paigecraig0231

Pure speculation here: But objectively I think my money was perceived as "dumb money" and YC had a great rep even back then. When you compare the offers the YC money is clearly the best deal and smarter move.

You being up a great point around the potential of "killing" a great company and this is important. I was always sensitive to their position as I'd been there 5 years earlier when I bootstrapped my company.

I always negotiated in good faith with them and spent time to understand their needs. Look at the budgets: When you look at that budget with handwritten notes that's my writing - I was concerned they weren't raising enough and I asked them to take more money to get more runway AND i agree to increase the valuation to account for the dilution.

As far as the "six weeks goes" that was from the first day we met until the day I had my lawyers at Greenberg Traurig negotiate docs with their counsel at Fenwick. Part of the delay was my own stupidity; I had my lawyers drafting custom docs (which I paid for completely out of pocket and didn't push into the closing costs). Brian has rightly sent me standard YC docs to use but I was too ignorant to even know what those docs were. And then I spent two weeks negotiating terms and final valuation.

The other complication is Brian wanted me to meet with another angel he wanted to bring into the round (I left this out of the post as I didn't want to embarrass this angel; we actually became pretty right friends after all this). So this other guy and I met up a couple times before he decided he wouldn't do the deal and that delayed us as well.

But I was always direct on my commitment to Brian and once we agreed to terms I immediately had my lawyers move to closing quickly.

I just had a similar situation with a company we committed to fund this year. We were coleading the deal with another VC; this other VC ended up in a protracted (2 months) negotiation of docs. We (Arena) couldn't fund our half of the deal until docs were finalized with this other VC. So the founder calls me up because he's now 3 weeks away from missing payroll and may have to slow down user acq that's going great and He's obviously worried that if this seed round fails the company is dead. And I told him not to stress - I offered him a $250k personal loan to his company at the lowest simple interest rate and he didn't have to secure it or offer me any warrants or incentives. I peronsally funded his company two days later and we're all good.

My point being - I do understand the consequences of being a bad investor because I always try to imagine myself in the founders shoes. I was in that spot years ago and I know how vulnerable it can feel. Even though I wasn't a well educated investor when I was doing the Airbnb deal I never took any action that would have harmed their potential.

It's not weird at all. Brian talked to a ton of people over many months. He was raising many months before I met him. And then I came in. I then spent too long negotiating but then we finally worked out a deal end of Sep and then my lawyers and their lawyers negotiated the agreement Sep 26th and then we did our dinner. But then YC smartly moved in after this closing dinner and booted me out. Funny enough Justin Kan and I ended up in Vegas a few years later at a tech party at Caesars hotel and had a good laugh about it. He remembered me as the crazy Marine who was writing a huge check into Airbnb before they elbowed me out. This isn't unusual - they probably googled me at the time (back then all of the results would have been stories about iraq, Syria, afghanistan, Pakistan operations; black operations and crazy shit). They probably thought they were protecting Airbnb and keeping dumb money out of the cap table. It's quite common for good investors to strongly advise you not to take dumb money and I agree with the practice.

And that goes back to one of the lessons from my post. I realized that for founders and investors to take me seriously and not lose deals I had to prove myself, build a positive brand by helping founders and getting smarter about this new world I was operating in.

If your emails had anything hurtful, embarrassing, proprietary or damaging to yourself or your company I wouldn't publish them.

In this case these emails and documents make ME look like a novice investor and speak highly of the Airbnb founders. I have no problem exposing my own failures and mistakes but I'd never expose yours unless you were cool with it.

This event was a very important lesson for me and made me a better investor. Most people commenting here are thinking short-term; but the consequence of this Airbnb deal was critical to my development. I learned to move fast and invested a great deal of time and energy into becoming a better investor.

exactly! I spent three weeks haggling - I should have figures out terms in 24 hours or less or simply given them a check and let it ride into future terms.

See my reply to beambot below. TLDR : my fault not Airbnb

As to posting details of the deal I've held off on this for years as I never wanted to hurt them and I don't see any way these early numbers are going to impact Airbnb. The specific point was to (1) demonstrate that the metrics many investors look for at this stage are meaningless and reinforce that founders working in the right Cardinal direction is what's important (at least to me).

The other details (events, feature list, budget) are documents we were brainstorming on and I wanted to see (1) how they think and (2) how fast they think. The point about the bugs, intros, etc isn't to demonstrate that I added meaningful value. Instead these docs demonstrate tte quality of the founders and their focus and planning.

As for "bossing" people around you're missing the context of this interaction. If you and I are sitting down figuring out your budget, user acquisition and product am I bossing you around when I ask to see results? I'll admit I'm demanding but i certainly don't believe in bossing founders around. If I have to boss you around then I'm walking away from the deal - I like to back founders who's own internal demands and expectations are higher than my own.

Either way appreciate all the thoughts here. I've waited seven years to start discussing startups / funding etc and you'll find that this and future posts will often focus on founder qualities.

You guys are missing the point. AirBnB didn't screw me over - this wa any first deal and I screwed around debating stupid points. I was disappointed they didn't do the deal but this whole post is about lessons learned. And one of the biggest ones was move fast once you have conviction. At the time of this Airbnb event I was just learning. I thought an investor had to worry about all these little details, negotiate tons of clauses, etc. but post Airbnb I realized all that detail was stupid. After that event I learned to move fast.

Example: When I met Peter (Contextlogic now known as Wish) I wrote him a physical check within a day (pretty sure it was his first) as I planned to take whatever terms he ended up negotiating. And then I immediately started brining in other investors, introductions to engineers, etc

So don't take this post as a "Brian screwed me" / the screwing was all self inflicted and a very important lesson