Andreessen Pulls a Bezos
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Also the capital + services model is an interesting theory, but I haven't heard any stories of it living up to the marketing hype from portfolio companies. Don't think it is anywhere close to top of mind when you are comparing term sheets against other top firms.
1. https://a16z-live.simplecast.com/episodes/beating-the-incumb...
- First Round Network Q&A site
- Structured mentorship program
- In house recruiters and job board (yes this is table stakes, but FRC did a great job here)
I also really liked the people I worked with from FRC and their whole vibe, but that’s another subject.
https://www.newcomer.co/p/the-unauthorized-story-of-andreess...
(.....) Deleted a thousand word rant that are against rules on HN and continued intensely fouled language.
They were the ones who said strategy is useless, execution eats strategy for breakfast.
Not entirely true. There's Airbnb Plus, in which they have, to quote what the article says about Hilton, "strict guidelines on how its [homes] are ... maintained."
I didn't get the reference as to what new year this is supposed to be.
https://www.linkedin.com/pulse/venture-building-new-model-en...
Two burger franchises can both be in the business of selling burgers and fries and how they prepare/arrange that food can be very different (never frozen vs frozen; etc). Thus according to the author doing things differently is only strategy if it's at some arbitrarily high enough macro level. The author is wrong of course, it is strategy.
The whole premise of the article collapses upon that issue however. So if the author had reconciled their rather enormous contradiction, it would have torpedoed the article.
Now, so much money has been printed and sovereign wealth / pension funds are legally obligated make 8% annual returns that their only option is to go far out the risk curve, which includes venture capital.
As a consequence, VC firms are a dime a dozen and the existing ones have more capital than ever. It’s still an accomplishment to raise money, but from the VC perspective there are still only so many hot deals per year and they need to be hyper aggressive to win those most promising deals.
Put another way, the very top-tier startups now have their pick of VCs, can raise a lot more money on better terms, and for a VC to truly be an automatic “yes” for the founders they need to check a lot of boxes. This includes all of the usual stuff like industry contacts but as government has become far more aggressive in tech a legal / lobbying arm also makes sense.
A good list here https://www.nasra.org/latestreturnassumptions
The pension fund’s board could just as easily use a lower expected return on assets, but you are correct that using a higher than reasonable return assumption transfers debt from yesterday’s taxpayer to tomorrow’s taxpayer, and that is by design since future taxpayers are not particularly strong voting blocks. And it does cause pension fund managers to gamble on riskier and riskier “investments”, since the alternative is raising taxes and lowering return assumptions to make up for the shortfall and who likes that.
Here is an article from today about drama in Illinois, the state with the worst funded pensions in America. Tax payers are legally obligated to back these https://www.illinoispolicy.org/chicago-park-district-reform-...
They will not though, since that would increase their own taxes, and of course start a political firestorm.
Ironically, the only law about return on investment assumptions is on non taxpayer funded pension plans via ERISA and PPA 2006. I cannot help but think the only reason taxpayer funded pensions have different rules is so future taxpayers can be fleeced.
The distinction is important, because the reason the pension fund boards invest in risky assets is not due to the law (aka legal mandate), but rather today’s taxpayers wanting to push today’s labor costs onto future taxpayers while not stating it on official reports so that the responsible actors can maintain plausible deniability.
Some state systems are required by law to remain solvent, and are empower to enforce that. For example, New York requires municipalities and other entities to make payments to cover lower returns within a year or two by law.
Other states, like most infamously Illinois, have no such requirement and their systems are essentially insolvent, barring the Federal government bailing them out.
NY is an outlier in terms of its defined benefit pension governance, but the way most taxpayer funded pensions currently work, they are vehicles for pushing 30%+ of today’s defined benefit costs onto future taxpayers.
At some point the economy will need to rebalance assets in order for interest rates to rise, but there is no preordained condition that requires this to occur.