Six months ago, Chris Dixon, an entrepreneur, angel investor, and renowned champion of New York’s tech scene, packed his bags and moved to the West Coast to join the venture firm Andreessen Horowitz.
For an exclusive interview, VCJ sat down with Dixon in a comfortable, glass-lined office at Andreessen Horowitz to see how things are going. Our conversation has been edited for length and clarity.
Q: A lot of entrepreneurs were programming nerds as kids. What was your upbringing like?
A: I was born in Chicago and lived in Santa Barbara, Calif., for a bit as a kid, but grew up in Springfield, Ohio, near Dayton. I had sort of been interested in computers as a kid and I lived near Wright-Patterson Air Force Base, where there was a large computer fan club kind of thing back then, so I used to go over there a lot and learn about new programming techniques. I played video games and thought it would be cool if I could make them.
Q: Then why did you go to Columbia University to study philosophy?
A: I got interested in philosophy because of computers. I started reading books about artificial intelligence, and it turns out there’s more crossover between computer science and philosophy than you might think.
Q: You earned a master’s degree in philosophy, and you were in Columbia’s Ph.D. program. Did you think you’d be an academic?
A: I came from a family of academics—my parents were English professors—so [yes]. But while I was there, I worked as a programmer to support myself, at a hedge fund, a high-frequency trading thing where we were building algorithms for trading stock options. Then I was offered a full-time job and did that for about three years, eventually working as the co-head of a 20-person R&D group. It was a cool job but after a while I was like, ‘Wait, I’m on a path to be on Wall Street and I didn’t ever plan to do that or really want to do that.’
This was around 2000 or so and dot-com stuff was still going on in New York. You could go and start a company and build cool technology and work with interesting people and not have a boss. That sounded cool. I thought I would go and try and do that.
Q: But you went to Harvard to get an MBA first.
A: I was trying to be a businessperson; everyone said, just be a programmer, so I went to [Harvard Business School].
Q: Why then did you land a job at Bessemer Venture Partners?
A: I thought, ‘When will I ever get a job offer at a VC firm again?’ It was in New York and I wanted to be in New York. So I took the job there and that was really interesting. I worked for Jeremy Levine and Rob Stavis, who were great and worked a ton.
I worked on three deals. The Series A of Skype, [on the global network of experts] Gerson Lehrman Group, and [on] Soleil Securities, which I think went out of business.
It’s a great firm. They’re very thesis driven. They spend a long time coming up with theories about how the world is changing, then they use [them] as their investment focus, which is kind of in contrast to firms like Andreessen, where we’re more deliberately reactive.
I learned a ton there, but I really wanted to start a company, so I started SiteAdvisor, which was a consumer security company [whose plan I began working on] at Bessemer. Then they funded me along with General Catalyst and a few angels.
Q: Your timing must have been good. SiteAdvisor was acquired three years later for $74 million.
A: If you remember, 2004 was the peak of spyware, and phishing had started, and Internet Explorer had a number of [security] problems. And [security giants] McAfee and Symantec were looking at the world through the lens of traditional security. They were building better alarm systems, whereas a lot of the new threats weren’t people breaking in but rather that the person knocking at the door wasn’t who they said they were.
Because there’s no technical malfunction with phishing—you’re just clicking on a link that looks like legitimate but isn’t—we built a system that warns people if they’re about to do something dangerous. I had two co-founders from MIT, who were much more sophisticated engineering-wise than I was and we built it.
Q: And big security companies took notice?
A: Pretty soon into the company, we got a call from McAfee. They saw our product and liked it. And then they offered to acquire us and then we had an offer from Symantec and the price got to a point where it [was too good to turn down].
And they all said to us that if we didn’t sell, they’d build it [themselves] and destroy us. [Laughs.] So, at some point, the writing is on the wall.
Q: Did you want to be a VC again eventually?
A: Ron Conway was an investor in my two companies. When I sold SiteAdvisor, the first person I called was Ron. I said that I wanted to learn how to angel invest, so he said, ‘OK, here are two companies I’m looking at.’ I flew out and I met them and the first was Mint.com, and it was the seed round. And I met Aaron Patzer, the founder, and I said, ‘This is awesome, I want to invest.”’And he said, ‘Well, look, I have this long line of people who want to invest.’ So I didn’t get to invest.
I’d sort of imagined that investing was just about picking the right companies, and it’s some of that, but it’s also about being someone who companies want as an investor. Ron said I needed to make some other investments. Then work really hard to make them think you’re helpful. And the next time [an investment opportunity comes along], you say, ‘Call these other three people and ask them how helpful I am.’ That was sort of trick and there’s no way around it. It’s such a small world and people talk and you either are known as someone who’s helpful, or you’re not.
One of the reasons I really liked Andreessen Horowitz is they’re sort of Ron Conway at a larger scale.
Q: A much larger scale. With roughly 70 support staff, does the vast team take you further away from entrepreneurs than might otherwise be the case?
A: We’re just as involved personally with entrepreneurs. It’s just now that we can do all these other things. It’s sort of a specialization of labor. If you’re looking to recruit a new executive, we have an executive recruiting team, and they’re going to do a better job than I am because they’re professionals and that’s what they do. But if you want to talk about strategy or organizational issues, just all the things that CEOs do, we’re here to talk to them.
Q: Now that you’re at AH, do you think you’re perceived differently by your peers in New York? It’s easy to imagine Fred Wilson, for example, hesitating to call you about a deal given the vast resources of your firm and its potential to take over a deal.
A: I assume yes. Previously I was viewed as a neutral party. Now I’m viewed as in some sense as competitive. But it varies. To take Fred as an example, what he does is very complementary to us. We just did two follow-on deals to Union Square: Dwolla and Shapeways. So they typically do these early, Series A rounds. A lot of their stuff is in New York. We love following them; it’s great. It’s probably more [that] we’re competitive with the big megafunds than we are with the smaller [ones].
Q: When you joined AH, you estimated you’d be in New York one week a month. Are you spending as much time in New York as you expected?
A: Yes, I’ve spent about a week a month in New York the last five months, and I think that might increase. It just depends how many New York deals I do. I’d love to spend more time there.
Q: How many deals have you done and how many are you expecting to do yearly?
A: I’ve done two: Shapeways [a 3D printing company] and Airware, the drone company. I think the model we have is that probably people can handle 12 deals altogether, which means if your average time on a board is five years, you probably want to do two or three deals a year, so I’m probably a little ahead of schedule. There’s no hard-and-fast rule; it’s just a question of how many board seats you can handle. If you see something great, you’re not not going to do it.
Q: If you keep seeing great companies, and you’re already maxed out, are you allowed to invest outside of AH?
A: I’m not [allowed to invest outside of the firm]. It’s sort of a balancing act; on the one hand, it’s like budget forecasting is a very uncertain thing. At the same time, if you see something great, you feel like you have to do it.
We have a big fund and we’re at the center of a lot of really interesting stuff going on and we want to be active. The stance of the firm is to be very active.
Q: How quickly can you make decisions about what to fund?
A: We have Monday and Thursday meetings, because we try to have a quick turnaround top give a yes or no [for] entrepreneurs. As a general rule, we try to do it within two or three days. We have a system in which I’ll get an email on my computer if I haven’t done it in time.
Q: That’s fast. Does that mean two to three days for a verbal commitment?
A: What we usually do is meet people, then we make sure we discuss it at the next Monday or Thursday meeting. So I met a few [startups] yesterday and today, I’ll be talking about them, then we’ll make a decision. And the decision could be yes, no, or, let’s do more diligence. Generally, it’s no or let’s do more diligence. But we try to get back to them quickly. And we don’t just say no. We give detailed reasons. So if I’m meeting five people, I have to write five long blog posts, basically.
Q: Does majority rule in these meetings?
A: Yeah, we try to keep going, so if someone is out, we still go ahead.
Q: You have talked publicly about the digital currency bitcoin. Does the AH partnership see it as you do, a big opportunity?
A: We don’t have a bitcoin theme, but the partnership thinks it’s interesting. You also have to pay attention to the fact that a lot of the best entrepreneurs right now are thinking about bitcoin. Regardless of what we think, it’s where a lot of smart people are gravitating.
Yesterday, I had two meetings with experienced entrepreneurs, who sold their previous companies, and they were starting bitcoin companies. Neither has spoken about them publicly, but you could fill your week with these. I think what you’ll see is a bunch of announcements about fundings and launches in a few months. We’re getting to see a bit of a preview of that.
Q: People still find bitcoin’s use case confusing, I think.
A: I think people in the U.S. don’t see as much need for it because there isn’t as much need for it in the U.S. A lot of its immediate value would be in developing countries, where you have either a volatile currency or you’re just unable to do a lot of online transactions. So, for example, you’ll soon see that if you’re in a developing country and go down to the bodega and exchange local currency for a bitcoin card, you can use it for Skype and a hundred other online services. That’s a simple, practical example.
Q: What about regulatory concerns?
A: A lot of times these things start off [being used] for very sketchy purposes, then [by] political ideologues, but then as entrepreneurs create really useful services, hopefully that will help to convince regulators of the value here.
Q: You’ve written that ‘What the smartest people do on the weekend is what everyone else will do during the week in 10 years.’ What are your hobbies? What do you do on the weekend?
A: Funny you say that because I don’t really have hobbies other than blogging and startups. When I was interviewing at AH, they were like, ‘So what do you do for fun?’ In the past I was working at starting my own companies, then on the weekends, I would do the angel investing stuff. It’s really kind of pathetic. They were like, ‘This guy has to get out more.’ [Laughs.]