On this special segment of the Full Ratchet, “Why I passed” is addressed by:
Each investor highlights a situation with a startup that they decided not to invest in and why it was that they passed.
Turns out that in the application, he’s a single founder, reason number one we wouldn’t consider him. He has no technical experience or technical cofounder, reason number two we wouldn’t interview him. He’s a Chicago public school teacher, never built a startup, never been an entrepreneur. He had no traction listen at all, it was just an idea. By what was on paper—or online in this case—there was no reason we would’ve interviewed him. When I met him in person, unfortunately after the application process was done, I was enthralled, and—so enthralled I actually made a personal investment. I angel backed him.
But he, today, I don’t know what the public numbers are now, but he ended up going to an education accelerator on the west coast, he’s based in silicon valley, has millions of millions of students going on every month and answering questions about grammar. He’s backed by Google Ventures. He’s a phenomenal “do well while doing good” story, and we missed it. And it’s kind of bittersweet, because I feel like we missed it, but none of it was in the application. There wasn’t anything to miss. But we really missed a great opportunity. And he’s a really great guy and it’s a great company and I wish them a ton of success.
Ultimately, Flybridge and Baseline did invest in that company and it was ultimately acquired by Twitter for a very nice number and a great IRR, for sure. And part of my learning there is two-fold. I’d say generally, when I’ve made an investment decision that I’ve regretted, it’s because I either underestimated the team or—not underestimated the team but sort of forgot the power on nature of great teams. Like the great, great teams are no fifty percent better, they’re five to ten times better at certain attributes.
And I would say that this is a team that was technically excellent and from a distribution standpoint an ability to build raving fans within their ecosystem was probably ten times better than most teams out there and proved it, right. And so that was a learning there. And it’s a constant learning, right, it’s the extent to which there is a power law distribution to the quality of great, great founders.
Posted in: Investor Stories
- 134. The Importance of Storytelling, VC EQ, and the LP-GP Dating Game, Part 2 (James R. ‘Trey’ Hart III)
- 133. The Importance of Storytelling, VC EQ, and the LP-GP Dating Game, Part 1 (James R. ‘Trey’ Hart III)
- 132. Nick Moran is Interviewed on Bootstrapping in America
- 131. How Amazon, Fitbit & Snap Won; Where Apple, Pebble & Google Did Not, Part 2 (Ben Einstein)
- 130. How Amazon, Fitbit & Snap Won; Where Apple, Pebble & Google Did Not, Part 1 (Ben Einstein)
- Investor Stories 61: Why I Invested (Roberts, Struhl, Verrill)
- Investor Stories 60: Why I Passed (Triest & DeMarrais, Tsai, Larkins & Galston)
- Investor Stories 59: Lessons Learned (Olsen, Collett, Sanwal)
- Investor Stories 58: What’s Next (Kurzweil, Buttrick, Hudson)
- Investor Stories 57: Exceptional Founders (Wilkins, Mason, Benaich)