Turning $10,000 Into $100,000,000

It was 2009 and I was on my way to meet with Yosi Amran. The last time we met, we played speed chess in his lawyer’s office while he negotiated his exit from the company he took public. I pulled into the parking lot of the restaurant in a shiny, black limousine, with my own personal driver. The cool ride cost less than $20. “Listen John,” Yosi said to me. “You can’t come in here and tell me how your start up is starving for cash when you pull up to our meeting in a limo. I’m not an idiot. You are wasting money”. “No, No, No.” I squealed back at him. “It’s not more expensive than a cab! You should look at investing in this company yourself. It’s awesome.” The next morning I sat with Tom Hastings and my nephew, Shawn Fanning, at a little breakfast cafe in San Francisco. “Hey, did you check out that company?” Shawn asked me. “Oh my god, yes. I used it to get to meetings yesterday. It’s awesome. How do you know them?” “Oh, I am friends with Garrett Camp. He founded stumbleupon. We were talking one day about how you should be able to order a ride using your smart phone, and here it is. They are looking for capital. What do you think?” “Well, honestly, I don’t know if this is going to be a great financial investment, but I love this service. I absolutely hate the cab industry, so I really want this company to exist. We should give them as much as we can.” “Wow, ok! I will double the amount then. What about you, Tom? You want to throw in $50k or so?” “No. You guys are nuts. The regulators will kill them. The unions will kill them. The cab driver associations will kill them. City governments will kill them. This company is going to die 100 different ways; you might as well throw your money away.” “Ok, I guess he’s out,” replied Shawn. By now, you have probably figured out that this company was Uber. If you invested $10,000 when we invested in Uber at that breakfast your stake would be over $100 million dollars today, valued at the last round of financing. If you are instead like Tom and did not invest with us, you would be kicking yourself about that 100 million that got away. The first thing that can be learned from this experience is that Tom was right. Along Uber’s path to success, everyone did come after them. However, their popular support was so high that they were able to overcome attacks by the establishment. With any new, successful start up that threatens an established industry, you can be sure they are coming. Next, the founder matters. Shawn knew Garrett Camp was a talented, driven entrepreneur who knew the drill. Sometimes the things you learn from your less successful attempts are the key lessons that drive your future success. Next, trust your gut. When I worked at Fidelity, Peter Lynch once told me “You, too can be a great investor. Just go through the course of your everyday life, find the products or services that resonate with you, and invest in them.” Lastly, a large market is critical. If you can imagine that product or service being used by nearly every person in the world, that’s when you have the potential for enormous returns.

About: John Fanning

John Fanning, Founding Chairman and CEO of Napster, has been a pioneer in internet technologies for over 25 years. Since 1994, he has founded numerous successful Internet ventures, including napster, NetGames, NetMovies, and Netcapital. John attended Boston College and has a background in finance from his work at Fidelity Investments in Boston, MA.

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Turning $10,000 Into $100,000,000

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About: John Fanning

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