Marc Andreessen has proved himself to be one of many foremost entrepreneurs and financiers of his technology and is claimed to see himself as another J. Pierpont Morgan. Andreessen jumpstarted the expansion of the Web because the technical professional and co-founder of Netscape that was offered to AOL for billions. He has since constructed his VC agency, named a16z, into one among Silicon Valley’s foremost funds and seeks to grow to be a pacesetter in different areas of finance with $55 billion in property underneath administration and with tentacles in different areas of finance. Listed here are 9 classes from Marc Andreessen:
#1. Give attention to 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 Prime 20 VCs, who’re in Silicon Valley, primarily finance after Technique Aha. to get an edge on different VCs, to interchange the entrepreneur with a seasoned CEO, and to advertise and construct the enterprise for a pretty 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 maintain entrepreneurs ready. They acknowledge that entrepreneurs are essential to carry concepts to Aha.
#4. Flip quick if valuations are by way of the roof. Timing is essential in VC to get a excessive worth exit by way of a strategic sale to gullible firms that acknowledge the potential however not the dangers. This is perhaps one cause why almost 70% – 90% of corporate acquisitions fail.
#5. Increase in “straightforward” instructions from a powerful base. Companies increase in “straightforward” instructions with confirmed merchandise into new markets or new merchandise into established markets. Whereas most VC companies have caught to their VC knitting, a16z is diversifying to cash administration and funding banking – to mix house runs and base hits for greater returns and synergies.
#6. Maintain companions on a sensible leash. Not too tight. Not too unfastened. a16z permits its companions to hunt new instructions, but in addition screens their ventures with a purpose 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. Sensible buyers do their homework. a16z challenges its companions’ assumptions and requires them to check to reduce the dangers. Apart from senior companions, who’ve extra leeway.
#8. No boundaries. Others could draw back from entrepreneurs with a dodgy previous, however 16z doesn’t appear to have any such qualms, together with financing Movement, the brand new enterprise by Adam Neumann of WeWork infamy.
#9. Promote continuously. a16z isn’t any stranger to PR, which helps corporations reminiscent of 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 under as a result of the valuations usually tank.
MY TAKE: Andreessen and his agency appear to have discovered the right combination of positioning on rising developments, testing new instructions, and relentlessly selling for top 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 way 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.