How Andreessen Horowitz Is Disrupting Silicon Valley
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Re: How Andreessen Horowitz Is Disrupting Silicon Valley
#2That made me ill. I'm sure a16z is great and all, but there wasn't even a hint of criticism there. They couldn't find one slightly pejorative anecdote to contrast with the endless amount of fawning? I had to double check the byline, because by the end of it, I was convinced it had to be written by Robin Leach. Champagne wishes...
Re: How Andreessen Horowitz Is Disrupting Silicon Valley
#3AH is doing some remarkable stuff.
1) Like any great knowledge based firm - which strives to differentiate over and above its people - they have invested in tools. While the inspiration maybe CAA, firms like Mckinsey (knowledge management system) and Goldman (SecDB / Slang on the trading side and a detailed CRM system for the banking side) used the software / infra layer to develop a sustainable advantage which did not just depend on hiring the "smartest people" I.e. if people quit Goldman / Mckinsey - suddenly they were not able to outperform. On wall street - they call it seat value (how much value are you adding versus the seat/organization)
2) As a complete outsider - one can still easily see how the CRM software + sales connectors capability translates to $$$ for portfolio companies. For e.g. Box's recent deal with GE.
3) Therefore, on the enterprise side , if AH acts like a sales force (led by Mark Cranney) - then how does an enterprise company that is not backed by AH compete? In other words, over and above the prestige factor of being backed by a top tier VC firm- will NOT raising money from AH in the enterprise side put you at a disadvantage?
4) How much of this sales force / business development muscle applies to the consumer side? AH partners have referred to consumer startups as fruit fly experiments and will invest with a strong offer post-traction/ series B? But is there value in the consumer side as well in BD deals like how Moritz/Doerr helped Google power yahoo search and collect valuable search engine user behavior which was used to refine and test thier algorithms.
5) The article did mention in passing about recruiting support. But - I have read about a detailed software + people capability on talent hiring.
6) So, if sales + recruiting + strategy/advise are three value adds by VC firms (not counting money!) - does AH have a lock on 2 of the three?
Re: How Andreessen Horowitz Is Disrupting Silicon Valley
#4That made me ill. I'm sure a16z is great and all, but there wasn't even a hint of criticism there. They couldn't find one slightly pejorative anecdote to contrast with the endless amount of fawning? I had to double check the byline, because by the end of it, I was convinced it had to be written by Robin Leach. Champagne wishes...
I agree. It's also worrisome that Marc Andreessen predicts the future so much lately. The future simply can't be predicted with such reliability as his certainty implies.
Re: How Andreessen Horowitz Is Disrupting Silicon Valley
#5What would be the (software) VC equivalent of contrarian investing?
Let's see, we could invest in companies that
- are tackling problems for which solutions already exist
- are staffed by experienced people, not youth
- use mature technology
- have nothing to do with the web or even the internet
- are run outside of the valley (bonus points for flyover country)
Surely there must be other things that warm the heart of the contrarian investor?
Re: How Andreessen Horowitz Is Disrupting Silicon Valley
#6I'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 great brand and reputation with a large portfolio of investments, b) hire partners who have individually strong brands of their own, and c) collect hefty management fees on each fund. The industry standard is a 2–2.5% yearly “management” fee, a figure that gets pretty large on a billion dollar fund. And, in my experience, not surprisingly, the senior people get a disproportionate slice of that management fee. At the same time, the venture capital industry has been a glaringly poor-performing asset management group, consistently underperforming the S&P 500. (For more detail on the struggles within the VC industry, a recent article on the Harvard Business Review Blog by Diane Mulcahy, a senior fellow at the Kauffman Foundation, entitled “Venture Capitalists Get Paid Well to Lose Money” is well worth reading).
But never swings back around to it (unless I missed it amongst the flowery prose). Which leads me to ask: are there data points that compares a16z (or other VC firms!) against the S&P 500, besides the aggregate?
Re: How Andreessen Horowitz Is Disrupting Silicon Valley
#7Andreesen Horowitz became the apple of every startup founder's eye because they were the new guys who had success as investors while being friendly to startups
I'd rather raise money from a guy who wears a 'No Bitchassness' [0] shirt who wants to pump up my valuation, help me recruit tech talent, and allow me to give equity to compensate my best people versus some stodgy old guy who thinks he's better than everyone because he invested in [insert successful company from the 90s/early 2000s].
Basically, they were the uber of VCs in terms of how they treated their portfolio companies.
That said, I generally don't like media that praises investors because once we start glorifying the fund-raising process rather than bootstrapping and making money, we'll have tons of companies with too much money and no exit. Bubble burst.
0: http://www.jasonshen.com/wp-content/uploads/2012/10/benhorow...
Re: How Andreessen Horowitz Is Disrupting Silicon Valley
#8That made me ill. I'm sure a16z is great and all, but there wasn't even a hint of criticism there. They couldn't find one slightly pejorative anecdote to contrast with the endless amount of fawning? I had to double check the byline, because by the end of it, I was convinced it had to be written by Robin Leach. Champagne wishes...
I agree. It's also worrisome that Marc Andreessen predicts the future so much lately. The future simply can't be predicted with such reliability as his certainty implies.
Strong opinions, weakly held.
Re: How Andreessen Horowitz Is Disrupting Silicon Valley
#9I'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 would love these figures too but VC is notoriously secretive about their returns. There was a court case where Reuters sued Sequoia to get them to disclose their returns based on the fact that a big public-sector pension fund was one of their investors. Reuters lost.
http://www.reuters.com/article/2013/12/20/us-funds-californi...
Re: How Andreessen Horowitz Is Disrupting Silicon Valley
#10That made me ill. I'm sure a16z is great and all, but there wasn't even a hint of criticism there. They couldn't find one slightly pejorative anecdote to contrast with the endless amount of fawning? I had to double check the byline, because by the end of it, I was convinced it had to be written by Robin Leach. Champagne wishes...
Criticism is bad for journalists unless it is done against recognized enemies.