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Challenge of VCs, 26 Sep 2014Burn Rates, 25 Sep 2014Movie Theaters, August 31, 2014CEOs, August 24, 2014Timing of Ideas, August 21, 2014Big Problems, August 19, 2014Buzzfeed, August 10, 2014Journalism, August 10, 2014Joel Mokyr, August 10, 2014Watergate, August 10, 2014Financial Regulation, August 7, 2014Lyft Line, August 7, 2014

Marc Lowell Andreessen (born July 9, 1971) is an American entrepreneur, investor, and software engineer.

He is best known as coauthor of Mosaic, the first widely used Web browser; as cofounder of Netscape CommunicationsCorporation; and as cofounder and general partner of Silicon Valley venture capital firm Andreessen Horowitz. Hefounded and later sold the software company Opsware to Hewlett-Packard. Andreessen is also a cofounder of Ning, acompany that provides a platform for social networking websites.

An innovator and creator, he is one of the few people who has pioneered a software category (Web browsers) used bymore than a billion people and established several billion-dollar companies. He sits on the board of directors ofFacebook, eBay, and HP, among others.

A frequent keynote speaker and guest at Silicon Valley conferences, Andreessen is one of only six inductees in the WorldWide Web Hall of Fame announced at the first international conference on the World Wide Web in 1994.

Source: Wikipedia

A Twitterstorm is a sudden spike in activity surrounding a certain topic on the Twitter social media site.

A Twitterstorm is often started by a single person who sends his or her followers a message often related to breakingnews or a controversial debate. Using a certain and often original hashtag, the tweet quickly spreads as people arenotified of the message and then reuse the hashtag with subsequent retweets and tweets.

Source: Technopedia

Notes from Marc Andreessen tweetstorms

List of Tweetstorms:

Who is Marc Andreessen?

What is a tweetstorm?

Published on Twitter, 25 Sep 2014

One response to the tweetstorm about Burn Rates:

"Why isn't this just hypocritical VCs overfunding reckless founders of out-of-control startups?"

In fairness, there is probably some of that, though we & the investors we respect try hard not to indulge recklessness &irresponsibility.

But while it's irresponsible to vaporize cash & your company, it can also be irresponsible to NOT invest to become #1 in abig new market. Particularly now, since there are SO many more people on the Internet & SO many more businesses thatcan consume cloud/SAAS vs 15 yrs ago.

Tension: Overinvest, escalate burn, risk down round, vaporize when market turns; OR Underinvest, starve growth, don'twin market, implode.

Why is this so important? In tech-driven markets, overwhelming economic returns tend to go to the company with thehighest market share. And, the winning company with the highest market share can invest the most in R&D, build the bestand most advanced products. The prize.

Via Glengarry Glen Ross: Reward for market position #1 is 90% of the economic value. #2, a set of steak knives. #3,you're fired.

The challenge for CEOs and boards of tech startups is to thread the needle, just enough investment to take the #1position, but not more.

Meeting this challenge has resulted in thousands of venture-capital-backed companies creating millions of jobs over last50 years.

This challenge becomes far harder when money is flowing freely, since more competitors get funded. Very tricky.Requires deep judgment. BUT opting out of the race generally guarantees you won't be #1 or even #2. Not a good ideaeither. Just as serious a risk as blowing up. No single answer. Up to VCs, CEOs, boards, and later-round investors tothink very carefully about this for each specific circumstance.

Challenge of VCs

Published on Twitter, 25 Sep 2014.

Recently Bill Gurley and Fred Wilson have sounded a vivid alarm1.

I said at the time that I agree with much of what Bill says, and I want to expand on the topic further.

New founders in last 10 years have ONLY been in environment where money is always easy to raise at highervaluations. THAT WILL NOT LAST. When the market turns, and it will turn, we will find out who has been swimmingwithout trunks on: many high burn rate co's will VAPORIZE.

High cash burn rates are dangerous in several ways beyond the obvious increased risk of running out of cash. Importantto understand why:

First: High burn rate kills your ability to adapt as you learn & as market changes. Co becomes unwieldy, too big toeasily change course.Second: Hiring people is easy; layoffs are devastating. Hiring for startups is effectively one way street. Again, can'tchange once stuck.Third: Your managers get trained and incented ONLY to hire, as answer to every question. Company bloats &becomes badly run at same time.Fourth: Lots of people, big shiny office, high expense base = Fake "we've made it!" feeling. Removes pressure todeliver real results.Fifth: More people multiplies communication overhead exponentially, slows everything down. Company bogs down,becomes bad place to work.Sixth: Raising new money becomes harder & harder. You have bigger bulldog to feed, need more and more $ athigher and higher valuations. Therefore you take on escalating risk of a catastrophic down round. High-cash-burnstartups almost never survive down rounds. VAPORIZE. Further, to get into this position, you probably had to raisetoo much $ at too high valuation before; escalates down round risk further.Seventh: Even if you CAN raise an up round, you are increasingly likely to incur terrible structural terms like ratchetsto chin the bar. That nice hedge fund investor willing to hit your valuation bar? Imagine him owning 80% of co afterdown round. How nice will he be then?Eighth: When market turns, M&A mostly stops. Nobody will want to buy your cash-incinerating startup. There will beno Plan B. VAPORIZE.

Finally, there are exceptions to all this. But if you're reading this, you're almost certainly not one. They are few and farbetween.

Worry.

1. http://online.wsj.com/articles/venture-capitalist-sounds-alarm-on-silicon-valley-risk-1410740054http://avc.com/2014/09/burn-baby-burn/ ↩

Cash burn rates at startups

Published on Twitter, August 31, 2014

Next generation movie theaters could be so much better, charge a premium & dominate financially (like ArcLightHollywood)...

Convenience:

Reserved seatingValet parkingWarm embrace of Lyft & Uber including ride-poolingOn-site daycare.

Experience:

No commercials before movieSuper-comfortable chairs & sofasFood delivery directly to seatsSparkling clean bathrooms

Food & drink:

High-quality food with healthy optionsSit-down dining on siteFull bars (Lyft & Uber make more practical & safe now)

Variety of screening experiences:

Silent, or noisyUse of phones allowedFamilies + kidsAll kidsDining + movie together.

Use of crowdsourcing & crowdfunding for special screenings, full embrace of group & corporate events, all-you-can-viewsubscriptions...

Next generation movie theaters

Published on Twitter, August 24, 2014

In tech, we talk about difference between technical-founder/CEO (product/eng background) vs professional CEO(sales/marketing background).

Our general theory is: Easier to teach product innovator how to manage, than it is to teach sales/marketing operator howto innovate. There are many exceptions in both directions, of course. Mountain is hard to climb either way. Lots ofwork/learning/adaptation required. I propose another lens on dynamic: Difference between knowing What & Who, vsknowing How, Where, & When. Bear with me...

Great tech founder/CEOs tend to focus on What & Who: What product to build, and Who to hire/train/retain/motivate tobuild it.

Great pro CEOs tend to focus on How, Where, & When: How = processes; Where = geographic expansion; When =optimizing business across time.

To succeed at scale, each needs to learn the other skills & hire people who have them:

Founder/CEO -> How/Where/WhenPro CEO -> What/Who

The challenge: Usually easier to hire skilled business professionals who know How/Where/When than What/Who.Fishing from unbalanced pool.

The trap: Only nailing What/Who can carry startup a long way, but only nailing How/Where/When = slow road tozombieland and company death.

Ultimately = team-building for both paths. But dynamic different & differently challenging in each direction; requires opendiscussion.

Addendum: The Why = the mission. Ideally beyond just "the company's success". Increasingly important for all paths.Addendum: The truly great tech CEOs have mastered all of these: What, Who, How, Where, & When... and Why.

The truly great tech CEOs

Published on Twitter, August 21, 2014

A thing I believe that few believe: Almost all Silicon Valley startup ideas from qualified founders = great ideas. But someare too early.

Track startups over multiple decades, what you find is that most ideas do end up working. It's much more a question of"when" not "if".

This is interesting for several reasons:

First, it means that criticism of the form "that will never happen" is usually misguided & wrong.

Second, it means that a much bigger risk for founders is "too early", vs "wrong" or "too late". Often doesn't matchfeedback from others. To quote Peter Thiel:

It is often better to be the last company to market (hit timing right & take down the entire market) vs the first.

Third, when you have the timing right, you almost always feel like you're too late. Terrified you've missed the window= great sign. When idea X has been in the air, with repeated attempts to build X, yet most customers are not yetdoing/using X, it's never too late.

Fourth, founders by definition live in the future, see a world that doesn't yet exist & try to make it so. Nailing timing =hardest thing. Which is often why more pragmatic founders end up building the big & important companies -- theidealists were just too early.

Fifth, therefore, most of the great ideas for the next two decades are already known. In labs, in failed startups, in bigcompanies prototypes. Those ideas are being dismissed now since the early attempts have't worked. This has theopposite predictive value vs what people think.

Quoting William Gibson:

The future is already here, it's just not evenly distributed

Or it's not yet distributed at all. But it is here.

The key question is: What ideas are widely dismissed today due to having been tried & failed? Answer is the codex tothe next 20 years.

Timing of Ideas

Published on Twitter, August 19, 2014

I really don't get people who go out of their way to crap on the hard work and efforts of founders and startup teams.

The simple form of such crapping is pure sour grapes. The advanced version is "Silicon Valley is not trying to solve bigproblems".

In honor of today's outstanding YC demo day1, I'll reprise some thoughts from my July 7 tweetstorm on this cynical andpointless canard.

There are six logical problems with the false choice of "make trivial apps for 20-something SF hipsters" vs "do things thatmatter":

First, "make trivial apps" vs "do things that matter" are not actually in conflict-there's plenty of room and plenty ofmoney to do both.

Second, it's often hard to tell which is which up front. Almost all big world-changers were dismissed by critics as trivialat first.

Third, observer bias: Only read consumer tech blogs, only go to consumer tech conferences, think SV only works onconsumer tech.

Fourth, battling cynical critiques: Founders who articulate the big vision for changing the world get called arrogantand vainglorious. Both criticisms leveled with no cognitive dissonance: Founders either not pursuing big ideas, or outof control egomaniacs if they are.

Fifth, subtext often that communication tech/apps in particular somehow aren't important or don't matter, vs energy,education, etc. Why? Communication is the foundation of collaborative work, which is how all the important problemsgets solved. People working together.

Sixth, Anyone who thinks Silicon Valley can be doing more/better/different, come join us and participate in buildingnew things, products, companies. The central truth of Silicon Valley is that there's always more to do, and there arealways new opportunities to build & contribute.

I couldn't be more proud of today's YC amazing demo day crop, spanning more problem domains than ever. SiliconValley spirit is thriving.

1. YC Demoday August 2014 ↩

"Silicon Valley is not trying to solve big problems"

Published on Twitter, August 10, 2014

Tonight I'm tickled pink to be able to talk about our new investment in Buzzfeed!

My partner Chris Dixon discusses our new investment in Buzzfeed here: http://cdixon.org/2014/08/10/buzzfeed/

We think of BuzzFeed as a technology company. They embrace Internet culture. Everything is first optimized formobile and social.

BuzzFeed has technology at its core. Its 100+ person tech team has created world-class systems... Engineers arefirst class citizens.

And then on top of its technology core, Buzzfeed's reporting team is now routinely committing breathtaking investigativejournalism... Examples:

@maxseddon at the Malaysian airlines crash site in Ukraine: http://www.buzzfeed.com/maxseddon/chaos-at-malaysian-airlines-crash-site-leaves-victims-by-the@mike_giglio's war reporting from Syria: http://www.buzzfeed.com/mikegiglio/inside-syria-al-qaeda-was-here@itsjina's amazing story of Rwandan women flexing their political muscles: http://www.buzzfeed.com/jinamoore/how-rwandan-women-got-their-power@jlfeder on how Vladimir Putin uses anti-gay policies as a geopolitical strategy:http://www.buzzfeed.com/lesterfeder/russia-exports-homosexual-propaganda-law-in-effort-to-fight@AramRoston on how the US covertly arms its proxies around the world: http://www.buzzfeed.com/aramroston/how-a-one-time-pig-peddler-helped-the-us-flood-war-zones-wit

We think the opportunity in front of @peretti, @BuzzFeedBen, @zefrank, and their colleagues is effectively unbounded.We are very excited to work with everyone at Buzzfeed to help them realize their dreams of a profoundly important newmedia institution.

Investment on Buzzfeed

Published on Twitter, August 10, 2014

Something I believe that a lot of people I know believe: We live in Golden Age of journalism as measured by quality oftop contributors.

I've collected 238 members of the press I most respect into this Twitter list: https://twitter.com/pmarca/press/members -- It'sa joy to read every day!

As I've discussed before1: Great unexpected side effect of Internet = best journalists have far broader reach now.

I can't resist singling out some who fall into category of "drop everything I'm doing to read anything they write" -- out ofmany.

Politics: @MarkHalperin, @jheil, @MarkLeibovich, @nickconfessore, @harrispolitico -- it's routinely amazing howdeep they go.Economics: @worstall explains the world we live in better than anyone; joined by @greg_ip and @Neil_Irwin fordeep dives into macro econ. Financial crisis made clear quality of reporting by @andrewrsorkin, @KateKellyCNBC,@GZuckerman, @bethanymac12, and @BoydRoddy. At intersection of finance & economics, the ongoing work by@TMFHousel and @matt_levine is truly extraordinary & deeply insightful.

1. http://www.politico.com/magazine/story/2014/05/marc-andreesen-why-im-bullish-on-the-news-105921_Page2.html#.U-fY4oBdV5k ↩

Golden Age of Journalism

Published on Twitter, August 10, 2014

Outstanding new op-ed by best living economic historian, Joel Mokyr at Northwestern:1

"There is nothing like a recession to throw economists into a despondent mood. Much as happened in the late1930s..."

"The economic growth experienced through the 20th century, they tell us, was fleeting. Our children will be noricher than we are."

"What is wrong with this story? The one-word answer is technology...digital codification of information = reinventionof invention."

"[Terms] like 'IT' don't begin to express the scope of the change...[array of] tools that the digital age places atscience's disposal."

"The consequences are everywhere, from molecular genetics to nanoscience to research in Medieval poetry."

"As science solves problems that were not even imagined, inventors, engineers and entrepreneurs are waiting inthe wings to design new gizmos and processes based on the new discoveries that will continue to improve ourlives."

"The economy may be facing some headwinds, but the technological tailwind is more like a tornado. Fasten yourseat belts."

"So: If everything is so good, why is everything so bad? Why the gloominess of so many of my colleagues?"

"[GDP and productivity] work for a steel-and-wheat economy, not [ours]... mismeasure the contributions ofinnovation to the economy."

"Many new things are expensive to design, but copy at low/zero cost: Contribute little to GDP even if consumerwelfare impact is large."

I highly recommend Mokyr's books:

The Lever of Riches: Technological Creativity and Economic ProgressThe Enlightened Economy: An Economic History of Britain 1700-1850 (The New Economic History of Britain seri)

I also highly recommend Mokyr's recent podcast with Russell Roberts from Nov 2013 -- an hour of genius.

1. http://online.wsj.com/articles/joel-mokyr-what-todays-economic-gloomsayers-are-missing-1407536487?mod=_newsreel_2 ↩

Joel Mokyr

Published on Twitter, August 10, 2014

Something I believe that nobody I know believes: Woodward & Bernstein Watergate coverage precipitated 40yr collapseof trust in print news.

That long slow slide of trust can be seen, among other places, in Gallup polls over the years.

After Nixon resigned 40 years ago this weekend, Washington Post Watergate coverage became exemplar for entire nextgeneration reporters.

Political press became obsessed with unearthing scandal, which metastasized throughout print journalism. Gunning forPulitzer bait.

There are clearly scandals that need to be unearthed, like Watergate. BUT: Endless scandal frenzy is exhausting anddemoralizing. Particularly when applied indiscriminately across news landscape, and particularly when extrinsic pressmotivations are so clear.

Irony is we now know Woodward & Bernstein less reported Watergate than had story fed to them by Mark Felt, partisan ininternal FBI battle.

I think the 40 year echo effects of Watergate have more to do with the existential crisis of newspapers than anyone wouldever admit. As news consumers, endless barrage of scandal, tragedy, and conflict has real psychological effects. Makesworld seem worse than it is.

Followup reading that provokes thought:

http://dobelli.com/wp-content/uploads/2010/08/Avoid_News_Part1_TEXT.pdfhttp://www.informationdiet.com/http://www.wjh.harvard.edu/~dtg/Gilbert%20et%20al%20(EVERYTHING%20YOU%20READ).pdf

Also the book "Breaking The News" by James Fallows is thought provoking and recommended.

And of course Steven Pinker on the broad perspective of our era.1

1. transcript: http://www.amazon.com/gp/aw/d/0143122010?pc_redir=1407566574&robot_redir=1 ↩

Watergate

Published on Twitter, August 7, 2014

Lessons learned by managers and shareholders of large regulated financial institutions for the next financial crisis:

There is no risk of individual executive criminal prosecution whatsoever.Bailouts are guaranteed, particularly for bondholders, for all but the weakest members of the herd.The one thing that will get punished is acceding to the government's request/demand for stronger companies to buyweaker companies.Ultimate fines will be levied against your shareholder base 8 years in the future, not your shareholder base when thesins are committed."Too big to fail" institutions will be allowed to become bigger than ever, increasing their safety buffer for next time.

For bonus points, regulatory barriers against new competition will be raised, not lowered, further entrenchingincumbents."Too big to jail" is real, according to the Attorney General of the United States.Regulators on whose watch the last crisis happened, will be allowed to become even bigger and more powerful.*All three gov't branches -- executive, legislative, and judicial -- are out to lunch on oversight.

Followup reading, from US Federal Judge Jed Rakoff: http://www.nybooks.com/articles/archives/2014/jan/09/financial-crisis-why-no-executive-prosecutions/

Financial Regulation

Published on Twitter, August 7, 2014

We 1 are very excited about the launch of Lyft Line 2, and I want to explain why!

Lyft and Lyft Line are an archetypal example of how Silicon Valley is going straight at the hard problems, in this casetransportation. A growing number of people know about the amazing consumer utility and convenience created by "a rideon demand whenever you want". And in parallel, services like Lyft make it possible for people who may otherwise not beable to make car payments to keep their cars. In many cities, this results in a triple win: Consumer convenience, drivereconomic benefits, and improved business/tourism environment. But beyond that, as Lyft and its peers grow, ride sharingbecomes increasingly convenient and affordable as alternative to owning a car.

This leads to environmental benefits:

Fewer cars needed -> less natural resource utilizationNetwork efficiency -> fewer miles driven.

Online supply/demand matching eliminates need for cars-for-hire to drive around & look for riders. Network optimizationin bits not atoms.

Lyft Line is especially environmentally friendly: Facilitates multiple people riding together on same route, still with highconvenience! Everyone on planet wants equivalent to upper-middle-class American lifestyle. Services like Lyft makepossible without destroying planet. Everyone in world wants equivalent to upper-middle-class American lifestyle.Services like Lyft make possible without destroying planet. Few new tech's deliver so much to so many: riders, drivers, carowners, cities, environment. And to think it just looks like an app :-). Closing note: Lyft Line is classic "peace dividend of

smartphone wars" -- not possible pre universal smartphones.3

1. a16z ↩

2. http://techcrunch.com/2014/08/06/lyft-line/ ↩

3. http://cdixon.org/2014/03/18/we-leverage-the-billions-of-dollars-spent-on-the-consumer-mobile-phone-business/↩

Lyft Line

Table of Contents

Introduction 2Challenge of VCs 2Burn Rates 3Movie Theaters 4CEOs 5Timing of Ideas 6Big Problems 7Buzzfeed 8Journalism 8Joel Mokyr 10Watergate 11Financial Regulation 12Lyft Line 12