Digital scarcity

As readers of this blog can tell, I’ve been spending a lot of my time recently focused on cryptonetworks and blockchains, and in particular, working through the complex legal and regulatory issues involved.

Explaining what cryptocurrencies, cryptonetworks and blockchains are is hard to do.  As Naval recently said on twitter:

One person who is able to describe this complex topic remarkably simply is Peter van Valkenburgh from Coin Center.  A few weeks ago Peter testified in the House on a committee exploring cryptocurrencies and so-called ICOs.  His 5-minute description of the “true innovation” here is crystal clear and worth watching:

Zombies eating kitties

On Tuesday we announced our investment in Cryptokitties, and, as you might expect, received a combination of enthusiasm and skepticism in response.  Bitcoin and cryptocurrencies already sound ridiculous to most people, and virtual “real” kittens made out of cryptocurrency take it a step further.

But, as with many new technologies, these first use cases just scratch the surface of a broader potential.  There are lots of things to be excited about here, but for now I’ll just focus on one of them: interoperability.

Cryptokitties are a specific type of cryptoasset, known as a “non-fungible token” (in this case, based on the ERC-721 standard).  Non-fungible means that each one is unique.  So, when a kitty is “born”, it is a one-of-a-kind digital asset, as opposed to other types of currencies or tokens that are completely interchangeable.  So, they are different than other tokens in that way, but are similar in that each NFT is “scarce” or “real” in that is secured by the blockchain – in this case the Ethereum blockchain.  So, what we have are unique, scarce, public digital assets.

The public part is particularly interesting.  Because each kitty is a token on Ethereum, that means that anyone else (aside from the original developers of Cryptokitties) can view that asset and integrate it into other systems, without anyone’s permission.

For example, on Kittyhats — developed independently from CryptoKitties — you can buy a hat for your kitty.  Here’s the one I bought:

(There are now 899 flat brim hats still available if anyone is interested)

What’s particularly interesting is that I don’t own the hat, my kitty does — from the KittyHats whitepaper:

When you sell a kitty, the sticker remains applied to the kitty. The new owner can choose to remove the sticker or leave it attached.”

Or, put another way:

So neat!  So what we have the beginnings of is a world where digital assets that are created in one place can be freely integrated into other places.

If hats are too tame, you can also race your kitty at KittyRace: (updated, via @sidkal)

Or, when you’ve had enough of your kitty, you can head over to CryptoZombies (hat tip to Aaron), which teaches Ethereum programming via online game development.  As you create a zombie, it can start to do things.  One of the things it can do is eat CryptoKitties:

The (original) internet brought us a world where any site could link to any other site, and they could all be accessed from anywhere in the world.  This was the first interoperability revolution.  The next one will be with data and digital assets.  For a long time, data has been the property of platforms — with cryptonetworks and cryptoassets, data can live outside of anyone platform, under the control of users.  This has the potential to open up a lot of innovation.

A bigger container

An idea I like from Zen Buddhism is becoming a Bigger Container.  My understanding of the idea is this:

There are a lot of difficult/bad/sad/scary things going on in the world, ranging from serious global issues, war, famine, terrorism, etc; to things in your city like homelessness or joblessnes; to things in your family, like difficult relationships or substance abuse; to tiny things in your life like a daunting project at work, or your inbox, or going through bills or cleaning your desk.

It’s hard to open yourself up to all of these things, because the are overwhelming and scary.  So the easy thing to do is turn away – to avoid.

Becoming a bigger container means making space within yourself to face an increasing number of these things, with compassion and without fear.  Being able to hold them and look them in the eye without any one of them grabbing control of you, carrying you away or breaking you.

From the reading linked above:

“What is created, what grows, is the amount of life I can hold without it upsetting me, dominating me. At first this space is quite restricted, then it’s a bit bigger, and then it’s bigger still. It need never cease to grow. And the enlightened state is that enormous and compassionate space. But as long as we live we find there is a limit to our container’s size and it is at that point that we must practice. And how do we know where this cut-off point is? We are at that point when we feel any degree of upset, of anger. It’s no mystery at all. And the strength of our practice is how big that container gets.”

When am most proud of myself, I am able to make space within myself to deal with hard things.  To look them in the eye, be with them, and not look away.  When I’m frustrated with myself, it’s often because I’m avoiding doing this.

The visualization that works for me is that when you become a bigger container — when you can generate some perspective — each of these individual things becomes smaller by comparison; less dominant.

It can be hard to do sometimes but I find it to be a really useful construct.

Cryptonetworks and why tokens are fundamental

“Cryptonetworks” can help us build a more competitive, innovative, secure and decentralized Internet.  “Tokens” (also known as cryptocurrencies or cryptoassets) are integral to the operation of cryptonetworks.  As we design new laws and regulations in this emerging space, we should keep these concepts in mind, beyond the financial aspects that are today’s primary focus.

In recent months, there has been untold attention paid to cryptocurrencies, blockchains and the coming of the “decentralized web” or “web3”.  And, given the rise of the cryptocurrency markets (over 1500 coins, with a total market cap of $370B as of today) and the recent boom in token-based fundraising (including a healthy dose of scams and shenanigans) there is increasing regulatory and legal attention being paid to the sector, and rightly so.

This is a profound, and confusing, innovation.  As John Oliver so aptly put it last week, it’s “everything you don’t understand about money combined with everything you don’t understand about computers”.  Basically right.

At USV, we’ve spent the better part of the past five years exploring and investing in this space, and now have roughly a dozen investments touching it in one way or another.  As we have watched the technology and market evolve, alongside the public discourse, we feel its important to reiterate why we think this technology is so powerful and important, and contribute to the ongoing collective learning about how it works.

While much of the focus, especially in the context of regulations, is on the financial and fundraising applications of cryptocurrencies, our interest continues to be on the potential for cryptonetworks to provide digital services, such as computing, file storage, social applications, and more.

You might ask, why is it important to have another way to provide digital services?  We already have lots of websites and apps that do that today.  The reason cryptonetworks are an interesting addition to today’s digital services is their core architecture of decentralization.  Just as the original internet gave us a decentralized layer on top of the telecommuncations network, which resulted in untold innovation, cryptonetworks are a decentralized way to provide digital services.  Chris Dixon has a great post exploring why this is important, including the historical parallels to the original internet.

The decentralized architecture of cryptonetworks has the potential to address many issues in today’s tech and business landscape, including information securitymarket competition, product innovation, and equitable distribution of gains from technology.

Imagine, for instance, if the owners or users of Amazon/Google/Facebook/Reddit/etc. were able to “fork” the product and launch an identical competing copy, if they didn’t agree with the direction of the company?  And imagine if all of the users of & contributors to a web platform also had a direct, monetary interest in the success of that platform, that reflected their own contributions as community members?  This is how cryptonetworks work, since they are essentially open-source, mutually owned & operated web platforms.  Each network’s cryptocurrency or “token” acts as the internal currency, incentive mechanism, and “binding agent” for the other processes that help the platform function.  And further, the internal data structure of cryptonetworks, the distributed ledger or blockchain has unique properties that can improve privacy and data security.  See also, Steven Johnson’s recent NYT piece exploring these ideas.

With that as context, it’s important to walk through how cryptonetworks function, and importantly, how tokens function within them — especially given the growing regulatory scrutiny around how tokens are created and traded.

The deck below (full size / downloadable PDF) is meant to help explain this.  While it does touch on some public policy goals at the end, it does not attempt to make specific, detailed recommendations.  The main takeaways should be (a) cryptonetworks are an important new innovation in how digital services are delivered, (b) tokens are fundamental to their operation, and (c) as we design new laws and regulations in the space, we should keep (a) and (b) in mind as guiding concepts.

Running the USV analyst application process using Ziggeo, FormAssembly and Airtable

We are in the middle of our 2018 Analyst hiring process at USV.  For the last several hiring cycles, USV has had an open process where anyone can apply.  I actually wrote about it back in 2011, right before I joined, remarking at the high quality of applicants that the process produced.

That is still the case today.  In this year’s Analyst application produced 326 applicants, of remarkable accomplishment.  Albert has been writing updates about the process on the USV blog.  At this point, we have reviewed all of the applications, and are working towards a second round of interviews with semi-finalists. What I’ll cover here is how we’ve managed the process this time.

For the past 3 cycles we have solicited video responses as part of the application process, powered by Ziggeo.  Having video in the application process has really worked for us.  Even with short videos (our were 30 and 60 seconds, respectively), you can get a good sense of a person’s manner of speaking, sense of confidence, thoughtfulness, etc.  While it doesn’t tell the whole story, it’s been a very helpful signal for us over the years.

The first time, we used a custom web application that Oliver from Ziggeo helped us build (source code here).  The second time, we re-used that codebase with some modifications.  This time, we tried to make it even more simple, using only off-the-shelf tools. What we ended up with was a combination of FormAssembly for the form itself (because FormAssembly supports Ziggeo integration) Ziggeo for the videos, and Airtable for the ultimate data storage and workflow management.

FormAssembly made it easy to build the form, including nice features like letting applicants save a partially-completed form and come back to it later.  The form looked like this:

Ziggeo made it really easy to capture the video.  Note the embedded video recorder in the form above, which looks like this when you fire it up:

For our internal process of reviewing applications, we needed something else, which is where Airtable comes in.

For those who don’t know Airtable, it’s basically a hybrid spreadsheet / database, with handy aspects of each.  It’s like a spreadsheet in that it’s really easy to update the schema and edit data.  It’s like a database in that you get persistent records that are linkable with one another (a feature that we didn’t use here but we make lots of use of elsewhere internally), and that has a great API.

There’s not an automatic way to move records from FormAssembly to Airtable, so we just did CSV export/import.  Ultimately, we ended up with a view like this, where we could review applicants one-by-one and then comment/score/sort/etc:

You can see a stripped-down version of the Airtable we used for the process here.

All in all, this setup worked great.  It took zero coding to build, had a really modest number of errors or mishaps, and handled our workflow well.

There are, of course, a few things that could have been better.  Top of the list would be direct Ziggeo support within Airtable.  Airtable has a feature where you can expose a form that will collect data directly into a table in Airtable.  Ideally, you’d be able to have a “video” type form element that would embed a Ziggeo recorder directly in the Airtable form.  Then, on the back end, it would be great if you could view those videos directly in Airtable, rather than clicking out to a link — imagine the screenshot above, but with embedded video players rather than links.  I suspect a lot of people use Airtable for applicant tracking, and I’m sure this kind of video support would be popular.  Another would be automated connectivity between FormAssembly and Airtable, maybe via Zapier.

So, that’s what we did.  Remarkably easy to manage this time around — thank you to all the teams out there building the tools that make this kind of thing easier by the day.

Teaching kids to invest

I’ve written a bunch about why it’s expensive to be poor, why we need better tools for managing money, and how to move from a labor mindset to a capital mindset.  A big takeaway for me is that accumulating wealth isn’t just a functional activity, it’s a mindset that needs to be learned, and taught.

It has taken me a long time — generationally speaking — to begin to figure this out.  Both of my parents grew up poor.  My father grew up especially poor, but managed to break out.  In the 1960s he took a computer programming course and learned to code (50 years ahead of his time!), and then just before I was born he started a small business, which my parents run together to this day.

While this business has been transformative for our family (it sent me to college – I’m the first one on my father’s side ever to graduate), I think it’s fair to say that it hasn’t yet finished the job of helping us relate to money in the right way.  For example, I don’t think I ever really learned, at a young age (or really into my late thirties), the concept of **investing**.  Saving was always a vaguely good idea, but spending was easier, and spending on debt even easier than that.  Basically, I think there is this transition, from having no money, to having some money (but spending all of it), to (in some cases) spending more than you have, to (if you’re lucky) learning how to get money to work for you.

Now that I have kids of my own, I’m trying to think about how to teach them about money.  I want them to learn about budgeting, about saving, and about investing.  I want them to see today’s spending needs/wants as not the whole picture. I want them to learn that if you’re smart about money, not only will you set a solid foundation for yourself, but other good things can happen (e.g., compounding interest).

Here is my v0 approach — no idea yet if this will work.  The primary way my kids spend money (of their own choosing) is on-demand videos.  We have a Roku TV in our living room, and occasionally they rent or buy TV shows or movies.  So, for starters, rather than having them simply ask every time if they can do it, we’re instituting a budget.  The budget is $20 per month per kid.  (that gets you roughly two movies or ten episodes).

The twist is that, at the end of each month, whatever they don’t spend rolls over into the next month — with 20% interest.  So if they spend $10 and save $10, they will roll over $10 + 20% or $2.  So next month they’d start out with $32.  The 20% monthly interest may seem unrealistic and overly generous, but I’m trying to compensate for both the low dollar amounts (hard to get excited about 1% monthly on $5), and also for converting to “kid time” (a month to them feels like a year to us).

I explained the new plan to them the other day (March is our first month), and my heart skipped a beat when my daughter immediately responded: “I think I’ll save most of it”.  :-).  We will see what happens. I am hoping that one of them realizes that the 20% will compound pretty quickly, and decides not to spend any at all.   By my calculations, if they decided to keep 100% of the allowance, by the end of a year they’d each have $950.

I’m curious to know what approaches others have taken to teaching kids about saving and investing.

How to make big problems small and small problems big

I’m on a plane right now.  I always find plane/train rides to be some of the best times to focus and get work done.  On this trip, I managed to get two “monkeys” off my back — little tasks that have been lingering in the back of my mind for a long time, and that I’ve been avoiding.  It doesn’t matter what they are, but I can tell you that one of them was tiny — so tiny (literally 5 minutes to do), and one of them was sort of medium-sized (maybe 2 hours).  So on this trip I finally stopped avoiding them   Having these little monkeys is the worst feeling, and clearing them out feels so good.

What is so pernicious about avoidance is the way it turns small problems into big problems.  I’ve written before about how Pain x Resistance = Suffering.  The more you avoid/resist, the more pain you feel and the larger your “problem” actually gets.  A 5 minute thing turns into hours, days, or weeks of avoidance.  Avoidance is a debt frame of mind.

Amazingly, the reverse is also true.  Taking “big” problems/challenges/tasks, and plugging away at them dutifully without resistance or avoidance, makes them smaller!  If you just focus on getting a little better every day, all of a sudden you have compounding results.   A little better every day is a capital frame of mind.

Don’t avoid. Rip off the band-aid.  Take the medicine.  Increase your throughput.  Make today a little bit better.  It will feel so good.

You need a budget

I’ve written for a long time about my desire to re-build personal finance infrastructure in ways that benefit people with the least money.  We see new personal financial products all the time targeting high value customers, but it still feels like they are ignoring a huge, and important part of the market: people scraping by living paycheck-to-paycheck.  This is a huge slice of America and the world, and I believe that tools that serve this population well will not only make a huge positive social impact, they can build huge businesses.

One such product that I’ve started using recently is the very aptly titled You Need a Budget.  I have tried nearly every app out there that tries to help people get a handle on their moment-to-moment finances, but this is the most thoughtfully designed (and I suspect, the most effective) one I’ve seen so far.

YNAB is full of product nuances that show that they’ve thought deeply about how people use money, and how to help people craft effective budgets.  The main idea, of course, is that you need to start with a budget.  The nuanced parts are the way YNAB helps track budget categories, map expenses against them, make tradeoffs when categories are overbudget, and start to understand new concepts like aging your money.

Having used apps like Mint in the past, which work on the same ideas, I’ve found that YNAB has figured something new out, which is how to make tracking your money, and tending to your budget, a daily activity.  The YNAB mobile app makes it easy to categorize expenses as they come in, on a daily basis.  It’s this daily check in that both makes the process less overwhelming (since you’re only dealing with a handful of transactions at once) and potentially change-making, since you are reflecting on your budget and expenses in real time.

Getting a grip on finances is hard.  It’s emotional, complicated and often overwhelming.  I like the way YNAB demystifies the process and provides a real helping hand.  I hope we see more things like this come to market.

The weakest link

We have spent a fair bit of time over the past year working on security at USV and across the USV portfolio.  Anyone who has spent time working on personal or corporate security — and in particular information security, knows that there are a million ways in, and you’re never “finished”.

Fred wrote a bit about his experience last year, and we had an issue yesterday with Albert’s phone:

The way we have been thinking about it is in terms of “the weakest link”.  It is critical to have your most important accounts (primary email, banking, crypto, etc) secured well, but it’s also important to work your way down the line to other accounts and entry points.  The lesson being that attackers will seek the weakest point and work from there.

One of weakest points in personal security is the phone — cell carriers are notoriously bad at security, and attacks like phone porting and SIM swapping are common.  For that reason, it’s important to move away from using SMS as a second factor backup wherever possible, and instead moving to apps like Google Authenticator, or to hardware-based 2FA using Yubikeys or similar.

Another weak point is personal email, or old email accounts.  It’s easy to forget about old accounts that you used back in the day, but those can be problematic, especially if they are linked to other accounts, and if 2fA is non-existent or tied to SMS.

So, by all means, start with the most important accounts.  But don’t stop there — keep sussing out weakest link.

For more resources on personal information security, see this excellent guide by EFF (written in the context of surveillance, but applicable to all attack vectors).

From a labor mindset to a capital mindset

I’ve been quiet on the blog lately — writing is one of those things that’s hard to build a habit for, but always pays big dividends when you do it.  Every time I’ve gotten into a good blogging rhythm I am undoubtedly surprised by the feedback I get (good and bad!), but more importantly, by the ripple effects.  Writing is capital — you work to make it, and then it works for you.

As someone who likes to work with his hands (both in the analog and digital worlds), I feel pretty deeply connected to both labor and to capital.  The process of making something (a table, an app, a blog post) can be deeply satisfying, and then the follow-on effects from that thing existing can (in the best cases) be very high leverage.

I would say my hands-on nature is both a blessing and a curse when it comes to this.  Because I like “making stuff” I’m often drawn into projects where I might be better off hiring (or inspiring) someone else to do it, or delegating it somehow.  When it comes to producing capital, sometimes actually the less you “do”, the more you can accomplish.  I think of this as learning to develop a Capital mindset, over a Labor mindset.

Of course this relates to money as well. For the longest time — I think this was just my foundational mental model — I intuitively understood the idea that you work, and you get paid.  Labor.  Paid for your time.  Despite the fact that I have worked for a  long time in the software economy (and of course now, in venture capital), I had to overcome this idea of labor being the thing.  For instance, I spent a lot of time in my early twenties as a freelance developer, building apps (capital) for others, but just getting paid for my time.

Maybe this is intuitively obvious to other people, but it has taken me some time to turn the corner and understand the value of, and the power of, capital.  **Especially** capital you can build through your own efforts, like writing, or coding, or making music, art, etc.

I feel like it’s an overall very powerful frame, and is especially helpful when it comes to prioritizing your own time & activities — whether you are the CEO of a company, or a guy/gal sitting in your living room.

With that in mind, here is my first blog post of 2018.  Here’s to a great year, everyone.


The week before last, we lost a dear friend to cancer.  Deb was an incredibly sweet, caring and giving person.  The memorial service last weekend was held at the elementary school where she taught first grade for the past 15 years.  The room was decorated — to the hilt — with hearts, butterflies, and ribbons, all in her favorite color purple, and was covered in notes of love and appreciation from students, parents and colleagues.

During and after the service, I was overwhelmed by two feelings: first, the incredible compassion and caring that Deb exuded, in particular towards her family and students.  It was palpable, and hung in the air long after the service was concluded.  And second: the weight of the impact she had on all of the people she touched during her life.  A friend of ours was remarking, after the ceremony, how lucky Deb was to be in a position to connect with, support, and serve so many people during her time here.

All of this has gotten me to thinking more about how much most of us get caught up in our own day-to-day anxieties and challenges, and how hard it can be, sometimes, to see over your own dashboard, so to speak.  Myself included.  It’s so easy to get hung up in our own personal challenges, desires, frustrations, anxieties and disappointments.

The great irony in this, is that one of the best ways to get out of your own shit, is to put yourself in the back seat and focus on serving others. I know Deb dealt with shyness and anxiety herself, and I suspect that this only added to her empathy when it came to supporting her family, friends and students.

Every time I have managed to do this in my life, the result has not only been to provide some sort of useful help (I hope), but also to quell the internal drama. In other words, perhaps the best way to escape from our own suffering is to help other people escape theirs. There are lots of ways to do this, many of which come naturally through the course of your day and are just a matter of reframing your own mindset, as opposed to finding something brand new (though that’s important too).

After Deb passed, we couldn’t help but notice her in the wind, and the sun, and the evening mist.  Her energy may have left her body, but it certainly hasn’t left the world.  And what I am trying to do is remember the power of her energy, and the importance of using whatever energy we all have, today and tomorrow, in the service of others.

Changing seasons

Today is the last day of September, and I’m happy and relieved to see it go. I’ve been holding my breath. September is a violent month.  That may seem like a ridiculous thing to say, but I think there’s some truth in it.  Something about the end of the summer and the abrupt change to the fall causes some trauma.  A lot of pent-up energy on the planet.  September is hurricane season, and this one has been particularly bad.

A year ago yesterday, my wife’s parents were hit by a truck while crossing the street.  The accident happened at 7pm, which in September, in Boston, is dark — a time of day when it wasn’t dark just a few weeks earlier.  My mother-in-law spent 4 months in the hospital, most of that with her skull partially removed to relieve the swelling and hopefully stave off extensive` brain damage.  A year ago today we were in a state of full shell-shock.

In the past year, she has had a miraculous recovery, and this month she actually went back to work.  She’s driving, and taking care of herself.  If you didn’t know her and didn’t know about the accident, you’d never suspect anything happened.  It’s amazing really.  The doctors have been in awe of the recovery.

We’re so thankful.  And so exhausted and traumatized from the past year.  And we’ve been walking on eggshells all month, feeling the season change — the air getting crisper, the night coming earlier.  Feeling the feelings we felt last year at this time, and having this unconscious expectation of impending doom.  I’m knocking on wood as I write this, that we’ve made it through.

It’s also Yom Kippur today — the day of atonement, the holiest day of the year, and the end of the high holidays.  A time to turn the page, look back at the last year, reflect on our actions, and look forward to the new year.  I like that.  I’ve always liked formal turning points; somehow they make it easier to find some clarity amidst the mess.

I guess I don’t really have a point to this post, except to point out the change in the air, and wish everyone the best as they navigate the coming season.

Labor Day: Project Repat

Yesterday, in the process of cleaning out my closet and donating a bunch of old clothes, I did something I’ve wanted to do for a long time: got going creating a t-shirt quilt for my old “sentimental” t-shirts.  I’m a bit of a t-shirt hoarder, especially when it comes to shirts that memorialize some special place or time in my life.  I’ve got shirts from basketball tournaments in high school, the video rental store where I worked in high school (long gone), the restaurant I worked one summer during college (also out of business now), bachelor parties, Clarence’s 40th birthday, from the “Free Bieber” campaign during the SOPA/PIPA protests, etc.  Lots and lots of shirts.  I can’t bring myself to get rid of them, and I also never wear almost all of them.

Step in Project Repat — as the name suggests their mission is to re-patriate textile jobs.  And the way they do it is by recycling people’s old t-shirts into quilts.  They’ve got two factories in the US (one in VA and one in MA), where they employ full-time factory workers who convert sentimental (but useless) piles of old shirts into useful and even more sentimental and actually useful quilts.  The quilts are the output, but the mission is really about creating high quality textile jobs here in the US.

Of course, this is a relatively niche business and a niche product, but they’ve scaled nicely, and according their website, have made over 175,000 quilts since 2012:

Project Repat co-founder Nathan Rothstein lays out some of their philosophy of building a successful online business — that’s appealing to consumers, competitive in the midst of Amazon, and fair to workers — in this post.

Clearly, t-shirt quilts are not the complete answer to bringing quality labor back to the US, but Project Repat seems to be doing a great job finding a niche where they can offer something unique and really excel.

Optimizing for energy

In the world of startups and investing and ideas, things are always chaotic and fluid, and as such a key skill is to somehow cut through the noise and find focus.  That’s on a micro level, like what do I do for the next five minutes, and on the macro level, like am I (or are we) heading in the right direction?

This may be true in other fields, but I find it to be especially true on the investing side, where situations are undefined, and there are infinity ideas and directions to explore.  On the operating side, things are slightly more bounded, but there are always large questions about direction and focus.

So I find myself spending a lot of personal time working on my own mindstate, and trying to find ways to help with this challenge.  One thing I have tried this year is to use a Volt Planner, which helps you structure goals on a weekly, monthly and yearly basis.  I have found this to be incredibly useful, and I can write more that later.  One immediate observation from using the Volt Planner is that I emerge from each session (on Monday each week) feeling a rush of energy, paired with an increased sense of focus.  It’s really nice.

And that energy is really the important thing.  It’s the foundation for all of the moments and decisions that happen, all day every day.  The more of it you have, the better.  It’s foundational.

So a little more broadly, I’ve been thinking about how important it is to optimize for energy in life.  I think that is some combination of exercise, diet, sleep, and writing.  Maybe that’s obvious, and the first three are things that anyone would tell you are good for your health.  But “health”, while obviously good and positive (especially compared to major injury or illness) is a little abstract, and for me at least, a little hard to motivate around on an everyday basis.  I suspect that will change as I get older.

Energy is the foundation of doing anything, and it feels like there are compounding / exponential results to having more.  I am not saying I have figured out how to really rally myself behind this idea on a consistent basis (which is why I’m writing this), but I think it’s worth figuring out which activities give you more energy and which suck it away.  Worth figuring out.

On the blockchain: platform first or app first?

I was emailing with a friend recently, who asked:

“On the web, in order to build a platform you first need a hit app. Do you think this dynamic is different in blockchain?”

It’s a great question, and one I have been thinking about a lot lately.  First, let’s unpack the idea that the way to make a “platform” on the web is by starting with a hit app.  This has certainly been the case with Amazon, Google, Twitter, Facebook, Salesforce and others — where a very successful application enabled either the consumer scale (FB and Twitter), enterprise scale (Salesforce) or infrastructure scale (Google and Amazon) for others to build on.

Identity is a particularly interesting example.  To the extent that Google, Facebook and Twitter are the identity standards on the web today, those were obviously a second-order results from hit applications.   So you essentially have the infrastructure or platform layer “falling out” of, or layering-under, the application layer.

But there are counter-examples, most of which are lower-level services and developer tools: Stripe, Twilio, MongoDB, etc.  These are platforms first, by their nature — they exist only to have things built on top of them, and were able to achieve scale with that approach.

And thinking back to the creation of the web itself, I think it’s fair to say it was platform-first.  The Internet protocol stack (TCP/IP, HTTP, SMTP, etc) is horizontal infrastructure, designed in a layered model that anticipated continued development by others (though perhaps you could argue that email was the app that drove development of that platform).

So, looking at the blockchain, what does it mean to build a platform?  How will the important infrastructure features (e.g., identity, reputation, personal data, payments, etc) come to be?  Will they be achieved platform-first, or will they be a second order result from something at the application layer?

In other words, will platforms on the blockchain be built bottom-up (like the original web protocols), or top-down (like the commercial web)?

In a lot of ways, the blockchain is like the original web: protocol-based and open source.  Implemented by a group of collaborating peers.  Dueling protocol design, white papers, and RFCs.  Layered.

In other ways, the blockchain is like the commercial web: hyper growth fueled by powerful economic incentives.  Economies of scale and network effects.

I don’t have a clear answer, and maybe it will be a combination of both. But it’s really interesting to think about.

Who should police content on the Internet?

The beauty, and the danger, of the internet is that it’s open to everyone.  Anyone can put up a website, about pretty much anything.  This “open platform” is an amazing thing, and means that innovation can come from all corners, without barriers or gatekeepers.  It also introduces new challenges for how to deal with the inevitable bad things that come along with the good.

This past week, this question has come back to the foreground with the Charlottesville riots and the associated far-right websites that helped organize them.  Particularly in focus has been the website “The Daily Stormer”, one of the most vocal/violent/awful neo-nazi sites on the internet.  In recent days, all of the infrastructure providers that served the Daily Stormer have dropped it, and it has relocated to a Russian domain.  As of this writing, it appears that Anonymous has already DDOS’d and it is offline.

One of the companies that initially resisted dropping the Stormer, but ultimately did, was (USV portfolio company) Cloudflare. Cloudflare has taken heat for some time now for its insistence not to drop the Stormer, dating back to this ProPublica article from May.  In Cloudflare’s response to that article, CEO Matthew Prince included the following:

“Cloudflare is more akin to a network than a hosting provider. I’d be deeply troubled if my ISP started restricting what types of content I can access. As a network, we don’t think it’s appropriate for Cloudflare to be making those restrictions either.

That is not to say we support all the content that passes through Cloudflare’s network. We, both as an organization and as individuals, have political beliefs and views of what is right and wrong. There are institutions — law enforcement, legislatures, and courts — that have a social and political legitimacy to determine what content is legal and illegal. We follow the lead of those organizations in all the jurisdictions we operate. But, as more and more of the Internet sits behind fewer and fewer private companies, we’re concerned that the political beliefs and biases of those organizations will determine what can and cannot be online.”

This is a difficult line to walk, but it’s actually really important to the underpinnings of the Internet.  To understand why, you have to think about all of the bad things that happen on the internet every day — from really bad things like neo-nazi genocide organizing (I am writing this as someone whose great grandfather was murdered for being a Jew) and child exploitation, all the way to marginally or arguably not-so-bad things like, “I don’t like what this person wrote on this website and I want it taken down”.

So, from the perspective of someone operating internet infrastructure, you are constantly bombarded with requests to take down things that people don’t like, for one reason or another.  This is unsustainable for two reasons: 1) the pure scale of it, especially for larger properties handling millions or billions (or trillions, in the case of Cloudflare) pageviews and 2) platforms are almost always not in the best position to make a just determination about whether a given piece of content is legal or illegal.  So the position of most large web platforms has been to delegate decisions about the legality of (user-generated) content to law enforcement, the courts, or other actors “at the edges” who are in the best position to make those determinations.

From the user/customer perspective, if you think about it, you really don’t want your ISP, or DNS provider, or hosting provider making arbitrary decisions about what speech is acceptable and what is not.

To further codify this general approach to handling content, we have something called Section 230 of the Communications Decency Act which grants internet intermediaries limited liability when it comes to handling internet traffic and user-generated content (e.g., the speech of others).  Generally speaking (and I am not a lawyer) this means that companies are legally insulated from content that someone else publishes on their platform.  If this were not the case, then it would be impossible, from a risk perspective, to operate any website that handled the speech or content of others (think Facebook, Dropbox, GoDaddy, etc).  If you needed to be 100% certain that every piece of information that any user published on your platform didn’t violate any laws anywhere, you would simply not let anyone publish anything.  Or you’d need to have some very draconian/slow editorial & approval process, so we’d have no Twitter, no Instagram, etc.

Over the years, every time a new wave of bad activity emerges on the web, there is the inevitable battle about who should be responsible for stopping it. This is what the Stop Online Piracy Act (SOPA) of 2011 was about — this would have made internet platforms directly liable for any user-generated content that might have copyright violations in it (as opposed to the current situation where sites must comply with valid takedown notices in order to keep their immunity).  This has come up again in 2017 with the introduction of the “Stop Enabling Sex Traffickers Act of 2017” that seeks to limit CDA 230 protections in the name of addressing child exploitation on the internet.

The really hard thing here, whether we’re talking about piracy, or child exploitation, or neo-nazis, is that tailoring a law that addresses those problems without having broader implications for free speech on internet platforms is really hard. And what we don’t want is a world where, rather than an environment of due process, we end up with either platforms making arbitrary, unilateral decisions about the validity of content, or we get the vigilante justice of DDOS attacks knocking websites offline.

Cloudflare has done the hard work of defending due process and freedom of expression online.  It’s not easy to do this, and it is often unpopular (depending on who is doing the speaking). But in the end, they decided to drop the Daily Stormer from the Cloudflare platform.  In his explanation of why he decided to make this call, Matthew Prince explained it this way, in an email to the Cloudflare team:

“This was my decision. Our terms of service reserve the right for us to terminate users of our network at our sole discretion. My rationale for making this decision was simple: the people behind the Daily Stormer are assholes and I’d had enough.

Let me be clear: this was an arbitrary decision. It was different than what I’d talked talked with our senior team about yesterday. I woke up this morning in a bad mood and decided to kick them off the Internet. I called our legal team and told them what we were going to do. I called our Trust & Safety team and had them stop the service. It was a decision I could make because I’m the CEO of a major Internet infrastructure company.

Having made that decision we now need to talk about why it is so dangerous. I’ll be posting something on our blog later today. Literally, I woke up in a bad mood and decided someone shouldn’t be allowed on the Internet. No one should have that power.”

This is intentionally provocative, and meant to help everyone understand why it’s dangerous to encourage large internet **infrastructure** providers to take editorial control.  For while it may seem obvious that this is the right call in this case, there are literally millions of other cases every day which aren’t so clear, and around which we really should be aiming to have due process to guide decisions.

I would encourage you to read the follow-up piece on the Cloudflare blog discussing why they terminated the Daily Stormer – in it Matthew details out all of the kinds of players in the internet infrastructure space, what role they play, and how they impact free speech online.

In all of this, there is an important distinction between what platforms are **legally required** to preemptively take down, and what they are **within their rights** to remove.  A tension in the industry is a hesitation to exercise corporate rights to remove content, at the risk of sliding towards a legal regime where platforms have a positive obligation to remove content — this is what introduces the greatest risks to free speech and due process.

Another key point, which is raised in the Cloudflare post, is the different roles played by various types of internet providers. There is a difference between low-level providers like DNS servers, backbone transit providers, etc.; and high-level applications like social networks, marketplaces, and other, more narrowly-focused applications.   Generally speaking, the higher up in the stack you go, and the more competition there is at that layer, and the more specific your application or community, the more it makes sense to have community guidelines that limit or direct what kinds of activities can take place on your platform.

Lastly, none of this is to say that platforms don’t and shouldn’t partner with law enforcement and other authorities to remove illegal content and bad actors.  This is actually a large part of what platforms do, every day, and it’s critical to the safe functioning of the internet and of social platforms.

But perhaps the big takeaway here is that, as we continue to discuss where enforcement and censorship should take place, we should fall back on the underlying belief that transparency, accountability and due process (and not arbitrary decisions by powerful companies or outside groups) are critical components of any solution.

Learning by doing

I had lunch yesterday with someone who has been investing in the crypto / token space recently — having pooled together a small “fund” from friends and family.  It’s a short-term vehicle (like, 6 months), and a large part of the goal is simply to become hands-on familiar / capable investing in token sales / ICOs, and dealing with issues like custody and security.  At least for the moment, there are so many odd aspects of working in this space (handling private keys, exchanging tokens on various exchanges, downloading wallet software, etc.) that actually a large part of the value that a fund manager offers is handling all of that stuff.  Over time, this will change, as infrastructure and new financial vehicles (e.g., ETFs) come to market. But for now, it’s actually really complicated and hard to do this stuff, and there’s no better way to learn it than by doing it.

More generally, I just love the idea of learning-by-doing.  It’s the best way.

Right after college, when I thought I wanted to be an architect, the first thing I did was get a job with a construction company, building homes.  I spent the better part of a year shoveling gravel, jack-hammering old driveways, and sealing foundations, but I also got to do some more interesting / complicated building work over time.  My reasoning at the time was that I didn’t want to be that jackass, know-it-all architect (believe me, that’s often how they are perceived by builders) who didn’t know how things really worked at the ground level.

Same thing when I got into programming.  There are two really beautiful things about learning to code: 1) you can learn everything you need to learn at basically zero cost online, and 2) you’re making as you’re learning.   I think that’s great as a learning mechanism, and it’s also really great in terms of motivation.  Nothing like wanting to finish making something as motivation for learning how to do it!

Learning-by-doing is harder to do when it comes to investing.  Because, of course, in order to invest, first and foremost you need capital.  But it doesn’t need to be a lot, especially in the cryptocurrency space.  So it’s possible to learn to be an early stage tech investor by actually doing it.  I think that’s pretty exciting.

(as always, buyer beware!)

Keeping it simple

We recently had our daughter’s birthday party, and we held it in a public park near our house, where there’s an old parks department building.  The sun plan was outdoors, but of course it thunderstormed and we didn’t have a back-up plan.  So we called an audible and asked if we could use the back room in the parks building and they said sure.

So we ended up with a bunch of kids running around a dank, old, concrete room (1950’s style – mostly unchanged since then), eating pizza and cake and being entertained by a (wonderful, thank god) balloon twister, in the pouring rain.  It was dead simple, and cheap.  And the kids had a *fabulous* time.  Our daughter was thrilled; one of her friends said it was the best party ever.

It just goes to show that sometimes, simple is best (or at least, can be great).

What’s your medium?

Yesterday, I caught up with my old friend Gary Chou.  Gary was the first General Manager of the USV Portfolio Network (predating Brittany and Bethany), and has since been running Orbital, a community space and “studio for building networks” (which happens to be in the original Kickstarter building on the Lower East Side).  We got to talking about the different things that have been going on at Orbital and the ideas Gary is working on now.

One of the things he said that really stuck w me was the question of “what medium do you want to work in”?  Like, bits & pixels (design, coding), or dollars (investing), or people (events, teaching), etc.  I had never really thought of it this way, but it does make sense to think of things in terms of the medium, or put another way, the tools and objects you have at your disposal.  Or yet another way, what is the craft you really want to hone.

At USV, our primary medium is dollars, or more accurately, investments, which includes dollars but also things like deal terms, corporate structure, etc.  And it’s also ideas – we need to absorb ideas from the market, develop our own ideas (conviction around investing themes) and trade in ideas (influence within companies, attention in the market, etc).  And my personal medium has always included a healthy dose of bits and atoms, as my background is as a builder, designer, and hacker.

I never really understood money/investing as a medium until I joined USV, but now I see that there is real artistry to be developed here.  So much nuance involved in making situations “work out”, and the tools at hand are the tools of finance, corporations, leverage, and dealmaking.  It has been really incredible to see those play out from the inside, and I feel like I have the privilege of observing masters at work.

As a personal strategic question (from the perspective of someone working to develop their career path or professional identity), I find the framing of “medium” to be really clarifying and helpful.  What medium do you really want to be devoted to?  Where do you have the most leverage?  And as such, how should you be prioritizing your time, and what skills should you be focusing on developing?  Where are you dedicating to perfecting your craft, and honing your art?

This is a useful frame because, at least in certain fields like startups where things are often under-determined and fluid, it can help you prioritize and focus, which is perhaps the #1 most important overall skill.

So, what’s your medium?


Speaking page

I’ve been doing more public speaking recently, and finally assembled videos into a single place:

As I look at that list, I realize that I’ve been doing a ton of speaking in Europe. Of course I know this, because I was there, but didn’t quite realize the pattern that the majority of my recently speaking gigs have been over there.

I love talking about what’s going on with startups and the internet, and look forward to finding more places to give talks and meet more great people.