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The Full Ratchet

Investor Stories 432. The Pain of Passing: Missed Bets on Uber, DoorDash, and Great Founders Who Proved Them Wrong (Shapiro, York, Dash)

5 min episode · 2 min read
·

Episode

5 min

Read time

2 min

Topics

Personal Finance, Investing, Startups

AI-Generated Summary

Key Takeaways

  • Founder quality over metrics: Kyle York passed on AdHoc due to ad tech concerns, but founder pivoted to flooring SaaS platform Broadloom and achieved successful exit, proving founder adaptability matters more than initial market choice.
  • Market timing blindness: Craig Shapiro rejected Uber seed round at four million valuation for seven hundred fifty thousand dollars because he viewed it as solving wealthy people's problems, missing the platform's mass market potential.
  • Anti-portfolio pain: Passing on transformative companies hurts more than picking wrong investments because only five to ten truly exceptional founders emerge yearly, making missed opportunities with vetted founders especially costly to venture returns.

What It Covers

Three venture capitalists share painful stories of passing on major investments including Uber at four million valuation and DoorDash during negative margin phase.

Key Questions Answered

  • Founder quality over metrics: Kyle York passed on AdHoc due to ad tech concerns, but founder pivoted to flooring SaaS platform Broadloom and achieved successful exit, proving founder adaptability matters more than initial market choice.
  • Market timing blindness: Craig Shapiro rejected Uber seed round at four million valuation for seven hundred fifty thousand dollars because he viewed it as solving wealthy people's problems, missing the platform's mass market potential.
  • Anti-portfolio pain: Passing on transformative companies hurts more than picking wrong investments because only five to ten truly exceptional founders emerge yearly, making missed opportunities with vetted founders especially costly to venture returns.

Notable Moment

DoorDash operated with negative gross margins during early fundraising rounds, requiring investors to believe in vision over current economics to justify the valuation being offered.

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Episode Transcript

This episode of TFR is brought to you by Ramp, the spend management platform we use here at TFR. They're offering listeners a $150 just to take a demo. We've never had an offer quite like this. Claim your $150 before this offer is gone at our partner link, ramp.com/partner/tfr. And this episode of TFR is brought to you by the American Arbitration Association, where smart startups and investors turn to for fast, efficient, and cost effective dispute resolution. Visit adr.org/tfr to learn more. Welcome to the podcast about venture capital where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is the full ratchet. Welcome Welcome back to TFR. On today's special segment, we ask guests to discuss their anti portfolio, a start up investment that they passed on. Here's the segment called why I passed. On today's special segment, we have Craig Shapiro of Collaborative Fund. Craig, can you tell us a story about a startup that you passed on? Sure. I I mean, I feel silly because I feel like there's lots and lots of people who who probably have shared this one, but Dave Shen, who was one of the earliest employees at Yahoo, and he was this is, you know, fifteen plus years ago, but he was involved with Beta Works in New York. He showed me Uber at their seed round. They were raising $7.50 ks at a $4,000,000 valuation and I passed. And so that was obviously, you know, a bad decision, but I passed because, to me, it felt like it was solving a problem for wealthy people. You know, I was like, Oh, you know, only wealthy people take private cars. Like, I'm a, you know, I'm a At the time, there was an app, I don't know if you remember, called Taxi Magic, in in San Francisco. And I was like, I'm I'm happy with Taxi Magic. Like, why why do we need, you know, black cars? So anyhow, that's probably my that's an easy kind of anti portfolio. That's a tough one. Yeah. On today's special segment, we have Kyle York of York IE. Can you tell us a story about a startup that you passed on? I passed on this company called AdHoc, back in 2015, 2016. It was an ad tech play, and I just had an angel investment go south in another ad tech play, so I just, like, called on it. But I loved, loved, loved the founder. Just a few months ago, that company rebranded. They were an ad tech play doing automated ad delivery, but they actually established and pivoted to be a SaaS platform for the flooring industry. And that company rebranded as Broadloom and just recently had a great exit to a firm called Syncly. It was one of these ones where I knew the founder would figure it out, but I just was called to the industry. So he …

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