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Mexico City is an amazing place. The Gotham Gal and I were there around this time last year.
The people, the culture, the energy are all great in Mexico City. It feels like a place on the move where good things are happening.
So I was upset to hear about the devastating earthquake last night.
We have had so many natural disasters in the last month and I understand that we may all be fatigued from giving to all of these needy causes.
But I took some time this morning to give and thought I’d share with all of you where I sent some funds in case you want to do the same.
- Salma Hayek’s Crowdrise Campaign to UNICEF’s on the ground relief efforts: I donated $1000.
- Bitso’s (Mexico’s largest crypto exchange) Campaign to benefit Red Cross and Brigada de Rescate Topos Tlaltelolco A.C.: I donated 2 ETH.
It feels good to send some funds to organizations on the ground that are actually helping people in a difficult time.
Being an investor and board member means that you are close to the companies you invest in but not “in them.”. This near and dear relationship creates some interesting challenges for both the management and the investors. One of them is understanding the difference between information/reporting and a real understanding of what is going on in the business.
I often find myself saying “but why?” at board meetings:
- “Revenues are soft this quarter” – but why?
- “MAUs are up 150% over last quarter” – but why?
- “We are going to miss our ship dates” – but why?
- “We expect to decrease our hosting costs by 50% next quarter” – but why?
- “We can’t seem to get any interest in the next round” – but why?
- “We are getting a lot of inbound interest from investors” – but why?
- “We have a lot of turnover in our engineering organization” – but why?
The beauty of working with investors who see a lot and have seen a lot is that they can often help you diagnose the disease by looking closely at the symptoms. But you have to be willing to engage in that exercise and be open to hearing “but why” and be prepared to answer it.
The Gotham Gal and I have been married for thirty years this June and we are spending the next month in Europe celebrating that and all that has come from it.
Blog posts will be arriving central european summer time (CEST) until the end of June.
And they will be about all sorts of things that may or may not have anything to do with technology and startups.
Now off to breakfast
For the past few weeks I have been going from Board Meeting to Board Meeting reviewing, discussing, debating, and, ideally, approving the 2017 plans for the companies that I work with.
Here are some thoughts and observations about the year end planning process:
1) Companies should start the annual planning process early. I think September is a good time. It should start with a wide open data gathering process which involves as much of the organization as is possible.
2) The planning process must be grounded in the strategy which should be set in advance of the planning process. If a strategy adjustment is required, that needs to happen before the plan can come together.
3) The senior team needs to do the plan as a group. That can involve offsites, a set of regular (weekly?) meetings, or something else. But planning is a team effort and a plan can’t be handed down from on high like the ten commandments.
4) My number one feedback on annual plans is that they should have less focus areas. I think three big bets is good for most venture backed companies. Five is an absolute max. The more you try to do the less you get done.
5) The numbers should fall out of the strategy and plan, not the other way around. If you don’t have enough money to do everything, change your strategy. Don’t plan by numbers. Plan by developing a set of priorities that come from the long term strategy, and informed by the inputs of the organization.
6) Don’t drop your plan for next year on your Board the day before a year end Board meeting. The good news is that none of the companies I work with did this. I am very happy about that. It is best to give the Board a preview (ideally multiple previews) of the plan as it is coming tother so that you can get feedback and buy-in well in advance of the final approval process.
I am a big fan of the annual planning process. I realize that all plans end up evolving during the year and things change and companies adapt. But a good plan gets everyone (including the Board) on the same page, working on the same things, and driving to get to the same place. And that alignment is incredibly valuable.
USV recently made two investments in hedge fund managers. You might gather from that fact that we are moving away from venture capital. But that would be an incorrect assumption. What we are doing is finding new ways to invest in technologies that we think are interesting. These would be technologies like artificial intelligence, encryption, and blockchain.
Last week it was leaked, and then announced, that USV had led a round of financing for Polychain Capital, a new kind of fund that invests in digital tokens. We have discussed these digital tokens here at AVC and elsewhere. We do plan to directly invest in blockchain based protocols via tokens, but we won’t be able to invest in all of them in a venture capital model, so we are also betting that a fund vehicle focusing on these assets will make a good investment.
Yesterday, my partner Andy wrote a blog post on the USV blog about Numerai, a new kind of hedge fund that allows machine learning experts all over the world to crowdsource public market investments by building models and sharing the selections that come out of their models. The data they use to power these models is encrypted and so are their models. It is the “blind leading the blind” according to this piece in Wired. I like that description as the focus moves away from things like fundamental and technical stock analysis to true pattern recognition done by machines. Numerai uses cutting edge encryption technology (a variation on homomorphic encryption), machine learning, and pays out using the bitcoin blockchain. It’s a trifecta of things that are interesting to us, as recognized in this tweet by MIT’s Technology Review.
In both cases, USV invested in the “GP” of these funds. In Polychain, we also made a small investment in the fund itself. We did not do that in Numerai, although it is possible that we could choose to do that in the future. Our investments are largely in the companies that manage these funds and they are a bet that these new technologies will offer new ways to build fund management businesses that over time will be highly valuable. These are both startups and we think of these investments as classic early stage investments with all of the risk and return that comes along with them.
My partner Albert Wenger gave a talk at Web Summit about the coming Knowledge Age. Many of you have seen previous versions of this talk which I have posted here. But Albert is evolving the talk as he learns more about some of these ideas.
It’s a short talk, about 15 mins long. I have included the video and the slides below that.
If you are like me, you might want to celebrate the end of a shrill and divisive election season with a stiff drink or a strong coffee.
And our portfolio company Foursquare has the exact tool you’ll need to do that.
Go here and enter your home address and Foursquare will map your voting place and bars, restaurants, and coffee shops nearby.
Here is my map:
I plan to vote bright and early on Tuesday morning and then head to one of these many excellent choices for my morning coffee.
And, whatever your political orientation, I hope you go out and vote on Tuesday.