Posts from Uncategorized
For the past few weeks I have been going from Board Meeting to Board Meeting reviewing, discussing, debating, and, ideally, approving the 2017 plans for the companies that I work with.
Here are some thoughts and observations about the year end planning process:
1) Companies should start the annual planning process early. I think September is a good time. It should start with a wide open data gathering process which involves as much of the organization as is possible.
2) The planning process must be grounded in the strategy which should be set in advance of the planning process. If a strategy adjustment is required, that needs to happen before the plan can come together.
3) The senior team needs to do the plan as a group. That can involve offsites, a set of regular (weekly?) meetings, or something else. But planning is a team effort and a plan can’t be handed down from on high like the ten commandments.
4) My number one feedback on annual plans is that they should have less focus areas. I think three big bets is good for most venture backed companies. Five is an absolute max. The more you try to do the less you get done.
5) The numbers should fall out of the strategy and plan, not the other way around. If you don’t have enough money to do everything, change your strategy. Don’t plan by numbers. Plan by developing a set of priorities that come from the long term strategy, and informed by the inputs of the organization.
6) Don’t drop your plan for next year on your Board the day before a year end Board meeting. The good news is that none of the companies I work with did this. I am very happy about that. It is best to give the Board a preview (ideally multiple previews) of the plan as it is coming tother so that you can get feedback and buy-in well in advance of the final approval process.
I am a big fan of the annual planning process. I realize that all plans end up evolving during the year and things change and companies adapt. But a good plan gets everyone (including the Board) on the same page, working on the same things, and driving to get to the same place. And that alignment is incredibly valuable.
USV recently made two investments in hedge fund managers. You might gather from that fact that we are moving away from venture capital. But that would be an incorrect assumption. What we are doing is finding new ways to invest in technologies that we think are interesting. These would be technologies like artificial intelligence, encryption, and blockchain.
Last week it was leaked, and then announced, that USV had led a round of financing for Polychain Capital, a new kind of fund that invests in digital tokens. We have discussed these digital tokens here at AVC and elsewhere. We do plan to directly invest in blockchain based protocols via tokens, but we won’t be able to invest in all of them in a venture capital model, so we are also betting that a fund vehicle focusing on these assets will make a good investment.
Yesterday, my partner Andy wrote a blog post on the USV blog about Numerai, a new kind of hedge fund that allows machine learning experts all over the world to crowdsource public market investments by building models and sharing the selections that come out of their models. The data they use to power these models is encrypted and so are their models. It is the “blind leading the blind” according to this piece in Wired. I like that description as the focus moves away from things like fundamental and technical stock analysis to true pattern recognition done by machines. Numerai uses cutting edge encryption technology (a variation on homomorphic encryption), machine learning, and pays out using the bitcoin blockchain. It’s a trifecta of things that are interesting to us, as recognized in this tweet by MIT’s Technology Review.
In both cases, USV invested in the “GP” of these funds. In Polychain, we also made a small investment in the fund itself. We did not do that in Numerai, although it is possible that we could choose to do that in the future. Our investments are largely in the companies that manage these funds and they are a bet that these new technologies will offer new ways to build fund management businesses that over time will be highly valuable. These are both startups and we think of these investments as classic early stage investments with all of the risk and return that comes along with them.
My partner Albert Wenger gave a talk at Web Summit about the coming Knowledge Age. Many of you have seen previous versions of this talk which I have posted here. But Albert is evolving the talk as he learns more about some of these ideas.
It’s a short talk, about 15 mins long. I have included the video and the slides below that.
If you are like me, you might want to celebrate the end of a shrill and divisive election season with a stiff drink or a strong coffee.
And our portfolio company Foursquare has the exact tool you’ll need to do that.
Go here and enter your home address and Foursquare will map your voting place and bars, restaurants, and coffee shops nearby.
Here is my map:
I plan to vote bright and early on Tuesday morning and then head to one of these many excellent choices for my morning coffee.
And, whatever your political orientation, I hope you go out and vote on Tuesday.
Last night was a revelation for me. I’m not joking. I wasn’t really expecting to be blown away by the experience of watching football on Twitter. I was.
I installed the new Twitter app on our AppleTV and watched the entire Jets Bills game on Twitter last night. It looks like this on the TV in our family room:
I was talking to folks on Twitter throughout the game and many said that they don’t understand the difference between having the tweets flowing up on the screen vs on your phone.
For me, it’s a huge difference. You can watch the game and follow the conversation about it without having your head in your phone.
But there is so much more Twitter can do to make this experience even better.
For starters, I would like to be able to log into the Twitter AppleTV app and then have options to only see tweets from people in my timeline or to have those highlighted or prioritized.
And, I would like to be able to use the Twitter app on my phone to control the AppleTV Twitter app like the Apple Remote app controls the AppleTV. Then I could tweet from the AppleTV app and be able to reply and engage right up on the screen.
I expect Twitter to showcase all sorts of live sports in the coming months in their apps. You can watch these events on your phone in your Twitter app. Or you can watch them on AppleTV and XBox and, I think one other device. I expect Twitter to add apps for other devices as well.
Everyone here at AVC knows I am a huge fan of Twitter and very long on the stock. So take all of this in that context. I think the addition of live content to Twitter is a game changer for them. It amplifies what is unique and different about Twitter and the experience is fantastic. Well done Twitter.
My two favorite basketball players, Patrick Ewing and Allen Iverson, are both products of John Thompson Jr’s Georgetown program of the 80s and 90s. Both went on to have hall of fame careers in the NBA and both were franchise players on teams that got close but never won an NBA championship. The thing Patrick and Allen have, more than anything else, is heart.
And Allen’s heart is on display in this rambling 30min acceptance speech he gave at the Basketball Hall Of Fame yesterday.
It’s about 25mins of him thanking people (his family, the people who shaped him as a child, his friends, his coaches, his teammates, his competitors, etc) and about 5mins of speech making. But in all of that are a few gems.
- the feeling of stepping on the court against Michael Jordan for the first time
- his relationship with the Philly fans
- his relationship with the media
- John Thompson Jr’s decision to recruit him to Georgetown and “save his life”
- how he learned the crossover
Allen is far from perfect, as a player and as a person (who is?), but what you see in this speech is how he managed to hold it all together throughout a chaotic career and life. His reputation is now “solidified” as he says at the end of the speech. I am very happy for AI.
The blockchain sector continues to entertain, amuse, impress, and inspire me.
Last week one of the biggest cryptocurrency exchanges, Bitfinex, was hacked and was reported to have lost around $65mm of bitcoin it was storing for its customers.
So what did they do in response? They told every customer that they had lost a portion of their assets (36% to be exact) and that they were issuing crypto-tokens to them in proportion to the amounts they had lost.
I have not done business with Bitfinex so I was not directly involved in this affair. However our portfolio company Coinbase competes with Bitfinex so I am most certainly an interested observer and maybe even an interested party.
What is interesting is that it is not entirely clear what these crypto-tokens will be exchangeable for. Will Bitfinex treat them as liabilities that they will eventually pay off (debt)? Or will they ultimately be paid back with equity in Bitfinex? Will there be a traditional bankruptcy or will this be settled out of court? And who is going to represent the creditors?
But maybe the most interesting thing of all is that a market is being made in these crypto-tokens. If you hold them and want to sell them for dollars or bitcoin, you can do that.
They have tokenized the claims their customers have against them. Talk about the dogs eating the dog food. It is impressive in many ways to watch the blockchain sector encounter traditional business problems and address them in a native blockchain way. And it will be interesting to see if the legacy system intrudes or not.
The crypto-currency Ethereum completed a hard fork on Wednesday. The Ethereum core developers, after getting a vote of support from the Ethereum community, hard forked Ethereum to “get back” the roughly $40mm of Ethereum that was taken in the hack of The DAO.
Hard forks are a bit of a lightning rod issue in the blockchain sector. The Bitcoin community has been debating the idea of doing a hard fork to increase the block size for well over a year. It seems that most of the Bitcoin core developers are against a hard fork and see it as risky. Bitcoin did have an accidental hard fork back in 2013, but that was dealt with quickly and confidence in the Bitcoin blockchain was restored.
I believe that hard forks are an inevitable occurrence in the blockchain sector. There have been, and will continue to be, issues that crop up that are best solved with hard forks. I do not think they will be common and I do not think they should be common. But they are an important tool in the toolset that core developers have to move these protocols forward. And so I see the successful Ethereum hard fork this week as an important milestone for public blockchains.
It’s a point of strength to be able to adapt to that change, to be able to respond to it, to be able to do it in an orderly fashion. Ethereum just demonstrated this. I think this is a rite of passage for ethereum.
In my mind, adaptability is more important than immutability.
And to some extent, that is what is now at the center of the Bitcoin vs Ethereum competition for the hearts and mind of developers. I believe the Bitcoin core developers have more or less landed on immutability and Ethereum core developers are very much into adaptability. It may be that it is useful to have two significant, liquid, and highly capitalized public blockchains, one that is immutable (think of gold) and one that is adatpable (think of the dollar).
There was a time when I was a Bitcoin absolutist. That changed a while ago and I now believe that we are going to have multiple blockchains, multiple currencies, and a ton of app tokens, some with their own blockchains, some built on top of Bitcoin or Ethereum.
It’s a very interesting time in the public blockchain sector right now. Stuff is happening. Lot’s of stuff.