Posts from May 2016

Disrupt NYC

I am doing not one, but two, appearances at Disrupt NYC today.

The first appearance will be at 9:05am est which is a chat with Jordan Crook. We did not discuss what we are going to talk about in advance (I hate doing that), but I did send her this list of things I think are interesting to talk about:

– robotics (drones, autonomous vehicles, etc)
– machine learning/AI
– VR/AR/MR/etc
– blockchain/bitcoin/ethereum/open bazaar/etc
So hopefully we will cover that stuff. The chat is 20mins long so 9:05am to 9:25am est.

The second appearance will be from 2pm to 2:20pm est. Tim Armstrong and I will talk about Tech:NYC which I blogged about last week.

I believe the entire conference is being livestreamed on the Disrupt website. So in theory you can watch these two appearances from your desk. That’s great.

We Are Hiring An Analyst

Every couple years USV hires a two year analyst. This is an ideal job for a young person early in their career who is looking to get a bird’s eye view on startups, the tech sector, and venture capital investing.

This is not the start of a career at USV as this job ends after two years and we expect the analyst to move on to other things. Our past analysts have launched a seed fund, joined one of our portfolio companies, joined another venture firm, joined another venture backed startup and worked on their own start-ups.

We have kicked off a new analyst search and my colleague Nick blogged about it on the USV blog on Friday. We’ll be accepting applicants until 11:59pm Eastern time on Tuesday, May 31st.

This search is open to anyone. There are no credentials required other than the ability to legally live and work in the US. This job is in New York City and we are not open to a remote work situation for this position.

If you remain interested after reading all of that, please visit the USV blog where there are details of what we need to know about you and how to apply.

The Maternal Instinct

It’s Mothers Day, a time to celebrate motherhood and moms. I woke up thinking about the maternal instinct and it’s effect on business.

I was talking to a friend last night about the challenges of working on troubled or failed investments. We were debating whether it is even worth the time to try and save a troubled investment versus moving on and focusing on a new one. This is the endless debate in venture capital. It can be applied to managing people as well. Should you work to develop a talented employee who is struggling or just move on and find someone new for the role?

As we were debating the point on whether to fight for a troubled investment or just move on, the Gotham Gal walked by. And I turned to my friend and said “she never gives up on any of her investments and she has 10x the number that I do.” I’ve cautioned her many times that she can’t fix every company, every CEO, every business plan. But she just keeps trying. It’s why I love her so much.

There is something about the maternal instinct. It’s a powerful thing. It is about protecting and caring for someone or something. It is innate in women and they do bring it with them into the world of business. This is one of many reasons why gender diversity in a team is important. Men and women bring different perspectives and instincts to a situation. Debating it out and finding common ground can be quite valuable.

Surely there is a limit to the maternal instinct in business. You can’t make every hire work. You can’t make every project work. You can’t make every investment work. That’s what I frequently tell the Gotham Gal. But that doesn’t stop her from trying. And I understand why.

Happy Mothers Day to all the moms out there. You care for us and we love you for it.

Video Of The Week: Brian Watson On How To Email A VC

Brian Watson worked at USV from 2012 to 2014. I just came across a very short video (~2mins) in which he answers a great question (how to email a VC). I agree with the basics (keep it short, make it actionable, be real, and link to your product). Here is it in his own words.

Feature Friday: Photo Search

I’ve been uploading my smartphone photos to Google Photo for my last two phones. Earlier this week, I was in a meeting with some architects and I said that I really liked the way they do the showers at the Soho House in Berlin. They asked if I had a photo of them. I opened up Google Photos, typed “Soho House Berlin”, and got this result.

soho house berlin

Sure enough, I had taken some photos of the shower. I showed them to the architects and we were able to talk about the features I liked in the shower. That was kind of magical because other than taking the photos, I had done nothing to tag or categorize them.

This works for all sorts of searches. I remember seeing a painting I really liked at The Hammer Museum in LA. A search on “Hammer Museum” produces the image I was looking for.

hammer museum

If you are looking for photos you took on a trip, you can do the same thing. Here are some photos I took of Grand Bazaar in Instanbul:

grand bazaar istanbul

Google Photos isn’t perfect. Some searches that I would expect to work don’t. But it is pretty good.

Our portfolio company Clarifai has a similar service in an iOS app called Forevery. If you don’t want to upload your photos to Google Photo and want to search them locally on your iPhone, Forevery is a great way to get a similar experience. Forevery will also search your photos in Dropbox.

Since I’m on an Android right now, I am using Google Photos but I use both apps on my iPhone.

Photo search is amazing. You no longer need to create albums and tag and categorize your photos to be able to find them. You just search for them. Kind of like how email changed when Gmail arrived.

Small Ball

Small Ball is a style of play in basketball when a team sacrifices size/height for speed and shooting. The Golden State Warriors, the best team in the NBA this regular season, are a good example of a team that often uses this strategy.

As the venture capital business and entrepreneurs are increasingly bulking up in terms of fund sizes (VCs) and round sizes (entrepreneurs), I am decidedly a fan of small ball.

Many of our best investments at USV have been in companies that never needed to raise VC or only needed to raise one round. In these situations, the founders own/owned large stakes in their companies, often north of 50% for the founding team at exit. These companies focused on a revenue/business model at launch, they kept their headcounts low until they had scale/traction in their usage, and they reinvested the profits back into scaling the business instead of external capital. My favorite example of this is Indeed where USV had to beg the founders to let us invest, only did one round of venture capital, and exited for $1.4bn and is likely worth 2-3x that number as the business has scaled massively post exit. Kickstarter, DuckDuckGo, and Zynga are other good examples of small ball in action. Zynga did raise a lot of money but it went to the balance sheet and secondaries and never was used to fund losses.

Small ball also works well in VC. It is hard to return capital to your investors in the VC business. Exits are a long time in coming and you get diluted over time and even in the biggest exits (billion dollar plus valuations), you might only have proceeds of $100mm to $200mm. If you have a fund size in the $500mm to $1bn range (or larger!), you need many of these big exits to return the fund once. But your LPs want you to return the fund three times, or more. I could never sleep at night if USV were managing a billion dollar fund. I don’t know how we would ever get our LPs back their money plus a return. I know it can be done and has been done. But I don’t really know how it happens. Getting big exits is just so damn hard.

So in an era when VCs and entrepreneurs are going for bulk, I really like the opposite approach which favors speed and agility over pounding it inside. It allows me to sleep at night, which is not that easy in our business.

Coin Center Keynote

On Monday night, Coin Center had their annual gala dinner in NYC which coincided with the Consensus Conference. I had the pleasure of giving a keynote which I will post in its entirety.


Hello. My name is Fred Wilson. This is my One Name profile. It is verified and resident on the blockchain at onename.com/fredwilson

one name profile

I have been investing in early stage emerging technologies for thirty years as a venture capitalist. I work at Union Square Ventures and we have been interested in and investing in the blockchain sector since 2011. We have watched this set of emerging technologies develop over the past five years and we remain very excited about the potential of decentralized trust systems.

I would like to talk tonight about resilience. Resilience is a trait we admire in entrepreneurs and it is a trait we look for in technologies and systems.

I remember when I first heard about the Internet, early in my career as a VC. It was described to me as a massively decentralized system designed explicitly to survive an attack that brought down one or more of its core systems. I thought about that and it resonated with me. Here was a system that was explicitly not controlled by a single entity and was designed to be resilient and self healing. A few years later, I left the venture capital firm I was working at and started a new firm dedicated to only investing in Internet based businesses. For me, the Internet was, and is, to use a term I learned from Joi Ito, a “belief system”. I have a deep and fundamental belief in decentralized, open, resilient systems. That belief has informed what I have invested in for most of my career and it has informed what I believe in politically and economically.

So when, back in early 2011, my friend Rikki Tahta told me about Bitcoin, I was immediately smitten. Here was another technology that was designed explicitly to be resilient, decentralized, open, and available to anyone. It fit like a glove into my belief system. So I started writing about it, meeting with people who were working on it, and, eventually, investing in companies built upon this new technology. We now have a handful of portfolio companies that are building businesses on blockchain technology. This is not just my area of interest. Every one of our investment team members works on and is involved in investing in this sector. Our pace of investment in this sector is increasing.

And yet, standing here today, I cannot point to a blockbuster company that has been built on blockchain technology. There has been no lack of trying. There is no lack of funding. I am a true believer and yet I can’t help but admit that despite all the hype, all the effort, all the capital invested, there has not been anything truly transformative to society that has been built on the blockchain, except perhaps Bitcoin itself and likely Ethereum. But these are enablers. What have the enabled other than grey and black market activities?

You know you are in a unloved sector when you start getting hated on for your boosterism on Hacker News. I saw this comment there last week:

After every VC, every founder, just everybody is talking about AI and bots Fred is a bit late to the game but better late than never. Or maybe writing about the Blockchain kept him back.

I don’t approach things that way, moving from one hot sector to another. It is a recipe to be late to everything. And I don’t let the haters get to me either. But I do find it amusing, and telling, to understand the broader mood. Bitcoin, blockchain, and all of the rest of this sector are in this portion of the hype cycle curve:

Gartner_Hype_Cycle.svg circle

Which brings me back to resilience. That is what keeps me excited about the blockchain sector and that is what all of us who are true believers need to have right now.

This is a Bitcoin price chart since Jan 2013.

btc price chart

If you draw a trend line from the start of that chart to the end of that chart, it is steadily up and to the right. And during that same time, we have seen so many things that should have meant the end of Bitcoin. And yet, it just keeps chugging along. That tells you something.

This is a chart of transactions on the Bitcoin blockchain over that exact same period.

bitcoin transactions

Same thing. Up and to the right, day after day, month after month. This is a resilient system.

So just like the set of technologies we are working on developing and commercializing, we need to be resilient in our work. And personal and professional resilience starts with a belief system. We must remind ourselves of why we believe in open, resilient, distributed, and decentralized systems and the power of these systems to produce profound change for businesses, economies, and society at large.

There have been and will continue to be headwinds for blockchain based technologies. Fundamental change doesn’t come easily.

We have seen that open source communities can and do struggle to develop consensus about what changes should be made and when and how. That will continue to be a challenge. I personally believe that multiple projects with multiple open source teams developing things in parallel is the best way to manage this risk. That could be multiple teams working on Bitcoin’s core system. Or it could be multiple blockchains and cryptocurrencies. It is likely to be both.

We have seen that the companies and industries that are most threatened by these technologies will not sit idly by while the market adopts new ways to do things that they do not control. I see the wave of private blockchains and startups that build and sell them as an attempt to coopt these technologies. It may take some time for the market to see this for what it is.

And we know that governments and the elected officials and bureaucrats and regulators who work in them are uncomfortable with these technologies and can be expected to try to rein them in as much as they can. This is where Coin Center comes in and I want to personally thank Jerry and his team for all that they have done, are doing, and will do to navigate the regulatory forces for our sector and find common ground and win/win solutions that move our industry forward in a way that governments can live with. This is hard work, done largely behind the scenes, with very little fanfare. And yet without it, our industry cannot and will not succeed. So thank you Jerry and thank you to everyone who supports Coin Center and works on it.

To bastardize a phrase from Ben Horowitz, the hard thing about hard things is that they are hard. The forces at work to hold back distributed and open trust systems are firing away on all cylinders. And many of our wounds are self inflicted. It is not an easy time to be a believer. It is not an easy time to be an entrepreneur who has decided to focus completely on this sector. It is not an easy time to be an investor in and cheerleader for this sector. I am being made fun of. Maybe you are too.

But let me tell you this. If they aren’t laughing at you, you aren’t working on the right things.

We are working on the right thing. It is taking longer than I thought and than you thought. It still isn’t clear to me how this market will eventually break out. But all the signs that I look at are moving up and to the right, day after day, month after month, year after year. The technology is working. And our breakthroughs will come. Maybe they are right around the corner. Or maybe they are years off. But if we stay resilient, like the systems we are working on, we will prevail.

Thank You.

Tech:NYC

Yesterday was the launch of a new organization in NYC that I have been working on since last fall. This new organization is called Tech:NYC and will be led by Julie Samuels. It will be co-chaired by Tim Armstrong and me.

For years the tech sector has been represented in the city and state and with local civic organizations by a loose and informal group of well known entrepreneurs, CEOs, VCs, and engaged members of the tech sector. I have been one of them.

Lately, as the tech sector has grown in importance in the local economy, this approach has become unsustainable. The same small group of people keep showing up at meeting after meeting.

We need a formal mechanism that allows the entire tech sector to be engaged with local government and civic organizations and we need to get the right people to the right meetings instead of the same small group meeting after meeting.

Tim and I explained all of this in a blog post that aired yesterday on Tech:NYC’s website.

Tech:NYC will be member supported. We would like every tech company, large and small, to join and be represented and engaged. Membership details are here and startups with less than 20 employees can join for free.

If you run a company in NYC, we hope you will sign your company up to be a member of Tech:NYC. If you work at a company in NYC, we hope you will encourage your leaders to join Tech:NYC.

The Business Blockchain

the business blockchainI’ve been reading The Business Blockchain this weekend. It was written by AVC community member William Mougayar.

This book started out as a Kickstarter project which I blogged about at the time. If you backed that project you will get a copy of this book. If not, you might want to get a copy on Amazon.

I am not done with it yet, but the book makes a complex subject, blockchain technology, accessible for the non-technical. It also lays out some of the more obvious uses cases for the technology and explains how the blockchain technology market is evolving.

If you think you might want to start a business based on blockchain technology or if you think blockchain technology is going to reshape a market you are working in, or if you just want to understand this thing that your son or daughter is obsessed about, then this is a great book to read.

I am also quite proud that the conversations we have had on this blog on this topic over the past five years have shaped William’s work and certainly had something to do with his interest and his growing expertise and reputation in this area.

This blog community is a talented group and we have helped each other grow and develop. This book is just one of many examples of that.