A16Z isn't doing $500k checks in the next Facebook. They're waiting for the "15 important companies" to emerge every year and trying to snatch them up on the basis of their superior brand and checkbook. Exactly what the old guard of VCs used to do.

They used to claim their partners were all successful founders. They gave that up a long time ago. Now they hire pedigreed market analysts to be partners. Their primary job seems to be to judge startups and tweet wisdom about them, even though they've never done it themselves.

They passed on investing in Oculus because they thought Microsoft would crush them. Probably because they underestimated the creator of Oculus, Palmer Luckey, because he didn't go to any of the fancy schools.

Then, later, when they realized what millions of Carmack fans had already realized (Carmack was involved long before any investor) they bought their way in to a later round and flipped the company to their friends at Facebook for a cool $2 billion.

And of course, when it came to funding RapGenius.com, they had tens of millions to spare. They weren't worried Microsoft would beat them at the lyrics SEO game.

The ultimate test of a Silicon Valley investor is whether they help bring about great new stuff that would otherwise not exist. Most VCs do not pass this test with a very high grade.