Fun Friday: Office Art

We have some fun office art at USV. The most recent addition is an Electric Objects digital frame.

Here’s a short video of it in action.

If you have cool art in your office, or home, please share it with us.

The Great Decoupling

I saw this chart in a Harvard Business Review piece called The Great Decoupling earlier this week:

decoupling

 

The “decoupling” is the divergence between labor productivity and employment/wages that happened in the US in the 1980s and has become quite pronounced over the past thirty years. During the great postwar boom, productivity and wages grew in lockstep in the US. Of course, we don’t see any data from the 19th century and the first half of the 20th century so it’s not clear that labor and wages have always grown in lockstep. But something certainly changed in the 1980s and the result has not been good for median family income which has been stagnant in the US for almost thirty years now.

The chart and the HBR piece is the focus of work done by Erik Brynjolfsson and Andrew McAfee, faculty members at the MIT Sloan School of Management. They attribute this great decoupling to the emergence of “digital technologies.” I would imagine the initial decoupling had as much to do with globalization and the pressure on wages that global competition for jobs in many sectors created. But, as we’ve discussed here before, the mechanization of information work, which Brynjolfsson and McAfee call “The Second Machine Age“, will accelerate this trend and it already seems to be doing that.

When I showed this piece to may partner Albert, he responded with disappointment for the policy ideas that the professors put forth as potential solutions. Those ideas are; education, infrastructure, entrepreneurship, immigration, and basic research. Albert is right that those are not new or original policy ideas and though I spend a fair bit of time and money on three of them, I do wonder if they will not be enough. So does Albert and here’s a policy idea he has been suggesting.

Beam

We got something in our office last month that is a game changer. It’s a Beam Telepresence Robot that allows anyone who is authorized to take control of the robot, drive around our office, attend meetings, or pop into someone’s office for a conversation.

The use case I like best is attending meetings with the Beam. We have had a big screen in the front of our conference room with various videoconference applications on it for years. It works well but it never feels like you are sitting around the table with the rest of the group. With the Beam, you get that exact feeling. It’s the closest I’ve felt to being in the room from a remote location.

I also like being able to grab the Beam and take a quick trip around the office and check in with people while I’m away.

Here’s a video that shows four use cases. You will get a sense of it and how it works from the video.

We have the Beam+ which is really fine for our office. It’s $2000 and I am thinking we should get another so we can have two remote people in our conference room at one time.

We haven’t yet had entrepreneurs use the Beam to pitch us, but I’m sure that will happen soon. And I think it will be a better experience than coming in over the big screen in the front of the room.

What Can It Be Worth?

The thing I always think about when making an investment is not what it is worth, but what can it be worth. To determine what something is worth, you can look at comps (which I posted about here), or you can let the market tell you what it is worth by running a process.  But the really interesting number is not what it is worth today, but what it can be worth.

For this, you need to use your imagination. When we invested in Twitter, we had to imagine that hundreds of millions of people around the globe would use Twitter to find out what was going on, and that Twitter would be able to build an advertising business around that behavior that would result billions of dollars of annual revenue, and that Twitter would be able to generate positive cash flow on that revenue, and that the public markets would welcome Twitter and value it as a multiple of those revenues and that operating cash flow. We did imagine that, although to be honest, we did not imagine as big of a success as evidenced by the fact that we stopped investing in Twitter after three rounds, which was a mistake that, in part, led to the creation of our Opportunity Fund.

So when valuing a venture stage opportunity, you have to imagine the product can scale to be used by many more people, or companies, or both, than are using it now. For that exercise, you need to study the product, the roadmap, and the use cases and be sure that your imagination is possible and not delusional. You also need to figure out what an annual revenue per user (ARPU) might be and apply that to the potential size of the market. Then you need to study the economics of the business and figure out how much of that potential revenue might flow to the bottom line.

Finally, you need to figure out how the market might value that cash flow. That’s where a comps analysis might be valuable. But you have to factor in that the market might not be valuing companies when you exit in the same way they are now.

After you figure out what it might be worth, you need to discount that back by 3x, or 5x, or even 10x, to discount for the risk that none of this might happen.

When you do all of this work, in today’s environment, it’s hard to make an investment. Because often the math doesn’t work. Which tells me that many people aren’t doing this work.

A Hopeful Thought On Memorial Day

Much has been written about the potential to replace menial and dangerous jobs with machines. One of those dangerous jobs that is already being replaced by machines is the foot soldier. Over the past decade the US has ramped up its drone program and reduced the number of men and women we put in harms way in service of our foreign policy and national security goals.

It’s worth a national discussion about the morality and legality of using machines to take out our enemies. We haven’t had that as far as I can tell. And we should.

But the truth is we are fighting more and more of our warfare with unmanned machines and the trend is clearly in that direction. It’s hard for me to see how we turn around and go back.

So while it is not entirely clear to me how this plays out over time, it does suggest that we may be burying less of our young men and women in military cemeteries in the coming years. Which is a hopeful thought on this memorial day in which we remember our fallen soldiers.

Rinse And Repeat

I’d like to call out a really great blog post (and talk) my colleague Nick Grossman delivered last week. He called it Venture Capital vs Community Capital, but to me its about the endless cycle of domination and disruption that plays out in the tech sector. This bit from the post rings so true to me:

So there’s the pattern: tech companies build dominant market positions, then open technologies emerge which erode the the tech companies’ lock on power (this is sometimes an organized rebellion against this corporate power, and is sometime more of a happy accident).  These open technologies then in turn become the platform upon which the next generation of venture-backed companies is built.  And so on and so on; rinse and repeat.

So, all that is to say: this is not a new thing.  And that seeing this as part of a pattern can help us understand what to make of it, and where the next opportunities could emerge.

Nick wrote the post and did the presentation for the OuiShareFest, an international gathering of folks interested in the peer economy. Nick starts out noting that the early enthusiasm for the peer economy has moderated with the understanding that a few large platforms have emerged and have come to dominate the sector.

Nick’s presentation and post, therefore, was a reaction to those emotions and a reminder that what goes around comes around eventually. That is certainly what I have observed in the thirty plus years I’ve been working in tech. Rinse and repeat. Same as it ever was.

The Apple Watch – How Is It Doing?

Continuing my obsession with the Apple Watch, a device I don’t own and don’t intend to own, I’m curious how its doing.

I read a report yesterday that suggested the early sales are disappointing and that a respected research firm has cut first year sales projections to 15mm watches although Morgan Stanley still has their estimate at 36mm watches.

But more than how it is selling, I am curious how it is doing with those of you out there that bought it.

If you own an Apple Watch, please complete this short survey. I appreciate it. I will post screenshots of the results as they come in.

CSNYC At Two

Next Wednesday night, at Civic Hall in New York City at 6:30pm, CSNYC will celebrate its second anniversary. For those that don’t know, CSNYC is a non-profit dedicated to the idea that every child who goes through the NYC public school system should encounter computer science along the way, in elementary school, in middle school, and in high school, and those that want to do a deep exploration of computer science should be able to do that before they graduate high school. The idea is not to turn every student into a software engineer, although it would be good if a bunch of students decided to do that. The idea is that every career will require a working knowledge of coding in the world we are heading into and that we ought to make sure our children have that.

In two years, we have increased our school coverage from one to over 120 schools. We are very proud of that accomplishment and will be showcasing those schools, the programs that are in them, and the students who are benefiting from this effort next Wednesday night. This event is also a fundraiser since we’ve got a lot of work ahead of us. Though we are in 120 schools, there are 1700 in the NYC public school system. At its core, CSNYC is funding teacher training and development. The only scalable way to get all children to learn computer science is to train the best teachers out there how to teach computer science. I figure it will require somewhere between 3500 and 4000 teachers trained in teaching computer science in order to reach all 1700 schools in NYC and achieve our goals. That will require a fair bit of money.

If you would like to attend CSNYC at Two next wednesday night, go here and RSVP. Individual tickets are $250. But if you have the means, you could also buy a $1000 ticket that is for two guests, or a table for $10,000, $25,000, or $50,000.

It’s going to be fun, optimistic, and exciting evening. I hope to see some of you there.