One of the things my partner Brad says is “we’ve seen this movie before”. It’s a cliche in a business full of cliches. I could go on and on on that subject, but I’ll blog that another day.
“We’ve seen this movie” before means we’ve lived through this issue before and are smarter because of it.
But it can also mean, “i don’t want to make that mistake again”. VCs are notorious about not wanting to get involved in something that didn’t work for them once before. It could be an industry, a technology, an entrepeneur, a geographic region, or any number of things.
It’s tricky business to figure out whether a bad investment should be a lesson that you learn and try to get it right the next time or whether it should be a stop sign, a line you don’t cross again.
I am thinking about this because I read my friend Ron’s comment on my Execution Matters post. Ron’s firm and a couple of other top tier VC firms lost money on an identical business to AuctionDrop.
The first company, called EZsale, did the exact same thing as AuctionDrop. They had a retail partner (MailBoxes Etc) just like AuctionDrop has in UPS. They had similar economics. But EZsale didn’t work as an investment. Ron wonders if AuctionDrop will meet with the same fate.
I wonder too. I sure hope the investors in AuctionDrop talked to Ron and his colleagues before they invested in AuctionDrop. That’s the best way I know to deal with stuff like this.