Investor humility

Last week I had the pleasure of conversing with Josh Kopelman in front of a live audience of startup investors at the UPROUND 13 conference. The focus of the discussion was on Josh’s lessons learned as an angel investor, and later, as an early stage VC investor.

Josh is no stranger to startups. While an undergraduate student at Wharton, he co-founded Infonautics which would go on to IPO on NASDAQ. He followed this up by founding which was acquired by eBay a couple years later, and subsequently helped start TurnTide which was acquired by Symantec just six months after being founded. Josh’s career as a startup investor is just as storied, with First Round, the VC fund he founded, backing such high-profile startups as Uber, Fab, Warby Parker, and Square. BTW, part of that storied history also includes releasing quirky holiday videos every year–I’m simultaneously proud and embarrassed that FundersClub made it into last year’s one.

For someone who has accomplished so much, I thought it’d be worth asking about Josh’s biggest regret as a startup investor. In an incredibly timely revelation, just two hours before Twitter announced its IPO filing to the world via a tweet, Josh revealed on stage at UPROUND that he missed out on being the first investor in Twitter. Josh made the first offer to Ev Williams but was unwilling to move up on valuation to where Fred Wilson, one of our friends at Union Square Ventures, was able to get comfortable. The Wall Street Journal was in attendance at UPROUND and detailed Josh’s story. Luckily for Josh, his failure to participate in Twitter provided the perfect backdrop to repent and turn a miss into a success. First Round would go on to back Twitter’s co-founder Jack Dorsey to launch Square.

When I asked Josh about bad habits he used to have as an angel investor, Josh revealed a tendency early on in his investing career to invest on the merit of what he thought a business could become, not what the founders were seeking to build. Pulling out his cooking analogies, Josh pointed out that in a kitchen, while similar ingredients might be present, one could alternatively create a soufflé or brownie. An investor might be investing in the soufflé, when in fact the founding team wants to bake brownies. Investor-founder alignment on vision is critical for the sanity of both investor and founder.

There were several other lessons shared by Josh, as well as by several other prominent VCs and angel investors, but I think the main takeaway that day was actually a lesson on humility. In spite of the stereotypical image of the egomaniac VC, I’ve noticed that some of the best startup investors around are also some of the most humble people I know. It’s good to see intellectual honesty and humbleness being rewarded in the startup investing community, as those are features that allow the industry to continue to learn and evolve.

Alex Written by:

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