• There are some investments that take years to make. They are often our best investments. Quizlet took something like five years to go from a company we got interested in to a USV investment.

    In March 2009, we hosted an event we called Hacking Education. That was the official start of our focus on education. From that event came a thesis on how we would approach investing in education. We would invest in lightweight services and networks that allowed anyone to learn anything. We would not invest in services sold top down to the existing K-12 and higher education system. We wanted to obliterate, not automate.

    We started hunting around for services and networks that fit our thesis. One that caught our attention was Quizlet, the leading web and mobile studying tool. We got an intro through Christina. Eventually Andy got a meeting. We found out that Quizlet had been bootstrapped, was profitable, and was not interested in raising outside capital. But Andy did not take no for an answer. He kept calling on them. He brought me to meet the two Quizlet leaders, Andrew and Dave, in September 2012. We got the same story in that meeting but we did make an impression. We started inviting them to our events in SF and they usually would come. So we kept doing that and kept stoping by to say hi when we were in SF.

    Earlier this year Dave called me to say that they were going to raise outside capital. He and Andrew had concluded that the opportunity to build and develop peer to peer learning and studying tools for web and mobile was so large that they could not continue to bootstrap. So we jumped onto the opportunity and threw ourselves at it. That process had a number of fits and starts but we hung in there and eventually the financing came together the way Andrew and Dave wanted it to and we joined our friends at Costanoa, Altos, and Owl in a $12mm Series A round for a ten year old company. Just writing those last few words makes me happy. You don't see many Series A rounds for ten year old companies. But when you do, they are generally good ones to do.

    So what is Quizlet? Well if you have kids in middle, high school, or college, they probably use it. Quizlet is a studying/learning tool written by Andrew Sutherland for his own use ten years ago when he was studying for a french test. He put it out on the web a bit later. He was joined by Dave Margulius who helped him turn Quizlet into a business by implementing an elegant freemium business model. Quizlet is free for anyone to use. But if you want to do certain higher value things, you can pay a small amount every month for access to them.

    Quizlet lets anyone create a study set and practice it online and on mobile. And it also allows anyone to use someone else's study set. Quizlet is peer to peer learning. Over 100mm study sets have been created by users and over 1bn study sessions have been done on Quizlet. Quizlet has been a top ten education app in the mobile app stores for years, a fact I was constantly reminded of every time I went to look at the education category in the years we were chasing this investment.

    Here are some examples I just found by searching around:

    Just imagine a massively open database of 100mm study sets like that which is growing by the day. And you get why we have been and continue to be so interested in Quizlet.

    There are over 7bn learners on planet earth. Within a decade, the vast majority of them will have a mobile device connected to this massively open database of study set which is available for free. These 7bn learners will be able to contribute and consume these study sets. And in the process the world will become more educated and more literate. That is hacking education and that is why USV is so excited to, finally, be an investor in Quizlet.

  • Clue Logo

    We are excited about our investment in Berlin-based Clue, which puts women around the world in charge of their fertility and their health more generally.

    Clue does this by offering a period tracker and fertility app. We have been pursuing native use cases for phones, which are with us nearly all the time, making things possible that have long been a dream. One of those is gathering health data: over 2 million women around the world are using Clue to keep track of their cycle. Under the leadership of CEO Ida Tin, the Clue team has created an app that makes data entry so easy that it is nearly effortless.

    Clue is growing rapidly with the apps available in 10 languages and users in 180 countries. The company is beginning to collaborate with leading researchers to provide the most value back based on the collected data. A recent release of Clue brings the total categories of data to 31, such as period, pains, emotions, sexual activity, sleep, energy level, exercise, hair, skin, weight and various birth control methods.

    Here is how Ida describes Clue's mission: “Reproductive rights are human rights: the right to freely decide whether to have children or not, how often and when, including easy access to contraception and the necessary knowledge about reproductive health, and the right to attain the highest standard of sexual and reproductive health. Technology can and will have a huge, positive impact on all these issues and Clue is leading the way. We have so many users telling us that Clue has become such an important tool because the app not only improves their daily lives but also helps them to know themselves and their body better.”

    If that mission resonates with you, Clue is hiring for several positions in Berlin, which is a terrific city to live in! For more on Clue and the funding: from Mosaic Ventures, from Bloomberg, and from Ida on the Clue Blog.

  • I recall meeting Perry Chen for the first time in the old USV offices on the 14th floor back in 2009 shortly after Kickstarter launched. He and his partners Yancey and Charles were onto something, I was sure of that. But they wanted to do things differently. He told me that Kickstarter always wanted to do what they felt was the right thing. He told me they were not building the company to be sold. And so, he said, they needed investors who understood that and appreciated it. I told him that approach was welcome at USV and that we were eager to figure out if there was another way to do things too.

    Six years later, Kickstarter has formalized those desires and commitments into its corporate charter and in the process has reincorporated a Public Benefit Corporation (PBC) under Delaware law. A Benefit Corporation is different than a “B Corp” because it involves formally amending the company’s charter and being recognized as such under the law.

    I encourage you to read their new charter [https://www.kickstarter.com/charter] as it outlines the things they will hold as dear as shareholder value and be held accountable to and report on annually. And you should also read their interview with the New York Times [http://www.nytimes.com/2015/09/21/technology/kickstarters-altruistic-vision-profits-as-the-means-not-the-mission.html] where they explain why they did this.

    There are those who say that Benefit Corporations and venture capital are not compatible. We don’t agree and we think companies that align their values with their customers and communities will benefit over the long term, not suffer. And that alignment can produce value for shareholders sustainably and profitably. It is worth noting that not one of Kickstarter’s angel investors, venture investors, employees, and board members who own shares in Kickstarter dissented on the vote to convert to a PBC.

    None of this should suggest to you or anyone that Kickstarter is not a for-profit business. It has made money since its second year of operation. Profits give it sustainability without the need to finance the business externally. And profits can enrich its founders, employees, and investors. But these profits are not the only goal of Kickstarter. The company exists to bring creative projects to life and that mission drives the company as much, or more, than the profit seeking motive.

    My partner Albert has written a lot about Benefit Corporations [http://continuations.com/post/48767728329/benefit-corporation-facilitating-a-new-market] and has worked with the State of Delaware to insure that their statutes are workable for entrepreneurs and the investors who support them. USV is a fan of Benefit Corporations and we are thrilled that Kickstarter has successfully converted into one and codified their values and commitments for the long-term as a Benefit Corporation.

    #kickstarter #crowdfunding
  • USV occasionally engages in debate on public policy issues that impact the freedom to innovate and the health of the web. During the past year, we have advocated in favor of the FCC's 2015 open internet rules (aka "net neutrality") along with many members of the startup community.

    Recently, several ISPs and Telcos filed a motion to stay the FCC Open Internet Rules. A group of leading web companies, coordinated by the Internet Freedom Business Alliance, jointly filed an Intervenor's Brief opposing the motion to stay. USV's Brad Burnham contributed a declaration to the intervenor's brief, restating our support for the Open Internet rules. The full intervenor's brief is here, and you can read Brad's declaration beginning on page 139.

    Upon review, the appeals panel for the DC circuit denied the ISP's request to stay the Open Internet order.

    As this debate and others play out, it's our intention to document any public statements or filings we make, which we'll continue to do here.

    #policy #open internet
  • La Ruche qui dit Oui! (the hive that says yes) is a marketplace that connects farmers to people who want farm fresh food in their kitchens and on their tables. We got to know the company last winter when my friends Simon and Toby from Mosaic introduced me to Marc-David Choukroun, one of the two founders of La Ruche. The Gotham Gal and I were in Paris and we met up with Marc-David at a Ruche on a saturday morning. We sipped coffee and talked to the farmers and customers who were stopping by to pick up their weekly supply of meat, cheese, milk, eggs, vegetables, fruit, and bread. We were smitten.

    For years, USV has been on the hunt for a way to invest in the “farm to table” market sector. As you all know very well, we believe in the power of networks to solve the challenging problems of our time. And making high quality farm fresh quality food available at a reasonable price to everyone is certainly one of those challenging problems. The most affordable food is also the most mass produced and, generally, the most unhealthy food. How can we get back to a time when the food we eat is produced nearby, is high quality, and is healthy?

    One way is to use the power of the network to connect farmers and consumers. And many entrepreneurs have been working on this problem over the past twenty years. We have met with most of them. Unfortunately, not many of them, until recently, met our test of a lightweight, peer to peer, capital efficient, people powered network. We call these “thin networks” and we are drawn to them as investors and as consumers.

    La Ruche has been operating in France and Belgium for the past four years. Their marketplace connects farmers, consumers, and, most importantly, hosts together to form communities (Ruches or Assemblies) that come together once a week to exchange products, feedback, and friendships. These are communities in the truest sense of the word. My colleague Nick went to a Ruche in Paris last month and there was live music playing and people were hanging out enjoying the lovely spring day. A community is the thing that La Ruche’s marketplace software helps people create.

    The business model is simple. Consumers order the food they want to pick up in advance and pay for it. The farmer comes to the community at the designated time, sets up next to the other farmers, and delivers his or her products in person. The farmer keeps most of the money, but the host and La Ruche split a small take rate for facilitating the transaction. It is a win/win/win. Farmers make more money selling directly, consumers get high quality products at reasonable prices, and the hosts make money for their effort to create the community, recruit the consumers, and curate the farmers. For many hosts, the income they get from creating and running these communities helps pay the bills, in the same way that selling on Etsy can help a family make a little extra money each month to make ends meet.

    La Ruche has expanded to the UK, Germany, Spain, and Italy recently. The communities are known as La Ruche qui dit Oui! in France and Belgium; The Food Assembly in the UK and Germany, ¡La Colmena que dice Si! in Spain, L’alveare che dice Si! in Italy and Boeren & Buren in flemish Belgium. With its recent expansion in Europe, the network now has 100,000 active customers, 4,500 local producers, 700 communities. The company has 70 employees operating in six countries.

    Over the past six months, USV has worked with Marc-David and his partner Guilhem Cheron to put together the right investor group to help La Ruche with their european expansion. La Ruche is a socially conscious mission driven organization that values farmers and communities and the needs of both as much as (or more than) the pure profit motive. In the US, they would be a B Corporation. And so they needed an investor group that was aligned on that. I am pleased and proud to say that they have succeeded in finding that investor group and USV is part of it. Our partners in this adventure are Frederic Court of Felix Capital, existing investor Rodolphe Menegaux and Xange, Eric Archambeau and Aymeric Jung of the social venture capital fund Quadia, and a few angel investors who are aligned with the company and its mission.

    If you find yourself in France, Belgium, Germany, Spain, Italy, or the UK in the coming months, go to La Ruche and find a Ruche or Assembly and stop by and check it out. It’s something to see. Here’s a map that will help you find one near you.

    #food #marketplaces
  • We have said many times that we believe in emergent, decentralized, start-up innovation. Institutions public and private, no matter how well intentioned, tend to protect their institutional interests, whether is it a current revenue stream, or a position of market power. That makes them inherently conservative. Start-ups and the entrepreneurs who create them are almost always outsiders. They depend entirely on innovation for success. So we are sensitive to market power and constantly on the look out for innovations that unlock markets by creating value for consumers and changing the structure of markets.

    We bet on networks like Twitter and Tumblr because they efficiently connected creators and consumers challenging the incumbent bureaucratic hierarchies in the media industry. But those networks also concentrate market power through network effects and as they grow, they tend to consolidate control over their creators and consumers in an effort to extract more economic value. This is capitalism’s creative destruction at work. We celebrate it, but we also look for opportunities to continue the process with new models, that are even more efficient.

    That interest in what’s next has led us to look closely at protocols that further flatten hierarchies and decentralize control. We are pleased to announce, today, our investment in OB1.

    OB1 is a company formed to further the development of OpenBazaar, an open source project that is refining a protocol that will enable anyone, anywhere to sell products and services to anyone, anywhere in a fully decentralized marketplace. Because the marketplace is defined by a protocol and distributed across every participant’s server, the hosting costs are shared and there is no way for a central authority to leverage network effect market power to extract rents from the participants.

    This begs the question of how OB1 can be a for profit business that will generate a return on the investment we are announcing today. How can a business that is consciously architected to undo network effect defensibility, one that is tearing down the walls and filling in the moats that every paper on market based competition has insisted are necessary for success… succeed. To paraphrase the old EF Hutton ad (yes I am dating myself), they intend to make money the old fashioned way: they intend to earn it.

    OB1 will offer a set of value added services to buyers and sellers on the OpenBazaar market. They expect others to provide services to the participants on OpenBazaar, and they don’t expect to have any proprietary advantage over those competitors. As investors, we hope that their familiarity with the marketplace and the goodwill they generate as early sponsors of the open source project will give them an advantage but we understand they must execute very well or be left behind.

    A close observer might say that the recent experience with decentralization is that it often leads to an unanticipated re-aggregation that creates extraordinary market power and financial returns. This is certainly the story of the TCP/IP and HTTP protocols that are the foundation of the Internet. Those protocols radically decentralized the creation and distribution of media and fundamentally changed the structure of the media industry. But the challenge in this newly decentralized world was discovery. When media was defined by distribution, the newspaper, radio station or cable franchise decided what was available to you. In a world where anything was available, the hard problem was finding what you want. The answer was search. And Google, whether they fully understood it or not, stepped in to meet that need and reaggregated human attention is a way that created an enormous amount of market value.

    A cynic might then say that OB1, is consciously architected to create this same reaggregation opportunity in commerce. I can say with some conviction, having talked about this for hours with the founders of OB1 that this is not their plan. But I also have to say that none of us understand exactly how discovery will work in a fully decentralized marketplace and how to prevent discovery from becoming a source of market power in the decentralized world we envision. We hope by calling it out here, you will keep us honest and help us imagine a new model for discovery that won’t subvert the goal of empowering buyers and sellers to trade freely and to capture the value they create.

    Finally, we can’t end this post without addressing the potential dark side of decentralized markets. Decentralization empowers individual participants in the network or marketplace. Some may use the protocol in ways that others consider immoral or that are illegal in some jurisdictions. That should, however, not prevent us from creating an open protocol. TCP/IP and HTTP, for instance, allow content to be shared between any two people who have access to the Internet. Some of that content is morally reprehensible to many if not most people. Some of that content is illegal. Still overall, most would argue that society is better off because the Internet has enabled everyone to connect and communicate. The Internet could have been designed to centralize control, but then it would not have enabled the permissionless innovation that led to so many of the services we now use every day. The OpenBazaar protocol makes the same conscious design choice. It is inherently decentralized. It favors innovation over control, so it is possible that the openness of the protocol could lead to use cases that some or most of us would disagree with. But as with TCP/IP and HTTP, we believe the creative and legitimate use cases will quickly dominate the marketplace.

    OB1 will, of course, not knowingly offer its value added services to anyone using the OpenBazaar protocol to engage in illegal activities. The trickier question is how OB1 supports the development of an open protocol, one that they do not control, without encouraging, or endorsing, or even facilitating the misuse of that protocol. This calculus is further complicated by the fact that many current contributors to the open source project may be motivated by a mistrust of political or economic power. We do not have an easy answer. It would be disingenuous for us to say the OB1 team has no influence over the open source project. They are respected code contributors. They are likely to encourage the development of the protocol through their own work and will now be in a position to offer bounties to encourage the development of specific features. But we can’t think of any design principle we could encourage, that would eliminate the possibility of misuse, without undermining the value inherent in a free and open marketplace, so the best we can do is aggressively advocate for the responsible use of the OpenBazaar protocol, be open and transparent ourselves, and be an example for others.

    USV and our syndicate partners at A16Z are committed to responsibly furthering the OpenBazaar protocol. We are excited to be working with the team at OB1 who we know shares our values and that commitment.

    #ob1 #marketplaces #blockchain
  • Dronebase

    A couple years ago, in early 2013, I started writing a lot about Drones. I have always thought that Drones represent the leading edge of a robotics age. There are a host of reasons for that but the main ones are that they are already being actively used in military and some commercial applications, they require less coordination with the “real world”, and they represent a 10x improvement in cost and speed over things they replace (helicopters and planes).

    However, finding an investment in this sector that fits well into our investment thesis has been challenging. We’ve looked at quite a few Drone investments but until recently we have come up empty. However, last month that changed when we closed on a seed investment in Dronebase.

    Dronebase is a marketplace for Drone services. This is not a consumer oriented marketplace. This is a business to business oriented marketplace. If you are in the construction industry and want to hire a Drone Service Provider to monitor or survey your job site, Dronebase is for you. If you are in the mining industry and want to hire a Drone Service Provider to measure inventory values in your stockpiles, Dronebase is for you. If you are in the real estate industry and want to hire Drone Service Provider to create aerial imagery for your properties, Dronebase is for you.

    Dronebase is standardizing pricing and quality around two basic offerings to start; aerial imagery & video and more data-driven mapping & surveying (including the relevant analysis).

    Like all investments, who is doing this is as important as what they are doing. Dronebase was founded by Dan Burton, a former Marine Infantry Officer, who saw the power of Drones firsthand in his time in Iraq and Afghanistan. He came back to the states and worked in a number of interesting jobs, but never lost the fascination for and the interest in Drones. So he started Dronebase to facilitate the commercial adoption of Drones.

    This is a seed investment for USV. Dronebase is operating, but only in the Los Angeles market right now. They have big expansion plans which this seed capital will help facilitate. They are looking for software engineers and sales and operations people in the Los Angeles area. If you are interested in working at Dronebase, check out their careers page and apply.

  • Over 30 years ago when I first started to program I was quickly fascinated by the potential for computers to become smart. I remember writing my own version of Eliza and buying the Winston's book on Artificial Intelligence. It seemed like anything was possible and thinking machines would be just around the corner. Then followed nearly a quarter century of, well, disappointments.

    Tasks that were simple for humans, such as figuring out what's in a picture, seemed to defy all efforts by machines. When spam and fake accounts became a problem on the Internet we wound up being able to use simple images of slightly distorted numbers or letters to tell machines and humans apart in what became known as a CAPTCHA, short for Completely Automated Turing Challenge.

    Alan Turing, the pioneer of theoretical computer science and cryptology, had proposed a test in which a human would be allowed to ask questions of multiple respondents. If the human couldn't tell which respondent was a machine then that machine should be considered (at least somewhat) intelligent. You can think of a CAPTCHA as a miniature version of such a test, which is why sometimes they are accompanied by questions such as "Are you a human?"

    But then suddenly a few years ago most CAPTCHAs stopped being effective. Machines were easily able to recognize the images as quickly as a human. And that turned out to be part of a much broader trend of breakthroughs in making machines smarter. For example, we went from first versions of self driving cars that barely made it one mile on a closed course in 2004 to self driving cars successfully navigating on crowded highways by 2012.

    How did all of this happen? There are of course many contributing factors, such as much faster CPUs and better algorithms. But the most important breakthrough has been the ready availability of vast amounts of data from which machines can learn. As it turns out, not unlike humans, machines learn by seeing lots of examples of what something is and isn't. This kind of "training data" is now everywhere and growing rapidly. For instance, every day millions of new images are categorized by humans who tag them with information about location and contents.

    Still, until recently it was difficult for developers to access these breakthroughs. Much of it was happening in either academic research or at the largest companies. We are therefore excited to be investors in Clarifai, a New York based company that is making advanced image and video classification solutions available as an easy to use API.

    With more and more visual content everywhere search and discoverability are becoming paramount. Marketplaces, in which products can be listed with images, are just one of many examples that can use Clarifai to offer a better experience. If you want to play around with the technology without programming you can just take an existing image or video and try out Clarifai's classification demo. We look forward to seeing what people will build on top of Clarifai — if you have a small project in mind you may want to participate in the upcoming video hack day. You can also read more about the financing on the Clarifai blog.

    PS Clarifai is hiring for many different roles!

  • Today the FCC is expected to approve its latest open internet rules, concluding the latest (but certainly not last) round in this now decade-long fight.

    We believe -- along with many others -- that this set of rules will help preserve the amazing innovation on the internet that we have known for the past two decades. We’ve been debating and writing about this issue since 2006, and we are pleased to see that the FCC has decided to recognize the special and essential nature of the internet access market, creating clear, strong rules that will stand up to legal scrutiny.

    We love the internet. It is the place where LittleCos can challenge the BigCos on even footing. Where voices that would never reach ears on traditional media can find their followings. Where any person can reach the whole world without seeking permission from a gatekeeper.

    From a societal perspective, this means more knowledge, more resources, more efficiency, and more opportunity. We are big believers that the future of everything -- education, healthcare, transportation, finance, entertainment, and on -- will be delivered by everyone to everyone. To put it in market terms, the open internet has been, and will now continue to be, the largest free trade zone in the history of the world.

    From an investment perspective, the open internet has been a phenomenal opportunity. The tiniest two-person team can launch a website or app, earn the affections of users, and be off to the races. Capital raised from investors can be used to hire the best talent, build the best product, and win over users, not to negotiate access deals with carriers or hire lawyers to adjudicate disputes at the FCC. Contrast that with what investing on a Cable-style internet would look like, which is scary and sad.

    All of this was essentially a happy accident. The internet was open by design, and no one expected it to become the global platform for communication and commerce. And it has been an incredible natural experiment, one that has produced trillions of data points. What it taught us is that by interconnecting our networks in an open, decentralized way, we open the way for innovation orders of magnitude more rapid and diverse than what was possible before.

    So, the purpose of these rules is to recognize that the open internet has been working well, and to take steps to keep it that way. To codify the historically open nature of the internet.

    Like many in the tech community, we are wary of regulations that could stifle innovation, and we didn't come to this position lightly. We want to see the most competition in internet infrastructure, but also recognize that internet access has natural monopoly characteristics, and that we have almost no competition for wired internet and an oligopoly in wireless. For a detailed response to many frequently cited concerns about these rules, check out our friend Brad Feld's post on the subject. Looking ahead, we will will keep pushing for more open spectrum and smart approaches to broadband deployment at the local level, and will keep investing in creative, bottom-up approaches to networking.

    We believe in markets. We believe that by recognizing that access to the Internet is an essential service, the FCC has moved to protect the free and open markets that depend on that access. Contrary to much FUD, this is NOT regulating the internet, it’s ensuring open access TO the Internet:

    We do not want to see this move as the first step to regulating the Internet proper, up the stack to the applications layer or into the internet backbone, both of which are high-functioning, highly competitive markets. We also know that this order will not be perfect, and there will be points to debate and areas to improve upon.

    But we see this as a huge step forward. We applaud the FCC’s decision to define access to the Internet as an essential service, and to preserve the openness that has made the Internet such a tremendous engine for innovation and opportunity.

    For more on our past writings on the open Internet, see:

    #policy #open internet #net neutrality
  • In our most recent fund, USV 2014, five of our first six investments, have been seed investments. That is probably surprising to many people as USV is not thought of as a seed investor. I wrote a post today explaining why we are doing a lot of seed investing these days and how we do seeds at USV.

  • As Nick, Jonathan and Fred have shared, this January we’re busy rolling out updates to USV.com. The core idea behind USV.com is to open source our thinking -- to do in public, with the great community of people that has been growing around the site, what we normally do internally at USV. Today, we’re launching a new feature that takes another step in that direction.

    We spend every Monday together as a firm. We look at new deals, discuss what’s going on in the world, and walk through each of our portfolio companies. There are always a number of ideas that surface in that meeting that we continue to explore in person or over email throughout the week. That cadence has worked well for us, as a way to collect thoughts, share resources, and take the conversation a bit further.

    We’ve debated how to open that longer forum to our network, and are kicking off a new feature to do so today. We’re calling it Topic of the Week. Each week after our Monday meeting, we’ll post a topic that we’re thinking about. We’ll seed it with a few posts exploring the topic in more detail and then keep the floor open for you to contribute. Whether it’s a thought, a comment, resource or a post you’ve written that relates, you can share it under the Topic of the Week.

    To kick things off, we’re discussing “What will undo today’s incumbent marketplaces?” Joel shared his account of exploring the Dark Web in order to better understand decentralized networks. We were captivated by what he learned and knew this was something worth you weighing in on.

    We’d love to hear your thoughts on this week’s topic and the new Topic of the Week feature.

    #topic of the week ##totw
  • You might have noticed the new look on USV.com today. We just pushed an update to make our feed more comfortable to read and interact with. I love the idea of websites and apps being comfortable, a term I picked up from Jared Sinclair's post on designing the Unread app (iOS only).

    Comfortable means always knowing where you are. It means not worrying about making a mistake. It means information has an obvious visual hierarchy: bold titles, tidy paragraphs, and spacious margins. Comfortable means there’s not visual clutter to distract you, except for those items that are supposed to stand out, like buttons.

    The update we pushed on January 1 introduced a few things on the front and back ends of this site. Nick's post about the update describe the primary goal we set out when planning the update: To give the most interesting posts and discussions on USV.com more time in the sun so that we could be sure everyone on USV.com was seeing really great stuff.

    As Fred wrote in his post on AVC: "I encouraged them to launch it and fix the inevitable bugs in public." That's what we're doing with today's refresh. We've simplified the feed. We've also rejiggered the form for posting new stuff: now you can now just start typing a thought and then add a title or link later, if you want.

    All in all this update to USV.com might just be a new coat of paint, but it feels more comfortable to us. We hope it does for you too.

    If you've got thoughts or comments about the latest update, you know where to find us. And while we keep you waiting for the cool new feature we're adding in the next week or two, here's a great Tom Waits song of the same name as this post. Because Tom Waits.

  • Last month Brad and Fred held an event for entrepreneurs in Berlin with the help of the folks fromTech Open Air Berlin. Here is their conversation about technology, startups, trends, and a little bit about Germany and Berlin.


  • eShares

    Anyone who owns shares or options in a private company instinctively knows that cap table management remains frustratingly analog. At USV, we own equity interests in more than 50 companies. For many of our portfolio companies we own three or more securities. The collection and management of this information is a thankless task but critical to our business.

    Almost every company in our portfolio manages its cap table in a spreadsheet (Google, Numbers, Excel, etc) and communicates that information via email. At the end of each quarter, we have the fun job of nudging the busy management teams of our portfolio companies to provide a current cap table so we in turn can accurately report our ownership positions to our limited partners. The whole process feels like snail mail and is prone to error. Not to mention the process of collecting and storing stock certificates in a third party vault, even though no one except our funds could really offer these outmoded pieces of paper as evidence of a legally valid ownership position.

    Of course, once a company goes public this information is all neatly arranged in a brokerage account. You don’t have to ping Google’s CFO or treasurer to confirm how many shares you own or calculate your fractional ownership position or try to triangulate a valuation. Why is that not the case with private companies? Why can’t investors log onto an account that has up to the minute information on our private ownership positions, as well as information on recent changes in 409A and other valuations?

    Employees who own options have their own set of problems but have no interest or training in keeping track of option agreements, vesting schedules, 409A valuations, exercise mechanics, etc. This in turn places an unwanted burden on our portfolio companies and their law firms, and is unfair to employees.

    Fortunately, a number of companies are bringing technology to bear on this problem. We think the leader in this space is eShares, which was founded by Henry Ward and Manu Kumar at K9 Ventures. On Friday, Henry authored a great post on the subject of broken cap tables: https://medium.com/@henrysward/broken-cap-tables-bbf84574a76a. In October, Andy Palmer, an early eShares investor, also wrote an excellent post from a user’s perspective: http://blog.koalab.com/2014/10/02/did-the-lawyer-lose-your-stock-certificate/

    We are excited to announce that we recently led eShares’ Series A round, joined by our friends at Spark Capital and investors from eShares’ seed round. One of my New Year’s resolutions is to get most if not all of our portfolio companies to adopt eShares. Now that we have played with the eShares platform, we wish this had happened yesterday. More importantly, employee option holders of our portfolio companies will also be thrilled even though they don’t yet know how much they will benefit from the ease and transparency of eShares’ solution. Like many software and cloud technologies we now take for granted, we will soon wonder how we lived without it.

    #portfolio #companies #investment
  • Hi Everyone -- I hope you are enjoying the beginning of the new year. As corny as it sounds, I love new years and the opportunity to get a fresh start, clear the decks, and make plans for the coming year.

    With that in mind, today we're pushing a minor update to USV.com, the first we've done in quite a while. Regulars will notice a few changes, notably the addition of a handful of topic pages (like this one on Blockchains) and the addition of a "USV team posts" feed. The goal of this site is to expose more of our thinking, and to do it together with others, and we've been working on ways to do that better. Big props to our two new analysts Joel (who we met through USV.com!) and Jonathan, who have contributed a lot of effort and thought to this -- they do a lot of their work here on USV.com and will likely do more in the future. Also to Brittany who helped give us a big dose of "half, not half-assed" when we needed it :-)

    Here's to a great 2015 -- looking forward to exploring it with all of you here at USV.com

  • There has been a lot of talk recently about the Internet of Things. Some analysts estimate there will be 9 billion connected devices, from parking meters to thermostats by 2018. By then, that will be roughly the number of smartphones, TVs, wearables and personal computers combined. There has been a lot less talk about how all those devices are going to be connected and almost no talk about the devices that don't stay put like drones, or sensors in cars will remain connected as they move around. 

    Our newest portfolio company, Veniam, has been working on that problem for a long time. Their goal is to become the networking fabric for the Internet of Moving Things. 

    Veniam's technology can be deployed in controlled spaces with many moving machines such as ports, airports, construction sites, and mines where it provides reliable and secure real-time data communication, creating new efficiencies in areas where cellular technology often does not work. But the real promise can be seen in Porto, Portugal where the companies technology was developed. There, Veniam has built the largest network of vehicles in the world, including the entire public bus fleet, garbage trucks, and taxis.

    By connecting all of those vehicles, they were able to create a mesh network that turned every public bus into a WiFi hot spot. Today, after just a few months 72% of the riders in Porto with smartphones connect to the Internet on their commutes. To make this possible, Veniam created the necessary connection management, multi-hop mesh routing, session management, cloud-based control and security. 

    Veniam will initially offer its technology to private companies and public institutions that own and operate large fleets of vehicles in urban environments. We believe, however, the company's mesh networking technology will ultimately do much more than create efficiencies for fleet owners. We expect Veniam to become a resilient, flexible, and cost effective alternative to cellular networks for connecting people and things on the go. We are excited to be along for the ride.

    #veniam #mesh #usvblog #investments
  • Web services, like governments, don't make anything, they just create the conditions necessary for their users to create value. Today's largest networks have demonstrated this to be true. Passionate communities have been born out of services like Twitter and Meetup. Entire businesses have been built off – and on top of – companies like Kickstarter and Etsy.

    It is almost impossible to measure the total impact created by large networks of engaged users. Platforms that enable individuals with different skill sets to collaborate enable innovation in a way that's only possible on the Internet. Github is a great example of such a platform. We believe Assembly is another one.

    We are thrilled today to announce our investment in Assembly, a platform that pairs developers, designers, and other creatives with great ideas to collaborate on the development and launch of software businesses and applications. On Assembly, anyone can submit a concept for an app or software product, and the community gets behind the best ideas to build them. Contributors are stakeholders who own their fair share of the products, and the revenues they generate.

    It's an entirely new way to design, develop and launch software projects, one that applies the values of Open Source to the founding of new businesses. Already, users from over 100 countries have come together to create products that have been used by over 4 million people. It's exciting to see what creators from all over the world have built, and will continue to build on Assembly. We are happy to welcome Matt and his team to our portfolio.

    #usv #portfolio #usvblog #investments #community-owned-applications
  • In discussing bitcoin we have always emphasized that payment is only one potential application of blockchain technology. The decentralized public ledger is a new protocol that enables a fundamenatlly new class of systems: logically centralized but with decentralized control.

    What does that mean? Logically centralized means everyone using the protocol agrees on what the state of the world is. For instance, imagine a list of usernames. Everyone agrees which names are on the list and which ones aren't. So "logically" it is as if the list of names were centralized, as if only a single copy of the list existed. Decentralized control, however, means that there is no entity (for profit or not for profit or even governmental) that controls which names are on the list. It is the protocol that handles that!

    Today we are excited to announce that we are supporting the team at Onename in building the foundations for a decentralized identity and authentication system. The decentralized here refers to control. The Open Name System will not be under the control of anyone. Yet it is logically centralized in that everyone agrees on which usernames exist and who holds them. People could participate in this system individually or through delegates (think registrars).

    Ryan and Muneeb have done a lot of work on enabling software which they are opensourcing so that others can start to build as well. They are looking for contributors, collaborators and team members as well as early adopters.

    #identity #blockchain #decentralized #bitcoin #namecoin
  • Social applications leverage the network structure of the Internet to connect people, places, and media. Over the last decade, we’ve seen the origination and maturation of these services, from Facebook to Twitter to Reddit to Tumblr to many more.

    At the same time, we’ve wondered what lessons and use cases of these applications, particularly the primacy of their mobile sharing experiences, would spill over into other disciplines. And, when they did, what those new services and apps would look like.

    For the past few years, USV has looked hard at how these examples might impact the healthcare system and sharing of medical knowledge. How, using the Internet network, you could connect every healthcare professional and by doing so, democratize access to medical knowledge. Human Dx, which USV invested in last winter, is attempting to do this through open machine learning.

    Figure 1, a medical photo and information sharing app that allows health-care professionals to collaborate with and tap into their peers’ knowledge, is another. In a little over a year since this mobile-only service launched, over 125,000 medical professionals, including over 15% of all U.S. based medical students at over 100 medical schools, have have used the service or shared images, which have been viewed 100,000,000 times and commented on over 60,000 times. The company has already seen this result in the crowdsourced assistance of diagnosis of rare diseases.

    This is an initial step in making the practice and learning of medicine into a more communal experience, by allowing medical professionals to share with their colleagues (and the world). One that we think will ultimately will be defined by a free, open access medical repository that any health care professional can contribute to and can comment on. Millions of assets, shared, collated and curated, by the greater medical community itself, via their mobile devices.

    USV is pleased to announce that we are leading a Series A investment in Figure 1 today, joined by Rho Canada Ventures and Version One Ventures.  We look forward to helping this team grow a free, open access medical repository that any healthcare professional in the world can contribute to and learn from.

    #figure1 #medicine
  • Communities have long been an integral part of the Internet, online places where people can connect and share their passions and interests. And communities can have great network dynamics, where they increase in value as participants join and share more. Union Square Ventures has a long history of funding these types of businesses.

    These communities are mature on the web, but less so on mobile. And in a mobile-native, or “mobile-first”, world, some questions about communities arise, such as - what do these communities look like, how do they work, and how do they interoperate? Additionally, we’ve wondered out loud about how a mobile app developer competes in an environment where it feels like there is consolidation and maybe even market domination, where a few companies are concentrated at the top of the app leaderboards.

    Then we met Amino (and Ben Anderson and Yin Wang, the founders behind it) -  a series of mobile-only apps each useful for a single niche interest community to share those specialized interests. Using the same technology platform, they’ve already launched communities for Whovians, Anime (Manga, Cosplay, Otaku, Vocaloid), K-Pop, Minecraft, and over 10 more. Each community is a separate app (iOS now, Android shortly), that collectively have been downloaded over 500,000 times. At the same time all the communities are networked together internally (which has real user benefits, such as single log in and deep linking across all the apps) and the platform itself is architected for easy and rapid deployment of new ones (the goal over time to have dozens, maybe even hundreds or more app communities).

    This mobile architecture -  app constellations, if you will - is an important part of the Amino thesis: that for communities on mobile devices, hyper specific is of more value than general; that a series of apps is of more value than one; and that people are looking to build online relationships through the phone now, not just on the computer. We are pleased to be investing in them as part of their Series A round, along with Google Ventures, SV Angel, Box Group, Kal Vepuri and Slow Ventures.

    #amino #usv
  • In November 2010 my friend Shana Fisher sent me an email suggesting I meet Edward Norton about his crowdfunding site for charities, called CrowdRise. I was pretty dismissive in my response to Shana. I told her that USV was “all in” on Kickstarter and we did not want to invest in anything that was too close to them. And though I did not mention it to Shana, I was also wondering how someone like Edward could manage being an entrepreneur in combination with all of the other things he does. But Shana is persistent. I took the breakfast which was at Pain Quotidien on 5th Avenue and 8th Street.

    I walked into that breakfast a skeptic and came out a believer. Edward impressed me with his commitment to making it easier to raise funds for charities and causes. And he impressed me with his knowledge of startups and technology.

    In the three+ years since, I have recommended CrowdRise to everyone who asks me where to crowdfund for charities. Each time I send them to Edward, he and his co-founders Shauna, Robert, and Jeffrey have treated them well and helped them run successful campaigns on CrowdRise.

    Last fall, we met again for breakfast. This time at Maialino. And Edward told me they had an incredible year in 2013 and had recently been approached by a buyer who wanted to acquire CrowdRise. I told him “absolutely not”. So Edward said “what would you do if you were me?” and I replied “I would raise a big round from top notch VCs and grow CrowdRise into the crowdfunding platform for charities”.

    And, as all of you must realize as you read this, that is exactly what Edward, Shauna, Robert, and Jeffrey did. Today CrowdRise is announcing a large investment by USV, Index, Spark, RatPac Entertainment , Bezos Expeditions, and the talent agencies CAA and UTA.

    At USV, we believe that the best crowdfunding services are domain specific. Kickstarter for project funding, Lending Club for consumer debt, CircleUp for equity investments in consumer products, Funding Circle for small business debt, and so on and so forth. And so our investment strategy is to find the very best platform for the important categories and back them. We’ve done that a lot but we did not have the premier crowdfunding platform for charitable giving in our portfolio.

    Now we do and we are super excited about it. And we are super excited to be working with Robert, Jeffrey, Edward, and Shauna. They are a great founding team and have built something truly special at CrowdRise.

    If you want to give CrowdRise a spin, you might consider backing CSNYC, a non-profit that is funding CS Education in NYC public schools. Their CrowdRise is here.

    #crowdfunding #charity #crowdrise
  • America's idea of itself is inextricably tied to the opening of the American West. In the 19th century America embraced the entrepreneurs, and rugged individuals who sought to reinvent themselves by going west. 

    Joe Manchin seems to have forgotten who we are. He seems to have forgotten that it was not the bankers or the boy scouts who opened the West, it was the entrepreneurs, and yes, the hucksters, and the speculators, and all manner of flawed characters looking for a place where they could enjoy the relative freedom of the frontier, away from the tentacles of an overreaching government.

    He seems to have forgotten that, more than anything else, it was the frenzied speculation of the Gold Rush that led to California becoming a state, the building of roads, churches, and schools throughout California and the development of the transcontinental railroad that bound California to the rest of the United States.  

    Senator Manchin says that we must protect innocent people from losing money by speculating in Bitcoin. As far as I know, we did not feel the obligation to protect the 49ers from losing money during the Gold Rush, and the vast majority of them lost everything they had. I would be shocked to learn that a meaningful number of them asked for help, just as I would be shocked to learn that anyone speculating in bitcoin today has asked Senator Manchin for help. 

    I agree that America should lead, but we should lead in a way that is consistent with who we are. We have never before been afraid to explore a frontier. Why start now?

    #bitcoin regulation
  • Announcing the investment in Sidecar that USV made last summer

    #mobile #transportation #sidecar
  • Joi Ito likes to say the Internet is a belief system. At Union Square Ventures, we believe in the Internet. We spend a lot of time thinking about how the Internet enables young companies to radically transform markets. We try to understand what it is about ubiquitous connectivity and permissionless innovation that leads to the emergent innovation we have all come to expect on the Internet. We have not, until recently, spent much time thinking about the Internet itself. Now, as more and more of our portfolio companies struggle to scale their services securely or fend off DDoS or malware attacks, we find ourselves thinking that the openness of the Internet - the characteristic that leads to so much innovation - is also a weakness. The question we grappled with is how can we preserve what is best about the Internet but recognize that there are bad actors out there that all of our portfolio companies should be aware of and protect themselves against.

    Just about the time we began grappling with this question I met Michelle Zatlyn, one of the co-founders of CloudFlare. We were both serving on the FCC’s Open Internet Advisory Committee. I was the only venture capitalist on the committee and Michelle was the only entrepreneur. We found ourselves working together to defend the freedom to innovate on the Internet in a room full of telecom and cable network operators, who were more concerned about the freedom to operate in a way that minimized their costs, maximized their revenue and ensured their strategic control over their networks. I came to appreciate her values long before I fully understood her business.

    Our first glimpse of the importance of CloudFlare came from Chris Poole, the founder of our portfolio company, Canvas, and before that 4Chan. He found CloudFlare at a moment of desperation. 4Chan was knocked offline by a denial of service attack and he was scrambling to find a solution. I am not sure how Chris learned about CloudFlare but I remember clearly, how big a difference it made in his life. Once he switched his DNS servers to put 4Chan behind the CloudFlare network, the DDoS attack was immediately mitigated. He also found that his site’s performance improved, but most importantly, it gave him the confidence that his site could be reliable, fast and secure, without a huge investment in his own internal site reliability team, something he could not afford.

    Now CloudFlare was on our radar. We started spending more time with Michelle and her co-founder Matthew Prince. We started to learn just how interesting and important CloudFlare was. Matthew likes to explain CloudFlare by referencing the typical network implementation of a large institution like a bank or an Internet service. At scale these networks invest in equipment to improve 1) performance, 2) load balancing, 3) WAN Optimization, 4) secure the perimeter (firewalls), 5) fend off DDoS attacks and malware. This equipment defines the edge of any large network. CloudFlares contribution was to realize that all of this could be abstracted into the cloud as a service, and that by offering this set of services CloudFlare could open up the market to the millions of smaller sites who could never dream of deploying and managing this kind of infrastructure themselves. Once we understood that CloudFlare was democratizing access to these essential services in a way that preserves open emergent innovation on the Internet, we knew we should do everything we could to get Matthew and Michelle to accept an investment from us. We are thrilled today to be able to publicly announce that we led CloudFlares most recent round. We look forward to working with a great investor syndicate, a great team, and the million and a half sites already on the CloudFlare network to make these essential network services available to innovators large and small worldwide.

  • One of the amazing things that the Internet has given us is the ability for people all over the world to collaborate. At times we use this for silliness (supercuts of animal videos on YouTube) and at other times to create important resources for humanity, such as a free, widely available, continuously updating encyclopedia (Wikipedia).

    We have also made substantial progress with machine learning. A great example of this is recent progress towards self-driving cars. It was only 2004 that the DARPA Grand Challenge ended with not a single vehicle finishing the closed course. Less than 10 years later Google’s self-driving cars have completed over a hundred thousand miles on public roads.

    So what if we could combine the two to get individuals all over the world to contribute and work with machines to help solve big problems? That's exactly what the team at Human Dx is tackling in healthcare: enabling the medical community to collectively contribute knowledge to an open machine learning system that could benefit people everywhere. If this sounds intriguing to you, check out the team members they are looking to join Human Dx.