Andreessen Horowitz

The Future of Networking

Ben Horowitz — Tue, 07 Feb 2012 01:41:13 +0000

Major technology platforms tend to last about 25 to 30 years. This gives them time to gather sufficient developer momentum, enable a set of transformational ideas, build those ideas, and form a large industry around it. The platforms then sustain for an additional 5-10 years due to inertia and lock-in. Finally, when the shortcomings of the old platform become too much to bear — as with the Mainframe, Hierarchical Databases, and more recently the PC — a new platform emerges to take the old platform’s place and bring the future forward.

When I was a young man in 1990, I designed and deployed Silicon Graphics’ first wide area network using technology from a little known networking startup called Cisco Systems. The technologies and techniques that I used would prove to be the basis for the next 2 decades of networking architecture. Through the years, the platform that I grew up on has served the world extremely well, enabling the massive build out of the Internet itself. However, certain characteristics of the platform have remained remarkably closed and stagnant over the years.

Why Has Andreessen Horowitz Raised $2.7B in 3 years?

Ben Horowitz — Wed, 01 Feb 2012 01:41:21 +0000

Since Marc and I founded Andreessen Horowitz three years ago, we have raised $2.7 billion. That statement begs a few questions. The two most obvious are:

Why did such a new venture capital firm raise so much money?
How did such a new venture capital firm raise so much money?

To get to the answers, it’s useful to go back to the original motivation for starting Andreessen Horowitz.

After raising our first round of funding for Loudcloud in 1999, we went to visit our new venture capital firm and meet their full team. As founding CEO, I remember being quite excited to meet our financial backers and talk about how we could partner to build a great company. That excitement took a sharp downhill turn when one of the top partners said to me, in front of my co-founders, “When are you going to get a real CEO?”

Steve Jobs, Superhero

scottweissa16z — Tue, 31 Jan 2012 01:49:11 +0000

When I was a kid, I read tons of superhero comic books. I fantasized about superpowers, but the storylines about heroes with massive Achilles’ heels really held my attention the most. They saved the world but had screwed up personal lives, made lots of mistakes, and often acted like complete assholes. In retrospect, l related to their flaws. And, probably not coincidentally, my favorite characters exhibited core weaknesses I had experienced: Spider-Man (immaturity), Iron Man (overconfidence/hubris), and Wolverine (rage). Ironically, it was often when the character’s weakness would comingle with the superpower that would spur them to succeed against impossible odds.

It was in this context that I was riveted reading Steve Jobs’ biography by Walter Isaacson. Given the number of different interviews and unfettered access granted to Isaacson, it felt like an incredibly authentic account of Jobs’ life. His greatest accomplishments, mistakes, superpowers, and flaws were laid out about as raw as I’ve ever read. Steve’s superpowers were many: He was wickedly brilliant, could see around corners, and had unparalleled understanding of how people interact with technology, to name just a few.

Who You Gonna Call? Strategic M&A

John O'Farrell — Sat, 28 Jan 2012 01:58:05 +0000

In part I, I talked about how up-front investment in a high-caliber strategic business development function helped to save Loudcloud when an existential crisis hit in 2002. But the value of strategic business development didn’t end there. In fact, it was only beginning.

Opsware V1: Single product, single customer

The EDS transaction closed in mid-August, and we started into the fourth quarter of 2002 in much better shape than we’d entered the first quarter. That said, we still had plenty of challenges. We were a single-customer, single-product company. Moreover, the product—software that automated the administration of servers—was powerful but far from ready for broad commercial adoption. It had been developed solely for internal use by skilled (and somewhat forgiving) Loudcloud system administrators in a controlled environment. It was difficult to sell and hard to implement, requiring significant process change on the part of the customer’s IT staff. It wasn’t easily consumable in small chunks, leading to protracted sales cycles and long implementation periods.

Management Debt

Ben Horowitz — Fri, 20 Jan 2012 01:45:24 +0000

Thanks to Ward Cunningham, the metaphor technical debt is now a well-understood concept. While you may be able to borrow time by writing quick and dirty code, you will eventually have to pay it back—with interest. Often this trade-off makes sense, but you will run into serious trouble if you fail to keep the trade-off in the front of your mind. There also exists a less well-understood parallel concept, which I will call management debt.

Like technical debt, management debt is incurred when you make an expedient, short-term management decision with an expensive, long-term consequence. Also like technical debt, the trade-off sometimes makes sense, but often does not. More importantly, if you incur the management debt without accounting for it, then you will eventually go management bankrupt.

The Freaky Friday Management Technique

Ben Horowitz — Fri, 20 Jan 2012 01:43:01 +0000

Many years ago, I encountered a particularly tricky management situation. Two excellent organizations in the company, Customer Support and Sales Engineering, went to war with each other. The Sales Engineers escalated a series of blistering complaints arguing that the Customer Support team did not respond with urgency, refused to fix issues in the product, and generally inhibited sales and customer satisfaction. Meanwhile, the Customer Support group claimed that the sales engineers submitted bugs without qualification, did not listen to valid suggested fixes, and were alarmists who assigned every issue the top priority. Beyond the actual complaints, the teams genuinely did not like each other. To make matters worse, these groups had to work together constantly in order for the company to function. Both teams boasted superb personnel and outstanding managers, so there was nobody to fire or demote. I could not figure out what to do.

A Recipe for Growth: Adding Layers to the Cake

jeffjordana16z — Thu, 19 Jan 2012 02:06:01 +0000

Businesses don’t grow themselves. One of the most important jobs of a CEO is to aggressively define and pursue a growth agenda for his or her business. Why is this important? Growth typically improves a company’s competitive position and provides increased scale and leverage, and investors clearly value growth.

The pursuit of growth continues to be important regardless of the lifecycle of the company. Obviously it’s critical early in a company’s life… or it won’t be a company for long. But it continues to be important as a company develops. Virtually all businesses, even hyper-growth ones, inevitably experience slower growth as they get larger, with their growth rates falling relentlessly back down to Earth over time. I call this effect “gravity” and it will weigh down even the most promising of companies—unless a CEO can find a way to accelerate growth and positively change the long-term growth trajectory of the business.

Who You Gonna Call? Navigating the Existential Crisis

John O'Farrell — Tue, 10 Jan 2012 02:00:03 +0000

This series of posts starts off with a short quiz for the startup CEO:

Q: Who’s responsible for developing your product?
A: That’s easy—Engineering!

Q: Who in your company is responsible for selling your product?
A: That’s easy, too—Sales!

Q: Who in your company has primary responsibility for:

Mapping and networking your ecosystem?

Building long-term relationships and driving deals with strategic partners?

Identifying, evaluating and executing acquisitions?

Developing and executing your strategy to go global?

Working with you to tackle major strategic opportunities, including existential crises?

A: In many startups, the answer to this one is, “That’s no one’s job yet.” What’s your answer?

Hiring Rockstars

scottweissa16z — Thu, 22 Dec 2011 01:50:57 +0000

In Europe, most sports leagues participate in a system of Promotion and Relegation. At the end of each season, the top three teams in the second league get promoted to the first league and the bottom three teams in the first league get relegated to the second league. This maintains the intensity of games for low ranked teams at the end of the season, among other things. Now here’s an odd fact: the very best players only play in the first league—it’s in their contracts. If their team gets booted to the second league, these folks roll off and immediately find first-league work, typically with some of the recently promoted teams.

If you’re a newly promoted team, it’s time to augment your roster quickly in order to compete. Rockstars that were impossible to attract in the second league suddenly want a tryout. Winning in the first league is all about signing a few new superstars and integrating them effectively with your existing team.

Fab – FORE!

jeffjordana16z — Thu, 08 Dec 2011 02:08:02 +0000

Marc and Ben founded Andreessen Horowitz with some very explicit beliefs. We would invest in Information Technology companies, and not in things medical, green or clean. We would have a preference for companies with deep technical roots and innovations. We would have one office, in Silicon Valley, and would not seek to invest in companies being incubated in places like China or India where we lacked expertise. We would be stage-agnostic, seeking to invest in the best companies regardless of what round they were seeking. And we would have a preference, all else equal, for companies being built in Silicon Valley.