TCT Exclusive: Jonathan Abrams, Founder of Friendster, Nuzzel, and now GP at 8-Bit Capital

We’re thrilled to announce this week’s exclusive with Jonathan Abrams, Serial Entrepreneur, Investor, Mentor and Board Member! 

Abrams, a 6x founder, started his career at Netscape as a Software Engineer before going on to found various companies including Friendster (backed by Benchmark & Kleiner Perkins) and Nuzzel (acq. by Scroll in 2019). With extensive operating experience under his belt, Abrams then went on to found Founders Den, a workspace and community for startups and investors, and most recently 8-Bit Capital in 2019, where he currently serves as Co-Founder and General Partner. With deep cap table knowledge as an operator and investor, we discussed: 

TCT: Thanks for sitting down with us, Jonathan. Let’s jump in.

How did you start out with regards to your career? How did that lead to where you are now?

Originally from Canada, I studied Computer Science before starting my career in Telecommunications Software. In 1996, I took a leap of faith and moved to Silicon Valley to join Netscape as a Software Engineer. 

Truth be told, I’ve never taken a business or finance class in my life, so my path to becoming a full-time investor occurred via the technology/entrepreneurship route, rather than traditional finance/MBA route. Fortunately, my business partner, Kent (Lindstrom) at 8-Bit Capital, has a very complementary background, as a former MBA/CFA before getting into the startup scene. Together, we make a great team.

You transitioned from operator to investor. What advice would you give operators thinking about transitioning into investing full time?

I’ve frequently heard a myth that operators who become investors will view an investment opportunity based on how they would operate it, or want to actually try to run the company themselves. 

I have deep empathy for founders, having been in the trenches myself as a founder and operator, but I don’t want to try to run the companies that we invest in. I know how hard it is to run a startup. Kent and I have a lot of experience mentoring entrepreneurs, but we still want to invest in Entrepreneurs who are not going to require huge amounts of help. 

The biggest change for us is to be investing full-time vs. part-time, and have much more bandwidth to proactively meet Entrepreneurs and consider investment opportunities, rather than just making Angel Investments opportunistically. 

You’re currently running 8-Bit Capital. 

What has been the most challenging aspect of the job? What’s been the most rewarding moment to date?

8-Bit Capital is very new. 

Source: Pitchbook News & Analysis

We have made 4 exciting investments so far. 

We invest in startups that connect people and businesses in new ways. I view building 8-Bit Capital as us institutionalizing the work that Kent and I have already been doing for years, helping other Entrepreneurs as Angel investors, Advisors, and Mentors. We stick to what we know, which means investing in early-stage Software startups. But, we are still “baby VCs” in a sense, with a lot to prove. We had some things to learn about fund management and portfolio construction, but we have been doing our homework and studying this stuff for years (as LPs and advisors to funds ourselves) and have been lucky to be mentored by some of the top Fund managers in Silicon Valley. 

The most rewarding part (by far) is working with other Entrepreneurs.

What are some notable stories from your times founding and selling Nuzzel and Friendster, and as a Software Engineer at Netscape and Nortel?

When I moved to Silicon Valley to work at Netscape (disclaimer: this was in 1996), there was a new company perk I wasn’t used to: free sodas (something unheard of back at Nortel in Canada). I thought I was in heaven!

It’s funny to think of how something so simple, such as free sodas back in the late 1990’s, now compare to the lavish perks and free food (amongst other luxury perks) that companies like Google and Facebook offer their employees. Of course, things are different now while people are working from home instead of on campus, but it’s good to remember your roots and where it all began. 

Friendster was a real roller coaster. We started an entire industry and grew very fast. Unfortunately, after receiving Venture Funding, Friendster went through 6 different CEOs in 6 years, and the full potential of the company was not realized. Needless to say, Kent and I learned a LOT from the Friendster experience.

Nuzzel won a lot of love and recognition. Our product was solving important problems: we were helping people connect with the content they really needed to know about (vs. the click-bait, fake news, and toxic content that is prevalent on today’s big social platforms). But, it was very difficult for any of the independent players to compete with the likes of big players like Facebook, Google, Apple, etc. Most of the other news app startups are long gone. 

I’m proud and glad to see that Nuzzel is still operating today, and many influential people still use it every day.

Would you call yourself the Godfather of Social Networks via Friendster?

I’m proud of the work we did at Friendster, and I think we inspired an entire generation of social products that worked differently than how the web was before Friendster. 

The innovative concepts that Friendster popularized were probably bigger than any one single company. It’s probably hard for some people to remember how things were before Friendster, when people did not use their real names on the Internet, and you did not see little photos of your friends in almost every website and app.

Any particular thoughts on Facebook/TikTok/Twitter and media censorship today?

I think the big online platforms still have a lot of work to do in terms of dealing with harassment and toxic content, and the integrity of our elections. I’ll leave it at that :) 

What new trends are you watching across Software Development? How has it changed since you were coming up as an Engineer early in your career?

The world of software development is always changing. 

There are some newer programming languages these days like Rust, Kotlin, and Go that seem really interesting. When we started Friendster, there was no AWS. In contrast, at Nuzzel, we did not need to worry about racking our own servers and changing hard drives at a data center, which was a big improvement. Many of the areas that we are interested in at 8-Bit Capital involve software trends like DevOps, Open Source, Serverless, Data Science, and No-Code/Low-Code. 

We are now seeing a big acceleration of the move to the Cloud and the Digitization of Business. 

How do you source deal flow? 

Our networks are diverse and broad. 

We don’t just source from one single alumni network. Founders Den is a source of dealflow for us since it’s a very successful community of Founders and Investors (now almost 10 years old!). 

We also get deal flow from many other sources including: 

For three out of our first four investments at 8-Bit Capital, the founders reached out to us directly.

Overall, we find that the deals we receive from Entrepreneurs tend to be more compelling than what we are seeing via other investors. As an Angel Investor before 8-Bit Capital, some of my deals came from serendipitous encounters with Entrepreneurs who were seeking my advice.

What are you passionate about outside of work?

Between 8-Bit Capital, Founders Den, Girls in Tech, mentoring, and my family, I don’t have a lot of discretionary time these days :) 

I read a lot, and like to watch TV. My current favorite show is a British show called Friday Night Dinner, which is currently streaming on Amazon.

Tell us about Girls in Tech. 

Girls in Tech is a global non-profit focused on the engagement, education and empowerment of girls and Women who are passionate about technology. Girls in Tech has more than 60,000 members in tech in more than 30 countries. The organization was founded by my friend Adriana (Gascoigne), and I’ve been on the board for 5 years. Given the diversity and equity challenges that the startup and venture worlds are still facing, I’m a proud Girls in Tech supporter and advocate.

What's your secret for getting on the cap table?

Even before we could write bigger checks via 8-Bit Capital, Entrepreneurs wanted us on their cap table for our advice or our name. 

We’re able to get on the cap table for several reasons, including: our relationships, our experience as operators, our empathy with founders, and our track record as mentors.

Thank you for your time and thoughts, Jonathan. We look forward to the continued success of you and 8-Bit Capital.

Warby Parker, arguably the most successful D2C business, is unsurprisingly raising money again.

Why is this unsurprising? Because pure D2C is inherently a bad business.https://t.co/vuP3il0wYf

— James Reynolds (@TenebristGlobal) August 27, 2020

Sources: Crunchbase, LinkedIn, Twitter