Marc Andreessen and Ben Horowitz of a16z (AP Photograph/Paul Sakuma)
Marc Andreessen has proved himself to be one of many foremost entrepreneurs and financiers of his technology and is alleged to see himself as one other J. Pierpont Morgan. Andreessen jumpstarted the expansion of the Web because the technical professional and co-founder of Netscape that was bought to AOL for billions. He has since constructed his VC agency, named a16z, into one in all Silicon Valley’s foremost funds and seeks to change into a pacesetter in different areas of finance with $55 billion in belongings beneath administration and with tentacles in different areas of finance. Listed below are 9 classes from Marc Andreessen:
#1. Deal with rising developments. Andreessen was a pioneer within the rising Web, and Netscape, his landmark enterprise, kickstarted the Web. Almost each entrepreneur from Sam Walton (Walmart) and Dick Schulze (Greatest Purchase) to Joe Martin of Boxycharm and Brian Chesky (Airbnb) jumped on an rising development.
#2. Finance after Technique Aha, the third Aha! There are 4 Aha’s and the High 20 VCs, who’re in Silicon Valley, primarily finance after Technique Aha. to get an edge on different VCs, to switch the entrepreneur with a seasoned CEO, and to advertise and construct the enterprise for a gorgeous exit. Nonetheless, in case you are an entrepreneur, watch for Management Aha!
#3. Respect your development engines. Andreessen and Horowitz, his associate in a16z, have a coverage to respect entrepreneurs and their time. Their agency’s VCs are fined in the event that they preserve entrepreneurs ready. They acknowledge that entrepreneurs are essential to carry concepts to Aha.
#4. Flip quick if valuations are by means of the roof. Timing is essential in VC to get a excessive worth exit by means of a strategic sale to gullible firms that acknowledge the potential however not the dangers. This is likely to be one motive why practically 70% – 90% of company acquisitions fail.
#5. Develop in “straightforward” instructions from a robust base. Companies increase in “straightforward” instructions with confirmed merchandise into new markets or new merchandise into established markets. Whereas most VC corporations have caught to their VC knitting, a16z is diversifying to cash administration and funding banking – to mix dwelling runs and base hits for larger returns and synergies.
#6. Hold companions on a sensible leash. Not too tight. Not too unfastened. a16z permits its companions to hunt new instructions, but additionally displays their ventures as a way to reduce losses. This implies permitting the companions to check new concepts with restricted capital, investing extra if profitable and reducing if not.
#7. Be taught investing by proving assumptions. Gamblers depend on their intuition. Good buyers do their homework. a16z challenges its companions’ assumptions and requires them to check to attenuate the dangers. Aside from senior companions, who’ve extra leeway.
#8. No boundaries. Others could shrink back from entrepreneurs with a dodgy previous, however 16z doesn’t appear to have any such qualms, together with financing Move, the brand new enterprise by Adam Neumann of WeWork infamy.
#9. Promote continuously. a16z is not any stranger to PR, which helps corporations comparable to Coinbase. Airbnb, Affirm, Instacart, Netscape, and Skype to be relentlessly hyped and permits VCs to exit at sky-high valuations. After they exit, be careful beneath as a result of the valuations usually tank.
MY TAKE: Andreessen and his agency appear to have discovered the correct mix of positioning on rising developments, testing new instructions, and relentlessly selling for prime valuations. However Andreessen is human – after being an early investor in Instagram, his firm invested in a competitor and averted a later spherical of Instagram funding. The competitor folded. Instagram grew to become a unicorn.
The above additionally suggests a bit of recommendation for the investing public: Watch out about investing when the enterprise goes by means of its hype cycle previous to, together with, or instantly after an IPO when the enterprise, the VCs and the funding bankers are in full promotional mode. Let the hype die down earlier than contemplating an funding.