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Musings of a VC in NYC
Updated: 2 hours 16 min ago

Voting

September 13, 2018 - 3:02am

Today is primary day in New York State. The polls open at 6am and stay open until 9pm.

There are primary races for the Governor, Lieutenant Governor, and Attorney General as well as a bunch of statewide races for State Senate and State Assembly.

In NYC, and to a lesser extent in New York State, the primary can be the election as the city and state lean left.

So I encourage everyone in New York State to go out to the polls and vote today.

It all comes down to voting in a democracy. Marching feels great. Tweeting feels great. Polls make the news. But voting is the political action that really counts unless you can give gobs of money to candidates which most voters cannot and don’t do.

I plan to get to my polling place early on the way to an early start to the workday.

I always feel great pulling that lever. I hope you do too.


USV TEAM POSTS:

Nick Grossman — September 22, 2018
The Utility Infielder

Nick Grossman — September 21, 2018
Fear

Categories: Blog articles

The Unbundling Of Health Care

September 12, 2018 - 3:16am

Naomi Shah, one of our analysts at USV, has been doing a deep dive on health care since she joined us this past spring.

She has started to publish a series of blog posts on what she has learned and what she thinks is investable at the intersection of healthcare and consumer tech.

Kind of like putting our playbook on display before we have even implemented it.

But that is how we roll at USV.

At least this way, we get feedback and input on these sector theses which ultimately make them even better.

And we get a lot of incoming pitches from entrepreneurs working in our target areas as a result of making our playbooks public.

She starts off her series with a post on the unbundling of health care and compares it to what has happened in financial services.

Naomi ends this post with this observation:

these observations seem to indicate some unbundling of the existing large, monolithic systems in healthcare towards a more open, local, independent and transparent model, with control residing with individual users. And ultimately, this could change the way healthcare is delivered to consumers.

“A more open, local, independent and transparent model, with control residing with the individual users” sounds exactly what we like to invest in at USV so expect to see more investing in health care from us and more posts from Naomi. You can find her posts on USV.com and/or follow Naomi here.
USV TEAM POSTS:

Nick Grossman — September 22, 2018
The Utility Infielder

Nick Grossman — September 21, 2018
Fear

Albert Wenger — September 20, 2018
Uncertainty Wednesday: Fear and Acceptance

Categories: Blog articles

Remembering 9/11

September 11, 2018 - 4:52am

On Sunday morning, I rode my bike by the memorial in lower Manhattan where the twin towers used to stand.

They have done a wonderful job rebuilding that area and the memorial itself is inspiring in just the right way, somber and reflective and serious.

Seventeen years is a long time.

Children, like ours, who were just old enough to know what happened and why, are now adults, living their own lives, going to work every morning.

Life moves on, the wounds heal.

But the scars are still there, in our hearts, our minds, and on the ground where it happened.

I am taking some time today to remember that day and the people we lost.

This post is part of that.


USV TEAM POSTS:

Albert Wenger — September 20, 2018
Uncertainty Wednesday: Fear and Acceptance

Categories: Blog articles

Farsighted

September 10, 2018 - 5:54am

My friend Steven Johnson has a new book out called Farsighted.

After attending a book talk he did on Thursday night, I put it on my Kindle and started reading it last night.

The book is about decision making, specifically “life-altering decisions” with long-term consequences.

In classic Steven fashion, he combines a detailed look at academic research and science on the topic with stories and real-world examples.

For example, he kicks off the book with the decision NYC made to fill the Collect Pond in 1811, which ultimately led to the creation of one of the most famous ghettos, the Five Points neighborhood.

We all make big and important decisions in our lives and in our business. So this is a topic that should be relevant to everyone.

I am already enjoying reading it and I suspect you all will too.


USV TEAM POSTS:

Bethany Crystal — September 18, 2018
States in Limbo

Categories: Blog articles

Reinventing Education

September 9, 2018 - 4:26am

Alibaba founder Jack Ma has announced that he plans to retire at age 54 and turn his attention back to education. He started his career as an English teacher.

It seems, from reading the piece I linked to and a few other news reports, that Jack Ma is inspired by what Bill and Melinda Gates have done.

So am I.

Bill Gates attended AFSE, a school that the Gotham Gal and I helped to start seven years ago, this spring and he wrote this recently about that experience.

Many have criticized the work that the Gates Foundation has done in education over the years.

But my view is different.

Bill and Melinda are investing, learning, evolving, and adapting their efforts.

Just like we all do in life.

Bill’s visit to AFSE showed him something he liked. He was inspired by it, wrote about it, and I suspect it will influence the way he thinks a bit.

Like Jack Ma, Bill and Melinda are relatively young and have so much capital to invest in education and their other target areas.

The impact people like Bill, Melinda, and Jack can and will have on education around the world is immense.

And we need it.

Education is provided very unevenly on planet earth.

A high-quality education is easy to come by if you are wealthy and/or live in a wealthy country.

But even in the US, a very wealthy country, we have much of our population receiving a poor or uneven education at best.

I see this in the NYC public school system where I do most of my education philanthropy.

We have 1.1 million public school students here in NYC and many of them are not getting the education they need and deserve.

The reasons for this are many and the solutions are hard.

But I see amazing things happen in the middle of this mess and I know that we can help more kids get a better education and we are doing that.

Reinventing education requires not just working inside the established systems, it means working outside of them and ultimately rethinking them and replacing them.

But all of this has to happen in parallel. We cannot let the existing systems falter and fail our children while we are busy finding better ways.

At USV, we have a number of exciting portfolio companies that are rethinking how education should work. Companies like DuoLingo, Quizlet, Codecademy, Skillshare, and Top Hat.

Part of the answer is backing entrepreneurs like the ones behind these companies to come up with better, less expensive, and more available education solutions for our globe.

And part of the answer is changing the way employers think about education. At USV, we do not require any sort of degree to work for us. But we require skills, knowledge, and curiosity. Many larger companies are starting to do the same.

The internet and technology writ large are making it a lot easier for someone to learn something. But we have barely scratched the surface of what is possible. Twenty-five years after the emergence of the web browser and the commercial internet, education still works largely like it did back then.

That is going to change, is changing, and I am very excited for it to happen.

And I am happy that massively successful people like Bill and Melinda Gates and Jack Ma are focusing their capital and productive energy in this area.

I am too.


USV TEAM POSTS:

Bethany Crystal — September 18, 2018
States in Limbo

Albert Wenger — September 17, 2018
World After Capital: Enhancing Freedom

Categories: Blog articles

Video Of The Week: Elon Musk on Joe Rogan Experience

September 8, 2018 - 6:33am

I have never been as obsessed with Elon Musk as many are in the tech sector. We own two Tesla cars. We pre-ordered Tesla’s solar roof tiles several years ago but have not yet received delivery of them. I appreciate his ingenuity and creativity and we like the Tesla products we own. We are not and have never been shareholders of Tesla or SpaceX.

With all of that disclosure, I want to share the video of Elon’s appearance on Joe Rogan Experience as the video of this week. Much has been made of Elon’s decision to take a puff on a tobacco/weed joint on the show. I don’t make too much of that. I’ve been around people smoking pot since I was a teenager and I think it is a lot like alcohol. I believe it is fine if it is done responsibly and appropriately and I am pleased that it is becoming legal in many states around the country.

What is more interesting to me in this video is how introspective and thoughtful Elon is in this interview, particularly about the role of AI in our society and the likely impact of AI on our world in the coming years. It is a lengthy conversation, but worth watching if you have some time this weekend.


USV TEAM POSTS:

Albert Wenger — September 17, 2018
World After Capital: Enhancing Freedom

Categories: Blog articles

Feature Friday: Android Smart Notifications

September 7, 2018 - 3:13am

With the new version of Android comes intelligence around mobile notifications.

If you tend to swipe away notifications from a particular app, Android eventually asks you this:

I told Android to keep showing these project updates to me even though I tend to swipe them. I like to see these but don’t often click on them.

I would say that most of the time, I select “Keep Showing” but some of the time I do choose “Stop Notifications.”

I love the idea of a smart operating system that learns how you want to use it and adapts to that versus forcing you to do the configuration manually and that is where Google is clearly going with Android.

You can really see it in the latest version of the OS.

Categories: Blog articles

Investment Risk Tolerance By Gender

September 6, 2018 - 11:57am

Our portfolio company Stash, which offers a super simple mobile investing app and has roughly 2.5mm users, did some analysis on male and female users to see if there was a material difference in risk tolerance between men and women on their service.

The conventional wisdom is that men are risk takers and women are more conservative.

Stash found that there really isn’t much difference between male and female users of their service when it comes to risk tolerance.

And they found that women are more tolerant of the highs and lows that come with being an investor.

Check out the data here.

Categories: Blog articles

Retaining vs Deleting Emails

September 5, 2018 - 5:54am

Conventional wisdom is that deleting old emails regularly is the best way to avoid issues down the road.

My experience has been different.

I’ve been involved in a few legal matters over the years where email discovery has been done.

Going back and re-reading emails you sent years ago is a pretty enlightening experience.

What I have found is if you have the right intentions and act reasonably and responsibly, old emails often show that to everyone and can be valuable.

Being able to go back over old emails is also a great way to jog a foggy memory.

So while I understand the challenges with having a lot of written and discoverable emails “on file”, I would argue they they often can be quite valuable.

Categories: Blog articles

Back To School

September 4, 2018 - 3:41am

Growing up, I always enjoyed the up and down patterns of work and play.

Back to school in the fall, a solid winter break, back to school for winter and spring, and then a long summer break.

Just as you were getting burnt out on school, a break would come along.

By the end of the summer, you were ready to go back to school and there was an excitement about it.

That doesn’t exist so much in the adult work environment unless you live in parts of the world where a long summer break is part of the picture.

As The Gotham Gal and I have moved beyond our child-rearing years, and found a way to work from wherever we are, we are recreating that childhood rhythm for ourselves.

We are wrapping up our summer today and heading back to the fall season in NYC.

It’s a bit like that back to school feeling, with a new lunchbox, some new clothes, the possibility of some new friends, and an excitement about all of that.


USV TEAM POSTS:

Albert Wenger — September 12, 2018
Uncertainty Wednesday: The Unknowable Alternative Life

Categories: Blog articles

Human Capital

September 3, 2018 - 4:00am

Today is Labor Day in the US. It is a day to celebrate labor, the union movement, and the role of the worker in our economy and our society.

I have always struggled with the idea that labor and capital are intrinsically opposed to each other.

It is obvious that workers have been taken advantage of by employers since the dawn of an industrialized society and possibly/probably for much longer than that.

But does it have to be that way?

In the tech sector, we typically issue between 15% and 25% of the company’s stock to the employees and we keep granting this equity as the company grows and expands.

And it is also the case that the tech sector is largely a non-unionized industry.

There are large portions of a tech company’s workforce that are in short supply, most notably software engineers and other technical positions where demand outstrips supply and has for as long as I have been working in this sector.

So there are things about the tech sector that are different from other large industries and I’ve always felt that human capital (as we like to call the people in the tech sector) is more valued in tech companies than traditional industries.

But when a tech company stumbles and starts bleeding cash, one of the first things to go is headcount.

Capital demands that a company have a profitable outlook or it will not flow to a company.

So there are fundamental economic realities that put capital and labor in opposition to each other at times.

But both capital and labor want sustainable companies that grow and prosper.

So it can be the case that labor and capital work together and succeed together.

And that has largely been the case in my career in the tech sector and I enjoy that feeling of shared success.


USV TEAM POSTS:

Albert Wenger — September 12, 2018
Uncertainty Wednesday: The Unknowable Alternative Life

naomi.shah@usv.com — September 11, 2018
Unbundling Healthcare

Categories: Blog articles

Peak Valley?

September 2, 2018 - 3:52am

The Economist has a cover story this week called Peak Valley.

The article suggests that Silicon Valley’s lead as a hub for innovation has peaked and other regions are rising. It ends with the concern that innovation more broadly has peaked.

I somewhat agree with “the rise of elsewhere” narrative and disagree that innovation has peaked.

Our experience at USV has been that we can and do find high impact startups to invest in outside of Silicon Valley but that we find just as many in Silicon Valley.

In our first four funds spanning the vintage years of 2004-2014, we have had twelve very high impact startup investments. Seven of them were from outside of Silicon Valley and five were from Silicon Valley. The seven outside of Silicon Valley came from NYC (four), Pittsburgh, London, and Austin. Each of the funds we raised and invested during that period have had at least one high impact investment in Silicon Valley and at least one outside of Silicon Valley.

But our data set is small. We made investments in a total of sixty to seventy startup companies in that period. And we don’t invest in Asia, South Asia, Africa, The Middle East, and Latin America so we don’t touch large swaths of the area outside of Silicon Valley. And we are based in NYC so we have a home-court advantage there.

My point is that it has always been possible to build a high impact startup outside of Silicon Valley and invest in it too. But if we were to stop looking for investments in Silicon Valley, our opportunity set would be significantly reduced.

What is true is that Silicon Valley has gotten extremely expensive to operate in. We see that across many dimensions. Valuations of startups in Silicon Valley are significantly higher than outside of Silicon Valley. Cash compensation for employees is significantly higher in Silicon Valley than outside of Silicon Valley. Equity compensation for employees is significantly higher in Silicon Valley than outside of Silicon Valley. And the cost of living for employees in Silicon Valley is much higher than outside of Silicon Valley.

All of that means that capital (both human capital and invested capital) needs to achieve a much higher return on input in Silicon Valley than outside of Silicon Valley, all things being equal. I am not sure all things are equal though and that is really the rub.

Silicon Valley has always had one important advantage over other regions when it comes to the tech sector. There is a much higher density of talent, capital, employment opportunity, and basic research in Silicon Valley versus other locations. When I say density, I mean physical density. If you walked a mile, how many tech companies would you pass along the way? That metric in Silicon Valley has always been higher than elsewhere and still is. So even though the return on capital (human and invested) has significant headwinds in today’s Silicon Valley, it is still a lot easier to deploy that capital there. And I think that will continue to be the case for a long time to come.

The Economist piece ends with the observation that some macro dynamics (large incumbents capturing the lion share of the economics in tech and bad governmental policy toward tech) are making innovation harder. While both observations are correct, I do not think we are seeing any downturn in global innovation. What is happening outside of the US, particularly in Asia, is amazing and there are many new sectors that are just emerging now that will drive innovation in new and exciting directions. Things always look darkest right before the dawn and I believe we are seeing the dawn of a number of important new sectors. And I think Silicon Valley is on to all of them and will make a play in all of them. But so will many other regions around the world.


USV TEAM POSTS:

naomi.shah@usv.com — September 11, 2018
Unbundling Healthcare

Albert Wenger — September 10, 2018
World After Capital: The Promise and Peril of the Digital Knowledge Loop

Categories: Blog articles

Video Of The Week: GoTenna Mesh

September 1, 2018 - 5:17am

It’s a long weekend with many of us off the grid.

So what do you do when you are off the grid?

Get a GoTenna to stay connected.

This promotional video explains the power of GoTenna when you and your friends are off the grid.

Disclosure: GoTenna is a USV portfolio company.


USV TEAM POSTS:

Albert Wenger — September 10, 2018
World After Capital: The Promise and Peril of the Digital Knowledge Loop

Categories: Blog articles

Feature Friday: Gmail Reminders

August 31, 2018 - 3:57am

I don’t know when Gmail started doing these for me but it was around the time I switched over to the new UI. Most likely this is one of the features of that new UI.

When I have not responded to an email that Gmail thinks is important, or when someone has not responded to an email from me that Gmail thinks is important, it resurfaces that email near the top of my inbox.

It looks like this:

The first email is a reply I sent to an email and the recipient has not responded in seven days. Gmail is suggesting that I follow up.

The second is a back and forth with my brother and I failed to reply to his latest. I just did. Thanks Gmail.

While this is a relatively small feature in the overall Gmail offering, I have found it quite useful in the month or two that I have had it.

Thanks Google.

Categories: Blog articles

Atoms and Bits

August 30, 2018 - 3:35am

There is a framework I’ve/we’ve used over the years to think about where to invest and where not to invest that I call “atoms vs bits.”

I am not sure where I got it from but the concept is simple. Is the software being built and taken to market dealing with just bits or are atoms also involved?

The idea being that it is going to be easier to make something work if there are just bits involved. Atoms make things more complicated and more expensive.

In the 90s, when I first came across this framework, it led us/me to focus on areas like media and financial services where the product was end to end digital. And the first industries to be truly disrupted by the Internet were the ones, like media and financial services, that are end to end digital (or can be).

I’ve held on to this framework over the years and while we’ve veered from it from time to time, often unfortunately, it still holds up.

If you look at machine learning, possibly the most impactful technology right now (and I mean right now), you can see this at work.

Machine learning algorithms have massively transformed online advertising (just bits), online commerce (just bits on the UI), trading of financial assets (just bits), and our attention (just bits and neurons).

But in areas where atoms are involved, not so much. There appears to be a growing acknowledgement in the tech sector that the timeline to fully autonomous vehicles is going to be longer than some had thought. It is not that surprising. There are lots of atoms and lives involved.

I’ve been waiting patiently for the day that I don’t have to do the dishes after yet another amazing meal by The Gotham Gal. I will likely wait longer. Atoms are involved.

I am not saying that we should not work on these harder problems. We should. But we should also understand that the timelines will be longer and the road to adoption will be more challenging. That means these efforts will be more capital intensive and should ideally be investable at more attractive valuations. Sadly the latter has not been the case.

When you are investing other people’s money, you need to be mindful of where the timelines are shortest and the path easiest. And that has been bits for the totality of my investing career.

Categories: Blog articles

Crypto On Campus

August 29, 2018 - 6:16am

Our portfolio company Coinbase partnered with Qriously to study the adoption of blockchain and crypto on campuses around the world.

They published their findings on the Coinbase blog yesterday.

Here are some interesting findings:

Stanford, Cornell, and Penn lead the way in the number of crypto and blockchain courses offered to students.

Blockchain and crypto courses are taught by math, science, business, finance, and social sciences departments.

 

Almost 20% of surveyed students own crypto assets and 26% want to take a course on crypto.

You can read the entire report here.

Categories: Blog articles

Chromebook

August 28, 2018 - 4:41am

I’ve been thinking about moving from a Mac to a Chromebook as my primary computing device.

I have not used desktop software for probably a decade now. The browser is how I do all of my desktop computing. Paying up for a full blown computer when all I need is a browser seems like a waste.

And there are some security things that appeal to me about a Chromebook. I like the ability to do two factor authentication on signing into the device, for example.

I am curious what advice those of you who use Chromebooks have for me.

I like to use a desktop style setup vs a laptop unless I am traveling. So the Acer Chromebase and Chromebox look interesting to me.

But I am hearing great things about the Pixelbook and am wondering if I should start there.

I am also curious how one uses a Password Manager on a Chromebook. That’s the one desktop app that I regularly use.

If you have any advice for me as I consider this move, I would appreciate hearing it.


USV TEAM POSTS:

Albert Wenger — September 5, 2018
Uncertainty Wednesday: A New Tack

Categories: Blog articles

Being Public

August 27, 2018 - 4:01am

The back and forth that Elon Musk did over the last few weeks about being public begs the question about whether the challenges of operating a public company outweigh the benefits.

Elon wrote this in a letter to Tesla’s employees:

As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term. Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.

I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we’re all trying to achieve.

A few weeks later, Elon wrote this:

After considering all of these factors, I met with Tesla’s Board of Directors yesterday and let them know that I believe the better path is for Tesla to remain public. The Board indicated that they agree.

So which is it?

I strongly believe that being public is the best form of shareholder ownership for the vast majority of companies and advocate for that path to the companies in the USV portfolio that have the opportunity to be a public company.

The pressure of quarter to quarter execution is hard on a team. But running a company is hard. And the accountability that comes from this quarterly reporting is a good thing too. If you have problems in your business, you can’t hide them. You have to come clean about them, deal with the implications of them, and fix them.

The long-term vs short-term thing is the critique I hear most often. But I don’t buy it. The best run public companies manage to think and act with a long-term focus while being public. I think it comes down to leadership, courage, and foresight more than whether you are public or not.

Stock price volatility is a factor no matter if you are public or not. At least when you are public, everyone knows when your valuation is going down. Private companies are able to hide that from their employees, the media, and others. Which is just kicking the can down the road and that always ends badly. I prefer the transparency of being public on this one.

And the short seller argument is nonsense. People are always working against you. Your competitors are working against you. The media may be working against you. The regulators may be working against you. Short sellers are just another group that wants to see you fail. But they are not the only ones and you can make them pay by executing against your commitments and guidance.

For me, it just comes down to leadership, courage, execution, and setting and meeting expectations. All good companies must have those in place. If you do, being public is not only manageable but preferable.

And I am pleased to see more and more high growth tech companies coming to this conclusion and taking the plunge.


USV TEAM POSTS:

Albert Wenger — September 5, 2018
Uncertainty Wednesday: A New Tack

Categories: Blog articles

Duty Honor Country

August 26, 2018 - 3:54am

I was born at and spent a fair bit of my childhood at the United States Military Academy where my father taught engineering.

It’s a magnificent and beautiful place, full of history and meaning.

The motto of the academy, enshrined in its coat of arms, is “Duty Honor Country”.

In 1962, when I was less than a year old, General Douglas MacArthur came to West Point to accept the Sylvanus Thayer Award and gave the famous Duty Honor Country speech, in which he said:

“Duty, Honor, Country” — those three hallowed words reverently dictate what you ought to be, what you can be, what you will be. 

I am reminded of those words upon the passing of John McCain, a man who embodied them in the world of politics that is mostly bereft of them.

Though I did not vote for John McCain when he ran against Barack Obama in 2008, I always appreciated the way he conducted himself in a political system that mostly seems to bring out the worst in people.

He was a sharp contrast with our current President, who exhibits none of these values.

Rest In Peace John McCain. You were a great American.


USV TEAM POSTS:

Nick Grossman — September 4, 2018
Form factor

Albert Wenger — September 3, 2018
Labor Day: AI & Labor

Categories: Blog articles

Video Of The Week: Silvio Micali on Algorand

August 25, 2018 - 5:20am

Silvio Micali is the founder of USV portfolio company Algorand, which is building a foundational blockchain of the same name.

In this video, Silvio explains what is different and important about Algorand.


USV TEAM POSTS:

Albert Wenger — September 3, 2018
Labor Day: AI & Labor

Categories: Blog articles