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One morning, as I sat down to breakfast with Andreessen, a rival V.C. sent me a long e-mail about a16z’s holdings. The V.C. estimated that because Andreessen’s
by jmduke 11y ago
One morning, as I sat down to breakfast with Andreessen, a rival V.C. sent me a long e-mail about a16z’s holdings. The V.C. estimated that because Andreessen’s firm had taken so many growth positions, its average ownership stake was roughly 7.5 per cent (it’s eight per cent), which meant that to get 5x to 10x across its four funds “you would need your aggregate portfolio to be worth $240-$480B!” You would, in other words, need to invest in every Facebook and Uber that came along. When I started to check the math with Andreessen, he made a jerking-off motion and said “Blah-blah-blah. We have all the models—we’re elephant hunting, going after big game!”
Uh, is there a more robust/cogent thought that explains this?
- Estragon 11y agoI don't think there needs to be... after all, he cites LBJ as a role model, and LBJ was known to give similar responses to hard questions. https://www.google.com/search?q=lbj%20substantial%20organ&oq=lbj%20substantial%20organ https://www.google.com/search?q=lbj%20substantial%20organ&oq...
- vasilipupkin 11y agoI think I'll take a stab at this. Suppose you do need the aggregate to be worth around 400 billion to deliver decent returns. If Andreesen Horowitz catches the next 2 Facebooks ( worth 200 billion each ) over the next 10-15 years and loses money on every single other deal ( an extremely pessimistic assumption ), they can deliver it. Is this a guaranteed outcome? No, but it certainly seems reasonable / plausible
- presty 11y ago> Suppose you do need the aggregate to be worth around 400 billion to deliver decent returns. If Andreesen Horowitz catches the next 2 Facebooks ( worth 200 billion each ) over the next 10-15 years and loses money on every single other deal ( an extremely pessimistic assumption ), they can deliver it. your assumption is that A16Z would own 100% of those 2 next Facebooks... which I don't think I need to point out how wrong that is (sorry, I just did) let's assume something more realistic, like a16z getting 20% of each 200B company that appears - they would need to invest on the next TEN Facebooks (at an earliesh stage), and that seems a bit harder. and let's not forget that most "unicorns" don't even go past the 10B when IPOing, so in reality, they need a lot more than 10 FBs...