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Airbnb, My $1B Lesson

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Re: Airbnb, My $1B Lesson

#51

Post by jkarneges »

quadrature wrote: post #39
loahou04 wrote: post #29

Its an interesting read to hear about other investors who have missed out on deals. I actually tried investing into a startup this year and completely failed due to governmental regulations. Even though i worked my ass off saving for 2 years to have discretionary income in order to invest as i wanted to I did not meet the requirements of being an "accredited investor" and so i missed out on the funding round. I spent…

Why would you want to invest in a startup ?, VCs can pull it off because they are playing with a lot of money and can eat the (completely inevitable) losses. It sounds like you only have enough to invest into one startup, thats an incredible amount of risk to take.

People also start companies, which is even riskier. Angeling into one startup may be better than never trying anything at all.

Re: Airbnb, My $1B Lesson

#52

Post by princeb »

[deleted] wrote: post #45
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]

> Investors, if you want a deal, cut a check: it's not complicated. Founders don't have time for your games - you're the one with the cash, they're the ones with burning ships actually doing something.

this makes it sound like investors simply crawl out of bed one day and say something uncomplicated like "mm I feel like giving money away to some startup for breakfast"

Re: Airbnb, My $1B Lesson

#53

Post by quadrature »

jkarneges wrote: post #51
quadrature wrote: post #39

Earlier quoted context omitted.

Why would you want to invest in a startup ?, VCs can pull it off because they are playing with a lot of money and can eat the (completely inevitable) losses. It sounds like you only have enough to invest into one startup, thats an incredible amount of risk to take.

People also start companies, which is even riskier. Angeling into one startup may be better than never trying anything at all.

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.

Re: Airbnb, My $1B Lesson

#54

Post by [deleted] »

princeb wrote: post #52
[deleted] wrote: post #45

Earlier quoted context omitted.

[deleted]

> Investors, if you want a deal, cut a check: it's not complicated. Founders don't have time for your games - you're the one with the cash, they're the ones with burning ships actually doing something. this makes it sound like investors simply crawl out of bed one day and say something uncomplicated like "mm I feel like giving money away to some startup for breakfast"

[deleted]

Re: Airbnb, My $1B Lesson

#56

Post by harryjo »

sjtgraham wrote: post #15
pjy04 wrote: post #7

What bugs me is that the founders went back on the deal that was agreed upon in person.

Docs were finished, a "closing dinner" was had, a handshake was made on the deal, and then AirBnb backed out. If an investor pulled that on a YC company I'm sure they would be blackballed rather quickly.

AirBnB has never been one to follow the rules, from the earliest days of Craigslist spamming and flouting lease agreements and hotel regulations.

You don't do handshake deals with people whose fundamental business model is "cutting corners wherever you can sneak away with it"

Re: Airbnb, My $1B Lesson

#57

Post by harryjo »

andrewstuart wrote: post #48
hhandoko wrote: post #32

Earlier quoted context omitted.

I hear you. I get that a deal isn't final until it's in writing (i.e. signed), but whatever happened to integrity?

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.)

Re: Airbnb, My $1B Lesson

#58

Post by free2rhyme214 »

I'm not sure what the big fuss is over this.

Here's the story in one sentence: an angel recognized Airbnb's potential but never got the deal in writing so they used it as leverage for a better offer.

Paige invested in Lyft, Twitter and Postmates. He's doing fine and learned from this.

Re: Airbnb, My $1B Lesson

#59

Post by paigecraig0231 »

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 tons of clauses, etc. but post Airbnb I realized all that detail was stupid. After that event I learned to move fast.

Example: When I met Peter (Contextlogic now known as Wish) I wrote him a physical check within a day (pretty sure it was his first) as I planned to take whatever terms he ended up negotiating. And then I immediately started brining in other investors, introductions to engineers, etc

So don't take this post as a "Brian screwed me" / the screwing was all self inflicted and a very important lesson

Re: Airbnb, My $1B Lesson

#60

Post by philwelch »

harryjo wrote: post #56
sjtgraham wrote: post #15

Earlier quoted context omitted.

Docs were finished, a "closing dinner" was had, a handshake was made on the deal, and then AirBnb backed out. If an investor pulled that on a YC company I'm sure they would be blackballed rather quickly.

AirBnB has never been one to follow the rules, from the earliest days of Craigslist spamming and flouting lease agreements and hotel regulations. You don't do handshake deals with people whose fundamental business model is "cutting corners wherever you can sneak away with it"

One thing we can all learn from AirBnB: if any group of people you hire for any reason, even on a contract basis, do one bad thing on the Internet one time, haters on the Internet will never let you live it down. Hire carefully.
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