In 2010, Andreessen Horowitz invested $250,000 in the social-networking app Instagram. It was by some metrics a spectacular home run: two years later, Facebook paid $1 billion for Instagram, and Andreessen netted $78 million—a 312x return on its investment. And yet by other measures this was a debacle. Andreessen Horowitz made the Instagram investment out of a $1.5 billion fund, so it needed fully nineteen $78 million payouts merely to break even.
