Silicon Valley venture fund Andreesen Horowitz on Wednesday named former White House economic director Larry Summers as a special adviser.
In a phone interview, Summers and Marc Andreesen, co-founder of the venture capital investment firm, said the appointment brings the former government official’s international economic expertise to a fast-changing high-tech industry where Internet companies are quickly expanding overseas and fundamentally changing the way business markets work.
Summers doesn’t have experience in tech, but that’s not why the venture firm wants him, they said. As the former Treasury secretary and a noted economist, the venture firm wants his economic knowledge to help companies think more broadly about how they can break into new markets and bring their services to various industries.
Summers said he was attracted to the offer because of the potential of the Internet industry.
“On any list of strengths of the American economy, one of the top three has to be that it is the only place in the world where you can raise your first $100 million before you buy your first suit,” Summers said.
“Information technology stands out because of the pervasiveness of its impact,” he said. “Every part of our economy from the way people bank and the way baseball teams set strategies and choose players to the way kids learn to the way restaurants collect their payments and tips are being transformed by information technology.”
Andreesen said he wants the portfolio of businesses he’s put money into to think big. He points to companies that have succeeded in disrupting business models.
Google, for example, has changed the way advertising works by implementing an online auction system.
Deals site Groupon has transformed the supply and demand relationship between retailers and customers, helping companies get rid of overstock and cutting out marketing.
Andreesen Horowitz, with investments in Facebook, Digg and Zynga, said Summers has an exclusive tech advisory deal to only advise their companies. He will receive “long-term” compensation, which would probably include a stake in companies or the fund, but Andreesen declined to give more specific details on their arrangement.
“We are at a special moment as tech becomes more central with some companies expanding to 170 countries within just three months of launch,” said Andreesen, who created the Web browser Netscape.“And a lot of our companies are trying to change the way markets work and we wanted someone on our team who understood these dynamics and opportunities.”
Andreesen said he first met Summers through Facebook Chief Operating Officer Sheryl Sandberg, who served as Summers’s chief of staff when he was treasury secretary. Sandberg suggested Andreesen take on Summers as an adviser, bringing rare economic know-how to Silicon Valley, which has tended to focus more on delivering new products than on sweeping economic thinking.
Google has an in-house economist, Hal Varian, who has applied the company’s search technology to predicting disease outbreaks and consumer behavior.
Summers said his role won’t involve policy or political advice.
“One thing I made clear to Marc in one of our first conversations about this relationship was that I had no interest in being a Rolodex man,” Summers said.
READ: Summers’s op-ed: “How to avoid a lost decade”