Wednesday, January 20, 2021

"The Unauthorized Story of Andreessen Horowitz"

 From Eric Newcomer writing at Medium, January 19:

Why media whisperer Margit Wennmachers is going direct.

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 fa├žade, 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.”....