It’s great to see so many first time entrepreneurs out there taking the big leap. At First Round, a lot of the companies we invest in have new founders at the helm. It’s exciting to work with them and incredibly rewarding to help them succeed.
Our penchant for backing new teams also means we’re willing to meet with lots of first time founders on the way to backing that select few. When people ask me what areas I’m interested in, I often say “early”. Taking meetings with entrepreneurs at these early stages means that you have to view these meetings in the right context. You know that they won’t have all the answers, or a complete team, and often they’ll still be working on the product. That’s totally fine and to be expected.
What’s tough is when you meet with first time founders that don’t seem to have studied up on their history. Being in venture capital gives you the benefit of having seen a lot of patterns of success and failure—and unfortunately, there are some basic ones that new founders seem to miss. Every sector has a history of attempts at unseating the leaders and disruption that should be evaluated before going all in on an idea. If you’re going to be the next Evite killer, why haven’t the last 15 worked? Why have their been so many attempts at new dating sites, but so very few exits? There’s nothing wrong with trying to improve on what’s been done before, but there’s no excuse for going in blind.
Sometimes, technology changes and old ideas that were before their time can be successful. Mercata was Groupon in the late 90’s before consumers were so comfortable with spending money online and social networking enabled inexpensive viral customer acquisition. Foursquare is really Dodgeball at a time when smartphones enable a better and geo-aware mobile experience. Knowing what worked and what didn’t—and the environments your predecessors played in is crucial. It is nearly impossible to rebuild Zynga today because that company took advantage of Facebook’s loose application marketing loopholes on its way to building up its userbase—channels that are now closed to new apps. LinkedIn’s first 1000 users had disproportionate representation from the top VCs in the valley—making joining the network early on very attractive. So, the next time you’re trying to build a business social network, keep in mind that it was more than just virality that caused the newly public network’s growth—it started out with the Who’s Who of startup investors and all the entrepreneurs who wanted to connect with them. Ignore that little detail at your peril.