Posts from August 2013

I suspect most of you have seen this by now. It's been coming at me for the past 10 days from all angles. I must have had it sent to me a dozen times and I've come across it in social media another dozen times. But that's because it is spot on and excellent.

This is a 5min edited summary of the talk. For the full thing, go here.

Last night at dinner Jessica and her friends Phoebe and Alex got to talking about the Myers Briggs personality type. Alex asked me a few questions and said to me "you are INTP". She did the same with the Gotham Gal and opined that she was "ENFJ". 

So this morning I took a Myers Briggs test on the Internet and sure enough, Alex was right. I am an INTP:

I did a little bit of looking around about INTP and found these two pages, portrait of an INTP and well known INTPs. 

That was fun for me so I thought it might be fun for all of us. If you want to play along today on Fun Friday, take the test (it took me about 3-4 mins) and then tell us in the comments what your Myers Briggs personality type is.

The JOBS Act was signed into law on April 5, 2012. This legislation was designed to make it easier for small businesses in the US to raise capital and contained a number of important and valuable changes to securities laws. One of the most promising changes in the JOBS Act is around the concept of General Solicitation. 

General Solicitation is the marketing of a securities offering (a fundraise) publicly in the open market. The Securities Act of 1933 (which still governs much of securities law in the US) prohibits "general solicitation" or other forms of advertising in securities offerings pursuant to Rule 506 and Rule 144A which are the two most common forms of securities offerings for private companies.

In response to the JOBS Act, the SEC has lifted the ban on General Solicitation and on September 23, 2013, companies can start to use public marketing in their fundraising efforts with some important conditions. I blogged about how important this could be for startups when that news came out.

First and foremost, if you want to use General Solicitation, you must limit your investors to accredited investors (investors that satisfy net worth or annual income requirements) and you must undertake some specific efforts to make sure that your investors are in fact accredited. This is above and beyond what is typically required in a securities offering where General Solicitation is not used.

But the SEC has not stopped there. They have put foreward additional rules for public comment. If anyone in the SEC cares to read this blog, they can consider this my public comment. I am not planning to send in a formal comment nor is USV or anyone else at USV.

It is my opinion, and that of those who we do business with, including our securities lawyers, that these proposed rules effectively make General Solicitation a non-starter for startup companies. If the SEC's intention, with these proposed additional rules, is to neuter General Solicitation to the point that it is legal but nobody avails themselves of it, they will succeed.

Here are a few of the most problematic rules:

1) A 15 day filing period for Form D before the company initiates its fundraising process (and before the company even knows if it will be able to raise capital). Typically we file for Form D after the raise has been completed. To do so before the company intitiates a fundraise is not realistic and ignores how startups raise capital. If there was one rule that I would most like to see the SEC remove, this would be it.

2) The requirement to formally file all written materials provided to investors with the SEC is very burdensome when entrepreneurs update their slides and other fundraising material from meeting to meeting.

3) The penalty for violating any of these rules is a one year prohibition from being able to raise capital under Rule 506. Given that startups need to raise capital frequently and they need to avail themselves of this form of securities offerings, this effectively means that a startup that violates any of these rules is likely to be put out of business. This is way too harsh and means the risk/reward analysis around using General Solicitation is skewed too much toward risk. Which means nobody will use it.

USV is an interested party to this rulemaking process in a number of ways. First, we invest in startups. The more startups there are, the better for us. So anything that creates more financing for startups is good for us. And anything that makes it harder for startups to raise capital is bad for us. Further, we are investors in CircleUp, a fundraising platform for startups that would benefit greatly from opening up General Solicitation. 

I have been investing in startups since the mid 80s. I have participated directly or indirectly in the financing of hundreds of startups, possibly more than a thousand when all of my activities are aggregated. If I am an expert in anything, I am an expert in the financing of startups. And in that capacity, I can tell you that the proposed additional rulemaking around General Solicitation is a non-starter in startup land. If these rules come down as drafted, we will keep doing things the way we have been doing them for years and possibly the single most important change from the JOBS Act will have been for naught. And that would be very dissapointing to me and many others in startup land.

Here are some other links worth reading on this topic:

Angel.co's public comment

Startup Law blog

William Carleton's blog

Brad Feld

My daughter Jessica gave me David Foster Wallace's A Supposedly Fun Thing I'll Never Do Again for my birthday and I've been reading the essay that gives the title to the book this week. This bit has been rattling around in my head since I read it a few days ago:

… so I come out and spot my duffel among the luggage, and I start to grab and haul it out of the towering pile of leather and nylon, with the idea that I can just whisk the bag back to 1009 myself and root through it and find my good old ZnO and one of the porters sees me starting to grab the bag, and he dumps all four of the massive pieces of luggage he’s staggering with and leaps to intercept me. At first I’m afraid he thinks I’m some kind of baggage thief and wants to see my claim-check or something. But it turns out that what he wants is my duffel: he wants to carry it to 1009 for me. And I, who am about half again this poor herniated little guy’s size (as is the duffel bag itself), protest politely, trying to be considerate, saying Don’t Fret, Not a Big Deal, Just Need My Good Old ZnO. I indicate to the porter that I can see they have some sort of incredibly organized ordinal luggage-dispersal system under way here and that I don’t mean to disrupt it or make him carry a Lot #7 bag before a Lot #2 bag or anything, and no I’ll just get the big old heavy weather stained sucker out of here myself and give the little guy that much less work to do.

And then now a very strange argument indeed ensues, me v. the Lebanese porter, because it turns out I am putting this guy, who barely speaks English, in a terrible kind of sedulous-service double-bind, a paradox of pampering: viz. the The-Passenger’s-Always-Right-versus-Never-Let-A-Passenger-Carry-His-Own-Bag paradox. Clueless at the time about what this poor little Lebanese man is going through, I wave off both his high-pitched protests and his agonized expression as mere servile courtesy, and I extract the duffel and lug it up the hall to 1009 and slather the old beak with ZnO and go outside to watch the coast of Florida recede cinematically à la F. Conroy.

Only later did I understand what I’d done. Only later did I learn that that little Lebanese Deck 10 porter had his head just about chewed off by the (also Lebanese) Deck 10 Head Porter, who’d had his own head chewed off by the Austrian Chief Steward, who’d received confirmed reports that a Deck 10 passenger had been seen carrying his own luggage up the Port hallway of Deck 10 and now demanded rolling Lebanese heads for this clear indication of porterly dereliction, and had reported (the Austrian Chief Steward did) the incident (as is apparently SOP) to an officer in the Guest Relations Dept., a Greek officer with Revo shades and a walkie-talkie and officerial epaulets so complex I never did figure out what his rank was; and this high-ranking Greek guy actually came around to 1009 after Saturday’s supper to apologize on behalf of practically the entire Chandris shipping line and to assure me that ragged-necked Lebanese heads were even at that moment rolling down various corridors in piacular recompense for my having had to carry my own bag. And even though this Greek officer’s English was in lots of ways better than mine, it took me no less than ten minutes to express my own horror and to claim responsibility and to detail the double-bind I’d put the porter in—brandishing at relevant moments the actual tube of ZnO that had caused the whole snafu—ten or more minutes before I could get enough of a promise from the Greek officer that various chewed-off heads would be reattached and employee records unbesmirched to feel comfortable enough to allow the officer to leave and the whole incident was incredibly frazzling and angst-fraught and filled almost a whole Mead notebook and is here recounted in only its barest psychoskeletal outline.

I made you all wade through that classicly dense DFW prose not to convert you to Wallace (which you should consider doing on your own terms), but because it tees up the conversation I want to have here today so perfectly.

You see, I hate to be pampered. When I check into a hotel, I want to take my bags to my room. I want to carry my golf clubs out to the range. I want to open my own yogurt (which they would not let me do in the Mandarin Oriental in Chiang Mai, Thailand). I want to get my own beach towels at the pool, etc. etc.

So why is that? I asked Jessica this morning. What causes this discomfort with being pampered (which is all about creating comfort)? She replied "guilt?". To which I nodded, "I guess so". But it's more than that. I can do these things. I can take care of myself. I don't want or need someone doing them for me.

But as Wallace points out, the people whose job it is to pamper you want to do their job and want to do it well. Which creates a challenge for people like me who don't want to be pampered. The older I get and the more set in my ways and the more pampering I encounter, the worse it gets. I suppose I should just learn to love it. I will work on that. 

Back in 2008, when I gave my talk at Web 2.0 on the recent history of the NYC tech sector, I said that Red Burns was responsible for restarting the tech sector in NYC when she created ITP at NYU in the late 70s.

The entire slide show for that talk is here.

Many of you know this sad news already. Red passed away this past week. She was an incredible woman who left NYC with the gift of a resurgent tech sector and a community of passionate makers and entrepreneurs. It is her legacy as much as anyone's.

Here are some links to the best posts I've seen on Red this week.

The New York Times

The Gotham Gal

Dennis Crowley

Clay Shirky

Wikipedia

ITP

I am headed out on a bike ride with my daughter this morning and don't have a lot to say today. But I did read an interesting post by Semil Shah where he outlines what he thinks is going on in the early stage financing markets right now.

He starts with this observation:

Young founders are incredibly influenced by the online brands of certain investors. 

And so that's why I post every day, even when I don't have anything to say 🙂

But go give Semil's post a read and do me a favor and have the discussion about his post on his blog, not here. He deserves it and I don't. And I'll make sure to engage there as well today.

This past fun friday was a big success. We found out that roughly half of the folks who answered the poll blog.

I don't know if that is a representative sample (~1,000 answers out of ~5,500 visits on friday), but it is clear that a lot of the people who read AVC blog, at least sometimes.

We also collected a large number of blogs on our hackpad. The hackpad was getting a bit messed up and so I cleaned it up and locked it down. Any additional entries to the hackpad will need to come through me as moderator. That will make sure it remains in good shape going forward.

Finally, Sebastian Wain created an OPML file out of the hackpad. It is available here. I imported it into a blank Feedly account and the result is something like 230 blogs:

In any case, this has been a great exercise that surfaced a lot of great voices out there. We've known many of them as commenters at AVC. But they also have blogs and now we've got an easy way to read them. I'd like to thank Arnold, whose idea this was, and Sebastian, who completed the final piece of this. Well done.

William reminded me that I posted this interview to my tumblr a while back but it had never made it to AVC Video of the Week. So I went back to Charlie Rose's site and figured out how to embed it here. This is a great interview that everyone who reads AVC should watch.

At 35mins, the video turns to Charlie's talk with Aaron Levie. I have not watched that yet, but I plan to and I imagine it is pretty good too.

Arnold suggested we find out how many of the AVC community members blog. So let's do that.

First, here's a poll. I suspect the number of bloggers will be 10% or less of the total audience. But we will see.

Next, let's create a "blog roll" of the AVC folks who do blog. I've created a Hackpad where everyone who blogs can add their blog. The format is blog title, blog url, blog author (comma delimited). I've embedded the Hackpad here so we can see it evolve as the day goes on. It is super cool to watch people add their blogs live. It started happening about thirty seconds after I hit publish.

It would be nice to figure out how to export this blogroll as an OPML file. But I am not smart enough to figure out how to do that. Maybe someone else can.

So that's it. Let us know if you blog and if so, where.