Marc Andreessen — Business And Life Lessons
What are the core business and life lessons told by the famous VC Marc Andreessen? What does it take to thrive in today’s business environment?
Marc Andreessen has been one of the key players in making the Internet and World Wide Web accessible to the masses.
Marc Andreessen co-created the highly influential Mosaic Internet browser, the first widely used graphical web browser. He also co-founded Netscape, which later sold to AOL for $4.2 billion.
Marc Andreessen is a legendary figure in Silicon Valley — and worldwide.
Marc Andreessen is also a successful and prolific venture capitalist. His portfolio includes some of Silicon Valley’s most enviable investments, including Facebook, Airbnb, Twitter, Lyft and Pinterest.
Nowadays, there is nothing permanent except change.
WarningBusinesses rise and fall, consumer needs change over time, and so do the rules of business and enterprise as a whole. It’s not easy to prosper in a climate of uncertainty.
Luckily, there are those who can guide you in the right direction.
ImportantMarc Andreessen is definitely one of the best people in Silicon Valley in terms of articulating a vision of where the world is going. He’s one of the many entrepreneurs who have made it, paving the way for newcomers who wish to become the next big thing.
His advices and lessons are particularly orientated towards people who want to enter the technology industry, which we think is a particularly promising path to social impact.
With a net worth of $600 million, Marc Andreessen has been there and done that, and probably knows a thing or two about success. Let’s have a look at the most important business lessons that Marc Andreessen would urge you to follow.
Raise Your Prices
How valuable do you think your offer is? Are you charging enough for what it offers? Or maybe you’re going down the path of least resistance and undercutting your competition.
Rather than making you competitive, low prices make your offer appear less valuable.
WarningIt’s not just about the way people perceive your service. Charging too little may suppress the growth of your business.
If you’re confident enough in what you offer, people will follow suit.
Why do you think the iPhone is the most popular smartphone in the world despite being the most expensive? Because Apple knows how to communicate value.
And if you want to thrive, you’ll have to figure out how to raise your prices.
Sadly, it has become conventional wisdom in Silicon Valley that the way to succeed is to price your product as low as possible, under the theory that if it’s low-priced, everybody can buy it, and that’s how you get to volume.
A lot of new startups don’t think about monetizing their products from the get-go because they are blinded by Amazon’s profitless business model. But Jeff Bezos has spent years building his investors’ trust to be able to deploy his company’s profits into other ventures. That’s a luxury most up-and-coming startups don’t yet have.
Those who don’t charge enough get into a problem called ‘too hungry to eat.’
WarningThey don’t charge enough to be able to afford the sales and marketing required to actually get anybody to buy it. They cannot afford to go acquire the customers.
As soon as you start raising your prices, you attract better customers. You attract the people who value what you do.
There are some markets where you’re selling commodities with zero pricing power, or you’re near-commodity, with limited pricing power, but most small businesses have a lot more pricing power than they think.
No matter your industry, it’s almost certain that things are different from, say, five years ago. And you can only expect further changes. If your business doesn’t adapt, it’s going to be a struggle to find your place in the market.
You need to be on the lookout for opportunities to leverage technology in a new way.
ImportantBe it for your products, processes, or other aspects of your business. As long as you’re up-to-date with the evolution of your industry, you’ll be at the forefront of growth.
Marc Andreessen’s top advice for entrepreneurs is to never stop growing.
No matter what happens, there’s always something that you can do to get to the next level. Keep in mind that you have all the tools you need to become successful. Don’t let them go to waste.
Amazon is the prime example of how shopping has moved online but even Wal-Mart has illustrated the power of technology by using software to power distribution and logistics. What’s more, this revolutionary move has enabled them to completely outperform their competitors.
When technology changes, you need to adapt.
WarningAt the same time, this is not only true for tech businesses today but rather every business in every industry. You see, more and more major companies rely entirely on software.
How does Marc Andreessen look for new opportunities? He applies the ‘Nerds At Night’ test.
Think about nerds who work at Salesforce.com, Intel or Apple. They go do whatever they need to do to make a living. The question is: What’s the hobby? What’s the thing at night or on the weekend? Then things get really interesting.
According to Marc Andreessen, founders are getting used to raising money at higher valuations, but that won’t always be the case. Many of these hot, headline-grabbing companies have high burn rates, something he advises against.
If you’re a new startup and spending $50 million a quarter, maybe switch to regular water instead of coconut water.
He calls it the ‘Edifice Complex.’ As soon as a company builds their fancy new headquarters they immediately fall off a cliff and collapse. It’s peak ego building, something that doesn’t work.
You don’t win in business by wasting money. Frugality is a state of mind.
WarningEven the most successful entrepreneurs pinched pennies in the early days — and many still do. A frugal entrepreneur is someone who can economically and prudently organize and/or manage a business while being mindful of any inherent risk.
Airware serves as cautionary tale of startup overspending in hopes of finding product-market fit. Had it been more frugal, saved cash to extend its runway, and given corporate clients more time to figure out how to use drones, Airware might have stayed afloat.
Nevertheless, frugal does not mean cheap.
ImportantCheap implies cutting corners for the sake of saving a few dollars in the short-term, with little regard to how those decisions will affect the health of the business in the long-run. Frugality, on the other hand, is both expansive and far-sighted.
Being a frugal entrepreneur means changing the way you look yourself, your business, your employees and your customers.
It is as much about utilizing and maximizing available business resources as it is reducing costs. Sometimes being frugal actually means spending more in the short-term to realize some future savings.
Don't Fetishize Failure
A top reason why plenty of business owners struggle is that they’re not ready to go all in. This often stems from being too soft, perhaps in the context of the recent ‘failure fetish’ trend.
Marc Andreessen explains that many companies seem to pivot too frequently.
In his opinion, such companies are not ready for serious growth as they’re not ready to put in the time and effort to get it right. Those who welcome failure to feel better about themselves justify bad decisions by telling themselves that ‘you need to fail to succeed.’
Not every startup should be a Lean Startup or embrace the pivot.
WarningMarc Andreessen has noted that as popular as the theory of Eric Ries can be, there are still some areas where it can’t really apply. Especially startups with really audacious goals. For example, Elon Musk’s ventures couldn’t be done on a small scale at first. “You got to get the rocket into space.”
“We do see companies that, literally, every time we meet them, they’ve pivoted. Every time, they’re off to something new, and it’s like watching a rabbit go through a maze or something. They’re never going to converge on anything because they’re never going to put the time into actually figuring it out and getting it right.” — Marc Andreessen
What makes Silicon Valley especially insane is a general willingness among the startup community to fail and fail often.
ImportantBut Marc Andreessen notes that sometimes, founders take this too far, and use it as an excuse to not keep trying. Marc Andreessen says it’s certainly okay to fail, as long as those lessons from failure lead you down the path to success — not just another series of failures.
Additionally, the apparent success rate of a hard pivot — changing the product, market, and business entirely — suffers from survivorship bias.
A handful of high-profile success stories — Slack, Twitter — spread like wildfire, while companies that fail to pivot remain silent and unaccounted for. For many companies, radical pivots serve only to postpone the inevitable decline through the Product Death Cycle. To have a better chance of success, a fresh start is sometimes required.
Commit 100% To Your Ideas
Growing up, we often think that failure isn’t an option. In reality, however, you swing and miss, and as Marc Andreessen put it, you almost always have more than one swing.
Be so good they can’t ignore you. When the right pitch comes, you have to go all-in to hit the home run.
WarningThe grass is brown on both sides of the fence. If your idea is challenging current conceptions, you have to fight to convince people they want what you’re selling.
The common theory is that you want to be first to market, but actually you want to be last to market and close the door on that industry so no one can come after you.
Marc Andreessen usually tells rookie entrepreneurs not to shy away from an idea that someone tried five or 10 years ago and failed with. If you think you can execute, you just have to be able to show that now is the time.
You need to offer the market something that you’re passionate about. Something that will solve problems and make people’s lives better. If you’re in it just for the money, you’re not going to last very long, at least not at the level you have in mind.
You must build for passion and not for the sake of owning a business.
ImportantAs a rule, Marc Andreessen believes that too many businesses are started for the wrong reasons. Too many startups fail simply because the founder was motivated by becoming their own boss.
Startup founders should focus on the product and ensure that passion is always the key motivator for what they do.
Many of the best inventions are the result of the creator studying or focusing endlessly on their idea without any real reward. Apple and Google were both started in a garage. Facebook was created in a college dorm room.
When it comes to startups, Marc Andreessen is a prime example of how to get ahead. While his exit from social media may seem a little unusual, it’s clear that success is something that continues to follow him around and his sage advice is just as relevant — even without social media.
Wherever your business is at right now, there’s no reason to think about how things would’ve unfolded if you’d done something differently.
WarningYou can’t do anything to fix your bad decisions of the past, so why dwell on them? Why not use that energy to think about how the current situation can get better? That’s how you focus your attention forward.
Only agree to new commitments when both your head and your heart say yes.
I’ve been guilty of taking on too many things because I’m excited by the possibilities or interested in the subject, only to find out later that I’m overcommitted and en route to disappointing myself and others.
There is no such thing as an “undiscovered genius”.
ImportantBecause the true geniuses will attract the resources necessary to turn their ideas into reality wherever they are. They understand that the most important component isn’t product or capital — it’s the people.
That starts with you. Building a company is only 10% about the product. The rest is about you, the people and the market.
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