A few weeks back I was in Silicon Valley and went by A16z offices for a quick hello with Chris Dixon. We chatted about angel investing, fintech and crypto for a bit. The valley is a small and pretty peaceful place but the offices of A16z were jam packed. I did not really think that much more about it until Ellen sent me this New Yorker article from 2015 about Marc Andreesen and his firm. It is a GREAT read on Marc, the firm and Venture Capital itself.
I loved how the article got started:
Marc Andreessen, the firm’s co-founder, fixed his gaze on Doshi as he disinfected his germless hands with a sanitizing wipe. Andreessen is forty-three years old and six feet five inches tall, with a cranium so large, bald, and oblong that you can’t help but think of words like “jumbo” and “Grade A.” Two decades ago, he was the animating spirit of Netscape, the Web browser that launched the Internet boom. In many respects, he is the quintessential Silicon Valley venture capitalist: an imposing, fortyish, long-celebrated white man. (Forbes’s Midas List of the top hundred V.C.s includes just five women.) But, whereas most V.C.s maintain a casual-Friday vibe, Andreessen seethes with beliefs. He’s an evangelist for the church of technology, afire to reorder life as we know it. He believes that tech products will soon erase such primitive behaviors as paying cash (Bitcoin), eating cooked food (Soylent), and enduring a world unimproved by virtual reality (Oculus VR). He believes that Silicon Valley is mission control for mankind, which is therefore on a steep trajectory toward perfection. And when he so argues, fire-hosing you with syllogisms and data points and pre-refuting every potential rebuttal, he’s very persuasive.
Doshi, lean and quizzical in a maroon T-shirt and jeans, began his pitch by declaring, “Most of the world will make decisions by either guessing or using their gut. They will be either lucky or wrong.” Far better to apply Mixpanel’s analytics, which enable mobile-based companies to know exactly who their customers are and how they use their apps. Doshi rapidly escalated to rhetoric—“We want to do data science for every single market in the world”—that would sound bumptious anywhere but on Sand Hill Road, where the young guy in jeans is obligated to astound the middle-aged guys in cashmere V-necks. “Mediocre V.C.s want to see that your company has traction,” Doshi told me. “The top V.C.s want you to show them you can invent the future.”
If you have a crackerjack idea, one of your stops on Sand Hill Road will be Andreessen Horowitz, often referred to by its alphanumeric URL, a16z. (There are sixteen letters between the “a” in Andreessen and the “z” in Horowitz.) Since the firm was launched, six years ago, it has vaulted into the top echelon of venture concerns. Competing V.C.s, disturbed by its speed and its power and the lavish prices it paid for deals, gave it another nickname: AHo. 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.
This paragraph about successful venture capitalists was dead on:
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. Doug Leone, one of the leaders of Sequoia Capital, by consensus Silicon Valley’s top firm, said, “The biggest outcomes come when you break your previous mental model. The black-swan events of the past forty years—the PC, the router, the Internet, the iPhone—nobody had theses around those. So what’s useful to us is having Dumbo ears.”* A great V.C. keeps his ears pricked for a disturbing story with the elements of a fairy tale. This tale begins in another age (which happens to be the future), and features a lowborn hero who knows a secret from his hardscrabble experience. The hero encounters royalty (the V.C.s) who test him, and he harnesses magic (technology) to prevail. The tale ends in heaping treasure chests for all, borne home on the unicorn’s back.
I am so lucky to be able to invest for a living. Don’t let your kids become lawyers.
Have a great Sunday.