By Kevin Purdy
Even if you don't know Fred Wilson as a thought leader among venture capitalists, your phone and your browser probably appreciate his investments in young, fun products. As a Buffalonian, you can also appreciate his enthusiasm and support for the newly launched Z80 Labs. Here's what Wilson has to say about kick-starting a startup scene in Buffalo.
Wilson co-founded Flatiron Partners in 1996, and the firm quickly became a standard bearer for the late-1990's tech boom. Flatiron had new-era media properties (TheStreet.com, Industry Standard, New York Times Digital), user-generated content (GeoCities, later sold to Yahoo!), and some flashy items that would stick out after the bubble popped (Kozmo.com). Flatiron shut down, but still manages what remains of its portfolio.
Wilson took time off to read, think, and, especially, write quite a bit about venture capital. In 2003, he co-founded Union Square Ventures, and now has pieces of many prominent web and mobile properties: Twitter, Tumblr, Etsy, Foursquare, Kickstarter, GetGlue, Meetup, SoundCloud, Turntable, and social gaming firm Zynga, to name just a few.
Before Flatiron and Union Square, in the early 1990s, Wilson was a board member at Upgrade Corporation of America, founded by Jordan Levy and Ron Schreiber, now the founding partners of Z80. Wilson, who will serve as an advisor to Z80, came to Buffalo for the startup incubator's launch, and offered to answer a few questions for Buffalo Rising.
Buffalo Rising: Your first investment was in Buffalo, with Ron (Schreiber) and Jordan (Levy). You posted about how it taught you to "roll up your sleeves.". Is that what separates a smaller incubator from the large?
Fred Wilson: I think the best incubators, and also accelerator programs ... they're obviously very different, but you can talk about them sometimes in the same breath ... things like Y Combinator and TechStars, which I call accelerator programs, whereas incubators ... having people who have done it before, around to provide mentorship, coaching, guidance, makes all the difference in the world. So if Ron & Jordan weren't involved with this, I would be less enthusiastic. They'll help these teams and say, "You might want to think about doing something a little differently," "We've tried that, it didn't work."
BR: It's hard to build a mentorship community for young startups where it didn't exist before, I imagine.
Wilson: But there are more people in this town than people probably realize, who have been successful in business, and can help provide guidance to young companies. Ron and Jordan are good people to catalyze that and make it happen.
BR: Z80 has at least one company now, and there's talk of having at least one or two companies make it to launch, with or without revenue models. What comes next after that?
Wilson: Well, Z80 should continue to live on, right? Companies should either fail and shut down, or succeed and move out.
Wilson: No, not out of Buffalo--I hope not. The idea is, (companies) will have their first 10 employees here. Once you have your first 10 employees, it's not so easy to move your company. So I would think these companies would hopefully stay here.
I just met a company that Jordan and Ron have been mentoring for close to 10 years now, called Campus Labs--they make software for universities. I was in their offices, and they must have 50, 60 employees now. I think you can easily build a technology company here in Buffalo.
And the point you made earlier (before interview began), it doesn't cost as much to live in this town, right? So you might have some cross-advantages. Good software developers in this town might cost you $60,000 a year, whereas in New York it might cost you $100,000 a year. That's a big difference.
BR: I'm sure local developers are hoping that changes somewhat.
Wilson: I'm sure they hope it changes, but even so ... I wonder what gets you a better quality of life.
BR: Do you think Z80 and Buffalo itself can keep people in Buffalo, when it seems like there's a natural draw to Boston, Austin, San Francisco, New York, where there is, for example, Union Square Ventures, there are experienced founders ...
Wilson: I think you're not going to keep every company in Buffalo. But it used to be in New York, as recently as five, six years ago, that a lot of entrepreneurs felt they had to leave New York and head to Silicon Valley, because that's where the action was, that's where the money was ... That's changed, though. The reason it's changed is that there is now a critical mass of companies now in New York, and a critical mass of investors. It's not the same thing as it used to be.
It's not going to happen overnight in Buffalo. It could take five or 10 years.
BR: That's not what we're used to hearing.
Wilson: I've watched the University of Pennsylvania do this. In five years, they've managed to create a pretty meaningful flow of startups every year. But it took them five years to really do that. I think if I was trying to figure out what metric Z80 was successful on or not, I would give them five years.
BR: How do universities play into an incubator?
Wilson: I think universities should have incubators too, for a lot of the technology that's coming out of their labs. But I also think, knowing about the other incubators that aren't university-focused, and how they're friends with each other, networking, and working together to bring capital into town, and executive talent, business talent ... I think (universities) should be very collaborative, and not competitive. And what's good is, Z80 is not going to be competing for life sciences companies (for example). They can all kind of have their own little things that they do.
BR: Do you think Canada plays a role at all here? Being close to Waterloo, Ontario, Toronto ...
Wilson: I have an investment in Waterloo (Kik), and we also have an investment in Toronto, which is WattPad. I think there's a little bit of a triangle, right? Toronto, Buffalo, Waterloo ... those are all about an hour and a half from each other, is that right?
BR: Toronto's maybe two hours, depending.
(Note: At this point, Wilson is told he's expected elsewhere.)
BR: One last question: Nexus 7 (Android) tablet. Still a fan?
Wilson: Oh, my God, I love it. I love it. I bought a second one.
BR: You use one as a home remote, right?
Wilson: One basically sits on the living room table. I use it as a Kindle, as a remote, and also for email and web browsing. The other one I bring with me in my briefcase ... Fits in your hand, right? On the plane up here, I spent basically the whole plane ride reading on it. I use an Android phone, and it's always a little weird for me going from the Android phone to the iPad, because it's a very different interface. But (the Nexus 7) feels like a bigger version of my phone.