Established VCs described their job as plucking deals from a "sushi boat" and treating LPs like "mushrooms." This blatant arrogance and complacency signaled to the a16z founders that the industry was locked in old patterns and that genuine competition would be easier than they thought.
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Trying to win a competitive Series A against a firm like Sequoia is nearly impossible for a smaller fund. Top firms leverage an overwhelming arsenal of social proof, including board seats at the world's most valuable companies and references from iconic founders, creating an insurmountable competitive moat.
Established industries often operate like cartels with unwritten rules, such as avoiding aggressive marketing. New entrants gain a significant edge by deliberately violating these norms, forcing incumbents to react to a game they don't want to play. This creates differentiation beyond the core product or service.
The venture capital industry was transformed by two parallel forces post-financial crisis. Crossover funds brought a hedge fund-style intensity and speed, while founder-led firms like a16z brought an entrepreneurial metabolism. This dual injection of urgency permanently changed the pace and nature of venture investing.
Students often believe their target industry is too crowded. Bravo counters this, recalling how a top PE head told him the industry was 'taken' in 1997. He argues the next generation can build bigger firms by ignoring such cyclical pessimism and focusing on execution.
Competing to be a founder's "first call" is a crowded, zero-sum game. A more effective strategy is to be the "second call"—the specialist a founder turns to for a specific, difficult problem after consulting their lead investor. This positioning is more scalable, collaborative, and allows for differentiated value-add.
When Marc Andreessen appeared on Fortune's cover, competing VCs were furious, arguing the entrepreneur should be the hero. This reaction exposed the industry's unspoken rule that VCs operate in the background. A16z's public-facing strategy deliberately broke this cartel-like code of silence.
When a potential LP dismissed them to advise NFL players, the a16z founders didn't just get discouraged; they got angry. This disrespect became a powerful, "nuclear fire" motivation to succeed and prove the investor wrong, a common pattern for resilient entrepreneurs.
The firm targets markets structured like the famous movie scene: first place wins big, second gets little, and third fails. They believe most tech markets, even B2B SaaS without network effects, concentrate value in the #1 player, making leadership essential for outsized returns.
An incumbent described venture capital as a "sushi boat restaurant" where deals just float by for the picking. This passive, arrogant mindset is a critical vulnerability. It signals an industry ripe for disruption by competitors who actively market, build relationships, and hunt for opportunities rather than wait.