First Round Capital
Posted at 21:41h, 10 Mar 2015 in List Archive by Bonnie Halper No Comments 135 Likes Share

Good morning, All,

Our next Breakfast with an Investor is next week, March 18th and our guest investor is Wiley Cirilli from First Round Capital. And notice that it’s called First Round Capital. Early stage.

Wiley Cerilli is a Venture Partner at First Round, and was founder of Single Platform, which was acquired two years after its founding by Constant Contact for $100M (What It Feels Like To Wake Up At 32 With Everything You’ve Ever Wanted). SinglePlatform was initially funded by First Round, and quickly went on to be named one of the Top 10 and 25 “Companies to Watch” by Business Insider, The Next Web and Website Magazine. Wiley has been named as a “Top 25 CEO” in New York, and “Top 10 People to Watch” by Crain’s. He also dropped in and out of school five times, and met his wife on Match.com. More about him below.

Back in the days of Web 1.0, when we spent the majority of our time recruiting, we got a call from someone, late on a Friday afternoon, who was in from out of town and wanted to get together to discuss his company’s recruiting needs. He needed to meet as soon as possible, as we had come very highly recommended, and he was leaving town the following day. Could we meet that evening and grab a drink somewhere? Sure and of course we brought our other half along, and chose our favorite local bar. We met, he told us a bit about the company. As for his hiring needs: he needed to add a thousand people in the next month or two. While this might sound like every recruiter’s dream, our red flags went up, and we asked him to start over. So he did, and after hearing it the second time, we turned down the contract. To us, it was a company that had come from out of nowhere, and how do you onboard a thousand people within 60 days?

“I’ll make you rich,” said the executive.

“You’ll kill my business,” we answered. “A good recruiter get leads via referral. You’re scaling too fast; the center will not hold, and if it falls apart and people lose their jobs, they’ll never trust us again, and there goes our business. Pass.”

True story and we have witnesses. Full disclosure: this came at a time when we were personally witnessing too much money chasing too much inexperience and our red flags were generally up.

The name of that company: Enron.

We mention this because This Venture Capitalist Says We Have Entered a Tech Bubble, and we agree. The general tech landscape feels like it did at the onset of the first tech bubble. California investors tend not to agree, but we hear it from the New York investors who went through the first tech bubble, and will mention something sotto voce. And when you look at some of the valuations that a number of the Cali based companies are getting – in the billions, and taking on venture rounds in the hundreds of millions, if not more, our red flags go up. Bill Gurley is also skeptical: Sorry, but a pricing model does not equate to a competitive advantage. When I see this stuff I fear the end is near (Jet.com’s Valuation Nears $600 Million Before Launch).

And remember: many of these Cali-based companies are getting wild valuations, without having so much as a clear revenue model.

When you see this and wonder why NY investors ask about your revenue model, it’s because we’ve been there, done that, and clearly aren’t smoking the same stuff that’s available in Silicon Valley. We remember. It wasn’t pretty, it was no fun at all – and the industry did not return in Internet Time. It took years.

A few words of caution:
Hype is not success (as a recruiter, we did caution applicants about from adkeeper)

OPM – Other People’s Money – is not a business model and far from an exit

FOMO is not a good reason to invest, or to take investor money
Fast in, fast out

Onward and forward.