A Lightspeed partner missed investing in Postman despite building high conviction. Because the founder wasn't officially fundraising, the VC hesitated. By the time they acted, a competitor had closed the deal hours earlier. In competitive, off-cycle rounds, conviction requires immediate action.
Nnamdi Okike's fund passed on an early Skype investment due to the founders' controversial past with the file-sharing company Kazaa. This 'hair on the deal' created legal and reputational concerns that, combined with the deal being too early for the fund's stage, overshadowed the promising internet telephony thesis.
Mike Maples Jr. passed on pre-YC Airbnb because a failed demo and bizarre funding tactics obscured its massive potential. He couldn't see past the execution chaos and the existing free competitor, CouchSurfing.com, to grasp the fundamental insight. This exemplifies how non-traditional signals can cause investors to miss outlier opportunities.