"One of the things with outliers is the ideas often seem completely nuts up front."
Marc Andreessen thought this couchsurfing app was crazy. Someone's going to get murdered!
A Startup Not Even a Mother Could Love
Brian Chesky and Joe Gebbia, the Airbnb co-founders, pitched just about every investor in Silicon Valley, including Marc Andreessen. But Andreessen found the concept absurd and dismissed it.
"We passed. We didn't even meet with them."
Airbnb is now valued at $75 billion. Dismissing Chesky and Gebbia cost Andreessen billions.
Andreessen tells this incredible story in a vintage interview at Y Combinator. The host: none other than Sam Altman.
Andreessen wasn't the only person who thought Airbnb was silly. Chesky's own mother didn't believe in it.
The Pitch Meeting from Hell
And forget about investors! Chesky recounts one hilarious meeting on a recent episode of This Week in Startups:
"…Joe and I went to University Avenue. We met an investor, who I won't name. He orders a strawberry smoothie. He then sits down, drinking his smoothie. Never picked his head up.
It was my first interaction with an investor. I thought, 'Maybe this is what they all do.'
He goes 'Uh huh, uh huh, uh huh.' And then within 10 minutes he, like, leaves. And I thought, like, he had to park his car. We haven't seen him since, though."
But, What If It Works?
So often, the best companies have a terrible flaw.
Uber sounds crazy too — get into some stranger's car? Fat chance. And isn't this against the law anyway?
Instead of just checking boxes, I try to ask myself "What if it works?"
If Airbnb works, it could replace hotels. If Uber works, transportation changes forever.
If they fail, you know what happens: you lose your money! But a good early stage investor makes small bets, so that's not a problem.
In our business, it's all about the upside. And despite its flaws, Airbnb had a heck of a lot of upside.
Andreessen's Second Chance
The story ends happily for Chesky and Gebbia — and Andreessen too! Marc and his firm, a16z, led a growth round of Airbnb at a $1B valuation.
He could've invested at a valuation of just a few million early on. But having a piece of this iconic company was worth paying up for.
That's one great thing about our business: there's always a chance to make good.
While I mostly invest at seed, I do the occasional Series A if I missed the seed round. There's nothing more important than being in the best companies.
Wrap-Up
The best startups often seem like a godawful idea. If we go about just checking boxes, we'll pass on them.
As angels and VC's, our job is to think about what could go right. If a startup has a real shot at changing things, let's write that check!
Would you have invested in Airbnb? Why or why not?
Leave a comment and let us know!
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