A few weeks ago at the CoinAlts conference in Chicago, I did a fireside chat with Sam McIngvale, CEO of Coinbase Custody. CoinAlts is a conference focused mostly on the institutional infrastructure around crypto assets — legal, accounting, custody, etc. So we started out talking about the evolving role of custody in the crypto markets, and also talked generally about what we’re excited about in the next few years. It was a lot of fun. Here it is:
Saying Sorry
As I turned to write this, I was in the middle of reviewing a document a friend had asked me to look at a little while ago. In somewhat typical fashion, I had not done it right away, and had basically forgotten about it until he pinged me again, and even then I didn’t get to it right away.
I feel terrible about that, and as I reflect on things as part of Yom Kippur today, I realize that one of the things I feel the worst about over the past year is being a bad communicator. I have let things drop and haven’t been responsive. At the end of the day, it’s a matter of respect and I have not done a good enough job.
So for the many of you out there (including readers of this blog — notice no new posts for about 5 months…) who I’ve done this to, I am sorry. I will do better.
How to Read a Pitch
Yesterday, we had a team offsite at USV, which included a “presentation party” where a bunch of us gave 3-minute presentations on a variety of topics. It was actually a perfect window into everyone’s personality — Andy gleaned lessons about venture capital from music lyrics (of course), Albert talked about beauty in math focusing on the Fibonacci sequence, Bethany talked about her early entrepreneurial adventures with Beanie Babies, Gillian walked us through the fun things you can find in a proxy statement, Matt introduced us to Kayfabe. That’s just a few, but suffice to say they were all great, and were totally on-brand with everyone’s personalities.
Not surprisingly, I decided to talk about the beauty I see in Baseball, focusing on just one small thing: the way the batter reads the spin on an incoming pitch. Here it is — enjoy (I recommend holding a baseball while you watch, if you have one):
Building a culture of success
My son played in a baseball tournament this weekend. His team did well, and finished as the runner-up. The team that beat them in the finals played really well, but more importantly, it was obvious that they had a strong culture of success.
From the moment they walked on the field, they had a noticeable “bounce”. – they were literally bouncing around with energy and excitement. When they started warming up, it wasn’t haphazard and sloppy, but rather organized, energetic, and purposeful. It was clear that they had a warm-up routine designed to instill focus. It was led by the kids themselves. They had a huddle before every inning at-bat ending with a cheer of “hit!” and boy did they hit the ball well (better than any team I’ve seen all season). They cheered every kid on in a major way, and bounced in celebration when they scored. When they won, they posed for a team photo and the coach said “ok, time for your first Legends’ point” and they pointed to the camera in a victory celebration (the club was called the Legends) — teaching the kids that not only were they part of a long-term culture of winning, but that this was just their first step on their path. Even when they were sitting together before the game eating lunch, they had togetherness and winning baseball in their eyes. They were having fun the whole time, and it was clear that at every step of the way, the club’s culture was behind it.
I looked through at the club website, and it became clear that what I witnessed was not a one-off moment, but part of a bigger culture. This club has a practice facility where they do game situation indoor practice all winter long (with trophies conspicuously mounted). I saw pictures on the website of older kids doing the same pre-game drills in that facility, with the same intensity. They have camps, and dinners, and skills clinics. I can just imagine the youngest members of the club (my son’s age) watching the bigger kids do the drills, and the chants, and the movements & motions.
Having coached baseball for 10 seasons now (5 years x 2 seasons per year), and having played high school ball on an pretty good team and little league ball on a very good travel team (1989 NYC Federal League champions, 46-5 record — yes, I am still proud of that), I am particularly attuned to the dynamics of winning (and less winning) teams.
And now, working in the startup / VC world, I see from the inside what winning (and less winning) teams look like. USV has built a culture of success over the last 15 years, which I am hell bent on carrying forward to the next generation.
Success is one part ability/skills and one part culture. The skills are the raw material and the culture is what makes it great. So what makes for a culture of success?
This is material for a series of posts rather than just one, but I’ll focus on a few observations & memories here:
1/ Legend & lore — winning begets winning, especially in generational enterprises like companies and sports clubs (just look at the Yankees, or Duke Basketball). The younger generation needs to look up to the older one and learn what success looks like and how to model it.
2/ Body language — so much of success is about feeling poised and energized. Think “power pose”. The team this weekend had it.
3/ Structure — complex tasks like building a company or hitting a baseball need to be broken down into pieces so they can be understood and mastered. Figuring out how to do this in the right way is the magic of coaching, and it’s not easy. How can you take an amorphous goal and break it into understandable pieces, ideally explainable with metaphors, analogies, and anecdotes?
4/ Fun — this seems silly but it’s really important. Teams succeed when they are having fun, and they have fun when they succeed.
That is it for now. I’m heading into my week energized and inspired.
The Trust Equation
This week was the annual USV CEO Summit, one of my favorite moments of every year (remarkably, this was my 8th summit, and they seem to get better and better). The theme of this year’s summit was “Trust”, which, for those paying close attention, is the anchor of USV’s investment thesis 3.0.
We have been spending a lot of time thinking about the concept of trust, what we mean by it, and how we think it can become an actionable part of a startup strategy. More on that to come.
As part of the summit yesterday, we asked a handful of CEO’s to talk about what trust means in the context of their product and/or company. As you can imagine, there are many different ways to look at it and think about it. Here, I’d like to point out the framework that CircleUp‘s Ryan Caldbeck presented, which is:
1/ I recently learned a way of framing trust – I don’t know who originally created this equation but I learned separately from @jorgestubbs and LifeLabs.
— Ryan Caldbeck (@ryan_caldbeck) July 2, 2018
Trust = Credibility x Reliability x Vulnerability
Let’s talk about components of equation and I’ll explain why I love it.
(click through to read the entire thread with Ryan’s commentary)
I found this to be surprisingly simple and profoundly useful. I hope it’s useful for you too.
Setting up a system
Like most people, I have struggled over the years to comes up with a organizational/productivity system that works for me. Disclaimer: I do not yet have it down perfectly, and am not claiming guru status. But I do have a few things that have worked pretty well, and I have noticed some things that others do that seem to work, so I will share those here.
I have a somewhat elaborate system which I will explain below, but at the end of the day it all boils down to a single strategy: getting things into my calendar. The other main thing I try to solve for is simply not forgetting things. I live in a constant stream of emails and meetings, and it’s easy to forget something important. So a goal here is to help ensure that I don’t forget things and ultimately, that I’m focused on the most important thing most of the time.
I live by the calendar and generally obey it. This is a trick I learned from Fred, who doesn’t use any productivity system except for brute force email and calendaring everything. Getting something into my calendar is the most sure-fire way that it will get done — having a date and time attached to something gives it a lot more weight than a wishy-washy entry on a list of to-dos or “priorities”.
Working backwards from the calendar as ultimate do-place, I have a few tricks for capturing and prioritizing, loosely based on the “Getting Things Done” theory of capture/clarify/organize/etc. As much as possible, I try to get big things out of my Inbox and into a place where I can see and organize. For this I use Trello. I have a board I use every day that looks like this:
From right to left:
The main show here is the “priorities” list, where I try to pluck out the important big things on my plate — this helps me make sure I am not forgetting something. Roughly daily, I review this list, sort it, and make sure things are in my calendar to do.
Another list in my Trello is “meetings”. I use this list to capture high-level takeaways from meetings. I am a big believer in the concept of the “commonplace book” and the value of taking notes and reviewing them over time. For me this step is more about just general processing rather than to-dos, though there is a to-do component. I take meeting notes by hand in a small notebook (currently a moleskine but in the old days I used a spiral bound), and always mark follow-ups with a “F/U” with a circle around it — this is a trick I learned from Phil Myrick back when I worked at PPS. As a way of processing the meeting notes, I make a card in trello for each meeting and add the follow-ups as checklist items (Dani has a system similar to this, using Notion, and I’m always impressed with how well it seems to help her process meetings). For little things, I just do them right away, for bigger ones, I prioritize and calendar them.
On the left is the “Inbound” list. I use this to capture fleeting thoughts, ideas and notes. Things get on this list in two ways: 1) via Wunderlist, which I mainly use by phone — I have found this to be the easiest and quickest way for me to jot something down on the go. I use Zapier to move things from my main list in Wunderlist into “inbound” on Trello. 2) I use Trello’s built-in email-to-board feature to get larger items out of my inbox and into Trello. Again, the goal here is just to capture so I can process/prioritize later.
Another input into this system is my other notebook, the Ink+Volt Planner. I am on my third year of using this wonderful tool: it’s a structured goal and priorities setting notebook that helps you create and reach yearly, monthly and weekly goals. I find that the Ink+Volt, like meditation, helps me cut through the noise and see what’s important more clearly. I do a planner session every week (it’s in the calendar), and use that to inform all of the above.
Having now written all of this, it seems pretty clear that this is a lot of work, and may be excessively complex. My wife would probably describe this as “planning to plan”, and just an elaborate mechanism for avoiding doing the actual stuff, or something like that. That may indeed be so, and I often think about Fred’s simple strategy of blast relentlessly through email and calendar everything. It is impressive and seems to work. Mostly, I use this system so that I am not just at the whims of my inbox.
For sure, my biggest weakness is email, which I still struggle with. Albert has a system here, which seems to work for him, which is: using a set of predefined gmail filters, clear the inbox daily. Not the entire inbox, but a few filtered versions (family, USV team, his portfolio companies). I’m not there yet.
So, there you have it. That’s my system. It’s a work in progress. What’s yours?
The power of community
Community is a funny thing. It can sound like a fluffy word or concept, but it’s actually really powerful. Maybe more powerful than many things.
Community is about helping people feel connected and aligned. When people are connected, they feel warm and good, and part of something bigger than themselves. When people are aligned, each of their individual efforts adds to the whole overall effort, so you have a lot of leverage.
There are so many examples of this. Here’s one: today is International Women’s Day — essentially an effort to get 1/2 half of humanity connected and aligned around a sense of community. On a much smaller level (and as a part of that), some friends of ours own a restaurant near where we live. As part of Women’s Day, the restaurant hosted an event, and was bustling all day long with people from the neighborhood, all wearing purple and doing a variety of activities. The restaurant itself is an important center of community where we live, and today it was plugging into an even bigger community movement.
Or, dating back to a past life where I helped create Streetsblog and Streetfilms: these were both community media efforts in the transportation policy space. When these launched, back in 2006, there were already plenty of organizations doing good policy work in this area. What Streetsblog and Streetfilms added were online places where this passionate community could come together, gain energy, and grow. The streetsblog comments section was (and is, today) a hotbed of community, and the Streetfilms videos (nearly 1000 today) highlighted community stories and community members. It was, and is today, a powerful force that has multiplied the effectiveness of people working on these issues.
Or let’s look at examples from the cryptocurrency space, like Ethereum and Bitcoin. Both of these (and other strong communities in the crypto space) have developed something bigger than a company ever could, in terms of the connection and alignment of the community. These communities are wild and wooly, for sure, but they are broad and deep and powerful. People who are deep into them feel like the are really part of something.
At USV, we invest quite a lot in community. We have a network team whose mission it is to build community among our portfolio companies — in this case charged with helping everyone become better at their jobs, and helping their companies succeed. The USV Network started out as a pilot program led by Gary back in 2010, was then grown larger by Brittany, and is now a 4-person team, scaled up by Bethany, that’s running over 150 events per year and managing a ~4,000 person online community.
It can be hard to measure the impact of community, and this can make it hard to know how well you’re doing when your job is to cultivate. But sometimes you can just know it when you see it / feel it.
What decentralization is good for (part 3): growth
Picking back up the series on what decentralization is good for (part 1, part 2), today I want to focus on one of the most exciting aspects of decentralization: growth.
In this case, when I say “decentralized”, what I really mean is “open and non-proprietary”. The two often go hand-in-hand.
Ok, so why are open, decentralized systems especially good for growth? When a technology is open (anyone can use, extend, modify, build on) and decentralized (no one party or company is in full control), it has the potential to spread like wildfire, for exactly those reasons. Since it is free to use without restriction, permissionless innovation is possible — meaning anyone who feels like it can pick it up and run. And because open, decentralized systems reduce platform risk, developers can feel comfortable building on them with less of a risk of getting the carpet pulled out from under them.
When this works, it works really well. Many of the technologies we use every day — like HTTP, SMTP, WiFi, USB and Bluetooth — have become ubiquitous precisely because they are open, nonproprietary and decentralized in nature (in addition to being useful!).
Everyone knows that it’s safe to build to the Bluetooth standard without platform risk. And what that means is that anyone, no matter what company they are with, or what country they live in, has the potential to grow the platform. This kind of omni-directional growth is really only possible with open, un-owned, decentralized technologies.
Often times, however, a single company drives the development of these open, un-owned, decentralized technologies. For example, the General Transit Feed Specification is on open data format that powers most of the public transit industry. As I have written about before, this standard came to market in large part because of Google’s initial efforts, and was then adopted and grown by a large community of others (including our work at OpenPlans back in 2009-2012). Or, to go farther back, we can look at the role that Mozilla/Firefox played in bringing modern web standards (includuing Cascading Style Sheets) to market. Or to today, and Apple’s and Google’s role in bringing USB-C to market (of course, Apple does not have the best track record on this topic). The point is, it can be difficult for open, nonproprietary, decentralized technologies to take off — they need some sort of catapult. Historically that has come from companies with some self-interest — this has been a good thing (generally speaking).
Today, in addition to companies driving open technologies, we have the potential to use cryptocurrencies to drive initial adoption. We seen this work to great effect with Bitcoin, Ethereum and other platforms, and while the specific mechanics are still being explored and experimented with, the basic concept is clear: we can use cryptocurrencies and tokens to bootstrap new open, non-proprietary, decentralized technology platforms. It doesn’t work every time — and we will no doubt continue to see a parade of flameouts — but when it does work, it has the potential to work in a massive, exceedingly rapid, and global way.
Changing your life
Just about 10 years ago, I had a migraine that lasted two weeks. I have never been in such pain; even an ER visit and a morphine drip didn’t touch it. Then, 6 months later, I had a stomach pain that just wouldn’t go away. Finally I went to the hospital, and it turned out that the stomach pain wasn’t indigestion, and the migraine wasn’t a migraine; both were actually blood clots.
And so I embarked on a multi-year journey to try and figure out why the clots were forming. In the end, after dozens and dozens of tests and weeks in various hospitals, we came up empty — and as a result, I have been on blood thinners as a precautionary measure ever since.
For me, it was the first time I ever dealt with a chronic condition. I had had plenty of injuries before — mostly broken bones and other sports-related injuries — but I’d never dealt with anything internal, and never anything… permanent. Not a welcome feeling.
I would say it has taken me close to 10 years to really internalize this. I have resisted it. Not only is the blood clotting a problem in itself, but the medicine causes its own problems — specifically, constant risk of over-bleeding. In other words: if I don’t take my medicine, I’m at risk of clotting up, and if I do take my medicine, and something happens (like a car crash or bike accident) I’m at risk of bleeding out. My wife put it pretty succinctly the other day when she said: “Anyone could fall down the steps, hit their head and die. That means you need to be more careful than everyone.” Ugh.
Being more careful than everyone has never been my strong suit, and really just isn’t in my nature. But truth is, that’s how it has to be, and I need to deal with it.
Here is the funny thing about making life-changing… changes. On the one hand, it feels lousy, unfair, and like missing out. On the other hand, when I think about the people I know who have done it, I am the most proud of them.
I remember when my uncle, who passed away a few years ago, had a health scare and abruptly quit drinking and smoking (after many years of doing both pretty seriously). I was maybe 14 at the time, but I remember being so impressed by the way he took the reigns and just did it. He knew he needed to, and was almost gleeful and proud about taking a hard right turn towards his health (and for his family).
An entrepreneur I know recently made a huge concerted effort to exercise, lose weight, quit drinking, and doubled down his focus both on his personal relationships and his company. He is thriving, big time. I see an effort like that and I am like, damn, that’s awesome. It takes courage and dedication to make changes like that. But it is so beautiful.
Another friend was in a bad place with his marriage. After close to 10 years and three kids, he and his wife finally divorced. After some time, they are both better off and have things going in a new way, on a more solid foundation. He, in particular, seems so renewed and rejuvenated. Almost like being healed from a sickness.
It feels like it often takes a big shock, of some kind, to make these kinds of changes. I will never forget another time, back in 2008 — I was dealing with a challenging situation at work, and wasn’t dealing with it well — ruminating, avoiding. I remember sitting in the doctor’s office, watching my son’s ultrasound, and seeing and hearing his heartbeat for the first time. Right at that moment I resolved to deal with the situation head on because, shit, I was undoubtedly responsible for important things and didn’t have time to fuck around.
There is something about that feeling of being forced to make a big change that ultimately does it. Without that, it is often just too easy to let things be as they are, and to continue sliding through.
So, to everyone out there who is mulling a major change that has the potential to fix something important in your life; I hope to give you just the smallest bit of extra strength as you consider it.
Leading vs. following
Last night I went to see RAIN, a Beatles tribute band, with my friend and neighbor Jeff. If you haven’t been to one, tribute bands/shows are kind of odd: on the one hand, typically technically/musically perfect (the tribute band can play the entire catalog of the original band flawlessly); and on the other hand, the vibe is strange: it’s a band pretending to be a band, so it doesn’t have any original energy or punch.
As I was watching the show I kept thinking about this. What is the difference between being a Beatle and being a musician that can play the Beatles catalog perfectly, in character?
Perhaps the answer is obvious, but it still got me thinking. I believe the answer is part creativity and part risk. Creativity because, of course, half of being the Beatles is actually inventing the music, not just playing it. Probably more than half the challenge.
And on risk: playing new music, music that has not been played before, or “digested” and understood by the general public, is hugely risky. People won’t “get it” right away, or worse may simply hate it (whether on the merits or just for being new and different).
On a broader level, it got me thinking about the difference between being a leader and a follower. Once the creative work is done, and the opportunity is de-risked, it is relatively easy to look at something and copy the execution. But it takes creativity and balls to do it on your own the first time.
This applies to all things — music, art, writing, a startup, investing, restaurants, etc. I have seen it particularly first hand in the startup and investing world, where a “lead” investor not only has the foresight and conviction to back an early team, but they have the leadership to bring other investors along.
Courage and conviction are contagious.
What decentralization is good for (part 2): Platform Risk
Continuing on the theme of what decentralization is good for, this week I would like to focus on one of the most powerful drivers in the near-term: Platform Risk.
Platform Risk is is the risk that the tech platform that you build your product/app/business/life on will become a critical dependency, will become unreliable, and/or worse, will screw you in the end.
Here is a post from a few years back that details many different flavors of platform risk, many of which are benign, and some of which are malicious. And here are some examples, to make it more concrete:
- Microsoft Windows: withholding APIs & documentation from competitors, and blocking distribution
- ISPs / Telcos: blocking / throttling certain kinds of traffic (especially video & VoIP)
- Google: determining the fate of sites reliant on search traffic and therefore at the whim of the algorithm
- Apple / iOS: blocking competitive apps, withholding APIs, taking a 30% cut, to the point that app developers have formed a union
- Amazon: competing with third-party sellers and manipulating search results
This is not to say that any of these acts are necessarily illegal, or even immoral. But if you are investing serious time and money — especially dropping everything to build a business on a platform — these kinds of risks are of grave concern.
So, what does decentralization have to do with platform risk? When the platform is a protocol (i.e, decentralized) rather than a company (i.e., centralized), the rules of engagement are known up front and can’t change on a whim or because of a business decision.
If we think about the original internet protocols (TCP/IP, HTTP, SMTP, FTP, SSL, etc), they are a set of networking, communications and data exchange protocols that ultimate form the platform we know of as the web. While there are certain forms of platform risk on the web (e.g., stability, speed, security), the web on the whole has become a very stable and reliable platform, generally absent of the flavors of risks detailed above.
Cryptonetworks (i.e., public blockchains and cryptocurrencies) combine the architecture of the original internet protocols with the functionality of today’s corporate applications platforms (data management & transactions). While there are still major issues to solve before these systems collectively become a mainstream platform, they are gaining major adoption from developers in large part because developers are so keenly aware of platform risk, and see cryptonetworks as a type of platform they can trust.
As an illustrative example, let’s compare downloads of the Truffle framework (a popular dev tool for Ethereum):
… with the price of ETH over the same time period:
Developers are the canary in the coal mine when it comes to platforms. And at the moment, they are pointing to the desire for platforms with less inherent risk, more reliability and more trust.
Unlocking a new skill
Over the long weekend, I spent a bunch of time with my kids doing outdoor cold weather activities. I love the winter, and I love winter sports — there is something about being outside on a cold, sunny day that gets my blood moving and makes me feel great.
Those who have read this blog for a while may know that a few years ago I got the ice skating bug and have been working on my skating and learning to play ice hockey.
This past weekend, while skating with my kids, I had a breakthrough moment — the elusive “backwards crossovers” that I wrote about back in 2016 finally made sense, both to my brain and to my body. It’s like that moment in Night School where Kevin Hart finally manages to make sense of the jumble of mathematical symbols:
It was amazing: somehow I managed to slow things down, connect my brain and my body in the right way, and the move that I just couldn’t master for so long suddenly made sense. It was absolutely a combination of body and mind — understanding it the way as well as feeling it the right way.
This is not a post about ice skating. But rather about the magic that happens when you finally unlock a new skill. It is an amazing feeling, and not something we get to feel every day.
I think there is something particularly important about doing it to get it — it’s one thing to read about something, or watch videos, etc — but nothing substitutes for getting out there and trying it (and falling a few times along the way). This is a lesson I keep reminding myself of whenever I’m trying to learn something new.
Blockstack Hong Kong: From Agile to Immutable
I gave this talk at the Blockstack Decentralizing the World Tour in Hong Kong earlier this month:
What decentralization is good for (part 1): Resilience
Recently, Simon Morris, a long-time BitTorrent exec, wrote a provocative series of posts on the nature of decentralization, in the wake of BitTorrent Inc’s acquisition by TRON. They are relatively short and a good read:
- Why BitTorrent Mattered — Bittorrent Lessons for Crypto
- If you’re not Breaking Rules you’re Doing it Wrong
- Intent, Complexity and the Governance Paradox
- Decentralized Disruption — Who Dares Wins?
There are decades’ worth of experience here, which are absolutely relevant for anyone and everyone working in the area of cryptocurrencies, cryptonetworks, and decentralized computing today.
In the second post in the series, Simon makes the argument that the killer feature of decentralized systems is rule-breaking:
“While a decentralized architecture can be effective at routing around a variety of different failures in a network, the type of decentralization that was achieved by Bittorrent (and by Bitcoin for that matter) has enabled routing around rules.”
While there is undoubtedly a strong dose of truth here, I think it is a dangerous place to stop. There is already a narrative that cryptocurrencies and decentralized systems are for pirates and criminals, but if we focus on that alone, we risk missing the more important characteristics and properties of decentralized systems. It’s a little bit like saying the original internet is only good for porn and copyright infringement, and stopping there.
For today, let’s focus on one key aspect of decentralized systems — a characteristic that was fundamental to the creation of the original internet protocols: resilience.
I like this definition of resilience: “an ability to recover from or adjust easily to misfortune or change”.
For example: decentralized mesh networking is resilient to centralized telecommunications going offline in the case of a disaster (as happened in NYC during Superstorm Sandy). USV portfolio company goTenna was founded out of the Sandy experience, and now serves a wide customer base of first responders, law enforcement and military who desperately need communications that are resilient to traditional network failure.
Or, decentralized HTTP/DNS (e.g., IPFS) which is resilient to infrastructure failure and censorship, as demonstrated by IPFS’s republishing of wikipedia in Turkey during internet censorship there. IPFS, generally, is a major improvement to content addressing on the web, adding substantial resilience by detaching physical location from the logical address of content.
Or, a simple example that Joel typically uses: the Bitcoin network has had 100% uptime for 10 years.
These are real, important properties. Remember, the original internet protocols were designed so that the network could withstand nuclear and other major attacks. Many centralized systems trade convenience for fragility, and resilience is a real, valuable property.
Coming up, I’ll look at other important properties of decentralized systems: platform risk, security, and innovation.
The Octopus Card
I am in Hong Kong this week for Blockstack‘s Decentralizing the World Tour (more on that in a forthcoming post). I arrived yesterday and have been exploring the city a bit.
The first observation is how awful the air quality is. Holy cow. This report from Plume Labs (snapshot from the time when I took this above photo of the skyline) tells the story:
While the air quality has made it a bit difficult to get around (no views, but more importantly, you just start to feel sick after a while), something else here has made it tremendously easy to get around: the Octopus Card.
The Octopus Card is a reusable, contactless smart card used for payments throughout Hong Kong, which most importantly works for nearly all modes of transportation. Yesterday, I traveled by high-speed train, subway, streetcar, bus, tram and ferry, and used my Octopus Card to pay every time (it also works in some, but not all, taxis).
It is hard to overstate how much of a convenience this is, especially to a visitor to a foreign city. I traveled by seven different modes of public transportation yesterday, and had zero cognitive overhead trying to figure out tickets, rates, etc. It is really liberating and makes exploring a new city so easy and so much fun.
Similar systems exist in other cities (Oyster Card in London, UPass in Seoul). It really makes the city so much more accessible, both for residents and for tourists.
Experiencing infrastructure like this makes me realize how broken and unusable most of the US equivalents are. Imagine if you could pay for a train, subway, bike, and ferry in NYC using one system? It is a shame we can’t make investments like that work (by and large) — the closest is perhaps EZPass, which in the American tradition works for cars.
Managing digital addiction
USV’s book club book for this month is Drug Dealer, MD, by Dr. Anna Lembke, Director of Addiction Medicine at Stanford Hospital – so we have spent a bunch of time recently talking about addiction.
It is not a stretch to hypothesize that we, as a society, are at a moment of heightened addiction, generally speaking. Binging on Netflix, checking phones constantly for emails and “likes”, playing Fortnite, vaping, pills, etc. There are a lot of forces pulling us towards a pattern of repeated short-term, immediate “highs”.
I worry about all of these forms of addiction, particularly for my kids, who are just entering the “danger zone” where the combination of access to things and social pressure starts to cause problems — for example, what’s happening with vaping, starting in middle school, is surprisingly powerful and terrifying.
Naomi, who proposed the book, invited Dr. Lembke to join us yesterday for our discussion, which was fantastic. In addition to talking in depth about the causes and treatments for opioid addiction, we spent some time talking about digital addiction — screens, games, etc.
I cannot at all claim that I am good when it comes to managing screen addiction, but we have done a few things around our house that I think are helpful, so I thought I would mention them here.
1/ No devices in the bedroom — no phones, computers, or TV allowed. I charge my phone on a dresser across the room from the bed. This serves double duty of forcing me to get out of bed to turn off the alarm.
2/ Meditation. Meditation seems to me to be the most obvious antidote and counter-force to addictions of all kind. For this reason it doesn’t surprise me at all that it is surging in popularity right now. Meditation not only focuses the mind, helping to shed the the static, but it also helps build that muscle to resist the moment-to-moment impulses that are so common with digital addiction.
3/ Physical activities. As much as I can, I try to engage in completely “analog” physical activities, especially with my kids. Sports (playing, coaching), projects in and around the house. Skiing, while expensive and hard to do a lot, is probably my favorite, as it’s really an extended digital vacation.
4/ Read physical books. Whether I’m reading before bed, or reading in the living room around my family, I try to read in print form. Or, worst case, if I am reading something digital around my family, I prefer to do it on a tablet rather than my phone — this is a subtle difference but I think it really does change the social dynamic (you are more “there” and others can see what you’re doing).
Zach was telling me yesterday that he sometimes does “no social media Saturdays”, which I like. I don’t do that formally, but I definitely do orient my weekends around non-digital activities as much as possible.
One area I would like to work on is not keeping my phone with me when I’m in the house, especially when I am with the family. I often keep the phone plugged in and charging in the kitchen, which helps, but is not 100% the norm.
I am also trying to do this without making a lot of rules for the kids around screen time. I prefer to get them to enjoy non-digital activities, rather than hold out screen time as some sort of prize if they abstain for long enough.
As anyone who has dealt first-hand with addiction knows, it is an awful thing, that can destroy people, relationships and families. So given that there is so much ambient opportunity for it these days, I think it’s really important to try and be proactive around it.
Paying down debt (financial, technical, and otherwise)
Debt is a complicated subject. On the one hand, it is empowering — it lets you get a quick start on something, and lets you do things that would not be possible otherwise. There are times when it is useful, necessary, and unavoidable.
I think about “debt” in the broadest possible terms: times when you are left “owing somebody” (including yourself) for something. My inbox is in a state of debt right now. The pile of unsubmitted medical bills on my desk is debt. Duct tape & bubble gum holding up v0.1 of an app is debt. Friends or family you haven’t called in a while is debt. Not to mention financial debt, which comes in many flavors.
I am actually a fan of incurring “technical debt”, especially in the early days of a project, when you are iterating quickly and you are not yet sure what the long-term architecture of your product should be. I think a “get something up and running quickly” attitude is often best. So taking on this kind of debt early is a strategic choice that if, done well, can actually save you time and/or money in the long run.
The challenge with debt, of course, is paying it down.
It seems as though one of the characteristics of debt is that you overestimate the short-term benefit and underestimate the long-term cost. The result being that it’s easy for things to get out of control, slowly and then quickly. This article on the nature of a “debt spiral” covers it well.
I always think about paying down debt at the end of the year, as it feels like a time to try and get the house in order and work on a fresh start on the new year. I don’t like “rolling over” debts (at least the kind I can really control in the short-term) into the new year. So I am doing my best to grind through and catch up on things now.
But better than getting in debt, and then getting out of it, is figuring out how to stay ahead of it. And again, I don’t just mean financial but in every way. Replying to an email before someone pings you with a reminder. Checking in on a friend or family member without them asking. Dealing with bills and expenses as they come in. Or even better, building capital: write a blog post, build v2 of that app, publish that presentation, make the budget, contribute to your savings or 401k. Proactively paying ahead.
Easier said than done, like most things.
Google Pixel Slate: first impressions
For the past week or so, I have been experimenting with the Pixel Slate, Google’s new hybrid tablet/laptop. Here is me typing this blog post right now, on the train to NYC.
For a longer, more technical analysis, this review from The Verge is good.
The Pixel Slate is an odd machine, and I am still trying to figure out how to use it, and then, whether I like it or not. The heart of the oddness is that it is really equal parts laptop and tablet — when the keyboard is attached it feels and acts like any other Chromebook. And with the keyboard detached, it feels like an Android tablet — actually running mobile apps from the Google Play store. (I didn’t realize this until now, but apparently this is also true for other new Chromebooks)
It is the back and forth between tablet mode and laptop mode that is odd, and requires a fair amount of cognitive overhead. Like, for reading email should I use Gmail in Chrome or use the Gmail app? Same goes for all other apps — you have to make about which experience you want, when, and then adjust accordingly. Often times this means multiple apps doing the same thing simultaneously (or more specifically, a Chrome web version and a mobile app version).
But to take a step back: what got me interested in the slate was exactly this mix of form factors:
For example, for long-form reading, I like tablet-mode, where I can get full focus on the content, and page through with my finger (like reading a newspaper on my lap). Same goes for short-form emailing. Basically, I like the addition of this “lean back” mode that the tablet form factor gets you.
And then, in “laptop mode”, you want the experience of, well, a laptop. High fidelity interaction with emails, docs and websites. The slate does all of that basically fine, though the major question is the keyboard. I am currently using the Google Pixel Slate Keyboard, which is a floppy, folio-style magnet-attached model. The key and trackpad action are surprisingly good, but the dynamics around folding and holding the keyboard take a little getting used to — the attachment is floppy, and the magnetized folding holder on the back takes up additional space. Another option is the Brydge keyboard, which intends to deliver more of a “laptop feel” when using it in laptop mode — I am curious here about both the key action and the quality of the Bluetooth connectivity.
Another nice feature of the tablet+laptop is fingerprint unlock — this is what you’d expect from a phone or tablet, but don’t normally see on a laptop. It’s a nice convenience.
So, I would say the jury is still out. The real questions are whether “tablet mode” and the fingerprint unlock are worth the overall cognitive load of a device that’s neither entirely here nor there.
A Visual Guide to the Howey Test
Disclaimer: I am not a lawyer, and I am not your lawyer.
I have been in an uncountable number of conversations over the past few years discussing the question of what defines a “security” in the context of cryptocurrencies, cryptonetworks, and token offerings.
Here is my current understanding, including a number of key questions I am still working on. I invite any and all corrections to this visual framework. And I should note that this is a high-level framework: the nuanced details are the subject of many enforcements, settlements, and litigations and will be worked out over a long-period of time to come.
First: the what constitutes a “security” has been defined by the courts more specifically as an “investment contract”, which is a transaction with the following properties:
- An investment of money
- With the expectation of profits
- In a so-called “common enterprise” (roughly meaning: investors and the company rise and fall together)
- From the efforts of a promoter or third party (some dispute over whether this means “solely” from a promoter, but clear that it entails “significant managerial efforts” of a single promoter)
This four-part test was established as part of SEC vs. Howey, a 1946 supreme court case involving the sale of tracts in an orange grove, with an associated lease-back arrangement where buyers of the land leased the land back to the Howey corporation in exchange for profits generated from cultivation of orange crops. This so-called “Howey Test” is now the basis for determining whether such a transaction constitutes an “investment contract” and would therefore fall under securities laws (with all associated registration and disclosure requirements).
The way the test works is that, if the contract satisfies all 4 “prongs”, it “passes” the Howey Test and is therefore a securities transaction. If the contract does not satisfy any one of the prongs, it fails the Howey Test and is therefore is not a securities transaction.
The 4 prongs of the Howey Test
Ok, with all of that as background, here is how I see the Howey Test — 4 prongs that all need to be satisfied:
So, if you were to start to think about how to “knock out” prongs of the test, thereby removing a transaction from securities status, you’d start one-by-one.
1) Remove the “investment of money” and what you have looks more like a Gift (think: receiving airline miles, or ride credits on Uber, or “airdrops” of tokens in a crypto network)
2) Remove the “expectation of profit” and what you have looks more like a product (think: pre-buying a backpack or movie on Kickstarter, purchasing laundry or arcade tokens, or buying Stacks Tokens to insert records in the Blockstack blockchain):
3) Remove the “common enterprise” and what you get looks more like a collectible (think unique items like stamps, baseball cards, or CryptoKitties):
4) Finally, remove the “efforts of a promoter or third party” and what you get looks more like a commodity (think gold, wheat, or Bitcoin or Ethereum):
All together, it looks like this:
Is a “security” an asset or a transaction?
A key question throughout all of this is whether the “security” is the digital asset itself, or instead the transaction involving the digital asset.
In a key speech by the head of SEC’s Corporate Finance Division, Bill Hinman, earlier this year, he addressed this question head on:
To start, we should frame the question differently and focus not on the digital asset itself, but on the circumstances surrounding the digital asset and the manner in which it is sold. To that end, a better line of inquiry is: “Can a digital asset that was originally offered in a securities offering ever be later sold in a manner that does not constitute an offering of a security?” In cases where the digital asset represents a set of rights that gives the holder a financial interest in an enterprise, the answer is likely “no.” In these cases, calling the transaction an initial coin offering, or “ICO,” or a sale of a “token,” will not take it out of the purview of the U.S. securities laws.
But what about cases where there is no longer any central enterprise being invested in or where the digital asset is sold only to be used to purchase a good or service available through the network on which it was created? I believe in these cases the answer is a qualified “yes.”
The Hinman speech clarified two things: 1) that by knocking out the “efforts of others” prong of the Howey Test (#4 above) a crypto asset transaction can be viewed through the lens of commodities vs securities and 2) that an early transaction of that asset (in this case the pre-sale of ETH) can be analyzed under Howey distinctly from a later sale, given different facts and circumstances at the time.
This last part is really important, and I still have a hard time pinning down (really smart, expensive) lawyers on the subject. There is an idea that a “security” is a thing rather than a transaction, which does seem at odds with both Howey and the Hinman speech. In the case of Howey, the oranges produced under the contract are not the same as the contract itself (similar to contracts for future tokens), and in the case of the Hinman speech, it’s the transaction rather than the underlying token (BTC or ETH).
Finally taking all of this together, it’s important to remember that 1) there are many kinds of cryptoassets, and 2) they are offered/sold/traded/transferred under different circumstances over time. I think about it like this:
I hope that is helpful. This is complicated stuff, and new territory.
Crypto fundamentals
Our good friend Chris Burniske was on Squawk Box this morning. I got up and watched it. You can see the video here.
Of course there is interest in the crypto market right now, as it is falling hard. I suspect there are many out there who are enjoying the drop, waiting for the bubble to finish popping and for this whole idea to go away.
One takeaway from watching the segment is how much of a learning curve there still is around this whole space. If you look at the questions Chris fielded this morning, you’ll see a looming gap in understanding of the fundamentals. The questions range from “why do we even need this” to “what is the rational basis for these prices”
It’s a complicated topic, with complicated mechanics, and to make matters worse, the narrative itself has shifted a bunch over time (digital cash, digital gold, decentralized computing, the new internet, etc).
Here is one way to think about it, that feels native to CNBC and the financial markets industry:
Crypto is a market-based system for providing computing services. The “miners” and other participants are just like the participants in other commodities markets. It really is a shift from providing computing services via a corporate/securities/centralized model to an ecosystem/commodities/decentralized model.
If you just hold that idea for a moment, then where Chris was trying to take the conversation (but didn’t exactly manage to — talk TV is tough!) is around the rational pricing of commodities. A simple way to start is by looking at the marginal cost of production, which is one way of looking at commodities pricing. While this does not make sense in a highly speculative bull market, it makes a lot of sense in a flat or bear market, as we seek a basis for understanding where the bottom might be.
Another challenge here is that the utility of cryptoassets like bitcoin ethereum is still being understood, so we do not yet have solid anchors for pricing. In the case of oil, for example, we have industries upon industries using it, establishing consumer value which lets price flow back to the original production. This is still nascent in the crypto space, but is getting clearer every day.
Thank you Chris for working to advance the dialogue.