ANDREESSEN HOROWITZ: Here's The Magic Formula For Building Massive Companies [DECK]

Ben Horowitz

The founding partner of Silicon Valley investment firm Andreessen Horowitz, Ben Horowitz, recently gave a great presentation at the DLD conference in Munich.

Ben explained how Andreessen Horowitz chooses its investments.

Specifically, he laid out what might be described as a “magic formula” for building humongous,  world-dominating, dynastic-wealth-creating tech companies.

Here’s his presentation…

Ben Horowitz is not just an amazingly successful investor. He is also an entrepreneur. So he has seen this game from both sides...

Andreessen Horowitz looks at 2,400 qualified (pre-screened) investment opportunities a year. It invests in 1 in 100.

In other words, the original idea actually isn't that important.

Ultimately, however, the idea has to have one very important quality...

But there's a problem with breakthrough ideas...

They seem crazy.

Ben flipped through some breakthrough ideas that seemed insane at the time... PayPal

Nicira

AirBnB

The entrepreneur.

Great entrepreneurs need to be brilliant, but...

They don't need to have college degrees.

In fact, Horowitz says, dropping out of college can be a sign of all three key characteristics: brilliance, courage, and a breakthrough idea (an idea good enough to make a smart person walk away from guaranteed success).

Yes, to support a huge company, the market opportunity has to be huge. However...!

And then there's the business model...

And Facebook! It was obvious to almost everyone who looked at Facebook that Facebook was just a silly fad that would never be a business. Facebook, for example, was obviously just a poor clone of the amazing MySpace..

And Twitter! Imagine thinking that you could build a business out of 140-character blurts.

In short...

More specifically...

So that's the magic formula for building a huge company.

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