Posts from April 2021

Funding Friday: Beach Lovers: A NYC Summer Love Story

One of the many things I love about Kickstarter is when a friend backs a project, I am alerted. My friend Kirk went on a binge yesterday and backed a half dozen photo book projects and I followed him on that binge.

I thought I’d blog about one of the projects we backed today.

NYC is many things, and one of them is a beach town. In the summer, the beaches of south Brooklyn and Queens (Rockaway) fill up with NYers of all ages and ethnicities. It is like the subway, a total melting pot.

This photo book project celebrates those beaches and the couples who fill them up in the summer months.

Email readers can see the video here.

#crowdfunding#NYC

Nuclear Energy

When I was in my early 20s, I had a conversation with my dad. I told him I was against nuclear power because it was dangerous and because it created radioactive waste that we had no idea how to safely dispose of. He replied that there certainly were problems with nuclear energy but that they paled in comparison to those of burning fossil fuels. This was before greenhouse gases and climate change were front and center in my mind and the minds of most people. I was not convinced by my dad’s argument.

Forty years later, my dad is no longer with us, but his words ring loudly in my ears. I have come full circle on nuclear energy and now see it as way more attractive than most other forms of generating energy.

There are two ways of making energy with atoms. We can split atoms to generate energy and that is called Fission. Or we can combine atoms to generate energy and that is called Fusion.

We have understood how to make nuclear reactors that generate energy with fission for 80 years now. But these fission reactors have two unsolved issues. In rare situations they can get out of control and melt down. We have seen that at Three Mile Island, Chernobyl, Fukushima, and a few others. While rare, these have been scary events that have shaken confidence in the safety of nuclear reactors in the public eye. Fission reactors also create radioactive waste that we have not yet found a good way to dispose of and that nuclear waste has slowly been building up around the world.

We don’t yet understand how to make nuclear reactors that generate energy with fusion in a sustainable way, although there has been a lot of exciting technological progress on fusion over the last few decades. I believe fusion is not an if, but a when.

As we electrify more and more of our energy use, we will need ever more electricity and most students of energy consumption do not believe we can fully electrify our lives with renewable energy (solar, wind, hydro, etc). I’ve heard people say there is a 30-40% gap between what we need and what we can generate with renewables.

At this time, nuclear is the best way to close that gap.

At USV, we believe that fixing fission and making fusion work are technological and engineering problems that can be solved with sufficient creativity and capital.

In fission, that means figuring out how to make reactors that are not prone to catastrophic meltdown and figuring out how to use/consume the radioactive waste that fission generates. There are a number of promising technologies that are attempting to do these things.

In fusion, that means figuring out how to make a reactor that generates more energy than it is given. The progress on that dimension is promising but we are nowhere near where we need to be and more creativity and capital will be needed to solve the fusion puzzle.

Our climate fund is focused on both mitigating the climate crisis and adapting to it. Solving these technological problems with fission and fusion is an important part of mitigating the climate crisis and we are talking to teams working on both approaches.

I am excited to do that and believe my dad would be too.

#climate crisis

Solar For Outdoor Devices

A trend I’ve been watching for a while now is the use of solar for devices that live outside away from electrical outlets.

Last summer, I bought an inexpensive device that keeps snakes away from our yard. It vibrates into the ground like the animals that hunt snakes and scares them away. I don’t really know if it works but we have not seen any snakes since we got it. The device is powered by a small solar device that is on top of it. Installation was basically pushing it into the ground.

This morning on my way back from getting coffee, I passsed this Citibike station.

I have noticed that most (all?) Citibike stations are now powered by solar. I imagine they also have a battery of some sort that stores solar energy for use at night.

Solar is slowly but surely making its way into all of our lives. It is a great way to power homes and offices, cars and buses, and, it turns out, all sorts of devices that live outdoors away from the electrical grid.

#climate crisis

Paternalism In The Office

Jason Fried, CEO of Basecamp, posted a message to his team yesterday in which he outlined a bunch of changes they are making to the way they run the business. Some will be familiar as others have done similar things (no more politics on the company’s communication channels, no more committees, rethinking the review process).

I think it is a good thing to revisit the ways a company does things and make changes when issues arise. And posting these changes publicly so that others can see them and think about them is very helpful. I had chats with a number of portfolio CEOs yesterday about this post. It is making people think. That’s a good thing.

One change that got my attention was this one:

2. No more paternalistic benefits. For years we’ve offered a fitness benefit, a wellness allowance, a farmer’s market share, and continuing education allowances. They felt good at the time, but we’ve had a change of heart. It’s none of our business what you do outside of work, and it’s not Basecamp’s place to encourage certain behaviors — regardless of good intention. By providing funds for certain things, we’re getting too deep into nudging people’s personal, individual choices. So we’ve ended these benefits, and, as compensation, paid every employee the full cash value of the benefits for this year. In addition, we recently introduced a 10% profit sharing plan to provide direct compensation that people can spend on whatever they’d like, privately, without company involvement or judgement.

That does not feel right to me. If you care about the mental and physical well-being of your team, I believe it makes sense to support them by investing in that. Companies can do that tax efficiently and employees cannot. Paying employees more so that they can then make these investments personally sounds rational but I don’t believe it will be as effective as company-funded programs that employees can opt into or not.

It is also the case that companies carry much of the cost of insuring their employees health in the US. While that may not be great health care policy, it is what it is right now. And so companies do have a vested interest in the health of their employees that goes beyond wanting them to be well and feel well.

It may be paternalistic, but I believe that companies can and should invest in the health and wellbeing of their team. I think it makes good business sense to do so.

#management

Sending Crypto To India

I saw this tweet in my feed yesterday and I sent some ETH to India this morning.

Sandeep followed with a bunch more wallet addresses to use if you want to send other crypto assets:

With the pandemic easing in the US, thanks to vaccines, we cannot turn a blind eye to what is happening elsewhere, particularly India.

I appreciate the crypto community, which is global, stepping up to do this and I encourage anyone with some crypto to participate.

And we finally found something useful to do with DOGE coins.

#crowdfunding#crypto#Current Affairs#hacking philanthropy

The Bolster Board Diversity Survey

Last June, I wrote about board diversity and suggested some things we are doing and that you can do to diversity your board.

In the ten months that have passed since I wrote that I am pleased to say that we have seen a noticeable increase in board diversity in our portfolio. I have personally stepped off a few boards to make room for diverse board members and I am prepared to do more of that. A number of my partners have done the same. It is that important to me and USV.

But I can also tell you that the state of diversity in startup/growth company boards and our portfolio is still awful.

Our portfolio company Bolster connects fractional executives and board candidates to startup and growth companies. They have done some of the board searches for diverse candidates in our portfolio and they are going to do a lot more.

They have been surveying the startup and growth sector over the last few months to determine the state of diversity on boards. They published the results today. The numbers are embarrassing.

We can do better and we must do better.

Here is how:

1/ Make room on your board for independent directors at the very start and fill those seats with diverse candidates.

2/ Ask your investor directors to become observers to make room for independent diverse candidates.

3/ Prioritize this.

4/ Use Bolster or other service providers to surface great diverse board candidates.

There are so many qualified diverse candidates out there for you to bring onto your board. I have participated in many of the board searches in our portfolio in the last year and I am blown away by the diverse talent that is out there waiting to help you grow your company. You just need to make room for them and ask them to join your board.

Just do it.

#entrepreneurship#management#VC & Technology

The Vision Thing

A well-known entrepreneur turned VC, who will go unnamed because I am not sure he would want me to share this conversation publicly, once told me “if you remove a founder, you must sell the company within a couple of years or it will start to decline in value.”

I don’t entirely agree with that and my experience with it has been different, but it brings up an incredibly important topic about leadership.

I like to keep things simple and in my simple mind, leadership comes in two flavors, visionary leadership and operational leadership. Founders are almost always visionaries (if they aren’t, run in the opposite direction) and hired CEOs are almost always operators.

What this VC was saying is that once you replace visionary leadership with operational leadership, the Company will stop innovating and start to lose value. I agree completely that companies that stop innovating will start to lose value. What I don’t agree with and have seen first hand, is that you can have a team that can provide both operational and visionary leadership.

Leaders who can provide both operational and visionary leadership are a rare but special breed. When you find one, get on their bus and stay on it for as long as you can. It will be an incredible trip.

It is also the case that you can pair visionary leadership with operational leadership and I have seen that model work very well for long periods of time. Most commonly, the visionary leader is “in charge” and the operational leader runs the business on a day to day period. That can be an Executive Chairman (visionary) and a CEO (operator) or it can be a CEO (visionary) and President/COO (operator). Most commonly in this model, the visionary leader is the founder and the operator is a hired executive.

Small early-stage companies can succeed without operational leadership but not forever. That is why founders who are great visionaries but weak operationally can be very successful for a while at least. Once a company gets into the hundreds of employees and is headed to the thousands, it needs operational leadership and this is where many visionary founders struggle. And this is when operational leaders are hired and the work starts to find the right long-term sustainable operating model.

Some founders are this rare breed of visionaries who can operate too. Most are not. So this work to find the right pairing is critical and is a lot of the work that board members do with the founders and their leadership team in startups.

But going back to my friend and his advice that I started this post with, it is true that operational leadership alone will not get the job done. And it is also true that operational leaders will have a hard time getting “the vision thing” from below. It has to come from the top. Operational leadership, fortunately, does not.

#entrepreneurship#management

Citibiking

Long-time readers know that I am a big Citibike fan. Citibike is the name of NYC’s bike-share program. I have been blogging about it since it launched in the spring of 2013, eight years ago now. I wrote this at the time.

Since it started getting warm in NYC about a month ago, I have been Citibiking to work, to home, to dinner, etc. And I must say that the Citibike experience in NYC has gotten a lot better in the last few years.

There are now a lot of electric bikes. I don’t use them because I prefer to get the workout, but I see a lot of people using them.

The newer bikes are really easy to ride. They keep improving the bikes and the latest lot of them are terrific.

The Citibike app has also improved. It now starts with a navigation map and you can easily see where to get your bike and where to drop it off.

And finally, NYC keeps adding bike lanes and making them better. I rode all around lower manhattan yesterday and was always in a bike lane, feeling safe and that I belonged there.

Biking is a great way to get around NYC and Citibike makes it so simple. Get a bike, ride somewhere, drop it off. It is one of the great things that has happened to NYC in the almost forty years we have lived here.

#NYC

Commercial Real Estate

With new Covid cases down 30% in the last two weeks and partially vaccinated people approaching 50%, NYC seems ready to start getting back to work.

I have been going to the office several days a week for the last two weeks and will be there again today. As my USV colleagues get fully vaccinated, they are joining me and our office is starting to fill up.

But our Flatiron neighborhood still feels empty and there is not one good restaurant open for lunch during the week.

As we head back to work, what will the new normal be?

That is a huge question looming over the commercial real estate sector in NYC and around the country.

According to this NYT piece from last week, the vacancy rate in commercial office space in NYC is almost 20% and that number is north of 15% across the largest cities in the US. And in the face of these historically high vacancy rates, more new office buildings are coming to market increasing the supply of space.

We have surveyed our portfolio companies and we understand that many will reopen their offices this summer and fall, but most will not expect their employees to be back in the office five days a week. Some will not expect their employees to be in the office at all.

I think this Jamie Dimon quote I read in the NYT piece is about right:

Jamie Dimon, chief executive of JPMorgan Chase, the largest private-sector employer in New York City, wrote in a letter to shareholders this week that remote work would “significantly reduce our need for real estate.” For every 100 employees, he said, his bank “may need seats for only 60 on average.”

We used to have 10,000 square feet in our old office that we left last month. We moved into 6,000 square feet and it feels like plenty. I think many/most companies will feel that way too.

Many of our portfolio companies let their leases expire during the pandemic, as did we. And they are now thinking about what to do going forward. I have a few suggestions:

1/ Take something temporary for the next year or two. Figure out what the new normal is before entering into a long term lease. This is what USV did. We took a nine month sublet to allow us to figure things out.

2/ Shop around and be aggressive in your offers to sublet or lease space. Many landlords will not engage in your bottom fishing. But some will, particularly in the sublease market.

3/ Avoid expensive office buildouts and focus on spaces that are extremely flexible. We have invested in office and conference pods in our sublet to reduce the need for expensive office buildouts. And the Gotham Gal and I made an entire co-working space in Brooklyn with office pods.

4/ Figure out how to integrate remote workers into your office environment. We have been investing a lot more in our conference rooms/video setups. I even suggested that we put some webcams in our office so our remote colleagues could see who is in the office at any time. I am not sure we will do that. Some feel it is creepy. But I think it’s a good idea.

5/ Offer perks to encourage your employees to be in the office. We have been ordering in great food for everyone in the office the last few weeks and everyone seems to appreciate and enjoy that.

I think occupancy expense will be a smaller percentage of our portfolio companies’ P&Ls in the future and those savings can be invested in our teams instead. That feels like a great trade and one that will lead to better companies and happier employees. And that is a very good thing.

#Current Affairs#management#NYC