Posts from October 2020

Funding Friday: Westbeth

The Gotham Gal and I have lived a block away from Westbeth for almost fifteen years. Westbeth is a treasure. It was Bell Labs for most of the first half of the twentieth century and became an artist community in 1970 about twenty years after Bell Labs left for New Jersey.

Earlier this week, I backed a photobook project on Kickstarter to document many of the artists who live there. That project was funded and is over now.

The video does a great job of showcasing what Westbeth is and so I am embedding it here on the blog. If you are reading this in email you can go here and watch the video.


A Failing Grade

I wrote yesterday, about the quarterly numbers for VC investing activity:

If this was a student coming home with a report card, it would be straight As.

Well, I missed something in the data that was subsequently reported on by PitchBook, one of the authors of the report:

Venture funding for female founders has hit its lowest quarterly total in three years.

Firms invested a total of $434 million in Q3—the lowest figure since the second quarter of 2017, according to PitchBook data. The third quarter total also amounts to a 48% drop in funding from Q2, when female founders received $841 million across 132 deals.

I hope Q3 is an anomaly and not the reversal of a trend that has mostly been “up and to the right” in recent years.

We continue to see, and fund, great woman founders so I am hoping that there is not some fundamental change to the market that is hurting women founders. But it is possible that there is and I missed that in my blog yesterday. I will give myself an F for that.

I’ve seen a few replies on Twitter that suggest the same is true for underrepresented minorities. I have not seen the data to back that up but if it is true, that is also a failing grade for the VC sector.

I have been encouraged by what I have seen in the VC/startup sector regarding opening up access to women founders and founders of color. It feels like positive change is happening. But we have to see that in the numbers or it is just talk.

And apparently we did not see it in the numbers last quarter.

#VC & Technology

Venture Funding Trends Intact

The NVCA and Pitch Book are out with their Q3 report on the VC industry and what they report is that the VC industry continues to be very active throughout the pandemic. Deal counts and deal values are stable to up over last year. The massive expansion of later-stage private capital continues unabated. Valuations continue to rise. And exits have been very robust.

If this was a student coming home with a report card, it would be straight As. The startup economy is alive and well during the pandemic.

#VC & Technology

The De-Carbonization Of The Economy

Over the last decade, the Gotham Gal and I have moved away from oil and gas in our homes and have installed solar panels for electricity and heat pumps for heating and cooling. It has gotten less expensive to do this swap out as solar and heat pump costs have come down. My partner Albert told me that when you factor in the financing costs of this swap, the average home in the Northeast United States could save $1000 to $2000 a year by doing this swap.

What this means is that homeowners can and should go to the bank and borrow the money to remove oil and gas powered boilers and replace them with energy efficient heat pumps and put solar on their roofs to power them. They should do this not just because it is good for the climate, but because it is good for the bank account. That’s a big deal.

I saw this chart in Azeem Azhar’s excellent Exponential View newsletter this week:

Electricity generation and consumption in the US has stabilized over the last twenty years and the use of coal to generate electricity is plummeting. In another twenty years this chart will have a huge amount of green and almost no red in it.

The de-carbonization of the economy is a megatrend that is already underway and is highly investable because the unit economics of renewables and energy efficient electrical equipment is now superior to the unit economics of carbon and mechanical equipment. We can see this in cars (EVs>Gas) and heating/cooling systems and many other aspects of our economy.

The narrative somehow has been that addressing the climate crisis is going to hurt our economy. I believe that is plain wrong. I believe it will power a huge economic boom that will look much like the boom that powered the carbon/mechanical/industrial economy from the late 19th century to the late 20th century.

So let’s get on with it.

#climate crisis#VC & Technology

Funding Friday: Getting Through The Winter

I backed Basilica Hudson earlier this week when I saw a friend had backed it in my notifications. Helping a leading upstate arts organization keep going during this pandemic felt like a good thing to do.

This morning, I backed a few other similar projects:

Dirty Precious: Off Premises

Museum Of The Moving Image

As it starts getting colder here in NYC, I have a sense that if we can help these institutions get through this winter into the spring, they can make it through the pandemic and be around when we all will desperately want to be packed in a room with other people again.

Kickstarter’s Lights On category is all about these sorts of projects and I stop by and visit them regularly and back them.


E-Commerce and Retail

Most of us have seen some version of this chart that shows how the Covid pandemic has accelerated e-commerce adoption:

What is interesting to me is that it has also impacted in person retail experiences.

Most restaurants in NYC are not passing out menus anymore. They just have a QR code at the table that you aim your phone camera at and are taken to the menu.

At my regular coffee shop in NYC, they now encourage ordering in advance versus standing in line to order your coffee. I took this photo while waiting for my coffee to come out yesterday:

The initial download and setup of the Toast Takeout app takes a few minutes. It is not something I would have done in the past. But now that ordering online vs lining up to order is the way that this coffee shop mostly works, I was happy to make that investment of time. And now, that’s the way I get my coffee every morning. I don’t think I or any other regulars will go back to lining up when the pandemic is over.

My point is this. Retail will come back after the pandemic. There are many reasons why we like to go into places and shop and drink and eat with others. I think we will enjoy that experience more than ever once we can do it again. But we will do it differently and more efficiently than we used to do it because we all learned some new tricks during the pandemic. And that is a good thing.

#Food and Drink

Business Books and Podcasts

I’m not a fan of business books. I find that you get most of the value from them in the opening chapter and then it is a lot of repetition from then on.

But there are some great concepts that one can glean from business books and I’ve often wanted to find an efficient way to do that without buying the book and reading one chapter.

Podcasts to the rescue. Most business book writers go on a podcast tour in order to promote their book. All you need to do is find your favorite interviewer on the podcast tour and listen to that one. That’s generally thirty to forty-five minutes and you will get everything you need from the book and maybe more.

As an aside, this is a classic example of the promotional effort cannabalizing the product itself.

Fortunately great writers don’t need to worry about this. I will always choose to read the words of a great writer over listening to them on a podcast. But there aren’t many great writers putting out business books. They write novels or big ambitious works of non-fiction. Which I prefer to read on a Kindle or in print.


AirPod Alternatives?

We have been back in NYC for the last month and enjoying the city very much. One of the many things we love about NYC is that we walk everywhere (or most everywhere). I enjoy walking around NYC by myself and listening to music, podcasts, or talking to friends or colleagues on the phone.

But earlier this year, I developed a bad case of Tinnitus. I stopped using the in-ear Airpods and the Tinnitus went away quickly. I am not saying that the Airpods caused the Tinnitus, but they certainly seem to make it worse and so I stopped using them about six months ago. I did not miss them much when I was in my car a lot, but I sure do miss them walking around NYC.

So I am in the market for bluetooth headphones that fit over the ear, not in the ear, that are small, light, and good for walking around with. I just can’t wear my Bose Quiet Comfort headphones (which I love for the office) out on the streets.

So if you have any suggestions for me, I would love to hear them. Please click on the button that says “Discuss On Twitter” and leave them there for me. Or reply to the email if you get this blog post that way. I am all ears 🙂


Negative Social Proof

I explained this last week on a call with some of our investors and I thought it might be useful to explain it more broadly.

Most of USV’s big wins have been in companies where we were the first institutional VC to talk to the company or where we had way more conviction about the opportunity than other investors at the time of our investment.

There was no social proof on these investments other than the fact that nobody else wanted to make the investment as much as we did. You can call it negative social proof.

I like to tell the story of when I met Brian Armstrong, the founder of our portfolio company Coinbase in the summer of 2012. Paul Graham had asked me to do office hours at Y Combinator and so I came to their offices and spent four hours meeting sixteen companies in back to back 15 minute pitches. At the end of the four hours, I walked out of the conference room and Paul was waiting for me. He asked “which ones did you like best?” and I replied “I like Coinbase. I think Brian Armstrong is on to something big.” He was surprised and said “You are the first VC to say that.” And I said “Then its going to be huge. Please make sure we get the call when they want to raise.”

That’s negative social proof. When nobody else likes the deal but you. That’s how you win big.

#crypto#VC & Technology