This morning around 4 AM, Marc Andreessen logged onto Quora and started answering questions for about an hour.
It looks like it was the first time he’s answered anything on the question-and-answer site since the end of December.
We tried to format this like an interview. A paraphrase of the question asked on Quora is in bold, Andreessen’s answer follows in quotes.
If you’re pitching and investor, and s/he asks, “Why won’t Facebook just roll this out as a feature?” what should you say? “When I ask variations on this question (not about Facebook specifically but more generally about any big company), the answer I am always hoping for but rarely get is, ‘Because we are going to kick their arse.’ Followed by an explanation of how.”
What should an entrepreneur wear to a meeting with a potential VC or angel investor? “To quote my friend Jim Barksdale: ‘Our dress code is, you must dress.'”
How important is it to have a technical cofounder? “…we would have a hard time funding a startup without a strong technical founder. I’d go so far as to say that it is irresponsible to start a technology company without a technical founder, for all but a very small number of non-technical entrepreneurs.”
Should Facebook have sold to Yahoo for a $1 billion given all that was known at the time? “Hell no!
What kind of return are limited partners looking for from a VC firm? “There are very complex agreements between venture capital LPs and venture firms/GPs, as you might imagine.
“Generally, top tier venture LPs are looking for something north of a 3x net return on invested capital. This is for venture funds that usually have a formal 10 year lifespan. Top tier venture LPs usually would rather have higher returns than faster returns, i.e. they don’t really care about IRR if they can get high overall returns.
“3x net return on invested capital doesn’t sound like a lot for a financing industry that helps fund companies like Google and Facebook, but there are surprisingly few venture firms that can generate that level of overall return over time.”
Are the rich paying enough in taxes? “Probably not, and in particular the most egregious unfairness is the failure to tax carried interest as ordinary income (fee for service) in investment businesses such as venture capital, private equity, and hedge funds.
“It is also a fairness problem that capital gains taxes are lower than ordinary income taxes, given that rich people usually generate more income from capital gains than poor people. But this conflicts with my view that capital gains taxes should be reduced to spur additional investment, particularly in new and growing businesses. Which is why the optimal tax system for the US would probably be focused on a consumption tax that is sharply progressive — i.e. rich people should get the bejeezus taxed out of us for consumption, but with a corresponding steep reduction in capital gains tax rates.
“It also seems obvious to me that the death tax should be 100% for amounts above a certain nominal point, as Bill Gates Sr advocates.”
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