Friday 1 p.m. Heading south on King Street.
"This place. I can't believe this place. San Francisco is amazing—ah-MAAAY-zing. Full of all these kids who are gonna make a billion dollars before they turn 35."
So begins the taxi driver's monologue as we speed through downtown San Francisco. I'm sitting in the backseat watching Kevin Rose—geek TV host turned Internet entrepreneur turned venture capitalist—try not to grimace.
"Well, I'm 35," Rose says. "It's a little late for me."
Our cabbie, a sixtyish British expat with a close-cropped white beard and a chipper demeanor, responds helpfully, "There's always today."
Not very long ago, Kevin Rose was one of those kids trying to make a billion dollars before his 35th birthday. Hell, he might have invented those kids. In 2004, with a few thousand dollars and rudimentary knowledge of programming, Rose launched Digg.com, the crowdsourced news site that allowed regular people, mostly nerdy guys like himself, to vote on which articles were most important. The site made him one of the leaders of the web 2.0 movement, anticipating the current incarnations of Facebook, Twitter, BuzzFeed, and pretty much every online media startup in existence.
Digg vaulted Rose to a kind of fame that had previously been reserved for actors and rockers, and he embraced the role. He created and starred in a weekly online video show, Diggnation, which attracted a quarter of a million viewers per week who tuned in to watch Rose and a cohost chug beer, talk about popular Digg stories, and generally geek out. Venture capitalists showered Rose with cash, Rupert Murdoch and Barry Diller tried to buy his company, and BusinessWeek put Rose's baby-faced, beheadphoned visage on the cover with the headline how this kid made $60 million in 18 months, even though that then-gaudy number represented the most optimistic interpretation of his unrealized paper worth.
For entrepreneurs of his generation—and for people like me who made careers writing about them—Rose was the archetype of a new kind of entrepreneur. Unlike Mark Zuckerberg, a cipher straight out of Harvard and Phillips Exeter, Rose was a down-to-earth non-genius whose creativity changed the world. Rose made the idea of being a founder accessible and fun, and some of his fans, including Pinterest CEO Ben Silbermann, were inspired to start companies of their own.
Rose has moved on since those heady days, reinventing himself as an investor in early-stage companies. His track record so far has been impressive: Rose's bets—in Twitter, Square, Fab, Facebook, Path, and Zynga—include pretty much every important web startup of the past half-decade. Some of his most sizable returns have come from the sale of a number of unheralded companies. There was Chomp, which Apple acquired for a reported $50 million, OMGPop, which Zynga purchased for $200 million, and Ngmoco, which was bought by a Japanese gaming company for $400 million.
Of the 11 investments he's made that have gone public, been acquired, or failed, Rose has produced a return of nearly 22 times his initial investment, making him easily worth eight figures. He still hasn't sold his stakes in Fab (whose current valuation is $600 million) or Square ($3.25 billion), which should push the return higher. "Kevin's predictive abilities about consumer products are uncanny," says Tim Ferriss, the best-selling author and one of Rose's best friends. "It's like walking up to a roulette table and picking the winning number over and over again."
For his part, Rose says, "I want to be known as one of the most accurate investors that ever lived. In five years, I want people to look at my portfolio and say, 'Holy shit, he's a good picker.'" He formalized his ken for investing last May when he joined Google Ventures, a $300-million-a-year VC fund backed by the search giant, as a partner focusing on seed funding, nurturing the youngest, most unproven startups.
It's a good time to be a good picker. Dramatic decreases in the cost of servers and bandwidth mean that companies with barely enough employees to field a softball team can sell themselves for tens or even hundreds of millions of dollars. Incubators and accelerators are churning out startups at an increasingly rapid clip, and a new professional class of angel investors has sprung up to fund them. In 2006, the idea that Kevin Rose could make $60 million in 18 months was fantastical. But last April, another Kevin, Kevin Systrom, agreed to sell his 18-month-old photo-sharing app, Instagram, to Facebook for $1 billion.
So much money has been flowing into tiny startups that observers have begun to fret about a possible bubble—an idea given credence by even a cursory look around San Francisco, where nearly revenue-free startups have become so ubiquitous that they're beginning to underpin elements of the city's day-to-day life. The vehicle in which Rose and I are riding is not, legally speaking, a taxi; it's a Side Car, a so-called peer-to-peer ride-sharing company that lets anyone moonlight as an unlicensed cabbie, using an iPhone to find fares. (Despite its dubious legality, the space is surprisingly competitive, with two other local startups, Lyft and Tickengo, also vying for customers and venture capital.)
Our driver is a retiree who signed up for the service four days earlier as a way to better acquaint himself with the city. "Those are my golf clubs rattling around in the back," he announces. "Let me know if you want to stop for coffee."
"No thanks," Rose says. "We're pretty caffeinated."
We've just come from a coffee shop where Rose spent an hour batting around ideas with the founder of Betable, an under-the-radar gambling startup that was looking for more cash. It's a funny thing: At ground zero of the information revolution, pickers like Rose still make most of their discoveries in person. For them, the important currency of our digital world is not code; it's conversation.
"Okay, guys," our unlicensed cabbie says, as Rose pays $12 for the lift with a few taps on his iPhone, and we head to meet another hopeful kid. "Go make that money."
5 p.m. Blue Bottle Coffee, 18th Street.
"Do you know about my background?"
Two meetings and two caffeinated beverages later, we're in another coffee shop. Across the table, Abhas Agrawal, the 30-year-old founder of YourMechanic.com, grins. "Of course I know about your background," he says.
Rose runs it down anyway: "I focus on consumer Internet," he says. "Sometimes it's a working prototype; sometimes it's an idea on a napkin. I don't do a ton of deals a year, and I really like working with startups—it's the only way I can invest. It fits my ADD brain."
Rose was never formally diagnosed with attention deficit disorder, but he's pretty sure he's got it, as well as a mild form of dyslexia. While growing up in lower-middle-class Las Vegas to a family of striving Lutherans—his father sold insurance and did bookkeeping; his mother did nails—Rose struggled in school. He couldn't focus, couldn't read well, and, as an undersize late bloomer, had trouble with girls. As a seventh grader, he taught himself a bit of programming. "My computer was my only friend." He laughs, "I should put that on a T-shirt."
Lacking the motivation to seriously consider college, Rose scrambled in his late teens and early twenties: He took night classes in computer science at the University of Nevada, Las Vegas, and he worked as a technician at the Nevada nuclear test site. At the nadir of the dotcom bust, in 2002, he accepted a $30,000-a-year job as a production assistant for the cable network TechTV (which was bought by G4, the men's lifestyle channel). "I just wanted to be in the Bay Area," Rose says. "And there were no other jobs."
Rose had never considered a career in television, but he is a natural talker—quick-witted, unflappable, and emotionally mature. Within a matter of months, his bosses put him on the air as the network's resident hacker and then as a host. "Kevin has always had a very good sense of what is cool on the Internet," says Daniel Burka, Digg's former design director. "People who are less geeky than him can't get beyond the surface of a product. And people who are more geeky than him tend to get mesmerized by the technology without seeing whether it's something that normal people can use."
This is obvious as Rose banters with Agrawal, whose startup is sort of like an Airbnb for mechanics. Customers use his website to order automotive house calls—oil changes, brake jobs, regular service checks—from underemployed mechanics. The company is hot, having already raised $1.8 million from a group that includes "super angel" Ron Conway and the actor Ashton Kutcher, and Agrawal is looking for $1 million more. (It was Kutcher who tipped Rose off to the deal.) After asking a few questions about the cost of acquiring new customers and the history of the company, Rose nods approvingly. "Yeah, I totally get it," he says, mentioning that he's a fan of Cherry, yet another app-based service that allows people to order at-home car washes using their iPhones. "If you have a great first-time experience, you're hooked."
Most of Rose's colleagues at Google Ventures work at the firm's Mountain View headquarters, but Rose operates more or less independently, bumping between San Francisco cafes and his Potrero Hill home office. So far, he has backed six companies on Google's behalf, including Rally, a crowd-funding website for charities; and Blue Bottle Coffee, which operates a dozen ultrahip cafes, including the one in which we're currently sitting. Though Rose is now making investments for Google Ventures, he doesn't need approval to close seed investments. A couple of coffees, a couple of emails, and a handshake usually do it. "Up to $250,000 is easy," Rose tells Agrawal. "You don't have to do a deep-dive pitch or anything. I can get back to you in the next couple of days."
As I watch this unfold, it becomes clear that Rose is selling Agrawal as much as Agrawal is selling Rose. "You have to fight for deals," Rose later tells me. "My big selling point is that I can drive a lot of early adoption. So what they get is someone who is pretty well connected to the industry and someone who is well connected to the product."
Though a handful of Rose's successful angel investments have been true discoveries—he met the founders of Ngmoco when they were still executives at Electronic Arts—he had to talk his way into most of his best deals. When Rose was interested in backing Square, founder Jack Dorsey only agreed to take his money after Rose created a promotional YouTube advertisement for the payment service—Rose is a master of the craft—and then shared it with his 1.4 million Twitter followers. In the case of Fab, CEO and cofounder Jason Goldberg insisted that his angel round was already closed when Rose, along with TechCrunch founder Michael Arrington, asked to join in. Goldberg said no to Arrington and yes to Rose, who had mounted a charm offensive that involved a series of enthusiastic emails in which he offered suggestions for Fab's website. "Kevin was nicer," Goldberg says with a chuckle.
The rise of a professional class of angel investors—the so-called super angels, who back dozens or even hundreds of startups a year—has made this once-sleepy corner of the venture capital industry fiercely competitive. Rose uses his charisma, his network, and the fact that the entrepreneur pitching him may very well have grown up wanting to be like Kevin Rose. "Some people perceive Kevin as lazy, like he's hanging out in tea shops all day," says Burka. "He is hanging out in tea shops all day—but with the smartest, most entrepreneurial people. He actually works hard."
As evidence, Burka points to Rose's video podcast, Foundation, in which Rose interviews entrepreneurs and investors about their lives and careers. A quieter, more grown-up version of Diggnation, the show is widely followed in entrepreneurial circles and has attracted such guests as Jack Dorsey, Elon Musk, and Ben Horowitz. "What matters in angel investing are relationships and access," says Naval Ravikant, the founder of AngelList, a matchmaking service for investors and startup founders. "Kevin has made a career of interviewing, associating with, and hiring the craftsmen of our age. He's friends with all of them. And Google pays for that."
On the surface, Foundation looks like a hobby project: The shows are shot in a single, unrehearsed take, generally in Rose's home, and often with his labradoodle, Toaster, jumping in and out of the frame. The informality is not by any means incidental—it's the point, Burka says. "Kevin has gone from being a guy who gets drunk and talks smack on TV, to somebody who is interviewing people about important issues," he says. "It's a brilliant move."
The following Tuesday, 7 p.m. Beretta, Valencia Street.
"I have a startup idea for you."
"What is it?"
It is on my fourth day, as we have a drink at an Italian bistro called Beretta, that I realize Rose has started treating me like one of his potential investment opportunities. The endless succession of meetings on Friday ended with Rose declining to invest in all of the companies we met, including YourMechanic. Even so, his enthusiasm was undimmed. "The key to making money in angel investing is saying no," he assures me. "You meet with 100 companies and say no to 99 of them."
The following morning I woke up to a text message from Rose: "Heading to the farmers' market if you want to check it out."
I found him there with a small entourage, including his fiancee, Darya Pino; his Revision3 cofounder, David Prager; and his sister and niece. "I love bringing people here," Rose says. "You're always going to eat something that will blow your mind." We sat on a retaining wall and ate a fancy Mexican brunch from a little food cart, followed by a stop at a pastry stand, and then a glass of fresh-squeezed pomegranate juice that Rose told me I simply had to try. It went on like this for the rest of the week. Rose got me to try the "best burger," the "best breakfast," and about a gallon of "awesome coffee." When I would express my approval of whatever delicacy we were sampling, he would nod vigorously.
"Dude!" he would say. "Move to San Francisco."
On Tuesday night, as we sip on the most awesome cocktails in San Francisco, Rose reveals that he has come up with a plan for me.
"You should start a company called Chapter One," he begins, leaning across the bar.
"What is it?"
"It would be a crowdfunding site for novels. You post the first chapter of a book on the site, and if people like it, they'll back you."
Rose's mouth widens into a huge smile as he takes a sip of a red tequila concoction.
"You can just run with that," he says, taking another sip. "And I'll fund you."
Rose's friends tell me that he is always doing this. "Have I told you about my dishwasher?" he asks me at one point. "It's a really stupid idea," he starts, and then proceeds to describe in intricate detail how dishwasher manufacturers should design dishes so everything fits more efficiently. He also muses about an investing app, a new social news site, and a cookbook app that would allow chefs and bartenders to sell recipes directly to customers. "I have so many random ideas," he says. "They're great little lifestyle businesses where you could make a couple hundred thousand a year. But they're not necessarily the things that you'd ever invest in or spend the next four or five years of your life battling for the market." So he gives them away—constantly.
Rose's office—inside the three-bedroom condo where he and Pino, a neuroscientist and author, live and work—is a testament to his tendency to flit between curiosities. There's a beer stein collection, a pipe collection, a model locomotive, a bar, a professional-grade espresso maker, and a gigantic Edwardian desk. "Honestly I need more space," he says. "I'd love to have another room with a treadmill and some weights." He launches into a brief dissertation on the virtues of working at a standing desk while walking on a treadmill. "The key is you lower the speed to a really slow pace, like 2 miles per hour," Rose says, which leads to a discussion of the "quantified self" movement, to which he and Pino are devotees. They both wear Fitbit pedometers, and he has experimented with pretty much every fad diet imaginable. Among the entrepreneurs with whom Rose met during my visit was the septuagenarian nutrition guru Dr. Andrew Weil, who is developing—I kid you not—plant-based steroids for dogs.
If his far-ranging curiosity makes Rose a tireless investor—only someone with a beer stein collection and a pedometer would be able to find something interesting in an almost endless series of pitch meetings that go nowhere—it also partly explains why Rose did not build a public company like some of his web 2.0 peers. Even as Digg basked in adulatory press and Rose entertained thousands of fans during live tapings of Diggnation, he could barely stay focused. He was convinced that the team he and Digg CEO Jay Adelson had assembled was not up to the challenge of improving the company's algorithms, but he couldn't bring himself to do anything about it. "In my heart of hearts," Rose says, "I don't think I ever believed we had the right team. Sometimes I'd want to come in, fire everybody, and start over. Other times, I'd come in and get really frustrated and walk away."
In 2006, Zuckerberg, then a little-known founder of a company smaller than Digg, visited Rose's office, and sat cross-legged on the floor as Rose asked him how he fired people at Facebook. Zuckerberg didn't understand the question. "I just fire them," he told Rose.
Rose never took Zuckerberg's advice. Instead he focused on a side project, the Internet TV network Revision3, which produced Diggnation and which would be acquired by Discovery Communications for $30 million in May 2012, and later on two other startups that went nowhere. He made his first angel investment, $25,000 in OMGPop, in 2007; bought into Twitter in 2008; and made half-a-dozen small bets in 2009.
By the time Rose's investors finally sold Digg last July to New York-based Betaworks for a price reported to be just $500,000, Rose was long gone. He formally left the social news site in March 2011 and almost immediately founded an app incubator, called Milk, as an attempt to reconcile his ADD nature with the demands of a Silicon Valley startup. The idea, backed by many of Rose's good friends, was a lab full of app developers who would produce a handful of projects a year. "I liked the idea of being very up-front with our investors about the fact that we didn't have that one big idea that we were going after," he says.
But even Milk's loosey-goosey mission could not cure Rose of his failings as a founder. His first app, a bar-and-restaurant-recommendation tool called Oink, had a reasonably good launch—attracting 100,000 users in the first month—but Rose doubted whether it was anything more than yet another nice little lifestyle business. "I started asking myself, was I really ready to spend the next five years of my life battling for this market? Did I have any other ideas that I wanted to go after?"
The answer to both questions, if he was being honest, was no.
Wednesday, 2:45 p.m. Somewhere in San Francisco's Mission District.
"Let me tell you something: Everyone wants a crazy bachelor party."
Rose's friend and unofficial bachelor party coordinator Chris Hutchins, who also happens to work at Google Ventures, stares at a spreadsheet and grins, trying to explain the science of planning an event for Silicon Valley's startup set as we wait for yet another coffee meeting to begin.
The plan is for Rose and two dozen or so of his closest friends to fly to Cabo San Lucas, in Mexico's Baja California, rent a palatial house, and party. To cope with the wild differences in wealth between the attendees, Hutchins explains that Rose and his friends use a form of price discrimination. Rich thirty- and forty-somethings can get private rooms and fly first class; those with more normal incomes bunk up and fly coach. "The secret is we charge the high rollers four times the price," says Hutchins.
"Just make sure the older folks have beds," says Rose, looking up from his laptop.
Rose has come a long way from the beer-chugging, babe-chasing dude-about-town he played during Digg's heyday. He'll be married soon and is thinking about kids. His mop of dark brown hair is now close-cropped, with flecks of gray. His interest in the quantified-self movement came, he tells me, not only out of a geeky desire to hack his body, but from the realization, several years ago, that he was getting fat.
Even his decision to shutter Milk and become an investor seems to be a symptom of growing up. Rose could have raised additional capital and continued to launch apps. But he received an acquisition offer from Google, which was looking for developers and designers for its Google+ social network. Rose clearly wasn't in love with the idea and extracted a counteroffer from Facebook's Zuckerberg. "It would have been nice to work with Mark," Rose admits. "But his terms weren't as good."
Meanwhile Google's offer, which was reported to be between $15 million and $30 million, meant financial security for his seven-person team, particularly Burka, who had just gotten married. "I'd made a lot of money investing already," says Rose. "It was about Daniel. I felt bad that things had gone to shit with Digg and he'd put so much effort into it."
A few weeks after accepting Google's offer, Rose joined Google Ventures. The move means that Rose will enjoy a generous salary, along with a share of the profits generated by the fund. It also means that if the current frothiness subsides—Rose won't utter the word bubble, but he often complains about an environment producing lots of me-too startups—he'll be insulated from any fallout, with an almost unlimited pool of capital from which to draw. Rose invests up to $250,000 in his Google Ventures deals, compared with up to $50,000 when he was on his own, and as his companies grow, he'll have the chance to lead larger, later-stage venture capital rounds. If he ever starts another company, he plans to incubate it within Google's warm embrace.
More important, perhaps, Rose seems happier than he has been in years. "I can't complain," he says. "It's freaking awesome. I get to surf the Internet as part of my job." Rose reserves at least three hours every day to scour the web for new products, ideas, and companies. "You really have to take the time to think through the idea and how it plays out in 12 to 18 months," he continues. He spends the rest of his time chatting with entrepreneurs and geeky early adopters—basically different versions of the person he was when he moved to San Francisco a decade ago.
One kid whom he is particularly fond of right now is Danny Trinh, a 22-year-old designer at the mobile social network Path. "Danny has got a great eye for what cool is," says Rose. Like many of the Bay Area's brightest young minds, Trinh was deeply inspired by Rose's work. He moved to San Francisco at age 17 to take an internship at Digg. "When you're his age you just breathe this stuff," Rose says. "Now some nights, I go home and close my laptop and don't turn it on until morning." He says this as if it is some great accomplishment. "So the only way for me to stay in touch is by going out there and having deep connections with people who are the extremely early adopters."
Rose wants to make sure that he stays in these conversations for the foreseeable future. Once the bachelor-party chat is over, he and Hutchins start talking about the real reason we're at this coffee shop: They are hoping to sign a lease to take the place over. "It's going to be a magnet for startups," says Rose, who is thinking about calling the new cafe Capital. (Because negotiations for a spot are ongoing, I agree to keep our location a secret.)
There will be coffee in the daytime and wine in the evening; fast, free Wi-Fi; and a full calendar of events for entrepreneurs. Ever the product guy, Rose plans to give out VIP cards—he's decided that they will be black—to 30 of the most influential people he knows that will entitle them to free coffee for themselves and a guest. "What I want to do is enable all these little influencers and tastemakers to have a place to bring their friends," he says. "And to be introduced to them."
Like much of what Rose does, the idea is both generous and a little bit sneaky. "It'll give us a competitive advantage over every other VC firm," he says. "Everybody else is sitting on Sand Hill Road, going home at 4 or 5 p.m." Rose plans to camp out in the corner, ready to meet any bright young thing who drops in. The coffee will be totally awesome.
Thursday, 12:30 p.m. Plow, 18th Street.
"There's this one idea that I've been sitting on for three years that could be an extremely big business. It's pretty capital intensive: It would require warehousing and shipping and a lot of bandwidth. There's no way to step into this. You gotta raise 5 million bucks and go build it."
It took Rose a week, but he's finally started pitching me on the big idea, the thing that has been gnawing at him.
"The idea—and it'd make more sense if you saw it on paper—but the idea is that television is going to change in the next 12 to 18 months when Apple releases its TV. There will probably be a camera on it and an entire class of apps. What I want to do is to explore an Internet-enabled QVC.
"Maybe when you come into the channel, you get a number. At the end of the hour, the host spins a wheel and 10 or 20 viewers win the item. You could show a picture of the winners or even interview them live using the camera. Maybe when the group starts buying, the price changes in real time depending on demand. You could do all sorts of crazy, fun stuff. QVC is a big-ass company. And the products are crap!"
Playing this game with Rose is fun. It also becomes pretty clear that he's not going to be a full-time investor for the rest of his life. For the time being, Rose says he's going to stay at Google, partly because he wants to try staying put. "If we sit down for lunch five years from now, I wouldn't be shocked if I'm still at Google Ventures," he says. "I wouldn't leave for another VC thing. It wouldn't be the allure of doing my own fund. It would only be if I came up with a killer idea."
I decide to change the subject: "So, Chapter One," I begin.
Rose's eyes light up. "I think it would be so cool, and it'd have to be run by a writer," he says. "It's one of those spaces that nobody is paying attention to, but if somebody passionate could do it well—"
He breaks off and lowers his voice. "Have you looked to see if the domain name is available?"
Out of curiosity, I had, in fact, looked up ChapterOne.com and wondered, maybe for a few seconds, what it would be like to follow the dream that Kevin Rose helped create. I'm only 30, I thought. It's not too late for me.
"Somebody owns it," I say. "I can help you with that," Rose says. "There are all sorts of variations you could try."
I didn't know what to say, so I just smiled and kept quiet. I was ashamed of myself for having bought into Rose's vision, and then ashamed at my cynicism for being ashamed. But there it was: What if? I'd been covering startups for nearly a decade, and it was the first time I'd really, seriously, considered that question.
I was still turning this notion over in my mind, but Rose was already halfway to creating the product. "You could lay it out like pages of a book," he says. "It'd be really beautiful." He pauses and then adds, "Let me know."
We shake hands and I walk away, catch a bus, and make my way back to my real life. When I get home to New York, I write Rose an email to thank him for showing me a little bit of his world.
His reply comes a few hours later: "Dude, move out!!" And then: "Hello from Mexico!"
A version of this article appeared in the February 2013 issue of Fast Company magazine.
Slideshow Credits: 01 / Melissa Golden; 02 / Melissa Golden; 03 / Melissa Golden; 04 / Melissa Golden; 05 / Melissa Golden; 06 / Melissa Golden; 07 / Melissa Golden; 08 / Melissa Golden; 09 / Melissa Golden;