Posts from January 2013

A Valentines Day Chat

On February 14th, the entire USV partnership will be in Salt Lake City and so courtesy of our friend Bryce, we are going to do an event called Sessions @ The Leonardo.

We've done this format before, usually in our event space, and its a lot of fun to do a public appearance with all of my partners. We finish each other's sentences, tee up topics for each other, and tell stories together.

It is from 4pm to 6pm on February 14th at The Leonardo. The event is free but space is limited. RSVP here.

#VC & Technology

The Startup Visa

The President announced yesterday that he was in favor of a Startup Visa. Hallelujah.

That led me to go back in time.

The first time I posted about #startupvisa on AVC was September 23, 2009.

The first time Brad Feld posted about #startupvisa was September 10, 2009.

The first time Paul Graham posted about #startupvisa was April 2009.

It's a shame that it takes almost four years before a good idea gets the President's support. And its a greater shame that there are many in Congress who will still vote against this idea.


Just Do It

We have a two year rotation program at USV for most of our non partner positions. We hire incredibly talented people, suck them into everything we are doing for two years, and then ask them to leave. The USV alumni group is becoming quite a collection of talent.

For much of last year Christina debated what she was going to do at the end of her stint. We made it even harder on her because we flirted with extending her stay. But at the end of year, she packed up her desk and headed out.

And today she explains all of that and what she's been doing since on her blog. I particularly like this part:

Why did I want to do something different? In part, because I wanted something that felt more tangible. But mostly because the story of the internet continues to be the story of our time. I’m pretty sure that if you truly want to follow — or, better still, bend — that story’s arc, you should know how to write code.

I admire Christina's willingness to leave a cushy job and take up the difficult task of teaching herself to code and building something publicly. I am sure it will turn out to have been a brilliant career move in time.

Marc Andreessen says you either will be the person who tells the computer what to do or the person that the computer tells what to do. I see more and more young folks internalizing that dichotomy and deciding to "get technical." And that makes me very happy, and I am particularly happy about and proud of the choice that Christina made.

#VC & Technology#Web/Tech

MBA Mondays: Revenue Models - Licensing

Licensing, according to wikipedia, is an authorization (by the licensor) to use the licensed material (by the licensee). Of all the business models listed on the revenue model hackpad, licensing is the least net native business model. There is very little about the internet that makes licensing work better and there is a lot that makes it work worse.

Here are some of the ways licensing can be used to build a business:

View Licensing on Hackpad.

The first five items in that list are related to the software business and reflect the dominant business model for software before the internet came along. Software used to be sold (licensed) with maintenance as the recurring revenue item. The internet has largely changed that with software moving to a subscription model (SAAS) as we discussed in the subscription post. Software is still sold with a license, in fact the SAAS model doesn't change the provision of a license, but the idea that you will pay up front for a license has largely gone away in favor of the subscription.

An important and growing form of license is the open source license. There are a number of variants on the open source license but the basic idea is the licensor makes a license of the software avaialable for free for anyone to use, modify, and share. The benefits of this model is that the software is maintained and improved by a group of developers working together with no economic model around their collaboration.

The last two items are forms of intellectual property licensing where an owner of a patent or a brand will license it to someone else to use in return for a monetary payment. These revenue models can work online but they don't take advantage of the scalability of the internet. In fact intellectual property and the internet are in many ways in tension with each other.

The only form of licensing that USV is actively investing around is the open source model. We think open source is an attractive form of licensing that creates network effects in the developer and user community and we have had success investing in the open source model.

That said, licensing is probably the least interesting business model to me of all the ones we are covering in this series. It is possible that entrepreneurs will invent new ways of licensing that take advantage of the scale and reach of the global internet, in the way that open source does, and that could produce some interesting opportunities.

#MBA Mondays

The Third Way

What do you do when you don't want to sell your company and you don't want to go public either? We've been discussing this issue here at AVC for a long time. I think back to this post from 2008, almost five years ago now, as the kickoff of this long running conversation. This is something I care a lot about because my business model requires getting liquid but I hate the idea that my business model creates problems for the entrepreneurs we back.

Here's a great three minute discussion of this issue between Chad Dickerson, Etsy's CEO, and Sarah Lacy, from last thursday night's PandoMonthly event.

I've been having frequent private conversations about these issues with the CEOs of our portfolio companies and it's great to see some of that become public in venues like the Pando event. This is an important topic, not just for me or for AVC, but for the entire startup ecosystem.

The entire talk between Chad and Sarah is almost two hours and can be seen in its entirety here.

#VC & Technology

Feature Friday: The Checkout Form

One of the most aggravating things about commerce online and on mobile is the inconsistent checkout experience site to site and app to app. It's one of the many things that keeps me shopping at Amazon and clicking on the PayPal button when its available. That and stored payment credentials.

Last week I saw something that makes me think we may be heading in the right direction. Stripe, the fast growing payments company, introduced Stripe Checkout. Now, if you choose to use it, Stripe will give you a standard checkout form for both web and mobile. It's a few lines of code in your app and Stripe takes care of the rest. It is optimized for the user experience and for the device. And they plan to keep optimizing it so that developers who use it will see better and better conversion rates.

But this is also great for the buyer. Now when I see this button below, I know I am going to pay with Stripe and I know what I am in for in terms of user experience.

Stripe button

It's like the good housekeeping seal of approval. I know I am going to get a simple and easy checkout flow.

The next thing I'd like to see from Stripe is stored payment credentials. Then they would enter the land of Amazon and PayPal for me for sure.


Who You Want On Your Board

One of the guys who taught me the venture capital business used to say "success is in inverse proportion to the number of VCs you have on your board." He was right. For a few reasons. First of all, most VCs get on your board by virtue of financing rounds you do. If you do a lot of financing rounds, you will collect enough VCs on your board to field a basketball team. And that sucks. And it means you had to raise too much money too. All of which are bad things.

But there is another reason and it became perfectly clear to me on Tuesday when I had back to back board meetings.

The first meeting was almost a celebration. The company had put together a phenomenal year in 2012 and there wasn't much to be concerned about. But the best question asked of management in the entire meeting was asked by an independent director who happens to be a CEO of a company that is five times bigger than our portfolio company. In the midst of the "celebration" he brought everyone back to reality and got folks to think about what we could be doing better. It was a great board moment.

The second meeting was even more interesting. The CEO was seeking advice on some important strategic questions. And this board has two investors and three very experienced operating executives on it. And one of the investors (not me) has deep operating experience. So you had essentially four very experienced operating executives plus me giving the CEO advice. It was a great meeting. I walked out thinking "that is the way a board should be constructed."

If I could construct the perfect Board for the companies I am invested in, it would be the CEO, me, and three CEOs who have built and/or run one or more tech companies of scale. If you have a very experienced VC on your board, you really don't need more of them. But you can never have enough peers on your board who have been where you are before. That is invaluable.

#entrepreneurship#VC & Technology

The Women Entrepreneurs Festival

Today is the Women Entrepreneurs Festival at NYU. Many of you know that the Gotham Gal is the co-founder of this event with Nancy Hechinger who is on the faculty at NYU ITP.

The live stream of the festival is here

This is the third year this event has been put on and I attended the first two and I will be there today.

This event celebrates and educates women entrepreneurs. The conventional wisdom has it that there aren't many women entrepreneurs but the truth is they are all over the place.

The Gotham Gal has been writing a post every Monday featuring a women entrepreneur for a few years now and she never runs out of women to feature.

Having observed the Gotham Gal build this festival, blog about women entrepreneurs, and invest in them over the past few years I have come to believe that we will see a lot more women starting companies in the coming years. And I think we will also see more women starting tech companies, getting venture funded, and having movies made about them when they are hugely successful. Its about time.


How A Local Government Can Help Local Startups

I get policy types asking me this question a lot – how can we help local startups?

Well one way is to use their products to deliver better and more efficient services to citizens.

The State Of Iowa is demonstrating how it is done today with our portfolio company Dwolla, which happens to be located in Iowa.

Today, they are announcing that:

  • The State Of Iowa will accept payments with Dwolla
  • This will allow the state to collect ~$100 million a year in taxes
  • New partnerships are on the horizon with property taxes, vehicle registration and others
  • They will explore new opportunities for collecting and issuing government payments 
  • Dwolla is hoping that this proof point will help them approach additional governments who are looking for better and cheaper options to take payments. And in reflection of that, Dwolla has launched a new landing page,

    So if you are looking to help startups get going in your region, one way is to become a customer of theirs and help them demonstrate the power of their technology to others. It's great to see the State of Iowa do that with Dwolla.