In the world of venture capital, it is not uncommon to make most of your money off only a small fraction of your investments. Here’s how Fred Wilson describes his firm’s “batting average”:

“I’ve said many times on this blog that our target batting average is “1/3, 1/3, 1/3” which means that we expect to lose our entire investment on 1/3 of our investments, we expect to get our money back (or maybe make a small return) on 1/3 of our investments, and we expect to generate the bulk of our returns on 1/3 of our investments.”

I’m guessing that this is one of the reasons why mistakes are more readily embraced – or even celebrated – in venture capital and in tech. It’s part of the DNA of the industry.

A perfect example of this is something called the Anti-Portfolio. Venture capital firm, Bessemer Venture Partners, has a page up on their website dedicated to “honoring those we missed.” It is a list of phenomenally successful companies that for various reasons BVP decided not to invest in. That is, they had the opportunity but they decided to pass.

Here’s a taste (copied verbatim from their site):

• [Apple] BVP had the opportunity to invest in pre-IPO secondary stock in Apple at a $60M valuation. BVP’s Neill Brownstein called it “outrageously expensive.”
  

• [Facebook] 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!”
  

• [Google] 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?”

In the world of venture capital, it is not uncommon to make most of your money off only a small fraction of your investments. Here’s how Fred Wilson describes his firm’s “batting average”:

“I’ve said many times on this blog that our target batting average is “1/3, 1/3, 1/3” which means that we expect to lose our entire investment on 1/3 of our investments, we expect to get our money back (or maybe make a small return) on 1/3 of our investments, and we expect to generate the bulk of our returns on 1/3 of our investments.”

I’m guessing that this is one of the reasons why mistakes are more readily embraced – or even celebrated – in venture capital and in tech. It’s part of the DNA of the industry.

A perfect example of this is something called the Anti-Portfolio. Venture capital firm, Bessemer Venture Partners, has a page up on their website dedicated to “honoring those we missed.” It is a list of phenomenally successful companies that for various reasons BVP decided not to invest in. That is, they had the opportunity but they decided to pass.

Here’s a taste (copied verbatim from their site):

• [Apple] BVP had the opportunity to invest in pre-IPO secondary stock in Apple at a $60M valuation. BVP’s Neill Brownstein called it “outrageously expensive.”
  

• [Facebook] 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!”
  

• [Google] 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?”