Ben Horowitz: “We like to invest in those who quit college and have crazy ideas for tiny markets without monetization”

During the DLD Conference in Munich, venture capitalist Ben Horowitz explained why he and his company Andreessen Horowitz are investing in a certain company and its founders, writes TechCrunch. Last year, Andreessen Horowitz found 2355 companies that were potentially worthy of investment. However, in the end, the company closed only 24 transactions (not counting the initial investment). The companies that reached the final, according to Horowitz, were founded by "those who quit college and have crazy ideas for tiny markets without monetization."

Speaking of crazy ideas, Horowitz noted that in 1975 software was not something that someone would invest in. The market was too small, and most people did not think that something like Altair Basic was a viable product. However, Microsoft thought otherwise. In 1998, a web search was considered a bad investment idea, since most of the existing search companies could not make money on it. However, Google came up with how.

Among other companies that started with a bad idea and then turned into large companies, Horowitz cited the example of the podcasting service Odeo, which turned into Twitter, and Burbn, which turned into Instagram.
')


According to him, to get funding, the idea must be breakthrough. It should be much better than what it is. The problem, however, is that these breakthrough ideas - by definition - look like insane ones. Even the smartest people can miss good ideas because they know too much about the old paradigm and cannot understand the breakthrough. Horowitz noted that, for example, Airbnb looks like a crazy idea - even the name seems like a bad idea. However, now in New York through Airbnb more hotel rooms are ordered than at Hilton.

According to Horowitz, the key characteristic for the search is an incredibly brilliant entrepreneur with a furious idea. Who are these great entrepreneurs? Citing the example of Mark Zuckerberg, Steve Jobs, Larry Ellison, and Bill Gates, who dropped out of college, Horowitz said he was looking for brilliant, bold, and breakthrough ideas. If you do not have brilliance, you will not go to college, and if you do not have the courage and breakthrough ideas, you will not give it up.

Horowitz also noted that although Silicon Valley is often accused of having great ideas, but the absence of good business models, companies such as Amazon, Facebook and Twitter were often underestimated at the beginning, and many analysts thought they would never be a profitable business. Their ideas initially looked crazy and impossible to monetize, but all these companies eventually learned to earn.