A16Z Partner: Why "Just Capital" Is Not Enough Anymore (The Firm of 2030) | David Haber

There's a lot of ways to be successful in the investing business, but most people are running funds. I think very few people are building firms. And if we're distinguishing between funds and firms, it's that most fund managers are focused through a fairly narrow lens of, like, "What is my next marginal investment going to be?"

Most firms are run by entrepreneurs. But importantly, you know, one of the unique competitive advantages, which we can get into more deeply, is.

David Haber is a general partner at Andreessen Horowitz, one of the largest and most influential venture capital firms in the world.

And today he's revealing the key differences between funds and firms.

And what it really takes to build an investment firm that lasts.

The objective function of a fund is sort of singular. It's: how do I generate the most carry with the fewest people in the shortest amount of time possible? But these are things, tactically, that can make or break a company.

Most funds, they often have a single CIO. It's the alpha kind of investment decision-maker that, you know, they have a bunch of other people that work at the firm, but ultimately it bubbles up to one person making a decision.

But I think it's very fragile. If that person decides to retire, the entire infrastructure disappears almost overnight. But as a firm, there's actually very little top-down direction,right? Everything we do should ultimately reinforce delivering the best product for the entrepreneur.

Entrepreneurs spend all their time thinking about their competitive advantages. And most fund managers, I would argue, don't. And so if you want to grow, making the firm feel like a platform for smart entrepreneurial people to build on top of is one of the most important reasons the firm, I think, is going to be so enduring.

We are compounding our reputation first and foremost, but it's only because we are delivering a great product for the best entrepreneurs. And a firm, you know, is really two variables. One is.

David, it's so good to have you here. We actually first got connected about five years ago. I called emailed you, called DM'd you on X in your first week of joining Andreessen. So this is the first time we're speaking face-to-face.

It's awesome to have you here.

Ollie, great to see you, and thanks for having me.

There's this whole new trend emerging, which is, you know, the fund versus firm kind of theme. What does that look like for the future of venture? You had a great article which just came out, which went super viral.

So that's going to be the main theme of today's show. And there's this one big thing that everybody's talking about: AI. So hopefully you'll get some hot takes from you around that. When founders think about fundraising, the one name which always comes up is Andreessen.

But I don't think many founders actually know what goes on behind the scenes. How does Andreessen actually operate? You know, I kind of think of it as you all run your, like, mini little funds. Is that kind of how it works?

Like, what goes on behind closed doors?

It is. I mean, yeah, we're kind of a team of specialists, you know, and the firm has grown. I mean, I joined the firm almost five years ago in 2021 to kind of do two things. One was to open our New York office, which is where I'm sitting.

And we've grown our presence here, you know, pretty meaningfully. We're now about 100 full-time people in New York City. The whole firm, by the way, has grown from about, I think it was 170 people when I joined in 2021, now about 600 people.

Again, spread out across kind of all of our different investment practice areas. But importantly, you know, one of the, you know, kind of unique competitive advantages, which we can get into more deeply, is, you know, the vast majority of our headcount sits across our operating platform, across a number of kind of functional areas, whether it's, you know, marketing or people practices or capital markets.

You know, it's this entire sort of war machine, you know, that we make available to our entrepreneurs to kind of tilt the board in their favor. And that was sort of the core ethos, you know, of Andreessen Horowitz from inception was, you know, Marc and Ben, you know, wanted to build ultimately the best product for entrepreneurs.

I think their view, having been the customers, you know, of the best, you know, venture capital firms at the time, was that it was a great product for LPs and kind of a mediocre product for the entrepreneur. And, you know, from the very beginning, they basically, instead of paying themselves, you know, large salaries, they began sort of reinvesting management fees into this sort of platform.

And that's just continued to grow and certainly benefited, you know, from economies of scale. But from an investing perspective, yeah, we each sit across kind of our different, you know, areas of expertise. Again, I sit in our AI applications fund.

So investing at the early stages across, you know, consumer and B2B applications, I tend to focus more on the B2B side of that equation. But, you know, I often say we're strongest at our intersections. And so we, you know, we collaborate, you know, across the firm, you know, fairly regularly as well.

It's amazing, you know, just how fast Andreessen has grown. I mean, you just mentioned like the headcount, which has grown like massively, but also all the new initiatives you're launching,right? New media, which has just come out last night, some of the biggest creators, which we'll talk more about.

But it feels also, you know, venture is changing so quickly, but also the startup ecosystem is changing so quickly,right? AI, like ChatGPT, came out basically 1,000 days ago,right? November the 30th, 2022. Like I remember exactly what I was doing and this new thing kind of exploded.

Have you been surprised just like how quickly AI has changed in really only 1,000 days?

Honestly, yes. I mean, it's grown, you know, faster than I think we expected. And we were incredibly bullish,right? We put a lot of money to work, obviously, across, you know, all parts of the AI stack and it's exceeded our expectations.

And, you know, I think that's fundamentally because software is actually doing the work,right? And so many markets, which I'm sure we'll get into, you know, that were never particularly interesting to sell software into, have now become radically interesting, you know, spaces for investment because, again, the TAM is no longer just IT spend, it's actually labor.

And I think that's one of the kind of core driving forces of kind of the acceleration that we've seen across many of our businesses. But yeah, it's been an incredibly exciting period. And candidly, I think we're still just at the beginning of this wave.

It's so exciting. And so many founders now are building amazing products with, you know, one two-man team,right? And it's only going to keep changing. But how has your role as an ambassador changed? And now, you know, where you spend most of your time, we're going to talk about some of the trends you're really excited about, but kind of just on a day-to-day, where are you spending most of your time or what's getting you really excited?

Yeah, look, we still spend the vast majority of our time meeting with entrepreneurs and trying to understand kind of what's happening on the frontier. And that's, you know, an incredibly privileged position,right? We get paid to learn from, you know, some of the smartest, most passionate people in the world about, you know, their areas of expertise and whatever they're building.

So, you know, that's still the vast majority of our time. You know, I also, we also all spend a meaningful amount of our time, you know, helping our entrepreneurs, you know, build the best businesses we can. You know, part of that is sort of marshaling the resources of the firm, as I mentioned, you know, the operating platform and ensuring that we're solving whatever problems come up.

A big part of that is sort of building networks,right? Networks with the ecosystem of incumbents,right? And that's been a particularly fun, you know, fun thing to invest in and focus on here in New York City because, you know, basically every large company in the world, you know, has some meaningful presence in New York.

And so, you know, part of this was a bit informed by my experience at Goldman Sachs and just seeing, you know, how distant in some ways, you know, large incumbent can be from what's happening, you know, on the frontier at the seed and Series A stage.

And I think we have sort of a unique opportunity, you know, as a 16z to be sort of this convening power,right? And so we spent a lot of time meeting, you know, the CEOs, the executive leaders, you know, the P&L owners at many of these companies who are driving, you know, change and managing large organizations.

They'd love to know what's happening on the frontier, but they have, you know, other priorities. They have 10,000 people to manage. And so, you know, that's part of what we're trying to do too is understand their strategic priorities and then bring them, you know, portfolio companies that are relevant in helping potentially solve those challenges.

And by the way, some of those live within the portfolio, many of those don't. And so we just try to be sort of a clearinghouse for great ideas and great problems. And so that's been, you know, another fun way to kind of spend time, you know, especially here in New York City, although we do it, you know, across the country and the globe as well.

I love that. We can talk more about like what the future of venture is looking like, you know, especially with the whole value add, distribution and moats and so on. So much we can cover there. But let's talk about your family story.

You mentioned Goldman Sachs. You actually, you know, were a former founder,right? Building Bond Streets. Like I actually remember when you guys started, you know, I think it was around 2013, 2014, I saw this, you know, lending business come from my partner.

I thought, "Oh, this is really cool. Let's check it out." Why did you want to go down this crazy route of like, you know, building your own company?

Yeah, you know, my career has kind of been bouncing back and forth in some ways between being an investor and an entrepreneur and operator, I guess, troublemaker maybe inside of Goldman Sachs.

You know, and I first kind of got exposed to, you know, both technology and fintech in particular when I was at Spark. You know, I joined them back in 2011, you know, seeded, got lucky in some ways, seeded amazing companies like Plaid when I was there.

You know, but as a young VC, you would often bump into, you know, fast-growing physical products businesses, services companies that in many cases were doing, you know, millions of dollars year in revenue, were profitable, were growing, weren't necessarily a fit for venture capital, but also were struggling to raise bank financing.

And as you dug into the problem, you know, more deeply, you realized, you know, taking out a loan from a bank really hadn't changed in 50 years,right? You still had to print out your physical financials, walk into a branch, you know, they'd fax that document to Texas, somebody's rekeying in the information to their system, and, you know, maybe 8 to 12 weeks later, you get a decision, you know, yes or no, they're declining the vast majority of applicants, and you have no visibility, you know, in that interim period as to the likelihood of approval or how much.

It just seemed like a very broken process. And in 2013, as you mentioned, you know, a lot was changing from a technology perspective. A lot of the data that we thought we would need to sort of understand the financial health of small businesses at that point was just becoming available online via API.

So that year Intuit just launched the QuickBooks API, but also Xero and Stripe and Harvest and Braintree. You know, many of the leading kind of accounting, invoicing, and payments companies were just beginning to kind of open up and become platforms.

That year, the IRS started accepting e-signature, so you could get access to a company's tax transcripts programmatically. We knew we could write integrations into the credit bureaus. And as I mentioned, we had just seeded Plaid in 2013 as well.

So you could, you know, authenticate access to your bank account and get kind of real-time visibility into transaction data. And so the sort of why now, at least from a technology perspective, seemed to really be changing in that moment where, again, instead of printing out your financials, you could kind of authenticate access to all your different accounts.

We could ingest that information, you know, and interpret the financial health of your company and ultimately make lending decisions, you know, in minutes instead of, you know, days or weeks. And that was sort of the brand promise that we were trying to deliver with Bond Street.

And, you know, I think we did get close to that. It was a challenging business for other reasons, which we can get into, but I'm still very close with many of the entrepreneurs that we served. And it's just very gratifying to see the physical impact, you know, that we've had, you know, across the country and even here in New York City.

That's amazing. I mean, I kind of remember that time, 2014, 2018, 2014, okay, I was only 16, 17 years old,right? Not for your age on you, but that kind of whole time, 2014, 2018, like all of these new banks were coming out, you know, you can get a digital bank like super quickly instead of going through like, you know, your mom and dad's bank, which took months and months to sort out.

But I also imagine like back then, there were so many challenges like trying to get these fintechs kind of off the ground. What do you think were some of those early challenges, you know, the top kind of like one or two, which are ingrained in you that you now pass over to, you know, fellow fintech founders, which you had to overcome?

Well, everything was new, you know, for me. I was a first-time founder. I was 25 when I started the business, you know, at the time. So, you know, raising equity was new, although I had seen, had some pattern recognition, I guess, from my time at Spark.

Had never raised debt capital before, which is way more complicated and challenging than raising equity because ultimately, you know, every, you know, you're sort of defining the perimeter of a box that your business model needs to fit comfortably inside.

And VCs, in my experience, are friendlier than credit investors. You're very focused on downside risk versus sort of, you know, potential upside. You know, we ended up raising $900M in debt capital, you know, in the four years that we ran the business, 11.5 million of equity.

So that was challenging. We were only able to do that because we built an exceptional team, you know, which is what I'm most proud of. You know, the first person that we hired was a guy named Jerry Weiss, who, you know, I think was 57 when he joined us in my apartment building before we had payroll set up.

He had been the former head of credit risk at Citibank and, you know, at that point had been underwriting small business loans longer than I'd been alive and really kind of set the culture of the company,right? I think what he brought, you know, he didn't just show up and said, "Ah, you kids, you know, you don't know what the hell you're doing.

Like I'm, you know, I'm the guy who's going to teach you everything." I think he understood certainly the value that he was going to bring to the business, but I think he also was excited to both learn from us and from the experience of going zero to one, which he'd never done before.

And so that sort of set this tone of what I called like humble confidence, you know, and that was sort of a quality that we looked for, you know, in every person that we brought into the team. But there were a lot of challenges.

I mean, you know, even just a lot of the infrastructure that now exists in the fintech ecosystem, some of which we've invested in, you know, here at Andreessen over the years, just didn't exist. So you had to build a lot of your own kind of internal, you know, capabilities.

You didn't get to sort of stand on the shoulders of other giants. And that just made it, you know, more challenging than it, you know, would be to build the same business, you know, today, certainly.

I mean, that's the great thing about building a company,right? Yes, it's super exciting, but there are so many challenges that come with it. But one of the great things about the story is, you know, this amazing giant came along, Goldman Sachs,right?

And the product company was eventually acquired and eventually became Marcus, which many of us know about. How did that all come about and, you know, what were you going through during those times?

Well, like with everything, I think it all starts with relationships. I mean, it's sort of funny. I, you know, and I always say careers are long and you never know how life is going to reintersect. So I first met a guy named Omar Ismail when he was a managing director inside of the Merchant Bank in Goldman Sachs in 2014.

And I met him because, as I mentioned, I was trying to raise debt capital. I had no idea what the hell I was doing. I didn't know what the Merchant Bank did or what it was. You know, I just thought it was sort of house money inside of Goldman Sachs.

Turns out it's the private equity arm, you know, basically of Goldman Sachs. And he at the time had been a, you know, largely a private equity investor, but was working with firm leadership at the time to figure out what they were going to do with the bank.

You know, Goldman became a bank holding company in the financial crisis, and they always sort of treated the actual like legal bank entity as sort of this sort of regulatory piece of infrastructure because historically for 140 years, Goldman had been a broker-dealer, not really like a traditional bank in that sense.

And yet they thought that there would be sort of an interesting commercial opportunity. And so at the time, he had actually expressed interest in potentially acquiring Bond Street then. We were six people working in my apartment. I'm like, "What are you talking about?

I just quit my job as a VC. I want to go be an entrepreneur. Like I don't want to go work at Goldman Sachs." You know, fast forward, you know, three or four years later, you know, we stayed close.

We would get coffee every, you know, few months. He, you know, that sort of seed of an idea, you know, ultimately became, you know, a consumer business that he ended up leading the Merchant Bank to go lead. And, you know, not everything in building a business is up and to theright.

Lending Club had gone public in 2016 and then declined, you know, precipitously in, I think, late 2016, 2017, almost 90%. And, you know, we were trying to figure out, you know, what to do with the company,right? Should we go, you know, take the term sheet that we had for a Series B or, you know, explore some of these, you know, this M&A interest?

And, you know, ultimately we decided on the latter and, you know, joined Marcus. About 30 of us joined Marcus together. And it was a fascinating experience,right? Going from, you know, a team of a few dozen to 40,000 people overnight was, you know, something I'd never experienced before.

Very much not the CEO of Goldman Sachs. But, you know, I learned a ton about myself, about what leadership looks like, about, you know, how a firm like that, you know, truly operates, you know, from the inside. We can get into that.

But, you know, in retrospect, I'm very grateful for that time and for the outcome that we had.

I was going to say, you know, going from just a bunch of you,right, into this tremendous, you know, conglomerate bank with tens of thousands of people all around the world, how did you mentally adapt going from that kind of, you know, true founder mindset, hustling, grinding every day to being in this kind of like corporate wagon wheel?

I mean, honestly, the first six months was probably just recovery. Like I was exhausted. You know, when you're building a business, you're 120% in, you're just sort of, you know, maniacally focused on building your company. There's a bit of an emotional disconnect that you need to kind of go through, I think, to make your team successful inside that organization,right?

You know, for the prior four years, they would look to you as CEO for kind of leadership and direction. And that wasn't the case,right? Many of them began reporting to other people in the organization. And you kind of have to let them go,right?

And let them kind of assimilate into the company to be successful. So that was, I think, a bit of a transition. At some point though, you know, my natural instincts are to lean into risk,right, as an entrepreneur. And I remember asking myself, like, what does it mean to take risk inside of a big company?

And, you know, for me, that basically meant like, you know, completely disregard your title, your job description, you know, speak very plainly to the most senior people at the company, you know, and the most junior on what you see that's working and what's broken.

And so I just started, funny enough, sort of sending cold emails, you know, throughout the organization. I remember emailing, you know, Marty Chavez when he was the CFO of the firm, you know, Dan Dees when he was the head of, he's still the head of investment banking, you know, Renan Agus, who was running, you know, the alternatives business and the asset management division, and basically running around the firm and kind of mapping the place, you know, and just basically showing up and saying like, "Hey, I'm here.

You know, I'd love to be helpful." And I think what's just so unique about, you know, Goldman Sachs versus many other large companies is it's not an operating business that has, you know, like, I don't know, an American Express that has a consumer business and a commercial business and a network.

It's really sort of this confederation of lots of small businesses, you know, kind of fighting for collective resources under these common, you know, divisional umbrellas. But because of that, if there's something interesting to do on the outside, there's somewhere to put it,right?

Likely. You can be an equity investor, excuse me, a debt investor, an acquirer, you know, a customer, an advisor. And so a lot of, you know, how I sort of viewed or eventually shaped my role was to try to be a bridge in some ways between Goldman Sachs and the outside world and in large part to the technology world.

And, you know, I ended up meeting a woman named Stephanie Cohen who had just been promoted to be the chief strategy officer. And we ultimately became, you know, good friends. And then she asked me to come work for her and kind of write a job description.

And so, you know, while I was kind of running around on, you know, on my own accord, I then had kind of air cover to do that, you know, in her organization in firm-wide strategy.

I love that. You know, when families kind of go through that process, like you kind of mentioned, there's a disconnect, but also there's that kind of emotional rollercoaster,right? When you were going through those, you know, four to six months of just like recovery and founders who are listening to this show, some of them might be going through something similar.

What are those, you know, one to two things you kind of did just to kind of like get back to David, who David used to be before kind of like founding a company?

Honestly, reading a lot. You know, I remember we moved, for folks that know New York City, we moved from Chelsea to the Upper West Side. And so, you know, I would have, call it a 30-minute, you know, subway ride, you know, from the Upper West Side down to Battery Park.

And I would just rip through, you know, audiobooks or physical books on those commutes. I'd had, you know, call it an hour a day. And I'd read probably a book a week, you know, for those few months. And I just, I remember feeling my brain physically expand,right?

Because you just have headspace now for other things to think about as opposed to sort of just your company. Maybe I should have, you know, read more, you know, when I was, you know, running Bond Street, but just sort of tapping back into that intellectual curiosity, I think, was just very refreshing.

And, you know, just part of the transition is just, yeah, you know, again, approaching kind of this new experience with curiosity. You know, I remember reading this book called The Partnership, partially because I was curious about the culture of Goldman Sachs.

And it basically chronicles, you know, the 100, at the time, 150-year history of the firm. And Goldman, you know, was and still is largely like one of the most entrepreneurial firms in the world,right? It wasn't like many of its peers, like JP Morgan and others, it wasn't a bank built through a series of bank acquisitions.

It was a business built, you know, brick by brick by generations of entrepreneurial partners sort of raising their hand and going off and building Europe or building, you know, the merchant banking division or building the wealth management division.

You know, many of these business units became kind of global franchises. And that was kind of an inspiring history. And so, you know, again, reorienting, I think many founders go through an M&A process and they feel like they're sort of resting, investing, or, you know, frustrated inside of this new, you know, company with a lot of bureaucracy.

By the way, some of those things are true, but I think if you can kind of reorient and approach that experience with curiosity, you know, you're going to learn a lot of new things. And again, I think with some distance from that experience, I've learned a tremendous amount, again, about what leadership looks like.

You know, how do you get shit done in a big company? You know, what are they uniquely good at? What are they bad at? Where would you want to compete with them or not? You know, what gets them to acquire a company for a lot of money versus a nominal amount?

Like all of these have been actually incredibly informative, you know, to even how I spend my time now, you know, here at a16z. And yeah, I'm very grateful for those few years.

You know, one of the greatest things I think founders should also look for is when they're looking to fundraise, kind of like bringing this whole story full circle is if they can find investors who have had an operating background and experience as well as someone who's been a founder.

I think that actually makes an incredible partnership. So kind of flipping back the question, you know, how did this incredible opportunity come about from being a founder, joining Goldman to then joining Andreessen?

Well, it kind of goes back to like, you know, what I said earlier about, you know, life reintersecting. You know, I ultimately, you know, the credit is with Alex Rampell, who's been a longtime partner here at Andreessen. He was the one who ultimately recruited me to the firm.

But, you know, I first met Alex, well, there were a few different ways. One, you know, he had led a later round in Plaid. We had seeded the company in 2013 and he ultimately invested, you know, here at a16z.

Our eventual COO at Bond Street was a guy named Eddie Saryl, who used to work for Alex at his prior company, TrialPay, you know, running, and he's an amazing entrepreneur and operator. He now helps lead the New York office at Stripe.

So I think I got, you know, connected to Alex originally, you know, through Eddie. I pitched Alex in 2015, 2016. He passed. We stayed friends. And, you know, when I was at Goldman, I helped them invest about $60 million into Carta alongside Maritech and then alongside, you know, Andreessen.

And on the other side, that deal was Alex and Mark. And then in COVID, you know, when the world shut down, I was very afraid that, you know, small business owners weren't going to have access to working capital.

And many of them only have about a month of buffer. And so they were going to go out of business. And we at the time, as a bank, could, you know, basically had unlimited leverage because we could pledge these assets to the Fed window.

And so I was trying to find creative ways to plug, you know, Goldman's trillion-dollar balance sheet like into the economy. And because many banks didn't have online loan applications, I thought fintech would be a really important kind of distribution engine, you know, for that capital.

And so he and I were sort of jamming, you know, in that vein at the time, kind of mid-COVID. You know, and then over a long period of time, just, you know, as kind of friends on the internet, we would riff on this sort of subject of firm versus fund.

You know, while I wrote the piece only recently, I've actually been tweeting about this since, I think, 2016, 2017. And, you know, I always viewed sort of a16z as the archetype of what that meant. And it's something he's quite passionate about as well.

And so, yeah, ultimately, you know, he ended up reaching out to me in early 2021 and, you know, basically precipitated the process, asked me if he could connect me with Marc Andreessen. And I've never met Marc, you know, of course.

And, you know, we kind of hit it off. And, you know, Marc and he ended up coming out to New York. I ended up flying out to the West Coast and spending time with Ben and actually went to a GP offsite and met the whole team and, you know, kind of snowballed from there.

And, yeah, ultimately joined again in July of 2021 to really plant the flag here in New York City. And, yeah, it's been a lot of fun to help, you know, kind of build the firm, at least in the city that I've grown up in professionally.

And for our audience who don't know who you are, you should definitely go and follow David on X. He's always, you know, posting really cool posts around kind of this whole new generation of what venture may look like kind of going forward, the fund versus firm.

Let's talk about that because it's something I'm really interested in as well, you know, especially how we look around, you know, what does the future of venture look like? This whole fund versus firm, help us dissect what you're currently thinking and we can jam on it.

Totally. Look, I should caveat this with, there's a lot of ways to be successful in the investing business. But I started thinking about this distinction because ultimately I feel best somewhere between being an investor and an entrepreneur,right? And this distinction of wanting to help build a firm as opposed to run a fund was sort of my articulation of that sort of experience.

And the idea is this, is that, you know, the objective function of a fund is sort of singular. It's how do I generate the most carry with the fewest people in the shortest amount of time possible? You know, and through that lens, most people are running funds.

I think very few people are building firms. And a firm, you know, is really two variables. One is how do I generate exceptional returns, which is sort of a prerequisite for doing either successfully. The second variable, I think, is equally interesting, which is how do I build a source of compounding competitive advantage?

Like what are my moats,right? If I think about Andreessen Horowitz or the firm as a company, as I would as an entrepreneur, you know, entrepreneurs spend all their time thinking about their competitive advantages. And most fund managers, I would argue, don't.

Most fund managers are focused, you know, through a fairly narrow lens of like what is my next marginal investment going to be? Not so much about how am I building a source of compounding advantage. And through that, you know, through that distinction, I think most firms, you know, are run by entrepreneurs.

I think if you had Marc and Ben on this podcast and you asked them, are you an entrepreneur or you're an investor, they would 100% say, we are entrepreneurs who happen to be building an investment management business,right? And, you know, I think that informs ultimately, you know, how we think about, you know, running this business and compounding those competitive advantages, which is ultimately like how do we build the best product, you know, for founders,right?

We are compounding our reputation first and foremost, but it's only because we're delivering a great product for the best entrepreneurs.

Yeah, and it's been fun. I mean, you know, venture has its own sort of unique history. You know, the source of, you know, compounding advantage has largely been brand and reputation, which is paramount. But I think if you broaden the aperture and look at other styles of investment management, you know, those sources of compounding advantage vary wildly.

You know, whether, you know, my first boss had started an amazing investment firm called Royalty Pharma. You know, this is, they became the largest buyers of pharmaceutical royalties in the world. He sort of invented the asset class in the mid-90s.

And that's a business, you know, it's now a publicly traded company, you know, with a $25 billion market cap with 50 employees. Like why does that happen? How does that happen? You know, and it's because it was a permanent capital vehicle.

It wasn't a fund. It was a complicated target asset. They built economies of scale. They had lower cost of capital because you could pool these, you know, cash flowing, you know, royalties into a single entity. I mean, I could go on and on.

But I think just as a student of sort of investment management firms, it's not to say we want to be them, but I think there's a lot to learn. You know, I always say opportunities live between fields of expertise,right?

And I love living in the gray,right? And I view that both as a metaphor for my own career. You know, it's like, am I an entrepreneur? Am I an investor? Am I an operator? You know, am I West Coast?

Am I, you know, am I New York City? Am I Silicon Valley or Wall Street? I think the answer is just yes,right? And I love kind of that liminal space.

When I look at all these new funds cropping up and

how venture firms describe themselves, they kind of all do the same thing. And you mentioned a great piece, a great part of your piece, which was, you know, around these kind of VC platform teams. Essentially, it's just recruiting a marketer,right?

And it's normally just one of each. And they're only catering for maybe 100, 400 companies. When you get to Andreessen's size, I think you have something like 400 people working just on the platform side.

Yeah. I mean, we, you know, we invest hundreds of millions of dollars a year, you know, in this platform, you know, not because it sounds cool, but because it actually moves the needle for the entrepreneurs. And when it does, you know, given the outcomes, you know, that we can, you know, try to help affect, it pays for itself, you know, many times over,right?

And again, I think that's just one of the, you know, kind of unique advantages that, you know, I credit all to Marc and Ben for having that foresight early on and thinking very long-term. You know, I think many, many investment firms scale.

But by the way, the thing that is so important about building a source of compounding advantage is that I believe funds get more fragile with scale,right? And so if you want to grow, you need to build a source of compounding advantage.

You get stronger with scale,right? Everything we do should ultimately reinforce, you know, again, delivering the best product for the entrepreneur,right? And again, instead of paying themselves a lot of money or having, you know, we reinvest those back into the firm, you know, ultimately for the benefit of our founders.

And that's paid for itself, you know, again, many times over.

I love that, you know, and all these, or at least some of the new funds which are cropping up, which have a kind of either this moat, you know, a lot of them are focusing on distribution now. So media channels, you know, you guys obviously do a great job of this.

Storytelling is kind of like the next big thing. So if any, you know, venture funds listening and they're trying to figure out kind of that moat, you know, is storytelling a big part of it? I feel like there are so many different moats and, you know, channels that these VCs can go down.

But a lot of these funds also only have so, you know, allocated funds available,right? They can actually invest. Not many are the size of Andreessen. So where do you think they should be focusing? And, you know, where are some of the biggest opportunities you think are available for established or incoming funds to focus on their new moat?

What's interesting, I think Marc, one of Marc's sort of distillations of like what founders want from their VC, you know, he basically described it as power. You know, he's like, when you're a fledgling, you know, young small company, you know, you don't have the credibility necessarily to get in front of, you know, the Fortune 100 or to attract the best, you know, executive to your business or to have a dialogue with, you know, a key regulator in DC.

You know, and it doesn't make sense necessarily for any individual company to invest, you know, the resources in their individual business, you know, to go do that until maybe they're at much, much larger scale. But as a firm, again, we can make that investment and sort of amortize it across, you know, all, you know, several hundred, you know, companies that we work with.

And so that's one of the things that I think we lend, you know, we lend our power, you know, to our founders,right? To, again, kind of tilt their board in their favor. Look, I think there's still a ton of white space, you know, for building, you know, new investment firms.

I don't argue that like, you know, Andreessen Horowitz is the last firm that will ever exist. I think we'll be hopefully successful over the long term, obviously. But, you know, I'm good friends, for example, with, you know, with Patrick O'Shaughnessy.

And I think what he is doing, what you're doing, what Harry Stebbings has been doing, you know, in building, you know, a media presence is a source of compounding advantage,right? You know, the bigger their audience becomes, the bigger their platform becomes, the kind of more unique access they get, you know, to the best founders.

And they can affect those outcomes on the companies that they invest in, you know, again, given their distribution. And so, again, I think there's a lot of different ways to approach this business, but I, you know, my aesthetic is one that, you know, starts kind of from an entrepreneurial perspective, you know, more than it is purely from a capital perspective.

It's super interesting, you know, the way we also think about this is, I mean, we do a tiny bit of investing just off our own balance sheet and into YT companies. And we say, look, super transparently, we don't write the same check sizes like you guys or other funds, but what we can do is we can be your biggest supporter.

We get like a million views a month across our channel and we'll give you a very small check. And that's our kind of entry in. We have one of the biggest operators that work. So anyone who works at like the top 500 companies, again, we can put them in front of them.

And we're tiny,right? We don't even have a fund. Like this is just us investing off our balance sheet. And, you know, I think those small things can actually make a massive impact. But not many VCs are doing this.

Why do you think this is the case?

I don't have a good answer, you know, to be honest. I mean, I remember thinking.

Yeah, it's strange, isn't it?

Yeah, I mean, my pitch as an angel, you know, because I didn't have a big, you know, balance sheet either, you know, running a small startup, you know, was to try to be the most valuable investor per dollar of invested capital.

I still think we should hold ourselves to that same, you know, kind of threshold even with bigger checks. And so, I don't know. I mean, I think the market has become a lot more competitive. The markets have grown, you know, massively.

I think it, you know, specialization matters more than ever, you know, because the depth of these markets and the complexity of these markets are real. So to be an expert in everything is, I think, quite challenging.

You know, but having, yeah, a unique point of view, you know, maybe a non-consensus opinion on a given market, a unique network, you know, either with talent or with incumbents, again, to kind of affect, you know, the outcomes of these businesses.

I think all of those are still, you know, very open opportunities for people to go prosecute.

It kind of feels, you know, this has all changed really in the last few years,right? Especially as storytelling now for founders, like the next big thing they're focusing on, distribution is, you know, becoming more and more important with some of these AI companies reaching, you know, $100 million in their first few years and annual current revenue.

That also makes me think, what does that mean for like growth funds kind of like down the line? If you're not in kind of that Ivy League of investors, what does that mean for like the growth investors? I think it's a really exciting space.

But I think what's also really exciting is all of these Solo GPs kind of like coming through the ecosystem. And I'd love to get your take, you know, so many are coming out, they're focusing on very, you know, particular niches or they are the go-to experts in that category.

Do you think there's a massive opportunity for Solo GPs in this kind of like new venture space?

I do. I mean, look, I think so long as you have kind of a differentiated, you know, point of view,right, or differentiated strategy, I think there's still, you know, plenty of opportunity, especially at the early stage,right? You know, the market is still not perfectly efficient,right?

And, you know, we were looking at this recently where I forget the exact statistic that we were tracking, but it was basically like, you know, what was the consistency of the seed investors into companies that became successful? I forget if it was like they had raised a Series B or if they hit some valuation milestone.

And there was only one seed firm that showed up twice out of a landscape of, I think, 70 companies that we were tracking,right? So it isn't that like there's some seed fund that is capturing all of the best companies at that stage.

It's actually pretty distributed,right? And so, again, if you have, I think, a unique, you know, unique access to a given talent pool, unique perspective on a market, you're early andright. You know, I think that opportunity still definitely exists to build, you know, to build a firm, you know, over time.

And you can kind of use that early success to compound. At the same time, many people don't aspire to build firms. They want to run funds. And I think that's okay too. I think it's just, it's more about understanding what game you're playing and playing it, you know, incredibly well.

I think that the challenge, and this is not that novel of a take anymore, is that you have kind of, you know, focused specialists, you know, either by sector or by stage, you know, at one end, and then you have large-scaled kind of platform firms.

I think the challenge is largely in the middle, you know, where it's, you know, $300,000, $400 million fund of generalists. You know, the brand doesn't necessarily stand for anything. You know, check sizes have increased. You know, they don't have a platform team.

Like I think those become quite challenging,right? You have some that will succeed, you know, because of, you know, their brand legacy, but I think many are going to find it, you know, very difficult.

It's pretty incredible, you know, A, just where kind of the venture is going, you know, firm versus fund, but also just the size of your platform team. I mean, 400 people, I mean, in comparison to other funds, you know, this is a magnitude of, you know, much bigger.

Is that, do you think, what sets Andreessen apart going forward?

I think it's one of those things. Again, everything that we do is, again, oriented around how do we deliver the best product to founders,right? And most of us were founders ourselves. So it's, I mean, it's funny, you know, one of the ways that many other firms or funds maybe try to counterposition against us is they say, oh, Andreessen is this huge firm.

The operating platform is really just a way to scale the GP so that I can work with more founders,right? And I think it's kind of a bullshit argument, you know, candidly. It's like because it's not one or the other,right?

By the way, many of the people that say that were never entrepreneurs themselves. They've been investors their whole career. You know, having been an entrepreneur, I'm like often jealous of the founders that we get to work with because they have this wealth of resources that would have saved me so much time and effort.

But the reality is you get all of my time and expertise and, you know, hard-earned wisdom and learnings, and you get 400 people behind me, you know, that can kind of tilt the board in your favor. And I think I say that with humility because I'm not going to have every answer,right?

You know, I will help the founders that I work with avoid all the mistakes that I made. But the reality is we have, you know, people that are far deeper specialists, you know, who have run thousand-person companies in HR and done rifts.

You know, how do you communicate a rift in a big company? What is the HR policy? What is the communication language that you should be using? Like these are things tactically that can make or break a company. I'm not going to have that experience, but, you know, Don on our people practices team does,right?

And so, again, my job is both to kind of lend my own individual experience, but marshal the resources of the firm to make our founders as successful as we possibly can,right? And so I think that the distinction is sort of a false equivalence.

It's like, why wouldn't you want every advantage you could possibly get to be as successful as possible? And that's our point of view.

It's incredible. You've mentioned Marc and Ben a few times. You know, obviously one of the greatest founders out there. What's the greatest lesson you've learned from them?

A lot, you know.

There's two things that have been particularly interesting to me since I joined. One is just how deeply involved they are in everything. Like, you know, they are running the firm,right? Ben, from my observation, is our CEO, and Marc is sort of the chairman and chief strategist.

But they are in every, you know, partner meeting and, you know, in any pitch meeting you need them to be. And I think that's just so rare,right? In many places that I've worked, people hit some level of, you know, material success, and they are literally or metaphorically on a beach.

And I was often the young kid like pulling the firm to be more, you know, aggressive or more ambitious. And that's just not the case here,right? The intensity, the focus, the drive, you know, starts with them and flows sort of top down.

And I feed off of that intensity,right? I think we all do. I think it's one of the core reasons the firm has been so successful. The other thing which was surprising to me, and I didn't fully anticipate, and I think this is actually a core distinction in many ways between funds and firms, is that despite it saying Andreessen Horowitz on the door, there's actually very little top-down direction,right?

They've done a remarkable job making the firm feel like a platform for smart entrepreneurial people to build on top of. And I think that's a really thoughtful and wise thing to have done, both to attract and retain the types of folks that they have been able to,right?

If you think about, you know, people like Chris Dixon or Alex Rampel or Martine Casado or, you know, David Yulovich, all of these folks were incredibly successful entrepreneurs before they got to Andreessen Horowitz,right? They didn't, you know, they didn't have to work, you know, candidly.

They can kind of do whatever they wanted. And again, they're fundamentally, they're entrepreneurs. They don't want to be micromanaged. What they want is to be given, you know, the biggest canvas, the nicest paint and paintbrushes, and told to go paint their masterpiece.

And I think the firm at its best is that,right? It's sort of delegated conviction,right? And kind of group tackle, you know? And so Ben, while Ben is the CEO, he's not the CIO,right? Each of the folks that I mentioned run, you know, our own kind of respective, you know, platforms.

You can kind of think about almost like divisions of a company. You know, if Martine or Chris had to like get every single deal approved by Marc and Ben, they would never work here. But that's not how most of our competitors operate.

You know, most funds, especially hedge funds, but, you know, which is like kind of the extreme version I would argue of funds, they often have a single CIO. It's the alpha, you know, kind of investment decision maker that, you know, they have a bunch of other people that work at the firm, but ultimately it bubbles up to one person making a decision.

And obviously that can work. You can make a lot of money and be very successful doing that. But I think it's very fragile,right? It's very fragile. If that person decides to retire, you know, or God forbid something happens to them, the entire infrastructure, you know, competitive advantage of that firm disappears almost overnight.

And so I think the sort of delegated authority, the decentralized decision making, I think time will tell, but I think it's one of the most

important reasons the firm I think is going to be, you know, so enduring.

I love that. You know, this whole decentralized model, I think, is A, it's pretty unique, I think, in venture. Not many people do it. But also, if you look at all the amazing products you guys have kind of like outside of the a16z core, okay, you have your funds, you have Speedrun, you have a16z media fellowships, you have Tech Week.

I'm doing the selling,right? I mean, there's probably a whole bunch more, but it's you're building these like mini products that can, you know, filter into, I guess, the a16z ecosystem at some stage.

Totally. I mean, even Eric Thornberg and I, you know, have been friends for almost 10 years, you know, before he joined the firm. I was an angel in OnDeck, and we've just known each other a lot kind of through the ecosystem.

I think what he's done with the new media team is a great example of this. Like he's an entrepreneur, you know, first and foremost, and they've given him a lot of freedom and resources and rope, again, to go kind of like be creative, be entrepreneurial, build an amazing organization.

And you're already beginning to feel, you know, kind of the significant impact that that team is having both in our portfolio and I think in the market. But it's because of that sort of freedom, you know, that I think, you know, you can attract somebody like that and help make them successful.

Exactly. I think it's so exciting, but also, yes, it's also so unique. And I was also, I had the lucky privilege of attending Speedrun demo day last year in SF. That was like super cool. And again, going back to Eric and kind of the new media team, you guys kind of hosted a dinner for some of the biggest creators.

And I think that's, you know, talking about kind of bringing this full circle, the fund versus firm. If you want to build an amazing, you know, firm that creates all these amazing products and has an everlasting kind of, you know, unique advantage and, you know, horizon for founders, this is the way to do it.

I appreciate you saying that. We think so.

Maybe segueing into some of the trends you're really excited about. You know, I think this is always the most exciting part of the show. As we mentioned earlier, you know, AI is changing absolutely everything from fintech, you know, these kind of like boring industries that we used to think is there's no innovation or no opportunity available, but actually now there is,right?

But also, I think there's a new trend kind of like emerging where instead of, you know, all these AI companies going straight into these, you know, potential customers, selling them the product, they're now actually showcasing what the impact of their product can be and the types of decisions they can make to, you know, to which makes the product better and hopefully, you know, increases their revenue and so on.

I think there are so many trends we can talk about, but maybe, you know, one in particular is around fintech,right? Which I know is your kind of area of expertise and kind of background. You know, when you look at the whole kind of financial services ecosystem, where do you think the biggest opportunityright now is for founders to build an AI or reimagine what financial services looks like in the next five or ten years?

I think there's a lot. I mean, I think, you know, financial services is one of the most human capital intensive industries,right? You have lots of highly paid people, you know, living largely in Excel,right? Not even using Excel as a modeling tool, but often using Excel to kind of track work.

And again, I think the kind of most fundamental paradigm shift that's happening with AI is like the software itself can actually do work. And so I think we're still at the, you know, bottom of the first inning in terms of how this technology is just going to change the way that all of these large, you know, incumbent companies operate.

I'll give you one, you know, example and a company in our portfolio that's doing quite well. You know, it's a company called Salient,right? They started with voice agents doing loan servicing. They started originally in auto lending, but they've expanded now to kind of a whole ecosystem of consumer lending products.

And so the voice agent will do, you know, welcome calls, payment reminders, and actually do collections. And again, the product can, you know, speak in 50 languages, you know, fully compliantly, is infinitely patient, works 24/7. And it's not just a cost reduction story,right?

Many of these large banks or large, you know, non-bank lenders have, you know, thousand plus person, you know, call centers. Obviously, there's a cost, you know, efficiency story there,right? In, you know, in having the software do the work.

But what is most remarkable to me is they're actually finding that Salient is actually getting 50% better collection rates,right? So in many cases, it's actually delivering a better product and driving revenue. And that's one of the kind of core things that I think we look for in the types of AI companies that we're looking at back is that are having an impact on both sides,right?

There is a cost reduction element, but it's actually changing the fundamental economics of these businesses often by driving, you know, meaningful revenue. And again, I think that's just one, you know, small example of how, you know, many of these large financial institutions operate.

And I think the culture of these firms are changing. I saw this certainly within Goldman Sachs. I think there's now a willingness, you know, to adopt third-party technology faster, you know, than it ever, you know, happened previously. That's often been the knock of selling into kind of, you know, big finance is that they move very slowly.

And I think AI is just, this wave is going to happen and it's shifting much faster than any prior technology cycle because, you know, if you were the CEO of Goldman or any large financial institution, you were asking yourself, you know, 10 years ago, like, do I need to be in the cloud?

It was kind of an esoteric question,right? It was hard to draw an immediate through line to the kind of commercial outcome. You know, now, you know, there's both bottoms up momentum,right? You're seeing, you know, the engineering organizations, you know, adopt products like Cursor that are driving massive productivity gains.

You're seeing, you know, the customer support organizations adopt products like Decagon and driving massive efficiency gains, you know, with call deflection. But likewise, like every CEO, every board member, technical or not, any of these companies can now plug a prompt into one of these models and immediately sort of intuit the impact that the technology could have on their business.

And so I think there's just also this sort of top-down pressure and momentum that is happening. I mean, AI is a topic of every single board conversation at every incumbent that we talk to. And I think those that sort of embrace this technology, again, have an opportunity to kind of radically transform, you know, their own fundamental economics in the way that these businesses run.

And again, we're still at the very early innings of that, but, you know, it's such a huge opportunity. Financial services are a massive part of our global economy. So I've never been more excited about opportunities in fintech than I am today.

I mean, that was amazing about this whole AI space now is like anyone can actually build a product. They don't need to, they don't need to know how to code or build products. They can go to Level 1, they can go to Cursor and just start building,right?

I was just speaking at this conference in Dubai called the 1 Billion Followers Summit. It's basically like the biggest creator summit where all the biggest creators go. And my talk was around, is AI the breakthrough for creators? You know, there are millions of creators out there.

Creators can now just go and build, you know, products for the audience and start making millions of dollars. That never happened a thousand days ago. If you were to start a company today, what would you start if AI was to change in the next thousand days?

That's a hard question. I mean, probably something along the lines of what I just described,right? I still think that there is, again, you know, I saw this at Goldman, and Goldman is one of the most progressive and kind of tech-forward large financial institutions.

They had 10,000 engineers. And yet, you know, so much of that firm, you know, wasn't using AI, let alone enterprise software. That's changing obviously very quickly, let alone large insurance company in the Midwest or, you know, pick your kind of financial institution.

So yeah, I think it would probably be, you know, building some sort of software product to change, you know, kind of core back office workflows of some of these large financial institutions. Maybe not the most sexy thing to begin with, but I think given, yeah, the kind of relationships and the impact that this technology can have, that's probably, you know, just off the top of my head where I'd probably, you know, start.

Yeah. Okay. And another question. If we look forward in the next thousand days, where's AI going to be?

Oh man, it's hard to predict, you know, what's going to happen next month, let alone in three years.

I don't know. I mean, I suspect it's going to be, you know, much deeper penetrated into most large enterprises. You know, not just, you know, today I would argue, again, like the three areas that have probably the most product market fit for AI are, you know, anything cogen, you know, customer support and legal, just given how document-intensive it is.

But that's just the tip of the iceberg. And so I think you're going to see AI, you know, go far deeper into these organizations, you know, across compliance and operations and, you know, treasury management. And so I think you're just going to see sort of, you know, much deeper impact in driving efficiency and automation across these companies.

I think you're also going to shift from, you know, AI being, you know, a copilot and augmenting, you know, humans to do their work and shifting, you know, into becoming kind of a management layer. You know, humans being the manager of kind of a bunch of AI agents, you know, who are going off and actually doing, you know, work throughout the enterprise.

And, you know, and I think you'll see the product sort of more deeply integrate into the kind of very siloed systems of record and understand context across an organization. I think you'll see companies begin to gather different types of information, a lot of unstructured information.

Like this conversation historically was never documented by, you know, legacy software. And actually that's like the context and color, you know, for a lot of how decisions get made inside of a business that historically lives in people's heads.

And so if you can actually put that into code,right, you can make a lot more decisions in a more automated fashion than you have been able to previously. And so I think, you know, gathering a lot more unstructured information, you know, voice being obviously a very important and kind of primary input of that.

You know, I think most conversations inside of companies will be recorded because that context and kind of connective tissue is so important for giving, you know, agents autonomy to go actually do work and make decisions in big companies.

You know, it's super exciting. It's so hard to keep up. Even for us, you know, we cover all of the AI trends, but it just keeps changing every single day. But I think we can both agree, hopefully, that AI is here to stay and what the future eventually looks like is going to be super exciting and hopefully more funds focus on becoming firm versus a fund.

Amazing. Thank you so much for your time, David. This has been so cool. Where can founders find out more about you? Where can founders get connected?

Well, yeah, thank you again so much for having me. Obviously, you can, you know, visit all of us at a16z.com. You can find me on Twitter at@dhaber. And yeah, would love to hear from, you know, folks building firms and from entrepreneurs, you know, building the future.

Amazing. Go and follow David on X. So many great forwards and thank you so much again. This has been amazing.