Uncapped #12 | Marc Andreessen from a16z

Marc Andreessen is a cofounder and general partner at the venture capital firm Andreessen Horowitz, a venture capital firm that manages $45 billion in assets under management. He is an innovator and creator, one of the few to pioneer a software category used by more than a billion people and one of the few to establish multiple billion-dollar companies. Marc co-created the highly influential Mosaic internet browser and co-founded Netscape, which later sold to AOL for $4.2 billion. He also co-founded Loudcloud, which as Opsware, sold to Hewlett-Packard for $1.6 billion. He later served on the board of Hewlett-Packard from 2008 to 2018. Marc serves on the board of the following Andreessen Horowitz portfolio companies: Applied Intuition, Carta, Coinbase, Dialpad, Flow, Golden, Honor, OpenGov, Samsara, Simple Things, and TipTop Labs. He is also on the board of Meta. We covered: Evolution of the venture playbook Small vs large funds Current AI landscape Politics and Silicon Valley Tech and the media A few highlights: Optimizing for the maximum amount of power Conflicts being the reason a16z isn’t even larger The middle is dead; you’re either Gucci or Walmart Only 8 companies in the S&P 500 are innovating We’ve lived in an era of intense preference falsification AI and machines making the ultimate decision --- Timestamps: (0:00) Intro (0:27) Evolution of the venture playbook (15:54) Small vs large funds (29:10) Becoming a top tier firm (35:33) Limiting factors to building big companies (40:11) Investing in AI (50:02) Developing investors (59:06) AI going wrong (1:09:20) Politics and Silicon Valley (1:11:39) Tech and the media (1:23:22) Preference falsification (1:31:10) Career advice (1:34:07) Huberman “beef” (1:38:21) Question from X --- More on Marc: https://x.com/pmarca https://pmarca.substack.com/ https://a16z.simplecast.com/ More on Uncapped https://linktr.ee/uncappedpod https://x.com/jaltma --- Email: [email protected]

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Here's what I encourage, break the fourth wall.

• 0:02Jack Altman?

  Yeah.

• 0:03Speaker 00

  Here's what I would encourage people to do. Here's the thought experiment to do. Just write down two, in the middle of the night with nobody around, doors locked.

• 0:09Jack Altman?

  Write it down on a piece of paper and let's pull it out in 10 years.

• 0:11Speaker 00

  Write down a piece of paper, two lists. What are the things that I believe that I can't say? And then what are the things that I don't believe that I must say?

• 0:21Jack Altman?

  All right. I am so excited to be here with Mark Andreessen. Mark, thank you so much for doing this with me today.

• 0:26Speaker 00

  Jack, it's a pleasure.

• 0:27Jack Altman?

  So what I wanted to start with was the topic of small funds, big funds. We had Josh Kopman on the podcast and he made a point that resonated around fund size, the outcomes in venture and sort of just like looking at the math of all of it. And I think as venture funds have grown, it sort of spoke to a lot of people about like, kind of what the plan is and sort of how tech is going to go. And so I guess to start, I'd be curious to hear your thoughts around that whole dynamic. Obviously, you know, you've got a big venture firm. And so I just want to hear kind of your perspective on this whole topic to start.

• 0:58Speaker 00

  So start by saying like Josh is a longtime friend and I think is a hero of the industry. And I say that because, you know, he started First Trend Ventures back in the very dark days. I forget the exact year, but you know, back during the dark days of after the 2000 crash. And in fact, you know, there was a period of time back there when, you know, the total number of angel investors or seed investors operating in tech was, you know, maybe eight total. And, and you know, actually Ben and I were two of them, but you know, this was sort of the heyday of, you know, Ron Conway and, and, you know, kind of a Reid Hoffman and a very small group of people who were kind of brave enough to invest in new companies at a point in time when, you know, basically everybody believed the internet was over, like the whole thing was done. And so he, like, I just think like that was an incredibly heroic, brave act.

• 1:39Speaker 00

  It obviously worked really well. It, you know, turns out by low, so high actually is a good strategy.

• 1:44Jack Altman?

  It was very good.

• 1:45Speaker 00

  It's, it's very nerve wracking when you're trying to do it, but it does work. And he, he had brilliant timing for when he started and, you know, the companies that he's supported have gone on to become incredibly successful. And we've, we've worked with him a lot. So, you know, we're a big fan. Of his. And then second is I would say I didn't actually, I heard, I heard there was a discussion. I never as a rule, I never, I never read or watched anything I'm involved in. So I totally.

• 2:03Jack Altman?

  Well, it wasn't about, you know.

• 2:05Speaker 00

  I totally missed it.

• 2:05Jack Altman?

  And to summarize, basically what he was saying is he coined this like venture arrogant score idea. But basically the idea is, you know, if you're going to own 10% of a company at exit and you want to have a three X fund and you're probably going to have a power law of outcomes, you basically need your big outcome to be like really big. And so like, how's the math shake out? And basically, you know, the question he was sort of posing broadly is, are the outcomes going to be much bigger? You can own a lot more, you can hit a lot more winners. But it was sort of like that math question.

• 2:30Speaker 00

  So I'd say a couple of things. So one is look, venture is a, is actually a customer service business in our, in our view. So start with this. So it's actually a customer service business. There are two customers. There are the LPs and there are the founders and we think of them both, both customers. And so, you know, at the end of the day, the market's going to figure this out and the, the LP money is going to flow to where obviously they think the opportunities are and the, you know, the founders are, you know, as you know, the best founders definitely pick who their investors are. It's actually very unusual, right? Asset class. It's the only asset class in which the recipient of the capital picks the,

• 2:58Jack Altman?

  Yeah.

• 2:58Speaker 00

  You know, picks the, you know, actually cares where the money comes from and picks, picks, picks it. So the market will figure this out. Um, I, I think the big thing, to respond to your general point, I think the big thing is the world has really changed. Um, and so, you know, modern venture capital, uh, in the form that we understand it is basically, um, you know, there, there were examples of venture capital going back to like the 15th century or something with like, you know, Queen, Queen Isabella and Christopher Columbus and Whalers off the coast of Maine in the 1600s and so forth. But modern venture capital was basically a product of the 50s and 60s. Originally this guy, Jacque Whitney from the Whitney family sort of created the model. George Doreo, who's a MIT professor, created a version of it. And then, you know, then the great, you know, the great heyday of the 1960s, VCs, Arthur Rock and those guys, um, and everybody that followed, Don Valentine and Pierre Lamont and Tom Perkins and so forth.

• 3:41Speaker 00

  Gene Kleiner, you know, all those guys, basically, basically from that period, it's called the 1960s through, call it 2010. There, there was like, there was just, there was a venture playbook and it became a very well established playbook. And it, it sort of consisted in two parts. One was a sense of what the companies were going to be like, right? And then the other was what the venture firm should be like. And so the, the playbook was the companies are basically tool companies. Basically all successful technology companies that were venture funded in that. That 50 year stretch were basically tool companies, right? Picks and shovel companies. So mainframe computers, desktop computers, smartphones, laptops, internet access, software, SaaS, databases, routers, switches, you know, disk drives, all these things. We're processors, tools, right?

• 4:24Speaker 00

  And so, you know, you buy the tool, you, the customer buys the tool, they use the tool. But it's a general purpose technology sold to lots of people. Basically, around 2010, I think the industry permanently changed. And, and, and the change was the, the big winners in tech more and more are companies that go directly into an incumbent industry. Right? Like insert directly. And, and I think the big turning point on this was like Uber and Airbnb, right? Where Uber could have been, like Uber in 2000 would have been specialist software for taxi dispatch that you sell to taxi cab operators. Uber in 2010 was screw it, we're doing the whole thing. Airbnb in 2000 would have been booking software for bed and breakfasts.

• 5:01Jack Altman?

  Yep.

• 5:01Speaker 00

  Right? Running on a Windows PC. Right? And then Airbnb is just like, screw it, we're doing, we're doing the whole thing. And so, and you know, Chris Dixon came up with this sort of term, the full stack startup, which he kind of meant, but the other way to think about that is just you're, you're actually, the, the company is delivering the entire, basically promise of the technology all the way through to the, to the actual customer.

• 5:20Jack Altman?

  Which is basically quicker to get there. Also, I suppose you get more margin capture when you do it that way. And you just get the technology seeped in rather than having to sell it through. Is that the idea?

• 5:28Speaker 00

  Prior to 2010, there were two kinds of tool companies, consumer tool companies and, and business tool companies. Right? So, you know, B to C, B to B. Right? As we called them in those days. And, you know, the consumer side was great, but like, you know, consumer, you know, it's just like selling, you know, video games and consumer software is great, you know, flying toaster, screensavers. It was great, but there was only so far, you know, that was going to go. And then, and then the B to B side for things like taxi dispatch or for, you know, bed and breakfast bookings. The problem is like you're, you're selling advanced technology into incumbents that are not themselves technology companies. Right. And so are they actually going to take those tools and then actually build the thing that the technologists know should actually get built? More modern version of that is what you see now happening with cars, right? So who's going to build the self-driving electric car, right? Is it going to be a incumbent who's able to adjust?

• 6:13Speaker 00

  Who's buying, you know, good components to be able to do that? Or, you know, is it going to be a Tesla or a Waymo?

• 6:18Jack Altman?

  Yep.

• 6:18Speaker 00

  Right, that's going to do that.

• 6:19Jack Altman?

  Same with SpaceX and NASA, I suppose.

• 6:21Speaker 00

  Exactly, yeah. You could, there are many companies that sell technological components that go into rockets. But was any of that going to lead to the existing rocket companies making the rocket that's going to land on its butt and then, you know, be relaunched within 24 hours? Right. And so, and by the way, same thing Airbnb or Uber. Had you sold a, the Uberized version of taxi dispatch software to the taxi

• 6:42Jack Altman?

  Wouldn't have been very good, yeah.

• 6:44Speaker 00

  Would it have resulted in the Uber customer experience? And so I think basically what happened was, and there was sort of, you know, these, Peter says, these things are over-determined, so it's a bunch of things that happened. But it was sort of, it was sort of the smartphone completed the diffusion kind of challenge for getting computers in everybody's hands. And then mobile broadband completed internet access in everybody's hands. And then the minute you had that, there was just no longer, you just had this ability to get directly to people in a way that you just never had. You didn't have to like have a giant marketing campaign. You didn't have to, you know, have a giant established, you know, consumer brand. And so there was a way to kind of get to market that didn't previously exist. And then, you know, and then look, also consumers just evolved. And, you know, people, especially, you know, kind of Gen X and then millennials were just much more comfortable with technology than the boomers were.

• 7:22Jack Altman?

  Yeah.

• 7:23Speaker 00

  And they, you know, the sort of Gen X was entering, you know, and boomers and millennials were kind of entering their consumer prime at the time this happened. And then you started having these big successes. And so you started lining up Uber, Airbnb and Lyft and SpaceX and Tesla. And, you know, you kind of, you start stacking these up. And at some point you're like, all right, there's a pattern here, right? There's, there's a thing that's happening and, and that's what's happening. We're 15 years into that. And what's happened now is basically that idea now has blown out basically across every industry, right? And so, so, so the tech industry used to be a relatively narrow tools, picks and shovels business. Today, it's a much larger and broader and more complicated. Basically process of applying technology into basically every area of business activity.

• 8:00Jack Altman?

  The result of that is that the companies are much bigger. Like when you're the whole, when you're both the picks and the shovels to yourself of the whole company are much bigger.

• 8:07Speaker 00

  Yeah.

• 8:07Jack Altman?

  And that changes venture math.

• 8:08Speaker 00

  Yeah, you eat the market, right? And so, and so Tesla ends up being worth more, like there have been points in time in the last five years when Tesla has alone been more valuable than the entirety of the entire auto industry put together.

• 8:18Jack Altman?

  Yeah.

• 8:18Speaker 00

  Right? And SpaceX is, you know, like you go through this and Uber is worth far more than the totality of every black cab operator.

• 8:25Jack Altman?

  Yep.

• 8:25Speaker 00

  And taxi cab company that ever existed. Airbnb is worth far more than the breakfast industry ever was. And by the way, it turns out some of these markets just turn out to be much larger than people think. Right? When we do a retrospective on our analysis over 15 years, like one of the things that's been hardest for us to do is to do market sizing. And, and, and sometimes we overestimate market size, but it's.

• 8:41Jack Altman?

  More often it's the other way.

• 8:42Speaker 00

  More often, well, for the winners.

• 8:44Jack Altman?

  Yeah.

• 8:45Speaker 00

  More often it's the other way.

• 8:46Jack Altman?

  I guess the, the net blend is that you underestimate it.

• 8:49Speaker 00

  Yeah. And this goes to venture economics, you'll talk about, so the core thing on venture, the core thing on venture bets, right? Is because, because venture doesn't run on leverage.

• 8:57Jack Altman?

  Yeah.

• 8:58Speaker 00

  Right? Cause nobody will bank.

• 8:59Jack Altman?

  Yeah.

• 8:59Speaker 00

  Nobody will bank a startup or a venture firm for leverage, because there's no assets when these things start.

• 9:04Jack Altman?

  Yeah.

• 9:04Speaker 00

  It's asymmetric, you can only lose one X.

• 9:06Jack Altman?

  Yeah.

• 9:07Speaker 00

  But you can potentially make a thousand X.

• 9:09Jack Altman?

  Yeah.

• 9:09Speaker 00

  And so that means, right, then there's two errors in venture. There's the error of, of, of, of commission where you invest in the thing that fails. And then the area of omission where you don't invest in the thing that succeeds. And of course, over, just in the math overwhelmingly, the error, the error that matters is the error of omission. And, and so if you run an analysis, and by the way, lots of people did this. You run an analysis that says ride sharing is only ever going to be as big as taxi cabs.

• 9:31Jack Altman?

  Yep.

• 9:31Speaker 00

  That leads you to the error of omission and not making the bet and, and, and therefore the difficulty of market sizing.

• 9:36Jack Altman?

  In your view, is this only, is, does that only apply up to a certain size? Or, you know, when you look at some of the rounds that now happen at huge valuations in companies that would otherwise, you know, be a large IPO. Like, let's say somebody's raising 10 billion at 100 billion or something like that. Does the power law still apply up there? Like, how do you think about that type of round? Or do you see venture capital sort of turning into private equity at some level at the higher end of things?

• 10:01Speaker 00

  Yeah. So I think there's two questions kind of embedded in there. One is why aren't these companies? Public, right? That's one question.

• 10:07Jack Altman?

  Yes.

• 10:08Speaker 00

  And then, and then the second question is like even whether they're public or not, like,

• 10:11Jack Altman?

  Right.

• 10:11Speaker 00

  Can they actually?

• 10:12Jack Altman?

  Is it still the lose one, win 20 type of dynamic?

• 10:15Speaker 00

  Yeah. So I think there's a bunch of ways to look at that. So like the smartest public investors I've met with basically have the view that the public market actually works just like the private market with respect to this dispersion of returns. Uh, the, the extreme case, a case I'll make sometimes is, um, it may be that there's no such thing as a stock. It may be that there's only an option or a bond. Right? Like so, so for, so, and the, and the reason is because there's, there's fundamentally two ways to run a company. One is to try to shoot the moon. One is to try to build for the future. And then the other way is to try to harvest the legacy. Right? And if you're shooting for the moon, the big risk, the big, then you're, the, the big risk of that is, you know, and you might fail, right? You might, it might not work, but if it works, you have this telescoping effect in the public market, just as much as you have in the private market.

• 10:50Jack Altman?

  Yeah.

• 10:50Speaker 00

  And, and historically the returns in the public market have been driven by a very small number of the big winners in exactly the same way that they've been driven by that in the private market. In fact, you see that playing out right now in the S and P 500. So one of the things I've been saying for years now is the S and P 500 is not, is it's no longer the S and P 500. It's like the S and P 492 and the S and P 8. So there's like 492 companies in the S and P that have no desire at all, right? It's just like watching their behavior to like really charge hard at the future. Like they, they, they don't want to do it. They won't do it. They're not doing it.

• 11:18Jack Altman?

  And then eight are betting everything.

• 11:19Speaker 00

  Eight are all in, right? And, and you, and then I always say, you know, who are they? And everybody always knows who the eight are.

• 11:24Jack Altman?

  Yeah, of course.

• 11:25Speaker 00

  Completely obvious.

• 11:26Jack Altman?

  Yeah.

• 11:26Speaker 00

  Who the eight are, because they're the ones that are building all the new things. And then, and then, and then again, if you, if you disaggregate like public market returns over the last 10 years, you see the, it's just, you see this just dramatic, you know, explosion of value among the eight and, and you see a, you know, relatively modest, you know, growth of the, of the 492. So even the S and P 500 is like having a portfolio of like bonds and options.

• 11:45Jack Altman?

  Yeah.

• 11:46Speaker 00

  And it's, it's like, it's like incredibly barbell. And, and so I, I just, I think, and then, and then people, people get cynical on this and they say, well, you know, if not for the eight, you know, the, the stock market.

• 11:54Jack Altman?

  You're like, yeah, but that's the whole point.

• 11:55Speaker 00

  That's the whole point.

• 11:56Jack Altman?

  Yeah.

• 11:56Speaker 00

  Right? If, if you have a healthy functioning capitalist economy, the whole point is some number of these things are going to go nonlinear.

• 12:01Jack Altman?

  This is like when someone says, ah, they're not a very good investor, but they invested in, name that 100 billion dollar companies. They got lucky. Well, you're like, okay, yeah.

• 12:07Speaker 00

  That's the point. Like that's the job. That's the desired outcome. That's the thing, you know, any of us who, you know, it's like, you know, kind of the classic joke. Like joke or venture, like isn't there just a way to invest in the good companies and not the bad companies?

• 12:19Jack Altman?

  That's good.

• 12:20Speaker 00

  It's like, yeah, like, okay, for 60 years, we've been trying to figure that out.

• 12:23Jack Altman?

  Yeah.

• 12:23Speaker 00

  Here's a fun fact in finding the analysis. Over the last 60 years, every one of the really great venture firms through that period missed most of the great companies while they were while they were investing.

• 12:32Jack Altman?

  Yeah.

• 12:32Speaker 00

  They the best firms in the world, whether it's, you know, Kleiner Perkins in the 90s, or benchmark in the 2000s, or Sequoia in the 2010s, or whatever, like, they just like flat out missed most of the winners in each cohort. Right. And on one hand, you're just kind of like, wow, I can't, can't you do better than that? But you've had these super geniuses for a very long time trying to do better than that. And I, you know, we could have a whole separate conversation about why this is so difficult.

• 12:53Jack Altman?

  The thing you said about companies building, you know, the whole stack, rollups are super popular. Should I, is it fair to take from what you said that you're bullish on that strategy or not necessarily? And basically just, you know, to walk out. And I mean, you know, instead of, you know, building accounting software and selling it to the accounting firms, just buy an accounting firm, become an accounting firm, AIify yourself, which I think is becoming like a more popular strategy. Do you like that? Or is there a nuance why it's different to buy something rather than build it yourself from the beginning? What do you think of this whole rollup thing?

• 13:20Speaker 00

  Yeah. And let's, let's come back to the venture question.

• 13:22Jack Altman?

  Definitely.

• 13:23Speaker 00

  I was still, I was still winding up into that. But however, this is actually also relevant to that. So, yeah, so there are a bunch of great, really good firms that are trying to do this rollup thing. I, you know, the, I mean, the opportunity with it is kind of very obvious. The, the challenge with it is just cultural change of an incumbent is just, a legacy company is just really difficult.

• 13:39Jack Altman?

  Yeah.

• 13:40Speaker 00

  Charlie Munger was once asked, you know, a few years ago, he said, you know, GE, I think was the company that's going through a big issue at the time. And he was asked at a shareholder meeting, how would you fix the culture at GE? And he's like, I have no idea. I don't even know how you would change the culture at a restaurant.

• 13:52Jack Altman?

  Yeah, that's funny.

• 13:53Speaker 00

  Right? Like, how do you do that?

• 13:54Jack Altman?

  It's really hard.

• 13:55Speaker 00

  Right? It's really hard.

• 13:56Jack Altman?

  Yeah.

• 13:56Speaker 00

  And so, you know, you have to have a theory on that. I mean, people, they do have, people doing it do have theories.

• 14:01Jack Altman?

  Yeah.

• 14:01Speaker 00

  I, I think we're much more oriented towards just trying to back.

• 14:04Jack Altman?

  Well, I think it gets a little into this, like, private equity. It's a little bit of the venture, private equity blend I see happening is related, not even just in dollar size, but in the mindset here.

• 14:12Speaker 00

  Well, this is where I go back to my bonds versus options thing.

• 14:14Jack Altman?

  Yeah.

• 14:14Speaker 00

  Like fundamental, the way I'd always describe venture is like fundamentally, we are, we are buying long dated out of the money call options. Which like seems completely insane, except when they pay off, they pay off like spectacularly. But like a lot of them expire out of the money and like, you know, statistically top inventory capital has a 50 plus percent.

• 14:30Jack Altman?

  Okay, well, yeah, I just want to get your hot take. I really wanted to hear about this, but yeah, we can go back to the venture math thing. So I think there's a lot more in there.

• 14:35Speaker 00

  Okay, good. So, so look, so, so anyway, so what's happened is the world has changed. The, the, the, the number of companies that, that are, that are being founded that are going to be important. It keeps expanding. The number of categories that those companies are in keeps expanding. Those companies are more complicated now. Because they're, they're, they're full stack. They're, they're in these incumbent industries. And then the winners are getting bigger. And you, and again, you just look at that in the market. I mean, look, we have, you know, of, of the, of the S and P eight, they're like, oh, they're all venture backed, right? Every single one of them is venture backed. They are on any given day, any one of them is bigger than the entire national stock market of countries like Germany and Japan and the UK. Right? And so the, the telescoping of.

• 15:12Jack Altman?

  The numbers are just absurd.

• 15:13Speaker 00

  The telescoping effect of, of victory is, is, is just incredible. Right? And so, so what Ben and I did is we, we looked at it and we kind of, we started our firm kind of as this was happening and we looked at it and we said, all right, like this is different. This, this is, you could, you could, you could, you could sit here and do things the old fashioned way, but the world is moving on. And then this goes back to the customer service aspect. The founders who are starting these kinds of companies need something different. It's, it's not sufficient anymore to just, you know, to have, to say to have investors who were operating the way that they were investing, you know, for the previous 50 years. That, that, that, that's not the value proposition that they need. That's not the, that's not the, the, the help that they need. And so there's a different way to do it. And so I, I think what's happened is like the, the, the industry, the venture industry, it, it, it had to restructure in order to basically accommodate the, the change in the market.

• 15:55Speaker 00

  Now, having said that, I don't think that's an argument that it's just there for big, big firms win everything. That's definitely not my, not my thesis. And by the way, that's also not how I'm deploying my own money, which, which I want to talk about because I'm, I'm, I'm living what I'm about to say. Which is, I think what happens is what Nassim Taleb calls the barbell. And the way to think about the barbell is basically you, you, you basically draw, you basically have a continuum. And on the one side of the continuum, you have high scale. And on the other side, you have high specialization. And what you see in industries that mature and develop in this way, including many industries in the last hundred years. Basically what happens is as they, as they mature and enter their kind of full state, as they kind of flower, what happens is they often start with generalists that are neither subscale nor particularly specialized. And then over the fullness of time, what happens is they get disintermediated.

• 16:40Speaker 00

  And then there are scale players on the one side and there are specialist players on the other side. The most obvious example of this in everybody's lives is retail. When I was a kid, there were these things called department stores. Pretty good selection at pretty good price, but not a great selection and not a great price. Right. And then sitting here today, those are all out of business. They're just gone.

• 16:55Jack Altman?

  It gets crushed by Amazon on one end and then like amazing retail on the other end.

• 16:59Speaker 00

  Exactly, exactly. Right. And so, and why do you go to Amazon or Walmart or, you know, the big, and by the way, there were even these big box guys, you know, Toys R Us and so forth. And then over time, like Amazon and Walmart even ate that. Cause when you go to Amazon or Walmart, what you get is just like an unbelievable selection of basically anything that's a commodity, right? That you just buy at like super low prices and it's basically impossible to compete with that if you're subscale on the one hand. And then to your point, and then the specialist retail experiences like the Gucci store, the Apple store, you know, the $15 candle store.

• 17:28Jack Altman?

  They gave me some Perrier when you walk in.

• 17:30Speaker 00

  Oh, they love you. Like they're so happy to see you. Exactly. Right. You know, they'll, they'll do private showings for you and you know, they pour the champagne and it's like, it's like, it's like an entire experience. And, and so what's happening is, and you just, again, you see this in like the return, you just look at this return standpoint, like this is what's happened. This is where this is, this is how the value is. And then what happens is that just like gaps way out and it never comes back together again. And then what the consumer does is they build a portfolio of their experiences. And so they, they buy things at unbelievably cheap prices at Walmart and Amazon. And then that gives them more spending money to be able to spend on the boutique.

• 17:59Jack Altman?

  So, so this middle, the, uh, the, the bar that's in the middle, that's kind of screwed.

• 18:03Speaker 00

  Yes.

• 18:04Jack Altman?

  What is the mechanic by which they're in trouble? Is it because?

• 18:07Speaker 00

  The customers go away.

• 18:08Jack Altman?

  The, the founder customers go away.

• 18:10Speaker 00

  Yeah. Yeah. The founder customers go away and then the LPs.

• 18:12Jack Altman?

  Who are neither getting sort of like the size and scale value, nor are they getting like a special focus of sort of.

• 18:17Speaker 00

  Exactly.

• 18:17Jack Altman?

  Can you do focus? Can you be a specialist with a $2 billion fund, let's say?

• 18:22Speaker 00

  So obviously we're at scale, but we, we do have a specialist approach inside the scale. And so we have, we have investment verticals. They're discreet teams. They have in some cases discreet funds. And by the way, they have like trigger pull, trigger pull, trigger pull authority. They can make investment decisions. Like we don't run the firm where Ben and I sit and decide, is this a good investment or a bad investment? Like our specialists who make those decisions.

• 18:41Jack Altman?

  Basically determine that by this is the size we think you can function. This is the biggest you can function as a specialist in a highly successful way. And then we're just going to put a bunch of those together. Is that like what defines the size?

• 18:53Speaker 00

  Yeah. Well, so it's sort of, it's, it's two, yes, yes, but it's two parts. One is what's the, what's the external view? What's the size of the market opportunity? Just how much money does this does this strategy? Does this vertical need? How many companies are going to be? How many different, you know, kind of how complex is it? And then the other is the internal dynamic, which is like, you know, you want to like, if you're going to have a team, you need everybody around the table being able to have a single discussion. And that puts natural limits on how big that can.

• 19:16Jack Altman?

  What's your limiting reagent to building an even bigger firm? Is it number of productive partners that can do this then?

• 19:24Speaker 00

  Conflicts, conflict policy.

• 19:25Jack Altman?

  Conflicts.

• 19:26Speaker 00

  Conflict policy.

• 19:27Jack Altman?

  That's the, that's the problem.

• 19:28Speaker 00

  The single biggest issue by far.

• 19:29Jack Altman?

  So if you had 50, if you had all the great GPs all wanted to work here and you had like, that would still be the issue.

• 19:36Speaker 00

  Yeah, there would be issues, there will, there would be issues for sure to your point that would come with.

• 19:41Jack Altman?

  So what's the conflicts thing?

• 19:42Speaker 00

  The conflicts thing. So the conflicts thing is the mainline venture firms forever, meaning, meaning the firms that do series A, series B, series C's, especially series As and Bs. The relationship with the founder is just so.

• 19:52Jack Altman?

  It's too deep.

• 19:52Speaker 00

  So it is too deep. And if you as a venture firm invest in a direct competitor, it's, it's just, it's a giant issue that the founder you're already invested in will be extremely upset with you.

• 20:00Jack Altman?

  By the way, do you think that's practical? Do you think it's all emotions? Like, do you think it's correct that firms shouldn't do conflicts?

• 20:06Speaker 00

  I would say when we were startup founders, we felt this very deeply. It's just, it's, it's okay. So when you're a startup founder, I'll channel the other, the other side of it. When you're a startup founder, the whole thing is so tenuous, right? It's just like, is this thing going to work? There's like 18,000 things can go wrong. People are telling you, no, every day, no, I'm not going to come work for you. No, I'm not going to invest in you. No, I'm not going to.

• 20:23Jack Altman?

  And then your board member invested in a competitor and you're like dagger to the heart.

• 20:26Speaker 00

  Dagger to the heart. And then you literally, what happens is the founder is you have to go into the all hands meeting and explain why your investor has given up on you.

• 20:32Jack Altman?

  Yes.

• 20:33Speaker 00

  Right? And you go in there and you do some song and dance about.

• 20:35Jack Altman?

  For sure.

• 20:36Speaker 00

  And they're just, and your employees are just like, your employee, basically your employees look at you and they're just like, you, the founder are so weak and lame.

• 20:41Jack Altman?

  Yeah, right. You can't even get your board member to not invest in a competitor.

• 20:44Speaker 00

  Exactly.

• 20:45Jack Altman?

  What about the marginal stuff though? Cause like, you know, all these companies are near each other. They blend, they evolve over time. So like, how does this, how does this play out on a practical level for firms?

• 20:55Speaker 00

  It almost never plays out the way that the founders think it's going to play out. And I say that in two dimensions. Number one. The company, historically, what we've seen is that the founders who think that they're directly competing with each other generally end up not doing so because one or the other of them changes strategies and then they diverge, which by the way is natural because it's like specialization. The company specializes and not competing. But the other thing that happens is two companies that were not competing that you're already invested in pivot into each other.

• 21:19Jack Altman?

  Yeah. And then they're mad at you.

• 21:20Speaker 00

  And then they're mad. Yes. And then they're very upset. You have to remind them that like that, you know, you didn't know that that was going to happen and it's not your fault. And then they're still upset. And so, so I would say the, the founders are not, the founders, and also we have very low predictability of terms of where the conflicts are going to be, but that doesn't ameliorate any of the emotion at the time. So it doesn't, it doesn't actually help. It doesn't help for us to explain to the founder, oh, don't worry about this guy who you think is directly competitive because he won't be in a year.

• 21:45Jack Altman?

  Yeah.

• 21:46Speaker 00

  Because you can't prove that. And the issue is, the issue is in the moment.

• 21:49Jack Altman?

  What does that leave your, how does that impact your strategy? Meaning like, if you know conflicts are this huge issue and you've got, you know, a big aggregate fund and so it's very important to catch winners. And then you invested in, you know, Blue Origin, which is really good, but SpaceX is, you know, bigger or whatever happens.

• 22:08Speaker 00

  Yeah.

• 22:09Jack Altman?

  What does that imply for your strategy when it comes to like, should we, you know, doing seeds and As and things like that versus like, say, you know what, let's just wait till like the D. Let's have D be our early stage.

• 22:20Speaker 00

  That's right. So the most obvious thing you do is you're just like, oh, we just need to wait because we need, we need to wait for clarity.

• 22:24Jack Altman?

  Just don't deal with this whole issue.

• 22:25Speaker 00

  Right. Just wait, just wait. Keep, just keep delaying and keep delaying until it's obvious what the, what the answer is.

• 22:29Jack Altman?

  If it's big, it's going to be really big. So we can buy later.

• 22:31Speaker 00

  But then the problem with that is, all right, now you're out of the venture business. Right. Because now you're doing, as you, as you said, now you're basically doing series Ds. Now you're a pure growth investor. And by the way, there are very good pure growth investors, but like our determination is to stay a top end venture investor.

• 22:43Jack Altman?

  Yeah.

• 22:44Speaker 00

  Because we think that that's kind of the whole point.

• 22:45Jack Altman?

  Why is it so important? Is it just because it's what you like? Or is there a strategic reason that it's important to stay doing early?

• 22:50Speaker 00

  So we've always wanted, I mean, that's the way we've always thought about it is we've always wanted to kind of be the founder's best partner and like to be, to be the one who's like the closest in, the one that can really be relied upon, the one that's going to be around for the longest amount of time, the one who they can really trust.

• 23:03Jack Altman?

  And it only happens early.

• 23:04Speaker 00

  Yeah. Like it's, yeah, it's your, it's your early guys. And so it's hard to insert after that.

• 23:08Jack Altman?

  Yeah.

• 23:08Speaker 00

  And then look, the other thing is like, there are great growth. Firms that do invest later and have done very well, but I, we just think there's so much information at the early stage. Like, so for example, when we, when we make a growth investment, because we have the active venture business that we have, by the time we make a growth investment, you know, we have either invested in the company for several years, or at the very least, we've met with them repeatedly over time. And so we, we just, we end up with just like enormous amounts of, of information. And then the other thing, by the way, is, you know, there's, there's, there's kind of time arbitrage, which is, you know, sometimes the right, the right answer is just like, okay, just invest in SpaceX or whatever later on. But sometimes the answer is no, there's actually a new thing, you know?

• 23:41Jack Altman?

  Totally.

• 23:41Speaker 00

  Do you invest in the MySpace growth round or the, you know, the Facebook, the Facebook seed round? Like, and if, if, if you're not in the early stage, you, you won't know that because you won't see the, you won't see the early things.

• 23:50Jack Altman?

  Yeah.

• 23:50Speaker 00

  And then, by the way, the other thing I'd just say is financially, one of the, one of the things people say that is inaccurate is they say, if you're running a big fund, you're not going to have the time to spend on the early stage opportunities because you can't justify it for putting the money. That's actually not true in venture because the aggregate dollar return opportunity at early stage is just as high as any growth investment. Right? Because if you get the right venture investment and you can make $10 billion on the upside case, it's definitely worth my time to spend with. So I spend as much time as I can with early stage founders, you know, for that reason.

• 24:16Jack Altman?

  So the barbell, there's, you know, there's big on one end, there's something sort of like me on the other end. Selfishly, I'd love to know, like, you know, I would assume you think it's better to be the big version, but you know, if you were conditioned on needing to be me at the small end of the barbell, like, how would you approach it?

• 24:32Speaker 00

  Nope. They're both good. They're both good. This is the thing is they're both good. They're both good. And if I were for some reason not doing this, I would immediately do what you're doing. Right? So.

• 24:38Jack Altman?

  Okay, that's good to hear.

• 24:39Speaker 00

  Yes, 100%. And then, and then I would say, I, I actually invest this way. So my liquid assets are basically tied up in either A16Z funds on the one side, or I run a very aggressive personal investment, investment program in early, early, basically angel and, and early stage seed funds. And it's because I believe in the barbell. I believe in the barbell so much. And so, but the conflict thing I wanted, I wanted to explain because that, that's the issue. So the, the, the big firm, like we do seed investing, it's just, we have this problem every single time. We're looking at a seed investment, which is like, are we really fully convicted that this is going to be the winner?

• 25:07Jack Altman?

  Even at seed, it creates a conflict before a board.

• 25:10Speaker 00

  There's debates. There's, there's always debates on this. It's like, you know, do the seed ones care as much? Do the growth ones care as much? Do the crypto ones care as much? What I'd tell you is it's not a logical question. It's an emotional question and we're just very. Sympathetic to the founder that needs to be able to

• 25:22Jack Altman?

  Yes.

• 25:23Speaker 00

  Justify their, you know,

• 25:24Jack Altman?

  You also definitely can't ask while you're like, if somebody asked me while they were making the investment, hey, is it okay if we invest in a conflict in a couple of years? I'd be like, what are you talking about?

• 25:31Speaker 00

  You know, we've done these things. We've tried that. We used to have this thing. We used to have this separate branded thing called A16C seed. And we were like, well, we have a different conflict policy on this and it's a great in theory, but it's like, no, it's A16. And so the way I think about it basically is like, the more successful you are as a, as a, as a venture firm, the bigger the issue this is going to be. Cause the more the people that you were investing in are going to care.

• 25:49Jack Altman?

  Yeah.

• 25:50Speaker 00

  And so it's, it's just, it's like the downside of success, but like success, yeah, right, right. The only people who like, the only investors you don't care whether they just know is if they, if they literally, if you don't care what they think about anything, right? If they, if they just don't matter at all and everybody knows that they don't matter at all. So, so, so, so there's that. So, so, so therefore it can be simultaneously, both of these things are true. Number one is we still, we, we definitely do lots of early stage investing and we will do, we will do, we do make seed bets. But it's just also true that we can't structurally for, for this, we cannot do all of the seed investments that we would like to do. In fact, we can't even do a tiny fraction of them. It's just like, it's strategically, we just, structurally, we just, we just can't do it. And so, and again, this goes back to the barbell. So, so that means structurally, it was the same reason why Amazon can't give you the champagne, you know, experience, right? It's the same thing. They can't, they're not set up for it. They can't do it. It's not a scaled strategy.

• 26:35Speaker 00

  And so what has to happen is there has to be the other side of the barbell. There has to be the specialization and intense focus and deep relationship.

• 26:42Jack Altman?

  Yeah.

• 26:43Speaker 00

  Um, right, uh, thing. And that's, and that's the role of the angel investor and the, and the seed investor. And that's, and of course in startups, that's incredibly important because that's the most formative, right? Fought time in the life of these companies is when they're first getting started, right? And as, as you know, right, half the time, these are people who haven't, you know, they haven't started a company before, they haven't run a company before. Some of them haven't had a job before.

• 27:04Jack Altman?

  Yeah.

• 27:04Speaker 00

  And so like they, they need to learn a lot and they need people to work with them on being able to do this. And they need to figure out how to actually, you know, do these things. And so there, there have to be, and there are like incredibly high quality seed investors, angel investors, um, on that side of the barbell. The, the, the big firms presumably, you know, if, if we succeed, we succeed by generating large numbers of aggregate dollars and a very good, you know, percentage return. The seed investors have, have this perpetual opportunity to just absolutely shoot the lights out.

• 27:29Jack Altman?

  Yeah.

• 27:29Speaker 00

  Right on upside. And you can, you know, you know, there are seed funds that generate like 200x, 300x returns.

• 27:34Jack Altman?

  Yeah.

• 27:34Speaker 00

  Right. And so these are both good strategies. They're both adapted to the current reality of the market. There's just two things that fall out of that. One is the death of the middle, which is it just doesn't make sense to have the old fashioned, you know, series A, series B, six GPs, 300 million dollar funds sitting on San Diego Road, waiting for people to walk in the door.

• 27:51Jack Altman?

  Yeah.

• 27:51Speaker 00

  Like those days are over and those funds are, you know, those funds are shutting down. Like that, that model is going away. And then the other thing that happens that causes some of the tension is this, what does a successful seed investor do, right? He raises more money and wants to become a venture investor.

• 28:03Jack Altman?

  Right.

• 28:04Speaker 00

  Right. But then he, he goes, but then you're, you're, you're going from one side of the barbell back to the middle and you're creating that same problem again. And I think that's where the tension is coming from.

• 28:12Jack Altman?

  I also feel like the mechanic that happens a lot of times is when you grow the fund, the only you, you know, you, you raise a huge fund and then you start deploying it into things just because you've got to deploy at some pace. And so the threshold for, I've got to deploy 400 million this year and I only see 700 million dollars worth of investable things. I'm going to do four sevenths of them versus, you know, presumably if you only had to do one seventh of it, you would, you know, you'd pick better, hopefully.

• 28:37Speaker 00

  Yeah.

• 28:37Jack Altman?

  Which I think is a huge we can't.

• 28:38Speaker 00

  I think that's part of it, but I think the related thing is your competitive set has changed. And, and what we, what we find with seed investors who migrate up and then regret it later, what we find is what they didn't realize was their competitive.

• 28:46Jack Altman?

  So, right. Cause now they're going for bigger, more competitive rounds against you and Sequoia.

• 28:50Speaker 00

  Yeah. All of a sudden, okay. Now you're competing for.

• 28:52Jack Altman?

  50 million dollar, be good luck.

• 28:54Speaker 00

  Right, right. Exactly. And so it's just like, and, and look, like, again, a market fundamentalist, if you have a better value proposition than Sequoia, you should go, you should, you should go off of that.

• 29:01Jack Altman?

  Right.

• 29:01Speaker 00

  But I just, I would not, I would not accidentally end up competing with Sequoia for series A. Like I would just say, that's a bad way to live.

• 29:06Jack Altman?

  Yep.

• 29:06Speaker 00

  And I think that's what hap, that, what, that is what has happened to a bunch of the seed funds that have gotten larger.

• 29:10Jack Altman?

  Why is it so rare for somebody to break through and get, I mean, you did it. And that's one that happened in the last 15 years. Maybe there's a couple of others, maybe, but why is it as rare as it is? It seems like almost more rare than a new big company.

• 29:24Speaker 00

  Yeah.

• 29:24Jack Altman?

  In a way.

• 29:24Speaker 00

  Yeah. That's true. In fact, our analysis actually, when we started was there actually hadn't been, I think there had been two firms, Andy Reckle, actually.

• 29:32Jack Altman?

  I mean, Thrive also.

• 29:33Speaker 00

  So Thrive was, yeah, they were after us.

• 29:34Jack Altman?

  Yeah.

• 29:35Speaker 00

  I mean, they've been great, but, but before, before us, in the, in the 30 years before us, we think that there were only two new VCs that actually punched through to become top tier.

• 29:44Speaker 00

  In, in other words, VCs that were not either firms that were built in the sixties and seventies or firms that weren't derivations of those firms.

• 29:49Jack Altman?

  Founder's fund?

• 29:50Speaker 00

  No, no, no, no, no. The founder's fund started at actually around the same time we did.

• 29:54Jack Altman?

  Okay.

• 29:54Speaker 00

  They, they were a little bit earlier, but around the same time. But I mean, over the preceding like 50 years.

• 29:58Jack Altman?

  Okay.

• 29:58Speaker 00

  Seven Rosen. You won't even

• 30:00Jack Altman?

  No.

• 30:00Speaker 00

  This is sort of the thing. You won't even recognize these things.

• 30:02Jack Altman?

  I need to read a book or something.

• 30:03Speaker 00

  So Seven Rosen was the venture firm that famously funded Compaq Computer, which was the big winner. And then they went on to become a successful firm. This guy Ben Rosen,

• 30:09Jack Altman?

  Yeah.

• 30:09Speaker 00

  early leader in the space. And then there was a firm called Hummer Windblad, uh, which was a software specialist firm in the late eighties, early nineties. Um, those are the only two that punched into the, the, the top end while they were operating.

• 30:19Jack Altman?

  Wow.

• 30:19Speaker 00

  Neither one of them, you know, sustained it.

• 30:21Jack Altman?

  But they got there.

• 30:22Speaker 00

  They got there for a bit, but that was like the success case.

• 30:24Jack Altman?

  Yeah.

• 30:24Speaker 00

  So this is a little bit like Elon looking at history of the car industry and saying, you know, Tucker Automotive.

• 30:28Jack Altman?

  Yeah.

• 30:29Speaker 00

  In the nineteen fifty's.

• 30:30Jack Altman?

  So rare.

• 30:30Speaker 00

  It's very, very rare.

• 30:31Jack Altman?

  So why, why is it that rare?

• 30:32Speaker 00

  Two reasons I think it's rare. So number one, um, there, there's the intimate reason for it. And then a sort of macro reason for it. Intimate reason for it is just it like you're going to have this incredible, as the founder, you're going to have this incredibly intimate experience, you know, very close trust relationship uh, with whoever you're working with. And it's like, you know, can you reference them, you know, do, do they have a history of and track record of the kinds of behavior? Um, that you need and the kinds of insight, you know, that you need. And it's just like, it's very hard to do that from, it's very easy for an existing firm that has a long track record of success to prove that. It's very hard. If you don't, so that's, that's like the close in reason. But then the other reason goes back to the way the world is changing is we always believe the thing that you want from your venture firm is power.

• 31:11Speaker 00

  So the thing as a startup that you want is you want them to like fill in all the missing pieces that you don't yet have when you're starting a company that you need, you need to succeed. And, and so you need power. And so you need power. That means like you need the ability to be able to like actually go meet customers and have them take you seriously. Uh, you need the ability to go get publicity and like, you know, major, you know, channels, you know, used to be media and how it's podcasts, um, and be able to like get taken seriously. You need to be able to be taken seriously by recruits, right? Cause there's thousands of startups recruiting for engineers. What makes yours stand out? I, I sometimes describe it as venture firm is providing a bridge loan of a brand.

• 31:42Jack Altman?

  Until you have your own brand that's big or bigger, you know, for your own space than the VC, you're borrowing your VC's brand.

• 31:47Speaker 00

  Exactly. And then that has been very effective for a long time. And that was how we looked at it when we were founders.

• 31:52Jack Altman?

  That's why you did media from the beginning?

• 31:53Speaker 00

  Yeah, oh, that's one of the, yeah, one of the, it's one of the reasons. Yes, but a very, very, very powerful one.

• 31:57Jack Altman?

  Yeah.

• 31:57Speaker 00

  A very, very major one.

• 31:58Jack Altman?

  Yeah.

• 31:59Speaker 00

  And then, by the way, you also need ability to raise downstream money, right? You're, you're, you're gonna have to need to raise money again and.

• 32:04Jack Altman?

  So they either need a lot of money or they need to be connected to a lot of money.

• 32:06Speaker 00

  Yeah, exactly. Right. Exactly. And so you, you just.

• 32:08Jack Altman?

  Better if they just have it.

• 32:09Speaker 00

  Yeah.

• 32:09Jack Altman?

  It's like being full stack.

• 32:10Speaker 00

  Well, then, by the way, now you're getting also like, again, you, you think like tools companies just never got into like, for example, politics, right? Or just, let's just say global affairs, global, global events, like what's happening with, you know, like what's happening? How do you navigate the world, right? How do you navigate Washington? You know, the, when the regulators show up and they want to kill you, like, how do you navigate that? Or you're like, it's again, in some, you know, giant fight with the EU or what? Like, so, so the, especially these full stack companies, they're, they're, they're getting involved in like very complicated macro political geopolitical situations, like much more early. And they have to like, in some cases, they have to like escalate up to like, you know, senior government officials, head of state. You know, major heads of sovereign wealth funds, they need to get to, you know, the, the, the CEOs of major companies.

• 32:51Speaker 00

  You know, how do you get to the CEOs? You know, you're, you're a new AI, you're just gonna get, you're a new AI company and you're trying to redefine, you know, visual production for movies. How do you get to the studio heads?

• 32:58Jack Altman?

  Yeah, right.

• 32:59Speaker 00

  The studio heads just don't have time to meet with a thousand startups. So where are they gonna meet with you? Right? So, so basically it's, it's projection of power. And this has been one of our, one of our theories, how we built our firm is you optimize for maximum amount of power in order to be able to give the startups access to it, right? Both the startups that are already in your portfolio, but also the startups that don't even exist yet, right? And, and, and again, and this goes to why the scale thing matters so much. It's just like, all right, there's just, there's a scale aspect of power. There's a big difference between being able to get to everybody who matters and not.

• 33:26Jack Altman?

  Why is it rare for people to be able to accumulate power even if they were, like, let's say everybody was trying to do it. It's not like everybody could do it. What, what's the cause of the rarity to be able to build enough power in that sense?

• 33:37Speaker 00

  It's in a certain way, you have to want to. And so we met with the, we, we met with all the GPs of all the top firms, basically, when we were starting out. Cause we wanted to, you know, see who we could be friends with and it worked very well in some cases and not, not well in other cases. But one of them told us, this is a GP at a top firm in 2009. And he said, yeah, the venture business is like going to the sushi boat restaurant, all right? And so the sushi boat restaurant, it's a sushi restaurant where they've got the boats, right? It's got like a, they've got like a water.

• 34:01Jack Altman?

  Like a conveyor belt.

• 34:02Speaker 00

  Conveyor, right? And the little sushi boat comes by. And there's a tuna roll and there's a, you know, shrimp roll and there's this or that. And you, and, and he said, basically, you just sit on St. Hill Road.

• 34:10Jack Altman?

  And you're like, we're gonna crush these guys.

• 34:11Speaker 00

  And, and, and the startups are gonna come in. And he said, you know, if you miss one, it doesn't matter, cause there's another sushi boat coming up right behind it. And he's just like, you just sit and watch the sushi go. And every once in a while, you reach into the, into the thing and you pluck out a piece of sushi.

• 34:24Speaker 00

  Like, what the hell?

• 34:25Jack Altman?

  That's funny.

• 34:25Speaker 00

  Like, in what industry is?

• 34:28Jack Altman?

  Two thousand nine or something?

• 34:29Speaker 00

  Two thousand nine, yeah. Like, that was a very common, this again is the mid, this was the mid-sized venture. One of the reasons, when, when, when, when I came, like, look, in nineteen ninety four.

• 34:36Jack Altman?

  It might have kind of been like that.

• 34:37Speaker 00

  It was, it was. When I came to Silicon Valley in nineteen ninety four, I had never heard the term venture capital. I didn't even know the thing existed. And then, as my business partner Jim Clark explained it to me, and I was like, there are guys, like, they're just sitting there waiting to give you money.

• 34:47Jack Altman?

  But you see this and you're like, this is gonna get eaten alive.

• 34:50Speaker 00

  Of course, this is absurd. Like, the minute anybody takes this seriously, it's all gonna change, right? And so it was this very clubby cartel, you know, basically, kind of thing. And again, it was, it was fine as long as the ambitions of the industry were constrained. And then, but then again, look, the, the, the tools companies, they didn't need all the power. They didn't, they needed some of the power, right? But they didn't need all the power. You know, they weren't dealing with, like, governments, right? Or, or, you know, these sort of big macro issues, um, you know, at least, you know, in the early years. Well, okay, so here's another thing that's happened, is just the world is globalized. Like, so startups thirty years ago, you would spend your first decade just in the US. And then you would start to think about Europe and global expansion. And, and now you just, you have to think about being a global company upfront, because you're gonna, if you don't, like, you, you, other people are gonna do it.

• 35:28Jack Altman?

  Yeah.

• 35:28Speaker 00

  Right? And so you, you just, you have to chin up, like, as an entrepreneur, like, the expectations are much higher than they used to be.

• 35:34Jack Altman?

  Maybe one final question on this topic of fund size, and then I want to go to AI. What do you think, and I know you've thought about this a lot, what do you think is the limiting factor for the creation of a lot more really big companies? Do you think it's founders? Do you think it's capital? Do you think it's market maturity? Do you think it's underlying tech stuff? Like, if you had to pinpoint the one or two things that you think would allow for there to be way more big companies, like, what is it?

• 36:02Speaker 00

  So there's sort of the holy trinity of venture startups, which is, you know, people, market, and technology. And I think the answer is sort of all three. And the way I would describe it is, there is some limiting issue with just market size, just how many markets are there? How big are they? How, how ready is the market to take something new? Then there's the technology question, which is, you know, when is the technology actually the, the, like, for the venture perspective, technology moves in stair steps, right? And so things become possible in the world of smartphones that just weren't possible. You know, you couldn't do Uber with, when everybody had a laptop, you had to wait till they had phones.

• 36:32Jack Altman?

  Yeah.

• 36:32Speaker 00

  Right? And so technology moves in a stair step. You get these, you know, paradigm shifts, platform shifts, and, and those just, they come when they come.

• 36:38Jack Altman?

  Yeah.

• 36:38Speaker 00

  And until they come, you, you can't do it. And then, and then the people side, you know, and this is the one that, you know, I say, you know, vexes me the most, which is like, okay, like, how do you just get more great, great founders?

• 36:48Jack Altman?

  Yeah.

• 36:49Speaker 00

  Right? And I think part of that is, you know, you, I, I think there is definitely a training thing that is real and getting people into the right scene in the right way. And like the thing that my commentator does, or the thing that the Teal fellows do, like, th- those are real things. And those help a lot, but also, you know, there is an inherent, you know, there are just certain, there, there, there are not infinite number of people running around who have the.

• 37:09Jack Altman?

  You probably figure there's a lot of people who could have built big companies who haven't though, and hopefully.

• 37:13Speaker 00

  A lot, a few.

• 37:14Jack Altman?

  Yeah, I don't know.

• 37:15Speaker 00

  Some.

• 37:15Jack Altman?

  Some, I don't know, some number. But they must be people who are just like in academia or government or edu- who are just doing something completely different, who if they were attracted to startups, would have built a big company.

• 37:25Speaker 00

  So yes, but then the other question is like, well, okay, then why didn't they? Why, why didn't they do the things required to get themselves in that position?

• 37:29Jack Altman?

  Well, it could have been then like 2001, it was just like, too many people were too scared to do it or didn't know about it or whatever.

• 37:36Speaker 00

  But what does that tell you about the people who didn't do it?

• 37:37Jack Altman?

  Yeah.

• 37:38Speaker 00

  Is they, they were heard, I can tell you who didn't listen to that, right? It was Mark Zuckerberg.

• 37:42Jack Altman?

  Are there more good?

• 37:43Speaker 00

  But, but let's just, let's press this point harder for a moment, which is like, I always describe this as like, I always call this the test with capital T, which is like, okay, like, if you're not in position to do the thing, it's the fact that you're not positioned to do the thing meant that you flunked the, you've already flunked the test.

• 37:55Jack Altman?

  Well, I guess the question would be, are, do, is there a subset of people who could build Facebook? Who, other than being too scared to do it, would have had all the other ingredients? And so when everybody's not scared, you get more Facebooks.

• 38:08Speaker 00

  You know, there's a line in the movie, I, I actually never saw the movie, but there's a line in the movie. If you could have built Facebook, you would have built Facebook.

• 38:13Jack Altman?

  Yeah, yeah, yeah, that's right. That's a good line.

• 38:16Speaker 00

  Right? And so this is the thing, it's like, you know.

• 38:20Jack Altman?

  Are there more great founders today than when you were, let's say, in, like, do you think there are more now than there were 20 years ago?

• 38:25Speaker 00

  I believe there are, but like, I, maybe there's, how many more are there, right?

• 38:29Jack Altman?

  Is it five times more? Is it like 50% more? Or is it?

• 38:32Speaker 00

  Well, so like the number of wins is increasing, right? So then, so we, we used to talk about the 15, 15 year that matter. It's, that up numbers probably, if you do the analytics, probably up like 10x.

• 38:40Jack Altman?

  There's like 150 companies.

• 38:42Speaker 00

  150 companies a year that like really matter. And the reason is because there's so many more sectors now. Right. So you get in the industry maturation. And so kind of by inference, there kind of have to be.

• 38:49Jack Altman?

  You're saying the markets are better more than you're saying the founders are better.

• 38:52Speaker 00

  Well, maybe a little bit of both. Look, also, I think the founders are getting better. Part of the founders getting better is they have.

• 38:56Jack Altman?

  Better training.

• 38:57Speaker 00

  They're all in the, well, start with they're just all online. So, so when I showed up here in 1994, like literally, there's like three books in the bookstore. None of which were that great.

• 39:04Jack Altman?

  Yeah, it's not that the DNA is better. It's that they're now the ecosystem is matured to teach people better.

• 39:08Speaker 00

  Yeah. And like people come in and they've watched every video, you know, they've watched every episode, you know, your podcast. And like, right. And they, they just walk in knowing all this stuff. And then, yeah, look, and then look, the white commentator didn't exist. And, you know, that definitely helps. And, and, you know, Teal Fellows didn't exist, and that definitely helps. There's, you know, Brian, you know, has this great term, senior, you know, scene plus genius. Right. And so it's just like, you know, the individual genius on his own is always, it's always, you know, it's hard to get things done.

• 39:32Jack Altman?

  Yeah.

• 39:32Speaker 00

  Some people do, but it's difficult. It's more often, more often in a profession where you're seeing creativity happen.

• 39:37Jack Altman?

  Yeah.

• 39:37Speaker 00

  There's almost always a scene, you know, there's, you know, Silicon Valley is definitely a scene in that way. People, people come here and they just, they kind of get, I don't know, they just get better. They just, you know, they meet more people who are like them. They're able to aggregate together. They learn from each other. So, yeah, so look, the founders are getting better. There's more of them, but is, is there, does that mean there's now 10,000 as opposed to 1,000?

• 39:56Jack Altman?

  Yeah.

• 39:56Speaker 00

  I don't know. There's, and there's eight billion people on planet earth. Why are we, why are we debating whether it's 1,000 or 10,000?

• 40:01Jack Altman?

  Yeah.

• 40:02Speaker 00

  Right. And so I, and I just, I, that I don't know.

• 40:04Jack Altman?

  Yeah.

• 40:05Speaker 00

  I would hope over the next, you know, years and decades, we'll all figure out a way to go make sure we get everybody who can do it and get them to do it.

• 40:11Jack Altman?

  That's a good segue into AI. Do you feel that we're now at the beginning of what is like the new next important, you know, paradigm? Like, is this cloud but on steroids?

• 40:21Speaker 00

  Yeah, much, I think much, I think much larger and I'll, I'll explain why. So, um, yeah, so, so I described, you know, I described, I described before, right? You know, the, the, the triangle people technology market. The, the technology is ultimately the driver is the, the technological, for venture, the technological step function changes drive, drive the industry. And they always have, right? And so if you talk to the LPs, you can see this is like when, when there's a giant new technology platform, it's an opportunity to reinvent a huge number of companies and products that, you know, now have become obsolete and create a whole new generation of companies. Often, you know, generally end up being bigger than the ones that they, they replaced. And so, so, so, and the venture returns map this. And so it, it, they come in waves and the LPs will tell you it's just like, yeah, there was the PC wave, the internet wave, the mobile wave, the cloud wave. Like that was the thing. And then, by the way, when in venture, when you get stuck between waves, it's actually very hard.

• 41:05Speaker 00

  Right. Cause you've seen this for the last like five years, like for the last five years, it's like, how many more SaaS companies are there to? Like just we're just out of ideas, out of category.

• 41:14Jack Altman?

  Yeah.

• 41:14Speaker 00

  Done. Right. And so it's when you have a fundamental technology paradigm shift that gives you an opportunity to kind of rethink the entire industry.

• 41:21Jack Altman?

  It would have been very sad, by the way, if the AI breakthrough didn't happen. Like the state of venture would be sad, I think.

• 41:25Speaker 00

  Three years ago, this was, I mean, so when we were talking to our LPs three years ago, we're just like, basically like, you know, we're in, you know, we're, so Chris Dixon has this framing he uses, he calls it your adventure, you're either in a search mode or hill climbing mode. And in search mode, you're looking for the hill.

• 41:38Jack Altman?

  And it was search mode.

• 41:39Speaker 00

  Right. And, and three years ago, we were all in search mode. And that's how we described it to everybody, which was like, we're in search mode. And there's all these candidates for what the things could be. And AI was one of the candidates, right? It was like a known thing, but it hadn't broken out yet.

• 41:49Jack Altman?

  Yeah.

• 41:49Speaker 00

  In, in the way that it has now. And so we were in search mode. Now we're in hill climbing mode.

• 41:53Jack Altman?

  Thank goodness. Yeah.

• 41:53Speaker 00

  Big time.

• 41:54Jack Altman?

  Yeah.

• 41:54Speaker 00

  Yeah. And then, and then, you know, look, like I, I said, say on the technology breakthrough itself, I think a year ago, you could have made the argument that like, I don't know if this is really going to work because the L L M's, you know, hallucinations. Can't, you know, it's great that they can write Shakespearean poetry and hip hop lyrics. Can they actually do math? You know, can they do, can they write code?

• 42:10Jack Altman?

  And now obviously.

• 42:11Speaker 00

  And now, now they obviously can. And this, this, I, I think for me, the turning point, the moment for certainty for me was the release of O one. So O one from OpenAI, the reasoner, and then, and then deep seek R one, the, the minute I, the, the, and those happened kind of back to back. And the minute those popped out, you saw what's happening with that. And the scale and why that was around that, you're just like, all right, this is going to work because reasoning is going to work. And in fact, that is what's happening. Like it's, it's, it's, you know, and, and I would say just every day I'm seeing product capabilities, you know, I'm seeing new, new technologies I never thought I would live to see, like really profound. I actually think the analogy isn't to the cloud or to the internet. I think the analogy is to the invention of the microprocessor. I think this is a new kind of computer. And being a new kind of computer means that essentially everything that computers do can get rebuilt, I think. So, so we're, we're investing against the thesis that basically all incumbents are going to get nuked.

• 42:56Jack Altman?

  Yeah.

• 42:56Speaker 00

  And everything is going to get rebuilt.

• 42:57Jack Altman?

  Just across the board.

• 42:58Speaker 00

  Just across the board. Now, we'll be wrong in a bunch of those cases because some incumbents will.

• 43:02Jack Altman?

  But power law, the things that are right will be super right.

• 43:04Speaker 00

  Will be super right. Exactly. And then, look, the, the AI makes things possible that were not possible before. And so there's going to be entirely new categories.

• 43:11Jack Altman?

  By the way, is your mindset there that you should just bet on, like, obviously incumbents are going to win some percentage and startups are going to win some, but it's basically the dominant strategy is a venture capitalist to just plan to bet that startups are going to win it all and go for the power law?

• 43:24Speaker 00

  Yeah, that's right. That's right. And, and again, the reason is because remember two, two customer sets. The way the LPs think of us, the way the LPs think of us is as complimentary to all their other investments.

• 43:32Jack Altman?

  Yeah.

• 43:33Speaker 00

  And so our LPs all have like major public market stock exposure. Like they don't need us to bet on.

• 43:37Jack Altman?

  Yeah.

• 43:38Speaker 00

  Incumbent healthcare, you know, whatever company, right? They, they, they need us to fit a role in their portfolio, which is, you know, to try to maximize alpha based on, you know, based on disruption.

• 43:47Jack Altman?

  Yeah.

• 43:48Speaker 00

  Um, and, and then, and then again, and then just again, the basic math adventure, which is you can only lose one X, you can make a thousand X and you just like slam that forward as, as, as hard as you can.

• 43:56Jack Altman?

  So when you have a moment in time worldview like this, do you, you know, as a firm leader, did you give a directive that's basically like, hey, everybody, we need to deploy in this kind of way right now? Or do you just build a system that's always picking birds out of the flock from like the bottoms up and you're just like, well, they're smart. They're going to see that every opportunity is good. Like, how much is it like a top down guidance versus, you know, the market's just obviously good all around?

• 44:21Speaker 00

  Yeah. So we don't do, like I said, we don't do top down investment decision making. And so Ben and I aren't sitting saying, you know, we need to invest in category X or we need to invest in this company versus that company. And we, we don't run, we run, we have a legal investment committee, but we don't run a process where they come to us to get approval.

• 44:35Jack Altman?

  Because you're letting the leader of each group sort of make that.

• 44:37Speaker 00

  Yeah. And, and, and, and often in those groups, it's actually delegated further, further as delegated to the individual, individual GP or check writer. And, and the reason for that is we just think that the knowledge of knowing what's going on and which one's likely to win is going to be focused in the mind of the person who's closest to the specific thing.

• 44:50Jack Altman?

  But do you have like a risk slider? Are you like, hey guys, if you had a nine right now?

• 44:53Speaker 00

  So this, this, this is the funny thing. So venture is the only asset class in which the leaders of the firm are in position of trying to get the firm to take more risk, not less risk on a regular basis.

• 45:02Jack Altman?

  Exactly.

• 45:02Speaker 00

  Cause right, cause the, the, the natural orientation towards any kind of, anybody who's in an existing business, there's a natural organizational incentive to try to reduce risk because you want, you just want to like hold on to what you have and not upset the apple cart.

• 45:13Jack Altman?

  Yep.

• 45:13Speaker 00

  And so Ben and I are generally on the side of like, take, take more risk.

• 45:16Jack Altman?

  Mm hmm.

• 45:17Speaker 00

  Um, one of the, one of the, one of the applications of this is the old Sequoia adage, which is they say, when in doubt, lean in. Like, so, so for example, so you, you see this, I'm sure when you do it is it's just like, okay, there's this thing, there's this company that is like potentially very interesting, but like there are these issues, right? And it's just like, it's too early and this and that, and weird guy's got a weird background and this, that, that, and he's in a, you know, whatever, I don't know. Issues and you know, there's a hair.

• 45:39Jack Altman?

  Yeah.

• 45:39Speaker 00

  You know, there's hair on the deal. There's no hair on the GP.

• 45:41Jack Altman?

  That's funny. That's good.

• 45:42Speaker 00

  But there's hair on the deal. The founders tend to have really good hair. They're saying the deal and it's just like, all right, like, what do you, how do you calibrate that? Right? And, and, and the history, and again, the history of venture is when you see something that's very promising and there's a lot of hair on it. Sometimes when you invest, it's going to go to zero.

• 45:57Jack Altman?

  Yeah.

• 45:57Speaker 00

  Cause the hair is going to kill it. And then sometimes when you invest, it's going to be.

• 46:00Jack Altman?

  But it's like something where you're like, I love that. I hate that. It's much better than, yeah, everything's fine.

• 46:05Speaker 00

  100%. And this is the way we describe this is invest in strength, not in lack of weakness. Or another way to think about it is it's not good versus great. It's very good versus great. That's the, differentiating good from great is very straightforward. Differentiating very good from great is actually very hard. And, and again, the risk reducing way to try to do that is, as you kind of alluded to, would be kind of the checkbox thing, which was like, hmm, very good team, very good market, very good this, very good that. And then you have this other one where it's like, they've got six great things and nine like horrible things, right?

• 46:35Jack Altman?

  Yeah.

• 46:35Speaker 00

  Okay. Which is the better bet?

• 46:36Jack Altman?

  Totally.

• 46:37Speaker 00

  Usually.

• 46:38Jack Altman?

  Yeah.

• 46:38Speaker 00

  Usually it's the, it's the thing with, with the greater strengths. Statistically, by the way, this shows up in the return data from the LPs, which is the top decile firms have a higher loss rate than, than, than everybody else. It's just, which is called in, in baseball called the Babe Ruth effect, which is the home run hitter strikeout more often.

• 46:53Jack Altman?

  Yeah.

• 46:53Speaker 00

  So the top performing venture firms statistically tend to have a higher loss rate than the mediocre firms.

• 46:58Jack Altman?

  Right.

• 46:58Speaker 00

  And it's for this reason, they're willing to invest in the thing that is, just looks like completely nuts, but has that magic something?

• 47:04Jack Altman?

  Yeah.

• 47:05Speaker 00

  And so, so when, when Ben and I think about trying to get the, the team to take more risk, it's almost always, it's basically either that kind of thing, which is like, look, and it's what, and what you're doing is you're telling the person closest to it, go with your gut.

• 47:15Jack Altman?

  Yeah.

• 47:15Speaker 00

  If your gut tells you there's something magical here, like go ahead, it's okay. Cause we're going to have some losses. So it's okay to make the bet if it, if it, if it, if it breaks because of the hair, that's fine. And, but then, then the other form of risk we try to do, and I, I do this a lot, it's just, you know, I am trying to push the firm constantly is like, go earlier.

• 47:30Jack Altman?

  Yeah.

• 47:31Speaker 00

  Right? Cause again, that for, as we discussed earlier, the natural inclination is to wait, right? And it's like, no, no, no, go earlier. Like we do actually want to make these, these, these, you know, we, we will make some C bets, but we definitely want to make like a lot of A bets.

• 47:41Jack Altman?

  Yeah.

• 47:42Speaker 00

  And again, we're going to lose in a bunch of those, like we're going to screw those up and miss the winner or whatever. But like, we, we have to do that because we have to get into some of these things early. We have to, you know, get, get to the level of percentage, you get the A, build that kind of relationship.

• 47:52Jack Altman?

  Yeah. And I guess there's risk that's of the flavor of like, do things that are more asymmetric where there's hair, but also brilliance.

• 47:58Speaker 00

  Correct.

• 47:59Jack Altman?

  There's also the flavor that's just like. Well, something I struggle with is the deals where I just barely said yes and just barely passed. I'm like, I don't actually have that much confidence that I can tell the difference between those. There's another flavor of sort of be more aggressive, which would just say like, just do a higher percentage of those ones where you're like right on the line. Do you give that kind of guidance? Like, do you think like that too, where you're like, it's not just do the more out there things and we're swinging for the fences. But it's also like, let's just do a little bit more right now in general.

• 48:27Speaker 00

  Yeah. So we used to run this process we call the anti-portfolio and the shadow portfolio. And so the shadow portfolio was, we used to track this statistically for like the first five years, exactly in this point, which is every time we do an A, every time we do pull the trigger on an A round, let's put in the shadow portfolio, the other company we were looking at at around the same time that we didn't end up pulling the trigger on.

• 48:45Jack Altman?

  Yep.

• 48:46Speaker 00

  And then let's build up representative, like build up the, you know, the earth two portfolio.

• 48:49Jack Altman?

  I'm so curious.

• 48:51Speaker 00

  Well, so the good news is it turns out generally that the main portfolio did better than the shadow portfolio.

• 48:55Jack Altman?

  But the shadow portfolio, it was a good book.

• 48:57Speaker 00

  Did really well.

• 48:57Jack Altman?

  Yeah.

• 48:58Speaker 00

  Right? Exactly the point. And so, and then you're, okay. So then you're just like, okay, you know, that's smart. But you're just like, okay, obviously what does that mean? It means do them both. Right? And again, this goes to the thesis of like, how big should these firms get? It's just like, well, if you had the opportunity to do both, the portfolio and the shadow portfolio, you should do them both. What's the constraint on that as we discussed is complex.

• 49:14Jack Altman?

  Yeah.

• 49:15Speaker 00

  But generally speaking, you should try to do both.

• 49:17Jack Altman?

  Yeah.

• 49:17Speaker 00

  And by the way, this is the, this is the, I don't know if it was Josh or the other, the other podcast that they were talking about this, but you know, at least I saw a reference to like a statistical analysis of like win rate or whatever, return, a percentage returns or whatever, or percentage of wins. It's just like, it doesn't invent your math.

• 49:31Jack Altman?

  Doesn't matter.

• 49:32Speaker 00

  It doesn't matter. The thing that matters is were you in the next big thing as early as you could get in and buy as much as you did? Like, that's the only thing that matters because if you don't do that, you miss out on the thousand X gain. The one X losses don't matter. They wash right out.

• 49:45Jack Altman?

  Yeah.

• 49:46Speaker 00

  And so this idea that somehow there's some like virtue to being like a, you know, small, you know, we only make a few bets. We have a higher percentage.

• 49:55Speaker 00

  It does. Yeah.

• 49:56Jack Altman?

  How much is?

• 49:57Speaker 00

  I'm glad people think that that's a, I would like to encourage people to, to think that that's a virtue that they should shoot for.

• 50:02Jack Altman?

  It seems like it's very hard to assemble lots of, you know, very good productive GPs into the same firm. It's just objectively rare.

• 50:09Speaker 00

  Yeah, that's right.

• 50:09Jack Altman?

  You've done it, but it's like, doesn't happen very often.

• 50:12Speaker 00

  Yeah.

• 50:12Jack Altman?

  Do you, I guess my first question on this is, do you think of just finding greatness and then you can't really teach it much? You know, so you're basically just gonna like hire people and see how it goes? Or do you think that it's about creating the system and conditions in which people do great work and you can actually create good investors?

• 50:31Speaker 00

  Yeah. So I think it only works if there's a point, like if there's a reason why you would have the aggregation of GPs in the first place. And our answer to that is power, right? The, our pitch to GPs as to why they should join us as opposed to go to a smaller firm or start their own thing is if you come here, you just like plug into this engine. That's just like massively powerful. And so everything that you do, the effects of it are going to just be like blown completely out. Therefore, you're going to have a much higher win rate on the deals you want to do.

• 50:54Jack Altman?

  Yeah.

• 50:55Speaker 00

  Much more satisfying and you're going to be able to actually help the company a lot more.

• 50:57Jack Altman?

  And you'll probably see more companies anyway.

• 50:59Speaker 00

  Yeah.

• 50:59Jack Altman?

  So everything probably gets better.

• 51:00Speaker 00

  Yeah, that's right. That's right. And by the way, you know, some people want to have colleagues. Some people don't want to have colleagues, but some people do want to have colleagues and you'll be working with people you like and, you know, who care about the same things you do. So, but there has to be, there has to be a point to it. And of course it's, you know, it's on us to keep proving that, right? Cause you know, the devil's in the details of whether they'll actually, you know, buy that. But so far, so far, a lot of, a lot of really good, great people have. And then, yeah, and then the second part of the question is like, okay, who, who do you, who do you put in those roles? Historically, we had a, our old model was basically we only hired GPs. We don't, we, we were not developing and we could go through why that was the case. We changed that like eight years ago. We, we now develop our own GPs that we've evolved to where I think that's, that's working quite well. I think the answer to your question is, it's a two-part question is there's some level of just objective, you know, are they, are they, are they, are they good? Are they good at doing the job?

• 51:45Speaker 00

  Uh, here's a big thing we focus on when we evaluate them, which is, um, you know, it's fine to invest in a category like five years early or like whatever, something goes wrong, like that's fine. What's not fine is you invest in the wrong company and you could have invested in the right company.

• 51:59Jack Altman?

  Yeah.

• 51:59Speaker 00

  Like at the moment you made the investment, you could, you, you made the wrong decision in that moment with which one you should invest in and you, you could have known. And so it's like, did you do the work to fully address the market?

• 52:08Jack Altman?

  How do you handle the fact that like you don't know that until like six years later and now you're going back and you're like, hey, you made this mistake six years ago. This isn't going to work out now.

• 52:15Speaker 00

  So it's generally, so that is a giant problem. Um, and I would say that when we started, actually, when we talked to our, our friends in the business, what they said basically was, they said, number one, you, you don't know if somebody's a good GP for 10 years. Cause you don't have the return data. And then they said, number two is nobody ever wants to admit that they made a mistake. And so they never actually fire anybody.

• 52:30Jack Altman?

  Yeah.

• 52:31Speaker 00

  Uh, so what they do is they just keep them on the masthead and they just kind of gently like, you know, retire them out, but they, they sit and pollute. Uh, one of the guys running one of the big firms 20, 15 years ago told me his, he said, they hired a partner, he said, they had a partner, it's older firms. They hired a partner in 1984. Um, who was like a big deal at the time in the industry and you know, the LPs were very fired up about it. And he said, he then proceeded to just like nearly ruin the firm over the next 20 years.

• 52:51Jack Altman?

  That's crazy.

• 52:51Speaker 00

  Cause he said he wanted, he said, all of his investments were bad, but then it was even worse that he talked them out of all the other good investments they could have made. And he said, we couldn't get him out, you know, the reputational damage was too great. So, so this is a long run. And then by the way, a lot of these firms are partnerships.

• 53:04Jack Altman?

  Yeah.

• 53:05Speaker 00

  The problem with the partnership is, partnership sounds good.

• 53:07Jack Altman?

  Yeah.

• 53:08Speaker 00

  The problem is you, you end up with lots of internal dissension and then you, you can't make decisions.

• 53:11Jack Altman?

  Yeah.

• 53:11Speaker 00

  So this is a big issue. Um, I guess what I would say is like, for example, the thing I talked about, it's just like, it's, it's, it's not a, it's, it's a, it's a, what I just described as a process issue, not an outcome issue. Right. Which is like, are you, are you doing the work?

• 53:23Jack Altman?

  Yeah.

• 53:24Speaker 00

  Right. Like it, it's an actual job. Like you, you, are you doing the work? If you're not doing the work, it's relatively clear you're not doing the work and you're probably not doing the work, not just on one thing, you're probably not.

• 53:32Jack Altman?

  So you do try to really look at the inputs.

• 53:33Speaker 00

  Oh yeah, very much so.

• 53:34Jack Altman?

  Yeah.

• 53:34Speaker 00

  We evaluate the inputs just as much as the outputs.

• 53:36Jack Altman?

  What, what, what do you do as an investor? I'm sure you've had this at some point where the inputs are not particularly good. They hit this one outlier thing.

• 53:44Speaker 00

  Yeah.

• 53:44Jack Altman?

  The outputs are objectively now good.

• 53:46Speaker 00

  Yeah.

• 53:46Jack Altman?

  And so you're looking at that situation or the inverse.

• 53:48Speaker 00

  So this is the other, so this is the other part of it. The other part of it is I think there's just a subjective criteria for venture, which is just, are you good at it?

• 53:54Jack Altman?

  Yeah.

• 53:55Speaker 00

  And like, do you have taste?

• 53:58Jack Altman?

  Yeah.

• 53:58Speaker 00

  Which is unquantifiable.

• 54:00Jack Altman?

  This is one of the nice things about your model too, where like you, somebody gets to make a call versus in these partnerships, I think it would be very hard. When nobody gets to make calls like this, cause at some point someone has to just like make a determination on this stuff.

• 54:10Speaker 00

  Yeah, that's right. And then even, you know, and even who even made the call, you know, gets, gets lost. Yeah. So, so, so I think there's a taste thing. And then, look, I think there's also just like a net, there's like a network cohort branding thing, which is the startups come in waves. And it's not just new technology, it's also new people. And they, you know, they're new, these new scenes form and like, are you in the scene or not? Right? And if you're not in the scene, like, yeah, I can't fix that for you.

• 54:33Jack Altman?

  There's also a ton of path dependence, it seems like, where like, you make an investment that gets you in the scene. Now, other founders want to work with you because you invested in this really cool company. And then it just snowballs. And you're like, well, I can't go back and, you know, change history and get you into the snowball.

• 54:47Speaker 00

  Yeah. Yeah. Like, and again, this is what I can always call this, this is the test for the capital T. So there's just different versions of the complaint, right? So you, you, you wrote off the one of the founder who's like, well, I could have done this, but I wasn't in a position to do it. All right. That's your own fault.

• 54:57Jack Altman?

  Yep.

• 54:58Speaker 00

  There's another version of it, which is that this is sort of the anti VC narrative is the VCs are so arrogant, they don't see my unique genius. Right? Right. You know, the, you know, the VCs are only as a critique they apply against Paul Graham is, you know, he wrote this post on pattern matching and he always gets attacked. It's like, you know, he pattern matches. He's not looking for quality. He's just looking for pattern matching. And like, you know, it's like, founders don't match the pattern. It's like, it's like, at least raising is very important for, for founders to understand. Raising money from venture capitalists is the easiest thing you will ever do as a startup founder. We are sitting here with checkbooks, waiting to write checks.

• 55:28Jack Altman?

  Yeah.

• 55:28Speaker 00

  We are dying for the next person to walk in the door and be so great that they convince us to write the check. We don't care where they come from. We don't care what country they're from. We don't care what like, doesn't, none of it matters. It's just like, do they know what they're doing? Are they going to be able to do it? We're just dying for that. Everybody else they're ever going to deal with, candidates and customers and downstream investors and everybody else is going to be much harder to deal with than we are. And so if they can't pass the test of raising money.

• 55:54Jack Altman?

  Yeah.

• 55:54Speaker 00

  Like, they're not going to be able to do it. And it's just, and it's the same thing with the GP. Like, if you can't network your way in and make good investments, that's the job.

• 56:04Jack Altman?

  Totally. Okay. On that point, right? Cause there's going to be, I completely agree with what you just said about how it's, you know, the easiest part of building a company. There's going to be a lot of, you know, frustrated founders hearing that who are like, why can't I raise, you know, what's going on here? One of the things that I'm really, you know, you've done this for enough time now, when founders, you know, get a pass note, it's usually about something that's related to the market or the product or whatever. And a lot of times it's what you just said, which is that like, I just want the founder to be great.

• 56:33Speaker 00

  Yeah, right.

• 56:34Jack Altman?

  But nobody says that.

• 56:36Speaker 00

  Nobody says that.

• 56:36Jack Altman?

  And so they don't get the actual feedback. And so I guess this whole dynamic of like, people aren't giving it, because it's, you know, what they're saying is not, you're not great, but it's, I didn't perceive you as great, or something like that. Is there, is there some way for there to be a more honest, useful back and forth around this? Or is it just one of the impossible structural things? And founders just have to go around frustrated that people are saying the market's too small, or it's too big, or whatever. And really, what it is, is they're just not landing as great.

• 57:02Speaker 00

  I mean, it's like, yeah, I mean, I think, oh, you think your baby's beautiful, but I think he's really ugly, right?

• 57:06Jack Altman?

  Yeah, yeah.

• 57:08Speaker 00

  You know, this kid's gonna have a really hard time in life, man. He's really, he's really unattractive. It's really hard. It's really difficult. And by the way, you embedded two things in there. One is like, you know, one is, do they come across as good? Which in theory is fixable. But the other is like, yeah, some people are better than other people at doing this.

• 57:22Jack Altman?

  Definitely.

• 57:22Speaker 00

  And some people should not be starting, some people should, should actually just like be on a team.

• 57:26Jack Altman?

  Yeah, sometimes it's a correct assessment, sometimes it's an incorrect.

• 57:28Speaker 00

  Yeah.

• 57:28Jack Altman?

  There are some people who in the early days can't raise, you know, there's a lot of great people who now we all know are really great, but they couldn't raise a lot of money. So they must have shown up in 60 VC meetings as not great, or whatever.

• 57:36Speaker 00

  And look, VCs make, and again, yeah, exactly. It's like, we don't, we don't know.

• 57:39Jack Altman?

  Yeah.

• 57:40Speaker 00

  And we, we make lots of mistakes of omission, you know? So we, like I said, most, even the great VCs, most of the time are screwing up. And so that's all true. The, the thing I always tell founders is the, it's the, Steve Martin was asked this question about becoming a great standup comic. And he wrote this whole book, a great book called Standing Up, where he talks about this. And he says, the, the secret to being a great, he said, the secret is be so great they can't ignore you.

• 58:00Jack Altman?

  Yeah. If your business gets good enough and you prove that you're really good, you don't have to show up in the one hour with a VC as very impressive. You just proved it on the field.

• 58:08Speaker 00

  We're dying for people to come in and just be like, wow.

• 58:10Jack Altman?

  Yeah.

• 58:10Speaker 00

  Right? And just be like, I cannot believe how good this is. I can't believe how good this product is. I can't believe how much the customers love it. I can't believe how much this person has gotten done in a very small amount of money. So it's just the exact same thing if I'm a talented, I'm just dying for the, for the young comedian to get on stage and make me laugh.

• 58:22Jack Altman?

  I also think the founders who like really struggled to like raise a round or two, and then the business got working, I think there's like a, there's a real strength that comes out of that. So it's not the worst thing that ever happened.

• 58:31Speaker 00

  Yeah. No, no, no, look, having said that, like, there's breakage along the way, like, there, there are.

• 58:34Jack Altman?

  Yeah. Also, it sucks. It's like really unpleasant.

• 58:36Speaker 00

  It's really great.

• 58:37Jack Altman?

  Yeah, it had to happen. It sucks.

• 58:38Speaker 00

  Yes.

• 58:38Jack Altman?

  Yeah.

• 58:38Speaker 00

  So, but like, you know, like, I just say, like, I, you know, having been a founder, like, it's an, it's an incredible privilege to be in a, in a, in an industry and in a world and in a country at a time. When you can actually do this.

• 58:50Jack Altman?

  Yeah.

• 58:50Speaker 00

  Like, you know, in most of history, in most places, you just, this kind of thing can't happen. And then, you know, we are genuinely trying to find the anomalies, right? Like, our business is defined by anomalies.

• 58:59Jack Altman?

  It is true. The thing you said about it's like an audience that wants to laugh. It's totally true.

• 59:03Speaker 00

  So desperate.

• 59:05Speaker 00

  Can't wait for somebody to finally tell a good joke.

• 59:06Jack Altman?

  So on AI, I want to talk about not just the startup side, but maybe like, um, just some of your takes on like the broader lens of AI. I guess my first question is around AI going wrong. And I know this is like a very hard thing, but I'm just sort of for fun, really curious what you think. You know, the downside case that people are very afraid of would be something like AI embodies humanoid robots. And now we have a Terminator situation on our hand. It gets agency. We have a big problem. You know, that's one end of the spectrum. The happy path is that it's just like the sickest software that anybody's ever seen. And like, it's a tool that humans use and everything's great. Do you think about this? If so, do you have any opinion on it? Or are you just like, it's going to be what it's going to be?

• 59:45Speaker 00

  Just to start by saying it's an important new technology. Any important new technology is what they call dual use. It can be used for good things. It can be used for bad things. The shovel, it can dig a well and save your life. You can bash somebody over the head with it and kill them. Fire, you know, the computer, the airplane, you know, the airplane can take you on a most marvelous vacation with your new spouse. It can also bomb, you know, Dresden. Right? And so it's just, I mean, atomic power was the big one because atomic power could be unlimited clean energy for the entire world, or it could be your bombs. Right? As it turns out, there we just got the bombs. We didn't get the unlimited clean energy. And so, um, like that, that's just like generally true. These things, these things are double edged swords. The question is like, all right, like, what are you going to do about that? And are you going to like somehow put it back in the box? Are you going to somehow like try to constrain it and control it?

• 1:00:31Speaker 00

  The, the nuclear example is really interesting because the, um, you know, there was a, you know, very big concern around obviously nuclear weapons. And then, and then nuclear, there's a kind of big moral panic that developed around nuclear power.

• 1:00:40Jack Altman?

  I mean, we kind of messed up with that.

• 1:00:41Speaker 00

  Meltdowns, we very badly messed up with it. And, and what happened was the, the, the green movement in the sixties and seventies created something called the precautionary principle, which is now there, which, which the same kinds of people are now trying to apply to AI, which basically says unless you can prove that any technology is definitely going to be harmless, you should not deploy it. And of course, that literally rules out everything. Right? That's just like no fire, no shovels, no cars, no planes, no nothing, no electricity. And so, and that is what happened to civilian nuclear power, which is they just, they, they, they killed it. The story I tell on that is President Nixon in 1971, the year I was born, he declared, he saw the oil crisis coming, the Middle East. He declared something called Project Independence. He said the American needs to build a thousand nuclear power, civilian nuclear power plants by the year 2000, go completely clean, carbon,

• 1:01:23Speaker 00

  carbon zero, completely electric, cut the entire, you know, they had electric cars a hundred years ago. So it's just obvious you just cut over to electric cars at some point. And, and, and basically, we need to do that. And then, and then we're not entangled in the Middle East, and we don't need to go, you know, do, do all the stuff there. He then created the EPA and the Nuclear Regulatory Commission, which then prevented that from happening. They absolutely killed the nuclear industry in the US, right? And then the Germans are going through the new version of that in with Ukraine, which is they keep shutting, you know, Europe ex-France keeps shutting down their nuclear plants, which just makes them more dependent on Russian oil. And so they end up funding the Russian war machine, which invades Ukraine. And then, you know, they, they're always, they're worried now it's going to invade Russia. And so the, the social engineering, I would, I would say the moral panic and then the social engineering that comes out of this, the history of it, it's been quite bad, like in terms of its thinking

• 1:02:08Speaker 00

  and then in terms of its practical results.

• 1:02:10Jack Altman?

  Yeah.

• 1:02:10Speaker 00

  I think it would be a very, very, very big mistake to do that, you know, in AI.

• 1:02:14Jack Altman?

  And then to like regulate early.

• 1:02:16Speaker 00

  Yeah, yeah, absolutely. Hundred percent. To try to offset the risks in order to like, and then, and then cut up the benefits. So start with that as number one. Number two, I'd just say, look, we're, we're not alone in the, in the world. And we, we knew that before, but especially after DeepSeek, we really know that. And so there is a two horse race. This is shaping up to be the equivalent of what the Cold War was in the, in the, against the Soviet Union.

• 1:02:36Jack Altman?

  Yep.

• 1:02:37Speaker 00

  In the last century, it is shaping up to be like that. China does have ambitions to basically imprint the world on their, on their, their ideas of how society should be organized, and how the world should be run. And they obviously intend to fully proliferate their technology, which they're doing in many areas.

• 1:02:50Jack Altman?

  Yeah.

• 1:02:51Speaker 00

  And the world, you know, 50 years from now is going to be running on, you know, 20 years from now is going to be running on Chinese AI or American AI. Like, those are your choices.

• 1:02:57Jack Altman?

  You think that's how it'll basically play out?

• 1:02:59Speaker 00

  Yeah. Yeah. It's going to run on one or the other.

• 1:03:00Jack Altman?

  How will that play out? Like, let's say it's one or the other.

• 1:03:03Speaker 00

  So AI is going to be the control layer for everything. So, so my view is AI is going to be how you interface with the education system, with the healthcare system, with transportation, with employment, with the government, with law, right? It's going to be AI lawyers, AI doctors, AI teachers. Okay. Do you want your AI teacher, you want your kids to be taught by Chinese AI? Really?

• 1:03:23Jack Altman?

  Yeah.

• 1:03:23Speaker 00

  Like Marx, like they're really good at teaching you Marxism and Xi Jinping thought like, you know, like the cult, another way to put it is the culture's in the weights.

• 1:03:31Jack Altman?

  Yeah.

• 1:03:31Speaker 00

  Right. And so like how these things are trained and like who they're trained by like really, really deeply matters. And so, and by the way, this is already an issue in lots of countries because they're like, number one, they may not want Chinese AI, but number two, do they want, you know, super woke Northern California AI is another open question, right? So there are big questions on this. And so I, I just think like, there's no question, like if you had a choice between AI with American values versus the Chinese Communist Party values, I mean, for me, it's just crystal clear where you'd want to go.

• 1:03:55Jack Altman?

  Yeah.

• 1:03:56Speaker 00

  By the way, there's also going to be direct military, there's a direct military version of national security version of this, which is, okay, do you want to live in a world of all CCP controlled robots and drones and airplanes and cars?

• 1:04:06Jack Altman?

  I mean, is, is.

• 1:04:07Speaker 00

  Is that really what you want?

• 1:04:08Jack Altman?

  Warfare and defense, I guess, just is going to fully go AI over the next 20 years.

• 1:04:13Speaker 00

  I, I think that's very much true. And I think this.

• 1:04:15Jack Altman?

  Robots plus AI, basically.

• 1:04:16Speaker 00

  There's a signal, well, there's a signal, I mean, probably saw the Ukrainian attack on the, on the Russian airplanes, you know, so those are no autonomous drones. And then they were doing AI targeting of structural, the right structural points to be able to attack the planes and destroy the planes.

• 1:04:27Jack Altman?

  Yeah.

• 1:04:27Speaker 00

  Right. And so, yeah, a hundred percent that's happening. You know, this is a major issue with our defense doctrine with respect, for example, to, you know, potential invasion of Taiwan, you know, aircraft, Ukraine has been fielding AI piloted jet skis. So they take a jet ski, take a jet ski, put an autonomous pilot on it and they strap it with explosives. And, you know, you could send out 10,000 of those.

• 1:04:47Jack Altman?

  Yeah.

• 1:04:47Speaker 00

  Against an aircraft carrier, right? And by the way, and you could just keep sending them, right? Because there's no, there's no loss of weight. You just keep sending them until you get through. And so, yeah, so the, the entire, I think the entire, the entire supply chain, the entire defense industrial base, all of the doctrine of warfare, all changes, you know, the idea of human beings and planes or on submarines just doesn't make any sense. It's all going to change. And then the symmetry or asymmetry between defense and attack is going to change.

• 1:05:11Jack Altman?

  You use the word dual use and obviously with like previous technologies, you know, they got used. At some point, I'm wondering, does it blend from getting used to being the user? Like if, like a business, a benign business example would be if you could tell an AI, hey, I want you to, you know, hey, prompt, I want you to. You build me a software company, you know, make it roughly do this, serve these users and run that for the next five years and just wire me the money to this bank account. Go. And if, you know, if that worked at some point, you know, in the middle of those five years, like, you know, what's, is it doing its own thing? Are you telling them what to do? Does that also happen, you know, in like a warfare scale?

• 1:05:54Jack Altman?

  And I guess that's maybe like the thrust of, to me, where, you know, where it turns into something scary or particularly when you get into, you know, the embodied version in warfare where it's just like, you know, the prompt is like, hey, just, you know, fight this, fight this war for the next year.

• 1:06:08Speaker 00

  That's right. That's right. So, so the good news, the, the, the messy version of it is straightforward, I think, which is we, we have, you know, US law, Western law has a concept of responsibility, accountability. If you use a machine to do something illegally, it's your fault. It's your, that's your problem. But by the way, if the machine goes wrong for reasons having to do with not with you, then it's a manufacturing, it's a product liability issue. The manufacturer is liable, but if you use it, you know, if I buy a shovel and I bash you over the head with it, right? It's my, you know, yeah, the shovel killed you, but like I'm to blame. And so I think that your, your example of the autonomous corporation, I think legally, the legal system is perfectly prepared to deal with that. Which is, yeah, you, that was, it was your, your bot, you set the whole thing up, it's your fault.

• 1:06:46Jack Altman?

  Yep.

• 1:06:46Speaker 00

  And so there's, there's a natural, there's a natural constraint. Uh, I think there's a natural constraint on that. The, the most obvious version of the military version of the question is autonomous targeting and trigger pulling. Right? And so, and this has been, this has been an issue in drone warfare for the last like 15 years, which is, uh, is there a human in the loop on pulling the trigger? Right? So predators flying overhead, da, da, da, da, da, sees a bad guy. Okay. How is the decision made for the predator to launch the missile on the bad guy?

• 1:07:10Jack Altman?

  Yeah.

• 1:07:10Speaker 00

  And, and by the way, the way that worked for a very long time was, uh, it actually had to be an air force, uh, uh, combat pilot who would actually pull the trigger on the drone. Very specifically, even if he wasn't otherwise responsible for like operations of the drone, you'd still get somebody whose job it was to make those decisions in the loop. There are a lot of people in the defense field who are like, it's absolutely mandatory that in all cases, it is required for the human being to make the kill decision.

• 1:07:32Jack Altman?

  Yeah.

• 1:07:32Speaker 00

  And, and, and maybe that is the, maybe that is the correct answer. There's a very powerful argument as to why that should be the case, because it's the biggest decision that any human, that anybody can make. And even if you don't believe in like the Skynet scenarios, just the idea of a human being not being responsible for that decision.

• 1:07:46Jack Altman?

  Yeah.

• 1:07:47Speaker 00

  Sounds ethically, morally very scary. There is a counter argument. Which is human beings are really, really bad at making those decisions.

• 1:07:53Jack Altman?

  Yep.

• 1:07:54Speaker 00

  Right. And so.

• 1:07:54Jack Altman?

  Like the self-driving cars thing. If it's safer than a human driver, then like who's, you know, yeah, there will be accidents, but there's sure.

• 1:08:00Speaker 00

  Correct. And so every post-analysis of any combat situation that you read or any war later on, you discover all these shocking things. So one is friendly fire. Like there's just huge amounts of death caused by friendly fire, people shooting at their own troops. You see, they're confused. Number two is, you know, fog of war is just like, it turns out the commanders have very little idea what's going on. They, they had some battle plan and immediately go sideways. They don't know what's, they literally don't know what's going on. They're not making, they don't have the information to be able to make decisions. Everything's confusing. Number three, the physiological impact of stress, adrenaline. It's like, it's one thing to be on a shooting range, making these decisions. It's another thing to be like, you know, have like a severe leg wound coupled with, you know, adrenaline, you know, overload coupled with two hours of sleep the night before. And like, is the human, is even the highly trained person making the decision right?

• 1:08:44Jack Altman?

  Yeah.

• 1:08:44Speaker 00

  And then there's just like a more basic thing, which I think is like a World War II retrospective. It's something like in a lot of combat situations, it was estimated only like 25% of the soldiers even fired their rifles. Like just generally, a lot of people just like, don't act, right? And so anyway, so you, the more you look at this, you're just like, wow, the human being is actually really bad at this.

• 1:09:01Jack Altman?

  Yeah.

• 1:09:01Speaker 00

  And then you, and then all these other issues around collateral damage, you know, and they shoot, you know, accidentally shoot the civilian. And so, so yeah, you're back in the self-driving car situation, which is like, all right, if, if you had, if you, if you could, if you knew you could get better outcomes by having the machine make the decision, better, safer, less loss of life, less collateral damage. And so I, and I would say, I don't believe I have an answer to this, but I think that is a very fundamental question.

• 1:09:20Jack Altman?

  I guess this kind of actually feeds into the, the next topic, which to me is, um, I think like, tech has now gotten to a place where with the government and politics, like it's sort of now undeniable. It used to kind of be an underdog, but now for reasons like this and a bunch of others, it's just like too important to like, not be in the mix at like the national stage now, which I think has really like changed the dynamic even insularly for Silicon Valley. Cause now, you know, people are, you know, looking at what people are doing, not just like in tech, but pretty broadly now.

• 1:09:51Speaker 00

  Yeah, that's right. Yeah. So I would say, I deeply agree with that. Um, I believe it is mostly our fault. Um, like the, the current situation is mostly our fault in tech, which is there's an old Russian, old Soviet joke, which is you may not be interested in politics, but politics is interested in you.

• 1:10:04Jack Altman?

  Yeah.

• 1:10:04Speaker 00

  And so I think we, we, we, and I would include myself in this, I think we all got complacent, or a lot of us got complacent between like 1960 and 2010, that basically just said, we could just sit out here. We can do our thing. We can talk about how important it all is, but like it's never gonna, you know, these are never going to be big social or, you know, cultural or political issues.

• 1:10:22Jack Altman?

  Yeah.

• 1:10:22Speaker 00

  And we can just kind of get away with not being engaged. And then I, for all the reasons we've discussed.

• 1:10:26Jack Altman?

  You're saying, and then once it was undeniable, we weren't prepared?

• 1:10:28Speaker 00

  And then we weren't prepared. We weren't even, I would say remotely prepared. And then, and then they're using metaphor, the dog that caught the bus and the, the dog is being dragged behind the bus. Tailpipe in his mouth. He doesn't know what to do with the bus. And look, you know, geography, I think has a lot to do with this. We're 3,000 miles away. You know, it's just hard to get there. They don't come here very often. And, and yeah, so I, I guess I would say like, like it worked. Like we, we actually, we always wanted to build important things. We actually are building important things. There are obvious political, cultural, social consequences to them. If we don't engage, nobody's going to.

• 1:10:58Jack Altman?

  Yeah.

• 1:10:59Speaker 00

  And then, by the way, the other thing I'll say is, you know, it's not like there's unanimity even in the industry on a lot of these issues, right? And so there's, you know, I would say two giant divisions right now, big companies versus small companies.

• 1:11:09Jack Altman?

  Yeah.

• 1:11:09Speaker 00

  You know, there's, often do not have aligned incentives right now and aligned agendas. And then the other is, you know, like just on AI, obviously there's a big dispersion of views even in the industry.

• 1:11:18Jack Altman?

  I guess this probably goes to why it's important for, to some extent, at least some VCs to have relationships with the government. Because big tech has the resources to do it themselves. Small tech can't. And so if this is the state of the world, we actually, as an industry, need somebody to be doing that on behalf of little tech.

• 1:11:36Speaker 00

  Yeah, that's exactly right. That's why we're doing what we're doing.

• 1:11:39Jack Altman?

  Yeah. On media in particular, I thought it was really interesting. I can't remember how many years ago, but Bology many years ago started talking about like some fracturing about, you know, the, the sort of relationship between tech and the media was going downhill. I think this was mostly talking about media and inside tech, but I think probably also at the major publications and at sort of a larger scale. From my read as often, you know, I think this was right. And from where I sit, it seems like it did kind of continue to degrade the relationship. What's interesting to me recently is I've seen a little bit of life, you know, in the sort of tech publication stuff, but it's actually been from the inside. And so like Eric, who you just brought on, his GP is awesome. And he's been really good at doing this.

• 1:12:23Jack Altman?

  T B P M is really cool. And I don't think I've seen something like that pop up maybe ever inside tech. What's your read, I guess, within our bubble of like the sort of tech media relationship and, and where it's been?

• 1:12:34Speaker 00

  So my background in this is I, you know, I have a weird kind of history because of what happened in the nineties. But, you know, I started dealing with the national press and the tech press, business press in nineteen ninety-three, nineteen ninety-four. And I did an annual press tour to the East Coast, you know, probably a week out of each year, usually in the spring. And you know what that means is you kind of go around and you meet with all the publishers, editors and reporters, you know, cover everything. And I would say the basically the stretch from ninety-four to two thousand sixteen was generally like, I thought it was like a quite healthy, normal, productive relationship. You know, like they would run, you know, they would do investigative reporting and they would run stories I don't like. But generally, they, you know, the major publications in each of those categories were trying to understand what was going on. And we're trying to kind of be, you know, honest brokers and trying to, you know, kind of represent what was happening.

• 1:13:18Speaker 00

  And so that's what means we're like super interesting. They always wanted to learn. They always had tons of questions. They were super curious about everything that was happening. That was great until twenty sixteen. It was the spring of twenty seventeen that I went on the press tour and it was like somebody had flipped a light switch. And they were like across the board, like unbelievably hostile, like unbelievably, like completely and across the board, like a hundred percent sweep.

• 1:13:40Jack Altman?

  Do you know why?

• 1:13:40Speaker 00

  Absolute hostility. I think the obvious answer is that Trump, Trump, Trump got nominated and then got elected and then they blame tech for, for, for both of those. Now, by the way, there's, there are a bunch of other factors, including that that was when the, that was when the, it's actually the, the, there's a business side to it, which is there was the fear that the internet was going to eat the news business in the nineties. It actually didn't happen. And actually twenty fifteen, I think, was the best year in history for like revenues to like newspapers.

• 1:14:04Jack Altman?

  Yeah.

• 1:14:05Speaker 00

  And then it was really after twenty fifteen, social networking went big and then the, their businesses started to collapse. And, you know, they started having lots of layoffs and so that didn't help.

• 1:14:13Jack Altman?

  Yeah.

• 1:14:13Speaker 00

  And then, you know, look, they would say, look, that was also, you know, they would say, hey, smart guy, that's also when you started doing all these things that actually matter more, right? And so, you know, the, the, everything we've been discussing, like the tech industry changed. And so, you know, you're going to get a different level of scrutiny because you deserve it. You're doing different things now. The political thing was just a giant swapping factor and they, and you know, this is a big, you know, I don't want to get into the politics per se, but if you just, you know, it's, it's, this whole thing ran in parallel with everything. It's like in Jake Tapper's book about, you know, like, so it's just like they, they just, they, they got locked in on a mode of, of interaction. They just became very polarized.

• 1:14:46Jack Altman?

  Yeah.

• 1:14:46Speaker 00

  And very polarized and very lockstep. And you know, from the outside, you just you read it and you're just like, wow, these people, they're all like really wrapping themselves around an axle.

• 1:14:53Jack Altman?

  But I think one of the other hard things is as the truth has become more accessible by other people, you more often see something in the news that you know about and you're like, wait, that's super backwards. And then somebody posts about how backwards it is. And now, you know, you see a clip of, you know, some major publication and, you know, here's the truth and everybody can tell. And it's like, okay, so should we just believe the rest of it or not? And I think the truth fact checking went way up to a social media.

• 1:15:19Speaker 00

  That's right. And I would say there, you know, the cliche has been, and there's some truth to the cliche that social media is where lies spread. And there are some truths to that. There's a lot of lies spread on social media. But the other side of it is what you're saying, which I think is right, which is the truth spreads on social media. And so the way I describe it is, the social media is an X-ray machine. And exactly to your point, like anytime there's, and you see this in any domain of activity right now, is anytime there's a thing and there's just like evidence that it's just not the way it's being portrayed, it is going to show up, people are going to see it. And that is, there's this guy, Martin Curry, who wrote this book called Revolt of the Public in 2015. And he was a CIA analyst who did what's called open source analysis for 30 years, which was studying basically what was in newspapers and magazines for the purpose of political forecasting. And his prediction in 2015 in his book was that basically, social media was going to completely destroy the authority

• 1:16:02Speaker 00

  of all incumbent institutions. And the way that it was going to do that was it was going to reveal through this X-ray effect that basically, none of them deserve the credibility.

• 1:16:09Jack Altman?

  Do you think that's kind of happened?

• 1:16:10Speaker 00

  And I think that's exactly what's happening. And I think there's statistical evidence that's happening. Gallup polls, they do an annual poll now for 50 years on trust in institutions with every different kind of major institution, including the press, and all the all the numbers are collapsing.

• 1:16:24Jack Altman?

  In light of widespread social media, what would be the correct sort of function or role of like journalism?

• 1:16:32Speaker 00

  I mean, look, I'm a believer in like the original, I like the original idea, right? Like, I'm, I don't know, I'm a romantic. I like, I like what, I like what journalism says that it is. I would like it to be like that. I like what the universities say that they are. I would like it to be like that. I like what the government says that it is. I would like it to be like that.

• 1:16:47Jack Altman?

  Which should be just to like name it.

• 1:16:48Speaker 00

  Yeah, well, for journalism, it's just like, all right, number one, like tell us correctly and accurately what's happening. Actually, there's a, there's a conflict at the heart of the journalism question, which is that journalists say two different things. Because one is they say, you know, basically be fair and objective, right? And then the other thing they say is they say like, hold power to account. Or they'll sometimes say they have this phrase, they'll say, uh, uh, uh, comfort the afflicted and afflict the comfortable. And like, there's, there's inherent, like, are, are, are you, are you a, are you an objective truth teller?

• 1:17:13Jack Altman?

  Well, yeah, I was gonna say, that has nothing to do with the truth. It's just unrelated to the truth.

• 1:17:16Speaker 00

  Exactly. And so there was already a conflict at the heart of the industry. And there's, and there's a, there's a selection process for the people who go into journalism tend to be critical by nature. Right? They tend to want to be on the outside looking in to be critical because if they didn't, they wouldn't be journalists. They would, right? And so, so there is an issue there, but look like, do we need people to tell us the truth?

• 1:17:31Jack Altman?

  Yeah, we do.

• 1:17:32Speaker 00

  Do we need people to hold the powerful to account? Yes, we do. Like, I would like them to do that.

• 1:17:36Jack Altman?

  Do you think they can be like for-profit corporations and it work? Cause I mean, I think another problem is they're getting all their distribution on social media. Eyeballs are what drives the revenue. People want to, you know, stay, you know, so that also is unrelated to the truth. In fact, it's antithetical to the truth a lot of times.

• 1:17:53Speaker 00

  Yeah. So there's two, two, two mentalities come out of that. One is, yeah, the profit incentive warps it and you want it to not have a profit incentive so it could be true to itself. The other argument is if you don't like for-profits, you're really not going to like nonprofits.

• 1:18:04Jack Altman?

  Yeah.

• 1:18:04Speaker 00

  Because at least for-profits have like, at least for-profits have like a market test.

• 1:18:08Jack Altman?

  Yeah.

• 1:18:08Speaker 00

  At least there's like some discipline.

• 1:18:10Jack Altman?

  Nonprofit just becomes somebody's sort of like, this is my agenda. I'm going to do what I feel like now.

• 1:18:14Speaker 00

  Arbitrarily crazy.

• 1:18:15Jack Altman?

  Yeah.

• 1:18:16Speaker 00

  And then go arbitrarily nuts.

• 1:18:17Jack Altman?

  It does sound worse.

• 1:18:18Speaker 00

  Yes, and they're completely unaccountable. They're completely unaccountable, right? They're, in fact, in fact, it's the opposite. It's the opposite accountability because of the tech, because of the tax break.

• 1:18:26Jack Altman?

  Yeah.

• 1:18:26Speaker 00

  You, you were actually paid.

• 1:18:27Jack Altman?

  Yeah.

• 1:18:28Speaker 00

  As a donor to invest in the things that are the most unaccountable.

• 1:18:30Jack Altman?

  Interesting.

• 1:18:31Speaker 00

  Right? And so, and then they could spin into like crazy land.

• 1:18:34Jack Altman?

  Yeah.

• 1:18:34Speaker 00

  And they, and they, and they don't come back. They don't come back.

• 1:18:37Jack Altman?

  Yeah.

• 1:18:37Speaker 00

  There's a history here.

• 1:18:38Jack Altman?

  Yeah.

• 1:18:38Speaker 00

  They don't come back. And so.

• 1:18:40Jack Altman?

  It's weird because like the citizen journalism thing is like a helpful fact check. It's like good to have and sometimes, but it does feel like it's not quite sufficient to tell the full story on everything all the time. So I do think that there's an important role. I just feel like it's, it still feels like it's very in limbo right now.

• 1:18:56Speaker 00

  So here is a theory that would be a reason for optimism, um, which is the last eight years were basically. It was basically the human animal adapting to the existence of social media. It was basically the assembly of the brain and you slam eight billion people into a chatroom together and like it's just like, we're not used to it. We weren't wired for it. We're not evolved for it. And it's just like, oh my God, everything goes bananas.

• 1:19:16Jack Altman?

  Yeah.

• 1:19:16Speaker 00

  Marshall McLuhan, actually the great media theorist, he talked about this. He had this term called the global village is what happens when everybody gets networked together. And actually, what people miss about it is he didn't mean in a good way is because the nature of a village is basically gossip and innuendo and infighting and reputational destruction and civil war.

• 1:19:31Jack Altman?

  Yeah.

• 1:19:32Speaker 00

  Like, that's what happens in a village.

• 1:19:33Jack Altman?

  Yeah.

• 1:19:33Speaker 00

  Right? And so.

• 1:19:35Jack Altman?

  Which actually functions at a certain size.

• 1:19:37Speaker 00

  Yeah, like up to 150 people, you can kind of deal with that.

• 1:19:39Jack Altman?

  Yeah.

• 1:19:39Speaker 00

  You know, at the size of like New York City, it actually gets quite complicated.

• 1:19:43Jack Altman?

  Yeah.

• 1:19:43Speaker 00

  At the scale of the world, it's like a disaster.

• 1:19:44Jack Altman?

  It's a disaster.

• 1:19:45Speaker 00

  Right?

• 1:19:46Jack Altman?

  Yeah.

• 1:19:46Speaker 00

  But you could say, look, like, we went through this eight year period where like everybody went, just say, everybody went nuts. Everybody went nuts in like a thousand different ways. And then, but maybe that was just, we had to get used to it, right? Maybe we just had to adapt to it. And like, if you talk to, I don't know, if you talk to like young zoomers now, you know, a lot of the time they'll tell you, yeah, we don't take any of that stuff seriously.

• 1:20:01Jack Altman?

  Yeah.

• 1:20:01Speaker 00

  Like, I just, of course, you don't believe what you see on, you know, whatever TikTok.

• 1:20:04Jack Altman?

  Yeah, which is wild.

• 1:20:05Speaker 00

  It's just all ops. Like, of course, it's all ops, like, whatever, right? And they just have like, they're, they're.

• 1:20:08Jack Altman?

  I'm glad people know. It's just like, that's a crazy state of the world.

• 1:20:11Speaker 00

  Yeah.

• 1:20:11Jack Altman?

  Yeah.

• 1:20:12Speaker 00

  Yeah, exactly.

• 1:20:13Jack Altman?

  Is that probably how people feel about like the news too?

• 1:20:15Speaker 00

  Well, so this is the thing on the news. So then this is the other thing on the news, which is, was the news ever as we were told that it was? And so the, my favorite example of this is people always cite Walter Cronkite as being the great truth teller. And the thing that they cite, for you young people, he used to be on TV.

• 1:20:29Jack Altman?

  I've heard of him. I have not.

• 1:20:30Speaker 00

  He was this guy where he would show up on TV. Everybody would say, oh my God, he's going to tell you the truth. Like, he was like, he was like the voice of the truth. And, and the way that he built that reputation is because he, he went negative on the Vietnam War in 1968. In 1968, he came out and he said, the Vietnam War is unwinnable and we need to pull out of this. And he, they aired all these reports that showed that that was happening. Everybody said he's the guy who told the truth and hold power to account, you know, tell the truth. Well, it's just like, the problem with that is he went negative. The fact that he went negative on the war in 1968, right? He was positive on it before that.

• 1:20:56Jack Altman?

  Right? Exactly. So what did he know the day before he said that, that he wasn't sharing?

• 1:20:59Speaker 00

  Yeah. And like, and then by the way, what else happened in 1968, uh, which is the White House went from a Democrat to a Republican. So the Vietnam War was created by Kennedy and Johnson, and then it was inherited by Nixon in 1968. And isn't it convenient and interesting that he went negative on it when it became Nixon's war as opposed to being Kennedy's, Kennedy's and Johnson's war? And so then it's like, all right, like, what was actually going on there? What was happening in the preceding five years? And is, was he actually on a side the whole time? And then there's just the reality of it, which is I grew up in rural Wisconsin. We always thought the press was out to get us.

• 1:21:26Jack Altman?

  Yeah.

• 1:21:27Speaker 00

  Like, we always thought the press was like the coast, basically passing, sneering judgment on the center of the country. Like, we never believed like the stuff to start with. Um, and we were always like, bear, people, where I grew up, people are like, super resentful of the stuff in the media and how it portrays them. And so I think there's also like a more fundamental underlying issue here, which is, you know, objective truth is a hot, like, objective truth is a high bar.

• 1:21:45Jack Altman?

  Yes.

• 1:21:46Speaker 00

  People have agendas.

• 1:21:47Jack Altman?

  Yes.

• 1:21:47Speaker 00

  Maybe we just need to get all this out on the table.

• 1:21:49Jack Altman?

  Particularly in politics, objective truth is not really how a lot of, like, people like, oh, that's a lie. I'm like, well, it's not a lie. It's just like an interpretation of a situation that like I wouldn't characterize, but like, sure. It's something like that.

• 1:22:00Speaker 00

  And these are complicated topics, you know, the ordering of society is a complicated topic, right? And the functioning of the economy is a complicated topic, and it's just not so easy to understand. And so, and so I, I think part of it might, the optimistic, the optimistic view would be humanity adapting to being in the global village is basically just taking on a little bit of a more humble attitude. Basically saying, all right, look, there's not going to be, we're not going to have a lot of objective truth colors running around. We're not going to, but also at the same time, we don't want to be in a complete panic about everything all the time. And we need to kind of be able to, you know, take a deep breath, touch grass, be a little bit more skeptical, be a little bit more open, be a little bit more understanding. Right. And so, and so maybe we're starting, and by the way, I think that's happening. I, um, uh, I mentioned that Jake Tapper, without getting into partisan politics, but the Jake Tapper book.

• 1:22:39Speaker 00

  I would, I would happen to have went to a, an event that he did, he did this weekend, uh, out here and like, it's a, like, the, the, that book and the reaction to the book. And if you watch the interviews on YouTube and the, the crowd response to that book, like, it, it, it feels like people are just like, oh. Like, if, if we just take a step back for a moment from like all the intense partisanship of it all, like, there's actually some.

• 1:22:58Jack Altman?

  Yeah.

• 1:22:58Speaker 00

  Like, maybe we can get back a little bit more. I, I, I thought it was, that book is a very positive step forward towards just a little bit of a calmer approach on these things. And then, by the way, the other book I'd promote on that is, uh, the Ezra Klein book on, uh, on abundance.

• 1:23:09Jack Altman?

  Yeah.

• 1:23:09Speaker 00

  Which I think is, I think is a, you know, somebody who's supported a lot of Democrats for a long time. I, I think it's like the most positive, you know, kind of manifesto that's come out, uh, basically saying, you know, no, like, we, we need, you know, whether you're on the right or the left, like, we need to actually build things. And I think that's also a healthy moment. So.

• 1:23:22Jack Altman?

  Sort of related to this topic, a little bit adjacent, but I saw you talking about preference falsification recently. And I think this is like a super interesting topic in general, but particularly in the last, I don't know, call it five-ish years, I think a lot of preference falsification became made apparent. So I'd be curious first to hear a little bit about what you think happened over the last some number of years where these changes happened. Maybe we can start there and then I've got a follow up on it.

• 1:23:48Speaker 00

  Yeah. So preference falsification, just to sketch an outline, it's when people, it's actually, there's two different, there's two different elements of it. It's when people are required to say something in public that they don't actually believe, or they are prohibited from saying something in public that they do believe. Right? So again, so commission, omission, issues. And then the, the, the theory of it, there's this great book by Timor Karan on it. The, the theory of it basically is it's, it's easy to think about what this happens in the case of a single person, which is are you telling the truth? Or is there your public statements mirroring what you actually think or not? The thing that gets complicated is when that happens across a group or across a society. And the thing that happens is if there's widespread preference falsification of society, you not only have people lying about what they actually think or hiding it, but you also, everybody loses the ability to actually know what the distribution of views are.

• 1:24:32Jack Altman?

  Yeah.

• 1:24:32Speaker 00

  Right? And, and he, and he says, basically, if you look at the history of political revolutions, a political revolution happens when a, a majority of the country realizes that a majority of the country actually agrees with them. And, and, and they didn't realize it. Right? So that whatever system they were in had convinced them that they were in a very small minority. And then you get a, at some point, there's, you know, the boy who points out-

• 1:24:50Jack Altman?

  It's like a catalyst.

• 1:24:51Speaker 00

  There's a catalyst, catalytic moment. And then, and then basically there's a, what's called a preference cascade.

• 1:24:55Jack Altman?

  Right.

• 1:24:56Speaker 00

  And then, and then all of a sudden-

• 1:24:57Jack Altman?

  It's like the correct prisoner's dilemma's box to live in, all of a sudden flips, everybody realizes that at once.

• 1:25:01Speaker 00

  Yes, exactly. And, and he said, you can see this in, you can see this like in a crowd, like a speaker, controversial speaker, where basically like you'll have a controversial speaker, and then there'll be silence in the crowd, and then one brave person will start clapping. And that person is like a severe peril because if they're the only asshole standing up clapping, like that's it, they might get killed.

• 1:25:18Jack Altman?

  Yeah.

• 1:25:18Speaker 00

  But then i- if it cascades, then a second person starts clapping. And then a third and a fourth and a fifth, and then you get the snowballing effect. And then the entire auditorium is clapping. And then that's everybody realizing that they actually are on the side of the majority, which they didn't realize before. By the way, this is what comedy, this is actually why comedy is what comedy does well. Because people can't control the involuntary response of the actor.

• 1:25:38Jack Altman?

  Yeah, exactly.

• 1:25:38Speaker 00

  And so when you get an entire group of people in a room laughing out loud, it's something that individually they will all swear they can't help it. They can't help it.

• 1:25:44Jack Altman?

  That's a great point.

• 1:25:45Speaker 00

  And then the stress relief from that, because they all know that they're part of it. They've rebonded the community, right? You're actually back in being a part of a community. It's just such an incredibly powerful feeling.

• 1:25:54Jack Altman?

  Yeah.

• 1:25:55Speaker 00

  Yeah, okay. So, so it's very easy to apply this theory to like the Soviet Union, right? Or like the, you know, the, you know, the Eastern Europe, you know, in the Cold War or whatever. You know, Mao's China. It's a lot, you know, trickier to apply this theory to, you know, your current society. I believe that, you know, we've lived in an era of like intense preference falsification. I think the last five years, probably the last 10 years were like way more intense preference falsification than the preceding 40 at least. You know, probably going back to, I don't even know. I have to go for sure back to the 60s, if not like the 1920s or something to find out an analogous period. I think this period is characterized both by people who were saying things they didn't believe, but critically not saying things they did believe.

• 1:26:35Jack Altman?

  Yeah.

• 1:26:35Speaker 00

  I think there are many reasons this happened. And look, this has happened many times in history. And so a lot of people want to say this is caused by social media.

• 1:26:42Jack Altman?

  Right, well, when you phrase it the way that you said, it actually makes a lot of sense when it's just if people are going to be in a part of this prisoner's dilemma matrix, it actually just gets caused by nothing other than itself. Like it doesn't really need an outside catalyst for people to get into the wrong box.

• 1:26:58Speaker 00

  That's true, although there needs, I know it's a good question. Does there need to be some kind of oppression? Does there need to be some kind of motivation for the cascade to have started where people end up in that box? It's a social pressure, so.

• 1:27:08Jack Altman?

  Yeah.

• 1:27:09Speaker 00

  Specifically, I think the thing that happened the last five years was

• 1:27:12Jack Altman?

  I guess it needs to be a high stakes enough issue for it to matter. Otherwise, it's just like, who cares whether you think like the clouds are pretty or not?

• 1:27:18Speaker 00

  Yeah, that's right.

• 1:27:19Jack Altman?

  So at least has to be that.

• 1:27:20Speaker 00

  Yeah. And the way I think Tim O'Connell would describe it is it needs to have like political, social, cultural salience.

• 1:27:25Jack Altman?

  Yeah.

• 1:27:26Speaker 00

  Like it needs to get to something fundamental about how the communities are organized. You know, we call that politics, but you know, this predates even the concept of politics. Right. And so, and by the way, look, like you don't even necessarily want to say that all preference falsification is bad because like, you know, I don't know that you want everybody out telling the truth about everything.

• 1:27:41Jack Altman?

  I don't think you do. I think at least in like a like social, like a lot of social graces come from people saying it's great to meet you. And I didn't feel like saying it was great.

• 1:27:48Speaker 00

  Your baby, I believe your baby is very attractive.

• 1:27:50Jack Altman?

  Exactly. So some of it's right.

• 1:27:51Speaker 00

  Yeah.

• 1:27:53Speaker 00

  Yeah. But, but, but, but yeah, you, as your point, you get wedged in this box. And so I think the specific thing that happened, so the good news is preference falsification in a lot of totalitarian societies was administered at the point of a gun. You say the wrong thing, they shoot you.

• 1:28:05Jack Altman?

  Yes.

• 1:28:05Speaker 00

  That for the most part is not what happens in our society. What happens in our society is the sort of nonviolent version, which is ostracized, canceled, ostracized, reputation is ruined, fired, become unhireable, lose all your friends, lose all your family, can't ever work again.

• 1:28:18Jack Altman?

  Still really bad.

• 1:28:19Speaker 00

  Still really bad.

• 1:28:21Jack Altman?

  So you said it sounds pretty bad.

• 1:28:22Speaker 00

  Very bad. And so, and it just turned out, I think part of, you know, the optimistic view would be part of adapting to the existence of social media was social media just turned out to be, among other things, a very effective channel to destroy people reputationally. Right. And this is the social media mobbing effect, right? We're now all familiar with it.

• 1:28:38Jack Altman?

  And you think that helped create basically more false preferences?

• 1:28:41Speaker 00

  Yeah.

• 1:28:41Jack Altman?

  Yeah. Do you think it also unwound them?

• 1:28:43Speaker 00

  Well, so this is, this is the thing. And this is maybe the thing that happened in the 2024 election, right? Which is just like, oh, okay. Like we don't have to live this way anymore. You know, certain, certain views become safer to say out loud. This also the censorship regime, like we lived under a very specific censorship regime.

• 1:28:56Jack Altman?

  Even in tech for 2024 election versus 2016, regardless of what you think, you know, who you wanted, at least everybody can agree that it was taboo to support Trump in 16 and it was not taboo to support Trump in 2024 in tech. And so something changed there.

• 1:29:11Speaker 00

  Something changed. Peter had this great line in 2016. He said, uh, he was one of the only people, you know, maybe the only person in tech who was actually pro-Trump in 2016. And he said, He said, this is so strange. He says, this is the least controversial contrarian thing I've ever done. He's like, half the country agrees with me.

• 1:29:23Jack Altman?

  Yeah.

• 1:29:24Speaker 00

  He's like, I've never had a point of view on anything else in my entire life where half the country agrees with me.

• 1:29:27Jack Altman?

  Yeah.

• 1:29:28Speaker 00

  And yet somehow this is such a heresy that I'm like the only one.

• 1:29:31Jack Altman?

  Yeah.

• 1:29:31Speaker 00

  Right. And so, yeah, so, so, so there was that, that definitely changed. And then I just think in general, like I said, I think they're optimistically, you just said there's a process of adaptation, right? Where it's just like, all right, we're just like, if, if we all just decide that we're just not gonna like live life by mobbing and scapegoating and personal destruction and just because somebody's offended by something doesn't mean it's gonna destroy, you know, if somebody says one thing, it's gonna destroy their lives. Like, we don't, you know, you don't have to do that.

• 1:29:56Jack Altman?

  Do you think it's basically been unwound now? Or do you think there are still a lot of falsified preferences?

• 1:30:01Speaker 00

  I would say it's radically different than it was two years ago. I would say there's still a lot of falsified preferences. I would, but, but again, I would say, I think probably in any healthy society, there's lots of falsified preferences. So.

• 1:30:12Jack Altman?

  Do you have any guesses for something that is currently falsified that will become unfalsified? Or is too hard to call it?

• 1:30:17Speaker 00

  Sure.

• 1:30:18Jack Altman?

  Yeah.

• 1:30:18Speaker 00

  Sure.

• 1:30:19Jack Altman?

  Okay, great.

• 1:30:19Speaker 00

  Well, of course, but it's far too dangerous to say.

• 1:30:21Jack Altman?

  All right, fine. We'll move on. Yeah. Damn. Gosh.

• 1:30:24Speaker 00

  But again, when you ask that, that is a very key question. Here, here's what I encourage, if, um, break the fourth wall.

• 1:30:28Jack Altman?

  Yeah.

• 1:30:29Speaker 00

  Here's what I would encourage people to do. Here's the thought experiment to do. Just write down two, in the middle of the night with nobody around, doors locked.

• 1:30:35Jack Altman?

  Write it down on a piece of paper and let's pull it out in 10 years?

• 1:30:37Speaker 00

  Well, write down a piece of paper, two lists. What are the things that I believe that I can't say? And then what are the things that I don't believe that I must say?

• 1:30:46Speaker 00

  And just write it down.

• 1:30:47Jack Altman?

  Yeah.

• 1:30:47Speaker 00

  And I bet, you know, if, if you're a reasonably introspective person, that, you know, the quote unquote NPCs can't do this. But like, if you're a reasonably introspective person.

• 1:30:54Jack Altman?

  Yeah.

• 1:30:55Speaker 00

  You know, most of us probably have 10, 20, 30 things on both sides of that ledger, right? And, and again, most of those are things where you've got, you know, I don't know, like, you don't want anybody ever see that piece of paper.

• 1:31:04Jack Altman?

  Maybe five or 10 years from now, we'll be back and everybody can reopen their papers and we'll see. And it'll be safe to say whatever people wrote down at that point.

• 1:31:10Speaker 00

  Exactly.

• 1:31:10Jack Altman?

  Okay. Um, a few final topics I wanted to ask you about. Um, one is, you're probably in a spot to be giving just sort of life or career advice to young people a lot now, both in general, but also maybe specifically with like AI and like the current set of tech, you know, changes right now. What do you most often find yourself repeating to a really smart, you know, recent grad about, you know, if they're like, what should I be doing with my career? If they get the chance to ask you that?

• 1:31:38Speaker 00

  To start with, I, I never took any advice. So.

• 1:31:41Jack Altman?

  Advice, yeah, there's something there, but a lot of people do.

• 1:31:44Speaker 00

  So maybe, maybe.

• 1:31:45Jack Altman?

  Okay, fair enough. That's like the, you know, if you could have built Facebook thing.

• 1:31:48Speaker 00

  Maybe, yeah, maybe, maybe the best people probably shouldn't take any of that.

• 1:31:51Jack Altman?

  Okay, well, the rest of us.

• 1:31:52Speaker 00

  But I would just say, especially for young people, I, you know, and again, I say this, like, people are very different. Like, I, I, I believe very deeply, some people, some people are very happy being in the middle of chaos. Some people are very unhappy. Okay, some people are very unhappy being in the middle of chaos and they will actually get themselves out of a chaotic situation as fast as they can. Other people love chaos so much that if they don't have any, they will create it, right? And so like, you have, you know, there's, there's a level of understanding here, you, you know, like, not everybody should be in like a high growth, high risk tech company because it might just be too nuts.

• 1:32:21Jack Altman?

  Yeah.

• 1:32:21Speaker 00

  So I don't think there's a one size fits all, you know, kind of thing.

• 1:32:24Jack Altman?

  Yeah.

• 1:32:25Speaker 00

  At all. Having said that, let's narrow it. So young, young person who wants to kind of be in tech, I think a big part of it is, I think it's, as I was saying, it's like run to the heat, like, or the, or the, the seed thing we were talking about. Like, where, where are the interesting things happening? And that's a conceptual question, and it's also like a place question and a community question, network question.

• 1:32:43Jack Altman?

  Yep.

• 1:32:43Speaker 00

  And so, you know, run to that as fast as you can. And it doesn't mean, you know, running to the fads, but it means like trying to identify.

• 1:32:49Jack Altman?

  Trying to get into those hot network or ideas or projects, basically.

• 1:32:53Speaker 00

  Yeah, yeah, exactly. And look, there's a geographic component to that, and I think we all kind of wish it wasn't the case, but there really is. And, and, and, and AI, AI, I think, has very successfully unwound the geographic dispersion of what was happening in tech.

• 1:33:05Jack Altman?

  In a huge way.

• 1:33:06Speaker 00

  Huge way. It's kind of slammed everything back into the California. I, I don't think that's good, really, for a lot of reasons, but I think it just is the case. And so I would say, like, you know, if you're going to like do AI, get here. Yeah. And then look, and then the other thing is, it's the Steve Martin thing, be so good they can't ignore you. Like, time spent on the margin, getting better at what you do is almost certainly better than most of the other uses of time. The, the old adage of you are the average of the five people you spend the most time with is also true. You want to do that, so you want to, you know, pick, pick, pick that carefully. And then I guess what I would say is, when I, when I talk to, you know, people about like what kind of company to go to, there are certain people who should only be in a raw startup. And there are certain people who should only be at a company. I think the general advice is the, it's, it's the high growth companies. It's the companies that we would describe as between like, being between like series C and series E probably or something.

• 1:33:50Jack Altman?

  Yes.

• 1:33:50Speaker 00

  Where it's like, they've hit product market fit, they've hit the knee in the curb and they're on the way up. On average, that's going to be the best place to go because you're not going to have the downside risk of a complete wipeout, usually.

• 1:33:59Jack Altman?

  Yeah.

• 1:34:00Speaker 00

  And then people who get into that position, like at those high growth companies, if you're talented, you can pick up new responsibility very quickly.

• 1:34:07Jack Altman?

  Yeah. Okay. Next is your Andrew Huberman thing that I see on Twitter. Like what's, I actually can't completely parse what it is. What's going on with that?

• 1:34:14Speaker 00

  So we have a completely fake beef. We're good friends. We're very good friends and are actually neighbors, neighbors in Malibu. And I've been on his podcast and like, we're very good friends, but.

• 1:34:23Jack Altman?

  But you don't follow his protocols?

• 1:34:24Speaker 00

  I don't do anything that he says. I don't do a single thing that he says. With one, one exception we'll, we'll talk about. But yeah, I don't, I don't, I don't do any of it. You know, he says maintain a regular sleep schedule.

• 1:34:33Jack Altman?

  You're all over the place on sleep?

• 1:34:34Speaker 00

  All over the place. He says always get up, you know, get up, you know, see sunlight as, as a count. I'm like, no, I don't want it to see sunlight. That's the thing I want to do. And I wake up to see sunlight. You don't drink caffeine for the first two hours of the day. It's like NFW. It sounds like torch. It sounds like being in a North Korean concentration camp. Like I can't even imagine.

• 1:34:48Jack Altman?

  You drink a lot of coffee?

• 1:34:49Speaker 00

  A lot of coffee. Hot plunge, cold plunge thing. I'm not.

• 1:34:52Jack Altman?

  The cold plunge is miserable.

• 1:34:53Speaker 00

  I'm not doing any of that shit.

• 1:34:54Jack Altman?

  Yeah. You think it's good for you though? All the?

• 1:34:56Speaker 00

  Oh, I'm sure it's, I'm sure it's good for you. I'm just not, I'm not going to do any of it. It all sounds just completely miserable.

• 1:35:00Jack Altman?

  That's good.

• 1:35:01Speaker 00

  The one thing that he says that I, I do is stop drinking alcohol. And I would say I am, I am physically much better off as a result and I am, but I'm very bitter and resentful.

• 1:35:11Jack Altman?

  It is.

• 1:35:11Speaker 00

  For him specifically.

• 1:35:13Jack Altman?

  Why'd you, why'd you do that one?

• 1:35:14Speaker 00

  Cause it's much better for you physically. Like it, it, it really is. Like it fixes sleep and energy problems.

• 1:35:19Jack Altman?

  So it's the most tolerable of all of these. And you're like, fine, I'll do one.

• 1:35:21Speaker 00

  Well, no, that's completely intolerable. It's horrible. I don't recommend it. Like I think it's a horrible way to live.

• 1:35:25Jack Altman?

  Yeah.

• 1:35:26Speaker 00

  Like I'd much rather be drinking alcohol.

• 1:35:27Jack Altman?

  Does he think even like a glass of wine at night is bad?

• 1:35:29Speaker 00

  He does. Yeah.

• 1:35:30Jack Altman?

  Just all of it?

• 1:35:30Speaker 00

  He did one of the great, he's actually had a, I think, big influence on the culture. And this is very, in seriousness, this is very positive.

• 1:35:36Jack Altman?

  Yeah.

• 1:35:36Speaker 00

  I think, at least for health, as he did this big, big thing. There's all these, so what happened is there's all these alcohol, there's all these fake alcohol studies, basically. You know, it's like red wine. And then it's like all, you know, it's heart protective and all this stuff. And it basically, it basically turned out that really sick people either drink a lot or nothing. And then healthy people tend to drink a little.

• 1:35:53Jack Altman?

  Yeah.

• 1:35:54Speaker 00

  Right. So, so, so one is healthy people tend to be very well disciplined.

• 1:35:57Jack Altman?

  Right. And then I guess there's that correlation or causation without.

• 1:35:59Speaker 00

  It's all in the sample set. So, so, so it turns out there's no health benefits to alcohol. That was all completely fake. In other words, just because.

• 1:36:06Jack Altman?

  I see.

• 1:36:07Speaker 00

  Healthier people drink a moderate amount of alcohol does not mean that drinking a moderate amount of alcohol makes you healthy.

• 1:36:13Jack Altman?

  I see.

• 1:36:13Speaker 00

  Michael Crichton called this, wet streets cause rain.

• 1:36:16Jack Altman?

  Yeah.

• 1:36:16Speaker 00

  Wet streets, rain.

• 1:36:17Jack Altman?

  Yes.

• 1:36:18Speaker 00

  Right.

• 1:36:18Jack Altman?

  So for some reason unhealthy people stop drinking.

• 1:36:20Speaker 00

  Unhealthy people stop drinking because they're like in the hospital. Their doctor says if you keep drinking, you're going to die.

• 1:36:25Jack Altman?

  Yep.

• 1:36:26Speaker 00

  Or by the way, they drink a lot, right? Because they're, right? And then there's this, there's this fundamental thing, which is healthy people tend to be very disciplined. But, but discipline is not, discipline is, there's like a big inherent component to it.

• 1:36:35Jack Altman?

  Yeah.

• 1:36:36Speaker 00

  Right? And so people who are, people who are disciplined who drink moderate amounts of alcohol also do moderate amounts of exercise, also experience moderate amounts of stress. Also, you know, you go to the doctor on a regular basis. They, they take the medication they're prescribed. They live all aspects of their, their health in it.

• 1:36:49Jack Altman?

  I guess it'll take a while to see, but it feels like it should be a good thing that Andrew and other people have gotten so many more people interested in health.

• 1:36:56Speaker 00

  It's good for, it's good physically.

• 1:36:58Jack Altman?

  Right. Yeah. Might not be good mentally.

• 1:37:00Speaker 00

  No, I'll try, I'll be funny again. It's, it's catastrophic emotionally.

• 1:37:04Jack Altman?

  Yeah.

• 1:37:04Speaker 00

  It's, it's made me a much less happy person.

• 1:37:06Jack Altman?

  You think, are you actually, you think that?

• 1:37:08Speaker 00

  Well, so I really, it's a, it's the, it's the, alcohol is a time, thousands of years, people have been using it, number one, to fundamentally relax.

• 1:37:16Jack Altman?

  Yep.

• 1:37:17Speaker 00

  And then, and then there's a very important social lubricant component to it.

• 1:37:20Jack Altman?

  Yeah.

• 1:37:21Speaker 00

  You know, it's like.

• 1:37:22Jack Altman?

  And the de-stressing could be healthy. So.

• 1:37:24Speaker 00

  Let's just say maybe, maybe it's not accident. The birth rate is crashing, right?

• 1:37:26Jack Altman?

  That's.

• 1:37:28Speaker 00

  I don't think Andrew would argue, you should not live your life purely maximizing for just physical health. That'd be a miserable way to live. I mean, it's like, what are you going to do? Just like never leave the house?

• 1:37:36Jack Altman?

  Yeah.

• 1:37:36Speaker 00

  Never take a risk crossing the street. And so, you know, he certainly doesn't judge people for drinking moderate amounts of alcohol. He just says, look, scientifically, you have to understand it is a poison. Now, having said that, as you know, speaking of scenes, as you know, the displacement thing that's happening is people like our world, they're not drinking alcohol, instead they're like doing hallucinogens.

• 1:37:54Jack Altman?

  Why?

• 1:37:55Speaker 00

  Is not necessarily an improvement.

• 1:37:57Jack Altman?

  As you, Jack, know very well.

• 1:37:59Speaker 00

  Yes, yes. Tell us about your latest ayahuasca trip. You're so much different than you were last time. Your personality has clearly completely changed.

• 1:38:07Jack Altman?

  I do feel different.

• 1:38:08Speaker 00

  So, so the other theory would be there's a law of like conservation of drug use, which is every society is going to pick some drug.

• 1:38:13Jack Altman?

  Probably right.

• 1:38:14Speaker 00

  And abuse it. And apparently in our case, it's going to be like LSD and mushrooms.

• 1:38:17Jack Altman?

  Seems like a good one.

• 1:38:19Jack Altman?

  Okay. Okay. My last question. When I tweeted out a request for questions, I got almost ratioed by one question. So I'm going to ask this one like nearly verbatim. It was by an anon named Signal. If you were frozen for a hundred years and you woke back up and you looked around, what would be the piece of data that you'd want to know? That would tell you whether or not your dominant worldview turned out to be correct in the fullness of time?

• 1:38:46Speaker 00

  Yeah. So I will pick a very unfashionable answer to this. And I would say United States GDP, just like straight out US GDP. Because I would say embedded in that is the question of technological progress, which is if you have rapid technological progress, you'll have rapid productivity growth, which means you'll have very rapid GDP growth. If you don't, you won't have rapid GDP growth. So you'll see that in the GDP numbers immediately. You know, number two is, you know, well, number two would be just like our markets are great with organized. And the US is the best market. And so, you know, is that, is that going to keep working? And then third is, is the US going to be a great country?

• 1:39:18Jack Altman?

  And you are along all of this?

• 1:39:19Speaker 00

  I am very long all three of those. I am very convicted on all three of those. But, you know, if I'm wrong about something big, it's, it's going to be something in there and it will show up in that number.

• 1:39:27Jack Altman?

  Mark, this is amazing. Thank you so much again.

• 1:39:28Speaker 00

  Good. Awesome. Thank you, Jack.