Alexis Ohanian, Reddit’s cofounder, recently shared insights into his most successful investment and some notable financial missteps during a podcast interview with venture capitalist Harry Stebbings. His candid reflections offer a valuable look into the highs and lows of investing.
Best Investment: Ethereum
Ohanian’s standout investment is his early bet on Ethereum. Investing $10,000 in Ethereum’s pre-token sale proved to be a highly lucrative move. At the time of the podcast, the value of his Ethereum holdings had surged to $17.1 million. This early investment in the cryptocurrency, which has become the second-largest by market capitalization, exemplifies the potential rewards of investing in emerging technologies.
Personal Touch: Bitcoin Sale
Ohanian also discussed his decision to sell a significant amount of Bitcoin, which he used for personal milestones. The sale was motivated by romantic reasons, specifically purchasing an engagement and wedding ring for his future wife, tennis champion Serena Williams. While the sale was a good financial move, it was driven by personal values rather than investment strategy.
Biggest Regret: Clubhouse
Despite his success with Ethereum, Ohanian has faced investment regrets. One of his notable disappointments is Clubhouse, the social audio app that experienced a meteoric rise during the COVID-19 pandemic. Ohanian initially invested in Clubhouse during its Series A round and later increased his stake during a high-valuation funding round. However, as the pandemic receded and social interactions returned to normal, Clubhouse’s user base and app downloads significantly declined. This shift led to a decrease in the app’s valuation and highlighted the risks associated with investing in hype-driven startups.
Another Major Flop: Zenefits
Ohanian’s other major investment regret involves TriNet Zenefits, an online HR platform. Zenefits quickly became a Silicon Valley unicorn, raising over $500 million and achieving a valuation of $4.5 billion. However, the company’s fortunes took a turn for the worse amid various controversies and operational issues. By 2016, Fidelity marked down Zenefits’ value by up to 38%, which negatively impacted Ohanian’s investment and the associated special purpose vehicle (SPV) he had set up to manage it.
Lessons Learned
Ohanian’s experiences underline several key investment lessons. The success with Ethereum highlights the potential for significant returns when investing early in promising technologies. Conversely, the struggles with Clubhouse and Zenefits illustrate the inherent risks in backing startups that may not maintain their initial momentum or face unforeseen challenges.
Market Trends and Investor Sentiment
These investment experiences also reflect broader market trends and investor sentiment. The volatility in tech and startup investments can be influenced by changing market conditions, evolving consumer preferences, and broader economic factors. Ohanian’s reflections serve as a reminder of the importance of due diligence and adaptability in the investment landscape.
Alexis Ohanian’s investment journey offers valuable insights into the rewards and pitfalls of venture investing. While his early bet on Ethereum stands as a testament to the potential gains from timely investments, his experiences with Clubhouse and Zenefits highlight the unpredictable nature of investing in high-growth startups. These stories underscore the importance of strategic decision-making and risk management in the pursuit of financial success.