On this special segment of The Full Ratchet, the following Investors are featured:
- David Ulevitch of Andreessen Horowitz
- Jake Saper of Emergence Capital
- Sandesh Patnam of Premji Invest
Each investor highlights a situation where they decided not to invest, why they passed, and how it played out.
The host of The Full Ratchet is Nick Moran of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area.
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Transcribed with AI:
0:19
Welcome 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. On today’s special segment, we have Jake Saper of Emergence. Jake, can you tell us a story about a startup that you pass on your anti-portfolio. The
0:42
startup I most work at passing on in my entire career was Figma. I got to know Dylan before the series B. I, we built a great relationship. I have an insane amount of respect for Dylan, which is obvious now, given what he’s built, but I did back then. I was a principal, so I didn’t have quite the full juice to, like, really, you know, pound my, you know, get it across the line. But I think the big failure mode we made there reflect on a lot was they had just started to monetize, so they were at like 500k in arr, which for a series b back then was like very, very low, this was like, you know, mid late 2010s What I missed was double clicking on the usage data. The usage today was phenomenal, not just for individual users, but it was spreading virally within companies, like, as one person would invite someone else to collaborate in the product, and that usage was a leading indicator on monetization, and I overly focused on where they currently were on monetization, and didn’t focus enough on the leading indicator. I also didn’t rotate enough on the specialists of Dylan, and we passed, and I regret
1:41
it. Anthony’s special segment, we have David Ulevich, GP of Andreessen Horowitz American Dynamism. David, can you tell us a story about a startup that you passed on your anti-portfolio?
1:53
When I first joined the firm, one of the first deals I looked at was a company called Clickup, which is run by a great founder, and I was really excited about it. The metrics and numbers all look good, but the founder walked in with flip flops and shorts. He told us he had just gotten back from living in Thailand. He moved to San Diego’s, I think he told me because he thought the burritos were better there, and it was just hard to take him seriously as a founder. And this is very early in my venture career, but the numbers all look good, and I, you know, I kind of wussed out and didn’t do it, and that, for sure, was was regrettable. Our growth team later made the investment, they were very smart, and the numbers just kept outperforming. And in San Diego, while it’s not Silicon Valley, there is a great talent base there, and if you’re the best company in San Diego, you actually can sort of be, you know, the biggest fish in a smaller pond and aggregate all the best talent, which they have also done. So that was a great, a great company, and I think I let my partners really dissuade me from investing in Clickup, and I, you know, I was nervous, so I didn’t, I didn’t make that, and you know, in our business, it’s much better to make the investment and regret it than to not make the investment and really regret it, right, you know, the cost of being wrong for making an investment in our business is only the cost that you invested, the cost for being wrong for not investing in a company that turned out to be worth $100 billion or more is unlimited uncapped upside that you’ve lost out on. So those are the ones that sting the most.
3:16
On today’s special segment, we have Sandesh Patnam of Primsy Invest. Sandesh, can you talk about a startup that you passed on your anti-portfolio?
3:24
Oh my god, my anti-portfolio is so long, it’s so painful. I should not be even called a good investor, because I missed on too many. But I think sometimes I think more knowledge can impact you negatively, and the deeper you think, sometimes you overthink the issue. And to me, we had the option to, you know, lead the series C in Uber. We had the ability to do the CVC in Pinterest, the CVC in Okta at the table with, you know, lots and lots of math, series D in Dodash. I can go through this list, I mean it’s a painful list for me, unfortunately, but you know, this is why I think the I kind of wonder, you know, when I overthink the the longevity of like some of these discussions that we’ve had was sort of the here and near, is
4:03
there a common thread in what you missed? Do you think?
4:06
No, I don’t know. I mean, they’re different reasons, I’d say. You know, I’d say somewhat fundamentals based, because we spend so much time in the public markets, we overthink what the public markets will think at some points, and then try to figure out a bridge between how the company can get there to what the sustainable economics are, and so I think those are the reasons. I think we’re a bit slower, you know, from that perspective. As a fund, we want to see some of these things play out, because look at the end of the day, I run capital for an endowment, and the endowment supports a foundation, we run schools, we’ve got lots of amazing things happening at the other end, and you know, there’s this notion of responsible investing that sits over my shoulder, and in some cases I feel like that maybe overwhelms some of these decisions, and so if I were to take the approach of saying, all right, I’m going to do 30 investments, few of these are going to be successful in return the fund, which is the venture economic model, by the way, and that’s probably the right thing to do. Unfortunately, we’re not set up like that. Each of my funds have 10 to 12 investments, maybe 15 at the outset. Wow, and so they run very. Very, very concentrated, and as a result, every every opportunity feels a little weighted for us. But then the flip side is we feel like, you know, we have great relationships with our companies, come high or high water. We’re like a protocol when things are turbulent. We do not, you know, we don’t like to really think about every business in a quarterized fashion, because that’s your life in the public markets. We want to think about product and product vision, and think in product cycles, as opposed to anything else. So, I think that you know allows us to sort of be different in many ways, but also, you know, it, we end up missing at some of these things, you know, early, and we’ve had a fair share. I mean, the most painful one is anthropic, and I won’t belabor the point here, which is every – I’m sure every investor in this era is going to talk about that, but we were in the room with Dario at the $4 billion round, the 18 girl dollar round, and you know, now in hindsight, you know, it’s, it’s a tough one. I, you know, I get nightmares thinking about how I missed out those things. Yeah,
5:52
well, you’re not doing the right things if you’re not at that table, I think, right enough times. And then, you know, you sins of omission, fine, but if the commission is is positive, then
6:04
you’re in good shape.
6:05
Yeah, we never got credit for the ones that we passed on when they didn’t do much, so in some ways it’s our own biases, right?
6:12
Yeah, yeah.
6:19
That 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, over prepare, choose carefully, and invest confidently. Thanks for joining me.
