Andreessen on VCs

I told you last week that the addition of Marc's voice to the blog world was going to be fruitful. And man has it ever been.

A post on how to be more productive

A post debunking web 2.0

A post on how to hire the best people

And now back to back posts on VCs.

I want to comment on these posts, react to them, debate them at some level. But I don't know where to start. Marc has basically nailed it. He lays out how we do our business, why we do it that way, and what our goals are.

Sure, I could nitpick. I do think that entrepreneur friendly VC firms will outperform "notoriously brutal"  VC firms (Marc's words not mine) over the long run. When you've got an efficient and transparent market, and we are basically there now in the VC business, the firms that services their customers (the entrepreneurs) will generate higher returns to their shareholders (the limited partners) than those who abuse them.

I also take some objection to this comment:

You actually don't want a VC who provides too much help without being asked.  I leave the why as an exercise for the reader.

Ask every entrepreneur I've ever worked with and they'll tell you I am guilty of doing that. It's what I do. I tell people what I think even if they haven't asked me. If they tell me to shut up, I'll do that to a point. But I don't think you want a VC who ignores your company.

But again, these are nits. Marc has nailed it. If you work with VCs or are thinking of working with them, read his two posts.

Comments

[Charlie Crystle]

You're a maven in the Tipping Point model--you have a lot of information and ideas and are compelled to share them. There's nothing wrong with that. But a lot (most?) of VCs have no or little operational experience, and can be a drag on time. The MBA is no substitute for rolling up sleeves and getting hands dirty, and it shouldn't be in portfolio companies.

But opinions and useful information can be helpful. The key is draw the line, and to identify what's useful. I don't want noise in my day.

If you help me build markets, identify great, productive partnerships, raise more capital, and find great people, that's likely pretty productive. If you're telling me about how much you like Twitter and why, it's pretty useless unless it has something to do with my model.

Regardless I think it comes down to defining the relationship between the CEO, or founder/CEO, and VC. The more clarity up front, the less noise, and the more productive the relationship can be.

[Benja Fallenstein]

Thanks for picking those nits, Fred.

Over at Ask the VC, Brad Feld is taking a similar stance: "[t]here are a few factual inaccuracies ... but his general perspective should be interesting and enlightening to any entrepreneur thinking about taking money from a VC." I wish someone would come and pick all the nits they have with Marc's post -- not to belittle Marc at all, but to help those of us who are trying to learn about the VC world see more of the different perspectives. :-)

[kareem]

"When you've got an efficient and transparent market"

Can you dig into this a little more, Fred? In my (limited) experience, the VC market seems anything but efficient, and one website does hardly makes the industry transparent.

[Marc Andreessen]

Hi Fred -- thanks for the kind words!

Readers of Fred's blog should be aware that while he and I have not worked together closely on a deal (although we have coinvested, e.g. in Delicious and Outside.in), my understanding from entrepreneurs who have worked with him is that his help is extremely useful, even when it is unsolicited :-).

(There are other VCs out there for which that is definitely not the case.)

Best,
Marc

[Saul Lieberman]

"a VC who provides too much help without being asked" is a far cry from "a VC who ignores your company".

Hmmm... maybe you should take a look at seth godin's "Coachable" post. ;-)

[allan isfan]

I'm in the process of trying to raise money and am particularly sensitive to these issues. There are a number of local angel investors that are notorious for getting so involved they nearly run the company. That can be helpful to some degree if they really know the space you are in contribute in a major way. Many of these guys don't get the web and it would be the kiss of death to get funded by them. Tough to walk away from money but for the best.

[Rick]

Wow, Fred, you're right: Marc is someone I'm going to have to start reading. Check out his latest post in the VC series. It's nothing you don't know I'm sure, but it's econ-heavy. I really enjoyed it.