Or they didn't realize just how directly the new company would compete with their existing portfolio company.

Except that for this round pg said you don't need an idea in order to apply. That implies that they'll help decide on an idea if they like the founders, so an idea conflict should be resolvable by switching to something else pg et al. have in mind.

Let me just say this: "the idea doesn't matter" is a statement that we found to be highly, highly unreliable. Don't expect to get funded without a solid idea that is different. I'll elaborate on this later, but trust me on this one.