Video Of The Week: Building Global Companies Quickly

Bloomberg’s Emily Chang did a great interview with Reid Hoffman earlier this week. I first caught some of it on Bloomberg’s TV channel.  I cannot find the entire video but parts of it are available on Bloomberg and YouTube.

Here’s a segment I like where Reid talks about a course he’s teaching at Stanford on rapidly scaling global companies and how different types of companies require different strategies to do that.

Update: Emily sent me a link to the entire interview on Twitter this morning. It is here

Feature Friday: Google Now Stories

The Google Now app has slowly but surely become one of the most used apps on my phone. I use it to keep track of my favorite sports teams, stock prices, weather, travel times to my meetings, and, most importantly, stories I want to read. I have never told Google Now what I want to read about but using all that Google knows about me, and that is quite a bit, Google Now always has something interesting to read for me.

This morning there were roughly twenty story cards in my Google Now feed. They are an eclectic mix of stuff. This screenshot from my phone shows a small sample of them.

google now stories

I like the user experience of swiping the stories out of my feed after I’ve read them or if I don’t want to read them. I can also leave them in my feed to “read later” by not swiping them away.

I also like the “is this card useful” question that you see in the screenshot above. I’m not sure what causes that prompt but I always answer it because I know it’s making Google smarter about me.

I’ve tried many news apps over the years. None of them have ever stuck for me. Google Now stories has stuck. It’s really good.

Getting The Deal Done

There’s a scene in Ben Horowitz’ book The Hard Thing About Hard Things when LoudCloud was burning through cash and financing options were challenging and so they went public. The valuation of $450mm was much lower than they had hoped and getting the deal done was hard but they got it done. It saved the company and ultimately the company, after changing its name to Opsware, sold to HP $1.6bn.

Here’s the opening text from a story about that LoudCloud IPO:

Shares in the company climbed 15 cents, or 2.6 percent, to $6.15 on a volume of 15 million shares. This gives the company a market value of about $450 million, less than half the $1.1 billion it planned for in its earlier filings.

Thursday, Loudcloud raised $150 million when it sold 25 million shares for $6 each to large investors such as mutual and pension funds. Lead underwriters Morgan Stanley and Goldman Sachs twice changed the size of the offering to make it more appealing to investors.

Initially the company planned to sell 10 million shares, or a 9.6 percent stake of the company, at a range of $10 to $12. The terms changed to 20 million shares, or a 30 percent stake, at a range of $8 to $10 in mid-February. Thursday, the company altered the terms again, offering 25 million shares at $6 each, or 34 percent of the company.

“It’s desperation,” said Dave Nadig, a portfolio manager with, who said he will not buy the stock. “I think they’re pretty much standing on street corners trying to find people to buy. They need the $150 million to build their business.”

Sometimes you just need to get the deal done. When you are burning through cash and need to finance your company, the terms might suck, but the cash doesn’t. So you do the deal and live to fight another day. Marc and Ben did the right thing at LoudCloud and Jack Dorsey did the right thing at Square.

If you believe in your business and yourself, take the money and get back to work. A financing is not an exit. The price matters less than the cash most of the time.

Knee Jerk Reactions

Warning: This post is going to generate a debate in the comments that will likely be upsetting. Don’t wander into them if you can’t tolerate strong opinions. That said, free speech and passionate debate is a cornerstone of the world the terrorists want to destroy and I am proud of the fact that it happens here daily.


I’ve held back on commenting on the horrible events in Paris last friday night, thinking that I don’t have much to add to the discussion. But as horrible as that night was, the knee jerk reactions that are now coming out of the mouths of supposedly rational people are even more horrible. As my partner Albert asserted this past weekend,

Turning against Muslims or against refugees is a terrible response as it only confirms the apocalyptic ideology of the attackers

The knee jerk reactions of politicians and governments to terror attacks over the past twenty years have not helped the situation and have likely fed necessary energy into the jihad movement. I am not a student of martial arts, but I do understand the principal of using your opponent’s energy against them. I believe the terrorists are doing a wonderful job of turning the energy of the free world against us. And we have to stop letting them do that.

So what should we do instead? Drink champagne. Go to a football match or a Knicks game. Sit at a cafe and have an espresso. Go see live music or perform live music. Have sex with someone you love no matter what their gender is.

And what should governments do? I am with Albert that we should continue use our considerable investment in data science to infiltrate and understand these terror networks. I want to print something he wrote in that post over the weekend because I agree with it completely and can’t say it any better:

But I am staunchly for collective intelligence. Collective intelligence in this case against terrorism, but also more broadly against crime and most importantly as a basis for improving education and healthcare. I cannot see how society could avail itself of the benefits of collective intelligence in any form of government other than a transparent democracy. And conversely it makes no sense for democracy to deny itself those benefits.

Insisting on privacy because we fear our own governments will continue to pit citizens against secrecy-seeking governments in a spy versus spy society. Many will protest that we are already there. Maybe so, but why double down on a mistake? Snowden’s revelations have given us a unique opportunity to start over. I would pardon Snowden on those grounds alone.

Governments can and should tell their citizens what information they are collecting and how they are using that information. And companies should disclose which of these programs they participate in. Any and all such programs should have oversight by elected politicians and transparent reporting on their scope and effectiveness.

As for the potential for collective intelligence to help, we see it all around us on the Internet. From the uncannily accurate do you know so-and-so suggestions on Facebook and LinkedIn to the related products on Amazon. I can also observe the effectiveness of collective intelligence from behind the scenes in many of our investments and in particular with Sift Science which does fraud detection. Combining a lot of data really does work.

Democracy, human rights and progress through critical dialog and collective intelligence. We need all of those more than ever.

That’s what I think we should be doing. I do not think we should be demonizing religions and people seeking refuge. Demonizing is the behavior the terrorists want to see from us. We should not let them have that victory.

Long Roadmaps

I’ve been thinking a lot about entrepreneurs with long roadmaps recently. I blogged about this four years ago. And while I captured some of what is special and important about long roadmaps in that post, I don’t think it really does this issue justice.

So I’m back for more on this one.

A big vision is critical for a big success. You have to know where you want to be in a decade or more. That’s where the long roadmap comes in.

But the mistake most entrepreneurs make is the try to ship most or all of their vision in their first product. And that’s a terrible idea.

The best companies start with a very narrow product that nails something pretty simple but powerful. And then they go from there.

This is true in both enterprise and consumer applications.

A long roadmap is comprised of many short and focused roadmaps, each leading to the next one.

It’s like you want to drive from NYC to LA. You start by driving to Philly. Then you drive to Pittsburgh. Then Cincinnati, then St Louis, then Kansas City, then Denver, then Salt Lake City, then Las Vegas, and finally you drive to LA. Each trip is its own thing and you plan it out carefully and then execute it with focus and energy, not thinking about where you want to end up beyond the next city.

Another good analogy is a basketball season. You want to win the NBA championship. But you get there one game at a time.

I was emailing with an entrepreneur last night who has a long roadmap. And we were discussing this very thing. He said he was very patient. And I replied that building a great company is a combination of patience and impatience in equal doses applied unevenly. Impatient short term, patient long term.

A long roadmap helps you be both.

The Blurring Of The Public And Private Markets

Five or six years ago, as the USV team was discussing the evolution of late stage financings and secondaries on the venture landscape, our partner Albert described something to us that was, in hindsight, very prescient. He said “there is no reason why there is such a bright line between public and private markets, we should have one market where the more a company discloses, the more liquid their security becomes” (or something like that). His point was that the only thing that really matters is how much information a company is willing to disclose.

We are increasingly seeing what Albert described to us come to pass. The ability to raise large sums of capital from public market investors has been available to privately held companies for a number of years now. There is no real difference between the public markets and the late stage growth markets in terms of availability of capital. That was not true a decade ago.

With the recent SEC adoption of Title III of the Jobs Act, non-accredited investors can start investing in private companies. There are limitations and reporting requirements which will certainly limit the adoption of Title III fundraising, but even so, we have crossed a threshold here that should lead to more individuals investing in privately held businesses over time.

Privately held companies are increasingly using electronic stock ledgers (like the one our portfolio company eShares offers) which allow them to easily manage a large and rapidly changing cap table, much like the function that brokers and transfer agents provide in the public markets.

So, as you can see, we are slowly witnessing the blurring of the lines between the public and private markets.

But maybe the biggest “tell” is the recent brouhaha over Fidelity’s public markdowns on its holdings of well known startups. One of the many reasons companies don’t want to go public is they don’t want to have to deal with a valuation that moves around all the time without their ability to manage it. Well guess what? If you raise from certain investors in the late stage growth market, you are doing that, even if you didn’t realize it.

I don’t think we will see less of these public markdowns. I think we will see more of them. And we VCs are now facing the choice of whether to markdown our portfolios in reaction to Fidelity’s markdowns or explain to our investors and auditors why we did not do that. Since our quarterly holding values don’t really matter to us (cash on cash returns are what matters), it’s easier to markdown than discuss why we didn’t do that.

It’s interesting and noteworthy that when the private capital markets got the benefit of large pools of capital coming in, that came with increasing transparency. Of course it did. We just didn’t realize that was going to happen. Staying private won’t shield you from the pains of going public. Because the lines are blurring between the private and public markets and we are in for more blurring and it will come faster in the coming years. Be careful for what you wish for, you may just get it.

Silicon City

The New York Historical Society’s Silicon City exhibit opened last week and I went yesterday with my daughters who are in their early/mid 20s now.

If you are a student of or have an appreciation for the history of technology, you will enjoy this exhibit. They have an early IBM computer which I’d never seen in person. There’s a ton on the history of IBM, the original NYC tech company, which I loved, including these manuals from the 1970s:

2015-11-14 15.11.04

My oldest daughter asked me if I knew Basic. I told her that Basic was the first language I learned and Fortran was the second.

There was a nice mention of Grace Hopper, one of the early computer scientists and one of the authors of the Cobol programming language. It was great to see my girls realize that women were at the forefront of computer science in the early days. That fact is lost on so many.

We also loved the videos on the early history of making art, music, and games on computers. If you came of age in this millennium, it’s mindblowing to see what a computer game looked like in the 60s and 70s. The videos on the early attempts to make art and music on computers are also particularly well done.

It ends with some videos about the re-emergence of the NYC tech sector in the 90s. I participated in the recording of oral histories along with some friends and colleagues from that era. It is fun to remember what the NYC tech scene was like in the mid 90s. It seems like yesterday but it was twenty years ago.

If you have kids who are into tech, they will enjoy this exhibit. And if you are a geek like me, you will too.

Video Of The Week: Solidarity

I woke up thinking about the french and I’d like to communicate my solidarity with them.

This video says it best for me

Fun Friday: Daily Fantasy Sports Services Debate

The NY State Attorney General shut down FanDuel and DraftKings earlier this week, saying this:

Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers … Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country. Today we have sent a clear message: not in New York, and not on my watch.

So, let’s debate this in the comments and we can use the new Twitter polls to quantify the debate.

New York FinTech Innovation Lab 2016

I’ve written about New York Fintech Innovation Lab here at AVC a bunch of times. It’s a great three month long program where entrepreneurs get mentoring on their businesses from executives at 25 large financial services companies including teams from the insurance, hedge fund, money management, and payments sectors, as well as teams from the 10 original money center banks who helped to found this program.

If you are starting or building a company that is focused on the fintech sector and would like some help on strategy, product market fit, and business development, this is a great program to consider.

The 2016 program application deadline is December 3rd, three weeks from today. You can apply here.

And there is an information session this evening at 5:30pm downtown at 1 Battery Place. Details and sign up are here.