24 4 / 2014

Over the last three months, my partner Adam Ludwin and I have been spending a good chunk of our time researching and thinking about decentralized technologies and networks.  I’ve just started my quest to understand exactly what’s going on but believe ‘decentralization’ will emerge as a mega trend in the next two to three years.  We’re not only seeing decentralized innovation around the block chain and mesh networks like OpenGarden (global) and NYCmeshnet (local) but also around storage and content delivery. My Spidey Senses tell me implications of this trend will fundamentally transform the way in which we all connect to the internet and exchange value.  It’s pretty hard not to get excited about this shift. 


RRE is actively making bets in these types of emerging technologies so I’m trying to learn as much as I can by devouring blogs, talking to founders and listening to podcasts every night.  In my quest to learn the basics, I recently stumbled upon a great podcast titled Let’s Talk Bitcoin and was pleasantly surprised when I discovered the latest installment features David Irvine, Founder / CEO of MaidSafe, one of the leading proponents for decentralized computing. In his talk David explains why decentralized architectures are good for the internet, the story behind MadeSafe and his philosophy on building a platform that creates rather than extracts value.  

For those of you who don’t have thirty minutes to listen to David’s talk here are some of my favorite nuggets:  

“I then realized that if all the computers are connected together and we’re suppling all of that computing resource, then the people should have full rights to use that. And the deal of joining that (system) shouldn’t be between you and a third party company. It should be between you and the internet. So we came to figure what we have to do is get all the computers to join together in some kind of global cyber brain. Kinda like what the block chain does for trade.  It’s really to get all the computers to join together in a manner that they could pervade all of the world’s (computing) resources to every individual person. And that’s really where the MaidSafe story started.” 

“With MaidSafe there were three really hard things that I needed to solve. The first was how do you make data so secure that no one can read it except for you and how would you store that data on multiple computers that switch on and off the whole time. The second part was really what does a cyber brain do, what’s it look like. How can all the computers recognize each other to be able to tell is a computer good or bad, is it doing a good or bad job? That autonomous network was a very difficult part of it. And the last problem which was probably the toughest one when we have highly encrypted data on a network that’s autonomous and looks after itself: how do you login to it when there are no servers and location to send a message to?” 

“This system when you join, nobody knows you’ve joined. The network is aware that you’re there and it can communicate information to your friends that only you know. And that’s really the way the internet should have been at the very start. It set out to go that way but it fell by the wayside when companies came in and started to try monetize this sort of system and advertise to you and take your information and steal your data and spy on you. That’s not a very natural way to run an internet. It’s a terrible way to run a network. The network should be run for the people by the people.  That’s what MaidSafe has been able to achieve.” 

“If we make this free to the whole world then the other five billion that don’t have internet connectivity are people who are off the internet can all come back on it. If someone down in Africa or some other third world country can get access to this data and access to this communications system and start curing diseases then that’s a phenomenal return for us.  And that’s as important to us as a solid business model.” 

As you can see, David’s vision for the internet is guided by strong values such as freedom, accessibility, affordability, privacy, community and fairness. Based on his talk and my preliminary research, I believe we’re still in the very early stages of this shift given the infrastructure is just being deployed. To steal an analogy from the nineteenth century, the steam rail locomotive has been designed but not yet optimized and the rails haven’t been laid down. All that said, the advancements in decentralized technologies like the block chain are evolving so rapidly that it’s hard to keep up. That’s what I love about it.  Everything feels so fluid and new. In the coming months and year, I plan to spend a fair amount of my time diving deeper into decentralized technologies, the numerous whitespace opportunities and the existing industries that will likely fall victim to their diffusion. If you’re also passionate about the impact that this trend will have on our world, I’d love to hear your thoughts and explore where we are heading with all of this. 

14 4 / 2014

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Today we are launching Update My VC - a modern guide on how founders can easily update and keep in touch with your investors. At RRE we always strive to provide the best possible support to our companies, but we realize you’re slammed building product, growing your business and recruiting the best talent. We also understand the last thing you want to think about and have time for is sending a lengthly update to your investors. 

To make this process easier for you, we’ve created a Tumblr blog that outlines the perfect investor update. Our template includes Highlights, Lowlights, Product, KPIs/Core Metrics, Business Development, Hiring, Financing, Press, Help Wanted, and Kudos. The site even has an Email Template button that auto generates a blank investor update as a new email message.

Additionally, we’ve included a library of resources including useful blog posts, slideshares, and Quora discussions.  Our expectation is to update this library so the most useful content and advice is all in one place.  We view this as an evolving site and community so feel free to share your questions, comments and feedback with community@rre.com

Finally, I’d like to thank Amrit Richmond and Kane Hsieh from the RRE team for their help in launching this site. 

08 4 / 2014

"Who knows what force gnaws at us, telling us that our accomplishments, no matter how sensational, are not enough; that we need to do more?"

-Arthur Ashe, Days of Grace

04 4 / 2014

Since I joined RRE Ventures last fall, I’ve spent time researching mobile on-demand services that we are able to access with a push of a button. “On-demand mobile services” (ODMS) is a broad category so I believe it’s important to start with a definition.  My friend Semil Shah defines ODMS as “apps which aggregate consumer demand on mobile devices, but fulfill that demand through offline services.”  I’ll take it one step further:  ODMS deliver a “closed loop” experience by collapsing the value chain including discovery, order, payment, fulfillment (offline but within owned network) and confirmation. In the pre-mobile era we had to search yellow pages (or google), find a provider, call  or email that provider, wait to connect with someone, schedule a convenient time, hope the provider arrives on time, and then pay with a credit card or cash.  Thankfully, a new array of mobile services removes all of that friction we were used to experiencing. Welcome to the uberification of our service economy: 

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As you can see from the market map, we now have on demand services for: 
The “uberification” of our economy signals a fundamental shift in the way that local services are discovered and fulfilled.  In my research I’ve mapped more than 70 startups redefining the segments listed above.  Since 2009, Venture Capitalists have poured more than $1.75B into these companies (excluding Groupon, Seamless and OpenTable) and I expect this will continue to grow.  This funding figure is conservative since CrunchBase, Mattermark, and CB Insights don’t have complete funding information for each company. Additionally, I excluded more than 30 “online to offline services” that haven’t launched a mobile app but likely will in the next twelve to eighteen months. Some of these services include MakeSpace, Paintizen, Boxbee, Moveloot, Homejoy, Manicube, and Blue Apron. Finally, I decided to exclude apps where demand is fulfilled digitally such as Doctor on Demand.  

Despite being three to four years into the ODMS trend, I’m super bullish on the road that lies ahead and I believe there are still plenty of untapped opportunities. For example, apps are emerging in categories like elderly care, medicine, real estate, and security. Additionally, there are a variety of B2B services emerging such as office cleaning, supply replenishment, tech support, and fleet management.  Finally, a sub-trend I’m observing is startups that create “infrastructure” to power a variety of ODMS. One company that comes to mind is YC-backed Rickshaw which solves delivery and logistics for a number of the services in the above market map.  

There are common challenges when building an ODMS such as offline logistical complexity, low barriers to entry, customer acquisition at scale, and aggregation of regional / local supply (see Exec and Cherry for case studies).  But the entrepreneurs and companies that overcome these challenges await numerous multi-billion dollar market opportunities.  The U.S. economy is largely driven by the service sector so it’s only a matter of time until all of our services are accessible via our mobile devices.  The implications are huge for large companies like Google and Craigslist as well as thousands of regional and local service providers.  Hundreds of billions of dollars of enterprise value are up for grabs.  At RRE, we have been spending a lot of time thinking about ODMS and would to hear how you think the space will evolve over the next 12 to 24 months. 

15 3 / 2014

I just finished reading the book, The Everything Store, which chronicles the life of Jeff Bezos and the rise of Amazon.  Towards the end of the book, the author, Brad Stone, tells a story about Bezos’s quest to understand how Amazon could be admired and not hated as the company raced past $100 billion in annual sales.

As part of this process, Bezos delivered a memo, titled Amazon.love, to his leadership team at a retreat. In essence, this memo outlines how he wants Amazon to conduct itself and be perceived by the world.  Bezos wrote, “Some big companies develop ardent fan bases, are widely loved by their customers, and even perceived as cool. For different reasons, in different ways and to different degrees, companies like Apple, Nike, Disney, Google, Whole Foods, Costco and even UPS strike me as examples of large companies that are well liked by their customers.” 

Bezos then went on to make a list of why some companies are admired and others are loathed: 

  • Rudeness is not cool. 
  • Defeating tiny guys is not cool. 
  • Close-following is not cool. 
  • Young is cool. 
  • Risk taking is cool. 
  • Winning is cool.
  • Polite is cool. 
  • Defeating bigger, unsympathetic guys is cool. 
  • Inventing is cool. 
  • Explorers are cool. 
  • Conquerors are not cool. 
  • Obsessing over competitors is not cool. 
  • Empowering others is cool. 
  • Capturing all the value only for the company is not cool. 
  • Leadership is cool. 
  • Conviction is cool. 
  • Straightforwardness is cool. 
  • Pandering to the crowd is not cool. 
  • Hypocrisy is not cool. 
  • Authenticity is cool. 
  • Thinking big is cool. 
  • The unexpected is cool. 
  • Missionaries are cool. 
  • Mercenaries are not cool. 

Jeff’s “cool” list struck a nerve because I’ve recently been spending a lot of time thinking about branding in the context of both RRE and the companies I’m fortunate enough to work with. Building an enduring and admired company regardless of stage and sector requires not only innovation but also strong values and morals to guide the way. 

05 3 / 2014

One of my 2014 goals is to read at least one book per month. To help me achieve this goal, I decided to buy a Kindle Paperwhite so I could read on the subway and have an uninterrupted reading experience while at home.  Like many people, I’ve struggled reading books on Apple devices because the screen isn’t optimal and I’m constantly being distracted by notifications. The Kindle, which I think is the ultimate single purpose device, has changed my life because I’ve honestly never enjoyed reading so much. While I still have ten months until I achieve my goal, I’ve already read more books in 2014 than I did in all of 2013. Here are the books I’ve read so far this year: 

1. The Art of Power by John Meacham (link)

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2. Status Anxiety by Alain de Botton (link)

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3. Hatching Twitter by Nick Bilton (link)

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4. Startup Boards by Brad Feld (link)

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5. Made In The USA by Vaclav Smil (link)

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27 2 / 2014

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Last month, RRE Ventures announced we would be sending a NYC-based entrepreneur to this week’s Female Founder Conference hosted by Y Combinator. I’m delighted to announce that Marianne Bellotti is the deserving winner based on the dozens of entries we received.  

Marianne is an engineer specializing in data infrastructure. She started hacking at 13 years old, finding a security vulnerability that allowed her to remove the parental controls her father had carefully installed to keep her from exploring the web unsupervised. She has worked for Radio Free Europe in the Czech Republic, Fair Trade organizations in West Africa and currently advises the UN as a Senior Software Developer. In April of 2013 she cofounded Exversion. By combining specially developed version control tools for data, Exversion allows developers and analysts to leverage the considerable amount of data being collected and released on the internet today. A true “github for data”, features like a RESTful API and access control allow users to clean and collaborate without jeopardizing the integrity of their data.

Join me in congratulating Marianne. We sincerely hope you have an amazing experience and build many meaningful relationships this weekend. 

26 2 / 2014

This post originally appeared on The New Hive a year ago this week.  

Being an investor isn’t easy for a number of reasons. But the hardest part for me is saying “No.” I meet hundreds of entrepreneurs each year, and at RRE Ventures we invest in only a small percentage of them. VC’s generally invest in less than 1% of companies they meet. So if you do the math, you know I have to say “No” a lot.

There are countless reasons why we choose not to back an early stage venture. Market size. Wrong team. Bad timing. Competition. Traction. Lack of monetization. Little or no competitive advantage. Outside our expertise. Valuation. I could go on. 

But regardless of whether I exchange a quick email with a founder or spend hours getting to know him or her, passing is the worst. It’s the only part of my job that I truly hate. And it’s not just because I lose the option to invest down the road. I hate passing because my daily work with entrepreneurs has given me a good look into their struggles…what founders sacrifice daily to ensure that their company is in a better place tomorrow than it is today. It becomes personal, emotional…it’s only human to feel for the founders who…

  • Sleep on an air mattress or couch
  • Max out credit cards
  • Part ways with a cofounder
  • Drop out of school
  • Borrow money from family and close friends
  • Spend days, weeks and months on the road
  • Miss family events and moments
  • Relocate, thousands of miles from home
  • Fight for a spot in an accelerator
  • Sell a product that doesn’t yet exist
  • Lay awake at night
  • Spec, wireframe, code for countless days, nights and weekends
  • Hear family and friends call you crazy
  • Overcome nerves before big meetings
  • Work around the clock for virtually no pay
  • Interview dozens of candidates to fill an open role
  • Kiss away virtually all of your “free time”
  • Pull all nighters to hit deadlines
  • Hear “NO” over and over again
  • Have an investor back out in the 11th hour
  • Stalk bloggers to get some press
  • Volunteer at a conference to get free entry
  • Miss another vacation
  • Sell prized possessions for startup capital
  • Wait for months to get that first contract signed
  • Quit your well paid job
  • Pivot again to nail product market fit
  • Show up to work when you’re sick or down
  • Are the first one in and the last one out
  • Pray you’ll get that lucky win
  • Cold call hundreds of potential customers for just one “Yes”
  • Break up with your significant other 

I think you get the point. Founders endure enormous struggles just for a chance to pitch an investor like me. I recognize it, and I take it very seriously.  So much is on the line.  

That’s why it’s so hard for me to say “No.”

24 2 / 2014

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On Friday, all of my meetings were downtown but I had a two hour open window in the late morning.  Instead of schlepping to RRE’s office in Midtown East or sitting in a noisy Starbucks with spotty wifi, I decided to give Breather a try.  Breather is a newly launched mobile app that provides on-demand rooms in large urban areas. It is the brain child of Julien Smith a Montreal-based writer and entrepreneur.  The service currently operates in Montreal and NYC, costs $25 / per hour and is available seven days a week from 6am to 10pm. 

The main goal of the app is to provide a quiet place to hold a meeting, work in private or just take a break for an hour or two. While the service is perceived as “odd,” novel and unproven, I can imagine a growing market for this type of flexible space. Demand will likely come from small companies with virtual organizations, freelancers, visiting executives and employees and even tourists. The timing for something like Breather to emerge couldn’t be any better since asset sharing, co-working and freelancing have become important pieces of the innovation economy for nearly a decade. 

The end-to-end experience was seamless, easy and surprisingly enjoyable. After I downloaded and registered for the app, I was able to easily search for Breathers in my area. As you can see the NYC locations are conveniently placed in SOHO, Flatiron and Penn Station: 

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Because my meetings were south of 14th St., I selected Soho and then received information on the location and the space: 

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I was then able to select the desired day and time using a simple interface:   

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Once the booking process was complete, I received a text message confirming the transaction and the countdown began: 

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When I arrived at the location in Soho on Friday morning, I checked into the space using the app: 

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Within a second of confirming my check in, I received an in app message containing a unique door code for this one time-use: 

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I then entered the code into the keypad found near the door handle: 

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And voila! I found peace and quiet for a two hour email blitz:

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The space was well designed, comfortable and very clean. It could comfortably accommodate eight people since there is a table for six, two lounge chairs and a love seat. The room also contained an “idea wall” for brainstorming, pens and paper, Tootsie Rolls, free wifi for surfing the web, plenty of plugs and a magazine rack.  Because I was running around all morning and wasn’t prepared, the only two items I wish the room had was a bathroom (located in the hallway) and some bottled water. image

When I was finished using the space, I cleaned up after myself, packed my bags and just walked out the door.  That was it. Very simple without any friction. Julien and his team nailed the product from a UX / UI perspective but wish they made the app a bit more social and rewarding so I can earn incentives by getting my friends and co-workers to sign up.  I’m sure that will come shortly.  

Since Breather just launched in NYC, the service still has a lot to prove but I’m excited to see how this experiment unfolds. My four biggest questions are related to price, utilization, cleanliness and vandalism. Is $25 per hour too much when competing with a free alternative like Starbucks? Can Breather acquire affordable leases and maintain a high utilization rate to make it a viable business? How does the company ensure cleanliness? Finally, will the spaces be used for illegal activities that will undermine the spirit of the community and company?   

Overall, the process was very ‘Uberesque’ which is the highest praise one can give a mobile service these days. I’m excited Breather chose NYC as a test market because I personally have a business need for this type of on demand space. If they can answer some of the big questions I noted above, I believe Breather has the potential to be a viable business and a valuable service in major urban centers around the globe. 

03 2 / 2014

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Several years ago I started teaching a class on raising seed capital at General Assembly and Skillshare.   I initially created the class because friends and founders were coming to me for fundraising advice and I was answering generally the same questions over and over.  

A few months ago, I realized the initial slideshare that I used for dozens of classes was good as long as there was a voiceover but not great as a standalone guide. I decided to speak with a handful of my students and founders to see what they would want in a v2 fundraising resource.  

After many conversations and too many nights and weekends in Powerpoint, I’m excited to share with you the next version of my guide to raising seed capital  In this slideshare, I answer the follow questions in an easy to digest format:  

  • What is seed capital?
  • Why should I raise?
  • What is the current state of the seed market. 
  • Who invets in startups?
  • How do I prepare?
  • What is the close process?
  • What are some useful resources?

I sincerely hope you find this resource valuable and educational. I plan to update the deck on a regular basis so any feedback is encouraged and appreciated. Finally, if you’re a founder and about to go through the process, be a little patient and stay optimistic. Fundraising is often a long and stressful but very rewarding journey.  Good luck.