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Musings of a VC in NYC
Updated: 3 hours 15 min ago

Funding Friday: Bellwether

August 1, 2019 - 6:23pm

I saw this project this morning and backed it immediately.

Bellwether is Sam Greenspan‘s next project (after doing 99% Invisible for five years).

Bellwether is about the future and what might happen. It is half journalism and half sci-fi storytelling. And it is delivered via 30min podcast episodes.

Finally, Sam has stated that he cares more about building a community around this project than the money he’s raising and so he will not consider this project a successful Kickstarter campaign unless he reaches 1000 backers or more. He’s at 652 as of this morning.

Categories: Blog articles

Employee Equity: How Much?

August 1, 2019 - 6:08am

I wrote a blog post about this topic in November 2010 that has become one of the most searched on and referenced AVC posts of all time. The numbers in that blog post are long out of date and so I now have a popup on it warning people not to use those numbers. However, the methodology in that blog post remains sound and is used by many startup companies.

Yesterday, Matt Cooper, the CEO of our portfolio company Skillshare, published a very detailed blog post on how Skillshare uses that methodology in their employee equity program.

He includes updated multipliers for the NYC startup market in that post, which is something many readers have been asking me for over the last few years.

The reality is that these multipliers differ from market to market. They are highest in the Bay Area, high in NYC/LA/Boston, and lower in other parts of the US and in Europe, and even lower in other parts of the world. And, like all markets, they change over time. So it is hard to maintain a valid set of multipliers and I have given up on doing that. A startup could be created to maintain those numbers, or an established company like Carta, which has access to the raw data, could do it.

But even with the vagaries of what multipliers to use, the methodology that I laid out in my initial blog post on the topic is best practice in my view and anyone who is struggling to figure out how much equity to be offering employees would be well served by reading Matt’s post.

Categories: Blog articles

NBA Top Shot

July 31, 2019 - 11:25am

I’ve written on this blog about extensible blockchain games, the ability to own the virtual goods you earn or buy in your games, and the idea that these virtual goods can move from game to game. I think this is a big deal and possibly the thing that brings blockchains and crypto tokens to the mainstream user.

So, here’s an awesome example of that. Our portfolio company Dapper announced today that it is building a blockchain game with the NBA called Top Shot.

Here is the idea behind the game:

NBA Top Shot will feature a social experience built around digital collectibles as well as a complementary head-to-head game designed to create a fun, authentic and accessible fan engagement on blockchain. Like other sports games or fantasy brackets, fans who play the game are tasked with creating their ideal squad, but in this game, their rosters are built by acquiring live in-game moments from the NBA season. These moments, such as a Kevin Durant 3-point shot, or Joel Embiid dunk, which are acquired as digital collectibles or tokens, can then be either owned forever or used to compete against other players in online tournaments and leagues.

NBA Top Shot will start offering crypto-collectibles in the fall, with the game to follow in early 2020. You can get early access by leaving your email address here nbatopshot.com

Categories: Blog articles

Turning A Loss Into A Win

July 30, 2019 - 5:20am

One of the traits of successful founders is their ability to turn a loss into a win.

You take a lot of losses as a founder, particularly in the early days. Investors pass on your funding pitches, people pass on your job offers, customers pass on your sales efforts, competitors take your customers and your employees, you get sued, you miss critical ship dates, morale tanks, and on and on and on.

But inside of each of those losing moments is the opportunity to turn it into a win.

You lose out on an important hire and in a pinch you promote a promising person from within and they turn out to be a superstar.

You lose out on a hotly contested sales opportunity and you do a post mortem with the customer and learn that you have a huge hole in your product and you fill it and start wining business.

You whiff on financing effort and so you cut your burn, execute for three more months, and go back and get term sheets from everyone you talk to.

My point is that losses are opportunities to win. You just have to see them as such and find the win in the loss.

This is all about resilience, optimism, and tenacity. The most successful founders have it in spades.

And it can be a learned skill. But you have to get your head in that space to learn it.

Categories: Blog articles

Haven

July 29, 2019 - 11:52am

Our portfolio company Open Bazaar released a new mobile app called Haven today.

The idea behind Haven is:

Finally, people anywhere in the world can connect directly to each other using their mobile devices and trade privately with no credit cards, no banks, and no tech companies tracking their activities, or charging listing and transaction fees. 

Here’s what the front page looks like:

And here is what an item listing looks like:

Note that you can pay for this coffee maker in Bitcoin and Litecoin.

Haven is built on the Open Bazaar protocol:

Haven creates a mobile window into the groundbreaking OpenBazaar network powered by cryptocurrencies like Bitcoin, Bitcoin Cash, Litecoin and Zcash (Ethereum coming soon). Over 250,000 nodes have been created by people using this peer-to-peer network since the release of version 2.0 and tens of thousands of listings have been put up for sale from crypto tokens to original paintings by popular artists to business services. OB1 expects Haven to rapidly bring even more users onto the network who are eager to shop, chat and send cryptocurrencies privately from their mobile phones.

If you want to check out Haven, you can do that here.

Categories: Blog articles

Certainty Of Close

July 28, 2019 - 4:53am

On Friday, I had two separate conversations with founders about fundraising strategies.

Both had an easier path that would likely get them to a closing quickly but might cost them some economics and a harder/longer path that would allow them to maximize economics.

I gave them both the same advice which is that certainty of close is super important, particularly early on in a venture when you see an opportunity and want to capture it before someone else does.

Most decisions are not black and white. There is usually a lot of grey in between. Fundraising is always like that. There is rarely an obvious right answer.

Many founders are advised to run a competitive process, get as many quality offers as you can, and use that competitive dynamic to maximize economics.

While that is a great strategy if you have the luxury of time on your side and the ability to spend several months focused on raising capital, there is often merit to the quick close that maximizes certainty over other things.

Both conversations on Friday ended in a discussion about people and how important they are in all of this. The answer to that is that they are the most important factor of all when raising capital.

If you are comfortable with the people involved and have a high degree of confidence that they will be great partners, then everything else is secondary. That is true for at least the first five years of a venture. At some point, in very late stage or public financings, the people issues lessen and you can optimize for other things.

But early on, if you optimize for anything, optimize for the people you work with. Otherwise you are taking on risks that can and will blow up in your face.

After that, I might put certainty of close next on the list, as long as the economics of the “bird in the hand” are ones you can live with and the people are known quantities. You can rarely go wrong with that combination.

Categories: Blog articles

Video Of The Week: Albert Wenger on AI and Attention

July 27, 2019 - 4:36am

This is a talk my partner Albert gave at an AI conference in Berlin last month. Although he gave it to an AI conference, it is really about where we are in our society and what we need to do about it. It is about 20mins long.

Categories: Blog articles

Funding Friday: “Arduino Meets Crypto”

July 26, 2019 - 4:43am

This Kickstarter project is for a circuit board that makes it easy for developers to create IOT devices that work on Blockchains. It currently supports Ethereum, Whisper, and IPFS. I backed it this morning and am sharing it with all of you in case you want to as well.

Categories: Blog articles

Extensible Games

July 25, 2019 - 5:34am

The promise of blockchain games and non-fungible tokens (NFTs) is extensible games. Imagine if developers could build new worlds/games/experiences on top of Fortnite and you could take your character, your weapons, your vehicles, etc with you into those new worlds/games/experiences. That is what I mean by extensible games.

We are seeing the beginnings of that in blockchain games now. There are many game experiences that third-party developers have built on top of Cryptokitties (built by our portfolio company Dapper Labs).

And now Dapper Labs is pushing this idea even further by turning their CheezeWizards game over to the community.

The idea is pretty simple actually. This summer gamers will be competing to win the first CheezeWizards battle royale. But after that ends, the players will still have their Wizards because they are NFTs. The Wizards are like Bitcoin or Ethereum or any other cryptotoken. They can be stored in a wallet and used again and again in new games.

So Dapper Labs has released all of the CheezeWizards IP under an NFT license and is inviting developers to build new game experiences for all of these Wizards that are now out there.

And they launched the CheezeWizards Hackathon yesterday with over $15,000 in prizes for the winning game experiences.

I will be judging this hackathon along with a number of other crypto investors and I am excited to see the gaming experiences that developers build on top of CheezeWizards.

Categories: Blog articles

A Resilient Grid

July 24, 2019 - 4:45am

During Hurricane Sandy, all of lower Manhattan lost power for several days when a transformer blew at a ConEd plant on 14th Street.

Driving around lower Manhattan at night in the aftermath of Sandy was one of the strangest moments I’ve experienced as a NY’er. The traffic lights didn’t work and everything was pitch black.

Except NYU. As you approached Washington Square the city lit up again. That is because NYU has its own power plant, a cogeneration facility next to NYU’s Courant Institute.

Similarly, when the west side of Manhattan went dark a few weeks ago in what is turning into a summer of blackouts, everything was pitch black except the new Hudson Yards development. That’s because on the top of the Hudson Yards Shopping Mall, there is a massive cogeneration facility that powers all of buildings in that development.

So when I heard Mayor de Blasio ruminating over the weekend about a government takeover of ConEd, I thought to myself “he’s got it all wrong.”

We don’t need more centralized control of our power grid, we need a more decentralized power grid.

NY State has been pushing in this direction for years now under the leadership of Richard Kauffman, Chairman of the New York State Energy Research and Development Authority (NYSERDA). The state has deregulated the energy markets, they have created substantial incentives for property owners to build out renewable (solar/battery/etc) capacity in their buildings, and they have put forth a vision of an energy grid that is not reliant on any one entity to stay up.

Back in the 1960s when the Department of Defense designed ARPANET, the precursor to the modern Internet, they designed a network that was entirely decentralized and therefore massively resilient (anti-fragile in Nassim Taleb speak).

That should be our goal with our energy grid as well. We should want energy production and consumption to happen at the edges of the network and we should want redundancy in the cables that connect everything together.

We aren’t there today and it will take a lot of work over many years to get there. But that should be our goal.

And we certainly should not be putting our energy system into the hands of a centralized and bureaucratic government. That would lead to more blackouts, not less.

Categories: Blog articles

When Things Just Start Working Again

July 23, 2019 - 11:25am

Several times this week something that was not working magically started working again through no intervention of mine.

I find this to be very frustrating.

I would almost rather something stay broken than magically fix itself.

First, I enjoy fixing things. I’m an engineer, a tinkerer, and I get great satisfaction out of debugging/troubleshooting/fixing things. It is such a great feeling when you figure it out and it works again.

And second, when something fixes itself, you don’t know what did the trick and if it breaks again, you won’t be able to easily fix it.

For the same reasons, when we call an expert to fix something, I always ask them what broke and how they fixed it so I can do that the next time. It isn’t that I actually want to fix it next time, but I certainly want to be able to if I have to.

I know plenty of people in my life who don’t feel this way. They just want things to work and don’t really care why or how they do.

But I am not wired up that way.

Categories: Blog articles

Smart Thermostats

July 22, 2019 - 4:49am

My colleague Dani sent me this chart last week:

I believe this is more or less a proxy for smart wifi-enabled thermostats in the US.

Those would be Nest, Honeywell Lyric, Hive thermostats and a lot of others too.

Those are pretty big jumps from 6.5% to 8.9% to 11.4% given that people don’t generally swap out thermostats unless they are doing a renovation or building a new home. Maybe there is more thermostat swapping going on outside of those “construction” moments than I would expect.

In a few years, more than 20% of homes will have heating and cooling systems that can be “managed” by software, either on-premises or, more likely, in the cloud.

That is pretty exciting.

I wonder what level of adoption is “critical mass” or “escape velocity” ?

Certainly 50% would be, maybe 25% will be.

I really like the area of networks, platforms, and protocols that will allow us to efficiently manage our energy consumption. It has been hindered to date by a closed “last mile”, but that is changing and I think the opportunity is approaching.

Categories: Blog articles

Parenting

July 21, 2019 - 5:08am

Parenting is the hardest and greatest job that I have had.

It presents the thorniest problems and generates the greatest rewards.

We had the pleasure of spending most of yesterday with our three kids and their significant others.

The occasion was our oldest daughter’s masters thesis presentation at her MFA program.

She is an artist who works with computer generated imagery and animation.

The work she made for her thesis was a five to seven minute animation loop and I probably watched it five or six times yesterday afternoon.

It was the first time I had seen it and I was amazed at its beauty, its quality, and the emotions it conveyed.

Needless to say, I am proud of her and also all of the other artists that showed their work alongside her.

We then spent the rest of the afternoon with our other kids hanging out and having fun with them.

Then we all got together for a late (for me) dinner that was celebratory and fun.

As the dinner ended, I sided up next to The Gotham Gal, put my arm around her, and said “that was a good parenting day.”

She looked at me and smiled.

I have loved all of parenting; rocking them to bed, the late feedings, changing the diapers, teaching them things, family vacations, the teenage years, leaving home, the college years, and the early adult years.

As I write those things, I also recall the challenges of each of them and the moments where we did not know what to do in certain situations.

But we figured it out and got through it and moved on to the next stage.

We certainly got better at it over time but we have never felt that we have parenting figured out.

Now we are in the phase where our kids are adults and accomplishing things that amaze and impress us.

They understand things we don’t understand, they do things we can’t do, and they are having successes that we have little part in.

That makes me feel so good.

I don’t believe our work is done. I believe we will be parenting for as long as we live.

But I do believe that the work is easier and the gains are richer.

But most of all I am reminded that our best work is done at home and the fruits of it are measured in joy.

Categories: Blog articles

Video Of The Week: CEO AMA

July 20, 2019 - 4:29am

AMA stands for “Ask Me Anything.” I have noticed a trend of CEOs doing these AMAs for their customers and broader stakeholder communities.

A good example of a CEO who is doing this is Brian Armstrong, CEO of our portfolio company Coinbase.

Brian has been doing this for several months. You can see all of them on their YouTube channel.

Here is the one he did with LJ Brock, Coinbase’s Chief People Officer, yesterday.

Categories: Blog articles

Funding Friday: Medicine Of Time Travel

July 19, 2019 - 4:04am

A few weeks ago, I got an email from a reader. She asked if he could subscribe to this blog without the funding friday posts. He thought they were “spammy.” I replied to him “think about them as the ads” and politely told him that wasn’t possible.

I love funding things. And I love sharing the things I fund with all of you.

I saw this project this morning and backed it instantly. A musical art project. Awesome.

Categories: Blog articles

Climate Adaptation?

July 18, 2019 - 4:37am

While society debates how to deal with climate change, there are some scientists who are now saying that that time has passed and we now need to start planning society’s adaptation to the climate tragedy we have created on planet earth.

This scientific paper from roughly one year ago is super depressing. I am linking to it because I read it this week and it certainly made me consider how our way of life may change dramatically in my lifetime.

I am not yet ready to throw in the towel on our ability to react to the mounting evidence of a rapidly warming planet and dramatically slow it down with actions like the Paris Accords, recent laws in New York City and New York State, and everyone’s personal actions in what we do and how we do it.

And there is no benefit in getting depressed or defeatist about the climate change threat.

I think the opposite is true. It is time to stop debating whether the planet is warming. It is even time to stop debating about who is going to pay for the massive investments we need to make immediately to slow that warming. It is time to start making them.

Categories: Blog articles

Abridge

July 17, 2019 - 5:01am

We seed funded a company late last year called Abridge and the company went public yesterday with their iOS and Android apps. Naomi wrote about the investment on the USV blog.

I want to focus on the product because I think it is a game changer for all of us that access the health care system regularly.

The Abridge mobile app (get it here) allows anyone to record a medical visit with a doctor, a nurse, or any other health care professional.

It works like this:

You open the app to see your visit history:

You tell the doctor, nurse, etc that you are going to record the session and hit the record button:

Then you record the session.

When you are done Abridge saves the audio recording of the session and also immediately (in way less than a minute) provides a transcript of the session with the key medical terms called out in bold.

That is me making stuff up this morning. I sure hope I don’t need a knee replacement any time soon.

This is one of those ideas that is so simple and so obvious that you wonder why nobody has done it before.

The team is a combination of physicians and machine learning people from University of Pittsburgh and Carnegie Mellon. It’s a combination of domain experts and technologists who are extremely well suited to make this work and work simply and elegantly.

I would encourage everyone who sees doctors regularly or has a loved one that does to get Abridge on your phones and their phones.

I think it’s a game changer for how we access and understand the medicine in our lives.

Categories: Blog articles

Dronebase Insights

July 16, 2019 - 12:12pm

I was sitting in my backyard this weekend looking up at the roof on my house, which I can’t see because of a parapet, and wondering how all of the solar panels we put up there a few years ago are doing. I was also wondering how the roof itself is doing.

Then it hit me that USV has a portfolio company that can help. I went to my Dronebase account and ordered a drone mission that will do an aerial inspection of my roof and also a thermal inspection of our solar panels.

Yes, one drone pilot with an off the shelf drone can do all of that for me in less than an hour.

I scheduled the flight for next week and should have a full report with aerial imagery and video and thermal scans of the solar panels within a few days after that.

And I am going to get all of that for a less than it costs me to keep my pool serviced!!

But it gets better. Today, Dronebase is announcing that it has acquired the Drone Reports business from Betterview and will turn that into a new product line called Dronebase Insights.

From that blog post:

DroneBase Insights aims to help insurers and property managers assess damage and mitigate risk for commercial properties, and we’ll expand our offering over time

So now you can get a full blown report from Dronebase in addition to aerial imagery and video and thermal scans.

I didn’t order that myself this weekend but maybe I should have. I probably will next time.

Categories: Blog articles

Immigration Makes Us Stronger

July 15, 2019 - 4:59am

It is ironic and upsetting that a nation built on immigration is increasingly unwelcoming to immigrants and that the words ” go back” are becoming a political rallying cry.

I am for immigration full stop.

I think opening our arms and borders to people who want to come here, work, build their lives and businesses and futures makes our country stronger.

It always has. Nothing that is great about the United States was accomplished without immigrants.

Immigrants built our docks, they built our railroads, they built our automotive industry, and they built our technology industry.

If we were to close our borders completely, I believe we would be a second rate country within a couple of generations.

Immigration is new blood, new ideas, a work ethic, a belief in a better future, a willingness to take enormous risk, burn the boats, and get it done.

We need that in our society. We will die without it.

Categories: Blog articles

Whales Not Unicorns

July 14, 2019 - 3:35pm

I have been vocal here that I do not like the term Unicorn to describe highly valued venture-backed startups. Unicorns are mythical creatures that don’t really exist and highly valued venture-backed startups do exist. They might be rare, but they are not fictional.

A better word would be Whales. And it turns out that the Whaling industry in the United States in the 18th and 19th centuries looked remarkably similar to today’s venture capital business.

Some of my friends and colleagues have been texting and tweeting about a book called VC: An American History by Tom Nicholas. So I got it on my Kindle and the first chapter is all about the Whaling industry and its similarities to the VC business.

Here are some photos I took of the first chapter on my phone.

This is a chart that plots the distribution of returns by whaling voyage vs venture capital fund.

This is a diagram that compares the structure of the whaling industry to the venture capital industry.

And this is a chart that shows the performance of the top 29 whaling agents. This is very similar to charts I have seen that compares the performance of the top venture capital firms.

So while Unicorns are made up creatures, Whales are not. And given the similarities between a highly successful venture capital investment and a highly successful whaling voyage, I am going to start calling the big winners in the venture industry Whales. I hope it catches on.

Categories: Blog articles