[mediaman]

a16z's investment thesis completely centers around finding the next bagholder for their investments.

They don't care about building enduring businesses that make them a lot of money because the businesses are actually driving that much value creation.

They care about creating a hype cycle and dumping before the tide goes out and their investments crash on someone else's balance sheet.

None of them could get on a podcast and say anything remotely rational or intelligent about their crypto investments: it was all pump and dump. In one interview, their head of crypto investments main value claim was "monetizing the sharing of your home wifi," and after some pushback resorted to deference to authority by saying the founders they invest in went to the right schools and nobody else could understand because "they weren't in the room."

These are smart people who couldn't articulate a clear value. They obviously didn't believe any of it and just saw an opportunity to promote a Dutch tulip mania.

Good fund for con artist "entrepreneurs" though. Same deal for Chamath and his SPACs.

There's increasing hesitation among builders to take money from funds that have strayed this far from long-term value creation, because once they get addicted to short-term pump and dump profits and chasing the latest thing, it's hard to go back to supporting actual builders.

[popcorncowboy]

> a16z's investment thesis completely centers around finding the next bagholder for their investments.

Boom, yes, this. I think a big part of the (for lack of a better phrase) butt-hurt the best of HN feels towards a16z is summed up by the Obi-wan scene where he's screaming at Anakin about how he was supposed to be the chosen one blah blah you've hurt my feelings because I truly believed you could have been something you are clearly not etc.

In reality, a16z are shrewd, smart operators, and it's a valid, scary effective investment thesis to be able to push waves higher due to your own gravitas. If you had the Buffet/Elon effect (genuine ability to move markets) and could, why wouldn't you trade on it?

The "they were the best of us and now look at them" is a sad, hard reality lesson for anyone feeling it, and utterly irrelevant to a16z.

[JumpCrisscross]

> a16z are shrewd, smart operators...if you had the Buffet/Elon effect (genuine ability to move markets) and could, why wouldn't you trade on it

Because you want to keep it. a16z's returns have been bottom-tier for a while. It's partly why they switched models from VC to retail asset manager. (The other part was to trade crypto.) That lack of returns translates to a lack of carry, which corrodes one's ability to attract and retain talent. It's a doom loop they've been floundering in for at least half a decade.

[ilikerashers]

I know a London-based VC who calls them the Daily Mail of Venture Capital.

Loud, noisy, full of half truths, sensationalist.

[toomuchtodo]

You know that “don’t anthropomorphize the lawn mower” bit about Larry Ellison and Oracle? Same story different org.

https://news.ycombinator.com/item?id=5170246

https://www.youtube.com/watch?v=-zRN7XLCRhc&t=33m

[gcanyon]

I'll never forget when I was at HBO in the '90s (large Oracle shop at the time) and we were trying to figure out an Oracle product. I wasn't core to the effort; I was just trying to help, since the people smarter than I was were completely stuck.

So I asked for the install cd. I figured I could install the product in question (Oracle Forms? It's been too long and I barely remember) and poke around, and maybe a beginner's eyes would see something the masters missed.

I stuck the cd in my computer and clicked the installer. It asked which install file I wanted to execute. There's more than one? Yep, several. And not all in one folder, clearly labeled. They were in several different places on the cd, and named things like x39usethis21 and yz2nousethis982. It was a completely garbage experience.

And to be clear, this wasn't some hand-crafted one-off. This was a silk-screened, mass-produced, official Oracle product.

So I went to the documentation, also on the cd. It wasn't in text files, or even standard html files -- there was a special documentation reader application, because of course there was -- even though the files were obviously (nearly) standard html. And again, the documentation app wanted to know what file to start with, and the doc files weren't well organized, and didn't have an obvious starting place. So I opened the most likely candidate, which turned out to not be the documentation root. But it did have a menu of links, and there was one that was labeled "index" or "start here" or something.

I clicked the link and got a 404. Double-check: yes, it's pointing to a location on the cd, just not one where there's a file.

There's more to the story, but the above pattern continued throughout. And the experts never got the tool to work, after months of trying, with Oracle consulting on speed-dial.

This confirmed what I've described since the '80s as Canyon's Law of Inverse Usability: the price of a product and the usability of that product tend to correlate inversely.

[jonathankoren]

I also discovered that law. Sometimes I’ve even declared, “This software really sucks. We must be paying $200,000 a year for this.”

[gcanyon]

Yep. I first realized this in the '80s when I was working in FileMaker Plus (from Nashoba at the time) to import data and print out bulk mail. FMP was WYSIWYG -- easy layout tools, and I could make anything I wanted happen in seconds with a ~$2800 Mac 512k and a ~$7000 laserwriter.

One time we had a job that required a high-speed printer, so we went to a copy shop. They had a ~$300K Xerox printer that was the size of three washing machines side by side. It could print something like 20-30 pages per minute compared to the laserwriter's 2(?).

And the Xerox had something like a 4-inch amber-and-black display, and the guy setting up the job was putting in parameters by hand, almost like writing code to do the layout. He spent a minute doing that, hit the button, the machine spun up, and then BOOM, out came a page. And the layout was wrong.

He spent 20 minutes getting the layout right, through maybe 10 iterations of write code, spit out a copy, see that it was wrong.

And that's when it hit me: with a machine that expensive, you want it working non-stop. Time spent on setup is time wasted, clearly. And yet no one at Xerox was thinking about that, obviously, because that thing couldn't have wasted more of its time on setup if they'd tried.

And on the other hand, the (relatively) cheap Mac+LaserWriter had WYSIWYG and was ready the first time, every time. It was insane the difference between the two.

[cdme]

It's still a thing with Oracle. I worked at a large music retailer running on ATG/Oracle commerce and I don't think I ever saw documentation on how any of it worked.

The folks on the backend had it running and, if they were out, you were SOL. It was 7+ sites running out of a ~10 year old code base with an alarming amount of technical debt. I'm sure it wasn't cheap.

[CPLX]

> If you had the Buffet/Elon effect (genuine ability to move markets) and could, why wouldn't you trade on it?

Because trading on it to extract other people’s money as part of fraudulent schemes will destroy your reputation.

The only reason to do it is if you feel your reputation is unearned and worthless and this is the best thing you can do with it.

There are definitely other ways to make a living.

[jonathankoren]

The only reputation that matters is the reputation of making money.

That's the only business investment firms have ever been in. To believe otherwise is naïveté.

[CPLX]

Clearly that's not correct.

A reputation for making money unfairly, and at the expense of others is, and has always been, extremely relevant to your ability to convince other people to do business with you.

[jonathankoren]

Yeah. That's why hedge funds and private equity in general went out of business 40 years ago.

Seriously. As someone that grew up in the 80s and watched how Milton Friedman's id was unleashed, and continues to run rampant today, there's little evidence to support your thesis.

[CPLX]

I mean in general I agree with you. Just having a ton of money has its own kind of reputation.

But these guys have really traded far beyond their actual raw financial power due to reputation.

[wslh]

If you know you will receive your cut as LP you don't care while you are not the defraud one.

[JumpCrisscross]

> only reputation that matters is the reputation of making money

Within this context, totally agree. It's where a16z has failed: its returns are subpar. The other failures flow from that.

[pigscantfly]

Just curious, are there any sources you could share on that? Or is this the kind of intel you need to be in the really, really in-crowd for in order to know what's really going on?

[Edit]: Can't reply that deep in the thread, but thanks for the insight!

[JumpCrisscross]

> are there any sources you could share on that

a16z started lagging in 2016 [1]. That led to the crypto fund in 2018 [2] and registering as an investment adviser in 2019 [3]. The '18 crypto fund did well [4], so they quadrupled down on the crack pipe and returned to form [5].

[1] https://www.wsj.com/articles/andreessen-horowitzs-returns-tr...

[2] https://techcrunch.com/2018/06/25/andreessen-horowitz-has-a-...

[3] https://www.thestreet.com/investing/cryptocurrency/andreesen...

[4] https://www.theinformation.com/briefings/a16zs-first-crypto-...

[4] https://www.wsj.com/articles/andreessen-horowitz-went-all-in...

[moron4hire]

"Here lies Jonathan Koren. He made a lot of money."

No, this Gordon Gecko philosophy is why the 2010s were a cultural wasteland.

[jonathankoren]

Dude. This philosophy has been driving everything since the 1980s. Either as a rejection, and embracing of it.

[SkyMarshal]

> a16z's investment thesis completely centers around finding the next bagholder for their investments.

To be fair, that's all of VC investment thesis, not just a16z. VC is by definition early stage investing, the objective being to build up a project enough that it can be either IPO'd or sold to a bigger company, providing the returns for the next round of early stage investments. a16z is nothing unusual there.

[bcrosby95]

The phrase "the next bagholder" means that it isn't worth it.

If, for example, you buy a house with a fucked up foundation, fixing and selling it isn't finding the next bagholder. Covering it up and selling it ASAP without disclosing it is finding the next bagholder.

[kristianc]

No, the objective is to add value by making it a better business. Not to pump it up full of hype so you can palm it off on a greater fool.

[EFreethought]

> resorted to deference to authority by saying the founders they invest in went to the right schools and nobody else could understand because "they weren't in the room."

Marc Andreeson tried to defend Groupon's use of a non-standard accounting metric by saying all the critics didn't know what they were talking about because he was "in the room" when the decision was made, and the critics were not.

Given how things worked out for Groupon, I think it's fair to say that non-standard accounting metrics are non-standard for a reason.

That was one of many things that made me skeptical of pmarca and a16z.

[misiti3780]

> In one interview, their head of crypto investments main value claim was "monetizing the sharing of your home wifi," and after some pushback resorted to deference to authority by saying the founders they invest in went to the right schools and nobody else could understand because "they weren't in the room."

Chris Dixon ?

[jjoonathan]

> None of them could get on a podcast and say anything remotely rational or intelligent

> main value claim was "monetizing the sharing of your home wifi,"

Let's see, we have a big stagnant incumbent monopoly, a last-mile moat that allows them the monopoly, and a proposed strategy for attacking the moat. Most ISPs have a "no-sharing" clause, but it isn't difficult to brainstorm potential workarounds: seeding connections into high-density locations, netflix boxes, even possibly a legislative play in a sympathetic area. Of course, the crux is in the execution of the workaround, but I'd expect this to have some complexity to it and I wouldn't expect a random a16z podcast host to necessarily have details at that resolution. I certainly wouldn't call them an idiot for not having all the details handy.

You seem pretty darn sure that it's a prima-facie idiotic idea, however. Can you back that up and explain your reasoning? Or are you just not remotely rational or intelligent enough to imagine a business that doesn't already exist? (See, I can be an asshole too!)

[blairbeckwith]

Crypto has done absolutely nothing to warrant anything beyond the most cursory dismissal.

[sneak]

This is simply objectively inaccurate, and reflects very poorly on the speaker's levels of bias when such false claims are parroted.

It's fine to not like cryptocurrency, but don't lie about it.

Ransomware would not exist without cryptocurrency: it was a major innovation (that subsequently enabled tons of new use cases, many of them criminal, some of them not).

[bckr]

There’s something about this comment that’s tongue in cheek, and something that’s earnest, and I cannot decipher it

[ABeeSea]

Reminds me of this tweet[0]:

>Sick of people calling everything in crypto a Ponzi scheme. Some crypto projects are pump and dump schemes, while others are pyramid schemes. Others are just standard issue fraud. Others are just middlemen skimming of the top. Stop glossing over the diversity in the industry.

[0] https://twitter.com/patdennis/status/1518637225789042688

[snapcaster]

Darknet markets, political dissident funding, the money laundering via mining trick, etc.. All pretty big innovations even if you don't like them

[jjoonathan]

With that attitude, nothing ever would. I'm glad VC exists. Without people taking long odds, our world would be much poorer.

[kristianc]

People don’t owe crypto a ‘good attitude’. The only justifiable attitude toward it is a healthy scepticism until it proves to be anything more than a glorified pump and dump scheme. So far, it hasn’t cleared that bar in over a decade of trying.

[mensetmanusman]

Bitcoin is used by people in unstable countries.

[kristianc]

How’s that going?

https://amp.theguardian.com/technology/2022/nov/15/china-el-...

[jjoonathan]

It's an ISP. They provide internet service and bill people for it.

[xk_id]

Embarrassing to post nonsense like this in 2023.

[freejazz]

> Or are you just not remotely rational or intelligent enough to imagine a business that doesn't already exist? (See, I can be an asshole too!)

Weird how you accuse someone of being "not remotely rational" yet you seem to completely reject the idea of reasonability