Dive Into Network Theory: Some Resources for The Curious

Earlier this week I published a piece for Mattermark’s blog that maps and visualizes the network of international mergers and acquisitions of startups and a few other private companies. To accomplished this, I used data from Mattermark recording 2,250 cross-border M&A deals made between January 1, 2015 and the end of August, 2015.

The visualization I made for that piece is one of the coolest I’ve made during my time freelancing for Mattermark. (See featured image above.) An explanation of how to interpret this network visualization can be found in the piece on Mattermark’s blog. But that’s not what this post is for.

One of my editors asked me to share some information about how I created the visualization and more about social network theory and analysis in general. Rather than letting my list of resources lie forgotten in a direct messages channel on Slack, I decided to expand and share it here for other people to benefit from. Continue reading “Dive Into Network Theory: Some Resources for The Curious”

Simple Security Best Practices for Bitcoin Users and Investors

One of the biggest stories to hit the Bitcoin space in months was the theft of 119,756 BTC (valued at ~$70 million USD) from Bitfinex this week. For those that aren’t familiar with the story, a great re-cap was published on CoinDesk within 24 hours of the break-in. (Obviously, if you’re reading this far into the future, the public’s understanding of the hack has likely changed.)

The attack brought to light a lot of questions about the security of Bitcoin exchanges and online wallets. As I’ve previously written, a lot of these questions arise from the tension between the trust one necessarily places in third parties to secure users’ Bitcoin holdings and the notion that Bitcoin, as a system, is built around the principle of trustless-ness. In light of the repeated failures of trusted third parties to maintain security, it’s likely that there will be more scrutiny of Bitcoin wallet providers and renewed interest in self-managed Bitcoin security.

Here are some suggestions for Bitcoin users looking to beef up their own security. Continue reading “Simple Security Best Practices for Bitcoin Users and Investors”

Virtual Reality, Already a Reality (for the Payments Industry)?

Note: This is the unedited version of an interview I gave to PCM, a payments industry trade journal produced by Payments & Cards Network. It is reprinted here with permission from the editor.

In the interview I give a broad overview of the history of VR/AR and the unique challenges and opportunities presented by the medium to the payments industry today. The edited version of this interview can be found on their website, and a mirror can be found here.


This piece was originally shared in my weekly newsletter. If you haven’t subscribed yet, you can do so here.

powered by TinyLetter


PCM: There seems to be a lot of interest in virtual reality these days. How long has the technology been around, and why is there so much interest now?

Me: First of all, I think that you’re definitely right about VR being a big trend right now. There are a lot of really interesting technical developments that helped to facilitate this current wave of VR interest, but it’s important to remember that VR is not a brand new idea.

Take, for example, the head-mounted display which modifies the image that’s projected into your eyes based on where your head is in space. That technology has been around in some form or another since at least the early 1960s. Controllers that fit your hand like a glove have been around for a similarly long time, but a lot of these early experiments were confined to academic research and some corporate research and development labs.

In the 1980s and 1990s there were several attempts made to commercialize VR technology, primarily by the video game industry, but it’s my understanding that those first attempts were fairly crude: lots of blocky, pixelated graphics and some significant lag in head tracking, which made users nauseous. All of this took away from the immersive experience that VR enthusiasts sought. The history of VR hardware is really interesting, but that’s kind of outside the scope of this conversation, so I’m sorry for digressing here.

Today, though, both hardware and software have gotten to the point where that kind of immersive experience is achievable. The high end PC gaming industry really drove a lot of technical progress in graphics processing chips. Both computer and mobile phone producers have developed and adopted displays with extraordinarily fine resolution, so whatever is being displayed looks very smooth. And, we could probably thank the smartphone industry for the huge variety of inexpensive gyroscopes, sensors and other components that allow for head tracking, tilt detection and other features. All these components have been appropriated and remixed by the VR industry today.

This is a long-winded way of saying that VR is the convergence of a lot of technical progress that’s come down to a price point that’s accessible to a lot of people now.

PCM: How does VR make user experience better? Is there anything that’s bad or lacking in the VR experience? Continue reading “Virtual Reality, Already a Reality (for the Payments Industry)?”

The Risk Of Trusting In A Trustless System

Discussing the risks and challenges of trust in the Bitcoin ecosystem.

Note: In light of the security breach at Hong Kong-based Bitcoin exchange Bitfinex, in which 119,756 BTC valued at approximately $70 million USD were stolen, I decided to share an excerpt from my undergraduate thesis. My thesis was about economic, social and computational centralization that was catalyzed by the Chinese Bitcoin community, and I may share other parts of it here at some point. It is copied verbatim from what I submitted to my supervising professor, so there may be allusions to prior sections of the paper that aren’t present in this post. I did my best to avoid the dry language of academic writing.

Please leave a comment or contact me privately if you have any feedback to share.


Trust, Centralization And Other Risks With Bitcoin

As I alluded to in the section about embeddedness, Granovetter helped to cement in the social science literature the role trust and social connections play in the formation of economic relationships. In somewhat simplified terms, the theory suggests that actors in an economic system will preferentially create economic relationships with actors they trust.

This creates an interesting theoretical and rhetorical tension with the fundamental concepts of Bitcoin. It is easy to think of trust as a prerequisite for “safe” economic interaction, but trust also carries its own set of risks. Trust is also a prerequisite for trickery and subterfuge. It’s out of this atmosphere of mistrust that central elements of Bitcoin’s technical architecture emerged. The programmatic way in which new currency enters the Bitcoin system reflects Satoshi Nakamoto’s mistrust of central banks and their ability to will economic value into and out of existence. The decentralized nature of transaction verification eliminates the need for a centralized, trusted third party to act as a clearinghouse for transactions. The fact that transactions are pseudonymous means that bitcoins can be treated as an electronic version of cash, which in conventional currency systems is used to facilitate fast, anonymous transactions. Nakamoto states in the opening paragraphs of the original Bitcoin paper that the irreversible nature of a Bitcoin transaction means that merchants don’t have to trust that customers will not maliciously dispute or “charge back” transactions, like they can do with credit cards.

The information security community has this saying, “Trust, but verify”. Well, why risk trusting when verification becomes trivially easy? The highly transparent nature of the central blockchain ledger removes the necessity to trust that a transaction occurred; verifying is as simple as using a blockchain explorer to look up the transaction-id or either Bitcoin address involved in the transaction. The fact that Bitcoin’s codebase has been open source effectively since day one of its existence means that any sufficiently knowledgeable person can audit the code to verify that there are no hidden back doors or other features that could facilitate malfeasance.

In these ways, Bitcoin’s architecture is anti-trust or “trustless”. In a very direct way, the very reasons that users cite for “trusting” Bitcoin stem from the trustless design of the protocol. If the trustless nature of Bitcoin is maintained by a decentralized network of miners and service providers, then it holds that that trustless-ness is corroded when the system becomes more centralized. So, the common narrative that Bitcoin is some pure, apolitical, trustless medium of exchange is at least severely flawed if not outright false. The economic and social centralization of Bitcoin has created a system that is rife with trust issues. Continue reading “The Risk Of Trusting In A Trustless System”

My Newsletter’s First Quarterly Report (Q1,Y0)

Today marks the close of the first quarter since I started my weekly newsletter. For those reading this who don’t know what I’m talking about, let me explain: every week I send out an email that contains links to things I’ve written and found online. Usual topics include tech news and commentary, coverage of the venture capital industry and the occasional set of links to articles, podcasts and other stuff I found interesting that week. 

If you don’t subscribe but would like to, you can do so on this page over here.

Maintaining this newsletter pushes me to seek out more interesting information and to improve my skills as a short-form writer and “curator”. And it has allowed me, in some tangential way, to maintain a connection to friends and mentors I don’t get the opportunity to see or speak with that often. I’ve received a lot of positive feedback from friends and strangers, and I plan to continue publishing this weekly newsletter for some time to come.

In the interest of transparency, and to keep myself accountable to readers, I wanted to share some details about how my newsletter has performed in the eleven weeks leading up to this one. Continue reading “My Newsletter’s First Quarterly Report (Q1,Y0)”

On The “Blanding” Of Web and Mobile Design: Some Light Reading

You don’t have to work for a tech company or be a professional designer to be able to intuit some things about mobile and web design. Over the past several years, designers have eschewed patterns and interface components inspired by the real world (a design trend known as skeuomorphic design). Lots of bloggers covered this shift, which kicked off somewhere around 2012, but for a good re-cap, you might want to check out John Gruber’s post on the subject.

There is a lot of internal corporate politics around this shift, primarily focused on the conflict between Apple executives in the wake of Steve Jobs’s death. Jony Ive won, and former iOS head Scott Forstall, who so loved the Corinthian leather pattern and pool table felt patterns that used to adorn several iOS apps, did not. Apparently, in the wake of his departure from Apple, Forstall threw his hat into the ring of Broadway musical production, so I guess it all worked out for him.

So-called “flat design” was in, but it was not all Apple’s doing. Lest we forget, though, that Microsoft’s Metro design language was one of the first to embody the characteristics of flat design in user interfaces on both desktop and mobile devices.

Twitter’s Bootstrap front-end framework, despite some relatively gaudy gradients in initial releases, eventually flattened out into the simple, bright aesthetic we’re used to today. Like, with Bootstrap in particular, its style is so monolithic that it’s become the subject of parody (NSFW language warning). Bootstrap definitely did its part to make flat design the aesthetic standard throughout the contemporary commercial web.

But now that brings us to today. On one end of the spectrum is the revival of 1990s-style websites as part of the Web Brutalism movement to the spare aesthetics of Medium and its content platform peers on the other.

For those who want to learn more, I made a small and rather incomplete list of readings and resources on the subject of web design and trends therein. Consider it a small jumping off point.

Whatever happened to the web page?

In a long answer to the question, “Whither the Webpage?” for The Awl, JSTOR Daily producer Charles Thaxton follows up his review of the recent “web brutalismcommentary with an incisive and delicious set of points: “As the investor class pivots toward video, the web actually stands a decent chance of becoming more disjointed and oddball and ecumenical in its design, and in turn more spontaneous or creative in its spirit […] But! It also stands to replicate the worst aspects of television: passivity, mediocrity, a plurality of superficial choice with the same indistinguishable affect. Not to mention new sorts of vacuity and horror specific to a post-platform age. I don’t know a lot about virtual reality, but I’m told to prepare myself not for ads but for ‘branded experiences.’”

A (now somewhat dated) corollary to the first one

Awl co-editor John Herrman explores the varying shades of blue used throughout modern social networking sites in his 2014 piece, “Internet, Why So Blue?”

“Complexion Reduction” is not a skincare treatment, it’s the post-Flat design paradigm du jour

Michael Horton, a UI and UX designer based in NYC, recently discussed a brand new trend in mobile design, “Complexion Reduction” in a post on Medium. The defining characteristics of Complexion Reduction, according to Horton, are:

  1. Bigger, bolder headlines;
  2. Simpler more universal icons;
  3. Extraction of color.

His post includes many screenshots to prove his point and a delightfully ironic guide to CR design at the bottom. It also includes this observation on the new trend: “[Your] iPhone home screen will soon become nothing more than a colorful mosaic of bright portals transporting you to Pleasantville.”

Surveying Last Week’s Bitcoin News

Bitcoin and blockchain technology is an area of ongoing interest for me. Although I’m not as involved in the space as I once was, I keep my eye on the news. The Bitcoin ecosystem can be quite insular, so I’m particularly interested in events that bubble up into the more conventional financial arena.

Last week saw a few news stories break about Bitcoin. 

Winklevii Amend BIT S–1, Again

Tyler and Cameron Winklevoss – the twin Olympic rowers and Facebook litigants turned prolific Bitcoin investors – filed an amended S–1 on their Bitcoin Investment Trust (the BIT), the proposed Bitcoin ETF that’s thus far eluded SEC approval to trade on a major exchange.

Note: the Winklevoss’ BIT is not to be confused with the Greyscale Bitcoin Trust, which is traded under symbol GBTC on the OTCQX exchange.

Their S–1 amendment, the sixth to be filed since the initial filing on July 1, 2013, reflects the Trust’s decision to cease negotiations with NASDAQ, instead signaling intent to debut on the BATS exchange. At least according to Investopedia, which can sometimes be a bit iffy on coverage, BATS is one of the most popular exchanges for ETFs. The proposed security would trade under the BIT’s initial desired ticker symbol: COIN.

The best article I could find about this amendment is this one on Seeking Alpha. Toward the end, there are a series of bullet points explaining the state of Bitcoin, the BIT, and the rest of the cryptocurrency ecosystem. It’s definitely worth checking out.

Fun Update: The Bitcoin Network is now ~22,800x faster than the Top 500 supercomputers combined

In December 2015, I published a short post updating the findings of Forbes contributor Reuven Cohen from November 2013. He found that the Bitcoin network hashrate was 256x faster than the combined compute power of the Top 500 supercomputers.

Note: Before all the computer scientists reading this start writing angry emails, Cohen explained the slightly squirrelly conversions Bitcoinwisdom makes between floating point operations per second and SHA–256 hashes per second. These statistics are useful primarily for entertainment purposes only.

In December of ’15, the Bitcoin network hashrate was around 600 petahashes per second, allegedly equivalent to 7.06 million petaFLOPs of raw compute power. The November 2015 list of the Top 500 supercomputers had a combined peak performance (R_peak) of 642 petaFLOPS. Divide the Bitcoin network speed in petaFLOPS by the combined Top500 from November 2015 and you arrive at almost exactly 11,000x faster.

Today, the Bitcoin network hashrate has increased significantly, up 153% to ~1,516 petahashes per second in only 7 months. Again, using some jiggery pokery on the conversions, that’s equal to 19.25 million petaFLOPS.

In June, the new list of Top 500 supercomputers was released. I summed the R_peak speeds of all the systems on the list to arrive at a total of… 845 petaFLOPs. So, divide one by the other and you find that the Bitcoin network is humming along at a clip 22,800 times faster than the top supercomputers combined.

So this is all well and good, but because the conversion between hashes and FLOPS is more or less meaningless, for all practical purposes, here are some no-bullshit comparative takeaways:

  • Remember that in 7 months, the Bitcoin network hashrate more than doubled in speed.
  • In the same period of time, aggregate peak speed of the Top 500 supercomputers increased by a comparatively small 30%.

This is testament to the fact that in the Bitcoin space, although it’s stayed out of the mainstream news, the technical arms race for share of total network processing speed has kept up its astonishingly fast pace. Gordon Moore, eat your heart out.

“Satoshi’s Law,” anyone?

China: The Seat of Power In Bitcoin’s “Decentralized” System

New York Times journalist Nathaniel Popper published a really good article about how China became the seat of power in the Bitcoin ecosystem.

(Popper’s work dovetails nicely with the research work I did for my undergraduate thesis. I intend to share some or most of what I found out at some point in the near future.)

Brexit: History, Market Failure & Science Threat

The late-breaking news on Thursday night that the United Kingdom voted to exit the European Union left global markets rattled and many scratching their heads. As John Goodman points out in his history of referenda for Atlas Obscura the UK overwhelmingly voted to stay in the European Community (the EU’s predecessor) in 1975. Obviously, much has changed since.

To me, the two most interesting aspects of the “Brexit” vote are the failure of prediction markets and the impact the move may have on science and technology in Europe. I don’t have much analysis of my own to share here, so in lieu of that I’ll share some links to some of the more interesting articles I’ve read as I’ve tried to wrap my head around the vote.

Failure of Prediction Markets

  • If you don’t know what a prediction market is or if you want to learn more, you might want to check out this list of resources from ConsensusPoint, a Nashville-based research group that specializes in prediction markets.
  • The Economist explains that prediction markets are subject to a number of cognitive biases that create a gap between expectation and reality. Their take: this gap can be exploited by the likes of pro-Brexit folks and such black swan political candidates as Donald Trump.
  • David M. Rothschild, an economist with Microsoft Research and proprietor of PredictWise, published an article analyzing the statistical upset of the Brexit vote. According to him, prediction markets failed due to market forces… most traders discounted the possibility of Brexit and held positions that would lose their entire value if (and when) the measure passed. In other words, it’s the same story as other market failures: over-confidence in one outcome and lots of unhedged risk led to a bad outcome.

Threats To European Science and Tech Research & Investment

  • Published before the vote, the MIT Technology Review explored the impact of a (then hypothetical) Brexit vote on British science research. Highlights from the article include: 83% of British scientists opposed Brexit; Britain is an outsized benefactor of EU funds for scientific research, receiving more money than it contributes to the fund (meaning Brexit has negative ROI for UK science); UK scientists may lose out on collaboration opportunities, much like Swiss scientists did when Switzerland tightened its borders in 2004.
  • Although the European Investment Fund has not announced any plans to change its relationship with the UK post-Brexit vote, there’s now a risk that the EIF will hold off on investing in new venture capital funds located in the UK, according to an article in FT Alphaville.

Remember, the Brexit vote is just the first step in what might be a long and messy divorce from the EU. In this particular case, researchers, technologists, entrepreneurs and investors might be caught in the crossfire. But a broader takeaway is the fallibility of prediction markets and polling data, which we should all keep in mind leading into the US election cycle.

Notes on Twilio, Line And The Open (?) Window

After several quarters of disappointing news from public tech companies (primarily those affiliated with Jack Dorsey, but I digress) and story after story about private tech companies’ reluctance to go public, Twilio may have blown open the tech IPO window on Thursday. Making its debut on the NYSE under symbol TWLO, at the price of $15/share, shares in the cloud communications company opened at $23.99, 60% higher than its initial offering. Shares hit an intra-day high of $29.61 and closed at $28.79, up over 90% for the day. (Shares in Twilio, like most other companies, experienced significant declines in Friday trading thanks to Brexit news.)

For more information and context on the Twilio IPO, check out some of these resources:

  • My friend Alex Wilhelm’s note on the IPO for Mattermark. (Also, thanks to Alex for linking to the EquityZen report mentioned below.)
  • This analysis from EquityZen shows that Bessemer Venture Partners owns 28.5% of Twilio. Bessemer generated a 27.4x multiple on invested capital on its Series B investment and 9.6x MOIC its Series C follow on.
  • That same report finds that Union Square Ventures generated an 82.3x MOIC on its Series A investment.
  • Fred Wilson, general partner at Union Square Ventures, says that Twilio’s was the best seed pitch ever. Proof positive that a live working demo trumps even the best pitch decks.

Whether or not Twilio’s public offering is a one-off success or the beginning of a trend is impossible to say, because it was the first major tech IPO this year. (One data point does not a trend make.)

The next scheduled IPO is for Japanese mobile messaging app Line, which is slated to go public on the NASDAQ on July 12. (More info on Line’s impending IPO can be found on the NASDAQ site.) Although all eyes will be on Line and the market’s reaction to its debut, there are some things to keep in mind (notes cribbed from Bloomberg):

  • Line filed for an IPO almost two years ago on the Japanese market at a valuation of 1 trillion yen. July’s IPO valuation, which will make shares publicly tradable on US and Japanese markets, is expected to be 588 billion yen, or 40% lower.
  • Facebook has steadily encroached on Line’s key product areas with the launch and continued expansion of Messenger, and its acquisition of Whatsapp.
  • Line’s average user is valued at $25 per user, less than half of the $55/user Facebook paid for Whatsapp.

Line is also unlike Twilio in that it’s not an infrastructure play. Remember that during a gold rush it’s best to invest in the people making the shovels, which is ostensibly why Twilio has performed so well… they built the platform that helped to catalyze the mobile app boom. Line has stiff competition from WeChat to the west and Snapchat, Messenger and Whatsapp to the east. And, unfortunately for Line, it’s one where the customers are more fickle.

Investors interested in this IPO should proceed with all the expected caution and due diligence, remember that one tech unicorn is not necessarily like another, and remember that past performance is not necessarily indicative of future results. There’s always room for an upside surprise.

3 Places To Start Learning About Marketplace Businesses

Earlier this week I published “A Beginner’s Guide to VC” on the Mattermark blog. There were a number of people who reached out to ask me to add more resources explaining certain business verticals. There is no possible way I could fit them all into that one post, and, so, I decided to make lists of great introductory resources to give investors, journalists, entrepreneurs, researchers and the otherwise curious a jumping off point to learning more.

Here, I want to talk about marketplace businesses. When you sit and think about it, most of the sites and apps we regularly interact with are a form of marketplace. There are, of course, companies like Ebay, Amazon, Etsy, and a number of marketplace platforms (Shopify, Magento, and their peers), but there are other marketplace categories. The online travel booking industry, on-demand services like Lyft and Uber, real estate sites like Zillow, and even consumer review sites like Yelp and Zocdoc are all incarnations of the marketplace idea.

So, we all use marketplace services to some extent, but unless it’s your job to analyze or grow these kinds of businesses, it’s surprisingly easy to not think about how and why marketplaces work and grow. Well, for those who want to learn more about marketplaces – whether you’re starting from ground zero or are just looking for extra reading material – I have some recommendations on where to start.

Without further ado, here’s that list:

Boris Wertz & Angela Tran Kingyens’s Book

Start with this excellent (and pleasantly short) e-book from VC firm Version One. Authors Boris Wertz and Angela Tran Kingyens explore the theory and practice of marketplace businesses while providing tactical advice on determining the business model, getting over the 2-sided-market problem and sustainably growing the business. The book’s concluding sections unpack the rise of new kinds of marketplaces (on-demand, community-driven, and decentralized marketplaces are all examples) and get into the nitty-gritty of metrics and dealing with investors.

Bill Gurley’s List of 10 Factors To Consider

Bill Gurley, general partner of Benchmark Capital, oversaw the firm’s investments in Ebay, Yelp, OpenTable, GrubHub, Uber, Zillow and many other leading marketplace businesses. Needless to say, he’s seen a lot, and in 2012 he did his best to condense some of those observations into a list of 10 factors to consider when evaluating digital marketplaces. Although this was written by a VC for an analytical audience (other VCs, journalists, commentators) entrepreneurs would do well to consider some of the factors he brings up. Some of the highlights include: frequency of purchasing activity, network effects, payment flows, and whether technology has the opportunity to add value.

Rishi Dean’s 7 Marketplace Design Patterns

At the time of writing, Rishi Dean is the head of product at Sittercity, a marketplace that connects child care professionals with parents. He’s thus spent a lot of time thinking about designing and scaling products and marketplace businesses, and he’s shared some of his thoughts on his blog. Like Gurley, Dean devised his own framework for thinking about consumer marketplace business models in 2013, which borrows and adds on to Gurley’s work. But I think Dean’s best work on the subject is from September, 2015.

In “The 7 Marketplace Design Patterns” Dean provides an analytical framework that categorizes marketplace businesses across three dimensions:

  1. Whether the marketplace is for commodity goods/services or something more “experiential”
  2. The degree to which consumers must consider their decision to use the marketplace .
  3. Finally, the degree to which the marketplace operator can predict the frequency of a given user’s transaction.

For each of the seven design patterns he gives example companies and goes into some detail about the tactical and strategic considerations marketplace operators (or investors in said operators) should keep in mind.

For those interested in the ecosystem of on-demand marketplaces, another post from Dean delves into 6 qualitative factors to account for when analyzing on-demand marketplaces.


Did you find this post interesting? Was there something I missed? Feel free to reach out and let me know.