How Andreessen Horowitz Fumbled An Instagram Investment

Anyone reading this article needs to remember to never be afraid of putting yourself out there because you are afraid of failure.<p>I saw the market first, I created picplz, and I went for it. I was a huge believe in the mobile photo sharing opportunity, and I went for it with all of my heart. Clearly, picplz didn't win, but I have ZERO shame or regret for doing my best.<p>When I read articles like these, which are about myself, my company and people that I know well, I can't help but feel vitriol aimed at me for DARING to create, launch and raise funding for picplz. I am not clear on what exactly people want, an apology for trying?<p>The fact is, I saw the writing on the wall that we wouldn't win <i>early</i> and pivoted out of photo sharing which I had ~90% of my series A cash still in the bank. It certainly seems like that was the right move, but all of this press makes it look like pivoting was the wrong call(?) The press I read is written in such a way that it assumed that the A16Z investment is dead and my entire company should just be written off to zero today. That is bullshit. If I started to take press like this too seriously I might as well just dissolve my company and stop coming into work.<p>I say this to the hn comminity: never be afraid of failure. No one knows what will happen. All of this arm-chair quarterbacking is a waste of time. Stop reading this kind of crap and instead put your energy into doing your best work. Sometimes you win, and sometimes you lose, but if you give yourself the opportunity to win enough times, you WILL be successful.

"At that market capitalization, Andreessen Horowitz’s stake would be worth $100 million — not bad for a $250,000 investment, but $200 million short of the return it could have earned had it stayed the course."<p>Amazing that you can turn $250k into (possibly) $100,000,000 and in the eyes of a NYT writer you have fallen short.<p>The writer will make a great parent.

Extra, extra, read all about it! Firm makes wrong bet in high risk industry and still comes out with 40000% return! Epic fail!

It's helpful to know as an entrepreneur that, whatever "A16Z" (heh) thinks about this particular instance, venture capitalists are, allegedly, as a species, <i>way more motivated</i> by fear of stories like this than they are of the fear that their investment in you will come to nothing. When they need to raise money for their next fund, nobody is going to hear about the investments that came to nothing, but the obvious missed opportunities are going to sting.<p>This helps explain why they'll plow money into shoot-the-moon me-too startups that have no discernable chance of success, but might turn you down even if you have steadily growing revenue.

Is it just me, or does this seem like a pretty savvy investment by A/H? They got their money into both companies, and ended up getting back (if the article is to be believed), a 400x return on their investment. There was a time and place where that was considered not too shabby, some might even say quite good.<p>Nobody can maximize every investment. How often does it happen that anybody maximizes their investment potential on any given deal? I wish I would have bought Apple stock in 1998 instead of 2005, but I wouldn't say I "fumbled an investment opportunity." When I first saw this headline, not knowing the backstory, I thought this meant that they did something to piss off the Instagram founders and lost out on the chance to put anything into the company at all.

Was the NYT headline updated? It currently reads 'How Andreessen Horowitz Bunted on an Instagram Investment'.<p>The piece describes how Andreessen Horowitz invested in both Burbn &#38; Picplz. After Burbn pivoted to Instagram, Andreessen Horowitz had to choose between the two - since they competed directly. Andreessen Horowitz chose to go with the company that they put money for photo sharing.

Also tells you how difficult it is to figure out who is going to make it big. picplz had Dalton Caldwell, both an Android and an iPhone version and a several month head start. You can't blame a16z for picking them.<p>Besides, it looks like they did the most ethical/default thing they could - back the company they had already funded for photo sharing and avoid a conflict.

<i>It was a calculated bet against Instagram and it left Mr. Systrom livid, these people said. Instagram’s founders never discussed strategy with the firm again.</i><p>Curious: To what extent can you avoid disclosing information to your investors, once it becomes clear that they are competing against you.<p><i>But Mr. Systrom’s experience with Andreessen Horowitz taught him to choose his investors warily.</i><p>Why? It seems like A16Z did the most ethical thing, which was support the company that the original founded for this idea. When Instagram pivoted into a competing position, why would they expect A16Z to back them and bury picplz?<p><i>By the time Facebook acquired Instagram for $1 billion in a cash-stock deal a week ago, Andreessen Horowitz’s stake in the company had fallen to less than 10 percent.</i><p>If A16Z had half the seed round, then that means that the seed investors owned 20%, diluted. If Benchmark own 30% at the sale, that means that the seed angels must have took &#62;30% of the company at the $500K seeding. Is this correct?

I'm personally sad to see what happened to picplz; they were the main option around for Android at the time and I always preferred their low-key feel to the more showy feel of Instagram. Competition is a good thing.

I'd hardly call a 400x return 'fumbling'.

I actually find this article rather unfair to all involved. It is quite clear that the author seems to have it out for AH - after all, a $100m return is freaking AMAZING for $250,000, and Benchmark made a far lower multiple for the amount they invested.<p>In the end, I'd say the win goes to AH - they made a mistake, but also didn't exactly lose either.

Why didn't he just invest in both?

The article failed to convince me of the truth of the thesis proposed in its headline. Seems more a hit piece than anything solid or impartial.

Marc ensured the market expanded with his wise bet. I doubt he has any regrets. Who knows whether Instagram would have expanded unless they were motivated to get to a point of turning their backs on A16Z. $ talks.