Facebook

""Rupert Murdoch holds 15% of the shares of News Corp., but 39% of the voting rights; even better, John Malone, with only 3% of the shares of Liberty Media, can rely on 28% of the voting rights; and it goes up to 53% for Facebook, of which Mark Zuckerberg [the founder] has only 15% of the shares.""

"While other venture firms seek out executive talent for their clients, Andreessen Horowitz goes further. It develops ties with the Valley’s best software engineers, designers, and product managers, helping them with introductions and career counseling. At times it connects these engineers and managers to one of its portfolio companies, but often there’s no direct payoff. It does the same for top Valley executives, much as CAA negotiated employment contracts for studio executives. Andreessen Horowitz aims to forge long-term relationships that might eventually prove helpful at a future start-up, or as part of future deal flow. And Marc and Ben’s thesis has worked brilliantly. They have rapidly established themselves as one of the nation’s top five venture firms, with prescient investments in Facebook, Skype, Stripe, Airbnb, GitHub, Instacart, Lyft, and Pinterest, among many others. As Marc told the New York Times, “We’ll wire up talent first with the goal of knowing and building relationships with all the best people. It’s more like a Hollywood talent agency.”"

"BranchOut Takes on LinkedIn In June of 2010 Rick Marini had a problem. He needed to track down a contact at a particular company—he was certain he knew someone there but just couldn’t recall the name. To most people this would constitute a soon forgotten frustration. But Marini was not most people. He was a Harvard Business School trained serial entrepreneur with significant recruiting industry experience—he had founded both SuperFan and Tickle.com, selling the latter to Monster Worldwide for nearly $100M. So a month later he launched BranchOut, a professional networking Facebook app. Marini went at this hard and by September had pulled together a $6M Series A round led by Accel Partners, Floodgate and Norwest Venture Partners with some notable tech firm execs joining the round as well. Recruiters want to make the best use of their time, so they go to the source with the largest number of listed professionals, while at the same time professionals want to list their names on the site with the most recruiters visiting. Such one-hand-shakes-the-other self-reinforcing upward spirals are known as Network Economies22: the value of the service to each customer is enhanced as new customers join the “network.” In such a situation, having the most customers is everything, and Marini knew exactly how this game was played: rapidly scale or die. Catch-up is usually impossible if there are Network Economies and LinkedIn already had 70M members. But Marini was betting that the game was not yet over. His idea was to build on Facebook’s base, which was almost 10x that of LinkedIn, enabling this with tools so that a user could seamlessly download all their information from LinkedIn. Marini positioned a Facebook tie-in as a key to better value: “Facebook has a strength of connection that LinkedIn doesn’t have. LinkedIn is"

"Industries exhibiting Network Economies often exhibit these attributes: Winner take all. Businesses with strong Network Economies are frequently characterized by a tipping point: once a single firm achieves a certain degree of leadership, then the other firms just throw in the towel. Game over—the P&L of a challenge would just be too ugly. For example, even a company as competent and with as deep pockets as Google could not unseat Facebook with Google+. Boundedness. As powerful as this Barrier is, it is bounded by the character of the network, something well-demonstrated by the continued success of both Facebook and LinkedIn. Facebook has powerful Network Economies itself but these have to do with personal not professional interactions. The boundaries of the network effects determine the boundaries of the business. Decisive early product. Due to tipping point dynamics, early relative scaling is critical in developing Power. Who scales the fastest is often determined by who gets the product most right early on. Facebook’s trumping of MySpace is a good example."

"The regulatory move thwarted Apple as it expanded into entertainment and services, which made it more like a Google or a Facebook. Bloomberg noted that Apple had been “allowed to grow almost unimpeded in China” in the previous decade, but now it looked like Beijing wanted to tilt the field in favor of domestic companies."

"When Yahoo! offered to buy Facebook for $1 billion in July 2006, I thought we should at least consider it. But Mark Zuckerberg walked into the board meeting and announced: “Okay, guys, this is just a formality, it shouldn’t take more than 10 minutes. We’re obviously not going to sell here.” Mark saw where he could take the company, and Yahoo! didn’t."

"Our results at Founders Fund illustrate this skewed pattern: Facebook, the best investment in our 2005 fund, returned more than all the others combined. Palantir, the second-best investment, is set to return more than the sum of every other investment aside from Facebook."

"Consider what happens when you break the first rule. Andreessen Horowitz invested $250,000 in Instagram in 2010. When Facebook bought Instagram just two years later for $1 billion, Andreessen netted $78 million—a 312x return in less than two years. That’s a phenomenal return, befitting the firm’s reputation as one of the Valley’s best. But in a weird way it’s not nearly enough, because Andreessen Horowitz has a $1.5 billion fund: if they only wrote $250,000 checks, they would need to find 19 Instagrams just to break even."

"Could successful energy startups be founded after the cleantech crash just as Web 2.0 startups successfully launched amid the debris of the dot-coms? The macro need for energy solutions is still real. But a valuable business must start by finding a niche and dominating a small market. Facebook started as a service for just one university campus before it spread to other schools and then the entire world. Finding small markets for energy solutions will be tricky—you could aim to replace diesel as a power source for remote islands, or maybe build modular reactors for quick deployment at military installations in hostile territories. Paradoxically, the challenge for the entrepreneurs who will create Energy 2.0 is to think small."

"A billionaire who at eighty-seven has no intention of letting go. On one hand, he is always ready to seize growth opportunities for his company, to embrace technological change by allying with social era global leaders – as demonstrated by the glasses developed with Meta, at the time Facebook –, on the other hand, he remains at the center of the financial world's attention due to his activism as an investor in banks and insurances."

"Don’t innovate blindly; learn from others when necessary. Undoubtedly, they imitated Facebook, and while saving costs, they achieved a first-rate UI experience at the time."

"Wang Xing’s first breakout entrepreneurship project was Xiaonei, a social networking service (SNS) website for college students, similar to Facebook. Before creating Xiaonei, Wang Xing and his team had explored and abandoned nearly ten projects, one every two months on average. Xiaonei was founded in 2005, but due to Wang Xing’s lack of experience and inadequate financing, the funding chain broke. In this situation, Xiaonei was sold to Chen Yizhou’s Oak Pacific Interactive in 2006, becoming the foundation for what would later become Renren."

"More typically, every venture he undertakes leads the wave of imitation in China’s internet scene. Renren, akin to Facebook, led the campus SNS wave; Fanfou, similar to Twitter, led the microblogging trend; Meituan, similar to Groupon, pioneered the group buying wave. His grasp of American internet trends is very accurate, and when transplanted to the Chinese internet, the products he made were outstanding. There is a lot of replication of foreign websites in the Chinese internet, many people only jump in when they see someone doing it successfully. Discovering an opportunity first once may be luck, but Wang Xing being the first every time is quite intriguing."

"Benko started as a start-up entrepreneur and simply remained one, even as the company branched out and grew in width and height. Other start-up entrepreneurs eventually bring in experienced managers to reorganize the company – like Google's bosses did with Eric Schmidt, who had previously led traditional IT companies, or Facebook's Mark Zuckerberg with manager Sheryl Sandberg, who had stints at McKinsey and Google."

"I took to that market like a fish to water. I had some experience of the tech sector through my gaming portfolio companies. One such business was CCP, an interesting company founded in Iceland by a team of developers and gaming enthusiasts with investments from an Icelandic pension fund. These two very different groups did not see eye to eye at all, so the founders approached me to buy out the institutional investor. They presumed someone like me who had founded and built several businesses would speak their language and be a better fit to expand the company. The founders and management had massive ambitions that I took with a pinch of salt, but there was an incredibly loyal fanbase of customers who paid a monthly subscription fee. The company’s stated goal was to create another world outside the real one: to their users, the creation was more important than the actual world! They called it the ‘Metaverse’ and they were actually the first real players there, years before Facebook’s Mark Zuckerberg called it out as the next level of social networks and renamed his company Meta. CCP’s EVE Online game was and is a space-based sandbox ‘massively multiplayer online’ (MMO) game known for its player-driven economy, vast universe and complex gameplay mechanics. It allows players to explore, trade, engage in player-versus-player combat, and participate in large-scale battles and political events within the game’s persistent universe. I saw CCP grow from one office in Iceland to large offices in the US, Shanghai, the UK and elsewhere. As most of EVE’s players were inside that sandbox world for hours each day, it really felt that it was becoming the most important place for many of them. The annual EVE Fanfest attracted thousands of people from all over the world, and often people from different countries who had met inside the game would get married there in reality. It was astounding to watch this community as it grew, and I really felt that if this was a guide to the future, then technology was changing the social fabric in more fundamental ways than most people realised."