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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Some more thoughts on innovation in eCommerce

I had the chance to speak on a panel about Online Shopping at a NextNY event this week. And after a great discussion, I started talking with some folks about my last blog post (which commented on how little has changed in online shopping since I founded Half.com back in 1999 -- especially given the vast amount of change that has occurred on the web outside of shopping).  

And I wanted to put a little more specifics/numbers to my thinking.  So I did a little digging on Alexa today -- and found some data that appears to confirm my perspective:

  • More than half of today's top 15 most trafficked websites today did not exist back in 1999.  That is not a surprise, as Facebook, Youtube, Wikipedia, Myspace, Blogger, Live.com and Twitter are all new -- and are representative of the massive amount of innovation and disruption that has occurred in the last decade.
  • Yet, of the top 15 most trafficked eCommerce websites today, just one of them did not exist back in 1999 (NewEgg - which launched in 2001).  Which means that over 90% of the top eCommerce websites are over 12 years old!  That is pretty remarkable to me -- and reflects an amazing lack of external innovation (and disruption).   

AlexaSlide12Year (2)

  • And if you compare today's top 15 list of eCommerce websites to this list from 2005, you'll see it's almost identical.  So not only have almost all the top eCommerce sites existed for 12 years -- there has been virtually no dislocation among the leaders.

As I said in my last post, I believe we've seen more innovation (and potential for disruption) in eCommerce in the last 10 months than we have in the last 10 years -- with group buying, demand aggregation, game mechanics, flash/group sales, leveraging the social graph for customer acquisition and mobile.  And, I believe that this is a great time to be investing in these disruptive models.

Anyone want to bet whether, in the five years from now, the top 15 eCommerce sites will look pretty different than they look today?

Change is coming to online shopping

It’s hard to believe it’s been 10 years since we launched Half.com.  (Unless you watch the video of Half.com's launch on the Today Show -- in which case you'll see how much I've aged since then)

One of the things that’s surprised me the most over the last decade is how little transformative innovation has occurred in ecommerce.  eBay looks pretty much the same as it did a decade ago.  Amazon looks pretty much the same as it did a decade ago.  While the top 10 sites on the Internet have changed dramatically over the last decade, the top 10 online shopping sites on the Internet have not.  The traditional catalog/cart shopping model remains pretty much unchanged.  I’m not sure of the reasons why so little innovation has occurred – perhaps it is because of Google.  Specifically, the fact that online retailers had a scalable, measurable, and predictable source of customer traffic (through both SEO and Adwords) might have reduced the external pressures to innovate.

However, the online shopping paradigm is finally changing.  Indeed, I think we’ve seen more innovation in the last 10 months than in the last 10 years.  We’ve seen an explosion of interesting technologies and opportunities that seek to change online shopping, such as:

  • Mobile
  • SNO (Social Network Optimization)
  • User Generated Content 
  • Private Sale Shopping Sites
  • Virtual Goods 
  • Behavioral Data Augmentation
  • Game Dynamics
  • Demand Aggregation
  • Real Time Marketing and Messaging
  • API's that allow for syndicated shopping
  • Alternative Payment Technologies

DSCN0020 At First Round Capital we haven’t been bashful about investing in these spaces.  In fact, we currently have over a dozen companies in our portfolio that seek to transform online shopping.  And tonight we put those companies on display at our first ever First Round Capital eCommerce Summit.   Like our previous one-day events for our advertising-focused and entertainment-focused companies, the goal of this summit was to give our portfolio companies a forum to make brief (6 minute) presentations to their target customers.  So we were really excited that we were able to attract over 100 attendees from the country’s leading eCommerce sites, brands, tool providers, analysts and influencers – including representatives from Alibris, Apple, CafePress, eBags, eBay, Fandango, Forrester, Gap.com, Google, GSI, Ice.com, Intuit, Magento, Omniture, Open Table, P&G, ProFlowers, QVC, Red Envelope, Safeway.com, Shopping.com, Shopzilla, Shutterfly, StubHub, Urban Outfitters, Williams Sonoma, Ylighting and Zappos.

I left the day really proud of our portfolio – and excited about the future of eCommerce!