Posts from March 2013

In a comment on yesterday's hobbyist post, Pete Griffiths offered "Do It Yourself Data Science" and I really liked that suggestion for a bunch of reasons.

I think data science and machine learning (I know they are not the same thing) are going to be a very big part of tech innovation in the coming years. And I also know that putting powerful tools in the hands of "everyman" produces more innovation than can happen when the tools are limited to mathematicians and scientists.

The blogging revolution in publishing is a great example of this. Once everyone could have a printing press, we got to see many important developments that did not and would not have happened as long as publishing was a high cost operation limited to professionals.

So what is the Tumblr or Blogger or WordPress of data science? When will my son and his friends be able to take the NBA dataset and start running algorithms against it to produce better fantasy picks? When will my daugther and her friends be able to take the TV viewing dataset to decide what TV shows to go back and watch that they missed last year?

I believe data science is going to go mainstream in the coming years. What will be the platform(s) that make that happen?

One of my favorite posts in the past month came from Chris Dixon. It is short and sweet, just the way I like a blog post. In the post Chris lays out three constituencies to the startup economy; business people, engineers, and hobbyists. And he makes the point that hobbyists are a great lens through which to see the future.

I love Paul Bucheit's edict to "live in the future". I totally agree that is the best way to find the things that will turn out to be the next big thing. Being a hobbyist is a great way to live in the future. And so I try to play around with all of this stuff in order to wrap my mind around it. You should too.

Chris lays out some things that hobbyists are playing around with a lot these days:

Today, the tech hobbies with momentum include: math-based currencies like Bitcoin, new software development tools like NoSQL databases, the internet of things, 3D printing, touch-free human/computer interfaces, and “artisanal” hardware like the kind you find on Kickstarter.

I am very pleased to say that we have investments in most of those hobbies and are working to make more.

But I also think that they may be the hobbies of the moment or even possibly the hobbies of the past few years. What are the hobbies that we should take on next? That is what I woke up thinking about this morning.

Last month I wrote a post mentioning that we have an activist in residence at USV. And I write a lot here at AVC about the policy stuff we have been working on. It might seem to some that we are more like policy think tank or adovacy organization than a venture capital firm. I think that is somewhat true. We make a lot of early stage investments and we work hard with those companies to help them succeed. But if you hung out at USV, you would see that we spend a lot of time on policy stuff. And that begs the question "why do you do that?".

The short answer is that Brad, who I founded USV with a decade ago, has felt from day one that policy and governance will be as important as technology in shaping what the market looks like in the coming years. And that, of course, will shape how impactful our portfolio companies are, and that will ultimately shape our returns. And we are in the returns business.

The longer answer has to do with the power of networks, which are central to our investment thesis, to be an economic force in society. These networks will reshape markets, lower costs, bring efficiencies, and disrupt the ways that things are done. And those who are incumbents in today's model will fight these networks tooth and nail, because they threaten their incumbency. And that will lead to policy fights. We want to get out ahead of all that as much as we can.

I have not seen much written about this coming change. So I was pleased to see a post by Om Malik yesterday that laid all of this out clearly and succinctly. Om says:

the challenges of the connected future are less technical and more legislative, political and philsophical. The shift from a generation that started out un-connected to one that is growing up connected will result in conflicts, disruption and eventually the redrawing of our societal expectations.

This redrawing of societal expectations is likely to be the political battle of our time. Om goes on to talk about this in the context of the labor issues that Uber is having in San Francisco. That is a good example of what happens when networks and the data they produce reshape a market that has been operating in a traditional framework.

We are at the start of this battle between incumbents, be they black car drivers or cable companies or government itself, and the network driven upstarts. And we have many of those upstarts in our portfolio. So our policy work is ultimately an investment in the success of our portfolio companies. And that is why we spend so much time on policy stuff.

One of the mistakes I often see in business is short term thinking vs long term thinking. It struck me over the weekend when I saw this tweet:

Last quarter, Samsung’s net profit from its mobile division alone exceeded Google’s total profit from all operations (including adwords).

— dustin curtis (@dcurtis) March 14, 2013

Sure Samsung is making a killing on handset sales right now. So is Apple. That goes to their bottom line and then onto their balance sheet. And apparently Google isn’t making any money in mobile.

Today.

But when I think about who is developing the strongest franchise in mobile, it is obviously Google. They have gmail on so many phones. They have google maps on so many phones. They are getting the majority of searches on mobile phones. And that doesn’t even begin to address Android itself. It is the dominant mobile operating system around the world. Just think about all the data they are getting from this enormous mobile footprint they have assembled.

You can change handsets pretty easily when all your data is in the cloud. There is no moat around a hardware only franchise these days. But the software you choose to use on your phone is different. There the moat is much bigger. And where your data goes in the cloud is even more important. Changing that out requires a major effort for an end user.

So my feeling is that Google is playing the long game in mobile while Apple is missing the cloud piece and Samsung is just a hardware player at this point. And the stock market understands that.

My longtime friend Alesandro Piol and his colleague Maria Teresa Cometto have been working on a book project to document the rise of New York City as a tech hub. They researched the book together and Maria wrote it over the past year. The book is called Tech And The City and is now available on Amazon (free for Amazon Prime members on your kindle).

I read a mostly final version of the book a month or two ago and then wrote the foreward.

The book does a very good job of explaining why New York City was not a participant in the early phases of the technology revolution and why it has come on strong in recent years. It also documents the leaders of the technology community in New York City and how they got things moving back in the early and mid 90s.

If you are a member of the NYC tech community or a student of tech hubs around the world, you will want to read this book. If you like technology, startups, and history, I am sure you will enjoy it as well.

In a couple weeks we are going to kick off a month long DonorsChoose campaign here at AVC. We haven’t done one since August of 2011, when all of us raised $56,000 to celebrate The Gotham Gal and my 50th birthdays.

I will explain more about this new campaign we are going to do when it launches on April 1st. But in preparation for the campaign, I would like to remind everyone why DonorsChoose is so great. This profile of James Walter Doyle explains exactly why investing in teachers and their classrooms is so important.

Sometime in the past week here at AVC, it was suggested we do "back in the day" for fun friday. I like that idea and so here we go.

I did most of my programming in college, at MIT. And I wrote most of my code on this thing, a DEC VT100.

This thing was a workhorse. I spilled coffee on it. I got muffin crumbs in it. I took out my frustration on it. And it just kept going and going.

It was hooked up to a VAX-11. We ran all the data acquisition and data analysis work at the MIT Dept Of Ocean Engineering Water Tunnel Laboratory on it.

That was over thirty years ago. In fact, this summer will mark the 30th anniversary of my graduation from college. Back in the day it was.

Now it's your turn to share your "back in the day" stories, photos, and videos with everyone in the comments.

There's an interesting project that launched on Kickstarter this week. The creator of the cult TV show Veronica Mars and the lead actress have launched a project to make The Veronica Mars Movie. In one day, the project has raised $2.5mm (as of 6:15am eastern). This is $500k more than the project goal of $2mm meaning the film will be shot this summer. It is also the largest film project on Kickstarter ever. The previous biggest film project on Kickstarter was around $800k.

This project is interesting in a number of ways. First of all, it shows that film projects can raise real budgets. I know you can make a film on $800k. But when you can raise $2.5mm (likely a lot more as this project has another 29 days to go), then you do a lot more with a film project.

But it is also interesting to see the power of a loyal audience. Veronica Mars was a cult TV show. It only ran two years. But it had a rabid fan base. And those fans are coming out in droves to make this movie a reality. There have been over 40,000 backers in the past day (including me).

The rewards they came up with are also worth checking out. One fan paid $10,000 for a speaking role in the movie. All of the expensive and limited rewards categories sold out very early on in the project. That tells you something right there.

Like the big gadget and video game projects that hit Kickstarter last year, this will likely open a lot of eyes to the power of the crowdfunding model. Financing your project via your loyal fans opens up a lot of possibilities to the producer, including creative control and distribution control. I suspect this will lead to a lot more creativity and experimentation than has been possible with the studio model. And that is a very good thing.

Related articles

[EveryJoe] Veronica Mars Movie Kickstarter Details

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Veronica Mars movie gets crowdfunded

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I often wish we could do business on a handshake.

I've been thinking about it more and more these days. We negotiate a sophisticated set of documents when we invest in a company and for the most part, those documents never come into play. Many times when things go badly, we rip up the documents and decide what to do based on an honest discussion among the interested parties. When things go well, all we need are the stock certificates.

I am not suggesting USV is going to start doing deals on a handshake. We have investors and we have a responsibility to them to act responsibly.

But if I were an angel, I might do things differently. There is something powerful that comes from establishing trust early in a relationship.

I always like to imagine the way that Andy Bechtolsheim handed Larry and Sergey that check for $100,000. I have no idea how it went down, but I always imagine they that pitched him, he said "sounds great" and whipped out his check book and wrote a check for $100,000. I sure hope that is how it happened. If instead he said "I will get my lawyers to draft a purchase agreement" I will be really bummed out.

The biggest problem with doing business on a handshake is you may not be dealing with the same folks in a few years. And when the person you are dealing with changes, things change. In those situations, you have to have a written agreement to fall back on. And it will be too late to get that document in place when the circumstances change.

So the right thing to do is get it in writing before you part with your cash. That is how I have always done it and how I suspect I will always do it.

But the most important thing in business is the understanding, the look in the eye, the handshake, and the personal trust that comes from those things. No piece of paper can beat that.