Ben Horowitz on Raising a New Fund and How Venture Firms Scale

You know, when we started the firm, like a big idea that we had was that venture capital was disappointing as a product for an entrepreneur. We always thought, wow, a much better product would be give me like the network to be confident in the advice I need to run this fucking thing.

0:00

Today we're sharing a feed drop from Uncapped with Jack Altman featuring A16Z co founder Ben Horowitz. In this conversation, Ben reflects on one of the core ideas behind A16Z Venture Capital as a product for founders often wasn't good enough. And that a better model would be a firm built around a real network, real operating experience, and real support for entrepreneurs building through the hard parts. Jack and Ben also get into Ben's 30 year relationship with Marc Andreessen. How the relationship works in practice, how they make decisions, and how you scale a venture firm without losing the edge that actually helps founders.

0:21

Ben, I'm really happy to be back here doing this. I got to be in the same room with Mark earlier in the year and I'm really happy that you're doing this with me.

0:57

I know, I'm glad to be here. It should be some fun.

1:04

Can we start with your relationship with Mark? Because I think it's like a super unique thing where you guys obviously work together, you know, running companies, you've built this firm together, you have a really unique relationship. I can't think of that many examples where I feel like I've seen it in that sort of equal way for so long. Can you talk about it a little bit?

1:06

We've been working together 30 years and I would say we're both different and the same and so not too complimentary. So that helps. He's kind of like we're a little more like relatives than anything else at this point. You know, working together 30 years and so forth.

1:25

So like are you friends outside of the work context or like what's like on like a non work situation? Like what is the interaction like we're.

1:45

Friends but not like drinking buddies or something like that. Right. Like we both work so much. We mostly talk about work anyway. And then like. Cause we're working together, we're talking about work. But it's kind of like the way I would describe it. And I want to say this without sounding, I'm not making the like level comparison. Like I'm so I'm just saying the relationship comparison that I think is most similar that I've know about is kind of the Michael Jackson, Quincy Jones relationship if you think about that. Um, and that, yeah, Mark's more Michael Jackson. Like, he's a. A star of talents that nobody else has.

1:53

Yeah.

2:30

Like, nobody else has maybe, like, ever had. Right. Like, you've talked to Mark to the point where, like, as a firm, we can just put him out there, and it's like a magic trick. Like, he's like, bang. You know, and, you know, for me to, you know, my kind of relationship with him is, you know, like a Quincy Jones. It's not like I'm, you know, I'm certainly not Michael Jackson, but I know enough. You know, Quincy Jones knew so much about music and so much about how you get the most out of somebody that talented, you know, that makes it work together. So I can surround Mark with the kinds of people, with the kinds of ideas and so forth that maximize him. And then, you know, like, he's makes me much, much better. Cause he's Michael Jackson. And like, you're never. You're never gonna make Thriller if you don't have Michael Jackson. Yeah. And all the great albums Quincy Jones made. Nothing was as big as Thriller. Cause, you know, you need that. And so that's the kind of relationship. So we're very complimentary. We're, like, in the same field. We do this, you know, like, I'm an investor, he's an investor. Like, you know, we built the companies together, all that kind of thing. I'm an engineer. He's an engineer by training. But he's different than me. Like, very different. So still.

2:31

Yeah.

3:45

And I'm different than him. And that. That's kind of what makes it work. We're enough the same and enough different. But I'm not saying that like, I'm Quincy Jones, the great Quincy Jones. Rest in peace. I love him. I want people mad at me.

3:45

Do you think about the firm similarly? Are you on different sides of certain ideas about the firm and that's what has led to it working the way it has? Or is it like you believe the same things about what it's going to take to win, and then you just have a different sort of daily skill set and set of work?

3:58

We've had a lot of kind of arguments, and we. We've had a lot of arguments both on kind of which direction it should go and in what kind of time frame. He has kind of more ideas about things we should do than I do. Just because, you know, in running it, I try and keep it a little more contained. Although, you know, you know, sometimes I'll push us in a direction that he wouldn't have normally gone otherwise. Like, Some of the international things we're doing and so forth.

4:12

So it's more common he's generating in your editing?

4:41

Yeah, more common. Although I definitely generate some ideas and he definitely will edit some of them. We talk so much and so forth. By the time we kind of get to the idea, we work through it. But it's a good kind of back and forth and I'm. Look, I would say I'm more decisive as a personality type than him. He's kind of more open ended because he's more of an idea generator and so that kind of helps. Where I can go, okay, we're committing the flag here, but not there.

4:44

It's kind of rare in venture. Like there's like a. I know like a lot of firms have like the CEO model, but like to have somebody who's operating as a CEO is kind of rare. Where like I guess at this point obviously Andreessen's big. It's like five, 600 people, right?

5:12

600 people.

5:26

Yeah. Yeah. And like your day is, I guess is management to some extent, you know.

5:26

It'S or half of it still. 600 is relatively small on kind of the scale things that I run. Yeah, I mean a lot of it is still like. I mean I have like 25:1 on ones with entrepreneurs every month, you know, just in various around the portfolio, helping them, you know, with CEO stuff and then you know, helping win deals and then doing our international stuff and working with investors. So you know, maybe management's like a third of my time. But still that's probably more than most VCs put on it.

5:31

I guess doing that stuff probably is important for you to be able to sort of run the firm anyway too, like as much as like generating returns, which I'm sure also happens. You probably also need to do the deals in order to like stay close to the work and know what's happening.

6:00

100%. Right? Yeah. I mean like I think that you don't really understand the VC business if you're not like on board to make investments and understanding like. Okay. You know, because like hiring changes, like hiring has changed a lot in the last five years just because like the offers didn't used to be like this. And how do you defend against that and how do you do all these things? And so like if you're running a venture capital firm and you're like, how in tarnation did they get that much, you know, that many RSUs and it's like when I was a boy, you'd only get four. Yeah, well, you get out of the loop. Yeah, you can get out of the loop really, really fast. Yeah.

6:13

When you think about, like, the way that you've decided to structure, I guess, the company, the firm, you've basically, you know, I got to speak with Martin who's like, amazing and could obviously run and lead his own firm.

6:46

Yeah.

6:59

You structured this in some way where you can have a certain caliber of gp. How have you thought about, like, what's like the, the narrative in your head as you've been thinking about, okay, this is what needs to be true to have people like Martine and Chris Dixon and so forth at the company.

6:59

You know, it's funny, Mike Morris had this great quote years ago where he said, like, the key to running a venture capital firm is to keep the principles from killing each other. Right. Like, and that, you know, there's a lot of truth to that because you have very, very high powered, like super high Q disagreeable people who are the best VCs. I mean, like that, you know, you can't find. You can find a VC who you don't like. You can find a great VC who, you know, maybe as a dick or whatever, but it's pretty hard to find one who you go like, that guy's not smart.

7:16

Can you be in a good, agreeable vc?

7:49

You know, I don't know many, so I think some are more agreeable than others. So I do think there is a kind. So to be kind of a long term, like all time great vc, I think most of those end up being disagreeable because you really have to think about everything for yourself and you can't, you know, you know, wanting to be liked can be a problem. However. Like there's a phase of VC that's this kind of heat seeking phase.

7:52

Yeah. You can be a good agreeable heat seeker.

8:21

Yeah, you can.

8:24

In fact, it probably helps because you just want to be liked by all your.

8:24

I think the best heat seekers probably are agreeable.

8:26

You're right.

8:28

So that, that kind for sure.

8:29

Friends with everybody when everybody think they're smart all the time.

8:31

Yeah, yeah. But the truffle hunters, like, they're all disagreeable.

8:33

Have you ever seen a very good set of results from somebody who is just doing heat seeking work in a period?

8:36

Yeah. And usually what happens is they show up during a boom and then they go away after the boom is over. And you know, because partly they weren't that they were interested in the chase more than the actual, like, oh, here's a breakthrough new technology and, you know, whatever. Cryptocurrency and the decentralized network and they're using all these amazing techniques. Like they don't care about that. I mean if you're the true heat seekers, don't care about that at all. They're just like, wow, that's hot. I'm gonna go see if I can get that deal. I know everybody wants that deal and you know, that's a real thing and it's a real thing in vc. And I think, you know, we, we kind of came out of that period. We may be going into that period again.

8:43

There's a good version of this that I, I know some people who are, would get framed as heat seekers, but it's a little bit different where they, they can tell that it's going to be hot. Like they can, they don't know if it's going to be a good long term business, but they're like, this is going to be hot by the next round. I can just see the setup.

9:23

Yeah.

9:37

And I think there's something interesting there. Like I've seen seed investors who just seem to have a nose for like, this is going to get a hot series A. Yeah. And who knows what will happen after that.

9:37

Yeah. You know, that's a real thing. I mean, I agree with you. I think that's a real thing. It's, you know, it's not so much our business, but it's. Yeah. I talked with Mark, bless him.

9:45

Yeah, I talked with Mark about how there's this issue once you're really big, which is you actually have to be really careful with those because of conflicts. And so it's like actually kind of not worth it. If you're able to win stuff later. There becomes this sort of like prisoner's dilemma where you should basically wait for, do the earliest round where you're sure it's the winner in a category or something like that.

9:53

Yeah, I mean, I think, I think there's some of that in the calculus. And then, you know, I mean, I think, you know, for us we have to kind of believe in it technologically, believe in the entrepreneur and so forth. It's just kind of, we a little bit view ourselves as more mission oriented. So like our mission isn't to get higher returns than the S&P 500, although that's a good side effect or whatever. You know, our mission is much more to like, can we help the best entrepreneurs build the best companies and kind of make us and the country and the west strong technologically. And so when we think about it through that lens, we Actually care much more about what it is than what the next round might think. Although, you know, like of course it's a consideration. Will anybody fund these guys after us or do we have to fund every.

10:11

Round going back to the type of like VCs that you think can be good and you're obviously, you know, it's not the only thing you do, but one of the things you do is you're managing these really good investors. Can you talk about the difference between managing, you know, these like very accomplished GPS versus you know, managing execs in like an operating company?

11:03

Yeah, it's like, I would say it's quite different in that, you know, look good execs understand one the, the importance of chain of command. The, you know, they're managers, they, a lot of them may be execution people, process people, you know, that kind of thing as opposed to people generating a lot of ideas. Whereas every good investor is a massive idea generator. They don't necessarily like rules or be willing to follow them. And so I think that the burden on everything making sense every step of the way is much higher. And then also you really have to, from an organizational design standpoint, you've got to minimize conflict or it's going to be complete chaos. So in a company you can get like, there's always going to be some cross functional dependency in a company and you have to live with it. And then through some combination of rules, process and telling people or whatever, shut the fuck up. Like we're just going to do it this way. You get there. I think in a VC firm you can tolerate much less of that. You know, like if the org doesn't solve the conflict issue, like the ability to solve major conflicts one off will cause a lot.

11:23

You're saying interpersonal conflict is worse in a venture firm?

12:50

Yeah, much worse in that both because of the personality types and then you can really like wreck each other's businesses. Right. Or each other's work in that. Let's say I'm a great expert in. I'm Martine and I know everything about AI and foundation models and so forth. And I've gone through every single video model like there is and I understand all the nuances and the strengths and the weaknesses and so forth. And then like, you know me over here who hasn't done any of that work but like found an entrepreneur that they like who's doing something and I go invest in that model that conflicts Martin out. Yeah, like he, he's going to be beyond Matt. Like he's gonna, he's gonna want to like, murder the person. I mean, like, that it's such a bad problem to have conflict like that in. In a ven. You just have to have respect for the work that people are doing and design the firm in a way that all that hard work gets them to the end that they expected and like, that their own people don't undermine them and these kinds of things. So like, the conflicts are extremely intense in that way.

12:53

When you see like a real one, are you like, I'm going to let them figure it out or are you like, I'm going to mediate this.

14:04

My biggest thing is like, sometimes they're too respectful of me on that. But like, I, like, I'll just resolve it. I need to resolve it.

14:12

What do you mean that you're respectful?

14:20

They're like, eventually the worst conflicts we've had are ones that nobody brings to me. Like, and it'll be like, it could be something very stupid and trivial, but they get so hot in between GC.

14:21

Gps that you worry about it. Or are you going inside team lead, sort of org and working out their conflicts for them? Or are you like, you need to run your own division or whatever?

14:34

Like, sometimes there's something inside the, like a fund, but those are pretty cohesive because. So we design them. Like every fund we have runs like, you know what somebody might consider a little vc. Like, there's not more than five gps. It's pretty cohesive. So there's not that much contention. You get the contention when things scale and everybody's not talking to each other every day. Like, then that becomes a problem. So mostly it's cross funds or cross functionally or something like that. But it's very important to squash them in the. They're all kimchi problems. They're all. The deeper you bury them, the hotter they get. Right? Like, so there, there is no problem that gets better over time in terms of conflict and a vc, it always gets worse.

14:44

What are the things that like, you then need to like, give sort of guidance on, like you and Mark, let's say at a firm wide level. Is it about overall, like, you know, deployment pace? Is it about like, structure? Is it about approach to the market? Like, what is this sort of broad intersection point across all the different funds?

15:27

Yeah, I mean some of it is just kind of general principles, things we believe in. So, you know, one, like, we have to make sure we're taking enough risk. Make, you know, like. And that usually comes of the form is evaluate the entrepreneur and the company on the magnitude of their strength. Like, how good are they at what they're good at? Are they super world class? Are they, you know, is this like literally the best person in the world at doing this thing? Not on, oh, like the monetization model doesn't make sense or like they don't know anything about go to market or they don't actually understand accounting. You know, like, that's not ARR. Like what the fuck are they talking about? Those things, like, you can always rule out a deal on weaknesses. And I think it's. It's always a mistake to rule out somebody who's truly world class on a weakness, and then it's always a mistake to invest in somebody who's not truly world class on a lack of weakness. And so a lot of the guidance is around ideas like that, you know, things that we believe where, you know, we're always like, okay, like, what can they do? Like, let's focus on what they can do, not what they can't do, and see if that's worth investing in. And it's a, it's an important psychological thing because, you know, we have so many like, brilliantly analytical people who can find what's wrong with anybody. And you know, I always remind them there's something wrong with everybody. Yeah, you just may not have been able to find it yet.

15:46

When you think about like how you're deploying capital, it seems to me like, you know, you and I would put like you and Sequoia in one shape, which is like, there are many deals and you've scaled up the number of great. Like it's basically a game of how many GPS can you scale? Because, you know, a GP can only do so many deals and like, how big can you make the teams? And your answer to that has kind of been like, many funds. And then you can sort of like keep it together. And that's like one way to scale broadly. I'm sure you can kind of like adjust what I said. And then let's say there's another version which is way fewer people with way more concentration. And let's call that like Thrive and Founders Fund and maybe Green Oaks or something like that. Maybe you would say that's not quite right, but directly you kind of know what I'm getting at.

17:20

Yeah, I mean, I think they do some of both and we do some of both, but sort of directionally I think that like, again, for us and what we want to accomplish as a firm, which is again, like making America the strongest country in the world technologically, the, the Concentrated approach just doesn't quite work with that mission. And then why is that?

18:02

Because we just need more shots to build these companies.

18:25

Well, I mean, you know, if you look at like, you know, a founder's fund or thrive, both great firms, you know, there are whole like sectors that they're not really in. There are entrepreneurs who could build something great that they're happy to miss because like, as long as they get, you know, the very biggest ones and so forth. And that's not really what we're about. Like if like crypto is going to be important to the like financial success of the United States or like the way AI interacts with the economy and so forth, like then we gotta, we're in like, what are you talking about? We're gonna ignore that we need to help that succeed. And like, it turns out in a sector like that, it's not just like funding entrepreneurs, it's like helping change the law and get the right policies in the country and these kinds of things. And so our model won't let us ignore something that important. But if what you're trying to do is say, okay, of the like five best companies of the decade, do I have big positions and enough of them, yeah, that's. Look, I think that's a good financial strategy. There's nothing wrong with that. Like, go get them. I mean, like, it's good, like it's good that they're doing what they do. We work with them on a lot of deals together, but it's just not who we are. Like you have to be who you are.

18:28

Is it the kind of thing where like, over time there's no reason for somebody who's doing the sort of broad base of lots of series A's and B's and you know that, that work. Is it just rational to, if you can raise the money, do billion dollar checks into those companies when they're really running very far?

19:46

If you look at it historically, like depending on the vintage, sometimes that strategy of waiting for the things to get to the billion dollar valuation is definitely the best strategy. But in other eras like that set of companies just all suck. And the actual, all the good investments are in the a, in the seed round because new, something new is happening. You know, like the world is changing and you know, the big SaaS companies, if you piled all your money in like Tiger Global, and it did in 2021, yeah, it didn't work out that well. You know, you were kind of at the end of the cycle, that may work better now we'll See, yeah, tbd.

20:03

Obviously you were raising, you know, big funds. And you've also like, it's worked, you know, it's like on some level, like if I think about like when you start any company or maybe any venture firm too.

20:48

Yeah.

20:58

It's like you sort of need to have something that you believe that not everybody believes and that needs to be right. And I would say, like, there's probably multiple, but like, clearly one of yours that you got to early was like, venture's gonna scale.

20:58

Yeah.

21:09

And you know, it looks like that's worked really so far. Can you talk about like the thinking behind why scale is so important and like why you and Mark have believed that it's like the dominant strategy.

21:10

Yeah. So there, I think there's a couple of different dimensions to it. One is like, what is the market of technology companies? And I think that's really important. And Mark wrote a piece In, I think 2011 called software is Eating the World. The conventional wisdom in D.C. at the time was, look, there's 15 companies in any given year that ever get to a hundred million or revenue. And the whole game is getting into as many of those 15 as you can. And so why have a big firm if there's only 15 companies to invest in? Right. Like that. That doesn't make any sense. You're just going to chase a lot of bad stuff. But what he thought then and kind of the bet that we made was, well, if software eats the world, it's not going to be 15, it's going to be 150 or 200. And that's what it's become. And so to get into that many great companies every year, you clearly need to be of a bigger size. Like, there's just no way to address the market. If you're five guys, that's not possible. I think the more important part of it, which is like a big rationale for starting the firm, was if you're an entrepreneur, what do you need? And you need, like, you need to be important in the world. Which means, okay, how do I, you know, how do I talk to big time CEOs, how do I get in front of big customers? How do I go international? How do I deal with the US Government if I'm in AI or crypto, which is like everybody now, like, how do I do all that?

21:21

How do you have employees take you seriously?

22:48

Yeah, how do I have employees take me seriously? Like, how do I find all these employees, all these kinds of things? There's a lot of capability that you need and if we can just bring that, you know, that's a much better product than. I'm a smart guy, I'll take you to coffee, I can give you some ideas about your product for two months until like I'm irrelevant on that because you've heard all my ideas. And, and so I think that like the, the product of a VC that has a platform and capabilities and so forth is so, you know, speaking as a, as a former entrepreneur, I needed all that, you know, and, and to me that's a more important part and we kind of see that every day. So, so that, that part of the idea was really good. Now the, there is a challenge on like mechanically, how do you do that? How do you build a big VC that's still like very, very good at.

22:50

Every part of it I want to pull open. So one obviously that seems like a no brainer is like the big brand and like this idea that you like give the company your brand or you lend it to them until they're big enough and then you know, they get bigger and that goes back to the firm and it's like this positive flywheel that seems like a big one. These relationships I think like you're talking about are very hard to get. If you're like a first time founder, you don't have the relationships with the government, whatever.

23:41

Yeah, yeah, like, hey, I just started a company, I've got regulatory issues. Jamie Dimon, can you have lunch with me? Yeah, like good luck.

24:05

So that's, that's a big one.

24:12

Yeah.

24:13

One of the ones that I don't feel strongly about, but I'm like less sure on is like the platform stuff and I'm curious to pull that open a little bit. What are the platform services that you're most confident work and then what are the ones that you're least confident work?

24:14

I actually think they all work because we've kind of moved away from the ones that didn't work.

24:27

Can you talk about some of the ones that you know that's fine.

24:31

Yeah, I mean like so we did some things early where we were publishing sort of, you know, we had this thing where we were going to have sort of general research ideas or whatever you know, for the entire like startup community. But like it turns out that that works really well if you do it for crypto or if you do it for AI. You know, like we try out all the models and so forth, you know, like, and we talk to companies all the time about, okay, like which model's best at which, and then we post Models and we try stuff out on them and so forth. So like from a tool evaluation standpoint, like we can just accelerate you and tell you exactly what's what doing that in general. Well like a lot of things I think that we tried to do across domains ended up being not as interesting and that's, you know, that's getting true for talent as well. So like yeah, CFO is a CFO for the most part like the hardware CFO different than a software cfo, that kind of thing. But that's easy. But like an AI researcher.

24:34

Yeah.

25:40

Is pretty different than a full stack engineer. Like that's a different talent pool. They run in different circles. Their comp structures are totally different and so you have to specialize.

25:40

I mean the recruiting stuff is probably at this point for me just talking to mostly series A companies. I think recruiting is like the number one thing that'll just like help me recruit.

25:51

Yeah, yeah.

25:59

Have you found that like you can effectively aim, you know, recruiting teams at companies for specific periods of time and.

26:00

Yeah, I think it helps to get the seed corn right. Like so a lot of what you're trying to do is can you get the first three to five people in who are stellar and then have networks where you want to draw from who your VC is actually matters a lot on that. Right. An engineer like cares about like okay, is this person going away? Is there more money behind this? Have I heard of them? That kind of thing. So that's an important feature. I think every company has to ultimately get hyper proficient at like recruiting, closing, interviewing, onboarding, training or they're never going to be a good company.

26:07

You're saying to some degree where like you can't do it all for them or they'll never build the muscle.

26:51

Yeah. At some point like you'll end up retarding their growth if you put in like their entire team. Now we've put it like we probably help through our network like databricks hire like over a hundred people for sure over time.

26:54

But it's like they clearly have.

27:10

But not in the beginning, but they're really good at recruiting and so forth and so on. So like now it's just like okay, people from our talent network are interested in working there. Yeah, but that's different than that. First, you know, the first few people that you hire, those are relationships that we have that will introduce you to somebody and like maybe they'll fit, maybe they won't and so forth. But like that's a kind of very specific thing.

27:11

How about your view on like, board seats and board membership and, like, how important that is. And maybe it's like, put, like, bookends on what people out there will believe. You've got some that are like, our selling point is, we don't take a board seat, we'll leave you alone. We don't. We're not going to do anything. You've got some that are sort of like, you know, breathlessly talking about this, you know, spiritual connection between the board member and the founder. And there's a lot there, like, where do you fall in this? How do you think about what, like, the board member should be?

27:35

I probably don't believe in the spiritual connection.

28:04

I was sort of maybe embellishing a little bit, but you know what I'm talking about.

28:06

So first of all, boards are important for founders. So, like, the idea that you're going to run without a board after you've, like, given equity to employees and sold equity to people who are not you is the most dangerous fucking idea in the world. Because if you know anything about securities laws, the only protection you have as CEO from going to jail or getting personally sued is that you run material ideas through the board. That's massive protection. Like, if I go, well, I want to give a 2% grant to this person in the company, you have to realize you're a fiduciary to the rest of the company that you're diluting is in question right there. Just that if you run that by the board, it's all good. You're completely protected, no problem. If you just make that on your own, somebody wants to sue you, they're going to win. Like, you really have very little defense at that point. So the idea that you're not going to have a board is a bad idea. I think once you start not owning the company 100%, you got to have a board. They're like, that's just how it goes. We went back and forth on this. Like, okay, how much does it. Like, the board actually helped the company? And I would say so there's a couple of interesting things. So the Y Combinator people actually said it must have been around, like, 2015, 2016. They came to us and they were like, we did, like, an analysis of all our companies who had boards and didn't. And the ones that didn't have boards all failed. Like, they didn't do well. Like, as a cohort, the ones with boards did much better. Now, like, that those. There's confounding factors, right? But in their view, the other thing was just in observing the company's the rhythm of having to tell somebody outside of the company what you're doing every three months or every two months creates internal pressure. It's very valuable. It's just like a good organizing principle to keep yourself on track. So I believe in that. And then I do think certain kinds of board members can be very, very impactful at different points in the company. Just with myself, like right now, if Ali kicked me off the board at Databricks, I'm not sure that like, they would do much worse. Like, I honestly don't. However, there were times, for example, the Series C, I led the Series A, NEA led the Series B. Nobody would do the Series C of that company. Pete Sonsini and I led that one too. NEA and us led the C in addition to the bnea. If I'm not on the board, like, I don't think there's any way that's happening. So that's like an existential issue. Second thing, you know, they had an offer to buy the company for like, I think it would have netted out to about $4 billion in 2018, 2019, something like that. And had I not been on the board, I think they would have sold.

28:08

That's a big deal.

31:10

And I think Ali would say they would have sold. And so like, they're worth, you know, they're raising now over a hundred billion dollars. So that's like a real value. And so to say that like, oh, all right, we're gonna do you a favor and not be on your board. Because look, when you're in a company, all you think about all day is a company.

31:11

Yeah.

31:29

You don't have perspective. So if there's somebody who can help you think through things and has perspective, that can be worth the whole thing. Right. Like, so, so it's not a, it's not a nothing. I think it's not a. I've seen board members and that had no value the whole time they're on the board. Like, that happens all the time for sure. So I don't want to overstate.

31:29

Well, there's also, there's two types of sort of ways to be impactful. There's, there's sort of like these high value moments that are these discrete crisp situations that you can say X was going to happen and I made Y happen and Y was better or whatever. And then there's sort of the like daily engagement type of board member who's talking all the time and, you know, interviewing candidates that, you know, the CEO is upset about. Something and somebody to talk to, et cetera? Do you think that that kind is actually less valuable in some ways, or do you think that they're like. Do you think about those similarly, differently?

31:51

So there's. There's the board and the work of the board, which is governance number one, as I kind of alluded to in the beginning. And then there's kind of certain points and certain things where board members can really matter. You know, I think most of the work that I do is more, you know, like, I'll have. Yeah. Well, I'll have a monthly call with a CEO just to talk through the things that they get stuck on. Like, the things. What's causing you to hesitate?

32:24

Does this work only at this point or earlier in your career did you need to do more of the, like, daily higher, you know, higher engagement model stuff, and only now can you do the. This version? Part of what I'm getting at, actually, is I think there's this idea in venture that you can only be on, like, eight boards before you collapse. And then I was, like, talking to Martin, who's, like, on all these incredible companies, the founders say he's awesome, and he's on, like, way more than eight or ten boards or whatever.

32:53

Yeah. So, okay, so I think that if you're the board member and you don't have a platform.

33:19

Yes.

33:26

Then you're the investor. Then 8 is probably right. Yeah. But if you have a platform, then when they go, hey, I need to meet a customer. I need to, like, help with recruiting. I need to, like, deal with this policy issue. I need to talk to, like, Gavin Newsom. I need to deal with. Then Martin's doing that. Then Martin's not doing that. Right. Like, we have a whole platform that does that. And so he can scale and just do the thing he does and do it very effectively. And then he works extremely hard and all that kind of thing. So, like, I think it's different, you know, if you have a platform or if you don't. Because if. If it's on you to do, to be the BD guy, the recruiting guy, the policy guy, the, you know, the governance guy, then you can't work on that many. Yeah. You know, like, those guys are like, that's a special, you know, God bless those VCs and so forth. But, yeah, we don't ask you to do that on our thing. And I don't think it's necessary. Intellectual, I think, like, for the work I do, which is, like, helping people think through, like, how they run the company, how they, you know, think about a business deal or this and that and the other, like that daily frequency, I think can be destructive to the development of the CEO. The CEO kind of ends up having to stand alone because that like ultimately they're going to stand alone, like no matter, you know, like you get advice, you get friends, you have people unstick you. But you have to have such high conviction in your own opinion to make these very, very difficult decisions. Like okay, we gotta do a layoff, are we gonna do this? Are we gonna, you know, change the direction of the company. That like you don't want the CEO looking to somebody from the outside to make a decision like that. Cause a person from the outside does not have the correct context, the amount of knowledge required to make such an important decision. And so you want the person from the outside really it to be advice, like let this this way. So you can look at it from that angle and this and that and the third. But not like what should we do, Ben? You know, like it's, it's how. How should I think about this is a much better question.

33:26

The last question on this. I just want to try to hear how your thinking has evolved. You guys came out early like I guess 2009 with this idea that like media and brand are a big deal. And I think in many ways I don't know exactly because I didn't graduate till 2011, but it seems to me like in those years this was like not what was happening versus like now obviously everybody kind of knows it.

35:32

Yeah.

35:56

Have you evolved your thinking like from 2009 to now? Like are you. Do you think it basically played out just like you thought? Do you think it's even more important? Has it. Have you changed your idea of like what type of brand and media and so on matters?

35:57

Yeah, yeah, yeah. So look, I think the original idea was very simple, which is VCs didn't market themselves. It was some kind of like code in VC land. And we're like, well since we're new and nobody knows who we are, that's what we know how to do. Where people build, companies will gonna market it. And we did and we did a good job of it and that kind of got us ahead. The world has changed. The world of media is completely different than when we started. When we started everything, I mean there were blogs and stuff and we had blogs and that kind of thing. But the primary way people got information was through the press for sure. And the rules of the press are. And the laws of physics of the, of the Indirect channel going through the press are completely different than the laws of physics of going direct. The very fixed number of channels that matter, very fixed format that you, you know, you can have a quote or a short five minute interview segment where they're like hitting you with questions that you don't want to answer and all that kind of thing. And then the brands were all companies, you know, Ford, gm, this, that the indirect world is completely upside down from that. There's unlimited channels, there's unlimited formats. You can tell the longest or the shortest story you want to, it's no problem. And then the brands are mostly people, right? Like, is it Palantir, is it Alex Karp, is it Elon? Or is it X? Is it, you know, like these, you know, is it Jensen or is it Nvidia?

36:12

Yeah.

37:46

So you can't really have a brand that's completely independent of the people behind the brand. And so I think the way that we're approaching the market now is both. This is why we brought on Eric Thornberg and what he's building is a completely new marketing model for us. We're not everything is there because the laws of physics are different. So you have to build a whole new system. And look, I think that what's happened with the other VCs is because they were late to copy us, they're still in the old world by and large, and they have some light shots at the new world, but they're going to have to do a lot of changing.

37:46

It's also the kind of thing, I think, where if you don't internally get what it's all about, you can't just replicate people's activities. I feel like this is one of those things where you have to understand the underlying physics of how it's working.

38:29

No, that, that's exactly right. You know, there, the, the ethos of it, it's like very culturally different.

38:40

Yeah.

38:45

Like you're no longer thinking about what you shouldn't say. Right. Like so much of the old world is, what can I not say?

38:46

Yeah.

38:51

How do I avoid answering that question? How do I give the talking point? Like, totally. There are no talking points in this world.

38:52

Totally.

38:58

You know, like I'm just talking shit and that's.

38:58

And if you, like offend somebody a little bit, it's like, so be it.

39:00

Yeah, yeah. Like, I mean, you just get on the air tomorrow, the next minute, just like it's a flood. Flood the zone. Like that's the answer to a gaffe has flood the zone. Not don't make the Gaffe.

39:03

Yeah, exactly. Never apologize. Flood the zone.

39:14

Yeah.

39:16

Does anything land as well as podcasts right now? I feel like you guys have, like, had an amazing growth in your podcasting, obviously. And yeah, it's like I watch a lot of them and they were good. And yeah, I'm doing one. And like, it seems to me like there is some thing going on where people have, like lost their attention and ability to read. And so we've all just decided, well, we'll just put out videos and stuff.

39:17

Yeah, I think podcasts are definitely working the best right now. I mean, like, do people read blogs? That'll change. People do read blogs, if you have one that really hits. I mean, actually we just. There's a couple of really great ones that we came out with. One was, you know, there is why there's no God video model. And like that kind of. Justine wrote that.

39:37

Yeah, the good ones are good. I feel like the long tail slop ones are not worth doing. Really.

39:59

Yeah. The right blog every day idea. I don't think that works anymore.

40:03

Or it used to. I think just to like have more content and surface area probably did work like 15 years ago.

40:07

Yeah, it was like kind of like the daily habit. But I think that now people would rather it's like, oh, I can do a pod read podcast and exercise, you know, like in that kind of thing, which is like. That's a big advantage.

40:12

Yeah, it's a big advantage.

40:23

Now with 11 Labs Reader, you can just throw it into the. The 11 Labs Reader and it.

40:24

What works besides podcasts?

40:29

Well, I actually think blogs and social media still work pretty well. I think that, you know, with podcasts you have to be state of the art and how you think about clips and all those kinds of things as well. The podcast has to be very interesting to the targeted audience, which is. I think one of the things that has been best for me as an audience member is, you know, if you watch the news, it's almost impossible, right? Like it's. Without throwing a chair at it, no matter who you are. Because it's like, what the fuck level are they trying to reach a human being? Like, they really think they're going to trick me with that. Like, like fake positioning on, like, oh, well, da, da, da, da. Like, I asked him the question this way. So now everybody's gonna like, hate Trump or everybody's gonna like Trump. It's like, it's especially an idiot. Like, you know, whereas a podcast, if I'm listening to the podcaster, that's marketing to my level. Of understanding of the world, then I'm gonna enjoy the whole thing, which is such a breakthrough in media to me.

40:31

Yes. For me at least to enjoy a conversation I'm watching, I need to trust both the asker and the answerer or it just doesn't feel quite right. It drives me nuts on the news when you know something about it, too, and you know it's just wrong.

41:32

Yeah.

41:44

And then they're going off and everyone's posting about it. Makes me crazy.

41:44

It's so bananas. Yeah.

41:47

Yeah.

41:48

Well, I mean, and particularly, by the way, everything in the regular media on AI is so whack, bro. So, like, you're talking about these threats that are imaginary, and then you are just ignoring the fact that, like, on current course and speed, we're going to have 10 million Chinese robots in the US with backdoors to China. Like, that's going to be an actual real problem, you know, like, just on terms of leverage in the next trade negotiation.

41:49

It's tough because a lot. I mean, in many ways, structurally, I think traditional media gets a lot off. I do think there's a lot of very good journalists at these publications who, like, see truth and, like, want to be right and, like, get it correct and all of that stuff. So I, like, I think like a year ago, I found myself just, like, so frustrated with traditional media. And then over the last year, I think I've, like, engaged with, like, a bunch of, I think, like, very honest, good journalists.

42:18

Yeah, there are definitely. There. There are definitely real journalists out there, even at publications who, you know, we in tech really don't like. And I think there's a role for it.

42:42

Like, there is a role for, like, the New York Times, Wall Street Journal that don't, you know, are not attached to, like, a. A firm. Even though I think both are good, it's just like, I still think it hasn't found its way yet. The whole thing.

42:52

Yeah. And we did it to them to some extent. Right. Like, so when tech broke the media monopolies. So they are coming from the standpoint of, you know, we're. We don't even care about the economics of it, because the economics are going to be there. And so we're going to have these. We're going to create these ideals around journalism and around truth and all the news that's fit to print and, you know, like, democracy dies in the darkness or whatever the crazy taglines they have are. And so they set themselves a standard, very high standard, and then all of a sudden, they're in an Existential financial crisis. And they have to get to an audience. And now they're going, well, going to a broad audience is just way too hard and way too expensive. So I'm just gonna market to people who are on the left. And so then I gotta be an activist. And so then all this stuff that I said before is all bullshit. Now that's a hard puzzle. And I think that a lot of the best journalists kind of predated that change and kind of grew up with those ethics that like, oh, no, I've gotta be objective. I have to find the real story. I have to tell the real story. But that's not the business model anymore. So how do you reconcile that? I think, like, right now, people are kind of coming out of the fever of that change and going, okay, are we gonna be an activist or are we going to be a journalist? And we'll see how it plays out. But it's going to be interesting.

43:03

It's kind of interesting because, like, I think Eric's amazing. You guys are now growing to a place where you have the resources to like, bring people like Eric on, to build, like a big thing. At some point, as your firm grows even more, you're going to have the resources to like, really, you know, you're going to have more resources than the New York Times at some point. It'll just be an interesting thing to watch.

44:27

Yeah, no, to me it's shout out.

44:45

To Eric hiring like a thousand people. This will be great.

44:48

Yeah, yeah, he is, he's. He's hiring a lot of people. But. But there, you know, like, the thing about Eric's team that's so amazing is it's a combination of people who lived in the old world and then very young people who only have lived in the new world.

44:50

Well, I imagine there's a lot of people who might have otherwise wanted to work at like, the Wall Street Journal or something like that who might, like, give Eric a call.

45:03

No, definitely. I mean, I think that. I think in a way he's got more access to more interesting people. And certainly the audience is building. So that could be thinking about your.

45:10

Sort of firm's growth. I want to ask you sort of a question both on, like, the strongest version of let's call it Big Venture. I know it's not quite the right thing because I think it's a very negative sounding word, but whatever.

45:22

Good venture.

45:34

Yeah, instead of big, good venture. So actually, let's start there. Obviously you've raised like, you know, a big new fund. I think, you know, I'm guessing your view is, over time, this could grow much more. What are the laws of physics on the size of how big venture firms can get and still be productive?

45:36

The biggest limit is the market market. So how many great new technology entrepreneurs are there to fund? Look, there's already more money in the venture capital market than there are kind of great entrepreneurs with great ideas. But if you're number one, that's fine because, like, we'll just get the deals anyway and it's no problem, if you ask me, well, why don't we raise a hundred billion dollars? Like that's the main limit. Because it would be hard to generate a return on 100 billion in venture capital capital, probably given the size of the market, like in 2020, basically.

45:51

You're saying the companies won't be big enough.

46:25

Well, I think there just won't be enough of them. I think that's the most likely, would be the most likely scale challenge for us that, like, you know, at least with the team that we've built, when we look at the markets that we're in, it's hard to see our way to like, an order of magnitude more money. But, you know, that could change. But that's the. I would say that's the current kind of number one limiter. I think the limiter on most funds or firms is not the limiter that we have. So for most firms, the limiter is they can't kind of have that many effective partners.

46:27

Cooperating.

47:04

Yeah, cooperating. There's two fundamental reasons for that. One is structure. So most venture capital firms are shared economics, shared control structures. And if you have shared control, you very likely can't reorganize effectively. So in order to scale, you have to be able to change the org structure. Like, it's just kind of fundamental to scale.

47:05

You're saying you need to periodically update. Like every few years you might need to do a reorg.

47:29

Yeah, yeah. Just, you know, like if you double in size, anybody runs a company, you double in size. Like, you have to look at the org structure and see if it still works, if the communication paths are still right, if there's too much conflict, all that kind of thing. The side effect of reorganizing is you redistribute power. And so people who had power lose power and people who didn't have power get power. Like, it's just that. That's what it is. And if you're voting on that, the chance of you getting that right is zero. Because having done many reorgs in My career, when a reorganization happens, people always do. Everybody does a local optimization other than the CEO. And so if the CEO gives into the needs of the people and makes it democratic, then you're done. Like that's never gonna work. So I think it's very hard. I don't know how you could ever get to like our size with shared control. It'd be very tough. The other thing you need is you do need a leader who can deal with that kind of scale in terms of making those decisions and running the firm. And most VCs don't have people of that kind of operational caliber like some do, but like it's pretty rare. And if they do, they're often not in charge. So we have like those are the two advantages that have led us. I mean, we're only now 16 years old. Like most of the firms we compete with are much older than that. But those issues have enabled us to get bigger is basically the situation.

47:33

And basically your view is being big and venture makes everything better because you can scale people like Martin and Chris, you can have more access to more power, you have a bigger brand you can lend to founders. And basically your view, I am assuming from everything you've shared of just how you're running the firm is the bigger you get, actually it's possible the better per dollar that you might be able to do.

49:05

I think so. I mean, I think that it's kind of, I mean, look, you know, we've got a 16 year track record. We just raised $15 billion. Like, I think the product to investors is kind of speaks for itself. But look, I think in venture capital, just generally the. There's kind of two parts to getting good returns, like picking the right deal and winning it. I think it turns out that winning it is a much bigger percentage of that equation than people like NVC World like to give credit for it because they like to think of themselves as such super genius. Oh, I saw Facebook early. That's a real thing. But if you can't win it, then you're still never going to have good returns. And so being able to win kind of automatically, I would say gets you to the top tier of returns and then, you know, picking kind of moves you up that list.

49:26

You're saying you could be a roughly random picker or an average picker, let's say, and a great winner and that's going to get better returns than the inverse?

50:18

Yes, for sure.

50:27

At all stages.

50:29

Yeah, I think at all stages. And it also kind of, they kind of, it's A little self fulfilling in that if you can win, then the best pickers want to join you. It's like as an investor, like, why does Martine work here? Why does Chris Dixon work here?

50:31

Because it makes it easier to win.

50:47

Yeah. Because they want their best ideas. They want to actually be in the deals they want to be in. If you're an investor and you go, hey, I think that's the future. I think that's the greatest entrepreneur I've met that and you can't invest in it, like, that's very frustrating. So then you end up the. The bet the winners get the best investors over time.

50:48

I think it's an interesting thing because I was talking to somebody recently that it's actually really rare for a venture firm to have two. What you would consider like generationally good investors. Like, almost never happens.

51:09

Yeah.

51:21

And then it's like ridiculously rare to have three. And like, if you have three, then you're like, you know, Sequoia Andreessen, basically. Why is it so hard to get many at one place? Like, it just seems so uncommon and it seems like, I don't know, is that a function of winning ability or is that a function of picking ability? Like, what is it that makes it so hard? Like, why don't you and Sequoia just end up with like everybody?

51:22

Well, I think that there just aren't that many generationally good. Right. By definition. Right. Like if you're generational, then there's only like one of you or two of you.

51:43

Okay. But let's say like top 10 or something. Yeah, whatever.

51:51

Yeah, yeah. No, look, I think that one, I mean, like some of it's historical, right? Like once you get the nice thing about VC economically, if you run one, is carry vests. And so like, if you made a bunch of good investments somewhere, like you start your career, you generally want to stay. I'd say the other thing, at least for us, is there's a lot of, or there's great investors that we could probably recruit from other firms. But we're so different culturally than the rest of the VC world that we've had a lot of trouble getting people to stick here who have worked at other firms. It's just the mentality is so different. And not to say that their way is wrong or our way is wrong, but it's different enough that we can't import them. They're not willing to assimilate, we're not willing to change. It's that kind of thing.

51:53

Could you, you give your best articulation or best Steelman of the counter to this idea of venture scaling. If you had to defend the view of, I've had Peter at Benchmark or Josh at first round to some extent, Sequoia had said there's limitations. What is sort of in your mind, if you had to give the best version of the argument for why adventure doesn't scale or why small is better in any way, could you give that narration?

52:51

Yeah, I mean, I think that there are kind of configurations where that is true. Right. Like, so, you know, as I said, look, if you have shared control, you just can't get past a certain size before it becomes some chaotic, crazy democracy, which, like, democracies are great for. Like if you've got 350 million people, but like, they're not good if you're a venture capital firm, it's just not good, at least in terms of scale. It's not going to work. It's fine if you don't scale. The second thing is, if you have like 20 people on an investing team, I don't think that works because I don't think that's a conversation anymore. And so, so much of investing is about like, you're trying to find the truth, right? Like, you're working every day. You have these conversations and you're talking to entrepreneurs and you're talking to all the references and you're talking to customers and you're understanding the technology and this and that and you're having this long, long running conversation about like, okay, what is true? Like, is there going to be a God model or does like, can I, like, take a little model and post train it with my own data and beat the piss out of OpenAI? What's the answer to that question long term? What's the answer to that question today? Like, we've got to get it to that. How do you have that conversation with 20 people? Like, it's very hard. So I think that if you're configured in that kind of way, then being large is dangerous, I think very dangerous. So, you know, there are reasons if you don't have the ability to scale in a way that makes you like, our investing teams all look like small VCs. I mean, like, so Martin's team or Chris's team or Alex's team, they all look like a little vc. So in some ways I'm all for that model. I'm just doing it in a context where you have a platform and a brand that can be helpful to entrepreneurs. Yes, more so than, you know, just, you know, having A person.

53:18

Yeah, it makes sense, I guess maybe to wrap, I think one of the other tenants at least when you got started, which I think is still roughly a tenant today, that I think is like core was you really believed in hiring ex founders, CEOs. I'm sure you've hired some people who are not, but for the most part it seems like you're highly beginning. Yeah, yeah, very concentrated at least. You know, it seems like a lot of the DNA is rooted in that, at least. Yeah. Why has that been like important to you?

55:13

Yeah, so you know, when we started the firm, like a big idea that we had, and I would say this idea mostly came from me, was that venture capital was disappointing as a product for an entrepreneur. The reason like I know we had a very hard time building like cloud. Cloud apps were. Although it reasonably well. It's just like a very, very difficult to build a company. Like extreme, excruciatingly difficult. And there's all these components to it and all these things you have to learn and then things go wrong that are completely out of your control, like the dot com crash or you know, that kind of thing. Venture capital firms kind of give you the money and then put a very smart person on your board and give you some advice. And that was like it. And so we always thought, wow, a much better product would be give me like the network to be confident in the advice I need to run this fucking thing. Really early on the way we thought about that was, okay, some experience required to be on your board. You have to have like done this thing before to advise me. Don't just like send me, you know, somebody who doesn't know how to do that. So that was the original idea. That idea turned out to be somewhat right, but not entirely right. So the problem with the way we did it is some founder CEOs are good at being founder CEOs but not good at explaining what the hell it was they did. And then they may also not be that interested in investing like they were at running something. Right. Like it's a little bit of. If you've. There's a feeling you have if you have a thousand people working for you or whatever that you're never going to achieve as an investor. Like that's just like that. That's not that. Yeah, it's a different thing. You know, we made kind of the adjustment. We're like, okay, like yes, advice on how to run a company is important. But like, you know, and that's when I was like, okay, so I'll write some books that explain it and then you can talk to me. Who knows how to explain that. But we're not going to. Everybody in the firm is not going to have to be that. That was, I think, a very important adjustment for us.

55:37

Would you write another book?

57:41

Well, if I have another thing that I think I understand that people don't understand. Like, I wouldn't do it to be like, popular, make money.

57:44

You don't want to write a book to make some more money?

57:51

No, that wouldn't be the driver. No. Although that book does well, you know, I'm sure thing about Hard things is a very good selling. I gave away all the money for it. But it's. It does well. Yeah.

57:53

Yeah. Cool. All right, Ben, I'm gonna let you go. Thanks a bunch for doing this. This was great.

58:02

Yeah. All right. Awesome.

58:05

Thanks for listening to this episode of the A16Z podcast. If you like this episode, be sure to, like, comment, subscribe, leave us a rating or review, and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X16Z and subscribe to our substack@A16Z substack.com thanks again for listening and I'll see you in the next episode. This information is for educational purposes only and is not a recommendation to buy, hold, or sell any investment or financial product. This podcast has been produced by a third party and may include paid promotional advertisements, other company references, and individuals unaffiliated with A16Z. Such advertisements, companies and individuals are not endorsed by AH Capital Management, LLC, A16Z or any of its affiliates. Information is from sources deemed reliable on the date of publication, but A16Z does not guarantee its accuracy.

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