A VC: Musings of a VC in NYC

My 1985 Nike Air Jordan Investment

A VC: Musings of a VC in NYC

Earlier this week I purchased 1% of a collection of five 1985 Nike Air Jordan sneakers using our portfolio company Otis’ mobile app. I paid $330 for ten shares (out of a total of 1000 shares) implying a value of $33,000 for the five pairs, or roughly $6600 each.

Computer Science For All NYC

A VC: Musings of a VC in NYC

About ten years ago, I started asking why were weren’t teaching computer science to every student in the NYC public school system.

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Being In The Flow

A VC: Musings of a VC in NYC

I have been investing in developer tools since the earliest days of my VC career. The first investment I led in the late 80s was a financing that provided the funds to acquire a programming editor called Brief. It was a text-based editor for PCs. That investment worked out but we didn’t make a lot of money on it. Brief was eclipsed by other better editors. But that did not cool my interest in developer tools.

No Shenanigans

A VC: Musings of a VC in NYC

I was talking to a friend today about company values and how important they are but also how lame so many of them are. I told him that some of my favorite company values come from our former portfolio company Twilio (which in the spirit of full disclosure I am still a large shareholder of).

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Building Healthy Innovation Ecosystems for Your Projects

Speaker: Nick Noreña, Innovation Coach and Advisor, Kromatic

In this webinar, Nick Noreña will walk through an Innovation Ecosystem Model that he and his team at Kromatic have developed to help investors, heads of product, teachers, and executives understand how they can best support innovation in their own ecosystem. He'll also go over metrics we can use to measure the health of our ecosystems as we build more resources for innovators.

Why USV is Joining the Libra Association

A VC: Musings of a VC in NYC

A new blockchain & cryptocurrency project, Libra , was announced today. Libra has been incubated by Facebook. USV will be one of the founding members of the governing body, the Libra Association.

USDC

A VC: Musings of a VC in NYC

I just bought some US Dollars today. I do that many days. But the dollars I bought today are crypto assets, like Bitcoin and Ethereum. These US Dollar assets are called USDC and they are issued by an industry consortium called Centre , led by Circle and our portfolio company Coinbase. I expect many other companies will join the Centre consortium in the coming months and years. I have been waiting to buy USDC for quite a while.

Some Thoughts On Crypto

A VC: Musings of a VC in NYC

The crypto sector is in an interesting phase right now. The market has rallied from its lows this past winter and is up a lot in 2019: But Bitcoin now makes up almost 70% of that aggregate market cap. In some ways, Bitcoin is the one protocol that has found lasting product-market fit.

Stack Today, Stack Tomorrow

A VC: Musings of a VC in NYC

Our portfolio company Stack Overflow (which I like to call Stack) is an Internet Treasure. My friend Mark Pincus introduced me to the concept of an Internet Treasure many years ago and I am a fan of the notion. In my view, an Internet Treasure is a service on the Internet that is wide open, gets better when more people use it, and solves a need that many/all of us have. Wikipedia is an Internet Treasure. Quizlet is an Internet Treasure. Reddit is an Internet Treasure.

Entertainment vs Utility

A VC: Musings of a VC in NYC

The news this week that HQ Trivia has finally called it quits reminded me of this post I wrote back in 2012 about the difference in sustainability (and thus value) between entertainment and utility apps. What is interesting to me is if you could use a social app or an entertainment app to get to another place (distribution, platform, blockchain, financial services, etc, etc). That feels like a much more sustainable place to be. But very few social apps and games have been able to do that.

State of MENA Startups 2019, Report

MAGNiTT and 500 Startups jointly launch first 'State of MENA Startups 2019" report. Survey findings reveal insights on trends in fundraising exercise, exit opportunities, hiring, and growth optimization.

Funding Friday: The 7th RiffTrax Live Campaign

A VC: Musings of a VC in NYC

These guys have been using Kickstarter, and a bunch of other online platforms, to support their live shows riffing on “campy B-movies.” ” I love the underground, indie creative community and these guys are a great example of that. I backed this project this morning. USV TEAM POSTS: Nick Grossman — Feb 17, 2020 Cryptographic Identity Albert Wenger — Feb 11, 2020 Birthday Wish: Contributions to Climate Crisis Collective. crowdfunding

Video Of The Week: Duolingo On SNL

A VC: Musings of a VC in NYC

Our portfolio company Duolingo was the subject of a funny skit on SNL a few weeks ago. hacking education

Helium

A VC: Musings of a VC in NYC

One of the areas of blockchain innovation I am most excited about is building open, permissionless, and decentralized technology infrastructure.

Open Finance First, Open Data Second

A VC: Musings of a VC in NYC

My partner Nick put together a deck outlining USV’s approach to crypto investing earlier this year and we have been using it with founders and investors since then. One slide I particularly like from that deck is this one which describes how we think the crypto market will develop over time.

The Startup Funding Gap

This resource discusses the gap between early funding from friends/family and the more substantial rounds from angel groups and VCs. Why does this gap exist and what can be done about it?

Grinding

A VC: Musings of a VC in NYC

It is tempting to search for the one magic move that will make everything better. A new VP of Sales. A new database layer in your tech stack. A new brand for your company. Moving everything to the cloud. More capital in the business. But it is rarely one thing that a business needs to succeed. It is often a little bit of everything. Back in the early days of Twitter, we could not keep the website and API up.

Tech Jobs For All Who Want Them

A VC: Musings of a VC in NYC

The tech sector is the fastest growing sector of the economy in NYC and around the US and around the world. The tech sector offers high paying jobs and a growing number of them. But, as we all know, the tech sector lacks the gender and racial diversity that would allow everyone to benefit from this growing sector of the economy. Most of the studies that have looked at the lack of diversity point to a skills gap standing in the way.

Cash Management In Startups

A VC: Musings of a VC in NYC

When I was in my mid-20s and had just gotten a job in venture capital, I read a piece on Alan Shugart , the larger than life founder of Seagate, one of the most successful disk drive companies. Alan was quoted as saying that “cash is more important than your mother.” ” That got my attention because mothers are really important. Over the years, I have learned what Alan meant. Cash is everything in a startup. It is the fuel that keeps the car running.

Whales Not Unicorns

A VC: Musings of a VC in NYC

I have been vocal here that I do not like the term Unicorn to describe highly valued venture-backed startups. Unicorns are mythical creatures that don’t really exist and highly valued venture-backed startups do exist. They might be rare, but they are not fictional.

What To Work On

A VC: Musings of a VC in NYC

My partner Brad likes to ask about the distinction between doing things right and doing the right thing. His observation, which I totally agree with, is that many people and companies do things right but don’t do the right thing. Taking the observation one step further, I have seen that doing the right thing the wrong way can actually result in something important and successful whereas doing the wrong thing the right way rarely does. So that begs the question “what should I work on?”

What Will Happen In The 2020s

A VC: Musings of a VC in NYC

It’s 2020. Time to look forward to the decade that is upon us. One of my favorite quotes, attributed to Bill Gates, is that people overestimate what will happen in a year and underestimate what will happen in a decade. This is an important decade for mankind. It is a decade in which we will need to find answers to questions that hang over us like last night’s celebrations.

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Why Positive Cashflow Matters

A VC: Musings of a VC in NYC

Venture backed companies have a strange relationship to positive cashflow. Because they have financial backers who can and do finance losses, they tend to operate in the red for a long time. In the early days it makes sense to burn cash. If you do not have revenues, you can’t generate cash. And if you can’t grow your revenues without investing out ahead of income, then you also need to be able to operate in the red.

The Education Transformation

A VC: Musings of a VC in NYC

Back in March 2009, USV hosted an event called Hacking Education. It was the beginning of our effort to invest in the transformation of the education sector. A few weeks ago, USV held its annual meeting, roughly 15 years after we closed our first fund. And our partner Rebecca gave a presentation on our eduction portfolio, which is now one of the strongest parts of our entire portfolio. As Rebecca was developing her presentation, I wrote an email to her that said: when did we do Hacking Education?

Business Model Innovation

A VC: Musings of a VC in NYC

I’ve shared my views on this before here at AVC. I believe business model innovation is more disruptive than technical innovation. A good example of this was moving from web apps to mobile apps, which was largely a technical innovation. While the move to mobile certainly created some new companies, it largely strengthened the market position of the big Internet companies because there was little to no business model innovation. Compare that to the move from desktop computing to the web.

Our Helium Hotspot

A VC: Musings of a VC in NYC

Back in June I wrote about a company we recently invested in called Helium. Helium is creating a decentralized low power and low bandwidth wireless network for the exploding number of smart devices out in the world.

The Hit Rate

A VC: Musings of a VC in NYC

This simple and short blog post by the folks at Correlation Ventures contains the key to venture capital returns – the hit rate. In the Correlation post, they define “hit rate” as: the percent of invested dollars generating a 10X or greater return.

What Happened In The 2010s

A VC: Musings of a VC in NYC

My friend Steve Kane suggested I take a longer view in my pair of year end posts this year: What, no decade end/decade ahead posts? — Steven Kane (@stevenkane) December 26, 2019. And so I will. Here are the big things that happened in tech, startups, business, and more in the decade that is ending today, in no particular order of importance. 1/ The emergence of the big four web/mobile monopolies; Apple, Google, Amazon, and Facebook.

Creating A Competitive Shaving Market

A VC: Musings of a VC in NYC

The FTC filed a complaint to stop the merger of Edgewell (Schick) and Harry’s yesterday. I don’t have a vested interest in this case in any way (other than having had a summer job working for Gillette in 1980). But it is a very curious action in my view. Over the last decade, two new competitors have emerged in the shaving market in the US, Harry’s and Dollar Shave. They have brought innovation and competition to a market that has long been dominated by Gillette and Schick.

Justworks

A VC: Musings of a VC in NYC

I just posted about USV’s investment in Justworks on the USV blog. I have known Isaac Oates for over a decade and he’s a terrific entrepreneur and has built a great company which offers a fantastic HR solution to small and mid sized companies. If you don’t love the payroll and benefits solution your company uses, go here and find out how Justworks can change that for you and your employees.

Video Of The Week: Angela Duckworth – Grit

A VC: Musings of a VC in NYC

A few years ago, we invited Angela Duckworth to speak to our portfolio company CEOs at our annual get together. It was a terrific talk that absolutely impacted the way these CEOs thought about hiring and managing their teams.

CS Education Week

A VC: Musings of a VC in NYC

This week is CS Education Week. There are CS Education week events all around the world, mostly in schools where students will do an hour of coding. In NYC, where I do most of my CS Education work, there are CS Education week events in many/most of the public school buildings this week.

Scaling In Lower Cost Locations

A VC: Musings of a VC in NYC

This is a topic I’ve written about a bunch over the years. I feel like it is becoming more urgent every day. Last week I heard some shocking numbers about salary levels for certain kinds of engineers in the bay area. I checked them out with a few of our bay area portfolio companies and they were more or less corroborated.

Hypothetical Value To Real Value

A VC: Musings of a VC in NYC

I remember when my son came home one day in high school and told me he wanted to “day trade” along with some friends who were doing it. We opened a TD Ameritrade account and staked him with a small amount of money, enough to trade but not enough that if he lost it all it would be an issue. And off he went. A few weeks later he asked me “Dad, what is a PE ratio?”

Unsafe Notes

A VC: Musings of a VC in NYC

I was reminded yesterday how much of a s**t show raising seed capital via SAFE notes is. I can’t and won’t get into why I was reminded of that, but let’s just say nobody wants to go there. So I thought I’d repost the important parts of a post I wrote on this topic a couple years ago. I have never been a fan of convertible notes. USV has done quite a few convertible and SAFE notes.

The Management Rights Letter

A VC: Musings of a VC in NYC

A friend asked me over the weekend “why do VCs ask for a management rights letter when they make an investment?” ” A management rights letter is a short agreement between a company and an investor to allow them certain “management rights.” ” These are typically the ability to attend board meetings, the ability to have access to financial reports on a regular basis, and the ability to advise and consult with the management of the company.

Founder Control

A VC: Musings of a VC in NYC

I have not written a lot about this issue. As I said in this post , I am generally a “one share one vote proponent”, but I have supported founder control provisions in a few companies where I was or am on the board. These provisions make me uncomfortable but there are solid arguments for them, particularly when you are taking a company public and want to be able to keep it independent.