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Ben Horowitz decorates his office with photographs of famous boxers.

Stashed in: Venture Capital!, @bhorowitz, Boxing!

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Erick Schonfeld writes:

Horowitz, who decorates his office with photographs of famous boxers, can also be a brawler. You don’t want to mess with either one of them. Most of the sources I spoke to for this story—even those who had positive comments—requested anonymity for fear of damaging existing business relationships with either Andreessen Horowitz (VCs all co-invest with each other and sit on boards together) or its growing portfolio of companies.

Why all the fear and loathing? The primary complaint about Andreessen Horowitz is that they are price insensitive when they decide to invest in a startup. “They are overpaying for deals,” says one VC, “forcing the Greylocks of the world to overpay as well.” In other words, it can drive up valuations even in the deals it doesn’t win. Another VC calls this proclivity to push up prices the “Andreessen Horowitz Effect.”

“I think it is sour grapes,” responded Horowitz when I first brought up the theory with him. “We rarely pay a premium,” he told me, calling the widespread belief among his competitors a “misperception.” Certainly, when it comes to venture capital, one investor’s premium valuation is another’s bargain. That is what makes it fun. The underlying thesis behind Andreessen Horowitz’s investing strategy is that in any given year only 15 companies will make up more than 90 percent of the returns. So it pays to get into those companies at almost any price.

Only 15 companies a year are worth investing in.

Chances are good you won't be one of them.

I do love that Ben Horowitz loves boxing.

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