Posts from 2021

Web3 vs Web2

Now that we are beginning to see what consumer applications are like in the decentralized web (web3), it is interesting to compare that to what consumer applications are like in the centralized web (web2).

It became clear early in the 2000s that the big opportunity in the web would be to build large networks of engaged users. That was USV’s initial web2 thesis:

And the way many/most of those networks were built was by delivering single user utility day-one and then building out network effects around that utility.

Chris Dixon called that “come for the tools, stay for the network” in this blog post.

We are seeing a different go-to-market action in web3.

Most consumers start with the token/asset and go from there. Initially, it was Bitcoin and you’d store it at Coinbase. Then it was Ethereum and you’d stake it. Then it was a Cryptokitty and you’d sire it. Then it was a TopShot and you’d collect it and trade it. Then it was a CryptoPunk and you’d make it your Twitter avatar. Then it was an Axie token and you’d use it to play Axie Infinity. I could go on and on but you get the idea.

And what is most interesting to me is that these assets that you start with don’t need to stay in the networks you first use them in. You can move your Bitcoin to your ledger wallet. You can pool your Ethereum on Uniswap. You can list your CryptoPunk on OpenSea. You can use your Axie token to buy a car.

Which leads me to believe that the go-to-market action in web3 is:

Come for the assets, stay for the experience.

I shared that on twitter yesterday and putting it here today.

#crypto

Startups Galore

When you look at the recent Q3 numbers on seed and early-stage VC fundraising, you might think we are in the late stages of a VC bubble:

The words I would use to describe the current environment in early-stage VC are “fast and furious.”

And yet the thing that makes me think this could be the new normal and not the late stages of a bubble is the dramatic increase in the number of people who are choosing to work in or form new startups. It has never been easier to start a company, build a team, and build a product. And many people are choosing to do just that.

It could be that we are in an environment where too much money is chasing too many good deals.

#entrepreneurship#VC & Technology

Funding Friday: Posterized

My friend Stephen sent me a text with a link to this Kickstarter project. I backed it immediately and went one step further than I ordinarily do, I bought a pre-order copy of the book.

The NBA is back in season, I went to the opener on Weds night here in NYC, and it was a thrill to be in the arena watching incredible athletes play my favorite game to watch.

So I am excited to get this book and put it on my coffee table. I will have endless fun rifling through the pages.

And if you are an NBA fan like me, do yourself a favor and watch this video.

#crowdfunding#Sports

The Mainstreaming Of Crypto

We started looking at crypto ten years ago, starting investing nine years ago, and have had a front-row seat to its development ever since. It has been enlightening, exciting, rewarding, but definitely not mainstream.

I think that is changing quickly now and yesterday I saw this tweet:

Though I am on the board of Coinbase, I had not been aware of this partnership until I saw the tweet. Seeing it made my day. Two of my favorite brands in the world are teaming up to educate and increase the awareness of crypto around the world.

That’s going mainstream right there.

#crypto

Working Multiple Jobs

Since 2016, I have been working “half time” at USV and taking half of a partner’s carry. That has allowed me to allocate more time to things like building green buildings with the Gotham Gal, building a philanthropic organization with the Gotham Gal, sitting on non-profit and civic boards, and a few other things.

The truth is I still work at least 40 hours a week at USV, probably a fair bit more some weeks, but I still have time to spend on these other things and my partners understand that I am doing that and my compensation reflects that.

The move away from commuting to the office, spending eight hours a day or more there, and the rise of working remotely has upended so much in the last 18 months and one of the things I am noticing is how many people are doing what I am doing – working multiple jobs at the same time.

I am not talking about freelancing, consulting, and the other forms of working for many clients. I am talking about holding down multiple full-time jobs at the same time. Early in the pandemic, there was a story about a software engineer that had full-time jobs at both Google and Facebook. It was somewhat amusing to read that Google and Facebook were being played like that, but the truth is this is happening all over the place.

In some cases, like mine, the employer(s) know about the arrangement and the compensation reflects it. In most cases, the situation is not transparent for everyone. And that is a problem because eventually, most things become public.

Employers are going to need to wrap their heads around this situation and create plans that allow this. I suspect the reason many employees are not transparent about what they are doing is that their employers won’t allow it. So they do it anyway and keep it under wraps.

Employers are probably reading this and saying “But I need 100% of their time. I can’t allow them to give me only half of their time.” But here is the thing. They are already only giving you half of their time.

I can tell you that being able to work on many different things at the same time makes me better at every one of those things. I have always had that situation in the VC business. I get to work with dozens of companies at the same time. But now I get to work on all of them and also different problems in different industries. It keeps me energized, motivated, curious, and excited. And productive as hell.

I think it is high time for employers to understand that some of their employees, often their best employees, need to work this way and will be happier working this way. The employers that lead on this issue will become the places the best people want to work. And they will be more productive and more successful.

We already have a model emerging where this happens. The most common form of organization in crypto is the DAO and most DAOs have this model of part-time work and compensation that reflects the contribution. I know of many people who work for multiple DAOs, get paid by multiple DAOs, and where all of this is out in the open and transparent to everyone.

I am certain that the model of employees working for multiple companies at the same time is here to stay and will grow over time. The only question for employers is whether they will lead or follow in this new model of work.

#crypto#employment#enterprise

Tracking Crypto For Taxes

For the last ten years, my tax prep on crypto was pretty easy. I have always had a buy and hold mindset and have custodied with Coinbase. So a simple report on Coinbase was all I needed to send to my tax folks. Pretty simple.

But as DeFi and NFTs have exploded on the scene, things have gotten more complicated. Swapping, bridging, staking, buying with ETH, SOL, FLOW, yield farming, liquidity mining. Across chains. On hardware wallets. On mobile wallets. It is giving me a headache just typing all of this into my browser.

So I’m on the hunt for the very best cross wallet/cross chain tax prep software for crypto. I am not seeking to invest in this sector, although I have friends who are. What I am seeking is suggestions from all of you. What do you use to deal with his headache?

If you have suggestions, please click on the link that says “Discuss on Twitter” and leave your suggestions there so everyone can see them. If you must email me, that’s fine too. I appreciate suggestions however you can send them. But I prefer Twitter because everyone will be able to see them.

#crypto

NYC's Tech Resurgence (continued)

A few weeks ago, I wrote about NYC’s Tech Resurgence. I observed that NYC continues to develop as one of the world’s leading centers of tech innovation.

And then yesterday, I saw this tweet:

NYC startups are getting funded at 2/3 the rate of Silicon Valley startups. That’s a huge change from where NYC was even two or three years ago.

It wasn’t that long ago that a NYC-based startup had to agree to move to Silicon Valley to get money from the VCs out there. I think that was still a thing into the latter part of the 2000s. Now a decade and a half later, we see NYC startups raising capital almost as much as Silicon Valley startups.

Wow.

#entrepreneurship#NYC#VC & Technology

IRAs and Wealth Creation

A couple of years ago, I wrote about buying crypto in an IRA. I went and did that with an old unused IRA that was sitting in cash and I have 8x’d the value of that IRA in the last 18 months. While my family is fortunate that we don’t have to rely on our IRAs to generate wealth like this, many folks do.

Tens of millions of people in the US rely on IRAs to save money tax-free for their retirement. There is $13 Trillion invested in IRAs and only 30,000 of those accounts have more than $5mm in them. IRAs are the retirement accounts for main street, not wall street.

And yet, the House Ways and Means Committee is now suggesting eliminating the ability of these IRA holders to invest their IRAs in the highest returning assets available; VC funds, private equity, and private companies (page 689, section 138312). I am sure they are proposing this to prevent wealthy people like me from using the tax shield of the IRA to invest in private businesses. But there are better ways to do that than a blanket prohibition.

A blanket prohibition will hurt main street, not wall street. We already limit what folks who aren’t wealthy can invest in by virtue of a multitude of regulations. It upsets me to no end that this paternalistic approach keeps the wealthy making lots of money and everyone else on the sidelines. I have railed about this set of issues here at AVC since I started blogging almost twenty years ago now.

What we should do instead is limit the tax advantages of an IRA to a set amount of money, something like single-digit millions. That will limit their attractiveness as a tax shield for millionaires but maintain them as a wealth generator for everyone else.

Please tell your elected officials in Washington that Section 138312 of the Reconciliation Bill must go. It hurts main street, not wall street, and is bad policy.

#policy#Politics

Dapper Collectives

Our portfolio company Dapper Labs, creator of CryptoKitties, the Flow Blockchain, and the NBA Top Shot collectible game, is announcing Dapper Collectives today.

Dapper Collectives comes by way of an acquisition of Brud, a company that has been developing “community-owned media and collectively built worlds” for the last five years. Dapper Collectives will be led by Trevor McFedries, the founder and CEO of Brud and the co-founder of the FWB DAO. Trevor is also an LP at USV.

Dapper Collectives has a mission to “bring decentralized organizations (“DAOs”) to the mainstream”. The initial efforts of Dapper Collectives will include:

  • Bring community ownership and collective building to Dapper Labs products –– starting with Lil Miquela and her 10 million fans;
  • Build and release open source tools to help other mainstream communities engage in decentralized ownership and governance on Flow blockchain;
  • Help the most forward-thinking “web 2” companies decentralize their operations, engaging at the CEO and Board of Directors level to assist in tokenomics as well as technical implementation.

DAOs are quickly becoming the preferred organizing model for crypto projects, community efforts, and investing activities in Web3 and Dapper Collectives will energize these activities on the Flow blockchain.

#crypto#Web3

NYC's Tech Resurgence

Early in the pandemic, we were all deluged with stories of tech workers, companies, and founders leaving Silicon Valley for Miami and Austin. And that was true. But from my personal experience, they also left for many other places too, including Los Angeles and New York City.

I met with a founder last week who has left the bay area for good and now splits his time between homes in LA and NYC. It is hard to know what cities have been the biggest beneficiaries of the great relocation but I am certain that NYC is one of them.

Here are some tweets I’ve seen in recent weeks talking about this:

I am not proclaiming the death of Silicon Valley. It is alive and well and will continue to be the epicenter of tech in the US for as far as I can see. What it has lost is the power to hold onto people who don’t really want to be there. One of the most important things the covid pandemic has done to work in the US, particularly tech work, is to make it so that people can work for great companies wherever they want to live. That’s a huge shift and I believe it is permanent.

But that’s not the only thing that’s driving NYC’s tech resurgence. As yesterday’s IPO of Warby Parker reminds us, NYC is now home to a growing number of large entrepreneurial companies that are now public and will remain independent and growing in NYC. They may employ people all around the world, but they are HQ’d in NYC and will continue to be.

And Jordan is correct in the tweet above that NYC is particularly strong in Web3 because of its roots in trading, speculating, DeFi, etc and because of large Web3 software players like Consensys that have been operating here for many years now. And as Web3 is now exploding into the creative class via things like NFTs, DAOs, gaming and more, we will only see NYC’s strengths come to the front and center in the most important new sector in tech.

It’s a great time to be working in tech in NYC. You get all of the benefits of living in this amazing city without the hassles of the commute every day.

I’ll end with a plug for a startup competition that Google, Tech:NYC, and Cornell Tech are putting on called the “NYC Recovery Challenge”.

The challenge will bring together startup entrepreneurs from across the five boroughs to pitch tech solutions for New York’s recovery to a panel of business, economic, and policy experts with the chance of winning cash prizes, technical mentorship, and more.

The top three founders and their teams will be recognized as “NYC RecoveryFellows” and will receive cash awards from a prize fund totaling $150,000. The first-place founder and their team will receive a non-dilutive cash award of $100,000, and two runners-up will each receive non-dilutive cash awards of $25,000. Seven other entrants will be recognized as “Founders to Watch” and will participate, along with the three cash award recipients, in a month-long, equity-free mentorship program — dubbed the “NYC Accelerator” — led by Cornell Tech, Google for Startups, and Tech:NYC advisers. 

If you and your startup want to apply, you can do so here.

#crypto#entrepreneurship#NYC