a16z Podcast Episode Summary
Episode: Meta CMO: How Advertising Works Under the Hood
Date: September 29, 2025
Host: Andreessen Horowitz (multiple interviewers, referenced as C for host)
Guests:
- Alex Schultz, CMO at Meta (A)
- Antonio Garcia Martinez, Director of Ads at Coinbase, author (D)
Episode Overview
This episode explores the often-misunderstood mechanics, ethics, and future of digital advertising, featuring candid perspectives from Meta CMO Alex Schultz and Antonio Garcia Martinez. The conversation digs into why online ads are the financial engine of the internet, debunks "surveillance capitalism" critiques, investigates retail media and first-party data, examines how AI is revolutionizing both ad targeting and online content, and undertakes several "alternative history" scenarios in tech. The tone is passionate, technical, and unvarnished—especially in defending digital ads as not just necessary but beneficial for society.
Key Discussion Points & Insights
Ads as the Engine of the Internet
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Positive View on Online Ads
- Alex opens with a strong defense: “I'm sick and tired of all the negative talk about online ads. It drives the entire Internet economy... It has democratized all this stuff so the startups can do little things that before you'd have to pay for a Super bowl ad to do.” [00:00]
- Antonio echoes: “It's time to end the stigma of ads. It's how the Internet gets paid for…good ads experiences…Instagram ads are amazing, right? People like Instagram ads. Actually, the CTRs are crazy.” [03:28]
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Misunderstandings & Critiques
- Discusses common criticisms such as privacy violations, manipulation, and the belief that advertising “dumbs down” content or incentives bad content on the internet. [04:44-07:15]
- Alex summarizes: “The biggest piece for me about attacking like the critique is growth is good. Growing the economy gives people better lives... Advertising is a good thing. It's useful.” [08:36]
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Historical Perspective
- Antonio says, “The New York Times was originally a platform for advertising…In many ways, ads actually kept media honest…once you have a subscription model…that actually skews media more than an ad model would.” [07:34–08:10]
How Digital Advertising Actually Works
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Marketing Funnels & Practical Challenges
- Antonio praises Alex’s book for blending high-level strategy with “the most detailed technical breakages you can possibly imagine.” [01:20]
- Alex wrote the book partly because: “I'm sick and tired of all the negative talk about online ads, about our industry as a whole... online advertising rocks.” [02:21]
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Stated vs. Revealed Preferences
- “People's stated preferences and revealed preferences are very different… it all comes out in the ctrs and the conversion rate, which is one message you have in your book… and that kind of is the only thing that actually matters.” [03:28]
Privacy, Data, and Surveillance Capitalism
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Debunking Myths
- “The rumors that Facebook is listening to you through your microphones, which is, like, completely ludicrous.” [04:59]
- Alex: “I think that dealman is like the Zuboff surveillance capital[ism]... They're selling you. That's the steel man. Oh, and by the way, you're manipulated by all of these marketers…” [06:09]
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First-Party Data & Ad Networks
- Retailers like Amazon and Walmart have an edge because they “control the entire [customer] funnel” and own the customer relationship, making first-party data more valuable and privacy-compliant than third-party, which was historically riskier. [26:39–33:07]
- Alex: “Data is not the new oil. Data is sand. And sand is only valuable if you refine it into silicon chips… data isn't destroyed. Data exists forever.” [22:34]
AI & the Future: “Audience of One” and Hyperpersonalization
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AI Disrupting the Ad Game
- “Ten years ago I would not use automated ad campaigns…Today I've learned to stop worrying and love the automated ad campaign. I am full in on algorithm first.” [13:36]
- Ads are becoming hyper-personalized: “you’re going to find a completely personalized ad will happen targeted entirely to you, that's customized to you. And you can convert in the ad…” [16:48]
- “AI optimization versus search engine optimization…AI search ads versus search ads…when you talk to a chat bot, why is that that different than SMS marketing, push notifications or snail mail back in the day?” [16:48]
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AI Agents and Next-Gen Direct Mail
- Direct mail will evolve: “direct mail was a letter…then email…then SMS…then [a] push notification…now it's a chat thread…when your direct mail is sentient and can interact with you, that is going to completely change the value of direct mail marketing…” [34:20]
Global Perspectives: WhatsApp, Super Apps, and Geography
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WhatsApp's Scope and Super App Ambitions
- Alex: “WhatsApp is the place, the single largest broadcast sharing channel on Earth. The WhatsApp Status tab is bigger than Instagram or Facebook in terms of the amount of content shared. It just so happens it's not in the US…” [24:27]
- Payments in India and “super app” status discussed. [24:27]
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Retail Ad Networks and First-Party Data
- “Retail ad networks have existed for as long as retailers basically have existed. And so all it's done is modernized that and brought it online...the whole thing does boil down…to data and algorithms and first party data…” [29:59–32:44]
Alternative Histories & Platform Shifts
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Instagram as an Independent Company?
- Alex: “Instagram, I think, was touch and go as to whether it could be either a Twitter or a Snapchat or just a complete also ran like path...Instagram, I think, was touch and go as to whether it could be either a Twitter or a Snapchat…” [38:49]
- Fights over Instagram’s growth focus: “We fought so much…Instagram was focused on public figures…And we said no people you may know…is really important to get that happy blend of friends and family with public figures...” [40:42]
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What if Libra Had Succeeded?
- Antonio suggests that global on-chain payments are inevitable, even if Libra failed, (referencing Stripe and stablecoins): “…I think you’re going to start seeing crypto be the rails under the hood. People are going to be on chain and not even realize it, actually. Which is fine… it’s going to open a level of economic freedom that you haven’t seen to date.” [43:30]
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Meta and the Metaverse / VR
- Alex: “Amazingly, the AI jumped forward far faster than we thought, which means that it got ahead of the waveguides that are needed to do the overlaid augmented reality experience that we think is the end game.” [55:45]
- Antonio: “Virtual reality has always been this perpetual technology of the future and somehow that ship hasn’t really quite come in yet...But sometimes things are just too early.” [57:42]
The Impact of AI on Work and Society
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Will AI Lead to Fewer Jobs?
- Alex: “Doing existing stuff more efficiently… things that literally weren't possible before will become possible… things that were possible but just…really expensive suddenly become…reasonable to do... Some of these companies may even get bigger…” [51:18]
- Antonio: “No, I think there’s going to be more demand, there’s going to be more code, there’s going to be more companies...Like Alex said, there’s going to be things that weren’t even physically possible…” [53:10]
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AI as a Force Multiplier
- “The best talent, when they can use the tools that currently exist, becomes way more valuable and then being able to produce the tool is way more valuable too... value accrues to the most creative best logic thinkers and value gets taken away from the routine work...” [49:14]
Notable Quotes & Memorable Moments
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“Ads is the damn business.”
— Alex Schultz [00:00, 04:31] -
"People's stated preferences and revealed preferences are very different…it all comes out in the ctrs and the conversion rate."
— Antonio Garcia Martinez [03:28] -
“Data is not the new oil. Data is sand. And sand is only valuable if you refine it in silicon chips. Right.”
— Alex Schultz [22:34] -
“We are building a super app. It's called WhatsApp. It is the largest place for broadcast sharing on Earth and it has a lot of success in commerce and in particular in payments growing.”
— Alex Schultz [24:27] -
“You're not going to lose your job to AI, you're going to lose your job to a human who uses AI better than you do.”
— Antonio Garcia Martinez [50:59] -
“The biggest thing is that advertising is good.”
— Alex Schultz [60:09]
Timestamps for Major Segments
- 00:00 – 01:11 – Introduction and context for conversation
- 01:20 – 03:28 – Why Alex’s book matters; demystifying digital ad mechanics
- 03:28 – 04:44 – Online ads as the core business model; user preferences in practice
- 04:44 – 08:36 – Steelmanning ads critiques; history and alternate models
- 13:00 – 16:48 – AI’s role in content ranking and advertising innovation
- 21:26 – 24:14 – The value and limits of user data in advertising
- 24:14 – 26:39 – WhatsApp, WeChat, and the global super app comparison
- 29:59 – 33:22 – Retail ad networks, first party data, and GDPR
- 34:20 – 36:48 – Direct mail’s AI evolution; global business chatbots
- 38:20 – 42:41 – Alternative history: Instagram, Libra, Snap, big tech competition
- 49:14 – 55:03 – The future of work: AI as multiplier, impact on compensation and jobs
- 55:45 – 59:37 – Metaverse/VR: progress, hype, and realistic timeframes
- 59:37 – 61:37 – Closing thoughts: What’s misunderstood about Meta/advertising
Concluding Thoughts
The conversation consistently champions the value of digital advertising as the pillar supporting the modern internet, tackling its critiques with data, historical context, and optimism about innovation. Key takeaways are the underestimated power and benefits of online ads, the truth about privacy and data use, the evolutionary leap AI brings to both ads and media as a whole, and how companies like Meta are grappling with rapid platform shifts. The participants are clear: ads (especially well-done, algorithmic ones) are not just a necessary evil, but a force for scale, democratization, and discovery—and AI is poised to amplify those dynamics, not destroy them.