Many investors missed out on Uber’s early rounds because they didn’t “get it” and forgot to bet on the jockey, not the horse.
Investors said Uber would never succeed outside of San Francisco, Los Angeles, and NYC. Now, they eat their words. Uber recently launched in Kenya, Africa and is in nearly 500 cities in over 75 countries. The investors didn’t underestimate the idea, they underestimated the founder. Travis Kalanick didn’t let barriers get in his way and said F-U to anyone who stood in his way.
The same happened with Brian Chesky, co-founder of Airbnb. Chesky received seven rejection letters from seven prominent VCs when Airbnb tried to raise $150,000 in exchange for 10% of the company. Airbnb is valued at $30 billion at the time of this writing. That $150,000 investment would have been worth $3 billion today. Chesky even published the rejection letters as motivation for other founders.
Too many VCs bet on ideas, when they should be betting on the founder. If the founder is a bulldozer, he or she can make almost any idea work.
Invest in bulldozers.
Mark Cuban passed on investing in Uber early. So did Gary Vaynerchuk, who passed on the angel round. Twice. “I didn’t get Uber enough,” said Vaynerchuk. Had he bet on the jockey instead of the horse, he could have had 5% of Uber for just $200,000 in 2010. That 5% would have been worth $3.4 billion today at Uber’s current valuation of $66 billion.
Kalanick succeeded because he didn’t let bullsh*t red tape stop him. A city said he couldn’t operate there? He did it anyway and said “so sue me.” Airbnb’s explosive growth is partially due to similar moxie: the company faces lawsuits regularly from entrenched interests that try to protect their own paychecks at the cost of innovation. That hasn’t stopped them from elbowing their way into more than 34,000 cities and 190 countries.
That bulldozer mentality wins. Most simply don’t have the cojones.
You have to have the willingness to let bad things happen and the confidence you’ll be able to solve them.
Most founders get to a 20-foot tall brick wall and turn around and go home. Bulldozers keep going. That wall isn’t the end of the road, it’s simply something to overcome. And when, on their path, they arrive at a 50-foot thick steel wall with a swamp of horse manure in front of it ― as most founders eventually will ― they soup-up the engine in their bulldozer and charge with a running start. If they bounce off, they install sticky tracks and scale the wall. They’re getting over the wall, or they’re going to die trying.
There are very, very few individuals out there who will stop at nothing to accomplish their goal. You’re probably not one of them, which is why it’s hard to believe what they are capable of. But when you come across one of them like Kalanick or Chesky or Elon Musk, don’t underestimate them. They will go the distance where others haven’t had the courage to reach.
Note: some of the numbers in this article do not factor for dilution.