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Marc Andreessen Reveals His Biggest Wins and Mistakes at a16z

What does it take to build a venture firm from scratch—and scale it across multiple waves of technological and cultural change? In this special episode recorded at the a16z LP Summit, Marc Andreessen joins Erik Torenberg for a wide-ranging conversation on the origins and evolution of Andreessen Horowitz. From raising Fund I during the depths of the 2008 financial crisis to shaping the firm’s multistage, multi-sector strategy, Marc reflects on how the firm was built—and rebuilt—as the tech landscape shifted. They discuss the rise of “Little Tech,” why policy now matters to startups, how scale became a strategic advantage in venture capital, and why the move from generalists to vertical specialists was inevitable. Along the way, Marc shares behind-the-scenes stories on Facebook’s near-sale to Yahoo, the evolution of founder archetypes, the global talent arbitrage, and what too many people still misunderstand about tech’s role in society. This is a masterclass in firm-building, investing, and long-term thinking. Timecodes: 00:00 Introduction 00:22 Founding the Firm 10:43 The Evolution of Venture Capital 13:37 The Rise of Specialized Funds 16:52 The Role of Domain Expertise in Tech 19:45 Globalization and Tech Enthusiasm 21:23 Challenges and Opportunities in Europe 23:05 International Investments and Policies 24:38 The Evolution of Tech Industry Politics 27:43 The Rise of Little Tech vs. Big Tech 30:47 Historical Context of Tech and Defense 36:29 Modern Tech's Role in National Security Stay Updated: Let us know what you think: https://ratethispodcast.com/a16z Find a16z on Twitter: https://twitter.com/a16z Find a16z on LinkedIn: https://www.linkedin.com/company/a16z Subscribe on your favorite podcast app: https://a16z.simplecast.com/ Follow our host: https://x.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.

Marc AndreessenguestErik Torenberghost
Jun 2, 202537mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 0:22

    Introduction

    1. MA

      It's like a process of falling up the stairs. Just when you think you've got everything figured out, some weird-

    2. ET

      Yeah

    3. MA

      ... issue like, you know, basically-

    4. ET

      Right

    5. MA

      ... pops up and you've got some new thing to prove. Every one of these companies that has ended up being a global world beater always has one of these stories of the path not taken. [upbeat music]

  2. 0:22 – 10:43

    Founding the Firm

    1. MA

      So the firm was started, we raised the first fund in 2009, um, which was in the height of the fin- uh, the height of the stock market. The depths of the stock market crash after the height of the financial crisis of 2008. And then, yeah, so we had the first LP meeting in tw- 2010, so this is whatever, what is this, number fifteen or something?

    2. ET

      Wow.

    3. MA

      Yeah, first one was folding chairs. We had about twenty LPs to start with.

    4. ET

      Wow.

    5. MA

      Folding chairs in our office in our little, uh, our little conference area, um, with our, uh, flat panel TV on the wall. Um, and actually some of the same people we-

    6. ET

      Wow

    7. MA

      ... the same people are, are still with us.

    8. ET

      Yeah.

    9. MA

      A bunch of our or- original LPs are, are still here, and then yeah, this is... Yeah, it's grown to be a somewhat larger production.

    10. ET

      And, uh, take us through some of the first LP, uh, com... They must have been true believers at the time, not just because of the strategy, but because of the, the market timing. Uh, take us a little bit back of what, what, what that, what that was like at the first-

    11. MA

      Yeah. So, uh, so the, the thing to remember is, so, you know, the, the dot com boom bubble, um, was sort of, you know, '90, sort of '95 to 2000. Um, although it has its own ups and downs even during that period that, that got forgotten later, but in 2000, of course, catastrophic crash. And then, you know, kind of the... It took like three year, three or four years to dig out of the dot com crash, and so it was like 2003, 2004 before anything really started to happen. Um, and, um, and then immediately what happened was any, any sign of anything working in tech was immediately viewed by just screams in the press of just bubble, bubble two point 0, bubble two point 0. It's just like it's all happening again. These crazy idiots are back at it again, that everything's gonna come crashing down. You know, there were two big M&A events in 2000, I think 2005. Two big M&A events. Uh, Yahoo bought, um, what was it? Uh, it was, it was Flickr and Delicious.

    12. ET

      [chuckles]

    13. MA

      Uh, so did Yahoo buy them both-

    14. ET

      Yeah

    15. MA

      ... I think or...

    16. ET

      Exactly

    17. MA

      ... and they were like twenty-five million dollar tickets, um, each. And literally the press just like bananas. You know, Facebook was, was getting started. Social media is a joke. What did your cat have for breakfast? Nobody cares.

    18. ET

      Right. How are they gonna make money?

    19. MA

      How are they gonna make money? They'll never make money. Um, [chuckles] and so it was just this like wall of negativity, uh, heading into 2008, and then, and then two thou... and then the financial crisis happened.

    20. ET

      Yeah.

    21. MA

      So just like everything just gets like completely devastated. Everybody's flat on their back in the, in the financial investment world. Um, and so Ben and I in March of 2009 decide it's the perfect time to go start a venture, [chuckles] venture capital firm, which was a, uh, absolutely unique view at the time. Um, there were only two venture capital funds that raised in all of 2009. It was us and a new, a New Coastal Ventures fund, and Vinod, of course, was one of the legends of venture capital, so he was able to do that. But we were the only, we were the only other literally venture fund raised that year.

    22. ET

      And at what point were you considering starting another company together? Or were you like, "Hey, we really wanna support entrepreneurs. This is the company"?

    23. MA

      Yeah, we were done. Oh yeah, I mean, we had, we had started multiple companies, and so we, you know, we had-

    24. ET

      [chuckles]

    25. MA

      We were done. We were done. We, we had completed that, that, that part of our, of the life-

    26. ET

      Yeah

    27. MA

      ... of life's journey. Um, and so then we went... Yeah, we decided to start a firm. And yeah, look, we met, we met, um, you know, some people who were really nice to us and really helped us, you know, kind of get underway. Um, and, uh, then we s- you know, started meeting the LPs.

    28. ET

      We'll get to the evolution of the firm, but just because you, you mentioned it, uh, the, the, the Zuckerberg acquisition story.

    29. MA

      Yep.

    30. ET

      You, of course, have been on the board of Facebook for a long time. Take us back to that memory and your conversations with Mark, and what was your perspective at the time?

  3. 10:43 – 13:37

    The Evolution of Venture Capital

    1. ET

      Yeah. Speaking of twists and turns, let, let's go back to the firm because the first fund is three hundred million, correct? And-

    2. MA

      Yeah

    3. ET

      ... we didn't have a sense for how big it would become.

    4. MA

      Yeah.

    5. ET

      Uh, y- but you wrote Software Is Eating the World, so you, you had a sort of hypothesis of that these companies were gonna get bigger, there's gonna be more of them. Ta- take us through when you realized that, um, scale was going to be a strategic asset for, for venture and that the, the future of venture was going to look like this barbell.

    6. MA

      Remember actually, I actually had a conversation with John Doerr in the mid-'90s, um, which is a- about just, you know, 'cause KP was an investor in Netscape at the time, and it's, it, you know, in, in those days, in the, in those, like, you know, when I, when I was young, basically the model was very straightforward at the time, which was basically Series A, Series B. So venture was Series A, Series B.

    7. ET

      Yeah.

    8. MA

      Um, and then, um, and there wasn't even really seed that much, like in the, in the mid-'90s. It was mostly you just raised like a venture A round, which would be like a three or four or five million dollar round, maybe six or seven if you were, uh, super ambitious. Um, and then there'd be like a B round of like 20 or 30, and then there was what was called the mezzanine round, which was the C round, and that basically is the pre-IPO round. Um, and so you, you kind of raise a total of three rounds and maybe $30 or $40 million, um, and then you go public. And then the IP... And that's if you needed m- and then if you needed money, you would go public. There, there was basically, there were no follow-on rounds after the, after the C round. And so you would go public, and you could go public in those days at like, it was sort of 50 million in revenue and then a 10X revenue multiple meant a $500 million market cap was kind of the, the bar to go public. By the way, a- as an example, Amazon went public in '97, and I think it was $400 million valuation. So, you know, it was kind of right, right in line with that, with that model. Netscape was, was kind of similar in '95.Um, and so venture had this very, very specific role. But what, what was even-- What, what was becoming clear even in the '90s that actually, I think it was a conversation John and I had about Cisco originally, which was just like some of these companies are really gonna rip. Like-

    9. ET

      Yeah

    10. MA

      ... you know, they're, they're really gonna run. If they're gonna run at the time to, you know... At the time it was like if they're gonna run to a hundred billion, which at the time was like the big, the big ceiling. Um, it's just like, all right, like the vent- all of a sudden the venture B round looks great. All of a sudden, by the way, the mezzanine round looks great. Like, maybe the VCs should basically just kinda keep re-upping.

    11. ET

      Yeah.

    12. MA

      You know, is it a mistake? Like, if you can make as much absolute money investing, you know, fifty million dollars in Cisco at their Series C as you could five in their Series A, like-

    13. ET

      Right.

    14. MA

      In those days it was like a big statement to, to say maybe the venture firms, um, should do that. And then, you know, of course, what's become clear since then is the ceiling isn't a hundred billion. It's much larger than that.

    15. ET

      Yeah.

    16. MA

      It's much, much higher than that, and that's just a consequence of, you know, tech proliferating and becoming, uh, becoming more important. So, uh, so anyway, so we had that sense, and Facebook actually h- was raising larger rounds by that point.

    17. ET

      Yeah.

    18. MA

      You know, DST. You know, DST kind of redefined-

    19. ET

      Right

    20. MA

      ... growth investing when they did the, the Facebook round. So basically this idea of sort of venture growth, growth investing was, was starting to really materialize. And so we, we did define the firm right up front. We said we want to be stage agnostic. We, we wanna be seed venture and growth. That was in the original pitch deck. Um, you know, the-- we-- it wasn't enough money to do a lot of growth investing, but we could, you know, we could start to get underway. But we, we sort of made this... Basically, this our argument to the LPs was, "Look, it's not, it's not about being in at a certain stage. It's about the total aggregate opportunity."

    21. ET

      Yeah.

    22. MA

      If you're gonna get into one of these world-beating companies, you can still do it at the B, C, or D, and you'll still have venture scale returns. And so yeah, we, we defined that right up front.

  4. 13:37 – 16:52

    The Rise of Specialized Funds

    1. ET

      And when did we figure out... Because our, our approach of sort of specialized funds is different than some of these other partnerships that, "Hey, we're just all generalists, where we're a small team. We all do everything." Um, when did that model originate, and what, what was that journey like?

    2. MA

      Yeah. So we, we started that way, so we started as generalists. And, you know, Ben, Ben and I had both worked in both sort of consumer and enterprise, which are-

    3. ET

      Yeah

    4. MA

      ... kind of the two big categories. At, at the time it was basically consumer software VC, enterprise software VC, and then sort of bio/health tech. The older venture firms actually did both what they called digital or, you know, kind of IT investing-

    5. ET

      Yeah

    6. MA

      ... software investing, and then they also did, uh, biotech. And actually, a lot of those firms have gotten-- they got like internal divorces and, and-

    7. ET

      Yeah

    8. MA

      ... and spun their groups off 'cause th-th-those industries at the time were going in different directions. But Ben and I had done consumer and enterprise, and so we, you know, we just said, "Look, we'll just be a generalist firm," um, you know, sort of modeled after the Benchmark model. And, and a big part of this is just industry evolution, which is around the time we started the firm, it was also the time that I would say the tech industry fundamentally changed from being a, um, uh, primarily building tools, um, to, uh, to actually going like directly into industry, so what we call kind of full stack companies. Um, I think the reason the generalist model worked well for as long as it did is because, like, fundamentally, a database company, a router company, a word processor company, an operating systems company, like, th-they're all fundamentally tools. Um, and so they're different if they sell to consumer or enterprise, but, you know, a router is a piece of software in a box. You know, chips are a little different, but, um, you know, a database and an operating system are kind of similar. Um, you know, the technical challenges, the form of the company, the organizational model for the company, um, is kind of similar. Word processors and video games at the time were both, you know, both cost fifty bucks, both sold in a box on retail store shelves. You know, kinda similar. And so the generalist model I think worked really well when the industry was that earlier model. And then, you know, 2010, 20- 2009, 2010 was kind of the pivot we now know, which was, you know, the rise of Uber and Lyft, the rise of Airbnb, the rise of Tesla-

    9. ET

      Right

    10. MA

      ... the rise of SpaceX. Um, the, the, the world-beating companies of the 2010s in many cases were companies that were full stack, direct insertion in end markets. Um, and, and then we, we therefore, you know, we, we leaned hard into that 'cause we saw that happening, and so we started investing in the, you know, everything from these e-commerce marketplaces to, you know, these, um, you know, defense, new kinds of defense companies. And then we, we decided to take on biotech 'cause we, we thought, you know, we, we, we thought then and believe now that the convergence is happening. You know, biotech is becoming much more based on, on software and IT and data and AI. Um, and then basically what we realized is like, okay, the generalist model doesn't work anymore 'cause e-each of those things now is actually a very deep domain in and of itself.

    11. ET

      Right.

    12. MA

      Right? With like very specific domain knowledge. And then the, the, the specific problem that a generalist has is that a generalist can sense heat, um, but a generalist has a very hard time getting into the specifics.

    13. ET

      Yeah.

    14. MA

      And the reason the specifics really matter, um, is because so much of venture... Because the way venture works is if you invest in one company in a space, you can't invest in the others. If you pick the space correctly and invest in the wrong company-

    15. ET

      Right

    16. MA

      ... [chuckles] you're, you're, you're screwed, right? 'Cause-

    17. ET

      Right

    18. MA

      ... you can't, you can't fix your mistake. You can't then invest in the successful company-

    19. ET

      Yeah

    20. MA

      ... 'cause of the conflict issue. Um, and so what we realized was the thing that was becoming very important in this new world was, um, understanding deep in the vertical what was going on, specifically for the purpose of being able to tell which, which company was actually the one that was most likely to win.

    21. ET

      Yeah.

    22. MA

      And that's just really hard to do-

    23. ET

      Yeah

    24. MA

      ... um, if you don't have domain knowledge.

    25. ET

      Yeah.

    26. MA

      Um, and so that, that catalyzed us, uh, us to verticalize, and then we did that in two steps. We did kind of a partial verticalization, uh, early, you know, probably, I don't know, 2013 or something, and then by 2017-

    27. ET

      Right

    28. MA

      ... I think we did the full-

    29. ET

      Yeah

    30. MA

      ... yeah, the one we have now.

  5. 16:52 – 19:45

    The Role of Domain Expertise in Tech

    1. ET

      you know, fifteen, twenty years ago as things like Y Combinator were getting off the ground, um, and, and you were this yourself. Pe-people said there was an arbitrage around young technical founders, um, and this idea that we-- you, you could teach them the business elements, um, and they could be successful. Uh, you don't, you don't need to go to MBA to be a successful founder. That, that, that's accurate. Um, and yet today, um, maybe there's a similar arbitrage around domain experts, uh, where you could sort of... The tech has gotten easier, and it's easier to get sort of things off the ground, and domain expertise values more and, and distribution values more, may-is valued more maybe than it was fifteen years ago, and maybe that's true on the founder side and on the, on the investor side.

    2. MA

      Yeah. Although, you know, at least until now, the, the... I think the question is, you know, whether AI's gonna, gonna change this, but at, at least until now, it still was the case the founders also needed to be very deep in the tech.

    3. ET

      Right.

    4. MA

      Um, and even the founders that would go out and, and I used to... You know, you get these... There was this wave of, like, design founders, right?

    5. ET

      Yeah.

    6. MA

      And it's like, okay, th-that's great. The design founders are great. It just turns out the successful design founders are also very strong technologists.

    7. ET

      Right.

    8. MA

      Um, and they maybe pretended sometimes that they weren't-

    9. ET

      Yeah

    10. MA

      ... 'cause they wanted the design cred, but like it turned out they were actually very deep-

    11. ET

      Yeah

    12. MA

      ... and substantive and, and-

    13. ET

      Pinterest, et cetera.

    14. MA

      Yeah. These, these were... You know, Ben Silbermann and Brian Chesky, these guys were like top-end technical founders-

    15. ET

      Right

    16. MA

      ... in addition to being, you know, good designers, great designers. Um, and so yeah. Uh, uh, like I would argue th-there's really no escape from kinda deep domain knowledge. I, I... To your point, I think the question is, um, okay, if AI makes deep domain knowledge kind of instantly accessible to anybody, you know, if everybody's got... If you have o3 deep researcher, its equivalent at your fingertipsUm, and if you're a generalist, um, or, you know, kind of, um, you know, a person wearing many hats, like can, can, can, can AI give you the depth when you need it? And-

    17. ET

      Yeah

    18. MA

      ... I don't know. I, I, I'm, I'm excited to see people tr- I'm excited to see people try that.

    19. ET

      Yeah.

    20. MA

      Uh, it's a little bit like, it's a little bit like the debate happening around coding right now, which is like, okay, is vibe coding a substitute for, like, actual coding? Right. And, you know, like sitting here today, you know, like vibe coding is like super exciting for casual development, but like, you know, at least right now, all of the really sharp like, you know, technologists I know don't think that you could like vibe code a top-end-

    21. ET

      Right

    22. MA

      ... like software company today.

    23. ET

      Yeah.

    24. MA

      But like the coding capabilities of these models are getting really good. Um, and so, and, you know, the agents are starting to work, and so, you know, the sort of famous, not... There's a fa- [chuckles] famous, um, there's a famous Dilbert, uh, which is, uh, Dilbert's, uh, boss pitches Dilbert on they're gonna go start a company together, and the, the boss is like, "You know, I'm gonna, I'm gonna, I'm gonna, I'm gonna bring the idea and, and, and be the manager, and you're gonna, you're gonna do the coding." And Dilbert's like, "And so what you're saying is you're gonna contribute nothing."

    25. ET

      [chuckles]

    26. MA

      Right? Um, and so, like, uh, you know, like does, does the existence of like really state-of-the-art AI coding actually change that to, you know, to Dilb- Dilbert's boss all of a sudden can, can have AI write the code?

    27. ET

      Yeah.

    28. MA

      Um, and then you, you get these very entertaining thought experiments like, uh, you know, are, are the agent-- are agents gonna get really good writing code, and then are you gonna be able to have a non-technical person supervising 1,000 AI coders-

    29. ET

      Yeah

    30. MA

      ... right, and outracing a top-end technical person who's supervising, you know, 100 great coders.

  6. 19:45 – 21:23

    Globalization and Tech Enthusiasm

    1. MA

      Yeah. Yeah.

    2. ET

      I wanna talk about areas where we've chosen to play and areas where we haven't chosen to play. So let's look at internationally. We, we talked about how we, uh, you know, you intentionally didn't enter China in, in ways that other firms did. We're a US firm, American dynamism. Uh, you know, Europe, when it's not shooting itself in the foot regulat- regulation-wise, you know, they're increasing their, uh, defense spend. Uh, you know, could you imagine, uh, uh, Europe dy-dynamism? Or how have we thought about internationally, uh, historically, and how do you think about it going forward?

    3. MA

      Yeah. So look, the, I mean, the good news. So the good news, the, you know, the good news is, look, the world, the world is globalizing. Um, you know, the, there is like, there's incredible activity and interest all over, all over the world. Like every- everywhere we go, you know, people wanna talk about tech. They wanna learn about tech. Ben saw this more than me, but like when Ben wrote his book, you know, and went on tour-

    4. ET

      Yeah

    5. MA

      ... it's like every... It, it didn't matter what country you went to, thousands of kids show up, and they wanna learn how to, how to do this. And, and look, the, the internet had a big impact there, which is, you know, every kid anywhere in the world now can watch, you know, Peter Thiel talks and our podcast and everything else.

    6. ET

      Yeah.

    7. MA

      And so, you know, I would say global enthusia- global knowledge is way up. Global enthusiasm is way up. Relevance, you know, to societies is way up. Um, as you mentioned, like defense, Europe needs to re-arm. Presumably, they'd be better off re-arming with the new systems as opposed to the old systems. Drones forums instead of, you know, aircraft carriers.

    8. ET

      Yeah.

    9. MA

      Right? That, that kind of thing. And then look, the- there's just the reality there's just smart people all over the place. Um, and so there's just, there's human capital everywhere. Like I think historians will look back, and they'll just say, "Wow," like, you know, "the 20th century was a really... 21st century was a really primitive society."

    10. ET

      Yeah.

    11. MA

      They had all these smart people all over the world, and they never figured out, you know, they, they just, they never figured out how to actually use, utilize them right.

    12. ET

      Yeah.

    13. MA

      They never figured out how to identify them and use them, and so this, the startup process is a way to kind of especially get smart young people-

    14. ET

      Yeah

    15. MA

      ... to kinda do ambitious things. Um, so that's great. Um, it's all fantastic.

  7. 21:23 – 23:05

    Challenges and Opportunities in Europe

    1. MA

      Um, against that, it's just this incredible drag by bad governments and bad policies. Um, as you mentioned, Europe, Europe-

    2. ET

      Right. [chuckles]

    3. MA

      ... persists in shooting itself not just in the foot, but in the other foot and in the ankle and in the knee and in the gut.

    4. ET

      Yeah.

    5. MA

      Um, and they're just on this absolute frenzy to regulate and kill, you know, tech in Europe, uh, the UK.

    6. ET

      And they're proud of it.

    7. MA

      And they're proud of it. Like they're very proud of it. Yes. The, the, the famous European... The actual European line now is we, we quote, we-- This is in the FT. This is an actual quote from a European, a senior, uh, uh, politician. It's, "We know we cannot be the glo- the global leader in tech innovation, so therefore we will be the global leader in tech regulation." Right.

    8. ET

      [laughs]

    9. MA

      And so you just imagine being like a German or French, you know, tech founder and reading that, you know, just being, "Oh, God."

    10. ET

      Yeah.

    11. MA

      To get to the US Embassy and apply for a visa as fast as possible, right? Um, and, and, and in fact, that's what's happened is, as a consequence, a lot of these really curious, bright people-

    12. ET

      Yeah

    13. MA

      ... basically end up moving to the US. Um, and so we've been, we, you know, we've been an enormous beneficiary, um, as a country and as a, as a firm of that. And so that, that, that remains a really big challenge. It's interesting watching the UK right now because, you know, I thought under, you know, the previous government they were gonna become enlightened and, you know, reign in, and they did the opposite. Like they, you know, they tried to ban AI, you know? They, and, you know, and they said they were gonna liberalize crypto, and they, they never did. Um, and so, you know, but the new gov- the new government says they're gonna open, you know... They, they, well, they say they're gonna open up some of this stuff. They still-

    14. ET

      Right

    15. MA

      ... wanna keep all the regulations, but they say they, they, you know, they want the economy to grow, so we'll see. The defense stuff, yeah. I mean, there's already a dispute. I've-- Just, this is just in the headlines. There's already a dispute if Europe cranks their defense spending up to five percent of GDP, which they're, you know-

    16. ET

      Yeah

    17. MA

      ... which they're supposed to. You know, d- will, you know, will they buy any of that from the US? You know, it will only be purchased from, you know, indigenous, you know, kind of European, uh, defense vendors.

    18. ET

      Yeah.

    19. MA

      So it's already becoming part of the whole trade war. Yeah, I mean, look, I think most of the state of the world is, you know, very, at least for what we do, it's high caliber people being held back by being in bad systems.

    20. ET

      Yeah.

  8. 23:05 – 24:38

    International Investments and Policies

    1. ET

      Yeah. What is our criteria for opening up offices in, in other places more generally?

    2. MA

      Yeah. So basically, there's, there's two kinds of activities that, you know, make sense for a firm like us to do internationally, I think, uh, or maybe, maybe three. Um, one is, uh, just w- sales is, you know, the crude term is, you know, we dress it up with fancy, fancy words. Business development.

    3. ET

      Yeah.

    4. MA

      Um, uh, go to market. A lot of the market is global. Um, and so, um, you know, for, for every, for all of our companies, and so helping our companies succeed-

    5. ET

      Right

    6. MA

      ... and, and build up businesses globally, and we've been doing that from the beginning, and that's always, always an important thing. Um, two is investing, and look, we, we've invested. We've always been, I would say other than China, um, we, uh, we, you know, generally we've been open to investing in many places in the world, and we've, we have investments in a lot of places.

    7. ET

      Very recently in Mistral in France, other, other-

    8. MA

      Yeah. Ex- exactly

    9. ET

      ... other places.

    10. MA

      Um, yeah, exactly. But, um, you know, we've, we've made investments in the past in, you know, k- you know, Vietnam and, you know-

    11. ET

      Yeah

    12. MA

      ... lot- lots of other interesting places. You know, having said that, again, just because of this kind of political dynamic, it, it, it has just been striking over the last thirty years how many great founders who could have stayed in country X-

    13. ET

      Right

    14. MA

      ... and started a company there have just moved to the US instead.

    15. ET

      Yeah.

    16. MA

      Um, and so we, we just from a practical standpoint have tended to emphasize US investing 'cause we figure we'll get most of the best of the global founders anyway.

    17. ET

      Yeah.

    18. MA

      Um, yeah, and then maybe the third thing, and we're not really active on this right now, but, um, you know, we're, we're very active now in US policy. Um, but-

    19. ET

      Yeah

    20. MA

      ... you know, there are these policy issues all over the world. Um-

    21. ET

      Right

    22. MA

      ... you know, and do we need to go get more, insert ourselves more into, you know, God, God help us, European politics.

    23. ET

      [laughs]

    24. MA

      Um, or, you know, whatever. And then, you know, and then the question, you know, can we? You know-

    25. ET

      Yeah

    26. MA

      ... are, are we, you know, as Americans, are we allowed to?

    27. ET

      Yeah.

    28. MA

      Um-

    29. ET

      Well, I know we've only done this sort of kicking and screaming. This is not our, our, our intent even on the, on the US side.

  9. 24:38 – 27:43

    The Evolution of Tech Industry Politics

    1. ET

      But talk a little bit about how just the Little Tech

    2. ET

      ... concept as a sort of different from big tech sort of e-emerged in, in our thinking

    3. MA

      Yeah. So basically the, uh, this also, this goes right back to this thing of the tech industry kind of changing around 2010.

    4. ET

      Yeah.

    5. MA

      Um, so i-in the era between, call it 1950 to 2010, you know, when the, the, the industry was in what was called tool phase, chips and word processors and routers and spreadsheets and things like that, um, tech was just never really-- Tech was really-- Startup, startup tech particularly was never really a salient political topic.

    6. ET

      Yeah.

    7. MA

      Like i-i-it-- Really, the only time it would ever enter politics really was it, was with antitrust.

    8. ET

      Yeah.

    9. MA

      Um, and so it was like a really big deal in the '90s-

    10. ET

      Microsoft

    11. MA

      ... when the government dug, dug into Microsoft 'cause it was-- Because, because it was a big deal f- That case was a big deal, but also because it was a very rare case of the government actually caring about tech, um, and, and wanting to, wanting to become involved. And so there was sort of a state of sort of, I would say, I don't know, benign neglect or something, you know, kind of up until 2010. A-and by the way, in both directions. Like the Valley companies never thought it was important to go to D.C. The D.C. companies didn't really think the Valley companies mattered. Um, and then that, that, yeah, that all started changing in around, I don't know, probably 2012, 2013, um, you know, ki-kind of, you know, you had this sort of increasing political, I would call, I don't know, ener-energizing happening just, you know, in general. Um, and you started getting the, this anti-tech narrative started getting more political. You know, so you got wrapped up in the Occupy Wall Street 1% thing and, you know-

    12. ET

      Right

    13. MA

      ... are these tech people just as bad as the finance people? The, uh, FT just ran a big story saying the tech people are now definitively worse than the finance people.

    14. ET

      [chuckles]

    15. MA

      And I, I read the story twice and I still don't understand it, but it, it, it-- But the gist of it was something like at least the finance people you could have dinner with and it's fun.

    16. ET

      Right.

    17. MA

      Whereas the tech people are just like all-

    18. ET

      Or sometimes they say at least the finance people know that they're money motivated or something, whereas the tech people have the delusion that-

    19. MA

      Yeah, they're saying sanctimonious-

    20. ET

      Yeah

    21. MA

      ... and, and insufferable. Which, you know, it, it-

    22. ET

      [laughs] Sometimes.

    23. MA

      Maybe there's a little, little, little bit of truth to that. Um, but yeah, it started to kind of energize then. And then, and then really w- you know, the takeoff was 2015, 2016, and, and it was really, uh, it was really Trump. It was really Trump's nomination and election, uh, that really radicalized a, a pretty big block of political actors in the country kind of against tech. And then by the way, you know, look, the, the-- I would say the way that I would describe the last decade is the left got like super angry at tech because of Trump and because of inequality and all these other things. And then the right got super mad at, at tech 'cause the right thought the tech were all on the left.

    24. ET

      Yeah. [chuckles]

    25. MA

      Right? And so we'd go talk to, you know, Republicans, and they would basically say, "Yeah, we agree with you, but, like, you're all Democrats, so, you know, you know, F off."

    26. ET

      Yeah.

    27. MA

      Um, they thought it was very entertaining. And it's just like, you know, that, that, the, the social media, social media was kind of the, the tip of the spear of that for about five years. And then, and then, you know, in the last five years, crypto, you know, became incredibly politicized, and the government, US government basically launched a full-on war against it, tried to kill it. Um, and then AI got, you know, just like incredibly, uh, politicized, you know, starting, you know, basically right around 2021, 2022. Um, and the government, like, was, was moving in very hard on, on, on AI. And, and it was, it was, for us, it was the combination of crypto and AI-

    28. ET

      Yeah

    29. MA

      ... um, that got us, like extremely alarmed. Um, and so, uh, you know, we decided we, we had to become involved. But, but like I said, you know, there were very sp- there's specific point issues in the both, both of those domains, but there's this, just this general kind of thing which was like, all right, um, you know, we, we always wanted to build things that matter. Like-

    30. ET

      Yeah

  10. 27:43 – 30:47

    The Rise of Little Tech vs. Big Tech

    1. MA

      Um, and so, so what we've done is we've generalized that idea out into what we call the Little Tech agenda.

    2. ET

      Yeah.

    3. MA

      And the first part of that is the Little Tech, and we say Little Tech specifically as differentiated from Big Tech.

    4. ET

      I like that it creates a cleavage.

    5. MA

      Yes. Yeah, that's right. And that, and that, that was another thing we discovered that was a result of kind of our early interactions like four or five years ago in D.C., which is just, they were just like, "Well, tech is tech." You know, they, you know, just meet with them on behalf of startups, and they start yelling at us about Google or something, and it's like, "We're not here representing Google." And it's like-

    6. ET

      Yeah

    7. MA

      ... "Well, that's tech." And you know, by the way, it wasn't a startup 20 years ago.

    8. ET

      Right.

    9. MA

      And we're just like, "Look, Google has its own... Google, you know, they have their own-"

    10. ET

      Yeah.

    11. MA

      "They, they have 10,000, you know-"

    12. ET

      Yeah

    13. MA

      ... "lawyers and policy people and compliance people. Like, they, they, they've got their own-"

    14. ET

      Right.

    15. MA

      "You know, they can kind of carry their own water. That, that's not what we're here for." And in fact, you know, a, a lot of what the venture ecosystem does is it funds competitors to Big Tech.

    16. ET

      We're disrupting Google, yeah.

    17. MA

      Yeah, we're disrupting Big Tech. And this is the, this is the story I was telling D.C., which is 100% true, which is the caricature of this sort of reck-reckless Silicon Valley, is that we're starting companies that go disrupt, you know, whatever, healthcare or something. I said, "Most of what we're trying, most of what our founders are trying to disrupt is, is Big Tech."

    18. ET

      Yeah.

    19. MA

      And I said, "Frankly, Big Tech companies, like, you know, we, they're sort of, you know, they, we have, you know, they, they would say they have a love-hate re- You know, we, we like them, but they have a love-hate relationship with us 'cause we're the esc- we're, we're the escape hatch. If there's somebody at a Big Tech company that basically is, gets frustrated, they, they come to us to raise money to start a company to compete with their former employer."

    20. ET

      Yeah. Yeah.

    21. MA

      Right? Um, and so, um, you know, the Big Tech is not always in favor of us. And then, and then look, Big Tech, they, they just have become very big companies, and they have-

    22. ET

      Yeah

    23. MA

      ... their own agendas. Um, and a, you know, a lot, a lot of big companies over time try to do things that, to prevent, you know, they try to form cartel-like, you know, basically structures to prevent-

    24. ET

      Right

    25. MA

      ... uh, new competitors, you know, startup, startups from emerging. And so we, we just noticed in, in more and more cases there was a, a divergence of interests. Um, that actually turned out to help a lot. The minute we figured that out and then we, we sort of, you know, sort of coined this Little Tech thing and, and, and kind of ran with it, um, it, it was basically like immediately that was like the icebreaker in the D- in the D.C. ki- Like, it's because everybody in D.C. hates Big Tech. Like, what the... They only agree on two things. They only agree on Big Tech and China. [chuckles] These are the only two things they agree on, but they really agree on those things. And Big Tech, they just all hate Big Tech. Um, and so the minute we say, "We're not here on behalf of Big Tech, we're on behalf of Little Tech, and in fact, our company is attack Big Tech," uh, they, we get, like, these huge smiles.

    26. ET

      Really?

    27. MA

      And they're like, "Oh, wow. You know, tech startups are actually good." Right?

    28. ET

      Yeah.

    29. MA

      "It's actually, this is actually exciting."

    30. ET

      Yeah.

  11. 30:47 – 36:29

    Historical Context of Tech and Defense

    1. MA

      else.

    2. ET

      Yeah. So the

    3. ET

      It, you know, it's funny, uh, 'cause there was the... On Twitter, there was the sort of Paul Graham, Palantir dust-up the other week, which I thought was just pretty symbolic or emblematic of kind of like a, not to pick on Paul, but it was sort of like older Silicon Valley versus newer Silicon Valley, or just like how the space has changed. You know, Palantir has to work with the government. They're building, you know, h-hard tech. It's not just sort of, you know, put something up and talk, talk to customers r-r-right away. And, and Paul Graham, you know, has been in England for quite a bit. You know, YC is still innovating, doing fa-fantastic things. But I just thought that was such a fascinating sort of, uh, example of how Silicon Valley is evolving, uh, which is just new kinds of companies, new, new kinds of go-to-markets, new kinds of sort of ethos.

    4. MA

      Right. That's right. And so the specific dust-up I think was over Palantir working with ICE-

    5. ET

      Yes

    6. MA

      ...uh, uh, Immigration.

    7. ET

      Yeah.

    8. MA

      The US government immigration agency. So yeah, so there's actually a deep... There's kind of a deep... Th-this is a generational change. I think this is a very deep and profound change, and there's a generational aspect to this, which is, um, basically... So the, the, the, the US tech industry and startup industry in Silicon Valley were basically deeply intertwined with the defense and intelligence, basically, you know-

    9. ET

      Yeah

    10. MA

      ...the, the deep state, um, the defense and intelligence agencies, in particular the federal government, really from like the... If you go all the way back, Steve Blank has this in- these incredible videos, uh, essays where he goes through all this, um, all the way back. Silicon Valley actually started in like the 1920s, and it was like a defense tech in the 1920s, and it was like radar, right? Um, and, um, you know, like early missile guidance systems and, you know, airplane, you know, or avionic systems and things like that, um, uh, in like the '20s and '30s. And then, you know, kind of from that time through to like basically the 1960s, it was just assumed that there was this very deep relationship and, you know-

    11. ET

      Yeah

    12. MA

      ...it's the Cold War, and of course, industry and government have to work together to-

    13. ET

      Yeah

    14. MA

      ...build all these systems to defeat the Soviets. You know, one of the first computers literally was called SAGE-

    15. ET

      Yeah

    16. MA

      ...which was a, a, a US government project, a giant mainframe computer for missile early warning systems. So, so, so it was just assumed that this was all kind of hand in hand, and then really what happened was it was in Vie- it was Vietnam. So, you know, Vietnam was the first wa- modern war where-

    17. ET

      Yeah

    18. MA

      ...you had this massive protest movement, and then, you know, the, the, the, the, you know, college campuses, you know, kind of went, went, went wild and, you know, with this, you know, anti-war, anti-war movement and, and, and all that stuff. Um, and, and what happened, if you talk to people who were involved back then, basically what happened was the, the, the leading edge American universities that did mili- that, that did science and technology were doing military science and technology, and, and many of them just stopped. So like Stanford, like spun up... There's this thing called Stanford Research Institute, SRI, that's actually no longer [chuckles] associated with Stanford-

    19. ET

      Yeah

    20. MA

      ...'cause it's like, it's like the, it's, it's, it's the remnants of what used to be, um, Stanford's military R&D. Um, uh, yeah, MIT had something similar with the Lincoln Lab.

    21. ET

      Yeah.

    22. MA

      Um, and so, and, and so that created a culture. You know, in the, in the Valley was always, you know, it's always been a mix of like right and left wing, but you know, the, the sort of le- the, the, the, the, the hippie anti-war movement, you know, you know, was, a lot of it was in California.

    23. ET

      Right.

    24. MA

      And a lot of it was at Stanford and Berkeley specifically. Um, and so, uh, there was just this, you know, mood, mood shift, um, uh, where, uh, yeah, I guess in the... We have the vibe shift now, so in those days it was like probably the groove shift.

    25. ET

      [laughs] Like-

    26. MA

      Right? So, um-

    27. ET

      Call it the groove shift.

    28. MA

      So the groove, the groove shift 50 years ago was no more work with the military. No more... US government is evil.

    29. ET

      Yeah.

    30. MA

      The US government is an evil colonial oppressive power re- wreaking havoc overseas.

  12. 36:29 – 37:36

    Modern Tech's Role in National Security

    1. ET

      eaten the world, and it didn't stop at, uh, you know, social networks or marketplaces, right? It, it got into, or internet marketplaces.

    2. MA

      Yeah.

    3. ET

      It's got into everything.

    4. MA

      Yeah. That's right. And in fact, what happened, if you go to DC and if you talk to people who were, if you talk to people who run the defense intelligence agencies in DC, almost every topic that they talk about or think about has a major tech component to it.

    5. ET

      Yeah.

    6. MA

      Like almost every single one.

    7. ET

      Right. Yeah.

    8. MA

      Um, and just, you know, obviously Ukraine, it's just the Ukrainian battlefield-

    9. ET

      Right

    10. MA

      ...is a comp- techno- is a completely new kind of battlefield because of all-

    11. ET

      Yeah

    12. MA

      ...this new, you know, drone technology-

    13. ET

      Right

    14. MA

      ...and all these things. Um, and, and, and that's basically true for like every area of, um, uh, every area of like, you know, basically national geopolitical policy has a big tech component to it.

    15. ET

      Right.

    16. MA

      And of course, you know, my, my approach is obviously we should be in the middle of that, and obviously-

    17. ET

      Love it

    18. MA

      ...we should be investing against that and trying to help-

    19. ET

      Yeah

    20. MA

      ...th-those things happen. But, but I understand why people get uncomfortable with it.

    21. ET

      Yeah. Yeah.

    22. MA

      Yeah.

    23. ET

      That's a perfect place to wrap our conversation at LP Summit. Marc, thanks so much.

    24. MA

      Good. Thank you, Erik. [upbeat music]

Episode duration: 37:36

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