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Unbelievable. Due diligence for Series A rounds is pretty comprehensive. How in the world this process, especially in such a solid VC firm as Sequoia, could mis

by ablekh 7y ago

Unbelievable. Due diligence for Series A rounds is pretty comprehensive. How in the world this process, especially in such a solid VC firm as Sequoia, could miss a potential significant conflict of interests is beyond my understanding.

frankdenbow 7y ago
This is the part that baffles me. Surely someone at Sequoia would have asked Stripe what they felt about the deal before it closed?
- ablekh 7y ago
  Certainly. However, it is more than just asking an existing portfolio company - I think that any solid VC firm would / should have skipped a potential-conflict-of-interests-deal regardless of an opinion by said portfolio company. It is the VC side's due diligence after all.
- abalashov 7y ago
  I haven’t explored what exactly it is that Finix do, so this is just shooting from the hip, but a few possibilities: (1) It wasn’t immediately apparent without getting deep into the weeds that they competed with Stripe; (2) Finix pivoted in a manner that caused them to compete with Stripe more directly; (3) There was a controversy at the beginning about whether there was a conflict, and someone broke the tie and decided it wasn’t enough of a conflict to worry about, and then someone else at Sequoia gained more influence or proximity, or reconsidered something they were previously sure of, and the balance tipped in the other direction.
  - ablekh 7y ago
    I have no comments on (2) & (3), though they sound a bit too speculative. However, (1) does not make sense to me, since due diligence, pretty much by definition, should have included "getting deep into the weeds" (especially for Series A and, even more so, by a prominent VC firm). BTW, kudos to you for your December 2018 blog post on bootstrapping (the relevant HN discussion does not disappoint either).
    - abalashov 7y ago
      Thank you, that’s really kind of you!
      - ablekh 7y ago
        My pleasure! Feel free to get in touch, whenever you feel lonely professionally or otherwise - will be happy to chat.
    - vidarh 7y ago
      Consider that there are two sides to this: Stripe and Finix. Due dilligence on Finix may well have been solid enough in isolation, but have unveiled things that requires non-public information about Stripe that few people were privy to before someone could connect the dots. Or someone seriously dropped the ball, of course - it happens.
- koboll 7y ago
  It's completely baffling. Not only do they do many of the exact same things that Stripe does, but even their design aesthetic is ripped directly from Stripe's, down to the signature tilted parallelogram. Compare: - https://www.finixpayments.com/ https://www.finixpayments.com/ - https://stripe.com https://stripe.com

by ablekh 7y ago

frankdenbow 7y ago

This is the part that baffles me. Surely someone at Sequoia would have asked Stripe what they felt about the deal before it closed?

ablekh 7y ago
Certainly. However, it is more than just asking an existing portfolio company - I think that any solid VC firm would / should have skipped a potential-conflict-of-interests-deal regardless of an opinion by said portfolio company. It is the VC side's due diligence after all.
abalashov 7y ago
I haven’t explored what exactly it is that Finix do, so this is just shooting from the hip, but a few possibilities: (1) It wasn’t immediately apparent without getting deep into the weeds that they competed with Stripe; (2) Finix pivoted in a manner that caused them to compete with Stripe more directly; (3) There was a controversy at the beginning about whether there was a conflict, and someone broke the tie and decided it wasn’t enough of a conflict to worry about, and then someone else at Sequoia gained more influence or proximity, or reconsidered something they were previously sure of, and the balance tipped in the other direction.
- ablekh 7y ago
  I have no comments on (2) & (3), though they sound a bit too speculative. However, (1) does not make sense to me, since due diligence, pretty much by definition, should have included "getting deep into the weeds" (especially for Series A and, even more so, by a prominent VC firm). BTW, kudos to you for your December 2018 blog post on bootstrapping (the relevant HN discussion does not disappoint either).
  - abalashov 7y ago
    Thank you, that’s really kind of you!
    - ablekh 7y ago
      My pleasure! Feel free to get in touch, whenever you feel lonely professionally or otherwise - will be happy to chat.
  - vidarh 7y ago
    Consider that there are two sides to this: Stripe and Finix. Due dilligence on Finix may well have been solid enough in isolation, but have unveiled things that requires non-public information about Stripe that few people were privy to before someone could connect the dots. Or someone seriously dropped the ball, of course - it happens.
koboll 7y ago
It's completely baffling. Not only do they do many of the exact same things that Stripe does, but even their design aesthetic is ripped directly from Stripe's, down to the signature tilted parallelogram. Compare: - https://www.finixpayments.com/ https://www.finixpayments.com/ - https://stripe.com https://stripe.com