On this special segment of The Full Ratchet, the following Investors are featured:
- Godard Abel
- Joseph Ruscio
- Alexander Niehenke
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 passed
0:35
on. Today’s special segment, we have Godard Abel of g2 Goddard, can you tell us a story about a critical opportunity or decision you chose not to pursue. Was it the right call, and why did you pass on the opportunity?
0:47
And usually I pursue too many opportunities, but then I have to give up. But one story like that. Recently, we required a startup at g2 called 19, and we were also going to launch a SaaS spend management product to sell to CIOs in addition to CMOS. Honestly, I realized it was too much, so we spun it off to better cloud. And so usually, as an entrepreneur, I tend to say yes to no many things, and then I have to learn to say no later.
1:10
So truly, so true for so many of us.
1:19
On today’s special segment, we have Joe rusio of heavybit, Joe, can you tell us a story about a startup that you passed on?
1:25
Yep, yeah. I mean, pass on a lot, but one that kind of sticks out for me, and I’m super excited too, because often when you, you pass on a company and they, they end up pivoting to something else, like, I don’t ever, like, kind of feel bad about that. Obviously the past was a good reason, but there’s one so replique, I don’t feel familiar with replicate. It’s, it’s a, it’s like a hosted development environment that’s super cheap, easy to use, so any developer can kind of, like, create a replica, log in and start like, writing and testing software. And they’ve, they’ve been at the very forefront now for the last two years, on on integrating AI generated Work Codes and even agentic work, even agentic approaches. So they’re just doing really, really well. I first met the founder Well, he was in 2018 so very early. It was my first kind of year investing. And I don’t think the reason we passed, I think, was twofold. Importantly, I think go to market. It had a very, kind of long plan in terms of, like, they were targeting university students who didn’t have access to great compute resources and gain a foothold there, and then translating that to university more often than not, like, like, more kind of, almost like Rube Goldberg, go to markets like that. Just don’t, they’re very, very hard to make work. And then I think, on the other side, what I think I just underestimated, because there’s some other I mean, we passed on around the same time on coder.com which is a more enterprise kind of hosted ID. I think I just underestimated the market for these hosted developer platforms. But yeah, and the founding teams on both those were tremendous. So I think, also, I don’t think was any Sure thing, and just kind of the sheer kind of force of will and skill the founders to get things where they were, it’s an important factor
3:16
on today’s special segment, we have Alex Nienke of scale, Alex, can you tell us a story about a startup that you passed on?
3:24
I mean, I’ll pick like, one of the funniest because it’s so large, and I was more of a consumer investor back then, but I always like sharing the story about, like, how just stupid you can be. And I have these friends that were using this Uber app. They were like, your finance bros, right? We all hung out with those guys in our 20s, and they were like, Oh, I’m gonna call my black car. This was when Uber only had black cars, and I just thought it was like the most stuck up annoying thing. These guys ordering their black cards running around San Francisco. This is a small market for jerks, and Silicon Valley Bank invited me to a baseball game, but the gentleman that was the original CEO of Uber, maybe Ryan Graves, or something like that. I never really fully met him, but anyway, he was there, and I remember him being in a box. There’s four other five other five, other entrepreneurs. We’re all supposed to network. I actively avoided networking with him because I didn’t want to run the risk of him saying, Hey, can I pitch you? We’re raising money, and now maybe I wouldn’t have invested. Maybe he didn’t even want to pitch me. There’s a lot of presumptions in there, but I just think that, like, you know, a 90 100 and $20 billion outcome, like I saw it at the earliest days, I just, I thought it was a I thought it was a pretty darn silly idea. I think, look, when you’re in the Valley for 20 years, you just have so many embarrassing stories where, like, you misunderstood something, or like, I also would say, like early in my venture career, this may be advice that I give to people, if anybody’s listening this in their adventure, I had some some deals that I liked, and I remember getting angry at my partners and partnerships because I bring them in. And when I look back at who I was then as an investor, in the way that I communicated things, I was a bit passive aggressive, I’d be like, I think this is great. You should do it. And what I didn’t do is I didn’t go to my partners and say, hey, look, I understand that I’m not a check writer. I understand that I have autonomy. But I want to be very crystal clear for these reasons, I deeply believe in this company. I think this is going to happen, and I’d be willing to put my money where my. Mouth is, if I have the ability to write a check, I would make this my first deal. And if I have the ability to put my 401 k into this, I would put my 401 k into this. I can tell you that when my, you know, team members that I work with come to me with that type of conviction, I pause and I stop and I listen and I second guess, my desire to maybe say, Ah, this isn’t the deal for me. Because, you know, I’m always short on good ideas as well, which is why we bring in really great people in our work. Yeah, work. That’s great.
5:31
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.
