The anti-portfolio

Kai Ryssdal Jul 28, 2006


KAI RYSSDAL: In investing, there’s always risk. In a business where fortunes can turn at any moment, a simple decision can lead to a lifetime of frustration. And sometimes the most experienced investors are the ones pulling out their hair. Take Dave Cowan for instance. He’s a partner at Bessemer Venture Partners and he knows all about money missteps. Bessemer has an anti-portfolio. It’s a diary of what-ifs, companies that he passed on. Dave, I gotta ask, why publicize the misses?

DAVID COWAN: We do not wish to try to convince anyone, especially an entrepreneur that we believe that Bessemer Venture Partners, our venture capital firm, deserves all the credit for the successes of the investments that we’ve made. If you look at the websites of some venture capital funds they would read as though any company that has an investment from this group is preordained to be successful. The world is actually much different. In fact, most of the credit for a successful company belongs with the entrepreneurs and the employees who make the company successful.

RYSSDAL: How did it happen that you guys passed on Google?

COWAN: Google, unlike some of the companies in the anti-portfolio didn’t come to our offices and give us a pitch. In the case of Google it turns out that the founders of that company were renting a garage from a very close friend of mine, a college friend of mine who lived just two blocks from me here in Silicon Valley. And one day while I was visiting her she said you know there are a couple of really smart guys in my garage who are working on a start up and you should go meet them. And I said okay, well what are they building? She said well a search engine. And it certainly seemed to me, quite incorrectly, in 1999 that the world didn’t really need another search engine. But then I said okay, who are these smart folks? And she said well they’re a couple of Stanford students. At that point and probably what was the crowning moment of our anti-portfolio I asked my friend, okay, so how do I get out of your house without going anywhere near your garage?

RYSSDAL: And of course it turns out to be Larry Page and Sergey Brin. Two guys who are now running Google and want to take over the world.

COWAN: I’m afraid so. We like other venture investors make mistakes. And sometimes really, really big mistakes like passing on Google.

RYSSDAL: Does it keep you up at night when you see that company and others you passed on? Does that really just get to you?

COWAN: Certainly I could go back and dwell on the mistakes that we make by not making certain investments. The important thing is that the investments that we do make are successful. So far we’ve been very fortunate that we’ve managed to be investors in some very good companies as well. Even though there are good ones that we’ve missed.

RYSSDAL: Dave Cowan is a partner with Bessemer Venture Partners. Cowan thanks a lot for your time.

COWAN: You’re welcome. A pleasure to be here.

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