Like millions of other Americans this weekend, I went to see Bohemian Rhapsody, the recently released biopic about Queen. The movie was so bad, I melted into uncontrollable giggles at its most serious moments. After two and a half long hours, I was fed up by overdramatic montages, a meandering plotline, and undisciplined editing, so I walked out before the completion of the film. As it turns out, so did the Director — which explains a lot about why it was so terrible.

What it does not explain is why I have been nonstop, obsessively thinking about Queen ever since. The more I read about them, the more I listen to their albums, the more I watch their performances, the more memories come flooding back to me.

The first time I heard “Bohemian Rhapsody”, it was the early nineties and my Grandma brought over a copy of Wayne’s World. You might find this odd, since I was somewhere around five years old at the time, but she insisted we would like it since it was based in the glorious town of Aurora, Illinois, only a few miles from where we lived.

I do not remember when she realized I was way too young to be watching Wayne’s World. What I do remember is re-enacting that opening scene for years afterward, belting “Galileo!” at the top of my lungs, packed into the backseat of shitty cars all over the Midwest. I remember stomping my feet to“We Will Rock You” before my high school basketball games, and “We Are the Champions” after we had won. I remember debating in an ethics class at Harvard whether or not it was okay that Vanilla Ice had stolen the opening riff of “Under Pressure” for “Ice Ice Baby”. I remember watching countless newly married couples dancing to “You’re My Best Friend.”

How could Queen have somehow woven themselves into the fabric of my entire life without me even realizing it? You might not think about them very much either, but Queen is actually everywhere. They have sold over 300 million albums worldwide. They have spent more time on the British charts than The Beatles. They have been featured in over 375 films.

The Quiet Genius of a Very Loud Band

As romantic as music can be, it is a business. A band is a company. The members are a team. Instruments are features. Songs are products. Concerts are experiences. In either case, music is the heart and soul.

Just like the record labels, venture capital is notorious for constantly being on the hunt for the next big hit. However, we are not looking for one hit wonders. We are looking for generation defining technologies; the companies that change the shape of our lives without us even realizing it; the experiences that find their way into the deepest crevices of our memories that we don’t even know they’re there. Basically, we are looking for the nerd’s equivalent of Queen.

So what can we learn from Queen? What makes them so special that they’ve been able to transcend time, genre, and space? Why does it matter if you’re not a musician? Whether you are in the music, technology, venture, or any human business, here is what we can all learn from Queen.

1. Team is everything — diversity is required.

Queen consisted of four musicians with very unique strengths: Freddie Mercury (vocalist, background in design), Brian May (guitarist, PhD in astrophysics), Roger Taylor (drummer, tried dentistry but got a BSc in Biology) and John Deacon (bass, background in electronics). Though he was often the face of the band, Freddie Mercury once famously said in an interview, “I’m not the leader of the band, I’m the lead singer.” He recognized he was nothing without his team.

In fact, Queen’s greatest hits were written by all members of the band. Freddie wrote “Bohemian Rhapsody”, Brian May wrote “We Will Rock You”, Roger Taylor wrote “Radio Ga Ga”, and John Deacon wrote “Another One Bites the Dust” and “I Want to Break Free”.

A truly remarkable team requires members with unique strengths, diverse backgrounds, and a shared commitment to making music. When a team like this comes together, individual intelligence transforms into collective magic.

2. Innovation requires commitment and constant experimentation.

Queen was formed in 1970, but they didn’t release their first album until 1973. They hustled their way into the only slot available at a friend’s recording studio, which required them to record from 3–6am. This is ultimately how they got noticed — they were very loud at a very quiet time.

“Bohemian Rhapsody” was recorded in 1975, though Freddie Mercury had been writing versions of the song (initially called “The Cowboy Song” for the opening line) for nearly ten years before the band ultimately recorded the hit. Once they did record it, the track notoriously took three grueling weeks to lay, with sessions ranging from ten to twelve hours per day. In some sections, it featured 180 separate overdubs. Yes, the final product was epic, but it took years of imagination, hard work, iteration, and experimentation.

Whether you are a band or a business, nothing world-changing is built overnight. It’s not about what you want — everyone wants massive success — it’s about what you’re willing to give up to get there.

3. Find your audience — sing to them, love them, engage them, and empower them.

In 1970, Queen started by playing to college audiences because it is what they knew and where they were accepted. After all, they were students themselves. As they grew and evolved, their audience grew with them — their fans graduated from college just as Queen was graduating to real concert venues. They got married and had kids as Queen continued to pump out hits, and it was these same fans that brought their kids to concerts when the band started playing in stadiums all over the world. It was Mike Myers, who had listened to Queen growing up, that threatened to walk off the set if “Bohemian Rhapsody” was not included in Wayne’s World, ultimately leading to the song’s second run at the top of music charts nearly twenty years after its initial release.

Queen had staying power because they were incredible at engaging audiences — not just figuratively through their lyrics, but quite literally in the performance of their music. Whether it was the stomp-stomp clap of “We Will Rock You”, the “Ey Oh” call at the beginning of “Under Pressure”, Freddie Mercury’s unforgettable exchange singing “Radio Gaga” with an audience of over 70,000 people at LiveAid in 1985, Queen rarely sang alone.

Though their power fans were small in the beginning, Queen serves as a reminder that if the most powerful companies speak directly to their users. If you can unify, engage, and empower customers, you will be filling stadiums for generations.

4. Don’t let your past define you.

Freddie Mercury was not born a British rock star. He was born in Zanzibar (now Tanzania) as Farrokh Bulsara. His family was originally from India and he spent his formative years in Mumbai until his family ultimately fled Africa for England in the late 1960’s. Given the constraints of coming from a traditional Parsi household and his conflicted identity as a gay man in a conservative society, he created Freddie Mercury as a way of liberating himself from where he came from.

Throughout my own life as a very American American who somehow found her way into the business of building global companies, I have learned that you are not defined by where you came from — you are defined by your choices, your mindset, and what you create. Most great filmmakers agree (if you need some good references, look for this theme in The Last Jedi and Bladerunner 2049).

Whether it is in the world of music, technology, or business, innovators are not constrained by their origins. The only way to find out what you truly can do is by letting go of what you were and what others tell you that you are. Farrokh Bulsara did just that, and thus Queen was born.

5. Embrace contradiction — turn ‘buts’ into ‘ands’.

So, what is it that makes Queen so fascinating that they have hijacked my ears and my mind not only this week, but arguably since I was five? How are they so subtly relevant today? Why are they everywhere and nowhere? Who else can possibly make grown men cry, and young women scream in the way that they do? What is it about them that seeps its way into our lives, no matter where we are or what kind of music we like?

Freddie Mercury was painfully shy, but somehow one of the best performers of all time. All the members of Queen were all highly intellectual, but also made head banging rock songs. Their lead singer was gay, but the love of his life was a woman. All four band members asserted they hated each other, but they also insisted they were family. A lot of Queen’s lyrics are gibberish, but their music is rich with meaning. Freddie Mercury died in 1991, but he sang alongside a captivated audience at the closing ceremony of the 2012 Olympics in London.

The answer to these questions, and the essence of Queen’s genius, is captured in a hotly contested scene in the movie about the release of Bohemian Rhapsody, in which Mike Myers (aka Wayne from Wayne’s World) insists that the song can never be a hit single because ‘it’s opera but it’s rock’, because it’s ‘six minutes long, but has no chorus’.

Once it was released, the length and unusual nature of the song forced Queen to market the song with a video — which is widely credited as the invention of the music video, seven years before MTV went on air.

What is it that made this level of innovation, depth, creativity, and longevity possible? Queen embraced their contradictions. They defied definition, they refused to be categorized — and thus created something truly new and meaningful. They worked really fucking hard in the process, and ultimately they turned ‘buts’ into ‘ands’. They are a rock band and they sing opera. Their lead singer was Farrokh Bulsara and Freddie Mercury. They possessed a rare level of intelligence, and they made universally accessible music. Freddie died of AIDS, and left his entire fortune to a woman (and cats).

Whether you are a musician, an entrepreneur, or just a regular person on the street, you can only innovate by embracing and exploring your inherent and inevitable contradictions. It’s not easy, and it’s the only way to change the world.

5 Business Lessons from the Music of Queen was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Today, I ate my breakfast at General Assembly San Francisco, listening to Claire L. Evans talk about the untold history of badass women in technology as featured in her book Broadband.

Her key point was that, in spite of the fact it is indeed a male dominated industry, technology is not an inherently masculine endeavor. There was a time when it was actually dominated by women, probably because the core mission of technology has fundamentally female qualities. Since their origin, computers and the internet have been about building unexpected connections, democratizing access to information, and creating unprecedented opportunities. Isn’t that what women are naturally the best at? So then, why and how did technology become such a boy’s club?

In spite of spending the last six years building tech businesses across borders, this is my first time living in “the Silicon Valley” and I have spent the past few months seeing it with an outsider’s eyes. There is no doubt in my mind that the Bay Area is truly the quintessential American hotbed of entrepreneurship, the land of opportunity for wealth creation, and the birthplace of our generation’s most transformative and impactful companies. We, as venture capitalists, are meant to be the fuel for that fire.

We all know the VC industry has been under attack for being a shameless old boy’s club filled with hypocrites; an impenetrable network tasked with finding and knighting the changemakers of tomorrow, yet it still looks more like a picture of the past (read: old, male, and white). I am fully committed to changing that reality, but it will take time. In the meantime, I am wondering — how did this come to be?

After all, venture capital is about finding and empowering innovators. It is about seeing value where others do not. It is about aligning yourself with people who are smarter than you, better than you, and more determined than you. It is about putting your ego aside and working tirelessly with others to help them succeed at all costs. VC is all about nurturing deep and meaningful relationships, but it is also about ruthlessly prioritizing. It is not about the spotlight. We are not the actors on stage, we are the producers cheering them on and making shit happen behind the scenes.

Aren’t these things that come most naturally to us as women? Have we not been playing these roles for centuries in our personal lives as mothers, wives, daughters and friends? Could it be possible that venture capital is actually, inherently, a lady’s job?

I’d like to think so. But, either way, there’s no reason why it should be dominated by men. Or anyone, for that matter. This is certainly one corner of the world where it should be an asset to be different.

Venture Capital: A Lady’s Job? was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

The other day a startup was pitching me and stressed the importance of the startup competition that they won. They had a whole slide complete with photos and online articles written about their victory. I told the startup that they should delete that slide and not tell investors about the competition as startup competitions are a waste of time for startups. I advised the founder that the only competition they should be entering is the competition for customers in the marketplace.

Naturally I got a lot of pushback.

Based on my experience as an investor, a former judge at countless startups events, and the winner of the business plan competition in b-school, I laid out what is wrong with startup competitions.

Startup Competitions Send the Wrong Message

By pitting startups up against each other, reality TV style, startup competitions create a “beauty pagent” that stresses the wrong things to win. Founders waste time polishing their pitch and focusing on how to put their best foot forward.

This is not how startups work.

Startups work by doing experiments, measuring the results against expectations, and iterating on their business model based on that feedback. Every minute spent by founders focusing on a competition is a minute not spent building their business in the real world.

The Judges Can’t Evaluate Properly

Whether you are doing an one evening pitch competition for bragging rights or a small check, a month long competition for a $10,000 grant, or a 6 month grand challenge for a $1m grant, the judges, no matter how awesome they are, won’t be able to evaluate the startups properly and the winners will not be the best companies.

At best the judges will only have a short bio and company write up to prepare. Then they see the startups for about 5 minutes and have the opportunity to ask one or two questions. Hardly the type of due diligence required for proper evaluation and feedback.

If you are part of a longer form challenge that has a council of judges and multiple interviews, those judges will have constraints set by the challenge organizers, preventing the best companies from advancing. The challenge organizers have to meet certain marketing goals so they create artificial criteria and categories that prevent the judges from selecting the right companies: sending the wrong message to the startups that apply.

Misaligned Incentives

Startup competition organizers are not investors.

At best they are non-profit organizations that put some money into a startup, however, they are driven by other incentives that put them at odds with the startups they support. The competition is motivated by attracting celebrities to their events and getting as much press and attention to their organization as possible (in order to raise more money to run more competitions.)

Typically if the winner of a startup competition receives money from the competition, the competition is a non-profit and does not take equity. This leads to a massive misalignment between the competition and the startup as the startup needs to build a sustainable business, not be a marketing pawn for the competition. Even if the competition takes equity, not being professional investors they usually are poor board members. Due to the misalignment of incentives, they usually give the wrong advice and push the founders to attend worthless events. In addition, they can’t help the company grow or help introduce new investors as most of the investors they know are equally as mis-aligned.

Lastly, startup competitions have the moral hazard of giving the startup who won the false sense of pride and even a sense of entitlement. In reality the startup has done nothing except make a good presentation and were lucky enough to match the organizers criteria. Worse yet, it can be demoralizing for the losers, potentially much better companies.

Stop Wasting Your Time

Stop wasting your time and stop entering startup competitions. Win customers, not competitions. You think winning competitions will help you find investors: It won’t. Very few companies that won startup competitions went on to build high growth companies. While there are some noticeable standouts, I’m using Medium, WordPress, and Google to produce this article and Facebook and Twitter to share it. None of them ever won any startup competitions.

What’s Wrong With Startup Competitions was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Last week, the Fresco team visited Washington DC and participated in a dialog with members of the US Congress. It was organized by a trade organization we are members of: ACT, the App Association.

ACT represents more than 5,000 tech companies in the United States. They advocate to the US government for a competitive environment that inspires and rewards innovation. Some of the issues ACT has prioritized this year involve law enforcement’s lawful access to data, cybersecurity, broadband, Net Neutrality and STEM education. ACT publishes an annual “State of the App economy” report that outlines broadband access and the number of tech jobs and Computer Science graduates.

The Cloud Makes Things….Complicated

We were the only VCs at the event, so you may ask, why should we care about policy in Washington DC?

To give you an example, Fresco invested in a SaaS startup based in Europe with customers all around the world. They also have several employees and a physical office in the United States. Their data is stored on Amazon’s AWS servers globally.

If one of those customers is accused of a crime and law enforcement demands the customer’s data, the startup has some legal problems. If they just hand over the data, they may be in violation of their local and EU laws. If they don’t hand over the data, they may be in violation of US or the accused’s country laws.

Very quickly a small startup may need lawyers in three or four different countries in order to solve the issue. That can get expensive, real fast.

The CLOUD Act (Clarifying Lawful Overseas Use of Data Act) helps to solve this problem. Passed this year in the US Congress with the help of ACT, it states that law enforcement’s request for data housed in the United States must follow the due process for the country of the accused person’s citizenship. While it is not perfect and there are still many issues to iron out, by clarifying the rules, it will have immediate benefit to tech companies worldwide, drastically reducing the burden on startups.

“Sarbanes Oxley” for Data Privacy

The members of Congress and their staff are up to speed on most of the tech issues, however, they struggle to prioritize the issues important to our industry against the zillion of other things in front of them. That’s why we went to Washington DC to have a dialog. We visited several offices and had very deep conversations on the CLOUD act, cyber security, consumer privacy, broadband, and quantum computing (in regards to encryption). We were able to link the issues to the economy, national security, and most importantly-their districts.

With the EU’s new General Data Protection Regulation (GDPR) about to go into effect there is a bill in front of Congress today that would take GDPR and push it one step further in the United States. It is basically “Sarbanes Oxley” for data privacy, creating a ton of new regulations, reporting, and legal requirements that would drastically increase the cost of doing a SaaS or consumer business. In addition, it would be illegal to store several types of data which could effectively kill the business models of Facebook, Google, and hundreds of other companies.

We were able to describe to members how this would effect the business of the companies in our portfolio as well as drastically reduce our future deal flow. We stressed how this would stifle innovation and the members clearly got the message. Several offices have already followed up with me and other members of the delegation. When this bill is up for debate, it will take into account all the concerns we brought up and the final bill will be very different-in part because of our dialog.

Our Responsibility

As a VC, it is our job to stay on top of all the new technology, demographic, and macroeconomic trends in order to to spot opportunities and invest in the best companies. We also have to be up to speed on everything in the startup ecosystem in order to give our portfolio companies the best advice. (Like advice on crypto and ICOs, for example.) Understanding the current regulatory and policy environment is now something we have to be up to speed on in order to best serve our investors and companies. I never thought going to Washington DC would be part of the job description of being a VC, however, it clearly is.

What a VC Learned by Visiting Congress was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Five years ago, when we first started talking about investing in and building a truly global edtech ecosystem, a lot of people thought we were crazy. Though I had brought General Assembly from New York to Asia, we had made several cross-border edtech investments from our first fund at Fresco Capital, and we helped those investments make their first international footprints, many potential investors insisted that education was an inherently localized problem. Edtech lacks scale, liquidity, and cross-border appeal, they insisted.

At the time, there was no argument the edtech ecosystem was in its early stages. But having spent time on the ground as operators, founders, and investors, we could see where it was going. So, we started evangelizing. We collected data points, distilled them into trends, published articles, outlined the key ingredients for a global edtech ecosystem, and spoke to hundreds of startup founders and corporate LPs about the value of an international strategy in edtech. We talked to anyone that would listen, and in the process, we launched two funds comprised of some of the most forward thinking corporate LPs interested in edtech and the future of work. Then, we built a portfolio of 60 companies from all around the world, and now have 7 successful exits from that portfolio.

In 2017, I outlined two major predictions for the following year, which were a pick up in cross-border M&A, and edtech going mainstream. Indeed, with three major exits announced these past few weeks — NetDragon buying Edmodo for US$137.5 million, Adecco buying General Assembly for $413 million, and finally Pluralsight filing for their IPO — this marks an exciting milestone for the evolution of an ecosystem we’ve so passionately played a role in building. So, I figured this would be a good time to pause, summarize what we’ve learned so far, and speculate on where we might be going next.

Here are 3 key lessons we’ve learned so far:

1. Investing early makes a big difference

I’ve talked to a lot of corporates and investors who believe that edtech is risky, so instead of investing in a portfolio of early stage companies, they’d rather make direct investments in later stage startups that have “proven” their business model. However, what recent exits have made clear is that the stage and the terms at which you invest make a big difference for your returns.

To quote one of the greatest hockey players of all time, Wayne Gretzky, “Skate to where the puck is going to be, not where it has been.”

Especially when it comes to edtech, the market is rapidly growing and also rapidly evolving. That means investing in the right team at the early stage pays off.

For example, General Assembly’s Series A post-money valuation was US$20 million. For us early stakeholders, a US$413 million exit is a huge win. However, later stage investors are facing much less impressive returns. Yes, investing early is risky and the total capital deployed is smaller, but the return profile is significantly better.

2. A cross-border strategy pays off

All three of these companies had international strategies that directly contributed to their growth as well as their exit profiles.

Pluralsight expanded aggressively internationally, beating competitors to the punch by localizing their offerings and selling courses in places like India. This helped diversify their revenue base, solidify a larger overall market size, and create a stickier brand. Surely this led to their options for liquidity and contributed to their recent S-1 filing.

Similarly, General Assembly expanded early on into London, Hong Kong, Singapore, and Sydney. Not only did this contribute to a strong, global brand that differentiated versus competitors, but also led to the development of strategic, international corporate relationships with customers and partners like Switzerland-based Adecco.

Edmodo had boots on the ground in Asia from very early on, and welcomed investors from Singapore and Japan into their later rounds of funding. NetDragon, based in China, ultimately acquired them, so there is little doubt that their presence in Asia had an impact on their ultimate exit.

3. Cross-sector partnerships are the most fruitful

Many edtech founders believe that their ideal partners are traditional education companies. Similarly, many traditional education companies are only looking to invest in and partner with startups in edtech. We have always been of the view that creativity is a key ingredient for scale, and the isolation of the edtech sector will only hinder its growth.

Indeed, through our experience as entrepreneurs, operators, and VCs, it is clear that the most productive partnerships are cross-industry. If you work with a partner not in the traditional education business, you are creating new possibilities for both of you. This means you are not competing for the same customer base, but instead opening up new customer segments for both parties. Consequently you are more like to have an open, collaborative partnership. It also means the multiples on your acquisition are likely going to be higher, as they represent completely new revenue streams and business lines for your new partner.

NetDragon is a China-based gaming company, and though Edmodo’s ultimate acquisition price may seem low compared to their later rounds of funding, the multiple on their revenue base is remarkable. Similarly for General Assembly, Adecco is a Switzerland-based HR/staffing firm, and not a traditional education business. At first glance, these aren’t the most logical partnerships, but they certainly have proven to be rewarding.

So, now that edtech is going cross-border, and cross-sector, you might be asking yourself… what’s next? Here’s what I think.

Here’s why education is eating the world

In 2011, Marc Andreessen made a splash by declaring that “software is eating the world.” In 2018, as a direct result of that assertion, education is eating the world. Back in the early days of the internet, and even when Marc first published his post, technology companies were considered to be a separate sector. This was largely due to the fact that barriers to integrating technology into your core business were high. However, as technology became cheaper and more advanced, billions of people came online via their mobile phones, demand for online services exploded, and software made its way into every business model. Today, no matter what your core product is — healthcare, financial, utilities, energy — there is a technology component. Every company, in some form, is a technology company.

Similar to the evolution of the technology sector, there will be a day in the near future when education is no longer a separate sector, but instead a layer that sits on top of every type of business. You see, every company is a technology company, and therefore every business is becoming a technology business. As a direct result, every job is a technology job. Technology is evolving at an exponential rate. Jobs and businesses have not only been transformed, but they are continuing to change at a rate faster than ever before. This requires companies to create a process for constant adaptation in order to remain competitive, productive, and profitable. (And this is precisely why Adecco, an HR/staffing firm, sees value in acquiring a business like General Assembly.) Every company must, in some form, become an education company.

At an individual level, since jobs are evolving so quickly, regular retraining is necessary. As a result, education can no longer remain a distinct portion of our early years. Instead, it must be integrated across all aspects of our lives and over the course of an entire lifetime. Day in and day out, we must constantly be learning if we are to remain competitive and productive members of society. Hell, given the recent scandals with cybersecurity and data privacy, we have to constantly be learning if we want to simply avoid being manipulated or hacked.

Given our education system has been largely unchanged for hundreds of years, the decentralization and globalization of education is a significant cultural shift that will take time to play out. I still meet people who assume “education” means K-12. However, there are early signs that this perception is changing. We’re already seeing cracks in the demand for tertiary degrees, increasing acceptance of vocational training programs, and a more informed, globally mobile student base. Instead of continuing to question whether or not edtech is a sizable opportunity, let’s seek to understand how technology is transforming businesses, jobs, and individuals’ lives worldwide, and what that means for how we will all need to adapt to that reality.

That’s what edtech is really about, and that’s why at Fresco, we’re putting our money toward investing in technology not just for education, but also the future of work, and healthcare. If we embrace a constant state of learning, then we will not only be able to keep up with how technology is inevitably disrupting every aspect of our lives, but we can also empower the next generation of innovative solutions to the world’s biggest problems.

Education is eating the world was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Last weekend I traveled about 250 miles south of the Arctic Circle in Siberia to the city of to Yakutsk. Yakutsk is a city of about 250,000 people and is pretty remote; it is about a 7 hour flight from Moscow, mostly over thousands of miles of snow and ice. Typically it gets to -40C and is usually in the news for being the coldest place on Earth (or Mars). Not the place you would expect to find a thriving startup ecosystem.

Fresco came to Siberia to visit the local startup and tech ecosystem. The local Venture Company and government invited Fresco Capital to host a hackathon, startup pitch event, and an ecosystem lecture series. We spent a lot of time in the local ecosystem and learned a lot of amazing things.

Ministry of Investment and Enterprise

Our first stop was a meeting with Anton Safronov, Minister of Investment and Enterprise for the Republic of Sakha (Yakutia) where Yakutsk is the capital city. Anton was an impressive guy, in his mid 30s, international (undergrad at Harvard, masters at MIT), and motivated to bring the digital economy to Siberia. The province is the size of India, has only 1 million people, but has tremendous natural resources like diamonds, gold, natural gas, and oil. They don’t need any help in those industries and if you want a mining or construction job, Yakutia is your place.

The challenge is to diversify and build the tech ecosystem. Anton is the right person for that job as he is the one who got the original ecosystem players to attend the MIT REAP program where they all met me last year. Anton also came to the opening of the hackathon.

The Hackathon

The hackathon was themed “Think Global” and had over 100 people participate. We had great diversity with 25% of the participants being women (and two all-female teams) with some people flying in from all over the region to participate.

The results were amazing. A total of 13 teams presented for the judges (going for the $1000 prize) and most played to the strengths of the Yakutia region while looking for a global appeal. The winner was a blockchain based distributed messenger service as Telegram has been in a dispute with the Russian government. Most projects were ambitious and some standouts were social media tools to manage comments on large sites, social media projects around engagement, travel, VR, and EdTech. As the largest tech employer in town is a very successful gaming company, there were a few impressive game teams as well.

Local Startups

Speaking of games, the largest and most successful tech company in town is MyTona, a mobile gaming company. MyTona was founded in 2012 by twin brothers Alexey and Afanasey Ushnisky. MyTona’s top games The Secret Society and Seekers Notes have more than 50 million downloads and are consistently in the top 20 grossing iOS games worldwide. We visited their office and they have over 300 employees building the games right in the middle of Siberia! MyTona could not find enough game developers in Siberia, so they train them after hiring them. A supporter of the local ecosystem, it also tells you that you can build a high performing startup anywhere.

We also visited the offices InDriver, a peer to peer ride sharing app also based in Yakutsk. Different than Uber insofar as most drivers are everyday drivers looking to pick up someone to carpool and make a little extra money. They compete head on with the big players in Russia and Central Asia and serve over 10 million rides a day. They too have about 300 employees in Yakutsk and recently closed a Series A.

We also had a startup pitch event where we met 10 local startups as well as visited Technopark, the IT park, co-work space, and incubator all rolled into one. All of the successful local startups we saw were ones that played to the strengths of Yakutsk but were focused globally. A lot of bio-tech (many unique plants and animals are nearby), export (tea and legal Mammoth bones), and cool things like vertical farming and fishing, as well as cooking flour made from fish bone. The startups are all early stage, but most have a clear path to try to get to the level of success of MyTona and InDriver.

We rounded out our time by visiting several ecosystem partners including a local bank (doing some innovative stuff), the Arctic Innovation Center, and the Higher School of Innovation Management (a corporate training center and host of several of our events.)

Fun

Of course we couldn’t go to Siberia and not have a little fun in the ice and snow. The organizers took us out to the Lena Pillars Nature Park, or the place the Game of Thrones producers got inspiration for “The Wall.” To get there we had to drive for about 3 hours on a winter ice road on a frozen river. After we arrived we hiked up about an hour to the top and took in the scenery. Of course it was about -25C/-13F and snowing. But it was worth it.

Our trip to Siberia was full of surprises. There is a lot going on in ecosystems around the world and Siberia is no different. The tech ecosystem in Yakutsk is proof that you can build great global startups anywhere.

Look What I Found in Siberia was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Last fall I did a keynote at MIT at their conference bringing together ecosystem partners from around the world to discuss ecosystem development. I spoke about how Fresco Capital builds global ecosystems and described some of our recent experiments in India, Singapore, and Vatican City. I finished my talk by saying that we like to do a lot of experiments to learn and that we are open to trying anything.

At the break, a group from Siberia approached me and asked if Fresco was really “open to anything”. Vasilii Efimov, representing Venture Company Yakutia, a Siberian VC, asked if Fresco would come and visit Siberia.

The team from Siberia was at MIT to discuss how to stimulate economic development in the remote region of Yakutia by building an ecosystem with multiple partners. The team is a partnership between the local VC fund, the Ministry of Investment Development and Entrepreneurship, a local bank (doing some innovative things around IT and exporting), a regional university, and an IT park.

I was impressed with the region’s commitment to ecosystem development and the large group of diverse stakeholders assembled to make it happen; I committed to learning more and to visit Yakutia in 2018. The team at Fresco wanted to see how this model was working in a such a remote region and if we can learn from their efforts and help replicate it in other environments.

We talked about organizing a local Hackathon, similar to the Hackathon we helped organize in Pune, India. The goal of the Hackathon in Yakutia is to learn about the developer and tech ecosystem in Siberia and see how the Hackathon model brings ecosystem people together in remote regions. The Hackathon will be held later this month at the Higher School of Innovative Management which is a large professional development center.

In addition to the Hackathon, we decided to organize a local startup mentor office hours and pitch event to give the local startups an opportunity to work with and pitch to an international group (besides me coming from Silicon Valley, I’m bringing partners from Hong Kong and Canada.) It will be a great learning opportunity for the local startups who don’t get a lot of international exposure. They will get some dedicated mentor time as well as have a group pitch event to gain feedback on their pitch as well as their business model. We at Fresco will learn more about Yakutia’s model of building ecosystems.

The team in Yakutia also organized an entire “IT Weekend” that consists of the Hackathon, the startup event, a few mini-conference sessions, local ecosystem tours, and visits to government, Techopark (IT park), university, and corporate partners.

The Yakutia team likes to brag about how cold it is there, apparently, the coldest inhabited place on Earth. Not sure what I’m getting myself into. However, I’m looking forward to spending time learning, exchanging ideas, and helping build global ecosystems.

Why I’m Going to Siberia was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Fresco’s Evolution: A New Look, The Same Mission

When Fresco Capital first started investing in early 2012, one of the least impressive things about us was our website. To be blunt, it sucked. We know, because Tytus hand coded it himself in HTML. We also know because people told us.

However, as our entrepreneurial roots suggest, Fresco is not just a VC fund. We are a startup, too. And just like the companies we invest in, we are constantly evolving.

In 2017, we launched our third fund, we welcomed our 50th founder team to our portfolio, and we added our fifth Venture Partner to our growing network of local teams. We soon realized we had outgrown previous skin and it was time to embrace our own evolution; a time to refresh our brand, our website, and our messaging. So, we worked with one of our close partners, Rival Schools, to do just that. Given the team has world class expertise on localizing user experience, branding, and messaging to suit a global audience, we knew we were in safe hands.

We wanted a design that reflected our global team, our partnership based approach, as well as our belief that our team is greater as a whole than as a sum of its parts. We were aiming to visually represent the simplicity of our mission, but the complexity of our approach. Here is how we look now:

Our mission: Building global ecosystems

Although our shape may have a changed a little on the outside, Fresco remains the same on the inside. In fact, our growth has only strengthened our commitment and our excitement about our core mission:

You’ll notice our mission isn’t just about being the best at investing in technology companies. Just like our logo, the idea of “building global ecosystems” may seem simple, but it is an approach that embraces the complex.

An ecosystem can be defined as a complex network or interconnected system. Whether we’re working with founders, our LPs, or our partners, we believe the most effective investment strategy is to look beyond just us, and instead focus on empowering others. That is the only way to truly enable exponential change. One person, one product, one platform, one investor, one country, can only do so much. If we are able to build ecosystems filled with individuals, startups, and investors that are passionate about solving big problems, then the impact will be unimaginable in scale. And, if that’s not what we’re striving for, then why even be here?

Our approach: Thinking global, acting local

Our portfolio companies are leveraging technology to solve the world’s biggest problems in the future of work, education, and healthcare. These problems are global in scale, but implementing any solution requires a deep understanding and appreciation for local challenges.

It would be impossible for any one person to understand or appreciate the nuances of doing business in every local market, so we have focused on building a diverse team of specialists. Each with their own unique network, set of experiences, point of view, and passion. In our new website, we put a bigger spotlight on some of our favourite local partners, with whom we have worked with closely over the years and trust to be the absolute best at what they do.

Our motivation: Why we’re global

Though we are strongly motivated by our mission, we must also admit we’re not simply building global ecosystems out of the goodness of our hearts. There is a clear and direct connection between helping our portfolio companies scale globally and higher returns for our fund investors.

Global companies are worth more money — they have more revenue, less concentrated risk, and higher valuations. They can extend runway by optimizing their operations, increasing access to later stage capital, and diversifying their relationships with potential acquirers. We’ve seen this play out across our existing portfolio, which now spans 54 companies, 12 countries, 7 exits, and a total market value of US$1.6 billion.

We talk to and work with founders all day, every day, about how to build a company that scales and endures over time. Indeed, successful business models have mission, values, and financial incentives aligned by design. So it’s natural for us to apply the same approach in building our own business.

Our bottom line: We can’t do it alone

Given all of the chaos endured in the past year, we believe that now is the time to double down our mission. The world is faced with an unprecedented level of uncertainty, inequality, and risk, and it is our responsibility to work together globally to source, build, and scale the world’s most promising technology solutions to our most critical challenges in the future of work, education, and healthcare.

We look forward to hearing from you and working together toward as we grow and evolve as a firm, and as an ecosystem in and of ourselves.

Why We’ve Doubled Down on our Mission was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

Headline numbers look good for global VC investment during the 2nd quarter of 2017 but the more interesting story is what’s going on underneath the surface.

Digging into the details, below is the trend for first time investment activity (thanks KPMG + Pitchbook for crunching the numbers).

Even taking into account stealth rounds which have not been announced, the number of new companies has not been keeping up with the $ invested. And if you take the data at face value, the number of rounds is back to levels not seen in several years.

Instead, VC investors have been adding more to existing companies.

The increase in round size can be seen in most rounds, with the obvious outlier being the late stage Series D+. The above numbers are median, so the $40M figure likely understates the outliers.

The median pre-money valuations above tell a similar story:

fat rounds are back.

Why?

First, VC funds are cashed up.

VC funds are continuing to raise $ at an impressive rate. If you’re familiar with the timeline of how VC funds deploy capital, one guarantee is that managers will invest this money. They’re not going to give it back next year saying “I can’t find anything to do with it.” The capital will be around for, oh, about the next 10 years. VC funds will invest in something.

Second, corporate VC funds are having a big impact.

The rate of participation has been increasing steadily and in this last quarter they have been even more aggressive. Many of these funds are structured with external investors, including the headline grabbing Vision Fund. So like traditional VC funds, the capital should be around for several years (as contrasted with pure balance sheet investment from corporates which can be harder to predict over time).

Third, exit trends have been lukewarm for VC backed startups.

This has meant that late stage companies are staying private for longer. Those fat rounds are in some sense becoming short-term substitutes for M&A and IPO exits.

So there’s an interesting paradox.

On the one hand, corporate VCs are more active than ever before and investing aggressively in late stage fat rounds.

On the other hand, corporate M&A activity is not keeping pace.

Based on the lifecycle of capital raised, expect VC funds to continue investing in existing companies.

However, if market sentiment deteriorates, fat startups will become the victims of cap table recaps. There will be money, yes, but the terms will be harsh.

For startups, VC investors, and LP investors in VC funds, now would be a good time to remember the benefits of capital efficiency. For startups especially, make sure you understand the terms of rounds, not just the headline valuation.

Fat startup rounds are back. Let’s make sure we’re building healthy businesses because it sucks to be a fat, dead startup.

Why Are Fat Startup Rounds Back? was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

It’s hard to believe, but after millions and millions of apps, it appears we are now entering the post-app era.

But think about it: When’s the last time you’ve download a new app that has truly transformed your life? It’s probably been awhile.

Yes, the average smartphone owner still uses apps. It’s just that we use the same five apps 80% of the time we spend on our phones. This makes it difficult for new apps to emerge and take over our phones to the point the average app loses 77% of its users within three days of being downloaded.

A Look Back

We used to have mainframes and terminals were the killer app back in the day. Then came along the client/server era and desktop application software (which ran on top of Windows). Up next, there was the web where the killer app was the browser and the webpage itself.

Which brought us to the app-filled mobile era — characterized by the lack or absence of desktop software and usually limited or no functionality on the web. Instagram didn’t have a web site until recently and there’s no (useful) web version of Candy Crush, for example.

It’s hard to imagine a world where apps are an afterthought. But as technology evolves and AI rises, we’re inching closer and closer to that reality.

The Post-App Era

We’re entering an era with no apps, no websites, no desktop software and no mainframe terminal.

For example, I was talking to a startup the other day. They don’t have an app.

You interact with it via chatbots in Facebook Messenger and other platforms. When you need to talk to a human, it jumps out to Skype.

The platform uses AI to keep track of interactions and it pings you on your Echo or Google Home to ask you for some input. It’s pretty cool stuff.

I asked the founder when they were planning to build an app. He told me that he figured they would have built an app by now, but they already had 50,000 daily active users and none of them have asked about an app — making it a low priority.

You wouldn’t have heard that five years ago. Or even a year ago.

Chatbots, Chatbots, Chatbots

According to Gartner, “smart agents” will facilitate 40% of all mobile interactions by 2020. Think Siri, Alexa, and Cortana — AI secretaries of sorts that learn more over time and can be customized to meet your specific needs.

Similarly, chatbots — which are already found on platforms like Facebook Messenger and Slack — will become a major communication medium for brands. Users of tomorrow (and today, really) will be able to pay their bills, shop for items, check the weather, and conduct research by interacting with these AI platforms.

It’s an exciting transition. Users won’t have to worry about hopping from app to app to app, nor will they have to worry about clogging their phones with apps they hardly use.

Whereas apps force users to behave in certain ways, chatbots, combined with AI and natural language processing, promise the ability to enable users to customize their experiences to their own preferences. The end result? A more efficient and enjoyable experience that adds more value to the user’s life.

What a time to be alive.

The Dawn of the Post-App Era was originally published in Fusion by Fresco Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.