Showing posts with label Andreessen Horowitz. Show all posts
Showing posts with label Andreessen Horowitz. Show all posts

Sunday, January 27, 2019

Chris Dixon @cdixon

Sunday, June 21, 2015

A Bizarre Blog Post By Ben Horowitz

Ben Horowitz does not have a hometown advantage with me. But once in a while I will drop by his blog to see what he has been up to recently, like I just did. And I think I just read the most bizarre blog post ever at his blog. What has venture capitalism come to?

There was a phase in my childhood when I used to fantasize about having curly hair. I thought it was just so cool. One of my post Spring Break jokes at college was to rib my white friends, "You getting there! You getting there!" It took me the longest time to see any kind of racial connotation between chicken and watermelons and the black identity. I still don't see the connection. I just so happen to be a huge fan of watermelons. If you grew up in the south of Nepal like I did where summers are hot enough for a siesta culture, you would also take watermelons at face value. They are a treat. They are better than any summer drink I ever had. Talking of siestas, Brad Feld has a most delightful blog post on that.

For the first time I am thinking those who think the VC firm A16Z has raised too much money might be right. They are now investing in bizarre territory. And here's some historical context.

The watermelon is no mango, the king of all fruits, but it sits right up there in the royal court. That has always been my opinion, and I am not changing it. Anything wrong you hear about watermelons has been planted in your brain by the fast buck fast food industry.

Also, how about this for a contemporary context? And to think, I have put out as many blog posts about The Tramp, as I have about Hillary!

Monday, May 18, 2015

The A16Z (AHo) Numbers

English: Mark Zuckerberg, Facebook founder and...
English: Mark Zuckerberg, Facebook founder and CEO, during his European Tour. (Photo credit: Wikipedia)

Each year, three thousand startups approach a16z with a “warm intro” from someone the firm knows. A16z invests in fifteen. Of those, at least ten will fold, three or four will prosper, and one might soar to be worth more than a billion dollars—a “unicorn,” in the local parlance.

With great luck, once a decade that unicorn will become a Google or a Facebook and return the V.C.’s money a thousand times over: the storied 1,000x. There are eight hundred and three V.C. firms in the U.S., and last year they spent forty-eight billion dollars chasing that dream........ Venture capitalists with a knack for the 1,000x know that true innovations don’t follow a pattern. The future is always stranger than we expect: mobile phones and the Internet, not flying cars. .... “The biggest outcomes come when you break your previous mental model. ...... en Horowitz, who sits next to his co-founder at the head of the table, is an astute manager who quotes the rap lyrics of his friends Nas and Kanye West to inspire fearless thinking—but he doesn’t try to manage Andreessen. ..... A16z was designed to be a full-throated argument about the future, a design predicated on its founders’ comfort with conflict. In 1996, when Horowitz was a Netscape product manager, he wrote a note to Andreessen, accusing him of prematurely revealing the company’s new strategy to a reporter. Andreessen wrote back to say that it would be Horowitz’s fault if the company failed: “Next time do the fucking interview yourself. Fuck you.” Ordinarily, relationship over. “When he feels disrespected, Marc can cut you out of his life like a cancer,” one of Andreessen’s close friends said. “But Ben and Marc fight like cats and dogs, then forget about it.” ....... He also tweets a hundred and ten times a day, inundating his three hundred and ten thousand followers with aphorisms and statistics and tweetstorm jeremiads. Andreessen says that he loves Twitter because “reporters are obsessed with it. It’s like a tube and I have loudspeakers installed in every reporting cubicle around the world.” ...... “We have this theory of nerd nation, of forty or fifty million people all over the world who believe that other nerds have more in common with them than the people in their own country. ...... Silicon Valley, the fifteen-hundred- square-mile shelf an hour south of San Francisco, was called the Santa Clara Valley until the rise of the microprocessor, in the nineteen-seventies. It remains contested ground. Armies of startups attack every incumbent, with early employees—and sometimes even their lawyers and landlords—taking deferred compensation, in the hope that their options and warrants will pay off down the line. Yet workers’ loyalty is not to a company or even to an idea but to the iterative promise of the region. “Uber is built on the efforts of thousands of people in the Valley,” the investor Naval Ravikant said. “On the back of the iPhone and Android and G.P.S. and battery technology and online credit-card payments, all stacked on themselves.”......... Apple and Microsoft got started with venture money; so did Starbucks, the Home Depot, Whole Foods Market, and JetBlue. V.C.s made their key introductions and stole from every page of Sun Tzu to help them penetrate markets. And yet V.C.s maintain a zone of embarrassed privacy around their activities. They tell strangers they’re investors, or work in technology, because, in a Valley that valorizes the entrepreneur, they don’t want to be seen as just the money. “I say I’m in the software industry,” one of the Valley’s best-known V.C.s told me. “I’m ashamed of the truth.” .......... they often follow one another, lemming-like, pursuing the latest innovation—pen-based computers, biotech, interactive television, superconductors, clean tech—off a cliff. ........ landing Sequoia, Peter Thiel, and a16z as seed investors “was a signal that was not lost on the banks we wanted to work with.” ....... The standard fee is “two and twenty”: two per cent of the fund each year, and twenty per cent of the ultimate profits. (The top firms, including a16z, charge thirty per cent.) ......... At the moment, venture funding accounts for less than 0.3 per cent of the U.S.’s G.D.P. “Venture is often called a rounding error in the economy” ....... the United States is as fossilized as Microsoft, and that the Valley has become stronger than Boston, New York, Los Angeles, and Washington, D.C., combined, Srinivasan believes that its denizens should “build an opt-in society, ultimately outside the U.S., run by technology.” ......... prescience. And then it’s removing every obstacle to the ferocious clarity of your vision: incumbents, regulations, folkways, people. Can you not just see the future but summon it? ....... A charismatic introvert, Andreessen draws people in but doesn’t really want them around. ..... has toyed with the idea of wearing a T-shirt that says “No hugging, no touching.” He doesn’t grasp the protocols of social chitchat, and prefers getting a memo to which he can e-mail a response, typing at a hundred and forty words a minute. He didn’t attend Netscape’s twentieth-anniversary celebration, because it combined two things from which he recoils: parties and reminiscing. ....... energetic and decisive, which makes him a valued counsellor. In 2006, Yahoo! offered to buy Facebook for a billion dollars, and Accel Partners, Facebook’s lead investor, urged Mark Zuckerberg to accept. Andreessen said, “Every single person involved in Facebook wanted Mark to take the Yahoo! offer. The psychological pressure they put on this twenty-two-year-old was intense. Mark and I really bonded in that period, because I told him, ‘Don’t sell, don’t sell, don’t sell!’ ” Zuckerberg told me, “Marc has this really deep belief that when companies are executing well on their vision they can have a much bigger effect on the world than people think, not just as a business but as a steward of humanity—if they have the time to execute.” He didn’t sell; Facebook is now worth two hundred and eighteen billion dollars. ......... Andreessen’s range of reference extends from Ibn Khaldun to “South Park,” yet he approaches new topics as if starved, eating through men’s fashion or whiskey-making or congressional politics until it has yielded every micronutrient. ....... He turns to theory the way a drinker turns to the minibar. ....... Horowitz also routinely forces a founder to abandon her script and regroup. It’s a stress test intended to elicit biography, resilience, and the real story...... the “idea maze”: you want the entrepreneur to have spent years thinking her idea into—and out of—every conceivable dead end ...... “we’re not funding Mother Teresa. We’re funding imperial, will-to-power people who want to crush their competition. ......... sixty-five specialists in executive talent, tech talent, market development, corporate development, and marketing. A16z maintains a network of twenty thousand contacts and brings two thousand established companies a year to its executive briefing center to meet its startups (which has produced a pipeline of deals worth three billion dollars). Andreessen told me, “We give our founders the networking superpower, hyper-accelerating someone into a fully functional C.E.O. in five years.” ...... They’ve moved into next-gen agricultural products and wearables and drone software ...... fifteen technology companies a year reach a hundred million dollars in annual revenue—and they account for ninety-eight per cent of the market capitalization of companies that go public. ....... “Deal flow is everything” ...... “I put ninety per cent of my effort into seeking out deals from the top eight venture firms, ten per cent into the next twelve, and zero per cent into all the rest.” ........ the bottom three-quarters of venture firms didn’t beat the Nasdaq for the past five years ...... “Since 1997, less cash has been returned to V.C. investors than they have invested.” ........ most V.C.s subsist entirely on fees, which they compound by raising a new fund every three years ....... V.C.s also logo shop, buying into late rounds of hot companies at high prices so they can list them on their portfolio page. ..... The tech publicist Margit Wennmachers built an eight-person marketing department and helped to orchestrate stories in Forbes and Fortune. ........ “In twenty-four months, Andreessen Horowitz was the talk of the town.” ...... house in Atherton, five minutes from a16z’s office ..... The toilet in the powder room is so visionary, and the surrounding dimmer lights so flattering, that I had to study it for some time to figure out how it flushed. ....... be aggressive and to fight your instinct to pattern-match. “Breakthrough ideas look crazy, nuts” ..... I see it in other people’s body language, and I can feel it in my own, where I sometimes feel like I don’t even care if it’s going to work, I can’t take more change.” ....... “O.K., Google, O.K., Twitter—but Airbnb? People staying in each other’s houses without there being a lot of axe murders?” .......... A16z passed on Airbnb’s A round in 2009. ..... Between 2004 and 2013, a mere 0.4 per cent of all venture investments returned at least 50x. The real mistakes aren’t the errors of commission, the companies that crash—all you can lose is your investment—but those of omission. There were good reasons that a16z passed on buying twelve per cent of Uber in 2011, including a deadline of just hours to make a decision. But the firm missed a profit, on paper, of more than three billion dollars. ................ Peter Thiel, who is four years older than Andreessen, observed that “the late nineties, for Gen Xers in Silicon Valley, was an experience as powerful as the late sixties was for the younger boomers. ....... “I always thought the entire venture thing was incredibly cool,” he told me. “Going to Kleiner Perkins”—the firm that funded Netscape—“with the high ceilings, the markers on the wall of all the great companies they’d I.P.O.’d, Larry Ellison walking through, and, at 11 A.M., the biggest buffet you’ve ever seen, at a time when I was eating at Subway? It was the closest thing to a cathedral for nerds.” Mark Zuckerberg told me, “When Marc started Andreessen Horowitz, I asked him why he didn’t start another company instead, and he said, ‘It would be like going back to kindergarten.’ ” .......... “Every firm we talk to now is ‘Hey, we’re doing all this recruiting, and we’ll introduce you to big customers.’ It’s become the table stakes.” ....... Andreessen is attempting to assuage the wound of the 2000 crash, by maintaining that it was an isolated event. “The argument in favor of concern is cyclical,” he told me—busts follow booms. “The counterargument is that stuff works now. In 2000, you had fifty million people on the Internet, and the number of smartphones was zero. Today, you have three billion Internet users and two billion smartphones. It’s Pong versus Nintendo. .......... “While Twitter is a lesser innovation than flying cars, it’s a much more valuable business. ........ Webvan was what he called a “ghost story”—a cautionary tale that still frightened investors. But Instacart proved that even haunted houses could be rehabilitated. ....... “This is an ‘I missed Uber, I don’t want to miss the next one’ climate.” ....... “Ordinary people love the iPhone, Facebook, Google Search, Airbnb, and Lyft. It’s only the intellectuals who worry.” ........ “Would the world be a better place if there were fifty Silicon Valleys?” he said. “Obviously, yes. ....... Pessimism always sounds more sophisticated than optimism ....... Software is already squeezing out other intermediaries—travel agents, financial advisers—and, at the end of the day, V.C.s are intermediaries. We’re all just selling cash.” ...... “What if we’re the most evolved dinosaur, and Naval is a bird?” ...... Already, more than half the tech companies that reached a billion-dollar valuation in the past decade were based outside Silicon Valley. ...... “Odds are, nothing your V.C. does, no matter how helpful or well-intentioned, is going to tip the balance between success and failure.” ........... “Over twenty years,” he continued, “our returns are going to come down to two or three or four investments ......... —you just don’t know which Tuesday Mark Zuckerberg is going to walk in.” ........ “Even if we could do perfect analysis, we just can’t know the future,” he said. “What if Google Ventures had access to all Google searches—could you predict hit products? Or perfect access to all of people’s conversations or purchases? You still wouldn’t know what’s going to happen. ....... If we could revise the industry completely, we’d just dump all the business plans and focus on people—the twenty-three-year-old Mark Zuckerberg, Bill Gates, Steve Jobs.” ......... “We’re imperfect people pursuing perfect ideas, and there’s tremendous frustration in the gap,” he said. “Writing code, one or two people, that’s the Platonic ideal. But when you want to impact the world you need one hundred people, then one thousand, then ten thousand—and people have all these people issues.” He examined the problem in silence. “A world of just computers wouldn’t work,” he concluded wistfully. “But a world of just people could certainly be improved.”

Saturday, October 18, 2014

Pinterest Dwarfing Facebook?

Pinterest dwarfing Twitter is yesterday's news. But Pinterest dwarfing Facebook?

Inside Pinterest: The Coming Ad Colossus That Could Dwarf Twitter And Facebook
A visual social network where people create and share image collections of recipes, hairstyles, baby furniture and just about anything else on their phones or computers, Pinterest isn’t yet five years old, but among women, who make up over 80% of its users, it’s already more popular than Twitter, which has a market capitalization of more than $30 billion. Pinterest’s U.S. user base is projected to top 40 million this year, putting it in a league with both Twitter and Instagram domestically ........ To date, Pinterest’s users have created more than 750 million boards made up of more than 30 billion individual pins, with 54 million new ones added each day. During the 2013 holiday season Pinterest accounted for nearly a quarter of all social sharing activity. Among social networks, only Facebook, with its 1.3 billion users, drives more traffic to Web publishers. ...... on the basis of average revenue per user, it’s only a matter of time before Pinterest blows past Facebook, Twitter and the rest of the social pack. ...... As Silbermann explains it, Facebook “is about your connections, your past events, your memories.” Users on Facebook volunteer a staggering amount of retrospective information such as birthplace, alma mater and vacations, data the company can use to power its highly targeted ad offerings. Twitter can’t offer that level of detail, which is why its revenue per user, at around $3.50, is only half that of Facebook’s. Twitter’s value remains stuck in the now, promising advertisers a presence in real-time conversations about the World Cup, a presidential election or Orange Is the New Black........ If Facebook is selling the past and Twitter the present, Pinterest is offering the future. “It’s about what you aspire to do, what you want to do down the line,” says Silbermann. And the future is where marketers want to live. ..... that delicate moment when browsing becomes shopping ..... For now advertising is Pinterest’s only revenue line. But it requires only the tiniest leap to conjure a scenario in which the company acts as middleman for the hundreds of thousands of retailers already showcasing their wares on its platform. ..... This is Amazon’s turf, but Facebook and Twitter have been making incursions, with both companies conducting tests of “Buy” buttons for frictionless shopping. ..... In his Cannes keynote Silbermann dismissed Google as “the ultimate card catalog,” an outdated technology useful only if you already know what you’re looking for. ..... Pinterest, he says, “exposes people to possibilities they never would have known existed.” ..... Silbermann grew up thinking he’d be a doctor like his parents, both of whom are ophthalmologists. An accomplished cellist and debater, he spent the summer before his senior year in high school at MIT’s elite Research Science Institute and then enrolled at Yale, where he took premed courses. Halfway through college, though, he caught the business bug. Instead of taking the MCAT upon graduation, he took a job as a management consultant at the Corporate Executive Board in Washington, D.C. “Like a lot of young people, I just wanted a job at the beginning,” he says of taking the road more traveled. ........ After three years as a consultant he scored “ the only job I could get at Google,” as a product specialist, and moved out West in 2006. Silbermann spent his days translating customer feedback into product refinements, acquiring a skill he considers crucial to Pinterest’s success. ...... Silbermann was visiting New York when he met through a mutual friend a Columbia architecture student named Evan Sharp. “We both had the same hobby, which was the Internet,” Sharp says. “I grew up in rural Pennsylvania, and Ben grew up in Des Moines. For both of us, in a way, the Internet was this really precious window into worlds outside our day-to-day experience.” ....... Sharp told Silbermann about his collection of thousands of architectural drawings and photos, which had become increasingly hard to organize. That resonated with Silbermann, who’d noticed that Tote’s users seemed more interested in saving photos of products than in buying the products themselves. ...... the three launched the first desktop version of Pinterest in March 2010. Users could save images from anywhere on the Web to thematically organized boards ..... As the work progressed, Sharp moved to the Bay Area and took a job at Facebook to support himself while the three worked from their makeshift offices, a “dirty apartment” in Palo Alto. ..... Its early gains were the result of laborious word-of-mouth marketing, with Silbermann leaning on everyone in his network to spread the word and personally contacting several thousand users to quiz them about what they liked and disliked. “If he hadn’t done that, my guess is we would’ve given up in a few more months,” says Sharp, 31. “It’s kind of ridiculous how long we worked on it, given how little success we were seeing.” .......... Nor was it an overnight sensation with investors. “He had a hell of a time raising money in the beginning,” says Ron Conway, a perpetual member of the Forbes Midas List, whose firm, SV Angel, invested in April 2011 at the urging of fellow angel Shana Fisher. Yelp CEO Jeremy Stoppelman was one of those who failed to see the potential. “A friend sent it to me, and I didn’t even take the meeting,” he recalls. “I was like, ‘Ehhhh, this is interesting, but I don’t know what to do with it. It’s too conceptual for me.’ ” ...... To date, Pinterest has raised $764 million in seven rounds from a group of investors that includes FirstMark Capital, Andreessen Horowitz and Bessemer Venture Partners. In May it closed that blockbuster $200 million round that provided fuel for its international expansion. At that valuation–and given the mania for fast-growth companies over the ensuing six months, a raise in the range of $8 billion to $10 billion is possible–Silbermann’s estimated 15% stake and Sharp’s estimated 10% would make them, on paper, candidates for the FORBES billionaires list. ........ “ I spend a lot more of my time trying to clearly communicate where we’re going so everyone can march in the same direction,” Silbermann says. “Technology has made it easier for small teams to scale fast, but no one’s ever released something that makes it easy to build a culture proportionately as fast.” ...... “My mind is like a warren, whereas Ben’s is like a f–king database.” ..... the phases of the so-called purchase funnel: awareness, consideration, preference and purchase. ...... More than 90% of Pinterest usage is on mobile, higher than Facebook (68%) and Twitter (86%) ...... Every Promoted Pin has to start out as an ordinary pin, living on the partner’s boards, and stunts like price promotions and contests are off-limits. ..... “How do we do for discovery what Google did for search?” Silbermann muses. “How do we show you the things you’re going to love even if you didn’t know what you were looking for? We think if we answer that question, all the other parts of the business will follow.”
Okay, so the metric is revenue per user. I can see Pinterest going past Facebook on that.

Ben Silbermann On How Pinterest Slowly Grew To Massive Scale
In June 2010, more than two years after Ben Silbermann left his job to start what became Pinterest, and three months after launching, the site had 3,000 registered accounts.

Monday, February 18, 2013

The VC Model Fast Changing

Rocky Balboa
Rocky Balboa (Photo credit: Wikipedia)
Andreessen Horowitz has been shaking things up. They write checks, that's still the primary thing they do, but they do that and about 11 other things for the companies they invest in. Over the past few years angel investing has been fundamentally disrupted, and the VC game is also being disrupted fast. That's a good thing.

Transcript: The keys to Andreessen Horowitz's success
Partners are fined $10 for every minute they are late to a meeting, a punishment that reinforces the belief that at Andreessen Horowitz, entrepreneurs deserve respect. ..... Having raised three funds worth more than $2.7 billion--and investments that have included Facebook, Skype, Groupon, and Instagram--Andreessen Horowitz quickly has become one of the most influential firms on Sand Hill Road. ..... founders make the best CEOs .... professional CEOs have these incredible networks. They know people in the press and customers and executives and all these guys they can bring into the company. So we thought the firm ought to build the definitive network for Silicon Valley so that when a founder comes in, we can give him a network that's better than any professional CEO ..... if you take out administrative staff, and you take out back office, that gives you about 45 operating professionals in the firm who aren't general partners. And there's no other firm in this industry that has anywhere close to that. You know, other firms might have three or four. We have 45. ..... these 40-some people are extremely expensive. They're cost centers. ..... in CAA, the way they were able to build a platform is the talent agents didn't take any salary for the first several years, and they used the commissions that they got from the actors and actresses and screenwriters to kind of build the platform. .... you won't see us doing things like biotech or clean tech or, you know, we're not degreed in material sciences ..... we have software-based startups in industries as diverse as agriculture, real estate, financial services, education
The Rise Of Company Builders
Certain operators are foregoing the traditional path of joining a traditional VC to instead create a studio-like holding operation. By doing so, they remain engaged with the grit and grassroots challenges of building a startup. They remain company builders......... a “new asset class” in the VC world .... Even VC giant Andreessen Horowitz is building an army of marketers, business development execs, recruiters and more to help aid in the creation of startups. .... because it is so easy to build startups these days, that there is a need for models that allow companies to leverage certain functions like sales and marketing, hiring, legal and more .... built and scaled sales teams across a number of industries and companies ..... the value of a shared platform of data, analytics and monetization tools. Betaworks has a layer of tools that its companies, which include Chartbeat, Bitly and others, all use. He compares this to the movie studio model, where companies like Disney and Universal create individual movies but have a layer of services in-house that promote films, and provide other functions across these various content plays. ....... if an entrepreneur is a coding genius, Andreessen will work on helping with go-to market strategies, marketing, recruiting, and more ..... The traditional VC model is predicated on the fact that failure happens in the marketplace. But our model is a more flexible platform for innovation. If things don’t look like they will work out, we can easily pivot because there hasn’t been as much capital and investment put in ..... the traditional VC model doesn’t allow VCs to go as in-depth in the trenches with entrepreneurs as with the studio model. .... it is very difficult for someone who isn’t really close to the company to add value on a regular basis ..... a class of entrepreneurs who don’t need to participate in the studio model. ..... Science takes mid-to-high, double-digit equity in their startups (compared to Y Combinator’s 7 percent). All models are different in terms of how they are breaking down equity allotments, but it can be daunting to give away that amount of equity and it begs the question of whether this is entrepreneur-friendly. ...... when Apollo Creed retired from professional boxing, but then decided to coach Rocky Balboa against Clubber Lang
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Wednesday, July 25, 2012

Big Data: It Is About Taking It To The Masses

Image representing GoodData as depicted in Cru...
Image via CrunchBase
GoodData brings in $25M to supply Big Data analytics
GoodData offers operational dashboards, metrics and performance reports, data storage, analytics, and collaboration tools in a single platform. The company focuses on user experience, so all the tricky, technical elements of big data are comprehensible to people outside of IT teams..... dramatic revenue growth of 500% year over year...... It was founded in the Czech Republic in 2007 and is now based in San Francisco. It has 180 employees.
Big Data has always been around. What is about to change is it is about to get to the masses. It is about to become as easy as email. Or as cumbersome, depends on how you look at it.

Your company needs electricity, it needs broadband, it also needs Big Data.

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