How to Recover after Passing up the Beatles
I invited Scott Freiman to dinner for a few reasons, but mostly because he gets paid to talk about rock ‘n’ roll. Scott, the CEO of a tech startup called Qwire (an intentional misspelling of choir), taught a class at Yale University on the music of the Beatles and lectures widelyon the topic. During a dinner with some 15 tech founders and investors, I asked Scott about the story behind Decca Records turning down the Beatles (an epic miss!) and subsequently overpaying to sign another young rock group.
Scott explained that an executive at Decca, who had stayed in touch with Beatles’ guitarist George Harrison, asked George what other hot young acts the label should be considering. George mentioned a young blues group, admonishing: “You blew it with the Beatles, don’t miss these guys.” That group was, of course, the Rolling Stones. The Stones went on to record more than a dozen records with Decca, including Beggars Banquet and Let It Bleed, which are often classed among the 100 greatest rock albums of all time.
Why does this anecdote belong in a column about startups and venture capital? Because it’s all about deal flow. The beautiful universality of Decca transforming humiliating loss into lucrative victory is that sticking with the one that got away works.
The lesson is the same, whether for investors who pass on the startup that subsequently ascends or startup founders who missed hiring the right executive. The story doesn’t need to end there. If there was some connection and some opportunity, maintain that relationship and swallow that pride.
As an angel investor, I’ve been handed some pretty interesting leads by startup founders I’ve unsuccessfully pursued, and I think that’s because I’ve refused to view my failures as being binary. The case is never closed, and there’s often a way to turn my own misfire into some broader opportunity set. Why didn’t George Harrison urge the Beatles’ own label, Parlophone to sign the Stones? Perhaps he did, but perhaps they never turned to Harrison and asked: “Hey George, can you introduce us to some really talented friends?” These stories are never truly this straight a path; there’s typically more effort and vision involved.
