Posts from entrepreneurship

No Shenanigans

I was talking to a friend today about company values and how important they are but also how lame so many of them are.

I told him that some of my favorite company values come from our former portfolio company Twilio (which in the spirit of full disclosure I am still a large shareholder of).

Twilio’s founder and CEO Jeff Lawson gave a great talk on company values at USV a few years ago and explained how he approached them. This blog post (and audio post) is about a similar talk he gave at First Round.

Twilio’s company values are shown below:

My favorite of them is “No Shenanigans” which translates to “Be thoughtful. Always deal in an honest, direct, and transparent way.”

It is such a great value. It is memorable. It is broadly applicable. It is interpretable. And I can imagine team members running their decisions against it and getting a helpful result that guides them.

That is what company values are all about at the end of the day – helping people make decisions that everyone in the company will be proud of and supportive of.

Like most things that are incredibly valuable, values are not easy to get right, but they are worth investing a lot of time and energy in.

Calling All Founders

NYC’s Partnership runs some outstanding accelerator programs.

There is the flagship Fintech Accelerator which is celebrating its 10th anniversary this year. In this program, founders are connected to the CIOs of the top banks, brokerages, and insurance companies in NYC as they work on their products and pitches. Over the past decade, 69 graduates of the Fintech Accelerator have raised over $1bn. I have written about this program frequently. It is an example of something that you could not do anywhere other than NYC.

And then there is the newest one, the Transit Tech Accelerator, where founders who are building transit companies are connected to the leading transit systems in the NY Metro area while they work on their products and pitches. The MTA is piloting four technologies they found in last year’s program and there are six more transit systems involved this year.

If you want to apply to the Fintech Accelerator, do so here.

If you want to apply to the Transit Tech Accelerator, do so here.

What You Do Is Who You Are

This past summer I read a proof of Ben Horowitz’s new book, What You Do Is Who You Are, and I even blogged about it here without naming the book.

What You Do is about culture, how you make it, how you keep it, and how the big decisions you make and how you explain them set the culture in your organization.

To explain this Ben tells the story of four different cultures that were set by strong leaders:

– the leader of the only successful slave revolt, Haiti’s Toussaint Louverture

– the Samurai, who ruled Japan for seven hundred years and shaped modern Japanese culture

– Genghis Khan, who built the world’s largest empire

– Shaka Senghor, a man convicted of murder who ran the most formidable prison gang in the yard and ultimately transformed prison culture.

https://www.amazon.com/What-You-Do-Who-Are/dp/0062871331/

These stories really make it clear how you set and keep your culture. You will come away from this book with a clear understanding of how your actions will set the culture in your company.

I read Ben’s interview with Connie Loizos and I like what he said here about why he wrote the book:

First, it was the thing that I had the most difficult time with as a CEO. People would say, ‘Ben, pay attention to culture, it really is the key.’ But when you were like, ‘Okay, great, how do i do that?’ it was like, ‘Um, maybe you should have a meeting about it.’ Nobody could convey: what it was, how you dealt with it, how you designed it. So I felt like I was missing a piece of my own education.
Also, when I look at the work I do now, it’s the most important thing. What I say to people at the firm is that nobody 10 or 20 or 30 years from now is going to remember what deals we’ve won or lost or what the returns were on this or that. You’re going to remember what it felt like to work here and to do business with us and what kind of imprint we put on the world. And that’s our culture. That’s our behavior. We can’t have any drift from that. And I think that’s true for every company.

So if you leading your company and you are thinking “ok, great, how do I do that?”, then go get this book and read it. I think you will come away with a much better understanding of what culture is all about.

Bringing It All Back Together

Early-stage companies are exercises in experimentation, iteration, and figuring things out. You try one thing, it sort of works, but you see a tangential opportunity and go after that. Sometimes that leads to a full-on pivot, other times it leads to an evolution of the opportunity.

This process can create multiple products, services, projects, and it can look messy. I love it when founders bring it all back together into one cohesive package. That doesn’t always happen, but when it does, it is a thing of beauty.

That happened this week with our portfolio company Numerai. I saw this tweet by Numerai founder Richard Craib:

If you have not been following Numerai, let me explain.

The initial idea behind Numerai was to build a quant hedge fund using “the crowd” to surface the machine learning models. They do that by running the Numerai Tournament and taking the best models and operating a hedge fund with them. That is what Numerai does and that business is working well.

Along the way, Numerai observed that incenting the players in the tournament with a crypto-asset they could stake on their models was a better way to crowdsource the best models. So they made a crypto-asset called Numeraire.

Numeraire is a crypto-asset that you can trade, own, and, if you are playing in the tournament, stake.

So then Numerai was in several businesses, the hedge fund business and the crypto business.

And then the team observed that there was a generalization of the thing they had built that had much broader applications – a decentralized marketplace for predictions. So they created a protocol called Erasure that allows anyone to build markets for predictions.

It started becoming a fairly messy story.

But last week it all started coming back together when team successfully ported the Numerai Tournament to operate on the Erasure protocol.

This accomplishes several things. First, it starts to tie all these loose threads together and the story becomes easier to understand. And also, you have a very successful application, the Numerai Tournament, running on Erasure. So developers can see what Erasure is good for and can start building other things on it.

I am excited for the Numerai team. And I quite like this example of how things get messy as you expand the opportunity but you can clean things up by bringing it all back together and would encourage founders and teams to look for opportunities to do that whenever possible.

Principles Over Profit

I was pleased to see NBA Commissioner Adam Silver say this with respect to the controversy over Houston Rockets’ General Manager Daryl Morey’s tweet in support of the protest movement in Hong Kong:

The NBA will not put itself in a position of regulating what players, employees and team owners say or will not say. We simply could not operate that way.

The NBA faces the potential of a backlash in China that could impact the league’s business interests there.

That could reduce the profits of the league and players and owners.

But the NBA is putting principles over profits here and that is a good thing.

We have faced this issue a number of times over the years at USV and we have tried to do the same.

We have also been on boards of companies that have faced this issue over the years and we have advocated for this approach.

It is not an easy choice. Companies have employees to pay, families to feed, and customers to serve. And principles are not always shared by everyone and the lines are not always clear

But one thing is for sure. The search for profits can lead a founder, a CEO, a team, a Board, and a Company to forget their principles and that is never a good thing.

That’s Not Fair

I saw some news this morning and immediately thought “that is not fair.”

And then I reminded myself that life is not fair.

Of course we all wish that life would be fair. It should be fair.

But it just isn’t and if you go through life wanting it to be fair, you are just setting yourself up for a lot of disappointment.

All of that said, I have found life to be more fair over the long run. Things tend to even out over longer time frames.

But in the short run, we have to be prepared to get the short end of the stick and then figure out how to make that a winning hand anyway.

Founder Control

I have not written a lot about this issue.

As I said in this post, I am generally a “one share one vote proponent”, but I have supported founder control provisions in a few companies where I was or am on the board. These provisions make me uncomfortable but there are solid arguments for them, particularly when you are taking a company public and want to be able to keep it independent.

But the truth about founder control, as I stated in this post from back in 2012, is:

If you want to maintain control of your company, focus on running it well or find a team to run it well, and make sure you have plenty of cash to operate your business and that you never find yourself in a position where you are running out of cash and have nowhere to go but your exisiting investors. Do those two things well and you will be in control for as long as you want to be in control.

We saw that play out with WeWork this week. The founder had a 10:1 supervoting provision and controlled a majority of the board seats.

Until he didn’t.

I don’t know anything about how that all went down.

But I can only imagine that WeWork was running out of cash and needed funds from its existing investors and the founder had to cede all of that to keep the company afloat. Or some version of that story.

So all the agreements and such are only as solid as the performance of the business. They can all get torn up in a nanosecond if things don’t go well.

Hard Decisions

Every startup journey involves making some really hard decisions.

Yesterday our portfolio company Kik announced they are shutting down the Kik messenger and parting ways with all but nineteen of their team.

The Kik team has spent almost a decade working on the Kik messenger. Although Kik’s popularity has waned in the face of iMessage, WhatsApp, Facebook Messenger, etc, etc, it still has 10mm monthly users and almost 5mm daily users. But it has never been a profitable business in a market full of free competitors.

The decision to shut Kik and scale back to a small core developer team is all about continuing to support the Kin cryptocurrency which has over 2mm monthly people earning Kin and over 600k spending Kin across a large network of mobile apps that run the Kin SDK.

But even so, shutting down something you have worked on for almost a decade and parting ways with 90% of your team is hard.

Another thing about hard decisions is the sooner you make them the sooner you realize the benefits of making them. Postponing them is the worst thing you can do.

Kik is not the only company in our portfolio and is certainly not the only company out there in startup land facing very hard decisions right now. I see a lot of this thing in my business and it doesn’t get easier.

What we must do is support the teams making these decisions and getting to the other side of them.

I will end this with a quote that the founder of one of our portfolio companies sent me this week. I think it sums it up nicely.

My centre is giving way, my right is in retreat; situation excellent. I am attacking.


Field Marshall Foch in the Battle of the Marne

You Can’t Please Everyone

I get a lot of feedback on this blog.

I appreciate all of it.

Even the harsh stuff (you are an idiot, etc).

One of the things I have learned from writing here is that the same words will generate very different reactions from people.

Last week I wrote about the value of bluffing.

It triggered a ton of inbound email.

I received two emails within seconds of each other.

One said “that is the best advice you have ever shared”

The other said “people will go to jail because of you”

I just shook my head and smiled.

That’s how it goes when you put your thoughts and ideas out there.

But there is also a lesson for leaders in here.

You will not be able to please everyone in your company and you can’t try to do that.

You must be true to yourself, you must be authentic. You can’t pander.

It is useful to get the feedback, to listen to it, to try to understand it.

But you can’t let it jerk you around.

You have to have the courage of your convictions and you need to be consistent with them.

Breaking Up Big Tech

With the news that two-thirds of Americans favor breaking up big tech combined with the news that Liz Warren (the biggest advocate of the idea) has broken out of the pack in Iowa, I thought I would return to this topic.

I wrote about this back when Liz first put the idea forward.

I am in favor of reigning in the monopoly/duopoly/oligopoly power of the large American tech companies. I am also in favor of reigning in the power of large tech companies that are not resident in the US.

Doing one without the other is bad policy and could give large tech companies outside of the US (particularly in Asia) a competitve advantage.

A better approach, as I advocated for in my earlier post on this topic, are policies, like the European’s GDPR, that would impact all companies doing business in the US equally.

I do not love GDPR. It is overly bureaucratic and for the most part has resulted in all of us robotically opting into being cookied everywhere.

But users do have a right to online privacy. We also have a right to self sovereign identity and ownership of our data.

Apple is offering Sign In With Apple in iOS13 to help us reduce our reliance on signing in with Facebook and Google. That’s great but it just replaces one boogyman with another.

What we need is an open sign-in protocol in which users control their sign-in keys and also all of the data we create and have created over the years once we are signed in.

Government can force industry into a regime like that with regulations that dictate that tech companies of all sizes adopt such approaches.

That is what we should be doing to reduce the market power of big tech instead of breaking them up. That is because their market power comes from this single sign-on oligopoly and the data that comes with it.

Government should not dictate the design of such a protocol or any of the technology that is required to produce such a regime. The market can and will do that once the requirements are put in place. We have much of what we need already in the form of cryptography and user centric wallet infrastructure.

We just need a forcing function to get big tech to adopt these technologies, which they won’t do on their own because they will reduce their market powers. Which is exactly why we need to do this.