Posts from February 2014

I have always loved the name of my friend Howard Morgan‘s now dormant blog – Way Too Early.

Some ideas are just way too early. And one of them was Apple’s Hypercard, which was a Mac application that came with a built in programming language. The interface was a series of cards that were mini apps inside of the Hypercard application. I built a few Hypercard based applications in the late 80s and early 90s as I was winding up my programming “career”.

But as I look around the mobile landscape, I see cards everywhere. Benedict Evans wrote a good post about this trend a few weeks ago. Google is pushing cards as a UI inside Android and their Google Now UI is the best example of that. Twitter has had cards inside of Tweets for several years now, although I wish they would display them by default in my timeline. The Facebook mobile UI looks like a series of cards, although you can’t really do anything with them, yet. And, of course, my favorite example are theKik Cards that are mini mobie web apps that run inside of Kik’s messenger. I’ve blogged about them a number of times here at AVC as Kik is a USV portfolio company.

It feels like the Hypercard metaphor has arrived as the atomic unit of content in mobile, both inside of native apps and, if Kik is going in the right direction (I think they are), as the default mobile web atomic unit (cards instead of pages).

The problem with the native app environment is that there are things you cannot do inside of a card without violating Apple’s and Google’s terms of service. If Facebook wanted their cards to allow the purchase of music or video natively in the card, well that would not be possible in the current regime.

On the mobile web, that is different. You can do anything you want in a browser, even if that browser is on iOS or Android. That’s a legacy of the desktop web and it’s a damn good thing. Innovation happens best when there are few if any limitations on what you can do as a developer.

So keep your eye on cards. I think Apple was on to something important from a UI and usability perspective thirty years ago when they started building Hypercard. It is now coming to life again on mobile and I think this will be the most interesting battle ground on mobile in the years to come.

I wrote a post the other day called This For That in which I suggestred that derivative ideas are challenging to execute on and equally challenging for USV to get excited about. But there are exceptions. And Github insipired ideas are one particularly interesting area to us.

I recall when Steve Martocci came to talk to us about Splice. He talked about watching musicians work and wondering why there was nothing like GitHub for them to use to store the various versions of their work. That, of course, led to Splice. And one could call Splice “GitHub for Music”. It is a lot more than that, of course, because building GitHub for Music opens up a lot of opportunities to do more for musicians. As GitHub did for programmers.

Yesterday, my partner Andy posted this link on usv.com. It’s a story about a one time programmer who left software for the world of molecular biology and after a decade in the world of academic research, is leaving to do a startup which is, not surprisingly, GitHub for Life Science Protocols. You can back his Kickstarter here. I just did.

When programmers who are used to modern tools and techniques come across other industries where the tools are antiquated and the work is frustrating, they get inspired to create similar tools to make life easier. That’s happening in a lot of sectors now, not just music and life sciences.

The power of the GitHub model is not just a repository of work and version control in the cloud. It’s the public nature of much of that work. And the reputation and identity effects for those who publish some or all of their work publicly.

Tools like StackOverflow (a USV portfolio company) and GitHub allow programmers to see how other programmers have solved similar problems. I was at a hackathon up at Columbia University last weekend and one of the hacks was a development environment that automatically queried StackOverflow and GitHub as you are writing code so that you always have in front of you the answers to the questions you are most likely to ask. The developer who did the hack introduced it by saying something like “programming these days is more about searching than anything else”. That reflects how collaborative the sharing of knowledge has become in the world of software development as a result of these cloud based tools for developers.

And this approach will naturally be adopted by other industries. And the entrepreneurs who bring these tools to other industries will most likely be developers who are inspired by GitHub and StackOverflow and tools like that. We are starting to see that in lots of interesting places.

I saw this on usv.com today:

Popular Science has decided to turn off comments. They aren’t the first and they won’t be the last.

As Adrian says in the usv comments:

Let’s face it – dropping comments on PopSci isn’t going to stifle societal debate. There are more than enough places online to debate the impacts of science.

There are so many places on the web to talk about stuff. There are the blog communities, like AVC and many others, and there are the link sharing communities like Reddit, Hacker News, and USV.com.

The web (and increasibly mobile) is a great place to talk about stuff that matters to you. It always has been and it always will be. Some publishers will foster those conversations on their own domains. Some will let the conversations happen elsewhere. I am not particularly concerned about who does what.

I am concerned that we keep talking and I am not the least bit worried that we will continue to do that.

Chris gave this talk last year at startup school. It’s great. It’s about 20mins so an easy watch.

My son turned me onto a wine app called Delectable Wine. I am waiting for the Android version so I can use it too. But I’ve used it a bit on his iPhone and its a really nice and useful application.

Think of Delectable Wine as Instagram for wine. People post the wines they are drinking, their reactions, tasting notes, etc. You follow your friends and experts (likeArnold) and you see what they are drinking. You can tag where you had the wine and what you thought about it. There’s a really nice searchable archive so you can go back and see what the wine was that you had at Perla that night with your friends that was so good.

But all of this is possible because of a very cool feature that my son calls Shazam for Wine Labels. When you want to add a wine to Delectable, you take a photo of the wine label and Delectable figures out what wine it is, what vintage it is, etc, etc. All of that important metadata comes in automatically just because you took a photo of the wine label.

I don’t think Delectable would work nearly as well without this feature. It enables so much of the discovery and data that makes the app so great. The first time I saw it in action, I said “wow”. I see a lot of technology demo’d every day. I don’t saw “wow” that often. But I did when I saw Delectable in action.

If you are into wine and have an iPhone, try it out. I think you’ll like it.

A few weeks ago the traffic coming to the new usv.com dropped off by 20 or 30% week over week. Brian and Nick were wondering if it was related to the new design we rolled out at the end of January. They decided to take a deep dive into our analytics to see what was going on.

I told them it had to be some sort of plumbing issue. Something that was hooked up to usv.com must have gotten unhooked. Because I have rarely seen the behavior of an entire user base change drastically overnight because of something like a redesign. Change can come pretty quickly, but in my experience it is months not weeks or days for something to drastically change in your user base resulting from a subtle product change/tweak.

They noticed in the analytics that front page views were steady but traffic to the article pages was off by a lot. I suggested that something in our twitter plumbing was off. And sure enough, we figured out that the autoposting of popular articles on usv.com to this twitter handle was broken (it is actually an RSS issue that is being fixed today).

I tell this story because we all encounter this sort of thing along the way of building and launching and growing a product. We make tweaks and something changes right away. That immediate change is usually related to something that brought traffic (google, twitter, rss, email, appstore) and not a design change. More gradual changes (up or down) are usually because of design changes.

There’s a difference between these two kinds of effects and it is important to understand that.

VC is a service business like law firms and ad agencies. Our customers are the entrepreneurs we back. Our shareholders are our limited partners. When we do a good job of helping our customers create value, our shareholders benefit.

But, like law firms and ad agencies, it is hard to provide truly objective and unbiased advice when you have a conflict of interest. In the law and advertising business, clients will demand that their service providers don’t work for their competitors. The same is mostly true of entrepreneurs and VCs. There is no language in the stock purchase agreements we sign with our portfolio companies preventing us from investing in a competitor. But there is an understanding about conflict avoidance and breaching that understanding can have negative reputational consequences.

The problem that arises is that conflct is not the same to everyone. As I said to an entrepreneur yesterday, “conflict is in the eye of the beholder.” This entrepreneur had pitched me on his business via email and I told him it sounded a lot like one of our portfolio companies. He was shocked as he didn’t (and doesn’t) see it. A few months later, he went to see the Gotham Gal about making an angel investment in his company. She pointed out the exact same conflict to him. Again he was surprised. So he emailed me yesterday about the situation and I pointed out that not everyone sees conflict in the same light. But I went on to point out that the perception of conflict is conflict.

When someone feels that something you invest in is encroaching on his or her territory, you have created a perception of conflict with that entrepreneur. Even if he or she is dead wrong about that, it doesn’t really matter because they are now in conflict with you in their own mind and they won’t listen to you the same way again. And that is the most powerful leverage point a VC has when making an investment. If you cannot get an entrepreneur to listen to you objectively and rationally, then you have lost your greatest hope of postively impacting that investment. And that is a tool that VCs should not throw away lightly.

So the meta point I am making in this post is that it isn’t the facts that matter when discussing conflict. It is the perception that matters. If anyone in a relationship with you percieves that you are in a conflicted situation, you are in a conflicted situation whether you agree with them or not. Your only choice is to try to convince them otherwise before you obligate yourself to the conflict situation. Once you’ve obligated yourself, it is too late.

A friend in the VC business told me yesterday that he thinks this is the biggest issue top VCs face. Because they get to see the most interesting investment opportunities, but the opportunity cost of saying yes to an investment is that they take themselves out of the running for everything else in that category going forward. I agree that conflict issues are large and need to be front and center in everyone’s minds when making an investment decision. But I also think that large markets are large and there are ways to slice them up in ways that do avoid conflict. And if you can get an entrepreneur comfortable, you can make multiple investments in a large space. We made five or six social media investments. We’ve made a similar number of crowdfunding investments. I would like to make a large number of bitcoin related investments. If you think carefully upfront about how these markets will likely segment themselves over time, and if you can make that case upfront (not after the fact) to an entrepreneur, I think you can navigate this tricky issue.

But the thing you have to keep in your mind first and foremost is that perception is reality. And managing that is the most important thing of all.

The annual NYC tech bowling event is around the corner. Kingpins of Silicon Alley will happen on April 7th, at 7pm

Kingpins of Silicon Alley
Bowlmor – Chelsea Piers
April 7, 2014  7 PM

Kingpins of Silicon Alley is New York City’s first and only startup bowling competition. It is a fundraiser and friendly competition for the entrepreneurial community in NYC. The funds go to benefit InSITE, a fellowship that connects exceptional graduate students to start-ups to help accelerate those companies to funding.

To attend click www.kingpins.eventbrite.com

I will be there and plan to sponsor a lane. If you would also like to sponsor a lane, you can do that here. I hope to see there on April 7th. It’s a fun evening.

So Fast Company has selected DonorsChoose.org as one of its most innovative companies and on top of that, they decided to put DonorsChoose founder Charles Best on the cover of the magazine and write a longer article about them as well. It’s pretty unusual that a non-profit would be selected for such a list and highlighted in this way. But then again, DonorsChoose is a pretty unusual non-profit. I’ve been fortunate to have been involved with DonorsChoose for the past seven or eight years and have been on their board for the past three or four. So I thought I’d list some of the things that DonorsChoose has done to illustrate the point.

– DonorsChoose launched a crowdfunding service and business model in 2000, fourteen years ago. To my knowledge they were the first crowdfunding service launched on the Internet, long before the leaders of the category like Kickstarter, Lending Club, and other emerged.

– DonorsChoose has built a network of almost 200,000 teachers, over 10mm students, and over 1mm funders. That network has brought $227mm of funding into public school classrooms but it is being used for a lot more. Entrepreneurs are using it to get things like 3D printers, underwater robots, and computer science classes into schools. DonorsChoose has become a distribution network in addition to a funding network.

– DonorsChoose has open data sets and an API that allow anyone to analyze what resources teachers and students are seeking. Increasingly policy makers are accessing this data to determine what resources are most needed in the public schools.

– DonorsChoose is a sustainable non-profit. They apply a take rate like every other commercial marketplace (it is currently about 13% and donors can, but usually don’t, opt out). This revenue scales as giving scales and has been covering the costs of the operating the business for a number of years now. Any profits they make above covering their costs are given back into the marketplace, usually in the form of match offers.

– DonorsChoose looks like, acts like, and is a startup. When I walk into the DonorsChoose office, it feels just like walking into the Etsy, Kickstarter, or Twitter office. People are active, animated, and energetic. They have a large software and product team. They could easily fit into the USV portfolio and if they did, they would be one of our star companies.

Networks are replacing hierachies as we enter the information era. And in the world of non-profits, the DonorsChoose network can and should be a model of how you can build an organization with huge impact using a networked model.

Another node on the DonorsChoose network are corporations and their marketing and corporate social responsibility teams. Corporations and their brands have a place on DonorsChoose as well. They provide match and challenge funding in all sorts of interesting and innovative ways. If you are involved in these kinds of programs and want to work with DonorsChoose, you can go here and learn more and contact them.

It’s very satisfying to see Charles and DonorsChoose get this kind of recognition. They are one of the most innovative organizations I work with. And I work in the innovation business. Congratulations DonorsChoose.