Posts from March 2012

The Next Generation

I got a tweet from a bot that told me yesterday was my fifth anniversary on Twitter.

 

That got me thinking about how long I'd been doing the things I do every day on the Internet. And I responded with this tweet last night.

 

 

It was at age fourteen that I started going down to the West Point computer center and playing around with the mainframes they had there. It was 1975 and I was going into ninth grade. It was super cool to be able to create things on the computer. We mostly hacked up graphics stuff and crude computer games. And we didn't go often. There were only certain times of the week we could go and it was a bit of a walk from our home.

Contrast that to today. I met with about 140 eighth graders yesterday at one of our Academy For Software Engineering open houses. These kids don't have to walk a mile to a computer center that is only open to them a few hours a week in order to hack around. They have laptops in their schools and many of them have laptops at home.

When I meet with these eighth graders I like to ask them "if you had the coding skills to build anything, what would you build?" The answers are inspiring. One young man told me he wanted to build a better operating system. He was going to fork a version of linux and do just that. 

 

 

Another eighth grader said he wanted to build a better social network, one that was based on the things that interested him and one that would connect him with kids around the world that were interested in the same things.

The girls in the room were full of ideas as well. They haven't yet reached the age when they are told they shouldn't be software engineers. I hope they can become accomplished software engineers before anyone tells them that.

These eighth graders were mostly born in 1998. They are the same age as Google. They have never known a world without a browser, a search engine, and a way to connect instantly to people on the Internet. They expect things to work a certain way and when they don't, they want to fix them. They are hackers by default.

If there is anything I've learned in the past few weeks as I've met between five hundred and a thousand eighth graders throughout the NYC public school system, it is that computers and the Internet are front and center in this generation's brain regardless of upbringing.

I suspect that is because this next generation has had access to computers in a way that preceding generations did not. As the cost and form factor of powerful computers comes down, computing reaches a broader segment of the population of America and eventually the world. And it is human nature to want to understand, control, and fix the things that you use every day.

So hacker culture is spreading from those with means to a much broader population. And this is happening on a global scale. It's impossible to comprehend what the result of this shift will be. But I think it's going to be transformative in many ways.

#hacking education#Web/Tech

Update On The Teen Art Gallery

The art world is in NY this weekend for the annual Armory Show. Art is everywhere you look right now. And so I thought I'd use this moment to give you all an update on the Kickstarter project I posted about a month ago.

The Teen Art Gallery project was successful. They raised $10,230 against their goal of $10,000. A photo finish it seems. Congratulations to the entrepreneurial teenagers behind this project.

And so now they will be able to put on the two gallery shows they raised the money to support.

The first show will be on the evening of Thursday, March 29th at Rogue Space in Chelsea. Details are here.

I don't know these kids. But I hope to meet them someday. They are taking matters into their own hands and making stuff happen at an early age. I love seeing that.

#art

Fun Friday: Mobile Games

It's friday, time to talk about something fun. Today I thought I'd talk about mobile games.

I've never been much of a gamer. I reached adulthood just before videogames went mainstream. But I have found the "quick hit" aspect of mobile games to be a good way to add some fun to the day and connect with a friend or family member.

I played our portfolio company Zynga's Words With Friends with my daughter late last year. And I've started playing OMGPOP's Draw Something with a few friends in the past week.

When I play a mobile game, I check in with our portfolio company HeyZap's social gaming service so others can see what game I am playing.

I'm not the only one checking in with HeyZap. Here's a cool maps mashup of HeyZap's data showing live checkins from around the world.

Heyzap game map

Do you play mobile games on your phone? And if so, which ones?

#Games

The Sub $1bn Revenues IPO Act

There's a bill in Congress to reduce the regulatory burdens for public companies that have less than $1bn in revenues and/or have been public for less than five years.  The name is too long so I call it the "sub $1bn IPO bill."

This is a good bill. This undoes some of the bad stuff done to smaller public companies in Sarbox.

It should become law. I hope it will.

Here are some blog posts on this topic.

#VC & Technology

The Nature Of The Firm and Work Markets

Those who watched the video I posted on Sunday saw me talking about this. But I didn't do it justice so I'm going to do a full post on this.

The brilliant Nobel prize winning economist Ronald Coase (who is still alive!) wrote a seminal essay called The Nature Of The Firm in 1937. This is an important work and something everyone should read. It is short, only 20 pages.

The entire essay

The wikipedia page on the essay

In The Nature Of The Firm, Coase investigates why "individuals choose to form partnerships, companies and other business entities rather than trading bilaterally through contracts on a market."

Coase argues that transaction costs that make "trading bilaterally through contracts" expensive spur the organization of firms. And if those transaction costs could be eliminated, more individuals would choose to trade with each other rather than forming partnerships, companies, and other business entities.

Enter the internet and having a computer in your pocket into this model and things change. Technology has been causing these transaction costs to drop precipitously for years now and the result is we have seen the emergence of work markets in which "individuals trade bilaterally through contracts."

Our firm is seeing these work markets sprout up all around us and if there is a single investment theme that is dominating our deal flow right now, this would be it. Christina touched on this in her recent blog post on the USV blog (the section she titled "work is shifting to a peer to peer model").

We have one investment in this category, appropriately called WorkMarket, and we will certainly make others as long as we can be sure they are not competitive with each other. And we can thank Ronald Coase who laid out this investment thesis for us only 75 years ago!

#VC & Technology

Moving To Google Hangouts

I saw that Brad Feld has been making the shift from Skype to Google Hangouts. I've been meaning to do that myself. Skype is the only piece of desktop software I have on my various machines other than a slew of web browsers.

But my decision last year to leave the world of files and apps and get to the cloud has been incredibly liberating. I want to finish it off. And so Google Hangouts here I come.

For those of you who have been using Hangouts, is there anyting I need to know? Does it work for multi-party videos? Does it work in all browsers? Does it work all around the world? Any reason why I should not do this?

#Web/Tech

The Board Of Directors: Role and Responsibilities

This is the first of a series of MBA Mondays posts on the topic of The Board Of Directors. I want to dig into the role and responsibilities of the Board as a way to kickoff this series. But first a few disclaimers. I am not a lawyer and I am not giving out legal advice on this topic. I am a practicioner and am telling you the way I see it and what I've learned over the years. I think both are important perspectives. You will have to look elsewhere for the legal view on this topic.

The Board of Directors is the governing body for a company. All major decisions will need to be ratified by the Board. You will need the Board's approval to sell your company. You will need the Board's approval to hire or fire a CEO. You will need the Board's approval to do a major acquisition. You will need the Board's approval to do a major financing, including an IPO. On all matters of major strategic importance, the Board will need to be engaged, involved, and supportive.

However, the Board should not run a company. That is the role of the CEO and his/her senior management team. The Board's job is to make sure the right team is at the helm, not to be at the helm themselves. Boards that meddle, that get too involved, that undermine the management team are hurting the company, not helping the company.

Boards work for the company. The company is their responsibility. They must always act in the best interests of the company and its major stakeholders; the employees, the customers, the shareholders, the debtholders, and everyone else that is relying on the company to deliver on its promises.

Some would say that the company works for the Board. But I think that is wrong. The company works for the market (and I am using the word market in all of its meanings) and the Board and the management team work for the company. Every director must put the interests of the company first and their interests second. This is called fiduciary responsibility.

About ten years ago, I was in a Board meeting when management told the Board that they had uncovered significant accounting issues in a recently acquired company. This was a public company Board. And these accounting issues had flowed through to several quarterly financial statements that had been reported to the public. Every Board member who was also a material shareholder (me included) knew that the minute this information was disclosed, our shareholdings would plummet in value. But there was no question what we had to do. We had to hire a law firm to investigate the accounting issues. We had to immediately disclose the findings to the public. And we had to terminate all the employees who had an involvement in this matter.

Things like fiduciary responsibility seem very theoretical until you find yourself in a moment like this. Then they become crystal clear. Directors often must act against their own self interests. They must do the right thing for the company, its shareholders, and its stakeholders. There is no wiggle room on this rule. For directors, it is the golden rule.

The hard thing about being a director is that many times, the right answer is not clear. Should we accept this extremely generous offer and sell the company? Should we ask the CEO to leave the company? Should we go public or wait a few more years? There are no formulas that you can run to tell you the answers to these questions. There is no "right answer." Only time will tell if the right decision was made. And even then, there will be debate.

Debate is what good Boards do. They put the key issues on the table and discuss them. Good directors are deeply engaged in the important issues and they are upfront and open about their opinions on them. They are respectful of the other Directors and listen carefully to opposing opinions. Boards should try to reach a consensus and then act on it. Board should not procrastinate on the big decisions. Boards need a leader to drive them. That leader is commonly called the Chairman. I plan to write an entire post on the subject of the Board Chair as part of this series.

There are many CEOs who want to manage their Board. That is a mistake in my opinion. A great Board manages itself and treats the CEO as a peer and gives the CEO's opinion great weight. But a great Board is not a rubber stamp. A great Board pushes the CEO and the company to make the most of the opportunities in front of the company. It makes sure that the CEO and the management team are pushed out of their comfort zone from time to time. It asks the hard questions that must be asked.

Boards are fluid. They should evolve. Members should come and go occasionally. There should not be too much churn but some churn is good. Board members should not coast. Board members should not treat their seat as a right (even if it is). Boards should always be looking for new blood.

I will end with a somewhat controversial statement in light of the way some of the most successful tech companies are run. Boards should not be controlled by the founder, the CEO, or the largest shareholder. For a Board to do its job, it must represent all stakeholders' interests, not just one stakeholder's interest.

Next week I will talk about how a Board is selected, elected, and how it evolves over time.

#MBA Mondays

Academy For Software Engineering

AfseSix weeks ago I wrote a post talking about a new NYC public high school called the Academy For Software Engineering. I wrote that post the day after Mayor Mike Bloomberg announced the creation of this new high school in his State Of The City speech.

In the six weeks since that post, a lot has happened and I want to give everyone an update.

First, and most importantly, we have a leader for the school. His name is Seung Yu. His first name is pronounced like sing. He's been in several new high schools working directly for the Principal waiting for his opportunity to lead a new school and now he has found it. I've been working very closely with Seung for the past four weeks and I'm really impressed with his passion and commitment and considerable talents. 

We are now recruiting the first class of 9th graders. Today and tomorrow are big days as we will be at the citywide High School Fair at Martin Luther King Jr High School on the Upper West Side. The fair is on from 10am to 2pm both days this weekend and Seung and I will be there along with many of the folks on the school's advisory board. Next week on Tuesday night there is an open house for parents and students at Google's office and next weekend there is an open house for parents and students at NYU. And there is one more open house the following week at NYU. If you know any students who are going into ninth grade and are a fit for this school, please tell them and their parents to come to the High School Fair and the Open Houses. That's the best way for them to get into this school.

We also have a full blown web presence now. We have a website, a twitter, and a facebook page. I'd like to thank Sean Gallagher for his tireless and excellent work on all of our physical and virtual brand presence. Sean is creative, technical, and hilarious. His sense of humor and vision will be plastered on this school for many years to come.

I'd also like to thank AVC community member Larry Erlich who left a comment on that first post six weeks ago that he was gifting the school a handful of web domains. That was the gift that kept giving and giving. With Larry's help, we assembled a bunch of domains, decided to use afsenyc.org, and lit that one up. Larry has also helped with a bunch of stuff around getting our web presence live. He's an example of what makes this community so great and why it is such a force.

There are literally dozens of people in the NYC tech community who have given massive amounts of their time for this school. The advisory board has people on it from many of the big and small tech companies in NYC. It is led by Evan Korth of NYU who has become a full partner in this effort. Evan's research interest is K-12 computer science education and he's getting a real-time live immersion in that right now.

Finally, I need to call out the NYC DOE. It's easy to dismiss government as big, slow, dumb, bureaucratic, and ineffective. I know I've been guilty of that myself. But I have to tell you that the DOE has impressed me again and again in this effort. The folks we work with are smart, committed, decisive, and most surprisingly, they are risk takers. There are too many of them to mention here, but they know who they are and I am extremely grateful for their efforts to get this school off the ground.

I'll end with a video that the folks at Makerbot (also on the advisory board) put together to explain this school and what its all about to the parents and students who are considering it. Please pass this on to any 8th graders you know in the NYC school system that you think might like to go to a high school and learn how to make software. 

#NYC#Web/Tech

Fun Friday: NBA Basketball

I watched the President talk to Bill Simmons about the Chicago Bulls (and Jeremy Lin) just now. I hope Obama gets his wish to welcome the Bulls to the White House as NBA Champions.

But I don't root for the Bulls. They killed the Knicks too many times in the 90s for me to ever be able to do that.

I'm a Knicks fan. And it's been fun to go to The Garden the past couple years. It's not just Jeremy Lin. The Knicks have a lot of weapons this year. They can run their entire bench without giving up much against most teams.

But I'm also a Oklahoma City Thunder fan. I've been into Kevin Durant since his brief college career. His game is so lovely to watch. His jump shot is pure and so good, and he can explode off the dribble as well as anyone. Last year in the playoffs, particularly against the Grizzlies and the Mavs, my son and I watched every game and became hard core Thunder fans. Westbrook has a ton of talent and James Harden is one of the smartest young players in the game.

I don't root for the Heat. I don't enjoy watching LeBron. He plays basketball like a linebacker. It's not beatiful but is effective. I do enjoy watching Dwyane Wade. But as the President says in that Bill Simmons interview, it will be hard to beat the Heat this year. They are playing much better than last year.

This shortened season is fun for the fans. There are a ton of games to watch every night. The lockout sucked but I feel like NBA Basketball is having a great season post lockout. I'm expecting the Thunder to get to the finals this year and hopefully they'll be playing the Bulls instead of the Heat.

Do you like NBA Basketball? Who do you root for? And who do you think will be visiting the President at the White House this year?

#Sports