These giant mistakes have cost one of the world’s most successful venture capital firms billions.
Bessemer Venture Partners is one of America’s oldest venture capital firms, tracing its origins back to the Carnegie Steel empire of the late 19th Century.
Over its illustrious history, BVP has invested in literally hundreds of successful companies, including LinkedIn, Yelp, Skype and Twitch.
Business acumen and a keen ability to spot potential has led to the company being valued at over $4 billion. They have offices everywhere from Silicon Valley to Israel, and a portfolio that gives you carpal tunnel to scroll through. But their tremendous success (and wealth) hasn’t come without some major missed opportunities.
BVP has managed to decline the offer to become early investors in some of the biggest, most valuable companies in world history. The reasons vary, but the results are the same – regret, deep, deep, regret.
“If we had invested in any of these companies, we might not still be working,” the company says on its website.
Then: BVP met with Airbnb co-founder Brian Chesky in January of 2010, the month that they made their first $100,000 in revenue. Brian valued the company at $40 million, what BVP called a “crazy” number. BVP and Chesky made plans to reconvene in May, but by that time, Airbnb had raised their required revenue at 1.5x the original “crazy” price.
Now: As of March 2018, it is estimated that Airbnb is worth at least $38 billion dollars, roughly 950x the original value that BVP passed on.
Then: Early in Apple’s life, BVP had the chance to invest in the company’s stock at a $60 million valuation. Founder partner of BVP, Neill Brownstein said that it was “outrageously expensive”.
Now: In August of this year, Apple became the first American company to be worth $1 trillion dollars. To put into perspective how much money that is: you could buy the entire NFL, NBA, MLB and NHL and still have well over three-quarters of your fortune left. It’s no wonder Brownstein no longer works for the firm.
Then: The Australian software company offered BVP an opportunity to invest in 2010, but at a $400 million valuation, BVP thought it a “tad rich”.
Now: In 2015, Atlassian made its initial public offering at over $4 billion, making it the biggest tech IPO in Australian history. The company’s value has since grown to around $9 billion, 22.5x the valuation BVP passed on.
Then: David Cowan, a partner in Bessemer’s Silicon Valley office, passed on the deal. Cowan figured, “Stamps? Coins? Comic books? You’ve GOT to be kidding.”
Now: The little company that helps people sell their stamps, coins and comic books, has a valuation of $38 billion in 2018.
Then: Way back in 2004, at a corporate retreat, Harvard undergraduate Eduardo Saverin wouldn’t shut up about the potential of his new venture. Finally, when he grew sick of the constant pitching, BVP partner Jeremy Levine delivered some advice: “Haven’t you heard of Friendster? Move on. It’s over!”
Now: The social networking giant has been in decline since its data privacy scandal, but when you’re one of the most successful companies in world history, ‘decline’ is a funny thing. In July, Facebook lost $123.4 billion overnight, bringing their total value down to $506.2 billion. How disappointing.
Then: BVP passed on Federal Express an unbelievable 7 times, way back when it was operating out of a fleet of vans that make Scooby Doo’s Mystery Machine look high-tech.
Now: FedEx has grown to become the world’s largest express transportation company, providing services to more than 220 countries and territories. As of 2018, the company is valued at $67 billion.
Then: That’s right. As if Apple and Facebook weren’t enough. This time, David Cowan’s college friend has rented her garage to two young Stanford students named Sergey and Larry. Between 1999 and 2000, she tried to introduce him to these “really smart students writing a search engine”, but Cowan wasn’t interested.
Now: Alphabet, Google’s parent company, has joined the rush to hit the $1 trillion mark. They’re close, too. In July, the company started by a couple of Stanford students was valued at $800 million.
Then: Back in 1968, when the colour brown was all the rage and shirt collars could take an eye out, BVP was interested, but could never quite come to an agreement in the small maker of logic circuits and computer parts.
Now: The little computer chip company started out of Mountain View California has been on the Fortune 500 list for 24 years running. On its latest valuation in June 2018, Intel is now worth $254.8 billion.
Then: Our unlucky pal David Cowan passed on the financial security company on the first round of funding. BVP wasn’t convinced by the amateur team and business plan, calling it a “regulatory nightmare”. Four years after declining investment, Paypal was acquired by eBay for $1.5 billion.
Now: In February of this year, Paypal’s value soared above their parent company, eBay, with a market cap of $108.22 billion.
Then: In 2011, after a delayed flight, BVP partner Jeremy Lavine arrived in Los Angeles three hours late, meaning that he could only fit in one of of his two scheduled meetings. He tossed a coin and cancelled his meeting with Evan Spiegel, the CEO of Snapchat’s parent company, Snap.
Now: Snap’s photo-sharing app Snapchat has struggled to maintain its market share, but it continues to hold considerable value for young users. In 2018, Snap had a market cap of $24 billion, only $1 billion away from overtaking Twitter.
Then: BVP partner Byron Deeter met with the sustainable car company in 2006 and even test-drove a Roadster. While he put a deposit on the car, he passed on the “negative margin company”.
Now: Twelve years on, Elon Musk is doing everything in his power to bring the company’s value down: smoking weed, building submarines, and accusing international heroes of pedophilia. But not even his ridiculousness can stop the renewable energy behemoth — it has an overall value of $71.3 billion.
It goes to show that even the most prosperous companies and individuals make mistakes. So, make sure you keep that in mind when your jobless roommate asks for $100 to start his food blog on WordPress. You never know when you might be declining a billion-dollar opportunity.