Absolute value

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It’s time for the annual window painting competition in my little town. Store owners allow kids to have a 2 foot by 4 foot piece of window to paint a scary/funny/punny Halloween billboard, and the winners get a certificate.

And every year, parents not only help, they often take over and do all the work.

The thing is: Not one of these entries, ever, has been the best in the world. None has been perfect or even worthy of hanging in a gallery. It’s not a worldwide absolute competition. It’s relative.

Relative to what you’re capable of.

You’re not running the race against everyone else. More often than not, you’re simply running it against yourself.

[And as long as we’re thinking about the Grateful Pumpkin and seasonal reasons to be thankful, a reminder that in the US, Thanksgiving is in three weeks. The annual Thanksgiving Reader is available for free download and easy at-home printing. Designed by Alex Peck, he and I are offering it to families so that we can create a new tradition. This year more than ever, even if it’s by Zoom.]

Don’t eat cheap chocolate!

October 31st 2020 Uncategorized

You can start a venture fund if you’re not rich; here’s how

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For years — decades, even — there was little question about whether you could become a venture capitalist if you weren’t comfortable financially. You couldn’t. The people and institutions that invest in venture funds want to know that fund managers have their own “skin in the game,” so they’ve long required a sizable check from the investor’s own pocket before jumping aboard. Think 2% to 3% of the fund’s total assets, which often equates to millions of dollars.

In fact, five years ago, I wrote that the real obstacle to becoming a venture capitalist ties less to gender than to financial inequality. I focused then on women, who are paid less (especially Black and Hispanic women), and who possess less wealth. But the same is true of anyone of lesser means.

Consider that one or two partners trying to raise a $50 million debut fund have to come up with $1.5 million. They’ll collect management fees off that $50 million fund — the standard is 2% annually for the fund’s investment period — but they have to use that $1 million per year to pay for everyone’s salaries, along with rent, auditing, legal costs and back-office administration fees. That doesn’t leave much, which is why having something to start with helps.

Thankfully, things are changing, with a growing number of ways that aspiring VCs can jump into the business who can’t write a big check. None of these approaches can guarantee success in raising a fund, but these are paths that other VCs have effectively used in the past when starting out.

1.) Find investors, i.e. limited partners, who are willing to take less than 3% and maybe even less than 1% of the overall fund size being targeted. You’ll likely find fewer investors as that “commit” shrinks. But for example Joanna Rupp, who runs the $1.1 billion private equity portfolio for the University of Chicago’s endowment, suggests that both she and other managers she knows are willing to be flexible based on the “specific situation of the GP.”

Says Rupp, “I think there are industry ‘norms,’ but we haven’t required a [general partner] commitment from younger GPs when we have felt that they don’t have the financial means.”

Bob Standish, founder of the fund administration firm Standish Management, echoes the sentiment, saying that a smaller general partner commitment in exchange for special investor economics is also fairly common. “You might see a reduced management fee for the LP for helping them or reduced carry or both, and that has been done for years.”

2.) Learn more about what are called management fee offsets, which investors in venture funds often determine to be reasonable. These aren’t uncommon, says, Michael Kim of Cendana Capital, a firm that has stakes in dozens of seed stage funds, because they also offer tax advantages (though the IRS has talked about doing away with these).

How does theses work? Say your “commit” was $1 million over 10 years (the standard life of a fund). Instead of trying to come up with $1 million that you presumably don’t have, you can offset up to 80% of that, putting in $200,000 instead but reducing your management fees by that same amount over time so that it’s a wash and you’re still getting credit for the entire $1 million. You’re basically converting fee income into the investment you’re supposed to make.

3.) Use your existing portfolio companies as collateral. Kim has had at least two managers whose brands have come to be highly regarded launch a fund not with a “commit” but rather by bringing to the table stakes in startups they’d funded as angel investors.

In both of these cases, it was a great deal for Kim, who says the companies were quickly marked up. For the fund managers’ part, it meant not having to put more of their own money into the funds.

4.) Make a deal with wealthier friends if you can. When Kim launched his fund of funds to invest in venture managers after working for years as a VC himself, he raised $1 million in working capital from six friends to get it off the ground. The money gave Kim, who had a mortgage at the time and young children, enough runway for two years. Obviously, your friends have to be willing to gamble on you, but sweeteners certainly help, too. In Kim’s case, he gave his friends a percentage of Cendana’s economics in perpetuity.

5.) Get a bank loan. Rupp said she would be uncomfortable if a GP’s commit was being funded through a bank loan for several reasons, including that there’s no guarantee a fund manager will make money on his or her fund, a loan adds risk on top of risk, and because should a manager need liquidity related to that loan, he or she might sell a strongly performing position too early.

That said, loans aren’t uncommon, says Raynard. He says banks with venture capital relationships like Silicon Valley bank and First Republic are typically happy to lend a fund manager a line of credit to help him or her to make capital calls, though he says it does depend on who else is involved with the fund. “As long as it’s a diverse group of LPs,” the banks are comfortable moving forward in exchange for winning over a new fund’s business, he suggests.

6.) Consider the merits of so-called front loading. This is a technique with which “more creating LPs can sometimes get comfortable,” says Kim. It’s also how investor Chris Sacca, now a billionaire, got started when he first turned to fund management. How does it work? Say a fund manager is getting paid a 2.5% management fee over the life of a 10-year fund. Over that decade, that amounts to 25% of the fund. Typically, management fees decline over time, to 2% and even slightly lower because you are typically no longer actively managing it but rather managing out the bets you’ve made in the first few years.

Some beginning managers blend that management fee — say it’s 20% over the fund’s duration — and pay themselves a higher percentage — say 5% for each of its first three years — until by the end of the fund’s life, the manager is receiving no management fee for it at all.

Without carry, that could mean no income if you aren’t yet seeing profits from your investments. But presumably — especially given pacing in recent years — you, the general partner, have raised another fund by the time that happens so have resources coming in from that second fund.

These are just a few of the ways to get started. There are other paths to take, too, notes Lo Toney of Plexo Capital — which, like Cendana Capital — has stakes in many venture funds. Just one of these is to structure to use a self-directed IRA to finance that GP “commit.” Another is to sell a portion of the management company or to sell a greater percentage of future profits and to use those proceeds, though VCs Charles Hudson of Precursor Ventures and Eva Ho of Fika Ventures avoided that path and suggested that first-time managers do the same if they can.

Either way, suggests Toney, a former partner with the Alphabet’s venture arm, GV, it’s important to know  one’s options but keep in mind, too, that what you start with may ultimately prove irrelevant.

Said Toney via email this week: “I have not seen any data on the front end of a VC’s career that wealth indicates future success.”

October 31st 2020 Uncategorized

ServiceNow CEO: COVID Accelerated Digital Transformation

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ServiceNow CEO: COVID Accelerated Digital Transformation

“Digital transformation was the opportunity for our generation before COVID,” says ServiceNow CEO Bill McDermott. “Now with COVID, it has accelerated and exacerbated all the issues of broken systems and siloed operations. Before COVID they didn’t want to be told to go into a cubicle. Do you think after COVID once this thing clears up at some point in the future they are going to be told to go into a cubicle? No, they’re going to be digital.”

Bill McDermott, CEO of ServiceNow, discusses how COVID has exacerbated “broken systems” and has accelerated the digital transformation of companies around the world:

COVID Has Accelerated Digital Transformation

Digital transformation was the opportunity for our generation before COVID. Now with COVID, it has accelerated and exacerbated all the issues of broken systems and siloed operations. People are not realizing that 75% of the workforce by 2025 will be millennial generation people. Before COVID they didn’t want to be told to go into a cubicle. Do you think after COVID once this thing clears up at some point in the future they are going to be told to go into a cubicle? No, they’re going to be digital.

They’re also going to absolutely expect their employer to give them the best tools. The big idea if you want to give the customer a Michelin 3 experience is you have to fuse the employee experience and the customer experience on a common platform. This way most things can be automated for the customer on a self-service basis. The things that can’t be automated can immediately be workflow ordered to get the right person in the right place with the right skill set at the right time. That’s what we do and that’s why this is a thrilling moment.

Now Platform Is the Standard For Digital Transformation

The Now platform has become the standard for digital transformation in business today. If you think about most of these companies they’re grappling with the future of work. They have to accommodate their employees. They have very distributed workforces. How are they going to get them the tools that they need and onboard them properly? In some cases, they never even meet the people they hire. Then obviously, how are they going to manage the experience they have digitally?

This also goes direct to the customer. How do you go direct to the consumer? How do you make sure you give them a great service so they stay loyal to you? The ServiceNow Platform is at the epicenter of all of that. More and more, developers are building new innovation on the fly on the Now Platform. The Now platform has become a standard for large enterprises around the world. The ecosystem and the network effect building on that are truly sensational. We’re extremely fired up because we want to make work… work better for people all over the world. What we’re trying to do is get to the essence of everything.

ServiceNow CEO Bill McDermott: COVID Has Accelerated Digital Transformation

ServiceNow CEO: COVID Accelerated Digital Transformation
Rich Ord

October 31st 2020 Uncategorized

Dior Lets Snapchatters Virtually Try On Its New B27 Sneaker

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Luxury brand Dior introduced its new B27 sneaker Friday via an exclusive augmented reality experience on Snapchat that enabled users to virtually try on and purchase the product. Snapchatters who access the lens can “try on” six different pairs of Dior sneakers via AR to see how they look wearing them, and they can also…

October 31st 2020 Uncategorized

TikTok stars got a judge to block Trump’s TikTok ban

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TikTok has won another battle in its fight against the Trump administration’s ban of its video-sharing app in the U.S. — or, more accurately in this case, the TikTok community won a battle. On Friday, a federal judge in Pennsylvania has issued an injunction that blocked the restrictions that would have otherwise blocked TikTok from operating in the U.S. on November 12.

This particular lawsuit was not led by TikTok itself, but rather a group of TikTok creators who use the app to engage with their million-plus followers.

According to the court documents, plaintiff Douglas Marland has 2.7 million followers on the app; Alec Chambers has 1.8 million followers; and Cosette Rinab has 2.3 million followers. The creators argued – successfully as it turns out — that they would lose access to their followers in the event of a ban, as well as the “professional opportunities afforded by TikTok.” In other words, they’d lose their brand sponsorships — meaning, their income.

This is not the first time that the U.S. courts have sided with TikTok to block the Trump administration’s proposed ban over the Chinese-owned video sharing app. Last month, a D.C. judge blocked the ban that would have removed the app from being listed in U.S. app stores run by Apple and Google.

That ruling had not, however, stopped the Nov. 12 ban that would have blocked companies from providing internet hosting services that would have allowed TikTok to continue to operate in the U.S.

The Trump administration had moved to block the TikTok app from operating in the U.S. due to its Chinese parent company, ByteDance, claiming it was a national security threat. The core argument from the judge in this ruling was the “Government’s own descriptions of the national security threat posed by the TikTok app are phrased in the hypothetical.”

That hypothetical risk was unable to be stated by the Government, the Judge argued, to be such a risk that it outweighed the public interest. The interest, in this case, was the over 100 million users of TikTok and the creators like Marland, Chambers and Rinab that utilized it to spread “informational materials,” which allowed the Judge to rule that the ban would shut down a platform for expressive activity.

“We are deeply moved by the outpouring of support from our creators, who have worked to protect their rights to expression, their careers, and to help small businesses, particularly during the pandemic,” said Vanessa Pappas, Interim Global Head of TikTok, in a statement. “We stand behind our community as they share their voices, and we are committed to continuing to provide a home for them to do so,” she added.

The TikTok community coming to the rescue on this one aspect of the overall TikTok picture just elevates this whole story. Though the company has been relatively quiet through this whole process, Pappas has thanked the community several times for its outpouring of support. Though there were some initial waves of ‘grief’ on the app with creators frantically recommending people follow them on other platforms, that has morphed over time into more of a ‘let’s band together’ vibe. This activity coalesced around a big swell in voting advocacy on the platform, where many creators are too young to actually participate but view voting messaging as their way to participate.

TikTok has remained active in the product department through the whole mess, shipping elections guides and trying to ban Qanon conspiracy spread. Even as Pakistan banned and then un-banned the app.




October 31st 2020 apple, Google

Comic for October 30, 2020

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Dilbert readers – Please visit Dilbert.com to read this feature. Due to changes with our feeds, we are now making this RSS feed a link to Dilbert.com.

October 31st 2020 Uncategorized

Cough-scrutinizing AI shows major promise as an early warning system for COVID-19

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Asymptomatic spread of COVID-19 is a huge contributor to the pandemic, but of course if there are no symptoms, how can anyone tell they should isolate or get a test? MIT research has found that hidden in the sound of coughs is a pattern that subtly, but reliably, marks a person as likely to be in the early stages of infection. It could make for a much-needed early warning system for the virus.

The sound of one’s cough can be very revealing, as doctors have known for many years. AI models have been built to detect conditions like pneumonia, asthma, and even neuromuscular diseases, all of which alter how a person coughs in different ways.

Before the pandemic, researcher Brian Subirana had shown that coughs may even help predict Alzheimer’s — mirroring results from IBM research published just a week ago. More recently, Subirana thought if the AI was capable of telling so much from so little, perhaps COVID-19 might be something it could suss out as well. In fact, he isn’t the first to think so.

He and his team set up a site where people could contribute coughs, and ended up assembling “the largest research cough dataset that we know of.” Thousands of samples were used to train up the AI model, which they document in an open access IEEE journal.

The model seems to have detected subtle patterns in vocal strength, sentiment, lung and respiratory performance, and muscular degradation, to the point where it was able to identify 100 percent of coughs by asymptomatic COVID-19 carriers and 98.5 percent of symptomatic ones, with a specificity of 83 and 94 percent respectively, meaning it doesn’t have large numbers of false positives or negatives.

“We think this shows that the way you produce sound, changes when you have COVID, even if you’re asymptomatic,” said Subirana of the surprising finding. However he cautioned that although the system was good at detecting non-healthy coughs, it should not be used as a diagnosis tool for people with symptoms but unsure of the underlying cause.

I asked Subirana for a bit more clarity on this point.

“The tool is detecting features that allow it to discriminate the subjects that have COVID from the ones that don’t,” he wrote in an email. “Previous research has shown you can pick up other conditions too. One could design a system that would discriminate between many conditions but our focus was on picking out COVID from the rest.”

For the statistics-minded out there, the incredibly high success rate may raise some red flags. Machine learning models are great at a lot of things, but 100 percent isn’t a number you see a lot, and when you do you start thinking of other ways it might have been produced by accident. No doubt the findings will need to be proven on other datasets and verified by other researchers, but it’s also possible that there’s simply a reliable tell in COVID-induced coughs that a computer listening system can hear quite easily.

The team is collaborating with several hospitals to build a more diverse dataset, but is also working with a private company to put together an app to distribute the tool for wider use, if it can get FDA approval.

October 31st 2020 Uncategorized

Apple acknowledges AirPods Pro issues, will replace those that crackle and rattle

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Are your AirPods Pro earbuds making weird noises? You’re not imagining it — and you’re not the only one.

Just a few months after Apple started shipping AirPods Pro, some users started noticing that one or both of their earbuds were rattling or crackling. The noises would reportedly get worse whenever the user moved, and would sometimes only develop after months of use.

Apple didn’t say too much about it at first, but would usually replace crackling earbuds if you took the time to hit up support. A few folks here at TechCrunch have had the rattle rear its head on our own AirPods Pro buds… only to have it pop up again in the replacements.

It seems the problem has become widespread enough for an official acknowledgement: today Apple launched an “AirPods Pro Service Program” (as first pointed out by Mark Gurman) specifically for swapping out crackling buds.

A newly published support page outlines the potential symptoms, both of which suggest the issue has to do with the noise cancellation system:

  • Crackling or static sounds that increase in loud environments, with exercise or while talking on the phone
  • Active Noise Cancellation not working as expected, such as a loss of bass sound, or an increase in background sounds, such as street or airplane noise

Apple notes that only units made before October 2020 are affected, suggesting they’ve fixed the issue in units now coming off the line. The support page repeatedly says faulty units will be “replaced” rather than “repaired” — so for the most part, it sounds like turnaround should be pretty quick.

October 31st 2020 apple

Panera CEO: Ecommerce Pivot Sparks Dramatic Growth

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Panera CEO: Ecommerce Pivot Sparks Dramatic Growth

“Close to 60 percent of our sales are coming from e-commerce,” says Panera CEO Niren Chaudhary. “By focusing on servicing customers through our off-premise channels, leveraging e-commerce, and then rapidly innovating we’ve seen a very smart recovery on our brand and also a stronger business model emerging from the pandemic. What’s clearly playing out is the off-premise channel is seeing dramatic growth.”

Niren Chaudhary, CEO of Panera, discusses how the company has focused on ecommerce and the “off-premise channel” to drive dramatic growth:

Panera’s Ecommerce Pivot Sparks Dramatic Growth

Panera is actually emerging quite strongly through the pandemic because we’ve been completely focused on what we have control over. By focusing on servicing customers through our off-premise channels, leveraging e-commerce, and then rapidly innovating we’ve seen a very smart recovery on our brand and also a stronger business model emerging from the pandemic. What’s clearly playing out is the off-premise channel is seeing dramatic growth.

To give you a sense, our delivery is growing by over 100 percent, drive-throughs are growing by over 60-70 percent, and rapid pickup is seeing strong growth. The off-premise channels are growing very strongly and in some ways compensating for the decline in business on-premise. Pre-pandemic we were probably about 60-40 in terms of off-premise versus on-premise. Now it is predominantly off-premise convenience for our customers as we’re moving in that direction.

Close to 60 percent of our sales are coming from e-commerce. Brands that are able to leverage their e-commerce strength and pivot very sharply on providing convenience and off-premise are beginning to see a smart recovery.

It’s All About Convenience, Ecommerce, and Innovation

There are three levers that we’re working on to get our business back on track: convenience, e-commerce, and then meaningful innovation. Included in that are cool foods, a coffee subscription program, and most recently the flatbread pizza launch. We’re very excited about this because it’s the launch of a new food category at Panera, one that we haven’t had before. It’s a bullseye innovation in terms of what the customer is looking for at this time. Customers are looking for a warm shareable at-home meal solution for their families. The flatbread pizza fits perfectly for that.

We’re doing it in a uniquely Panera way as you would expect. We’re leveraging the credibility of our breads. We have unique ingredients that are all clean, they’re fresh, we have double blend cheese, bold flavors of our sauces, and it’s stone-baked. Think of this as a pizza that customers love but done in a very unique Panera way. That’s why we’re so excited.

Panera CEO Niren Chaudhary: Ecommerce Pivot Sparks Dramatic Growth

Panera CEO: Ecommerce Pivot Sparks Dramatic Growth
Rich Ord

October 31st 2020 Uncategorized

Michaels to Bring 360-Degree Immersive Holiday Shopping Experiences to Pinterest

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Arts-and-crafts retailer Michaels teamed up with R/GA to bring three virtual holiday shopping experiences to Pinterest, starting Saturday (Oct. 31). Pinners will be able to explore 360-degree experiences in three themes: Peppermint Lane, Silver and Snow, and Winter Wonderland. Each virtual room includes do-it-yourself projects and shoppable products, and Pinners exploring the Pins will see…

October 31st 2020 Uncategorized