On November 20, I had the pleasure of having dinner with First Round Capital Founder Howard Morgan as part of an intimate Israel Tech CEO Roundtable in NYC. I hosted the dinner (as the Manager of the Israeli Founder Syndicate on AngelList and Partner at Excellerate) with Guy Franklin, General Manager of Sosa NY (and Founder of Israel Mapped in New York), and Nir Inbar, Head of Tech Banking, Leumi NY. The group meets quarterly as a support platform for CEO’s of Israeli tech companies in NY to share business challenges and network around relevant content.
I’ve known Howard since 2000, when my first start-up, .tv, was founded out of idealab, where Howard was then Vice-Chairman. While I’ve seen Howard speak numerous times over the years, this was the first time I heard his life story, followed by some lessons learned and some Q&A. All in attendance felt lucky to be present and soak up the wisdom. Here are ten jewels:
- In 1975, Howard had the 50th computer on the ARPANET, the precursor to the internet.
- In 1996, Howard became the first investor in idealab, now the longest running tech incubator in the world. Howard would eventually become Vice-Chairman at idealab, and remains on the Board of Directors.
- First Round has made over 300 investments, including 6 in Israel (Howard currently sits on the Board of Augury). Howard is also active with CornellTech.
- First Round passed when Jack Dorsey brought them Twitter because, at $20 million, it was above their $10 million threshold. However, learning from their mistake, First Round agreed to a much higher valuation for Dorsey’s next start-up, Square (now valued at $4.5 billion).
- First Round had invested in Garret Camp’s first company Stumble Upon, so they were excited to get an opportunity to invest in his second, Uber.
- First Round looks for the “6 P’s” — people, products, plans, profits, passion, persistence.
- Follow on rounds are getting more difficult as “tourist” investors like Fidelity and Wellington slow their investing
- Part of the secret sauce of First Round is the staff of 20 to help the companies (similar to Andressen) which is complemented by a network of 235 other Founders who help each other via a Slack like app.
- Among the most interesting findings to come out of First Round’s “10 Year Project”, a data driven analysis of its 300+ investments are that 1) female founders perform 63% better than their male peers, 2) Teams with at least one founder coming out of Amazon, Apple, Facebook, Google, Microsoft or Twitter, performed 160% better than other companies, and 3)Teams with two founders perform better then single founders, or 3+ founders
- At First Round, Howard says the ethos is that it is not a sin to pass on a great deal like Twitter, the sin is not getting the opportunity to invest.
Howard recently announced that he will be retiring from First Round, and he penned this thoughtful post on Medium about the transition. Luckily, Howard plans to continue to be active in the start-up community as an angel investor.
Thanks for a great evening Howard!
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