A legendary venture capitalist who made early investments in Twitter and Skype explains why he turned down Netflix — and what he learned from it

Draper's hesitancy to invest in Netflix is part of a larger trend in his investment decisions, he told Entrepreneur.

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Draper’s hesitancy to invest in Netflix is part of a larger trend in his investment decisions, he told Entrepreneur.
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Ramin Talaie/Corbis via Getty Images

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.”

Read more: A billionaire venture capitalist who made early investments in Twitter and Skype says there’s a single question he asks himself when deciding which companies to invest in

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.