Posts from March 2016

Back when we started USV in 2003/2004, we used to see a lot of side projects that had taken off and were turning into companies. We funded at least one such side project, Delicious, which ended up getting sold to Yahoo! a few years later. But I remember that we would see one or two of these sorts of things every month. It was a meaningful part of the internet innovation ecosystem at that time.

Fast forward to today and we don’t see many side projects that have turned into or are turning into companies anymore. I suspect that some of that is the effort to build and launch something that can reach broad adoption is harder. You have to build for desktop web, mobile web, iOS, and Android if you want to get your app in front of everyone. Back in 2003/2004, you just had to build for the desktop web.

But I also think that it is so much easier to quit your job and get some seed funding that less and less people are building apps as side projects today. Why work 60 hours a week at Facebook and then another 40 hours a week on your side project when you can quit your job at Facebook and land $250k of seed money on the day you leave?

I think the move away from side projects toward doing a startup day one is not all good. There was something great about the ability to experiment with an idea before committing to it and before sucking other people’s money into it. When it didn’t work, it didn’t work. No need to pivot to save face or get your investors whole. Just shut it down and tinker on another idea.

I am hopeful that crowdfunding services like our portfolio company Kickstarter and others offer people with good full time jobs the opportunity to be “entrepreneurs on the side”, to test their ideas with potential customers, to build prototypes, and to see if there is excitement about the idea before leaving their job and pursuing the idea on a full time basis.

My point is that experimentation is critical. We should have lots of it. Seed capital, venture capital, angel investments, angellist, YC, techstars, etc, etc are great and fund a ton of experimentation. But they do require a commitment of time (yours) and money (mine) that isn’t ideal in many cases. So I hope that the fact that we are seeing less and less side projects is a temporary thing and that the market will correct in some way to bring them back. I think they have an important role to play in the innovation economy.

My alma mater is doing some really good work in the area of digital currencies. MIT, via its Media Lab, has built something called the Digital Currency Initiative. The basic idea of the DCI is to bring together researchers and scientists from all over the world and from many different disciplines (cryptography, economics, privacy, distributed systems, etc) to collaborate on research and efforts to promote and develop digital currency and distributed ledger technologies. This is a institute wide initiative at MIT though its center of gravity is in the Media Lab.

Earlier this week, MIT’s DCI announced a $900,000 Bitcoin Developer Fund. The Gotham Gal and I were one of the financial backers of this fund which will pay the salaries of developers who work on the open source codebase that is at the core of the Bitcoin protocol. It is important to note that as a financial backer of this fund, we do not have any influence over these developers. That is true for all of the financial backers. In the true sense of “academic freedom” the Bitcoin Developer Fund has a “hands off” approach to the developers it supports. This quote is from the announcement:

The establishment of this fund enables us to offer positions in a neutral academic environment. This allows developers like Wlad, Cory and Gavin to work on code and develop new ideas that may be controversial, but can do so with the assurance that they won’t be fired for diversity of thought.

I would love to see this fund grow in size over time and be able to support a larger group of computer scientists and developers to work on forks of Bitcoin and other digital currencies like Ethereum. Diversity of thought is badly needed in this important new technology sector and we don’t have enough of it right now.

While I’m on the topic of diversity, DCI also announced $100,000 in “diversity scholarships” this week. Here are the details:

The MIT Digital Currency Initiative (DCI) is excited to announce more than $100,000 in scholarships and support for underrepresented minorities and women to attend Consensus 2016: Making Blockchain Real. In collaboration with CoinDesk, a news site specializing in bitcoin and digital currencies, the DCI will be selecting 50 Consensus Scholars to attend the event on May 2–4 in New York City. This will be our second year collaborating on a scholarship effort for the conference–we are excited to continue to foster a more diverse community of attendees at Consensus. Click here to apply!

If you are a woman or a minority with an interest in Bitcoin, Ethereum, and other blockchain related technologies, you should apply for one of these 50 scholarships at the link above.

I am pleased by and proud of MIT’s efforts in this area. Entrepreneurs and investors are doing a lot to move the state of the blockchain technology sector forward, but there is a big role to be played by the world of academia. And MIT is certainly doing its part.

Today is a big day for our portfolio company SoundCloud. They are launching SoundCloud Go in the US today. They plan to launch SoundCloud Go in other parts of the world as soon as they can get the rights together to do so.

SoundCloud Go is the ultimate music service, giving listeners access to 125 million tracks from all over the world, offline or online, and ad-free. For comparison, traditional music subscription services, like Spotify and Apple Music, offer access to roughly 35 million tracks and internet radio services, like Pandora, offer access to roughly 2 million tracks.

I’ve had beta access to SoundCloud Go for the past month and it is an entirely different experience than the other premium music services. Here are some of the things you can only do on SoundCloud Go:

1. build a playlist that includes the top hits, emerging unsigned artists, and remixes and listen to it on the subway to work
2. stream your favorite podcasts online or offline and ad free
3. listen to mixtapes legally in a way that honors the rights of the underlying content creators
4. start a listening experience with a top hit and find emerging artists that are similar

You can either build a content platform on the internet top down or bottom up. It is easier to do it top down, going to the industry for the content. But it is better to do it bottom up, going directly to the creators for the content. Because a service with an upload button in it is fundamentally different than a service without one.

The bottom up approach can be harder to pull off, but the services that have done it like YouTube and SoundCloud are special.

I am listening to my favorites on SoundCloud Go while I write this. In that playlist I have Kanye and I have my friend Noah who grew up with my son and is an emerging artist. Both Kanye and Noah have profiles on SoundCloud. Both Kanye and Noah upload tracks they make to SoundCloud. So SoundCloud Go is the democratic, open, all inclusive music service, built for creators first and foremost, but also perfect for listeners.

To try SoundCloud today, go to https://soundcloud.com/go. It is $9.99 on desktop and Android. If you are an iOS user, I would recommend you subscribe on web and then enjoy on your mobile. There is a 30 day free trial. I hope you enjoy SoundCloud Go as much as I do.

In 1996, Jerry Colonna and I decided to call our venture capital firm Flatiron Partners (it was code named Acme Ventures). We named it after the Flatiron Building and decided to locate in the neighborhood with the same name. We moved down there a bit later and I immediately was smitten with the neighborhood. I have made my office there ever since. It’s twenty years now.

The thing I immediately noticed about the Flatiron district upon moving there was that it was unlike midtown manhattan, where I had worked for the previous ten years. The Flatiron district was about half residential and half business. And the businesses ranged from small photo studios to fledgling internet companies to accounting firms and therapist offices. The building that USV is now located in was full of photo studios in 1996. I don’t think there is a single one left.

The other thing that I love about the neighborhood is that it stays open late. The streets are full of restaurants, cafes, and bars. I can leave my office at 11pm and wander into any one of the local spots and they are still humming. That was true when we arrived in 1996 and it remains true today.

Working in the Flatiron district is like working in a residential neighborhood. You have grocery stores, dry cleaners, bodegas, and preschools. When you walk the streets, you see strollers and couples holding hands.

I thought of the Flatiron district when I read this MIT Technology Review article about a follow up study to Jane Jacobs’ seminal work on the vitality of cities by some University of Toronto researchers. The new work is called The Death and Life of Great Italian Cities: A Mobile Phone Data Perspective. These University of Toronto researchers used mobile phone data supplied by our portfolio company Foursquare and a few other data sources to study the vitality of a number of Italian cities.

Jane Jacobs says that for cities to thrive they need four conditions:

The first is that city districts must serve more than two functions so that they attract people with different purposes at different times of the day and night. Second, city blocks must be small with dense intersections that give pedestrians many opportunities to interact. The third condition is that buildings must be diverse in terms of age and form to support a mix of low-rent and high-rent tenants. Finally, a district must have a sufficient density of people and buildings.

The Flatiron district is the perfect example of Jane’s four conditions. I bump into people I know and don’t but should literally every day on the streets of the Flatiron district. It’s a mixed use neighborhood and though it has been gentrified a lot in the past twenty years (rents have gone from $15/sf to $75/sf in some buildings over those twenty years), it remains as vital today as when we arrived. I’d like to see the Foursquare data on the Flatiron district. I suspect it would be off the charts on the Jane Jacobs score!

It’s Easter Sunday. A time to celebrate those that have risen from the dead.

My favorite success stories are the ones that were written off for dead and somehow pulled it out and built something lasting and sustainable.

It doesn’t happen that often to be honest. Sure there are the pivots like Odeo>Twitter and Glitch>Slack. But I am not talking about them.

I am talking about something like the Fedex story. Out of money with nobody willing to invest. And Fred Smith pulled it out and built one of the most important companies of the latter half of the 21st century. Or Apple when Steve Jobs went back and turned it around. These companies were near death. And their founders figured out how to keep them alive and then turn them into juggernauts. That’s rising from the dead.

The truth is that over the past twenty years and two venture capital firms, I could not find a great example of a portfolio company of ours that rose from the dead. There were a couple that were near dead and were turned around and got nice exits. But nothing on the scale of Fedex or Apple.

It’s really hard to go from dead to juggernaut. So when it happens, you just have to look at the experience with wonder. That’s why these are my favorite success stories.

Happy Easter Everyone.

I was surfing around YouTube today looking for something to watch (and post) this morning. I found this video with two of my favorite people, Esther Dyson and Chad Dickerson (Etsy’s CEO). This video is more than a year old so the data in it is not current. But the lessons on scaling and managing a creative community remain as relevant today as they were when they had this conversation.

Last night we got home from dinner and I wanted to watch some TV.

TV is not really my thing but I am trying to get more into it these days. I did not turn on the cable box. I went straight for Netfix, HBO Go, Showtime Anytime, and NBA League Pass.

This morning I thought “do we really need that cable box anymore?” And then I thought that would make for a fun friday discussion.

I just tweeted out this poll:

have you gone “over the top” at home?

— Fred Wilson (@fredwilson) March 25, 2016

Please take that poll and, because its fun friday, let’s talk about this in the comments too.

Our portfolio company Return Path built a “returnship” program a few years ago to help stay at home moms and other men and women who have left the work force to take care of children, sick parents, etc figure out how to get back into the workforce. This program, which involves a 20 week paid internship and a bunch of training in new tools and technologies, has been incredibly successful at Return Path where they have run several cohorts and hired many of the interns into full time positions.

Recently Return Path started helping other tech companies start these returnship programs. They found that these companies had similar success with it.

So this week Return Path spun out the team, the systems, and the curriculum into a new non-profit called Path Forward. The Gotham Gal, who has written a lot about the challenges women face in getting back into careers they temporarily left, will be joining the Board and helping them grow this new effort. She wrote a bit about it on her blog yesterday. And Fortune has a great piece on Path Forward too.

This topic has been near and dear to our family for a long time. Our daughter Emily wrote her college thesis, Life Sequencing: A Viable Solution To Work-Life Conflict For High-Achieving Women, on this topic and her work has further encouraged us to work on this issue.

If you have a company in NY, CA, or CO (they are starting in those three states) that would like to start doing returnships, go to Path Forward and fill out this form. If you are ready to restart your career after taking time off, go to Path Forward and complete this form.

And if you think this is awesome and want to support Path Forward financially, go to Crowdrise and hit the big donate button.

Living in LA this winter has been a boon to my podcast listening and discovery. I get in the car, fire up SoundCloud on my phone, and start listening. This past weekend I listened to three new podcasts that I thought I’d share with all of you.

Unlisted With Brad Inman

Brad Inman‘s Inman News has been covering the real estate industry for as long as I’ve been interested in the real estate industry. Brad’s relationships and insight into the world of real estate are unmatched. Unlisted With Brad Inman is Brad’s weekly podcast. In this episode he talks with an economist at StreetEasy about the NYC residential real estate market. If you own real estate in NYC or are thinking of buying or renting in NYC, you should listen to it. The “hot, medium, cold” thing at the end of this podcast is really great.

The VinePair Podcast

VinePair is a website about beer, wine, and spirits. Their podcast is about the business side of the industry and this episode is about the rise and fall and rise again of Irish Whiskey. It’s really well done.

Studio 1.0

Studio 1.0 is Emily Chang‘s podcast on Bloomberg Business. In this episode she talks with Showtime’s CEO David Nevins about the TV business and all the changes that are going on. If you watch a lot of Netflix, HBO, Showtime, Amazon, etc, you will enjoy this interview.

The amazing thing is the diversity and quality of podcasts you can listen to these days. If you want to get into podcasts, get the SoundCloud app and start following these podcasts and others and they will just show up in your feed each week and you can listen when you are behind the wheel, in the gym, on the subway, etc.