I am curious to see how a16z's investment results eventually pan out. I don't believe any of their funds have gone through a full cycle, nor have they experienced a down market, so its still too early to declare him a top dawg.
His "twitter schools" parrot things like Buffett's shareholder letters pretty closely ("When the tide goes out, we find out who's been swimming naked."), so at least at an intellectual level he gets it, but his investment behavior contrasts this strongly, where he seems willing to pay any price for growth. Unfortunately this is common in the investment world, where everyone is a value investor in words, but rarely in behavior.
I guess I am mostly interested to see how the "founder as rockstar" thesis that is central to a16z works in practice.
> I am curious to see how a16z's investment results eventually pan out. I don't believe any of their funds have gone through a full cycle, nor have they experienced a down market, so its still too early to declare him a top dawg.
And the only reason they've been able to reach $4B in AUM so quickly is because record-low interest rates and stagnating growth in the developing world have created a rush of capital to Silicon Valley looking for any semblance of alpha.
The real question we should be asking is what sector of the economy all this roving capital will target next, when it becomes clear that tech startups can't live up to the promises of the VCs.
> I guess I am mostly interested to see how the "founder as rockstar" thesis that is central to a16z works in practice.
That's just a sales message used to get gullible and desperate founders to take money from them without giving it a second thought. When things go south, like they did for Zenefits (YC W13), a16z won't be so nice anymore:
> On Feb. 1, Zenefits held an emergency board meeting. The licensing problems and the macro were discussed. [a16z partner] Dalgaard suggested to Conrad that, as the person who created the program, he needed to leave.[0]
I am curious to see how a16z's investment results eventually pan out. I don't believe any of their funds have gone through a full cycle, nor have they experienced a down market, so its still too early to declare him a top dawg.
They returned their first fund twice over ... in three years.
The guy was a programmer (no insult, so was I) who wrote, while young and enthusiastic, a derivative copy of well known software idea... he got rich, good for him (no sour grapes, so did I) but that hardly makes him a genius of business savvy and economics. His name and commentaries started popping up everywhere a few short years ago which to me smells strongly of having a PR agency (insult+sour grapes, I don't have one)
So, when I say Marc Andreessen is a bubble, I mean his money came from a bubble, and his portfolio has expanded in a bubble, and so has his apparent influence, but I don't myself see evidence of extra-technical genius or being able to see the future. I have no problem with his living the dream; and if you're living the dream, it wouldn't even be surprising if you fell in love with sniffing your own farts (sour, not grapes!) that's human nature. What I have a problem with is, why is everybody else always hanging on his every word, what is notable in what he purportedly says?
> His name and commentaries started popping up everywhere a few short years ago which to me smells strongly of having a PR agency
This is exactly right. One of the first things a16z did after it was founded was to hire Margit Wennmachers[0] and her PR firm [1].
Horowitz openly addresses the topic in his book, The Hard Thing About Hard Things[2]:
> “We hired the Outcast marketing agency, headed up by its formidable founder, Margit Wennmachers, to generate media interest. We needed people to know what we were about as we had decided to defy the conventional venture capital theory of no PR. The daughter of a German pig farmer, Margit was the furthest thing from a swine wrangler imaginable. Smart and sophisticated, she was the Babe Ruth of PR. She worked her contacts, landing a cover story in Fortune in 2009 that featured Marc posing as Uncle Sam. Andreessen Horowitz was an overnight sensation, and yet Marc and I were still the only two people in the firm.”
As someone who has been around the web from the beginning, I will tell you this is horse shit.
Andreessen was building Mosaic at NCSA when very few people knew what a web browser even was. (There were only a few browsers in existence at that time, most of them were unusable, and the most popular one displayed only text. ftp was still massively more 'popular' than the Web, and in fact so was gopher ... gopher, FFS.) O'Reilly hosted what was basically the first WWW conference, in New Orleans, sometime in 1992. The attendance was about 40 people -- that is how big a Web conference was at that time. Marc was there. (So was I). People were mad at him because Mosaic was hacking the IMG tag into HTML without waiting for everyone else to discuss and agree on a standard.
So yeah, you are denigrating someone despite having no idea what you're talking about. But hey, I guess that is par for the course on an internet forum.
I don't think that's fair. Andreessen had an avid following on HN in the years before A16Z because his pmarca blog was one of the most astute out there. Or at least seemed so; I haven't gone back and read those posts. I do know that smart readers frequently lamented when he stopped producing them.
Be careful with this line of reasoning, or you might notice that pretty much all the valley hero pundits don't have any kind of track record of real prescience or predicting the future through periods of genuine upheaval at all, and mostly just talk their own book and spout Tom Friedman style business folk-inanities about how the world is changing fast and stuff.
I worked a short internship as an analyst at a mid tier regional VC that was affiliated with a larger well-known Sand Hill firm. I won't claim to be an insider, nor will I claim to be especially knowledgeable about VC or visionary of the future. But I will tell you this: your description of Marc Andreessen as a lucky know-nothing fits 99.9% of VC partners out there, even in the top tier firms. They are all bumbling bufoons, spouting fortune-cookie wisdom and clinging to their solitary past success as an entrepreneur with unparalleled hindsight bias. They are completely unable to critically analyze anything. You could throw that description against any wall in Sand Hill and be guaranteed to hit at least one VC partner.
The thing is, the description doesn't really fit Marc. I don't believe in hero worship; I don't think he is invincible, nor do I think he is especially prescient about the future. And I don't give credence to everything he says as if it is some sort of unique nugget of wisdom. But he does do one thing well that the rest of Silicon Valley hasn't figured out yet: He forms his own opinion and when he likes something, he throws his whole weight behind it.
The rest of Silicon Valley relies heavily (and by heavily, I mean solely) on social proof. It's actually quite amusing to watch a forum of partners from different firms sit in the same room and listen to a pitch. They rarely listen to the pitch, cause they are so fucking busy looking around the room to try to gauge the reactions of the other VCs in the room. They are incapable of making decisions for themselves. They will only decide to invest if they see other VCs investing.
This groupthink behavior of most Silicon Valley VCs has a real effect beyond it's soundbite-ness: It bounds their upsides. If you are only willing to invest in a company if other investors also invest, you might get slightly better at picking winners, but you end up taking smaller stakes in those winners, and you end up spending more for those stakes because you essentially are bidding up their valuations. This kills the power law distribution of returns that is supposedly obvious to the VC industry. It dooms these firms to making the approximate same level of returns as everyone else in the industry.
Marc has been a successful entrepreneur no doubt. Even after three very large successes, you might be able to attribute that to luck. I still consider that to be mostly irrelevant. Marc has no problem throwing big money around to acquire as much as possible in a promising firm, and he gives zero shits about what other VC's think about the investment. This behavior is inherently risky. Throw your weight behind losers and you go bankrupt. But he got in on the ground floor of some of the biggest exits in the last decade, and the ground floor is where those power law exits really pay off. This makes him different, and worth listening to, even if you ultimately disagree with him.
It is possible for people to be good at self promotion without needing a PR agency. Some people have the hubris to put themselves out there, and are skillful enough to be successful at it. Not everyone is like that, and we do dole a great deal of praise and attention to good self promoters, but no reason to be resentful of it or ascribe it to a paid professional service. It's a skill like anything else.
I've never heard of him but I do know that there's been noone at any point in history who has been any good at predicting the future, even the very near future, so you can take anything he/anyone says with a large pinch of salt. Bill Gates wrote a book which barely mentioned the internet right as it was happening!
I recall when they publicised their early investment thesis, to wit: most of the returns are from few companies, so let's invest in those.[0]
There was a great deal of fanfare and forehead slapping for what is, essentially, saying "most of the winnings in horse racing are from the winning horses, so we will only bet on the horses that are going to win".
Still, I am inspired. I'm announcing a new venture fund. We will only buy winning lottery tickets. Bring your slide deck describing your lottery ticket and we will decide whether to buy it off you.
(You may need to show how much money the ticket has already won -- we're not amateurs).
he's batting 1000 in life..not bad for someone who wrote a 'derivative copy of well known software idea'. Everything he has done has worked out perfectly, which reflects some luck but also genuine skill at understanding markets, trends, etc. Timed the Netscape exit perfectly got into the best start-ups early
If we're in a bubble, the opposite of what is listed in the article will be happening: investments will be increasing, VC backed companies will be splurging more etc.
It is amazing that they'd list a bunch things that support the position that there isn't a bubble and draw the conclusion that there is one! It is sunny and hot out and people are walking around in shorts in Seattle, clearly this means it is winter because people would click on an article about winter.
Who knows if we are actually in a "bubble" or not, but if anything we have to reach the opposite conclusion from the facts listed in the article.
Normally we wouldn't change from a text article to an audio piece that has no transcript, since the latter is much less accessible. But it feels wrong to reward the above behavior.
My belief why many people are calling this cycle a bubble is because they experienced two big bubbles almost back to back. I think much of the bubble calling over the past few years reeks of recency bias and people have been burned, not just once, but twice.
I have no idea if we are in a bubble or not, I'm sure some segments in tech are bubbles. I think focusing too much on whether or not we are in a bubble is a distraction of doing the work in front of us, whatever that work may be. Don't get distracted by the hype of bulls or the bears.
The worst thing about VC's is their herd-like behaviour. You work hard to get your biz funded and as soon as the valley gets wind of your funding, all the other VC's immediately fund X other copy-cat businesses (almost seemingly without regard to viability of the original business model).
And given a16z's huge reliance on PR, I'd argue that if they funded your biz, you'd then have even more copy-cat funded competition than if you went with a more low-key VC.
Are we in a "bubble" or just the latter stage of a business cycle? A lot of it depends on the definition you use for "bubble." Regardless of your definition, it doesn't matter much one way or another.
Central bank policies have been ridiculous the last 8 years. Nobody should be surprised there are market distortions - and nobody should pretend there aren't.
[+] [-] dharmon|9 years ago|reply
His "twitter schools" parrot things like Buffett's shareholder letters pretty closely ("When the tide goes out, we find out who's been swimming naked."), so at least at an intellectual level he gets it, but his investment behavior contrasts this strongly, where he seems willing to pay any price for growth. Unfortunately this is common in the investment world, where everyone is a value investor in words, but rarely in behavior.
I guess I am mostly interested to see how the "founder as rockstar" thesis that is central to a16z works in practice.
[+] [-] w1ntermute|9 years ago|reply
And the only reason they've been able to reach $4B in AUM so quickly is because record-low interest rates and stagnating growth in the developing world have created a rush of capital to Silicon Valley looking for any semblance of alpha.
The real question we should be asking is what sector of the economy all this roving capital will target next, when it becomes clear that tech startups can't live up to the promises of the VCs.
> I guess I am mostly interested to see how the "founder as rockstar" thesis that is central to a16z works in practice.
That's just a sales message used to get gullible and desperate founders to take money from them without giving it a second thought. When things go south, like they did for Zenefits (YC W13), a16z won't be so nice anymore:
> On Feb. 1, Zenefits held an emergency board meeting. The licensing problems and the macro were discussed. [a16z partner] Dalgaard suggested to Conrad that, as the person who created the program, he needed to leave.[0]
0: http://www.bloomberg.com/features/2016-zenefits/
[+] [-] _pius|9 years ago|reply
They returned their first fund twice over ... in three years.
http://fortune.com/2012/07/24/nice-ira-andreessen-horowitz-r...
[+] [-] paulpauper|9 years ago|reply
Facebook, Twitter, Skype, AirBNB are why it's so valuable. All you need are a few huge winners.
The ones since 2012 don't seem so great though. Maybe too soon to tell
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] g_delgado14|9 years ago|reply
[+] [-] sheepleherd|9 years ago|reply
The guy was a programmer (no insult, so was I) who wrote, while young and enthusiastic, a derivative copy of well known software idea... he got rich, good for him (no sour grapes, so did I) but that hardly makes him a genius of business savvy and economics. His name and commentaries started popping up everywhere a few short years ago which to me smells strongly of having a PR agency (insult+sour grapes, I don't have one)
So, when I say Marc Andreessen is a bubble, I mean his money came from a bubble, and his portfolio has expanded in a bubble, and so has his apparent influence, but I don't myself see evidence of extra-technical genius or being able to see the future. I have no problem with his living the dream; and if you're living the dream, it wouldn't even be surprising if you fell in love with sniffing your own farts (sour, not grapes!) that's human nature. What I have a problem with is, why is everybody else always hanging on his every word, what is notable in what he purportedly says?
[+] [-] w1ntermute|9 years ago|reply
This is exactly right. One of the first things a16z did after it was founded was to hire Margit Wennmachers[0] and her PR firm [1].
Horowitz openly addresses the topic in his book, The Hard Thing About Hard Things[2]:
> “We hired the Outcast marketing agency, headed up by its formidable founder, Margit Wennmachers, to generate media interest. We needed people to know what we were about as we had decided to defy the conventional venture capital theory of no PR. The daughter of a German pig farmer, Margit was the furthest thing from a swine wrangler imaginable. Smart and sophisticated, she was the Babe Ruth of PR. She worked her contacts, landing a cover story in Fortune in 2009 that featured Marc posing as Uncle Sam. Andreessen Horowitz was an overnight sensation, and yet Marc and I were still the only two people in the firm.”
0: https://en.wikipedia.org/wiki/Margit_Wennmachers
1: http://money.cnn.com/2014/10/02/news/economy/ozy-silicon-val...
2: http://www.amazon.com/Hard-Thing-About-Things-Building/dp/00...
[+] [-] jblow|9 years ago|reply
As someone who has been around the web from the beginning, I will tell you this is horse shit.
Andreessen was building Mosaic at NCSA when very few people knew what a web browser even was. (There were only a few browsers in existence at that time, most of them were unusable, and the most popular one displayed only text. ftp was still massively more 'popular' than the Web, and in fact so was gopher ... gopher, FFS.) O'Reilly hosted what was basically the first WWW conference, in New Orleans, sometime in 1992. The attendance was about 40 people -- that is how big a Web conference was at that time. Marc was there. (So was I). People were mad at him because Mosaic was hacking the IMG tag into HTML without waiting for everyone else to discuss and agree on a standard.
So yeah, you are denigrating someone despite having no idea what you're talking about. But hey, I guess that is par for the course on an internet forum.
Also. Marc actually had hair in 1992!!
[+] [-] dang|9 years ago|reply
[+] [-] CPLX|9 years ago|reply
[+] [-] saosebastiao|9 years ago|reply
The thing is, the description doesn't really fit Marc. I don't believe in hero worship; I don't think he is invincible, nor do I think he is especially prescient about the future. And I don't give credence to everything he says as if it is some sort of unique nugget of wisdom. But he does do one thing well that the rest of Silicon Valley hasn't figured out yet: He forms his own opinion and when he likes something, he throws his whole weight behind it.
The rest of Silicon Valley relies heavily (and by heavily, I mean solely) on social proof. It's actually quite amusing to watch a forum of partners from different firms sit in the same room and listen to a pitch. They rarely listen to the pitch, cause they are so fucking busy looking around the room to try to gauge the reactions of the other VCs in the room. They are incapable of making decisions for themselves. They will only decide to invest if they see other VCs investing.
This groupthink behavior of most Silicon Valley VCs has a real effect beyond it's soundbite-ness: It bounds their upsides. If you are only willing to invest in a company if other investors also invest, you might get slightly better at picking winners, but you end up taking smaller stakes in those winners, and you end up spending more for those stakes because you essentially are bidding up their valuations. This kills the power law distribution of returns that is supposedly obvious to the VC industry. It dooms these firms to making the approximate same level of returns as everyone else in the industry.
Marc has been a successful entrepreneur no doubt. Even after three very large successes, you might be able to attribute that to luck. I still consider that to be mostly irrelevant. Marc has no problem throwing big money around to acquire as much as possible in a promising firm, and he gives zero shits about what other VC's think about the investment. This behavior is inherently risky. Throw your weight behind losers and you go bankrupt. But he got in on the ground floor of some of the biggest exits in the last decade, and the ground floor is where those power law exits really pay off. This makes him different, and worth listening to, even if you ultimately disagree with him.
[+] [-] bigdubs|9 years ago|reply
[+] [-] dave2000|9 years ago|reply
[+] [-] unknown|9 years ago|reply
[deleted]
[+] [-] jacques_chester|9 years ago|reply
There was a great deal of fanfare and forehead slapping for what is, essentially, saying "most of the winnings in horse racing are from the winning horses, so we will only bet on the horses that are going to win".
Still, I am inspired. I'm announcing a new venture fund. We will only buy winning lottery tickets. Bring your slide deck describing your lottery ticket and we will decide whether to buy it off you.
(You may need to show how much money the ticket has already won -- we're not amateurs).
[0] http://www.nytimes.com/2012/07/23/business/venture-capital-f...
[+] [-] paulpauper|9 years ago|reply
[+] [-] kirubakaran|9 years ago|reply
It is amazing that they'd list a bunch things that support the position that there isn't a bubble and draw the conclusion that there is one! It is sunny and hot out and people are walking around in shorts in Seattle, clearly this means it is winter because people would click on an article about winter.
Who knows if we are actually in a "bubble" or not, but if anything we have to reach the opposite conclusion from the facts listed in the article.
[+] [-] dang|9 years ago|reply
Normally we wouldn't change from a text article to an audio piece that has no transcript, since the latter is much less accessible. But it feels wrong to reward the above behavior.
[+] [-] TDL|9 years ago|reply
I have no idea if we are in a bubble or not, I'm sure some segments in tech are bubbles. I think focusing too much on whether or not we are in a bubble is a distraction of doing the work in front of us, whatever that work may be. Don't get distracted by the hype of bulls or the bears.
[+] [-] jgalt212|9 years ago|reply
And given a16z's huge reliance on PR, I'd argue that if they funded your biz, you'd then have even more copy-cat funded competition than if you went with a more low-key VC.
[+] [-] elgabogringo|9 years ago|reply
Central bank policies have been ridiculous the last 8 years. Nobody should be surprised there are market distortions - and nobody should pretend there aren't.
[+] [-] tommynicholas|9 years ago|reply
[+] [-] otl1248|9 years ago|reply
[+] [-] paulpauper|9 years ago|reply
[+] [-] dang|9 years ago|reply
Normally we'd change the URL to the original (http://fourhourworkweek.com/2016/05/29/marc-andreessen/), but that's audio content, which HN users tend not to prefer, so there's a tradeoff here.