Posts from 2014

Today is a big day for the Internet as we know it. The FCC will meet today to consider a proposed notice of rulemaking that could, if adopted, change some fundamental rules about how the last mile of the Internet works.

I’ve written about this issue a lot here at AVC, but if you are new to it, please read this post and this post. That should get you up to speed (no pun intended) on what is going on.

So I am participating in a virtual protest movement called #StopTheSlowLane today.

You probably got an annoying interstitial when you came to AVC this morning that made you wait and wait while AVC loaded.

I’m running the Slow Lane Widget via a WordPress plugin on AVC today and maybe for a few more days. If you would like to put the widget (javascript or WP plugin) on your site, you can get it here.

I’ve seen this widget at a few places around the Internet over the past 24 hours. I am hoping this spreads to other bloggers and ideally mainstream websites. If the mainstream Internet user can see what a slow lane really looks like, I think this issue will be clarified for everyone and the FCC will do the right thing. Which is to reclassify last mile Internet as a telecommunications service that is regulated under Title II. Last mile Internet is like water and electricity and should be regulated as such.

Last year, USV invested in Firebase. Albert wrote a blog post about Firebase back when we invested.

Yesterday Firebase announced a hosted version of their product so you don’t have to use it alongside S3 or some other host.

I wandered by Hacker News to see what the developer crowd thought about Firebase and the new hosting service and was pleasantly surprised to see one of the most positive threads on Hacker News that I have seen in a long time.

The top voted comment describes the power of Firebase really well:

I’ve been using Firebase for a couple of months now for an iOS app I’m building for a client, and it has been a fantastic experience.

For anyone who doesn’t know, it’s main selling point is that it automatically syncs with the server so you can focus on the data instead of the communication protocol or replication. Its nosql data store looks like a local filesystem, so you can save trees of data to it as JSON. It also has server-side rules written in javascript that enforce constraints on data and read/write permissions per user. They also have a free test account for developers.

“What about merge conflicts?” was my first question, but luckily it has transactions on an individual node (and its subtree) that perform an “optimistic-concurrency transactional update” which basically means a compare-and-swap where you review the current value in a callback and decide whether to try to commit that value (or a new value, say, for a counter) or give up. For most other writes, you’re usually just saving status updates where there is little or no danger of being rejected or encountering merge conflicts. If in doubt, it’s possible to get a callback with the final value.

So when it’s all said and done, I can totally see writing a full-featured app using it without a single line of server-side code. I used their hosting while it was in development to store images (like a CDN) and it’s very simple to use from the console, so if you have a build script, it could push to production with a single call. After an exhausting ordeal battling iCloud for a different project, Firebase is so profoundly better that I will never go back.

That’s the kind of unsolicited customer testimonial that most companies would die for. It’s a real tribute to the Firebase team that they have built something that developers love. We have been involved with a few companies that make products developers love (Stack, Twilio, Mongo for example) and these have all been fantastic investments for us. Looks like its time to add Firebase to that list.

Charlie O’Donnell, who was our first analyst at USV and who now runs his own VC fund, wrote a post yesterday outlining the economics of running a venture capital fund.

Charlie’s fund, Brooklyn Bridge Ventures, operates on the 2.5/20 model. That is 2.5% in annual management fees and 20% of the profits after the investors get their capital back.

That is the exact same set of economics the USV operates on.

There are many, probably most, of our peers in the VC business who charge a “premium carry” of 25% or 30%, but at USV we have never moved away from 20%. If you do your job well, 20% will make you a bundle.

Back at Flatiron, we increased our carry on a new fund just before the Internet blew up and caused massive losses in our fund and every other VC fund. That was one of the many reasons Flatiron didn’t work out so well in the end. And that taught me a big lesson. When you raise your compensation, you had better earn your increase. We did not. No more raising carry for me.

I am not going to go line by line on the USV income statement like Charlie did. But we manage $1bn across six funds which is roughly $160mm per fund. That is on the small side for our peers and probably slightly below average for an early stage venture fund. One of our funds will stop paying management fees this year because it is ten years old. And we have a couple more that are paying reduced management fees because they are no longer in their “investment period”. And our two Opportunity Funds pay nominal management fees and are mostly about carry for us.

So while we manage about 200x what Charlie does, we don’t make 200x the management fees. We probably make 50x the management fees that Brooklyn Bridge Ventures makes. We have twelve employees and our own office. The people who work at USV are well compensated for sure, but our goal is to make way more on carry than we make on cash compensation. That is the basic point Charlie made in his post and it is true for us as well.

The goal of VC fund economics is to incent the partners to focus on carry and not on current cash compensation. That means that we are focused on generating large gains on our investments and that aligns us well with the entrepreneurs we back and the investors who provide us with capital. That works incredibly well in a small fund like Charlie’s, and it works pretty well in a traditional fund size like USV’s. It can break down as the dollars under management get larger and larger and the management fees turn into huge numbers. We have purposely kept USV small to avoid that. And I think that has been a good decision for us.

Over the past few years, a phrase I often hear uttered in business has come to bother me a lot – “you guys”.

I hear it said in all hands meetings, I read it on blogs and other communication channels between a company and its employees, I hear it in small group conversations.

I hear both women and men say it, so it is not necessarily a sexist thing.

But to me “guys” means men. And so I think this phase is reinforcing a societal bias in the tech business against women.

This past saturday I attended a recruiting session for young women to attend The Academy For Software Engineering.

As I stood in the back and watched these young women talk about their career aspirations, I thought that we have a good shot at making the tech sector non gender biased in the coming years. And I am excited about.

So I have consciously attempted to strike the phrase “you guys” from my vocabulary unless I am, in fact, talking to a group that is all male.

One of the many things that got my attention last week was the speech Kevin Durant gave accepting his MVP award. His remarks about his mom were very touching. He said “when something good happens to you, I tend to look back to what brought me here.” And, of course, at the top of the list of “what brought me here” is our mothers.

Like most of us, I have two Mothers in my life.

My Mother, Peg Wilson, who gave me birth and put up with all the crap that I dished out as a kid. I was a difficult child. I always wanted things my way and drove most of the people around me crazy. At the top of the list of people I drove crazy was my Mom.

The other Mother in my life is the Gotham Gal. Not only has she been an incredible mother to our three children, she took over from my Mom around the year we met and finished off the job of shaping who I am. The Gotham Gal is my harshest critic and always has been. There is nobody who can put me in my place quite like her. I don’t appreciate that in the moment, but I appreciate it after the fact.

I guess that is the ultimate thing about Moms. They shape who we are. They are demanding, loving, and giving. Thank god I have two mothers in my life. I love both of them very much.

My partner Albert gave a talk at DLD NYC last week that covered some interesting topics regarding the future of our economy and our society. It’s a short talk (only 12mins) and well worth watching.

I like to read the news on my Nexus 7 while sitting at the bar in our kitchen. The Gotham Gal sits next to me reading the paper. I like the juxtaposition of that.

I don’t like reading on the Nexus 7 when it is lying flat on the bar. I want it at an angle for easier reading.

So I purchased this tablet stand on Etsy recently.

It gets the job done, but it’s a bit flimsy. So I am looking for something a bit more substantial.

Does anyone use a tablet stand for reading on a Mac Mini or Nexus 7? And if so, what do you use? I am all ears.

I realize I’ve been writing a lot this week about the FCC’s decision next week on new rules for the last mile Internet here in the US. I promise I will return to the regularly scheduled programming soon. But this is a big issue and we need to keep up the pressure on the FCC to do the right thing here.

Today, about fifty leading VCs have signed onto a letter to the FCC asking them to keep the Internet free of fast lanes and slow lanes.

We are hoping that more angel investors and VCs will want to sign onto this letter today before we send it to the FCC tomorrow.

We pulled this together quickly over the past 24 hours, and weren’t able to directly reach as many VCs and other investors as we would have liked, so will gladly welcome additional signatories throughout the day today before we formally file this with the FCC tonight. Email nick [at] usv [dot] com if you’d like to join.

This debate is just picking up, and it will be critical for everyone who cares about innovation on the Internet to wrap their heads around this issue, and engage on it, as the FCC runs its rulemaking process through the summer and fall.

This week Nathaniel Granor, who runs the TEALS program in NYC, spoke at the NY Tech Meetup. If you are a software engineer and if you might be up for helping to teach CS in High Schools, please take two minutes to watch this.

If you want to learn more about participating in TEALS in NYC, you can do that here. But please take action quickly as the deadline to apply is this week.