Censorship, Racial Inequality and Freedom

Venture Trends Newsletter, Issue #21

Palo Alto, 4 June 2020

This week’s venture trends includes news of a crisis surrounding the social media platforms in relation to free speech and censorship. I have penned an essay on the topic:

This week also includes content from Albert Wenger, Tomasz Tunguz, Ben Thompson, Saastr, Christoph Janz, The Information, The New York Times, Axios and many more. The topics are the ones that dominated the week.

Video interview with Andrew Keen here:

Here are this weeks highlights.

Censorship and Free Speech in Social Media Platforms

  • Facebook Ex-employees shun Zuck’s policy - New York Times

  • Tech Readers fail to support Zuckerburg - The Information 

  • Fixing Social Media with decentralized platforms - Albert Wenger

  • In Defense of Mark Zuckerburg - Keith Teare

Racism, the Social Contract and Venture Capital

  • America’s Social Contract is Broken - The New Republic

  • Practical Steps To Combat Discrimination In VC - Crunchbase News

  • Major Venture Capital Firms Announce Initiatives Addressing Racial Inequality - Dan Primack

  • Venture capital reckons with its racial disparities - Axios

Blockchain and Crypto

  • Union Square Ventures, invests into Numerai’s new token sale

  • Andreessen Partner Predicts More Libra-Type Crypto Efforts

Startups and Strategy

  • 5 Considerations on selling your startup - Saastr

  • Leadership & Optimism - Harvard Business Review

  • Are VCs still investing - Christoph Janz

  • Is California declining - Tomasz Tunguz

  • Interview with Wordpress Founder Matt Mullenweg

Early Facebook Employees Disavow Zuckerberg’s Stance on Trump Posts

The New York Times

Facebook’s leadership must reconsider their policies regarding political speech, beginning by fact-checking politicians and explicitly labeling harmful posts.As early employees on teams across the company, we authored the original Community Standards, contributed code to products that gave voice to people and public figures, and helped to create a company culture around connection and freedom of expression.

Little Support for Zuckerberg’s Hands-Off Policy Among The Information Subscribers

The Information

A majority of The Information subscribers responding to our survey think Facebook should attach warning labels or fact-check Trump’s posts. Only a quarter think the social network should leave the posts alone, and 17% think Facebook should take down the incendiary posts. 

Read the transcript of Mark Zuckerberg’s tense meeting with Facebook employees

Vox

In recent days, Facebook employees have shown unprecedented levels of open dissent against Zuckerberg by criticizing his decision not to take down or moderate Trump’s recent posts that referred to the ongoing protests in the US against racism and police brutality by saying, “when the looting starts, the shooting starts.” They’ve also taken issue with the company’s decision to not fact-check the president’s posts that shared misleading information about voting by mail.

In this nearly hour-and-a-half-long meeting, Zuckerberg first explained his process and rationale for leaving the post up, including saying that he didn’t see Trump’s apparent reference to civil rights era segregationist police rhetoric as being “read as a dog whistle for vigilante supporters to take justice into their own hands.” In the latter Q&A portion of the meeting, employees pressed Zuckerberg on how he came to that conclusion and whether there’s enough diversity in the company’s upper ranks. The dialogue in its entirety offers fascinating insights into the thinking of one of the most important business leaders of our time on issues of democracy, speech, and racial justice at a critical moment in US history, and in the face of sharp criticism from many of the people who work for him.

The Social Media Triangle

Union Square Ventures

“Two out of three ain’t bad” is the title of a Meat Loaf song but is also the idea behind triangles: situations in which you can achieve only two of three objectives. The classic example is the idea that in manufacturing you can have any two, but not all three from fast, cheap, good. (*)

Much of the current debate about social media and how to regulate it is people shouting loudly past each other because they are pursuing different objectives in what I believe is a social media triangle:

Freedom: there isn’t a central authority that can exert power over individual expression or appropriate rents generated by contributors to the system.

Openness: anyone can join a globally connected network and express themselves without being trolled or harassed.

Criticism: there is a mechanism by which people get exposed to opposing viewpoints and relevant facts and by which information cascades (especially spread of misinformation) are curtailed. 

All the existing big systems such as Twitter, Facebook and YouTube fail on the first objective, as they are controlled by for-profit corporations, which are further subject to regulation and intervention by governments.

This of course has many people, myself included, arguing for decentralized alternatives. I think we have to be clear though that this will make accomplishing objective #2 harder (although to date the bar set here by the centralized players is extremely low). More importantly though accomplishing #3 will not be possible in a decentralized system.

In Defense of Mark Zuckerberg

Medium: Keith Teare

Of course Mark Zuckerberg is an easy target. Seeming to protect Donald Trump is not a popular step.

We have all learned to understand how utterly self-serving President Trump is, and that Trump will do and say almost anything in order to attempt to keep the momentum in his favor — at least in his own mind.

In that context Zuckerberg is easily portrayed as an unprincipled and opportunistic capitalist, bent on short term advantage. It is almost commonplace to say that Zuckerberg has no principles other than profit and that, unlike Jack Dorsey at Twitter, has no backbone. But the truth is this has to be looked at from the perspective of censorship. Not government censorship, or editorial choice, but a new kind of censorship I will call platform censorship.

America's Social Contract Is Broken

The New Republic - Ryu Spaeth

Current Attorney General William Barr, meanwhile, has delegitimized the protests by claiming that they have been “planned, organized, and driven by anarchic and far left extremist groups using antifa-like tactics.”There may be solidarity among discrete groups; there may be common feeling between like-minded people who, to name one example, agree to wear masks or shelter in place for the benefit of everyone.

Practical Steps To Combat Discrimination In VC: A Q&A With DivInc’s Preston James

Crunchbase News

PJ: At the very basic level, a key challenge is that founders of color/women typically do not travel in the same circles/networks as white venture capitalists or even angel investors.DivInc is on a mission to improve diversity in the tech ecosystem by providing black, brown and women founders with the critical resources they need to grow and scale their tech startups.

Major Venture Capital Firms Announce Initiatives Addressing Racial Inequality

Morning Brew

Zoom out: Venture capital is the coal that fuels much of the tech world’s fire, so improving VC diversity may help encourage equity across Silicon Valley.SoftBank will skip the management fee, and half of all gains will be reinvested into future opportunity funds.

Venture capital reckons with its racial disparities

Axios

Historically black college and university endowments are rarely limited partners in VC funds.Venture capital is not the primary cause of, nor primary solution to, America's racial inequities.

Union Square Ventures, Placeholder among the investors in Numerai’s new $3M token sale

OnCoins

Numerai, the startup known for hosting data scientist tournaments to find the best trading strategies for its hedge fund, has concluded a $3 million token sale of its native token, NMR. Why more European VC firms should launch scout programmes

Andreessen Partner Predicts More Libra-Type Crypto Efforts

pymnts.com

Share Tweet Share Share Share Print Email On the heels of the U.S. Mint’s decision to phase out production of pennies next year, a partner at Andreessen Horowitz, a California-based venture capital firm, said money will be digital by 2030, Bloomberg News reported .While many venture capital firms remain wary of crypto, Bloomberg reported Andreessen recently started a second, $515 million fund, which Haun co-manages, that’s investing in cryptocurrencies and blockchain projects.

What Leading with Optimism Really Looks Like

Harvard Business Review

The authors share four tips for companies that want to make happiness a hallmark of their organizational culture: role model from the top, help employees connect before asking them to change, make changes part of the routine way of doing work, and track outcomes.In addition, the department leaders and staff were tasked with examining how to change existing work routines to create more happiness at work, like starting their meetings with three positives or adopting a praise and recognition program .

Selling Your Startup? 5 Things To Think About

SaaStr

I know it may sound appealing to “Continue Your Vision Inside of Google” or “Go 1000x Bigger Inside of Apple” or whatever, but even if it’s true at some level, it doesn’t matter in the end, 2-3-4 years down the road.But if you do, don’t expect a better, or really, another, offer next year in most cases.

Where to find limited partners and how best to engage them as an emerging VC fund manager? - Emerging Europe

Emerging Europe

However, the fundraising journey for a new fund can be especially challenging due to the lack of a solid track record, making diligence more time consuming and the difficulty in identifying and developing strong LP relationships Requirements by some institutional limited partners (LPs) for a minimum ticket size (say, 10 million euros) and a maximum allocation of the total fund (say 10 per cent), rules out any VCs raising less than 100 million euros before they even begin.The majority of capital invested in start-ups across Europe, including Central and Eastern Europe, comes from venture capital firms, many of which are deploying capital out of their first, second or third fund vintage (and therefore are classed as ‘emerging’).

Are VCs Still Investing?

Point Nine Land - Medium

To try to get a better sense for the state of fundraising I went to Crunchbase , pulled some data on financing rounds of the two months, and compared the numbers to the same period in 2019. Let’s look at what’s been happening at the Series A and Series B stage: As you can see it’s a similar trend, but compared to pre-seed/angel/seed, the drops at Series A/B are somewhat smaller across the board.

myfirstminute in conversation with Matt Mullenweg

firstminute capital - Medium

At Founders Intelligence, we help business leaders reinvent their industries by tapping into insights from the tech and venture world; below are our key take-aways from the conversation with Matt Mullenweg: User empathy should be the primary driver of product development When people click on something expecting it to do one thing and instead it does another, we should change the technology, not the people.Matt is best known for developing the free and open source web software WordPress, which now powers over 30% of the web.

Fundings & Exits – TechCrunch

That meant that the company leaders really needed to work hard to help investors understand the true value proposition that it had to offer, and it made the roadshow deck production process even more critical than perhaps it normally would have been.Rowe Price , perhaps to prepare for working with institutional investors before it went public the next year.

Inside Clubhouse, the elite audio social network for A-listers and investors

Telegraph.co.uk

Clubhouse may have a tiny number of users, but alongside famous Hollywood names, they include some of tech’s top investors – for example, Ben Horowitz of the venture capital institution Andreessen Horowitz, which led the $12m investment in the company in May. Founded by two engineers in San Francisco, Paul Davison and Rohan Seth, its star-studded user base mirrors how apps such as Twitter operated in their early days – as a direct connection to high-profile figures.The best way to describe Clubhouse is as a collection of group phone calls that people can dip in and out of at any time.

A New Month

AVC

After three months of pandemic lockdowns, job losses like I have not seen in my lifetime, and a week of turmoil in our streets and in our hearts, we have the hope that comes with a new day.And then we should seize the opportunity that comes with a new day, a new month, a new set of priorities, to make those changes.

Joe Martin, Founder of Boxycharm

From $375 To The Newest Unicorn In Beauty: How Joe Martin Built Boxycharm.com Without VC

Forbes

Use the Best Bootstrapping Sales Driver : To grow without VC, entrepreneurs need to master two key variables that kill many new ventures – the cost of sales and marketing, and the level and timing of sales.Unicorn-entrepreneurs who delay or avoid VC keep 100% to 500% more of the wealth they create (see The Truth About VC at  www.dileeprao.com ) than entrepreneurs who seek and get VC early, and lose control to the VCs and hired CEOs. In his first venture, Martin got financing from vendors who wanted to liquidate inventory.

Why Mentorship Matters for Startup Founders

Startup Grind - Medium

A great mentor believes in the founder’s bold vision but also asks the tough questions to help founders experiment, solicit feedback, quantify results, and navigate challenging business decisions.Experienced startup founders recruit and retain great mentors because it increases their startup’s odds of succeeding in the long-term.

Startups: Leveraging the Narrative Process to Set Goals and Think Clearly

Startup Grind - Medium

How to Leverage the Narrative Process to Set Goals and Think Clearly If you’ve ever read anything about the internal processes of Amazon, you may know that Amazon eschews PowerPoint presentations in favor of written documents.As such, it’s important to start any narrative with its ‘Purpose’ and some ‘Background.’ In the ‘Purpose’ section, you should tell the reader why you’re writing the document, what information you expect to present, and which topics you will-and will not-touch upon.

Early-Stage VC Is 'Highly' Sensitive to Downturns — Including This One

Institutional Investor

“This higher sensitivity in early-stage VC is noteworthy, as the 10-year fund structure and the private, long-term nature of venture investments might suggest that VC deal activity — particularly at the early stages — is relatively insulated from downturns,” the authors wrote.This content is from: Portfolio Early-Stage VC Is ‘Highly’ Sensitive to Downturns — Including This One The “low correlation” to public markets claimed by venture capital managers may not exist, according to an NBER study.

California Dreaming - Is Silicon Valley Still the Best Place to Start a Company?

Tomasz Tunguz

Over the last ten years, California based startups consistently raise about 35% of the venture capital in the US by round count.The Bear Flag Republic’s share of US startup IPOs has doubled in the last two years from 25% to more than 40%.

Where are Most Unicorns Headquartered?

Tomasz Tunguz

63% of current unicorns, startup companies valued at $1B or more, are headquartered in California.I pulled the unicorn valuation list and analyzed US startups by state.

Why more funds should consider launching scout programmes in Europe

Sifted

Or perhaps this could be explained by the fact that European funds were using alternative methods to identify early-stage investment opportunities, like working with entrepreneurs-in-residence (EIRs), venture partners, or investing via programmes like Seedcamp (which actually predates Sequoia Capital’s scout programme).Over the last few years, we’ve seen a growing interest in angel or scout programmes on behalf of European funds.