Jun 10, 2019 · 29m · 20vc
20VC: a16z's Scott Kupor on The Biggest Learnings From Scaling a16z from $300m to $7Bn AUM, The Biggest Mistakes Entrepreneurs Make When Pitching VCs & Why VC Is Simply A Customer Service Business
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of The Twenty Minute VC, host Harry Stebbings interviews Scott Kupor, Managing Partner at Andreessen Horowitz, who shares operational lessons from scaling a16z from $300 million to over $7 billion in AUM. Kupor breaks down essential strategies for startup fundraising, founder evaluation, and navigating macro economic cycles.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 40.6% of the talking time here. How this is scored →
Harry as informed peer 4.1 Guest teaching 5.0 Guest disagreement 1.4 Harry pushing back 2.7
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 4:57 Rejection of post-bust conservatism premise
Scott explicitly dissents from Josh Koppelman's view on post-bust investor conservatism, arguing that one cannot conservative their way to success in venture capital.
Hardest push from Harry ▶ 10:42 Challenging Scott with Okta founder's formulaHarry pushes back on Scott's assertion that team is primary by confronting him with a contrary 70/20/10 market-first weighting from Frederick at Okta, Andreessen Horowitz's first check.
Biggest teaching moment ▶ 7:25 Data breakdown of dot-com IPOs versus current marketScott educates Harry on the disparity between 700 IPOs in 1999-2000 and 450 over a full decade, leading Harry to acknowledge he had not realized the true scale of that era.
Harry holds his own ▶ 10:42 Demonstrating deep portfolio knowledge on pitch criteriaHarry demonstrates strong background research and interview preparation by citing exact quote ratios from A16Z's first portfolio founder to test Scott's perspective.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Scott Kupor's Journey to Andreessen Horowitz | 5 | 5 | 2 | 4 | Harry cites Josh Koppelman's philosophy on post-bust conservatism to frame his question. Scott politely dissents, explaining that investors cannot conservative their way to success, before Harry presses further on evaluating early-stage unit economics. | |
| Comparing Current Market Conditions to 1999-2000 | 3 | 7 | 1 | 1 | Scott provides detailed comparative data on IPO volume and average revenue metrics between 1999 and the present. Harry openly admits he had not fully grasped the massive scale of the 1999 IPO volume prior to Scott explaining it. | |
| Common Founder Pitching Mistakes | 6 | 5 | 3 | 6 | Harry uses a quote from Okta founder Frederick to challenge Scott's emphasis on team over market. Scott reframes the ratio and walks through the math required for a large fund like Andreessen Horowitz. | |
| Compressed Round Timelines and Investor Relationships | 5 | 4 | 3 | 5 | Harry expresses his personal dislike for founders offering fundraising range targets. Scott gently counters Harry's opinion by detailing why ranges are acceptable if tied to different milestone outcomes. | |
| Fundraising Transparency and Managing Bridge Rounds | 5 | 5 | 1 | 2 | Harry brings up Mike Maples' opinion on bridge rounds to frame the dilemma of failing startups. Scott agrees and breaks down how to distinguish between a viable bridge and an extended lifeline, as well as the emotional aspect of winding down. | |
| Scaling Andreessen Horowitz: Learnings and Challenges | 3 | 5 | 0 | 1 | Harry asks standard reflective questions regarding A16Z's scaling history. Scott shares insights into network effects, viewing VC as a customer service business, and key fund inflection points. | |
| Quickfire Round with Scott Kupor | 2 | 4 | 0 | 0 | In a standard rapid-fire segment, Harry prompts Scott on books, mottoes, and personal flaws. Scott offers self-aware responses regarding his difficulty with feedback and time management. |
Statements from this episode (22)
Kupor: VCs cannot achieve success through conservative investing
“I think it's very hard to kind of conservative your way to success in this business.”
Kupor: Reliance on paid acquisition degrades startup unit economics over time
“So if this is a heavy paid marketing business, it's probably the case that those economists are going to degrade over time because, you know, your cost of acquisition, you know, through Google and Facebook and other paid channels may be difficult.”
Kupor: Dot-com bubble comparisons are not relevant to current tech market
“We don't think that comparisons, particularly to 99, 2000 are that relevant for today.”
Kupor: US had 700 IPOs in 1999-2000 vs 450 from 2009-2018
“We did 700 IPOs in 1999 and 2000. And in the decade from kind of 2009 to 18, we did about 450.”
Kupor: Average IPO revenue grew 10x from $17M in 2000 to $170M
“The average revenue for those companies was about seventeen million dollars on an annual basis when they went public. Today, those numbers are roughly about a 170, so almost 10 X scale from a you know, size perspective.”
Kupor: Founders focus too much on pitching products that will inevitably change
“And I think what happens a lot of times in pitches is people immediately want to kind of talk about product, which is wonderful. And of course we love product, but you know, the product we know is going to change. That's just the nature of this business.”
Kupor: Uber and Lyft expanded SF taxi market from $100M to $1.5B
“At the time, Lyft and Uber were raising kind of their first couple rounds of financing. I think the taxi market in the, in San Francisco was about a hundred million dollars annually. And I think today, the combined, the two of them do north of a billion and a …”
Kupor: Startup evaluations shift 80% toward team after market qualification
“So I agree with Freddie, which is, you have to at least believe the market is big, but I would kind of flip his percentages, and I would say, once you get to market being attractive, then I think most of the evaluation shifts to team. So I don't know if it's 8…”
Kupor: $750M venture funds require multi-billion dollar outcomes to move the needle
“So I think you're right, which is you gotta have to do the backward math, which is, okay, if you've got, call it a, we have a seven hundred and fifty million dollar early stage fund that we just raised in the, for consumer enterprise, and so for something to k…”
Kupor: Average startup board tenure in US exceeds average marriage duration
“And so in the US, at least it's interesting that the likely life of a board member on a company in the tenure, I should say, which is probably about 10 years in many cases, probably exceeds the average of marriages in the US, which actually is only eight years…”
Kupor: VCs must engage entrepreneurs 12 to 18 months before fundraising
“I think that what that means is the onus is really on us as venture capitalists to get to know entrepreneurs way earlier in the cycle. And so I think the biggest thing that we've got to do to kind of try and address that problem is we need to be talking to ent…”
Kupor: Compelling pitches inspire people to make irrational career moves
“The most compelling pitches that we see are those individuals who can really create a vision and distill that vision and tell it in a way that will cause people, as I said, to do maybe even irrational things, right?”
Kupor: Founders raising Series A should work backward from Series B pitch
“The best advice we always give is when you're raising your A round of financing, what's the pitch that you're going to give at the B round and work backwards and say, okay, based on that, if I'm raising A today and I'm targeting 18 to 24 months to raise my B, …”
Kupor: Target fundraising ranges are fine if objectives scale with capital
“I think it's okay with ranges as long as you can articulate, if I have eight, this is what I'm going to do with that money, but if we're lucky enough to be able to raise 12, this is the incremental, you know, set of financials or company objectives we're going…”
Kupor: Most startup bridge rounds are simply bridges to nowhere
“I would agree with Mike that unfortunately a lot of them are bridges to nowhere. You know, most of the time, in my experience, it's pretty clear, though, whether that's the case or whether you are bridging to something.”
Kupor: Distressed startups cannot sell themselves without pre-existing inbound interest
“At the end of the day, companies are bought, not sold, meaning that if you don't have that inherent interest already from other companies, it's very hard when you're facing a bridge situation to assume you're going to go out and market yourself to somebody els…”
Kupor: Founders Are Often Relieved When VCs Suggest Winding Down
“When I started this business, when we started, we thought these would be incredibly difficult conversations, and there's no doubt sometimes they are, but oftentimes we find actually exactly the opposite, which is sometimes the founders are relieved after those…”
Kupor: Venture capital is fundamentally a network-effects business
“I think the biggest one has been that this is fundamentally a network effects business. If you do things right, if you respect the entrepreneurial process, if you know, handle yourself professionally, you get tremendous lift from that.”
Kupor: Venture capital firms are purely customer service businesses
“We don't build anything. We don't make any products. All we are, quite frankly, is a customer service business. And day-to-day, we've got to make sure that we deliver on that customer service.”
Kupor: Tech must look beyond the Bay Area and NYC-Boston bubbles
“The biggest thing we've got to change is we have to kind of get out of our own bubble and realize that the entire U.S. Doesn't live in the fifty-mile radius of the Bay Area or in the New York-Boston area. And just understand that for all the great things that …”
Kupor: Startups must act on partial information and make new mistakes
“I love the phrase, make new mistakes, because to me, it implies exactly what you need to do in a startup, which is you can't be great, cannot be the enemy of good. Sometimes you have to just move forward with the information you have and be willing to make mis…”
Kupor: Building external networks is more valuable than extra working hours
“Working fewer hours and spending more time on external relationship development, I think it's one of the most undervalued skills that we all kind of fall into, that trap, because that's the way the educational system works, particularly in the U.S., But making…”