Funding Friday: The NYC Mayoral Race

In less than four months, the Democratic Primary will effectively choose the next mayor of NYC. For those of us who live here, this will be a very important choice. Though the race is partially funded by NYC through matching of small donations below $250, the candidates need more funds to get out their message, connect with voters, and help us make the best choice we can.

If there are candidates you like and want to support, here are some links to the donation pages of the most popular candidates. The Gotham Gal and I have financially supported most of these campaigns.

Andrew Yang

Maya Wiley

Eric Adams

Kathryn Garcia

Shaun Donovan

Ray McGuire

Scott Stringer

Dianne Morales

If you live in NYC and have the means to support the political process, I encourage you to do so and get behind some of these candidates.

#NYC#Politics

Ten Years And Just Getting Started

I remember meeting Zach Sims and his co-founder Ryan Bubinski back in 2011 when they started Codecademy. Zach was still in college and thinking of dropping out to focus on the Company. I just realized this morning that it has been ten years since then. Wow. Time does fly.

Like many great companies their idea was simple, but powerful.

build the easiest way to learn to code

They did that and they have gone on to build a large and profitable business helping anyone learn to code, get a job, and start a career.

But it isn’t as simple as that. In fact, when you look at the ten-year history of the Company that Zach lays out in this great tweetstorm, you see how hard it is to build something lasting, sustainable, and important.

What is more impressive is that when you read this blog post Zach wrote this week you see that he is just getting started. When building long-lasting companies, it helps to have a mission that really matters. This line from Zach’s post brings it home for me:

Times like these remind us that what we’re doing matters: hundreds of thousands of people around the world use Codecademy every single day to learn the skills they need to find jobs, upgrade their careers, and live better lives.

The world is changing quickly before our eyes, the job market is changing with it. Our educational institutions are trying to evolve to meet the needs of students and employers but it is hard to turn a battleship around. So companies like Codecademy are filling in the gaps, helping people learn the things they need to learn, and building some incredible businesses along the way.

To another ten years!

#entrepreneurship#hacking education

QR Codes

QR Codes have been with us for as long as there has been a commercial Internet. They were invented in 1994 in Japan for use in the automotive industry. QR stands for “quick response” and a QR code is a barcode that can contain a lot of data and be read very quickly.

But QR codes kind of languished over the last twenty-five years, certainly in the US. They seem to be much more popular in Asia.

I think that all changed during the pandemic. In an era when stores and restaurants wanted to maintain as much social distance as possible, I saw QR codes popping up everywhere. Most of us are now very proficient scanning a QR code on our phone and getting taken to a web page.

I spent some time this morning setting up Nest Protect smoke alarms in our home. The setup process is very slick. You scan the QR code on the back of the smoke alarm and the app does the rest of the work. No more manually typing in MAC addresses or some such thing.

Now that we are all much more comfortable with QR codes, we will see them being used for more and more things. They are a very powerful way to quickly transfer information between a physical object and a phone.

#mobile

Remote Learning

I wrote this in yesterday’s post:

Remote learning is here to stay.

I got a bunch of emails and tweets from parents saying that they want their kids back in school. So do I!!! I think getting kids back in school is the single biggest thing we can do to put the pandemic in the rear view mirror.

I should have been more clear about what I meant by that line.

I meant that when kids are sick, they can stay home and still learn.

I meant that when there is a snow day, kids can stay home and still learn.

I meant that when kids have trouble with their homework, maybe there is a way they can log on and get help.

I meant that summer school could happen anywhere, maybe even at sleepaway camp.

What I meant by “remote learning is here to stay” is that we now understand that learning can move from the classroom to anywhere and back and does not need to be constrained by place and time. That’s a huge thing to learn and I think K12 education (and higher education) will benefit enormously from it.

But I am all for getting kids back into the classroom as soon as possible.

#hacking education

The Light At The End Of The Tunnel

In my Jan 1st post talking about what I expected to happen this year, I wrote:

I think we will see the end of the Covid Pandemic in the US sometime in the second quarter. I believe the US will work out the challenges we are having getting out of the gate and will be vaccinating at least 40mm people a month in the US in the first quarter. When you add that to the 90mm people in the US that the CDC believes have already been infected, we will have well over 200mm people in the US who have some protection from the virus by the end of March.

Seven weeks later, it seems like that is pretty much what is playing out. I have read that about half of the population of the US now has some protection against the Covid 19 virus, either via having had the disease or by being vaccinated at least once. At the current vaccination rate of 1.8mm a day, the number of people who have at least some protection against the Covid 19 virus will be about 70% by the end of March.

What that means is the virus will spread less, infecting less people, and less folks in the hospital or worse. I believe that means a gradual re-opening of the economy throughout much of the US in the second quarter with schools, stores, restaurants, and nightlife coming back. I am sure that precautions will continue for much, if not all, of 2021 because nobody wants to take this lightly after what we have all been through.

If that is in fact the case, and we don’t know for sure that it is, what does that mean for the economy, businesses, tech, and more?

I wish I knew. But I have some suspicions.

As I have written here quite a few times, I believe that habits that we have formed in the last twelve months will stick with us even when we don’t need to use them anymore. I believe work from home has proven to be very effective for some, possibly even a majority, of knowledge workers. E-commerce has delivered (no pun intended) and the gains it has made against in-store retail will not be given back much, if at all. Remote learning is here to stay. So is telehealth.

I also believe that the things we have not been able to do in the last year; travel, be tourists, see live music, live theater, live sports, and all of that will be in more demand than ever. As Joni Mitchell said, “you don’t know what you got until it is gone.” We want all of that back and I think we will embrace being with others experiencing things in the real world with a passion.

But where all of this lands is anyone’s guess. And there are many businesses whose near-term fortunes depend on how the balance of remote vs in-person lands over the rest of 2021.

I also think a re-opening may not be great for the stock market, which was a major beneficiary of the pandemic. The NASDAQ is basically up 100% since March 20, 2020. I wrote a bit about why I think that might be the case last week. I don’t know how quickly a re-opening will impact the stock market, but I do think it could.

But let’s not get negative here. And end to the Covid pandemic and a re-opening of the economy would be about the best thing that could happen to the US and the world and I am becoming more and more optimistic that it will start happening in the second quarter of 2021.

#Current Affairs#economics#employment#stocks

Going Off Grid

It is terrible what is happening to people in Texas and other parts of the country where this super cold snap has caused power outages and freezing cold temperatures in their homes.

But it is also a reminder that we need not be reliant on the grid. In fact, we should figure out how to reduce our reliance on the grid when things like this happen.

Until recently, that generally meant a generator that is powered by oil or gas. And that is still a good thing to have when the grid becomes unreliable.

But there are also new ways of doing this with solar and batteries.

A Sonnen Eco battery can store up to 20kWh. A Tesla Powerwall stores 13.5kWh.

A fully electrified home, heated and cooled with energy-efficient heat pumps, would consume on average 20kWh per day to heat and cool the home in a moderate climate. Rooftop solar could produce that or more on most days on sunny days.

A home that is fully electrified and has rooftop solar could operate off grid many days. Adding a battery means that the home could also operate off grid at night.

And when the grid goes down, the combo of solar, battery, and a heat pump could allow a home to stay warm (or cool) for as long as necessary.

I have been drawn to this model of resilience and have been working towards it personally for a while now. I think what is happening with the weather out there might be the catalyst for many more to think this way.

#climate crisis

Secondary Markets

Buying something from the creator or issuer is often called the “primary market.” Reselling it to someone else is often called the “secondary market.” I have spent my career in the primary market, buying equity from very young companies and holding it for many years usually until a sale or IPO. That has worked well for me over the years but recently, I have watched a vibrant secondary market develop for private company shares and I think that is a good thing as I believe more liquidity is better than less liquidity in most, maybe all cases.

I was reminded of this yesterday when I purchased tickets to a Knicks game against the Warriors next week at Madison Square Garden. As a season ticket holder, I was able to get into a pre-sale to purchase two of the two thousand seats that will be available at that game, the first Knicks game at MSG with fans in almost a year.

Those tickets come with some very serious, and appropriate requirements including obtaining a negative Covid PCR test within 72 hours of the game. After discussing the requirements with my son last night, we decided it wasn’t for us and I put the tickets on StubHub. Although I probably could have and should have marked them up, I just wanted my money back and the tickets sold in a matter of minutes and I was made whole.

I knew I could do a secondary sale when I purchased the tickets and I also knew that as a season ticket holder, I had the ability to buy when others could not, and that I had to move quickly. Knowing that I could resell them took the risk out of moving quickly and I was able to do that with confidence.

That’s an example of how secondary liquidity reduces risk and increases trust and confidence in a market.

Going back to startup equity, I believe that we will continue to see more and more secondary liquidity for startup equity. Our portfolio company Carta has recently launched a market for exactly that called CartaX and I believe it will be an important source of secondary liquidity for founders, employees, and investors in startups. As we de-risk the investments of time and money that everyone is making in these startups, I believe that will draw more talent and more capital to the startup sector.

And that is a good thing.

#entrepreneurship#VC & Technology

How This Ends

We are in the middle of one of the great asset bubbles of modern times. It has been brought on by the easy money policies of central banks around the world aimed at weathering the global Covid 19 pandemic. Interest rates are near zero or negative in most developed economies and asset prices have gone way up as a result.

When interest rates are zero or negative, the value of future cash flows is huge and that is how you get PE and EBITDA ratios of over 100 and price/revenue multiples approaching 100.

The big question is how does this end?

I believe it ends when the Covid 19 pandemic is over and the global economy recovers. Those two things won’t necessarily happen at the same time. There is a wide range of recovery scenarios and nobody really knows how long it will take the global economy to recover from the pandemic.

But at some point, economies will recover, central banks will tighten the money supply, and interest rates will rise. We may see price inflation of consumer goods and labor too, although that is less clear.

When economies recover and interest rates rise, the air will come out of the asset price bubbles that have built up and the go go markets will hit the brakes.

When will that happen? Your guess is as good as mine. It could be later this year. It could be in a few years. It could take longer. A lot of damage has been done to the global economy and it is unclear how quickly it can recover.

A good chart to watch is the one year treasury bill.

When the one year treasury yield gets back above 2%, we are leaving the easy money era. We aren’t close to that right now.

#Current Affairs#economics