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Bessemer Venture Partners' Anti-Portfolio

101 points by yarapavan 2y ago

deleted 2y ago
[deleted]
amadeuspagel 2y ago
So good. Some of my favorites: > David Cowan’s college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to “these two really smart Stanford students writing a search engine.” Students? A new search engine? In the most important moment ever for Bessemer’s anti-portfolio, Cowan asked her, “How can I get out of this house without going anywhere near your garage?” > Jeremy Levine spent a weekend at a corporate retreat in the summer of 2004 dodging persistent Harvard undergrad Eduardo Saverin’s rabid pitch. Finally, cornered in a lunch line, Jeremy delivered some sage advice, “Kid, haven’t you heard of Friendster? Move on. It’s over!”
- opminion 2y ago
  Thank you. I had missed that the grey icons are hyperlinks with interesting stories.
  - MrsPeaches 2y ago
    Ebay: “Stamps? Coins? Comic books? You’ve GOT to be kidding,” thought David Cowan. “No-brainer pass.”
  - deleted 2y ago
    [deleted]
- makerdiety 2y ago
  It was possible to write a search engine in the year 2000? Or any software at all for that matter? And writing a software application is much different from writing a mere academic research paper. By being harder and more technical. It, writing software, is engineering actually. Writing software is engineering, backed by computer science knowledge. So, the point is, that has there been a growth of resources and capabilities—opportunities—for motivated individuals to write software apps that are much stronger and capable than their 1990s predecessors? Common sense says "Yes, of course!" But a comprehensive look says no one who is social nor someone who is educated is doing anything like what Sergey and Larry have done for their pre-Google generation. No one is writing anything, no one is building, and least of all is anyone who does the college education thing building anything remotely close to the next Facebook or Google. There are no engineers today. Just drones doing financially compensated development. No passion for building. Instead just doing what is told to do and for to be done.
  - ethbr1 2y ago
    That's because it's easier and more profitable to get acquired by Facebook, Google, et al. Reversing that (so it's easier and more profitable to compete and outgrow them) is step 1.
    - disgruntledphd2 2y ago
      And that's why VCs and tech in general should be in favour of strong antitrust and competition law.
  - lovethevoid 2y ago
    They could build because they were left alone and had to prove themselves over time. Now? The split second you have any sort of potential of profitability, you’re surrounded by vultures before you had a chance to grow. You’re bought out, brand changed, and the behemoths get even bigger. Despite all the fuss over passion, even Sergey and Larry would have abandoned it all for the type of money being thrown around in recent years.
lokimedes 2y ago
Wonderful idea. It strikes me that anyone in the selection / allocation / decision business becomes more credible by illustrating the anti-selection like this. Kudos to BVP.
yarapavan 2y ago
Here is a list of companies from the page: Airbnb, Apple, Atlassian, Coinbase, eBay, Facebook, FedEx, Google, Intel, Intuit, Kayak, Okta, PayPal, Snapchat, Tesla, Zoom, Instacart Interesting notes from the page: 1. Apple: Bessemer had the opportunity to invest in pre-IPO secondary stock in Apple at a $60M valuation. Neill Brownstein called it “outrageously expensive.” 2. Coinbase: Ethan’s pithy response would go on to earn Brian and Coinbase a spot in the Anti-Portfolio for life: “There’s really no questions you could answer that would cause me to invest!” Almost nine years later, Coinbase would go public in a direct listing valuing the leading crypto exchange at $85.8 billion – or just a mere 8,580x the price Brian had eagerly offered up!
lkdfjlkdfjlg 2y ago
Wow these guys are horrible at this.
- andybak 2y ago
  You missed the point somewhat.
  - lkdfjlkdfjlg 2y ago
    What was the point that I missed?
    - unsupp0rted 2y ago
      That everyone who’s in the game will inevitably fumble the ball some % of the time. And the more opportunities you get with the ball, the more opportunities there are to fumble it.
      - lkdfjlkdfjlg 2y ago
        Ok, so what's your criteria for saying that someone sucks at investing? If you go "oh shucks i fumbled some %" that will excuse anything and everything. If you give me a list of the times you fumbled and they're all the most amazing opportunities ever, what that tells me is that you're taking the obviously good opportunities, and missing the counter-intuitively amazing opportunities.
        pm215 2y ago
        A reasonable criterion for whether somebody sucks/is good at investing would be something like "what % return did you get over the last decade, and how does that compare to (a) markets in general and (b) other investors in your field?". If BVP passed on a bunch of great opportunities but also passed on a bunch of money-losing deadends, and on net got better % returns than the hypothetical alternative VC fund that took more of these but also lost a pile of cash on terrible startups, then BVP is making good decisions even given the failures. That a hundred-year old VC firm didn't identify every unicorn it ever had the opportunity to invest in doesn't seem very surprising to me.
bernardlunn 2y ago
My favorite take on startup investing by a long shot
aitchnyu 2y ago
> In some cases, we were making a conscious act of generosity to another, younger venture firm, down on their luck Is this serious or sarcasm?
- JumpCrisscross 2y ago
  The next sentence is “in other cases, our partners had already run out of spaces on the year’s Schedule D and feared that another entry would require them to attach a separate sheet.”
- michaelt 2y ago
  Investors are in the business of buying things that don't yet exist. Sure, they might do spreadsheet analysis and business planning to show the first person to invent a working, practical <foo> will make billions. But is this the company that will invent that? That is an inherently vibe-heavy judgement. I can well believe they remember considering a load of things, including the competition from their buddy's new venture firm. And they don't know themselves quite how they weighted the many things that contributed to the vibes, but they know saying 'generosity' sounds better than saying 'I didn't like the guy's glasses'
carlsborg 2y ago
Admirable level of honesty. Great signalling for culture.
forkerenok 2y ago
Are all these companies still as successful in alternative universes where BVP did invest in them? I guess in part it depends on whether BVP just gets on the cap table and stays the f out of the company direction :D
deleted 2y ago
[deleted]
asah 2y ago
The lesson: deal access matters more than selection.
aiisahik 2y ago
This is typical VC masterbation. 1. This list is tiny. They have pass on 10000 more companies than the ones on this list. Most of that passing was done correctly 2. VCs rightly over-index on the big winners. The Facebooks and Airbnbs of the world are completely outsized in terms of one key thing: how much money they make for the GPs and LPs. However, as builders, we should not focus on these because they are few and far in between and you don't need to be a founder of one of these to have a life changing event. You just need a good 7 or 8 figure exit. VCs don't make money on an 8 figure exit so they train us to go big or go home. This webpage is another piece of that propaganda.
- pclmulqdq 2y ago
  The honest portfolio of bad passes should include plenty of companies that they would happily include as "good exits" that they passed on. It should also include a number of companies that they effectively killed by not investing, when the company would otherwise have been a successful entry in their portfolio. To me, this is a way to brag about them being so selective that they rejected Google, so you can be excited when they offer you a deal at Acme AI. Everything about this page underscores the importance of access to deals. Bessemer can afford to pass on Google because the quality of deals they get is so high that it's not too bad to pass on winners.
adamgordonbell 2y ago
I assume besides being good marketing, this list is also meant to serve as a salve for rejected founders. It's a "It might not be you. I could very well be us." message. If you are getting rejected by 99 VC firms, it can beat you down and something like this could be soothing when things seems grim.
- pclmulqdq 2y ago
  I assume it's primarily intended as marketing to founders they offer money to. You are joining a club so exclusive that even Google isn't in it.
jimmyswimmy 2y ago
Interesting that all but two of the listed startups were software companies (FedEx, Tesla). I imagine the costs of fixed investments required to scale a company not based on software can reduce the potential max returns quite substantially. Can a non-software company achieve the kind of returns a software company can?
- threetonesun 2y ago
  I would say mostly no, which is exactly why software gets so much investment and has seen so much growth, especially 15-10 years ago when it suddenly became possible to address the entire world with very few regulations. The runner up darling child (outside of questionable financial products) seems to be biotech, whose heavy regulation and complex supply chain issues are offset by almost everyone in the world's desire to not die.
htrp 2y ago
> 2011 Jeremy Levine arrived at LAX three hours late, thanks to flight delays, with enough time for only one of the two meetings on his calendar. He literally tossed a quarter and phoned Evan Spiegel with his regrets. SNAP was the largest IPO in 2017. I guess you should blame the airline for that one

101 points by yarapavan 2y ago

deleted 2y ago

[deleted]

So good. Some of my favorites: > David Cowan’s college friend rented her garage to Sergey and Larry for their first year. In 1999 and 2000 she tried to introduce Cowan to “these two really smart Stanford students writing a search engine.” Students? A new search engine? In the most important moment ever for Bessemer’s anti-portfolio, Cowan asked her, “How can I get out of this house without going anywhere near your garage?” > Jeremy Levine spent a weekend at a corporate retreat in the summer of 2004 dodging persistent Harvard undergrad Eduardo Saverin’s rabid pitch. Finally, cornered in a lunch line, Jeremy delivered some sage advice, “Kid, haven’t you heard of Friendster? Move on. It’s over!”

opminion 2y ago
Thank you. I had missed that the grey icons are hyperlinks with interesting stories.
- MrsPeaches 2y ago
  Ebay: “Stamps? Coins? Comic books? You’ve GOT to be kidding,” thought David Cowan. “No-brainer pass.”
- deleted 2y ago
  [deleted]
makerdiety 2y ago
It was possible to write a search engine in the year 2000? Or any software at all for that matter? And writing a software application is much different from writing a mere academic research paper. By being harder and more technical. It, writing software, is engineering actually. Writing software is engineering, backed by computer science knowledge. So, the point is, that has there been a growth of resources and capabilities—opportunities—for motivated individuals to write software apps that are much stronger and capable than their 1990s predecessors? Common sense says "Yes, of course!" But a comprehensive look says no one who is social nor someone who is educated is doing anything like what Sergey and Larry have done for their pre-Google generation. No one is writing anything, no one is building, and least of all is anyone who does the college education thing building anything remotely close to the next Facebook or Google. There are no engineers today. Just drones doing financially compensated development. No passion for building. Instead just doing what is told to do and for to be done.
- ethbr1 2y ago
  That's because it's easier and more profitable to get acquired by Facebook, Google, et al. Reversing that (so it's easier and more profitable to compete and outgrow them) is step 1.
  - disgruntledphd2 2y ago
    And that's why VCs and tech in general should be in favour of strong antitrust and competition law.
- lovethevoid 2y ago
  They could build because they were left alone and had to prove themselves over time. Now? The split second you have any sort of potential of profitability, you’re surrounded by vultures before you had a chance to grow. You’re bought out, brand changed, and the behemoths get even bigger. Despite all the fuss over passion, even Sergey and Larry would have abandoned it all for the type of money being thrown around in recent years.

lokimedes 2y ago

Wonderful idea. It strikes me that anyone in the selection / allocation / decision business becomes more credible by illustrating the anti-selection like this. Kudos to BVP.

yarapavan 2y ago

Here is a list of companies from the page: Airbnb, Apple, Atlassian, Coinbase, eBay, Facebook, FedEx, Google, Intel, Intuit, Kayak, Okta, PayPal, Snapchat, Tesla, Zoom, Instacart Interesting notes from the page: 1. Apple: Bessemer had the opportunity to invest in pre-IPO secondary stock in Apple at a $60M valuation. Neill Brownstein called it “outrageously expensive.” 2. Coinbase: Ethan’s pithy response would go on to earn Brian and Coinbase a spot in the Anti-Portfolio for life: “There’s really no questions you could answer that would cause me to invest!” Almost nine years later, Coinbase would go public in a direct listing valuing the leading crypto exchange at $85.8 billion – or just a mere 8,580x the price Brian had eagerly offered up!

lkdfjlkdfjlg 2y ago

Wow these guys are horrible at this.

andybak 2y ago
You missed the point somewhat.
- lkdfjlkdfjlg 2y ago
  What was the point that I missed?
  - unsupp0rted 2y ago
    That everyone who’s in the game will inevitably fumble the ball some % of the time. And the more opportunities you get with the ball, the more opportunities there are to fumble it.
    - lkdfjlkdfjlg 2y ago
      Ok, so what's your criteria for saying that someone sucks at investing? If you go "oh shucks i fumbled some %" that will excuse anything and everything. If you give me a list of the times you fumbled and they're all the most amazing opportunities ever, what that tells me is that you're taking the obviously good opportunities, and missing the counter-intuitively amazing opportunities.
      - pm215 2y ago
        A reasonable criterion for whether somebody sucks/is good at investing would be something like "what % return did you get over the last decade, and how does that compare to (a) markets in general and (b) other investors in your field?". If BVP passed on a bunch of great opportunities but also passed on a bunch of money-losing deadends, and on net got better % returns than the hypothetical alternative VC fund that took more of these but also lost a pile of cash on terrible startups, then BVP is making good decisions even given the failures. That a hundred-year old VC firm didn't identify every unicorn it ever had the opportunity to invest in doesn't seem very surprising to me.

bernardlunn 2y ago

My favorite take on startup investing by a long shot

aitchnyu 2y ago

> In some cases, we were making a conscious act of generosity to another, younger venture firm, down on their luck Is this serious or sarcasm?

JumpCrisscross 2y ago
The next sentence is “in other cases, our partners had already run out of spaces on the year’s Schedule D and feared that another entry would require them to attach a separate sheet.”
michaelt 2y ago
Investors are in the business of buying things that don't yet exist. Sure, they might do spreadsheet analysis and business planning to show the first person to invent a working, practical <foo> will make billions. But is this the company that will invent that? That is an inherently vibe-heavy judgement. I can well believe they remember considering a load of things, including the competition from their buddy's new venture firm. And they don't know themselves quite how they weighted the many things that contributed to the vibes, but they know saying 'generosity' sounds better than saying 'I didn't like the guy's glasses'

carlsborg 2y ago

Admirable level of honesty. Great signalling for culture.

forkerenok 2y ago

Are all these companies still as successful in alternative universes where BVP did invest in them? I guess in part it depends on whether BVP just gets on the cap table and stays the f out of the company direction :D

deleted 2y ago

[deleted]

asah 2y ago

The lesson: deal access matters more than selection.

aiisahik 2y ago

This is typical VC masterbation. 1. This list is tiny. They have pass on 10000 more companies than the ones on this list. Most of that passing was done correctly 2. VCs rightly over-index on the big winners. The Facebooks and Airbnbs of the world are completely outsized in terms of one key thing: how much money they make for the GPs and LPs. However, as builders, we should not focus on these because they are few and far in between and you don't need to be a founder of one of these to have a life changing event. You just need a good 7 or 8 figure exit. VCs don't make money on an 8 figure exit so they train us to go big or go home. This webpage is another piece of that propaganda.

pclmulqdq 2y ago
The honest portfolio of bad passes should include plenty of companies that they would happily include as "good exits" that they passed on. It should also include a number of companies that they effectively killed by not investing, when the company would otherwise have been a successful entry in their portfolio. To me, this is a way to brag about them being so selective that they rejected Google, so you can be excited when they offer you a deal at Acme AI. Everything about this page underscores the importance of access to deals. Bessemer can afford to pass on Google because the quality of deals they get is so high that it's not too bad to pass on winners.

adamgordonbell 2y ago

I assume besides being good marketing, this list is also meant to serve as a salve for rejected founders. It's a "It might not be you. I could very well be us." message. If you are getting rejected by 99 VC firms, it can beat you down and something like this could be soothing when things seems grim.

pclmulqdq 2y ago
I assume it's primarily intended as marketing to founders they offer money to. You are joining a club so exclusive that even Google isn't in it.

jimmyswimmy 2y ago

Interesting that all but two of the listed startups were software companies (FedEx, Tesla). I imagine the costs of fixed investments required to scale a company not based on software can reduce the potential max returns quite substantially. Can a non-software company achieve the kind of returns a software company can?

threetonesun 2y ago
I would say mostly no, which is exactly why software gets so much investment and has seen so much growth, especially 15-10 years ago when it suddenly became possible to address the entire world with very few regulations. The runner up darling child (outside of questionable financial products) seems to be biotech, whose heavy regulation and complex supply chain issues are offset by almost everyone in the world's desire to not die.

htrp 2y ago

> 2011 Jeremy Levine arrived at LAX three hours late, thanks to flight delays, with enough time for only one of the two meetings on his calendar. He literally tossed a quarter and phoned Evan Spiegel with his regrets. SNAP was the largest IPO in 2017. I guess you should blame the airline for that one