Andreessen Horowitz’s Spin Master Built Silicon Valley As You Know It

In May 2015, The New Yorker published a profile of the Silicon Valley investor Marc Andreessen. In it, writer Tad Friend joined Andreessen in his living room to watch an episode of Halt & Catch Fire, the AMC drama chronicling the rise of personal computing in the early 1980s. The scene provided an intimate window into the billionaire’s home life. Friend described a powder room toilet so opulent it wasn’t immediately clear how to flush it; the rooms were grand to accommodate Andreessen’s gigantic presence. Friend chronicled the endearing flourish with which the investor’s wife presented dinner—omelettes and Thai salads for two, served on Costco TV trays. Andreessen’s obsession with a punk software prodigy shed light on his self-conception as a man aligned with the industry’s outsiders.

There was one presence Friend failed to document. That would be Margit Wennmachers, who spent the evening tucked on the couch across from Andreessen and his wife.

An operating partner at Andreessen Horowitz, Wennmachers is among the most skilled spin masters in Silicon Valley. She has a sixth sense for communications strategy, which has helped her educate the world about the revolution technology is powering. She knows how to create the memorable scene that will shape a story. She understands how to get ahead of bad news that’s about to break and when to push startup founders to take responsibility for their actions. She returns nearly every call within 30 minutes, be it from a blogger, portfolio company CEO, or New York Times reporter. Over the past two and a half decades, Wennmachers, 53, has worked with, advised, or broken bread with nearly everyone who has endeavored to build—or write about—a startup. “She’s like the router at the center of the industry,” Andreessen says.

In many ways Wennmachers is an architect of Andreessen Horowitz, the prestigious investment firm that has backed hundreds of startups, including Facebook, Airbnb, and Twitter. Or, at least, she’s the architect of what the firm appears to be—and her presence has left an indelible imprint on the hundreds of businesses that have come into contact with the firm. Because of her, Silicon Valley looks very different than it did even a decade ago.

Over the past two and a half decades, Wennmachers has worked
with, advised, or broken bread with nearly everyone who has endeavored
to build a startup.

We’re all familiar with Silicon Valley’s mythological image of the tech founder: brilliant, nerdy, eccentric, well-meaning. What you don’t know is that, more than just about anyone else in tech, Wennmachers is the person responsible for harnessing that prototype to build the legend of Silicon Valley. Before Andreessen Horowitz launched in the summer of 2009, most venture capital firms believed that no press was good press. They remained lean, behind-the-scenes outfits and won deals because of their back-room reputations. Wennmachers helped put the firm on the map by pushing its founders, Andreessen and Ben Horowitz, to embrace the press and by helping the companies in their portfolio articulate their ideas publicly. In the years that followed, many firms emulated Andreessen Horowitz’s strategy, hiring marketing and communications leads. As a journalist, I’d often get the call: “Hey, we’re trying to hire a Margit. Do you know anyone?”

Yet it’s the nature of the communications role that we rarely hear much about the people who hold it: The best communicators, by definition, go unnoticed. They’re the invisible third person in every interview. It was Wennmachers who coaxed a reticent Andreessen into participating in Friend’s story because she believed it would be good for the firm. It was Wennmachers who set up most of Friend’s interviews and sat through them all. When Friend felt he needed to see more of Andreessen, Wennmachers hit upon the idea of a TV-watching dinner date, correctly suspecting the scene would be just weird enough to guarantee inclusion and that Andreessen would come off exactly as she hoped: a relatable visionary who identifies with oddball hackers and who, when he is not predicting the future of computers, is watching TV shows about people who predict the future of computers.

For years Wennmachers has quietly advanced a narrative that has shaped how the world sees Silicon Valley and how the Valley perceives itself—as a group of brainy outcasts upending the limits of the status quo. But as the Valley’s tinkerers become industry titans, that image is changing. In the wake of the 2016 elections, the industry’s largest companies have suffered a backlash. From almost every political perspective, they have been criticized as profit-mongering, irresponsible, privacy-invading, and out-of-touch. In the wake of that backlash, tech is now trying to come to terms with the impact of the tools it has introduced and to manage the wealth it has created. This presents Wennmachers with a new and critical challenge: crafting a revamped image of the techie of the future, one that embraces the great responsibility that arrives with newfound great power.

One afternoon last October, I meet Wennmachers at the Battery, a tony private social club in downtown San Francisco. It had been a busy day. She’d had jury duty but wasn’t selected, which left her time to meet up with a tech executive. The pair hadn’t met before in person, but a few days earlier she’d helped him through an emergency. A friend, not a close friend, had called Wennmachers with an urgent request, saying the man was “about to get skewered by The Journal.” She’d spent four hours helping out over the phone, and then she met him for a coffee because she’d been sprung from jury duty. When you interact with a stranger at a vulnerable moment, a certain closeness is formed, she tells me. “It’s like, ‘I feel like I should give you a hug,’” she says.

The guy wasn’t part of her firm, or even connected to one of its portfolio companies. But he could be important one day. Maybe Apple will acquire his company, and she’d have a friend at Apple. Maybe he’ll start a new company and come to Andreessen for funding. She calls people like this guy “the outside nodes of the network,” and considers them strategic relationships that extend her reach. “It’s not altruism—it just really works,” Wennmachers says. Spending large amounts of time applying her superpower to the problems of people she doesn’t know is a deliberate move to nurture her most important asset: her social network.

The best communicators, by definition, go unnoticed. But Margit Wennmachers’ sixth sense for communications strategy has made her one of the most powerful people in tech.

©Michelle Le

In Wennmachers’ view, communications rests on a single choice: One plays offense or defense. Defense, of course, is table stakes. It must be done. But, often, the best way to defend oneself in the world of ideas is to shape those ideas, to author them. To play offense.

Consider, for example, Andreessen Horowitz’s investment in Skype. This was back in 2009, just a few months after the firm had launched, when Andreessen and Horowitz were still working to build a brand with which they could compete alongside top-tier firms like Sequoia and Benchmark for deals. The private equity giant Silver Lake Partners led the Skype deal, which then valued the company at $2.75 billion.

At the time, Skype was a mess—a strong brand with a dud business that had spun through six CEOs. It was a complicated deal, and Andreessen Horowitz wasn’t even the lead investor; the firm had ponied up just $50 million of the $1.9 billion the group had invested in exchange for a majority stake in the service. Still, many people questioned the deal’s rationale. Then, 18 months later, Microsoft bought Skype for $8.5 billion, netting the young firm a significant profit. Wennmachers knew Microsoft would announce the deal with a press release before the markets opened on the East Coast. Reporters would write their stories, and whatever narrative they pieced together from the release would shape the way people understood the deal.

For years Wennmachers has quietly advanced a narrative that has
shaped how the world sees Silicon Valley and how the Valley
perceives itself.

Wennmachers saw an opportunity to set the narrative. So she asked Andreessen to show up at the office by 5 am on the morning the news was set to break. Sometime around 4 am on that Tuesday, as she was speeding down the 101, traveling from her San Francisco home, she noticed a police officer trailing her Mini Cooper. “When the lights go on, I was like, ‘Shit,’” she says, waving her arms and shaking her hands at the memory. “I was like, ‘Sir, I need to be in the office before the markets open.’” The cop let her off. That morning, a colleague worked her way down a call list, phoning reporters to give them a heads up about the deal and offer up 10-minute interviews. In a room nearby, Wennmachers connected them to Andreessen, who repeated his talking points on why the deal was evidence of what Skype could eventually be.

As the stories began to emerge, Wennmachers knew that her early-morning tactics had paid off. TechCrunch featured Andreessen in the headline. The New York Times quoted him. “Brand is hard to measure. Really, it’s impossible,” she says. “But 80 percent of the press coverage about the deal was about the investors, and they mentioned us and had the framing we wanted.” Wennmachers had used the news event to build the firm’s reputation. Success.

Long before she joined Andreessen Horowitz, most tech journalists already knew Wennmachers. Along with Caryn Marooney, she’d cofounded OutCast, a public relations firm that has launched waves of startups since the late 1990s. OutCast had a reputation for its high-caliber client list. As a young tech reporter, I knew that a call from OutCast meant a company was on the verge of breaking out, and I would do well to take the meeting.

For years Margit Wennmachers has quietly advanced a narrative of Silicon Valley as a group of brainy outcasts upending the limits of the status quo.

Michelle Le

Wennmachers’ ability to advocate skillfully for herself and others had begun much earlier in her life. The daughter of a mushroom farmer who later pivoted to raising pigs, Wennmachers grew up in a tiny German village, the youngest of four children. When she was 18, her mother died in a car accident. Soon after, she left her hometown. She studied business and languages, and on school breaks she’d escape to Cologne to stay with her sister and work temp jobs. In one early assignment, she shaped metal into parts at a factory. She lasted just long enough to figure out that factory life wasn’t for her. Shortly after finishing university, she landed in Cologne, where she stumbled into a job at a tech company. By the time she was 24 she was running the marketing division of Ardent Computer’s German region.

That’s how Wennmachers got to the United States. It was 1991 and she’d transferred to the Bay Area along with the man to whom, for a short time, she’d be married. All around her, internet businesses were sprouting up. “My first husband was a computer programmer. He wrote the 3-D modeling software. He taught me some C++,” she says, which was helpful. “You need to have some entry into the world to really appreciate what is even happening.”

Ardent ultimately failed. After a year of job searching, Wennmachers tripped into communications. She landed a gig as an assistant at a small comms agency and then followed a colleague to Blanc & Otus, where she learned the ins and outs of public relations and met Marooney (among other things, the pair helped IBM manage its 1996 Atlanta Olympics sponsorship). By 1997, Wennmachers had talked Marooney into starting a new agency.

Unlike many others, Wennmachers and Marooney didn’t name their company after themselves. They wanted to avoid a situation in which a needy client insisted on speaking to the named partner, aka “the important person,” to get work done. They deliberated over a name they’d come up with with journalists at the Demo Conference, a watering hole for early Valley internet types. People had all kinds of opinions, but they didn’t stop talking about it. “We just looked at each other and it was like, ‘You know what? It’s something memorable. We’re sticking with it,’” Wennmachers says. Indeed, the name was a description of the cast of characters Wennmachers and Marooney sought to represent: the nerds who’d eschewed law or med school in favor of a hacking culture. Outcasts.

The early OutCast days were scrappy—the pair ran the agency from Marooney’s spare bedroom in Berkeley, alternating with Wennmachers’ kitchen table in San Francisco’s Cow Hollow neighborhood. Marooney’s elderly dog kept them company and they drank lukewarm coffee all day. Their first client was a startup that made online expense report software, Extensity, “which was probably the least interesting thing on the freaking planet,” Wennmacher says. It had been backed by Kleiner Perkins’ special fund for java startups, and the duo convinced John Doerr to appear at an event with Sun Microsystems founder Scott McNealy, an outspoken advocate for the computer language; they were set to name their top 10 java startups. The marquee names appealed and journalists showed up to cover it. Not long after, Wennmachers and Marooney signed a renegade enterprise software startup, which became their first breakout hit. The company was called Salesforce.

The name was a description of the cast of characters Wennmachers and
Marooney sought to represent: Outcasts.

As a duo, Marooney and Wennmachers had complementary skills. Wennmachers was direct; Marooney could help someone come to an idea so skillfully they’d believe it was their own. “People would joke that Margit is the smart one and I’m the nice one,” Marooney says. ”And we’d joke that I’m not that nice, and she’s not that smart.”

Over the decade that followed, they navigated two recessions in which they had to make layoffs. It sucked. But they focused heavily on building a culture. They fired clients who didn’t understand that their work was central and valuable to a startup’s strategy, even when it meant turning down revenue. After OutCast’s 2005 sale to the UK-based Next Fifteen Communications for $10 million, Wennmachers and Marooney stayed on for several years. The work was interesting; they were representing Amazon, Facebook, Etsy, and many of the most central companies in the business. Through these two women’s trajectories, OutCast has built what tech is today. If Wennmachers landed one of the most influential marketing jobs in tech, Marooney snagged another: Today, she is Facebook’s global head of communications.

The rise of Andreessen Horowitz corresponds—not coincidentally—with the emergence of a new generation of tech entrepreneurs. The image of the geeky founder was changing, and so were the business dynamics of startups. The cost of the technology needed to launch a digital enterprise had plummeted—the tools were in the cloud now—and every teenager with a laptop was a potential CEO. That shift sent a rush of young talent into the valley, many of them dreaming that they might be the next Zuckerberg. They weren’t content with the old model that VCs had insisted on with previous generations: Once a business got big enough, the founders needed to be eased out to make way for “grownups,” professional managers with name-brand MBAs and experience.

From the beginning of their collaboration, Wennmachers helped Andreessen and Horowitz develop and sell that Zuckerberg promise. She never planned on joining them; initially, they hired her through Outcast. That was 2008, and together they hit upon a one-two punch of a launch strategy. Andreessen agreed to a Charlie Rose interview, and at the end, dropped that he was “thinking of starting something.” It wasn’t technically advertising, which is absolutely not allowed for a fund, but nonetheless, he signaled to investors that he was taking money. Several months later, once the pair succeeded in raising $300 million, Wennmachers brokered a Fortune cover story to announce its launch, following it up with a mainstage appearance at Fortune’s annual tech confab. For tech, it was the equivalent of an opera singer debuting at the Met.

Within the year, Andreessen and Horowitz hired her as an operating partner, a role in which she helps the firm profit from their investments. “She was probably the hardest person to recruit,” Andreessen says. “We just said, ‘Look, would you consider coming over full time?’ And we got one of those looks that you’re probably familiar with.” (I am. It’s a long fixed stare, poker face, you’re-not-serious-here-change-your-mind kind of look.) Wennmachers had little incentive to leave a plumb role that allowed her to interact with so many of tech’s most promising startups at their most strategically challenging moments.

For tech, it was the equivalent of an opera singer debuting at the Met.

But Andreessen and Horowitz weren’t looking for a PR person to shine the best light on their investment decisions. They saw an opening for someone to step in and tie the disparate stories in the basket of startups into a cohesive narrative about tech’s broader impact on business, Andreessen says. In the process, they’d be putting out “the bat signal that if you’re an engineer or an entrepreneur trying to build something fundamentally new we want you to come to us—because we’re the people who understand this stuff.” If their plan worked, Andreessen Horowitz would set the agenda for tech’s future. The idea appealed to Wennmachers enough that she joined.

Wennmachers’ main job is to advance the larger ambitions of the firm itself, but often that includes helping portfolio companies. The Lean Startup’s Eric Ries calls her “a secret weapon.” Andreessen Horowitz is a venture investor in Ries’s startup, Longterm Stock Exchange, which is attempting to build a new stock exchange that creates incentives for long-term thinking. It’s a hard project to explain to people. Ries had always thought of that as a liability, but when he ran it by Wennmachers, who is an official advisor to his company and attends board meetings, she reframed it. “She said, ‘That’s not a liability. It’s an opportunity,’” he recalls.

She’s particularly good when things get hard. “Her advice has always been transparency and honesty—just tell the story, warts and all,” Ries says. Around Andreessen Horowitz, Wennmachers is known for a code—she inserts it in email subject lines—that serves as an internal panic button. She uses it, on average, every couple of months. An email arrives with the subject 4B. It’s a cheeky reference to the idea that plans 1 through 3 did not work, and neither did plan 4A, so it’s time to resort to 4B. “It’s where something has really gone sideways, usually in a company, where we feel like we have to weigh in,” Andreessen says. “Zenefits is a classic example,” he says, referring to the human resources startup and its founder, Parker Conrad, who became embroiled in a massive scandal involving fraud two years ago.

Wennmachers has a strategy for dealing with any disaster, which she discusses at length in an Andreessen Horowitz podcast, “Crisis Communications.” First, get to the bottom of what happened. You rarely know it immediately, so take the time to do the digging. Second, communicate about it transparently. Don’t lie. Don’t take too long. If it takes a while to investigate the situation, tell everyone that! Tell everyone everything you can! Third, understand that a communications crisis is not a PR problem—it’s a business problem. Use the disaster to address the problem.

Controlling the message of tech has become both easier and harder. In the early days, Wennmachers needed to hustle to put the firm’s founders at the center of tech conversations, which often happened in the pages of a short list of reputable publications. Yes, Andreessen Horowitz had a blog, but its most powerful ideas were conveyed by the traditional press. Consider Andreessen’s iconic August 2011 missive announcing that “software is eating the world,” which became the rallying cry for the generation of tech startups that followed. It was first published as an op-ed in The Wall Street Journal.

That media ecosystem has now been upended and the path to success has changed. Wennmachers’ ability to push out a narrative no longer depends on having an editor’s ear. Andreessen Horowitz can advance its own editorial ideas through blog posts, podcasts, social media, and a newly launched YouTube channel independent of the media, connecting directly with people starting or building companies.

Its founders write frequent blog posts, and they have access to enough social channels that they no longer need a Wall Street Journal to push out their perspective. A former WIRED editor produces a regular podcast that is downloaded and listened to by a wide audience of aspiring founders, business people, policymakers, and tech enthusiasts. “The running joke of the firm is that we’re a media company that monetizes through venture capital,” Andreessen says. It’s a joke, but also an inevitable evolution of Wennmachers’ role—in which a communications lead begins to look much more like a media tycoon.

Recently, as the industry has grappled with its speedy ascendance, the Valley’s stories have taken a different form. Who gets to build and run tech companies? The answer seemed easy until Ellen Pao jumpstarted a painful reckoning with her sexual harassment suit against Kleiner Perkins. How should these companies be run? As executives at startups like Theranos, Andreessen-backed Zenefits, and Uber are newly exposed for malfeasance, it’s tough to content with all the things that went unquestioned. Have we given the largest of these companies—Facebook, Google, Amazon—too much power, and is it too late to regulate them?

Andreessen Horowitz can advance its own editorial ideas through blog
posts, podcasts, social media, and a newly launched YouTube channel.

The very premise on which Wennmacher has based her work—that the geeky outsiders are actually visionaries who are creating the future, and should be driving business—has come to pass. Or, as Wennmachers puts it: “Tech is becoming its own power center.” She holds it up alongside our country’s other power centers, like Wall Street, Washington, and Hollywood. “This tech thing was experimental. Now the companies are big. The revenues are real. Everybody has a smartphone, so they’re on the internet all the time.”

In the face of this, Wennmachers is bolstering the firm’s media strategy in an attempt to become even more relevant to people trying to understand tech. “The best role for us to play is to explain technology, explain the future, explain how it works, explain the potential implications,” she says. “We just need to double down on it.” By fashioning Andreessen Horowitz as the world’s tech translator, she believes the firm can expand its role as an expert on all things Silicon Valley.

Yet the greatest danger tech workers face is that they cling to an outdated view of themselves. For the firm to maintain this authority, the Valley itself must evolve. The tropes that Wennmachers helped to fashion, the ideas that built the image of the heroic founder, must now be reexamined. This requires a severe and sudden-feeling identity shift.

But it also means there’s an opening for a new narrative. There’s a chance for at least some of tech’s execs to cast themselves as stewards and engage in conversations about what we should do with the things they are building and the resulting wealth that is generated. This is the possibility that Andreessen Horowitz’s growing media empire provides: that Wennmacher will offer up a new image for a cohort of tech’s founders—as brilliant and nerdy, yes, but also established, inclusive, and fair-minded. That once again she will set the narrative—a better one, for this moment— and the Valley will align itself around her vision.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *