I got a new Pixel 7 last week and have started the tedious process of moving over to a new phone.
One of the more painful chores in moving from one phone to another is moving the Google Authenticator app and all of the two factor codes to the new phone.
My partner Nick told me about Yubikey Authenticator and I converted to it while moving phones since I was going to have to get all new codes anyway.
If you use a Yubikey for anything else, switching to Yubikey Authenticator is a breeze.
You download the Yubikey Authenticator app onto your phone, insert your Yubikey and start scanning QR codes (just like Google Authenticator).
Then any time you need a code, you simply insert your Yubikey into your phone and your codes appear in the app.
You can also put the Yubikey Authenticator app on a laptop or a desktop and get the codes that way which is a great backup solution in case you misplace or lose your phone.
And, when it is time to switch phones, you simply put the Yubikey Authenticator app on your new phone and insert the Yubikey and your codes are there.
Even with all of this goodness, I still keep physical copies of my backup codes in a safe. I am also considering setting up a second Yubikey for the two factor codes I use the most just in case I lose my main one.
When it comes to two factor codes, I think you have to have a plan B and a plan C.
If you use a Yubikey already, consider using the Yubikey Authenticator for your two factor codes.
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.
First and foremost, this is not tax advice. I am not a tax advisor and you should never take anything you read here as tax advice. If you read something here that makes you think you should take some tax-related action, please always consult your tax advisor.
With that disclosure out of the way, I would like to talk about 83b elections.
An 83b election is a choice a taxpayer can make to pay the taxes in full at the time of the grant of an asset that vests over time and would otherwise be taxed as the asset vests.
So why would you want to do that?
Well, if the value of the asset at the time of grant is quite low and the taxes would not be significant to you, you might want to make an 83b election. Otherwise, you will be taxed as the asset vests and if the asset increases in value, those taxes could be significantly larger.
Let’s look at an example. Let’s say you join a company that is very early stage and you are one of the first employees. Let’s say you are granted 100,000 shares of restricted stock that vest over four years and the current value of each of those shares is $0.10. That means the entire grant is worth $10,000 (100,000*0.1). If you file an 83b election, you are volunteering to pay the taxes on that $10,000 even though the shares vest over the next four years. The taxes on that $10,000 will depend on where you live, but will generally be in the range of $2500 to $5000.
Now let’s say you decide not to file an 83b (or worse, you never heard of an 83b election and nobody suggested you file one). Let’s say one year later, your first vesting period happens, and 25,000 shares vest. And let’s say that the stock has increased significantly in value to $1/share over the first year. That means that the 25,000 shares that have vested will generate $25,000 in taxable income to you and the taxes you will owe on them will be in the range of $6,000 to $12,000. And you still have 75% of your grant unvested and the stock might keep going up, creating more taxes for you over the next three years.
You have 30 days post grant to file an 83b election so you must move quickly if you want to do this.
The downside of the 83b election is you will have paid the taxes on the stock even though you may leave the company and not vest into any or all of it. That is the risk you are taking when you file an 83b election and you must consider that risk when you make the election. In life, there are generally no free lunches.
If you are being granted restricted stock, founders stock, or some other asset that vests over time, you should ask your employer and your tax advisor if you should file an 83b election. There is a good chance you will want to.
The reason I decided to write about 83b elections today is that USV signed onto a comment letter to the IRS last week asking them to make e-filing and e-signing of 83b elections permanent. You can read the comment letter here.
83b elections are an important tax strategy for founders and early employees in startups and they should be used more frequently than they are. And it should be dead simple to file one. Taxes are hard enough for the average startup employee to understand and comply with. We should not make it harder.
The Gotham Gal and I just spent the last two weeks in Paris. We have been going to Paris together for around forty years and have had a place there for the last decade. It is a place we can go to get away from it all for a few weeks, connect with each other, and enjoy ourselves in a city we love.
I’ve thought a lot about why Paris works so well for us to dial it down a bit and focus more on each other for a while. The time zone is a big part of it. The US doesn’t wake up and start working until early afternoon in Paris so our mornings and lunchtime are all our own. We sleep way later than we sleep anywhere else and stay up later too. The coffee shops I like don’t open until 9am or later so that’s an added incentive to stay in bed a bit longer.
We do find time to work when we are in Paris, but it is generally from mid/late afternoon until dinner time. So the time we work goes down considerably but not to zero and the time together goes up a lot.
Add to that our love of walking through cities and neighborhoods. We do a ton of that in NYC and will walk to and from dinner most of the time in NYC. But walking in Paris is next-level walking. The avenues are wider, the buildings are lower, the light is better, and the architecture fills the streets with beauty. We walk between 10,000 and 20,000 steps every day we are in Paris except for full rainouts, of which we had one on this trip.
And then there is the culture. The museums, the galleries, the nightlife, the restaurants, the stores. You can get all of that in NYC or London or a number of other great cities in the world, but Paris does it so well.
Our stays in Paris are basically less work, more sleep, more culture, more walking, and more fun together. It’s a formula we found many years ago and has never failed us over the years.
On this trip, there were some new things and observations that I thought I’d mention.
1/ Pedal assist bikes and bike lanes: I’ve been doing Velib bikes in Paris since they launched in 2007/2008. I wrote about them back then. But over the last few years, Paris has really upped its bike game. They have cut down lanes for cars and replaced them with bike lanes. They have allowed competitors to Velib in the market and now I have three bike apps on my phone, Velib, Dott, and Lime. The Gotham Gal and I were able to find pedal-assist e-bikes whenever we wanted them with no trouble. Our favorite was Lime which was the most available and their new Gen4 bikes are really good. On Thursday, when we wanted to go to the Paris Photo Show in the 7th, there was a strike on the Metro and so we biked forty minutes, mostly along the River Seine, to the show. It was fabulous. NYC should allow competitors to come into the market and compete with Citibike. When it comes to pedal-assist e-bikes, I think the more options the better. And the way Paris manages the parking spots for the Lime and Dott bikes works pretty well and suggests that the kiosk model that Citibike and Velib use may not be ideal.
2/ English spoken everywhere: Well maybe not everywhere. But over the last decade, since we got our first place in Paris, the number of people we encounter whose English is worse than our French has basically gone to zero. I don’t feel great about my poor french, which gets better over the course of two weeks but is not conversational in the least. But I do feel great about being able to communicate with whomever we need to while we are in Paris.
3/ More and more American ex-pats are living in Paris. Or maybe it’s that we know more American ex-pats living in Paris. Some of them came a decade ago. More came in the wake of the changing political dynamic in the US in the last five years. And the Pandemic brought even more. I did think a few times, “maybe we should join them” but we are not ready to give up the lives we have built in the US over the last forty years. But I do understand why so many US citizens are making Paris their home. It’s a very livable city. And with the dollar so strong, an American income goes a long way in Paris these days. And socialism, which is a scary word to many in the US, seems to work quite well in France. There is a safety net. There are fewer homeless on the streets and there is a sense that people in need are better taken care of in Paris. I don’t know that to be true, but that’s the feeling I get walking around the city for a few weeks.
4/ Property values and rents are more stable: Having bought a couple of apartments in Paris over the last decade, we have come to understand that the real estate markets work a bit differently in France. If an apartment is offered at a price, and you meet that price, the apartment comes off the market for a month while you decide if you absolutely want to buy it. There are no bidding wars as a result. There may be other factors at work as well, but we got the sense that the real estate markets, both purchasing and renting, are moderated in Paris in a way that is absolutely not the case in NYC. We own a lot of property in NYC and have benefitted from increases in the value of our real estate but we feel like those gains came at a great cost, which is that NYC, particularly Manhattan, has become so expensive to own and rent that many stores cannot make it anymore. It’s hard to find a shopping street in Manhattan that doesn’t have multiple vacant stores. We saw very little of that in Paris. And many restaurants we love have remained in the same spaces for over a decade. Again, we don’t know the details of how and why this is, but it is noticeably different and it seems like the model is working in Paris. The streets are alive and vibrant in a way that NYC streets are not right now.
We returned home yesterday having spent a wonderful two weeks together, reconnecting in lots of ways, and with new memories and new adventures under our belt.
I highly recommend that couples find a time and place that they can go unwind and reconnect. For us it is Paris. But it can be almost anywhere that allows you to cut back on work, spend more time with your loved one, and refresh and recharge. It has been working great for us for many years and the longer we do it, the better it gets.
After skipping a year last year, USV held its annual team party last night.
It has felt great getting back to getting together with friends, family, and co-workers this holiday season. It has meant a lot of rapid testing for me, all negative thankfully, including one this morning.
We also had every single team member in the USV office yesterday, which was a first since we fully re-opened in March of this year.
And for our weekly team meeting yesterday, we had everyone around the conference room table. Nobody on Zoom. I can’t remember the last time that was the case.
I’ve been doing in-person board dinners and in-person board meetings a lot lately as well.
While Zoom has certainly transformed the way we work and I don’t expect that we will ever go back to everything in-person, the last few months of getting back together in groups has reminded me how important the human connection is to life, love, and work.
I met with a founder yesterday and he told me that his executive team gets together in person once a quarter. I encouraged him to get the exec team together in person at least once a month, if not more frequently. It is hard to be a tight team, that gives and takes, debates and commits, and moves fast in sync without the in-person connection.
We have a great team at USV and we did great working remotely during the pandemic, but being back in the office since March, working together, and celebrating together, has made things so much better. I am very appreciative of that.
Like many did, we spent much of this weekend watching Peter Jackson’s wonderful documentary of the Beatles making Let It Be, titled Get Back.
I enjoyed so much of the film, particularly the music, but the big thing I took away is the power of real partnerships. While this was the Beatles last recording session, what you see in the film are four partners working together creatively and wonderfully. I wasn’t really expecting that and I found it so enjoyable to watch.
I have worked in partnerships for most of my adult life, since I was in my mid 20s. I have spent 35 years in three partnerships, all of them “equal partnerships”, the kind where everyone brings their own ideas, they are worked on together, and there is mutual respect and admiration.
Partnerships are not easy. Everyone has to dial back their ego a bit and let others have their say on things. But what you get when you do that is an environment where everyone gets better than they would be on their own. And you can see that in the Beatles work. All of the four Beatles went on to have solo careers, but none of them produced a sustained level of work that the four of them were able to make together.
Watching Paul, John, George, and Ringo work together for a month to make an incredible record was a reminder that when we sacrifice a little bit of our self and commit to a team dynamic, wonderful things can and do result.
Like most holidays we celebrate, the essence of the Thanksgiving holiday hides underneath our celebration of it.
Ask anyone about Thanksgiving, and you will hear about turkey, stuffing, a big meal, family, and maybe football.
I’m fine with all of that, particularly the stuffing and family parts.
But the thing that I like most about Thanksgiving is the idea that this is a time of year to give thanks.
The story I heard is that the first Thanksgiving was done to give thanks to the bounty of the harvest. That makes sense to me given the time of year in late fall.
But regardless of why this tradition started, I am a big fan of a day set aside to be thankful.
And I am very thankful this year. Here are some reasons:
1/ We are starting to learn to live with Covid. Between vaccinations, testing, therapeutics, behavior modifications, and more, we are starting to understand the risks and the protections that allow us to live with a virus run amok. The Gotham Gal and I traveled to Paris and back earlier this month and we were able to enjoy a city we love while the virus was still very much a thing in both NYC and Paris. I am starting to attend more and more board meetings in person. The USV office has been open since March and our team enjoys being able to work together face to face. I get to go to MSG, the greatest arena in the world, and watch NBA basketball with twenty thousand other people a few times a week. While the pandemic may not be over, the panic and isolation are easing. And I am thankful for that.
2/ Technology continues to make our lives better. While the narrative has grown that tech and tech companies are bad for society, our everyday lives suggest that the opposite is true. I facetime with my mom when I used to call her on the phone. Seeing her smile warms my heart every time. I can drive to the east end of long island and back in a car that has been entirely powered by the sun. An artist can make a beautiful image and sell it in such a way that they get compensated every time that image trades hands. A founder in Egypt can (and did) raise millions of dollars for their company on one zoom with a team of investors in NYC. I can go on and on, but you get the idea. Technology continues to improve our lives and I can play a role in that. I am incredibly thankful for that.
3/ Aging gracefully is a wonderful thing. We have watched our children become wonderful adults. We have watched the things we have created have an impact on others. We have found time to give back. We have found time to write. We have found time to have great fun with great friends. Time spent on planet earth is such a gift and I’ve now spent 60 years here. I am so thankful for that.
That felt good to write. Giving thanks is awesome. I encourage everyone to take some time to do it. That’s what today is all about.
I am a fan of and a practioner of investing in risky assets. I believe you must take significant risk to earn significant returns.
But I also am a huge fan of diversification when holding a lot of risky assets. It has been easier for USV to get into new sectors, like crypto and climate for example, knowing that we also have large positions in other parts of the early stage tech sector.
When crypto went crazy in 2017 and then blew up, it was mostly a blip in our portfolio values. The same was true in the second quarter of this year when crypto had a big pullback.
This is not an argument against crypto only funds. USV has invested in a number of them and so have the Gotham Gal and I. But I would not be comfortable with a portfolio that was only crypto funds. I like to have a mix of assets, ideally uncorrelated, in our portfolio.
An asset class that I really like as a hedge against early stage tech sector risk is real estate. The Gotham Gal and I own a lot of income producing real estate and it feels very uncorrelated to early stage tech.
But there are many ways to get diversification. If you don’t want to think about your investments, something I cannot bring myself to do, then a stock index fund or a portfolio of stock index funds, and some fixed income funds can get you the diversification you need. But the level of risk taking in that strategy is a lot lower.
But regardless of how you get there, it is very important that you not have all of your eggs in one basket. That basket can drop and then you have a mess.
Today is my sixtieth birthday and I plan to goof off with friends and family all day and night in celebration. If I don’t respond to an email, text, or tweet, well that’s because I’m celebrating.
I’ve been told that turning 60 is a big one and to expect to feel a lot. I will make sure to do that but as many know, it is not my nature to do that. So I will have to work at it.
I have cut back on blogging a lot in the last year. Four posts a week on AVC is now a lot. Many weeks there are only three. I’m hoping that the quality has gone up as the quantity has come down. At least that is the goal.
I’ve caught a second (or maybe third or fourth) wind with my work in the last year. It is a combination of covid, climate, and crypto. The world is changing and there is so much energy being released from these changes that draws me back. At sixty, it is a different kind of work; less hustle and more conviction. I like that.
As the Gotham Gal and I enter our fifth decade together, I am struck by how much we have become one. We often say the same thing to each other at the same moment. A mind meld.
As I told my partner Albert this morning on text, I am a very fortunate person. Life has given me many blessings. I try to give them back as much as I can and AVC is an important part of how I do that.
With that, I am off to have fun with friends and family for the rest of the day.
I have watched countless companies and leadership teams manage transitions over the years and I have come to believe that companies and leaders should do everything they can to promote “leaving well.”
What I mean by “leaving well” is a smooth transition of a leader out of a role/company. This typically means that a departing leader gives a company a heads up that they are planning to transition out, that news is shared broadly internally, allowing for a transparent process to find a new leader. A similar process is used to transition a leader out when a new one is needed.
For this to work, companies need to do their part to facilitate this process. This means reacting well to the news that an executive would like to move on. It can also include a financial incentive to stick around during a transition. A culture that embraces leaving well puts everyone in a better place during transitions.
There are certainly times when leaving well is not possible. If an executive is terminated for reasons that require an immediate departure, there is no way to execute a smooth transition.
It is also the case that an executive could get an offer that requires an immediate start date that they feel that they have to accept. This is exactly the kind of thing a tradition and culture of leaving well is designed to prevent. Generally speaking, it is preferable to run a process to find your next role versus accepting an offer that comes in unsolicited. If a company has a culture of leaving well, executives will feel that they have the option of running a process versus accepting an offer that comes at them.
It is best to set this culture up at the very beginning. Precedent is powerful. If people see that others have been treated well on the way out, they will be more comfortable being open and honest. If people see the opposite, then they will be more mercenary in their actions.
Cultures that allow for open honest transitions are better places to work and easier companies to manage. Nobody likes a fire drill. Sometimes you have no choice, but if your company has them all of the time, it is a tough place to be.