American Dynamism (with Katherine Boyle)

We sit down with a16z General Partner Katherine Boyle to discuss investing in “American Dynamism”, why it’s so important and why now is the right time to pursue it. Katherine has a fascinating background, beginning her career as a reporter at The Washington Post before entering the VC world first at Founders Fund, then General Catalyst and now a16z. Her perspectives don’t fit neatly in any box — political, economic or otherwise — and we have a great conversation exploring them. Tune in! *Links:* - Katherine’s post on Building American Dynamism: https://future.com/building-american-dynamism - Marc Andreessen’s It’s Time to Build: https://a16z.com/2020/04/18/its-time-to-build - Katherine’s Substack: https://boyle.substack.com *More Acquired:* - Get email updates https://www.acquired.fm/email and vote on future episodes! - Join the Slack http://acquired.fm/slack - Check out the latest swag in the ACQ Merch Store https://www.acquired.fm/store! _Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions._

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

• 0:00Ben Gilbert?

  I think this is our first time doing video in hotel rooms.

• 0:03David Rosenthal?

  I know, I know. It'll be funny.

• 0:06Ben Gilbert?

  And the funniest thing is David and I are in hotel rooms down the hall, recording in different rooms so we get better audio quality.

• 0:14David Rosenthal?

  Man, doing live in-person events again is awesome, but yields a whole new level of complexity.

• 0:21Ben Gilbert?

  A whole new level. All right, let's do it.

• 0:24David Rosenthal?

  All right.

• 0:41Ben Gilbert?

  Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert and I am the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.

• 0:55David Rosenthal?

  And I'm David Rosenthal and I am an angel investor based in San Francisco.

• 1:01Ben Gilbert?

  And we are your hosts. David, this should be a very fun, I should, it's funny I say should be, we recorded this already. I know it was a fascinating conversation.

• 1:12David Rosenthal?

  We are speaking to you from the future. We had a great, great fun conversation here with my good friend Katherine Boyle, who is just a wonderful investor. She's a general partner at Andreessen Horowitz, where she leads their American dynamism practice. We dive all into what that means, why this is an important vertical, both for venture investing and technology and the world and for America, but also for Andreessen, why they decided to do this. Her background, her story is fascinating. She was a reporter at the Washington Post in the pre-Bezos era, and then came out to Silicon Valley, went to GSB, that's where we intersected, and then became a venture capitalist. She just has an amazing story

• 1:56David Rosenthal?

  and we were pumped to get to do it with her.

• 1:59Ben Gilbert?

  All right, listeners, now is a great time to tell you about a longtime friend of the show, Vanta. AI has scrambled the whole security picture. It used to be that you prove that you were secure once a year on audit or a static PDF, then everyone would nod and you're done. But in an AI-first world, that doesn't hold up anymore.

• 2:18David Rosenthal?

  Yep. Your risk surface changes every week now. A vendor turns on an AI feature, or someone writes in a new model without telling IT, and your posture is different than it was last week, let alone at your last audit. Vanta's own research found that around 70% of companies have this "shadow AI" running with no security review at all.

• 2:39Ben Gilbert?

  Right. And that's where Vanta comes in. They're the leading agentic trust platform, meaning they've built the thing that closes the gap. And the way that they close that gap is Vanta Agent. Think of it as a GRC engineer, that's Governance, Risk and Compliance, except that it's software and it doesn't sleep. It finds the issues, drafts the fixes, and cuts the time that you'd spend on vendor assessments in half.

• 3:01David Rosenthal?

  In half! Which is exactly why more than 16,000 companies today run on Vanta. Companies like Ramp, Cursor, and Snowflake all stay audit-ready and catch the risks that crop up between audits across every vendor, every AI tool, the whole environment.

• 3:19Ben Gilbert?

  And that's the real value. Trust has to be continuous now, which is why Vanta automates your security, your compliance, and the work to earn and prove trust. We're huge fans of Vanta over here, and literally hundreds of Acquired listeners have become Vanta customers at their companies over the years. So you can get $1,000 off Vanta at vanta.com/acquired. That's V-A-N-T-A.com/acquired for $1,000 off, and just tell them that Ben and David sent you. Listeners, you know the drill by now. Come join us in the Slack. We are 12,000 strong. We would love to have you there if you are not there already. And with that, none of this is investment advice. David and I and any of our guests may hold interests

• 4:01Ben Gilbert?

  in things discussed on the show, and make sure you do your own research. All right, now on to our interview with Catherine Boyle, a general partner at Andreessen Horowitz.

• 4:10David Rosenthal?

  Catherine, welcome to Acquired. It is so great to have you here.

• 4:15Speaker 02

  Thanks so much for having me. We've known each other for a long time, but I'm a huge fan, so it's so great to be here.

• 4:21David Rosenthal?

  I think we met just after you graduated from GSP, right?

• 4:24Speaker 02

  Yeah, it's been a journey.

• 4:26David Rosenthal?

  It totally has. Oh, my gosh. Well, we'll get all into that later, but let's start off with the most important, most interesting things going on right now, which for you and in the whole technology landscape, which is what you and Andreessen call this a thesis of American dynamism. It brings me back to like our Berkshire Hathaway episodes and you know, like, believe in America, believe in the power to like, make things better.

• 4:52Speaker 02

  Yeah.

• 4:53David Rosenthal?

  And there's a lot of the opposite side out there right now. So maybe to start, could you tell us what the American dynamism thesis means to you and to Andreessen?

• 5:02Speaker 02

  Sure. So the most simple definition is it's companies that support the national interest. So it's everything from companies that sell directly to government, like aerospace and defense, these classic industrial sectors that have been supporting government since the, you know, mid 20th century, but then also things that every citizen cares about and takes part of. So education, housing, transportation, infrastructure, these really big categories that we, when we look back through kind of the history of technology, there's been so much technological innovation, but at the same time, the last 30 years of software really hasn't touched a lot of these physical spaces. And so what we noticed through our portfolio is that some of the most important companies, some of the largest companies

• 5:44Speaker 02

  actually fall into this category that's outside of consumer technology and it's outside of enterprise technology. It's outside of these categories that sort of venture capital has found themselves sort of creating, but these become big companies that affect most people in the country. So the kind of broadest definition is these are companies that support the national interest. Oftentimes they sell to government. Sometimes they compete with government. Other times they're just heavily regulated by government, but they touch everyone. And so we're excited to build a practice around this thesis, but also because we feel like the tailwinds are unique for this moment that we're in, especially coming out of COVID.

• 6:17Ben Gilbert?

  And Catherine, does that include things that support the national interests that aren't necessarily sort of defense or foreign policy related? I'm thinking healthcare, I'm thinking education, big swaths of the American economy and American time spent domestically?

• 6:31Speaker 02

  Definitely, yeah. So I mean, education and housing are two areas that I think venture capital hasn't touched as much as say healthcare. Like if you look at like the last 10 years, digital health has just grown tremendously. And we have, you know, we have a separate bio and health fund, but the same can't be said for education and housing. And education is one of these things that I think coming out of COVID, people really realize that we are still operating on a 19th century model and that when the kind of world had to shut down, there were not that many good solutions for the vast majority of Americans to educate their children, whether it be K through 12 or things like higher education. One of the things we are noticing coming out of COVID is that there's just a tremendous founder appetite for innovating on a model that's really a 21st century model of how we're going to educate people.

• 7:13Speaker 02

  I know that's going deeper into the thesis now, but we really do see these big categories that can be transformative, that are oftentimes funded by government as needing the help of technologists and private sector in order to transform some of these categories.

• 7:26Ben Gilbert?

  So everything you're saying in some ways sounds a little bit like, how could you possibly argue with that? This all seems obvious. Of course, we want prosperity and at least those of us in America, the American way to be as prosperous as possible and for as many people around the world who want that sort of lifestyle to have that sort of lifestyle, freedom, democracy, that those sorts of things, free markets. What are the counter arguments? Why is this not a no brainer? And why are you a little bit out on a limb in our industry, being a person who is beating this drum?

• 7:55Speaker 02

  Yeah, because I think these are hard sectors. The counter argument to investing in the physical world is that it's not pure software. You know, I think the argument against investing in defense, the argument against investing in a lot of these physical sectors is one, they've been around for a long time. And so there's usually a lot of regulatory capture. We can get into kind of what the defense sector looks like and why it's so difficult to innovate in defense or, you know, in cases of transportation. Like, these are important, large swaths of the economy, but there's entrenched interests, there's large players. So it's always been harder. The kind of history of Silicon Valley, as you all know- And many of the episodes that you've done, it's like a lot of people innovate on the things where there's not an existing sector. Sometimes it's a lot easier to innovate in the virtual world than the physical.

• 8:36Speaker 02

  So I think there's sort of been a focus on how do we build some of these big sectors of the economy where there aren't entrenched issues where software plugs in perfectly, where the economics look perfect. And I think these companies are just harder to build. As we like to say, like, these companies go deeper down the J curve. They often don't look that good at Series A.

• 8:53David Rosenthal?

  The J curve, of course, being an initial investment in venture capital. You know, it's going to look bad, you're gonna, your IRR is going to go negative as you're investing period before the returns come. But yeah, so I love that deeper on the J curve.

• 9:05Speaker 02

  Yeah, I mean, you look at SpaceX and SpaceX is one of the most important companies, one of the largest private venture backed companies. And yet, for the first 10 years of SpaceX, there was a lot of fear and a lot of worry that investors wouldn't necessarily see a return. You know, it was often talked about, it's like you destroy three rockets before the fourth actually works. And there was a ton of sort of questions, even until very recently, around the business model of SpaceX. And so I think for a lot of these companies, they take extraordinary founders. Sometimes they have some technical risks, sometimes they require more capital upfront. Sometimes they have longer periods of how they'll have to stay private or how they'll be venture backed. But ultimately, they are such broad swaths of the American economy, as you've said. And also, they become holding companies earlier.

• 9:48Speaker 02

  Like, this is something we can get into about like, why these companies are a little unique. But a lot of times, if you're looking at companies in consumer enterprise, you'll see three or four different competitors going after a similar market and they're all competing. And oftentimes, you see one or two companies that look alike, that are able to go public, and that's fine. These companies usually become holding companies pretty quickly and attract all of the talent. There's finite talent around things like aerospace, there's finite talent around things like defense. So you don't see as many competitors. And as I said, they are harder to build in the beginning, but towards like the middle part of these companies' trajectory, they're really just competing against themselves and really trying to compete against legacy incumbents.

• 10:23David Rosenthal?

  Well, this is good. So maybe before we dive into some example companies or specifics of the thesis itself, I'm curious, what was the intellectual process, maybe for you personally, but also I'm curious, like within A16Z, you have these, as a firm, these vertical practices now, which has been done in venture before, but not nearly to the degree that you all are doing it now. How did this vertical kind of originate? Did it start with Mark's Time to Build blog post at the beginning of COVID? Like, what does it look like within the firm of like, hey, I think we should create a vertical?

• 11:02Speaker 02

  Yeah, it certainly starts with its time to build. I mean, that was, I think, the impetus for everyone realizing that the story of Silicon Valley pre-COVID is very different than the story that is about to come. But I think we all very much believe that, that the world fundamentally changed. Anyone who doesn't believe that from a historical context or a technology context isn't paying attention. The world fundamentally changed with COVID and will be reaping those, both the positive aspects of it and the negative aspects of it for generations to come. So I think there was that understanding. But then I also think one of the observations that I had is that Silicon Valley is very good at understanding kind of consumer businesses. They're very good at understanding how to make businesses more efficient. But Silicon Valley has never touched government. The kind of narrative around how Silicon Valley works with government has always been like, try to stay as far away as possible.

• 11:47David Rosenthal?

  Which is so ironic, given, you know, we covered so much of the origins of Silicon Valley on this show and like, you know, Don Valentine was selling to the Department of Defense back in the day, right?

• 11:57Speaker 02

  Yeah, that's something that is just not understood in the modern history of Silicon Valley. And of course, you know, Silicon Valley was built on defense investment. But this sort of view that software could actually ever work with government or the DoD, I mean, it's just viewed as the procurement of these types of technologies is almost impossible. And so there has been sort of, I think, this sort of 20, 30 year sort of do not engage kind of modern wisdom from venture capital firms has been, it's just too hard. There's so much other stuff to do. There's so much other stuff to build. Let's make sure that we don't tick off the regulators in some way. And in some ways, like when you look at the geography of Washington versus Silicon Valley, I think that is part of the magic of Silicon Valley is that it emerged so far away from Washington. It emerged in a totally different part of the country with a totally different history.

• 12:41Speaker 02

  And it's sort of outside of the East Coast establishment or the Acela corridor that's like very much understands how the world works. And so there is a reason why Silicon Valley has emerged in a way that it has. But I think my background, I had spent 10 years in Washington. It was sort of the center of my universe until I came out to Silicon Valley. And I was stunned by the fact that there was sort of very little overlap between what people in Northern California, this sort of haven we're talking about and people in Washington cared about. And of course, when you look at it from a DC perspective, these markets are so large, they're the most important markets, that's why they're regulated. And because they touch everyone, why are we so afraid of working with them? And so I think that was always just a question, an intellectual question in my mind of is it possible for some of these companies to actually do the work of government? And then I started doing these sorts of kind of research.

• 13:26Speaker 02

  I wrote a piece for the Washington Post in 2018 about how actually it seemed like Silicon Valley was actually doing a lot of the work of government. They just didn't want anyone to know about it or talk about it. They didn't think of it in those terms. And it's everything from SpaceX and Palantir, which, you know, are companies that really were helping intelligence agencies or NASA, you know, the kind of classical realm, but also things like Lyft and Uber that were completely transforming public transportation in cities across America.

• 13:52David Rosenthal?

  Not to mention the cloud providers, there was the big Jedi contract.

• 13:57Speaker 02

  Oh, absolutely. That's a whole other story because that was a good example of, say, Google pulling out of working with government because they had employees who didn't necessarily want to work with the DOD. So, yeah, there was a lot of just, I think, events happening that made people realize that Silicon Valley is actually a lot closer to working with government than people realized. And that whether you think it's good or bad, or, you know, there's a value judgment, I think, on it from a lot of sides, but whether you think it's good or bad, it's happening.

• 14:21David Rosenthal?

  It was already happening, yeah.

• 14:22Speaker 02

  Yeah. And it happens in a very organic way, and it's definitely not going away for a lot of factors I'm sure we'll get into.

• 14:29Ben Gilbert?

  Well, it's funny, even not thinking about the companies serving government as a customer, you know, take Palantir, for example. Let's say you run an experiment where you have A bunch of people doing and building very innovative things. And then, over the course of 70 years, that compounding at a high rate. Well, at some point, that goes from being garage projects to creating a lot of the value and infrastructure in a society. And so, at some point, these things have to come to a head because here we are, and I'm thinking about the timeframe from 1950-ish to 2020-ish. A lot of the infrastructure that everyone outside the tech community uses in their day-to-day lives now are born of the tech community in Silicon Valley. And it's just, it's just the math.

• 15:14Ben Gilbert?

  You're going to keep compounding that capital, that talent, those innovations. And our way of life is now based on the things built in this community.

• 15:23Speaker 02

  Yes. This is also a function of, and this is one of the things that I think has actually kind of forced the government to say, okay, we're going to have to work with the private sector in a way that's probably a lot deeper than what we used to do in terms of a defense industrial base. Software is a revolution that is completely touching every aspect of society. But the people who are building the best forms of software are not going into government. And that is actually a radical change from how government used to work. It used to love to build internally. That was sort of the thesis is we need tanks and battleships and we can get those from the private sector. We actually like to build our own internal tools. And so, anyone who's a student of history of company building, that sort of thing is like, that is not what's happening in the best companies. You can choose to build or buy, but like, the vast majority of companies that are getting

• 16:07Speaker 02

  off the ground are using external tools. There's sort of a outsourcing, there's sort of a decentralization that's happening even in company building that we can get into. But like, the government has not realized that in terms of how it procures software. And so, if you talk to people who are in the bureaucracy of government, it's like their private life of catching the Uber to go home, the DoorDash so they can get food delivered. They have this complete, normal, consumer internet, private life that all of us share. And then, they go into government and it takes 30 minutes to start their computer. It's like being back in the 1980s. And it's one of the biggest frustrations because there's a lot of great, I would say, especially in the, you know, the DoD, I think is the best example of the most forward-thinking part of the government that actually understands technology. I mean, this is the most frustrating thing for people to say, I'm living in a time warp

• 16:52Speaker 02

  when I go to work. And we can understand that as people who are, you know, kind of in this modern tech ecosystem of, you know, we have these modern tools when we go to work, we're conversing right now and it feels great and it's easy and it's simple. Like that is just not how the government works. And so it's one of the last holdouts.

• 17:08David Rosenthal?

  To your point, we have this like mega theme on acquired of don't do stuff that doesn't make your beer taste better. The origin of that quote was with Bezos when he was launching AWS at Y Combinator, you know, 15 years ago, but probably 70% of our sponsors here, you know, Fanta, Modern Treasury, Vouch, it's just in the water now that like, of course, the way you succeed, the way you build great products is you be really, really great at one thing. And then you use the whole suite of other products that are built in this ecosystem that are really, really great at everything else you need.

• 17:40Speaker 02

  Yeah, even when we think about like, okay, why is the cost of starting a startup gone down tremendously? I mean, that is the case. It's like, you don't have to build everything from scratch anymore. You can buy, but the one place that still does that is government. It's actually incredible. And of course, like, how are they doing that? Well, they're using taxpayer dollars to build internally. So when we talk about the sort of why have defense budgets bloated, you know, even if we're looking at education and sort of the kind of major changes that are going to come from, like, why are these things that are civic goods so expensive now? It's because it is very difficult to use the technology that would actually make them cheaper. And you look at, I think there was that famous AEI graph on like, everything has come down the cost curve, like televisions are less expensive, everything is less expensive in consumer land, except for healthcare, except

• 18:22Speaker 02

  for housing and except for education. And it's really because technology has not touched those sectors and will not touch those sectors unless we do something about it.

• 18:30Ben Gilbert?

  And there's mostly regulatory capture in those sectors.

• 18:33Speaker 02

  Yeah, I do think it is. We can talk about classic regulatory capture, but it is also this idea that like, none of those sectors use technology yet. And so going back to sort of like, what is the thesis? If we truly believe software is eating the world, which we do, this is like the last holdout, and it's such a massive holdout, but it's something where it's like, it is deeply tied to the physical world. It is not something that you can do just through the virtual world alone.

• 18:57David Rosenthal?

  So one of the core mega themes that I think we have on acquired that anybody who's a longtime listener is probably asking themselves right now is there's sort of three components of being right in a big way to an investment thesis. There's being correct. There's being non-consensus and correct. But then there's also getting the timing right, the why now. And I think that's the natural question, right? For you and for a 16Z in launching this vertical, was it COVID that created this moment? Why is now the right time that this is finally going to change?

• 19:34Speaker 02

  Yeah, it's a fantastic question. I think especially when you put all of these sectors together, I mean, these are disparate sectors. The reasons for why education is compelling right now are very different than the reasons why manufacturing is compelling right now. So I do think broadly, it has a lot to do with COVID. But I also think there's a couple other things that make it a really interesting time. One is that the talent is very different in Silicon Valley and that it's not just an outpost. And I use the term Silicon Valley broadly. I should say, I'm in Miami. Like Silicon Valley is an idea, not a place.

• 20:04David Rosenthal?

  State of mind.

• 20:05Speaker 02

  But when I say Silicon Valley, I mean, the people who are leaving the culture and going to the counterculture to build. And they're building with technology because they want to solve real problems. And that used to be like, a bunch of nerds that used to be people who would major in computer science and they were, you know, they were in the engineering department and they were really interested in infrastructure, like technology infrastructure, not the infrastructure that I'm talking about. And I think what happened, and I've written about this, is I think the myth of Silicon Valley hit everyone really hard to where like, the culture and the counterculture merged. And now, people who would have gone into government, people who would have gone into very different careers say, I have this problem and I want to solve it. And oh, and by the way, going back to our whole, you can take things off the shelf and build a company without necessarily knowing how to build your own infrastructure for the company, like,

• 20:50Speaker 02

  They can build companies too. And so you see a lot of founders who are not your typical profile. They're not engineers. I've talked to founders recently who are former teachers. I've talked to founders recently who have worked in the Department of Defense as procurement officers. And it's like, they're not the normal people, we would say, are the founders of 10 years ago. I think there's a lot of reasons for that. And what that leads to is people are going into vastly different sectors than the sectors that they went into most recently.

• 21:17David Rosenthal?

  You've talked about this before elsewhere, but the social network coming out now 11 years ago, I think it was, which is wild. Yeah, that really like started this moment, right, of being a founder, like you say, the merging of the culture and the counterculture, even though the movie might have been intended as a cautionary tale. If you want to build, you can do this.

• 21:39Speaker 02

  When you look at any good movies about industries and that sort of thing, it's like, they're always, yeah, they're cautionary tales, but then it leads to just a flood of young people saying, I want to do that. I mean, that's certainly the kind of the 80s Gordon Gekko sort of, why did so many people look at a villain and say, wow, he's a superhero? I want to go do that. But it's true. Like, a lot of these movies, there's always a question of, do they create the myth, or are they responding to the myth? But I do think the social network came out at just the right time, where young people said, wow, this technology thing is really interesting. And maybe I want to be a part of it. And maybe I want to make it my own. Maybe I don't want to necessarily create a social network, but wow, it's a real thing, and I want to be part of it. And I do think that that what set off sort of the, okay, it doesn't have to be the nerds. Now it's become the thing that every kid who goes to a university and says, hey, I can go work in a kind of

• 22:23Speaker 02

  traditional job, or I can work with a bunch of my friends to do this. And by the way, there's a glut of capital. And of course, we can talk about kind of the macro now. But like, for a very long time, we were at the bull market, where it was a glut of capital. Any kid with an engineering degree who had a bunch of friends could come out to Silicon Valley and raise some money. So it was actually like a very, I shouldn't say an easy way, but it was a simpler way to solve problems. And probably the only way that young people could actually do something where they felt they were having an impact. You know, I talk a lot about like, If you wanted to be someone in Washington to have an impact, you would go work for like the ranking member of Congress and you would get that person coffee. So it's like, does that really ambitious person who wants to change the world want to be delivering coffee to senators?

• 23:06Speaker 02

  Or do they want to come out to Silicon Valley and like work on an education product, work on a housing product? And so I think you saw 10 years of young people saying, hey, I don't want to be a glorified intern anymore. Like, I actually want to solve some things. And actually, I'll have the title of CEO, a founder. So I do think it is sort of a young people's revolution that we're going to continue seeing that.

• 23:24Ben Gilbert?

  Do you think that Silicon Valley went from being counterculture to perhaps too much infrastructure on how to be a startup? And let me frame this question with a little bit more context. If you think about lots of institutions throughout history, they went from becoming an exciting frontier to becoming a bogged down institution that perhaps brought people in who weren't looking for the frontier. And NASA's probably a phenomenal example. You could look at the space race. Lots of people who would have started companies today were going to work at NASA because, oh, my God, we have a 10-year mission or an eight-year mission to go land on the moon. And then you look at NASA, I actually think we should draw a hard line in the early 2000s

• 24:07Ben Gilbert?

  because there's been a really big switch that we can talk about later. But let's say in the late 90s, it's a lot of like bureaucrats, process people, people who want to polish something for seven years to accomplish what used to take one because we now have all this process in place. Do you think Silicon Valley has so much infrastructure now that it is attracting the 90s NASA people instead of the 60s NASA people?

• 24:31Speaker 02

  Maybe three weeks ago, we could have had that conversation or three months ago, we could have had that conversation and been a little more worried about it. I do think markets are self-correcting in that respect. So you can talk to people who've been through downturns before. I haven't. I mean, I'm not someone who was working in Silicon Valley in 2001, but like-

• 24:46Ben Gilbert?

  You have some partners who were.

• 24:47Speaker 02

  Yes, yeah, these sort of natural corrections that happen. Tourists often leave. And in sort of people realize that they have to think differently. There's the kind of famous Ben Horowitz, peacetime CEO versus wartime CEO. There's sort of like peacetime in Silicon Valley versus wartime in Silicon Valley. And I do think there is sort of this question of are we entering that now? And that leads to a lot of innovation, especially for early stage companies. I mean, the companies that are built, historically, companies that have been built in downturns become tremendous successes because they sort of have to rethink the playbook. I mean, you could make the argument that a lot of people are going to have to be going through that and that the most innovative thinkers will win coming up through what we're seeing.

• 25:23David Rosenthal?

  I think this is the perfect place to switch gears a little bit, but building off the social network, that period, that time between, I think it was 2011 when it came out and today. Somewhere along that time, everything you were saying about young people wanting to go build, realizing old institutions weren't necessarily the place to have the impact. That was also kind of your personal story.

• 25:48Speaker 02

  Yeah.

• 25:49David Rosenthal?

  Could you tell us about your background before coming to Silicon Valley? And that personal story of why you did, because I think it's super relevant here.

• 25:57Speaker 02

  Certainly, and it's going to sound a lot more forward thinking in retrospect than it was. The actual answer of why I left Washington and why I left the Washington Post was that I was convinced I was going to be fired. And it was a terrible, terrible time to be in journalism. I was there from 2010 to early 2014. I actually left right as Jeff Bezos bought the Washington Post, which people look at the institution now and they think, oh, wow, it's really chugging along. It's incredible. But when I was there, I mean, there was a fear that it would go into bankruptcy. And that was kind of the fear that a lot of media companies were going through before the sort of great reshuffling.

• 26:30David Rosenthal?

  Man, I was working at the Wall Street Journal a few years before and like, we were like, thank God we're owned by News Corp, you know, like otherwise if Dow Jones were still independent, like the Post was at that point in time, there was no surviving as an independent entity.

• 26:45Speaker 02

  Totally. It's interesting to look back on hindsight, but when I was there, I think the big thing that I was noticing is, you know, I was not a technology reporter, but every story I was writing had something to do with technology touching old institutions. How do we deal with this modernization? How do we bring tech into these various institutions in Washington that have never had to deal with, you know, a tech savvy consumer? And it was one of these things where I said, okay, like, if I'm going to figure out with, you know, I'm covering these stories and this is the biggest story of our time, why not be part of it? So it really did feel like I was fortunate to be able to come out to the valley and actually kind of studied it as a student of history. What is happening here? What is my own view of, of what's going on with all of these movements? And it was, I think, the biggest culture shock I had ever experienced.

• 27:30Speaker 02

  I sort of lived around the world at that point. And when I came out to Silicon Valley, I said it in some ways, it didn't even feel like the country I knew. People were so heads down, they didn't read the news. That was another thing I was stunned about. Like, no one talked about what was happening on, in the day to day news of the world. People were just focusing on their own passions and projects. And that was new to me. The other thing that was really new to me is in Washington, and I'd say broadly everywhere else in the world, there is sort of this wait your turn mentality, this sort of, you can email someone, but if they're the CEO of a company, they're not going to really pay that much attention to a young student or to a young person. And when I got out to Silicon Valley, I was stunned, like, people just want to talk. And I was like, why do people want to talk? And it's like, well, because the incentives are aligned. They don't want to mix the next big thing. And so it was incredible as a former journalist coming out and being able to email anyone

• 28:15Speaker 02

  and realizing that, like, people would answer my email. It was like, sort of, another shock of a different kind. Like, people will actually let you in their office, you know?

• 28:23Ben Gilbert?

  It should be the opposite, right? When a Washington Post journalist emails me, like, that's much more interesting than a cold email from someone with a Gmail address in most scenarios. But perhaps you were feeling as a journalist that people were nervous to answer your emails for fear of being on the record?

• 28:40Speaker 02

  Yeah, no, and I also just think this is a different conversation about media that I think was evolving at the time when I moved. There's no upside to talking to the media and the minds of people who are heads down building. But there's a lot of upside to talking to someone who might be your next employee. There's a ton of upside, if you're an investor, to talking to a young person who might build a new company. But like, talking to someone who is only going to get information about what's happening and derail your plan? So that was something where I think had I thought more about it, I wouldn't have been as surprised, but I was just, wow, like, people want to talk to a student? Like, you know, this is why Silicon Valley is the most peculiar place in the world, because it's the only place where incentives are aligned with that sort of positive sum mentality.

• 29:21Speaker 02

  Whereas in places like DC, no one ever turns down talking to the press because it's information trading. It's a consulting class. It's a group of people who very much see a zero sum mindset and like, the press has a lot of power there because of that. So the incentives of the ecosystems are so diametrically opposed. I actually think, coming back to the thesis, that's one of the reasons why we haven't seen that much innovation in Washington. I mean, they are so different as ecosystems.

• 29:45David Rosenthal?

  So, you know, when you made the choice to make that transition out to Silicon Valley, the choice to have the reaction to like, well, shoot, things are not going so well here. I'm going to go see what it's like on the other side versus I'm gonna complain about it and, you know, bet on hope as a strategy and stay here. What did all of your networks in Washington say? Like, I mean, that must have been a really very non-consensus choice to make.

• 30:14Speaker 02

  It's interesting because I'm trying to put myself in the shoes of myself a very long time ago. And what I'll say is like, most people in Silicon Valley have not experienced what it is like to be in a dying industry. For one, I think people were happy that there were young people choosing to leave because it's like, it was a constraining environment. It was like, okay, great. Like, we don't have to fire this person now. You know, it's like, it was really, really bad. I can't stress. I mean, there were these things called cakings. We even had a name for it. And it's any time that someone was forced to take a buyout or forced to leave, they would bring in a cake. They would wheel in cakes. And sometimes like on Fridays, there would be like just cakes going across the newsroom and people crying and like, people celebrating all these great colleagues who, some of them were like, you know, winners of the Pulitzer Prize. These are not people who should be

• 30:58Speaker 02

  fired. But it was such a bad ecosystem. So, no one really said anything. They were just like, okay, at least you got out. You know, it's like, you found a life raft. That's great. You know, I will say like, six months before I left, my editor took me to lunch. This is like, great management. She's like, it'll be painful for you to leave. Like, it'll be painful to have someone who... You know, I was one of the younger people on the team. I worked seven days a week. You know, sometimes I would write three stories in the section and they were just bleeding people. She's like, it will be painful, but you are young enough to do something new with your life. And I'm forever grateful to her for like saying, it wasn't you're bad at your job. It's actually, I was reflecting on this recently, that maybe three years ago, we went out to drinks. I visited the new improved newsroom and it was this, you know, now it's marble columns and Jeff Bezos.

• 31:41David Rosenthal?

  This is the Amazon funded.

• 31:42Speaker 02

  Yeah, Amazon funded newsroom. And we went out for drinks and she's like, you were good, but you could have been great. And it like, sort of brought me to tears. I was like, wow, like she actually told me I should leave because she saw what was happening. Probably before I actually realized it, you know, it's like young journalists, I will think they're going to be like the next Bob Woodward. But I think, why did I go? It's like, well, if you're going to start over from scratch. I mean, in some ways it's like, if you're going to start over from scratch, why not go to California? It's like, that's always been sort of the, the American dream is move west and find something new. But it really was, it's like, okay, like I need to understand this tech thing. And I hadn't been exposed to the culture, but I didn't have a reaction that it was a bad thing. I had a reaction more that it was the future and the biggest story of our time.

• 32:22David Rosenthal?

  What were you covering at the Post?

• 32:24Speaker 02

  So it's interesting. I was a style section reporter.

• 32:27David Rosenthal?

  At the Post? That's a big deal.

• 32:29Speaker 02

  It's interesting. The style section has a very storied history of being where writers write. So there's always this question of, are you a writer or are you a reporter? And I think the number of people at the style section who would say that they are writers first and reporters second is actually quite high. So, and that was when I was there. It's changed a lot since I've left. But for people who really enjoyed language and enjoyed doing 3,000, 5,000 word stories about just random things. One of the famous pieces that the style section published when I was there was the difference between sheets and Wawa. And it was a 10,000 word piece on just like convenience stores on the interstate.

• 33:04David Rosenthal?

  Wawa, the best.

• 33:05Speaker 02

  But you would read these like, you know, great Tom Wolfe sort of meditations on just American culture. You know, as a young reporter there, it's like, that's what you aspire to do. You aspire to write these ridiculous pieces about random things. But it was more like the joy of language and the joy of culture than even the kind of reporting aspect of it. So I was a general assignment reporter. I wrote about culture. And it's interesting because people often ask me, they're like, what's the connection between venture capital and journalism? And I think people often think about like, oh, you know, the hard-nosed journalist who's doing diligence.

• 33:36David Rosenthal?

  The Mike Muritz style.

• 33:38Speaker 02

  Yeah, yeah.

• 33:39David Rosenthal?

  I think Don Valentine said, Mike Muritz and Steve Jobs were the two best question askers I ever met.

• 33:45Speaker 02

  Yeah, and I believe it. I mean, that's one of the aspects where they're similar. But I also think the sort of similarity of what I saw in my colleagues and what I did is it's like trying to get at the forefront of cultural shifts, even if you don't know what they mean, just trying to see, okay, are these like these weird movements that are happening in society and like, maybe you should be the first person there to talk to these weirdos, these random people. And that was sort of the like, what's the weird, interesting thing that's happening? And now most of that happens on the internet. That I think is the real shift is that like, all the weird, interesting movements in the world now come as internet born movements. And that's oftentimes what venture capitalists are looking for as well.

• 34:22David Rosenthal?

  Clearly, you still have such love and reverence for that world and for the post. The world we're in today, especially with Andreessen Horowitz, it does feel like in some ways, they're on the other side and that there's like a battle going on now. A specifically battle between the old world media and technology.

• 34:44Speaker 02

  The world of media has completely changed since I was a journalist. There was in a sense that you were at war when I was a journalist. And I think that of course, changed with a number of things, like everything from Trump being elected to the types of people that are going into journalism, even the idea of what journalism means. I mean, a lot of the people that I worked with when I was a journalist had this very old school view, and it's talked about a lot. It's the, are you reporting the facts or are you an activist? And there are a lot of people who will point blank say now they're going into journalists to change the culture, to change the world. They are activists and they will use that word. They will say, I am an activist. You know, I was part of a generation of people who would have bristled at that. There were people when I was at

• 35:27Speaker 02

  the Washington Post that wouldn't vote in elections because they didn't believe that they should be voting in elections if they were covering certain stories.

• 35:35David Rosenthal?

  Wow.

• 35:35Speaker 02

  And I had such admiration for that, that if you are going to be the person who is on the sidelines of the culture, reporting on the culture, that you should really Do your best to take a neutral stand. And I took a lot of pride in that as well. Covering things that were uncomfortable for me. That was something that I actually revered about sort of a old style view of journalism that I think has completely transformed and changed in terms of the people who are now at the forefront. I think there's reasons for that. I think a lot of it is Twitter. I was pre Twitter actually becoming what it is when I was at the Washington Post. And there was still a view that social media should be second to our actual reporting. I think that is if you read the recent reports from the New York Times about how they're trying to kind of curtail their Twitter use because they've realized that it's completely

• 36:20Speaker 02

  changed how they report. I think the kind of biggest trend in media, and I can talk about another one of our investment Substack, which I think has sort of benefited from this trend, is that people are now brands. They are identities. And the individual journalist is ultimately more powerful than the institution. And I think that's just one of many trends where institutions are collapsing and kind of individuals, I mean, you all know this, look at what you've built. But individuals will capture an audience and be more important than an institution now. So when I talk about being a former journalist, I'm really talking about like the Stone Age. You know, it was 10 years ago, but that type of journalism does not exist anymore.

• 36:56David Rosenthal?

  It's so funny. I feel the same way thinking back on my time at the Wall Street Journal, even though I was on the business side, not writing, like, I know exactly what you're talking about with that style of journalists, like, the people who were the managing editors, the deputy managing editors, the section editors at the journal at the time, like, they were those people. And yes, it's so different than today.

• 37:19Speaker 02

  I was only there for a few years. You know, I've been investing twice as long as I've been a journalist at this point. You know, it's something that captures people's imagination and it's sort of like, how did it affect you? And it really is, it's like, I think the greatest way that it affected me was, I think, starting your career off in a dying industry gives you a different perspective than if you start your career off in a company that is just filled with abundance. You understand what death looks like versus momentum. And that was probably very formative for me, coming out to the valley and then seeing what good looks like.

• 37:50Ben Gilbert?

  It's the same thing as those child psychology studies of people that always not necessarily grew up with a tremendous amount of wealth, but who did not come from scarcity. And so there's a general underlying belief in every subsequent decision that gets made that I'll always be okay.

• 38:07Speaker 02

  Totally.

• 38:08Ben Gilbert?

  And I think the same sort of translates to career decisions and people being willing to take risks and believe that there is a growing pie, rather than I need to fight for my corner of it.

• 38:19Speaker 02

  And also just understanding culture. I don't think people understand the difference between a culture of scarcity and a culture of abundance unless they've experienced both. And I do think, I've been really fortunate now, I'm definitely part of a culture of abundance. And an abundance culture leads to yes. It leads to, oh yeah, try that. The idea of building an American dynamism practice can only come out of a place that it has movement and that has growth. Those types of things cannot be built in a culture of scarcity. And I do think Washington is a culture of scarcity just by its nature, that the incentives are every two years, there's an election and half the people who are in charge will leave and the other half will come in. And the people who are kicked out will go to think tanks and it is very zero sum. And it's every two to four years.

• 39:02Speaker 02

  It is not a long-term cycle because that is just not how we structured our democracy.

• 39:07Ben Gilbert?

  Okay, here's a snarky response, though. How is it a culture of scarcity when every decade since 1913, the government has a bigger budget and significantly more employees than it ever had before?

• 39:18Speaker 02

  So that is very true. I mean, we could very much talk about the bloat of government, the fact that it doesn't feel like a culture of scarcity when we look at it as taxpayers. But in terms of who gets power, and remember, the currency of Washington is not money, it is power. Power is scarce and it is extremely hierarchical. There can't be multiple winners. Someone wins the news cycle every day. That's another part, like, we have to remember that news is part of the Washington establishment. There's a reason why it's called the fourth estate. It is part of the anchor of government. So all of those things are very scarce. Only one story can be the front page story. Only one person can hold the most power. And that is anathema. To Silicon Valley and the culture of Silicon Valley is equity. It is money. It is success.

• 40:03Speaker 02

  It is building bigger businesses faster. And there can be as many of those as possible. Yes, you could argue that in certain sectors, there will only be one winner. But this is why you see founders helping other founders. Venture capitalists can have a portfolio of winners. There is a culture of abundance. It changes the incentive structures and it changes how people think about solving problems.

• 40:23Ben Gilbert?

  It's quite interesting thinking about that. There's this idea of if everybody in a sector is paying attention to the same thing, call it whatever Politico is reporting on, or whoever has the most airtime on cable news that day, that means that no matter how large headcounts and budgets get, there is a fixed supply of the thing people want, which is attention and power. But when the thing people want is money, and we can say it in nicer terms than that, but financial success.

• 40:52David Rosenthal?

  Oh, that's totally what it is.

• 40:54Ben Gilbert?

  That is not a finite supply.

• 40:56Speaker 02

  We're not hedge fund managers. This is something that I think oftentimes is misconstrued in Washington is like, oh, well, you know, I remember talking to some reporters I used to work with and they're like, all you people who think you're changing the world. Like, at least the hedge fund guys didn't think they were changing the world. And my response was, do you not see the difference? You know, and I actually think one of the biggest, biggest problems with how we've been lumped in with other asset classes. I remember when I first moved to the Valley and it was private equity and venture capital. Private equity and venture capital as a category could not be more different from what they are doing. Venture capital is creating new things from nothing and it is creating more jobs. It is pouring money into companies so that they can grow, expand and solve new problems with the most modern technology possible.

• 41:39Speaker 02

  And private equity is the death of old companies and it's consolidating them, firing people and ensuring that they're going to be able to create value from things that have already existed.

• 41:48David Rosenthal?

  Man, the hedge fund people sound pretty good now.

• 41:52David Rosenthal?

  At least they're neutral.

• 41:53Speaker 02

  Yeah, you could probably make that argument. When you look at those, everything is lumped together in the minds of Washington. It's like you're all just making money. So when I say like equity is the currency, what I mean is like people come here and they actually build things and the incentives driving how things are built. It's a system that actually works and encourages growth and encourages creation. I think we have to be very honest about that, which is very different than East Coast private equity, and it's very different than hedge funds in which that is not what people are focused on. And I think one of the greatest tragedies is that we're all lumped together.

• 42:26David Rosenthal?

  I think so much of our audience is like a complete outsider to Washington. Like, is it gauche to talk about like making money, starting things, building like, is that like looked down upon?

• 42:38Speaker 02

  You know, I recently moved to Miami. And one of the things that I love about Miami is that there's no shame. And I actually think this is one of the big problems of Silicon Valley. Like Miami, it's like, it doesn't matter what you are doing. Everyone is dressed to the nines. It doesn't matter if you're, you know, someone who works an hourly job or if you're someone who is, you know, a real estate mogul. I mean, like, who knows what people are before all the tech people came in. It's like there were all these kind of weird things that people were doing in Miami. But everyone took pride. It's like, it is a culture of being proud of what you have earned. And I do think that comes from, it is the city in the US with the largest foreign-born population. A lot of the people who come to Miami have come from countries that have collapsed. They're proud of capitalism. I mean, because of the Cuban population, they're extremely anti-communist.

• 43:23Speaker 02

  And there's just this view that like, if you work hard and it's like a culture of hard work, it is a culture of hustle, you should celebrate that. And I actually think Silicon Valley has the hardest problem with that.

• 43:34David Rosenthal?

  Hmm, interesting.

• 43:35Speaker 02

  That was always stunning to me in Silicon Valley. It's like, you don't see the same displays of we're proud of what we have built. In fact, like, there's a lot of people in Silicon Valley who build something and then apologize for it. And it's like, they're ashamed.

• 43:49Ben Gilbert?

  Oh, Seattle is far worse at this.

• 43:53David Rosenthal?

  Seattle is far worse than that.

• 43:54Ben Gilbert?

  Living up here, it's like the Bay Area, except even your shoes aren't nice. There's billionaires walking around in hiking pants.

• 44:01David Rosenthal?

  We're talking about personal displays of wealth. I think, yes, that is Gosh in Silicon Valley, definitely in Seattle, but people are proud of the companies that they've built and the size of like, my company did 100 million in revenue, or I got a unicorn status valuation. Like, people are proud of that.

• 44:17Speaker 02

  That's true. And it goes back to this. We are creating something. It is, we are creating something. And you all know this better than anyone in the number of founders that you have interviewed. It's like founders, especially the best founders, are so obsessed with that creation story, even the incentives that are used to align people on the mission. And that's more what I meant when I said like equity and what is the currency? What is the thing that is traded that makes the system go? It is equity. But why people come here, it is so much more, it is driven to create something real. And it's usually driven to right the wrongs of whatever you've experienced in a previous industry, or you know, like, that's so much of what is driving people. But one of the things I've been pleasantly surprised with in an ecosystem like Miami is that people are not ashamed to be successful.

• 45:02Speaker 02

  And I do think that that is a uniquely kind of American dream part of what Silicon Valley should be and what it is and what it historically was, is that people were really proud of what they've achieved and the number of people they're employing and what they're building. And weirdly, I think Washington, in some corners, has moved away from that, that story of creation.

• 45:23Ben Gilbert?

  All right, listeners. Now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team, and deploying them is no longer the hard part.

• 45:37David Rosenthal?

  Yeah. The hard part is knowing what permissions they have, what employees are using them for, or what decisions AI is making. AI security for an enterprise at scale is not a small concern. Like, the risks are real.

• 45:51Ben Gilbert?

  Exactly. And the challenge with AI is governing it, securing it, measuring it, and making sure that it actually delivers value. That is why ServiceNow built the AI control tower.

• 46:00David Rosenthal?

  Yep. AI Control Tower gives enterprises a single place to see, manage, govern, and optimize AI across the entire business. And it works with any AI, not just theirs. Every device on your network, every permission across every system, every AI agent visible and secure in one place.

• 46:18Ben Gilbert?

  And ServiceNow can do this because they've spent more than 20 years building the operational backbone of the enterprise. The workflows, governance, approvals, security controls, and institutional knowledge that power how work actually gets done across IT, HR, customer service, finance, and security.

• 46:34David Rosenthal?

  ServiceNow already runs more than 100 billion workflows annually and trillions of transactions for more than 85% of the Fortune 500. So when companies need a place to govern AI at enterprise scale, they're building on a platform at the center of how their business already operates.

• 46:51Ben Gilbert?

  And in a future that isn't going to be one AI, it's going to be thousands of AI agents working across every function of the company. But the question is, who's managing them all?

• 47:00David Rosenthal?

  So if you're trying to turn AI ambition into real business outcomes and make it work safely, securely, at scale, go check out servicenow.com/acquired and tell them that Ben and David sent you. Yeah, so let's talk about what I think is probably now another huge mega trend to come for the decades ahead, the exporting of Silicon Valley to the rest of the country and the rest of the world. You've been talking about it. You're there in Miami. You're not here in California anymore, or Seattle, or the West Coast. How has your personal experience been over the past two years with that?

• 47:34Speaker 02

  This is a core part of the American dynamism thesis. Maybe talking through a couple companies that explain this trend will make it clear because I think we've talked about kind of your atypical founder, someone who came from different industries who felt like they weren't able to build a company. That's happened. And a lot of those people felt like they were forced to move to Silicon Valley, or maybe in some cases, New York. What I'm now seeing and what we're seeing in our own portfolio is that those people can build from anywhere. And what that means for the country? It is an extraordinary thing that Silicon Valley could be exported to the rest of the country. I mean, that will be game changing when you think of just post-war, how there was sort of this myth that if you were someone who was high achieving, someone who wanted to have a career, you had to go to certain

• 48:19Speaker 02

  universities, you had to leave your state, and then you had to go to one of a handful of cities. And the impact that has had on the country has been very detrimental, that there is brain drain from certain states that has benefited places like San Francisco and New York. And if we're telling the story 50 years from now, and we're looking back on what happened, the thing that will come out of COVID is that people have now said, I do not need to be in San Francisco. I can be anywhere in the world, and anywhere in the country, and I can be in my hometown, building something, and there's enough talent there to do it, or there's enough talent around the country that can do it remotely. And so I'm incredibly bullish that American dynamism will not only be companies that are built around the country, but it will also be just different types of

• 49:01Speaker 02

  problems, because founders who wouldn't have gone to San Francisco are now building for their hometowns. I'll give a perfect example of this, because I think this is one of my favorite examples in our portfolio. So there's a company called Flock Safety, that was a YC company, built in Atlanta, by second time founders, Garrett Langley, extraordinary founder, and he had just built a small company before, and said, I want to go after one of the biggest problems. What do I want to do? And he's like, well, why is it so hard to eliminate crime? Like, most crimes are done with a car, whether we're talking about petty crimes, or things like Amber Alert's child kidnapping, he's like, why is it so hard in an era of software and of cameras around the world? Like, why is it so hard to solve crime? And so he built a very small camera license plate reader, realizing that so many of the license plate readers

• 49:45Speaker 02

  around the country were very expensive, built by legacy systems, and in some ways, public safety contractors, and started selling them to homeowners associations, so selling them to neighborhoods, saying, put up this camera, we'll be able to track cars, not people, which was very important to him. And with a network of cameras, like, maybe we can solve crime. And what started happening around Atlanta is, they didn't do any press, but these cameras started actually solving very dangerous crimes, things like child kidnappings. And they were covered on the nightly news, and then more homeowners associations would buy them. And then, after a while, police chiefs across the country just started contacting them, inbound, can you give us some of these cameras? And so now they're in 30 states, they've grown tremendously over the last few years, but it was something that was built so that they could solve one of the biggest

• 50:29Speaker 02

  problems that they saw in their community. And so That's where I think they're a perfect example of an American dynamism company, of a company that is solving civic needs, selling to government, but didn't actually start out selling to government, but ultimately built for their community. And it's incredible. You know, this is an Atlanta-based company, which I think five years ago, people would have said, can you build in a very large company in Atlanta?

• 50:50David Rosenthal?

  Oh, my gosh. I'm thinking as you're saying this, like, I used to live this as a venture capitalist. I was the bad guy on the other side of the equation of like, company in an interesting market gets traction in a XYZ city, Atlanta, you know, wherever, you know, they're interesting enough that Silicon Valley Venture Capital writ large is interested. Probably the, in the second meeting that you have with your VC before the term sheet, they're like, so you're based in Atlanta. Do you really want to build something big? You got to move here.

• 51:20Speaker 02

  Yeah. And I think for a long time, that was the view. And what COVID has changed is everyone realizes that's not the case. By the way, people want to move to places like Atlanta. It's a great city. Same thing with Miami and Austin and Provo, Utah, Salt Lake City. Like, there's so many places that people want to live, but didn't feel like they could do it because the myth was you have to be in Silicon Valley, you have to be in New York, if you're a serious person. And I think that completely changed after COVID. And so the number of new companies we are going to see sprout up in second and third cities across America, I don't even think it has to be really big cities. I think it could be smaller towns. The remote work movement, I think, will spur so many of these great companies and really just lead to a democratization of tech around the country.

• 52:04David Rosenthal?

  Do you feel now that like you personally, A16Z generally, your geography is the internet at this point, like, you know, versus anything else?

• 52:15Speaker 02

  I think COVID made that inevitable. All of us were keeping our relationships online. It's so funny, a couple of years before COVID, people would mock people who spent too much time on Twitter. They would mock people who were in their Signal chats, like, why aren't you going to cocktail parties? Like, how you really meet people is building relationships in person. And I very much disagree with that view. I mean, when you think of sort of like the early internet, people were hanging out in chatrooms. You know, they were all weird avatars. It was all pseudo anonymous and you see that more in the crypto world now, but it's like COVID led to this sort of rebirth of actually you could build relationships online. And actually Gen Z, like that's how they build their relationships. They make friends, not with their neighbors or not with the kids that are in their class. Like they're all over the country and like, that's a great thing is that people can find community online.

• 53:00Speaker 02

  And so the idea that investors aren't going to find community online or founders aren't going to find their next hire online. Like the internet is not this thing that's not part of our lives. I mean, I'd say in some ways, like the physical world is definitely downstream of the internet and culture is downstream of the internet. But we clearly need both. And of course I'm invested in the physical world, but it's like, what we're doing right now is through the enablement of the virtual.

• 53:25David Rosenthal?

  So what's the path now, pre-COVID? The path for a company that was, you know, in the, of the caliber that Andreessen Horowitz could lead at series A or series B? The path for that company was book a one-way ticket to SFO and stay on the peninsula as long as you need, driving up and down Sand Hill, meeting with firms, you know, until you get a term sheet. What's the path now as an example? Like, how did you meet them? How did they present? How does the relationship happen? How do board meetings happen? What does it look like?

• 53:59Speaker 02

  I'll share the story of how I met Hadrian, which was my first investment since being at Andreessen Horowitz and sort of how that relationship blossomed. Cause that's another Los Angeles-based company, typically not a place where VCs spent much time. But of course with the emergence of the just extraordinary new space movement, there's a lot of people spending a lot more time for different reasons in Los Angeles. And I know my partners are certainly spending time there in games and other areas too. But Hadrian's a company where it was our first formal investment out of the American dynamism practice. And it's a company that is building automated machine shops for aerospace and defense manufacturing. So talk about a sector that technology just did not go to. We just mentioned the private equity world and it's like, private equity had been buying up machine shops for a long time, seeing that as a great place to do rollups and to cut people.

• 54:44Speaker 02

  But in terms of like building jobs and creating new machine shops to actually service the needs of these large aerospace companies. That was not something that Silicon Valley was interested in, or that technologists were really interested in. And the origin story of that company, the founder, Chris Power. This extraordinary founder who moved from Australia a few years ago was very devoted to this idea that he wanted to do something in manufacturing and wanted to build something new, but actually started out with, hey, maybe the only way is to raise a small private equity fund. So he raised a small private equity fund and talked to a bunch of different shops, machine shops where people were retiring. I mean, the nature of this field is that a lot of the machine shops are owned by people who are baby boomers and they're trying

• 55:27Speaker 02

  to get out and their kids don't have the capacity to either leave the shops or want to. And he realized, he's like, this is a nightmare of what is about to happen. Like, this is an impending nightmare because even if you are to try to bring software into these existing shops, it's almost impossible from a technical perspective. Like, there's not much that can be done unless you build something from scratch. So we actually returned capital to his investors and said, this is not feasible from a private equity standpoint or with existing shops. And we have to build new machine shops with automation. And then we have to upskill American workers so that they can do this type of work. Like, we need to bring in a new generation of machinists who are technically competent, but can also, where it doesn't require some sort of special artisan knowledge. And so he built his first

• 56:12Speaker 02

  factory, he's now on to his second, and is serving a lot of large aerospace and defense companies in a lot of the new space sector. And it's one of these things where, when you talk about how we met, we met through a number of people in the ecosystem. It's like, it's one of these things, and I always joke about, anytime you hear this about a founder, like, you should always, like, pick your head up. It's like, every third call I was having about aerospace, about like, what's happening in defense, his name would come up, this company would come up as, this is one of these things where if it doesn't succeed, like, we will be in a bind. Like, we will be in a bind if we can't get parts delivered as a hardware company, or if we have to fly out to a random machine shop in the middle of the country and like, find out why things are delayed. And so it was

• 56:55Speaker 02

  one of these things where, yeah, like, you hear people talking about it on the internet, but you also hear it just in your entire network, that everyone is rooting for a founder to succeed. And that's also just like, what's so cool about a lot of these companies is they don't have real competition. Everyone is excited about their success because if they don't create this world of abundance in a lot of these categories, we'll all suffer. And particularly, things like aerospace and defense will suffer. So- That's one of the companies I point to because one, it's an immigrant founder solving one of America's biggest problems. It's being built in Los Angeles at the heart of our defense and aerospace industry. It's right next to the customer. It's being able to interface with the customer every day. And then it also has this really, really important mission that I think is, people see it as secondary to what's actually happening,

• 57:40Speaker 02

  but it will be the legacy of this company, which is that you are upskilling a generation of people who were told that working with their hands was embarrassing, who were told that they had to go to college and they had to read Kant.

• 57:53Ben Gilbert?

  You're describing David's college experience.

• 57:56Speaker 02

  Probably mine too.

• 57:57David Rosenthal?

  Yeah, right. We can joke about it.

• 58:00Speaker 02

  But like, we were told if you have an interest in doing something, that your value comes from going to college. Your value comes from having one of these jobs.

• 58:10David Rosenthal?

  And we were told, you know, don't worry, it'll all work out.

• 58:12Speaker 02

  Oh, yeah.

• 58:13David Rosenthal?

  We've been lucky it has for us, but for so many people it hasn't.

• 58:17Speaker 02

  For a lot of people who graduated right at the Great Recession, it was like, okay, the myth and the lie has been exposed. And so we need companies that are saying, actually, you can be part of the startup revolution. You can work hand in hand with the people who are aerospace engineers as a machinist, and we're going to solve these problems together. And that looks a lot more like what Silicon Valley looked like in the 40s and the 50s. This is what the innovation with the Department of Defense looked like. And as Silicon Valley was coming up in the 60s and the 70s, I mean, it was a very different type of community of people. And so I'm excited for that because I do think that like, we are going to see that renaissance of people working together. And it's just, it's great that Hadrian is sort of emblematic of sort of the innovation we think is going to happen with the practice.

• 59:00David Rosenthal?

  You mentioned Substack earlier, you know, thinking about like, I think one of the greatest problems facing America, Western society broadly right now is just like, well, these people that need jobs that, you know, read Kant in college.

• 59:17David Rosenthal?

  Or didn't, but like, you know, what to do, how to like, how are people going to make money in this new society? And, you know, how is the middle class going to thrive? You've talked about, lots of people have talked about, you know, the surveys now that like, for the first time in generations, most Americans believe their kids are going to be worse off than they are and feel that they're worse off than their parents. At the same time as all this, you know, we're talking about these companies that A16Z funds that are power law dynamics, create these huge, huge outcomes. At the same time, there is this new middle class on the internet. We're kind of like doing it right now in this conversation, you know, and lots of Substack writers are too. Is that part of the American dynamism thesis too?

• 59:58Speaker 02

  We're a little bit more tailored in terms of like, a lot of the companies that we are investing in now have a physical component. They don't necessarily need to, and I do think they touch government. But I do think you're pointing out a trend that is so important that I think a lot of people are missing, which is that these companies are leading to a revolution for people who want to be individual creators. Like the creator economy thing is, you know, people have their theories on it, but it's like, you do see people are building new types of businesses through this enabling technology, and it is a small business revolution. The thing that I get upset with when Washington talks about tech is that it's this monolithic thing. Everyone points to big tech and everything falls into big tech. But small tech is actually the thing that gets me excited.

• 1:00:41Speaker 02

  It's the fact that I invest in early stage companies. I invest in companies from the napkin stage and those are small companies. Those are small businesses. Of course, they aim to become large businesses because the incentive structure of venture capital and the incentive structure means that we want to see things grow and that's good. We should not be afraid of that. But these are like wonderful, small businesses. And now people across the country can use the tools that have been built to enable these businesses. And so whether you're talking about, like, as you said, Substack or Shopify, where people are building incredible businesses on the platform, or whether it's, hey, like, there's a lot of capital available and now I'm a founder in Miami and I want to build a company here and I want to employ people in Miami and it's fantastic, but we're talking about small businesses.

• 1:01:23Speaker 02

  That's what's really exciting is like, we can talk about companies that are too big or things that get the focus of Washington and get people riled up on both sides. I mean, it's like, the only thing Washington can actually agree on is that they hate big tech. But like not enough credence is given to small tech. And like where I'm focused and American dynamism, these are small tech companies that are trying to solve the country's big problems. And so we should support that. That's exciting. And it's also like this method of company building that I don't think people have realized. I think our generation has, I don't think older generations that are outside of technology have realized it yet, that this is the new way of company building. Whether you're in middle America or whether you're in Silicon Valley, like this is how companies are going to be built in perpetuity. And so we need to be excited about that. Like, nothing is not a tech business anymore.

• 1:02:10David Rosenthal?

  It's funny, I mean, even, you know, for me and us being in Silicon Valley, made it myself, like, when I transitioned to making acquired my full-time thing, I didn't know how to talk about it. Even here in, you know, the capital of Silicon Valley, like, the thing that I landed on after a couple of months of trying to explain what the heck it was I and we were doing, that seemed to resonate the best was I was like, well, we're building a small business on the internet. And because of the internet, it can actually be a pretty big small business, but like, but that's what we're doing.

• 1:02:39Speaker 02

  Yeah. And we should celebrate that. We are a country of small businesses. And the worst thing that can happen is when all of the talent goes to certain hubs and abandons the rest of the country. And so I do think the centralization that we saw in tech, maybe over the last, say, decade, we're now experiencing this decentralization. And, you know, the fact that I'm investing from Florida, of all places, which, you know, I grew up in Florida and like, did I ever think before COVID that I would be returning to Florida in any point in my life? No, I didn't think it was possible. I loved Florida, but like, I certainly did not think that, you know, the world would change to where everything could become decentralized and people could dissociate where they live from where they work. But if we're all working online, and if we're all online, this is actually a really good thing for the rest of the country.

• 1:03:23Speaker 02

  So I'm hugely excited about that trend. And I think we'll look back and say, wow, like, the post-war movement to New York City and to San Francisco didn't have to be the end-all, be-all of the American experience.

• 1:03:34Ben Gilbert?

  All right, listeners. Now is a great time to talk about a new partner of ours here on Acquired, Logora, the agentic operating system that is redefining how the world's best legal teams work.

• 1:03:48David Rosenthal?

  Yep. It's sort of obvious that AI is going to completely change the legal industry. I bet most of you listening have dropped a contract into some sort of AI chatbot out there. Logora took that insight and asked the question, what if you really built something with that power from the ground up for the legal industry?

• 1:04:04Ben Gilbert?

  So the founders did exactly what great founders do, operate with obsessive customer focus. They embedded inside a massive law firm for months. They sat with the lawyers just watching how the work really gets done.

• 1:04:19David Rosenthal?

  And that's how you get features that customers love, like Tabular Review, where you drop in a folder of hundreds of contracts and it pulls every key term into a grid a lawyer can actually work with. Logora's bet here is interesting. Since it lets each lawyer handle more complexity, any given person can increase the quality of their work and do higher value work. And this means that the pie can grow even as each individual task takes less time.

• 1:04:43Ben Gilbert?

  And they recently launched Logora Agent, offering greater intelligence and performance. The agent lets lawyers set an objective. Then it can handle the planning and the execution and delivery of the final product. Legal teams get to maintain full control and transparency since they're still involved where judgment is required.

• 1:05:02David Rosenthal?

  And Logora works where you already work. You can use it within Microsoft Word while redlining or drafting. The early Logora numbers essentially speak for themselves. When they have a head-to-head pilot with their top competitor, they win 70% of the time. Logora now has over 100,000 lawyers on the platform from 1,200 legal teams in 50 countries. And crazily, they went from 1 million to 100 million in ARR in about 18 months.

• 1:05:32Ben Gilbert?

  Truly insane numbers. And that is the real test. Plenty of things demo well, but the question is whether a busy associate actually reaches for it during crunch time, or whether a partner trusts it before going into a conversation with a major client. If your legal team wants to check it out, whether you're a law firm or you're in-house at a company, you can learn more at logora.com/acquired and just tell them that Ben and David sent you. Catherine, I have a question for you that is somewhere on the border of moral philosophy and politics. And I know that's a dangerous tee up.

• 1:06:05Speaker 02

  A good one.

• 1:06:06Ben Gilbert?

  But in investing in American infrastructure projects, both to improve our footing domestically, but also to ensure continued prosperity in the international community of defense projects, things like that, there's a implied assumption that the continuation and breadth of the American way is a good thing. And I think there are lots of good answers as to why that's a great assumption. But why is that to you? When you are going to bed at night and you're like, I'm funding this mission, what is it about the American way where you're like, this is a very good thing that I'm investing in this?

• 1:06:49Speaker 02

  This question is so interesting because I used to get this question a lot more, say, five years ago. So I've worked with a company called Anduril for a very long time, actually, since their seed round. And this was one of the more contrarian, it's kind to say it's contrarian, but I can also say it was unpopular when the investment first happened. I was excited about the mission of the company, but I think I had, because I came from Washington, I kind of knew what would happen in a way that I think a lot of other people didn't, which was, defense was something that was deeply unpopular in San Francisco. And now when you talk to people about Anduril, all they can talk about is Ukraine. It's like, people are watching on a world stage, like, what happens when a country invades another

• 1:07:32Speaker 02

  sovereign country? Like, we haven't seen a war like this since World War II. And people are now realizing, actually, like, we need strong defense. It is not something that anyone wants to be right about, honestly. Like, it is painful and it is horrible to watch. But what I think was so clear about that investment was, like, time would tell why we need new defense contractors, especially ones that are built with modern technology. And so, going back to the journalism point, like, I've always understood what conviction looks like. And sort of like, when other people see something as deeply unpopular, you say, I'm totally fine standing up and saying that history will serve us right, or defending why I believe something is so important. But it was so clear to me, it's like, one of the clearest investments I think I've ever made.

• 1:08:16Speaker 02

  Where it was so clear that people were going to change their minds about the company. And it's just extraordinary to see it has grown tremendously over the last five years. Multiple offices now working with Australia, the UK. It is a company that I think everyone is just so happy exists and realizes that, hey, we need modern defense contractors, not ones that were built in the 1920s.

• 1:08:37Ben Gilbert?

  So what is it about the American way that fires you up and says, we should have a lot more of this for a lot longer time?

• 1:08:44Speaker 02

  I think America is the greatest experiment in human history. The vast majority of Americans come from somewhere else. My grandfather drove a truck, didn't have an eighth grade education. The fact that I'm sitting here is a miracle. And the fact that I get to do this job is a miracle. And the thing that has always motivated me and the thing that's very clear is that something like 50% of unicorn founders in this country are foreign born. And they are sometimes the greatest testament, I think, to what it means to live the American dream. It's the same thing of why I'm so excited to live in Miami, because it's like people are enthused about what this country stands for, about what you're able to achieve here, what you're able to build. If you go to any other country as a venture capitalist or as a founder and you talk to

• 1:09:25Speaker 02

  people, whether it's elected officials, or you talk to people who are also working on civic technology, the question you get is like, how do we become like you? Like, how do we do this? How do we create this unique thing? I do think the founders' experience in this country looks a lot like what the founders did in this country, where it is just like a rejection of everything they have known to build something new. And usually it's these people who are misfits, contrarians, doing something that say like no one else can do. It is an American experience and it's an American type of investing. I mean, it's like even the model for venture capital is something that is deeply part of the Silicon Valley story. And so it's like, there's just something so part of the history of this country of what we're doing.

• 1:10:10Speaker 02

  And so I think when you look at other countries and other ecosystems that are emerging using this model, which is exciting and extraordinary and something I think we're all excited about, it's following a story that was created here.

• 1:10:21David Rosenthal?

  Totally. I mean, we tell it on acquired almost every episode, right? Like if they get of Jensen and Nvidia, you know, where else could somebody come from? His dad was a, you know, air conditioner engineer and not in this country. And then Jensen ended up going to reform school and now he's Jensen.

• 1:10:37Speaker 02

  Yeah. Yeah.

• 1:10:39David Rosenthal?

  That is a pretty uniquely American story.

• 1:10:41Speaker 02

  Totally. A country of misfits where people come to escape and build something new. It's like, that is the Silicon Valley story. I mean, it's like, I was escaping my reality as about to be fired journalist. That is like the kind of motivating factor of, I have nothing to lose. And you all know this, and you talk to so many founders, and it's like, they're coming from a place of, we have nothing to lose, and that is such a motivating force. And then you add all of the incentive alignment of everyone trying to see that there's more innovation in ecosystem. The thing that I'm most hopeful about, and I think if we do our jobs right over the next 10 years, this will be the case. I want to see that incentive alignment across the country, so that it's not just this unique thing that's in Northern California, and that a certain class of people are privy to, that it's like, it is everywhere.

• 1:11:26Ben Gilbert?

  I love that. Well, Catherine, as we wind to a close here, any parting thoughts or anything you want to leave listeners with?

• 1:11:32Speaker 02

  Going back to your original question of like, as a venture firm, how do you create a new practice? I think if we do our jobs right, and we invest in the companies that we're intending to invest in, and we tell the story right, I think every venture capital firm will have an American dynamism practice. And while like selfishly as an investor, like I don't necessarily want that, but as an American, I want that. I want every firm to say, actually, this is the best place to be investing. Can't believe we weren't looking at it, and the just extraordinary opportunity. And it's not impact investing, it's not ESG, it's not just like, oh, well, we're going to see incremental returns. Like, it is going to be the source of American innovation, and it is a great place for the top venture firms to be investing.

• 1:12:14Speaker 02

  And so I think if we do our jobs right, we will see this new category, and it'll be just like enterprise, it'll be just like consumer. And I'm excited for that to happen, truly. And I think that's sort of the story of the next 10, 20 years of Silicon Valley.

• 1:12:28David Rosenthal?

  Well, what's cool, you can see it starting, like space is the first piece of this, I think. It went from deeply unconsensus in Silicon Valley to now pretty consensus.

• 1:12:37Speaker 02

  Yeah. One of the things that I think has made this easier is like, we see these companies in our portfolio before we had this practice. Like, I mean, they are soaring. So it is not something where it's like, oh, we're creating something completely new from nothing. It's like, there are a lot of success cases. But the idea that it's just going to be these one offs, like, no, this is going to be a category of innovation that becomes almost like, you have to be investing actively in this category. And the same way that, you know, SaaS wasn't a thing. And then now it's like, who would say, oh, we don't invest in SaaS? That is what I think is going to happen. But it's not just going to be this one off. So maybe we're an investor in this weird thing. It's just gonna be, no, this is a category of innovation that's going to be driving this country for the next 10, 20, 30 years.

• 1:13:19Ben Gilbert?

  And it wasn't the first thing that people attacked because it didn't have the highest gross margins, the way that, you know, these software as a service businesses did. But as technology permeates everything else in the world, it turns out that you can build some really big businesses by attacking these broad swaths of the American economy. And so I think we're going to continue to see lots and lots of entrepreneurs do that. And we're all better off for it.

• 1:13:41Speaker 02

  Absolutely.

• 1:13:43David Rosenthal?

  Well, Catherine, last thing before we wrap up here, we've been talking this whole episode about all these trends, you know, the internet, you can build companies anywhere, American dynamism. You know, you and Andreessen are the, you are the first ones, you are planting your flag officially. How can founders who are listening, who this like totally resonates with, who are already building companies that fit with the American dynamism thesis, how can they get in touch with you and Andreessen?

• 1:14:11Speaker 02

  Yeah, yeah. So you can find me on the internet.

• 1:14:14David Rosenthal?

  I'm shocked. I'm shocked.

• 1:14:16Speaker 02

  On Twitter, I'm KTM Boyle. I'm pretty responsive there. But we're pretty easy to get in touch with. So definitely come find us.

• 1:14:23David Rosenthal?

  And you have a great Substack, too. The Rambler, right?

• 1:14:27Speaker 02

  Yeah, yeah. No, and I haven't been as active. I need to get back into it. But it's boyle.substack.com.

• 1:14:32David Rosenthal?

  Love it.

• 1:14:33Ben Gilbert?

  Catherine, thank you so much.

• 1:14:35Speaker 02

  Thanks so much for having me. This has been awesome.

• 1:14:38David Rosenthal?

  All right, listeners. Now is a great time to talk about one of our favorite companies, Statsig.

• 1:14:45Ben Gilbert?

  Yes, there is a reason why the best product teams rely on Statsig, whether they are iterating on their core product features or shipping AI-powered experiences at scale.

• 1:14:56David Rosenthal?

  Yep. In the crazy speed of today's AI world, shipping fast is just table stakes now. It's basically trivial to build and deploy your app constantly. The real advantage is how quickly you learn what changes actually created value for customers, and how fast you can use that signal to guide what you ship next.

• 1:15:16Ben Gilbert?

  This is where Statsig comes in. It brings experimentation, feature flags, and product analytics into one unified system so teams can ship safely, test rigorously, and directly link what they changed to how users actually behaved.

• 1:15:28David Rosenthal?

  So if you want to make learning your competitive advantage, whether you're building new AI experiences or just evolving your existing core product, go to statsig.com/acquired to get started.

• 1:15:39Ben Gilbert?

  All right, listeners. Thank you for going on the journey with us and Catherine. She's, I don't know, really dynamic, and I think what their dynamic dynamism, see what I did there accidentally?

• 1:15:50David Rosenthal?

  I like what you did there.

• 1:15:51Ben Gilbert?

  I don't know. It's an inspiring, big swing that Andreessen Horowitz is taking, and it's very cool that she is on the forefront of it. If you want to join us in the Slack, you should, acquired.fm/slash/Slack. If you want to listen to more Acquired between now and when the next show comes out, you can search Acquired LP Show in any podcast player, and you can get more episodes of the LP Show. The back catalog is now completely open and free, so you can go listen to the old classics like VC Fundamentals or How to Invest in Consumer Businesses with Sarah Tavell from Benchmark. There's just a lot of good old gems in there that I think a lot of people didn't get to experience because...

• 1:16:33Ben Gilbert?

  You know, it was behind a paywall. And as folks know, if you want to get access to those episodes early, two weeks early before anyone else, you can sign up at acquired.fm/lp. We've got a job board, acquired.fm/jobs. We appreciate any ratings, reviews, anything like that you give us on any platform. But more than that, we just appreciate it when you tell one friend. Because as we deeply believe, organic growth is the best growth, and we deeply, deeply want to keep our community as a great group of people who love getting together. And so screaming it from the hilltops can spike numbers, but like, bring other people into the acquired fold that you want to hang out with, because we probably will too. And we'll see you next time.

• 1:17:18Ben Gilbert?

  We'll see you next time.