Posts from November 2019
A regular reader sent me this project last week and I backed it today and am sharing it with all of you.
there is this thing called the Internet which allows anyone like me to connect a server to it and host content like this blog post.
Thankfully there is open source software like WordPress that allows me to do all of this without using a proprietary service.
Thankfully there is a range of operating systems (some open source) that we can choose from and a range of browsers (many open source) that we can choose from to access this content.
It is this permissionless environment, designed fifty years ago, and developed over the next thirty years, that has done so much for society.
Of course, there are many things about this permissionless environment that are problematic and we are faced now with the need to address them intelligently without undoing all that is good about it.
I am thankful that my lifetime has roughly lined up against this incredible invention and development and that I have been able to play a small role in it and that I can also play a small role in addressing the challenges we now face.
I am also very thankful for my family, friends, colleagues, supporters, and readers.
Happy Thanksgiving Everyone.
When I was in my mid-20s and had just gotten a job in venture capital, I read a piece on Alan Shugart, the larger than life founder of Seagate, one of the most successful disk drive companies. Alan was quoted as saying that “cash is more important than your mother.” That got my attention because mothers are really important.
Over the years, I have learned what Alan meant. Cash is everything in a startup. It is the fuel that keeps the car running. And startups fail largely because they run out of cash.
I was working with one of our portfolio companies yesterday on a cash forecasting model, a practice that I strongly recommend and appreciate greatly.
Forecasting cash is more art than science, particularly in a growing company where there are all sorts of unpredictable things (revenue, infrastructure costs, hiring pace, receivables, etc).
But like all practices, it is about the practice. You have to engage in cash forecasting, you have to engage in it regularly, you have to adapt to changing conditions on the ground, and you have to internalize the puts and takes and their impact on operations.
When a company gets mature in their business operations, has repeatable revenues, and has a strong balance sheet, you can run the business based on an annual plan or a semi-annual plan.
But early on in a company’s life, you are going to have to operate on an ever changing plan. If the revenues are coming in more slowly, you hire more slowly. If you want to wait another six months to raise more capital, you have to buy that time with changes to the operating model.
That is the back and forth between cash management/forecasting and operating. They go hand in hand.
It all starts with a cash forecasting model. It looks like a forward-looking profit and loss statement. But you do it on a cash basis. And you include balance sheet items like security deposits, equipment purchases, etc in it. Think of it as forecasting your checking account over the next year.
Once you have that, you need to engage in updating the model regularly and it is ideal to do that as a team, or at least with parts of the team, in the room. That makes it abundantly clear to everyone how operational decisions impact cash and runway.
I like a weekly cadence to this process and I like it to happen with the key senior leaders in the room. That may feel like wasting people’s time. But cash is more important than your mother in a startup, so managing it is never a waste of time.
At USV, we have had a two-year analyst program since the very early days. The alumni of our analyst program are an impressive group of people. Some have their own venture capital firms, some are founders of companies that are doing great, some are working in large companies.
We are starting the process of hiring a new group of analysts and, as always, we kicked off the process with a blog post on USV.com.
If you are interested or know someone who might be, check out this post.
Last Thursday I wrote about the Helium launch in NYC and suggested that readers might want to purchase a Helium hotspot.
Well, I have good news. AVC readers can buy a Helium hotspot with a discount.
Here is how you do it.
1/ Go to the Helium Store and hit the Order Now button
2/ Put AVC100 into the field called “Referral or Promo Code”
3/ Complete your order
I enjoy earning Helium tokens every day with my hotspot. I hope they will turn into something someday.
So goes the famous Mark Twain quote.
I thought of this in reading a few blockchain sector reports this morning.
In his summary at the end, he writes:
Tim Berners-Lee developed the protocol for the web in 1989. 10 year later, in 1999, its potential was glimpsed — but technological, commercial and economic challenges brought expectations back to earth with a crash. 15 years later, Tim’s vision for globalised information, e-commerce, and communication was realised. The Bitcoin white paper was published in 2008. 10 years later its potential was glimpsed — but technological, commercial and economic limitations brought expectations down to earth with a crash.https://medium.com/@dkelnar/fa610002b999
I take that as a suggestion that the crypto sector is following essentially the same timeline as the web sector. Facebook launched in Feb 2004, four years after the start of the internet crash. So using David’s timeline, the killer app for crypto might launch at the end of 2021 or early 2022.
But then there is this chart from Morgan Stanley’s recent report on BTC and Libra:
As you can see in that chart, Morgan Stanley’s timeline for Bitcoin is much faster than for the Nasdaq. It seems that their implicit argument is that the crypto sector will move much more quickly through its ups and downs than the web did back in the 90s and 00s.
I am more in David’s camp than Morgan Stanley’s camp. I think the crypto sector is progressing, but slower than I would like. I remain long term bullish but short term frustrated with the crypto sector. As I have been for quite a while now.
I have found their daily videos that give me what I need to know in five minutes or less a godsend.
This past week was a blur for me as I was on the go all week and could not catch up on anything.
So to be able to get a sense of Wednesday night’s debate on my phone on the subway between meetings was so great.
Here is that video:
If you want to get more videos like this, you can download the Recount iOS app and/or sign up for their videos delivered via a daily email. You can also follow the Recount on Twitter, Instagram, and YouTube.
I almost never take a reward when I back a Kickstarter project but I did that this morning with these playing cards. I can’t wait to get them.
On Tuesday night, our portfolio company Helium launched the Helium Network in NYC.
As many of you know, Helium is a peer to peer low bandwidth wireless network that anyone can run a hotspot for. I wrote about our hotspot in our apartment in NYC a few months ago.
When you operate a Helium hotspot, you earn Helium tokens. We earned about 7 Helium tokens yesterday with our hotspot.
The Helium network in NYC is already 133 hotspots strong and the map of lower Manhattan looks like this:
If you would like to buy a Helium hotspot and start earning Helium tokens you can do that here.
The cost of Helium hotspots are $495 right now but early adopters earn Helium tokens at a higher rate. As the cost of Helium hotspots come down to what you are accustomed to with wireless networking equipment, the competition for earning tokens will go up and the rate at which you earn tokens will come down too.
This is token incentive economics at work in building out wireless infrastructure and I am excited to watch this happen.