Andreessen Horowitz is now openly courting the capital of Saudi Arabia, despite US tensions.
According to BloombergMarc Andreessen and Ben Horowitz appeared onstage with WeWork co-founder Adam Neumann to speak for at least the second time since november about your company $350 million investment in Flow, which is Neumann’s new residential real estate agency. Its choice of venue was intentional: The conference was hosted by a nonprofit organization backed by one of Saudi Arabia’s largest sovereign wealth funds, and Flow could launch in the Kingdom, Bloomberg says. Meanwhile, the three reportedly got serious, with Horowitz praising Saudi Arabia as a “startup country” and saying that “Saudi has a founder; you don’t call him founder, you call him his royal highness.”
Neumann separately said, “It’s leaders like her royal highness who will really get us where we want to go.”
We reached out to Andreessen Horowitz with related questions this morning and have yet to hear back.
That a firm of the size and interests of Andreessen Horowitz is looking to cement relationships in Saudi Arabia is not surprising. Although the 14-year-old team has never made public who their limited partners are, no one would hold on to their pearls where it was revealed that the region’s sovereign wealth funds have helped boost assets under management at the company to $35 billion through his many funds. In fact, in October, Horowitz spoke at the investment conference called “Davos in the desert”, which is often a clue that someone is raising funds.
As for more explicit partnerships, in 2016 both Andreessen Horowitz and the Founders Fund sold part of their stake in ride-sharing company Lyft to Prince al-Waleed bin Talal of Saudi Arabia and his Kingdom Holding. In 2017, Marc Andreessen also joined forces with the prince’s first cousin, Saudi Crown Prince Mohammed bin Salman (“MBS”), agreeing to join the advisory board of the ambitious MBS project. neoma group of futuristic, technology-driven communities with their own laws in “an area where massachusetts size”, as the WSJ has described it.
If Andreessen left that same board in 2018 after the CIA concluded that MBS ordered the gruesome murder of a Washington Post columnist, he did not share. To be fair, neither did some of Neom’s other high-profile advisory board members, including Travis Kalanick or Sam Altman. Only Apple’s then-head of design Jony Ive disappeared from the list almost as quickly as he was added, with Apple calling the inclusion of him “a mistake.”
Notably, not a single US investor or startup founder with business interests tied to Saudi Arabia spoke out against MBS during that protracted chapter in 2018, even as a Saudi-led military and economic war against Yemen was also brewing. . grabbing headlines for his brutality.
Meanwhile, many very large US companies have continued to do business in the region. KKR and the Saudi Arabian Public Investment Fund still work together routinely. JPMorgan said it planned expand your operations in Saudi Arabia late last year. Saudi Arabia Sovereign Wealth Fund and BlackRock signed an agreement a few months ago to jointly explore infrastructure projects in the Middle East.
However, venture firms, which tend to paint themselves as more virtuous than other asset providers to win over founders, have mostly remained tight-lipped about any ties to the region. Which makes the comments made yesterday by Horowitz at the Miami event all the more remarkable. From the Bloomberg story:
On the stage of the conference. . . Horowitz lamented that after Andreessen, the co-founder of his namesake venture capital firm, wrote a blog post in 2020 arguing that it was “time to buildmade waves, but it didn’t change much in the US. “Probably 50 people in the US government approached Marc to talk to him about it, and absolutely nothing happened,” Horowitz said.
But when Horowitz visited Saudi Arabia in October and had lunch with Saudi princess Reema bint Bandar Al Saud and, more recently, met the governor of his sovereign wealth fund, Yasir Al-Rumayyan, they were ecstatic.
Al-Rumayyan told him, “Let’s go,” and “in a week we organized half a dozen really interesting meetings,” Horowitz said. “In April, we will bring our companies to Saudi Arabia. And that’s what a startup feels like.”
So what has changed? The US economy, for one, where US companies are dealing right now with tighter lending and higher inflation.
By so openly praising his friends in Saudi Arabia, Andreessen Horowitz appears to be aligning himself with other global investment firms that are unapologetic about their relationship with the oil-rich region. If they can do it, so can we, may be the thought.
Andreessen Horowitz may also be betting that the United States will be forced to reconsider its relationship with Saudi Arabia despite its repressive regime. Consider: After President Joe Biden reluctantly visited MBS last summer, asking it to lower gas prices, MBS instead path during the US midterm elections in a show of power. To further empower MBS, a US federal court in December threw out a lawsuit against MBS for the murder of the Post columnist after MBS was appointed prime minister of Saudi Arabia by his father. (MBS was already the de facto ruler of the Kingdom, but the move grants him immunity by US State Department standards.)
It will be interesting to see if other powerful venture firms follow Andreessen Horowitz’s lead. Although Andreessen Horowitz has in many ways reshaped the way the venture industry in general operates, publicly siding with Saudi Arabia is a bigger gamble than, say, launching a independent media property or jump headlong into crypto.
While MBS may be making progress on a global comeback, US concerns continue to abound as Saudi Arabia approaches China about developing a nuclear power program the US doesn’t want it building. That doesn’t say anything about MBS friendly relationship with Vladimir Putin, whose war against Ukraine is believed to have already cost hundreds of thousands of people their lives, or of Yemen, where the Kingdom’s war created what is now the biggest humanitarian crisis in the world.
It’s also worth remembering that business is done differently in Saudi Arabia, no matter how aggressively the region represents its transformation.
In a telling example, last summer, according to the WSJafter his fans prompted two game companies to cancel sponsorship deals with Neom for Saudi Arabia human rights recordNeom CEO Nadhmi al-Nasr called an emergency meeting to complain to his communications team and ask why he was not warned about the gaming companies’ positions.
“If you don’t tell me who’s responsible,” the executive said, “I’m going to pull a gun out from under my desk and shoot him.”
