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Andreessen Pulls a Bezos

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Re: Andreessen Pulls a Bezos

#31

Post by Spooky23 »

lumost wrote: post #7
seibelj wrote: post #4

Before, VC money was precious and merely being a VC was enough to get deal flow. Now, so much money has been printed and sovereign wealth / pension funds are legally obligated make 8% annual returns that their only option is to go far out the risk curve, which includes venture capital. As a consequence, VC firms are a dime a dozen and the existing ones have more capital than ever. It’s still an accomplishment to rais…

Where does a legal obligation to make 8% a year come from?

Usually pension funds target 6-8% returns.

Some state systems are required by law to remain solvent, and are empower to enforce that. For example, New York requires municipalities and other entities to make payments to cover lower returns within a year or two by law.

Other states, like most infamously Illinois, have no such requirement and their systems are essentially insolvent, barring the Federal government bailing them out.

Re: Andreessen Pulls a Bezos

#33

Post by gkop »

rkk3 wrote: post #26

They have always explicitly said they modeled themselves after the agency CAA, which was more than just a rep because leveraged their network/roster of talent synergistically. Not sure it needed another analogy. Also the capital + services model is an interesting theory, but I haven't heard any stories of it living up to the marketing hype from portfolio companies. Don't think it is anywhere close to top of mind when…

I haven’t worked with A16z, but will say in the case of First Round Capital, their services are truly amazing, and would be material to me in considering term sheets, or even in choosing an early stage start up to join. So I think the capital + services model can be legit.

Re: Andreessen Pulls a Bezos

#34

Post by adventured »

temp8964 wrote: post #14

How is doing the “same” thing better not strategy? If it’s consistently better, there must be some strategy involved.

The author made a ton of mistakes in the article, one of which is apparently failing to grasp that there can be matters of macro and micro strategy involved in operating similar businesses.

Two burger franchises can both be in the business of selling burgers and fries and how they prepare/arrange that food can be very different (never frozen vs frozen; etc). Thus according to the author doing things differently is only strategy if it's at some arbitrarily high enough macro level. The author is wrong of course, it is strategy.

The whole premise of the article collapses upon that issue however. So if the author had reconciled their rather enormous contradiction, it would have torpedoed the article.

Re: Andreessen Pulls a Bezos

#35

Post by mattzito »

jjeaff wrote: post #27
jamestimmins wrote: post #10

I've heard of other VC firms with similar models of having a lot of support services baked into their business. Does anyone know if what A16Z doing is actually unique, or if they're just branding/publicizing an existing model?

I had a company funded by a smaller VC 6+ years ago that offered services like this. The reality was that it was a real pain. They offered "discounted" services but the discounted rate was far more expensive than what we could find for ourselves. And we had to deal with the pressure of their soft sales pitch for everything. Our in house bookkeepers are only $50 an hour, use out legal firm for $500/hr. Our tax account…

If they're trying to make money off of the services, that's a key problem. It's one thing if it's "Hey, we have a relationship with this random uniquely qualified individual who is expensive, and that's between you and them" and maybe there's a friend and family discount. It's a very different thing when they are trying to get you to book services thay they get revenue from.

Re: Andreessen Pulls a Bezos

#37

Post by rkk3 »

gkop wrote: post #33
rkk3 wrote: post #26

They have always explicitly said they modeled themselves after the agency CAA, which was more than just a rep because leveraged their network/roster of talent synergistically. Not sure it needed another analogy. Also the capital + services model is an interesting theory, but I haven't heard any stories of it living up to the marketing hype from portfolio companies. Don't think it is anywhere close to top of mind when…

I haven’t worked with A16z, but will say in the case of First Round Capital, their services are truly amazing, and would be material to me in considering term sheets, or even in choosing an early stage start up to join. So I think the capital + services model can be legit.

What service/s specifically impressed you?

Re: Andreessen Pulls a Bezos

#39

Post by effingwewt »

iratewizard wrote: post #38
recursivedoubts wrote: post #36

Earlier quoted context omitted.

Yes, but not everyone who is a BS artist sells thought leadership.

It's their loss. It's a ripe market filled with insecure Peter principals

<3 This thread. I needed this very unexpected laugh after the day I've had, much love.

Re: Andreessen Pulls a Bezos

#40

Post by lotsofpulp »

seibelj wrote: post #25
lotsofpulp wrote: post #18

Earlier quoted context omitted.

Classifying a pension fund’s expected return on assets to be a legal obligation to earn that much is a stretch. The pension fund’s board could just as easily use a lower expected return on assets, but you are correct that using a higher than reasonable return assumption transfers debt from yesterday’s taxpayer to tomorrow’s taxpayer, and that is by design since future taxpayers are not particularly strong voting bloc…

You act as if reducing the rate of return is a simple maneuver. This is politically fraught as it automatically requires employees to contribute more money. Here is an article from today about drama in Illinois, the state with the worst funded pensions in America. Tax payers are legally obligated to back these https://www.illinoispolicy.org/chicago-park-district-reform-...

It is relatively simple, as in no laws need to be passed or anything. The pension board could decide to match the PPA 2006 standards the government requires for non taxpayer funded DB pensions anytime it wants.

They will not though, since that would increase their own taxes, and of course start a political firestorm.

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