20 VC 053 Inside Union Square Ventures with Jonathan Libov @ Union Square Ventures

Abstract

Abstract

In the 53rd episode of the 20 Minutes VC, host Harry Stebbings interviews Jonathan Lipov from Union Square Ventures, exploring his transition from a product manager at Appsfire and creator of the 50 app to a venture capitalist. Jonathan discusses his product management experience in Tel Aviv, his cognitive science background, and his design and coding skills. The conversation delves into Union Square Ventures' thesis-driven investment approach, the impact of network effects on business defensibility, and the importance of blogging for intellectual development. Additionally, Jonathan shares insights on the future of SMS as a primary mobile identifier, the potential of decentralized marketplaces like Openbazaar, and the unique challenges of investing in the sports sector. The episode also touches on the role of central authorities in marketplaces and the personal interests that guide sector specialization within venture capital firms.

Summary Notes

Introduction to the Podcast Episode

  • Harry Stebings introduces the 53rd episode of the 20 Minutes VC.
  • This week's feature focuses on guests from New York.
  • Jonathan Lipov, from Union Square Ventures, is the guest.

Hello and welcome to the 53rd episode of the 20 Minutes VC with your host Harry Stebings. And this week we're going to borrow from the magnificent Frank Sina Archer, in.

The quote is an introduction to the podcast episode, setting the stage for the New York-focused feature and introducing the host, Harry Stebings.

Jonathan Lipov's Background

  • Jonathan Lipov is part of the investment team at Union Square Ventures.
  • He has experience as a product manager at Appsfire in Tel Aviv.
  • Lipov holds a degree in cognitive science from Vasar College.
  • His early career was in neuroscience research.
  • He is also skilled as a designer and coder, with a side project called app 50.

Jonathan joins us today from the investment team at the incredible Union Square Ventures in New York, but he has lived for the last few years in Tel Aviv, where he most recently worked as a product manager at Appsfire.

This quote provides an overview of Jonathan Lipov's professional background and his connection to Union Square Ventures and his past in Tel Aviv.

Hiring Screen's Candidate Directory Feature

  • Hiring Screen offers a solution for tracking candidate applications.
  • It is positioned as a modern alternative to using Excel spreadsheets.
  • The feature is promoted for those seeking a more user-friendly recruitment technology.

But before we jump into today's episode, if you are stuck in the 20th century using Excel spreadsheets to keep track of all your candidate applications or your existing recruitment technology is so complex that it appears to have come from another planet, you will love hiring Screen's candidate directory feature.

The quote is a promotional message for Hiring Screen's candidate directory feature, suggesting it as a technological upgrade for recruitment processes.

Transition to Venture Capital

  • Jonathan Lipov transitioned from Appsfire to venture capital.
  • His knowledge of the mobile ecosystem was a key factor in his hiring.
  • He became an analyst at Union Square Ventures after following the firm and reading Fred's blog.
  • Lipov applied for the analyst position when he realized his time at Appsfire was ending.

Well, I was a product manager at Appsfire in Tel Aviv. I had been there for about four years and really gotten to know the mobile ecosystem really well. I think that was one of the reasons they brought me on here.

This quote explains how Jonathan Lipov's experience in the mobile ecosystem contributed to his shift from product management to venture capital at Union Square Ventures.

Union Square Ventures Interview Process

  • The interview process involved recording two-minute videos.
  • The questions asked were about tech inspirations and personal background.
  • Interviews were conducted with the partners and team at Union Square Ventures.

Well, the initial screening involved recording two two minute videos. I think the questions were, what aspects of tech most inspire you? Or what are your greatest inspirations? And the other question was, I think, just to tell them a little bit about myself.

The quote describes the initial part of the interview process for the analyst position at Union Square Ventures, which included recording videos to answer specific questions.

Learning Experience at Union Square Ventures

  • Jonathan Lipov has learned extensively during his time at Union Square Ventures.
  • He highlights the intellectual framework provided at USV for understanding networks.
  • Networks are seen not just as social connections but in a broader, fundamental sense.

Well, I think I've learned more in this ten months than any ten months of my entire life. That probably includes the ten months from the day I was born till when I started walking.

This quote emphasizes the significant learning experience Jonathan Lipov has had at Union Square Ventures, comparing it to the most formative times of his life.

Union Square Ventures' Success Factors

  • Brad and Fred, founders of Union Square Ventures, believed networks were key to internet business defense.
  • The firm's success is attributed to focusing on network effects rather than just reliability or features.
  • Union Square Ventures' investments include Twitter, Zynga, and Kickstarter.

I think they had a real belief that networks would be the defensible quality of the Internet, or the defensible thing about building a business on the Internet, whereas, let's say, in prior businesses like Microsoft Office or Windows or any other software that came packaged in a CD or even a box, that reliability was actually one of the primary differentiators and probably also features.

The quote explains the strategic belief of Union Square Ventures' founders that network effects are a fundamental aspect of building a defensible internet business.

The Role of Fred's Blog in Union Square Ventures

  • Fred's blog serves as a communication tool to showcase USV's insights and smart money.
  • It is seen as a valuable resource for entrepreneurs seeking funding in New York.
  • Jonathan Lipov was inspired by the blog, which may have influenced his hiring.

And talking of kind of networking, it seems very much that Fred's blog is a way to communicate that USV's money is a form of smart money, if you know what I mean.

This quote discusses the importance of Fred's blog as a means of demonstrating Union Square Ventures' value proposition, particularly in terms of the expertise and networking opportunities they provide to entrepreneurs.

Blogging as a Means of Expressing Interest

  • Blogging is recommended by Jonathan Lipov for expressing interest in topics.
  • Lipov's own blogging may have resonated with the ideas from USV's partners.
  • Blogging is not for everyone, but it can be a powerful tool for sharing and developing ideas.

Yeah, I couldn't recommend it more highly. I mean, it's probably not for everyone, but for me, the reason why I do recommend it is because there's nothing.

The quote suggests that blogging is a highly recommended activity for those interested in sharing their thoughts and interests, as it can lead to opportunities like the one Lipov experienced with Union Square Ventures.

Blogging for Learning

  • Blogging requires deep thinking and understanding of a topic to communicate a coherent and clear message.
  • Blogging is not only about communicating to readers but also serves as a learning tool for the blogger.
  • The process of writing a blog post helps in exploring different angles of a topic.

"But when you're formulating it for a blog post and something that's meant to be consumed, you really need to think deeply and figure out every single angle so that you're communicating something which is coherent and clear and powerful."

This quote emphasizes the depth of thought and consideration required when creating a blog post intended for an audience. It highlights the importance of clarity, coherence, and the impact of the message being communicated.

Blogging Frequency and Tools

  • Jonathan blogs approximately once every three weeks.
  • He expresses a desire to blog more frequently if time permitted.
  • Jonathan's blog is self-created using Rails, indicating technical proficiency.
  • Ideas for blog posts often come to him during walks, suggesting a continuous engagement with his blog topics.

"I built it on rails, okay, but I blog probably now about once every three weeks."

Jonathan mentions the platform he uses for his blog (Rails) and his current blogging frequency, which provides insight into his personal schedule and technical choices for blogging.

SMS Industry and Its Future

  • Jonathan Lipov does not believe SMS is dead.
  • He suggests SMS is becoming more relevant with the shift from desktop to mobile, serving as a primary identifier.
  • SMS is used for verification purposes, such as receiving codes to confirm identity.
  • While not the primary way to interact with services, SMS has its place for certain interactions.
  • The conversational framework of SMS can be preferable to app-based interactions in some scenarios.

"I certainly don't believe SMS is dead. And in some ways, you could argue that it's becoming ever more relevant as we move from the desktop to mobile."

Jonathan argues against the notion that SMS is becoming obsolete and instead believes it is gaining importance in the mobile context, particularly as a means of user identification.

The Reserve App Experience

  • Reserve is an app used for making restaurant reservations in New York.
  • The app communicates with users via SMS for convenience and efficiency.
  • SMS allows for a conversational interaction that is sometimes more suitable than navigating through an app.

"They just send you an SMS and say, all right, your reservation is confirmed. Do you have any questions?"

This quote describes the user experience with the Reserve app, highlighting the simplicity and directness of SMS communication for confirming reservations and facilitating further interaction.

50 App for Pro Football

  • 50 app is an application for watching and consuming professional football content.
  • The app provides advanced analytics in a digestible format, such as visual graphs depicting win percentages during games.
  • 50 app curates Twitter content related to football, making it more accessible to users who may find Twitter overwhelming.

"One of the things that we found frustrating were that, one, there's a lot of great advanced analytics that are happening around pro football and other sports that weren't really in a terribly digestible format."

Jonathan discusses the motivation behind the creation of 50 app, which is to present complex football analytics in a user-friendly manner, enhancing the viewing experience for fans.

Role at USV

  • The transcript cuts off before Jonathan can fully describe his focus at Union Square Ventures (USV).
  • It is implied that he may have a specific sector focus or a multisector approach, but the details are not provided in the transcript.

"And as an analyst at USV. Are you looking specifically at the sports sector or are you looking multisector?"

This incomplete quote suggests a question about Jonathan's role as an analyst at USV, inquiring whether his analysis is focused on sports or spans multiple sectors. However, the response is not included in the transcript.

Personal Interests in VC Specialization

  • Jonathan Lipov discusses his personal interest in the 50+ demographic and sports.
  • He notes the challenge in these sectors due to intellectual property constraints.
  • Jonathan and his colleague, Joel Monegro, focus on sectors aligned with their interests and online activities.
  • They both go deep into sectors they are interested in and share findings with each other and their team.

"Yeah, well, the 50 thing and the sports thing is sort of a personal interest."

This quote highlights Jonathan's personal interest areas within venture capital.

"And a tough one for vcs, just because a lot of that industry is locked down by intellectual property and things like that, which actually is something that we had to deal with with 50."

Jonathan explains the difficulty in investing in the 50+ and sports sectors due to intellectual property issues.

"There's two analysts at USB, myself and Joel Monegro. And we do look at particular sectors."

Jonathan mentions his and Joel's roles as analysts at USB, focusing on specific sectors.

Venture Capital Approach at USB

  • USB is thesis-driven rather than deal flow-oriented.
  • The firm focuses on core beliefs about the Internet and business growth.
  • Investments are made based on the alignment with the firm's thesis and intellectual interests.
  • Jonathan describes the serendipitous nature of finding a company like Figure One, which fit USB's thesis unexpectedly.

"Well, one of the things that's unique about USV, insofar as I can tell, because this is the only venture capital firm that I've ever worked at, and I've only been here for ten months, is that we're thesis driven."

Jonathan explains the unique thesis-driven approach of USB compared to other VC firms.

"So in contrast to some firms, which are more, I think, deal flow oriented... we tend to follow our thesis and our intellectual interests quite a bit more."

He contrasts USB's approach with other firms that are more focused on the available market deals.

"But then figure one walks in and, well, I shouldn't say they walked in because I think Andy had heard or read about them somewhere and gotten in touch and gotten to know with them over time. But then you stumble across a figure one and it's not as if you ever said, oh, we were waiting for this, but all of a sudden it totally makes sense."

Jonathan describes how USB's investment in Figure One aligned with their thesis in an unexpected but fitting manner.

The Structure of Scientific Revolutions and Its Relevance to Investing

  • Jonathan's favorite book is "The Structure of Scientific Revolutions."
  • He discusses the impact of the book on his understanding of scientific and intellectual frameworks.
  • The book's ideas about paradigm shifts are applicable to investing, where existing frameworks can break down and new ones can be built.

"It's a book called the structure of scientific revolutions, okay? Which when I was a science student in undergraduate, I read in a science, technology and society class."

Jonathan identifies "The Structure of Scientific Revolutions" as his favorite book and notes its influence on him during his undergraduate studies.

"And then once you have a new framework, it sort of like flips a switch, right? And suddenly the whole framework breaks down and you can build a whole framework anew from that."

He explains the concept of paradigm shifts from the book and how it relates to his perspective on investing.

Apple Music: Analysis and Personal Thoughts

  • Jonathan Lipov shares his thoughts on Apple Music without making predictions.
  • He appreciates the full access to the iTunes catalog and the potential value of radio-like spontaneity.
  • His wife enjoys the radio feature, which suggests a user experience that on-demand services may overlook.
  • Jonathan criticizes the 'daddish' quality of the Apple Music interface, indicating some design issues.

"It's actually quite remarkable that you think that the entirety of the iTunes catalog is available to you all at once, whereas there are some cases on Spotify where I run into content that I would like that isn't know."

Jonathan expresses his appreciation for the comprehensive access provided by Apple Music compared to Spotify's limitations.

"There's some aspect of the radio which I think is there might be something fundamental about it that we might have looked over in this rush to make everything on demand."

He contemplates the potential undervalued aspect of radio in the era of on-demand music streaming.

"The things not to like is it has sort of like a daddish quality. I mean, if you look at really. I have trouble parsing the interface, but there's like that connect section, and there's."

Jonathan critiques the user interface of Apple Music, suggesting it is not as intuitive as it could be.

Apple Music's User Experience

  • The user interface of Apple Music, with its circle selection feature, is perceived as sterile and not very engaging.
  • Jonathan Lipov draws a parallel between Apple Music's UI and Game Center, implying a lack of appeal.
  • This aspect of the design leads to skepticism about the success of Apple Music.

"Just choosing between rock, jazz, classic rock, rap, I mean, just hitting those circles, there's something that feels like it's intended to be playful, but actually feels quite sterile."

The quote reflects Jonathan Lipov's view that the method of selecting music genres in Apple Music lacks the warmth and engagement that users might expect from a music platform.

Apple Music vs. Spotify

  • Jonathan Lipov hasn't given much thought to what Apple Music is missing compared to Spotify.
  • The conversation with the host shifts to what features might make Apple Music more appealing than Spotify.
  • Lipov is intrigued by the direct artist-to-fan connection, exemplified by Taylor Swift's interaction with her audience.

"The one thing that I found that I think is compelling also about Apple Music is... how an artist can connect directly with their fans these days."

The quote highlights a positive feature of Apple Music, where artists have the ability to connect with fans, potentially giving it an edge over competitors like Spotify.

Uber's Employment Model and Regulation

  • Jonathan Lipov discusses Uber's capitalization and its ability to adapt its business model amidst regulatory challenges.
  • He notes that the California ruling on employment classification is not universally applicable and that Uber can adjust its practices accordingly.
  • Lipov also points out that not all Uber drivers wish to be classified as employees (W-2), with many preferring the independence of being contractors (1099).

"I think they're so well capitalized that they can figure out a way to make their model work with W-2s... They'll find a way to work them out."

This quote suggests confidence in Uber's ability to navigate and adapt to employment regulations, despite the complexities involved.

Advice to Younger Self

  • Jonathan Lipov reflects on his past skepticism towards technology and the internet.
  • He shares a personal anecdote about an early business idea similar to Tinder, which he pursued before the prevalence of smartphones.
  • Lipov advises his younger self to have kept an open mind about technology and its potential.

"I probably would have recommended myself to have kept a much more open mind from an earlier age."

The quote encapsulates Lipov's change in perspective over time and underscores the value of maintaining an open mind, especially in the fast-evolving tech industry.

OpenBazaar and OB1 Investment

  • Jonathan Lipov discusses USV's investment in OB1, which operates the OpenBazaar protocol.
  • OpenBazaar aims to create decentralized marketplaces, reducing reliance on central authorities like Amazon or Etsy.
  • The use of blockchain technology could significantly lower transaction fees, potentially to zero.

"Openbazaar and Obi Wan are doing some really unique things that would enable decentralized marketplaces."

This quote emphasizes the innovative approach of OpenBazaar in creating a new kind of marketplace that operates without central authorities, leveraging blockchain technology.

Final Thoughts and Resources

  • Harry Stebings concludes the interview with Jonathan Lipov, thanking him for his insights.
  • Stebings directs listeners to the blog for resources mentioned in the interview.
  • A promotion for Hiring Screen's candidate directory feature is mentioned, highlighting its organizational benefits for recruiters.

"It's been a real pleasure. Thank you for having me, as always."

The quote is Jonathan Lipov's courteous conclusion to the interview, expressing gratitude for the opportunity to share his thoughts.

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