Photography: Timothy Archibald
HBR: How would you characterize the best entrepreneurs you work with?
Andreessen: We aim for a trifecta in the people we want to back. We’re trying to find a product innovator who is entrepreneurial and wants to start a company, and who also has the bandwidth and discipline to become a CEO. When people like that actually deliver and work hard for 10 years, the results are miraculous. If they fall down on any of those three fronts, generally it’s a casualty.
Do all those skills really have to reside in one person?
It’s hard to pair a product innovator with a business partner—or to partner the founder with an outside CEO—and have them get anywhere. We work with our companies when they absolutely have to do this, but it’s very challenging.
Can entrepreneurs be taught? Or are the skills innate?
We think CEOs can be taught, so we specialize in training innovators to become CEOs. We don’t spend a lot of time trying to teach CEOs to be innovators.
To what extent is the start-up business still hungover from the last boom and bust in tech stocks?
It’s a really big deal, especially for anybody over age 35. It’s similar to what happened after the Great Depression: Not until the 1950s did people really start focusing again on the stock market. Everybody’s hypersensitive about another bubble. The minute anything starts to show even a little bit of life, they say, “Oh, my God, it’s another bubble!”
Are you saying that the general view of the market is irrational?
Yeah, it’s irrational. The rational thing is to focus on the future, not the past. But current attitudes are very much based on what happened in the past.
What’s the view of Andreessen Horowitz?
Obviously, we see opportunity. We started our firm in 2009, after probably the worst 10 years ever in venture capital. But given the history of these things, this is probably a good time to get in.
Do you see the danger of a new bubble out there?
It’s in the nature of venture capital and start-up investing that there are always stupid investments. The problem is that you never know which ones are which. I get these things as wrong as anybody else. But if you’re afraid to make any investments that might be stupid, you’ll never get any big winners—because the big outlier winners tend to look crazy at the start.
One symptom of the hangover is that fewer start-ups are doing IPOs. What does that mean for investors like you?
In a sense it’s good for me. As venture capitalists, we have a 13-year lockup on our money, so we take “long term” seriously. I tell our entrepreneurs, “If you build a big successful independent company, at some point you almost certainly will go public.”
In the meantime, how do you prepare them for that moment?