Posts from January 2019

Mark Leslie On Entrepreneurship, Leading, and Selling

I have had the pleasure of sitting on a few higher education boards with Mark Leslie. He’s a very accomplished and wise person. I respect him a lot.

In this talk with Peter Levine, Mark talks about some of the most important concepts in starting, leading, and building companies. Listen to him. He’s knows what he’s talking about.

Funding Female Founders

As a follow up to yesterday’s post, I asked Zach to calculate the percentage of teams with at least one female founder in our last two core funds.

Yesterday, I wrote “I don’t have the exact data on me and it would take more time than I have right now to calculate it, but my guess is that over the last four years, about thirty to fifty percent of the teams we have funded have had at least one woman founder on them”.

Well I am pleased and proud to let you all know that my guess was correct.

Here is the data:

Percentage of investments with at least one female founder:

USV 2014 Fund: 33%

USV 2016 Fund: 43%

Certainly we have more work to do, the female founder ratio is not 50/50 yet, and we have work to do on other areas like people of color, etc.

But I am quite pleased that USV is female founder friendly.

Changes In VC and Startups Take Time

Starting and investing in startup companies is a long lead time business. It takes on average seven to ten years for the seed and early stage investments we make to turn into something.

So looking at data across the entire VC landscape can be confusing. Important trends can be lost in the noise.

Look at these two charts from the All Raise and Pitchbook analysis of the funding of female founders:

The first one tells a troubling story. Female founders are getting a tiny amount of the supply of venture capital and the percentages are not changing much.

The second one tells a promising story. The percentage of teams getting funded that are all male founded is declining and the percentage of teams that have women founders on them, or are all women founders, is rising.

The first chart is dominated by late stage companies (think companies that are 5-10 years old) and the second chart is dominated by earlier stage companies.

Let’s look at this data in five or ten years.

I think we will see a different story.

I don’t have the exact data on me and it would take more time than I have right now to calculate it, but my guess is that over the last four years, about thirty to fifty percent of the teams we have funded have had at least one woman founder on them.

The times are changing in venture, thanks to the hard work by a number of women founders, women angels (like The Gotham Gal), venture capitalists, and some men too, and it is having a big impact. We just can’t see it in the aggregate funding numbers yet.

We will.

The Send To All Mistake

I believe I’ve written about this before but I see it made so often that I feel compelled to write about it again.

Entrepreneurs, VCs, and others in the startup ecosystem often send an email introducing a company to all of the partners (or most) at our firm. And that email is addressed to all of us, not one of us.

The result is that none of us feel ownership in the introduction and though we generally figure out who should reply, it can result in the email going unanswered for a while or longer.

On the other hand, if an email is sent to one partner, with possibly a copy to others, then the recipient feels a responsibility to reply and the email is generally answered.

I send emails to busy people a lot. And what I have learned is that I need to address them directly, write the note personally so that it is obvious that I have written it myself, and then copy someone (usually their assistant, but often a colleague as well) to make sure they see it.

Email is such a challenging medium to operate in that when using it, you must be very careful to optimize the chances of a reply.

Sending an email to all is generally not a form of optimization that works.

Funding Films, Continued

The Gotham Gal and I have been at the Sundance Film Festival this weekend. We’ve seen a nice mix of documentaries and feature films. And in the feature film category we’ve seen mainstream crowd pleasers like Mindy Kaling’s Late Night which Amazon bought for a bundle and indie films that may struggle to find a mainstream audience.

We tend to prefer the latter and among the best of the indie variety that we’ve seen was a film called Ms Purple that we saw yesterday morning at its world premiere.

Ms Purple raised almost $75k on Kickstarter (a USV portfolio company) a few months ago which funded much of the post-production costs and licensing expenses. A total of 373 patrons invested an average of $200 each (some way more, some way less) to help this film come to life.

From my experience yesterday morning, I would say it was a fantastic investment. Ms Purple is about the challenges that immigrant families navigate in the US, and about the tensions that exist in sibling relationships, particularly when a parent is dying.

Ms Purple’s filmmaker (writer and director) Justin Chon is exactly the kind of artist that Sundance and Kickstarter exist to serve. While I hope his stories can and will go mainstream, they need to be heard even if they don’t.

And funding mechanisms outside of the studio model/system insure that they will.

Video Of The Week: From Agile To Immutable

Two weeks ago, my colleague Nick traveled to Hong Kong to attend a Blockstack event (Blockstack is a USV portfolio company) and deliver this talk, which covers some important questions/issues in the crypto sector.

This short tweetstorm sets up the video well, so I will start with that and follow with the video which is 17mins long.

Funding Friday: Funding Films

The Gotham Gal and I are at the Sundance Film Festival this weekend and we are going to watch all sorts of films, from features, to documentaries, to short films, and more. It is a blast to see such a variety of films and the filmmakers who made them. We will see a few of these films that were funded on Kickstarter.

So I’m featuring a documentary about surf culture in the 60s that needs another $30k (ish) to finish the film and show it at an upcoming film festival. I backed it this morning and maybe some of you will too.

The Founder’s Commitment

The people who start companies are special people. We call them founders in the startup world and I have had the opportunity to work with many of them over the years.

They bring all sorts of important things to the companies they start (or help to start). One of those things is a level of commitment, responsibility, and care that others rarely bring to a company.

I was reminded of that today when I saw what Eric Wahlforss, one of the two founders of our portfolio company SoundCloud, wrote about his decision to step away from the company after 11 years:

Eric did pretty much every job in the company at one time or another, including being the CEO for a three month period in 2016. He gave SoundCloud everything he had for eleven years.

Startups are incredibly chaotic organizations with a lot of change. Very few people can make it through all of that chaos for a decade or more. But founders can and do.

Eric is an example of that and I am incredibly grateful to him, and his co-founder Alex, for the level of care and responsibility they brought to SoundCloud (not to mention the original idea and the original product!)

We meet with founders all the time and a few times a year decide to back them with our firm’s capital. One of the things we look for is that commitment, responsibility, and care, the “founders commitment.” It has to be there or it isn’t going to work. Because building a company is really hard. But also incredibly rewarding.

Capitalism and Inequality

I was talking to a friend about AOC’s proposal to increase marginal federal rates to 70% to fund investments in fighting climate change. My friend said he was disappointed that she didn’t propose a top federal rate of 83.25% so that the marginal rate in NYC would be 100%. He was joking but his remark is important because it speaks to the nuance of the marginal rate, something AOC and her followers don’t really understand as much as they claim.

It reminds me of a heated conversation I had with my kids and their friends during our family ski trip over the year end break. Our kids, like most millennials I know, are struggling with the notion of capitalism at any cost and the massive income and wealth inequality that we are witnessing.

This headline I came across on Twitter today kind of sums it up well:

I am in the business of helping founders start companies which results in some of them becoming billionaires. Contrary to what some think, my wife and I aren’t in that club ourselves. But I know a fair number of billionaires and I have had a front row seat to the process of them going from not having a penny in their pockets to billions on their balance sheet.

And we are participants in the “economic system that creates billionaires.” I do not think it is immoral and I do not think billionaires are immoral. I do think the inequality that we allow in our country is immoral.

To me, these are two different things. And that is the gist of the discussion I was having with my kids and their friends over the year end holiday. They asked me why I don’t believe in massively raising taxes on the rich to pay for all of these new social programs that the candidates on the left are proposing.

I am a fan of many of these social programs, like medical care for all, like more affordable education for all, like new approaches to what we once called “welfare” and now is taking shape as Universal Basic Income. I have been called a communist, a socialist, a liberal, and more on this blog and all of those labels could be accurate in someone’s mind. I believe that society must find ways to support the basic needs of everyone, which include wellness, knowledge, and income. That we do not is immoral. That we allow billionaires is not.

I am a capitalist and a business person. I understand that increasing taxes on the wealthiest leads many of them to move their income and assets to lower tax jurisdictions and can be counter productive, particularly when you go beyond a certain threshold. I also understand that government is bloated and there are many places where we could cut spending to fund these new innovative programs that could help counter the immoral wealth imbalance we have in our country.

I believe that technological revolutions, like the industrial revolution and the information revolution, create opportunities for entrepreneurs to reimagine how the economy should operate. Those entrepreneurs, like Rockefeller, Carnegie, Morgan, Bezos, Page, Zuckerberg, build very powerful monopolies and amass billions.

As these revolutions reimagine how the economy should operate, many people lose jobs, can’t find jobs, find themselves in lower paying jobs, and there is real dislocation that results. And you get this “immoral wealth imbalance.”

The one part of the economy that seems immune to re-imagination is the government. If we were to force it to go through the same technological revolution that the private sector is going through, we would see massive efficiencies, and massive job losses, that would free up a huge amount of capital that could be used to pay for things like medical care for all, affordable education for all, and some amount of income for all.

That is what I am for. That is what I explained to my kids and their friends that I am for.

Times of change are times of change. And we can’t change some things but not everything.

I will end with a story from a book I read a few years ago. The book is called The Prize that was written by Dale Russakoff and is about the effort by Chris Christie, Cory Booker, and Mark Zuckerberg to fix the broken Newark NJ public school system.

The story takes place at an anti-charter school rally. Dale meets a woman who is protesting against the charter schools that are replacing the district schools. As she is talking to this woman, she explains that she is late to the rally because she had to spend all morning in line trying to get her child into the new charter school in her neighborhood. Dale is perplexed. Why would she be protesting charter schools if she is that committed to getting her child into one? The woman explains that most of her family works in the district schools and will lose their jobs if the city moves to charter schools.

And that’s where we are. We are not willing to move away from the things of the past to get the things of the future. So our elected officials decide to try to give us both and we struggle with how to pay for it all.

I am not for the emerging progressive Robin Hood narrative. I am certainly not for the entrenched conservative Let Them Eat Cake narrative. I am for a new narrative that understands that everything must change if we are to find ways to support everyone in our society.

What Kind Of Coach Do You Want?

My colleagues and I are asked all the time for recommendations for coaches, mostly for the founders and CEOs we work with, but often for others on the senior team. I am a huge fan of coaches. I think they can be game changing for leaders and their teams.

I always ask a bunch of questions to find out what kind of coach someone wants before making suggestions.

A key question is whether you want answers or questions from your coach.

My partner Andy wrote a bit about this, in a very different context, the other day.

I’ve spent a large portion of my career investing in early-stage companies. Part of that job is to advise and counsel, to assist a company in reaching its potential. I try to ask for feedback on how I am doing in that job. A constant thing I hear is to provide more direct answers to problems posed to me. Typically, I am told, I answer their questions with further questions.  

Yet, I think it’s important to tolerate ambiguity. Maybe there isn’t a direct answer. Maybe I don’t know the answer. Maybe I want to assist others in coming up with their own answers.

I have to confess that I am more of a “why don’t you try this?” sort of advisor.

Andy is more of a “why do you want to do that?” sort of advisor.

Both can be very valuable but it really depends on what you want/need in an advisor. Getting answers when you want questions can be frustrating. Getting questions when you want answers can be equally frustrating.

So think about what it is you want from a coach before going out and finding one. Getting the fit right is important.