Posts from June 2014

The Law Of Unintended Consequences

One of the great things about getting older is you see things over and over again and you start to understand. That’s called wisdom I guess. One thing I have seen over and over is that the best of intentions often lead to unintended consequences that are exactly the opposite of what the good intentioned people wanted to happen. I like to call that the “law of unintended consequences” and it goes like this:

Whatever it is that you intend to do, you will likely do the exact opposite

I was reminded of that when I read Marc Andreessen’s comments on Sarbanes Oxley (and IPOs in general) in this interview in Vox. Marc said:

The irony of Sarbanes-Oxley was that it was intended to prevent more Enrons and Worldcoms but it ended up being a gigantic tax on small companies.

Sarbanes Oxley and Regulation FD were an attempt to make the stock market safer for the average investor. What it did is make the stock market less attractive for the average investor by removing the best investment opportunities from the market.

Marc lists investments like Netscape, Microsoft, Oracle, HP, and IBM as companies that went public at relatively small valuations and grew their valuations in the public markets. I would add Apple, eBay, Yahoo!, Cisco, and a host of other silicon valley success stories to that list.

The Vox piece points out that:

Twitter waited until it was worth about $25 billion before it went public last year. Facebook was worth more than $100 billion when it had its IPO in 2012.

Dropbox did a private financing recently at $10bn, Uber did a private financing recently at $17bn, Airbnb recently did a private financing recently at $10bn. All three of those deals could have and would have been an IPO in the 1980s or 1990s.

The public markets are not as attractive to emerging high growth companies as they used to be. The private markets have accumulated enough capital to support the growth needs of high potential companies and IPOs are no longer being used to finance growth. They have now been relegated to liquidity paths for the most part. And Marc explains why in this part of the interview:

But for young companies, everything is connected: stock price, employee morale, ability to recruit new employees, ability to retain employees, ability to sign customer contracts,  ability to raise debt financing, ability to deal with regulators. Every single part of your business ends up being connected and it ends up being tied back to your stock price.

I have lived through this (being public while you are still building the company) and it is not easy. You really want to wait until you’ve got everything very buttoned up before you run the gauntlet that is the public markets.

Of course the important question is can we go back to the way it was before the federal government messed things up with all of their good intentions. I think the answer is no. We are not going to put that genie back in the bottle.

But I do think there is another way to fix this mess and it is already happening. As my partner Albert likes to say “the line between the public markets and the private markets are blurring”.  Platforms like AngelList and our portfolio company CircleUp are allowing individual investors the opportunity to invest in startups and the amount of capital that is being invested on these platforms is growing very quickly.

If the regulators keep their hands off these new emerging markets and let them develop naturally, we will eventually fix this problem. Let’s hope they have learned their lesson from the fuckup that was Sarbanes Oxley and Reg FD and don’t try to help us out again.

Tweetstorming

Yesterday, I tried Tweetstorming for the first time. It was a Tweetstorm about Tweetstorming. You can see the entire storm here.

You might think “that’s a strange way to communicate publicly when there are all these awesome blogging tools out there like WordPress, Tumblr, Medium, etc” and you would be partially right.

What you might miss, and I missed until recently, is that Tweetstorming has some unique characteristics, which I outlined in my storm, that make it different and possibly better in some respects.

But what is certainly true, and I demonstrated by missing Tweet 8/ in my storm, is that Twitter doesn’t make it easy to storm properly and Twitter doesn’t make it easy to consume storms properly. As a result many Twitter users feel that storming is spamming and they also feel like its very hard to consume and engage with storms. At the end of my storm, I encouraged Daniel Graf, Twitter’s new VP Product, to fix all of that.

There are already some good tools out there for Tweetstorming, like Dave Winer‘s Little Pork Chop.

After my storm and the engaging discussion on Twitter, Dave reached out to me and encouraged me to use Little Pork Chop.

I wrote back to him and said that I would try it, but that I would prefer to have Tweetstorming functionality built natively into Twitter and that I had been encouraging the folks at Twitter to do that.

Dave then asked why I would want Twitter to build this when the functionality already exists and that would have negative consequences for the developers who had already been building and iterating on tools to solve this problem.

I wrote back and said that I use Twitter’s Android app for almost all my tweeting and consumption and I really want everything to be right in that app and not have to mess around with third party tools to get what I want out of Twitter.

Which begs an age old question about platforms and the developers who hack around them. And, of course, this age old question has been front and center in the discussion about Twitter since it first emerged back in 2006.

So as I sit here in front of the computer using a traditional blogging platform to compose my thoughts, I see a few interesting questions and I’d love to get everyone’s thoughts on them.

1/ Do you agree that Tweetstorming has some unique characteristics that make it different and possibly better in some ways than traditional blogging?

2/ Do you agree that Twitter should productize Tweetstorming, like they have done with @replies, #hashtags, and RTs, which also emerged organically from the user base?

3/ Do you think that third party tools such as Little Pork Chop should be allowed to satisfy this use case in lieu of Twitter building it natively into their apps?

Please let me know what you think in the comments, and as always, if there are other interesting topics about Tweetstorming to discuss, please introduce them too.

Feature Friday: Trust

I went back and looked at the Ten Golden Principals For Web Apps presentation I did four and a half years ago.

Nowhere on this list is Trust. Maybe that was an oversight. Or maybe times have changed.

Take auto photo backup from my Android phone to the cloud. I have two great options on my phone, Dropbox and Google+.

I don’t use Google+ for this and I do use Dropbox for this.

It is not that I don’t trust Google to host my photos. And it is not that I don’t trust Google in general. It is that I don’t trust Google to change the privacy rules on Google+ and instantly expose all of these photos to their crawlers and the web at large.

It’s really Facebook’s fault that I don’t trust Google with this. Anyone in the social networking game who isn’t already default public is trying to figure out how to get there. That’s the nice thing about Twitter. It has always been default public and so you know what to expect when you post something there.

I trust Dropbox to keep the photos I backup to the cloud private. It’s not that Dropbox is more trustworthy than Google in my mind. But it is that privacy is part of the brand promise that Dropbox makes and their business of hosting all of our data in their cloud depends on them being very careful with our privacy expectations.

Going back to why in early 2010 I didn’t put Trust in my top ten – it may be that Facebook’s assault on our privacy and the loss of trust that ensued was just developing in our collective consciousness at that time. And now we live in a more paranoid state about this stuff.

The rise of Snapchat, I believe, is largely in response to this exact thing. With Snapchat, you have explicit control over who sees your photos and where they go from there. That was a feature we did not know we needed four years ago. And it is a feature that built an entire company. And probably many more. Trust is a very important feature these days.

Some Quick Thoughts on I/O

I am in SF but sadly was not able to make it to I/O. So I’ve been reading up on the news coming out of I/O.

Here, in no particular order, are the things that I am most excited about or thinking the most about:

1) Smart notifications. Many times the top of my screen gets filled with Twitter notifications (I get notifications whenever my daughters and my partners and my wife tweet), and so I don’t see my Kik notifications unless I swipe down to see all my notifications. I would like a mobile OS that looks at what notifications generate the most reliable and immediate reactions from me and put those front and center for me. The notification channel is becoming more and more like email and Google is well positioned to bring some of the smarts it has brought to email to mobile notifications.

2) Android mirroring on Chromecast. I have been so jealous of entrepreneurs walking into USV with only an iPhone, mirroring it to our conference room displays via Airplay, and doing their pitch on their phone. As an Android user, I have not been able to do that. We have both Chromecast and Airplay in our conference rooms at USV. Now Android users will not be second citizens. Yesssss.

3) In app data available in web search. This is a big one. When I search on mobile web for a restaurant, I’d sure like to see a Foursquare result come up if I’ve got the Foursquare app on my phone. Same with Tweets, Songs on SoundCloud, Movies on Fandango, etc, etc.

4) Wear, Car, TV. Google is trying to get Android everywhere. Just like Apple is trying to be everywhere. Regular readers know that I’m a bigger fan of “casting” your phone onto your car, watch, TV, than running apps and such on the devices. We will see how far Google is going in terms of putting smarts on these devices vs making Android phones control these devices. I prefer the latter approach myself.

But, as I said, I was not there. Benedict Evans was and here’s a 30 min podcast where he shares his impressions.

The Aereo Ruling

The Supreme Court just issued its opinion in the case between the TV broadcasters and Aereo over the legality of the Aereo service. It was not particularly close. Six Justices felt that Aereo was infringing broadcaster copyrights. Three dissented.

I just read Justice Breyer’s majority opinion (available on the link above). As I read it (recognizing that I am a layman), the majority went with “if it walks like a duck and quacks like a duck, it must be a duck” argument. They felt that, as delivered, the Aereo service is essentially equivalent to a cable TV service and the rules should be applied similarly.

Justice Scalia’s dissenting opinion rejects the “it must be a duck” argument and goes further to suggest that it ignores widely recognized “service provider liability protections” and will cause confusion for years to come:

The service provider liability protections are near and dear to Internet startups. Many of the companies we have backed over the years have relied on these protections to avoid getting sued out of business the way that Aereo may have just experienced. These are important protections and it is very unfortunate to see a majority of the Supreme Court set a precedent here that goes against those protections.

It seems to me that the majority opinion creates an incentive for engineers to build hardware that would be operated by individuals to create a similar benefit but that doesn’t look and act sufficiently like cable to be infringing. Our former portfolio company Boxee, which was sold to Samsung last year, built something similar to Aereo but instead of provisioning it as a full blown cloud service, required each user to buy a BoxeeTV to get similar functionality. Boxee was not sued by the broadcasters and is now part of Samsung which may not push forward with that part of Boxee’s business (I have no idea), so it’s not clear if that approach will be legally tested any time soon.

But I do believe that customers want to be able to DVR and stream HD content that they can get for free over the air from the broadcasters and I imagine that engineers are already working on other approaches to give the users what they want.

There’s a discussion of this issue brewing over at USV.com as well if you want to check that out.

Why The GOP Should Embrace Net Neutrality

The politics of Net Neutrality (ie preventing the creation of fast lanes and slow lanes on the Internet) in Washington is pretty simple. Democrats are largely for Net Neutrality. Republicans are against it. The reason is simple. Net Neutrality has been sold to Washington by the telecommunications lobby as a regulatory overreach. And in that context, the politics are simple.

But if one thinks of the way the commercial Internet has operated for roughly 20 years, it has operated as a level playing field where everyone’s bits are treated the same. So Net Neutrality is just embracing the way it has always been.

Another way to look at this debate is that big corporate interests (Verizon, ATT, Comcast, etc) have been lobbying for the right to build fast lanes on the commercial Internet for almost as long as the Internet has been around and that investment is finally paying off. They have effectively bought their way into the halls of government and are now looking for their payday.

And the GOP, particularly its Tea Party wing, should find that abhorrent. As Dave Brat, who beat Eric Cantor, said:

I’m an economist. I’m pro-business. I’m pro-big business making profits. But what I’m absolutely against is big business in bed with big government. And that’s the problem.

I am headed to DC today to meet a few people and make this point. Wish me luck.

Bitcoin and Charities Were Made For Each Other, They Just Don’t Know It Yet

On the evening of July 14th at 6:30pm, I am going to give a talk on the subject of Bitcoin and philanthropic giving. It will take place at NYU’s Eisner and Lubin Auditorium and we are selling tickets to the event (in bitcoin of course) to raise money for charity.

Seats are $25 and they are first come first serve. There are 300 of them. VIP seats, which, in addition to being the best seats in the house, will also come with some goodie, are $100. If you have the extra cash and are feeling generous, please step up for the VIP seats. There are 75 of them.

We hope to raise $15,000 via this event and all the proceeds will go to CSNYC‘s programs to bring computer science education to the NYC public school system.

I was inspired to do this talk because our portfolio companies Coinbase and CrowdRise have teamed up to bring bitcoin to the world of philanthropic giving. You can see this partnership in action on the CrowdRise page for the talk.

This talk brings together three of the things I have been spending most of my time on over the past year (crowdfunding, bitcoin, and philanthropy). If you want to hear me talk about the things that get me up and out of bed in the morning, come to this.

In addition to highlighting the possibilities for charities that Bitcoin opens up, I believe this event will be a great place for Bitcoin enthusiasts to meet each other. I’ve agreed to sponsor up to 60 NYU students and faculty who are working on bitcoin projects to attend the event. The NYU bitcoin community is really taking off right now and I would like to help galvanize that. And the entire HackNY summer intern class will be there. These are some of the best and brightest computer science students in the country who are spending the summer in NYC working in startups.

If you work in a charitable organization and want to understand how Bitcoin can help turbocharge your fundraising, or if you are a Bitcoin enthusiast, I think you will enjoy hearing the talk and meeting like minded folks. To claim a ticket please make your donation in Bitcoin here.

I hope to see you there.

PS – If you can’t attend, you can still donate here and check a box saying that you can’t attend but you want to support the event and the cause.

Flipping The Model

We’ve had AppleTVs and Boxees on our family room TV for a while now. Last year I put Chromecast on it as well. I use it a lot but my kids haven’t warmed up to it yet.

Yesterday I got a call from my son. He said “how do you use this Chromecast thing?” I told him to take out the Nexus7 and turn on the TV and go to the Chromecast video source. He said he had already done that but there were no content options on the screen. I asked him if he still had the Nexus7 in his hand. He said yes. I told him to launch the Netflix app on the Nexus7. He did that. I told him to click on the Chromecast icon in the app. He responded “wow, that was easy.”

In an instant he understood that Chromecast flips the model. The content is on your device and you “cast” it onto the screen. He asked me if he could do the same with his iPhone. I told him he could. He was pleased.

I’ve written this before, but I think things like Bluetooth, Airplay, and Chromecast are the better model for getting content from the Internet onto TVs and into cars.

TVs and cars are expensive, you don’t replace them very often, and it takes time to get a new model designed, built, and into the market.

Contrast that with an app on your phone or tablet. You can iterate on that quickly with new features, functionality, and content.

It’s always tricky to go to market with a different model. We’ve had smart devices like set top boxes connected to our TV sets for decades and that’s how people think of getting content onto screens.

But I’d be plenty happy with a new TV and car that came with nothing more than a screen and bluetooth, airplay, and chromecast built in. No wires, no UI, just a screen and connectivity.

That’s where I think we are headed. It may take some time to get there. But it makes a lot more sense.

Video Of The Week: The YC Startup School Fireside Chat

This past week YC did their first Startup School in NYC. I was honored to be part of it. Aaron Harris and I did a fireside chat. It’s about 25mins long. I hope you enjoy it.

By the way, how awesome is the thumbnail they chose for the video? I need to get a copy of that image.