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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Happy Holidays

Still_JoshAs many of you know, this time of the year is one of our favorite at First Round Capital - and not just because it's the holiday season.   But rather because it's time to fire up our camera, polish up our writing skills, dust off our dancing shoes, practicing our singing and prepare for our holiday video.

We hope this annual tradition shows that even though startups are a serious business - we don't take ourselves too seriously.  Our holiday video also gives us the chance to get together with the amazing entrepreneurs we work with to sing and dance, celebrate like it’s Friday, and end the year with a bit of Spice.

As our portfolio has gotten bigger, so too has our video – and it is a “labor of love” for our entire team.  Phin wrote the lyrics, CeCe scouted locations, secured costumes and handled the choreography (you should have seen how bad we were before she coached us), and Brett continues to amaze us all with his direction and production. 

So without any more delay, we're thrilled to share with you, the First Round Capital Holiday Video 2012

We really hope it puts a smile on your face.

Student Engineers: Apply to work at 170+ startups with one Common Application

CaptureWe'vtalked a lot recently about the amazing amount of talent that exists in universities across the country – and one of the main reasons we launched the Dorm Room Fund was to create a new and more efficient way for capital to flow onto campuses and into the best and brightest entrepreneurs.  But we realize that not everyone wants to start a company; many students, instead,  would love to join one.   But it’s often really hard for students to find the perfect startup jobs.  Startups typically don’t recruit/interview on college campuses.  And they rarely post job openings for internships.  Too often, it is often based on who you know.  So a lot of top university talent simply end up taking an internship or full-time job at Google or Microsoft.   We don't think this makes sense.

Last year, we quietly launched an experiment called the First Round Capital Common Application.  It was a simple idea: allow engineering students to fill out one application and get matched with the perfect startup from across our 170 companies.  That tiny experiment lead to some incredible matches.  Will Drevo, undergraduate CS student (and winner of the Autonomous Robotics Competition) at MIT said, "Applying for an internship through First Round Capital unexpectedly landed me a dream internship at a cutting-edge stealth startup of 12 employees - ToyTalk, Inc. It was honestly the best work experience I've had to date and I worked with a truly amazing and fun-loving team. I got to walk into work every day and talk with the CEO and CTO - I really felt like part of the team. But I never would have heard about ToyTalk unless I applied through First Round Capital."

So we’re super excited to launch this year's Common Application for university students.   With this one application, engineering students can apply for summer internships or full-time jobs at over 170 amazing startup companies.  Maybe you're an algorithms and data junkie looking to work on insanely tough problems with a small team in SF, or perhaps you're more interested in doing iOS development for an eCommerce company in NYC  – just tell us about yourself, your interests and desired location and we'll take care of the rest.   If you're a student, you can apply here now.

Once you complete your application, our Talent Team will review your submission and if you're a fit, we'll follow up directly and connect you with relevant companies.  You'll receive a number of introductions so you can choose the opportunity and company you are most excited about.

We hope our Common Application continues to make it easier for the most talented students to have the opportunity to work at small startups with big ambitions.  The only way to learn how to build great companies is to be a part of them - and we hope more students have that opportunity in 2013.

Why First Round Capital funded a lawsuit

You can imagine the scene in the board room.

The CEO of our portfolio company, Techforward, is discussing a “make the company opportunity" -- Best Buy wants us to to power their nation-wide buyback program.   And Best Buy is talking about launching it with a Super Bowl commercial!  We had just finished a pilot test in several Best Buy stores and the results were very strong – and now, before we moved forward with the national rollout, Best Buy was asking us to provide them with access to our proprietary analytical model. This model was our crown jewels -- we had invested years and millions of dollars building it.  But we had signed a non-disclosure agreement with Best Buy – and they had assured us the information would remain confidential and was critical to moving forward. The board ultimately agreed to share the model – knowing we were protected by our confidentiality agreement.

Fast forward a few months and many more meetings in Minneapolis. Best Buy abruptly tells Techforward that it is not moving forward with them – but rather, they are moving forward themselves. They launch a Super Bowl commercial staring Ozzy Osbourne and Justin Bieber to promote their program. And Best Buy goes on to generate over $140M in revenues through this program.

Now imagine the scene in the Techforward board room.  Although the company had been providing services for other retailers (like Radio Shack and Dell), the company had invested well over a year’s effort to get the Best Buy deal underway.  And Best Buy’s last minute actions posed a fatal blow. Techforward sued Best Buy – but it would take a very long time before the case made it through trial.   And since Techforward had invested so much money working on the Best Buy deal, the cash position of the company was not looking good.   The board ultimately had to make a horrible choice – they sold Techforward’s assets to a third party.  BUT – they did not sell the lawsuit. Instead, First Round Capital (along with our co-investor, NEA) decided to keep funding the lawsuit.  And over the last 18 months, we and NEA gave the lawyers hundreds of thousands of dollars to keep the suit going.  This wasn’t an easy decision. We are in the business of funding companies – not lawsuits.   But my partner, Howard Morgan, was a board member of Techforward – and he sat in those board meetings. And Howard was convinced that Best Buy shouldn’t get away with their behavior.   We needed to send a message to Best Buy – and every other large company – that they can’t blatantly violate agreements and steal ideas from startups.  And if big companies believe they can violate agreements with immunity because a startup can’t afford to sue them, it is bad news for every startup in the ecosystem.

Today Howard is smiling.  Because after 18 months in court, a nine-person jury found Best Buy liable for misappropriation of TechForward’s trade secrets and breach of contract, and returned a verdict of $22 million in favor of TechForward.  And the jury also found by clear and convincing evidence that Best Buy did so willfully and maliciously, so the judge awarded an additional $5 million in punitive damages.

As we saw the information that was produced by Best Buy during the trial (some of which is summarized here), I was amazed by their brazenness.  Best Buy had:

  • Internal emails that acknowledged that it would “ a couple of years before we [Best Buy] have a model that is up and running…” and “...I’m not convinced we’d be able to organically duplicate Tech Forward’s model in a reasonable period of time…” so they “…wanted an opportunity to peek under the hood a little bit at their [Tech Forward’s] modeling…”  
  • The models which Best Buy did build internally were virtually identical to the models that Techforward had provided them.  And there were internal Best Buy emails asking Best Buy employees to “…remove the Techforward reference in the file names…”  
  • While Best Buy promised to build a “brick wall” to protect the information that Techforward provided them, they acknowledged that they did not do so. And in fact, the same people that reviewed Techforward’s model were the ones who built Best Buy’s model.  
  • My favorite email is one from a Best Buy employee (I am using all my willpower to not put his name here) who argued in favor of running the program internally, saying that “I don’t think we should be making this company [Techforward] rich…” 

This has been an educational process for me.   I had (naively) assumed that senior-level employees of a $50B company would know right from wrong.   (And this is a company that recently launched a “College Innovators Fund” to help discover innovative ideas on college campuses… Applicants beware ;-)    Going forward, I won’t be as trusting.  This should be turned into a case study that every major company should make their business development people read.

I also learned that our justice system, while slow and imperfect, does work.   And while the outcome here is still not what we had expected when we funded the company initially, it’s nice to turn a money-losing outcome into a money-making one.   And I am thrilled for the founders of Techforward - Jade Van Doren and Marc Lebovitz - who finally have vindication after doggedly pursuing justice for almost two years.  

I hope that going forward we can stop funding lawsuits – and just fund companies. And I won’t be shopping at Best Buy this holiday season.