Ben Horowitz on the Global Race for Tech, Power, and Influence

1. 0:00 – 1:01

   Intro

   1. BHBen Horowitz0:00

      When AI becomes the interface for everything, every tool we have, every technology we use is gonna be built on these models. And the models are not objective. They have opinions. They have strong opinions on things like history, on culture, on values, and those are very different [chuckles] depending where you are.

   2. ANAnne Neuberger0:18

      Deterrence is no longer just the size of a military. It's the pace of innovation in reacting to cheap software-built tech that adversaries may be using, whether they're a country, criminal, or a terrorist group. And those technologies today are not being built by governments. They're being built by the private sector.

   3. RRRaghu Raghuram0:34

      Products and technology travel faster than companies can. So what happens is, for startup companies, usually in the olden days, you didn't care about going international until you had a few hundred million dollars in revenue. Now these companies have to go sooner and sooner internationally.

   4. ETErik Torenberg0:49

      The number one question we often get when we're visiting different countries is, "How do you recreate Silicon Valley locally?"

   5. BHBen Horowitz0:55

      I don't think that's true, by the way. I think that's, uh, happy talk.

2. 1:01 – 5:06

   Why a16z Is Going Global

   1. ETErik Torenberg1:01

      We are here to talk international today. Um, lots of things going on at the firm, uh, for a firm that used to historically, uh, be all centered in Menlo Park, and, and we didn't even wanna open up a San Francisco office. This is a big change for us. So Ben, why don't you take us through, uh, this announcement around our global ambition and how all the pieces between global affairs, international go-to-market, LP relations on the global partnership level kind of fit in together.

   2. BHBen Horowitz1:25

      Yeah. Well, it really kind of starts with, um, America, interestingly. Uh, and, you know, it's kind of been our belief, our, our strong belief that, you know, if you're-- drop a person into any country in the world, and they don't have the culture, and they don't have, uh, money and capital resources yet, and they just have an idea of how to make the world a better place, um, their best shot is in America. And, um, that's just a very, very special thing. And so a big mission of our firm is kind of trying to preserve that, that special thing that is America, and that means America has to be a leader. It has to be a leader, uh, economically. It has to be a leader culturally. It has to be a leader militarily. Um, and to do that, we have to be a leader technologically. We have to be a tech leader, and that's kind of really our role in the ecosystem and in the world is to help America be a leader. And then, uh, what we realized as kind of we've gotten further along with this mission is that we need to kind of bring in our partners, our allies into that mission. Uh, and it kind of started, uh, with, uh, the work that you're doing, Jen, with, uh, just people from around the world wanting to kind of participate in the, uh, kind of US technological opportunity, and that kind of meant, you know, we started getting investors from around the world. Uh, and as we went out to see those investors, and we said, "You know, look, how can we be a better partner?" Um, we found some interesting things. So one is every country wants to not only kind of economically benefit from the technology, but they'd like to actually directly benefit from the technology. "Can you bring it to us? Can we get the chance to use it?" Um, and then at a kind of higher level, uh, you know, at, at the kind of government policy level, people wanted to know, "Well, how can we be a great country for adopting technology, for innovating like, uh, you guys are, and for kind of helping push our country into the future?" And, you know, as we, uh, looked at, okay, how do we kind of step up and, uh, step into that opportunity and be a good partner, we realized, um, with our country partners, we needed relationships at the kind of government level, at the investor level, at the adoption level, and that's what, what these kind of three components become. So we've got, um, global affairs, which, uh, builds our relationships, led by Anne, which, uh, helps us have relationships in the right way with, uh, governments from, you know, ranging from Saudi Arabia to Japan to Mexico. Um, and we've had, uh, you know, just great conversations with all of them. Then we have people who, uh, invest. You know, sometimes those are the government. Sometimes they're, uh, various companies in the government. Sometimes they're companies in-- who actually, um, handle government money in the form of pensions. Uh, and then finally, um, you know, both the government and the businesses want to adopt the technology, and that's where kind of Raghu's effort comes in, where we have the, uh, the go-to-market component.

   3. ETErik Torenberg4:53

      Um, Anne, I'm gonna get you involved here. How much of your decision to join a16z was motivated by this mission and also the sense of duty in helping other countries think about the adoption to AI and not wanting to get left behind in AI, like Ben was alluding

3. 5:06 – 9:36

   Tech as the Arena of National Power

   1. ETErik Torenberg5:06

      to?

   2. ANAnne Neuberger5:07

      Very much so. You know, what I saw happen in the years in the intelligence community and then the White House is technology moved from being a tool of diplomacy, of national power, to the arena of it, where the supply chain for chips was not a technology issue as much as a foundational economic and national security issue. The supply chain for the components that go into drugs, when used by one country to constrain or have impact on another country, it becomes a tool of national power.

   3. ETErik Torenberg5:38

      Mm-hmm.

   4. ANAnne Neuberger5:39

      A software vulnerability is now not an IT issue.

   5. ETErik Torenberg5:41

      Yep.

   6. ANAnne Neuberger5:42

      It can be-

   7. ETErik Torenberg5:43

      [chuckles]

   8. ANAnne Neuberger5:43

      ... a source of leverage, particularly if that vulnerability is in key parts of your power systems or your water systems.

   9. ETErik Torenberg5:49

      Yep.

   10. ANAnne Neuberger5:49

       So I saw that shift happen from tech being either an IT issue or just a tool to the central arena of both economic growth and national power. And quite frankly, the-- from a deterrence perspective, which is the language we talk about between countries in terms of deterring an invasion of a country, maintaining an international system of stability You know, deterrence is no longer just the size of a military. I think as we see in the Strait of Hormuz or we saw on the Red Sea, it's the pace of innovation in reacting to cheap software-built tech-

   11. ETErik Torenberg6:23

       Mm-hmm

   12. ANAnne Neuberger6:23

       ... that adversaries may be using, whether they're a country, criminal, or terrorist group.

   13. ETErik Torenberg6:27

       Yep.

   14. ANAnne Neuberger6:28

       And those technologies today are not being built by governments, they're being built by the private sector, whether that's AI systems, whether that's autonomous systems, whether that's cyber defense systems. They are being built on the, in the private sector. So certainly from a US perspective, ensuring that we have the relationships between government and private sector to leverage that for our own economic growth and as a force for good on the world stage, but also that our allies as well. We build together, we fight together, and to ensure that together we can both have the advantages of that, and to the extent that our tech also represents our values-

   15. ETErik Torenberg7:04

       Mm-hmm

   16. ANAnne Neuberger7:05

       ... it's important that the world run on American, on Western tech.

   17. ETErik Torenberg7:08

       Yeah. Actually, that's a great point on the values point, 'cause Ben, you've said before, no country also wants to get colonized-

   18. BHBen Horowitz7:14

       [chuckles]

   19. ETErik Torenberg7:15

       ... in cyberspace, right? Particularly because-

   20. BHBen Horowitz7:18

       Yeah

   21. ETErik Torenberg7:18

       ... AI's now just getting built in-

   22. BHBen Horowitz7:19

       Mm-hmm

   23. ETErik Torenberg7:19

       ... the six-block radius in San Francisco. Um, say, say a little bit more about that.

   24. BHBen Horowitz7:24

       Well, y- you know, when AI becomes the interface for everything, um, so e- every, every tool we have, every technology we use, every kind of system we have from your car to your r- refrigerator to your education system, is gonna be built on these models, and the models, um, are not objective. They have opinions. Um, and they, they have strong opinions on things like history-

   25. ETErik Torenberg7:50

       Mm-hmm

   26. BHBen Horowitz7:50

       ... on culture, on, um, you know, ethics, on values. And by the way, those are very different [chuckles] depending where you are. Y- you know, the, uh, you know, the history of wars and the, you know, history of, uh, of, of a country and laws and whether that country was a good actor or a bad actor, uh, are all very different depending on, um, where you're getting the information from. And so if you believe that y, you know, as, as I do that, you know, for all our flaws, our fundamental values and ideas about everything from the way our economic system works to the rule of law, uh, have resulted in basically the best opportunities, uh, for humans in the world, then you want those values to be projected onto the world more so than to be the recipients of some other values, um, which, you know, maybe were good at a time or maybe, um, you know, have some merits, but overall don't give people a real opportunity.

   27. ETErik Torenberg9:07

       Yeah. Giving, giving people a chance, that's the-- that was the premise of the original announcement we did for our fund announcement earlier this year and the importance of that, and then particularly extending that chance to the allies of America as well. Um-

   28. BHBen Horowitz9:18

       Mm-hmm

   29. ETErik Torenberg9:19

       ... Raghu, I wanna get you involved on this as well because portfolio companies-

   30. RRRaghu Raghuram9:22

       Sure
4. 9:36 – 14:01

   Products Travel Faster Than Companies Can

   1. RRRaghu Raghuram9:36

      Yep. Yeah, I mean, the reality is that, uh, products and technology travel faster than companies can-

   2. ETErik Torenberg9:42

      Yep

   3. RRRaghu Raghuram9:42

      ... right? Because if you got a great product, everybody learns about it very quickly, instantaneously. You can access it through APIs wherever in the world you are. You can build on top of those things. So what happens is, for startup companies, usually in the olden days, you didn't care about going international until you had a few hundred million dollars in revenue, et cetera. Now these companies have to go sooner and sooner internationally. So while, um, the products are being discovered internationally sooner, also this, uh, to Ben's earlier point, it's easier to adapt these products for local markets much more easily thanks to AI, or as Wise becomes the interface to localize, uh, and internationalize these products, it's so much more easier. But in order to capitalize on the opportunity at scale, things don't change, right? I mean, you still have to be in region. It-- You still have to understand the market structure of the region that, uh, you wanna operate in. Um, you have to understand partnerships. You have to build relationships. Lots of other countries are very relationship-based economies, not transaction-based economies. So it's, it's this interesting blend where you've got to-- the technology moves really fast, but the way you do business hasn't changed that fast.

   4. BHBen Horowitz11:05

      Yeah, actually, so a really great example of, uh, what Raghu was talking about. So, uh, when we were in, uh, Mexico recently, um, we were meeting with, uh, the CEO of Televisa Univision, which, uh, Al- Alfonso Anguita, who is a great friend of the firm, so one of our global partners. And we were asking about, "Gee, you know, what are your struggles?" And one of his challenges is, you know, he's really faces, uh, you know, heavy competition from some of the kinda global streamers like, you know, a Netflix or Disney-

   5. ETErik Torenberg11:38

      Yeah

   6. BHBen Horowitz11:38

      ... or so forth, who have this US technology that's very powerful. Um, but he has, you know, this unbelievable Spanish-speaking content. Uh, but it was hard for him to get to play on a global basis because it's in Spanish. It's a Mexican Spanish accent, which is different than a, an Argentinian Spanish a- or Colombian Spanish accent. Uh, and you know, he's like, "You, you know, how should we solve this?" And we're like, "Well, we've got this great company, Eleven Labs. They can help you with it." We put them together. In a couple of months, he was in, you know, France and Poland [chuckles] and all over the world with, uh, this incredible technology that had his actors basically acting exactly as they normal do with their right kind of intonations, their right laugh, everything, but in different languages. And he recently, um, based on that success- Got a big deal with Netflix. [chuckles]

   7. ETErik Torenberg12:33

      Yeah.

   8. BHBen Horowitz12:34

      Uh, and so here we have, um, something where we can bring our partners who, you know, have a great product, uh, that's culturally local, but really, really interesting, and make it a global product by, you know, not competing, uh, with their allies, but partnering with their allies. And, and I think that's a lot of what the program is about.

   9. ANAnne Neuberger12:56

      And I want to tie what Ben just said back to the values point, because people often ask us, you know, Chinese open source models, how do you compare and contrast? So in that case, they didn't have to worry that when the content was dubbed into different languages, that if the speaker said something sensinent- sensitive about Tiananmen Square or sensitive regarding the Chinese government, that using an American model, that content would be translated and changed along the way, right? They knew it would be true to what was said. And that's what we mean when we talk about American values of not censoring, not injecting political will into how these models operate in the way that one would contrast. Now, open source is something we, we deeply value because at the end of the day, there's all different kinds of models and all different kinds of price points, clearly.

   10. ETErik Torenberg13:51

       Yeah.

   11. ANAnne Neuberger13:51

       Um, but that's really a good example of what we mean when we say American and Western values reflected in the models that we deploy around our infrastructure.

5. 14:01 – 18:52

   American Values in the Models the World Runs On

   1. ETErik Torenberg14:01

      For sure. The telenovelas are spicy enough. I, I don't know how much the [laughs] introduction of Tiananmen Square needs to be introduced necessarily in the storyline, but you never know. The border crossings, et cetera. [laughs]

   2. ANAnne Neuberger14:11

      Good point. They keep their audience well enough.

   3. ETErik Torenberg14:15

      Exactly. Exactly. Um, but, but this actually is a core part, you know... Um, when Packy McCormick wrote the article about us earlier this year, he, he called us a power broker, and power being part of an offering that we enable our founders to tap into.

   4. BHBen Horowitz14:29

      Yeah.

   5. ETErik Torenberg14:29

      And for a lot of companies, you know, starting a Mexico office, for example, is probably not one, two, three, maybe even top 10 on their list.

   6. BHBen Horowitz14:38

      Absolutely.

   7. ETErik Torenberg14:38

      But if they have a deal that we're able to walk in and, and effectively enable them of a shot at winning way earlier in the life cycle, they might prioritize that. So, so maybe if you wanna riff on that, Raghu and Ben, on, on particularly how that's changed for founders as they think about international when they have the benefit of being able to go right to the buyers in a much more adept way than kind of figuring out a market from scratch.

   8. RRRaghu Raghuram15:02

      Yeah. I mean, a lot of markets are very top-heavy.

   9. ETErik Torenberg15:04

      Mm-hmm.

   10. RRRaghu Raghuram15:05

       Right? So you take any mature business and you say how much of your revenue comes from... Even companies like, I mean, countries like UK, a significant chunk is gonna come from the very, very top companies in the UK, right? So the reality is, whichever country you look at, it's five or 10 companies that matter, and of course, the government is a big influencer and buyer. So the example that you gave in Mexico is great, right? I mean, there are a few global companies in Mexico, like the one that Ben talked about, and so the only way you could-- It is not worthwhile setting up a whole office and serving all of the countries, right? But if you could get into the top five countries in-- sorry, companies in Mexico, that probably is worth a lot more than setting up a full operation in some other, uh, country. So it is the top-heavy nature and the relationship-heavy nature that helps in this, uh, uh, helps our portfolio companies.

   11. BHBen Horowitz16:01

       Right. And, and the thing, uh, th- there's a couple of other aspects that are important. One is, like, you're right that Mexico probably isn't a top 10 thing that most, uh, companies go into first. And, and by the way, that's a terrible shame because Mexico's our neighbor. Uh, and from a... You know, when we think about it from a national security standpoint, how powerful would it be to have a Western Hemisphere supply chain-

   12. ETErik Torenberg16:27

       Mm-hmm

   13. BHBen Horowitz16:28

       ... um, kind of ecosystem that was really, really well connected? So I think it's kind of bad for the country that it is number 10. Um, secondly, y- you know, to open a country, [chuckles] uh, as a company is a very large expense. You have to set up an entity. You have to hire a team. You have to, like, localize the product. And, you know, that's gonna be, you know, depending on the country, depending on how committed you are to it, it could be, like, easily $5 or $10 million just to get to your first deal. Um, and so that is gonna delay in your life cycle when you can go international. But what if, [chuckles] you know, what if you, before you ever, uh, put up an entity or ever kind of got started in that country, you had an opportunity, a big opportunity, a $5 million opportunity, a $10 million opportunity? That makes that investment much easier to do earlier.

   14. ETErik Torenberg17:25

       Yeah.

   15. BHBen Horowitz17:25

       And so we can really enable both our companies and our allies, uh, by kind of paving the way for that kind of thing. A, a great example is, um, like, nobody's going to Saudi Arabia first. Uh, however, like, Saudi Arabia is booming, [chuckles] um, and there are great opportunities there, and they really need our help, uh, in developing the country. They're modernizing, which is incredibly important to the security of the world, that, you know, Saudi Arabia is going from this, uh, kind of tribal, uh, different kind of society, I would just say, to kind of a modern, you know, like, highly civilized, you know, player in the modern world and full ally of the United States. Like, that transition is really important that it succeeds. So we're able to take a company like Flow, Adam Neumann's company, bring them to Saudi Arabia, introduce them to the right people in the government, introduce them to the right people in business, introduce them to the right investors. You know, it's the optimal place to live if you're an expat, you know, kind of moving to Riyadh, help develop, helping develop the economy. Um, and it's something that just, it's not really possible without an effort like this.

   16. ETErik Torenberg18:38

       For sure. For sure. Maybe let's talk about geos we're prioritizing, 'cause there's a handful. Um, Japan, Korea, the Middle East, Mexico, Canada. Are, are there themes as we think about different countries that make more sense

6. 18:52 – 24:41

   Prioritizing Geos: Japan, Saudi, Mexico & the Indo-Pacific

   1. ETErik Torenberg18:52

      versus others?

   2. ANAnne Neuberger18:52

      Mm-hmm.

   3. RRRaghu Raghuram18:53

      [laughs] Yeah.

   4. ANAnne Neuberger18:53

      Yeah, this is-

   5. RRRaghu Raghuram18:55

      Th-th-this is timely. Raghu and I have been debating this on... No. So, so I would just say, like I think, you know, from our standpoint, it's very powerful when we-- when they're a strong ally of the US. We've got a r-relationship with the, uh, people in government. We've got a relationship with the people in business. We've got a relationship with, uh, the investors, you know, 'cause those, those things are not separate. They, they all interact with each other. And if we, you know, have that, then we can, uh, really, really accelerate the opportunities, um, for them and for us.

   6. ANAnne Neuberger19:35

      I think what I would just say to that point, building on Ben's point, and then I'll turn it over to Raghu, is what's changed so much, as we talked about a moment ago, is that on the, on the global stage, whether it's in the context of war, whether it's in the context of countries pressuring other countries via supply chains, there are parts of the world which we have close allies who are now in increasingly tenuous positions.

   7. ETErik Torenberg20:02

      Mm-hmm.

   8. ANAnne Neuberger20:02

      So if we look at the Indo-Pacific region, China has vastly increased its military, vastly increased the number of nuclear capabilities that it has, uses various, um... Their shipbuilding capability are orders of magnitude more than the United States, and our allies in the region have started responding. Japan has changed its really sacrosanct policy from the f- the post-World War II period to say it must have a capable military.

   9. ETErik Torenberg20:30

      Yeah.

   10. ANAnne Neuberger20:30

       It wants to build the military to fight today's wars, not yesterday's wars. It doesn't necessarily have the military industrial base. Now, that cuts both ways, as we know from the own kind of the halting steps the United States military's been taking. The number of defense reform policies that have been written in the last 20 years, they all say the same thing, right?

   11. ETErik Torenberg20:50

       Mm-hmm.

   12. ANAnne Neuberger20:50

       Fewer small numbers of exquisite platforms, more cheaper, larger numbers of platforms, in addition to very exquisite platforms for certain specific use cases. So as Japan thinks about building a capable military in order to deter aggression in the region, it is looking to partner with new firms building autonomous ships, building AI for an integrated battle space, and they want to build with us. They don't wanna just buy because they have their own capabilities they want in their own country, their own supply chains to protect. So I think a part of that is thinking about those regions of the world. I talked about one in the Indo-Pac region. That covers Australia as well, obviously. Certainly, the Middle East has been an area of American interest for a long time. Israel's an incredible capable ally with capable military and intelligence community. The UAE is as well. Saudi Arabia is modernizing and thinking about AI infra, how it builds an innovation, entrepreneurial innovation base-

   13. ETErik Torenberg21:46

       Mm-hmm

   14. ANAnne Neuberger21:47

       ... in order to compete globally. And then certainly when we think about Latin America, when we think about fentanyl coming into the United States, it comes in via Mexico. So public safety, national security, how autonomous ships can help a vast Mexican coastline-

   15. ETErik Torenberg22:01

       Mm-hmm

   16. ANAnne Neuberger22:02

       ... are not only important to our ally and to the stability of Latin America, it's important to us as well. So I think that's at least the national security lens we bring to some of our partnerships in American dynamism or in the AI infra space.

   17. RRRaghu Raghuram22:16

       Yeah. I mean, it's-- The reason Ben and I have been debating is there are so many sides to this that you gotta bring it all together.

   18. ETErik Torenberg22:22

       Mm-hmm.

   19. RRRaghu Raghuram22:23

       Firstly, um, to, to Anne's point, you gotta be ally-- It has to make a lot of sense from America's interest point of view, right? And that is abundantly existing in all these countries. These governments are very AI forward, and they're putting in policies that are very modernization centric, whether it's in defense or across the economy. Thirdly, they're all top-heavy economies. I mean, you go hit the, the top companies, you are actually having global influence. For example, all those North Asian countries that you talked about, I think 15, 20% of the Global 2000 are across Japan, Korea, Taiwan.

   20. ETErik Torenberg23:04

       Yep.

   21. RRRaghu Raghuram23:04

       Right? Um, and then lastly, for our startups, it's this-- the way business is done in these countries is very different than, let's say, UK or some English-speaking country, right? So the value add that we can provide to these, uh, to our startups and the value add we can provide to these countries is so remarkably higher than in other places.

   22. ETErik Torenberg23:28

       Yeah.

   23. RRRaghu Raghuram23:28

       So when you put it all up and score it out, that's why we go into these countries.

   24. ETErik Torenberg23:32

       Yeah. And some of these countries are also leapfrogging too, where they didn't have to deal with the prior-

   25. RRRaghu Raghuram23:36

       Exactly, like Saudi. Yeah

   26. ETErik Torenberg23:37

       ... era of technology. Like Saudi, you go through the, uh, visa entry, and it takes 30 seconds. Like, way-- That snap wasn't good.

   27. RRRaghu Raghuram23:43

       You, yeah.

   28. ETErik Torenberg23:44

       Um, the, the 30 seconds to go through the, the visa entry, which is, like, unbelievable. And, you know, here you get stuck behind, uh, unfortunately, a very long line, increasingly, uh, for, for a number of different other reasons. But, you know, it's a, it's a different kind of, uh, approach to how you think about incorporating technology in everyday life, but it's not evenly distributed. So what are ways we can accelerate that in different avenues is, is also the opportunity that a lot of these countries-

   29. RRRaghu Raghuram24:08

       Yeah. Yeah

   30. ETErik Torenberg24:08

       ... we're seeing is, is a huge leg up. Um, it's very different, though, when we think about international prioritization compared to maybe other VC firms. 'Cause the typical VC firm was that, you know, Ben, you've talked about this before, like the typical way that other VC firms have done international have always been investment driven versus actually thinking about the portfolio companies and what they would like to do internationally. So maybe speak a little bit more about that contrast and, and quite frankly, why for the first 10 years of the firm, it was very rare we even did an international deal outside of, of not just the US, but even outside of the Silicon Valley.

7. 24:41 – 29:31

   How a16z's International Strategy Differs from Other VCs

   1. BHBen Horowitz24:41

      Well, I think we've always looked at investing through the lens of what do we bring to the table.

   2. ETErik Torenberg24:46

      Mm-hmm.

   3. BHBen Horowitz24:46

      Um, so as, as a result, like if you think about what we try to do for a company, um, we, you know, we really try to help them network to the right talent, to the right customers, um, to, you know, the right expertise, and that is very hard to do in kind of multi, uh, geographies. Even like San Francisco, Menlo Park in the early days, we were like, like, "Let's just have a really good product for this-

   4. ETErik Torenberg25:19

      Mm-hmm

   5. BHBen Horowitz25:19

      ... and then we'll expand from there." Whereas I think other VCs, um, think of the product much more as the money.

   6. ETErik Torenberg25:26

      Mm.

   7. BHBen Horowitz25:26

      Um, and so if the product is the money, then the international strategy is, okay, we'll find a team of investors in, say, the UK, and we'll help them raise money.

   8. ETErik Torenberg25:39

      Mm.

   9. BHBen Horowitz25:40

      And then we'll take a percentage of their winnings for helping get them-

   10. ETErik Torenberg25:44

       Mm

   11. BHBen Horowitz25:44

       ... their product. Uh, and you know, and that makes sense in that model. I think it doesn't make sense for us because y- y- you know, our, our whole thing is how do we help you build a better company? How do we, y- y- you know, how do we accelerate your opportunity, your growth, and so forth? So we needed to get to kind of a certain level of size and stature for that to make sense in more regions. Um, but now that y- you know, now that we are, [chuckles] um, it starts to make a lot of sense. And I think, you know, in our role in investing, we don't look at it as how do we snatch up the opportunities in Sweden or Japan or, or, or s- or Saudi or UAE or that kind of thing. We look at it as what is your ecosystem missing-

   12. ETErik Torenberg26:33

       Mm

   13. BHBen Horowitz26:33

       ... uh, in terms of kind of capital and expertise to go global, and is there an opportunity for us to plug in? So we don't wanna displace their A round and seed investors necessarily. We wanna kind of say, "Oh, okay, if you've got companies that are merging as real global, uh, companies, then that's where we can really step in and help." And if we're already in the, uh, country and we're already doing a lot of business, and we're already kind of understanding, um, them and their entrepreneurs and so forth, then we're in great position to do that. But we would do that directly. We're not raising money for somebody who's not part of our firm, our culture, our mission, and having them go run a play. That, that, that's just not us.

   14. ETErik Torenberg27:19

       And also, so much of the time when you think about these, um, entrepreneurial ecosystems, what they're oftentimes missing is growth capital. They actually have a great talent base on the early stage side, but they're kind of missing that component to actually go global, and they become a localized success-

   15. BHBen Horowitz27:35

       Yeah

   16. ETErik Torenberg27:35

       ... versus, you know-

   17. BHBen Horowitz27:36

       Yeah

   18. ETErik Torenberg27:36

       ... actually thinking about global ambitions. Maybe that actually, drawing from your experience at, at VMware, Raghu, thinking about the evolution of company building, how has that kind of particularly changed in the, the ambition for local companies to become global over time?

   19. RRRaghu Raghuram27:49

       That's dramatically increased, right?

   20. ETErik Torenberg27:51

       Yeah.

   21. RRRaghu Raghuram27:52

       Um, previously, like I said earlier, you would not even dream of going global until you're like-

   22. ETErik Torenberg27:58

       Mm-hmm

   23. RRRaghu Raghuram27:58

       ... really well advanced. And now because your product can be... There is such a universal appeal for you. If you've got a great product, such a universal appeal, whether it's B2B or a B2C product, it behooves you to go earlier.

   24. ETErik Torenberg28:13

       Mm-hmm.

   25. RRRaghu Raghuram28:13

       What is missing is the supporting ecosystem-

   26. ETErik Torenberg28:15

       Yep

   27. RRRaghu Raghuram28:16

       ... right? And being a, finding a way to plug into a new country, right? And that's where our new offering, uh, really focuses on, right? So it's really help them get a fast start in these regions.

   28. ETErik Torenberg28:30

       Yep.

   29. RRRaghu Raghuram28:30

       And for that you need to have-- you need to be in the region to have the relationships, to build the trust, to build the credibility. All of those things don't happen overnight, and that's where we can provide that.

   30. ETErik Torenberg28:42

       Yeah. Yep, and then by spending time locally as well, we get to know the local ecosystem-
8. 29:31 – 37:00

   AI, Cybersecurity & the Dual-Use Dilemma

   1. ANAnne Neuberger29:31

      So it's a hot topic right now, um, as you know, and it's a hot topic around the world because fundamentally, as many technologies are, AI is dual use, right?

   2. ETErik Torenberg29:41

      Mm-hmm.

   3. ANAnne Neuberger29:42

      So the first step, let's use cyber as an example, right? The first step, whether you are an attacker or a defender, is finding vulnerabilities in systems. And then if you're a defender, you patch them. If you're an attacker, you exploit them.

   4. ETErik Torenberg29:55

      Yep.

   5. ANAnne Neuberger29:55

      So models make the step of finding vulnerabilities in code far easier.

   6. ETErik Torenberg30:01

      Mm-hmm.

   7. ANAnne Neuberger30:02

      Um, and quite frankly, it makes the next steps, exploit or defend, easier as well. The economics of cyber defense were broken well before, you know, the latest AI models came out.

   8. ETErik Torenberg30:14

      Mm-hmm.

   9. ANAnne Neuberger30:14

      I saw that in the White House where my nightmare was the ransomware attacks against, you know, rural hospitals in America, where there wasn't another hospital two blocks down. So actual Americans' opportunity to access healthcare was disrupted by, in some cases, states, state-harbored criminal groups halfway around the world, right?

   10. ETErik Torenberg30:31

       Yep.

   11. ANAnne Neuberger30:32

       So infrastructure is very fragile, and the reality is that the models help both. I personally believe- I'm focused on cybersecurity for a moment, that they help far more in defense because defense is far harder. You have to be, you know, defending a broad expanse.

   12. ETErik Torenberg30:46

       Yeah.

   13. ANAnne Neuberger30:46

       An attacker has to find one way in. Um, so as a result, I actually think we have-- we are in a difficult space at this moment because there is such a broad attack surface, there's so many systems that are vulnerable, but I think we will see the opportunity for a much more secure space. To your point, you know, when I talk with governments around the world or companies around the world, all are grappling with that question of, I'll talk about the government side, given we know it can both help-- Most countries have two missions, right? Defending the country-

   14. ETErik Torenberg31:21

       Mm-hmm

   15. ANAnne Neuberger31:22

       ... as well as defending it, you know, as well as maintaining its interest overseas. Given both, how do we ensure that these powerful capabilities don't fall into our adversaries' hands, don't fall into criminals' hands to be used for that purpose? And I think, you know, in the traditional cyber tools arena, we always grappled with this, right? When a capability is on a thumb drive-

   16. ETErik Torenberg31:43

       Mm-hmm

   17. ANAnne Neuberger31:44

       ... export controls are a joke.

   18. ETErik Torenberg31:45

       Yeah.

   19. ANAnne Neuberger31:45

       You can't actually control it in that way. And there is real power, as we talked about earlier, in the models that the world runs on being run on trusted models.

   20. ETErik Torenberg31:57

       Mm-hmm.

   21. ANAnne Neuberger31:57

       When people are using an American model, they don't have to worry there's an intentional backdoor. As we talked about earlier, they don't have to worry that a chatbot's answers will be framed by, you know, censoring to fit a particular political story of, like, an authoritarian government. So the question for now is to say, how do we build in the degree of safety in models so that they can be used in environments that need that safety? And that is somewhere where because the main models are American, we're in a particular position to think through and build that out. And I think this is not done by government, it's not done by the private sector. What it really needs is people who really understand the models best from the private sector at the table with folks on the government side who are thinking about how do we both promote innovation and control for these risks, and building out the right set of government policies to enable both the use as well as the understanding of how do you protect against the risks-

   22. ETErik Torenberg32:59

       Yeah

   23. ANAnne Neuberger32:59

       ... that come with the, with the models as well.

   24. ETErik Torenberg33:01

       Yeah. Yeah. As our partner Mark often says, we, we-- technology is the dog that caught the bus, and we've never seen before that countries are do- you know, kind of feverishly demanding the latest versions of the model because they recognize how competitive it is to their economy, to their people, to their interests, and this now is unlocking all sorts of new paradigms as we think about globalization in a way that, that feels categorically different than just selling product internationally, right?

   25. ANAnne Neuberger33:25

       Yeah.

   26. ETErik Torenberg33:25

       And, and this is hopefully been an opportunity for many of our founders as well.

   27. BHBen Horowitz33:29

       No doubt. Although it, it is complicated. Um, like, so for example, you'd like to, like, from a government standpoint, you'd like to say, "Okay, don't release your model with cyber hacking capabilities." But if you do as Anne say, and you want to find the vulnerabilities in your own code and patch them, you can't do that without also enabling cyber attacks.

   28. ETErik Torenberg33:57

       [laughs]

   29. BHBen Horowitz33:57

       Because as soon as it can find the vulnerabilities, guess what? Uh, and so you're kind of in this situation where it's like, well, if you kind of lock that up, lock that capability to understand vulnerabilities, then the only people who will be able to understand vul- vulnerabilities are the bad actors who jailbreak-

   30. ETErik Torenberg34:19

       Yeah
9. 37:00 – 42:05

   What It Actually Takes to Build a Silicon Valley

   1. ETErik Torenberg37:00

      maybe in closing, so Ben, I, I know the number one question we often get when we're visiting different countries is, how do you recreate Silicon Valley locally, right? That's, let's, like, they want the ingredients to it, and there, there's a few components to success that have enabled Silicon Valley, but there's also the, the proposition, what if the internet is actually Silicon Valley? Or the s- the, the actual Silicon Valley just distributed. So-

   2. BHBen Horowitz37:21

      Look r- yeah.

   3. ETErik Torenberg37:22

      Yeah.

   4. BHBen Horowitz37:23

      I don't think that's true, by the way. [laughs]

   5. ETErik Torenberg37:25

      [laughs]

   6. BHBen Horowitz37:25

      And like, I think that's a happy talk. If y- y- you know, like, one thing you learn when you go to different countries is they're very different. Like, the laws are different-

   7. ETErik Torenberg37:34

      Mm-hmm

   8. BHBen Horowitz37:34

      ... the policies are different, the governance are different, and that's why, you know, America has continued to be special. We've had the internet now for quite a long time-

   9. ETErik Torenberg37:41

      Mm

   10. BHBen Horowitz37:41

       ... and like, that's absolutely not the case. Uh, so like, so what is going on? And, and by the way, I wish we could bring, uh, some of our own, uh, policymakers on those trips so they could hear people say, "We want Silicon Valley," before they keep trying to wreck us. [laughs]

   11. ETErik Torenberg37:58

       [laughs]

   12. RRRaghu Raghuram37:58

       [laughs]

   13. BHBen Horowitz37:58

       Not all of, many of our policymakers are outstanding, but some really don't like the fact that we have a technology industry. Um, so I think that, like, a- as we've traveled around, there's a kind of a, a combination of ingredients, and, and they are a little bit the combination that makes Silicon Valley special, and then, you know, America itself special. So the first is, um, you do need the talent, and, uh, talent is kind of easily, kind of most easily seen in, like, is there a great technical university, um, that graduates people who know how to build things? Uh, that, that, that's kind of like an essential thing. And like, by the way, many countries have that that don't have a Silicon Valley. Um, and what are they missing? They're missing the other two components. The second is, do you have a set of laws and policies that, uh, facilitate entrepreneurship, are essentially good for business? Like, can you create a company easily? Can you hire people easily? Um, can you fire people easily? Is there a tax incentive structure that's not onerous? Can you, um, own... And then this is a big one lately, which, uh, y- you know, California is kind of moving against, but can you own an illiquid asset that has value?

   14. ETErik Torenberg39:27

       Mm.

   15. BHBen Horowitz39:27

       Um, or will it get seized? Uh, and so I think Norway, uh, introduced a, um, unrealized capital gains tax, and that, that kind of effectively ended the tech ecosystem there. Uh, and I think that that, you know, so those, those kinds of policies are super important. If they're not right, nobody is gonna take the extreme risk, um, kind of both personal and financial, of starting a company if it's not an environment that's conducive to that. And then the third one, which is, I think, kind of a combination of everything in a way, is, is the culture such that young people, the most capable young people willing to make the biggest contribution, is do they get status, social status reward? Is it cool to either start or join a new company? Um, and almost no, very few countries have that.

   16. ETErik Torenberg40:23

       Mm.

   17. BHBen Horowitz40:24

       Uh, I would say that it's really, really good in the US. It's, um, you know, it's clearly good in China, by the way, uh, although they've done a few things [laughs] the, to mess it up. But in most countries, you know, like in a lot of ways, like success is frowned upon.

   18. ETErik Torenberg40:38

       Mm-hmm.

   19. BHBen Horowitz40:38

       It's like, oh, you know, and in a lot of, you hear a lot of this in the political rhetoric, "Oh, the only way you could make a billion dollars is if you're a thief."

   20. ETErik Torenberg40:45

       Mm.

   21. BHBen Horowitz40:45

       Which is completely absurd. Um, you know, you just look at the people, and almost none of them are thieves. [laughs] Like they, they... You can't steal a billion dollars is the real truth, but like, that's just like, it's a rhetoric that works-

   22. RRRaghu Raghuram40:57

       Yeah

   23. BHBen Horowitz40:57

       ... 'cause if you're, you know, if you're like how... It's a great sour grapes idea, right?

   24. ETErik Torenberg41:01

       Mm.

   25. BHBen Horowitz41:01

       Like it's like, "How the, how did he get all that money? Oh, he's a thief. Okay, I go, I'm not a thief, so like I feel much better about myself now." But, but that's the y- y- and that's a lot of the thing, and that's the thing that's so hard to replicate, and it's so hard to build, and it's so easy to destroy. Uh, so it's, you know, something that I think we have to just be aware of how special that is and unique in the world, and then we can try and help other people do it, but we also have to try equally hard not to wreck it ourselves.

   26. ETErik Torenberg41:31

       Yeah, for sure. It's, uh, it's World Cup season, and there was a great tweet where someone was like, "I think America thinks they could potentially win the World Cup." And like, it's like, maybe they can, maybe they can't-

   27. BHBen Horowitz41:40

       Mm

   28. ETErik Torenberg41:40

       ... but like the fact that America thinks they can-

   29. RRRaghu Raghuram41:43

       Yes

   30. ETErik Torenberg41:43

       ... is a feature, not a bug. [laughs]

Episode duration: 42:24