I posted earlier this week on Libra and USV’s involvement in this project
Laura Shin had Dante Disparte of the Libra Association on her Unconfirmed Podcast yesterday.
This is a good and relatively quick way to get up to speed on Libra and how it has been structured.
Jerry Colonna‘s book, Reboot, came out this week.
He had given me the manuscript to read so many months ago that I had to go back and read it again before I could write about it.
So I bought the book yesterday and read it again over the last twenty four hours.
AVC regulars don’t need any introduction to Jerry. I’ve been writing about him, citing him, and telling stories about him since the very start of this blog.
Jerry is my friend, my former partner and co-founder of the first business I ever started, Flatiron Partners, and one of the best people on planet earth.
Jerry’s book is about two things that are really the same thing, himself and his work to help people, mostly entrepreneurs, discover themselves.
Jerry describes this work as “radical self inquiry”:
But the most challenging piece of the formula—indeed, the most important—is the notion of radically inquiring within. I define it as the process by which self-deception becomes so skillfully and compassionately exposed that no mask can hide us anymore. The notion is to recognize that, if things are not okay, if you’re struggling, you stop pretending and allow yourself to get help. Even more, it’s the process by which you work hard to know yourself—your strengths, your struggles, your true intentions, your true motivations, the characteristics of the character known as “you.” The you behind the masks, the stories, the protective but no longer useful belief systems that have been presented for so long as the “you” that you would like everyone to see.
Invariably such inquiry involves getting to know, as the poet Adrienne Rich says, “not the story of the wreck but the wreck itself.” With help, patience, courage, and guidance, we explore the wreck and retrieve the treasure. Knowing how to survive and understanding what it takes to thrive are skills that come from our childhood. Take any random group of entrepreneurs, for example, and do a quick unscientific survey by asking them to raise their hands if they grew up in an environment where at least one parent had disappeared or left or was never present. Most hands will shoot up. Early promotion into adulthood is often painful and equally often a sign of an early promotion into leadership. Probe a bit further and you may find that leaders who have built their company may have unconsciously stacked the team with other folks who experienced such early promotion.
Radically inquiring within allows us to step back and see the patterns of our lives not as random acts of a willful or even vengeful God but as forces that shape who we are. It’s this understanding that will make us not only better leaders but better, happier, more resilient people.
Reboot, the book, is about Jerry’s radical self inquiry to discover who he is and then his work to help others do the same.
He tells his own personal story over the course of the book and also weaves in the stories of others who he has worked with along the way to explain what the work of radical self inquiry is and why it must be done and the rewards that come from doing it. He is teaching by example.
Jerry started his career as a writer and he is a wonderful one. It is a joy to see him go back to those roots and exercise those muscles again.
Let me put it to you this way. You are reading AVC for a reason. Maybe you are an entrepreneur. Maybe you want to be one. Maybe you work for one. Maybe you are investing in entrepreneurs. Or maybe you are married to one. Or maybe your daughter is one. No matter what the reason, you are here at least in part because you are interested in entrepreneurs and the work they do. And so as part of that interest, I would recommend you pick up Jerry’s book and get inside the head of one. It will flip some switches on for you.
One of the areas of blockchain innovation I am most excited about is building open, permissionless, and decentralized technology infrastructure.
The three areas that seem most obvious to me for decentralized infrastructure are compute (code execution), storage (storing files, etc), and bandwidth (network infrastructure).
And today, we are excited to announce that USV has made an investment in a decentralized network infrastructure project called Helium.
My partner Nick, who led this investment for USV, wrote about Helium on the USV blogand explains why we made the investment (as is our practice with all new investments). I would encourage you to read that blog post as it explains a lot about how Helium works, how the token economics builds the supply side of the network infrastructure, and why it fits so neatly into our investment thesis.
I would just like to point out how cool Helium is.
Anyone can run a Helium hotspot in their home:
And then they can earn Helium tokens for doing so.
You can run a hotspot in your home/apartment and do the equvalent of bitcoin mining for network infrastructure.
Helium is optimized for very long distance, low power communications. It is ideal for Internet of Things (IoT) devices. Think about electric scooters needing to “phone home” over long distances. Think about your dog’s name tag. Think about figuring out when the school bus is going to arrive at the bus stop.
We plan to run a Helium hotspot or two at USV and it would be great to see people powered Helium networks popping up all over the place and providing very low cost, low power, highly reliable long range network infrastructure.
Owning an EV in a dense urban city is challenging. Most people don’t have their own garages and so they park on the street or in large parking garages. We do the latter.
About five or six years ago, I walked into our parking garage and saw that the garage operator had installed a ChargePoint charging station in the garage.I literally walked back across the street to our apartment and bought our first EV. We now own three.
But charging with ChargePoint is not ideal. There are a limited number of these charging stations in our parking garage and more and more EVs. They are often filled up. And the rates that ChargePoint supplies electricity at are borderline gouging. They have a monopoly on our garage and price accordingly. I believe the rate we pay in our parking garage in NYC is literally double the rate we buy electricity from ConEdison in our NYC appointment.
In our homes in Los Angeles and Long Island we charge off our solar panels on our roofs and basically don’t pay to charge our EVs other than the depreciation on the solar installation costs. That is absolutely the way to go if you can afford the cost of a solar installation.
But back to dense urban areas like NYC. If we want more EVs and less gas powered cars on our streets, we need better charging infrastructure.
In Paris, where we have been for the last few days, they are trying an experiment with putting EV charging stations on street lights.
If the city makes those curb locations only available for charging and not parking, that could be a great option for encouraging more city dwellers to buy or rent EVs.
I believe the availability of charging options, whether it is a rational fear or not, is holding back a lot of people from moving from gas to electric. So anything that can change that dynamic is a good thing in my view.
There have been many calls to break up the large Internet monopolies; Amazon, Google, Facebook, Apple, etc.
Breaking up a large monopoly feels like a very 19th/20th century move to me.
I would prefer that politicians and policy makers think about opening up as the better intervention.
A good way to explain this is to go back to the architecture that Twitter used in its early days when there were many third-party Twitter clients. Imagine if Facebook, Instagram, Twitter, LinkedIn, etc were protocols, not applications, and there were many high-quality clients to participate in these networks.
Then the clients could innovate on things like content filtering, promotion of high quality content, business model, etc
If we are going to “break up” these large social media platforms, I would urge elected officials and regulators to think about pushing them to move from platforms to protocols instead of just ripping them apart.
We could do the same thing with search. Our portfolio company DuckDuckGo has built a nice search business by building a different user interface on top of one of the two leading search indexes. If we made it easier and reliable for others to innovate on top of the core search engine, then there might be many more options in search.
In mobile, a good first step is to open up the app stores and allow the browsers to have the same access to the operating system as native mobile apps.
In commerce, if I could checkout as easily everywhere as easily as I can on Amazon, there would be more competition for my shopping dollars.
I think you get the idea. It is very true that the big Internet services have built centralized monopolies and have consolidated their market positions. We do need more competition in these core services. And the best way to do that is force them to open up their services, not break them up.
I backed this cool project to make a game console for a scratch games today.
Games that you can edit/change are such a great way to teach kids how to program and instruct machines.
I worked for a VC named Bliss McCrum early in my career. He had been on wall street for about twenty five years before getting into VC mid/late career. He loved investing. He taught me technical analysis/charting and a lot of other things about stocks.
I used to ask him “why did that stock go down yesterday?” and he would always respond “more sellers than buyers.”
I loved that response and sometimes would ask him the question just to hear that answer.
What I really wanted to know was the underlying reason for more sellers than buyers. Did the company post weak earnings? Did a competitor enter their market? Was the CFO fired?
But Bliss would never take the bait.
Just “more sellers than buyers.”
His point, I think looking back after thirty years, was that markets are markets and you need to treat them as such and respect them as such. They are not always rational but the supply/demand for the stock doesn’t lie.
This week we are finally getting an Uber IPO. Its competitor Lyft’s stock has been weak post its recent IPO.
I don’t have a view on either stock but we will get to see if there are more buyers than sellers or the other way around.
I think this is a good thing, for those companies, for their shareholders, and for the entire tech and startup sector. We should let markets work. They do their job very well.
Yesterday morning, in raw, windy,
The Shed is a new arts institution created to commission works from artists, both emerging and established, across multiple genres. It is all about facilitating and celebrating artistic innovation.
I got involved with The Shed about four years ago around the time Alex Poots was selected as the Chief Executive and Artistic Director. Alex is an impresario of the modern age, comfortable working across many genres and with artists of all kinds, from Grammy-winning musicians to kids he sees dancing in the streets. It is Alex’ ability to stitch all of this together and make it coherent, entertaining, and inspiring that infected me with an interest in what The Shed can be.
I have consulted with The Shed on technology matters and the Gotham Gal and I have been benefactors as well.
Yesterday The Shed was dedicated and the opening performance, The Soundtrack of America, which features performances from roughly thirty emerging black musicians, will open friday night. We will be there.
The person who made The Shed happen is my friend Dan Doctoroff. It was a proud moment for me yesterday to see Dan standing up on stage talking about this thing that he helped to make happen.
It is my hope that The Shed will have the same cultural impact on NYC that Lincoln Center, Brooklyn Academy Of Music, and similar arts institutions have had.
It is really rewarding to get involved in projects like this. Watching the idea come together, then watching it get built, and then watching it open. It reminds me that imagination and will can achieve so much.
I just backed this project. I like the part in the video where the robot passes them spices for their dinner.
To some extent, this blog has been about demystifying venture capital and in particular me and the firm I work at, USV.
There are many reasons why I think that is a useful exercise. When I got into the VC business in the mid 80s, it was a fairly opaque business and that did not change a lot over the next 15 years. When the Internet came along, it promised more transparency and I thought that using the Internet to help facilitate more understanding about VC was a good idea.
But also it was, and is, a self interested move. I believe that entrepreneurs are more likely to take money from a firm that they feel like they know, like, and trust. And in the hyper-competitive world of startup finance, being an open book can pay huge dividends. We have seen that to be true again and again.
So understanding your investors is important and reading VC blogs is a good way to increase your understanding of the people who may invest or have invested in your company.
One area that entrepreneurs should take some time to understand is the way that VC funds are structured. The economic terms (management fee and carry) and the durability of the capital (investment period, fund life) are particularly important as they will influence the behavior of your investors.
I have written a fair bit about these issues here at AVC as have others like Brad Feld.
One area where fund structures are different is in the crypto sector. Because crypto tokens become liquid much more quickly than startup equity, and because investors in the crypto sector will want to own publicly traded crypto tokens, the hedge fund model has been adopted by many of the investors in the crypto sector.
Joel Monegro, co-founder of Placeholder.vc and a former USV team member, wrote a good crisp comparison of the venture fund model and the hedge fund model on the Placeholder blog yesterday. USV is an investor in Placeholder.
Joel writes:
The effect of these differences is that hedge fund managers have a greater incentive to maximize short-term profits, as they can be severely affected if the fund underperforms in any given period, while VCs are incentivized to maximize long-term, realized value in order to increase their payout. And this is reflected in how each type seeks profits: in general, hedge funds will tend to trade around market fluctuations, while venture funds tend to build and hold investments to optimize for long-term value.
USV has invested in a half a dozen token funds, often as an initial LP to help the fund get going, and most of the funds we are invested in use the hedge fund model. Placeholder uses a VC model.
So we don’t have a strong point of view about which approach is best. Certainly in terms of maximizing our liquidity, the hedge fund model is best. But for entrepreneurs who want patient stable capital, it may be true that the VC fund model is preferable.
This is something to watch over the next five to ten years as this sector matures and we learn about which structure is preferable for entrepreneurs, fund managers, and fund investors.
We already see hybrid models emerging where a hedge fund structure is used but long lockups are required for investors. It will be interesting to see if the way management fees and carry payouts will evolve as well.
One thing is for sure. Entrepreneurs need to understand how the capital they are taking into their company is structured and what expectations and requirements the suppliers of that capital have negotiated with the fund managers. If you aren’t asking those questions of your investors, you should be.
