Processing risk and response

Posted on March 6, 2020. Filed under: Uncategorized |

It has been a very tough month or so. Typically, I write this blog to organize my own thoughts. It’s been hard to wrap my head around what is going on at the moment…maybe if I start writing it will help. I am typically pretty cool, calm, and collected. However…when it comes to matters of health, I can thank my mother for giving me a heightened sense of anxiety relative to the average bear. Something that’s been hard to figure out for me is what % of mindshare is appropriate to spend on the potential pandemic we have on our hands. I’m not sure that’s answerable. Lately it has felt like watching the world burn could be a full time job. I continue to take meetings, support our companies, look at new investments, read, etc…but that idle moment when my mind is not occupied has been claimed by the coronavirus. Whether it’s monitoring, preparing, communicating with colleagues, communicating with family and friends, or frankly just worrying…it’s a lot of time and energy. That effort and mindshare feels both productive and afflictive at the same time. There is undoubtedly an optimal point of information consumption and corresponding action, but damned if anyone knows where that is.

I see people around me approaching these questions in very different ways. It’s hard to process such divergent paths from people I equally respect, none of whom are particularly better equipped to make decisions than me. I find myself conversing with other folks who’s job it is to process risk and probability (and bet on it), but is that a good input in this context? I talk to folks who are uniquely tuned to detecting and understanding the shape of growth…do they qualify as authority? I see large corporations like Coinbase, Microsoft, and Twitter, as well as smaller companies and other venture firms like ours, implementing work from home protocols, while others go on conducting business as usual. Is anybody doing it right?

To me, these questions all come down to calibrating risk, reward, and consequence. Despite feeling like that practice, in the abstract, is a power lane for me, I don’t feel particularly well equipped to do so in this context. Information is sparse and conflicting, emotion and survival instinct are obfuscating, and decision making must be made not in a vacuum, but in the context of friends, family, colleagues, and strangers. This is an extremely hard problem to navigate.

So yea, there’s no takeaway or insight that I have to share, but I figure if i’m experiencing this level of anxiety and uncertainty, many others are as well, and perhaps it’s helpful to know that you aren’t the only one who’s having a hard time with it.

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A Counterintuitive Proposal for How AR Will Unfold…

Posted on February 4, 2020. Filed under: Uncategorized |

You are walking down Bleecker street in New York City. You pass by a store with a cool jacket in the window. You say “Hey camera, how much is that jacket? And a voice replies into your Airpods, ”It’s $400:“ I think that’s gonna be the way it goes down.

There have been many proposals for how augmented reality (AR) will solve this use case and ones like it. Most demos you see today, a person takes her phone out of her pocket, opens an app that invokes the video camera, and then metadata about whatever is in the frame appears on the screen. I don’t think that’s the way it’s gonna go down.

More futuristic versions of this use case contemplate heads-up displays, where the metadata about the jacket is written visually to a lens on your glasses or even a contact lens. I don’t think that’s the way it’s gonna go down either (at least not this decade).

I think the insight that we will use computer vision to augment the way we process our physical surroundings is more or less a given. Car’s are perhaps further along than people in this regard. It seems implausible that this assistive capability will not follow us into all realms of our mobility (i.e. when we get out of our car and walk). What I don’t think is a given is a) that the camera we use to capture our surroundings will be on our phone, or b) that the response to a camera based query will be displayed visually.

Most read/write situations don’t traverse disparate medium. If you capture visual information, it tends to be displayed visually. If you capture audio information, it tends to be displayed acoustically. Even if you capture tactile information, it tends to be displayed/processed tactilely.

But in the case of AR, I see the capture/write function and the read function decoupling as it relates to media type. I think will use a wearable, voice activated camera to capture and query, and I think we’ll listen to the response or results that come from that query.

Ring and other always on camera have desensitized us to the reality that we might be recorded when in public. There is definitely a societal learning curve that Snapchat Spectacles began to climb, around wearing cameras in social settings. But I think consumers have learned what a “wake word” is thanks to Siri and Alexa, and have gotten comfortable with always on sensors that are known to be asleep unless awoken. My instinct is that voice and audio is paving the way for visual sensors to do the same.

It’s not just a privacy issue that will need to be solved, but also a fashion issue. Snapchat Spectacles came close but not close enough to solving the fashion challenge of wearing sensors on your face. Airpods solved it completely. Whatever camera wins will have to thread this same fashion needle. I could actually see a not too distant world where your Airpods have a camera(s) on them. If not, I guarantee you Apple is working on a Siri controlled wearable camera that is meant for everyday use (as opposed to gopro use cases, etc). Interestingly, I see these cameras as being utilitarian as opposed to creative in the near term. Spectacles captured media that was meant for human consumption, and in that way, kind of fell short of the production quality we’ve come to expect from our smartphone camera. But if the consumer of an image is a machine, the image doesn’t have to be pretty, or compelling, or even particularly high fidelity in order to be valuable…and in that way a hardware manufacturer can bend the typical constraints around size, form factor, cost, battery life, etc to optimize for the fashion and form over image quality.

I think the promise of AR is that we can look up at the world and not down at or even into a screen, and this camera/earbud architecture feels like the closest we can come to an invisible read/write interface that marries our surroundings to machine assisted computation and the internet.

If you are working on any piece of this future, be it hardware, software, or other, I’d be up to jam and maybe even lead your Series A round: jordan@pacecapital.com

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Blockchain Based Gift Tax Hack

Posted on January 21, 2020. Filed under: Uncategorized |

I was reading something this morning about gift tax exemption and had a weird idea. I’ll premise this idea with the acknowledgement that this solves a problem that I’m not sure I philosophically want solved, but regardless, thought it was kind of a cool architecture.

The IRS taxes gifts of a certain size. Generally the giver pays said taxes, and the rate ranges from 18-40% depending on the context. Every year, every person can take advantage of a “gift tax exclusion” which allows the giver to give AS MANY people as she desires a $15K tax exempt gift. You could give a million sub-$15K gifts and not pay any gift tax, but you can’t give a single $20K gift without paying tax on the extra $5K. If you are trying to transfer wealth from one generation to the next, the gift tax exemption is like the first thing an accountant or tax adviser will guide you to take advantage of every year.

If you have $100M that you want to pass down, the exemption ain’t gonna get you very far, and there’s a nice 40% Estate tax waiting for you if you transfer your wealth at death.

But I had this weird idea that you could create a network of proxy recipients, and make exempt gifts in parallel to thousands of them, who in turn would be incentivized but not obligated to pass the gift along to an intended recipient via their own exemption. Interestingly, you could authenticate this flow of funds and identify an intended recipient without needing to expose the ultimate recipients identity or bank credentials.

You’d incentivize people playing the role of proxy to pass along the gift via a take rate that is meaningfully lower than the gift tax rate (i.e. 10% cut), and design the network to make the income generation opportunity of continuing to perform the role for many givers more lucrative than maliciously keeping the money from any one giver.

There are many crypto protocols that create roles or jobs within a system, where the right to an income generation opportunity is bestowed only upon the best actors in the system. Livepeer’s transcoder nodes are a good example.

I wonder if you could create a crypto based gift tax proxy protocol to allow for untaxed giving at scale between generations. You’d be able to both incentivize proxies, transfer funds in network, and authenticate that the proxy did their job / the intended recipient ended up with the money.

As I right this post, a) I hate this idea, and would prefer if wealth wasn’t easily transferred between generations, and b) may have just designed a money laundering scheme by a different name.

But, without a contractual obligation to pass the gift along, and rather simply a strong network based incentive to do so, I kind of think this hack would work.

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A Depressing Startup Opportunity

Posted on January 17, 2020. Filed under: Uncategorized |

“Be fearful when others are greedy and greedy when others are fearful.” – Warren Buffet

I live downtown on the Hudson River in NYC (Flood Zone 1). During Hurricane Sandy, the Hudson enveloped my building and I spent the evening bailing water out of our entranceway, trying to protect the mechanical room from flooding. We live in a Co-Op and everyone who stayed, even the late Lou Reed, took turns both witnessing the craziness of our street becoming the river, and trying to protect the building, which is a Co-Op (we are all on the hook for the buildings health economically), from serious damage.

I sit on the board of our building, and after that event, we implemented a new flood protocol, made some tweaks to our physical infrastructure, and upped our investment in flood insurance. Securing additional flood insurance wasn’t easy, and my understanding is that in areas of high risk, it’s getting harder and harder by the day to find an insurance company who will underwrite the risk.

Generally speaking, the entire carrier market is fearful, as it should be. At the same time, demand for flood insurance is going to keep growing. In such a situation, it feels like the way underwriters approach this type of risk, the inputs to their actuarial models, and their economic agreement with customers needs an overhaul. I am far from an insurance expert, but it feels like there’s an opportunity for a new entrant to shake things up in this segment of the market.

I am inspired by USV’s commitment to investing in solutions to our climate problem. I think that’s the first order need. As bleak as it sounds, after reading Alberts post, I couldn’t help but ask “well what is investable if we don’t fix this fast enough or well enough?” There’s an entire class of businesses that will be built over the next 50 years not only to fight climate change, but to help us adapt as it inevitably progresses.

There’s a tinge of heartless capitalism in asking how companies will profit from such a destructive and existential challenge, but the reality is we have a responsibility to our planet AND also to maintaining or improving quality of life for those most affected by these changes. What services will be built to help people adapt to new reality? I think modern flood insurance fits that bill, but it’s a much broader question. Holler if you are working on something like this and thinking about raising capital: jordan@pacecapital.com

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You Gotta Know When to Hold Em’

Posted on November 26, 2019. Filed under: Uncategorized |

I used to play a lot of poker when I was younger. If you read about underground card rooms in New York City in the early 2000’s, or have seen the film Rounders, it wasn’t quite like that…but it wasn’t unlike that. At the time, poker wasn’t televised yet, and at least in the places I played, people weren’t doing the math the same way they are today. As a result, it was easier to win. My approach at the time was a few fold:

1) I’d commit to very long blocks of time when I’d sit down to play (which is actually quire exhausting). When you know that you are going to grind it out for 6 or 8 hours, it makes it much easier to exercise patience and wait for the right hands. I’d play very “tight,“ which means I’d fold down all but the best hands, and I trusted in the discipline of my approach irregardless of what else was happening at the table or to my stack of chips.

2) I spent more time watching the people at the table than I did calculating the pot odds of a given hand. 8 hours is a lot of surface area to observe people’s behavior. Generally, I was looking for people who were “on tilt,” which is a phrase to describe someone who was prone to making emotional or irrational decisions as a result of a previous hand or event at the table. You could put a person on tilt by winning a big hand, but you could also achieve the same end simply by talking to them at the table. I talked a lot…nowadays, you see the people on TV totally stoic, sunglasses, hat pulled down, trying not to reveal anything with body language. That wasn’t me. I’d talk and talk and talk and try to shape the energy at the table.

This week, and generally speaking over the past few months of Pace Capital being in business, I find myself exercising muscles that I definitely built at the poker table. As a general statement, the early stage venture markets are VERY fully priced at the moment. Many have commented that we are at the end of a cycle…it’s not my job to predict if or when the tides shift, but it is my job to stay true to our strategy through all market environments, exercise discipline, and not get caught up in a specific moment in time from a capital markets perspective. We’ve been in business for almost 5 months and I have folded down every hand I’ve seen. I’ve been at or near conviction on two companies so far. The first raised money at ~2x the price I felt comfortable investing at. While I wasn’t happy with the outcome of not getting to go on that journey, I am happy with the process we ran and the discipline we exercised to stay rational in irrational markets. The second company I absolutely loved and price was not the issue. I spent a ton of time and energy and so hoped that it would be my first investment at Pace. Despite loving the founders, loving the market and thesis, and seeing a path to a positive outcome, in diligence it became clear that the risk I would be buying at the Series A was actually closer to Seed risk. Things are all moving the right direction and the vision is spot on, but I recognized that the risk/reward didn’t fit Pace’s investment thesis as a Series A firm. We strive to eschew outcome oriented thinking at Pace in the name of finding either alignment or misalignment on any potential partnership, but I am human and I am disappointed with the discovery of misalignment.

A flaw in my approach to poker, was that on a day good cards weren’t coming, if you keep folding down hands for 8 hours, eventually the blinds (which is the ante you must put in to sit at the table) will eventually kill you. I’m not sure there is an exact corollary in venture investing, but the closest thing might actually be the management fees you are taking while not deploying capital. Drawing fees adversely impacts net-IRR, which is a core metric your LPs use to measure your performance.

The second, and perhaps more interesting poker analog, is that venture investors are not immune to emotional decision making. As a founder raising money, you don’t walk into a venture capital firm’s office thinking about what the GP you’re meeting experienced yesterday or last week. Your instinct is to believe that your company and opportunity will be evaluated in a perfectly logical vacuum, but in practice that’s not the case. That GP might be on “tilt,” which may either bode positively or negatively for your pitch, but a no or a yes may result from events over which you have zero control or knowledge. As I wind down a pretty intense sprint on the second company I mentioned, I am pushing myself to be aware of how that disappointment influences the next pitch I see. Writing this post is perhaps even an exercise in recentering. There are countless startups calling on machines to make more rational decisions in markets were human emotion costs margin…I don’t think venture investing is well suited for that approach, but there is something to modulating the peaks and valleys of a deal driven practice when trying to make consistent great decisions. Who would have thought that playing cards would be such good preparation for my ultimate vocation??

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Associate with me @ Pace Capital

Posted on September 6, 2019. Filed under: Uncategorized |

Associate means a lot of different things at different venture capital firms. I started my venture career as an Associate at General Catalyst Partners in 2006. I was hired by a guy who came out of Summit Partners. For those that don’t know, Summit is one of the original practitioners of the “outbound associate sourcing model.” At least when I joined GC, they had an army of associates, working through pipelines, calling 100s of companies a week, looking for the diamond in the rough that was bootstrapped, with $xx Million in revenue, growing at 100% a year, and associates were measured by how many deals they sourced for the firm. Something like that. Anyway, he had left Summit to build a similar, but scaled down sourcing program at General Catalyst, and I was the 3rd Associate he’d hired to the team. When I got to GC, I was told I’d be measured by the volume of companies I spoke to, and I’d have weekly checkins where we’d talk about “getting my numbers up, etc.” The surest way to get your numbers up was to indiscriminately call down lists of companies or conference attendees, but to me that felt dumb. In my own head, I measured my progress by the bottom of my funnel, not the top. Was I brining high quality companies into the firm and were the General Partners interested in the work I was doing? As I got a bit more comfortable with the landscape, and observed how the Partners at the firm spent their time, and with whom the partners at the firm spent time (as opposed to how the other associates did), I decided that I would be independent, essentially breaking out of the program for which my boss had hired me. The guy who hired me stopped managing me, a few GPs tried to take over that role, and eventually it became clear to everyone that I was not manageable (I’m not proud of that, it was a weakness that I only saw years later). This was a huge pain in the ass for the firm, but I was doing good work and from there I just kind of carved my own path, collaborating with many people at the firm, and trying to contribute first principals thinking to our collective understanding of what the fuck was going on in the world, and what might happen in the future.

Since that experience, I’ve hired a number of Associates and in doing so, gravitated toward collaborating with people who could confidently work alongside me, as opposed to beneath me, irregardless of title or experience level. I hate paint by numbers, rigid, formulaic, contrived management frameworks or styles. I like self starting, independent thinking, self-motivated, figure-it-out minded, sponge brained, curious, hungry, self aware, authentic teammates (who just happen to have been born 10-15 years after me). I have the deepest faith that someone’s age or level of experience does not mandate the quality of her thinking, and I expect to learn as much from any Associate I’d hire as she would learn from me. I don’t measure the Associates with whom I work by how many deals they source, how much leverage they give me in diligence or investment memos, or the number of meetings I can pass off to them that I don’t want to take. I measure Associates by how quickly and creatively they are advancing our collective thinking within the context of any thesis or area of interest that’s in focus.

I don’t want to represent the job as completely autonomous because it’s not. One of the things you are signing up for is allowing me to route your attention toward questions and problem spaces that I choose. That’s a bit of the trade you make for getting to do one of the best jobs in the world without the natural ceilings or constraints that most analogous jobs would present at larger firms. Of course, I expect and want you to take us in new directions, into new problem spaces, etc…but at the end of the day, you kind of have to persuade me to care about what you care about, or it’d be hard to justify a lot of time spent there. I think this is one of the biggest differences between an Associate and a Principal…I initially thought I might hire either at Pace, but I realized through a few conversations that a Principal can and should define their own focus and time. An Associate, at least in my view, gives that up in the name of learning and mentorship and experience.

If I haven’t stated it explicitly yet, it might be obvious that I’m starting an Associate search to come work with me at Pace. I think it’s a unique role for someone interested in practicing a very bottoms up, Series A, first principals approach to venture investing. You’ll be working primarily with me, but we’re a (VERY) small team at the moment, and you’ll get to enjoy plenty of time with Chris and players to be named at a later date. I’ll write another thing with more of what I’m looking for and more about Pace, but I’m very open minded to different backgrounds and past experiences. Beyond the character stuff, I have a bias but not dogmatic attachment to at least semi-technical if not technical backgrounds. I work well with extroverts partly because I skew introvert. And investing experience of some kind would be nice, but entrepreneurial, product, academic, or engineering experience is all relevant.

If you are interested or know someone who might be, please get in touch. I would especially love to hear from you if you come from a background that is not yet well represented in the venture capital world: jordan@pacecapital.com

About Pace
Pace is an early stage venture capital firm primarily focussed on Series A investments. We are generalist and are investing in any market at any layer in the stack. Previously Chris was a founding partner & GP at Thrive Capital where he invested in companies like Twitch (acq. by Amazon, Patreon, Unity, ClassPass, Grailed, MM LaFleur, and Flatiron School (acq. by WeWork). Previously I was a founding partner & GP at Lerer Hippeau where I invested in comapnies like Seatgeek, Sunrise (acq by MSFT), Moat (acq by Oracle), Soylent, Smartthings (acq by Samsung), Groupme (acq by MSFT), Cue (acq by AAPL), MongoHQ (acq by IBM), Tapad (acq by Telenor), Adaptly (acq by Accenture), Floored (acq by CBRE) and a number of others. Concurrent with my investing role at Lerer, I also started and served as CEO of two venture backed technology companies, one of which (Hyperpublic) was successfully acquired by Groupon (GRPN) shortly after they went public.

We closed our first fund, Pace I, at the end of June. It’s $150M (more than half of which comes from leading university endowments who we are very proud to work in service of). While we invest across the United States, this job is sitting next to us in our New York office.

P.S. Sorry, I had no idea when the A in associate does and does not get capitalized…obviously

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Technical CEOs

Posted on August 15, 2019. Filed under: Uncategorized |

This summer has been a lot of catch ups and time spent with angel and seed investors. For the first time since leaving General Catalyst a while ago, I find myself 100% focussed on Series A, slightly further downstream in the capital markets than “first to believe.” The bottoms up, catalyst driven work I do to find early stage companies I want to invest in is exactly the same as it’s always been, but my dynamic with friends who are seed and angel investors has changed in the sense that Pace Capital now represents follow on capital, as opposed to the coinvestment, to their early stage portfolios. When they ask me what types of companies I like, so they can send me relevant opportunities, my answer doesn’t fit into a clean box like “networks and marketplaces” or “SaaS and enterprise.” My default is simply to share the 4 or 5 theses that I’m developing at any given time (currently in the spheres of airpods/voice, blockchain, distributed labor & credentialing, contactless payment, media forensics, and a few less developed things), all of which I think make for interesting conversation, but I know people don’t leave remembering a simple commonality that they can then use to place me in their schematic of relevant Series A investors.

My approach to investing is and always has been entirely bottoms up. I look for catalysts in a few key spheres: 1) technology 2) capital markets 3) regulatory environment or 4) a societal change, where it’s clear that enterprise value is going to shift from incumbents to new entrants, and then specifically, I look for companies that are “native” to that underlying change. So the thing that wasn’t possible prior to the change tends to be the most valuable thing. Within that set I am most tuned to technical catalysts, and most of my thesis development comes from studying and understanding the new primitives that a technical change exposes, and then I start to think about what types of systems people can and will design against those primitives. This framework is, I believe, the best approach to proactively identify companies you want to invest in (at least for me), but I am still left with the reality that lot’s of deals are referrals, especially at the Series A, and I’d like a cleaner way of helping my network know what to send.

I recently looked back at all of the investments I’ve made at Lerer Hippeau and as an Angel over the last 10 years and tried to deduce some more simple tangible commonality between them. The first observation, which I’m not sure is so helpful in this context, is that I tend to invest in companies that express elegant system design (technical or otherwise). I don’t think most angels or seed investors know how to transpose that filter onto their portfolios, but maybe some do. Perhaps more actionable, but more limited and less expressive of what I actually look for, is that it turns out I overwhelmingly gravitate toward technical CEOs. I guess that’s not a surprise given the system design thing, but I actually didn’t realize what a strong bias I’ve had toward technical leaders. This is true as measured not only by volume, but also by depth. By far my deepest and most fruitful investor/founder relationships have been with technical CEOs.

I like the communication plane i have with technical thinkers, so in the absence of a paint by numbers description of the companies I’d like to spend time with, “technical CEOs” feels as close as I’m gonna get to a 30 second sound byte. If that’s you: Jordan@pacecapital.com

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33 Questions We Asked Ourselves Before Starting Pace Capital

Posted on July 12, 2019. Filed under: Uncategorized |

The first 10 months of Pace Capital we didn’t pitch a single LP for investment. The effort was entirely inward as we attempted to assemble a partnership and lay sound foundation. A mantra that originated during that time and persists today is, “Don’t optimize for outcomes, optimize for alignment.” Health willing, forming Pace at this stage in our careers is a 30+ year commitment. For such a long range decision, it was essential that we get to a more granular understanding of each other, our fundamental values, our communication plane, our relative investment frameworks, what we wanted to build, and perhaps most importantly, what we valued in future partners. Because the cost of a false positive in partnership is so high, we didn’t want to form the partnership via probabilistic decision making, but rather we committed to setting the bar at certainty. With a goal of getting to 4-5 perfectly equal GPs at Pace, we saw real advantages to beginning in a formation that most closely resembled our steady state (i.e. a team of 3 or even 4), so we explored those configurations very actively. A LOT of time was spent in different combinations and permutations. It’s a totally non-linear path to conviction around partnership (venture or otherwise). At its most basic level, there is no substitute for time spent, and getting a requisite number of reps in together is simply a requirement. But not all time spent is equal. We found tremendous value in unstructured group meals and coffees, etc., but also went through a series of much more structured exercises in order to accelerate our understanding of how any combination of GPs would impact the ecology of the firm as a whole. One tool that was born from that process of particle collision was a structured set of discussion topics. After some number of more informal discussions, we’d all get in a room together, often over multiple sessions, and each of us would speak to every point on this outline. It was designed to surface conversation around topics that might be difficult or not likely to occur organically, and the only goal was to surface alignment or misalignment within that group. After hundreds of conversations with potential partners, and thousands of hours spent, we learned that the best thing we could do for the future of the firm was to stand it up. So 5 months ago, Chris and I decided to begin our fundraise for Pace Capital as the first 2 customers of a platform that will decidedly come to service additional GPs over time. We don’t have any attachment as to when that might happen, but it’s a priority for us. Recently, a number of people have asked how we conducted those early conversations, so I thought I’d share the discussion topics. Below is our Structured Discussion Topic Outline. Hopefully others going through something similar might find it helpful 🙂

GP structured discussion topics

1) Work style

  • how do you spend time and decide where to spend time
  • where on spectrum of collaborative vs independent?

2) Team

  • What do you want and need in a partner(s)?
  • What can’t you tolerate? Pet peeves?
  • How big a group do you want to be a part of?
  • What does a team look like in year 1, fund 1, fund 2, etc. How would you staff?

3) Budget

  • where do you spend the money?
  • What’s worth investing in? (office, admin, research, contractors, software development, platform, press, events/programming

4) Economics

  • beyond an equal partnership, how do you think about sharing carry with staff
  • what kind of salary will make you happy/comfortable?
  • what are your economic goals over what time frame?

5) Superpowers and strengths

  • what are yours, and how can we accentuate and build around them?
  • what are our strengths as a team?

6) Brand

  • what brand do you want to build?
  • How do you want to be understood by founders, other firms, lps, etc?
  • What channels do you like to communicate through to build and reenforce a brand?
  • What type of behavior is decidely on brand vs off brand in this context

7) Absolutes

  • what will you never do and never tolerate from anyone on your team
  • what will you always do and demand from everyone on your team

8) People

  • who are your closest thought partners and collaborators and why?
  • mentors?
  • who doesn’t like you and why? who would you consider adversaries?

9) Ethics and Behavior

  • Have you ever had any issues in the realm of sexual harassment, inappropriate work behavior, legal issues, or has anyone ever challenged or questioned your integrity in a way that might come into focus in the future?
  • What if any policies or infrastructure would you want to create to ensure a healthy and ethical work environment?

10) Fund size / structure / strategy

  • What stages and shape of assets do you think it’s important to be setup for in the early days and the end state?
  • Multistage vs Early Stage vs Growth vs Crypto
  • Generalist vs Thesis Driven vs Vertically focussed and how does this change from fund 1 to say fund 4 or 5 if at all?
  • What size fund do you feel most comfortable managing in fund 1, 2, 3, 4. What does this arc look like. AUM goals if any and why?

11) Decision making

  • Consensus vs Single sponsor or something in between and why?
  • Ideal process of a deal from investment thesis through firm decision?

12) Values

  • What are the values that you want to define your firm?
  • Things the firm and everyone in it will live by and stand for?

13) Concerns / worries

  • what do you think is going to be hard both initially and down the line?
  • Where do you think you are weak and where do you think we are weak as a team?

14) First 365 days

  • what are the most important things for us to do?
  • is it make great investments? engage the right supporters?
  • if we do x, y, and z what will be a great first year in business?

15) Motivations

  • why are you doing this vs joining another firm vs some other career option?
  • what gets you out of bed each morning?
  • is winning important to you?
  • what role does money play in your ambitions?
  • how do you measure the impact of your work?
  • Who’s opinions of you matter and why?

16) What’s the ideal relationship between a firm and it’s limited partners?
17) What’s the relationship you want founders to feel to you personally and your firm?
18) How do you win a deal? along what axis?
19) What is the balance between crypto narrative and the rest of the startup and venture world and how should it be reflected in our strategy?

  • is this a moment in time vs the new reality?
  • What is the venture landscape going to look like in 5 years. more like today or more like 3 years ago, or nothing like either?
  • how does crypto strategy differ from overall early stage firm strategy. Seed vs A mentality, support, investment cadence, size and concentration, etc.

20) Structure

  • Do you think we need to innovate structurally to reflect post crypto world or any other market/technology dynamics that might call for structural innovation?
  • Ideas on how if yes?
  • How do you feel about registering with the SEC?
  • Are these decisions that need to be made now vs later?
  • tradeoffs between enabling functions of structural changes vs challenge/ease of raising capital and large amounts of capital?

21) LP relationships

  • who are your strongest?
  • who would you most value and why?
  • Do you have strong preferences around sources of capital: endowments vs. pension funds vs. hedge funds vs rich people vs family offices vs china etc.

22) Geography

  • Is it 100% requirement to all be in the same place/office?
    • for how long?
  • What if any remote strategy would we run to cover other coast?
    • scouts/venture partners/college programs, etc.
  • Life updates, spousal considerations, etc.

23) Pace and portfolio construction

  • how many deals per year?
  • how many companies in a fund?
  • ownership minimums or no?
  • Home run swings vs. batting average?
  • When do you pay up and when do you stay disciplined on valuation?

24) What’s your process for learning?

  • are you a certain type of learner? (audio/visual/textual/collaborative/independant?)

25) Roles and Responsibilities

  • What do you want responsibility over and what do you actively not want to own?
  • What responsibilities do you think should be shared?
  • (marketing & brand building, public relations, programming, LP management, team management, support, admin & ops, finance, reporting and communication, recruiting, etc.)

26) Without referencing what other people are doing, what do you want to create?
27) What is the relationship we have with the entrepreneurs we work with?

  • Spectrum of investor-friendly to entrepreneur-friendly
  • What are examples of conduct that you use as theses / antitheses?

28) Life timeline

  • What major life events do you envision over the next 10 years?
  • How do you imagine your frame of mind evolving over the next 10 years?

29) Personality type

  • Enneagram / Myers-Briggs?
  • What kinds of founder personalities do you find yourself most drawn towards?
  • What kinds of founder personalities do you resonant most well with?

30) Investment methodology

  • overall what’s your process beginning to end?
  • collective portfolio review: let’s look at everyone’s deals historically and talk through them
  • dive into how you get to investment decisions, thinking behind them, etc
  • what turned out to be right and wrong and why?

31) how does rising early stage round sizes and large fund dynamics at multistage firms impact our strategy, fund size, etc?
32) Roughly how much do you envision allocating or reserving for follow-on investments?
33) Are there markets you are morally opposed to investing in (e.g. tobacco, guns)?

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Pace Capital

Posted on June 27, 2019. Filed under: Uncategorized |

Today we are stepping out a bit with a new venture capital firm called Pace Capital. We closed our first fund, Pace I, which is a $150 Million vehicle focused on Series A investments. As we were raising the money, investors would ask us, “What’s the brand? How are you going to position the firm?” Our answer, which we deeply believe, is that a venture firm’s brand is the aggregate of the community it builds. Everything else is just hype. Right now our community is small: two GPs (Chris Paik and I) and about a dozen institutional LPs. But so much of what Pace will become is dependent on our future partners, be they the founders we back or the GPs and staff we assemble. To define Pace today would be premature. We have a clear idea of what we want to be, and we’ve laid the groundwork and foundation for that to occur, but ultimately it’s Pace founders who will come to speak for us and define us. They’ll let you know if we are their most valued investor. They’ll let you know the degree of our integrity, whether we help them consistently make good decisions, and if they like spending time with us and each other. They’ll show you what a Pace founder is and what a Pace company is, and you’ll see that Pace is a collection of generation defining entrepreneurs and investors. Until then, we’d love to lead your Series A: jordan@pacecapital.com and chris@pacecapital.com.

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Concert ticketing 2.0?

Posted on June 10, 2019. Filed under: Uncategorized |

This past weekend Olivia and I did a lot of driving…which for us means a lot of Spotify. We sort of have 2 modes for selecting music: 1) Creative: we’ll assemble a unique playlist for the drive and queue up a bunch of music that hits a certain vibe, or 2) Old Faithful: we have between 8 and 15 artists or playlists that are regular defaults when we don’t have the energy to curate our music. As I rotely scrolled through my library of recent listens, selecting from the default set, I thought to myself: “I wonder what insane percentage of my Spotify consumption is Leon Bridges?” I have to believe I listen to him more than most Spotify users, and I realized that, only with the advent of streaming, this is actually a pretty valuable piece of information.

Concert ticketing, at least in the primary market (the first time a ticket is sold, as opposed to say Seatgeek or Stubhub), is still living in the stone age. Priority as to who gets early access to ticket sales is still rooted in ridiculous loyalty programs like “Amex presale.” In what way does being a gold or platnum card member have anything to do with whether I deserve to see my favorite artists? Artist level loyalty is still living in the age of email sign up forms to follow your favorite acts. Perhaps, if you are a registered fan, you get an email with an early invite code, but even those programs don’t seem particularly effective in getting the most loyal fans to the show.

But what if access to ticket sales was rooted in relative consumption of a given artists’ music across streaming platforms like Spotify, Apple Music, or Tidal. For fans, there are now objective metrics to demonstrate how loyal and dedicated a fan you are relative to others. You might even listen to a given artists more than you would otherwise in the name of jumping the ticket line. For artists, not only would you have more fun at shows playing to a sea of your most die hard fans as opposed to, say, your richest fans, but also you would introduce an incremental revenue boost to your standard concert monetization. You see, in the primary market, monetizing a concert presents a fixed upside, irregardless of demand for the tickets or who buys them. Your addressable revenue is: number of seats times x price per seat time x number of shows. The value of excess demand is captured largely by the secondary market, which on the surface, you don’t participate in. So how do you further monetize the tour? Well, if people know that listening to more of your music on streaming services gives them a better shot at tickets, you now have an uncapped increase in payouts from said services as your music is consumed more and more.

I think there’s real alignment in a listening based loyalty and ticketing strategy, and would love to see an independent company be the analytics and data provider to primary ticketing platforms, or to see any of the primary ticketing platforms leverage APIs from the streaming services to enable this type of presale. The big concern with a system like this would be people/brokers etc trying to game it, as they have every other angle of the ticketing market. I like the idea that there is a cost to gaming the system rooted in streaming subscription fees, and also that detection of unnatural listening patterns (i.e. one artist streamed 24 hours per day, 7 days a week) is within the realm of existing technology capabilities. There’s something very simple about the contract between an artist and a fan that says “if you listen to more of my music, I will hook you up with tickets, and we both win.” and that is a contract that could not be written in the age of CDs or even downloadable music.

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Airpods as the next platform, part three

Posted on June 5, 2019. Filed under: Uncategorized |

If you’ve been reading this blog, you know I think Airpods have a chance to be the next platform. There’s a lot of surface area at the application layer designing against this hardware edge, but I also have been thinking that it’s not just Airpods that are interesting, but rather the entire fabric of internet connected microphones that is permeating our space and society. It’s your Amazon Echo, Google Home, Apple Watch, the phone in your pocket that has the microphone on even though you don’t opt for it, the voice interface in your car, and your television, and if you squint you can see a world where there will be, if it hasn’t happened already, as many internet connected microphones as there are internet connected cameras. And if you think about the amount of value that’s been created on top of internet connected cameras, the voice and audio ecosystem is an incredibly compelling problem space.

So you might ask, what’s the most valuable position you could own in a world where there exists this dense fabric of internet connected microphones? I actually think the answer may be the identity layer. Not dissimilar from how Facebook began as an application and pushed down stack to a more infrastructural identity layer largely through Facebook auth, a similar opportunity exists in the voice ecosystem. Facebook auth made it so that you could show up at a website you’d never been to before, click a button, and get a personalized experience as a result. The same premise is going to be important in the voice ecosystem.

Currently, all the internet connected microphones we use contemplate a known user or set of users. You talk to YOUR watch, or YOUR airpods. Amazon Echo can already serve different results based on whether I or my wife is asking a question, but it’s still a known set of users. If you believe that voice is going to become an important, if not dominant way that we query the internet and our various services, it’s going to be necessary for me to be able to query my information and applications regardless of who owns the microphone with which I’m interacting (i.e the conference room mic in someone else’s office). That’s a non-trivial technical problem, and I’m guessing the implementation will require not just a voice ID, but multiple inputs (i.e. your voice AND the location of your phone, or a series of other unique/probabilistic identifiers). But it’s gonna matter.

The value of this identity layer is not lost on Apple and Amazon. Amazon already is distributing the Alexa OS via Samsung televisions, trying to spread out horizontally and attain this position. Google is doing the same, but seems less likely to win here without a novel/leading voice based hardware edge. And you ask, could a startup plausibly win the identity layer in this market. I think the answer is yes, although it would probably come in the form of a new hardware edge. But even if that doesn’t happen, the mere presence of an identity layer within the voice ecosystem is going to enable an entire class of applications that was not previously possible. Again, if you are building in the space, I’d love to talk and potentially invest (especially when you are ready to raise an A round): jordan.cooper@gmail.com

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Airpods as the next platform, Part deux

Posted on May 31, 2019. Filed under: Uncategorized |

A while ago i started developing a thesis on “AirPods as the next platform.” I wrote about it here. Core to that thesis were two new primitives that the hardware exposed on which developers could build applications not previously possible. Since posting, I’ve spoken with a number really creative founders who are designing and developing apps native to this new hardware edge. It’s an area where i am spending a fair amount of my investment energy.

I realized this week that in addition to “always on audio access” and an “always on microphone interface” there is potentially a 3rd new primitive afforded by the AirPod hardware edge that is worth talking about for a minute. I say potentially because I haven’t studied the constraints and capabilities of the underlying technology yet. Please correct me if you have and I’m wrong here, but…

I’ll call this third primitive “head position.” Before i get into head position, we need to acknowledge the technical specification that enables it. AirPods have a sensor in them called an accelerometer (actually they have 2 accelerometers, the one I’m interested in measures motion and the other is an assist on the microphone). Your iPhone and your Apple Watch and your Fitbit have this type of sensor as well. The motion accelerometer is one of two ways, along with a light sensor, that your AirPods know when you’ve put them in your ears, or more generally their orientation and movement through space.

If your AirPods can detect how they are moving through space, and they are in your ears as they are moving, for the first time developers can have a sense for a users head position at any moment. So who cares if your AirPods know your head position?

I do. Because with head position applications and users can start to ask “what am i looking at?” The current state of the art in this line of questioning is “what’s here?” And that is a question that Google Maps, Foursquare, Yelp and a myriad of other valuable applications try to help users answer. But…if you combine “head position” with off the shelf mapping data, for example, a user can now look at a place or a statue or anything else and ask the internet what it is without pressing a button or describing it or even taking her phone out of her pocket.

This is interesting because it’s a commonly suggested augmented reality use case that is largely expressed today through the interaction of a user holding their open camera in front of what they are looking at in order to ask the same question. The open camera UX, in my opinion, is clunky, obtrusive, and feels like more of a gimmick than a useful tool. So maybe that “what am i looking at” or “tell me more about what I’m looking at” AR use case will end up being more of an audio AR experience then a visual/camera based UX, and “head position”, enabled by AirPods as motion sensors attached to your dome, could be the primitive that unlocks it. I’m guessing this data isn’t exposed via an API yet, but when a billion people are walking around with AirPods in their ears all day, bet that it will be and developers and designers will build awesome native applications against it. As I’ve said before, if your building applications that are native to AirPods I’d love to think with you, especially as you look toward your Series A: Jordan.cooper@gmail.com

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Greatness at all costs

Posted on December 29, 2018. Filed under: Uncategorized |

Last night we went to see Free Solo. For those who don’t know, it’s an incredible documentary that follows Alex Honnold as he prepares to and eventually does “free solo” the 3000 foot vertical rock formation El Capitan. Free soloing is when a climber, unassisted, scales the rock face without any ropes or protective measures in place. Ipso facto: one slip or missed hold and your dead. As the film makes clear, free solo repeatedly over successive attempts, and you will eventually die. Alex’s attempt represents by far the highest and most significant free solo climb in the history of the world.

Overall the film is inspiring. It chronicles the life, habits, and mind of someone practicing his craft at the very highest level. Many of the themes will be familiar to entrepreneurs and founders, especially around sacrifice and dedication and pursuit of greatness at literally all costs. In our world, mistakes cost money and time and reputation, but in Alex’s world a single mistake costs his life. It’s hard not to admire his dedication and ability, but there is also something pretty imbalanced about the way he prioritizes his pursuit relative to love and family and his life itself. I spent the better part of my 20’s skewing toward the balance that Alex strikes between these realms. Granted, the stakes were much, much, lower and I was not nearly as good at business/investing/founding as he is at rock climbing, but something about a guy living in a van for 7 years methodically training and studying to achieve his destiny reminded me of my mindset as I was searching to realize my potential.

You walk out of the film and think “well, that was incredible…and impossible without exactly that level of imbalanced obsession toward a singular craft and goal.” It’s a bittersweet feeling, knowing that it’s possible to achieve the impossible, but only if you’re wiling to give everything else up…you’re inspired, and refocussed, and connected to a very pure energy of ambition…and then you turn to your wife, look her in the eye, and realize you aren’t wiling to give everything up to do the same. Alex talks openly about being ok leaving his partner behind if he dies…but as you leave the theater and drop into whatever balance you’ve struck between all of your various pursuits and priorities, you realize you’re not ok sacrificing EVERYTHING…so what does it mean? Does it mean you won’t achieve greatness? Does it mean you won’t be the absolute best, but you can still be quite great while having some semblance of balance? I want to believe that it doesn’t mean either of those things. That sacrifice is a spectrum and not binary…that this film is a simple reminder that if you want to achieve your goals you better be comfortable sliding further towards imbalance than wherever you are on such a spectrum…I want to view this film as more of a kick in the ass than a mandate to sell all your shit, live in solitude, and do nothing but work and practice your craft all day every day. But I don’t know…maybe that’s delusional.

Personally, I didn’t walk into this film thinking I need a kick in the ass. I’m very motivated and dedicated and industrious in the pursuit of my goals…but I did leave longing for a bit of that almost manic imbalance that fueled an earlier version of myself.

Regardless of whether your a founder or an investor or anything else, if you have goals and want to understand the most extreme form of goal oriented behavior and mentality, I strongly recommend you see the film. It’s still in a few theaters, which I suggest you try to get to vs. on demand, as the film is a visually stunning look at Yosemite National Park as well.

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Hack Idea: ~Calendly for the self-aware

Posted on November 27, 2018. Filed under: Uncategorized |

I was scheduling a call this morning with my friend Greg via iMessage and something occurred to me. Normally I am scheduling in email, and I have a pretty routine flow for moving between my calendar and email and suggesting times, etc…but I guess b/c i was on my phone, and in iMessage which feels more natively mobile than Email, when it came time to suggest times, I toggled to my calendar and instead of picking a few times and messaging back, i just screenshotted my calendar, sent the screenshot in imessage, and asked if he was free when I was. It was very easy but I was worried it might be offensive. There is something about this action which evokes Calendly…and I’ve always hated Calendly and other scheduling tools that put the work of calendaring a meeting on the other person in an interaction. When someone tells me to pick a time on their Calendly my immediate (and maybe unfair) response is “what an asshole, do your own calendar work.” I was worried that the screenshot might have a similar feel, but there’s something about not making the recipient click through a link, select a time, input their email credentials, etc…that felt more lightweight and friendly and helpful. It felt like the lightest possible way to sync on calendars without using an overbuilt or presumptuous tool to do the job. I asked Greg if he liked being on the other side of it, or not, and he was a fan. I asked if he’d ever seen anyone else do that, and he said no. Neither have I. One reason why, might be trust and transparency. I know Greg really well and trust him without question. So him knowing who else I was meeting that day wasn’t a big deal. But I think this flow could benefit from a very light software build to mitigate this trust requirement. In it’s simplest form, I think the hack would be to build a native app that runs in the background and:

1) auths with your camera roll
2) detects screenshots
3) determines if screenshot is a calendar view (maybe clarafai API can do this easily as a service. it’s a trivial ML problem, no idea how plug and play they are)
4) blurs all text in calendar view
5) deletes non blurred version
5) saves blurred view back to camera roll

The user experience would be identical to the UX I had with Greg, except when selecting the screenshot from photos to share in iMessage or email or whatever, my selection would automatically be the blurred version.

I’m not sure if anyone else would value a simple tool like this that fits within your mobile workflow and let’s you continue to schedule in your preferred channels with a light enhancement of a screenshot for availability, but if you want to do a little hack with (or without me), I’m up to put a little elbow grease in or at least test/use it if you build it without me. jordan.cooper@gmail.com.

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Juuled in the face? maybe here’s why

Posted on October 10, 2018. Filed under: Uncategorized |

I am not exaggerating when I say that I get Juuled in the face every single day walking around New York City. For those that don’t know, Juul is the most popular vaping device in the country. The company recently raised money from fancy investors like Tiger Global at a reported $15B valuation, reflecting it’s explosive growth over the last few years. I’ve read the statistics…last year 11% of high schoolers vaped. This year north of 20%…but even still, when I walk around New York I find myself wondering if it’s possible that THIS MANY more people are inhaling nicotine than pre-Juul days.

Last night, as I dodged a plume of mist coming at me on my walk to the grocery store, I realized the moment of the act was not a typical smoking moment. It was a transitional moment…a guy was stopped at a crosswalk, reached into his pocket, took a single hit from his Juul, and then put it away and crossed the street. It was a moment that a non-vaper who, like all of us, is addicted to the phone, would have pulled out a device and thoughtlessly checked some notification or feed.

When you light a cigarette, there’s a commitment to the minute or two that you will dedicate to enjoying it/feeding your addiction. You have to take out your lighter, stop to light it, and then be in a situation where you know you’re going to have time to finish smoking it. It’s intentional. Juul, I believe, has changed that paradigm…there’s no commitment in taking a sip form your vape…and as such, I feel like Juul has increased the addressable market of moments that a user can consume nicotine. It’s broken the core unit of nicotine consumption down into a smaller size, that fits in everywhere, and in this low friction model, people are consuming it in a way that’s closer to phone consumption than cigarette consumption.

So as I walk down the street…yes…there are more people vaping than there have been smoking in a long time, but also, the volume and frequency with which they are doing so, I would bet, is increasing…many more acts because the friction is lower to engage…When Twitter reduced the size of a public expression from 3 paragraphs for a blog post, to 140 characters for a tweet, they removed significant friction from the act of publishing. The effect was a significant increase in the number of people publicly “speaking” and also an increase in the frequency with which they published. I fear that Juul has done the same thing for smoking…

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On Equal Partnership

Posted on September 30, 2018. Filed under: Uncategorized |

1992 USA Basketball “Dream Team”

I’ve had a lot of discussion recently about the concept of equal partnership in a venture firm. Most venture firms you have heard of are NOT equal partnerships. There are degrees of partners, uneven economics, small groups within larger groups that suck up excess fees and carried interest, and bright distinctions as to which partners do and do not control the firm. These inequities lead to politics and over a long enough arc tend to be cancerous.

Benchmark Capital is the most visible example of a firm who insists on equality in their partnership. Whether you just got there or you’ve been there forever, if your a GP you are equal. In some ways this is counterintuitive. Most compensation and responsibility in an organization tends to flow to the people who got there first or who have been there the longest. In startups, for example, founders keep most of the equity for themselves and the nth executive, irrespective of their impact and responsibility, is granted a fraction of what a founder grant would look like. There’s been a fair amount of ink spilled about the misalignment this causes in startups, but this is not a post about that.

I understand why the partners who have their name on the door at venture capital firm xyz don’t cede their power and economics to the rest of the GP, but to me this is not the way to build an enduring and leading firm. A venture firm wins if it’s able to attract and retain the best talent in perpetuity. An uneven partnership, by definition, creates a ceiling on the new talent you can attract to your platform. Sure, with a fancy brand and a bunch of money, you can get good people to come work “with you” but where the rubber hits the road, actually “for you.” But you’re never gonna get the BEST people with that architecture. And even if you do manage to trick the best talent into your hierarchal structure, as their success unfolds, good luck retaining them in anything other than an equal structure.

Beyond talent attraction/retention, an equal partnership is a choice to practice venture capital as a team. It’s a structure that creates alignment to work as a group and offer the full resource of the firm to any founder in the portfolio, regardless of who holds her board seat. Not everyone in venture capital is collaborative, or likes to work as a team. A common criticism of even some of the best firms, is that they are a loose federation of individual practitioners sharing a brand and capital base. I think on this axis, it’s different strokes for different folks, but if you don’t believe you can be greater than the sum of your parts as a GP, than your working with the wrong people.

There’s short term orientation and long term orientation when it comes to building a firm. If you are a founding GP who’s in it for the next 10 years, wants to pull out $100M and go sail around on your yacht, you’re not going to strive for equality within your firm. You’re gonna suck up the economics as much as possible and leave whoever is left when you’re gone holding the bag of tier 2 or 3 talent you leave behind. But if you’re a 30 something who wants to spend the next 30+ years building the firm where you end your career, and if you aspire to have your firm endure even beyond your tenure, I believe equality is a requirement.

Lastly, if you’re a founder thinking about with whom to partner, selecting a GP from an equal partnership is advantageous. There are politics in every firm, but if you want to minimize the likelihood that internal firm politics will adversely affect you and your company, choosing a firm that is most aligned is the way to go. Even beyond the politics risk, when a firm tells you everyone in the partnership is there to help you succeed, that’s way more believable when they are economically and emotionally compensated to behave that way.

I think I’ve always held these beliefs about how to build a winning firm, but the more I think about it and talk about it, the more I believe in the power of an equal partnership. If you get the people in that structure right, there’s no reason to be greedy or controlling…everything that you want will organically follow.

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Welcome to crypto, here are the only 10 things worth working on

Posted on September 17, 2018. Filed under: Uncategorized |

Lately I’ve been thinking about a subtle but apparent change in the blockchain world that kind of bums me out. Go back 2 or 3 years, the amount of technical talent that was learning and building in the space was small, but the breadth of systems and projects they were exploring was vast. Because nobody “knew” anything, and the market of thought leaders and investors hadn’t anointed any particular class of project as viable are particularly of merit, there was an intoxicating creativity in system design as people explored newfound primitives afforded by the underlying technology, and dreamt up networks or platforms that they could, for the first time, design with them. I absolutely loved this phase. Not everything people were building made sense, but the aperture was wide on what was worth trying.

Fast forward to today, the amount of technical talent pouring into the space is amazing and deeply encouraging, but I fear the diversity and creativity of what they are aspiring to build has narrowed and plateaued. More people for sure, but they’re zeroing in and directing their energy to a handful of known classes of project or system, as opposed to experimenting with something brand new.

Loud and influential thought leaders and investors have declared that “somebody will build the winning stablecoin” and somebody will build the “winning money coin”, and the “winning privacy coin,” and the “winning smart contract platform” and the winning “decentralized exchange”, and “decentralized derivatives platform”, and “prime broker”, and “interoperability platform”, and “security token platform” etc…and that when they do…that thing will be valuable and important. Developers and system designers that are coming up the curve, who are passionate about building something in the space, seem to choose one of these known classes (and by the way vear away from say the dreaded “utility token”) because somebody else has looked into the future for them and told them if they can just build xx, it will matter.

I’m of the opinion that the classes of project or system that will end up being important have largely not been surfaced yet. It’s too early to anoint any crypto use case as “true” or “viable,” and I kind of miss the wider aperture we had when people were just trying to experiment and figure out what was possible. I’m not saying the anointed areas of interest aren’t worth working on…in fact I think most of them are…I just have this sense that there are more primitives to surface and more classes of project to define, and I’d like to talk to the people who are doing that work. The nth more scalable smart contract platform is getting a little boring. If you’re doing novel work or trying something weird that people aren’t yet talking about as worthwhile or interesting, I’d love to learn about it. jordan.cooper@gmail.com

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Airpods as the next platform (and the native applications therein)

Posted on August 29, 2018. Filed under: Uncategorized |

If you hang out around venture capitalists for any length of time, you will inevitably arrive at the question of “what’s the next platform?” There are a lot of nebulous definitions of platform, but I typically think of a platform as a piece of infrastructure on top of which many businesses and applications are built. Iphone and Android are platforms than enable millions of independent apps. The web was a platform that enabled millions of applications. At various points in their lives applications like Twitter and Facebook have evolved downstack to become platforms for 3rd party developers, and there are plenty of others. Platforms tend to be quite valuable and very difficult to rip out or replace. The reason venture capitalists are looking for “the next platform” is partially because platforms themselves are valuable, and partly because every time a new platform emerges, there are native applications or businesses built on top of it that were not possible before, but that are uniquely enabled by the underlying platform’s existence. Those native applications also tend to be incredibly valuable, and so venture capitalists are looking to escape the saturated, over picked domain space of the last platform, and move to greener pastures.

Candidates for the next platform that are currently in play, or that have been suggested as possibilities include blockchain/ethereum/whatever smart contract platform replaces ethereum, VR and AR, the smart/connected automobile, and i’m not sure what else. In the latter two cases, new hardware edges represent the promise of new applications native to the hardware. So if VR truly becomes the next platform, companies like Bigscreen VR or Vchat might represent uniquely native applications playing with the newfound primitive of “presence,” and those applications might be very valuable. Similarly, you can imagine a set of native applications to the smart car or the self driving car that are native to the underlying platform and have not yet been explored because the install base and consumer adoption of the would-be platform is still on the come. VR and AR, for example, have a combined install base of about 12 million headsets (many of which are early generation and not performant/enabling). Facebook and Twitter had many 10s of millions if not hundreds of millions of users before they were able to become true platforms. Obviously IOS and Android and the web have an even larger install base. So there’s this uncertainty around what hardware, software or computing edge might be next to get to this kind of scale and infrastructural position.

It might sound strange, but through a few conversations with friends, I have come to believe the dark horse platform might actually be Apple’s Airpods. I believe Airpods now have about 40 million users, and the growth curve looks pretty good to me. Granted, Airpods as a platform, is not nearly as expressive or dynamic as say virtual reality, but they are here and now and I believe unlock a few new primitives on which very valuable applications can be built.

The first and I think most interesting primitive is also in the realm of presence. You have heard anecdote after anecdote of people “who never take their Airpods out”, and I think it’s safe to assume, although I don’t have the data, that an Airpod user has headphones in 2-3x the time of traditional headphone users, and importantly they stay in even when not in use. It’s becoming normal to order a coffee while still wearing your Airpods or even have a conversation with your wife. I used to caveat a walk and talk w my Airpods by saying “these are on but not in,” but I no longer have to do that. The person just knows. So what happens when a platform exposes the primitive of always on audio access to 3rd party applications. What can I create knowing that I have a channel to somebody’s ears that follows them wherever they go day and night.

The second primitive is similar to the first, but is an input primitive through an always accessable, but not yet always on, microphone that is embedded in the Airpod.

*A key distinction between these two primitives exposed by the Airpod platform, and say smart speakers like Alexa or Google Home, is that Airpods are 100% personal/private, and I’m guessing the native applications enabled by this privacy model are different than a public interface like Alexa.

I spent a little time thinking about what you could build with those primitives and especially what a social application might look like thats built for Airpod users. Although not part of the initial inspiration, I realized that Fortnite is actually an “audio social network” where a new form of presence has been unlocked via the headset dimension to the game. Granted it is heavily supported by the visual input of say the Xbox hardware edge, but still it’s a unique headset based social experience that I think you can squint and transpose onto the Airpod use case. There was actually a whole class of applications that might be native to an audio/Airpod platform that contemplate the user looking at the real world, as opposed to a gamescreen as shared context. But I think more interesting than that, is a new presence paradigm. In this class of applications I’d put things like Houseparty, telepresence robots, Vchat, etc…but for the Airpods I think a presence application might look more like an evolution of the walky talky use case. A walky talky is an open line between two parties with a basic permission model (the button you press) that gates that line. If 40M people and all of my friends have their airpods in all the time, I kind of like that construct as a basis for what shared audio presence might look like. Critical to success of any such platform would be getting the permission model right to interrupt another person and talk into their ears. I could see an audio directory showing the status of who has their airpods in and who doesn’t, and a low level audio notification exposing the name of any friend that’s asking to pop into your Airpods. Kind of like a Waze alert notification.

A completely different line of thought I had was that music may be the “unit” of interaction within a social application that’s native to the Airpod platform. I don’t know whether that means new forms of song sharing, singing to your friends, etc…but there’s something about music that feels richer than voice alone…I found this line of thought less personally interesting, but there might be something there.

I think it’s highly likely that Siri will be exposed via an always on mic interface in future generations of Airpods, which unlocks the Her like virtual assistant use case and a bunch of others, but those fall into the category of utility more than social, and my exercise was more socially oriented.

Anyway, just some ramblings on a slow day in late August. If you are building in and around this space, I’d be interested in talking to you and maybe supporting you as an angel investor. jordan.cooper@gmail.com

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Chasing a Perfect Storm

Posted on August 3, 2018. Filed under: Uncategorized |

Every few years a deep change in technology, capital markets, society, or regulation catalyzes meaningful flow of power and value from large incumbents to new market entrants. These catalysts are the lifeblood of venture capital returns and the beginning of every thesis I have ever had as an early stage technology investor. As a general rule, my approach is to look for the “native” systems and companies created in a catalyst’s wake that could not have existed prior to it’s occurrence. These native systems are the purest expression of the underlying change and are often the most valuable when they grow up. Today, we are in a moment of deep flux. As of October 2017, it is possible that not only has a single catalyst emerged along one of the above axis, but rather that we are in a perfect storm where deep change is present in all four of these catalyzing realms, simultaneously.

From a technology standpoint, the advent of blockchain technology looks like a fundamental development that has and will enable multiple $10B+ market cap systems to develop where they could not have previously. Recent technical catalysts on the magnitude of this development might include the advent of social networking technology in 2002 (~$1 Trillion of value creation/capture), the development of the iPhone and mainstream mobile computing in 2007 (well over $1 Trillion of value creation/capture), and not much else.

This technical breakthrough not only challenges the large, centralized incumbents that dominate the technology landscape today, but importantly also the capital markets that surround them. A new financing mechanism, business model, and organizational structure has emerged around blockchain technology, known as tokens, and their issuance and behavior has impacted the early stage capital markets on as fundamental a level as, say the accelerator model and Y-combinator did in the early 2000’s. Venture Capital firms, hedge funds, angel investors, and entrepreneurs are reeling and reorganizing in response to this development and new entrants are capitalizing on de novo market positions built from scratch for this new reality.

From a societal perspective, both domestically and internationally, bottom up dissatisfaction and lack of trust in the powers that be, coupled with modern communication tools assisting in self organization and public communication, has led to a state of social instability. Tensions between the “haves”, the “have nots”, and the “used to haves” are at a boiling point and existing societal systems and infrastructure are being challenged daily and with ever increasing veracity. Further, we have entered a “post truth” world where we can no longer take an image, a public figure, or a piece of content at face value. Many of the upstack systems built on a premise that facts exist can and will be rewritten. The crowd, whatever faction of which you choose, wants change and increasingly has the tools to exert force against our organizing systems, namely private enterprises and government structures. These tools, to date, have largely been social media and messaging platforms that have organized and amplified voices, whereas Blockchain represents a new ability to align and coordinate economic force within these now networked and organized segments of the population. With coordinated information, behavior, and economics, incumbent challenging ideas, movements, and services stand to accelerate the flow of value toward new entrants and those that finance them.

From a regulatory standpoint, the United States has an administration that is ripping up the carpet on which we have stood for over almost a decade. Value promises to change hands in highly regulated arenas such as insurance, healthcare, transportation and energy, as well as tangential markets that feel the ripple effects of administrative 180s. In addition, new regulation around capital markets and cryptocurrencies is being written and defined in real time. Decisions made here will have a profound effect on the early stage capital markets, themselves, as well as the very formation of entities that birth new technology.

Exciting times!

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On $80M Series A rounds…

Posted on July 11, 2018. Filed under: Uncategorized |

I read Dan Primack’s term sheet email most days. Increasingly I read things like “xx startup raised $80M Series A” and I’ve been trying to make sense of it. I am an early stage investor. I love the beginning and I love thinking about the future with people in their first years of building and testing and learning. When I started working in venture capital in 2006, the standard high profile Series A deal was $3-5M, split between two well regarded firms. A competitive seed round in 2008 was $500-700K at $4 or $5 Pre. Obviously, things have changed. I’m not the first to suggest that constraints and sobriety yield success in the nascent stages of development. USV and others have been singing that song forever, and I tend to agree. I’ve also lived raising $10M when I should have raised $3M and I’ve seen what happens when the money gets ahead of the stage of development. I think the purest early stage investor in me believes that less is more and the discipline that comes with is healthy, but the market is the market, and a founder rightly questions this position. “Why would I raise $5M when for the same dilution I could raise $10M?” There are some arguments around valuations getting ahead of you, and down rounds, and limited outcome options when you do this, but if you are upside thinking, the $10M is attractive. Extrapolate that out, and the $30M, $50M, $80M war chest at onset can also be attractive.

Increasing fund sizes for early stage investors is driving this early stage round bloat. Most marquee firms are raising $1 Billion+ funds now and a $10M early stage check from a % of fund standpoint, economically feels to them like writing $3-5M in a past company in a past smaller fund at the same stage of development. Yes, the outcomes might be increasing in size, and this behavior might be justifiable both for scaled firms and aggressive entrepreneurs, but it leaves me wondering if and how you can play the purist, sober game while everyone else is buying into the creep.

If you have been in venture for a while, you know that these dynamics move in cycles as opposed to straight lines. Normal 5 years ago, isn’t normal today, and what’s normal today won’t be normal 5 years from now. It’s not clear to me when the market is getting ahead of itself on the risk/reward curve whether or not holding the line on what you know is healthy and normal is the right approach or not. There’s an argument that you have to invest through all stages in the cycle and a smaller check size product is “off market” in today’s terms. And there’s an argument for not chasing the inflated financings, staying disciplined, slowing down if need be, and allowing for self selection in the founders and companies with whom you work. i don’t think there’s a right answer to this question, but a $50M or $80M Series A round is something I want no part of. I don’t care if Softbank, or A16Z, or whoever else does…

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    I’m a NYC based investor and entrepreneur. I've started a few companies and a venture capital firm. You can email me at Jordan.Cooper@gmail.com (p.s. i don’t use spell check…deal with it)


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