Andreessen Horowitz is one of the largest venture capital companies in Silicon Valley that invests in both start-up startups and established growth companies. His investments cover the entire gamut of software industries, and lately he’s been investing in games.
Founded in 2009 by the founder of Netscape Marc Andreessen and entrepreneur Ben Horowitz, Andreessen Horowitz supported companies like Skype, Airbnb, Lytro, GitHub, Ripple, Oculus VR, Buzzfeed, CryptoKitties and many others. The company, also known as a16z, has more than $ 12 billion in assets under management in several funds.
He also started investing more in game companies such as the Roblox user-generated gaming world, which $ 150 million in February in an agreement led by Andreessen Horowitz. This interest is a validation of the general public growth of the game, because the number of players around the world reach billions and industry revenues exceed $ 160 billion.
Andrew Chen, a partner at Andreessen Horowitz, has a lot to do with the company’s interest in games and consumer products. With game specialist Jonathan Lai, Chen and a16z partners have invested in game startups such as Singularity6, Strong, SandboxVR, Central unit, Unlikely, Elodie Games, CodeCombat, and others. He writes regularly on games and consumer trends, and he balances his enthusiasm for games with interests in the wider technological arena.
I spoke with Chen about these trends and why he thinks the game could be the source of some of the greatest ROI in the future. We also talked about cultural issues such as social unrest and how the business can help through cultural leadership investment fund and its all new Talent x Opportunity Fund.
Here is a revised transcript of our interview.
GamesBeat: Tell me about your background. Why did you decide to join Andreessen Horowitz?
Andrew Chen: I’ll give a super quick summary. I grew up in Seattle. I worked in startups and found myself in the Bay Area, where I started my own business, which was funded by Marc and Ben when they were angel investors. Meanwhile, I was doing a lot of blogging about the intersection of product design and social products, how you develop products from scratch. I’ve been writing for a long time, which is fun. I landed the startup softly at Uber, so I led a bunch of growth games at Uber, mostly on the product pilot side. All of the tens of millions of new users who have entered Uber in the past few years have had experiences that I’ve worked on, which is cool.
I then joined Andreessen Horowitz a little over two years ago. It was cool. Part of the reason we are talking about is because I have always been passionate about games, coming back to BBS door games, the first online multiplayer games. Then the NES, then play a lot of the first massively multiplayer games. I started to see a convergence of many things that interested me, all at once. I was super excited about it. I invested in games, I probably spent half of my time there. The main thing is to invest in game studios. We have a bunch of studio investments. I am also interested in technology companies related to games. You can imagine this as the next series of companies like Sleeper, which we have just announced, with chat and communication around games. Everything that will become the next Discord. We are at Caffeine, a Twitch competitor. We are very excited by all these adjacent things.
Frankly, we see a lot of life in game design ideas and features going into mainstream products, which is exciting. Everything from avatars looking for virtual points, currencies and microtransactions. I spend half my time there, and then I spend the other half working on my background in the markets and Uber, thinking about the next set of businesses in the market and how people can make money. money online. These are companies like Substack.
GamesBeat: Did you come up with an investment thesis? And if so, did you stick to it?
Chen: I was lucky to be interested in the next social media general very early on. I always thought there would be more beyond that – obviously you have TikTok and Twitch and products like that that are successful and continue to grow. But also thinking afterwards. Part of what we’ve been talking about, and how it interacts with games, is one of the easiest ways to choose the next set of social products – what are young people using?
You quickly see that if you’re a child, one of the first things you do is spend all your time playing with your friends at Roblox. You use it as a social network. You spend time with your friends there and talk with them. You are building a persistent identity. You can play Roblox and Minecraft and Fortnite and some of these other games for years before you are allowed to have a social media account. Even if it’s really your social network. I’m interested in that, the idea that these multiplayer gaming experiences are the next social media. This was a key part of my thesis.
Another thesis that interests me, and that has stayed with me throughout, has been the fact that there are ways to – when I grew up, my mother said, “You can be a doctor or an engineer. Choose one or the other. “It’s amazing to me now that being a YouTuber or being a game streamer is a real profession that you can practice. The other big area that cuts across games, which you’ve also been following very closely, is idea that as a content creator, influencer, there are many new ways to create work in the economy.
If you are creating a platform that allows this, this is one of the great areas that has fascinated us recently. There is a whole range of markets that allow players to find other players, such as professional players or companions, to play with them. It’s a model that has worked well in China. There are a few floating companies, like Legion Farm and EPal and others that are all very interesting. It’s a model. Obviously, there is the streaming model. Lots of people make a living by creating tutorials and reviews, doing it for strategy players and some of the YouTube superstar games, making a living that way. This is an interesting trend, which I have followed very closely.
GamesBeat: Given the company’s history with things like Oculus and Roblox, how do you feel like this desire to get a metaverse guide you in some of these investments? Finally, this universe of virtual worlds that are all connected is where we are going to end.
Chen: It’s an interesting question. I don’t think that comes up much in our investment criteria. The parts where we share a lot of interest with what people have articulated as the metaverse are, number one, when you think of a metaverse, you think of the idea that there are other people. Inherently, it is a social product. There are other people you interact with, as opposed to the next triple A narrative story. We are not looking to fund them. I don’t think the metaverse will come out.
The other part of the metaverse that is convincing is that you might be ready to insert many different types of content into it. You could imagine that part of the metaverse would have very sci-fi or very fantastic stuff. We like the idea of user generated content or editable platforms as part of our investment thesis because it allows users to participate in the creation of their own worlds. It’s very interesting.
Another big part of this is just the concept of a persistent identity that is close to your heart. Part of the metaverse idea is that you could spend as much time there as in real life. It’s an interesting thing. People already play, of course, for several hours a week. It’s almost already available. It’s share.