Investor Stories 432. The Pain of Passing: Missed Bets on Uber, DoorDash, and Great Founders Who Proved Them Wrong (Shapiro, York, Dash)

**Nick Moran** (0:00)
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**SPEAKER_2** (0:24)
Welcome to the podcast about Venture Capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is The Full Ratchet.

**Nick Moran** (0:40)
Welcome back to TFR. On today's special segment, we asked guests to discuss their antiportfolio, a startup investment that they passed on. Here's the segment called Why I Passed.

**Nick Moran** (0:56)
On today's special segment, we have Craig Shapiro of Collaborative Fund. Craig, can you tell us a story about a startup that you passed on? Sure.

**Craig Shapiro** (1:07)
I mean, I feel silly because I feel like there's lots and lots of people who probably have shared this one. But Dave Shen, who was one of the earliest employees at Yahoo! And he was early, this is, you know, 15 plus years ago, but he was involved with Beta Works in New York.
He showed me Uber at their seed round. They were raising $750K at a $4 million valuation. And I passed. So that was obviously, you know, a bad decision. But I passed because to me, it felt like it was solving a problem for wealthy people. You know, I was like, oh, you know, only wealthy people take private cars. Like, I'm a, you know, I'm a, at the time there was an app, I don't know if you remember called Taxi Magic in San Francisco. And I was like, I'm happy with Taxi Magic. Like, why do we need, you know, black cars? So, you know, that's probably my, that's an easy kind of anti-portfolio.

**Nick Moran** (2:10)
It's a tough one.

**Craig Shapiro** (2:11)
Yeah.

**Nick Moran** (2:17)
On today's special segment, we have Kyle York of York IE. Can you tell us a story about a startup that you passed on?

**Kyle York** (2:24)
I passed on this company called AdHoc back in 2015, 2016 It was an ad tech play, and I just had an angel investment go south in another ad tech play, so it's just like cold on it. But I loved, loved, loved the founder. Just a few months ago, that company rebranded. They were an ad tech play, doing automated ad delivery, but they actually established and pivoted to be a SaaS platform for the flooring industry. And that company rebranded as Broadloom and just recently had a great exit to a firm called Syncly. It was one of these ones where I knew the founder would figure it out, but I just was cold to the industry. So he circled back around, one of our clients now, actually, on advisory, but they circled back around and were basically like, hey, you know, you were right. The reason you passed, you didn't like the space, you thought it was overheated. I didn't think of it till now, but followed you over the years, and we kind of pivoted and picked the vertical and owned it. It led to this, right? And it kind of was like, man, but I still wish I was on that cap table. It felt good to hear the story, but I would have loved to have been on the cap table.

**Nick Moran** (3:24)
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**Nick Moran** (4:04)
Tell us a story about a startup that you passed on.

**Somesh Dash** (4:06)
When I started, I used to think it was more painful when you pick the wrong company, but the greatest thing about Venture Capital is that it really celebrates taking risk and understands when you fail. That's part of the process.
What other economy, environment can it be where someone can fail in startup one and immediately get funded for startup two and actually get higher caliber people, higher valuation? It's kind of unbelievable if you think about it. The anti-portfolio is probably what keeps me up the most at night because there's very few truly transformative companies and founders. They're, you know, Andy Ratcliffe, my former professor at Stanford, you know, you still always say there's typically 5 to 10 every year. And so it's rare to find those 5 to 10 and even get a chance to meet them. And then when you have an opportunity, they want to work with you and you say, no, it really is painful because you've done a lot of the work to mutually vet each other. The one that comes to mind for me because I just admire the founder in the company so much and I'm a big user of it is DoorDash. I am a huge fan of Tony and the amazing team there is co-founders, executive team. I had the opportunity to meet Tony early. Our paths crossed both from the kind of Berkeley, Stanford, GSB and then when you start in DoorDash. There was a round specifically though where it was not obvious. DoorDash was going through a pretty heavy investment period. At one point, I think their gross margins were actually negative. And I had a chance to spend two weeks with Tony and really dig into his vision. And I just couldn't foot, I think, the current economics with kind of what we needed to believe to get to the valuation that they ultimately got from another firm. But that one sticks up because Tony, back to my earlier point, is one of those founders who have seen evolve and mature and is one of the all-time great leaders in Silicon Valley. And I just think his ceiling is almost astronomical. He's going to just keep going and build an unbelievable global business. And I'm just, it would have been so fun and wonderful to be part of that journey and profitable.