Posts from August 2018

On this episode of the Epicenter podcast, Ryan Selkis, founder of the Messari project, talks about what they are trying to do with Messari and how it might bring needed transparency and accountability to ICOs and other token projects.

The neighborhood where we live in NYC will be underwater with a 2-degree Celsius increase in global temperatures.

This Kickstarter project will create stickers that all of us can place on places like ours and remind everyone that climate change is a big deal.

I backed this project today and you can too right here.

More and more of the news around tech these days is about the relationship between technology companies and government. That was not the case a decade ago when regulators and elected officials took a largely hands off approach to technology, particularly the Internet, web, and mobile.

While I am not a fan of many of the moves that regulators and elected officials have made over the last few years, including the NYC City Council’s recent bills to clamp down on home-sharing and ride-sharing in NYC, I do believe that the tech sector and tech companies must engage with the public sector and they must do it earlier in their development.

It is hard to be an advocate for the tech sector and tech companies with the public sector, a role I play fairly regularly, when the companies in question have not been the best actors themselves.

The good news is that the tech sector no longer naively believes that it can opt out of the public discourse and political engagement.

The bad news is it is playing catch-up and is on it’s heels. That is going to take time and money to fix.

Emerging sectors like crypto and machine learning should pay heed to what has happened here and not make the same mistakes as their predecessors.

At USV, we report to our investors on our portfolio and performance four times a year, once a quarter. We produce an audited report once a year, with our Q4 results.

We do that in writing and we also do a quarterly call for our investors three times a year (we combine our Q4 and Q1 calls since our annual audit process slows down our Q4 reporting).

In our annual and Q2 written reports, we prepare a short update on every one of our portfolio companies. We call these “one-pagers.”

This can be a fair bit of work but we do it regularly and have been doing it since we started USV.

I think it is a great discipline for investors to take the time on a regular basis to sit down and write and speak to their investors about what is going on in their portfolio and in the macro environment.

It is a time-honored tradition that fund managers write a letter to their investors explaining what they are seeing and doing. Warren Buffet’s letters are a particularly great example of that. But there are many fund managers who are excellent writers and whose letters get passed around and read by many in the investment community.

Everyone here at AVC knows that I think writing and investing fit like a hand and glove and writing and thinking out loud can make you a better investor.

The Gotham Gal and I are investors in a number of venture capital funds and I have noticed a trend among venture fund managers to reduce the amount of writing and verbal communication they do with their investors. I understand that it can be time-consuming and that many fund investors don’t even bother to read the reports.

But I would urge my peers to resist that urge and to take time to regularly sit down and write about what is going on in your portfolio companies and the markets you invest in. I think it provides insights, raises issues, and gets the entire investment team talking about things in a way that few other regular processes do.

Plus I really enjoy doing it.

I like to think of the investing discipline as composed of three key modes of operation.

Buying – Figuring out what you should buy and what you should not buy. There are many strategies that work here but my favorite is buying things that others are not buying. And my preferred reason for “others not buying” is that they don’t know about it yet.

Managing – This is the work an investor does to manage the investment. It includes decisions around whether to buy more of an investment that is working, which is incredibly important and can massively impact returns. But I believe that the most powerful thing an investor can do to impact their investment is to work with the management of the investment to make sure that the team is making the right strategic and operational decisions.

Selling – This is all about when to exit an investment and how. It is the hardest part of the investing discipline in my view.

The conventional wisdom on selling is that an investor should set a target price when they buy and once an investment reaches that target price they should sell.

That approach doesn’t work very well in venture capital because as a minority investors in an illquid investment, we don’t control the sell decision.

That doesn’t mean I/we don’t have targets when we make our investments. But it does mean that we don’t usually have the ability to do sell when those targets are hit.

And, as a result of this dynamic in venture capital, I have learned a different lesson over the years about selling and that is to let your winners run and sell everything else.

As I mentioned previously, as minority investors in illiquid investments we don’t control the sell decisions. They are made by the Board and driven strongly by the founders and management.

But that said, when we have the opportunity to sell an investment that is not one of our big winners, I have found that it is generally the right idea to do that.

When you make an investment that is really working out, I have found that it is generally a good idea to hold on to it even when it goes past your original sell targets for it. It can be a useful discipline to develop new sell targets when this happens based on the new information you have about this investment.

In the venture capital business, your best investments often go public and the venture capital fund distributes the stock to the underlying investors (called LPs) in the venture fund. Those investors then have to make the sell decisions on those investments.

As a general partner in these venture capital funds, I receive these distributions too.

And, as a result of some really poor decisions earier in my career around selling or not selling public stocks that were distributed to me, I have developed an approach for selling stock that is distributed to me.

I like to sell one third of the position immediately, put one third away for a long term hold, and actively manage the other third.

This method insures that if the whole thing blows up, at least we got something out. If it goes up 10x or more, at least we didn’t miss out on all of that. And it is simple and easy to execute and we do it this way all of the time.

But even with all of these lessons I have learned and approaches I have developed over the years, I continue to struggle with selling. It is hard for me to do and I resist the urge, particularly with the big winners. It is like taking your medicine. You know it is the right thing to do but it doesn’t feel very good when you do it.

I have an excellent voice assistant on my Android phone. I never use it.

I could be dictating this blog post using the same voice assistant. I don’t do that except when I want to prove that I can.

We have had Alexa and Google Home in our home. We shut them off and sent them away.

But we use the Siri voice assistant on our AppleTV all the time.

Why?

Well for one, searching for video content does not have to be exact. Just close enough. So when you say “Allen Iverson crossover Michael Jordan” into your AppleTV remote, even if Siri doesn’t translate that perfectly, YouTube understands it and delivers up one of my favorite basketball moments reliably.

Second, the keypad entry on AppleTV is horrible. I spent some time yesterday setting up apps, entering passwords, etc and it is about the most frustrating experience I’ve had on a computer in a long time.

Siri on the AppleTV is so much better than the alternative and reliably good enough that it has become the way we interact with our AppleTV.

Another example is my car. I have a Jeep and it has this awful smart car UI called UConnect in it. It’s the worst. Except I can say “call Joanne Wilson” while I am driving and it does that pretty reliably. I have called a person we know named Jan Wilson a few times by accident, but that is way better than another kind of a accident in my Jeep.

So while voice imput has not taken hold in our life where text input works reliably and conveniently, it has taken hold where text input is not reliable, convenient, or safe.

What this tells me is the path forward for voice input technology, which has gotten very good, is in applications that are not mainstream yet but can get mainstream by solving the data input problem.

And, in fact, that is what is already happening.

A friend shared this book and blog with me called Vanishing New York. Both chronicle the loss of the culture and institutions that made NYC a magical place to live in the 70s, 80s, and 90s.

Certainly rising rents, rising wealth, a rising proportion of apartments owned by people who don’t live here, and all in all, a major bout of affluenza is afflicting Manhattan and possibly greater NYC right now.

But I personally struggle with sentimentality and wistfulness. Yes, the NYC that I fell in love the in the early 80s is no more, replaced by something that is much harder to sing the praises of.

But what interests me more is not what was or even what is, but what will be?

Where is NYC heading?

How will it manage it’s transportation crisis?

How will it cope with rising sea levels?

How will it deal with entire blocks of empty store fronts, brought on by the rise of ecommerce and landlords who won’t accept that their space is no longer worth what it once was?

I loved this Atlantic piece that suggested NYC should reimagine it’s massive array of subway tunnels as the underground highways for autonomous vehicles. I have no idea if that is a good idea or even feasible. But I love the ingenuity and thinking the author displays.

The Gotham Gal and I are making an apartment building in Brooklyn that is heated and cooled by solar power and has enough left over that we can sell it to the deregulating energy markets in New York State. We hope to make a few more of these buildings and maybe we will inspire other developers to do the same.

I am drawn to the vitality of life in the outer boroughs where the melting pot vibe still pulses through the neighborhoods. Of course, gentrification can and will mess them up the same way it has messed up Manhattan if we aren’t careful. But we still have time to implement policies that can mitigate the negative aspects of gentrification.

My point is this.

We can, and probably should, bear witness to what has become of NYC and what we have lost in the process.

But we must also be working on, investing in, and imaging what NYC (and life in general) can and will become.

Change is the only constant. Fighting it is a losing proposition. Shaping it is the winning one.

At the Code Media conference a few months, Peter Kafka interviewed Kerry Trainor, CEO of our portfolio company SoundCloud.

It’s a great conversation about the past and future of SoundCloud and also the past and future of the music business.

In late 2016/early 2017, Apple introduced a new app to the AppleTV called TV. We’ve had it on our various AppleTV devices but have not been big users of it until this summer.

With our recent move to ditch traditional cable/satellite and go “over the top”, we have started using the AppleTV a lot more and the TV app has become our primary way into TV content.

When you launch it, the app shows you what is playing now and what you have been watching recently:

There is a sports tab that is great when a lot of sports is on but not so great at 6:45am:

You connect your various apps to the TV app in settings and then the TV app aggregates the content from all of them:

What I don’t understand is is why some apps are supported and others are not. The awesome YouTubeTV app and Netflix, for example, are not supported by the TV app.

I guess this feature is invite only right now or something like that.

If the TV app was connected to every app that we have on our AppleTV, it would be the Google of TV and that’s a pretty powerful place for Apple to be. I have to believe that it is in their interest to go there.