How Andreessen Horowitz Is Disrupting Silicon Valley • Hacker News Board

Re: How Andreessen Horowitz Is Disrupting Silicon Valley

#51

Post by walshemj » Sat, Sep 06, 2014, 3:32 PM UTC

jeffreyrogers wrote: post #11

jmduke wrote: post #6

I'll be honest -- my first impression after reading this piece was to research Peter Sims and figure out his connection to a16z, since my gut reaction was that blatant puff pieces usually have some sort of connection hidden below the surface. (I was unable to find anything.) Sims brings up the following point about VC returns: > The predominant old way of thinking about venture capital is that you: a) build up a grea…

I have data that compares other VC firms to the S&P 500. Give me a few minutes and I'll find it. Foreshadowing: it's pretty bad, you'd do much better putting your money in an index of the S&P 500.

Depends what's the Beta of PE/VC vs the S&P 500 / FTSE 100.

And blindly tracking major indexs means you are highly invested in a smallish number of stocks in the same area in this example investing in the big indexes means you will have take all the losses with the bank crashes - instead of a share/fund that got out or banks when it looked to toppy.

Re: How Andreessen Horowitz Is Disrupting Silicon Valley

#52

Post by pbreit » Sat, Sep 06, 2014, 3:59 PM UTC

johan_larson wrote: post #39

pbreit wrote: post #35

Earlier quoted context omitted.

I don't think the geography is the best parameter. Think of it this way: if something was contrarian in all other aspects, would you prefer it in the Valley or outside? Can you say that about other parameters?

Contrarian investors try to do what most investors don't. Don't most VCs invest primarily in companies that are nearby, meaning Silicon Valley proper and maybe the larger peninsula? Which means a contrarian would invest outside it. Maybe way outside it. Like Kansas.

Well, I was just trying to explain why that might not need to be the case. You can be contrarian and focus on the Bay Area. And that in fact might be smarter.

Re: How Andreessen Horowitz Is Disrupting Silicon Valley

#53

Post by michaelt » Sat, Sep 06, 2014, 4:13 PM UTC

foobarqux wrote: post #49

chetanahuja wrote: post #27

Earlier quoted context omitted.

Like this ? "Only four of thirty venture capital funds with committed capital of more than $400 million delivered returns better than those available from a publicly traded small cap common stock index"

That's helpful but the argument will always be that you just need to pick one of those four or that Kauffman are bad pickers of funds and therefore exclude many of the best from their allocation.

  you just need to pick one of those four

Outside of the VC industry, one technique used by some investment management companies is to launch enough funds that some will outperform the market by chance. Then they quietly close down all those that perform equal to, or worse than the market average and trumpet the success of the one or two that lucked out.

Perhaps which four of the thirty you should pick is only obvious with hindsight :)

  or that Kauffman are bad pickers of funds

I assume when they compare VC funds to a "common stock index" they mean an index fund [1], a type of fund that aims to provide market-average performance with lower fees than an actively managed fund. For example, an index fund tracking the S&P 500 does it by holding all the shares that comprise the S&P 500.

[1] https://en.wikipedia.org/wiki/Index_fund

Re: How Andreessen Horowitz Is Disrupting Silicon Valley

#54

Post by lutusp » Sat, Sep 06, 2014, 4:17 PM UTC

michaelt wrote: post #53

foobarqux wrote: post #49

Earlier quoted context omitted.

That's helpful but the argument will always be that you just need to pick one of those four or that Kauffman are bad pickers of funds and therefore exclude many of the best from their allocation.

you just need to pick one of those four Outside of the VC industry, one technique used by some investment management companies is to launch enough funds that some will outperform the market by chance. Then they quietly close down all those that perform equal to, or worse than the market average and trumpet the success of the one or two that lucked out. Perhaps which four of the thirty you should pick is only obvious…

> ... one technique used by some investment management companies is to launch enough funds that some will outperform the market by chance. Then they quietly close down all those that perform equal to, or worse than the market average and trumpet the success of the one or two that lucked out.

Yes, that's how independent investment advisors puff up their reputations also. In fact, it's the basis of a sneaky and convincing promotion scheme called "Miracle Man":

http://arachnoid.com/equities_myths/index.html#Miracle_Man

People who hear only the result of Miracle Man often say, "That's impossible!" But it's so easy that it can be automated.

Re: How Andreessen Horowitz Is Disrupting Silicon Valley

#55

Post by foobarqux » Sat, Sep 06, 2014, 5:31 PM UTC

michaelt wrote: post #53

foobarqux wrote: post #49

Earlier quoted context omitted.

That's helpful but the argument will always be that you just need to pick one of those four or that Kauffman are bad pickers of funds and therefore exclude many of the best from their allocation.

you just need to pick one of those four Outside of the VC industry, one technique used by some investment management companies is to launch enough funds that some will outperform the market by chance. Then they quietly close down all those that perform equal to, or worse than the market average and trumpet the success of the one or two that lucked out. Perhaps which four of the thirty you should pick is only obvious…

I agree with you, it just would be nice to have some data to further support the argument. It is much more convincing if Sequoia funds have inconsistent or mediocre performance than if they all had outsized returns. I am also genuinely curious as to the exact returns the premiere funds have.

Also what I meant regarding bad fund picking is that the universe of VCs funds that were in the Kauffman portfolio may not have included all the great performing funds.

Re: How Andreessen Horowitz Is Disrupting Silicon Valley

#56

Post by markpundmann » Sun, Sep 07, 2014, 3:32 PM UTC

michaelochurch wrote: post #41

Andreessen Horowitz has generated a positive reputation (in a field where most of its counterparts are ridiculous, incompetent assholes, so seeming strongly competent provides prominence) but here's a stark indicator for "wolf in sheep's clothing": http://a16z.com/2014/07/30/the-happy-demise-of-the-10x-engin... . Read it. If you don't have a nose for rot, I'll point your way to it: Today, if you have a great idea for…

Your acting just like the old factory worker who's pissed that his profession is starting to become more automated. Wake up and smell the coffee, developers are getting more productive and you have to adapt to the decreasing demand that this will cause. Programming is job in the labor market just like a fast food cooker. If you want to make some more money, either learn some skills that most other people do not have and that are needed (low supply, high demand), or start a company so that you can make some profits (which technically have no limit).

BTW, I think you need to look at the salaries of some other professions. I'm gonna be making 6 figures out of college as an SDE, while most of my engineering and business friends are going to be making about half of that. Talk to non engineering/business majors (cough, communication majors, cough) and the pay gets even worse.

Re: How Andreessen Horowitz Is Disrupting Silicon Valley

#57

Post by oroup » Sun, Sep 07, 2014, 4:35 PM UTC

Havoc wrote: post #44

It strikes me as ironic that he would pick Twitter to convey >140 char essays.

Especially as a board member of Facebook.

Re: How Andreessen Horowitz Is Disrupting Silicon Valley

#58

Post by cyphunk » Thu, Sep 11, 2014, 4:14 PM UTC

jeremyt wrote: post #46

easytiger wrote: post #36

Earlier quoted context omitted.

And from reading some books discussing Andreessen & his past ventures I wouldn't have thought he'd have considered Snowden anything other than a +ve force in the information world. Perhaps Andreessen has interests in companies that were hoping to help governments spy on their charges?

Or maybe he just happens to believe what he says? Maybe he believes that the sensitive information that Snowden released is damaging the security of the US? I personally think Snowden was a traitor. He released way more information than was necessary to accomplish his goal; The information he released has almost certainly put lives in jeopardy; AND he fled to Russia which is essentially a totalitarian state where his…

The only comment he made were to blame Snowden and brush off the massive surveillance and obstruction of civil liberties without a word. So rather than consider the problem that created Snowden he only blames the messenger. I can't think of a single character from the past year, be they pro or con, that commented on the topic in a more pathetic way.