Chris Dixon: Who Will Win the Next Generation of Venture? | E1132

1. 0:00 – 0:49

   Intro

   1. CDChris Dixon0:00

      I haven't seen a software movement where a bunch of very smart people were excited about it that hasn't eventually worked. Yeah, I think there's sort of broadly two methods that work in venture: heat-seeking and truffle-hunting. All these different strategies can work but you gotta know what it is and lean into it. The big five companies have 95% plus of the traffic and the money, and AI is, exciting as it is, will very likely accelerate that consolidation.

   2. HSHarry Stebbings0:21

      If you could make one change to the regulation environment today, what would it be?

   3. CDChris Dixon0:26

      Look, I just think the main thing is...

   4. HSHarry Stebbings0:30

      Chris, I've been waiting many, many years for this one. I've heard so many great things from especially the team at Founder Collective, but thank you so much for joining me today.

   5. CDChris Dixon0:38

      Nice. Thank you for having me. I'm excited to be here.

   6. HSHarry Stebbings0:40

      Not at all, but I wanna start with a little bit of context. And this is a weird show for many reasons, but I wanna go back to when you were a child. If your parents

2. 0:49 – 6:42

   Chris’s Professional Background

   1. HSHarry Stebbings0:49

      were to describe you, or your ch- teachers were to describe you, how would they have described the very young Chris?

   2. CDChris Dixon0:54

      I think I, I'm kind of just a little bit of a stereotype of tech people, which is I was into, you know, it's, it's sort of a cliche but, uh, I was super into computers, and so that was a clear part of my personality, you know, programming computers. Um, and then, you know, slightly entrepreneurial. Like, I had various jobs and tried to start businesses, (laughs) failed businesses, um. I, you know, I don't know, I, I guess, um, I, I think curious, uh, slightly mischievous maybe, I don't know, or something like... (laughs)

   3. HSHarry Stebbings1:25

      (laughs)

   4. CDChris Dixon1:26

      Um, but, uh, you know, I, I don't think I, yeah, I don't know, I was, um, pr- I think pretty normal in some, a lot of ways. I had a nice childhood, I grew up in s- a, kind of a smallish town in Ohio, and, you know, um, generally had a good experience. And so, I, I don't think anything out o- extraordinary.

   5. HSHarry Stebbings1:45

      I heard from a little birdie that you studied philosophy at university, and then have continued to study philosophy. Uh, thanks Alex Rampell. Um, how did studying philosophy impact how you think, both just as a person as an, and as an investor?

   6. CDChris Dixon1:59

      So, I got into it from computers, um, a little bit like the current AI stuff, um, I mean it was a long time ago, but in the sense of there's sort of overlap between, for those who've read these kinds of books, there's like Daniel Dennett and Douglas Hofstadter, and there's sort of this, uh, overlap between, I guess what they su- or the, maybe so-called cognitive science and philosophy of mind and computer and AI and computer science, and so that kind of got me into it. So it was on the more kind of a- analytic, they call it, um, scientific side of philosophy, and, um, I, you know, I just like a lot of people at that age had no idea what I wanted to do. (laughs) And it ultimately, and, um, I thought arrogantly that I knew how to program and didn't have any use for computer science, um, in retrospect, you know, I think I could've taken some interesting theory classes and stuff. Um, the, uh, um, and then I stayed just kind of a through inertia, uh, I got invited to stay, um, for the, for a PhD program. But I, I was in New York, and in New York, you know, you just sort of have to work (laughs) un- you know, if you, you know, unless you have the money, um. And so I was always doing, uh, freelance computer programming, and then that kind of, in New York, in the, like, around the, like, late '90s, 2000, um, if you were doing computer programming, you were, ended up at an internet startup. Um, and so I sort of discovered that world, and for me that was basically since then have been, you know, kind of fell in love with that, um, the idea that you could start a company or, you know, some day invest in companies and work on interesting technology, work with interesting people, um, uh, build products. You know, I like the kind of real world aspect of it, you know, acad- academia you're very kind of cloistered.

   7. HSHarry Stebbings3:40

      When did you realize investing was your calling? 'cause you obviously were at Founder Collective for three years and, and worked with the team there. When was that, this is what I was born to do?

   8. CDChris Dixon3:49

      Well, I, I always thought it was, you know, I'd read about it and thought it was interesting but didn't have the means or the, you know, wasn't ... Well, I, sorry, I worked briefly at, uh, Bessemer Venture Partners as a junior person in 2003, and for about a year, and then ... But I, I didn't see a path honestly, it was a much smaller industry, um, and, and I didn't, and I thought, I had, I thought that I needed to be an ent- I wanted to be an entrepreneur, and I needed to be an entrepreneur I thought to be a credible investor. Um, so I left and started a company. They funded me along with General Catalysts, um, and then we ended up selling the company pretty early, um, in 2006, and I, I (laughs) literally the, I think it was the day after we sold the company, I was on the phone with Ron Conway, and I was like, "I wanna start angel investing." And I think probably four days later I was out in the Bay Area and, and he was introducing me to people, you know, like I just wanted to do that. I was working at McAfee but I also, you know, it's just, it's more of a corporate job at that point, so I had time to do the stuff, um. So right away, and then you mentioned the Founder Collective guys, uh, Dave Frankel and Eric Paley, like we had known each other, um, from school, and actually had a business plan, funny enough, like this, I mean this would've been a great business but we, um, 2004 we had been talk- like years before had been talking about the fact that the, um, that we, we, so we had all been entrepreneurs, Dave and Eric and I, and we had all gone out to raise money. And in the time, 2000, you know, mid-2000s if you tried to raise money essentially the product that venture capitalists offer was a $10 million series A was sort of the smallest check. They, they would occasionally do smaller checks but they weren't really built for that. Like, they, they want, like especially on the East Coast, they wanted financial statements, they wanted, like it just wasn't (laughs) a seed funding environment. So we actually had a plan in 2004 to start a consumer, um, internet seed fund. Um, and the idea was it's cheaper than, I mean this is all obvious now, but I think at the time it was s- you know, somewhat forward-thinking. Um, the idea was to start a, uh, um, yeah, is that companies needed less money, and that the consumer internet was sort of, eh, you know, very much frowned upon by the venture- by a lot of, at least the East Coast especially, li- little less on the West Coast, um, and that that would, there would be an opportunity there. And then I sold my company, Eric sold his company, David been investing like personally, and like I think Eric had gotten some job offers or something and we said, "Hey, why don't we dust off that business plan and do it?" Um, so that was Founder Collective, so we, we co-founded it back then, and so that was 2004?I think we started in 2008. I think we closed in early 2009, so we were raising during the financial crisis, which was... I think, if you go back, we were one of very few funds then, um, in the financial crisis. So that was, that was that story. But the, uh... I just always... Look, I always thought it was interesting, like this world has all these interesting characters, and it's just like another way to be involved with startups. Like, I love startups, so I was like, okay, the sort of direct way to (laughs) be involved with a startup is to start a company. And then... And the next best thing is to be part of it, uh, as an investor.

3. 6:42 – 13:53

   Wealth and Investment Acumen

   1. CDChris Dixon6:42

   2. HSHarry Stebbings6:42

      So, I have two questions on the back of this. One is, I have this theory that financially secure, or in other words, rich investors make better investors, because they're not scared of downside and they don't bring paranoia and nerves to the entrepreneur like someone who really needs the money and needs it to work does. Do you agree that richer investors often make better investors?

   3. CDChris Dixon7:07

      I would put a spin on that. I would say that a lot of issues in, um, vent-... Like, speaking of venture capital, um, a lot of issues are so-called principal-agent problems. Um, meaning the individual is not aligned with the, kind of the... Ultimately, with the, you know, with the financial interests of the LPs. Because, like, you're a junior person, you're afraid, and you're... You know, you have three shots on... Lo- lot of firms, you get three shots on goal or something like that, right? And you better have a hit. (laughs) And if you don't, like, you're not promoted and you're fired, essentially. You know, that creates a kind of a... Like we're describing... And, and look, maybe this also applies to angel investing, but if you're like, if you're in a business where one in 10, if not one in 100, you know, 50 (laughs) are... Work really well... And by the way, in almost all cases that I've seen, the, the startups at work go through a trough of despair, right?

   4. HSHarry Stebbings7:58

      Mm-hmm.

   5. CDChris Dixon7:58

      They go through a tough, tough s- time. And so if you're in a business where it's like a very low hit rate, relatively speaking, the hits hopefully are so big they pay for everything, and you have these downturns, right, you just have to... Like, the optimal strategy is to, is to, you know, be really calm (laughs) and, and not panicky. And so... And there are lots of reasons people get panicky. One is maybe if... Like, look, people should not invest more than some X percent of their savings in this kind of, this asset class. It's a very risky asset class, but it also occurs... Uh, I would say what you're saying is true, and it also occurs, uh, with professionals at firms if they don't have... Uh, you know, if they have incentives that aren't aligned fully with the f- with the fund.

   6. HSHarry Stebbings8:37

      Chris, I, I, I love doing this show because I just get to ask the smartest people in the world questions that I have naturally, and I just remove the schedule. You said that about the trough of sorrow. I'm totally with you, uh, which leads to my no reserves model. I don't think that you can accurately pick your winners early. If you acknowledge the trough of sorrow, how do you think about effective reserves deployment?

   7. CDChris Dixon9:00

      It's fu-... You... Funny you bring it up, because like, we... At Founder Collective, this was always a question in like early seed fund. Like, I, I, I guess I would... So, you're talking about follow-on investing specifically. Like, how do you-

   8. HSHarry Stebbings9:09

      Yeah.

   9. CDChris Dixon9:09

      ... do follow-on investing?

   10. HSHarry Stebbings9:10

       Yeah, yeah.

   11. CDChris Dixon9:11

       You know, I, I would say, honestly, I started off... Like, back when we started Founder Collective, one of our tenets was to not do f- reserves and follow-ons. And the, and the argument was that we would be fully aligned with the entrepreneurs, right? We weren't trying to like, like... We do the first investment and we wanna see the next valuation be higher, and so we're fully aligned. And then the other argument was your argument, I think, essentially, that like, it's... You know, markets are efficient, and, you know, it... Like, it, this... It will, it will drag down our returns, because we're gonna be averaging up our cost basis. And, you know, the real alpha comes from being early in seed investing. You know, I tend to... I, I kind of don't think... (sighs) I, I just think that there's more being involved w- you know, with a company. There's just, you know, just seeing... Like, the ability to see an entrepreneur over a multi-year process and how they handle things. Um, I don't know. I, I would say the data also that I've looked at, you know, from my own history doesn't... You know, because the winners can be just so... If you're good at it, the winners can just be so big that you wanna do parata. So, you know, I, I, I... It's, it's... Look, it's a, it's a hard question. I do think... I, I probably lean more toward the reserves and the parata kind of thing, uh, at this point.

   12. HSHarry Stebbings10:27

       Can I ask you on the, on the flip side of that? You mentioned kind of going back to the early days of Founder Collective there, and their preference for no reserves. You know, Doug Leone said before on the show that we have moved from a high margin boutique business to a low margin commoditized industry. I'm just intrigued, given your perspective now over 14 years, having seen the Founder Collective start, to the size of Andreessen today, which is immense and incredible. Do you agree with that transition?

   13. CDChris Dixon10:54

       Let me just maybe step back. Uh, so my theory, and, and this... I'm not claiming this is original. I, I mean, you may have had other, other people say this, but I, I think the first thing to think about with venture is this bar belt, all right? Which is, um... And this happens, sort of death of the middle. Like, this happens in a lot of industries, so the most famous would be retail, where, you know, the internet comes along, and you used to have JCPenneys and Sears and sort of these mid-size retailers that existed for... Because you, you know, you need logistics and shopping, and that's just the way people bought things, is they go to their nearby town and buy something. The internet comes along, and you have this m- m- barbelling effect, right? So you have the very big winners, like Amazon, who are very good at sort of hyper-efficiency and logistics. And then on the other side, you have boutiques, (laughs) um, and, and the, you know, the, the financial winner there, for example, was LVMH, which is a roll-up of boutique brands, right? Uh, it's not a coincidence that the two most (laughs) successful retailers of the last 20 years, one was on the one side of the barbell, Amazon, and the other was on the, uh, the other side, LVMH. I think a similar thing has been happening in venture for the last 10 years as, as it matures, um, and so there's the A16Z kind of Sequoia strategy of being a, you know, kind of a, a big fund. And you have a different product. You offer, quote-unquote, product you offer entrepreneurs, which is, you know, operating services, help, full stage support. Um, and then on the flip side, there's, there's the kind of boutique model where it's early stage, probably sub $50 million funds, um-... uh, uh, managers with some deep expertise in some area. And look, in my experiences if ... And, and I would say another dimension to this is strategy. Um, if all, if your strategy is to ... Like, I think there's sort of broadly two methods that work in venture. I would call one heat-seeking and one truffle hunting, right? So heat-seeking is, you know, it's the team out of Google that's doing foundation models and it's just everybody in Silicon Valley thinks of it as a hot deal and the game is to win it, right? And that can w- that can work. You know, if you get the Google, like, you know, that ... Or whatever, some massive success, um, heat-seeking can work. But it's a different game than truffle hunting which is, you know, kind of the classic one I think of is, like, Union Square Ventures in 2005 where they were the first ones to really see the Web2.0 movement and, and develop that thesis. And, you know, there's a bunch of cases in the history of venture where you're sort of like you have a thesis that someone else doesn't have. So I, I think, like, I, I guess I think if you are cognizant to the barbell and you, like, like, a lot of the low margin things I think are people that don't really understand their strategy. So, like, they're in ... They think they're a seed fund but they've raised $500 million and they're actually competing with scale funds that, that, uh, are better prepared to service the entrepreneur. Um, or you don't really ... You know, I s- I meet a lot of people who I think they think they're truffle hunters but they're actually heat-seekers. (sighs) And you need to know what you're doing. (sniffs) And I think both can work. All these different strategies can work, but you gotta know what it is and lean into it.

4. 13:53 – 17:10

   Andreessen’s Investment Strategy

   1. CDChris Dixon13:53

   2. HSHarry Stebbings13:53

      Chris, I, I love this so much for the different analogies already. Which would you say that Andreessen is? Heat-seeking or truffle hunting?

   3. CDChris Dixon14:01

      I think we try to do both. And I, I, that's the way I think about it, and I think about it explicitly. Like, I, this, this is a heat-seeking investment, this is a truffle-hunting investment. For truffle hunting, you know, by that I mean, you know, uh, it could ... By the way, tr- it could be you go deep and often it's deep in a vertical before other people kinda figure it out. It can be within a vertic. Maybe it's, you know, crypto when it's not cool, maybe it's some subsegment of AI that's out of fashion or un- overlooked. Maybe it's a geography. So there's, there's a lot of different ways to, to do these things, but I think you need to know what you're doing. And if you do each strategy it's a very different thing. Like, truffle hunting, you gotta go deep, you gotta be an expert, you gotta meet everybody. Um, uh, you know, you need to appeal to them. It's like when they, when the entrepreneur meets with you, when you're in that, you know, if you're Fred Wilson doing w- you know, consumer internet in 2005, you'll hear, you know, you heard the reason that, that Twitter picked him, you know, when it was a competitive deal at the Series A was that he was using the product, he was deep in the space. So it's a different strategy. Whereas heat-seeking is much more of the sales motion, like, you're trying to win the deal that everyone wants to win, um, and so it becomes, uh, you know, about can you be the most helpful? It becomes fe- like founder referencing. I think one of the things about this business that keeps people honest is that ultimately winning investments at, sort of, at large VC firms comes down to what the founders say about you. And that's a very good thing, 'cause it keeps, it keeps the market ... It forces people to behave, (laughs) right? I mean, 'cause ult- you can't ... There's no way to game that, like, what a founder will say. It's a special call, I think, at least in my experience as a founder, if another founder calls you and they're about to choose a VC and dedicate the next, devote the next 10 years of their life, people give pretty candid references, right?

   4. HSHarry Stebbings15:36

      I, again, so many thoughts. Do you worry that we've over-rotated on founder NPS? You know, we saw a lot of lack of governance in the last few years where there maybe should've been some. And-

   5. CDChris Dixon15:46

      I think ... Yeah. (sighs) I'm sorry, I didn't mean to interrupt you.

   6. HSHarry Stebbings15:50

      P- no, no, no, I am. My question to you is simply I agree in terms of the importance of the founder reference, but it leads to, in some cases, just pure negligence because people don't wanna have anything bad said about them.

   7. CDChris Dixon15:59

      I think there's a difference between being the founder's friend and being their partner. Um, and so being their partner means you're, you know, a good fiduciary, you're supportive, you help the company, um, you give them honest feedback. It's not always friendly feedback. That's an important ... Like, I think what, I think a bad partnership is you say yes to everything and then the moment they need money, you say no or you let them behave, you know, not p- practice good governance. A good partnership is you're honest with them, you, you know, you support them, but you're also ... Like, there are times when the best thing for the company is, for example, for the, you know, for, for a CEO change or something. And that has to be a good partner would recommend that if that's actually the best thing for the company, or a change in governance, or whatever it might be. So I think that distinction is important. Um, you're not ... Like, look, I mean, o- obviously we become friends with people that we work with, but ultimately, like, you, you, you know, it's important to keep in mind that, you know, the, the kind of professional roles that people have, and the fact ... Look, when you're involved with a startup, there's often many employees, many other investors. Uh, it's a important responsibility to be a good custodian of those people's careers. And so, you know, you have to balance all these things, right?

5. 17:10 – 26:57

   Founders and VC Relationships

   1. HSHarry Stebbings17:10

      I've spoken to, you know, many of the team at Founders Fund on the show and they always say that the best founders don't need their VCs, and they don't need help. How do you feel about the best founders actually don't need their VC?

   2. CDChris Dixon17:21

      I think there's a distinction between do you need advice and do you need sort of network, I guess. Um, like, I just don't believe that if you're a ... Especially if the, the sort of founders that we tilt towards, which are technical product founders, they, it's just impossible that they know the right customer prospect at all Fortune 500 companies. Like, I just don't ... So I think it de- Like, the best founders, do they know how to build the product and the technology? For sure. And like, for example, I, uh, I'll speak for myself and not the firm, but I, I r- rarely, um ... In fact, I'm, I rarely get involved in th- in those parts of the companies. And in fact, I probably judiciously tried to not comment on that, because I think sometimes board members' and investors' opinions on, like, this button should be purple or something. Like, they'll say these things and then suddenly it'll become, like, an organizational priority, (laughs) um. So, so I think, I think if you k- ... Look, but there's just no, uh, reason that, for example, a founder doesn't have as much experience with fundraising. They don't know all the investors, they don't know all the potential partners, they don't know all the potential customers, they don't have the same talent network. Like, it just, they, they just almost, sort of ... I mean, inconsistent with their ... If they're, (laughs) if they're in truly a deep product or technologist, sort of, you know, founder, they just couldn't be spending, have been spending their time like that, um. And so I think, I think it's about what you add, um, as opposed to ... So I thi- I think if, if they're saying that, if the Founders Funds folks are saying that in terms of product and technology, I tend to agree. Like, it's, something is wrong if Chris Dixon is giving you your tech ideas or product ideas, (laughs) yes, um. But, but if I'm introducing you to a great executive, like, th- I think that's working well.

   3. HSHarry Stebbings18:53

      Chris, why do you think the best founders in the world pick you?... I, I have many thoughts (laughs) . Good, good choice, my friend. Uh, I have many thoughts-

   4. CDChris Dixon19:01

      (laughs) Yes.

   5. HSHarry Stebbings19:02

      ... uh, eh, from, you know, Ron Conway and Alex. But why would you say the best founders choose you?

   6. CDChris Dixon19:07

      Again, this is a business I think that primarily goes down to founder referencing. Um, and so I'm not on those calls, but I think ultimately, um, when you're competing over, uh, an investment, like, that, that is the determining factor. And so, um, what those folks say about you is very important. Um, I would also say specific to blockchain crypto, there's a lot of sensitivity around, uh, the fact that every... you know, we've now been through maybe four cycles that this is a bull market. Um, and every time that there's a downturn, kind of a lot of investors leave, and that becomes... like, I've had a lot of, you know... Th- that, that becomes a big issue, um, and that's, it's very important to founders that you are high conviction. And that, that, look, that comes out again in founder referencing. By, by the way, that's not just my group at the firm. That's throughout the firm. I think there's a, kind of a misunderstanding around this that I see some articles that misunderstand it. We, we, our s-... we, we don't pivot at A16Z. Like, we've never pivoted. Um, we have, uh, all, you know, we've done AI for 10... since I've been at the firm since 2013. We've done blockchain crypto consistently. We've done bio, we've done SaaS, we've done video games. Over time, we've created verticals. Like, as we think something's working, we've spun out verticals, like crypto, games, bio. Um, but, but, you know, we've stayed very high conviction in those areas. Um, sometimes we're too early, and, you know, and that, that can m- be, mean there's a challenging, you know, era. But that's kind of just how we practice it, and I think that's important to founders. Like, when they're, you know, they wanna know that their in- investors... You know, this is Ron, you mentioned Ron Conway, you know, who's a good friend, he always says, uh, I, I, I don't know if it came from him, but I've heard him say it, is, "You make your money in the, in the bull market and your reputation in the bear market."

   7. HSHarry Stebbings20:50

      Ron actually told me that you are a master of conviction, and quote, "You have remained undeterred in the face of the most adverse conditions."

   8. CDChris Dixon20:59

      (laughs)

   9. HSHarry Stebbings21:00

      I mean, that's a very nice thing to hear. Uh (laughs) . Uh, my question to you is-

   10. CDChris Dixon21:04

       Either crazy or high conviction, yeah.

   11. HSHarry Stebbings21:05

       ... when the world and the market tells you you are wrong, how do you retain that undeterred conviction?

   12. CDChris Dixon21:13

       I think there's different ways to do this job, um, and, and, and different ways can work. Um, and, and I think a lot of people in the industry today, uh, d- they'll say things like, "I don't try to predict the future, I just try to predict the present." Like, or, "I look," you know, uh, there's a lot of focus these days on metrics, on, um, as you know, ARR and all these other kinds of things. And there's a lot of kind of moving around to different areas, um, and that can w- that can work, and it has worked for people. Um, I have a different view, which is I do try to predict the future, um, and I do, and I spend a lot of time thinking about that. And I, um, it's, I think, I think, as I recall, Peter Thiel, I think in Zero to One he has this part about it, about sort of a d- deterministic or indeterministic future. Like, I fall into the deterministic camp. Like, I think that (coughs) you know, people should... I, I, I'm not saying everyone should do this. I, the way I approach it is, I, I have a view of the future, and I wanna get to that v- that future. And I spend a lot of time s-... like, if, you know, in my book and other places you'll see this, reading about the history of technology, trying to understand it. Um, a lot of that is to try to understand how the future might play out. Is to, is to look and, and study the patterns and to study the, um, the kind of the underlying forces. Um, I think that's, you know, when you have an incredibly complex system with economics and technology and people and all of these things, it's very hard to kind of draw lines through charts. I don't think that's a very good way to, to view in the future. I think a better way is to really understand the dynamics and the historical forces and things like that. So, so that's my approach, and I've just spent so much time on it that I believe in it (laughs) , and that's why, like, I think we'll talk about my book. Like, I, if you read that book, that is a book of somebody who is, I believe, you know, you can agree or disagree with it. It's somebody who has spent a lot of time thinking about the internet, and it has a lot of frameworks for how these things play out, and I believe in those frameworks. Um, and I think, you know, like, there are setbacks, so like in, in crypto, the, uh, the stuff that happened two years ago with FTX and a bunch of scandals I think set back the space a couple, you know, maybe a couple years. Um, and, and, you know, that, this is the kind of thing that your frameworks can't, can't help you with, right? There's just things in the world that happen, these exogenous events. Um, e- there's ways you can mitigate that kind of risk through, for example, companies having more cap-... you know, raising... having longer runways and things. But that, anyway, that's just my approach, and I, and I believe in it. And actually, the, the book which I, you know, I wrote, uh, a part of the book was, uh, writing the book was a test of conviction. Um, I, I think if you can write something out in 230 pages and detail an argument, like, that helps you kind of vet that argument and, and test and, and kind of pressure test it.

   13. HSHarry Stebbings23:49

       Uh, we're gonna get to the book. I just wanna ask on this. Alex Rampell told me that you are the master of strong opinions loosely held. And so on this, there's a point when you do let them go. Can you talk to me about when you have enough data to realize that you need to change your mind?

   14. CDChris Dixon24:07

       I mean, I change my mind about little things all the time. I mean, I'm always... I think of... look, I think of venture as, you know, sort of this fox and hedgehog. The fox knows many things, the hedgehog one thing. Like, venture is the fox business, I think. Like, it's like you're, you're constantly tuning your neural network. Um, what are all the different things that go into this decision-making? And, and it's very complex, and there's many things, and that's one reason it, it's sort of a... it takes a long time, I think, to really get good at it, and it's real important to have mentorship and other things, 'cause it's very hard to kind of get these neural networks trained. So, I, I just wanna make clear, I'm constantly... like, there's l- lots of little things that I think... and specific, you know, this sector's not gonna work, this one is, that kinda thing. But-... on the big thing, look, I mean, I guess I've, if anything, I've been (laughs) emboldened on the big thing. I mean, I just, ev- every single thing, I mean, Marc Andreessen and I talk about this a lot, like, he, he, I think his phrase is, "There's no bad ideas, there- there's only too early." Like, I have, I've literally spent, you know, my entire internet... first of all, I've spent my entire internet career, I started my internet career when the internet was kind of a joke. People today cannot picture this. It was. And so, you start your busine- you start your career in a highly contrarian area, you know, that, that shapes you. I then doubled down in the financial crisis and then, you know, and then did a whole bunch of, you know, things like blockchain and VR and other things over 10 years ago. So I've just been used to this, and I, and I've, and I've just kind of block out the noise, and I don't really, and I just look at the, um, the, you know, I just kind of try to look at the fundamentals. I'm very careful about only, about the information I consume and, and really focusing on primary sources. Um, I, I think that most, uh, I think, for example, on the crypto/blockchain stuff, like, most mainstream news coverage is just factually incorrect, and I could go through with a red pen and show you all the mistakes. And, and that, you know, if you just read that, and I assume that's probably the case for other areas, (laughs) it's a Murray Gell-Mann thing, you know, the, it, it, it's not just the area, I know it's others. And so, like, I, I, I talk to entrepreneurs all day, I look at metrics, I, uh, read technical, uh, t- technical and product papers, um, and, you know, read a lot of books and history, and, and when you do that, you know, I, I don't know, like, it's, it's a different set of inputs, and, and, um, I, like I just haven't see- I haven't seen a technology movement, a software movement, where a bunch of very smart people were int- excited about it, in my career, that hasn't eventually worked. Um, I started an AI company in 2008, and I, if you told m- and I sold it to eBay in 2011, a machine learning company called Hunch. I, I was obviously too early, um, but eventually it worked. I think, so the interesting question to me is not whether something like crypto/blockchain will work, I don't think it's a question, I think it's a question of, the timing is a question, um, w- a- as it is, as it was with AI and other things, and, but you can do a lot of work to try to, to try to, uh, understand the timing too, so.

6. 26:57 – 31:24

   The Control of Big Tech

   1. CDChris Dixon26:57

   2. HSHarry Stebbings26:57

      Speaking of the timing, and, and moving more to crypto specifically, you've said to me before that big tech is stifling the internet, but blockchain networks can break the stranglehold. Again, moving to very much today, and to the crypto space, why is big tech first strangling the internet? Just so we have an element of causation.

   3. CDChris Dixon27:16

      Yeah, so, and this is, you know, in, in my book, in my, in Rewrite/Own, I go through, in the first couple of chapters, to try to sort of dia- I guess the book, I sort of think of the book as split between, on the first half, diagnosing what happened, so how did the internet go from an open and democratically controlled system in the '90s, to, uh, you know, a, a internet that's essentially controlled by five companies today. Um, the five, you know, the, the big five companies have 95%, 5% plus of the traffic and the money, and, and I think that will con- that's, you know, AI is, exciting as it is, will, will very likely, um, accelerate that consolidation because it rewards companies with large stores of data and capital. And so, you know, why did that happen? I go through in detail, and I think it, it has to do, my argument is, you know, we started off with the, the internet is a network of networks, so like, the, the, you know, there's the base layer of the internet protocol that connects hardware, and then we build networks on top, and in the '90s the dominant networks were email and the web, which are what I call protocol networks, people call them protocols. Um, they are networks that are, that are more like, you know, they're standards among a community, and the, and the network effects, which is, that don't accrue to a company, they accrue to the community. And then in the 2000s there were a lot of great things that happened, including kind of the democratization of the internet that went from 100, couple of hundred million to five billion people, uh, people got lots of great services, but in, in the flip side, we, in that process, we, uh, adopted, um, internet services that had a different architecture, that were controlled by companies and not by communities. And that sort of seemed fine in the t- in the 2000s and even the early 2010s when those companies acted in very open ways, uh, and supported, you know, allowed for creators and software developers and entrepreneurs to build businesses on top of them, but they've since changed the way they're doing that, and that's why, I mean, look, look at consumer internet investing today. There's, there's, there h- there's very few successful, uh, consumer internet companies the last 10 years. That's because you have this sort of chokehold with these five companies, um, and, uh, and so my, my argument is, then, is that what blockchains let you do is create a, a new wave of internet services which have the societal benefits of those early protocol networks, but a lot of sort of what I say is, call the competitive advantages, sort of the advanced functionality, the ability to, to, to do a lot of, uh, financial things that, uh, make them competitive with these corporate networks. So that's, so that's, and I, and I, I, I, I, I think that's important 'cause I-

   4. HSHarry Stebbings29:43

      Can I ask one, can I ask, what, what, what does that, what does that look like in reality, Chris? Sorry, just to take it down to a more human level, uh, what does that actually look like in reality for these networks?

   5. CDChris Dixon29:53

      So for example, I'll just give you an example, we have a, a, a c- it's a blockchain-based social network called Farcaster is, we're investors in, and Farcaster, if you use it, it, it, you can download it and use it, uh, they, it's, uh, it's, you know, it's got a couple 100,000 active users today, it's, uh, it will feel a lot like a Twitter or something, you know, it's the user experience, everything else. Um, the difference is that you're, in, on Twitter, when I have cdixon and I have an audience, that's controlled by Twitter, and they can change the algorithm, they can change the economics, they can, you know, change the rules, they could remove me from the platform. On Farcaster, I control my name and I control my audience, much more the way like with an email list, like you think about your, you know, you have your email list on Substack, you own that list. If Substack messes with you, you can switch to another provider. That's how Farcaster works. So there's many... Farcaster's the protocol and then there's many different clients. The same way with email and with web browsing, you have many different clients. And so it provides the kind of advanced functionality of social networking that you want and all the features, but it...... pushes control to the users. Um, and s- and so they have choice. They can choose different software providers, right? That's just one example, but there's, uh, I think there's, like there's, you know, we have dozens in our portfolio of new services where the functionality is very advanced, um, and modern, but the, uh, but it has different economic and control properties because it shifts, using blockchain shifts power to the edges of the network, the users, the creators, and the software developers.

   6. HSHarry Stebbings31:23

      Chris,

7. 31:24 – 39:51

   The Role of Cash Flow in Success

   1. HSHarry Stebbings31:24

      you're a student of history, and you mention the power of incumbents there. I- I'm- I've never been more worried about the size of incumbents. As we mentioned, the size of their data is enormous. The free cash flows of their businesses is enormous. Have incumbents ever been this dangerously large? And is it not too big to usurp them with a Farcaster, where, or a Hive Mapper, or you name any of your innovations given the free cash flow machines that these businesses have?

   2. CDChris Dixon31:56

      So, okay, so I have a chapter, for those of you interested in the book, on s- it's called Software, it's called Community Created Software, where I kind of walk through this. But if you look at the history of the technology industry, it's basically moved to different layers of... The competition has moved to different layers of the stack. So, you know, prior to Microsoft, the people sold... The business of computing was to sell hardware. Companies like IBM would sell mainframe computers, they'd bundle it with software and services, but the business was hardware. The- the contrarian innovative idea of Bill Gates was that software would be the next layer of value, right? And that was the idea behind Microsoft and it turned out to be correct. And so, you know, they made, they- they had a- very high cash flows, very high margins, um, and- and essentially began to commoditize the hardware layer. Com... You didn't care if you got Compaq or Dell as long as you had Windows and Office, right? And then, the- the, what happened was open source software came along, and particularly like Linux, which is, you know, fast forward today, by far the dominant operating system in the world. And it turned out that- i- that sort of a ragtag group of people could create a better operating system than this giant high cash flow company. Right? And that- and that- that I think is a- a- a- a, I think the rise of open source software, I- I- I think is a very, uh, underappreciated thing. It's the fact that, you know, every Android phone is running open source software, a lot of your Apple computers running it, and certainly every backend system runs all- a- all open source stacks. All the new devices do. And this was a techno... This was a movement that was a crazy left-wing political movement in the '80s and then dismissed in the '90s. Go- go read, 19... Was it 98 was the DOJ case going a- against Microsoft? Go read the documents. Like Linux doesn't occur. It's all about SUN and Java. So like, a- a- and yet that was when Linux was growing. And so I- I think that there's... And you know there's a famous essay from the '90s, Eric Raymond, The Cathedral and the Bazaar, and he talks about these sort of different ways to make software. Like one is the cathedral is Microsoft, it's this, you know, cathedral, the- the product managers are the priests, they, you know, they speak in secret incantations. And then the bazaar is this, you know, is this like the r- the- the- the, you know, this- this cacophonous marketplace of, you know, of brilliant people, and you know, and crazy people and all the sort of things you get with th- the internet and humanity. But in the end, you know, his prediction, and he was right, is that the bazaar would win because you would have, um, just as Bill Joy famously said, the co-founder of, uh, SUN, "No matter how many smart people you have working for you, the- most of the smart people don't work for you." Or some... I'm butchering it, but most of the smart people work for somebody else, right? Um, and- and it's just, you know, if you just look at h- h- how many people at these big cash flow companies actually work on- on cutting edge new products, right? I mean Google has 300,000 employees or something, the vast majority are doing customer service, product management, they're maintaining old products, they're doing bureaucratic, you know, PowerPoints, arguing over politics. I don't know what they do. But like, I bet you there's a thousand people that are really doing cutting edge new products for as big as these companies are. And, you know, there's that many people working on Ethereum, uh, that are- that are very, very smart and they have people from all over the world and they... And so I just think, I think this force of commu... Bl- th- so blockchains are- blockchains are to centralized services as open source software was to centralized operating systems, right? Like this is, that's what- that's what we're doing here. We're trying to open the services layer of the internet. And I think that- that this historically, this pendulum has swung back and forth between the cathedral and the bazaar and I think there's a lot of, uh, pent up energy to support the bazaar, and I- and I think that- that as powerful as these companies are, that they have... Look, and y- I- I can't predict the future, you may be right, maybe it's too late, m- you know, maybe it- maybe it's over, um, but I think there's a- I think that there's a- um, a lot of w- strong forces that w- that will ultimately support a- a more, uh, kind of community, uh, built internet services layer than we have today.

   3. HSHarry Stebbings36:00

      Can I ask, what do you think is the biggest challenge to the next generation community built services layer that we both want to see? Is it, uh, the talent acquisition from the community platforms? Is it the cash flow machines? Is it the distribution of the cash flow machines? What are the biggest barriers that the community led next generation has to break to enable or to be what it could be?

   4. CDChris Dixon36:23

      I think actually, I think there's two things. I think, um, so I would describe it... So in the- in the book I have this, I talk about the, what I call the computer and the casino. And so this i- this idea is that around blockchains there are two communities that have developed. The casino is a set of folks who are more interested in kind of the trading and gambling aspects of meme coins, and you know, and like, I think, t- m- you know, to me this is where FTX and Luna and a bunch of these catastrophes kind of came out of that community. And then the computer is people who, like me, view blockchains as a computing movement. I was just at ETH Denver, m- E- Ethereum has these series of community orga- organized conferences, you go there and it's- it's awesome. It's like early Linux days or early, like it's like, you know, thousands of like-... you know, nerds talking about computing and stuff. Like, I love it. Um, and that world is kind of ignored I think by the... But I think most people that think about the blockchain world don't realize that exists, how big it is, and how lively it is. That's the world I'm part of. That's what we invest in. I think that... So, I, I, I think of it as there's the blockchain as a computer movement and then, and then we're... On the one side, we have people that are, I think, co-opting that movement for these kind of casino activities. And on the other side, we have, you know, basically the, sort of the mainstream world, the policy makers, the media, the establishment, all these forces that are against us. Um, the establishment, banking. You know, the big banks hate crypto. The big tech companies hate crypto. Media seems to hate crypto. Um, certain elements of the government seem to hate crypto. So, we've got that on one side, and then we've got these kind of co-opters on the other side. So that... (laughs) . Um, and, and, and I think what's going on is that the reason those people don't like it is they see the casino side, and they don't understand that there's two sides to it. And that in, in an ideal world what we would do is, uh, come up with policy prescriptions, and this is what we've been calling for for years, long before FDX. We've had stuff on our website. We've been, you know, advocating for it, is policy that encourages the innovative use cases and discourages the harmful use cases, right? Um, in an ideal world, you'd... That's what you'd have, is you'd have something that sort of reins in the speculation and the casino stuff, but allows somebody when they're building, like, a new social network using blockchains to have a path to be compliant. Instead, what we have today is actually the opposite, which is we actually have a regulatory system which, uh... So, just to give you an example, you can c- creating a memecoin... You know, a memecoi- memecoin is just an utterly stupid token, uh, that has no purpose by design. You can create a memecoin. You can own 10% of it. You can dump it and get rich and f- and as long as you don't manipulate the markets and things like this, basically that's legal. Um, if you then take that memecoin and try to build something useful, like a game or a financial service, that's when you get tripped up with regulators today. So, we have a system now that is, uh, that, that literally encourages the casino behavior and discourages the productive use cases. So, you ask me what the biggest challenge is? That, that's the biggest challenge, uh, is that we, we have this, I think, this harmful community on the one side and then we have, and then, and then we have, are trying... And this is like, this is why I wrote a book. This is why a lot... I'm, I speak to a lot of people about this, that we, we, you know, it's not a sensible... It'd be, it'd be as if we had an AI policy that allowed you to create, you know, dangerous bioweapons but didn't let you create customer service chatbots. Like, it's just opposite land of what we should be doing.

   5. HSHarry Stebbings39:43

      So, Chris, as I said, everything is editable. Um, and I ask from-

   6. CDChris Dixon39:47

      (laughs)

   7. HSHarry Stebbings39:47

      ... pure inquisition because I am naive as fuck on this, if I'm honest.

8. 39:51 – 45:03

   Misunderstandings in Cryptocurrency

   1. CDChris Dixon39:51

      Yeah.

   2. HSHarry Stebbings39:51

      Why does everyone throw the accusation then against Andreessen Crypto for pump and dump?

   3. CDChris Dixon39:56

      Uh, this is factually incorrect. So, I, I, I don't know where that, I mean, where they get, get their, their alleged facts. So, first of all, all of our funds are ten-year venture funds. Um, w- we, throughout the lifetime of the crypto funds, we c- we, today, hold 94% of our investments. The length of the lockup, in some ways, is limited by the market, so we've been advocates... In other words, if we go too far, the entrepreneurs won't work with us. And so, we've been lo- we've been advocating for a long time, uh, for, you know, regulatory guardrails that make longer lockups. Um, I, I don't understand where this comes from. The, the... Look, you don't... It doesn't, uh... You don't have to believe that we're g- good people or something, but just look at all the charts. Look at the history of venture capital. Like, selling your winners is the worst possible strategy, and the things that aren't winners don't move the needle on funds. Like, it's just not how venture capital works. There's a J-curve. Um, and that holding things for a long time is, is always... You know, i- if it's a growing market that's, that's, you know, that's growing in value, which crypto has, uh, is always a good strategy. So, I, I... Yeah. I don't know. That's just misinformation.

   4. HSHarry Stebbings41:05

      Can I ask you, you mentioned there the kind of casino-like culture, and you mentioned the word speculation. Is speculation bad always? Like, can it not be an inroad for interest, you know?

   5. CDChris Dixon41:16

      No, I don't... Look, I don't think speculation's always bad. I think that... I, I, I would liken it to, um, to the housing market. So, so, to me, the point of a blockchain is to enable digital ownership. And so, like, an NFT is a, um, is a d- a digital object, um, and it can represent a name on a social network. It can represent a game, an object in a video game. It can represent a piece of art. It can represent whatever the creator wants to represent. Um, similar to the offline world, like, I think we'd all agree that home ownership is, has a positive societal value, right? Like, it's psychologically, personally rewarding to own a home and, and, and you know, have a family. And it, uh... I think we think societally, like, people that own homes are more likely to improve their homes, are more likely to contribute to their community, so home ownership's a good thing. We also have speculation around real estate. People flip houses, you know, REITS and all this other kind of stuff. I don't think we think... I, I... So, I don't think the speculation is bad, but I think that the point is home ownership. And s- in fact, speculation pays a purpose, right? You have price discovery, liquidity, um, and I think generally as a society, we allow specula- I mean, s- stock markets are similar, right? Like, the, the purpose of a stock market is to productively allocate capital to companies that are building products. The byproduct is you have hedge funds and other folks like that. They do provide liquidity, and they play a service, right? I think the prob- my, my issue with the casino community in, around blockchains is the, is the focus. The focus should be on building useful services that, um, that enable digital ownership. As a byproduct, there should be markets around that, and those markets should be regulated, and there should be, it should be tamped down. The, the issue is you ask most people, you read the media, et cetera, like, all of the focus is on the casino, and that skews incorrectly the perception of the technology.

   6. HSHarry Stebbings43:05

      If you could make one change to the regulatory environment today, what would it be?

   7. CDChris Dixon43:10

      I mean, we have a bunch of specific...... you know, proposals. I think these, these... I think... Look, I just think the main thing is that, as an entrepreneur, and this, this ends up affecting our business because, like, as an entrepreneur, you don't want gray area. Um, gray a- if you're a, you know, top computer scientist and you're choosing what sector to go into, in one sector there's gray area, so there's some percent chance that no matter what you do you get a subpoena or something, um, a lot of people just won't do that. And on the flip side, with the gray area, if you're a bad actor and y- you know, your other career choices are stealing money or something, like, creating a meme coin seems like a good idea, right? And so, what happens with these gray areas is that, uh... It just took me a while to appreciate. I had to work in the space. Like, I didn't understand how kind of policy worked and how policy interacted with entrepreneurship. But I will say that my chief learning there is that gray areas, um, discourage good entrepreneurs and encourage bad actors. And so my main thing is, uh, we talk about this a lot, like clarity. Now, obviously we want a- not just clar- like, clarity, bright-line rules, here's what you do, here's what you don't do, and, of course, a pathway. It could be a lot, it could be a onerous pathway, but a pathway to building these products. Um, and so there's very specific proposals that, you know, that w- w- you know, that are out there that we've been advocates of that, that, that pro- do that, and tamp down the speculation and, and allow for entrepreneurs to build products, and have long lock-ups and disclosures and security audits, and, like, all these things that should be happening that, that in a sensible policy f- uh, environment would be happening just aren't happening today. Like, you have these hacks, and it's 'cause there's no requirements around security audits. Like, there should be requirements around that. Like, we can't, you know, we can, we can try to force it, but if we go too far with entrepreneurs they won't work with, like, we can't... We're not the referee, right? Um, and, and you need, you need a referee for some of these things.

9. 45:03 – 55:24

   Regulatory Changes in the Crypto Space

   1. CDChris Dixon45:03

   2. HSHarry Stebbings45:03

      Can I ask a blunt one? How would a Trump administration impact the regulation or environment for crypto?

   3. CDChris Dixon45:08

      I mean, it's... Look, it's complicated. There's, you know, there are obviously three branches of government. Uh, all matter. The... In fact, a lot of it is playing out in courts right now, and the ju- so the judiciary matters a lot. I think ultimately this will get resolved, I hope, through Congressional legislation. So that matters a lot. Um, the, the, the Executive branch matters too, can... and who they pick. Like, a lot of it, it just comes down to who they pick as the head of agencies, and you could imagine... Uh, I think the... Look, generally, uh, N- Trump, I don't know, but, like, Republicans tend to skew more, you know, kind of pro-business, and so there's some... But ultimately it really comes down to the specific people they choose to run, to run these agencies.

   4. HSHarry Stebbings45:44

      Chris, why did you decide to write the book now?

   5. CDChris Dixon45:47

      Well, I... One is I needed time to write it, and it... and, uh, you know, after the sort of last downturn I had more time, so I thought that was... it was a good opportunity. Um, but, but really it was that I feel like the technology is very misunderstood, and I wanted to have a single, like, a one-stop shop for somebody who wanted to understand it to be able to, and to hear the other side of the story, 'cause I think they hear the negative side a lot, and I wanted to provide the other side of the story and the full, kind of, treatment of it.

   6. HSHarry Stebbings46:17

      I often think, like, who's the customer for the book? Is this a net new entrant to crypto? Is this an existing crypto enthusiast? For you writing it, who was that customer in your mind?

   7. CDChris Dixon46:26

      I think of it as concentric circles. There's the crypto community, which I think, um... you know, I think has embraced it, honestly, in, in a very nice way as sort of the book, you know, the, the, the best explainer. Um, and then there's the next s- ring of the circle is all the people they know. So you're joining Coinbase and your family's like, "Isn't that the thing with Dogecoin?" And you're like, "No, family member, it's actually (laughs) more than that. Here's a book to read," right? And, and I, and I'm very excited to say that, that I've heard a lot of, uh, feedback that that's happening now. So it's becoming that book that people kind of give to, to let's call it crypto-adjacent people (laughs) , right? Which there's a lot of. There's, you know, hundreds of thousands of those people, right? Uh, there's, there's 50,000 that work in the industry. I don't know what the exact number is depending on how you count it, 'cause there's a lot of, you know, non-official organizations and things. But, um... And then if they all give it to five friends kind of thing. And then, and then, look, I also think there's a, you know, people that are tech-interested, um, but, but not deep in these spaces who just want to understand something, who are open-minded. I'm sure there's a set of people who, you know, this is a controversial topic. There's a set of people that won't read it or will, you know, that just won't, won't po-... can't possibly be, um, open-minded about it. But I think there's a pretty big set of people that are open-minded who read books. You know, one thing about books, I... This is one thing I debated, is (laughs) when you actually look at the book sales figures of all books it's sort of surprising how small... Like, when you're used to the internet, it's just a small number. Like, there's a kind of, I don't know, a million people that still read non-fiction books (laughs) in a, in a country or something. I mean, the best-selling non-fiction book last year was 400,000 books or something, and that was, like, a self-help book. Um, so just... It's just a smaller set of people. So you're... You know, when you write a book you're kind of saying, "I want a..." Uh, it's a smaller set of people, but, uh, I'm hoping... You know, they're important set of people that read books. Um, I also... The way... The, the, uh... To the audience, I also think about this, which is, like, I had books that really influenced my life, um, and I, and I imagine it would be cool if 10 years from now I meet somebody who's an entrepreneur who'd done some really interesting stuff and the book was part of that. So even though books, uh, they... You know, did you see, uh, you know, the, the phrase canon event from... Did you see Spider-Verse 2?

   8. HSHarry Stebbings48:35

      Yeah, yeah.

   9. CDChris Dixon48:35

      It's become a meme. So I think of it as, like, books th-... Like, a blog post can reach, you know, millions of people. A tweet can reach millions of people. Books reach a smaller gr- group, but they can be canon events. They can really affect people's lives. Um, and so that, that s-... So that's how I... I think of it both as, like, a way to explain it to the people that are adjacent, um, but also potentially a way to kind of influence entrepreneurs. And particularly, like, when they talk about the computer in the casino, I'm trying to influence those entrepreneurs to go towards the computer, and, like, explain the whole thing to them, and explain why this is the right way to... this is the right path to take. So I'm hoping to kind of nudge the industry in that direction.

   10. HSHarry Stebbings49:07

       Chris, do you think brand is more important than ever in venture?

   11. CDChris Dixon49:10

       Gosh (laughs) . Yeah, I don't know. I haven't... I, I don't think about v-... I... To be honest, I, I don't think about venture as a category. I mean, I...... thinking about my day job, um, I think that the internet changed the way that information flowed, for sure, and I think probably unbundled a lot of brand and venture. So it used to be, like when I started off, there were just these kind of like, it was just these black boxes. It was like Sequoia and Kleiner and, uh, Benchmark and Excel, and you'd hear rumors about who the people are. You'd hear rumor- literally like rumors about how term sheets work 'cause there was no blogging about it. There were- there weren't really books on it, and so it was just sort of like this mysterious, you know, like (laughs) like thing-

   12. HSHarry Stebbings49:51

       (laughs)

   13. CDChris Dixon49:51

       ... that you, uh, didn't really understand. But you- but the firms carried a lot of weight, right? Like, the firm name was the thing. Like, it was a big deal, and you saw it, you read about the history and the f- companies they funded. And I think that's how fundraising worked too, right, with LPs. They were like- this is why, and this is a lot of what's happened with the unbundling I was talking about before, where you have the barbell and the- like, the rise of seed funds, right? Is if you're someone like you, like the calculus has changed versus 20 years ago, where then you had to join a big firm to raise money, and now you don't because you're- you have your own brand, right? Um, and so I think the sort of unbundling of the branding where you can just build your brand with your podcast and with the other things you do and then, of course, over time with your investing and everything, it is very different.

   14. HSHarry Stebbings50:34

       The thing that I worry about honestly, Chris, is- is the weight of capital is different. You know, fi- $5 million to me is very different to $5 million to you and Andreessen. And so you can do a five on 25 with ease, whereas for me, that's a big bet in a early company with absolutely no traction and very little to go on. When the weight of capital is different, it makes it very hard for boutiques to survive, I think.

   15. CDChris Dixon51:02

       Yeah, I think that- I mean, I guess the counterargument, I hear that, um, I mean, look, I- I will say-

   16. HSHarry Stebbings51:09

       If you think to our founder collective, you know, they can't-

   17. CDChris Dixon51:10

       Yeah, I mean look, in our-

   18. HSHarry Stebbings51:11

       ... throw a five on 25.

   19. CDChris Dixon51:11

       I will say in our- I, I speak from my own- for- for my own vertical here, or my own area, which is we very- we do very little seed investing. Um, and the reason is, uh, we take conflicts very seriously, meaning we invest in one company per category, and, um, if, you know, if we go too early, like that's sort of our bet in the category. And so, um, I do very, you know, I- so we do- most of our stuff is like a true Series A and not seed, um, that- that I do for that reason, and I think that- and I try to work very hard to collaborate with seed funds and- and sort of, you know, they- they- they go earlier and then, um... So that- that's just speaking for myself, I- that's obviously not true throughout the industry. Um, I think though that if you- if you really sharpen your value proposition, like why- why do people want you, you know? Like if- if you have a sharp value proposition as an early stage seed invest fund and you have- you size your fund accordingly, I think- I- I feel like- I mean you mentioned Ron Conway, like he- he's- he's able to, you know, operate his business through lots of different environments including the current one successfully, and there are others who do, but I think you probably- the days of just being kind of like a helpful person, probably over. Like you need a sharper- a- a sharp- sharper way to kind of help the- help the founders.

   20. HSHarry Stebbings52:28

       Do you agree with if the cash is on the table you should take it? Because like, you know, if you have a two on 10 versus a five on 25, it's a lot more money, it's a much better price. (laughs) It's hard to argue and tell a founder that, "No, the two on 10 is better."

   21. CDChris Dixon52:40

       I think there's many- honestly I think, and this- maybe this sounds like I'm talking my book, but I- I would say this even if I were a founder, like I think there's many factors. This is a 10- this is a 10-plus year relationship with your investors, um, it's- it's a long term thing. Look, obviously the dilution and everything matters, and so you shouldn't be crazy and- but, you know, I think- and I think it's- it's- one, it's an important factor, but I also think that, you know, the- the way I think about it is you're building a company, you're thinking about how do I kind of assemble an excellent- a team of excellence both in my company and around my company, and those- some of those decisions are, like in- like who you take as investors, basically irreversible. So I- I do think you should know who you're dealing with.

   22. HSHarry Stebbings53:21

       Final one before we do a quick fire, which is, as part of that partnership often it comes with a board seat, what are your biggest lessons on what it takes to be a great board member and how has your style of board membership changed over time as an investor?

   23. CDChris Dixon53:34

       Yeah, look, I think a lot of- a lot of it is, um, is just being a good- you know, is- is good governance, and you know, it's- uh, unfortunately I think it's relatively easy to be in the top (laughs) quartile of that if you care about it, if you're supportive in- in multiple- in both up cycles and down cycles. Like to your point earlier, there's just a lot of stuff that goes on wh- when the market drops, um, and I'm not just talking about crypto here, I'm talking about regular venture, you know, when the downturn happens, 'cause you just have individuals- y- you have somebody who's early in their career at venture, they've made three investments, they've told their partners this is their hot company and now it's struggling, um, you know, they're- they're worried, um, this happens a lot, um, or maybe the fund isn't doing well and they need to recover money, maybe they have a different... I just had a situation where, you know, the investors came in at a high valuation and they have a high preference stack, and so like they would financially be better off if the company sold themselves right now versus the early stage investors because of the way preferences work, you have different incentives. You know, you have people who micromanage, um, and try to- you know, board members who don't really have the expertise trying to give granular product advice. You have... So I think a lot- and I don't mean to sound negative, but I do think a lot of it is just not (laughs) not being bad. It's like you're- it's like- helps a lot, um, caring, uh, being there for downturns, um, you know, b- being, uh- being like a- a true kind of s- you know, it's- it's complicated when you're an investor right, 'cause you- we- kind of wearing two hats, you're w- wearing the board member hat and you're wearing the investor hat and so being able to sort of separate those, you know, I- I think that's a lot of it. If you- if- if you bring- if you bring some detail like some expertise, like operating expertise or financial expertise, that's a bonus, but I think just that alone is just an important thing

10. 55:24 – 59:15

    The Growth of Andreessen Horowitz

    1. CDChris Dixon55:24

       when I describe.

    2. HSHarry Stebbings55:24

       Final, final one before we quick fire. Do you enjoy the size and scale of Andreessen today? It's very different to the firm that you joined 11 years ago, um-... do you prefer it today than you did when it was much smaller and more boutique-y, and I'm sure less process-driven and...?

    3. CDChris Dixon55:39

       I will say, first of all, we, you know, we're very verticalized now. So, uh, we're a big firm, but, you know, I run a vertical and, you know, it's pretty independent. Um, and that's important because I think we actually avoid a lot of the bureaucracy and other things. You know, we had a period where that, that was a transition period where we weren't like that always. But I think we're in a very good spot there. I think it, like it's, for this is just a personal thing for me, and this is, I'm not saying this is right or wrong, but at some point I, I think my interests kind of shifted from just investing in startups to sort of having impact. Um, I remember when I joined the firm in the beginning of, or I was considering joining in 2012. I joined the beginning of 2013, thinking a lot about the fact that it was starting to really bug me that, you know, I'd put some money into an investment and they would either do well or not, and I would think to myself, "Did I actually have any impact?" Um, or, "If I didn't do it, would somebody else have just put that money in an oversubscribed round, like someone else would have invested? Yeah, maybe I gave some advice and this and that." Um, and so is this, is this how I wanna, this is what I wanna do. And so what really appealed to me, why I joined, is when I talked to Mark and Ben, I was like, "Look, we just went through the, the three, the era of mobile social cloud. These are the three big computing trends. I think there will be, you know, in the next ten years we'll have another wave of multiple computing trends, and I want to aggressively invest in those areas." Um, and I think there were a handful of organizations on, in the world who, at that time, would have supported a plan like that (laughs) . And Andreessen Horowitz, Mark and Ben were one of them, right? And that, that's, that's what, that's what we've been doing. I mean, so that was the, that, just to go back, that was my motivation, and that's still very much my motivation today. Um, and, and I, and I, I think about it in terms of impact. Um, obviously, we, you know, we manage the fund and, and, you know, there's all the kind of financial aspects of it. But, but for me that, that's a lot of my motivation, is not just kind of riding along, but actually, um, having some influence.

    4. HSHarry Stebbings57:33

       I guess my question is, how do you assess your own relationship to money, and has that changed over time?

    5. CDChris Dixon57:38

       Yeah, I, I mean, I think that, look, the, I think the healthiest relationship, if you're, you know, in the tech industry and lucky enough to be successful, is to think of money mostly as capital. Um, as mostly as a way to invest in people and ideas that you believe in. Um, and so, you know, f- Mark Andreessen and I have been for a long time, but first individually and for the last seven years together, investing in funds, you know, supporting new managers, starting venture funds. We do other kind of things, like we, I don't know if you've seen this, California Forever, this was something we did. I mean, it's a new city in northern California that, you know, at the time didn't fit into the venture fund model. So we did that, you know, as a personal thing we did. Um, later on, it, that changed and the firm did invest. But, um, s- I support, you know, I'm very interested in sort of internet freedom, blockchains, open source software, uh, being able to support some of those causes. So I think that's the health- like, I think that's the healthiest relationship with money. I've seen a lot of, uh, you know, if you, as you do these kind of job over time, you see a lot of unhealthy relationships with money (laughs) . And you see people that kind of, you know, make money and end their career or get on the, you know, kind of hedonistic treadmill or something and like, I don't know. So those are, there's lots of unhealthy relationships, I'll say that. I think that's a healthy way to think about it, is just, uh, a resource to do, to kind of do things that are, that are help, that help people you like or causes you like.

    6. HSHarry Stebbings59:03

       Chris, we're gonna do a quick fire round because otherwise I could talk to you all day.

    7. CDChris Dixon59:07

       Mm-hmm.

    8. HSHarry Stebbings59:07

       One, what have you changed your mind on in the last 12 months?

    9. CDChris Dixon59:10

       Probably a lot of things. Um, I think I, you know, one that

11. 59:15 – 1:06:17

    Quick-Fire Round

    1. CDChris Dixon59:15

       might be interesting is I, I, you know, COVID, I, uh, like a lot of, like everyone, I guess, we went remote. And I really wanted to believe this was the new world, um, and, and all these kinds of, you know, tweet, (laughs) tweet threads that you read about how the world's changed. And I, and I wanted to believe that, you know, just that you could have now a globally distributed workforce, people could live wherever they want. Um, I, I've come to think it's, especially in our business, just doesn't work. Um, and that, you know, we've now kind of returning our, like, at least on our investment team, you know, back in one place in New York. Um, it's just, you know, the relationships, um, are very har-, you know, it's very, in some ways, I think what, the, what works in remote teams is that you're, you know, you're kind of piggybacking off past relationships, and it's very hard to build new relationships. It's hard to sort of share knowledge. This is a quick fire round. I'll try to, I'll s- I'll stop. Um, but (laughs) uh, that, that's been something I think I've changed my mind on.

    2. HSHarry Stebbings1:00:10

       What are you most concerned about in the world today, Chris?

    3. CDChris Dixon1:00:13

       Well, the issue I spend the most time on that I'm concerned about is, are these issues we're discussing, I think is sort of what I would call broadly internet freedom. Uh, little tech versus big tech. I think that the outside world perceives, would say that someone like me and you work in the tech industry. I see myself as working on the behalf of sort of little tech, of startups. I think that having a dynamic internet economy and software economy is good for the world. I think it's good for innovation. I think it's good for a whole bunch of reasons. And I think we're at serious risk of losing that, and I think the two, the, to me, the two issues are, I think that there's a real effort to ban open source AI, and there's a real effort to ban blockchains. And I care a lot about those two issues and spend a lot of time thinking about that and working on that.

    4. HSHarry Stebbings1:00:55

       Should we open source OpenAI?

    5. CDChris Dixon1:00:56

       Yeah. Now, the, by the way, there's many other issu- obviously issues in the world that are important. I'm not... But these are the ones that I personally feel like I can contribute to.

    6. HSHarry Stebbings1:01:03

       I've got to ask, should OpenAI be open sourced?

    7. CDChris Dixon1:01:06

       I think e- everyone should choose their own strategy. That's fine. I just think that open source should be le- frontier open source models should be legal. And I, if you look at the Biden executive order, it looks like you're gonna have to register and there'll be export controls. So I just think every, every project should have choice and they can do whatever they want. Um, but, but Mistral and, you know, and, uh, all the other, like LLaMA with Facebook, they, they should all be allowed to, to open their s- code, open their weights. I think there's just a lot of crazy panic right now about this. And it's, all it's gonna do is...... further entrench the, the big... The, the obvious thing that's gonna happen if they do put regulations around this is just further entrench the power of the big five companies.

    8. HSHarry Stebbings1:01:42

       What's the biggest lesson from working with Mark and Ben, for over a decade?

    9. CDChris Dixon1:01:46

       Yeah. (laughs) I mean, so, you know, we used to... Uh, for the first five or so years I was at the firm, we'd sit in this, you know, in the s- room, and there were relatively small number of us at the firm, and just sit around and talk about mostly investing. I mean, like, people would... Entrepreneurs would come in, and then we'd talk about it. So I can't... I mean, it's be hard to enumerate all of the things I've learned and... Hopefully I've taught them some things, but mostly I've probably learned from them. I mean, we have a couple frameworks I, I like. There's a, f- y- you know, Ben, this is in our... When you join the firm, it's in our onboarding, it's first class business in a first class way. (clears throat) And it's just sort of everything we do, uh, no matter how seemingly small it is, needs to be conducted in sort of a high integrity way. And I think, uh, I think if you talk to people who interact with our firm, what, w- regardless of who at the firm, they'll... You often hear, will hear that. Like, it's just everything is done in a very, um, sort of high integrity, um, way, and which we, and we really care about it, and we care about, very much about who we hire and the culture we create. I think, um, we, we like to say, "Invest in strength, not lack of weakness." Um, that em- that, that applies both to qu- c- you know, portfolio, like, company investing, but also hiring. Um, so we try to find people that have some very special ability. Um, often that is, comes bundled with issues. (laughs) Um, but, like, the issues are things that we can try to work through, as opposed to, you know, looking for people that are kind of perfect and well-rounded, and, but, but maybe not exceptional. Um, I think that we're in the exception business. Venture capital is the exception business. It's the exception business with investing, it's the exception business with hiring. Like, you can't lose sight of that, and you have to always remind yourself of it.

    10. HSHarry Stebbings1:03:26

        Chris, what's your biggest miss, and how did that impact your mindset?

    11. CDChris Dixon1:03:30

        (laughs) I've had a lot of miss. Everyone, I think any... I, I think it's important moment in your investing career to have, like, t- like, high conviction pass and then have it become a big thing, and I, everyone I know has had that happen. Um, and then you're like, "Oh, wow, I've gotta go readjust my mental model." I mean, I had a lot. I started investing in, I guess it was 2006, '7, when I sold my first company. Um, and I... Well, I remember one thing that was funny was, um, I... So I, my company was a security company, I sold to McAfee, and so one might think that I'm, uh, knowledgeable (laughs) about internet security. And I remember, like, four years into it, noticing that my best investments were non-security, and my worst investments were security. And I sort of thought about why that is, and I came to the conclusion it's because in the security ones, I was over, uh, weighting the idea. Because I had a whole bunch of ideas, I thought things should be built, and someone came in that had one, that matched one of those ideas, and I was like, "Okay, here, here's some money." Whereas in the non-security areas, I was much more agnostic about the ideas and just sort of met the people and was like, "Wow, that person's really smart." Right? And so my conclusion was, you know, I needed to significantly increase the kind of weighting I put (laughs) on the, on the people. And I actually eventually developed kind of a methodology that I think about now, which is, there's a very interesting balancing act you do in venture, which is, you do need to become an expert on something. Uh, um, like, obviously I spent a lot of time on crypto and blockchains, and I know a lot about it, but you also have to be willing to throw out your expertise and just say, like, "Wow, that person knows more than me. That person's smarter than me." Um, and so there's this kind of balancing act between prepared mind and humility, um, (clears throat) that, that took me a long time to kind of get right, I think. Um, and so, yeah. Th- and that was through a series of misses, a whole, a whole bunch of stuff early on.

    12. HSHarry Stebbings1:05:17

        Final one for you, Chris. Where do you wanna be in 10 years? What does Chris Dixon in 2030 look like?

    13. CDChris Dixon1:05:23

        Yeah. I mean, I'm, uh, I'm very focused on this mission of, you know, the, the space I work in, so I very much see myself focusing on that until the mission is done, and that, by that I mean it's sort of passed all of these, you know, kind of growing pains. Um-

    14. HSHarry Stebbings1:05:35

        People often say, "Ah, four and a half billion is too big a fund for this space." Why is he getting away with that?

    15. CDChris Dixon1:05:39

        Well, I think, like, I mean, when we announced it, we had two, there were two funds. There was a growth, there was a, a, you know, a, a venture fund and a seed fund, and the, the v- and, you know, part of our charter is we can invest in over-the-counter assets, uh, like Bitcoin, Ethereum. The, the market cap of all the crypto assets today is something like two and a half trillion, so I, I just, it's, you know, if you just do the math, um, ha- having, uh, a, a fund that size is a very small percentage of the market.

    16. HSHarry Stebbings1:06:07

        Chris, listen, I've wanted to do this for a long time. I so appreciate you putting up with my flexible questions. You've been fantastic.

    17. CDChris Dixon1:06:13

        Oh, they're great.

    18. HSHarry Stebbings1:06:13

        So thank you so much.

    19. CDChris Dixon1:06:15

        Thank you, Harry. Yeah. Thank- really appreciate it.

Episode duration: 1:06:17