Investor Stories 458: Anti Portfolio Lessons: Netflix by Mail, Palantir at the Wrong Price, and the Cost of Price Sensitivity (Madera, Bussgang, Orlovski)

What It Covers

Three venture capitalists share their anti-portfolio stories: Paul Madera passing on Netflix when it was DVDs by mail and Palantir four times due to price concerns, Jeff Bussgang losing Veeva after winning the term sheet, and Viktor Orlovsky's framework for analyzing missed investments.

Key Questions Answered

• •Price sensitivity kills returns: Madera passed on Palantir four separate times as the company grew from one to two million in revenue because the valuation seemed too high each time, missing what became the highest multiple software company in the market today, demonstrating how price concerns at early stages can eliminate generational investment opportunities.
• •Geographic disadvantage in competitive deals: Flybridge issued a term sheet for Veeva and was told Friday they won the deal, but by Monday lost to Emergence Capital because the company was Valley-based while Flybridge operated from Boston and New York, showing how location creates structural disadvantages when competing for hot deals in concentrated startup ecosystems.
• •Document rejections more thoroughly than acceptances: Orlovsky writes five to six pages of notes when making an investment but ten to fifteen pages when passing, then reviews these rejection notes when companies succeed to identify systematic blind spots in his decision-making process, creating a feedback loop that improves future investment judgment over time.
• •Assess founders not product feasibility: An experienced fintech investor passed on Chime's seed round despite the founding team's track record with Green Dot because he evaluated whether he personally would build that product rather than trusting the team's vision, illustrating how investors substituting their own judgment for founder conviction leads to missing breakthrough companies in early stages.