Welcome To The "Dark Side" Marc and Ben

I think this is big news although I have not seen anyone pick up on it yet. Last night on Charlie Rose, Marc Andreessen told Charlie that he and his longtime business partner (and CEO of Opsware/Loudcloud) Ben Horowitz are getting into the venture capital business on a full-time basis. They are forming a new firm and raising a venture fund.

Marc and Ben have been active angel investors in web/tech for a while now. They are co-investors with our firm Union Square Ventures in a number of companies, including delicious and twitter. They are smart and experienced and plugged in. That's a formula for success.

The entire interview with Charlie is terrific and I agree with almost everything Marc said on the show. But if you want to get to the news about the new VC fund fund, click thru to the video (no idea why you can't embed it) to 18:30 in and watch Marc talk about it.

If you look at the history of Silicon Valley venture capital firms, there is a rich tradition of experienced entrepreneurs and operators leaving the operating side of the business and starting venture firms in the middle of their careers. Marc and Ben are the latest to do this and I expect they'll be very successful and we hope to continue to invest with them as they build their firm.

UPDATE: Now the news is starting to percolate out across the tech blogs:

PE Hub



#VC & Technology

Comments (Archived):

  1. David Noël

    Thanks for sharing, Fred. You’re actually able to embed it: just click ‘Share’ next to the description and it will display the code

  2. alphanaliste

    What *didn’t* you agree with?

    1. fredwilson

      I’ll go back and watch carefully and let you know

    2. fredwilson

      watching again now on my living room TV. here’s some things i don’t entirely agree with:1) newspapers are not spending 90% of their time on print even though the vast majority of their revenue is still coming from print. i think they might be spending over half their time thinking/working on their online oppty2) i wouldn’t classify amazon as a “magic business”. to me Amazon is a testament to Bezos tenacity and execution. that business is a slog not “magic” like google or microsoft.3) i don’t have a “special relationship” with my xbox. my son does, but i don’t. i think its a generational difference between Marc and me. and that makes him a better investor than me in the games sector.4) he uses the word “valley” to talk about the startup sector broadly. that’s a mistake that silicon valley insiders make all the time. silicon valley represents less than half (maybe as little as 1/3) of all innovation/startup activity.but i had to work hard to find stuff i did not agree with. i see the word almost identically to the way marc does.

  3. Merl

    Time was NOT kind to Marc.

    1. fredwilson

      That’s not true. He’s aged well as a person.

      1. Merl

        Clarification: Physically, time has not been kind to Mark. But as long as you have your health, cheers!But really, the press needs to stop using that picture from a decade ago.

  4. rkorba

    Marc’s blog is one of the best (along with yours, sir!) and his father in law is a stunningly savvy dude… hope he gets some tips.

  5. stone

    One thing he said that is plain ridiculous: that Facebook could generate a billion dollars in revenue if they wanted to. Instead, they’ve decided to struggle raising money and suffer further dilution — yeah, right! If they could generate a billion dollars my guess is they would. Since they are not doing anything close to these numbers it’s safe to think they cannot .

    1. fredwilson

      They are doing $300-$400mm in annual revs without even tryingIf Facebook was being run by a media guy (say Tom Evans of Bankrate andformerly Geocities), they’d be doing $1bn for sure with that kind ofaudience and engagementZuckerberg has no intention or interest in doing thatSome of these young entrepreneurs are capitalists but not exactly rationalin the sense that we areThey are betting that by foregoing a dollar today, they’ll make two tomorrowI am not sure that’s a good bet, but Marc is sitting on the board watchingbehavior that I’ve seen as wellAnd I think he’s right

      1. stone

        The folks at Microsoft would quibble with the view that no one has tried to monetize Facebook. In fact, they will tell you that the roi is so poor that they hate putting serious advertisers on the site, especially if they expect a decent click-through rate.The real truth is about PR. They have a massive amount of traffic — truly amazing — but cannot find the repeating pattern that will turn that traffic into a massive cash machine like AdWords. So, what do they do? Keep using brute force to drive revenue while making it look like they don’t really care. This buys them time — time with employees, investors and anyone else that cares.For a company that hasn’t tried, they have built multiple ad/targeting products, held parties for NY ad agencies, struck multiple deals with Microsoft, fired Owen Vanatta (for failing to hit revenue numbers), etc., etc., etc.Fred, you are very smart but you are falling for spin because you believe in Facebook. I will tell you that the picture is a bit murkier.

        1. mdudas

          In your understanding, are the ROI complaints from Microsoft sellers & their clients true for the social & engagement-type advertising, or more specific to click-through rates on targeted display ads? And how is ROI-being defined by these advertisers (I hope not solely click-through, as Facebook is a social media site – people interact with it very differently than they do Google search results, obviously, so the objectives of the campaigns & the way results are measured should be different).The biggest challenge is demonstrating and getting advertisers, planners and buyers to agree on value beyond click as well as expanding comfort levels with online brand advertising that goes beyond traditional display. My company, TargetSpot, is working on this from the audio and video side of the business. Much of offline television and radio advertising is driven by branding – the clients understand this, accept it and have seen positive brand lift & awareness that drives measurable offline and online sales for years.Note that much of what works in radio & local TV includes custom components such as station promotions, contests, on-air talent reads, etc. Online media companies are getting better at putting these packages together for advertisers, so I would expect the picture to get much less murky over the next few years.

          1. fredwilson

            Good point mike

        2. fredwilson

          Good points, all of themI’m thinking hard about all of this and appreciate the diverging viewpoints

  6. Saul

    It is absolutely wrong for him to use that headshot. Might as well use a baby pic.

  7. RexDixon

    totally agree and said so on my tumblr stroll (rexdixon.tumblr.com) about 5 hours ago. 🙂

  8. ibankerinSValley

    Excuse me Fred, but whats VCs overall ROI over the past 5 years and how does that compare w the S&P500?

    1. fredwilson

      S&P is down 30% over the past five yearsThomson/Reuters says that the 5 yr VC return is 8.6%So VC has outperformed S&P500 by almost 40% in the past five years

  9. alanp

    I completely agree with Stone. There is no doubt that Facebook can and will generate a certain amount of ad revenue because of their sheer size and massive inventory. Unfortunately for them, they are a communications site (like Yahoo Mail, AIM) and the value of ads on these sites is low for 2 reasons. First people move from page to page very quickly so the ads are often never seen by the user. second, users are engaged with other people, not the web sites or its content, so it is difficult to move the user from this mindset to an engagement with an advertiser. Adwords is a platform that works for the obvious reasons – consumers are LOOKING for an advertisers product or service. Facebook, while it may open up many opprotunites to leverage the word of mouth benefits of the site for its advertises, will probably never be able to monetize this with a universal platform. they will have to create one new ad concept/strategy after another with advertisers to drive success for advertisers. while they may hit some marketing homeruns as one-offs, it is not a scalable platform that will bring in the masses of advertisers they will need to make FB into the kind of succcess Google has generated. i just can’t envision any platform that they can create for advertisers that will deliver the accountable and obvious value that advertisers need. I am a FB fan (as a user) but I rarely buy ads for my clients on this site becuase they don’t work (from a direct response perspective).I equate their problem to the telephone. While it might be a fantastic communication tool that everybody uses, the only ad revenue genreated by the telephone is from telemarketing – a nice business but it doesnt drive anywhere near the ad revenue that television does.Maybe Facebook can’t ever be monetized at the level we are all hoping?

    1. fredwilson

      What if the telephone had a recorder that advertisers could listen to andthen display ads on your TV while you are watching later that match thestuff you talked about earlier?

      1. alphanaliste

        Wow, that would be creepy.

      2. alanp

        that will be coming to TV ads soon as related to your online actions even with the recent beat downs of nebu ads and phorm. probably why google abandoned radio and print but still has hopes for tv.

  10. kidmercury

    IMO the key to social networking monetization is in enabling influencers on social networks to make money. which is why i think ning and niche social networking in general is a better bet than facebook and the other mass social networks. with that said facebook is undeniably a juggernaut and now has more options than simply being a social networking destination, as evidenced by facebook connect, so perhaps there are new revenue opportunities that are not dependent upon facebook as destination as well.and the alleged supermodels participating in this discussion may wish to upload their own pic to disqus before hatin’ on marc’s appearance. yes marc has more success and intelligence in his toe nail than the youngsters bringin’ the hate will ever have in their entire existence, though being a jealous hater knockin’ the dude’s appearance is not the way to cope with that.

    1. fredwilson

      Nice one Kid. Love the supermodels line!

    2. markslater

      the value is surely contexting against the flow on facebook. you make a god point here, as does another commenter above. people are connecting on facebook – they dont spend much time on a page.There have to be more opportunities beyond the site associated with what we are socially doing or what we socially choose to share with our network. Twitter i guess is a step towards this, but there surely is a more dynamic location aware way to leave your social jestream using facebook to connect.

  11. EntrepreneurDude

    I thought that was Dr Evil….

  12. Aruni S. Gunasegaram

    That’s great. It’s always good to have people who have built businesses investing in other businesses. I’ve found that a successful entrepreneur turned investor tends to add a lot more value to the companies they invest in…at least within the first 5 to 7 years they start doing it full time.

  13. FairlyPrice

    It is absolutely wrong for him to use that headshot. Might as well use a baby pic.

  14. booger

    small wonder marc’s going the vc route — ning’s not likely to make him rich again.