Marc Andreessen on The Future of Venture Capital | Ep. 12

Here's what I encourage and break the

fourth wall. Yeah. Here's what I would

encourage people to do. Here's the

thought experiment to do. Just write

down two in the middle of the night with

nobody around, doors locked. Write it

down on a piece of paper and let's pull

it out in 10 years. Well, write down a

piece of paper, two lists. What are the

things that I believe that I can't say?

Mhm. And then what are the things that I

don't believe that I must say?

All right. I am so excited to be here

with Mark Andre. And Mark, thank you so

much for doing this with me today. Jack

it's a pleasure. So what I wanted to

start with was the topic of small funds

big funds. We had Josh Copelman on the

podcast and he made a point that

resonated around fund size, the outcomes

in venture and sort of just like looking

at the math of all of it. And I think as

venture funds have grown that sort of

spoke to a lot of people about like kind

of what the plan is and sort of how tech

is going to go. And so I guess to start

I'd be curious to hear your thoughts

around that whole dynamic. Obviously

you know, you've got a big venture firm

and so I just want to hear kind of your

perspective on this whole topic to

start. So, start by saying like Josh

Josh is a longtime friend and I think is

a is a hero of the industry. Uh and I

say that because you know he started

First Ventures back in the very dark

days. I forget the exact year but you

know back back during the dark days of

after the 2000 crash. Um and in fact you

know there was a period of time back

there when you know the total number of

angel investors or seed investors

operating in tech was you know maybe

eight total and and you know actually

Ben and I were two of them but you know

this was sort of the heyday of you know

Ron Conway and and um you know kind of a

you know Reed Hoffman and a very small

group of people who were kind of brave

enough to invest in new companies at a

point in time when you know basically

everybody believed the internet was over

like the whole thing was was done. And

so he like I just think like that was an

incredibly heroic brave act. It

obviously worked really well. It you

know turns out by low sell high actually

is a good strategy. It was very good. Um

it's it's very nerve-wracking when

you're trying to do it but it does work

and he he he had brilliant timing for

when he started and you know the

companies that he supported have gone on

to become incredibly successful and we

we've worked with him a lot. Um so you

know we're a big fan uh of his. And then

second is I would say I didn't actually

I heard I heard there was a discussion.

I I never as a rule I never I never read

or watch anything I'm involved in.

Well, it wasn't about, you know, I I

totally missed it. And to summarize

basically what he was saying is he

coined this like venture arrogance score

idea, but basically the idea is, you

know, if you're going to own 10% of a

company at exit and you want to have a

3x fund and you're probably going to

have a power law of outcomes, you

basically need your big outcome to be

like really big. And so like how's the

math shake out? And basically, you know

the question he was sort of posing

broadly is are the outcomes going to be

much bigger? Are you going to own a lot

more? Are you going to hit a lot more

winners? But it it was sort of like that

math question. So I say a couple things.

So one is look the venture is a is

actually a customer service business in

our in our view. So start with this. So

uh it's actually a customer service

business. There are two customers. There

are the LPs and there are the founders.

Um and we think of them both both

customers. And so you know at the end of

the day the market's going to figure

this out and that the LP money is going

to flow to where obviously they think

the opportunities are and the founders

are you know as you know the best

founders definitely pick who their

investors are. It's actually very

unusual right asset class. It's the only

asset class in which the the recipient

of the capital picks the you know picks

the you actually cares where the money

comes from and picks picks picks it. So

the market will figure this out. Um I I

think the big thing to responding to

your general point I think the big thing

is the world has really changed. Um and

so you know modern venture capital uh in

the form that we understand it is

basically um you know there were

examples of venture capital going back

to like the 15th century or something

with like you know Queen Isabella and

Christopher Columbus and Whalers off the

coast of Maine in the 1600s and so

forth. But modern venture capital was

basically a product to the 50s and60s.

Originally this guy Jock Whitney from

the Whitney family sort of created the

model. George Doro who's a MIT professor

created a version of it and then you

know then the great you know the great

heyday of the 1960s VCs Arthur Rock and

those guys and everybody that followed

Don Valentine and Pier Lamond and Tom

Perkins and and so forth Jean Kleiner

you know all those guys ba basically it

basically from that period let's call it

the 1960s through call it 2010 there

there was like there was just there was

a venture playbook and it became a very

well-established playbook and it it sort

of consisted in two parts one was a

sense of what the companies were going

to be like right and then the other was

what the venture firm should be Like and

so the the playbook was the companies

are basically tool companies, right?

Basically all successful technology

companies that were venture funded in

that 50-year stretch were basically tool

companies, right? Pix and shovel

companies. So uh mainframe computers

desktop computers, smartphones, laptops

um internet access software, SAS

databases, routers, switches, um you

know, disc drives, all these things

word processors, tools, right? And so

you know, you you buy the tool, you the

customer buys the tool, they use the

tool, but it's it's a general purpose

technology sold sold to lots of people.

Basically, it around 2010, I think the

industry permanently changed and and and

the the change was the the big winners

in tech more and more um are companies

that go directly into an incumbent

industry, right? Like insert directly.

And and I think the big turning point on

this was like Uber and Airbnb, right?

where Uber could have been like Uber in

2000 would have been special specialist

software for taxi dispatch that you sell

to taxi cab operators. Uber in 2010 was

screw it, we're doing the whole thing.

Airbnb in 2000 would have been booking

software for bed and breakfasts, right?

Running on a Windows PC. Um uh right and

and then Airbnb is just like screw it

we're doing we're doing the whole thing.

And so and you know Chris Dixon came up

with this sort of term the full stack

startup which he kind of meant but the

other way to think about that is just

you're you're you're actually that the

company is delivering the entire

basically promise of the technology all

the way through to the to to the actual

customer which is basically quicker to

get there. Also I suppose you get more

margin capture when you do it that way

and you just get the technology seeped

in rather than having to sell it

through. Is that the idea? Prior to 2010

there were two kinds of tool companies

consumer tool companies and and business

tool companies right. So you know B TOC

B2B right as we called them in those

days. And you know the consumer side was

great but like you know consumer you

know it's just like selling you know

video games and consumer software it was

great you know flying toaster screen

savers it was great but there was only

so far you know that was going to go and

then and then the B2B side for things

like taxi dispatch or for air you know

bed and breakfast bookings. The problem

is like you're you're selling advanced

technology into incumbents that are not

themselves technology companies, right?

And so are they actually going to take

those tools and then actually build the

thing that the technologists know should

actually get built? More modern version

of that is what you see now happening

with cars, right? So who's going to

build the self-driving electric car

right? Is it going to be a incumbent

who's able to adjust, who's buying, you

know, good components to be able to do

that or, you know, is it going to be a

Tesla or a Whimo? Y, right, that's going

to do that. Same with SpaceX and NASA, I

suppose. Exactly. Yeah. You you could

there are many companies that sell

technological components that go into

rockets, but was any of that going to

lead to the existing rocket companies

making the rocket that's going to land

on its butt and then you know be

relaunched within 24 hours, right? And

so and by the way, same thing Airbnb or

Uber had had you sold a the Uber

uberized version of taxi dispatch

software to the taxi would would it have

resulted in the Uber customer

experience? And so I think basically

what happened was and and there sort of

you know these as Peter says these

things are overdetermined. So, it's a

bunch of things that happened, but it

was sort of the it was sort of the

smartphone completed the diffusion kind

of challenge for getting computers in

everybody's hands and then mobile

broadband completed internet access in

everybody's hands. And then the minute

you had that, there was just no longer

you just had this ability to get

directly to people in a way that you you

just never had. You didn't have to like

have a giant marketing campaign. You

didn't have to, you know, have a giant

established, you know, consumer brand.

And so there there was a way to to kind

of get to market that didn't previously

exist. And then, you know, and then

look, also consumers just evolved. And

you know, people especially, you know

kind of Gen X and then millennials were

just much more comfortable with

technology than than the boomers were.

Yeah. And they, you know, the sort of

Gen X was entering, you know, and

boomers and millennials were kind of

entering their consumer prime at at the

time this happened. And then you started

having these big successes and so you

you started lining up Uber, Airbnb, and

Lyft and SpaceX and Tesla and, you know

you kind of you start stacking these up

and at some point you're like, all

right, there's a pattern here, right?

There there's there's a thing that's

happening. And and that's what's

happened. We're 15 years into that. And

what's happened now is basically that

idea now has blown out basically across

every industry, right? And so so so the

tech industry used to be a relatively

narrow tools picks and shovels business.

Today it's a much larger and broader and

more complicated uh basically process of

applying technology into basically every

area of of business activity. The result

of that is that the companies are much

bigger. Like when you're the whole when

you're both the picks and the shovels to

yourself of the whole company you're

much bigger and that changes venture

math. Yeah. You eat the market, right?

And so and so Tesla ends up being worth

more like there have been points in time

in the last 5 years when Tesla has alone

been more valuable than the entirety of

the entire auto industry put together

right? And and SpaceX is, you know, like

you go through this and Uber is worth

far more than the totality of every

black cab operator and taxi cap company

that ever existed. Airbnb is worth far

more than the bed and breakfast industry

ever was. So, and by the way, it turns

out some of these markets just turn out

to be much larger than people think

right? when we do a retrospective on our

analysis over 15 years, like one of the

things that's been hardest for us to do

is to do market sizing and and and and

sometimes we overestimate market size

but it's more often it's the other way.

More often. Well, for the winners. Yeah.

Yeah. More often it's the other way.

Yeah. I guess the uh the net blend is

that you underestimate it. Yeah. For and

this this goes to venture economics.

You'll talk. So the the core thing on

venture the core thing on venture bets

right, is because because venture

doesn't run on leverage. Yeah. Right.

Because nobody will bank Yeah.

We'll bank a startup or a venture firm

for leverage because there's no assets

when these things start. It's

asymmetric. You can only lose 1x. Yeah.

Um but you can potentially make a

thousandx. And so that means right then

there's two errors in venture. There's

the error of of of of commission where

you invest in the thing that fails. And

then the the area of omission where you

don't invest in the thing that succeeds.

And of course over just in the math

overwhelmingly the the error that

matters is the error of omission. And

and so if you run an analysis that and

by the way lots of people did this. You

run an analysis that says ride sharing

is only ever going to be as big as taxi

cabs. Yeah. That leads you to the error

of emission and not making the bet and

and and and therefore the difficulty

with market sizing. In your view, is

this only is does that only apply up to

a certain size or, you know, when you

look at some of the rounds that now

happen at huge valuations in companies

that would otherwise, you know, be a

large IPO, like let's say somebody's

raising 10 billion at 100 billion or

something like that. Does the power law

still apply up there? like how do you

think about that type of round or do you

see venture capital sort of turning into

private equity at some level at the

higher end of things? Yeah. So I think

there's two questions kind of embedded

in there. One is why aren't these

companies public? Right. That's one

question. And then and then the second

question is like even whether they're

public or not like can they actually is

it still the lose one win 20 type of

dynamic? Yeah. So I think there's a

bunch of ways to look at that. So like

the smartest public investors I've met

with basically have the view that the

public market actually works just like

the private market with respect to this

dispersion of returns. um the the

extreme case I'll make sometimes is um

it may be that there's no such thing as

a stock it may be that there's only an

option or a bond right like so so for so

and and the reason is because there's

there's fundamentally two ways to run a

company one is to try to shoot the moon

one is to try to build for the future

and then the other way is to try to

harvest the legacy right and if you're

shooting for the moon the big risk the

big then the big risk of that is you

know you might fail right you might it

might not work but if it works you have

this telescoping effect in the public

market just as much as you have in the

private market yeah and and historically

the returns in the public market have

been driven driven by a very small

number of the big winners in exactly the

same way they've been driven by that in

the private market. In fact, you see

that playing out right now in the S&P

500. So, one of the things I've been

saying for years now is the S&P 500 is

not it's no longer the S&P 500. It's

like the S&P 492 and the S&P 8. So

there's like 492 companies in the S&P

that have no desire at all, right? Just

like watching their behavior to like

really charge hard at the future. Like

they they don't want to do it, they

won't do it, they're not doing it. And

then eight are betting everything. Eight

are all in, right? Right. And and you

and then I always say, you know, who are

they eight? And everybody always knows

who the eight are. It's completely

obvious who the eight are because

they're the ones that are building all

the new things. And then and then and

then again, if you if you disagregate

like public market returns over the last

10 years, you see the it's just you see

this just dramatic, you know, explosion

of value among the eight and and you see

a you know, relatively modest, you know

growth of the of the 482. So even the

S&P 500 is like having a portfolio of

like bonds and options. Yeah. And it's

it's like it's like incredibly barbar

and and so I I just I think and then and

then people people get cynical on this

and they say well you know if not for

the eight you know the the stock market

you're like yeah but that's the whole

point that's the whole point right if if

you have a healthy functioning

capitalist economy the whole point is

some number of these things are going to

go nonlinear this is like when someone

says ah they're not a very good investor

but they invested in named that hundred

billion dollar company so they got lucky

well you're like okay yeah that's the

point like that's the job that's the

desired outcome that's the thing you

know any of us who you know this like

you know kind of the classic joke like

joking venture like isn't there just a

way to invest in the good companies and

not the bad companies? It's like yeah

like okay for 60 years we've been trying

to figure that out. Here's a fun fact in

you find in the analysis. Over the last

60 years, every one of the really great

venture firms through that period missed

most of the great companies while they

were while while they were investing

right? They the best firms in the world

whether it's, you know, Kleiner Perkins

in the '90s or Benchmark in the 2000s or

Sequoia in the 2010s or whatever. Like

they just like flat out missed most of

the winners in each cohort, right? On

the one hand, you're just kind of like

"Wow, I can't can't you do better than

that?" But you've had these super

geniuses for a very long time trying to

do better than that. And I, you know, we

could have a se whole separate

conversation about why this this is so

difficult. The thing you said about

companies building, you know, the the

whole stack rollups are super popular.

Should I is it fair to take from what

you said that you're bullish on that

strategy or not necessarily? And

basically just, you know, to to walk out

what I mean, you know, instead of, you

know, building accounting software and

selling it to the accounting firms, just

buy an accounting firm, become an

accounting firm, AI yourself, which I

think is becoming like a more popular

strategy. Do you like that or is there a

nuance why it's different to buy

something rather than build it yourself

from the beginning? What do you think of

this whole rollup thing? Yeah, and let's

let's come back to the venture question

because I was still I was still winding

up into that. But however, this is

actually also relevant to that. So yeah

so there are a bunch of really good

firms that are trying to do this rollup

thing. I you know the I mean the

opportunity with it is kind of very

obvious. Um the the challenge with it is

just cultural change of an incumbent is

just a legacy company is just really

difficult. Uh Charlie Mer was once

asked, you know, a few years ago, uh he

said, uh, you know, GE, I think, was the

company was going through a big issue at

the time, and he was asked at a

shareholder meeting, "How would you fix

the culture at GE?" And he's like "I

have no idea. I don't even know how you

would change the culture at a

restaurant." Yeah, that's funny, right?

Like, how do you do that? It's really

hard, right? It's really hard. Um, and

so, you know, you have to have a theory

on that. I mean, people they do have

people doing it do have theories. Um, I

I think we're much more oriented towards

just trying to back Well, I think it

gets a little into this like private

equity. It's it's a little bit of the

the venture private equity blend I see

happening is related not even just in

dollar size but in the mindset here.

Well, this is where I go back to my

bonds versus options thing like

fundamental the way I'd always describe

venture is like fundamentally we are we

are buying longdated out of the money

call options which like seems completely

insane except when they pay off they pay

off like spectacularly well but like a

lot of them expire out of the money and

like you know you know statistically top

end venture capital has 50 plus%. Yeah.

Okay. Yeah. I just want to hear how t I

really wanted to hear about this but

yeah we can go back to the venture math

thing because I think there's a lot more

in there. Okay, good. So, so look, so

so, so anyway, so what's happened is the

world has changed. The the the the the

number of companies that that that are

being founded that are going to be

important, it keeps expanding. The

number of categories that those

companies are in keeps expanding. Those

companies are more complicated now

because they're they're they're full

stack. They're they're in these

incumbent industries. Um, and then the

winners are getting bigger, right? And

you and again, you just look at that in

the market. I look, we have, you know

of of the of the S&P 8, they're like

they're all venturebacked, right? Every

single one of them is venturebacked.

Yeah.

They are on any given day any one of

them is bigger than the entire national

stock market of countries like Germany

and Japan and the UK. Yeah. Right. And

so that the telescoping effect the

numbers are just absurd. The telescoping

effect of of victory is is is is just

incredible. Right. And so so what Ben

and I did is we looked at it and we kind

of we started our firm kind of as this

was happening and we looked at it and we

said all right like this is different.

This this is you could you could you

could you could sit here and do things

the old fashioned way but the world is

moving on. And then this goes back to

the customer service aspect. the

founders who are starting these kinds of

companies need something different.

Yeah. It's it's not sufficient anymore

to just you know to have in let's say to

have investors who were operating the

way that they were investing you know

for the previous 50 years that that

that's not the value proposition that

they need. That's not the it's not the

the the help that they need. So there's

a different way to do it. And so I I

think what's happened is like the the

the industry the venture industry it had

to restructure in order to basically

accommodate the change in the market.

Now having said that I don't think

that's an argument that it's just

therefore big big firms win everything.

That's definitely not my not my thesis.

And by the way, that's also not how I'm

deploying my own money, which which I

want to talk about because I'm I'm

living what I'm about to say. Yeah. Um

which is I think what happens is what

Nim Tb calls the barbell. And the way to

think about the barbell is basically you

you you you basically draw you basically

have a continuum and on the one side of

the continuum you have high scale and on

the other side you have high

specialization. And what you see in

industries that mature and develop in

this way, including many industries in

the last 100 years, basically what

happens is as they as they mature and

enter their kind of full state, as they

kind of flower, what happens is they

often start with generalists that are

neither subscale nor particularly

specialized. Um and then uh over the

fullness of time, what happens is they

get disintermediated and then there's

scale players on the one side and there

specialist players on the other side.

The most obvious example of this in

everybody's lives is retail. Um when I

was a kid, there were these things

called department stores. pretty good

selection at pretty good price, but not

a great selection and not a great price

right? And then sitting here today

those are all out of business. Like

they're just gone. It gets crushed by

Amazon on one end and then like amazing

retail on the other end. Exactly.

Exactly. Right. And so and and why do

you go to Amazon or or Walmart or you

know the big And by the way, there were

even these big box guys, you know, Toys

R Us and so forth. And then over time

like Amazon and and and Walmart even ate

they a cuz when you go to Amazon or

Walmart, what you get is just like an

unbelievable selection of basically

anything that's a commodity, right? um

that you just buy at at like super low

prices and it's basically impossible to

compete with that if you're upscale on

the one hand and then to your point and

then the specialist retail experiences

like the Gucci store, the Apple store

you know, the the $15 candles. They give

you some perier when you walk in. Oh

they love you. Like they're so happy to

see you. Exactly. Right. You know

they'll they'll do private showings for

you and you know they pour the champagne

and it's like it's like it's like an

entire experience and and so what's

happening is and and you just again you

see this in like the return you're just

looking at this return standpoint like

this is what's happened. this is where

this is this is how the value is and

then what happens is that just like gaps

way out and it never comes back together

again. Yeah. And then what the consumer

does is they build a portfolio of of of

their experiences. And so they they buy

things at unbelievably cheap prices at

Walmart and Amazon and then that gives

them more spending money to be able to

spend on the boutique. So So this middle

via the the bar that's in the middle

that's kind of screwed. Yes. What is the

mechanic by which they're in trouble? Is

it because the customers go away? The

the the founder customers go away. Yeah.

Yeah. The other fun customers go away in

the office who are neither getting sort

of like the size and scale value nor are

they getting like a special focus of

correct. Exactly. Can you do focus can

you be a specialist with a $2 billion

fund let's say? So obviously we're at

scale but we we do have a specialist

approach inside the scale and so we have

we have investment verticals. They're

discreet teams. They have in some cases

discreet funds and by the way they have

like trigger pull trigger puller trigger

puller authority. They can make

investment decisions. Like we don't run

the firm where Ben and I sit and decide

is this a good investment or a bad

investment. like our specialists who

make those decisions. You basically

determine that by this is the size we

think you can function. This is the

biggest you can function as a specialist

in a highly successful way and then

we're just going to put a bunch of those

together. Is that like what defines the

size? Yeah. Well, so it's sort of it's

it's two Yes. Yes. But it's two parts.

One is what's the what's the external

view is what what's the size of the

market opportunity? Just how what what

how much money does this does this

strategy does this vertical need? How

many companies are it going to be? How

how many different you know kind of how

how complex is it? And then the other is

the internal dynamic which is like you

know you want like if you're going to

have a team you need everybody around

the table being able to have a single

discussion and that puts natural limits

on how big that can what's your limiting

reagent to building an even bigger firm

is it number of productive partners that

can do this then like conflicts conflict

policy conflicts conflict policy that's

the problem the single biggest issue by

far really so if you had 50 kill if you

had all the great GPS all wanted to work

here and you had like that would still

be the issue yeah there there would be

issues There will there would be issues

for sure to your point that would come

with so what's the conflict thing the

conflict thing so the conflict thing is

the the mainline venture firms forever

meaning meaning the firms that do series

A series B series C's especially series

A's and B's the relationship with the

founder is just so it's too deep and if

you as a venture firm invest in a direct

competitor it's it's just it's a giant

issue that the founder you're already

invested in will be extremely upset with

you by the way do you think that's

practical do you think it's all emotions

like do you think it's correct that

firms shouldn't do conflicts I would say

when we were startup founders We felt

this very deeply. It's just it's it's

okay. So, when you're a startup founder

I'll channel the other the other side.

When you're a startup founder, the whole

thing is so tenuous, right? It's just

like, is this thing going to work?

There's like 18,000 things can go wrong.

People are telling you no every day. No

I'm not going to come work for you. No

I'm not going to invest in you. No, I'm

not going to. And then your board member

invests in a competitor and you're like

dagger to the heart. Dagger to the

heart. And then you literally what

happens is the founder is you have to go

to the all hands meeting and explain why

your investor has given up on you

right? and and you go in there and you

do some song and dance about da da and

they're just and the your employees are

just like your employ basically your

employees look at you and they're just

like you the founder are so weak and

lame right you can't even get your board

member to not invest in a competitor

exactly what about the marginal stuff

though cuz like you know all these

companies are near each other they blend

they evolve over time so like how does

this how does this play out on a

practical level for firms it almost

never plays out the way that the

founders think it's going to play out

and I say that in two dimensions number

one the company this historically what

we've seen is that the founders who

think that they're directly competing

with each other generally end up not

doing so because one or the other of

them changes strategies and then they

they diverge which which by the way is

natural because it's like spec

specialization the companies specialized

they end up not competing but the other

thing that happens is two companies that

were not competing that you're already

invested in pivot into each other. Yeah.

And then they're mad at you and then

they're Yes. And then they're very upset

and you have to remind them that like

that you know you didn't know that that

was going to happen and it's not your

fault and then they're still upset. Um

and so so I would say the the the

founders are not the founders and and

also we have very low predictability of

of terms of where the conflicts are

going to be. But that doesn't amilarate

any of the emotion at the time. So it it

does it doesn't actually help it doesn't

help for us to explain to the founder

oh don't worry about this guy who you

think is directly competitive because he

won't be in a year. Yeah. Because you

can't prove that. And and and the issue

is the issue is in the moment. What does

that leave your how does that impact

your strategy? meaning like um if you

know conflicts are this huge issue and

you've got you know a big aggregate fund

and so it's very important to catch

winners and then you invested in you

know Blue Origin which is really good

but SpaceX is you know bigger or

whatever happens what does that imply

for your strategy when it comes to like

should we you know doing seeds and A's

and things like that versus like say you

know what let's just wait till like the

D let's have D be our early stage.

That's right. So the most obvious thing

you do is you just like, "Oh, we just

need to wait because we need we need to

wait for clarity. Just don't deal with

this whole issue, right? Just wait. Just

wait. Keep just keep delaying and keep

delaying until it's obvious what what

the what the answer is." And who if it's

big, it's going to be really big so we

can buy later. But then the problem with

that is all right, now you're out of the

venture business. Mhm. Right. Because

now you're as you as you said, now

you're basically doing serious D's. Now

you're a pure growth investor. And and

by the way, there are very good pure

growth investors. Um but like our

determination is to stay a top 10

venture investor. Yeah. Because we think

that that's kind of the whole point. Why

is it so important? Is that just because

it's what you like or is there a

strategic reason that it's important to

stay doing early? So, we've always

wanted I mean that's the way we've

always thought about it is we've always

wanted to kind of be the founders's best

partner um and and like to be to be the

one who's like the closest in the one

that can really be relied upon, the one

that's going to be around for the

longest amount of time, the one who they

can really trust. It only happens early.

Yeah. Like yeah, it's your it's your

early guys and so it's hard to insert

after that. And then look, the other

thing is like there are great growth

firms that do invest later and have done

very well, but I we just think there's

so much information at the early stage.

Like so for example when we when we make

a growth investment because we have the

active venture business that we have by

the time we make a growth investment uh

you know we have either invested in the

company for several years or at the very

least we've met with them repeatedly

over time and so we just we end up with

just like enormous amounts of of

information and then the other thing by

the way is you know there's there's

there's kind of time arbitrage which is

you know sometimes the right the right

answer is just like okay just invest in

SpaceX or whatever later on but

sometimes the answer is no there's

actually a new thing you know totally do

you invest in the MySpace growth round

or the you know the Facebook the

Facebook seed round like And if you and

if if you're not in the early stage, you

you won't know that because you won't

see the you won't see the early things.

Yeah. Um and and then by the way, the

other thing I just say is financially

one of one of the one of the things

people say that is inaccurate is they

say if you're running a big fund, you're

not going to have the time to spend on

the early stage opportunities because

you can't justify it before you're

putting the money. That's actually not

true in venture because the aggregate

dollar return opportunity on early stage

is just as high as any growth

investment, right? Because if you get

the right venture investment and you can

make $10 billion on the upside case

it's definitely worth my time to spend

with the early. So I spend as much time

as I can with the early stage founders

you know, for that reason. So the

barbell, there's, you know, there's big

on one end, there's something sort of

like me on the other end. Selfishly, I'd

love to know like, you know, I would

assume you think it's better to be the

big version, but you know, if you were

conditioned on needing to be me um at

the small end of the barbell, like how

would you approach it and they're both

good. They're both good. This is the

thing is they're both good. They're both

good. And if I were for some reason not

doing this, I would immediately do what

you're doing, right? So Okay, that's

good to hear. Yes. 100%. And then and

then I would say I I actually invest

this way. So my liquid assets are

basically tied up in either A6Z funds on

the one side or I run a very aggressive

personal investment program in early

early basically angel and early stage

seed funds and it's because I I believe

in the barbell. I I believe in the

barbell so much. And so but I the

conflict thing I wanted I wanted to

explain because that that's the issue.

So the the big firm like we do seed

investing it's just we have this problem

every single time we're looking at a

seed investment which is like are we

really fully convicted that this is

going to be the winner? Even at seed it

creates a conflict before a board seat.

There's debates. There's there's always

debates on this is like, you know, do

the seed ones care as much? Do the

growth ones care as much? Do the crypto

ones care as much. What I tell you is

it's not a logical question. It's an

emotional question. And we're just very

sympathetic to the founder that needs to

be able to justify their, you know

authority. You also definitely can't ask

while you're make like if somebody asked

me while they were making the

investment, hey, is it okay if we invest

in a conflict in a couple years? I'd be

like, what are you talking about? You

know, and we've done these things. We

tried to we used to have this thing. We

used to have this separate brand of

thing called A16C. And we were like

well, we have a different conflict

policy on this and it's it's a great in

theory, but no, it's A16C. So the way I

think about it basically is like the

more successful you are as a as a as a

venture firm, the bigger the issue this

is going to be because the more the

people that you are investing in are

going to care. Yeah. And so it's it's

just it's like the downside of success.

But like success, you know, right

right? The only people who like the only

investors you don't care whether they is

if they if literally if you don't care

what they think about anything, right?

If they if they just don't matter at all

and everybody knows that they don't

matter at all. So so so there's that. So

so so therefore it can be simultaneously

both of these things are true. Number

one is we still we we definitely do lots

of early stage investing and we will do

we will do we do make seed bets but it's

just also true that we can't

structurally for for this we cannot do

all of the seed investments that we

would like to do. In fact, we can't even

do a tiny fraction of them. It's just

like strategically we just structurally

we just we just can't do it. Um and so

and and again this goes back to the

barbell. So so that means structurally

it's the same reason why Amazon can't

give you the champagne you know

experience, right? It's it's the same

thing. They can't they're not set up for

it. They can't do it. It's not a scaled

strategy. Uh and so what has to happen

is there has to be the other side of the

barbell. There has to be the

specialization and intense focus and

deep relationship. Yeah. Um right um uh

thing and and that's and that's the role

of the angel investor and the and and

the seed investor. And that's and of

course in startups that's incredibly

important because that's the most

formative right fraugh time in the life

of these companies is when they're first

getting started, right? And as as you

know right half the time these are

people who haven't you know they haven't

started a company before, they haven't

run a company before. Some of them

haven't had a job before. Yeah. And so

like they they need to learn a lot and

they need people to work with them on

being able to do this and they need to

figure out how to actually you know do

these things. And so there there have to

be and there are like incredibly high

quality seed investors, angel investors

um on that side of the barbell. Um the

the the big firms presumably you know if

if we succeed we succeed by generating

large numbers of aggregate dollars and a

very good you know percentage return.

The seed investors have is have this

perpetual opportunity to just absolutely

shoot the lights out. Yeah. Right. on on

upside and and you can have you know you

know there are seed funds that generate

like 200x 300x returns right and so

these are both good strategies they're

both adapted to the current reality of

the market there's just two things that

fall out of that one is the death of the

middle which is it just doesn't make

sense to have the old-fashioned you know

series A series B 6GPS $300 million fund

sitting on Santa road waiting for people

to walk in the door like those days are

over and those funds are you know those

funds are shutting down like that that

model is going away and then the other

thing that happens that causes some of

the tension is this What does a

successful seed investor do? Right? He

raises more money and wants to become a

venture investor. Right. Right. But then

he he goes but then you're you're you're

going from one side of the barbell back

to the middle and you're creating that

same problem again. And I think that's

where the tension is coming from. I also

feel like the mechanic that happens a

lot of times is when you grow the fund

the only you you know you you raise a

huge fund and then you start deploying

it into things just because you've got

to deploy at some pace. And so the

threshold for I've got to deploy 400

million this year and I only see $700

million worth of investable things. I'm

going to do 47ths of them versus you

know presumably if you only had to do

one seventh of it you would you know

you'd pick better hopefully. Yeah. Which

I think is a huge we can't I think

that's part of it but I think the

related thing is your competitive set

has changed and and what we what we find

with seed investors who migrate up and

then regret it later. What we find is

what they didn't realize was their

competitive. So right because now

they're going for bigger more

competitive rounds against you and

Sequoa. Yeah. All of a sudden, okay, now

you're competing for $50 million be good

luck. Right. Right. Exactly. And so it's

just like and and look like market

fundamentalist. If you have a better

value proposition than Sequoia, you

should go you should go off for that.

But I just I would not I would not

accidentally end up competing with

Sequoia for series A. Like I would just

say that's a bad way to live. Yeah. And

I think that's what hap what that is

what has happened to a bunch of the seed

funds that have gotten larger. Why is it

so rare for somebody to break through

and get I mean you did it and that's one

that happened in the last 15 years.

Maybe there's a couple others maybe. But

why is it as rare as it is? It seems

like almost more rare than a new big

company. Yeah, in a way. Yeah, that's

true. In fact, our analysis actually

when we started was there actually

hadn't been I think there had been two

firms. Andy Rackov actually I mean

Thrive also so Thrive was Yeah, they

were after us. I mean they've done great

but um but before before us in the in

the 30 years before us we think that

there were only two new VCs that

actually punched through to become top

tier. Um in other words, VCs that were

not either firms that were built in the

60s and 70s or firms that weren't

derivations of those firms. Founders

Fund. No, no, no, no. The Founders Fund

started at actually around the same time

we did. Okay. Um they were a little bit

earlier, but they're around the same

time. But I mean over the preceding like

50 years. Okay. Seven Rosen. You won't

even this is sort of the thing. You

won't even recognize your name. I need

to read a book or something. So Seven

Rosen was the venture firm that famously

funded Compact Computer, which was the

big the big the big winner. And then

they went on to become a successful firm

this guy Ben Rosen. Yeah. Early early

leader in the space. And then there was

a firm called Hmer Windlad U which was a

software specialist firm in the late 80s

early 90s. Um those were the only two

that punched him at the the top end

while they were operating. Wow. Neither

one of them, you know, sustained it, but

they got there. They got there for a

bit. But that was like the success case

right? So, this is a little bit like

Elon looking at the history of the car

industry and saying, you know, Tucker

Automotive in the 1950s. So, it's very

very rare. So, why is it two two reasons

I think it's rare? So, number one, um

there there's the intimate reason for it

and then a sort of macro reason for it.

Intimate reason for it is just it like

you're going to have this incredible as

the founder, you're going to have this

incredibly intimate experience, you

know, very close trust relationship uh

with whoever you're working with. Then

it's like, you know, can you reference

them? You know, do do they have a

history and track record of the kinds of

behavior um that you need and the kinds

of insight, you know, that you need. And

it's just like it's very hard to do that

from it's very easy for an existing firm

that has a long track record of success

to prove that. It's very hard if you

don't. So that's that's like the

close-in reason. But then the other

reason goes back to the way the world is

changing is we always believe the thing

that you want from your venture firm is

power. Um, so the thing as a startup

that you want is you want them to like

fill in all the missing pieces that you

don't yet have when you're starting a

company that you need you need to

succeed and and so you need power. And

so you need power. That means like you

need the ability to be able to like

actually go meet customers and have them

take you seriously. Uh you need the

ability to go get publicity and like you

know major you know channels you know

used to be media now it's podcast. Um

and be able to like get taken seriously.

You need to be able to be taken

seriously by recruits right because

there's thousands of startups recruiting

for engineers. What makes yours stand

out? I I sometimes describe it as

venture firm as providing a bridge loan

of a brand. I was saying until you have

your own brand that's big or bigger, you

know, for your own space than the VC.

You're borrowing your VC's brand.

Exactly. And and that has been very

effective for a long time. And that was

how we looked at it when we were

founders. That's why you did media from

the beginning. Yeah. Oh, that's one of

the Yeah. One of it's one of the

reasons. Yes. But a very very powerful

one. Very very major one. And then by

the way, you also need ability to raise

downstream money, right? You're you're

going to have to need to raise money

again. And so they either need a lot of

money or they need to be connected to a

lot of money. Yeah. Exactly. Right.

Exactly. And so you you just better if

they just have it like being full stack.

Well, then by the way, now you're

getting also like again you you think

like tools companies just never got into

like for example politics right or just

let's just say global affairs glo global

events like what's happening with you

know like what's happening how do you

navigate the world right how do you

navigate Washington you know when the

regulators show up and they want to kill

you like how do you navigate that or

you're like get in some you know giant

fight with the EU or what like so so the

especially these fullstack companies

they're they're they're getting involved

in like very complicated macropolitical

geopolitical situations like much more

early and they have to like in some

cases they have to like escalate up to

like you know senior government

officials, heads of state um you know

major heads of sovereign wealth funds

they need to get to you know the CEOs of

major companies you know how do you get

to the CEOs you know you're you're a new

AI you're a new AI company and you're

trying to redefine you know visual

production for movies how do you get to

the studio heads right and the studio

heads just don't have time to meet with

a thousand startups so where are they

going to meet with you right so so

basically it's it's projection of power

um and and this has been one of our one

of our theories how we built our firm is

you optimize for maximum amount power in

order to be able to give the startups

access to it, right? Both the startups

that already in your portfolio and but

also the startups that don't even exist

yet, right? And and and again, this goes

to why the scale thing matters so much.

It's just like all right, there's just

there's a scale aspect of power. There's

a big difference between being able to

get to everybody who matters and not why

is it rare for people to be able to

accumulate power even if they were like

let's say everybody was trying to do it.

It's not like everybody could do it.

What's the cause of the rarity to be

able to build enough power in that

sense? Start with you have to want to

Um, and so we met with the we met with

all the GPS of all the top firms

basically when we were starting out

because we wanted to, you know, see who

we could be friends with and it went

very well in some cases and not not well

in other cases, but uh, one of them told

us this is a GP at a top firm in 2009.

He said, "Yeah, the venture business is

like going to the sushi boat

restaurant." All right. And so the sushi

boat restaurant, it's a sushi restaurant

where they've got the boats, right? It's

got like a they've got like a water like

a conveyor belt conveyor belt, right?

and the little sushi boat comes by lunch

and there's a tuna roll and there's a

you know shrimp roll and there's this or

that and you and and he said basically

you just sit on Sand Hill Road and

you're like we're going to crush these

guys and and the startups are going to

come in and he said you know if you miss

one it doesn't matter cuz there's

another sushi boat coming up right

behind it and he's just like you just

sit and watch the sushi go and every

once in a while you reach into the into

the thing and you pluck out a piece of

sushi and we we walked out of that thing

like what the hell that's funny like in

what industry is 2009 or something 2009

yeah like that was a very common this

again is the mid this was the midsize

venture One of the reasons when when

when I came like look in 1994 it might

have kind of been like that. It was it

was when I came to Silicon Valley in

1994 I had never heard the term venture

capital. I didn't even know the thing

existed. And then my business partner

Jim Clark explained it to me and I was

like there are guys like they're just

sitting there waiting to give you money

and but you see this and you're like

this is going to get eaten alive. Of

course this is absurd. Like the minute

anybody takes this seriously it's all

going to change right? So it was this

very clubby cartel you know basically

kind of thing. And again it it was fine

as long as the ambitions of the industry

were constrained. And then and but then

again look the the the the tools

companies they didn't need all the power

they didn't they needed some of the

power right but they didn't need all the

power you know they weren't dealing with

like governments right or or you know

these sort of big macro issues um you

know at least you know the early years

well okay so here's another thing that's

happened is just the world is globalized

like a so startups 30 years ago you

would spend your first decade just in

the US and then you would start to think

about Europe and global expansion and

and now you just you have to think about

being a global company upfront because

you're if you don't like you're other

people are going to do it. Yeah. Right.

Um, and so you just you have to chin up

like as an entrepreneur like the

expectations are much higher than they

used to be. Maybe one final question on

this topic of fund size and then I want

to go to AI. Um, what do you think and I

know you've thought about this a lot.

What do you think is the limiting factor

for the creation of a lot more really

big companies? Do you think it's

founders? Do you think it's capital? Do

you think it's market maturity? Do you

think it's underlying tech stuff? like

if you had to pinpoint the one or two

things that you think would allow for

there to be way more big companies like

what is it? So there's sort of the holy

trinity of venture uh startups which is

you know people market and technology.

Um and I think the answer is sort of all

three. And the way I would describe it

is there's some limiting issue with just

market just how many markets are there?

How big are they? How how ready is the

market to take something new? Then

there's the technology question which is

you know when is the technology actually

like from the venture perspective

technology moves in stair steps right

and so things become possible in the

world of smartphones that just weren't

possible. You know you couldn't do Uber

with when everybody had a laptop. You

had to wait till they had phones. Yeah.

Right. Um and so technology moves in a

stair step. you get these par, you know

paradigm shifts, platform shifts, and

and those just they come when they come.

Yeah. And until they come, you you can't

do it. And then and then the people

side, you know, and this is the one

that, you know, I say, you know, vexes

me the most, which is like, okay, like

how do you just get more great great

founders? Yeah. Right. Um, and I think

part of that is, you know, you I think

there is definitely a training thing

that is real and getting people into the

right scene in the right way and like

the thing that my cominator does or the

thing that Teal Fellows like those are

real things. Um, and those help a lot.

But also I you know there is an inherent

you know there are just certain there

there's there there are not infinite

number of people running around who have

the you probably figure there's a lot of

people who could have built big

companies who haven't though and

hopefully a lot or a few yeah I don't

know some some I don't know some number

but there must be people who are just

like in academia or government or educa

who are just doing something completely

different who if they were attracted to

startups would have built a big company.

So yes but then the other question is

like well okay then why didn't they why

why didn't they do the things required

to get themselves in that position?

Well, it could have been then like 2001.

It was just like too many people were

too scared to do it or didn't know about

it or whatever. But what does that tell

you about the people who didn't do it?

Yeah. Is they they were heard. I can

tell you who didn't listen to that

right? It was Mark Zuckerberg. Are there

more good but let's just press this

point harder for a moment which is like

I always describe this as like I always

call this the test with capital P which

is like okay like if you're not in

position to do the thing is the fact

that you're not positioned to do the

thing meant that you flunked the you've

already flunked the test. Well, I guess

the question would be are do is there a

subset of people who could build

Facebook who other than being too scared

to do it would have had all the other

ingredients. And so when everybody's not

scared, you get more Facebooks. You

know, there's a line in the I actually

never saw the movie, but there's a line

in the movie, if you could have built

Facebook, you would have built Facebook.

Yeah, there's a line that Yeah. Yeah.

Yeah. That's right. That was a good

line. Right. And so this is the thing.

It's like, you know, are there more

great founders today than when you were

let's say, a net? Like do you think

there are more now than there were 20

years ago? I believe there are but like

I maybe there's how many more are there

right? Is it five times more? Is it like

50% more or is it well so the the number

of wins is increasing like so the so we

we used to talk about the 15 15 year

that matter it's that up number is

probably if you do the analytic it's

probably up like 10x there's like 150

companies 150 companies a year that like

really matter and the reason is because

there's so many more sectors now right

so again the industry maturation. So

kind of by inference there kind of have

to be like you're saying the markets are

better more than you're saying the

founders are better. Well, maybe a

little bit of both. Al, look, also I

think the founders are getting better.

Part of the founders getting better is

they have they're all in the Well, to

start with, they're just all online. So

so we when I showed up here in 1994

like literally there's like three books

in the bookstore, none of which were

that great. Yeah. It's not that the DNA

is better, it's that there now the

ecosystem has matured to teach people

better. Yeah. And like people come in

and they've watched every video, you

know, they watched every episode, you

know, your podcast, right? And and they

they just walk in knowing all this

stuff. Um and then yeah, look and then

look, the white commentary didn't exist

and you know, that definitely helps. And

and you know, Steel Fellows didn't exist

and that definitely helps. Um there's

you know Brian Eno has this great term

seniors scene you know seen plus genius

right and so it's just like you know the

individual genius on his own is always

it's always you know it's hard just get

get things done some people do but it's

difficult it's more often more often in

any profession where you're seeing

creativity happen there's almost always

a scene you know as you know Silicon

Valley is definitely a scene in that way

people people come here and they just

they kind of get I don't know they just

get better they just you know they meet

more people who are like them they're

able to aggregate together they learn

from each other so yeah so look the

founders are getting better there's more

of them. But is is there does that mean

there's now 10,000 as opposed to a

thousand? Yeah. I don't know. There's

and there's 8 billion people on planet

Earth. Why are we why are we debating

whether it's a thousand or 10,000? Yeah.

Right. And so and I just I that I don't

know. I would hope over the next, you

know, years and decades we'll all figure

out a way to go make sure we get

everybody who can do it and get them to

do it. That's a good segue into AI. Do

you feel that we're now at the beginning

of what is like the new next important

you know, paradigm? like is this cloud

butt on steroids? Oh, yeah. Much I think

much I think much larger and I'll I'll

explain why. So, um yeah. So, so I

described you know I described right I

described before right you know the the

triangle people technology market the

the technology is ultimately the driver

is the techn the the technological for

venture the technological step function

changes drive drive drive the industry

and they always have right and so if you

talk to the LPS you can see this is like

when when there is a giant new

technology platform it's an opportunity

to reinvent a huge number of companies

and products that you know now have

become obsolete and create a whole new

generation of companies often you know

generally end up being bigger than the

ones that they they replaced and so so

so and the venture returns map this and

so it They come in waves and the LPS

will tell you it's just like yeah there

was the PC wave, the internet wave, the

mobile wave, the cloud wave like that

was the thing and then by the way in

venture when you get stuck between waves

it's actually very hard right because

you've seen this for the last like five

years like for the last five years it's

like how many more SAS companies are

there to found like just you're just out

of ideas out of categories done right

and so it's when you have a fundamental

technology paradigm shift that gives you

an opportunity to kind of rethink the

entire industry it would have been very

sad by the way if the AI breakthrough

didn't happen like the state of venture

would be sad I think three years ago

this was I mean so when we were talking

to our LBs 3 years ago we're just like

basically like you know we're in you

know we're so Chris Dixon has this uh

framing he uses he calls it your

adventure you're either in search mode

or hill climbing mode and in search mode

you're looking for the hill and it was

search mode right and and three years

ago we were all in search mode and

that's how we described it to everybody

which was like we're in search mode and

there's all these candidates for what

the things could be and AI was one of

the candidates right it was like a known

thing but it hadn't broken out yet in in

the way that it has now and so we were

in search mode now we're in hill

climbing mode thank goodness yeah big

time Yeah. And then and then you know

look like I I as I say on the technology

breakthrough itself I think a year ago

you could have made the argument that

like I don't know if this is really

going to work cuz LLM you know

hallucinations can you know it's great

that they can write Shakespearean poetry

and hip-hop lyrics. Can they actually do

math? You know can they do can they

write code? Now it obviously is and now

now they obviously can. And this this I

I think for me the turning point m the

moment for certainty for me was the

release of 01. So 01 from OpenAI the

reasoner and then and then Deepseek R1.

the minute I the and those happened kind

of back toback and the minute those

popped out and you saw what's happening

with that um and the scaling law that

was around that you're like all right

this is going to work because reasoning

is going to work and and in fact that is

what's happening like it's it's it's you

know and and I would say every day I'm

seeing product capabilities you know I'm

seeing new new technologies I never

thought I would live to see like really

profound um I actually think the analogy

isn't to the cloud or to the internet I

think the analogy is to the invention of

the microprocessor I think this is a new

kind of computer and being a new kind of

computer means that essentially

everything that computers do can get

rebuilt, I think. So, so we're we're

investing against the thesis that

basically all incumbents are going to

get nuked. Yeah. And everything is going

to get rebuilt across the board. Just

across the board. Now, we'll be wrong in

a bunch of those cases cuz some

incumbents will adopt. The power law

the things that are right will be super

right. Will be super right. Exactly. And

then look, the the AI makes things

possible that were not possible before.

Um, and so there's going to be entirely

new categories. By the way, is your

mindset there that you should just bet

on? Like obviously incumbents are going

to win some percentage and startups are

going to win some, but it's basically

the dominant strategy as a venture

capitalist to just plan to bet that

startups are going to win it all and go

for the power law. Yeah, that's right.

That's right. Well, and and again, the

reason is remember two two customer

sets. The way the LPs think of us, the

way the LPs think of us is as

complimentary to all their other

investments. Yeah. And so our LPs all

have like major public market stock

exposure. Like they don't need us to bet

on Yeah. incumbent healthcare, you know

whatever company, right? they they they

need us to fit a role in their portfolio

which is you know to try to maximize

alpha uh based on uh you know based on

disruption. Yeah. Um and and then and

then again and then just again the basic

math of venture which is you can only

lose 1x you can make a 1000x and you

just like slam that forward as as as

hard as you can. So when you have a

moment in time worldview like this, do

you, you know, as a firm leader, do you

give a directive that's basically like

hey everybody, we need to deploy in this

kind of way right now or do you just

build a system that's always picking

birds out of the flock from like the

bottoms up and you're just like, well

they're smart. They're going to see that

every opportunity is good. Like how much

is it like a top down guidance versus

you know, the market's just obviously

good all around? Yeah. So, we don't do

like I said, we don't do top down

investment decision-making. And so, Ben

and I aren't sitting saying, you know

we need to invest in category X or we

need to invest in this company versus

that company. And we we don't run we run

we have a legal investment committee

but we don't run a process where they

come to us to get approval because

you're letting the leader of each group

sort of make those decisions and and and

and often in those groups, it's actually

delegated for further is delegated to

the individual individual GP or check

writer. And and the reason for that is

we just think that the knowledge of

knowing what's going on and which one's

likely to win is going to be focused in

the mind of the person who's closest to

the specific thing. But do you have like

a risk slider? Are you like, "Hey guys

let's be at a nine right now." So this

this this is the funny thing. So venture

is the only asset class in which the

leaders of the firm are in the position

of trying to get the firm to take more

risk, not less risk on a regular basis.

Exactly. Because right because the the

the natural orientation towards any kind

of anybody who's in an existing

business, there's a natural

organizational incentive to try to

reduce risk because you want you just

want to like hold on to what you have

and not upset the apple cart. Y and so

Ben and I are generally on the side of

like take take more risk. Um, one of the

one of the one of the applications of

this is the old Sequoia adage which is

they say when in doubt lean in like so

so for example so you see this I'm sure

when you do it is it's just like okay

there's this thing there's this company

that is like potentially very

interesting but like there are these

issues right and it's just like it's too

early and this and that and weird guy's

got a weird background and this that

that and he's in a you know whatever I

don't know the issues and you know it's

a hair you know there's hair on the deal

there's no hair on the GP but there's

hair there's hair on the deal the

founders tend to have have really good

hair on the deal and it's just like all

right like what do you what do you how

do you calibrate that right and and and

the and again the history of venture is

when you see something's very promising

and there's a lot of hair on it

sometimes when you invest it's going to

go to zero because the hair is going to

kill it and then sometimes when you

invest it's going to be the next but

it's like something where you're like I

love that I hate that is much better

than yeah everything's fine 100% and

this is the way we describe this is

invest in strength not in lack of

weakness or another way to think about

it is it's not good versus great it's

very good versus great that's the

Differentiating good from great is very

straightforward. Differentiating very

good from great is actually very hard

and and again the risk reducing way to

try to do that is as you kind of alluded

to would be kind of the checkbox thing

which is like very good team, very good

market, very good this, very good that

and then you have this other one where

it's like they've got six great things

and nine like horrible things, right?

Okay. Which is the better bet? Totally.

Usually, yeah, usually it's the it's the

thing with with the greater strengths.

Um, statistically, by the way, this

shows up in the return data from the

LPS, which is the top decile firms have

a higher loss rate um than than than

everybody else. Um, which is which is

called in in baseball called the Babe

Ruth effect, which is the home run

hitters strike out more often. Yeah. So

the top performing venture firms

statistically tend to have a higher loss

rate than the mediocre firms, right? And

and it's for this reason they're willing

to invest in the thing that is just

looks like completely nuts, um, but has

that magic something. Yeah. Um, and so

so when when Ben and I think about

trying to get the the team to take more

risk, it's almost always it's basically

either that kind of thing, which is

like, look, and it's what, and what

you're doing is you're telling the

person closest to it, go with your gut.

Yeah. If your gut tells you there's

something magical here, like, go ahead.

It's okay because we're going to have

some losses. So, it's okay to make the

bet. If it if it if it if it breaks

because of the hair, that's fine. And

and but then then the other form of risk

we try to do, and I I do this a lot, is

just, you know, I am trying to push the

firm constantly, is like go earlier.

Yeah. Right. Because again, that for as

we discussed earlier, the natural

inclination is to wait, right? Um, and

it's like, no, no, no, go earlier. Like

we do actually want to make these these

these, you know, we we make some seed

bets, but we definitely want to make

like a lot of a a bets. Yeah. And again

we're going to lose a bunch of those.

Like, we're going to screw those up and

miss the winner or whatever, but like we

we have to do that because we have to

get into some of these things early. We

have to, you know, get get the level of

percentage you get in the A. That kind

of relationship. Yeah. And I guess

there's risk that's of the flavor of

like do things that are more asymmetric

where there's hair, but also brilliance.

Correct. There's also the flavor that's

just like well sometime something I

struggle with is the deals where I just

barely said yes and just barely passed.

I'm like I don't actually have that much

confidence that I can tell the

difference between those. There's

another flavor of sort of be more

aggressive which would just say like

just do a higher percentage of those

ones where you're like right on the

line. Do you give that kind of guidance?

Like do you think like that too where

you're like it's not just do the more

out there things and we're swinging for

the fences but it's also like let's just

do a little bit more right now in

general. Yeah. So we used to run this

process we call the anti portfolio um uh

the shadow portfolio um and so the

shadow portfolio was we used to track

this statistically for like the first

five years exactly on this point which

is every time we do an a every time we

do pull the trigger on a round let's put

in the shadow portfolio the other

company we were looking at at around the

same time that we didn't end up pulling

the trigger on y and then let's build up

representative like build up the you

know the earth two portfolio I'm so

curious had well so and the good news is

it turns out generally that the main

portfolio did better than the shadow

portfolio but the shadow portfolio was

close it was a good did really well.

Yeah. Right. Exactly the point. And so

and then you're okay. So then you're

just like, okay, you're not that smart

but you're just like, okay, obviously

what does that mean? It means do them

both, right? And again, this goes to the

thesis of like how big should these

firms get. It's just like, well, if you

had the opportunity to do both, the

portfolio and the shadow portfolio, you

should do them both. What's the

constraint on that? As we discussed, is

conflicts. Yeah. Um, but generally

speaking, you should try to do both.

Yeah. And and and by the way, this is

the this is the um I don't know if it

was Josh or the other the other podcast

that they were talking about this, but

you know, at least I I saw a reference

to like a statistical analysis of like

win rate or whatever, return to

percentage returns or whatever or

percentage of wins. It's just like it

doesn't in venture math doesn't matter.

It doesn't matter. The the thing that

matters is were you in the next big

thing as early as you could get in and

buy as much as you did. Like that's the

only thing that matters because if you

don't do that, you miss out on the

thousandx gain. The 1x losses don't

matter. They they wash right out. Yeah.

Um, and so this idea that somehow

there's some like virtue to being like

a, you know, small, you know, we only

make a few bets, we have a higher

percentage.

It does. Yeah. How much is that? I'm

glad people think that that's a I would

like to encourage people to to think

that that's a virtue that they should

shoot for. It seems like it's very hard

to assemble lots of, you know, very

good, productive GPS into the same firm.

It's just objectively rare. Yeah, that's

right. You've done it, but it's like

doesn't happen very often. Do you I

guess my first question on this is do

you think of just finding greatness and

then you can't really teach it much you

know so you're basically just going to

like hire people and see how it goes or

do you think that it's about creating

the system and conditions in which

people do great work and you can

actually create good investors. Yeah. So

I think it only works if there's a point

like if if there's a reason why you

would have a aggregation of GPS in the

first place. And our answer to that is

power, right? The the our pitch to GPS

as to why they should join us as opposed

to go to a smaller firm or start their

own thing is if you come here, you just

like plug into this engine that's just

like massively powerful. And so

everything that you do, the effects of

it are going to just be like blown

completely out. Therefore, you're going

to have a much higher win rate on the

deals you you want to do, which is much

more satisfying. And you're going to be

able to actually help the companies a

lot more. And you'll probably see more

companies anyway. Yeah. So everything

probably gets better. Yeah. That's

right. That's right. And and by the way

you you know, some people want to have

colleagues, some people don't want to

have colleagues, but some people do want

to have colleagues. And you'll be

working with people you like and, you

know, who care about the same things you

do. So, but there has to be a there has

to be a point to it. And of course, it's

you know, it's on us to keep proving

that, right? Because, you know, the the

devil's in the details of whether

they'll actually, you know, buy that.

But so far, so far a lot a lot of really

good great people have. And then yeah

and then the second part of the question

is like, okay, who who do you who do you

put in those roles? Um, historically, we

had his our old model was basically we

only hire GPS. Uh, we don't we we were

not developing. And we could go through

why that was the case. We changed that

like 8 years ago. We we now develop our

own GPS um that we've evolved to where I

think that's that's working quite well.

Um I think the answer to your question

is it's a two-part question is there's

some level of just objective you know

are they are they are they are they good

are they good at doing the job. Y here's

a big thing we focus on when we evaluate

them which is um you know it's fine to

invest in a category like 5 years early

or like whatever something goes wrong

like that's fine. What's not fine is you

invest in the wrong company and you

could have invested in the right

company. Yeah. like at the moment you

made the investment, you could you you

made the wrong decision in that moment

of which one you should invest in and

you you could have known. And so it's

like did you do the work to fully

address the market? How do you handle

the fact that like you don't know that

until like 6 years later and now you're

going back and you're like hey you made

this mistake 6 years ago this isn't

going to work out now. So it's generally

so that is a giant problem. Um and I say

that when we started actually when we

talked to our our friends in the

business what they said basically was

they said number one you don't know if

somebody's a good GP for 10 years

because you don't have the return data.

And then they said number two is nobody

ever wants to admit that they made a

mistake and so they never actually fire

anybody. Yeah. So what they do is they

just keep them on the mast head and they

just kind of gently like you know retire

them out but they they sit and pollute.

One of the guys running one of the big

firms 20 15 years ago told me his he

said they hired a partner that they

hired a partner older firm. They hired a

partner in 1984 um who was like a big

deal at the time in the industry and you

know the LPs were very fired up about it

and he said he then proceeded to just

like nearly ruin the firm over the next

20 years. That's crazy. because he said

he want he said all of his investments

were bad but then it was even worse that

he talked him out of all the other good

investments they could have made and he

said we couldn't get him out you know

the reputational damage was too great so

so this is a long run and then by the

way a lot of these firms are

partnerships and the problem with the

partnership is partnership sounds good

yeah the problem is you end up with lots

of internal dissension and then you you

can't make decisions yeah so this is a

big issue um I guess what I would say is

like for example the thing I talked

about it's just like it's it's it's not

a it's it's a pro it's a what I just

described as a process issue not an

outcome issue right? Which is like are

are you doing the work? Right? Like it's

an actual job like are you doing the

work? If you're not doing the work, it's

relatively clear you're not doing the

work and you're probably not doing the

work not just on one thing. You're

probably not doing So you do try to

really look at the inputs. Oh yeah, very

much so. Yeah. We evaluate the inputs

just as much as the outputs. What what

what do you do as an investor? I'm sure

you've had this at some point where the

inputs are not particularly good. They

hit this one outlier thing. The outputs

are objectively now good. And so you're

looking at that situation or the

inverse. So this is the other so this is

the other part of it. The other part of

it is I think there's just a subjective

criteria for venture which is just are

you good at it? Yeah. And like do you

have taste? Yeah. Which is

unquantifiable. This is one of the nice

things about your model too where like

you somebody gets to make a call versus

in these partnerships I think it would

be very hard when nobody gets to make

calls like this cuz at some point

someone has to just like make a

determination on this stuff. Yeah.

That's right. And then even you know

even who even made the call you know

gets gets lost. Um yeah. So, so, so I

think there's a taste thing and then

look, I think there's also just like a

there's like a network cohort branding

thing which is these startups come in

waves and it's not just new technology

it's also new people. Um, and they, you

know, the news these new scenes form and

like are you in the scene or not, right?

And if you're not in the scene like like

I can't fix that for you. There's also a

ton of path dependence it seems like

where like you make an investment that

gets you in the scene now other founders

want to work with you because you

invested in this really cool company and

then it just snowballs and you're like

well I can't go back and you know change

history and get you into the snowball.

Yeah. Yeah. Like and again this is what

I call this this is the test for the

capital T. So there's different versions

of the complaint right so you you run

off the one of the founder who's like

well I could have done this but I wasn't

in a position to do it. All right that's

your own fault. Um there's another

version of it which is this is sort of

the anti-VC narrative is the VCs are so

arrogant they don't see my unique genius

right right you know the VCs are only as

a critique they apply against Paul

Graham is you know he wrote this post on

pattern matching and he always gets

attacked it's like you know he pattern

matches he's not looking for quality

he's just looking for pattern matching

and like you know it's like and founders

don't match the pattern it's like

at least raising is very important for

for founders to understand raising money

from venture capitalists is the easiest

thing you will ever do as a startup

founder we are sitting here with

checkbooks waiting to write checks.

Yeah, we are dying for the next person

to walk in the door and be so great that

they convince us to write the check. We

don't care where they come from. We

don't care what country they're from. We

don't care what like does none of it

matters. It's just like, do they know

what they're doing? Are they going to be

able to do it? We're just dying for

that. Everybody else they're ever going

to deal with, candidates and customers

and downstream investors and everybody

else is going to be much harder to deal

with than we are. And so if they can't

pass the test of raising money, Yeah.

like they're not going to be able to do

it. And and it's and it's the same thing

with the GP. Like if you can't network

your way in and make good investments

that's the job. Yes. Totally. Okay. On

that point, because there's going to be

I completely agree with what you just

said about how it's, you know, the

easiest part of building a company.

There's going to be a lot of, you know

frustrated founders hearing that who are

like, why can't I raise, you know

what's going on here? One of the things

that I'm really, you know, you've done

this for enough time now. when founders

p you know get a pass note um it's

usually about something that's related

to the market or the product or whatever

and a lot of times it's what you just

said which is that like I just want the

founder to be great yeah right but

nobody says that to them and so they

don't get the actual feedback and so I

guess this whole dynamic of like people

aren't giving that because it's you know

what they're saying is not you're not

great but it's I didn't perceive you as

great or something like that is there is

there some way for there to be a more

honest, useful back and forth around

this or is it just one of the impossible

structural things and founders just have

to go around frustrated that people are

saying the market's too small or it's

too big or whatever and really what it

is is they're just not landing as great.

I mean, it's like Yeah. I mean, I know

you think your baby's beautiful, but I

think he's really ugly, right? Like

yeah. Yeah. You know, this kid's going

to have a really hard time in life, man.

He's really unattractive. It's really

hard. It's really difficult. And and by

the way, you you embedded two things in

there. One is like you know one is do

they come across as good which in theory

is fixable but the other is like some

people are better than other people at

doing this and some people should not be

start some people should should actually

just like be on a team. Yeah, sometimes

it's a correct assessment, sometimes

it's incorrect. But there are some

people who in the early days can't

raise, you know, there's a lot of great

people who now we all know are really

great, but they couldn't raise a lot of

money, so they must have shown up in 60

VC meetings is not great or whatever.

And look, VCs make and and again, yeah

exactly. It's like we don't we don't

know. Yeah. And we make lots of mistakes

of a mission, you know. So we we like I

said, most even the great VCs most of

the time are screwing up. Um and and so

that's all true. The the thing I always

tell founders is the it's the Steve

Martin was asked this question about

becoming a great stand-up comic and he

wrote this whole book a great book

called standing up which he talks about

this and he says the the secret to being

a great he said uh the secret is um be

so great they can't ignore you if your

business gets good enough and you prove

that you're really good you don't have

to show up in the one hour with a VC is

really impressive you just proved it on

the field we're dying for people to come

in and just be like wow right and just

be like I cannot believe how good this

is I can't believe how good this product

is I can't believe how much the

customers love it I can't believe how

much this person has gotten done in a

very small amount of money. So, it's

this exact same thing if I'm a talent a

I'm just dying for the for the young

community comedian to get up on stage

and make me laugh. I also think the

founders who like really struggled to

like raise a round or two and then the

business got working. I think there's

like a there's a real strength that

comes out of that. So, it's not the

worst thing that ever happened. Yeah.

No, no, no. Look, having said that like

that there's breakage along the way like

there there are Yeah. Also, it sucks.

It's like really unpleasant. I had Yeah.

I had it happen. It sucks. Yes. Yeah.

So, but look it, you know, look, I just

say like I, you know, having been a

founder, like it's an it's an incredible

privilege to be in a in a in a in an

industry and in a world and in a country

at a time when you can actually do this.

Yeah. Like, you know, most of history in

most places you just this kind of thing

can't happen. And then, you know, we are

genuinely trying to find the anomalies

right? Like our business is defined by

anomalies. It is true. The thing you

said about it's like an audience that

wants to laugh. It's totally true. So

desperate. Yeah. Can't wait for somebody

to finally tell a good joke. So on AI, I

want to talk about not just the startup

side, but maybe like a just some of your

takes on like the broader lens of AI. I

guess my first question is around AI

going wrong. And I know this is like a

very hard thing, but I'm just sort of

for fun really curious what you think.

You know, the downside case that people

are very afraid of would be something

like AI embodies humanoid robots and now

we have a Terminator situation on our

hand. It gets agency. We have a big

problem, right? You know, that's one end

of the spectrum. the happy path is that

it's just like the sickest software that

anybody's ever seen and like it's a tool

that humans use and everything's great.

Do you think about this? If so, do you

have any opinion on it or you just like

it's going to be what it's going to be?

Start by saying it's it's an important

new technology. Any important new

technology is what they call dual use.

Um it can be used for good things, it

can be used for bad things. Um the

shovel, it can dig a well and save your

life. You can bash somebody over the

head with it and kill them. Fire, you

know, the computer. um the airplane, you

know, the airplane can take you on a

most marvelous vacation with your new

spouse. It can also bomb, you know

Dresden. Um right. And so it's just at I

mean atomic power was the big one

because atomic power could be unlimited

clean energy for the entire world or it

could be new bombs, right? Um as it

turns out there, we just got the bombs.

We didn't get the unlimited clean

energy. And so um like that that's just

like generally true. The these things

these things are double-edged swords.

The question is like all right, like

what are you going to do about that? Um

and are you going to like somehow put it

back in the box? So you're going to

somehow like try to constrain it and

control it. Um the the nuclear example

is really interesting u because the um

you know there was a you know very big

concern around obviously nuclear weapons

and then and then nuclear there's a kind

of big moral panic that developed around

nuclear power. I mean we kind of messed

up with that meltdown. So we very badly

messed up with it and and what happened

was the the the green movement in the

60s and 70s created something called the

precautionary principle which is now

which the same kinds of people are now

trying to apply to AI which basically

says unless you can prove that any

technology is definitely going to be

harmless you should not deploy it. And

of course that literally rules out

everything, right? That's just like no

fire, no shovels, no cars, no planes, no

nothing, no electricity. And so and that

is what happened to civilian nuclear

power, which is they just they they they

killed it. The story I tell on that is

President Nixon in 1971, the year I was

born, he declared he saw the oil crisis

coming, the Middle East, uh he declared

something called Project Independence.

He said the American needs to build a

thousand nuclear power civilian nuclear

power plants by the year 2000. Go

completely clean carbon carbon zero

completely electric. cut the entire, you

know, cut, you know, they had electric

cars 100 years ago, so it was just

obvious you just cut over to electric

cars at some point and and and and

basically we need to do that and then

and then we're not entangled in the

Middle East and we don't need to go, you

know, do do all the stuff uh there. He

then created the EPA and the Nuclear

Regulatory Commission which then

prevented that from happening like

absolutely killed the nuclear industry

in the US, right? Um, and then the the

Germans are going through the new

version of that in with Ukraine, which

is they keep shutting, you know, Europe

ex France keeps shutting down their

nuclear plants, which just makes them

more dependent on Russian oil. And so

they end up funding the Russian war

machine, which invades Ukraine. And

then, you know, they they always they're

worried now it's going to invade Russia.

And so the social engineering I I would

say the moral panic and then the social

engineering that comes out of this, the

history of it is it's been at quite bad

like in terms of its thinking and then

in terms of its practical results. Yeah.

Um I think it would be a very very very

big mistake to do that you know an AI um

and then to like regulate early. Yeah.

Yeah. Yeah. Absolutely 100%. Um to try

to offset the risks in order to like and

then and then cut up the benefits. So

start with that as number one. Number

two I just say look we we're not alone

in the in the world and we we knew that

before but especially after deepseek we

really know that. Um and so there is a

two- horse race. Um this is shaping up

to be the equivalent of what the cold

war was um in the in the against the

Soviet Union in the last century. It is

shaping up to be like that. China does

have ambitions to basically imprint the

world on their on their their ideas of

how society should be organized. Now the

world should be run and they obviously

intend to fully proliferate their

technology which they're doing in many

areas. Yeah. Um and the world, you know

50 years from now is going to be running

on, you know, 20 years from now is going

to be running on Chinese AI or American

AI. Like those are your choices. You

think that's how it'll basically play

out? Yeah. Yeah. It's going to run on

one or the other. How will that play

out? Like let's say it's one or the

other. Like so AI is going to be the

control layer for everything. So, so my

view is AI is going to be how you

interface with the education system

with the healthare system, with

transportation, with employment, with um

the government, with law, right? It's

going to be AI lawyers, AI doctors, AI

teachers. Okay. Do you want your AI

teacher, you want your kids to be taught

by Chinese AI? Really? Yeah. Like Marx

like they're really good at teaching you

Marxism and Xiinping thought like, you

know, like the c another way to put it

is the culture in the weights. Yeah.

Right. And so like how these things are

trained and like who they're trained by

like really really deeply matters. Um

and so and and by the way this is

already an issue in lots of countries

because they're like number one they may

not want Chinese AI but number two do

they want you know super woke Northern

California AI is another open question

right so there are big questions on this

and so I I just think like there's no

question like if if you had a choice

between AI with American values versus

the Chinese Communist Party values. I

mean for me it's just crystal clear

where you'd want to go. Yeah. By the

way, there's also going to be direct

military. There's a direct military

version of national security version of

this, which is okay. Do you want to live

in a world of all CCP controlled robots

and drones and airplanes and cars? I

mean, is is that really what you want?

Warfare and defense, I guess, just is

going to fully go AI over the next 20

years or something like that. I think

that's very much true. And I think this

you know, robots plus AI basically

there's these signal the signal that

they probably saw the the Ukrainian

attack on the on the Russian airplanes

you know. So those are no auton those

are autonomous drones and they were

doing AI targeting of structural the

right structural points to be able to

attack the planes and destroy the

planes. Yeah. Right. And so yeah 100%

that's happening. Um you know this is a

major issue with our defense doctrine

with respect for example to you know

potential invasion of Taiwan you know

air if an aircraft uh Ukraine has been

fielding AI piloted um jet skiis. Uh so

they take a jet ski take a jet ski put

an autonomous pilot on it um and they

strap with explosives and you know you

could send out 10,000 of those. Yeah.

Against an aircraft carrier. Right.

Right. And by the way, and and you can

just keep sending them, right? Because

there's no there's no loss of life. You

just keep sending them until you get

through. And so, yeah. So, the the

entire I I think the entire the entire

supply chain, the entire defense

industrial base, all the doctrine of

warfare all changes. You know, the idea

of human beings and planes or on

submarines just doesn't make any sense.

It's all going to change. And then they

the symmetry or asymmetry between

defense and attack is going to change.

You use the word dual use. Um, and

obviously with like previous

technologies, you know, they got used at

some point. I'm wondering does it blend

from getting used to being the user?

Like if like an a business a benign

business example would be if you could

tell an AI, hey, I want you to, you

know, hey, prompt, I want you to build

me a software company. You know, make it

roughly do this, serve these users, and

run that for the next 5 years and just

wire me the money to this bank account.

go and if you know if that worked at

some point you know in the middle of

those five years like you know what's h

is it doing its own thing or are you

telling it what to do does that also

happen you know in like a a warfare

scale and I guess that's maybe like the

thrust of to me where you know where it

turns into something scary particular

when you get into you know the embodied

version in warfare where it's just like

you know the prompt is like hey just you

know fight this fight this war for the

next year or something that's right

that's right so so the good news the the

the version of it is is straight

straight forward I think which is we we

have you know US law western law has a

concept of of responsibility

accountability if you use a machine to

do something it legally is is your fault

it's your that's your problem but by the

way if if the machine goes wrong for

reasons having to do with not with you

then it's a manufacturing it's a product

liability issue the manufacturer is

liable but if you use it you know if I

buy a shovel and I bash you over the

head with it right it's my you know yeah

the shovel killed you but like I'm to

blame and so I think the your your

example of the autonomous corporation I

I think legal legally the legal system

is perfectly prepared to deal with that.

Um, which is yeah, you that was it was

your your bot. You set the whole thing

up. It's your fault. Y and so there's

there's a natural there's a natural

constraint. Uh I think there's a natural

constraint on that. Um the mil the most

obvious version of the military version

of the question is autonomous targeting

and uh trigger pulling. Um right. And so

and and this has been this has been an

issue in drone warfare for the last like

15 years which is uh is there a human in

the loop on pulling the trigger. Right.

So predators flying overhead dies.

Okay. How is the decision made for the

predator to launch the missile on the

bad guy? Yeah. And and by the way, the

way that worked for a very long time was

uh it actually had to be an air force uh

uh combat uh pilot who would actually

pull the trigger on the drone um very

specifically. Even if he wasn't

otherwise responsible for like

operations of the drone, you'd still get

somebody whose job it was to make those

decisions in the loop. There are a lot

of people in the defense field who are

like it's absolutely mandatory that in

all cases it is required for the human

being to make the kill decision. Yeah.

And and and and maybe that is the maybe

that is the correct answer. There's a

very powerful argument as to why that

should be the case because it's the

biggest decision that any human that

anybody can make and even if you don't

believe in like the Skynet scenarios

just the idea of a human being not being

responsible for that decision. Yeah.

Sounds ethically morally very scary.

There is a counterargument

which is human beings are really really

bad at making those decisions. Y right.

And so it's a self-driving cars thing.

If it's safer than a human driver then

like who's you know yeah there will be

accidents but there's fewer. Correct.

And so every post analysis of any combat

situation that you read or any war later

on, you discover all these shocking

things. So one is uh friendly fire. Like

there's just huge amounts of deaths

caused by friendly fire, people shooting

at their own troops just because they're

confused. Number two is uh you know fog

of war is just like it turns out the

commanders have very little idea what's

going on. They they had some battle

planet immediately go sideways. They

don't know what's they literally don't

know what's going on. They're not making

this. They don't have the information to

be able to make decisions. Everything's

confusing. Number three, the

physiological impact of stress.

Adrenaline. It's like one like it's one

thing to be on a shooting range making

these decisions. It's another thing to

be like, you know, have like a severe

leg wound coupled with, you know

adrenaline, you know, overload coupled

with two hours of sleep the night before

and like is the human is even the highly

trained person making the decision

right? Yeah. Um and then there's just

like a more basic thing which I think

this is like a World War II

retrospective. It's something like in a

lot of combat situations, it was

estimated only like 25% of the soldiers

even fired their rifles. Wow. Like just

generally a lot of people just like

don't act, right? And so anyway, so you

you the more you look at this, you're

just like, "Wow, the human being is

actually really bad at this." Yeah. And

then you and then all these other issues

around collateral damage, you know, they

should, you know, accidentally shoot the

civilian. And so so yeah, you're back in

the self-driving car situation, which is

like, all right, if if you had if you if

you could if you knew you could get

better outcomes by having the machine

make the decision better, safer, less

loss of life, less cattle damage. And so

I and I would say I don't believe I have

an answer to this, but I think that is a

very fundamental question. I guess this

kind of actually feeds into the the next

topic which to me is um I think like

tech has now gotten to a place where

with the government and politics like

it's sort of now undeniable. It used to

kind of be an underdog, but now for

reasons like this and a bunch of others

it's just like too important to like not

be in the mix at like the national stage

now, which I think has really like

change the dynamic even insolarly for

Silicon Valley cuz now you know people

are you know looking at what people are

doing not just like in pack but pretty

broadly now. Yeah, that's right. Yeah.

So I say I deeply agree with that. Um I

believe it is mostly our fault. Um like

the current situation is mostly our

fault in tech which is there's an old

Russian old Soviet joke which is you may

not be interested in politics but

politics is interested in you. And so I

think we we we and I would include

myself in this. I think we all got

complacent or a lot of us got complacent

between like 1960 and 2010 that

basically just said we could just sit

out here we can do our thing. We can

talk about how important it all is but

like it's never going to you know these

are never going to be big social or you

know cultural or political issues. Yeah.

Um and we can just kind of get away with

not being engaged. And then I for all

the reasons we've just discussed, you're

saying and then once it was undeniable

we weren't prepared. And then we weren't

prepared. We weren't even I would say

remotely prepared and then and then

there used the metaphor the dog that

caught the bus and the dog is being

dragged behind the bus tail pipe in his

mouth doesn't know what to do with the

bus. And look, you know, geography I

think has a lot to do with this. We're

3,000 miles away. You know, it's just

hard to get there. They don't come here

very often. Um and and yeah, so I I

guess I would say like like it worked.

Like we we actually we always wanted to

build important things. We actually are

building important things. there are

obvious political, cultural, social

consequences to them. Um, if we don't

engage, nobody's going to. Yeah. And

then, by the way, the other thing I'll

say is, you know, it's not like there's

unonyimity even in the industry on a lot

of these issues, right? Um, and so

there's, you know, I would say two giant

divisions right now, big companies

versus small companies. Yeah. You know

there's often do not have aligned

incentives right now, uh, and aligned

agendas. And then the other is, um, you

know, like just on AI, obviously there's

a big dispersion of views even in the

industry. I guess this probably goes to

why it's um important for to some extent

at least some VCs to have relationships

with the government because big tech has

the resources to do it themselves. Small

tech can't. And so if this is the state

of the world, we actually as an industry

need somebody to be doing it on behalf

of little tech. Yeah, that's exactly

right. That's why we're doing what we're

doing. Yeah. On media in particular, um

I thought it was really interesting. I

can't remember how many years ago but

biology many years ago started talking

about like some fracturing about you

know the the sort of relationship

between tech and the media was going

downhill. I think this was mostly

talking about media and inside tech but

I think probably also at the major

publications and at sort of a larger

scale from my read as often you know I

think this was right and my from where I

sit it seems like it did kind of

continue to degrade the relationship.

What's interesting to me recently is

I've seen a little bit of life, you

know, in the sort of tech publication

stuff, but it's actually been from the

inside. And so like Eric, who you just

brought on as GP, is awesome and he's

been really good at doing this. TBPN's

really cool, and I don't think I've seen

something like that pop up maybe ever

inside tech. What's your read, I guess

within our bubble of like the sort of

tech media relationship and and where

it's been? So my background in this is I

I you know I have a weird kind of

history. Um uh because of what happened

in the 90s but you know I started

dealing with the national press and the

tech press business press in 1993 1994.

Um and I did an annual press tour to the

east coast you know probably a week out

of each year usually in the spring. And

you know what that means is you kind of

go around and you meet with all the

publishers, editors and reporters um you

know cover everything. And I would say

the basically the stretch from 94 to

2016 was generally like I thought it was

like a quite healthy normal productive

relationship you know like they would

run you know they they would do

investigative reporting and they would

run stories I don't like but generally

they you know the the major publications

in each of those categories were trying

to understand what was going on and were

trying to kind of be you know honest

brokers and trying to you know kind of

represent what was happening and so were

like super interesting. They always

wanted to learn. They always had tons of

questions. They were super curious about

everything that was happening. That was

great until 2016. It was the spring of

2017 that I went on the press tour and

it was like somebody had flipped a light

switch. Um, and they were like across

the board like unbelievably hostile.

Like unbelievably like completely and

across the board like 100% sweep. Do you

know why? Absolute hostility. I I think

the obvious answer is Trump Trump got

nominated and they got elected and then

they blamed tech for for for both of

those. M uh now by the way there's there

are a bunch of other factors including

that was when the the that was when the

it's actually the the there's a business

side to it which is there was the fear

that the internet was going to eat the

news business in the '90s actually

didn't happen and actually 2015 I think

was the best year in history for like

revenues to like newspapers. Yeah. Um

and then it was really after 2015 social

networking went big and then the their

businesses started to collapse and you

know they started having lots of layoffs

and so that didn't help. Yeah. And then

you know look they would say look that

was also you know they would say hey

smart guy that's also when you started

doing all these things that actually

matter more right and so you know that

everything we've been discussing like

the tech industry changed and so you

know you're going to get a different

level of scrutiny because you deserve it

you're doing different things now the

political thing was just a giant

swamping factor and they and you know

this is a big yeah you know I don't want

to get into the politics per se but if

you just you know it's it's this whole

thing ran in parallel with everything

that's like in Jake Tapper's book about

you know like so it's just like they

just they got locked in on a mode of of

interaction um that just became very

polarized. Yeah. Um and very polarized

and very lock step and you know from the

outside you just you you read it and

you're just like wow these people

they're all like really wrapping

themselves around an axle. I think one

of the other hard things is as um the

truth has become more accessible by

other people. You more often see

something in the news that you know

about and you're like wait that's super

backwards. And then somebody posts about

how backwards it is and now you know you

see a clip of you know some major

publication and you know here's the

truth and everybody can tell and it's

like okay so should we just believe the

rest of it or not I think the truth

factecking went way up too with social

media. That's right. And I would say

there, you know, the cliche has been and

there's some truth to the cliche that

social media is where lies spread. And

there is some truth to that. There's

lots of lies spread on social media. But

the other side of it is what you're

saying, which I think is right, which is

the truth spreads on social media. And

and so the way I describe it is the

social media is an X-ray machine. And

exactly to your point, like anytime

there's and you you see this in any

domain of activity right now, is anytime

there's a thing and and there's just

like evidence that it's just not the way

it's being portrayed, it is going to

show up. People are going to see it.

Yeah. And that is there's this guy

Martin Curry who wrote this book called

Revolt to the Public in 2015. And he was

a CIA analyst who did what was called

open source analysis for 30 years which

was studying basically what was in

newspapers and magazines for the purpose

of political forecasting. And his

prediction in 2015 in his book um was

that basically social media was going to

completely destroy the authority of all

incumbent institutions. And the way that

it was going to do that was it was going

to reveal through this X-ray effect that

basically none of them deserve the

credibility. Do you think that's kind of

happened? And I think that's exactly

what's happening. Yeah. And I think

there's statistical evidence that's

happening. Gallup polls um they they do

an annual poll now for 50 years on um

trust in institutions of every different

kind of major institution including the

press and all the all the numbers are

collapsing in light of widespread social

media. What would be the correct sort of

function or role of like journalism? I

mean look I'm a believer in like the

original I like the original idea

right? Like I'm I don't know. I'm a

romantic. I I like I like what I like

what journalism says that it is. I would

like it to be like that. I like what the

universities say that they are. I would

like it to be like that. I like what the

government says that it is. I would like

it to be like that, which should be just

to like name it. Yeah. Well, for

journalism, it's just like, all right

number one, like tell us correctly and

accurately what's happening. Well

actually, there's a there's a conflict

at the heart of the journalism question

which is that journalists say two

different things, which is one is they

say, you know, basically be fair and

objective, right? And then the other

thing they say is they say like hold

power to account or they'll sometimes

say they have this phrase, they'll say

uh uh comfort the afflicted and afflict

the comfortable. And like there's

there's an inherent like are are you are

you a are you an objective trutht

teller? Well, yeah, I was going to say

that has nothing to do with the truth.

It's just unrelated to the truth.

Exactly. And so there was already a

conflict at the heart of the industry

and there and there's a there's a

selection process or the people who go

into journalism tend to be critical by

nature, right? They tend to want to be

on the outside looking in to be critical

because if they didn't they wouldn't be

journalists. They would, right? And so

so there is an issue there. But look

like do we need people to tell us the

truth? Yes, we do. Do we need people to

hold the powerful to account? Yes, we

do. Like I would like them to do that.

Do you think they can be like for-profit

corporations and it work? Because I mean

I think another problem is they're

getting all their distribution on social

media. Eyeballs are what drives the

revenue. People want to, you know, stay

employ you know. So that also is

unrelated to the truth. In fact, it's

antithetical to the truth a lot of

times. Yeah. So there there's two two

mentalities come out of that. One is

yeah, the profit incentive warps it and

you want it to not have a profit

incentive so it could be true to itself.

The other argument is if you don't like

forprofits, you're really not going to

like nonprofits. Yeah. Because at least

for profits have like at least

forprofits have like a market test. Like

at least there's like some discipline.

Nonprofit just becomes somebody's sort

of like this is my agenda. I'm going to

do what I feel like now. Arbitrarily

crazy. They go arbitrarily nuts. It does

sound worse. Yes. And they're completely

unaccountable. They're completely

unaccountable. Right. They're in In

fact, in fact, it's the opposite. It's

the opposite of accountability because

the t because of the tax break. You you

are actually paid as a donor to invest

in the things that are the most

unaccountable. Interesting. Right. And

so and then they can spin into like

crazy land and and they and they don't

come back. I they don't come back.

There's a history here. They don't come

back. And so it's weird because like the

citizen journalism thing is like a

helpful fact check. It's like good to

have and sometimes it but it does feel

like it's not quite sufficient to tell

the full story on everything all the

time. So I do think that there's an

important role. I just feel like it's it

still feels like it's very in limbo

right now. So here is a theory that

would be a reason for optimism. um which

is the last 8 years were basically it

was basically the human animal adapting

to the existence of social media. It was

it was basically the assembly of the

group brain and you slam 8 billion

people into a chat room together and

like it's just like we're not used to

it. We weren't wired for it. We're not

evolved for it and just like oh my god

everything goes bananas. Yeah. Marshall

McLuhan actually the great media

theorist he talked about this. He had

this term called the global village is

what happens when everybody gets

networkked together. And actually what

people miss about it is he he didn't

mean in a good way is because the nature

of a village is basically gossip and

innuendo and infighting and reputational

destruction and civil war. Like that's

what happens in a village, right? Um and

so which actually functions at a certain

size. Yeah. Like up to 150 people you

can kind of deal with that you know at

at the size of like New York City it

actually gets quite complicated at at

the scale of the world. It's like it's a

disaster, right? But you could say look

like we went through this 8-year period

where like everybody went just say

everybody went nuts. Everybody went nuts

in like a thousand different ways and

then but maybe that was just we had to

get used to it, right? Maybe we just had

to adapt to it and like if you talk to I

don't know if you talk to like young

zoomers now, you know, a lot of the time

what they'll tell you is yeah, we don't

take any of that stuff seriously. Yeah.

Like I just of course you don't believe

what you see on you know whatever

TikTok. Yeah. Which is wild. It's just

all ops. Like of course it's all ops

like whatever, right? And they just have

like they're they're I'm glad people

know. It's just like that's a crazy

state of the world. Yeah. Right. Yeah.

Exactly. Is that probably how people

feel about like the news too? Well, so

this was the thing on the news. So then

this is the other thing on the news

which is was the news ever as we were

told that it was and so the my favorite

example of this is people always cite

Walter Kankite um as being the great

truth teller and the thing that they

cite for you young people he used to be

on TV um I've part of him I have not he

was this guy where he would show up on

TV everybody would say oh my god he's

going to tell you the truth like he was

like he was like the voice of the truth

and and the way that he built that

reputation is because he went negative

on the Vietnam war in 1968 and 1968 he

came out and he said the Vietnam war is

unwinable and we need to pull out of

this and he they aired all these reports

that showed that that was happening.

Everybody said he's the guy who told the

truth and hold power to account and

tell, you know, tell the truth. Well

it's just like the problem with that is

he went negative. The fact that he went

negative on the war in 1968, right? He

was positive on it before that, right?

Exactly. So, what did he know the day

before he said that that he wasn't

sharing? Yeah. And like, and then by the

way, what else happened in 1968? U which

is the White House went from a Democrat

to a Republican. So, that the Vietnam

War was created by Kennedy and Johnson

and then it was inherited by Nixon in

1968. And isn't it convenient and

interesting that he went negative on it

when it became Nixon's war as opposed to

being Kennedy's Kennedys and Johnson's

war? And so then it's like, all right

like what was actually going on there?

What was happening in the preceding five

years? And is was he actually outside

the whole time? And then there's just

the reality of it, which is I grew up in

rural Wisconsin. We always thought the

press was out to get us. Yeah. Like we

always thought the press was like the

coast basically passing sneering

judgment on the center of the country.

Like we never believed like the stuff to

start with. Um and we were always like

people where I grew up people are like

super resentful of the stuff in the

media and how it portrays them. And so I

think there's also like a more

fundamental underlying issue here which

is you know objective truth is a like

objective truth is a high bar. Yes

people have agendas. Like maybe we just

need to get all this out on the table.

Particularly in politics objective truth

is not really how a lot of like people

like oh that's a lie. I'm like well it's

not a lie. It's just like an

interpretation of a situation that like

I wouldn't characterize but like sure

it's like that comp and these are

complicated topic. you know, the

ordering of society is a complicated

topic, right? And the functioning

economy is a complicated topic and it's

just not so easy to understand. And so

so I I think part of it might the optim

the optimistic view would be humanity

adapting to being in the global village

is basically just taking on a little bit

of a more humble attitude basically

saying, "All right, look, there's not

going to be we're not going to have a

lot of objective truthtellers running

around. We're not going to have but also

at the same time, we don't want to be in

a complete panic about everything all

the time. And we need to kind of be able

to, you know, take a deep breath, touch

grass, be a little bit more skeptical

be a little bit more open, be a little

bit more understanding, right? And so

and so maybe we're start and and by the

way, I think that's happening. I um uh I

mentioned that Jake Tap without getting

into partisan politics, but the Jake

Tapper book I I would have to went to an

event that he did he did this weekend

out here and like it's a like the the

that book and the reaction to the book

and and if you watch the interviews on

YouTube and the the crowd response to

that book like it it it feels like

people are just like oh like if if we

just take a step back for a moment from

like all the intense partisansship of it

all like there's actually some Yeah.

Like maybe we can get back a little bit

more. I I thought it was that book is a

very positive step forward towards just

a little bit of a calmer approach on

these things. And then by the way, the

other book I'd promote on that is the

Ezra Klein book on on abundance. Yeah.

Which I think is I think is a you know

somebody who supported a lot of

Democrats for a long time. I I think

it's like the most positive you know

kind of manifesto that's come out uh

basically saying you know no like we we

need you know whether you're on the

right or the left like we need to

actually build things. And I think

that's also a healthy moment.

sort of related to this topic a little

bit adjacent but I saw you talking about

preference falsification recently and I

think this is like a super interesting

topic in general but particularly in the

last I don't know call it fiveish years

I think a lot of preference

falsification became made apparent um so

I'd be curious first to hear a little

bit about what you think happened over

the last some number of years where

these changes happened u maybe we can

start there and then I've got to follow

up on it yeah so preference

falsification just a sketch an outline

it's it's when people um it's actually

there's two different definition there's

two different elements of it um it's

when people are required to say

something in public that they don't

actually believe or they are prohibited

from saying something in public that

they do believe right so again so

commission omission uh issues and then

the the theory of it there's this great

book by team kuran on it the theory of

it basically is it it's it's easy to

think about what this happens in the

case of a single person which is are you

telling the truth or is are your public

statements mirroring what you actually

think or not the thing that gets

complicated is when that happens across

a group or across a society and the

thing that happens is if there's

widespread preference falsification of

society, you not only have people lying

about what they actually think or or

hiding it, but you also everybody loses

the ability to actually know what the

distribution of views are. Yeah. Right.

And and he and he says basically if you

look at the history of political

revolutions, a political revolution

happens when a a majority of the country

realizes that a majority of the country

actually agrees with them and and they

didn't realize it. Right? So that

whatever system they were in had

convinced them that they were in a very

small minority. And then you get a at

some point there's, you know, the boy

who points out like a catalyst. There's

a catalyst catalytic moment and then and

then basically there's a it's called a

preference cascade, right? Um and then

um and then all of a sudden it's like

the correct prisoners dilemmas box to

live in all of a sudden flips. Everybody

realizes it at once. Yes. Exactly. And

and he said you can see this in um you

can see this like in a crowd with like a

speaker controversial speaker where

basically like you'll have a

controversial speaker and then there'll

be silence in the crowd and then one

brave person will start clapping. Uhhuh.

And that person is like at severe peril

because if they're the only

standing up clapping, like that's it.

They might get killed. But then if if if

it cascades, then a second person starts

clapping and then a third and a fourth

and a fifth and then you get the

snowballing effect and then the entire

auditorium is clapping and then and then

that's everybody realizing that they

actually are on the side of the majority

which they didn't realize before. By the

way, this is what comedy this is

actually why why comedy so it's what

comedy does well because people can't

control the involuntary response after.

Yeah. So when you get an entire group of

people in a room laughing out loud at

something that individually they will

all swear they think it's not funny.

They can't help it. That's a great

point. And then the stress relief from

that because they all know that they're

part of a they've rebonded the

community, right? You're you're actually

back in being a part of a community is

just such an incredibly powerful

powerful feeling. Yeah. Okay. So so it's

very easy to apply this theory to like

the Soviet Union, right? Or like the you

know the the the you know the Eastern

Europe, you know, um uh in the Cold War

or whatever. Um, you know, Ma is China.

It's a lot, you know, trickier to apply

this theory to, you know, your current

society. I believe that, you know, we've

lived in an era of like intense

preference falsification. I think the

last five years, yeah, probably the last

10 years were like way more intense

preference falsification than the

preceding 40 at least. Um, you know

probably going back to I don't even

know. I you have to go for sure back to

the 60s if not like the 1920s or

something to find an analogous period. I

think this period was characterized both

by people who were saying things they

didn't believe, but critically not

saying things they didn't believe. I I

think there are many reasons this

happened. Um and look, this has happened

many times in history. And so a lot of

people want to say this is caused by

social media, right? Well, when you

phrase it the way that you said, it

actually makes a lot of sense when it's

just if people are going to be in a part

of this prisoner's dilemma matrix, it

actually just gets caused by nothing

other than itself. Like it doesn't

really need an outside catalyst for

people to get into the wrong box. That's

true. Although there needs I know that's

a good question. Does there need to be

some kind of oppression? Does there need

to be some kind of motivation for for

the for the cascade to have started

where people end up in that box social

pressure. So yeah, specifically I think

the thing that happened in the last 5

years was I guess it needs to be a high

stakes enough issue for it to matter.

Otherwise it's just like who cares

whether you think like the clouds are

pretty or not. Yeah, that's right. So at

least has to be that. Yeah. And the way

I think team would describe it is it

needs to have like political, social

cultural salance like it needs to get to

something fundamental about how the

community is organized. you know, we we

call we call that politics, but you

know, this this predates even the

concept of politics, right? And so, um

and by the way, look, like you don't

even necessarily want to say that all

preference falsification is bad because

like, you know, I don't know that you

want everybody out telling the truth

about everything. I don't think you do.

I think at least in like a like social

like a lot of social graces come from

people saying it's great to meet you

when I didn't feel like saying it was

great to meet you. Your baby I believe

your baby is very attractive. Exactly.

So some of it's

so um yeah but but but but yeah you as

your point you get wedged in this box

and so I I think the specific thing that

happened and so the good news is

preference falsification in a lot of

totalitarian societies was administered

at the point of a gun. You say the wrong

thing they shoot you. Yes. Um that for

the most part is not what happens in our

society. What happens in our society is

the the sort of non-violent version

which is ostracized canceled ostracized

reputation is ruined fired become

unhirable. Lose all your friends lose

all your family. Can't ever work again.

Still really bad. still really bad.

Well, you said it sounds pretty bad.

Very bad. And so, and it and it just

turned out I think part of you know the

optimistic view would be part of

adapting to the existence of social

media was social media just turned out

to be among other things a very

effective uh channel to destroy people

reputationally, right? With and this is

the the social media mobbing effect

right? Um we're now all familiar with

it. And you think that helped create

basically more false preferences? Yeah

big time. Big time. Do you think it also

unwound them? Well, so this is this this

is the thing and this is maybe the thing

that happened in the 2024 election

right, which is just like, oh, okay

like we don't have to live this way

anymore. Um, you know, certain

certainties become safer to say out

loud. This also the censorship regime

like we lived under a very specific

censorship regime. Even in tech for 2024

election versus 2020, you know, 2016

regardless of what you think, you know

who you wanted, at least everybody can

agree that it was taboo to support Trump

in 16 and it was not taboo to support

Trump in 2024 in tech. And so something

changed there. Something changed. Peter

had this great line in 2016. And he

said, uh, cuz he was one of the only

people, you know, maybe the only person

to attack who was actually pro Trump in

2016. And he said, he said, "This is so

strange." He says, "This is the least

controversial, contrarian thing I've

ever done." He's like "Half the country

agrees with me." Yeah. He's like "I've

never had a point of view on anything

else in my entire life where half the

country agrees with me. And yet somehow

this is such a heresy that I'm like the

only one." Yeah. Right. And so, yeah.

So, so, so there was that that

definitely changed. And then I just

think in general, like I said, I think

there optimistically, you just say

there's a process of adaptation, right?

where it's just like, all right, we're

just like if if we all just decide that

we're just not going to like live life

by mobbing and scapegoating and personal

destruction and just because somebody's

offended by something doesn't mean it's

going to destroy, you know, somebody

says one thing, it's going to destroy

their lives. Like we we don't h, you

know, you don't have to do that. Do you

think it's basically been unwound now or

do you think there are still a lot of

falsified preferences? I would say it's

radically different than it was 2 years

ago. Um, I would say there's still a lot

of falsified preferences. I would but

but again I would say and I think

probably in any healthy society there's

lots of falsified preferences. So do you

have any guesses for something that is

currently falsified that will become

unfalsified or is too hard to call it?

Sure. Yeah. Sure. Okay. Great. But it's

far too dangerous to say. Fine. We'll

move on. Yeah. Dang. Gosh. But again

when you ask that that is a very key

question here. Here's what I encourage.

Break the fourth wall. Yeah. Here's what

I would encourage people to do. Here's

the thought experiment to do. Just write

down two in the middle of the night with

nobody around, doors locked. Write it

down a piece of paper and let's pull it

out in 10 years. Well, write down a

piece of paper two lists. What are the

things that I believe that I can't say?

And then what are the things that I

don't believe that I must say?

And just write them down. Yeah. And I

bet you know if if you're a reasonably

introspective person, you know, the

quote unquote NPCs can't do this, but

like if you're a reasonably

introspective person, um, you know, most

of us probably have 10, 20, 30 things on

both sides of that ledger, right? And

and again, most of those are things

where you got to, you know, I don't

know, like you don't want anybody to

ever see that piece of paper. Maybe 5 or

10 years from now, we'll be back and

everybody can reopen their papers and

we'll see and it'll be safe to say

whatever people wrote down at that

point. Exactly. Okay. Um, a few final

topics I wanted to ask you about. Um

one is you're probably in a spot to be

giving just sort of life or career

advice to young people a lot now, both

in general, but also maybe specifically

with like AI and like the current set of

tech, you know, changes right now. What

do you most often find yourself

repeating to a really smart you know

recent grad about you know if they're

like what should I be doing with my

career if they get the chance to ask you

that to start with I I never took any

advice so advice is yeah there's

something there but a lot of people do

so may maybe okay fair enough that's

like the you know if you could have

built Facebook thing maybe yeah maybe

the best people probably shouldn't take

any advice okay the rest of us but um I

would just say in especially for young

people I I you know and again I I say

this like people are very different like

I I I believe very deeply. Some people

some people are very happy being in the

middle of chaos. Some people are very

unhappy being sorry some people are very

unhappy being in the middle of chaos and

they will actually get themselves out of

a chaotic situation as fast as they can.

Other people love chaos so much if they

don't have any they will create it

right? And so like you have you know

there's there's a level of understanding

here you you know like not everybody

should be in like a high growth

high-risisk tech company because it

might just be too nuts. Yeah. So I I

don't think there's a one one

sizefits-all you know kind of thing um

uh at all. Having said that let's narrow

it. the young young person who wants to

kind of be in tech. I think a big part

of it is I think it's as I was say it's

like run to the heat like or or the the

the scene thing we were talking about

like where where are the interesting

things happening and that's a conceptual

question and it's also like a place

question and the community question

network question. Y um and so you know

run to that as fast as you can and it

doesn't mean you know running to the

fads but it means like trying to

identify trying to get into those hot

network or ideas or projects basically.

Yeah. Yeah. Exactly. Um, and look

there's a geographic component to that.

And I think we all kind of wish it

wasn't the case, but there really is.

Um, and and and and AI, AI, I think, has

very successfully unwound the geographic

dispersion of what was happening in

tech, in a huge way. It's kind of

slammed everything back in Northern

California. I I don't think that's good

really um for a lot of reasons, but I

think it just is the case. And so I

would say like, you know, if you're

going to like do AI, get here. Yeah. And

then look and then the other thing is

it's the Steve Martin thing. Be so good

they can't ignore you. like time spent

on the margin getting better at what you

do is almost certainly better than most

of the other uh uses of time. The the

old adage of you are the average of the

five people you spend the most time with

is also true. You want to do that. Uh so

you want to you know pick pick that

carefully. And then I guess what I would

say is uh when I when talk to you know

people about like what kind of company

to go to. Um there are certain people

who should only be in a raw startup and

there are certain people who should only

be at a big company. I think the general

advice is the it's it's the high growth

companies. It's the companies that we

would describe as between like being

between like series C and series E

probably or something. Yes. where it's

like they've hit product market fit

they've hit the knee in the curb and

they're on the way up. On average

that's going to be the best place to go

because you're not going to have the

downside of risk of a complete wipeout

usually. Um, and then people who get

into that position like at those high

growth companies, if you're talented

you can pick up new responsibility very

quickly. Yep. Okay. Next is um your

Andrew Huberman thing that I see on

Twitter. Like what's I actually can't

completely parse what it is. What's

going on with that? So, we have a

completely fake beef. We're we're good

friends. We're very good friends. Um

and we're actually neighbors neighbors

in Malibu and um, I've been on his

podcast and like we're very good

friends. Um, but um, but you don't

follow his protocols. I don't do

anything that he says. I I don't do a

single thing that he says. Um, I with

one one exception we'll talk about, but

yeah, I don't I don't do any of it. You

know, he says maintain a regular sleep

schedule. There's no all over the place.

He says always get up, you know, see get

up, you know, see sunlight as as you

can. I'm like, no, I don't want to see

last thing I want to do when I wake up

to see sunlight. You don't drink

caffeine for the first two hours of the

day. It's like NFW. It sounds like

torture. It sounds like being in a North

Korean house. Like I can't even imagine.

You drink a lot of coffee? A lot of

coffee. Hot plunge, cold plunge thing.

I'm not The cold plunge is miserable.

I'm not doing any of that Um, you

think it's good for you though? All

this? Oh, I'm sure it's I'm sure it's

good for you. I'm just not I'm not going

to do any of it. It all sounds just

completely miserable. Um, the one thing

that um he says that I I do is stop

drinking alcohol. Um, and I would say I

am u I am physically much better off as

a result. And I but I'm very bitter and

resentful towards him specifically. Why'

you do Why'd you do that one? cuz it's

much better for you physically. Like it

it really is like it fixes sleep and

energy problems. So it's the most

tolerable of all these and you're like

fine, I'll do one. Well, no, it's

completely intolerable. It's horrible. I

don't recommend it. Like I think it's a

horrible way to live. Like I'd much

rather be drinking alcohol. Does he

think even like a glass of wine at

night's bad? He does. Yeah. Just all of

it. He did one of the great He's

actually had I think big influence on

the culture and this is very in

seriousness this is very positive. Yeah.

I think um at least for health. Um so he

did this big big thing and there's all

these al so what happened is there's all

these alcohol there's all these fake

alcohol studies basically um you know

this is like red wine and then it's like

all you know heart protective and all

this stuff and it basically it basically

turned out that really sick people

either drink a lot or nothing and then

and then healthy people tend to drink a

little. Yeah. Right. So so so one is

healthy people tend to be very well dis

right and then I guess is that

correlation or causation is that it's

all in the sample set. So so it turns

out there's no health benefits to

alcohol that was all completely fake. In

other words, just because I see

healthier people drink a moderate amount

of alcohol does not mean that drinking a

moderate amount of alcohol makes you

healthy. I see. Michael Kiteon called

this wet streets cause rain. Okay. Wet

streets rain. Yes. Right. So, for some

reason unhealthy people stop drinking.

Unhealthy people stop drinking because

they're they're like in the hospital.

They doctor says if you keep drinking

you're going to die or by the way they

drink a lot. Right. Because they're

right. And then there's this there's

this fundamental thing which is healthy

people tend to be very disciplined. But

but discipline is not discipline is

there's like a big inherent component to

it. Yeah. Right. And so people who are

dis people who are disciplined who drink

moderate amounts of alcohol also do

moderate amounts of exercise also

experience moderate amounts of stress.

Also, you know, you go to the doctor on

a regular basis. They they take the

medication they're prescribed. They live

all aspects of their health in it. I

guess it'll take a while to see, but it

feels like it should be a good thing

that Andrew and other people have gotten

so many more people interested in

health. It's good for It's good

physically. Yeah. Might not be good

mentally. No, I'll try. I'll be funny

again. It's it's it's cat it's

catastrophic emotionally. It's it's made

me a much less happy person. Do you

think are you actually you think that?

Well, so I really so it's the it's the

alcohol is a time thousands of years

people have been using it number one to

fundamentally like relax. Y um and then

and then there's a very important social

lubricant component to it. Um you know

it's like um and the d-stressing could

be healthy. So it's well let's just say

you know maybe it's not accident the

birth rate is crashing right at the same

time. I don't think Andrew would argue

you should not live your life purely

maximizing for just physical health.

That'd be a miserable way to live. I

like what are you going to do? Just like

never leave the house, never take the

risk across the street. Um and so, you

know, he certainly doesn't judge people

for drinking modern alcohol. He just

says, "Look, scientifically, you have to

understand it is a poison." Yeah. Now

having said that, as you know, um

speaking of scenes, um as you know, that

the displacement thing that's happening

is people are like our world, they're

not drinking alcohol. Instead, they're

like doing hallucinogens. Why is not

necessarily an improvement as you Jack

know very well. Yes. Yes. Tell us about

your latest Iawaska trip. Yeah. Your

person you're so much different than you

were last time I saw. Your personality

is clearly completely changed. I do feel

different. So So the other theory would

be there's a law of like conservation of

drug use which is every society is going

to pick some drug and abuse it. And

apparently in our case it's going to be

like LSD and mushrooms. You like a good

one? Yeah. Okay. Um okay my last

question. When I tweeted out a request

for questions, I got almost ratioed by

one question. So, I'm going to ask this

one like nearly verbatim. It was by an

anan uh named Signal. If you were frozen

for 100 years and you woke back up and

you looked around, what would be the

piece of data that you'd want to know

that would tell you whether or not your

dominant worldview turned out to be

correct in the fullness of time? Yeah.

So I will pick a very unfashionable

answer to this and I would say United

States uh GDP just like straight out US

GDP because I would say embedded in that

is the question of technological

progress which is if you have rapid

technological progress you'll have rapid

productivity growth which means you'll

have very rapid GDP growth. If you don't

you won't have rapid GDP growth. So

you'll see that in the GDP numbers

immediately you know. Number two is you

know well number two would be just like

our market's a great way to organize um

and the US is the best market and so you

know is that is that going to keep

working? And then third is is is does is

the US going to be a great country? And

you are along all of this. I am very

long all three of those. I am very

convicted on all three of those. But you

know, if I'm wrong about something big

it's it's it's going to be something in

there and it will show up in that

number. Mark, this is amazing. Thank you

so much again. Good. Awesome. Thank you

Jack.