A legendary venture capitalist who made early investments in Twitter and Skype explains why he turned down Netflix - and what he learned from it
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- Billionaire venture capitalist Tim Draper built his fortune by being in an early investor in successful tech startups including Twitter and Skype.
- In a recent interview with Entrepreneur, Draper said he didn't understand why Netflix CEO and cofounder Reed Hastings wanted to focus on mailing DVDs instead of the budding technology for streaming.
- Draper said he more often regrets not taking a chance on startups than investing in companies that didn't work out.
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No investment decision haunts legendary venture capitalist Tim Draper like his choice to turn down the opportunity to become an early investor in Netflix.
In a recent segment of Entrepreneur's The Playbook, the 61-year-old investor said he initially didn't understand why Netflix CEO and cofounder Reed Hastings wanted to start out mailing DVDs to customers when the technology for streaming was only a few years away.
"[Hastings] said, 'They aren't ready for that yet,'" Draper told Entrepreneur. "I went, 'Yeah, why don't I just wait for that?' Huge mistake. Enormous mistake."
Draper's hesitancy to invest in Netflix is part of a larger trend in his investment decisions, he told Entrepreneur.
"My failures tended to be failures to act," Draper said. "Those are the ones that really kill me."
Business Insider's Lydia Ramsey previously reported that another top venture capitalist, Annie Lamont of Oak HC/FT, advised that VCs make the best investment decisions when they focus on startups in one industry.
"In any industry, particularly in venture, have your lane - have something you know better than anybody else," Lamont said. "You've got to pick your spot. So I picked my spot, and that was going to be healthcare."
While many of Draper's investments are in technology, he has also invested $500,000 in fraudulent blood-testing startup Theranos and Bitcoin. He lost $250,000 in his first investment in Bitcoin before making over 40 more successful cryptocurrency investments that are now worth between $350 million and $500 million, according to Forbes.
While Draper admitted to Entrepreneur that he has made numerous mistakes as an investor, his biggest regret is still not taking a chance on Netflix.
"That one that really irks me because it was completely my fault," Draper said.