Posts from 2020

When I go back and read my Jan 1st post on what would happen in the 2020s, I am reminded how hard it is to predict the future. The Covid Pandemic changed everything in 2020 and likely for years to come. And yet it was not one of my predictions, even though Covid was already spreading in China at the time I wrote it.

We are nine months into the pandemic in the US and there is light at the end of the tunnel. We have two vaccines that have reported fantastic results and will soon be approved for emergency use by the FDA. I have heard people who know about such things say that those approvals could come as soon as the end of November. They cannot come soon enough in my view. We have two safe and efficacious vaccines and we should get busy vaccinating people, starting with those in the greatest harms way (health care workers, first responders, essential workers) and then on to the rest of us. I would take either the Pfizer or Moderna vaccine right now if it was offered to me. Vaccines are the way out of the pandemic and we have known that since it started. What is amazing is how quickly safe and effective vaccines have been developed and tested by our pharma/biotech industry. Science to the rescue.

We are also in the third wave of virus cases in the US (and around the world) and it appears that the virus is everywhere these days. Our family has locked things down pretty significantly in the last week and we are hunkering down for a rough patch. We figure that we did it in March and April. We can do it again this winter.

The other big deal is the availability of rapid and accurate at-home tests. I figured out how to get cheap antigen tests from Asia for our family this summer and we have been testing ourselves regularly. They are not as accurate as PCR tests and they have not been approved by the FDA. But I figured some data that was fairly accurate was better than no data. It has helped our family stay safe and healthy and it upsets me so much that our FDA has not prioritized getting these tests into everyone’s hands.

There are also more expensive and not exactly rapid (30-60 mins) at home tests that are as accurate as PCR coming out now. This is a post about one of them. When you think you might be infected, a test like this is super helpful to have at home. And yet we have not prioritized these either.

Operation Warp Speed to get vaccines into the market quickly was a great success. But the lack of a similar coordinated strategy around mass, rapid, convenient testing was the big miss of the pandemic in the US. We should learn from that.

I believe this winter is going to be very hard. But getting through it safely will likely get us into the end game of this pandemic. So keeping things locked down, masking up out of the home, testing yourself and your loved ones, and following the rules seems like the thing to do. It is what we are going to do.

A reader emailed me yesterday and I replied:

Hi Fred, do you have any suggestion for good primers/book explaining cryptocurrencies a bit better to the inexperienced and uninitiated?   

i would start at the start

https://bitcoin.org/bitcoin.pdf

The Bitcoin Whitepaper, originally published in October 2008, is a work of art. Eight pages long and it describes most of what we now know as the crypto sector.

If you want to understand crypto, I recommend starting there.

The first crypto asset most people purchase is Bitcoin. It has the highest market capitalization. It has way more search interest.

But Bitcoin is not all there is to the crypto sector. There is about $160bn of market value in the crypto sector outside of Bitcoin.

The “non-Bitcoin” portion of the crypto sector has risen over $100bn in 2020 and is up 2.7x this year.

Bitcoin is up about 2.2x in 2020.

What seems to happen is that individuals, and increasingly institutions, purchase Bitcoin to start their crypto portfolios and journeys, but over time they move some of their gains into other assets.

According to Coinbase, there are now 24 crypto assets with a market capitalization of greater than $1bn. I expect that list to expand greatly over this crypto bull run we are in that started this past spring.

We are starting to see sectors of the economy decentralize using blockchain technology, starting with the finance sector, naturally. This is a ten to twenty year trend that is just getting started. And owning crypto assets is the way to play that trend. Starting, but not ending, with Bitcoin.

AVC regular Charlie Crystle told me that his neighbors are doing a fun Kickstarter. So I went and watched the video (here for email readers):

The video is only 30 seconds and it sold me instantly. I backed it and I bet you will too if you like to drink beer with friends.

It’s a beer opener and a game all in one. It reminds me of what our family does with the chicken bone. So much fun.

A number of members of Congress sent a letter to the Office of Comptroller of the Currency (OCC) on Tuesday. I have embedded it below but readers via email may need to click here to read it.

Letter to the OCC on Fintec… by CoinDesk

These elected officials are correct that way too many people in the US are unbanked or underbanked. They are also correct that community banks and minority owned banks are closing at a rapid rate, which is contributing to these alarming unbanked and underbanked numbers.

However, I think that the OCC and, more importantly, the crypto industry, owe these elected officials an education on how crypto can address these important issues and why it is not a distraction from them.

In the letter, the members of congress mention “the immediate needs of millions of at-risk individuals who have not yet received an economic stimulus check and/or cannot deposit their funds in a bank.”

If the United States was developing (as is China), a digital currency stablecoin (a digital dollar), then those millions of at-risk individuals would have been able to receive their economic stimulus funds via any one of the popular mobile apps that support or will soon support digital assets, like Coinbase, Square, PayPal, Robinhood, and many more.

It would have been less expensive (by an order of magnitude or more) and much simpler to get funds to these at-risk individuals with blockchain based assets vs outdated technologies like paper checks.

I am not taking a swipe at these well-meaning elected officials. I am saying that the crypto sector needs to sit down with them and their staffs, pull out their phones, have them do the same, and send them some money. And then talk about regulations that will accelerate the adoption of these new technologies among the at-risk communities instead of what we have now which are regulations that are holding all of this progress back.

I was looking at the numbers on an early-stage VC fund that the Gotham Gal and I are invested in. I am not very familiar with the portfolio but this fund was formed in 2012. There are 24 names (investments) in the portfolio and 3 of them have produced 92% of the value in the fund.

This is more or less the pattern of every early-stage venture capital fund I have helped to manage and every early-stage venture capital fund I have invested in over the last thirty years. I believe it is a fundamental law of early-stage investing that a small number of investments will produce that vast majority of the returns.

But here is the thing. You may get your returns from a small number of names, but you cannot simply focus on them.

I liken it to a teacher and a class full of students.

There will always be the “star pupils” but the teacher’s job is to serve all of the students. The reward may be to watch the star pupils shine, but the job is not. The job is to serve all of the students equally, or possibly to help the students who are struggling more than the others.

That mindset has helped me navigate this challenging issue in the early stage venture capital business. The work is often in one place and the rewards in another.

Yesterday morning we got the news that Pfizer’s mRNA Covid vaccine developed in partnership with BioNTech saw 90% efficacy in phase three clinical trials. While this is terrific news, Wall Street saw it as bad news for companies that are doing well during this pandemic (Zoom, Peloton, e-commerce, etc).

This is a chart of Jim Cramer’s Covid 100 index:

Wall Street believes the end of the Covid pandemic is in sight and is rotating out of this group. I see that as terrific news, even though I am a large holder of a name or two in that index.

I cannot wait until I can start meeting entrepreneurs again in person. I cannot wait until USV can meet together in person. I cannot wait until I can see live music, movies, theater, etc, etc. These things cannot come soon enough for me.

But I also wonder how many of the habits we acquired during this pandemic (which is NOT over yet), will stick when we can go back to doing all of these things we long to do.

Here are some questions to ponder:

1/ Will our use of Zoom to meet decline materially when the pandemic is over?

2/ Will we get back on planes and resume our business travel like we did before the pandemic?

3/ Will we go back to the spin studio even though we learned to love a spin class on our Peloton?

4/ Will we rush back to stores and abandon our e-commerce habits?

5/ Will we all go back to the office five days a week?

I think the answer is yes to a degree, but almost certainly not totally. We have created new habits in this awful year and they are not going to go away so quickly, or ever.

I don’t know if that means the Covid 100 index is a buying opportunity or it needs to go down some more. I will leave that to Jim Cramer.

I do know that the way we work and live and entertain ourselves has changed materially and forever in this pandemic and things won’t be exactly the same when it is over.

There has been a fair bit of good news in the last 48 hours. Here is some more. I logged onto Twitter just now and saw this tweet from my colleague Matt:

Starting this week with as many open jobs as we did before the pandemic https://t.co/5WacYVR2yn

— Matthew Cynamon (@mattcynamon) November 9, 2020

It has taken almost nine months, but our USV portfolio companies have as many open and unfilled jobs this morning as they did prior to the pandemic. That is approximately 1,500 open positions.

That’s very good news. If you want one of them, go here and check out our job board.

I’ve always been a fan of music in the shower. So when a long time AVC reader sent me a link to his Kickstarter project, Shower Power, I immediately backed it.

If you are into music in the shower like I am, you might want to check it out and support it too.