Last month, Andreessen Horowitz – one of the largest and most prominent players in venture capital – announced that its “Cloudy Headquarters” going forward.
Founded in 2009 in Menlo Park, California, the firm — also known as a16z — has been an icon of Silicon Valley investing for years.
Its new philosophy in this post-COVID era of remote working is that there is no longer a need for a centralized headquarters. This philosophy extends to its fintech team.
I sat down with General Partners (literally, that is) Angela Strange And anisho Teacher To learn more about why the pair believe that the fact that there are more people working globally offers a huge opportunity for fintech companies. The interview has been edited for clarity and brevity.
TC: Tell me what you think is the biggest change you’ve seen in this post-pandemic era in terms of how companies are being built.
Anish: If you were Building a startup five, 10 or certainly 15 years ago, most of the work in focus was very local, meaning you were what we call the ‘default local’. You’d have a group of people who would get together in a physical office and work hard to build a software product and sell it to customers who were probably in your country – maybe even in your neighborhood if you’re in Silicon Valley. – But of course in your country. And then over time, if the product and company were successful, you would gradually expand globally.
And the big trend we saw that was already happening – and COVID catalyzed a lot of this – is that companies increasingly want to go global on day one. And the software lends itself to it.
When Google launched, there was no reason you couldn’t use Google on launch day in India or any other country where you could have internet access. But the problem is that even though the software is global, the money is very much local. This is really where a lot of our fintech thinking got into things. Now the idea is that the company of the future, and the company of the present, will be global on day one and the opportunity (for fintech companies) is to build all the infrastructure for that company to operate and sell globally. first day.
TC: I think this is an interesting point. It’s very complicated though, isn’t it? When you talk about different countries, and as you mentioned, global wealth is a local thing. Every country, every region addresses it differently. And I think maybe it has scared some companies in the past.
anisho, The difference is that when you have a platform that can manage a lot for you, the idea is that the company won’t have to worry about it. As we saw a few years back with global payment acceptance. A bunch of companies went out and made it really easy to accept payments in any country using local payment methods. If you had to identify and do all those integrations yourself, it was a lot harder. But if you can use a single payment provider that offers it to you for a fee, it suddenly becomes a lot less painful.
Angela: Before this change, I’ll have a meeting with a global credit card company working on currency expense management and think ‘who needs this’? Well, it would probably be companies that would have taken about five to 10 years to reach this point. They started in one country, then went to another country and then went to another country. Your customer for a multi-currency auto matching expense card will be a large enterprise customer.
If you’re going to start a company in that space, you’re going to be like ‘holy crap, I have a huge product to build. I have to cover many different countries and I have to do a venture sale, which means I have to raise a lot of money before I can sell it.’ Whereas now, you have companies — like Jeeves for example, and from day one, they have operations in Colombia and Brazil and Mexico. and they need it [management] right away. So now you have this huge opportunity to sell the new — versus selling the old — because all these new companies need your products and services, which creates a much bigger, more accessible market. A lot of these new companies and new startups are actually targeting customers because of their needs. If they grow, the company can grow with them.
The other point, on the contrary, is that companies that expand into different countries over time actually have to hire someone whose work on a certain hourly basis accounts for all their different bank accounts in their different countries. Having to manually log in and record it in a spreadsheet is completely ridiculous. If you’re a really early startup, can you afford the resource to do so? No, you must have the software.
Anish: Correct. If you’re a company that hired people internationally, you were probably an old school company with a worldwide payroll team and expensive fancy Oracle integration. Now after COVID, there are so many startups distributed globally. We are moving towards the cloud itself. Now, companies like Deal and others are making it possible for startups to just do this in a turnkey fashion and not have to think about where their employees are located.
TC: Angela, you and I have talked a lot about Latin America and the growth there over the years has been clearly explosive. What other areas are you all looking for potential investment?
Angela: There is an interesting ‘second order’ effect. It used to be where a company had its headquarters, where there were executives and very early employees. But now, in Silicon Valley or other big cities, it’s going to start to see CEOs coming out elsewhere.
Anish: Yes, this is a great point. Because if you think about what Silicon Valley is, if we’re like Silicon Valley, then sure, there’s a place there — but then there’s Silicon Valley networks, Silicon Valley ambitions, Silicon Valley capital markets and Silicon Valley talent, businesses, etc. Huh. You can really take all these ideas outside of Silicon Valley. This had never happened before because of the network effect component. In the midst of what is being distributed to people globally and the COVID catalyzing this change, it feels like Silicon Valley is going unbundled.
One of my favorite things about Mark (Andreessen) and Ben (Horowitz) and the whole firm is their willingness to change our minds. We’ve been so historically Silicon Valley-oriented, and I think the new fence post really puts a fine line under the fact that we’re not that way anymore — and that was a change in a relatively short period of time.
TC: Geography aside, of course, which areas of fintech are you most excited about?
Anish: The world is just getting started. The narrow view of fintech is that it is banking, payments, lending and insurance. But I think a more expansive view is that we see fintech as a new business model for internet companies. In that world, the global opportunity is so huge. So, cross-border and global is a big focus, and wealth management is something that we’re spending a lot of time on and you know, it means very different things than in the past. This means asset classes like crypto that you might never have thought of as money management, as well as new groups of people that can be served. For example, young people working in Silicon Valley companies have a very different set of personal financial challenges that are soon to retire. I’m also seeing some things in the consumer sector, such as the idea that the bank for Gen Z is going to be dramatically different than the bank of other generations.
Angela: basic infrastructure. Managing teams and currency globally used to be a problem you could solve later. This is now a problem we just need to solve. I’m literally going through my whole infrastructure stack and thinking, ‘Well, if you had to do this work for 10 countries from the start, what would that company look like?’ Also any problem related to asset management of crypto and fiat only. We’re also starting to see it on the infrastructure side as you try to get people from the fiat world into crypto. You have to follow all kinds of banking rules, but you also have to understand the world of web3. There are a bunch of different opportunities in that scene that we as a firm are looking at.
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