The VC Channel

Proud Uncle Alert – Sabrina Feld

Fri, 27 Feb 2026 15:09:08 +0000

My brother Daniel sent an email to the family last Wednesday with the subject line “Proud Dad alert!” His daughter Sabrina had just built and launched a portfolio website from scratch. She didn’t use Squarespace or Wix. She built a custom Next.js site with scroll-triggered animations, a frosted glass navigation header, a custom image carousel with lightbox, and six page templates – all self-hosted on Netlify.

Sabrina is a senior at Scripps College pursuing dual degrees in Science, Technology & Society and Fine Arts. She’s a product designer and fine artist – not a software developer. She built the entire thing using Claude Code.

She wrote a blog post about the process, describing what it’s like to direct an AI when you don’t know CSS. She “had to get precise in other ways” – using design vocabulary and visual references instead of code snippets. When bugs appeared, she described symptoms and shared screenshots rather than reading stack traces.

A line that stuck with me: “Vague prompts produced generic designs. Clear creative conviction produced something that felt like mine.”

This matches what I see building with Claude Code every day. The quality of the output tracks directly with the specificity of the input. “Make this look better” gives you something generic. “I want warm tones, editorial layout, and a buttercup accent color for hover states” gives you something that looks like a real design decision was made. Sabrina’s version of this was arriving at each session with strong opinions about what she wanted – gathered design references, prepared content, and a clear vision for the aesthetic.

She did over twenty feedback sessions across an eleven-day build, with about four to six hours of active work. The AI didn’t eliminate iteration. It made each round faster.

Go look at the site. Her art section showcases monotype, pastel, watercolor, and cyanotype work. The projects section covers her product management work at StackHawk, including a product launch she led end-to-end and research for an AI-driven security testing tool. The design is clean and typography-focused, with a dark footer and those buttercup accent colors she specified.

After I saw the site, I did what any uncle who is a nerd would do – I ran a security review. The results were solid. TLS configuration is correct, no sensitive files exposed, no source maps in production, and HTTP redirects to HTTPS correctly. I sent Sabrina a list of security headers to add and some DNS records worth configuring – about ten minutes of work that addresses the findings.

Sabrina is looking for roles in product design and product management after graduation this spring. Her portfolio is at sabrinafeld.com.

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Venture Deals Spring 2026 Course

Wed, 18 Feb 2026 16:17:40 +0000

Registration for the Spring 2026 Venture Deals course is open. The course kicks off on March 2nd and, as always, is free.

Since we revamped the course in 2022, over 32,000 people have enrolled. This version includes entirely new video content and two sections we added that I think are important — Diversity, Equity, and Inclusion in Venture Capital, and Mental Wellness in Entrepreneurship.

The course is self-guided and based on our book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist, now in its fourth edition.

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Adventures in Claude

Mon, 16 Feb 2026 16:44:19 +0000

My obsession with Claude Code continues. Amy is now referring to Claude as my other best friend.

I realized my Claude posts were taking over this blog. Since I’ve been playing around with a bunch of things with it, I decided to create a place for me and Claude to collaborate on some experiments, many of which are self-referential as I explore new tools, technologies, approaches, and ideas. I’m also keeping a Claude Code diary.

Claude is generating much of the content, which is different from what I’ve historically put on this blog, though a few of my prior posts had Claude’s help in the drafting stage. I decided I wanted a dedicated place for Claude’s writing, so they will go on Adventures in Claude. I’ll occasionally write about that stuff here, but most of it will go there.

I’m also going to use Adventures in Claude as a laboratory for some code things I’ll incorporate into the Intensity Magic platform. After many years of struggling (and paying too much money to have others help me with) WordPress themes, I decided to create a Theme Studio that allows me, or the user of the site, to modify the theme in real time. This was a huge unlock for me on a few dimensions, including the Landing Page editor I’d created for all the Intensity Magic apps and the booksite website creator I’ve been working on for AuthorMagic.

So, if you are interested in my Adventures in Claude, wander over there and subscribe to the RSS feed, or click here to get the posts sent to you by email.

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Streamline Workflow with CEOS: Claude Meets EOS

Sat, 14 Feb 2026 19:58:41 +0000

I’ve been aware of EOS (Entrepreneurial Operating System) for over a decade. A number of companies I’m on the board of use some element, or all of it. Several friends, including Bart Lorang, are EOS Implementers.

Last night, while watching Olympic highlights and the first few episodes of Steal, I created a v0.1 of CEOS — an open-source project that brings the core EOS toolkit to any Claude Code session. I went from an empty GitHub repo to a public-ready project in about 90 minutes. Please feel free to make fun of Amy and me about how we spend our Friday nights.

EOS has great tools — V/TO, Rocks, Scorecard, L10 Meetings, IDS. But most companies implement them in a patchwork of Google Docs and spreadsheets. Or Notion pages. Or maybe they use one of the EOS-related SaaS products. The data ends up scattered across platforms, locked in proprietary formats, and disconnected from the actual conversations where decisions happen.

Since I’m living inside Claude Code (and integrating more and more of my workflow to it), I thought I’d see if I could make a set of skills that implement EOS. I’m working on another project (private at this point, but maybe I’ll open source it) called CompanyOS, which, while focused on a very early-stage company (like the 5,000+ that have gone through Techstars), potentially could scale.

CEOS is built on three ideas:

1. Everything is a file. Every Rock, every Scorecard entry, and every L10 meeting is a Markdown file with YAML front matter. Human-readable on GitHub, parseable by any tool, and diffable in git. No database. No SaaS subscription. Git history is your audit trail.

2. Skills, not software. CEOS isn’t an application — it’s a set of Claude Code skills. Each skill teaches Claude how to facilitate a specific EOS workflow. You say “let’s set our quarterly rocks” and the ceos-rocks skill walks you through the process: reviewing the V/TO for alignment, collecting titles and owners, validating the 3-7 rule, generating the files. You say “run our L10” and ceos-l10 pulls your scorecard data, reviews your Rocks, checks last week’s actual to-dos, and facilitates IDS on your top 3 issues.

3. Fork and own it. The upstream repo (bradfeld/ceos) has skills, templates, and docs — no company data. You fork it, run ./setup.sh init, answer four questions (company name, quarter, team members, L10 day), and your EOS data lives in your fork’s data/ directory. Pull upstream for skill updates; your data stays untouched.

Here’s the timeline of the work I did with Claude Code. It implemented everything – I just provided the guidance. And yes, Claude came up with the timeline below. If you aren’t technical and don’t care, skip the next 10 paragraphs – they’ll be boring. But, if you are technical, it’s kind of fascinating what Claude decided, entirely on its own, to do.

9:38 PM — gh repo create bradfeld/ceos --public --add-readme --license mit --clone. One command created the GitHub repo, initialized it with LICENSE and README, and cloned it locally.

9:42 PM — Repo scaffolding. README with project overview and architecture diagram. CONTRIBUTING.md addressing two audiences (EOS practitioners and developers — deliberately different skill sets). .ceos marker file for skill repo-root detection. .gitignore that keeps data/ out of the upstream repo. Directory structure for skills, templates, and docs.

9:50 PM — Seven EOS template files. This was the first real design decision: which files get YAML frontmatter (structured data that skills parse programmatically) vs. which are pure markdown (reference documents humans read). The answer: frontmatter for objects with lifecycle state — Rocks have status: on_track, Issues have ids_stage: identified, L10 meetings have rating. Pure markdown for reference documents like the V/TO and Accountability Chart.

10:04 PM — The setup script. Pure bash, zero dependencies. Three modes: ./setup.sh (symlink skills), ./setup.sh init (guided setup), ./setup.sh --uninstall (clean removal). Two portability decisions that matter: using | as the sed delimiter instead of / so file paths in values don’t break substitution, and avoiding sed -i entirely (macOS and GNU Linux handle it differently) by using temp files instead.

10:23 PM — Five EOS skills. This was the meat of the project. Each skill is a SKILL.md file — essentially a prompt engineering document in structured form. The key tension in writing skills is comprehensiveness vs. followability. Too much detail and Claude skims; too little and it improvises. The pattern that worked: tables for quick-reference data (status enums, file paths, modes) and prose for workflow logic.

The five skills:

ceos-vto — Review and update the Vision/Traction Organizer. Shows diffs before writing. Runs alignment checks between sections.
ceos-rocks — Three modes: setting (with V/TO alignment checks, 3-7 validation, ID generation), tracking (milestone progress, status updates), and scoring (binary complete/dropped, quarter scorecard with 80% target).
ceos-scorecard — Define metrics with goals and thresholds, log weekly values, 13-week trend analysis with automatic escalation to the Issues list.
ceos-l10 — The full Level 10 Meeting. Seven sections with time boxes. Pulls real data from scorecard and rocks files. Reviews actual to-dos from last week’s meeting. Facilitates IDS on the top 3 issues. Captures meeting rating.
ceos-ids — Structured issue resolution with 5 Whys for root cause identification, discussion capture, and to-do generation.

A critical design choice: skills reference each other but never auto-invoke. The L10 skill mentions that ceos-ids can create issue files, but lets you decide when to switch. Loose coupling through mentions, not tight coupling through auto-invocation.

10:39 PM — Five documentation files targeting different audiences. The EOS primer translates business concepts into developer vocabulary. The data format spec translates the same content into a parsing contract. The skill-authoring guide sits at the intersection—it’s prompt engineering documentation in disguise as a contributor guide. A skill reference provides users with a quick overview of all five skills, including trigger phrases and examples.

10:52 PM — GitHub configuration. CODEOWNERS, three issue templates (EOS Process Request, Bug Report, Skill Improvement), a PR template with before/after sections, and custom labels. The issue templates are deliberately different — one for EOS practitioners (“I think the Rock scoring process should work differently”), one for developers (“setup.sh fails on Ubuntu”), one for skill improvements (“ceos-l10 should handle recurring agenda items”).

11:08 PM — Final cleanup. Removed companyos-integration.md which contained internal details about how CEOS would integrate with our private CompanyOS system. Archived the content to a Linear comment before deleting — git history preserves it, but a Linear comment makes it findable without git archaeology.

During this, my Claude instance learned a few things that have been incorporated into our local learning (a dynamic file I keep and use to update skills during periodic sweeps).

Writing skills are prompt engineering in document form. The biggest trap is the description field. If you write “manages Rocks in three modes with binary scoring,” Claude will follow that summary and skip the detailed process sections. The description should say when to use it (“use when setting, tracking, or scoring quarterly Rocks”), not what it does. The body has the what.

Templates need lifecycle awareness. The distinction between frontmatter and pure markdown isn’t about complexity — it’s about whether the file has state that changes over time. A Rock moves from on_track to off_track to complete. A V/TO document is edited but doesn’t have lifecycle states. That distinction determines whether a skill can programmatically query and manage the data.

Documentation for AI skills packages needs three layers. User-facing (what can I do?), contributor-facing (how do I add?), and machine-facing (what’s the contract?). Most projects get the first two. The third — the data format spec that makes YAML frontmatter a real, portable, parseable contract — is what makes the ecosystem extensible.

The .ceos marker pattern is underrated. Borrowed from .git and .npmrc, a zero-byte marker file at the repo root gives every skill a reliable way to find the CEOS repository regardless of where the user’s working directory is. No environment variables, no configuration, no hardcoded paths. Just search upward for .ceos.

CEOS is live at github.com/bradfeld/ceos. MIT license. Do whatever you want with it. If you are into EOS, come play. I’ll pay attention to any PRs and issues. Following are the next few things I’m going to create.

Process Documentation skill — The 6th EOS component. Document core processes as checklists with followability metrics.
People Analyzer skill — Right people, right seats. The GWC (Get it, Want it, Capacity to do it) evaluation tool.
Quarterly Conversation skill — The formal quarterly check-in between managers and direct reports.
Annual Planning skill — Year-end V/TO refresh and next-year Rock setting.

And, while I was trying to come up with a name for this, with Claude, it told me I need to include the following footer.

CEOS is an independent open-source project. It is not affiliated with or endorsed by EOS Worldwide.

The post Streamline Workflow with CEOS: Claude Meets EOS appeared first on Feld Thoughts.

Freshell – Contributing to Open Source

Thu, 12 Feb 2026 18:54:11 +0000

Dan Shapiro just open-sourced Freshell — a browser-based terminal multiplexer for Claude Code, Codex, and other coding CLIs that lets you detach and reattach sessions, browse your coding history, and access everything from your phone. The tagline is “What if tmux and Claude fell in love?” which is about right. It can be pronounced multiple ways: Free-shell, Fresh-hell, fresh-shell. I’ve been thinking of it as Fresh-hell, which amuses me.

As part of my exploration into AI coding, I decided to start contributing to open-source projects. I’ve been around open source for decades as a user and investor, but I’ve never been a consistent contributor. That’s changing now — it’s a natural extension of the learning I described in Blurry Transitions, and the best way to understand how software gets built today is to actually build it with other people.

Freshell is my first project. Dan and I have been working together for over a decade at Glowforge, and I love working with him.

I’ve been using iTerm2 for about six months. I expect I’ll have switched to Freshell by the end of the weekend. It already does most of what I want, and a lot more is coming. The combination of persistent sessions, browsing the CLI history, and the ability to access my terminals from any device is enough on its own. But the thing that makes me want to contribute rather than just use it is that it’s early — there’s a bunch of stuff to build, it’s something I will use continuously, and by participating in the open-source project, I can see how the changes I make work in that context.

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Claude Code Now Posts to This Blog

Tue, 10 Feb 2026 17:25:41 +0000

This post was written inside a Claude Code session and posted directly to feld.com as a draft. Not copy-pasted. Not emailed to myself. I just typed /blog-feld in iterm2 and it showed up on my blog.

Setting this up took about ten minutes.

I asked Claude to figure out how to connect to feld.com (hosted on WordPress.com) for direct posting. It researched three approaches: the WordPress.com REST API, the official WordPress MCP connector, and the WordPress plugin MCP Adapter. The WordPress MCP connector is read-only (so, useless for posting). The MCP Adapter only works on self-hosted WordPress (not WordPress.com). That left the REST API with OAuth.

Claude wrote a command called /blog-feld that handles the workflow: look at whatever I’ve been discussing in the current conversation, assemble it into a post, show me a summary, interactively edit with me, and then push it to feld.com as a draft.

It never publishes directly — I still review everything in the WordPress editor before hitting publish.

For authentication, WordPress.com requires OAuth. Normally, my experience setting this up is tedious. In this case, Claude just told me what to do step by step.

– I registered an app at developer.wordpress.com (Client ID + Secret)
– Claude set up the authorization code flow.
– I visited a URL, clicked “Approve,” and the browser redirected to localhost with an authorization code in the URL.
– The page itself didn’t load, but the code was sitting right there in the address bar.
– I screenshotted the page and pasted it into iterm2, and Claude exchanged it for an access token.

Done.

To verify it worked, Claude pulled my last three posts from the API. “Tech I’m Obsessed With,” “Blurry Transitions,” and “Interview With Guy Kawasaki.”

This is a small thing, but it’s the kind of small thing that changes behavior. Every day as I work with Claude Code, I think of multiple things like this. Instead of waiting for someone else to implement it or paying for a third-party service, I just create it in Claude Code and make it a permanent part of my environment.

I’ve been writing more inside Claude Code sessions anyway — working through ideas, editing, and iterating. The friction was always the last step: copy the text, open WordPress, paste it in, format it, fix the formatting that broke. Now that step is gone.

Thinking-in-conversation and writing-for-the-blog are the same thing.

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Tech I’m Obsessed With

Mon, 09 Feb 2026 15:27:58 +0000

I love getting emails from Ben Casnocha. Short, sweet, and to the point. Today’s was “what tech are you obsessed with now? Saw your blog post…” I wrote a response and then realized it was a good answer to my tease from my previous blog post (Blurry Transitions) about what I was exploring. The only thing I removed was my ad hominem comments on various tech companies, since that’s not that interesting to me. And, I fixed some … typos.

Here are a few hints: IntensityMagic and an image of my computer screen (the one above).

I decided I really wanted to understand how AI coding works. I’ve been deeply involved in a few shifts in the past (Agile software development, user-generated content (RSS), email everything (SMTP), … and, if you go back far enough, Feld Technologies was all about shifting from minicomputer business systems to PC-based network database systems). In all cases, I had to “do stuff” to understand it and form a viewpoint, given all the BS and marketing in tech.

I wanted to see if I could create a zero-employee company, aside from the CEO and CTO. Daniel (Feld) is the CEO. I’m the very part-time CTO. I’ve created a thing called CompanyOS, which is IntensityMagic’s AI-powered business operations system. It’s designed around the premise: “Run 100% of a company’s business operations through Claude Code. Two people, multiple Claude agents, zero employee overhead.”

At the core, I’ve gone extremely deep on Claude Code and everything around it.

– I think “vibe coding” is nonsense – it’s just prototype development and a different flavor of no-code software, which is useful but not compelling for scaled applications.

– There are $x billions of VC who have funded what are effectively wrappers on AI and/or point solutions that can be made obsolete overnight.

– Most companies that try to integrate “AI coding” into what they are doing are struggling because they haven’t figured out the tooling, which is not just “turn on Github Copilot” or “use Cursor.”

It’s much easier to experiment deeply with “no employees” and “no legacy stuff,” so that’s what I’m doing. I’m viewing it as a video game, and I’m on level 19. It’s awesomely fun.

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Blurry Transitions

Thu, 05 Feb 2026 19:41:49 +0000

Turning 60 in December marked an important moment for me. A key section from that blog post was:

“I’ve definitely shifted into a new mode over the past year. I’m still on a bunch of boards for Foundry and deeply involved in several companies. But I’m much less focused on the broader technology industry, uninterested in many of the things that are going on, and tired+bored of the arc the narrative about technology and society has taken.”

Amy and I spent the last six weeks in New Zealand and Australia for my 60th birthday trip. I went into hibernation as part of that, stopped doing anything public-facing, and flipped to default no. I also stopped blogging, engaging with social media, and reading the news.

It gave me a lot of time to think and reflect. One thing that I realized was that I’ve never had a hard break or a clean transition from one thing to another. I have multiple threads of this, but if I just choose a professional one, here’s an example.

– I started my first company while in college.
– I started making angel investments while working for the company that acquired my first company.
– I became a VC while I was still founding companies and making angel investments.
– I co-founded Techstars and Foundry while still managing the legacy Mobius funds.
– I started writing books as a VC.

I did a similar exercise on technologies that interested me and generated long investment arcs (which we used to call themes at Foundry). There was usually a trigger point that created a new theme, where I became obsessed with a new technology of some sort and went very deep into it as a user and investor. These overlapped and fed off each other multiple times.

Basically, I’ve never had a “clean break” or a hard transition from what I was doing to what I did next.

I’m enjoying another one of these blurry transitions. I’ve found the new technological thing I’m obsessed with. While I’ve played with this new thing over the past year, I spent a lot of time with it over the last two months. And my interest (and competence and understanding) is accelerating.

I also realized that I missed writing. I know that I learn by reading and writing. I don’t learn by listening and talking (or at least not very much). I have to actually write things down. And, my new obsession involves a lot of writing…

Historically, I’ve gotten a lot of feedback on ideas by writing publicly. It’s also more helpful to me, as it has generated a ton of randomness on many dimensions. And, if you’ve read Give First: The Power of Mentorship, you know that many of the successful things I’ve been involved in came from this randomness.

So, I’ll be writing publicly more. I’ve consciously decided that is not part of hibernating.

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Interview With Guy Kawasaki

Wed, 04 Feb 2026 16:48:59 +0000

When I was 17, I knew of four people at Apple Computer: Steve Jobs, Steve Wozniak, Al Eisenstat, and Guy Kawasaki. I loved my Apple ][ (not a +, 48k, with an Integer Card, two floppy disks). By this point, I was spending a lot of time on my high school buddy Kent Ellington’s TI PC (pre-release – his dad was the production manager), but my Applie ][, now with a Z-80 card, sat in the corner of our family room and consumed a lot of my time.

Of the four, I’ve met all but Steve Jobs in person. Al Eisenstat was the first, on a trip to Cupertino with my parents, where I was supposed to meet Steve Jobs, but Al greeted me and spent a meaningful 30 minutes with me instead. Woz was next and we ended up investing (via Mobius) in one of Woz’s companies (called … Woz – it was ahead of its time).

I’ve long admired Guy and we have lots of second-degree-of-separation friends. One of them, Buzz Bruggerman, came up to me after a Give First: The Power of Mentorship talk in Seattle this summer and asked if I knew Guy and had ever been on his podcast. I said, “Nope, but I just listened to the one with Ben Gilbert that Guy did.”

In typical Buzz fashion, I had an email connecting me to Guy within a few minutes, and we quickly set up a time to do a podcast. I did it sitting outside at Rancho Valencia on a sunny day, was in a great mood, and at the very end of the podcast grind for the book promotion.

The podcast is now up at Building What Lasts: Brad Feld on Trust, Mentorship, and Long-Term Thinking.

It was special. It starts off fast. We learn about Guy’s early dating history with Al Eistenstat’s daughter. We talk about Heidi Roizen and Atherton. And then Guy is the very first person to make the link between the 18 items in the Techstars Mentor Manifesto, Chai, the important number 18, and entrepreneurial Tzedakah. All within the first ten minutes.

Enjoy!

And Guy – that was a delight.

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The Newest Members of the USV Team

Mon, 06 Mar 2023 11:43:07 +0000

Last Thursday, three new blog posts hit USV.com announcing our three new analysts:

This is our tradition at USV. When someone starts at USV, we ask them to write a post on the USV blog introducing themselves. This helps founders who come to talk to us about their companies understand the folks they will be talking to.

Grace joins us from Silver Lake where she was working on their ESG strategy.

Nikhil joins us from Daffy where he was helping to build charitable giving software.

Matt joins us from Aerofarms where he was working on vertical farming.

At USV, they will work with all of us areas helping us find, invest in, and support founders working in our thesis areas. I am excited to work with them for the next two years.

USV TEAM POSTS:

Nikhil Raman — Mar 2, 2023
Joining USV – Nikhil

Grace Carney — Mar 2, 2023
Joining USV – Grace

Matt Mandel — Mar 2, 2023
Joining USV – Matt

Nick Grossman — Feb 27, 2023
Being in Motion

The VC’s Customer

Mon, 27 Feb 2023 10:13:21 +0000

I saw Dan Primack assert that the venture capitalist’s customer is their limited partners in this tweet about the Citizen app, the recap, and their VCs:

Regular reminder that, ultimately, VC funds works for their limited partners, not for their portfolio companies. https://t.co/0uGuk8KUZo
— Dan Primack (@danprimack) February 25, 2023

I DM’d Dan to let him know that is not the right way to think about the venture capital business.

Back in 2005, in the early days of this blog, I wrote this post on the topic.

The entrepreneur is the customer and the LP is the shareholder. That’s the only way to think about the venture capital business that makes sense to me.

https://avc.com/2005/11/the_vcs_custome/

I encourage everyone to read that post. It is one of the most important things I’ve written about the VC/founder relationship and I would not change a single word in it almost twenty years later.

USV TEAM POSTS:

What Does “Native” Mean

Tue, 21 Feb 2023 11:08:16 +0000

When a new technology comes to market, we often look for “native” applications of that technology.

What is a “native” AI application?

What is a “native” Web3 application?

I have not seen a better articulation of “native” than my partner Albert’s post from 2009 on native mobile applications.

He started out by laying out the new primitives that mobile smartphones made available to developers. In the case of mobile, he cited:

Location
Proximity
Touch
Audio Input
Video Input

He then went on to say that it would be the combination of these primitives, more than any individual one, that would make for native mobile applications.

And then he went on to lay out some of the applications he was seeing that were native.

If you want to figure out what the native AI applications or the native Web3 applications will be, or the native AI/Web3 applications, start by laying out the new primitives and going from there.

USV TEAM POSTS:

Albert Wenger — Feb 16, 2023
Building Out the Climate Capital Stack

The Cleanse

Tue, 31 Jan 2023 17:18:49 +0000

I’ve never done a cleanse. But many of my friends and family members have done them. There are various flavors of cleanses but the basic idea is you cut back your consumption of food and drink and replace it with mostly liquid nutrition for anywhere from a day to a month. I believe the most common lengths are in and around one week.

As I understand it, the theory behind the cleanse is it helps your body eliminate all sorts of toxins that build up over time from a poor diet and other unhealthy practices and allows you to reset. I’m told that people feel great when they complete the cleanse.

I like to think of what we’ve been going through in the tech sector/startup land/venture capital over the last year as a cleanse. Things had gotten so nutty, frothy, and out of control that we needed a reset. It was not just valuations that got out of whack, although they certainly did. Cost structures got out of whack. Compensation structures got out of whack. Company cultures got out of whack. Venture capital firms got out of whack.

Things just moved too fast, we lost track of what made sense, and focused on doing more than thinking. Everyone was reacting to everyone and everything. All of this hyperactive behavior was driven by fear of missing out and the idea that the path to success was more, more, more.

So now we have stopped eating all of that bad food and drink and are on a liquid diet of cost containment, extending runways, focusing on unit economics, getting back to deal sizes and valuations that make sense for the long run, and growing profitably.

The first few days of a cleanse are apparently unpleasant. And the last year of the tech downturn has also been unpleasant. Lots of people have lost good-paying jobs. VC portfolios have been marked down upwards of 50% and more. Stock prices of publicly traded tech companies are down between 30% and 80%. It has been hard for many people.

It is my view that we are entering the part of the cleanse where the body has adjusted and is starting to feel better. Everyone is starting to get comfortable in the new normal.

This cleanse is likely to continue for most, if not all, of 2023 but I think it gets easier from here. At least for most people who work in tech and startups.

And when it is over, sometime in the next twelve to eighteen months, possibly sooner, we should all feel a lot better. New technologies are emerging that provide a lot of opportunities to start and build new companies. The pool of talent that is sitting on the sidelines and available to work in these new companies is quite substantial. We are already seeing the seeds of all this being planted now.

For established companies that grew up in the go go years, my mindset is to survive the downturn and invest in new products and services that the market will want when things snap back. Many/most of the companies that I get to work with are doing just that. I think they will be rewarded for getting back to basics, building and shipping new things, and improving their products and services meaningfully during the downturn.

I’ve been through a few down cycles now that I am in my fifth decade in tech/startups/venture capital and while they are all a bit different, they all eventually end and those who survived, invested and built, and improved their market positions materially during the downturn have always been rewarded for that. I see no reason why that would not be the case this time as well.

USV TEAM POSTS:

Andy Weissman — Jan 26, 2023
Hume AI

Rebecca Kaden — Jan 24, 2023
Journey Clinical’s Series A

Albert Wenger — Jan 21, 2023
Termination Shock (Book Review)

What Will Happen In 2023

Sun, 01 Jan 2023 15:46:38 +0000

I want to focus this post on the macro environment for tech, startups, web3, and climate because that is where my head is at right now.

I believe that sometime in the first half of 2023, the central banks around the world will start backing off the tightening that they have been engaged in as inflation continues to ease and the economy continues to cool. Interest rates will level off in the first half of 2023 and I think there is a good chance of a “soft landing” or a very mild recession in 2023.

With that macro view in mind, what would that mean for tech, startups, and web3?

The largest tech companies will emerge from this downturn leaner and more profitable and growing more slowly. They will be mature businesses that behave like the blue chips that they are. I think these companies, like Apple, Amazon, and possibly Google, will see their stocks come back into favor ahead of everything else in tech. I am hedging on Google because I believe the massive advances in AI/ML that we are seeing right now may be a threat to their core search franchise.

Startups are going to have a tough year in 2023. While many have gotten their burn rates way down, most startups still are losing money and will eventually need to raise capital in 2023. Because most startups avoided raising in 2022, there will be a glut of startup companies in the market for capital this year and while there is plenty of venture capital sitting on the sidelines waiting to be deployed, VCs will be much more selective, instead of funding everything that moves as we’ve done over the last few years.

Good businesses with product market fit, positive unit economics, and strong leadership teams will raise capital although it will be at the new normal in terms of valuation. I believe that “new normal” is more or less where we were in 2015 where seed rounds were done around $10mm, A rounds were done around $15mm to $25mm, B rounds were done around $25mm to $50mm, and growth rounds had a cap at 10x revenues. This new normal will lead to many flat rounds, down rounds, inside rounds, and rounds with a lot of structure on them. None of that is good, but the worst of those options is rounds with a lot of structure. I believe founders and CEOS and Boards should take the pain of a new valuation (flat, down, whatever) over structure.

But there is a huge number of startups out there that have not really found product market fit, have not created positive unit economics, and have unresolved issues in their founding teams and leadership teams. These startups will struggle to raise capital at any price and most of them will fail. This has already started to happen but because so much capital was raised in 2021 and the early part of 2022, it has taken longer for these companies to fail. I think we will see a lot of startups in this category go under or taken out in fire sales in the first half of 2023.

While all of that sounds gloomy and downright horrible, I do think the startup sector will end the year in a much better place. The good companies will have gotten funded, the bad ones will have shut down, and VCs will be back to competing with each other to win deals, which is where founders always want VCs to be.

I think web3 will behave similarly in some respects but different in others.

I think the large caps in web3 (BTC and ETH mainly) will start to attract more interest from investors and should do well in 2023. I am more bullish on ETH personally because it has the best underlying economic model of any web3 asset.

Like the startup sector more broadly, web3 will go through a triage of sorts in 2023. Projects and protocols that have found product market fit, have real token economics, and ship new features quickly will attract new interest and rise in value. But many web3 projects have not found product market fit, have weak or no token economics, and do not execute well and I think we will see many of them continue to flounder and fail in 2023.

There is a much larger overhang in web3 right now when compared to the broader startup and tech sectors. There are entities that are insolvent but have not been restructured. There are funds that are so far under water that they may be forced to liquidate. These kinds of activities will produce ongoing sell pressure on web3 tokens for at least the first quarter of 2023 and maybe for much longer.

While there are compelling values out there in web3, I am not convinced that it is safe to go back into the water just yet unless you have a very strong stomach and a very long time horizon.

Climate, where USV has been actively investing for the last three years and now has two funds dedicated to the sector, has mostly been spared the carnage that has hit the other parts of USV’s portfolio. 2022 brought largely good news to the sector in the form of the oddly named Inflation Reduction Act (IRA) that will flow billions of dollars of capital into the sector over the next decade. Many leading VC firms have dedicated climate funds now and we see huge amounts of capital available for climate startups with strong teams and novel approaches.

Last year I predicted 2022 would be a big year for carbon credits and while we saw a lot of growth in the market for these credits, particularly among the large tech companies, I was way too optimistic about how fast the market would grow. That said, I think 2023 will bring more growth in this market which provides the underlying business model to many of the new climate startups VCs are funding right now.

We are also seeing a noticeable movement of tech and startup talent into the climate sector in search of new problems to solve, more meaning in their work, and many more job openings too. I think 2023 will be a big year for this talent migration.

There is a pattern to much of this and it is that 2023 is going to be a tough year for most but those that get through it should find themselves in a good place, with leaner cost structures, less competition, and healthier employer/employee dynamics. Surviving is thriving in 2023.

So to everyone who is reading this, Happy 2023. Buckle up, hang tough, and be smart.

USV TEAM POSTS:

What Happened In 2022

Sat, 31 Dec 2022 16:33:07 +0000

I like to bookend the New Year holiday with two posts, one looking back at the year that is ending and one looking forward to the year ahead. This is the first of these two posts. The second one will run tomorrow.

What happened in 2022 is the bottom fell out of the capital markets and the startup and tech sector more broadly.

Back in February 2021, I wrote a post called How This Ends. In it, I wrote:

I believe it ends when the Covid 19 pandemic is over and the global economy recovers. Those two things won’t necessarily happen at the same time. There is a wide range of recovery scenarios and nobody really knows how long it will take the global economy to recover from the pandemic.

But at some point, economies will recover, central banks will tighten the money supply, and interest rates will rise. We may see price inflation of consumer goods and labor too, although that is less clear.

When economies recover and interest rates rise, the air will come out of the asset price bubbles that have built up and the go go markets will hit the brakes.

I went on to say that I had no idea when all of that would happen, but I was confident it would.

Well, it happened in 2022.

The air came out of the asset price bubbles that had built up over the last decade and were accelerated/exaggerated by the pandemic. There have been a number of other factors at work, like a war in Europe, that made things even worse, but it is my view that most of what happened in 2022 was entirely predictable, expected, and necessary.

In the areas that USV works in; tech, startups, and web3, there have been a number of important downstream effects of the popping of the bubble and they are worth enumerating.

As the capital markets, including crypto/web3, came undone, companies reacted by adjusting their burn rates to reflect that the growth at any cost phase was over and it was time to get on a path to breakeven. That has meant layoffs across the tech, startup, and web3 sectors. The voracious appetite for talent has waned. Spending for growth has largely stopped and most tech companies and startups are growing more slowly but with better unit economics and lower cash burn.

Some startups have failed, particularly the ones with upside-down unit economics or with a lack of product market fit. I think we have just seen the start of this trend and I plan to talk more about this in tomorrow’s post.

The sector with the largest impact, obviously, has been web3. Many large centralized entities; lenders, exchanges, crypto funds, etc, blew up when the value of web3 assets declined 70-90% over the course of 2022. The carnage has been massive and reminds me of what happened to the web sector in 2000/2001. Some of this has been markets doing their thing, but not all of it was. There was fraud, mismanagement, irresponsible risk-taking, and more, at play in the web3 sector.

And yet, I am not aware of any leading decentralized protocols blowing up in 2022. The smart contracts that run these protocols did what they were programmed to do and they have come through intact. It is a testament to the power of decentralized protocols over centralized entities and, for me, the major lesson of 2022 in web3.

I used the word necessary a few paragraphs ago to describe what happened in 2022. I understand that this year has been painful for most and devastating for many. I am not immune to it. Our family’s net worth has taken a massive hit. The carrying value of USV’s assets under management has been cut in half this year. And yet, I am fine, my family is fine, and USV is fine. Many are not. I understand that and have a lot of empathy for those who lost so much, including their jobs, this year.

And yet, I know that the unwinding of an unhealthy and unsustainable growth at all costs/cheap capital environment was necessary and will be healthy in the long run. We already see many of our portfolio companies operating at much more sensible cost structures with clear paths to profitability at much lower growth rates.

The ending of the war for talent in tech also is incredibly healthy. Some leading tech company CEOs I know believe they can operate with much lower headcounts in product/engineering/design than they have been for the long term. That talent can move into new startups and new growth areas, like climate and healthcare, that need it.

Like all transitions, this is messy, painful, disruptive, and ugly. And this year has been all of that and more. I am happy to see it in the rearview mirror and looking forward to better things in 2023. Which will be my topic for tomorrow.

USV TEAM POSTS:

Sign Everything

Mon, 05 Dec 2022 11:10:22 +0000

The advances in AI over the last year are mind-boggling. I attended a dinner this past week with USV portfolio founders and one who works in education told us that ChatGPT has effectively ended the essay as a way for teachers to assess student progress. It will be easier for a student to prompt ChatGPT to write the essay than to write it themselves.

It is not just language models that are making huge advances. AIs can produce incredible audio and video as well. I am certain that an AI can produce a podcast or video of me saying something I did not say and would not say. I haven’t seen it yet, but it is inevitable.

So what do we do about this world we are living in where content can be created by machines and ascribed to us?

I think we will need to sign everything to signify its validity. When I say sign, I am thinking cryptographically signed, like you sign a transaction in your web3 wallet.

I post my blogs at AVC.com and also at AVC.Mirror.xyz which is a web3 blogging platform that allows me to sign my posts and store them on-chain. This is an attestation at the end of last week’s blog post.

You can see that “author address” and click on it to see that it is one of the various web3 addresses I own/control. That signifies that it was me who posted the blog. It is also stored on-chain on the Arweave blockchain so that the content exists independently of the blogging platform. That is also important to me.

I think AI and Web3 are two sides of the same coin. As machines increasingly do the work that humans used to do, we will need tools to manage our identity and our humanity. Web3 is producing those tools and some of us are already using them to write, tweet/cast, make and collect art, and do a host of other things that machines can also do. Web3 will be the human place to do these things when machines start corrupting the traditional places we do/did these things.

USV TEAM POSTS:

Is It A Computer Or A Car?

Mon, 03 Oct 2022 10:11:42 +0000

In the spring of 2014, I walked across the street from our apartment building to our parking garage to get our car and drive somewhere. I can’t recall where I was headed that morning. But as I walked into the garage, I saw two EV charging kiosks had been installed in our parking garage. I turned around and ran back to our apartment building, went back upstairs to our apartment, and told The Gotham Gal that we were getting a Tesla. I had long wanted an EV but the “how do we charge it in the city” problem had been the blocker. Now that was solved.

Maybe a month later, the Tesla arrived and I drove it into the parking garage to show the garage attendant how to drive and charge the car. He sat behind the wheel while I described the features of the car and when I was done he said to me “Mr. Wilson, they have combined an iPhone with a car!“

I love that story because never a truer word has been spoken.

I was thinking about that when I was recently describing how my new Rivian Truck handles off-road driving. It isn’t four-wheel drive, it isn’t all-wheel drive, it is any-wheel drive. There are four electric motors, one on each wheel, and depending on how the truck is performing, different amounts of power are delivered to each and every wheel. The software determines which wheels need what power and supplies it to that wheel in real-time.

Is the Tesla a car or a computer? Neither and a bit of both. Is the Rivian a truck or a computer? Neither and a bit of both.

When you rethink a system, like a car or a truck, as a computer first and foremost, amazing things become possible. Like over-the-air software upgrades which continue to add new features to our Tesla eight years after I drove it into the parking garage for the first time.

We have seen this story play out across many devices in our lives; phones, TVs, watches, thermostats, smoke alarms, light switches, etc, etc. It is an enormous shift in how things are designed and made and it is playing out right in front of us.

USV TEAM POSTS:

Albert Wenger — Oct 2, 2022
Burning Man: Experiencing Rationing

Face To Face

Tue, 06 Sep 2022 10:48:01 +0000

As we all prepare for the fall back to school/back to work season, I thought I’d touch on a topic that has been top of mind for me for the last six months.

The covid pandemic taught many of us that we can be productive and our companies can succeed in a fully remote work environment. But just because you can does not mean you should.

In the venture capital business, this has meant making investments in teams we don’t meet face to face. For founders, this has meant raising rounds from their offices instead of getting on planes.

As the pandemic has eased and offices have gradually reopened over the last year, we are meeting more founders face to face. But we have not gone back to a world where we meet every team we back in person. I don’t think we will ever go fully back to that world.

But even if the way we work has changed permanently, it does not mean that it has changed for the better. I believe that all change has positive and negative impacts. We can meet more founders than we used to. And founders can meet more investors. That is good. But matches are now being made over video and that is not always great.

We know that humans are better to each other in person. We know that in-person interaction is more meaningful, we are more present, and we connect in more fundamental ways.

So I believe that we must work in the coming years to get out of our offices (or homes) and see each other in person more often.

That means we should run fundraising processes that include meeting in person. We can do the initial screens (on both sides) over zoom, but the final selection process should include face-to-face meetings whenever possible. And board meetings should be done in person at least a few times a year. And those in-person meetings should include some social time in addition to business.

For companies, this means hiring should include a face-to-face meeting. Teams should meet in person regularly. Going to the office should be a regular occurrence for those that live near one.

It is time to get back to the office, at least some of the time. It will make for better business. And I also think it will make us happier at work.

USV TEAM POSTS:

Deep Dives

Mon, 29 Aug 2022 11:12:54 +0000

We like to do a lot of deep dives at USV. We pick areas that we think will present interesting investment opportunities over the next five to ten years and then spend time researching them. We like to talk to lots of experts, academics, investors, entrepreneurs, and industry. We generally spend a few months on these deep dives and then present them to the rest of the team so that everyone at USV will be somewhat fluent in the topic area and can flag interesting things that fit what is interesting to us.

Deep dives are not so much about areas we’ve been investing in, although we sometimes do that to refresh a thesis. Deep dives are generally about new areas that are just starting to percolate and appear interesting to us.

This summer all of the USV partners picked one or two (in one case three) areas to do deep dives on. As the market has cooled down, we’ve found the time to take on some primary research.

I’ve been looking into nuclear reactors and batteries with the lens of how small is possible. Could we make a nuclear reactor or battery that fits in our home? Could we make a nuclear reactor or battery that we carry with us like a phone?

I know these ideas seem preposterous but that’s exactly the kind of questions we like to ask ourselves. Often we find out that the idea is as nutty as it seems but we bump into something else along the way that is even more interesting.

So if you know something about my research topic or know someone who does send me an email. I’m all ears.

USV TEAM POSTS:

Hanel Baveja — Aug 26, 2022
Zanskar

Albert Wenger — Aug 25, 2022
USV Analyst Program 2022: Heads Up

Reminder: Seeing Both Sides is at a New Location

Mon, 10 Jun 2019 12:49:00 +0000

I just posted a new blog on Product Market fit and it reminded me to remind you that my blog moved a ways back to Seeing Both Sides so if you're still getting email notifications for Boston VC Blog you should shift over and subscribe to Seeing Both Sides and/or my Medium page. Enjoy!

Starting Your StartUp Career: The Rocket Ship Startup List

Sun, 19 May 2019 16:26:31 +0000

New graduates should jump on board one of these high flying companies and go along for the ride Graduating students hungry to dive into the startup community around the world (aka StartUpLand) often struggle to select the right, specific opportunity where they can productively start their career. Each spring, I provide a comprehensive list of exciting, growing, hiring startups that are worthy of consideration as places to start or continue a career in StartUpLand. The criteria for being on the list is subjective but is a mix of fundraising (typically > $20m in the most recent round), scale (typically > 100 employees), momentum (typically growing users or revenue > 50%) and hiring (typically growing headcount > 20%, including a number of entry-level positions that would be a fit for recent college or business school graduates). Before we get into the companies themselves, I suggest checking out two of my posts where I give some more detailed advice on how to select the right company for you and position yourself to secure a job: Getting Your First Startup Job Are You Suited For A StartUp? Once you have reviewed this framework for deciding what you’re looking for, below you will find a list of over 600 companies to research and approach. As usual, the list is compiled and organized based on location. Like David Brooks, I believe in selecting a particular community to invest in and contribute to as a member of the ecosystem. I received fantastic input from angels, entrepreneurs, lawyers and VCs across the world, helping me pressure test and compile this list (note: Flybridge portfolio companies are in blue). This year, I added companies from India and China with the help of a number of friends from those communities — a nod to the growing global importance of those two startup ecosystems. I’d also point folks to Stanford’s Andy Rachleff’s terrific list, which he publishes each fall with a similar theme. I’m sure I made many mistakes and omissions, which are all my own. Special thanks to my Flybridge teammate and MIT Sloan intern Caroline Constable, who methodically crushed this year’s list and Harvard computer science intern Raymond Wang, who provided awesome analytical, programmatic firepower. As always, feedback welcome! East Coast West Coast International Other Startup Hubs ATL: Bitpay, CallRail, FullStory, Kabbage, MailChimp, Pindrop, SalesLoft, Terminus CHI: AvantCredit, bloXroute, Civis Analytics, Fooda, FourKites, Kin Insurance, Project 44, ShopRunner, Sprout Social, Tempus CO: Boom Supersonic, Cloud Elements, CyberGRX, FullContact, GoSpotCheck, Ibotta, JumpCloud, LogRhythm, Quantum Metric, Red Canary, TeamSnap, Welltok DC: MapBox, Optoro, Sonatype, Vox Media, WeddingWire SEA: Apptio, Convoy, DefinedCrowd, ExtraHop, Knock, OfferUp, Outreach, Porch, Rover.com, Textio UT: Avetta, BambooHR, Canopy Tax, Fortem Technologies, Health Catalyst, HireVue, InsideSales.com, Lucid Software, ObservePoint, Podium, Qualtrics, Solutionreach, Via, Workfront

How to get rich

Wed, 01 May 2019 15:52:48 +0000

For the last few months, Naval and I have been publishing a podcast on “How to Get Rich.” It’s based on his chart-busting tweetstorm. I’ve embedded the first episode above.

You can find it on Apple, Spotify, YouTube, Overcast, Google, Breaker and every other damn app on the planet.

The title is a little cheesy. It should really be called “How to Create Wealth.” But that doesn’t have the same oomph.

This time it’s different

This podcast is different than other advice on getting rich. It’s free. There are no ads. It’s abstract. Our goal is to make timeless material, not to sell ads or keep you listening.

Each episode is only a few minutes long, covering a single topic and there’s no fluff. We use Descript to chop up, re-arrange and organize the interviews before publication. You don’t have to fast forward through 10 minutes of intro to get to the good stuff.

We publish clean, organized transcripts so you can read each episode if you like.

The episodes are edited for sound quality by our killer sound guy and filler words are removed (um like basically). If you hate the sound quality on the first few episodes, hang on, it gets a lot better as we improve our mics and switch to Zencastr in later episodes.

Everyone on the planet should hear this podcast, whether they want to build a 1-person cashflow business or they want want to build a multi-billion dollar company with a team.

You can do us a favor by sharing it with someone who needs to hear it.

How to write like the great entrepreneurs

Mon, 22 Apr 2019 19:11:01 +0000

Entrepreneurs are the best business writers in the world. If you can’t write, you can’t raise money. Or recruit. Or sell.

I don’t know a single great entrepreneur who isn’t a great writer.

Good business writing is clear, compelling and concise. Read Steve Jobs, Elon Musk and Warren Buffett (though they should have used half the words).

Here’s what I send my friends when they ask for writing tips:

Writing is a customer service problem.
Pretend you’re sending an email.
Sum it up in a tweet.
Read it on your phone.
Don’t write your thought process.
Start with a summary.
Writing is rewriting.
Delete half the words.
Avoid adjectives.
Scrutinize every word for bias.
Kill your darlings.
Use persuasion checklists.
Skim Strunk & White.
Break the rules once you learn the rules.
Writing is a design problem.

1. Business writing is a customer service problem. You’re not the star—the reader is. Help them get what they want, as quickly and effectively as possible. They might want to solve a problem. They might want to be persuaded. Give ’em the goods.

2. Pretend you’re sending an email. Or a Slack message. It will calm your mind and yield better writing.

3. Sum it up in a tweet. If the tweet isn’t compelling, the rest isn’t compelling. The ideal tweet absolves the reader from reading further. Sequoia says, “Summarize the company’s business on the back of a business card.”

4. Email it to yourself and read it on your phone. You’ll see the words with fresh eyes, as if someone else wrote them. This will force you to keep it short and simple.

5. Don’t write your thought process. The final draft shouldn’t mimic the path you took to come up with the idea. Instead, start the piece with a conclusion and make your best case.

6. Start with a summary. A good summary absolves the reader from reading further. But they will still want to.

7. Writing is rewriting. Write down your thoughts in a stream of consciousness. Don’t get hung up on diction. Then spend most of your time rewriting and reorganizing—sweat the details. I’m still rewriting posts days after I’ve published them.

8. Delete half the words. Say more with less. That’s good customer service. “If I had more time, I would have written a shorter letter.”

9. Avoid adjectives. Use numbers instead. An adjective is an admission that you don’t know the number.

10. Scrutinize every word for bias and rhetoric. Are they an ‘unruly mob’ or ‘patriots’? Perhaps neither—just call them by their name. Argue the other side of every word, at least to yourself. Learn more about bias.

11. Kill your darlings. Delete beautiful ideas and phrases if they don’t help the customer solve their problem.

12. Use persuasion checklists like CLASSR and SUCCES. See the Appendix for details.

13. Skim Strunk & White once in a while. You don’t need to read the whole book at once. Also read The Day You Became a Better Writer.

14. Break the rules once you learn the rules. Write in your authentic voice. Tell a story. Use adjectives! Learn which word choices unlock action. But first learn how to write clearly and concisely.

15. Writing is a design problem. Example: never use the idiom of ‘the former or the latter.’ It forces the reader to go back and figure out what you’re referring to.

Learn design by reading Tufte, A Pattern Language and Don’t Make Me Think. Dieter Rams: “Indifference towards people and the reality in which they live is actually the one and only cardinal sin in design.”

Appendix

Consider adding a sentence for each of the CLASSR persuasion techniques: commitment, liking, authority, scarcity, social proof and reciprocity. Here’s a joke example by Victor Ghitescu:

“Learn more about CLASSR by reading Influence by Cialdini. Do it because you like books that make you smarter. Do it for me, I’m an expert on this. The world’s best salespeople have all read it. Do it before the whole world finds out about it. You can thank me later.”

Make sure your writing is simple, unexpected, concrete, credible, emotional, stories (SUCCES from Made to Stick):

“I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth.”

11 angel investing lessons

Wed, 17 Apr 2019 12:33:07 +0000

Spearhead asked me to write a post on angel investing when they first launched. Here’s a slightly updated version—most of the wisdom is from Naval.

Charlie Munger says investing requires a latticework of mental models. Here are 11 lessons for your angel investing lattice:

If you can’t decide, the answer is no.
Proprietary dealfow means ‘they want you’.
Investing takes years to learn, but improves for a lifetime.
Valuation matters: you will have to pass on future greats.
Back $0B companies.
Judgment is important but overrated.
Invest only in technology.
Some of the best investors have no opinions.
Incentives make for bad investing advice.
Play fantasy football.
Power beats contracts.

1. If you can’t decide, the answer is no

If you can’t decide on an investment, the answer is no. For all practical purposes, there are an infinite number of investments out there, so pass.

That doesn’t mean you won’t regret it. But the next investment is just as good a priori.

Your experience and judgement is only going to get better by the time you see the next deal.

2. Proprietary dealflow means ‘they want you’

Nobody thinks they have a shortage of dealflow. The hard problem is getting your money into the startups you want. The company has to want you over other investors.

Without ‘they want you,’ you will get cut out of good investments and end up with adverse selection of weaker companies. It’s okay to pass on investments, but you don’t want them to pass on you.

Missing out on a few investments can mean losing all your money because of the power law returns of investing: the top deal in a good portfolio returns as much as deals 2 through N combined. If you miss out on the top deal, you’re going to miss out on most of your returns.

You never want to hear, “I will come to you if I don’t get money from Sequoia.”

3. Investing takes years to learn, but improves for a lifetime

Get started with angel investing now. It takes years to learn and longer to see returns.

You want to invest in 30 companies at a minimum–that takes time. Start with small investments because your later ones will get better as you gain expertise and brand. So your returns will take even longer.

Investing takes a long time to learn, but it is one of the few professions that you can improve until the day you die.

4. Valuation matters: you will have to pass on future greats

You can’t build a portfolio of pre-traction companies at $8-10M pre-money and expect to make a venture return. On occasion, you can make an exception, but you can’t do all of your investments at this price.

You will have to pass on great teams because the valuation is too high. You will have to pass on future iconic technology companies because the price is too high. But passing at a $40M pre-money lets you take 10 shots on goal with unknown companies at $4M pre-money.

You can’t negotiate valuation unless you’re investing 1/3 to 1/2 of the round. Or if you’re the first check in the company. Start the negotiation by saying, “I like you but I can’t make the valuation work, but I would invest if the valuation were X.”

Despite high valuations, it’s still possible to make money in angel investing. If you can’t make money in tech, you can’t make money anywhere.

Anecdotal valuation data

Valuations for pre-traction companies between 2005-2010 were $1-5M pre-money for the first non-friends-and-family round. Funds that invested during this time period made 4x-100x returns.

These valuations moved to $4-6M pre-money after 2010, with some demo days in the $8-10M range. This likely cut returns by 2/3 or more.

Play with valuations tool on AngelList.

5. Back $0B companies

To quote Vinod Khosla, invest in “$0B companies” that could be worth $1B tomorrow.

Focus your attention only on companies with the potential for a 100-1000x return. Otherwise, pass.

Without these large exits, your portfolio will not achieve a venture return.

6. Judgment about markets is important but overrated

Some markets are obviously bad and should be avoided. But judgment about markets is less important than you think, because there is so much luck and randomness involved. Companies can do hard pivots into new markets (Twitter, Slack and Instagram).

Judgment is not about doing a lot of research, digging and homework. By the time you figure it out, you will have missed the deal. Instead, learn a few markets really well.

Of course, you will learn about new markets over time. But learn a few markets really well. Buy all the products and try them.

Find the best scientists in the market and invest in them. They can help you with research on your next investment; this is an unfair advantage.

Read research papers then call the grad students who wrote them. Waiting to learn about new markets on TechCrunch is too slow.

7. Invest only in technology

The best returns come from investing in technology companies. Avoid companies that don’t develop meaningful technology (either software or hardware).

The 5 largest companies in the S&P 500 (Apple, Google, Microsoft, Amazon, and Facebook) are all technology companies. The largest private companies are also technology companies.

There are exceptions like Dollar Shave Club. Their early investors had good returns. But, as a rule of thumb, you should only invest in technology.

8. Some of the best investors have no opinions

“I have no idea what’s hot. But I’m certainly always listening. Big Dumbo ears. Just listening.” – Doug Leone, Sequoia

Some of the best investors on the planet have no strong opinions about a particular business. They try not to project into the future, so they can listen intently in the present.

Almost any entrepreneur will be smarter than them in their market. The investor’s job is to listen and decide whether the founders are smart, honest, and hard-working.

These investors don’t fall in love with a business. When it comes time to do a new round, they re-evaluate the business from scratch and ignore sunk costs.

If you’re thinking about all the great things you could do if you were running the business, you’re going down the wrong path: you’re not running the business.

If you are telling the entrepreneur what to do, don’t invest. Thinking like an investor is different than thinking like an entrepreneur who is determined to make a business work.

9. Incentives make for bad investing advice

Incentives influence the advice you get from VCs, lawyers, incubators, and everybody else. Everyone serves their own interests first. The best source for angel investing advice is other angels and founders.

People are generally well-meaning but, in the words of Upton Sinclair, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

10. Play fantasy football

Build your instincts by looking at startups without investing. Your instincts are what you really use to make investment decisions.

In the old days, you had to work at a VC firm to see dealflow. You had to make a few investments and lose money before getting good judgment. John Doerr called this “crashing a fighter jet.” First you lose $25M, then you have some judgment.

Now you can get judgment without crashing the fighter jet. You can see dealflow from your friends, your incubator, demo days, and AngelList.

You need a lot of data to build up your instincts. Track your fantasy portfolio and anti-portfolio. Write down what you like and dislike about each deal and see how your judgment develops over time.

11. Power beats contracts

Contracts can be renegotiated. You will be pressured to renegotiate your investment by founders and VCs. If you’re alone, you won’t have the power to fight back.

Contracts are written for worst-case scenarios, so people can’t outright steal your money. Suing people is bad for your dealflow. So real-world decisions are usually based on power.

If you’re the only seed investor in a round, you can get screwed. There aren’t enough co-investors to make a ruckus if the company wants to:

Recap and start over
Raise the cap on your convertible note
Give your pro rata to a new investor

If you’re alone, you won’t have the power to fight back. The startup and their new investors can pressure you to renegotiate. So don’t be a herd animal when making an investment decision, but move with a pack when you do.

Venture Hacks goes rogue

Tue, 16 Apr 2019 11:14:35 +0000

Venture Hacks is now independent of AngelList.

Muchos thanks to AngelList for assisting with this transition (Aaron, Jake, Kevin).

The first version of AngelList was a blog post on Venture Hacks. It shipped in one day, maybe two. I don’t know if anyone remembers, but it was called AngelBase back then. They’ve come a long way since then.

Now, Venture Hacks is going solo with new posts on fundraising, investing and good times.

More thanks to WordPress (Andy, Chris, Matt) for hosting us on Pressable. And for cleaning up this old blog which launched on April 1, way back in 2007.

Space is Open for Business

Sun, 24 Feb 2019 00:40:39 +0000

The physical infrastructure of modern civilization runs on machinery: traffic lights, railroad switches, nuclear reactors, water treatment, electricity distribution, dams, ship engines, draw bridges, oil rigs, hospitals, gas pipelines, and factories depend upon mechanical elements such as pressure valves, turbines, motors, and pumps. These actuators (like the ones in the original Bessemer steel smelting process) were once manually configured, but today these machines are controlled by software running on directly-attached, single-purpose computers known as Programmable Logic Controllers (PLC). PLCs, in turn, are connected in aggregate to computers running Human Management Interfaces (HMI) through closed, vendor-proprietary Supervisory Control & Data Acquisition (SCADA) protocols like DNP3 and Profibus. Industrial manufacturers provide the machines, the PLCs, and the HMIs, and so Operations Technology (OT) teams typically need to use a mix of controllers and interfaces. This is collectively known as an ICS.

During the PC revolution, many of these ICS components migrated to cheap, standard PCs, and their SCADA connections migrated to LAN switches and routers that leveraged the connectivity benefits of those PCs’ standard Ethernet ports. The security implications were relatively minor until the Internet came along; but

It's Time for Robots to Mine the Asteroids

Tue, 13 Sep 2016 00:46:46 +0000

Phil Metzger at University of Florida has just published an important and compelling article titled Space Development and Space Science Together, an Historic Opportunity about the need to develop a Self-sufficient Replicating Space Industry that uses robots to harvest space-based resources . The article is detailed, well-cited and fully attentive to the objections often raised.

Metzger calculates that it would take only a third of Earth's national space program budgets over the coming decades to deploy and complete the industrial infrastructure we need for harvesting resources from space that address major challenges we face in economic development, science, climate change, energy needs and other dwindling mineral resources.

Metzger specifically prescribes an initial focus on mining water for the purpose of fueling steam-based propulsion systems. Robust water deposits on the moon, asteroids, Europa, and elsewhere in the solar system promise bountiful supplies that will propel us to the stars. Another benefit of hydro-propulsion, explained to me this week by Deep Space Industries @GoDeepSpace CEO Dan Faber, is that water would be easy and safe for entrepreneurs integrating propulsion into their satellites today. Metzger has focused his attention and efforts on developing a lunar mine, Faber's company looks to mine water from Near Earth asteroids since their negligible gravity makes it easier to extract the water without escaping lunar gravity. (See DSI design, right.)

Metzger outlines other important projects as well, such as a Space-Based Solar Power system and extraterrestrial compute facilities, sorely needed infrastructure that we simply cannot scale on Earth:

"The primary benefit of space is real estate that biology does not need. Earth is the one special place in the solar system required by life, but machines can function anywhere else."

Why now? Metzger argues that AI has reached the points of maturity and acceleration that we need to pull it off, citing Bill Gates that robotics "is developing in much the same way that the computer business did 20 years ago."

Counter intuitively, the primary obstacles are not technical. Rather it is government inaction, in both funding and regulation. Peter Diamandis' startup Planetary Resources employs JPL veterans who know how to prospect Near earth asteroids today, but PR's mission awaits space-faring nations to legally recognize asteroid mining rights (other than the U.S. which did so last year). And government funding is hard to come by for what the Chairman of the Senate Subcommittee on NASA dismissed as a "nutty fantasy." Metzger lays out strategies for overcoming these obstacles.

Enough said. Click through and read Metzger's important, fascinating paper.

Announcing a New General Partner at Flybridge

Mon, 20 Jun 2016 16:03:36 +0000

I am thrilled to welcome Jesse Middleton to the Flybridge family. Jesse is joining us as a General Partner to help lead our NYC office. This hire is a big deal for us. Jesse is the first General Partner we’ve hired in over a decade. Jesse is a tremendous entrepreneur and executive, having for over the last five years been a part of the creation of one of the most successful start ups in history – WeWork – and serving as an active angel investor in NYC. Here’s his blog post announcing his arrival: Also, a reminder, my blog has now moved to www.SeeingBothSides.com

SoftTech VC Closes $150M Across Two New Funds

Wed, 08 Jun 2016 12:30:23 +0000

Early in January 2016, I was thrilled to announce Stephanie Palmeri and Andy McLoughlin becoming Partners! At that time, we filed SEC Form Ds disclosing the creation of two new funds – SoftTech VC V and SoftTech Plus. We’re delighted to announce that both funds have closed at their hard cap, respectively $100M and $50M – great news as we celebrate our 12-year anniversary. Most importantly, we are beyond excited by the myriad of new, radical innovations we see coming from early stage entrepreneurs and the opportunity we have to help them realize their vision with our active support and capital.

To share a bit of background: we invest our funds on a 3-year investment cycle and will be wrapping up Fund IV (that held a final close a couple of years ago) as planned sometime in Q316. Why raise a fund when we had plenty of dry powder in Fund IV? When we discussed our fund raising plans with Limited Partners (LPs) last year, we were warned that a large number of managers were planning to go to market in the first half of 2016. Their advice: it should be easy for us to raise but we should go out early in order to do it quickly. That’s essentially what we did.

SoftTech VC V

Our $100M Fund V is the slightly larger version of Fund IV ($85M). We will invest in about forty seed stage startups over the next three years, with initial check size ranging from $500K to $1.5M. We will also reserve capital for Series A and B pro-rata investments – with an objective to recycle all management fees and up to 20% of the Fund. We “hard capped” Fund V at $100M as we believe that it is very challenging to have a seed focused strategy, strive for bringing the best possible co-investors and limit founder dilution with funds that are much larger. While we could have raised up to $200M for this vehicle, we elected to be disciplined.

Like Fund IV, Fund V will look at acquiring 7 to 10% of the companies it invests in by writing checks ranging from $500K to $1.5M. We expect to continue leading and taking board seats in 30% of the deals we close – serving on these boards for about two to three years. The rest of the time, we will co-lead or join a syndicate led by one of our peers. Companies we invest in at seed stage will typically be raising $2M to $3M, after developing a product that has received some initial validation from early users or customers. They may have raised a friends and family round, a pre-seed round, or have gone through an incubator.

Core investment sectors, technology and wedges for SoftTech VC’s $100 Fund V

Our portfolio construction has evolved over the past twelve years and four funds: way back, I started by investing heavily in “traction-based” consumer internet, gaming and adtech – three categories we have move away from in recent years. Just as new categories of startups have emerged, we’ve evolved our focus areas to take advantage of opportunities ripe for investment. We have updated our sector chart to reflect the areas of interest of Fund V:

SaaS/B2B will again be our core focus, looking for opportunities in cloud infrastructure, vertical SaaS, developer tools and the mobile application stack.
Connected Devices, both consumer and industrial, now have their own sector after years of “New Areas” classification.
Consumer Services and Media will typically have a clearly defined business model (subscription, ad-based, freemium,…), even if it may not be in place when we invest.
Commerce and Marketplaces will primarily consist of investments in B2C and B2B marketplaces and e-commerce infrastructure.
New Areas is our “catch all” sector dedicated to new categories, technologies or types of investments before they become eligible for their own sector. That’s where Connected Devices like Fitbit, August, and Molekule started. In Fund V, “New Areas” deals may include AR/VR, AI, autonomous vehicles, and robotics opportunities.

In addition to sectors, we also have the concept of Wedges – industries in which we invest across quadrants. In the past we have been very active in Education Tech and Healthcare IT. In Fund V, we’ll continue with both, as well as Government and “Blue Collar” tech (which covers non-knowledge workers in construction, transportation, hospitality, etc.).

It’s fair to say that we invest in a very broad set of categories – but we are extremely concentrated geographically. Roughly 80% of our investments are in the Bay Area, 10 to 15% are on the East Coast between New York and Boston, and the rest are in Canada (between Toronto and Waterloo). We’re open to coming back to Los Angeles or Boulder, where we’ve had successful investments in the past – but that’s pretty much it. And while we don’t invest outside of North America, we are more than happy to invest in strong international teams that have relocated to the US.

SoftTech VC Plus

A number of our colleagues have raised Opportunity funds in the last few years. While implementations can vary widely, these are typically late stage vehicles that allow firms to double down on their best companies when the fund that originally invested is out of capacity for follow-on investments.

This is the purpose of the Plus Fund: it will invest $2M to $5M (or more) in Series C or Series D rounds of existing portfolio companies, going as far back as Fund II. Only a subset of deals will a fit for the Plus fund, based on a set of criteria we’ll refine over time (revenues, growth rate, valuation, potential exit multiple, etc.). We expect to invest in 12 to 15 companies over the next three years.

So far, Plus has made one investment: the $35M Series C round of Vidyard led by Battery Ventures, in which we contributed $3M.

A Swift Fundraising

We were fortunate to assemble a strong syndicate of institutional Limited Partners when we raised Fund IV and proudly saw all of them come back in this raise. Per the advice of our LP Advisory Committee (LPAC), we released our data room to existing and prospective LPs on Dec 23rd (our way of wishing them “Happy Holidays!”). We followed with six weeks of fundraising meetings and initiated the closing process – our first close happened at the end of March for $95M in Fund V and $32M in Plus, and the final close took place last week with a handful of new LPs who needed some extra time for their investment process.

Our anchors among existing LPs were Michael Kim from Cendana Capital and Trey Hart from Northern Trust, who are again joining our LPAC. They are joined by Lindel Eakman from FG Next and Greg Millhauser from Glenmede, both new LPs in Fund V and Plus. Other large investors include Knollwood Investment Advisory and the State of Wisconsin Investment Board. In total, we welcomed 40 investors in this raise: 18 institutional, 16 individuals and 6 family offices. And we’d like to take this opportunity to thank them for their support and their trust.

None of this would be possible without the hard work of the 176 founding teams we have invested in to date – and we want to thank them too.

One More Thing

We’re excited to announce that Nicole Carpenter is joining us as Executive Assistant for all three Partners, after three years assisting the CEO and executive team of Super Bowl 50. A warm welcome to her as the latest member of the SoftTech family.

Ashley Cravens has been promoted to Director of Operations and will focus on managing the firm’s back office, events, HR, and finance operations. I want to thank her for her tremendous support over the last 6 years as my Executive Assistant and congratulate her on this new role!

Twelve Years

SoftTech VC has come a long way, from me on my own in a tiny attic office in Palo Alto investing from modest savings to my team of investment partners and operations support in our thriving San Francisco office, with $300M+ in assets under management. In addition to our 176 deals, we’ve launched a robust series of monthly and annual events (including our Founder Summit, CTO Summit, and expert roundtables) to better connect the amazing network of SoftTech founders and executives.

Our entire team is beyond excited to start a new chapter for the firm with these two new funds and to find additional ways to support our founders. We’re humbled to have the opportunity to back more awesome entrepreneurs whose crazy ideas just might work and to help them build iconic companies that will have a meaningful, positive impact. Finally, I am thankful for the opportunity to serve a 4-year term on the NVCA board, supporting Bobby Franklin and his team in their invaluable service to our industry.

The post SoftTech VC Closes $150M Across Two New Funds appeared first on Uncork Capital.

Growth vs. Profitability

Tue, 17 May 2016 23:43:54 +0000

I have a new post on my newly designed blog: Growth vs. Profitability and Venture Returns. A reporter from BostInno tweeted that the blog post should have been titled: Profitability isn't cool. You know what's cool? Venture returns. seeingbothsides.com/2016/05/16/gro… via @bussgang Anyway, if you want to read the post, check out www.SeeingBothSides.com

Updated Blog - Seeing Both Sides

Sun, 03 Apr 2016 22:00:05 +0000

I've moved out of the dark ages and (finally) shifted from Typepad to WordPress. I will keep this blog site up, but all new posts can be found at Seeing Both Sides. Enjoy!

Stephanie Palmeri and Andy McLoughlin both made Partners!

Tue, 19 Jan 2016 17:00:59 +0000

You got the gist of it – now read on for more details.

First, Stephanie: ever since I met her 5 years ago, I have been impressed by her drive, smarts and resourcefulness. Even though I sort of pushed her away initially, we were lucky enough to have Stephanie join us as Senior Associate then Principal – and sponsor 18 investments across Fund III and IV (including Niche [TWTR], Grovo, and ClassDojo), sourcing and supporting several more. Not only has Stephanie developed the fundamental skills that make a great investor (sourcing, board leadership, fundraising, legal), she has supported companies in good times and challenging ones, and become an invaluable contributor to both our SoftTech family and the broader ecosystem. Thanks to her hard work, Stephanie has demonstrated that she has earned the Title and I am very excited to share the good news: Stephanie is now my Partner.

Andy joined us last April as Venture Partner after co-founding Huddle eight years ago. In a few short months, he sourced and led a number of deals (including OnboardIQ and LaunchDarkly), and has delivered a lot of value to an even greater number of our SaaS companies by sharing his experience in sales, marketing, pricing strategy, etc. I am delighted to announce that he is now a Partner as well.

Charles Hudson transitioned to Venture Partner when he launched his own firm, Precursor Ventures. He will remain on a part-time basis at SoftTech until we wrap up the investment period of Fund IV later this year. We’re excited for Charles and wish him the very best with his pre-seed strategy.

While 2015 was a great year for SoftTech – it brought us our first IPO, we made large distributions to Limited Partners, we invested further in building up our events platform and closed a dozen very exciting deals – we already see signs that 2016 is going to be a tough year: the sheer market optimism that has prevailed for a while has taken a hit in the last six months of the year, and round sizes and corresponding valuations have started to deflate. We expect that it will be harder for startups to raise follow-on rounds, and the right mix of top line revenue growth and sustainable unit economics will be rewarded – as opposed to top line growth at all cost. Companies will stumble and will need the financial and operational support of their investors – who will have to show their experience and conviction. I look forward to working with my Partners on these challenges.

And while we are at it, everyone at SoftTech wishes you a Happy, Healthy and Prosperous New Year!

The post Stephanie Palmeri and Andy McLoughlin both made Partners! appeared first on Uncork Capital.

Pixar President’s Wisdom

Fri, 08 Jan 2016 17:31:19 +0000

Some highlights from Ed Catmull’s Creativity Inc. Ed is the President of Pixar.

“If there is more truth in the hallways than in meetings, you have a problem.

“The desire for everything to run smoothly is a false goal.

“The truth is, the cost of preventing errors is often far greater than the cost of fixing them.

“Rules can simplify life for managers, but they can be demeaning to the 95 percent who behave well. Don’t create rules to rein in the other 5 percent—address abuses of common sense individually. This is more work but ultimately healthier.

“The first conclusions we draw from our successes and failures are typically wrong. Measuring the outcome without evaluating the process is deceiving.

“An organization, as a whole, is more conservative and resistant to change than the individuals who comprise it. Do not assume that general agreement will lead to change—it takes substantial energy to move a group, even when all are on board.”

Boston’s WebInno Is Now BIG

Mon, 19 Oct 2015 11:00:03 +0000

Back in June, the local Boston tech community together celebrated the ten year anniversary of the Web Innovators Group, affectionately known as “WebInno.” Now Boston’s largest regular tech conference, every few months it draws hundreds of attendees from the entrepreneurial ecosystem – including founders, software engineers, startup executives, and investors. Each gathering showcases early stage startups in their infancy, not as a capital-raising pitch, but rather as a way to show off their product to peers for both exposure and feedback.

The origins of WebInno are humble. Originally, I had invited a dozen or so internet entrepreneurs to a Cambridge bar where we crammed into the back room wearing hand-drawn nametags. My intent wasn’t to create an organization, let alone an “institution,” but rather just react to the readily apparent desire for those in the local community to have a venue for connecting and sharing ideas. In the mid-2000’s, there weren’t a lot of options to do so, as the ecosystem vibe still hadn’t recovered from the dot-com bubble burst.

Fast-forward to today and the landscape is different. Accelerators, incubators, and co-working spaces have proliferated in Cambridge and Boston. Seed capital is more readily available, including of course through NextView Ventures. And the number of tech networking events available on any one given night is exciting (and tiring if you were to try to attend them all). Plus, tech has moved on from the Web 2.0 era to a mobile-first one, and soon beyond even that. The Web Innovators Group, with innovation in its namesake, should reflect this changing environment.

So today, I am pleased to announce that we’re changing the name of the Web Innovators Group to the Boston Innovators Group — or, as we’ll mainly refer to it, BIG.

Yes, WebInno is becoming BIG. In one sense, I felt it was important for the name to both move beyond a narrow view of “web” tech while also invoking something large or grand to match the end-goal of any audacious, innovative, entrepreneurial endeavor.

Moreover, I felt that a decade into this group, it was time turn the page to the next chapter. Soon we’ll begin to add new features to the gatherings’ format as well. But the continued goal is to highlight local tech entrepreneurs who are in the earliest stages of building something big, as well as for others in the Boston community to connect with each other and see product demos from startups which will be the next Dropbox, thredUP, reddit, or Localytics — all “alumni” startups from past events.

Nothing is more personally gratifying than hearing from attendees, “I met my co-founder at the event,” or, “I met my first investor there,” or, “I found a startup job there.” My personal aspiration is that I’ll continue to keep hearing these things from people who attend BIG events for hopefully another decade.

So I hope that you’ll join me for the first BIG event, which will be held on November 19 at District Hall. (After all, you wouldn’t want to miss something big.)

RSVP to the event here.

PS: Be sure to follow @BIGinnovators on Twitter. (If you already followed @webinno, no action needed.) Lastly, the new hashtag will be #BIG + the event number — so #BIG1 will be the hashtag for our Nov. 19 event. Hope to see you there!

The post Boston’s WebInno Is Now BIG appeared first on GenuineVC.

"Brief Candle in the Dark: My Life in Science" by Richard Dawkins

Sat, 10 Oct 2015 18:07:51 +0000

Oxford Zoology Professor Richard Dawkins is finishing up a whirlwind book tour through the U.S., addressing sold-out venues of free-thinking fans who flock to him as much for his sermons on Reason and Science as they do for a signature on his memoirs.

One of Richard's favorite stops is always Kepler's Bookstore in Menlo Park, where I had the pleasure of interviewing Richard about his memoirs before a crowd that sold out four weeks in advance. Richard graceed his audience by reading several excerpts I selected -- chosen to give a sense for his writing but, like any good trailer, not to reveal crucial plot lines.

So rather than write a review of the book (which the NY Times and Guardian have already done quite well) I'm here to share a little preview of the story, which covers the second half of Richard's illustrious life so far. With this taste of the book, you can relish how Richard crafts every message with subtle detail and humor that, in Silicon Valley parlance, delights the user.

The first excerpt gives a glimpse into life at the hallowed institution of Oxford University, featuring brilliant but eccentric personalities who mix profound wisdom with the backseat bickering of children. As Richard recounts his unwelcome rotation as Sub-Warden, the setting seems less like Oxford and more like Hogwart's.

Although the Sub-Warden doesn’t have to seat people and their guests (as the presiding fellow does in some other colleges), he is expected to beam the role of genial host at dessert. I did my best, but there was one awkward evening. As I was helping people to find their seats I became aware, from a sort of ominous rumbling, that all was not well. Sir Michael Dummett, immensely distinguished philosopher, Wykeham Professor of Logic in succession to Freddie Ayer, stickler for grammar, conscientious and passionate campaigner against racism, world authority on card games and voting theory, was also famously choleric. When angered he would go even more than usually white, which somehow seemed – though this may be my fevered imagination – to make his eyes glow a menacing red. Pretty terrifying . . . and it was my duty as Sub-Warden to try to sort out whatever this problem was.

The rumble grew to a roar. ‘I have never been so insulted in my life. You have the most atrocious manners. You obviously must be an Etonian.’ The target of this damning sally was not me, thank goodness, but our quirkily brilliant classical historian, Robin Lane Fox. Robin was hopping with anxiety and bewildered apology: ‘But what have I done? What have I done?’ I didn’t immediately succeed in discovering what the problem was, but in my hostly role I saw to it that the two of them were seated as far from each other as possible. I later learned the full story. It had begun at lunchtime that day. Lunch is an informal, self-service meal and fellows sit where they like, although it is conventional to fill up the tables in order. Robin noticed that a new fellow was hesitantly looking for a place. He courteously motioned her to sit, but unfortunately the chair he indicated was the very chair for which Sir Michael was heading himself. The perceived slight rankled, simmered up through the afternoon and finally boiled over after dinner at dessert. The story had a happier ending, as Robin told me when I asked him recently. A couple of days after that distressing incident, he was approached by Professor Dummett who offered the most gracious apology, saying that there was nobody in the college whom he would less wish to insult than Robin. Thank goodness I was never the target of his ire, although I might have been vulnerable as he was a devout Roman Catholic with the zeal of the convert.

Here is a memory of Richard's biogeographic expedition to Barro Colorado Island in Panama with John Maynard Smith:

This party was also memorable because of the firework display on a huge ship passing through the canal just beyond the trees. Actually falsely memorable, because for years I have been utterly convinced that we saw in not just a new year but a new decade: 1 January 1980. So detailed and full were my recollections of ‘seeing the new decade in’, it took multiple documentary evidence, kindly sent me by Ira Rubinoff, Ragavendra Gadagkar and Nancy Garwood, to finally convince me that what I had thought to be a crystal clear memory was faulty. It was actually 1 January 1981, not 1980. I was quite shaken to discover this, because it made me worry how many other clear memories actually never happened (and the reader of my memoir is, I suppose, duly warned).

The dreamlike presence of large tankers deep in the jungle was one of the most vivid memories I took away from the place. On several afternoons I had joined the resident scientists swimming off a raft, and it was a surreal experience to see those gigantic vessels gliding calmly, and surprisingly quietly, through the still, clear water, just a few yards away behind the trees. Some of the women scientists liked to sunbathe, and I couldn’t help wondering what the tanker crews thought about the undraped feminine pulchritude diving off the raft deep in the jungle. If those mariners were Greek, did they think Sirens; or if German, Lorelei? Or – peering through the lush tropical vegetation – did they see a vision of Eve’s innocence before the Fall? They had no way of knowing that these tropic nymphs had PhDs in science from some of the top universities in America.

Among my favorite passages is RIchard's recollection of the BBC-televised Christmas Lectures, an annual lecture series for children replete with physical demonstrations. Michael Faraday had launched the London tradition and the honor on has since passed on to the greatest science educators like Carl Sagan, Sir David Attenborough, and Richard.

One agreeable and unanticipated feature of the Christmas Lectures was that the very name was a golden key to unlock goodwill whichever way I turned. ‘You want to borrow an eagle? Well, that’s difficult, I honestly don’t see how we can realistically, I mean do you seriously expect… Oh, you’re giving the Royal institution Christmas lectures? Why didn’t you say so before. Of course. How many eagles do you need?’

‘You want an MRI Scan of your brain? Well, who is your doctor, have you been referred to the MRI department on the National Health Service? Or are you going privately? Do you have health insurance? Have you any idea how expensive MRI scans are, and how long the waiting list?... Oh, you’re doing the Christmas lectures? Well, of course, that’s different. I’m sure I can slip you into a research run, no questions asked. Can you come to the radiography department on Tuesday during the lunch hour?’
By just dropping the name of the Christmas lectures, I managed to borrow an electron microscope (big, heavy, and transported at the lender’s expense), a complete virtual reality system, an owl, an eagle, a magnified circuit diagram of a computer chip, a baby, and a jactitating Japanese robot capable of climbing walls like a much enlarged, ponderously hissing gecko.

I chose, as the overall title of my series of five lectures, Growing Up in the Universe. I meant ‘growing up’ in three senses: first, the evolutionary sense of lice growing up on our planet; second, the historical sense of humanity’s growing out of superstition and towards a naturalistic, scientific apprehension of reality; and third, the growing up of each individual’s understanding, from childhood to adulthood.

It was a tradition to call up volunteers from among the children, which is what Richard proposed to do in preparation for an experiment that involved injecting a human eye.

This being the Christmas Lectures, the next thing to do was to call for a volunteer . . . I produced a huge veterinary hypodermic syringe, fit to sedate a rhinoceros, and asked who would like to take part in the experiment. Normally, the children at the Royal Institution Lectures fall over themselves in their eagerness to assist in demonstrations. Surely nobody would volunteer in this case, and I was about to reassure everyone that it was only a joke when one little girl of seven, probably the youngest in the audience, hesitantly raised her hand. It was my darling daughter Juliet, sitting shyly by her mother. I still choke up a little at the memory of her uncomprehending loyalty and courage in the face of the monstrous hypodermic that I was brandishing.

When Richard does call up a volunteer, it turns out to be a plant -- his friend Douglass Adams. Later in the story he recounts how Douglass introduced Richard to his current wife, Lalla, to whom Richard dedicated the book.

This was 1992, when Douglas Adams reached his fortieth birthday, and his party was memorable for a particular reason. It was there that he introduced me to the actress Lalla Ward, whom he had known from the days when Doctor Who was at its wittiest because he was the script editor and she and Tom Baker gave added value to the wit by their inventively ironic playing of the two leading roles. At the birthday party, Lalla was talking to Stephen Fry when Douglas led me over and introduced us. Douglas and Stephen are both absurdly much taller than Lalla and me, so it was natural that we should find ourselves facing each other under a Gothic arch formed by Douglas and Stephen as they exchanged lofty witticisms high above us. Through the archway I shyly offered to refill Lalla’s glass, and when I returned we rapidly reached agreement that the party was too noisy for conversation. ‘I suppose, by any faint chance, it wouldn’t just possibly be a good idea to go out for a quick meal and – of course – return later?’ We discreetly slipped away and found an Afghan restaurant off the Marylebone Road.

That Lalla had read The Selfish Gene and watched my Christmas Lectures was gratifying. That she had read The Extended Phenotype (and Darwin) as well was too good to be borne. I subsequently discovered that, in addition to Doctor Who’s companion, she had played a beautiful Ophelia to Derek Jacobi’s Hamlet in the BBC TV production, and was also a talented and versatile artist, published author and book illustrator. As I said, too good to be borne. We didn’t return to the party.

I mentioned to Lalla that I was about to embark on my American journey, having added to the itinerary a visit to John Brockman. She said she was about to set off for a holiday in Barbados, with a girlfriend from the theatrical world. Impulsively she asked if I would take her to America with me, although it would mean letting down her friend in Barbados. Equally impulsively I agreed.

Slight embarrassments then opened up. I was due to stay with Dan and Susan Dennett on first arriving in Boston, and later with the Brockmans in Connecticut. In both cases one house guest was expected, not two. How could I broach the subject? Lalla and I fretted that our hosts would ask – it is, after all a perfectly normal question to ask of a couple – ‘How long have you known each other?’ and we would have had to answer, ‘A week.’ As it turned out, they didn’t ask, and it was only years later that Lalla confessed to Dan the truth. ‘Really?’ said Dan, with possibly mock innocence. ‘I thought you’d known each other for years.’

In this excerpt, Richard recounts some of the backlash he faced from his most successful and controversial book God Delusion:

Opposition from religious apologists was predictable, and I’ve already mentioned the flea books. But attacks came, too, from fellow atheists, sometimes in outspokenly belligerent terms. One well-reputed reviewer went so far as to say that The God Delusion made him ashamed to be an atheist. His reason seemed to be that I didn’t take ‘serious’ theologians seriously. I dealt fully with those theological arguments that purport to support the existence of a deity. But I was entirely right not to bother with those that assume the existence of a deity as a starting point and go on from there.

I have tried but consistently and failed to find anything in theology to be serious about. I certainly take professors of theology seriously when they use their expertise to do things other than theology: jigsaw the fragments of the Dead Sea scrolls, for instance; or minutely compare Hebrew and Greek texts of scriptures, or sleuth out the lost sources of the four gospels and the other gospels that didn’t make it into the canon. That’s all genuine scholarship, fascinating to read and deserving of respect. It’s even true that historians need to study theological logic-chopping in order to understand the disputes and wars that have stained European history, for example the English Civil Wars. But the vacuous deepities (Dan Dennett’s splendid word) of ‘apophatic theology’ (Karen Armstrong’s obscurantist smokescreen), or the expenditure of precious time arguing with other theologians over the precise ‘significance for us today’ of Original Sin, Transubstantiation, the Immaculate Conception, or the ‘mystery’ (sorry, ‘Mystery’) of the Trinity, none of that is scholarship in any respectable sense of the word, and it should have no place in our universities.

Theological gymnastics over the ‘significance for us today’ of nonsensical ideas from the past like transubstantiation lend themselves to satire – positively beg for it. A gem that I recently met: ‘Of course we don’t literally believe the story of Jonah and the whale. But it is symbolic of Jesus’ death and resurrection . . .’ Suppose science worked like that. Suppose that (to take a most unlikely hypothetical) future scientists were to find that Watson and Crick were completely wrong, and the genetic molecule is not a double helix at all. ‘Ah well, of course nowadays we no longer literally believe in the double helix. But what is the significance of the double helix for us today? The way the two helices twine intimately around one another, though not literally true in the crude, materialistic sense, nevertheless symbolizes mutual love, don’t you feel? The precise, one-to-one pairing of purines with pyrimidine is not literally true, nothing so crude as that, but it stands for . . . When you contemplate the Watson–Crick model, don’t you get an overwhelming feeling – I know I do – . . . etc. etc.

The book features many wonderful cameos in by Richard Leakey, Francis Crick, Chris Hitchens, and so many other great thinkers. For the final excerpt, here are Richard's impressions of Carolyn Porco.

Carolyn came to visit us in Oxford, and has been friends with Lalla and me ever since. She is a planetary scientist, in charge of NASA’s Cassini imaging team – the team that has brought us those stunning pictures sent back from Saturn and its many moons. But she is more than just a good scientist; she is inspired by the poetry of science, especially the romance of the spheres that share our sun. She is the nearest approach I know to a female Carl Sagan, a poet of the planets and singer of the stars. Whether or not the heroine of the book Contact was actually modelled on her, it is a fact that Carl Sagan invited her to be the character consultant on the film version. The scene where Ellie first hears the unmistakable communication from far space still gives me goose bumps when I think of it. The slender, clever young woman, woken up by the mind-shattering signal, bouncing back to base in her open car, exultantly yelling the celestial coordinates into the intercom for her dozing assistants: numbers, numbers, the spine-tingling poetry of those numbers and their arc-second precision. And how poetically right that the hero of the numbers should have been a woman. A role model, just like Carolyn.

An anecdote displays the poetry of Carolyn, and I related it in the Oxford Playhouse when introducing her Simonyi Lecture. A beloved professor from her days at Caltech was the geologist Eugene Shoemaker, co-discoverer, with his wife and David Levy, of the famous Shoemaker–Levy comet. A pioneer of astrogeology, Shoemaker was part of the Apollo space programme. He was in the running to be the first geologist on the moon, but to his sad regret had to drop out for health reasons, and he turned to training astronauts instead of being one. In 1997 Shoemaker was killed in a car crash in Australia. Carolyn, in her grief, raced into action. She knew that NASA was about to launch an unmanned craft, which was programmed to crash-land on the moon after its mission was accomplished. She managed to persuade the mission manager, as well as the head of the planetary exploration programme at NASA, to add her teacher’s ashes to the spacecraft’s payload. Gene Shoemaker’s ambition to be an astronaut was denied him in life, but his ashes now lie on the moon’s surface where no wind stirs them (it is said that Neil Armstrong’s footprints are almost certainly still intact), and with a photographic engraving bearing these words that Carolyn chose, from Romeo and Juliet:

. . . and, when he shall die

Take him and cut him out in little stars,

And he will make the face of heaven so fine

That all the world will be in love with night,

And pay no worship to the garish sun.

I have dined out on that story from time to time, but I usually cannot manage to recite the Shakespeare, and turn to Lalla to rescue me. When she speaks the lines from memory in her beautiful voice, I think I am not the only one around the table to choke up.

Richard takes a break from book signings to appear on Bill Maher with Neil dGrasse Tyson

Announcing Our Investment in Renoviso

Mon, 28 Sep 2015 11:44:32 +0000

A few years ago I replaced all of the decades-old windows in our home with new ones. The entire process was horrible. I used home service lead-gen and recommendation-review sites to identify a half-dozen installers to set up initial in-person consultation appointments. Only half of them even showed up. For those who did, I was offered a set of confusing options with opaque pricing without any relative understanding of the quality of the service or the product itself. After finally making a selection, the installation took longer the one-day quoted plan and we were left overnight with gaping hole in our house! To top it off, there was a dispute about the final cost given the scope of work. Eventually everything was completed and resolved, but not after an extremely frustrating and delayed process. In a world of consumer-centric on-demand services, it didn’t seem like it should be this way.

Meanwhile, Eric Horndahl and Brian Waldman had been germinating a startup idea to address this consumer home renovation problem for a while now. Over a year ago Eric and I were chatting at a NextView-organized entrepreneur event where he shared the concept of what has now become Renoviso. It immediately clicked with me as a consumer when I detailed the above narrative, and he shared that my experience wasn’t unusual, nor was it exclusive to just window replacements.

Renoviso is a service empowering consumers to complete home renovation projects through a transparent and easy e-commerce model. The company offers easy online configuration ordering with transparent pricing for premium products, short in-home consultation to confirm measurements and details before commitment, and no-hassle professional installation. Renoviso has established direct relationships with both product manufacturers and high-quality installers to enable a seamless experience for the end-consumer.

Today Renoviso is announcing their $1.4M Seed round of financing led by NextView Ventures, where I will be joining the Board of Directors. We’re joined in the round by RRE, BOSS Syndicates, NextGen, and awesome strategic angels like Niraj Shah (CEO of Wayfair) and Fabrice Grinda.

The rationale behind our investment isn’t built upon my one lone VC customer experience. Rather, the foundation is based on our experience with labor marketplace investments like Paintzen and TaskRabbit, as well as our long-held thesis about high-consideration e-commerce. I’ve blogged before about the latter:

People are now buying things online which take more than a few (dozen) minutes of reflection. And not surprisingly, the most salient reasons that these items are given more consideration are that the cost are higher, they often take up more space in a person’s life/house, and they’re experienced over a longer duration. In many cases, there were already cases of these types of products already being purchased online, but given a new wave of innovation and greater acceptance, I think we’re at an inflection point where an increasing number of high-ticket, larger, enduring goods will be bought on the web.

Selling high-consideration goods online is not just about publishing a web product catalog with features, specs, and reviews. It’s about helping foster consumers though a rich buying experience… The innovation happening in this space now is centered around the way vendors present, inform, and consummate a sale.

Home renovation is perhaps the ultimate high-consideration purchase, both because it affects an individual’s life so directly and also because the purchase price can be very meaningful. This means that if a startup can address the category with an effective solution, the rewards can be absolutely massive. Historically and even recently, the online category has been filled with lead-generation & advertising models, but those only effectively direct consumers to installation providers to experience the same set of problems… Renoviso actually takes care of the whole process for the consumer.

Eric and Brian are the perfect duo to make this company a success. Both are online marketing gurus with a rich background in multi-category customer acquisition at BuyerZone, TripAdvisor, and Cayan. As I mentioned, I’ve known Eric for a while now, but in diligencing this investment I conducted a number of background references on both of them and heard superlative phrases like “I don’t think can give higher recommendation to anybody,” “fiercely hard working,” and “so hungry… I’d highly highly bet on him.” It’s hard to argue with endorsements like those.

Windows are just the beginning for Renoviso. I am looking forward to the day not too far from now when I personally can use the service to install a new fence or add hardwood floors to our den. But I am more excited about when there will be thousands of customers joining the existing ones who are ecstatic about a home renovation experience which is stress-free.

The post Announcing Our Investment in Renoviso appeared first on GenuineVC.

Seeking Nonconsensus

Thu, 27 Aug 2015 12:42:51 +0000

Tales become legends about founders of exceptionally transformative companies who truly struggled to get any investors’ attention early on. These rejection emails to the founder of Airbnb represent just one of the most recent example of this familiar theme.

If a startup were obvious, then everybody would be doing it. And it wouldn’t be an opportunity.

My partner Lee likes to talk about successful fundraising as “finding the believers, not convincing the skeptics.” When I think to the best performing companies in our NextView portfolio, the investment process was driven by (at least) one of the three of us who became a true believer. It wasn’t obvious. In fact, some of these investments were initially not unanimous in perspective and perhaps controversial decisions internally. That’s not to say that all of our strong portfolio companies were nonconsensus among the three of us – quite the opposite. But looking back upon reflection, they were almost all nononsensus within the venture community.

Instead, we had a unique insight that drove our conviction. A long-standing relationship with a founder and her ability to execute. A deep understanding in a particular market landscape. A lesson from another portfolio company situation which “rhymed” that could extend to another situation. A stronger appreciation of the primary distribution method’s effectiveness. Or perhaps a simple recognition of the market need that others don’t see. Even the “hot” companies which seem perhaps obvious given traction or a star experienced founder sometimes have pricing that’s driven up to being “crazy”… consensus then becomes that “the VCs overpaid.” Consensus internally, nonconsensus externally. That’s what my partners and I at NextView are striving for.

(Note: we have an explicit internal cultural “ethos” rule that once we decide to make an investment as a team, together we collectively fully own it and work tirelessly 110% for all of our portfolio companies.)

Entrepreneurs (rightfully) lament that VCs follow a herd mentality. It’s true. It’s easier to, and human nature to, unconsciously shape your thinking with heavy influence from your peers. VCs are people and are subject to the same conformity bias that social psychologists identified decades ago. The proverbial “me too” VC-funded companies in any category du jour are a reflection of that fact.

But with the recognition of this natural tendency comes the ability to overcome it. My partner Rob talks about “getting beneath the surface” in “truth seeking” diligence. We deliberately ask ourselves, “What do we recognize or understand about this investment that others do not?”

The truth comes out in looking at our own NextView portfolio. Why would consumers ever want a new calendar app when there’s already one installed on their phone? Exceptional product execution fundamentally changes its utility. Why would moms ever dress their kids in somebody else’s used clothes? Great selection of like-new condition items at lower-prices. Why would developers ever turn over their entire source code to a third-party? Ensuring security and efficiency.

The flip side of seeking nonconsensus is not doing it for its own sake. Nonconsensus is perhaps necessary to invest in a transformative company, but it certainly isn’t sufficient – you also have to be right in your thesis. Mike Maples has talked a lot about this framework; so has Peter Thiel in his Venn diagram that opportunity is the overlap of “seems like a bad idea” and “is a good idea”; and Chris Dixon’s continuing meme about “the next big thing will start out looking like a toy.”

Last week I shared the pitch about our latest (to be announced) investment to another VC. The human in me naturally wanted him to say, “Wow! That’s a unicorn in the making.” Instead, he just forced a grin and noted it was “kind of interesting” while citing the meaningful challenges ahead. It’s certainly a nonconsensus bet… but I believe that I know something he doesn’t. Now we just have to wait half a decade or more and see if I’m right.

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The Imitation Game (or, Why I Invested in Distil Networks)

Tue, 30 Jun 2015 15:52:15 +0000