Uncapped #38 | Ben Horowitz from a16z

Ben Horowitz is a cofounder and general partner at the venture capital firm Andreessen Horowitz, a venture capital firm that manages $60 billion in assets under management. He is also the author of the New York Times bestsellers, The Hard Thing About Hard Things and What You Do Is Who You Are. Prior to a16z, Ben was cofounder and CEO of Opsware (formerly Loudcloud), which was acquired by Hewlett-Packard for $1.6 billion in 2007. Earlier, he was vice president and general manager of America Online’s E-commerce Platform division, where he oversaw development of the company’s flagship Shop@AOL service. Ben also ran several product divisions at Netscape. Ben serves on the board of Anyscale, Databricks, Mayvenn, NationBuilder, Navan, and UnitedMasters. We covered: Marc and Ben’s relationship as co-founders Operating a venture firm like a CEO of a company Why scale is important and not for everyone The evolution of media --- Timestamps: (0:00) Intro (0:30) Marc and Ben’s relationship (6:10) Structuring the firm to attract great talent (10:28) Difference between execs and GPs (14:51) Firm-wide guiding principles (16:43) Scaling GPs vs small teams who concentrate (20:11) Why scale is so important in venture (23:45) What platform services work and don’t work (26:58) Ben’s view on board seats (34:56) The evolution of media (44:44) Laws of physics for fund sizes (48:28) Winning is more impactful than picking (52:15) Defending why venture doesn’t scale (55:00) Hiring ex founders and CEOs --- More on Ben: https://a16z.com/ https://a16z.simplecast.com/ https://x.com/bhorowitz More on Jack: https://www.altcap.com/ https://x.com/jaltma --- https://linktr.ee/uncappedpod Email: [email protected]

• 0:00Speaker 00

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

• 0:20Speaker 01

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

• 0:27Speaker 00

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

• 0:30Speaker 01

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

• 0:48Speaker 00

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

• 1:09Speaker 01

  Like, are you friends outside of the work context? Or like, what's like on a, on like a non-work situation? Like, what is the interaction like?

• 1:15Speaker 00

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

• 1:59Speaker 00

  where like, as a firm, we can just put him out there and it's like a magic trick. Like, he's like bang, you know? And, you know, for me to, you know, my kind of relationship with him is. You know, like Quincy Jones, it's not like I'm, you know, I'm certainly not Michael Jackson, but I know enough, you know, Quincy Jones knew so much about music and so much about how you get the most out of somebody that talented, you know, that makes it work together. So I can surround Mark with the kinds of people, with the kinds of ideas and so forth that maximize him. And then, you know, like he's makes me much, much better because he's

• 2:42Speaker 00

  Michael Jackson. And like you're never, you're never going to make Thriller if you don't have Michael Jackson.

• 2:46Speaker 01

  Yeah.

• 2:46Speaker 00

  And all the great albums Quincy Jones made, nothing was as big as Thriller because, you know, you need that. And so that's the kind of relationship. So we're very complimentary. We're like in the same field. We do the, you know, like I'm an investor, he's an investor. Like, you know, we built the companies together, all that kind of thing. I'm an engineer, he's an engineer by training, but he's different than me, like very different still.

• 3:08Speaker 01

  Yeah.

• 3:08Speaker 00

  And I'm different than him. And that, that's kind of what makes it work. We're enough the same and enough different. But I'm not saying that like I'm Quincy Jones.

• 3:16Speaker 01

  No, I get it.

• 3:17Speaker 00

  The great Quincy Jones, rest in peace. I love him. I want people mad at me.

• 3:21Speaker 01

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

• 3:35Speaker 00

  No, we've had a lot of kind of arguments and we, we've had a lot of arguments both on kind of which direction it should go in and in what kind of timeframe. He has kind of more ideas about things we should do than I do just because, you know, in running it, I try and keep it a little more contained. Although, you know, you know, sometimes I'll push us in a direction that he wouldn't have normally gone otherwise, like some of the international things we're doing and so forth.

• 4:04Speaker 01

  So it's more common that he's generating and you're editing?

• 4:07Speaker 00

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

• 4:36Speaker 01

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

• 4:49Speaker 00

  600 people, yeah.

• 4:50Speaker 01

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

• 4:54Speaker 00

  You know, it's

• 4:55Speaker 01

  Or half of it.

• 4:56Speaker 00

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

• 5:24Speaker 01

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

• 5:37Speaker 00

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

• 6:05Speaker 01

  Yeah.

• 6:05Speaker 00

  Well,

• 6:05Speaker 01

  You get out of the day super fast.

• 6:06Speaker 00

  Yeah, you can get out of the loop really, really fast.

• 6:09Speaker 01

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

• 6:22Speaker 00

  Yeah.

• 6:23Speaker 01

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

• 6:39Speaker 00

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

• 7:12Speaker 01

  Can you be in a good, agreeable VC?

• 7:15Speaker 00

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

• 7:45Speaker 01

  Yeah. You could be a good, agreeable heat seeker.

• 7:47Speaker 00

  Yeah.

• 7:47Speaker 01

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

• 7:50Speaker 00

  I think the best heat seekers probably are agreeable.

• 7:52Speaker 01

  You're right.

• 7:52Speaker 00

  So that, that kind for sure.

• 7:54Speaker 01

  Friends with everybody, want everybody to think they're smart all the time.

• 7:56Speaker 00

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

• 8:00Speaker 01

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

• 8:05Speaker 00

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

• 8:46Speaker 01

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

• 9:00Speaker 00

  Yeah.

• 9:00Speaker 01

  And I think there's something interesting there. Like I've seen seed investors who just seem to have a nose for like, this is gonna get a hot series A.

• 9:07Speaker 00

  Yeah.

• 9:07Speaker 01

  And who knows what will happen after that.

• 9:08Speaker 00

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

• 9:15Speaker 01

  Yeah, I talked with Mark about

• 9:16Speaker 00

  God bless him.

• 9:16Speaker 01

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

• 9:34Speaker 00

  Yeah, I mean, I think, I think there's some of that in the calculus. And then, you know, I mean, I think, you know, for us, we have to kind of believe in it technologically, believe in the entrepreneur and so forth. It's just kind of, we a little bit view ourselves as more mission oriented. So like, our mission isn't to get higher returns than the S and P 500, although that's a good side effect or whatever. You know, our mission is much more to like, can we help the best entrepreneurs build the best companies and then kind of make us and the country and the West strong technologically. And so when we think about

• 10:13Speaker 00

  it through that lens, we actually care much more about what it is than what the next round might think. Although, you know, like, of course, it's a consideration. Will anybody fund these guys after us? Or do we have to fund every round?

• 10:28Speaker 01

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

• 10:46Speaker 00

  Yeah, it's like, I would say it's quite different in that, you know, look, good execs understand, um, one, the, the importance of chain of command, the, uh, you know, they, they're managers, they, a lot of them may be execution people, process people, you know, that kind of thing, as opposed to people generating a lot of ideas. Whereas every good investor is a massive idea generator. They, they don't necessarily, um, like rules or be willing to follow them. And so I think that the burden on everything making sense every step of the way is much higher.

• 11:29Speaker 00

  And then also you really have to, from an organizational design standpoint, you've got to minimize conflict or, uh, it's going to be complete chaos. So in a company, you can get, like, there's always going to be some cross-functional dependency in a company and you have to live with it. And then through some combination of rules, process and telling people, whatever, shut the fuck up, like, we're just going to do it this way. You get there. I think in a VC firm, you can tolerate much less of that. You know, like if the org doesn't solve the conflict issue, like the ability to solve major conflicts one-off, uh, will cause a lot of issues.

• 12:14Speaker 01

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

• 12:17Speaker 00

  Yeah, much worse in that, um, both because of the personality types and then you can really like wreck each other's businesses, right? Or each other's, you know, work in that, let's say I'm. A great expert in, I'm Martine and I know everything about AI and foundation models and so forth. And I've gone through every single video model like there is, and I understand all the nuances and the strengths and the weaknesses and so forth. And then like, you know, me over here, um, who hasn't done any of that work, but like found an entrepreneur that they like, who's doing something and I go invest in that model that conflicts Martine out.

• 12:57Speaker 01

  Yep.

• 12:58Speaker 00

  Like he, he's going to be beyond mad. Like he's gonna, he's gonna want to like murder the person. I mean, like that, it's such a bad problem to have conflict like that in a, in a venture capital firm. And you just have to have respect for the work that people are doing and design the firm in a way that all that hard work gets them to the end that they expected. And like that their own people don't undermine them and these kinds of things. So like the conflicts are extremely intense in that way.

• 13:27Speaker 01

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

• 13:32Speaker 00

  No, no, no. Stand up and figure it. My biggest thing is like, sometimes they're too respectful of, uh, of me on that. But like, like, I, like, I'll just resolve it. I need to resolve.

• 13:43Speaker 01

  What do you mean too respectful? They're like a bent.

• 13:45Speaker 00

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

• 13:56Speaker 01

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

• 14:07Speaker 00

  Like sometimes there's something inside the, uh, like a fund, but those, those are pretty cohesive. Cause so, so we design them, um, like every fund we have runs like, you know, what somebody might consider a little VC, like there's not more than five GPs. It's, it's pretty cohesive. So there's not that much contention. You get the contention when things scale.

• 14:28Speaker 01

  Mm hmm.

• 14:29Speaker 00

  Um, and everybody's not talking to each other every day. Like then, then that becomes a problem. So mostly it's cross funds or cross functionally or something like that. But, uh, it's very important to. Squash them in there. They're all kimchi problems. They're all the deeper you bury them, the hotter they get, right? Like, so there is no problem that gets better over time in terms of conflict in a VC. It always gets worse.

• 14:50Speaker 01

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

• 15:10Speaker 00

  Yeah, I mean, some of it is just kind of general principles, things we believe in. So, you know, one, like, we have to make sure we're taking enough risk, make, you know, like, and that usually comes of the form is evaluate the entrepreneur and the company on the magnitude of their strength. Like, how good are they at what they're good at? Are they super world-class? Are they, you know, is this like the literally the best person in the world at doing this thing? Not on, oh, like, the monetization model doesn't make sense, or like, they don't know anything about go-to-market, or they don't actually understand accounting. You know, like, that's not ARR. Like, what the fuck

• 15:53Speaker 00

  are they talking about? Those things, like, you can always rule out a deal on weaknesses. And I think it's, it's always a mistake to rule out somebody who's truly world-class on a weakness. And then it's always a mistake to invest in somebody who's not truly world-class on a lack of weakness. And so a lot of the guidance is around ideas like that, you know, things that we believe where, you know, we're always like, okay, like, what can they do? Like, let's focus on what they can do, not what they can't do, and see if that's worth investing in. And it's a, it's an important psychological thing, because, you know, we have so many, like, brilliantly analytical people who can find what's wrong with anybody.

• 16:37Speaker 00

  And you know, I always remind them there's something wrong with everybody.

• 16:40Speaker 01

  Yeah.

• 16:41Speaker 00

  You just may not have been able to find it yet.

• 16:43Speaker 01

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

• 17:25Speaker 00

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

• 17:48Speaker 01

  Why is that? Cause we just need more shots to build these companies.

• 17:51Speaker 00

  Well, I mean, you know, if you look at like, you know, a founder's fund or thrive, we're both great firms. Um, you know, there are whole like sectors that they're not really in. There are entrepreneurs who could build something great that they're happy to miss. Cause like, as long as they get, you know, the very biggest ones and so forth. And that's not really what we're about. Like, if like crypto is going to be important to the like financial success of the United States, or like the way I AI interacts with the economy and so forth, like, then we got to, we're in like, what are you talking about? We're going to ignore that. We need to help that succeed. And like, and it turns out in a sector like that, it's not just like funding entrepreneurs. It's like helping change the law and get the right policies in the country and these kinds of things.

• 18:40Speaker 00

  And so. Our model won't let us ignore something that important. But if what you're trying to do is say, okay, of the like five best companies of the decade, do I have big positions and enough of them?

• 18:55Speaker 01

  Yeah.

• 18:56Speaker 00

  That's like, I think that's a good financial strategy. There's nothing wrong with that, like, go get them. I mean, like, it's good, like, it's good that they're doing what they do. We work with them on a lot of deals together, but it's just not who we are. Like, you have to be who you are.

• 19:09Speaker 01

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

• 19:26Speaker 00

  If you look at it historically, like, depending on the vintage, sometimes that strategy of waiting for the things to get to the billion dollar valuation is definitely the best strategy. But in other eras, like, that set of companies just all suck. And the actual, all the good investments are in the A and the seed round because new, something new is happening, you know, like, the world is changing. And, you know, the big SaaS companies, if you piled all your money in like Tiger Global and it did in 2021.

• 20:02Speaker 01

  Yeah.

• 20:02Speaker 00

  It didn't work out that well. You know, you were kind of at the end of the cycle. That may work better now, and we'll see.

• 20:09Speaker 01

  Yeah.

• 20:09Speaker 00

  TBD.

• 20:11Speaker 01

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

• 20:21Speaker 00

  Yeah.

• 20:21Speaker 01

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

• 20:33Speaker 00

  Yeah.

• 20:33Speaker 01

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

• 20:44Speaker 00

  Yeah, so there, I think there's a couple of different dimensions to it. One is, like, what is the market of technology companies? And I think that's really important. And Mark wrote a piece. In I think 2011 called software is eating the world. The conventional wisdom in VC at the time was, look, there's 15 companies in any given year that ever get to 100 million in revenue. And the whole game is getting into as many of those 15 as you can. And so why have a big firm if there's only 15 companies to invest in? Right? Like that, that doesn't make any sense. You're just going to chase a lot of bad stuff. But what he thought then and kind of the bet that we made was, well, if software eats the world, it's not going to be 15. It's going to be 150 or 200.

• 21:29Speaker 00

  And that's what it's become. And so to get into that many great companies every year, you clearly need to be of a bigger size. Like, there's just no way to address the market if you're five guys. That's not possible. I think the more important part of it, which is like a big rationale for starting the firm was, if you're an entrepreneur, what do you need? And you need to be like, you need to be important in the world, which means, okay, how do I, you know, how do I talk to big time CEOs? How do I get in front of big customers? How do I go international? How do I deal with the US government if I'm in AI or crypto, which is like everybody now? Like, how do I do all that?

• 22:12Speaker 01

  How do employees take you seriously?

• 22:13Speaker 00

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

• 22:57Speaker 00

  good. Now that there is a challenge on like mechanically, how do you do that? How do you build a big VC that's still like very, very good at every part of it?

• 23:05Speaker 01

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

• 23:28Speaker 00

  Yeah. Like, hey, I just started a company.

• 23:31Speaker 01

  I've got regulatory issues.

• 23:32Speaker 00

  Jamie Dimon, can you have lunch with me? Like, good luck.

• 23:35Speaker 01

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

• 23:50Speaker 00

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

• 23:54Speaker 01

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

• 23:57Speaker 00

  Yeah. I mean, like, so we did some things early where we were publishing sort of, you know, we had this thing where we were going to have sort of general research ideas or whatever, you know, for the entire like startup community. But like, it turns out that that works really well if you do it for crypto or if you do it for AI, you know, like we try out all the models and so forth, you know, like, and we talk to the companies all the time about, okay, like which model's best at which. And then we, you know, post models and we try stuff out on them and so forth. So like, from a tool evaluation standpoint, like we can just accelerate you and tell you exactly what's

• 24:40Speaker 00

  what. Doing that in general, well, like a lot of things, I think that we try to do across domains.

• 24:48Speaker 00

  Ended up being not as interesting.

• 24:49Speaker 01

  Yep.

• 24:50Speaker 00

  And that's, you know, that's getting true for talent as well. So like CFO is a CFO for the most part, like the hardware CFO, different than a software CFO, that kind of thing. But that's easy. But like an AI researcher.

• 25:03Speaker 01

  Yeah.

• 25:03Speaker 00

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

• 25:14Speaker 01

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

• 25:23Speaker 00

  Yeah, yeah.

• 25:23Speaker 01

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

• 25:30Speaker 00

  Yeah, I think it helps to get the seed corn, right? Like, so a lot of what you're trying to do is can you get the first three to five people in who are stellar and then have networks where you want to draw from? Who your VC is actually matters a lot on that, right? An engineer like cares about like, okay, is this person going away? Is there more money behind this? Have I heard of them?

• 25:55Speaker 01

  Yeah.

• 25:55Speaker 00

  That kind of thing. So that's a, that's, that's an important feature. I think every company has to ultimately get hyper proficient at like recruiting, closing, interviewing, onboarding, training, or they're never going to be a good company.

• 26:14Speaker 01

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

• 26:18Speaker 00

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

• 26:33Speaker 01

  But it's like they clearly have their muscle.

• 26:34Speaker 00

  Not in the beginning, but they're really good at recruiting and so forth and so on. So like now it's just like, okay, people from our talent network are interested in working there.

• 26:43Speaker 01

  Yeah.

• 26:43Speaker 00

  But that's different than that first.

• 26:47Speaker 00

  Yeah, the first few people that you hire, those are relationships that we have that will introduce you to somebody and like, maybe they'll fit, maybe they won't and so forth. But like, that's a kind of very specific thing.

• 26:58Speaker 01

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

• 27:27Speaker 00

  I probably don't believe in the spiritual connection.

• 27:30Speaker 01

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

• 27:32Speaker 00

  So first of all, boards are important for founders. So like, the idea that you're going to run without a board, after you've like, given equity to employees and sold equity to people who are not you, is the most dangerous fucking idea in the world. Because if you know anything about securities laws, the only protection you have a CEO from going to jail or getting personally sued, is that you run material ideas through the board. That's massive protection. Like, if I go, well, I want to give a, you know, 2% grant to this person in the company, you have to realize, your fiduciary to like, the rest

• 28:16Speaker 00

  of the company that you're diluting, is in question right there. Just that. If you run that by the board, it's all good. You're completely protected. No problem. If you just make that on your own, somebody wants to sue you, they're going to win. Like, you really have very little defense at that point. So, the idea that like, you're not going to have a board is a bad idea. Like, I think, once you start not owning the company 100%, you got to have a board. They're like, that's just how it goes. You know, we went back and forth on this, like, okay, how much does, like, the board actually help the company? And? I would say, so there's a couple of interesting things. So the Y Combinator people

• 28:57Speaker 00

  actually said, it must have been around like 2015, 2016, they came to us and they were like, we did like an analysis of all our companies who had boards and didn't. And the ones that didn't have boards all failed, like they didn't do well. Like as a cohort, the ones with boards did much better. Now like that, those, there's confounding factors, right? Like, but you know, in their view, the other thing was like, just in observing the companies, the rhythm of having to tell somebody outside of the company, what you're doing every three months or every two months.

• 29:30Speaker 01

  Creates internal pressure.

• 29:31Speaker 00

  It is very valuable. It's just like a good organizing principle to keep yourself on track. So I believe in that. And then I do think certain kinds of board members can be very, very impactful at different points in the company. Just with myself, like, right now, if Ali kicked me off the board at Databricks, I'm not sure that like they would do much worse. Like, I honestly don't. However, there were times, for example, the Series C, I led the Series A, NEA led the Series B, nobody would do the Series C of that company. Pete Sancini and I led that one too. NEA and us led the C in addition to the B and E. If I'm not on

• 30:14Speaker 00

  the board, like, I don't think there's any way that's happening. So that's like an existential issue. Second thing, you know, they had an offer to buy the company for like, I think it would have netted out to about $4 billion in 2018, 2019, something like that. And had I not been on the board, I think they would have sold.

• 30:33Speaker 01

  That's a big deal.

• 30:34Speaker 00

  And I think Ali would say they would have sold. And so like, they're worth, you know, they're raising now over $100 billion. So that's like a real value. And so to say that like, oh, we're going to do you a favor and not be on your board. Like, cause look, when you're in a company, all you think about all day is the company.

• 30:52Speaker 01

  Yeah.

• 30:53Speaker 00

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

• 31:14Speaker 01

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

• 31:47Speaker 00

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

• 32:16Speaker 01

  Does this work only at this point? Or earlier in your career, did you need to do more of the like daily higher, you know, higher engagement model stuff? And only now can you do the, this version?

• 32:28Speaker 00

  Nah, like I think that.

• 32:30Speaker 01

  Part of what I'm getting at actually is I think there's this idea and venture that you can only be on like eight boards before you collapse. And then I was like talking to Martin, who's like on all these incredible companies, the founders say he's awesome. And he's on like way more than eight or 10 boards or whatever.

• 32:42Speaker 00

  Yeah. So, so, okay. So I think that if you're the board member and you don't have a platform, and you're the investor, then eight is probably right.

• 32:52Speaker 01

  Yeah.

• 32:52Speaker 00

  But if you have a platform, then when they go, hey, I need to meet a customer, I need to like help with recruiting, I need to like deal with this policy issue, I need to talk to like Gavin Newsom, I need to deal with.

• 33:05Speaker 01

  Then Martin can scale.

• 33:06Speaker 00

  Then Martin's not doing that, right? Like, like we have a whole platform that does that. And, and so he can scale and just do the thing he does and do it very effectively. And then he works extremely hard and all that kind of thing. So like, I think it's different. You know, if you have a platform or if you don't, because if it's on you to do to be the BD guy, the recruiting guy, the policy guy, the, you know, the governance guy.

• 33:30Speaker 01

  Then you can't work on that many.

• 33:31Speaker 00

  Yeah, you know, like those guys are like, that's a special, um, you know, God bless those VCs and so forth. But yeah, we don't ask you to do that on our thing.

• 33:42Speaker 01

  Yeah.

• 33:42Speaker 00

  And I don't think it's necessary. And look, I think like for the work I do, which is like helping people think through like how they run the company, how they, you know, think about a business deal or this and that, the other, like that daily frequency, I think can be destructive to the development of the CEO. The CEO kind of ends up having to stand alone. Uh, because that like ultimately they're going to stand alone. Like no matter, you know, like you, you get advice, you get friends, you have people and stick you, but you have to have such high conviction in your own opinion to make these very, very difficult decisions. Like, okay, we got to do a layoff. Are we going to do this? Or we're going to, you know, um, change the direction of the company that like, you don't want the CEO looking

• 34:27Speaker 00

  to somebody from the outside to make a decision like that. Cause a person from the outside does not have the correct context, the, the amount of knowledge required to make such an important decision. And so you want the person from the outside, really it to be advice, like, let me tilt this, this way. So you can look at it from that angle and this and that and the third, but not like, what should we do, Ben? You know, like it's, it's how, how should I think about this is a much better question.

• 34:55Speaker 01

  The last question on this, um, I just want to try to hear how your thinking has evolved. You guys came out early, like I guess 2009 with this idea that like media and brand are a big deal. And I think in many ways, I don't know exactly, cause I didn't graduate until 2011, but it seems to me like in those years, this was like not what was happening versus like now, obviously everybody kind of knows it. Have you evolved your thinking like from 2009 to now? Like, are you, do you think it basically played out just like you thought? Do you think it's even more important? Has it, have you changed your idea of like what type of brand and media and so on matters?

• 35:35Speaker 00

  Yeah. Yeah. Yeah. So like, I think, um, The original idea was very simple, which is VCs didn't market themselves. It was some kind of like code in VC land. And we're like, well, since we're new and nobody knows who we are, like, and that's what we know how to do where people build companies, well, go and market it. And we did, and we did a good job of it, and that kind of got us ahead. The world has changed. The world of media is completely different than when we started. When we started, everything, I mean, there were blogs and stuff, and we had blogs and that kind of thing. But the primary way people got information was through the press, for sure.

• 36:17Speaker 00

  And the rules of the press are, and the laws of physics of the, of the indirect channel going through the press are completely different than the laws of physics of going direct. The very fixed number of channels that matter, very fixed format that you, you know, you can have a quote or a short five-minute interview segment where they're like hitting you with questions that you don't want to answer and all that kind of thing. And then the brands were all companies, you know, Ford, GM, this, that. The indirect world is completely upside down from that. There's unlimited channels. There's unlimited formats. You can tell the longest or the shortest story you want to. It's no problem. And then the brands are mostly people, right?

• 37:02Speaker 00

  Like, is it Palantir? Is it Alex Karp? Is it Elon? Or is it X? Is it, you know, like, these, yeah, is it Jensen or is it Nvidia?

• 37:09Speaker 01

  Yeah.

• 37:09Speaker 00

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

• 37:52Speaker 01

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

• 38:03Speaker 00

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

• 38:08Speaker 01

  Yeah.

• 38:09Speaker 00

  Like, you're no longer thinking about what you shouldn't say. Like, so much of the old world is, what can I not say? How do I avoid answering that question? How do I give the talking point? Like, there are no talking points in this world.

• 38:21Speaker 01

  Totally.

• 38:22Speaker 00

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

• 38:24Speaker 01

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

• 38:27Speaker 00

  Yeah, like, I mean, just get on the air tomorrow, the next minute, just like, it's a flood, flood the zone. Like, that's the answer to a gaffe is flood the zone, not don't make the gaffe.

• 38:37Speaker 01

  Yeah, exactly. Never apologize, flood the zone.

• 38:39Speaker 00

  Yeah.

• 38:40Speaker 01

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

• 39:00Speaker 00

  Yeah, I think podcasts are definitely working the best right now. I mean,

• 39:05Speaker 01

  Like, do people read blogs?

• 39:06Speaker 00

  I expect it'll change. People do read blogs. If you have one that really hits. I mean, actually, we just, there's a couple of really great ones that became out. One was, you know, there is why there's no God video model. And like, that kind of, Justine wrote that.

• 39:22Speaker 01

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

• 39:26Speaker 00

  Yeah, the write a blog every day idea, I don't think that works anymore.

• 39:31Speaker 01

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

• 39:35Speaker 00

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

• 39:46Speaker 01

  Yeah, it's a big advantage.

• 39:47Speaker 00

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

• 39:52Speaker 01

  What works besides podcasts?

• 39:54Speaker 00

  Well, I actually think blogs and social media still work pretty well. I think that, you know, with podcasts, you have to be. State of the art and how you think about clips and all those kinds of things as well. The podcast has to be very interesting to the targeted audience, which is, I think one of the things that has been best for me as an audience member is, you know, if you watch the news, it's almost impossible, right? Like it's without throwing a chair at it, no matter who you are, because it's like, what the fuck level are they trying to reach a human being like they really think they're going to trick me with that? Like, like fake positioning on like, oh, well, da, da, da, da. Like I asked him the question this way. So now everybody's gonna like hate Trump.

• 40:39Speaker 00

  Everybody's gonna like Trump. It's like, it's especially idiot, like, you know, whereas a podcast, if I'm listening to the podcaster that's marketing to my level of understanding of the world, then I'm going to enjoy the whole thing, which is such a breakthrough in media to me.

• 40:55Speaker 01

  Yes. For me, at least to enjoy a conversation I'm watching, I need to trust both the asker and the answerer. Or it just doesn't feel quite right. And it drives me nuts on the news when you know something about it too. And you know, it's just wrong. And then they're going off and everyone's posting about it. It makes me crazy.

• 41:10Speaker 00

  It's so bananas. Yeah.

• 41:11Speaker 01

  Yeah.

• 41:12Speaker 00

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

• 41:35Speaker 01

  Yeah.

• 41:36Speaker 00

  You know, like just on terms of leverage in the, in the next trade negotiation.

• 41:41Speaker 01

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

• 42:05Speaker 00

  Yeah, they're definitely, they're, they're definitely real. Journalists out there, even at publications who, you know, we in tech really don't like.

• 42:14Speaker 01

  And I think there's a role for it.

• 42:15Speaker 00

  Yeah.

• 42:16Speaker 01

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

• 42:26Speaker 00

  Yeah, and we did it to them to some extent, right? Like, so when tech broke the media monopolies, so they're coming from the standpoint of, you know, we're not, we don't even care about the economics of it, because the economics are going to be there. And so, we're going to have these, we're going to create these ideals around journalism and around truth and all the news that's fit to print and, you know, like, democracy dies in the darkness or whatever the crazy, you know, taglines they have are. And so, they set themselves a standard, very high standard. And then, all of a sudden, they're in a, like, an existential financial crisis. And they have to get to an audience. And now, they're going, well, going to a broad audience is just way too hard and way too expensive.

• 43:09Speaker 00

  So, I'm just going to market to people who are on the left.

• 43:13Speaker 01

  Yeah.

• 43:13Speaker 00

  And so, then, I got to be an activist. And so, then, all this stuff that I said before is all bullshit now. That's a hard puzzle. And I think that a lot of the best journalists kind of predated that change and kind of grew up with, you know, in that, with those ethics that like, oh, no, I've got to be objective. I have to find the real story. I have to tell the real story. But that's not the business model anymore. So, how do you reconcile that? I think, like, right now, people are kind of coming out of the fever of that change and going, okay, are we going to be an activist or are we going to be a journalist? And we'll see how it plays out, but it's going to be interesting.

• 43:50Speaker 01

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

• 44:07Speaker 00

  Yeah, yeah. Yeah, no, it's, well, it's, uh...

• 44:11Speaker 01

  Shout out to Eric hiring like, a thousand people. This will be great.

• 44:13Speaker 00

  Yeah, yeah, yeah, no, he is, uh, he's hiring a lot of people. But there, you know, like, the thing about Eric's team that's so amazing is it's a combination of people who lived in the old world.

• 44:22Speaker 01

  Yeah.

• 44:23Speaker 00

  And then, very young people who only have lived in the new world.

• 44:27Speaker 01

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

• 44:33Speaker 00

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

• 44:44Speaker 01

  Thinking about your sort of firms growth, I want to ask you sort of a question both on like the strongest version of let's call it big venture. I know it's not quite the right thing because I think it's a very negative sounding word, but whatever.

• 44:57Speaker 00

  Good venture.

• 44:58Speaker 01

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

• 45:14Speaker 00

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

• 45:48Speaker 01

  Basically, you're saying the companies won't be big enough.

• 45:50Speaker 00

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

• 46:24Speaker 00

  kind of have that many effective partners.

• 46:27Speaker 01

  Cooperating.

• 46:28Speaker 00

  Yeah, cooperating. There's two fundamental reasons for that. One is structure. So.

• 46:34Speaker 00

  Most venture capital firms are shared economics, shared control structures. And if you have shared control, you very likely can't reorganize effectively. So in order to scale, you have to be able to change the org structure. Like, it's just kind of fundamental to scale.

• 46:52Speaker 01

  You're saying you need to periodically update, like every few years, you might need to do a reorg?

• 46:56Speaker 00

  Yeah, yeah. Just, you know, like if you double in size, anybody who runs a company, you double in size. Like, you have to look at the org structure and see if it still works, if the communication paths are still right, if there's too much conflict, all that kind of thing. The side effect of reorganizing is you redistribute power. And so people who had power lose power and people who didn't have power get power. Like, it's just that that's what it is. And if you're voting on that, the chance of you getting that right is zero. Because having done many reorgs in my career, when a reorganization happens, people always do, everybody does the local optimization other than the CEO.

• 47:33Speaker 00

  And so if the CEO gives into the needs of the people and makes it democratic, then you're done. Like, that's never gonna work. So I think it's very hard. I don't know how I, you could ever get to like our size with, you know, shared control. It'd be very tough. The other thing you need is you do need a leader who's, can deal with that kind of scale in terms of making those decisions and, and running the firm. And most VCs don't have people of that kind of operational caliber like some do, but like, it's pretty rare. And if they do, they're often not in charge.

• 48:12Speaker 01

  Yeah.

• 48:13Speaker 00

  So, so we have like, those are the two advantages that have led us. I mean, we're only now 16 years old. Like, most of the firms we compete with are much older than that. But that, those, those issues have enabled us to get bigger.

• 48:26Speaker 01

  Yeah.

• 48:26Speaker 00

  Is basically the, the situation.

• 48:28Speaker 01

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

• 48:49Speaker 00

  I think so. I mean, I think that it's kind of, I mean, like, you know, we've got a 16 year track record. We just raised $15 billion. Like, I think the product to investors is kind of speaks for itself. But like, I think in venture capital, just generally, the way you, there's kind of two parts to getting good returns, like picking the right deal and winning it. I think it turns out that winning it is a much bigger percentage of that equation than people like in VC world like to give credit for, because they like to think of themselves as such super genius. Oh, I saw, I saw Facebook early. That's a real thing.

• 49:27Speaker 00

  But, you know, if you can't win it, then you're still never going to have good returns. And so being able to win kind of automatically, I would say, gets you to the top tier of returns. And then, you know, picking kind of moves you up that list.

• 49:42Speaker 01

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

• 49:51Speaker 00

  Yes, for sure.

• 49:53Speaker 01

  At all stages?

• 49:54Speaker 00

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

• 50:10Speaker 01

  Because it makes it easier to win.

• 50:11Speaker 00

  Yeah, because like, they want their best ideas. They want to actually be in the deals they want to be in.

• 50:17Speaker 01

  Yeah.

• 50:18Speaker 00

  Right? Like, if you're an investor, and you go, hey, I think that's the future. I think that's the greatest entrepreneur I've met. And you can't invest in it. Like, that's very frustrating.

• 50:27Speaker 01

  Yeah.

• 50:28Speaker 00

  So then you end up, the best, the winners get the best investors over time, I think.

• 50:33Speaker 01

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

• 50:44Speaker 00

  Yeah.

• 50:45Speaker 01

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

• 51:06Speaker 00

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

• 51:14Speaker 01

  Okay, but let's say like top 50 or something. Yeah, whatever. Yeah.

• 51:17Speaker 00

  Yeah, no, look, I think that, one, I mean, like, some of it's historical, right? Like, once you get the nice thing about VC economically, if you run one, is carry vests.

• 51:27Speaker 01

  Yeah.

• 51:28Speaker 00

  And so, like, if you made a bunch of good investments somewhere, like, to start your career, you generally want to stay. I'd say the other thing, at least for us, is there's a lot of, or there's great investors that we could probably recruit from other firms, but we're so different culturally than the rest of the VC world that we've had a lot of trouble getting people to stick here who have worked at other firms. It's just, the mentality is so different.

• 52:03Speaker 00

  And not to say that their way is wrong or our way is wrong, but it's different enough that, like, we can't import them. You know, they're not willing to assimilate. We're not willing to change. It's that kind of thing, yeah.

• 52:15Speaker 01

  Could you give your best articulation or best steel man of, like, the counter to this idea of venture scaling? Like, if you had to defend the view of, like, a, you know, I've had Peter at Benchmark or Josh at First Round, to some extent, you know, Sequoia, you know, had said there's limitations. What is sort of, in your mind, if you had to give the best version of the argument for, like, why a venture doesn't scale? Or why small is better in any way? Like, could you give that narration?

• 52:42Speaker 00

  Yeah, I mean, I think that there are kind of configurations where that is true, right? Like, so, you know, as I said, look, if you have shared control, you just can't get past a certain size before it becomes some chaotic, crazy democracy, which, like, democracies are great for, like, if you've got 350 million people, but, like, they're not good if you're a venture capital firm. It's just not good. At least in terms of scale, it's not going to work. It's fine if you don't scale. The second thing is if you have, like, 20 people on an investing team. I don't think that works because I don't think that's a conversation anymore. And so so much of investing is about like, you're trying to find the truth, right? Like you're you're working every day, you know, these conversations and you're talking to entrepreneurs

• 53:27Speaker 00

  and you're talking to all the references and you're talking to customers and you're understanding the technology and this and that and you're having this long, long running conversation about like, okay, what is true? Like, is there going to be a God model or does like, can I like, take a little model and post train it with my own data and beat the piss out of OpenAI? Like, what's the answer to that question long term? What's the answer to that question today? Like, we've got to get it to that. How do you have that conversation with 20 people? Like, it's it's very hard. So I think that if you're configured in that kind of way, then then being large is dangerous, I think, very dangerous. So, you know, there are reasons.

• 54:08Speaker 00

  If you don't, if you don't have the ability to scale in a way that makes you, like, our investing teams all look like small VCs. I mean, like, so Martine's team or Chris's team or Alex's team, they all look like a little VC.

• 54:23Speaker 01

  Right.

• 54:23Speaker 00

  So in some ways, I'm all for that model. I'm just doing it in a context where you have a platform and a brand that can be helpful to entrepreneurs more so than, you know, just, you know, having a person.

• 54:36Speaker 01

  Yeah, makes sense. I guess maybe to wrap, I think one of the other tenants, at least when you got started, which I think is still roughly a tenant today, that I think is like core was you really believed in hiring ex-founders, CEOs. I'm sure you've hired some people who are not, but for the most part, it seems like you're

• 54:52Speaker 00

  In the beginning, yeah.

• 54:53Speaker 01

  Yeah, very concentrated, at least, you know, it seems like a lot of the DNA is rooted in that at least.

• 54:58Speaker 00

  Yeah.

• 54:58Speaker 01

  Why has that been like important to you?

• 55:00Speaker 00

  Yeah, so you know, when we started the firm, like, a big idea that we had, and I would say this idea mostly came from me was that venture capital was disappointing. As a product for an entrepreneur, the reason like I know we had a very hard time building like cloud, cloud ops where although it ended reasonably well. It's just like a very, very difficult to build a company, like excruciatingly difficult. And there's all these components to it and all these things you have to learn. And then things go wrong that are completely out of your control, like the dot com crash or, you know, that kind of thing. Venture capital firms kind of give you the money and then put a very smart person on your board and give you some advice. And that was like

• 55:42Speaker 00

  it. And so we always thought, wow, a much better product would be, give me like the network to be confident and the advice I need to run this fucking thing. Really early on, the way we thought about that was, okay, some experience required to be on your board. You have to have like done this thing before to advise me. Don't just like send me, you know, somebody who doesn't know how to do that. So that was the original idea. That idea turned out to be somewhat right, but not entirely right. So the problem with the way we did it is some founder CEOs are good at being founder CEOs, but not good at explaining

• 56:21Speaker 00

  what the hell it was they did. And then they may also not be that interested in investing like they were at running something, right? Like it's a little bit of if you, there's a feeling you have, if you have a thousand people working for you or whatever, that you're never going to achieve as an investor. Like that's just like that, that's not that. Yeah. It's a different thing. You know, we made kind of the adjustment. We're like, okay, like, yes, advice on how to run the company is important, but like, you know, and that's when I was like, okay, so I'll write some books that explain it and then you can talk to me. Who knows how to explain that. But we're not gonna, everybody in the firm is not going to have to be that. That was, I think, a very important adjustment for us.

• 57:05Speaker 01

  But you write another book?

• 57:07Speaker 00

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

• 57:15Speaker 01

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

• 57:17Speaker 00

  No, although that book does well.

• 57:19Speaker 01

  I'm sure.

• 57:19Speaker 00

  Hard thing about hard things is very good selling. I gave away all the money for it, but it's, it does well. Yeah.

• 57:25Speaker 01

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

• 57:28Speaker 00

  Yeah. All right. Awesome.