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November 24th, 2009 False Negatives and the Anti-Portfolio |
Seeing last week’s Venture Capital Dispatch in the online Wall Street Journal, When Venture Capitalists Let One Slip Away, reminded me of Jim Armstrong’s (Clearstone Venture Partners) comment last year about false negatives. “You can afford to have a false positive; you can afford to invest in things and fail, but because the big ones are so rare, you cannot afford a false negative. You cannot afford to be looking the wrong way.”
Some VCs, like Bessemer and their Anti-Portfolio, list their best false negatives on their website. As Bessemer puts it, “Whatever the reason, we would like to honor these companies, 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.”
If you think VCs and Angels have had some of the biggest investment oversights, here are some of the bigger and more amusing ones from outside the VC community:
“We don’t like their sound. Groups of guitars are on the way out…You really should stick to selling records in Liverpool. Electric guitars are now old hat. (Mike Smith, Decca A&R manager, turning down the Beatles in 1962)
“There is no reason anyone would want a computer in their home.” (Ken Olson, president of Digital Equipment Corp. in 1977)
“You ain’t goin’ nowhere son. You ought to go back to drivin’ a truck” (Jim Denny, manager of the Grand Ole Opry when he fired Elvis in 1954)
“You’d better learn secreatarial work or else get married” (Emmiline Snively, director of Blue Book Modeling Agency to Marilyn Monroe in 1955
“Rembrandt is not to be compared in the painting of character with our extraordinarily gifted English artist Mr. Rippingille.” (John Hunt, 19th-century art critic, on Rembrandt)
“You’ll sink, not like a lead balloon, but even faster, like a lead zeppelin.” (Keith Moon, drummer of the Who, when Led Zeppelin was forming)
“(His) compositions are deprived of beauty, of harmony, and of clarity of melody.” (German music critic in1737 about Johann Sebastian Bach)
“Far too noisy, my dear Mozart. Far too many notes.” (Emperor Ferdinand of Austria after a performance of Mozart’s Marriage of Figaro in 1786
These examples should give you a pretty good idea why Angels and VCs don’t typically invest in music, movies or other forms of content.
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