Posts from June 2014

This Is What Happens When You Let A Monopoly Own The Last Mile

From Business Insider:

Verizon won’t be able to hit its deadline to bring its FiOS fiber internet service to all residences in New York’s five boroughs by the end of June 2014.

and

In 2008, Verizon made an agreement to bring FiOS to any New York resident who requests it within six months.

I’ve been asking Verizon to bring FIOS to the condo apartment building the Gotham Gal and I built since 2007. They keep promising and they keep breaking those promises. That’s what monopolies do.

I hope the folks to run the FCC, the Federal Government, and local governments realize that Verizon are not to be trusted and neither are their lobbyists. They are the worst. I can’t believe we allow them and their brethren to continue to control the last mile access to the Internet here in the US.

#NYC#policy#Politics

Privacy As A Competitive Vector

Our portfolio company DuckDuckGo has made privacy a big part of its value proposition. And slowly but surely, their search engine has gotten good enough that people are using it instead of Google.

DuckDuckGo publishes its search volumes publicly. They are doing 6mm searches a day now. This page says that Google does 6bn searches a day. So if that’s right, DuckDuckGo is doing 0.1% of Google’s search volume.

That’s not a huge market share. But DuckDuckGo is growing quickly. A year ago, their search volume was 1.8mm/day. So if they continue to triple their daily search volume each year for the next three years, they would have >150mm searches a day by June 2017. And assuming that Google’s search volume keeps growing at 15% per year, DuckDuckGo would be doing 1.7% of Google’s daily search volume in three years.

So there is certainly a market out there for people who will accept a slightly weaker product in exchange for privacy. It’s not 25% of the market. It may not even be 5% of the market. But I believe it is well north of 1% of the market.

And if that is the case, are there other big product categories out there other than search where privacy could be used as a competitive vector? How about email? How about messaging? How about maps? How about browsers?

I think we are going to see this play out in the coming years. DuckDuckGo is making it work. Why won’t others do the same?

#mobile#Web/Tech

Feature Friday: Bluetooth Stereo Headset

A month or so ago, my friend Jeff Epstein walked into a board meeting with these around his neck.

bluetooth stereo headset

He stopped next to me, took them off his neck, and said to me “these are life changing”.

I pulled out my phone, went to Amazon, and ordered a pair. I’ve been using them ever since. They are life changing.

It’s not like I haven’t used a Bluetooth headset before. I’ve had many. I’ve just never stuck with any before. I would keep going back to wired headphones.

But these LG stereo headphones just do it right. I like the feeling of buds in my ear. These replicate that feeling, but deliver it wirelessly.

The controls are placed perfectly on the device. When you slide the on switch, they tell you that the headset is on, the battery is high, and you are connected to your phone. You get similar information when you turn them off.

They are comfortable, the battery time is long, and the sound quality is great.

I use them in my office to do all my calls now. I put my Nexus5 in its wireless charger, and walk around my office with these on doing calls.

I use them on the subway to listen to my soundcloud feeds (another feature friday topic).

I use them to walk to and from work and make phone calls and listen to music.

It is amazing how something so simple can make a measurable improvement in my life. These have done it.

Now I just want the blinged out version with gold and diamonds 🙂

#mobile

Some Thoughts on iOS8

I’ve taken most of this week to digest all that Apple said and showed off at WWDC. Of everything I read and watched and listened to, my favorite was this A16Z podcast about WWDC.

Here’s my take:

1) Apple is making some great moves toward opening up iOS8. Allowing our portfolio DuckDuckGo’s search engine on Safari is one example. Allowing widgets and third party keyboards is another. My favorite is app to app sharing is now open to all apps, not just Facebook and Twitter. iOS8 is moving toward Android in some fundamental and important ways and I am super happy to see that.

2) Apple made some comments about allowing Bitcoin wallets on iOS. That’s really important because right now, you can’t have a bitcoin wallet on an iPhone. I don’t know exactly how that will play out but, like Brian Armstrong, Coinbase’s founder and CEO, I am excited about it.

3) Apple is bringing the cloud more front and center in iOS8. Photos are now synced to the cloud. Data is now synced to the cloud. But they still use on device data to power things like word prediction on the keyboard. Contrast that with Google who uses the cloud to power word prediction and voice recognition. I think Apple needs to embrace the cloud for more than storage. Benedict Evans makes that point at the end of the A16Z podcast:

For Google, devices are dumb glass and the intelligence is in the cloud, but for Apple the cloud is just dumb storage and the device is the place for intelligence.

4) Healthkit and Homekit are very interesting. I don’t totally understand yet how open these “internet of things” services are to third parties. Can any device send data into Healthkit and Homekit? Can any app get data out of Healtkit and Homekit? Will Apple be building more of these kinds of services (Carkit)? Benedict Evans calls this the “personal cloud” in his post on WWDC. He describes it as the “Bluetooth LE/wifi mesh around you”. I really like that way of thinking about the “internet of things” and I like that Apple is pushing in this direction more agressively than Android, at least until we hear what Google has coming at IO.

I am not sure that anything that was announced at WWDC is a game changer for iOS8 vs Android and I think the current dynamic that is in the market remains in play. Apple is reacting to a strong competitor in Android by making their operating system better and more open. Competition is a good thing for the consumer and the market.

#mobile

Kickstarter's Launch Now

Our portfolio company Kickstarter announced some important changes yesterday. They massively simplified their rules (from over 1000 words to under 300 words). And they introduced “Launch Now”:

launch now

At USV, we’ve always been a fan of fully open marketplaces over closed or curated marketplaces. I have written about that a bit here.

That said, you do benefit, particularly early on, by curating the market so that buyers are protected from crap and scams. Kickstarter turned five earlier this year and the company, service, and brand are well understood in the marketplace. I saw a chart on the Internet today that shows just how powerful the Kickstarter brand is right now:

When people think of funding a project on the Internet, they think of Kickstarter first and foremost. So the decision to curate and insure that backers on Kickstarter had a good experience was clearly the right one for Kickstarter.

But crowdfunding is a big business now. There is crowdfunding for seemingly everything now and users’ expectations and understanding has been well set. So it makes sense to be more open and creator friendly. Backers on Kickstarter and the vast number of other crowdfunding sites are now pretty clear about the risks and rewards of backing a project.

I am pleased with these moves. It makes life a lot easier for creators, it will lead to more crowdfunding by more people, it will lead to more projects that backers can back. There will be criticisms that Kickstarter is opening itself up to scammers and crappy projects. That’s always been a criticism of Kickstarter and other crowdfunding sites and will always be. But as this market has matured and gone mainstream, those criticisms need to be seen in the context of the overall success of crowdfunding and Kickstarter’s role as the creator and leader in the market. I think they will be fine.

#crowdfunding#marketplaces

Is Coding Speech?

We got into an interesting discussion yesterday at USV during our analyst interview process. A candidate said that he believes coding is speech and so applications should be protected like speech is protected.

Of course, not all speech is protected and not all code should be protected. I went to Wikipedia this morning and read a bit up on the law on this. From the “hate speech” page on Wikipedia:

Some limits on expression were contemplated by the framers and have been read into the Constitution by the Supreme Court. In 1942, Justice Frank Murphy summarized the case law: “There are certain well-defined and limited classes of speech, the prevention and punishment of which have never been thought to raise a Constitutional problem. These include the lewd and obscene, the profane, the libelous and the insulting or “fighting” words – those which by their very utterances inflict injury or tend to incite an immediate breach of the peace.”

I suspect we can all come up with examples of code that would not be protected. Malware being the prime example.

I’m curious if there is case law on protecting code as speech and also if there is any case law that defines what kinds of code would not be protected.

To all the lawyers in the AVC community, can you educate us on this? I’m curious and I suspect others are too.

#law

My Closing Keynote At The Collaborative, Peer and Sharing Economy Summit

NYU and The NYC Partnership (the chamber of commerce for NYC) held a conference last friday on the Collaborative, Peer, and Sharing Economy. I was asked to give a closing keynote. I don’t believe it was filmed. If it was, I will post the video here when I find it.

Instead of wrapping up and summarizing what had been discussed, I decided to look out ten years and think about where this sector is headed.

Here is the outline I prepared before going on stage. The talk was only 10 minutes.

– Networks are replacing Hierarchies

– Peer Networks Are The Most Powerful

– We Are In Stage One Of This

* your new boss is the same as your old boss

– We Are Still In An Age Of Centralization

* facebook, twitter, uber, airbnb

– Decentralization Is Next

– Look At The BlockChain For A Model Of Decentralized Commerce

* Gambling Without A House

* Stock Trading Without Exchanges

* Real Estate Transactions Without Deeds

* Transactions Without Clearinghouses

– The Regulatory Challenges We Discussed Today Are Just Scratching The Surface

– The Ultimate Sharing Economy Is A World Of Peers Without Middlemen

– We Will Get There But We Are Not Anywhere Near There Yet

#marketplaces

Health Care's Inflection Point

The Gotham Gal looked up from her laptop yesterday and said to me “I’m seeing a ton of health care deals right now.” I looked up from my Kindle app and nodded.

Mary Meeker’s slide deck addressed this is bit. Here are a few of the big points from it:

Healthcare is now $2.8 trillion in the US, which represents 17% of GDP

Healthcare is being consumerized

Healthcare is being digitized

Digital Health Venture Investment was $1.9bn in 2013 (out of a total of $24bn)

I listed health care as one of four “sectors” in my LeWeb talk last fall and when asked recently what excites me most, I mentioned the “mobilization of health care”.

The Gotham Gal has been making a bunch of these kinds of angel investments this year. She’s closed two and has a third in her pipeline. That’s somewhere between 25% and 33% of her investment activity right now. As Mary’s data shows, digital health is approaching 10% of all VC activity.

At USV, we’ve been looking hard at this sector but have only made one investment so far, in HumanDX. Albert explained the investment thesis behind HumanDX here.

We’ve made a few other offers but got outbid pretty badly on them. There is a lot of heat around this sector right now.

We are looking for networks of users, patients, doctors, and other stakeholders in our health care who can transform the way health care is delivered. We only have one game plan at USV and look to play it in every market opportunity we see.

I am pretty certain the intersection of the Internet and mobile, the digitization of the health care system, and a desire for people to take more control over their health is going to be one of the biggest investment opportunities we will see in my lifetime. And its game on.

#health care