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Is This You?

I caught an early flight out of LAX yesterday morning. I sat next to a woman who slept all the way to SF. I am always jealous of people who can do that. I don’t sleep much on planes.

When we landed in SF and were taxiing to our gate, she woke and checked her phone. She landed on my daily email, read the bit about flying to SF, and turned to me, showed me the AVC email, and said “is this you?” I replied “yes.”

It turns out she works for a startup and knows people who have worked for various USV portfolio companies. And she uses Foursquare.

We had a nice chat, I bought one of her company’s products, I am mulling over the idea of buying another one, and I pitched a BD partnership between her company and one of Gotham Gal’s portfolio companies.

Why am I telling this story? Because it’s good to have a calling card in business and this blog is mine. It pays off all the time. It widens my network constantly. 

I am not saying that everyone should blog. That’s not going to work for most people. But finding some way to connect to the people you should know is huge. It could be public speaking, it could be publishing research, it could be going to conferences all the time. Whatever it is, getting out there and networking and meeting people is the secret to building a big rolodex. And a big rolodex is an incredible asset to have.

A Cautionary Tale

What do you do if you are a crowdfunding service and one of your high profile projects fails to deliver leaving roughly 12,000 backers high and dry?

Well our portfolio company Kickstarter (where I am on the board) decided to shine a light on the failure by hiring an investigative reporter and giving him freedom to research and then tell the story of what went wrong without any interference by Kickstarter.

The journalist, Mark Harris, published his findings a few days ago. You can read the entire story here.

The project in question was called Zano and the idea was to build and ship a small autonomous drone. I am not going to summarize the story here on AVC. Those of you who want to read it should go read the entire piece. 

But I will say that the Zano story is a cautionary tale that anyone who backs projects on Kickstarer should read. Not every project works. In fact, it is shocking that something like 90% of projects funded on Kickstarter have eventually delivered although many are late.

Creative projects fail. Startups fail. Banks fail. Governments fail. Marriages fail. Failure is an important part of the human experience. I have personally failed more times than I want to remember. 

And so I hope that Kickstarter figures out a way to continue to shine a bright light on the big failures. They should not be swept under a rug. They should analyzed, discussed, and understood by the Kickstarter community and beyond. That is a very healthy thing.

Politics and the Future

It is political season in the US. For the next three months (ish) the two major political parties will select their nominees, then there will be a lull while the two nominees prepare for the general election which will kick off with the two conventions this summer and then it will be off to the races until election day in November. So for the next ten months the US will be in the throes of a Presidential election cycle. 

Its a good time to get all of issues on the table and debate them. One issue that I feel has not gotten enough air time yet and is fundamental to most everything is what is going on in the global economy (not just the US economy) and what that means for policy at home and abroad.

I saw a link to this post on Twitter today. I don’t know the author but it strikes me as directionally correct about the macro tends in the global economy. Here are some charts from it:

  
  
  
The author goes on to say:

The individual GDP share of the food, energy and healthcare industries of the total economy are larger than the ITC sector. What will the world look like if the total value of these would contract in similar fashion than we have had in ITC industry? Will we face an era of technological deflation? Most likely yes. Will it be a good or bad thing?

Deflation is a scary word. We have seen the Fed and other monetary bodies around the world print money for going on eight years to offset the effects of deflation and yet it feels like the deflationary pull is stronger today than ever.

It may be that the diverging lines in that first graph are going to continue to diverge no matter what we do from a policy perspective. The advancement of our technological capabilities may drive down the costs of living dramatically and also drive down the amount of human work that is required to produce and sustain our current quality of life.

This is a big deal. And yet we hear almost nothing about this in the current political debate. We hear old school jobs programs from the left and shrink the government and cut taxes from the right. 

We hear hawks talking about carpet bombing the middle east but no mention of what happens to that region if the world no longer needs their oil.

I don’t expect much from the political process because it hasn’t given us much other than some high quality entertainment value, which may be its core function in society right now. Which is a sad thought.

But if I were advising Hillary, or Bernie, or Cruz, or Rubio, or, god forbid, Trump, I would get their heads wrapped around these global macroeconomic trends and what they might mean ten, twenty, and thirty years out and suggest they start talking straight with the american public about them. Because they have the stage right now and they are the conversation starters and we have to start talking about this stuff.

Songs That Stayed With Me In 2015

Year end music posts have been a tradition since this blog got started in 2003. For years I would post the top ten (or eleven or twelve) albums that I liked that year. Then as I moved away from albums to tracks, I started creating year end playlists. Here is last year’s playlist.

My music listening has evolved a lot over the twelve+ years of AVC. I was still listening to a mix of mp3s and streaming when I started blogging in 2003. I moved to streaming soon after that, mostly to Rhapsody, and then Rdio (which went under in 2015). But since USV invested in SoundCloud and I joined the board at the end of 2010, I have slowly but surely moved all of my listening there and I currently don’t listen on any other services anymore.

I love to listen to my SoundCloud feed (which is like a Twitter feed for music and podcasts) and favorite the songs that I like best. That’s the discovery mode for me. Then I listen to my liked feed a lot. That is my collection. I liked over 300 songs in 2015.

I went back over those 300+ songs this past week and pulled out the roughly 30 songs that were released in 2015 that have stuck with me throughout the year. These are my songs of the year. Enjoy.

Mantra

Having a mantra for your work is helpful.

Mine is “the VC’s job is to help entrepreneurs realize their goals and dreams.”

That doesn’t mean that every VC should have that same mantra.

To each his or her own.

But the longer I work in VC, the more I see misalignment between investors and founders.

And misalignment gets in the way of getting somewhere.

Koko

There are a number of unannounced USV investments that we have made over the years. They are unannounced at the request of the founder(s). One of them is having a coming out party today and I thought I’d write a bit about it today.

Koko is a mobile social network that calms your mind.

When we’re stressed it can be difficult to think flexibly. We get caught up in our own mind. We focus on the worst narratives – that we can’t do it, that we’re not good enough, that things will never get better.

On Koko, you share your stress anonymously and the community helps you think more flexibly about your situation. Because how we think about stress impacts how we feel, simply being shown other, less negative, ways to view the situation helps reduce stress.

Here’s a screen shot of an anonymous user sharing their stress and the community posting “rethinks” that help that user overcome the stress that is bothering them.

postreplies

Koko is the creation of Fraser Kelton, Kareem Kouddous, and Robert Morris. We’ve known Fraser since he was one of the early employees and COO of our former portfolio company GetGlue. Fraser met Robert who was at MIT Media Lab and Koko is the product of Robert’s PhD thesis on an innovative form of crowdsourced cognitive therapy that was developed at the Media Lab.

One of our primary investment areas right now is digital health and we have made a number of investments in this sector. Koko is one of them. At USV, we believe that our phones, connected to us, the networks that are on it, and the broader global internet, will have an enormous positive impact on our health and happiness. Mental health is right in the center of this thesis and we are excited about the potential of Koko to help people manage their mental health.

Work Life Balance

We’ve been in Europe since Oct 2nd. We are on a cross Atlantic flight returning to NYC today. In those 18 days we spent a week in Paris with our oldest daughter who was installing a show there for two artists she works for, a long weekend in Berlin with two other couples, two days in London, and wrapped with a long weekend in Paris and a board meeting yesterday before coming back.

The passport control agent in CDG today asked us if we were in Europe for business or vacation. The Gotham Gal answered “both, of course.”

If there’s anything we’ve mastered since our kids left home and headed to college and on to adult life it is the art of mixing work and time off.

Last night we had dinner with a friend in the VC business in Europe. The Gotham Gal had drinks with him and then I joined for dinner. They had a seed/angel discussion over drinks and we had a wider ranging discussion at dinner.

It is also great to do business travel, particularly long range business travel, with your spouse. I find being half way around the world in a hotel jet lagged to be a disorienting experience (Lost In Translation captured it well) and having my spouse along for the trip makes it much better for me.

I am happy to get home. I’ve missed my routine, my yoga, my local coffee shops, the Mets and Jets and Knicks games, my colleagues at works, our friends, and the creature comforts of home.

But being away makes you appreciate those things so much. There’s a world full of business opportunities and culture and things to enjoyed that you have to get on a plane and fly overseas to enjoy. We do that three or four times a year and it’s a great thing to do.

TPP

TPP stands for Trans Pacific Partnership, a far reaching free trade deal that US and our Asian trading partners have been working on for years. The TPP was in the news yesterday because Hillary Clinton came out and said that, in its current form, she cannot support TPP. You can read her reasons for taking this stance.

You would think as a free trade loving, free market loving venture capitalist I would be a huge proponent of TPP. But I am not.

I am very concerned about the copyright provisions in TPP which feel very much in the old world model of intellectual property protection and which would make it hard for the US government to evolve copyright laws in an era of digital content, more open innovation, and remix culture.

The EFF has a great discussion of these issues on its website so instead of reciting them here, you can read a detailed discussion of the copyright issues in TPP here.

One of the problems with these big multi-national trade negotiations is that it is super hard to get everyone to agree on everything in them. That is why they are negotiated in secret and the end result is then voted yes or no in each country without any amendments.

I realize that perfect is the enemy of the good and you need to have a comprehensive view of a trade bill like this and not focus on one issue. But copyright law is a big deal for the innovation economy and if I were in Congress, I would be seriously thinking about voting no on TPP.

Kickstarter, PBC

I recall meeting Perry Chen for the first time in the old USV offices on the 14th floor back in 2009 shortly after Kickstarter launched. He and his partners Yancey and Charles were onto something, I was sure of that. But they wanted to do things differently. He told me that Kickstarter always wanted to do what they felt was the right thing. He told me they were not building the company to be sold. And so, he said, they needed investors who understood that and appreciated it. I told him that approach was welcome at USV and that we were eager to figure out if there was another way to do things too.

Six years later, Kickstarter has formalized those desires and commitments into its corporate charter and in the process has reincorporated a Public Benefit Corporation (PBC) under Delaware law.  A Benefit Corporation is different than a “B Corp” because it involves formally amending the company’s charter and being recognized as such under the law.

I encourage you to read their new charter as it outlines the things they will hold as dear as shareholder value and be held accountable to and report on annually. And you should also read their interview with the New York Times where they explain why they did this.

There are those who say that Benefit Corporations and venture capital are not compatible. We don’t agree and we think companies that align their values with their customers and communities will benefit over the long term, not suffer. And that alignment can produce value for shareholders sustainably and profitably. It is worth noting that not one of Kickstarter’s angel investors, venture investors, employees, and board members who own shares in Kickstarter dissented on the vote to convert to a PBC.

None of this should suggest to you or anyone that Kickstarter is not a for-profit business. It has made money since its second year of operation. Profits give it sustainability without the need to finance the business externally. And profits can enrich its founders, employees, and investors. But these profits are not the only goal of Kickstarter. The company exists to bring creative projects to life and that mission drives the company as much, or more, than the profit seeking motive.  

My partner Albert has written a lot about Benefit Corporations and has worked with the State of Delaware to ensure that their statutes are workable for entrepreneurs and the investors who support them. USV is a fan of Benefit Corporations and we are thrilled that Kickstarter has successfully converted into one and codified their values and commitments for the long-term as a Benefit Corporation.

Ten Years Of Techmeme

If you were blogging about tech in September 2005 when tech.memeorandum.com launched, you knew about it and you read it. There was a time when AVC posts would regularly be on Techmeme and AVC would regularly be on its leaderboard. That has not been the case for years but I still read Techmeme every day. It is as valuable a source of news for me as anything else.

Gabe wrote a short post about Techmeme yesterday on its 10th anniversary. There are few things in there that I’d like to react to.

  1. Techmeme’s original goals were to “1. Recognize the web as editor, 2. Rapidly uncover new sources, and 3. Relate the conversation.” These are awesome goals and made the site what it was and what it is. Techmeme does a better job at number 3 than anything out there, ten years after showing the world how it is done. Sadly they do not do a particularly good job at number 2 and have not for years. Gabe tacitly acknowledges this with this bit “However, as Techmeme became the first stop for tech news for a growing and influential segment of the tech industry, other goals became imperative too. In particular: strive for comprehensive coverage of the day’s most significant tech stories, and post big, breaking news story quickly.” I can get the “big breaking news” anywhere and don’t value Techmeme for that. But I understand that others do and frankly Techmeme can and should do whatever they think makes for the best site for the largest audience. But I do miss the time when solo bloggers made up most of the links. Those kind of voices are still out there and there really isn’t a great way to find them unless they are software engineers whose links show up on Hacker News.
  2. Techmeme survived each and every effort to supplant it. Gabe writes this “Later the phrase “Techmeme Killer” would appear fairly regularlyin headlines, most notably when Google itself introduced a would-be “Techmeme Killer”. Even after Techmeme survived Google’s Techmeme-killer, services like ePlatform and TechFuga would still elicit comparisons to Techmeme, while TechCrunch would later say of Tweetmeme, a Techmeme-like aggregator of tweets “If I were Gabe Rivera, I’d start worrying now”.” I’ve ranted on this before but nothing annoys more than the “xyz killer” headline. The fact is that that supplanting a category creator and market leader is not easy, as much as the media would suggest that it is, and Gabe and his team have done a terrific job of continuing to produce a great site day after day, year after year.
  3. Techmeme has never taken outside investment, allowing them to run the business as a “cashflow business” that creates a good living for the team. Gabe says this “I always hoped it would be possible to build and sustain Techmeme without the aid of venture capital or debt. Not so much because of real or perceived issues around independence or autonomy, not because “bootstrapped” is an impressive badge of honor, and not because I disliked investors (some of my best friends are VCs!) But rather because the media business we envisioned by its nature was just not destined to become the “unicorn” VCs always want, at least in its first of several possible iterations. So proving sustainability always seemed necessarily part of the plan. Moreover, in casual conversations with investors over the years most ideas for expansion suggested to me seemed destined to fail in my estimation (a fate borne out in a few cases by actual companies that carried out such plans).” Most businesses, including many that do raise VC including some we have invested in, should not raise VC. Kudos to Gabe for understanding that and financing his business another way (revenues).

Techmeme is an “internet treasure” to use the phrase my friend Mark taught me. I visit it every day. So do most of the leaders of the tech sector. It’s a fantastic resource and it’s been a pleasure to watch Gabe and his team build it into what it is over the years. Happy 10th anniversary Techmeme.