Uncapped #23 | Martin Casado from a16z

Martin Casado is a general partner at a16z, where he leads the firm’s $1.25 billion infrastructure practice. Martin has led investments in Cursor, dbt Labs, and Fivetran to name a few. Prior to joining a16z in 2016, he was the co-founder and CTO of Nicira, which was acquired by VMware for $1.26B. While at VMware, Martin was the SVP and GM of network and security, which he scaled to a $600 million run-rate business. Martin started his career at Lawrence Livermore National Laboratory where he worked on large-scale simulations for the Department of Defense before moving over to work with the intelligence community on networking and cybersecurity. We covered: What necessitates specialization The conflicts dynamic Infra vs app companies Importance of open source The only sin in VC --- Timestamps: (0:00) Intro (0:27) Importance of media for VC (3:50) Evolution of a16z (7:00) Specialization (10:32) Value of distribution (13:16) Staying power in infra (19:49) The conflicts dynamic (26:32) State of play in AI (30:48) The future of coding (34:58) Significance of open source (39:48) Marc Andreessen’s leadership (44:02) The only sin in VC (48:37) Scaling a lot of board seats --- More on Martin: https://a16z.com/author/martin-casado/ https://x.com/martin_casado More on Jack: https://www.altcap.com/ https://x.com/jaltma --- https://linktr.ee/uncappedpod Email: [email protected]

• 0:00Speaker 00

  The market is so big and it's growing so fast. Even companies that seem like they're competing end up in totally different places just because so much white space is being created. But they're all competing like totally different companies spaces are competing for the same talent. So the first time I can remember where the actual talent competition is like way more fierce.

• 0:19Speaker 01

  Martina, I'm really excited to be doing this here with you today.

• 0:21Speaker 00

  Same.

• 0:22Speaker 01

  Thanks for making time for it.

• 0:23Speaker 00

  Yep.

• 0:23Speaker 01

  And one of the things that I was just chatting with you and laughing about on my way in, there were like many other podcasts going. There's like one like before and after us, and I talked about this with Mark.

• 0:33Speaker 00

  Yeah.

• 0:33Speaker 01

  About how like podcasts are like this future thing.

• 0:36Speaker 00

  Yeah.

• 0:37Speaker 01

  Of of media. And basically, my question for you is sort of like, as somebody who's been on the inside of a firm that's dominated this, you do a lot of it yourself. Like, what's your experience about like the importance of media for venture capital?

• 0:50Speaker 00

  So I think it's probably important to recognize that it's never been a thing, really. Like, if you look at a lot of historically good investors, they want very public. I can think about like the greats like Moritz, Ping Li, Doug Leoni, Benton, Mike Falpe. Like, they're just not very public. And so historically, there's been no correlation to be between public or not.

• 1:09Speaker 01

  Yep.

• 1:09Speaker 00

  I think a couple of things have changed in that time.

• 1:14Speaker 00

  One of them is the traditional media just turned on tech and it hates tech, right? And so in the past, you know, when I was a founder, to get a like a lukewarm to positive article was pretty straightforward. And the VCs would help with that. Like, you know, they would know a few reporters. It was very easy. But now it's actually very dangerous because like you go talk to them and like, who knows what they're going to say. And so in a way, like, if you want to help a portfolio, you do want to build a bit of a platform, you do have to go straight. So I, I, I think that's one thing that's changed. The second thing is.

• 1:44Speaker 00

  So if you're traditionally an enterprise, take from the enterprise standpoint, like, marketing has been something that you build brick by brick, right? And it's like, you put content out there and people read it and like, it's durable over time. And so you get this kind of compendium and you build a brand over time. And it feels we're in an era now where it's just become so episodic that if you don't understand like the current zeitgeist, you just can't even get a voice at all. And by episodic, I mean, like today, GPT five launch, right? It was, it was, it was massive. Like if you didn't know that that was going to happen, you would have been drowned out. And if you did know, you could draft on it. And so, and then, and then it just feels like for some launches, they go, they're a big deal, and then they just disappear forever. So I just, so much of the

• 2:28Speaker 00

  nature of how we consume and think about content has changed. And so I do think that venture capitalists, one, they need to like, if they have a message they want to get out, they kind of have to go direct because, I mean, if it's your own platform, it doesn't hate you. That's one. But then also to help your portfolio company, I think you need to build an in-house capability. So like, they can know how to like most effectively message and you can't really borrow a page from traditional marketing. And this is from someone that's come very much from the age of traditional marketing. It's just different.

• 2:54Speaker 01

  Yeah. I mean, one of the things that I've been very surprised by is, you know, there's always room for like another podcast or something like that. Like, um, like people consume a lot of this stuff. And I think people in tech find it sort of like a, it's almost like a halfway between working and like watching Netflix where it's like, I'm passively learning, but it's like low stress and people would like rather consume a good podcast than like a new Netflix show.

• 3:17Speaker 00

  Yeah, for sure. And I'll also say like, there's always a concern that there's too much content, but that been concerned has been around forever. There's always been too many books to read. There's so many, and too much like, you know, TV to watch. There's always been too many webpages to read, et cetera. So it's always been an ordered list that starts with the most important and goes to infinity. So the question has always been, how do you be in like the top 10 or the top 20?

• 3:37Speaker 01

  Yeah.

• 3:37Speaker 00

  And that, that changes all of the time. I do think you're right. I think people like to consume things that they can consume casually that is relevant to their interests. And so it's actually a great time now that you can actually be in that top 10 for the set of people that, that you care about.

• 3:50Speaker 01

  Totally. So I want to talk about your time

• 3:52Speaker 00

  Yeah.

• 3:53Speaker 01

  at Andreessen and like what's evolved, which has obviously been like a lot.

• 3:56Speaker 00

  Yeah.

• 3:57Speaker 01

  Can you sort of give the picture of what it was like when you joined?

• 3:59Speaker 00

  Well, it's one, do you want to start when I joined as a, when I was a founder or when I actually joined as a GP?

• 4:03Speaker 01

  Maybe when you joined as a GP, but then let's connect it back to when you.

• 4:06Speaker 00

  Okay. So when I joined, it was 2016. So I've been here almost 10 years.

• 4:10Speaker 01

  Yep. That's a lot.

• 4:12Speaker 00

  No, wild. So, um, uh, so I think it was the ninth general partner. I think the firm has 75 people.

• 4:20Speaker 00

  Not only were we all generalists, like, you know, you could do whatever you want. That was kind of part of the pitch. You know, you could kind of do whatever you want, but like, most of us had done some pretty serious time operating. Like, my journey of my startup was about 10 years, let's call it. And so many of us, like, we're so tired of the space we came from, we did something totally different. You know, like, you know, and so it was very, very different than that. So generalists, a few people in the firm. And then actually, the investing team alone, you really had GPs.

• 4:49Speaker 01

  Yeah.

• 4:49Speaker 00

  And we were all the same. And then you had relatively junior partners that couldn't write checks that actually would bounce between the GPs. Like, so there's no alignment at all. So it was a very, very different structure.

• 4:58Speaker 01

  So I guess one of the things that's interesting then over the evolution is that, you know, it started in this generalist version. And now you're running a distinct platform. And the way the firm is shaped is there's a ton of autonomy. You know, Mark was talking about this on the podcast where basically, part of the idea was like, we can recruit these amazing GPs because they get huge autonomy, but we're going to have specialists, you know, sort of leaders for things.

• 5:18Speaker 00

  Yeah.

• 5:20Speaker 01

  And so I guess what does that change meant for you? What's it been like to go from generalist to specialist, I guess?

• 5:25Speaker 00

  Yeah. So, so I think it's important to maybe talk about why a change is necessary. So the historical context is interesting. I think there's two things that are important. One of them is the model of venture came out when like, tech was like a non-market. It was like this total speculative stuff. And when you meant tech, you meant everything from like bio to software. Everybody was a generalist. Often, it was just kind, it wasn't like really a profession. It was like, you know, if you wanted to play money, you'd do it. And so, you know, they made decisions that made sense at the time, but that no longer makes sense. So for example, it's a historical quirk. Why, you know, we, venture capital uses like the same

• 6:07Speaker 00

  model that you'd use for like a dentist office or something, like a partnership where everybody's equal, right? Like, that makes sense for a small service organization, but you can never scale that. And so there's all these decisions that were made when the market was much smaller that as AUM grows and as the market grows, like there's many companies, many more companies you could deploy in now, you'd have to restructure the firm. And so kind of our view is like, we definitely want to scale. We definitely thought we had the best platform for founders. And also, the markets were so large, you didn't have to be a generalist. Like in 1980, if you did enterprise infrastructure software, how many companies could you invest in?

• 6:42Speaker 01

  Not a lot.

• 6:43Speaker 00

  Two or something like this. Now, you know, someone can have an entire career investing in databases alone, right? And so as the market grows, clearly you have to specialize. And so when I joined, we were all generalists, often that hated our own disciplines.

• 6:55Speaker 01

  Yeah.

• 6:56Speaker 00

  Because, you know, we've kind of been through it.

• 6:57Speaker 01

  Can I ask you a question or something?

• 6:58Speaker 00

  Yeah, of course, yeah.

• 6:59Speaker 01

  Do you have to, do you have to become specialists as the market grows or as the firm grows? In other words, is that, is the specialization choice downstream from growing the firm? Or do you think it's downstream from the market growing?

• 7:12Speaker 00

  I think it's ultimately the function of the market, and I'll describe why. So if you believe that this stuff is competitive, right, which I do, then you need to end up with a product that is, that is competitive. And because it's adaptively competitive, like let's say you've got two firms that are competing, you're always going to be looking at like what the weakness of the other one is. And so like, for example, if a certain firm can't do seed, then of course, you know, you'll want to do seed. Or if they can't do large checks, you want to do large checks. What happens is everybody ends up getting as many products as they can so that they don't have any weaknesses, which will naturally happen. Now, you can only do that if the market is large enough. And so now you have a high AUM, right?

• 7:57Speaker 00

  You've got a lot of products. I've got a growth fund, I've got a seed fund, I've got a venture fund. And then you have to ask the question of how do you scale that? And my venture was not, was not built to scale. And I think this is why we've seen the industry go this way, which is the market has increased a lot. You know, funds want to be competitive. In order to be competitive, they have to find out kind of like what products that they offer that are actually competitive. This drives to higher AUM. And as a result, you know, you have the specialization.

• 8:21Speaker 01

  When you're...

• 8:22Speaker 00

  No, that's just, just that said, so, so, but there's also kind of this internal thing, which is assuming that you want to scale AUM independent of the market, you have to solve this problem because you just can't scale like a consensus org of generalists. Like it's just not something you can do.

• 8:38Speaker 01

  Like the people issues on the inside? You just can't get through good decisions, is that what you mean?

• 8:42Speaker 00

  Well, I just think conflicts, well, there's many, many issues, right? Like, but one of them is, is you wouldn't ever have a structured approach to tackling a market. So you can never know that you've got good coverage because maybe everybody wakes up in the morning and they decide they all like the same thing. And so I just don't think you could actually, even from a numbers game, scale it because you don't, you're not carving it up enough where you actually know that you've got like, like a uniform focus. You don't know if you have, are hiring people that can cover the certain areas. I actually just think, even just from a strict number standpoint, it doesn't work.

• 9:14Speaker 01

  How valuable is the specialist thing when you're in these competitive situations? Like, I imagine that a lot of the times when you're competing to win a deal, it's, you know, up against a firm that, or a partner that is like more or less generalist, I would think. And I'm curious how that plays out sort of in the day to day.

• 9:33Speaker 00

  Uh, so I'm not, yeah, it's, it's, it's hard to answer how much it helps in a competitive situation. I think, I think my experience is a lot more powerful that founders know that I've been a founder. And I know this is such a cliche thing to say, but I, I do feel that resonates much more than like, I got a PhD in computer science, or I know infrastructure.

• 9:58Speaker 01

  Right.

• 9:58Speaker 00

  Because the reality is, most founders know a lot more than I do about whatever their area is, even if I've got a high level thing. So I think in the competitive situation, it's not, it's not hugely, but, but what I think it is very helpful for is like, I am primarily a series A investor. And at series A, you have to have some thesis on how the tech hits product and how the product hits the market. And unless you've been very close to, to both of these things, that's a hard thing to do. Now, if I was a growth investor, it wouldn't matter. I'd just look at numbers. But like, for where I am, I think you kind of have to understand.

• 10:32Speaker 01

  Yeah. And, and interesting offshoot question from that is,

• 10:37Speaker 01

  You know, when we were talking earlier about how important is media? You're like, it seems really important, but you know, there's a lot of great examples of investors who are all over. They're, you know, all over media and social media. There's a bunch of examples, phenomenal investors who you never hear about if you go on the internet.

• 10:51Speaker 00

  Yeah, I don't know. I literally don't know if they're correlated at all. Mostly the best investors I have known in the last 20 years had no media presence and they had no interest in it.

• 10:59Speaker 01

  Totally. And then I'm wondering, I think, you know, around being a former founder.

• 11:04Speaker 00

  Yeah.

• 11:04Speaker 01

  Like, as I'm just like thinking through names, I can think of like a lot of examples of both. I definitely think founders appreciate it and I'm, you know, speaking as somebody who's a former founder and that's a nice thing. But like it also, I wonder if that's also an uncorrelated thing? Or do you think that has more of a correlation somehow?

• 11:20Speaker 00

  Okay, so I'm, I'm just gonna guess, I would guess that founders really appreciate reach. And so I don't think a founder's like, Martine, I saw you on that podcast. You seem smart because everybody sounds pretty smart on podcasts and articulate and whatever. I do think, I do think a founder would be like, hey, listen, like when you really believe in something, boy, like you talk a lot about it. You know, I will have the opportunity to talk about it, you know, you will help me kind of break through the bootstrap problem of, of zeitgeist, understanding and brand. And so I do think having a platform matters more and more. And again, a lot of this is just because the media has turned on tech so heavily.

• 11:57Speaker 01

  Totally.

• 11:58Speaker 00

  Like, there just aren't a lot of options.

• 11:59Speaker 01

  Yeah.

• 12:01Speaker 00

  Again, I mean, I, I think sometimes we in DC kind of overweight our importance in these things. It was, most companies with great brands did not do it through a VC firm.

• 12:09Speaker 01

  Totally.

• 12:09Speaker 00

  Right? And like, it's not like, you know, we somehow can single-handedly make great brands, but we are an accelerant. We are a platform, um, you know, and there is actually a lot of signaling as a result of alignment with a good firm. So I think all of that matters.

• 12:22Speaker 01

  Yeah, I do think that it's, um, there's this question of like, are the top VCs getting to do the great deals? Because they were the top VC or are they in some sense helping make them? And I, you know, my own instinct is that for the most part, it's the former and like, you know, companies are just almost exclusively made by the founders.

• 12:40Speaker 00

  I totally agree a hundred percent. I think that the primary, the primary reason to create a distribution channel is a VC is so the portfolio can get out there and reach to people. This is very hard what we do. It's not because like whatever Martine needs to be famous or Martine needs a brand like that doesn't really matter. That never comes up in like a closing situation. I mean, I've done so many deals, right? That's never been a thing, but I do feel that a number of our companies, you know, once they're ready to launch, you know, we can provide a benefit. And so I think that is ultimately the benefit to the portfolio, but I've never seen a company win or lose by marketing. Right? So I just don't think that that's the high order.

• 13:15Speaker 01

  Totally. Okay. I want to jump over and talk about AI a little bit. And in particular, I'm interested in talking about like infrastructure because it's something I know relatively little about. And so I want to like learn from you about like, first of all, like, what is it? If you could like put some like broad, you know, kind of, you know, a broad fence around what the term is.

• 13:33Speaker 00

  Yeah. So I do computer science infrastructure. So I'm like a computer science maximalist. I think it's like the meta discipline that you can like, you know, solve other, other disciplines with, right? Like we solve grand unified field theory and physics goes away and then we just go on to biology type thing, right? So I do computer science. So infrastructure is the stuff used to build the apps. So you sell to technical buyers, people that use computer science to solve business problems. So like if the company sells to marketers, that's not infrastructure, but it is developers, database administrators, networking. That's our infrastructure. I mean, and so like depending on how you count, this is a multi-trillion dollar industry. But like the important thing is, is like the actual buying and use behavior is a very technical thing.

• 14:16Speaker 00

  So that's, that's our definition of infrastructure.

• 14:19Speaker 01

  Okay. So when you're looking.

• 14:20Speaker 00

  Computer network, storage, databases, now models, like that dev tools, that type of stuff.

• 14:25Speaker 01

  And it seems to me from, you know, just my, my viewpoint is that when these new paradigms come, cloud, mobile, you know, AI. It seems like that's like a very good moment for, you know, infrastructure because the board's shuffling a lot and new infrastructure is being laid. And so when you're looking at it, is there any broad way that you think about, you know, will this, will this continue to exist over time? Will the models or, you know, whatever AWS in the past, will they do it? Will there be, you know, a need for somebody, third party? Like, how do you even start to think about what will play out over time, just like at a structural level and infrastructure?

• 15:01Speaker 00

  So can I say something that's probably may not be true, but I feel very strongly.

• 15:04Speaker 01

  That's what we're here for.

• 15:05Speaker 00

  This is like a total.

• 15:06Speaker 01

  That's what this whole thing's about.

• 15:07Speaker 00

  This is like an inflammatory opinion that's self-serving that may not be true.

• 15:11Speaker 01

  That's what I want.

• 15:12Speaker 00

  But but it's an observation. Here's my observation. In software, the true differentiation is is technical, right? You know, now there's, of course, brand stuff and business stuff, but like, you know, if you have two products, like, it comes down to a technical problem. And that almost always comes from the actual infrastructure that, you know, that the software is built on, right? So if I built like two, let's say, dog walking apps, the fact that like it's got three or four features, like, you know, that's a very light differentiation, but like one being super fast, one being super slow. That's like a like an infrastructure. So the companies that provide infrastructure, I think ultimately they are this, they are like the source of value.

• 15:56Speaker 00

  They are the source of differentiation. And so while there are fewer infrastructure companies, my bet, and this is my my my inflammatory opinion, is that they just have better multiples and they're more durable because they service everything above it, but they're the thing that provides it. And actually, Sarah Wang, who is an investor on the growth fund here, and I did a, you know, kind of relatively loosey goosey public market analysis where like, what are the multiples of companies that are infrastructure versus apps? And they just have higher multiples for this reason. Does that make sense?

• 16:29Speaker 01

  It does make sense.

• 16:29Speaker 00

  So like, so my, so my view is, is, is the infrastructure is where the value is. Every time you have a platform shift, you'll get a new set of infrastructure companies. And then a bunch of apps get built on top of those. But like, the value is going to accrue largely to the infrastructure because that's where the differentiation ends up happening. So you don't need to have a platform shift necessarily in order for you to have, you know, like important infrastructures with good multiples. Like, I just think it's a durable part of any sort of application. But then the question is, is what happens when it matures like the clouds do and becomes an oligopoly and they no longer can private investors invest on it. But every time we've seen that happen, you see a layer of infrastructure evolve on top of it.

• 17:14Speaker 00

  So maybe say it this way. So the way I view the world is you've got a bunch of app developers who are non-tactical and they want to develop apps to solve all sorts of like consumer problems and business problems and whatever. So their goal is to build is to build an app for a non-technical user. So why would they kind of invest heavily in technology? So they will pick up whatever is easiest to use technically. And so, you know, the companies that fill that need are the ones that provide a lot of the value of the true differentiation.

• 17:43Speaker 01

  Yep.

• 17:44Speaker 00

  Does this make sense? And so I always think that will always be something that you can make it faster, you can make it easier, you can make it more reliable. It'll always be kind of the bedrock that apps get built on. And, you know, until like people stop wanting to produce apps, like you'll always need to produce. And this is totally independent of like macro shifts or platform shifts.

• 18:04Speaker 01

  How do you think about if or when the big players are going to decide to like enter those markets and like how that might impact things? You know, like in cloud, like whether or not AWS was going to offer something directly now, whether like, you know, OpenAI or Anthropic are offering directly, or are you like, if I'm investing in the series A or B, that's not that important. You just have to think about great entrepreneur, big market, and that's okay.

• 18:28Speaker 00

  Yeah, I mean, I mean, I worked at VMware for four years. We were the big incumbent. And so like, we're always worried about the shadow that is cast by these incumbents. But the reality is like, it's not nearly as strong as everybody's worried about. And it's very hard for these big companies to execute. And so, you know, Reinvent is like the AWS conference. And I swear, being an infrastructure investor for so long, every time they have Reinvent, I have to play therapist to all the founders. They call them like, oh, they're entering our market, they're entering our space, like they're doing all this competitive stuff, etc. And I still today can't really think of a company that AWS has put out of business, even though it entered the market. And the reality is they kind of compete with everybody. And so, I mean, if the market will bear an independent company.

• 19:14Speaker 00

  Then that requires your own sales force, your own focus on customers, your own support, your own technical differentiation, right? And like, no big company can like, build a small company in a big company because they have too many centralized service. And if the market won't bear an independent company, there's no company to build anyways. And so my view is, as long as the market is continuing to expand, which software is continuing to expand, if you enter an area that's viable, as it expands, you will fill that expanse. And if that doesn't work, then the market is either not big enough or it isn't expanding fast enough. And I just feel like if you take the historical view, this is the case.

• 19:48Speaker 01

  I strongly agree with that. When you think about like, markets in AI right now, and like, how things are evolving, one of the things I thought was really interesting from talking to Mark was like, basically, as you know, you all sort of ambitiously grow the firm, one of the biggest whole, one of the biggest issues is companies running into each other in this like, conflicts dynamic. And obviously, you're super, you're, you're becoming prominent within a, you know, area to a degree where you're gonna just, I would imagine, just companies, as they grow, they grow into each other. And what's your experience?

• 20:21Speaker 00

  It's such a complicated problem, because you can do, you can try and do everything, right? And still end up with conflicts. So it's actually pretty good to categorize the conflicts. And so perhaps the most common conflict is one company that, two companies that you've invested in, one pivots into the other one. Right? And this one, it's basically impossible to do anything, because companies have to, you know, figure out the right business. You're on the board or not, and you don't control it, and they do that. So that one, I feel like no investor can, you know, there's nothing an investor could do. There's another more pernicious type of conflict of existing portfolio companies, I'll get to the net new companies soon, which we're seeing a lot now, which is, imagine you have an old, imagine

• 21:06Speaker 00

  you have a tech revolution like AI, and you have a set of old companies doing things the old way. And you have a set of new companies doing the new thing and the old company wants to pivot to using AI to do what they did before. But the reality is, is the old way is not the AI way. They're not AI native, right? And so now there's this question where she's like, well, when we invested in this company, it was doing X, whatever it is, and now wants to do X with AI. But the reality is the AI way of doing it is entirely different and they've got no chance. And so then you have, you know, the dilemma of going to the founder and saying, listen, we're investing in one of the new space, but it's AI and you're not AI, which of course that's not going to work. Or you just don't do the deal. I run into this one a lot. We've got a very large portfolio and to date, we've just been like, hey, listen,

• 21:51Speaker 00

  like we're going to back the portfolio companies that we have. Actually just happened last week. The founder called me and says, you can't invest in this. This is the space we're going into. They haven't even done it yet and we try to do the right thing.

• 22:01Speaker 01

  Yeah.

• 22:03Speaker 00

  There. So that, that one is, I think the toughest one for all investors today, just because like you never want to kind of bet against your own portfolio. But like the reality of them doing, like being actually competitive is very low. I think the most, and then there's, there's one more, which is kind of like this fun stage thing, which is like, we've got a growth fund. They do their own thing. We've got like an early stage, they do their own thing. And, and like, sometimes the communication isn't always perfect and you can kind of end up in like, you know, conflicts that way. The one that we simply do not do is, you know, and I always have this talk track, you've probably heard me say it. And I borrowed it from Chris Dixon, but it's very, very effective where you basically say, for any company that I'm an investor in, if I'm talking to another company that looks similar, I'll ask the founder, I'm like, listen,

• 22:48Speaker 00

  is this your mortal enemy? You only get one. You can't, you don't have 21, you only get one, but is this, if this is your mortal enemy, we'll do everything together to kill it. And we won't invest in that, but like you have to name your mortal enemy and you can't keep changing it. And I think at least that gives them the power to decide who it is, but not kind of hamstring investment efforts.

• 23:05Speaker 01

  Total. That makes sense. I mean, it's also funny because I think a lot of times, you know, two companies that look the same, but are serving very different segments of the market. Those are actually, they might sound like competitors, but they're actually never going to bump into each other. Versus two companies offering, you know, different products to the same customer are much more likely to bump into each other.

• 23:23Speaker 00

  Well. In AI, it's even crazier than that, which is the market is so big and it's growing so fast. Even companies that seem like they're competing end up in totally different places just because so much white space has been created. But they're all competing like totally different companies of space that are competing for the same talent.

• 23:39Speaker 01

  Talent, yeah.

• 23:40Speaker 00

  So the first time I can remember where the actual talent competition is like way more fierce than the market.

• 23:47Speaker 01

  Well, actually, what's funny about that is I've heard of people getting upset with their investors because not. And they're like, I know this company has nothing to do with it, but we were interested in that candidate. And one of your partners sold that candidate on one of their.

• 23:59Speaker 00

  It's a very real thing. And what's interesting is like, you often don't even know.

• 24:02Speaker 01

  Yeah.

• 24:02Speaker 00

  I'd like, you know, like, yeah, they'll say, oh, I'm, you know, I'm talking to a healthcare company.

• 24:07Speaker 01

  Yeah.

• 24:07Speaker 00

  You know, or whatever. And you're like, okay.

• 24:09Speaker 01

  What's I got, I, what's, what's tough, but I guess is also like a blessing overall is I think there's a lot more good ideas than there are talented people to work on those ideas. And I think one of the hardest things right now is like clustering talent densely enough behind a good idea.

• 24:22Speaker 00

  Yeah, it's also, this happens when there's these large infrastructure build outs. This happened with the cloud too, which is there are these moments in time where to build the system, you have to have experience with the system at scale. Right? This happened with the internet. This happened with like the big cloud data centers. And this is the case with AI, which is like, it's one thing to like go to school and know AI and be a good researcher. It's another thing to have actually trained a very large model. You know, like maybe what there's 30 teams that have ever done it.

• 24:48Speaker 01

  And that's part of where you see these like mega aqua hire acquisition things. Because it's like certain experiences are worth a huge amount.

• 24:55Speaker 00

  Yeah, yeah, a hundred percent. And like, like the, the market always normalizes these things. By the way, I mean, this is all ancient history now, but the exact same thing happened in the internet. I remember once there was like basically one guy that ever wrote a BGP stack, which is like, it's a way that kind of routers talk on the internet. And he was like the one guy that could make it work. And so he just basically got these crazy, at the time, crazy offers. And he'd jump between all the router companies and do that. And there are very few teams that could do this. And so we've always seen this episodically in the industry. We're just kind of seeing the new version and the, listen, the businesses are working and they're doing great. So we're kind of seeing it on steroids.

• 25:28Speaker 01

  Yeah. I mean, you know, if you're a, if you're a Fang sized company, what's it worth to have like the one or two or three people who really know how to do something huge?

• 25:36Speaker 00

  Yeah. Yeah. I also feel like.

• 25:40Speaker 00

  Tech always figures out a way around kind of regulations and markets like, you know, and like the late 90s, it was like, you know, you could IPO a company for very little, you know, with not a lot of of market traction. Remember like the whole SPAC craze?

• 26:01Speaker 00

  And then now we've got these weird acqui hire things. I think the reality is is is in hot markets, people know that there's a lot of value to be had. Nobody knows exactly where it is. And so, you know, there's all sorts of things, you know, the markets try to do to get access either to the talent or the companies or whatever it is. And we're kind of seeing our version of that now, whether it's these like, I will hire an individual one, I'll do where to acqui hire. But again, I feel like this is all normal in the sense of, you know, we've seen it in different shades in the past.

• 26:30Speaker 01

  Yeah, totally. It's like an evolutionary response. What are the markets right now in AI that you feel most confident are totally working? What are the ones where you feel like they're on the horizon and, you know, should be working very soon? And then what are the ones, if any, that you maybe have low confidence will will work, period?

• 26:47Speaker 00

  Yeah. So, so the diffusion markets are all working. So any area where you bring the marginal cost of creating something, a piece of content to zero is clearly working. You're creating an image, creating music, you know, creating speech. And we don't think about these markets as much because we're all so focused on like the frontier labs, but like, it's cheaper to build these models because they're smaller. And then like, you know, people need content. And like, actually, like, the economics are so simple. Like, I, you know, like, whatever. Imagine you're an artist and you're like, okay, I'm gonna, I'm gonna draw a picture of Martine, right? Like, how long would that take you?

• 27:25Speaker 01

  A while.

• 27:25Speaker 00

  Whatever. Three hours and it costs you 400 bucks, right? But if I have a model do it as a hundredth of a penny type thing, right? So you've got a four orders of magnitude difference in economics. So that's why we've seen those types of companies, you know, think like, you know, Eleven Labs or whatever do very well. So like, that's clearly working. And this is content creation where the marginal cost of of creation goes to zero. I actually think the whole kind of loneliness companionship stuff is definitely working. It's just this very fragmented market. So I think If, you know, I think the unit economics are fine. I'm not sure like from an investor's standpoint, how you think about it, but like it's a use case that will be solvent. You know, that will, that will, will do fine.

• 28:05Speaker 01

  Yep.

• 28:05Speaker 00

  Um, code seems to be working incredibly well.

• 28:08Speaker 01

  Yes.

• 28:08Speaker 00

  Uh, and you know, we, you know, you see this in, you know, in, in, in cursor and, and the whole thing.

• 28:16Speaker 00

  The areas that I don't know, I mean, the work, but I don't know how the economics actually pencil out are the enterprise use cases at this point that are kind of a bit more agenticy, audibly.

• 28:27Speaker 01

  These are ones you're putting in the middle bucket? This is like what you're saying is like kind of working, but not a hundred percent sure yet.

• 28:32Speaker 00

  No, no, no, that, so the ones that are, are, well, so, so the middle bucket was like, was companion, was, was actually like, like, you know, like, like the friend, the emotional, like the character that AIs, like there, there's a long tail of companies that are, that are basically emotional support and our friends and our entertainment.

• 28:50Speaker 01

  Probably also a big component of the usage of like the main models and stuff.

• 28:53Speaker 00

  Yeah, a hundred percent. Like that's clearly working in the sense that people are willing to pay for it. The engagement's great, et cetera. From an investor's standpoint, it tends to be kind of long tailed and fragmented and kind of spreading.

• 29:02Speaker 01

  And then that enterprise agentic workflow type stuff.

• 29:05Speaker 00

  That was the, the fourth one I mentioned. That's like, you know, chatbots. I mean, clearly it's working. And there's, there's companies that are doing it, but it, it tends to be, you know, if you look at the companies like, you know, there's a lot of like bespoke work going on. Like it's just a different type of economic model than the content creation one where it's like.

• 29:24Speaker 01

  Totally.

• 29:24Speaker 00

  It's just a model. So like those ones, we're still trying to understand.

• 29:27Speaker 01

  Yeah. I mean, one way to think about that is like, how confident are you that, um, that like highly skilled work will get replaced in, let's say like legal, finance, accounting, tax, like those kinds of areas.

• 29:39Speaker 00

  So the, I think the way I do it is, is, is actually very simple. So if the use case is the model is creating content.

• 29:48Speaker 00

  And that content is whatever it could be language, it could be image, that clearly works. Right? So, okay, if the model is automating something a human being would do. And we conflate these two things all the time. That's totally different, right? So if I'm like, model, do this thing instead of me, that's not content creation. It somehow has to like mimic exactly what I do. That area still needs a lot of work, it seems to me. And so they they clearly can do some work of a human. But, you know, you know, not as exact and they need a lot of guidance. And I think that's an area where there's still holds a lot of promise. But like the economic case isn't as obvious, right? Like make me a picture versus like, go browse the web for me. And so it's kind of that second one, the automating what humans do.

• 30:33Speaker 00

  Where we're still like, we've got lots of investments. We're very excited about it. We think there's a great future there. But like, the economic case isn't nearly as good as make me a picture.

• 30:42Speaker 01

  Totally. Let's to double click on code for a second. Obviously, you know a lot about it through cursor, your technical CTO. Where do you think we are right now? You know, like I, I just posted one with Guillermo, who, you know, and who obviously knows a lot too. And it was like, this is both the future. And it's also at the moment, you know, it's not obvious that it is in today's, you know, incarnation. It's not necessarily producing quite as much value for engineers as even they themselves experience. But clearly it's gonna get there. So yeah, I'm curious.

• 31:13Speaker 00

  So just so you know, AI in general has this problem, which is so dazzling. People conflate, oh, this is dazzling, whether this is useful, right? That's for everything, right? It's not just code, right? It's like, you're so impressed, like, these things are magic. And then somehow that dopamine, you know, hit.

• 31:29Speaker 01

  What's really funny is so I posted this on X and, you know, like this study that was saying that people experience their own programming as plus 20%. And like the the observed results are minus 20 or whatever. And what was funny was there were a bunch of reply threads where somebody was like, no, no, no. This is crazy. I've been using it and I'm so productive. And then the reply to that is like, that's what the study is saying. Which I'm sure for some people there, but you know, there is this thing.

• 31:53Speaker 00

  There literally, there is an endorphin hit. These things are absolutely magic, but I don't think it makes it very hard to think clearly about the actual utility. Right? Now, so I think you can say a few things like, you know, like, there's a lot of things that it does very well that programmers don't like to do. That like is pretty routine, right? Documentation, it's great at writing documentation, right? There's a lot of boilerplate stuff it knows. The thing that I use it for the most is, you know, writing code isn't just writing code. Writing code is like, understanding the frameworks, it's knowing how to deploy it. It's knowing how to run the tool chain. And like, there's no first principle way of knowing that type of stuff. There's not like some like core computer science fundamentals on deploying to Netlify.

• 32:38Speaker 00

  Like, that doesn't exist. And so it has all of that knowledge, which is clearly very useful. The writing code itself, I think it's still clearly very early days. I mean, if you constrain how you use it, it can be very effective. And then if you don't, it may not be as effective. And so I think that like, studies like this that are purely observational are hard to read into because, you know, it's just like, this is like, you can use it for anything. And because they're so magical, I do think people tend to use them for stuff that they may not be so good at.

• 33:09Speaker 01

  Yeah.

• 33:09Speaker 00

  Just because the experience feels good. And so my guess, like any new to technology will develop best practices. I feel very strongly we're going to get a 10x in productivity. But like, it'll take us a while to get, listen, I remember in other epochs of development productivity, like when the IDE came out, when a higher level language, when Oop came out, like, we'd get so enamored with the toolset. Like, object-oriented programming, I'm gonna do everything in it. And it turns out these were great advancements in computer science and they helped the best practices and they helped architecture and engineering. But at the time they came out, they were just so cool, like that just kind of took a lot of our focus. So I think we're seeing that. So it's like, this drop of productivity is not like, necessarily could require you to drop productivity. I think it's, it's just so cool, I'm gonna try it with everything.

• 33:53Speaker 01

  Yeah, it does seem like it's on a path to like, you know, in the same way that like, people have been saying this about self-driving cars. And it seems like it's going to become true. It does seem like we'll get to a place where like, you can.

• 34:01Speaker 00

  It's so clear, I mean, this is incredibly obvious. I mean, you can literally just scope into a subset of things that are obvious, like it's really good at writing tests. It's really good at writing documentation. It's really good at like, dealing with a bunch of like, you know, long-tail framework stuff that you don't know. It's good at teaching you things. I mean, there's clearly, these things are obviously good at. I just think. We get so enamored with it, maybe we start using it for stuff that it's not so good at, or not so equipped to deal with, et cetera. But yeah, this is very clearly, uh, it's gonna change software. And, and, and sorry, I don't mean to ramble on. I just have to say, I have been in software for a long time, since the late 90s. We disrupted everything, right? We disrupted the back office, we disrupted hotels, we disrupted everything.

• 34:43Speaker 00

  Um, this is the first time I say that we're probably getting legitimately disrupted as a discipline. Like, what it means to be a software engineer is changing pretty fundamentally. I think it's because of AI. So it's kind of fun to like, actually be the disrupted.

• 34:55Speaker 01

  Yeah.

• 34:55Speaker 00

  For a change.

• 34:56Speaker 01

  That's awesome. Yeah. Um, another topic I wanted to get your thoughts on was, um, like, why is open source so important to you? And, um, you know, like I saw, you know, you were really excited about, you know, OpenAI's open source model. And I know this is like thematically and spiritually important. Like, why do you, why, why do you think that it is such a critical part of the way that, you know, this plays out?

• 35:18Speaker 00

  So I think open source is historically one of the best mechanisms that shows a healthy ecosystem, right? Uh, and what normally happens is somebody does something closed source. It turns out to create a market and then somebody releases open source and it like stops a monopoly from forming. It enables everybody else, you know? And then it kind of, you know, keeps the, the people that are closed source to continue to be innovators. Um, and allows everybody else to come in. So it's just been very, very healthy. And the thing that really worried me last year, and, and, and, you know, in the past, academia, VCs,

• 35:56Speaker 00

  startups were all very pro open source because they understood that it was a very, it was a very important part of a healthy competitive ecosystem. And the thing that really, really worried me last year was the people that should be championing open source, like VCs, like startup founders, like academia, were decrying how dangerous it was in relationship to AI. The implications of this to me are huge, right? I mean, of course, you know, the national security implications are pretty straightforward, which is like, if somebody else does the open source, it proliferates. And that, that's not good for US interest, but for the industry, it's terrible, right? I mean, this is kind of how you actually create monopolies. Um, if, you know, you're not allowed to, to create, um, something that enables everybody else.

• 36:38Speaker 00

  And, and again, it was very dramatic when like the node close was like, open source is bad. And founders fund is like, open source is bad. And you had academics saying, open source is bad. And so I was much more interested in like, Trying to reset the discourse than like any specific open source release.

• 36:53Speaker 01

  Yeah, and I guess a lot of that probably came down to like how how potentially dangerous was the technology? You know, and so like if you thought it was extremely dangerous, for example, then there is an argument for like massive containment. I got or what was the steel man in your mind? You know, at the moment when closed source was like such a strongly argued, like if you had to, you know, argue why you think people were saying that, like, what would have been?

• 37:16Speaker 00

  I really think it's the legacy of Bostrum, right? Like, so, you know, Bostrum wrote the book Superintelligence in two thousand and fourteen.

• 37:21Speaker 01

  Terminator is waking up, we gotta.

• 37:23Speaker 00

  But this is before all of these things, right? That like like Bostrum's book was a thought experiment. It was like this platonic ideal.

• 37:30Speaker 01

  Yeah.

• 37:31Speaker 00

  Of AI, and then somehow that created this, you know, very interesting kind of intellectual journey on the perils of AI. But then, you know, like GPT two lands and these two things got totally conflated.

• 37:44Speaker 01

  You also got, there's a lot of incentive for people to be doomery, I think. Like it like gets a lot of clicks. It was like.

• 37:50Speaker 00

  Yeah, but not a story, but it's the weird thing historically, like, let's take the internet as an example. So like I was there during the early days of the web. We had a lot of examples of like how it actually changed the dialogue when it came to to risks, right? We're running critical infrastructure on it. We had totally new types of attacks like the Morris worm, which had actually taken down computer systems. So we're at this space, we're like, OK, well, it makes you more vulnerable if you use it. And we have new attacks that you can attack with it, right? And yet academics are like, this is great. The technologists were this is great. So you had this very even handed debate. What was so weird about the AI was it wasn't even handed. Like, I'm all for both sides of the debate. Like, I'm not a, you know, I, you know, I'm not just, you know,

• 38:36Speaker 00

  pro innovation at all costs, but like, that's not what was happening. And so like, maybe you're right, maybe it's like the doobers got more a click, but I think it's something more than that. I just think that there was an existing intellectual legacy that came from Bostrum that had some very influential people, right? Like Elon was pilled by that. You know, Eric Schmidt.

• 38:56Speaker 00

  Moscow, it's like, and they had very legit concerns, but they were kind of already primed. And like, you know, there was already kind of that ready. So when it happened, I just think they, they were already ahead of the game. It took a while for the rest to catch up. And now I, now I listen, when I listen to the discussion, it just feels more even handed, which thank God I don't have to like, be on Twitter.

• 39:17Speaker 01

  Yeah.

• 39:17Speaker 00

  Talking shit about this like I did for so long. Just I feel like the right voices are in the room.

• 39:22Speaker 01

  For sure. And obviously this isn't like, you know, I don't think either of us would saying that like, there aren't real risks.

• 39:27Speaker 00

  No, they're totally real. It was just a totally lopsided debate. It's so crazy when VCs are talking against open source. I mean, to me, I mean, and like, no academics are talking in defense. But now, now we have a bunch of academics in defense. I mean, like, I think the right people got mobilized, but it really took some, some rallying to get the right folks back into the conversation.

• 39:45Speaker 01

  Yeah, yeah, absolutely. I want to ask you just a couple more questions about sort of the structure of the, the firm and sort of your own work outside of the specifics of what you're investing in.

• 39:55Speaker 00

  Yeah.

• 39:56Speaker 01

  One that I thought was a really interesting point from Mark, when I talked to him on the podcast, was basically around, you know, like, how do you sort of drive the right overall aggression of the firm? And he said something to the effect of like, when you're in a market moment like this, the right answer is to just encourage people to do more. And so many partnerships are trying to get other people to a no. And like, that's like the common function.

• 40:21Speaker 00

  Yeah.

• 40:21Speaker 01

  And, you know, he was basically describing something where like, it was like, how do we get people to a yes? And like, how do we take advantage of this?

• 40:27Speaker 00

  Yeah.

• 40:27Speaker 01

  I'm just curious how you feel and, you know, your experience, you know, in the last couple of years in AI land.

• 40:35Speaker 00

  So one of the reasons Mark is such a great leader is he, his intuition on the temperament of people is, is almost perfect. And he will drive.

• 40:46Speaker 00

  Like the right behavior relative to that. And so like, if he thinks people are being too conservative, of course, he'll drive them to be more aggressive. There's definitely a more aggressive state. I mean, the reality about AI is there's been a lot of money that's already been lost in absolutely record time, right? Right? So just because like the upsides aren't great, doesn't mean like the down, like there's been a lot of money, you know? And so, you know, as a, as a firm, we've, we tend to be fairly disciplined and do a lot of market analysis. And you, he, you think for coming? And so like, you know, he's very good about like pushing the team. And I think he's absolutely right to do that because, um, you know, there is already a foundation of discipline that like is not going to be eroded or compromised by doing that. On the other hand, there are

• 41:31Speaker 00

  individuals who are like, shoot from the hip, like everything. And then he actually tempers his messaging a lot with those. And so I would say, again, I, I mean, you know, I, I don't know what was in his head when he was saying that. But I just think if I was going to add a little bit of nuances, my observation of Mark is, he's very good at pushing when people need to push, but he understands the situations when like, that's probably not the most appropriate thing. And so I think this is a core issue of leadership, which is you need to provide kind of the right kind of macro, you know, macro, you know, shift in order to get the right one without being too overbearing.

• 42:09Speaker 01

  Yeah, I think, you know, some of that conversation was in relation to like, you know, fund sizes and what's possible. And I think some of it was articulating just like, these companies can be enormous. This opportunity is like, you know, quite oversized relative to what's

• 42:21Speaker 00

  Yeah, yeah. But, but I mean, but, but again, I just think it's important to note, which is

• 42:25Speaker 01

  That it's a per person thing.

• 42:28Speaker 00

  If you take, you know, him at his word, it would be an infinite fund deployed infinitely.

• 42:34Speaker 01

  Yeah, yeah.

• 42:34Speaker 00

  Right? So like, this is a

• 42:36Speaker 01

  It's calibrated to the people.

• 42:37Speaker 00

  This is an intellectual landmark, which is set And is a hundred percent the right one to do.

• 42:43Speaker 01

  Yep.

• 42:43Speaker 00

  But it, but what's important.

• 42:45Speaker 01

  Yeah.

• 42:45Speaker 00

  He's, he's so good at that. Yeah, it is in relationship to the mindset of the people that he's talking to.

• 42:50Speaker 01

  And what.

• 42:50Speaker 00

  And he knows that.

• 42:51Speaker 01

  And what flagpost you have to put out to get people.

• 42:53Speaker 00

  A hundred percent and a hundred percent. And then I have seen him very subtly, depending on who is the audience.

• 42:58Speaker 01

  Yeah, yeah, yeah.

• 42:59Speaker 00

  You know, he like moved that flagpost to different places.

• 43:02Speaker 01

  Where do you normally experience yourself there? Are you, do you feel you're often needing to get pulled into more aggression or into more conservative?

• 43:09Speaker 00

  I think I'm a seven out of 10 for aggressiveness. I would say my team is a five or a six out of 10. Those people on my team that are 10 out of 10s, there's people on my team that are three out of 10s. So I think like, if you did a normal distribution, I'd say we're six and a half to seven. And so for us, you know, he, I mean, he, he pushes pretty hard, but I know he knows that he's getting like.

• 43:32Speaker 01

  Yeah.

• 43:32Speaker 00

  You know, like a step forward as opposed to like.

• 43:35Speaker 01

  Yeah. And I think that's like one of the, I mean, being a leader of people is always in relation to, you know, pulling, you know, minds in a certain, so that's always how it goes, which is, you know, it's a rare thing to. It's rare to be able to do multiple versions of that at the same time with lots of different.

• 43:48Speaker 00

  No, exactly. Exactly. And it is just, it's just, it's hard to appreciate from the outside because you have to actually see the conversations.

• 43:54Speaker 01

  Yeah.

• 43:54Speaker 00

  It's something that he's just phenomenal at. And I'm, and they're very kind of nuanced, different takes where he kind of knows where people are, you know, kind of nudge them in the right direction.

• 44:02Speaker 01

  To the extent that we are in somewhat of like a gold rushy in the good sense moment.

• 44:07Speaker 00

  Yeah.

• 44:07Speaker 01

  You know, overall.

• 44:08Speaker 00

  Yeah.

• 44:09Speaker 01

  Do you think, um, does it change your perspective at all about, um, what you need to see to want to make an investment? And so like, maybe a specific version of this question is in a somewhat stabilized time, I think most, you know, most people would agree that you should only back extremely special founders.

• 44:26Speaker 00

  Yeah.

• 44:27Speaker 01

  Is there ever a version in these kind of moments when a good founder in, you know, a great market with like exceptional traction or some configuration like that?

• 44:35Speaker 00

  Yeah.

• 44:36Speaker 01

  Where you say, actually, you know what? That, that works here and that can produce something really big.

• 44:39Speaker 00

  So do you know how we think about investments? Cause I think it answers this question. So it's very simple. So the way that we think about investments and the, the reason is, is the only way you can scale. Because you can actually distribute this kind of algorithm to a team is. The only sin is picking the wrong company in a certain space because

• 44:59Speaker 01

  Because that conflict thing?

• 45:00Speaker 00

  Because you're conflicted out of the winner. Like investing in a space that doesn't work is fine. I mean, like, there's no way you can actually predict whether a space is going to work or not. I mean, that's like weather prediction, right? But in a given space, if you know all of the companies, you do the work, you can most likely, you know, at least tilt it. Like, you can do the work to determine if you think one is better than the rest. Like, it's something you can actually put. So the way that we view the world is first you have to identify legit spaces. We think that founders are smarter than VCs. So I don't care if VCs think it's interesting. If there's five founders in a space and they're good founders, man, they're betting their families, their fortunes, you know, their time. So it's probably a real space.

• 45:43Speaker 00

  And then we do the work to understand the space and all the teams, and then we make a pick within that. I mean, that's really how we think about it. That's true within AIs, anything else, right? The thing that's harder is, and I've evolved so much as an investor. I used to think like, oh, we'll get good deals, like price matters, outcome matters, TAM matters. And more and more, especially with AI, that's what you have to throw away. The market is the market.

• 46:09Speaker 01

  And that's what matters the most, you're saying?

• 46:11Speaker 00

  It doesn't matter at all. I'm saying, I'm so, so, so, so we don't know what the TAM is because it's growing so fast. Like, nobody knows valuation. So I think this is, it's contrary to like, common belief. I think in these times where you don't know the TAM and things are moving quickly, you definitely want to pick the best team. You definitely want to pick the best team. I don't think you should overthink the space. But like, asking questions about like TAM or valuation or value makes a lot less sense because that's actually what's uncertain.

• 46:44Speaker 01

  You just need to be in the best one.

• 46:46Speaker 00

  You have to be in the best ones.

• 46:47Speaker 01

  And the market will just produce it on some.

• 46:49Speaker 00

  The market is the market. And listen, either you believe that the stuff is expanding very quickly in marketing, because our. Are efficient or not. And listen, having been through the dot com boom and bust, the reality is the market was actually pretty smart. And if you put the bets in the right companies, that would have been generational up, the same thing with cloud, the same thing with mobile. And so the goal is finding the right companies. And like, if you really, if there's one change, I would say is you, you need to throw away too many thoughts about market sizes and damn.

• 47:18Speaker 01

  Is the rational sort of behavior then to, you know, obviously you want to invest as early as possible, but you want to invest as early as possible when you know that you've got the right one. So does that ever push you to being like, I'd rather wait around.

• 47:30Speaker 00

  Oh, yeah, all the time, right?

• 47:32Speaker 01

  Yeah.

• 47:32Speaker 00

  All the time. So I mean, yeah, this is all very rough heuristics, right? Like, you know, we get it wrong all of the time, you know, I mean, you know, like I've made so many mistakes. And so you're just trying to beat the market, right? You're just trying to have.

• 47:48Speaker 00

  But, but yeah, very often like our discussions are like, do we actually know who the winner is?

• 47:52Speaker 01

  Yeah.

• 47:52Speaker 00

  Like, you know, and, and often we wait for that reason.

• 47:55Speaker 01

  Basically, the earliest that you feel confident you can pick it.

• 47:58Speaker 00

  Yeah. And so like, listen, when we do see it's normally it's like the person that did the thing in the big company. And now is doing the thing and is the world expert. And the thing is very tactical thing. And like somebody else isn't just going to wake up and decide to do it. Who's a good founder, right? Because it like the pool of people that do it are like five and like this one's the best of the five. Like, that's kind of like for early investments, the way that we think about it. And then most everything else is actually the result of a lot of market work. And then this is our best guess, like this is kind of best approach, best team, best market. And then in these types of way, and this is where market, this is, this comes from Mark and Mark is totally right. Like, if you think you can outsmart the market, like I think, you know, it's very tough. And so just being the best deals.

• 48:37Speaker 01

  As a final topic, I want to just hear your perspective on the board relationship and board roles in general.

• 48:42Speaker 00

  Yeah.

• 48:43Speaker 01

  And maybe as like a prompt on this, I feel like you've done something which I find very impressive, which is it seems like you're able to manage successfully many more board seats than a lot of people. And, you know, I often will hear common wisdom that, you know, it could be 10 or 12 or 15. But it seems like, you know, you found a way to do more than that and be very effective with those founders. And so I just want to hear sort of your perspective on like, what's that relationship? What do you think is sort of like the limiting factor here, if any? How does it all play out?

• 49:14Speaker 00

  Yeah, um, I mean, I do think that like a lot of the common wisdom on boards came from like that earlier year in DC when, you know, it's like people would literally choose VC for like a life choice or whatever, right? And I think if you come from like pretty serious operating like you do and like I do, like we've just got a lot of hours into the day to throw at it. VC is also involved that we've got better platforms that actually really help with these things. And so, um, you know, between like actually, you know, the hours in the day, um, I mean, how much does that take up? Like board work take? I mean, you're a board member, you know, I actually find that like, can I, can I just take a step back just because let's, let's talk about what boards mean. Like, because I always ask when I invest in a founder, like, like, what is a board for? What do you think they say normally?

• 49:58Speaker 01

  I'm actually curious what the most common answer is, but I could imagine.

• 50:01Speaker 00

  What do you think it would be? Yeah.

• 50:02Speaker 01

  Uh, I would think they would probably say it's something like, uh, you know, governance and approvals or something like that.

• 50:08Speaker 00

  No, that's, that's what they should say. That's what you and I would say. They say, they say to provide guidance, to help with hiring. I'm like, no, that's an, that's not a board, right? And, and, and, and so a lot of, you know, there's a lot of this belief that like a board member is somehow helping with company building and, and almost like, it's actually hard for a board member to be like the best friend of a founder for those types of things because like, you know, you're, you're a fiduciary and you do governance. So like the actual board work itself is just not a lot from the fiduciary governance standpoint. So often implicit in this question is, is like non-board stuff, like how can you be helpful to a company and everything else? Cause that can take a lot of time. And I do think this is where like,

• 50:49Speaker 00

  you know, having a big platform to lean on, being totally available helps a lot, but like, it's not the board work. It is the other stuff. And so I would say to, you know, anybody listening who, who is a VC, you can take as many boarders you want. The actual board work itself is not. The question is, can you still be available to founders and add value, whether you're on the board or not? A lot of the companies I spend the most time with, I'm not even on the board.

• 51:10Speaker 01

  Yeah. That's what's funny to me is, you know, people talk about this with me. There's some board seats I have that are, you know, the founder's asking quite a lot less than, you know, some seats where there's no board seat and they're sort of decoupled.

• 51:22Speaker 00

  Uh, yeah, exactly. So I feel, I feel like we need to be very clear. Like a board is to keep everybody out of jail and to like do the right thing for the shareholders. And like, like the actual work requirements to that are relatively little.

• 51:32Speaker 01

  Yep.

• 51:32Speaker 00

  That's actually not the hard thing, but we use it as a proxy for the hard thing. The hard thing is like, how do you add a lot of value? And for that, I do think like this, and you have to like, in, in my case, Listen, I have the pleasure of working with the best team I've ever worked with my life. They're fucking amazing. We've got like a phenomenal platform. Like it's fucking amazing. And I get to leverage all of that. And it's not a board thing. It's like the help the company type thing.

• 51:52Speaker 01

  Totally.

• 51:52Speaker 00

  And I just think this is like the new era of VC. Like you help these companies with more than just one person who shows up, you know, off the golf field, like, I don't know, every Thursday.

• 52:01Speaker 01

  Yeah. Well, that's a great place to leave it. Martine, thanks so much for making time for this. I really enjoyed it.

• 52:05Speaker 00

  It's a pleasure. That was great.