Marc Andreessen: Three Necessities for Start-up Success

So the general criteria for a successful high tech startup, in my view, you see different sort of rules of thumb from different people. But the three big things you always come back to are, is there a big market? And by the way, that comes in two parts. Is there a big existing market that you think you can go after and sort of displace incumbents? Or is it? Or do you believe there will be a new market that will be big? So, big market, is there a fundamental technology or economic change that causes you to basically justify having a new company? And that's really important. And the way I always think about that is, Is there a 10x change happening in the technology landscape? Is something 10x faster or 10x cheaper or 10x better? And if it's not 10x, we view as both VCs and entrepreneurs, we really have to ask ourselves, is it really worth doing? Because it's really hard. I mean, it's really hard to start new companies. Tell you my macro theory, new companies generally shouldn't exist. Existing companies are usually pretty good at what they do. And so for a new company to exist, it not only has to go into business and bring a product to market, but it has to bring a product to market that's so much better than what already exists that it punches through the sort of status quo. And most customers in most markets are pretty happy buying from the current suppliers. And so there has to be a real kind of edge on the thing. And we look for that in either a technology change, usually a technology change, or an economic change, which are often the same thing. And then the third is team. Is the team outstanding? And if you think about this as an entrepreneur, it becomes a question of the founding team. Some companies are solo founders and they can work, but generally most of us, like myself, who are human beings, are mortal. You want to have a founding team of complementary skill sets. And so you want to have at least one super strong technologist, quite possibly more than one. Some of the best startups are actually more than one founding technologist. And then it often helps to have somebody who's like a product or who's a market or sales person or has a sort of really good understanding of business on the team certainly helps a lot. And so we sort of look at market, product and team and you know, the reality is you need all three. I would say, interestingly, if you're going to compromise as an investor, if we're going to compromise on one of those, it would actually be the product. And the reason I say that is because a great market is a lot easier to make up for with iterative product execution than a poor market. Because the problem with a poor market, a small market, is even if you do a great job on the product, there just aren't that many customers. It's hard to ever get big.