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Airbnb, My $1B Lesson

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Re: Airbnb, My $1B Lesson

#71

Post by jsprogrammer »

philwelch wrote: post #66
jsprogrammer wrote: post #64

Earlier quoted context omitted.

Sorry, but this protocol should be improved: "in" is ambiguous. All the startup has done is repeat verbatim what the investor said. In this situation the startup has signaled receipt of the investor's offer and has not signaled intent to ratify or otherwise accept.

"You're in for [number]" is meant to be interpreted as acceptance.

Yes, an eager investor might interpret that as acceptance.

>1. The investor says “I’m in for [offer].”

>2. The startup says “Ok, you’re in for [offer].”

You'll notice that the startup has only repeated back what the investor said, correcting for the inverted subject-verb and adding a customary signal opening. The startup has confirmed receipt of the investor's signal.

>3. The startup sends the investor an email or text message saying “This is to confirm you’re in for [offer].”

The startup confirms receipt on a secondary channel.

>4. The investor replies yes.

Waiting on communication from startup.

Re: Airbnb, My $1B Lesson

#72

Post by andrewstuart »

harryjo wrote: post #57
andrewstuart wrote: post #48

Earlier quoted context omitted.

All a matter of perspective. My basic understanding is that deals are complete when signed off. Where's the lack of integrity in that?

Lying is generally considered lack of integrity. Integrity: "I like your offer a lot" (but then something actually changed, and I don't sign). Lack of Integrity: "I'm in." (but then I don't sign.)

With all due respect, you'd get crushed by business people who mean business.

Re: Airbnb, My $1B Lesson

#73

Post by paigecraig0231 »

late2part wrote: post #44

Hey Paige - If I negotiate a potential financing with Arena, and it doesn't work out, will you take all of my emails and publish them as well?

If your emails had anything hurtful, embarrassing, proprietary or damaging to yourself or your company I wouldn't publish them.

In this case these emails and documents make ME look like a novice investor and speak highly of the Airbnb founders. I have no problem exposing my own failures and mistakes but I'd never expose yours unless you were cool with it.

This event was a very important lesson for me and made me a better investor. Most people commenting here are thinking short-term; but the consequence of this Airbnb deal was critical to my development. I learned to move fast and invested a great deal of time and energy into becoming a better investor.

Re: Airbnb, My $1B Lesson

#74

Post by [deleted] »

paigecraig0231 wrote: post #59
beambot wrote: post #21

If it's bad form for a VC to break a handshake deal, it's equally-bad for a startup too... no? Doesn't that reflect poorly upon the founders? It's so important that YC went through the effort to codify the process: http://www.ycombinator.com/handshake/

You guys are missing the point. AirBnB didn't screw me over - this wa any first deal and I screwed around debating stupid points. I was disappointed they didn't do the deal but this whole post is about lessons learned. And one of the biggest ones was move fast once you have conviction. At the time of this Airbnb event I was just learning. I thought an investor had to worry about all these little details, negotiate to…

[deleted]

Re: Airbnb, My $1B Lesson

#75

Post by [deleted] »

napoleond wrote: post #41

Let me get this straight: in June 2008, Airbnb got intro'd to a bunch of investors, who all said no [1]. In September of 2008, Airbnb had a $250k round on the table that valued them at 2.5M[2]. And then, also in September 2008 (before YC usually does interviews) they rejected that offer for YC, who ended up giving them $20k[3], with a valuation presumably around $250k?? (Although Brian Chesky says that didn't happen…

[deleted]

Re: Airbnb, My $1B Lesson

#76

Post by logicallee »

paigecraig0231 wrote: post #69
[deleted] wrote: post #45

Earlier quoted context omitted.

[deleted]

See my reply to beambot below. TLDR : my fault not Airbnb As to posting details of the deal I've held off on this for years as I never wanted to hurt them and I don't see any way these early numbers are going to impact Airbnb. The specific point was to (1) demonstrate that the metrics many investors look for at this stage are meaningless and reinforce that founders working in the right Cardinal direction is what's im…

Thanks for your post - and welcome to HN, we appreciate your posting here. On reflection I chose to delete the comment, unfortunately I saw that you wrote a reply to it afterward. I think my comment was overly critical.

I think the key insight that a lot of people may miss in your post is about timing - the first email your post quoted from Brian said they wanted to close $100K to operate "for the next 4 months", so a closing time 6 weeks later (1.5 months into that period) is quite late in that process. Early stage companies are radically underfunded and at times running on vapors. If you hadn't closed in time and the company had died, you never would have written about "the time you killed a $25 billion company* by not investing in time when you were the only investor who they could still count on". You would have long-since forgotten them.

So the lesson to investors is to cut the check! You may not have another opportunity.

  Gather ye rosebuds while ye may,
  Old Time is still a-flying;
  And this same deal that smiles today
  To-morrow will be dying.

Re: Airbnb, My $1B Lesson

#77

Post by hhandoko »

jacques_chester wrote: post #38
hhandoko wrote: post #34

Earlier quoted context omitted.

That's not what I get from the story though. I sense the founders used the VC as leverage. They had a closing dinner the night before and shook on it. The VC was reasonable to expect the paperwork to be finalised the next day. YC changing their mind at the very next day sounds very convenient...

I imagine that everyone's recollections differ. I'd hate to speculate. Edit: I seem to have touched a nerve, but I don't know what it is. Can someone explain what I said that caused annoyance? I have the usual embarrassing secret obsession with made up internet points.

I didn't downvote you...

But they way you worded it seems to suggest that the VC wasn't telling the truth. At this stage, he has the benefit of the doubt.

Re: Airbnb, My $1B Lesson

#78

Post by philwelch »

jsprogrammer wrote: post #71
philwelch wrote: post #66

Earlier quoted context omitted.

"You're in for [number]" is meant to be interpreted as acceptance.

Yes, an eager investor might interpret that as acceptance. >1. The investor says “I’m in for [offer] .” >2. The startup says “Ok, you’re in for [offer] .” You'll notice that the startup has only repeated back what the investor said, correcting for the inverted subject-verb and adding a customary signal opening. The startup has confirmed receipt of the investor's signal. >3. The startup sends the investor an email or…

I can see how you interpret it that way, but since this is a published "handshake deal" protocol, I'm not sure that's how it's meant.

Re: Airbnb, My $1B Lesson

#79

Post by hhandoko »

andrewstuart wrote: post #72
harryjo wrote: post #57

Earlier quoted context omitted.

Lying is generally considered lack of integrity. Integrity: "I like your offer a lot" (but then something actually changed, and I don't sign). Lack of Integrity: "I'm in." (but then I don't sign.)

With all due respect, you'd get crushed by business people who mean business.

But, you can do business and be successful whilst keeping your integrity intact.

I think that integrity is essential in building trust, which is important in any kind of business relationship.

Re: Airbnb, My $1B Lesson

#80

Post by sown »

paigecraig0231 wrote: post #73
late2part wrote: post #44

Hey Paige - If I negotiate a potential financing with Arena, and it doesn't work out, will you take all of my emails and publish them as well?

If your emails had anything hurtful, embarrassing, proprietary or damaging to yourself or your company I wouldn't publish them. In this case these emails and documents make ME look like a novice investor and speak highly of the Airbnb founders. I have no problem exposing my own failures and mistakes but I'd never expose yours unless you were cool with it. This event was a very important lesson for me and made me a be…

I think it's actually makes you look secure in your self, maybe even a bit gutsy. I'm not sure what the right word would be here, but it I like it.

Someday, I hope to join the ranks of VCs but I figure I need to figure things out first.

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