This is an interesting piece and definitely fits with my perception of a16z.
Their podcasts are really good and cover a wide range of tech subjects at a medium-high level for those not familiar. Content is usually aggressively future looking and often brutally honest and this article makes me think that is all by design now. Also look at their portfolio[0], makes you realize how big of a hand they have in the startup pie.
Didn't realize they funded Coinbase. Explains a lot of their crypto-content. I've seen a lot of skepticism on HN about crypto, but the a16z podcasts have convinced me it will be a critical component of finance and the web going forward.
Its not coins or tokens, but the blockchain that is already being integrated into traditional and decentralized finance. All the major financial players are working on some sort of smart contracts to reduce paperwork and more precisely the people that do the paperwork. And that's just the tip of the iceberg.
I’m probably ignorant to some big issue here, but it’s. It obvious to me that ledgers solve a big problem. Yes contracts are a big problem in general, but the ledger seems like they’re giving me a new pen to sign them with or a new box to put them in. The work in contracts is in the negotiation and I don’t see that’s affected at all.
Ahh, blockhain and smart contract technology. I take it that a16z are hoping to get a piece of that major financial player action by investing in that space?
reading the article is really how i always felt about the a16z podcast. it feels so 'advertise-ish' the few times I listened to it. Like some sort of manufactured low key sales pitch on the companies they invest in.
Anyway I think the general takeaway from the article is the degree to which VC culture has become media/influencer/entertainment dominated. I really had to laugh when I read his "build" article and the next thing I read was that he pumped countless of dollars into clubhouse, a digital nightclub. So much for building real stuff. I feel like at this point if you put all the VC people together they couldn't build a bus station.
Never been the biggest fan of Elon personally but in contrast to all the valley types he and his companies to me represent what technologists should actually do, build companies that actually manufacture things.
I wouldn’t say Musk is immune to manufactured advertisting. there certainly has been some informal or not to reinforce his brand of of “real life Iron Man who will solve all the world’s problems”
I've realized in the last few years that VC is fundamentally marketing. Getting pitched by the best founders and getting the biggest LPs is all about how well a VC can position themselves as a thought leader. That's why most of the day job of a VC is basically content marketing: blogging, writing surveys of the tech landscape, appearing on startup pitch competitions, getting quoted in the media.
For a post-industrial economy, it's marketing all the way down, for the "fast-growing" segments. Tesla and Apple valuations come to mind. Good marketing goes above the activities you list, creating a sub-culture pushing the hype for the brand instead.
VCs are not there, and probably never will be, but they dream of it, as some of their self-aggrandizing visionary guru posturing can attest.
Isn’t YC an example of VC successfully creating such a “subculture pushing the hype for the brand”? After all, we are having this conversation on their website...
It's kind of hard for me to claim Apple is all marketing hype when they've just released their own new silicon that is by all accounts outstanding. That's not marketing, that's real engineering.
(Unless they didn't actually do that work and just white-labelled some chips from another firm)
Apple is a hard tech engineering company disguising as a branding company so that everyone that tries to compete with them follow the wrong lead and invest billions of dollars trying to sell unimpressive hardware at high margins and fail /j
> just white-labelled some chips from another firm
That's trivially verified by watching which of their competitors is licensing just as good custom silicon from the same firm, achieving similar performance/Wh. And it's nobody AFAIK.
"We put out manuals that had just hundreds of pages of listings of code, descriptions of circuits, examples of boards that you would plug in—so that anyone could look at this and say, “Now I know how I would do my own.” They could type in the programs on their own Apple II and then see “that’s how that works” instantly, and know how to write their own programs.
Running cards was the most important thing. All these companies started up making cards that you could plug into your Apple II and write a little software (mostly games at first) on cassette tapes. You’d go to the store and they’d just have all this stuff that you could buy to enhance the Apple II.
So one of our big keys to success was that we were very open. There’s a big world out there for other people to come and join us."
Steve Wozniak in "Founders at Work" by Jessica Livingston.
I too miss those days when you could look at a schematic for an entire computer and understand it.
I too miss the days when the computer was something you could just hack around on for hours, plug various things in and make a business out of it.
Unfortunately we're a long way away from those days.
That Apple ][ was never going to get the market penetration of an iPhone or an iPad. And that Market is what Apple is chasing today and where their focus is.
The market that the Apple ][ played in is basically the same as the one for the Raspberry Pi today. If you're looking for that experience, that's where you'll find it.
Apple sells products with the edges filed off (both literally and metaphorically) for the masses.
There are ample sources, and lawsuits, disagreeing with your argument.
"Josh Begley, a graduate student at New York University, developed Drones+ to provide up-to-date information on strikes, using reports collated by the London-based Bureau of Investigative Journalism – an organisation that tracks the use of unmanned CIA aircrafts. But repeated attempts to get Apple to offer the software at its app store have been fruitless. At first, Begley was informed that the program – which he hoped would raise awareness of the growing death toll from drone strikes – was "not useful" enough and did not appeal to a "broad enough audience".
The company position has since shifted, but only in the reasoning behind its refusal to stock Drones+. In the latest rejection email, Apple reportedly informed him: "We found that your app contains content that many audiences would find objectionable, which is not in compliance with the app store review guidelines.""
- You are thought of as a leader
- You get to invest in better companies because they know/want you
- The better companies outperform, because they were better
- You are increasingly thought of as a leader
- You get to invest in better companies... etc.
The marketing angle is increasingly a way to get onto (and sustain your place on) this carousel.
This would suggest that there is an imbalance and a lot more capital than startup projects though. Is it really that extreme over there in silicon valley?
Yeah. There’s a lot of startups, but only a few that are actually promising from a risk reward perspective. VC investing is about home runs. So they all fight over investing in a few companies
It's not about the lack of startup projects, it's the lack of genuine unicorn projects that pays for the other 19 companies that fail in their portfolio along the way from MVP to IPO.
Everyone has ideas for companies that can be worth millions. But the current orthodoxy around VC economics balk if your game plan is to be a 50M sale. Either you make the big time, or you can be a tax write off when you fail. A "moderate" success won't pay the Limited Partners back at the end of the 10 year vesting cycle the billions the put in at the start.
Theranos is an example how how much money there is trying to find the next Jobs/Musk/Zuck/Gates. Everyone that gave Elizabeth Holmes money we hoping that she was the Steve Jobs of biotech.
There is much less money for someone who wants to create a a dating site for people with food allergies.
Isn't that a perfect example of the folly of this intention? Maybe better if we collectively pursue a more fractal, pluralistic model? If capital only pursues monopolies that are a detriment to individuals at large, shouldn't we redirect that urge?
It depends a bit on the stage. It is definitely that competitive for the best growth stage companies, where "best" roughly means "highest growth in a market that can sustain a venture-level return (which in practice means a $1B+ valuation)." These companies tend to be large enough that they naturally gain access to investors, there's cheap capital everywhere, and there just aren't that many companies in big markets that are on aggressive growth trajectories.
Fwiw it also isn't just silicon valley at this point, the funding patterns increasingly hold across much of north america.
VC is fundamentally about the exits and the 'unrealized value'. Without those there is no way to keep the cycle going. Of course those exits had better confirm the unrealized value from previous news sent to investors.
WeWork, Valient and many others should dispel any notion of market sanity. There’s an insane amount of hype to the point of it being difficulty sometimes to discern who the bullshitter is (especially since everyone, including the “successful” gamblers, is bullshitting to some degree since there’s a lot of negotiation).
I don’t see why it’s irrational to believe that you can overwhelm the information channels a large amount of people have access to so that your hype gives you a market advantage (or in 0-sum situations your competitors end up making incorrect chooses).. You know the saying “perception is reality”? That’s not an irrational position and failing to acknowledge this is just leaving money on the table. To me the question is whether such unbridled hype is actually worth the cost. To me it seems to come with a lot of degradation in public trust, a commodity that’s perhaps the most important when trying to building a lasting, cohesive society.
I must say though that I don't love the a16z podcasts. The couple that I listened to were fairly bland. They need more personality/charisma etc. I find the TWIST podcast by Jason Calacanis much more interesting mainly because of his engagement/personality/authenticity etc.
I actually think I could do better with a bit a practice. @wennmachers ... hit me if you want to chat! (I figured I "go direct" here! :-)
Since the media likes to roll this way, I'll post the part Eric buried at the end:
"I talked to Wennmachers for over an hour for this story on the condition that I wouldn’t quote her. She asked me to write that she strenuously disagreed with many of this story’s characterizations and facts."
I wonder if there's any bad blood between YC and a16z now based on the Zenefits story? I mean this article basically said Parker was thrown under the bus. This suggests that a16z is not founder friendly.
As much as the collective "we" rails against cancel culture it seems to me he was cancelled. I mean a regulatory fine would be expected... and others have done worse.
Whole VC industry is set up on pushing one simple lie: that you need VCs to create a successful company. Everything else is marketing endeavours to try to sell this convincingly.
It's all the capitalists realising that to make software you don't need no factories anymore, which means much lower initial investment. So the marketing machine had to start and created this bizarre ecosystem of hyper growth, fuelled in kinda' pyramid fashion (all the money that is pumped into startups is spent on services provided by other startups they've financed).
The whole system attracts money hungry teenagers, which can be convinced that ethics are an obstacle to be overcome, and we end up with what we have today.
Personally, I think that owner of a bakery on a corner of my street that is visited by all the locals is successful. Is that a success as measured by the VCs? Probably not. Pinboard is an example of that in tech.
Also, yeah raising capital is helpful if you can do it in a smart way, and use that as a leverage to continue what you are doing. That usually means not listening to the VCs, as their goal is for you to grow as fast as you can and keep raising bigger rounds, so they can report how great of investors they are, not for you to build a sustainable (successful) business. You can see that replayed over and over.
Is Whatsapp successful? It was definitely raising quite a bit of capital, but still ended up being eaten by a well-funded competitor. I'd say that when you have VCs on your board who will actively push you to sell, so they can register profit, it increases chances of you being swallowed, by someone bigger. Unless you're saying that being eaten up, means outcompeted and pushed towards bankruptcy.
You don't really need VCs, you need Bezos to run you a tab. In fact I don't know why Amazon and AWS don't do this. The tab should have some leeway obviously with AWS taking on some risk but it seems like a no brainer.
"That same year, John Carreyrou revealed that Theranos had "struggled with its blood testing technology." Theranos had mostly raised money outside of Silicon Valley. But some venture capitalists tied their reputations to defending the company anyway. Marc Andreessen, who tweeted prolifically at the time, appeared to develop an affinity for blocking people who tweeted negatively about Theranos."
Their podcasts are really good and cover a wide range of tech subjects at a medium-high level for those not familiar. Content is usually aggressively future looking and often brutally honest and this article makes me think that is all by design now. Also look at their portfolio[0], makes you realize how big of a hand they have in the startup pie.
Didn't realize they funded Coinbase. Explains a lot of their crypto-content. I've seen a lot of skepticism on HN about crypto, but the a16z podcasts have convinced me it will be a critical component of finance and the web going forward.
[0] https://a16z.com/portfolio/