Posts from March 2020

We onboarded our new analyst team over the last few weeks at USV.

As is our tradition, they have each written a “hello world” blog post on usv.com introducing themselves.

They are:

David

Hannah

Hanel

I can’t imagine how hard and surreal it must be to join a new firm just as we are all starting to work from home. So they are going to be challenged getting out of the gate more than prior analyst teams, but I am confident that each of them will rise to the challenge and we are learning some new tricks on how to remotely onboard too.

I hope that many of you will get the chance to meet or engage with them. They are a great group of analysts and I am excited to work with them.

I promised to post this once it is live and it went live today.

So here it is:

I tweeted on friday that our portfolio company Outschool, which offers live K12 classes delivered by real teachers over video, would be offering free classes to those who need them for their kids and can’t afford to buy them right now:

As you might imagine, the response to Outschool’s offer has been off the charts (an 11x rise in enrollments) and now Outschool is concerned about running short on classes to offer to families that are temporarily homeschooling their kids.

So Outschool is looking for 5,000 more teachers who can start offering classes in the next two weeks. If you are a K12 teacher who wants to start teaching online during this downtime, or if you know a K12 teacher who would want to do this, please read visit or share this link.

Here is a post by Outschool’s CEO explaining all of this in a bit more detail.

This is a challenging time for all of us, but being a parent with kids at home who want and need to keep learning is a particularly challenging situation. Thankfully we have a technology, online video, that can help. And we have K12 teachers who aren’t at school teaching right now. So getting them online and teaching our kids is a great solution and I hope we can all help Outschool quickly find another 5,000 teachers.

The Gotham Gal and I have been largely self quarantining in our home for the last two weeks and are preparing to continue doing so for a while longer.

It’s a bit depressing to be honest and I’ve been looking for ways to get the proper mental state for what could be an extended stay at home.

My friend Brad Feld wrote a blog post yesterday calling this “spring break at home.” I like that framing. It puts a positive spin on this challenging situation.

Our oldest daughter told me that a lot of great work has been done by people when they were under quarantine for the plague.

So I’ve been thinking about what I can accomplish with all of this new found time. Of course I plan to work as USV is open for business. But I also have down time which I am now going to spend at home.

We certainly could binge on all of the TV shows we’ve never watched (Friday Night Lights, Breaking Bad, The Wire, etc, etc) but somehow I doubt that’s where we are headed.

Our younger daughter suggested I learn French on Duolingo. That’s a possibility. She also suggested I finally learn to cook. That probably isn’t. Thankfully the Gotham Gal is a fantastic cook so I’m set there.

My point is this. It’s a shitty situation we are all in right now. But I’m going to try to make the best of my spring break at home and I hope that all of you can too.

This reimagination of the card game Old Maid is terrific. I backed it immediately this morning.

I got an email from a well known journalist who covers the VC sector today. He was asking a bunch of VCs a few questions that basically can be summed up “are you open for business?”

I answered him with these facts:

1/ We are working on two term sheets for new investments by USV this week and hope to sign them by end of this week

2/ We are closing on several existing term sheets as well

3/ At least one of our portfolio companies received a term sheet this week and hopes to sign it shortly

4/ We have seen a few deals that were in negotiations get put on hold in our portfolio.

It will be interesting to see where his informal survey of the VC business shakes out.

But from where I’m sitting it seems that much of the VC industry is still open for business and USV certainly is.

My friend Howard Lindzon has started a podcast series called Panic With Friends. It’s about the market meltdown and a lot more. I hope that it turns out to be a short lived series and this panic ends quickly.

Episode One was posted today on Howard’s blog.

He asked me to do an episode with him and although I been saying no to all podcast requests for the last year or two, I’m going to say yes to this. If we have to panic, it’s best to do it with friends.

I will post the episode I do with Howard here. Likely some time next week.

Tech:NYC, NYC’s tech industry association (which I co-chair), has launched a daily email digest for the tech sector to keep up with the latest COVID-19 developments in NYC.

Here is the first daily email that went out yesterday afternoon.

You can sign up for it here.

If you are leading a company right now, it is hard to know exactly what to do and when to do it.

Industry associations, like Tech:NYC, can help by accumulating data on best practices and staying abreast of the latest information. There are links to a number of resources on best practices in that first daily email that went out yesterday afternoon.

There is a lot of anxiety sloshing around right now and staying calm and making good decisions is important. I am glad that Tech:NYC is doing its part to help with that.

Today is a tough day in the financial markets. Who knows where we will end up at the end of the day, the week, or this month. We’ve already seen the major indexes give up around 20% of their value in a few weeks with today’s down moves at the opening.

I’ve seen this movie before. I had just started working in the venture capital business in 1987 when the stock market crashed 23% on “black monday.” There was the Internet stock meltdown in 2000 when the internet sector went down something like 80% over that bear market. And then there was the financial crisis in 2008.

I don’t know if we are in for another of those moments or something else.

But I do know that good companies can be bought at very attractive prices when markets meltdown. Back in 2008, I was blogging my purchases of Apple, Amazon, and Google during that crisis.

I went back and looked at those blog posts this morning to remind myself of what it was like back then. In this post, I mentioned buying Apple at $90, Google at $320, and Amazon at $40. Those turned out to be fantastic prices when the market bottomed and then started going up again. I eventually sold those positions which of course was a mistake. But even so, it was a great trade.

I was buying these three great companies at less than 10x projected annual cash flow. And they went on to increase their cash flow enormously over the next decade.

Capital markets sometimes put out the for sale sign and if you are patient and wait for bargains to emerge, they will do that.

We are a long way from being able to buy Google and Apple at 10x projected annual cash flow and I am not suggesting we will get to those levels.

But I do know that good companies with resilient businesses and strong balance sheets will survive these occasional crises and that they can be bought with confidence at the right time.

I also know that market meltdowns cause a lot of unwinding of risk and leverage. This is a painful process and the losses can be enormous for investors and financial institutions. That impacts all capital markets, including the private markets.

We may be in for a downturn in all markets and if you have a business that is dependent on the capital markets (ie you are losing money), then you need to be very mindful of that and make sure you are making the financial moves to preserve your cash. On the other hand, if you have a business that is not dependent on the capital markets because you are profitable and/or have a very strong balance sheet, then this environment could be an opportunity to play offense. But you really need to figure out which camp you are in and plan accordingly.

I hope that this crisis will end quickly and that things will return to normal soon. But hope is not a strategy. So we all need to be clear eyed and calmly assess our situation and develop a strategy that gives us the best chance of success.