Carta

Our portfolio company eShares changed their name to Carta this week.

Why?

For a bunch of reasons, but mainly because the opportunity has gotten a lot bigger than “shares”.

As founder/CEO Henry Ward points out in this post, the opportunity is to build the ownership graph:

If you drill far enough into the ownership graph, through the pensions and real-estate trusts and all the shared ownership vehicles, you eventually get to a person. You reach their retirement plan or savings account or option grant or even a simple title representing their ownership interest. That is how our society works. The leaf nodes of the ownership graph must be individual people.

This ownership graph is large and hard to quantify. We don’t know how many corporations, properties, investment vehicles, and partnerships exist in the world. But we do know if you mapped the entire graph your leaf nodes would eventually represent every person in the world. There are 7 billion people in the world. That is a lot of leaf nodes. Who knew the cap table market could be so big?

If you and/or your company uses eShares (now Carta) to track your ownership table, you likely understand this. Using Carta is transformative for all parties. And that is why it is growing as fast right now as any software company I have ever been involved with. And the TAM, it turns out, is massive.

A lot of our best investments at USV have gone this way. We invest early, when we like the product and the founder, and then over time the opportunity reveals itself to everyone (including the founder) to be a lot bigger than anyone thought. “Sharing what you had for lunch?”, “an API for text messages?”, “a search engine for jobs?”, “a Bitcoin wallet in the cloud?” and now we can add “cap table software?” to that list.

Quantitative Investing in Shampoo

My partner Andy wrote a blog post on USV.com with this title today. I like the title so much that I want to feature the post on AVC today too.

I have been a skeptic about data-driven venture capital investing for a long time. However, I do think CPG is a sector where this could work very well.


Can a machine help you invest in shampoo? Coffee? Another consumer product?

Last week, the USV portfolio company CircleUp announced the closing and launch of CircleUp Growth Partners  – a $125 million fund that will use a quantitative machine learning approach to invest in early-stage consumer and retail brands.

We believe this is an important evolution towards using data technology to make investment decisions – a theme we at USV have invested in many times ranging from Lending Club to Funding Circle to Numerai. CircleUp Growth Partners is slightly different. The Fund’s thesis is that one can use machine learning to determine early-stage equity decisions in consumer companies. This machine learning platform, Helio, identifies and evaluates companies across billions of data points. The Fund is live right now – Helio recently analyzed 3,400 vitamin and supplement companies and flagged HUM Nutrition as being in the top 3% for brand score. This ultimately led the Fund to make one of its first investments in that company.

The provocative proposition is that a system like this can run these types of analyses at scale and pinpoint brands earlier and with more efficiency than traditional investors. Consumer investors historically have had to spend around 75% of their time sourcing deals manually. Helio is able to automate this entire sourcing process and provide data-driven insights to help companies grow.

Helio has also been applied to two other business lines – credit and marketplace.  CircleUp originally operated solely on a marketplace model but has recently launched a credit arm that provides working capital to consumer companies. These three business units all provide data back to the model, which in turn makes each better in its own domain. This is a data network effect – Helio is continually improving.

The focused industry of consumer goods should lend itself well to this approach; consumer packaged goods all share the same business model, and data proliferates across the industry.

Could data-driven investment models like that of Circle Up be extensible to sectors beyond consumer goods? It will be interesting to see how these approaches might affect capital formation more broadly, as data applications move to designing new financial products and services we have not yet even considered.

Election Day

It’s election day and I’m going to stop by the polls this morning and vote.

It would be easy for me to skip the polls as there is not much at stake in NYC this year.

Mayor de Blasio is going to get re-elected fairly easily as he has no strong challengers.

The same is true of the other citywide officials and most city council members, including mine.

But I am going to vote in spite of all of that.

I think one of our biggest problems in our country is voter apathy.

So I am going to demonstrate against that by showing up and voting in an election with little to nothing at stake.

Onename to Blockstack

Our portfolio company Blockstack, which was the subject of a video I posted here last week, started out as Onename.

Onename is a distributed identity system, kind of like Facebook Auth, built on the blockchain.

I wrote about Onename a few times here on AVC back in 2014 and I suspect some of you registered onenames.

If you have a Onename that you like to use on the Internet, you have to import it to Blockstack before November 11th, or you will lose it.

To do that, you have to download and install Blockstack on your computer and then log into the Blockstack browser and import your Onename.

Instructions how to do all of that are here.

I like to use the same userid everywhere. So this sort of thing is important to me.

If it is important to you too, then I suggest you take the time to do all of that in the next week.

Airpods and Android

I wrote a post a month or so ago saying that I had fallen hard for Airpods while I was briefly using an old iPhone and was going to miss them when I moved back to Android.

A bunch of readers responded to me in the comments and via email that the Airpods would work just fine as Bluetooth headphones on my Pixel phone.

And they were right. I have been using the Airpods with my Pixel for a month now and they work great.

So if you are an Android user like me and like the idea of tiny wireless headphones in your ear without wires or bulk, you can absolutely get a pair.

Now if Apple would only make iMessage work on Android there would be no reason to use an iPhone 😉

Feature Friday: AirCraft By Dronebase

I hesitate to call this a feature, even though it is, as AirCraft is a way bigger deal than a new feature.

Our portfolio company Dronebase operates the largest drone pilot network in the world. Tens of thousands of pilots fly missions for Dronebase and the Dronebase mobile apps are used by most of these pilots to do these missions. Pilots connect their mobile phones to their drone consoles and the smartphone adds a lot of capability during the mission.

So what else can a smartphone do for a drone mission? Well it can add augmented reality.

AirCraft is the first augmented reality drone platform for commercial and recreational activities.

What AirCraft is, at the most fundamental level, is the ability for the drone to be a cursor in the sky.

AirCraft allows drone pilots to make something like this in the sky:

AirCraft is available in the Dronebase iPhone Pilot App today and will be available in the Dronebase Android app later this year.

If you want to build a virtual drone race course, you can do that with AirCraft.

If you want to build a flight plan for a drone pilot to do a regular survey of your radio tower, you can do that with AirCraft.

If you want to build a virtual city in the sky, you can do that with AirCraft.

The possibilities are endless, kind of like Minecraft in the sky.

So if you have a drone and the Dronebase iPhone app, you have AirCraft and you can get going on building things in the sky.

Token Summits in SF and NYC

The Token Summit, run by AVC regulars William Mouyagar and Nick Tomaino, announced two more events in the coming months, Dec 5th 2017 in San Francisco and May 17 2018 in New York.

The first Token Summit was held in NYC at NYU last May, and sold out. Here’s a highlight reel from it.

Today, William and Nick have published the agenda for the San Francisco conference, and you can find it here. It is being held at the Mission Bay Conference Center at UCSF, in a hall that will fit 600 people.

Some of USV’s portfolio companies will be presenting, and I am sure William and Nick will have yet another successful event. If you want to learn about where the token economy is going, and network with the entrepreneurs and companies who are leading it, the Token Summit is a great place to do that.

Fintech Innovation Lab

I write this post every year because I think this is a great program.

Fintech Innovation Lab NYC is a business accelerator program that works with the largest financial services companies here in NYC to support emerging fintech companies and the founders who start them to get their companies off the ground.

This year, the lab is making a big push into insurance with a special track for entrepreneurs/companies that service the insurance market.

Here is the blurb they sent me this week to announce the kick off of their next program which will take place in the first half of 2018:

We’re looking for entrepreneurs developing disruptive, pioneering enterprise technologies for the financial services and insurance sectors. As part of the 12-week program co-founded by Accenture and the Partnership Fund for New York City, fintech companies selected by senior executives of the world’s leading financial services firms will receive mentorship that accelerates product and business development.

The participating financial institutions and insurance providers include: AB, AIG, Alight Solutions, Ally, Amalgamated Bank, American Express, AQR Capital Management, Bank of America, Barclays, BlackRock, BNY Mellon, Capital One, CIT Group, Citi, Credit Suisse, D.E. Shaw, Deutsche Bank, Fidelity Investments, Goldman Sachs, Guardian Life Insurance, JPMorgan Chase & Co., KeyBank, Marsh & McLennan, Mastercard, MetLife, Morgan Stanley, New York Life Insurance, Pitney Bowes, Rabobank, RBC Capital Markets, Scotiabank, Synchrony Financial, TIAA, The Hartford, UBS, U.S. Bank, Wells Fargo, XL Catlin and Zurich Insurance.

We are holding an information session on Wednesday, November 8, 2017 from 5:30 – 6:30 PM for any companies interested in learning more about the program. For additional information on the Lab, please have the companies contact us at [email protected].

Ledger Nano S

I got my hands on a Ledger Nano S last week and set it up over the weekend.

The Ledger Nano is a “Cryptocurrency Hardware Wallet” which means it is a device you can store your Bitcoin, Ethereum, and other crypto assets on. It costs $95 on Amazon.

It looks like this:

It is about the size of your average thumb drive/USB Stick.

The screen you see in that photo is quite small and the UI that runs on it is pretty bare bones as a result.

There are Chrome Apps that run in your browser and connect to the Ledger and provide the basic wallet functionality that you have gotten used to on Coinbase or some other hosted or software wallet (balance, send, receive, etc).

I was able to set up the Ledger Nano and get it working without too much hassle. The instructions are pretty good. But the security precautions (which are absolutely necessary) are a bit of a pain to deal with and it is not the simplest experience. It doesn’t take a long time to set up, it’s just a process you have to go through.

There is a USB cable that you use to connect to your computer and put the device online. You can then send and receive crypto assets and use the wallet apps to see the activity on the device.

When the device is disconnected and saved somewhere safely, it is offline.

Many crypto purists believe that you must own a hardware wallet and that your assets are not really yours unless you control the keys and the device on which you store your assets. For those who feel that way, the Ledger is a great solution.

I personally am happy to store my crypto assets with our portfolio company Coinbase in the cloud, particularly in their vault offering which provides delayed withdrawal and multi-sig on the account.

But I do understand those who feel that storing your assets on your own device is the right answer.

Where I find value in the Ledger is as a solution to store crypto assets that aren’t supported by Coinbase and/or some other trusted hosted storage provider.

What many people do is store their “alt-coins” on the exchanges that support those coins. That has turned out to be a dicey option as many exchanges have been hacked over the years.

What I advise, and do, is to store these “alt-coins” on a hardware wallet, like the Ledger, and then move them onto an exchange to trade them, and then back off after the trade clears.

The idea is to limit your assets in “hot storage” as much as possible and maximize your assets in “cold storage” as much as possible.

And for that, the Ledger Nano is a great solution.