If you are in this business long enough, you’ll see some great deals walk through your door.
If you are in this business long enough, you’ll show some great deals the door.
We try to limit our self-flagellation to one deal per fund.
Fund 1 – formed in 1983
Mentor Graphics (Beaverton, Oregon)
To get even, we stole their co-founder and President in 1992.
Fund 2 – formed 1986
Starbucks (Seattle, Washington)
To get even (wasn’t our not making money enough?) years later, Howard opened his own venture capital firm right down the street.
Fund 3 – formed 1994
Amazon (Seattle, Washington)
To get even, we buy all our books at Barnes & Noble. We don’t think Amazon has noticed.
Fund 4 – formed 1997
Pixelworks (Wilsonville, Oregon)
This was a high technology company right in our sweet spot. We saw the firm early on when there was plenty of time to make a decision. There was one small concern – the CEO was an ex-venture capitalist. (Shouldn’t he have gotten credit for realizing his mistake?). However, the big negative came as we walked away from the meeting at the company. One of our partners turned and said, “Why would we want to do another semiconductor deal?” Apparently, we all suffered a memory lapse greater than Amazon’s CEO, since we did back some little company called Xilinx in fund 1.
To get even, we now are all forced to buy flat panel TVs and computer displays containing Pixelworks’ chips. And the ex-VC, used OVP as a “case study” for years.
Fund 5 – formed 1999
Blue Nile (Seattle, Washington)
To get even, we are not getting our respective spouses diamonds next holiday season, while those who invested in Blue Nile are. If you don’t think this is painful, we’ll introduce you to our spouses.
They know. They remember. They remind.
Fund 6 – formed 2001
Networks in Motion (Aliso Viejo, CA)
We knew the space (wireless, location services), we had independent calibration on the terrific CEO this CFO worked for. We even had the benefit that their first major account (Verizon) was one of our largest investors, so we had a back channel into how the company was viewed. So, why didn’t we invest? Was it because one of our partners literally lost their demo phone? (clue to VCs – don’t ever do this!)
No, we were worried the category would get commoditized and so pricing wouldn’t hold up. Sure enough, in 2009 up pops Motorola’s Droid phone offering a similar product as a free application. One of us (name withheld to protect the not-so innocent) even went so far as to write an internal email saying maybe we hadn’t missed the boat on Networks in Motion (NIM) after all. That email was followed no more than a week later by the announcement that NIM had been acquired for an amount that would have made it a winner for OVP. (Was that CFO on our email string, chuckling in his beer?)
So, we were analytically right, and financially wrong. In this business, as in life – timing is everything.
To get even…
Oh, to heck with it, getting even isn’t working.
Fund 7 – formed 2006
*and it appears we may be wrong. One contender for the title is Inrix, the traffic information service. Once we passed on the deal, and began to realize our mistake, we tried our best to sabotage the company by messing with their forecasting algorithms. Two of our partners opted not to drive to the office any more, but rather hold court at the Madison Park Starbucks. This backfired when Starbucks, still smarting over our snub back in the 1980′s, sent us a rent check covering our partners’ usurping of their space. Then, one of our partners decided to go for the ultimate algorithm muddle by driving to work a different way every day. We believe he is lost somewhere south of Fargo – and yet the Inrix software still hasn’t broken.