CEO Summits at USV

Each year in May, USV hosts a CEO Summit for our portfolio network founders and CEOs.

Initially, we designed this day-long event similarly to what you might experience at a typical conference. It included a predefined agenda, packed with panel discussions, fireside chats, and presentations. While the summit did provide an opportunity for our CEOs to meet each other, interacting with each other was by no means the focus of the day.

The feedback we received was clear: Our CEOs wanted to spend less time passively listening and more time engaging. Preferably with each other.

Then Scott Heiferman, Meetup’s CEO, suggested something even more interesting--kick off the day with stories and lessons learned, opening up a safe space to share anything.

So we scrapped the format and started fresh. Rather than tee up topics that we thought our CEOs might want to hear, we had them drive the content, sharing questions or topics that they might want to discuss with their peers across the portfolio. We kicked off the day with a brave question: “What’s one success or failure you experienced last year that you would like to share?”

For the past five years, we have stuck to this format, and it’s been a game changer.

Now, prior to each summit, our CEOs submit lessons learned and current challenges, which we use to help curate breakout groups where they lead each other in conversation. By leveraging an “unconference style” model, our CEOs and founders learn from each other, rather than from us, which makes a lot more sense. In fact, we thought this idea was powerful enough that we built it into our USV Network guiding principles.

This year’s CEO Summit is coming up in May, and we are eager to see what new questions and topics surface at this year’s event.

Hiring New Analysts (Update 2)

A second quick update on our analyst hiring process (previous update, original announcement). We have now reviewed all applications. We will be reaching out this week to all candidates, starting with those who have made it to the next stage, which will be telephone interviews.

I wish we could write personalized notes to everyone else, but the large number of applicants makes that impossible. As in years past, this is an incredibly talented group of people and unfortunately we have room for only two new analysts. When we reach out, we will include a link to a brief questionnaire where you can opt into us sharing your information with specific USV portfolio companies, which might be of interest to you.

Hiring New Analysts (Update 1)

A quick update on our analyst hiring process. We received 326 applications. Andy and I have so far reviewed 190 of those and plan to complete that initial review by the end of next weekend. We will contact everyone with next steps the week of February 26th.

We had asked a valuation question and gave people a choice of writing about Twitter, Snap, Bitcoin or Ethereum. Here is the breakdown of what people chose (the total does not add up to 326 because, well, not everyone followed the instructions).

Number of Responses

And here is how the applicant pool comes out on their valuations:

Percentage Overvalued / Undervalued

It has been fascinating to read the valuation rationales. Especially for the valuation of crypto currencies, people took widely divergent approaches, including at least one based on volatility that I had never seen before.


We have been writing about the importance of decentralized protocols going back to 2013. Since then a lot has happened, including a run up in the price of Bitcoin (and eventually other crypto currencies), the launch of Ethereum, the rise of ICOs and with them the funding of many new projects. And yet it feels to us that we are still in what Carlota Perez calls the “Installation Phase” of a new technology. That’s the period when a market attracts a lot of capital to help build out the necessary infrastructure.

One clear indication that we still require infrastructure investment was when the CryptoKitties project wound up nearly swamping Ethereum late last year. There is not yet a blockchain that can handle the throughput requirements of most real world applications. Now there are important efforts underway both to build on existing chains, such as the Lightning Network for Bitcoin and Plasma for Ethereum, as well as to extend the capabilities of existing base chains such as Ethereum through protocol upgrades (such as shifting to proof of stake and introducing sharding).

Beyond those efforts though is the quest for a new foundational blockchain. There are many projects at varying stages developing new consensus algorithms that allow for scalability while also remaining secure and decentralized. It turns out to be relatively easy to achieve scalability, if you are willing to comprise on one or both of the other properties. The hard trick is to achieve all three.

We are excited to be backing one of these projects, Algorand, which builds on the work of Silvio Micali and others at MIT. You can learn more about the project on the just unveiled and still somewhat under construction Algorand website. If you are more technically inclined you can read a research paper about Algorand.

Welcoming Stash to the USV Portfolio

At USV, we believe that the best products and services can broaden access in unprecedented ways. Nowhere is this opportunity more substantial than in financial services where, despite the trillions of dollars of market cap that make up the sector, the vast majority of Americans remain poorly served.  

Why? Current banking products aren’t built to establish financial health or understanding for the vast majority of consumers in our country. Instead, traditional banking is built for the wealthy. The banking model functions in 2 basic ways: by investing wealthy customers’ money and charging fees to those whose accounts live around zero. My colleague Nick outlined this imbalance in a post a number of years ago about why it’s so expensive to be poor in America.

And the state of people’s finances shows its shortcomings. 39% of Americans have unpaid credit card balances and 41% have student loans outstanding. 70% have less than $1,000 in savings. More than ⅔ believe that you need at least $100 to start investing (and nearly ⅓ believe that number is closer to $1,000.) These numbers are getting worse not better--despite our technology savvy, millennials are investing at lower rates than any of the generations before. 76% of millennial women find investing confusing.

But in these troubling stats is huge opportunity. Technology makes it possible to serve the mass base of financial services customers with personalized, tailored, high quality products that can improve financial well being for them and their families and result in massive businesses along the way.

Which is why we’re excited to announce our investment in Stash out of our Opportunity Fund.

Brandon and Ed, the founders of Stash, have made it their mission to fix the inequities of the financial services sector. They combine the customer focus and analytical mindset needed to create both a powerful consumer brand and data driven financial institution targeted at a demographic of users that has largely been ignored. 85% of users on Stash come in as either beginners or without any investing experience and now can open their investment account with as little as $5.

And while investing was the starting point, Stash is on a mission to build the suite--this involves a current product set that includes savings, retirement, and custodian accounts, with much more to come. The products are information rich with both content and personalized coaching so consumers can feel empowered to make decisions and to put their money behind the things they care about while knowing Stash has their back and will guide them through. As they increasingly learn about their customer, Stash becomes more and more helpful.

Along the way, they are building a powerful community. Stash users aren’t just investing and saving, they are talking about the product and spreading the word--the root of a powerful growth flywheel. This creates better acquisition funnels and momentum in scale, but, more importantly, its indicative of a product that’s integrating into the lives of their customers and creating excitement, peace of mind, and trust in a new kind of financial services institution. And when’s the last time someone said that about their bank?

We are excited to welcome Stash to the USV family and work with Brandon, Ed, and the rest of the team.

USV Level Up Series

As our portfolio grows, we can help make more of an impact if we leverage the power of our vast network. One part of that effort in scaling impact is to create an “ambassador-like” program. Our intention is to help empower leaders, provide them with access and a platform to collaborate, and host events that are open to our portfolio companies.

Last fall we launched a program exclusively offered to employees within the USV portfolio. Having been invited or nominated to apply, these 10 individuals were chosen based on their level of involvement in the USV network, their leadership skills, and their ability to connect others. The impetus and execution for the USV Level Up Series came from 4 participants in our Network Leaders program - Karen Ko, Office Manager at Foursquare, Michael Rurka, Design Lead at Nurx, Amethyst Hills, Executive Assistant at Carta and Noelle Li, Business Intelligence Engineer at Funding Circle US.

During the week of January 23, we hosted the 1st USV Level Up Series in San Francisco. This 4 day, 5 event program engaged over 200 USV portfolio participants, showcased 20 speakers, 4 Bay Area portfolio offices, and built the foundation for countless connections and future events. The central theme of the USV Level Up series was around career and leadership development. Each event had a fundamental goal of giving participants tools, contacts and valuable insights to enhance their professional development. Below is an overview of each event, its’ general flow and some valuable lessons shared with our network.

Event 1: Letters to a Younger Self
Network Leader: Michael Rurka, Design Lead at Nurx

The first event on January 23 was “Letters to a Younger Self” which was held at Cloudflare’s office. The evening included 5 speakers from a variety of job functions standing in front of 65 participants, reading letters they had written to younger versions of themselves. Their current roles included CEO & Co-Founder, Account Executive, Project Manager, Business Development and Founder. Some letters were personal, some strictly professional. Regardless of the story line, each person shared valuable life lessons they’ve learned throughout their lives to becoming who they are today. One common thread between presenters was that they are still learning. They encouraged their younger selves to be patient, give into the journey and trust themselves. Each of them faced adversity, success, and tough decisions and gave valuable, candid advice on how to level up.

USV Network Leader Michael Rurka sharing his story and his interest in hosting “Letters to a Younger Self”.

Event 2: Manager Fireside Chat
Network Leader: Karen Ko, Office Manager at Foursquare

Wednesday evening featured a Manager Fireside Chat with Foursquare CFO, Rory Parness and was held at their office in San Francisco. Moderated by Bethany Crystal, GM of the USV Network, the conversation centered around Rory’s career and his advice about leadership, management, sharing pitfalls, and candid lessons learned. The conversation also included his management philosophy, thoughts on mentorship and sponsorship, and the power of networking.

With over 40 participants gathered in their office communal area, the Foursquare office was buzzing with chatter. Employees that might not have otherwise attended felt compelled to join the conversation and hear from one of their company’s leaders. One quote that resonated with many was that “God gave us two ears and one mouth and we should use them in that proportion”. One of the key traits of a good manager is that they understand how to listen, how to ask effective questions, and lean on data and facts when giving feedback.

Foursquare CFO, Rory Parness and USV Network GM, Bethany Crystal speaking with the audience at Foursquare

Event #3: Forging Your Path as a Women in Tech
Network Leader: Karen Ko, Office Manager at Foursquare

On Thursday, January 25, Carta hosted a “Forging Your Path as a Women in Tech” panel. Moderated by Natalie Weyerhaeuser, Software Engineer at Foursquare, the panel included Connie Yang, Director of Design at Coinbase, Suja Viswesan, Engineering Director at LinkedIn, Diane Ko, Front End Software Engineer at Airbnb, and Jane Sherman, Principal Technical Project Manager at Funding Circle. The audience was 30-35 women and men and the discussion weaved from career planning and manager versus IC (individual contributor), to advocating for yourself, culture, retaining women in tech, imposter syndrome, and finding a sense of belonging.

When asked about receiving difficult feedback, one of the panelists stated that “feedback is a gift”. Their recommendation was that when you receive any type of feedback, you should train yourself to immediately say, “Thank you”. Give yourself time to process it emotionally and irrationally, understand the context and then formulate a proper, neutral response. Feedback is a gift and you want people to be honest about how they truly see you so that you can help change their perception. Finally, one challenge we are faced with is how to make this conversation open to allies. As successful as this event seemed to be, this type of discussion could run the risk of feeling insular. One question we need to answer is “how do we make men feel more like they are a part of the solution rather than part of the problem?”

Panelists, moderator, Network Leader and USV Network Team after the “Forging your Path as a Women in Tech” panel. Panelists (left to right) Connie Yang, Suja Viswesan, Diane Ko, and Jane Sherman.

Event 4: Women’s Goal Alignment Workshop
Network Leaders: Amethyst Hills, Executive Assistant at Carta and Noelle Li, Business Intelligence Engineer at Funding Circle US

The fourth event on Friday, January 26 was centered around mentorship, career development and leadership for women. The agenda had a blend of keynote speakers including USV partner Rebecca Kaden, group breakout sessions, mentorship brainstorming and networking. The Network Leaders who organized this event wanted the setting to be conversational and transparent and capped the registration to 25 people. Each attendee came from a different expertise, title, and department, but they all commonly shared the interest in participating in a mentorship program. There were 6 mentors invited to lead a mentorship “breakout session” with a smaller group. Apart from myself, the mentors included Carol Foster, COO & CFO at SharesPost, Pat Suh, VP of Customer Success at Affirm, Annie Lange, Co-Founder at Stealth, Andi Vanetta, CEO & Founder at Vanetta Partners, and Jane Sherman, Principal Technical Project Manager at Funding Circle. One fundamental goal of this workshop was to use this initial discussion and “matching session” to kick off a series of mentorship circles for women in the USV network. 

Guest speaker Heidi Williams, Founder & CEO – WEST Diversity & Inclusion sharing her story and lessons around mentorship and professional development

Event 5: Closing Ceremony

At the end of a hectic, content-heavy week, there was an optional happy hour for those who attended any of the USV Level Up events. We wanted to thank everyone for participating, connect those who might not have had a chance to meet during the week and hang out. One of my favorite photographs from the week came out of this social event. Karen, one of the USV Network Leaders, asked everyone to draw their face on a post-it and write 3 words to describe you. Then, see if you have anything in common with others on the poster and, if so, draw a line to connect you. Well, if this isn’t network effects in action I don’t know what is! Seeing people connect with others on common interests such as programming, ultimate frisbee, design, and dogs (dogs was a big one!) was the icing on the cake. A phenomenal way to sum up the incredible success of our 1st USV Level Up Series.  

USV Network effects in action at the closing ceremony 

USV Network Leaders Karen Ko, Michael Rurka, Amethyst Hills, and Noelle Li

Velocity by Code Climate

Today our portfolio company Code Climate is launching its new “Velocity” product into public beta. The product provides teams with data driven insights into the speed of their development process. It answers important questions, such as where in the process do engineers have to wait (e.g. long continuous integration times or long wait for code to be reviewed)? Or, how much work in progress is accumulating (and how much risk does that contain)? For more examples of the types of insights provided by Velocity, you can see the product launch page.

Bringing data driven insights to the engineering process seems like a no brainer. After all, nobody would run sales or marketing today without a ton of data. But historically there have been two obstacles, both of which Velocity by Code Climate helps overcome. First, engineering departments usually have a long list of data analytics requests from other parts of the organization and so there tends to be a “cobbler’s children” problem. Second, just looking at your own data, how do you know what’s good? Because sales and marketing have been data driven for quite some time there is a pretty decent understanding of what constitutes good metrics for say conversion rates at different stages of the funnel. Velocity solves this problem for engineering by letting teams see where they fall on a percentile basis in the industry. That’s made possible by data coming from the large number of repositories that Code Climate analyses across its customer base.

I am especially excited about this launch because with Velocity by Code Climate, teams can measure the payoff from investing in development process improvements and from putting code quality first. When we originally announced our investment in Code Climate, I wrote that “when you lead with quality in manufacturing you can in fact have all three: quality, speed and low cost. The same will be true for code.” Eventually Code Climate will also help teams track cost, but for now it lets them gain rapid and deep insight into the speed component.

So if you want data driven insights into your engineering process (who doesn’t?), sign up to try out Code Climate Velocity.

Hiring New Analysts

We are excited to announce that we are recruiting two new analysts at USV. Analysts at USV are part of the investment team and work closely with partners both on current portfolio and potential new investments. They gain exposure to our large network of startup and growth companies, as well as insight into our investment decision process.

For this analyst cycle, we are changing things up a bit by transforming the program into more of an apprenticeship. What does that mean? You will work mostly with two partners at the firm, one of whom will be primarily responsible for your training. We are looking for two people. The first analyst will be working primarily with Andy, the second primarily with Albert (we have already found someone who will work with Rebecca).

Despite this change, we will continue to structure our analyst role as a 2-year rotational program. Past analysts have gone on to join other venture firms and even start their own (Andrew, Charlie, Joel), work at USV portfolio companies (Jonathan, Eric), help launch new products (Christina, Brian) and start their own companies (Zander, Jennifer).

What are we looking for in candidates? We are looking for analysts who share our enthusiasm for innovation and working with entrepreneurs from the earliest days. More than any particular background, we look for candidates who are intellectually curious, have strong analytical and communication skills, thrive off of new ideas and can push our thinking. Candidates should have demonstrated a high level of initiative in a prior activity and have at least 2 years of work experience.

How do you apply? Our process starts with having candidates answer two questions by recording videos, as well as submitting two short written pieces. These will be due by end of day Thursday, February 15.

From the initial submissions we select a smaller group for telephone interviews and then a set of finalists for in-person meetings. We expect the process to be finished by the end of March and candidates should be available to start work in April or May.

Here are the questions:

Video 1: Why are you interested in the analyst role? [30 seconds]

Video 2: What is an example of an initiative you took outside of school or work? [60 seconds]

Written 1: An email asking for a meeting with the founder of a startup you admire.

Written 2: An argument for why one of the following is either overvalued or undervalued [Twitter, Snap, Bitcoin, Ethereum] [750 words max]

Start your application now

USV Manager Bootcamp: A cross-company learning opportunity

At our USV Manager Bootcamp in Toronto in September, Tucows CEO Elliot Noss spoke about his management philosophy and leadership principles.

Today marks the kickoff of the 6th USV Manager Bootcamp, a cross-company training for first-time managers at USV portfolio companies. Inspired by leaders across our network and facilitated by LifeLabs Learning, each 4-course session covers the core competencies that many new managers need on the job.

This San Francisco class includes 20 individuals from 7 portfolio companies ranging in job functions from sales and operations to product, engineering, and legal. Some are brand new to managing people, others are learning how to manage remotely, and a few are just looking to supplement their existing managerial toolkits. All of them were hand-selected by leaders at their organizations.

At the kickoff, we discuss shared challenges that permeate across organizations and invite an experienced portfolio executive to share “lessons learned” from their early days of managing. Every week, participants meet for interactive workshops that include “mini missions” to practice in the days ahead. During down time between sessions, we encourage participants to connect offline and swap stories. By the end of this month-long program, we hope that participants walk away with a shared vocabulary and heightened awareness about some of the all-too-common people management conundrums that occur in startup life.

You’re probably wondering – why is a VC firm so committed to leveling up people management?


Identifying shared challenges among our portfolio

In 2016, nearly all of our portfolio companies launched a new product. Three out of four expanded internationally, and 70% raised a new round of funding. But when we surveyed employees about what they expected to spend a lot of time thinking about in 2017, the top answer was not about scaling, product launches, or fundraising. It was about people.

Two-thirds of survey respondents said that in 2017, they expected to spend a lot of time thinking about better ways to collaborate with other teams internally.

At first glance, this may seem surprising. While businesses can’t always predict market conditions, customer retention rates, or competitive pressure, they do have control over the people they hire. But as a VC firm, we recognize that companies are simply a collection of people executing a vision to build a product. Success hinges on the effectiveness of each organization and how individual skills are amplified via collaboration.

We’re learning this lesson alongside our companies every day. And at the rate our companies grow, there’s always a new challenge around the corner. In 2016, more than half of our businesses grew the headcount substantially, and one in four employees was new to their role that year. If our survey results mirror our portfolio as a whole, that would mean that, out of a 7,000-person network, nearly 3,000 employees are learning how to do their jobs for the first time.

Given all that, it’s only natural that collaboration and communication topped the collective priority list. So in 2017, we set out to find a way to tackle this challenge head-on, leveraging our portfolio network effects.


Launching a cross-company learning and development initiative

To cultivate an effective, collective network, we continually seek out opportunities for our cross-company collaboration. Since 2010, employees across every job function have stepped up to share their experiences, challenges, and approaches to solving problems with peers at different companies. Through these trusted relationships, our network members pay forward knowledge on topics ranging from mobile app launches and localization to recruitment strategies and board deck format.

Last year, we explored how we might extend this relationship to foster a collaborative culture of learning and development among our 70+ portfolio companies. To do so, we teamed up with our HR leaders to identify gaps in people management that they had observed among newly promoted managers.

Our list looked like this:

  • Giving/receiving feedback
  • Expectation setting
  • Understanding/adapting to communication
  • Balancing personal work and team management
  • Being a player-coach to colleagues
  • Identifying disengaged/unmotivated employees
  • Managing underperformers
  • Delegating and accountability
  • Managing career growth
  • Being strategic vs. tactical

Drawing from these priorities, we identified an external training provider – LifeLabs Learning – to teach some of these “squishy” people management skills to new managers. Their management curriculum breaks these tricky situations into four bucket areas: Coaching, Feedback, Prioritization / Time Management, and Effective 1-on-1s.

Our goal was simple: Collectively level up the crucial middle management function. By bringing together newly promoted, first-time managers from a handful of companies, participants could get the best of both worlds: Core management skills from outside professionals and advice from peers who are divorced from any of their inner company politics.   

And thus, USV Manager Bootcamp was born.


Promising early results

In 2017, we offered five sessions of USV Manager Bootcamp in three cities: New York, San Francisco, and Toronto. Combined, more than 100 managers from nearly 30 portfolio companies participated. This year, we’ll be offering quarterly trainings in New York and San Francisco, as well as options for remote-only participants for employees outside of our “hub cities.”

While it's always tricky to measure the impact of learning and development initiatives, our feedback surveys three and six months after these trainings show promising results. Nearly everybody said that they continue to use the skills from these sessions day-to-day, particularly in one-on-one meetings with managers or direct reports. We also noticed measurable, self-reported improvements in two areas -- communication skills and giving/receiving feedback.

But above all, we’re thrilled to hear about the intangible benefits of peer-to-peer interactions and new mentor relationships that have emerged from this programs. By teaming up with our leaders across our portfolio network to create this program together, we’ll be able to collectively help our companies build better businesses.


How to Hire for HR: Lessons from 18 USV People Ops Leaders

Within our USV portfolio network, we are continuously looking for opportunities to “level up” the collective knowledge across the companies that we work with every day. As these businesses evolve and grow their customers and user communities, we also have the unique opportunity to observe how these companies build out their organizations from the inside -- which often falls to the role of the HR and People Operations team.

Today, more than 200 people leaders think about culture building every day across our 70 active portfolio companies. At our most recent HR summit in New York City, we learned that there is no consistent path to a career in People Ops, nor is there a consistent approach taken to when to think about first hiring for this individual. So we surveyed HR and People Ops leaders across our portfolio network to find out when they were hired, what projects they initially took on, and what advice they have to founders and CEO who may be looking for their first HR or People Ops leader.

Several trends emerged when asked about ideal characteristics needed in an HR hire -- including a need for empathy, resourcefulness, and adaptability. We also noticed several patterns among projects taken on based on company size. At earlier stages, we noticed increased focus on recruiting and new employee onboarding. At later stages, this is less of a focus, and HR leaders tend to spend more time evaluating and cultivating cross-team alignment and coaching (particularly among the leadership team). But no matter what stage your company is in today, one thing is clear: The HR function touches many different aspects of business operations.

Trends by Company Size

0-50 employees: Prototyping

  • Designing hiring and onboarding processes
  • Installing applicant tracking systems (ATS) or human resource information systems (HRIS)
  • Compliance with employment laws and creating employee handbooks
  • Managing office operations
  • Creating performance reviews
  • Serving as a communications channel between employees and management

50-150: Operationalizing

  • Compensation philosophy / leveling of salary bands
  • Conducting a culture audit
  • Streamlining recruiting and onboarding processes
  • Hiring senior leadership

150+: Aligning

  • Understanding company culture, engagement, and employee experience
  • Creating or iterating on company values
  • Conducting a market-pay analysis company-wide
  • Improving alignment and effectiveness among teams and senior management
  • Launching annual reviews process
  • Building out leadership development programs
  • Launching diversity & inclusion initiatives
  • Iterating on systems to scale

Below, see how 18 HR and People Ops leaders from across our USV portfolio network took on their roles and their advice for startups and founders. 

Updated: You can also view the original slide deck of this Google Slides presentation here.


Leveraging Company Engagement Across the USV Network

Imagine that you are the first finance leader hired at a 25-person, Series A startup. Chances are, there won’t be another person on your team for awhile, so you can count on personally managing all of the systems needed to get your business through the next two fiscal years.

Naturally (as things never go smoothly), within your first six months, you find yourself caught between mitigating future audit risk and restructuring client billing, all while trying to process payroll on time. You’ve been trying to find time to research new account systems so you are prepared to scale with the business but just haven’t found the time.

What do you do?

Meet the USV portfolio network

Across our active USV portfolio network of 70 companies, it’s highly likely that there’s at least one other person thinking about some of those same challenges. Our goal is to design an experience that makes it as easy as possible to find that individual and get your questions answered.

Here’s how we leverage our network to forge meaningful connections for our 8,000+ portfolio network members.

Today, the largest company in our active USV portfolio network has just over 700 employees; our smallest has only four people. Despite the varying industries, sizes, and stages of each company in our portfolio network, our companies have one indisputable thing in common: They move fast. Whether it’s preparing for a new product launch, embarking on a hiring spree, or re-architecting the system backend to be localized, the companies in our USV network are running a mile a minute.

The worst thing we could do with the USV network is slow them down.

To that effect, our network programming sets out to enable two key functions: Information routing and collaborative ideation.

To route information and resources through our network as quickly as possible, we capture relevant datapoints about what our network members are thinking about, then facilitate introductions to people thinking about the same business needs. This may happen via Slack (where over 80,000 messages have been sent in the past 2 years alone), via in-person meetups, or through direct introductions.

This year, we have already connected more than 300 USV network employees to each other in direct, 1-to-1 introductions. These introduction topics range from “Help me think through my new system architecture” to “Help me find a new technical recruiter” and “Help me find people thinking about mobile retention best practices.” By keeping our pulse on what people across our network are thinking about in real time, we can help employees across every level of a company find somebody else who may be puzzling through a similar challenge.

To facilitate collaborative ideation among our portfolio network members, we bring people together for day-long discussions with peers to offer a new perspective, share challenges, and yes, even vent on similar frustrations. At these day-long events (called summits), we crowd-source discussion topics and ideas from our network members, then lean on them to drive discussions.

By the end of 2017, we will have facilitated over 100 events for employees at USV portfolio companies, tailored to everyone from executives to executive assistants.

You may be wondering about how we encourage an environment of transparency and trust among so many different companies at once. Given that our companies are building business models in different areas or sectors, business leaders across all functional areas readily swap tips, pitfalls, and lessons learned. It also helps that many of our companies also share common growing pains associated with managing large networks of users, data, or information.

Sometimes, in the case of broader topics that affect many businesses the same way, our portfolio companies team up to tackle these challenges in tandem. This year alone, the natural connectors within our network have stepped up to host nearly a dozen diversity & inclusion roundtables, a shared policy list, and workshops on narrower topics, such as PR and communications best practices.

Getting Connected

Think back again to the conundrum you faced as the only finance hire at a 25-person company without enough hours in the day to tackle all of the problems on your plate.

It’s hard to be the first person (often, the only person) doing your job at a company. For many, it makes the leap from a larger business to a startup downright terrifying. But we hope the strength of this network makes every new employee feel a little bit more like they have the security of a larger organization.

In this example, by leveraging our USV finance network, you can immediately get your question in front of 100+ finance professionals, all working at fast-paced startups, each coming from a different background. Chances are, at least one other person in this network has researched and identified billing systems for their company. And given your overlapping company stages, a one-hour introductory call may save you 10-15 hours of your own research time.

We see network connections happening across all levels of our organizations.

Last year, before Quizlet had launched any products internationally, they attended our globalization summit in San Francisco and learned how a dozen other companies had approached globalization. (They came back to that same summit this year -- to share back with the newer companies needing advice.)

Just this week, we called on the VP of HR at one of our later stage companies to lead a discussion for 20 people leaders at different companies about year-end performance reviews and best practices. In December, in anticipation of the new GDPR compliance policies that will impact nearly all of our companies next year, a trust and safety expert from our network stepped up to lead a workshop for our companies to work together on this process.

At each point in a company’s life cycle, new changes, challenges, and problems surface. Our USV network is here to help companies grow collectively smarter and learn on each other through these changes.

If we’re doing our job right, with each new investment we make, the experience of being an employee at a USV company gets a little bit better. This is the power of network effects at work.

Quantitative Investing in Shampoo

Can a machine help you invest in shampoo? Coffee? Another consumer product?

Last week, the USV portfolio company CircleUp announced the closing and launch of CircleUp Growth Partners  - a $125 million fund that will use a quantitative machine learning approach to invest in early-stage consumer and retail brands.  

We believe this is an important evolution towards using data technology to make investment decisions - a theme we at USV have invested in many times ranging from Lending Club to Funding Circle to Numerai. CircleUp Growth Partners is slightly different. The Fund’s thesis is that one can use machine learning to determine early-stage equity decisions in consumer companies. This machine learning platform, Helio, identifies and evaluates companies across billions of data points. The Fund is live right now - Helio recently analyzed 3,400 vitamin and supplement companies and flagged HUM Nutrition as being in the top 3% for brand score. This ultimately led the Fund to make one of its first investments in that company.       

The provocative proposition is that a system like this can run these types of analyses at scale and pinpoint brands earlier and with more efficiency than traditional investors. Consumer investors historically have had to spend around 75% of their time sourcing deals manually. Helio is able to automate this entire sourcing process and provide data-driven insights to help companies grow.

Helio has also been applied to two other business lines - credit and marketplace.  CircleUp originally operated solely on a marketplace model but has recently launched a credit arm that provides working capital to consumer companies. These three business units all provide data back to the model, which in turn makes each better in its own domain. This is a data network effect - Helio is continually improving.      

The focused industry of consumer goods should lend itself well to this approach; consumer packaged goods all share the same business model, and data proliferates across the industry.

Could data-driven investment models like that of Circle Up be extensible to sectors beyond consumer goods? It will be interesting to see how these approaches might affect capital formation more broadly, as data applications move to designing new financial products and services we have not yet even considered.

The USV Portfolio Network: Now 70 Companies Strong

At Union Square Ventures, we spend a lot of time thinking about networks. Financial networks, social networks, data networks, and yes, even decentralized networks. But the most “meta” version of this is the network we’ve spent the past seven years cultivating among the employees of our active portfolio companies -- our USV portfolio network.

The USV network enables cross-pollination of ideas among our portfolio companies by fostering connections between people thinking about similar business challenges or problems.

We invite every employee (regardless of seniority) from each of our portfolio companies into the network. Due to this access, with every added node (i.e. company), our portfolio members become collectively smarter and better equipped to make the best decisions possible in their day-to-day. In this way, we hope to break down silos across companies and democratize access to knowledge about best practices in building businesses.

Because knowledge and experience are powerful and intangible resources, access to the network as a resource allows each of our businesses to become incrementally more successful.

If you work for a USV portfolio company, there is no additional hurdle or secret password: You’re in the network. While you may be working at a small startup, you have access to the knowledge and experience of a large corporation.

Right now, we estimate that the total size of our network is approximately 8,000 employees across our 70 active investments. If you add in our extended “alumni” community, comprised of former employees or current employees at exited portfolio companies (such as MongoDB, Twitter, Etsy, Twilio, and Lending Club) the reach of this network jumps to 20,000+.

That’s on par with the total number of employees at Facebook and equal to the number of Boston Consulting Group alumni.

Here’s our best guess about how our current active portfolio network breaks down by functional area:

Needless to say, when you’re part of a group of people that’s 8,000 strong, it suddenly doesn’t seem so scary to take a job as the only finance leader at a 25-person company.

To access these network connections, employees at USV companies are invited to join more than 100 portfolio-only events each year. Each “summit” event is organized as an “unconference” format: crowd-sourced ideas, open questions and discussion groups based on different topics or challenges creates the framework for the sessions.  

A selection of events this year includes day-long summits on scaling, internationalization, engineering leadership strategies, and integrating product management into organizations. We also offered recurring roundtable discussions among curated groups for finance, legal, or human resource professionals, as well as opportunities for discussion on broader topics such as diversity, inclusion, and women in leadership.

Event themes are surfaced by employees in the portfolio network, and all programming is specially curated for the entire portfolio. In this way, we surface relevant and timely topics that can have direct impact across multiple growing businesses at once.

The businesses we invest in each grow stronger when more data is contributed to their platforms. Similarly, with each new investment we make, the experience of working for a USV portfolio companies gets a little bit better. These are the network effects among our portfolio.

We hope one day you’ll be a part of this network too.

And if you happen to be on the job hunt now, we encourage you to check out the 2,000+ job openings across 58 portfolio companies currently hiring.

New Adventures: Joining Union Square Ventures in NYC

I am excited to share that I am joining the Union Square Ventures partnership alongside Albert, Andy, Fred, John, Brad, and the rest of the fantastic USV team.

What struck me first about each of my future partners at USV is that they so clearly love what they do and the founders they do it with.  While their investments in many category-defining businesses speak for themselves, I quickly learned that their passion around entrepreneurs and innovation, deep curiosity, hunger, and belief in seismic change is contagious. They have an ability to think at a universal level about massive societal shifts, and then drill that thinking down to the tangible, messy, uncertain, exciting beginnings of early-stage businesses. They have the conviction to make bold bets and believe the unlikely possible, and they know that this industry is not only in a moment of change now; it is constantly in flux. That the magic of entrepreneurship and the creation of the new is its constant evolution. The USV team embraces this change with excitement, not fear, and continually looks to push their thinking. Most importantly, they have a track record of being standout partners to the entrepreneurs they back. Every founder I talked to said essentially the same statement: they dream big; they are in it with us.

These are the same values I learned to place importance in at Maveron, a firm and team I love and believe in and whose belief in me has been a monumental gift. There is no doubt in my mind that this is an apprenticeship business and my Maveron partners allowed me to learn from both exceptional consumer investors and people I deeply admire. Dan, David, Jason, Pete, Anarghya, Elise, and Clayton taught me not only about investing but, most of all, about the necessary combination of head and heart, what it means to be a true team, and that, in our business and all businesses, it is all about the people. I’m grateful for the opportunity and experience, and equally so for the fun and friendship along the way. I can’t wait to find many opportunities to collaborate in the future.

A huge part of my motivation for this next adventure is my excitement about getting back to NYC and digging into its entrepreneurial ecosystem. New York City is my hometown, a community I care about, and a group of founders and creators that I am passionate about working with. I grew up loving the curiosity and sense of possibility New York inspires, and I can’t wait to dive further into how that helps form the great companies of tomorrow. Coming home is fun for many reasons, but coming home to such a hotbed of innovation and dreamers, particularly in the categories that excite me the most, is simply awesome.

Next up: exploring the intersection between our core USV thesis around network effects, whether centralized or decentralized, and the entrepreneurs building the standout consumer businesses that integrate into our hearts and minds. In each generation, no matter the changes, great consumer brands have emerged into the fabric of the world, and technology is accelerating their growth, reach, and potential more than ever before. Thinking about how to stretch the USV scope to include these breakout consumer businesses that I’ve become passionate about at Maveron is an exciting piece of this partnership. I'm equally eager to stretch my own scope, too. More on that soon as we continually evolve and iterate the USV thesis together.

If you’re a founder or potential founder building something transformational, I’m so eager to meet you. I’m on a new adventure and I’m ready to dive into yours, too. You can reach me at [email protected]


6 Ways Great Companies Use Board Decks to Their Advantage

This past summer at Union Square Ventures, Max Heald joined us as our summer intern. During his 10 weeks at USV, he helped us better aggregate insights shared across our portfolio companies through data collection. As part of this process involved reading through company board decks, he came away with a few top takeaways from his project, which he recently posted about on his Medium account. Below, the full text of his original posting:

After graduating from college in June, I had the chance to spend three months at Union Square Ventures, helping with a project that created anonymous aggregate insights for USV portfolio companies by analyzing data across stages, customers, and industries. In order to not put a lot of extra reporting effort on our companies, we approached this project by drawing from data in existing board decks. This work afforded me the unique opportunity to familiarize myself with many of our portfolio companies’ board decks, and the communication styles of the leadership teams behind them.

I quickly found out that there is no one standard board deck for a USV company (and in fact, we’re proud of that), but I did observe a few commonalities among the most effective decks.

At a high level, the best decks accomplish three things:

  1. Address two information needs simultaneously (the board’s need for information and the team’s need for advice)
  2. Speak about progress and pain points frankly
  3. Highlight a company’s unique culture

Here are 6 ways I saw this done best:

1. They place metrics in context

There’s a difference between telling someone, “Our GM decreased by 8% last month”, and “Our GM fell by 8% because we ran a promotion which netted us a 20% bump in total clients.”

The best board decks anticipate questions in advance, and answer them with clear, concise data. My favorite example is a simple graph of total ARR versus a bar graph of ARR broken down by addition and subtraction of clients, and expansion and contraction of client spend. Our portfolio company eShares does an excellent job of this:

Another excellent example of effective data context is a 12-month trailing P&L. Most of the decks I read had monthly data for the most recent quarter, and projections for a few months out. I ran into a couple problems here: First, many companies’ board meetings happen infrequently enough where there are significant gaps in data. This makes it extremely difficult to understand a company’s financials in the context of their most recent fiscal year without making a data request to the company, something we generally like to avoid. In the case the data does overlap, however, it still requires piecing together information from multiple decks to get a decent view of the last year. As a recent college graduate / workaholic, I’m happy to do this. I imagine a board member of a venture-backed company would be less inclined.

For these reasons, the 12-Month Trailing P&L is perfect; not only is it an easily-updated table, but it’s a way to view the scope of a company’s financials over a substantial amount of time. Though things often change drastically from quarter to quarter, most investors want to see how the company has grown through multiple phases. And though projections are usually wrong, including them for the next quarter or two is usually worth doing, too.

2. They structure decks to gather input

Board meetings are typically the only time when all of the key stakeholders of a company are in the same room, so naturally, it makes sense to wring as much as possible from these discussions.

Some of the best decks I read do this by kicking off the deck (and thus, the meeting) with a board-only Q&A. This encourages board members to come in prepared to fire away to the CEO and their leadership team.

Structuring a deck this way offers an incredible method of ensuring preparation from the stakeholders of a company, and structuring meetings effectively. Give them the data, and let them loose. It also sets time for the outside stakeholders who know a company best to have an unfiltered discussion during which unexpected ideas may rise to the surface, before the team then uses the rest of the time to address their own pre-planned questions.

The best of these team-led sections of decks tend to focus on a few key issues, rather than providing comprehensive data streams; evaluating potential key hires, discussing a fledgling revenue stream, or a potential acquisition offer could all be strategic issues worth spending time on.

Great board decks balance gathering information on what the team needs help with, and providing critical updates the board needs to hear. Again, it’s about style, and leaders of a company will know what’s best. But by structuring decks to gather key input from the stakeholders in the room, teams can ensure they are putting board meeting time to its best use.

3. They are frank about what they need to do better, even if they don't know how

Board meetings are not pitches. As obvious as this is, there is no need to sugarcoat, talk around, or avoid data points which are less than ideal.

The most effective board decks I read were direct about what the teams could improve, and asked for specific feedback from the board on how they could accomplish it, or better yet, on their already-thought-out plan for accomplishing it. Board members are a brain trust for a company, and they know it better than anyone outside the team- if there is a place to be blunt about the challenges a company is facing, it’s with them.

4. They pull out the numbers that matter

Most companies track many statistics for internal use, but when it comes to two-hour board meetings, there are often a few key metrics which are the best indicators of the health of a business. As with discussion topics, narrowing in on these metrics can focus the conversation and give the board a broad understanding of the company’s situation quickly. In the interest of time and productive conversation, it’s usually better to go deep than broad.

Considering SMART metrics (Specific. Measurable. Achievable. Relevant. Timely.) here might be a useful litmus test for figuring out what to track. Whether it is gross margin, active users, and LTV, GMV and MRR, or even a statistic uniquely effective for the business, the best board decks bring out the key levers of the company for a more productive discussion.

5. They highlight key wins, and the people responsible for them

Most decks I read tended put these up front, or worked them into their brief overview of company progress, as a way to kick off the discussion on a high note. The part I enjoyed most, though, was how many companies would include recognition for the non C-level employees who spearheaded these big wins for the company.

Especially for people who prefer “the right people knowing” of their contribution over more public, company-wide recognition, this is an excellent way to show appreciation for team members who excel.

6. They let company culture inform the deck’s style

Board decks are art. And art often tells us as much about the artist as it does about itself. I came across a consumer platform company’s deck which really popped; translucent spreadsheets and statistics against varying hues of neon. A security-focused company’s deck was a stoic black-and-white, the pre-set Powerpoint template unchanged in any way. Jobbatical’s deck, as you can see below, throws in just a bit of personality.

Each of these three decks conveys a different company culture. One focused on imbuing its office with as much liveliness as the platform they’re building. One so serious about security, it doesn’t have time for design. One playful, unorthodox, and a little weird, in a great way.

Every board meeting is a chance to for company leaders to communicate to their stakeholders what they have built. Half of that work is communicating the culture of the workplace they have created. And since these decks are meant to be read as well as presented, it’s crucial that culture is communicated through the style of the deck, and not just the presentation of it. The best teams know this, and use it as a way to demonstrate their leadership.

A final thought:

While they may not be built to be as flashy as a pitch deck, board decks can be an incredibly strategic and constructive communication tool for your business.

They are a chance to show your stakeholders how well you can synthesize the key levers of your business, discuss them efficiently and effectively, and communicate directly any problems that need to be tackled. They are an art, and a chance to show off the culture and team you have built.

And as an opportunity for a demonstration of effective leadership, to the stakeholders who are the most active supports of your company, they are well worth the effort.

Max recently graduated from Northwestern University, where he was an Agile coach and two-time founder. He is currently interested in venture and startup roles that allow him to meet and learn from great founders.

You can follow him on Twitter at @max_heald, or reach him at [email protected]

The Unknown Path to a Decentralized Future

Some companies with currently centralized services have been criticized for issuing tokens and raising money in ICOs. There are even allegations that venture investors are pushing companies to do so as a ploy for liquidity. I suspect that some situations like that do actually exist, but I know from first hand conversations that many of the entrepreneurs pursuing this route are doing so out of a genuine conviction that it is the right path to a decentralized future.

Most startups that have come into the crosshairs of one of the large centralized players (Google, Facebook, Amazon, Apple and maybe a few others) have experienced how difficult it has become to grow a new offering. The new incumbents are aggressively managed, have nearly limitless financial resources and most importantly leverage their existing network effects to keep potential competition at bay.

Along come blockchains and crypto currencies. Here is a new technology that represents a foundational breakthrough: the ability to build decentralized networks that have consistent data without being controlled by a corporate or government entity. It is a technology that is potentially disruptive to the large players, exactly because it goes against the core of their existing businesses, which is the control and rent extraction from networks.

Now there are two schools of thought as to how to get to that decentralized future where networks are owned by their participants and anyone can innovate on top of the network. One group believes that we need to start from scratch and build new protocols outside existing services. There are good arguments for that position, such as being able to iterate on a protocol with few users on the basis of feedback from early adopters. Another group though believes that existing services, some with millions of users, can give a new protocol immediate critical mass. They also point out that it may be possible to take a stepwise path where some centralized elements remain at first (for instance, ones that demand throughput right now that’s not yet achievable on blockchains) with a view to decentralizing those elements in the future.

I believe we should be pursuing both approaches. Getting to a decentralized future is too important to restrict right now how we are going to reach it. We will know in a decade or two what worked, but until then we shouldn’t be attributing ill intentions to fellow travelers simply for choosing a different path. We can be critical of specific steps and proposals. We can suggest how they might be improved. We can demand (increased) transparency. We can start or fund or own efforts. By all means: let’s do more, rather than less.


A Google search for “apartment lease” returns 86 million results. Which makes sense. One of the constants in life is finding a place to live, and signing a long-term contract for that living place. That constant — that lease — remains in force even though changes in our lives may not line up neatly with that one- or two-year period. Many things happen to us while we are stuck with a long-term house or apartment lease: new job opportunities, new roommates or relationships, new family members, and so much more.

If you could construct a service for home rentals that would reconcile that conflict between life and lease, what would it look like? Probably like Flip — a marketplace for flexible housing specifically designed for leases that last for any duration, starting at one month.Just take a look at this word cloud below, which pulls from descriptions on Flip listings, where people explain the circumstances that drew them to the platform

Since 2016, 15,000 people have listed spaces (rooms, apartments and houses) on the Flip marketplace. Unlike traditional housing platforms, Flip is completely end-to-end, by qualifying every user, handling all payments,  legal documents and landlord approvals. Today, over 50,000 people have used it to search for a new home across New York, Los Angeles and San Francisco.

We are leading Flip’s latest financing round, as it is the type of market or domain specific network that USV focuses on. In market-specific networks, closing the loop on a transaction is the key to unlocking network effects, and Flip does just that.  

As importantly, Susannah Vila and Roger Graham, the founders of Flip, aspire to enable seamless access to all all housing, everywhere, for everyone. Flip accomplishes this via a fully digital platform that does not assume that fixed lease terms are necessary. Instead, it works from the idea that the rental housing market should be truly liquid, and that if housing were transacted on one digital platform, it would be easier and more affordable for everyone to get on a lease or off of a lease.

Flip’s mission is to provide seamless access to all housing for everyone, everywhere. We think that is one measure of increasing individuals’ economic freedom; we are excited to be able to support this company’s development.


Blockstack Browser and Token

Today Muneeb and Ryan from Blockstack delivered the morning keynote at the Consensus 2017 conference here in New York. They made two important announcements: first the availability of the developer edition of the Blockstack Browser and second the news that there will be a Blockstack Token. To understand the importance of both of these announcements, it useful to look at some of the history of the Internet. 

The Internet got going in the early 1960s but for the first quarter century its usage grew slowly. Broad usage really didn't take off until the creation of an easy to use consumer layer with the Web and the availability of developer tools in the mid 1990s. Now fast forward to today. We all use the Internet every day for nearly everything we do. But now we are seeing some critical problems that have emerged based on the basic architecture of the Internet. For instance there is a lot of blind trust into lower level infrastructure, such as certificate authorities that can result in large scale man-in-the-middle attacks (for example a recent event in Turkey which resulted in endusers believing they were connected directly to Google when they were not). Even more importantly, state in the current Internet is maintained in databases operated by companies such as Twitter, Facebook and Amazon which hold and control users' data. 

Blockstack aims to resolve these problems using blockchain technology and by building the developer tools and consumer layer to make this new decentralized Internet broadly available. The Blockstack system has now been up and running for 3 years and has a community of over 5,000 members. 

How does Blockstack address these problems? With Blockstack endusers (individuals and companies) control their identities, storage and payment credentials directly. This is accomplished by keeping the namespaces — both enduser names and addresses for applications — in a blockchain. The blockchain here is a virtual chain that currently sits on top of the Bitcoin blockchain but could be migrated to another blockchain in the future. In fact the chain has been migrated once already as it started out on top of Namecoin. The virtual chain layer requires only minimal guarantees from the underlying layer and allows for separate scaling. 

The Blockstack blockchain itself in turn only contains keys and pointers. All the enduser data is stored in existing storage systems, such as S3, Dropbox, Google Drive etc. But the way it is stored there is fully encrypted and distributed across these systems. That way each underlying storage system is used like a dumb hard drive and the use of multiple systems provides resilience at high performance. This is provided by Blockstack's Atlas Network and Gaia Storage components.

Now that all of these components are in place, how do consumers access these systems and how can developers build applications? This is where the Blockstack Browser comes in. By running a local application, consumers can use any existing web browser (Chrome, Firefox, etc) to access the new decentralized systems. Right from there they can do things like register names, make payments, configure their storage. This feels just like using an existing centralized system and requires no special skills or knowledge. Similarly, developers can now write decentralized applications without having to learn all the details of the underlying systems. Instead, they can write in Javascript and implement the authentication and data access APIs exposed by Blockstack. 

Finally, how does the Blockstack Token fit into all of this? For the Blockstack network to work there is some degree of scarcity that has to be maintained. For instance, there is a need for names to be unique. Whenever you have scarcity, you need an allocation mechanism. To that end Blockstack will introduce a token some time later this year. The Blockstack Token will be mined at the layer of the virtual chain and will power operations such as name registration. It will also be used to let Blockstack network participants vote on protocol changes, including a potential migration to another underlying blockchain in the future. 

So if you are a developer and want to start building apps for the Blockstack Network, head on over and download the developer preview.

Protocol Labs

Protocol Labs made a series of announcements earlier today including that Union Square Ventures made an equity investment in the company late last year. We are thrilled to be working with Juan Benet and his team and excited to be able to share some of our thinking here. 

As most of you know all of us at Union Square Ventures believe in the decentralized, emergent, permissionless innovation that was so central to the vitality of the early Internet. Prior to the Internet, the media industry was dominated by a small number of companies that controlled access to in their respective mediums, print, television, radio, cable etc. It was the broad adoption of a set of open protocols, like TCP/IP, SMTP and HTTP, that allowed any creator on the planet to get to any consumer and unleashed the wave of innovation that led to the consumer Internet we know today. That vital innovation is threatened today by consolidation at the applications layer of the Internet. Publishers find themselves becoming commodity content suppliers in a sea of undifferentiated content in the Facebook news feed. Web sites see their fortunes upended by small changes in Google’s search algorithms. And manufacturers watch helplessly as sales dwindle when Amazon decides to source products directly in China and re-direct demand to their own products. 

The source of this market power is control over the data we all contribute as we interact with these services online. The key to mitigating the market power of the web giants is open protocols further up the stack. If an open public communications network (the Internet) unlocked the distribution bottlenecks that characterized the media industry, an open public data layer is the key to and unleashing another wave of innovation. It is the mission of Protocol Labs to coordinate the efforts of a large and passionate community of open source contributors to create these protocols. 

It is an audacious mission. As you move higher in the stack the complexity of the protocols is exponentially greater. Luckily, they are not starting from scratch. Juan Benet, the founder of Protocol Labs, is the creator of IPFS (the Interplanetary File System) an increasingly popular protocol that allows content on the web to be addressed directly instead of by reference to a file located on a specific server. This subtle but profound change means that a provably unique piece of content is no longer tied to a specific server but can exist anywhere there is a little surplus storage capacity on the web. Protocol Labs and everyone else working on open protocols today has another advantage that was not available to the creators of the original Internet protocols. They have blockchains. 

Blockchain based crypto tokens have been have been described as the native business model of open source software. They have the promise of being able to fund the critical shared infrastructure of the information economy in a way that equity can not. Protocols are more valuable when they are open and shared broadly. But equity is most valuable if a company can extract monopoly profits from a resource they exclusively control. When a protocol incorporates an incentive in the form of a crypto token it can resolve this inherent contradiction. 

In the next few weeks, Protocol Labs will be introducing Filecoin, a crypto-token to support the development of a next generation protocol that enables a decentralized data storage layer on top of IPFS. By funding this effort through the sale of a token rather than the sale of additional equity, they ensure that the creators and consumers of value in the storage network (the people who buy storage with tokens and the people who earn tokens by storing files for others) will benefit directly from the success of the network and the protocol that defines it. This happens because the protocol sets limits on the number of tokens that can ever be issued. Because the tokens are the currency in this marketplace for storage, as the protocol becomes more broadly adopted and the marketplace for storage grows, demand for the token increases, and the currency appreciates. So the tokens that investors purchase in a pre-sale to fund the engineering effort to build the protocol, the tokens people hold in their wallets in anticipation of buying storage and the tokens people earn by providing storage capacity all grow in value over time. 

The bitcoin protocol demonstrated that it was possible to finance an enormous computing infrastructure - reportedly one with a hashing power greater than all the super-computers in the world - with an crypto-token. But it does so at a great cost. Securing the bitcoin blockchain could by 2020 consume as much electricity every year as all of Denmark. With Filecoin, Protocol labs, hopes to secure the network with useful work - work that has to get done anyway - storing files for people. Over the next few years, Protocol Labs plans to develop a series of protocols that could become the infrastructure of a more decentralized economy. By funding these efforts through sales of crypto tokens, they ensure that the economic value of the protocols is shared broadly. By designing systems that secure the network by doing useful work, they respect the limits of our natural resources. 

But they have also made one more investment to further the development of this shared infrastructure, they have invested heavily in the legal design of the Filecoin token and the pre-sale process in the hopes of demonstrating that these offerings can be done responsibly in respected jurisdictions. We have already made the point that the pre-sale of a crypto-token is different than equity. It is also not a commodity, a currency or a futures contract. It is something new. As such, it does not fit neatly into any existing regulatory or legal framework. Many of the recent offerings of crypto-tokens have avoided the difficult task of fitting the round peg of crypto-tokens into the square hole of existing regulatory frameworks by raising money in a foundation based in Switzerland, and offering the token for sale in a jurisdiction like Malta or Singapore. This is a reasonable approach. The reality is that these offerings are inherently global. Pretty much anyone anywhere can participate, and the recent returns in the sector have caught the eye of investors around the world. In the near term, it benefits the existing holders of the token to have access to global demand in an unregulated offering, but not all of these offerings will end well. Protocol Labs is playing the long game. They believe that a pre-sale of a crypto-token is an important new funding mechanism that will support the creation of a rich ecosystem of protocols that decentralize the web, democratize access to services and spread the wealth created by networks beyond a narrow cohort of equity owners. To further that goal, they are working with an army of lawyers to create a mechanism that is defensible under U.S. law and regulation - one that can hopefully be a template for others who want to build infrastructure that lasts. 

Protocol Labs is creating new infrastructure in an new way. We think their commitment to the re-decentralization of the web will lead to protocols that are powerful, broadly embraced and generative. Their approach to financing their work will spread the value that is created more broadly. Their commitment to investing in a legal approach that respects the current regulatory environment while not compromising on the promise of the new technology will be a foundation others can build on. We are thrilled to be along for the ride.


Disruptive innovations often start out as worse versions of something that already exists. Worse along all dimensions except for one, but one that turns out to really matter because it unlocks a new use case for which the incumbent does not work at all or is not affordable. The PC was slower, had less memory and less storage than a minicomputer. But it was massively more affordable and could be set up and run without the help of the centralized IT department. That’s why the early adoption of PCs was in parts of companies that did not have minicomputer access.

Direct networking among consumer mobile phones is a disruptive innovation. It doesn’t give you the bandwidth of, say, LTE. If there is extra hardware involved it only works between participants who have that hardware. But it has one crucial advantage: it works even when the mobile network infrastructure is down (e.g., during an emergency) or where it doesn’t exist at all (e.g., when hiking in the deep countryside).

Extra hardware paired with your phone is exactly the approach that goTenna has been pursuing for phone-to-phone communication. They have been shipping tens of thousands of their first device which are in use by outdoor enthusiasts and also by emergency responders.

goTenna’s latest product, goTenna Mesh is about to ship and supports mesh networking. That means as more people in an area have the product, phone-to-phone connectivity improves for everyone. Including one super cool feature: with SMS network relay, if any phone in the mesh also is connected to the SMS mobile network then all the goTenna-enabled phones can relay regular text messages out through the SMS-capable device.

We are excited to be leading the Series B round for goTenna. The team has accomplished all of this on very little capital to date, including the development of the mesh protocol and of a hardened Pro device which will start shipping later this year. We believe this is a disruptive innovation in connectivity, and a perfect fit with the Access 2.0 portion of our current investment thesis.

If you are excited too, you can pre-order a set of the new goTenna Mesh units. And if you are truly excited you should check out the terrific opportunities for joining goTenna’s team.


In July 2011, we were fortunate to lead the Series D financing round in Lending Club, founded in 2006 by Renaud Laplanche. Along with Zopa (UK company) and Prosper, Lending Club was a pioneer of the now-familiar marketplace lending model, which cut interest costs for high quality borrowers by as much as 50% (not a typo) and at the same time offered investors attractive risk-adjusted returns not available elsewhere. This was a fundamental innovation in financial services that is thriving globally and will continue to gain in importance.

During the next four years, we watched Renaud and his team execute extremely well, growing from $20mm a month in originations at the time we invested to $500mm a month when Lending Club went public in December 2014. Lending Club originated over $20 billion in loans to over 2 million borrowers, saving consumers substantial amounts. Scaling a company at this rate is very difficult. Renaud and his team did as good a job as we have seen.

In retrospect, Lending Club probably went public too early. Financial services companies are held to high standards in the public markets these days, regardless of size or vintage. In May 2016 the company faced compliance issues and Renaud left the company, a difficult and unfortunate event for all involved.

Today, Renaud and his new team are announcing the launch of Upgrade, a new marketplace for consumer credit. We think of it as Lending Club 2.0 and are excited to be Series A investors in this new venture, along with our friends at VY Capital, Sands Capital, FirstMark Capital, Ribbit Capital, Silicon Valley Bank and others.

In our view, we are still in the early innings of the marketplace lending model. We believe Upgrade’s team and business plan makes it well positioned to quickly become a leading company in the industry, benefitting both borrowers and lenders. We look forward to helping Renaud steer his ship once again.

USV Session: Building the Healthcare Stack

The USV portfolio network consists of 67 active companies with over 7,000 employees across the US, Canada and Europe. We believe in using the power of networks to help our portfolio companies build better businesses through peer to peer learning, external network relationships, and shared resources. On average we host 60 portfolio events each year and, in 2017 we are on track to host nearly 80 in total.

Within the USV portfolio, we have several companies working in the healthcare space. Based on their feedback and recommendations we organized an intimate session with leaders from the USV portfolio, USV partners and staff, and external industry leaders. We held this discussion at our office and called it “Building the Healthcare Stack”.

This “Hacking Healthcare” event was the brainchild of USV CEOs who wanted to connect with other healthcare organizations and professionals that are spearheading initiatives and development within this industry. They wanted to debate high-level areas such as telemedicine as well as dive into granular challenges facing open source health data and patient care.

In USV fashion we organized this as an “unconference” style conversation and segmented the day into 4 high-level topics.

  1. Open Source Health Data
  2. Reinventing the Patient experience
  3. Treatment and Telemedicine
  4. Big Data for Big Outcomes

Our goal for this session was for participants to come away with thoughtful perspectives on a variety of areas. We chose specific, complex topics that would seed provocative and unfiltered discussions and I have chosen to highlight 3 of the top takeaways.

1. Healthcare companies are investing too much money in walled gardens

When thinking about medical facilities (hospitals, doctor’s offices, research centers, etc.) every single one of them controls their own data — what they collect, how it is stored, cleaned, and analyzed. There is no universal system that allows patient data to connect and talk to each other.

One reason why walled, healthcare gardens exist and in fact flourish is that there are no financial incentives to open them up. As a result, healthcare organizations only see the world through their own institutional myopia. This nearsighted mentality can have lasting effects on the staff, patient experience and culture. An example of a set standard are the Press Ganey scores which are calculated from post-appointment patient surveys. Some facilities use these scores to award bonuses which can cause tension and wrongfully placed incentives for the physician. This can also shift their priorities from treating someone as effectively as possible to focusing on personal, soft skills and excellent bedside manner. As we see more digital health companies emerging in the space, we may need to find ways to blend and ultimately open up some of these datasets.

2. How can we open source healthcare data?

In software, open source data is anything made publicly accessible for others to use or modify. But what does this mean when talking about personal data in healthcare, such as patient records and diagnoses?

One view in favor of open sourcing health data is that asynchronous medical care is absolutely required to improve the efficiency of the medical industry. In theory, this could allow a patient to visit any clinic in the world, see a physician, and get a diagnosis utilizing their existing data. This diagnosis could be based on the patient’s medical history as well as aggregated data from other doctors and facilities.

One point made against open source health data is that since clinical data is not being captured in structured data formats, there would need to be major, additional regulation around the input and “cleanliness” of the data points. It would also be extremely time consuming and costly to implement this open source database. Finally, if this data is open to anyone, then patients would of course have access as well. Is this in fact useful to you as an individual or rather is it too much clutter and detail to comprehend in a relevant way? If it is accessible to anyone, it could be incredibly susceptible to abuse and malpractice.

3. More data ≠ better data.

Some of the participants challenged the group on whether healthcare data should be considered “big data.” One opinion was that big data is dependent on the quality of the data, not quantity. In other words, if you feed bad data into the system, the AI and data output will produce bad results. Deep learning has struggled to work in healthcare as, contrary to other industries, there is not a lot of big data to be analyzed yet. Let’s take Facebook for example — if you think about facial recognition technology, Facebook services millions of people through their tagging feature. There is not that kind of system built yet for health systems.

Another crucial issue worth mentioning is that there is a tremendous amount of bias in datasets. When aggregating data in a machine learning context it is difficult to deduce evidence based conclusions. The methods used to analyze and collect data vary from one provider to another and every facility wants to use their data to help control their own standard of care. A suggested solution to this issue is to build a business model focused on aggregating data on a patient level. This would allow facilities to recognize the behaviors of individuals (habits, socializations, family complexity, etc.) and collect rich, unbiased data.

Staying in line with the idea that less data is better, what is the least amount of data that could be collected to achieve optimal results? For example, if a pregnant woman is asked if she previously had a premature birth (Yes or No response), based on her answer she could receive more targeted treatment and precautions to reduce complications and medical bills. Rather than attempting to tackle big healthcare data, one could focus on “small data for small outcomes”. This would result in more precise patient data through light-touch interactions which would lead to better facility / patient habits.

_ _ _

I wish I could say that we unraveled answers to some of these complex questions. Instead, the conversation between 30 industry leaders was rich, unfiltered and provocative — in our eyes, a success. Everyone was willing to share critical developments, milestones and roadblocks. Industry giants heard the voices of mighty, lean startups and vice versa. Arguments and compromise ensued, relationships were built and partnerships were seeded.

With some of the brightest minds in medicine, technology, insurance, non-profit, and academia, some leaders around the room had been confronting these issues for decades — others for less than a year. Out of all of those brilliant minds, not one person could pinpoint the solution to one of these healthcare challenges. Personally, I left with hope that big strides are being made in this industry. On behalf of USV, our hope is that we can continue to facilitate open and transparent conversations like this across the country and world.

Call for Genomics and Software-driven Biology Startups

Everyone knows the big Web 2.0 companies use hundreds of data points to determine which ad we might prefer. And yet — in the deathmatch against disease, we reduce human health to single variables. 

Granted, this has partially been due to immature technology and infrastructure; after all, an assembly line of PhDs can only annotate the genome so quickly. There is also a hard limit on a human’s ability to find patterns within the noise.

In the last couple of years however, a few trends have reshaped the landscape for startups working at the intersection of computer science and biology: 

1) the hardware layer of the genomics stack has been commoditized, 

2) the cost of genomic sequencing has fallen below the threshold required for routine reads, 

3) data storage is effectively free, and

4) sophisticated computational tools, including deep learning, have matured, allowing us to apply strategies that were not possible before





Once in a while, there is an inflection point that completely changes the rules of the game. We saw this in the early 2000s, for example, when suddenly you didn’t need a big check to build your own servers and infrastructure, just to get a website up and running.



What this shift enables, is a new generation of biotechnology companies very distinct from its predecessors, with characteristics not unlike the software and machine learning companies we are familiar with.


 The characteristics that make software startups so appealing — that you can test your idea cheaply, that you can de-risk early, that you can scale quickly, etc — will be found in this new generation of biology companies also. In fact, many of these startups should really be thought of as machine learning/software companies with domain knowledge in biology. Just as we saw an explosion of web startups running many experiments at a low cost in the mid 2000s, we expect to see a similar phenomenon in the biology space.



And clearly genomics is a big-data problem — arguably the biggest today. The thing is, most people think of the genome as a static tell-all dataset. In reality, even your somatic dna changes at an astonishing rate; in fact, we can predict your age, within around a 5 year confidence interval, from your genome. That would not be possible if your genome was static. So we need to reframe the genome as a dynamic real-time data stream of what is happening in the body. Then of course, we also need to couple longitudinal genomic datasets with time series biomarker data before we can use our new tools to understand human health a little better. 

We have been excited to meet teams that are fully leveraging the promise of this new era. A couple weeks ago, for example, we met cancer diagnostic startup Freenome, which uses cell-free dna from liquid biopsies to detect cancer at an early stage. If that sounds scary, at a very high level, it is just a machine learning categorization algorithm. What is exciting is that they have essentially taken an agnostic approach to the problem. Healthcare is a notoriously slow-moving industry, but imagine that in the future, new findings will simply be incorporated through a software update.

Beyond disease diagnosis, we have seen startups working in agriculture genomics, drug response, and even designing a new genomic programming language, that have all captivated our imagination.

It will be tempting at times to dismiss these startups as naive; after all, many of them are tackling highly complex problems that generations of scientists have given blood sweat and tears to, only to make tiny contributions. And indeed, there are many technical and commercial bottlenecks we have yet to overcome (next post). However, we have seen impressive real-world results, and we are excited about what is to come.

Top Hat

Even back when I was in graduate school, I found the price of textbooks to be high and their quality to vary widely. Now that I have children taking college courses, I was shocked to find textbooks that cost over $200 and are still large physical objects that have to be lugged around! The high prices and lack of innovation are the result of a market structure which has become highly concentrated among just a few textbook publishers. That's why I am excited to announce that USV has led a new round of financing for Toronto-based Top Hat, which last year launched a content marketplace for higher education.

I first met Mike, the founder & CEO of Top Hat, shortly after he had started the company. He told me about his exciting vision for bringing innovation to the higher education market. But then he said he was getting going by replacing Clickers. For starters I didn't know what those were as they had come after my time in college. Once I figured out what a Clicker was, I admittedly thought going after those was, well, boring. But Mike was right and I was wrong. Starting with classroom engagement turned out to be the perfect basis for establishing a large footprint in higher education. We stayed in touch as Top Hat grew and then last year the team successfully used their user base to launch a content marketplace.

While it is still early there are many positive signs about the potential for the content marketplace that remind us of other successful marketplaces we have invested in over the years such as Etsy and Science Exchange. In addition to individual professors adding content by themselves there are also new behaviors emerging and we are particularly excited about collaboratively developed content. Much work remains to be done but the company is now well funded to execute on that.

Our investment comes from the USV Opportunity Fund, which we set up in part for this type of situation where we have developed a relationship with an entrepreneur over time. Also worth noting is that Toronto continues to impress us with its quality and diversity of companies. We now have five investments there, placing Toronto third as a location in the USV portfolio after New York and San Francisco.


Union Square Ventures has made a substantial investment in Tucows, a 23 year old company company that has been publicly traded for over 15 years. Since we have never before invested in a public company, that requires a bit of an explanation.

All of us at USV feel fortunate to have participated in the wave of innovation unleashed by the open Internet. That innovation is now threatened by consolidation at the application layer and the access layer. Watching football over the weekend and seeing every carrier advertise video and music services on national television that don’t count against your data cap punctuated, for me, the end of the era of permissionless innovation that gave rise to Twitter, Tumblr, Etsy, and Kickstarter. As Fred pointed out  when large companies can pay to play, start-ups ability to reach consumers has been seriously compromised.

We are investing in Tucows because we believe they have built a great business, but also because they have been a stalwart defender of the open Internet. We are excited to be working with them now because they are challenging the incumbent access providers and the conventional wisdom, by building modern fiber networks in local communities across the U.S.. They are doing this at a time when telephone and cable companies are exploiting their natural monopolies in these communities, underinvesting in their outdated networks, raising prices and using the excess profits to buy back their stock, and buy their way into global entertainment businesses, pleasing shareholders but doing nothing for the communities they serve.

Tucows is doing the exact opposite. They are using hard won profits from the competitive wholesale domain name business to invest in modern fiber networks in cities like Charlottesville VA, Holly Springs, NC, and Centennial, CO. They believe, as we do, that, a modern communications infrastructure is the most important investment any community can make to expedite the transition from a 20th century economy based on undifferentiated manufacturing to a 21st century economy based on highly specialized manufacturing and services.

While they are at it, Tucows is exploding the myth propagated by the cable and telephone companies that the only way to finance a fiber network is to return to the gatekeeper model of the cable industry where the network build is subsidized by fees extracted from content providers in exchange for access to consumers. Tucows is committed building open networks that offer unfiltered, unthrottled, and unfettered access to consumers.  Open networks preserve the defining feature of the open Internet, permissionless innovation. It is that feature that ensures applications layer services have the freedom to innovate. More importantly, without open access to the Internet, no community can protect the economic, political, or personal freedom of their citizens. And without those freedoms, communities will have little chance to successfully manage the transition to a modern 21st century economy. Individuals in these communities will need unfettered access to knowledge to retool their skills for the new opportunities. Gig workers will need to access multiple platforms to optimize the return on their labor. Specialized manufacturers will need to fit seamlessly into global supply chains. All of this will need to happen quickly if we are to minimize the economic dislocation these communities are already grappling with. None of this will happen, if access to the Internet is mediated by vertically integrated global conglomerates.

The cable and telephone companies would like us to believe the open Internet is threatened by over reaching government regulation. In fact, it is threatened by crony capitalism. Instead of investing in local communities, the incumbents deploy thousands of lobbyists to argue that communities should not be able to invest in their own future. We are thrilled to be working with Tucows, because instead of lobbying Washington, to prevent competition, they are actively investing in fiber networks, the critical 21st century community infrastructure, and while they are at it, proving that investing in community fiber networks is a great business.