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.


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

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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Google Finance

Google Finance and Yahoo Finance are two web services I have used daily since the early days of the Internet. I have used Yahoo Finance since it first launched in January 1997. But after Google Finance launched in 2006, I started using Google Finance more and eventually, it became my default finance site on the web. Sometime in the last month or two, I can’t remember exactly when, Google revamped Google Finance. The UI is cleaner and the service is much simpler. But a lot of the power user features I had come to rely on in my daily work are either gone or buried so deeply that I can’t find them. I also find it hard to search for a price quote now, which is kind of the most basic feature one would want in a service like this. Anyway, I have switched a lot of my usage back
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This Giant Infographic Has 140+ Facts on the Scale of Amazon

This Giant Infographic Has 140+ Facts on the Scale of Amazon

This Giant Infographic Has 140+ Facts on the Scale of Amazon

As Amazon continues its takeover of the retail sector, the scale at which it operates continues to impress. Back in late 2016 we examined the extraordinary size of Amazon from a market valuation perspective, which showed that the ecommerce giant was worth more than most brick and mortar retailers put together. Today’s infographic from 16Best continues along that same thread, except this time focusing on Amazon from more of an operational perspective.

Amazon: At a Glance

Amazon has more than 304 million users, and 3 billion products selling on their 11 marketplaces – and every day, 1.3 million new products are added. The company has a 43.5% market share of U.S. ecommerce spending. It’s no surprise then, that the average customer spends $700 per year with Amazon, and that 34.7 items are shipped every single
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Why the Spotify IPO is Both Unusual and Intriguing

Why the Spotify IPO is Both Unusual and Intriguing

Why the Spotify IPO is Both Unusual and Intriguing

The Chart of the Week is a weekly Visual Capitalist feature on Fridays. On April 3, 2018, the music streaming service Spotify is expected to hit the public markets for the first time. However, while IPOs are usually large, hype-driven spectacles that involve investment bankers and roadshows to financial institutions, the Spotify IPO is taking quite a different route. For a variety of reasons, this will make the Spotify IPO both an unusual and intriguing event for investors. Here’s what’s interesting about the impending listing of the Sweden-based unicorn.

1. A Rare Breed

Despite the tech IPO being a legendary exit strategy among startup founders and venture capitalists, the reality is that today tech IPOs are few and far between. Tech IPOs in the U.S. By the same token, IPOs are also traditionally a way for investors to get a handle on market sentiment. With fewer
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Taking Money “Off The Table”

One of the hardest things in managing a venture capital portfolio is managing your big winners. A big winner can dwarf the rest of the entire portfolio and you end up sitting on enormous paper profits that you can’t get liquid on. I realize that this seems like a great problem to have, and it is, but it is still a challenging situation. We faced it in Twitter in 2010/2011/2012, in the years before Twitter went public (which happened in the fall of 2013). We had bought 15% of Twitter for $3.75mm in the first VC round in 2007 and though we had been diluted down a bit in subsequent rounds, we had a very large position that was worth in the neighborhood of $1bn by 2011. Our entire fund was $125mm and so we were sitting on a position that was worth 8x the entire fund. It was
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Breaking Down How Amazon Makes Money

‘Tis the season for shopping. For many of us, that means buying things online – and if you are like most internet denizens, you’ll be picking up at least one item this holiday season through the the world’s largest e-commerce giant, Amazon. The company’s sales numbers are growing at a staggering pace. Last year, Amazon had $136 billion in sales, and the company is projected to finish at the $177 billion mark this year. What are the exact sources of Amazon’s revenue, and how does it all break down?

How Amazon Makes Money

Today’s infographic comes to us from Sellbrite, and it dives into the company’s success, and how Amazon makes money: Breaking Down How Amazon Makes Money To the chagrin of many investors, Amazon has traditionally spent a lot to make a little. In 2016, for example, the company brought in $136 billion in net sales, but it spent $131.8 billion on operating
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Why Tech Investors Love the SaaS Model

Why Tech Investors Love the SaaS Business Model

Why Tech Investors Love the SaaS Business Model

Investors love businesses that have a reputation for minting cash. And as far as tech companies go, the Software as a Service (SaaS) model is as good as it gets. It provides predictable, quantifiable, and fast-growing revenue for any company that can execute correctly – and everyone from venture capitalists (like Marc Andreessen) to asset managers (like Blackrock) love investing in companies with these traits. Today’s infographic from TIMIA Capital explains why this is the case.

What is SaaS?

Unlike in years past when software was bought in a physical form at a store, much of today’s software runs right off the cloud. This is made possible by ubiquitous broadband access and powerful computers – and SaaS allows users to consume software in a different way:

Most Valuable U.S. Companies Over 100 Years

The Most Valuable Companies in the U.S. Over 100 Years

The Most Valuable Companies in America Over 100 Years

How much does the business world shift in a century? Today’s visualization comes from HowMuch.net, and it uses Forbes data to show how the list of the top 10 companies in the U.S. has evolved over the last 100 years.

1917: The Industrialist Era

In 1911, both John D. Rockefeller’s Standard Oil and J.P. Morgan’s U.S. Steel (which was formed from Andrew Carnegie’s steel company and others) were facing antitrust action. Standard Oil, which controlled over 90% of all oil in the United States by 1900, got split up into 34 independent companies after a ruling by the Supreme Court. However, U.S. Steel, which controlled 67% of steel in the country, was able to weather the antitrust storm at the time. In the chart showing data for 1917, you can see that U.S. Steel
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IPOs Are Back In Favor

I read this piece on Reuters claiming that the huge megafunds in venture and growth equity are “stalling IPOs.” And while it makes sense at some level, the truth is the exact opposite. Based on everything I am seeing, hearing, and reading, 2018 and 2019 will be bumper years for tech IPOs, assuming the markets behave. Uber’s new CEO Dara Khosrowshahi has promised an IPO in 18-36 months. That says 2019 to me. Hot companies like Stitch Fix are filing to go public this year. We have a pipeline of strong mature (and increasingly profitable) companies in our portfolio that will head to the public markets in 2018 and 2019. So when you read stuff on the Internet, don’t take it as correct. The truth is often the exact opposite.


USV TEAM POSTS:

Albert Wenger — October 23, 2017
Rebecca Kaden: New Partner at USV

Numeraire Is Live

Back in February, I posted about Numeraire. I wrote:
the Numerai team has now gone a step further and issued a crypto-token called Numeraire to incent these data scientists to work together to build the best models instead of just competing with each other

And roughy four months later, I am happy to write that the Numeraire token is live on the Ethereum blockchain. You can read more about this here. Well done Numerai team.


USV TEAM POSTS:

Albert Wenger — June 21, 2017
Uncertainty Wednesday: Random Variables Albert Wenger — June 20, 2017
MongoDB Stitch: A Fresh Take on Backend As A Service

Blue Apron will raise $587M in its IPO, valuing itself close to $3B

 Blue Apron, the meal ingredient delivery service that filed to go public earlier this month, has just priced its IPO. The company will price its shares between $15-$17, hoping to raise a maximum of $586,500,000. Using a $16 midpoint, this pricing gives the company a proposed valuation of just under $3 billion. The company will be listed on the NYSE under the symbol “APRN”, and… Read More

A Man For All Markets

I have had this book, A Man For All Markets, on my kindle for the past year. I can’t recall who recommended it, possibly my friend Jeremy, but I can’t be sure. A couple weeks ago, I had lunch with my friend Harry and he again suggested it to me. I decided to put it at the top of my to read pile (a virtual pile) and have been reading it for the past week. It’s a terrific book, nominally the life story of Edward Thorpe, the math professor, blackjack card counter, and hedge fund manager. The book is a reminder that math, particularly the highly agile mathematical mind, is a very powerful thing. But it is also full of amazing insights on risk and return, from gambling to investing. I particularly liked this observation that Edward makes after testing his “ten count” system with the the
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Being Public

Two former USV portfolio companies had tough earnings calls last night. And you look at that and you might say “why would any company want to go public?” But here is the thing. Being public is about being transparent, accountable, and owning up to the issues and dealing with them. I think it makes companies better. If you are losing your biggest customer, you have to tell the world and deal with the consequences. If you are making a leadership change, you have to tell the world and deal with the consequences. Both of those companies are great companies, in which the Gotham Gal and I are a very large shareholder, and in which we believe in totally and completely. Nothing is always up and to the right, even though you might want it to be. The great companies are the ones that have the guts to bare it
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Surging tech stocks have pushed Nasdaq over 6000 for the first time ever

 The Nasdaq composite just passed 6000 for the first time, hitting an all-time intraday high in the process. Over the past 12 months the composite is up nearly 32%. The majority of this strong performance can be attributed to five technology stocks that have also been surging – Apple, Facebook, Amazon, Microsoft and Alphabet account for about 40% of the composite’s gains in 2017.… Read More

The Blockchain Could Change the Backbone of the Stock Market

Modern technology enables stock markets to be faster and more complex than ever. But while the speed of order executions are infinitely more impressive across the board, the conceptual backbone behind the stock market itself hasn’t changed much. In fact, the model we use today for settling trades and ensuring proper share ownership is still based on the one initially created in the 17th Century.

A Decentralization of Equities?

Today’s infographic comes to us from Equibit, and it envisions what a decentralized securities platform could look like. In such a paradigm, the settlement of trades would not occur through centralized transfer agents, but instead through a blockchain with this feature “built in”. Where the Blockchain Meets the Stock Market The application of blockchain technology could take the modernization of the stock market one step further. Instead of technology being used simply to speed up more complex transactions, the blockchain could change how the plumbing behind the
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When The AI Comes To Your Annual Shareholders Meeting

I was looking at the top twenty shareholders of some public companies last week and saw quite a few “quant funds” on those lists. With the news that Blackrock is going to move much of its asset management business to models and machines, I think we will see more of this in the coming years. It’s annual meeting season for public companies and all of this made me think about when the AI shows up to your annual shareholder meeting. Or when the AI gets your proxy and needs to vote for Directors, executive compensation, and the choice of auditors. Governance is an important part of being a shareholder. When the shareholders are all machines, how does governance work?