Josh Kopelman - The Past, Present, And Future Of Seed Investing - [Invest Like the Best, EP.170]
My guest today is Josh Kopelman, the founder of famed venture capital firm First Round Capital. Prior to starting First Round, which has invested at the earliest stages in companies like Square, Uber, and Roblox, Josh was a three-time entrepreneur, so our conversation spans early-stage investing, business building, and entrepreneurship. I’ll not sure forget his analogy distinguishing between navigators and cartographers, nor the rest of the interesting ideas he shared after seeing and investing in so many great businesses. We also discuss how First Round has bucked the trend to build what I’d call a platform adjacent to the core investing business which does a lot for their entrepreneurs and is a model for other professional investing firms, both in venture and elsewhere. Please enjoy my conversation with Josh Kopelman.
This episode is brought to by Koyfin.
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Show Notes
(2:05) – (First question) – How pandemic has impacted their investing strategies
(3:54) – How this stressful environment impacts founders
(6:23) – His early career as a founder and how startup culture has changed
(10:15) – Most important lessons from his entrepreneurial career and building from just an idea
(11:50) – How to analyze a founder
(14:05) – Common disagreements when it comes to deciding on an investment
(15:33) – How many opportunities they evaluate in a meeting
(16:16) – The curvy road to their investment in Roadblox
(17:52) – Whether the concept for a platform is overused
(19:36) – Founders asking what google search they should build on
(20:46) – Solving existing or forecasted problems
(25:39) – How the startup scene is impacted by the huge legacy tech companies
(30:28) – What makes a great early stage investor
(32:19) – Do they focus on founders or themes
(33:19) – Where will valuations and returns come back to after the pandemic
(36:30) – How are business models evolving in technology entrepreneurship
(36:31) – Matt Clifford Podcast Episode
(39:40) – The Dorm Room Fund
(43:02) – Whether investment funds should have their own platform
(47:31) – Product mistakes in software building
(51:52) – What he’s most excited about for the future
(54:05) – The kindest thing anyone has done for him
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on Twitter at @patrick_oshag
20VC: First Round's Josh Kopelman on Why Price Is Both An Art and A Science, Why Ownership Must Be Built on First Check and The Negative Consequences of Attribution in Venture
Josh Kopelman is Founder & Partner @ First Round, one of the world's leading seed funds with a portfolio including the likes of Uber, Warby Parker, Flatiron Health, Square, HotelTonight, GOAT and more incredible companies. As for Josh, he founded First Round in 2004 to reinvent seed stage investing. Since he has invested in over 200 startups and been ranked 4th in Forbes Midas List and named one of the top ten 'angel investors' in the US by Newsweek magazine. Josh has previously sat on the boards of Flatiron Health, Clover Health, AppNexus and more.
In Today's Episode You Will Learn:
1.) How Josh made his way into the wonderful world of venture from angel investing and what the inspiration behind the founding of First Round was?
2.) How does Josh think about price sensitivity today? What were his learnings from being priced out of the seed round for Twitter and Dropbox? How has Josh seen his relationship to price change over time? How did witnessing the boom and bust both as operator and investor affect his investing mentality today?
3.) How does Josh and First Round think about reserve allocation? How has their thinking changed and evolved over time? Does Josh believe that ownership is fundamentally built on first check? What does the investment decision-making process look like for reserves? In terms of allocation, how does Josh think about time allocation across portfolio? Spend it with the winners, they return the fund or the strugglers and save cents on the dollar?
4.) Josh has spent over 3,000 hours on boards, what have been some of the biggest inflection points that have changed the way he thinks about being a good board member? How has he seen his style and approach change over time? What advice would Josh give to an individual that has just gained their first institutional board seat?
5.) Why does Josh believe that we fundamentally neglect "the pick" today in startup world? Why does Josh believe a high degree of startup mortality begins at the pick (idea) stage? How do the very best founders aproach this stage? How should these founders approach picking their investors? What should they look for? What should they be wary of?
6.) Why does Josh want to be known as a better picker of partners than investments? How has Josh thought about the building ou of the first round partnership over time? If there was anything he would have done differently, what would it be? Why does Josh fundamentally disagree with attribution? How does Josh think about generational transition? What are the steps required to do it well?
Items Mentioned In Today's Show:
Josh's Fave Book: Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts
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Episode 60: Josh Kopelman
Josh is an entrepreneur, investor, and founder of First Round Capital. We talk about his come up story, starting half.com and selling it to ebay, how he started First Round, how he learned how to invest, advice to entrepreneurs, and much more. For anyone looking to learn how to invest, Josh is one of the best in the game and drops a bunch of gems in this episode.
