You know, when we started the firm like a big idea that we had was that venture capital was disappointing as a product for an entrepreneur.
We always thought wow, a much better product would be.
Give me like, the network to be confident and the advice I need to run this fucking thing.
Today, we're sharing a feed drop from Uncap to Jack Altman featuring A16Z co-founder Ben Horowitz.
In this conversation, Ben reflects on one of the core ideas behind A16Z that venture capital as a product for founders often wasn't good enough and that a better model would be a firm built around a real network, real operating experience and real support for entrepreneurs, building through the hard parts.
Jack and Ben also get into Ben's 30-year relationship with Marc Andreessen, how the relationship works in practice, how they make decisions and how you scale a venture firm without losing the edge.
That actually helps founders.
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.
This should be some fun.
Can we start with your relationship with Mark?
Because I think it's like a super unique thing where you guys obviously work together.
You know running companies, you 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, working together 30 years and so forth.
Like, are you friends outside of the work context?
Or like, what's like on a non-work situation?
Like what is the interaction?
Like we're friends but not like drinking buddies or something like that right.
Like, we both work so much, we mostly talk about work anyway.
And then like, because we're working together, we're talking about work.
But it's kind of like the way I would describe it.
And I want to say this without sounding I'm not making the like level of comparison like, so I'm just saying the relationship comparison that I think is most similar that I've know about is kind of the Michael Jackson Quincy Jones relationship.
If you think about that um, and that yeah, Mark's more Michael Jackson, like he's a, a star of talents that nobody else has.
Yeah, like nobody else has maybe like ever had right, like you've talked to Mark um to the point where, like as a firm, we can just put him out there and it's like a magic trick, like he's like bang.
You know, and you know, for me to, you know, my kind of relationship with him is, You know, like a Quincy Jones.
It's not like I'm, you know, I'm certainly not Michael Jackson, but I know enough.
You know, Quincy Jones knew so much about music and so much about how you get the most out of somebody that talented.
You know, that makes it work together.
So I can surround Mark with with the kinds of people, with the kinds of ideas and so forth that maximize him.
And then, you know, like, he makes me much, much better because he's Michael Jackson.
And, like, you're never going to make Thriller if you don't have Michael Jackson.
Yeah.
And all the great albums Quincy Jones made.
Nothing was as big as Thriller, because you know you need that.
And so that's the kind of relationship.
So we're very complementary.
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.
No, I get it.
The great Quincy Jones, rest in peace.
I love him.
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.
We've had a lot of arguments both on kind of which direction it should go and in what kind of timeframe.
He has kind of more ideas about things we should do than I do, just because, you know, in running it I try and keep it a little more contained.
Although, you know, 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?
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, look, I would say I'm more decisive as a personality type than him.
He's kind of more open-ended because he's more of an idea generator.
And so that kind of helps where I can go, okay, we're committing the flag here, but not there.
It's kind of rare in venture that there's like a...
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, 500, 600 people, right?
600 people, yeah.
Yeah.
And, like, your day is, I guess, is management to some extent.
You know, it's...
It's still 600 is relatively small on kind of the scale of 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 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 close to the work and know what's happening.
100 right yeah, i mean like i think that you don't really understand the vc business if you're not like on board to make investments and understanding like okay, You know, because like hiring changes, like hiring has changed a lot in the last five years, just because like, the offers didn't used to be like this.
And how do you defend against that?
And how do you do all these things?
And so, like if you're running a venture capital firm and you're like how in tarnation did they get that much?
You know that many RSUs.
And it's like when I was a boy, you'd only get four.
Yeah.
Well, yeah, you can get out of the loop really, really fast.
Yeah.
When you think about, like the way that you've decided to structure your, I guess, the company, the firm you've basically.
You know, I got to speak with Martine, who's like amazing and could obviously run and lead his own firm.
Yeah.
You structured this in some way where you can have a certain 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 Morris had this great quote years ago where he said like the key to running a venture capital firm is to keep the principles from killing each other right.
Like and that you know there's a lot of truth to that, because you have very, very high powered, like super high IQ, disagreeable people who are the best VCs.
I mean, like that's...
You can find a VC who you don't like.
You can find a great VC who you know maybe is a dick or whatever, but it's pretty hard to find one who you go like.
That guy's not smart.
Can you be a good, agreeable VC?
You know, I don't know many.
So I think some are more agreeable than others.
So I do think there is a kind.
Yeah.
To be kind of a long-term, like all-time great VC.
I think most of those end up being disagreeable because you really have to think about everything for yourself.
And you can't, you know, wanting to be liked can be a problem.
However, like there is a phase of VC that's this kind of heat seeking phase.
Yeah.
You could 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 when everybody think they're smart all the time.
Yeah.
Yeah.
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, and you know, whatever cryptocurrency and whatever a decentralized network, and they're using all these amazing techniques.
Like, they don't care about that.
I mean, the true heat seekers don't care about that at all.
They're just like, bro, 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 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 a good long term business, 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 will 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 God bless them.
I talked with Mark about how there's this issue once you're really big, which is you have to be really careful with those because of conflicts.
And so it's like actually kind of not worth it.
If you're able to win stuff later, there becomes this sort of like prisoner's dilemma where you should basically wait for do the earliest round where you're sure it's the winner in a category or something like that.
Yeah, I mean, I think there's some of that in the calculus.
And then you know, I mean I think you know, for us we have to kind of believe in it technologically, believe in the entrepreneur and so forth.
It's just kind of, we a little bit view ourselves as... more mission oriented.
So like our mission isn't to get higher returns than the SP 500, although that's a good side effect or whatever.
You know our mission is much more to like.
Can we help the best entrepreneurs build the best companies and kind of make us and the country and the West strong technologically?
And so when we think about it through that lens, We actually care much more about what it is than what the next round might think.
Although, you know, like, of course, it's a consideration.
Will anybody fund these guys after us or do we have to fund every round?
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 you know, look good, execs understand.
You know One the importance of chain of command.
You know, they're managers, they...
A lot of them may be execution people process people, you know that kind of thing as opposed to people generating a lot of ideas.
Whereas every good investor is a massive idea generator.
They don't necessarily like rules or be willing to follow them.
And so I think that the burden on everything making sense every step of the way is much higher.
And then also you really have to from an organizational design standpoint.
You've got to minimize conflict or conflict, it's going to be complete chaos.
So in a company you can get – like there's always going to be some cross-functional dependency in a company and you have to live with it.
And then through some combination of rules, process and telling people whatever, shut the fuck up like we're just going to do it this way, you get there.
I think in a VC firm you can tolerate much less of that.
You know like if the org doesn't solve the conflict issue like the ability to solve major conflicts, one-off 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 personality types, and then you can really like wreck each other's businesses, right?
Or each other's, you know, work in that.
Let's say I'm a great expert in I'm Martine and I know everything about AI and foundation models and so forth.
And I've gone through every single thing. video model like there is.
And I understand all the nuances and the strengths and the weaknesses and so forth.
And then, like you know me over here um, who hasn't done any of that work but like, found an entrepreneur that they like, who's doing something.
And I go invest in that model that conflicts Martine out.
Yeah.
Like he, he's going to be beyond mad.
Like he's gonna, he's gonna want to like murder the person.
I mean, like that, it's such a bad problem. to have conflict like that in a venture capital firm.
And you just have to have respect for the work that people are doing and design the firm in a way that all that hard work gets them to the end that they expected and like that, their own people don't undermine them and these kinds of things.
So like the conflicts are extremely intense in that way.
When you see like a real one, are you like, I'm going to let them figure it out?
Or are you like, I'm going to mediate this and get to a resolution?
No, no, I'm just going to let them figure it out.
My biggest thing is, like, sometimes they're too respectful of me on that.
But, like, I'll just resolve it.
I need to resolve it.
What do you mean they're too respectful?
They're like, if Benjamin stopped fighting, I'll stop fighting.
The worst conflicts we've had are ones that nobody brings to me.
Like, and it'll be... Like, it could be something...
Very stupid and trivial.
But they get so hot in VC.
Is this between GPs that you worry about it?
Or are you going inside team lead sort of org and working out their conflicts for them?
Or are you like, you need to run your own division or whatever?
Like sometimes there's something inside like a fund, but those are pretty cohesive.
So we design them like every fund we have runs, like you know what somebody might consider a little VC.
Like there's not more than five GPs.
It's pretty cohesive.
So there's not that much contention.
You get the contention when things scale.
Mm-hmm. and everybody's not talking to each other every day, 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.
They're all kimchi problems.
They're all the deeper you bury them, the hotter they get, right?
So there is no problem that gets better over time in terms of conflict in a VC.
It always gets worse.
What are the things that, like you, then need to like give sort of guidance on, like you and Mark, let's say at a firm, wide level?
Is it about overall like, you know, deployment pace?
Is it about like structure?
Is it about approach to the market?
Like what is 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 you know one like, we have to make sure we're taking enough risk.
You know like and that usually comes of the form is evaluate the entrepreneur and the company on the magnitude of their strength.
Like, how good are they at what they're good at?
Are they super world-class?
Are they, you know, is this like literally the best person in the world at doing this thing?
Not on.
Oh, like the monetization model doesn't make sense, or like they don't know anything about go-to-market, or they don't actually understand accounting.
You know, like that's not ARR.
Like what the fuck are they talking about?
Those things, like you can always rule out a deal on weaknesses.
And I think it's always a mistake to rule out somebody who's truly world-class on a weakness, and then it's always a mistake to invest in somebody who's not truly world-class on a lack of weakness.
And so a lot of the guidance is around ideas like that.
You know, things that we believe, where you know, we're always like okay, like what can they do?
Like let's focus on what they can do, not what they can't do, and see if that's worth investing in.
And it's an important psychological thing because we have so many brilliantly analytical people who can find what's wrong with anybody.
And I always remind them there's something wrong with everybody.
You just may not have been able to find it yet.
When you think about how you're deploying capital.
It seems to me, like you know, you and I would put, like you and Sequoia in one shape, which is like there are many deals and you've scaled up the number of great, like it's basically a game of how many GPs can you scale.
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 you can sort of like keep it together.
And that's like one way to scale broadly.
I'm sure you can kind of like adjust what I said.
And then let's say there's another version, which is way fewer people with way more concentration.
And let's call that like Thrive and Founders Fund and maybe Green Oaks or something like that.
Maybe you would say that's not quite right, but directionally 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 um, And what we want to accomplish as a firm, which is again like making America the strongest country in the world technologically, the concentrated trading approach just doesn't quite work with that mission.
Why is that?
Because we just need more shots to build these companies?
Well, I mean, you know, if you look at, like you know, Founders Fund or Thrive, both great firms, right?
You know, there are whole like sectors that they're not really in.
There are entrepreneurs who could build something great that they're happy to miss because like, as long as they get, you know the very biggest ones, and so forth.
And that's not really what we're about.
Like...
If 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 funding entrepreneurs.
It's helping change the law and get the right policies in the country and these kinds of things.
And so... our model wouldn't let us ignore something that important.
But if what you're trying to do is say okay, of the like five best companies of the decade, do I have big positions and enough of them.
Yeah.
That's like, I think that's a good financial strategy.
There's nothing wrong with that.
Like, Go get them.
I mean, like, it's good.
Like, it's good that they're doing what they do.
We work with them on a lot of deals together.
But it's just not who we are.
Like, you have to be who you are.
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 work?
Is it just rational to, if you can raise the money, do billion dollar checks into those companies when they're really running very far?
If you look at it historically, like depending on the vintage, sometimes that strategy of waiting for the things to get to the billion dollar valuation is definitely the best strategy.
But in other eras, like That set of companies just all suck.
And the actual, all the good investments are in the A, in the seed round, because something new is happening.
You know, like the world is changing.
And you know the big SaaS companies.
If you piled all your money in, like Tiger Global, and it didn't 2021.
Yeah. it didn't work out that well.
You know, you were kind of at the end of a cycle.
That may work better now.
We'll see.
Yeah.
TBD.
Obviously you were raising you know big funds and you've also, like it's worked, you know it's like on some level like, if I think about, like when you start any company or maybe any venture firm too, it's like you sort of need to have something that you believe, that not everybody believes and that needs to be right.
And I would say like there's probably multiple, but like clearly one of yours that you got too early was like venture's gonna scale.
And, you know, it looks like that's worked really well so far.
Can you talk about like the thinking behind why scale is so important and like why you and Mark have believed that it's like the dominant strategy?
Yeah.
So there, I think there's a couple of different dimensions to it.
One is like, what is the market of technology companies?
And I think that's really important.
And Mark wrote a piece in, I think, 2011 called Software is Eating the World.
The conventional wisdom in VC at the time was look, there's 15 companies in any given year that ever get to 100 million in revenue.
And the whole game is getting into as many of those 15 as you can.
And so why have a big firm if there's only 15 companies to invest in, right?
Like that doesn't make any sense.
You're just going to chase a lot of bad stuff.
But what he thought then, and kind of the bet that we made, was well, if software eats the world, it's not going to be 15.
It's going to be 150 or 200.
And that's what it's become.
And so to get into that many great companies every year, you clearly need to be of a bigger size.
Like there's just no way to address the market if you're five guys.
That's not possible.
I think the more important part of it, which is like a big – rationale for starting the firm, was if you're an entrepreneur, what do you need?
And you need to be 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 U.S. government if I'm in AI or crypto, which is like everybody now?
How do I do all that?
How do you have employees take you seriously?
Yeah, how do I have employees take me seriously?
Like, how do I find all these employees?
All these kinds of things.
There's a lot of capability that you need.
And if we can just bring that, you know, that's a much better product than I'm a smart guy.
I'll take you to coffee.
I can give you some ideas about your product for two months until like, I'm irrelevant on that because you've heard all my ideas.
And so I think that, like, the product of...
A VC that has a platform and capabilities and so forth is somewhat you know, speaking as a former entrepreneur, I needed all that.
You know.
And to me, that's a more important part.
And we kind of see that every day.
So that part of the idea was really good.
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.
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 goes back to the firm.
And it's like this positive flywheel.
That seems like a big one.
These relationships I think, like you're talking about, are very hard to get if you're 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?
Good luck.
So that's a big one.
One of the ones that I don't feel strongly about, but I'm less sure on, is 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?
I actually think they all work because we've kind of moved away from the ones that didn't work.
Can you talk about some of the ones that, you know, that's fine?
Yeah, I mean like, so we did some things early where we were publishing sort of.
You know, we had this thing where we were going to have sort of general research ideas or whatever you know for the entire like startup community.
But like, it turns out that that works really well if you do it for crypto or if you do it for AI.
You know like, we try out all the models and so forth.
You know like, and we talk to companies all the time about okay like, which models best at which, and then we, you know, host models and we try stuff out on them and so forth.
So, like from a tool evaluation standpoint, like we can just accelerate you and tell you exactly what's what.
Doing that in general.
Well, like a lot of things I think that we tried to do across domains ended up being not as interesting.
And that's, you know, that's getting true for talent as well.
So like yeah, a CFO is a CFO for the most part, like a hardware CFO, different than a software CFO, that kind of thing.
But that's easy.
But like an AI researcher, Yeah.
Is pretty different than a full stack engineer.
Like that's a different talent pool.
They run in different circles.
Their 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 will just like help me recruit.
Yeah.
Have you found that like you can effectively aim?
You know recruiting teams at companies for specific periods of time and Yeah, I think it helps to get the seed corn right.
Like.
So a lot of what you're trying to do is can you get the first three to five people in who are stellar and then have networks where you want to draw from?
Who your VC is actually matters a lot on that right.
An engineer like cares about like, okay, is this person going away?
Is there more money behind this?
Have I heard of them?
Yeah.
That kind of thing.
So that's an important feature.
I think every company has to ultimately get hyper proficient at like recruiting people closing interviewing onboarding training, or they're never going to be a good company.
You're saying to some degree where, like you can't do it all for them or they'll never build the muscle.
Yeah, at some point, like you'll end up retarding their growth if you put in like their entire team.
Now we've put it like we probably helped through our network.
Like Databricks hire like over a hundred people for sure over time.
But it's like they clearly have their own muscle.
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.
But that's different than that.
First, you know, the first few people that you hire are Those are relationships that we have that will introduce you to somebody and like maybe they'll fit, maybe they won't, and so forth.
But like that's a kind of very specific thing.
How about your view on like board seats and board membership and like how important that is?
And maybe it's like put like bookends on what people out there will believe.
You've got some that are like our selling point is we don't take a board seat.
We'll leave you alone.
We're not going to do anything.
You've got some that are sort of like you know breathlessly talking about this.
You know spiritual connection between the board member and the founder.
And there's a lot there.
Like, where do you fall in this?
How do you think about what like the board member should be?
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 for founders.
So, like the idea that you're going to run without a board after you've like given a equity to employees and sold equity to people who are not you, is the most dangerous fucking idea in the world.
Because if you know anything about securities laws, the only protection you have a CEO from going to jail or getting personally sued is that you run material ideas through the board.
That's a massive protection.
Like if I go, well, I want to give a, you know, 2% grant to this person in the company.
You have to realize your fiduciary to like.
The rest of the company that you're diluting is in question right there.
Just that.
If you run that by the board, it's all good.
You're completely protected.
No problem.
If you just make that on your own.
If somebody wants to sue you, they're going to win.
Like, you really have very little defense at that point.
So the idea that, like, you're not going to have a board is a bad idea.
Like, I think once you start not owning the company 100%, you've got to have a board.
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?
Yeah.
I would say, so there's a couple of interesting things.
So the Y Combinator people actually said it must've 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 You know, in their view the other thing was like, just in observing the companies, the rhythm of having to tell somebody outside of the company what you're doing every three months or every two months.
Creates 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 certain kinds of board members can be very, very impactful at different points in the company.
Just with myself, like right now, if Ali kicked me off the board at Databricks, I'm not sure that, like they would do much worse.
Like I honestly don't.
However, there were times, for example, the Series C, I led the Series A, NEA led the Series B.
Nobody would do the Series C of that company.
Pete Sonsini and I led that one too.
NEA and us led the C in addition to the B and the A.
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 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, 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 the company.
You don't have perspective.
So if there's somebody who can help you think through things and has perspective, That can be worth the whole thing, right?
Like, so it's not a nothing.
I think it's not a... I've seen board members and...
That add no value the whole time they're on the board.
Like that happens all the time for sure.
So I don't want to overstate it.
Well, there's also, there's two types of sort of ways to be impactful.
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, you know the CEO is upset about something.
It's somebody to talk to, etc.
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?
So there's the board and the work of the board, which is governance number one, as I kind of alluded to in the beginning.
And then there's kind of certain points and certain things where board members can really matter.
You know, I think most of the work that I do is more, you know, like I'll have yeah well, I'll have a monthly call with a CEO just to talk through the things that they get stuck on.
Like the things, what's causing you to hesitate?
Does this work?
Only at this point or earlier in your career did you need to do more of the like daily higher, you know higher, engagement model stuff and only now can you do the this version, like i think that um, 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 martin, who's like on all these incredible companies, the founders say he's awesome and he's on like way more than eight or ten boards or whatever.
Yeah yeah so so, okay.
So i think that if you're the board member and you don't have a platform, then you're the investor.
Then aid is probably right.
Yeah.
But if you have a platform, Then when they go, hey, I need to meet a customer.
I need to like help with recruiting.
I need to like deal with this policy issue.
I need to talk to like Gavin Newsom.
I need to deal with.
Then Martin can scale.
Then Martin's not doing that, right?
Like we have a whole platform that does that.
And so he can scale and just do the thing he does and do it very effectively.
And then he works extremely hard and all that kind of thing.
So like I think it's different.
You know if you have a platform or if you don't, because if it's on you to do to be the BD guy, the recruiting guy, the policy guy, the you know the governance guy, and so forth.
Then you can't work on that many.
Yeah.
You know, like those guys are like, that's a special thing.
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, like how they run the company, how they, you know, think about a business deal or this and that and the other.
Like that daily frequency, I think, can be destructive to the development of the CEO.
The CEO kind of ends up having to stand alone because that like, ultimately they're going to stand alone.
Like, no matter, you know, like you get advice, you get friends, you have people on stick, you know.
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 direction of the company that you don't want the CEO looking to somebody from the outside to make a decision like that, because the person from the outside does not have the correct context, the amount of knowledge required to make such an important decision.
And so you want the person from the outside really to be advised like let me tilt this this way so you can look at it from that angle and this and that and the third, but not like what should we do, Ben?
You know, like it's how should I think about this is a much better question.
The last question on this, I just want to sort of hear how your thinking has evolved.
You guys came out early like, i guess 2009, with this idea that like, media and brand are a big deal, and i think in many ways i don't know exactly 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.
Yeah, have you evolved your thinking, like from 2009 to now?
Like are you?
Do you think it basically played out just like you thought?
Do you think it's even more important?
Has it?
Have you changed your idea of like, what type of brand and media and so on matters?
Yeah yeah yeah, so like i think um, the original idea was very simple, which is vcs didn't market themselves.
Um, it was some kind of like code in vc land and we're like well, since we're new and nobody knows who we are like and that's what we know how to do, we're 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 everything, I mean there were blogs and stuff and we had blogs and that kind of thing.
But the primary way people got information was through the press, for sure.
And the rules of the press and the laws of physics of the indirect channel going through the press are completely different than the laws of physics of going direct.
The very fixed number of channels that matter, very fixed format, that you can have a quote or a short five-minute interview segment where they're like hitting you with questions that you don't want to answer and all that kind of thing.
And then the brands were all Companies, you know, Ford, GM, this, that.
The indirect world is completely upside down for them.
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, you know, like these, you know, is it Jensen or is it NVIDIA?
So you can't really have a brand that's completely independent of the people behind the brand.
And so I think the way that we're approaching the market now is – this is why we brought on Eric Torenberg.
And what he's building is a completely – new marketing model for us, where not everything is there, because the laws of physics are different.
So you have to build a whole new system.
And look, I think that what's happened with the other VCs is because they were late to copy us.
They're still in the old world by and large.
And they have some, like you know, light shots at the new world, but they're 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, like the underlying physics of how it's working.
No, that's exactly right.
You know, the ethos of it, it's like very culturally different.
Yeah.
Like you're no longer thinking about what you shouldn't say.
Like so much of the old world is what can I not say?
How do I avoid answering that question?
How do I give the talking point?
Totally.
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.
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 has fled 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 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, Like, do people read blogs still?
I expect a little change.
People do read blogs.
If you have one, that really hits.
I mean, actually, we just, there's a couple of really great ones that we came out with.
One was, you know, there is why there's no God video model.
And like that kind of, Justine wrote that.
Mm-hmm.
Yeah, the good ones are good.
I feel like the long tail slop ones are not worth doing really.
Yeah, the write a 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.
But I think that now people would rather less like oh, I can do a podcast and exercise, you know, like in that kind of thing, which is like it's a big advantage.
Yeah, it's a big advantage.
Now with 11 Labs Reader, you can just...
Throw it into the 11 Labs reader.
What works besides podcasts?
Well, I actually think blogs and social media still work pretty well.
I think that you know, with podcasts you have to be state of the art and how you think about clips and all those kinds of things as well.
The podcast has to be very interesting to the targeted audience, which is, I think, one of the things that has been best for me as an audience member is, You know, if you watch the news, it's almost impossible, right?
Like it's not without throwing a chair at it, no matter who you are, because it's like what the fuck level are they trying to reach a human being?
Like, they really think they're going to trick me with that?
Like... like fake positioning on like, oh, well, da, da, da, da.
Like I asked him the question this way.
So now everybody's 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 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.
Well, I mean, and particularly, by the way, everything in the regular media on AI is so whack.
So like you're talking about these threats that are imaginary.
And then you are just ignoring the fact that, like on current course and speed, we're going to have 10 million Chinese robots in the US, with backdoors to China.
Like that's going to be an actual real problem.
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 –
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, 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.
And we did it to them to some extent, right?
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 of it, because the economics are going to be there.
And so we're going to have these – we're going to create these ideals around journalism and around truth and all the news that's fit to print.
And you know, like democracy dies in the darkness or whatever the crazy – you know, taglines they have are, and so they set themselves a standard, very high standard.
And then all of a sudden, they're in a like an existential financial crisis and they have to get to an audience.
And now they're going, well, going to a broad audience is just way too hard and way too expensive.
So I'm just going to market to people who are on the left.
Yeah.
And so then I got to be an activist.
And so then all this stuff that I said before is all bullshit now.
That's a hard puzzle.
And I think that a lot of the best journalists kind of predated that change and kind of grew up with, you know, in that with those ethics that like oh no, I've got to be objective.
I have to find the real story.
I have to tell the real story, but that's not the business model anymore.
So how do you reconcile that?
I think, like right now, people are kind of coming out of the fever of that change and going okay, are we going to be an activist or are we going to be a journalist?
And we'll see how it plays out, but it's going to be interesting.
It's kind of interesting because like, I think Eric's amazing.
You guys are now growing to a place where you have the resources to like bring people like Eric on to build like a big thing.
At some point, as your firm grows even more, you're going to have the resources to like.
Really, you know you're going to have more resources than the New York Times at some point.
It'll just be an interesting thing to watch.
Yeah, no, it's, it's.
Shout out to Eric hiring like a thousand people.
This will be great.
Yeah, yeah, yeah.
No, he is, 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, who might like give Eric a call.
No, definitely.
I mean, I think that.
They think in a way he's got more access to more interesting people and certainly the audience is building.
So that could be.
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.
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?
The biggest limit is the market.
So how many 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, because we'll just get the deals anyway and it's no problem.
If you ask me, well, why don't we raise $100 billion?
Like, that's the main limit.
Because it would be hard to generate a return on 100 billion in venture capital, probably given the size of the market, like in 2020.
Basically, you're saying the companies won't be big enough.
Well, I think there just won't be enough of them.
I think that's the most likely, would be the most likely scale challenge for us.
Yeah.
That, like you know, at least with the team that we've built, when we look at the markets that we're in, it's hard to see our way to like an order of magnitude more money.
But, You know, that could change, but I'd say that's the current kind of number one limiter.
I think the limiter on most firms is not the limiter that we have.
So for most firms, the limiter is they can't kind of have that many effective partners.
Cooperating.
Yeah, cooperating.
There's two fundamental reasons for that.
One is structure, so—
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, like you have to look at the org structure and see if it still works, if the communication paths are still right, if there's too much conflict, all that kind of thing.
The side effect of reorganizing is you redistribute power.
And so people who had power lose power, and people who didn't have power get power.
Like, it's just that that's what it is.
And if you're voting on that, the chance of you getting that right is zero because, having done many reorgs in my career, when a reorganization happens, people always do – everybody does a local optimization other than the CEO.
And so if the CEO gives in to the needs of – 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 with, you know, shared control.
It'd be very tough.
The other thing you need is you do need a leader who's can deal with that kind of scale in terms of making those decisions and running the firm.
And most VCs are don't have people of that kind of operational caliber like some do, but like it's pretty rare.
And if they do, they're often not in charge.
So we have like, those are the two advantages that have led us.
I mean, we're only 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.
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 parts to getting good returns, like picking the right deal and winning it.
Mm-hmm.
I think it turns out that winning it is a much bigger percentage of that equation than people like MVC World like to give credit for, because they like to think of themselves as such super genius.
Oh, I saw Facebook early, da, da, da.
That's a real thing.
But if you can't win it, then you're still never going to have good returns.
And so being able to win kind of automatically, I would say, gets you to the top tier of returns.
And then picking kind of moves you up that list.
You're saying you could be a roughly random picker, or an average picker, let's say, and a great winner, and that's going to get better returns than the inverse.
Yes.
For sure.
At all stages.
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 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, the winners get the best investors over time, I think.
Yeah.
It's an interesting thing because I was talking to somebody recently that it's actually really rare for a venture firm to have two what you would consider like generationally good investors.
Like almost never happens.
Yeah.
And then it's like ridiculously rare to have three.
And like if you have three, then you're like, you know, Sequoia and Jason basically.
Yeah.
Why is it so hard to get many at one place?
Like, it just seems so uncommon.
And it seems like, I don't know, is that a function of winning ability?
Or is that a function of picking ability?
Like, what is it that makes it so hard?
Like, why don't you and Sequoia just end up with like everybody?
Well, I think that there just aren't that many generationally good, right?
By definition, right?
Like, if you're generational, then there's only like one of you or two of you.
Okay, 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 carry vests.
And so, like if you made a bunch of good investments somewhere like to start your career, you generally want to stay.
I'd say.
The other thing, at least for us, is there's a lot of, or there's great investors that we could probably recruit from other firms, but we're so different culturally than the rest of the VC world that we've had a lot of trouble getting people to stick here who have worked at other firms.
It's just... the mentality is so different.
And not to say that their way is wrong or our way is wrong, but it's different enough that, like we can't import them.
You know, they're not willing to assimilate.
We're not willing to change.
It's that kind of thing.
Could you give your best articulation or best steel man of like the counter to this idea of venture scaling?
Like if you had to defend the view of like a?
You know i've had um peter at benchmark or josh at first round to some extent.
You know um sequoia, you know have 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, crazy democracy which, like democracies are great for like if you've got 350 million people, but like they're not good if you're a venture capital firm.
It's just not good, at least in terms of scale.
It's not going to work.
It's fine if you don't scale.
The second thing is, if you have like 20 people on an investing team, I don't think that works, because I don't think that's a conversation anymore.
And so, so much of investing is about like you're trying to find the truth, right?
Like you're 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 post-strain it with my own data and beat the piss out of OpenAI?
Like, what's the answer to that question long-term?
What's the answer to that question today?
Like, we've got to get it to that.
How do you have that conversation with 20 people?
Like, it's very hard.
So I think that if you're configured in that kind of way, then then being large is dangerous, I think, very dangerous.
So, you know, there are reasons.
Yeah.
If you don't have the ability to scale in a way that makes you, like our investing teams, all look like small VCs.
I mean, like, so Martine's team or Chris's team.
Yeah.
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 just having a person.
Yeah, that makes sense.
I guess maybe to wrap, I think one of the other tenants, at least when you got started, which I think is still roughly a tenant today, that I think is like core was you really believed in hiring ex-founders, CEOs.
I'm sure you've hired some people who are not, but for the most part it seems like you're highly concentrated.
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 as a product for an entrepreneur.
The reason.
Like I know, we had a very hard time building like CloudOps, although it ended reasonably well.
It's just, like, very, very difficult to build a company.
Like, excruciatingly difficult.
And there's all these components to it and all these things you have to learn.
And then things go wrong that are completely out of your control, like the dot-com crash or you know that kind of thing.
Venture capital firms kind of give you the money and then put a very smart person on your board and give you some advice.
And that was like it.
And so we always thought wow, a much better product would be.
Give me like, the network to be confident and the advice I need to run this fucking thing.
Really early on the way we thought about that was okay, some experience required to be on your board.
You have to have like done this thing before to advise me.
Don't just like send me, you know, somebody who doesn't know how to do that.
So that was the original idea.
That idea turned out to be somewhat right, but not entirely right.
So the problem with the way we did it is...
Some founder CEOs are good at being founder CEOs but not good at explaining what the hell it was they did.
And then they may also not be that interested in investing like they were at running something right.
Like it's a little bit of if you've there's a feeling you have, if you have a thousand people working for you or whatever that you're never going to achieve as an investor.
Like that's just like that, that's not that.
It's a different thing.
You know, we made kind of the adjustment.
We're like, okay, like, yes, advice on how to run a company is important.
But like, you know, and that's when I was like, okay, so I'll write some books that explain it.
And then you can talk to me.
Who knows how to explain that?
But we're not going to, everybody in the firm is not going to have to be that.
That was, I think, a very important adjustment for us.
Would you write another book?
Well, if I have another thing that I think I understand, that 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 hard thing about hard things is it's a very good selling.
I gave away all the money for it, but it does well.
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.
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