Skip to content
Uncapped with Jack AltmanUncapped with Jack Altman

Inside a16z’s $1.25B Infra Bet | Martin Casado, General Partner at a16z | Ep. 23

(If you enjoyed this, please like and subscribe!) Martin Casado is a general partner at a16z, where he leads the firm’s $1.25 billion infrastructure practice. Martin has led investments in Cursor, dbt Labs, and Fivetran to name a few. Prior to joining a16z in 2016, he was the co-founder and CTO of Nicira, which was acquired by VMware for $1.26B. While at VMware, Martin was the SVP and GM of network and security, which he scaled to a $600 million run-rate business. Martin started his career at Lawrence Livermore National Laboratory where he worked on large-scale simulations for the Department of Defense before moving over to work with the intelligence community on networking and cybersecurity. We covered: - What necessitates specialization - The conflicts dynamic - Infra vs app companies - Importance of open source - The only sin in VC Timestamps: (0:00) Intro (0:27) Importance of media for VC (3:50) Evolution of a16z (7:00) Specialization (10:32) Value of distribution (13:16) Staying power in infra (19:49) The conflicts dynamic (26:32) State of play in AI (30:48) The future of coding (34:58) Significance of open source (39:48) Marc Andreessen’s leadership (44:02) The only sin in VC (48:37) Scaling a lot of board seats More on Martin: https://a16z.com/author/martin-casado/ https://x.com/martin_casado More on Jack: https://www.altcap.com/ https://x.com/jaltma https://linktr.ee/uncappedpod Email: friends@uncappedpod.com

Martin CasadoguestJack Altmanhost
Sep 3, 202552mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 0:27

    Intro

    1. MC

      The market is so big, and it's growing so fast, even companies that seem like they're competing end up in totally different places, just 'cause so much white space is being created. But they're all competing, like, totally different companies and spaces are competing for the same talent.

    2. JA

      Talent, yeah.

    3. MC

      So the first time-

    4. JA

      Yeah

    5. MC

      ... I can remember where the actual talent competition is, like, way more fierce. [upbeat music]

    6. JA

      Martin, I'm really excited to be doing this here with you today.

    7. MC

      Same.

    8. JA

      Thanks for making time for it.

    9. MC

      Yep, yep.

    10. JA

      And, um, one of the things that I was just, uh, chatting with you and laughing about, on

  2. 0:27 – 3:50

    Importance of media for VC

    1. JA

      my way in, there were, like, many other podcasts going. There's, like, one, like, before and after us.

    2. MC

      Yeah.

    3. JA

      And I talked about this with Mark-

    4. MC

      Yeah

    5. JA

      ... about how, like, podcasts are, like, this future thing-

    6. MC

      Yeah

    7. JA

      ... of, of media. And basically, my question for you is sort of like, as somebody who's been on the inside of a firm that's dominated this, you do a lot of it yourself-

    8. MC

      Yeah

    9. JA

      ... like, what's your experience about, like, the importance of media for venture capital?

    10. MC

      So I think it's probably important to recognize that it's never been a thing, really. Like, if you look at a lot of historically good investors, they weren't very public. Like, think about, like, the, the greats, like Moritz, Ping Li, Doug Leone, Benton, Mike Volpi. Like, they're just not very public, and so historically there's been no correlation to being between public or not.

    11. JA

      Yeah.

    12. MC

      I think a couple of things have changed in that time. Um, one of them is the traditional media just turned on tech, and it hates tech, right?

    13. JA

      Yeah.

    14. MC

      And so in the past, you know, when I was a founder, to get a po- uh, like, a, a lukewarm to positive article was pretty straightforward, and the VCs would help with that. Like, you know, they would know a few reporters. It was very easy. But now it's actually very dangerous because, like, you go talk to them, and, like, who knows what they're gonna say? And so in a way, like, if you wanna help a portfolio, you do wanna build a bit of a platform. You do have to go straight. So I, I, I think that's one thing that's changed. The second thing is... [exhales] So if you're traditionally an enterprise, take from the enterprise standpoint, like, marketing has been something that you build brick by brick, right? And it's like you put content out there, and people read it, and, like, it's durable over time, and so you get this kind of compendium, and you build a brand over time. And it feels we're in an era now where it's just become so episodic that if you don't understand, like, the current zeitgeist, you just can't even get a voice at all. And by episodic, I mean, like, today, GPT-5 launched, right? It was, it was, it was massive. Like, if you didn't know that that was gonna happen, you would've been drowned out, and if you did know, you could draft on it. And so, and then, and then it just feels like for some launches, they go, they're a big deal, and then they just disappear forever. So I just... So much of the nature of how we consume and think about content has changed, and so I do think that venture capitalists, one, they need to, like... If they have a message they wanna get out, they kind of have to go direct because, I mean, if it's your own platform, it doesn't hate you. That's one.

    15. JA

      [chuckles]

    16. MC

      But then also to help your portfolio company, I think you need to build an in-house capability, so, like, they can know how to, like, most effectively message, and you can't really borrow a page from traditional marketing. And this is from someone that's come very much from the age of traditional marketing.

    17. JA

      Yeah.

    18. MC

      It's just different.

    19. JA

      Yeah, I mean, one of the things that I've been very surprised by is, you know, there's always room for, like, another podcast or something like that.

    20. MC

      Yeah.

    21. JA

      Like, um, like, people consume a lot of this stuff-

    22. MC

      Yeah

    23. JA

      ... and I think people in tech find it sort of like a, it's almost like a halfway between working and, like, watching Netflix, where it's like, "I'm passively learning-

    24. MC

      Yeah

    25. JA

      ... but it's, like, low stress," and people would, like, rather consume a good podcast than, like, a new Netflix show.

    26. MC

      Yeah, for sure. And I'll also say, like, there's always a concern that there's too much content, but that been- concern has been around forever. There's always been too many books to read. There's how many... And too much, like, you know, TV to watch. There's always been too many web pages to read, et cetera. So it's always been an ordered list that starts with the most important and goes to infinity. So the question has always been: How do you be in, like, the top 10 or the top 20?

    27. JA

      Yeah.

    28. MC

      And that, that changes all of the time. I do think you're right. I think people like to consume things that they can consume casually-

    29. JA

      Yeah

    30. MC

      ... that is relevant to their interests, and so it's actually [chuckles] a great time now that you can actually be in that top 10 for the set of people that, that you

  3. 3:50 – 7:00

    Evolution of a16z

    1. MC

      care about.

    2. JA

      Totally. Uh, so I wanna talk about your time-

    3. MC

      Yeah

    4. JA

      ... at Andreessen and, like, what's evolved-

    5. MC

      Yeah

    6. JA

      ... which has obviously been, like, a lot.

    7. MC

      Yeah.

    8. JA

      Um, can you sort of give the picture of what it was like when you joined?

    9. MC

      Well, so when do you wanna start, when I joined as a f- when I was a founder or when I actually joined as a GP?

    10. JA

      Maybe when you joined as a GP, but then let's connect it back to when you, you were-

    11. MC

      Okay. So when I joined, it was, it was 2016, so I've been here almost 10 years.

    12. JA

      Yep, that's a lot. [laughing]

    13. MC

      [chuckles] I know, wild. So, um, uh, so I think it was the ninth general partner. I think the firm has 75 people. Um, not only were we all generalists, like, you know, you could do whatever you want. That was kind of part of the pitch.

    14. JA

      Mm-hmm.

    15. MC

      You know, you could kinda do whatever you want, but, like, most of us had done some pretty serious time operating. Like, my journey of my startup was about 10 years-

    16. JA

      Yeah

    17. MC

      ... let's call it. Um, and so many of us, like, we're so tired of the space we came from, we did something totally different. [chuckles]

    18. JA

      Yeah.

    19. MC

      You know, like-

    20. JA

      Yeah, totally

    21. MC

      ... you know, and so it was very, very different than that. So generalists, few people in the firm, and then actually the investing team alone, you, you really had GPs-

    22. JA

      Yeah

    23. MC

      ... and we were all the same, and then you had relatively junior partners that couldn't write checks, that actually would bounce between the GPs. Like, so there's no alignment at all. So it's a very, very different structure.

    24. JA

      So I guess one of the things that's interesting then over the evolution is that, you know, it started in this generalist version-

    25. MC

      Yeah

    26. JA

      ... and now you're running a distinct platform.

    27. MC

      Yeah. Yeah.

    28. JA

      And the way the firm is shaped is-

    29. MC

      Yeah

    30. JA

      ... there's a ton of autonomy. You know, Marc was talking about this on the podcast-

  4. 7:00 – 10:32

    Specialization

    1. JA

      to, do you have to become specialist as the market grows or as the firm grows? In other words, is that, is the specialization choice downstream from growing the firm, or do you think it's downstream from the market growing?

    2. MC

      I think it's ultimately the function of the market, and I'll describe why. So if you believe that this stuff is competitive, right, which I do, then you need to end up with a product that is, that is competitive. And because it's adaptively competitive, like, let's say you've got two firms that are competing, you're always gonna be looking at, like, what the weakness of the other one is.

    3. JA

      Mm-hmm.

    4. MC

      And so, like, for example, if, um, a certain firm can't do seed, then of course, you know, you'll wanna do seed, or if they can't do large checks, you wanna do large checks. What happens is everybody ends up getting as many products as they can so that they don't have any weaknesses, which will naturally happen. Now, you can only do that if the market is large enough. And so now you have a, a high AUM, right? You've got a lot of products. I've got a growth fund, I've got a seed fund-

    5. JA

      Yeah

    6. MC

      ... I've got a venture fund, and then you have to ask the question of: How do you scale that? And, like, venture was not, was not built to scale. And I think this is why we've seen the industry go this way, which is the market has increased a lot, you know, funds wanna be competitive. In order to be competitive, they have to find out kind of like what products that they offer that are actually competitive. This drives to higher AUM, and as a result, you know, you have the specialization.

    7. JA

      When you're-

    8. MC

      Now, that... Just, just that said, so, so but there's also kind of this internal thing, which is assuming that you wanna scale AUM independent of the market, you have to solve this problem, 'cause you just can't scale like a consensus org of generalists. Like, just not something you can do.

    9. JA

      Like the people issues on the inside, you just can't get through good decisions, is that what you mean?

    10. MC

      Well, I just think conflicts- well, there's many, many issues, right? Like, but one of them is, uh, y- you wouldn't ever have, um, uh, a structured approach to tackling a market, so you could never know that you've got good coverage, because maybe everybody wakes up in the morning and they decide they all like the same thing. And so I just don't think you can actually, even from a numbers game, scale it, because you don't... You're, you're not carving it up enough where you actually know that you've got, like a, like a uniform focus. You don't know if you have... Are hiring people that can cover the certain areas. I actually just think even just from a strict numbers standpoint, it doesn't work.

    11. JA

      How valuable is the specialist thing when you're in these competitive situations? Like, I imagine that a lot of the times when you're competing to win a deal, it's, you know, up against a firm that, or a partner that is, like, more or less generalist, I would think. Um, and I'm curious how that plays out sort of in the day-to-day.

    12. MC

      Uh, so I'm not... Yeah, it's, it's, it's hard to answer how much it, it helps in a competitive situation. Um, I think, think my experience is it's a lot more powerful that founders know that I've been a founder. Uh, and I know this is, like, such a cliché thing to say, but I, I, I do feel that resonates much more than, like, "I got a PhD in computer science-

    13. JA

      Yeah

    14. MC

      ... or I know infrastructure," right?

    15. JA

      Right.

    16. MC

      'Cause the reality is, most founders know a lot more than I do about whatever their area is, even if I've got a high-level thing. So I think in a competitive situation, it's not, it's not hugely... But, but what it, I think it is very helpful for is, like, I am primarily a Series A investor, and at Series A, you have to have some thesis-

    17. JA

      Mm

    18. MC

      ... on how the tech hits product and how the product hits the market. And unless you've been very close to, uh, to both of these things, that's a hard thing to do. Now, if I was a growth investor, it wouldn't matter, I'd just look at numbers. But, like, for where I am, I think you kind of have to understand.

  5. 10:32 – 13:16

    Value of distribution

    1. JA

      Yeah. And an interesting offshoot question from that is, um, you know, when we were talking earlier about how important is media, you're like: It seems really important, but, you know, there's a lot of great examples of investors who are all over. They're, you know, all over media and social media. There's a bunch of examples, phenomenal investors who you'd never hear about if you go on the internet.

    2. MC

      Yeah, I don't know if- I literally don't know if they're correlated at all. Mo- most of the, the best investors-

    3. JA

      Yeah

    4. MC

      ... I have known in the last 20 years-

    5. JA

      Yeah

    6. MC

      ... had no media presence, and they, they had no interest in it.

    7. JA

      Totally.

    8. MC

      Yeah.

    9. JA

      And then I'm wondering, um, I think, you know, around being a former founder-

    10. MC

      Yeah

    11. JA

      ... like, um, as I'm just, like, thinking through names-

    12. MC

      Yeah

    13. JA

      ... I can think of, like, a lot of examples of both. I definitely think founders appreciate it, and I'm, you know, speaking as somebody who's a former founder-

    14. MC

      Yeah

    15. JA

      ... I think that's a nice thing.

    16. MC

      Yeah.

    17. JA

      But, like, it also, I wonder if that's also an uncorrelated thing, or do you think that has more of a correlation somehow?

    18. MC

      Okay, so I'm, I'm just gonna guess here. I would guess that founders really appreciate reach, and so I don't think a founder's like: "Martin, I saw you on that podcast. You seem smart," 'cause everybody sounds pretty smart [chuckles] on podcasts, and articulate, and whatever. I do think, I do think a founder would be like: "Hey, listen, like, when you really believe in something, boy, like, you talked a lot about it. You know, I will have the opportunity to talk about it. You know, you will help me kind of break through the bootstrap problem of, of zeitgeist-

    19. JA

      Yeah

    20. MC

      ... understanding and brand." And so I do think having a platform matters more and more. And again, a lot of this is just because the media has turned on tech so heavily.

    21. JA

      Totally.

    22. MC

      Like, there just aren't a lot of options.

    23. JA

      Yeah.

    24. MC

      Again, I mean, I, I think sometimes we in VC kind of overweight our importance in these things. There's... Most companies with great brands did not do it through a VC firm.

    25. JA

      Totally.

    26. MC

      Right? And, like, it's not like, you know, we somehow can single-handedly make great brands, but we are an accelerant, we are a platform. Um, you know, and there is actually a lot of signaling as a result of aligning with a good firm, so I think all of that matters.

    27. JA

      Yeah, I do think that it's, um... There's this question of, like-... are the top VCs getting to do the great deals because they were the top VC, or are they-

    28. MC

      Yeah, absolutely

    29. JA

      ... in some sense helping make them? And I, my, you know, my own instinct is that for the most part, it's the former, and, like, you know, companies are just almost exclusively made by the founders.

    30. MC

      I totally agree a hundred percent. I think that the prime- the primary reason to create a distribution channel as a VC is so the portfolio can get out there-

  6. 13:16 – 19:49

    Staying power in infra

    1. MC

      ... bit.

    2. JA

      Okay, I wanna jump over and talk about AI a little bit, and in particular, I'm interested in talking about, like, infrastructure, 'cause it's something I know relatively little about, and so I wanna, like, learn from you about, like, first of all, like-

    3. MC

      Yeah

    4. JA

      ... what is it? If you could, like, put some like broad, you know, kind of, uh, you know, a, a broad fence around what the term is.

    5. MC

      Yeah, so I do computer science infrastructure, so I'm, like, a computer science maximalist. I think it's like the meta-discipline that you can, like, you know, solve other, other disciplines with, right? Like, we solve grand unified field theory, and physics goes away, and then we just go on to biology type thing, right? So I do computer science. So infrastructure is the stuff used to build the apps. So you sell to technical buyers, people that use computer science to solve business problems. So, like, if the company sells to marketers, that's not infrastructure, but if it's developers-

    6. JA

      Mm

    7. MC

      ... database administrators, networking, that's core infrastructure. I mean, and so, like, depending on how you count, this is a multi-trillion dollar industry, but, like, the important thing is, is, like, the actual buying and use behavior is a very technical thing. So that's, that's our definition of infrastructure.

    8. JA

      Okay, so when you're looking-

    9. MC

      Like compute, network storage, databases-

    10. JA

      Yeah

    11. MC

      ... now models-

    12. JA

      Right

    13. MC

      ... like, that dev tools, that type of stuff.

    14. JA

      And it seems to me, from, you know, just my, my viewpoint, is that, um, when these new paradigms come, cloud, mobile, you know-

    15. MC

      Yeah

    16. JA

      ... AI-

    17. MC

      Yeah

    18. JA

      ... it seems like that's, like, a very good moment for, you know, infrastructure-

    19. MC

      Yeah

    20. JA

      ... 'cause the board's shuffling a lot-

    21. MC

      Yeah

    22. JA

      ... and new infrastructure's being laid.

    23. MC

      Yeah, yeah.

    24. JA

      And so when you're looking at it, is there any broad way that you think about, you know, will this, will this continue to exist over time? Will the models or, you know, whatever, AWS in the past, will they do it? Will there be, you know, a need for somebody third party? Like, how do you even start to think about what will play out over time, just, like, at a structural level in infrastructure?

    25. MC

      So can I say something that's probab- that may not be true, but I feel very strongly? [chuckles]

    26. JA

      That's what we're here for.

    27. MC

      This is, like, a total- [chuckles]

    28. JA

      That's what this whole thing's about.

    29. MC

      But this is, like, an inflammatory opinion that's self-serving-

    30. JA

      Please

  7. 19:49 – 26:32

    The conflicts dynamic

    1. JA

      that.

    2. MC

      Okay.

    3. JA

      When you think about, um, like, markets in AI right now-

    4. MC

      Yeah

    5. JA

      ... and, like, how things are evolving-

    6. MC

      Yeah

    7. JA

      ... one of the things I thought was really interesting from talking to Mark was, like, basically, as, you know, you all sort of ambitiously grow the firm-

    8. MC

      Yeah

    9. JA

      ... one of the biggest whole- one of the biggest issues is companies running into each other in this, like-

    10. MC

      Yeah

    11. JA

      ... conflicts dynamic.

    12. MC

      Yeah.

    13. JA

      And obviously, you're super... You're, you, you're becoming prominent within a, you know, s- area to a degree where you're gonna just, I would imagine, just-

    14. MC

      Yeah

    15. JA

      ... companies, uh, na- as they grow, they grow into each other.

    16. MC

      Yeah.

    17. JA

      And what's your experience with that?

    18. MC

      It's such a complicated problem, because you can do... You can try and do everything right and still end up with conflicts. So it's actually pretty good to categorize the conflicts. And so perhaps the most co- common conflict is one company that... Two companies that you've invested in, one pivots into the other one.

    19. JA

      Yeah.

    20. MC

      Right? And, um, this one, it's basically impossible to do anything, because companies have to, uh, you know, figure out the right business. You're on the board or not, and you don't control it, and they do that one. So that one I feel like no investor can, um, uh... You know, there, there's nothing an investor can do. There's another more pernicious type of conflict of existing portfolio companies. I'll get to the net new companies soon-

    21. JA

      Mm-hmm

    22. MC

      ... which we're seeing a lot now, which is, imagine you have an old co- imagine you have a tech revolution like AI.

    23. JA

      Mm-hmm.

    24. MC

      And you have a set of old companies doing things the old way, and you have a set of new companies doing the new thing, and the old company wants to pivot to using AI to do what they did before. But the reality is, is the old way is not the AI way. They're not AI native, right? And so now there's this question, which is like: Well, when we invested in this company, it was doing X, whatever it is, and now it wants to do X with AI.

    25. JA

      Mm-hmm.

    26. MC

      But the reality is, the AI way of doing it is entirely different, and they've got no chance.

    27. JA

      Mm-hmm.

    28. MC

      And so then you have, you know, the dilemma of going to the founder and saying, "Listen, we're investing in one of the new space, but it's AI and you're not AI," which of course, that's not gonna work. Um, or you just don't do the deal. Uh, I run into this one a lot. We've got a very large portfolio, and to date, we've just been like: Hey, listen, like, we're gonna back the, the portfolio companies that we have. Um, actually, this happened last week. You know, the founder company says, "You can't invest in this. This is the space we're going into." They haven't even done it yet, and we try to do the right thing-

    29. JA

      Yeah

    30. MC

      ... um, there. So that, that one is, I think, the toughest one for all investors today, just because, like, you never want to kind of bet against your own portfolio, but, like, the, the reality of them doing, like, being actually competitive is very low. Um, I think the most, um... And then there's, there's one more, which is kind of like this fund stage thing, which is like: We've got a growth fund. They do their own thing. We've got, like, an early stage. They do their own thing. And, and, like, sometimes the communication isn't always perfect, and you can kind of end up in, like, you know, conflicts that way. The one that we simply do not do is, you know... And I always have this talk track. You probably heard me say it, and I, I borrowed it from Chris Dixon, but it's very, very effective, where you basically say: For any company that I'm an investor in, if I'm talking to another company that looks similar, I'll ask the founder, I'm like: "Listen, is this your mortal enemy? You only get one."

  8. 26:32 – 30:48

    State of play in AI

    1. MC

      Yeah.

    2. JA

      What are the markets right now in AI that you feel most confident are totally working? What are the ones where you feel like they're on the horizon and, you know, should be working very soon?

    3. MC

      Yeah.

    4. JA

      And then, what are the ones, if any, that you maybe have low confidence will, will work, period?

    5. MC

      Yeah. So, so the diffusion markets are all working. So any, any area where you bring the marginal cost of creating something, a piece of content to zero, is clearly working. You're creating an image, creating music, you know, creating speech, and we don't think about these markets as much because we're all so focused on, like, the frontier labs. But, like, it's cheaper to build these models because they're smaller. Um, and then, like, you know, people need content, and like, actually, like, the economics are so simple. Like, I, you know, like, whatever. Imagine you're, uh, an artist and you're like: "Okay, I'm gonna, I'm gonna draw a picture of Martine," right? Like, how long would that take you?

    6. JA

      A while.

    7. MC

      Whatever, three hours, and it costs you 400 bucks, right? But if I have a model do it, it's a hundredth of a penny type thing, right? So you've got a four orders of magnitude difference in economics. So that's why we've seen those types of companies, you know, think like, you know, Eleven Labs or whatever, do very well. So, like, that's clearly working, and this is content creation, where the marginal cost of, of, of, of, um, creation goes to zero. I actually think the whole kinda loneliness, companionship stuff is definitely working. It's just this very fragmented market. So I think if... You know, I think the unit economics are fine. I'm not sure, like, from an investor standpoint, how you think about it-

    8. JA

      Mm-hmm

    9. MC

      ... but, like, it's a use case that will be solvent, you know-

    10. JA

      Yeah

    11. MC

      ... that will, that will, will do fine.

    12. JA

      Yeah.

    13. MC

      Um, code seems to be working incredibly well.

    14. JA

      Yes.

    15. MC

      Uh, and you know, we, you know, you see this in, you know, in, in, in, in Cursor and, and, and the whole thing. Um, the areas that I don't know, I mean, they're working, but I don't know how the economics actually pencil out, are the enterprise use cases at this point that are kind of a bit more agenticky, automatey.

    16. JA

      These are the ones you're putting in the middle bucket? This is, like, what you're saying, is, like, kind of working, but not 100% sure yet?

    17. MC

      No, no, no, no, that... So the ones that are, are, are... Well, so, so the middle bucket was like, was companion, was, was actually like, like, you know, like, like the friend-

    18. JA

      Yes

    19. MC

      ... the emotional, like, the character that AI is. Like, there- there's a long tail of companies-

    20. JA

      I-

    21. MC

      ... that are, that are basically emotional support-

    22. JA

      Yeah, yeah, yeah

    23. MC

      ... and/or friends and/or entertainment.

    24. JA

      It's probably also a big component of the usage of, like, the main models and so on.

    25. MC

      Yeah, 100%, like, and that's clearly working-

    26. JA

      Right

    27. MC

      ... in the sense that people are willing to pay for it, the engagement's great, et cetera. From an investor standpoint-

    28. JA

      Yeah

    29. MC

      ... it tends to be kinda long-tailed and fragmented and kinda spread and stuff.

    30. JA

      And then that enterprise agentic workflow-type stuff?

  9. 30:48 – 34:58

    The future of coding

    1. MC

      Yeah.

    2. JA

      Like, um, where do you think we are right now? You know, like, I, um, I, I just posted one with, uh, Guillermo, who, you know, and-

    3. MC

      Yeah

    4. JA

      ... he, he obviously knows a lot too, and-

    5. MC

      Yeah, he's great. He's amazing.

    6. JA

      And it's like this is both the future-

    7. MC

      Yeah

    8. JA

      ... and it's also, at the moment, you know, it's not obvious that it is in today's-

    9. MC

      Yeah

    10. JA

      ... you know, incarnation. It's not necessarily producing quite as much value for engineers as even they themselves experience, but- [laughing] ... clearly it's gonna get there.

    11. MC

      Well, well-

    12. JA

      So, yeah, I'm curious.

    13. MC

      So just so you know, AI in general has this problem, which is so dazzling. People conflate, "Oh, this is dazzling," with, "This is useful," right?

    14. JA

      Yeah.

    15. MC

      That's for everything, [chuckles] right?

    16. JA

      Oh.

    17. MC

      It's not just code, right?

    18. JA

      Yeah.

    19. MC

      It's like, you're so impressed, like, these things are magic.

    20. JA

      Yeah.

    21. MC

      And then somehow that dopamine, you know, hit.

    22. JA

      What's really funny is, so I posted this on X, and, you know, like, this study that was saying-

    23. MC

      Yeah

    24. JA

      ... that people experience their own programming as plus twenty percent-

    25. MC

      Yeah

    26. JA

      ... and, like, the-

    27. MC

      Yeah

    28. JA

      ... the observed results were minus twenty or whatever.

    29. MC

      Yeah, yeah, that's right.

    30. JA

      And what was funny was there were a bunch of reply threads, where somebody was like: "No, no, no, this is crazy. I've been using it-

  10. 34:58 – 39:48

    Significance of open source

    1. JA

      another topic I wanted to get your thoughts on was, um, like, why is open source so important to you? And um, you know, like I saw, you know, you were really excited about, you know, OpenAI's open-source model.

    2. MC

      Yeah. Yeah.

    3. JA

      And I know this is, like, thematically and spiritually important.

    4. MC

      Yeah.

    5. JA

      Like, why do you... Why, why do you think that it is such a critical part of the way that, you know, this plays out?

    6. MC

      So I think open source is historically one of the best mechanisms that shows a healthy ecosystem, right? Uh, and what normally happens is somebody does something closed source, it turns out to create a market, and then somebody releases open source, and it, like, stops a monopoly from forming and enables everybody else.

    7. JA

      Mm.

    8. MC

      You know, and then it kind of, you know, keeps the, the people that are closed source to continue to be innovators, um, and allows everybody else to come in. So it's just been very, very healthy. And the thing that really worried me last year... A- and, and, and, you know, in the past, academia, VCs, startups were all very pro open source 'cause they understood that it was a very, it was a very important part of a healthy, competitive ecosystem. And the thing that really, really worried me last year was the people that should be championing open source, like VCs-

    9. JA

      Mm

    10. MC

      ... like startup founders, like academia, were decrying how dangerous it was in relationship to AI. The implications of this to me are huge, right? I mean, of course, you know, the national security implications are pretty straightforward, which is like if somebody else does the open source, it proliferates, and that, that's not good for US interest. But for the industry, it's terrible, right? I mean, this is kind of how you actually create monopolies, um, if, you know, you're not allowed to, to create, um, something-

    11. JA

      Right

    12. MC

      ... that enables everybody else. And, and again, it was very dramatic when, like, Vinod Khosla was like: "Open source is bad," and Founders Fund is like: "Open source is bad," and you had academics saying, "Open source is bad." And so I was much more interested in, like, trying to reset the discourse than, like, any specific open-source release.

    13. JA

      Yeah, and I guess a lot of that probably came down to, like, how, uh, how potentially dangerous was the technology.

    14. MC

      Yeah.

    15. JA

      You know, and so, like, if you thought it was extremely dangerous, for example, then there is a argument for, like, massive containment. I guess-

    16. MC

      Right

    17. JA

      ... or, or what was the steel man in your mind, you know, at the moment when closed source was, like, such a strongly argued... Like, if you had to-... you know, argue why you think people were saying that? Like, what would've been-

    18. MC

      I really think it's the legacy of Bostrom, right? Like, so, you know, Bostrom wrote the book Superintelligence in 2014.

    19. JA

      Yeah. Terminator, waking up, we gotta continue.

    20. MC

      But this is before all of these things, right? That like, like, Bostrom's book was a thought experiment.

    21. JA

      Mm-hmm.

    22. MC

      Right? It was like this Platonic ideal-

    23. JA

      Yeah

    24. MC

      ... of AI, and then somehow that created this, you know, very interesting kind of intellectual journey on the perils of AI. But then, you know-

    25. JA

      Yeah

    26. MC

      ... like, GPT-2 lands, and these two things got totally conflated.

    27. JA

      You also got... There's a lot of incentive for people to be doomer-y, I think. Like, it, like, gets a lot of clicks. It was like-

    28. MC

      Yeah, but not histor- but this is the weird thing historically. Like, let's take the internet as an example. So, like, I was there during the early days of the web. We had a lot of examples of, like, how it actually changed the dialogue when it came to, to risks, right? We were running critical infrastructure on it. We had totally new types of attacks, like the Morris worm, which had actually taken down computer systems. So we're at this space. We're like, "Okay, well, it makes you more vulnerable if you use it, um, and we have new attacks that you can attack with it," right? And yet academics were like, "This is great." The technologists were, "This is great." So you had this very even-handed debate. What was so weird-

    29. JA

      Mm

    30. MC

      ... about the AI was it wasn't even-handed. Like, I'm all for both sides of the debate. Like, I'm not a, you know, I... You know, I'm not, I'm not just, you know, pro innovation at all costs, but, like, that's not what was happening. And so, like, m- maybe you're right. Maybe it's like the doomers got more click, but I think it's something more than that. I, I just think that there was an existing intellectual legacy that came from Bostrom that had some very influential people, right?

  11. 39:48 – 44:02

    Marc Andreessen’s leadership

    1. JA

      Uh, I wanna ask you just a couple more questions-

    2. MC

      Yeah

    3. JA

      ... about sort of the structure of-

    4. MC

      Yep, yeah

    5. JA

      ... uh, the, the firm and sort of your own work outside of the specifics of what you're investing in.

    6. MC

      Yeah.

    7. JA

      One that I thought was, um, a really interesting point from Mark when I talked to him on the podcast-

    8. MC

      Yeah

    9. JA

      ... was basically around, you know, like, how do you sort of drive the right overall aggression of the firm? And he said something to the effect of like, "When you're in a market moment like this-

    10. MC

      Yeah

    11. JA

      ... the right answer is to just encourage people to do more." And so many partnerships are trying to get other people to a no, and, like-

    12. MC

      Yeah

    13. JA

      ... that is, like, the common function.

    14. MC

      Yeah.

    15. JA

      And, you know, he was basically describing something where, like... It was like, "How do we get people to a yes, and, like, how do we take advantage of this?"

    16. MC

      Yeah.

    17. JA

      I'm just curious how you feel and, you know, your experience, you know, in, in the last couple of years in AI land.

    18. MC

      So one of the reasons Mark is such a great leader is he- his intuition on the temperament of people is, is almost perfect, and he will drive, like, the right behavior relative to that. And so, like, if he thinks people are being too conservative, of course, he'll drive them to be more aggressive. There's definitely a more aggressive sta- I mean, the reality about AI is there's been a lot of money that's already been lost in absolutely record time.

    19. JA

      Mm-hmm.

    20. MC

      Right? Right, so just because, like, the-

    21. JA

      Yeah

    22. MC

      ... upsides aren't great, doesn't mean, like, the down... Like, there's been a lot of money, you know? And so, you know, as a, as a firm, we've... We, we tend to be fairly disciplined and do a lot of market analysis, and, you know, he do things for coming, and so, like, you know, he's very good about, like, pushing the team, and I think he's absolutely right to do that because, um, you know, there is already a foundation of discipline that, like, is not gonna be eroded or compromised by doing that. On the other hand, there are individuals who are like, [chuckles] "Total shoot from the hip, like everything," and then he actually tempers his messaging a lot with those. And so I would say, again, I, I mean, you know, I, I, I don't know what was in his head when he was saying that, but I just think if I was gonna add a little bit of nuance is my observation of Mark is-

    23. JA

      Mm

    24. MC

      ... he's very good at pushing when people need to push, but he understands the situations when, like, that's probably not the most appropriate thing. And so I think this is a core issue of leadership, which is, you need to provide kind of the right kind of macro, you know, macro, you know-

    25. JA

      Yeah

    26. MC

      ... shift in order to get the right one without being too overbearing.

    27. JA

      Yeah, and I think, you know, s- some of that conversation was in relation to, like, you know, fund sizes and what's possible.

    28. MC

      Yeah.

    29. JA

      And I think some of it was articulating just, like, these companies can be enormous. This opportunity is, like, you know, quite oversized relative to what's been in the past.

    30. MC

      Yeah, yeah, but, but I mean, but, but, but again, I I just think it's important to note, which is, um-

  12. 44:02 – 48:37

    The only sin in VC

    1. MC

      Yeah.

    2. JA

      To the extent that we are in somewhat of, like, a gold rush-y, in the good sense, moment-

    3. MC

      Yeah

    4. JA

      ... you know, overall-

    5. MC

      Yeah

    6. JA

      ... do you think, um, does it change your perspective at all about, um, what you need to see to want to make an investment? So, like, m- maybe a specific version of this question-

    7. MC

      Yeah

    8. JA

      ... is in a somewhat stabilized time, I think most, you know, most people would agree that you should only back extremely special founders.

    9. MC

      Yeah.

    10. JA

      Is there ever a version in these kind of moments when a good founder in, you know, a great market with, like, exceptional traction or some configuration like that-

    11. MC

      Yeah

    12. JA

      ... where you say, "Actually, you know what? That, that works here, and that can produce something really big"?

    13. MC

      So do you know how we think about investments? 'Cause I think it answers this question.

    14. JA

      Tell me.

    15. MC

      So it's very simple. So the way that we think about investments... And the, the reason is, is the only way you can scale, because you can actually distribute this kind of algorithm to a team, is the only sin is picking the wrong company in a certain space. Because in the-

    16. JA

      Because that conflict thing?

    17. MC

      'Cause you're conflicted out of the winner. Like, investing in a space that doesn't work-

    18. JA

      Mm

    19. MC

      ... is fine. I mean, like, there's no way you can actually predict-

    20. JA

      Mm

    21. MC

      ... whether a space is gonna work or not. I mean, that's like weather prediction, right? But in a given space, if you know all of the companies, you do the work, you can most likely, you know, at least tilt it... Like, you can do the work to determine if you think one is better than the rest. Like, it's something you can actually put... So the way that we view the world is, first you have to identify legit spaces. We think that founders are smarter than VCs, so I don't care if VCs think it's interesting. If there's five founders in a space and they're good founders, man, they're betting their families, their fortunes, you know, their time, so it's probably a real space. And then we do the work to understand the space and all the teams, and then we make a pick within that. I mean, that's really how we think-

    22. JA

      Mm

    23. MC

      ... about it. That's true within AI as anything else, right? The thing that's harder is... And I've, I've evolved so much as a, an investor. I used to think, like, "Oh, we get good deals, like, price matters, outcome matters, TAM matters." And more and more, especially with AI, that's what you have to throw away.

    24. JA

      Mm.

    25. MC

      The market is the market, right? Like-

    26. JA

      And that's what matters the most, you're saying?

    27. MC

      It doesn't matter at all. I'm saying... I'm so, so, so histo- so we don't know what the TAM is, 'cause it's growing so fast. Like, nobody knows valuation, so I think this is... It's, it's contrary to, like-

    28. JA

      Mm

    29. MC

      ... common belief. I think in these times, where you don't know the TAM and things are moving quickly, you definitely want the, to pick the best team. You definitely wanna pick the best team. I don't think you should overthink the space, but, like, asking questions about, like, TAM or valuation or value makes a lot less sense, because that's actually what's uncertain.

    30. JA

      You just need to be in the best one, and then-

  13. 48:37 – 52:10

    Scaling a lot of board seats

    1. JA

      Um, as a final topic-

    2. MC

      Yeah

    3. JA

      ... I wanna just hear your perspective on the board relationship and board roles in general.

    4. MC

      Yeah, yeah.

    5. JA

      And maybe as, like, a prompt on this, I feel like, um, you've done something which I find very impressive, which is it seems like you're able to manage successfully many more board seats than a lot of people. And, um, you know, I often will hear common wisdom that, you know, it could be 10 or 12 or 15.

    6. MC

      Yeah.

    7. JA

      Um, but it seems like, you know, you've found a way to do more than that and be-

    8. MC

      Yeah

    9. JA

      ... very effective with those founders. And so I just wanna hear sort of your perspective on, like, what's that relationship? What do you think is sort of, like, the limiting factor here, if any?

    10. MC

      Yeah.

    11. JA

      How does it all play out?

    12. MC

      Yeah, um, I mean, I do think that, like, a lot of the common wisdom on boards came from, like, that earlier year in VC, when, you know, it's like people would literally choose VC for, like, a life choice or whatever, right? And I think if you come from, like, pretty serious operating, like you do, and like I do, like, we've just got a lot of hours in the day to throw at it. VC is also involved that we've got better platforms that actually really help with these things. And so, um, you know, between, like, actually, you know, the hours in the day, um... I mean, how much does that go, like, board-... take? I mean, you're a board member. You know, I actually find that, like- can I, can I just take a step back? Just 'cause, uh... Let's, let's talk about what boards mean. Like, 'cause I always ask when I invest in a founder, like, like, "What is a board for?" What do you think they say normally?

    13. JA

      I'm actually curious what the most common answer is, but I could imagine-

    14. MC

      What do you think, what do you think it would be? Yeah.

    15. JA

      Uh, I would think they would probably say it's something like, uh, you know, governance and approvals or something like that.

    16. MC

      No, that's, that's what they should say. That's what you and I would say. They say, they say, "To provide guidance-

    17. JA

      Uh-huh

    18. MC

      ... to help with hiring." [chuckles] I'm like, "No!"

    19. JA

      Yeah, yeah.

    20. MC

      That's an inv- that's not a board, right? And, and, and, and so a lot of... You know, there's a lot of this belief that, like, a board member is somehow helping with company building. And, and almost like it's actually hard for a board member to be, like, the best friend of a founder for those types of things because, like, you know, you're, you're a fiduciary and you do governance. So, like, the actual board work itself is just not a lot from the fiduciary governance standpoint. So often implicit in this question is, is, like, non-board stuff. Like, how can you be helpful to a company and everything else? 'Cause that can take a lot of time.

    21. JA

      Mm-hmm.

    22. MC

      And I do think this is where, like, you know, having a big platform to lean on, being totally available helps a lot. But, like, it's not the board work, it is the other stuff.

    23. JA

      Mm-hmm.

    24. MC

      And so I would say to, you know, anybody listening who, who is a VC, you can take as many boards as you want. The actual board work itself is not. The question is, can you still be available to founders and add value-

    25. JA

      Yeah

    26. MC

      ... whether you're on the board or not? A lot of the companies I spend the most time with, I'm not even on the board of.

    27. JA

      Yeah.

    28. MC

      And-

    29. JA

      Actually, that's what's funny to me is, you know, people talk about this with me. There's some board seats I have that are o- you know, the founder's asking quite a lot less than, you know, some seats-

    30. MC

      No, it-

Episode duration: 52:10

Install uListen for AI-powered chat & search across the full episode — Get Full Transcript

Transcript of episode qsa-QDklCUk

Get more out of YouTube videos.

High quality summaries for YouTube videos. Accurate transcripts to search & find moments. Powered by ChatGPT & Claude AI.

Add to Chrome