Andreesen Horowitz is loosing the
ability to identify impactful startups
I don't know if anyone can properly guess if a consumer startup is going to get traction until it does, especially in the mobile space. That said, they did manage to get a 312x return on their seed investment in Instagram (which they declined to invest in a second time as explained here: http://bhorowitz.com/2012/04/22/instagram/)
A-H offers seed investments to YC companies in order to get a foot in the door with the small fraction who will succeed. Offering blanket seed investments confirms that they really don't have any idea at first either. There's nothing wrong with that, it's just the nature of the beast. (http://venturebeat.com/2011/10/14/andreessen-horowitz-to-giv...)
No where in your comment did you outline where my reasoning is wrong. Losing vs Loosing. Instagram doesn't address why they are dropping series A investments. 300x growth on nothing is still nothing.
As for seed investments into YC companies, who cares? If they are getting out of the seed and series A game, I assume that that extends to everything else.
The fundamental point is that the further you move down the investment line the less you are likely to be able to identify revenue before it happens.
None of the exits, except Instagram, listed on Wikipedia were invested in at a seed or A stage. http://en.m.wikipedia.org/wiki/Andreessen_Horowitz
A classic example is the drug Viagra, one of the most profitable consumer technology investments in recent history. Its (most profitable) use today was originall reported as a "side-effect" in early clinical trials.