Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Airbnb, My $1B Lesson

arenavc.com

Post reply on HN
Print view View original

101–110 of 149 posts

Re: Airbnb, My $1B Lesson

#101

Post by ska »

jkarneges wrote: post #63
quadrature wrote: post #53

Earlier quoted context omitted.

Yes but picking between investment opportunities is a bit different than starting a company. If you have enough money to buy a significant chunk in an angel round then you also have enough money to open yourself up to other less risky investment opportunities.

Some people like living on the edge. Angels are a certain kind of crazy. Also high risk -> high reward, right? 10x in 7 years can be game changing.

That's lottery style thinking, and will get you the predictable results - almost certainly.

Maybe turning this around will help you see how ineffectual this is:

If you are a naive investor desperate to put all of your small stake into one company and I am an early stage startup, why would I want your money if I can have smart money with a good network instead?

And if I can't have that, if I'm desperate for the investment, well your odds just got much, much worse.

Re: Airbnb, My $1B Lesson

#102

Post by acveilleux »

hhandoko wrote: post #82
paigecraig0231 wrote: post #70

Earlier quoted context omitted.

exactly! I spent three weeks haggling - I should have figures out terms in 24 hours or less or simply given them a check and let it ride into future terms.

Hello and welcome to HN! Is it prudent though? I understand the need for expediency, but surely you need to do some due diligence?

By his story, he spent some time getting to know them but then haggled terms once he'd decided to invest. The way I read the story, his regrets where that he spent that long haggling once he'd decided they were go. Had he closed then, he'd have closed 3-4 weeks before YC, and he would still have had his partners in to spread the risk.

Re: Airbnb, My $1B Lesson

#103

Post by frogpelt »

gargarplex wrote: post #99
Beltiras wrote: post #88

Earlier quoted context omitted.

His general approach does indicate that belief in the product is paramount, his trust in the team second. The takeaway is not to yank the chain too hard negotiating when these two criteria are met. He could have closed a week before.

Those who aren't willing to walk away make bad deals.

This is generally true. "Today and today only" is usually a red flag.

But those who aren't willing to pull the trigger quick enough miss the great deals.

Re: Airbnb, My $1B Lesson

#104

Post by jacquesm »

staunch wrote: post #42
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/

They probably shook hands after a meeting, as one always does. That is not a "handshake deal". Airbnb probably had similarly positive meetings with dozens of investors. All of them probably talked about doing the deal soon. He's known for being bold and writing checks on a first meeting. Why didn't he write a check to Airbnb after months of haggling? YC, or any other investor, was free to come along and close the dea…

I've seen an investor back out on a signed terms sheet (once). In my book the deal isn't done until the check clears or the wire arrives.

Re: Airbnb, My $1B Lesson

#105

Post by someear »

paigecraig0231 wrote: post #70
staunch wrote: post #42

Earlier quoted context omitted.

They probably shook hands after a meeting, as one always does. That is not a "handshake deal". Airbnb probably had similarly positive meetings with dozens of investors. All of them probably talked about doing the deal soon. He's known for being bold and writing checks on a first meeting. Why didn't he write a check to Airbnb after months of haggling? YC, or any other investor, was free to come along and close the dea…

exactly! I spent three weeks haggling - I should have figures out terms in 24 hours or less or simply given them a check and let it ride into future terms.

but at the end of the day, the haggling ended, and terms were agreed upon (it seems). Handshakes done.

I think the comments have gone off on a tangent focusing on whether you getting cut out of the deal was ethical (whereas the blog post was just a flat out interesting story to read about). But at least the way your post reads, you definitely got screwed out of the deal. Sure, nothing is done until things are signed, but as many investors have told me "my reputation is everything". Seems like it should go both ways. This certainly doesn't reflect positively on the founders.

Re: Airbnb, My $1B Lesson

#106

Post by vasilipupkin »

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.)

I think it's generally understood that signed documents describing the terms in detail is what matters. In my mind, integrity is a) not lying about what's in the docs b) sticking to the letter and spirit of signed docs. Until docs are signed, there is no deal

Re: Airbnb, My $1B Lesson

#108

Post by napoleond »

paigecraig0231 wrote: post #87
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…

It's not weird at all. Brian talked to a ton of people over many months. He was raising many months before I met him. And then I came in. I then spent too long negotiating but then we finally worked out a deal end of Sep and then my lawyers and their lawyers negotiated the agreement Sep 26th and then we did our dinner. But then YC smartly moved in after this closing dinner and booted me out. Funny enough Justin Kan a…

Thanks for joining the conversation! To clarify, I didn't mean to insinuate that I thought anyone was necessarily lying; it's more of a "surprised" weird. Surprised because:

(a) Based on your story, Airbnb got accepted into YC early (or at least received a strong enough signal that they would be accepted). I don't think that's inconsistent with Airbnb or YC's account, I'd just never heard about it before (amidst a ton of lore about Airbnb's early days at YC).

(b) Airbnb had the foresight to see that YC's deal was better than yours. This would actually have been non-obvious in 2008: Dropbox was only a year old, Stripe didn't exist yet, and YC's best-known successes at the time would have been Heroku and Reddit. Not to mention the fact that you were offering them 10x the cash at 10x the valuation.

So it is "weird" in the way that history is kind of weird. I don't doubt your version of events though, and I appreciate you sharing it.

Re: Airbnb, My $1B Lesson

#109

Post by hluska »

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…

You may want to update the post with this conclusion - it makes the entire article click for me!

Re: Airbnb, My $1B Lesson

#110

Post by PopeOfNope »

someear wrote: post #105
paigecraig0231 wrote: post #70

Earlier quoted context omitted.

exactly! I spent three weeks haggling - I should have figures out terms in 24 hours or less or simply given them a check and let it ride into future terms.

but at the end of the day, the haggling ended, and terms were agreed upon (it seems). Handshakes done. I think the comments have gone off on a tangent focusing on whether you getting cut out of the deal was ethical (whereas the blog post was just a flat out interesting story to read about). But at least the way your post reads, you definitely got screwed out of the deal. Sure, nothing is done until things are signed,…

> Handshakes done.

Nothing's done until the papers are signed. This goes for all things in life, too, from investing to renting apartments. If you don't have a signed piece of paper, you have no deal.

Post reply on HN