Wednesday, July 7, 2010
Some Useful Perspective
Yes it is officially hot in New York City these days. I don’t know if I can stand this when I am older, but for now I quite enjoy the huge seasonal differences. They are a reminder that much as we may obsess about things that happen at work or at home, there are much bigger forces surrounding us (we all live on a rock traveling through space). This is a useful bit of perspective. One of the books that is part of my summer reading adds to this view: 13 Things that Don’t Make Sense: The Most Baffling Scientific Mysteries of Our Time ( http://www.amazon.com/gp/aw/d.html?qid=1278504607&a=0307278816&sr=8-1 ). I have only read the first chapter so far and it is already well worth the price of the book: a concise summary of the dark matter and dark energy dilemma that also serves as an illustration of the strangeness of scientific progress (think Kuhn). It feels good to take a moment off to marvel at the wonder that is all around us before diving back into the details of our lives (and the sauna that is New York City).
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Tuesday, July 6, 2010
A Run In With Bacteria
I love to blog about all the awesome things that the Internet is bringing and how that creates great investment opportunities. But once in a while I have first hand experiences that remind me how much innovation could/should/will (?) occur in other areas. Last week was one of those. One of our kids suddenly had areas of skin the size of quarters essentially dissolve. The pediatrician thought that it was some kind of bacterial infection. But here is where the interesting part starts.
In order to determine what exactly it was the doctor swabbed some skin and then the lab had to culture the bacteria. This turns out to be a surprisingly longish process. Even the fastest available diagnostic, a rough cut to determine if it is MRSA takes two hours (that test came back negative but is apparently not super accurate). The more definitive determination that it was Staph Aureus took over 24 hours and the so-called sensitivities (figuring out which antibiotic works best) apparently require several days. Waiting several days was not an option which meant that the doctor prescribed an especially strong and broad antibiotic.
Now a medical Tricorder may be asking a bit much, but given that we have instant Strep and E.Coli tests available, getting a quick, fast and accurate reading on other bacteria would seem like a realistic opportunity. Based on our experience last week I sure hope someone is working on this! In the meantime, I am happy to report that the antibiotic appears to be working.
Tags: medicine innovation bacteria infection i
Wednesday, June 30, 2010
Foursquare Financing
Yesterday saw the “wire transfer heard ‘round the world,” as Bryce put it in a tweet. Foursquare did indeed close a Series B financing as has by now been widely reported. My job of writing a blog post about this has been made very easy: Dennis wrote a terrific announcement on the foursquare blog, Ben Horowitz from “A16Z” does a great job in his post of describing why all the investors are excited about Foursquare; and my partner Fred provides a refreshing perspective on the process.
The only thing I want to add is that I was hugely impressed by how much progress foursquare made during this time period. Whether it was negotiating a lease, forming new partnerships or recruiting some amazingly talented people, it appeared as if the company barely took a breather — in a situation that might have completely paralyzed others. That’s a great testament to the strength and conviction of the team.
All of us at USV are thrilled to continue supporting Dennis, Naveen, Harry, Evan, Alex and the rest of team foursquare on their exciting journey.
Tags: foursquare
Tuesday, June 29, 2010
Supreme Court in High Gear
The Supreme Court handed down a bunch of rulings yesterday. The two that I find most interesting relate to patents and guns. Both rulings are disappointing, as I am against software patents and for stricter gun control. But they are also not as terrible as I feared they might be. As far as I can tell, on both counts the Supreme Court handed down fairly narrow rulings. The initial analysis over at Groklaw of the Bilski decision (patents) suggests there are plenty of openings in this ruling for potentially stricter limits on software patents. Similarly, the Chicago gun decision appears to still keep it possible for cities to attempt to regulate gun ownership (just not ban it outright). Unfortunately, this means that companies will continue to get sued over frivolous software patents and cities will continue to be sued over gun control ordinances. But the silver lining here is that this lower courts still have room to move and for new cases to make their way back to the Supreme Court. Let’s hope that at some point we will have a different Supreme Court too!
Tags: patents gun_control politics supreme_court
Monday, June 28, 2010
Some Thoughts on the Super Angel Funding Discussion
Paul Kedrosky has kicked off an interesting debate by suggesting we will see a “super-angel crash.” Paul’s initial post resulted in a bunch of strong disagreement in tweets and comments, enough to cause an update to the initial post. While the update says many nice things about “super angels” and a bunch of negative ones about “incumbent vcs,” it ends on the same note by reiterating that we are seeing too much of a good thing.
From a social perspective I believe that overfunding of startups (which is what Paul argues is happening) is actually a good thing. Even if a bunch of super angels wind up not succeeding, there will be a lasting benefit to society from training many more entrepreneurs and people who know how to work at a startup.
From an individual super-angel perspective, I have no doubt that there will be some that will not succeed. Even lame-old rational economics would suggest this. Whenever a new set of investment opportunities emerges, capital should flow in until the marginal investments have essentially no return. But since funds have highly variable outcomes, for the marginal players to have zero return on average requires some of them to do really poorly. Now add to that the fact that investors tend not to be rational and are likely to rush in even past the point of marginal returns being zero and you have a fairly strong case for a future “super-angel crash.”
I don’t think, however, that this is likely to impact the authentic super-angel innovators (I won’t attempt a list as I will surely forget and upset someone), but rather the folks who are coming late to this party. These are funds that most of us haven’t even heard of but are nonetheless putting money out as if it were going out of style. And it includes yet another wave of corporate incubators and strategic investment vehicles that rolls around at roughly the same time.
There is another reason that I feel fairly confident in this prediction: I have been late to the party myself. Towards the tail end of the first bubble (late 1999, early 2000), I and two partners raised $25 million when none of us had any meaningful investment experience. By being somewhat disciplined and very lucky we managed to lose only some of that money, but we lost money for investors nonetheless. The same will likely be true for many folks forming super-angel funds too late.
Tags: super_angels funding_cycles venture_capital
Friday, June 25, 2010
Concentric Circles of Angel Investors
First time entrepreneurs who are just getting going frequently ask me about how to find angel investors. I usually tell them about my theory of “concentric circles” of angel investors.
- The innermost circle are people who know you and love you and will give you money no matter what (even if you were opening an ice cream store on the South Pole). These are the friends and family angel investors.
- The next circle out are people who care deeply about the thing itself that you are doing. So if you are starting an online fashion company this might be a successful fashion designer.
- The circle beyond that are professional angels/super angels.
- And finally the circle beyond that is everyone else.
The gist of my theory is that each time you go further out from one circle to the next it gets 10x harder to convince someone to give you money. I am beginning to think though that there are now so many professional or at least semi-professional angels that maybe the second and third circle out should be in different order.
Tags: startups angel_investors
Thursday, June 24, 2010
Big Victory for Google and UGC in General
Yesterday, a judge granted YouTube’s Motion for Summary Judgment in the Viacom v. YouTube litigation. This is a major victory for all user generated content (UGC) companies because it strongly affirms the DMCA safe harbor. Congrats to David Drummond and the legal team at Google. Given that Google has been defending Internet freedom on a number of fronts it must feel good for them to score this victory. Great coverage can be found over at the EFF.
With this decision it is even more important than ever before that any web company that has UGC — and that includes just having forums! — make sure to register with the Copyright office ($105). In addition to registering you also need to include appropriate DMCA language in the terms of service with a reference to the designated agent registered with the Copyright office. I am often surprised to find that startups that have extensive UGC components are not familiar with this.
Tags: google digital_millennium_copyright_act youtube viacom copyright
Wednesday, June 23, 2010
UI/UX: Form Laziness Nuisances
I complained about one pet peeve on Monday (stock certificates for startups) and can’t help myself with another one today: programs that complain about user inputs that are easily fixable. Yesterday I copied a bunch of email addresses from Jobscore and pasted them into the bcc field of an email in Outlook. The emails were comma separated. Outlook didn’t like that — and popped up a dialog saying something was wrong, including suggesting that I replace commas with semicolons. I copied the emails into TextEdit and did a find and replace, but only after first tweeting that I really would expect Outlook to do this for me.
This is just one example of a whole class of problems in which developers did not take the time to make a form accept a likely range of inputs, but instead insist on a specific format. Phone number input fields that don’t allow dashes or dots in the numbers are a perfect example. It is trivial to allow these and discard them after the fact. Another one is that almost all payment input forms ask users about the type of credit card. That is of course completely redundant information because the first four digits of the card number encode that information!
While I am at complaining about user interface annoyances here is another one: browsers not letting you tab into a list box. When filling out a form, I really like not having to move the mouse pointer and just use the keyboard instead. But Firefox and Safari both tend to skip over lists instead of popping them open and letting me use the keyboard to move to the right entry.
Tags: ui ux
Tuesday, June 22, 2010
Payment Innovation and Net Neutrality
One of the key arguments for net neutrality is that it fosters independent and rapid innovation at both the transport and application layers. It is instructive to look at a different type of network to see what happens to innovation in the absence of net neutrality. Visa and Mastercard have built dominant positions in payment networks by tightly controlling all aspects of the network, such as what devices can be connected to it and who can issue and process cards. The result has been dramatic. Both have amazing profit margins, but payment innovation in the US has been minimal. The only way a new entrant could get going is by building an entire new network. That is not just a (nearly) prohibitive cost to the new entrant, but also socially wasteful — something akin to having two Internets (imagine the amount of duplication in routers and cabling). Now contrast that with the government mandating that if you operate a payment network, you need to accept transactions from anyone meeting some set of defined standards, such as say having a bank charter (using that as an example to show that this doesn’t necessarily require an additional government bureaucracy). Now someone could innovate regionally with much lower capital requirements, for instance by establishing a payment solution based on Bluetooth and mobile apps.
Tags: innovation net_neutrality
Monday, June 21, 2010
Can We Please Get Rid of Stock Certificates For Startups?
It is 2010 and while we don’t have jetpacks, it doesn’t seem too much to ask to not have to deal with paper stock certificates. Yet most early stage deals that I see still wind up sending out physical paper certificates. While it may seem like a convenient way to push out the expense of keeping track of certificates to holders, that is not really the case. Whenever a transaction takes place that requires the certificates, such as a secondary sale or an exit, there are people who can’t find theirs (not surprising, this is often 5-10 years later). That causes delays, stress and legal work at the time of the transaction. Generally, people don’t want to punish their early stage investors for having lost or misplaced the certificates and so the solution winds up being that investors sign an affidavit of loss. I believe it would a be net cheaper and more convenient for everyone if company counsel just maintained a stock register without issuing certs. If a company gets sufficiently large — in terms of revenues and number of owners — that job can be handed over to a custody service. Would love to know if there are any compelling reasons for carrying on with paper certificates!
Tags: startups law finance
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