Building In The Blockchain Era

At Lattice, we believe blockchain technology will have a large impact on tech, entrepreneurship, and venture funding. In the history of technology cycles, we believe this technology will be as transformational as the Internet. By decentralizing creation and contribution, it creates more opportunity to participate in building new networks.

In the years to come, the next great tech companies will leverage the blockchain to build their businesses. It is an excellent representation of our network effects thesis at work, and we look forward to sharing our expertise with the new wave of entrepreneurs. As a firm, we've already made investments in the space and have portfolio companies looking to implement blockchain technology in their existing stacks.

We have spent years in the space so while bullish, we also recognize that we can't discuss blockchain without addressing the risks. That includes the excessive volatility of cryptocurrencies, security risks, regulation unknowns, and the wild-west-type environment currently surrounding ICOs.

We believe that the best way to help entrepreneurs reduce these risks is to surround them with a network of the best experts and practitioners in the space to aid in developing best practices. We're focusing on these topics:

• Raising Capital - ICOs, investment structure, secondary markets, and attracting long term investors
• Corporate Structure - Establishing legal, accounting, and governance standards in the context of changing regulation
• Security - Digital, financial, and physical security
• Community - Building a decentralized community of contributors
• Talent - Sourcing and attracting technical talent as demand for blockchain developers increases

We’ve been gathering people across our network to discuss these questions and have found great collaborators. To democratize access to these conversations, we'll be hosting community events in NYC to share with our community. We'd love to have you join us. Sign up here to hear about our upcoming events.

Call for experts too! If you are you currently working in the blockchain industry? Whether an entrepreneur, lawyer, regulator, accountant, or community member, we want to hear your thoughts. Please sign up to share your expertise or say hi to us at @br_ttany or @vanessadice

AI Enhanced Workforce

AI is going to be changing the workforce and we want to surface the best opportunity for early adoption. We have been reviewing AI marketplaces, infrastructure tools for deep learning developers, and tools for non-developers to leverage the benefits of AI. These models are heavily reliant on access to data and numerous developers building, training, and in some cases sharing machines. More open data sets create more opportunities to start machine learning training.

Data comes from a few places: developers, existing data sets, or scraping/cleaning data from other sources. Developers train on these platforms, build and share so others can replicate/use, and create additional data feedback into the ecosystem. The more people that run the platform’s models or train their models on the platform's data, the smarter the machines get for both the platform and the developer. Marketplaces and model builders require more feedback loops of data into their ecosystems to strengthen them. Building the right concentration of developers and sharing is important to allow more innovation in this field.

We continue to evaluate companies in this space, weighing the team, focus, tech, and target users. Companies are either too early in their concept but we are keeping an open door and others are not differentiated enough in their thinking from existing competitors. We believe the team that is focused on providing accessible machines to the right market will be the winner.

More Benefits For All Employees

In the US, the three largest pieces that contribute to a healthy society are tied to full time employment: financial stability, health coverage, and opportunities for education. As the labor landscape shifts more to part time and contract work, it creates a gap for the 1099 and part time workers seeking these services.

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The chart shows 18% of the employed workforce work less than 35 hours a week. This chart excludes 1099s or part-time employees that work more than 40 hours a week across one or multiple jobs. (Source: https://www.advisorperspectives.com/dshort/updates/2017/02/06/the-ratio-of-part-time-employed-remains-high-but-improving)

Full time employers attract and retain talent by offering easy access to or subsidized plans for the following:

• Health programs: health insurance, disability, workers compensation
• Financial programs: 401k, transportation reimbursement, equity as a non-accredited investor, pensions, stock options
• Training and education: education reimbursement, on-the-job training, specialized skills, learn and earn programs
• Family benefits: child care or reimbursement, paid leave, paid sick leave

Access to these benefits is lost or limited if you are not employed in a traditional full time job. Though government will continue to play a role in providing access to benefits, we believe the more interesting opportunity is for tech entrepreneurs to fill this gap with a profitable and sustainable business to continue to meet changing needs.

The existing market offerings for individuals to patch together benefits, insurance, and financial services are difficult to navigate and still rely largely on paper to set up. Even tools that only cater to full time employees are stuck in a web 1.0 model. The path to change will likely involve many separate players focused on niche services.

A great example in healthcare is Oscar Health. They set out to change the way people obtain health insurance by making it easier to understand and sign up for. They began with a more bottom up approach by selling to individuals first, before they expanded to selling a B2B product. This approach ensured that they were satisfying the needs of individuals, full time employees or not, before expanding to serve employees of large enterprises. They started with any individual before offering a product exclusively for W2 employees. 

Finding ways to make it easier for more people to access these outside of their employment creates a powerful way to serve a population that have the potential to be more loyal to your service than they are to one employer. Already Millennial and Gen Y employees are reported to have 45% job turnover, representing a low percentage of employer loyalty. There is a huge market to be served.

Better online tools, easier administration, and leveraging data across a broad group of customers is still missing for many of these services. Entrepreneurs passionate about the need to serve part-time and contract employees have a lot of room to provide tech-enabled services and build a big business. Those superior solutions may end up creating better alternatives for W2 workers as well. Better tech in employment services and benefits is a win for everyone.

The 1099 Workforce, a Labor Market Opportunity

There comes a point when a high skilled employee reaches a point of deceleration on growth and the career trajectory is focused more on depth of expertise and knowledge. The employee realizes that they could potentially do this work for themselves and the idea of taking the grand leap to setting up an independent practice is exciting and intimidating.

We believe there is an opportunity to serve the highly skilled independent consultant workforce. One of the biggest pain points from people that take the leap to set up their own practice is sales or simply keeping the top of the funnel full and utilization rate high. An engineer is not a specialist in business development or sales as they would rather focus on the work they are best at accomplishing.  

The investment opportunities we seek should address the pain of access to customers and increase in full time utilization.  Unlike the gig economy, which has proven to be mostly true for supplemental income roles only, i.e. picking up uber shifts in off hours.

We are focused on full-time high skilled labor. As an example, we invested in WorkRails, which helps software companies deliver professional services. They are also providing opportunities to qualified expert consultants, which addresses the utilization rate pain point. WorkRails does much more for consultants to increase utilization, manage payments and eliminate marketing costs. They let the consultant focus on the delivery of their work freeing their time to do more.

People want to focus on the work that matters to them, not the sales pipeline, back office pains or administrative burden. We continue to review more interesting startups, marketplaces and creative concepts that address the potential of highly skilled talent to set up their own practice. If you are addressing this pain in any form, then we would love to hear from you.

Borderless Ecommerce Trends

We wanted to share thoughts on the emerging trend of borderless ecommerce as we look for innovations in the space. Given the current political climate, borders and trade rules are an increasing area of volatility.

From manufacturer to consumer, global logistics is well over a trillion dollar market and retail ecommerce sales is pushing two trillion dollars globally.  We are seeing the movement of tech companies to support borderless ecommerce, technology used to bridge transactions where geographical borders prevent trade. The global market is a great opportunity for these companies and we have heard time and again as to how companies would like to set up an office in China to seize the local market opportunity, which is currently growing at 10% YoY.  We believe the US should participate in the global market, however, if the US is prevented from participating in the near term, we believe there is still a massive global opportunity for these emerging tech companies.  

Several entrepreneurs are focusing on the push to give consumers access to buy anything online, worldwide.  Innovations for this problem are emerging as: access to the consumer via curated marketplaces, interface layers to transact with US retailers typically blocked, SMB tech tools to intelligently process payments from international processors, and technology to increase shipping efficiency, especially cross-borders.

We see an exciting opportunity to expand ecommerce but are still looking for a defensible platform to solve this problem at scale.  We find that many companies struggle to attract one side of the marketplace and do not have a clear strategy on how they will grow it. They bring highly qualified expertise for one side but then tend to go too broad in their target audience on the other side or they believe the early traction they achieve in one market is repeatable in any similar market.  

We believe companies that use the borderless mindset to bring existing high-demand products online for the first time are in the best position to scale.  A successful company in this space will require the alignment of an expert entrepreneur, shared belief in tech adoption and distribution, and market focus.