) Ignore them

What they want and crave is attention.

Don’t give it to them.

Categories: Blog articles

Last Minute Etsy Shopping

A VC - December 19, 2017 - 8:25am

If you really want to buy someone a gift that is unique and special from a real live person on Etsy vs some mass produced crap from Amazon, but you think it might be too late for that now, don’t fear. There are plenty of last minute items that can be bought and shipped directly to your friends and family from an Etsy seller.

Here is an Etsy Holiday Gift Guide for items that can be shipped in one business day.

And here is a blog post from Hello Giggles that features sixteen awesome last minute gifts on Etsy.

This is my favorite item from that Hello Giggles post:

I told that to my friend Josh who is the CEO of Etsy and I think he bought it on the spot for me. I should do that more often

Categories: Blog articles

Disruptive Technologies are Making Money Obsolete

Beyond Money - December 18, 2017 - 10:59am

Broadly speaking, technology is the organization of knowledge, people, and things to accomplish specific practical objectives. It includes processes, practices, techniques and systems as well as things. So what are the disruptive technologies in money and finance? Or is that even the right question to be asking? Is it Bitcoin, Ethereum, and other so-called crypto-currencies? Is it the blockchain, “smart contracts,” “big data,” algorithms?

To find out, watch this 15 minute video, which was extracted and adapted from a longer recording of the presentation, I  made to the International Institute of Advanced Islamic Studies, in Kuala Lumpur, Malaysia, on October 10, 2016. It describes how communities and businesses can escape the debt trap and become more resilient and self-reliant? New independent approaches to payment and reciprocal exchange are being deployed which are making conventional money obsolete.

Links to this video:
YouTube link:
Vimeo link:

Many thanks to Ken Richings for doing the hard work of editing and preparing the video for publication.

The full Malaysia presentation titled, A World Without Money and Interest: A pathway toward social justice and economic equity, can be found here.

Categories: Blog articles

Crypto Explorers

A VC - December 18, 2017 - 5:15am

Crypto Explorers is a community that got it start here at AVC earlier this year with this post.

Crypto Explorers is a group of crypto enthusiasts that travel to Zug Switzerland (“crypto valley”) together and engage in discoveries and discussion.

Typical participants include folks running small crypto hedge funds, VC’s re-calibrating their business models, academics making sense of things, crypto holders figuring out their next moves, hackers/makers, and the generally curious and deep-thinker types around all this.

Their next trip is Jan 29-31 and you can apply to join it here.

They do roughly one per quarter so if you can’t make this one, there will be another one in the spring.

Categories: Blog articles

Playing Your Role

A VC - December 17, 2017 - 7:53am

Investing in many different companies, with different founders, different cultures, and different missions requires the ability to adapt to each and every one. I like to think about it as playing a role in a play.

Even though I am the same person, with the same fundamental beliefs, I end up playing very different roles in the companies I invest in and work with. The Fred Wilson that works with Coinbase is different than the Fred Wilson that works with Kickstarter and the Fred Wilson that works with Etsy and the Fred Wilson that works with SoundCloud and the Fred Wilson that worked with Twitter.

It starts with the founders and the mission. They set the course for the company. As an investor, you show up and something is already underway. You have to take the time to understand where the company is headed, why it was formed in the first place, where it is going and why. You have to figure out how to insert yourself into that journey in a way that is constructive and value adding. And you have to do that work before you invest because if you can’t figure out how to play a role that is constructive and value adding, you should not make that investment and join that Board.

Some founders start companies to make money first and foremost. It is important to understand that. They will be “coin operated” and transactional.

Some founders start companies to solve a very specific problem, often one that they themselves have. They will be very product and market focused.

Some founders start companies to chart a course that is different from others. They will be iconoclasts who like to zig when others zag.

Some founders build companies to sell.

Some founders build companies to go public.

Some founders build companies to outlive them.

What I have learned is that there is no right way to build a business, no right way to exit a business, no right way to operate a business. There are many different ways to do the startup thing. And I have learned that getting everyone on the same page about the specific way you are going to do it is critical. If everyone on the management team, investor group, and Board are bought into the long term vision and wanting to go to the same place, on that specific opportunity, then great things can happen.

If, on the other hand, there is tension between the founders about the direction, or between the Board and founders about the direction, or between the management team and the founders about the direction, or between members of the management team about the direction, then it makes it very hard to move things forward.

I know that people who read AVC, who follow the investments we make at USV, who work in USV-funded portfolio companies often scratch their head trying to figure out why what is right for one company is not right for another.

Why is it that its a great idea for one of our portfolio companies to move to a token based business model and do an ICO when it is not a great idea for another one of our portfolio companies to do that?

Why is it that it is a great idea for one of our portfolio companies to accept an M&A offer before they have reached their potential when it is not a great idea for another one of our portfolio companies to do that?

Why is it that it is a great idea for one of our portfolio companies to go public when it is a bad idea for another one of our portfolio companies to do that?

To understand these conflicting choices that companies we work with make, it is important to understand how these companies were funded, what the vision was, what they founders wanted out of the effort, what the investors signed up for, how they were capitalized, how they were managed, and how all of that changed over the years. And it is hard to understand those things from afar.

To understand it better, you need to think about each company as a different journey, to a different place, and all of us – the employees, the management, the founders, the investors, the board members – as role players in that journey. And when you choose to join a company as an employee or an investor or as the CEO, you really need to take the time to understand that journey before you step into that role. Because you will be playing it, possibly for a long time.

Categories: Blog articles

Video Of The Week: Colbert On Net Neutrality

A VC - December 16, 2017 - 5:44am

I got a chuckle out of this:

TONIGHT: The FCC voted to repeal #NetNeutrality today which sucks for everyone who uses the Internet (which if you’re reading this, is you), but it especially sucks for @StephenAtHome’s personal Etsy shop. #LSSC

— The Late Show (@colbertlateshow) December 15, 2017

Categories: Blog articles

Funding Friday: Save

A VC - December 15, 2017 - 4:26am

I backed this project when it launched last week.

Here’s the pitch:
Gawker isn’t gone, it’s up for auction. The person who drove the site into bankruptcy wants to buy it.
We’re a group of former Gawker Media employees across editorial, tech, and business, and we want to put in our own bid to buy it back.
We believe the site can thrive in an entirely membership funded model.
The Gawker Foundation is a non-profit with a dual mission:
1.) Preserve the archives and make them accessible.
2.) Relaunch the site under the stewardship of former editors, new writers, and an entirely membership-funded model.

Here’s the video:

Click here to back this project.

Categories: Blog articles
Syndicate content