

Why Has Andreessen Horowitz Raised $2.7B in 3 Years? - yarapavan
http://bhorowitz.com/2012/01/31/why-has-andreessen-horowitz-raised-2-7b-in-3-years/

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zach
The simple answer is that a16z is showing the world how this is done, and so
many investors have come knocking on their door that it'd be silly to say no.

First off, they're clearly doing this right. They are more than just the new
face of venture capital, they're innovators in technology capital (much like
YC). They have a clear mission (as you've just read) flowing from some of the
most insightful, experienced and well-connected technology business leaders in
the world. Their portfolio is great and they have a compelling case that they
are adding value to companies far beyond the money.

Second, this is a nearly-perfect moment to raise for their fund. I know if I
was in charge of some serious money in this economic environment I would be
haranguing them endlessly to invest. I can imagine they just had to pick a
number, and why not take as much as they were offered on the best terms? If
things go well, they may need to come in to deals with more money. If the
market goes sour, they'll be glad they don't have to raise for a long while.

And by the way, even if you're not interested in VC financing or even being an
entrepreneur, please at least check out some of Ben's classic blog entries
from the sidebar of this article. I recommend his essential take on corporate
politics:

[http://bhorowitz.com/2010/08/23/how-to-minimize-politics-
in-...](http://bhorowitz.com/2010/08/23/how-to-minimize-politics-in-your-
company/)

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morsch
I find the whole thing distasteful, without being able to say why, exactly.
Apparently, apart from being able to design a large organisation, CEOs stand
apart by knowing _other_ senior executives, both as candidates for jobs within
their organisation and as potential customers. It all sounds very caste-like.
I don't blame them for trying to make money by getting people a place within
the aristocracy.

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shingen
Yes, the real world can be distasteful at times. I spent years refusing to
play the game; preferring to stay strictly idealistic about ability and hard
work paving the way. It got me nowhere fast as an entrepreneur. The minute I
stopped fighting against how things actually work, success came calling.

I still don't like the notion that your connections can get you the right
opportunities radically faster than your ability, but that will always be how
the world works. Marc Andreessen would not be what he is today without Jim
Clark (the gatekeeper).

People are social beings, and that's the root of the issue. The networks you
form, give you radical advantages. Half of success, in my opinion, is your
ability, work ethic and willingness to seize opportunity; the other half is
who you know.

Most meaningful jackpots in life are guarded by gate keepers. If you want to
succeed, far more often than not you're going to need help, and you're going
to have to give someone else a cut of the action. Others are inclined to help
you once you make them personally invested, that's obvious. People are also
more inclined to trust and work with people in their networks - trust by
established association. Works the same way with that little piece of paper, a
degree, that gets you the stellar job.

Silicon Valley is supposedly a meritocracy. Try getting a meeting with, a
contact with, a phone call with, or an email response from - Ron Conway (for
example). I don't care how badass of an engineer you are. You can't get
anywhere near him without a referral from someone else (the who you know part
playing its role).

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bproper
Does believing in founding CEOs and building a great network of contacts
explain in any way why they felt they needed to raise so much money so fast?

~~~
ghshephard
To some degree it answers why they are raising money in the first place.

Agreed, though, his essay doesn't answer either (A) Why $2.7B in particular,
and (B) Why in just three years - other than the fact that purpose people
believe in their approach so much that it was easy to do so.

~~~
friendstock
Agreed. The essay answers the question, why is A2Z awesome... but it doesn't
provide any reason as to why they want to raise so much (e.g. they see the
need to be able to invest hundreds of millions into certain companies), and
why now (e.g. there's an epic shift in mobile/internet so it's necessary to
invest now).

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GFKjunior
I agree, every CEO had to learn the proper skills at some point their career.

Jack Welch from GE comes to mind, he is consistently ranked as one of the best
CEO's in modern business but he started off as a chemist. Sure MBA's have a
little more finance knowledge or management skills but nothing that cannot be
practiced, learned, and mastered.

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nostrademons
Eric Schmidt as well. His ancient history is as the author of lex.

~~~
pm90
so is Andy Grove, who holds a Chemical Engineering degree (but lead Intel to
its success)

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keeptrying
Thats $54 million in operating fees. You've got a pretty good company right
there.

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cluda01
I presume that they both already have more money than they know what to do
with, so I suspect the management fees weren't the primary motivation. Also
they have office space, employees, computers, etc. None of which are free.
Assuming they are collecting the 2% management fee which is allegedly
standard, then most of it is probably going towards running the firm.

~~~
keeptrying
Yeah I believe that to be true but its staggering how success begets success.

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kschrader
I would be interested in learning more about the technology that they use
inside of their organization to enable a lot of this. Clearly they've
recognized that they need share a lot of information to make this work and to
give them a competitive edge.

Does anyone know if they have a dev team in-house to build this stuff?

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far33d
a16z is taking an incredibly well-structured approach to value-added
investing. It's nice to see a strategy and mission that actually explains how
they are different and goes beyond generic platitudes like "enable
innovation".

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hexis
Clearly, it was not to find out what it means to beg a question.

~~~
vedant
Alas, the only winning move with "begging the question" is to not play. Insist
on its proper use as a logical fallacy and you're a pedant; misuse it and draw
the ire of grammarians and Aristotelians. Solution: "this raises the
question."

~~~
DavidAdams
So true. I move that the expression "beg the question" be stricken from the
lexicon. If you use it right, people have no idea what you're talking about.
Use it wrong, and people like me get all distracted and discombobulated. Best
not to say it at all.

~~~
_delirium
Yeah, I avoid it, in part because it's not even clear that the correct meaning
_is_ correct. Originally question-begging and circular reasoning were subtly
different fallacies, but they're rarely distinguished anymore. If it's a case
where "circular reasoning" (or perhaps "assuming the conclusion") works, those
are clearer terms imo.

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four
Okay, it's settled. I want these guys in my corner after YC to raise my game
when I'm a founding CEO.

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draggnar
I'm in favor of more musical blog posts

