Tech Market Analysis


Why Uber Should Go Public


Posted on Feb 6, 2016 | 0 comments

“It has been said that democracy is the worst form of government, except all those others that have been tried” – Winston Churchill.

At the Upfront Summit this past week there was an electric interview of Fred Wilson led by well-researched and artful Dan Primack of Fortune Magazine that ended up making news.  The newsworthy moment was when Fred expressed his view that companies like Uber should go public. The video of the interview will be available this week and I will talk more about it then because the interview covered so many great topics

Is it a bad thing when public stocks get eviscerated (given USV has a few that have)?
Why could blockchain be a foundational technology that yields many great companies?
Do you need to be technical to be a great VC?
Why AI is an important technology and investment area
And there was a great discussion about generational change at Venture Capital firms handled so well by Benchmark & Sequoia and how Fred is thinking about it.

But back to the blockbuster – Fred’s emphatic response that founders have a responsibility to go public and that liquidity is good for all stakeholder (employees, investors & the company). I agree whole-heartedly with Fred. But I’d also like to add one further thought. I actually believe being public offers a long-term competitive advantage for the best run companies (and Darwin deals with those that aren’t meant to be special long-term).

The reason I enjoy reading so much about history & politics is that I find it gives you more context for thinking about organizing principles in life. One such brilliant book was

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“This is the year the tortoise may gain on the hare.”

There are a lot of data points that one can observer to get a sense of the venture capital markets – both LP fundings into venture and VC financings of startups. They point to some widely known facts: financings & valuations are up massively over the past 7 years and non-VC money has entered the system.

But these data points are often lagging indicators and perhaps a better barometer of the future would be to gather data on VC perceptions in the market right now. Of course sentiment can swing wildly with new information but I set out to take the pulse of the market as we enter 2016.

[note: to follow realtime conversations & engage with me on Facebook you can follow me here: https://www.facebook.com/msuster ]

State of the Market

The full presentation & data can be downloaded on SlideShare.

Let’s start with some basic data most people know.

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Venture Outlook 2016


Posted on Oct 18, 2015 | 0 comments

There is a lot of uncertainty about the state of the private, high-growth technology markets and the venture capital markets that underpin them. On the one hand innovation is clearly at an all time high unleashed by smart phones, fast telecom networks, social networks that spread commerce and the fact that we are all one click away from buying things on Amazon, Apple, Google or PayPal.

In 2012 I penned an article called “It’s Morning in VC” that highlighted many of these trends and in 2014 I published a series of data in this VC SlideShare presentation of “Why VC is Much More Compelling” now, which updated many of our earlier analysis.

Fast forward 3 years and looking out into the 2016 horizon, what do I see? Perhaps I would call it “Mourning in VC” as in mourning for the days of rational behavior.

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I’ve heard many investors and some executives repeat the mantra, “Never offer exclusive deals,” and since this blanket statement is generally bad advice I thought I’d offer the less conventional but I believe more practical version of why exclusive deals can actually be a huge bonus for a startup and why I actively encourage them.

So that we’re speaking the same language I would define “exclusive” as a period in which your company is prohibited from doing business with certain customers or business partners, which is why many incorrectly assume this is necessarily bad. I need to give credit for the topic to PR Malloy who Tweeted me this question. I must admit I discuss this very frequently with portfolio companies but hadn’t thought to write about it.

@msuster looking for an inspired post on when an exclusivity deal (w/ major industry player) works (cons as well) for an early stage tech co

— PR Malloy (@diddly_do_indy)

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Obsession. The drive to succeed at all costs. When second place isn’t good enough because we live in winner-take-most markets. The desire to be better than anybody else in one’s field.

This blog started from a series of conversations I found myself having over and over again with founders and eventually decided I should just start writing them.It would often make my colleagues laugh because they’d hear me like a broken record and then the next week read my ramblings in a post.

Last week’s obsession was about obsession itself.

10 days ago I saw the film, Whiplash, which is one of my favorite films of the year. I would be shocked if it doesn’t win at least one Oscar. I won’t have any spoiler alerts here, don’t worry.

The protagonist in the film, Andrew, is a drummer and the story is his experiences in his freshman year of one of the most elite music conservatories in the country. He wants to compete to be the lead drummer in the competitive ensemble and study under Terence, an obsessive instructor who is hell bent on winning competitions for the school.

I absolutely loved the film. I loved the music.

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The story on Uber has been written about ad nauseam, which is why I’ve been reluctant to weigh in. But enough people have asked my perspective so I decided to weigh in with my non-conformist view. I love Uber and I don’t believe there has yet been a real scandal. Grievances – yes. But scandal? I’m not so sure.

For starters – I’m not an investor in Uber. I wish I were. I had a chance to be in the seed round and unfortunately didn’t do so. I didn’t invest in any of their fine competitors either like Lyft, Sidecar, Hailo, etc. I have no overt biases (we all have subconscious ones). I’m not friends with Emil Michael – I’ve never met him.

This post is nothing than a bystanders attempt to put this situation in perspective.

1. Is Uber evil?
No. That’s silly. It’s a fantastic startup that has had a amazing impact on society. It’s not just about people like me who can (and do) turn up in nearly any city in the US and immediately book a ride. On that front it has revolutionized my life. No more 45-minute queues at airports, no more stuck in the rain with no ride.

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