Posts from January 2022

Two years ago this weekend, the Gotham Gal and I were in Park City at the annual Sundance Film Festival with another couple we have been great friends with for thirty years. On Monday morning we came down to breakfast and our friends announced they were flying back to NYC a few days early. Our friend Phil has been trading the financial markets for as long as we’ve known him and he knew, about a month before most of us, that something big was going to happen and he wanted to get prepared for it. That’s when it first hit me that we were in for something big. The financial markets tend to see things a bit ahead of us.

If you look at the financial markets now, as I wrote two weeks ago, what we see is the unwinding of the Covid trade. Companies like Zoom and Peloton have seen their stocks come way down. Fiscal and monetary policies around the world that kept people fed and housed for the last two years are being unwound. And the financial markets are reacting as one would expect. Stocks are down. All risk assets are down a lot. This is the “tell” that Covid, as we have known it, is coming to an end in many parts of the world.

There are three primary reasons why Covid, as we have known it, is coming to an end in the wealthier parts of the world. First, we have less severe variants now. Second, most people in the developed world who want to be vaccinated have been vaccinated, many multiple times. And third, we have antivirals that can protect those who get very sick.

One of the first wake-up calls I got early in the pandemic was a blog post I read called “The Hammer And The Dance” that was written by Tomas Pueyo on March 19th, 2020. In that post, he described the series of lockdowns and other drastic measures that we would all go through over the last two years in order to attempt to protect vulnerable populations and the medical system from a virus that would otherwise wreak havoc on the world. He was prescient and accurate. About a week ago Tomas wrote a Twitter thread explaining that we are now in the midst of the end of the pandemic. You can read it here. This tweet particularly rang true to me:

They need to realize the risk has now changed. They need to unlearn many of the behaviors they've learned in the last 2 years.

Maybe in a month it will be time to see people, dine in restaurants, go watch a movie. Enjoy life. Again. pic.twitter.com/Z3VJRC44RM

— Tomas Pueyo (@tomaspueyo) January 17, 2022

We all have been through a crazy, trying, stressful, and dangerous two years. Many of us have what Tomas calls PCSD, including our governments. And we all need to “unlearn many of the behaviors we’ve learned in the last two years”, particularly our governments.

But I am not one to criticize our governments too much. Almost 6mm people have died because of Covid around the world in the last two years. The death toll in the US is approaching 1mm people. If our governments had not done “The Hammer and the Dance”, those numbers would be massively higher. The death toll from the Spanish Flu pandemic of 1918-1920 was between 20mm and 50mm around the world. We can all find faults with the way our governments handled Covid, but I think it was largely a job well done.

In the US, the Trump administration prioritized vaccines with Operation Warp Speed which was a massive success. The Biden administration prioritized getting those vaccines distributed broadly and prioritized the most vulnerable populations. In NYS and NYC, vaccine mandates helped to get over 95% of NYers vaccinated and almost 75% “fully vaccinated“.

And yet, most Americans find fault with our government’s response. Trump lost his re-election bid at least in part because of Covid. And Biden is facing massive unpopularity, also at least in part because of Covid. We have people who oppose vaccination and masks. We have people who believe that everyone should be required to be vaccinated and masked. Nobody can agree on anything and everyone is angry.

It is time to stop obsessing about Covid. It is time to stop politicizing Covid. It is time to stop tweeting about Covid. It is time to stop reading about Covid. It is time to start healing and it is time to start moving on.

We can live with Covid and most of us will. The current death rate of Covid in the US is about what a bad flu season would be. We have vaccines if you want them. We will have anti-virals if you need them. We should take a lesson from many Asian countries and mask up if we are feeling sick from now on. And you can wear masks if you are uncomfortable on the plane or the subway. We’ve normalized mask-wearing in the US now and that is a good thing.

We’ve got other pressing matters to deal with. We have a warming planet that desperately needs our attention. We have economic challenges that need our attention. We have gun violence in our cities. We have other health care challenges to tackle. Covid was terrible, we are scarred from it, but we cannot let it divide us and we cannot let it drive us crazy. There are more important things facing us and let’s go deal with them now.

Six years ago this month Julie Samuels got together with a group of technology leaders in NYC and we decided to form an industry group for the growing tech sector in NYC. I agreed to co-chair the organization and have been in the chair role since then. We called it Tech:NYC and I first wrote about it here at AVC in March of 2016.

Last year, after more than five years at the helm, Julie decided it was time to pass the baton to a new leader and she and I and a group of board members spent the fall talking to lots of people and we found a fantastic new leader named Jason Clark. Jason starts as the Executive Director of Tech:NYC next week.

Jason takes over an organization of 800+ member companies, from the largest names in tech to the three-person startup you have yet to hear of. Tech:NYC has succeeded in getting tech “at the table” in Albany and City Hall and helping to make the tech sector more civic-minded and more integrated into the city and state. Julie and her team have done a tremendous job of taking an idea and making it a reality and I am incredibly grateful for her leadership.

The tech sector finds itself at an interesting moment in NYC. It is quickly becoming the largest employer in NYC and is bringing much-needed innovation to the city, state, and world. We have new leaders in Eric Adams and Kathy Hochul who are eager to work closely with the tech sector to do new things and move the region forward. But with great success comes great responsibility and the tech sector needs to employ a broader and more diverse group of NYers, it needs to be more civic-minded, it needs to be more philanthropic, and it needs to think beyond Manhattan out to the five boroughs and on to New York State and the NY Metropolitan region.

And Jason is the perfect leader to take Tech:NYC in those directions. Jason is a born and bred NYer, from southern Queens, a product of the NYC public schools, a lawyer who has started a law firm and worked in the Attorney General’s office in Harlem, and a former candidate for public office for the City Council seat in his home neighborhood in southeast Queens. Jason has the relationships, the lived experiences, and the mindset to lead NYC’s tech sector in the directions it must go as it becomes the leading industry and employer in the city and state.

I welcome Jason to Tech:NYC and look forward to working closely with him and the city and state leaders to step up to the opportunity that is in front of us. It is an exciting time.

Also, Jason is already on the hunt for a strong policy director with lots of tech experience. If you would like to fill that role or know someone great, please visit this job spec with instructions on how to get into the process.

Last month our portfolio company Kickstarter announced the creation of a protocol organization that will develop a web3 protocol for the crowdfunding of creative projects.

They are now assembling a protocol team and are talking to candidates to lead that effort. The protocol lead role is an exciting one that combines product leadership, smart contract development, team management, and a lot more.

I believe Kickstarter is at the forefront of a wave of companies that have been built on web2 technologies that will be adopting web3 approaches to move their products and stakeholder networks forward. And so leading this protocol effort will be an opportunity to help shape what that looks like.

If you are interested in this role or know someone who would be great for it, please email me and I will make the connection.

The stock and crypto markets have started off the year in selloff mode, with the Nasdaq down almost 5% this week and the big crypto assets down almost 10% this week. But this selloff has been going on for a lot longer than one week. It has been going on since early November when the Nasdaq peaked at $16k and BTC hit $67k. Since then it’s been downhill and the biggest carnage has been in the highflying “cloud” stocks. The Gotham Gal and I own a few stocks that have been cut in half in the last two months. Yes, they lost half of their value in the last two months.

Of course, these highflying stocks have only given up some of their gains over the last two years. In the case of a few of our public stock holdings, they went up 10x in the last two years and are now “only” up 5x. Easy come, easy go.

Even at these new “discount” prices, none of these stocks look cheap to me. Most are still trading well in excess of 10x revenues which has always been my baseline for a subscription-based software business. I don’t know where they will bottom out, but it certainly could be lower. Or the sector could have already bottomed out in this first week of 2022 blowout sale. One never knows where the bottom is until you are well on your way back up.

The capital markets have been awash in money for the entire pandemic and it has resulted in some crazy prices being paid for public stocks and for growth rounds in high-performing privately held companies. The optimist in me sees this selloff as a return to normalcy, in the capital markets and in the world we live in. It’s hard to see a return to normalcy when offices remain closed, events are being postponed or moving to virtual. But markets tend to see things first and I do wonder if the capital markets are coming back to earth in anticipation of things getting better this year.

It also makes me wonder if the “pay any price” mentality in venture may ease up a bit this year. When the IPO markets or the M&A markets can’t/won’t be able to pay more for a business than the private markets are paying, that’s unsustainable. It can last a few quarters, maybe even a year. It can’t last forever. We will see.