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Apr 11, 2013    |       10 comments

You are not changing the world

I’ve recently noticed a trend in the startup world: people that say they are changing the world by building a photo sharing application or a social game.

I’m not really sure how we got to this point, but everyday I see a twitter bio mentioning “(We are || I am) changing the world”.

I love that people want to work on stuff that has a massive impact on society and makes the world a better place, and I realize that the “valley state of mind” is beautiful because of this sense of purpose that drives a lot of entrepreneurs, but I feel that we need to realize not everyone of us is doing so if we don’t want to appear completely disillusioned and be mocked by journalists and investors alike.

Don’t get me wrong, there’s a lot of people who work on extremely impactful projects that aim to advance human society, but I don’t think that social gaming and photo sharing are some of those.

We are building cool stuff, having fun, hopefully making money, innovating and maybe even disrupting a market or making it easier for people to do something. That’s already good enough. Let’s keep the “changing the world” phrasing for people that actually do. Working on startups is the best thing in the world, we don’t need to fake ourselves into thinking that we’re curing cancer.

Moreover people that change the world do so not by setting it as a goal for themselves, but by doing something they’re very passionate about, achieving scale and ultimately impacting the whole society.

So try to do something you’re passionate about, solve a problem that really bugs you, and try to achieve massive scale, you’ll then be much closer to having changed the world.

So I’ll set the example and start: I am not changing the world.
But I am having fun, learning a ton and doing what I love.

Apr 8, 2013    |       4 comments

Bitcoin is awesome, but it sucks.

BitCoinIconX_270x270Bitcoin is all the rage these days and it almost seems like the general tech scene finally got to understanding the potential. It’s really great to see everyone and their mothers talk about Bitcoins and crypto-currencies. It’s crazy to think that for a “lucky” series of events it only took 4 years.

As a passionate “virtual economist” I’ve been following Bitcoin (as well as other projects) for a good while now but always failed to get excited about it. I’ll try to explain why.

The good

 

  • Pioneering. Bitcoin is really pioneering and has managed to grab the attention of the press, businesses and tech community at large. That is already a major achievement for a cryptocurrency.
  • P2P. Nobody can forge transactions and issue more Bitcoins (assuming no one gains control of 51%+ of the network’s nodes).
  • Anonymous. This can be regarded as a good or bad thing, but for me it’s more on the good side. Bitcoin transactions, when they stay in the virtual world and don’t involve offline stuff (product shipping or services) are completely anonymous. It is still very easy to track transactions with goods and services, but it’s nothing different from cash.
  • Open source. Anyone can check out the code and trust that the issuing, transactions and balances are correct.
  • Unbacked. There is no underlying asset that backs the currency. Again a good or bad thing depending on who you ask, in my opinion it’s usually a great thing when coupled with currency flexibility which unfortunately Bitcoin lacks. This brings us to to :

The Bad

 

  • Mining. Even before the pretty-bad fixed amount, in my opinion the #1 worst thing about Bitcoin is mining. It just doesn’t make any good economic sense. Bitcoin tries to force scarcity where there should be abundance and awards bitcoins to people who do not create any value, but rather destroy it. It is also environmentally hostile.
  • Fixed amount. The much know flaw of Bitcoin is its fixed money supply. There will only ever be ~21M Bitcoins and that’s bad on a number of levels. Another way to create scarcity where we should instead much rather have flexibility.
  • Hackable / losable. Multiple hacks have shown how easy it is to steal Bitcoins, just as easy as cash. In the world of e-currencies, we can probably achieve something better in regards to security.
  • 51% attack. This is a seldon mentioned fact, but if a malicious user were to gain control of 51% of the network, Bitcoin would be done.
  • More information on all of the weaknesses of the protocol can be found here.

 

Still, Bitcoin is the most awesome thing to happen to economics in this decade and will lead to a more open and competitive market for currencies. But will it still be around 10 years for now and, if so, what value will it have? Well nobody knows. I personally believe it will still be around playing a minor role in a much larger virtual currency ecosystem, and I’m glad for it.

Apr 6, 2013    |       5 comments

Transparency and Zombies in VC

Danielle Morrill’s post on Zombie VCs got a lot of attention Friday and generated a huge amount of comments on Twitter ad well as in private circles.

Criticism has come in on a number of levels:

  • Data accuracy: Crunchbase data is notoriously bad, incomplete and industry-specific.
  • Approach: the “guilty till proven innocent” approach has made a number of VCs mad (mostly ones included in the list, but not only). I think that this might have been the only way to get attention to this point and call for more data.
  • Timeline: 6 month with no announced Series A seems definitely strict and does not account for fundraising, partner bandwidth and a number of other factors.
  • Inclusion of seed or later stage funds: there are some funds in the list which don’t belong in the Series A group, mostly seed funds who only participate in follow ons in their portfolio companies, and later stage or corporate VCs who only do deals once in a while.

While I agree with most of those points, I also think that criticizing (and writing a post about it ;)) is extremely easy. Danielle recognized that there are a lot of Zombie VCs, gathered data and had the guts to publish it. Massive props for that.

What I’d like to put the accent on, is the actual need for such a list. The list might be useful to some entrepreneurs that need to fundraise for their Series A round, but all in all, I don’t think it is as valuable as her previous list about active Series A investors (and some other awesome Startup Indexes). All the attention it got was really curious for me and I think it is determined by the strong title and the potential bad image rather than the actual value conveyed.

We all know there are a lot of Zombie VCs and honestly what I don’t understand is the hostility towards them. They are out of money and can’t raise a new fund. They are not malicious in their being Zombies. They are legitimately having a hard time.

And don’t get me wrong: they often deserve all of it because they made poor bets, didn’t add value or screwed up companies.
But what do we expect them to do? Publish a post saying: “hey don’t pitch us: we can’t fund you cause some of our bets aren’t returning what we expected and we’re having a hard time raise a new round”?

The bigger and known underlying problem is the feedback loop of the VC industry: it takes 10 or more years to know if a fund will have a meaningful return and during this time VCs can raise new funds and make more deals. I don’t think the list highlights those, unfortunately.

The talk on Twitter seemed to focus on transparency, with people arguing that funds who don’t share data are somewhat fishy. Transparency is always awesome, but I do not mistrust firms who don’t provide data on their investments, as there are a number of legitimate reasons for doing so.

In the end, I don’t think we should call out Zombie VCs for having a hard time or non-transparent VCs for not releasing investment data. I think it’s the market’s job to do so and thus ultimately the LP’s job, who will signal by not recommit to non-performing funds and ultimately having them go out of business. The effort should be in trying to minimize the feedback loop.

I think the more interesting approach would be to call out the funds that market themselves as entrepreneur-friendly but end up revealing themselves as terrible partners for companies, as subjective as it can be. Dealing with Zombies VC might lose you some time, but partnering with a “bad” VC will hurt your company much more. Those are the VCs we should be hostile towards and here is where we need more transparency.

I’ll try to spend some time spec’ing out how this can be done, and would love any input from Danielle, entrepreneurs and VCs. Thank again to Danielle for having the guts to get the conversation started.

Edit: good reply post by Brendan Baker who has a more detailed analysis of the post itself.

Oct 17, 2012    |       5 comments

The politics I dream of

  • I dream of when politic debates will be anonymous. The debate should be between ideas and plans, not between people and promises. We should have every candidate (possibly team of candidates) present their plan and values and vote based on that.
  • I dream of when politics will be based on data. We should run simulations against promises and plans. We should understand what every scenario implies in terms of risks and rewards and make decisions based on that.
  • I dream of when politics will be accountable. Promises should turn into contracts and contracts should be evaluated against results and facts.
  • I dream of when politics will be a group effort. How can we put the world in the hands of a single person? As entrepreneurs and investors we see this every day: teamwork is what matters. Why can’t we have that for politics? We should not have to rely on one single person. We should have teams making decisions, coming up with plans, collaborating. Sure we still need a C.E.O. and sure politicians already have huge teams, but instead of focusing on the president and his second, we should focus on the full management team as well as giving them more power and impact potential.
  • I dream of when politics will be coherent. If we really believe in representative democracy, then representatives should have online tools to ask their voters (and represented non-voters) on each matter they will vote on.
  • I dream of when we’ll have experts and not politicians trying to solve the world’s biggest problems. When we do startups, we  hire the best to handle specific areas of our companies. That should be exactly the same thing with politics.
  • I dream of when politic donations will mandatorily have to be anonymous. This is such a big and untackled problem, it’s just unbelievable.

It’s sickening that in 2012 we still have to suffer the problems of this stupid system and we are unable to get out of it. I love that we have startups trying to disrupt the space like Votizen, Votify, Popvox and many others but I think we’re still scratching the surface of what’s possible. We need more Seasteading Institutes.

Jun 11, 2012    |       4 comments

Startup Act 2.0 is a Fucking Joke

Yuri Assomov, a serial entrepreneur and University professor, posted on TechCrunch a very interesting article where he explains why the Startup 2.0 Act would hypothetically have had as a consequence the visa rejection for people like himself, Peter Thiel, Michael Moritz, Steve Chen, Linus Torvalds, Shai Agassi, Marten Mickos, Max Levchin, Elon Musk, Niklas Zennstrom, Stepan Pachikovand even Vivek Wadhva.

Washington has been great at creating hype on the Startup Act before elections and primaries, marketing to us that the act would help startups and most of all would help foreign entrepreneurs set up they companies in the USA. Nice marketing, extremely bad execution. I must say that it’s one of the most stupid things I read in a while. Check out the following Section 4, regarding visas for immigrant entrepreneurs:

Are you fucking kidding me?

At this point you should either be crying or laughing, both rolling on the floor. Let’s revisit this sentences in a timeline of a wannabe immigrant entrepreneur.

  1. You first have to get an H1-B Visa. There are only 65,000 per year (this year they are already over) and you need a 4-year degree from a university. No drop-outs whatsoever.
  2. After that, you have to start a business. Problem is that H1B visas are usually for full-time employment and so you have to start the business in your spare time. You have to do this in the first year after you get to the US, which is a period in time when you’re usually broke and have to figure out your new life (you can only come to the US 10 days prior to your start date). It’s a fun period, since you will have no credit score and most landlords will ask for one and will want 3 paystubs. Good luck explaining you don’t have debt.
  3. Then you have to hire 2 people, which is illegal to do as, for H1B rules, you can’t work for the company you started, you can only be a passive shareholder.
  4. Then you have to either invest or raise $100k, again while working full-time for another company. Good luck going to an investor and telling them that you will join full-time the company only when your visa is approved.

This my friends is what the people in Washington were able to come up with. I’m speechless. Sometimes I wonder how people that write this stuff can run a country.

The Economist is already warning the US that other countries actually get it, and are attracting the talent that instead could have come here.

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