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June 24, 2005

The Motus that Got Away

I have yet to find a more interesting, revealing, and truly brilliant web page on any other VC website than this one.  This is my all time favorite and it is from Bessemer, or BVP as they seem to call themselves these days — one of the few truly great Grizzley Funds — and here, exposing their gratious and self-effacing side, with a list of all the Motus they let get away. 

(Notice: Even to lose a Motu is still worthy of recounting —– For more on VCs and Motus read “Bagging the Rare Motu”)

BTW, I’ve “copied” (errr stolen?) the web page in its entirety rather than just linked to it because it is so good that I never want to lose it to some revamped website or some editorial “indiscretion” on the part of the Bessemer webmaster. (okay okay I’m just a bit paranoid is all — just another run-of-the-mill control freak …) —-cgm


Bessemer Venture Partners - Our Portfolio

    Glasses and Pen 


Bessemer Venture Partners is perhaps the nation's oldest venture capital firm, carrying on an unbroken practice of venture capital investing that stretches back to 1911. This long and storied history has afforded our firm an unparalleled number of opportunities to completely screw up.

While, over the course of our history, we did invest in:

  • a wig company
  • a french-fry company
  • the Lahaina, Ka'anapali & Pacific Railroad

We chose to decline the investments below, each of which we had the opportunity to invest in, and each of which later blossomed into a tremendously successful company.

Our reasons for passing on these investments varied. In some cases, we were making a conscious act of generosity to another, younger venture firm, down on their luck, whom we felt could really use a billion dollars in gains. 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. Whatever the reason, we would like to honor these companies -- our "anti-portfolio" -- whose phenomenal success inspires us in our ongoing endeavors to build growing businesses. Or, to put it another way: if we had invested in any of these companies, we might not still be working.


Hewlett Packard  

Apollo Computer

(acquired by Hewlett Packard)
BVP's Felda Hardymon was offered a small position in the company's last private round, and waved it away: too small a position, he thought, at too high a price. In less than a year it was worth 17x.



Apple Computer  

Apple Computer

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."



Check Point  

Check Point

In 1994, Gil Schwed pitched his idea to BVP's David Cowan, who said that Gil would never get distribution in the US. The next year, Check Point got a huge Sun OEM deal and sold $25M of firewall software.





"Stamps? Coins? Comic books? You've GOT to be kidding," thought Cowan. "No-brainer pass."



Federal Express  

Federal Express

Incredibly, BVP passed on Federal Express seven times.





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?”





Rob Chandra met these guys in 2000 at the start of the telecom meltdown, and remembers saying something like, “Rajesh, I like you a lot but do you really want to build a communications semiconductor business right now?” He looked at Rob in a sort of funny way and then raised money from Greylock, Sequoia and others. They are now running at a $60 million revenue run rate by focusing 90% of their effort on the telecom boom in China.





BVP's Pete Bancroft never quite settled on terms with Bob Noyce, who instead took venture financing from a guy named Arthur Rock.





Along with every venture capitalist on Sand Hill Road, Neill Brownstein turned down Intuit founder Scott Cook. Scott managed to scrape together only $225K from friends, including HBS classmate and Sierra Ventures founder Peter Wendell, who personally invested $25K to get Scott off his back.



Lotus & Compaq  

Lotus and Compaq

(formerly known as Gateway Computer)
Ben Rosen, one of the founders of Sevin Rosen, offered Felda Hardymon the chance to invest in both Lotus and Gateway Computer on the same day. Says Hardymon: "Lotus had just missed a payroll, and I was worried about the situation there. As for Gateway, I told him there was no real future in transportable computers since IBM could do it."





David Cowan passed on the Series A round. Rookie team, regulatory nightmare, and, 4 years later, a $1.5 billion acquisition by eBay.





(acquired by IBM)
Right after ROLM's IPO, when its stock was trading around its offering price of $10, an insider owning 10% of ROLM needed to sell. BVP bid $8 - figuring that we could purchase as many shares as we wished at $10 - and didn't get the shares, which were sold to another investor at $10 subject to a two-year restriction. Instead, we purchased some shares in the open market at about $10 - 12 and later sold for a nice gain at $18-22. Those who purchased the restricted stock, unable to sell, were forced to hold through the next 10X on the stock.



Cisco Systems  


(acquired by Cisco)
Felda Hardymon: "[Sierra's] Pete Wendell asked if I'd like to look at Stratacom, which was doing a 'fast packet switch.' I gave him a blank stare."




Posted by cmayaud at 04:20 PM | Permalink| Comments (1)
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Good Lord Christian,

You were good to copy the webpage in its entirety.. Remind me never to say no! (or at least check with someone else first... :)


Posted by: Arun Sadhashivan at June 28, 2005 02:47 PM

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