Marc Andreessen Reveals His Biggest Wins and Mistakes at a16z

Marc Andreessen 0:00 It's like a process of falling up the stairs. Just when you think you've got everything figured out, some weird-

Erik Torenberg 0:04 Yeah

Marc Andreessen 0:05 ... issue like, you know, basically-

Erik Torenberg 0:06 Right

Marc Andreessen 0:06 ... 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]

Marc Andreessen 0:22 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?

Erik Torenberg 0:37 Wow.

Marc Andreessen 0:38 Yeah, first one was folding chairs. We had about twenty LPs to start with.

Erik Torenberg 0:40 Wow.

Marc Andreessen 0:41 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-

Erik Torenberg 0:48 Wow

Marc Andreessen 0:49 ... the same people are, are still with us.

Erik Torenberg 0:50 Yeah.

Marc Andreessen 0:50 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.

Erik Torenberg 0:55 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-

Marc Andreessen 1:05 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.

Erik Torenberg 1:50 [chuckles]

Marc Andreessen 1:50 Uh, so did Yahoo buy them both-

Erik Torenberg 1:52 Yeah

Marc Andreessen 1:52 ... I think or...

Erik Torenberg 1:53 Exactly

Marc Andreessen 1:53 ... 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.

Erik Torenberg 2:02 Right. How are they gonna make money?

Marc Andreessen 2:02 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.

Erik Torenberg 2:11 Yeah.

Marc Andreessen 2:11 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.

Erik Torenberg 2:36 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"?

Marc Andreessen 2:41 Yeah, we were done. Oh yeah, I mean, we had, we had started multiple companies, and so we, you know, we had-

Erik Torenberg 2:44 [chuckles]

Marc Andreessen 2:44 We were done. We were done. We, we had completed that, that, that part of our, of the life-

Erik Torenberg 2:47 Yeah

Marc Andreessen 2:47 ... 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.

Erik Torenberg 2:59 We'll get to the evolution of the firm, but just because you, you mentioned it, uh, the, the, the Zuckerberg acquisition story.

Marc Andreessen 3:04 Yep.

Erik Torenberg 3:04 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?

Marc Andreessen 3:10 Yeah. So basically, I mean, this has been, you know, kinda chronicled over the years, but, you know, basically what happened was... It wasn't negativity at that time of like, you know, this technology is evil and it's gonna destroy the world. It was, the negativity was this technology is absolutely useless.

Erik Torenberg 3:20 [chuckles]

Marc Andreessen 3:20 Absolutely useless, has no point, has no purpose.

Erik Torenberg 3:22 Absolutely.

Marc Andreessen 3:22 It's a joke.

Erik Torenberg 3:23 Yeah.

Marc Andreessen 3:23 It's a farce. It's a, you know, basically, and like, it, as you said, never make any money. Um, and that was just kind of the uniform kind of public conversation around it at the time, and so... And Facebook took off. And, you know, in the end they, they had ad revenue early on, but ear- early on it was like remnant ad revenue. They didn't have targeted ads yet.

Erik Torenberg 3:38 Yeah.

Marc Andreessen 3:38 So it was literally... Uh, the early re- ad revenue at Facebook literally was selling remnant banner ads from the Bing, uh-

Erik Torenberg 3:43 [chuckles]

Marc Andreessen 3:44 ... ad network. Um, and so it was like these super low CPMs. Um, and, and you know, Mark, Mark always had this theory of how he could turn it into a big thing, but, you know, he just, he just ev- so this wall of negativity. And then he, he just at that time had a lot of people around him. I mean, it had been a fast rush from 2004 to 2008 to get to the point where-

Erik Torenberg 4:00 Yeah

Marc Andreessen 4:00 ... you know, all of a sudden they're starting to get offers in the, you know, hundreds of millions of dollars, and then-

Erik Torenberg 4:04 And was this after a down round or before the down round?

Marc Andreessen 4:06 I believe there was only one do- The Microsoft down round-

Erik Torenberg 4:08 Yeah

Marc Andreessen 4:08 ... was after that.

Erik Torenberg 4:09 Yeah.

Marc Andreessen 4:09 'Cause that was like a... That was after the fifteen billion dollar round. It was like a down round.

Erik Torenberg 4:12 Right.

Marc Andreessen 4:13 So that was, that was-

Erik Torenberg 4:13 A while

Marc Andreessen 4:14 ... a couple years later. Um, but, um, yeah, no, Yahoo at the time, I remember Yahoo at the time, Yahoo was doing a turnaround under, under Terry Semel at the time, and, um, and Terry, Terry correctly figured out that, you know, yeah, Facebook was a property that they should buy. Um, and so they, they actually struck a deal. I don't know if it got literally signed or verbally agreed to, but they structured a deal. There was a billion dollar takeout. It was an agreement to do a billion dollar takeout, and then the financial crisis hit. Advertising immediately collapsed.

Erik Torenberg 4:36 Yeah.

Marc Andreessen 4:37 Because ad- advertising is the first thing that gets cut, uh, in a recession. Um, and, uh, Yahoo came back and essentially renegotiated the, the deal, tried to lower the price.

Erik Torenberg 4:45 Yeah.

Marc Andreessen 4:45 Um, and that gave Mark basically the, you know, I don't know, cover or kinda wherewithal to be able to walk away from the deal.

Erik Torenberg 4:51 Wow.

Marc Andreessen 4:52 Um, but, you know, look, he was seriously, he was seriously consider- at the very least strongly considering it at the billion dollar level. And again, it's just like at the time, it was just like a spectacular-

Erik Torenberg 5:00 Right

Marc Andreessen 5:00 ... you know, spectacular home run for a company growing that fast. Started in a dorm four years earlier during a time when, you know, again, this stuff was all just like viewed as a complete joke. The sort of ultimate kind of thing in the story is a y- a f- a few years later, somehow, I don't know how, but somehow the internal Yahoo deck on the acquisition got leaked, uh, and got published. Um, so Yahoo's internal analysis of Facebook at that time, um, and the Yahoo people were bullish on the company, which is why they offered to buy it, but they, they and everybody else radically underestimated the future growth of the company. Like it's just-

Erik Torenberg 5:28 Yeah

Marc Andreessen 5:28 ... like, it's like this incredible low bound-

Erik Torenberg 5:31 Yeah

Marc Andreessen 5:31 ... you know, kind of estimate. Um, and then, right, and then as you know, um, you know, not only did Facebook grow really fast, but, um, you know, they figured out targeted advertising and then... By the way, they went through the exact same crisis again basically after they went, after, after they went public in 2012, um, which is, um, that they went public right as the transition from desktop to mobile was happening.

Erik Torenberg 5:48 Yeah.

Marc Andreessen 5:48 That was really when the iPhone was kinda hitting critical mass.

Erik Torenberg 5:50 Right. Fascinating.

Marc Andreessen 5:51 And there was just this wall again, uh, this wall of negativity, which is... I mean, you read the articles at the time and they're just like, "This is gonna destroy Facebook because everybody knows that internet ads are based on the amount of screen real estate that you can sell." Like, the ad rates literally are the number of pixels on the screen.Um, and therefore logically because mobile screens are much smaller, um, than, than, than desktop screens [chuckles] , you know, the ad, the ad rates are gonna shrink and that's gonna be it.

Erik Torenberg 6:12 Yeah.

Marc Andreessen 6:12 And the stock came out and like-

Erik Torenberg 6:13 Wow

Marc Andreessen 6:14 ... shit the bed right out of the gate. And it was literally this argument of like the, the mobile ad opportunity was much less than the desktop ad-

Erik Torenberg 6:19 [laughs]

Marc Andreessen 6:20 ... opportunity. And, and what we know now today, right, is that mobile, mobile meant people were gonna use this stuff far more-

Erik Torenberg 6:25 Yeah

Marc Andreessen 6:25 ... throughout the, you know, piece of, you-

Erik Torenberg 6:27 All day long

Marc Andreessen 6:27 ... us- yeah, all, all day long. Usage went way up, and then we, we learned that the targeting works, right? And it, you know, and everybody now today is sort of obvious that, you know, a company like Facebook is a trove of, you know, pers- personal data that you can target ads against. But at the time it was like th- it, it was not something that people believed would be the case. I often describe these companies as, um, you know, even, even the ones that kind of from the outside look that like they're just like up and to the right the whole time. I always describe it as it's like a process of falling up the stairs.

Erik Torenberg 6:50 Yeah.

Marc Andreessen 6:50 Right? It's [chuckles] it's just like... 'Cause it's just like, it's just when you think you've got it-

Erik Torenberg 6:54 Yeah

Marc Andreessen 6:54 ... and figured out, like some weird-

Erik Torenberg 6:55 Yeah

Marc Andreessen 6:56 ... issue like, you know, basically-

Erik Torenberg 6:57 Right

Marc Andreessen 6:57 ... pops up, and you've got some new thing to prove, and you've got some other, you know, thing and-

Erik Torenberg 7:01 Yeah

Marc Andreessen 7:01 ... and Mar- and Mar- you know, like Marc's one of the best, one of the best who's ever lived at, at being able to, you know, work his way through every single thing that's come along.

Erik Torenberg 7:07 It's funny that we went from mobile ads won't work to organizations, you know, Tristan Harris dedicated to ad, you know, s- stopping ads from working too well, basically. [laughs] The ads work so well, we have an epidemic of, of, uh, of sort of, you know, people using it so much. This is so funny.

Marc Andreessen 7:22 I, I would even, even, I would even heighten that. It, it went from, it went, it went from within four years, it went from the ads don't work at all to they are literally mind control.

Erik Torenberg 7:28 [laughs]

Marc Andreessen 7:29 Right? They are literally mind control, right? And, you know, this is pol- political ads specifically. Um, and they can literally like put the whammy on people to vote for candidates who nobody would ever vote for had they not been mind controlled-

Erik Torenberg 7:39 Yeah, exactly

Marc Andreessen 7:40 ... right, by the Facebook algorithm. And the whole thing the whole time was so weird 'cause it's like, wow, like if the mind control works so well, like why, why don't we have like, you know, triple the ad rates on like-

Erik Torenberg 7:46 Right

Marc Andreessen 7:46 ... Colgate toothpaste? Like-

Erik Torenberg 7:47 Yeah. [laughs]

Marc Andreessen 7:48 ... why does it only work for, you know-

Erik Torenberg 7:49 Yeah.

Marc Andreessen 7:49 [chuckles] Why does it only work for Trump?

Erik Torenberg 7:50 Yeah, exactly.

Marc Andreessen 7:51 Um-

Erik Torenberg 7:52 A few hundred thousand dollars can shift a whole entire election.

Marc Andreessen 7:54 Yeah, and then the Russ- and then the Ru- you're right, exactly. That's the thing. The Russians can spend... By the way, I, I think the result of it was, I think it was a result of eighty thousand dollars of ad spend by the Russians-

Erik Torenberg 8:01 [laughs]

Marc Andreessen 8:01 ... um, dur- in, in the relevant period of the election. It was like a total of like a hundred and forty thousand, but during the actual run-up to the election, it was eighty thousand dollars, and so the theory was eighty thousand dollars of ad- ads ch- channeled into this magic mind control device, um-

Erik Torenberg 8:12 Talk about bang for the buck.

Marc Andreessen 8:13 Yeah, yeah, yeah. That literally swung an election that Hillary Clinton spent three billion dollars on [both laughing] right? And the whole time we're just sitting there, uh, I- I'm just sitting there just like, "I can't even believe," like it doesn't make any sense.

Erik Torenberg 8:24 Yeah.

Marc Andreessen 8:24 You know, and I, I went to, I went to Hillary's, uh, big speech, uh, I went to her first big speech after she lost at Stanford, and she literally said on stage, you know, "Donald Trump is only president today because Vladimir Putin hacked Facebook." And I'm like-

Erik Torenberg 8:35 [laughs]

Marc Andreessen 8:35 ... "Vladimir Putin hacked Facebook? What?"

Erik Torenberg 8:38 Yeah.

Marc Andreessen 8:38 "What the F are you talking about?" And a- anyway, and, and so literally it went from, you know, 2008 to this is useless, to 2012, this is still useless, however, it does get some credit for the Arab Spring. Um-

Erik Torenberg 8:49 Yeah [laughs]

Marc Andreessen 8:49 ... right, and for getting Obama elected.

Erik Torenberg 8:51 Yeah.

Marc Andreessen 8:51 And there were, there were lots of headlines at that time of social media saves democracy-

Erik Torenberg 8:54 Yeah

Marc Andreessen 8:54 ... um, because it, of, of the Arab Spring, and then to 2016, it's the evil, you know, it's the evil mind-controlling death machine.

Erik Torenberg 8:59 Yeah.

Marc Andreessen 9:00 It turned out that the method that was supposedly used by the Russians/ you know, the Trump campaign to do the mind control, you know, basically like that, that method... A- a- and I mean, we now know basically it never worked. Like, it, it, it, the whole psycho, psycho, psychometric thing that they were doing, that Cambridge, that Cambridge Analytica was supposedly doing, um, like it- it's not, it's not something people do today. Like-

Erik Torenberg 9:17 Yeah

Marc Andreessen 9:17 ... like this is the other thing is they, this is the other part of the narrative you're forced to believe is, is you're told to believe is it was magic mind control, but only for that election, and then nobody ever tried it again.

Erik Torenberg 9:25 Yeah, exactly. Yeah. It- it's fa- fascinating to imagine sort of, uh, alternative tech history, like what if Yahoo'd a- actually-

Marc Andreessen 9:31 Yep

Erik Torenberg 9:32 ... been able to, to buy, buy Facebook? Obviously, that would've been a massive blow for Facebook. But sometimes it works the other way of, you know, maybe Snap should've sold to, to Facebook. Maybe it would've been better for, for everyone else. It's just, uh-

Marc Andreessen 9:41 I have, you know, endless stories like Netscape. Netscape, we almost bought Yahoo. There was like a-

Erik Torenberg 9:44 Wow

Marc Andreessen 9:44 ... bid-ask spread between like three million and five million dollars.

Erik Torenberg 9:46 Oh my God.

Marc Andreessen 9:47 Yahoo almost bought Google, um, and there was a very, you know, uh, low price deal at the time. N- um, Netflix almost, uh, uh, sold to Blockbuster early on.

Erik Torenberg 9:55 Yeah.

Marc Andreessen 9:55 So there's, there's all the, every one of these companies that has ended up being a global world beater always has the-

Erik Torenberg 10:00 Yeah

Marc Andreessen 10:00 ... always has this little s- always has one of these, one of these stories of the path not taken, and so-

Erik Torenberg 10:03 Uber and Lyft almost merged at one point.

Marc Andreessen 10:05 The-

Erik Torenberg 10:05 I don't think. You're telling me.

Marc Andreessen 10:06 Yeah, yeah, exactly. Th- yeah, there's all that. And so, I mean, look, the for- the forces mean something. Like, the, the smartphone was going to happen.

Erik Torenberg 10:13 Yeah.

Marc Andreessen 10:13 There were going to be killer apps on the phone. There was gonna, you know, there was gonna be, there was gonna be something like this. Somebody was going to do it and, you know, like had, I don't know, in the counterfactual Facebook sold to Yahoo, and Yahoo let it languish, you know, somebody else probably would've figured it out. But, um, you know, so and in a sense, these things were kind of, some of these things, you know, were kind of bound to happen. But the specific companies involved, like it's just that, that there are so many kind of twists and turns-

Erik Torenberg 10:34 Yeah

Marc Andreessen 10:34 ... along the way. It's so contingent on very specific people doing very specific things at each point-

Erik Torenberg 10:38 Totally

Marc Andreessen 10:39 ... that I think it's just ex- it's extremely sensitive to the micro level decisions that are made along the way.

Erik Torenberg 10:43 Yeah. Speaking of twists and turns, let, let's go back to the firm because the first fund is three hundred million, correct? And-

Marc Andreessen 10:47 Yeah

Erik Torenberg 10:48 ... we didn't have a sense for how big it would become.

Marc Andreessen 10:50 Yeah.

Erik Torenberg 10:50 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.

Marc Andreessen 11:05 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.

Erik Torenberg 11:21 Yeah.

Marc Andreessen 11:21 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-

Erik Torenberg 12:19 Yeah

Marc Andreessen 12:19 ... 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.

Erik Torenberg 12:35 Yeah.

Marc Andreessen 12:35 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-

Erik Torenberg 12:43 Right.

Marc Andreessen 12:44 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.

Erik Torenberg 12:52 Yeah.

Marc Andreessen 12:52 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.

Erik Torenberg 13:01 Yeah.

Marc Andreessen 13:02 You know, DST. You know, DST kind of redefined-

Erik Torenberg 13:04 Right

Marc Andreessen 13:04 ... 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."

Erik Torenberg 13:29 Yeah.

Marc Andreessen 13:29 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.

Erik Torenberg 13:37 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?

Marc Andreessen 13:50 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-

Erik Torenberg 13:55 Yeah

Marc Andreessen 13:56 ... 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-

Erik Torenberg 14:05 Yeah

Marc Andreessen 14:05 ... 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-

Erik Torenberg 14:10 Yeah

Marc Andreessen 14:10 ... 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-

Erik Torenberg 15:20 Right

Marc Andreessen 15:20 ... 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.

Erik Torenberg 15:56 Right.

Marc Andreessen 15:57 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.

Erik Torenberg 16:06 Yeah.

Marc Andreessen 16:06 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-

Erik Torenberg 16:16 Right

Marc Andreessen 16:17 ... [chuckles] you're, you're, you're screwed, right? 'Cause-

Erik Torenberg 16:19 Right

Marc Andreessen 16:19 ... you can't, you can't fix your mistake. You can't then invest in the successful company-

Erik Torenberg 16:22 Yeah

Marc Andreessen 16:22 ... '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.

Erik Torenberg 16:35 Yeah.

Marc Andreessen 16:35 And that's just really hard to do-

Erik Torenberg 16:37 Yeah

Marc Andreessen 16:37 ... um, if you don't have domain knowledge.

Erik Torenberg 16:39 Yeah.

Marc Andreessen 16:39 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-

Erik Torenberg 16:48 Right

Marc Andreessen 16:48 ... I think we did the full-

Erik Torenberg 16:49 Yeah

Marc Andreessen 16:49 ... yeah, the one we have now.

Erik Torenberg 16:50 It's fascinating because,

Erik Torenberg 16:52 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.

Marc Andreessen 17:29 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.

Erik Torenberg 17:38 Right.

Marc Andreessen 17:38 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?

Erik Torenberg 17:43 Yeah.

Marc Andreessen 17:43 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.

Erik Torenberg 17:48 Right.

Marc Andreessen 17:48 Um, and they maybe pretended sometimes that they weren't-

Erik Torenberg 17:50 Yeah

Marc Andreessen 17:50 ... 'cause they wanted the design cred, but like it turned out they were actually very deep-

Erik Torenberg 17:53 Yeah

Marc Andreessen 17:53 ... and substantive and, and-

Erik Torenberg 17:54 Pinterest, et cetera.

Marc Andreessen 17:55 Yeah. These, these were... You know, Ben Silbermann and Brian Chesky, these guys were like top-end technical founders-

Erik Torenberg 17:58 Right

Marc Andreessen 17:58 ... 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-

Erik Torenberg 18:24 Yeah

Marc Andreessen 18:24 ... I don't know. I, I, I'm, I'm excited to see people tr- I'm excited to see people try that.

Erik Torenberg 18:30 Yeah.

Marc Andreessen 18:31 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-

Erik Torenberg 18:47 Right

Marc Andreessen 18:48 ... like software company today.

Erik Torenberg 18:50 Yeah.

Marc Andreessen 18:50 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."

Erik Torenberg 19:12 [chuckles]

Marc Andreessen 19:12 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?

Erik Torenberg 19:24 Yeah.

Marc Andreessen 19:24 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-

Erik Torenberg 19:34 Yeah

Marc Andreessen 19:35 ... right, and outracing a top-end technical person who's supervising, you know, 100 great coders.

Erik Torenberg 19:39 Right.

Marc Andreessen 19:40 You know, you know, it's possible. Um, you know, we'll see.

Erik Torenberg 19:43 If it's the era of the ideas guy.

Marc Andreessen 19:45 Yeah. Yeah.

Erik Torenberg 19:45 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?

Marc Andreessen 20:13 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-

Erik Torenberg 20:27 Yeah

Marc Andreessen 20:27 ... 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.

Erik Torenberg 20:39 Yeah.

Marc Andreessen 20:39 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.

Erik Torenberg 20:54 Yeah.

Marc Andreessen 20:54 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."

Erik Torenberg 21:07 Yeah.

Marc Andreessen 21:07 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.

Erik Torenberg 21:12 Yeah.

Marc Andreessen 21:13 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-

Erik Torenberg 21:18 Yeah

Marc Andreessen 21:18 ... to kinda do ambitious things. Um, so that's great. Um, it's all fantastic.

Marc Andreessen 21:23 Um, against that, it's just this incredible drag by bad governments and bad policies. Um, as you mentioned, Europe, Europe-

Erik Torenberg 21:29 Right. [chuckles]

Marc Andreessen 21:30 ... 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.

Erik Torenberg 21:35 Yeah.

Marc Andreessen 21:35 Um, and they're just on this absolute frenzy to regulate and kill, you know, tech in Europe, uh, the UK.

Erik Torenberg 21:39 And they're proud of it.

Marc Andreessen 21:40 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.

Erik Torenberg 21:54 [laughs]

Marc Andreessen 21:55 And so you just imagine being like a German or French, you know, tech founder and reading that, you know, just being, "Oh, God."

Erik Torenberg 22:00 Yeah.

Marc Andreessen 22:00 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-

Erik Torenberg 22:07 Yeah

Marc Andreessen 22:08 ... 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-

Erik Torenberg 22:35 Right

Marc Andreessen 22:35 ... 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-

Erik Torenberg 22:48 Yeah

Marc Andreessen 22:48 ... 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.

Erik Torenberg 22:56 Yeah.

Marc Andreessen 22:56 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.

Erik Torenberg 23:04 Yeah.

Erik Torenberg 23:05 Yeah. What is our criteria for opening up offices in, in other places more generally?

Marc Andreessen 23:10 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.

Erik Torenberg 23:23 Yeah.

Marc Andreessen 23:23 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-

Erik Torenberg 23:30 Right

Marc Andreessen 23:31 ... 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.

Erik Torenberg 23:45 Very recently in Mistral in France, other, other-

Marc Andreessen 23:46 Yeah. Ex- exactly

Erik Torenberg 23:47 ... other places.

Marc Andreessen 23:48 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-

Erik Torenberg 23:52 Yeah

Marc Andreessen 23:52 ... 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-

Erik Torenberg 24:01 Right

Marc Andreessen 24:01 ... and started a company there have just moved to the US instead.

Erik Torenberg 24:04 Yeah.

Marc Andreessen 24:04 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.

Erik Torenberg 24:10 Yeah.

Marc Andreessen 24:11 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-

Erik Torenberg 24:16 Yeah

Marc Andreessen 24:16 ... you know, there are these policy issues all over the world. Um-

Erik Torenberg 24:19 Right

Marc Andreessen 24:19 ... you know, and do we need to go get more, insert ourselves more into, you know, God, God help us, European politics.

Erik Torenberg 24:25 [laughs]

Marc Andreessen 24:26 Um, or, you know, whatever. And then, you know, and then the question, you know, can we? You know-

Erik Torenberg 24:30 Yeah

Marc Andreessen 24:30 ... are, are we, you know, as Americans, are we allowed to?

Erik Torenberg 24:32 Yeah.

Marc Andreessen 24:32 Um-

Erik Torenberg 24:33 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.

Erik Torenberg 24:38 But talk a little bit about how just the Little Tech

24:40 ... concept as a sort of different from big tech sort of e-emerged in, in our thinking

Marc Andreessen 24:44 Yeah. So basically the, uh, this also, this goes right back to this thing of the tech industry kind of changing around 2010.

Erik Torenberg 24:49 Yeah.

Marc Andreessen 24:49 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.

Erik Torenberg 25:04 Yeah.

Marc Andreessen 25:04 Like i-i-it-- Really, the only time it would ever enter politics really was it, was with antitrust.

Erik Torenberg 25:08 Yeah.

Marc Andreessen 25:09 Um, and so it was like a really big deal in the '90s-

Erik Torenberg 25:11 Microsoft

Marc Andreessen 25:11 ... 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-

Erik Torenberg 25:51 Right

Marc Andreessen 25:51 ... 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.

Erik Torenberg 25:58 [chuckles]

Marc Andreessen 25:58 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.

Erik Torenberg 26:04 Right.

Marc Andreessen 26:04 Whereas the tech people are just like all-

Erik Torenberg 26:06 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-

Marc Andreessen 26:10 Yeah, they're saying sanctimonious-

Erik Torenberg 26:12 Yeah

Marc Andreessen 26:12 ... and, and insufferable. Which, you know, it, it-

Erik Torenberg 26:13 [laughs] Sometimes.

Marc Andreessen 26:15 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.

Erik Torenberg 26:41 Yeah. [chuckles]

Marc Andreessen 26:42 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."

Erik Torenberg 26:49 Yeah.

Marc Andreessen 26:49 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-

Erik Torenberg 27:18 Yeah

Marc Andreessen 27:18 ... 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-

Erik Torenberg 27:34 Yeah

Marc Andreessen 27:34 ... it turns out these things matter.

Erik Torenberg 27:36 Right.

Marc Andreessen 27:36 Um, you know, as a consequence, like we're either gonna show up and explain ourselves or, you know-

Erik Torenberg 27:40 Yeah

Marc Andreessen 27:40 ... other people who hate us are gonna, you know-

Erik Torenberg 27:42 Right

Marc Andreessen 27:42 ... gonna describe us.

Marc Andreessen 27:43 Um, and so, so what we've done is we've generalized that idea out into what we call the Little Tech agenda.

Erik Torenberg 27:48 Yeah.

Marc Andreessen 27:48 And the first part of that is the Little Tech, and we say Little Tech specifically as differentiated from Big Tech.

Erik Torenberg 27:53 I like that it creates a cleavage.

Marc Andreessen 27:54 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-

Erik Torenberg 28:07 Yeah

Marc Andreessen 28:07 ... "Well, that's tech." And you know, by the way, it wasn't a startup 20 years ago.

Erik Torenberg 28:09 Right.

Marc Andreessen 28:10 And we're just like, "Look, Google has its own... Google, you know, they have their own-"

Erik Torenberg 28:13 Yeah.

Marc Andreessen 28:14 "They, they have 10,000, you know-"

Erik Torenberg 28:15 Yeah

Marc Andreessen 28:15 ... "lawyers and policy people and compliance people. Like, they, they, they've got their own-"

Erik Torenberg 28:18 Right.

Marc Andreessen 28:18 "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.

Erik Torenberg 28:27 We're disrupting Google, yeah.

Marc Andreessen 28:28 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."

Erik Torenberg 28:42 Yeah.

Marc Andreessen 28:42 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."

Erik Torenberg 28:58 Yeah. Yeah.

Marc Andreessen 28:58 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-

Erik Torenberg 29:05 Yeah

Marc Andreessen 29:05 ... 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-

Erik Torenberg 29:13 Right

Marc Andreessen 29:14 ... 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.

Erik Torenberg 29:48 Really?

Marc Andreessen 29:49 And they're like, "Oh, wow. You know, tech startups are actually good." Right?

Erik Torenberg 29:51 Yeah.

Marc Andreessen 29:51 "It's actually, this is actually exciting."

Erik Torenberg 29:52 Yeah.

Marc Andreessen 29:53 Um, and then, and then, so the, the, so that's the Little Tech side. And then the agenda side is, you know, basically it's, it's essentially freedom to innovate, right?

Erik Torenberg 29:59 Right.

Marc Andreessen 29:59 So, uh, uh, uh, ability for companies in, in new fields that are not completely yet well understood, that lawmakers of the past did not anticipate-

Erik Torenberg 30:06 Right

Marc Andreessen 30:06 ... that they should actually be able to operate. And then, you know, the other maybe important thing is we're not, like, lobbying for no regulation, right? So s-sometimes we get tagged by, you know, we're these crazy libertarians, and we want these companies to just run wild and like commit fraud and do all this crazy stuff.

Erik Torenberg 30:19 Yeah.

Marc Andreessen 30:19 And that's not what we're pushing for.

Erik Torenberg 30:20 We want clarity.

Marc Andreessen 30:21 We want clarity. We want clarity. We want, we want clarity. We want clear guidelines. We want sense, we want sensible rules. Um, I... And we always tell these people, like, consumer protection regulation go, you know, go crazy. Like 100%, no problem. Like that, that's all good. In fact, we want that 'cause we want, we, we want our companies to be compliant. We certainly don't want our companies committing fraud.

Erik Torenberg 30:37 Yep.

Marc Andreessen 30:37 By the way, the other thing we don't want is we don't want our compliant companies competing with non-compliant companies that aren't getting regulated or prosecuted.

Erik Torenberg 30:43 Yeah.

Marc Andreessen 30:43 We're a-advocating on behalf of regulation as, as often as we're doing anything

Marc Andreessen 30:47 else.

Erik Torenberg 30:47 Yeah. So the

30:49 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.

Marc Andreessen 31:25 Right. That's right. And so the specific dust-up I think was over Palantir working with ICE-

Erik Torenberg 31:28 Yes

Marc Andreessen 31:29 ...uh, uh, Immigration.

Erik Torenberg 31:29 Yeah.

Marc Andreessen 31:30 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-

Erik Torenberg 31:47 Yeah

Marc Andreessen 31:47 ...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-

Erik Torenberg 32:17 Yeah

Marc Andreessen 32:17 ...it's the Cold War, and of course, industry and government have to work together to-

Erik Torenberg 32:20 Yeah

Marc Andreessen 32:20 ...build all these systems to defeat the Soviets. You know, one of the first computers literally was called SAGE-

Erik Torenberg 32:25 Yeah

Marc Andreessen 32:25 ...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-

Erik Torenberg 32:38 Yeah

Marc Andreessen 32:38 ...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-

Erik Torenberg 33:04 Yeah

Marc Andreessen 33:04 ...'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.

Erik Torenberg 33:13 Yeah.

Marc Andreessen 33:13 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.

Erik Torenberg 33:25 Right.

Marc Andreessen 33:26 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.

Erik Torenberg 33:38 [laughs] Like-

Marc Andreessen 33:39 Right? So, um-

Erik Torenberg 33:41 Call it the groove shift.

Marc Andreessen 33:41 So the groove, the groove shift 50 years ago was no more work with the military. No more... US government is evil.

Erik Torenberg 33:46 Yeah.

Marc Andreessen 33:46 The US government is an evil colonial oppressive power re- wreaking havoc overseas.

Erik Torenberg 33:50 Yeah.

Marc Andreessen 33:50 And it would be better to have like disarmament and, you know, you know, pass- passive, basically pacifism.

Erik Torenberg 33:55 Yeah.

Marc Andreessen 33:55 Um, and the US should, you know, sort of give up all these, all these foreign engagements. And that, that was a very hot, you know, very hot political topic because the Soviet Union was still up and running. Um, but anyway, as a result, like a lot of these universities, and, and then as a result, a lot of the companies just basically disengaged.

Erik Torenberg 34:07 Yeah.

Marc Andreessen 34:08 They just weren't willing to do that. And another topic that became very hot at the time was RO- so-called ROTC recruiting. So the military used to just actively recruit for new officers-

Erik Torenberg 34:15 Yeah

Marc Andreessen 34:15 ...on these campuses, and then a lot of these colleges kind of outlawed that 50 years ago. Um, anyway, so, and so, uh, I would say, you know, Paul, you know, is a very, very bright guy. Um, you know, Paul is kind of from that era, uh, not the Vietnam era, but like the, the, the, the arc that followed-

Erik Torenberg 34:28 Yeah

Marc Andreessen 34:28 ...like in, in the '80s and '90s when it was just universally assumed-

Erik Torenberg 34:31 Right

Marc Andreessen 34:31 ...that of course you don't try to enable the, you know, military industrial comp- you know-

Erik Torenberg 34:35 Right

Marc Andreessen 34:35 ...complex defense agencies. Um, I, I never really felt that way, and I don't, maybe it's just, I don't know, um, it's, I don't know, where I grew up or whatever, but, um, I never really felt that way. But I, I knew I was kind of swimming in those waters for a long time. My company, Netscape, was always very active with defense and intelligence. We, we, we always leaned hard into it. It's the only real thing that you're... Alex Karp I think is a national hero. The one thing when he does is he's, you know, Palantir is the first company that's ever done this, and I'm all, "No. [laughs] No, we were doing it 10 years earlier," but that's okay. Yeah, he gets, he gets tons of credit.

Erik Torenberg 35:04 Yeah.

Marc Andreessen 35:04 Um, and so anyway, so I would say Paul kind of represents that, you know, call it, I don't know, you know, kind of neo-hippie, you know, '80s and '90s, you know, phase where it's just like, clearly you don't do this. And then to your point, now the, the vibe shift, it's like, you know, now more recently with, with, uh, you know, Palantir and Anduril, uh, and, and again, give Alex Karp huge credit. Give-

Erik Torenberg 35:21 Right

Marc Andreessen 35:21 ...you know, Ryan Chin and, and, uh, Palmer Luckey huge credit. Uh, Peter, um, you know, these guys, you know, really, really led the way on this. Um, and so yeah, the n- the new model is, yeah, of course you, of course you work, of course you work with them because number one, you're a business and they're a customer, and-

Erik Torenberg 35:33 Right

Marc Andreessen 35:34 ...you know, you shouldn't be like sitting there as like moral judge for like every single customer.

Erik Torenberg 35:37 Yeah.

Marc Andreessen 35:38 Like, 'cause how are you gonna do business if like you're-

Erik Torenberg 35:39 Right

Marc Andreessen 35:39 ...just sitting there having these moral conversations all day long? Um, a-and then, and then number two, it's like, all right, the nat- these national missions actually matter, right? And, you know, the, the border one is very inflammatory, but like, let's just say most people in the history of civilization have thought that borders are an important and valid thing. Uh, yeah, I mean, you know, is the world a safer place because the US is in it versus not? Uh, is, and because the US military is strong versus weak, um, and do we wanna protect ourselves against terror attacks?

Erik Torenberg 36:04 Yeah.

Marc Andreessen 36:05 Um, and so, you know, I think there's a lot of us that are like, "Oh, clear- clearly we wanna do those things."

Erik Torenberg 36:08 Right.

Marc Andreessen 36:08 I'm encouraged by it 'cause I think things are headed in the right direction according to what I want, but I also recognize that, you know, these are serious underlying moral, philosophical, ethical questions.

Erik Torenberg 36:16 Yeah.

Marc Andreessen 36:16 And I, I don't... Like, I don't question Paul's good f- I don't question Paul's intent. I think, I think when he says those things, he's operating out, out of, out of like a very strong sense of ethics and morals.

Erik Torenberg 36:24 Right. Totally. Well, it goes to your earlier, your-

Marc Andreessen 36:26 But I disagree with him.

Erik Torenberg 36:28 Yes.

Marc Andreessen 36:28 Yeah.

Erik Torenberg 36:28 Software has

Erik Torenberg 36:29 eaten the world, and it didn't stop at, uh, you know, social networks or marketplaces, right? It, it got into, or internet marketplaces.

Marc Andreessen 36:34 Yeah.

Erik Torenberg 36:34 It's got into everything.

Marc Andreessen 36:34 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.

Erik Torenberg 36:44 Yeah.

Marc Andreessen 36:44 Like almost every single one.

Erik Torenberg 36:46 Right. Yeah.

Marc Andreessen 36:46 Um, and just, you know, obviously Ukraine, it's just the Ukrainian battlefield-

Erik Torenberg 36:49 Right

Marc Andreessen 36:49 ...is a comp- techno- is a completely new kind of battlefield because of all-

Erik Torenberg 36:52 Yeah

Marc Andreessen 36:52 ...this new, you know, drone technology-

Erik Torenberg 36:53 Right

Marc Andreessen 36:54 ...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.

Erik Torenberg 37:03 Right.

Marc Andreessen 37:04 And of course, you know, my, my approach is obviously we should be in the middle of that, and obviously-

Erik Torenberg 37:07 Love it

Marc Andreessen 37:07 ...we should be investing against that and trying to help-

Erik Torenberg 37:08 Yeah

Marc Andreessen 37:09 ...th-those things happen. But, but I understand why people get uncomfortable with it.

Erik Torenberg 37:12 Yeah. Yeah.

Marc Andreessen 37:12 Yeah.

Erik Torenberg 37:12 That's a perfect place to wrap our conversation at LP Summit. Marc, thanks so much.

Marc Andreessen 37:15 Good. Thank you, Erik. [upbeat music]