Andreessen Horowitz, Dealmaker to the Stars of Silicon Valley • Hacker News Board

Re: Andreessen Horowitz, Dealmaker to the Stars of Silicon Valley

#41

Post by SamReidHughes » Sat, May 02, 2015, 7:10 PM UTC

michaelochurch wrote: post #40

tptacek wrote: post #35

Earlier quoted context omitted.

"I'll make your kid VP/Engineering if you agree to make your employer buy as at $2B" does not sound like something that has ever happened. Has it?

I don't know that it's ever been put so explicitly, but I have seen startups and ex-startups give out very highly compensated positions (over $300k) to people who were spouses, proteges, and children of people on purchasing boards at other companies. Usually the explicit quid pro quo isn't needed because self-interest is enough to keep the parties in step. In that example, once the kid is given the job, the guy on th…

> I don't know that it's ever been put so explicitly, but I have seen startups and ex-startups give out very highly compensated positions (over $300k) to people who were spouses, proteges, and children of people on purchasing boards at other companies.

But I thought it was VC's that were funneling money and prestige to their children.

Re: Andreessen Horowitz, Dealmaker to the Stars of Silicon Valley

#42

Post by tptacek » Sat, May 02, 2015, 8:12 PM UTC

michaelochurch wrote: post #40

tptacek wrote: post #35

Earlier quoted context omitted.

"I'll make your kid VP/Engineering if you agree to make your employer buy as at $2B" does not sound like something that has ever happened. Has it?

I don't know that it's ever been put so explicitly, but I have seen startups and ex-startups give out very highly compensated positions (over $300k) to people who were spouses, proteges, and children of people on purchasing boards at other companies. Usually the explicit quid pro quo isn't needed because self-interest is enough to keep the parties in step. In that example, once the kid is given the job, the guy on th…

Can you clarify this by citing a specific example where a board member or executive of a privately-held company recused themselves from a recruiting decision because of a conflict of interest concern?

Could you describe more fully a case where a nepotistic hire was made at a company you have first- or second-hand knowledge of where the impetus for that hire was an outside investor? I have for-sure seen crappy and nepotistic hires at startups. That's a banal observation. What I haven't seen is quid-pro-quo.

Further: your claim wasn't simply that there are nepotistic hires (again, of course there are; banal claim) --- it's that the quid-pro-quo for those hires was commitments to subsequent mergers/acquisitions activities. That is an extraordinary claim and one I think you're unlikely to be able to back up, but, I mean, prove me wrong.

Re: Andreessen Horowitz, Dealmaker to the Stars of Silicon Valley

#43

Post by ironchef » Sun, May 03, 2015, 1:50 PM UTC

ajju wrote: post #31

jtzhou wrote: post #14

Earlier quoted context omitted.

> AH almost certainly beats 10% annually. AH was started in July 2009, at the start of a bull market. Since that period, the S&P 500 has had an annualized return, with dividends reinvested, of 17.2%. http://dqydj.net/sp-500-return-calculator/ This is significantly better than AH which has much greater single-sector risk (early stage/small cap, Bay Area, technology companies with little to no earnings). And AH at leas…

"This is significantly better than AH which has much greater single-sector risk" Are you saying a16z will make less than 17.2% per year in average returns on the years 2009-2015? Want to bet?

That information is definitely not public, so he's just guessing. One could look at some of a16z's hits and show they have done well at least in some cases. 50 mil into skype which they made into an estimated 150 - 170. They were one of nicira's biggest backers who sold to vmware for north of a billion. They were investors in Facebook, etc.

Re: Andreessen Horowitz, Dealmaker to the Stars of Silicon Valley

#44

Post by garry » Tue, May 05, 2015, 4:49 PM UTC

adventured wrote: post #34

garry wrote: post #20

Earlier quoted context omitted.

> In reality, if most of these founders put their money in standard index funds, they would have better returns adjusted for risk, but without all of the publicity that they crave. This demonstrates a lack of understanding of venture returns. Actually Khosla, Andreessen, Benchmark and the rest of the top tier account for the vast majority of the outsize returns. The "average" VC you haven't heard of, and those are th…

Your 100x and 1000x example would represent the best of the best of course. Then you use that to contrast how a public company may only yield 2X at an extreme over a year. First, VC investors are rarely looking at a one year horizon on a new investment, so I have no idea why you chose a year as a reference point. Why would you compare an elite outcome of 1000X in VC to a typical public company? Second, just like the…

You're right about time frame. We live in very different times now though — the vast majority of fast growing companies opt to stay private for far longer, thanks to Sarbanes-Oxley. Those juggernaut public co's you mention went IPO with a valuation in the hundreds of millions, which accounts for the 100X to 1000X. Now all of that is happening in these late stage rounds. Major macro shift that wasn't true before.