Posts from November 2015

Our 60+ portfolio companies have meetups among themselves more 50x a year. These meetings are part of something we call the USV Network. They also have peer mentoring services and a large number of vibrant slack channels. The idea is to get them sharing information with each other in a networked model versus relying on the USV team to provide the information flow. We still do that, of course, but its not the primary way that information flows around our portfolio. We believe in the power of networks and we try to use them in our business as much as as we can.

Last week in one of the meetups, the subject of international expansion and the lack of reliable (and expensive) mobile data in certain regions came up. A number of our portfolio companies have found that providing offline functionality in their mobile app improves app usage and adoption in parts of the world where mobile data is less reliable and more expensive.

This makes total sense but it was not obvious to many of our portfolio companies and it was not obvious to me either. Which is why I am passing this tip onto all of you. If you have a mobile app  that is doing well in the more developed regions of the world but is struggling in the less developed regions, think about going offline. That might help.

I wrote this “mobile downturn” post 18 months ago. It rings more true today than when I wrote it.

Some friends emailed me about investing in a mobile consumer startup last week and my reply to them included this line:

doing anything in the consumer mobile space these days is super hard. i can’t think of many consumer facing mobile apps that have gained massive traction and sustained it in the past three years. can you?

So if you want to launch a new consumer mobile app, what do you do? The best answer I have heard to that question came at breakfast yesterday with an entrepreneur. He said he plans to build mobile web experiences that can go viral and build adoption of his product and use that as a funnel to drive adoption, over time, to his native apps. I’ve seen that work.

But even so, it’s not an easy time to build consumer facing mobile companies. It is not an easy time to invest in them either.

In our first fund that we invested from 2004 to 2007, 57% of our investments were in broad horizontal consumer facing companies. This was pre-mobile so many did not have a mobile app when we invested. But all of them that are still around are predominantly mobile companies today. That percentage declined to 45% in the fund we invested from 2008 to 2011, and further declined to 30% in the fund we invested from 2012 to 2014. In the fund we are investing now, which is about 75% invested, that percentage stands at 35%, a bit of an uptick, largely because we’ve gone a bit later in our consumer facing strategy and have largely limited our investments in consumer facing businesses to ones that have strong product market fit.

The funny thing about all of this is that I don’t see any shortage of entrepreneurs walking into our offices with plans to build and launch consumer facing mobile apps. While the odds are increasingly against them, hope springs eternal it seems.

If you listed the habits of successful people, tracking and measuring would be near the top of that list. I see it with people, companies, and teams that I work with. I see it in my own behavior.

When the Gotham Gal started making angel investments with our personal capital nearly a decade ago, I put together a spreadsheet to track all of them. That spreadsheet is now almost 100 rows long. If she wants to know how it is going, I can give her the numbers ten different ways. And we do that from time to time. A portfolio review of sorts.

When our best portfolio companies start building a new product or feature they scope out how much investment they are going to make in this new product or feature and they build a base case for what the results of this investment will be. They instrument the product or feature to make sure they can track the results they expect to get. And they track the actual investment vs budgeted investment and they measure the actual results vs the expected results. Not only do they know how they did versus expectations, they also know whether they got a positive return on the investment or not. This informs how they approach the next investment.

I see people doing this with their health, their education, their finances, and, most commonly, their work.

Technology helps immensely with this desire to track and measure things. From google sheets, to Fitbit, to Duolingo, to Foursquare, I find myself tracking and measuring more and more of my life every day, and its easier and easier to do so.

But technology alone will not get you there. You have to want to do this. Some of that is learned and some of that is innate. But it can be taught. I’ve tried to pass my track and measure habits on to our kids. And it makes me happy when I see them doing it.

If you want to get sharper and better at something, track it and measure it. It will help you do that.

A few weeks ago, USV and our friends at Box Group hosted a panel discussion in the USV Event Space on artificial intelligence. We called it Talking With Machines (bios of the panelists are on that page).

Here’s the video of the discussion.

Talking with Machines from Union Square Ventures on Vimeo.

If you’d prefer to listen to it and not watch it, you can do that on SoundCloud:

Our portfolio company Etsy launched a super cool feature called Shop Updates a few weeks ago that I would like to talk about today.

Etsy sellers have always been great marketers. They bring buyers to their shops on Etsy in a myriad of ways. I remember back in the early days seeing Etsy sellers promoting their shops face to face at craft fairs. They still do that, of course, and much more.

Social networks are an obvious place for sellers to reach new buyers and Etsy sellers are all over them. But it hasn’t been that easy for a seller to be creative on social networks. Posting a link to their shop on facebook, or tweeting or pinning their latest item is fine. But doing that over and over quickly gets boring for everyone.

Enter Shop Updates. They allow a seller to take photos of their items in the real world and share them on social networks and into the Etsy mobile apps with links back to their shops and item pages.

An example will be illustrative.

Glittery Moon Vintage has this porcelain vase for sale on Etsy.

She can post that image to facebook, pinterest, twitter, and instagram and get buyers to come and take a look.

But with Shop Updates, she can take a picture of that vase in the real world and post it to facebook or some other social net.

My favorite thing about this feature is the orange shopping tag that signifies that the shared image is “shopable” or “clickable”. You click on that orange tag and are taken to Etsy where you can look at the item and buy it.

These items also show up in the Etsy app to everyone that has liked your shop. Here’s a screenshot I took of my Etsy app this morning:

Here are some more details on Shop Updates in case you want to learn more.

So don’t be surprised if you start seeing orange tags showing up in your Twitter feed, your Facebook feed, your Pinterest app, and your Etsy app this holiday season. Shop Updates also show up in Instagram without the orange tag because Instagram doesn’t make their images clickable.

And when you see those tags, you should think about clicking and buying something unique and special for your loved ones this holiday season!

Our portfolio company Kickstarter announced yesterday that it has passed $2bn in total project funding since it launched six years ago.

This page has a ton of stats on the $2bn of pledges.

My favorite is this graphic:

The studio system funds creativity in million dollar increments.

The Kickstarter economy funds creativity in fives and tens.

I love it and I love Kickstarter.

I have used the word “physics” to describe a few things here at AVC over the years. I am tempted to write a “textbook” on this topic as I have observed many “formulas” over the years that seem to repeat themselves again and again.

A few examples are this post on the relationship between monthly actives, daily actives, and concurrent users, or this one on the elasticity of paid vs free services. I also wrote one about the numeric relationship between creators, curators, and consumers on a platform but I’m having trouble finding it and linking to it right now.

Yesterday I suggested another to William Mougayar via Kik when he observed to me that valuation mania has emerged in the blockchain for financial institution space.

I told him that when you are looking at financial manias, the amplitude of the mania is inversely correlated to its duration.

I like to think of these manias as waveforms. When they build slowly they last longer. When they develop overnight, they dissipate quickly as well.

This rule also works pretty well for consumer internet services.

In the web era, if you had a two sided marketplace, you had one app that served both sides of the market.

In the mobile era, it seems that it is better to have different native mobile apps for both sides of the market.

Ridesharing and delivery companies like our portfolio companies Hailo and Sidecar have apps for the rider/buyer and apps for the driver.

Etsy has the buyer focused Etsy app and the Sell On Etsy app.

And yesterday our portfolio company SoundCloud launched Pulse, their creator app, on Android.

This requires more development and marketing resources for each side of the market, yet another reason why building a business in the mobile era is harder, more complicated, and more expensive.

But it sure feels like this is how you have to do it. I’ve seen folks try to put both sides of the market in a single mobile app and it doesn’t work that well.

If Brooklyn were its own city, which it was until 1898, it would be tied with Chicago as the third largest city in the US. It is the largest borough in New York City.

So I am excited that the Brooklyn Borough President Eric Adams is going to announce Code Brooklyn today at PS/MS 282 in Park Slope.

Code Brooklyn is Brooklyn’s effort to get every one of its elementary, middle, and high schools teaching computer science. It is highly complimentary to the City’s effort, announced by Mayor de Blasio earlier this fall, to get computer science into all of the city’s schools over the next ten years. Brooklyn is stepping up and getting out and leading the city in this effort and I’m really pleased to see that.

The signature element of Code Brooklyn is to get all 500 of its public schools to do the Hour Of Code this year during computer science week which is December 7-13th. For that to happen, they will need a ton of parent and community support.

CodeBrooklyn needs volunteers to help run “Hour of Code” activities in schools. This is your chance to inspire in students an interest in computer science. The commitment will take about 2-3 hours of prep time and then about 3-5 hours start-to-finish on the the day of the school’s Hour of Code. You can volunteer at volunteer.codebrooklyn.org – CodeBrooklyn partners NPower and #NYCEDU will match you to a school based on your interest and experience. I hope you’ll you’ll use this opportunity to start a long-term relationship with the school community with which you’re matched or be inspired to volunteer for a CSNYC supported program like TEALS or ScriptEd.

If you would like to get your child’s school involved in Code Brooklyn and the Hour of Code, you should  connect with CodeBrooklyn to find out how to make that happen.

I’d like to thank my friend and occasional AVC community member Rob Underwood for his leadership in the Brooklyn public school community and his passion for getting computer science into our schools. Code Brooklyn would not have happened without him. I’d also like to commend Eric Adams for understanding the power of computer science education to improve the lives of the students and families of Brooklyn and to change the trajectories of their lives and their neighborhoods.