It looked like an awesome team, but investors didn't see the opportunity. I read that one fund (I think USV) took the miss as a lesson not to base investment decisions on whether their partners would use a particular service. The consuming proclivities of 50-year-old millionaires not being indicative of a larger market. Seems terribly sloppy as an investor (or prospective employee, for that matter) to be influenced by such a personal bias. But maybe the founders didn't fully expect such an amazing success, either?
In general you have to use your own life experiences to make investments.
It's nice to think that you could put yourself in someone else's shoes well enough to make stock purchases based on what you think they will want, but investors learn very quickly that that doesn't actually work. "Buy what you know."
It means there are great opportunities for people who are a minority in the investment world -- like ladies.
Look at ETSY stock right now. It's insanely cheap I believe (at 1.771B valuation). Despite being cultishly popular with 20-something women, who will soon be entering the demographic that spends the most, it's been crashing through the floor. A male-led investment world is not putting their money there. Ask any young lady what they think of Etsy and you'll see why that's dumb.
In 2008, when Starbucks was priced at $3.42 a share, asking any woman what business they think will grow in popularity would have elicited the reply of "Starbucks, duh", but investors didn't see the opportunity. In 2009, Lululemon was priced at $2.25 a share.
It's a good thing for minority investors. They just need to get in the buying market, and take some risks.
Buy what you know is certainly a good heuristic. If I were a partner at a fund that invests in Internet-enabled networks of engaged users, I would be very alarmed if companies like AirBnB and Etsy started to drift outside the scope of "what I know". Also, what I know probably shouldn't be so limiting as what I use. For example, one of Warren Buffet's best investments was Blue Chip Stamp -- a discount coupon book publisher. I doubt Warren Buffet ever licked a discount stamp (other than as a stunt). But he does understand businesses that generate float. He is the master of investing float.
>Seems terribly sloppy as an investor (or prospective employee, for that matter) to be influenced by such a personal bias.
It is but, on the other hand, it would be equally sloppy to decide to fund an idea that you think seems pretty ridiculous and couldn't imagine using in a million years on the grounds that someone will find it appealing. With AirBnB, the real trick was that there was apparently (though still to be proven long-term) a business opportunity in the interstices of couch-surfing, hotels, B&Bs, and traditional vacation rentals that has mostly managed to skirt regulatory/legal/contract issues.
