I have worked in three venture capital firms in the thirty-six years I have been doing venture capital investing. They have all been small partnerships, between three and seven investing partners, where there is little to no hierarchy among the partners.

There are many models out there for building and managing investment firms. They vary from a single partner to an organization structure that looks like a Fortune 500 company. There is no best way to structure an investment firm.

But for early-stage investing, I believe that the small flat partnership is the best structure if the goal is to produce high return on capital funds. Here are some reasons why this model is superior for early-stage investing:

• At the early stage, investors must bet on teams and ideas that have not been proven. The biggest winners almost always come from the investments that are the most controversial and “out there”. A small tight partnership where there is a lot of trust between the partners is a place where you can make a lot of these kinds of investments.
• Being a lead investor in a company you start working with when it is very young (sub 10 employees) and remain actively involved with until exit can take a decade or more of work. Staying aligned as a partnership on the company and supportive of it is hard to do but incredibly important if you want the best outcome. That is hard, if not impossible if the investing team is large, hierarchical, bureaucratic, and largely disengaged with the company.
• No single investor has the entire package. Not even the best investors out there. Trust me. I know this. Surrounding top investing talent with other top investors is a magical thing. Some have great deal instincts. Some have great networking skills. Some are great working with founders. Some have great financial minds. Some are great technical minds. Some see new markets before others. If you can put together a team that has all of this, they fill in each other’s gaps and everyone gets better. This describes the team we have at USV right now and it is a joy to work in a team like this.
• It is very hard to make an investment that will produce over a billion of proceeds. You need to get and keep double digit ownership and the company needs to be worth over $10bn at exit. I’ve made less than five of these in my career, over almost forty years. So if you want to produce a high return on capital fund, you have to raise a lot less than a billion. I think a quarter billion is probably where it starts getting really hard to produce a high return on capital fund. This means you need a small partnership and a small firm.

The key to all of this is partnership. Real partnership. A real partnership is where everyone is equal, not just in terms of economics (which is critical to sustaining this model), but also in terms of influence and stature. This is actually quite rare in the venture capital business. I see it in some other firms. But I don’t see it very frequently. The firms that have this are special places. They are special places to work at. And special partners to take capital from.

The last six months have been a challenging time for tech and tech startups. Macro events have weighed on the sector, valuations have come crashing down, revenue growth has slowed (or stopped), and layoffs are happening across the sector.

Many of the folks I work with are frustrated. The things that were working in their business stopped working and they can’t get it moving again. They are struggling to project the business and plan for the year and next year. They feel terrible about letting so many great people go and blame themselves for it.

It helps to work with many companies in times like this. We see this happening almost everywhere. And so we have some perspective. Yes, it is our collective fault for getting out over our skis during the good times and not seeing tougher times ahead. Yes, we could have and should have been more conservative with our growth plans and hiring. Yes, it is our fault for putting our companies in the position where they have to let go of so many people.

But it is also the case that the number one thing in times like this is staying in the game so you can play another round. You don’t want to go bust right now. So it is time to take your lumps, learn some valuable lessons from them, and move on.

It is also time to stay positive. When you are the leader of a company (or anything else), you have to lead with optimism, enthusiasm, and positive energy. There are people out there declaring tech is dead, web3 is over, and cheering on the fall from grace. It is best to ignore all of that, focus on what you are building, and find some wins for the team, and for yourself.

The great thing about working in tech is that there are always new problems to solve, new markets to create, new products to ship. The macro events don’t change that. So focus yourself and your team on building and shipping those things, get some wins, and move forward with optimism and positive energy. It will be infectious.

The Gotham Gal and I own five EVs and have been driving electric-powered cars since 2014. I don’t drive gas-powered cars and haven’t for a few years now. We have purchased two Chevy Bolts, two Tesla Model Ss, and one Rivian truck.

I love the instant acceleration you get from an EV, I enjoy driving mostly with just one foot due to the fact that EVs accelerate and brake using the accelerator pedal, I like that I can charge my car every night at home (using solar panels on our roofs) and don’t have to go to the gas station anymore, and I like that the maintenance costs and hassle are much lower with an EV. There is certainly an environmental benefit from driving EVs, but in my view, EVs are also better cars (and trucks).

But EVs remain expensive and “risky” for most folks and only 9% of global car sales are electric and that percentage is smaller in the US (more like 5%).

So how do we change that?

With gas prices sky-high, policymakers are looking to do something about the cost of driving. They are talking about short-term solutions like gas tax holidays that will do little to reduce the price of gas. I believe they should spend that money on longer-term solutions that will accelerate the conversion to EVs and reduce our reliance on the fossil fuel industry.

So what would those things be? Here is a list:

1/ A government-backed loan program (like student loans) that makes buying an EV less expensive to the average car and truck purchaser.

2/ An incentive program for merchants (think Starbucks or 7-Eleven, but it could be any merchant) to install and offer fast-charging stations.

3/ Subsidies to build battery manufacturing facilities (80% of EV battery manufacturing is in China).

4/ Policies to produce more cathode materials (which are roughly half of the cost of an EV battery).

Most automobile manufacturers are making EVs now. They understand EVs are the future. But there remain real impediments to consumer adoption of EVs. We need policies that work to reduce those impediments and speed the adoption of EVs and we need them now.

AVC has been around for nineteen years and it has evolved over the years from a place I’d post multiple times a day to once a day to now once a week. There was a time when there was a vibrant comment community at AVC with many posts getting over a hundred comments and replies. That’s long gone and now it is just me posting here with some chatter occasionally on Twitter.

As anyone who has tried knows, posting every day is a mighty big commitment. I am relieved to have given that up, gradually, a few years ago.

What is left at AVC is a place where I can write when I have something to say that I want to say out loud. That last bit is important because there are many things I will say privately these days but not publicly. At this stage of my life, AVC is for conversations that are helpful, productive, and constructive. Everything else can happen elsewhere.

The entire catalog of AVC posts remains online and can be accessed in the archives. If anyone wants to see the progression, it is right there out in the open for anyone to see. The comments are there too for the posts that have them.

The AVC archives are a journey through the evolution of social media. From an experiment in the early 2000s, to a happening in the late 2000s, to mainstream in the early 2010s, to a mess in the late 2010s, to something to be incredibly careful with now.

At least that is my journey with social media. I continue to believe that technology that gives everyone a voice, that gave me a voice, is an incredible thing. But like many incredibly powerful technologies, it has to be used carefully or it can create more bad than good.

And that’s what I’m seeking to do here at AVC. Create more good than bad. Use the technology carefully and constructively. It has taken me a few years to land here but I’ve been here for a while now and I thought I’d explain it that I understand it myself.

I wrote the post at the bottom and linked here when Elon Musk announced his intention to buy Twitter in late April. I am relieved that Musk has decided he does not want to own Twitter. I never thought he would be a good shepherd of the Twitter network and maybe now we have the opportunity to find a better ownership/governance model for it.

I understand why the Twitter Board and management team feel they must force Musk to perform on the agreed-upon deal. They have shareholders to protect and an obligation to do what is best for them. If Musk really does not want to own Twitter and is not just trying to renegotiate the deal, then eventually both sides will come to some settlement that enriches Twitter and lets Musk out of the deal. That will likely be a lot more than the $1bn breakup fee. I hope that we don’t end up with Musk owning Twitter at a lower price. That would be a bad outcome for the shareholders and for the Twitter network.

I would like to see the Twitter Board and management team continue to press Musk to perform on the deal, and at the same time start working on a plan to decentralize Twitter and move it to the thing it has always wanted to be which is a core communications protocol for the Internet. A first step in that direction would to broadly re-open the API and allow third-party clients to be built on Twitter with a business model that covers the costs of operating the Twitter network. Longer-term, Twitter should move to a fully decentralized protocol, like Bitcoin or Ethereum, but that will take some time to do.

When I read the news a few weeks ago that Elon Musk had offered to buy Twitter, I wrote this:

I continue to believe that decentralization is the right long-term answer for a core communications protocol of the Internet and hope that Elon will think about doing just that once he owns it and is not concerned with the stock price and meeting quarterly revenue targets.

My partner Albert wrote this yesterday:

Albert’s suggestion would return Twitter to where it was a decade and a half ago when it first launched and that would be a fantastic first step towards full decentralization.

I continue to believe that a single person owning one of the most important communications protocols of the internet is a bad idea, but maybe it can be a bridge to something better.

Certainly being a public company has not been the right ownership model to make the big fundamental changes which are badly needed.

Every quarter our firm goes through a process to value our entire portfolio. Those values, on a schedule of investments we publish to our investors every quarter, flow through to our financial statements and capital accounts and establish how much an interest in our partnerships are worth at that time.

We have always taken this process very seriously and approach it with a lot of rigor. Every partner is highly engaged with this process. Although we have a fantastic financial team at USV, we do not simply outsource valuing the portfolio to them because we understand that those who are closest to the portfolio companies will have the best view of what they are worth.

We have a few rules and I would like to share them:

– Be conservative. The auditors try to get us to mark our portfolio up to reflect “market prices” but we prefer to keep our portfolio marked below market prices, particularly in times of market froth. This leads to a fair bit of haggling with our auditors that is mostly a waste of everyone’s time but we feel that it is important to maintain our conservative posture.

– Get Ahead of Market Pullbacks. We like to move quickly to take our marks down when we see the market environment changing. Public stocks often lead private valuations by several quarters so we like to look to public market comparables and mark down quickly.

– Never Mark Higher Than Potential Sale Value. Every time we have a significant M&A exit in our portfolio, I like to check that the proceeds to USV exceed our current mark. I believe we have always met that test. I hope we always do.

– Take Total or Partial Write-Downs In Advance of Problems. When a company is having real issues, we like to take total or partial write downs. We sometimes reverse them if the company recovers. If you might lose money on an investment, it is always best to signal that ahead of time.

– Have Multiple Sets Of Eyes On The Marks. We debate and discuss the marks with each other. This is all about getting multiple sets of eyes on the marks. While the partner closest to the company will always have the best sense of value, debating and discussing often leads to a better answer. We do this in everything we do at USV. It’s a huge part of our culture.

Valuing a private investment or a portfolio of private investments is an inexact exercise. Because there is no liquid market for most of our positions, we don’t really know what someone would pay for them right now. So we do the best we can, take a very conservative posture, and revisit them quarterly. That has worked well for us over the years.

Q1 of this year was a down quarter for USV and we expect we will see additional markdowns in Q2. But our markdowns have not been as steep as the decline in the Nasdaq over the last six months. That is because we maintained a conservative bias throughout the last few years and resisted the efforts of some to get us to behave differently. And that feels good and right to me.

We have been watching our portfolio of ~130 technology companies wrestle with this decision for the last two and a half years. Brought on by the covid pandemic and the work from home moment that it created, there has been a sea change in the way that technology companies organize themselves to get work done.

Ben Horowitz observed this in a piece last week where he described A16Z’s decision to embrace a hybrid model that he called “HQ in the Cloud.”

It turns out that running a technology company remotely works pretty darned well. It’s not perfect, but mitigating the cultural issues associated with remote work turns out to be easier than mitigating the employee satisfaction issues associated with forcing everyone into the office 5 days/week. 

https://a16z.com/2022/07/21/a16z-is-moving-to-the-cloud/

Most people are happier having a lot of flexibility around where they work. We have seen that people who are raising families have benefitted from the flexibility of working closer to where their families are and the ability to be somewhere quickly. But that is only one example of why flexibility around where you work is so powerful. Many job functions require, or at least benefit from, the ability to concentrate without interruption or distraction. A quiet home office is vastly better than a busy open workspace for that kind of work.

And then there is the commute. I am writing this on a commuter train heading into NYC. For a time in my life, I took a train like this into the city every morning at 6am and got back on it to go home at 6pm. It was almost an hour each way, so I spent almost two hours a day, five days a week, commuting. This can be a productive time, particularly if you are commuting on mass transit like I am right now, but many people don’t have convenient mass transit options in their lives and must drive to and from work, often in traffic. Eliminating the need to commute to the office might be the single best reason that people are happier having a lot of flexibility around where they work.

The numbers are telling. As of this spring, only 38% of NYC office workers were in their office on a given day based on this survey by the Partnership For NYC (a leading business group in NYC). The numbers are similar in the Bay Area and Los Angeles. Some cities around the US have much higher numbers but I have not seen any city higher than 70% on this score.

The Partnership concluded that remote work is here to stay:

Remote work is here to stay, with 78% of employers indicating a hybrid office model will be their predominant post-pandemic policy, up from just 6% pre-pandemic.

https://pfnyc.org/research/return-to-office-survey-results-may-2022/

But I want to return to Ben’s quote and talk about the cultural issues. I don’t believe we (the tech sector broadly) have done a good job of “mitigating the cultural issues with remote work.” I think a lot of the challenging morale and retention situations in our portfolio and across the tech sector suggest the opposite is true.

Here is the quandry we face:

People are happier with flexibility around where they work.

Companies, teams, and organizations are happier when people are working together.

Aren’t companies just collections of people? Yes. But groups of happier people are less happy together when they don’t get the face time that makes group dynamics easier.

We all know that people are nicer to each other in person. Email and slack and zoom don’t bring out the best in people. Having a meal together does.

So what should we do about this quandry?

I don’t think the answer is restricting flexibility around where people work. That feels like table stakes now for knowledge workers. I think the answer is figuring out how to get people back together more frequently in ways they want to convene in person.

There are many ways to do this and we have seen some good ones.

At USV, we have two days a week where we meet together and as a group with founders (Mondays and Thursdays) and those days tend to be much more popular to be in the office. We don’t require people to come to the office on those days, but we do see that most people opt into coming in those days. We also make sure to order a great lunch on Mondays and Thursdays. We could and probably should add an after-work happy hour and/or sports teams/leagues to make those days even more attractive to the team. The basic idea is to make coming to the office an attractive option a few days a week.

One USV portfolio CEO suggested a great idea in a CEO zoom we organized on this topic a year or so ago. He said that he wanted his teams to come together for a week at the start of a project and again for a week at the end of a project. He wanted them to be together to kick it off and again to ship it. I think that’s a great idea and have been encouraging the teams that I work with to do that.

Our portfolio companies used to do exec team offsites a few times a year. A few of them are now doing them monthly. That makes sense to me. I can’t imagine an effective exec team that isn’t in person together at least once a month. And yet so many of the exec teams I have exposure to are not spending nearly enough time together right now and have not for the last few years. This same thought can be extrapolated to any team in any company.

Those are just some examples of things that can be done and should be done to get people working together again in an age of remote work that is not going to end. I am sure there are many other great techniques and if you lead a company and/or an HR team, you should be collecting and using as many of them as you can right now.

At USV, we feel pretty strongly that getting people back to working together in person is important to the success of our portfolio companies and the broader tech sector. So we recently opened our new office in NYC that is designed to host individuals and teams from our portfolio and the broader tech ecosystem that need somewhere nice to work together. Think WeWork meets SohoHouse meets VC firm. We are still working out the kinks this summer and plan to open it up more broadly in the fall. Stay tuned for more on that here and elsewhere.

All change has good and bad downstream effects. The broad-based adoption of remote work in the tech sector (and beyond) is allowing people to balance work and home life in ways that are extremely beneficial to them. But team morale and the broader cultural needs of companies have suffered and we need to recognize that and address it. We can’t accept that as the new norm. It is unacceptable the way it is right now. A hybrid model that provides continued flexibility while creating a lot more face time is the long-term answer and we must keep innovating until we find the right balance.

Tech:NYC is the industry association for NY’s tech sector. They play a number of important roles and one of them is to educate and inform about the impact of the tech sector in NY. To that end, they launched a valuable resource last month called Innovation Indicators.

Innovation Indicators is a dashboard that shows the latest data on the impact of the tech sector on the NY economy. Here is some of the data you will find there:

Innovation Indicators will be updated regularly and will be a valuable resource to entrepreneurs, academics, policymakers, journalists, and anyone else who is interested in the development and growth of the tech sector in NY.

When fundraising gets tougher for startups, the existing investors (insiders) will often provide a bridge loan to the company to extend the runway for getting another round done. There is more of this sort of thing happening in today’s fundraising market and I thought I’d share some of the things I have learned about setting up bridge loans.

First, bridge loans are a bridge to something else. Most commonly they are a bridge to a round of financing with new investors (outsiders). They can also be a bridge to the sale of the company. Occasionally, but not often, they can be a bridge to getting cash flow positive. If none of those things is going to happen in a relatively short period of time, then it is a bridge to nowhere and you really want to avoid that. A bridge to another bridge is never a good thing and should be avoided at all costs.

An alternative to a bridge is an “insider round” where the existing investors provide sufficient capital to fund the business for eighteen to twenty-four months. That is a real round of financing and it is not a bridge. While that can sometimes be the right answer for a startup, I strongly prefer bringing new investors/new capital into a company in every financing round. New investors strengthen the investor syndicate which makes the company more resilient. New investors bring new ideas, new experiences, and new sources of funding to the business. New investors in every round are a very good thing and I like to try for that whenever possible.

So let’s say your company really wants to bring new investors into the business with another round, but it is taking longer. But you and your investors are confident that the new round will happen. Then a bridge is a good idea.

Here is how I like to structure a bridge:

• All material existing investors should participate, ideally “pro-rata”, meaning the investors participate based on their respective ownership interests. When you have an existing investor that owns a large percentage of the business and they won’t or can’t participate, you have a problem. You can get a bridge done in these circumstances but it will be painful because nobody likes to “carry” a large existing investor who can’t support the business.
• The ideal structure is a convertible note, with nominal interest, and a discount upon conversion into the next round of financing.
• I like the discounts to be based on the amount of time the bridge note is outstanding. This creates an incentive to get the round done quickly, which is what everyone wants in this situation. It is also easier to explain the discount to the new investors in the next round when the discount is small if the bridge has not been outstanding for long. And it is understandable if the discount is larger when the bridge has been outstanding for a longer time period.
• I like to start with a 5% discount and cap the discount at 25%. The ideal discount is between 10% and 20% and so the time frame for the various discounts should be set with that in mind.
• A very important consideration in structuring a bridge loan is what happens if the company is sold when the note is outstanding. If the bridge documents do not specify anything in this situation, the noteholders will only get their money back, plus interest, in a sale. That is not really appropriate given that they are providing the capital to get the company to a sale, and so I like a premium to be paid in the event of a sale. I like somewhere between 2x and 3x depending on the circumstances.

When it is time for a bridge, the lead investor, which is typically the investor with the largest capital invested and largest ownership, should “step up”, suggest terms, and work with the investor syndicate to come together and provide a bridge loan. That kind of leadership is very important when fundraising gets harder. The startups that have strong leads will do a lot better in tough times and this is a really good example of why that is.

In about a month, an important moment will happen in the world of crypto/web3. The Ethereum blockchain will move from a proof of work consensus mechanism to a proof of stake consensus mechanism. This event is known as “The Merge” in Ethereum land.

There are many reasons why this is an important moment for the world of crypto/web3, but to my mind the most important reasons are:

1/ The Merge reduces the carbon footprint of the Ethereum blockchain very significantly. No longer will miners be required to run large energy-intensive compute facilities to secure the Ethereum blockchain. There are many people out there who have serious concerns about web3 over environmental reasons. We can argue about that and have, but The Merge takes the concern off the table for the largest and most used smart contract blockchain. This is a big deal.

2/ The supply/demand balance of the Ethereum token will change dramatically. In a proof of work system, miners spend significant sums of money to run large energy-intensive compute facilities to secure the chain. They are rewarded with tokens (in Ethereum’s case, these are Ethereum tokens) and they must sell most of these tokens to pay their electric bills and hardware costs. In a proof of stake system, validators stake significant amounts of the base token (in Ethereum’s case, these are Ethereum tokens) and risk losing them if a bad transaction is validated. There is very little cost associated with staking so the tokens that are earned from staking are mostly held/re-staked instead of sold. I have seen a lot of estimates of how this shift will play out and my take is that Ethereum will move from a system that has roughly $20mm a day of structural outflows to a system that has roughly a half a million dollars a day of structural inflows. This shift in supply/demand will likely result in a very different dynamic for ETH/USDC, ETH/USD, and ETC/BTC (and other ETH pairs too) going forward.

3/ Proof of Stake systems (of which they are many in the market already like Solana, Avalanche, etc) are considered more secure because the likelihood of a 51% attack is much lower. I don’t plan to lay out the argument here, but suffice it to say that Ethereum is moving to a consensus mechanism that many consider to be more resistant to attack, making it even more secure than it has been.

There are some interesting side effects of this event. The current Ethereum proof of work blockchain will not go away. This chain, which many are calling ETH POW, could develop a community around it and live on and provide value to developers and others. This has already happened in the Bitcoin community a few times and once before in the Ethereum community. Holders of ETH at the time of The Merge will receive ETH POW tokens as a result of this fork. These ETH POW tokens could be worthless in time or worth a lot in time. There is really no way to know how ETH POW will develop.

The Merge is probably the most important change that a large scaled blockchain has ever undergone. It is not without risk and there is a chance that things will not go smoothly. The Ethereum core developers have been working on this effort for many years and have deployed many testnets and they are confident they can pull this off next month. The crypto/web3 world will be watching closely and I am rooting for them. I think this is a very important moment for the sector and that it will be very positive if things work as planned.

Disclosure: My family and USV have large holdings in ETH and other crypto assets and may continue to add to them in the coming weeks, months, and years.

Joe Hovde wrote a blog post about AVC last week. He analyzed all of the blog posts on AVC to find trends and other interesting tidbits.

He charted the number of posts a month I have written here over the last nineteen years.

He observed:

he treated the blog similarly to a twitter account before Twitter blew up, and then settled in to a daily posting habit for the next 15 years, slowing down a bit in the last 2.

He is correct, AVC was like Twitter in the early days with upwards of four posts a day, which helped me see the value of Twitter when it launched in 2006. Post Twitter, I moved to posting daily for a decade, and then I have gradually slowed the pace to a post a week in the last few years.

Joe also shows how the topics have changed over the years:

While that is directionally correct, I am not sure the TD-IF methodology he uses is that insightful. I think an analysis of the post categories I used during these eras would be more useful. But he is 100% correct that my interests have evolved over the years and my writing has reflected that.

I enjoyed reading Joe’s post. It is a trip down memory lane for the nineteen years that I’ve been writing AVC. Thanks for doing this Joe.

We like to do a lot of deep dives at USV. We pick areas that we think will present interesting investment opportunities over the next five to ten years and then spend time researching them. We like to talk to lots of experts, academics, investors, entrepreneurs, and industry. We generally spend a few months on these deep dives and then present them to the rest of the team so that everyone at USV will be somewhat fluent in the topic area and can flag interesting things that fit what is interesting to us.

Deep dives are not so much about areas we’ve been investing in, although we sometimes do that to refresh a thesis. Deep dives are generally about new areas that are just starting to percolate and appear interesting to us.

This summer all of the USV partners picked one or two (in one case three) areas to do deep dives on. As the market has cooled down, we’ve found the time to take on some primary research.

I’ve been looking into nuclear reactors and batteries with the lens of how small is possible. Could we make a nuclear reactor or battery that fits in our home? Could we make a nuclear reactor or battery that we carry with us like a phone?

I know these ideas seem preposterous but that’s exactly the kind of questions we like to ask ourselves. Often we find out that the idea is as nutty as it seems but we bump into something else along the way that is even more interesting.

So if you know something about my research topic or know someone who does send me an email. I’m all ears.

As we all prepare for the fall back to school/back to work season, I thought I’d touch on a topic that has been top of mind for me for the last six months.

The covid pandemic taught many of us that we can be productive and our companies can succeed in a fully remote work environment. But just because you can does not mean you should.

In the venture capital business, this has meant making investments in teams we don’t meet face to face. For founders, this has meant raising rounds from their offices instead of getting on planes.

As the pandemic has eased and offices have gradually reopened over the last year, we are meeting more founders face to face. But we have not gone back to a world where we meet every team we back in person. I don’t think we will ever go fully back to that world.

But even if the way we work has changed permanently, it does not mean that it has changed for the better. I believe that all change has positive and negative impacts. We can meet more founders than we used to. And founders can meet more investors. That is good. But matches are now being made over video and that is not always great.

We know that humans are better to each other in person. We know that in-person interaction is more meaningful, we are more present, and we connect in more fundamental ways.

So I believe that we must work in the coming years to get out of our offices (or homes) and see each other in person more often.

That means we should run fundraising processes that include meeting in person. We can do the initial screens (on both sides) over zoom, but the final selection process should include face-to-face meetings whenever possible. And board meetings should be done in person at least a few times a year. And those in-person meetings should include some social time in addition to business.

For companies, this means hiring should include a face-to-face meeting. Teams should meet in person regularly. Going to the office should be a regular occurrence for those that live near one.

It is time to get back to the office, at least some of the time. It will make for better business. And I also think it will make us happier at work.

I’ve always been interested in tapping into the “crowd” to fund things that need to happen and that our current institutions can’t figure out how to support. Our investment in Kickstarter back in 2009 is an excellent example of that. In the last thirteen years, Kickstarter has helped direct $6.2bn towards creative work that would not have been funded by the legacy institutions that support creative work. That has led to all sorts of interesting projects which are too numerous to mention here.

Our interest in web3 which started back in 2011 was also grounded in the idea that new forms of funding are necessary to finance innovation and creative work. I am not sure if anyone has tracked how much funding the web3 sector has directed towards new projects over the last decade, but I am certain it is in the tens of billions, if not more. And the vast majority of this funding has come from individuals, not institutions.

As we turn our attention toward climate and the existential threat of a warming planet, these ideas are top of mine for me. And that is why Regenerative Finance (aka ReFI) is so interesting to me. ReFi is an idea, like DeFi, based on a set of web3 technologies and economics, that suggests that efforts to combat climate change can and will be funded by the crowd.

Here’s a great example:

My friends Gordon and Courtney built the New Atlantis DAO to create open public datasets about the evolving ocean climate and funding mechanisms to support work that moves the data in the right direction. If you click on the tweet I posted above, you can learn more about that.

But that is just one of many different ReFi projects that are being started right now.

USV is invested in the Toucan Protocol which is building the web3 infrastructure to bring carbon offsets on-chain and to allow them to be traded/invested/etc using DeFi protocols. There has been some negative press about Toucan, but that reporting misunderstands what Toucan is doing and why it is so important.

It is ironic that many in the environmental justice and climate movements are so anti web3. Because web3 presents a set of tools, technologies, and economics that can and is being used to bring badly needed innovation, innovators, and funds to the fight.

It is my hope that ReFi is the movement that brings all of these folks together and aligns us all to fight the good fight, the necessary fight and that we win this fight.

Nuclear power (both fission and fusion) has the potential to provide much of the energy the world needs without the damaging effects of carbon emissions which are warming our planet.

And yet nuclear power is politically unpopular in many parts of the world and that has led to a massive underinvestment in nuclear power over the last fifty years. It will take a much different attitude about nuclear power among the public before nuclear power can remerge as a major source of energy for the world.

That is but one example of very promising technologies that suffer from negative public opinion.

Web3, which will usher in a different way of engaging with web services also suffers from a negative public perception. And yet a web3 that allows users to control their data with web services that will need our permission to use it offers a radically better model for the web as we know it.

Vaccines, which are one of the most important public health innovations of the last hundred years also suffer from negative public perception. Way too many people don’t trust vaccines and don’t avail themselves of them.

So what can those of us in the business of creating and bringing these important technologies to market do to reverse these negative opinions?

I believe that getting these technologies into market and showing people their benefits is the very best thing we can do.

For nuclear, that means smaller, safer, and more “personal” nuclear power. There are pacemakers that have nuclear batteries in them. Why not put way more nuclear powered devices into our lives and show that the benefits massively outweigh the risks?

For web3, that means shipping applications that mainstream users will use and see the benefits of controlling and provisioning their data. I think gaming and social applications are likely to be the first mainstream web3 applications because not everyone is a trader or investor. Mainstream means our parents and our children.

For vaccines, it means better and more effective vaccines. It means easier delivery (like nasal sprays). And it means less side effects. It’s hard to be enthusiastic about a wellness benefit that makes you feel like shit for a day or two.

All of these industries have large public policy organizations and spend lots of money on changing public perception. I’m absolutely in favor of that.

But there is nothing better than putting amazing technology in the hands of ordinary people and changing their lives for the better. That moves public perception more powerfully than anything else.

At USV, our climate thesis is about both mitigating and adapting to the climate crisis. One way we can adapt to the climate crisis is by building a more resilient energy supply system. Demand Response is one of many approaches that will be necessary to do that.

Demand Response is when consumers of energy voluntarily cut back on energy consumption in reaction to peak demand situations. There are many different ways this is done, and energy companies will often offer economic incentives for their customers to do this.

A great example of this is what happened in the recent heat wave in California in early September. Our portfolio company Leap aggregates energy consumption devices across a partner network via their API tools. They recently wrote a blog post about how their demand response network performed in California during the early September heat wave.

Leap aggregated 21,152 energy consumption devices (smart thermostats, EV chargers, etc) across 24 participating partners in California.

As Leap wrote in that blog post:

On September 6th, the California power grid peak demand hit 52,061 MW, a new all-time record for CAISO. Demand-side reductions were instrumental to preventing rolling blackouts as extreme temperatures caused demand for electricity to spike across the state.

Leap’s network of 21,152 devices was able to curtail about 115MW of that demand at peak. That is about 0.22% of the total peak demand in California and represents the equivalent of a small traditional power plant or large solar farm that would cost tens of millions of dollars to construct.

Leap’s network is not the only Demand Response network operating in California. There are many of them and the total amount of demand curtailed by Demand Response networks was certainly a big factor in avoiding brownouts during the recent heat wave.

If you have smart energy devices in your home or office, you should look into how to connect them to a demand response network. Helping to curtail energy consumption during peak demand situations will be an important part of adapting to the climate crisis.

In the spring of 2014, I walked across the street from our apartment building to our parking garage to get our car and drive somewhere. I can’t recall where I was headed that morning. But as I walked into the garage, I saw two EV charging kiosks had been installed in our parking garage. I turned around and ran back to our apartment building, went back upstairs to our apartment, and told The Gotham Gal that we were getting a Tesla. I had long wanted an EV but the “how do we charge it in the city” problem had been the blocker. Now that was solved.

Maybe a month later, the Tesla arrived and I drove it into the parking garage to show the garage attendant how to drive and charge the car. He sat behind the wheel while I described the features of the car and when I was done he said to me “Mr. Wilson, they have combined an iPhone with a car!“

I love that story because never a truer word has been spoken.

I was thinking about that when I was recently describing how my new Rivian Truck handles off-road driving. It isn’t four-wheel drive, it isn’t all-wheel drive, it is any-wheel drive. There are four electric motors, one on each wheel, and depending on how the truck is performing, different amounts of power are delivered to each and every wheel. The software determines which wheels need what power and supplies it to that wheel in real-time.

Is the Tesla a car or a computer? Neither and a bit of both. Is the Rivian a truck or a computer? Neither and a bit of both.

When you rethink a system, like a car or a truck, as a computer first and foremost, amazing things become possible. Like over-the-air software upgrades which continue to add new features to our Tesla eight years after I drove it into the parking garage for the first time.

We have seen this story play out across many devices in our lives; phones, TVs, watches, thermostats, smoke alarms, light switches, etc, etc. It is an enormous shift in how things are designed and made and it is playing out right in front of us.

I’ve always been a fan of preventive medicine. I like the idea of medicine that stops us from getting sick.

As a child, I was vaccinated for all of the normal things, polio, whooping cough, etc in order to be able to go to school.

Growing up I was vaccinated for tetanus and a few other things.

As an adult, I have gotten a flu vaccine every year for almost forty years. And as a result, I have avoided the flu almost every season.

Last Friday, I biked over to CVS and got my annual flu shot and the new bivalent Covid vaccine.

That Covid shot is my sixth. I started with a J&J in March 2021 when I was skiing in Utah. I got the Pfizer double shot in the summer of 2021, I got a Moderna booster in Jan 2022 a few weeks after I got a mild case of Covid. I got another Moderna booster this past summer, and on Friday I got the new bivalent Moderna vaccine.

I think it is safe to say that I am a believer in vaccine technology and I avail myself of it when it is recommended. I got the double shingles shot a few years ago on my doctor’s recommendation. I had shingles once, in my early 30s, and hope I never get it again. It is painful.

I know that many people don’t trust vaccines. They believe they cause bad side effects. Or they believe they don’t work. Or both.

But I am in the other camp. I am a vaccine enthusiast. I like the idea that we have a technology for instructing our immune systems on how to react to a pathogen. I would like to instruct my immune system as much as possible.

I have enjoyed collecting NFT art over the last few years and I have very much wanted to display it in a physical space vs just having it online on a profile, like this one.

So when we started designing the new USV offices last year we started thinking about NFT screens. We were inspired by these amazing NFT screens in the Bright Moments NFT Gallery in Venice Beach California.

So we bought six large displays for the new USV office, three portrait orientation like the photo above and three landscape orientation and hung them around the new USV office. Here are a few photos I’ve taken of the USV NFT screens over the last few months:

Here is how we manage the screens:

We bought Yodecks, one for each screen. A Yodeck is a raspberry pi-based inexpensive device made for the digital signage market but works great as an NFT player.

There is a web app to manage the Yodecks and you can put all kinds of media onto the device. We chose to make a simple web app that runs a playlist of NFTs on each screen and shows the artist, title, and owner on the bottom left and a QR code to view/buy/etc the NFT on the bottom right.

We curate NFTs into a Google Sheet, we use a script to construct a web page playlist from that curated list, and the Yodeck runs the playlist.

It is really simple and works great.

I recommend the larger (4GB) memory Yodecks for displaying rich media NFTs. I also recommend auto refreshing the web app in the Yodeck interface with some frequency to avoid crashed web pages blanking the screens.

My partner Nick wrote the simple web app and we’ve had a lot of fun getting it working well in our office and curating the playlists. Anyone who can fill out a Google Sheet can curate a playlist in our office. So everyone can and does.

Here is the GitHub repository for the web app that Nick wrote.

If you collect NFTs and want to display them in your home, office, gallery, store, or somewhere else, I highly recommend doing some version of what we’ve done. It’s great to showcase digital art on large format screens.

There are many efforts underway to reduce carbon emissions in order to get to “net zero”. But most climate scientists believe that reducing emissions won’t be enough and we will also need to engage in removing carbon from the atmosphere.

There are natural ways to do this like reforestation, soil carbon, biochar, etc but there are also “engineered” approaches to removing carbon from the atmosphere.

One of the most promising of the engineered approaches to removing carbon from the atmosphere is direct air carbon capture (DAC).

In DAC, air is run through a device which captures C02 and air is returned from the device with less CO2. The captured CO2 is then sequestered underground or used for fuel or something else.

DAC facilities exist and are removing carbon from the atmosphere but the total carbon removal rate from DAC is currently only around 100,000 tons of CO2. It is estimated that by 2030, DAC facilities around the world will be removing 1.5bn tons of CO2. And that number will grow in the decades to come as our planet works to get to net zero and beyond in this century.

I remember hearing that “we’ve spent hundreds of years taking carbon out of the ground and putting it into our atmosphere and we are going to spend hundreds of years taking carbon out of the atmosphere and putting it back into the ground”. I believe DAC will be a big part of how we do that.