Marc Andreessen is a legendary figure in Silicon Valley — and worldwide. After launching Netscape 20 years ago, Marc Andreessen has had a remarkable second act as a successful and prolific venture capitalist.
His firm’s portfolio includes some of Silicon Valley’s most enviable investments, including Facebook, Airbnb, Twitter, Jawbone, Lyft, Pinterest, and Zenefits. Marc co-created the highly influential Mosaic Internet browser, the first widely used graphical web browser. He also co-founded Netscape, which later sold to AOL for $4.2 billion. Then he co-founded Loudcloud, which sold as Opsware to Hewlett Packard for $1.6 billion.
Here are the 10 success lessons from Marc Andreessen – “Legend of Silicon Valley” for entrepreneurs,
1. Tech companies are different
According to Andreessen, General Motors has always and will always be in the business of making and selling cars. But what about businesses like Google? Andreessen said that a tech company’s long-term success depends on the products in its pipeline. “What tech companies make and sell today no one is going to buy in five years,” he said. “Tech companies are in the business of innovation.”
2. Disagree and then commit
Andreessen Horowitz partners don’t make an investment on the spur of the moment. Their colleagues are challenging them with counter-arguments before they make their decision.
“If we relied on consensus, we would only invest in the good ones as opposed to the great ones, and then we would fail as a firm.” says Marc Andreessen.
3. You’re not WhatsApp
“The common theory is that you want to be first to market, but actually you want to be last to market and close the door [on that industry]so no one can come after you,” Andreessen said, referring to how there will never be another WhatsApp.
The next big thing in tech, Andreessen predicts, will be something that seems bizarre and fringe.
4. The tech industry renews itself
Andreessen first arrived in Silicon Valley in 1994. It was a time when investment prospects had slowed considerably following the PC era, and Andreessen initially believed the opportunities had dried up. But his faith in tech startups was renewed when he came to realize that tech companies operate differently than other companies. “What I learned is that the Valley is self-renewing, self-revitalizing, and it never stops,” he said. “Tech is always going into new areas: health care, real estate, education, financial services, transportation.”
5. Artificial intelligence would be the next battleground
Andreessen says that artificial intelligence would be the next battleground for both large companies and startups. “Amazon has lapped everyone in AI this year,” referring to the e-commerce giant’s success with its virtual assistant and home automation device Echo. “Amazon has set a new benchmark.”
6. Disruption is part of natural economic cycles
“We have this new magic machine that cleans hotel rooms, but we’re not going to use it because we want to keep the maids in business. Well, in the old days there used to be a job at the hotel called the guy who lights the coal fire … If you follow that logic, you would unwind all the way back to where it all started, which was subsistence farming.”
7. Market is the most important factor in a startup’s success or failure
“In a great market — a market with lots of real potential customers — the market pulls product out of the startup. The market needs to be fulfilled and the market will be fulfilled, by the first viable product that comes along. The product doesn’t need to be great; it just has to basically work. And, the market doesn’t care how good the team is, as long as the team can produce that viable product.”
8. Don’t overspend
According to Andreessen, founders are getting used to raising money at higher valuations, but that won’t always be the case. Many of these hot, headline-grabbing companies have high burn rates, something he advises against.
“If you’re a new startup and spending $50 million a quarter, maybe switch to regular water instead of coconut water,” he said. “We call it the ‘edifice complex.’ As soon as a company builds their fancy new headquarters they immediately fall off a cliff and collapse. It’s peak ego building, something that doesn’t work.”
9. Take sales and marketing seriously
Andreessen tells, entrepreneurs must take sales and marketing seriously and stop applying a consumer mindset to business. They need to build an engine, he says. Business apps don’t just sell themselves; someone has to be out there to “go get the money.”
Everyone’s counting on their brand going viral, but that’s a magic business model. If yours goes viral, Andreessen says, that’s fantastic; viral is great. However, in reality, few companies can do this. Hoping to go viral is not a business model.
10. The magic founder/CEO
From IBM to Microsoft to Intel to Amazon, some of the greatest technology companies were built by their founders. Andreessen referred to this special founder/CEO combination as “magic.”
But that doesn’t mean that every founder has what it takes to take a company public and be a great CEO, Andreessen warned. “It’s a real test for a company when the founder steps down,” he said.