Having talked a couple of times to various members of Andreessen Horowitz's team, I'm thoroughly impressed with they way they are approaching VC in the Valley. They are very much taking a long term approach to things, and they have some really good people on their team.
I can see the benefits of such a company for a select group of individuals. However, the rest of the population may be treated as second-rate professionals; like the way it is with Hollywood. Most "talent" in Hollywood are not the best and brightest. They're either well connected or extremely lucky (with very few exceptions).
If an idea like this were to be successful, I think we'd see a flood of talented people more interested in being stars than being productive.
I've seen this happen in smaller markets with one dominant VC... Thankfully in the Valley we're a long ways from a company being DOA without AH as an investor.
You should be comfortable hearing a sentence such as that. Horowitz is clearly generalizing, but a great company will always make a return on investment. Obviously in this particular case Groupon is going to give investors a smaller return now than it would have 6 months ago, but it's still a winning strategy. Great companies keep growing - which is more than a good reason to invest.
Kudos to them for innovating.