The influential US venture capital firm Andreessen Horowitz, commonly known as a16z, which is based in Menlo Park, California, has just announced in a post on its corporate blog written by one of its founders, Ben Horowitz, that it is “moving to the cloud”.
Big deal, you might say, thousands of companies “are in the cloud”, in the sense that their computer systems, storage space, etc. are hosted by cloud providers that allow them to optimize their costs and let someone else deal with hardware problems. Cloud computing has been around for some time.
However, a16z isn’t moving its systems to the cloud — they’ve been there for many years — but something bigger: the company’s headquarters will be in the cloud, and it will open offices in various locations around the world to provide support and infrastructure for its partners and teams. In addition to the company’s existing offices in Menlo Park and San Francisco, it will be opening offices in Miami Beach, New York and Santa Monica, in order to configure the company’s ability to physically meet in different locations when needed.
Logically, the configuration of these offices is very different from that of a regular office, because the idea is not to provide a place for someone to sit for eight hours a day, but for occasional face-to-face activities: a meeting, a presentation or some other type of event that works best in person. Regular, day-to-day work becomes cloud-centric, as a result of a learning process carried out during the pandemic that has shown that managing a technology company remotely is easy. According to 16z, the result is not perfect, but it proves that fixing the cultural problems associated with remote work turns out to be much easier than fixing the employee satisfaction problems that come from forcing everyone to be physically in the office five days a week.
The result, according to a16z, is that nearly all technology companies have moved to a remote or hybrid work approach, and this shift is profoundly weakening the network effect of Silicon Valley, the place where it was once virtually essential to move to if you wanted access to intellectual capital, funding and other resources. San Francisco now has office vacancy ratios of 24.2% in the second quarter of the year, up from 23.8% in the previous quarter, and businesses in areas that depend on workers in those buildings are finding it hard to make ends meet. The displacement of tech industry workers has also meant that areas considered typical for a second vacation home such as Lake Tahoe, more than two hundred miles away, are running out of properties, with prices skyrocketing due to demand from workers who want large homes with some land, a pool and enough space to set up a personal office, and who do not need to drive into the city often.
In another note, a16z says “the company of the future is default global”, and mentions the cases of recently created outfits that are not linked to the city or the place where their founder or founders live, but start from the very first moment to hire workers regardless of their place of residence, in different cities or countries around the world. The article reviews the software and tools needs of these types of companies where the founder does not have to physically meet the staff in order to work with them.
The entry reminds me powerfully of some conversations I have had on a regular basis with Phil Libin, who after many years of activity in Silicon Valley, made the decision during the pandemic to create his new company, mmhmm, in a completely distributed way, and in fact, moved himself and his family to Arkansas: the people he has been hiring since then are based all over the world, have adopted methodologies that allow them to be perfectly operational and efficient without being physically together in a building, and he gets access to talent and a much higher employee satisfaction.
Obviously, not all companies can operate in this way. But I have no doubt that it will be a model that we will see more and more of over time, and that will prove its efficiency or its superiority as it becomes more and more widespread.