Peter Rojas (Betaworks Ventures): We are really focused on people who can build. We are builders and we build products and lead teams who build products to scale.

By Borys Sydiuk

31 May, 2020

Peter Rojas is a partner at Betaworks Ventures

Peter Rojas is a partner at Betaworks Ventures. He is a successful four-time entrepreneur with deep operating experience. He was VP of Strategy at AOL and co-director of AOL Alpha, co-founder of Weblogs Inc. He created and was the founding editor of tech sites Engadget and Joystiq, music discovery site RCRD LBL, gdgt, and gadget blog Gizmodo.

How it’s all started? How you decided to enter the venture investment business?

I started as a technology journalist. In the late nineties I worked in a magazine in San Francisco, called Red Herring, which was a magazine that covered the business of technology, but very focused on venture capital. The idea behind the magazine was “If you want to see the future of the technology industry, you need to look at the companies which venture capitalists are investing in.” And 20 years ago that was a very novel idea; I think, at that time most people thought it was going to be big technology companies that drove the agenda for the industry. As we’ve seen over the past 20 years that it’s really startups which push the industry forward and come up with the new ideas, and products, and ecosystems, and platforms. Not exclusively, but that’s where the bulk of the innovations happens in terms of new products and business models. So, I was a journalist there until 2001, was laid off when the Dot-com bust during the Dot-com crash. I moved to New York and started a company called Gawker Media with Nick Denton. It wasn’t Gawker Media at the time, just one site called Gizmodo. As you know, it is still around, 18 years later. It was the first gadget blog and one of the first professional blogs, as distinguished from personal blogs that predominated up until that point. I left in 2004 to start a company called Weblogs, Inc. with Jason Calacanis, who is now a pretty well-known Angel investor. I was a chief content officer with that business and personally edited a couple of blogs, including Engadget which was one of the biggest sites out there. I left those companies in 2008, made a couple more companies, one of which, GDGT, was acquired by AOL in 2013. I have given a lot of thoughts as to what I want to do next. I was running experimental product development at AOL VP of Strategy for the media business there. I didn’t think I would want to stay in the big company; I wasn’t sure that I was the right kind of personality. I also had the best job in AOL that anybody could have. I loved the job there, but there was no other job I wanted. I also didn’t have another idea for a startup. I’ve done 4 and I’ve been pretty lucky, I was not sure that I would want to do another startup. Given my background as a journalist and blogger, VC is a good way to mix the things I love about being a blogger and a journalist with the things I love about being a founder, who is trying to solve big project problems. You’ll get businesses off the ground. But you also can indulge your curiosity about a lot of different things. One of the investors from my last company was raising a new fund. They were creating a proper venture fund, which they never had before – Betaworks Startup Studio in 2007, and focused on incubating new companies, and that was where Giphy came out of, and Bitly, and Dots, and Chartbeat, and a number of very successful companies. And they also did some investments off the balance sheet of the studio, so they were the first investor in Tumblr, they were invested in KickStarter, in Medium, in Everlane, in Groupon, and many more. But they never had a proper venture fund. I joined in 2015 to help them create Betaworks Ventures that expanded the original Betaworks. We are pre-seed and seed stage fund, which invests in the frontier consumer – the future of interactivity and we will create, communicate and connect within through technology. We’ve been pretty active investors into a lot of emerging categories, whether it’s computer vision, augmented reality, interactive voice, future of audio and podcasting, investing around future gaming, investing in synthetic reality. And I really love it! I have two partners – based in New York and based in San Francisco – and even during this time we are making new investments. So, this is my long-winded way of explaining who I am.

What was the most unusual startup you ever supported?

Usually, there is something interesting I find in everything that we get pitched. But I’d say that occasionally you see something that is kind of crazy, and you love it, and you don’t know where it’s going to go, and you just want to be part of it. A good example of that is a company called Ghost Commander. It was a founder that we had known for a while; his earlier company just didn’t work out. His idea was to do live interactive shows on Twitch with live actors. And the audience would be able to control the shows by voting on Twitch. It’s almost like the audience will play the show. It was quite crazy and amazing. Their first show was called Ghost Commander, after the company. The way it works is that the audience split up into two teams – a Ghost team and a Ghost Hunter team. You have to help the Ghost Hunters, which are all actors, in the house with wearing earpieces in their control room, that’s taking the vote of the audience and translating it into action that the actors take on screen. It’s crazy, it was like the most interesting take on interactive television and gaming; it was blowing the boundaries between TV and gaming, that I’ve never seen. We invested. When they did the first few episodes of Ghost Commander, they got almost 100000 people watching every episode.

How many startup projects do you review per year?

If you count everything that I reviewed at deck or saw through email, I would say it is around 1500. But I don’t really count. I definitely get at least 3 or 4 a day. Sometimes when we do a specific programs like Audio Camp, we’ve got about 200 applicants just for that program. I did open pitch session for pre-seed startups last month, and we’ve got 160 applicants for that. As you see, it’s a lot of startups out there.

How startup team usually find you? Do you wait for inflow or scout for interesting ideas and perspective teams?

It’s a mixture of both, I’d say. There are different ways for people to find us. Other VCs send us things, because we are very thematic, we have areas that we are focused on. We have a lot of investors that send us things, because they know what we like and want our opinion on them. We get a lot from these programs that we do, where people will apply. We get a lot of just cold emails. I’d say we’ve only done one investment from cold emails, so it’s a tough way. It’s not that we don’t look at things and not that we don’t consider them, it’s just, unfortunately, usually the company is not fit for us or at different stage. We do some outbound, especially when we’re doing investment program around a specific topic and we want to go and contact companies. That ends up being a huge percentage of our investments, but it is meaningful. It’s very tough at early stage, because if somebody is working on some new idea quietly, you don’t have a way to find out about it. The later stages when you’re doing Series A and Series B, you can just go on Crunchbase and look for ideas. I wouldn’t say it’s easier, because the decisions are still hard, but things are on the map, so to speak. Sometimes we try to get people to let us know that they are out there.

What industries you’re interested in?

It is emerging consumer or frontier consumer: things related to synthetic reality; AI and machine learning related to consumer products, media and social; podcasting and audio – we have a lot of success there with Gimlet and Anchor acquired by Spotify last year. I’m doing a lot around gaming right now – not so much the games themselves, but people, ecosystems, platforms or tolls around games. I’m very interested in Metaverse and this idea of shared social gaming spaces. We are investing in a company Against Gravity, producing Rec Room, which is doing really well in that category. I love stuff that is weird and interesting, consumer and pre-seed.

What is geography of your interests?

In terms of investments we focus primarily on the US. Being pre-seed, we like to spend a lot of time helping companies. Not that we have to do a face-to-face, especially now, but it’s more that just because of the time zone differences it can be harder for us to work as closely with companies as we’d like if they’re not in the US. Oftentimes we will have companies which are based in Europe, come to the US for a few months and work at our New York office. In fact, we don’t invest in a company if we don’t think that we can help them. We have a set of areas that we know really well, we can be really helpful, where we understand user acquisition, a product development, etc. If we can’t do anything or offer anything of value to the startup beyond our money, like either expertise, or network, or business development, we probably shouldn’t invest.

What is your due diligence procedure and how long does it take you to cover the whole way from the first meeting with founders to contract and check signing?

Our typical process with three partners is like this. Matt Hartman, based in New York, and I are usually the first points of contact on a new investment and one of us will take the first meeting. We meet each Thursday to discuss all the new deals on and decide which one of us should look at. When both of us have met the team, we go through all those deals with our third partner John on Monday meetings. If we decide to proceed, John will schedule time with them. After that the process can be really short or take a little longer: sometimes it includes travelling, sometimes it’s difficult because of the schedules. In this early stage, there is a lot of financial diligence, it may include sending a list of questions we have around the product metrics, if it’s a post-launch. Maybe we have some technical questions, maybe we have some product timeline questions. But we try to move pretty quickly. Sometimes it takes longer, when we have some uncertainty in how we think about the company or the category, and we may need to do more research independently to better understand it. That usually means that we don’t end up investing if we have real questions or if we don’t understand this category very well. It’s hard for us both to help a company efficiently and to accurately assess the product. So we try to move pretty quickly, and I’ve never seen anything take long time, unless the founder needs more time or the product, as we think, needs more development.

How big is a check you usually issue?

It can vary. We had written checks as small as $25-50,000 to $500-600k. Most of our checks end up being between $250k and $400k. It depends on the company. We like to be the first investor, but there are some companies where we will not invest until after launch, and so this idea doesn’t work there. We also run these programs called Camps about once or twice a year. They have a specific topic we are really excited about and we’ll run in investment program. It will be 5 to 10 programs coming to Betaworks office in New York. We will adjust the program, so it is just a preliminary idea. This usually involves us investing $100k to $250k. It’s very much like acceleration check, and we are only institutional investor at this point. 

How many Xs do you expect on exit for your investment?

A good rule of thumb is if we think that this investment can return the whole fund. Our first fund, for example, was $50m. If we own 5% to 10% of the company at the time of liquidity, what kind of exit do you need to see for the company in order to return the fund? If we own 5% of the company after the dilution, and they get sold for a billion dollars, that returns our fund. We try to look at: can we get the right mix of ownership and pass through a billion dollar outcome. Obviously, it’s hard: there aren’t that many billion dollar companies every year, especially at the consumer side. We believe that there’s a path to that kind of outcome, and that path can be in terms of user growth, or early signs around revenue or something we believe around the category or the product opportunity. We have a number of social products that we’ve invested in and pay a lot of attention to those numbers. Otherwise, it’s easy to fool yourself.

What percentage ownership of a company is fair to take for investment?

We are aiming to get between 5% and 10%. It’s pretty typical for investors to take about 20% of the company per round. You cannot take too much, it must be enough for dilution. We want to make sure that the founders have enough of the company, otherwise they can just walk away, and that’s not a good thing.

What qualities you are looking for in teams? 

We are really focused on people who can build. All of us are builders and we built products and led teams who built products to scale before. We look for people that have a good sensibility about product and how to craft a good user experience, which means a lot of empathy and an ability to put yourself in the user’s shoes. We look for teams that often will have a unique relationships with their customers. Maybe, it’s a special understanding that they have or experience that they have. Being able to understand your user, your customer is really important for consumer startups. They require so much trial-and-error, so much experimentation to get things right and to find things that can connect, that being able to start from that place of trying and understanding user needs and behaviours is very important. I also look if the product strategy, user or customer acquisition strategy, the monetization strategy – do they work hand in hand? It’s easy at this early stage to have a product strategy that is at odds with your monetization strategy or your acquisition strategy. People are trying to build an ad-supported social product, but they are paying for users. Things like that are not sustainable, because you can’t monetize your user; the lifetime value of the user is lower than an acquisition cost. Teams that have that familiarity and that ability to speak fluently about products, monetization, user acquisition really help us to make a decision. We can help and coach teams on these ideas, but it just makes the things really challenging. You don’t need to have all the answers, but it’s helpful to know what the questions are.

Have you ever supported a one-person startup?

We’ve done solo-founder startups. There are people, like YCombinator, who don’t believe in solo-founder startups. We do believe that there needs to be someone technical in the founding team, and if you’re going to be a solo founder, I think you need to be technical; in that case the founder has a unique connection to the category or a customer, and it helps. We’d rather won’t do something like seven co-founders: whoever started the company has a  trouble saying “No” to people, and that a bad sign. Our experience shows that two ends up being a really good number, while three means that one person will leave or be not that happy.

With who you would prefer to work rather, with Steve Jobs or Steve Wozniak?

Steve Jobs really disliked me – I pissed him off a few times. So I don’t know if he would let me work for him. Wozniak was a little bit friendlier. At the end of the day, Jobs is, probably, the person that you do want to work for. Setting aside that he is legendary and all the rest, he had a very strong sense of what user needs and wants, and that, again, love and empathy, even if he himself was not a great person, is critical. For every startup I would work while not being a founder, I want a founder to have this level of sensibility. 

What are your red flags?

There is a lot of things to be red flags. I’ve seen people misrepresent their work and progress they made with the startup. I’m not a fan of “fake it till you make it” stuff and people trying to hustle their way into success rather than work hard and make something good. We have to say “No” to the most things. If it’s somebody, who is not the founder, is reaching out, like a banker or a chief of staff, it is very strange. At that stage you shouldn’t have a chief of staff! At this stage, it should be a founder. If you don’t like fundraising, you shouldn’t do startup. It’s a part of the game. 

Have you ever rejected a startup and then regret it?

If you aren’t seeing things that go on to become big, you’re certainly not seeing enough things. I don’t think that regret is the right feeling. You make the best decision you can with the information you have. Sometime it is a matter of time, because you just don’t have 2 or 3 months to get known every founder before investing. We see people who might be pre-launch or very early, and we pass, say, because they didn’t have the product yet or early version of the product wasn’t very good. Later they may become big. Still I don’t regret. I’m always excited to see things that work, whether or not I’d invested in them. And I’d rather be wrong and have somebody be successful, then see them fail. 

Can you name industries you really like, yet will never invest into?

There are some DeepTech things, I’m really interested in, that I don’t see Betaworks investing in. I’m very interested in quantum computing, but I don’t even know whether there are startup opportunities in quantum computing. It may be too late for startups, I don’t know.  I think a lot about plant-based products and meat alternatives – not a category that we would invest in, but it’s really promising and there’s a lot of opportunities there. If I were wealthy enough to do a little side fund on my own, I would, maybe, invest into something like that. 

As a private person, do you donate to not profit-oriented things? Charities, cultural or educational projects?

I do, and I am on the board of a school here in San Francisco, where I spend a lot of time helping out, especially at this challenging times. I think, the mission of the schools is to be able to be there and never turn back anybody away, regardless of their ability to pay the tuition. It also means that the schools need a lot of help. It is really great to be able to be a part of that community.

Your opinion, is COVID-19 a threat or an opportunity to the VC business?

I’m not sure I agree with that framing. We live in a world that we live in, right? That world is always changing, but now it’s been changed in a dramatic way. Whenever things change, there’s always going to be businesses that are able to drive through that change and businesses that are unable to. The economy is going to be at the difficult place for a long time, probably. As we are focused on the future of interactivity, a number of our startups had seen growth over the past few months. Maybe, we are, as a fund, less exposed to these changes. But at the same time, if consumers’ spending is down, our startups will face hard times, because serving the consumers are going to be challenging. COVID is pending and disrupting people’s lives in just horrible ways – they are losing their jobs and homes, getting sick, having medical debt they can’t pay off. I think, what we can do day by day is helping our communities as a fund, to help our founders to navigate this time. We have to be realistic: this is uncharted territories, all we can do is to keep with our day by day or week by week work.

What books, movies, blogs, events can you suggest to startup founders?

I don’t read any business stuff at all. Blogs… Ben Thompson’s Stratechery is great to read. In terms of gaming and media it is Matthew Ball (, who is a good friend of mine – we play Fortnite a lot together. Alex Danko has some great writing. People like that are doing a great job of analyzing the moment and thinking about where we are. The truth for startup founders is that you’re always going into uncharted territory. Trying to dig into your category and finding the people that are writing a great work about maybe helpful. The one thing I did as a blogger and still do today is using an RSS reader – every day I go through about 80 sites just to keep track of tons and tons of great writing. I find it really valuable to be able to, whenever I get excited about a category, go and find 5 of 6 great sites and start reading them everyday. 

Can you name three most breakthrough startups in the history?

I guess you have to say “Apple, Microsoft and Google.” It is pretty much just picking the biggest tech companies, right? What interesting is how in the past 20 years was changed the understanding of how startups can grow and how they become engines of growth. It was much harder, you needed much more resources, because VCs could take 30% to 50% of your company at the first round. A lot of people were not given the opportunity to start a company, because they didn’t have the right background, or the right level of expertise, or relevant experience. If you weren’t a white guy, who’d already been successful in business, it was hard to get people to give you any money to invest. We still have a long way to go, but the situation is changing, more and more people outside of the US are getting access to educational resources and investitions. This is very encouraging. 

Do you like where you are now in terms of your current career? Or, maybe, you would like to try something new to apply you knowledge and ideas to?

I love my job! Occasionally I think about doing a startup, and I think that I need to find an idea I love so much, that even if I did it for 5 years and it failed, I wouldn’t care. I haven’t had that idea yet. I like being able to work with the founders I get to work with, to have the kind of life where I can dive deep into something that I’m interested in. No, I have no complaints.  And I would like to be successful first in this, before I may try something else. I would like to get to a certain level of accomplishment as an investor beforehand. I feel like I’m still a beginner. 

What desktop game can you compare VC business: chess, checkers, backgammon, go, card games?

I would say, it’s got to be close to a card game, because early stages are so much around the psychology and being able to take a risk and make assessments based on information that you have. I think it’s definitely not chess, otherwise it would be a lot easier to know how to win. Situations can be unpredictable! You may have a company which is doing well, makes money, everything on track, and then the founder just disappears. At the end of the day, you may give people money, help them and advise, but you can’t run the business for them and you shouldn’t be running it for them. You have to be comfortable with that. Over the past couple of years I become comfortable. I used to be an operator before and I wanted to operate, so it was quite hard.

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About the Author

Borys Sydiuk

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