Martin Casado (1:33)

Him as a board member.

Ben Horowitz (1:35)

Yes.

Martin Casado (1:35)

You told me that his bedside manner has improved.

Ben Horowitz (1:38)

Yes, has improved.

Raghu Raghuram (1:39)

In my defense, I would just say that we were in this very weird situation where we came out with the browser and it was like the biggest kind of software hit ever at the time. It put everybody on the Internet and then Microsoft, who had 97% market share on the desktop. So basically a complete monopoly. Macs weren't a thing or anything else. And they decided their whole mission was to put us out of business. And we were selling the browser for money at that time. It's $50 a browser. And they did things that, like, I really haven't seen since. So they would put bugs in Windows to break our client, our browser, so it wouldn't work. They set their download thing on their downloader that had a bug in it between, like, 13 megabytes and 13.3 megabytes, and our download was like 13.1 megabytes. It did stuff like that. The craziest was when we cut a deal with Compaq, which was the biggest PC vendor to kind of bundle Netscape with all the Compaq PCs. And we did a big announcement with them was front page of the Wall Street Journal, above the fold, the whole thing, which was a big deal in those days. And the next day, Compact called us and said, you have to let us out of the deal. And we're like, why do we have to let you out of the deal? It's like a great deal for everybody. And they said, Microsoft is withholding Windows 95 from us unless we break the deal, we'll go out of business. Like that type of tactic. So we were under a lot of pressure, just long to say. And so then the strategy at Netscape that I hired Raghu into was basically to replace all the browser revenue with server revenue. But the problem is we really didn't have any server products. And the browser was, congrats, job. It peaked at like 250 million a year. And so it was a lot of revenue to replace in a very, very short order because it went from 250 to zero over a two year period. And so anyway, so poor Raghu gets hired in by me, who was feeling very urgent at the time. I would just say, and you guys.

David George (3:54)

And you came in right out of grad school, Right? You were straight out of grad school.

Ben Horowitz (3:57)

Yeah.

David George (3:58)

Okay.

Raghu Raghuram (3:58)

Yeah, but I didn't have time for a lot of that slow training type of stuff. It was all like very like military style training.

Ben Horowitz (4:09)

Because wartime all the time.

David George (4:10)

Yeah. What are some of the stories of the war that you were.

Ben Horowitz (4:12)

No, I mean, I think if I think back, Ben was on top of everything. Like you wouldn't believe. Like you couldn't miss a comma in your data sheet. And Ben would catch it. Right. It's crazy. People used to dread going into reviews with this guy. But the second thing, though, in his defense, because we had no server products, I think you hired what, six or seven product managers at the same time? None of us knew any product management. Some people are like one or two years in the industry. Some people are like me. So remember there was this paper floating around on the Internet for a long time. Still is the good pm, bad pm.

Martin Casado (4:50)

Yeah, Didn't Ben.

David George (4:51)

Of course. Ben, that's yours, right?

Martin Casado (4:52)

Ben wrote that.

Raghu Raghuram (4:53)

No, it wrote it for those six guys.

Ben Horowitz (4:56)

Yeah.

Raghu Raghuram (4:56)

It wasn't for us. It wasn't meant to be published.

Martin Casado (5:01)

That was for you.

David George (5:02)

It was your training document.

Ben Horowitz (5:03)

It was A training document.

David George (5:04)

Congratulations. Here's your training.

Ben Horowitz (5:06)

So that is actually the second thing to say about Bayern is even. I mean, systematizing organizational behavior. I think all of that is. That's true of him then and true of him now. Obviously now he's written books about it.

David George (5:20)

All right, so I want to fast forward a bunch here. So obviously we have Martin, Ben, Raghu. We got to talk about Nicira. So, Martin, obviously you're the co founder and the inventor of sdn. Ben was the investor and board member. And obviously Raghu was the champion of the acquisition at VMware. So I'd love to hear the dynamic across the three of you.

Martin Casado (5:44)

I mean, listen, the short version is that Ben saved my company from going out of business by investing in it and then helped run it. And then because we love Raghu so much, we gave him a big discount on a great company. Here we go.

Ben Horowitz (5:59)

It was a premium.

Martin Casado (6:00)

Like.

David George (6:01)

No, I love that it's positioned as a big discount because it was like the highest priced acquisition of its time.

Martin Casado (6:06)

Yeah, I think we had.

Raghu Raghuram (6:07)

I think it was. But if you look at the revenue numbers that thing did after the fact, Raghu got it very cheap.

Martin Casado (6:14)

Yeah, that's very cheap.

Raghu Raghuram (6:16)

But it was weird because, yeah, we only had. I mean, I don't know, we didn't really have. I don't want to say what our revenue was, because I don't know if it was really even revenue. We had some checks.

Ben Horowitz (6:25)

Yeah. Yes. Yeah.

Martin Casado (6:29)

And by the way, so part of the story is we had an acquisition offer from Cisco and we didn't want to sell. And so I thought if we don't get into the hypervisor, what we sold is we sold networking. That would go on the hypervisor. But, like, the entire hypervisor market was VMware. Yeah. And so I'm like, well, if we don't get in the hypervisor, we kind of don't have a market. I'm like, there's one person that controls the hypervisor. One person. And that was Raghu. So I took the lonely trip up to see Raghu.

Ben Horowitz (6:57)

Hold on.

David George (6:57)

This is when you had an offer from Cisco, though.

Martin Casado (6:59)

We had an offer from Cisco, and it was to, like, basically put a hole in the backyard and bury the company. And so. And we knew that because it was threatening hardware. And so, like, I took the long walk up to Raghu. Do you remember this meeting?

Ben Horowitz (7:09)

Yeah, yeah, I remember the meeting.

Martin Casado (7:10)

And I'm like, listen, we have this offer from Cisco. We would love to be in the Hypervisor. And you know what Raghu said? No.

David George (7:18)

You understood leverage at the time.

Ben Horowitz (7:20)

I'm super genius, but I'm not that dumb.

Martin Casado (7:24)

It wasn't a nuance, it was no, that's. At the time, I thought we were basically done. We'd have to sell to Cisco.

David George (7:30)

So then how did it progress from no to ask?

Martin Casado (7:32)

Ask Ragu. By the time I got. By the time I'd gotten home, Shikr had called me. So there must have been some internal conversation.

Ben Horowitz (7:38)

No. So part of saying no was because we wanted to acquire the company as well.

Raghu Raghuram (7:43)

Yeah. It was no to the BD deal. Dg, you have to understand. So it was kind of, hey, we can gang up and compete with Cisco. And Raghu is. No, not gang up like that. Gang up like, I will swallow you.

Ben Horowitz (7:56)

Yeah.

David George (8:00)

Yeah, I'm buying the cow, not the milk.

Ben Horowitz (8:02)

Yeah, yeah.

Martin Casado (8:02)

But I was.

Ben Horowitz (8:03)

I mean, there was no scenario in the world where it made sense for me to have big market for marketing.

David George (8:09)

Independent. Yeah, of course. Yeah.

Ben Horowitz (8:11)

But more positively, we knew we had to get the next product that was going to sort of rule the enterprise like the Hypervisor did, and this clearly was it. And Pat Gelsinger, to his credit, he was the CEO at the time, my boss, he was as equally convinced about it as I was, and so was Joe Tucci, who's CEO of EMC, which held 80% of VMware. And so there was no hesitation from that point of view.

Martin Casado (8:39)

Yeah, no, it was very good. We got it done over a weekend, actually.

Raghu Raghuram (8:42)

Yeah, yeah, yeah. It was some of the fastest Corp. Dev work.

Martin Casado (8:46)

Yeah.

Raghu Raghuram (8:46)

Because I think also the VMware team and Raghu realized that if Cisco actually realized what was going on, they would buy it at any price because it was the only actual threat to Cisco.

Ben Horowitz (9:04)

And speed, I mean, that's a lesson that carries through especially against bigger companies, Carp. Dev and acquisition and so on. Speed matters a lot. Speed matters a lot.

David George (9:14)

Yeah. Getting a deal done over the course of the weekend at that size, the highest price paid ever.

Martin Casado (9:18)

It's very fast, I will say. I mean, Ragu has so many strengths as a leader, which many people know, product, etc. But it's hard to overstate how complex the integration was, because the reality was is the VMware had an internal team that was doing work just as good. Like, literally, they were just as talented, just as good. Some areas they were stronger, some areas we were stronger. Now, what we had that they didn't have is we had all the Linux stuff just because we were doing this open source stuff. But we were a smaller team and we were a team that actually got this big acquisition. And so Raghu is in charge of integrating this smaller team with a large payout with a larger team. Both teams had done this great work in having that work out. And listen, we managed to do it.

Ben Horowitz (9:59)

I mean, yeah, we managed to do it.

David George (10:00)

Yeah. So how did you actually do it?

Ben Horowitz (10:02)

I mean, it took a lot of great leadership from the Nicira team as well. Right. And the VMware team that was in there to get to work together. That's one. And then overall, it turned out that the value proposition that mattered to the customer had elements of what VMware had built and what Martin had built. So once you realized that, then it became easier. The tricky part was, whose base product do you use? And that was the hardest part of it. But once we solved that, then the rest became possible.

Martin Casado (10:36)

I will say when we were selling, I put in a call to Diane Green, who was the CEO before, and I said, okay, I would love some guidance. Is there anything you can point me to? And she said, keep your sales team. That was it. That was kind of the guidance. And I didn't appreciate that until after we landed, which is if. And by the way, VMware is phenomenal. Like Raghu and Pat were phenomenal. They kind of allowed us, you know, to do our thing for the first few years pretty much unencumbered. Right. And then over time, you have to integrate kind of more seriously. So the thing is, when you have your own sales team, you can actually lead your. You can lead your product team much better just because they're directly doing the enablement. They directly see the customer pool. They have directly have access to customers. So it's much easier to unify a team from the market on end if you actually control that market. So I honestly think one of the keys, in addition to the leadership, in addition to, you know, the, you know, the hands off approach, was just we were able to keep and grow our independent sales team. And then over time, of course, we rolled that back in.

Ben Horowitz (11:37)

And let's face it, the category was not built out. The product suddenly was not built out.

Martin Casado (11:42)

Yeah.

Ben Horowitz (11:42)

So without an independent sales team, we would not have been able to build a product.

David George (11:45)

Yeah, we got in the vinyl. Yeah. Okay, so then brag a little bit, because this is one of the most successful integrations and, you know, financially acquisitions probably in the history of technology. So what happened in the coming years afterwards?

Ben Horowitz (12:00)

Yeah, I mean, I think there were two dimensions of value to VMware one is the independent revenue from this. I mean, this cut about $2 billion in revenue. And this was, by the way, license.

David George (12:10)

And you sold it.

Ben Horowitz (12:11)

2 billion.

Raghu Raghuram (12:11)

3.

Ben Horowitz (12:12)

2 billion.

Martin Casado (12:12)

This is why it was a discount right here.

David George (12:16)

Yeah. Get your mind around a less than 1 times revenue multiple.

Ben Horowitz (12:21)

Yeah. So I was just going to say the second is the multiplier effect on the VMware core franchise.

David George (12:27)

Yeah, sure.

Ben Horowitz (12:27)

Because it made the. I mean, Microsoft's product was slowly getting better, open source was getting better, and now we were able to redefine the core virtualization stack in the enterprise to say you got to have this and you got to have networking. Right. And so just purely on a multiple of revenue point of view, it paid for itself 10 times massively.

Martin Casado (12:46)

I will also say there was a portion of time where we were like just the bu. That was part of the Nissir acquisition was a significant portion of VMware growth.

Ben Horowitz (12:55)

Yeah.

Martin Casado (12:56)

Right. So not. Not only was it just like the revenue alone, it was actually if you looked at the overall. Yeah, yeah. Like, I mean, like, basically the growth was coming from the.

Ben Horowitz (13:04)

I think it was something meaningful contributor to the growth rate.

Martin Casado (13:06)

I forgot the numbers, but yeah, 46%. I remember.

David George (13:13)

I remember just something around there.

Ben Horowitz (13:17)

But he.

Raghu Raghuram (13:18)

To defend the sales price, though. I remember when we had the meeting with the bankers, the DOT for our multiple was like literally off the chart. Like of all the deals that had been sold, nobody had that. Like, it just didn't even fit on the chart.

David George (13:41)

How much revenue was it?

Martin Casado (13:42)

There was what? There was. There was one other dot that we beat, which was Yammer.

David George (13:47)

Oh, yeah, Yammer with Microsoft. Okay.

Martin Casado (13:49)

Yeah. But they had like 20 million.

David George (13:51)

Slightly less successful integration performance.

Martin Casado (13:54)

Yeah, yeah, yeah, yeah.

Raghu Raghuram (13:56)

We're David Sachs for getting that deal done.

Martin Casado (13:59)

Yeah, yeah.

David George (13:59)

Okay. Huge success story. Okay. So, you know, that's Nicira into VMware. Obviously you were at VMware and then became the CEO ultimately. So talk about your experience building the company.

Ben Horowitz (14:13)

At the time when we bought nicira, we were on a product expansion path. So obviously, I mean, Sarah wrote a great piece on the platform.

David George (14:21)

Platform, yeah. What it takes to be a platform.

Ben Horowitz (14:23)

Yeah. It was as though she was a VMware. Right. Because it literally follows that playbook. And so once you get to a certain level of saturation in your core market, you got to build out the adjacent markets. Right. And that's what we were up to. We built management, then we got Nicira for networking. We did our own thing on storage and then security. So we were progressively building that out. So that was our task for the following seven, eight years. What that did is it vastly expanded the on Prem franchise because even though cloud was coming, we were continuing to dominate on Prem. And as you well know, in enterprise, things never go fast. They always take their time, they don't really go away.

David George (15:08)

New stuff comes on.

Ben Horowitz (15:09)

But. Yes, yeah, exactly. So I think so that was one big part of the mission. The second is we initially tried a variant of the cloud, we add our own cloud thing which did not work. And then we recoiled the industry around what we call the hybrid cloud because most of these enterprises, they had some stuff on AWS and stuff on us. So we said let's go partner. And that was another radical move because people thought this was going to be a bloodfire path between the two.

David George (15:44)

Yeah, of course.

Ben Horowitz (15:45)

So I was doing that right. And then we had to get the developer franchise. So we went and acquired Pivotal.

David George (15:51)

Yes.

Ben Horowitz (15:52)

So it was basically building out the product portfolio first as a GM for all these data center businesses and then as a coo.

Martin Casado (16:02)

So what's also crazy about it is like the amount of lessons that you saw in infrastructure software successful. Like you know, under Palmeritz was trying to go the application stack, which is very tough to like skip parts of the stack. Then you went back to doing adjacencies. You do organic product build out like vsan, which became billion dollar product lines. You did inorganic acquisitions became billion dollar product line. So I feel like, you know, like the broad scope of business strategy was embodied at VMware at some point, I think more than any other company. Like you can see it in hardware companies like Cisco, but very other few other companies had to play that many games.

Ben Horowitz (16:36)

In reality, if you're going to be around for more than 15, 20 years, you got to play all those things.

Martin Casado (16:40)

Yeah, that's true.

Ben Horowitz (16:41)

Fair enough. Because the markets change on you so fast. But yeah, I think if you have a consistent theme around how to do it, then it's quite possible. Yeah.

Raghu Raghuram (16:51)

And actually VMware interestingly was born before the cloud. So although it was kind of a cloud technology, it was like a very. It was almost like not even first generation, it was like pre, first generation cloud technology. So the cloud immediately put pressure on the business. It's this very difficult product cycle circumstance.

Ben Horowitz (17:14)

Oh, it's a business model too. Sorry.

David George (17:16)

Yeah.

Martin Casado (17:17)

Even like most people's first experience with VMware that were around at the time was actually as a consumer product.

Ben Horowitz (17:23)

Yes.

Martin Casado (17:24)

Like it was literally like, it was like, it was really like the first time I used was like the late 90s and I was like, I'm running Red Hat on my Windows machine. That was it. And so like, you go from like a consumer product to like this certain. And then, of course, you know, you did server consolidation, then became like, you know, deep enterprise product. And then of course, there's all the OEM stuff that happened early on. It was a very, very complex business.

Ben Horowitz (17:44)

Yeah, it was a complex business. And by the way, that's where the founder vision comes into play. Diane and Mendel, right, from day one, knew that they had to get to the server and they actually charted their path. They said, hey, we're going to get known with a desktop product, which, by the way, is going to work out all the bugs in the system and then we're going to go into the server and then into the data center. So you got to give them a lot of credit for that.

Martin Casado (18:05)

Yeah, for sure.

Raghu Raghuram (18:06)

Yeah, yeah.

David George (18:07)

So at exit. At exit, how large was the company? How many, how much revenue, how many people?

Ben Horowitz (18:13)

So we were 13 and a half billion in revenue.

Martin Casado (18:17)

And how big it was when you joined?

Ben Horowitz (18:19)

Roughly, I think it was 10 to 15, about 40 a quarter. Something like that. 40 a year? Something like that.

Martin Casado (18:27)

40 million.

David George (18:28)

40 million a year or something like that.

Martin Casado (18:30)

To 13 billion.

Ben Horowitz (18:31)

Yeah.

Martin Casado (18:33)

What a ride.

David George (18:34)

That's incredible.

Ben Horowitz (18:35)

Yeah.

David George (18:35)

Again with the cloud in your face. Like, that's the most incredible part of it.

Ben Horowitz (18:39)

No, it was Microsoft.

Martin Casado (18:40)

Well, Microsoft and Microsoft. Yeah, of course, VMware was sitting on top of Windows, Right. I mean, like, you know, Netscape.

Raghu Raghuram (18:46)

Yeah. What was the name of Microsoft's crap?

Martin Casado (18:48)

Hyper V. Hyper V. Hyper V, Hyper.

Ben Horowitz (18:50)

V. No, I mean, I think after the Netscape stint, the thing that gave me most satisfaction was beating back Hyper.

Martin Casado (18:58)

V. Yeah, of course I was gonna say.

Ben Horowitz (18:59)

That's right.

Martin Casado (19:00)

Face the same.

Ben Horowitz (19:01)

I'm like, you're not gonna get me a second time.

Martin Casado (19:02)

Yeah, a second time. I love that.

Ben Horowitz (19:05)

Yeah. So, yeah, so 30 and a half billion dollars, about 37,000 people.

David George (19:12)

Incredible.

Ben Horowitz (19:13)

And $69 billion in enterprise value.

Martin Casado (19:15)

Unbelievable.

Ben Horowitz (19:16)

Wow. Yeah.

David George (19:17)

What a run. Okay, so I now wanna shift topics. You have this incredible set of experiences, you know, compute, network, storage, maybe better than anyone, experience wise. What are you going to do with Sierra?

Ben Horowitz (19:32)

Yeah, I mean, I think I would say fundamentally two or three areas where I'm super excited by. One is like we were talking about the other week. Everything from the foundation model down all the way to the power station is going to get reinvented.

David George (19:47)

Yeah, of course.

Ben Horowitz (19:48)

Yeah, right. There is just no other way. You can supply all the compute that AI is going to need. Right. And that opens up all the opportunity in the world. For the last 15 years, you really did not have opportunity as a hardware vendor because everything was being done in house by the hyperscalers. Right now there is near clouds and the world is moving so fast, even too fast for the hyperscalers. OpenAI is going to build a lot of things on their own, Oracle, et cetera, et cetera. So now there's a legitimate infrastructure market that's opened up for innovators. Right. So I think I'm super excited by that. I think that's going to be a significant area for both early stage companies as well as late stage companies.

Martin Casado (20:34)

Yeah.

David George (20:34)

And helping late stage companies navigate that market as well.

Ben Horowitz (20:37)

Yeah, there are going to be new types of service providers, et cetera. I think that's one, the second one, and this is more in partnership with you on the growth side. These enterprise. The enterprise transformation will happen right through AI. I think that's going to open up a lot of opportunities. And then the third is adjacent areas to the data center, like robotics, applied to the data center, generally robotics as a whole. Those are all areas that are going to be physical AI. In other words, significant areas that I think are going to be a lot of exciting things, a lot of fun to go study and work on.

Martin Casado (21:14)

So one thing that really occurred to me as Raghu was talking to us about joining is where this very unique point in history where even very small companies have the problems that would draw on the breath of someone like Raghu. Think about someone like Curse. Right. The ecosystem includes kind of incumbents at scale. The company is at scale. How do you manage platforms? How do you manage the clouds? All of these things are at the sophistication that you would actually see a VMware. Right. And it's just because AI is growing so fast. And so one thing that, I mean, I've said this, you know, many times is Rigor's the best techno strategist in the industry, and I strongly believe that. But also he has this wealth of experience when it comes to partnerships. You know, OEM deals, dealing with incumbents, you know, dealing with competitors, dealing with challengers, dealing with stuff like the whole thing. So it's like if you could distill all that down, International expansion. International expansion, literally it applies to the companies in the portfolio that aren't that. Yeah. So like you would think, like, oh, this is some, you know, this is only going to be growth stage stuff. And it's absolutely well, it's not so relevant.

David George (22:24)

That's the. That's the dynamic they are. Early stage companies reach the problems of big companies so fast because they grow so fast. And so this is the magic of organic demand and like the market pool.

Martin Casado (22:33)

That they're all in. In fact, you know, as. As you know, Raghu was coming on board. I mean, probably every night I would call him asking for some help with like, you know, a 10 company. I'm like, raghu, can you help with this intro? Can you talk to us about whatever? And so this is the reality of what we're living in. Everything's been changed all at once. The problems are the problems that you would face as a very serious senior CEO. And so it's great to actually have that kind of experience and talent around the table.

Ben Horowitz (22:59)

Yeah. Early stage companies are having large company questions being posed to them.

David George (23:06)

Well, it used to be like year 10 or 15 when you're facing things like how do I be multi channel, multi product, international. And now it's like year one and a half. These are the companies like all you see.

Martin Casado (23:15)

You see M and A, like, yeah, of course they're working very well, these very large cloud partners. I mean, we have companies that will like, raise money and then broker $100 million GPU deal.

David George (23:26)

Right.

Martin Casado (23:26)

I mean, this happens all the time.

David George (23:28)

With tiny, like, very small companies.

Martin Casado (23:30)

And then you're relying on these, I mean, all of these things that you have to manage, you know, so.

Raghu Raghuram (23:34)

Yeah, well, and the thing that's still true is none of the founders, you know, a year into running the company or two years in, have any of those skills.

Martin Casado (23:45)

Right, of course.

Raghu Raghuram (23:46)

And so it's just such a boost to have somebody to talk to. I mean, it's just, it's transformational because the number of mistakes that you will make right there and blow yourself to bits is just insane. Well, and we have to change too, right? Like, we. The way you build a company is different. The technology stack is different, the type of people you hire are different. And so we also have to be different. And so one of the things that, for me is great about having Raghu here is there's a lot to do on that front, you know, on every dimension there. So I need help too.

David George (24:26)

Yeah, yeah, exactly. It's about the combination of the companies growing really big really fast and facing big company problems really fast at the same time that companies stay private so much longer now. Like, we have to evolve to that, you know, dynamic as well. And so, so one of the areas, Raghu, that You mentioned that you are intrigued by and you have obviously great experience in is robotics. I'd love to hear your state of the world of robotics right now and what gets you excited over the next few years.

Ben Horowitz (24:57)

Yeah, I mean, I started looking into the data center construction and all that. Right. And server construction. And you find that, number one, all those industries are highly manual today, believe it or not. Right. These AI servers that people are building is like 70% of labor or 80% of labor. Right.

Martin Casado (25:19)

Wow.

Ben Horowitz (25:19)

And if you look at the bazillions of GPUs that have to get turned into usable infrastructure and all the power that is getting converted, the only way that's going to happen is there's going to be a lot of robotics. Right. And then you look at that and you say, turn out, say, what are the generalizable elements from a robotic build out of data centers? I think that applies to pretty much the robotic build out of a lot of manufacturing things. I mean, humanoid is obviously the most exciting concept, but the pathways to getting humanoids to work itself is very valuable because of all the ways you can use everything that comes along the way. Yeah, I mean, that's, that's the really interesting thing. And there is horizontal infrastructure that's needed, like the data infrastructure that's needed. And if you want to get the right training, you got these sensors from various different places that has to get synchronized. So there's a lot of new infrastructure that needs to get built.

Martin Casado (26:14)

So I think robotics is so verticalized that, you know, it's more defined by the market it goes after than something pure horizontal.

Ben Horowitz (26:23)

Which is, which is.

Martin Casado (26:24)

Yeah, which is why I'm very happy Raghu is focused on it, because when it comes to things like infrastructure creation and servers and data centers, we can become real experts in that. And he's got a lot of background in that. And I just think it's kind of funny because we wrote this piece on where China is head of the United States, and a lot of people are like, okay, well, that means you're investing in humanoids. I'm like, listen, humanoids are very interesting. Maybe somebody at Andreessen Horowitz is investing in humanoids. I know nothing about this, but I do know a lot about the manufacturing of chips, for example. And so I think, you know, listen, we, we need to take a systemic approach to understanding this market. There's a tremendous amount of opportunity. We're going to do a broad set of research, but, you know, we will definitely focus on the areas that we understand.

David George (27:08)

Yeah, absolutely. Yeah. And I think the important point that you're making is there's going to be a ton of productive use cases that happen that lead up to that point where you have humanoids walking around and doing personalized tasks.

Ben Horowitz (27:19)

Yeah, yeah. And the history of infrastructure is infrastructure is actually a second order thing to the solution.

Martin Casado (27:24)

Yeah, yeah.

Ben Horowitz (27:25)

First you come up with some solution and then the infrastructure falls out of it almost. And I think that's what has to happen in robotics too. So. Yeah, so you have a vertical solution and then you get the infrastructure.

Martin Casado (27:36)

That's right. I mean, I remember like, you know, we actually invested a lot in the drone wave. If you actually looked at those businesses at the time and we had experience with a lot of them, like you'd kind of evaluate, you know, at first we'd evaluate it as tech companies. Like, oh, this is a drone company. You look at the tech and you look at the team. But then you find like, if you're selling into insurance, you kind of have to become an insurance company. And like they're actually buying, you know, like whatever you see, you're buying it from a human or you're buying it from a drone. And if you're doing construction, you're a construction company. If you're ag, you're an AG company. And so I think from that we've learned that you have to really be a specialist in this space. You're going to do it. You can't just be kind of a garden variety infrastructure investor. That said, sometimes you get these aggregation points where to build the robotics you need. There are horizontal tools you can use. So for example, in the AV industry, it turns out you needed high definition mappings and you need a simulation. Right. And so like you could create a company like Applied Intuition, which allows you to kind of do software. So there are opportunities to do these kind of horizontal investments. Sometimes the software, sometimes they're hardware. But I think the closer you get to the actual robot, the more you have to verticalize in the industry.

Ben Horowitz (28:38)

Once you solve the vertical problem, the horizontal pieces come out naturally.

Martin Casado (28:41)

Yeah, yeah, absolutely.

David George (28:42)

And there's commonalities that you identify. Absolutely.

Martin Casado (28:44)

That's exactly right. That's right. Cool.

David George (28:46)

We're so lucky to have Ragu with us.

Ben Horowitz (28:48)

No, no. I'm so lucky to be here. Come on.

Martin Casado (28:50)

Yeah.

David George (28:51)

This is awesome.

Raghu Raghuram (28:52)

And the other great thing is he fits right in.

David George (28:54)

Yeah.

Raghu Raghuram (28:55)

Of course, I can't say how valuable that is. That, that.

David George (28:58)

Oh yeah.

Martin Casado (28:59)

Perfect.

David George (29:00)

Friday night, slacking at nine o' clock with, with thoughts on markets.

Ben Horowitz (29:04)

And it helps if you're empty nester.

Martin Casado (29:05)

Yeah, exactly.

David George (29:07)

Exactly. Well, we love it.

Martin Casado (29:09)

Awesome.

Ben Horowitz (29:10)

Great, man.

Podcast Host/Announcer (29:10)

Okay.

Ben Horowitz (29:11)

All right, guys, thanks for doing this.

Raghu Raghuram (29:13)

Thanks.

Ben Horowitz (29:13)

Yeah.

Podcast Host/Announcer (29:16)

Thanks for listening to this episode of the A16Z podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating, or review and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X16Z and subscribe to our substack@a16z.substack.com thanks again for listening and I'll see you in the next episode. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see a16z.com disclosures.