The kingmaker in the past decade and likely the next for breakout growth in the tech sector is Andreessen Horowitz (aka “a16z”), a venture capital investment firm on Sand Hill Road in Palo Alto with nearly $18 billion under management.
It is named after founding partners, Marc Andreessen and Ben Horowitz, two legendary technology investors who have almost singlehandedly reshaped the world over the past decade by pouring capital into a stream of disruptive innovators.
It all started – as a revolution – with Marc Andreessen’s epic WSJ editorial “Why Software is Eating the World”, published in August 2011.
The prescience of the piece is striking given the world we now inhabit nearly ten years later. In the article, Andreessen made the case that the Great Recession sparked by the banking sector crash in 2008 was at an end and that the coming age would be defined for shrewd investors by a shift to technology-driven growth.
And boy has it ever, with Apple, Microsoft, and Amazon quickly reaching the trillion-dollar market cap level, and then doubling that. And the term “Megacap tech stock” coming into vogue use over the period.
Andreessen’s view has graduated into such dominant orthodoxy at this point that it’s difficult to even understand why it was so contrarian and revolutionary nearly ten years ago. But one has to remember that, at the time, we were emerging from an era defined by growth in emerging markets, real estate, finance, and commodities, and technology was seen as a dead-end bet after suffering a reputational cataclysm in the popping of the dotcom bubble a decade earlier.
As surely as the moon follows the sun, the Generals on The Street seem to be perpetually engaged in battle, fighting the prior war. Occasionally, a grand new thesis like this comes along and shifts perspective to drive an epochal shift in the capital paradigm.
For better or worse, the world around you right now is the product of just such a shift. And it has its roots in Silicon Valley a decade ago, with a16z at its epicenter.
All of that brings us to Clubhouse Media Group Inc (OTCMKTS:CMGR). Though it may be difficult to see how it fits into the story at this point, we assure you that it does.
a16z has become the kingmaker because the firm has been able to see around corners better than its rivals and has been able to coordinate multi-company and paradigmatic strategies better than anyone else in Silicon Valley. As a result, assets under management at the firm have multiplied by 17x over recent years and now cast a deafening shadow over rivals Sequoia and Kleiner Perkins.
Now, from its perch atop the hill, Marc and Ben are setting up to disrupt the world yet again by laying a capital and advisory foundation under new hit social audio app, Clubhouse.
While the story in the papers is that Clubhouse Media Group and the Clubhouse app have nothing to do with one another, there is an undeniable convergence underway that could be destined to confuse the picture even more.
That convergence is signaled by CMGR’s announcement yesterday morning that Andrew Omori, partner at Andreessen Horowitz (www.a16z.com), is coming on board as a key member of the Company’s official Advisory Board. Andrew has been a key player working with Snap Inc (NYSE:SNAP), Pinterest Inc (NYSE:PINS), Roblox Corp (NYSE:RBLX), and the Clubhouse app.
Note that CMGR is not a social media network. It is an influencer-based marketing and advertising model driven by controlling a vast tract of the social media landscape. In short, Clubhouse Media is an influencer-based marketing and media firm with a massive aggregate global social media reach driven by its in-house stars, which include some of the most powerful and widely followed influencers on the planet at present.
In total, CMGR’s influencers boast a reach, in aggregate, that easily exceeds 100 million and could be verging on 300 million if you do the math based on its recent communications.
Think about it this way: Clubhouse Media Group Inc (OTCMKTS:CMGR) is perhaps the world’s leading aggregation of social media influencers (and thus, followers). And the Clubhouse app is an upstart trying to disrupt the social media world with a new angle.
Andreessen Horowitz is the lead investor in the Clubhouse app after solidly leading its series B round. And now, Andrew Omori, a key partner at a16z, has joined CMGR’s advisory board.
It’s not like the two don’t share obvious synergies. Imagine what another 200-300 million users of the Clubhouse app would do for establishing a clear network effect lead as the app works toward a possible $4 billion valuation into its series C round.
This is especially important given the fact that Twitter (NYSE:TWTR) recently introduced its own social audio feature (“Spaces”) and Facebook (NASDAQ:FB) is exploring one, too. Microsoft Corp (NASDAQ:MSFT), through its LinkedIn segment, and Slack Technologies Inc (NYSE:WORK) have also said they’re working on similar features for their networks, according to Bloomberg.
The Space Race
In other words, this is a race. And network effect is everything. Whoever gets traction among users first is going to win a massive winner-take-all game.
Andreessen Horowitz has placed a massive bet. And Clubhouse Media Group Inc (OTCMKTS:CMGR) has become a potentially significant asset as a chess piece in this multi-billion-dollar game.
“In coordinating influencer-based marketing and media into a larger and more scalable technology-augmented platform, we are doing something new and innovative,” noted Chris Young, President of Clubhouse Media. “Andrew will be a tremendous asset as we scale this model and pursue optimal pathways for monetizing the huge reach we have already built. He will also be instrumental in providing access to relationships, branding opportunities, and partnerships that hold the potential for further gains in shareholder value.”
It’s all about scale of influence. By being in bed with an emerging superstar force in the social media landscape and the kingmaker of Silicon Valley, CMGR stands to gain in terms of scalability.
The Influencer Revolution in the Ad Industry
The advertising industry is in tatters.
A new direction is emerging, and it’s called Influencer-based marketing. This could also be a winner-take-all game given the shape of the game theory landscape and the impact of aggregating influence in the social media world.
TV and Print ads are dead. Internet pop-ups and banners are lifeless. Gaming the ecosystem of those cul-de-sacs isn’t going to change the game. The only “next big thing” is the influencer-based marketing direction.
And, right now, CMGR looks like the only game in town. Clubhouse Media has an edge in this fledgling model. With a16z casting support as a tailwind, that edge could become an insurmountable advantage in the race to dominate the new model in the multi-billion-dollar global ad industry.
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