10 years in NYC

On Jan 4, 2021, I will be celebrating 10 years of being in NYC, so I guess that makes me a real New Yorker finally. Here is a post on why I moved to this great city. I still vividly remember the day (Jan 4 2011) we landed here on a very cold and windy afternoon. We arrived at JFK with a ton of luggage, two yorkies and there was snow all over the ground and it was in the 30s. Given we were coming from California, we didn’t have the proper attire but we quickly fixed that we a much needed trip to the North Face store in UES.

Thinking back about the past decade for me , family and the startup community, it has been an epic journey. Moving here was the best professional and financial decision that I have made. Both of our children were born in Manhattan, how cool is that for them to say when they get older. We spent seven years in Manhattan and Queens, then moved to the suburbs in New Jersey, have been here for three years now. When we decided to move to NYC, it was a calculated decision as I knew something exciting was brewing in the startup community and I wanted to not only be a part of it but also make a contribution. The growth of the community has been much larger than I anticipated though, I knew it would be big but not this big, what a wonderful surprise. There is a lot of chatter now about what the startup scene will be in NYC and other major tech hubs, given that the pandemic has forced everyone to recognize that we can in fact work remotely and be productive. I remain very bullish on the NYC startup scene, this great city will continue to be magnet for people who thrive in a high pace, high energy environment and are risk takers. The contrarian move right now would be to come here, those are individuals that I would bet on.

Here is some data via NYC HQ’d CB Insights that clearly shows the rapid increase in activity the past 10 years. The first image is amazing, a clear rapid acceleration of deals and dollars. The second image shows an acceleration of median and mean deal sizes. The third image shows which investors were the most active during the stated time periods, it a high quality list of VCs, so of which aren’t based here but are heavily investing in this community (YC, SV Angel, Founder Fund). NEA didn’t have an office here at the time but now have an established team on the ground. General Catalyst had maybe one person on the ground ten years ago if I recall correctly and have since built a team locally.

Startup growth by state and region

Given covid-19, we have been pushed to WFH environment for people in the startup world. The longer we stay in WFH, people are either contemplating about moving or have already moved to other regions. I was interested to comparing various states and regions from today to ten years ago, as a way to think about what region/state might breakout in the next 10 years.

The data below is from Pitchbook. I took a look at companies that are HQ’d in these regions and have raised an aggregate of $1M+ of funding from VCs. I compared two date periods: Jan 1 2009 through Dec 21 2010 and Jan 1 2019 to Dec 5 2020 (today’s date). Here is the data.

I have been living in the NY Metro area now for 10 years, so the NY numbers were not a surprise, almost a 4x growth in 10 years, truly remarkable at the growth but also aggregate, being in the #2 spot overall. Was surprised to see the growth of Chicago / IL region. In terms of the future, I believe that Atlanta has a lot of upside and could catapult to the 5th position. There is a lot of chatter of about Texas and Florida, there are a fair amount of startup people moving there from the Bay Area and NYC, so there certainly is a chance that they could move up quickly. I do wonder if these moves are temporary due to COVID or are permanent. Texas and Florida are a bit challenged as they have a handful of large cities within the state which makes impacts the concentration of talent. If you look at the top regions above , it is usually one large market in a state that has the concentration of talent. In Texas, you have Austin, Dallas, Houston, etc and in Florida, you have Miami, Tampa, Orlando, Jacksonville, etc. It will be interesting to see who move up the chart in the next 10 years, who do you think has the best shot, feel free to post your thoughts on twitter or comments section below.

How To Help In Georgia Runoff

Who: you and Jon Ossoff and Reverend Raphael Warnock

What: Runoff for two seats in the U.S. Senate

When: January 5, 2021 is the final day of voting. Last day to register to vote is December 7, 2020. In person voting starts December 14th.

Where: State of Georgia

Why: Two seats are available for the U.S. Senate in the State of Georgia. Democrats are in a position to take control of the Senate

The Senate currently has 50 seats for the Republicans and 48 seats for the Democrats.

To recap the November 3, 2020 election. In Georgia, 5 million people voted out of 7.6 million people who were registered to vote, which was an amazing turnout (66%)!! The put into perspective, the entire state of Georgia has 11 million people and there are still people who haven’t registered to vote as of yet. The goal in the next few weeks is to get more people registered but more importantly, we need to have a great turnout like we had on Nov 3, if you are going to focus on organizations to contribute to, that is where we need the money.

The two candidates for the Democratic party are John Ossoff and Reverend Raphael Warnock, see links below:

There are four organizations that are helping get people registered and/or helping get folks out to vote: Voter Participation Center, BlockPower, The New Georgia Project and Fair Fight, see descriptions and links below. I’m going to contribute to several of these organizations and have already contributed to both candidates. In terms of dollars, I’m going to be contributing more with BlockPower, as they are less well known than the others and there only focus is to increase voter turnout, which is critical for this race. I hope you can donate and/or volunteer for this candidates and/or organizations.

Jon Ossoff (Democrat)

follow: https://twitter.com/ossoff

contribute: https://secure.actblue.com/donate/ms_hp_ossoff?refcode=ms_hp_fr_2019.09.10_x_homepage_x__x__x

volunteer: https://www.mobilize.us/electjon/event/362688/


Reverend Raphael Warnock (Democrat)

follow: https://twitter.com/ReverendWarnock

contribute: https://secure.warnockforgeorgia.com/page/s/website_vol

volunteer: https://warnockforgeorgia.com/take-action/


Voter Participation Center

The Voter Participation Center is a U.S.-based 5013 non-profit organization that seeks to increase voter registration among young people, people of color, and unmarried women, a group it calls “The Rising American Electorate

follow: https://twitter.com/VoterCenter

donate: https://www.voterparticipation.org


BlockPower

BlockPower is a nonprofit focused on increasing voter turnout among Black citizens who don’t vote regularly.

BlockPower pays people in majority-Black neighborhoods to be “Voting Ambassadors” and talk with their friends, family members, and neighbors about the importance of voting.

follow: https://twitter.com/BlockPowerUS

donate: https://blockpower.us/


The New Georgia Project

THE NEW GEORGIA PROJECT IS A NONPARTISAN EFFORT TO REGISTER AND CIVICALLY ENGAGE GEORGIANS.

follow: https://twitter.com/NewGAProject

donate: https://newgeorgiaproject.org/

Fair Fight

We promote fair elections in Georgia and around the country, encourage voter participation in elections, and educate voters about elections and their voting rights. Fair Fight brings awareness to the public on election reform, advocates for election reform at all levels, and engages in other voter education programs and communications

follow: https://twitter.com/fairfightaction

donate: https://fairfight.com/

Reminder of the Nov 3 election, as of now, the state has flipped from red to blue!!

VC SPACs

2020 has been the year of SPACs led by Venture Capitalists (VC) firms and individuals. Some people have compared SPACs to ICOs, in terms of hype and also potential outcome (ICOs flared up with a lot of drama and gov’t scrutiny). I believe SPACs can play an important avenue for specific companies, typically those that are more capital intensive and take a while to get to maturity. From a retail perspective, it provides an opportunity for investor to get access to technology companies that still have a lot of upside. I’m bullish on SPACs that are led by established technology focused VCs who have a track record of returning capital to their existing investors in established venture funds.

Here are the active SPACs in market today, including the amount of it:

VC firm led SPACs

Ribbit Capital $350M – https://www.renaissancecapital.com/Profile/LEAP.U/Ribbit-LEAP/IPO

FirstMark Capital $360M – https://www.renaissancecapital.com/Profile/FMAC.U/FirstMark-Horizon/IPO

Lux Capital $300M – https://www.renaissancecapital.com/Profile/LUXAU/Lux-Health-Tech-Acq/IPO

General Catalyst $500M – https://www.renaissancecapital.com/IPO-Center/News/72692/Health-technology-SPAC-Health-Assurance-Acquisition-files-for-a-$500-millio

Social Capital – 5 SPACs for a total of $3.2B+ – https://www.renaissancecapital.com/Profile/IPOF.U/Social-Capital-VI/IPO

Altimeter $450M – https://www.renaissancecapital.com/Profile/AGCUU/Altimeter-Growth-Corp/IPO

Dragoneer $600M – https://www.renaissancecapital.com/Profile/DGNR.U/Dragoneer-Growth-Opp/IPO

Social Leverage $300M https://www.renaissancecapital.com/Profile/SLAC.U

Science $270M https://www.renaissancecapital.com/Profile/SSAAU/Science-Strategic-Acq/IPO

Fifth Wall $300M https://www.renaissancecapital.com/Profile/FWAA/Fifth-Wall-Acquisition-I/IPO

Lerer Hippeau $200M https://www.renaissancecapital.com/Profile/LHAAU/Lerer-Hippeau-Acquisition/IPO

Tribe Capital $200M https://www.renaissancecapital.com/Profile/ATVCU/Tribe-Capital-Growth-I/IPO

Individual VCs (but not their firms) SPACs

Reid Hoffman (of Greylock) $600M https://www.renaissancecapital.com/Profile/RTP.U/Reinvent-Tech-Partners/IPO

Bradley Tusk (of Tusk Ventures) $300M https://www.renaissancecapital.com/Profile/IGACU/IG-Acquisition/IPO

Brad Feld (of Foundry Group) $225M https://www.renaissancecapital.com/Profile/CRU.U/Crucible-Acquisition/IPO

Jeff Ransdell (of Fuel Venture Capital) $200M https://www.renaissancecapital.com/Profile/MAQCU/Maquia-Capital-Acq/IPO

I know of several other VC led SPACs coming online. More to come for sure.

Relative to all the SPACs that have been raised this year and previous years (see below), the number and total value of VC related SPACs is tiny percentage. Image is via https://www.spacresearch.com/

Insights from the SOHN Conference

I attended the virtual SOHN Conference, which was focused on the healthcare space, there were 200+ people in attendance. Having seen this tweet by Josh Wolfe at Lux, one of the event organizers, I was intrigued with the lineup below. Typically these virtual conferences don’t have a cost or very minimal cost but this was an exception as they were raising money for a an important cause: “All proceeds of the September 23rd gathering will support Rockefeller University’s Dr. Michel Nussenzweig, who is developing a novel therapy for COVID-19”

I was hoping to see the battle royal between Keith Rabois of Founders Fund and Zach Weinberg of Flatiron Health, those who are on twitter too much would get the context 🙂

The battle didn’t materialize as they did separate fireside conversations with Josh, but I did find the talks interesting and gleaned some tidbits from it.

Zach, Co-Founded Flatiron Health, which was a massive $2B+ exit and many of us in NYC tech scene are proud of, he is also an active early stage investor. Zach indicated will spend the next 10 years of his career in healthcare. On the investment front, he indicated 30%-40% of his angel investments are in healthcare but that he is sector agnostic, he just wants to fund the best Founders out there. Josh asked Zach about what trends he is seeing with Founders that he is backing, which he answered, that Founders are carrying the traits of having both technical and business skills now (called them athletes who stretch up and down), something that was less seen in the past. Zach did address the beef with Keith, made his point that randomization is critical in healthcare trials but not critical in the software business (A/B testing/optimization), so that is likely the driver of the disagreement between the two. His perspective is that covid cases will spike this fall/winter 😦 . Lastly, during the opening remarks of the fireside chat between the two of them, Josh acknowledged that he passed on the investment opportunity in Flatiron Health and that is was a big miss for him. Josh had a hard time getting comfortable with a team that has a background in advertising/media (Founding Invite Media) jumping over to healthcare, oops 🙂

Josh had a conversation with Keith Rabois, who has a deep background in operating companies, being a Founder and Investor. Keith helped form Opendoor, which just went through a SPAC, but there wasn’t time to elaborate on that event. One of the topics they discussed is distributed teams who are working from home due to Covid, both indicated that teams that are able to get together in close physical proximity will have an advantage over teams that fully distributed. Josh asked him about being wrong or missing things, Keith did indicate that he had an opportunity to invest at the Seed and Series A round in Airtable and that it was a huge miss for him. Keith also declared that he is the most active lead investor in venture over the past seven years.

Josh also spoke with Bob Nelson of ARCH Ventures Partners. Bob is one of the most successful VCs out there and recently had a massive $8B+ exit in his portfolio. Bob also believes the covid cases will spike this fall/winter but is confident that there will be effective therapeutics available by year end. He invests in really far out ideas but one area that he is currently focused on is the supply chain and manufacturing in the life science sector. I’m not too familiar with that sector but that is an area I would be interested in hearing more about from Bob, but there wasn’t enough time to dig into that during the chat.

There were more tidbits shared, but these are some of the points that stood out to me. It was great to hear from all of them as they have great insights on the market and hopefully a lot of money was raised for Rockefeller University’s Dr. Michel Nussenzweig, who is developing a novel therapy for COVID-19.

Defund Police / Abolish Police ?

After the killing of George Floyd by the Minneapolis Police, there have been protests all over the world. One of the themes coming out of these decentralized protests, is a call to action to defund the police and/or abolish the police.

For many, the words “abolish the police” is jarring as they might tie that to the demands of anarchists and it seems like a very extreme perspective, I can understand that.

For those who believe defunding the police and/or abolishing the police is an extreme view, this post is written to connect with you, please keep an open mind and continue to read. I will not give you the answers to these questions below , but I ask you to do the work and look up the answers, as I believe they are informative. My purpose isn’t to change your mind but to have your explore these questions with an open mind.

I used to believe that defunding the police or abolishing the police was an extreme view but I have slowly changed my mind. When I was younger, I was in favor the California “Three Strikes You Are Out” bill. I also voted for laws the provided more funding for the police and laws that provided funding for new prisons. It has taken years for me to get to my current perspective, it was through conversations, listening and visiting a prison, that enabled a change of view.

Here are some questions that are worth exploring, the answers are available via online research and provide insights on my position.

Who created the police?

When was the police created?

What is the purpose of the police?

What the is breakdown of the race of the people that are being arrested?

What are the offenses of the people who were arrested?

What is the breakdown of the races that are in jail?

What are the offenses of those that are in jail?

How many rape kits have not been tested by the police?

How much money is spent every year on the police?

What training do the police receive and are they trained to handle mental health causes, domestic disputes, those that are acting suicidal, deescalation tactics?

How many hours of training is needed to be a police officer? and how does that compare to other industries where people are licensed? (barbers, beauticians, architects, electricians, etc.)

Has crime gone down/up in this country? What is the trajectory?

Who monitors the police? Why do you think it is set up that way?

Have police been reprimanded for breaking any laws? If so, to what extent?

Please visit this Twitter thread as well. Thank you for reaching this far.

https://platform.twitter.com/widgets.js

New June

Over several days in June 1-5 2020, several significant events occurred for our Democracy, I can’t recall a week in my lifetime where many positive events took place in a short amount of time. While we are taking some steps forward, there is a long way to go still.

It’s worth noting that the month of June is celebrated by many as this is when Juneteenth takes place , which commemorates the ending of slavery.

The events:

Steve King, who has long been considered to be one of the most racist politicians, has lost his seat in the state of Iowa, a key battleground state for the election of the US Presidency.

Ella Jones, was elected the Mayor of Ferguson Missouri. She is the first woman and first black person to be elected the mayor of that city. Ferguson is known as the location of the murder of Michael Brown, by the hand of police. Major protests ensued following the killing and Ms. Jones winning the seat is directly connected to those protests.

The Governor of Virginia, Ralph Northam, announced the removal of iconic Richmond statue of Confederate Gen. Robert E. Lee. As you are aware, the Confederate army lost the civil war , as they wanted to maintain the horrific status quo of enslaving black people in the United States of America.

The remaining three policemen who were complicit in the lynching of George Floyd were charged for their cowardly act.

Americans and people all over the world (Paris/Berlin/Amsterdam/etc), took to the streets and protested in unison, the killing of George Floyd and institutionalized behavior of police brutality.

James Mattis publicly spoke out against the President

The Mayor is Washington D.C. put up a Black Lives Matter sign and street name next to the White House

We have momentum, lets keep this going. Register. Vote. Protest. Donate. Volunteer.

Consider joining me in donating to these organizations:

https://colorofchange.org/

https://www.joincampaignzero.org/

What is happening?

As of May 9, 2020, there are over 276,000+ dead people worldwide from the Cornavirus / Covid-19, 78,000+ of those deaths are in the US and numbers are still climbing with no end in sight.

Unemployment in the US is over 20% and increasing, with over 30M people out of work.

There isn’t a vaccine for the virus, there is a lack of rapid testing, a shortage of masks/PPE and continuing shortage of Lysol/disinfectant on store shelves .  There is no clear picture as to what the new normal will look like or a real plan on how we deal with the virus in the US.

Despite all the horrific news that is impacting millions of people, the US stock market (Dow and Nasdaq) have rebounded (for now) and many companies are performing well.  It has been challenging for me to reconcile what is occurring in the public markets with what is happening to Americans (and global population), it just doesn’t make sense to me.  How can the stock market go up with all this carnage?

Over the past week, it has become more clear to me why there is a disconnect between the reality we are living and why many stocks have rebounded quickly.  I’m not a public markets expert at all but I do know that a driver of the market has been digital acceleration across many facets of our lives.  I arranged a presentation, primarily to gather my thoughts and it is more of storyboard for personal consumption, so it isn’t perfectly formatted but wanted to share with others as I think some will find it interesting.  This is a working document for me, so will likely be adding data/charts/quotes as time goes on.  If there are other quotes, stats, charts that are relevant to this presentation, please let me know via comments below, twitter and/or email.

Plaid, the non-obvious unicorn

If you follow the fintech/VC scene, there was a huge exit announced yesterday evening, Plaid was purchased for $5.3B by Visa.  There are some really interesting facts about Plaid that should be pointed out.

The Founders, Zach Perret and William Hockey, didn’t go to Stanford/Harvard/MIT/etc or worked at Facebook/Google/etc.  People love to do pattern recognition when picking Founders, but the Founders went to Duke/Emory and were consultants at Bain, great places but not what many VCs consider “top tier”.   If you talk to folks in the Bay Area, consultants is like a four letter word, eeck.

They only have 450 employees.  Much of the headcount was added over the past two years, see below.  You don’t need to have bloated company to create enterprise value, more isn’t better.

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When the Founders started the company in 2013, fintech was NOT a hot sector, see funding history below.  The fintech startups that were considered “hot”, were mainly consumer facing, not those that were B2B and working with banks, which is what Plaid does.

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It was great to see Spark Capital, the first firm to lead a round in the company, give recognition to their departed colleagues, Mo Koyfman and David Haber.  You don’t always see firms doing this.

Kudos to the early investors for making a contrarian bet and returning a lot of money to their LPs.  Per Pitchbook:

“The company raised $2.8 million of Seed funding led by Spark Capital on July 31, 2013, putting the company’s pre-money valuation at $10 million. Amit Avner, Benjamin Cirlin, David Tisch, Nat Turner, Spark Capital, Google Ventures, New Enterprise Associates, Felicis Ventures, Homebrew Capital, Box Group and Zachary Weinberg also participated in the round.”

I don’t know the Founders, but folks say a lot of great things about them and while I take Glassdoor ranking with grain of salt, the employee feedback has been very positive, maybe you don’t have to be an @$$hole to be successful.

The success of Plaid is a boom for the fintech startup scene, which has been yearning for some exits, I expect to see more large exits in this space in 2020.

Side note, I had Plaid speak at a fintech conference I hosted in 2015 in NYC, the lineup was pretty killer IMHO

Bushwick > DUMBO

On Friday, I went out to visit Bushwick, which is a neighborhood in Brooklyn, NY.  Since moving to NYC nine years ago, I’ve only been to Bushwick three times, so I’m definitely not an expert on what is happening there but I am more excited about the opportunity after this visit.

I sent out a tweet on Friday, which essentially said that Bushwick is going to be a better startup scene than DUBMO, another neighborhood in Brooklyn.  When I moved to NYC,  DUMBO had a lot of energy, buzz and momentum as a emerging startup hub.  A lot of folks were very bullish on how the startup community would play out there, I didn’t think it has met the expectations for a few reasons.

One, DUMBO has become very expensive to live, so if you are looking to attract startup talent, it is hard to reside there (2 bedroom condo starts at $1.8M).  The surrounding neighborhoods are getting expensive too.

As Jay-Z said :

“Wish I could take it back to the beginnin’
I coulda bought a place in Dumbo before it was Dumbo
For like two million
That same building today is worth twenty-five million
Guess how I’m feelin’? Dumbo”

DUMBO is a great neighborhood, partly given the spectacular views as it is perched on top of the East River;  the views of the sunset, various bridges, Manhattan, New Jersey, Statue of Liberty, etc are amazing.  This leads to the second point, DUMBO is limited on how it can expand from a real estate perspective given the river, the bridges and parks nearby.  Third, access to the neighborhood is a bit limited given its location and available subway lines, served primarily via the F line.  DUMBO has had a lot of success, so not a knock on them, it just didn’t deliver on the hype that many built up.

Lets me highlight why I’m excited about Bushwick.

One, it has some nice wind in the sails on the tech side, which is primarily driven by crypto related ConsenSys being HQ’d there, they have 150 people working there and a lot of tech people have visited the neighborhood to visit them specifically.  The jury is out on what ultimately happens with ConsenSys, as they betting on Etherum ($ETH) blockchain, but that is separate topic and blog post.  In addition, there is a lot of potential on what the Bushwick Generator is working on, check it out.  A big driver is that Netflix is building a huge production studio, over 161,000 square feet, in the neighborhood, which is going to be a boost for media startups or for startups selling technology to studios.   Bushwick has a ton of manufactures, many of which will likely move or close, which will provide a lot of available commercial real estate, especially if more rezoning is completed.  Similar, on the residential front, there is a lot of development happening and is a lot more affordable than DUMBO.  Access to the neighborhood via the L line makes it a lot more accessible for people coming from Manhattan or deeper in East Brooklyn (L line serves 300K people every day).   The surrounding neighborhoods are a good feeder for creative talent, primarily Willamsburg and Bed-Stuy.  There are lot of great ingredients in the neighborhood, lets see if they can cook up something special.

A side note, Bushwick might be the best location to get people from other neighborhoods that don’t know about the thriving tech community in Manhattan.   Would love to see marginalized , low-income, minority community integrated to what is brewing on the tech front in the neighborhood.  If the Bushwich tech can deliver on this, they build something really special.