On Tuesday we announced our investment in Cryptokitties, and, as you might expect, received a combination of enthusiasm and skepticism in response. Bitcoin and cryptocurrencies already sound ridiculous to most people, and virtual “real” kittens made out of cryptocurrency take it a step further.

But, as with many new technologies, these first use cases just scratch the surface of a broader potential. There are lots of things to be excited about here, but for now I’ll just focus on one of them: interoperability.

Cryptokitties are a specific type of cryptoasset, known as a “non-fungible token” (in this case, based on the ERC-721 standard). Non-fungible means that each one is unique. So, when a kitty is “born”, it is a one-of-a-kind digital asset, as opposed to other types of currencies or tokens that are completely interchangeable. So, they are different than other tokens in that way, but are similar in that each NFT is “scarce” or “real” in that is secured by the blockchain – in this case the Ethereum blockchain. So, what we have are unique, scarce, public digital assets.

The public part is particularly interesting. Because each kitty is a token on Ethereum, that means that anyone else (aside from the original developers of Cryptokitties) can view that asset and integrate it into other systems, without anyone’s permission.

For example, on Kittyhats — developed independently from CryptoKitties — you can buy a hat for your kitty. Here’s the one I bought:

(There are now 899 flat brim hats still available if anyone is interested)

What’s particularly interesting is that I don’t own the hat, my kitty does — from the KittyHats whitepaper:

“When you sell a kitty, the sticker remains applied to the kitty. The new owner can choose to remove the sticker or leave it attached.”

Or, put another way:

You own the cat. But the cat owns the hat.
Cascading unique digital good ownership. Super interesting. https://t.co/iGqaWics2E
— Liad Shababo (@L1AD) March 22, 2018

So neat! So what we have the beginnings of is a world where digital assets that are created in one place can be freely integrated into other places.

If hats are too tame, you can also race your kitty at KittyRace: (updated, via @sidkal)

Or, when you’ve had enough of your kitty, you can head over to CryptoZombies (hat tip to Aaron), which teaches Ethereum programming via online game development. As you create a zombie, it can start to do things. One of the things it can do is eat CryptoKitties:

The (original) internet brought us a world where any site could link to any other site, and they could all be accessed from anywhere in the world. This was the first interoperability revolution. The next one will be with data and digital assets. For a long time, data has been the property of platforms — with cryptonetworks and cryptoassets, data can live outside of anyone platform, under the control of users. This has the potential to open up a lot of innovation.

An idea I like from Zen Buddhism is becoming a Bigger Container. My understanding of the idea is this:

There are a lot of difficult/bad/sad/scary things going on in the world, ranging from serious global issues, war, famine, terrorism, etc; to things in your city like homelessness or joblessnes; to things in your family, like difficult relationships or substance abuse; to tiny things in your life like a daunting project at work, or your inbox, or going through bills or cleaning your desk.

It’s hard to open yourself up to all of these things, because the are overwhelming and scary. So the easy thing to do is turn away – to avoid.

Becoming a bigger container means making space within yourself to face an increasing number of these things, with compassion and without fear. Being able to hold them and look them in the eye without any one of them grabbing control of you, carrying you away or breaking you.

From the reading linked above:

“What is created, what grows, is the amount of life I can hold without it upsetting me, dominating me. At first this space is quite restricted, then it’s a bit bigger, and then it’s bigger still. It need never cease to grow. And the enlightened state is that enormous and compassionate space. But as long as we live we find there is a limit to our container’s size and it is at that point that we must practice. And how do we know where this cut-off point is? We are at that point when we feel any degree of upset, of anger. It’s no mystery at all. And the strength of our practice is how big that container gets.”

When am most proud of myself, I am able to make space within myself to deal with hard things. To look them in the eye, be with them, and not look away. When I’m frustrated with myself, it’s often because I’m avoiding doing this.

The visualization that works for me is that when you become a bigger container — when you can generate some perspective — each of these individual things becomes smaller by comparison; less dominant.

It can be hard to do sometimes but I find it to be a really useful construct.

“Cryptonetworks” can help us build a more competitive, innovative, secure and decentralized Internet. “Tokens” (also known as cryptocurrencies or cryptoassets) are integral to the operation of cryptonetworks. As we design new laws and regulations in this emerging space, we should keep these concepts in mind, beyond the financial aspects that are today’s primary focus.

In recent months, there has been untold attention paid to cryptocurrencies, blockchains and the coming of the “decentralized web” or “web3”. And, given the rise of the cryptocurrency markets (over 1500 coins, with a total market cap of $370B as of today) and the recent boom in token-based fundraising (including a healthy dose of scams and shenanigans) there is increasing regulatory and legal attention being paid to the sector, and rightly so.

This is a profound, and confusing, innovation. As John Oliver so aptly put it last week, it’s “everything you don’t understand about money combined with everything you don’t understand about computers”. Basically right.

At USV, we’ve spent the better part of the past five years exploring and investing in this space, and now have roughly a dozen investments touching it in one way or another. As we have watched the technology and market evolve, alongside the public discourse, we feel its important to reiterate why we think this technology is so powerful and important, and contribute to the ongoing collective learning about how it works.

While much of the focus, especially in the context of regulations, is on the financial and fundraising applications of cryptocurrencies, our interest continues to be on the potential for cryptonetworks to provide digital services, such as computing, file storage, social applications, and more.

You might ask, why is it important to have another way to provide digital services? We already have lots of websites and apps that do that today. The reason cryptonetworks are an interesting addition to today’s digital services is their core architecture of decentralization. Just as the original internet gave us a decentralized layer on top of the telecommuncations network, which resulted in untold innovation, cryptonetworks are a decentralized way to provide digital services. Chris Dixon has a great post exploring why this is important, including the historical parallels to the original internet.

The decentralized architecture of cryptonetworks has the potential to address many issues in today’s tech and business landscape, including information security, market competition, product innovation, and equitable distribution of gains from technology.

Imagine, for instance, if the owners or users of Amazon/Google/Facebook/Reddit/etc. were able to “fork” the product and launch an identical competing copy, if they didn’t agree with the direction of the company? And imagine if all of the users of & contributors to a web platform also had a direct, monetary interest in the success of that platform, that reflected their own contributions as community members? This is how cryptonetworks work, since they are essentially open-source, mutually owned & operated web platforms. Each network’s cryptocurrency or “token” acts as the internal currency, incentive mechanism, and “binding agent” for the other processes that help the platform function. And further, the internal data structure of cryptonetworks, the distributed ledger or blockchain has unique properties that can improve privacy and data security. See also, Steven Johnson’s recent NYT piece exploring these ideas.

With that as context, it’s important to walk through how cryptonetworks function, and importantly, how tokens function within them — especially given the growing regulatory scrutiny around how tokens are created and traded.

The deck below (full size / downloadable PDF) is meant to help explain this. While it does touch on some public policy goals at the end, it does not attempt to make specific, detailed recommendations. The main takeaways should be (a) cryptonetworks are an important new innovation in how digital services are delivered, (b) tokens are fundamental to their operation, and (c) as we design new laws and regulations in the space, we should keep (a) and (b) in mind as guiding concepts.

We are in the middle of our 2018 Analyst hiring process at USV. For the last several hiring cycles, USV has had an open process where anyone can apply. I actually wrote about it back in 2011, right before I joined, remarking at the high quality of applicants that the process produced.

That is still the case today. In this year’s Analyst application produced 326 applicants, of remarkable accomplishment. Albert has been writing updates about the process on the USV blog. At this point, we have reviewed all of the applications, and are working towards a second round of interviews with semi-finalists. What I’ll cover here is how we’ve managed the process this time.

For the past 3 cycles we have solicited video responses as part of the application process, powered by Ziggeo. Having video in the application process has really worked for us. Even with short videos (our were 30 and 60 seconds, respectively), you can get a good sense of a person’s manner of speaking, sense of confidence, thoughtfulness, etc. While it doesn’t tell the whole story, it’s been a very helpful signal for us over the years.

The first time, we used a custom web application that Oliver from Ziggeo helped us build (source code here). The second time, we re-used that codebase with some modifications. This time, we tried to make it even more simple, using only off-the-shelf tools. What we ended up with was a combination of FormAssembly for the form itself (because FormAssembly supports Ziggeo integration) Ziggeo for the videos, and Airtable for the ultimate data storage and workflow management.

FormAssembly made it easy to build the form, including nice features like letting applicants save a partially-completed form and come back to it later. The form looked like this:

Ziggeo made it really easy to capture the video. Note the embedded video recorder in the form above, which looks like this when you fire it up:

For our internal process of reviewing applications, we needed something else, which is where Airtable comes in.

For those who don’t know Airtable, it’s basically a hybrid spreadsheet / database, with handy aspects of each. It’s like a spreadsheet in that it’s really easy to update the schema and edit data. It’s like a database in that you get persistent records that are linkable with one another (a feature that we didn’t use here but we make lots of use of elsewhere internally), and that has a great API.

There’s not an automatic way to move records from FormAssembly to Airtable, so we just did CSV export/import. Ultimately, we ended up with a view like this, where we could review applicants one-by-one and then comment/score/sort/etc:

You can see a stripped-down version of the Airtable we used for the process here.

All in all, this setup worked great. It took zero coding to build, had a really modest number of errors or mishaps, and handled our workflow well.

There are, of course, a few things that could have been better. Top of the list would be direct Ziggeo support within Airtable. Airtable has a feature where you can expose a form that will collect data directly into a table in Airtable. Ideally, you’d be able to have a “video” type form element that would embed a Ziggeo recorder directly in the Airtable form. Then, on the back end, it would be great if you could view those videos directly in Airtable, rather than clicking out to a link — imagine the screenshot above, but with embedded video players rather than links. I suspect a lot of people use Airtable for applicant tracking, and I’m sure this kind of video support would be popular. Another would be automated connectivity between FormAssembly and Airtable, maybe via Zapier.

So, that’s what we did. Remarkably easy to manage this time around — thank you to all the teams out there building the tools that make this kind of thing easier by the day.

I’ve written a bunch about why it’s expensive to be poor, why we need better tools for managing money, and how to move from a labor mindset to a capital mindset. A big takeaway for me is that accumulating wealth isn’t just a functional activity, it’s a mindset that needs to be learned, and taught.

It has taken me a long time — generationally speaking — to begin to figure this out. Both of my parents grew up poor. My father grew up especially poor, but managed to break out. In the 1960s he took a computer programming course and learned to code (50 years ahead of his time!), and then just before I was born he started a small business, which my parents run together to this day.

While this business has been transformative for our family (it sent me to college – I’m the first one on my father’s side ever to graduate), I think it’s fair to say that it hasn’t yet finished the job of helping us relate to money in the right way. For example, I don’t think I ever really learned, at a young age (or really into my late thirties), the concept of **investing**. Saving was always a vaguely good idea, but spending was easier, and spending on debt even easier than that. Basically, I think there is this transition, from having no money, to having some money (but spending all of it), to (in some cases) spending more than you have, to (if you’re lucky) learning how to get money to work for you.

Now that I have kids of my own, I’m trying to think about how to teach them about money. I want them to learn about budgeting, about saving, and about investing. I want them to see today’s spending needs/wants as not the whole picture. I want them to learn that if you’re smart about money, not only will you set a solid foundation for yourself, but other good things can happen (e.g., compounding interest).

Here is my v0 approach — no idea yet if this will work. The primary way my kids spend money (of their own choosing) is on-demand videos. We have a Roku TV in our living room, and occasionally they rent or buy TV shows or movies. So, for starters, rather than having them simply ask every time if they can do it, we’re instituting a budget. The budget is $20 per month per kid. (that gets you roughly two movies or ten episodes).

The twist is that, at the end of each month, whatever they don’t spend rolls over into the next month — with 20% interest. So if they spend $10 and save $10, they will roll over $10 + 20% or $2. So next month they’d start out with $32. The 20% monthly interest may seem unrealistic and overly generous, but I’m trying to compensate for both the low dollar amounts (hard to get excited about 1% monthly on $5), and also for converting to “kid time” (a month to them feels like a year to us).

I explained the new plan to them the other day (March is our first month), and my heart skipped a beat when my daughter immediately responded: “I think I’ll save most of it”. :-). We will see what happens. I am hoping that one of them realizes that the 20% will compound pretty quickly, and decides not to spend any at all. By my calculations, if they decided to keep 100% of the allowance, by the end of a year they’d each have $950.

I’m curious to know what approaches others have taken to teaching kids about saving and investing.