in discussion with Kevin Rose via Youtube
Solid interview with good info throughout. Enjoyed this bit near the end, paraphrasing Horowitz : "The thing I believe we do better, at a16z, we are very, very good at helping the technical founder become CEO.
Thats important in our model, because we prefer the founder run the company. Are many reasons for this, but simply its:
- knowledge of things that have already happened
- commitment to making the company work, especially when it doesn't make sense to have commitment.
Courage and conviction were recurring themes. Also the work of a16z to make life easy on founders by providing a deep CEO network. Silicon Valley runs on network effects, the best firms are explicitly investing millions to capture and curate this (see YC alumni network).
as Stanford GSB via Youtube
During late 1990's tech bubble conventional wisdom on the C-suite went something like: founders can't run companies, therefore we'll premote the founder to VP of Eng, or CTO and bring in a professional business person to be the CEO.
The result was a lot of poor companies were built. They rushed to go public as soon as possible, built medicore products. Extreme mantra like:
Forget details, just do deals
All the engineers we're miserable at these companies. In 2015, we all understand technical founders as CEO is a good thing. Now the art of building a business, is that sales and marketing is forgotten. The technology is now leading these companies, with excellent products, but they fail on the execution of selling the product.
A magical partnership between technical founder and CEO.
a16z decided to build a VC firm optimized for how turn a technical founder into a CEO. Using this as their guiding principal has led to outsized success. To get on the board, or become a16z partner, you must have been a CEO somewhere.
Network effects are huge with former CEOs in the Valley. The technical founders often lack this network, so a16z has 'pre-constructed the network'. We have 60 FT staff that organize around different parts of the network: sales, marketing, hiring, legal, etc.
Our day job is crushing entrepreneurs hopes and dreams. We say no a lot.
Basic math: only about 200 compenies per year that get funded by top VCs. Half of these will fail outright, and the returns will be concentrated in 10-15 big winners. They all need a huge market, great people and a differentiating technology.
Ultimate decision is, and should be around, people. Find people with courage and genius. Courage without genius might not get you where you need to go, but genius without courage certainly won't.
Many smart people will assume that Sherlock Holmes-esque, or MacGyver-type magic solutions will solve their problems. This is dangerous thinking, as it more often not the case that a silver bullet will solve your problems. In contrast, firing a bunch of lead bullets tends to work: more hours from engineers on product, more calls by sales reps, etc.
The best ideas are not clones of others. Uber for parrots is not going to work. Instead, we look for the idea maze route of discovery. In this case, a founder has worked for years on an idea from the 'crazy starting point' to the end which is a great idea for a viable product that will work today.
A good way to spot this take a contrarian approach to coachable entrepreneurs. If a VC provides an opinion or domain-specific optimization that is rejected by the entrepreneurs, this is a great sign.
If during a pitch the founder gets angry at a potential undermining or ignorant question by a VC, this is a good sign, so long as they have a good explanation to support their incredulity.