In 2004, Jeremy Levine, a partner at Bessemer Venture Partners, spent a weekend at a corporate retreat actively avoiding a relentless Harvard student. The student had repeatedly tried to pitch him a social media company he had co-founded just a few months prior. Finally, Levine snapped and gave him some brutal advice: “Kid, haven't you heard of Friendster? Move on. It's over!”
The student was Eduardo Saverin. And the company? That would be Facebook.
BVP is one of the oldest venture capital firms in the country with some great companies in its portfolio, including LinkedIn, Yelp and Pinterest. Yet one of BVP’s biggest points of pride is its “anti-portfolio” -- the investments the firm decided to pass on. In addition to Facebook, Apple (“outrageously expensive”) and eBay (“Stamps? Coins? Comic books? You’ve GOT to be kidding”) are also on the list.
See the following cringe-worthy missed deals that show how even the most experienced investors sometimes make gigantic mistakes.
Chris Sacca: The billionaire venture capitalist passed on Airbnb because renting a room in a house while owners were still home would be “too dangerous.”
Fred Wilson: When Airbnb’s founders came to visit Union Square Ventures, VC Fred Wilson just couldn’t get behind the idea of “air mattresses on the living room floor.” He says, “We focused too much on what they were doing at the time and not enough on what they could do.”
OVP Venture Partners: OVP had a handshake term sheet with the Amazon CEO to invest $2 million for 20% of the company at a $10 million post-money value. At the last minute, VC John Doerr offered $8 million for 20% of the company at a $40 million post-money value. OVP’s handshake deal fell through. “To get even, we buy all our books at Barnes & Noble,” OVP’s website reads. “We don’t think Amazon has noticed.”
Bessemer Venture Partners: BVP's Neill Brownstein called it "outrageously expensive” after having the chance to invest in pre-IPO secondary stock at at $60 million valuation.
Bessemer Venture Partners: BVP’s David Cowan’s thoughts on eBay? "Stamps? Coins? Comic books? You've GOT to be kidding," he said. "No-brainer pass."
Bessemer Venture Partners: After Facebook co-founder Eduardo Saverin cornered BVP’s Jeremy Levine at a corporate retreat with his pitch, Levine responded with “Kid, haven't you heard of Friendster? Move on. It's over!”
Bessemer Venture Partners: David Cowan’s college friend rented her garage to Google’s co-founders for their first year. When she tried to introduce them to Cowan, he wasn’t too thrilled about a student-founded search engine. He responded with, “How can I get out of this house without going anywhere near your garage?”
Chris Sacca: After Sacca heard Nick Woodman’s GoPro pitch, he quickly dismissed it by saying there was “no way GoPro could compete with China/Taiwan/Korea.”
Chris Sacca: After getting the “perfect email” from Pinterest founder Ben Silbermann, Sacca followed up … two years later.
Kevin Rose: After Ben Silbermann showed Rose the platform, he offered him an angel investment opportunity in Pinterest at a $5 million valuation. Rose said, “At the time I thought, wow, that’s really high.”
Bessemer Venture Partners: David Cowan passed on PayPal’s Series A round because of its rookie team and the potential for a “regulatory nightmare.”
Ron Conway: The VC passed on Salesforce because “the $30 million valuation seemed too high at the time!”
Chris Sacca: He passed on an invitation to meet with Snapchat’s founders because he “wasn’t sure it would evolve past dick pics.”
Josh Elman: When asked about the biggest startup he passed on and why, Greylock Partners’ Josh Elman said, “Snapchat. I just wrote the answer of why, but it already disappeared.”
OVP Venture Partners: When Howard Shultz walked into the OVP office in the late 1980s with his idea to charge $2 for coffee (when you could buy it for 25 cents at the time), the partners had the following reaction: “Of course, you listen politely, and then fall off your chair laughing when he leaves.”
Bessemer Venture Partners: Byron Deeter put a deposit down on a Tesla but passed on the negative margin company saying, “It’s a win-win. I get a great car and some other VC pays for it!”
Ben Lerer: Though Ben Lerer of Lerer Ventures never formally passed on Uber, he didn’t pursue the opportunity when he should have. “I passed because I didn't trust my gut,” he says. “I thought of reasons why not to do a deal rather than just trusting my intuition."
John Greathouse: The VC passed on Uber’s seed round and refused to listen to founder Travis Kalanick’s pitch. “Note to my loving wife: The next time a friend knocks me over the head with a billion-dollar opportunity, I’m going to listen. Promise,” he says.