Noya

Six months ago, I wrote about Direct Air Carbon Capture and ended with this:

I remember hearing that “we’ve spent hundreds of years taking carbon out of the ground and putting it into our atmosphere and we are going to spend hundreds of years taking carbon out of the atmosphere and putting it back into the ground”. I believe DAC will be a big part of how we do that.

I used that quote again on a blog post I wrote yesterday on the USV blog about Noya, a Direct Air Capture company that USV recently invested in.

Sometimes when I write about something here at AVC, it is a sign that it will end up on USV.com. This was one of those times.

#climate crisis

Leading From The Heart

I have watched so many leaders over the years in my various roles as lead investor, board member, board chair, investor, and advisor.

And one thing I have learned from this front-row seat is that leading from the heart is very powerful.

A leader can be the most brilliant product person, strategist, entrepreneur, and business builder, but if they cannot get people to follow them, trust them, and care for them, they will not be an effective leader.

This is a hard lesson to learn. It is a fairly natural tendency to hold your emotions in check when you are in front of a large group of people. We are taught to project strength in moments like this.

And it is also a natural tendency to hold back the most difficult-to-process information, like a fundraising process that is not going well, or conflicts in the board room, or a co-founder relationship that is fraying, or the loss of the biggest customer, or a key supplier relationship that is at risk.

And yet, it is these exact moments where leaders develop that followership, trust, and care from the team.

I am not suggesting that leaders should become deeply emotional every time they talk to the team. I am not suggesting that leaders share every little detail about the business with the team. I understand that some details about the business need to stay confidential until the appropriate time to communicate them. There is a balance to all of this.

I am suggesting that more transparency, more vulnerability, and more honesty is the winning formula and when you are choosing between the two, choose these things.

One of my favorite stories about this comes from a particularly difficult moment in my career where I had to transition a founder out of the company they started. It was the night before the all-hands where the CEO transition was going to be announced. I asked the founder if they were going to attend the all-hands and the founder said no. I then asked the founder what I should tell the team. The founder said, “tell them you fired me because that is what happened”.

The next day I stood up in front of the entire company and told the team the Board had asked the founder to leave the company they started and that the Board had asked a member of the team to step into the CEO role.

After the all-hands ended, there was a line of about twenty or thirty people long to talk to me. And every single one of them waited in line to tell me the same thing which was “thank you for telling us the truth.”

It was a powerful lesson for me. And like most of the lessons I’ve learned in business, I learned it from a founder and their team.

If you are struggling to build the level of trust you want with the team in your company, try a little more transparency, vulnerability, and honesty in your communication style. It will pay dividends.

#entrepreneurship#life lessons#management

The Blackbird Platform

The first project launched this week on our portfolio company Blackbird‘s platform.

It is a friends and family program at a restaurant in Williamsburg Brooklyn called Gertie.

Blackbird wrote about it today on their excellent Supersonic blog:

Throughout, when you tap Gertie’s Blackbird-powered NFC chip (shown above), wonder awaits. On the first tap, a free cookie sourced from a nearby bakery comes your way. On the second, coffee is on the house. Over time, one-size-fits-many freebies give way to the kinds of perks you’d expect as a regular, like a personalized coffee mug that is always at the shop awaiting your arrival.

I also really love how Blackbird’s founder Ben Leventhal describes the company’s mission:

Blackbird is here to create meaningful connectivity between restaurants and their customers. By connectivity, we mean direct connectivity, where guests know that the more they show up, the better their experience is going to be. We hope to help restaurants think about benefits as a line of business, not just a bunch of random comps. If we can, restaurants will begin to deliver magic at scale, and get more profitable in the process. We’ll turn good restaurants into bonafide thrill rides — spontaneous, consistent, and compulsively enjoyable.

The Blackbird platform is a great example of what can be built on a web3 stack when most of the web3 stuff is under the hood, invisible to the users but powering things that can’t happen on a web2 stack. Some people call this “web 2.5” but I just call it awesome.

Blackbird will continue to introduce capabilities and develop its platform much further. So in the weeks, months, and years ahead, when you see this on the host stand when you walk into an establishment, you will be in for some of that awesomeness.

#NYC#Web/Tech#Web3

The Daily Bolster

USV is an investor in Bolster, a marketplace for fractional and full-time executive talent for startups and growth companies.

This week Bolster launched a daily short (5min) podcast and email with actionable insights and advice from founders, operators, and investors. It is called The Daily Bolster.

I did a Daily Bolster episode and it is featured today. I’ve embedded it below and you can watch it here if you are reading AVC via email.

The daily email contains a short pull quote from the daily podcast which in and of itself is quite useful but is also a prompt to spend five minutes and watch or listen to the daily podcast.

I strongly recommend founders and operators in the startup and growth sectors subscribe to the daily email and podcast. You can do that here:

Subscribe to The Daily Bolster Email

Podcast:

Subscribe on Apple Podcasts

Subscribe on Spotify

Subscribe on YouTube

#entrepreneurship#management

A Conversation With Mike Zamansky

Mike Zamansky is the person who got me interested in K12 Computer Science Education in NYC, a cause I have now contributed almost fifteen years of my life to.

Our family’s public charity, Gotham Gives, has been funding the work we do in K12 Computer Science Education in NYC for the last decade and a month or so ago, the Gotham Gal recorded a podcast with Mike talking about the early days of our journey into K12 Computer Science, how we met, and what transpired.

That podcast is up on YouTube and I’ve embedded it here. It’s about ten minutes long.

#hacking education#hacking philanthropy

The Newest Members of the USV Team

Last Thursday, three new blog posts hit USV.com announcing our three new analysts:

This is our tradition at USV. When someone starts at USV, we ask them to write a post on the USV blog introducing themselves. This helps founders who come to talk to us about their companies understand the folks they will be talking to.

Grace joins us from Silver Lake where she was working on their ESG strategy.

Nikhil joins us from Daffy where he was helping to build charitable giving software.

Matt joins us from Aerofarms where he was working on vertical farming.

At USV, they will work with all of us areas helping us find, invest in, and support founders working in our thesis areas. I am excited to work with them for the next two years.

#VC & Technology

The VC's Customer

I saw Dan Primack assert that the venture capitalist’s customer is their limited partners in this tweet about the Citizen app, the recap, and their VCs:

I DM’d Dan to let him know that is not the right way to think about the venture capital business.

Back in 2005, in the early days of this blog, I wrote this post on the topic.

The entrepreneur is the customer and the LP is the shareholder. That’s the only way to think about the venture capital business that makes sense to me.

https://avc.com/2005/11/the_vcs_custome/

I encourage everyone to read that post. It is one of the most important things I’ve written about the VC/founder relationship and I would not change a single word in it almost twenty years later.

#entrepreneurship#VC & Technology

What Does "Native" Mean

When a new technology comes to market, we often look for “native” applications of that technology.

What is a “native” AI application?

What is a “native” Web3 application?

I have not seen a better articulation of “native” than my partner Albert’s post from 2009 on native mobile applications.

He started out by laying out the new primitives that mobile smartphones made available to developers. In the case of mobile, he cited:

  • Location
  • Proximity
  • Touch
  • Audio Input
  • Video Input

He then went on to say that it would be the combination of these primitives, more than any individual one, that would make for native mobile applications.

And then he went on to lay out some of the applications he was seeing that were native.

If you want to figure out what the native AI applications or the native Web3 applications will be, or the native AI/Web3 applications, start by laying out the new primitives and going from there.

#entrepreneurship#VC & Technology#Web/Tech#Web3

The 83b Election

First and foremost, this is not tax advice. I am not a tax advisor and you should never take anything you read here as tax advice. If you read something here that makes you think you should take some tax-related action, please always consult your tax advisor.

With that disclosure out of the way, I would like to talk about 83b elections.

An 83b election is a choice a taxpayer can make to pay the taxes in full at the time of the grant of an asset that vests over time and would otherwise be taxed as the asset vests.

So why would you want to do that?

Well, if the value of the asset at the time of grant is quite low and the taxes would not be significant to you, you might want to make an 83b election. Otherwise, you will be taxed as the asset vests and if the asset increases in value, those taxes could be significantly larger.

Let’s look at an example. Let’s say you join a company that is very early stage and you are one of the first employees. Let’s say you are granted 100,000 shares of restricted stock that vest over four years and the current value of each of those shares is $0.10. That means the entire grant is worth $10,000 (100,000*0.1). If you file an 83b election, you are volunteering to pay the taxes on that $10,000 even though the shares vest over the next four years. The taxes on that $10,000 will depend on where you live, but will generally be in the range of $2500 to $5000.

Now let’s say you decide not to file an 83b (or worse, you never heard of an 83b election and nobody suggested you file one). Let’s say one year later, your first vesting period happens, and 25,000 shares vest. And let’s say that the stock has increased significantly in value to $1/share over the first year. That means that the 25,000 shares that have vested will generate $25,000 in taxable income to you and the taxes you will owe on them will be in the range of $6,000 to $12,000. And you still have 75% of your grant unvested and the stock might keep going up, creating more taxes for you over the next three years.

You have 30 days post grant to file an 83b election so you must move quickly if you want to do this.

The downside of the 83b election is you will have paid the taxes on the stock even though you may leave the company and not vest into any or all of it. That is the risk you are taking when you file an 83b election and you must consider that risk when you make the election. In life, there are generally no free lunches.

If you are being granted restricted stock, founders stock, or some other asset that vests over time, you should ask your employer and your tax advisor if you should file an 83b election. There is a good chance you will want to.

The reason I decided to write about 83b elections today is that USV signed onto a comment letter to the IRS last week asking them to make e-filing and e-signing of 83b elections permanent. You can read the comment letter here.

83b elections are an important tax strategy for founders and early employees in startups and they should be used more frequently than they are. And it should be dead simple to file one. Taxes are hard enough for the average startup employee to understand and comply with. We should not make it harder.

#economics#employment#entrepreneurship#life lessons

The Rebrand

I’d guess that upwards of half of USV’s portfolio companies have changed the name of their company during their lifetime. It is not hard to understand why. Founders start out with an idea and not much more. By the time they have built a product, built a team, and found product market fit, they might be doing something a bit different or a lot different than where they started out.

Most often the name change comes in the first few years when the business opportunity comes into clarity and the original name becomes an issue.

But occasionally it comes much later in life.

A good example of the later in life name change is our portfolio company Dronebase which changed its name to Zeitview this week. We made a seed investment in Dronebase eight years ago about six months after the company was formed. So the company is in its ninth year.

Zietview does aerial inspections of buildings, renewable energy infrastructure, and telecommunications systems using advanced AI/ML software. It is a high-growth business that just raised a $50mm late-stage round.

Over time, the company has adopted many techniques to acquire the imagery that they use to do the AI/ML inspections. Drones are still a big part of the mix but only when they are the best way to acquire the imagery.

So it came time for a rebrand. The Company took its time, thought a lot about it, hired a rebranding agency, surveyed all of its stakeholders, cleared all of the typical conflicts, and landed on Zeitview. They rolled out the name change this week.

I will miss the name Dronebase. I have had good success investing in companies with “base” in the name 🙂 But I am already warming to Zeitview. The two-syllable name with a well-known noun in the second spot is always a great approach to a name.

#entrepreneurship