Interview with Richard Wolpert, The Mail Room Fund

Story by Benjamin F. Kuo


Richard Wolpert is the head of the Mail Room Fund, a new venture fund backed by William Morris, Accel Partners, Venrock, and AT&T. Wolpert is well known for his work as Chief Strategy Officer for RealNetworks, as president of Disney Online, as well as for his angel investments. We sat down for breakfast a few days ago to chat with Richard about the new fund, his angel investments, and what he sees as the promise of Los Angeles.

Tell us a little bit about the fund and what you're investing in?

Richard Wolpert: We started the fund about two months ago, called the Mail Room Fund. That's sort of an LA play on the garage, if you will. In Silicon Valley, everything gets started in the garage--in LA, and although we're not specifically focused on entertainment, a lot of famous people got started in the mail room. So, David Geffen got started in the mail room, Barry Diller started in the mail room, William Morris specifically. So it's the Mail Room fund, and it's partnered with AT&T, Accel, Venrock, and William Morris. The idea is to specifically invest in companies in LA, that are in the broad Internet consumer space. So there's a little bit of an assumption that since William Morris is involved, we're just working with entertainment companies, and just looking at content, but it's actually the contrary. We're looking broadly at Internet consumer plays and services, and technologies that support those plays. Our ideal investment per deal is about a million dollars. And, we're looking for earlier stage things, things that have not or are not to the Series A stage yet. We're off and running.

What's your ideal investment--what do you want to see in a company, how far along do you want them to be?

Richard Wolpert: If I could answer that question with just 20 words, I'd be smarter than I am. But, I'll give you some guidelines. In terms of the entrepreneur, the most ideal is someone who has had a successful exit. My first company, I got funding, and hadn't had a successful exit. So, that's not a requirement for us, but if you've got value out of a successful exit, the odds that you know what you are doing are great. To the extent that they haven't had a successful exit, if it's a group of young guys, who are sharp and working hard but also open to knowing they need help, that's something we're completely happy and willing to do as well. I would say we're looking at a mix of companies right now. We haven't announced or done any deals yet, and if I can think of two of the ones that are more interesting. One is a guy who has done this twice before, and one are some guys who just got out of college three years ago, and this is basically their first thing. It just depends on their talent, the space, their ability to learn, and their experience.

In terms of kinds of companies, could you expand on what you might consider looking at?

Richard Wolpert: In terms of kind of company, we are saying broadly consumer Internet. Some people think that's so broadly ambiguous it doesn't mean anything. We're not doing hardware in any sort. Not doing back end storage. We're not doing at this point pure content plays -- like "fund this TV/webisodic series" -- we're not doing those sorts of things. We're trying to avoid the hits bet -- the hits bet being somebody who needs $20 million dollars to build something and we won't know until they've spend $20 million dollars if it's a hit or not.

One of the things that is very different about 2008 than 2000 is that you don't need $5 million dollars to build a web site. So when we ask people to come to us--who have spent half a million dollars--and have a couple of good people on their team, and have actually built something to show for it, and they need a million/million and a half to get to the next step, that's very, very interesting. When we have people come to us, saying "here's our idea" and need $5 million dollars and 18 months to show for it, we don't think that is that interesting --based on the tools and how the market works today. We think the market is such that you can actually launch -- some level of a service -- even if it's not the ultimate service or a complete vision, for a million or million and a half dollars. We are looking for people who get that. Sometimes, frankly, the younger and newer entrepreneurs get than the people who have done it two or three times--because they're used to doing everything with no capital.

So why the focus on LA, what's the interest here?

Richard Wolpert: A couple of reasons we've focused on LA. One, which is a selfish one, is I live in LA. I have been doing angel investing for about 14 years on my own, just with my own capital through an investment company called Chance Tech. The Mailroom Fund allows me to do what I've been doing, but on a much larger scale, with far more resources. I would do a very small part of a million dollar round before, and now the Mailroom Fund can do a million dollar round. One thing I would like to clarify there is I would like to work with angels and other VC firms in LA. We're going to be very open, if not aggressive, about finding other people to coinvest with.

Talk a little bit about your partners, how did you get this all together?

Richard Wolpert: It's a very long story. But, the short version is, I became an advisor to Accel, and had been looking at deals for them for a couple of years. I have known the people at William Morris for a number of years, just from being in LA. Some of people at William Morris are good friend with people at Venrock. And it really started with William Morris. They decided about a year ago that they see lots of investment opportunities in LA, but they're not professional investors, so they don't know when to invest and when not. They started talking to folks up in the Valley about would you partner with us, and coinvest in this stuff, and bring your level of expertise on when to invest or not to our deal flow, and offer some connections. That's how the whole thing got started.

Because of the pre-existing relationships between William Morris, Venrock, and Accel, the whole thing came together. Once that was agreed to, we thought if we could get a corporate partner--who could invest, not only money, but guidance and potentially assist the company as being a customer, then not only would that help them with VC and give them the connection to William Morris, but we'd also be potentially giving them a customer--one of the biggest brand advertisers in the world. We went to AT&T, and once we had agreed, and they were in right away. For them, I think it's more than the money--this is far less money than matters to AT&T--it's a way for them to get exposure to early stage companies they otherwise never would have. So I think for them they're most excited about the education of what's happening in this space.

In terms of LA, there's significantly more that happens in LA and Southern California in general than people realize. Everyone pays attention the Bay Area, Bay Area, Bay Area -- because that's the only industry that really matters there is the tech industry. But, LA has a tremendous amount of opportunity and doesn't nearly have nearly as sophisticated an investment community. So we think the opportunity is huge.


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