a16z’s fintech leaders say ‘Silicon Valley is going untethered’ – TechCrunch

Last month, Andreessen Horowitz—one of venture capital’s biggest and most prominent players—announced that their “headquarters will be in the cloud” forwards.

Founded in 2009 in Menlo Park, California, the firm – also known as a16z – has for years been a symbol of Silicon Valley investment.

Its new philosophy in this post-COVID era of remote work is that there is no longer a need for a centralized headquarters. This philosophy extends to the fintech team.

I sat down (almost, that is) with General Partners Angela Strange and Anish Acharya to learn more about why the pair believe that the fact that more people are working globally presents great opportunities 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 how companies are built today in terms of headquarters.

Anish: If you were building a startup five, 10, or certainly 15 years ago, most of the focus of the work was very local, meaning you were what we call “standard local.” You would have a group of people who would come together in a physical office and struggle 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 certainly in your country. And then over time, if the product and the company were successful, you would slowly expand globally.

And the big trend that we saw that was already happening—and COVID catalyzed a lot of it—is that companies increasingly want to be global on day one. And software lends itself to this.

When Google launched, there was no reason why you couldn’t use Google on launch day in India or any other country where you could access the internet. But the problem, of course, is that while the software is global, money is very local. This is really where a lot of our fintech thinking has come into things. The idea now is that the company of the future, and the company of today, should be global on day one and the opportunity (for fintech companies) is to build all the infrastructure for the company to be able to operate and sell globally on day one.

TC: I think that’s an interesting point. But it’s very complicated, isn’t it? When you talk about different countries, and as you mentioned, global money is very much a local thing. Each country, each region addresses it differently. And I think that might have scared off some companies in the past.

a16z General Partner Anish Acharya. Image credit: a16z

Anish: The difference is when you have a platform that can handle a lot of that for you, the idea is that the company doesn’t have to worry about it. Like what we saw a couple of years ago with global payment acceptance. A bunch of companies went out and made it very easy to accept payments with local payment methods in any country. If you had to identify and do all these integrations yourself, it was very difficult. But if you could use a single payment provider that gave it to you for a fee, then suddenly it becomes a lot less painful.

Angela: Before this shift I took a meeting with a global credit card company working on foreign exchange expense management and wondered “who would need this”? Well, there would probably be companies that had been around for five to ten years to get to this point. They started in one country, went to another, and then to another. Your customer for a multi-currency auto-reconciliation spending card will be a fairly large corporate customer.

If you’re going to start a company in that space, you’d be like ‘holy hell, I’ve got a huge product to build. I have to cover tons of different countries and I have to do a corporate sale which means I have to raise a lot of money before I can even sell it.’ Whereas now you have companies that start right and they start – like Jeeves as an example, and from day one they have operations in Colombia and Brazil and Mexico. And they need that right away. So you now have this great opportunity to sell to the new—vs. to sell to the old—because all these new companies need your products and services from the start, which makes for a much larger, much more accessible market. Many of these newer companies and newer startups are actually target customers because of their needs. If they grow, the company can grow with them.

a16z General Partner Angela Strange. Image credit: a16z

The other bit that happens, conversely, is that companies that expand into different countries over time actually had to hire someone whose job was on an hourly basis to manually log into all their different bank accounts in the different countries and record this in a spreadsheet , which is absolutely ridiculous. If you are a very early stage startup, can you afford a resource to do this? No. You must have software.

Anish: Right. If you’re a company that hires people internationally, you were probably an old-school company with a worldwide payroll team and expensive fancy Oracle integration. Now post-COVID, so many startups are distributed globally. We ourselves are moving to the cloud. Now companies like Deel and others are making it possible for startups to just do it in a turnkey way and not have to think about where their employees are based.

TC: Angela, you and I have talked a lot about Latin America and how the growth there has obviously been explosive in recent years. What other regions are you all looking at for potential investment?

Angela: It’s an interesting “second-order” effect. It used to be where the managers and very early employees were where the company headquarters were. But now Silicon Valley or other big cities will start to see CEOs coming out from other places.

Anish: Yes, that’s a good point. Because if you think about what Silicon Valley is, if we single out Silicon Valley, of course it’s a place – but then there’s Silicon Valley networks, Silicon Valley ambition, Silicon Valley capital markets and Silicon Valley talent, companies, etc. … You can really take all these ideas outside of Silicon Valley. That had never happened before because of the network effect component. Between people being distributed globally and COVID catalyzing this change, it feels like Silicon Valley is becoming untethered.

One of my favorite things about Marc (Andreessen) and Ben (Horowitz) and the entire firm is their willingness to change our minds. We’ve been so historically Silicon Valley-oriented, and I think the new fence posts really draw a fine line under the fact that we’re no longer that way — and that was a change over a relatively short period of time.

TC: Aside from geography, of course, what areas of fintech are you most excited about?

Anish: The world has just begun. The narrow view of fintech is that it is banking, payment, lending and insurance. But I think a more expansive view is that we keep fintech as a new business model for internet companies. In that world, the global opportunity is so much greater. So cross-border and global is a big focus, and wealth management is something we’ve spent a lot of time on, and you know, it means completely different things than it has in the past. That means asset classes like crypto that you would never have thought of as wealth management, as well as new sets of people to serve. For example, young people working in Silicon Valley companies have a very different set of personal financial challenges than the soon-to-be-retired. I’m also looking at some things in the consumer space, like the idea that the bank for Gen Z is going to be dramatically different than the bank for other generations.

Angela: Infrastructure. Managing teams and currency globally used to be a problem you could solve later. There is now a problem we have to solve now. I literally go through my entire infrastructure stack and think, ‘Okay, if you had to make this work for 10 countries from the start, what does that company look like?’ Also any problem related to just the management of crypto and fiat. We’re starting to see that on the infrastructure side as well because you’re trying to onboard people from the fiat world into crypto. You have to comply with all kinds of banking regulations, but you also have to understand the web3 world. There are a bunch of different opportunities on that stage that we as a company are looking at.

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