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by mattmanser
5166 days ago
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Because there's the occasional hit to pay for all the ponzi schemes. So it ends up being not ponzi because it really does generate cash. I have no idea if Marc actually has done anything at all with his life after mosaic apart from make a lot of terrible companies that sold well. The article seems to imply he's a total fraud. But I'll tell you who has. Microsoft, Google, AOL, Yahoo, etc. They all made lots of money and they're the ones paying silly sums of money to buy companies that they then almost consciously let rot, fester and die. I think mainly so that no-one can accidentally get bigger than them and take them out. Imagine if someone bought facebook 5 years ago. It probably would be dead by now. |
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You're underestimating the "made man" effect. Once you have a really enormous hit, you become a Made Man; someone will always be willing to throw some money at you for future worthless businesses you found, because the people with the money know you and want to stay on your good side on the off chance lightning strikes a second time later on. So they're willing to throw some money away to keep you happy. (And not just you -- it lets them do a solid for the people who invested in your company, too, by letting them walk away without taking a loss. Why do that? Because the investors are usually also Made Men.)
It's not just Andreessen who illustrates this. Look at Google's recent acquisition of Milk:
http://money.cnn.com/2012/03/20/technology/startups/Google-D...
Milk only ever shipped one product, Oink, which was a total flop. But Google spent a reported $15-30 million dollars to acquire them.
Why?
Because Milk was founded by Kevin Rose, and Rose's hit with Digg made him a Made Man; and it had gotten ~$1.5 million in angel funding from a veritable Who's Who of other Made Men (see http://techcrunch.com/2011/04/26/milk-completes-1-5-million-...).
If you had the same company, with the same team and track record, and subtracted Kevin Rose and the plugged-in investors from it -- the same company, just staffed in some podunk Midwestern town and funded by no-name investors -- I doubt Google would have spent a plugged nickel to buy it. But Milk was very plugged in, so Google bailed them out.
In other words, it's classic logrolling (see http://en.wikipedia.org/wiki/Logrolling). You bail me out when my venture tanks, and I'll bail you out when yours does. It's a pretty sweet deal. But it's a deal that's only available to Made Men.