The New York Times is reporting that Amazon has officially chosen NYC and DC as the locations for its big planned expansion, known as HQ2.

This is big news for NYC, as I wrote about last week.

I would like to welcome Amazon to NYC. I think this is going to work out great for Amazon and for NYC.

I know there are plenty of “not in my back yard” opponents to this idea and folks who think growth is bad and we should not grow until we fix things that are straining under the load.

I appreciate all of those concerns. They are valid at some level.

But I am a fan of grow, prosper, invest, fix, grow, prosper.

And we are doing that in NYC right now.

I keep little things that remind me of events over my career in venture capital. And I have been doing that for most of those thirty plus years. I keep them on a bookshelf I have in my office at USV.

It started with the lucite “tombstones” that bankers would make up when a deal closed. I started collecting them in the late 80s and had them on my bookshelf until recently. I finally got rid of them. Over time, I moved onto more interesting things and started putting them on the bookshelf.

I moved offices at USV this fall and I had to put my bookshelf back together. I did that on Saturday afternoon this past weekend.

The new configuration looks like this:

The third shelf has my collection of useless consumer electronic devices that were a big deal at one time. I have a Apple Newton there, a first generation Blackberry pager style device, and a whole lot more.

I have a bunch of family photos and things my kids made for me over the years. The peace sign painting on the left of the third shelf was made by my daughter when she was ten. I love it.

I put my old Mac desktop on the right corner of the second shelf. I plan to put some digital art on there but have not yet gotten to that.

It took me about three and a half hours to put everything back on the bookshelf on saturday. I had to wipe stuff down to get the dust off. Dusting off memories, literally.

There are a few gems that I had forgotten about. The lighter that Jerry and Dan brought back from Beijing when they did the diligence on Sina.com in the late 90s. The matchbox Porsches that Mark Pincus sent me when we exited Freeloader. The “move to NYC” booklet that Rob Kalin made to convince engineers to leave Silicon Valley and move to the greatest city in the world and work for Etsy. The Dick Costolo mask (partially hidden on the upper left) that the entire Feedburner board put on before he walked back in for exec session. I chuckle every time I look at that one.

I have a ton of stuff that did not make the cut this time. Including all of the lucites. I can’t throw them out so they will collect dust in a closet somewhere and drive the Gotham Gal crazy.

Memories are important. A career of memories is a blessing. And I like to live with mine. It reminds me why I do this work and why I love it so much.

Let’s say you are the founder and CEO of a startup and you have now been at it for four years. The company is doing great, you’ve raised several rounds of financing, you have a product in the market that is solving a real problem, you have a bunch of customers, you have a growing team, and things are stressful but largely great.

And you realize that you are now fully vested on your founder’s stock which means if you were to leave the company tomorrow, you get to keep all of it. What do you do about that?

This is a common question I hear from founders. They ask me what is standard in this situation. And I tell them that not only is there no standard answer, that this is one of the most emotionally charged issues to come between founders and their investors and boards and companies.

This situation also exists for other founders who are not the CEO, and the issues are very similar, but for the purposes of keeping this post as simple as possible, I am going to focus on the founder/CEO role.

Here are some, but not all, of the issues that come into play in thinking about this:

1/ If a founder/CEO were to leave their company after they become fully vested on their founder’s stock, the company would have to go out and hire a new CEO and that new CEO would get an equity grant that would be between 2.5% and 7.5% of the Company, depending on the value of the business. So one could certainly argue that the founder CEO ought to get similarly compensated.

2/ But that argument about how a new CEO should be compensated essentially puts on the table the question of whether the founder CEO is actually the best person to run the Company right now or if there is someone better suited to do that who could be recruited for a new market equity grant. It is often not in everyone’s best interests to have that conversation.

3/ Many founder CEOs four years in still own a lot of their companies. A typical range would be between 10% and 40% depending on if there are co-founders and how much capital had to be raised in the early years and at what valuations. For most situations, an equity grant that would be made to a new CEO is actually a relatively small percentage of the overall equity ownership of a founder CEO and in the context of that, it is not as valuable to the founder CEO as many other things.

4/ However, the founder CEO is subject to additional dilution in subsequent rounds so a new grant would at least partially offset future dilution and that is quite attractive to founder CEOs.

5/ One of the most valuable things to a founder CEO is having a large unissued equity pool from which to hire talent into their company and any allocation of that pool to the founder CEO reduces that asset.

6/ It is generally a good practice to have all executives vesting into some equity compensation. It standardizes the executive compensation program and aligns incentives.

7/ Refresh grants for executives are not usually equal to their sign-on grants. They are usually some percentage of the sign-on grant. So the same should be true of a founder CEO getting a refresh except that they never got a sign-on grant.

8/ Investors bet on the appreciation of the equity they already own not the issuance of new equity. A founder is aligned with the investors when they too are focused on making the equity they already own more valuable.

9/ When founders get diluted below double-digit ownership, they begin to see themselves as employees, not owners and that is bad for the company, the team, and the investors. For some founders, they start to feel that way at below 20% or 15%.

10/ It is hardly ever the case that what happens after a founder is completely vested is negotiated ahead of time, during the various rounds of financings, and priced in by the investors. If a founder was to pre-negotiate a new “market grant” for themselves once they are fully vested, and that was included in the size of the option pool that is set aside and baked into the pre-money valuation, investors could model that future dilution and build that into their valuation models and price that into a round. But nobody does that because founders want to maximize valuation in the financing rounds and investors assume that the founders will be happy with their initial grant or will not be around to earn it. Both parties either naively or purposefully kick the can down the road until the issue rears its head and then the emotions come out.

So what happens in practice?

It depends entirely on the situation at hand.

If the founder CEO owns a large percentage of the business, a new grant is rarely made because the value of it pales in comparison to the annual value that their founder’s equity is increasing organically.

If the founder CEO has been massively diluted and owns a small percentage of the business, a new grant is often made.

If the business is performing very well, the likelihood of a new grant is higher.

If the business is performing poorly, the introduction of the idea of a new grant can be very destabilizing and can actually precipitate a larger conversation about who should be running the company.

A common area for compromise is a new grant to the Founder CEO that is some percentage of what a “market” grant to a new CEO would be and that percentage ranges from 20% to 50% depending on the situation. The less a founder owns of the company, the higher the percentage will be and the more a founder owns, the less that percentage will be. If a Founder owns more than a quarter of the business, this is almost never done. I certainly have never seen it done for founders who own more than a quarter of the business.

I have two suggestions for how entrepreneurs should handle this issue.

The first suggestion is that you might want to raise this issue with all of your investors before you take money from them, and understand how they feel about this issue and what their expectations are so that you know that ahead of time. Do not wait until the moment to find that out.

The second is that if you wait to raise this issue once you are fully vested, do it carefully and delicately. If it is seen as a demand, it will not go well. If it is seen as a discussion about what is in the best interests of the company, it will go better.

But most of all, remember that there is no “one size fits all” solution for this situation and that you and your board will have to figure it out on a case by case basis.

The Gotham Gal and I are investors in Blueprint Power, a company that helps landlords turn their buildings into mini power plants.

Robyn Beavers, the CEO of Blueprint, was on the Gotham Gal’s podcast this past week. They talked about how Robyn spent fifteen years working in the tech, energy, and real estate industries and took all of those work experiences and combined them into the idea for Blueprint. They also talk about how the changing supply and demand for energy is opening up new revenue streams for property owners and how Blueprint enables that. 

I backed this project the minute I saw it.

Maybe you might like to back it too and get some holiday cards that might inspire the girls in your life to grow up and be like these amazing women.

Malls need anchor tenants. These are the stores that bring the folks to the mall so that they can discover all of the other amazing places to shop that sit between the big tenants.

Cities need the same. Particularly cities that are trying to develop new industries.

NYC’s tech sector has had an anchor tenant since the early 2000s in Google. I wrote a bit about this a few years ago and cited my partner Albert’s line that 111 8th Avenue (Google’s NYC HQ) is the “gift that Google gave NYC.“

Big anchor tenants to a tech ecosystem provide all sorts of benefits but the biggest impacts are that they are both talent magnets (they attract people to relocate to the region) and talent sources (you can recruit from them).

Rumor has it that NYC is going to get a second anchor tenant as Long Island City is apparently a strong candidate to be one of two locations for Amazon’s HQ2. This would result in something like 25,000 new jobs for the NYC tech sector.

And another rumor is that Google is going to purchase the massive St John’s Terminal in the West Village and take its NYC workforce up to 20,000 over the next few years.

If both of these things happen, and that is still a big if, then NYC’s tech sector would have two large and well known anchor tenants. Together they would speak for about 10% of the jobs of the entire NYC tech sector.

I have had a front row seat to watch the emergence of the NYC tech sector over the last thirty years. It started as a trickle, then a stream, then a river, and it’s feeling more and more like an ocean.

NYC has responded well to the challenges of supporting a rapidly growing new industry with investments in infrastructure (real estate, connectivity, etc) and talent/education (CS4All, Cornell Tech, NYU Tandon, etc). Some areas have been lacking like transportation where we need better subways, better airports, and better regional rail systems.

I am hopeful that the continued growth of the NYC tech sector and the overall regional economy will give our elected officials and permanent bureaucracy the will and the resources to address these deficiencies and allow the NYC region to continue to develop into one of the most important tech sectors in the world. 

I blogged about this in the spring of 2017 but I am back with more.

TYWLS stands for The Young Women’s Leadership School, which is located in Astoria Queens in NYC. A few years ago the students decided to show off their computer science coding skills by making a “digital dance.” I posted the first one they did at the link above.

I just saw a video about their most recent digital dance and I just had to post it here.

I love this digital dance thing so much. It shows that coding skills can be used creatively. It shows that young women, particularly young women of color, can be coders and be proud of it. And it shows that technology is everywhere.

I have met some of these young women and they are impressive and I can’t wait to see what they are going to do when they grow up.

Today is Election Day. Polls are open in every state in the US. It is time to stop the incessant back and forth, and do the one thing that counts – voting.

There is very little on my ballot here in NYC that matters much to me. The races are not close. The ballot referendums are not on issues that matter a ton to me. 

It would be easy for me to blow off voting today.

But I am not going to do that.

I plan to go to my polling place, stand in line for however long it takes, and fill out the ballot and submit my choices and be counted.

I hope everyone who reads this blog that lives in the US and is a citizen will do that today unless they have already done it via early voting.

I feel that voting is not only our right, it is our responsibility.

Let’s do it.

I spent a fair bit of time this weekend moving phones from the Pixel 2, which I have loved using, to the Pixel 3 XL.

It is drop dead simple to port over all of my accounts, data, and apps from one Pixel to another. Google has made that as easy as moving from one iPhone to another. You just connect both phones with the cable that comes in the Pixel 3 box and in about ten minutes the new phone has everything that was on the old phone.

But getting all of my security set up on a new phone (2FA, passwords, etc) and then logging into all of my apps (because I don’t like to log in with Google or Facebook or anyone else) is a massive pain. 

But at least I feel more secure.

After using the Pixel 3 XL for the last couple days, I cannot say that it is a meaningfully different experience than using the Pixel 2. Everyone says the camera is better. I have not noticed that yet but I am also not hugely particular about my phone camera.

One new feature of the Pixel 3 that I am using is wireless charging. I also bought the Pixel Charging Stand and when I get home, I just put the phone on the stand and it charges wirelessly. That’s nice. I used to charge my earlier Pixels wirelessly but they got rid of that in the recent models and now it is back. I like that.

I am excited about getting the Pixel 3 to screen my calls. That is another new feature it comes with. But I have not yet set that up. I will report back on how that is working for me.

The biggest disappointment for me is the lack of facial recognition on the Pixel 3. I like using my fingerprint to log into my phone, but I think I would like facial recognition even more. The iPhone has had that feature for a year or so now and I can’t understand why Google can’t match that.

Anyway, my big takeaway from spending a fair bit of my time this weekend moving from Pixel 2 to Pixel 3 is that not much changed for me. That’s fine. A new phone is always a nice thing to have. But I am not sure it was worth all of the setup time I put in this weekend. It’s pretty much the same phone I have had for the last year or so.