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Deals Missed

ovp.com

152 pointsjkuria32 comments

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Reminds me of BVP's hilarious Anti-Portfolio[1].

[1]: http://www.bvp.com/portfolio/antiportfolio

What does it mean if your anti-portfolio looks far better than your actual portfolio?:-)

There are 1000s of startups on the anti-portfolio list. Only the winners are shown.

Investing in startups is hard.

Is it even better than random?

This anti-portfolio is so impressive it seems to suggest a strategy of investing a small amount in all but the stupidest rather than even trying to pick winners

Yes. Being better than random is a particularly low bar to pass.

Is it so hard to believe? We still put hundreds of billions into mutual funds that aren't better than random

If you had to keep all the failures you'd rejected on the anti-books... actually, I thought this was an asinine comment but there might actually be a lesson here. I ain't no fancy big city investin' type, but wouldn't one of the fundamental principles be to find the point where this your portfolio and your anti-portfolio are balanced?

My co-founder and I were sitting in Coupa cafe two years ago with a couple of VCs who told us that the Youtube co-founders had pitched them right from the same booth we were were sitting at. "Did you invest in Youtube?", I asked, to which they said, "no - the idea seemed preposterous at the time".

"Well", I said, smiling, "you'll probably think our idea is just as preposterous, and saying you didn't take the jump like it's a badge of honor probably means your firm won't work for us".

I passed on Google in 2000 or 2001 (some eng or ops role), since I was doing my own ultimately doomed startup. I wouldn't consider it a badge of honor (although it is cool that they asked me; I was working on containerized Datacenter stuff for the next phase of the startup)

YouTube has never been profitable. Google only owns it, because they can afford to, and because they believe it's the future of how people will consume video and TV (and I think they are right).

yeah, but someone made a lot of money. http://news.cnet.com/8301-31001_3-10360384-261.html

Correct, but as you perfectly know, VCs are not about building companies that turn profits; they are about exiting with more than they initially invested, regardless if someone will pay "more" because they company is really worth it, or because its just popular in SV in this exact moment.

If you dig into YouTube long and deep enough, you will see it being "too crooked to fail" kind of purchase (most Goog board was against it; one of the owners is a family of a big VC name in Valley, etc).

Precisely. YouTube was, is, and probably always will be a terrible investment.

Sadly OVP, a Pacific Northwest institution, is winding down after 30 years. http://www.xconomy.com/seattle/2012/10/11/exclusive-ovp-vent...

Good thing too:

> [OVP] funds have returned -16.7 percent, -18.6 percent, and -11.9 percent, respectively, according to the most recent data posted online by the Oregon Public Employees Retirement Fund

VCs get many deals wrong. A deal missed is hardly a mistake. It's the deals won that are interesting to watch. If your chosen idea/team/model is unable to reach profitability even after you provided a $100m cash infusion - now that's something to be embarrassed about.

I think it's nice for entrepreneurs to read these once in a while to remind themselves that VCs aren't perfect and that they are capable of accepting their mistakes. But in reading this article, PG's words about how ideas that seem flat-out crazy can have potential to succeed in a big way (Starbucks is the one in this article that rung a bell) is really evident.

They're not very popular on HN, but there's a great sit-down discussion between Mark Suster and Steve Blank from a while back in which they touch on this topic, among others:

"Let me know the last time (traditional) venture capital led an innovation. [...] As an industry, venture capital is now being disrupted by new entrants rather than the existing players. Everybody from Dave McClure to Andreessen were outsiders who were entrepreneurs themselves." (http://youtu.be/BUD2gxU5LPM - quote is at 49:30)

VCs are fast followers who are all racing to find hot ideas that have already started to take off, but it seems that most of them are no better at foreseeing and driving real innovation than even any of us.

OP if you're looking to raise $ from OVP, I'd suggest you keep looking.

I am aware they shut down (someone was lamenting how VC firms in the Seattle area are shutting down, the other being Frazier technologies) and was curious why so I went to their site. If you miss deals like those, it is inevitable that you have to shut down :)

Anyways, I also found this article: http://www.xconomy.com/seattle/2012/10/11/exclusive-ovp-vent...

Interesting article in xconomy. I hadn't realized that all three of their final funds had negative IRRs. That is a pretty challenging place to be.

Wtf is Seattle so weak for VC? It has a lot of rich people, mostly who got rich from tech. Ignition is nice (but do most of their investments in the Bay Area now, wtf), and I've never talked to Madrona but they seem to be the other one. If I were going to do a 30-50mm global fund, I'd probably base it in Seattle. Great for security, cloud, etc., with a great school (UW), successful local companies, etc.

Perhaps the folks who got rich from MSFT or AMZN simply never wanted to think about tech again.

Plenty of tech other than those two -- F5, McCaw, etc.

Sure, but based on what little I know about the Seattle tech scene, it seems like a common goal is to make a lot of money and then get out of the game entirely.

Contrast with Bay Area, where many people seem to love the game and aspire to be angel investors themselves one day.

This is just conjecture, there's likely some other reason.

Yeah, I get that from some Seattle people -- which seems really weird to me. If I didn't care about tech, I'd just do something like banking where returns are more predictable and to some extent easier. If I did care about tech (and do), I'd not want to leave just because I made a lot of money.

    The Internet boom was just beginning. Amazon had sales of $4M a year. 
    We had a handshake on a term sheet with the CEO to put $2M into Amazon 
    for 20% of the company (a $10M post money value). At the eleventh hour, 
    some guy named John Doerr flew up and offered $8M going in for 20% of 
    the company (a $40M post money value). Handshake? What handshake?

    To get even, we buy all our books at Barnes & Noble. We don’t think 
    Amazon has noticed.

There seems to be so much capital floating around that a policy similar to YC but broader might be the best be for a well funded VC company - call it Pre-Angel.

Put in 30,000 dollars for 1 % of a company and option of ten. Startups must be incorporated, and have a one page business plan. Aim to get 50/50 balance of college grads and middle aged contractors. 30,000 is a year of ramen or a quarter or half year for a middle aged contractor. Long enough to get off the ground.

Then you have funded 10,000 startups for a 300 million fund. Rinse after six months and drop 3/4 of them. Then repeat for the remaining 3000. After that you have a stable of maybe 1000 startups now actually talk to them.

Is this just a dumb idea? I mean picking winners and crazy ideas is so hard why not ignore it ?

Maybe if they'd taken just one of those deals, it would have been worth more than their entire portfolio.

Nicely honest of them. A lot of people would not want their missed deals made public, much less put it on their website.

Where's the google story? Originally they pitched it in terms of a digital library ...

hilarious. "To get even... Oh, to heck with it, getting even isn't working."

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