Amino

At USV, we have always been interested in communities. They are, in some ways, the iconic representation of our “large networks thesis”. We have been impressed by communities like Reddit, 4chan, and Hacker News. We love what our portfolio company Disqus has done to turn blogs like this one into vibrant communities. And we have turned our own website at USV into community, using Disqus and Twitter and link sharing.

We’ve long wondered what a native mobile community looks like. A few months ago we saw one when the two founders of Amino came into our office. They have built an app constellation of native mobile apps, each focused on a niche topic (like a subreddit). Examples are Minecraft, K-Pop, and Anime.

My partner Andy wrote a short post on USV.com about our investment in Amino yesterday. If you want to see what the future of communities might look like check out Amino. We are intrigued and excited to see how this plays out.

The Basic Income Guarantee

My partner Albert has begun a series of blog posts on a concept called The Basic Income Guarantee. This is fundamentally different than a minimum wage. It is essentially a safety net for a world where robots will be doing more and more of the manual and difficult labor that has, until now, provided income for unskilled workers.

I don’t have a formed opinion on this idea. I know that welfare didn’t work out too well in the last century. So I’m nervous about any system that encourages or incents people not to work. But if we really are headed into a world where there aren’t any low skilled jobs, then I guess we need to be talking about ideas like this.

All of Albert’s posts on this topic are here.

Silicon Valley: A Place Or A State Of Mind?

Marc Andreessen, as is his wont, posted a tweetstorm this morning that was a spirited defense of Silicon Valley. It starts with this tweet:

One thing I always think about in reading things like this is the use of the phrase “Silicon Valley” or SV as Marc uses in his tweetstorm. Let’s look at this tweet:

Does Marc mean “move to Silicon Valley” or does he mean “do a startup or join one and work on this stuff”?

I actually don’t know what Marc meant by his use of SV in this tweetstorm, but having spent 25 years in the tech/startup/VC sector and having done that time outside of Silicon Valley (the place), I am sensitive to the use of those words and always wonder.

We have about a third of our portfolio in the bay area. We have about a third in NYC. We have about a third elsewhere with a large concentration in Europe where I am heading in a few weeks to attend several board meetings. I like to think of the tech startup ecosystem as a global movement. We don’t invest in Asia, South Asia, or Latin America but I see more and more interesting things coming from those regions these days.

Silicon Valley is most certainly a mindset and it is one that is infecting large swaths of the global economy. I agree with Marc’s tweetstorm, in particular this one.

And I think, when applied to the global startup ecosystem, he is absolutely right.

MayDay PAC

Today, July 4th, the anniversary of the day in which our founding fathers signed the Declaration of Independence, is also the final day of a crowdfunding campaign to raise $12mm for a Super PAC to fund campaign finance reform.

This campaign is called MayDay and the person behind it is Larry Lessig.

The idea is to use the $12mm to make campaign finance reform the fundamental issue in five high profile congressional races and win them.

If that works, then May Day PAC will crowdfund a much larger amount in 2016 and do this again in a lot more races.

Larry’s assertion is that the vast majority of americans want big money out of government, but the small number of people with the big money don’t want that to happen and they are calling the shots now.

He believes that the best way to fix that is for everyone with small amounts of money to come together and put together some big money and go toe to toe with them.

I think it is an interesting idea and when Larry raised the first $1mm from the crowd, the Gotham Gal and I participated in the small group that matched the first $1mm. We can and do write big checks to politicians because that’s the way our corrupt system of government works right now. We are happy to write big checks to change that system and make it right.

The second part of the crowdfunding campaign is seeking to raise $5mm and then get that matched in the same way the first $1mm was matched.

With one day to go, the campaign is short by about $1.5mm. It would be amazing if the american public celebrated July 4th by coming up with the final $1.5mm.

If you are so inclined, you can help do that here.

Coinbase Vault

If you want to buy some Bitcoin and store it online and have it on your Android phone or your iPhone, then our portfolio company Coinbase has the product for you.

But what if you own a couple thousand Bitcoin? That’s $1.3mm of Bitcoin at today’s price. Well then you might want something more secure.

Yesterday Coinbase announced Vault, a more secure offering designed for people who own a lot of Bitcoin and want to protect it and are willing to put up with more security as a result.

Like the core Coinbase wallet offering, Vault is free. It is being rolled out now and about 5% of Coinbase’s customers have it already. Coinbase told Coindesk that all Coinbase users will have access to Vault by mid July.

I like to think of Coinbase as the bank and brokerage firm for Bitcoin. They have checking accounts (wallet), CD/savings (vault), brokerage (buy/sell), and merchant services.

And more is coming. Stay tuned. I will keep you posted.

Songza

So yesterday it was announced that Google has purchased Songza. Congratulations to Elias Roman and his colleagues. They build a great product and sold it to a great company.

But I’d like to take a second to tell the story of Songza as I know it. I am sure there are lot’s of parts of this story that I don’t know but the parts I do know make for a great story and now is a good time to tell it.

A few Brown University students had a great idea in 2006. They felt that mp3s should be priced based on demand not on a fixed price. So they started a company called Amie Street and built that service.

I first met them at some point after they had graduated from Brown and moved to NYC. I liked the idea a lot but was hesitant to invest. Others were not and they raised some money and chased that dream.

At some point Amazon got involved, I think as an investor. The Amie Street model ultimately did not pan out and in 2010 it was sold to Amazon. I don’t know the terms of that transaction but it did allow the team to stay together and work on a something else.

Long before the sale to Amazon, in October of 2008, Amie Street acquired Songza, a music app that was built by Aza Raskin and Scott Robbin.

After the sale of Amie Stree to Amazon, the team focused on Songza and iterated on it for a few years until they landed on the concierge user interface that helped popularize Songza.

I started using Songza in early 2012 and have been actively using it ever since.

I have three modes for listening to music and a primary services for each.

Passive – Songza, Intent Based – Rdio, Discovery/Social – SoundCloud. I use Songza the way most people use Pandora. And I use it mostly on my various Sonos systems.

But back to the story of Songza. Over time Songza built a popular music service and they raised some more capital in the fall of last year. We spent some time with them during that process but we were already knee deep in online music with Turntable (RIP) and SoundCloud.

Every interaction I’ve had with the Songza team has been fantastic. They are great people. And every interaction I’ve had with the Songza service has been equally good. Which furthers my view that great people build great products.

I wasn’t surprised to see that they sold to Google. The streaming music business is hard. And the big platforms understand that music is a great audience builder and retainer. And Google has been a great home to great products (YouTube, Android, Nest, etc).

So that’s the end of my story. It has a happy ending.

If there is a moral to this story it is that tenacity pays off. The Songza team graduated from college eight years ago and worked on two separate services over that time with a fair bit of success and failure. They hung together and built something that is very good. And they got a good exit. As JLM would say “well played.”

Reading Rainbow

If you were a child growing up in the 80s and 90s, you probably remember Reading Rainbow, a PBS television show that encouraged kids to read.

Well Reading Rainbow is back as a tablet app and is headed into homes and classrooms. The actor and now entrepreneur LeVar Burton is behind the resurgence of Reading Rainbow.

And LeVar is financing this new version of Reading Rainbow with a Kickstarter campaign that is its final stage (32 hours to go).

The initial goal of the campaign was $1mm and when they hit that in the first few days, LeVar raised it to $5mm and as of right now, they are about $300k short.

I backed this project a while ago and I think it is fantastic. I encourage everyone from AVC to check it out and back it if you are so inclined.

The Law Of Unintended Consequences

One of the great things about getting older is you see things over and over again and you start to understand. That’s called wisdom I guess. One thing I have seen over and over is that the best of intentions often lead to unintended consequences that are exactly the opposite of what the good intentioned people wanted to happen. I like to call that the “law of unintended consequences” and it goes like this:

Whatever it is that you intend to do, you will likely do the exact opposite

I was reminded of that when I read Marc Andreessen’s comments on Sarbanes Oxley (and IPOs in general) in this interview in Vox. Marc said:

The irony of Sarbanes-Oxley was that it was intended to prevent more Enrons and Worldcoms but it ended up being a gigantic tax on small companies.

Sarbanes Oxley and Regulation FD were an attempt to make the stock market safer for the average investor. What it did is make the stock market less attractive for the average investor by removing the best investment opportunities from the market.

Marc lists investments like Netscape, Microsoft, Oracle, HP, and IBM as companies that went public at relatively small valuations and grew their valuations in the public markets. I would add Apple, eBay, Yahoo!, Cisco, and a host of other silicon valley success stories to that list.

The Vox piece points out that:

Twitter waited until it was worth about $25 billion before it went public last year. Facebook was worth more than $100 billion when it had its IPO in 2012.

Dropbox did a private financing recently at $10bn, Uber did a private financing recently at $17bn, Airbnb recently did a private financing recently at $10bn. All three of those deals could have and would have been an IPO in the 1980s or 1990s.

The public markets are not as attractive to emerging high growth companies as they used to be. The private markets have accumulated enough capital to support the growth needs of high potential companies and IPOs are no longer being used to finance growth. They have now been relegated to liquidity paths for the most part. And Marc explains why in this part of the interview:

But for young companies, everything is connected: stock price, employee morale, ability to recruit new employees, ability to retain employees, ability to sign customer contracts,  ability to raise debt financing, ability to deal with regulators. Every single part of your business ends up being connected and it ends up being tied back to your stock price.

I have lived through this (being public while you are still building the company) and it is not easy. You really want to wait until you’ve got everything very buttoned up before you run the gauntlet that is the public markets.

Of course the important question is can we go back to the way it was before the federal government messed things up with all of their good intentions. I think the answer is no. We are not going to put that genie back in the bottle.

But I do think there is another way to fix this mess and it is already happening. As my partner Albert likes to say “the line between the public markets and the private markets are blurring”.  Platforms like AngelList and our portfolio company CircleUp are allowing individual investors the opportunity to invest in startups and the amount of capital that is being invested on these platforms is growing very quickly.

If the regulators keep their hands off these new emerging markets and let them develop naturally, we will eventually fix this problem. Let’s hope they have learned their lesson from the fuckup that was Sarbanes Oxley and Reg FD and don’t try to help us out again.