We all have regrets, but they don’t typically involve blowing billions of dollars. Not so for Nolan Bushnell (pictured above), the founder of Chuck E Cheese’s and Atari. Sorry, Nolan: Turning down a chance to own one third of Apple was not your finest moment.
Many view venture capital as an easy route to billions of dollars, but success is often dictated by inventing at the right time. Home run investments in companies like Facebook and Apple what make up for scores of outright failures and disappointing losses. If it weren’t for the meteoric rise of Tandem Computing (acquired by Compaq for $3 billion), one of Silicon Valley’s most prolific venture capital firms, Kleiner Perkins Caulfield Byers, would have been unlikely to raise another fund. This, and other tales of the early days of venture capital, are the subject of the recent documentary Something Ventured.
The stand-out successes are few and far between. According to the National Venture Capital Association (NVCA), about 40 percent of venture backed companies fail, 40 percent return moderate amounts of capital, and only 20 percent or less produce high returns.
Inspired by Bessemer Venture Partners’ anti-portfolio, here is a list of the greatest missed opportunities in the history of Silicon Valley.
(And I’ve got to hand it to Bessemer: They readily volunteer this information, whereas the half-dozen firms I asked about the super-successful startups they didn’t fund weren’t so willing to ‘fess up!)
-
Apple
In 1976, Atari's charismatic founder Nolan Bushnell passed on the opportunity to own a third of Apple for $50,000. At that time, Sequoia Capital's Don Valentine and other investors also weren't convinced by the unkempt Steve Jobs. Valentine later changed his mind and asked Mark Markkula, Apple's then marketing lead, if he could invest.
-
Intuit
Scott David Cook, Intuit's founder, was turned down by almost every investor in Silicon Valley. He scraped together $225,000 from friends to build the personal finance company. Today, Cook boasts a net worth of $1.1 billion.
-
ebay
"Stamps? Coins? Comic books? You've GOT to be kidding," Bessemer Venture Partner's David Cowan thought before passing on the e-commerce giant.
-
Airbnb
On his blog, "A VC", Fred Wilson expressed regret for turning down Airbnb, "one of the best startups to come our way in the past few years." Wilson said he couldn't wrap his head around "air mattresses on living room floors as the next hotel room" and did not chase the deal. Now, the startup is valued at over $1 billion.
-
YouTube
In a New York Times interview, LinkedIn's cofounder Reid Hoffman admitted that in 2005, he lost out on a chance to own an estimated 30 percent stake investment in YouTube for $11.5 million. Citi recently estimated that the video site will generate more than $3.6 billion in gross revenue per year.
-
iTunes and the iPod
When computer scientist Tony Fadell had the idea for a Napster-like service for purchasing songs, Philips and RealNetworks didn't see the value. Fadell then approached Steve Jobs. His idea was developed into the iPod and iPhone, two of Apple's most successful products.
-
Salesforce.com
Angel investor Ron Conway told Business Insider he passed on Salesforce because the $30 million evaluation seemed too high. Conway also regrets his decision to turn down Pandora.
-
Zynga
Angel investor David Tisch was approached by Mark Pincus in the early days of Zynga. He passed because the idea didn't make much sense to him.
- Previous Slides
-
- Next Slides
