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.

There's a surprising disconnect between the perceived brilliance of individual investors at large, well-known private equity firms and their actual net-to-LP returns, which are often no better than the market median. This violates the assumption that top talent automatically generates outlier results.

A16z's foundational belief is that founders, not hired "professional CEOs," should lead their companies long-term. The firm is structured as a network of specialists to provide founders with the knowledge and connections they lack, enabling them to grow into the CEO role and succeed.

Underperforming VC firms persist because the 7-10+ year feedback loop for returns allows them to raise multiple funds before performance is clear. Additionally, most LPs struggle to distinguish between a manager's true investment skill and market-driven luck.

Benchmark Partner Ev Randall argues that large, multi-billion dollar VC funds struggle to generate the high-multiple returns (e.g., 5x net) that LPs seek from venture capital. He claims the sheer size of these funds "defies the laws of physics," positioning smaller, more constrained funds like Benchmark as better able to deliver traditional venture-like returns.

A16z's growth fund avoids traditional investment committees, which can lead to politicization and slow decisions. Instead, it uses a venture-style "single trigger" model where one partner can champion a deal, encouraging intellectual honesty and speed.

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.

David George of Andreessen Horowitz reveals that contrary to the belief that smaller funds yield higher multiples, a16z's best-performing fund is a $1B vehicle. This success is driven by capturing enough ownership in massive winners like Databricks and Coinbase, demonstrating that fund size can be an advantage in today's market where value creation extends into later private stages.

Mega-funds like a16z operate on a different model than smaller VCs. They provide Limited Partners with diversified, almost guaranteed access to every major tech company, prioritizing strong absolute dollar returns over the high multiples sought from smaller, more concentrated funds.