Tremendous

An angel investor's take on life and business

  • The Easy Way to Make Your Investor Meetings 10X Better

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    Founders might have to do 50 meetings to get a check. But you can make those meetings 10X better and up your odds of raising money by changing how you answer investor questions.

    Picture Francis sitting on Zoom. I have a list of 8 questions I want to ask the founder in my trusty composition book.

    But we’re 18 minutes into a 30 minute call, and I haven’t had a chance to ask any of them yet!

    The founder has been excitedly telling me about his company. And I’m starting to get excited about it too!

    But the downside of that excitement is the presentation can lose focus.

    Structure Your Meeting Like This

    Here’s a great way to structure meetings: the 1/3 and 2/3 rule.

    Present for the first 1/3 of the meeting. Leave the remaining 2/3rds for Q&A.

    If the investor says they’ve already reviewed the deck and would just like to do Q&A, it’s fine to skip to that too!

    How to Answer Questions

    If you do these 2 things, you will answer questions 10X better than most founders:

    1) Be as specific as possible.
    2) Take about as long to answer a question as the investor took to ask it.

    Let me give you a concrete example of a founder who does this really well.

    Peter from Props was on a recent episode of This Week in Startups, and he presents and answers questions beautifully. Even Jason commented on it.

    Do you see how crisp his answers are? Aim for that.

    What to Avoid

    When you answer questions, you want to avoid nonspecific or meandering responses. Here’s a (fictional) example of what you don’t want to do:

    “Me: How many paying customers do you have?

    Founder: Well, we started out with some pilots and we’re working closely with Bigcorp right now. We have a letter of intent from them and our internal champion, Melissa, is super stoked on the product! She’s telling everyone internally about it, and the deal could come any day. We’re also heading to a conference in Vegas next week which should be really helpful. My COO can’t make it but I’ll be there, we even got a booth.”

    You see what happened there? We took up a bunch of time, and I never got an answer to my question.

    I can only assume they have no paying customers. And I also have less time to find out more about the company.

    Wrap-Up

    Crisp, focused presentation. Crisp Q&A with specific answers.

    That’s what you want to aim for.

    Even if the facts aren’t as impressive as you’d like, investors will respect your candor! And hey, just because you don’t have any revenue right now doesn’t mean you won’t next month!

    By showing that you know how to sell and you’re candid, your stock goes up in the investor’s mind. Use this approach, and those checks will start rolling in.

    What have your investor meetings been like? Leave a comment and let us know!

    Have a great weekend, everybody! Let’s relax, have some fun, and recharge our batteries to do awesome work next week.

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Meet My Latest Investment: Zest

    Talking Follow-On Strategy with JCal

    Chaos Monkeys

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

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  • Why We Should Invest in Offensive Military Technology

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    Marine special forces are testing robot dogs armed with rifles. A human still makes the decision to fire — for now.

    The robot that Marine Forces Special Operations Command (MARSOC) is using comes from a company called Ghost Robotics, according to The War Zone. The robots are armed with rifles from Onyx Industries.

    You can see the new robot in action here.

    Metalhead

    I’m not gonna lie — this is pretty creepy. Anyone who’s seen Black Mirror will instantly recognize Metalhead, the killer robots from an episode in 2017.

    It’s amazing how quickly science fiction has become an accomplished fact.

    But I have to admit this could save our soldiers’ lives. Every loss is a family that will never be the same.

    Surely, preventing such losses is something worth pursuing.

    What’s more, we’ve been using UAV’s with missiles for years. If we’re okay with that as a society, this isn’t much different.

    Defending the Nation That’s Done So Much For Us

    Many technology investors refuse to invest in offensive weapons. I think that’s absurd.

    Those of us who invest in startups have benefited from America more than almost anyone. And most, like me, never served in the military.

    So how can we refuse to help even in this peripheral way? If we don’t invest in offensive military tech, we’re just expecting a free ride.

    “Can you go over there and risk your life to protect us? We’d love to help but we’re a little busy making money. Thanks so much!”

    My Approach to Military Tech

    I wouldn’t invest in something like the Ghost Robotics dog simply because I don’t do robotics or hardware in general.

    It’s a tough industry and I don’t know much about it. It wouldn’t matter if the robot were a vacuum cleaner or a weapon.

    But if I saw a great piece of software, I’d be happy to make a bet. And that’s true even if the product is used in an offensive way — the OS for the Ghost Robotics dog, for example.

    Lowering the Bar to War

    I’m all for arming our military, but I do have one concern. Making it easier to attack from far away could make the US more likely to go to war.

    Losing our men and women in uniform is a huge disincentive to military action. But if we can strike easily from an air conditioned office in Nevada, we may strike a lot more often.

    I think these endless wars weaken our country. They cost a fortune, often kill many innocent people, and turn other countries against us.

    So while protecting our soldiers is a wonderful thing, let’s have peace as our goal.

    Wrap-Up

    If these killer robots save the lives of our soldiers, I say they’re worth building.

    Even if we don’t, our rivals will. In fact, China and Russia already have them.

    I’d love to see a future where we don’t need weapons and people live peacefully. But let’s be honest — it’s not likely.

    Until then, we have to create and invest in weapons to protect ourselves.

    What do you think of the Marines’ new robot dog? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Astribot: Your Future Butler

    Control a Robot with Your Vision Pro!

    Would You Get Microchipped?

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

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  • Chaos Monkeys

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    Antonio Garcia Martinez sold his startup for $10 million to Twitter just a year after founding. Then at Facebook, he was part of the rise of the most successful startup in the last 20 years.

    This week, I dug into Chaos Monkeys, his inside story of how startupland really works.

    The Biggest Problems Are People Problems

    The closeness of AdGrok was incredible. Martinez even began to recognize the odors of his co-founders, cooped up as they were in a tiny apartment.

    That familiarity can breed contempt. Martinez dealt with one co-founder becoming increasingly disengaged and the other testy.

    It turns out the human element is the hardest part:

    “People go into startups thinking that the technical problems are the challenges. In practice, the technical stuff is easy, unless you’re incompetent or really at the hairy edge of human knowledge — for example, putting a man on Mars. No, every real problem in startups is a people problem, and as such they’re the hardest to solve, as they often don’t have a real solution, much less a ready software fix. Startups are experiments in group psychology. As CEO, you’re both the therapist leader, and the patient most in need of therapy.”

    A wonderful company I invested in some time ago is succumbing to people problems now. They had everything in their favor: a great product, incredible growth, and backing from a top VC.

    But the co-founders couldn’t get along, and one was pushed out. Today, the company is languishing and may not survive.

    What a shame! If you can get the human part right, you’re well on your way to success.

    Facebook vs. Google

    In 2011, Google launched Google Plus to kneecap Facebook and take social media for themselves. For me, this was the most striking story in Chaos Monkeys.

    On a Sunday morning shortly after Google Plus launched, Martinez decided to see what was going on at Google HQ. He drove the short distance from Facebook to the Googleplex in nearby Mountain View.

    Pulling into the parking lot, he noticed something strange:

    “It was empty, completely empty.
    Interesting.
    I got back on the 101 North and drove to Facebook.
    At the California Avenue building, I had to hunt for a parking spot. The lot was full.
    It was clear which company was fighting to the death.”

    Beating the Big Guys

    Facebook was successful in 2011, but Google was far larger. Nonetheless, Facebook prevailed. Google Plus never became popular and folded quietly a few years later.

    This is how smaller companies can beat the giants.

    For Google, Google Plus was but one in a wide variety of products. For Facebook, social media was all they had.

    Facebook had the will to fight to the death. Google didn’t.

    If you’re running a startup and you are worried about a big competitor, keep in mind that you have something they don’t: single-minded purpose. You care deeply, and it’s this or nothing.

    Your competition is a Product Manager in a giant organization with numerous priorities. You can beat them, if you try.

    Wrap-Up

    In the end, Martinez was fired from Facebook when the company shelved the product he was working on. He never saw much of the millions he hoped for. But his book was a hit, reaching the best seller list.

    Chaos Monkeys paints a vivid picture of life inside a startup. For Martinez, it was intense, emotional, and by turns rewarding and dispiriting.

    As someone who invests in startups but never started one, I learned a lot from Chaos Monkeys about the stress founders are under. That will help me relate to them better in the future.

    Have you read Chaos Monkeys? Do you plan to?

    Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on business:

    Poor Charlie’s Almanack

    Meet My Latest Investment: Zest

    Talking Follow-On Strategy with JCal

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

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  • Poor Charlie’s Almanack

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    At age 29, Charlie Munger’s marriage was falling apart and his son was dying of leukemia. “A friend remembers that Charlie would visit his dying son in the hospital and then walk the streets of Pasadena crying.”

    I cannot imagine anything worse. And yet, Munger came back from it.

    He went on to have a total of 7 children and lived to age 99. Along the way, he accumulated a net worth of over $2 billion doing what he loved — investing.

    That’s a life well lived, as far as I’m concerned. So I dug into his book, Poor Charlie’s Almanack, with gusto.

    Resilience

    One of the biggest lessons I learned from Charlie is resilience.

    Few people have encountered harder circumstances. His son Teddy died young. Later, Charlie suffered complications from cataract surgery so severe he had to have his left eye removed.

    Charlie also had reversals in business. The investing partnership he ran prior to Berkshire took two losses of over 30% in the 70’s, despite having an excellent overall record.

    Every time, Charlie kept going. In one of the talks in the Almanack, he gives advice on how to be miserable:

    “My third prescription to you for misery is to go down and stay down when you get your first, second, or third severe reverse in the battle of life.”

    We’re all going to suffer setbacks and tough things in our lives. But the next time I run across one, I’ll be thinking of Charlie.

    A Multidisciplinary Approach

    One of the most fascinating parts of the book for me was Charlie’s portrait of his partner, Warren Buffett:

    “If you watched him with a time clock, you’d find that about half of his waking time is spent reading. Then a big chunk of the rest of his time is spent talking one-on-one, either on the telephone or personally, with highly gifted people whom he trusts and who trust him. Viewed up close, Warren looks quite academic as he achieves worldly success.”

    So what exactly is Warren reading? If he’s anything like Charlie, it just might be a history book.

    Charlie advocates a multidisciplinary approach to business. He focuses on absorbing the key principles from a huge variety of disciplines: psychology, biology, history and more.

    Most investors are watching CNBC or reading TechCrunch. They’re not reading books on psychology or physics.

    Most investors aren’t performing that well either. To beat everyone else, you need a different approach.

    I just ordered Clinical Psychology: A Very Short Introduction. After that, I’m planning to read similar books on a variety of fields.

    Then, like Munger, I want to apply the key insights of those disciplines to business.

    Understanding Our Minds

    Munger wraps up this wonderful book by giving us a list of common reasons why we behave irrationally.

    For example, what Munger calls the “social proof tendency” gets us doing whatever everyone else is doing. This effect is disastrous in financial markets — think about all those $100 million crypto seed rounds in 2021.

    The deprival-superreaction tendency is one I’m especially prone to. We humans view a $10,000 loss as an awful thing, but experience way less pleasure from a $10,000 gain.

    If we can recognize these biases in ourselves and others, we’ll be better at whatever we do.

    Wrap-Up

    Above all, Charlie attributes his success to his rationality. I would add another key trait: resilience.

    Faced with Charlie’s situation as a young man, many people would’ve collapsed into alcoholism or some other dysfunction.

    Charlie did not. He kept going, as hard as that must’ve been.

    As Charlie built Berkshire from the ground up, he tried to make decisions as rationally as possible. For us flawed humans, that’s easier said than done.

    I want to be like Charlie: rational and resilient. If I master that, I can do whatever I want.

    Have you read Charlie’s book? Do you plan to? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on business:

    How Charlie Munger Taught Warren Buffett About the Power Law

    Meet My Latest Investment: Zest

    Talking Follow-On Strategy with JCal

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

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  • Why I Never Use AI on This Blog

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    I recently spoke with a reader of this blog. He noticed something strange about a lot of the other articles in his inbox.

    “Most of the newsletters I get seem to be written by AI,” he explained.

    He’s probably right! But I never, ever use AI to write this blog. Here’s why…

    Respecting Your Time

    You don’t need me to type prompts into ChatGPT for you. And if a blog is written by AI, that’s what they’re doing.

    My goal is to give you an inside view of technology and business from someone who’s in the market every day.

    An AI cannot do that. That requires human experience.

    Writing Helps Me Figure Out What I Think

    As I write, I work out a perspective. And my viewpoint has to be clear, so it makes sense when you read it!

    Here’s an example: in February, I wrote about how consumer subscriptions can make great investments.

    I’ve tended to focus on SaaS and marketplaces in the past. But seeing Duolingo grow into a $10 billion monster, I had to admit consumer subscriptions could produce giant outcomes.

    The research and thinking I did for that post really informed my recent investment in Zest, which is basically Duolingo for cooking. When I read that deal memo, I knew that consumer subscriptions could become big winners.

    Why I Started This Blog in the First Place

    I started this blog in November 2020. It looked like we were going into a second COVID lockdown here in North Jersey. I needed a new, lockdown proof hobby.

    As it happened, we never did have that 2nd lockdown. But the habit of writing stuck — this is the 929th post!

    If I have AI do the writing for me, there goes my hobby!

    As AI becomes increasingly powerful, we must be careful not to let it replace the things we enjoy.

    Perhaps you enjoy playing the guitar. Some day, AI may make better songs than you can.

    But that’s okay! There’s joy in the handmade and imperfect.

    Where AI Fits In

    While I never use AI to do the writing for me, AI can be very helpful in research.

    When I wrote about Astribot recently, I was struck by how different companies are converging on the same design. It reminded me of how Leibniz and Newton both invented calculus independently around the same time.

    I wanted to refresh my memory on the Newton/Leibniz story so I could relate the details accurately. So, I had Perplexity get me up to speed.

    Using AI as a research assistant is helpful and makes the blog better. It’s like Google on steroids.

    Wrap-Up

    AI is an incredible new technology. But too often, we’re letting it drain the authenticity and humanity out of our interactions with others.

    I get laudatory comments on my LinkedIn posts that were clearly written by a computer. Your inbox is probably flooded with machine written content.

    That’s something I’m never going to do here. Dumping machine-written writing on you doesn’t serve your purposes, nor does it serve mine.

    Looking forward to telling you about more interesting happenings in tech and business!

    What do you think of AI writing? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Meet My Latest Investment: Zest

    How to Get Started Angel Investing

    Talking Follow-On Strategy with JCal

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

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  • Meet My Latest Investment: Zest

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    When I first moved to New Jersey in 2014, I weighed 40 pounds more than I do today. I also had a lot less money than I do now. One of the key ways I got from there to here was learning how to cook.

    Gradually, I picked up the basics from the blog Budget Bytes, among others. I made a lot of things, some good, some barely edible.

    Bit by bit, I learned how to cook. But what if I could’ve used an app that would guide me every step of the way, teaching important concepts even as I make yummy food?

    That didn’t exist back then. But it does now.

    My latest investment, Zest, is basically Duolingo for cooking. It teaches you the basics of chopping, seasoning and cooking in a fun way — your teacher is a giant leek!

    Loma the Leek makes me smile, but the recipes are serious. They have a former chef from Alinea developing them. If you don’t know it, Alinea has been called the best restaurant in the world.

    What’s great about Zest is that the recipes are doable. A top chef developed them, but they’re written with an eye toward the average person.

    Going out to eat for every meal costs a fortune. What’s more, restaurants have no incentive to keep you healthy — only to keep you coming back.

    Cooking for yourself puts money in your pocket and keeps you slim. And Zest is a great way to learn how.

    Check out Zest and make something delicious!

    If you enjoyed this post, subscribe for more like this!
    Have a great weekend, everybody!


    More on tech:

    Why I Passed on a High Growth Startup

    How to Get Started Angel Investing

    Talking Follow-On Strategy with JCal

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

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  • Why I Passed on a High Growth Startup

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    iWashie was raising $600,000 at a very attractive valuation. It was growing like crazy. But I passed.

    This company is a composite and I changed the name and some identifying details. But it illustrates a key point: the size of the market matters.

    An Amazing Startup

    iWashie is a SaaS product for car washes. It gives them a great website, accounting tools, and an online store where you can book washes and detailing.

    The car washes who were using iWashie loved it.

    The fast website led to a lot more customers. Churn was practically zero.

    When I met with the founders, they seemed very smart and dedicated.

    The Numbers

    iWashie was growing like crazy.

    For the last 6 months, it had grown over 35% month over month, an outstanding record. Annual Recurring Revenue (ARR) was closing in on $500,000.

    iWashie was also raising at a very reasonable valuation: just $5 million. This may be because the founders were in the middle of the country, not the big markets of SF or NYC.

    But There’s One Problem

    At this point, you’re probably thinking “Francis, why the heck did you not invest in this?”

    Well, for all the awesome things about iWashie, there was one big problem: the market.

    There are only about 17,000 car washes in America. iWashie was charging them $500/month for its product.

    If they grabbed every single car wash in America as a customer, they’d still only make about $100 million a year in revenue.

    For a company to become a unicorn, they need to get to at least $100 million a year in revenue. To IPO, it can be even more.

    Although they have a great product, they’ll never get every car wash as a customer. And being so customized, the product didn’t easily slot into other businesses outside car washes.

    Wrap-Up

    As much as I loved these founders, I found myself wishing they were in a different business.

    Angel investors have to go after giant opportunities. It’s the only way we’ll get those billion dollar outcomes that pay for all the failed startups!

    So, as much as I loved the iWashie guys, I had to pass. This can be a great business, but it’s not a great venture capital investment.

    Would you have invested in iWashie? Why or why not?

    Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    How to Get Started Angel Investing

    Talking Follow-On Strategy with JCal

    They Passed on Airbnb. Here’s Why.

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

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  • How to Get Started Angel Investing

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    I recently met a great young lady named Jill*. She works at a major tech company and wanted to get into angel investing. But she didn’t know where to start.

    Three years ago, I was where Jill is. Today, I have 28 investments and counting.

    Here’s the best way to get started:

    1) Read the book Angel by Jason Calacanis. It’s less than 300 pages and it’s not boring.

    Jason tells you step by step exactly how to invest in tech startups. He explains what to look for, how to meet great founders, and how venture deals work.

    This book was what got me into angel investing. I’ve read a lot of other books about venture since, but Jason’s is still the best.

    And if you don’t know Jason, here’s why you should listen to him: he was an early investor in Uber, Robinhood, Calm, Superhuman, and more.

    2) Join some syndicates. Syndicates are groups of angel investors who invest in deals together.

    The syndicate lead picks a startup he likes and sends it to the syndicate. Each member decides on his own if he wants to invest.

    You never have to invest in anything. On every deal, you have a choice.

    Jason’s syndicate is a great place to start. It’s the first one I joined.

    Although I’ve joined almost 100 more since then, Jason’s is still the best.

    I also like Mana Ventures and Tom Williams’ syndicate.

    I suggest you do your first 10 deals with a syndicate. They can point you to some great startups you probably won’t meet on your own, at least at first.

    3) Keep your bets small.

    For at least the first 10, I suggest investing whatever the minimum is. With a syndicate, that could be $1-5k.

    You need to make around 30-50 investments to have a chance at hitting a unicorn. Make sure you have enough cash to do that.

    What you don’t want to do is spend your entire angel investing bankroll on a few companies. You won’t have enough shots on goal to hit something big.

    Even 3 years in, I usually invest $5k as my first bet. This way, I can make lots of bets.

    Then, I double down on the best ones. I might invest $25k in those.

    4) Join OpenVC and Mercury Raise. These are great ways to meet strong founders, and they’re free.

    Even if you’re still on your 10 syndicate investments, you can steer the best founders you meet to the syndicate leads. They’ll be grateful for the introduction!

    And when you’re ready to do deals directly, these platforms can give you solid deal flow.

    My first investment this year, a great company called Mobly, came from OpenVC. And I just met with another Mercury Raise founder this morning!

    Wrap-Up

    We start with getting some essential knowledge from Jason’s book. Then, we begin to do small deals already vetted by top investors.

    In time, we’ll be ready to do deals directly.

    This is a crawl, walk, run plan. If you follow it and make 30, 50, or even 100 investments as I plan to, you have a great shot at success!

    What questions do you have about angel investing? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    Talking Follow-On Strategy with JCal

    They Passed on Airbnb. Here’s Why.

    The Coinbase Deck

    *Name has been changed to protect privacy

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

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  • They Passed on Airbnb. Here’s Why.

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    In 2008, Brian Chesky was trying to raise $150,000. For this sum, you could’ve owned 10% of Airbnb. His friend Michael Seibel introduced him to 7 top investors, but Brian didn’t get a single check.

    Today, that 10% stake would be worth about $5 billion.*

    Let’s look at the reasons these investors passed and figure out where they went wrong. You can read the entirety of the rejections here, but I’ll just quote some key parts.

    #1 “Not in our area of focus.” Having too narrow a focus can be a real problem.

    Every year, there are thousands of new startups created. Only a few will ever matter.

    If you’re looking in a narrow area, it’s very hard to find an outlier.

    For example, I worked in medical software for many years. What if today, I only invested in healthcare tech companies?

    How many important ones are created every year…is there even one? What are the odds I meet them and decide to invest?

    My aperture would be just too narrow. I need the flexibility to invest in the next Brian Chesky if I meet him.

    #2: “Potential market opportunity did not seem large enough.”

    Airbnb created a new market. That’s what this investor missed.

    The market for staying in someone’s house was pretty close to 0 when Brian was pitching in 2008.

    That was the point of Airbnb! He was going to take those empty rooms and put guests in them.

    Maybe staying in someone’s house was a small market, but hotels certainly weren’t. If this investor had looked at an adjacent market, they could’ve seen how big this opportunity really was.

    #3: “Not in one of our prime 5 target markets.” Again, having too narrow an aperture is a real problem. That’s why I consider anything software to be fair game.

    I’ve tilted more toward SaaS because that’s where my background is. But I also have some great marketplaces, consumer subscriptions, and more.

    #4 “I was unavailable to get on a call.” Michael introduced Brian to prominent people in Silicon Valley. Many probably had a team of people working with them.

    Delegate the call to someone else if you’re too busy!

    #5 “We’ve not been able to get excited about travel-related businesses.”

    I don’t even know what this means. Do you want to make great investments or not?

    I can only imagine being the founder getting messages like this one. Weird, non-specific, and totally unhelpful.

    When I pass on a company, I like to give the founder a reason that makes some sense. “I’d like to see higher growth” or “I’d like to see you find a CTO.”

    At least then, the founder knows where she stands.

    The Ghosts

    Remember, Michael introduced Brian to 7 people. We’ve only covered five.

    The other two never even replied!

    Of all the mistakes investors made here, this one is the most egregious. How do you not reply to a warm intro?

    I can’t always reply to every cold message. But if someone I know introduces me to a founder, I’m going to at least respond to the email!

    Some investors just aren’t working hard enough. I don’t do 90 hour weeks or anything crazy like that, but I at least manage to reply to warm intros.

    There’s no excuse for this sort of stuff. Try harder!

    Wrap-Up

    In the end, hindsight is 20/20. We cannot meet with every founder, and we can only invest in a small group.

    Some day, I’ll be looking at an e-mail in my inbox from the founder of a now-unicorn. And I’ll be crying in my cinnamon apple herbal tea, “I never even met them!”

    That’s the way the business is. You’ll have many mistakes, but hopefully you’ll make them up with one or two big successes.

    What do you think of Brian’s story? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    The Airbnb Deck

    Talking Follow-On Strategy with JCal

    Astribot: Your Future Butler

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

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    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

    I wrote a detailed review of Misfits here.

    Use this link to sign up and you’ll save $15 on your first order. 

    *10% of the company would be worth about $10 billion, but an early investor would have been diluted by future fundraising. That dilution is usually around 50%, hence the $5 billion figure.

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  • Astribot: Your Future Butler

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    He pulls a tablecloth from beneath a pyramid of wine glasses. They scarcely move an inch.

    This is Astribot, a new robot from Chinese startup Stardust Intelligence. In an incredible new demo, Astribot cooks, decants wine, and even irons a shirt.

    And should you need a little Chinese calligraphy done, Astribot can do that too!

    Stardust Intelligence claims that the video was shot at 1x speed and the robot is not teleoperated (another term for remote control).

    Like bots from Tesla, Figure and others, it’s not yet publicly available. So, we can’t try it out for ourselves and verify that it works.

    But for a first demo, Astribot is incredibly impressive.

    Stardust Intelligence plans to release the robot later this year. Meeting this goal would be an incredible feat.

    If Astribot fails, we know what happens: things stay as they are. But what if it works?

    On the latest All In Podcast, angel investor Jason Calacanis sketches an intriguing robot future.

    What if a manufacturer could get the bill of materials for such a robot down to about $10,000? At that price, the company could rent them out for about $300 a month.

    Who’s not going to do that?

    Ten years from now, I might be renting an Astribot. I pay $300, and it does all my housework for me.

    When I’m asleep, I could have my Astribot work in a factory. The wages it earns could pay for the rental and then some.

    Free housework, and a profit to boot!

    Even if Astribot never makes it to market, there are countless competitors. Tesla, Boston Dynamics, Figure and others are all working on androids.

    Are they all going to fail? I don’t think so.

    This moment in robotics reminds me of the invention of calculus. Both Leibniz and Newton invented these new techniques independently around the same time, building on prior discoveries.

    Today, numerous companies are all converging on a humanoid robot. These robots are powered by AI, sucking in videos of humans doing things and replicating these actions.

    People have imagined robot servants for generations. Today, we may be close to making those dreams real.

    Would you get an Astribot? Leave a comment and let us know!

    If you enjoyed this post, subscribe for more like this!

    More on tech:

    The Most Amazing Video I’ve Ever Seen

    Can Meta AI Beat GPT4? I Tested Them to Find Out.

    Talking Follow-On Strategy with JCal

    Save Money on Stuff I Use:

    Fundrise

    This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 with great returns.

    More on Fundrise in this post.

    If you decide to invest in Fundrise, you can use this link to get $100 in free bonus shares!

    Misfits Market

    I’ve used Misfits for years, and it never disappoints! Every fruit and vegetable is organic, super fresh, and packed with flavor!

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