Posts from November 2014

I saw a post that described how Uber tried to mess with Lyft’s fundraising. This is not a new tactic. I have seen it used for as long as I have been in the VC business. It is, however, unethical and unsavory, just like the companies that use it.

And it is one other thing, ineffective. When I get a phone call from a company telling me that they are going to raise more money and we should think about investing in them instead or at least not investing in their competitor, I hear fear and it makes me more excited about investing in the competitor. If you can’t win in the market on the merits and have to turn to messing with a competitor’s fundraising, what does that tell you about the defensibility and differentiation of a company’s service?

And when another VC calls me to ask about a company that competes with our portfolio company, I don’t bother to trash talk the competitor. I just tell them the pros and cons of the market, the two companies, how I think things will play out, and then let them make the investment decision on the merits. I assume the competitor is going to get funded from someone so I might as well provide an honest assessment of the situation.

Capital is not normally a recipe for success vs competition. Product execution, network effects, go to market strategies, and a few other things are what allows companies to win the market. Access to capital and raising a boatload of it is rarely the thing that wins the market.

And there is a ton of money in the market for funding startups right now. When the CEO of one of our portfolio companies tells me one of their competitors is raising money, I always tell them “assume your competitor will raise successfully and raise a lot” because that is what is happening in the market today.

Don’t waste your time trying to mess with a competitor’s financing. It doesn’t look good, it won’t work, and your time and energy is best spent elsewhere, where the real competition happens, product and market.

We’ve been investing in the crowdfunding market for a long time. My initial exposure to it was via the non-profit DonorsChoose where I am on the board and where my partner Brad and I made an early contribution to the fundraise which allowed them to go nationwide. That was almost ten years ago now.

There are two prevalent funding models in the crowdfunding market, all or nothing and keep what you raise. I prefer the all or nothing model and I think most funders do. DonorsChoose uses the all or nothing model and that’s where I saw it first. Kickstarter also uses the all or nothing model.

In the all or nothing model, the project creator picks the size of the raise they want to do and then they have to hit that number to get the funds. In the keep what you raise model, the project creator picks a size of raise as well, but they don’t have to hit the number, they keep whatever they raise.

Many project creators think the keep what you raise model is preferable. They don’t like the idea that they will fail and not get anything. But they fail to realize a number of important points about crowdfunding:

1) Funders prefer all or nothing because they want to be sure the project creator will have the funds to complete the project

2) The need to hit the goal pushes everyone, including the project creator, to work hard to make the goal. It drives the whole raise.

3) Creators who choose all or nothing are more committed to the project, the raise, and the process. Keep what you raise often attracts dabblers.

4) All or nothing raises more money. The amount of money that is raised every year in crowdfunding via the all or nothing model dwarfs the amount of money that is raised in the keep what you raise model, except in the charitable giving category.

Crowdfunding on the global Internet may be new, but raising money is not. In the venture capital business, the keep what you raise model is almost non-existent. A founder can’t go out to raise $5mm and then say to the investors “well we only got $2mm of capital committed, but we are going to close on that next week.” That just doesn’t fly.

Keep what you raise is for people who are afraid to fail. It’s not funder friendly. And it is less effective too.

So if you are considering a crowdfunding project for anything other than charity and are being wooed by a platform that pitches its keep what you raise offering, you should see that for what it is. Lame.

Web Summit was this past week in Dublin. I’ve been watching some of the video from the conference and I thought this discussion David Carr hosted about the future of content was particularly good.

So it’s been about four weeks since I switched from a Nexus5 to an iPhone6. It’s going ok. I feel like someone who has spoken english their entire life and finds themselves living in a city where everyone speaks spanish. I can function but everything seems a bit off for me.

But there is one thing that is driving me crazy. On an Android, whenever I come across a phone number, in an email, a calendar event, a website, whatever, it’s clickable and I don’t need to cut and paste it into my phone app. On iOS it is almost always the case that when I come across a phone number, it is not clickable and I need to cut and paste it and I also find cutting and pasting much harder on an iPhone. The latter might well be “spanish vs english” but I am pretty sure the former is not.

I’m hoping that all of you iOS users out there can help me. I’m open to suggestions except that I can’t move from gmail to the native iOS mail app. I am totally reliant on gmail’s priority inbox feature and can’t operate without that. I would be happy to move my calendar from the native iOS calendar app to something that supports phone number parsing better.

Yesterday I was cleaning up a google spreadsheet that contained a data dump I wanted to do something with. The spreadsheet had a bunch of blank rows and columns and garbage data in it that I needed to remove. So I was going through the sheet deleting stuff, moving stuff, and in general cleaning it up. It was super boring work. I got about half way through this mundane chore and was so bored that I decided to tweet about it to relieve the mental drain this chore was creating for me.

This is what I tweeted out:

I don’t think I will ever have to do the same set of cleanup actions that I did yesterday afternoon and I don’t expect to get a data dump in that general format again so I think the decision not to write a cleanup script was the right one. I got through the cleanup in about 15-20 minutes, not including the time I spent on that tweetstorm, and it would have probably taken me as long or longer to write the script to automate the cleanup.

So I think I made the right call.

But then I got this reply on Twitter:

@fredwilson always automate and open source it. You never know who will need to use it in the future! #dogood

— Francesca Krihely (@francium) November 5, 2014

And I thought to myself that my current “script or not” algorithm is a selfish one and I need to add another factor which is a modification of the 2nd tweet in the tweetstorm. It should be “if I or others are going to find ourselves doing this again.”

Thanks Francesca for correcting me on that one.

My wife and I were investors in the blog network Curbed until it was sold last last year to Vox. Curbed has three primary brands, Curbed (local real estate), Eater (local food & restaurants), and Racked (local shopping). The network operates across something like 25 cities in the US. Curbed is a classic example of a blog network, with a unique voice, attitude, and angle. They built a very nice and highly profitable business over six years and sold to a larger blog network Vox. Most of the team has stayed at Vox and are in key management roles there. Vox is a pretty interesting business too and the Gotham Gal and I are small investors in that company by virtue of our Curbed investment. This is all a bit of backdrop and disclosure for the thing I want to talk about which is the Eater 38.

The Eater 38 is one of my favorite things on the Internet. It is a map/list of the 38 “essential” restaurants right now in about 27 cities in North America. The fact that there are 38 restaurants on the list, not 10, not 25, not 50, but 38 is classic Curbed. They do things their own way and they do it right and they do it well.

But the thing about the 38 that I like most is the concept of “essential.” These are not the finest restaurants. This is not where you will find the very best food right now. These are not the trendiest restaurants right now either. These are the places that you should go to tonight, tomorrow, and again and again, right now. The 38 is updated twice a year (I think) so its always up to date and it changes a fair bit. The 38 recognizes that restaurants ebb and flow. Today’s essential restaurant is not always tomorrow’s.

When I go to a new city and am looking for a place to eat, I will always check the 38 in that city (if there is one). Earlier this week a good friend emailed the Gotham Gal looking for a large table or private room to take a bunch of people to dinner this weekend. I pulled up the NYC 38 on my phone and we went down the list and we found exactly the right place for them.

In the wake of the sale to Vox, Eater has been moved over to Vox’s modern CMS and the Eater 38 has been jazzed up with a nice map/list interface on the web and mobile web. Here are a few of them for all of you to check out (somewhat based on the AVC readership):

New York City 38

San Francisco 38

Los Angeles 38

Philadelphia 38 (for Kirk and LE)

Austin 38 (for JLM)

Toronto 38 (for William)

San Diego 38 (for Howard)

I’ve written about this financial services oriented accelerator program run by the Partnership Fund for NYC and Accenture before. It’s a great program. Most of the major banks and brokerages are sponsors of this accelerator. So if your startup is accepted into FinTech Innovation Lab you will have high level access to these banks and brokerages. And there are “sister” programs in London and Hong Kong so you can also access sponsoring financial institutions of the sister programs.

If you are building a company that intends to sell to or otherwise partner with the largest financial services companies in the world, you would be well served to apply to FinTech Innovation Lab. The next program runs from April to June of 2015 and you and several of your colleagues will be required to be in NYC during that time period.

Applications for the 2015 spring program are now open and the application deadline is December 5th. There is an info session next week on November 12th. Details on all of this and how to apply are here.

I have seasons tickets to the Knicks and I share seasons tickets to the Nets with my friend John. Managing these tickets is a bit of a pain. At the start of the season, I download the iCal files that both teams post on their websites and convert them into CSV files. I then convert them to Google Spreadsheets and then share them with a bunch of people. Then I take the games I can go to, and give away games to friends and family, and sell a few games here and there. John does the same on his “half” of the Nets tickets. The truth is John gets to go to a lot more Nets games than I do but I get to go to the ones that matter, with him in most cases.

This morning I logged into the Nets season ticket holder website, and sent two tickets to tonight’s Nets Thunder game to Alex. Neither John nor I can go so I gave these tickets away. This wasn’t too hard and it would have been even easier if I had done it on the Nets iPhone App.

Like many industries, the Internet and mobile has changed ticketing. These days you have your tickets on your phone, when you board a plane or enter a stadium, you just pull out your phone, they scan the QR code, and you walk through. Getting the ticket on the phone is pretty easy if you have the app installed. And, though I have not figured out how to use it yet, Apple’s Passport App seems like a secondary storage system for tickets for those who don’t want to have hundreds of ticket apps installed on their phones.

But as much as ticketing has changed, it still hasn’t reached the ideal state which in my mind is how Bitcoin works in my Coinbase app. The Coinbase app offers the following options:

I would like to have a ticketing app that offers the same thing. Buy/sell, transfer, account summary. When I want to buy tickets, I just buy them from the app. When I want to sell tickets, I just sell them from the app. When I want to transfer, I just send them from the app.

Bitcoin can be the transactional system that all of these tickets run on top of. You can “color a bitcoin” with anything, and a ticket would be an ideal thing to color a Bitcoin with. Coloring means you take a tiny amount of bitcoin, say one penny worth of Bitcoin, and you attach something to it, like Row 15, seat 9 to tonight’s Nets Thunder game. When that ticket is sent, bought, or sold, that penny worth of bitcoin clears in the blockchain and the transfer is recorded. This insures that there is only one valid ticket to that seat to tonight’s game out there in circulation. That’s pretty important and that’s what most ticketing systems spend a lot of time and effort insuring. You no longer have to build or buy that technology if you want to sell tickets. It’s free for anyone to use. It’s called the blockchain.

Anyway, I think within a decade all tickets will be bought, sold, and transferred this way. The phone, or watch, or ring, or belt buckle, or something else, will house the ticket. And it will be bought, sold, transferred, and cleared on the blockchain. And the whole world of ticketing will be a lot easier for everyone as a result.

NY Magazine has a piece up on podcasting. I think this is the money line in the post:

Connected cars are a boon for the entire streaming audio industry, but they’re especially exciting for podcast makers, whose shows are perfectly suited to in-car listening. Just as TV watchers can now choose Netflix or Amazon streams over surfing channels, radio listeners will soon have a bevy of on-demand options at their disposal.

As is often the case, a simple little thing turns out to be the big thing. That little thing is that almost every car that has been sold in the past five years has had bluetooth connectivity to the car audio system. These days your phone is connected wirelessly to your car the minute you open the door and get in it. That’s a powerful thing. The phone has become the portal to the car audio system. And so if you can get podcasts on your phone, which is trivial these days, you can listen to them on the way to work or your way home.

It is also true that the quality of podcasting content has massively improved in the past five years. Back in 2005 and 2006, our family used to do a podcast called Positively 10th Street. It was a fun experiment but we were pretty terrible at the podcasting thing and dropped it after a year or so. All of the episodes seem to have vanished from the Internet which is shocking to me but probably a happy fact for my kids.

As the NY Mag piece explains, many public radio veterans have started podcasts and they are, as you would expect, very good. And you have things like the A16Z podcast and Spark’s Hallway Chats to listen to if you are tech or startup person and want to listen to tech/startup stuff on the way to work. The trending audio page on SoundCloud shows the most popular talk content on SoundCloud. The diversity of subject matter and styles is really extraordinary.

And there are also a host of podcasting clients for mobile phones that have come to market recently. Stitcher, Overcast, and Instacast are three popular ones. I mostly just listen on SoundCloud but if you want to have a single client that can aggregate RSS feeds as well as SoundCloud and other audio hosts, the mobile phone client is the way to go.

The only thing we need now is for Howard Stern to leave the airwaves and move to podcasting. Then podcasting would take over the world of talk radio. It seems inevitable.