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How First Round Capital missed out on Twitter's first round.

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Re: How First Round Capital missed out on Twitter's first round.

#11

Earlier quoted context omitted.

As a counterpoint: http://pmarca-archive.posterous.com/the-pmarca-guide-to-star... TL;DR Market is more important than team. Of course, trying to estimate the market of something totally new (or sorta new) like Twitter is hard. What market does it enter/disrupt? Social networking? Blogging? Edit: Example is Odeo. Just about the same team as Twitter... Crappy market as it turns out.

I tackled that exact question in a post about my experience on the Odeo team at the start of Twitter. My conclusion was that the phrasing was wrong. What matters most for a product? Market. What matters most for a company? Team. Odeo the product failed because there was no market for it. Odeo the company produced a great win with Twitter because it had the right team to do something like that. A little more depth her…

That is an epic-good blog post. Thank you!

"A good team, that listens to its customers, is going to find a good market and put together a good product for that market."

This is true. But, Andreeson is looking as an investor-- he invest once a team has settled on a market--- when it's oftentimes too late to change directions so radically. Ev did the sensible thing when Twitter was looking promising-- he effectively put Odeo on the shelf and started a fresh company with a fresh cap table.

A lot of founders don't have that option (after they've taken money) and are forced to pivot within their market. So a good team can be constrained by investment/inertia.

Re: How First Round Capital missed out on Twitter's first round.

#12

Earlier quoted context omitted.

I tackled that exact question in a post about my experience on the Odeo team at the start of Twitter. My conclusion was that the phrasing was wrong. What matters most for a product? Market. What matters most for a company? Team. Odeo the product failed because there was no market for it. Odeo the company produced a great win with Twitter because it had the right team to do something like that. A little more depth her…

That is an epic-good blog post. Thank you! "A good team, that listens to its customers, is going to find a good market and put together a good product for that market." This is true. But, Andreeson is looking as an investor-- he invest once a team has settled on a market--- when it's oftentimes too late to change directions so radically. Ev did the sensible thing when Twitter was looking promising-- he effectively pu…

You're right. It's nuanced.

Re: How First Round Capital missed out on Twitter's first round.

#13

The key to any early stage investing is betting on the team involved. I agree valuation really matters, but getting in with a great team is more important than the perfect valuation.

As a counterpoint: http://pmarca-archive.posterous.com/the-pmarca-guide-to-star... TL;DR Market is more important than team. Of course, trying to estimate the market of something totally new (or sorta new) like Twitter is hard. What market does it enter/disrupt? Social networking? Blogging? Edit: Example is Odeo. Just about the same team as Twitter... Crappy market as it turns out.

I guess it depends what you consider "early stage" investing. At WV, we concentrate on the super early stage and I can tell you that at the crazy early stage very few people/teams have their story, message, product, or market together. In our world, you only bet on people. As a matter of fact, I often don't even care what the product or story is as I will bet on people that I know will get it right sooner or later.

Re: How First Round Capital missed out on Twitter's first round.

#14

The key to any early stage investing is betting on the team involved. I agree valuation really matters, but getting in with a great team is more important than the perfect valuation.

I'm not an expert yet, but I believe what really matters is a great market first, then a decent team second. From an investor point of view, you can always fix the team with money, you can't fix the market.

In 20 years of doing this, I have always found that good teams are worth almost anything you can pay. There are very few truly good teams.

Re: How First Round Capital missed out on Twitter's first round.

#16
post #5

It's nice (and rare) to see VCs being humble.

Lots of us are humble... and a lot of us are jackasses. It is like any other industry.

I've found the ratio to be much higher in VC than other professions. I can email CEOs cold and they usually respond... VCs with warm intros are 50-50...
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