Redeye VC

Josh Kopelman

Managing Director of First Round Capital.

espite being coastally challenged (currently living in Philadelphia), Josh has been an active entrepreneur and investor in the Internet industry since its commercialization. In 1992, while he was a student at the Wharton School of the University of Pennsylvania, Josh co-founded Infonautics Corporation – an Internet information company. In 1996, Infonautics went public on the NASDAQ stock exchange.

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53651One of the few benefits to being a technology investor based outside of Silicon Valley is that I don’t spend all my time in the valley.  While I'm out in California every few weeks, I get to spend most of my time in the "real world."

Over the last several weeks, I’ve been on several phone pitches from west-coast companies that are looking to be the “flickr of XXXX” or “like but YYYY” or “the Digg killer”.  It got me thinking – how many people outside of the valley have ever heard of these companies?  I asked a bunch of local (Philly-area) acquaintances and the answer came back loud and clear: none – nada - zip.  People here have barely heard of Myspace and Craigslist – let alone any of the “hot” Web 2.0 companies. 

As more and more entrepreneurs start building what Fred Wilson referred to as second derivative companies, I think they run a big risk of designing a product/service that is targeted at too small of an audience. 
Too many companies are targeting an audience of 53,651.  That’s how many people subscribe to Michael Arrington’s TechCrunch blog feed.  I’m a big fan of Techcrunch – and read it every day.  However, the Techcrunch audience is NOT a mainstream America audience. 

A good review in Techcrunch can get a company their first 5-25K beta users very quickly.  However, I’d strongly caution entrepreneurs from taking their initial consumer adoption metrics and extrapolating them too far into the future.  I believe startups will find it difficult to cross the “Techcrunch chasm” between the Web 2.0 geeks and Mainstreet USA. 

If we could get access to the usage logs of the top 10 Web 2.0 properties, I would bet that their 10,000 most active users would all be the same. 

As I evaluate new startups these days I’m finding it harder and harder to see the big ideas that will appeal to a large, non-geek consumer audience.  Thoughts?