Andreessen Horowitz makes bold donation to philanthropy

Steven Loeb · April 25, 2012 · Short URL: https://vator.tv/n/262f

Partners pledge to donate half their lifetime earnings to charity

In an announcement that rings similar to Giving Pledge, organized by Warren Buffet and Bill Gates to encourage the world's richest to give half their fortunes to charity, partners of one of the most high-profile VC firms in Silicon Valley said they are donating at least half their lifetime earnings to philanthropic causes. 

The six partners of venture capital firm Andreessen Horowitz made the pledge, starting with a $1 million gift to six charities, the firm announced on its blog Wednesday.

Ben and Felicia Horowitz are donating to Via Services, a charity that helps people with disabilities and special needs. Jeff and Karen Jordan are giving to Ecumenical Hunger Program, a Palo Alto based charity that provides families with emergency food and clothing. John O’Farrell and Gloria Principe chose Second Harvest Food Bank,  one of the largest food banks in the country. Marc and Laura Andreessen chose Fresh Lifelines for Youth, which is dedicated to ending gang violence. Peter and Martha Levine are donating to Canopy, a charity to benefit urban forests. Scott and Pamela Weiss are giving to The Shelter Network, which helps homeless people find housing and shelter.

"We are fortunate to work with some of the best entrepreneurs and technologists in the world, and in the process help create great and valuable companies," wrote the partners on the company blog. "That activity, done well over decades, can generate a lot of money that can then be productively deployed philanthropically back into the society that makes it all possible.  We love participating in this process, and we hope that our philanthropy can, over time, help make the world a better place."

The way it will work is that the partners will donate half their management fees and carried interest for their entire venture capital career.  

How much will it pledge?

Menlo Park, Calif-based Andreessen Horowitz has only been around since 2009, but it is already a top VC firm, raking in siginificant management fees. It secured a $1.5 billion fund in January, announcing it had raised $2.7 billion in three years.

And, while the company doesn't publicly report its returns, it's already had a significant exit in Instagram. Andreessen Horowitz initially invested $250,000 in Instagram, eventually making $78 million off the investment, a 312-times return. Andreessen Horowitz has already returned $288 million to its investors.

The firm is also invested in some notable winners. It invested $27 million in Pinterest, led a $112 million round for Airbnb, invested $80 million in Twitter, was involved in a $180 million round for Zynga and led a $40 million round for Fab.com.

The firm was also involved with a consortium made up of Silver Lake, Joltid Limited and the Canada Pension Plan Investment Board, who, together, purchased Skype from eBay for $2 billion in 2009. In May 2011, they sold Skype to Microsoft for $8.5 billion.

How charitable is Silicon Valley?

Andreessen Horowitz is following in the footsteps of some other big name venture capitalists and entrepreneurs. 

Facebook founder Mark Zuckerberg also promised to give the majority of his fortune away to charity, as did venture capitalist John Doerr. VC Mike Moritz gave a donation of $50 million to his alma mater, Christ Church, Oxford and PayPal co-founder Peter Thiel has set up the Thiel Fellowship, which gives $100,000 grants to 20 people under 20 years old so they can grow their ideas. Wall Street business magnate Warren Buffet gave $1.78 billion to charity last year. 

The gold standard for charity is still Bill Gates, who set up the Bill & Melinda Gates Foundation with his wife, which has so far given out over $26 billion in grant money. 

Andreessen Horowitz did not return our request for comment.

For an excellent discussion on charitable giving, read What will you do with your billions on the Weover.me blog.

(Image source: blog.wepay.com)

Read more from our "Trends and news" series

More episodes

Related Companies, Investors, and Entrepreneurs

Twitter

Startup/Business

Joined Vator on

What is Twitter?

Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from Twitter.com, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests. 

Where did the idea for Twitter come from?

Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.

How is Twitter built?

Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes. 

We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.

How do you make money from Twitter?

There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.

In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within Twitter.com, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet. 

At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.

Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on Virginamerica.com that were only accessible through the link in the @earlybird tweet.

 

What's next for Twitter?

We continue to focus on building a product that provides value for users. 

We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.

Digg

Startup/Business

Joined Vator on

Digg is a user driven social content website. Everything on Digg is user-submitted. After you submit content, other people read your submission and “Digg” what they like best. If your story receives enough Diggs, it’s promoted to the front page for other visitors to see.

Digg has been a force ever since. Acquisition offers have been made, Rose was on the cover of BusinessWeek and according to Alexa, Digg is in the top 100 most trafficked sites on the internet. The success hasn’t come without its share of problems though. The site has had to face services aimed at gaming the way stories hit the front page, as well as a user revolt. Digg has however been able to get over these hurdles as it continues to be one of the social news leaders.

Airbnb

Startup/Business

Joined Vator on

Airbnb.com is the “Ebay of space.” The online marketplace allows anyone from private residents to commercial properties to rent out their extra space. The reputation-based site allows for user reviews, verification, and online transactions, for which Airbnb takes a commission. As of June, 2009, the San Francisco-based company has listings in over 1062 cities in 76 countries.

BlueStacks

Startup/Business

Joined Vator on

BlueStacks enables Android applications to run on Windows machines. BlueStacks’ technology can be integrated into offerings for both the consumer and commercial (enterprise) market segments. Incorporated in March 2008 by leaders in Microsoft Windows, mobility and Android development, BlueStacks is privately held and headquartered in Silicon Valley with global offices in India, Japan and Taiwan.

 

Fab

Startup/Business

Joined Vator on

Fab is on a mission to help people better their lives with design.

Fab was founded by serial entrepreneur Jason Goldberg in February 2011 and launched on June 9, 2011. Fab’s founders are Bradford Shellhammer, Nishith Shah and Deepa Shah. Fab’s headquarters are in New York. The company also has offices in Berlin, London and Pune.

Over 6 million people around the world use Fab todiscover everyday design products at great prices, to connect with the world’s most exciting designers, and toshare their favorite design inspirations.

 

 

Zynga

Startup/Business

Joined Vator on

Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users.  Zynga’s games are available on Facebook, MySpace, Bebo, Hi5, Friendster, Yahoo! and the iPhone, and include Texas Hold’Em Poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist.  The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group, Reid Hoffman and Peter Thiel.  Zynga is headquartered at the Chip Factory in San Francisco.  For more information, please visit www.zynga.com.