Andreessen Horowitz cofounder Ben Horowitz on the cloud, weathering economic turmoil, and building lasting relationships
Few people have seen the technology sector transform like Ben Horowitz. The Andreessen Horowitz (a16z) cofounder, entrepreneur, and New York Times-bestselling author has spent decades fostering innovation and building strong business relationships—and has plenty of wisdom to share.
Horowitz spoke with Ruba Borno, Amazon Web Services (AWS) Vice President of Worldwide Channels and Alliances, at the AWS ‘Startups in the Stadium’ event at re:Invent this past December. Here are six major insights from their discussion—on trust, venture capital, the cloud’s impact, and more.
Today’s VC industry empowers founders
Since a16z began in 2009, Horowitz has witnessed – and spearheaded – several major shifts shaping the venture capital (VC) industry. For one thing, he explained, it’s more likely today that founders will lead their businesses through all stages of growth, instead of leading from “zero to one” and then ceding the role to a professional chief executive officer (CEO).
That shift is due partially to the philosophy that a16z brought to the VC world. “Our idea was … what if we build a firm that enables the founder to be a CEO?” Horowitz explained. After all, a leader who truly understands the company could shepherd the business through another winning project—a secondary product, for instance.
He cited Amazon Web Services itself as an example. “It’s another [project] that was done much later. And we all know if Jeff [Bezos] wasn’t the CEO, it would never have happened. You can’t bring in somebody who doesn’t really understand the company to go from zero to one.”
Cash is (and remains) king
As much of the world heads into economic uncertainty, Horowitz warned startups against committing what he views as business’ one “unforgivable sin”: running out of cash. In a downturn, this becomes particularly difficult, as consumers tend to cut newer companies from their budgets before tried-and-true stalwarts.
Still, Horowitz said, it should remain the priority. “You can screw up absolutely everything: the product, the go-to-market, everything. But if you still have money, you can fix it … if you run out of money, it doesn’t matter how many good things you do. You’re dead.”
The cloud drives innovation
Many of a16z’s portfolio companies build on AWS, which Horowitz sees as a means to scale, innovate, and streamline day-to-day operations.
“The cloud deployment model is just such a massive advance in every person’s ability to build great software, solve big important problems, and focus on higher level issues,” he said.
He pointed to the difference between bygone tech companies like Netscape, which sold its Navigator browser as a physical, boxed product, and newer players like Snap, which created and distributed its product with just, “four guys, a laptop, AWS, boom.”
“[AWS] has been a big change,” he said. “Which is why there are so many more startups now.”
In addition to boosting innovation, AWS helps smooth out internal processes, he said. Old-school software was difficult to install and implement—plus, training teams on new software (and updates) could be arduous. Integrating new software was so difficult, Horowitz explained, that a company’s chief information officer (CIO) was the point-of-contact for sales. But when the cloud came along, it became much easier, and software companies could sell to whichever department had the actual business need.
“You don’t need training,” Horowitz said. “The software is usable enough and away you go.”
Three ways to succeed with AWS
Horowitz had three pieces of advice for businesses interested in working with AWS.
First, he said, it’s imperative to get into the AWS Marketplace. “It works,” he said. “You will get sales, it’ll help you.”
Next, he emphasized the importance of aligning your sales teams with AWS sales. “Your regional salespeople need to find their AWS sales counterpart, who want to help you. Your teams should find them … call them up … it’s maybe your best lead-gen opportunity.”
Finally, he recommends all businesses go through the AWS technical review process. “The reason you should go through that is: If you’re in the AWS field, how do you know if this software is any good?,” he said. The way to find out: approval from a trusted party like AWS.
Building trust within partnerships
Horowitz shared his organization’s culture values trust and communication. Here’s three ways a16z builds trust across partnerships.
First, he said, “we have one culture for how we treat each other and how we treat people outside [the organization]. We don’t change it. It’s not us and them.”
Next, his word—and the word of his team—is a bond. “You don’t need a contract with us,” he said. “If we say it, we’re going to do it. We tell our employees to be careful about what they say because they’ll bind the company.” (In fact, a16z employees must sign a culture document affirming that they understand this.)
Finally, he emphasized that he does not believe in transactional relationships. “We take the long view of relationships because we’re in the relationship business,” he explained. “We’re either in business with you for the long term or we’re not.”
Creating the future you want
Horowitz has held a variety of roles throughout his career. As Borno put it, he’s been “a product manager, CEO of a startup to GM at HP, and … founder of one of the most successful VC firms in the world.”
Horowitz has carried that attitude with him in his subsequent endeavors: The priority is always a positive impact on the customer.
“What do I need to step up and do?” Horowitz said. “What am I capable of doing that’s going to make a difference?”