Uber and Airbnb reshape the VC game, a look into the investment logic of A16z founder Andreessen.

Mark Andreessen, the founder of the well-known Silicon Valley venture capital firm a16z, stated during an interview on June 12 that the venture capital game has been fully upgraded. He mentioned that companies relying on the software as a service (SaaS) model to sell software and collect subscription fees have a bleak survival chance in the future. The main focus now is on full-stack startups (Full Stack Startup).

He further pointed out the harsh reality of the venture capital world, which is that the venture capital firms that truly make money tend to have a higher tolerance for mistakes because they dare to heavily invest in projects that initially seem very crazy. The issue of market size is merely superficial; whether the founder is strong enough is the key to success.

Uber and Airbnb are reshaping the rules of venture capital; a one-stop service is essential.

Andreessen was the first to state that starting from 2010, the winners in the tech industry are no longer just selling technology to traditional industries, but are directly "jumping in to do it themselves."

He cites examples like Uber and Airbnb, which are one-stop new startups that not only provide a solution but also handle everything from start to finish, delivering the value promised by technology directly to the end user. Andreessen uses a metaphor:

"Because when you are selling shovels and also go to dig for gold yourself, you will become a super large company that takes over the entire market, which will fundamentally change the investment logic of venture capital."

Large and small venture capital funds coexist, but the mid-sized ones are being phased out.

Andreessen pointed out that the venture capital industry is forming a "barbell structure" (Barbell), with one side being large-scale, resource-driven funds like a16z, and the other side being small but specialized niche seed funds.

And the kind of old-fashioned venture capital firms that are stuck in the middle, only doing Series A and B rounds, with 6 partners and a scale of 300 million dollars, sitting in the office waiting for entrepreneurs to come to them, are on the verge of being eliminated.

Missing out is the fatal key; venture capital must dare to take action.

Andreessen emphasized that what venture capitalists fear the most is not losing money, but missing out, because venture capital does not win by average success rates, but by hitting a few cases that can bring thousands of times returns. This is why he has always encouraged the team to get in early and not to be afraid of problematic cases. He stated that as long as the intuition is right, one should take action.

Venture capitalists are not afraid of losing money; they are afraid of not being able to invest in competitors.

Andreessen stated that the biggest dilemma faced by a16z is not performance, but conflicts of interest:

"If you invest in a startup and three years later say you want to invest in its competitor, they will feel betrayed, and the meeting won't even be able to continue, leading to a breakdown in the relationship between both parties."

As a result, a16z often has to forgo a large number of seed deals due to potential conflicts.

"The market is not big enough" is just an excuse; the key is whether the people are strong or not.

Andreessen stated that many founders of startups often hear "the market is not big enough" when they are rejected for investment, but this is just a polite way of saying "the team is not strong enough," they just don't want to say it outright.

He advised founders not to be tied down by perfunctory reasons, but to find a way to be strong enough to be impossible to ignore.

AI reconstructs the whole world, taste and circles are the keys to venture capital success.

Andreessen stated that AI is not a technology like "cloud" but is on the level of the birth of the computer:

"This is a new computer, everything will be restructured, including software, services, industry structure, and even government agencies."

He believes that all industries will be reshuffled in the next 10 years, and the mission of venture capital is to "capture the targets with the highest returns among these possibilities."

Andreessen finally pointed out that the core competitiveness of venture capital lies not in capital, but in "taste" and "networks." He stated that this is quite unfair and difficult to replicate, yet it is very real.

This article "Uber and Airbnb Reshape VC Playbook, Understand a16z Founder Andreessen's Venture Capital Logic in One Read" first appeared in Chain News ABMedia.