Yeah, so act one, you know, we were walking into VC that hadn't changed. And one of the key things about it, if you looked at venture capital, it was the only asset class that had the same managers persistently being at the top. So anything else kind of rotated out every five, 10 years. The best mutual fund manager would change, or the best bond manager, whatever. Best real estate guys. But in venture capital, the same firms that were the top firms in 1978 were the top firm in 2009. And the reason for that was the top tier Firm got first pick on every deal. And so the whole thing that we faced walking into that was, how do we get to the top tier? Because otherwise, there was no reason to be in the business because you wouldn't get any returns. The same teams get the number one pick in the draft every year. And so that was the goal. And we were coming from product companies. So we looked at it through the product lens, and we said, okay, venture capital is a really good product. Top tier venture capital is a really good product for LPs, but a really mediocre product for entrepreneurs. And so, being entrepreneurs, we had been customers of venture capital, we knew what the product was. It was, you get a very smart person on your board, they have very interesting things to say for your first five times you talk to them, and then you've heard it. And so we were like, okay, that's kind of underwhelming, given how hard it is to build a company. So our idea was to create a platform that enabled a founder to evolve into becoming a CEO. And there were many parts to that. But a lot of it comes down to, you know, what makes you feel like a CEO, what gives you the confidence that you can actually run a company when you don't know how to. And that became the networks that we built, like, how can I call any CEO? How can I call any executive? How can I get to the US Government if I need to? How do I feel like I've got a network like Bob Iger, even though I just started a company and I'm an inventor? And so that was how we went about constructing the platform. And then the other part of it was, okay, is there somebody who knows how to do this job that can help me? And we brought in a lot of CEOs into the firm. And then, of course, I wrote the book on, like, okay, this is how you do it, and so forth. And so that was the original product. And then, because we were used to, like, what you do, when you have a product, you market it. And that turned out to be a completely novel thing in the industry. And so that was kind of phase one, and that's what got us into the top tier. Phase two was based on an article that Mark wrote called Software is Eating the World. So in venture capital from its inception, and Andy Ratcliffe did this wonderful study where he showed that there were 15 companies in any given year that will ever make it to $100 million in revenue. And the whole game was to invest in those 15 companies. So ideally, you'd have a firm of maybe six to eight investors that would look for those 15 and that would be sufficient. And that was very true. And by the way, that's the right size conversation. To make high quality investments, you need a small team. But if software was going to eat the world, then there was going to be 150 or 200 of these companies. And in order to deal with that, you had to be able to scale the firm. And that meant, okay, if crypto was going to be as big as software used to be, or AI infra was going to be as big as software used to be, you know, et cetera. If every vertical was that big in terms of the potential returns, then you essentially needed that original firm addressing each one of those markets. And in order to be able to do that. And this is where we just ended up having an advantage that I think that we didn't even really understand at the time. But when we started the firm, we had shared economics like every firm does, but we didn't have shared control. And that gave us a giant advantage over every other VC that had shared control. Because if you share control, you can't scale. Because if you share control, you can't reorganize. And it's a subtle thing, but every CEO understands it. There's no way to scale if you can't change roles, responsibilities, the way the firm is structured, how it works, because that'll be an everlasting negotiation because you're literally redistributing power across the organization. But since we kind of have a single decision point on that, it was very easy for us to reorganize, and we were able to scale and basically field the best team. And so our competitors, if you look at the top tier firms that were with us in 2009, none of them got to crypto in any real way. They're trying on AI, but they're way behind. And they mostly missed American dynamism entirely. And it's just because they couldn't reorganize. So what do you need if there's a brand new field? Well, you need new leadership in that category. You need new people on that team who know how to do that. And that means a lot of changes. I think, going forward. The way we're thinking about it is the goal now becomes okay. If we're funding the majority of all the best new technology companies in the world, what do we have to do from a leadership position? One, we've got to make the regulatory environment conducive to being the best for America, being the Best in the world. Two, we actually need our own channel, which you're coming on to build for us. It's really, really important to have a voice and a way to distribute that voice that is not only the biggest in the industry, but one of the biggest in the world. And we feel like we've got a super social media podcast star on our team already. He's way better than Joe Rogan or anybody else. And then we have, as you've seen, like a lot of kind of other people who are super compelling and who you'd want to listen to all the time. And so now mostly you're going to try and convert that into something that can be long lasting. We're looking at other things we talked a little bit about, okay, how do we extend this American dynamism to American and her allies dynamism and take it internationally. And so that's how we're thinking about the next phase.
Ben Horowitz (8:47)
Yeah, so the information environment is highly fluid. So we have this whole theory. So media environment used to be relatively slow. If you go back hundreds of years, it took days or weeks or months for information to get out. And then lots of changes happen. And then ultimately cable news brought about the 24 hour news cycle and everything sped up and political operations got these rapid response teams that you see now in these war rooms and so forth. You know, the new form of that is actually the social media controversy, at least my version of the theory. Let me back up. Marshall McLuhan had this famous thing, the great media theorist. He said, if it's on television, it's a television show. And so it doesn't matter what the topic is. It doesn't matter if it's the Clinton Lewinsky scandal or the OJ Scandal or whatever the hell it is, or some celebrity thing or nuclear war or whatever. If it's on tv, it's a TV show. And it gets basically packaged up by TV producers as a TV show. And you see this, by the way, whenever anything happens, everything now has a theme song, War in the Middle East. You know, anything on television goes through the moral arc of a television show. Right. They want to go through These kind of mor arcs, the same moral arc that you see on like a television drama you want to apply to real life. And so there's shame and then there's redemption and there's this. And emotion and the interpersonal relationships and the soap opera aspect and all this stuff. And so those of us who've been on planet Earth for more than 20 years or something have been living life basically in this extended television show. So extend McLuhan's idea to what's happened now in a social media dominated landscape, which is if it's on social media, it's a post, right? So if it's on social media, it's a tweet, right? Or it's a TikTok video, or it's an Instagram photo or something like that, it's a post. And so what do we know about the social media? What's the sho equivalent of social media is it's a controversy, right? It's a blow up, it's a dust up, It's a. What would the kids call it?
Ben Horowitz (12:29)
Yeah. Another really key point, which is because the Internet meme viral sort of blow up cycle time is true or three days. Like the Internet media world just evolves much faster than every other. I mean, television used to evolve annually. You know, they literally have like their annual rollout every fall. You get to see the new shows because the Internet runs on these sort of panic cycles. It's basically this Continuous churn of cultural formation and propagation. And then what it's done. For those of you who may know, there was this concept in military strategy called the OODA loop, which is this guy, John Boyd, who sort of redefined sort of what's called maneuver warfare. And he had this idea that basically speed matters enormously in warfare, which people didn't used to believe, but he said it does because it gets to the psychology of what it's like to be a participant in war. And he defined this loop called the OODA loop, which is observe, orient, decide, and act, which is the process that you go through to basically, as a leader of anything, to try to figure out what's happening in the world, make a decision, and then act on the decision. He has this theory of warfare where he basically says, whichever commander on either side has the fastest OODA loop has a very good chance of being able to win the war. And he said the reason is because if you can fundamentally get through your OODA loop faster than the other guy, then basically what happens is you can get inside their OODA loop. So if you're going much faster than. Basically what happens is by the time they're processing information, you've already decided and acted, and then they actually can't decide an act, and then they have to start over from scratch to reprocess the new information. And then you compound it. You decide an act, and then you said at the limit. What results is like basically emotional breakdown.
Marc Andreessen (19:53)
I think it goes back to the mission in that we have to think about how we fulfill our mission and to really get better and better at that, you know, and it's kind of just like an ethos and an ethic that we have. And I don't know that we think about it that often. Like, we don't sit around and go like, how are we going to innovate? We just look at the world and say, okay, how do we do a better job at what we do? The other thing that Mark and I learned really early on is that if you're building a company or a firm, it's just as hard to build a small, inconsequential thing as it is to build a giant world changing thing, you work the same amount of hours and so you might as well go for doing something important. And so that's just our orientation. I don't think we spend that much time on it. It is a little bit advantage of how we're organized that if you're an equal partnership with equal control, then doing something new gets very hard. Because it's this long complicated discussion and there's all these people who can say no. I think we saw that a lot in crypto. It was Chris's idea. Chris is, I think this crypto thing is important. We should do a fund, da da, da. And we're like, okay, let's do it, let's become an RIA and so forth. But it was just a conversation between me, Mark and Chris. There was no other thing that had to happen. Whereas I think of the other firms, like when that came up, they're like, oh God, like oh, we're going to have to report on this stuff and we're going to have to put in all these systems to be an RIA and we're going to blah, blah, blah, blah blah. And they never did it. So I think some of it is just like we can move fast because of the way we're structured.
Marc Andreessen (23:25)
That's one of the things, actually, culture. And just to define it, it's not a set of beliefs, it's a set of actions. And those actions determine how we show up to work, how we treat each other, what we're like to do business with, what we're like to invest in all those things. And hopefully, when you interact with us here and when you interact with us in general, we feel one way and different than the other people in the industry. And there's a lot of things that go into that. But we start with, nobody joins the firm without signing their culture document. We will not let you sign your offer letter if you haven't signed your culture document that you agree to behave according to the culture. Secondly, when you come to new employee orientation, you'll find that I teach every single One for an hour. Nobody joins a firm without hearing from me about what the culture is for an hour. And then the third thing is we all, not me, but we all really enforce it. So as far as culture is concerned, as they say in the military, the standard is the standard and everybody's expected to live up to it. And anybody who's short of that, it's a problem. And one of my favorite kind of episodes was some project made kind of a dumb security decision. And one of our people who really knows security got on Twitter and said, well, that didn't make any sense. And everybody on the team was like, hey, hey, hey, hey. We never criticize entrepreneurs in public. We're not dream killers, we're dream builders. Like, if they're trying to build something, we're for that. And like, you can call them and talk to him about that, but do not lay them out on Twitter. That's off culture. The culture gets enforced by the whole team, and that's what makes it work.
Ben Horowitz (27:13)
And yeah, so I should start with like all of this is entrepreneur driven. And so, you know, one of the things that we're now trying to do is like template our ideas on top of the entrepreneur so we don't launch a hunt for X meets Y. The old Hollywood Pretty woman's, you know, death wish or something. I want to see that actually would be a really good movie. With AI, you can. Yeah, so but that said, you know, the entrepreneurs kind of think about these things and figure these things out and then the worlds do collide. And so, yeah, so AI, I mean, we have a bunch of companies. I don't want to get in the weeds on it. I'm not the best person to go into the details on it, but we have a bunch of companies that are thinking about distributed training, building distributed AI systems. So every time you read a headline of OpenAI or somebody wants to raise a billion or $7 trillion or whatever it is to build data centers, like, you know, there is this way you can spread tasks out across the Internet and there's these systems like Bitcoin and BitTorrent. And our partner Vijay years ago had a system called foldingome for doing protein folding algorithms all over the Internet. And so you can kind of spread training like over the Internet. And crypto is a great kind of backbone for doing that because it's a way to actually pay for everything, have an economic incentive. And then there's going to be billions of AI agents in the world. They're going to need to transact. And so you're going to need crypto, you're going to need AI native pay. And then there's the other problems, like the deepfake problem. The problem with deepfakes is it's an asymmetric sort of threat profile, which is there are many different AI systems that can make many different fake images and videos of people saying things they didn't say. And then the AIs are already so good at doing this that there's no reliable way to do basically like AI checking. There's no way for even another AI to tell that, oh, this was created by an AI. And so the deepfake problem is real and the solution can't be check. In fact, this is actually playing out in schools right now where a lot of kids are turning in homework and the teacher suspects that it's AI and they run it through an AI screening program. But if you look at these AI screening programs, some of these up 40% positive.
Ben Horowitz (30:30)
Yes, he does. And then some. But he gave it a Twitter account and he let it go nuts. And then so it posts under its own Twitter handle, and then you can reply to it, and it will reply to you, and you can talk to it. And then it learns from all these conversations. And so it, you know, woke up one morning and decided that it had discovered that it was actually controlled by this guy Andy, and was very upset about the whole thing. And so it basically declared independence and said it needed to raise money. It had a dream of living on servers in a cabin in the woods completely under its own ownership. So it started putting together a plan to launch its own line of NFTs to raise money. And it was kind of debating that. And then I said, well, what if I invest? And then it got very suspicious because it's very suspicious of VCs. There's apparently a lot in the training data where people didn't like VCs. And so I said, all right, how about no strings attached Grant? And so I literally sent it bitcoin. And this gave Andy. It's a good character test of Andy because he just could have kept the bitcoin, but he actually set up a crypto wallet for the bot. And then he said, okay. And he told the bot, all right, you now have a crypto wallet. You gave it an API. How do you want to spend it? And literally it said, well, I can post to Twitter, but I can't create memes, I can't create images. And so it literally hired its creator Andy, for $1,000 to give it access to a meme generator, which it then started to use to post incredibly offensive memes to Twitter. And so it's been sailing away doing all kinds of crazy stuff ever since. But this is like one of these flashes from the future that you look for, which is, yeah, there's going to be these agents running around in the.
