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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Monthly Archives for 2010

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Permanent Record

Fr100392_1 I am pleased to welcome my partner at First Round Capital, Rob Hayes, to the blogosphere.  His new blog, Permanent Record, is off to a wonderful start.  In his most recent post, Rob is right-on with his comments on Web 2.0, where he astutely observes that:

"the Web 2.0 label will inevitably end up in the dustbin of overused company descriptors (where it can have a cup of coffee with B2B, nano, and any non-medical usage of the word “eyeball”)..." 

I share his concerns.  While I'm looking forward to attending the Web 2.0 Conference next week as a convenient location to hold many of my west-coast meetings, I've come to believe that Web 2.0 has no useful meaning  as a company descriptor.  What started as an attempt to classify an emerging form of business model has come to signify any Internet company that was formed after 2003.  I don't look to fund Web 2.0 businesses - I look to fund good businesses.  I don't care if you use AJAX to develop your website any more than if you use Ajax to clean your office furniture -- just show me how you will satisfy an urgent and pervasive customer need and how you will generate revenue.   

Welcome to the blogosphere Rob - I can't wait to hear what you have to say next...

Rob's Blog, Permanent Record, can be found at http://permanentrecord.firstround.com/



An Obvious Success

Investing in pre-revenue startups is risky.  Seed-stage investors know that things typically don't go according to plan.  And sophisticated investors know that they will lose money in a good percentage of their investments -- with the expectation that they will make that back plus a nice profit in some of their other deals.

Today Evan Williams announced the creation of a new company, Obvious Corporation, that purchased the assets of Odeo (a company First Round Capital invested in).  As Evan wrote today in his blog, Odeo "was a humbling and highly educational experience."  And he concluded that although there was real value in what the team created, the structural constraints/requirements of venture investors were not a good match for the company. 

So he did something that amazed and surprised me.  He dug into his own pocket to return capital to his investors.  100% of our investment.  Evan did not have to do this.  His shareholders are sophisticated investors and we went into this with our eyes open.  We know startups are risky. 

The reason I invested in Odeo in the first place was because I wanted to make a bet on Evan – and his recent actions have shown me how right I was.  I continue to be a huge “Evan fan” – and should he decide to raise outside capital again, I hope to be his first phone call. 

In the meantime, I will be cheering for an Obvious success from the sidelines

Your business plan is wrong...

CrystallballEvery business plan is wrong.  The moment an entrepreneur hits "save" or "print" the plan is out of date.  Things change.  In some cases you grow ahead of plan (like portfolio company Jingle Networks whose 1-800-FREE411 service has captured 3% of the US Diirectory Assistance market in one year) and are faced with the challenges of successfully scaling to satisfy user demand.  In other cases you find that some of your initial assumptions are no longer valid.  A competitor emerges.  New technologies emerge.  You are unable to build a team as fast as you had planned.  Distribution channel deals take longer than expected.  Customer adoption is different than what you expected.

Either way - it is critical for an entrepreneur to be able to listen to the market, their team and their customers and make changes to their plan as necessary.  I've always said that I'd much rather bet on an entrepreneur who can adapt to change rather than an entrepreneur who is convinced that they have the ability to predict the future.    But adapting to change is hard.  How do you maintain flexibility yet still preserve a goal oriented culture?  What do you say to investors who backed your initial plan?  When is a data point an outlier and when is it a warning bell?  Munjal Shah, CEO/Founder of Riya is doing a wonderful job blogging about his experiences in transforming Riya

(Disclosure:  Riya is a portfolio company of First Round Capital). 

 

Woulda Coulda Shoulda

Add this one to my woulda coulda shoulda list...

-----Original Message-----

From: Chad Hurley [removed@youtube.com]
Sent: Monday, August 15, 2005 12:09 PM
To: Josh Kopelman [removed@firstround.com]
Subject: Re: Great news!

Hi Josh,

Yes, it was great talking with you last week. We definitely would
like to have you on board with YouTube. Right now, we are just
exploring our options and I will let you know before we move forward
with any of them.

Chad