Fred Wilson tells the story in this extraordinary post of how his investment company, Union Square Ventures, missed the opportunity to invest in Airbnb, one of my favourite peer-to-peers. At the time, the founders had ideas but the service was still a marketplace for air mattresses on people's floors. It was, he says, the classic investor's mistake of focusing too much on what the business were doing at the time and "not enough on what they could do, would do, and did do".
Paul Graham (with Fred's permission) provides an interesting accession to the story with a fascinating string of emails between him and Fred, as one investor attempts to persuade another investor of the value of investing in one of their portfolio start-ups.
It's not quite a Beatles/Decca moment (at least not yet) but it can't be easy seeing a missed investment opportunity go on to gain significant traction. Last week Airbnb passed one million nights booked. I can't say I'm surprised - it's a great idea well executed. But as is often the case, it wasn't an easy path. In the early days, the founders of Airbnb bulk bought a supply of generic cheerios and made up boxes of Obama O's, each a numbered edition on the top of each box, and sold them for $40 each at the Democratic convention in Denver at which Obama was nominated, to generate seed capital and keep their startup alive.
There's a box of Obama O's in the Union Square Ventures conference room. The cereal box is a reminder to back great entrepreneurs regardless of what they pitch (as long as its in the Union Square investment universe). Says Fred: "Whenever someone tells me that they can't figure out how to raise the first $25,000 they need to get their company started I stand up, walk over to the cereal box, and tell this story. It is a story of pure unadulterated hustle. And I love it."
As Paul Graham says, VCs miss good startups all the time, but it's extraordinarily rare for one to talk about it publicly until long after the occasion. I think humility in business is a powerful thing. It speaks of a willingness to admit fallability and a desire to learn. Which is why it is so absurd that there is so little of it.