It's such a cliche to say that "less is more" but it's so often the case.
We often advise companies we're talking to to raise less money than they otherwise might. Raising less now typically means less dilution. It can also mean more focus. Often times, raising too much means spending too much, or growing the team faster than makes sense, ultimately slowing things down.
Often times doing less means accomplishing more. What I mean by this is: doing something "perfectly" or "bigly" or whatever, often adds pressure, which can often lead to accomplishing less. This is the "perfect as the enemy of good" version of more. I most often see this expressed in forms like, we are encouraging our analysts at USV to write blog posts or develop internal decks/memos more quickly with less pressure, to get them out in the world and get feedback. My partner Jared encapsulates this well in Shitty First Drafts. This is also the theory behind Minimum Viable Products (MVPs). Often times, waiting to do more results in accomplishing less (and feeling worse along the way).
Doing less has the important result of keeping things moving. Doing less more often is better than doing more less often, because it generates momentum. For example, for the past week, I've been picking up acorns in my back yard, in 3 minute bursts when I have a moment. I've collected hundreds of acorns, and it has felt like basically no work.
More stuff also means more responsibility. More pressure, more weight, more cost, etc etc. I'm definitely not a Marie Kondo minimalist, but I do understand this point of view. While I love stuff, I also like to pack light.
I'm writing this now mostly as a reminder to myself about how much I value this overall approach.
I was sitting with an investor friend earlier this week, describing the kinds of things that USV likes to invest in. She asked if USV invested much in SaaS (Software as a Service), and I said no, not really. But yes, in certain cases, especially where there is a network to be had, and I mentioned that one kind of network we like to invest in is a system-of-record style network.
The canonical example is our portfolio company Carta, which is certainly SaaS, but really, it's system-of-record, grounded in ownership interests (starting with equity ownership in startups) as the foundation record that binds the system together. From there, many stakeholders can engage and collaborate, all based on the shared interest in the records at the heart of the system.
Since the beginning of USV, we have always asked the question: "is this a tool, or can it become a network?" In the early days of Carta (f/k/a eShares), you could look at it as a tool for managing cap tables, or you could look at it as a network of assets and stakeholders.
The system-of-record network effect is also at heart of why blockchains are interesting. They are, by definition, ledgers that track the relationship between digital assets (money, date, etc) and a wide variety of stakeholders.
With any system of record, the more data and records that the system holds, and the more stakeholder identities that interact with it, the more valuable it gets. It's no surprise that the enterprise ERP systems (eg., SAP, Oracle, Microsoft, Salesforce, etc) that form the systems-of-record for most large companies are extremely highly valued and long-term durable.
Perhaps all of this is obvious. But it has proven to be a helpful frame for us as we continue to consider software applications in a wider variety of contexts. For example, CarbonChain is building a system-of-record around carbon accounting, and Odyssey is building a system-of-record around financing and operations of distributed energy resources in emerging markets.
Becoming a system of record is not easy -- it requires placing oneself at the center of someone else's workflow and digital life. Open source solutions (e.g., blockchains) are well suited to it because bring a high level of transparency and trust. Digitizing an asset type that was previously analog and making it 100x more useful is another way to generate enough momentum to get there.
And with that, I will hit publish, and as I do so, this post will get recorded -- permanently -- in the arweave blockchain which provides the system-of-record datastore for this blog!
The middle of a crypto (and broader financial) market meltdown is perhaps an apropos moment to introduce my second podcast guest: Muneeb Ali, the co-founder of Stacks.
Stacks is a "Bitcoin L2", meaning a system for scaling and expanding the usefulness of the bitcoin network, by making it less expensive and more programmable.
The "Slow Hunch" that Muneeb has followed for over a decade is the idea that blockchain networks can and will be used for more than just financial transactions.
USV invested in the the precursor to the Stacks project back in 2014 -- at that time, the focus was a project called OneName, which can be thought of as an "app" (for digital identity) on top of what would become the Stacks "platform".
We believed then, as we do now, that cryptonetworks and blockchain technology are not just financial technology but also "internet" technology and will, over time, change the way that many internet applications are built.
This has indeed been a slow hunch so far. In 2014, the technology infrastructure was so far away from supporting consumer use cases in a smooth way. One could argue that that's still true today, a decade later -- though the advances, especially in the last 2 years, have been remarkable.
Aside from the "if" of this slow hunch, there is the "how". In 2015, Ethereum launched on very much the same thesis of a highly programmable blockchain. And over the years since, it has used an "L2" (aka Layer 2) approach to scaling -- with a highly secure, but slow and expensive base layer, paired with an ecosystem of faster/cheaper L2s on top.
Where the Stacks project has differed is in this approach -- believing that Bitcoin makes more sense as the base layer, given its simpler approach and more reliable security. Muneeb and the Stacks team believe that this approach is more consistent with the "stack" of internet protocols, built around the highly simple, but extremely durable, IP protocol.
I hope you enjoy my conversation with Muneeb.
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