Audio Of The Week: Sarah Beatty and Montgomery Builds

The Gotham Gal loves this conversation with Sarah Beatty about her Montgomery Builds project and suggested that I give it a listen. So I am doing the same with all of you.

Funding Friday: Subway Art

When I got to NYC in the early 80s the subway cars were like moving paintings with graffiti all over the cars. Going down into the subway station was like going to an art show.

This retrospective of Henry Chalfant’s photography of that era at the Bronx Museum captures that period so well and I helped support it today.

AVC Stats

As I’ve been working on a new design and approach to this blog/newsletter, I have been diving into the analytics to understand what all of you are doing with it.

Here are some charts and tables:

1/ The web traffic (desktop and mobile) has risen and fallen over the years, driven by SEO and other factors. MAUs peaked in the 2012/2014 period in the 300k range. It has settled in more recently at 80-100k a month.

2/ The email “newsletter” subscriptions have risen a lot in recent years. For much of AVC’s history, email was not a particularly popular way to read this blog, but in the last four or five years, it has grown a lot, to about 30k active email readers.

The top 50 blog posts of all time are an interesting bunch. Most of them have been written in the last five years, but there are

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The Erasure Protocol

Some crypto projects are developed from scratch. Bitcoin, Ethereum, and our portfolio company Algorand are examples of this. The developers have a vision and they go out and build it.

Other crypto projects evolve from something else. Kin and Props, both created by USV portfolio companies, are examples of that.

A particularly interesting example of the latter model is Numerai>Numeraire>Erasure. USV is an investor in Numerai which is a hedge fund that sits on top of the “The hardest data science tournament on the planet”.

Numerai initially developed the crypto token called Numeraire to allow data scientists to stake their predictions in the Numerai tournament and earn more compensation.

But as the Numerai tournament gained scale and the adoption of Numeraire grew, the Numerai team “realized that the primitives Numerai has built could have a wide range of applications beyond the tournament”.

And so they built the Erasure protocol

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Returning The Fund

I have always felt that every investment in a venture fund should be able to return the fund.

That doesn’t mean that they all will.

In fact, for many funds I have worked on, only one or two investments work out well enough that each of them can return the fund.

So if you have a $100mm fund, you need to look at each and every investment and ask yourself if the company delivers on everything they are seeking to do will that return $100mm to your fund.

It’s a tall order and doesn’t happen that frequently.

But if it never happens, you won’t be in the venture capital business for long.

Time For A New Look

Five and a half years ago, I moved AVC from Typepad to WordPress and rolled out the design that we now have. It has worked incredibly well. It is low maintenance, easy on the eyes, and minimalist, all things I have come to appreciate in a blog.

But I am in the mood to change things up. Maybe it is the arrival of fall weather in the northeast, or watching my daughter and my colleagues at USV do redesigns and some envy as a result. Or maybe it is just time.

Here are the things I would like to achieve with the redesign:

  • Even lower maintenance
  • Much better archives (and better search too?)
  • A new look and feel

I am not sure how long it will take for me to roll this out. I could get it done in a month. Or it could take me many months.

But

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Hypothetical Value To Real Value

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?” So I said to him “you know that deli that you stop in every morning and get a bacon egg and cheese on the way to school?” He said “yes”. I said “let’s say tomorrow the owner says to you, I’m selling the business, do you want to buy it? We make $1mm a year in profits and have for the last thirty years.” Then I said, “how much would

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Video Of The Week: Sofar Sounds

Our portfolio company Sofar Sounds facilitates intimate live music experiences all over the world.

This video gives you a glimpse of what a Sofar is like:

You can go to a Sofar in your community, or you can go to one when you are traveling in a foreign country. Both are great experiences.

You can find a Sofar to go to here.

Funding Friday: Positive Exposure

My friend Holly showed me this Kickstarter for a project she’s been working on for a while now.

POSITIVE EXPOSURE, founded in 1998, utilizes the arts, film and narratives to present the humanity and dignity of individuals living with genetic, physical, behavioral and intellectual differences.

And they are opening an art gallery in Harlem NYC to showcase works that celebrate these individuals.

I backed the project earlier this week and I am sharing it in case you want to back it too.

The Virtue Of Patience

Our portfolio company Duolingo is known for their super popular language learning app. According to Wikipedia over 300mm people all over the world have used Duolingo.

Back in May 2014, Duolingo launched something called the Duolingo Test Center. The idea was to compete with expensive and inconvenient foreign language tests like TOEFL.

It makes sense. If you are in the business of helping people learn a foreign language, you might as well be in the business of helping people demonstrate their mastery of a foreign language.

But there is a “chicken and egg” problem in the foriegn language testing market. If you don’t have a lot of test takers, it is hard to get your test accepted by educational institutions and corporations. But if you aren’t accepted by educational institutions and corporations, it is hard to get anyone to take your test.

Duolingo has been patient, largely because they have

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Unlimited Capital

This post on the WeWork IPO ends with the following observation:

In fact, I would argue that the WeWork bull case and bear case have more in common than it seems: both are the logical conclusion of effectively unlimited capital.

I don’t think there is unlimited capital. If that were the case, every idea, every startup, every person would be able to get the capital they need/want.

And I see proof every day that is not the case.

But it is true that for some things, some companies, some ideas, there is effectively unlimited capital.

Probably the biggest change I have seen in my 30+ years in VC is the huge amounts of capital that are available to “big ideas” like WeWork, Uber, Bird, etc

And the questions to ponder are whether this is a temporary phase based on global macroeconomic conditions or the new normal and whether it is

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Fifty-Eight

Fifty-eight years ago this morning, my mother went to the hospital at West Point New York and shortly thereafter I arrived on planet earth.

I’ve always liked having a birthday late in August, at the tail end of the summer and right before labor day.

It is the most relaxed time of year for me, with the start of the fall season right around the corner.

I plan to celebrate it at the beach with family and friends.

Crypto IRA

I have an old IRA that I don’t pay much attention to. I thought about cashing it out but the tax load to do that was too much for me to stomach. So then I thought about investing it in crypto.

But that turns out to be pretty hard.

I think there is an opportunity out there for a crypto brokerage to offer IRAs or an IRA custodian to offer crypto, or both.

Given the tendency for many investors to buy and hold crypto, it would lend itself to a long term investment product like an IRA.

Seems like an opportunity to me.

The Long Engagement

The Gotham Gal and I met when we were 19 and got married when we were 25. We lived together for most of those six years before we got married. By the time we tied the knot, we knew each other very well.

While venture capital investing and marriage are two different things, I think there are some things one can take from love and marriage into the world of startups and venture capital investing.

One of them is the value of long engagements.

I have never understood why founders want to run a lightning fast process to select business partners who they may have to “live with” for the next seven to ten years.

And yet we see this behavior all of the time. Often it is driven by other VCs who toss in “preemptive term sheets” thus turning a fundraising process into a sprint.

What I would prefer

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Video Of The Week: A Reminder

As the US government thinks about regulating big tech and constraining crypto-currencies, I think a reminder about the value of open markets and freedom to innovate is important.

Funding Friday: Vacuum Tube Speakers

I love when old meets new. And so when I saw this project this morning, I backed it immediately.

Zooming

For the past three or four years, I have been trying to reduce my air travel for a host of reasons (wellness, reducing carbon footprint, increasing productivity, etc) and I would say that this effort has largely been successful.

The main tool that I have used to accomplish this is videoconferencing and although I use whatever videoconferencing software that the other side wants to use, it turns out that I am mostly Zooming these days.

We use Zoom at USV for all of our team meetings and for many of the pitches we receive over video (which has increased significantly in the last few years).

And the vast majority of our portfolio companies use Zoom too.

There are many days when I will be on Zoom for three, four, five hours and I can get a lot done that way.

We had a board meeting yesterday that was one of

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Tumblr

The news hit yesterday that WordPress has purchased Tumblr from Verizon (which owns it by virtue of its acquisition of Yahoo! and AOL).

USV seeded Tumblr along with our friends at Spark in the summer of 2007 and were actively involved in the development of the company until its sale to Yahoo! in 2013.

I maintained an active Tumblog from before we invested in 2007 until October 2016, when I stopped posting there. There was no moment when I decided to stop posting there. I just did.

The narrative around the sale of Tumblr to WordPress is all about Yahoo! paying more than a billion for it and selling it for $3mm. It is absolutely true that Yahoo! never figured out how to turn Tumblr into a business and ending up losing its shirt on the investment.

But it is also true that Tumblr was bypassed by native mobile applications

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Open Finance First, Open Data Second

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.

We have already seen an explosion of assets issued on blockchains and a number of very large and profitable custody/brokerage/exchange businesses built. We expect we will see continued innovation in the open finance (finance 2.0) sector in the next few years while the open data (web 3.0) sector will take longer to develop.

We also think that open finance will inevitably lead to open data as users (both consumers and businesses) will start to understand and appreciate the benefits of increased user control, lower transaction (and other) costs, and other benefits of decentralization.

Awesome Features That I Did Not Know About: Version Management In Google Sheets

One of the joys of using technology for me is discovering awesome features that I did not know about. This happens to me every so often and always brings a smile to my face. So I thought I’d blog about this when it happens to me.

This recently happened with version management in Google Sheets. When I work with a big spreadsheet, I always worry about making some change and messing the entire thing up. I have been using spreadsheets since Lotus123 and have messed up many a spreadsheet. So I like to make copies of my work regularly so I have something to roll back to.

Sometime in the last few weeks, I accidentally deleted a row and could not undo it. So I searched for “version management in Google Sheets” and got this one box answer:

This works for all Google apps but is particularly valauble for Google

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