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Andreessen-Horowitz Core Principles & 5 Other Things Marc Said

Marc Andreessen and Ben Horowitz recently launched their new VC firm Andreessen-Horowitz with a $300 million initial raise.  I’ve always been a huge fan of Marc – he is a quintessential entrepreneur who has built some of the greatest businesses in the tech space over the past 20 years. 

On Sunday Marc announced his new firm via his blog.  In an interview with CNET’s Rafe Needleman Andreessen noted:

“The problem is that there aren’t valuable companies being formed. And there never have been,” Andreessen continues. There are, he says, on average 15 tech companies launched a year that will ultimately do $100 million a year in revenues, and these companies are responsible for 97 percent of the returns in the venture industry overall. “There just aren’t that many great founders.”

Andreessen-Horowitz is designed to address that very problem.  In his post announcing the new firm, Marc lays out the eight core principles of his and Ben’s new firm.  Later in this post you can read five other interesting revelations Marc has about the tech and venture industry from an interview he did with TechCrunch’s Sarah Lacy.  You can read Marc’s entire post here.  Some of the core principles of the new Andreessen-Horowitz include :

“Technology and its advancement is absolutely central to human progress. Entrepreneurs who create new technologies and technology companies are improving the standard of living of people worldwide and unlocking amazing new levels of human potential.”

While broad investor psychology whips wildly between euphoria and depression, technology change not only continues but is accelerating. In fact, we believe that technology change cascades — each new generation of technology continues within it the seeds for even more profound advances to come. And,

A technology startup is all about the entrepreneurial team and their vision. Our job as venture capitalists is primarily to support entrepreneurs by helping them build great companies around their ideas.”

You should read Marc’s entire post to get the other five core principles.  In addition, Marc laid out a few more points about how the firm will operate.  Some of these include:

“We have the ability to invest between $50 thousand and $50 million in a company, depending on the stage and the opportunity. We plan to aggressively participate in funding brand new startups with seed-stage investments that will often be in the hundreds of thousands of dollars. But we will also invest in venture stage and late stage rounds of high-growth companies.

Ben and I will go on boards of companies in cases where we are investing serious money — generally, $5 million or more, although there could be exceptions in both directions. We will generally not go on boards of raw startups — in fact, in many cases, we don’t even think today’s raw startups should have boards.”

Finally, Marc talked about the types of companies and entrepreneurs they are interested in investing in.  Some of those observations include:

“Above all else, we are looking for the brilliant and motivated entrepreneur or entrepreneurial team with a clear vision of what they want to build and how they will create or attack a big market. We cannot substitute for entrepreneurial vision and drive, but we can help such entrepreneurs build great companies around their ideas.

We are hugely in favor of the founder who intends to be CEO. Not all founders can become great CEOs, but most of the great companies in our industry were run by a founder for a long period of time, often decades, and we believe that pattern will continue. We cannot guarantee that a founder can be a great CEO, but we can help that founder develop the skills necessary to reach his or her full CEO potential.

Here are some of the areas we consider within our investment domain today: consumer Internet, business Internet (cloud computing, “software as a service”), mobile software and services, software-powered consumer electronics, infrastructure and applications software, networking, storage, databases, and other back-end systems. Across all of these categories, we are completely unafraid of all of the new business models — we believe that many vibrant new forms of information technology are expressing themselves into markets in entirely new ways.

We are almost certainly not an appropriate investor for any of the following domains: “clean”, “green”, energy, transportation, life sciences (biotech, drug design, medical devices), nanotech, movie production companies, consumer retail, electric cars, rocket ships, space elevators. We do not have the first clue about any of these fields.”

TechCrunch’s Sarah Lacy wrote an excellent piece about Andreessen’s announcement.  You can read her full piece here.  Her post came out of an hour long video that you can see here on Yahoo’s TechTicker.  In her post Sarah summarized five things Marc said in the interview that he didn’t cover in his blog post.  Those points were:

“1. Twitter and Facebook’s investors aren’t worried about monetization, but “it’s sweet” of you to.

2. Digg isn’t done. Andreessen is still bullish on Digg, citing the fact that Kevin Rose is no longer distracted with Pownce and Jay Adelson is moving to San Francisco to manage the company full-time.

3. The venture capital market should stop whining about Sarbox and other factors that are hurting their ability to take companies public. Says Andreessen, “Build Companies More Valuable and You Won’t Have this Problem.”

4. At least 300 venture firms will go out of business in the next five-to-ten years.

5. Innovation and opportunities to build businesses on the Web aren’t done. They won’t be done for a long time because the Web is one of the only inventions that’s pure software, compared to computers, the television or even the railroads. “

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4 Responses to “Andreessen-Horowitz Core Principles & 5 Other Things Marc Said”

  1. Allen Taylor Says:

    Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

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