Andreessen Horowitz is one in every of Silicon Valley’s largest enterprise capital corporations investing in each early-stage startups and established progress firms. Its investments span the gamut of software program industries, and currently, it been investing in video games.
Based in 2009 by Netscape founder Marc Andreessen and entrepreneur Ben Horowitz, Andreessen Horowitz has backed firms resembling Skype, Airbnb, Lytro, GitHub, Ripple, Oculus VR, Buzzfeed, CryptoKitties, and lots of extra. The agency, often known as a16z, has greater than $12 billion in property below administration throughout a number of funds.
It has additionally begun making extra investments in recreation firms such because the user-generated gaming world of Roblox, which raised $150 million in February in a deal led by Andreessen Horowitz. This curiosity is a validation of gaming’s mainstream progress, because the variety of gamers in the world reaches billions and the industry revenues grow beyond $160 billion.
Andrew Chen, a accomplice at Andreessen Horowitz, has rather a lot to do with the agency’s curiosity in video games and client merchandise. Together with video games specialist Jonathan Lai, Chen and the companions at a16z have put cash into recreation startups resembling Singularity6, Forte, SandboxVR, Mainframe, Improbable, Elodie Games, CodeCombat, and others. He writes repeatedly about gaming and client traits, and he balances his enthusiasm for video games with pursuits within the wider tech enviornment.
I spoke with Chen about these traits, and why he thinks gaming might be the supply of a number of the largest enterprise returns sooner or later. We additionally talked about cultural points resembling social unrest and the way the corporate can assist via its present cultural leadership investment fund and its model new Talent x Opportunity Fund.
Right here’s an edited transcript of our interview.
GamesBeat: Inform me about your background. Why did you resolve to affix Andreessen Horowitz?
Andrew Chen: I’ll give an excellent fast abstract. I grew up in Seattle. I labored in startups and ended up within the bay space, the place I used to be beginning my very own firm, which was seed funded by Marc and Ben again after they had been angel buyers. Throughout that point I used to be doing quite a lot of running a blog concerning the intersection of product design and social merchandise, the way you develop merchandise from zero. I’ve been writing for a very long time, which has been enjoyable. I comfortable landed the startup at Uber, so I used to be working a bunch of the expansion video games at Uber, totally on the rider facet of the product. All of the tens of hundreds of thousands of recent customers which have popped into Uber all the previous few years undergo experiences that I labored on, which is cool.
Then I joined Andreessen Horowitz a bit over two years in the past. It’s been cool. A part of the explanation why we’re speaking is as a result of I’ve had a lifelong ardour for video games, going all the best way again to enjoying BBS door video games, early on-line multiplayer video games. Then the NES, after which enjoying quite a lot of the early massively multiplayer video games. I began to see a convergence of quite a lot of issues I used to be enthusiastic about, all at one go. I received tremendous enthusiastic about that. I’ve been investing in video games, most likely spending half my time there. The core of it’s investing in recreation studios. We now have a bunch of studio investments. I’ve additionally been enthusiastic about tech firms associated to video games. You’ll be able to think about that as the following set of firms like Sleeper, which we simply introduced, with chat and communication round video games. No matter will change into the following Discord. We’re in Caffeine, a Twitch competitor. We’re very enthusiastic about all these adjoining issues.
Frankly, we’re simply seeing quite a lot of life in recreation design concepts and options getting into mainstream merchandise, which is thrilling. The whole lot from avatars to digital factors and currencies and microtransactions. I spend half my time there, after which I spend the opposite half of it engaged on my background in marketplaces and Uber, fascinated with the following set of market firms and methods for individuals to earn money on-line. These are firms like Substack.
GamesBeat: Did you are available in with an funding thesis? And if that’s the case, have you ever caught to it?
Chen: I used to be fortunate to be very enthusiastic about what’s the following basic of social networks early on. I at all times thought that there could be extra past–clearly you’ve gotten TikTok and Twitch and merchandise like that, that are profitable and proceed to develop. However then additionally fascinated with what’s subsequent. A part of what we’ve talked about on this, and the way it intersects with video games, is that one of many best methods to pick the following set of social merchandise–what are younger individuals utilizing?
You rapidly see that in case you’re a child, one of many first stuff you do is spend all of your time enjoying with your folks in Roblox. You employ it like a social community. You hang around with your folks there and speak with them. You construct a persistent identification. You would possibly play Roblox and Minecraft and Fortnite and a few of these different video games for years earlier than you’re allowed to have a “social community” account. Although that’s actually your social community. I’ve change into enthusiastic about that, the concept these multiplayer recreation experiences are the following social networks. That’s been a key a part of my thesis.
One other thesis that’s been fascinating to me, and that has caught all over, has been the truth that there’s methods to–after I grew up, my mother would say, “You generally is a physician or an engineer. Choose one or the opposite.” It’s wonderful to me now that being a YouTuber or being a recreation streamer is an precise career you possibly can tackle. The opposite massive space that intersects with video games, that you just’ve additionally adopted very carefully, is the concept as a content material creator, an influencer, there are quite a lot of new methods to have the ability to create work within the economic system.
In case you construct a platform that permits that, that’s one of many massive areas we’ve gotten enthusiastic about lately. There’s an entire sector of marketplaces that permit players to search out different players, like professional players or companions, to play video games with them. This can be a mannequin that’s labored effectively in China. There are a pair firms floating round, like Legion Farm and EPal and others which are all very fascinating. That’s one mannequin. Clearly there’s the streaming mannequin. A bunch of individuals are making nice livings for themselves by constructing tutorials and opinions, doing that for technique players and a number of the famous person video games on YouTube, making a residing that approach. That’s an fascinating development, and one I’ve adopted very carefully.
GamesBeat: Given the agency’s historical past with issues like Oculus and Roblox, how a lot do you are feeling like this want to a get to a metaverse is guiding you in a few of these investments? Ultimately this universe of digital worlds which are all related is the place we’re going to wind up.
Chen: It’s an fascinating query. I don’t suppose it’s come up very a lot in our funding standards. The elements the place we share quite a lot of curiosity with what individuals have articulated because the metaverse is, primary, once you consider a metaverse you consider the concept there’s different individuals. Intrinsically, it’s a social product. There are different individuals you’re interacting with, versus the following triple-A primary-person narrative-driven factor. We’re not within the enterprise of funding these. I don’t suppose the metaverse will come out of these.
The opposite a part of the metaverse that’s compelling is that you’d be prepared, perhaps, to place in quite a lot of various kinds of content material there. You may think a part of the metaverse would have very science-fiction stuff, or very fantasy-oriented stuff. We like the concept of user-generated content material or moddable platforms as a part of our funding thesis, as a result of it lets customers take part in creating their very own worlds. That’s very fascinating.
One other massive a part of it’s simply the idea of a persistent identification you care about. A part of the metaverse thought is that you just would possibly spend as a lot time there as in actual life. That’s an fascinating factor. Individuals are already gaming, clearly, for a lot of hours every week. That’s virtually already obtainable. That’s shared.