On this special segment of The Full Ratchet, the following Investors are featured:
- Ethan Austin of Outside VC
- Arianna Simpson of Andreessen Horowitz
- Navin Chaddha of Mayfield
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.
We’re proud to partner with Ramp, the modern finance automation platform. Book a demo and get $150—no strings attached.
Want to keep up to date with The Full Ratchet? Follow us on social. You can learn more about New Stack Ventures by visiting our LinkedIn and Twitter.
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 Ethan Austin of outside VC. Can you tell us a story about a startup that you passed on your anti portfolio?
0:44
Yeah, sure. One of my LPS started a company called kin, and he had gone through techstar Chicago with me back in 2010 a guy named Sean Harper and one of our other buddies, shiel at Better Tomorrow ventures was an investor, and he said, Hey, invest in this company in the seed round. And I think I just didn’t have any money at the time, but I wish, I mean, I just saw they just raised at a $2 billion valuation, I think, a couple weeks ago, and missed on that one which, which would have been a nice one to have invested in. There’s a lot the anti portfolio tends to be larger than the than the portfolio, but, but that was one that really hurt
1:32
on today’s special segment. We have Ariana Simpson of Andreessen Horowitz, can you tell us a story about a startup that you passed on?
1:40
One thing we think a lot about is correcting our mistakes where possible. In some cases it’s certainly not possible because the opportunity has passed. But I think, you know, we erroneously passed on the very early round of Solana, I think at the time, you know, we had some questions about the architecture and a number of other things. The reality was that the team executed extremely well. And so, you know, not long thereafter, we were able to kind of correct our mistake. And, you know, still, still join the join the bandwagon a little bit later than we would have liked, but still early in the grand scheme of things. But I think you know that, and I give a lot of credit to my colleague Ali for this, it requires a certain dose of humility as an investor to kind of be willing to say, oh shit, like I was, I was totally wrong about that, and I want to fix my mistake. Obviously, it also requires the entrepreneur to be gracious enough to to come back and say, Yes, I want to work with you, despite kind of the earlier No. But you know, investors are human, and we often make mistakes, so despite our best efforts. Sometimes, sometimes we’re wrong, and some cases we’re actually right, but the answer is still wrong, meaning we had concerns about X, but then the founders fix x, and we might have been right, but, you know, maybe they’re able to fix it, or things like that. So in many cases, you have to kind of be constantly reevaluating your your thinking, because you know you might be right at a certain point in time, but still have come to the wrong ultimate conclusion, and so being able and willing to fix that is important. And so I think that’s one of the things that I appreciate about being at a firm that invests in many stages. I think the challenge is there are pros and cons to everything. But I think if you only do seed investments, if you miss the seed, then
3:45
you know that’s that. But it’s a benefit of being a multi stage firm, I guess.
3:50
Yeah, yeah, exactly. And so sometimes we get another opportunity to work with a founder, even if we made the wrong call early on. You
4:03
on today’s special segment we have Naveen Chadha of Mayfield, can you tell us a story about a startup that you passed on and maybe what you missed?
4:11
Yeah, I missed, actually, many, many startups, because at the stage we invest it’s very hard to pick people and most of our mistakes, not one happened during 2008 2009 2010 when this team was novice in the business. We were monkeys trying to learn the business. Now we are not apes, not after much. We are like humans, but still evolving. So the one which comes to mind is Twilio. I love Jeff Lawson. It came at the seed stage, and I was a junior partner. My team told me this is already a solved problem. Okay, right? There’s another one. Zoom, dear friend, that was my mistake. Video Conference, brutal, would you miss there? I thought it’s a solved problem because I did it 15 years back. I was wrong
5:16
as a WebEx user, oh, I was never very happy with that.
5:20
We are still friends, right? Like, basically, I forgot to look at the person. So that’s why, when you ask me people first, man, I’ve gone wrong on backing the 15 years back the right people, because we didn’t believe in their idea. Now I don’t care about any idea. My point is, is greatness. Let’s go. It’s like baseball, things like I’m in so do you see what I’m saying? That’s what we have gotten better, not in getting fooled by entrepreneurs. But when the entrepreneur is a black swan, I don’t care about their ideas, initial ideas. Those are my two biggest misses, and then I can keep going on. It’s Docusign. I’ll bore you MongoDB, right, like big ones
6:12
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.
