20 VC 079 BETAWORKS WEEK East vs West Coast Investing with Peter Rojas, EIR @ Betaworks, CoFounder @ Weblogs & Engadget

In this episode of the 20 Minutes VC, host welcomes Peter Rojas, an entrepreneur in residence at Betaworks and a seasoned figure in the tech industry, known for co-founding Weblogs, Inc., Engadget, and Gizmodo, and his strategic role at AOL. Peter discusses his career trajectory, from technology journalism to entrepreneurship, and his focus on early-stage investments on the West Coast for Betaworks. He emphasizes the importance of loving the problem over the product and the value of constraints in business development. Additionally, Peter shares insights into the differences between East and West Coast tech ecosystems, the venture capital community's collaborative nature, and his openness to new ideas and founders from diverse backgrounds. He also touches on the democratization of deal sourcing through platforms like AngelList and the impact of platforms like Kickstarter on startup funding.

• Betaworks is a successful startup studio with notable investments.
• Peter Rojas is an entrepreneur in residence at Betaworks, focusing on early-stage investments.
• Peter has a history of entrepreneurship and strategy, including founding Weblogs, Inc., creating tech sites like Engadget and Gizmodo, and working in high-level positions at AOL.
• Product Hunt, a Betaworks investment, has a new podcast section.

"And following from our interview with Matt in New York City, we are heading over to a new Betaworks branch on the west coast and I'm delighted to welcome Peter Rojas."

This quote introduces Peter Rojas and connects the current conversation to a previous interview, highlighting the expansion of Betaworks to the west coast.

"Peter is an entrepreneur residents at Betaworks, focusing on early stage investments."

This quote summarizes Peter Rojas's role at Betaworks and his focus on early-stage investments.

"He also created tech sites n Gadget and Joystick and Gadget, a social commerce platform acquired by AOL in 2013."

This quote provides background information on Peter Rojas's entrepreneurial achievements, including the creation of technology sites and a social commerce platform.

"And one of Betaworks'investments on the West coast is the amazing product Hunt."

This quote mentions one of Betaworks's successful investments, Product Hunt, and its new podcast section.

• Peter started as a technology journalist at Red Herring magazine.
• Post-Red Herring, he moved to New York and embraced blogging in its early days.
• He co-founded Gizmodo with Nick Denton and later Weblogs, Inc. with Jason Calicanis.
• Peter's career includes significant contributions to technology journalism through blogging.
• He has worked with AOL and led an experimental product group before joining Betaworks.

"I started out actually as a technology journalist with a magazine called Red Herring, which was the magazine covering the business of technology."

This quote explains Peter's beginnings in technology journalism with a magazine that focused on the business aspect of technology.

"I wasn't sure where it was going to go. It seemed at the time blogging was a very small space at that point."

Peter discusses his early involvement in blogging, noting the uncertainty and the niche nature of the space at that time.

"My idea was blogging could be this much bigger product which took on established technology journalist brands like CNET and Wired and things like that."

This quote reveals Peter's vision for blogging as a platform capable of challenging established technology journalism brands.

"We sold that business to AOL in 2005. I stayed for a few years and helped kind of get in. Gadget and the other Weblogs Inc. Sites firmly established there."

Peter narrates the acquisition of his business by AOL and his efforts to establish the Weblogs Inc. sites within the company.

"And we started a new site called Gadget, just GDGT, which was more of a social kind of commerce platform around consumer electronics."

This quote describes the launch of GDGT, a social commerce platform focused on consumer electronics, illustrating Peter's continuous innovation in the tech space.

"And when I was getting ready to leave, got in touch with my friend John Borthwick, who I'd known since actually when he was at AOL in the, I think, 2002, 2003. And Betaworks had been an investor in gadget."

Peter shares the story of how his connection with John Borthwick and Betaworks' investment in GDGT led to his current position at Betaworks, highlighting the importance of networking and past relationships in his career trajectory.

• Betaworks has historically been centered in New York, with a strong focus on investment and incubation within the city.
• Despite being a New York-based company, Betaworks has invested approximately 25-30% of its portfolio in West Coast companies, mainly in San Francisco and Silicon Valley.
• The decision to increase seed investing on the West Coast was driven by the need for local representation, understanding Betaworks' DNA, and providing startups with the benefit of proximity.
• Having someone from Betaworks on the West Coast allows for direct support to startups and gives startups the advantage of connections in both New York and the West Coast.

"Dataworks has done about 25, maybe 30% of its investments historically have been on the west coast, with the majority of those being pretty much in San Francisco, a handful in Silicon Valley."

This quote highlights the geographical focus of Betaworks' investments and their historical presence on the West Coast, particularly in major tech hubs like San Francisco and Silicon Valley.

• Betaworks' studio side sets it apart from other venture capital firms, incubators, and accelerators.
• Unlike typical incubators or accelerators, Betaworks doesn't necessarily bring companies into an incubation program but may do so under certain circumstances.
• Betaworks offers a network of people with operational expertise, knowledge in scaling businesses, customer acquisition, monetization, and a hacker mentality towards product development.
• The company has a track record of producing successful products, which is a testament to their approach to finding product-market fit and differentiates them in the seed investment space.
• Betaworks is seen as a valuable partner for a seed round due to its operational experience and the additional benefits offered by the studio side of the business.

"I think Betaworks has been remarkably successful in producing hit products over the years, which I think is, having tried to do it at AOL, I know it's no simple matter."

This quote emphasizes Betaworks' success in launching successful products, suggesting it as a strong selling point for startups considering their investment and support.

• The primary difference between the two coasts is the size of the tech ecosystems, with the West Coast being significantly larger.
• There are differences in the types of companies that emerge from each coast, with New York being more design and commerce-focused and the West Coast leaning towards on-demand startups.
• The speaker expresses a personal connection to the New York tech community, indicating a level of sentimentality in the comparison.

"It's so big here in the west coast compared to New York, and New York is very strong, and I feel like I grew up in that community."

This quote contrasts the size of the West Coast tech community with that of New York and reflects the speaker's personal journey within the New York tech ecosystem.

• There is more capital available on the West Coast due to the presence of more funds.
• The speaker suggests that startups should consider raising money from both coasts to benefit from diverse geographical financing sources.
• The mix of geographical sources can add value to a startup's financing strategy.

"I would say that there's access to more capital here because there are more funds."

This quote indicates that the West Coast has a higher concentration of funds, which translates to greater access to capital for startups in that region.

• Valuations have started to become more rational, but hot deals can still lead to high valuations due to a pile-on effect.
• Platforms like Y Combinator provide startups with visibility and access to venture capital networks, which can influence valuations.
• Venture capital is relationship-driven, and referrals are preferred, but the speaker is open to cold emails and considers them.

"I think that they've actually started to rationalize a little bit more."

This quote suggests that while valuations can be inflated for certain in-demand startups, there is a trend towards more reasonable valuation practices in the venture capital industry.

• Breaking into the venture capital world can be challenging for outsiders.
• The venture capital community has become more accessible than in the past.
• Increased accessibility has contributed to the emergence of many successful startups and rising valuations.

"Everything, but I think that if you are outside of that world, outside of that network, it can seem very opaque. How do you break into it and start to get the attention of the right people? But it's easier than it was before, I would say. And I think that's one reason why there are now so many great startups that are able to kind of command attention. And I think that's one reason why the valuations are going up."

This quote emphasizes the difficulty of entering the venture capital network from the outside and acknowledges that it has become more navigable over time, leading to more startups gaining attention and higher valuations.

• Some venture capitalists are less approachable and do not publicly share their contact information.
• Peter Rojas is an exception, as he is open to communication and responds to most emails.

"Why do you think you're different then in terms of reach? Why do you accept the emails? And the rest of the community are much more hesitant to, I mean, I know a lot of vcs don't even have their emails on their."

This question highlights the varying levels of accessibility among venture capitalists, with some being more open to communication than others.

• Peter Rojas is open to communication and provides his email address for contact.
• He draws the line at requests for Kickstarter backing unless it's part of a larger fundraising effort.

"I mean, I'm happy to have my email. My email is just. Peter@betaworks.com if anyone wants to get in touch with me and I answer pretty much every email I get, the only things I don't answer is people begging for Kickstarter backing. That's the only thing."

Peter Rojas shares his email address and expresses his willingness to communicate, except for specific requests related to Kickstarter backing.

• Peter Rojas relates to the feeling of being an outsider in the venture capital world.
• His background in journalism, blogging, and his education from a British university, as well as his Hispanic American heritage, contribute to his unique perspective.
• He values the support he received when he was starting out and aims to offer the same to others.

"Well, I think one is that having been, I remember what it was like to be on the outside. And I think also maybe my background is slightly unusual for someone to come in venture capital. I came in through journalism and blogging. I have a master's degree, actually, from a british university in English."

This quote reflects Peter Rojas' understanding of the challenges faced by outsiders in the venture capital world and how his unique background influences his approach.

• Peter Rojas is not solely focused on metrics at the early stages of a startup.
• He prioritizes understanding the product, its scalability, and potential to drive revenue.
• The founder's passion and commitment to solving a problem are crucial factors in his assessment.

"So not metrics driven at this stage. For me, I think that what I care a lot about is I look at the product and I think that's also maybe my bias, having again, been a blogger and then a product person and an entrepreneur and product person."

Peter Rojas explains that his investment decisions are not based on metrics alone, but also on a deep understanding of the product and the founder's passion for the problem they are solving.

• Founders should be more committed to solving a problem rather than being attached to a specific product.
• A common mistake is trying to force a product to work without achieving product-market fit.
• Being flexible and willing to adapt the product to solve the problem is key to success.

"And frankly, one of the things I always say is you fall in love with a problem and not a product, which is to say, is there a big thing that you want to solve and that you're willing to kind of take whatever twist and turn with the product to solve that problem, rather than trying to fall in love with a product and then trying to find a problem that it solves, which I see all the time."

This quote emphasizes the importance of focusing on solving a significant problem rather than being overly attached to a particular product, which is a common pitfall for founders.

• The venture capital community is generally open, friendly, and collaborative.
• Other venture capitalists have been generous with their time and advice to Peter Rojas.
• There is a stereotype of venture capitalists being cutthroat, but Rojas' experience has been positive.

"But I think one of the things that I've been pleasantly surprised by is how open and friendly other people in the venture community are. I've spent a lot of time just really, since I've started just taking, just going to meet with people that I either know or have been introduced to and getting to know them and asking them what their advice is."

Peter Rojas shares his positive experience with the venture capital community, highlighting its openness and the collaborative nature of relationships among venture capitalists.

• Venture capitalists admired by the speaker are not solely driven by profit but by a passion for new ideas and innovation.
• The speaker values soulful and kind individuals in the venture capital industry.
• Making money is a common goal, but those with a genuine interest in new technology and ideas stand out.

"The VCs that I know and that I admire and that are the reason why I wanted to do this are people that are some of the sort of most soulful kind people that you'll ever meet, right. People who are passionate about new ideas and new things rather than just obviously everyone wants to make money."

The quote highlights the speaker's admiration for venture capitalists who are passionate and kind-hearted, emphasizing that their motivation extends beyond financial gain.

• The speaker has had the opportunity to work with notable investors like Mark Cuban and has been influenced by them.
• The speaker mentions specific investors from Spark, True Ventures, and other firms who have had a positive impact on their professional life.
• Fred Wilson and Brad Feld are mentioned as respected figures in the venture capital community for their thoughtful and introspective approach.

"But with Gadget, I mean I got to work with like Mo Kaufman from Spark and Bijean Sabet from Spark. I got to work with Tony Conrad and John Callahan from True Ventures. Again, I got to work with John Borthwick and Andy Weisman from when Andy Weisman was at, you know, so many really great people."

This quote lists several investors the speaker has worked with, indicating the importance of these professional relationships in their career.

• The speaker uses RSS readers to stay informed, specifically mentioning Feedbin for RSS feed sync and Reeder for reading feeds.
• TechCrunch, Engadget, and Product Hunt are cited as indispensable sources of tech news, along with Jason Hirschhorn's Readap newsletters.

"Well, I still use an RSS reader, which maybe is a little archaic, but I love being able to stay on top of a lot of different information sources really quickly."

The quote explains the speaker's preference for RSS readers as a way to efficiently consume information from multiple sources.

• The speaker highlights the role of relationships in deal sourcing, with referrals from other investors being particularly valuable.
• AngelList is praised for democratizing the investment process, allowing newcomers to participate alongside established networks.
• The speaker acknowledges Naval Ravikant's vision in creating AngelList.

"I think for me, getting referred deals from other investors that I know has been really important. And the first deal that I did for Betaworks, which I can't announce yet but closes on Wednesday, that was referred to me by an investor who I've been friends with for a really long time."

This quote emphasizes the significance of personal relationships and referrals in the venture capital industry, particularly for sourcing deals.

• The speaker's favorite recent book is "Anti-Fragile" by Nassim Nicholas Taleb.
• The book's theme revolves around the benefits of stressors and constraints, challenging the notion that these are always negatives.
• The speaker applies this concept to entrepreneurship, suggesting that constraints can lead to better business decisions and outcomes.

"And what I like about it is it sort of takes a very counterintuitive approach to how you should think about risk and ecosystems and about how stressors can actually be an important and valuable thing."

The quote reflects the speaker's appreciation for the book's unconventional perspective on risk and the positive role of stressors in business and ecosystems.

• The host thanks Peter Rojas for his participation and wishes him well in his new role.
• The podcast offers a giveaway of "Venture Deals" by Brad Feld for iTunes review participants.
• Vdar Law is mentioned as a resource for legal advice on crowdfunding campaigns, which are increasingly popular for raising business finance.

"And I would love to say a special thank you to Peter for joining us today and wish him all the best in his new role on the west coast with Betaworks."

The quote is a courteous acknowledgment and farewell to Peter Rojas, expressing good wishes for his future endeavors.