Posts from marketplaces

Fun Friday: Favorite Online Store

It’s fun friday. It’s also black friday. So I thought we would share with each other the best places to shop online.

For me, that’s an easy choice. I love shopping on Etsy. I like the fact that I’m buying directly from another person. I also love that the items you buy on Etsy are largely “one of a kind”.

I’m on the Board of Etsy and have been for eight years. USV owns a lot of the company. So I’m biased for sure, but if you haven’t tried shopping on Etsy, I’d encourage you to give it a try.

Where do you like to shop online?

The Emerging Architecture Of Internet Applications

The bitcoin blockchain is not just going to change the way money works on the Internet (and off). It’s going to change the way Internet applications are built. We have been working hard to understand how things are going to look in five to ten years and Joel Monegro has been providing much of that thought leadership inside our firm.

Since we are not into keeping our insights to ourselves, we have encouraged Joel to publish all of our work in this area (and every area). And today Joel has posted something that is really important and needs to be understood by every Internet/mobile entrepreneur, investor, developer, employee, and analyst. It is the blockchain stack and it looks like this.

blockchain stack

The most important things to understand about this blockchain stack are the overlay networks (most of which are still emerging), and the shared data layer and the shared protocol layer. Please read Joel’s post which describes each of these in some detail.

What is most important about this emerging stack is, in Joel’s words,

This imposes a very interesting set of challenges for developers, entrepreneurs, and investors as so much of the value in the current Internet stack will be commoditized by this architecture.

Differentiation and defensibility and network effects will be much harder to obtain with this architecture. Most things will work like email. Take your keys from one app to another and all your data and relationships come with it.

Fun times are ahead. Time to put your seat belt on.

Averaging In And Averaging Out

One of my favorite techniques to buying and selling transactional assets (stocks being the prime example) is to dollar cost average on the way in and the way out.

I am doing this right now with Bitcoin. I want to buy enough bitcoin so I can make charitable gifts and political donations with it and generally transact in it as much as possible. I’m buying 1.5 bitcoin every week in my Coinbase account. I have a reminder in my calendar and I buy some every week at the same time (I bought some this morning). I’ll keep doing this until I feel like stopping. A lot depends on how much I spend I guess. But the point is I would not be comfortable going out and buying a bunch of bitcoin in one transaction. There’s too much market risk in doing that. By purchasing an asset in small amounts over a long period of time you average into your price and I like doing that.

When a stock is distributed to me from USV, I generally sell a little bit and then put some away permanently. And then I slowly sell the remaining amount over a long period of time, generally three to five years. I generally like to sell once a quarter at the same time. I like the week after the earnings reports, when all the information is in the market and the market has digested it. But that’s not the important thing. The important thing is to sell roughly the same amount in a regular rhythm.

The point of averaging in and averaging out is you never get the top or the bottom, but you get the average. And the average is just fine with me.

In some ways, building a position in an early stage venture fund is the same thing. We buy a bit at the seed stage, a bit more at the Srs A stage, a bit more at the Srs B stage, and so on and so forth. In some of our best companies, we have bought stock in five to ten rounds. Some of those rounds will turn out to have been bargains. Some will turn out to have been overpriced. But on average, if you get to invest in ten rounds, you will build a very good position at a very good price.

It goes back to optimizing versus satisficing. If you want to find the optimal entry price or the optimal exit price, you will drive yourself crazy. I prefer to find an acceptable price. And I think that averaging in and averaging out does that for you.

Feature Friday: Etsy In Real Life

This week our portfolio company Etsy introduced Etsy Reader, a dongle for your phone or tablet that allows Etsy sellers to sell on Etsy in real life.

etsy_in-person_payments

The natural reaction to this would be “Etsy knocked off Square” and to some degree that would be correct. But Etsy Reader is not just a card reader. There is quite a bit of software behind the scenes that connects the checkout experience to the seller’s shop on Etsy and all of the seller tools that Etsy provides. The better way to think about this is that Etsy Reader extends a seller’s Etsy Store to the real world of craft fairs, flea markets, and other in person experiences.

Etsy Reader is about coming full circle at Etsy. In the early days, back in 2005 and 2006 when we first invested, Etsy was built seller by seller, at craft fairs, with street teams manning Etsy booths and evangelizing a new way to find customers and meet other like minded people. Etsy sellers still sell a lot at craft fairs and other face to face environments. Now with Etsy Reader, the shop can be online or offline with everything tied together.

I am excited to see Etsy Reader come to market. It’s been a dream for a while now and props to Camilla and her team for getting it out the door. Well done.

Algorithmic Organizing

My partner Albert penned a post yesterday (on and because of labor day) talking about the changing nature of work (more freelancers working on marketplace platforms) and suggested some interesting ideas. You can read his post here.

The two really interesting and related ideas are:

– A legal right for workers on these platforms to have real time (API based) access to the information about their work, pricing, supply and demand in the marketplace, etc, etc

– The development of algorithms (and coops and communities using these algorithms) that will allow these freelance workers to extract the best rates for their work

I believe that in the long run these platforms may/will be replaced by blockchain based networks of labor where there is no platform middleman and there would be no need for a legal right to an API because all the data would be public by default.

But who knows how long it will take for that transformation to happen? In the meantime, Albert’s ideas are really good and I would encourage people who are thinking about old school based regulation of these platforms to think instead of a new school regulatory approach along the lines of what Albert has suggested.

Kitchensurfing

There is only one company to date that the Gotham Gal has made an angel investment and subsequently USV has invested in and that is Kitchensurfing. I was not involved in either investment decision. The Gotham Gal made the angel investment herself. And because I was conflicted, by virtue of her investment, I recused myself from USV’s investment decision. So I don’t know as much about this company as many others in the USV portfolio.

But I know this much, it’s a fantastic service. Last night we had a dozen people at our beach house. The Gotham Gal is a great cook but she wasn’t really down with the idea of cooking and cleaning up for that large of a group. So we went with Kitchensurfing.

We wanted to eat healthy, lots of farm fresh foods, cooked without any heavy sauces or spices. We selected Chef Warren and he came through for us. He picked up some chicken at the local chicken farm. And he brought all sorts of fresh vegetables.

Our meal wasn’t one of the standard menus on his Kitchensurfing page. But it was pretty close in terms of price and selection to this one. We obviously customized it.

He grilled everything up to perfection, served it buffet style, and cleaned up everything and left the kitchen and grill as he found it.

I tweeted this out as dinner was served:

If you find yourself in a similar situation, with a house full of guests, without a desire to cook and clean, and are willing to spend what you’d spend if you went out to eat, try Kitchensurfing. It’s great.

Video Of The Week: Etsy and Rockford

Our portfolio company Etsy is helping Rockford Illinois build an entrepreneurial economy in their city. Here’s a short (3 min) video that talks a bit about what they are doing and how it got started.

Kickstarter’s Launch Now

Our portfolio company Kickstarter announced some important changes yesterday. They massively simplified their rules (from over 1000 words to under 300 words). And they introduced “Launch Now”:

launch now

At USV, we’ve always been a fan of fully open marketplaces over closed or curated marketplaces. I have written about that a bit here.

That said, you do benefit, particularly early on, by curating the market so that buyers are protected from crap and scams. Kickstarter turned five earlier this year and the company, service, and brand are well understood in the marketplace. I saw a chart on the Internet today that shows just how powerful the Kickstarter brand is right now:

When people think of funding a project on the Internet, they think of Kickstarter first and foremost. So the decision to curate and insure that backers on Kickstarter had a good experience was clearly the right one for Kickstarter.

But crowdfunding is a big business now. There is crowdfunding for seemingly everything now and users’ expectations and understanding has been well set. So it makes sense to be more open and creator friendly. Backers on Kickstarter and the vast number of other crowdfunding sites are now pretty clear about the risks and rewards of backing a project.

I am pleased with these moves. It makes life a lot easier for creators, it will lead to more crowdfunding by more people, it will lead to more projects that backers can back. There will be criticisms that Kickstarter is opening itself up to scammers and crappy projects. That’s always been a criticism of Kickstarter and other crowdfunding sites and will always be. But as this market has matured and gone mainstream, those criticisms need to be seen in the context of the overall success of crowdfunding and Kickstarter’s role as the creator and leader in the market. I think they will be fine.

My Closing Keynote At The Collaborative, Peer and Sharing Economy Summit

NYU and The NYC Partnership (the chamber of commerce for NYC) held a conference last friday on the Collaborative, Peer, and Sharing Economy. I was asked to give a closing keynote. I don’t believe it was filmed. If it was, I will post the video here when I find it.

Instead of wrapping up and summarizing what had been discussed, I decided to look out ten years and think about where this sector is headed.

Here is the outline I prepared before going on stage. The talk was only 10 minutes.

- Networks are replacing Hierarchies

– Peer Networks Are The Most Powerful

– We Are In Stage One Of This

* your new boss is the same as your old boss

– We Are Still In An Age Of Centralization

* facebook, twitter, uber, airbnb

– Decentralization Is Next

– Look At The BlockChain For A Model Of Decentralized Commerce

* Gambling Without A House

* Stock Trading Without Exchanges

* Real Estate Transactions Without Deeds

* Transactions Without Clearinghouses

– The Regulatory Challenges We Discussed Today Are Just Scratching The Surface

– The Ultimate Sharing Economy Is A World Of Peers Without Middlemen

– We Will Get There But We Are Not Anywhere Near There Yet

Use Social Sharing Platforms Like A Panel

More and more artists are embracing social sharing platforms like YouTube (video), SoundCloud (audio), Wattpad (storytelling) to get their works out and connect with fans. We have invested heavily in this category and both SoundCloud and Wattpad are USV portfolio companies. Another benefit of these platforms is you can use your followers/fans on these platforms like a panel. If you assume that the millions of followers you have on SoundCloud are more or less a representative sample of your entire fan base, then their behavior is more or less a reflection of the behavior of your entire fan base. If they like a new song a lot, it will probably be popular with your entire fan base. If they aren’t so excited about it, then maybe it won’t be a hit with your fan base.

SoundCloud announced a new feature for creators today that is a great example of this. It is called “Top Cities”. This is how SoundCloud describes it:

Plan your next tour, release strategy, and get better at connecting with your fanbase, by knowing exactly where they are — just click the ‘Top cities’ tab in your stats dashboard.

I recall seeing startups crop up from time to time where this was the entire business plan – figuring out where artists fans were so they could plan a tour. It turns out it wasn’t a great business. But I do think its a great feature. And just one example of how you can turn your followers on social sharing platforms into a panel that will allow you to understand them and connect with them better.