Slashdot Mirror
Andreessen's Secret Plan To Find the Next Netscape
Hugh Pickens writes "CNN reports that Netscape co-founder Marc Andreessen has raised $300 million to launch a new venture capital firm that aims to reinvent the way money is doled out in Silicon Valley while reflecting Andreessen's unwavering view that the Internet will soon take over all aspects of our lives and that online services won't merely supplement your TV viewing or newspaper reading, but will replace those activities altogether. Andreessen, on the board of Facebook and an angel investor in Twitter, says that technology moves so quickly that only the young can keep up with what the latest stuff can do. 'So the 24-year-old coming out of Stanford will have a view of technology that the 29-year-old — who was 24 just five years ago — would never think of,' say Andreessen. 'We love that kind of thing.' Andreessen thinks that when companies are acquired too quickly, innovation slows down, and he says that YouTube might have come up with a path to profitability faster if it wasn't a part of Google. 'It is hard for big ones to out-execute up-and-comers,' Andreessen says. 'Our secret plan is to watch what gets acquired and fund the next company. A good template is to fund companies doing whichever the next-generation product would have been.'"
"that the 29-year-old -- who was 24 just five years ago" I was told there wouldn't be math.
"So the 24-year-old coming out of Stanford will have a view of technology that the 29-year-old â" who was 24 just five years ago â" would never think of," say Andreessen. "We love that kind of thing."
Great. More age discrimination in software development hiring practices.
I'm obsolete at 36.
So how old in Andreessen and how will he recognize the 24yo luminary from the 24yo that is full of shit?
Is anyone else getting the feeling that the board of Facebook just might be the founders of Carrousel in Logan's Run?
You could have the greatest development the tech world has ever seen, but if you're over 30, prepare to be recycled as fodder for Andreessen's mythical 24 yr old.
1) Come up with secret plan ...
2)
3) Profit!
Said Andreessen, "Our secret plan is..." ...posted on a blog at NYtimes.com.
You're not doing it right!
OMG!!! Ponies!!!
Ummm...wasn't Netscape purchased by AOL...so much for that theory.
Reality is a bitch.
So they'll fund the also-ran companies that no one wanted to buy?
Let's see- for YouTube, that would have been Break.com, Dailymotion, and about ten zillion other video startups that I am having trouble recalling at this point.
This sounds like a strategy out of an airport business book, but it needs a snappier tagline- something like "The Goldilocks Effect." You don't want the company that's too hot...
It is hard for big ones to out-execute up-and-comers
Funny quote, coming from a guy whose company was crushed by Microsoft.
online services won't merely supplement your TV viewing or newspaper reading, but will replace those activities altogether.
Will replace?
For me, at least, it has replaced already.
Many years have passed since I bought my last newspaper, and I only watch TV for live football games.
factor 966971: 966971
Ah. The old "youth is everything, experience is irrelevant" approach. The movers of this new culture can facebrag about it as they pass their hand me ups to their decrepit, tweetless, senile elders (anyone over 25).
This is like hitting refresh on your browser until a new /. posting comes up, right?
mmmm...forbidden donut
Interesting, I'm now late 30s and frequently run across 20-somethings who have little to no computer/Internet interest. Some personality types want to interact socially in person and others want to read paper.
Sure libraries are accommodating new media, but they aren't eliminating the old, which still gets used. Attorneys and doctors continue to need paper.
His perspective generally sounds like a good one, but doesn't seem to recognize an entire segment of our population--like nearly everyone at the BBQ I was at on the 4th.
A friend there was laughing when her sister called to ask where/when fireworks might be shown, despite them having a computer in the kids playroom and their kids being able to search it faster than she could call her!
This guy has a track record of following behind and just missing. The plan sounds like a mission statement rather than an actual plan, and the preconception that age has anything to do with innovation at all is crap thinking.
He is spending other people's money in a risky environment with their full knowledge and consent. it is not called "venture" capital without a reason. They know they are investing in a high risk high potential business plan.
Andreessen had his shot. He choked. Next.
At least he cashed out enough so he can play business boy forever. whatever.
but hire some old people to run the company. Big ideas and lots of money don't always work out well if you don't have someone experienced steering the ship.
If Andreessen's looking for the next Netscape to give money to, I'll save him some trouble and email him my home address.
http://alternatives.rzero.com/
And it doesn't matter. As the prototypical "obsolete" 29 year old from the example, I can tell you it doesn't matter whether the 24 year old is full of shit or not. Shit sells.
When I was applying to ivy league schools, literally every piece of advice I got was to lie out your ass. Lie about your achievements. Write your own recommendations. Just pull stuff out of thin air. Make it as flamboyant as possible, and as convincing as you can. As far as they know, you're a genius black inventor mathematician cellist who can write upside-down and backwards using your little toes. Books, articles, current and former students; they all said the same thing: Give admissions staffers the unbelievably entertaining bullshit they want to hear. Hell, you should even tell them that you have some plan to pay back the ridiculous loans they give you.
And judging by what I've witnessed over the last ten years, that was absolutely the correct advice. Yale, Harvard, the school doesn't even matter. Most of them didn't do well. Some didn't even graduate. But, one by one, a steady stream of the the best liars these institutions have to offer have stood up and lied over and over again to the rest of us and become filthy rich and wildly successful doing so. They have swindled us, stolen from us, violated our rights, led us into wars and destruction and profited greatly by it. All the while giving back to their alma maters in the process.
It doesn't matter that this group of people are investing millions of dollars into completely unproductive Web 2.0 bullshit with no viable revenue stream. It doesn't matter that the money they are frittering away is ultimately borrowed from foreigners, swindled from the elderlies' retirement funds, or doled out via government "stimulus".
It doesn't matter that they are sinking the US economy in the process, wasting an entire generation's productive efforts on shiny trinkets that will be unceremoniously duplicated by overseas competitors if by accident they ever attain any real value.
No, no. What matters is that they are productive, successful "entrepreneurs" who are "innovating". And if they can find an ambitious young 24-year-old with an idea to spy on his neighbor's porn surfing and advertise divorce lawyers to his wife, that'll be the next big thing. Because it'll be easy to patent and will give a 2% greater return than a business plan to manufacture automated fruit-pickers.
"I assumed blithely that there were no elves out there in the darkness"
Whatever happened to taking pride in making something great, and then spending a large portion of your life refining that thing or your ability to make it? Sometimes I wish I was a furniture maker instead of a software developer. New and innovative products are great, but what's the end goal? More new and innovative products? Sure, fine, great. I'm sure it's all just a big race to the bank for most people, like Andreessen, but for some who just need enough money to live comfortably, it's about striving for excellence and enjoying what you're doing for as long as you are physically able.
.... none other than Marc Andreesen! Drum roll.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
interesting theory you have there. So, all people who engage in any activities which have risk associated with them only do so because they are unaware of the risks, therefor all risk-based activities are scams and should be illegal?
-- 'The' Lord and Master Bitman On High, Master Of All
There's so much wrong with this young, arrogant fool touting his ageism. Young people are not necessarily the crux of innovation.
Working in the creative industries, it's easy to see that the arrogance and folly of youth might get you noticed and the attention of other young people -- but most great art is done by people with decades of experience. Compare the early work of any artist to their later work and you will see that in most cases.
The trouble with technology and the internet in particular -- is that it is seen as a "young person's medium". It's often just a get rich quick scheme for investors. Many of the new internet ideas have made a great deal of money for a small number of people, but they all have limited shelf life, and their users grow up and mature and seek other things. Yahoo, Facebook, MySpace, are dwindling. Geocities, Altavista, Netscape, and many, many more are all but gone. Twitter will follow them shortly.
The problem is, these innovations are shallow and mostly only appeal to young people. Nobody under 25 is looking at sustainable, reliable, usable services for the over 30s. It's all just fad and fashion and plugging a gap to get rich quick. This is not really innovation.
I've seen very little innovation on the internet in the past 10 years. Google came, changed search, and stayed the same. Social networking and blogs are easier to use and more marketed, but not significantly different from many BBS and similar at the beginning of the web. Google Earth is innovative, bittorrent is innovative, and perhaps there are a few other things. But on the whole the legacy of developers and entrepreneurs in their 20s is just using the same old tech with lots of hype and buzzwords.
DaVinci, Edison, Tesla, and many, many, many, many more, kept truly innovating late into life. As their experience grew, they made better inventions.
Sorry, but this precocious, silly little boy needs slapped. He does not know as much as he thinks he knows. Maybe he will get rich. But it is not likely he will really do anything of any importance to future generations for many years to come.
Now get off my lawn...
What do we need another Netscape for? Internet Explorer works just fine!
Personally I'd like to know how to contact someone like this in regards to presenting an idea. Business plans are not somethign that is easily done, and I've always been better at a verbal pitch, but gettign the opportunity to talk or coorespond via email with someone that has the power to make a decision is neearly impossible. I've emailed every address on the planet that I could find for News Corp, initially wanting to pitch the idea to them. But you don't even get a reponse back of any kind. wtf - I mean I know there are crack-pots out there, but not evryone that has an idea is going to pitch you something absurd.
Never try to beat a professional at his own game!
One of the big problems with Internet businesses is that there's a huge disconnect between what will attract users and what will make money. In 1999, there were companies saying that growth was about "eyeballs", and only "old economy" people worried about revenue. That didn't work out too well. For a recap of this, see Downside's Deathwatch, which I did back then. (Where it says "Chart is not available for this symbol", it means they're long gone.) So we've heard that particular line of bullshit before.
Similar claims have been heard for social networks, few of which have paid back their original investment. Myspace, in their best year, (2007) made only $10 million. News Corp paid $580 million for Myspace. They'll never see that back. Investors in other has-been social networks (AOL, GeoCities, Orkut, Tribe, Friendster, Classmates, Nerve, etc.) did even worse.
Andreessen has a point that YouTube would have had to find a way to become profitable by now if they weren't part of Google. Of course they would. No VC would continue to fund a money drain like YouTube. YouTube couldn't even survive as a zombie; they cost too much to run. ("zombie": VC term for companies which can't come close to paying their startup investment, but generate just enough revenue to cover their operating costs. They're the living dead of startups.)
Google still gets something like 97% of their revenue from AdWords. Everything else they've done loses money. Google had one great revenue product - AdWords. They've been frantically trying to find another, without success. Google has a great capability for deploying money-losing free services, but none of them, from Gmail to book-scanning, are generating serious revenue.
There are lots of things that are interesting to do technically, and even useful and popular, but don't make money. I've done a few myself. Andreessen probably has some good ideas like that, and I'm sure he can find more. But if he's going to run money as a VC, he'll have to do better.
Better than the average VC, in fact. There are currently too many venture capitalists. VCs as a group lose money, and have been losing money since 2003 or so. Venture capital as a business used to be highly profitable, but it no longer is. Too much dumb money came in during the first dot-com boom, and the VC business overexpanded. Silicon Valley venture capital used to be about funding a few engineers in a lab to do something great. Those startups often failed, but didn't cost more than a few million when they did. If one in 10 did something good, that was a win. During the dot-com boom, VCs started funding companies into the deployment and operating phase, which is when it starts to really cost. That's a way to lose hundreds of millions a pop.
So we'll see how Andreessen does. Remember, though, that it's not a win until long-term profitability is achieved and the original investment paid back.
It's called 'ROI'. If I have a portfolio of $100M, I might be willing to put up $10M in highly risky ventures under the assumption that some of them might succeed and return a significant sum that offsets the losses.
.. it's legalized gambling. Except gambling is usually defined as a game of pure chance, where the odds can be calculated (and usually favor the house.) Investing is taking a gamble, but the odds are unknown and based on guesswork.
This is the nature of investing. I don't invest my 401K in risky stocks because I can't afford to loose it. But that doesn't mean someone who can afford to loose it, because they have already made enough to live on the rest of their lives, won't mind taking the risk for even more gain.
Yes
The odds of flipping a coin 5 times and having it come up heads each time are known and each flip is independent of prior results. The odds of a specific company becoming highly profitable are unknown, but the risks are decreased by inventive minds and creative forces where each decision impacts the outcome of events afterward.
I rarely read replies, it's my opinion and if you thought about your opinion a little more, I'm OK with that.
The advantage that young people have is two-fold; That of Time, and Easy Cross-Cultural Networking.
Back when you were a kid, you didn't have to work. (School work, even when hard, is minimal.) Kids don't have kids, they don't have to worry about car or house payments. They don't have to go grocery shopping. They have all their free time to think about and explore the new trends.
Second, they have the biggest water-cooler to chat around. All day. --After you grow up and enter the work force, you are suddenly segregated into one social category or another and with that, you lose perspective. When you are a kid in school, however, you are rubbing shoulders with everybody; kids who will grow up to become doctors and nuclear scientists and politicos and hair-stylists and crack-heads. You see it all and you have the time to process it. You live right there in the big picture. You just don't have the brains to realize the power of that scenario.
See, on the down side, when you are a kid, you have cognitive blinders on which are so big that when you reach your thirties, you are stunned at the fact that you managed to survive for all the stupid things you did and blind-spots you functioned within. Kids are functionally retarded. --And I say that in the nicest way, because it's a process of growing up and we all go through it. Or at least this has been my own experience, and when I ask others, they nod and sigh deeply. Perhaps you are different, but I doubt it. Brains don't stop growing until you turn 18 or 19 after all, and your internal knowledge processing networks don't really crystallize into a rich enough understanding of reality to be terribly useful for another ten years at least. There's nothing wrong with this. It's called, "Growing up".
So. . . The trick is to make sure that when you reach your thirties you work to put yourself into a position where you have tons of free time and where you can connect with every social class you can reach. If you can do that. . , well then, now you're getting somewhere.
How old were the guys who came up with the iPod?
I'm betting they weren't twenty year-olds.
-FL
As a proud satanist investing in these innovators, I demand to be called a demon investor, not an "angel investor" or some similar pussy ass fairy. (And why aren't there any atheists among the VC any more?)
This is the same dirtbag who helped SCO craft their litigation strategy against IBM and Linux. Claiming that he was somehow instrumental in many of the software channels we use today. I never did figure what channels he was talking about, but apparently he's not getting mega rich off them if he's out begging for VC money.
Look where SCO is today. Barely breathing in bankruptcy court.
Netscape got spanked, SCO was a loser...you really want this guy investing your money? Seems more like a giant ego linked to an opportunist who gets more publicity than he rates if you ask me.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
Nice
One of the companies that Andreessen/Horowitz are funding is virtualization/cloud computing startup webappvm, which recently demonstrated its technology at a Sun Microsystems event.
It's one thing to have an idea, and another entirely to monetize it and another thing entirely again to run a company that does it profitably. Yes, there are a few young people out there who can do all those things, but mostly they don't have the maturity or experience to do the critical latter two of those three tasks. They wind up blowing all the money on phat office furnishings and pool tables and parties so they can have hip, creative environments to inspire their genius, and only when the bank accounts begin to run dry do they wake up and realize that oh yeah! they need to make money. And from there 99% of the time it turns into a circular firing squad that ruins lives and sends many investors to the poor house. This attitude is, after all, what drove the last dot-com craze and is exactly what brought it down in the end. Same thing is happening to MySpace now, and still guys like Andreesen come back with the same playbook over and over again.
Do what you can, with what you have, where you are.
Andreessen can't come up with any new big ideas (not that Netscape invented the browser anyway) so he can use the excuse that he's too old and everybody else his age is too old too.
The unsurprising truth is that 24 year-olds are better at coming up with ideas that teens and young adults can relate to. That's not to say that the ideas are good or profitable.
Andreessen should do what most of the other high tech luminaries do after their peak - become a "fellow" at some famous company. You don't have to do any real work - it's basically being a high-tech celebrity spokesmodel.
ROI stands for return on investment. This is a method for deciding whether to make (or not) a particular investment.
It has nothing at all with how much you can afford to lose, nor with spreading the risk.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
tl.dr
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
"So the 24-year-old coming out of Stanford will have a view of technology that the 29-year-old -- who was 24 just five years ago -- would never think of," say Andreessen.
Who was 24 only 13 years ago.
Edith Keeler Must Die
"Our secret plan is to watch what gets acquired and fund the next company."
.
Anyone who is following is, by definition, behind.
.
By the time any company grows and gets acquired, the ship has not only left the dock, it has arrived at its next port of call.
.
Even trying to "fund companies doing whichever the next-generation product would have been." is a hopelessly backwards-looking strategy. I've always had the impression that Andreessen is stuck in 1995, so I guess it is no surprise that he hasn't got the confidence to generate any new groudbreaking ideas himself, and the best he can come up with is A) watching what gets bought, and B) trying to fund 24-year olds as if they are wiser.
.
If this is the best he can think of, he's sunk, and the investors deserve what they will get, which is plenty of capital losses for their tax returns.
So by that logic, Andreessen doesn't know what the hell he's talking about. If you believe his bs, he'll never be able to find the next "netscape" because he is too old to recognize it.
Better to have really kept the business plan secret, that fewer people might laugh at it.
It's been noticed by everyone who follows the VC industry that VCs move in herds.
The 3F rule "First, Fabulous, or Failed" rule applies to VC-funded high-tech as well as mass-market publication.
Everyone knows what "first-mover" advantage is. You can overcome this by being "fabulous", i.e. a far better product than the "first-mover" has got if everyone isn't already locked into the first-mover's solution and even sometimes even after everyone is locked in and decides the "fabulous" solution is worth the trouble to switch to.
What Andressen seems to have in mind is to back the "second movers", i.e. follow the part of the herd that moves fastest without recognizing that being faster than just about everyone else doesn't necessarily correlate with being smarter.
His investors would probably be better off if he used a dartboard to select companies for funding. Or based his selections on finding the smartest and most cost-effective next-gen technologies and figuring on helping these companies to bring them to market and putting his VC value-add there, and refraining from the buzzword-compliant micromanagement by people who don't understand the technologies and market realities (as in who might be induced to buy the damned things) which is a large part of why the old "1 in 6" rule of 'which takes off, which dies' in the VC-funded high tech model has been replaced by "1 in 8+".
What's in TFA is part of why I'm not looking to VC to fund the alternative energy R&D I want to do.
Tech Public Policy stuff
ROI can and should be applied to an entire investment portfolio to set goals. Once an investment strategy is determined, individual types of risks are gathered together and another expected ROI for each group can be further determined based on risk exposure.
.. if I invest $1M ten times on a group of investments with a 75% of failure (0 ROI) but a 500% ROI if they succeed, my return on the 2-3 that succeed (i.e. 25% of 10) will be 10-15M, meaning at worst I'll probably break even if two succeed, but might see a 50% return if at least three do. Or lose it all if they all fail, a risk I have to decide whether or not is worth it. If all I have to invest is $10M, then it's probably not worth it. If I have $100M to invest, then it's probably worth it.
So
Both ROI and risk have to be used when deciding to invest in anything. I won't be investing my 401K in this venture, but that doesn't mean someone else with a higher risk tolerance won't.
I rarely read replies, it's my opinion and if you thought about your opinion a little more, I'm OK with that.
The last time he had near monopoly on a product he designed, he couldn't make it fly and sustain. What makes him think he can with someone else's ideas? Pompous ass.
So the 24-year-old coming out of Stanford will have a view of technology that the 29-year-old â" who was 24 just five years ago â" would never think of
No, shithead, that has nothing to do with age. Two months ago I was 22 and I didn't have a clue about Twitter cause I didn't see what the big deal was about. Now I'm 23 and I had to get into that stuff for marketing/PR and I know more about it.
The point is : it's not about age but about how updated you keep yourself. And thinking that a 24-year old will think "younger" than a 29-year old is like saying that an old man has to be more politically/morally conservative than a young man, when the old man could be a pro-everything social democrat and the young man could be a Mennonite.
By the way, I wonder where that kind of thinking would have taken him if he was a technology investor back in 2000. "Hey, these guys are like 23 and they've got a young-sounding idea, let's give em a few millions and wait for the bubble to burst!"
You just got troll'd!
... the competition will be legal or at least ethical.
IANAL but write like a drunk one.