The Finance To Value Framework

There are two major failure modes in startups. The first common failure mode is the thing you make doesn’t get adopted. That’s called not finding product market fit in startup lingo. The second common failure mode is “getting too far out over your skis” and it happens to companies that do find product market fit but mess things up by building an inappropriate cost structure (and capital base) and it all comes crashing down on them when they either can’t continue to raise money at ever increasing valuations and/or when they can’t grow into their cost structure quickly enough. The first failure mode comes with the territory. The world of startups is all about experimentation. Most experiments fail. If this happens to you, it sucks, but that is what you signed up for. The second failure mode is entirely avoidable and way more common than you might think. The capital
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Video Of The Week: How Play Made the Modern World

I got to spend a fair bit of time with my friend Steven Johnson this past week, in preparation for our crypto talk on Thursday night and before and after that talk. Steven has this wonderful quality of being able to observe both history and the present and make connections between the two and also to weave those observations into narratives that make for great stories. A persistent theme in his work is the role of play in the advancement of society. He argued in Everything Bad Is Good For You that playing video games and watching TV are actually educational and productive uses of our time. And in Wonderland, he argued that play led to many important societal advances. This talk at RSA, delivered in the wake of Wonderland, is a great articulation of the value of having fun to moving society forward. I enjoyed it very much
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Funding Friday: Food Security for Puerto Rico

An AVC community member sent me to this GoFundMe project last weekend and I backed it. They are raising $20k to build two hydroponic vertical tower farms in two communities in Puerto Rico. A tower farm looks like this: This is from the project page:
Puerto Rican families need sovereignty over their own food supply. Before Hurricane Maria, Puerto Rico was 80% reliant on imports to supply the island’s food. Now they are 100% reliant on imported food.  People need access to fresh water and food to live. There is no time to waste in launching the agricultural revitalization that Puerto Rico so desperately needs. The local government is financially over-extended and has limited support from FEMA. Lives depend on us.
And this is the team behind this project:
Green Food Solutions was co-founded by Electra Jarvis and Mary Wetherill. We are a vertical farming company. We sell, install,
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What’s Going On?

A lot, to be honest. It’s Crypto Week in NYC this week. The last two weeks have been a blur, with so many things happening that I can’t keep up or write about all of them. But, here are a few 1/ The Rockets ended the sweep nonsense talk going on in the bay area with a trompsing of the Ws last night in Houston. Thank God. 2/ The Celtics are showing how great a job Danny Ainge and Brad Stevens are doing running that team. 3/ Our portfolio company Blockstack launched a Dapp Store yesterday, featuring Dapps across all of the competing chains. When I saw that on Twitter, I said this: 4/ I will spend the day at William and Nick’s Token Summit and
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The Maturation Of A Market

Yesterday’s announcement that our portfolio company Coinbase is launching a suite of institutional products for the crypto market made me step back and think about the evolution of their institutional business. Coinbase started out as a place for individuals to buy, sell, and hold Bitcoin. They launched that in 2012. In 2015, Coinbase added the GDAX exchange where institutions, other exchanges, and large traders could trade Bitcoin. By the middle of last year, it became clear that many big institutions were entering the market and needed a lot more. And so Coinbase went back to the drawing board and developed a plan for a comprehensive suite of institutional products. And that is what they announced yesterday:
  • Coinbase Custody
  • Coinbase Markets
  • Coinbase Prime
  • Coinbase Institutional Coverage Group
What started out as a simple web and mobile app for buying, selling, and holding Bitcoin has evolved into a full-fledged financial services company, serving
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Off Grid Crypto Transactions

One of the benefits of decentralization is that you can build “censorship-resistant” applications. The best example of that is Bitcoin, a store and transfer of value system that governments can’t interfere with. Censorship resistant money, as it were. But if these transactions are going across a wire that is controlled by the government or some other censor (Apple, Google, Facebook, etc), then you haven’t really accomplished your goal. Enter mesh networks. Yesterday, our portfolio company GoTenna, which makes a popular and inexpensive mesh networking device, announced something pretty interesting, a mobile app called TxTenna that will allow off grid Bitcoin transactions. From that blog post:
Today we are pleased to announce that the Samourai team took our suggestion, and went well beyond our expectations! The result is the TxTenna app. A transaction using the TxTenna app works as follows: Using the Samourai Wallet app the user creates a standard
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Having A Foot In Both Camps

At our annual CEO Summit, which took place last week, we kick things off going around the room with each attendee (there are over seventy at this point) mentioning something they are struggling with right now. When it got to my turn, I said that I am struggling to be “all in” on crypto and also “all in” on my current portfolio companies. A few of my current portfolio companies are in the crypto space, which makes it easier. We have been investing in crypto since 2012. But most are traditional internet-based businesses that use subscriptions, advertising, and/or commerce to monetize. I am very happy with the progress of these portfolio companies and am very engaged with them, their teams, their strategies, and their businesses. My portfolio has not been in this good shape in I don’t know how long and I am quite enjoying my work with these companies.
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Happy Mothers Day

It is a bit strange that we set aside one day a year to honor Mom and motherhood because where I sit it is something we need to honor every hour of every day. Motherhood is one of the most beautiful things about life. The combination of unrelenting love and equally unrelenting demands is a potent mix. It is the thing that makes us grow up and be what we are. So let’s celebrate motherhood and the mothers in our life today, and every day. Happy Mothers Day.

Video Of The Week: Vitalik’s Talk At Edcon

One of the most important questions in crypto land right now is “whither Ethereum?” To get a sense of the answer to that question, it helps to listen to the important speeches Vitalik gives. This one, at Edcon in Toronto last week, was quite helpful to me.

And Now A Word From Our Sponsor

I’m running an advertisement here today. I’ve been Chairman of two public companies in my career and the leaders of those two companies sat down and talked yesterday. I enjoyed watching that very much and hope you do too. In this nine-minute video, Jim Cramer talks to Josh Silverman, CEO of Etsy, about what makes Etsy “special” and how being special allows them to compete and win against Amazon. Etsy CEO on Amazon Handmade: It doesn’t really threaten our business from CNBC. Disclosure: I am the Chairman of Etsy, have been on Etsy’s board for 12 years, and my wife and I own a lot of Etsy stock.


Albert Wenger — May 9, 2018
Uncertainty Wednesday: Beliefs (Part 3)

The Jetsons

When I was a kid, two of my favorite cartoons were from Hanna-Barbera; The Flintsones and The Jetsons. I particularly loved The Jetsons. From Wikipedia:
the Jetsons live in a comical version of the future, with elaborate robotic contraptions, aliens, holograms, and whimsical inventions.[3][4] The original series comprised 24 episodes and aired on Sunday nights on ABC beginning September 23, 1962, with primetime reruns continuing through September 22, 1963
In the last few weeks, I have been feeling that we are heading into a future that looks quite similar to The Jetsons. I got a deck last week for an eVOTL company (which is not something we would invest in at USV) and shared it with a few colleagues and said “The Jetsons”. The Jetson’s family robot Rosie is way better than Alexa but maybe in a decade or so, Alexa will be able to do
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Subscribing To AVC Via Email

About a month ago I put all of AVC traffic behind “https.” This is something you can do with one click of a button if you are behind Cloudflare, as AVC is. I should have done this a long time ago, but only got around to doing it last month. In the process, I broke the subscribe via email feature and only fixed it this morning. So, this is as good of a time as any to mention that you can get this blog delivered via email every morning. You can subscribe via email (or RSS if you prefer that) here.


Albert Wenger — May 7, 2018
World After Capital: Getting Past Capital

Giving Publicly Traded Stock To Charity

One of the best things about having highly appreciated publicly traded stock is that it is the most attractive way to make charitable gifts. The Gotham Gal and I do this all of the time and I encourage others (founders, early employees, investors, angels, etc) to do it. Here’s how it works: Let’s say you have shares of Facebook that you got when you joined back in 2006. Let’s say that your exercise price was $3/share and that is your cost basis. Let’s say you want to make a $100,000 gift to a great cause that you are deeply involved with. Instead of taking out your checkbook (who does that anymore?) and writing a $100,000 check, consider gifting some Facebook shares. At $175/share, a $100,000 gift would be 571 shares. So you ask the charity if you can gift shares. Almost every time I do that, the answer is
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Is Buying Crypto Assets “Investing”

There are few investors I have more respect for than Warren Buffett and Charlie Munger. So much of what I believe as an investor has come from watching them conduct themselves over the last thirty-five years (that’s as long as I have been paying attention to investing as a discipline). I believe in fundamental value, I believe in buying when others are selling, I believe in holding positions you find attractive over very long periods of time, and I believe in a lot more that they have espoused and done. So when I read the two of them disparaging the purchase of crypto assets, it bothers me. Obviously I don’t agree with them, but I am trying to see what they are seeing and disliking. This interview that Buffett did with Yahoo! Finance is instructive. Buffet says:

“If you buy something like a farm, an apartment house, or an

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Video Of The Week: Kevin Slavin on “Getting Brilliant People to Surprise Themselves”

There is a new cultural institution being built in NYC right now, the first major new cultural institution built in NYC in quite a while. It is called The Shed and its mission is to be “The first arts center designed to commission, produce, and present all types of performing arts, visual arts, and popular culture.” I have been fortunate to have had a ground floor seat to watch this come together and observe the team led by the Chairman Dan Doctoroff and CEO Alex Poots make something that is equally ambitious and futuristic. The CTO of The Shed is Kevin Slavin, who is well known to folks in the NYC tech community. He’s an entrepreneur, academic, and technologist. In this video, made by Y Combinator, Kevin talks about how to get “brilliant people to surprise themselves” which is something Kevin and The Shed are going to have
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Founder Control

I will start this post by stating that I am very much in the “one share one vote” camp. That said, I have supported founder control provisions, like the one that Mark Pincus put in place when he took Zynga public back in 2011. Mark wanted to put those provisions into the Series A deal when we co-led the first venture round at Zynga. I was not a fan of the idea then, but when the Company got ready to head into the public markets, Mark made a convincing argument that a founder would have the long-term interests of the company at heart, whereas the public investors would not. And so Mark has controlled 70% of the voting stock at Zynga for the last seven years while his actual ownership is now around 10%. I am telling you all of this because yesterday Mark did something that many thought he would never
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I’m in Canada today to attend a board meeting. I love Canada. It’s a kindler gentler more welcoming version of the US. And it’s increasingly an important place to be for the tech sector. About 10% of USV’s active portfolio is in Canada. And 30% of our last ten investments are in Canada. We have portfolio companies in Toronto, Waterloo, and Vancouver. We also know that Montreal, Quebec, and Ottawa are attractive places to invest. Canada has a lot to offer as a home for a tech company or a second office for a tech company. The government is enthusiastic about tech companies and provides an R&D credit to tech companies. I don’t think this credit is so financially significant that it should determine where you locate your company, but it is a sign of the government’s enthusiasm for tech. More importantly, the talent pool in Canada is rich. Canadians
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Token Summit III In NYC

On  May 17th, AVC regulars William Mougayar and Nick Tomaino will be hosting the 3rd Token Summit in New York at Pier 36 (aka Basketball City).
There are still a few tickets left but I think it will sell out soon.
The agenda was released a few days ago. There are some interesting topics on the agenda: Security Tokens
Token Regulation in the US
Non-Fungible Tokens
The Asian Crypto Landscape
Token Regulation in Switzerland I will be there and will talk to the CTO of CryptoKitties Dieter Shirley about digital collectibles. My partner Brad Burnham will be on a panel discussing token regulations. And some of our companies will also be speaking, such as Blockstack and Coinbase. May 14-18 is “Blockchain Week” in NYC and also features the Consensus Conference where I will be doing a fireside chat mid-morning on Wednesday May 16th. If you are in the blockchain/crypto sector,
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