JDR’s Newsletter – #3 (XL Edition)

Hello there,

This is an extra-large edition of a (roughly) weekly newsletter experiment containing links to things I’ve written and made, plus links to other interesting articles, reports and essays I’ve come across.

In case you haven’t already subscribed, you can do so through Tinyletter. You can find an archive of this and previous issues of my newsletter at news.jdr.fyi.

Thoughts, opinions and typos are my own.

Quote of the week

“It is not simply the brightest who have the best ideas; it is those who are best at harvesting ideas from others. It is not only the most determined who drive change; it is those who most fully engage with like-minded people. And it is not wealth or prestige that best motivates people; it is respect and help from peers.”

– Alex Pentland, Social Physics: How Good Ideas Spread-the Lessons from a New Science (New York: The Penguin Press, 2014).

My blog posts and articles

How Much Does Pre-Seed Equity Really Cost? (Mattermark)

What is the price curve of startup equity at the seed and pre-seed stage? In other words, in something like an accelerator program, a certain amount of equity is given up by the company in exchange for the money and services an accelerator provides. Both those numbers ought to vary in some sort of proportion, and I wanted to find that proportion. Using data I gathered from F6S on over 700 accelerator programs in North America and Europe, I derived and compared the cost curves of pre-seed and seed stage startup equity in each of those markets. It’s not perfect by any means, but it’s a good first crack at finding out how much equity in very early stage companies really costs.

Venture Capital Is Boring (Mattermark)

Is venture capital, as an asset class, all that special? As it turns out, no, not really. I examined the venture capital industry from the general partner and limited partner side of the business using a Bloomberg dataset that another researcher passed along. In my analysis, I conclude that venture capital is subject to the same cyclicality, power law distributions, herd mentality and diverse set or returns as other asset classes. Nothing too surprising there.

Quick Takes On This Week’s News

Fed Spooks Creep On Bay

In a revelation that seems straight out of the Cold War, the CBS affiliate in San Francisco reported that the FBI had cast a wide net of hidden microphones (hiding spots include “under rocks… [and] in trees”) for an investigation of potential bid fixing by real estate investors. Jeff Harp, a security analyst for KPIX 5, advises, “if you’re going to conduct criminal activity, do it in the privacy of your own home.”

Now We Know Just How Bad the SF Housing Market Is

Researcher Eric Fischer doubled the amount of San Francisco housing data available to policymakers, economists and journalists bemoaning high rents in the city. His effort, which involved transcribing rent data by hand (I repeat, by hand) from the San Francisco Chronicle produced some startling results: SF rent has increased by an average 6.6% year over year since 1956. As Michael Anderson reported in his excellent analysis of Fischer’s findings, “6.6% is 2.5 percentage points faster than inflation [which after compounding like this for 60 years] means housing prices quadruple compared to everything else you have to buy.”

(Thanks to journalist Michael Anderson for writing about this on Medium.)

Maker of A Device In My Sock Drawer Acquires Another

Engadget reported Wednesday that Fitbit acquires the majority of [Coin]6], the all in one payment card platform that launched on Kickstarter in 2014 and faced many shipping delays. (For the record, I own a base-model Fitbit and a Coin. Both of these devices are now kept safely in the back of my sock drawer, only lightly used.) Fitbit announced that it wouldn’t be integrating Coin’s tech into their products in 2016, so it’s safe to say that Coin’s NFC and card replicator tech will probably find a home in the Fitbit feature set in 2017. Still, I probably won’t be buying another.

Recent Observations from Other People

Benjamin Bratton on The Stack

You should read Metahaven’s interview with Benjamin Bratton about his new book, The Stack: On Software And Sovereignty. I started reading the book last week, and it is easily some of the most gripping reading I’ve done in the last 12 months. The interview and the book is a far reaching, well-executed theoretical work analyzing and connecting the various layers and ramifications of the recent rise of what he’s calling Planetary Scale Computing.

As he defines it: “The Stack is planetary-scale computation understood as a megastructure. The term “stack” is borrowed from the TCP/IP or OSI layered model of distributed network architecture. At the scale of planetary computation, The Stack is comprised of 7 interdependent layers: Earth, Cloud, City, Network, Address, Interface, User. In this, it is an attempt to conceive of the technical and geopolitical structures of planetary computation as a ‘totality.’”

Expect more about The Stack and stack-thinking in future editions of this newsletter as I work through the book.

Charlie O’Donnell On Why I Am Wrong

Charlie O’Donnell, a Brooklynite, self-announced 6x triathlete and early stage VC really, really didn’t like my analysis in the “Venture Capital Is Boring” article I wrote for Mattermark. So much so that he probably spent a couple of hours writing a post explaining why I was wrong. You know, he has a point. He had/has access to more (and probably better) data than what I had to work with. But rather than complain about the quality or kind of data I analyzed, like Mr. O’Donnell does in the title of his post, maybe he as a VC could do more to share insights about the venture capital industry data. I for one would love to see more data-centric coverage of the industry, and I’m sure many others would as well.