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Functionality Vs Content

A VC - April 14, 2019 - 7:14am

I saw some chatter on Twitter this past week about Netflix and Disney in the wake of Disney’s announcement of Disney+:

I’m long $dis myself and no $nflx at the moment. That said will never not pay $nflx at current pricing https://t.co/aInOGQQFXZ

— Lindzon+ (@howardlindzon) April 12, 2019

Disney’s stock was up 11% on the week

And Netflix stock was down 5% on the week

Certainly getting into the streaming game will be good for Disney. But I am less sure that content matters that much when it comes to Netflix.

A friend of mine shared this with me earlier this week:

When I saw that data, I replied to him with this:

It is the frustrations of the prior model (interruptive advertising, by appointment consumption, etc) that open the opportunity for the next model

Given that the new model, streaming, is well entrenched now, I am not saying that functionality alone will save Netflix or anyone else.

But I do believe that the functionality of a service (no ads, binge watching, user interface, curation, notifications, price, etc) are just as important, or possibly more important, than whether or not you can watch The Incredibles on it.

And most importantly, it is the frustrations of the prior model, as I mentioned above, that creates the opening for the new model.

So if you are working on a new model, for anything (it could be crypto, health care, education, finance, etc, etc), you should look very closely at what are the most annoying and frustrating aspects of the current model and focus on leading with features that remove them.

Categories: Blog articles

Audio Of The Week: Coinbase Custody

A VC - April 13, 2019 - 5:57am

And now a word from your sponsor:

Coinbase is a USV portfolio company, I am on the board, and I am deeply invested in this business.

Coinbase’s regulated custody subsidiary is an important part of their overall business and I am also on the board of it.

This Unconfirmed Podcast with Sam McIngvale is a really good explanation of what Coinbase is doing in the custody market and how they are developing new income earning options for their customers.

Categories: Blog articles

Funding Friday: Math In America

A VC - April 12, 2019 - 4:29am

Did you know this?

Well, this film that is being funded on Kickstarter is all about the math crisis in America. I backed it this morning and you can too.

Categories: Blog articles

A Registered Token Offering

A VC - April 11, 2019 - 10:29am

Our portfolio company Blockstack tweeted out this today:

After rounds of private comments, we’ve publicly filed for a $50M token offering with the SEC.

Upon qualification, our network and the Stacks tokens will be available to retail investors, including the US. https://t.co/OuPVbA4eJt

— Muneeb Ali (@muneeb) April 11, 2019

Given that USV is an investor and one of my partners is on the board, I don’t want to opine on this in any way.

But I do think this is an interesting development in the evolution of tokens as investable assets.

So here is a Coindesk post on this news.

Categories: Blog articles

Dronebase Goes Thermal

A VC - April 10, 2019 - 6:00am

Our portfolio company Dronebase is announcing some big news today.

They are going to be offering thermal imaging missions in partnership with FLIR, the leading provider of thermal sensors. And FLIR has made a strategic investment in Dronebase.

What is thermal imaging? Thermal imagery, which is also called infrared imagery, is the ability to see a much larger portion of the electromagnetic spectrum than what is visible to the eye. This page from FLIR’s website does a good job of explaining the technology.

If you put a FLIR thermal sensor on a drone, you can learn a lot more about buildings, equipment, terrain, etc, etc. The military sector has been doing this for years and the commercial sector is starting to use the technology a lot now too.

Here is an image of a roof captured with a traditional drone camera:

And here is an image of a roof captured with a drone using a FLIR thermal sensor:

This drone mission, recently run by Dronebase, identified water damage and leakage on this roof.

So what is the big deal here?

Dronebase offers the world’s largest drone pilot network. They have pilots all over the world who are skilled at operating commercial drone missions. And they have an API that captures information from drone missions at scale. Now enterprise customers can use their pilot network and API to capture thermal imagery. This will significantly reduce the cost and increase the availability of drone-based thermal imagery to enterprises of all sizes and locations.

If you want to learn more, you can contact Dronebase here and start using thermal imagery to improve your business operations.

Categories: Blog articles

Get Your Message On Mobile

A VC - April 9, 2019 - 4:41am

I finally got around to reading the Political Advertising Report from Tech For Campaigns. My conclusion is we are going to see our phones light up with political messages over the next year and a half. Here is why:

Only Trump spent a percentage of total spend on digital that is close to what companies do When you buy Facebook ads, you are buying mobile ads The older you are the more likely that you click on ads on your phone

So let’s brace ourselves for the messages that are going to start coming into our phones from politicians over the next 18 months. Mobile advertising works.

I am closing comments to this post because I don’t want to turn this blog’s comments into a soapbox for certain people and we all know who they are.

Categories: Blog articles

Scaling A Company While Controlling Costs

A VC - April 8, 2019 - 4:42am

Over the last decade, the costs of scaling a company in the bay area, NYC, and many other startup regions in the US has escalated sharply. We have encouraged our portfolio companies that are located in these high cost regions to build out secondary locations where they can hire high quality engineering and other talent at lower costs. Locations in North America that have been attractive to our portfolio companies are cities like Des Moines, Indianapolis, Toronto, and a number of others.

Another approach that has worked well for our portfolio companies is to have a secondary location outside of the US, where talent can be hired a much lower cost than the US.

So it was with interest that I read this in Zoom’s IPO prospectus;

we have a high concentration of research and development personnel in China

It turns out that Zoom has most of its engineering team in China, where they can hire high quality engineering talent at much lower cost.

Look at this P&L.

Zoom spends most of its opex on sales and marketing because it has kept its engineering costs lower as a result of building product in China.

This is something to think about as you scale your company.

Categories: Blog articles

The Heartbeat (Continued)

A VC - April 7, 2019 - 6:56am

I wrote a post last year called The Heartbeat in which I advocated for a cadence and a rhythm in an organization.

I was reminded of that in this exchange on Twitter over the last 24 hours:

I am a fan of routines and set cadences

— Fred Wilson (@fredwilson) April 7, 2019

Many of USV’s portfolio companies use an OKR process to create this rhythm in their teams. What I have learned from watching these companies and listening to how the teams talk about the OKR process is that to some extent it is “form over substance” in that the process is ultimately more important than the specific objectives and key results that flow through the process.

I am not saying that teams shouldn’t be thoughtful in setting objectives and committed to hitting them. They should.

But I am saying that the regular setting of objectives (quarterly is a time frame most companies use) and the weekly or bi-weekly reporting against them is the most valuable thing that comes from the process. It sets the heartbeat and keeps it. And that is so valuable.

Many VC firms, including USV, use a weekly team meeting, often on Mondays, to align the group, report on the week that has past, and focus on the week to come. That weekly cadence allows us to be responsive to entrepreneurs, come to relatively quick decisions as a group, and stay in sync.

Public companies report on a quarterly basis. That rhythm sets up a cadence of setting expectations (guidance) and reporting on results (earnings reports). It is not entirely different from the OKR process in a few important ways. It creates a cadence that is super valuable for execution and performance.

I am a fan of all of these processes. They set a cadence and rhythm for an organization and force decision making and provide for timely execution.

The best companies master this and working in those organizations is fun and rewarding. Setting objectives and meeting them on a regular basis is a virtuous system that brings out the best in people and teams.

Categories: Blog articles

Video Of The Week: AI and Society

A VC - April 6, 2019 - 6:58am

Earlier this week, Kara Swisher interviewed Kate Crawford and Meredith Whittaker, who run NYU’s AI Now Institute.

It is an interesting and thought provoking discussion. I don’t personally love Kate and Meredith’s answers on how society should be thinking about these issues. They feel very “20th century” to me.

But regardless of what you think about their particular take on the issues, I do think we all ought to be paying a lot of attention to AI and its impact on and role in our society. It is important.

Categories: Blog articles

An important new book

Beyond Money - April 5, 2019 - 10:32pm

Rebuilding after Collapse: Political Structures for Creative Response to the Ecological Crisis

Edited by John Culp

As society grapples with the reality of climate change, many believe that technology will somehow save the planet. As this book argues, that is not enough: larger-scale collaboration, coordination, and funding is needed. Individuals and groups, even with significant personal resources, will not be able to reverse the present course of ecological disaster. What our endangered planet needs is broadly supported community action, which is what happens when people come together and organize for the common good. What we need, in short, is political structures and actions. The essays in this book examine the political structures that have led to our present crisis and offer concrete lessons from the U.S., Japan, Brazil, and Greece, that can, if heeded, bring us back from the brink and toward an ecological civilization.

This book of essays emerged out of some of the presentations that were given at a major conference, Seizing an Alternative: Toward an Ecological Civilization. that was organized by Center for Process Studies and held at Pomona College (CA) in June 2015 and attended by more than 1500 people. It includes two of my own essays, Greece and the Global Debt Crisis, and How Private Currencies and Credit Clearing Exchanges Can Help Save Civilization, as well as essays by John Cobb, Ellen Brown, Gayle McLaughlin and several others.

The full list of contents and order form can be found here. The book can also be ordered on Amazon.com

Categories: Blog articles

Funding Friday: Code Society

A VC - April 5, 2019 - 4:13am

Code Society is like Schoolhouse Rock for Computer Science. They use hip hop music and videos to teach computer science concepts to diverse communities.

They are doing a $40k project on Kickstarter (and are about half way there) to create content and applications. I backed it earlier this week and you can back it here.

Categories: Blog articles

Orthodoxy

A VC - April 4, 2019 - 5:54am

I am not a fan of Orthodoxy.

I appreciate the power of religion although I am not religious personally. I respect the followers of Allah, Jesus, Moses, Buddha, and other religious figures. I know that the beliefs of religious people give them great comfort and a purpose in life.

What I don’t appreciate is when a person of faith believes so deeply that they cannot tolerate beliefs that are different from theirs. I call this Orthodoxy and it has led to wars, horrible crimes, and many other bad things. It is the downside of what is and should be a very positive thing for humanity.

We see this same behavior developing in the crypto sector. Bitcoin and other cryptoassets have become a belief system. That is at the core of their value. Why would I give you $5000 of my dollars for one of your Bitcoin? Because I believe in Bitcoin and want to own it.

This faith in the value and power of cryptoassets is good. It is necessary for all of the other good things that can come of them.

But like religion, there is an Orthodoxy in these communities that borders on obsession and leads some people to be extremely intolerant of any other community or cryptoasset. The crypto community calls these people “maximalists”, a term I don’t like and don’t use.

I believe that we will see many cryptoassets emerge to solve different kinds of problems, just as we have seen many different religions develop to serve different groups of people. This diversity is good. It leads to a richness of thought and innovation that moves us forward.

If someone wants to believe deeply in one thing and nothing else, we should understand and appreciate it. But when that leads to hatred, nastiness, and ridicule, we should reject it. We should call it out for what it is and we should not accept it.

Categories: Blog articles

The Annual Computer Science Fair

A VC - April 3, 2019 - 4:16am

Here in NYC, we are about halfway into a 10-year effort to get computer science classes into every public school building in NYC. We are already seeing significant impact and outcomes.

Most of the students taking CS classes at school live in neighborhoods in NYC where there are no tech companies and they can’t see the pathway that they are on if they want to be. That is where the Annual Computer Science Fair comes in.

This year was the sixth annual CS Fair. We invite high school students who are taking CS classes to take the morning off from school and come to the Armory in Washington Heights and meet tech companies that they could one day work for and colleges/universities that they could attend.

I spent much of yesterday at the Fair and had the honor of taking Mayor de Blasio, who has been funding CS4All since the early days of his administration, through the event. Here are some photos from what is always a fantastic day for me.

I hope these young women made it over to the Etsy booth Where they could have learned how Etsy uses data science to personalize everyone’s shopping experiences This young man from the Bronx made a multiplayer video game in javascript and told me and the Mayor that he wants to work for a tech company out of high school. I asked him to send me an email. This teacher from Information Technology High School in Queens had two teams of students showing software projects in the student showcase. She and her students took a selfie with the Mayor.

The Annual CS Fair would not be possible without the financial support of tech companies who underwrite the expenses. I would like to thank the major sponsors for making this possible.

Categories: Blog articles

The Shed

A VC - April 2, 2019 - 6:14am

Yesterday morning, in raw, windy, 30 degree weather in NYC, I took a walk up the Highline to Hudson Yards. As I made the turn west at 29th street, I saw The Shed emerge through the tall buildings.

The Shed is a new arts institution created to commission works from artists, both emerging and established, across multiple genres. It is all about facilitating and celebrating artistic innovation.

I got involved with The Shed about four years ago around the time Alex Poots was selected as the Chief Executive and Artistic Director. Alex is an impresario of the modern age, comfortable working across many genres and with artists of all kinds, from Grammy-winning musicians to kids he sees dancing in the streets. It is Alex’ ability to stitch all of this together and make it coherent, entertaining, and inspiring that infected me with an interest in what The Shed can be.

I have consulted with The Shed on technology matters and the Gotham Gal and I have been benefactors as well.

Yesterday The Shed was dedicated and the opening performance, The Soundtrack of America, which features performances from roughly thirty emerging black musicians, will open friday night. We will be there.

The person who made The Shed happen is my friend Dan Doctoroff. It was a proud moment for me yesterday to see Dan standing up on stage talking about this thing that he helped to make happen.

It is my hope that The Shed will have the same cultural impact on NYC that Lincoln Center, Brooklyn Academy Of Music, and similar arts institutions have had.

It is really rewarding to get involved in projects like this. Watching the idea come together, then watching it get built, and then watching it open. It reminds me that imagination and will can achieve so much.

Categories: Blog articles

The IPO Bonanza

A VC - April 1, 2019 - 4:01am

After predicting an IPO bonanza in my new year’s day post in 2015, and being largely wrong about it for four years, we are finally seeing it happen.

I am not exactly sure what it is about this year, as opposed to any of the last five years, that has drawn all of these highly valued private companies into the public markets, but here we have it.

It does take a number of years for a privately held company to prepare to be a public company. They need to get their finance and legal houses in order, they need to beef up their teams in these areas, and they need to make sure they have a repeatable business that they can manage under the spotlight of the public markets.

Already we have seen S1s from Lyft, Pinterest, and Zoom. And we are likely to get them soon from Uber, Slack, Airbnb, and a host of others, in the coming months.

I see this as largely beneficial to the startup sector for the following reasons:

1/ We will have benchmarks from highly liquid markets in terms of what these high growth tech companies are worth. Until now, most of these benchmarks have come from illiquid private market auctions, which are not exactly the best price discovery mechanisms.

2/ Many employees, angels, seed investors, VCs, and growth investors will get liquidity from these investments and recycle it back into the startup sector. More capital means more startups and more innovation.

3/ Limited Partners, the providers of capital to venture capital and growth equity funds, will get large distributions which will give them more confidence in the startup sector and they will continue or perhaps step up their commitment to invest in early stage technology.

4/ These newly public companies will be able to accelerate their acquisition programs now that they have liquid stock and cash to fund those deals. That will further flow capital back into the startup sector.

Of course there will be negatives. It will be harder than ever to afford to live in the bay area. But tech folks from the bay area are certainly welcome in NYC, LA, and any number of other startup regions around the US. Get paid on your stock and move to a more affordable and liveable region!!!

And the monster funds that have been advocating staying private forever will have to argue why these IPOs are not what every other startup should be aiming for. And I think that argument is going to be harder and harder to make with this IPO bonanza under way.

All in all, I think the IPO bonanza that is under way in 2019 is a good thing. I have been expecting it and wanting it for years and I am pleased that it is now upon us.

Categories: Blog articles

Portable TV and Music

A VC - March 31, 2019 - 11:18am

We just packed up an Airbnb that we have been living in for three months in Los Angeles and are heading back east.

This is a photo of my carry on luggage as I was packing it this morning.

That is an AppleTV and a Sonos Connect in between my “shaving kit” and my sneakers.

I brought these two devices out west and connected the AppleTV to the one TV in the Airbnb and I connected the Sonos to the receiver that powered the in ceiling speakers in the main living space in the house.

Even if the Airbnb had come with an AppleTV and a Sonos device, I would have swapped out theirs for ours for the length of our stay because these two devices have all of our services pre-confgured on them and we are logged into all of the services.

That is where the big difference is for me and the reason it is worth schlepping these devices cross country and back. The devices aren’t crazy expensive. The AppleTV is around $150 and the Sonos Connect is around $300. But setting these devices up, connecting them to all of the various services we subscribe to, and logging into each and every one can be an hour or more of work each time you do it.

All I had to do was power them up, connect to wifi, and connect to the TV and/or the receiver, and we were good to go.

It’s kind of magic to have all of your services right there on the device, organized how you like them, and ready to go.

I have friends who do the AppleTV move in hotels when they travel for business. I haven’t gone that far but I might leave the AppleTV in my carry on luggage along with my shaving kit and try that on my next business trip. Plugging in an HDMI cable into a TV is pretty straightforward in most cases.

What this means is TV and music is now highly portable. You can bring your TV and music with you when you travel and connect into the existing infrastructure in your hotel or Airbnb.

If these devices get small enough or cheap enough (or both), or if our smartphones can replicate all of the functionality of these devices, then the hospitality industry can focus on the “dumb” infrastructure and the guests can bring the smart devices.

Categories: Blog articles

Video Of The Week: Vitalik Buterin – The Unchained Podcast Interview

A VC - March 30, 2019 - 7:45am

As I mentioned last week, at the start of this interview Laura Shin plays a bit of my “rant” about Ethereum losing it’s lead.

Vitalik, as is his nature, calmly reacts to it and rebuts it.

The entire interview is interesting and hopeful for Ethereum holders like me.

Categories: Blog articles

Funding Friday: Renewable Plastic Tiles

A VC - March 29, 2019 - 7:14am

I backed this project out of Kigali Rwanda this morning.

They are making tiles for your home (bathroom, kitchen, etc) out of renewable plastic. Check it out:

Categories: Blog articles

More S1 Fun

A VC - March 28, 2019 - 7:03am

We are now seeing a wave of longtime private companies coming public and with that we are getting data on usage, financial performance, and a host of other issues that is very useful market data.

I spent some time looking at Pinterest’s S1 today. They filed it a week or two ago.

I found this chart of user growth quite interesting:

That shows monthly active users in the US and International over the last few years on a quarterly basis.

Pinterest is rapidly growing its user base outside of the US but usage in the US has stalled out.

This chart, also from the S1, shows revenue growth in the US and Internationally:

So what you can see is that Pinterest has been growing its US revenues rapidly but not its US user base. And on the other hand, Pinterest has been growing its International user base but its International revenue is still nascent.

So the question is whether Pinterest will be able to monetize its rapidly expanding international user base.

That is the kind of insight you can get from reading these S1s. I find them fascinating and try to read them when they come out.

I don’t plan to buy Lyft or Pinterest when they come public. That’s not really my thing. And I don’t have an opinion on whether they are attractive investments or not. But I do think we can learn a lot about these businesses from reading S1s and that can help us with the investments we do have.

Categories: Blog articles

Fewer Cars More Mass Transit

A VC - March 27, 2019 - 8:41am

Well it looks like NYC is finally going to get congestion pricing, a technique used successfully in a number of cities around the world to reduce the number of cars on the road and increase the investment in mass transit.

The concept is simple. Tax cars coming into the center of a city and use those tax revenues to invest in other ways of moving people in and out of the city.

I have been a supporter of this idea going back to the Bloomberg era in NYC when it looked like we were going to get congestion pricing and then it fell apart due to political opposition.

I wrote about congestion pricing late last year when a report came out from the Governor’s committee on metro area transportation which recommended congestion pricing and increased investment in the MTA.

I think this is the right policy. We need to create financial disincentives to drive in NYC (with the proper exemptions like people with disabilities) and we need to invest more in mass transit.

This will be good for the tech sector in NYC, where employees largely use mass transit to get around. Julie Samuels, Exec Director of Tech:NYC, explains why in more detail in this op-ed.

I do have concerns about giving billions of new tax revenues to the MTA which has not been great at using the billions we have already given them to deliver better mass transit. I mention those concerns in my post late last year.

But we should not let perfect be the enemy of the good. NYC needs congestion pricing and we need it now. It will reduce traffic in lower and midtown manhattan and it will provide the resources we need to modernize and improve our mass transit options.

If we could couple congestion pricing with structural reforms of the MTA, then we would be really cooking with gas.

Categories: Blog articles
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