The Uber that Never Was

Using the proliferation of newly GPS-enabled mobile devices to enable taxi hailing and beat out stagnant incumbent providers was always going to be a big win for consumers. It provided a better service than existing cabs were going to be able to do for at least several years—cutting out lots of unnecessary overhead in the system.

Had it been built differently, it could have been a better company and honestly I’d like to believe maybe even a more valuable one in the long term. Maybe it would have given up short term hypergrowth—but as the standard bearer, it could have helped the whole market get on this path, instead of just landgrabbing.

It could have championed fair pay and a national minimum wage—incorporating it into its brand. Would that have cut into its growth? Maybe—but in the long run it would have created happier drivers and a base of more loyal customers feeling better about their brand.

It could have made HR, diversity and employee experience a priority from the start. There’s no reason why a culture needs to fall apart at the seams in a hypergrowth startup. The damage done to the company’s brand do to internal scandals and mismanagement was an economic reality that was the result of really short term thinking.

It could have made accountability around driver behavior more of a priority, but instead it pulled out of cities that required higher levels of screening.

Instead, we got one of the most lucrative startup investments of all time from a company built off of a legion of drivers unable to make a living wage after expenses, without benefits, and not even classified as employees even when they work for the company for full time hours.

But, the VCs did their job—as designed. It’s a tricky subject, because VCs only exist to make money—not really to oversee the running of these companies as beneficial to the world, unless it gets so bad that it affects the economic outcome.

Not only that, we have other portfolio companies to worry about. So, the extent to which any one VC would be openly critical of another’s portfolio company or the investors behind it is limited by the fact that you’ve got other companies that need their late round money. I have a portfolio where 50% of the investments have founders that come from diverse backgrounds—and yes, I want them to get money from all of the still-active funds on Uber’s cap table that benefitted from the IPO.

So, the extent to which any one fund will call out the other funds on the cap table that sat quietly on the sidelines for three years after Sarah Lacy called the company out in 2014 is going to be somewhat limited. The company’s misogynist culture was well documented before Susan Fowler tipped the scales in 2017 and I don’t recall a single investor saying anything about it up to that point.

What if the early investors—some of whom had decades long reputations for being on the forefront of social issues—had made all of their companies sign diversity pledges and been active and public from day one instead of quiet for seven years? Perhaps I’m being too cynical, but when the problems get this big, I think I’d rather hear “I could have done more” than “I tried”.

Everyone is documenting through e-mail screenshots how they invested or didn’t invest in the early days of Uber—showing off their access to the early deal as a badge of honor, but where are the screenshots of the 2014, 2015 e-mails to the team showing their concern about the journalist harassment issues, driver earnings, or privacy concerns?

The too little too late around Ubers culture created a missed opportunity to build an empowering industry leader on social issues—because, at its core, matching drivers to more work is a good thing. Everyone could have done more and until we acknowledge that, this will keep happening.

What if all of the early investors in Uber had, as part of their criteria, a vetting of how serious the company was at creating a healthy culture and a company that would be an impact trendsetter—either because they believed that was the best way to create sustainable economic benefits, or because that was required of them by their investors?

That’s who really should be driving this—because that’s who the bosses of the VCs are. If all of these foundations and endowments that fund VCs start asking about what their social impact screens are, because they want to make sure their money is improving the world, VCs will start behaving differently.

What if the kind of portfolio diversity, became a sought out feature that LPs look for and not just a nice to have—not just from diverse managers, but from everyone? How many LPs are asking the top tier funds what they’re doing to enforce and oversee values and culture from a board perspective?

Does any fund that invested in Uber fear not being able to raise their next fund because their underlying companies might not perform well around these other criteria? Nope.

Until the underlying money starts shifting, we’re going to see more of the same—waiting until the problems get really bad, only calling things out when the cats are out of the bad and it’s politically safe to do so, and championing business models that come at the expense of workers and economic equality.

The Terribleness of On Demand: Why I Backed Journey Meditation

When I was growing up, I watched Seinfeld religiously—literally every single Thursday night from the premiere to the end without missing a single one. Not only did I really love the show, but I was that committed to it because of the reinforcement I experienced by being part of a community that also watched when I did. The next day, I couldn’t wait to see my classmates and repeat whatever the key line from the episode was. It was almost more enjoyable to laugh about the episode the next day with friends than it was to watch it on my own the night before.

The other nice thing about live, scheduled TV—something I’ve come to appreciate now—is that sometimes there was nothing on worth watching. I would flip through the channels and if I didn’t find anything to watch, I would turn it off.

When’s the last time you hit up an on-demand streaming service, came up empty, and decided to do something else instead?

What else did I do? I might have read a book, called up a friend, or went outside for a walk—all things that as I evaluate my habits today are probably more productive than watching Iron Man for the 8th time or clip compilations of West Wing.

The behavior is even more pronounced with kids today. They know that Frozen is available to watch anytime the mood strikes them. They can ask Alexa to play their favorite song.

They never have to sit through anything they don’t initially like.

Some of the most enriching and enjoyable activities I experience in my life now are scheduled and they involve other real live people… in person.

I’ve been playing on the same softball team for almost 14 years. We started playing in our mid-late 20’s as a way to meet new people. Now, as the number of kids and significant others rises on our team, it’s our way to stay connected with our friends—it’s a thing we make time for to keep people in our lives.

I’ve abandoned going to the gym anytime I want to work out by myself in favor of group classes at Conbody—where I see a lot of the same people on a regular basis and trainers that I’ve become friendly with. Interestingly, social media enhances my relationship with these real life people—it gives me a window into their life outside of the gym so I can see who really loves their dog or who likes photography. This makes my real life interaction with them more substantive. Making time for Conbody classes in my schedule is not only a great motivator, but it provides important accountability. I’m going to hear it if I don’t show up for a week.

Meditation is a similar experience to working out—anyone can find a video or an app to watch, but the experience lacks for the kind of community that is built up when you gather live humans at a particular time to experience the same moment. For a lot of people, getting stuck in your own head for too long isn’t a positive experience. It might feel lonely or the whole thing might be super intimidating.

That’s why I got excited when my friend Stephen Sokoler told me he was building Journey Meditation. Journey is a live, guided meditation experience and a community of participants. Friendly teachers bring their own style and experience to the session and it’s something you make time to participate in on a particular schedule.

If you’ve ever wanted to meditate, were curious about it, or tried other methods that didn’t stick—consider joining a community where there are no spoilers, because everyone is experiencing it at the same time. Meditation is a practice of calming focus—where you exercise your ability to narrow the beam of sensory overload. Technology especially throws way too many things at you at once, and the ability to let what doesn’t matter or what you find distracting from your mission pass around you is a useful defense mechanism for today’s world.

Plus, there’s nothing to lose—because you can try it free for seven days.

It’s been a pleasure working with Stephen and his team, as well as Brendan Dickinson at Canaan who also invested in Journey’s seed round with me.

Certainty on Demand: How Labor Platforms are Moving to Higher Order Work

Over the years, we’ve seen a revolution in how labor is supplied because of technology.

First, we saw simple outsourcing—taking one person doing one job and moving the job over to a cheaper person in another geography. That only worked because you could connect everyone via technology—routing phonecalls, e-mails, design documents, etc. halfway across the world so that working with someone in India was as seamless as if they were on another floor in your building.

As emerging markets start to achieve more equality with the rest of the world in labor cost, that arbitrage starts to go away. The best people start to charge more, or they simply move to the US, and the time and efficiency cost of working with labor for less complex tasks starts to not be worth it anymore.

To gain next level efficiencies, we worked on breaking up the tasks that go into a job. If you have two people, a highly skilled worker and an entry level person, if you could microchunk the simpler tasks, move them over to the entry level person, and make the highly skilled person not only more productive but probably happier.

That gave rise to platforms like Amazon Mechanical Turk on the simple task side of the spectrum or marketplaces like Upwork and Taskrabbit where you want someone a bit better, but the tasks are still pretty straightforward. In all of these cases, workers are working as individual contributors—while one person might be managing multiple people, the workers are not connected to each other as a feature of the platform.

Uber and Lyft largely work the same way. Driving is obviously a more complex task than identifying whether an image has a puppy in it, but lots of people can do it, and as long as the driver doesn’t crash or kill you on the way to the movie theater, you’re pretty much ok getting anyone.

If you needed anything done by someone not in your employ for anything more complicated, you are basically looking at some kind of agency work—because more complicated work generally requires teams of people working together. For the longest time, teamwork was inefficient—requiring lots of overhead in planning and setup to get a team with a variety of skills all on the same page and working together on a complex project.

Every new job or set of tasks was treated as unique and constructing teams was viewed as a challenge—so agency work from McKinsey to IDEO, or your corporate law firm, was very expensive.

That’s starting to change as companies realize that for many aspects of teamwork, 80% of most work frankly isn’t that hard and looks somewhat similar to a lot of the other work. You could build semi-rigid operating plans that cover most of the jobs that come through.

Take Block Renovation. Block takes the stressful and sometimes disastrous process of remodeling and makes it simple. Instead of going out into the market and getting a contractor, which is essentially an agency, and an architect (another agency), it focuses on the 80% of bathrooms where all you’re doing is just taking out old stuff and putting in new stuff. They preselect the inventory of fixtures, create standardized pricing, and vet for the basics of contractor reliability—has references, is licensed, etc. The bar is lower here because the jobs are simpler—and the worst aspect of having work done, the price negotiation, is done upfront.

They’re eliminating the work that a customer needs to do in a marketplace—the sorting, vetting and labor management—and turning it into a service with something of a guarantee, which puts the marketplace aspects on the backend under the management of the company.

In short, they’re offering Certainty on Demand—a term coined by Michele Serro, the founder of Doorsteps. If your job fits their criteria, they’re selling the certainty that at the end of X time, you will definitely have a new bathroom. That’s much easier to do when you’ve taken apart the process and put it back together again in a way that optimizes for getting to the finish line with certainty over and over again at scale.

Investors took notice and gave the company over $4mm in its seed round.

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It’s a model that is starting to get repeated in the market. Bench looked at the process of bookkeeping, realized that 80% of the clients had the same simple, straightforward set of needs, and built in automation to service them more efficiently and less expensively than an accounting firm that treats every new client’s set of needs from scratch. Noken replaces a traditional travel agency quite effectively for 80% of the trips in the market where the person is going to a new country wants to see all the stuff that everyone agrees you should probably see. At the same time, they figure out which customer decisions are major consumer satisfaction leverage points—like the quality of the hotel. Just a handful of choice can make an automated process appeal to the vast majority of the market. These platforms enable automation to solve higher order problems effectively, driving above market revenues for lower cost tasks. Consumers are thrilled with the experience, which often seems like “magic” that they are being served so well on such “low” costs compared to full service agencies. Axiom does this for law—providing “the same” legal service for way cheaper because it has filtered which tasks it makes sense for it to do and has more throughput than a traditional legal firm.

Wethos is now doing this for a variety of higher order labor outsourcing—like website design, PR campaigns, or social media marketing. Creating a new website isn’t a job for just one person—someone needs to think about the site copy, someone else needs to do the visual design, and someone else needs to do the front end coding necessarily to implement that design.

There are a multitude of higher order projects that fit this same pattern—too complex for just one person, but 80% similarly structured to a million other similar projects that came before it. Instead of paying for a full on agency with all its custom overhead, Wethos can quickly spin up a group of people from its curated talent network, give them a framework for collaboration, and help you accomplish your goal for a serious discount to a traditional agency. The full potential of a creative agency is something you wouldn’t have taken advantage of with a project like this—much in the same way that Block Renovation doesn’t need to hire an architect for every new bathroom they give a facelift to, Moving curation behind the curtain is key, too. Why outsource the selection of the talent to the customer when the platform knows who is actually good?

The exciting aspect of these startups is that they can turn on revenues from day one—they often experience solid margins from the beginning, and those margins improve over time as they expand the number of playbooks they research and implement. Wethos will add more verticals of work. Noken will add more countries. Block will do kitchens one day and the list goes on.

Labor will find itself able to complete more task, more appropriately funneled to the right level of work, and business will get more efficient, thanks not only to technology but to thoughtful process design.

The Smartest Most Unsympathetic Guys in the Room: Tech's Responsibility Going Forward

I'm a bit tired of tweeting, donating, protesting, etc. to end gun violence--so I'll take a different tact in the wake of the Christchurch shooting.

If you're an investor, employee, or just user of a large media distribution network, please ask the hard questions about the responsibilities of those platforms to prevent the spread of hate and violence--again and again until these platforms take their role seriously.

It's just not acceptable that violent people see online platforms as a viable channel for their hate and that, after all this time, the "smartest innovators in the world" still seem at a loss as to how to stop it. How many ways have we heard Youtube tell us that hundreds of hours of video gets uploaded to Youtube every second--and they make it seem super easy, but yet they can't get out in front of people trying to share a mass shooting livestream over and over again? Isn't building an infrastructure to ingest all of those videos with the kind of uptime it has pretty darn hard? Is it really possible that your $500k/year engineers can somehow build the world's best infrastructure but can't be held accountable to figure out how to put a safety on the damn thing when someone wants to use it as a weapon?

This is what happens when your tech largely gets built by people at the top of the social food chain--it escapes their imaginations that someone might want to use it to hurt someone else because they're so rarely the victim of anything.

Diversity isn't about numbers--it's about changing the way we design our products to better our society.

The Achilles Heel of Startup Ecosystems

Across the world, various economic development organizations, government agencies, and non-profits are putting in admirable and well-intentioned efforts to develop startup ecosystems. They’re building campuses, districts, buildings, spaces, as well as running new educational efforts and contests—basically anything they can think of to foster the growth of new and innovative companies.

One thing they’re spending very little time on could wind up being the reason why all of these efforts dry up. Very little time and effort is spent helping professional, full time investors raise capital for venture funds. Everyone is excited when a new company gets funded in their ecosystem, but no one spends much time thinking about where the money comes from to fund that deal.

To care about this issue, you have to believe one thing—that the presence of full time, professional investors in an ecosystem catalyzes funding rounds better than a collection of part time angels, accelerators, and/or government entities that usually don’t lead deals. Accelerators can be great, but they’re not giving companies enough money to achieve the kind of escape velocity needed to get on the radar of national Series A firms that will invest anywhere. At some point, a real seed round needs to get raised—and it needs to get led by someone. Angels will often sit on the sidelines until someone comes in to set the terms and write a bigger check.

Take the example of goTenna, a thriving communications hardware startup located in Downtown Brooklyn that employees almost 50 people. I backed that company in 2013 when it was basically a table top science project, but the key was a series of connections that could have only been possible as a full time investor. I first met Daniela Perdomo, goTenna’s founder, at SXSW. So, number one is that I needed to be at least engaged enough as an investor to be out there attending gatherings of innovative people.

Second, I sought her out at that conference because I saw on SXSW’s intranet that she had listed NYC Resistor, a hardware hacking space and collective, on her bio. Resistor is a bit under the radar as a very cool community—and so being associated with it was a signal that I could have only known about if, again, I spent all of my efforts as a seed investor turning over every rock looking for opportunity. This isn’t the kind of thing your average high net worth individual who occasionally does a deal would know about.

This company would have had a much harder time getting a seed round together had it not been for the presence of professional seed fund investors—and my seed fund wouldn’t exist had it not been for the 50 different individuals and entities who participated in my first fund.

Yet, do you know how many of those investors came through intros made by those who have a strategic economic development interest in fostering the NYC ecosystem?

Zero.

Not a one—and through conversations with other seed funds I know, this is pretty widespread. A lot of these strategic entities have boards that are filled with some of the most successful high net worth individuals, family offices, foundations, etc. but the connections are not being made to support the funds that are supposed to be funding all these local startups.

I was talking with someone who worked for one of these entities recently and they gave me some insight as to why. This person told me that their group was worried about these folks “getting hit up all the time”.

This is exactly the wrong way to think about the economic opportunity presented by innovation. Innovation isn’t a charity—it’s a ticket to a very interesting and exciting future.

Wealthy people trade that wealth for interestingness—and the opportunity to economically participate in the upside of your local startup ecosystem is super interesting to many people. Not only that—these people are doing all sorts of different kinds of deals—and you don’t do deals without deal flow. No one has to say yes, but rather than this seeming like a bother, anyone with an investment mindset is going to welcome the opportunity to roll up their sleeves and dive into thinking about an opportunity.

Not only that, but for many in the real estate world, their economic upside is already tied to innovation. The growth of the local NYC startup community has been a huge moneymaker for many of those folks and can continue to be if the ecosystem continues to roll.

This won’t happen if all the seed funds become institutional, get larger, and stop writing the kinds of small checks that turn science projects into 50 person companies.

The other reason why development related entities that support startups should be making these introductions is because of some of the indirect roles VCs can play in the startup ecosystem. By being full time in the community—they can make connections to help market various programs and opportunities. They can help filter who these organizations should be focusing their time in supporting. They can also help generate interest across different types of wealth through their history of success. There’s no better way to get a room full of people who made money in real estate, manufacturing, or natural resources to care about tech startups than to have a professional investor up in front of a room sharing their approach, their wins and translating the enormous amounts of individual deal risk they appear to be taking into a sensible investment philosophy others can buy into.

Raising for a seed fund is exceptionally difficult. Institutions typically don’t participate until you’ve already got a few funds under your belt, and even when they do, their average check size is often too large for what you’re trying to put to work. That leaves seed funds out trying to gather a random mix of high net worth individuals and family offices, which is a bit like trying to find a needle in a haystack in a dark room with one hand tied behind your back.

It’s not exactly like anyone puts “willing venture fund investor” on their LinkedIn profile.

If you really want a solid startup ecosystem, you need multiple seed funds all coming at the community from different perspectives both funding a wide variety of companies but also working collaboratively together. It’s not just about having one dedicated fund—you need many funds coming together in a marketplace of ideas.

No one is asking the Mayor to tweet their fund prospectus, but hosting informal meetings with members of community economic development boards, looking into small baskets of endowment funding that can go into local early stage funds, and just generally being willing to help because they understand that we can’t fund your local startups unless someone funds us would be enormously helpful.