First Round’s Charlie O’Donnell on What’s Right/Wrong with NY Tech Scene

Charlie O’Donnell may not be be loved by every last entrepreneur in New York, but they all know him — or will. Indeed, while plenty of young venture capitalists do their share of networking to stay in the game, O’Donnell is a networking maestro in comparison. He doesn’t just make introductions, appear at conferences and attend parties; he creates the parties, organizes the communities and regularly comes up with new ways to drum up deal flow.

It’s a ways from where O’Donnell thought he would be not so long ago. In the summer of 2009, O’Donnell’s startup, Path 101, was running on fumes, unable to attract Series A funding. When he ran into Josh Kopelman of First Round Capital at a popular event that O’Donnell organizes, both spotted a match. First Round had sewn up a dozen deals in New York but wanted to be better plugged in. O’Donnell — who worked in junior roles at both General Motors Pension Fund and Union Square Ventures before starting Path 101 — needed a job.

O’Donnell joined First Round as an entrepreneur in residence in October 2009, the same time that First Round opened its NYC office. The relationship has been fruitful. O’Donnell is a Brooklyn native who attended Fordham University and has deep ties across New York City. He’s been blogging since 2004, he sends a  weekly events-related email to roughly 3,000 investors and entrepreneurs, and, more recently, O’Donnell began organizing startup “school” programs that educate participants while giving him access to more deal flow. Such efforts have raised First Round’s profile substantially in New York. Just last month, O’Donnell was featured in a lengthy profile in the Observer.

On Wednesday, at First Round’s spare Park Avenue South offices, I talked with O’Donnell about his obsessive networking, as well as what he’s seeing in the local ecosystem that the rest of us may not. Our conversation has been edited for length.

Q: There’s been a crush of seed-stage funding in New York over the last 18 months. Is there some nervousness now about what happens to all those companies when they look for later rounds?

A: There’s more seed funding, but because the funding [amount] is more reasonable, there are more exit opportunities for entrepreneurs at different stages. For example, an interesting team can be bought by a larger company, and their investors made whole, while their team DNA really impacts the bigger company for the better, like [search startup] Summize [acquired by Twitter in July 2008]. Summize really infected Twitter; it’s the search technology behind it.

Q: Do you agree that New York needs some breakout companies to mature and go public and create more widespread wealth to keep things up around here?

A: Right, the [widespread belief that New York needs a] billion-dollar exit. [Online ad company] Right Media and [affiliate marketer] Linkshare add up to a billion dollars. [Luxury e-tailer] Gilt Groupe is on that kind of trajectory. Even without them, I just don’t see that there’s any shortage of money here willing to go into tech startups. I don’t think that’s an issue. What’s in short supply are really good ideas with the right teams to go after them.

Q: Where is the talent coming from?

A: Not out of the colleges here — and if they are, they’re doing it by accident. There are some people who’ve come from NYU and Columbia who are in the tech community, but that’s not a byproduct of the schools. It’s not like Stanford.

Out of school [in New York], you have pressure, loans, your family’s expectations, and you’re optimizing for safety and security. And so what do you see on campus? The job fairs, the big companies, the hedge funds, and the banks, and each seems like a pretty viable route. Someone pays you $60,000 a year and you’ve never had a paycheck before; it doesn’t sound so bad. Students just don’t know that, oh, by the way, working for a venture-funded startup company is probably just as secure, you’re going to learn a ton more and have more fun. [An acquaintance at the hyperlocal news site] Outside.in once [told me]: ‘I never hugged a co-worker until I worked at a startup.’

Q: But they’re harder to find. So how are people finding these jobs, and more, how are you recruiting for your startups?

A: In terms of recruiting talent, it’s a process that’s owned by the companies, but to help, this year, I started these education events because companies really do need employees, technologists, biz dev people.

Q: How do they work?

A: Well, you can’t major in product management, for example. You fall into it accidentally. But a lot of companies need them, so we thought: Why don’t we do five sessions — two talks per session — where you can teach other people, ‘here’s how we do wireframes,’ and ‘here are best practices for user-experience testing sessions,’ and ‘here’s how I build my feature roadmap, and interact with the tech team and balance that against business priority.’

Right now, we’re doing CTO school for first-time CTOs and lead technologists. The idea is that there are a lot of twentysomething developers who are part of a two-person startup team and suddenly they’re CTOs and feeling like boys dressed in big boy pants. But they could grow into people overseeing tech teams and we want to help them understand how.

We’ve had 150 technologists to each of the [CTO] events — we’ve done four of five them so far. I was stunned that there are so many in New York, and you know if there were that many showing up there are probably 300 more first-time CTOs out there.

Q: You do all of this for more exposure?

A: We have street cred from my doing that. People think about Charlie from First Round, [which] means you don’t need to spend money to put your banner all over the place. But also, I get the list of companies that RSVP and sometimes I haven’t heard of them before because they’re trying to build a great product before they pitch investors. So we might get a deal out of that by seeing who shows up. Plus, some of these people are CTOs of side projects rather than full-time, so we might use that list for recruiting purposes for our companies. Or maybe we use it six months from now when half those companies don’t quite make it or get sold.

Q: New York seems to have this networking thing down in a way that Chicago doesn’t, though I gather it’s getting closer. Both are big cities with diverse industries. What’s the difference?

A: Community-building is tough. A couple of people have tried offshoots of [my event series] NextNY in other cities — Chicago was one and D.C. was another. But the D.C. guy said to me, ‘We tried to organize an event, but nobody showed.’ But he merely listed the event on BarCamp [a network of user-generated conferences]. I said, ‘Did you go to BarCamp? You have to participate to be in the community.’ It’s hard to do a really good event, but I think that’s why I’ve been able to accomplish a lot as an organizer. I know the investor community. I know the entrepreneur community. I get around in a lot of different circles, including mixing in academics and VCs. It’s very important in a place like New York where everybody is heads down building their business.