A highlight from The Andreessen Effect

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If you were to get an invitation by mark andriessen into hit menlo park office. You might see photograph on the wall of early. Banking mogul j. p. Morgan andriessen might tell you that. He admires jp morgan for his ability to build a long lasting institution which also has his name on it. And it's the sort of as you'd expect from a master of the universe type like andriessen. The netscape founder. Of course put his own name on a much younger. financial institution. injuries and horowitz. So what kind of legacy is andriessen. And his firm building for itself. What is the state of in recent horowitz. Those are some questions posing on this episode of the information or what one. I'm cory weinberg. The information recently published deep. Dive headlined inside andriessen horowitz's rise my colleague. Kate clark join me to discuss in this episode. Of course recent listings of coin base and airbnb as well as the upcoming ipo instacart robinhood as well as slew of investment in that. One little app called. Clubhouse have given andrey horowitz new relevance then we discussed a story about one of the most classic tensions in startup land. Do quote unquote digital founders. Actually want to go public. My colleague kevin mclaughlin will join me to discuss future story. He just published there's investor pressures employees pressures dramas. It's worth reading and listening to first. Let's get to kate. and talk. And recent horwitz andriessen horowitz or a sixteen z. Is up there with sequoia excel and founders fund as one of the most recognizable names and venture capital. But over the years. A nagging question has hung over. The firm does its financial performance of the firm. Really live up to its big reputation. The information's kate clark was one of the reporters that dug into that question in recent weeks and she joins me now. Hello hey how's it goin'. It's all right So you've been on the show bunch recently talking about fintech and the rapid pace of investments of tiger global management Now we turn to andriessen who is also investing in a at a torrid pace first. Let's take a little bit of a step back because you cover venture capital you cover. Start you talk to a lot of entrepreneurs what do entrepreneurs usually think of when they think of a sixteen z. And you said already at are. They're known first and foremost for being one of the best top winter capital firms. But i think second to that second to their their global reputation they're they're known for their somewhat. Celebrity founders marc andreessen. And ben horowitz. Two who are both former entrepreneurs who had you know multi-billion dollar exits on early internet companies and then came together. To form andriessen horowitz. So there's there's that piece of it and then second is the platform model andriessen horwitz pioneered decade ago when they founded the firm and what that means is in addition to a check that they give founders. They will provide them with recruiting experts. Sales experts marketing experts security experts. They'll connect the people in their portfolio to founders that they backed years prior. It's this hollywood agency model that they really brought to venture capital and since they they did that twelve or thirteen years ago we've seen other firms follow in their footsteps. And i feel like the firm has also always had its fair share of skeptics. I feel like because they are maybe more out there. They built a reputation. They put more of a target on their back. They elicit maybe some. I rolling or some some back chatter from from others in the valley. What is that side of their reputation. Yeah it's absolutely true. I would say the more recent years and actually maybe throughout their entire history. I dunno some of that is before my time covering venture but they have been known for paying really high prices for companies and therefore running up valuations in silicon valley. They they have long kind of said you know. They don't concern themselves So much with entry multiples. So they're not gonna worry about the fact that evaluation might be fifty to one hundred x current revenues. They are much more concerned with the future with future. Growth prospects with with wilder company become a trillion dollar company. And while a lot of vc's may say that that's that's also their philosophy. I think this is something that we've seen andriessen do from. The beginning is is be willing and being comfortable paying high prices and now in this market. You know you're seeing every company has kind of high prices so it's really interesting to see how andriessen has adapted and we can talk about this more but i think one of the ways in which they have adapted is by doubling and tripling down on their best companies right and i think you point out in your story that one key recent example of this was of is of course point base which had a monster direct listing last week and gave andriessen horwitz. One of the biggest returns in vc history. What dot investment. Tell us about the firm's strategy andriessen general partner chris dickson Invested very early in coin base anderson hurwitz continued to invest in the company over many years including during the so-called crypto winter when nobody really wanted to invest in crypto or blockchain companies because people thought bitcoin heyday was over. And it wasn't really going anywhere. So people do give andrey horwitz a lot of flack for running up prices or being sort of time media or having politics that they may not agree with or whatever it may be but i think it's sort of undeniable the success that they've had with coin base. I mean you just mentioned. It was one of the largest the stakes in history. I think the firm is netting about eleven billion dollars from their investment and that could rise or fall depending on the performance of the stock. But it's pretty remarkable. So i think you kind of have to give them kudos for that because they did stand by a company that a lot of people were very skeptical of for a long time and they seem to be emboldened by these potential exits. They keep raising bigger and bigger funds and investing at a more furious pace. As you point out. I think in your story you said that the firm is making multiple deals per week which raises the question can start ups handle all this cash. Yeah yeah i think it's. It's a question that i ask. Sources investors founders all the time. Like if i'm interviewing a company that has raised four hundred million dollars in the last year. I'll say why do you need to raise that much money. And and there's a spectrum of answers. I think from will why not take take take the capital. Now when it's cheap and easy to come by and not knowing what's ahead especially after going through something like the pandemic and other companies you know. They're they're growing faster than ever. It's easier to scale company now than ever. And they're using that money to sort of quote unquote hyper hyper scale. Hype lit scale. Whatever you wanna call it and blitz for plants exactly but on the other end of that as investors one of their favorite investor quotes is that more startups die of indigestion and starvation and that really begs the question. Are we going to see a generation companies kind of wipe out. Because they raised too much money. I mean we will see losers. And i think it's just a matter of time before we know who those losers are and why that happened. I think your story at least made me realize that look. This is a firm that is probably more confident than ever. It probably was not lacking for confidence before. But you know. They're finally coming into a period where they've had some pretty significant ed exits and that more coming so i think he took us inside of the swagger a little bit And i i encourage everyone to read the story that we'll

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