Marc Andreessen's plan for fostering more "Unicorn" startups
The job of a VC is to identify the highest value companies of a generation and invest early and often to support their growth. The prevailing wisdom within the industry has long been that there are but a handful of companies per era that drive the majority of returns. If you miss out on the Google, Facebook, or Uber grand slams of a respective generation, there’s no number of doubles and triples that can make up the difference.
But for some people, this long-accepted reality seems to be starting to change. As software and technology penetrate every industry and area of our lives, the thinking goes that we’ll see more “Unicorns,” or companies valued at more than $1 billion, and “deca-Unicorns,” those valued at $10 billion or greater. But beyond the natural evolution of the industry, and simple inflationary affects over time, are there things that the venture and technology industries themselves can do, in conjunction with politicians, regulators, and educators, to foster this growth?
That’s the question explored by Andreessen Horowitz partner and resident futurist Marc Andreessen* in a late Sunday night tweetstorm. Andreessen tackles the idea of proactively creating an environment that supports an expansion in the number of great tech startups over time.
Sure, it would be good for VC firms like his Andreessen Horowitz to see more Unicorns, but there’s an argument that it would be good for society as a whole, not to mention the global and US economies. More (multi-)billion-dollar companies presumably means more transformative products and services, more personal wealth creation, more jobs, and a host of other benefits. Such an expansion doesn’t come without its tradeoffs, however, including the risk of greater income inequality, the further displacement of “non-skilled” or at least “non-technical” workers, and, if efforts aren’t made to reverse current trends, limited inclusion of women and ethnic minorities.
Andreessen’s plan touches on a number of subjects, including a heavy does of education reform, diversity promoting, increased access to the fruits of federally-funded research, patent reform, healthcare reform, and tax reform. There’s a lot to unpack in that list, and given the number of constituencies involved in these various areas, there’s likely no easy solution. If we want to create an environment that is conducive to entrepreneurship, it will take a national, or even international, crusade. But given the above-outlined benefits it seems to be challenge worth taking seriously.As extensive as the above list is, it’s surely not exhaustive. Certainly there are other strategies not mentioned that could also have positive impacts on entrepreneurship and the rate of large company formation. Similarly, there are no doubt ideas on Andreessen’s list that many will disagree with.
Andreessen’s tweetstorm generated plenty of discussion, but, as is the case with most Twitter conversations (particularly those late on Sunday evenings of a holiday weekend) the number of participants were limited and it had largely faded away by this morning.
The point is, this is the kind of discussion that we as an industry should be having at a large scale and on an ongoing basis. If you have thoughts to share on the subject, don’t keep them to yourself. Share them in the comments below, on Twitter, in a blog post, or in any other forum that might lead to actual change. That said, if you're an entrepreneur, you probably shouldn't wait for any of the above suggestions to materialize. Who knows how long it will take, not to mention the fact that great companies are built despite the challenges before them, not because of their absence.
[Disclosure: Andreessen is an investor in Pando.]