Investor Stories 489: Missing Airbnb, Zocdoc, and Prediction Markets — Lessons from the Deals Investors Passed On (Demaree, Peter Davis, Solomon)

0:00This episode is brought to you by Ramp, the spend management platform we use here at TFR. They're offering listeners$150 just to take a demo. We've never had an offer quite like this. Claim your$150 before this offer is gone at our partner link, ramp.com slash partners slash TFR. Now on to the episode. Welcome to the podcast about venture capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is The Full Ratchet.

0:39Welcome back to TFR. On today's special segment, we ask guests to discuss their anti-portfolio, a startup investment that they passed on. Here's the segment called Why I Pass.

0:56Grant Emery joins us today from the Bay Area. He's the CEO and founder of One Brief, the defense company building the operating system for military planning. Talk to us about a critical opportunity or decision you chose not to pursue. Was it the right call and why did you pass on the opportunity? I could have acquired a prediction aggregator like for really, really little money. And like, I'm a huge believer in prediction aggregators as like, you know, most of our businesses, like you can't plan without getting to the truth. And prediction aggregators are a really good way of doing this. And this was long before like the current wave where these companies have obviously been very successful.

1:35Obviously, it was wrong to pass. Like, I think from a purely financial perspective, it makes a lot of sense. And I had this idea in my head that it's very connected to our core business. and I don't think at the time I had the credibility to sell that, nor the inclination on all the other things we were doing, and I chose not to make that my main thing. Like, if I could go back, I think I would have said, no, this is a risk that is really worth taking. I'm willing to stake, like, all my credibility on, like, this actually is central to what we do, and, like, this is a thing that we need to be doing.

2:20On today's special segment, we have Mark Peter Davis of Interplay Ventures. Mark, can you tell us about your anti-portfolio, a startup that you pass on? Oh, there's a bunch. I'll throw out one of the earliest ones I remember was my first venture role. We missed ZocDoc. Why I bring up that one, there's been at least 100 since. There's so many logos that are out there that I saw. Sometimes I even forget that I saw them by the time they're successful because we're talking years, years and years. ZocTalk was one that stung because it was the first time I realized how painful it could be to miss. The mentor of mine at the time had a great phrase, a veteran VC, that there's always another one.

3:03And it's part of our role, our job to live with the anti-portfolio. You have to, if you're going to play in this kitchen, you have to be okay getting burned with some of these misses. If you're not missing some, either you're perfect, which I don't think any of us are, or you're not seeing the deal flow. So if you're going to have a real shot of being legit, you actually have to develop an anti-portfolio by nature. So that was my first moment where I realized I was starting to accrue one. There have been plenty since. I'm sure I could dredge up a huge list.

3:35Are you still managing expenses with outdated apps and spreadsheets? If so, it's time for Ramp, the leading U.S. spend management platform covering corporate cards, travel, AP, and more. All built to save time and extend runway. We use Ramp at TFR and it's been a game changer. As our preferred partner, they're offering listeners$150 just to take a demo. No need to sign up. Head to ramp.com slash partners slash TFR to claim your$150 before the offer expires. Now back to the interview. On today's special segment, we have Glenn Solomon of Notable. Glenn, can you tell us a story about a startup that you passed on, your anti-portfolio?

4:19Back in 2010, I had a handshake with Brian Chesky to lead Airbnb's Series A. Oof. A 10 % stake for roughly$7 million. That's an oof. You're right. Brian returned my draft term sheet, crossing out the board seat I'd asked for. saying he didn't want help at the board from a Series A lead. And I also got some feedback from a lawyer that was working with me on the deal that couch surfing looked like it might be illegal, be made illegal in New York and some other jurisdictions. And as a result, I got cold feet. I backed out of the deal and lost millions, billions. Now, fortunately, we remained on very good terms with Brian and his co-founders, Nate and Joe.

5:10And we ended up investing later in their journey. But missing that Series A really haunts me.

5:22That will conclude this installment of Investor Stories. If you're enjoying the program and would like to see it continue, take a moment and leave a five-star review in iTunes. Okay, that will wrap things up for today. Until next time, overprepare, choose carefully, and invest confidently. Thanks for joining me.