The other night, Matt and I were having drinks with one of our investors at the King Cole Bar at the St. Regis.
Somehow, we got onto the topic of regrets.
As we sipped our cocktails, each of us spun a tale or two about a lost love, or a job that could have changed our lives.
But the subject we really got hooked on was investment regrets.
And before long, I realized that all our investing regrets had one surprising thing in common.
So today, I’m going to share this common element with you.
My hope is that you can avoid it—and most importantly, profit from it...
Matt’s Biggest Regret
Simply put, all our regrets had to do with an investment we could have made—but chose not to.
For example, in the winter of 2012, Matt had an opportunity to invest in Facebook when it was still private.
This was one of the fastest-growing Internet companies of its time, and it was slated to go public later that year.
At the time, however, Matt thought the price seemed steep. The company was valued at $50 billion.
Considering that Facebook was slated to go public at a similar valuation, Matt decided to pass.
And he still regrets it to this day.
You see, Facebook went public at a valuation of about $100 billion—so he would’ve doubled his money in 90 days...
And earned another 600% profits over the next few years.
Howard’s Biggest Regret
One of our investors and business partners is a man we’ve told you about before: Howard Lindzon.
You can go ahead and Google him. He’s one of the most successful and experienced early-stage investors in the country today.
While many investors wait until a company gains traction before they invest, Howard likes investing in start-ups when they’re just getting off the ground.
That’s exactly what he did with start-ups like BuddyMedia and LifeLock—and when those companies became successful, he ended up banking profits of 10,000% and 13,000%, respectively.
So Howard didn’t have too many investing regrets... but he remembers this one well:
Several years ago, a new travel start-up was just getting off the ground. Its goal was to help hotels fill up their empty rooms. Basically it offered consumers deep discounts to high-quality hotels if they were willing to book at the last minute.
The company is called HotelTonight.
As Howard sipped his drink at the King Cole Bar, a wistful look came over his face. “I just didn’t get it,” he said. “Hotels.com or kayak.com seemed to be doing the same thing. So I passed on the deal.”
He regrets it to this day.
You see, HotelTonight became a tremendous success story.
At the time Howard had the opportunity to invest, the company was valued at just a few millions dollars.
Today, Bloomberg reports that the company does $25 million a month in bookings, and might be on track for a $2 billion to $3 billion IPO next year.
In other words, on this one deal, Howard missed out on profits of 40,000% to 60,000%.
My Biggest Regret
For me, my biggest regret goes back to 2013.
That’s when I had the chance to invest in a tiny HR start-up called Zenefits.
The company had a seasoned founder, and already had traction and revenue.
We used their software here at Crowdability, and we liked it. But I felt that bigger, more old-fashioned enterprises wouldn’t feel comfortable using an Internet-based HR solution…
So I passed on the investment.
At the time, Zenefits was valued at $9 million.
Today, it’s valued at close to $2 billion.
In other words, had I invested, every $1,000 I put in would’ve been worth almost a quarter of a million dollars today.
The One Thing They All Have in Common
And here’s what’s most interesting about all of these regrets:
Not a single one of them involved an investment we actually made.
Sure, we’ve all made bad investments over the years. Investments that declined in value, or even went to zero.
That happens. It’s part of the game.
But as long as you’re a disciplined investor—as long as you pay attention to your asset allocation, and never invest too much into any one deal—situations like that will never leave you broke or feeling regretful.
At the end of the day, it seems the only investment regrets we have involve the investments we didn’t make.