I'm really struggling to understand the issue. I understand the issue of conflict of interest when it comes to things like government contracts and public corporations. Here conflict of interest occurs because the person makes decisions on how to spend money that isn't their money. It is either the taxpayer's money or the stockholder's money.
In a private company, like Andreessen Horowitz, they are effectively spending their own money. If they choose to invest in a company founded by one of their partners, I do not see the conflict of interest. From the outside we may question whether or not the startup is really worthy of being funded, but it really isn't our call to make.
But what if it was our call to make? Did they make a bad decision by funding one of their own? Looking at his track record he already has experience as a co-founder and a CTO. On top of having prior experience, he has worked as a partner at Andreessen Horowitz for over a year. The people making the decision whether or not to fund his startup have experience working with him. They probably have a good idea of whether this person can or cannot deliver.
I think most people object to this, because they imagine a situation where a better startup is not funded because the partners decided to fund their buddy instead. Let us say that is true. For the sake of argument, assume this guy is incompetent and should not be given funding. Imagine this guy worked at Andreessen Horowitz for over a year and everyone knew he was incompetent, but decided to fund him anyways just because they were BFFs.
I guess it is possible something like this happened, but I doubt it. I recently finished reading Horowitz’s book The Hard Thing about Hard Things and he doesn’t seem like the type of person who keeps incompetent people around just because likes them.
The only valid objection I see is if they are using information provided to them under a non-disclosure agreement to gain unfair advantage. But is this a valid concern? As others have pointed out, most ideas are cheap. Even if that information provides some short-term advantage, it won’t help in the long-term as the market changes.
In a private company, like Andreessen Horowitz, they are effectively spending their own money. If they choose to invest in a company founded by one of their partners, I do not see the conflict of interest. From the outside we may question whether or not the startup is really worthy of being funded, but it really isn't our call to make.
But what if it was our call to make? Did they make a bad decision by funding one of their own? Looking at his track record he already has experience as a co-founder and a CTO. On top of having prior experience, he has worked as a partner at Andreessen Horowitz for over a year. The people making the decision whether or not to fund his startup have experience working with him. They probably have a good idea of whether this person can or cannot deliver.
I think most people object to this, because they imagine a situation where a better startup is not funded because the partners decided to fund their buddy instead. Let us say that is true. For the sake of argument, assume this guy is incompetent and should not be given funding. Imagine this guy worked at Andreessen Horowitz for over a year and everyone knew he was incompetent, but decided to fund him anyways just because they were BFFs.
I guess it is possible something like this happened, but I doubt it. I recently finished reading Horowitz’s book The Hard Thing about Hard Things and he doesn’t seem like the type of person who keeps incompetent people around just because likes them.
The only valid objection I see is if they are using information provided to them under a non-disclosure agreement to gain unfair advantage. But is this a valid concern? As others have pointed out, most ideas are cheap. Even if that information provides some short-term advantage, it won’t help in the long-term as the market changes.