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The Andreessen Horowitz Effect | Techonomy


Stashed in: Marc Andreessen, @bhorowitz, Interesting...

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Interesting.

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.”

This doesn't affect 99.99% of the startups out there, so I agree, this complaint is weak.

oh yes.. they quite controversial-- and often disliked-- by many other firms for driving up prices. As well, I've heard form many they believe core functionality has to be done within, not as a service organization "Would Apple be Apple if they used their VC's team when they needed design?"

"Asked about Andreessen Horowitz and its full-service strategy onstage at the last TechCrunch Disrupt (where the firm’s impact on the VC industry was a recurring theme), Sequoia partner Roelof Botha quipped: “One thing we believe at Sequoia is that it is important to teach companies how to fish instead of just giving them a fish. Ultimately what matters most is the relationship between the partner who is on the board and the entrepreneur.”"

In 2020 we'll have a good comparison of the returns of a16z and Sequoia to know which model has better ROI.

But it's an experiment worth doing.

Actually, if there's one thing impressed upon me by the Steve's jobs isaacson biography, it's just how much apple hired agencies and companies to work with them on their core design, branding, and logos...

This reminds me of that show "Auction Hunters"... ❝ 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 haven't seen Auction Hunters. How is it similar?

In Auction Hunters, and Storage Wars they spend their time buying things abandoned in storage units. Since it is a micro-economy with limited available products, and limited cash bidding on those products, you'll often see people upping the bids JUST so they can exhaust the cash of other bidders to advance their position on later buys.

also referenced recently in White Collar

Dave, that sounds a lot like how I've seen people use eBay against me, too. :)

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