Posts from 2018

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.

Sonos priced it’s initial public offering last night at $15/share and will start trading today under the ticker SONO.

I am very fond of this company and the products it makes. The Gotham Gal and I are surely one of the company’s best customers.

I am not an investor in Sonos, nor is USV, and this post is not a recommendation to purchase the stock. It is a love letter to the company.

The love affair started twelve years ago, in March of 2006.

The marketing folks at Sonos reached out to me and suggested that they sponsor the music picks I used to run on the sidebar on the AVC blog.

I said yes and Sonos ads started appearing on the AVC blog that month.

I also received a test unit and reviewed the Sonos product here on AVC later that month.

A year later, I visited Sonos at their headquarters in Santa Barbara California.

Over the years, we have purchased so many Sonos devices that I have lost count. We use them everywhere.

I have also written about Sonos dozens of times here at AVC.

There have been many attempts to build a home music device that is better than Sonos.

They have all failed.

It is possible that Apple will get it right with the HomePod.

But they haven’t done that yet.

And even if they do, we will likely stay with Sonos as it works so well for us and we have them everywhere.

And now Sonos is a public company. Well played Sonos.

For the past six months, Jed has been helping USV build some much-needed tools to connect people at our 60+ portfolio companies to each other.

It has worked out well, so well that we decided to ask Jed to join us full time in a new role that we call Developer In Residence.

Why would a VC firm need a full-time software developer?

Well, we have always had people at USV who can code, but it was always a side thing, never our full-time job.

And there are things that we are doing at USV that require a full-time commitment to the code.

Jed explained all of this and the fact that he moonlights as a bass singer in a barbershop quartet, on the USV blog yesterday.

At USV, we are committed to helping our portfolio companies without asking them to do a lot of the work to enable that.

Ultimately that requires intelligence that is automated and that means writing and maintaining code.

And so I’m thrilled that we now have a full-time person at USV who is doing that for us and our portfolio.

I read this post yesterday that says that 40% of VC investors went to either Stanford or Harvard.

Frankly, I am not surprised.

I’ve worked in this industry for over thirty years. It is full of Stanford and Harvard grads.

I’ve got nothing against either school. They are wonderful education institutions and full of great people.

We have Stanford and Harvard alums at USV so we are certainly a contributor to this statistic. But we don’t have 40% of our team from those two schools.

We don’t ask where you went to school on our analyst application. We ask you to answer four questions and we go from there.

I learned the VC business from a man who went to Case Western Reserve University, my co-founder of Flatiron Partners went to Queens College, and my co-founder of USV went to Wesleyan University.

We have hired analysts at USV that did not graduate from college and maybe didn’t even go, I really don’t know and don’t care.

What I have learned from all of these individuals is that curious and brilliant people come from all places, all genders, and all ethnic and racial backgrounds.

The VC business is making some progress on gender diversity. This chart is from the same post that I linked to at the start of this post.

Eighteen percent is not a number to be proud of, but 60% growth in two years is. If we continue at that rate of gender diversity growth, the VC business could be gender neutral by the middle of next decade. It would not surprise me if that happens. I feel the desire for gender diversity pulsing through our industry so powerfully right now.

But in most other ways, the VC business is still a very homogenous place. Mostly white and, it turns out, mostly educated at a handful of higher education institutions.

We can do better. We must do better. And, I hope, we will do better. Looking in the mirror and not liking what you are seeing is the first step to rehabilitation.

Kin, the cryptocurrency launched by Kik (a USV portfolio company), recently launched a developer challenge. The challenge: build a breakout cryptocurrency-based consumer experience.

Kin is a cryptocurrency focused on driving mainstream consumer transactions. Kin envisions a world where cryptocurrencies are used by people every day.

Consumers have no problem buying coffee with dollars every day. Dollars work great for that transaction.

Kin is focused on driving daily consumer utility in the digital world. Digital value for digital goods.

So, Kin launched a program designed to incentivize developers to build consumer apps with the Kin SDK.  The incentives are described here.

Developers are invited to submit ideas by August 10th. If you’re selected, and you publish an app, and you drive a significant number of active Kin wallets, you will receive the incentives.

This is a greenfield opportunity for developers. There are all sorts of consumer use cases to be discovered. So build a fun app and get rewarded for doing it.

It is my view and our view at USV that the crypto market is in what Carlota Perez calls the installation phase.

We believe that we are still putting the pieces in place for a new technology architecture to take hold.

The “big bang” for this technology cycle was the publishing of Satoshi’s whitepaper, almost ten years ago.

But we still don’t have consensus mechanisms that can scale to transaction speeds that are typical of mainstream web apps, we don’t yet have consensus mechanisms that are both energy efficient and battle-tested at scale, we don’t have an array of development tools that make building applications on this stack easy, quick, safe, and secure, we don’t have hundreds of millions of users with crypto browsers & wallets, and we don’t have all the other things that would need to be in place in order to move into the deployment phase.

But we do have the one thing that is the hallmark of a classic installation phase. We have a frenzy of innovation and financial capital that has been unleashed by the ICO boom, itself a creation of the crypto tech cycle.

Over $20bn has been raised by crypto projects via ICOs in the last 18 months.

And that is not counting the amount of capital that has gone into crypto companies via traditional means (venture capital, angel capital, etc).

This frenzy of entrepreneurship and investment has unleashed thousands of crypto projects all around the world.

And many of these teams, projects, companies are shipping things now.

Which is leading to an incredible amount of innovation coming to market in a very short period of time.

Like any early market, most of these projects and companies will fail. Some will fail to ship. Some will ship things that don’t work. Some will ship things that work but aren’t adopted. And some will ship things that are adopted but are surpassed by something better. The failure rate of these thousands of projects will be very high.

But inside this cohort of companies and projects will be the next Google, Amazon, Facebook, Twitter, Dropbox, Uber, and Airbnb.

And so the job of a crypto investor is to sort through all of them and decide which ones have the best chance of emerging as a winner.

We have been doing that for seven years now, since we first started poking around this sector in 2011.

And it has never been harder.

It is like drinking from a firehose right now.

There are so many high-quality projects, high-quality teams, and blue-chip financings happening in the crypto market right now.

It makes my head spin just trying to stay on top of it all.

And we have a great team of investors at USV working on this, and we have a network of crypto funds we have invested in that we collaborate with, and we have a bunch of like-minded VC firms that we work with in this sector.

That produces a lot of information flow and helps us better understand what is going on.

And what is going on is a frenzy of innovation that will lead to many important things.

But keeping up with it all is exhausting.

I spoke to a group of women entrepreneurs a few weeks ago, and one asked me “why do you need to raise VC?”

And the answer is “you don’t.”

The vast majority of entrepreneurs out there don’t raise VC. Many don’t raise any money to start their businesses.

As I was answering that question, I thought about a talk I gave at the 99U Conference back in 2012 called “Ten Ways To Be Your Own Boss.”

I’m sure I have posted this here before, probably back in 2012, but I thought I’d post it again.

It makes the point that you don’t need VC to be an entrepreneur pretty nicely.

I am a big fan of small creative projects on Kickstarter. And I also love supporting creators from other parts of the world.

As an example, I backed this project out of Mexico today. The designer is creating a tortillero, a tortilla warmer, that looks like a flying saucer.

And, naturally, I also love warm tortillas.

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An entrepreneur asked me a great question last week:

When is it OK to say I don’t know in a pitch meeting?

I told her the following things:

1/ This varies from investor to investor. Some investors are looking for founders to have all the answers.

2/ I am not one of those investors but I do want the founders to have some of the answers.

3/ If I asked her how large and valuable her publicly traded competitor is, and she said “I don’t know but I will find out and get back to you on that”, I would be fine with that answer.

4/ If I asked her what the tech stack is that her engineering team is using to build the product, I would be dissapointed if she didn’t know that answer.

In general, I believe it is critical that the founder be knowledgeable about all the details and aspects of the internal operations. They should have those answers on the tip of their tongue. That includes things like monthly burn, cash balance, headcount, etc.

And if you don’t know the answer to the question, you should be honest about it and say that you will get it and get back to the investor. And do that quickly.

Sometimes investors ask ridiculous questions and then you have to bite your tongue and be polite.

I will end with a great story. It was 1991 and we had seed funded a brilliant software engineer who was building a product for the wall street sector. I took him to see a very prestigious VC as we were looking to fill out the seed round. The company was maybe six months old and was not yet in market with the product.

The entrepreneur started in on the market, the opportunity, and the product. Maybe three or four minutes in, the VC interrupts the founder and asks, “what will your revenues and profits be next year and the year after?”

The founder was pissed. He had not even gotten to the product they were building and he was annoyed by the interruption and the question.

So he answers in his broken English “I don’t have a fucking clue.”

Our meeting ended several minutes later and we were shown the door.

We did not secure an investment from that VC but the company was successful and went public five or six years later.

So you obviously don’t need to have all of the answers in a pitch meeting to be successful. But you do need to be polite and respectful if you want to secure the funding. And there are some things you absolutely need to know the answers to.