Posts from VC & Technology

So I’m on sitting on the couch waiting to go out to dinner with the Gotham Gal and friends last night, and wasting time by scrolling through Twitter and I came across this tweet:

New Blog Post: Mining a VC http://t.co/BKJr43xhzq | Topic Model Analysis on Fred Wilson’s blog posts over more than 11 years!

— Bugra Akyildiz (@bugraa) January 17, 2015

I didn’t have time to check it out, so I favorited it and made a note to come back to it. And I did that this morning.

Bugra is a Data Scientist @axialco; he likes machine learning, data, Python and NLP, not necessarily in that order. He did some data science on this blog, starting on September 23rd, 2003, which is when I wrote the first post here.

Here is his post. It’s worth a full read but I’m going to gank a few images from it to summarize his findings for those who don’t feel like clicking over to it (you should).

Bugra mined 22 topics based on things I wrote most about and then did some analysis on those topics. Here is a frequency graph of them:

But of course my interest in these things rises and wanes over time.

I mentioned at year end 2014 that I thought social media had become uninteresting. Well the data on what I write about proves that:

Sometimes it’s a lack of interest. But it could also be a conscious decision to stop writing about something. As the readership of AVC grew, it became a lot less personal. That was a conscious decision on my part.

Not everything has gone down over time.

I’ve become a policy wonk (thanks to my partner Brad mostly):

And some topics just reflect the changing landscape we operate in, like this one:

And some topics reflect the changing patterns of my blogging, like the rise and fall of MBA Mondays:

Anyway, I found Burga’s post fascinating. I would like to see him add a few more topics, like bitcoin/blockchain, education, healthcare, and crowdfunding. Those are all things that I think a lot about and I’d be very curious to see how my interest in them has risen and/or fallen over the years.

In closing, I’d like to thank Burga for his work. It is valuable and revealing to me. Thank you Burga.

On the same day that Brad and I did our Berlin talk, I spent an hour with Seedcamp during their Berlin Seedcamp Week. I chatted on stage with Dave Haynes, who before Seedcamp was at our portfolio company SoundCloud. So we had a lot to talk about.

A few weeks ago Jerry Colonna and I got on Skype and had a 40min chat about startups and what goes on in them. As most of you know, Jerry and I started a venture capital business together in the mid 90s and have been close friends since then. So this is a public conversation between friends, which is usually a recipe for a good discussion.

The first five minutes is some stuff about Jerry’s new business, Reboot.io. It’s worth listening to, but if you want to skip it, click on the soundwave at 5mins in and you will get to the start of our conversation.

At the end of the Berlin talk I posted yesterday, there was a question about ethics. It was directed at startups and how they build a culture of ethical behavior.

But ethics and morals is an issue that extends beyond startups. It is an issue for all businesses and business people.

The Gotham Gal recently told me a story about one of her portfolio companies. I am going to leave names out of this post because I don’t want to get in the middle of something that, at least right now, is between the parties involved.

Her portfolio company went out to raise an early Series A for a business that was in market and ramping. They met with a VC who passed on the deal. A few months later they saw a competitor emerge in the market with an identical business plan and a website that was eerily similar to their own. The CEO of the competitor was the son of the VC who passed on the deal. And the VC was the seed investor in the competitor.

There was no NDA or non-compete between the parties involved so it is not clear that anything illegal transpired here. But it sure feels unethical to me. And I bet it feels unethical to you too.

At USV, we work very hard to avoid these sorts of things. We do not start or incubate businesses. We do not have EIRs sitting in pitch meetings while they think up their next startup. We put big moats around our existing portfolio and try hard not to invest in anything competitive. If we are looking at investing in a competitor, we let the entrepreneur know that before we meet with them.

I am sure we have messed up a little bit here and there over the years on these rules. But we try really hard to live up to our ethics, values, and morals and I think we do a decent job. And we get to see great deals because of that.

This unnamed VC will not see great deals if this behavior continues. You can’t behave this way for long before the market becomes aware of it. So even if the legal system can’t take care of this situation, I believe the market will. As it should.

Both Benedict Evans and I wrote posts about the year we are now in, 2015, as we enter it.

Here is mine

Here is Ben’s

My approach was to take a swing at some predictions. They generated a ton of conversation and are still generating it. It seems that people really love to debate predictions.

Ben’s approach is to put forward a bunch of questions that will likely be answered this year. In many ways, his approach is more helpful. He raises the issue without giving the answer, forcing all of us to think about how to answer it. I suspect Ben has opinions on how all of these questions will be answered, but he left his opinions out so that we can form our own.

That’s not entirely true however. My favorite of his questions was this one:

Is this the year that the Bitcoin blockchain starts producing real consumer products? If so, they’ll be on mobile first

And there you can see his opinion coming out in the latter part of that question. And I agree with him, bitcoin is easier to grok and use on mobile. A native mobile application using bitcoin and the blockchain does seem likely to be the first killer application for this technology. I referenced that a bit in this post from a few months ago.

I don’t regret taking a shot at predicting the future. That’s what we do all day long to be honest. And if we end up with a career batting average of .333, we will go to the hall of fame. I am sure I will be wrong on many (most?) of my predictions. But that’s how it goes. Asking the questions is safer for sure. But answering them is more fun. So when you look at Ben’s questions, try to answer them. It’s a good exercise for everyone to undertake as we enter the new year.

A “cap table” is a schedule of all the shares outstanding for a specific company. Here’s an MBA Mondays post I wrote back in 2011 on the subject of cap tables. If you want to know how much of a company you own, a cap table is the best way to figure that out.

Cap tables are almost always prepared and kept in spreadsheets, usually excel, but also increasingly google sheets. And, it turns out, they are often wrong.

Henry Ward is the founder and CEO of a company that is aiming to fix that called eShares. Last month USV led a Series A round in eShares and my partner John Buttrick wrote a bit about that investment today on the USV blog.

The reason I tell you this is that yesterday Henry wrote a great post about broken cap tables that everyone in the startup world should read. Here are the four big takeaway’s from Henry’s post:

1. Most cap tables are wrong
2. Most investors don’t track their shares
3. Note holders are often forgotten
4. Employees suffer most

How does Henry know this? Well part of eShares’ business is converting cap tables from spreadsheets into their cloud based application and reconciling everything to make sure it is correct. They onboard about 100 companies a month right now and they see a ton of cap tables.

Tracking everyone’s ownership in companies is a perfect application for a cloud-based network of owners and issuers. If every company used a platform like eShares, and if all these platforms talked to each other, if there was a common identity standard, then as you move from one company to another over your career, collecting equity along the way, you could access and manage all of your ownership interests in a single dashboard.

This is a service that is incredibly useful to startups and angel investors and VCs. But as Henry outlines at the end of his post, it will ultimately help employees the most. And, as we have discussed here before, employee equity is certainly more broken than cap tables are. Fixing that is a worthy mission for a startup and that is what Henry and his team intend to do.

Yesterday we relaunched usv.com. A team inside USV has been working on it on and off over the past few months. Though it’s not perfect yet, I encouraged them to launch it and fix the inevitable bugs in public. And that is exactly what they did yesterday. Nick Grossman, who led the effort, wrote a post outlining some of the goals of the relaunch.

To summarize, we want to make usv.com less “real time” and more thoughtful. We would like less noise and more substance. We want it to be referential as opposed to news driven. And the biggest step we’ve taken in that direction are the topic pages. Here’s the blockchain topic page. Here’s the policy topic page. We’ve started with four topic pages (blockchain, policy, marketplaces, mobile) but we intend to build out a bunch more.

I think this line in Nick’s post sums up our goals for usv.com and I’m pleased to see we are moving it in that direction in the new year:

The goal of [usv.com] is to expose more of our thinking, and to do it together with others

Yesterday I wrote a post summing up what happened in 2014. In it I promised a post on what is going to happen. What I did not specify was how far forward I am going to look. It’s a lot easier to predict the future without a timeline on it. I think we all know, for example, we are going to have driverless cars. When that is going to be mainstream, however, is a pretty big question that I can’t answer.

But, because yesterday was about 2014, I am going to make this post about 2015. And so here is what is going to happen in 2015 according to me.

1/ The big companies that were started in the second half of the last decade, Uber, Airbnb, Dropbox, etc, will start going public. Investors will be glad to scoop up some of their shares. That will lead, in turn, to a wave of acquisitions by these newly minted goldmines.

2/ Xiaomi will spend some of the $1.1bn they just raised coming to the US. This will bring a strong player in the non-google android sector into the US market and legitimize a “third mobile OS” in the western world. The good news for developers is developing for non-google android is not much different than developing for google android.

3/ More asian penetration into the US market will come from the messenger sector as both Line and WeChat make strong moves to gain a share of the lucrative US messenger market.

4/ After a big year in 2014 with the Facebook acquisition of Oculus Rift, virtual reality will hit some headwinds. Oculus will struggle to ship their consumer version and competitive products will underwhelm. The virtual reality will eventually catch up to the virtual hype, but not in 2015.

5/ Another market where the reality will not live up to the hype is wearables. The Apple Watch will not be the homerun product that iPod, iPhone, and iPad have been. Not everyone will want to wear a computer on their wrist. Eventually, this market will be realized as the personal mesh/personal cloud, but the focus on wearables will be a bit of a headfake and take up a lot of time, energy, and money in 2015 with not a lot of results.

6/ Capital markets will be a mixed bag in 2015. Big tech names will continue to access capital easily (see 1/), but the combination of rising rates and depressed prices for oil will bring great stress to global capital markets and there will be a noticeable flight to safety around the world. Safety used to mean gold, US treasuries, and blue chip stocks. Now it means Google, Apple, Amazon, and Facebook.

7/ The Republicans and Democrats will start jockeying for position in silicon valley for the next presidential election and tech issues will loom large. Republicans will put forward their own answers on immigration and net neutrality (Title X) and the White House will meet them halfway. Both sides will claim victory, but the real winners will be the people.

8/ The horrible year that bitcoin had in 2014 will be a wakeup call for all stakeholders. Developers will turn their energy from creating the next bitcoin (all the alt stuff) to creating the stack on top of the bitcoin blockchain. Real decentralized applications will start to emerge as the platform matures and entrepreneurial energy is channeled in the right direction.

9/ the enterprise/saas sector will shine in 2015 with dozens of emerging important new companies taking advantage of the cloud and mobile to redefine what work and workflow looks like in the enterprise.

10/ cybersecurity budgets will explode in 2015 as every company, institution, and government attempts to avoid being Sony’d. VCs will pour money into this sector in the same way they poured money into the rental economy. and, yet, the hacks will continue because on the open internet there is no such thing as an impenetrable system.

11/ the health care sector will start to feel the pressure of real patient centered healthcare brought on by the trifecta of the smartphone becoming the EMR, patients treating patients (p2p medicine), and real market economies entering health care (people paying for their own healthcare). this is a megatrend that will take decades to fully play out but we will see the start of it in 2015.

Of course, many other things will happen this year. A lot of them will be things we could never see or predict. And this list is biased by what interests me and what we’ve invested in. It is, as someone said in the comments yesterday, “biased”. But then so is every single word ever written on this blog. As it should be.

Happy New Year everyone. Here’s to a great 2015.

I’m not much for the rear view mirror. I like to look forward, not back. I guess that’s why I’m in the line of work I’m in.

But I’m going to force myself to look back at 2014 and explain what just happened. Doing that will help me look forward (tomorrow?) and explain what is going to happen.

This is not an attempt to be comprehensive, or accurate, or anything else. This is what I think happened in 2014:

1/ the social media phase of the Internet ended. this may have happened a few years ago actually but i felt it strongly this year. entrepreneurs and developers still build social applications. we still use them. but there isn’t much innovation here anymore. the big platforms are mature. their place is secure.

2/ messaging is the new social media. this may be part of what is going on in 1/. families use whatsapp groups instead of facebook. kids use snapchat instead of instagram. facebook’s acquisition of whatsapp in february of this year was the transaction that defined this trend.

3/ the “sharing economy” was outed as the “rental economy.” nobody is sharing anything. people are making money, plain and simple. technology has made renting things (even in real time) as simple as it made buying things a decade ago. Uber and Airbnb are the big winners in this category but there are and will be others.

4/ the capital markets have moved to the internet. we call it crowdfunding but what is really going on is raising money is a great application of a global platform that connects billions of people in real time. i don’t know the total amount of capital that was raised on the internet across all sectors (equity, debt, creative projects, charity, helping a person in need, real estate, energy, etc, etc) in 2014 but i am sure it is in the tens of billions.

5/ mobile OS has become a stable duopoly around the world. but android is splintering into google android and non google android and that may lead to new large players. 2014 was a big coming out party for xiaomi. if and when they come to the US, things will get interesting. they are the new (and better) samsung.

6/ mobile and messaging has started to impact the enterprise. slack is the poster boy for this trend in 2014.

7/ youtube became a monster. it always has been. but in 2014 youtube emerged as the place for entertainment consumption for anyone under 16. and these youngsters are going to grow up quickly. watching The Interview on YouTube was a fitting end to an amazing year for the king (and queen and joker too) of Internet video.

8/ we finally got rid of files. dropbox, google drive, soundcloud, spotify, netflix, hbogo, youtube, wattpad, kindle, and a host of other cloud based services finally killed off three letter filenames like mp3, mov, doc and xls. spending a week in the caribbean with young adults and bad internet was the tell on this one for me. they don’t even have mp3s on their iphones anymore!

9/ the net neutrality debate emerged as a national political issue with Obama’s endorsement of Title II regulation of the last mile of the internet. it is unclear how this issue will resolve itself but the public has spoken loudly and clearly and politicians understand that the internet needs to remain open for innovation and we can’t let the monopoly carriers and cable companies mess that up.

10/ cyberwarfare, cybercrime, cyberhacking, and cybersecurity was by far the dominant theme of 2014. if anyone had their head in the sand on this one before this year, they don’t anymore. this is our new normal. the US takedown of North Korea’s internet last week, and the state department official’s comment that “i guess accidents can happen” is a moment to remember as we head out of 2014 and into our future.

so that’s what happened in 2014 according to me. i am sure i left out many important things. you can add them in the comments. hopefully i’ll write a whats going to happen in 2015 tomorrow. i tried hard to keep this post backward looking and had to edit out a lot of forward looking statements as i wrote it.

happy new year everyone.