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When Andreessen Horowitz announced its fifth fund a month ago, the venture capital firm said its investment strategy $1.5 billion fund would continue to hew to the firm's motto: Software is eating the world. But now, it turns out it has more in mind than the same-old, same-old.
The original notion is that software is disrupting nearly every traditional industry. But according to a July 10 podcast with firm co-founders Marc Andreessen and Ben Horowitz, Managing Director Scott Kupor and editorial partner Sonal Chokshi, there's a new theme: “Software programs the world.”
When a16z raised its first fund in 2011, three new platforms were emerging: mobile, social, cloud. Now there's a new trio of trends, says Andreessen.
For one, Moore's Law, the longtime dictum that the number of transistors on a silicon chip integrated circuit has doubled about every two years, is now being applied not to make chips twice as powerful but to make them half as expensive. That means that "chips will be free and they will be embedded in everything.”
Second, all those chips will be on the Internet, meaning every physical object gets networked and able to be programmed.
Third, that creates even more opportunities for software to be applied to transform everything, from homes to businesses to cars.
The result is that Andreessen Horowitz is in all kinds of markets, even for physical goods, that didn't make sense to invest in before. And it's not alone among VCs. So while some skeptics might think VCs that invest in food delivery and the like are getting ahead of themselves, there's a method to the seeming madness.