I am sorry but I am not a believer in a16z anything after their massive crypto token scams and wealth extraction. We all need to move away from all these companies who continue to bloat in private and then have a big pay day as a public company.
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.
> 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.
> 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.
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.
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.
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.
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.
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.
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!
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].
> 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.
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.
> 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.
> 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."
> 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!)
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).
>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.
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.
Yes. I feel there should be some kind of anti-list of people who dumped SPACs and ICOs on the public.
I personally feel it was pretty gross behavior (in many, but not all, cases), and the people who did the egregious ones mostly knew at the time that they were doing a zero sum wealth transfer to themselves.
I personally avoid working with people who were involved in ICOs and SPACs where at the time of issuance a reasonable analysis could've shown that it was grossly overpriced to the public investors it was sold to (because in those cases, I believe that the issuer themselves should've known, and shouldn't have proceeded).
A list, ranked by person/sponsor, ranked by total value reduction across all SPACs they did since some time point (merger? before then?), and normalized for multiple compression by looking at the ratio of some overall public tech index between that date and now (so that they're not overly penalized by multiple compression from higher interest rates).
Either presented as a list on a web page or a list in an infographic/image.
Overall show how much wealth public investors have lost in aggregate from investing with that person, normalized to general tech stock market declines. How much did they lose relative to the market. Their alpha, or negative alpha, I suppose.
That just isn't a reasonable statement. No one forces someone to participate in a ponzi scheme.
The problem with SPACS is these were companies that did not go the IPO route because they would not pass SEC approval. Companies should go public even if they are unlikely to survive, but what we saw was mostly fraud. They received absurd valuations based on exaggerated growth claims combined with imaginary non-GAAP accounting -- things you can't do in an IPO.
Some of these participants will get in trouble. Enforcement is not immediate. a16z is probably going to end up in a lot of trouble over their cryptocurrency shenanigans. I think these guys pretty much burned their reputation in exchange for things like owning a $177m house in Malibu.
The consequences will be felt by everyone, not just the shitco and shitcoin hucksters.
Fair enough, I didn't realize SPACs were effectively an end-run around SEC approval & GAAP accounting - and I worded too strongly for what was effectively an uninformed take.
I wouldn't go so far. I know the authors quite well, and as someone who has multiple publications in machine learning confeerences (and started a PhD in ML), they know their stuff well.
Their crypto scams look like child's play compared to their 350MM investment into Adam Neumann AGAIN. Like whaaat? Were "Liz" Holmes and Martin Shrkeli not available? Or did SBF not satiate you enough?
This is oversimplified at best. Not all VCs are created equal. A broad-brush characterization like this removes any incentive for VCs to behave well (if everyone will assume the worst of you, why bother trying to build a good reputation), and discourages entrepreneurs from vetting their investors (why bother, if they're all equally bad).
The goal for all VCs is to make large returns from startups, Otherwise they underperform. VCs know that 90% of these startups fail and will make sure that they are highly unlikely to lose. Even if it means dumping on retail at higher prices via selling SAFEs in 'crowdfunding campaigns'.
Do you include other parts of a16z like their biology investments? Do you believe the bio folks are doing scamming and wealth extraction (beyond the normal VC scamming and wealth extraction)? Or is it guilt-by-association, simple being in a16z when another part of the company did something dumb is enough to write them off?
a16z took decades to build a reputation and less than a year to toss it in the fire. It's hard to take their current discourse around anything seriously (they constantly publish think pieces on hype topics like AI or games).
The submission has nothing to do with what you're complaining about. It's just a review of key papers, writings, and courses that are most pertinent to understanding the current state of AI.
I think a16z and other SV companies got rich by being lucky in their investments in a low interest rates environment. Maybe they then bought into their own hype, or they’ve trapped themselves in overpromises to the people they’ve raised money from, and that’s why they’re now pumping crypto. They have no other options.
I’m curious to see what happens in the next couple of years and which big VC firms will remain given the current economy…
