They probably shook hands after a meeting, as one always does. That is not a "handshake deal". Airbnb probably had similarly positive meetings with dozens of investors. All of them probably talked about doing the deal soon.
He's known for being bold and writing checks on a first meeting. Why didn't he write a check to Airbnb after months of haggling? YC, or any other investor, was free to come along and close the deal at any moment. The way an investor claims a deal is with their checkbook (or a signed term sheet). He learned his lesson and realizes his mistake. Airbnb did nothing wrong.
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.
Do you honestly think if you hadn't haggled for 3 weeks that:
a) They wouldn't have turned around for advice from YC
b) YC deciding to come over the top once hearing the news
I agree with your assessment that YC was probably trying to keep dumb money out of the cap table but I also hypothesize they originally underestimated the team and once they saw they were actually able to put a TS together that was proof enough their original calculus was wrong and they circled back around. I don't think you were getting this deal either way.
By his story, he spent some time getting to know them but then haggled terms once he'd decided to invest. The way I read the story, his regrets where that he spent that long haggling once he'd decided they were go. Had he closed then, he'd have closed 3-4 weeks before YC, and he would still have had his partners in to spread the risk.
but at the end of the day, the haggling ended, and terms were agreed upon (it seems). Handshakes done.
I think the comments have gone off on a tangent focusing on whether you getting cut out of the deal was ethical (whereas the blog post was just a flat out interesting story to read about). But at least the way your post reads, you definitely got screwed out of the deal. Sure, nothing is done until things are signed, but as many investors have told me "my reputation is everything". Seems like it should go both ways. This certainly doesn't reflect positively on the founders.
Nothing's done until the papers are signed. This goes for all things in life, too, from investing to renting apartments. If you don't have a signed piece of paper, you have no deal.
One of the main selling points of YC is that they promise not to legal obnoxious things. Saying "nothing's done until the papers are signed" is completely missing the point.
is this comment a non-sequitur or am I missing something? The deal we're talking about was between the author of the piece and Airbnb. YC may have made the offer to fund the whole round, but they're not the ones who made the decision to pull out between shaking hands and signing the paper.
In any case, I apparently place too high a premium on paperwork. In another comment thread on this story, someone pointed out that the remedy for breach of contract is to unwind the wrong party's situation to the position they were in before the contract was signed. In this case, until the check has been deposited and spent, it's trivial to tear up the paperwork.
He's known for being bold and writing checks on a first meeting. Why didn't he write a check to Airbnb after months of haggling? YC, or any other investor, was free to come along and close the deal at any moment. The way an investor claims a deal is with their checkbook (or a signed term sheet). He learned his lesson and realizes his mistake. Airbnb did nothing wrong.