a16z is Moving to the Cloud

a16z.com

Since our inception in 2009, Andreessen Horowitz has been a Silicon Valley venture capital firm. This was highly intentional on our part. Historically, the largest number of great technology companies emerged from Silicon Valley for good reason – the network effect. Many things drove the network effect, but the most important was this: If you were a great technology entrepreneur born anywhere in the world where it was difficult to start a company such as Bangladesh or The Sudan or Marianna, Arkansas, and you decided to move, the place you were most likely to move to was Silicon Valley. As a result, Silicon Valley became the place that attracted most of the great national and international talent.

Then in 2020, COVID-19 hit and technology companies were forced to figure out how to work remotely. It turns out that running a technology company remotely works pretty darned well. It’s not perfect, but mitigating the cultural issues associated with remote work turns out to be easier than mitigating the employee satisfaction issues associated with forcing everyone into the office 5 days/week. As a result, nearly every technology company has moved to a remote or hybrid approach to work and this change is profoundly weakening the Silicon Valley network effect.

This is a very good thing for the country and the world. As my partner Marc wrote in his 2011 article, “Software Is Eating the World,” every important new company is likely to have a world-class software team at its core. Concentrating all of those companies into one or two geographies cuts off great opportunities from anyone who can contribute, but cannot easily move. Remote work is opening up many new locations for entrepreneurs and technology workers. We embrace that by changing our own operating model.

In our firm’s new operating model, we work primarily virtually, but will use our physical presence to develop our culture, help entrepreneurs, and build relationships. Specifically, the firm is now virtual, but can materialize physically on command.

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