How Andreessen Horowitz Is Disrupting Silicon Valley
The predominant old way of thinking about venture capital is that you: a) build up a great brand and reputation with a large portfolio of investments, b) hire partners who have individually strong brands of their own, and c) collect hefty management fees on each fund. The industry standard is a 2–2.5% yearly “management” fee, a figure that gets pretty large on a billion dollar fund. And, in my experience, not surprisingly, the senior people get a disproportionate slice of that management fee.
.. The team at Andreessen Horowitz plays down hierarchy and seeks to be inclusive as it expands to nodes at the periphery of its network. A.H. sees everyone as a potential contributor to its network. Members of the team who I spoke with emphasize that the power of a network lies in its external nods (i.e. distant acquaintances) – a nod to inclusivity and the need to constantly expand the network. The firm’s strategy is nearly perfectly positioned for what entrepreneurs look for in a partner today.
.. Using customer relationship management software as a foundation, Andreessen Horowitz seems to be creating one of the largest, most networked, and powerful ecosystem platforms in the world.
.. Here is how it works. Let’s say you’re an entrepreneur who wants to sell into General Electric. Well, a host of A.H. relationship managers can type “General Electric” into the system and presto: You see dozens of contacts within the A.H. ecosystem working at G.E., including Beth Comstock, senior vice president and Chief Marketing Officer. The software also specifies who from A.H. is the primary relationship owner, and when the last contact was made. All interactions get tracked, even emails, so that anyone at A.H. can review the relationship history.