Last week, I had to clear my calendar for two days and spend them in doctors’ offices and radiology labs. I developed a kidney stone last week and my doctors and I wanted to understand how large and where it was. The answer is 4mm and it was somewhere between my kidney and bladder as of last Thursday. That may be more information than you need to know.

Over four appointments, I experienced how much progress we have made during the pandemic and how much more we have to go before we have a high functioning software powered health care system in the US.

The good news is that for all four of my appointments, I was able to check into them via an app on my phone and in most cases, leverage stored information in apps on my phone to complete most of the forms. The stack of forms that we all usually complete when arriving at a new doctor has been reduced significantly during the pandemic, but it is not yet zero. I still had to complete at least one paper form at three of my four appointments.

The pandemic has forced health care providers to use mobile apps and software to automate much of the check-in functionality and that is great news. The fact that they only went 90% of the way there is a bit depressing though.

I also got most of my test results delivered into an app on my phone. But not the ultrasound and CT scans. I realize that I probably can’t read those scans, but I feel like I paid for them so I should have them. If I had them, I could post them here 🙂

But seriously, I feel like the last fifteen months have brought much needed and long overdue changes to the information collection and management practices of the US healthcare system. I can see the system changing in front of my eyes. And that is very exciting.

But I don’t feel like we are anywhere near where we can go and should go to leverage the power of information and software to optimize the experience for patients and providers. I hope the last fifteen months is the proof point that change is possible and that we can keep innovating and improving the experience without a crisis forcing it on us.

This public art work speaking to the growing refugee crisis around the world is really great. I backed it earlier this week when I saw my friend Sunny back it.

From July to November 2021, a giant puppet of a 9-year-old Syrian refugee girl called ‘Little Amal’ will walk from the Syria-Turkey border, across Europe to the UK, travelling 8,000km to focus awareness on the refugee crisis. The Walk is an international arts festival meets endurance event – the length and sheer size of the challenge is capturing imaginations even before our heroine’s first step.

I’ve posted the video into this blog post but if you are reading on Mirror or via email, click here and watch it.

Stock-based compensation plans throughout the startup and tech sector are based on “golden handcuffs” – the idea that an employee can’t leave because they would be giving up too much money if they do.

I’ve never loved that concept. It feels like staying in a bad marriage for the kids.

So I have been involved in a number of efforts to rethink that practice and one of those efforts came to light earlier this week when Coinbase, where I am on the board and compensation committee, blogged about their new compensation strategy.

This line in particular stands out to me as a powerful way to think about retaining employees:

Some may say eliminating 4-year new hire grants could hurt retention; we disagree. We don’t want employees to feel locked in at Coinbase based on grants awarded 3 or 4 years prior. We want to earn our employees’ commitment every year and, likewise, expect them to earn their seat at Coinbase.

We operate in an open market for talent. We all know that. Letting that market operate efficiently and not trying to game it makes a lot of sense to me.

Last week I spent three hours with my six partners in a conference room talking through what we are investing in and why. It was a terrific session and I had more “ahas” in those three hours than I have had in many many months. There really is no substitute for sitting together with your colleagues working things out face to face.

This week our team met with a founder in Singapore via Zoom. It was midnight in Singapore and noon in NYC. In one hour we learned enough from the founder to be able to make a decision on whether or not to invest in the founder’s company.

In the last year, events like the latter one have been commonplace. Events like the former have been non-existent. And there are many in the tech sector and broader business sector (and other sectors too) that have come to believe that on-screen interactions will be the primary way we engage going forward.

For certain things, like raising capital and investing capital, on-screen works pretty well. Founders have figured out that they can raise capital from their kitchens, bedrooms, and offices in weeks vs roadshows that lasted months. I don’t think we will see founders going back on the road in any material way ever again. And founders in Singapore can access capital markets in NYC with ease. And investors in NYC can access investments in Singapore with ease. These are all important and disruptive changes to the startup, tech, and business sectors.

But in the last month, as I have been going into the USV offices most days, I have come to realize what we have been missing with the on-screen work model vs the in-person work model. Many things are more efficient on-screen but some things are way better in-person.

Understanding which is which and then figuring out how to continue to do the in-person things will be critical to leaders and teams navigating the new normal.

I got an email from a founder/CEO about six months ago saying that his company was going back to the office completely when the pandemic was over. I had not heard many CEOs taking that strong of a stance at that time. Since then, I have heard the same from a number of our portfolio company leaders. They are in the minority but they are not non-existent. When we survey our portfolio we find that about 20-25% will go back to full-time in the office work, another 20-25% have gone entirely remote, and the balance will try to figure out a hybrid model that makes sense for their company.

At USV, where we have landed for now, and maybe forever, is a bias to be in the office, particularly on the days we meet in person, but we are also way more open to on-screen work and we have an expectation that some team members will choose to work on-screen for multiple days a week, possibly the majority of days a week. We see that working parents benefit from the flexibility that on-screen work allows and younger team members benefit from the socialization and camaraderie that an office provides. We also see that those who commute long distances benefit significantly from being able to reduce the commuting load by working on-screen multiple days a week.

Our business has a natural rhythm of two days a week when we meet as a team; Monday and Thursdays. So those tend to be the days that team members try to be in the office and those are the days we do things like cater in lunch and maybe go out after work together. That allows us to retain the team dynamic and culture while being more open to on-screen work going forward.

We definitely have not figured this all out, but we are starting to see some patterns and some benefits of both work modes, and we are trying to navigate to a good middle ground.

Each company needs to figure this out in a way that works for their team and culture and I believe that there is no “right way” for everyone. But I also believe that in-person interactions remain critical to making better decisions, better products, better cultures, and better companies and so I would encourage everyone, including the fully remote teams, to figure out how to make in-person interactions happen on some regular cadence.

I have read more books written by Steven Johnson than any other author. In addition to being a friend and a USV-funded founder, Steven writes about things that fascinate me. And he is a wonderful writer. That’s a potent combination.

I am about to embark on another journey with Steven. This one is called Extra Life and it is about how mankind doubled our life expectancy over the last hundred years.

But Extra Life is not just a book. It is also a four part TV series airing on PBS that starts tomorrow night at 8pm.

Steven told me that when he started exploring the idea of this book years ago, he thought there might be a nice symmetry to launching the book on the hundred-year anniversary of the end of the flu epidemic of 1918-1919. Well little did he know then that we would have our own 100 year anniversary of that event that has shaken our world to its core over the last year.

This book is about much of what has come to dominate our lives in the last year, public health, vaccines, drug trials, etc, etc. But instead of focusing on the here and now, it zooms out and talks about the result of all of that. Which is a 10x reduction in childhood mortality and a doubling of life expectancy.

I am eager to dive into Extra Life. I’ve wanted something to put a hopeful and optimistic context on the events of the last year and here it is. Thanks Steven!

Longtime AVC reader Alex Wolf has a Kickstarter project that I think is awesome.

She has long been working on a “pattern alphabet” to encode the patterns of nature and life.

This project turns this alphabet into cards that can be used by kids in school and at home to learn.

I backed the project this morning and I hope and expect she will do great with this Kickstarter project.

Email readers can see the video here.

Yesterday’s post has this line in it:

I suspect all buy maybe two of those eleven funds have outperformed the public markets

As you can see, there is a typo there. “buy” should be “but”

A number of readers let me know about the typo, which I very much appreciate.

But for some reason, I am not all that motivated to change it.

I make typos all of the time in my emails and texts and other informal communication.

And I am increasingly seeing AVC as another form of informal communication.

AVC is me. I am human. Humans are imperfect. So AVC should be imperfect.

So there it is. I am letting it stand.

There has been this narrative about investing in VC funds that you have to get into the top quartile (25%) or possibly the top decile (10%) in order to generate good returns. I have heard that for as long as I have been in VC and probably have written it here a few times.

Well, it turns out that is not right. Half of all venture funds outperform the stock market which is the benchmark most institutions measure VC funds against.

My friend Dan Malven wrote about this on his blog yesterday:

A working paper published by the National Bureau of Economic Research (NBER) in November 2020 contradicts that notion, showing that half of all VC fund managers outperform the public markets, and are therefore worthy of institutional investment.

This study was based on a large sample of VC fund level returns from 2009 to 2017 and does not include the last few years which have been particularly strong for the VC sector.

Manager selection remains an important part of VC investing because the lower half of VC funds do not outperform the stock market. An interesting data point from this study is the VC “fund of funds” mostly outperform the stock market so a portfolio of VC funds will generally give you enough diversification that you can meet your performance objectives.

The best way to know what managers to pick is to be in the startup business in some way. All you need to do is watch how people behave to know who is good and who is not. The Gotham Gal and I have been investing in the VC funds of managers we know well and have worked with closely on boards of startups for about fifteen years now.

These are the gross return multiples of all of the funds that are “mature” meaning the returns are pretty clear now:

Multiple	Year Of Initial Investment
8.66	2006
3.65	2007
5.29	2007
3.31	2010
10.38	2010
7.63	2010
4.71	2010
2.01	2010
2.29	2012
8.58	2012
3.97	2012

I am not going to do the work of calculating performance against the stock market for these funds, but I suspect all buy maybe two of those eleven funds have outperformed the public markets.

As you can see, investing in VC funds can be very profitable. And I suspect it is getting more profitable, not less, as the capital markets and M&A markets are providing robust liquidity options for managers.

Sadly the VC market remains largely out of reach of many “main street” investors as the SEC limits these fund investments to qualified and accredited investors. That has never made sense to me and is yet another example of the “well meaning” rules resulting in the wealthy getting wealthier and everyone else missing out.

My friend Seth Levine and Elizabeth MacBride have written an important book about the changing face of entrepreneurship in the US. It is called The New Builders and it came out this week. You can purchase it at all the places listed here.

This bit from the book’s Amazon page explains The New Builders’ message:

The dominant image of an entrepreneur as a young white man starting a tech business on the coasts isn’t correct at all. Today’s American entrepreneurs, the people who drive critical parts of our economy, are more likely to be female and non-white. In fact, the number of women-owned businesses has increased 31 times between 1972 and 2018 according to the Kauffman Foundation (in 1972, women-owned businesses accounted for just 4.6% of all firms; in 2018 that figure was 40%). The fastest-growing group of female entrepreneurs are women of color, who are responsible for 64% of new women-owned businesses being created.

In a few years, we believe women will make up more than half of the entrepreneurs in America.

Seth sent me a manuscript about six months ago and I read with interest the stories of these women of color starting businesses of all kinds. This is not the entrepreneurship that I tend to write about here at AVC, but in many ways it is more important, more courageous, and more powerful.

If you want to be inspired and encouraged, pick up The New Builders give it a read.