Posts from 2023

It has been a long time since I did a Funding Friday here at AVC. I used to do them every Friday. We have funded a lot of bars, restaurants, coffee shops, and bakeries here over the years. Here are a few examples.

L’Appartement 4F

Land To Sea

There is a new wrinkle in crowdfunding restaurants, bars, coffee shops, bakeries, etc courtesy of USV portfolio company Blackbird, which I recently wrote about.

Blackbird is a loyalty/membership platform for the hospitality industry and it allows operators to issue memberships in-store (at check-in or check-out) or elsewhere. Although Blackbird did not imagine its platform being used for crowdfunding, operators have started to use it that way.

A great example is gertrude’s, a new restaurant in Prospect Heights Brooklyn which hopes to open next month.

gertrude’s is offering anyone the opportunity to become a member in advance of opening and there are three levels of membership:

The benefits of each membership ladder on top of each other and get better and better.

If you live in NYC, particularly if you live in our near Prospect Heights, you can help gertrude’s pay for the cost of opening the store and get your money back in the form of dining opportunities and long-term membership benefits.

This strikes me as a fantastic way for restaurant operators to defray (or ideally fully fund) the cost of opening a new venue. They give up less equity and spend less on raising it and their customers become VIPs and regulars and enjoy the benefits of that. A true win/win.

If you want to help gertrude’s get open, go here and become a member.

There has been a lot of discussion about how AIs can make art and possibly replace artists, but I think the opposite is more likely to happen. Artists have been using AI to make art for a while now and the pace has picked up a lot in recent years.

I have always loved the work of Ian Cheng who makes computer-generated simulations that evolve using artificial intelligence. His works change infinitely. The first time I saw that, maybe ten years ago now, it made me rethink many ideas I had about art.

With the introduction of NFTs, artists can now make, release, and sell AI-generated art much more easily.

This week, our portfolio company Bright Moments has a big event in Tokyo, and one of the collections being shown features eleven top AI artists.

Though I could not make it to Tokyo this week, I was able to acquire a number of fantastic works in the collection.

My favorite is this piece by Claire Silver which is one of a series she calls paracosm.

Claire said this about the work:

This collection is a visualization of part of the artist’s paracosm. A text-to-image model was trained on some of their memories of that world and its inhabitants. 

I also quite like Helena Sarin‘s Kogei Kats. I picked up this one:

Helena’s website says that “Since 2021 her main creative energy is directed towards the #potteryGAN – making ceramics using her GAN/AI work as designed to 3D functional objects.” I really dig that.

I am very bullish on the creativity that AI will help artists bring to the world. It is a tool, like a paintbrush or a camera, or a kiln. And they will use that tool to make work that will bring great joy to our lives. They already are.

I was approached by a company this week that has trained a large language model on all of the blog posts I have written here at AVC. There are 9059 of them for those that are counting. They wanted to offer me a chat bot called “ask Fred.”

I told them no thanks.

Let me explain.

I am totally fine with anyone using all of the content I have produced here at AVC to train their AI models. When I started AVC, I put a creative commons license on the content here. It has always been my view that anything I write here is in the public domain. You can repost it. You can do what you want with it. I just need attribution and a link back to the original post. That’s been my deal since the earliest days of AVC.

But an AI is not me. When you ask me something, you get my brain on the problem.

I have put a lot of what is in my brain onto the page here at AVC. But I have not put all of it.

I also don’t think an AI has my humanity, my ego, my empathy, my love, or my hate.

Maybe someday that will change. But we are not there yet. I think we are a long way from that.

So if you want to ask Fred something, you will still have to approach me.

Ten years ago, a small group of folks in the K12 Computer Science Education community in NYC decided to put on a “mock job fair” for high school students who were taking computer science classes in the NYC public schools. That was the start of an annual day of engagement and learning for high schoolers considering a career in tech.

Yesterday we got the Fair back in person after three years of not doing it or doing it remotely. And it was so great to be there. This is a picture of all of the students making their way around the various booths learning about careers in tech.

Most everyone in the tech sector would like to have more diverse companies but there are no easy ways to accomplish that. Ultimately we need to get young people interested in careers in tech much earlier in their schooling and show them what those pathways look like.

This photo is of a team from Justworks doing exactly that.

I want to thank all of the sponsors who made this event possible:

And most of all I would like to thank Jennifer Klopp, Executive Director of Gotham Gives, who led the effort to get the Fair back in person this year and the team at the NYC Public School System, TEALS, and Tech:NYC who helped get the students and the tech companies there.

Yesterday was one of those days for me where a lot of the work I do across different areas of interest comes together in a single place and time. And those are great days for me.

I am the Chair of the Etsy Board and have been an investor and board member at Etsy since the mid-2000s. It is a company that I love and get great joy from being part of. Last year Etsy quietly launched a feature that has completely changed the way I use Etsy. It is called Etsy Lens.

Etsy has millions of items for sale in its marketplace but shopping on Etsy is generally not intent-driven. It is idea-driven. Most people don’t go to Etsy and enter “pizza oven” into the search field. A more common search would be “red pillow for my couch.” As a result, searching on Etsy can be a bit of a “hunt and peck” experience, even as the search on Etsy has improved enormously in the last few years.

I was in a coffee shop in a hotel in NYC this morning and saw an antique typewriter that I thought was great. I opened my Etsy app and got the search field.

I clicked on the camera icon and my phone took a photo of the antique typewriter:

I clicked the blue checkmark and Etsy gave me these search results:

I have been using Etsy so much differently since finding out about Etsy Lens. I see things that I like when I am out and about, use the Etsy app to photograph them, search Etsy for similar things, favorite and curate them in my profile, and then buy the ones I love.

When I showed Etsy Lens to the Gotham Gal, she said “Take photos of things you like to find things you will love.” That sums up Etsy Lens so well for me.

USV’s current thesis is:

Enabling trusted brands that broaden access to knowledge, capital, and well-being by leveraging networks, platforms, and protocols.

https://www.usv.com/#thesis-3-0

That last word is powerful but unfortunately less understood than the other words in that sentence.

Protocols have been around forever and are well-understood codes of conduct between people.

In computer science, protocols are the same thing, codes of conduct.

I like this definition of computer protocols from the Cloudflare website:

Standardized protocols are like a common language that computers can use, similar to how two people from different parts of the world may not understand each other’s native languages, but they can communicate using a shared third language. If one computer uses the Internet Protocol (IP) and a second computer does as well, they will be able to communicate — just as the United Nations relies on its 6 official languages to communicate amongst representatives from all over the globe. But if one computer uses IP and the other does not know this protocol, they will be unable to communicate.

https://www.cloudflare.com/learning/network-layer/what-is-a-protocol/

Protocols have been around for as long as computers, but we are at the beginning of a golden era of protocols that I like to call “web3.”

Until recently protocols were mostly free and unmonetized. We all use the HTTP protocol every day to access web pages. We all use the SMTP protocol every day to send email. But these protocols are free to use and don’t make money for any company or project or individual.

With the arrival of Bitcoin back in January 2009, we got a protocol that had monetization built in.

And since then, computer scientists have been creating web3 protocols for all sorts of things, most of which have a token that monetizes the protocol.

The monetization is not just about enriching the creator(s) of the protocol. It is also used to incentive usage of the protocol and operation of the protocol. In the Bitcoin protocol, that is operating mining computers that secure the Bitcoin network. In the Helium protocol, that is operating hotspots that connect the network. In the Ethereum protocol, that is staking to secure the network. In the Filecoin protocol, that is operating storage systems that provide decentralized storage.

It is the monetization that sustains these protocols and makes them reliable for others to use and build on them.

And with sustainable and reliable protocols, we will get a new architecture of services that will be much more interoperable.

Let’s look at mobile messaging. Most of my friends and family are on iPhones. I use an Android. Messaging does not work very well between iPhones and Android phones. Many people in the world use Whatsapp for mobile messaging. But Whatsapp doesn’t speak to iPhone’s messaging app. Nor does Signal. And Signal doesn’t talk to Whatsapp. And so on and so forth.

If every mobile messaging app was built on a monetizable protocol, that was sustainably reliable because operating it made people and companies money, and if developers were incentivized to build on it so they could also make money, we would have a different situation. All of our mobile messengers would interoperate with each other.

The same situation will play out in every computing sector over the next few decades as these web3 protocols are designed, built, shipped, and built on. We are in the early days of this golden era of protocols, but we already have many working extremely well in the decentralized infrastructure and decentralized finance sectors.

It upsets me that protocols are both so powerful and also so poorly understood by the media, the mainstream, and the government.

The White House recently put out a document that said “crypto assets currently do not offer widespread economic benefits” suggesting that web3 was not economically important to the US. While the economic benefits of web3 are not widespread today, they are quite powerful and will eventually impact every economy and every market. And pouring cold water on them will not make them go away. Thankfully.

Six months ago, I wrote about Direct Air Carbon Capture and ended with this:

I remember hearing that “we’ve spent hundreds of years taking carbon out of the ground and putting it into our atmosphere and we are going to spend hundreds of years taking carbon out of the atmosphere and putting it back into the ground”. I believe DAC will be a big part of how we do that.

I used that quote again on a blog post I wrote yesterday on the USV blog about Noya, a Direct Air Capture company that USV recently invested in.

Sometimes when I write about something here at AVC, it is a sign that it will end up on USV.com. This was one of those times.

I have watched so many leaders over the years in my various roles as lead investor, board member, board chair, investor, and advisor.

And one thing I have learned from this front-row seat is that leading from the heart is very powerful.

A leader can be the most brilliant product person, strategist, entrepreneur, and business builder, but if they cannot get people to follow them, trust them, and care for them, they will not be an effective leader.

This is a hard lesson to learn. It is a fairly natural tendency to hold your emotions in check when you are in front of a large group of people. We are taught to project strength in moments like this.

And it is also a natural tendency to hold back the most difficult-to-process information, like a fundraising process that is not going well, or conflicts in the board room, or a co-founder relationship that is fraying, or the loss of the biggest customer, or a key supplier relationship that is at risk.

And yet, it is these exact moments where leaders develop that followership, trust, and care from the team.

I am not suggesting that leaders should become deeply emotional every time they talk to the team. I am not suggesting that leaders share every little detail about the business with the team. I understand that some details about the business need to stay confidential until the appropriate time to communicate them. There is a balance to all of this.

I am suggesting that more transparency, more vulnerability, and more honesty is the winning formula and when you are choosing between the two, choose these things.

One of my favorite stories about this comes from a particularly difficult moment in my career where I had to transition a founder out of the company they started. It was the night before the all-hands where the CEO transition was going to be announced. I asked the founder if they were going to attend the all-hands and the founder said no. I then asked the founder what I should tell the team. The founder said, “tell them you fired me because that is what happened”.

The next day I stood up in front of the entire company and told the team the Board had asked the founder to leave the company they started and that the Board had asked a member of the team to step into the CEO role.

After the all-hands ended, there was a line of about twenty or thirty people long to talk to me. And every single one of them waited in line to tell me the same thing which was “thank you for telling us the truth.”

It was a powerful lesson for me. And like most of the lessons I’ve learned in business, I learned it from a founder and their team.

If you are struggling to build the level of trust you want with the team in your company, try a little more transparency, vulnerability, and honesty in your communication style. It will pay dividends.

The first project launched this week on our portfolio company Blackbird‘s platform.

It is a friends and family program at a restaurant in Williamsburg Brooklyn called Gertie.

Blackbird wrote about it today on their excellent Supersonic blog:

Throughout, when you tap Gertie’s Blackbird-powered NFC chip (shown above), wonder awaits. On the first tap, a free cookie sourced from a nearby bakery comes your way. On the second, coffee is on the house. Over time, one-size-fits-many freebies give way to the kinds of perks you’d expect as a regular, like a personalized coffee mug that is always at the shop awaiting your arrival.

I also really love how Blackbird’s founder Ben Leventhal describes the company’s mission:

Blackbird is here to create meaningful connectivity between restaurants and their customers. By connectivity, we mean direct connectivity, where guests know that the more they show up, the better their experience is going to be. We hope to help restaurants think about benefits as a line of business, not just a bunch of random comps. If we can, restaurants will begin to deliver magic at scale, and get more profitable in the process. We’ll turn good restaurants into bonafide thrill rides — spontaneous, consistent, and compulsively enjoyable.

The Blackbird platform is a great example of what can be built on a web3 stack when most of the web3 stuff is under the hood, invisible to the users but powering things that can’t happen on a web2 stack. Some people call this “web 2.5” but I just call it awesome.

Blackbird will continue to introduce capabilities and develop its platform much further. So in the weeks, months, and years ahead, when you see this on the host stand when you walk into an establishment, you will be in for some of that awesomeness.