On this special segment of The Full Ratchet, the following Investors are featured:
- Mike Maples Jr. of Floodgate
- Nnamdi Okike of 645 Ventures
- Hemant Mohapatra of Lightspeed India
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 asked 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 Mike Maples, JR of floodgate. Can you tell us a story about a startup that you passed on.
0:42
Stupidly, I passed on a startup called air bed and breakfast in 2008 so now, in my defense, it was, it was before they even applied to yc. So Michael Seibel had been one of the co founders of Justin TV at the time, and he introduced him to me, and they couldn’t get the product to work in our meeting, and so and then they didn’t bring slides, because they heard that I wanted to see the product. So we’re 20 minutes into the meeting, I still have no idea what they do. And then it was a room full of cereal boxes they were trying to sell me Obama owes and Captain McCain crunch, because that was what they were funding the company with was selling these cereal boxes for the election, and I just didn’t, I didn’t really figure out what his fundamental insight was. I was like, well, doesn’t couchsurfing.com, already exist, and isn’t it free? And why are you different from that? And I just didn’t have the presence of mind a lot of why I wrote the pattern breakers book was looking back on the post mortem of why I got Airbnb wrong and what I needed to learn from that lesson. Fortunately, we got it right with Lyft right later on, so that I’d say that that was the biggest that was the biggest miss that I ever had, probably by a wide margin even
2:02
Brenna. On today’s special segment, we have namdi okike of six, four or five ventures. Namdi, can you tell us a story about a startup you passed on your anti portfolio?
2:14
Yes, yes, I’ll mention one Skype. So when I was at insight, we came upon Skype super early. I found it through the outbound sourcing that I was doing. I was kind of interested in internet telephony at the time, super early in that world. And so we chatted with the founders. I think they had just launched the product, if I remember. And there was some hair on that one, because the founders had come out of he they started Kazakh, which, at the time, was a file sharing company that got sued and had to pay a lot of money the record companies. And so there was, there was some, some question around the founders, and, you know, even, like, legally, whether they could operate this company, kind of, given the previous legal situation they were in. And it was also, you know, again, too early for insight, the firm I was at at the time, and so we passed on it. It cut apart a couple years later for two and a half billion dollars. I was in business school at the time, and I remember saying, wow, you know, that was a miss. She’s definitely done that. That was one that comes to mind that was kind of a costly, costly pass
3:19
on today’s special segment we have, hey month, mohatra of lightspeed. Hey, month, can you tell us a story about a startup that you passed on?
3:26
So, okay, I have one that’s very it’s my part of my anti portfolio. It’s a company called postman. This is a company that is, I would say, very central to the API economy in the world. Last round they raised was roughly at 5 billion. I saw them five six years ago. Actually, you didn’t really pass on the company, but this is an example in our business. If you blink and you have conviction, and you don’t really act on your conviction, it really haunts you for the rest of your career. So we had done a lot of work on the company. The founder was not really raising, so we didn’t have access to the primary data, be that room deck, none of those things, but we really, really had a lot of respect for the founder and the business they had built and how quickly they were growing. And we spoke to about 50 people across all the top companies that were users of this product, and we heard great things. So we went there. Since he was not fundraising, it took us a couple of months to really build that level of conviction. And conviction. And then one day, one fine day, I heard that, you know, he is, he’s raised, and I was in India at the time, in the office, I heard it kind of skipped a beat, went back home, picked up my passport on the way, my ear, booked ticket to the US on the flight, we designed what kind of strategy we’ll do to really, you know, be in business with him, landed with a term sheet and an offer. And unfortunately, just about eight to 10 hours before that, just the night before, in front of his office, when I was there, he said that I already signed with a partner that you know, that we like, and unfortunately, there’s no more room. And then I realized that, you know, it’s so. Rare in our business to find the tip of the spear, company that actually is scaling has the highest quality founder. Really excites you, right? Tailwinds all things coming together. And if you have done the work to build conviction, do not sit on your conviction. Act on your conviction. Put a ring on it, otherwise somebody else will.
5:17
I love that lesson, right? Because even off cycle businesses, there’s, there’s always an opportunity, right? Like this. This thing isn’t just done in phases and gates like yes, you build a true relationship. Things can be worked out often. Yeah,
5:38
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.
