Marc Andreessen, Andreessen Horowitz cofounder and general partner, at Startup School 2016.
In his conversation with YC Partner and COO Qasar Younis, Marc outlined two tests investors run on entrepreneurs before working with them.
1. Can they get a warm intro?
Marc : The way that most of the top end venture capital firms work is basically they'll take you seriously if you come in introduced by somebody they've worked with before and they won't take you seriously if you don't. There's an argument that plays out in the Valley which is that that's sort of unfair and unreasonable and what about all these founders all over the world and why can't they have access the way the people who are already connected can?
The argument in favor of the warm referral is that it's the first test and it's the first test of your ability to basically network your way to the investor. The way the investor thinks about it is if you can't figure out a way to network your way to a VC firm, which is, of course, in the business of meeting founders, then you're unlikely to be able to network your way into hiring a great team or network your way into selling your product to customers.
I think that the role of the warm referral is misinterpreted. It's a test you just want to pass. You don't want to take any chances on that. The good news is if you're connected to YC, if you're connected into the Valley angel/seed ecosystem, that's a very easy test to pass. If you're not connected into YC then the thing to do is to get to the Valley or get into the network.
2. Can they successfully present to Andreessen Horowitz's full partnership?
Marc : Usually the process is a first meeting with one of the junior people which might then lead to a second meeting with a broader group of those folks, maybe with one or two general partners.
Then the big event is when you progress through one or two or three meetings and you get invited to present to the full partnership. Usually at most firms that's on a Monday. And that's a formal thing, including all the general partners at the firm. Sometimes we'll have 40 people in the room for that.
And this gets into another debate, which is, okay you guys go on and on about creativity and all this stuff, why do you want the founder to stand up there like an idiot for 50 minutes reading off powerpoint slides? Why don't we just have a conversation? Why don't we do things casual? Why don't you do more research up front?
Again, I think that's misinterpreted. I think the formal presentation is another test, which is as a founder if you're good enough at your job as a CEO to get up and present to an institutional investor for 60 minutes and sell them on your thing. We're easy. VC firms exist to give out money. We love when somebody walks in and has a compelling pitch and we can give them a check. That's a successful day for us.
In contrast, every other pitch you're ever going to make will be to somebody who's going to be much worse than us, right? Customers are going to be like "No, I'm not gonna give you any money" as their default position. You're going to try to recruit engineers and they've got 20 other job offers. Why is your pitch going to be so much better than the other 20 startups?
Later in the conversation Qasar asked Marc who he looks up to.
Marc : I'm a big fan of history. There's sort of a classic cliché in the Valley which is we don't respect history very much. And for a lot of people who visit the Valley for the first time that's their impression because they want to drive around Silicon Valley and it's like "good luck with that." There's a freeway. There's a strip mall. There's an office park. There's a security guard that won't let you in the office park. There's no physical history here, really.
And we're all about the future. We're building the future. So I think there's a natural tendency to assume the past isn't very relevant. And I actually criticize a little bit the Elon [Musk] school of thought, which is very strong in the Valley, which is about thinking from first principles. It has its huge strengths for sure but it does kind of dismiss the idea that people who came before us had anything to teach us.
My general view is the people who came before us had a harder time doing what they did than we do. The world was in a more immature state. Startups started before 50 years ago didn't have venture capital. Startups before 20 years ago didn't have the internet. Things were harder in the past.
So the people who were successful in the past I think were often better than we are because they had to be. I'll recommend a few books.
The Maverick and His Machine by Kevin Maney
If you think that Steve Jobs was rough on people, he had nothing on Thomas Watson Sr. The book has transcripts of executive staff meetings at IBM in the 1930s and 1940s and let's just say he was an absolute terror. And built an extraordinary company. So he's a role model–though not the terror part.
Bill & Dave by Michael S. Malone
It talks about how Bill Hewlett and Dave Packard built HP over the course of 30 or 40 years.
Then I like going back further. I like what was called the Second Industrial Revolution where you got electricity and cars.
The Wizard of Menlo Park by Randall E. Stross
I Invented the Modern Age by Richard Snow
If you go back and read the history of cars a hundred years ago, Detroit was a lot more like Silicon Valley today than I think people understand. In fact with Henry Ford, Ford Motor Company was not his first company. There are all these interesting backstories.
And you can go back even further. This is not to compare us to this but just as inspiration and role models. Florence at the time of the Medici and Leonardo DaVinci.
Leonardo's Lost Robots by Mark Rosheim
It turns out DaVinci, while he was doing everything else that he did in life, he was also designing robots. And in his sketchbooks there are fully fledged designs for like everything mechanical. Things like all the Boston Dynamics projects. He was trying to invent all that stuff 500 years ago and didn't quite have the technology to pull it off. Couldn't quite go to TI and get the microcontroller. So he had some issues but, you know, he's an inspiration.
The Lunar Men by Jenny Uglow
It's about the Lunar Society, which was in England about 250 years ago. James Watt who invented the steam engine and all these other guys who were doing this kind of thing back then all worked together. They had sort of a YC thing going back then.
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