Posts from June 2018

The Gotham Gal and I got to see Patty McCord give a talk a few months ago and I was blown away by her pragmatic, no-nonsense, calling out bullshit approach to managing people. Patty helped Netflix build their culture and left about six years ago to advise companies, small and large, how to manage people better.

She’s a breath of fresh air in a world of corporate speak. I think you’ll enjoy her as much as I do.

As I mentioned yesterday, GiveCrypto.org is a non-profit that allows anyone to make a charitable donation of cryptoassets and get a charitable tax deduction (in the US).

If you want to join me in doing that, you can do so here.

Yesterday, Brian Armstrong, the founder and CEO of our portfolio company Coinbase, announced the formation of a new non-profit called GiveCrypto.org.

Joanne and I are donating some of our Bitcoin to this charitable effort. Here is a list of the donors who have committed to give away some of their crypto assets to this effort.

So what is GiveCrypto.org all about?

Well it is basically an effort to take some of the crypto assets that folks like me bought a long time ago, that have appreciated a lot, and use them to address poverty around the world.

As Brian wrote in the announcement:

GiveCrypto.org is a nonprofit that will both hold and distribute crypto to those in need. It’s an evergreen structure, meaning it gives away less than the amount that the fund grows each year.

and

Cryptocurrency is unique in that it can be used to send small amounts of money anywhere in the world, in real-time directly to an individual in need — they just need a mobile device with an internet connection. With distribution of aid to foreign countries, high fees and corruption are unfortunately common; cryptocurrency is a way of circumventing both.

If you would like to learn more about this effort, you can do that here.

If you would like to give some of your crypto to this organization, you can do so here.

The best companies I work with have a heartbeat, they operate on a pace and a cadence and a rhythm that is perceptible to everyone in and around the company.

I am not talking about just product and engineering, although you can’t have a company with a heartbeat if you don’t have it in product and engineering. A company that doesn’t ship product regularly builds clogged arteries and that becomes pervasive in the culture and you end up with low morale, a lack of confidence, a revolving door, and a mess.

There are many ways to get this beat going and sustain it. There are techniques like agile product development, monthly and quarterly OKRs, weekly show and tells at the all-hands meeting, metrics meetings, etc, etc.

What it comes down to in my view is a mindset around getting stuff done on a regular cadence and then letting that rhythm become a wave and riding that wave.

And it starts with the CEO. They are the drummer in the band. They set the beat and keep the beat. And everyone plays around it.

If you have been in a company that has a heartbeat, you know what I am talking about.

If you haven’t, then you need to find one and join it and learn how it feels.

Becuase a heartbeat is what you want in your company.

I guess this is the week I am going to compliment our competitors in the VC business.

That meme started yesterday in my post on Benchmark and will continue today.

Yesterday afternoon my friend Chris Dixon announced a new VC fund called “a16z crypto” which he will lead with a team of great investors, many of which are also friends, including his new partner Katie Haun who I serve on the Coinbase board with. She is a very special person as Ben Horowitz described in this post.

Go read the blog post which Chris wrote to announce the fund. It is among the best articulations of the crypto opportunity that I have read.

Here are some of the concepts he explains which had me nodding my head:

Trust is a new software primitive from which other components can be constructed.

and

The new primitive of trust also means that 3rd-party developers, entrepreneurs, and creators can build on top of crypto-powered platforms without worrying about whether the rules of the game will change later on. In an era in which the internet is increasingly controlled by a handful of large tech incumbents, it’s more important than ever to create the right economic conditions for developers, creators, and entrepreneurs. Trust also enables new kinds of governance where communities collectively make important decisions about how networks evolve, what behaviors are permitted, and how economic benefits are distributed.

and

We believe that just as the last three megatrends — mobile, social, and cloud — intersected and reinforced each other, so will the next three megatrends — next-gen computing devices, AI, and crypto.

and

crypto is purely a software movement and doesn’t depend on a hardware buildout, in contrast to, say, the internet, which required laying cables and building cell towers. Second, the space is developing extremely rapidly, partly because the code, data, and knowledge is largely open source, and partly because of the increasing inflow of talent.

and

Cryptogoods can unlock new experiences and business models for games and other forms of media.

I really like the term “cryptogoods” and plan to start using it as my default word for NFTs and related efforts.

Many of our crypto investments have been with Chris and his partners and I hope that will continue. They are fantastic to work with.

I saw this chart in Recode’s piece on Benchmark:

It’s an interesting chart because it breaks out new investments and follow-on investments, both of which have been falling at Benchmark for going on five years now.

The Recode article, written by Teddy Schliefer, also states that Benchmark has not raised a new core fund in over four years.

Our numbers at USV are not as stark, we never took up our investing pace that much. We have always done around 6-10 new deals a year and while there is a fair bit of variability in that number year to year, over time it has stayed pretty constant.

But we last raised a new core fund in early 2016 and we are maybe 2/3  of the way through investing that so it should take us at least three years to put that fund to work. That is down from the two year period where we went from the 2012 fund to the 2014 fund to the 2016 fund.

So Benchmark is not the only leading VC firm that has slowed things down over the last three to four years.

Teddy makes an interesting point in his piece:

That long a dry spell between funds — at a time when rival firms are competing with one another to raise bigger and bigger war chests at a faster and faster clip, led by SoftBank’s $100 billion Vision Fund — is decidedly unusual.

Longtime readers know that I have a huge amount of respect for Benchmark. I think they are a firm that beats to its own drum and does what it thinks is right and doesn’t worry too much about what others think. That approach leads to better returns over the long run in my view.

But if there are diverging perspectives among the top-tier VC firms right now, who is right? Or maybe both are right. Slow down the pace of early-stage investing and step on the gas in later-stage/growth?

And then, of course, there is crypto, where a lot of the smart people and smart money is going. Chris Dixon at Andreessen is raising a dedicated crypto fund. Matt Huang leaves Sequoia to do a crypto fund with Fred Ehrsam. And those are just two high profile examples, but there is most definitely a discernable pattern of smart money and smart people moving to the crytpo sector over the last few years.

So times they are a changing in VC land right now. Which mirrors the broader tech sector which is maturing and consolidating while a next wave starts brewing. How to play this whole thing is challenging. The future of the VC business and its top firms are in flux and those who play it right stand to gain a lot and those who don’t stand to lose a lot. It is most definitely not a time for the status quo.

There is a bill in front of the NYC City Council called Intro 981 that will impose reporting requirements on Airbnb and their hosts in NYC. There will be a public debate on that bill this coming week.

The backdrop here is the growing housing affordability crisis in NYC and the idea that Airbnb is a significant contributor to it.

While I am not an expert in the economics of housing, I have lived in NYC for the past thirty-five years (my entire adult life), and my wife and I are also landlords in several of the neighborhoods in Brooklyn where rents have been rising most quickly. I have a layman’s understanding of the issue and an on the ground feel for it.

It is my view that we have a fundamental supply and demand problem at work in the rapidly gentrifying outer boroughs of NYC (most acutely in Brooklyn, Queens, and the Bronx). NYC has added almost 500,000 residents this decade alone, a 5.5% increase in population from 2010 to 2017. This is driven by multiple factors but there are more people choosing to live in the five boroughs and less people choosing to leave them.

A major change in the last fifteen years is the emergence of the boroughs of Brooklyn, Queens, and the Bronx as the preferred place to live for many young professionals. They moved into these communities in their 20s to escape an increasingly unaffordable Manhattan and have stayed and are now raising their families in them.

This sea change in demand for housing has not yet been met with an equal increase in supply. There are cranes all over Brooklyn and Queens so I am optimistic that we will see the increases in supply that we need, but there is a lag in the supply of housing coming to market. And we need two kinds of supply, market-rate housing for those that can afford it, and subsidized housing for the displaced families that no longer can afford market rate housing.

And so where does Airbnb fit into this picture? It’s a reducer of supply to some extent as landlords take rental units off the market and list them on Airbnb instead. But having looked at multiple studies on this issue, I believe that Airbnb is a marginal player in this story, not the root cause of the problem. If Airbnb decided to stop operating in NYC (a terrible outcome in my view), I do not believe we would see a material change in the affordability issues that plague NYC.

And yet, elected officials in NYC and NY State have chosen to make Airbnb the poster child of the problem and impose restrictions and constraints on their operation. And, of course, the industry that Airbnb most threatens, the hotel industry and its labor unions, have fought back aggressively and effectively. It is hard to know what is good policy and what is good politics. I suspect we are seeing a lot of the latter and not enough of the former.

I am for reporting of listings as required by Intro 981. But I am not for the city using that data to come after hosts and harass them. Similar reporting requirements that have been enacted in SF, Chicago, and Seattle have included those protections for hosts. Intro 981 should too.

But more than that, I am for a comprehensive solution to the issues that short-term rentals raise. I am in favor of requiring a mechanism for neighbors to register complaints. And I am in favor of requiring Airbnb to collect taxes on short-term rentals in NYC and NY State, which is estimated to produce $100mm of incremental revenues for the City and State. A comprehensive bill that would legitimize the short-term rental market in NY State and NYC would unlock those revenues but the forces at work against Airbnb are fighting it. That makes no sense to me.

It is time to accept that Airbnb is here to stay in NYC and NY State. It is time to legitimize the practice of short-term rentals. It is time to put sensible complaint mechanisms and reporting requirements in place. And it is time to start collecting the taxes on this activity and using those revenues to solve other pressing issues like transportation, schools, and most importantly, our ability to house those who can’t afford to pay market rents.

I would encourage our elected officials to do all of that.

Last month, at the Consensus 2018 Conference, Paul Vigna of the WSJ, Coinbase CTO Balaji Srinivasan, and I had a 30min discussion of all things crypto.

Here is a video of that discussion:

I hit the play button and heard her voice say “My poems are harsh, but they are meant to show the truth, which a lot of people are afraid to face.”

That sold me. I made a significant contribution to this project to bring Ai’s Killing Floor back into print.

Maybe you will join me.