Compay profile
Introduction to a16z
Andreessen Horowitz (aka a16z) is a well-known venture capital company in Silicon Valley founded by the two famous entrepreneurs Marc Andreessen and Ben Horowitz.
Founders
For Mark Anderson, you can see the introduction to my previous post of Two famous essays by Marc Anderson on software and artificial intelligence
And for Ben Horowitz, another founder of a16z, he wrote a famous book “The Hard Thing About Hard Things“
Origin of company name
The company’s official name is Andreessen Horowitz, which is from Mark Anderson and Ben Horowitz’s name. Interestingly, because Andreessen Horowitz is too long, the 16 in the company’s nickname a16z represents the total of 16 letters between the first English letter a and the last English letter z. This nickname a16z is now used by most people.
a16z’s predecessor
Opus
Mark and Ben first founded a software startup called Opsware, which went public in 2001. In 2002, the company sold most of its assets and operations to EDS. Only the software department, EDS, was later acquired by HP. After HP was split, it was merged into Hewlett Packard Enterprise (ticker: HPE). Finally, in 2007, Opus sold the company to Hewlett-Packard (ticker: HPQ).
a16z founded
After Opus was sold to HP, Mark and Ben established the Andreessen Horowitz Angel Fund as an angel fund investor in new startups.
In 2009, they established the Andreessen Horowitz Foundation─they discovered that the venture capital industry in Silicon Valley had undergone great changes, and it no longer and could not just provide funds for new startups. After 2005, the venture capital industry must provide value-added services to new ventures in order to increase its own value and market competitiveness.
Later, based on this, the two founded what is now known as Andreessen Horowitz (a16z), which has now become a well-known venture capital company in the Silicon Valley venture capital community.
Famous startups a16z invested in
The following are well-known startups that a16z has invested in:
- Airbnb (ticker: ABNB): See my other post of “Airbnb’s unique offering is competitive“
- Pinterest (ticker: PINS)
- Instacart (ticker: CART)
- Oculus, which was later acquired by Meta (ticker: META)
- Slack, later acquired by Salesforce (ticker: CRM)
- GitHub, later acquired by Microsoft (ticker: MSFT)
An atypical and aggresive VC firms
Eyes popping out strategy
The title of this article is “a16z, Silicon Valley’s most aggresive venture capital firm” Let’s take an example below. At this moment, when artificial intelligence is the hottest, in order to win the favor of artificial intelligence startups with the most investment value and prospects, a16z adopts a completely different investment strategy from others, which proves how active a16z is a venture capital company.
Stashing AI chips
In July 2024, according to The Information, a16z had purchased and began hoarding thousands of GPUs, including many of Nvidia’s H100 processors (which are the latest Nvidia artificial intelligence chips currently available on the market). ).
As a bargaining power for the deal
Readers will be curious about a16z, which is not a technology company, has no engineers, and does not sell hardware or software products. So why does it buy so many of the most popular and expensive artificial intelligence chips? The answer is to use these hard-won, popular and expensive artificial intelligence chips in large quantities as bargaining chips to help provide artificial intelligence startups when a16z competes with other rivals to invest in artificial intelligence startups. Assist a16z to defeat opponents and win transactions.
The working model
The venture capital firm, which has $42B in assets under management, has leased GPUs to many of its portfolio companies, the news outlet said, citing a person who has discussed the plan with the company’s partners. It’s unclear whether the A16z will be a direct purchase or a rental GPU.
Eventually, a16z plans to expand this venture, which it calls “Oxygen,” to more than 20,000 GPUs.
There is precedent
As the artificial intelligence craze continues, it’s not the first time GPUs have been used in non-traditional ways. In August 2023, CoreWeave, a cloud service startup backed by Nvidia, raised $2.3B in debt using Nvidia’s H100 GPU as collateral.
Related books
If you want to know more about and Peter Thiel, his companies and startups, you can refer to the following three other books by PayPal Mafia members that are influential in Silicon Valley and the venture capital community:
- “Zero to One“
- “The Hard Thing About Hard Things” by A16Z co-founder Ben Horowitz.
- “PayPal Wars” by former PayPal executive Eric Jackson
- “The Alliance” by former deputy general manager of PayPal and founder of LinkedIn Reid Hoffman
Note:
After Reid Hoffman sold LinkedIn, which he founded, to Microsoft, he founded a well-known artificial intelligence startup, Inflection.ai, and is currently focusing on running this compan
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