AVC

One of the things that I was sad about losing as I moved from iPhone to the Nexus 6P was the ability to unlock my phone with my thumb.

But it turns out that the Nexus 6P also has fingerprint phone access. It’s not a thumb on the home button, it’s your index finger on the upper back of the device.

So I’ve been using the Nexus 6P for about a week now and I have to say that the index finger on the back of the phone is in many ways a more natural place for the fingerprint scan. It’s easier when you have the phone in your hand than reaching over with your thumb.

There are a few situations where the back of the phone is less desirable, most notably when the phone is lying on a table. And I haven’t yet purchased a case for my phone but I wonder if the Nexus 6P cases have an opening for the fingerprint scan. I would hope they do.

If your phone doesn’t have a fingerprint scan device for unlocking your phone and your high security apps, then you should really get one that does and check it out. It’s a great feature.

I blogged about our portfolio company Clarifai‘s Forevery app a while back.

Forevery is an iOS app that lets you search your photo library and do a bunch of other cool things.

One feature I really wanted was Dropbox integration. I back up all my smartphone photos to Dropbox and have been doing that for years. But searching for the one that I want has been really hard.

Now with Forevery’s Dropbox integration it is drop dead simple.

Here’s the blog post from the Forevery team explaining how this works.

If you want to download and try Forevery, you can do that here.

I follow Emily Chang’s Studio 1.0 podcast on SoundCloud. It’s very good.

She recently sat down with Former NSA Director General Keith Alexander to discuss privacy vs. security and why there needs to be more collaboration between Washington and Silicon Valley in the on-going encryption debate.

I enjoyed the conversation and you may too.

I was watching The Masters golf tournament on Sunday when Jordan Speith melted down on the 12th hole, hitting not one but two balls into Rae’s Creek. It was hard to watch. It was gut wrenching.

Jordan is the most talented young golfer that has come along since Rory McIlroy emerged five years ago. And Rory had a similar meltdown in the 2011 Masters.

My friend Bob sent me an email yesterday and said “No matter how bad you might feel today, I guarantee Jordan Spieth feels worse.”

To which I replied “you have to fuck up to get better.”

I have been playing the game of golf since I was 12. I took it up on my own. Neither of my parents are golfers. I don’t really know why golf was something I wanted to do at the age of 12. And I regularly curse the day I took it up. But I will say this about the game – it is a microcosm of life. You cannot master it. You can be brilliant one minute and god awful the next. That’s how the arguably best player in the game puts two balls into Rae’s Creek on two consecutive swings. Golf requires a mental toughness to be great. I see it in my friends who are way better than me. They have the ability to hit a horrible shot and completely forget it and just focus on the next shot as if nothing happened. I cannot do that as hard as I try. That’s why they are single handicappers and I am not.

Going back to Jordan and Rory, I think it is great that they had these meltdowns so early in their professional careers. These meltdowns teach you something important. It teaches you that you are not infallible and that you can fail spectacularly and get up the next day and continue to be the best player in the game. That leads to the mental toughness that is required to play the game of golf at the highest level.

And because golf is a microcosm of life, you can extrapolate this to everything that matters, your marriage, your family, your career, your reputation, etc. We are humans. We fuck up. And when we do, we have to get up the next day and keep plugging away at the game of life. And the sooner we figure that out, the better off we all are.

I’ve written a fair bit about this topic over the past few years. I’ve been a skeptic that watches are the next big thing in mobile devices. But I also believe that wearables will be important in our ongoing effort to integrate computation and data into our every day life.

The smartwatch sector has been around for a number of years now and Apple took a big shot at it with the launch of the Apple Watch a year ago in April 2015. It hasn’t gone that well for Apple and it begs the question of that means for watches and wearables.

Here’s a google trends query I ran this morning to get some sense of what is going on in this market.

The Apple Watch was supposed to crush its competition and yet that has not happened. Fitbit is stronger than ever and is currently generating more search interest (only one measure and maybe not the best one) than the Apple Watch. A new version of the Apple Watch is coming out soon and maybe that will be a game changer. I am skeptical.

I think wearables are more of a fashion item than computers and smartphones. It is also not clear that the network effects of operating systems and application platforms that have made computers and smartphones a duopoly are as prevalent in wearables. It is very likely that wearables are an accessory to a smartphone more than an application platform in and of itself.

I think wearables will be a big category but there won’t be one iconic device that dominates like iPhone dominates smartphones in the US. Some of us will wear an Apple Watch, some will wear a Fitbit, some will wear a Here in our ear, some will wear a Dash in our ear.

I am wondering when we will see the smart nose ring come to market.

I read the other day that Patrick Ewing would like to be considered for the currently vacant NY Knick head coach role.

I think that’s a terrific idea. Companies like Apple and Twitter have gone back to their early leaders to rejuvenate the company.

The Knicks have started down that path by bringing Phil Jackson back as GM. They should complete the effort by bringing back Patrick Ewing as head coach.

I arrived in NYC a couple years before Patrick showed up in 1985. And for the next fifteen years there was an energy and a winning attitude at the Garden that honestly hasn’t existed since then.

While Patrick doesn’t have a ring, he has about almost everything else on his resume that a basketball player can accomplish. And he has been one of the most respected assistant coaches in the league for years.

Patrick has the heart of a lion. The Knicks need that, badly.

I’m going to the Garden tonight to close out the season, yet another losing one. I am thinking about bringing a Bring Back Pat sign with me.

Our portfolio company OB1 launched the Open Bazaar p2p decentralized marketplace protocol recently. Here’s a video where OB1 founder Brian Hoffman explains what Open Bazaar is and why they built it.

I’m pretty skeptical about the early implementations of Virtual Reality and Augmented Reality. I think the early versions are expensive, require powerful computers, are tethered, require headsets, and can cause headaches and worse. But I am in the minority in our business and in the tech community. VR and AR are among the most hyped and invested new areas of tech right now.

So let’s talk about this today on fun friday.

Are you bullish on AR and VR over the next several years? If so, why?

Or are you with me that the early implementations will underwhelm?, If so, why?

I remember back in the mid 90s, I used to say with some pride that I had not lost money on any of my VC investments. Then one day, someone told me “then you are not taking enough risk.” I ended that streak of not losing money on VC investments in the late 90s in a series of epic flameouts. I lost somewhere between $25mm and $30mm on one single investment. I am not proud of those mistakes. They were stupid. I am ashamed of them to be honest. But I learned a lot from them. Not only was my “winning streak” a case of not taking enough risk, it was also a case of not enough learning. The go-go Internet era of the late 90s fixed both of those things for me. I took more risk and learned a ton.

Our first USV fund, our 2004 vintage, has turned out to be the single best VC fund that I have ever been involved in. We made 21 investments. We made money on twelve of those investments. We lost money on nine of them. And we lost our entire investment on most of those nine failed investments. The reason that fund performed so well has pretty much nothing to do with the losses. It was all about five investments in which we made 115x, 82x, 68x, 30x, and 21x.

It wasn’t like we were swinging for the fences in that fund. Every single one of those 21 investments seemed like an intelligent investment decision at the time we made it. But many of them didn’t work. We lost all or almost all of our money on over 40% of our investments in that fund.

The next fund we raised, our 2008 vintage, is now eight years old and we can begin to calculate the win/loss ration on that one too. We don’t yet know the magnitude of our winners, but there will be a bunch. It will be one of the better funds I’ve been involved with. I doubt it will be as good as our 2004 fund, but it will be a very good fund. We invested in 22 companies in that 2008 fund. We have already completely written off six companies. Those are complete and total losses. And, I think there will be at least a couple more losses in that fund when it is all said and done. So it looks like something like 14 winners and 8 losers. We will likely lose all or almost all of our money on roughly 40% of our investments in that fund.

My point on sharing all of this with you is to explain that losing money is part of being an investor. It happens. As Richie, the guy who sits behind me and my friend John at the Nets game, says “you can’t make ’em all.”

But there are some things you can do with your winners and losers to drive up your performance.

The first and most important thing you can do is minimize the amount of money you invest in your losers. In our 2004 fund, we invested a total of $50mm out of $120mm of total investment in our nine losers. That wasn’t so good. We could have, and should have, recognized our bad investments earlier and cut them off. In our 2008 fund, I think we will invest roughly $35mm out of roughly $140mm of total investments in failed investments. So even though our loss ratio on “names” is around 40%, our loss ration on dollars will be around 20%. We did a good job of not allocating too much of the fund’s capital to losers in our 2008 fund. And most of those losers were mine by the way.

Ironically, another key to managing your losses is to spend more time with them, not less. By spending more time with them you can develop clarity about the investment, whether it will work or not, and you can get the founders and other investors to see the light early and not waste more of their time and/or money on it. I am a big believer in “loving your losers” in the sense that you should not orphan them and you should work hard to get to the right outcome. Enabling them with good money after bad is not loving them.

Finally, getting clarity on your losers, getting them sold or shut down quickly (with dignity for everyone), frees up more time and money for the winners. And, as our 2004 fund shows, a few really good companies can carry a fund to the moon. You must make sure you can get a disproportionate amount of your time and money invested in those great investments.

When I look at a VC to work with, recommend to LPs, or very rarely, invite into our partnership at USV, I look for someone who has made their share of mistakes. Making bad investments is humbling, frustrating, annoying, time sucking, and most of all, a big part of the VC business. I look for VCs who have done it a lot, have done it with grace and respect, and continue to learn from it. They are the best VCs to work with.

Disqus, the USV portfolio company that powers the comments/community here at AVC, released an iOS app this past week. You can download it here.

The Disqus mobile app has two primary features.

The first is the ability to follow channels and discover content and conversations in those channels.

Here’s a screenshot of my home tab which features this discovery capability:

The second primary feature, and possibly more interesting to the AVC community, is the notifications tab where you see your comments and related activity:

I have found that Disqus works really well on the mobile web now (a big improvement over where it was a few years ago) and so I mostly review and respond to comments in line in the browser, but it’s nice to have this mobile app to be able to read and respond quickly to all of your activity.

I expect that Disqus will follow with an Android app in due course and I also believe they will add features for the publishers (ie me) into these mobile apps as well.