Benedict Evans, Andreessen Horowitz’s former in-house analyst, has mused over the years that “A16Z is a media company that monetizes through VC.”
That observation becomes truer by the day.
While
there’s a lot of loose talk on Twitter about cutting out the media and
“going direct” – publishing your own story to the world without the
press as an intermediary – Andreessen Horowitz is really doing it,
consciously and methodically. The firm’s strategy has dramatic
implications for the future of media and the venture capital industry.
This
is the story of how Andreessen Horowitz disrupted the world of venture
capital by cozying up to the media and then, how they purposefully threw
that relationship away.
Let me tell you the story from the beginning.
About a decade ago, Margit Wennmachers sent an email to reporter Kara Swisher.
Swisher took a break from horseback riding to write that Wennmachers was leaving Outcast, the communications agency she co-founded with Caryn Marooney.
Wennmachers was joining the one-year-old venture capital firm
Andreessen Horowitz as a full partner – a rare title for a woman in
Silicon Valley, especially in 2010.
Wennmachers explained her strategy for positioning the firm in the early days, in an interview
on Andreessen Horowitz’s in-house podcast. “I wanted to try and get a
cover story because – this sounds old fashioned now, because everybody
reads their news on Twitter and it's all online whatever – but there's
still a statement that comes with a cover story that is in print, that
you see at the airport,” she recalled.
With Wennmachers’ press savvy, Marc Andreessen’s idea-a-second patter, and Ben Horowitz’s
gravitas, the trio took Silicon Valley by storm. The firm outbid
competitors for sought-after companies, spun up a slew of services for
founders, and pitched its story relentlessly to the press.
With Wennmachers’ encouragement Andreessen penned a now historic Op-Ed in the Wall Street Journal
in 2011, titled, “Why Software is Eating the World.” The phrase became
so ubiquitous that it can seem like everything eats the world these
days.
“Margit is really a hidden founder of this firm,” a startup
founder who has raised money from the firm told me. “The power dynamics
there is, Marc, Ben, and Margit.”
Communications executives and
reporters alike are in awe of Wennmachers for her sway with the media.
“Comms in the Valley – she's the number 1 draft pick. She's very good,”
one public relations person said. “I would never want to be crosswise
with her.”
While Wennmachers’ strategy in that early period would
have been familiar to many in Hollywood and Washington, it was less
common in clubby and decorous Silicon Valley at the time. “She would say
that was her job – to manage information so that she could shape the
narrative,” one person who knows Wennmachers said.
Wennmachers deployed industry gossip and access to her firm’s partners to stay in the good favor of many reporters.
One
communications executive at an Andreessen Horowitz portfolio company
recalled Wennmachers fishing for information about an upcoming story on
behalf of reporters. Wennmachers pushed to deliver the information to
the reporters herself, this executive said.
A high-powered rival PR executive described Wennmachers as an enforcer: “You don't cross us and if you do, we shut off the information flow.”
One
member of the press recalled Wennmachers chasing down a potential bit
of news. When Wennmachers returned the call and threw cold water on the
story, the reporter took it in stride. Wennmachers told the reporter
that they were now a “friend of the firm.” The comment struck the
reporter as odd. They were just trying to get the facts right. But
Wennmachers’ attitude seemed to reflect a coziness that she had come to
expect from reporters dutifully covering Silicon Valley.
Wennmachers
regularly hosted salon-style dinners at her home near the Presidio in
San Francisco with reporters, portfolio companies, and the firm’s
partners. While it’s not unusual for a venture capital firm to host
reporters for a dinner, Wennmachers did it better than anyone else. When
I attended one of her dinners in 2014, it felt like I’d finally gotten
invited inside the Silicon Valley.
“I was invited to dinner at
her house with members of the media. It was incredible,” one founder
recalled. “That was like a cool invitation. If you were in the press you
were really excited about getting dinner at Margit’s house, which is
kind of mind-blowing if you think about it.”
Wennmachers can put
on a friendly façade, but if you spend much time with her you come to
realize that she’s a profoundly serious person. She doesn’t win over
reporters because she’s fun. It’s because she cuts through the bullshit.
She fundamentally understands what makes a good story. She knows what
motivates reporters better than many reporters. That’s part of what
makes the firm’s turn against the media so worrying.
Back in that
early media heyday, Wennmachers doled the firm’s partners out to media
companies who were eager to have them speak at lucrative conferences.
And the firm’s partners were game to prophesize in audacious terms about
what the future might look like, filling column inches.
Swisher
and Wennmachers – two women who climbed their way to dominance in an
industry overrun with men – are friendly to this day. Many Silicon
Valley insiders strongly suspect that Wennmachers was one of Swisher’s
sources when she covered Silicon Valley’s day-to-day dramas. But Swisher
describes Wennmachers as fiercely loyal to her own companies, though
Wennmachers “also did not pretend a problem I might call about was not
one.”....
