Posts from New York City

Hailo

It's no secret that USV invested in Hailo at the end of last year.

What is less well known is why we would do that.

Hailo announced the financing today and also a bunch of impressive hires for their US and Asia operations and they also disclosed a bunch of numbers for the first time.

Hailo is as big in their home city (London) as Uber is in SF and across the ten markets they are in, Hailo has similar scale as Uber in total transactions per day, week, month, and year. Hailo is different than Uber though. They focus exclusively on the regulated part of the market and as a result they can offer lower prices and a higher liquidity of cars to their riders. The power of this model becomes clear if you travel to London and compare the Uber experience to the Hailo experience.

Another big factor in our investment process was the "I told you so". In late 2011 as Hailo was just launching in London, the team came to see us and told us everything they planned to do in 2012. We were impressed by the team, their backgrounds, and their attitude and energy. But we had big concerns about everything they said they were going to do in 2012. A year later, they came back to see us and not only had they done everything they said they were going to do, they actually did a few things more than that. I referenced this story in a post I wrote at the end of last year. Now the company in the story has been named. They will be added to the investments page on usv.com today.

 And maybe most importantly, we believe in large networks of users that have the power to transform big markets. We've long thought that the ubiquity of the smartphone will enable transactional networks between buyers and sellers and it turns out the urban transportation market is one of the first big markets that is rapidly being transformed by large smartphone networks. We are excited to be able to invest in one of them.

#mobile#NYC#VC & Technology#Web/Tech

Museum Of Math

Last night the Gotham Gal and I were out and about town attending some holiday parties. One of them was on 26th street, on the north side of Madison Square Park. As we arrived at the building we were headed to, I saw this:

Museum of math

Somehow I had missed the news. The Museum of Mathematics has opened in NYC on the north side of Madison Square Park.

We did not go in. The museum had closed by the time we were there. I am eager to return and check it out. I am and have always been a math geek. And I love teaching math to my kids and anyone who will listen. It is magical stuff when you understand it.

I am so happy we have a place where we can take kids in NYC, either on field trips or family outings, to get them into math and all that it can lead to in their lives. Here’s a short photo tour that gives a glimpse of what it is like.

Update:

Jason sent me this video. I am adding it to this post.

#hacking education#NYC

Support E-Hailing in NYC!

Last year, at about this time, USV met Jay Bregman and Ron Zeghibe, who are two of the cofounders of Hailo, a mobile app for hailing taxis, that had just launched in London. If anyone has been to London in the past year, you probably know that Hailo has taken London by fire with over half of all cabbies in London accepting rides on Hailo. Hailo has gone onto launch in Dublin, Toronto, Chicago, and Boston, and they hope to launch in NYC in 2013. Imagine being able to hail a yellow cab in NYC from your Android or iPhone? I cannot wait.

But before Hailo, Uber and other e-hailing apps can hail yellow cabs in NYC, we need changes to our taxi cab regulations. And that vote is TOMORROW. So I've asked Jay Bregman to pen a guest post explaining to all of you, and hopefully all of NYC (and especially five reluctant regulators), why we need e-hailing to be allowed in NYC.

———————————————–

Every ten seconds across the world a licensed taxi driver accepts a Hailo E-hail. And with each match, Hailo helps chip away at the millions of dollars lost by drivers and hours wasted by passengers due to inefficiency in the market. E-hailing apps help solve the line of sight problem – they are the natural evolution of the arm-flail, the doorman’s whistle, the light outside the hotel – and nowhere will our impact be greater than right here in New York City, my hometown.

Right now, cab drivers (and prospective passengers) are limited by their line of sight at any given time. A passenger can be very close by, but if a driver does not see them, they will not get picked up. As a result, the fare is lost, and the passenger misses out on a cab ride. Drivers currently spend up to half of their time cruising empty in NYC, desperately looking for passengers.

 

This does not make any sense.

E-hailing is now commonplace in cities across the globe – including London, Dublin, Boston, Toronto, Chicago, San Francisco and many others. In London, half of London’s 23,000 drivers safely use apps to get up to 30% more business every day. Hailo passengers on average wait only two minutes from tap to taxi.

This Thursday, the NYC Taxi and Limousine Commission’s nine-member board will vote on proposed rules which will allow E-Hailing in NYC, subject to a balanced and sensible licensing scheme similar to those already in place in cities such as Chicago and Toronto. If adopted, the rules would take effect in mid-February. But politics – in particular outcry from adjoining industries such as black car and livery companies seeking government protection against change – are currently threatening whether the rules will pass and therefore whether this technology will be allowed in NYC, where, like London, cabs provide a critical, cost efficient service.

Four commissioners have already expressed support for the rules – meaning New Yorkers are just one vote away from a substantial technology improvement to the iconic Yellow Cab. I am writing this post as the Founder & CEO of Hailo – one such E-Hailing provider – to explain why E-Hailing is important, why it is ready for NYC, and what you can do to help convince the commission if you agree. To be very clear, these rules do not select a single supplier or favor Hailo over anyone else; they merely establish an open marketplace in which E-Hail providers may compete for the hearts and minds of Yellow Cab drivers and the riding public.

 

There is overwhelming evidence that E-hailing works, it has been proven on New York style scale and sophistication, and it will do nothing but good for passengers and drivers – so why do TLC commissioners remain unconvinced?

 

The TLC must pick up the reins of innovation and competition and finish the task started when credit card machines were introduced in 2005, when the contracts with these providers first contemplated smartphone apps. We pledge our support to the drivers and people of New York, and the TLC, to make sure this time we get it right.

To make your voice heard, please email the TLC at [email protected] or contact the Chair here. The vote is Thursday, 13 December.

Further Information

Hailo’s testimony at a recent TLC Public Hearing on the E-Hailing regulations:

#mobile#NYC#Politics

FinTech Innovation Lab: December 19th deadline

For the past two springs, a great program has run in NYC called the FinTech Innovation Lab. It's an accelerator program of a different sort. They accept a half dozen innovative financial technology companies into a twelve week program where the companies get direct access to top executives in the leading financial services companies in NYC. This program is all about validating your product or service with top customers. I have talked to entrepreneurs who have been through this program and I have heard universally that the access was incredible and the feedback was invaluable.

You don't have to be two entrepreneurs in a loft to be a good candidate for this program. You can be a two or three year old startup with a large team. What's important is the need for product market validation. If you have started a fintech company and have built a product or service and want direct access to the top customers in the market, this program may be for you.

If you want to apply for next summer, please do it before December 19th, when applications close. More details are here.

#VC & Technology

Status Update

The Gotham Gal and I have received countless messages from many of you wishing us well and volunteering all sorts of things. We even were offered use of a 3400 sf apartment on the upper west side! It is very gratifying to know that so many of you are thinking of us and wanting to help.

The past few days have been very strange here in NYC. North of 34th street in Manhattan and in most parts of Brooklyn, everything seems quite normal. But downtown manhattan is eerie. There are no working stop lights. Crossing a major avenue is a life threatening experience. Lower manhattan is a ghost town.

Our apartment building is on the hudson river. The Gotham Gal has a photo of what happened to it on Monday night on her blog. Our basement filled to the brim with part of the Hudson River and possibly a bit of the Atlantic Ocean as well. Happily we've been able to pump all of that water out as of last night. Every building on our street was pumping water out into the street the past two days. The Far West Village is a mess and will be for a while more.

We will be in remediation and repair mode for a while. We don't know how long yet. So we've been focusing on finding a place to live in for the next month or two. We are committed to getting back downtown as soon as power comes back on. All signs indicate that will happen in the next day or two.

In the meantime, we've been staying with friends on the upper west side. They have not one, but two families, camped out with them for the past few days. We are very fortunate to have such good friends.

What comes to my mind most as we struggle through all of this is how others who don't have the resources we have are dealing with things. I have to believe that tens of thousands of NY'ers are homeless or seriously displaced by the hurricane. And I am equally sure that many of them don't have the wherewithal that we have to deal with it. Those are the people that need help in NYC right now, not us.

I would guess this goes without saying, but I am not working this week. I am trying to stay up on my emails and doing a few calls here and there on urgent matters. But if you don't hear from me this week, don't be surprised. My attention is largely elsewhere.

#NYC

The ConnectNYC Fiber Challenge

Possibly the biggest local policy issue in NYC for tech companies is the lack of good broadband infrastructure in the city. We could get into a debate about broadband policy at the local and national level, but this post isn't going to be about that. This post is about something City Hall is doing about the broadband issue.

In the spirit of "race to the top" and other contest based efforts to attack stubborn problems, NYC has launched the ConnectNYC Fiber Challenge in partnership with Time Warner Cable and Optimum Online (Cablevision) to provide fiber build out to businesses.

Here's how it works. You sign up at ConnectNYC, you get and sumbit a letter from your landlord saying they will allow fiber installation in your building, and then you describe how high speed broadband will positively impact your business.

The judges will select the winners and NYC EDC, Time Warner, and Optimum will invest $12mm over two years, with $7mm being invested in year one, into fiber buildouts for the winners. It is estimated that each installation will have a value of $50,000 of investment by Time Warner and Optimum.

In addition to getting a lot of local businesses high speed broadband, this contest will also give an indication to the city and local ISPs of where the most important neighborhoods are for broadband buildout.

We spend a lot of time with our portfolio companies dealing with infrastructure issues around real estate and broadband and I can tell you that this is big problem in NYC. Companies that want to move to low cost neighborhoods with interesting buildings like Red Hook, Gowanus, Vinegar Hill, the Greenpoint waterfront, Long Island City, and other similar places simply cannot do that due to the lack of good broadband. If the city wants to see these neighborhoods emerge commercially, they will need to deal wtih the broadband problem. ConnectNYC is a nice way to get going on the problem. If you are struggling to get a fiber installation in your building, give ConnectNYC a try.

#NYC#Web/Tech

Metainstability

I had breakfast yesterday with a friend who had recently relocated to NYC from SF. He told me he was taken with the hyperactivity of NY'ers. I asked him where he thought it comes from. He had a great answer and I am going to share it with all of you.

He said that NY is "meta unstable" meaning that it is inherently unstable and therefore in a constant state of imploding on itself. And NY'ers implicitly understand that. So they only way we can keep the city functioning is to be constantly seeking to upgrade it in real time. So that's why the city is in a constant state of construction. That's why NY'ers are always looking for a better way to do something and a faster way to get somewhere.

This may sound like psycho physics babble. In fact it is. But it also captures something inherent in the NYC psychology that I have felt since the day I arrived here in 1983. This city is in a constant state of seeking to get to a better place. And that is why it is such a great place to be an entreprenuer despite all of the challenges of operating a business in NYC. And it is why I felt at home here the day I arrived and why I suspect I always will.

I'd also like to wish a happy birthday to my partner in our Big Apple adventure. The Gotham Gal. Who brings a measure of stability to our metainstability.

#NYC

Two Must Read Books For The AVC Community

There are many themes that grace this page from time to time. Two of the most common are the rise of startup communities and the role that the Internet can play in allowing society to governing itself. And there are two books out this week that are must reads on these two topics. Further and in full disclosure, they are written by two very good friends. No conflict no interest as it were.

Let's start with Startup Communities by Brad Feld. I met Brad in 1996. He had just moved to Boulder Colorado and was going to help build a startup community there by building a market leading VC firm in Boulder. Sounds audacious? Yes. But he did it. As I was working on the same idea for the past sixteen years in NYC, I was able to watch a parallel universe forming in Boulder with Brad at the center.  In Startup Communites, Brad tells us what he's learned from that experience and how the same thing can be done elswhere. If you want to create a Boulder or NYC tech scene in your community, this is your roadmap, bible, and textbook. You can get it on Kindle today and or pre-order the book for delivery next week.

On to Future Perfect by Steven Johnson. Back in the Spring, Steven emailed me a draft of this book. I put the PDF on my Kindle and started reading. I found myself yelling Yes, Yes, Yes as I was making my way through the chapters. I know most, if not all, of the stories in this book. I have been involved in some of them and have followed the others closely. Those stories tell me that there is a "case for progress in a networked age" and Steven makes that case as only he can, by telling the stories brilliantly and then wrapping the meaning of them together in a crisp, cohesive, and easy to understand narrative that leaves you with a framework to take out in the world. You can get Future Perfect on Kindle or in hardback right now as it was published earlier this week.

The comment thread on my Get Out The Vote post a couple days ago was downright depressing and full of anger and cynicism. So for all of you and everyone else, here is a short 3 min video from Steven talking about the ideas in his book and where they are going. If you need a shot of optimism this morning, watch it.

#Books#VC & Technology#Web/Tech

The AFSE Rec Room

The Academy For Software Engineering (AFSE) is opening in a few weeks. Roughly 125 high school freshmen will be starting a four year program that is designed to prepare them for secondary education if they want that and also for a career in software engineering and web development.

The inspiration for AFSE was the computer science program that Mike Zamansky has built at Stuyvesant High School in NYC over the past 15 years. When I first went to visit Mike at Stuy a few years ago, I walked into his office through a room where a bunch of his students were hanging out after school. These high school students could have headed home after school, or they could have hit the streets. But instead they were hanging out writing code, listening to music, playing video games, and in general geeking out together. I thought "this is where the magic happens."

So when we negotiated with the DOE for space for AFSE at the Washington Irving Campus, I was insistent that we create something similar for AFSE. We got a room and Frank Denbow is leading the effort to deck it out.

He needs the following stuff:

Furniture: Bean bag chairs, couches, small tables, tv stands

Electronics: TVs, game systems, speakers

Books: Technology, entrepreneurship, etc

Misc: Anything else that you think might be interesting to high school students interested in computer science

If you can help, please email Frank @ frank at startupthreads dot com.

#hacking education#Web/Tech

Why Hasn't NYC Produced Many Tech IPOs?

Jeff Bussgang asks an interesting question on his blog.

He suggests that the lack of NYC tech IPOs compared to Boston is a result of:

  • The IPO culture hasn’t fully permeated NYC?  There are only very few public technology companies based in NYC:  I count AOL as the only one with > $1 billion market capitalization, whereas Boston has 30-35 innovation economy companies with greater than > $1 billion market capitalization.  Perhaps Boston CEOs, CFOs and boards feel more pressure to go public sooner and/or are comfortable with the IPO process because they community has done it so many times.  Honestly, this theory doesn’t totally resonate with me as NYC is the heart of Wall Street – all the relevant bankers, accountants and advisors are there.  If any technology hub can build a strong middle market public company ecosystem, it should be NYC.
  • NYC’s tech sectors are out of favor with public markets?  This theory suggests that the sectors that NY is particularly strong in – consumer, advertising technology, media – are out of favor for some reason.  Perhaps the poor performance of the Facebook IPO soured Wall Street on the consumer sector and advertising-based business models?  But then why have consumer plays like Boston-based Kayak, TripAdvisor and Zipcar done so well?  As for the adtech sector, why did DC-based Millenial Media, a mobile advertising network, have such a strong public offering if the sector is out of favor?  Again, I’m not sure this theory holds water.
  • NYC companies are more sizzle than steak?  This theory is that because NYC companies are so heavily covered in the mainstream media, they are perceived to be ahead of where they really are in terms of actual business progress.  E-commerce companies like Etsy, Gilt Group and Rent the Runway get a lot of ink compared to, say, Boston-based Wayfair and RueLaLa.  But if you objectively examined their financials in terms of actual revenue scale and profitability, who is really closer to being ready to file their S-1?  This theory resonates somewhat with me.  For example, there is no TechCrunch reporter in Boston, but a number in New York and Business Insider is a strong local publication that does a nice job cheerleading for the local sector.

I would agree with all of that. Plus as Shai Goldman points out in the comments, time is also a factor:

Hi Jeff, you are missing another reason why NYC hasn't had many IPOs as compared to Boston. Many of the NYC companies that are doing well were started in 2007 or later, so it will take a few more years before they are IPO ready. The Boston IPOs that were stated in this post were started before 2007 I believe. You also forgot to mention Admeld (NYC company) which was a $400M acquisition by Google in June 2011.

I responded in the comments with this:

i think it's all of the above (including Shaig's comment about time)

NYC is a trader town. people like to trade stocks not hold stocks. so what Buddy did is more in line with how NYC folks think. Boston seems to have a long standing culture of building large public companies, like Silicon Valley.

that said, i think we have a couple NYC based companies that will choose the IPO route in the next few years. we are not in a hurry nor are they.

To me this is all about the decades it takes to build a lasting startup community. Boston has been at it since the end of World War II. Silicon Valley has been at it since the 1960s. NYC has been at it since the mid 90s. We will get there. I see it in our portfolio and all around NYC these days.

And while we are talking about Jeff's blog, let's all encourage him to get Disqus on there. He writes good stuff and I am sure he'd get more discussion with a modern comment system.

#VC & Technology