20VC: The Roblox Memo: First Round's Chris Fralic on The 17 Year Journey to Build a $41BN Market Cap Company, Why It Is Way Harder To Increase Ownership Across Rounds Today & What Happens Post SPACMania
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
The Twenty Minute VC
4.4 • 637 Ratings
🗓️ 29 April 2021
⏱️ 37 minutes
🧾️ Download transcript
Summary
Chris Fralic is a Board Partner @ First Round Capital, one of the leading seed-stage venture firms of the last decade with investments in the likes of Uber, Square, Notion, Warby Parker and more. As for Chris, he has led deals in Roblox, Ring.com, HotelTonight, Rec Room and many more incredible companies. Prior to the world of venture, Chris was VP of Business Development at social bookmarking and tagging company del.icio.us through the Yahoo! acquisition. He was also one of the early employees at Half.com and after the eBay, acquisition spent six years with eBay in a variety of business development, media and entertainment roles.
In Today’s Episode with Chris Fralic You Will Learn:
1.) How did Chris come to first meet Dave and the team at Roblox? Where was the first meeting? Who was in attendance? How did Chris feel post that first meeting with the team?
2.) Turning the company down: Why did First Round turn down Roblox on first look? How does Chris assess his own relationship to price? Through what mechanism does he determine whether to pay up or not? How does Chris retain relationships with founders when saying no? Does Chris believe you can buy up ownership post first check today, with the capital proliferate we have?
3.) What does Chris mean when he discusses the lessons from First Round's portfolio when it comes to "slow bake vs fast bake"? How did the First Round partnership analyse the Uber, Square, Roblox portfolio at the time? Through what framework does Chris think about reserves management given the challenge of "slow bake companies"? How does he address it today?
4.) What does Chris mean when he discusses the hype to substance ratio? Why is it more important than ever today? What does this mean for startups? How can startups with a low hype to substance ratio raise funds at good prices? What advice does Chris have for them? How does Chris think about the importance of firm and individual brand in venture today?
5.) How has Chris seen Dave evolve as a leader and CEO over time? What caused the changes in his leadership style? What moments stand out as the most challenging moments to Chris in the scaling of Roblox? Who does Chris believe are the behind the scenes rockstars that made Roblox possible?
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Transcript
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| 0:00.0 | This is 20 VC and my favourite show of the month, The Memo. This is the show where we unpack |
| 0:04.4 | the investing rationale associated with the investment made in a specific breakout company, |
| 0:09.0 | all aligned to the core investment memo written at the time of the investment. Today, we're |
| 0:13.2 | focusing on none other than Roblox and First Round Capital's early investment in the company. |
| 0:17.7 | Joining me for the discussion, the man that made it happen, Chris Freilich, now board partner at First Round Capital. At first round, Chris has led deals in the likes |
| 0:25.1 | of Roblox, Ring.com, Hotel Tonight, recrum, and many more incredible companies. But prior to the |
| 0:31.1 | world of venture, Chris was VP of Business Development at Social Bookmarking and Tagging Company, |
| 0:35.7 | Delicious, through the Yahoo Acquisition. He was also one of the early employees at Half.com, and tagging company, Delicious, through the Yahoo acquisition. |
| 0:37.8 | He was also one of the early employees at Half.com, and after the eBay acquisition, |
| 0:42.1 | spent six years with eBay in a variety of business development, media and entertainment roles. |
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