September 2021: the 35x I passed on
I passed on a startup investment in 2016. They were building something a bit esoteric, but I understood its value. The market needed what they had, and I expected that market to grow. I passed because I thought their product was useful, but not technically difficult to build. My comparison was an internal tool we had built that wasn’t far off from the current product. After comparing the product with the company’s valuation, I deemed it a mismatch and passed. It took me about a year to recognize two errors: 1) the technical difficulty of an early-stage product might not matter if customers don’t want to build and maintain their own versions, and 2) early-stage companies are rarely “worth” their valuations at the time of investment. While I recognized my errors years ago, it took until this week to understand just how wrong I was. The company just exited for 35x the valuation I deemed too high.
November 2021: the product that sucked, until it didn’t
I was reminded this week of a startup I declined to invest in. It was 2017 and they hadn’t launched a product yet. In 2019, I finally tried their product and it sucked. Now the product doesn’t suck anymore. In July of this year they were valued at $1.6 billion. Oops. The lesson? Things can get better when people keep working at them. Crypto has a lot of smart people working to make it better. I believe it’s going to get a lot better.
January 2023: my first write-off
I made a small investment in MilkRun in May 2021 through an online syndicate. MilkRun was an online farmers market led by passionate founder Julia Niiro, whose TEDx talk How to save farmers from extinction I enjoyed watching a year or so earlier. I had passed on investing the prior year because I couldn’t try the service in Chicago. But this time, living in Austin, I could be a customer. Their branding was great, as was their product. Sadly they recently ran out of money and weren’t able to raise more. The investment is now my first official “zero” since I started supporting startups in 2016. The most surprising part is that I had such a long (and for sure lucky) streak without write-offs. While it’s a disappointing outcome, I remain grateful to the team that tried their best to build a meaningful company.