Earlier this week Chris Anderson, who runs TED, hosted a 45min conversation with Bill Gates. I heard a lot about it in the last few days (it has already had 1.2mm views) and this morning the Gotham Gal and I watched it over our morning coffee.
What I like about this conversation is that Bill provides a lot of information and helpful context in a very calm, serious, and helpful way. It made me more comfortable just watching it. And we can all use some comfort right now.
If you do watch this, please make sure to stick around to the last six minutes or fast forward to it. It has such a hopeful ending. Bill is a long term optimist about science and technology, as am I, and the talk ends in a discussion around that.
As the coronavirus pandemic spreads across the US, the people who are stepping up the most to meet this challenge are our country’s healthcare workers. We should do everything we can to help make sure they can work safely during this crisis.
So today I am highlighting two fundraisers for protective equipment for these health care workers. Both are on GoFundMe (which happens to be a USV portfolio company but that is just a coincidence here). I have given to both of them.
A Million Masks For NYC – This one was started by a bunch of folks in the NYC tech sector and has raised from individuals (like me) and NYC tech companies. You can give here.
Frontline Responders Fund – This is a $10mm campaign started by Edward Norton and the logistics company Flexport to fund supplying “masks, gowns, gloves and other critical supplies to protect medical professionals in hospitals across the world.” You can give here.
If you are a crypto enthusiast like me, how do you stay on top of the daily crypto news cycle? There is crypto twitter, but that’s not for the faint of heart. If you hang out there, you know what I mean. You can read the news at Coindesk, Cointelegraph, and the other leading crypto news sites. I do both of these things as well as participate in a number of chat groups where we trade links. It gets the job done, but it’s a lot of work.
And yet much of the media business is supported by advertising. There are a growing number of subscription-based media services, but many people cannot or won’t pay for content and the vast majority of content consumed on the web is advertising supported.
So USV has long felt that a subscription-based ad blocker would make a lot of sense. Ad-supported publications could opt-in to get a piece of the subscription revenue and agree to block ads to the subscribers who have the ad blocker.
And that is why we invested in our portfolio company Scroll which makes exactly that.
And today, Scroll and Firefox are launching Firefox Better Web, which is a service inside of Firefox ($2.50 a month to start and $5 a month in time).
I downloaded the latest version of Firefox this morning and signed up. It went like this:
I signed up by giving my email address and entering my payment credentials.
And then I added the Scroll browser extension and was good to go.
I visited SB Nation and got an ad-free experience.
Which compares to this experience in my Chrome browser without Scroll (Scroll works on Chrome too)
The partnership between Firefox and Scroll makes a ton of sense. Firefox has long been committed to privacy and making the web work better for its users. If you use Firefox try the Better Web service. And if you use Chrome or another browser, you can get Scroll and experience more or less the same thing there too.
I have been teaching in one form or another since college. I helped pay for graduate school by teaching other grad students. For most of my life, teaching has meant standing up in front of a group of people and explaining things to them in a large group setting.
But, like many things, that is quickly changing right now.
I mentioned that we have a new group of analysts at USV. And we are doing an onboarding program for them where the various partners at USV take turns teaching them things they will need to know during their time at USV.
When we planned this onboarding program, we thought those classes would take place in person. But now they are taking place online.
This week, I am going to teach a three-hour class on cap tables and liquidation waterfalls. These are the spreadsheets we use to track everyone’s ownership in a company and how much money each shareholder gets in a sale transaction. While much of this is straightforward, there are edge cases that can be pretty gnarly. I am looking forward to teaching this class.
As I prepared for it this weekend, I decided to create the bare bones of a google sheet that will have one tab for the cap table and another for the liquidation waterfall.
The three analysts will act as the three founders of a company and we will simulate three rounds of financings and then a sale of the company.
We will all be in the google sheet together and also in a zoom room together. I will coach them through the exercise but they will do all of the work.
And as I was planning all of this out and building the bare bones google sheet, I thought to myself, “this may be the single best way to teach this material that I have ever come across.”
I have taught this material to many people, but never quite like this.
We are leveraging two technologies that have come of age in the last ten years; collaborative documents (google sheets) and videoconferencing (zoom). And we are using project-based learning in a small group setting which has always been one of the (the most?) powerful teaching/learning models.
The question I am wondering about is once I teach this subject this way, will I ever want to teach it any other way? I think maybe not.
Also, if this is a sector you care about, you might want to subscribe to Some Meals Considered, a newsletter written by our daughter. She has been covering the challenges facing the restaurant industry almost daily this week and is surfacing a lot of useful and helpful information.
When bad news hits, I have seen traders sell quickly, get to cash, and then take some time to evaluate the situation before acting on the news. That is true of a company missing its quarter, a sudden management change, and many other forms of bad news. It is also the case when macro events hit the market.
So when a macro event hits the markets, all assets get sold in a “risk off” trade to increase liquidity and buy some time to figure out what is going on.
But soon enough, the market starts to sort through winners and losers. That’s when things stop correlating.
The obvious example is Zoom which is clearly a major beneficiary of this macro event we are in the middle of.
Zoom sold off with the market over the last week and a half but has rebounded nicely and year to date is up something like 75%.
Blue Apron, which the market had left for dead, is another example of a business that will likely do well in this macro environment, or at least it seems that the market thinks so.
Contrast that chart with Bookings, one of the largest (the largest?) online travel businesses, and you can see the lack of correlation.
I believe this downturn will see a greater number of winners and losers than most of the downturns I have lived through. That is because we are already into a pretty meaningful transition from an industrial/physical economy to a knowledge/digital economy and the very nature of this macro event is accelerating that transition in many ways. We just won’t go back to doing some things the same way.
I do plan to go out to my favorite restaurants as soon as I can. But I also plan to fly even less for business when this thing is over. Some things will return to normal. Others won’t.
And that is what the market will sort out over the course of this downturn and is already busy sorting out.
Which takes me, naturally, to crypto. Crypto, to true believers like me, was supposed to be a place to go for safety. We can trust crypto when we can’t trust banks or governments, right?
Bitcoin crashed harder than anything in the first few days of the market selloff. It was down 60% over five days from March 7th to March 12th. But since then it has recovered nicely and is now only down about 30%.
Howard’s guest was right. In panics, all assets are correlated because the market needs to deleverage. Margin loans get called. Leveraged bets go bad. Weak hands fold. And in crypto that happened faster and more furiously than any other asset class. That’s because the market infrastructure is less mature, there are places (largely outside of the US) where you could (and maybe still can) get 100x leverage on a crypto trade, and because these markets are not as liquid and other markets.
But now that the deleveraging has happened, we can look at what crypto has to offer.
Bitcoin is “hard money.” There is a fixed supply of it. 21mm bitcoins to be exact, some of which are gone and are never coming back.
Contrast that to what the central banks are doing right now. The printing presses are melting down there is so much money being printed to stabilize the global economy.
So if you want to hedge your portfolio from that risk, where can you go? Actually a few places. But one of them is Bitcoin. And I suspect that will be where some smart money will go over the next few months, quarters, etc.
But that’s not all that crypto has to offer. The entire decentralized finance stack (fintech 2.0) is being built on Ethereum. And we are seeing decentralized bandwidth, storage, and other critical infrastructure being developed in a number of new protocols.
I’m not going to write an entire crypto thesis here. But my point is that crypto won’t be correlated with the overall market for long. It’s doesn’t even appear to be a week in.
I can’t imagine how hard and surreal it must be to join a new firm just as we are all starting to work from home. So they are going to be challenged getting out of the gate more than prior analyst teams, but I am confident that each of them will rise to the challenge and we are learning some new tricks on how to remotely onboard too.
I hope that many of you will get the chance to meet or engage with them. They are a great group of analysts and I am excited to work with them.