Posts from Union Square Ventures


I posted this on the USV blog yesterday but thought I should share it with the AVC community as well.


We are big fans of communities at Union Square Ventures. The partners in our firm have been investing in Internet communities for almost 15 years and we are constantly reminded of the power of the community. Whenever we are presented with the opportunity to invest in an emerging new Internet community, we take it very seriously.

We were presented with exactly that opportunity a few months ago by Chris Poole, also known on the Internet as "moot." When Chris was 15 years old he launched one of the most powerful Internet communities, 4chan, from his bedroom. For eight years, Chris has been operating, moderating, building, observing, and learning from 4chan. Last year, Chris recruited a small group of engineers and designers and started building a new Internet community called Canvas.

Canvas is a real-time canvas on the Internet. It is a community where everyone can come to create imagery together. It is inspired by the best of 4chan but is aimed at much more. At the heart of Canvas is the concept of remixing. Every image on Canvas has a remix button which allows users to quickly modify the image and repost it. The result are threads that are anchored by the initial image. Here are a few of my favorite examples:

Ze Frank Scribbler

Charlie Sheen – I Probably Took More

All The Things?

Redrawn Icons

4chan is famously anonymous. It is raucous, unruly, and tremendously creative. The architecture of Canvas is subtly different, and although anonymous posting is allowed, you must first register a login to participate.

There aren't any filters on Canvas. You see what is happening there in real-time. Sometimes the result is inspiring. Sometimes the result is provocative. I liken it to real world creative communities like the Lower East Side of NYC when I arrived here in the early 80s. The most interesting creativity comes from places that aren't always manicured and sterile.

Canvas is very much a work in progress. The service is still in invite-only beta and requires you connect with Facebook to register. Chris and the Canvas team are committed to building the most exciting and interesting community for real-time creativity on the Internet, and we are thrilled to be along for the ride. You can get on the ride as well because Canvas is hiring. Their jobs page is here.

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Of all the things we have done at USV this year so far, the thing I am most proud of is the work of Gary Chou on our USV Jobs page. Gary wrote a bunch of code that hits the Indeed jobs service (Indeed is a USV portfolio company) and finds all the open jobs across our entire portfolio. The code then parses through the jobs, finds out where the jobs are, what kind of job it is, what the job title is, etc. And then all of the jobs are published and sorted on

Right now, 24 of our 32 active portfolio companies are hiring. There are 557 jobs open across 27 cities and several continents. I am proud of Gary's work on this service and I am proud that our firm is helping to facilitate that kind of job creation activity.

All of us at USV constantly get emails from people who want to work in our portfolio. We love getting these emails because our companies are always in search of great talent to hire. Often these emails come via an introduction from a trusted relationship. And often they come in unsolicited. But they almost always come without much context. So it requires a fair bit of work to take that initial email and turn it into a good lead for our portfolio companies.

Our hope is that can change that. If you want to work in a USV portfolio company or if you have a friend or contact that wants to do that, a visit to before you send the email can help a lot. There's a big difference between an email that says "I'd like to work in one of your portfolio companies" and one that says "WorkMarket is looking for a QA Engineer and I know of a really good one I'd like to intro you to."

We are all hoping that will result in a lot more of the latter and a bit less of the former. And if you know of a great QA Engineer in the NYC market, please send me an email.

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Open and Closed

At Union Square Ventures, we pride ourselves on our transparency and openness. Wednesday's Airbnb post and Paul Graham's followup posting of our email thread on that opportunity is a good example of where being open benefits everyone involved, from Airbnb, to Y Combinator, to Union Square Ventures, and mostly to entrepreneurs out there who have always been curious what really goes on.

But there are plenty of times when we are not open. If an entrepreneur comes in and pitches us on an investment, we don't blog about it. We have all sorts of things going on in our portfolio right now that we'd love to talk about but obviously we can't and won't. And when we make an investment that the people involved decide should be kept quiet, we are fully capable of doing that.

Today, I wrote a short blog post on about our portfolio company Kickstarter. We've been an investor in Kickstarter since the fall of 2009 but are only talking about it now that everyone involved is comfortable with making the investment public.

We prefer to be open and transparent, but that is not always the appropriate or desired posture. And when we are expected to be discreet, we are fully able to do that.

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Originally uploaded by charmaine_cooper.

When you walk into our conference room at Union Square Ventures, you see the box of cereal on the right on our conference room credenza next to a wifi router and a jar of Jolly Ranchers. It is there because we are big Obama fans? Nope. The cereal box is a reminder to back great entrepreneurs whenever they walk into our office regardless of what they pitch us on (as long as its in our investment universe).

Let me explain. Cliff Elam made a suggestion for a blog post in the "bloggers block" comment thread. He said:

Tell us about something you saw that was intensely interesting but was not something you'd invest in. And why.

So here's the story of how we missed Airbnb, one of the best startups to come our way in the past few years.

The Airbnb founders came out of the winter 2009 Y Combinator class. They came to see us during their time at YC. They told us about a great stunt they pulled at the Democratic Convention in Denver (in which Obama was nominated). They bought a bulk supply of generic cheerios and made up these cereal boxes to generate seed capital for their startup. Here's how one of the founders Joe Gebbia describes it:

We made 500 of each (Obama O's and Cap'n McCains). They were a numbered edition on the top of each box, and sold for $40 each. The Obama O's sold out, netting the funds we needed to keep Airbnb alive. The Cap'n McCains… they didn't sell quite as well, and we ended up eating them to save money on food.

I asked them if they'd leave a box of the cereal for us and it has been sitting in our conference room ever since. Whenever someone tells me that they can't figure out how to raise the first $25,000 they need to get their company started I stand up, walk over to the cereal box, and tell this story. It is a story of pure unadulterated hustle. And I love it.

At that time, Airbnb was a marketplace for air mattresses on the floors of people's apartments. Thus the name. They had ideas for taking on other listings but they had not yet made much progress on them.

We couldn't wrap our heads around air mattresses on the living room floors as the next hotel room and did not chase the deal. Others saw the amazing team that we saw, funded them, and the rest is history. Airbnb is well on its way to building the "eBay of spaces." I'm pretty sure it will be a billion dollar business in time.

We made the classic mistake that all investors make. We focused too much on what they were doing at the time and not enough on what they could do, would do, and did do. I am proud that our portfolio is full of companies where we saw the vision before other investors did and backed a great team. But we don't always get it right. We missed Airbnb even though we loved the team. Big mistake. The cereal box will remain in our conference room as a warning not to make that mistake again.



We are taking a break from our regularly scheduled programming (MBA Mondays) to share some exciting news about our newest portfolio company. I wrote this post on the USV blog and am cross posting it here.


At Union Square Ventures, we seek to invest in large networks of engaged users. And we believe that the new beachhead for creating large networks is the mobile device.

When you look at the engaged user on the mobile device, the thing you notice is that messaging is the killer app. People like to talk and increasingly people like to text. But sms has all sorts of issues. It costs money to send a text. There has been a maddening lack of innovation in the sms channel.

So it makes total sense that something will come along and replace texting and we believe that thing is mobile push. And we think the killer app for mobile push is messaging. And for the past year, we have been seeking to make an investment in mobile messaging built on the push channel.

There are no lack of startups innovating in this sector. In fact, there are a ton of them. It is a very crowded space and we have had the benefit of meeting with and getting to know many of the teams working in this sector. There are a handful of excellent teams and excellent apps in this sector. Choosing a team to back has been hard for us.

Today, we have finally made that choice. Our newest portfolio company, Kik, has announced that it has raised a round of financing from RRE, Spark, and our firm. I am joining the board along with Adam Ludwin from RRE.

You may wonder – how did we decide which mobile messaging startup to back? For us, it came down to the product and the team. The Kik product is simple, fast, and elegant. It gets the job done and doesn't get in the way. And the team, led by founder Ted Livingston, has a vision for how to package a lot of power and functionality into a simple, easy, and quick utility. We believe that less is more and that message delivery speed is paramount.

If you want to experience Kik yourself, please visit the download page and give it a try.

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My Partners

It's friday so it's time for another suggested post from the amazing comment thread on the bloggers block post. Mark Suster suggested:

how about a post on your partners: who they are, how you guys work together & a bit more about how you guys reach decisions on deals?

I have two and half partners at Union Square Ventures.

Brad Burnham – Brad and I founded USV together in the summer/fall of 2003. We had both been in the venture business for more than a decade, had made a fair bit of money, but were still hungry to prove ourselves. Brad is the strategist and the most principled investor in our firm. It was Brad's idea to write a treatise on venture capital and the internet before we set off to raise our first fund and that exercise we did together continues to be our guding light. Brad is the person behind phrases like "the application layer of the technology stack" and "large networks of engaged users" that I use all the time. He gives me most of my good stuff which I often get credit for.

Albert Wenger – Albert was the President of Delicious until it was sold to Yahoo!. After that sale, he joined USV as a venture partner and as a general partner when we raised our second fund in 2008. I can't image operating USV wihtout Albert but we did for our first several years. Albert is hacker who still codes stuff up in his spare time. He's been a CTO, a VP Engineering, and has run businesses. And he is a great investor too. And he's the most underrated blogger in our firm. Albert has a very analytical mind, asks piercing questions, and thinks deeply about the web, its underlying technologies, and new business models.

John Buttrick – I can't link to John because he's managed to avoid any social media presence in his first fifty years on planet earth. We will get him on our website, but I'm not confident we will get him to do much more than that. John joined us officially in December when we raised our Opportunity Fund. You can read a bit about him in my post on the Opportunity Fund. John's been hanging around USV since formation advising us on legal, financial, and operational stuff. He's helping us evaluate the more established businesses we look at, but more than that he's helping us rethink the way we raise funds, structure funds, communicate with our investors, and run our firm. It's great having him around.

We run our busines in the model of the "sleepy little firm" that I spent my first ten years in the venture capital business with. We all work out of a single office. We have a total of six and half (John is half time) people at USV. It is quiet in the office on many days when we are out and about visiting companies. We value trust, respect, and consensus. We don't invest in companies that everyone is not 100% behind. We never vote. We don't exercise vetos. We don't yell. We don't blame each other for our failures, we blame our team, our process, and our collective decision making.

Many people think I am the "lead partner" at USV. That could not be further from the truth. Brad should get most of the credit for setting a strategy that we have executed very well. Albert should get the credit for steering us into new areas we would not have been in without him. I get to be the front man but that's really the easisest job in the partnership.

We are a true partnership where each person contributes deeply to our collective success. Trust and respect are the key operating words. And once a partner has worked one fund with us together, we are equal partners and share in the profits equally. We don't want to have too many partners and I don't think we will add many more. Maybe one more, maybe not. We will see. We are doing fine with the ones we have right now.

I love working in this partnership. It is easy, it works, and it has proven itself.

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Some New Stuff From USV

Yesterday we kicked off "office hours" for USV. We did it with this post on the USV twitter account. We got 68 responses in a few hours for 32 slots. So we've taken down the signup form (which is why the link in the tweet doesn't work). The first 32 responses will get priority but we will try to accomodate everyone who filled out a form in the coming months.

The idea for office hours comes from our friends at First Round Capital and Foundry Group. Both Josh Kopelman and Brad Feld have written about the benefits of "first come first serve" meetings with no filters and no qualifications. We also believe in a level playing field for all entrepreneurs and have been wanting to do this for a while now.

I'd like to recognize Gary Chou, the General Manager of the USV Network, for his work in getting this going. Gary's got a "can do" attitude and he's been putting together lots of new stuff for us and our portfolio companies since his arrival this summer.

Another new effort from USV courtesy of Gary and Christina is our USV Jobs twitter account. We try to tweet out a job or two every day. We get the feed of job openings from our portfolio company Indeed and then we curate it to highlight interesting jobs in our portfolio companies.

If you are interested in working in one of our portfolio companies and/or meeting with one of us for 15 minutes, I suggest you follow the USV and USV Jobs twitter accounts. Based on yesterday's response to office hours, we need to be doing more stuff like this. And with Gary and Christina's help we will.

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Dave McClure's Investment Thesis

I’ve been a fan of Dave McClure since I met him some time ago. He has strong opinions, he shares them liberally, spices them up with foul language, and finds himself involved with a lot of interesting entrepreneurs and companies. In a nutshell, he’s my kind of investor.

Yesterday he outlined his investment thesis on his blog. I’ve heard this thesis verbally from him a few times now, but I am so happy to see him write it all down for everyone to see. If you are a web/mobile entrepreneur, go read it.

Dave clearly articulates the new realities of tech investing. Here is the way he puts it:

Fast Forward to Twenty-Ten, and let's take a look at these fundamentals, with a specific lens on the consumer market & internet startups:

•    PRODUCT now typically means a website or service, run on low-/no-cost open source software, hosted in the cloud on low-cost servers, developed in a few months (or a WEEKEND!) by a small team of 1-5 developers, who continuously test & iterate in real-time with online customers

•    MARKETing now typically means using a variety of online distribution channels via paid & organic search (SEM/SEO) on Google, viral/social amplification on new media platforms & social networks like Facebook, Twitter, & YouTube, and the quickly-growing mobile platforms of Apple iPhone & Google Android. With the exception of search, most of these distribution channels didn't exist 5 years ago, yet they now easily reach over 100M-500M+ users, with very low cost and measurable marketing campaigns such that even a small team can reach billions of people globally.

•    REVENUE can now be collected easily via a variety of online payment, transactional e-commerce, digital goods, subscription billing, lead generation, CPM/CPC/CPA advertising.  Many people buy things online now, and many companies are even bought for usage & users ahead of revenue.  

Longtime readers of this blog will recognize all of these themes but even so, I like the way Dave lays them out. The world has changed a lot for tech entrepreneurs and VCs are adapting to the new realities. Some VCs will adapt. Others will decide not to raise another fund, spend the next five to ten years winding up their older funds, and then retire.

Dave’s thesis is different in some ways than our thesis at Union Square Ventures. We are not as interested in smaller revenue focused companies that aim to be sold for $25mm to $50mm. We’d like to see our portfolio companies aim a bit higher than that. Even so, we will certainly end up with more than a few companies that will sell in that range. That is a successful outcome for us too if we can own 15-20% of the business and have less than $5mm invested, which is the case for many of our companies.

We tend to favor big networks of scale, like Etsy, Meetup, StackOverflow, Twitter, Zynga, Foursquare, Indeed, Tumblr, Disqus, among others. We believe that there are going to be a lot more opportunities like these that we can invest in.

But regardless of whether you are Dave McClure or Union Square Ventures, you need an investment thesis and you need to stick to it. And I believe that you need to make it public, articulate it well, and make sure everyone, particularly your target entrepreneurs, know what it is and why.

Dave did that yesterday and he did it well. Kudos to him. I think it will serve him very well.

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StackOverflow announced yesterday that our firm Union Square Ventures led a $6mm round of financing in their company yesterday. My partner Brad is joining Stack's board and he will post about this investment on sometime this week. 

However, given Kid Mercury's persistent advocacy of niche communities here at AVC, I thought I'd make a couple remarks.

Stack makes StackExchange, a hosted software solution for creating niche communities. It is the software that powers the super popular StackOverflow community for programmers and also communities like ServerFault (for sys admins), SuperUser (for tech enthusiasts), MathOverflow (for math geeks), and many more.

These communities are all about helping each other out. You want to know the magnitude of graham's number? Well then head over to MathOverflow and ask the question and get some help. You want to know about LVM Mirroring vs Raid 1? Then head over to ServerFault and ask the question and get some help.

We think this is a powerful new take on the broadly popular Q&A model on the web. You can go to Yahoo! Answers, Mahalo, or Quora and ask any question. But our bet is vertical communities will make better Q&A sites in the long run as people aggregate around what they know and what they need to know.

So if you have a niche community that is vibrant and in need of a Q&A solution, then look for StackExchange 2.0 which is coming soon. 

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Last week I told Mark Josephson, CEO of, that I have a greater appreciation for the hard hiring work all of you entrepreneurs do right now.

Yesterday all of the investment professionals in our firm sat in a conference room for seven hours and waded through hundreds of amazing applicants for the two open positions we have at Union Square Ventures. We cut the 616 applications (359 for Analyst and 257 for General Manager) down to 75 (47 for Analyst and 28 for General Manager).  

For the past week, my partners and I have done little else but work on this project. It is exhausting work. I believe we could hire any one of at least three quarters of the applicants and be very happy with our choice. But we only have two positions and we owe it to ourselves and the candidates to be thorough and make the very best choice we can.

People and Product are the two most important things a company has. In our case, our product is our ongoing work so we are even more people dependent than most of the companies we invest in. But regardless if you are a product oriented business or a service oriented business, you cannot invest too much time and money on your people. It is critical. 

Our hiring process has always been a bit unusual. We announce the open position on our blog and invite anyone to apply. We do not require a resume. In fact, we prefer that candidates not send one. We want to see the candidate's online presence and we want to know what they have accomplished.

Looking at over 600 online presences and mapping that to what they have accomplished is time consuming work but the insights you get from doing that are incredible. I said to my colleagues yesterday that it was like we interviewed 600 people yesterday.

That number is now down to 75. My partner Albert has a post up on the USV website explaining where we are at in the process and where we go from here (phone screens). This is our third hiring update post so far and I am sure we will do a few more. The candidates seem to love the transparency of this process and how we are communicating. That's a big takeaway for me. If you use the web to source your candidates, you also need to use it to communicate to everyone in the process. It works very well.

I'll end this post with a graphic from Albert's post. Check out his post because he has a bunch more graphical data including some great word clouds. This is a map of all the places in the US that our GM candidates come from. We also have a number of candidates from outside of the US but we couldn't get them on the map for some reason.

Gm candidates

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