I support a bunch of artists on Kickstarter’s new Drip service.
One of my favorites is Shantell Martin.
She draws her dreams and makes music and shares her work regularly with her backers.
It’s great to get a little bit from her on a regular basis.
So the chips we use in our personal computers and cloud computers have some newly discovered security holes. One is called Meltdown. The other is called Spectre.
My first reaction upon hearing the news yesterday was “so what do we do about this?”
The answer is you can’t do much on your own.
For Meltdown, we need the operating system and hardware manufacturers to issue patches and firmware upgrades. I am sure they are furiously working on them.
The Verge has a good piece on what we can and should be doing about this.
Here’s the key part of that post:
- Update to the latest version of Chrome (on January 23rd) or Firefox 57 if you use either browser
- Check Windows Update and ensure KB4056892 is installed for Windows 10
- Check your PC OEM website for support information and firmware updates and apply any immediately
I expect Apple will be issuing an update shortly for their OS.
Apparently Microsoft, Google, and Amazon’s cloud services are already patched for Meltdown.
As for Spectre, apparently there are no fixes for it as of now, but it is also a lot harder to implement hacks using that one.
Finally, my partner Albert has some optimism about all of this. We should expect some good to come of this mess.
We do a lot of referencing in our business. We certainly ask around about a team before investing in them. But we do even more referencing post investment when we help the founders and management of our portfolio companies build a team. Investors often have access to references that founders and management don’t. So we can add a lot of value to the hiring process by reaching out to our network and asking about people.
The thing I have learned in thirty plus years of making reference calls is to pay attention to how things are said more than what is said. And pay particular attention to what is not said.
I have also learned to call people instead of sending emails. Most people don’t want to put negative things in writing, but will do so on the phone, particularly with someone they trust.
It is also helpful to talk to people with knowledge of a situation but not handcuffed by it. For example, a CEO may not feel comfortable saying something negative about someone they transitioned out of their company, but a co-worker might be. Or a close friend of a co-worker might be.
I don’t mean to suggest that references are all about finding out the negatives. You should also seek to hear what someone’s strengths are. Most people are good at some things and not so good at other things. Getting a sense of strengths and weaknesses and making sure the person is a good fit for the role is what referencing a person is all about.
But I do believe strongly in hearing the negatives when hiring someone. If you can’t find anything negative about someone, that is a red flag to me. Often negatives in one situation can be positives in another.
If someone says to me, “they were great when the company was small but got lost as the company scaled” that means that person is great at the very early stages of a company’s development. And that is often the most valuable time in a company’s life. Finding people who can operate in that environment is not easy. So I like hearing that about people. I know where to orient them.
I am not a fan of calling the references on someone’s list unless I know those people well. What I do instead is figure out who I know well that knows the person or knows someone who does. And then I reach out and call them. It’s more work but it yields much better results.
I am also a believer in having a group of people do the referencing. Getting multiple angles of attack on a situation is valuable and multiple people will have a much bigger network of close relationships to leverage.
I am not a fan of referencing by checklist questions. I have been on the other end of calls where the person is reading from a list of questions. That strikes me as an odd way to do a reference check. I think a conversation where you can dig into the meat of the issue in a natural way works a lot better. At least it does for me.
Finally, I think you should wait until you have a good sense of the person and are seriously considering them for the role before doing the references. The more information you have about the person and their potential fit for the role, the better your calls can be. But you don’t want to wait too long. If there is a big red flag on a candidate, you want to know that before you spend too much of your time and their time on the hiring process.
Referencing is an art more than a science. Getting people on your team and around you (on your board, your advisors, your investor group) who are good at it can be super helpful. And don’t forget to reach out and use them in your hiring process. It can make a huge difference.
I saw this tweet in my timeline yesterday and thought “what a great way to start the new year.”
1st day of the year has to be inbox 0
I’ve declared email bankruptcy.
— Oo Nwoye (@OoTheNigerian) January 1, 2018
I had 1,625 unread emails in my inbox this morning.
I have archived all of them that came in during 2017.
If you sent me an email in 2017 and did not get a reply, you won’t.
I am starting the year fresh. It feels good. Thanks for the suggestion OoTheNigerian.
This is a post that I am struggling to write. I really have no idea what is going to happen in 2018.
- Will the crypto markets continue in their bull cycle? I have no clue. I was showing my daughter’s friend an app that helps people save and invest and he said to me “I don’t need that, I just buy some ETH every week.” I said “that’s a good plan until it isn’t.” I just don’t know when buying crypto will stop being a good idea. It was a great idea in 2017.
- Will the economy extend its eight year expansion? I have no clue. The longest post WWII economic expansion was 10 years from 1991 to 2001. Can this one beat that one? Maybe. Will this one also burst over the collapse of another tech bubble? Maybe. But again, I have no idea when that might come.
- Will the corporate tax cuts that are coming from Trump’s tax bill lead to increased hiring and investments, or will companies simply hoard that cash or pay it out in dividends? Likely a bit of both. But I think Wall Street has largely priced in the increased earnings so I’m not sure the tax bill will be a boon for the stock market in 2018.
- Will the current Internet oligopoly (Amazon, Apple, Facebook, Google) continue to take share from the rest of the sector, or will one or more start to falter? I’d like to see the latter, but I suspect it will be more of the former.
- Will the rise of massive growth funds (SOFTBANK, Sequoia, etc) lead to the best and brightest tech companies delaying IPOs even longer? The logical answer is yes, but I think the answer may be no. We see an increasing desire of founders in our portfolio to take their companies public.
- Will the tech backlash that I wrote about yesterday continue to escalate? Yes.
- Will we see more gender and racial diversity in tech? Yes.
- Will Trump be President at the end of 2018. Yes.
- Will the GOP lose control of Congress in the midterm elections. Yes.
- Will we avoid war with North Korea? I sure hope so.
So there you have it. Ten questions. A few predictions. A lot of unknowns. That is how I am going into 2018.
Happy New Year Everyone.
As has become my practice, I celebrate the end of a year and the start of a new one here at AVC with back to back posts focusing on what happened and then thinking about what might happen.
Today, we focus on what happened in 2017.
If you look at the Carlota Perez technology surge cycle chart, which is a framework I like to use when thinking about new technologies, you will see that a frenzy develops when a new technology enters the material phase of the installation period. The frenzy funds the installation of the technology.
2017 is the year when crypto/blockchain entered the frenzy phase. Over $3.7bn was raised by various crypto teams/projects to build out the infrastructure of Internet 3.0 (the decentralized Internet). To put that number into context, that is about equal to the total seed/angel investment in the US in 2017. Clearly, not all of that money will be used well, maybe very little of it will be used well. But, like the late 90s frenzy in Internet 1.0 (the dialup Internet) provided the capital to build out the broadband infrastructure that was necessary for Internet 2.0 (the broadband/mobile Internet), the frenzy in the crypto/blockchain sector will provide the capital to build out the infrastructure for the decentralized Internet.
And we need that infrastructure badly. Transaction clearing times on public, open, scaled blockchains (BTC and ETH, for example) remind me of the 14.4 dialup period of the Internet. You can get a taste of what things will be like, but you can’t really use the technology yet. It just doesn’t work at scale. But it will and the money that is getting invested via the frenzy we are in is going to make that happen.
This is the biggest story in tech in 2017 because transitions from Internet 1.0 to Internet 2.0 to Internet 3.0 cause tremendous opportunity and tremendous disruption. Not all of the big companies of the dialup phase (Yahoo, AOL, Amazon, eBay) made a healthy transition into the mobile/broadband phase. And not all of the big companies of the broadband/mobile phase (Apple, Google, Facebook, Amazon) will make a healthy transition into the decentralized phase. Some will, some won’t.
In the venture business, you wait for these moments to come because they are where the big opportunities are. And the next big one is coming. That is incredibly exciting and is why we have these ridiculous valuations on technologies that barely/don’t work.
The Beginning Of The End Of White Male Dominance:
The big story of 2017 in the US was the beginning of the end of white male dominance. This is not a tech story, per se, but the tech sector was impacted by it. We saw numerous top VCs and tech CEOs leave their firms and companies over behavior that was finally outed and deemed unacceptable.
I think the trigger for this was the election of Donald Trump as President of the US in late 2016. He is the epitome of white male dominance. An unapologetic (actually braggart) groper in chief. I think it took something as horrible as the election of such an awful human being to shock the US into deciding that we could not allow this behavior any more. Courageous women such as Susan Fowler, Ellen Pao, and many others came forward and talked publicly about their struggles with behavior that we now deem unacceptable. I am not suggesting that Trump’s election caused Fowler, Pao, or any other woman to come forward, they did so out of their own courage and outrage. But I am suggesting that Trump’s election was the turning point on this issue from which there is no going back. It took Nixon to go to China and it took Trump to end white male dominance.
The big change in the US is that women now feel empowered, maybe even obligated, to come forward and tell their stories. And they are telling them. And bad behavior is being outed and long overdue changes are happening.
Women and minorities are also signing up in droves to do public service, to run for office, to start companies, to start VC firms, to lead our society. And they will.
Like the frenzy in crypto, this frenzy in outing bad behavior, is seeding fundamental changes in our society. I am certain that we will see more equity in positions of power for all women and minorities in the coming years.
The Tech Backlash:
Although I did not get much right in my 2017 predictions, I got this one right. It was easy. You could see it coming from miles away. Tech is the new Wall Street, full of ultra rich out of touch people who have too much power and not enough empathy. Erin Griffith nailed it in her Wired piece from a few weeks ago.
Add to that context the fact that the big tech platforms, Facebook, Google, and Twitter, were used to hack the 2016 election, and you get the backlash. I think we are seeing the start of something that has a lot of legs. Human beings don’t want to be controlled by machines. And we are increasingly being controlled by machines. We are addicted to our phones, fed information by algorithms we don’t understand, at risk of losing our jobs to robots. This is likely to be the narrative of the next thirty years.
How do we cope with this? My platform would be:
- Computer literacy for everyone. That means making sure that everyone is able to go into GitHub and read the code that increasingly controls our lives and understand what it does and how it works.
- Open source vs closed source software so we can see how the algorithms that control our lives work.
- Personal data sovereignty so that we control our data and provision it via API keys, etc to the digital services we use.
- A social safety net that includes health care for everyone that allows for a peaceful radical transformation of what work is in the 21st century.
2017 brought us many other interesting things, but these three stories dominated the macro environment in tech this year. And they are related to each other in the sense that each is a reaction to power structures that are increasingly unsustainable.
I will talk tomorrow about the future, a future that is equally fraught with fear and hope. We are in the midst of massive societal change and how we manage this change will determine how easily and safely we make this transition into an information driven existence.
AVC community member William Mougayar sent me a video of a talk he recently gave in Moscow.
I really like the framework he articulates about half way through the talk regarding token 1.0 (where we are now) and token 2.0 (where we need to be before we will see real sustainable disruptive value creation with blockchain technologies).
Here is that bit:
If you’d like to watch the entire talk, you can do so here.
Our friends at TrueBit are trying to raise $250k to support Covenant House Toronto.
They have built a virtual Christmas tree and are accepting donations in Ethereum here.
The Gotham Gal and I have donated 5.5 ETH. Our donation may take a few days to show up on the leaderboard.
I am hoping those of you out there who are holding a lot of ETH might part with a little bit of it to help a great cause.
You can do that here.
This chart from eMarketer really brings it home.
We have a digital advertising duopoly.
The difference between second and third place is massive.
I don’t want nor do I expect any governmental response to this market failure.
I want to see the technology industry adopt new approaches to monetization, ideally not attention based models, to combat this.
I don’t think subscriptions are the only answer here, as many do.
We need models that support free consumption of media for many reasons.
I think the crypto sector has some answers for us but I am also looking elsewhere.
We need new approaches and we need them now.