note: when it comes to business, we often think of to seek the aid of vc firms to avoid risk. So how do vc firms for their risk aversion and success? Let the subversion of VC industry in silicon valley andreessen Horowitz tells you, how to do like star packaging technology risk investment.
Andreessen Horowitz, founded in 2009, has now become the top in silicon valley venture-capital firm. To say the secret of its success, is very simple: talent is the highest.
Andreessen Horowitz seems to be doing business plan and market analysis, of course, it also pay attention to the details of the new technology. As much as possible, however, no matter what it’s all in a few days to solve enterprise’s fund-raising, rather than from enterprise, has been waiting for, but don’t know when is the head, this kind of situation is very common in the vc industry, apparently Andreessen Horowitz has broken industry practices. In addition, the company also hired a few people to help entrepreneurs to develop the market, recruiting employees, expand the business, and provide the new company does not have industry knowledge and contacts.
“the company has 100 employees, almost everyone in the service for you,” Andreessen to participate in the investment of financial services the founder of a start-up company Dwolla Ben Milne said.
Andreessen Horowitz is a science and technology investment company, but also to a certain extent can be said to be an entertainer broker company. Its co-founder Marc Andreessen is Internet pioneer, he started Netscape before start into the field of venture capital and other companies, so have long made clear their development center of gravity. In 2010, Marc Andreessen interviewed once become a Hollywood super agent Michael Ovitz, who also started a creative artist company (CAA), the interview as a private event by the Wall Street journal on the screen, to the public.
Marc Andreessen leading venture capital company has a professional attitude, founder of this trait can attract a lot of science and technology, but the income is not high. – Robert Galbraith/Reuters
“we try to do a lot of things in Andreessen Horowitz, is directly to use the experience of artist Michael started innovation company,” Ben told the present silicon valley tycoons. The company did not comment.
indeed, these two industries of similar degree is very high. And realize a vc can like entertainers brokerage operations, not only Andreessen Horowitz’s partners, people also includes Andreessen long-term business partner. The economics of silicon valley and Hollywood has an astonishing consistency in economics. Once the use is found, is likely to accelerate the production of the tech bubble.
Michael Ovitz all attention was focused on his star investment, creative artists partner, is there a hospital or a private school board members, thus provides the high-quality service for the stars. Now, he can the stars to the most important thing is money and control.
in the mid – 70 – s, 20th century innovation Ovitz was established artists, coincided with the disintegration of traditional studio system, thus created a new world. In this new world, the artists are expected to get more money, but the company get less. “Over the past 60 years, the production company by a lot of benefits from these artists,” Ovitz said in an interview, “we now do is to try to change the rules.”
studios still thirst for stars, but they are no longer bound by long-term contracts.
Ovitz brings together a whole is talent customer base, and then use the power of the collective win lucrative business contracts for them. “Ovitz says, ‘I’ll help you out of your life,’ and he helped me and universal pictures, arrived at an agreement.” 1999 Martin Scorsese said. “they set up the office and the projection booth, also support my film fund.” Creative artist company or Dustin Hoffman (Dustin Hoffman), Tom Cruise (Tom Cruise) and Glenn Close (Glenn Close) brokerage firm.
from the point of view of Andreessen, he finished from venture capitalists in silicon valley to the founder of a major shift. In the 1970 s, vc firms in start-up companies with relatively low price to gain more of the company. But in the 21st century, the emergence of new technology to reduce the company’s start-up capital. “We have been estimated, now set up a software company, the cost is only one over ten of the ten years ago,” Revolution, said David Gordon’s Golden (David).
deep-pocketed individual investors are often called angel investors, their ability to have how old? You can say that, on the premise of no vc help, they can let anyone to set up the company. Founder if lucky, met such an angel investor, he rose to the company’s performance is exponentially, as a result, venture capital firms in the disadvantaged.
but Naval Ravikant said, vc firms also have a lot of the best deal. Naval Ravikant is a long-term investor, also created aggregators AngelList, now, he said: “the main problem is that who can get into the qualifications.”
Andreessen Horowitz congenital advantage helps him to win, but if you want to get a startup investment authority, the key is also very favorable financing conditions, this point and creative artists is the same company.
in general, vc firms trading way is like this: after his (her) to determine investment object, will forecast the company’s “value” before, and then on the basis of plus a stake. , for example, assume that vc firms think of before the investment of a company’s market value is $40 million, then the vc investment of $10 million for a 20% stake in the company that the company’s market value is $50 million. The higher valuations more advantageous to the entrepreneurs, because it means that he is going to give up in order to cash equity will be a lot less.
in silicon valley, Andreessen Horowitz renowned for driving up prices, that she was angry that rivals. is now said to be the management of Andreessen Horowitz assets reached $4.2 billion, in order not to let a high valuation dilute the ownership of the company, the company then improved the investment quota. Ever thought about some of the competing risk investors that Andreessen Horowitz investment than other enterprises put forward investment quota. (some investors who had agreed to accept interview requested anonymity) “they want to change the chip in the match,” Greg Kidd said. Greg Kidd is an angel, he invested in several companies, Andreessen investment later. “Wealthy people can also have some other assets that deal or no deal, but there are few indeed.”
have said for venture capitalists with Andreessen Horowitz, Andreessen Horowitz bidding often half higher than other bidders, even one times. in 2001, their valuation of Fab flash sales site as much as $200 million, also sillily get a $40 million investment. (the company occasionally will handle the big deal, as it Uber that trading is very expensive.) These bids tend to enterprise was overjoyed, the value of their own company unexpectedly suddenly soared to twice, as expected.
there is a rule in Hollywood, hire star can produce a sensation. However, this is not necessarily so. Film expert economist Arthur s. De varney (Arthur s. De Vany) through research in the 80 S to the mid – 90 – S movies, found that the participation of only 19 stars with director seems to increase the chance to let the film grossed over $50 million. And in the star’s payday, the profit of whole studio also lost spontaneously.
management actually films and the rule of start-ups is and similar. They all follow the so-called power-law distribution, which means most investment close not back to the cost, only a few can make ends meet. But some people can get considerable profit, even did a very successful here.
Andreessen and his partner seems to be playing the Ovitz believes he and his super agent: the role of the agent to select talented people star for packaging, and send them to the market, the agent to bring the interests of rich, also bring many benefits to the stars. In fact, no matter be packaging is a Hollywood star or start-up, the relations are the same.
however, one thousand partners and Andreessen Horowitz analogy method to make a mistake? Unlike Ovitz income with the guys, venture capitalists are more like the studios in Hollywood, they are rarely pay subsidy program for a long time. Ben and his friends have invested many startups, as usual, they should have formed the industrial chain can one keep a balance of payments, also should have corresponding investment skills. Now can reflect skills is early in the morning they bought an, sets and Pinterest, however, investment record shows that they do not profit. At present, they already have some well-known misfiring investment also in them (Fab), nearly tens of millions of dollars in losses.
even if they these options are good, but they are stars spend too much, so much so that returns are usually appear insignificant. For this example, imagine that in 100 million the company invested 10 million, compared with $1 billion worth of $100 million investment, obviously the former are more likely to double the money, but they in maternal and infant Zulily flash sales site is to choose the latter. Of course, can demand to raise billions of money or reached such a high price for an initial public offering of the company is not much, can keep valuation company even less, Zulily’s share price fell sharply from last year.
in addition to business contact with other companies, Andreessen Horowitz’s fate is closely connected with the technology market. If the shares of the technology industry has always maintained good momentum, then Andreessen, the valuation of ultra high among the enterprises can keep a profit, even if has a loss, is confined to manageable. However, if the market turned, Andreessen Horowitz is really in big trouble.
is particularly bad, Hndreessen Horowitz is not just up beneficiaries of the tech bubble formation in the final analysis or because too much money in the company around the little circles. Of course, is also part of the company’s own ambitions. “More often than not, because there is competition, so if not appeared on the market price standard members, that is to raise costs for all people,” says one investor.
of course, in the eyes of Andreessen, the market is rational and some fundamental power, just like the popularity of smart phones have revolutionized the value of the popular software applications. Andreessen, however, also showed some concern. Last September, he said on Twitter: “market will one day be turned to, if that day really comes, will expose those swimming naked.” He was warned companies that failed to manage her money, be careful of the property “evaporate”.
it seems to be the spending tens of millions of dollars in entrepreneur’s confession. Hollywood stars have advantages, but also it has been proved that the stars will only make their own pockets, while others will only be getting poorer and poorer.
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