17 ms·

7 Rejections

720 points by flylib 11y ago

bakztfuture 11y ago
These kinds of things are very easy to call out in hindsight, so, I do sympathize with the investors at least a bit. Based on a collection of screenshots I put together of Airbnb's homepage over time (using content from the Internet Archive) I wouldn't have invested either in early versions of Airbnb: http://www.startuptimelines.org/startup-timelines/airbnb/ http://www.startuptimelines.org/startup-timelines/airbnb/ Fred Wilson got his email from PG, I believe, in January 2009 and if you look at the Airbnb homepage then - the site is no where near as promising as it is now.
- johnx123-up 11y ago
  FWIW, in terms of design, I think, for their current site, they've got inspiration from Agriya script. Why Everyone At Airbnb Is A Pirate article explains why http://www.fastcompany.com/3013899/bottom-line/why-everyone-at-airbnb-is-a-pirate http://www.fastcompany.com/3013899/bottom-line/why-everyone-...
- nether 11y ago
  How did other VC funded startup pages look? I don't think it looks particularly dated compared to its peers. This was the era of "web 2.0" which seems daft today.
- seeingfurther 11y ago
  This post isn't meant to call out poor judgement in VCs, but rather to encourage all the struggling founders out there who receive these emails on a daily basis.
  - at-fates-hands 11y ago
    This is how I read it too. As someone who spent more than a few years in sales, I was trained to take rejection as a positive. The more rejections you get, the closer you get to a sale. The only time you don't is when you stop looking for more clients. It's all a numbers game. If you look at rejection as something that gets you closer to success, you'll be encouraged, instead of discouraged when you get these types of letters.
    - fapjacks 11y ago
      Ah, this is very interesting. That is definitely one way to look at slogging through rejections: That you're one closer to a sale.
- AgentConundrum 11y ago
  Having not followed Airbnb very closely - I have no interest whatsoever in using the service either as a traveller or a host - your link clarified one thing that's always sort of bugged me. I had never understood how "air" fit with B&B. It wasn't until I saw the original screenshot that I understood that it's "AirB & B" rather than "Air B&B".
  - BinaryIdiot 11y ago
    Wow I just realized I also had no idea. Interesting and it makes so much more sense now.
  - mandeepj 11y ago
    full details here - https://www.quora.com/Where-did-Airbnb-get-its-name-What-does-the-name-mean https://www.quora.com/Where-did-Airbnb-get-its-name-What-doe...
    - coldpie 11y ago
      Thanks for the link. I've never heard of an inflatable mattress being called an "airbed," so I still didn't get it.
- morgante 11y ago
  I don't agree. The fundamental business model of Airbnb didn't change through all those homepage iterations—those were just redesigns of the exact same concept. In fact, for the time I think Airbnb's original designs were quite current.
  - carrotleads 11y ago
    Yeah that is exactly what I thought as well.. its not like they pivoted... maybe the homepage pitch changes... All this episode should highlight is that founders should not think that VC's have some sort of wisdom when they reject... They follow only one wisdom and that is traction... if you got that and in huge spades, then everything can be explained in a wise manner.. and we will marvel at their wisdom.
  - annnnd 11y ago
    Is it just me or do the early designs actually look better?
  - cowsandmilk 11y ago
    Presentation matters. Airbnb's story even shows that. Taking professional photos of listings is what turned the company around.
- hamhamed 11y ago
  funny how they started by returning results based on event searches and today they stopped supporting it. Now there are startups trying to do that same thing: https://www.stay22.com/ https://www.stay22.com/ (disclaimer: my startup!)
- sanmon3186 11y ago
  Just curious to know how this could have been done better. Those who believe the design of 2008-09 Airbnb was not up to mark, mind explaining this to a guy with little UX design understanding.
- shanev 11y ago
  Investors aren't the only ones who missed out. I'm sure a lot of potential early employees did too based on the 2008 homepage design. I know I did. Joe asked me if I'd be interested in developing their iPhone app, but I rejected because I didn't see how they could take off when Couchsurfing was free. In retrospect I should have known they'd be successful no matter what they did. To this day Joe is the most passionate and charismatic person I've ever met. He was always into connecting people and building relationships. I first met him at Jelly, a coworking space he ran out of his San Francisco apartment. So great to see him achieving his mission at a large scale.
- deleted 11y ago
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- jasode 11y ago
  >I wouldn't have invested either in early versions of Airbnb: http://www.startuptimelines.org/startup-timelines/airbnb/ http://www.startuptimelines.org/startup-timelines/airbnb/ Fred Wilson got his email from PG, I believe, in January 2009 and if you look at the Airbnb homepage then - the site is no where near as promising as it is now. I disagree somewhat. I think that is hindsight bias to relate the website's 2008 designs to cause&effect of VC decisions. The April 2015 website designs looks "prettier" but as far as communicating to unknowing customers (and uninformed VCs) what Airbnb actually does, the "uglier" 2008 designs are actually better. Notice that the 2008 designs have icons/pictures of an actual "bed" and a "breakfast". It's concrete visual communication. But the 2015 photos instead, show "people" in what I call "aspirational lifestyle" poses. It's abstract visual communication. (And I just took another quick look at airbnb.com today July 13 2015 and now the home page shows photos of "destinations" overlayed with city names in prominent white font. So now the page design taps into the romanticisms of the Condé Nast Traveler. The visual abstractions continue.) I think it's fascinating the lifecycle of companies's visual style that transition from The Concrete --> The Abstract. The visuals including marketing, advertisements, and home webpage designs. The concrete approach has to show the actual product. The abstract does not. At this point, I think Airbnb can get away with abstract visuals because they are well-known enough now to not have to waste landing page pixels on an actual "bed" or "eggs & toast". That's what 7 years of penetrating the public consciousness allows you to do. These days, I would guess that the majority of visitors already know (by way of friends & family) what Airbnb does before they visit airbnb.com. Therefore, if the company is a startup nobody knows, they must use concrete visuals. If a company is established and successful, they have the luxury of being abstract. I don't think tomorrow's YC2016 unknown company should base their website's information design based on airbnb's 2015 website. Instead, look at their 2008 designs even though they are uglier. Other examples of companies doing abstract visuals: Nike's "Just Do It" commercials often do not highlight any shoes in obvious ways and instead show sweaty people running or playing.[1] (If one didn't know Nike was a shoe and sports apparel company, one might think that commercial was about karate lessons.) Viagra commercial don't show the actual pills but instead shows older couples holding hands walking the beach or a guy sailing a boat.[2] This is unlike many Tylenol pills commercials showing the actual pills.[3] Even in the tech world has examples. Anyone remember the old IBM OS/2 Warp commercials in 1990s? The entire commercial was showing people's faces looking at a computer screen (presumably of OS/2). The camera didn't show what they were looking at -- therefore you saw no GUI demostrations. The camera also didn't show the software box. It was just a bunch of reaction shots of people's faces showing astonishment ("wow!", "cool!", etc). [4] The abstract commmercials from Nike & IBM are not suitable for convincing investors who don't understand athletic shoes or operating system software. Likewise, the 2015 versions of airbnb.com showing abstract lifestyle photos are not useful for potential investors either. [1]https://www.youtube.com/watch?v=Pp5dZZBKTXQ https://www.youtube.com/watch?v=Pp5dZZBKTXQ [2]https://www.youtube.com/watch?v=y1ZqQ55T25c https://www.youtube.com/watch?v=y1ZqQ55T25c [3]https://www.youtube.com/watch?v=4LIYEC9mNqM https://www.youtube.com/watch?v=4LIYEC9mNqM [4]https://www.youtube.com/watch?v=G6YZbrhBhjQ https://www.youtube.com/watch?v=G6YZbrhBhjQ
- mangeletti 11y ago
  Firstly, what a great idea (startup timelines). FWIW, I love the wayback machine, and I probably use it 1-2 times per week. The thing I took away from your timeline of airbnb was the same thing I think successful people try to explain time and time again, and it's the same lesson that makes the investors passing up airbnb seem more like a minor, unavoidable incident. The lesson is that a business or idea isn't a success until a team works mega hard at making it a success, and even then it has a huge chance of failing. This lesson is made clear to me in part by the reminder that airbnb has been around since the first year after I learned to program, and that feels like an eternity ago. If I spent 3 years working on a brand with a good team and with VC backing, I'd expect to see some resemblance of success also, as long as the idea wasn't terrible. Hard work pays off, but it's easy to look back at these success stories as some sort of lottery winners.
e0m 11y ago
7 is out of what? How many VCs gave them offers for money, and how many did they take?
- vlasev 11y ago
  It says right in the very first line of the article: > On June 26, 2008, our friend Michael Seibel introduced us to 7 prominent investors in Silicon Valley. Therefore, the answer to your question is: in this particular encounter they talked to 7 VCs, got 5 NOs and 2 no-answer's.
tptacek 11y ago
How did they get such clear "No" answers? That list of rejections was very, very unlike my experience trying to raise VC, which was more like 7-10 VC firms giving meaningless "yes, soon!" responses until we gave up.
- tekacs 11y ago
  Perhaps because their rejections were seemingly policy-driven ('we don't handle/haven't had luck with this category') rather than qualitative? I've heard the same happen to friends attempting to seek investment in 'music' and 'gaming' businesses - clear rejections based upon their 'category'.
  - curiousjorge 11y ago
    This is probably the safest way to reject someone seeing that 4 of them used the exact same response as well as your music business investors. I hear this line all the time. To be fair, I guess making huge returns is not their prime policy or maybe their investors have a policy against certain investments due to moral or some esoteric reasons.
    - tekacs 11y ago
      A common-enough rhetoric in discussion with folks from VCs does definitely seem to involve the 'areas they are currently interested in'. A sibling comment to mine bears this out slightly with the 'security is not our sweet spot' response. You cite esoterica, but perhaps investors just feel more comfortable with certain areas - or ones they have the in-house experience to evaluate properly - or that are easier for junior partners to sell to the folks higher-up?
      - curiousjorge 11y ago
        I don't know much about VC but I thought taking risks was the name of the game? Isn't that what "venture" in VC mean? I'd understand if this was Ontario Teachers Pension Fund or something like that where a large amount of capital had to move around to generate some sizable returns. Even these money managers are scrutinized for bad decisions. The whole 'not our area of focus' seems to be the same line mutual fund managers use during report card season by writing off bad picks and claiming they beat the market.
hyuuu 11y ago
I am surprised that they only got 7 rejections, I would expect a lot, lot more NOs
- detaro 11y ago
  7 rejections after a meeting with 7 potential investors, not 7 rejections overall
tomasien 11y ago
These rejections are a testament to why you shouldn't give up just because smart people give you a hard "no", but also why storytelling is so important. These investors clearly did not understand Airbnb, and I think the Airbnb guys would admit that's in large part because they did a bad job explaining it. Explaining why something that is small today could some day be huge is so hard.
- zeroxfe 11y ago
  I agree, storytelling is important. But your second sentence does not follow from the first.
  - tomasien 11y ago
    The conclusion from putting the two together is "when you get hard nos from smart people, if you're still compelled by your mission, keep going and work on either changing your story or telling it better".
    - asuffield 11y ago
      I believe the GP was trying to say that while your first sentence sounds reasonable, your second one sounds surprising and needs some justifying.
      - tomasien 11y ago
        If that's the case, the backstory to Airbnb indicates to me that around this time they had still not adequately figured out how to tell their story in such a way where it seemed like a big deal. At the time I believe, it was about: - People having strangers stay on air beds in your homes, while you were there, and then serving them breakfast in the morning - It was ONLY targeted at conferences where people would become so desperate for space that they'd stay anywhere (that's how the company got started - big design conference in SF. Here you can see they were focusing on the DNC and RNC). This is a really implausible idea for one, a really small market (constrained by hosts but also conferences that fit the criteria) for two, etc. What the story became when they broke through was about turning the excess living inventory hundreds of millions of people have into a place for people to stay. This has benefits for both sides it turns out and is widely applicable and massively scalable. Those are really, really different stories. Like, startling different. But if you can't not only tell the second one but also show some evidence that it could be so, your stuck with the shitty first story. When they started seeing the behavior during YC that pointed them to the second story, they focused the company on it which caused it to grow, investors better understood the potential, and slowly over time it became trivially easy for them to raise money.
GuiA 11y ago
Much like tech hiring, investors prefer to optimize for false negative over false positives. Especially because the power dynamic is still skewed in their way, which allows them to say things like "call us back when you get to a series A" - none of the risk, all of the upside. Kind of like that girl who rejected me in high school but said "if in 10 years we both haven't found someone, maybe we can get together".
- curiousjorge 11y ago
  Yeah that one really irked me. Hey, call us when you are a billionaire and we'll talk about investing. Yeah I'll marry you when it's in the prenup. I'd immediately pull out my funds as an investor out if I found out the names of the people writing these rejection letters. It would also be bad for street cred. "hey these guys missed out on the deal of the century, who else did they reject?" 150k is like peanuts to these firms with millions of dollars to throw. Hell, I'd bought out of the money put options near expiry if it meant there was a slight chance it would have potentially unlimited returns.
  - BadassFractal 11y ago
    Sure, except there are thousands of companies out there asking for that firm's 150k, each year. They can't spray and pray, they have to at least find a reason to believe their decision is based on sound logic, otherwise they might as well make themselves self-service.
    - curiousjorge 11y ago
      If there's an airbnb in there then I think it's worth betting more. 15 million spread across 100 startups, is that too much? I expect most to fail but the point is I have limited downside risk for unlimited return. the overdiversification argument is moot here because you are not optimizing for total portfolio return but maximizing your exposure to upside. Who says you have to do it all in one go? Keep moving and make bite sized bets but not being married to your ideas. Also how can you be sure that your sound logic isn't going to hurt you in the end like those guys writing rejection letters? I'm sure they have done,some introspection. And like that guy who said he's going to see nd me a business plan in an hour, I've yet to hear from. One clear distinction is that I am also investing in the person, and if they can't hold up their end or if they think it's an easy way to swindle a years salary they are fucked in the head. I'm here to make bets not run a fucking charity, excuse ma francais.
curiousjorge 11y ago
> for $150,000 you could have bought 10% of Airbnb. Ouch. Ego can get very expensive. Consider this, had they invested, Airbnb might not be where it is today.
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adamdavid 11y ago
Damn...wish I were there. Would have pitched $20k of my own money and maybe had my parents pitch another $10k, with a lawyer to sign-off on it. Nowadays, it's just crappy companies that are easy to invest in - garbage on kick starter, and pump and pumps on Wall St. for example - the good stuff requires connections.
Kiro 11y ago
> We were attempting to raise $150,000 at a $1.5M valuation. That means for $150,000 you could have bought 10% of Airbnb. This is completely off-topic but since the $150,000 is going back to the business, wouldn't that mean that the valuation becomes $1.65M? The word "bought" makes it sound like someone is taking the money and selling their share.
- jeremyjh 11y ago
  No. They were offering to sell 10% of the company for $150K. That values the entire company at 1.5MM.
  - mikeryan 11y ago
    You're missing the nuance of the question. If Airbnb is worth 1.5 million before selling 10% for 150k then after the sale they are still worth 1.5M they were valued at before the sale, but also have an additional 150k in the bank which should add another 150k to their valuation. (ergo the pre/post money valuation thing linked above)
    - ridgeguy 11y ago
      But wait - You're leaving out the company's loss of 10% of its equity as part of the investment transaction. The company's equity was worth $1500K before the investment. After the investment, the company had $1350K of equity left because it sold 10% of itself, and it no longer owned that chunk of equity. However, it had $150K of cash that its equity investor paid for 10% of the company's equity. So $1350K of remaining equity + $150K cash = $1500K company value. Same as pre-investment valuation. It looks like the company's total value didn't change, it just traded 10% of its value for cash. Which is the point of selling equity - cash allows a company to pay for people and things. Equity doesn't.
      - mikeryan 11y ago
        But wait - You're leaving out the company's loss of 10% of its equity as part of the investment transaction. A "company" can't lose equity it never owned any to begin with. The equity was transferred from one party (usually the founders) to another entity in exchange for cash. After the investment, the company had $1350K of equity left because it sold 10% of itself, and it no longer owned that chunk of equity. This is completely wrong.
bambax 11y ago
> The other 2 did not reply. OT, but I applied to be a contract photographer for AirBnB a month ago and did not get a response either -- not "no", not "maybe later", not anything. I did get an automated email thanking me "for pressing send"; after that, zilch. So I guess it goes both ways.
- hasenj 11y ago
  When you become a world famous photographer, you can write about that in a blog post :)
- petercooper 11y ago
  That's ultimately the lesson IMHO. You gotta keep hustling and doing what you think is right but not get hung up about any particular connection or rung of the ladder.
mud_dauber 11y ago
Good lord, I needed to see this.
gargarplex 11y ago
This was when Airbnb was pre-YC
caltonji 11y ago
Marc Andreessen talked about passing on AirBnb's initial investment round at How to Start a Startup. It helps put these rejections in perspective: https://www.youtube.com/watch?v=uFX95HahaUs&t=29m11s https://www.youtube.com/watch?v=uFX95HahaUs&t=29m11s
localhost3000 11y ago
Saw some VC tweeting this link with the caption, "VC is hard." ...I think he missed the point of the article.
- wutbrodo 11y ago
  His point is entirely consistent with Brian's point. Brian's saying "consistent rejection doesn't mean you should give up" and the VC is saying "even consistent VC rejections can be wrong because VC is hard".
mikeryan 11y ago
An oldie from Fred Wilson where he calls himself out for missing on Airbnb. http://avc.com/2011/03/airbnb/ http://avc.com/2011/03/airbnb/
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ionwake 11y ago
If I was at the same stage as they were at this time. How would I have contacted these investors - or similar ones? I have no idea how to start the process of asking VCs for a small sum in return for a share of the company. I would really appreciate and answer. Thank you.
- kevinmobrien 11y ago
  The "traditional" answer is to identify the VCs you're interested in, and network your way into an introduction if you don't know them yourself. Accelerator programs can also be a way to become involved. Have a clear, clean pitch deck. Know your unique value proposition, understand your competition, be able to demonstrate that there's a market and that it's significant. Show traction, team, and ability to execute.
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- onion2k 11y ago
  I'm not sure turning down ABB is a sign of incompetence. It is with hindsight, but there was very little that showed there was a huge market waiting to be exploited prior to ABB. They were genuinely pioneering; they essentially invented the market. Also, there are thousands of deal turned down annually which end up being the right decision (for the VC at least) when the startup fails - all those would point to VCs actually making the right call most of the time. Someone getting it wrong, even if it means missing a unicorn of a deal, isn't necessarily incompetent.
datashovel 11y ago
I remember watching an investigative journalism piece that showed that professional traders on Wall Street can barely outperform a monkey. I think given these kinds of statistics I can't understand why there's not some public fund where average citizens can invest toward. That fund would run a lottery every year and accept 'x' # of companies depending on how much was invested the previous year. Each of those companies would (depending on current cash flow) provide a % of ownership to the fund. Noone tells them how to use the money. No investor has authority to interfere whatsoever. Of course I imagine there would be reporting requirements, and require certain levels of transparency into their books and such in order to create at least some hurdles to prevent people who are just out to scam the system from applying. Maintaining the status quo just perpetuates the "rich get richer" paradigm.
larrys 11y ago
This, in itself, means nothing. If you need to read things like this in order to understand that not everybody is going to love you or your idea and to help deal with rejection, most likely you are not be cut out to be an entrepreneur. Every investor has stories of ideas that they passed on that they shouldn't have (in retrospect of course) and every entrepreneur (or guy dating in high school) also knows of investors or dates that they felt made the wrong decision. Pushes all the right buttons, but keep in mind that those investors also rejected vastly more ideas that most likely never went anywhere. That was their take on airbnb at the time. With respects to Airbnb, Fred Wilson of USV passed on the opportunity as well and posted emails showing where Paul Graham personally spent quite a bit of time trying to convince him otherwise. [1] http://www.paulgraham.com/airbnb.html http://www.paulgraham.com/airbnb.html
anon3_ 11y ago
Ha. You know the same concept applies to talking to girls? I'll never forget the day I went out exclusively to meet a girl. I was rejected by maybe a hundred girls I approached. The worst one's were the ones that just stared at their phone, like I wasn't even human. I was tired. It was 8PM... around that. I go up and approach girl inside of a clothing store. Please God speak english. She opens up with perfect english, smiling. We went on a date right there. Huge confidence booster. Frankly, people are a complicated bunch. You don't understand their learned behaviors, position and internal politics. There's no way you could understand the whether a girl is grumpy, just broke up, open to meeting someone new until you come up to her. We need more posts like this. Not just for VC's, I'd like to see comeback stories for freelancers scoring gigs / job interviews. Good job OP
rodrigocoelho 11y ago
Reminds me of BVP's anti-portfolio: http://www.bvp.com/portfolio/antiportfolio http://www.bvp.com/portfolio/antiportfolio
simonebrunozzi 11y ago
For Brian: On Dec 13th, 2012, I wrote the following email to you, after having applied for a “Head of Community” position at AirBnB. I didn’t get any reply either. Note that I cannot claim I became the big success that AirBnB has after these “rejections”, but it still surprises me that you or your org didn’t even wanted to talk to a Technology Evangelist from AWS. I guess you did a similar type of mistake with me. "Hi Brian, I know you’re busy, therefore I’ll keep it short. My name is Simone, I work in San Francisco for Amazon Web Services, and I’m interested in becoming the Global Head of Community at Airbnb. I think I have what it takes to be successful in that role, and I’m a big fan of Airbnb. Let me know if we can discuss, or if you want more details. Have a great day,"
- simonebrunozzi 11y ago
  I'm wondering why the downvotes - can someone care to explain? I'm honestly curious on why.
  - petercooper 11y ago
    Just my guess. You were sorta putting your situation on a par with investors missing out on investing in the early stages of a company now worth $24bn. That is to say, them not paying attention to you is equivalent to missing out on an absolutely mind boggling amazing opportunity (in hindsight). Now, you might truly be as awesome as that but people tend to vote down comments where people are blowing their own trumpets, for better or worse.
    - simonebrunozzi 11y ago
      And what about this sentence then? "Note that I cannot claim I became the big success that AirBnB has after these “rejections”"
      - MichaelGG 11y ago
        Why do you think they owe you a response? Your comment sorta sounds like you think you're something special, maybe that's why people downvoted?
mangeletti 11y ago
The only thing to be warned about here is the blowback effect. This is a form of confirmation bias, whereby the victim uses rejection as a means of confirmation.
- bazillion 11y ago
  I was curious to what he meant by the blowback effect, and so my googling eventually led me to The Backfire Effect[1] which is when "in the face of contradictory evidence, established beliefs do not change but actually get stronger". I don't really see that applying in the sense of obtaining venture capital, as it is well known that you aren't going to immediately walk in to an office and hand them a check for the valuation you asked for. It's going to take a bunch of both hard and soft rejections, but a person isn't usually going to be in that room pitching to these VCs if they don't already strongly believe that their startup is fundable. [1] http://rationalwiki.org/wiki/Backfire_effect http://rationalwiki.org/wiki/Backfire_effect
  - mangeletti 11y ago
    Ah yes, I meant "backfire effect". This pertains to the conclusion (and thus the premise) of the blog post: "Next time you have an idea and it gets rejected, I want you to think of these emails." The message in my comment is, don't allow yourself to fall pray to the backfire effect when people reject your ideas (whether VC, colleagues, etc.). If people reject your idea, it might mean it's not a very valuable idea, as opposed to being an indication that you're on to something that's so radically new and different, etc.
patmcguire 11y ago
Made me really, really want to see the yes email.
sospep 11y ago
is this post the airBnb version of the godadday commercial? - https://www.youtube.com/watch?v=VIBfctISM9M https://www.youtube.com/watch?v=VIBfctISM9M
arikrak 11y ago
> Next time you have an idea and it gets rejected, I want you to think of this email. The winner of a lottery could go around telling people not give up buying lottery tickets...
- bazillion 11y ago
  I don't think that's quite applicable in this case, as getting a business funded is a far cry from winning the lottery -- plenty of people frequenting this site were able to obtain funding under similar circumstances (a lot of rejections amidst a couple yes's). The reason this is the exact opposite of winning the lottery, is that the lottery is the equivalent of saying, "Please, a higher power, change my life by granting me all that I want.", whereas someone getting their company funded is more akin to saying, "I want to take full responsibility for the failures and successes of my own life, and to even become responsible for the livelihood of others.". In short, they are worlds apart as far as mentality goes. Regardless of the success of the company after the funding, going forward with a company in the face of such utter rejection by those who the author viewed as "smart people" takes a mentality that is shared by pretty much all of those who have achieved similar success.
  - vacri 11y ago
    arikrak is saying that it's "this startup became a billion-dollar concern" that's winning the lottery, not the funding step. The funding step is analagous to buying the lottery ticket. In clearer words, it's confirmation bias: there are thousands of ideas and startups pursuing them. Most fail, some succeed, a rare few become AirBnB gorillas.
  - curiousjorge 11y ago
    Or maybe the "smart people" are exactly that and that's as far as they will go as we've seen throughout history when smart people get together decisions become more about maintaining ones ego rather than actual results. Taleb terms so called smart people as "empty suits". 50 cent is a successful venture capitalist, but do people picture him first when they think smart people?
- 11y ago
amelius 11y ago
Airbnb is an example of a company that is nothing more than just a brand, because anybody can build a booking website in a matter of a few weeks. So, this is just gambling. I'm not sure of what interest that would be here, but that is of course a personal opinion.
- gargarplex 11y ago
  I have a client who needs a booking website built in NYC. Competitor to Airbnb, targeting high-end rentals.
- vlasev 11y ago
  > nothing more than just a brand I think that's quite the understatement. But then, one could easily say this about most big brands, no? Brand happens to be really really important.
- nsgi 11y ago
  It's also a two-sided market. A new competitor would need to solve the chicken-and-egg problem. The argument about it being easy to clone could be applied to almost any website.
- humbertomn 11y ago
  Well, building that brand was part of the work, which you call "gambling". The technical side clearly can build innovation, but that's not even close all you need to have a successful startup. You suggest "building the website in a few weeks", so then you should measure how long it will take you to have people paying to use your site and scaling this globally.
- prostoalex 11y ago
  > Airbnb is an example of a company that is nothing more than just a brand, because anybody can build a booking website in a matter of a few weeks. Many people have, and some (Roomorama, FlipKey) are reasonably successful. Heck, there's entire sub-sector of vacation home rentals (HomeAway, VayCayHero) that has publicly traded companies operating in it. The problem with two-side marketplace is the trust. Bait-and-switch and similar scams have plagued marketplaces like CraigsList. You arrive at a place, and it's not what the photos look like. You make a reservation, and are told at the last minute that it got "flooded" a night before, and now the host gives you an option to switch to an inferior place or pay up more for a better-looking option. You arrive and find out the place is not for rent, and the photos have been taken by some scammer who thrives on taking small deposits and just repurposes same photos across multiple sites. Then it degrades into horrors like this one http://www.dailymail.co.uk/news/article-1205794/Rape-horror-tourist-used-couchsurfing-website-aimed-travellers.html http://www.dailymail.co.uk/news/article-1205794/Rape-horror-... Building a trust network and keeping a reasonably clean two-side marketplace is very hard, and is a major asset.
thomasrossi 11y ago
refusal happens in life, nothing new? But at least most of that email had a clear reason why, some also gave advice. I think they were lucky to have such responses.
cabinpark 11y ago
Now show me the e-mails from investors of the hundreds of start-ups that get rejected and fail.
hauget 11y ago
Reminds me of Stephen King's rejection slips: "By the time I was fourteen the nail in my wall would no longer support the weight of the rejection slips impaled upon it. I replaced the nail with a spike and went on writing.” Like Guy Kawasaki once said, "Don´t Let The Bozos Grind You Down".
- nandemo 11y ago
  I think "bozo" is too harsh. It's hard to predict what books will be bestsellers and what startups will reach $1B valuation. Arguably, traditional publishers and VCs have to say "no" most of the time. Maybe Kawasaki's quip had a context that made it more palatable, though.
- lukaslalinsky 11y ago
  With Stephen King (or any book author) it's a little different. It's not like they get rejected and keep selling that one book they just wrote. Most authors write bad books when they are starting, they get rejected and they continue to write more books, usually better books.
  - hauget 11y ago
    "It's not like they get rejected and keep selling that one book they just wrote." (1) just because you're selling doesn't mean you're making profit. (2) Airbnb wasn't profitable when they were getting rejected, so in a sense "they kept writing". Hell, they even sold cereal boxes to stay afloat before Ycombinator picked them up! https://www.airbnb.com/obamaos https://www.airbnb.com/obamaos
robg 11y ago
Wish he showed the names.
shinamee 11y ago
It's really hard to tell the success of an idea and I think one investor mentioned in the email that they don't understand the market so it would make it hard to nurture such products. They simply cannot invest in all ideas, just because Brian got lucky doesn't makes it applies to all startups
ageofwant 11y ago
Survival bias, much ? https://en.wikipedia.org/wiki/Survivorship_bias https://en.wikipedia.org/wiki/Survivorship_bias
smil 11y ago
This is evidence that: Investors and VCs are not smart/do not have enough information/experience to make smart decisions generally The only way to escape working for non-smart people (bosses, VCs) is to bootstrap
RawInfoSec 11y ago
Every investment opportunity has risk, and many possible outcomes. There will always be investors who gained. There will always be investors who missed a chance to gain. Alternatively, there could be investors who lost, or those who dodged the bullet. This one had gains and missed opportunity. No one lost anything except time reading a post that appears to be 'prodding the losers' when there weren't any. In fact, some of the investors probably made more elsewhere in something closer to their realm, so it can't readily be said that an opportunity was missed.
pbreit 11y ago
Even in 2008, was this a reasonable way to try and raise $150k? I would think that level of investment should/would be procured from friends & family, not cold-ish intros to angels/VCs?
caseyf7 11y ago
"It's not in one of our prime 5 markets...you would be better without us...but Hey call us when you're doing your series A". This ranks just below my favorite answer: "We love that you have 1M users, but we need to see 10M before an A round. (Month passes). Oh, really 10M users that's great but we like to see 50m before doing A rounds now. Come back later!" Of course, you won't need this chump change fund's money when you reach that point.
trymas 11y ago
Sorry, but this looks like humble-brag, because everybody knows what happened in retrospect. Those VCs, probably can give CEO of ABB dozens of examples, how they rejected some 'promising' startups which have failed, and a few which they accepted and made them nice cash. Also to this day ABB to me looks like Couch-surfing for money, unless you get full apartment. And usually only advantage you get versus hotel is that you have a kitchen and/or washing machine. IMHO, there are lucky people who own apartments near city center, and are collect month's worth of rent from 4-7 night stays. That's how ABB looks to me after I tried it.
zekevermillion 11y ago
It looked like an awesome team, but investors didn't see the opportunity. I read that one fund (I think USV) took the miss as a lesson not to base investment decisions on whether their partners would use a particular service. The consuming proclivities of 50-year-old millionaires not being indicative of a larger market. Seems terribly sloppy as an investor (or prospective employee, for that matter) to be influenced by such a personal bias. But maybe the founders didn't fully expect such an amazing success, either?
- ghaff 11y ago
  >Seems terribly sloppy as an investor (or prospective employee, for that matter) to be influenced by such a personal bias. It is but, on the other hand, it would be equally sloppy to decide to fund an idea that you think seems pretty ridiculous and couldn't imagine using in a million years on the grounds that someone will find it appealing. With AirBnB, the real trick was that there was apparently (though still to be proven long-term) a business opportunity in the interstices of couch-surfing, hotels, B&Bs, and traditional vacation rentals that has mostly managed to skirt regulatory/legal/contract issues.
- hodwik 11y ago
  In general you have to use your own life experiences to make investments. It's nice to think that you could put yourself in someone else's shoes well enough to make stock purchases based on what you think they will want, but investors learn very quickly that that doesn't actually work. "Buy what you know." It means there are great opportunities for people who are a minority in the investment world -- like ladies. Look at ETSY stock right now. It's insanely cheap I believe (at 1.771B valuation). Despite being cultishly popular with 20-something women, who will soon be entering the demographic that spends the most, it's been crashing through the floor. A male-led investment world is not putting their money there. Ask any young lady what they think of Etsy and you'll see why that's dumb. In 2008, when Starbucks was priced at $3.42 a share, asking any woman what business they think will grow in popularity would have elicited the reply of "Starbucks, duh", but investors didn't see the opportunity. In 2009, Lululemon was priced at $2.25 a share. It's a good thing for minority investors. They just need to get in the buying market, and take some risks.
kriro 11y ago
It's obviously easy to critique in hindsight but I think it's interesting that a theme of the rejections is "not our type of marked". It seems like the investors are somewhat conservative in sticking to what they know which is a little disappointing (I like the response that the investors can't really help because they don't know much about the market). That suggests that you'll get filtered out pretty quickly on variables like market type which seems pretty unfortunate.
- peeters 11y ago
  Keep in mind that this can also be code for "we didn't get a good vibe from you, but since it's hard to explain intangibles, we'll say it's not our type of market." Investors also aren't necessarily above hand waving to spare feelings.
sagivo 11y ago
Yes, follow your dream. but don't follow too hard that you loose all your money and savings because "the airbnb guys got rejected too". sometimes it's good to be realistic and understand that if you get rejected all the times maybe it means you're in the wrong direction. posts like that will encourage people to keep hoping and might causing them damage by not being connected to reality.
sungmoon 11y ago
Investors who missed out on great products aren’t to be sneered at. Indeed, Airbnb of year 2008 would’ve looked like merely a toy to most people — something that in no way could become huge. There were too many risks. Even if it grew, it still seemed would not be anything to write home about. That's why people who invest in toy-like products are usually family or friends of the founders. I wrote a blog post about this. https://medium.com/@sungmoon/the-next-big-thing-53ae218c4b6d https://medium.com/@sungmoon/the-next-big-thing-53ae218c4b6d

720 points by flylib 11y ago

These kinds of things are very easy to call out in hindsight, so, I do sympathize with the investors at least a bit. Based on a collection of screenshots I put together of Airbnb's homepage over time (using content from the Internet Archive) I wouldn't have invested either in early versions of Airbnb: http://www.startuptimelines.org/startup-timelines/airbnb/ http://www.startuptimelines.org/startup-timelines/airbnb/ Fred Wilson got his email from PG, I believe, in January 2009 and if you look at the Airbnb homepage then - the site is no where near as promising as it is now.

johnx123-up 11y ago
FWIW, in terms of design, I think, for their current site, they've got inspiration from Agriya script. Why Everyone At Airbnb Is A Pirate article explains why http://www.fastcompany.com/3013899/bottom-line/why-everyone-at-airbnb-is-a-pirate http://www.fastcompany.com/3013899/bottom-line/why-everyone-...
nether 11y ago
How did other VC funded startup pages look? I don't think it looks particularly dated compared to its peers. This was the era of "web 2.0" which seems daft today.
seeingfurther 11y ago
This post isn't meant to call out poor judgement in VCs, but rather to encourage all the struggling founders out there who receive these emails on a daily basis.
- at-fates-hands 11y ago
  This is how I read it too. As someone who spent more than a few years in sales, I was trained to take rejection as a positive. The more rejections you get, the closer you get to a sale. The only time you don't is when you stop looking for more clients. It's all a numbers game. If you look at rejection as something that gets you closer to success, you'll be encouraged, instead of discouraged when you get these types of letters.
  - fapjacks 11y ago
    Ah, this is very interesting. That is definitely one way to look at slogging through rejections: That you're one closer to a sale.
AgentConundrum 11y ago
Having not followed Airbnb very closely - I have no interest whatsoever in using the service either as a traveller or a host - your link clarified one thing that's always sort of bugged me. I had never understood how "air" fit with B&B. It wasn't until I saw the original screenshot that I understood that it's "AirB & B" rather than "Air B&B".
- BinaryIdiot 11y ago
  Wow I just realized I also had no idea. Interesting and it makes so much more sense now.
- mandeepj 11y ago
  full details here - https://www.quora.com/Where-did-Airbnb-get-its-name-What-does-the-name-mean https://www.quora.com/Where-did-Airbnb-get-its-name-What-doe...
  - coldpie 11y ago
    Thanks for the link. I've never heard of an inflatable mattress being called an "airbed," so I still didn't get it.
morgante 11y ago
I don't agree. The fundamental business model of Airbnb didn't change through all those homepage iterations—those were just redesigns of the exact same concept. In fact, for the time I think Airbnb's original designs were quite current.
- carrotleads 11y ago
  Yeah that is exactly what I thought as well.. its not like they pivoted... maybe the homepage pitch changes... All this episode should highlight is that founders should not think that VC's have some sort of wisdom when they reject... They follow only one wisdom and that is traction... if you got that and in huge spades, then everything can be explained in a wise manner.. and we will marvel at their wisdom.
- annnnd 11y ago
  Is it just me or do the early designs actually look better?
- cowsandmilk 11y ago
  Presentation matters. Airbnb's story even shows that. Taking professional photos of listings is what turned the company around.
hamhamed 11y ago
funny how they started by returning results based on event searches and today they stopped supporting it. Now there are startups trying to do that same thing: https://www.stay22.com/ https://www.stay22.com/ (disclaimer: my startup!)
sanmon3186 11y ago
Just curious to know how this could have been done better. Those who believe the design of 2008-09 Airbnb was not up to mark, mind explaining this to a guy with little UX design understanding.
shanev 11y ago
Investors aren't the only ones who missed out. I'm sure a lot of potential early employees did too based on the 2008 homepage design. I know I did. Joe asked me if I'd be interested in developing their iPhone app, but I rejected because I didn't see how they could take off when Couchsurfing was free. In retrospect I should have known they'd be successful no matter what they did. To this day Joe is the most passionate and charismatic person I've ever met. He was always into connecting people and building relationships. I first met him at Jelly, a coworking space he ran out of his San Francisco apartment. So great to see him achieving his mission at a large scale.
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jasode 11y ago
>I wouldn't have invested either in early versions of Airbnb: http://www.startuptimelines.org/startup-timelines/airbnb/ http://www.startuptimelines.org/startup-timelines/airbnb/ Fred Wilson got his email from PG, I believe, in January 2009 and if you look at the Airbnb homepage then - the site is no where near as promising as it is now. I disagree somewhat. I think that is hindsight bias to relate the website's 2008 designs to cause&effect of VC decisions. The April 2015 website designs looks "prettier" but as far as communicating to unknowing customers (and uninformed VCs) what Airbnb actually does, the "uglier" 2008 designs are actually better. Notice that the 2008 designs have icons/pictures of an actual "bed" and a "breakfast". It's concrete visual communication. But the 2015 photos instead, show "people" in what I call "aspirational lifestyle" poses. It's abstract visual communication. (And I just took another quick look at airbnb.com today July 13 2015 and now the home page shows photos of "destinations" overlayed with city names in prominent white font. So now the page design taps into the romanticisms of the Condé Nast Traveler. The visual abstractions continue.) I think it's fascinating the lifecycle of companies's visual style that transition from The Concrete --> The Abstract. The visuals including marketing, advertisements, and home webpage designs. The concrete approach has to show the actual product. The abstract does not. At this point, I think Airbnb can get away with abstract visuals because they are well-known enough now to not have to waste landing page pixels on an actual "bed" or "eggs & toast". That's what 7 years of penetrating the public consciousness allows you to do. These days, I would guess that the majority of visitors already know (by way of friends & family) what Airbnb does before they visit airbnb.com. Therefore, if the company is a startup nobody knows, they must use concrete visuals. If a company is established and successful, they have the luxury of being abstract. I don't think tomorrow's YC2016 unknown company should base their website's information design based on airbnb's 2015 website. Instead, look at their 2008 designs even though they are uglier. Other examples of companies doing abstract visuals: Nike's "Just Do It" commercials often do not highlight any shoes in obvious ways and instead show sweaty people running or playing.[1] (If one didn't know Nike was a shoe and sports apparel company, one might think that commercial was about karate lessons.) Viagra commercial don't show the actual pills but instead shows older couples holding hands walking the beach or a guy sailing a boat.[2] This is unlike many Tylenol pills commercials showing the actual pills.[3] Even in the tech world has examples. Anyone remember the old IBM OS/2 Warp commercials in 1990s? The entire commercial was showing people's faces looking at a computer screen (presumably of OS/2). The camera didn't show what they were looking at -- therefore you saw no GUI demostrations. The camera also didn't show the software box. It was just a bunch of reaction shots of people's faces showing astonishment ("wow!", "cool!", etc). [4] The abstract commmercials from Nike & IBM are not suitable for convincing investors who don't understand athletic shoes or operating system software. Likewise, the 2015 versions of airbnb.com showing abstract lifestyle photos are not useful for potential investors either. [1]https://www.youtube.com/watch?v=Pp5dZZBKTXQ https://www.youtube.com/watch?v=Pp5dZZBKTXQ [2]https://www.youtube.com/watch?v=y1ZqQ55T25c https://www.youtube.com/watch?v=y1ZqQ55T25c [3]https://www.youtube.com/watch?v=4LIYEC9mNqM https://www.youtube.com/watch?v=4LIYEC9mNqM [4]https://www.youtube.com/watch?v=G6YZbrhBhjQ https://www.youtube.com/watch?v=G6YZbrhBhjQ
mangeletti 11y ago
Firstly, what a great idea (startup timelines). FWIW, I love the wayback machine, and I probably use it 1-2 times per week. The thing I took away from your timeline of airbnb was the same thing I think successful people try to explain time and time again, and it's the same lesson that makes the investors passing up airbnb seem more like a minor, unavoidable incident. The lesson is that a business or idea isn't a success until a team works mega hard at making it a success, and even then it has a huge chance of failing. This lesson is made clear to me in part by the reminder that airbnb has been around since the first year after I learned to program, and that feels like an eternity ago. If I spent 3 years working on a brand with a good team and with VC backing, I'd expect to see some resemblance of success also, as long as the idea wasn't terrible. Hard work pays off, but it's easy to look back at these success stories as some sort of lottery winners.

e0m 11y ago

7 is out of what? How many VCs gave them offers for money, and how many did they take?

vlasev 11y ago
It says right in the very first line of the article: > On June 26, 2008, our friend Michael Seibel introduced us to 7 prominent investors in Silicon Valley. Therefore, the answer to your question is: in this particular encounter they talked to 7 VCs, got 5 NOs and 2 no-answer's.

tptacek 11y ago

How did they get such clear "No" answers? That list of rejections was very, very unlike my experience trying to raise VC, which was more like 7-10 VC firms giving meaningless "yes, soon!" responses until we gave up.

tekacs 11y ago
Perhaps because their rejections were seemingly policy-driven ('we don't handle/haven't had luck with this category') rather than qualitative? I've heard the same happen to friends attempting to seek investment in 'music' and 'gaming' businesses - clear rejections based upon their 'category'.
- curiousjorge 11y ago
  This is probably the safest way to reject someone seeing that 4 of them used the exact same response as well as your music business investors. I hear this line all the time. To be fair, I guess making huge returns is not their prime policy or maybe their investors have a policy against certain investments due to moral or some esoteric reasons.
  - tekacs 11y ago
    A common-enough rhetoric in discussion with folks from VCs does definitely seem to involve the 'areas they are currently interested in'. A sibling comment to mine bears this out slightly with the 'security is not our sweet spot' response. You cite esoterica, but perhaps investors just feel more comfortable with certain areas - or ones they have the in-house experience to evaluate properly - or that are easier for junior partners to sell to the folks higher-up?
    - curiousjorge 11y ago
      I don't know much about VC but I thought taking risks was the name of the game? Isn't that what "venture" in VC mean? I'd understand if this was Ontario Teachers Pension Fund or something like that where a large amount of capital had to move around to generate some sizable returns. Even these money managers are scrutinized for bad decisions. The whole 'not our area of focus' seems to be the same line mutual fund managers use during report card season by writing off bad picks and claiming they beat the market.

hyuuu 11y ago

I am surprised that they only got 7 rejections, I would expect a lot, lot more NOs

detaro 11y ago
7 rejections after a meeting with 7 potential investors, not 7 rejections overall

tomasien 11y ago

These rejections are a testament to why you shouldn't give up just because smart people give you a hard "no", but also why storytelling is so important. These investors clearly did not understand Airbnb, and I think the Airbnb guys would admit that's in large part because they did a bad job explaining it. Explaining why something that is small today could some day be huge is so hard.

zeroxfe 11y ago
I agree, storytelling is important. But your second sentence does not follow from the first.
- tomasien 11y ago
  The conclusion from putting the two together is "when you get hard nos from smart people, if you're still compelled by your mission, keep going and work on either changing your story or telling it better".
  - asuffield 11y ago
    I believe the GP was trying to say that while your first sentence sounds reasonable, your second one sounds surprising and needs some justifying.
    - tomasien 11y ago
      If that's the case, the backstory to Airbnb indicates to me that around this time they had still not adequately figured out how to tell their story in such a way where it seemed like a big deal. At the time I believe, it was about: - People having strangers stay on air beds in your homes, while you were there, and then serving them breakfast in the morning - It was ONLY targeted at conferences where people would become so desperate for space that they'd stay anywhere (that's how the company got started - big design conference in SF. Here you can see they were focusing on the DNC and RNC). This is a really implausible idea for one, a really small market (constrained by hosts but also conferences that fit the criteria) for two, etc. What the story became when they broke through was about turning the excess living inventory hundreds of millions of people have into a place for people to stay. This has benefits for both sides it turns out and is widely applicable and massively scalable. Those are really, really different stories. Like, startling different. But if you can't not only tell the second one but also show some evidence that it could be so, your stuck with the shitty first story. When they started seeing the behavior during YC that pointed them to the second story, they focused the company on it which caused it to grow, investors better understood the potential, and slowly over time it became trivially easy for them to raise money.

GuiA 11y ago

Much like tech hiring, investors prefer to optimize for false negative over false positives. Especially because the power dynamic is still skewed in their way, which allows them to say things like "call us back when you get to a series A" - none of the risk, all of the upside. Kind of like that girl who rejected me in high school but said "if in 10 years we both haven't found someone, maybe we can get together".

curiousjorge 11y ago
Yeah that one really irked me. Hey, call us when you are a billionaire and we'll talk about investing. Yeah I'll marry you when it's in the prenup. I'd immediately pull out my funds as an investor out if I found out the names of the people writing these rejection letters. It would also be bad for street cred. "hey these guys missed out on the deal of the century, who else did they reject?" 150k is like peanuts to these firms with millions of dollars to throw. Hell, I'd bought out of the money put options near expiry if it meant there was a slight chance it would have potentially unlimited returns.
- BadassFractal 11y ago
  Sure, except there are thousands of companies out there asking for that firm's 150k, each year. They can't spray and pray, they have to at least find a reason to believe their decision is based on sound logic, otherwise they might as well make themselves self-service.
  - curiousjorge 11y ago
    If there's an airbnb in there then I think it's worth betting more. 15 million spread across 100 startups, is that too much? I expect most to fail but the point is I have limited downside risk for unlimited return. the overdiversification argument is moot here because you are not optimizing for total portfolio return but maximizing your exposure to upside. Who says you have to do it all in one go? Keep moving and make bite sized bets but not being married to your ideas. Also how can you be sure that your sound logic isn't going to hurt you in the end like those guys writing rejection letters? I'm sure they have done,some introspection. And like that guy who said he's going to see nd me a business plan in an hour, I've yet to hear from. One clear distinction is that I am also investing in the person, and if they can't hold up their end or if they think it's an easy way to swindle a years salary they are fucked in the head. I'm here to make bets not run a fucking charity, excuse ma francais.

curiousjorge 11y ago

> for $150,000 you could have bought 10% of Airbnb. Ouch. Ego can get very expensive. Consider this, had they invested, Airbnb might not be where it is today.

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adamdavid 11y ago

Damn...wish I were there. Would have pitched $20k of my own money and maybe had my parents pitch another $10k, with a lawyer to sign-off on it. Nowadays, it's just crappy companies that are easy to invest in - garbage on kick starter, and pump and pumps on Wall St. for example - the good stuff requires connections.

Kiro 11y ago

> We were attempting to raise $150,000 at a $1.5M valuation. That means for $150,000 you could have bought 10% of Airbnb. This is completely off-topic but since the $150,000 is going back to the business, wouldn't that mean that the valuation becomes $1.65M? The word "bought" makes it sound like someone is taking the money and selling their share.

jeremyjh 11y ago
No. They were offering to sell 10% of the company for $150K. That values the entire company at 1.5MM.
- mikeryan 11y ago
  You're missing the nuance of the question. If Airbnb is worth 1.5 million before selling 10% for 150k then after the sale they are still worth 1.5M they were valued at before the sale, but also have an additional 150k in the bank which should add another 150k to their valuation. (ergo the pre/post money valuation thing linked above)
  - ridgeguy 11y ago
    But wait - You're leaving out the company's loss of 10% of its equity as part of the investment transaction. The company's equity was worth $1500K before the investment. After the investment, the company had $1350K of equity left because it sold 10% of itself, and it no longer owned that chunk of equity. However, it had $150K of cash that its equity investor paid for 10% of the company's equity. So $1350K of remaining equity + $150K cash = $1500K company value. Same as pre-investment valuation. It looks like the company's total value didn't change, it just traded 10% of its value for cash. Which is the point of selling equity - cash allows a company to pay for people and things. Equity doesn't.
    - mikeryan 11y ago
      But wait - You're leaving out the company's loss of 10% of its equity as part of the investment transaction. A "company" can't lose equity it never owned any to begin with. The equity was transferred from one party (usually the founders) to another entity in exchange for cash. After the investment, the company had $1350K of equity left because it sold 10% of itself, and it no longer owned that chunk of equity. This is completely wrong.

bambax 11y ago

> The other 2 did not reply. OT, but I applied to be a contract photographer for AirBnB a month ago and did not get a response either -- not "no", not "maybe later", not anything. I did get an automated email thanking me "for pressing send"; after that, zilch. So I guess it goes both ways.

hasenj 11y ago
When you become a world famous photographer, you can write about that in a blog post :)
petercooper 11y ago
That's ultimately the lesson IMHO. You gotta keep hustling and doing what you think is right but not get hung up about any particular connection or rung of the ladder.

mud_dauber 11y ago

Good lord, I needed to see this.

gargarplex 11y ago

This was when Airbnb was pre-YC

caltonji 11y ago

Marc Andreessen talked about passing on AirBnb's initial investment round at How to Start a Startup. It helps put these rejections in perspective: https://www.youtube.com/watch?v=uFX95HahaUs&t=29m11s https://www.youtube.com/watch?v=uFX95HahaUs&t=29m11s

localhost3000 11y ago

Saw some VC tweeting this link with the caption, "VC is hard." ...I think he missed the point of the article.

wutbrodo 11y ago
His point is entirely consistent with Brian's point. Brian's saying "consistent rejection doesn't mean you should give up" and the VC is saying "even consistent VC rejections can be wrong because VC is hard".

mikeryan 11y ago

An oldie from Fred Wilson where he calls himself out for missing on Airbnb. http://avc.com/2011/03/airbnb/ http://avc.com/2011/03/airbnb/

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ionwake 11y ago

If I was at the same stage as they were at this time. How would I have contacted these investors - or similar ones? I have no idea how to start the process of asking VCs for a small sum in return for a share of the company. I would really appreciate and answer. Thank you.

kevinmobrien 11y ago
The "traditional" answer is to identify the VCs you're interested in, and network your way into an introduction if you don't know them yourself. Accelerator programs can also be a way to become involved. Have a clear, clean pitch deck. Know your unique value proposition, understand your competition, be able to demonstrate that there's a market and that it's significant. Show traction, team, and ability to execute.

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onion2k 11y ago
I'm not sure turning down ABB is a sign of incompetence. It is with hindsight, but there was very little that showed there was a huge market waiting to be exploited prior to ABB. They were genuinely pioneering; they essentially invented the market. Also, there are thousands of deal turned down annually which end up being the right decision (for the VC at least) when the startup fails - all those would point to VCs actually making the right call most of the time. Someone getting it wrong, even if it means missing a unicorn of a deal, isn't necessarily incompetent.

datashovel 11y ago

I remember watching an investigative journalism piece that showed that professional traders on Wall Street can barely outperform a monkey. I think given these kinds of statistics I can't understand why there's not some public fund where average citizens can invest toward. That fund would run a lottery every year and accept 'x' # of companies depending on how much was invested the previous year. Each of those companies would (depending on current cash flow) provide a % of ownership to the fund. Noone tells them how to use the money. No investor has authority to interfere whatsoever. Of course I imagine there would be reporting requirements, and require certain levels of transparency into their books and such in order to create at least some hurdles to prevent people who are just out to scam the system from applying. Maintaining the status quo just perpetuates the "rich get richer" paradigm.

larrys 11y ago

This, in itself, means nothing. If you need to read things like this in order to understand that not everybody is going to love you or your idea and to help deal with rejection, most likely you are not be cut out to be an entrepreneur. Every investor has stories of ideas that they passed on that they shouldn't have (in retrospect of course) and every entrepreneur (or guy dating in high school) also knows of investors or dates that they felt made the wrong decision. Pushes all the right buttons, but keep in mind that those investors also rejected vastly more ideas that most likely never went anywhere. That was their take on airbnb at the time. With respects to Airbnb, Fred Wilson of USV passed on the opportunity as well and posted emails showing where Paul Graham personally spent quite a bit of time trying to convince him otherwise. [1] http://www.paulgraham.com/airbnb.html http://www.paulgraham.com/airbnb.html

anon3_ 11y ago

Ha. You know the same concept applies to talking to girls? I'll never forget the day I went out exclusively to meet a girl. I was rejected by maybe a hundred girls I approached. The worst one's were the ones that just stared at their phone, like I wasn't even human. I was tired. It was 8PM... around that. I go up and approach girl inside of a clothing store. Please God speak english. She opens up with perfect english, smiling. We went on a date right there. Huge confidence booster. Frankly, people are a complicated bunch. You don't understand their learned behaviors, position and internal politics. There's no way you could understand the whether a girl is grumpy, just broke up, open to meeting someone new until you come up to her. We need more posts like this. Not just for VC's, I'd like to see comeback stories for freelancers scoring gigs / job interviews. Good job OP

rodrigocoelho 11y ago

Reminds me of BVP's anti-portfolio: http://www.bvp.com/portfolio/antiportfolio http://www.bvp.com/portfolio/antiportfolio

simonebrunozzi 11y ago

For Brian: On Dec 13th, 2012, I wrote the following email to you, after having applied for a “Head of Community” position at AirBnB. I didn’t get any reply either. Note that I cannot claim I became the big success that AirBnB has after these “rejections”, but it still surprises me that you or your org didn’t even wanted to talk to a Technology Evangelist from AWS. I guess you did a similar type of mistake with me. "Hi Brian, I know you’re busy, therefore I’ll keep it short. My name is Simone, I work in San Francisco for Amazon Web Services, and I’m interested in becoming the Global Head of Community at Airbnb. I think I have what it takes to be successful in that role, and I’m a big fan of Airbnb. Let me know if we can discuss, or if you want more details. Have a great day,"

simonebrunozzi 11y ago
I'm wondering why the downvotes - can someone care to explain? I'm honestly curious on why.
- petercooper 11y ago
  Just my guess. You were sorta putting your situation on a par with investors missing out on investing in the early stages of a company now worth $24bn. That is to say, them not paying attention to you is equivalent to missing out on an absolutely mind boggling amazing opportunity (in hindsight). Now, you might truly be as awesome as that but people tend to vote down comments where people are blowing their own trumpets, for better or worse.
  - simonebrunozzi 11y ago
    And what about this sentence then? "Note that I cannot claim I became the big success that AirBnB has after these “rejections”"
    - MichaelGG 11y ago
      Why do you think they owe you a response? Your comment sorta sounds like you think you're something special, maybe that's why people downvoted?

mangeletti 11y ago

The only thing to be warned about here is the blowback effect. This is a form of confirmation bias, whereby the victim uses rejection as a means of confirmation.

bazillion 11y ago
I was curious to what he meant by the blowback effect, and so my googling eventually led me to The Backfire Effect[1] which is when "in the face of contradictory evidence, established beliefs do not change but actually get stronger". I don't really see that applying in the sense of obtaining venture capital, as it is well known that you aren't going to immediately walk in to an office and hand them a check for the valuation you asked for. It's going to take a bunch of both hard and soft rejections, but a person isn't usually going to be in that room pitching to these VCs if they don't already strongly believe that their startup is fundable. [1] http://rationalwiki.org/wiki/Backfire_effect http://rationalwiki.org/wiki/Backfire_effect
- mangeletti 11y ago
  Ah yes, I meant "backfire effect". This pertains to the conclusion (and thus the premise) of the blog post: "Next time you have an idea and it gets rejected, I want you to think of these emails." The message in my comment is, don't allow yourself to fall pray to the backfire effect when people reject your ideas (whether VC, colleagues, etc.). If people reject your idea, it might mean it's not a very valuable idea, as opposed to being an indication that you're on to something that's so radically new and different, etc.

patmcguire 11y ago

Made me really, really want to see the yes email.

sospep 11y ago

is this post the airBnb version of the godadday commercial? - https://www.youtube.com/watch?v=VIBfctISM9M https://www.youtube.com/watch?v=VIBfctISM9M

arikrak 11y ago

> Next time you have an idea and it gets rejected, I want you to think of this email. The winner of a lottery could go around telling people not give up buying lottery tickets...

bazillion 11y ago
I don't think that's quite applicable in this case, as getting a business funded is a far cry from winning the lottery -- plenty of people frequenting this site were able to obtain funding under similar circumstances (a lot of rejections amidst a couple yes's). The reason this is the exact opposite of winning the lottery, is that the lottery is the equivalent of saying, "Please, a higher power, change my life by granting me all that I want.", whereas someone getting their company funded is more akin to saying, "I want to take full responsibility for the failures and successes of my own life, and to even become responsible for the livelihood of others.". In short, they are worlds apart as far as mentality goes. Regardless of the success of the company after the funding, going forward with a company in the face of such utter rejection by those who the author viewed as "smart people" takes a mentality that is shared by pretty much all of those who have achieved similar success.
- vacri 11y ago
  arikrak is saying that it's "this startup became a billion-dollar concern" that's winning the lottery, not the funding step. The funding step is analagous to buying the lottery ticket. In clearer words, it's confirmation bias: there are thousands of ideas and startups pursuing them. Most fail, some succeed, a rare few become AirBnB gorillas.
- curiousjorge 11y ago
  Or maybe the "smart people" are exactly that and that's as far as they will go as we've seen throughout history when smart people get together decisions become more about maintaining ones ego rather than actual results. Taleb terms so called smart people as "empty suits". 50 cent is a successful venture capitalist, but do people picture him first when they think smart people?
11y ago

amelius 11y ago

Airbnb is an example of a company that is nothing more than just a brand, because anybody can build a booking website in a matter of a few weeks. So, this is just gambling. I'm not sure of what interest that would be here, but that is of course a personal opinion.

gargarplex 11y ago
I have a client who needs a booking website built in NYC. Competitor to Airbnb, targeting high-end rentals.
vlasev 11y ago
> nothing more than just a brand I think that's quite the understatement. But then, one could easily say this about most big brands, no? Brand happens to be really really important.
nsgi 11y ago
It's also a two-sided market. A new competitor would need to solve the chicken-and-egg problem. The argument about it being easy to clone could be applied to almost any website.
humbertomn 11y ago
Well, building that brand was part of the work, which you call "gambling". The technical side clearly can build innovation, but that's not even close all you need to have a successful startup. You suggest "building the website in a few weeks", so then you should measure how long it will take you to have people paying to use your site and scaling this globally.
prostoalex 11y ago
> Airbnb is an example of a company that is nothing more than just a brand, because anybody can build a booking website in a matter of a few weeks. Many people have, and some (Roomorama, FlipKey) are reasonably successful. Heck, there's entire sub-sector of vacation home rentals (HomeAway, VayCayHero) that has publicly traded companies operating in it. The problem with two-side marketplace is the trust. Bait-and-switch and similar scams have plagued marketplaces like CraigsList. You arrive at a place, and it's not what the photos look like. You make a reservation, and are told at the last minute that it got "flooded" a night before, and now the host gives you an option to switch to an inferior place or pay up more for a better-looking option. You arrive and find out the place is not for rent, and the photos have been taken by some scammer who thrives on taking small deposits and just repurposes same photos across multiple sites. Then it degrades into horrors like this one http://www.dailymail.co.uk/news/article-1205794/Rape-horror-tourist-used-couchsurfing-website-aimed-travellers.html http://www.dailymail.co.uk/news/article-1205794/Rape-horror-... Building a trust network and keeping a reasonably clean two-side marketplace is very hard, and is a major asset.

thomasrossi 11y ago

refusal happens in life, nothing new? But at least most of that email had a clear reason why, some also gave advice. I think they were lucky to have such responses.

cabinpark 11y ago

Now show me the e-mails from investors of the hundreds of start-ups that get rejected and fail.

hauget 11y ago

Reminds me of Stephen King's rejection slips: "By the time I was fourteen the nail in my wall would no longer support the weight of the rejection slips impaled upon it. I replaced the nail with a spike and went on writing.” Like Guy Kawasaki once said, "Don´t Let The Bozos Grind You Down".

nandemo 11y ago
I think "bozo" is too harsh. It's hard to predict what books will be bestsellers and what startups will reach $1B valuation. Arguably, traditional publishers and VCs have to say "no" most of the time. Maybe Kawasaki's quip had a context that made it more palatable, though.
lukaslalinsky 11y ago
With Stephen King (or any book author) it's a little different. It's not like they get rejected and keep selling that one book they just wrote. Most authors write bad books when they are starting, they get rejected and they continue to write more books, usually better books.
- hauget 11y ago
  "It's not like they get rejected and keep selling that one book they just wrote." (1) just because you're selling doesn't mean you're making profit. (2) Airbnb wasn't profitable when they were getting rejected, so in a sense "they kept writing". Hell, they even sold cereal boxes to stay afloat before Ycombinator picked them up! https://www.airbnb.com/obamaos https://www.airbnb.com/obamaos

robg 11y ago

Wish he showed the names.

shinamee 11y ago

It's really hard to tell the success of an idea and I think one investor mentioned in the email that they don't understand the market so it would make it hard to nurture such products. They simply cannot invest in all ideas, just because Brian got lucky doesn't makes it applies to all startups

ageofwant 11y ago

Survival bias, much ? https://en.wikipedia.org/wiki/Survivorship_bias https://en.wikipedia.org/wiki/Survivorship_bias

smil 11y ago

This is evidence that: Investors and VCs are not smart/do not have enough information/experience to make smart decisions generally The only way to escape working for non-smart people (bosses, VCs) is to bootstrap

RawInfoSec 11y ago

Every investment opportunity has risk, and many possible outcomes. There will always be investors who gained. There will always be investors who missed a chance to gain. Alternatively, there could be investors who lost, or those who dodged the bullet. This one had gains and missed opportunity. No one lost anything except time reading a post that appears to be 'prodding the losers' when there weren't any. In fact, some of the investors probably made more elsewhere in something closer to their realm, so it can't readily be said that an opportunity was missed.

pbreit 11y ago

Even in 2008, was this a reasonable way to try and raise $150k? I would think that level of investment should/would be procured from friends & family, not cold-ish intros to angels/VCs?

caseyf7 11y ago

"It's not in one of our prime 5 markets...you would be better without us...but Hey call us when you're doing your series A". This ranks just below my favorite answer: "We love that you have 1M users, but we need to see 10M before an A round. (Month passes). Oh, really 10M users that's great but we like to see 50m before doing A rounds now. Come back later!" Of course, you won't need this chump change fund's money when you reach that point.

trymas 11y ago

Sorry, but this looks like humble-brag, because everybody knows what happened in retrospect. Those VCs, probably can give CEO of ABB dozens of examples, how they rejected some 'promising' startups which have failed, and a few which they accepted and made them nice cash. Also to this day ABB to me looks like Couch-surfing for money, unless you get full apartment. And usually only advantage you get versus hotel is that you have a kitchen and/or washing machine. IMHO, there are lucky people who own apartments near city center, and are collect month's worth of rent from 4-7 night stays. That's how ABB looks to me after I tried it.

zekevermillion 11y ago

It looked like an awesome team, but investors didn't see the opportunity. I read that one fund (I think USV) took the miss as a lesson not to base investment decisions on whether their partners would use a particular service. The consuming proclivities of 50-year-old millionaires not being indicative of a larger market. Seems terribly sloppy as an investor (or prospective employee, for that matter) to be influenced by such a personal bias. But maybe the founders didn't fully expect such an amazing success, either?

ghaff 11y ago
>Seems terribly sloppy as an investor (or prospective employee, for that matter) to be influenced by such a personal bias. It is but, on the other hand, it would be equally sloppy to decide to fund an idea that you think seems pretty ridiculous and couldn't imagine using in a million years on the grounds that someone will find it appealing. With AirBnB, the real trick was that there was apparently (though still to be proven long-term) a business opportunity in the interstices of couch-surfing, hotels, B&Bs, and traditional vacation rentals that has mostly managed to skirt regulatory/legal/contract issues.
hodwik 11y ago
In general you have to use your own life experiences to make investments. It's nice to think that you could put yourself in someone else's shoes well enough to make stock purchases based on what you think they will want, but investors learn very quickly that that doesn't actually work. "Buy what you know." It means there are great opportunities for people who are a minority in the investment world -- like ladies. Look at ETSY stock right now. It's insanely cheap I believe (at 1.771B valuation). Despite being cultishly popular with 20-something women, who will soon be entering the demographic that spends the most, it's been crashing through the floor. A male-led investment world is not putting their money there. Ask any young lady what they think of Etsy and you'll see why that's dumb. In 2008, when Starbucks was priced at $3.42 a share, asking any woman what business they think will grow in popularity would have elicited the reply of "Starbucks, duh", but investors didn't see the opportunity. In 2009, Lululemon was priced at $2.25 a share. It's a good thing for minority investors. They just need to get in the buying market, and take some risks.

kriro 11y ago

It's obviously easy to critique in hindsight but I think it's interesting that a theme of the rejections is "not our type of marked". It seems like the investors are somewhat conservative in sticking to what they know which is a little disappointing (I like the response that the investors can't really help because they don't know much about the market). That suggests that you'll get filtered out pretty quickly on variables like market type which seems pretty unfortunate.

peeters 11y ago
Keep in mind that this can also be code for "we didn't get a good vibe from you, but since it's hard to explain intangibles, we'll say it's not our type of market." Investors also aren't necessarily above hand waving to spare feelings.

sagivo 11y ago

Yes, follow your dream. but don't follow too hard that you loose all your money and savings because "the airbnb guys got rejected too". sometimes it's good to be realistic and understand that if you get rejected all the times maybe it means you're in the wrong direction. posts like that will encourage people to keep hoping and might causing them damage by not being connected to reality.

sungmoon 11y ago

Investors who missed out on great products aren’t to be sneered at. Indeed, Airbnb of year 2008 would’ve looked like merely a toy to most people — something that in no way could become huge. There were too many risks. Even if it grew, it still seemed would not be anything to write home about. That's why people who invest in toy-like products are usually family or friends of the founders. I wrote a blog post about this. https://medium.com/@sungmoon/the-next-big-thing-53ae218c4b6d https://medium.com/@sungmoon/the-next-big-thing-53ae218c4b6d