Posts from Politics

VC Pitches In A Year Or Two

Entrepreneur: I plan to launch a better streaming music service. It leverages the data on what you and your friends currently listen to, combines that with the schedule of new music launches and acts that are touring in your city in the coming months and creates playlists of music that you should be listening to in order to find new acts to listen to and go see live.

VC: Well since Spotify, Beats, and Apple have paid all the telcos so that their services are free on the mobile networks, we are concerned that new music services like yours will have a hard time getting new users to use them because the data plan is so expensive. We like you and the idea very much, but we are going to have to pass.

Entrepreneur: I plan to launch a service that curates the funniest videos from all across the internet and packages them up in a 30 minute daily video show that people will watch on their phones as they are commuting to work on the subway. It’s called SubHumor.

VC: Well since YouTube, Hulu, and Netflix have paid all the telcos so that their services are free via a sponsored data plan, I am worried that it will hard to get users to watch any videos on their phones that aren’t being served by YouTube, Hulu, or Netflix. We like you and your idea very much, but we are going to have to pass.

Entrepreneur: I plan to launch a photo sharing service where the faster your friends like the photos, the faster they disappear. It’s gamified social snapchat.

VC: Well since Facebook, Instagram, Twitter, and Snapchat have paid the telcos so the photos that are served up in their apps don’t use up any of the data plan, I worry that users won’t want to use any other photo sharing services since they will have to pay high data costs to use them. We love your idea and would have funded it right here in the meeting back in the good old days of the open internet, but we can’t do that anymore. We are passing.

This is Internet 3.0. With yesterday’s court ruling saying that the FCC can not implement the net neutrality rules they adopted a while back, this nightmare is a likely reality. Telcos will pick their preferred partners, subsidize the data costs for those apps, and make it much harder for new entrants to compete with the incumbents.

Video of the Week: Bruce Schneier and Eben Moglen

By any measure, 2013 will go down as the year we all saw the dark side of the Internet revolution, courtesy of Edward Snowden. So I think it’s fitting to showcase Eben Moglen’s conversation with Bruce Schneier as the final video of the week of 2013. This is long (90mins) but worth watching. Eben and Bruce are two of the leading intellectuals on the important subjects of trust, identity, privacy, and the Internet.

Guest Post: Nick Grossman – Winning on Trust

This is a post Nick did around his User First keynote. It's great and I wanted to feature it to the AVC community today. The comments thread at the end is also running on Nick's blog and at usv.com so you will see commingled comments from all three places.

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"It is trust, more than money, that makes the world go round."
— Joseph Stiglitz, In No One We Trust

The week before last, I visited Yahoo! to give the keynote talk at their User First conference, which brought together big companies (Google, Facebook, etc), startups (big ones like USV portfolio company CloudFlare and lots of way smaller ones), academics, and digital rights advocates (such as Rebecca MacKinnon, whose recent book Consent of the Networked is an important read) to talk about the relevance of human/digital rights issues to the management of web applications.

I was there to speak to the investor perspective — why and how we think about the idea of “user first” as we make and manage investments in this space.

First, I want to point out a few things that might not be obvious to folks who aren’t regulars in conversations about digital rights, or human rights in the context of information & communication services.  First, there has been substantial work done (at the UN, among other places) to establish a set of norms at the intersection of business and human rights.  Here is the UN’s guiding document on the subject. Second, in terms of digital rights, the majority of the conversation is about two issues: freedom of expression/censorship and privacy/surveillance.  And third, it’s important to note that the conversation about digital rights isn’t just about the state ensuring that platforms respect user rights, but it’s equally about the platforms ensuring that the state does.

The slides are also available on Speakerdeck, but don’t make much sense without narration, so here is the annotated version:

As more and more of our activities, online and in the real world, are mediated by third parties (telecom, internet and application companies in particular), they become the stewards of our speech and our information.  

Increasingly, how much we trust them in that role will become a differentiating feature and a point of competition among platforms.

A little background on who I am:

I work at Union Square Ventures — we are investors in internet and mobile companies that build social applications.  I also have academic affiliations at the MIT Media Lab in the Center for Civic Media, which studies how people use media and technology to engage in civic issues, and at the Berkman Center for Internet & Society at Harvard Law School which studies tech & internet policy.  And my background is working in the “open government” space at organizations like OpenPlans and Code for America, with a focus on open data, open standards, and open source software.

So, to start out: a guiding idea is that the internet (as we know it today) is not just an open, amorphous mass of random peer-to-peer communications.  It’s actually a collection of highly architected experiences:

Whether it’s the governance structure of an open source project, the set of interactions that are possible on social platforms like Twitter and Tumblr, or the web-enabled real-world interactions that are a result of Craigslist, Airbnb, and Sidecar, much of the innovation and entrepreneurial activity in the web and mobile space has been about experimenting with architectures of collaboration.

Web & mobile technologies are giving us the opportunity to experiment with how we organize ourselves, for work, for pleasure and for community.  And that in that experimentation, there are lots and lots of choices being made about the rules of engagement.  (for example, the slide above comes from an MIT study that looked at which kinds of social ties — close, clustered ones, or farther, weaker ones — were most effective in changing health behavior).

At USV, we view this as part of a broader macro shift from bureaucratic hierarchies to networks, and that the networked model of organizing is fundamentally transformative across sectors and industries.

One big opportunities, as this shift occurs, it to reveal the abundance around us.  

I first heard this phrasing from Zipcar founder Robin Chase and it really stuck with me.  It’s as if many of the things we’ve been searching for — whether it’s an answer to a question, an asthma inhaler in a time of emergency, a ride across town, someone to talk to, or a snowblower — are actually right there, ambient in the air around us, but it’s previously not been possible to see them or connect them.  

That is changing, and this change has the potential to help us solve problems that have previously been out of reach.  Which is good, because for as much progress we’ve made, there are still big problems out there to tackle:

For a (relatively) trivial one, this is what most California freeways look like every day.  In much of the world, our transportation systems are inefficient and broken.

…and this is what Shanghai looked like last week as a 500-mile wide smog cloud, with 20x the established limit for toxicity, rolled in for a visit.  We obviously don’t have our shit together if things like this can happen.

…and we have tons to figure out when it comes to affordable and accessible health care (not the least of which is how to build an insurance marketplace website).

…and education is getting worse and worse (for younger grades) and more and more expensive (for college).  There’s no question that the supply / demand balance is out of whack, and not taking into account the abundance that is around us.

So: these are all serious issues confronting global society (and the ones I mentioned here are just a small fraction of them at that).  

All of these issues can and should benefit from our newfound opportunity to re-architect our services, transactions, information flows, and relationships with one another, built around the idea that we can now surface connections, efficiencies, information, and opportunities that we simply couldn’t before we were all connected.

But… in order to do that, the first thing we need to do is architect a system of trust — one that nurtures community, ensures safety, and takes into account balances between various risks, opportunities, rights and responsibilities.

Initially, that meant figuring out how to get “peers” in the network to trust each other — the classic example being Ebay’s buyer and seller ratings which pioneered the idea of peer-to-peer commerce. Before then, the idea of transacting (using real money!) with a stranger on the internet seemed preposterous.

Recently, the conversation has shifted to building trust with the public, especially in the context of regulation, as peer-to-peer services intersect more and more with the real world (for example, Airbnb, Uber, and the peer-to-peer ride sharing companies and their associated regulatory challenges over the past three years).

Now, a third dimension is emerging: trust with the platform. As more and more of our activities move onto web and mobile platforms, and these platforms take on increasing governance and stewardship roles, we need to trust that they are doing it in good faith and backed by fair policies.  That trust is essential to success.

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In terms of network & community governance, platforms establish policies that take into account issues like privacy, enforcement of rules (both public laws and network-level policies), freedom of expression and the freedom to associate & organize, and transparency & access to data (both regarding the policies and activities of the platform, and re: the data you produce as a participant in the community).

When you think about it, you realize that these are very much the same issues that governments grapple with in developing public policy, and that web platforms actually look a lot like governments.

Which makes sense, because both in the case of governments and web-enabled networks, the central task is to build an architecture around which other activity happens.  You build the roads and the other essential public infrastructure, and then you set the ground rules which enable the community and economy to function.

Of course, there is a major difference: web networks are not governments, and are not bound by all the requirements & responsibilities of public institutions.  They are free to create their own rules of engagement, which you agree to when you decide to participate (or not) in that community.

This is both a plus and a minus, when it comes to user rights — the major plus being that web platforms are competitive with each other.  So that when there are substantive differences in the way platforms make and enforce rules, those differences can be the basis for user choice (e.g., it’s easier to move from Facebook to Google than it is to move from the US to Canada).

I would like to put some extra emphasis on the issue of data, since it’s growing so quickly and has been so much at the forefront of the public conversation over the past year.

We are generating — and sharing — more data than we ever have before.  

Everywhere we go, on the internet and in the real world, we are leaving a trail of breadcrumbs that can mined for lots of purposes.  For our own good (e.g., restaurant recommendations, personal health insights), for social purposes (crowdsourced traffic reports, donating data to cancer research), for commercial purposes (ad targeting & retargeting, financing free content), and for nefarious purposes (spying, identity theft).

One distinguishing idea within all of this is the difference between data sharing that we opt into and data sharing that happens to us.  Certain web services (for example USV portfolio company Foursquare, highlighted above) make a business out of giving people a reason to share their data; getting them to buy into the idea that there’s a trade going on here — my data now for something of value (to me, to my friends, to the world) later.  It’s proving true that lots of people will gladly make that trade, given an understanding of what’s happening and what the benefits (and risks) are.

Convincing someone to share their data with you (and with others on your platform) is an exercise in establishing trust.

And my feeling is that the companies that best establish that trust, and best demonstrate that they can stand behind it, are going to be the ultimate winners.

I think about this a lot in the context of health.  There is so much to gain by sharing and collecting our health data.  

And If we don’t get this right (“this” being the sensitive matter of handling personal data), we miss out on the opportunity to do really important things.

And there is no shortage of startups working to: a) help you extract this data (see 23andme), b) help you share this data (see Consent to Research and John Wilbanks’ excellent TED talk on sharing our health data), and c) building tools on top of this data (see NYU Med Center’s virtual microscope project).

We are pushing the boundaries of what data people are willing to share, and testing the waters of who they’re willing to share it with.

Which brings us back to the idea of competition, and why winning on trust is the future.

We are just just just scratching the surface of understanding whether and how to trust the applications we work with.

EFF’s Who Has Your Back report ranks major tech & communications firms on their user protection policies.  The aptly-titled Terms of Service; Didn’t Read breaks down tech company Terms of Service and grades them using a crowdsourced process.  And, most effectively (for me at least), the Google Play store lists the data access requests for each new application you install (“you need my location, and you’re a flashlight??”).

You might be saying: “that’s nice, but most people don’t pay any attention to this stuff”.

That may be true now, but I expect it to change, as we deal with more and more sensitive data in more parts of our lives, and as more companies and institutions betray the trust they’ve established with their users.

There is no shortage of #fail here, but we can suffice for now with two recent examples:

Instagram’s 2012 TOS update snafu caught users by surprise (who owns my photographs?), and this summer’s NSA surveillance revelations have caused a major dent in US tech firms’ credibility, both at home and especially abroad (not to mention what it’s done to the credibility of the US gov’t itself).

So… how can web and mobile companies win on trust?

We’re starting to see some early indications:

Notice the major spike in traffic for the privacy-oriented search engine, USV portfolio company, DuckDuckGo, around June of 2013, marked by [I] on the graph.

Some companies, like Tumblr, are experimenting with bringing more transparency to their policy document and terms of service.  Tumblr’s TOS include “plain english” summaries, and all changes are tracked on Github.

And of course, lots of tech companies are beginning to publish transparency reports — at the very least, starting to shine some light on the extent to which, and the manner in which, they comply with government-issued requests for user data.  Here are Google’s, Yahoo’s and Twitter’s.

There are juicier stories of platforms going to bat for their users, most recently Twitter fighting the Manhattan DA in court to protect an Occupy protester’s data (a fight they ultimately lost), and secure email provider Lavabit shutting down altogether rather than hand over user data to US authorities in the context of the Snowden investigation.

And this will no doubt continue be a common theme, as web and mobile companies to more and more for more of us.

And, I should note — none of this is to say that web and mobile companies shouldn’t comply with lawful data requests from government; they should, and they do.  But they also need to realize that it’s not always clear-cut, that they have an opportunity (and in many cases a responsibility) to think about the user rights implications of their policies and their procedures when dealing with these kinds of situations.

Finally: this is a huge issue for startups.

I recently heard security researcher Morgan Marquis-Boire remark that “any web startup with user traction has a chance of receiving a government data request approaching 1”.  But that’s not what startups are thinking about when they are shipping their first product and going after their first users.  They’re worried about product market fit, not what community management policies they’ll have, how they’ll respond when law enforcement comes knocking, or how they’ll manage their terms of service as they grow.

But, assuming they do get traction and the users come, these questions of governance and trust will become central to their success.

(side note: comments on this post are combined with this post on nickgrossman.is and this thread on usv.com, as an experiment)

The Limits of Capitalism

I am a capitalist. Contrary to the occasional community members who call me a socialist or a techno communist, I believe wholeheartedly in the power of markets to efficently determine what's best in most cases.

But I am not an absolute capitalist. I believe that markets do break down from time to time and we need to recognize when those things happen and do something about it. The labor movement, when it was not corrupt for the most part, is an example of a societal response to a market breakdown.

When we stare into the future, we see that our cars will not have drivers. We see that the stuff we buy from Amazon will be delivered by drones. We see that the foundations and structures of our homes will be built by 3D printed concrete. We see a world where many jobs will not exist anymore. Taken out by technology. The very technology that many of us here at AVC are working hard to create and that many of us here at AVC celebrate.

My partner Albert has been talking about this on his blog for a long time. If you want to see the totality of Albert's thinking on this topic, read the economics tag on his blog. One of Albert's thoughts is that we may need a basic income guarantee to redistribute the consumer surplus we will be creating when we no longer have to pay for drivers, delivery people, and construction workers in our lives (and many others). He's now doing a research project to look into this idea in greater detail and is looking for a research assistant.

But Albert is not the only one thinking about this stuff. Bruce Bartlett, a senior policy advisor to the Reagan and Bush administrations wrote a piece in the NY Times earlier this week advocating for a basic income guarantee.

And if you haven't read David Simon's rant on this topic in the Guardian, I would suggest you do.

I am not sure about the basic income guarantee. It feels like welfare to me and that system destroyed many productive lives. People need to work. They need to have something to feel good about doing every day. Work is a big part of self image and self worth. Any system that makes it possible for people to sit at home eating bon bons (as the Gotham Gal likes to say) is not a good system.

That said, we do need to recognize that technology is taking massive costs out of our collective P&Ls and creating a large surplus for many of us. At the same time, the people who made up that cost structure are out of work and struggling to put a roof over their head and feed their families. Shouldn't that surplus, at least part of it, go to assisting those people?

So I welcome this debate and I will not be principled on this point. I will not let ideaology and orthodoxy drive my thinking here. And I don't think anyone else should either. Because this is an important discussion to be having. And not just for the US, but for the entire world.

The Government Surveillance Letter

Note: The website this post is about is now down. I am not sure if that means this thing was a hoax or something along those lines. Regardless, I believe the sentiments expressed on the website are correct and that Internet companies, large and small, should ban together to express them.

Sometime last night, a letter to the President of the United States and Congress was published on the Internet. It was signed by eight of the largest Internet companies; Apple, AOL, Facebook, Google, LinkedIn, Microsoft, Twitter, and Yahoo!

The website where the letter is hosted outlines five principles for government surveiilance:

1) sensible limitations on government's ability to compel service providers to disclose user data

2) checks and balances, including court oversight

3) transparency about government demands

4) letting information flow freely, particularly across national boundries

5) cooperation between governments to create multi-national treaties

I wholeheartedly support these five goals. These issues do not only impact large Internet companies. They impact all Internet companies. When you get a National Security Letter, you have no choice but to comply, even if it violates everything you and your company stand for.

It is time for governments around the world to rethink how they go about spying on us, particularly with the help of companies, both large and small.

Bill de Blasio, the next Mayor of NYC

I would like to congratulate Bill de Blasio on his landslide victory in the NYC mayoral race. He will become our next mayor on Jan 1st 2014.

His vision of making NYC a city of opportunity for everyone is laudable and I hope he can deliver on it. But it is easier said than done. The problems facing our economy, our city, and our citizens are deep rooted and not prone to easy solutions. I don't believe old school liberalism will provide the answers. If we want to address the income equality issues, the job stagnation problems, and the crime and poverty that still blights parts of NYC, we must look for new ideas and they must start with education, empowerment, and entrepreneurship.

As the readers of this blog know, I am investing as much as I can in these three Es here in NYC. And in my work, I meet so many other like minded people who are investing their time and energy in similar ways. I hope Bill de Blasio embraces this kind of work because creating opportunities for our people, particularly our children, is the most powerful form of social change that I know.

The tech sector can be a powerful ally for our new mayor. And my sense is that he knows it. I was asked yesterday by a journalist for my take on what de Blasio's tech policies should be. Here is what I wrote her.

I think that Bloomberg's tech policies have been really good, particularly in the latter part of his time in City Hall. de Blasio would be well served to continue them and in many cases double down on them.

Two areas where more could be done are procurement of software where the city needs to adopt a more open process including open sourcing of code as much as possible and a more aggressive posture on broadband which may have to include looking at alternatives to the duopoly we have in NYC right now.

The tech community is largely apolitical. But that does not mean it is unavailable to help our city and our incoming administration. I hope that Bill de Blasio finds time for the tech community and listens and learns from us. I think many good things could come of that.

Fun Friday: Revisiting Default

Two weeks ago, in a fun friday that many derided as "no fun" we established that a minority of this community, but a sizeable one, thought that the US would default in its debt obligations as a result of an inability to find common ground in the latest budget fight.

Sep 27 fun friday

I would like to redo that poll to see where the community has come in the past two weeks, most of which has been during the government shutdown (a misnomer if there ever was one as most of the government is still operating) and a political showdown in Washington. So here is the same question, slightly reworded:

My view is that we are not going to default on our obligations this year and I voted that way.

The emergence of the Ryan plan (and Paul Ryan) strikes me as exactly what we need to get ourselves out of this mess. I would like to see Obama engage in serious negotiations to further cut the deficit by attacking Medicare and Medigap spending and I would like to see the GOP agree to modest revenue increases to go along with those cuts.

We've made a lot of progress over the course of the Obama administration in reducing the god awful deficits that the Bush Administration and the Stimulus Plan left us with. Obama may have been brought to all of these budgetary moves kicking and screaming by his Republican opposition, but we have gotten them done. And it looks like we might get even more now.

The way this is going, we might have a balanced budget by the end of the Obama administration. Who would have thought that Obama's twin legacies would be a health care system where everyone is covered and a balanced budget. Truth is always stranger than fiction it seems.

Fun Friday: A Debt Ceiling Default?

The Congress and the President have to agree on a deal to lift the debt ceiling by Oct 17th in order to avoid a default on the US’ obligations. The House Republicans seem hell bent to extract some big concessions from the President in order to agree to lift the debt ceiling. And the President is refusing to negotiate over the debt ceiling. Seems like yet another deadline driven drama in Washington.

So let’s have some fun today and guess whether this thing is going to get resolved or not. I am voting that they will figure it out once again and avoid a default.

Larry Lessig, Corruption, Tumblr, and The Supreme Court

Professor Larry Lessig has submitted a brief to the Supreme Court in a case arguing that limiting large political contributions is Constitutional and exactly what the Framers had in mind when they used the word corruption.

As part of the evidence he has submitted in his brief, Larry created a Tumblr with 325 citations from the Framers themselves showing that they had a very broad understanding of the word corruption. This will be the first time that a Tumblr has been submitted as evidence in a Supreme Court case.

Today at noon eastern, Larry and Senator Elizabeth Warren will have a livestreamed discussion about the Supreme Court case. The stream is on YouTube and the live chat will be held at the Constitutional Accountability Center. Please tune into the stream at noon eastern if you are interested in limiting the effect of money (ie corruption) on our elected officials. I certainly am.

A Big Day For The Big Apple and Tech’s Apple

This blog, which will be 10 years old in two weeks, was initially called “AVC: Musings of a A VC in NYC”. I thought I might like to think out loud when I named it that. Turns out I do.

So I am going to muse out loud about two important things that will happen today.

First, I am going to vote in the NYC Democrat Mayoral Primary this morning. I plan to vote for Chris Quinn who The Gotham Gal and I have known for around ten years. Chris is a great person and I think that among the Democrats, she will do the best job maintaining the policies and attitude that the Bloomberg administration brought to City Hall. Sadly, I don’t think Chris ran a great campaign and I think that Bill de Blasio did. There is a chance that de Blasio will win enough votes today that he can avoid a runoff. He did not and will not win mine.

Even if Chris wins, I do not plan to vote for her in the General Election. I prefer both Joe Lhota and Jack Hidary to every Democrat candidate for Mayor. I guess that begs the question why am I a Democrat. This is not a long enough post for me to address that. But I can and maybe should at some point.

If you live in NYC and are registered to vote, please make the time to do that today. There is nothing more important in our democracy than our right (and obligation) to vote. Please exercise it.

Second, Tim Cook will take the stage today to announce some new Apple products. Rumor has it he will announce a cheap iPhone (the 5C) and an upgrade to the iPhone 5 (the 5S). The more interesting of these two new phones to me is the 5C. I think Apple needs a cheap phone to compete with Android in the prepaid market which is very important outside the US. And, as I’ve said here before, we need a competitive mobile OS market to keep everyone honest. Google is looking more and more ominous to me and I want to see Apple keep the pressure on them. I hope it goes well for Tim and Apple today.

So it’s a big day for the Big Apple and Tech’s Apple. Days like today mean a lot. I will be paying attention to both as the day develops.

UPDATE: The folks at Sketchfab sent me this 3D rendering of the new iPhone 5C. So here it is in all its glory