Confessions of a VC: why I passed on Uber’s seed round

Did I pass on Uber’s seed round? No. It’s worse than that. I did not even bother to listening to Travis’ pitch, even though I was repeatedly offered the opportunity. I then passed on Uber’s A Round as well, which I thought was valued too high, in light of the company’s progress.

Too bad, as the initial funding round has increased over 4,000 times in value, making a $250,000 investment worth more than $1,100,000,000. Nope, that’s not a typo. Two hundred and fifty thousand would have netted my firm more than one billion dollars.

VCs love to talk about their successes, but seldom publicly acknowledge their mistakes. However, passing on a killer investment is not the worst error an investor can make. It is far more detrimental to one’s returns to make investments in companies which fail to return capital. A VC has done their job when their funds include enough great companies to generate an industry-leading outcome.

Thus, while it is painful for a great investment to pass you by, the pain is wistful, not acute.

How Uber started, early tweets!

The billion dollar email

Although Uber never pitched Rincon Venture Partners, we share a very good mutual friend with Travis Kalanick, Uber’s founder and CEO. Our mutual friend mentioned to me over breakfast during the late summer of 2010 that Uber was raising a seed funding round. At that moment, I could have been one of Travis’ first pitches, if I had been curious to learn more.

In between mouthfuls of home-fried potatoes, I recall telling my friend (paraphrasing from memory – his and mine), “It might work in San Francisco, Boulder and Austin, but I don’t see it expanding beyond a few small cities with strong tech communities. If they try to move into Philly, New York or Boston, they’re going to get their throats slashed.” Note: I am not disclosing my friend’s identity. He is now a Senior Executive at Uber, although back in 2010 he had no formal affiliation with the company.

A few months later, on December 30th, 2010, my friend appended the following text to a lengthy, non-Uber oriented email:

“not sure if you guys are aware of uber (ubercab.com). Essentially they are a service that turns the downtime of town car/limo services into cab service. i thought it was a great idea given how crappy cabs are and it seems to be getting traction. One of my old *** [company name redacted] colleagues is the CEO. probably not up your alley, but thought I’d mention it.”

My email response was characteristically brilliant, stating:

*** [name redacted] – I think you have mentioned this one before, not sure. Sounds familiar.

What I missed about Uber

Listen to trusted sources and take the freakin’ meeting