Marc Andreessen’s View From the Top

Joe Hansen

Esteemed entrepreneur talks startups, literature and history

Marc Andreessen spoke at Stanford’s Graduate School of Business on Tuesday to a packed audience that included his wife, Laura Arillaga-Andreessen, and his father-in-law, John Arillaga.

Andreessen covered topics from his views on the current tech landscape to how he assesses entrepreneurial talent to his partnership with Ben Horowitz. He also shared thoughts about journalism.

Despite the fact that many MBAs (Stanford and elsewhere) are flocking to the industry, Andreessen is adamant that there is not a tech bubble. He said it was simply entering a mature phase. He would not discuss Facebook’s acquisition of WhatsApp, noting that he was on Facebook’s board. He compared today’s companies with shell companies of the late 1990s that ignored details in favor of deals. He said today’s startups are not as strong in the sales and marketing space.

Andreessen joked that MBAs could find roles in startups by trying to become a Sheryl Sandberg equivalent: a high-powered businessperson with deep expertise and a willingness to be a No. 2 person to a tech founder. He cited other examples such as Bill Campbell (who partnered with Scott Cook at Intuit) and Dick Costolo. He said when great pairings like the ones above occur, teams can really crack the code and make 1+1=3.

Andreessen said that as he and Horowitz created their venture fund they talked to many VCs but the only two VCs who provided much help were Jim Breyer (Accel) and Aneel Bhusri (Greylock and Workday). Bhusri tweeted to The Dish Daily that it was nice of Andreessen to say that, “but he didn’t need much help :-).”

He noted that Andreessen Horowitz was built on the notion that a VC firm could empower an entrepreneur with a large network of recruiters, reporters, customers, CIOs, CTOs and other business contacts that VCs typically possess.

Andreessen noted that there are roughly 4,000 startups each year that contact his firm and that his firm only invests in 20. His—and the other VCs at A16Z’s—job is to crush entrepreneurs’ hearts and dreams.

He said out of the thousands of business plans they narrow the number of investible companies to a couple of hundred and that the hardest thing to decide is whom to invest in among the couple of hundred. Within that couple of hundred, there are teams that are fundable by any of the top tier VC firms. Each year, there are probably 15 companies that will generate 95 percent of the industry’s returns. Andreessen said that “even the top VCs tank half of their deals and that funding is not a complete validation of a startup’s idea.”

He said the best founders have a combination of courage and genius, and that one of the A16Z partners liked to quote Fridriech Nietzche, saying that those entrepreneurs have the will to power. These courageous entrepreneurs “simply will not stop.”

He also belittled the oft-repeated notion in Silicon Valley that it is acceptable to fail; he doesn’t buy it.  A16Z believe “failure sucks.” He said that the most exciting startups are led by the bright founder who can walk an investor through an idea maze and move the investor from a crazy position to a point where it seems like an executable idea in the real world.
Andreessen highly recommended three books to the audience. The first is The Innovator’s Dilemma, which many in Silicon Valley recommend. The others were more surprising: Technological Revolutions by Carlota Perez and Ben Horowitz’s The Hard Thing About Hard Things, which just hit the shelves.

He noted that his relationship with Horowitz is similar to a marriage, and provided the analogy of the old couple on a park bench who sit at opposite ends but nonetheless sit together. He said that “they had been working together for so long” and that they “understand each other and know when to defer to each other and when to trust each other.” He added that “they argue about everything and constantly argue because they come from different points of view.” He acknowledged that Horowitz was a better operator.

He did answer a question about Carl Icahn’s attacks about him being on the board of Ebay. He quipped that he thought Ichan would be introducing him today, and that the fact that there is activist activity in the tech space indicates that tech is not close to being in a bubble stage. He said this was especially true for older companies as they generally have very high cash balances and low multiples.

Andreessen said he spends most of his Mondays in partner meetings and that it’s a very good sign for entrepreneurs to be invited to the Monday meeting. He also said that it’s best for startups to pitch early in the day rather than late and that the partners will typically meet with 3-5 startups each Monday. He said A16Z is run very methodically and that they have a pipeline report and run the deal process through a salesforce pipeline. He added that A16Z comprehensively tracks companies in their portfolio and companies they are sourcing.

He said he hated copycat startups and startups that are variations of successful startups. He noted the flappybird clones and the snapchats for dogs.

Andreessen finished the talk by answering two questions. The first question was around journalism, and he noted that his interest in journalism was less from an investment point of view as A16Z doesn’t really invest in content and media production. But he thinks news journalism is very important and believes that newer entrants to the field will be able to make the business sustainable again. He noted that another reason he cares about journalism is because he is an avid reader.

The second question he answered was what areas of the tech industry he found exciting. He said there were three areas with great potential: healthcare, education and financial services. He noted that early on the plan for A16Z was to do “no rocketships, no space elevators, no drugs, and no biotech and healthcare.” It is interesting to note that all three of those spaces are heavily regulated.

Throughout the discussion, Andreessen displayed a deep appreciation for history. He cited tech pioneers such as Thomas Watson, David Packard, Ross Perot and Tom Perkins. He quickly captured the zeitgeist of the late 1990s during the tech bubble. He also provided a broad overview of journalism’s history.

Andreessen was interviewed by Andre De Haes, an MBA2 at the Business School and who will be a venture capitalist working at Index Ventures after graduating in June. He’s included in our list of Stanford students who are VCs.

This is a repost of an article that appeared on The Dish Daily on March 5, 2014