Posts from July 2019

NBA Top Shot

I’ve written on this blog about extensible blockchain games, the ability to own the virtual goods you earn or buy in your games, and the idea that these virtual goods can move from game to game. I think this is a big deal and possibly the thing that brings blockchains and crypto tokens to the mainstream user.

So, here’s an awesome example of that. Our portfolio company Dapper announced today that it is building a blockchain game with the NBA called Top Shot.

Here is the idea behind the game:

NBA Top Shot will feature a social experience built around digital collectibles as well as a complementary head-to-head game designed to create a fun, authentic and accessible fan engagement on blockchain. Like other sports games or fantasy brackets, fans who play the game are tasked with creating their ideal squad, but in this game, their rosters are built by acquiring live in-game moments from the NBA season. These moments, such as a Kevin Durant 3-point shot, or Joel Embiid dunk, which are acquired as digital collectibles or tokens, can then be either owned forever or used to compete against other players in online tournaments and leagues.

NBA Top Shot will start offering crypto-collectibles in the fall, with the game to follow in early 2020. You can get early access by leaving your email address here nbatopshot.com

Turning A Loss Into A Win

One of the traits of successful founders is their ability to turn a loss into a win.

You take a lot of losses as a founder, particularly in the early days. Investors pass on your funding pitches, people pass on your job offers, customers pass on your sales efforts, competitors take your customers and your employees, you get sued, you miss critical ship dates, morale tanks, and on and on and on.

But inside of each of those losing moments is the opportunity to turn it into a win.

You lose out on an important hire and in a pinch you promote a promising person from within and they turn out to be a superstar.

You lose out on a hotly contested sales opportunity and you do a post mortem with the customer and learn that you have a huge hole in your product and you fill it and start wining business.

You whiff on financing effort and so you cut your burn, execute for three more months, and go back and get term sheets from everyone you talk to.

My point is that losses are opportunities to win. You just have to see them as such and find the win in the loss.

This is all about resilience, optimism, and tenacity. The most successful founders have it in spades.

And it can be a learned skill. But you have to get your head in that space to learn it.

Haven

Our portfolio company Open Bazaar released a new mobile app called Haven today.

The idea behind Haven is:

Finally, people anywhere in the world can connect directly to each other using their mobile devices and trade privately with no credit cards, no banks, and no tech companies tracking their activities, or charging listing and transaction fees. 

Here’s what the front page looks like:

And here is what an item listing looks like:

Note that you can pay for this coffee maker in Bitcoin and Litecoin.

Haven is built on the Open Bazaar protocol:

Haven creates a mobile window into the groundbreaking OpenBazaar network powered by cryptocurrencies like Bitcoin, Bitcoin Cash, Litecoin and Zcash (Ethereum coming soon). Over 250,000 nodes have been created by people using this peer-to-peer network since the release of version 2.0 and tens of thousands of listings have been put up for sale from crypto tokens to original paintings by popular artists to business services. OB1 expects Haven to rapidly bring even more users onto the network who are eager to shop, chat and send cryptocurrencies privately from their mobile phones.

If you want to check out Haven, you can do that here.

Certainty Of Close

On Friday, I had two separate conversations with founders about fundraising strategies.

Both had an easier path that would likely get them to a closing quickly but might cost them some economics and a harder/longer path that would allow them to maximize economics.

I gave them both the same advice which is that certainty of close is super important, particularly early on in a venture when you see an opportunity and want to capture it before someone else does.

Most decisions are not black and white. There is usually a lot of grey in between. Fundraising is always like that. There is rarely an obvious right answer.

Many founders are advised to run a competitive process, get as many quality offers as you can, and use that competitive dynamic to maximize economics.

While that is a great strategy if you have the luxury of time on your side and the ability to spend several months focused on raising capital, there is often merit to the quick close that maximizes certainty over other things.

Both conversations on Friday ended in a discussion about people and how important they are in all of this. The answer to that is that they are the most important factor of all when raising capital.

If you are comfortable with the people involved and have a high degree of confidence that they will be great partners, then everything else is secondary. That is true for at least the first five years of a venture. At some point, in very late stage or public financings, the people issues lessen and you can optimize for other things.

But early on, if you optimize for anything, optimize for the people you work with. Otherwise you are taking on risks that can and will blow up in your face.

After that, I might put certainty of close next on the list, as long as the economics of the “bird in the hand” are ones you can live with and the people are known quantities. You can rarely go wrong with that combination.

Extensible Games

The promise of blockchain games and non-fungible tokens (NFTs) is extensible games. Imagine if developers could build new worlds/games/experiences on top of Fortnite and you could take your character, your weapons, your vehicles, etc with you into those new worlds/games/experiences. That is what I mean by extensible games.

We are seeing the beginnings of that in blockchain games now. There are many game experiences that third-party developers have built on top of Cryptokitties (built by our portfolio company Dapper Labs).

And now Dapper Labs is pushing this idea even further by turning their CheezeWizards game over to the community.

The idea is pretty simple actually. This summer gamers will be competing to win the first CheezeWizards battle royale. But after that ends, the players will still have their Wizards because they are NFTs. The Wizards are like Bitcoin or Ethereum or any other cryptotoken. They can be stored in a wallet and used again and again in new games.

So Dapper Labs has released all of the CheezeWizards IP under an NFT license and is inviting developers to build new game experiences for all of these Wizards that are now out there.

And they launched the CheezeWizards Hackathon yesterday with over $15,000 in prizes for the winning game experiences.

I will be judging this hackathon along with a number of other crypto investors and I am excited to see the gaming experiences that developers build on top of CheezeWizards.

A Resilient Grid

During Hurricane Sandy, all of lower Manhattan lost power for several days when a transformer blew at a ConEd plant on 14th Street.

Driving around lower Manhattan at night in the aftermath of Sandy was one of the strangest moments I’ve experienced as a NY’er. The traffic lights didn’t work and everything was pitch black.

Except NYU. As you approached Washington Square the city lit up again. That is because NYU has its own power plant, a cogeneration facility next to NYU’s Courant Institute.

Similarly, when the west side of Manhattan went dark a few weeks ago in what is turning into a summer of blackouts, everything was pitch black except the new Hudson Yards development. That’s because on the top of the Hudson Yards Shopping Mall, there is a massive cogeneration facility that powers all of buildings in that development.

So when I heard Mayor de Blasio ruminating over the weekend about a government takeover of ConEd, I thought to myself “he’s got it all wrong.”

We don’t need more centralized control of our power grid, we need a more decentralized power grid.

NY State has been pushing in this direction for years now under the leadership of Richard Kauffman, Chairman of the New York State Energy Research and Development Authority (NYSERDA). The state has deregulated the energy markets, they have created substantial incentives for property owners to build out renewable (solar/battery/etc) capacity in their buildings, and they have put forth a vision of an energy grid that is not reliant on any one entity to stay up.

Back in the 1960s when the Department of Defense designed ARPANET, the precursor to the modern Internet, they designed a network that was entirely decentralized and therefore massively resilient (anti-fragile in Nassim Taleb speak).

That should be our goal with our energy grid as well. We should want energy production and consumption to happen at the edges of the network and we should want redundancy in the cables that connect everything together.

We aren’t there today and it will take a lot of work over many years to get there. But that should be our goal.

And we certainly should not be putting our energy system into the hands of a centralized and bureaucratic government. That would lead to more blackouts, not less.

When Things Just Start Working Again

Several times this week something that was not working magically started working again through no intervention of mine.

I find this to be very frustrating.

I would almost rather something stay broken than magically fix itself.

First, I enjoy fixing things. I’m an engineer, a tinkerer, and I get great satisfaction out of debugging/troubleshooting/fixing things. It is such a great feeling when you figure it out and it works again.

And second, when something fixes itself, you don’t know what did the trick and if it breaks again, you won’t be able to easily fix it.

For the same reasons, when we call an expert to fix something, I always ask them what broke and how they fixed it so I can do that the next time. It isn’t that I actually want to fix it next time, but I certainly want to be able to if I have to.

I know plenty of people in my life who don’t feel this way. They just want things to work and don’t really care why or how they do.

But I am not wired up that way.

Smart Thermostats

My colleague Dani sent me this chart last week:

I believe this is more or less a proxy for smart wifi-enabled thermostats in the US.

Those would be Nest, Honeywell Lyric, Hive thermostats and a lot of others too.

Those are pretty big jumps from 6.5% to 8.9% to 11.4% given that people don’t generally swap out thermostats unless they are doing a renovation or building a new home. Maybe there is more thermostat swapping going on outside of those “construction” moments than I would expect.

In a few years, more than 20% of homes will have heating and cooling systems that can be “managed” by software, either on-premises or, more likely, in the cloud.

That is pretty exciting.

I wonder what level of adoption is “critical mass” or “escape velocity” ?

Certainly 50% would be, maybe 25% will be.

I really like the area of networks, platforms, and protocols that will allow us to efficiently manage our energy consumption. It has been hindered to date by a closed “last mile”, but that is changing and I think the opportunity is approaching.