The thing all the venture firms have in common is they did not invest in most of the great successful technology companies. “The mistakes that we make in a field like venture capital generally aren’t investing in something that turns out not to work. … it’s the big hit that you missed. And so every venture capitalist who had the opportunity to invest in Google and didn’t just feels like an idiot. Every venture capitalist who had the opportunity to invest in Facebook and didn’t feels like an idiot. The challenge in the field is all of the great VCs over the last 50 years, the thing that they all have in common, is they all failed to invest in most of the big winners. And so this again is part of the humility in the profession.”
Warren Buffett and Charlie Munger call this type of mistake an “error of omission” (i.e., what you don’t do can hurt you more than what you actually do). No one describes this category of mistake better than Charlie Munger: “The most extreme mistakes in Berkshire’s history have been mistakes of omission. We saw it, but didn’t act on it. They’re huge mistakes — we’ve lost billions.