Ben Horowitz on How a16z Built a Venture Machine | Ep. 38

Ben Horowitz 0:00 You know, when we started the firm, like, a big idea that we had was that venture capital was disappointing as a product for an entrepreneur. We always thought, "Wow, a much better product would be, give me, like, the network to be confident and the advice I need to run this fucking thing."

Jack Altman 0:20 [upbeat music] Ben, I'm really happy to be back here doing this. I got to be in the same room with Marc earlier in the year, and I'm, I'm really happy that you're doing this with me.

Ben Horowitz 0:27 I know. I'm glad to be here. This should be some fun.

Jack Altman 0:30 Can we start with your relationship with Marc? 'Cause I think it's, like, a super unique thing-

Ben Horowitz 0:34 Yeah

Jack Altman 0:34 ... where you guys obviously work together, you know, running companies. You've built this firm together. You have a really unique relationship.

Ben Horowitz 0:41 Yeah.

Jack Altman 0:41 I can't think of that many examples where I feel like I've seen it in that sort of equal way for so long. Can you talk about it a little bit?

Ben Horowitz 0:48 We've been working together thirty years. Uh, and, uh, I, I, I would say we're, we're both different and complement... and, and the same, and so not too complementary, so that helps. Um, he's kind of like, uh, we're a little more like relatives than, than anything else at this point, you know, working together thirty years and so forth, so-

Jack Altman 1:08 Yeah

Ben Horowitz 1:09 ... uh, yeah.

Jack Altman 1:09 Like, are you friends outside of the work context? Or, like, what's like on a, on, like, a non-work situation, like, what is the interaction like?

Ben Horowitz 1:15 Yeah, we're, we're friends, but not like drinking buddies or something like that, right? Like, uh, we both work so much, we mostly talk about work anyway, and then, like, 'cause we're working together-

Jack Altman 1:25 Yeah

Ben Horowitz 1:25 ... we're talking about work. But it's kind of like the, the way I would describe it, um... And I, I want to say this without sounding-- I'm not making the, like, level comparison, like, I'm, uh, so I'm just saying the relationship comparison that I think-

Jack Altman 1:40 Mm-hmm

Ben Horowitz 1:40 ... is most similar that I've know about is kind of the Michael Jackson, Quincy Jones relationship, if you think about that. Um, and that, yeah, Marc's more Michael Jackson, like, he's a, a star of talents that nobody else has.

Jack Altman 1:54 Yeah.

Ben Horowitz 1:54 Like, nobody else has maybe, like, ever had, right? Like, you've talked to Marc. Um, to the point where, like, as a firm, we can just put him out there, and it's like-

Jack Altman 2:02 Yeah

Ben Horowitz 2:02 ... a magic trick. Like, he's like, bang, you know? And, you know, for me to, you know, my kind of relationship with him is, you know, like a Quincy Jones. It's not like I'm, uh, you know... I, I'm certainly not Michael Jackson, but I know enough. You know, Quincy Jones knew so much about music-

Jack Altman 2:23 Mm-hmm

Ben Horowitz 2:23 ... and so much about how you get the most out of somebody that talented. You know, that makes it work together, so I can surround Marc with the kinds of people, with the kinds of ideas, and so forth, that maximize him. And then, you know, like, he's makes me much, much better 'cause he's Michael Jackson, and, like, you're never, [chuckles] you're never gonna make Thriller if you don't have Michael Jackson.

Jack Altman 2:46 Yeah.

Ben Horowitz 2:46 And all the great albums Quincy Jones made, nothing was as big as Thriller, 'cause, you know, you need that. And so that's the kind of relationship. So we're very complementary. We're like in the same field. We do the... You know, like, uh, I- I'm an investor, he's an investor. Like, you know, we built the companies together, all that kind of thing. I'm an engineer. He's an engineer by training. But he's different than me, like, very different-

Jack Altman 3:08 Yeah

Ben Horowitz 3:08 ... still.

Jack Altman 3:08 Yeah.

Ben Horowitz 3:08 Uh, and I'm different than him. Um, and that, that's kind of what makes it work. We're enough the same and enough different. But I'm not saying that like I'm Quincy Jones.

Jack Altman 3:16 No, I get it.

Ben Horowitz 3:17 Like, the great Quincy Jones, rest in peace. I love him. [chuckles] I don't want people mad at me.

Jack Altman 3:21 Do you think about the firm similarly? Are you on different sides of certain ideas about the firm, and that's what has led to it working the way it has? Or is it like you believe the same things about what it's gonna take to win, and then you just have a different sort of daily skill set and set of work?

Ben Horowitz 3:35 No, we've had a lot of kind of arguments, and, and we, uh, we've had a lot of arguments, both on kind of which direction it should go and, and in what kind of timeframe. He has kind of more ideas about things we should do than I do just 'cause, you know, in running it, I try and keep it a little more contained.

Jack Altman 3:56 Mm-hmm.

Ben Horowitz 3:56 Um, although, you know, you know, sometimes I'll push us in a direction that he wouldn't have normally gone otherwise, like some of the international things we're doing and so forth.

Jack Altman 4:04 So it's more common that he's generating, and you're editing?

Ben Horowitz 4:07 Yeah, more common, although I definitely generate some ideas, [chuckles] and he definitely will edit some of them. Um, we talk so much and so forth, by the time we kind of get to the idea, we work through it. But it's a good kind of back and forth. And I'm-- Look, I, I would say I'm more decisive, um, as a personality type than him. He's kind of more open-ended-

Jack Altman 4:29 Yeah

Ben Horowitz 4:29 ... uh, 'cause he's more of an idea generator. And so that kind of helps where I can go, "Okay, we're committing the flag here, but not there."

Jack Altman 4:36 It's kind of rare in venture that there's, like, a... I know, like, that a lot of firms have, like, the CEO model-

Ben Horowitz 4:41 Yeah

Jack Altman 4:41 ... but, like, to have somebody who's operating as a CEO is kind of rare, where, like, I guess at this point, obviously, Andreessen's big. It's, like, five, six hundred people, right?

Ben Horowitz 4:49 Six hundred people, yeah.

Jack Altman 4:50 Yeah. And, like, your day is, I guess, is management to some extent.

Ben Horowitz 4:54 You know, it's-

Jack Altman 4:56 Or half of it?

Ben Horowitz 4:56 Still, six hundred is relatively small on kind of-

Jack Altman 4:59 [chuckles]

Ben Horowitz 4:59 ... the scale of things that I've run. Yeah, I mean, a lot of it is still like, I mean, I, I have, like, twenty-five one-on-ones with entrepreneurs every month, you know, just in various around the portfolio, helping them, you know, with CEO stuff.

Jack Altman 5:11 Yeah.

Ben Horowitz 5:11 And then, you know, helping win deals, and then doing our international stuff and working with investors. So, uh, you know, ma- maybe management's, like, a third of my time, but still, uh, that's probably more than most VCs put on it.

Jack Altman 5:24 I guess doing that stuff probably is, uh, important for you to be able to sort of run the firm anyway, too. Like, as much as, like-

Ben Horowitz 5:31 Yeah

Jack Altman 5:31 ... generating returns, which I'm sure also happens, you probably also need to do the deals in order to, like, stay close to the work and know what's happening.

Ben Horowitz 5:37 Hundred percent, right. Yeah, I mean, like, like, I think that you don't really understand the VC business if you're not, like, on board to make investments and understanding, like, okay... You know, 'cause, like, hiring changes.

Jack Altman 5:47 Yeah.

Ben Horowitz 5:47 Like, hiring has changed a lot-

Jack Altman 5:49 Mm-hmm

Ben Horowitz 5:49 ... in the last five years just because, like, the offers didn't use to be like this. And how do you defend against that? And how do you do all these things? And so, like, if you're running a venture capital firm, and you're like, "How in tarnation did they get that much, you know, that many RSUs?" [chuckles]

Jack Altman 6:02 Yeah, yeah.

Ben Horowitz 6:03 And it's like, when I was a boy, you'd only get four.

Jack Altman 6:05 Right. Yeah.

Ben Horowitz 6:05 Well, like-

Jack Altman 6:06 You get out of there super fast.

Ben Horowitz 6:07 Yeah, you can get, uh, out of the loop really, really fast.

Jack Altman 6:09 Yeah.

Jack Altman 6:10 When you think about, like, um, the way that you've decided to structure-... I guess the company, the firm, you've basically, you know, and I, I got to speak with Martine, who's, like, amazing and could obviously, you know-

Ben Horowitz 6:21 Yeah

Jack Altman 6:21 -run and lead his own firm.

Ben Horowitz 6:22 Yeah.

Jack Altman 6:23 You've structured this in some way where you can have a certain caliber of GP.

Ben Horowitz 6:28 Mm-hmm.

Jack Altman 6:29 How have you thought about, like, what's like the, the narrative in your head as you've been thinking about, "Okay, this is what needs to be true to have people like Martine and Chris Dixon and so forth at the company?"

Ben Horowitz 6:39 You know, it's funny, um, Mike Moritz had this great quote years ago where he said, like: "The key to running a venture capital firm is to keep the principals from killing each other," right? [chuckles] Like, and that, you know, there's a lot of truth to that because you have very, very high-powered, like, super high IQ, disagreeable people who are the best VCs. I mean, like, that's, you know, you, you, you can't find- You can find a VC who you don't like, you can find a, a great VC who, you know-

Jack Altman 7:07 Mm-hmm

Ben Horowitz 7:08 ... maybe is a, a dick or whatever, but it's pretty hard to find one who you go like, "That guy's not smart."

Jack Altman 7:13 Can you be in a, a good, agreeable VC?

Ben Horowitz 7:15 [chuckles] You know, I don't know many. Um, so-

Jack Altman 7:18 You know Andy

Ben Horowitz 7:18 ... I think some are more agreeable than others.

Jack Altman 7:20 Mm-hmm.

Ben Horowitz 7:20 Uh, so I do think there is a kind. So the, to be kind of a long-term, like, all-time great VC, I think most of those end up being disagreeable because you really have to think about everything for yourself, and you can't... You know, you know, wanting to be liked, uh, can be a problem. However, like, there's a phase of VC that's this kind of heat-seeking phase.

Jack Altman 7:45 Yeah.

Ben Horowitz 7:45 Um-

Jack Altman 7:45 You could be a good, agreeable heat seeker.

Ben Horowitz 7:47 Yeah, you could be a good-

Jack Altman 7:47 In fact, it probably helps 'cause you just wanna be liked by all your peers in venture.

Ben Horowitz 7:50 I think the best heat seekers probably are agreeable.

Jack Altman 7:52 You're right.

Ben Horowitz 7:52 Um, so that, th- that kind for sure.

Jack Altman 7:54 Friends with everybody-

Ben Horowitz 7:55 Yeah

Jack Altman 7:55 ... want everybody to think they're smart all the time.

Ben Horowitz 7:56 Yeah, yeah.

Jack Altman 7:57 Yeah.

Ben Horowitz 7:57 But the truffle hunters, like, they're, they're all disagreeable.

Jack Altman 8:00 Have you ever seen a very good set of results from somebody who is just doing heat-seeking work?

Ben Horowitz 8:05 In a period, yeah. And, and usually what happens is they show up during a boom, and then they go away after the boom [chuckles] is over.

Jack Altman 8:12 Mm-hmm.

Ben Horowitz 8:13 And, you know, because partly they, they weren't that... They were interested in the chase more than the actual like, "Oh, here's a breakthrough new technology," and, you know, whatever, cryptocurrency and the decentralized network, and they're using all these amazing techniques. Like, they don't care about that. I mean, if you're-- the true heat seekers don't care about that at all.

Jack Altman 8:33 Yeah.

Ben Horowitz 8:33 They're just like, "Wow, that's hot. [chuckles] I'm gonna go see if I can get that deal."

Jack Altman 8:36 Yeah.

Ben Horowitz 8:36 "I know everybody wants that deal." And, you know, that's a real thing.

Jack Altman 8:39 Mm-hmm.

Ben Horowitz 8:39 And it's a real thing in VC, and I think, you know, we, we kinda came out of that period. We may be going into that period again.

Jack Altman 8:46 There's a good version of this that I... I know some people who are- would get framed as heat seekers, but it's a little bit different, where they, they can tell that it's gonna be hot. Like, they can-- they don't know if it's gonna be a good long-term business, but they're like, "This is gonna be hot by the next round. I can just see the setup."

Ben Horowitz 9:00 Yeah.

Jack Altman 9:00 And I think there's something interesting there. Like, I've seen seed investors who just seem to have a nose for, like, "This is gonna get a hot Series A."

Ben Horowitz 9:07 Yeah.

Jack Altman 9:07 And who knows what'll happen after that?

Ben Horowitz 9:08 Yeah, you know, that's a real thing. I mean, I, I agree with you. I think that's a real thing. It's, you know, it's not so much our business, um-

Jack Altman 9:14 Yeah

Ben Horowitz 9:14 ... but it's, uh-

Jack Altman 9:15 Yeah, I talked with Mark about-

Ben Horowitz 9:15 God bless them. Yeah. [chuckles]

Jack Altman 9:16 I talked with Mark about how there's this issue once you're really big, which is you actually have to be really careful with those because of conflicts, and so it's, like, actually kind of not worth it. If you're able to win stuff later, there becomes this sort of like prisoner's dilemma, where you should basically wait for- do the earliest round, where you're sure it's the winner in a category or something like that.

Ben Horowitz 9:34 Yeah, I mean, I think, I think there's some of that in the calculus. And then, y- you know, I mean, I think, you know, for us, we have to kind of believe in it technologically, believe in the entrepreneur, and so forth. It's just kind of, we a little bit view ourselves as, um, more mission-oriented. So, like, our mission isn't to get higher returns than the S&P five hundred, although that's a good side effect or whatever. You know, our mission is much more to, like, can we, uh, help the best entrepreneurs build the best companies and, and kind of make us and the country and the West strong technologically? And so when we think about it through that lens, w- we actually care much more about what it is than what the next round might think. Although, you know, like, of course, it's a consideration. Will anybody fund these guys [chuckles] after us-

Jack Altman 10:25 Yeah

Ben Horowitz 10:25 ... or do we have to fund every round?

Jack Altman 10:28 Going back to the type of, like, VCs that you think can be good, and you're obviously, you know, it's not the only thing you do, but one of the things you do is you're managing these really good investors. Can you talk about the difference between managing, you know, these, like, very accomplished GPs versus, you know, managing execs in, like, an operating company?

Ben Horowitz 10:46 Yeah, it's like, I, I, I would say it's quite different in that, you know, look, good execs understand, [chuckles] um, one, the, the importance of chain of command. The, uh, y- you know, they, they're managers, they... A lot of them may be execution people, process people, you know, that kind of thing, as opposed to people generating a lot of ideas. Whereas every good investor is a massive idea generator. They, they don't necessarily, um, like rules [chuckles] or be willing to follow them. Uh, and so I think that the burden on everything making sense every step of the way, uh, is much higher. And then also, you really have to org- from an organizational design standpoint, you've got to minimize conflict, or, uh, it's gonna be complete chaos. So in, in a company, you can get-- like, there's always gonna be some cross-functional dependency in a company, and you have to live with it. And then s- through some combination of rules, process, and telling people, whatever, "Shut the fuck up, like, we're just gonna do it this way," you get there. Um, I think in a VC firm, you can tolerate much less of that. You know, like, if the org doesn't solve the conflict issue, like the ability to solve-

Jack Altman 12:10 Mm

Ben Horowitz 12:10 ... major conflicts one-off, uh, will cause a lot of issues.

Jack Altman 12:14 You're saying interpersonal conflict is worse in a venture firm?

Ben Horowitz 12:17 Yeah, much worse in that, um, both because of the-... personality types, and then you can really, like, wreck each other's businesses, right?

Jack Altman 12:26 Mm-hmm.

Ben Horowitz 12:26 Or each other's, you know, work in that, let's say, I'm a great expert in-- I'm Martine, and I know everything about AI and foundation models, and so forth, and I've gone through every single video model like there is, and I understand all the nuances and the strengths and the weaknesses, and so forth. And then, like, you know, me over here, um, who hasn't done any of that work but, like, found an entrepreneur that they like, who's doing something, and I go invest in that model, that conflicts Martine out.

Jack Altman 12:57 Yep.

Ben Horowitz 12:58 Like, he, he's gonna be beyond mad. [chuckles] Like, he's gonna, he's gonna wanna, like, murder the person.

Jack Altman 13:04 Yeah.

Ben Horowitz 13:04 I mean, like that-- it, it's such a bad problem, uh, to have conflict like that in a, in a venture capital firm. And you just have to have respect for the work that people are doing and design the firm in a way that all that hard work gets them to the end that they expected, and, like, that their own people don't undermine them and these kinds of things. So, like, the conflicts are extremely intense in that way.

Jack Altman 13:27 When you see, like, a real one, are you like, "I'm gonna let them figure it out," or are you like, "I'm gonna mediate this-

Ben Horowitz 13:32 No, no, no

Jack Altman 13:32 ... get to a resolution?"

Ben Horowitz 13:33 They're gonna figure it. [chuckles] My biggest thing is, like, sometimes they're too respectful of, uh, of me on that, but like, like, uh, I, like, I'll just resolve it. I need to resolve the conflict.

Jack Altman 13:43 What do you mean they're too respectful? They're like, if Ben's gonna stop fighting, it'll stop that.

Ben Horowitz 13:46 Like the, like, the worst conflicts we've had are ones that nobody brings to me. Like, and it'll be... like, it could be something very stupid and trivial, but they get so hot, uh, in, in VC.

Jack Altman 13:56 Is this between GC- GPs that you worry about it, or are you going inside team lead s- sort of org and working out their conflicts for them, or are you like, you need to run your own division or whatever?

Ben Horowitz 14:07 Like, sometimes there's something inside the, uh, uh, like a fund, but tho- those are pretty cohesive. 'Cause so, so we design them, um, like, every fund we have runs like, you know, what somebody might consider a little VC.

Jack Altman 14:21 Yep.

Ben Horowitz 14:21 Like, there's not more than five GPs.

Jack Altman 14:23 Yep.

Ben Horowitz 14:23 It's, it's pretty cohesive, so there's not that much contention. You get the contention when things scale-

Jack Altman 14:28 Mm-hmm

Ben Horowitz 14:29 ... um, and everybody's not talking to each other every day. Like, then, then that becomes a problem. So mostly, it's cross funds or cross-functionally or something like that, but, uh, it's very important to squash 'em in the... They're all kimchi problems. They're all the deeper you bury them, the hotter they get, right? Like, so there, there is no [chuckles] problem that gets better over time in terms of conflict in a VC.

Jack Altman 14:49 Yeah.

Ben Horowitz 14:49 It always gets worse.

Jack Altman 14:51 What are the things that, like, you then need to, like, give sort of guidance on, like, you and Marc, let's say, at a firm-wide level? Is it about overall, like, you know, deployment pace? Is it about s- like, structure? Is it about approach to the market? Like, what is the sort of broad intersection point across all the different funds?

Ben Horowitz 15:10 Yeah, I mean, some of it is just kinda general principles, things we believe in. So, you know, one, like, w- we have to t- make sure we're taking enough risk, make y- you know, like... A- and that usually comes of the form is, evaluate the entrepreneur and the company on the magnitude of their strength. Like, how good are they at what they're good at? Are they super world-class, or are they, you know, is this, like, the, the literally the best person in the world at doing this thing? Not on, oh, like, the monetization model doesn't make sense, or, like, they don't know anything about go-to-market, or they don't actually understand accounting. [chuckles] Um, you know, like, that's not ARR. Like, what the fuck are they talking about? Those things, like, you can always rule out a deal-

Jack Altman 15:58 Mm-hmm

Ben Horowitz 15:58 ... on weaknesses, and I think it's, it's always a mistake to rule out somebody who's truly world-class on a weakness, and then it's always a mistake to invest in somebody who's not truly world-class on a lack of weakness. And so a lot of the guidance is around ideas like that, you know, things that we believe where, you know, we're always like, "Okay, like, what can they do?"

Jack Altman 16:22 Mm.

Ben Horowitz 16:22 Like, let's focus on what they can do, not what they can't do, and see if that's in, worth investing in. And, and it's a, it's an important psychological thing 'cause, you know, we have so many, like, brilliantly analytical people who can find what's wrong with anybody. Um, and you know, I always remind [chuckles] them there's something wrong with everybody.

Jack Altman 16:40 Yeah.

Ben Horowitz 16:41 You just may not have been able to find

Ben Horowitz 16:43 it yet.

Jack Altman 16:43 When you think about, like, how you're deploying capital, it seems to me like, you know, you and... I would put, like, you and Sequoia in one shape, which is, like, there are many deals, and you've scaled up the number of great-- like, it's basically a game of how many GPs can you scale? 'Cause, you know, a GP can only do so many deals, and, like, how big can you make the teams? And your answer to that has kinda been, like, many funds, and then you can sort of, like, keep it together, and that's, like, one way-

Ben Horowitz 17:08 Mm

Jack Altman 17:08 ... to scale broadly. I'm sure you can kind of, like, adjust what I said. And then let's say there's another version, which is way fewer people with way more concentration, and let's call that, like, Thrive and Founders Fund and maybe Green Oaks or something like that.

Ben Horowitz 17:22 Mm-hmm.

Jack Altman 17:22 Maybe you would say that's not quite right, but directionally you kinda know what I'm getting at.

Ben Horowitz 17:25 Yeah. I mean, I think, um, they do some of both, and we do some of both-

Jack Altman 17:29 Of course

Ben Horowitz 17:29 ... but yeah, sort of directionally. I think that, like, a- again, for us, um, and what we want to accomplish as a firm, which is, again, like, making America the strongest country in the world technologically, the, the concept of traded approach just doesn't quite work with that mission. Um, and then-

Jack Altman 17:48 Why is that? 'Cause we just need more shots to build these companies?

Ben Horowitz 17:51 Well, I mean, you know, if you look at, like, you know, uh, a Founders Fund or Thrive, are both great firms. Um, you know, there, there are whole, like, sectors that they're not really in. There are entrepreneurs who could build something great that they're happy to miss 'cause, like, as long as they get, you know, the very biggest ones and so forth, and that's not really what we're about. Like, w- if, like, crypto is gonna be important to the, like, financial success of the United States or, like, the, uh, uh-... way AI, AI interacts with the economy and so forth, like, then we gotta-- we're in. Like, what are you talking about? We're gonna ignore that. We need to help that succeed. And like, and it turns out, in a sector like that, it's not just like funding entrepreneurs, it's like helping change the law and get the right policies in the country and these kinds of things. And so our model wouldn't let us ignore something that important. But if what you're trying to do is say, okay, of the like, five best companies of the decade, do I have big positions and enough of them?

Jack Altman 18:56 Yeah.

Ben Horowitz 18:56 That's-- Look, I think that's a good financial strategy. There's nothing wrong with that. Like, go get 'em.

Jack Altman 19:02 Yeah.

Ben Horowitz 19:02 I mean, like, it's good. Like, it's good that they're doing what they do. Um, we work with them on a lot of deals together, but it's just not who we are. Like, you have to be who you are.

Jack Altman 19:09 Is it the kind of thing where like, over time, there's no reason for somebody who's doing the sort of broad base of lots of Series A's and B's and, you know, that, that work? Is it just rational to, if you can raise the money, do billion-dollar checks into those companies when they're really running very far?

Ben Horowitz 19:27 If you look at it historically, like depending on the vintage, um, sometimes, [chuckles] that strategy of waiting for the things to get to the billion-dollar valuation is definitely the best strategy. But in other eras, like, that set of companies just all suck.

Jack Altman 19:47 Mm-hmm.

Ben Horowitz 19:47 And the actual-- all the good investments are in the A, in the seed round because new, something new is happening.

Jack Altman 19:54 Yeah.

Ben Horowitz 19:54 You know, like, uh, the world is changing, and, you know, the big SaaS companies, if you piled all your money in, like Tiger Global, and it did in twenty twenty-one-

Jack Altman 20:02 Yeah

Ben Horowitz 20:02 ... it didn't work out that well. Um, you know, you were kind of at the end of a cycle. Uh, that may work better now, um, we'll see.

Jack Altman 20:09 Yeah.

Ben Horowitz 20:10 TBD.

Jack Altman 20:11 Um, obviously, you were raising, you know, big funds, and you've also like, it's worked. You know, it's like on some level, like if I think about, like when you start any company-

Ben Horowitz 20:20 Mm-hmm

Jack Altman 20:20 ... or maybe any venture firm, too.

Ben Horowitz 20:21 Yeah.

Jack Altman 20:22 It's like you sort of need to have something that you believe that not everybody believes, and that needs to be right. And I would say, like, there's probably multiple, but like, clearly, one of yours that you got to early was like, venture's gonna scale.

Ben Horowitz 20:33 Yeah.

Jack Altman 20:33 And, you know, it looks like that's worked really well so far. Can you talk about, like, the thinking behind why scale is so important and like, why you and Marc have believed that it's like the dominant strategy?

Ben Horowitz 20:45 Yeah. So there-- I, I think there's a couple of different dimensions to it. One is like, what is the market of technology companies? Um, and I think that's really important. And Marc wrote a piece in, I think, two thousand and eleven, called Software is Eating the World. The conventional wisdom in VC at the time was, look, there's fifteen companies in any given year that ever get to a hundred million in revenue, and the whole game is getting into as many of those fifteen as you can. And so why have a big firm if there's only fifteen companies to invest in, [chuckles] right? Like that, that doesn't make any sense. You're just gonna chase a lot of bad stuff. But what he thought then and, and kind of the bet that we made was, well, if software eats the world, it's not gonna be fifteen, it's gonna be a hundred and fifty or two hundred, and that's what it's become. Uh, and so to get into that many great companies every year, you clearly need to be of a bigger size. Like, there's just no way to address the market-

Jack Altman 21:40 Mm-hmm

Ben Horowitz 21:40 ... if you're five guys. That's not possible. I think the more important part of it, which is like a big rationale for starting the firm, was if you're an entrepreneur, um, what do you need? And you need, like, you need to be important in the world, uh, which means, okay, how do I, you know, how, how do I talk to big-time CEOs? How do I get in front of big customers? How do I go international? How do I deal with the US government if I'm in AI or crypto, which is like everybody now?

Jack Altman 22:10 Yeah.

Ben Horowitz 22:11 Like, how do I do all that?

Jack Altman 22:12 How do you have employees take you seriously?

Ben Horowitz 22:13 Yeah, how do I have employees take me seriously? Like, how do I find all these employees? All these kinds of things. There's a lot of capability that you need, and if we can just bring that, you know, that's a much better product than, "I'm a smart guy." [chuckles]

Jack Altman 22:27 Mm-hmm.

Ben Horowitz 22:27 "I'll take you to coffee. I can give you some ideas about your product for two months until, like, I'm irrelevant on that-

Jack Altman 22:33 Yeah

Ben Horowitz 22:33 ... 'cause you've heard all my ideas." And so I think that, like, the, the product of a VC that has a platform and capabilities-

Jack Altman 22:42 Mm

Ben Horowitz 22:42 ... and so forth is so mu-- You know, speaking as a, as a former entrepreneur, I needed all that, you know? And, uh, and to, to me, that's a more important part, and we kinda see that every day. So-

Jack Altman 22:55 Yeah

Ben Horowitz 22:55 ... so that, that part of the idea was really good. Now, the, there is a challenge on, like, mechanically, how do you do that? How do you build a big VC that's still, like, very, very good at every part of it?

Jack Altman 23:05 I want to pull open a couple of those. Um, so one, obviously, that seems like a no-brainer is, like, the big brand and, like, this idea that you, like-

Ben Horowitz 23:12 Yeah

Jack Altman 23:13 ... give the company your brand or you lend it to them until they're big enough, and then, you know, they get bigger-

Ben Horowitz 23:18 Yeah

Jack Altman 23:18 ... and that improves back to the firm, and it's like this positive flywheel. That seems like a big one. These relationships, I think, like you're talking about, are very hard to get if you're, like, a first-time founder. You don't have the relationships with the government, whatever.

Ben Horowitz 23:28 Just really hard to get. Yeah, yeah.

Jack Altman 23:29 Yeah.

Ben Horowitz 23:29 Like, "Hey, I just started a company."

Jack Altman 23:31 I've got regulatory issues.

Ben Horowitz 23:32 "Jamie Dimon-

Jack Altman 23:32 Yeah

Ben Horowitz 23:32 ... can you, uh, have lunch with me?"

Jack Altman 23:34 Yeah.

Ben Horowitz 23:35 Like, good luck.

Jack Altman 23:35 So that's, that's a big one.

Ben Horowitz 23:37 Yeah.

Jack Altman 23:37 One of the ones that I don't feel strongly about but I'm less sure on is, like, the platform stuff, and I'm curious to pull that open a little

Jack Altman 23:45 bit.

Ben Horowitz 23:45 Sure.

Jack Altman 23:45 What are the platform services that you're most confident work, and then what are the ones that you're least confident work?

Ben Horowitz 23:50 I actually think they all work 'cause we've kinda moved away from the ones that didn't work.

Jack Altman 23:55 Can you talk about some of the ones that, you know, that's fine?

Ben Horowitz 23:57 Yeah, I mean, like, so we did some things early, um, where we were publishing sort of... Y- you know, we had this thing where we were gonna, um, have sort of general research ideas or whatever, you know, for the entire, like, start-up community. But, like, it, it turns out that that works really well if you do it for crypto or if you do it for AI. You know, like, we try out all the models-

Jack Altman 24:25 Mm

Ben Horowitz 24:25 ... and so forth, you know, like, and we talk to the companies all the time about, okay, like, which model is best at which, and then we, you know, host models, and we try stuff out on them, and so forth. So, like-... from a tool evaluation standpoint, like we can just accelerate you and-

Jack Altman 24:39 Yeah

Ben Horowitz 24:39 -tell you exactly what's what. Doing that in general, well, like, uh, a lot of things I think that we tried to do across domains, uh, ended up being not as interesting.

Jack Altman 24:49 Yep.

Ben Horowitz 24:50 And that's, you know, that's getting true for talent as well. So like, yeah, a CFO is a CFO for the most part, like a hardware CFO is different than a software CFO, that kind of thing. But that's easy. But like a, an AI researcher-

Jack Altman 25:03 Yeah

Ben Horowitz 25:03 -is pretty different than a full stack engineer. [chuckles]

Jack Altman 25:06 Totally.

Ben Horowitz 25:06 Like that's a different talent pool. They run in different circles. Their comp structures are totally different, and so you have to specialize.

Jack Altman 25:14 I mean, the recruiting stuff is probably-

Ben Horowitz 25:16 Yeah

Jack Altman 25:16 ... at this point for me, just talking to, you know, mostly Series A companies, I think recruiting is, like, the number one thing, they'll just, like: "Help me recruit."

Ben Horowitz 25:23 Yeah. Yeah, yeah.

Jack Altman 25:23 Have you found that, like, you can effectively aim, you know, recruiting teams at companies for specific periods of time, and-

Ben Horowitz 25:30 Yeah, I think it helps to get the seed corn, right? Like, so a lot of what you're trying to do is, can you get the first three to five people in who are stellar and then have networks where you want to draw from? Who your VC is actually matters a lot on that, right? To an engineer, like-

Jack Altman 25:49 It does

Ben Horowitz 25:50 ... cares about like, okay, is this person going away? Is there... Are the-- Is there more money behind this? Have I heard of them?

Jack Altman 25:55 Yeah.

Ben Horowitz 25:56 That kind of thing. So that's a, that's, that's an important feature. I think every company has to ultimately get hyper-proficient at, like, recruiting, closing, interviewing, onboarding, training, or they're never gonna be a good company, so-

Jack Altman 26:15 You're saying to some degree, we're like, you can't do it all for them, or they'll never build the muscle?

Ben Horowitz 26:18 Yeah, at some point, uh, like, you'll end up retarding their growth if you put in, like, their entire team. Now, we've put in-- like, we've probably helped through our network, like Databricks hire, like over a hundred people for sure, over time.

Jack Altman 26:33 But it's like they clearly have their own muscle.

Ben Horowitz 26:34 But not in the beginning, but they're really good at recruiting-

Jack Altman 26:36 Yeah

Ben Horowitz 26:36 ... and so forth and so on. So like now it's just like, okay, people from our talent network are interested in working there.

Jack Altman 26:43 Yeah.

Ben Horowitz 26:43 Um, but that's different than that first... You know, the, the first few people that you hire, th- those are relationships that we have that will introduce you to somebody, and, like, maybe they'll fit, maybe they won't, and so forth. But, like-

Jack Altman 26:56 Yeah

Ben Horowitz 26:56 ... that's a kind of very specific

Ben Horowitz 26:58 thing.

Jack Altman 26:58 How about your view on, like, um, board seats and board membership and, like, how important that is, and maybe to, like, put, like, bookends on what people out there will believe?

Ben Horowitz 27:08 Yeah.

Jack Altman 27:09 You've got, you've got some that are like, "Our selling point is we don't take a board seat, we'll leave you alone, we don't-

Ben Horowitz 27:13 Yeah

Jack Altman 27:13 ... we're not gonna do anything." You've got some that are sort of like, you know, breathlessly talking about this, you know, spiritual connection between the board member and the founder, and there's a lot there. Like, where do you fall in this? How do you think about what, like, the board member-

Ben Horowitz 27:26 [chuckles]

Jack Altman 27:26 -should be?

Ben Horowitz 27:27 I probably don't believe in the spiritual connection. Um...

Jack Altman 27:30 [chuckles] I was sort of maybe embellishing a little bit, but you know what I'm talking about.

Ben Horowitz 27:32 So first of all, boards are important for founders. So, like, the idea that you're gonna run without a board, um, after you've, like, given equity to employees and sold equity to people who are not you, is the most dangerous fucking idea in the world. Because if you know anything about securities laws, the only protection you have as CEO from going to jail or getting personally sued is that you run material ideas through the board. That's a massive protection. Like, if I go: "Well, I want to give a, you know, two percent grant to this person in the company," you have to realize your fiduciary to, like, the rest of the company that you're diluting is in question right there, just that. Um, if you run that by the board, it's all good.

Jack Altman 28:25 Yeah.

Ben Horowitz 28:25 You're completely protected, no problem. If you just make that on your own, somebody wants to sue you, they're gonna win.

Jack Altman 28:32 Mm-hmm.

Ben Horowitz 28:32 Like, you, you really have very little defense at that point. So the idea that, like, you're not gonna have a board is a bad idea. Like, I, I, I think any-- once you start [chuckles] um, not owning the company a hundred percent, you've got to have a board. Like, that's just how it goes. You know, we went back and forth on this, like, okay, how much does, like, the board actually help the company? And I would say, so there's a couple of interesting things. So the Y Combinator people actually said, pr- it, it must have been around like twenty fifteen, twenty sixteen, they came to us, and they were like: "We did, like, an analysis of all our companies who had boards and didn't, and the ones that didn't have boards all failed. Like, they didn't do well. Like, as a cohort, the ones with boards did much better." Now, like that, those- there's confounding factors, right? Like, but, you know, in their view, the other thing was, like, just in observing the companies, the rhythm of having to tell somebody outside of the company what you're doing every three months or every two months-

Jack Altman 29:30 Creates internal pressure

Ben Horowitz 29:31 ... is very valuable. It's just like a good organizing-

Jack Altman 29:33 Mm-hmm

Ben Horowitz 29:34 ... principle to keep yourself on track. So I, I, I believe in that. Uh, and then I do think certain kinds of board members can be very, very impactful at different points in the company. Ju- just with myself, like, right now, if Ali kicked me off the board at Databricks, I'm not sure that, like, they would do much worse. Like, I, I, I honestly don't. However, um, there were times, [chuckles] um, for example, the Series C, I led the Series A, NEA led the Series B. Nobody would do the Series C of that company.

Jack Altman 30:07 Mm-hmm.

Ben Horowitz 30:07 Pete Sunsimie and I led that one, too. NEA and us led the C in addition to the B and the A. If I'm not on the board, like, I don't think there's any way that's happening. Uh, so that's, like, a, an existential issue. Second thing, you know, they had an offer to buy the company for, like, uh, I think it would have netted out to about four billion dollars in twenty eighteen, twenty nineteen, something like that. And had I not been on the board, they-

Jack Altman 30:32 They would have sold

Ben Horowitz 30:33 ... I think they would have sold.

Jack Altman 30:33 That's a big deal.

Ben Horowitz 30:34 Um, and I think Ali would say they would have sold. And so, like, they're worth, um, you know-

Jack Altman 30:39 Hundred billion

Ben Horowitz 30:39 ... they're raising now over a hundred billion dollars. Um, so that's, like, a real value. And so to say that, like-... Oh, all right, we're gonna do you a favor and not be on your board?

Jack Altman 30:49 Mm-hmm.

Ben Horowitz 30:49 Like, 'cause look, when you're in a company, all you think about all day is the company.

Jack Altman 30:52 Yeah.

Ben Horowitz 30:53 You don't have perspective. So if there's somebody who can help you think through things and has perspective, that can be worth the whole thing, right? Like, so, so it's not a, it's not a nothing. I think it's not a... I've seen board members, um, that add no value the whole time they're on the board. Like, that happens all the time, for sure.

Jack Altman 31:13 Yep. Yep.

Ben Horowitz 31:13 Like, so I, so I don't want to overstate it.

Jack Altman 31:14 Well, there's also, um, there's two types of sort of ways to be impactful. There's, there's sort of like these high-value moments that are these discrete, crisp situations that you can say, "X was gonna happen, and I made Y happen, and Y was better," or whatever. And then there's sort of the, like, daily engagement type of board member who's talking all the time and, you know, interviewing candidates, that, you know, the CEO's upset about something, it's somebody to talk to, et cetera.

Ben Horowitz 31:40 Yeah.

Jack Altman 31:40 Do you think that that kind is actually less valuable in some ways, or do you think that they're... Like, do you think about those similarly, differently?

Ben Horowitz 31:47 So there's, there's the board, um, and the work of the board, which is governance, number one, as I [chuckles] kind of alluded to in the beginning.

Jack Altman 31:55 Yeah.

Ben Horowitz 31:55 And then there's kind of certain points and certain things where board members can really matter. You know, I think most of the work that I do is more, you know, like-

Jack Altman 32:06 Pointy.

Ben Horowitz 32:07 ... I'll have, yeah, well, I'll have a monthly call with a CEO just to talk through the things that they get stuck on, like the things, "What's causing you to hesitate?"

Jack Altman 32:16 Does this work n- only at this point, or earlier in your career did you need to do more of the, like, daily, higher, you know, higher engagement model stuff, and only now can you do the, this version?

Ben Horowitz 32:28 Nah, well, look, I think that, um-

Jack Altman 32:30 Part of what I'm getting at actually is I think there's this idea in venture that you can only be on, like, eight boards before you collapse. And then I was, like, talking to Martine, who's, like, on all these incredible companies. The founders say he's awesome, and he's on, like, way more than eight or ten boards or whatever.

Ben Horowitz 32:42 Yeah.

Jack Altman 32:43 And so I'm like-

Ben Horowitz 32:43 Yeah, so, so-

Jack Altman 32:44 ... how do we-

Ben Horowitz 32:44 The, so okay, so I think that if you're the board member and you don't have a platform-

Jack Altman 32:49 Yes

Ben Horowitz 32:49 ... and you're the investor, then eight is probably right.

Jack Altman 32:52 Yeah.

Ben Horowitz 32:52 But if you have a platform, then when they go, "Hey, I need to meet a customer. I need to, like, help with recruiting. I need to, like, deal with this policy issue. I need to talk to, like, Gavin Newsom. I need to deal with-

Jack Altman 33:05 Then Martine can scale.

Ben Horowitz 33:06 Then Martine's not doing that, right? Like, like, we have a whole platform that does that, and, and so he can scale and just do the thing he does-

Jack Altman 33:14 Mm-hmm

Ben Horowitz 33:14 ... and do it very effectively, and then he works extremely hard and all that kind of thing. So, like, I think it's different y- you know, if you have a platform or if you don't, because if i- if it's on you to do, to be the BD guy, the recruiting guy, the policy guy, the y- you know, the governance guy, and so forth-

Jack Altman 33:31 Then you can't work on that many.

Ben Horowitz 33:32 Yeah, you know, like, those guys are... Like, that's a special, um... You know, God bless those [chuckles] VCs and so forth, but, you know, we don't ask you to do that on our thing.

Jack Altman 33:42 Yeah.

Ben Horowitz 33:42 And I, I don't think it's necessary. And, look, uh, I think, like, for the work I do, which is, like, helping people think through, like, how they run the company, how they, you know, think about a business deal or this and that and the other, like, that daily frequency, I think, can be destructive to the development of the CEO. The CEO kind of ends up having to stand alone, uh, because that, like, ultimately they're gonna stand alone, like, no matter... You know, like, y- y- you, you get advice, you get friends, you, you have people unstick you, but you have to have such high conviction in your own opinion to make these very, very difficult pos- decisions, like, "Okay, we've got to do a layoff," or, "We're gonna do this," or, "We're gonna, you know, um, change the direction of the company," that, like, you don't want the CEO looking to somebody from the outside to make a decision like that. 'Cause a person from the outside does not have the correct context, the, the amount of knowledge required to make such an important decision. And so you want the person from the outside, really, it to be advice, like, "Let me tilt this this way so you can look at it from that angle, and this and that, and the third," but not, like, "What should we do, Ben?" [chuckles] You know, like-

Jack Altman 34:52 Yeah

Ben Horowitz 34:52 ... it's, h- it's, "How, how should I think about this?" is a much better question.

Jack Altman 34:56 The last question on this, um, I just wanna sort of hear how your thinking has evolved. You guys came out early, like, I guess two thousand and nine, with this idea that, like, media and brand are a big deal, and I think in many ways, I don't know exactly 'cause I didn't graduate till twenty eleven, but it seems to me like in those years, this was, like, not what was happening versus, like, now, obviously-

Ben Horowitz 35:18 Yeah

Jack Altman 35:18 ... everybody kind of knows it.

Ben Horowitz 35:20 Yeah.

Jack Altman 35:20 Have you evolved your thinking, like, from two thousand and nine to now? Like, are you... Do you b- think it basically played out just like you thought? Do you think it's even more important? Has it... Have you changed your idea of, like, what type of brand and media and so on matters?

Ben Horowitz 35:36 Yeah. Yeah, yeah. So look, I think, um, the original idea was very simple, which is VCs didn't market themselves. Um, it was some kind of, like, code in VC land, and we're like, "Well, since we're new and nobody knows who we are, like, and that's what we know how to do, we're people who build companies, we're gonna market it." And we did, and we did a good job of it, and that kind of got us ahead. The world has changed. The, the world of media is completely different than when we started. When we started, everything... Uh, I mean, there were blogs and stuff, and we had blogs and that kind of thing, but the primary way people got information was through the press, um, for sure. And the rules of the press [chuckles] are, and the laws of physics of the, of the indirect channel going through the press, are completely different than the laws of physics of going direct. The very fixed number of channels that matter-

Jack Altman 36:32 Yeah

Ben Horowitz 36:32 ... um, very fixed format that you, you know, you can have a quote or a short five-minute interview-

Jack Altman 36:37 Yeah

Ben Horowitz 36:37 ... segment where they're, like, hitting you with questions that you don't want to answer and all that kind of thing. And then the brands were all-... companies, you know, Ford, GM, this, that. The indirect world is completely upside down from that. There's unlimited channels. [chuckles] Um, there's unlimited formats.

Jack Altman 36:54 Mm-hmm.

Ben Horowitz 36:54 You can tell the longest or the shortest story you want to, it's no problem. Uh, and then the brands are mostly people, right? Like, is it Palantir? Is it Alex Karp? Is it Elon, or is it X? Is it, you know, like these, you know... Is it Jensen, or is it NVIDIA?

Jack Altman 37:09 Yeah.

Ben Horowitz 37:10 So you can't really have a brand that's completely independent of the people behind the brand. And so I think the way that we're approaching the market now is com- this is why we brought on, uh, Eric Torenburg, and what he's building is a completely new marketing model for us, um, we're not- everything is different because the laws of physics are different, so you have to build a whole new system. And look, I, I think that what's happened [chuckles] with the other VCs is, because they were late to copy us, they're still in the old world, by and large. Um, and they have some, like, you know, light shots at the new world-

Jack Altman 37:50 Mm-hmm

Ben Horowitz 37:51 ... but they're gonna have to do a lot of changing to, to kind of catch up.

Jack Altman 37:52 It's also the kind of thing, I think, where if you don't internally get what it's all about, you can't just replicate people's activities. I feel like this is one of those things where you have to understand, like, the underlying physics of how it's working.

Ben Horowitz 38:03 No, that, that's exactly right. You know, there, the, the ethos of it, it- it's, like, very culturally different.

Jack Altman 38:08 Yeah.

Ben Horowitz 38:09 Like, y- you're no longer thinking about what you shouldn't say. Right, like, so much of the old world was, "What can I not say?"

Jack Altman 38:15 Yeah.

Ben Horowitz 38:15 "How do I avoid answering that question? How do I give the talking point?"

Jack Altman 38:19 Totally.

Ben Horowitz 38:19 Like, there are no talking points in this world.

Jack Altman 38:21 Totally.

Ben Horowitz 38:22 You know, like, I'm just talking shit-

Jack Altman 38:23 Yeah

Ben Horowitz 38:23 ... and that's better.

Jack Altman 38:24 And if you, like, offend somebody a little bit-

Ben Horowitz 38:25 Yeah

Jack Altman 38:25 ... it's like, so be it. Yeah.

Ben Horowitz 38:27 Yeah, like, I mean, you just get on the air tomorrow. [chuckles]

Jack Altman 38:30 Yeah.

Ben Horowitz 38:30 The next minute, just like it's a flood, flood the zone.

Jack Altman 38:33 Yeah.

Ben Horowitz 38:33 Like, that's the answer to a gaffe, is flood the zone, not don't make the gaffe, right?

Jack Altman 38:37 Yeah, exactly.

Ben Horowitz 38:38 Yeah.

Jack Altman 38:38 Never apologize, flood the zone.

Ben Horowitz 38:40 Yeah.

Jack Altman 38:40 Does anything land as well as podcasts right now? I feel like, um, you guys have, like, had an amazing growth in your podcasting, obviously.

Ben Horowitz 38:47 Yeah.

Jack Altman 38:47 And it's like I watch a lot of them, and they were good, and-

Ben Horowitz 38:50 Yeah

Jack Altman 38:50 ... obviously, I'm doing one. And, like, it seems to me like there is something going on where people have, like, lost their attention and ability to read, and so we've all-

Ben Horowitz 38:58 [chuckles]

Jack Altman 38:58 ... just decided, well, we'll just put out videos and stuff.

Ben Horowitz 39:00 Yeah, I think po- podcasts are definitely working the best right now. I mean-

Jack Altman 39:05 Like, do people read blogs still?

Ben Horowitz 39:06 I expect it'll change. People do read blogs if you have one that really hits. Um, I, I mean, actually, we just, uh... There's a couple of really great ones that we came out with. One was, um, you know, there is why there's no God video model, um, like that kind of like, Justine wrote that.

Jack Altman 39:22 Mm-hmm. Yeah, the good ones are good.

Ben Horowitz 39:23 Yeah.

Jack Altman 39:23 I feel like the, um-

Ben Horowitz 39:24 But, but-

Jack Altman 39:24 ... the long tail slop ones are not worth doing, really.

Ben Horowitz 39:27 Yeah, the write a blog every day idea-

Jack Altman 39:29 Yeah

Ben Horowitz 39:29 ... I, I don't think that works anymore.

Jack Altman 39:31 Where it used to-

Ben Horowitz 39:31 Yeah

Jack Altman 39:31 ... I think, just to, like, have more content and surface area, it probably did work like fifteen years ago.

Ben Horowitz 39:35 Yeah, it was like, kind of like the daily habit, but I think that now people would rather just like, "Oh, I can do a pod- read-

Jack Altman 39:41 Yeah

Ben Horowitz 39:41 ... a podcast and exercise." [chuckles]

Jack Altman 39:43 Totally.

Ben Horowitz 39:43 You know, like-

Jack Altman 39:44 Yeah

Ben Horowitz 39:44 ... and that kind of thing, which is like, uh, it's a big advantage.

Jack Altman 39:46 Yeah, it's a big advantage.

Ben Horowitz 39:47 Uh, now, with the Eleven Labs reader, you can just throw it into the, uh, uh, the Eleven Labs reader, and it can read to you.

Jack Altman 39:53 What works besides podcasts?

Ben Horowitz 39:54 Um, well, I actually think blogs and social media-

Jack Altman 39:57 And social media, of course

Ben Horowitz 39:57 ... still work pretty well. I think that, you know, with podcasts, you have to be state-of-the-art in how you think about clips and all those kinds of things as well. The, the podcast has to be very interesting to the targeted audience, which is... I, I think one of the things that has been best for me as an audience member is, you know, if you watch the news, it's almost impossible, right? Like, it's without throwing a chair at it, no matter who you are, 'cause it's like, what the fuck level are they trying to reach a human being? Like, th- they really think they're gonna trick me with that? Like, like, fake positioning on like-

Jack Altman 40:33 It's, it's pretty- [chuckles]

Ben Horowitz 40:33 ... "Oh, well, da, da, da, da." Like, I asked him the question this way, so now everybody's gonna-

Jack Altman 40:38 Yeah

Ben Horowitz 40:38 ... like, hate Trump, or everybody's gonna like Trump. It's like-

Jack Altman 40:41 It's especially-

Ben Horowitz 40:41 ... now I'm not an idiot.

Jack Altman 40:42 Yeah.

Ben Horowitz 40:42 Like, you know, whereas a podcast-

Jack Altman 40:44 Mm-hmm

Ben Horowitz 40:45 ... if I'm listening to the podcaster that's marketing to my level of understanding of the world, then I'm gonna enjoy the whole thing-

Jack Altman 40:53 Yeah

Ben Horowitz 40:53 ... which is such a breakthrough-

Jack Altman 40:55 Totally

Ben Horowitz 40:55 ... in media to me.

Jack Altman 40:56 Yes. For me, at least, to enjoy a conversation I'm watching, I need to trust both the asker and the answerer.

Ben Horowitz 41:02 Yeah.

Jack Altman 41:02 Or it just doesn't feel quite right.

Ben Horowitz 41:03 Right.

Jack Altman 41:03 It drives me nuts on the news when you know something about it, too, and you know it's just wrong.

Ben Horowitz 41:07 Yeah.

Jack Altman 41:07 And then they're going off, and everyone's posting about it. It makes me crazy.

Ben Horowitz 41:10 It's so bananas, yeah.

Jack Altman 41:12 Yeah.

Ben Horowitz 41:12 Uh, well, I mean, and particularly, by the way, everything in the regular media on AI is so whack. Bro, you, you... So, like, you're talking about these threats that are imaginary, and then you are just ignoring the fact that, like, on current course and speed, we're gonna have ten million Chinese robots in the US with backdoors [chuckles] to China. Like, that's gonna be an actual, real problem.

Jack Altman 41:35 Yeah. Yeah.

Ben Horowitz 41:36 [chuckles] You know, like, just on terms of leverage in the-

Jack Altman 41:38 Yeah

Ben Horowitz 41:38 ... in the next, uh-

Jack Altman 41:39 Yeah

Ben Horowitz 41:40 ... trade negotiation.

Jack Altman 41:40 Yeah. It's tough, 'cause a lot... I mean, in, in, in many ways, structurally, I think traditional media gets a lot off. I do think there's a lot of very good journalists at these publications who, like, see truth and, like, want to be right and, like, get it correct and all of that stuff. So I, like... I think, like, a year ago, I found myself just, like, so frustrated with traditional media, and then over the last year, I think I've, like, engaged with, like, a bunch of, I think, like, very honest, good journalists.

Ben Horowitz 42:06 Yeah, there are definitely-

Jack Altman 42:06 So it's there

Ben Horowitz 42:07 ... there, there are definitely real journalists out there, even at publications who, you know, we in tech really don't like.

Jack Altman 42:14 And I think there's a role for it.

Ben Horowitz 42:14 There are, and there are good ones, yeah.

Jack Altman 42:16 Like, there is a role for, like, The New York Times, Wall Street Journal, that don't, you know, are not attached to, like, a, a firm, even though I think both are good. It's just, like, I still think it hasn't found its way yet, the whole thing.

Ben Horowitz 42:26 Yeah, and we did it to them to some extent, right? Like, so when tech, uh, broke the media monopolies, so they were coming from the standpoint of, you know, we're not- we don't even care about the economics of it, because the economics are gonna be there. And so we're gonna have these- we're gonna create these ideals around journalism and around truth and all the news that's f- fit to print and, you know, like, democracy dies in the darkness or whatever the crazy-

Jack Altman 42:50 [chuckles]

Ben Horowitz 42:50 ... you know, taglines they have are. And so they set themselves a standard, very high standard, and then all of a sudden-... they're in a, like an existential financial crisis, uh, and they have to get to an audience, and now they're going, "Well, going to a broad audience is just way too hard and way too expensive, so I'm just gonna market to people who are on the left."

Jack Altman 43:13 Yeah.

Ben Horowitz 43:13 "And so then I gotta be an activist." And so then all this stuff that I said before is all bullshit now. That's a hard puzzle.

Jack Altman 43:20 Totally.

Ben Horowitz 43:20 And I think that a lot of the best journalists kind of predated that change, um, and kind of grew up with, you know, in that, with those ethics, that like, "Oh, no, I've got to be objective. I have to find the real story. I have to tell the real story," but that's not the business model anymore. So how do you reconcile that? I think, like, right now, people are kind of coming out of the fever of that change-

Jack Altman 43:42 Mm-hmm

Ben Horowitz 43:43 ... and going, "Okay, are we gonna be an activist, or are we gonna be a journalist?" And, um, we'll see how it plays out, but it, it's gonna be interesting.

Jack Altman 43:50 It's kind of interesting 'cause, like, I think Eric's amazing. You guys are now growing to a place where you have the resources to, like, bring people like Eric on to build, like, a big-

Ben Horowitz 43:58 Yeah

Jack Altman 43:58 ... thing. At some point, as your firm grows even more, you're gonna have the resources to, like, really, you know, you're gonna have more resources than The New York Times at some point, and it'll just be an interesting thing to watch. [laughing] Just like...

Ben Horowitz 44:08 Yeah, yeah. Yeah, no, it's well, it's, it's, uh-

Jack Altman 44:11 Shout out to Eric hiring, like, a thousand people. This will be great.

Ben Horowitz 44:13 Yeah, yeah, yeah. No, he is, uh, he's, he's hiring a lot of people. But there, you know, like, the thing about Eric's team that's so amazing is it's a combination of people who lived in the old world-

Jack Altman 44:22 Yeah

Ben Horowitz 44:22 ... um, and then very young people who only have lived in the new world.

Jack Altman 44:27 Well, I imagine-

Ben Horowitz 44:27 Yeah, yeah

Jack Altman 44:27 ... there are a lot of people who might have otherwise wanted to work at, like, The Wall Street Journal or something like that, who might, like, give Eric a call.

Ben Horowitz 44:33 No, definitely. I mean, I think that, I think in a way, he's got more access to more interesting people, um, and, uh, and certainly the audience is building, so that could

Ben Horowitz 44:44 be-

Jack Altman 44:44 Thinking about your sort of firm's growth, um, I wanna ask you sort of a question both on, like, um, the strongest version of, let's call it big venture. I know that's not quite the right thing 'cause I think it's a very negative-sounding word, but whatever. Um-

Ben Horowitz 44:57 [chuckles] Good venture.

Jack Altman 44:58 Good-

Ben Horowitz 44:59 I call it good venture.

Jack Altman 44:59 Yeah, instead of big, good venture.

Ben Horowitz 45:01 Yeah.

Jack Altman 45:01 So actually, let's start there. Obviously, you're, you've raised, like, you know, a big new fund. Um, I think, you know, I'm guessing your view is, over time, this could grow much more. What are the laws of physics on the size of how big venture firms can get and still be productive?

Ben Horowitz 45:14 The biggest limit is the market. So how many great new technology entrepreneurs are there, um, to fund? Look, there, there's already more money in the venture capital market than there are kind of great entrepreneurs with great ideas. But if you're number one, then that's fine, like, 'cause, like, we'll just get the deals anyway, and it's no problem. If you ask me, "Well, why don't we raise a hundred billion dollars?" Like, that's the main limit, um, because it would be hard to generate a return on a hundred billion in venture capital, probably, uh, given the size of the market, like, in twenty twenty-

Jack Altman 45:48 Basically, you're saying the companies won't be big enough.

Ben Horowitz 45:50 Well, I, I think there just won't be enough of them. I think that's the most likely, it would be the most likely scale challenge for us.

Jack Altman 45:58 Yeah.

Ben Horowitz 45:58 That, like, you know, at least with the team that we've built, when we look at the markets that we're in, it's hard to see our way to, like, an order of magnitude more money. But, you know, that could change, but that's the current-- I'd say that's the current kind of number one limiter.

Jack Altman 46:13 Mm-hmm.

Ben Horowitz 46:13 I think the limiter on most funds or most firms is not the limiter that we have. Uh, so for most firms, the limiter is they can't kind of have that many effective partners.

Jack Altman 46:28 Cooperating.

Ben Horowitz 46:28 Yeah, cooperating. There's two fundamental reasons for that. One is structure. So most venture capital firms are, uh, shared economics, shared control structures.

Jack Altman 46:40 Mm.

Ben Horowitz 46:40 And if you have shared control, you very likely can't reorganize effectively. So, uh, in order to scale, you have to be able to change the org structure. Like, it's just kind of fundamental to scale.

Jack Altman 46:52 You're saying you need to periodically update. Like, every few years, you might need to do a reorg.

Ben Horowitz 46:57 Yeah, yeah. Um, just, you know, like, if you double in size, anybody who runs a company, you double in size, like, you have to look at the org structure and see if it still works, if the communication paths are still right, if there's too much conflict, all that kind of thing. The side effect of reorganizing is you redistribute power, and so people who had power lose power, and people who didn't have power get power. Like, it's just that, that's what it is. And if you're voting on that, the chance of you getting that right is zero because having done many reorgs in my career, when a reorganization happens, people always do-- everybody does a local optimization other than the CEO.

Jack Altman 47:33 Mm.

Ben Horowitz 47:33 And so if the CEO gives in to the needs of the people [chuckles] um, and makes it democratic, uh, then you're done. Like, that's never gonna work. So I think it's very hard. I don't know how I'd-- you could ever get to, like, our size with, you know, shared control. It'd be very tough. The other thing you need, uh, is you do need a leader who's, can deal with that kind of scale-

Jack Altman 47:58 Mm-hmm

Ben Horowitz 47:59 ... um, in terms of making those decisions and, and running the firm. And most VCs don't have people of that kind of operational caliber, like some do, but, like, it's pretty rare, and if they do, they're often not in charge.

Jack Altman 48:12 Yeah.

Ben Horowitz 48:13 Um, so, so we have, like, those are the two advantages that have led us... I mean, we're only now sixteen years old. Like, most of the firms we compete with are much older than that. But that, those, those issues have enabled us to get bigger-

Jack Altman 48:26 Yeah

Ben Horowitz 48:26 ... is basically the, the

Ben Horowitz 48:28 situation.

Jack Altman 48:28 And basically, your view is being big in venture makes everything better because you can scale people like Martine and Chris, you can have more access to more power, you have a bigger brand, you can lend to founders, and basically, your view, I am assuming from everything you've shared and just how you're running the firm, is the bigger you get, actually, it's possible the better per dollar that you might be able to do.

Ben Horowitz 48:49 I think so. I mean, I think that it's kind of-- I mean, like, you know, we've got a sixteen-year track record. We just raised fifteen billion dollars. Like, I, I think the product to investors is, kind of speaks for itself. But look, I think in venture capital, just generally, the way you... There's kind of two-... parts to getting good returns, like picking the right deal and winning it.

Jack Altman 49:08 Mm-hmm.

Ben Horowitz 49:09 I think it turns out that winning it, [chuckles] uh, is a much bigger percentage of that equation than people, like in VC world, like to give credit for, 'cause they like to think of themselves as such super genius. "Oh, I saw F- I saw Facebook early," da, da, da.

Jack Altman 49:24 Mm-hmm.

Ben Horowitz 49:24 That, that's a real thing. Um, but, you know, if you can't win it-

Jack Altman 49:30 Yeah

Ben Horowitz 49:30 ... then you're still never gonna have good returns. And so being able to win kind of automatically, I would say, gets you to the top tier of returns, and then, you know, picking kind of moves you up that list.

Jack Altman 49:42 You're saying you could be-

Ben Horowitz 49:43 Yeah

Jack Altman 49:43 ... a roughly random picker or an average picker, let's say, and a great winner, and that's gonna get better returns than the inverse?

Ben Horowitz 49:51 Yes. For sure.

Jack Altman 49:53 At all stages?

Ben Horowitz 49:54 Yeah, I, I, I think at all stages. And, and it also kind of- th- they kind of- it's a little self-fulfilling in that, um, if you can win-

Jack Altman 50:02 Mm-hmm

Ben Horowitz 50:02 ... then the best pickers wanna join you.

Jack Altman 50:05 Mm-hmm.

Ben Horowitz 50:05 It's like, as an investor, like, why does Martine work here? You know, why does Chris Dixon work here?

Jack Altman 50:10 'Cause it makes it easier to win.

Ben Horowitz 50:11 Yeah, 'cause, like, they want their best ideas. They wanna actually be in the deals they wanna be in.

Jack Altman 50:17 Yeah.

Ben Horowitz 50:17 [chuckles] Right? Like, if you're an investor, and you go, "Hey, I think that's the future. I think that's the greatest entrepreneur I've met," and you can't invest in it, like, that's very frustrating.

Jack Altman 50:27 Yeah.

Ben Horowitz 50:27 Uh, so then you end up... the, the be- the winners get the best investors over time, I think.

Jack Altman 50:33 It's an interesting thing because, um, I was talking to somebody recently that it's actually really rare for a venture firm to have two, what you would consider, like, generationally good investors. Like, almost never happens.

Ben Horowitz 50:45 Yeah.

Jack Altman 50:45 And then it's, like, ridiculously rare to have three. And, like, if you have three, then you're like, you know, Sequoia Andreessen, basically.

Ben Horowitz 50:51 Yeah.

Jack Altman 50:51 Why is it so hard to get many at one place? Like, it just seems so uncommon, and it seems like... I don't know, is that a function of winning ability, or is that a function of picking ability? Like, what is it that makes it so hard? Like, why don't-

Ben Horowitz 51:03 Yeah

Jack Altman 51:03 ... you and Sequoia just end up with, like, everybody?

Ben Horowitz 51:06 Well, I think that there just aren't that many [chuckles] generationally good, right? By definition, right, like, if you're generational, then-

Jack Altman 51:13 Sure

Ben Horowitz 51:13 ... there's only, like, one of you or two of you a decade.

Jack Altman 51:14 Okay, but let's say, like, top fifty or something. Yeah, whatever. Yeah.

Ben Horowitz 51:17 Yeah, no, look, I think that, one, I, I mean, like, some of it's historical, right? Like, once you get the nice thing about VC economically, if you run one, is carry vests.

Jack Altman 51:27 Yeah.

Ben Horowitz 51:28 And so, like, if you made a bunch of good investments somewhere, like-

Jack Altman 51:31 You wanna stay

Ben Horowitz 51:31 ... you start your career, you generally wanna stay. I'd say the other thing, at least for us, is th- there's a lot of, or, or there's great investors that we could probably recruit from other firms, but we're so different culturally than the rest of the VC world, that we've had a lot of trouble getting people to stick here who have worked at other firms. It's just, the mentality is so different.

Jack Altman 52:02 Mm.

Ben Horowitz 52:02 Um, and not to say that their way is wrong or our way is wrong, but it's different enough that, like, we can't import them. [chuckles]

Jack Altman 52:10 Makes sense.

Ben Horowitz 52:10 You know, they're not willing to assimilate. [chuckles]

Jack Altman 52:12 Yeah, yeah, yeah.

Ben Horowitz 52:13 Um, we're not willing to change. It's that kind of thing,

Ben Horowitz 52:15 yeah.

Jack Altman 52:15 Could you give your best articulation or best steel man of, like, the counter to this idea of venture scaling? Like, if you had to defend the view of, like, a, you know, I've had, um, Peter at Benchmark or Josh at First Round, to some extent, you know, um, Sequoia, you know, have said there's limitations. What is sort of, in your mind, if you had to give the best version of the argument for, like, why a venture doesn't scale or why small is better in any way? Like, could you give that narration?

Ben Horowitz 52:42 Yeah, I, I mean, I think that there, there are kind of configurations where that is true, right? Like, so, you know, as I said, look, if you have shared control, you, you just can't get past a certain size before it becomes some chaotic, crazy democracy, which, like, democracies are great for, like, if you've got three hundred and fifty million people, but, like, they- they're not good if you're a [chuckles] venture capital firm. It's, it's just not good. Uh, at least in terms of scale, it's, it's not gonna work. It's, it's fine if you don't scale. The second thing is, if you have, like, twenty people on an investing team, I, I, I don't think that works, 'cause I, I don't think that's a conversation anymore.

Jack Altman 53:18 Mm-hmm.

Ben Horowitz 53:18 And so, so much of investing is about, like, you're trying to find the truth, right? Like, you're, you're working every day, you have these conversations, and you're talking to entrepreneurs, and you're talking to all the references, and you're talking to customers, and you're understanding the technology, and this and that, and you're having this long, long running conversation about like, okay, what is true? Like, is there gonna be a God model, or does like... Can I, like, take a little model and post-train it with my own data and beat the piss out of OpenAI? Like, I- w- what's the answer to that question long term?

Jack Altman 53:48 Mm.

Ben Horowitz 53:48 What's the answer to that question today? Like, we've got to get it to that. How do you have that conversation with twenty people? Like, it's, it's very hard. So I think that if you're configured, um, in that kind of way-

Jack Altman 53:58 Yeah

Ben Horowitz 53:59 ... then, then being large is dangerous, I think, very dangerous. So, you, you know, there are reasons [chuckles] um-

Jack Altman 54:08 Yeah

Ben Horowitz 54:08 ... if you don't, if you don't have the ability to scale in a way that makes you... L- like, our investing teams all look like small VCs. I mean, like, so Martine's team or Chris's team-

Jack Altman 54:20 Yeah

Ben Horowitz 54:20 ... or Alex's team, they, they, they all look like a little VC.

Jack Altman 54:23 Right.

Ben Horowitz 54:23 So, so in some ways, I'm all for that model. Um, I'm just doing it in a context-

Jack Altman 54:28 Yeah

Ben Horowitz 54:29 ... where you have a platform and a brand that can be helpful to entrepreneurs-

Jack Altman 54:32 Yes

Ben Horowitz 54:32 ... more so than, you know, just, you know, having a person.

Jack Altman 54:36 Yeah, makes sense. I guess maybe to wrap, I think one of the other tenants, at least when you got started, which I think is still roughly a tenant today, that I think is, like, core, was you really believed in hiring ex-founders, CEOs. I'm sure you've hired some people who are not, but for the most part-

Ben Horowitz 54:52 [chuckles]

Jack Altman 54:52 ... it seems like you're very-

Ben Horowitz 54:52 In the beginning, yeah.

Jack Altman 54:53 Yeah, very concentrated. At least, you know, it seems like a lot of the DNA is rooted in that, at least.

Ben Horowitz 54:58 Yeah.

Jack Altman 54:58 Why has that been, like, important

Jack Altman 55:00 to you?

Ben Horowitz 55:00 Yeah, so, you know, when we started the firm, like, a big idea that we had, um, and, and I, I'd say this idea mostly came from me, was that venture capital was disappointing.... as a product for an entrepreneur. The reason, like, I know we had a very hard time building, like, Loudcloud Opsware, um, although it ended reasonably well. It's just, like, a very, very difficult to build a company, like, excruciatingly difficult, and there's all these components to it, and all these things you have to learn, and then things go wrong that are completely out of your control, like the dot-com crash or, you know, that kind of thing. Venture capital firms kind of give you the money and then put a very smart person on your board, um, and give you some advice, and that was, like, it. And so we always thought, "Wow, a much better product would be, give me, like, the network to be confident and the advice I need to run this fucking thing." Really early on, the way we thought about that was, okay, some experience required to be on your board. You have to have, like, done this thing before to advise me. Don't just, like, send me, you know, somebody who doesn't know how to do that. So that was the original idea. That idea turned out to be somewhat right, but not entirely right. So the problem with the way we did it is some founder CEOs are good at being founder CEOs, but not good at explaining what the hell it was they did, and then they may also not be that interested in investing like they were at running something, right? Like, it's a little bit of... If you've, [chuckles] there's a feeling you have if you have a thousand people working for you or whatever, that you're never gonna achieve as an investor. Like, that's just, like, that, that's not that.

Jack Altman 56:42 Yeah.

Ben Horowitz 56:43 Um, it's a different thing. You know, we made kind of the adjustment, we're like, "Okay, like, yes, advice on how to run a company is important," but like, you know, and that's when I was like: Okay, so I'll write some books that explain it, and then you can talk to me, [chuckles] who knows how to explain that.

Jack Altman 56:58 Yeah.

Ben Horowitz 56:59 But we're not gonna... Everybody in the firm is not gonna have to be that. That was, I think, a very important adjustment for us.

Jack Altman 57:05 Would you write another book?

Ben Horowitz 57:07 Uh, well, if I have another thing that I think I understand that people don't understand, like, I won't do it, [chuckles] uh, to be, like-

Jack Altman 57:14 Yeah

Ben Horowitz 57:14 ... popular or make money.

Jack Altman 57:15 You don't want to write a book to make some more money?

Ben Horowitz 57:16 No. [chuckles]

Jack Altman 57:17 That wouldn't be the driver?

Ben Horowitz 57:18 No. Although that book does well, you know.

Jack Altman 57:19 I'm sure.

Ben Horowitz 57:20 The Hard Thing About Hard Things is a very, uh-

Jack Altman 57:21 Yeah

Ben Horowitz 57:21 ... good seller. I gave away all the money for it, but it's, um, it, it does well, yeah.

Jack Altman 57:25 Yeah. Cool. All right, Ben, I'm gonna let you go. Thanks a bunch for doing this. This was great.

Ben Horowitz 57:28 Yeah. All right.

Jack Altman 57:29 Thanks.

Ben Horowitz 57:29 Awesome. [upbeat music]