Uncapped #38 | Ben Horowitz from a16z

[00:00] You know, when we started the firm, like a big idea that we had was that venture capital was [00:06] 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. 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. Right now, I'm glad to be here. It should be some fun. Can we start with your relationship with Mark? Because I think it's like a super unique [00:36] Yeah. [00:36] 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? We've been working together 30 years. And I would say we're both different and the same. And so not too complimentary. So that helps. He's kind of like, we're a little more like relatives than anything else at this point, you know, [01:06] 30 years and so forth. Yeah. 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? We're friends, but not like drinking buddies or something like that. Right. Like, uh, we both work so much. We mostly talk about work anyway. And then like, cause we're working together, we're talking about work, but it's kind of like the way I would describe it. Um, and I want to

[01:36] So I'm just saying the relationship comparison that I think is most similar that I've... [01:42] 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 star character. [01:51] of talents that nobody else has. - Yeah. - Like nobody else has maybe like ever had, right? Like you've talked to Mark, to the point where like, [02:00] As a firm, we can just put him out there and it's like a magic trick. He's like, bang. And for me to... [02:07] My kind of relationship with him is... [02:11] You know, like... [02:12] Quincy Jones, it's not like I'm, you know, [02:16] I'm certainly not Michael Jackson, but [02:18] I know enough, Quincy Jones knew so much about music and so much about how you get the most out of somebody that talented. 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 he makes me much, much better because he's Michael Jackson. And you're never going to make Thriller if you don't have Michael Jackson. [02:48] 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. And I'm different than him. And 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, like the great

[03:18] I love him. I want people mad at me. 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? No, we've had a lot of kind of arguments. And we... [03:40] We've had a lot of arguments both on kind of which direction it should go and in what kind of time frame. He has kind of more ideas about things we should do than I do just because, you know, in running it, I try and keep it a little more contained. Although, you know, 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. So it's more common that he's generating in your editing? [04:07] Yeah, more common, although I definitely generate some ideas and then 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, OK, we're committing the flag here, but not there. [04:37] that there's like a [04:39] 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, six hundred people. Six hundred people. Yeah. Yeah. And like your day is, I guess, is management to some extent. You know, it's still 600 is relatively small on kind of the scale things that I run. Yeah. I mean, a lot of it is still like, I mean, I have like 25 one-on-ones with entrepreneurs every month, you know, just in various around the portfolio.

[05:09] 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. 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 [05:39] I think that you don't really understand the VC business if you're not like on board to make investments and understanding like, okay, you know, because like hiring changes. Like hiring has changed a lot in the last five years just because like the offers didn't used to be like this. And how do you defend against that? And how do you do all these things? And so, like if you're running a venture capital firm and you're like, how in tarnation did they get that much, you know, that many RSUs? And it's like when I was a boy, you'd only get four. Yeah. Well, yeah, you can get... [06:08] out of the loop really, really fast. When you think about like... [06:12] the way that you've decided to structure [06:14] 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. Yeah. You've structured this in some way where you can have a certain... [06:26] caliber of GP. How have you thought about like, what's like 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? You know, it's funny. Mike Moritz 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

[06:56] disagreeable people who are the best VCs. I mean, like that's, you know, the, you, you, you can't find, you can find a VC who you don't like. You can find a great VC who's, 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. Can you be in a good, agreeable VC? You know, I don't know many. Um, so I think some are more agreeable than others. So I do think there is a kind. So the, [07:24] To be kind of a long-term, like all-time great VC, I think most of those end up being disagreeable because... [07:32] 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. Yeah. You can be a good agreeable heat seeker. Yeah. In fact, it probably helps because you just want to be liked by all your peers. I think the best heat seekers probably are agreeable. You're right. So that kind for sure. Friends with everybody, want everybody to think they're smart all the time. Yeah. [07:57] But the truffle hunters, like they're all disagreeable. Have you ever seen a very good set of results from somebody who is just doing heat seeking work? In a period, yeah. And usually what happens is they show up during a boom and then they go away after the boom is over. And, you know, because partly they weren't that they were interested in the chase more than the actual like, oh, here's a breakthrough new technology.

[08:27] these amazing techniques. Like they don't care about that. I mean, if you're the true heat seekers, don't care about that at all. They're just like, wow, that's hot. I'm going to 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. There's a good version of this that I know some people who are, would get framed as heat seekers, but it's a little bit different where they, they can tell that it's going to be hot. Like they can, they don't know if it's going to be [08:57] this, but they're like, this is going to be hot by the next round. I can just see the setup. Yeah. And I think there's something interesting there. Like I've seen seed investors who just seem to have a nose for like, this is going to get a hot series A. Yeah. And who knows what'll happen after that. Yeah. You know, that's a real thing. I mean, I agree with you. I think that's a real thing. It's, you know, it's not so much our business, but it's, uh, God bless them. 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 [09:27] there becomes this sort of like [09:28] 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. Yeah, I mean, I think there's some of that in the calculus. And then... [09:37] You know, I mean, I think, you know, for us, [09:41] 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... [09:49] Yeah. [09:50] more [09:51] mission oriented. So like our mission isn't to get higher returns than the S&P 500, although that's a good side effect or whatever. You know, our mission is much more to like, can we help the

[10:03] best entrepreneurs build the best companies and kind of make us in the country and the West strong technologically. [10:12] And so when we think about it through that lens, [10:15] 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? [10:27] 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? Yeah, it's like I would say it's quite different in that. [10:49] You know, look, good execs understand, um, [10:54] One, the importance of chain of command, their managers, they... [11:01] A lot of them may be execution people, process people, that kind of thing, as opposed to people generating a lot of ideas. Whereas every good investor is a massive idea generator. They don't necessarily like rules or... [11:17] be willing to follow them. And so I think that the burden on everything making sense [11:26] every step of the way is much higher. And then also you really have to, from an organizational design standpoint, you've got to minimize conflict or it's going to be complete chaos. So in a company, you can get, like there's always going to be some cross-functional dependency in a company and you have to live with it. And then through some combination of rules process and telling people or whatever, shut the fuck up,

[11:56] this way, you get there. I think in a VC firm, you can tolerate much less of that. [12:02] you know, like if the org doesn't solve the conflict issue, like the ability to solve major conflicts one-off will cause a lot of issues. You're saying interpersonal conflict is worse in a venture firm? Yeah, much worse in that both because of the [12:20] 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 martin 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 [12:50] but like found an entrepreneur that they like who's doing something and I go invest in that model that conflicts Martine out. Yeah. Like he's going to be beyond Matt. Like he's going to want to like murder the person. I mean, like that, it's such a bad problem to have conflict like that 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. [13:20] that your own people don't undermine them and these kinds of things so like the conflicts are extremely intense in that way when you see like a real one are you like i'm gonna let them figure it out or are you like i'm gonna mediate this no no no 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 what do you mean they're too respectful they're like if benton would stop fighting the worst conflicts

[13:50] it could be something very stupid and trivial, but they get so hot in VC. Is this between [13:57] GC GPs that you worry about it, or are you going inside team lead? [14:02] sort of org and working out their conflicts for them? Or are you like, you need to run your own division or whatever? Like sometimes there's something inside the, like a fund, but those are pretty cohesive. So we design them, like every fund we have runs like, [14:18] 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 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 it's very important to squash them. And they're all kimchi problems. They're all the deeper you bury them, the hotter [14:48] in ABC. It always gets worse. What are the things that like you then need to like give sort of [14:55] guidance on, like you and Mark, let's say, at a firm-wide level? Is it about overall deployment pace? Is it about structure? Is it about approach to the market? What is the sort of broad intersection point across all the different funds? Yeah, I mean, some of it is just kind of general principles, things we believe in. So, one, we have to make sure we're taking enough risk. And that usually comes of the form is...

[15:23] 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? [15:35] in the world of doing this thing, not on [15:38] Oh, like... [15:40] the monetization model doesn't make sense, or like they don't know anything about go-to-market, or they don't actually understand accounting. You know, like that's not ARR, like what the fuck are they talking about? [15:54] Those things, like... [15:56] You can always rule out a deal on weaknesses. And I think it's... [16:01] It's always a mistake to rule out somebody who's [16:04] truly world-class on a weakness. And then it's always a mistake to invest in somebody who's not truly world-class [16:12] 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 important psychological thing because, you know, we have so many like brilliantly analytical people who can find what's wrong with anybody. And, you know, I always remind them, [16:42] to find it yet. When you think about how you're deploying software, [16:46] capital, it seems to me like, you know, you and I would put like you and Sequoia in one shape, which is like, there are many deals and you've scaled up the number of great, like, it's basically a game of how many GPs can you scale? Because, you know, a GP can only do so many deals. And like, how big can you make the teams? And your answer to that has kind of been like many funds. And then

[17:07] 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. [17:16] 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, you kind of know what I'm getting at. 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... [17:35] And what we want to accomplish as a firm, which is, again, like making America the strongest country in the world technologically, the concentrated approach just doesn't [17:45] quite work with that mission. And then- Why is that? Because we just need more shots to build these companies? Well, I mean, if you look at a founder's fund or Thrive, we're both great firms. [17:59] There are whole sectors that they're not really in. There are entrepreneurs who could build something great that they're happy to miss because as long as they get the very biggest ones and so forth. And that's not really what we're about. [18:14] If crypto is going to be important to the financial success of the United States or the way AI interacts with the economy and so forth, then we're in. What are you talking about? We're going to ignore that. We need to help that succeed. 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. And so...

[18:42] Our model wouldn't let us ignore something that important, but [18:47] If what you're trying to do is say, okay, of the five best companies of the decade, do I have big positions and enough of them? Yeah. Look, I think that's a good financial... [18:59] 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. Is it the kind of thing where like over time, there's no reason for somebody who's doing the sort of broad base of lots of series A's and B's and, you know, that, that work. Is it just rational to, if you can raise the money, do billion dollar checks into those companies when they're really [19:26] running very far. If you look at it [19:28] Historically, depending on the vintage, sometimes that strategy of waiting for the things to get to the billion-dollar valuation... [19:38] is definitely the best strategy. [19:41] other eras like [19:44] that set of companies just all suck. And the actual, all the good investments are in the A and the seed round, because something new is happening. - Yeah. - 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, it didn't work out that well. You know, you were kind of at the end of the cycle. That may work better now, we'll see. - Yeah. - TBD. - Obviously, you were raising, you know,

[20:13] big funds and you've also like, it's worked. You know, it's like on some level, like if I think about like, [20:18] when you start any company or maybe any venture firm too. Yeah. It's like you sort of need to have something that you believe that not everybody believes and that needs to be right. And I would say like there's probably multiple, but like clearly one of yours that you got to early was like venture is going to scale. Yeah. And, you know, it looks like that's worked really well so far. Can you talk about like. [20:38] the thinking behind why scale is so important and like why you and Mark have believed that it's like the dominant strategy? Yeah. So there, I think there's a couple of [20:47] different dimensions to it. One is like, [20:50] 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 doesn't make any sense. You're just going to chase a lot of bad stuff. [21:20] But what he thought then and kind of the bet that we made was, well, [21:25] If software eats the world, it's not going to be 15. It's going to be 150 or 200. And that's what it's become. And so to get into that many great companies every year, you clearly need to be of a bigger size. There's just no way to address the market if you're... [21:40] Five guys. That's not possible. I think the more important part of it, which is like a big...

[21:46] rationale for starting the firm was if you're an entrepreneur, [21:51] What do you need? [21:53] And you need to be important in the world, which means, okay, 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 an AI or crypto, which is like everybody now? How do I do all that? How do I have employees take you seriously? [22:23] 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, [22:37] Like the product of a VC that has a platform and capabilities and so forth is somewhat, you know, speaking as a former entrepreneur, I needed all that, you know, and to me, that's a more important thing. [22:52] part and we kind of see that every day so so that that part of the idea was really 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 i want to pull open a couple of those um 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 cruise back to the firm and it's like this positive flywheel that seems like a big one these

[23:22] 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. Like, hey, I just started a company. I've got regulatory issues. Jamie Dimon, can you have lunch with me? Yeah. Like, good luck. So 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? [23:52] moved away from the ones that didn't work. Can you talk about some of the ones that [23:56] You know, that's fine. Yeah, I mean, like, so we did some things early, um... [24:02] where we were publishing [24:05] sort of, you know, we had this thing where we were going to, um, [24:10] have sort of general, [24:12] 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 is best at which. And then we, you know, host models and we try stuff out on them and so forth. So like, [24:35] from a tool evaluation standpoint, like we can just accelerate you and tell you exactly what's what. Doing that in general, well, like a lot of things I think that we tried to do across domains, uh, ended up being not as interesting. And that's, you know, that's getting true for [24:52] talent as well. So like, yeah, CFO is a CFO for the most part. Like the hardware CFO different than a software CFO, that kind of thing. But that's easy. But like an AI researcher is pretty,

[25:04] 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. I mean, the recruiting stuff is probably at this point for me, just talking to mostly series A companies, I think recruiting is like the number one thing that was like, help me recruit. Yeah. Yeah. Have you found that like you can effectively aim [25:26] you know, recruiting teams at companies for specific periods of time. And yeah, I think it helps to get [25:32] The... [25:33] seed corn, right? Like, so a lot of what you're trying to do is, can you get the first three to five people in who are stellar and then have networks where you want to draw from? Who your VC is actually matters a lot on that, right? An engineer like cares about like, okay, is this person going away? Is there more money behind this? Have I heard of them? That kind of thing. [26:03] Thank you. [26:04] get [26:05] hyper proficient at like [26:08] recruiting [26:09] Closing. [26:11] interviewing onboarding training or they're never going to be a good company you're saying to some degree we're like you can't do it all for them or they'll never build the muscle yeah at some point uh like you'll end up retarding their growth if you you [26:23] put in like their entire team. Now we've put it like we've, [26:27] probably help through our network, like Databricks hire, like over a hundred people for sure over time, but not in the beginning, but they're really good at recruiting and so forth and so on. So like now it's just like, okay, people from our talent network are interested in working there. Um, but that's different than that first, you know, the first few people that you hire, those are relationships that we have that will introduce you to somebody and like, maybe they'll fit,

[26:57] of very specific thing. How about your view on like, um, [27:00] board seats and board membership and how important that is. And maybe to put 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're not going to do anything." You've got some that are sort of like, you know, [27:17] breathlessly talking about this 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 the board member should be? I probably don't believe in the spiritual connection. I was sort of maybe embellishing a little bit, but you know what I'm talking about. So first of all, boards are important. [27:35] for founders. So like the idea that you're going to run without a board, um, [27:40] after you've given [27:43] equity to employees and sold equity to people who are not you. [27:47] 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 a massive protection. Like if I go, well... [28:06] I want to give a 2% grant to this person in the company [28:13] You have to realize you're a fiduciary to like the rest of the company. [28:17] that you're diluting [28:19] 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,

[28:29] 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 a hundred percent, 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 [28:53] I would say, so there's a couple of interesting things. So the Y Combinator people actually said... [28:59] 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, there's confounding factors, right? Like, but... [29:18] In their view, the other thing was just in observing the company's rhythm of having to [29:25] tell somebody outside of the company what you're doing every three months or every two months. Creates this internal pressure. It's very valuable. It's just like a good organizing principle to keep yourself on track. So I believe in that. And then I do think... [29:40] Certain kinds of board members can be very, very impactful at different points in the company. Just with myself, [29:47] But like... [29:48] Right now, [29:50] If Ali kicked me off the board at Databricks, [29:52] I'm not sure that like they would do much worse. Like I honestly don't. However, there were times, for example, the Series C, I led the Series A, NEA led the Series B, nobody would do the Series C of that company. Pete Sonsini and I led that one too. NEA and us led the C in addition to the B and the A.

[30:13] If I'm not on the board, like, I don't think there's any way that's happening. So that's like an existential issue. Second thing, you know, they had an offer to buy the company for like, [30:24] 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. That's a big deal. 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... [30:46] Oh, we're going to do you a favor and not be on your board. Because look, when you're in a company, all you think about all day is a company. You don't have perspective. So if there's somebody who can help you think through things and has perspective... [31:01] that can be worth the whole thing, right? So it's not a nothing. I think it's not a... I've seen board members... [31:08] and [31:09] that add no value the whole time they're on the board. Like that happens all the time for sure. Yeah. Yeah. So I don't want to overstate it. Well, there's also, um, there's two types of sort of ways to be impactful. [31:18] There's sort of like these high value moments that are these discrete, crisp situations that you can say X was going to happen and I made Y happen and Y was better or whatever. And then there's sort of the like daily engagement type of board member who's talking all the time and, you know, interviewing candidates that, you know, the CEO is upset about something. It's somebody to talk to, et cetera. Yeah. 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?

[31:48] board. [31:50] 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... [32:06] 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? Does this work now? [32:18] Only at this point or earlier in your career did you need to do more of the daily higher engagement model stuff, and only now can you do the-- [32:27] this version. No, like I think that part of what I'm getting at actually is I think there's this idea in venture that you can only be on like eight boards before you collapse. And then I was like talking to Martine, 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. Yeah. 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. Yeah. But if you have a platform, then when they go, hey, I need to meet a customer, [32:57] 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 Ben Martin's not doing that, right? Like we have a whole platform that does that. And [33:10] 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.

[33:20] 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 and so forth. Then you can't work on that many. Yeah. You know, like those guys are like, that's a special platform. [33:37] God bless those VCs and so forth. But we don't ask you to do that on our thing. And I don't think it's necessary. And look, I think for the work I do, which is helping people think through how they run the company, how they think about a business deal or this and that and the other, that daily frequency, I think, can be destructive to the development of the CEO. The CEO kind of ends up having to stand alone. Because ultimately, they're going to stand alone. [34:07] you know, like 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? Are we going to, you know, change the [34:24] Like, you don't want to... [34:26] the CEO looking to somebody from the outside to make a decision like that. Because a person from the outside does not have the correct context, the [34:35] 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, [34:43] this way so you can look at it from that angle, missing that in the third. [34:47] but not like, what should we do, Ben?

[34:50] You know, like it's, how should I think about this is a much better question. The last question on this, I just want to, [34:59] sort of hear how your thinking has evolved. [35:01] You guys came out early, like I guess 2009, with this idea that like media and brand are a big deal. And I think in many ways, I don't know exactly because I didn't graduate 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. [35:31] of what type of brand and media and so on matters. Yeah, yeah, yeah. So look, I think the original idea was very simple, which is VCs didn't market themselves. It was some kind of code in VC land. And we're like, well, since we're new and nobody knows who we are, and that's what we know how to do, we're... [35:51] People who build companies will kind of 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, [36:04] Everything. [36:05] I mean, there were blogs and stuff, and we had blogs and that kind of thing. But the primary way people got information was through the press, for sure. And the rules of the press are...

[36:21] And the laws of physics of the indirect channel going through the press are completely different than the laws of physics of going direct. [36:29] very fixed number of channels that matter, very fixed format that you can have a quote or a short five-minute interview segment where they're hitting you with questions that you don't want to answer and all that kind of thing. And then the brands were all... [36:44] companies, you know. [36:46] Ford, GM, this, that. The indirect world is completely upside down from that. There's unlimited channels. There's unlimited formats. You can tell the longest or the shortest story you want to, it's no problem. And then the brands are mostly people, right? Like, is it Palantir? Is it Alex Karp? Is it Elon? Or is it X? Is it Jensen or is it NVIDIA? So you can't really have a [37:13] brand that's completely independent [37:15] 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 Thornberg, and what he's building is a completely [37:29] new marketing model for us. [37:33] Everything is there because the laws of physics are different. So you have to build a wholeness system. And look, I think that what's happened with the other VCs is because they were late- [37:43] to copy us, they're still in the old world by and large. And they have some light shots at the new world, but they're going to have to do a lot of changing. It's also the kind of thing I think where if you don't internally get what it's all about, you can't just replicate people's activities. I feel like this is one of those things where you have to understand the underlying physics of how it's working. No, that's exactly right. The ethos of it, it's very culturally

[38:13] to 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. Totally. You know, like I'm just talking shit. And that's better. And if you like offend somebody a little bit, it's like so be it. Yeah. [38:27] 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. Yeah, exactly. Never apologize, flood the zone. Yeah. 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 some thing going on where people have like lost their attention and ability. [38:57] to read and so we've all just decided well we'll just put out videos and stuff yeah I think podcasts are definitely working the best right now I mean [39:05] Like, do people read blogs still? I expect a little change. People do read blogs. If you have one, that really hits. [39:11] I mean, actually, we just, there's a couple of really great ones that we came out. One was, you know, there is why there's no God video model and like that kind of Justine wrote that. Yeah, the good ones are good. I feel like the long tail slop ones are not worth doing really. Yeah, the right blog every day. I don't think that works anymore. Where it used to, I think, just to like have more content and surface area probably did work like 15 years ago. Yeah, it was like kind of like the daily habit.

[39:41] podcast and exercise you know like in that kind of thing which is like that's a big advantage yeah it's a big advantage now with uh 11 labs reader you can just throw it into the uh uh the 11 labs reader and what works besides podcasts [39:54] Well, I actually think blogs and social media still work pretty well. I think that, you know, with podcasts, you have to be... [40:02] 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 [40:12] things that [40:13] has been best for me as an audience member is [40:17] You know, if you watch the news, it's almost impossible, right? Like, 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? [40:30] like fake positioning on like, oh, well, da-da-da-da. Like I asked him the question this way. So now everybody's going to like, hate Trump. Everybody's going to like Trump. It's like, no, I'm not an idiot. Like, you know, whereas a podcast, if I'm listening to the podcaster that's marketing to [40:49] 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. Yes. For me, at least to enjoy a conversation I'm watching, I need to trust both the asker and the answerer, or it just doesn't feel quite right. It drives me nuts on the news when you know something about it too, and you know it's just wrong. And then they're going off and everyone's posting about it. It makes me crazy. It's so bananas. Yeah. Yeah. And well, I mean, and particularly, by the way, everything in the

[41:19] So, like you're talking about these threats that are imaginary and then [41:25] you are just ignoring the fact that like on current course and speed, we're going to have 10 million Chinese robots in the U.S. with backdoors to China. Like that's going to be an actual real problem. Yeah. You know, like just in terms of leverage in the next trade negotiation. It's tough because a lot, I mean, in many ways, structurally, I think traditional media... [41:46] 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. Yeah, there are definitely there. There are definitely real journalists. [42:09] journalists out there, even at publications who, you know, we in tech really don't like. And I think there's a role for it. 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. Yeah. And we did it to them to some extent, right? Like, so when tech broke the media monopolies, so they are coming from the standpoint of, you know, we don't even care about the economics [42:39] So we're going to have these, we're going to, [42:41] 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.

[42:57] They're in a like an existential financial crisis and they have to get to an audience [43:04] And now they're going, well, going to a broad audience is just way too hard and way too expensive. So I'm just going to market to people who are on the left. 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. [43:34] 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, OK, 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. 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 [44:02] 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. Yeah, yeah, yeah. Yeah, no, it's, well, it's, uh... Shout out to Eric hiring like a thousand people. This will be great. 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. Yeah. And then very young people who only have lived in the new world. 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,

[44:32] No, definitely. I mean, I think that they think [44:36] In a way, he's got more access to more interesting people and certainly the audience is building. So that could be... [44:44] Thinking about your sort of firm's growth, I want to ask you sort of a question both on like the strongest version of let's call it big venture. I know it's not quite the right thing because I think it's a very negative sounding word, but whatever. Good venture. Good venture. Yeah, instead of big, good venture. So actually, let's start there. Obviously, you've raised like, you know, a big new fund. I think, you know, I'm guessing your view is over time, this could grow much more. What are the laws of physics on the size of how big venture firms can get and still be productive? [45:14] The biggest limit is the market. So how many [45:18] great new technology entrepreneurs are there to fund. Look, there's already more money in the venture capital market than there are kind of great entrepreneurs with great ideas. But if you're number one, that's fine. 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, [45:48] Basically, you're saying the companies won't be big enough. Well, I think there just won't be enough... [45:53] of them, I think that's the most likely, would be the most likely scale challenge for us. Yeah. 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

[46:05] to like an order of magnitude more money. But [46:09] you know, that could change, but that's the, I would say that's the current kind of number one limiter. I think the limiter on most funds or most firms is not the limiter that we have. So for most firms, [46:20] The limiter is they can't [46:23] kind of [46:25] have that many effective partners. Cooperating. Yeah, cooperating. There's two fundamental reasons for that. One is structure. So... [46:34] 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. You're saying you need to periodically update. Like every few years, you might need to do a reorg. Yeah, yeah. Just, you know, like if you double in size, anybody who runs a company, you double in size, [47:04] 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 [47:11] And so people who had power lose power, and people who didn't have power get power. [47:17] 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, [47:26] When a reorganization happens, people always do, everybody does a local optimization other than the CEO. And so if the CEO gives into the needs of...

[47:37] the people and makes it democratic, then you're done. Like that's never going to work. So I think it's very hard. I don't know how you could ever get to like our size and, [47:48] with [47:49] you know, shared control would be very tough. The other thing you need is you do need a leader who's [47:56] can deal with that kind of scale in terms of making those decisions and running the firm. And most VCs, [48:04] don't have [48:06] 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 yeah um so so we have like those are the two advantages that have led us [48:18] Now, 16 years old, like most of the firms we compete with are much older than that. But those issues have enabled us to get bigger is basically the situation. 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. [48:48] 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 look, I think in venture capital, just generally, the way you, there's kind of two... [49:05] parts to getting good returns, like picking the right deal and winning it. I think it turns out that

[49:11] Winning it is a much bigger percentage of that equation than... [49:16] people like in VC world like to give credit for it because they like to think of themselves as such super genius. Oh, I saw I saw Facebook early. That's a real thing. [49:27] But, [49:28] 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 10. [49:38] tier of returns and then, you know, picking kind of moves you up that list. You're saying you could be a roughly random picker. [49:45] or an average picker, let's say, and a great winner, and that's going to get better returns than the inverse? Yes. [49:52] For sure. At all stages. [49:54] 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 work here? Because it makes it easier to win. Yeah, because like they want their... [50:13] best ideas. They want to actually be in the deals they want to be in. Yeah. 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. Yeah. So then you end up, [50:29] The winners get the best investors over time, I think. It's an interesting thing because I was talking to somebody recently that [50:37] it's actually really rare for a venture firm to have two, what you would consider like generationally good investors, like almost never happens. And then it's like ridiculously rare to have three. And like, if you have three, then you're like, you know, Sequoia and Dresden basically. Why is it so hard to get many at one place? Like, it just seems so...

[50:55] 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 well i think that [51:08] 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. Okay, but let's say like top 50 or something. Yeah, whatever. Yeah. Yeah, no, look, I think that one, I mean, like some of it's historical, right? Like once you get the nice thing about VC economically, if you run one is Carrie Vess, [51:27] 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... [51:36] there's a lot of [51:39] Or there's [51:40] Great investors that we could probably recruit from other firms, but we're... [51:46] So different. [51:48] culturally than the rest of the VC world that [51:52] we've had a lot of trouble getting people to stick here who have worked at other firms it's just [51:59] The mentality is so different. [52:03] And not to say that their way is wrong or our way is wrong, but it's different enough that we can't import them. They're not willing to assimilate. We're not willing to change. It's that kind of thing. Could you give your best articulation or best steel man of the counter to this idea of venture scaling? If you had to defend the view of like a... [52:25] Peter at benchmark or Josh at first round, to some extent, you know, Sequoia, you know, 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? 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.

[52:53] 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 gonna work. It's fine if you don't scale. The second thing is if you have [53:10] like, [53:11] 20 people on an investing team. [53:14] I don't think that works because I don't think that's a conversation anymore. And so, so much of investing is about like, you're trying to find the truth, right? Like you're working every day, you know, these conversations and you're talking to entrepreneurs and you're talking to all the references and you're talking to customers and you're understanding the technology and this and that. And you're having this long, long running conversation about like, okay, what is true? Like, is there going to be a God model or does like, can I like take a little model and [53:41] post-strain it with my own data and beat the [53:43] piss out open AI. 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 very hard. So I think that if you're configured... [53:57] in that kind of way, then [54:00] Then, [54:01] Being large is dangerous, I think, very dangerous. [54:05] There are reasons. If you don't have the ability to scale in a way that makes you, like our investing teams all look like, [54:16] small VCs. I mean, like, so Martine's team or Chris's team or Alex's team, they all look like a little VC. So in some ways I'm all for that model. I'm just doing it in a context where you have a platform and a brand that can be helpful to entrepreneurs more so than, you know, just

[54:35] you know, having a person. Yeah, it makes sense. I guess maybe to wrap, I think one of the other tenants, at least when you got started, which I think is still roughly a tenant today, that I think is like core, was you really believed in hiring people [54:47] Ex-founders, CEOs. I'm sure you've hired some people who are not, but for the most part, it seems like you're highly concentrated. In the beginning, yeah. Yeah, very concentrated. At least, you know, it seems like a lot of the DNA is rooted in that, at least. Yeah. Why has that been, like, important to you? 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 for me. [55:12] as a product for an entrepreneur. The reason, like, I know we had a very hard time building, like, Cloud, Cloud Ops, although it ended reasonably well. It's just, like, very, very difficult to build a company. [55:23] excruciatingly difficult. And there's all these components to it and all these things you have to learn. And then things go wrong that are completely out of your control, like the dot-com crash or, you know, that kind of thing. Venture capital firms kind of give you the money and then put a very smart person on your board and give you some advice. And that was like it. And so we always thought, wow, a much better product would be [55:47] Give me like... [55:49] The network... [55:51] to be confident in the advice I need to run this fucking thing. Really early on, the way we thought about that was, okay, some experience required to be on your board. You have to have done this thing before to advise me. Don't just send me 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

[56:16] Some founder CEOs are good at being founder CEOs, but not good at explaining what the hell it was they did. And then they may also not be that interested in investing like they were at running something. [56:31] There's a feeling you have if you have a thousand people working for you or whatever. [56:37] that you're never going to achieve as an investor. That's not that. 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... [56:52] All right. [56:53] some books that explain it, and then you can talk to me. Who knows how to explain that? But we're not going to, everybody in the firm is not going to have to be that. That was, I think, a very important adjustment for us. [57:05] Would you write another book? [57:06] Well, if I have another question [57:09] thing that I think I understand that [57:11] people don't understand. Like, I wouldn't do it to be, like, popular or make money. You don't want to write a book to make some more money? No. That wouldn't be the driver? No. Although that book does well. I'm sure. The thing about hard things is very good selling. I gave away all the money for it, but it's... [57:24] It does well, yeah. Yeah, cool. All right, Ben, I'm going to let you go. Thanks a bunch for doing this. This was great. Yeah, all right. Awesome.