Editor’s note: originally published at Fredo Pareto.

Investors regret passing on Airbnb

In March 2011, Fred Wilson wrote about his regret for passing on AirBnB. The very next day, Paul Graham wrote about how rare this type of confession was for investors, to divulge their “anti-portfolio,” the ones that got away. That same day, the Wall Street Journal (and other national publications) picked up the story, too, and even included “the one that got away” in the article’s title.


Regret is part and parcel of VC investing

Every quarter or so, some confession grabs headlines when an investor decides to publicize which startups he/she regrets passing on. I think folks eat this kind of confession up, because it humanizes the 2,000 or so VC gatekeepers. Also, founders in particular probably appreciate the “I told you so” theme, insofar at it’s like a salve to soothe all of the “nos” we’ve ever gotten. We probably celebrate, even if unconsciously, when one of our own proves one of these gatekeepers wrong. This, of course, is non-sense. It’s no different than hero-worshiping a guy who goes on a lucky run on the craps table. The guy, in truth, deserves neither your praise nor your “I told you so.” It’s simply a numbers game, and the odds are ever against you getting it right. VCs will miss sometimes by saying “no” and miss more often by saying “yes.” This is the inevitable fate of VC investing. VC regret is more the result of a “yes” than a “no.” So simmer down, peanut gallery.

Airbnb founder publishes seven emailed “nos”

Four years after Fred Wilson’s confession, AirBnB founder, Brian Chesky, made a similar confession, except his perspective was the rejected founder. He published seven emails from prominent investors who had passed on AirBnB early on. He does not attribute any of the seven emails to any particular investor, but I wonder if among those replies were “nos” from Fred Wilson or Chris Sacca (who also passed). The same month as Chesky’s confession, the Guardian got in on the fun with this video confession from several UK-based investors. 

It’s not just a US thing

It seems that startup investors all over the world prefer to not talk about their misses, and, even of the few investors who eventually do, no one seems to do it in advance of the bet being settled. It’s sort of like the difference, in Texas Hold ‘Em poker, between showing your cards before the river and only showing them a couple of days after you’ve left the casino. It’s way more interesting to know who bet which way before we know the outcome. That’s drama. That’s also ballsy. I’ve been told that investors have large egos (really? I haven’t noticed). I wonder if the reason why investors don’t publicly call their shot before the swing is more strategy–not wanting to give competing firms inside information–or precaution–not wanting to look foolish unless/until, years later, they decide to come clean–because, as we know, most never come clean. And years later, there is no strategic advantage to keeping silent. So that leaves precaution.


I have a crazy idea

What if every time a founder got a “no” from an investor, he immediately tweeted something like this:

Fred Wilson turned us down. It was a great opportunity to connect w/ fantastic people of Union Square. Excited to turn the page.

It would certainly make the whole fundraising regime less opaque.

To see this crazy idea in action, I decided to test it myself, the last time an investor said no to CellBreaker. Turns out, he was not pissed (see my ensuing dialogue with that investor).

Would investors object?

Now, I imagine that someone from the investment side might object to founders doing this, but what I am truly interested to understand is what the basis of that objection would be. Why the fear of transparency? I will make this easy. I will even pave the way for the objection by beginning the argument for “strategic” reasons. As CEO of CellBreaker, there is a lot of info I simply cannot responsibly share publicly. Should an investor’s “no” be similarly privileged? If so, why?