By nearly any account, Philadelphia has a pretty great Chinatown. It’s authentic and has great restaurants and cultural institutions. But likely no one there argues Philadelphia Chinatown should compete with China. If you’re building a technology business corridor outside of Silicon Valley, you need to think similarly. Build for you, not to be something you’re not.
That’s an important metaphor that entrepreneur-turned-investor Josh Kopelman has made part of his stump speech when asked about Philadelphia’s competitiveness in the fearsome entrepreneurship battle of today.
Kopelman, 42, who in 2003 founded bi-coastal, early stage investment firm First Round Capital, is easily the biggest name in Philadelphia tech entrepreneurship today. So one doesn’t have to look far to find the meaning in Kopelman’s decision 18 months ago to relocate his firm from West Conshohocken, a sleepy suburban township that is part of its own business community, to a 10,000 square foot, renovated industrial headquarters in the midst of the University City innovation corridor.
“The arrival of Josh Kopelman in Philadelphia is a game changer,” said Mayor Nutter when the announcement was made in September 2012. It’s the kind of moment that makes urban economic development analysts swoon.
That’s because in an age when clustering the small pieces is the coveted way to build a knowledge economy, having a new anchor join a part of Philadelphia that already has giants like Penn, Wharton, Drexel and the University City Science Center helps make a serious case for impact.
“Tech hubs don’t get built by edict,” said Kopelman, in a ‘Conversations in Tech‘ interview with Technical.ly Philly last summer. There are governmental actions that can help and a community that can welcome and retain talent is necessary, but “tech hubs get built by one thing: successful companies.”
And Kopelman, the rational investor with a purse to back it, decided being a short walk from Wharton is a good way to get in early on ideas that can grow — Kopelman often rattles off the names of the founders of AdMob, Warby Parker, Invite Media, and Milo as Penn business alumni who started their companies here but left.
Today, an array of young college entrepreneurs often linger in the industrial chic First Round offices, welcomed there by staff and caffeinated by an impressive coffee machine and a fridge of soda. [Full Disclosure: Technical.ly, too, is based in these offices, so we know this well.]
Kopelman himself has been building successful companies here since the New York State native landed in Philadelphia for Wharton in the early 1990s.
- He cofounded early-web information cataloging service Infonautics and took it public.
- He launched discount online retailer Half.com, which he sold for $350 million in 1999 to eBay.
- Then he was part of the anti-spam startup TurnTide team on its wild six-month ride from launch to $28 million exit.
First, watch an introduction with Kopelman and how he sees non-traditional tech markets growing.
“It’s gotten easier being an entrepreneur anywhere,” said Kopelman. Capital and knowledge have become more mobile. So, though Silicon Valley still reigns supreme for high-growth tech experiments, there is a flourishing nationwide in supporting and growing entrepreneurship ecosystems.
For regional leaders across the country today, building a modern economy largely means cultivating the technology sector and the entrepreneurship conversation it is tied to at the moment. The spread of this brand of risk-tolerant business celebration is largely good, said Kopelman, preparing another of his metaphors.
“There is value in having community arts in every city,” said Kopelman. “Not all great actors are born in Hollywood. Not all great entrepreneurs are born in Silicon Valley. Sometimes those actors or entrepreneurs go to those places and sometimes they should…but increasingly you don’t have to.”
For Philadelphia, this has meant that a local tech business community has become downright fashionable in a way it once wasn’t. In a sign of it being a Millennial moment, the clustering today is increasingly coming in places that urbanists and young creatives would take great pride in: spruced up Center City skyscrapers, the N3rd Street corridor in Old City and throughout University City, with apologies to a still very established Great Valley and a powerful, and nearly transited, Navy Yard.
Second, hear Kopelman discuss how to develop non-traditional tech markets.
This transformation here has many mothers, from a generation-old Center City revitalization, to Sixth Borough population waves and a steady, decade-long assembling of the pieces that make a subculture shine: events and traditions and leaders.
It also has many challenges, including a tax structure that, if indifferent to startups, is a perception buzz kill for profitable firms, and the intractable problems of big, poor, old cities, among others.
But despite those challenges, what was once decidedly a kind of underground private club just a short time ago is fast being championed as a serious part of what Philadelphia can be proud of: a tech startup sector.
Kopelman, like any serial entrepreneur in any market trying to develop its entrepreneurship chops, can’t be given credit for making that happen on his own. It would be a discredit to too many who were involved.
What can be said though is that he’s a magnet for attracting an even higher caliber of talent here. That’s when you might begin to think about the legend that defined several generations of Philadelphia technology business before Kopelman.
Pete Musser is in his 80s now and rarely speaks publicly, but for much of the last half of the 20th century, while Philadelphia city was in decline, he was building an economic empire.
As CEO of Safeguard Scientifics, he briefly became a billionaire — before collapsing into financial ruin in 2001. His story is tied to the modern remaking of Comcast and the launch of QVC. The Safeguard campus in Wayne defined a generation of Philadelphia tech business.
In a handful of conversations with old-hand lawyers of late, the names of Musser and Kopelman do get brought up. For those who have worked near or with both, Musser is seen as having sparked something from nothing, whereas Kopelman is more the local whiz kid made good and is now easing into being a regional leader.
It’s a comparison that Kopelman dismisses, saying what Musser and Safeguard did for the region is too large to balance against his work today.
“[Their] impact on Philadelphia startups, Philadelphia investors and Philadelphia philanthropy is legendary,” Kopelman wrote in an email. “Over the course of decades, Pete helped transform the region. He mentored and advised countless entrepreneurs, spawning numerous epic companies and several successful spin-off investment funds.”
Others say the relevance is there.
“In the 1990s, you saw a tech scene build out around Pete Musser and Safeguard Scientifics. Now, that’s happening around Josh,” said Lucinda Duncalfe during an interview last summer.
He’s been the best respected investor with a national reputation here for years.
A half dozen entrepreneurs told Technical.ly Philly in the course of reporting this story that Kopelman is so nationally prominent that it can be something to overcome for firms here. When Philly-based startup leaders hit the road to seek investment out of market, any connected venture capitalist elsewhere will always ask first if Kopelman has invested in their business.
“If you’re a Philadelphia based technology company and Josh hasn’t invested in you, they want to know why,” said one Center City-based entrepreneur. “It can be a black cross on you.”
That’s the start of the kind of influence that Musser had, though Kopelman’s regional influence may be in a less direct way.
Likely the very reason that Kopelman himself doesn’t care for the comparison is exactly why it works. The two are interesting symbols of their respective eras, and their differences largely support what has changed.
Musser is a grandfather of modern venture capital and built Safeguard Scientifics into a multi-billion-dollar powerhouse before it crumbled when the dot com bubble burst. Kopelman was a serial entrepreneur in the 1990s who parlayed that success into establishing an early-stage venture capital firm that specializes in investing in ideas and teams before there’s much a company to speak of.
Generally speaking, Musser did big, million-dollar investments. Kopelman is more often putting a few hundred thousand dollars into a company — and doing so around the country.
But that scale difference has more to do with the two eras. It’s so much cheaper to start a technology company today than even 10 years ago, so, too, investment strategies in technology have had to change. Kopelman knows that.
“The costs of starting a company have come down by more than an order of magnitude because of all kinds of systems and infrastructure,” Kopelman said, citing cloud hosting, open source software and low-cost communications tools.
Perhaps the most relevant difference between the two for those following the Philadelphia portion of the story is where they did their building.
Musser made the suburban Route 202 corridor legendary and did his business at the Radnor Hotel, an old-money regional landmark. Kopelman unveiled in fall 2012 his new University City headquarters, now taking meetings in his 10,000 square-foot renovated industrial space when he’s not taking the train from 30th Street Station or off to Philadelphia International.
Of course, there’s another very clear point to make on the topic, one of how these two men can define seismic shifts in how business gets done.
Musser’s late 20-century height was one defined by large institutions dominating the landscape, and so Safeguard rightly played that role for tech entrepreneurship here, led by a man whose wider prominence didn’t come until later in his life — Kopelman was part of an early breed of 20-something tech kid. The Safeguard campus was one that incubated nearly every IT firm of note from the 1990s, now First Round is one of many hubs in the city.
Today, the work is far more widespread — look at the Economy League’s recent report on the maturing sector and how many organizations it ties that work to. It’s a moment of many smaller, more collaborative efforts and youthful experiments, and Kopelman’s First Round is doing just that: being one of the many leaders, albeit one likely with the best reputation, led by its youthful-looking founder who had a track record by his late 20s.
Third, watch Kopelman discuss metrics for success.
In all of these ways, Kopelman is part of the charge here. If you want to retain strong business, you need strong business to cede that next generation. After what success was had here in the 1990s dissipated in the dot com bust, everything fizzled.
“The entrepreneurs didn’t try it again,” Kopelman said following the Web 1.0 crash. That’s something Kopelman is making his mission to change. (His Dorm Room Fund is an attempt, though its portfolio has seen some leave).
Some tie that lack of continuity to Musser’s personal decline. Like the 20th century as a whole, when you bet it all on one leader, it can be crippling when that leader falters — though Musser did continue to build. The argument then could be made that today is a stronger community than before, with redundancy in the organizations, efforts and people who are rallying for a stronger tech sector here.
That’s because today, though Kopelman is almost surely the best respected leader, there are so many organic efforts that he couldn’t begin to lay dominion over it all.
In the story of our age, he’s one leader of many — GSI Commerce veteran Michael Rubin has never appeared much interested in public life but is widely celebrated and local entrepreneurs like Artisan CEO Bob Moul, serial entrepreneur Mike Krupit and Real Food Works founder Duncalfe are often seen as experienced spokespeople. The leaders of coworking communities and building hubs and meetup groups and popular events all, too, have their tribes who add valuable work.
Of course, at just 42, Kopelman is surely still working at what his legacy here will be. Musser’s public peak came in his 60s, though he too built a track record over time like Kopelman is doing today. As an investor, Kopelman is in the business of finding and funding the next generation, so Musser’s mantle is his for the taking. But the generational differences are too clear.
Kopelman said: “There’s never been a better time to be an entrepreneur, ever.”
If you want more Kopelman, below, watch his interview during a Philadelphia magazine event in the fall.-30-
Philadelphia is as unequal as Colombia. Will a minimum wage boost help?
Amplify Philly drew 3,500 fans at SXSW. But what exactly does it mean?
In Philly, less than a fifth of all VC dollars go to women-founded companies
Why working with the University City Science Center was a game changer for 4 Philly startups
Philly’s tech industry added 8,000 new jobs since 2013
These Philadelphia tech companies will make waves in 2019: Technical.ly realLIST
Live streaming and in-app gifting helped Meet Group beat its 2018 revenue goals
Take a peek at the opportunities popping up at PromptWorks
Sign-up for daily news updates from Technical.ly Philadelphia