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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American Idol

Americanidol Over the past year there have been several insightful posts on the similarities between Deal or No Deal and the venture business.  Lately I’ve found that there’s another popular show that good lessons can be drawn from – American Idol. (I admit it -- I watch American Idol.  Think what you want of me.)

As an entrepreneur, I watched the first few seasons of American Idol and found myself empathizing with the contestants; the person whose hopes and dreams were on the line.  Just like a technology startup, with so much competition the "beta" is very high. 

Now that I'm a VC, I find myself identifying much more with the judges sitting on the other side of the table.  They filter through thousands of hopeful applicants to find a handful of the most promising candidates.  And for every candidate they accept, they pass on hundreds of others.  Kind of like my job.  Last quarter we reviewed over 600 deals -- that means that my partners and I were passing on an average of 10 deals a day.  I've found that this is one of the toughest parts of making the transition from being an entrepreneur to a VC.  I know how hard it is to be an entrepreneur -- and I'd love to be able to be helpful/supportive/encouraging to all of them.  And it sure is not fun to say no to people 50 times a week.  And unlike most VC's, as a seed-stage firm we can't use the most common excuse: "It's too early for us, come back to us after you've proven XXX."   

So watching American Idol, I can’t help but wonder: which judge’s style would be most effective in the venture business?

Is it Simon’s brutal honesty and candor?  While he comes across as an unsympathetic ass, I have to admit that I usually agree with his assessment.  More often than not he’s right, and his feedback tends to elicit that ring of truth among viewers hearing something they know to be true but may never verbalize. On the other hand, although most contestants would be better off heeding his advice and not quitting their day jobs, his unvarnished assessments appear rude, leaving them upset and disillusioned.

Is it Paula’s unbridled enthusiasm and politeness? No matter how much a contestant sucks, Paula will always find something nice to say, even if it’s just about their outfit.  Although the candidate may come away feeling better, are they really getting the kind of advice to help them decide whether to dedicate a couple of years and potentially millions of dollars to their idea?  ("Your powerpoint looks hot" or "You made that demo your own" just don't seem to work)

Or is it Randy’s noncommittal, whats up dawg feedback? Often on the fence, Randy’s comments tend to be vague, lacking in any real substance. But his lack of an opinion can leave the contestant guessing as to what he really thought, which makes it difficult for both of them to make any real progress.

So which style is best for an investor? The answer is that I’m not quite sure yet.  My wife (frequently) describes me as "often wrong but never in doubt."  As such, my natural tendency with entrepreneurs has been to candidly share my thoughts and opinions.  However, when I'm looking at a plan that is a clear "Sanjaya", if I give an entrepreneur my straight-up opinion (like Simon) I often find that I've made an enemy for life.  When I give false encouragement like Paula, I'm misleading them as to my true level of interest.  And when I am non-committal like Randy, I drag the entrepreneur along.

My thoughts on this are definitely still a work in progress.  Fred Wilson has some good perspective on the subject.  What do you think?