Read more about how we’re thinking and where we’re investing here.

<span style="font-weight: 400;">Over the past few days, you may have seen news about </span><a href="https://celo.org/"><span style="font-weight: 400;">Celo</span></a><span style="font-weight: 400;"> cross your newsfeed. </span> <span style="font-weight: 400;">Today, we are thrilled to share that we were early backers in the company (since January 2018) as it announces it’s most recent </span><a href="https://www.wsj.com/articles/startup-celo-aims-to-make-crypto-accessible-to-mainstream-mobile-users-11554204600?mod=searchresults&amp;page=1&amp;pos=1"><span style="font-weight: 400;">$30M raise</span></a><span style="font-weight: 400;"> led by A16z and Polychain.</span> <span style="font-weight: 400;">What exactly is Celo? It’s an open and open-sourced crypto-powered global payment platform that enables financial applications to be built on top of it. Applications can range from easier cash transfer programs to P2P lending, collaborative small-scale insurance, digital assets and wallets. Celo is mobile-first, and as such, it is far more accessible and user friendly than the average typical crypto wallet. </span> <span style="font-weight: 400;">Celo is putting its initial focus on those who need it most: emerging markets where people have limited access to traditional banking services. The company’s mobile-first approach is important since </span><a href="http://documents.worldbank.org/curated/en/332881525873182837/pdf/126033-PUB-PUBLIC-pubdate-4-19-2018.pdf"><span style="font-weight: 400;">two thirds of the “unbanked” population</span></a><span style="font-weight: 400;"> now have a smartphone.</span> <span style="font-weight: 400;">Users can get access to Celo tokens via a mobile app. Celo creates a cryptographically secure mapping of phone numbers to wallet addresses so that people can easily find wallet addresses of people in their address book.</span><span style="font-weight: 400;"> Sending payments is as easy as sending a text</span><span style="font-weight: 400;">.</span> <span style="font-weight: 400;">The platform has two tokens: Celo Gold can be earned for decentralized verifications. Celo Dollar is a stable coin that is pegged to the dollar. The stable coin is particularly important given the volatility of cryptocurrency and emerging markets.</span> <span style="font-weight: 400;">We have been excited about this investment for two key reasons: the team and their vision.</span> <span style="font-weight: 400;">Celo’s strong global team knows how to make complicated technology easy to use. Co-founder Sep Kamvar </span><span style="font-weight: 400;">developed the first efficient algorithm for adding personal context to the internet search process. Until recently, he has been a computer science professor at MIT and invented EigenTrust, a well known algorithm for managing reputation and trust online.</span> <span style="font-weight: 400;">Co-founders Rene Reinsberg and Marek Olszewski previously founded local business data startup Locu, an MIT spinout that was sold to GoDaddy Inc. Marek made influential contributions to the field of efficient deterministic multithreading while at MIT, and Rene has worked in global capital markets at Morgan Stanley and at the World Bank’s Venezuela office.</span> <span style="font-weight: 400;">And as a sign of just how small and connected our world is, we at Version One share alma maters with the co-founders: Boris and Rene at </span><span style="font-weight: 400;">WHU – Otto Beisheim School of Management a</span><span style="font-weight: 400;">nd Angela and Marek at the University of Toronto.</span> <span style="font-weight: 400;">From the start, we understood how well Celo’s vision aligns with our </span><a href="https://www.versionone.vc/philosophy/"><span style="font-weight: 400;">core belief</span></a><span style="font-weight: 400;"> in technology’s ability to solve problems and democratize access to resources. As we mentioned earlier, Celo’s initial focus is on those who need this technology the most…the large populations on this globe who are unbanked or underbanked. For more on this, we’ll let Celo’s powerful words speak for themselves:</span> <em><span style="font-weight: 400;">“We believe blockchain technology is one of the most exciting innovations in recent history and as a team we look to push the boundaries of what is possible with it today. More importantly, we are driven by purpose -- to solve real-world problems such as lack of access to sound currency, or friction for cash-transfer programs aimed to alleviate poverty. </span><b>Our mission is to build a monetary system that creates the conditions for prosperity for all</b><span style="font-weight: 400;">."</span></em> <span style="font-weight: 400;">We are so proud to be a part of Celo’s journey and mission.</span> <span style="font-weight: 400;">You can stay up to date with Celo’s progress on </span><a href="https://twitter.com/celohq?lang=en"><span style="font-weight: 400;">Twitter</span></a><span style="font-weight: 400;">. </span><span style="font-weight: 400;">To learn more about the technology under the hood, check out Celo’s </span><a href="https://storage.googleapis.com/celo_whitepapers/Celo__A_Multi_Asset_Cryptographic_Protocol_for_Decentralized_Social_Payments.pdf"><span style="font-weight: 400;">whitepaper</span></a><span style="font-weight: 400;">. And of course, the team is </span><a href="https://celo.org/jobs"><span style="font-weight: 400;">hiring</span></a><span style="font-weight: 400;">! </span>

<span style="font-weight: 400;">We’re already a full quarter into 2019, and as expected, it’s shaping up to be a busy year. The Version One portfolio is filled with great startups doing incredible things, and here’s a selection of what has been happening (that we can talk about publicly):</span> <b>Company news and product releases:</b> <a href="https://www.outreach.io/"><span style="font-weight: 400;">Outreach</span></a><span style="font-weight: 400;"> launched Galaxy, the app marketplace for the modern sales team. With Galaxy, Outreach is more deeply integrating their partners, so users can handle all of their sales actions in a single workflow within Outreach. You can read more about Galaxy on their </span><a href="https://www.outreach.io/blog/introducing-galaxy"><span style="font-weight: 400;">blog</span><span style="font-weight: 400;">. </span></a> <span style="font-weight: 400;"><a href="https://dropoutlabs.com">Dropout Labs</a>, focused on secure, privacy-preserving machine learning, </span><a href="https://medium.com/dropoutlabs/introducing-dropout-labs-d1b96f638ae2"><span style="font-weight: 400;">introduced themselves to the world</span></a><span style="font-weight: 400;">.</span> <a href="https://www.coinbase.com/"><span style="font-weight: 400;">Coinbase</span></a><span style="font-weight: 400;"> is bringing together its custody services and its OTC desk to allow users to </span><a href="https://www.theblockcrypto.com/2019/03/13/coinbase-has-unveiled-the-next-phase-of-its-otc-roll-out-and-it-shows-where-crypto-trading-is-heading/"><span style="font-weight: 400;">trade directly out of cold storage</span></a><span style="font-weight: 400;">. This means that clients no longer need to transfer their assets online and onto the exchange to complete an OTC trade. </span> <a href="https://placenote.com/"><span style="font-weight: 400;">Placenote</span></a><span style="font-weight: 400;"> SDK 1.6.12 is out with newer, better localization algorithms, iPad 2018 compatibility and a new virtual notes app. You can get it here:</span> <a href="https://t.co/LF4xMi5nkH"><span style="font-weight: 400;">placenote.com</span></a>. <a href="https://blockstack.org/"><span style="font-weight: 400;">Blockstack</span></a><span style="font-weight: 400;"> has a full lineup of community events across the globe - you can check out future events </span><a href="https://community.blockstack.org/events"><span style="font-weight: 400;">here</span></a><span style="font-weight: 400;"> and keep up-to-date with the </span><a href="https://blog.app.co/new-dapps-february-27th-2019/"><span style="font-weight: 400;">new Dapps being launched</span></a><span style="font-weight: 400;"> on its platform.</span> <a href="https://www.frankandoak.com/"><span style="font-weight: 400;">Frank and Oak</span></a><span style="font-weight: 400;"> now has a Style Plan, which is a</span> <a href="https://www.usmagazine.com/shop-with-us/news/frank-and-oak-winter-2019-subscription-box-review/"><span style="font-weight: 400;">subscription clothing box</span></a><span style="font-weight: 400;">. Frank and Oak stylists pick out what you need (there’s plenty of room for customization). Try on the clothes, keep what you like and return the rest.</span> <a href="https://www.clio.com/"><span style="font-weight: 400;">Clio</span></a><span style="font-weight: 400;"> launched </span><a href="http://www.abajournal.com/news/article/clio-releases-new-client-management-platform"><span style="font-weight: 400;">Clio Grow</span></a><span style="font-weight: 400;">, a new CRM to help lawyers track potential client leads while collecting</span><span style="font-weight: 400;"> data on those leads and client retention. Clio Grow (which is through the company’s acquisition of Lexicata) makes the client intake process more efficient, automates tasks so lawyers can focus on what matters, and provides the insight to ensure the future success of their business.</span> <span style="font-weight: 400;">Last but not least, </span><a href="https://medium.com/@ddebow/a-big-thank-you-to-the-helpful-community-46ec9380d12b?source=twitterShare-a47dd2092fc6-1548711106&amp;_branch_match_id=618572054743319365"><span style="font-weight: 400;">Helpful joined Shopify</span></a><span style="font-weight: 400;">. The whole team </span><span style="font-weight: 400;">is joining the </span><span style="font-weight: 400;">fast-growing Shopify presence in Toronto, and we’re so excited and proud to see where this new path goes!</span> <b>Fundraising and accolades</b> <a href="https://www.abstract.com/"><span style="font-weight: 400;">Abstract</span></a><span style="font-weight: 400;">, a versioning platform that helps designers work like developers, </span><a href="https://techcrunch.com/2019/03/20/abstract-a-versioning-platform-that-helps-designers-work-like-developers-raises-30m/"><span style="font-weight: 400;">raised $30M</span></a><span style="font-weight: 400;"> in Series C funding, led by Lightspeed Venture Partners.</span> <a href="https://www.gencove.com/"><span style="font-weight: 400;">Gencove</span></a><span style="font-weight: 400;"> raised $3M to expand its genome sequencing platform, including developing new applications for agricultural markets, as well as expanding Gencove’s commercial operations in human genetics. You can read the press release </span><a href="https://www.prnewswire.com/news-releases/gencove-raises-3m-investment-led-by-spero-ventures-to-expand-genome-sequencing-platform-300811820.html"><span style="font-weight: 400;">here</span><span style="font-weight: 400;">. </span></a> <a href="https://www.clio.com/"><span style="font-weight: 400;">Clio</span></a><span style="font-weight: 400;"> was (once again!) named one of</span> <a href="https://www.clio.com/about/press/clio-once-again-named-one-of-canadas-best-managed-companies/"><span style="font-weight: 400;">Canada’s best managed companies</span></a><span style="font-weight: 400;">. Congratulations for this well-deserved honor!  </span> <a href="https://www.linkedin.com/in/medinism/"><span style="font-weight: 400;">Manny Medina</span></a><span style="font-weight: 400;">, cofounder and CEO of </span><a href="https://www.outreach.io/"><span style="font-weight: 400;">Outreach</span></a><span style="font-weight: 400;">, was a winner of a</span> <a href="https://www.seattlebusinessmag.com/profile/2019-executive-excellence-awards-manny-medina-outreach-inc"><span style="font-weight: 400;">2019 Executive Excellence award</span></a><span style="font-weight: 400;">, which recognizes leaders in Seattle-based companies.</span> <a href="https://blockstack.org/"><span style="font-weight: 400;">Blockstack</span></a><span style="font-weight: 400;"> was included in PowerToFly’s </span><a href="https://blog.powertofly.com/best-work-from-home-companies-2626617776.html?utm_source=social&amp;utm_medium=partnercontent&amp;utm_campaign=2019BestRemoteCompanies"><span style="font-weight: 400;">“Best Work-from-Home Companies of 2019”</span></a><span style="font-weight: 400;"> list. The site noted Blockstack’s flexibility, premium healthcare and </span><span style="font-weight: 400;">positive work culture centered on humility, ownership, and collaboration.</span> <span style="font-weight: 400;">That’s it for this quarter. Stay tuned for more news and announcements in the months ahead. </span> <span style="font-weight: 400;">You can follow us on Twitter to stay up to date: </span><a href="https://twitter.com/VersionOneVC"><span style="font-weight: 400;">https://twitter.com/VersionOneVC</span></a> &nbsp;

<span style="font-weight: 400;">Crypto / blockchain has always been as much of a business model innovation as a technical innovation…</span> <ul> <li style="font-weight: 400;"><i><span style="font-weight: 400;">Technical innovation</span></i><span style="font-weight: 400;">: running a decentralized ledger / platform at scale</span></li> <li style="font-weight: 400;"><i><span style="font-weight: 400;">Business model innovation</span></i><span style="font-weight: 400;">: issuing tokens to give users / participants in the platform a stake in the project</span></li> </ul> <span style="font-weight: 400;">By issuing crypto tokens, platforms gave early users an incentive to help bootstrap the service </span><span style="font-weight: 400;">and solve the often inherent chicken and egg problem. These tokens act as value exchange / currency within a platform and often give owners specific rights like voting on forks, etc.</span> <span style="font-weight: 400;">In the ICO bubble of 2017, nearly every crypto project introduced a token (often for fundraising purposes only). Yet very few ever answered why they actually needed a unique token for their project and how value would actually accrue to this token. </span><span style="font-weight: 400;">Over the last few years, several concepts have evolved on how tokens can actually accrue value over time, with the underlying question always being if more people want to hold that specific token versus selling it (which means that the price should increase).</span> <b>Store of value</b> <span style="font-weight: 400;">The first and oldest idea around value accrual is centered around the store of value concept. If people think that a certain currency / token is a good store of value, that will drive demand in such token / currency. Bitcoin is the best example, but it’s also clear that very few tokens will have a shot at such a position (with ETH being probably first in line to join Bitcoin).</span> <b>Working capital</b> <span style="font-weight: 400;">The second concept is centered around the idea that I have to hold a token in order to participate in a platform or financial instrument and I have chosen to call it a working capital token. There have been two use cases that have evolved around working capital tokens.</span> <span style="font-weight: 400;">The first use case is staking. </span><span style="font-weight: 400;">Users on Numerai stake NMR tokens on their predictions as a way to express the confidence they have in their machine learning model. If their predictions are good, they earn money and their NMR is returned. If their predictions are poor, their NMR is destroyed. Users on the prediction market Augur stake the native token REP to create a bet, dispute a bet’s outcome and purchase participation tokens. For every action they take that uses REP, they are literally staking their reputation on it.</span> <span style="font-weight: 400;">The second use case is using a token as a collateral in financial instruments, mostly in the Ethereum ecosystem. Decentralized finance platforms have recently gained in importance (especially Maker) and the amount of ETH locked up in these instruments is increasing significantly (see </span><a href="https://defipulse.com/"><span style="font-weight: 400;">https://defipulse.com/</span></a><span style="font-weight: 400;">).</span> <span style="font-weight: 400;">I predict that both working capital use cases (staking and collateralization) will become significantly more important in the near term, while additional working capital use cases might emerge.</span> <b>Governance</b> <span style="font-weight: 400;">The last concept on how tokens can accrue value is centered around governance: the basic premise being that token ownership determines who has the power to change the rules of a platform, and under which conditions. The crypto fund Placeholder has created a whole investment thesis around</span><a href="https://www.placeholder.vc/blog/2019/2/19/cryptonetwork-governance-as-capital"> <span style="font-weight: 400;">governance tokens</span></a><span style="font-weight: 400;"> and their role in a network.</span> <span style="font-weight: 400;">The big question is how valuable a governance token is if losers of a token vote can simply fork? That answer most likely depends on the nature of the protocol. If the underlying platform acts mostly like an open-source software library but “states” are not stored on the protocol level (e.g. 0x - the decentralized exchange protocol - acts like an open-source software library with instructions on how to build a decentralized exchange, but liquidity is built by relayers on top of 0x), then there are no network effects on the protocol level and there is little cost to fork the network (and hence little value to a governance token that would prevent such a fork).</span> <span style="font-weight: 400;">You can find more background on the distinction between stateful protocols with network effects and protocols more akin to software libraries in this talk by Jesse Walden from a16z crypto at the recent Multicoin summit</span><a href="https://www.youtube.com/watch?v=Fbtz6rOKlBw"> <span style="font-weight: 400;">https://www.youtube.com/watch?v=Fbtz6rOKlBw</span></a> <span style="font-weight: 400;">Overall, we are still early in understanding how token economies work and in which ways value can accrue to tokens. But it is exciting to see that different concepts are emerging and conviction in the strength of some concepts is building based on actual traction and usage, like in the working capital token case.</span>

<span style="font-weight: 400;">Over the past couple of months, we have written about a range of themes that have been interesting to us lately. Through public brainstorming, we have met some inspiring entrepreneurs, been introduced to some cool companies and received some great feedback. All in all, we have been enjoying the process of refining our thesis in areas like:</span> <ul> <li style="font-weight: 400;"><a href="https://www.versionone.vc/the-increased-the-risk-profile-of-start-ups/"><span style="font-weight: 400;">Full stack / managed platforms</span></a></li> <li style="font-weight: 400;"><a href="https://www.versionone.vc/health-wellness-apps/"><span style="font-weight: 400;">Digital health and wellness apps</span></a></li> <li style="font-weight: 400;"><a href="https://www.versionone.vc/biotech-investing/"><span style="font-weight: 400;">Biotech and therapeutics</span></a></li> <li style="font-weight: 400;"><a href="https://www.versionone.vc/building-strong-local-communities/"><span style="font-weight: 400;">Local communities</span></a></li> <li style="font-weight: 400;"><a href="https://www.versionone.vc/building-on-ehrs/"><span style="font-weight: 400;">Apps built on existing platforms (i.e. EHRs)</span></a></li> <li style="font-weight: 400;"><a href="https://www.versionone.vc/smart-saas-the-next-generation-of-enterprise-apps/"><span style="font-weight: 400;">Smart SaaS</span></a></li> </ul> <span style="font-weight: 400;">This week, we want to explore hardware. It’s hard to believe that it has been nearly five (!!) years since Boris wrote about the </span><a href="https://www.versionone.vc/hardware-renaissance-gaining-speed/"><span style="font-weight: 400;">hardware renaissance gaining speed</span></a><span style="font-weight: 400;">. At the time, we had just made investments in platforms that provide help with funding, selling, or developing hardware, i.e. Indiegogo, Tindie, Upverter.</span> <span style="font-weight: 400;">Today, hardware continues to capture the imagination of many entrepreneurs and investors, and while it is still a difficult pursuit, we all have collectively learned a lot along the way.</span> <span style="font-weight: 400;">For us at V1, we understand the risk of building hardware (i.e. supply chain, capital intensity, etc.), but we are excited about it, and any physical product for that matter, when the big differentiator is in the data collected / software layer which can lend itself to network effects - regardless of whether the hardware is developed in-house or bought off the shelf. We’ve identified two key paths:</span> <ol> <li><b> Unique product with strong IP</b></li> </ol> <span style="font-weight: 400;">It’s always helpful to be the first to market so that you can be the category leader and build a strong brand, i.e. Nest and Ring. Then, find ways to take advantage of all the data you’re collecting. In Ring’s case, this could be face/people recognition; with social networks like Fitbit, this could be the individuals that are using it for friendly competition. </span> <span style="font-weight: 400;">We recently made an investment in a consumer hardware product in the beauty space that will leverage both social (i.e. community around beauty/artistic creation can be seen all over Instagram, Pinterest, Facebook already) and marketplace dynamics (i.e. people selling/sharing their designs).</span> <span style="font-weight: 400;">On a related note, we see how building a unique product with strong IP </span><a href="https://www.versionone.vc/healthcare-thesis-update/"><span style="font-weight: 400;">can align with the health space</span></a><span style="font-weight: 400;"> (with the added challenge of FDA approval). To date, we have invested in two clinical-grade D2C devices that collect bio sample data which can then be leveraged for network effects to offer personalized and actionable insights on one’s health.</span> <ol start="2"> <li><b> Existing / commoditized hardware</b></li> </ol> <span style="font-weight: 400;">Hardware startups don’t necessarily need to build their own hardware. You can leverage “un-smart” hardware already on the market and “retrofit” it with AI/ML, i.e. add an intelligence layer.  </span> <span style="font-weight: 400;">We’ve seen some companies take off-the-shelf robots (i.e. Universal Robots) and make them “smart”, whether the application is in fulfillment or pizza making. We recently invested in a company that is working on packaging handling. As another example, startups can take advantage of the ubiquity of smartphones and their sensors. In fact, I just met a company that uses the back camera of a phone to measure blood pressure.</span> <span style="font-weight: 400;">If you’re building a hardware product with network effects, please come talk to us!</span>

<span style="font-weight: 400;">Start-ups, by definition, are risky. But traditionally, start-ups have looked for the least risky position in the value chain. And for many, this is being a platform.</span> <span style="font-weight: 400;">Successful platforms build an ecosystem of contributors that create content for the platform. Or, they build a marketplace where sellers decide which products might sell or not. In both cases, the platform is a risk-minimizing strategy. Why take a decision about what content to develop if platform participants will do it for you? Why take inventory risk if the sellers on the marketplace make the inventory decisions and take on that risk for you?</span> <span style="font-weight: 400;">But with less and less white space available and often driven by the need to provide a better customer experience, start-ups are now moving into areas of the value chain with much more increased risk. The level of risk was first measured in steps, e.g. Uber guaranteeing drivers certain bonuses if they were available in certain geographies at certain times. Then, start-ups became more aggressive: WeWork takes on office leases and then resells them in smaller chunks; Opendoor buys homes from sellers to then resell them; Sonder takes on long-term leases for apartments to rent them out on a short-term basis on AirBnB and other sites.</span> <span style="font-weight: 400;">By taking such risks, these companies can either provide a vastly better user experience (“sell your home immediately”) and / or scale faster. The risk in this strategy is obvious: if the economy turns, any of these companies might sit on long-term commitments that require more cash to fund than what they can bring in on the revenue side in the short-term.</span> <span style="font-weight: 400;">But it might well be that many of the interesting start-up opportunities going forward will require much more risk-taking than what we used to see. Look no further than crypto.</span> <span style="font-weight: 400;">The overarching narrative of crypto platforms is that they want to cut out the middleman and the middleman’s rake by creating an open source platform that can be forked at any stage if the community thinks that the fee structure is inappropriate. If this assumption holds true at scale, then the only way to make money would be to build a business (risk-taking) on top of those platforms, e.g. the best storage provider on top of Filecoin or the best market maker on top of a prediction market like Augur.</span> <span style="font-weight: 400;">If this trend of increased risk taking holds true, then many start-ups will have to develop very different capabilities to be successful in such a world - it will be interesting to see this unfold!</span>

Here at Version One, we had two nightmarish weekends in early February when our accounts were hacked by pretty sophisticated and aggressive hackers. As we’ve since learned, hackers love weekends, because it’s a time when targets may not realize the hack right away and the customer service at service providers is limited. But thanks to very immediate help from Google, Twitter and other organizations, we were able to regain control of our accounts pretty quickly. Through the process, we’ve learned quite a bit about safeguards to prevent these kinds of hacks from happening – and here are some key lessons that everybody should take to heart: <ol> <li>Do NOT use 2fa (two-factor authentication) with text messages. Our experience has shown that there is really no safe way to protect your phone number from a <a href="https://en.wikipedia.org/wiki/SIM_swap_scam">SIM swap attack</a> and it happens all the time. Some of the most aggressive hackers use fake documentation to pretend to be you and neither the tech nor the customer service at mobile carriers is currently very well set up to prevent such fraud. Once hackers have control of your phone, they can use the recover password process to take over the account. If you take away just one piece of advice from this blog post, it should be “Do NOT use 2fa with text messages - remove your phone number from any recovery mechanism" :-)</li> <li>While you are eliminating a big piece of risk by not using text messages as a 2fa method, you should still protect your mobile carrier account: please put a PIN on your account plus a lock, if your carrier offers that option.</li> <li>Use an authenticator app wherever you can. Services will offer 'backup codes' in case you don’t have access to your authenticator app. Write them down or print them, then store them in a safe place (ideally, a safety deposit box). In addition to these steps, you can also get a physical dongle/key like <a href="https://www.yubico.com/">Yubikey</a> or <a href="https://cloud.google.com/titan-security-key/">Google Titan</a>.</li> <li>Follow these steps for all of your key accounts: email, Facebook, Twitter, Dropbox, bank accounts, PayPal, domain registrars, etc. As we found out, domain registrars are actually a dangerous point of attack: if a hacker is able to take over the account (again with 2fa and text messages), he/she can change the email records and suddenly have control of all incoming emails without having to hack into your Gmail.</li> <li>Use a password manager like <a href="https://1password.com/">1password</a> or <a href="https://www.dashlane.com/">Dashlane</a>. There have been so many hacks of large sites out there, that there is a chance that hackers have access to your email and a password that you have been using on one of those sites. Given that we all have used the same / similar password on other sites, you are at risk of getting hacked.</li> <li>Use the opportunity of setting up your passport manager to change all of your passwords for all of your accounts.</li> <li>Take a minute to delete accounts that you no longer use, but might have sensitive information.</li> <li>On the topic of passwords, we also recommend not storing your passwords in Google Chrome. If your Gmail account gets hacked, you immediately give the hacker access to all of your accounts (even with the option to export this data and use this data at a later stage).</li> <li>Consider making your primary phone number private and giving out an alias number with services like Google Voice (which works in the US)</li> <li>And for those of you who use Google Suite (or a similar service), make sure that your public accounts / email addresses do not have super/admin privileges. You can create an admin account like private@yourdomain.com and then make yourname@yourdomain.com a “regular” user. That’s because if hackers get a hold of an admin account, they can lock out everyone else related to you and your org.</li> </ol> And the last piece of advice you should take away from this blog post: don’t just read it but reserve a few hours today or tomorrow to actually do these things. Believe us, it is a very good investment :-) P.S.: Funnily enough, we recently invested in a company that provides managed security for small- and medium-sized companies that cannot afford a full-time security expert on staff but want to get ahead of any potential attacks on their software / network. We will be able to share more about this company in the upcoming weeks and months but this attack has certainly confirmed our investment thesis. &nbsp;

<span style="font-weight: 400;">We are continually refining our thesis on healthcare, from looking at </span><a href="https://www.versionone.vc/healthcare-thesis-update/"><span style="font-weight: 400;">clinical-grade at-home diagnostics</span></a><span style="font-weight: 400;"> to </span><a href="https://www.versionone.vc/biotech-investing/"><span style="font-weight: 400;">biotech and therapeutics</span></a><span style="font-weight: 400;">. Our previous posts on this topic haven’t included digital health and wellness apps, but these consumer-facing products certainly play an important role in transforming healthcare and democratizing its access.</span> <span style="font-weight: 400;">The consumerization of healthcare through apps continues to pick up steam, and what was once labelled the “quantified self” movement is starting to see mainstream adoption. We all want to be healthier, whether it’s through exercise (Strava, Runkeeper) or meditation (Headspace, Calm) as examples.</span> <span style="font-weight: 400;">Apps can also overcome the common friction points associated with going to the doctor’s office or seeing a health professional (therapist, nutritionist, trainer): cost, lack of accessibility, and stigma. They make treatment and monitoring much more convenient – whenever and wherever a user needs it. And, smartphones and watches are ubiquitous with increasingly more sophisticated sensors and trackers to collect more data on our activity.</span> <span style="font-weight: 400;">At Version One, we’re excited to see what new apps will emerge to help us with our health and wellness goals. We don’t have any specific products in mind, or any specific categories within physical/mental health and wellness, for that matter. But from an investor’s perspective, here are the questions we ask when looking at an app:</span> <ul> <li><b>What type of app is this? </b><span style="font-weight: 400;">Is it aspirational (nice to have), treatment-focused (need to have), or monitoring (somewhere in between)? The type of app will affect engagement and business model.</span></li> <li style="font-weight: 400;"><b>What is the daily / frequent use case? </b><span style="font-weight: 400;">How engaging is the app and how “actionable” is it?</span></li> <li style="font-weight: 400;"><b>Are users willing to pay for it?</b> How (i.e. freemium / subscription, one-time download fee) and how much? How do we get to a good LTV:CAC ratio?</li> <li style="font-weight: 400;"><b>How do we overcome the natural churn problem?</b> When users feel like they have “healed,” or are in control of their situation (in monitoring or treatment cases), or are discouraged (in aspirational cases), there is a risk that they will no longer use the app. How do you address this?</li> <li style="font-weight: 400;"><b>What is the best way to get your product out to market? </b>At Version One, we’ve written about how we like bottoms-up distribution. However, going direct-to-consumer can be expensive here in terms of CAC, an unwillingness to pay (potentially lower LTV), and natural churn. This monetization and acquisition problem is probably why we’ve seen many startups take the B2B2C approach. However, the challenge with a top-down distribution is that when an app is recommended by your payer (for example, insurer or employer), it’s going to feel forced. People inherently don’t like to be told what to use – what employee wants to be told which app to use in their personal lives, even if there are strong incentives? The question is: how do you build something delightful with a top-down distribution?</li> <li style="font-weight: 400;"><b>What about defensibility? </b>Are there network effects around people: is there a community / social component to the app that is engaging? Are there network effects around data: is there unique information being collected?</li> </ul> <span style="font-weight: 400;">  </span><span style="font-weight: 400;">Are you building a digital health and wellness product? If so, we’d love to talk to you and think through how your app can scale. Scaling is key if we are going to make a lasting impact on the healthcare system and democratize resources to make everyone a healthier version of themselves.</span>

<span style="font-weight: 400;">Over the past year, some of the most interesting and intellectually-stimulating pitches we heard have come from startups in biotech, specifically companies developing therapeutics. From non-hormonal contraceptives that work for men </span><i><span style="font-weight: 400;">and</span></i><span style="font-weight: 400;"> women to muscle-promoting gene therapy, the potential impact of these new drugs is both immeasurable and inspiring.</span> <span style="font-weight: 400;">So, it comes as no surprise to us that private investments in this sector hit record-breaking numbers in 2018 (</span><a href="http://www.pharmatimes.com/magazine/2018/december_2018/a_record-breaking_year_for_biotech_funding"><span style="font-weight: 400;">$13.5B in the first 10 months in 2018</span></a><span style="font-weight: 400;">). And while most of the capital comes from life science funds and the corporate venture arms of pharma companies, there is growing interest from VCs, like ourselves, from the IT/tech ecosystem.</span> <span style="font-weight: 400;">It’s no secret that biotech can be very lucrative – particularly when a drug successfully makes it to market. On the flip side, biotech is much more capital intensive than software. The cost of bringing a drug to market is expensive (hundreds of millions of dollars to billions of dollars) and risky (it simply might not work!). </span> <span style="font-weight: 400;">As such, life science investors who fund drug development typically have deep pockets. And when making big investments, these investors have higher ownership targets (40-50%) compared to IT/tech VCs (20-25%). This aggressive ownership target is one reason more and more founders are looking for capital from IT/tech VCs who don’t demand as much equity.</span> <span style="font-weight: 400;">To make investments attractive, biotech founders also sell that the time to exit might be faster than in IT (it is true that successful therapeutics companies IPO or are acquired before launch) and that now, they can accelerate drug discovery with AI/machine learning (meaning, less time and thereby less capital is required).</span> <span style="font-weight: 400;">With these dynamics at play, I’ve been thinking a lot about how we at Version One can effectively invest in biotech. What is the best thesis to ensure companies are well capitalized, without diluting everyone’s ownership with every round raised, assuming every round is larger in both size and valuation than a traditional IT one?</span> <span style="font-weight: 400;">One strategy might be to build a drug discovery platform where the technology can be licensed to other pharma companies for specific therapeutics that they might be experts in and have developed a brand for. Then, the revenue you earn from these partners/customers can cover your operating costs while you develop your own drug to bring to market – which is where the most value is captured in biotech.</span> <span style="font-weight: 400;">I’d love to speak to founders and funders who are thinking about similar issues. How are you building biotech companies where all incentives are aligned in order to bring transformational treatments and therapies to patients who need them?</span>

<span style="font-weight: 400;">We at Version One are becoming increasingly convinced that stronger local communities can help solve many of the problems we are currently facing.</span> <span style="font-weight: 400;">When you think about it, most things that people truly care about are local issues. Do we have access to good schools? Is our neighbourhood safe? Do we have access to good stores nearby to do our daily shopping? Are there any facilities, sports clubs, not-for-profit organizations where our kids can go after school?</span> <span style="font-weight: 400;">Making progress toward addressing these issues usually requires a combination of factors. First, some of the local projects need funding. Second, they need a community leader who will take the initiative to find a solution. And they need awareness within the community (you need to know that somebody is working on it and needs your input).</span> <span style="font-weight: 400;">Several tools already exist to help local communities become stronger. Current examples are Nextdoor and Facebook Groups on the social networking side and GoFundMe on the fundraising side</span><span style="font-weight: 400;">. We</span><span style="font-weight: 400;"> wonder if there is an opportunity for a product that combines a few of the features that these platforms offer into a powerful tool to build, manage and fund local communities.</span> <span style="font-weight: 400;">While we don’t have an exact product in mind, we think that the tool should have a few characteristics:</span> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">A strong, frequent use case. The tool will only be as successful as the strength of the network, so it is important that we keep users coming back on a daily/weekly/monthly basis.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">It needs to put local community leaders front and center. If you don’t have a strong moderator/curator/leader, the whole initiative will likely fail. With that said, we feel that adoption and engagement will be greater with a bottoms-up distribution, as opposed to a top-down approach.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">The platform needs to make sure that the participants and conversations are truly local and are not getting taken over by people from outside of the local geography. The platform also needs to make sure that the conversations on it stay productive (instead of becoming very aggressive and partisan like with many other social media platforms). You might have </span><a href="https://www.theverge.com/2019/1/24/18129437/front-porch-forum-vermont-social-network-listserv-local-online-community"><span style="font-weight: 400;">recently read</span></a><span style="font-weight: 400;"> about </span><a href="https://frontporchforum.com/"><span style="font-weight: 400;">Front Porch</span></a> <span style="font-weight: 400;">who has achieved both things by strict user controls (need to provide an address) and strong community moderation.  </span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Being able to fund specific projects (instead of “just” advocating for them) is a very powerful opportunity. I imagine something along the lines of </span><a href="https://www.donorschoose.org/"><span style="font-weight: 400;">DonorsChoose</span></a><span style="font-weight: 400;"> with the hope to attract both local funding as well as funding from outside of the community.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">If the platform can serve as some type of feedback tool for local politicians, it would augment its reach.</span></li> </ul> <span style="font-weight: 400;">Those are our initial thoughts, and we’d love to get any feedback. Who else has been thinking about this? What tools already exist out there (besides the ones I mentioned)? Do you agree or disagree that slicing and dicing the product around local communities makes sense (vs. using more horizontal products like GoFundMe)?</span> <span style="font-weight: 400;">Looking forward to hearing what everyone thinks. And for more thoughts on social platforms in general, here is our book:</span><a href="https://www.versionone.vc/social-handbook/"> <span style="font-weight: 400;">https://www.versionone.vc/social-handbook/</span></a>

<span style="font-weight: 400;">The world seems more volatile than ever before. There’s an explosion in the number of issues, combined with an ever-accelerating news cycle to cover each issue 24 hours a day.</span> <span style="font-weight: 400;">Much of today’s uncertainty can impact start-ups… When will the US government shutdown end? Are we heading into a US-China trade war? Will both of those events trigger a recession after a 10-year economic expansion? And if there is a recession, will there be less venture capital available for start-ups in 2019?</span> <span style="font-weight: 400;">It’s all too easy to lose sleep and get sucked into discussing these issues ad nauseam. But, the reality is that nobody knows the answers. So instead of spending cycles on things that are outside of your control, focus on what you can control.</span> <span style="font-weight: 400;">Everyone is looking for advice for during these uncertain times. The most important thing you can do is to build the best product that your customers love and hence, will be more likely to pay for no matter what the economic realities are. You should also watch your burn rate and the amount of capital in the bank.</span> <span style="font-weight: 400;">For later-stage start-ups, it’s always advisable to have a Plan B on how to get to profitability with existing cash in case funding markets dry up. And a bunch of our portfolio companies went out for their next funding event earlier than they had originally planned, in order to put additional money in their coffers in case the economy turns south.</span> <span style="font-weight: 400;">The bottom line. Don’t get bogged down in predicting things that simply cannot be predicted right now. Focus on what you can control: build the best product you can and watch your cash.</span>

<span style="font-weight: 400;">Hiring is key to the success of any business, but it can especially critical for startups. Most founders appreciate the importance of making good hires; however, when a startup is scaling rapidly, process often gets left behind. In our experience, successful recruiting is a combination of process discipline and checks and balances. Here are three things every startup should implement in their recruiting process:</span> <b>1. Really understand the candidate profile</b> <span style="font-weight: 400;">The first thing to do is create a formal job description: what will the person do and what backgrounds are you are looking for. If you don’t take the time to define the job upfront, it’s going to be really hard to hire against a need.</span> <span style="font-weight: 400;">Keep in mind that the job description will depend on the stage of your company. During the early stages, you are trying to hire athletes, not specialists. You should over-prioritize for smarts, work ethic, and ambition over experience. First hires should be like “swiss army knives,” able to take on multiple tasks at any stage and figure out how to solve problems. Your job description for hiring at this stage should focus on general capabilities.</span> <span style="font-weight: 400;">At later stages, you start hiring for specialists. Now it is incredibly important to be very specific with the job description. For example, if you want to hire your first marketing person, it could be someone that is really good at demand generation marketing or somebody who is really good at product marketing. But those two require completely different backgrounds. It’s important to spend some time to really understand the required profile of a position and then you can better target your search and interview process.</span> <span style="font-weight: 400;">And, no matter the stage, try to avoid cookie-cutter HR language in your descriptions. Instead, describe in plain English what the person is supposed to do, what success looks like, and what kind of background you’re looking for.</span> <b>2. Hire an internal recruiter earlier than you think</b> <span style="font-weight: 400;">Never wait for candidates to come to you; you need to actively build a pipeline. But too often with startups, there aren’t enough resources dedicated to that task.</span> <span style="font-weight: 400;">We recommend to all of our portfolio companies to build up their in-house recruiting function as soon as they’re ready to hire at scale (usually after the A round). And while internal recruiters should do the bulk of the pipeline work, it makes sense to leverage external recruiters for VP-level positions and up. External recruiters are very expensive, but it’s usually a worthwhile investment for key hires.</span> <b>3. Create checks and balances</b> <span style="font-weight: 400;">Make sure you have a correcting function in the hiring process to protect against some common pitfalls. For examples, overloaded teams might be incentivized to hire as quickly as possible versus waiting for the best candidate. Or your interview teams might not have the deepest interviewing experience yet.</span> <span style="font-weight: 400;">A “correcting function” could be a final interview with the CEO/founder. Or, when the company has scaled to the point where it would be impossible for the founder to meet with every candidate, you could implement a function like Amazon’s bar raiser program. Bar raisers are Amazon employees who are skilled evaluators and interview job candidates. They can veto any candidate, even for positions that are completely out of their area of expertise. This program helps the company make good hiring choices, since several diverse employees need to sign off on a candidate.</span> <span style="font-weight: 400;">Remember that hiring is not luck; it’s a skill. You need to develop the right process to ensure success.  </span>

<span style="font-weight: 400;">We are well into 2019. And yes, this is the time of year when people are thinking about resolutions and looking ahead. And while we are very excited about the new year and new fund, we also want to spend a few minutes to reflect on last quarter. Q4 was an important quarter for our firm and portfolio companies. As we move ahead into 2019, we can ride some great momentum.</span> <b>Announcements</b> <span style="font-weight: 400;">We announced our investment in </span><a href="https://www.lolli.com/"><span style="font-weight: 400;">Lolli</span></a><span style="font-weight: 400;">, the </span><span style="font-weight: 400;">first bitcoin rewards application that lets people earn and own bitcoin when they shop online</span><span style="font-weight: 400;">. The company’s goal is to make bitcoin more accessible for all. There’s good coverage of their seed round in </span><a href="https://www.forbes.com/sites/darrynpollock/2018/11/15/big-investors-put-2-25-million-behind-bitcoin-reward-startup-lolli/#382c2eff3cae"><span style="font-weight: 400;">Forbes</span></a><span style="font-weight: 400;"> and </span><a href="https://www.wsj.com/articles/gerons-take-can-shopping-rewards-bring-bitcoin-to-mainstream-1542198600"><span style="font-weight: 400;">The Wall Street Journal</span></a><span style="font-weight: 400;">.</span> <span style="font-weight: 400;">Dapper Labs, the creators of <a href="https://www.cryptokitties.co">CrypoKitties</a>, announced they raised </span><span style="font-weight: 400;">$15 million to build more blockchain cats. It’s well known that </span><span style="font-weight: 400;">CryptoKitties is the world’s most used consumer blockchain application outside of exchange</span><span style="font-weight: 400;">s. </span><span style="font-weight: 400;">You can read more about their growth and latest funding round on </span><a href="https://venturebeat.com/2018/11/01/cryptokitties-creator-dapper-labs-raises-15-million-to-build-more-blockchain-cats/"><span style="font-weight: 400;">VentureBeat</span></a><span style="font-weight: 400;">.  </span> <span style="font-weight: 400;"><a href="https://www.coinbase.com">Coinbase</a> </span><a href="https://blog.coinbase.com/coinbase-raises-series-e-round-of-financing-to-accelerate-the-adoption-of-cryptocurrencies-1ad927463814"><span style="font-weight: 400;">announced their Series E</span></a><span style="font-weight: 400;"> to accelerate the adoption of cryptocurrencies.  </span> And <a href="https://ada.support/">Ada Support</a> <a href="https://venturebeat.com/2018/12/18/ada-raises-15-million-to-help-companies-develop-their-own-customer-service-chatbots/">raised $14m</a> to help companies develop their own customer service chatbots. <b>Product Launches and Updates</b> <span style="font-weight: 400;">Coinbase continues to explore support for new digital assets </span><span style="font-weight: 400;">from Civic (CVC) to Augur (REP), from EOS to Tezos (XTZ). Their </span><span style="font-weight: 400;">goal is to offer support for all assets that meet their standards and are fully compliant with local law</span><span style="font-weight: 400;"> – you can read more about this work </span><a href="https://blog.coinbase.com/coinbase-continues-to-explore-support-for-new-digital-assets-92ba4ab7f465"><span style="font-weight: 400;">on their blog</span></a><span style="font-weight: 400;">.</span> <a href="https://placenote.com/"><span style="font-weight: 400;">Placenote</span></a><span style="font-weight: 400;"> continues to update their SDK, improving the product’s runtime memory usage during mapping and location. You can take a look at the latest specs here: </span><a href="https://placenote.com/docs/"><span style="font-weight: 400;">https://placenote.com/docs/</span></a> <a href="https://www.manifold.co/"><span style="font-weight: 400;">Manifold</span></a><span style="font-weight: 400;"> introduced its all-new Manifold Marketplace - designed to be effortless and fun to use, just like every great developer tool should be.</span> <a href="https://www.clio.com/"><span style="font-weight: 400;">Clio</span></a><span style="font-weight: 400;"> acquired Lexicata, </span><span style="font-weight: 400;">a Los Angeles-based customer relationship management and client intake tool for lawyers</span><span style="font-weight: 400;">. You can read </span><a href="https://www.pehub.com/canada/2018/10/venture-backed-legal-software-provider-clio-acquires-lexicata/#.W7ituBOt4oE.twitter"><span style="font-weight: 400;">about the acquisition here</span></a><span style="font-weight: 400;">.</span> <span style="font-weight: 400;"><a href="https://www.coinbase.com">Booster Fuels</a> is </span><a href="https://www.geekwire.com/2018/foot-gas-fuel-delivery-startup-booster-fuels-generating-180k-revenue-per-day/"><span style="font-weight: 400;">generating $180K in revenue per day</span></a><span style="font-weight: 400;"> delivering gas. You can watch CEO Frank Mycroft</span><a href="https://www.cnbc.com/video/2018/11/20/booster-fuels-amazon-prime-for-gasoline.html"> <span style="font-weight: 400;">on CNBC</span></a><span style="font-weight: 400;">, discussing the company’s aspiration to be Amazon Prime for gas.</span> <span style="font-weight: 400;">Karthik Sridharan, founder of </span><a href="https://www.kinnek.com/"><span style="font-weight: 400;">Kinnek</span></a><span style="font-weight: 400;">, wrote a great article on Medium on what they’ve learned from </span><a href="https://medium.com/@ksrid/what-weve-learned-from-building-the-largest-north-american-b2b-marketplace-95893f65d6ce"><span style="font-weight: 400;">building the largest North American B2B marketplace</span></a><span style="font-weight: 400;">.</span> <b>Accolades</b> <span style="font-weight: 400;">Two Version One teams were named to the Forbes 30 under 30 list! </span><a href="https://www.forbes.com/profile/ada/?list=30under30-enterprise-technology#3aa2277377eb"><span style="font-weight: 400;">Mike Murchison and David Hariri</span></a><span style="font-weight: 400;">, the founders of </span><a href="https://ada.support/"><span style="font-weight: 400;">Ada Support</span></a><span style="font-weight: 400;"> and </span><a href="https://www.forbes.com/profile/distributed-systems/#52c5b56f3ab3"><span style="font-weight: 400;">Nikhil Srinivasan and Alex Kern</span></a><span style="font-weight: 400;">, founders of Cleargraph, which was</span><a href="https://medium.com/dsys/distributed-systems-acquired-by-coinbase-1d17ed4f0340"> <span style="font-weight: 400;">acquired by Coinbase</span></a><span style="font-weight: 400;"> last summer.</span> <span style="font-weight: 400;">And, Laura Behrens Wu, CEO of </span><a href="https://www.goshippo.com/"><span style="font-weight: 400;">Shippo</span></a><span style="font-weight: 400;">, was named to </span><a href="https://www.vanityfair.com/news/photos/2018/10/future-innovators-index"><span style="font-weight: 400;">Vanity Fair’s Future Innovator’s Index</span></a><span style="font-weight: 400;">.</span> <span style="font-weight: 400;">Congratulations to all for these well-deserved honors!</span> <b>Version One News</b> <span style="font-weight: 400;">In October, we announced the launch of </span><span style="font-weight: 400;">Version One Ventures III with $45M USD ($57M CAD) in commitments. With the new fund, we’re doubling down on all that has worked in our previous funds – our strategy, geography, investment thesis and </span><a href="https://www.versionone.vc/philosophy/"><span style="font-weight: 400;">philosophy</span></a><span style="font-weight: 400;">, If you haven’t heard about Fund III yet, you can read </span><a href="https://www.versionone.vc/announcing-version-one-fund-iii/"><span style="font-weight: 400;">Boris’ announcement</span></a><span style="font-weight: 400;">.</span> <span style="font-weight: 400;">And last, but not least, Angela made two “investor to watch” lists on the very same day: she was featured in Forbes’ “</span><a href="https://www.forbes.com/sites/kellyhoey/2018/11/09/six-rising-stars-in-venture-and-how-to-network-with-them/#b980d2bee3e1"><span style="font-weight: 400;">Six rising stars in venture”</span></a><span style="font-weight: 400;"> and WSJ’s </span><a href="https://www.wsj.com/articles/vc-women-to-watch-ten-women-fueling-tomorrows-disruptive-startups-1541713412"><span style="font-weight: 400;">“Ten Women Fueling Tomorrow’s Disruptive Startups.”</span></a> <span style="font-weight: 400;">That’s the recap from Q4 2018. A reminder that as we go into this new year, we are spending lots of time in crypto and bio. We are excited about </span><a href="https://www.versionone.vc/our-refocused-investment-thesis/"><span style="font-weight: 400;">network effects</span></a><span style="font-weight: 400;"> that exist in VR/AR, autonomy, etc. And we still love </span><a href="https://www.versionone.vc/marketplace-handbook/"><span style="font-weight: 400;">marketplaces</span></a><span style="font-weight: 400;">,</span><a href="https://www.versionone.vc/social-handbook/"> <span style="font-weight: 400;">social platforms</span></a><span style="font-weight: 400;">, and Smart SaaS.</span> <span style="font-weight: 400;">Follow </span><a href="https://twitter.com/VersionOneVC"><span style="font-weight: 400;">@VersionOneVC</span></a><span style="font-weight: 400;"> for the latest news from us and our portfolio!</span> &nbsp;

<span style="font-weight: 400;">Happy new year! </span> <span style="font-weight: 400;">Each week we like share our thoughts on a range of topics from vertical markets to general startup advice and our reflections on investing. We’re proud to say that we wrote a blog post every week in 2018 – and we’ve done that now for the past three years. In case you didn’t catch each and every post, here’s a look back at some of our favourite and most read pieces from 2018.</span> <b>Running a Startup</b> <a href="https://www.versionone.vc/the-risks-of-scaling-too-fast-too-soon/"><b>“The risks of scaling too fast too soon”</b></a> <span style="font-weight: 400;">Back in April, Boris shared some insights on scaling prematurely. After closing a Series A or B, there’s a sudden influx of cash and this can place a lot of stress to show results and move too fast.</span> <a href="https://www.versionone.vc/changing-the-narrative-on-distributed-teams-in-silicon-valley/"><b>“Changing the narrative on distributed teams in Silicon Valley”</b></a> <span style="font-weight: 400;">Among our Silicon Valley-based portfolio companies, every company past “A” has a distributed team.</span><span style="font-weight: 400;"> We discussed two common approaches toward opening a second location: opening a location built around a specific task (e.g. platform integration, customer service and distributing team members across the board.  </span> <b>“So you just raised a….” three-part blog series</b> <span style="font-weight: 400;">We published a three-part series throughout December to help startups manage their changing priorities and strategies as they grow…</span> <ul> <li style="font-weight: 400;"><a href="https://www.versionone.vc/so-you-just-raised-your-seed-round-now-what/"><span style="font-weight: 400;">“So you just raised your seed round, now what?”</span></a></li> <li style="font-weight: 400;"><a href="https://www.versionone.vc/so-you-just-raised-your-a-round-now-what/"><span style="font-weight: 400;">“So you just raised your Series A round, now what?”</span></a></li> <li style="font-weight: 400;"><a href="https://www.versionone.vc/so-you-just-raised-your-b-round-now-what/"><span style="font-weight: 400;">“So you just raised your Series B round, now what?”</span></a></li> </ul> <b>Marketplaces and SaaS</b> <a href="https://www.versionone.vc/marketplaces-guide-ed2/"><b>The Guide to Marketplaces: Second Edition</b></a> <span style="font-weight: 400;">In addition to weekly blogging, we refreshed our Guide to Marketplaces eBook, adding a revised section</span> <span style="font-weight: 400;">on decentralized marketplaces, a new chapter on marketplace exits, and a Funding Napkin that links milestones with fundraising stages.</span><span style="font-weight: 400;"> You can download the </span><a href="https://www.dropbox.com/s/7t7aeoxsitwt84w/A%20Guide%20To%20Marketplaces-2nd%20Edition-03012018.pdf?dl=0"><span style="font-weight: 400;">PDF</span></a><span style="font-weight: 400;"> or </span><a href="https://www.dropbox.com/s/dff9udbsnnpbrbz/A%20Guide%20To%20Marketplaces-2nd%20Edition-03012018.epub?dl=0"><span style="font-weight: 400;">ePub</span></a><span style="font-weight: 400;"> version.</span> <a href="https://www.versionone.vc/next-venture-scale-marketplaces/"><b>“What are the opportunities for the next venture-scale marketplace business?”</b></a> <span style="font-weight: 400;">As we ramped up our focus on new markets like crypto and healthcare in 2018, we were often asked if we still invest in marketplaces. In July, Angela responded in a blog post – it’s a resounding yes. We love marketplace’s network effects and she outlined some of the </span><span style="font-weight: 400;">opportunities we see for the next generation of large, venture-scale marketplace businesses.</span> <a href="https://www.versionone.vc/smart-saas-the-next-generation-of-enterprise-apps/"><b>“Smart SaaS – the next generation of enterprise apps”</b></a> <span style="font-weight: 400;">In October, Boris described our concept of “Smart SaaS” – the</span> <span style="font-weight: 400;">next generation of enterprise apps that can use AI/machine learning to </span><span style="font-weight: 400;">automate processes, while also having the potential to be intelligent and create interesting data network effects along the way.</span> <b>Crypto/Blockchain</b> <a href="https://www.versionone.vc/crypto-investing/"><b>“Is crypto investing different from VC investing?”</b></a> <span style="font-weight: 400;">Through our experiences backing companies like </span><span style="font-weight: 400;">Citizen Hex, Blockstack, Coinbase, Metastable, Polychain</span><span style="font-weight: 400;">, and CryptoKitties, we came to realize that the way we evaluate blockchain opportunities is no different than how we have evaluate any other investment opportunity. However, we need to think about how to evolve as a fund for crypto.</span> <a href="https://www.versionone.vc/a-few-take-aways-from-the-augur-prediction-market/"><b>“A few takeaways from the Augur prediction market”</b></a> <span style="font-weight: 400;">After Augur went live, Boris spent some time on the platform and reported his observations. It’s always exciting to see something in the early days as it moves from the whitepaper phase to live product!</span> <b>Bio/Healthcare</b> <a href="https://www.versionone.vc/healthcare-thesis-update/"><b>“Expanding our bio/healthcare thesis”</b></a> <span style="font-weight: 400;">In August, Angela shared our updated healthcare thesis which essentially looks like:  </span> <span style="font-weight: 400;">D2C (for rapid adoption) –&gt; FDA clearance, approval –&gt; gold standard –&gt; cost structure change</span> <a href="https://www.versionone.vc/building-on-ehrs/"><b>“Building on top of EHRs”</b></a> <span style="font-weight: 400;">We’re excited to see what the opening of EHR systems offers to healthcare innovators.</span><span style="font-weight: 400;"> But just like any other company that relies on incumbent platforms, these startups need to tackle the associated risks of dependency. In this post, Angela outlined several questions that a startup building an app on top of an EHR needs to answer.</span> <b>Venture Capital</b> <a href="https://www.versionone.vc/vcs-rarely-make-exceptions-to-their-investment-scope/"><b>“VCs rarely make exceptions to their investment scope”</b></a> <span style="font-weight: 400;">We strayed from our investment focus when we invested in Coinbase’s Series D. But as Boris explained, we had a pretty strong conviction based on several factors. Such exceptions are limited to truly special opportunities. As an entrepreneur, it’s much better to do your research upfront and focus on those investors who are the right fit.</span> <a href="https://www.versionone.vc/5-years/"><b>“Reflecting on 5 years in VC: How to survive the marathon”</b></a> <span style="font-weight: 400;">In September, Angela marked her </span><span style="font-weight: 400;">“VC anniversary” and shared the key pillars that help her stay sharp and sane in this fast-paced marathon.</span> <span style="font-weight: 400;">What were your favourite pieces from last year? Are there any topics or themes that you’d like us to write more about in 2019?</span> <span style="font-weight: 400;">Follow </span><a href="https://twitter.com/VersionOneVC"><span style="font-weight: 400;">@VersionOneVC</span></a><span style="font-weight: 400;"> to keep up with our posts and other fund news!</span>

2018 was a big year for Version One, and it’s hard to believe another year is drawing to a close. We invested in seven new companies and participated in many follow-on rounds. Of the new investments, one is in encryption, one is in security, one is in consumer hardware, one is in bio/healthcare, and three are in crypto/blockchain. We spent a lot of time in bio/healthcare and crypto/blockchain in 2018 and will continue the trend in 2019… <b>Crypto/blockchain</b> After the 2017 price run up, reality set in during 2018; both BTC and ETH value plummeted. Some say that we are in “crypto winter.” Lots of ICOs and capital poured into the frenzy of this market in 2017. Now as projects are developing, it is clear that blockchain technology is still in the early stages. There are some fundamental issues to be sorted out, including volatility, fiat-to-crypto on-ramps, and scaling. Yet we continue to be bullish about the long-term potential of this technology and are investing in companies that are <a href="https://www.versionone.vc/crypto-native-applications/">building native applications</a> to leverage the specific strength of the underlying platform… in this case trust without a third-party intermediary. Following this thesis, we made the several investments in 2018: <a href="https://www.cryptokitties.co/">CryptoKitties</a>: a game centered around breedable, collectible, digital creatures that is starting to show <a href="https://www.versionone.vc/cryptokitties-and-the-kittyverse-the-exciting-potential-of-programmable-assets/">the potential of programmable assets</a> <a href="https://celo.org/">Celo</a>: An open platform for fast, secure, stable digital payments to any mobile number at a fraction of today’s cost. <a href="https://www.lolli.com/">Lolli</a>: gives customers bitcoin when they shop online (n.b. This helps <a href="https://www.versionone.vc/announcing-lolli/">encourage the mainstream adoption of cryptocurrency</a>). In addition, our existing startups in this space continue to do well. For example, <a href="https://www.coinbase.com/">Coinbase</a> raised its Series E this quarter. <b>Bio/healthcare</b> US VC deal flow in healthcare hit an all-time high this year as we continue to <a href="https://www.versionone.vc/healthcare-thesis-update/">refine our thesis on the space</a>. We’re focused on vertically integrated startups that empower consumers and companies to collect health data easily and affordably, to become a “biobank” where this data can power personalized recommendations. We’re looking forward to sharing details on a recent investment. The startup’s at-home test has the potential to not only improve access to certain diagnoses and treatments, but by doing so, also change the cost structure associated with it. <strong>Transitioning to Fund III</strong> What made 2018 especially big was that <a href="https://www.versionone.vc/announcing-version-one-fund-iii/">we raised Fund III</a>. While we have <a href="https://www.versionone.vc/congratulations-to-angela-tran-kingyens-version-ones-new-general-partner/">expanded our partnership to two GP</a> and have a bigger fund, our fundamentals stay the same: we invest at seed / pre-seed, in companies that leverage network effects, and across North America (hubs are SF, Toronto/KW, NYC, Seattle). This should serve as a reminder that while we are spending lots of time in crypto and bio, we are still excited about <a href="https://www.versionone.vc/our-refocused-investment-thesis/">network effects</a> that exist in VR/AR, autonomy, etc., and love <a href="https://www.versionone.vc/marketplace-handbook/">marketplaces</a>, <a href="https://www.versionone.vc/social-handbook/">social platforms</a>, and <a href="https://www.versionone.vc/smart-saas-the-next-generation-of-enterprise-apps/">Smart SaaS</a>. If you’re enthusiastic about these themes as an entrepreneur, investor, or operator, please reach out! And finally, we wish to thank everyone who has been a part of the Version One community for this incredible year, from our LPs, peers, partners, entrepreneurs, friends, followers, and our families. We wouldn’t be here without your encouragement and support. Best wishes to you and your loved ones this holiday season. See you in 2019! ~ Ange &amp; Boris :)

<span style="font-weight: 400;">In case you missed our posts from the previous weeks, we have been summarizing what founders should focus on at each stage of their startup’s journey. Priorities and strategies change as a company grows – starting with </span><a href="https://www.versionone.vc/so-you-just-raised-your-seed-round-now-what/"><span style="font-weight: 400;">finding product-market fit after a seed round</span></a><span style="font-weight: 400;"> to </span><a href="https://www.versionone.vc/so-you-just-raised-your-a-round-now-what/"><span style="font-weight: 400;">figuring out distribution between Series A and Series B</span></a><span style="font-weight: 400;">. And that brings us to the B Round.</span> <span style="font-weight: 400;">After raising your B Round, it’s all about building the organization. We have found that this is usually the toughest phase for founders. They have been the leaders for the company since the start and now need to build a leadership team around them. This means transitioning from maker to manager.</span> <span style="font-weight: 400;">Suddenly, you’re no longer providing day-to-day hands-on management – you need to be more focused on providing indirect leadership and setting the framework for the company… making sure that everybody in a fast-growing organization understands the vision, making sure that everybody lives and breathes the culture, and making sure that your leadership team is best equipped to do their best every day. </span> <span style="font-weight: 400;">This means investing in your people at all levels and investing in yourself. </span> <b>Focus on company culture and vision</b> <span style="font-weight: 400;">In the early days, the first handful of employees likely formed a single tight-knit group and the management structure was pretty flat. You’ll probably cross 100 employees during this stage; different groups will evolve and layers will be added – and it becomes all the more important keep everyone aligned to the central mission.</span> <span style="font-weight: 400;">One of the most important things a leader can do is to make sure the whole organization understands the company’s vision, priorities, and goals. We’ve found that most CEOs underestimate just how often the vision needs to be repeated. </span><a href="https://www.versionone.vc/three-leadership-lessons-from-slacks-stewart-butterfield/"><span style="font-weight: 400;">Stewart Butterfield advised</span></a><span style="font-weight: 400;"> to “Repeat the message until you are sick of hearing yourself talking about it.”</span> <b>Invest in your people</b> <span style="font-weight: 400;">While it is now pretty common for young founders to work with coaches, leadership development has typically been limited to executives.</span><a href="https://www.versionone.vc/shopifys-big-people-investment-how-a-startup-scaled-coaching-beyond-its-executives/"> <span style="font-weight: 400;">Shopify has done a really good job</span></a><span style="font-weight: 400;"> in making sure their company leaders are nurtured and developed at all levels of the organization.</span> <span style="font-weight: 400;">They brought on a part-time coach when the company had around 60 employees, and then full-time when they reached 160 employees. They’ve been offering one-on-one coaching for executives, ad hoc mentoring for 1</span><span style="font-weight: 400;">st</span><span style="font-weight: 400;"> and 2</span><span style="font-weight: 400;">nd</span><span style="font-weight: 400;"> level managers, as well as “at scale” leadership workshops for all company managers. </span> <span style="font-weight: 400;">You don’t necessarily have to bring coaching in house. </span><a href="http://www.lifelabslearning.com/"><span style="font-weight: 400;">LifeLabs Learning</span></a><span style="font-weight: 400;"> offers a good series of workshops and some of our portfolio companies have used </span><a href="https://www.soundingboardinc.com/"><span style="font-weight: 400;">Sounding Board</span></a><span style="font-weight: 400;"> for scalable, and affordable, 1:1 coaching.</span> <b>Invest in yourself</b> <span style="font-weight: 400;">We can all learn from what Stewart Butterfield has done (and continues to do) at Slack. In </span><a href="https://www.versionone.vc/three-leadership-lessons-from-slacks-stewart-butterfield/"><span style="font-weight: 400;">conversations with Stewart</span></a><span style="font-weight: 400;">, we are always impressed by how self aware he is about his own strengths and weaknesses. He actively seeks feedback on how he can further improve himself. This has been critical because when a company scales as quickly as Slack scaled, its leaders need to scale equally fast.</span> <span style="font-weight: 400;">Great leaders are made, not born – although we tend to see just the end product and not the hard work that led to the success.</span><a href="https://www.versionone.vc/scaling-from-maker-to-manager/"> <span style="font-weight: 400;">Scaling from founder to manager</span></a><span style="font-weight: 400;"> is going to take a whole village – coaches, mentors, peers, feedback from your company and direct reports. Most importantly, you need to look at feedback as an opportunity to grow, rather than criticism.   </span> <b>Hiring after a B Round</b> <span style="font-weight: 400;">During the earlier phases, you have mainly been hiring generalists rather than specialists. But at this stage in the company’s growth, founders can no longer wear all the hats. Now is the time to hire a great VP Sales, VP Marketing and VP Product.</span> <span style="font-weight: 400;">In general, you should be looking for candidates that have seen it and done it before, but are </span><span style="font-weight: 400;">still flexible enough to adjust their playbook to your company's specific situation. We have seen many situations where VP's that came from "big brands" cannot adjust to the limitations and necessities of a Series B startup: budgets and teams are usually way smaller, playbooks are still evolving, and it takes more work to chase customers (people aren’t automatically coming to you because of your brand yet). Keep in mind that not every hire will work out and you might be back to leading some of these functions.</span> <span style="font-weight: 400;">For those of you who have experience leading a Series B company, is there anything you would add? What do you see as the biggest priorities after raising a B round?</span>

<span style="font-weight: 400;">Last week, we kicked off a blog series to help founders determine their</span><span style="font-weight: 400;"> company’s core priorities and strategies at each stage of the </span><span style="font-weight: 400;">progression from seed to Series A and Series B.</span> <a href="https://www.versionone.vc/so-you-just-raised-your-seed-round-now-what/"><span style="font-weight: 400;">In the previous post</span></a><span style="font-weight: 400;">, we outlined what startups should focus on right after raising a seed round. The next stage in the journey is the A round, and as expected, it brings a brand new set of priorities.</span> <b>Focus on distribution and understanding your business</b> <span style="font-weight: 400;">Between seed and Series A, a startup typically needs to focus on product-market fit. Next, figuring out distribution is generally the most important thing to solve between Series A and Series B. Before raising your B round, you’ll need to be able to show how you can scale sales and marketing and that you are starting to really understand your business. In other words, you should demonstrate that revenue and/or engagement are repeatable and achievable in a cost-effective manner, and not just a function of pent-up demand from a small segment of underserved customers that will dry up in the near future.   </span> <span style="font-weight: 400;">With that said, you’ll need to understand what sales and marketing channels work (and scale), what your customer acquisition costs are, and how much a typical user is worth over their lifetime with your company.  </span> <span style="font-weight: 400;">For example, if you are building a consumer business, you should be watching for the following metrics:</span> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">LTV/CAC: Ideally, your Lifetime Value: Customer Acquisition Cost ratio is over 4:1. It’s even better if you understand the LTV and CAC for each of your major marketing channels and customer groups.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Retention rate: What percentage of users can you retain quarter over quarter? This metric is over 90% for best-in-class startups and is a huge driver for above mentioned LTV.</span></li> </ul> <span style="font-weight: 400;">If you are building a SaaS company, consider:</span> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">CAC payback is ideally below 24 months – and under 12 months in the best scenarios.</span></li> <li><span style="font-weight: 400;">Customer churn: Churn should ideally be under 1% per month. It’s even better to be net negative (expansion dollars &gt; churn dollars).</span></li> </ul> <span style="font-weight: 400;">At this stage, you are ultimately trying to create a model that shows how a $1 investment in Sales and Marketing creates $x in additional revenue - so when the Series B comes around, a new investor can get comfortable how a large amount of additional capital is being used to truly scale the company. </span> <b>Hiring after an A round</b> <span style="font-weight: 400;">At this stage, generalists are still more valuable than specialists but you should start to bring on expertise and hire directors / VP's in areas where your playbook is clear...for example, engineering, customer service / success and finance. Try to avoid hiring specialists in areas where your playbook is still in development and where a founder is the best leader...for example, product, marketing, and sales. </span> <span style="font-weight: 400;">As you are starting to scale aggressively in this phase, we would also recommend that you invest in an internal recruiter (or even a team of recruiters) - hiring successfully and at scale often comes down to the depth and breadth of the hiring pipeline and having somebody focusing 100% on this task is usually the most important driver.</span> <span style="font-weight: 400;">As always, we welcome discussion so please share your thoughts and observations about a company’s priorities after raising an A round. And next week, we’ll be sharing the third and final post in this series, “You just raised your Series B, now what?”</span>

<span style="font-weight: 400;">At V1, we have had the privilege to sit on many of our <a href="https://www.versionone.vc/our-portfolio/">portfolio</a> companies’ boards from (pre-)seed to Series B (and beyond). We have seen these companies grow and go through the different stages in the start-up journey. And over the years, we have observed common patterns emerge at every phase. </span> <span style="font-weight: 400;">We actively help each portfolio company manage their changing priorities as they grow. Now, we want to share some general advice to the broader community. In a three-part series, we’ll outline the core priorities and strategies for each stage in the journey – starting with what happens once you raise your seed round. We hope this helps, since we all know that setting proper priorities at each stage is the most important thing a entrepreneur can do. </span> <i><span style="font-weight: 400;">What should you focus on (and not focus on) right after raising your seed round:</span></i> <b>1</b><span style="font-weight: 400;">. </span><b>Priority = product-market fit  </b> <span style="font-weight: 400;">The seed round is all about finding product-market fit. In fact, this is typically the </span><b>only</b><span style="font-weight: 400;"> thing that matters between seed and Series A. Be myopically focused on product-market fit and don’t waste your time on things that won’t contribute to achieving this goal.</span> <b>2. Start to be data driven</b> <span style="font-weight: 400;">By fostering a metrics mindset in your organization from the start, you can run experiments more effectively and efficiently as you work on product-market fit. These metrics will become your business’ North Star for everyone to rally around. And of course, a solid data foundation will come in handy in the future when you need to understand which levers to pull in order to really scale.  </span> <b>3. How to hire</b> <span style="font-weight: 400;">At this stage, you should be hiring smart, hungry generalists, rather than specialists. Specialists are great when you have a playbook, but very few start-ups have a playbook at the seed stage. What you need now are smart and ambitious people who can figure out whatever needs to be figured out at any given moment. This means you need to design a hiring process to find generalists. Instead of posting ads for a specific position (where you’ll naturally get applications from people that fit the job description), </span><span style="font-weight: 400;">try to identify the smartest people in your network and go after them.</span> <b>4. Should you outsource?</b> <span style="font-weight: 400;">Outsourcing is a great option when you have limited resources and not necessarily a deep talent bench in certain areas…so one would think it should be a great option for the seed stage. However, we never recommend outsourcing unless it’s for an ancillary area or a one-time task. You</span><a href="https://www.versionone.vc/never-ever-outsource-your-core/"> <span style="font-weight: 400;">never, ever want to outsource your core</span></a><span style="font-weight: 400;">… by doing so, you fail to build the expertise in your own company. And you can’t build a great company on an outside agency’s stuff.</span> <b>5. What about culture?</b> <span style="font-weight: 400;">Company culture often gets created with the first 10-20 people. Be very deliberate with your hiring choices as the early employees shape company culture as much as the founding team. This doesn’t necessarily mean that you should go out and hire a bunch of people just like you. If diversity is important to you, make sure you’re thinking about building a diverse team from day one (and this may mean you need to hire outside your network)</span> <b>6. Be frugal, but not too frugal</b> <span style="font-weight: 400;">During the seed stage, it’s important to watch your burn so that you can give yourself enough time to reach the necessary milestones for the next round. To this end, you want to focus your investments on those things that will get you closer to product-market fit. There’s no point in investing in sales &amp; marketing at this stage. However, you will need to spend in a few areas outside product development – such as legal and accounting. Not having your house in order can come back to bite you at a later date.</span> <span style="font-weight: 400;">Let us know if you have any other thoughts or observations about a company’s core priorities at the seed stage and stay tuned for next week’s post “You just raised your Series A, now what?”</span>

<span style="font-weight: 400;">Traditionally, startups in healthcare have had challenges with distribution. This is not any different from companies in other industries, but innovation is not fully “permissionless” because of regulation, the many stakeholders involved (i.e. government, payers, hospitals/clinics, physicians, caregivers, and patients) with competing incentives, and the power of incumbents that continue to consolidate the market (i.e. pharma, PBMs, and EHRs).</span> <span style="font-weight: 400;">The tide, however, might be changing. Over the last few years, certain companies have opened up platforms to encourage app development in the EHR space - from </span><a href="https://apporchard.epic.com/Gallery"><span style="font-weight: 400;">Epic’s App Orchard</span></a><span style="font-weight: 400;"> to </span><a href="https://code.cerner.com/apps"><span style="font-weight: 400;">Cerner’s Code</span></a><span style="font-weight: 400;"> and </span><a href="https://allscriptsstore.cloud.prod.iapps.com/"><span style="font-weight: 400;">Allscripts’ Development Program</span></a><span style="font-weight: 400;">. It’s still early: there are just over 200 apps on these three platforms combined. But if “data is oil”, then what’s exciting is that there is an opportunity to pull health/medical information that has been siloed in these systems of record into a “new engine” (i.e. a new smart enterprise or personalized consumer application). And with these EHR app stores, there is now a new distribution channel for healthcare startups and a way for customers to discover new apps.</span> <span style="font-weight: 400;">If you are building a healthcare app on top of these EHRs, then just like any other company that relies on incumbent platforms, it is important to recognize the associated risks and answer the following questions:</span> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">How do you control your destiny? This is particularly important since platforms control your distribution and monetization.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Your integration into the platform is a great initial wedge. But how do you become more independent over time and what does that look like? Can your application be its own native product (i.e. can you use your app without the platform?) and/or become a new system of record?</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">The EHR market is quite fragmented which diversifies you and takes away dependencies, but market share is split evenly across these three major players. How do you develop on each platform when they are all different? In addition, it is not uncommon for the implementation of a specific type of EHR to vary from one hospital/clinic to another, but also vary within one organization between different departments/specializations. Thus, it is important to have a strategy to deal with the customization that occurs with every EHR.</span></li> </ul> <span style="font-weight: 400;">We’re excited to see what the opening of EHR systems offers to healthcare innovators. If you are building an application on top of these and have a clear strategy on how to tackle dependency, we’d love to talk to you!</span>

<span style="font-weight: 400;">When Lolli </span><a href="https://medium.com/@alexadelman/lolli-bitcoin-for-everyone-aa8f52e0ffa"><span style="font-weight: 400;">launched in August</span></a><span style="font-weight: 400;">, co-founder Alex Adelman wrote, “</span><i><span style="font-weight: 400;">Over 60% of Americans have heard of bitcoin, but very few actually own any.”</span></i> <span style="font-weight: 400;">For all of us in the tech bubble, this is a good reminder of the relative inaccessibility of cryptocurrency. Many of us have Coinbase accounts (a V1 portfolio company) and don’t think twice about buying currency. But when you take a step back, you realize that the act of buying another type money is very unfamiliar to the average consumer (the closest thing we ever had before was foreign exchange).</span> <span style="font-weight: 400;">Pair this with the fact that bitcoin, as an example, has a distribution problem. The only way you can get BTC is via buying or mining. There should be no surprise that mainstream adoption is so low.</span> <span style="font-weight: 400;">Enter Lolli, a rewards application that earns you bitcoin when you shop online. </span><span style="font-weight: 400;">Their mission is to make bitcoin more accessible to all</span><b>,</b><span style="font-weight: 400;"> by simplifying the way people earn, share, and save bitcoin.</span> <span style="font-weight: 400;">And today, we are excited to announce our investment in this company. We led the round with participation from Bain Capital, 3K VC, Forerunner, FJ Labs, DCG and some great angels.</span> <span style="font-weight: 400;">  </span><b>Why are we so excited about Lolli?</b> <ul> <li style="font-weight: 400;"><span style="font-weight: 400;">Their mission aligns very well with our core beliefs – primarily belief #1 “democratizing access to resources.”</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Lolli is intuitive and easy-to-use – perfect for people’s first experience with bitcoin. It’s a browser extension with over 500+ brand partnerships already in place. You can</span><span style="font-weight: 400;"> earn bitcoin while shopping for clothes, groceries, hotels, and more.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">There’s no risk to the consumer, significantly improving on-ramping into crypto. Since bitcoins from Lolli are “gifted” to you as a reward, you won’t feel the sting of crypto’s volatility in the same way as if you had bought it.  </span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">Lolli has network effects with the ability to earn/spend one reward currency (BTC) across different online retailers. While rewards programs have traditionally been silo’ed (what you earn on one e-tailer’s site has to be redeemed on that site), think of Lolli as a universal rewards program.</span></li> <li style="font-weight: 400;"><span style="font-weight: 400;">The grander opportunity is that Lolli will be *the* wallet for everyone. To start earning BTC, the company creates a wallet in a quick and frictionless for each consumer who signs up.</span></li> </ul> <span style="font-weight: 400;">And in addition to all of this, we love the team! Co-founders Alex Adelman and Matt Senter </span><span style="font-weight: 400;">have been working on democratizing commerce for years. Their last company, Cosmic, gives people </span><span style="font-weight: 400;">the ability to seamlessly buy and sell all across the web (Cosmic was acquired by PopSugar and then later by Ebates).</span> <span style="font-weight: 400;">So, whether you closely track your crypto portfolio or have been wondering how to get into bitcoin, sign up for Lolli – and </span><span style="font-weight: 400;">bring your parents and grandparents on board too!</span> <em><span style="font-weight: 400;">Download Lolli: </span><a href="http://www.lolli.com/"><span style="font-weight: 400;">www.lolli.com</span></a></em> <em><span style="font-weight: 400;">Join the </span><a href="https://www.facebook.com/groups/trylolli/"><span style="font-weight: 400;">Lolli Facebook community</span></a><span style="font-weight: 400;"> for exclusive deals</span></em> <em><span style="font-weight: 400;">Follow Lolli on Twitter </span><span style="font-weight: 400;">for company updates &amp; more ways to earn bitcoin: </span><a href="https://twitter.com/trylolli"><span style="font-weight: 400;">@trylolli</span></a></em>

Over the past decade, new platforms have driven down the cost of starting a tech business. For example, you don’t need to buy servers anymore – you can just host your site on AWS. And distribution has become immediate, efficient, and highly targeted thanks to Google and Facebook. The impact extends beyond technology companies too. In just the past few years it has become a lot less expensive to start a new business in many other verticals. We are seeing new retail brands launch every day <a href="https://www.cnbc.com/video/2018/08/28/shopify-coo-on-the-new-era-of-e-commerce-retail.html">over Shopify and Instagram</a>. New entertainment companies, like in eSports, are scaling fast thanks to YouTube, Facebook, and Twitch. And Uber has helped launch over <a href="https://www.bloomberg.com/news/articles/2018-10-24/uber-s-secret-empire-of-virtual-restaurants">1K “virtual” restaurants</a>. It’s very hard to predict second order consequences. Benedict Evans did a very thorough examination of possible <a href="https://www.ben-evans.com/benedictevans/2017/3/20/cars-and-second-order-consequences">second order consequences</a> that will ripple out from today’s changes in the automotive industry. But when it comes to second order consequences from the tech world, a few things are clear. First, platforms that are breaking out have an even bigger opportunity to scale because of second order effects. And second, these platforms will help millions of entrepreneurs start new businesses in a way that was not possible before. These platforms are Shopify, Instagram, Twitch and Uber today, they might be new platforms like AR / VR, autonomous cars and crypto tomorrow. We are excited to meet entrepreneurs that are going after these new opportunities and the platforms that are creating them.