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Musings of a VC in NYC
Updated: 3 hours 27 min ago

The AT&T/Time Warner Trial

March 19, 2018 - 6:46am

Trump’s Justice Department goes to court this week to block the merger of AT&T and Time Warner on “anti-competition concerns.”

Like most of the things that come out of this administration, this is a joke.

HBO has 54 million subscribers and spent $2bn on new content last year.

My friend Pat Keane tweeted this out last month:

The Netflix juggernaut: 120 million global subs, 50% of U.S. time streaming, $8 billion 2018 content budget. Competitor content budgets: Apple $1 billion, Hulu $2.5 billion, Amazon Studios $4.5 billion.

— Patrick Keane (@phkeane) March 8, 2018

And what about Amazon? With 80mm global Prime subscribers, they are maybe the biggest threat of them all

This trial is a joke. A waste of taxpayers money. All because our loser President hates CNN. Ugh.


Albert Wenger — March 19, 2018
Back from the Mountains

Categories: Blog articles

Your Data Is My Data

March 18, 2018 - 7:28am

This piece in Recode explains that Cambridge Analytica built an app that 270,000 people used to amass profiles on 50 million people.

That’s not very surprising because we are talking about networks here.

This is a network graph that my colleague Jacqueline made of my twitter network a few years ago:

In our online life, we are connected to a huge number of people.

If I get access to your email inbox, I am going to see emails with thousands of people.

Which is what makes this privacy/data sovereignty stuff so important.

When your data is taken without your knowledge/permission, it is not just your data that is taken.

It is the data of thousands of other people, often the people closest to you.

That sucks.

This is one of the many reasons I am hopeful about an Internet 3.0, a decentralized system with data security and integrity at its core.


Albert Wenger — March 19, 2018
Back from the Mountains

Categories: Blog articles

Slideshow Of The Week: Why Tokens Are Fundamental

March 17, 2018 - 9:32am

This weekend I am going with a slideshow instead of a video or audio embed.

Some of my colleagues at USV have been spending a lot of time with regulators, elected officials, and lawyers helping all of these people understand cryptonetworks and why they are super important and need to be regulated with extra care.

One of the issues that many folks get wrong is the role of tokens in these cryptonetworks. For many reasons, not the least of which being the speculative frenzy surrounding cryptotokens, regulators and others simply see tokens as financial instruments and want to regulate them as such.

So my colleague Nick put together this deck to explain the “centrality” of cryptotokens to the operation of cryptonetworks. He published it on his blog earlier this week. I am republishing it here.

I would encourage everyone to hit the [ ] icon and read this in full screen mode.


Albert Wenger — March 19, 2018
Back from the Mountains

Categories: Blog articles

Funding Friday: Blockchain A-Z

March 16, 2018 - 7:45am

I backed this project today which is attempting to build a comprehensive online course on blockchain technology.


Albert Wenger — March 19, 2018
Back from the Mountains

Categories: Blog articles

The Coinbase Tax Center

March 15, 2018 - 7:55am

Our portfolio company Coinbase launched some much needed tax tools this week.

I used them today to calculate our gains in 2017 and send the reports to our accountants.

The Coinbase tax center is here.

The tools look like this:

I generated all of those reports just now and sent them to my accountant so we can report the 2017 gains on our returns.

Sadly in 2015 and 2016, we had no gains. Some small losses which might offset a few of the 2017 gains, but not much.

2017, on the other hand, was a material year for us. The BCH fork generated real value and we sold some of that. We will be paying taxes on that shortly.

I tell you all of this because gains and losses on crypto trading is taxable income and you should declare it and pay the taxes.

That’s the law and it is important to comply.


Albert Wenger — March 19, 2018
Back from the Mountains

Categories: Blog articles

The VC/Company Relationship

March 14, 2018 - 6:43am

When I got into the VC business in the early 80s, the VC/Company relationship was pretty different than it is now.

Capital was hard to come by, VCs commanded terms that would be laughed at today, and once they had made the investment, VCs acted as if they owned the Company (they sometimes did).

The VC/Company relationship was a lot more like the current PE business than the current VC business.

Back then VCs thought their customers were their Limited Partners. They would put on lavish annual meetings, treating their investors to three day events at resorts and such.

Capital was hard to come by for VCs too and so they worked hard to earn the favor of the capital suppliers.

All of that changed, starting in the 90s, when capital became very easy to come by in the first Internet boom.

When we started Flatiron Partners in the mid 90s, I told my colleagues that our customers would be the entrepreneurs and that I wanted to treat our investors as our shareholders.

That was a novel idea at the time, but I have advocated for it ever since and I think it more properly captures the relationship that the best VCs have with their portfolio companies today.

Our portfolio companies are our customers.

At USV, we have a portfolio network of about seventy companies. This group spans 8,000+ employees across more than 10 countries and 20 cities.

We have a dedicated team that services our portfolio and as we have built it, we have been guided by several principles which reflect this “customer” orientation.

We put them up on our website yesterday, they are here.

Go read them and you will see that they reflect the fact that we are here to support our portfolio, not the other way around, we view them as our customers, and their success is our success.

I believe this is as it should be.


Albert Wenger — March 19, 2018
Back from the Mountains

Categories: Blog articles

The Stack Overflow Developer Survey 2018

March 13, 2018 - 8:21am

Every year our portfolio company Stack Overflow surveys its developer community and publishes the results.

This year Stack had over 100,000 respondents to its survey from all over the world, making this survey possibly the most comprehensive view of the global software developer community.

There is a ton of data here. It’s a 30 minute survey. You can see the results here.

But since many of you won’t click that link, here are some highlights from it:

First, we know that software engineering is a largely white male profession. The data shows that:

If we look at the gender and racial/ethnic mix of the students who answered the question, there is some promising data on racial/ethnic diversity, but less promising data on gender diversity. Efforts like I blogged about yesterday are badly needed to change these numbers.

I found the technology questions interesting.

Javascript is by far the most common programming language.

But Python is the most “wanted” programming language. And Go and Kotlin are rising fast.

Some great news for our portfolio company MongoDB in this survey. Mongo was the most popular non-SQL database and was the most wanted database of them all.

Finally, some data on how important Stack Overflow is in these developers’ work:

Any service where 2/3 of its users visit daily is a big deal. And for developers, Stack is very much that.


Albert Wenger — March 19, 2018
Back from the Mountains

Categories: Blog articles

The Fifth Annual NYC Computer Science Fair

March 12, 2018 - 9:59am

Once a year, tech companies in NYC run a fair for high school computer science students in NYC.

This was last year:

Tech companies set up booths and the students come by the booths learning about what it is like to work in a tech company. Colleges and Universities that offer undergraduate computer science majors also set up booths to recruit these students to attend their schools and major in computer science. And extra-curricular programs that offer computer science education after school, weekends, or over the summer also come and set up booths to solicit interest in their programs.

It is the one time each year when all the stakeholders in the NYC K12 computer science movement come together and it is a fantastic day. I have attended every year and I plan to attend again this year, in our fifth year.

This event is called the NYC CS Fair and it is happening on Wednesday, April 11, 2018, from 9:30am-2pm, at the Armory Track, 216 Fort Washington Ave, New York, NY.

If your company wants to help build a pipeline for a more inclusive and diverse talent pool, you should come and host a booth at the fair.

If you want to do that, please reach out to Bryan at Tech:NYC, bryan@technyc.org, or Aimee Rosato at TEALS,aimee@tealsk12.org.


Albert Wenger — March 19, 2018
Back from the Mountains

Categories: Blog articles

Founder Vesting

March 11, 2018 - 7:28am

Founder vesting is when founders agree that their founder’s stock will vest over some period of time, normally four years.

Many times we will come across a company that we might want to invest in and when we look into the cap table and documents, we see that the founders were granted their shares with no vesting. In those situations, we will insist that the founders vest their shares as part of a financing we do, usually Seed but sometimes Series A.

The point of founder vesting is that it is not fair to the rest of the shareholders, particularly the other founders, if one founder leaves early on in the life of a startup. I have seen situations where this has happened and its very problematic. One or more founders continue to work at the company while one or more founders leave but keep all of their founder’s stock. It creates all sorts of problems for the remaining founders and shareholders.

So the answer to this is to put a founder vesting provision into the formation documents when the founders stock is issued. Or if that wasn’t done, to fix it by putting vesting onto the founders shares when a seed or some other financing round is done.

It is typical that all founders will have accelerated vesting of their founders shares in the event of a sale of the company. If the buyer wants them to stay past the sale transaction, they can address the founders equity in the sale transaction in various ways.

It is also typical, but not often agreed upon up front, that a founder who is asked to leave, would get some additional vesting on their founders stock as part of a separation agreement. Full vesting is rare unless the founder is leaving late in their vesting term. But some additional vesting is pretty common in a forced departure.

If you and your co-founders do not have vesting on your founders stock, you should fix that. If you do a financing with a sophisticated angel investor or venture capital firm, you will be required to fix it as part of the investment deal.


Albert Wenger — March 19, 2018
Back from the Mountains

Categories: Blog articles

Audio Of The Week: Skin In The Game

March 10, 2018 - 11:08am

I have been listening to Nassim Nicholas Taleb‘s new book, Skin In The Game, in audiobook form while driving around LA this past week. I’ve always been a fan of having skin in the game and others having skin in the game and so it’s a topic that makes a lot of sense to me.

I happened upon this podcast between Russell Roberts and Nassim and it’s a pretty good summary of many of the important topics in the book. So if you don’t have time to read or listen to the entire book, this podcast is an excellent short cut to some important concepts.


Albert Wenger — March 19, 2018
Back from the Mountains

Categories: Blog articles

Funding Friday: I Will Never Give Up

March 9, 2018 - 7:47am

I backed this project earlier this week.

As the narrator says in the video “How is this guy, with this voice, still in the subway?”

I’m a fan of busking. I always drop some change in the basket. A little entertainment underground goes a long way with me.


Nick Grossman — March 16, 2018
A bigger container

Categories: Blog articles

Nothing Is “Standard”

March 8, 2018 - 7:51am

I told this story last night at dinner to the Gotham Gal (who has heard it many times) and two friends who are in the investment business. They loved it.

I’ve blogged it before, but it has been almost ten years since I’ve told it here.

So I am going to share it with all of you this morning:

I woke up thinking about Morty this morning. I haven’t seen or heard from him in over ten years. But Morty taught me one of the most important lessons about negotiating that I’ve ever learned.

Morty was Isaak’s partner in Multex early on. They put up the initial money to get it started. Morty wasn’t a venture guy. He was a real estate lawyer and sometime real estate investor. He was as conservative as you can get and never liked the startup/venture business. But he was Isaak’s partner. And Isaak asked Morty to negotiate the term sheet for the seed round with me.

This was late 1992 and I’d been in the venture business for five years and was on my second or third deal on my own. I’d negotiated a bunch of term sheets by that point, but I’d never had a negotiation like the one I was in for with Morty. Actually I don’t think I’ve ever had one as rough as that since.

Morty wasn’t familiar with venture terms. They didn’t make sense to him. So standing in an airport pay phone (before cell phones) I went line by line, term by term with Morty.

We got to redemption and he started in. “Why do you need this provision Fred?“. I was getting tired of his non stop push back and blurted out “Because it’s standard. We always get this provision. Always have, and always will“.

That got Morty pissed. He shouted over the phone:

I don’t give a f>>>k that you always get this provision. Doesn’t mean shit to me. This deal will be the first time you don’t get it if you don’t explain why you need it.

That set me back on my heels and I weakly explained that if the deal goes sideways for years, we need some way to get out of the deal and redemption provides that path. I don’t even remember if he bought that argument. But I do know that we had redemption in the Series A at Multex and pretty much every deal I’ve ever done.

But the point Morty made rang true to me and I’ve lived by his rule ever since. I never ever say that a specific provision is “standard”. Nothing is standard. You either need it or you don’t. Explain why you need it and most of the time you’ll get it or something like it as long as both sides really want to make a deal.


Nick Grossman — March 16, 2018
A bigger container

Categories: Blog articles

Coinbase Index And Coinbase Index Fund

March 7, 2018 - 8:50am

First a disclosure for all the disclosure enthusiasts who hound me here and on Twitter to disclose things that are well known to most readers in hopes of turning this blog into a legal document: USV is a large investor in Coinbase and I am on the Board of Coinbase.

Ok, now that we have done that part, here’s the news that came out yesterday and I want to talk about today.

Coinbase launched an index and an index fund yesterday:

Announcing Coinbase Index Fundhttps://t.co/ca98IKrzUv

— Coinbase (@coinbase) March 6, 2018

The Coinbase Index is a measure of the financial performance of all assets listed on Coinbase’s GDAX exchange, weighted by their market capitalization.

And the Coinbase Index Fund is a way to buy that index without having to buy the individual assets that make up the index.

This blog post has more details on both.

To start, the Coinbase Index Fund will only be available to US-resident, accredited investors. Coinbase is actively working on launching more funds which will be available to all investors and cover a broader range of digital assets.

To me, this is all about broadening the appeal of crypto tokens to a wider range of investors than are currently in the market. Making it simple for the average investor to get exposure to this emerging sector is a good thing and I am pleased that Coinbase is broadening its offerings to reach people it is currently not serving.


Nick Grossman — March 16, 2018
A bigger container

Bethany Marz Crystal — March 15, 2018
Gunman Hoaxes Are Not Okay: Let’s Fight Fairly

Categories: Blog articles

Bird Scooters

March 6, 2018 - 2:21pm

Everywhere I look on the west side of Los Angeles, I see Bird Scooters.

These are electric scooters you can rent from your mobile phone.

They look like this:

I finally got around to taking a ride on a Bird today.

After you download the app on your phone, you snap a picture of your credit card and your drivers license and sign a waiver, all on your phone, and you are good to go.

Then the app shows you where there are available Birds near you. That looks like this.

When you click the Ride button, the app asks you to scan the Bird’s QR code, which looks like this:

And then off you go.

My friend David snapped these photos of me arriving for our meeting.

It was a lot of fun.

I plan to ride them a bunch more while we are in LA this month.


Bethany Marz Crystal — March 15, 2018
Gunman Hoaxes Are Not Okay: Let’s Fight Fairly

Categories: Blog articles

Twitter TV Ad

March 5, 2018 - 10:04am

I believe the ad Twitter ran at the Oscars last night is their first TV ad.

Happy to join fellow women of color storytellers @IssaRae @JenBrea and the legendary @JulieDash. Fierce poem by @DeniceFrohman. #HereWeAre pic.twitter.com/L4SPqwIlX0

— Ava DuVernay (@ava) March 5, 2018

If so, I am a fan.

It was an anchor to a hashtag conversation and took on a topic of cultural relevance.

It speaks to the power of Twitter to be a force for good in the world.

I understand that Twitter is used by all sorts of bad people and for all sorts of bad things.

That is the challenge of operating a real-time, open, global communication system.

But it is also true that Twitter is used by all sorts of good people and for all sorts of good things.

And the ad reminded me and everyone of that last night.

Disclosure: My wife and I are long TWTR.


Bethany Marz Crystal — March 15, 2018
Gunman Hoaxes Are Not Okay: Let’s Fight Fairly

Nick Grossman — March 13, 2018
What are Cryptonetworks and Why are Tokens Fundamental?

Bethany Marz Crystal — March 13, 2018
CEO Summits at USV

Categories: Blog articles

Pay Attention To The Package

March 4, 2018 - 10:23am

Tech investing is a lot about big trends and timing them.

We knew mobile was going to be a game changer as far back as the mid 90s, but it didn’t really take off until the iPhone came along in 2007

We knew personal computing was going to be a big deal in the late 70s, but computers didn’t become truly personal until operating systems got graphical user interfaces in the mid 80s.

The internet was super interesting in the late 80s and early 90s but it didn’t go mainstream until we had web browsers in the mid 90s.

Artificial intelligence has been around as a computer science effort for sixty years but it didn’t start impacting our every day experiences until it was packaged up (and effectively made to disappear) in web and mobile apps and increasingly cars and voice activated devices.

My point is that technologies present themselves as interesting investment opportunities long before they go mainstream and figuring out when they are going to go mainstream is a lot about looking for the right packaging.

Virtual and augmented reality has been an interesting and investable technology for the last six or seven years. But it hasn’t gone mainstream yet because the packaging of the technology remains problematic. At some point, some company will figure out how to package it up correctly and it will go mainstream. Until that happens, it is a difficult place to make money, even though a few entrepreneurs and investors have been able to do that.

Blockchain and crypto is in a similar state. Today, other than buying and selling crypto tokens, blockchain applications are clunky and hard to use. Centralized applications are way better than their decentralized cousins. When entrepreneurs figure out how to package up blockchain applications so that they are fun and easy to use, I think we will see them take off. My guess is that it will happen first in gaming and collectibles.

My point is that it is one thing to develop a technology that is superior to the current offerings, but entirely another thing to make it usable by most people. The first part is, in some ways, the more important thing (like Satoshi’s white paper) but the second thing is often where the investment leverage happens.


Nick Grossman — March 13, 2018
What are Cryptonetworks and Why are Tokens Fundamental?

Bethany Marz Crystal — March 13, 2018
CEO Summits at USV

Categories: Blog articles

Video Of The Week: Albert on Squawk Box

March 3, 2018 - 10:38am

My partner Albert went on Squawk Box along with Chris Hughes a few weeks ago.

Here is the part where Albert talked about his views on intellectual property rights and a bit more.

Categories: Blog articles

Funding Friday: Soundbops

March 2, 2018 - 9:52am

I backed this project today.

I like the way this toy makes notes and chords easier for young children to understand.

Categories: Blog articles

I Read Your Newsletter

March 1, 2018 - 9:55am

I get that a lot.

And I saw this on Twitter this week (which made my day, Matt is great).

@matt_levine and @fredwilson are the two newsletters I most look forward to reading each day

— Shaun Chaudhary (@shaundre3k) February 28, 2018

I certainly don’t think of AVC as a newsletter.

I think of it as a blog, a public place to write every day.

But many/most of you get it via email and read it that way (and reply to me that way too).

Which is fine.

The format doesn’t really matter as much as the frequency, the writing, and the topics I touch on regularly.

I get that and support that.

If you don’t get AVC via email but want to, you can do that here.


Bethany Marz Crystal — March 9, 2018
How Our Cat Helped Us Make Friends in Our Apartment Building

Categories: Blog articles

From Simulscribe, To Edison Jr, To Doorbot, To Ring, To Amazon

February 28, 2018 - 8:41am

Yesterday it was announced that Ring had sold to Amazon.

The Gotham Gal was an early seed investor in Ring’s predecessor Doorbot, which came out of an incubator called Edison Jr that she was also an investor in. So it was a nice win for her (and me since we are partners in everything).

But the story I want to tell is about Simulscribe.

Ring’s founder and CEO, Jamie Siminoff, started a company called Simulscribe (now called PhoneTag) back in the early 2000s. I met him around the time USV got started in 2003/2004 and the value proposition for Simulscribe was so compelling to me:

stop checking voice mails, get your voice mails translated and sent to you in email

I loved it and the Gotham Gal and I became early users. We still use the PhoneTag service!!

Jamie tried to get me and USV to invest in Simulscribe a bunch of times, but that never happened. I was worried about the lack of defensibility and other things.

Jamie eventually sold Simulscribe/PhoneTag and started an incubator called Edison Jr.

That’s when the Gotham Gal became a seed investor in Edison Jr in 2012.

Edison Jr launched several projects and one of them really took off. That was Doorbot.

So Jamie shut down Edison Jr and focused all of his energy on Doorbot, which eventually changed its name to Ring.

And now, with the sale of Ring to Amazon, Jamie has finally had his big win.

We kind of knew it was going to happen when we first met him fifteen years ago.

But it took quite a few twists and turns. As these things do.

Jamie has two things that make him an amazing entrepreneur.

He makes great products that solve real problems. Both Simulscribe and Ring are great products.

He has incredible infectious energy and optimism and salesmanship.

As inevitable as this outcome seemed fifteen years ago, it still took fifteen years, endless struggles, and a lot more.

That is the way of startups and always has been.


Bethany Marz Crystal — March 9, 2018
How Our Cat Helped Us Make Friends in Our Apartment Building

Categories: Blog articles