The Exchanges

Q And so maybe, maybe I'm a European communist, Mark, but then why are we seeing layoffs? Why are we seeing layoffs everywhere? Why is every CEO meeting saying, oh, we're flat headcount or we're reducing?

A Oh, oh, that's very easy. So, uh, number one, uh, interest rates. Um, so it, as you know, so interest rates, interest, interest rates, uh, we're, we're at zero. Um, and then interest rates went from zero to five percent, uh, at, at, at, at, at, at record speed, like three years ago. Um, and, and companies, Companies, every company had to replan, every big company had to replan all of their financial, all their cost of capital went up five points. Like they all had to completely replan financials. And then number two is they all overhired during COVID. Like the, I mean, you know, I mean, the, the, the, the hiring binge that companies went on in COVID was just like wild. Right. And it was the, and it was the combination of the two. It was, it was the interest rates going to zero during COVID. And then it was just the complete loss of discipline at all these companies when they went virtual. Um, and when employees just became a, you know, an icon on a screen. Um, and they just, you know, because like, yeah, just like go hire like tons more of them. Um, and so, specifically what you have happening right now is you have essentially every large company is overstaffed. We could debate how much it's at least overstaffed by 25%. I think most large companies are overstaffed by 50%. I think a lot of them are overstaffed by 75%. Um, and, and then, and now they all have the silver bullet ex…

AI assessment note: “number one, uh, interest rates. And then number two is they all overhired during COVID.”

Q Is it possible to literally, I, I, I love what you said there, cause I love the boutique craftsman style adventure, but is it, Is it literally possible to care about a five million dollar seed check when you have fifteen billion dollars that you raise at once?

A Yes, and it, it is. And the reason for that, twofold. Uh, one is just the, the, you know, the, the, the conceptual kind of reasons that I described, but the other is just pure, pure economics. It is, um, because as you know, the upside on the five million dollar check is every bit as big as the upside on a five hundred million dollar growth investment. Right. And this is what's so unusual about venture. If I make a five million dollar seed investment and I nail it, I, you know, I can make ten billion dollars on that, a hundred billion dollars on that. If I make a five hundred million dollar growth investment and I nail it, I can make ten billion or a hundred billion dollars on it. It's this, you see what I'm saying? It's this, it's the same upside.

AI assessment note: “Yes, and it, it is. And the reason for that, twofold.”

Q Now, I was running listening to every show that you've done before, and you recently said that you don't introspect, And introspection is potentially overrated. I really struggled with this because I thought we learned from mistakes and a valued experience in that way. Can you help me understand the lack of value placed on introspection and do we not learn from mistakes?

A You know, we do learn from mistakes, uh, but the problem is learning from mistakes sometimes is good and sometimes it's bad, right? Um, and if you just talk business for a moment, like in the venture mindset, this is a very big problem. There's a founder version of the mistake. There's a venture version of the mistake. The founder version of the mistake is if a founder starts a company in a category and the founder doesn't work, the founder is then emotionally angry at that category for the rest of his life, um, and will not acknowledge, uh, when there's something that's going to work in that category. Um, and I've just seen that, like, over and over and over again. Um, and, and that's fine, because most founders go on to do other things, and that's fine and good, and it generally doesn't damage them from a business standpoint. In venture, the same thing, the same thing happens. If you invest in a category, or if you invest in a kind of company, uh, or you invest in a kind of founder, um, and it doesn't go well, it's extremely easy to learn from the mistake, right, and to basically say, all right, I touched that hot stove, I'm never doing it again, and then, you know, you can tell me what happens next. Right, which is the next thing shows up and pattern matches, and it's the thing that you should invest in, and you have the chance to invest in, and but, but you touch the scalde…

AI assessment note: “learning from mistakes sometimes is good and sometimes it's bad”

Q Penultimate one. What was the most memorable first founder meeting you've ever had? Not the best founder or anything like that. Just the most memorable first founder meeting.

A First meeting with Mark Zuckerberg. Um, it was amazing. Uh, it's Mark's like 19 or whatever. Uh, and it was Mark and Sean Parker. Um, and I knew Sean a little bit, but not well, and I'd never met Mark before. Um, and Sean talked the entire time. Um, Sean literally talked the entire time. It was just talking about a minute, every idea. It was just absolutely amazing. Um, and, and Mark like didn't talk and, and, and, um, and, uh, Sean, so Sean and I basically talked the whole time. And Mark sat and listened, and I walked away, and I was just like, wow, that was really weird. I was like, one of two things that's happened here, like, either he's completely unsuited for the job, because, like, he literally doesn't talk, um, or he's, like, listening and absorbing everything that people are saying around him, and he's going to be on a vertical learning curve like crazy, because he doesn't have the ego need to just, like, say things. He can just, like, absorb. And, of course, it turned out to be number two, which is, you know, and I've talked about this before, like, he's just on this incredible learning curve and has been his entire life in the most, like, amazing way. Um, but yeah, I would say that, that one, I've never told that story before, but that, that was memorable.

AI assessment note: “First meeting with Mark Zuckerberg. Um, it was amazing.”

Q Is it possible to literally, I, I, I love what you said there, cause I love the boutique craftsman style adventure, but is it, Is it literally possible to care about a five million dollar seed check when you have fifteen billion dollars that you raise at once?

A Yes, and it, it is. And the reason for that, twofold. Uh, one is just the, the, you know, the, the, the conceptual kind of reasons that I described, but the other is just pure, pure economics. It is, um, because as you know, the upside on the five million dollar check is every bit as big as the upside on a five hundred million dollar growth investment. Right. And this is what's so unusual about venture. If I make a five million dollar seed investment and I nail it, I, you know, I can make ten billion dollars on that, a hundred billion dollars on that. If I make a five hundred million dollar growth investment and I nail it, I can make ten billion or a hundred billion dollars on it. It's this, you see what I'm saying? It's this, it's the same upside.

AI assessment note: “Yes, and it, it is. And the reason for that, twofold.”

Q one of your companies, actually, it's 11 Labs. We could have invested at the seed round, but we would have only got one percent mark, and naturally, as an emerging manager, I thought it was important to retain the high ownership model I promised my LPs. How do you reflect or advise me on when to break the rules versus when to maintain doing what I said I would do?

A So, you know, quite honestly, it's, it's the, it's the simplest answer in the world, and it's the hardest answer in the world, and it's, it's the answer that I think every great investor ends up resolving to 30 years in, frankly. Um, I, I had this, um, I actually had this discussion actually with Arthur Rock, uh, you know, who's sort of the light, you know, obviously the light, almost virtually the creator of, of, of modern venture capital, um, and he, and he actually, he actually wrote a paper on, on, on, on this topic, and I'll just give you his conclusion, which is also my conclusion. Arthur Rock, for people who don't know, he invested in Apple and Intel, right, right, in the seed rounds, and like, In many, many other great companies for like 30 years was that he would have been a better venture investor had he fed all of the business plans and pitch deck straight into the shredder upon receiving them, and if he had spent 100% of his time on the resume. And I think that's basically right, which is the great, the great founders will, you know, basically buy you enormous upside that may break rules in all kinds of directions and may break precedent in all kinds of directions. And the world's best business plan executed by a mediocre team will almost certainly get lapped by a great team. Now, let me say, having said that, this sounds easy. Of course, why is that hard is because…

AI assessment note: “great founders will, you know, basically buy you enormous upside that may break rules”

Q a later stage as well as an early stage. I spend my time interviewing public company CEOs all the time, Mark. I'm so used to really fine tune Daniel Ek. When I meet a seed founder that's rough and unpolished, of course they don't seem as good. How do you think about that challenge and projecting earlier and seeing if they're good given how much time you spend with perfection?

A I'll just say, look, I think people have different takes on this. My personal formula is basically the follows, is basically as follows, which is you, you need high IQ as table stakes. Like, you just need somebody who's, like, incredibly smart. My basic test is if I have my notebook open, um, and they're talking, am I, like, writing out lots of notes or not? Um, and if I'm writing out lots of notes and I'm learning from them, then, like, that, that indicates that their, their level of, you know, intelligence and some of the other attributes that we'll talk about, but, you know, indicates, you know, clearly that, that they're very smart. Um, but I think that's table stakes, because I think just, just intelligence, you know, there are many people who are very smart who are just grinders or just, you know, as they say, kind of the, you know, kind of the, the clerk mentality, you know, I'm gonna, you know, put me in the, in the back office somewhere, um, or, you know, doing research or something, and I'm, I'm never gonna build something, and that's fine, but, you know, IQ's not enough. I think the second thing you need really is what, what my partner Ben calls courage, um, which is basically, you know, um, uh, an absolute determination, uh, to succeed. Um, and to be able to, you know, confront problems directly and to be able to basically pound through anything. Um, and, you know, …

AI assessment note: “My personal formula is basically as follows, which is you, you need high IQ”

Q To what extent is the late stage fund a function of executing on the omissions of the early stage fund?

A So it's basically, I think it's in two, it's in two parts. Um, part of it is, yes, fixing the mistakes of omission, uh, mistakes of omission, uh, fixing the mistakes and becoming partners later. And, and look, that can work really well. Those can be very good investments, you know, and we, we do get very close to some of those founders. Um, you know, but again, it's, it's not, you know, they, they always at that point have somebody early on who, who they're very close to. So, you know, we do see the difference there. Um, and, and then look, the other part of it is doubling, you know, doubling down, you know, doubling down on the companies that are working or growing. And, and I would just say on that, you know, look, you know, part of that's just, you know, Just economics, which is if you have the chance to do that, you know, you should do that as a professional investor. But there's, there's another really fundamental thing where we decided, why we decided to go so big in growth, um, on that front, which is, um, this is less true now, but, you know, 10 years ago, 15 years ago, um, these companies would raise money from venture investors, and then they would get to a certain point, and then they would raise money from a completely different kind of investor, um, that was not tech-centric. Um, and then they would all of a sudden end up in this situation where they had, You know,…

AI assessment note: “part of it is, yes, fixing the mistakes of omission”

Q Do you need to like the founders you invest in, Mark?

A So I say no. Opinions vary. You know, I said earlier I'm emotional both in good and bad ways. Like, you do end up getting very close to people, um, and you do end up wanting to have a high level of trust, and it certainly helps if you like each other and trust each other and, um, uh, and so forth. But, like, I, I, I would just say on the other hand, like, some of the best founders in history and, you know, look, I, I give you example after example in the distant past, you know, they were not very likable people. Um, and, and a lot of, you know, by the way, the same thing is true of many of the great artists. Many of the great filmmakers, many of the great, you know, literary geniuses, many of the great philosophers, um, you know, many of the great, by the way, political leaders, um, you know, these people, you know, but there's a lot of cases where these people are, like, not, not likable. Um, and yeah, and I, and I, and I, and so I say no, you don't, because I think, like, if, if you're trying to fulfill your personal emotional needs at work, like, I think that's a very fundamental problem, and you shouldn't try to do that. Um, it's the Harry S. Truman quote, if you, if you need a friend, get a dog. Like, like the, the, the point, or another version of this is, you know, we always say, do not bring your whole self to work. Like, whatever you do, do not bring your whole self to…

AI assessment note: “So I say no. Opinions vary.”

Q And so maybe, maybe I'm a European communist, Mark, but then why are we seeing layoffs? Why are we seeing layoffs everywhere? Why is every CEO meeting saying, oh, we're flat headcount or we're reducing?

A Oh, oh, that's very easy. So, uh, number one, uh, interest rates. Um, so it, as you know, so interest rates, interest, interest rates, uh, we're, we're at zero. Um, and then interest rates went from zero to five percent, uh, at, at, at, at, at, at record speed, like three years ago. Um, and, and companies, Companies, every company had to replan, every big company had to replan all of their financial, all their cost of capital went up five points. Like they all had to completely replan financials. And then number two is they all overhired during COVID. Like the, I mean, you know, I mean, the, the, the, the hiring binge that companies went on in COVID was just like wild. Right. And it was the, and it was the combination of the two. It was, it was the interest rates going to zero during COVID. And then it was just the complete loss of discipline at all these companies when they went virtual. Um, and when employees just became a, you know, an icon on a screen. Um, and they just, you know, because like, yeah, just like go hire like tons more of them. Um, and so, specifically what you have happening right now is you have essentially every large company is overstaffed. We could debate how much it's at least overstaffed by 25%. I think most large companies are overstaffed by 50%. I think a lot of them are overstaffed by 75%. Um, and, and then, and now they all have the silver bullet ex…

AI assessment note: “number one, uh, interest rates... number two is they all overhired during COVID”

Q Do you need to like the founders you invest in, Mark?

A So I say no. Opinions vary. You know, I said earlier I'm emotional both in good and bad ways. Like, you do end up getting very close to people, um, and you do end up wanting to have a high level of trust, and it certainly helps if you like each other and trust each other and, um, uh, and so forth. But, like, I, I, I would just say on the other hand, like, some of the best founders in history and, you know, look, I, I give you example after example in the distant past, you know, they were not very likable people. Um, and, and a lot of, you know, by the way, the same thing is true of many of the great artists. Many of the great filmmakers, many of the great, you know, literary geniuses, many of the great philosophers, um, you know, many of the great, by the way, political leaders, um, you know, these people, you know, but there's a lot of cases where these people are, like, not, not likable. Um, and yeah, and I, and I, and I, and so I say no, you don't, because I think, like, if, if you're trying to fulfill your personal emotional needs at work, like, I think that's a very fundamental problem, and you shouldn't try to do that. Um, it's the Harry S. Truman quote, if you, if you need a friend, get a dog. Like, like the, the, the point, or another version of this is, you know, we always say, do not bring your whole self to work. Like, whatever you do, do not bring your whole self to…

AI assessment note: “So I say no. Opinions vary.”

Q the, oh, entry price doesn't matter because we're going to have a hundred billion dollar companies. Like, I just see the round inflation across every round. It makes my life harder with the greatest of respects, Mark. Large funds make my life harder because you have a different cost of capital. Do you buy the, if it's a hundred billion dollars, the enterprise doesn't matter, or do you think differently?

A Yeah, so look, the enterprise definitely matters in particular as you go, in particular as, as, as the company grows in size. Um, by the way, it matters for a couple of reasons, and this is a lesson that gets, like, relearned over and over again, and will be learned many times in the future, uh, which is, you know, the old Don Valentine thing, which I do think is correct, which is more companies die from, from, um, uh, indigestion than from starvation, um, which is overfunding is actually very dangerous to the operations of a company. Um, by the way, this is the one piece of startup advice that I think is like tremendously grounded in reality for which everybody has many examples in the past. No founder ever listens to it. My, my, my track record of ever convincing any founder on this point, I think is zero, but I, I will keep trying. Um, and so I would just say number one.

AI assessment note: “the enterprise definitely matters in particular as you go”

Q You, you mentioned the multitude of problems that are in the Valley and kind of California more generally. Um, when you look at the state of play in the US today, are you more optimistic today or are you less optimistic today?

A I'm a lot more optimistic than I was two years ago, um, and I'm a lot less optimistic than I was 20 years ago. There is something magical in the American, I don't know what you want to call it, gestalt character psyche. There's some, there's something in, and look, a lot, quite honestly, a lot of it is the inflow of people from all over the world, and a lot of that is the great Europeans who have moved here, you know, over, over the last, you know, 400 years, um, right? Um, there's something about having a country that is this big, um, and this powerful, and this, You know, kind of, let's say, lucky and blessed in its geographics, um, and it's, and it's, uh, you know, natural resources, and size, and scale, and all the rest of it, that nevertheless is, like, incredibly dynamic, and has, like, risk-taking at the core of its DNA, um, and, and a, and a willingness and a history of, like, throwing the harpoon at, like, really big bets in extremely aggressive ways, um, and there's just something amazing about that, and, you know, you always kind of worry, or at least I always kind of, you know, always kind of worry that that's diminishing, and kind of, you know, there's this term managerialism, Uh, I use a lot, but he, you know, he's kind of worried that everything's just becoming managerial. Everything's becoming bureaucratic. Everything's becoming stale. And there's certainly, you…

AI assessment note: “I'm a lot more optimistic than I was two years ago”

Q one of your companies, actually, it's 11 Labs. We could have invested at the seed round, but we would have only got one percent mark, and naturally, as an emerging manager, I thought it was important to retain the high ownership model I promised my LPs. How do you reflect or advise me on when to break the rules versus when to maintain doing what I said I would do?

A So, you know, quite honestly, it's, it's the, it's the simplest answer in the world, and it's the hardest answer in the world, and it's, it's the answer that I think every great investor ends up resolving to 30 years in, frankly. Um, I, I had this, um, I actually had this discussion actually with Arthur Rock, uh, you know, who's sort of the light, you know, obviously the light, almost virtually the creator of, of, of modern venture capital, um, and he, and he actually, he actually wrote a paper on, on, on, on this topic, and I'll just give you his conclusion, which is also my conclusion. Arthur Rock, for people who don't know, he invested in Apple and Intel, right, right, in the seed rounds, and like, In many, many other great companies for like 30 years was that he would have been a better venture investor had he fed all of the business plans and pitch deck straight into the shredder upon receiving them, and if he had spent 100% of his time on the resume. And I think that's basically right, which is the great, the great founders will, you know, basically buy you enormous upside that may break rules in all kinds of directions and may break precedent in all kinds of directions. And the world's best business plan executed by a mediocre team will almost certainly get lapped by a great team. Now, let me say, having said that, this sounds easy. Of course, why is that hard is because…

AI assessment note: “great founders will, you know, basically buy you enormous upside that may break rules”

Q Do you worry about the inequality that we're seeing in terms of wealth inequality? You know, I didn't feel, to me, it feels like it's greater than it's ever been. I think we're seeing wealth created in technology larger than it's ever been, obviously. Do you worry about that wealth inequality?

A Yeah, so to start with, it's definitely not greater than it's ever been, and we know that because we know history, um, and we know the natural mode of history for thousands of years was, like, there's a strong man, like, and we call him the king or the prince, right, or the whatever tribal leader, and, like, he has all the stuff, and then there are the serfs, and then they just, like, work the fields, and they don't have any stuff, right, um, and then, you know, God forbid, you know, then, you know, typically in human history, then they're the slaves, and they also don't have any stuff, right, uh, or any, or any rights. Um, and so the, I would say the long run state of, of human history has been like a much greater, more profound level of inequality than anything under capitalism. Um, and so, so number one, I would, I would challenge the premise of the question. Um, and then two is like, look, you, you, I mean, you know, the debate, the debate about inequality always is, would you rather live in a society that has a faster level of aggregate growth, um, and, and a, and a generally rising standards of living across the board, but with greater inequality? Um, or would you rather live in a society which has lower standard of living, lower growth, or maybe even no growth, or declining growth, um, in which things are more equal? Um, and like I said, like, I, look, I, I have a lot of…

AI assessment note: “I would challenge the premise of the question.”

Q the, oh, entry price doesn't matter because we're going to have a hundred billion dollar companies. Like, I just see the round inflation across every round. It makes my life harder with the greatest of respects, Mark. Large funds make my life harder because you have a different cost of capital. Do you buy the, if it's a hundred billion dollars, the enterprise doesn't matter, or do you think differently?

A Yeah, so look, the enterprise definitely matters in particular as you go, in particular as, as, as the company grows in size. Um, by the way, it matters for a couple of reasons, and this is a lesson that gets, like, relearned over and over again, and will be learned many times in the future, uh, which is, you know, the old Don Valentine thing, which I do think is correct, which is more companies die from, from, um, uh, indigestion than from starvation, um, which is overfunding is actually very dangerous to the operations of a company. Um, by the way, this is the one piece of startup advice that I think is like tremendously grounded in reality for which everybody has many examples in the past. No founder ever listens to it. My, my, my track record of ever convincing any founder on this point, I think is zero, but I, I will keep trying. Um, and so I would just say number one.

AI assessment note: “the enterprise definitely matters in particular as you go”

Q We're gonna do a quick fire round and we're gonna start with an easy one. Adam Neiman and Flo was a controversial deal. Why did you, why did you do it? What was the thinking behind it?

A Um, so at the height of the WeWork meltdown, um, when it was in the newspaper every single day, um, and, and, you know, kind of, and kind of, you know, reaching its, its end point, um, I talked to a friend of mine who is one of the legends of the real estate world, um, uh, who I won't name, but, um, is a very, very credible, very famous real estate guy, and he said, look, he's like, whatever people say about this whole thing, he said, look, there are only two people in the history of the world who have built brands, uh, built compelling brands where people care about Uh, the brand, uh, care about the name on the building, uh, for commercial real estate and the history of the entire world. And he said, one of them is president of the United States, um, and the other is Adam Neumann. Um, and so he said, people need to understand, like, yeah, this is, like, whatever, it's going, this one's going sideways now, but, like, this guy is, like, a generational or all-time talent in that industry, um, at doing that. And, and of course, not just the brand, but, like, the, you know, the value proposition, like, the, the, the thing that's underneath that. Um, and so that, you know, that, you know, that, you know, that, you know, that really, that really stuck with me, right? Because then that was up against the F's Absolute wall of negativity, right? At the time where people were just trippi…

AI assessment note: “reinforced our view that he was a generational talent”

Q What was the most controversial deal or most disagreed upon deal internally from your memory?

A I don't think we've individual, individual deals that are really controversial internally. Cause we, we, we could, so the deal we kind of make with all of our investing partners is they all get to, they all get to take risk. So they all get to go out on a limb and do the things that other people are going to think are dumb. Um, and so they don't generally like backbite each other on that. Um, so I don't think it's really that as much. Which, um, I, the, the bigger issue, I think, is probably more, and I put this more on Ben and me than anybody else, but it's just like, okay, what are the kinds of investments that we do? Like, what's, like, what, you know, what sectors are in and out of the strike zone, right? Um, and I'll just, I'll just give you an, I'll give you an, I'll give you an example. I mean, the most straightforward example is the deal we didn't do, we should have done, is the Andrewle Series A, um, right, which was like, which was just, like, sort of obvious that it was gonna be special, and, you know, Palmer, we had worked with Palmer at Oculus, and it was just, you know, and his colleagues were clearly very capable, and it was just kind of obvious that, You know, there was something, you know, very special, but it was just like at the, the, the, the, say like the politics, the cultural elements of that at the time when it first came around, I would say we got scare…

AI assessment note: “I don't think we've individual, individual deals that are really controversial internally.”

Q You haven't gone to Miami? I think I got lost. Like, why has he moved to Miami? I'm like, has he moved to Miami? My research tells me no, but fuck, okay. Maybe he's done a Sergey.

A No, I'm a California, I'm a California, I'm a California, I'm very dug into California. Um, and so, like, look, I am very keenly, I am not a, I am not a Silicon Valley partisan in the sense of, like, I think everything should be in Silicon Valley, or I think it'd be good if everything was in Silicon Valley, like, I don't believe that, and I am a very, very keen, I would say, student of all the issues, uh, in Silicon Valley, and I, I could spend a long time taking you through them, you probably know them all already, um, but, like, Silicon Valley has real issues as a, as a place, including, by the way, just, like, practical issues, cost, cost of living, cost of housing, trans, you know, The cost of, you know, transportation, commutes, like, you know, and then, and then when you get into politics, and it's a whole other kind of parade of horribles. Um, and, and so, like, there are a lot of issues. Um, uh, and then, you know, look, San Francisco proper, there are a lot of issues. Like, it, you know, it's a city that, 100% does not want to grow. It's a city for which, like, the voters on average do not want business to be there. Um, you know, it's a city that's, you know, has real issues for, you know, quality of life, um, and so forth. Um, and so, like, Like, I would love to see the I would love to see the industry spread throughout the US and then spread throughout the world. I w…

AI assessment note: “No, I'm a California, I'm a California, I'm very dug into California.”

Q Do you worry about the inequality that we're seeing in terms of wealth inequality? You know, I didn't feel, to me, it feels like it's greater than it's ever been. I think we're seeing wealth created in technology larger than it's ever been, obviously. Do you worry about that wealth inequality?

A Yeah, so to start with, it's definitely not greater than it's ever been, and we know that because we know history, um, and we know the natural mode of history for thousands of years was, like, there's a strong man, like, and we call him the king or the prince, right, or the whatever tribal leader, and, like, he has all the stuff, and then there are the serfs, and then they just, like, work the fields, and they don't have any stuff, right, um, and then, you know, God forbid, you know, then, you know, typically in human history, then they're the slaves, and they also don't have any stuff, right, uh, or any, or any rights. Um, and so the, I would say the long run state of, of human history has been like a much greater, more profound level of inequality than anything under capitalism. Um, and so, so number one, I would, I would challenge the premise of the question. Um, and then two is like, look, you, you, I mean, you know, the debate, the debate about inequality always is, would you rather live in a society that has a faster level of aggregate growth, um, and, and a, and a generally rising standards of living across the board, but with greater inequality? Um, or would you rather live in a society which has lower standard of living, lower growth, or maybe even no growth, or declining growth, um, in which things are more equal? Um, and like I said, like, I, look, I, I have a lot of…

AI assessment note: “it's definitely not greater than it's ever been, and we know that because we know history”

Q To what extent is the late stage fund a function of executing on the omissions of the early stage fund?

A So it's basically, I think it's in two, it's in two parts. Um, part of it is, yes, fixing the mistakes of omission, uh, mistakes of omission, uh, fixing the mistakes and becoming partners later. And, and look, that can work really well. Those can be very good investments, you know, and we, we do get very close to some of those founders. Um, you know, but again, it's, it's not, you know, they, they always at that point have somebody early on who, who they're very close to. So, you know, we do see the difference there. Um, and, and then look, the other part of it is doubling, you know, doubling down, you know, doubling down on the companies that are working or growing. And, and I would just say on that, you know, look, you know, part of that's just, you know, Just economics, which is if you have the chance to do that, you know, you should do that as a professional investor. But there's, there's another really fundamental thing where we decided, why we decided to go so big in growth, um, on that front, which is, um, this is less true now, but, you know, 10 years ago, 15 years ago, um, these companies would raise money from venture investors, and then they would get to a certain point, and then they would raise money from a completely different kind of investor, um, that was not tech-centric. Um, and then they would all of a sudden end up in this situation where they had, You know,…

AI assessment note: “part of it is, yes, fixing the mistakes of omission”

Q You, you mentioned the multitude of problems that are in the Valley and kind of California more generally. Um, when you look at the state of play in the US today, are you more optimistic today or are you less optimistic today?

A I'm a lot more optimistic than I was two years ago, um, and I'm a lot less optimistic than I was 20 years ago. There is something magical in the American, I don't know what you want to call it, gestalt character psyche. There's some, there's something in, and look, a lot, quite honestly, a lot of it is the inflow of people from all over the world, and a lot of that is the great Europeans who have moved here, you know, over, over the last, you know, 400 years, um, right? Um, there's something about having a country that is this big, um, and this powerful, and this, You know, kind of, let's say, lucky and blessed in its geographics, um, and it's, and it's, uh, you know, natural resources, and size, and scale, and all the rest of it, that nevertheless is, like, incredibly dynamic, and has, like, risk-taking at the core of its DNA, um, and, and a, and a willingness and a history of, like, throwing the harpoon at, like, really big bets in extremely aggressive ways, um, and there's just something amazing about that, and, you know, you always kind of worry, or at least I always kind of, you know, always kind of worry that that's diminishing, and kind of, you know, there's this term managerialism, Uh, I use a lot, but he, you know, he's kind of worried that everything's just becoming managerial. Everything's becoming bureaucratic. Everything's becoming stale. And there's certainly, you…

AI assessment note: “I'm a lot more optimistic than I was two years ago”

Q What's the biggest one that you'd like to change?

A Oh, I mean, I could, I mean, there's like, I don't know, there's probably like, there's probably like a hundred. I mean, um, so like, I'll give you an example. I have a strength and a liability, which is I get emotional. Um, and so the, the advantage of emotion is like, when I, when I commit, I deeply commit, um, and I fall in love with things, and I become incredibly determined, um, and I'll, I'll, I'll, I'll, I'll kind of go, you know, very long lengths, um, uh, kind of out, out of a sense of, of emotion or love. Um, you know, the negative is, you know, I will get emotional, and I've spent, I've spent a lot of time, and people who know me will tell me, I've, will tell you I've spent a lot of time, you know, trying to not, you know, Um, yeah, trying to not, uh, let's say, get negatively emotional in meetings.

AI assessment note: “trying to not, uh, let's say, get negatively emotional in meetings”

Q a later stage as well as an early stage. I spend my time interviewing public company CEOs all the time, Mark. I'm so used to really fine tune Daniel Ek. When I meet a seed founder that's rough and unpolished, of course they don't seem as good. How do you think about that challenge and projecting earlier and seeing if they're good given how much time you spend with perfection?

A I'll just say, look, I think people have different takes on this. My personal formula is basically the follows, is basically as follows, which is you, you need high IQ as table stakes. Like, you just need somebody who's, like, incredibly smart. My basic test is if I have my notebook open, um, and they're talking, am I, like, writing out lots of notes or not? Um, and if I'm writing out lots of notes and I'm learning from them, then, like, that, that indicates that their, their level of, you know, intelligence and some of the other attributes that we'll talk about, but, you know, indicates, you know, clearly that, that they're very smart. Um, but I think that's table stakes, because I think just, just intelligence, you know, there are many people who are very smart who are just grinders or just, you know, as they say, kind of the, you know, kind of the, the clerk mentality, you know, I'm gonna, you know, put me in the, in the back office somewhere, um, or, you know, doing research or something, and I'm, I'm never gonna build something, and that's fine, but, you know, IQ's not enough. I think the second thing you need really is what, what my partner Ben calls courage, um, which is basically, you know, um, uh, an absolute determination, uh, to succeed. Um, and to be able to, you know, confront problems directly and to be able to basically pound through anything. Um, and, you know, …

AI assessment note: “My personal formula is basically as follows... you need high IQ as table stakes.”

Q So then how do you, when you are guiding conversation, when you are guiding partners, how do you ensure that they have a fresh mind with every new company and every new investment and are not plagued by the downsides that bluntly lost money before?

A Yeah. So by the way, just the other example, by the way, is AI. AI was a tremendously good way to lose a lot of money in venture capital from 19, from 1945 to 20 17 right so there i mean look when i was getting my computer science degree in the late eighties like ai was like it was like the one field that you knew would never succeed like there had actually been an investment boom for ai in the eighties and it failed and everybody including all the computer scientists were like yeah this field is dead and that happened like five times over the course of uh of ai over the last eight years um and so like that you know so again another great example so so look i i think a couple things in terms of how we we run our firm or how you run a firm like this so so one is as you well know that there are But very important, there are two categories of mistakes, right? There's, there's the mistake of commission, and there's the mistake of omission, or there's a mistake of cost, and there's the mistake of opportunity cost. Um, and so, of course, the mistake of cost is you invest a million dollars in a startup, it fails, you loses the money, you lose the money, that's bad. Um, the, the, the, the, the, the mistake of omission is you don't invest in Google, and you lose a hundred billion dollars of opportunity cost, right? Um, and so, of course, venture is like the most polar, you know, it's th…

AI assessment note: “there are two categories of mistakes, right? There's, there's the mistake of commission”

Q Do you care what people say about you? It's something I'm trying to work on, but I still desperately care, honestly, Mark, and it desperately upsets me when I read bad things.

A So I have a bunch of friends in the entertainment business, um, who I basically, I, I look at and I say, like, there's no way I could possibly do what you do, which is, like, make myself vulnerable on an eighty-foot screen that way. And they're like, yeah, that's, that's the, you know, that's the hard part. And then I always ask, like, you know, do you read your own reviews? Like, do you read what people say about you? And they all basically say this exact same thing, which is they say, I tell everybody I don't, and then of course I do. Right. And so it's, it's, it's very hard to avoid that. I, I, I do think don't read the comments, um, is a, uh, is generally a very good life, uh, life guideline. But by the way, I will say YouTube comments have gotten much better. Um, so maybe your YouTube comments are productive now, but, um, I think in general, don't read the comments, uh, is helpful. I mean, it's really hard. I mean, you know, everybody's human. I think it's really hard when somebody, like, is cursing you out or calling you, you know, saying horrible things. Uh, you know, it's very hard for that not to stick. Um, I would say I'm pretty happy. Um, I'm pretty happy not, not paying attention to that. Um, are, are you aware, uh, are you aware at this point of, uh, the concept of the meme of retard maxing?

AI assessment note: “I would say I'm pretty happy not, not paying attention to that.”

Q we go. Um, we brought up, uh, we brought up kind of, uh, the future of Europe and, um, whether you need to be in Silicon Valley because of AI. Um, when I look forward to how this plays out, when you project forward, does the gains in AI look like AWS in terms of infrastructure dominance, or does it look like the internet in terms of application value dispersion?

A Yeah, so actually, let me give you a, a broader answer. I think it's a great way to come at it. So I think there's actually a broader answer to the original question. So I think if you're talking, like, so the, the question that I answered before of, like, concentration in Silicon Valley is, like, the mainline companies building AI. Um, and, you know, Google and OpenAI and Anthropic and Meta and, you know, XAI and so, like, Silicon Valley. Um, right, um, uh, so, so I think the NVIDIA, right? So, so that's true for sure. Um, but, but I think there's a second phase to it, um, which again, I'm, I'm like very excited about. And the second phase, which, which relates to your, your, your, your new question, the second phase is, I think the benefits of AI, um, the, the power of AI diffuses out globally, like, like to a degree people are really not expecting. And furthermore, I think that's already happening. And I, and I think, but this is also an answer, by the way, to your inequality question, because, you know, the, the, the sort of assumption always is, well, you know, surely the biggest companies in the world will have access to the best technology, or the rich people will have access to the best technology. Or whatever like that. And it's actually quite striking. If you look at AI, it's, I think it's the, I think it's the most hyper, hyper democratic, small D democratic technolo…

AI assessment note: “it follows kind of the internet and follow smartphones in this”

Q What's the biggest one that you'd like to change?

A Oh, I mean, I could, I mean, there's like, I don't know, there's probably like, there's probably like a hundred. I mean, um, so like, I'll give you an example. I have a strength and a liability, which is I get emotional. Um, and so the, the advantage of emotion is like, when I, when I commit, I deeply commit, um, and I fall in love with things, and I become incredibly determined, um, and I'll, I'll, I'll, I'll, I'll kind of go, you know, very long lengths, um, uh, kind of out, out of a sense of, of emotion or love. Um, you know, the negative is, you know, I will get emotional, and I've spent, I've spent a lot of time, and people who know me will tell me, I've, will tell you I've spent a lot of time, you know, trying to not, you know, Um, yeah, trying to not, uh, let's say, get negatively emotional in meetings.

AI assessment note: “trying to not, let's say, get negatively emotional in meetings.”

Q Mark, do you want to take Andreessen public? It's the question that came up time and time again, but when you look at the machine that's been built, would you like to take it public?

A Yeah, so I think the, I think we basically don't have to confront, it's a serious answer, like we really, we don't have to confront that question, um, which is there's, there's nothing that we're missing today, um, that we could, we could solve by going public, um, which as you know, by the way, is also increasingly true of a lot of the companies, right, that we, that we both invest in. Um, and so I, I don't think so. I, I mean, I would never rule, I would never rule anything out. Um, we have, you know, Ben and I have run public companies before. Ben's been the CEO of a public company before. Um, specifically, and so, you know, we know what that entails. So I'll tell you my, my, my funny version of this story. So, um, when we first started A-Six-Z, we went around and we met with a lot of the top VCs at the time. This is in 2009, 2008, 2009. I kind of pitched them on what we were doing and got a variety of very interesting feedback. Um, and, and some of them became very, you know, very helpful to us and, and, and really helped us, but, um, we got some very interesting feedback. And what one legendary VC told us at the time, he said, the, the thing you're gonna hate the most about being a VC is you're gonna hate, you're gonna hate the LPs. Like, just like these LPs, like they are just like the worst people in the world. And he, and he gave us what we call the, the mushroom talk, …

AI assessment note: “there's nothing that we're missing today, um, that we could, we could solve by going public”

Q Um, and you worry, do you worry about the future of Europe when you look at that flat or sinking growth rate for many European countries? Do you worry about it?

A Yeah. So I would say I am a tremendously, I am, I am, I am like tremendously pro-European. I am like Like, pro-European at my very core. Like, I'm an Anglophile and a Francophile and a, you know, Germanophile. Um, and, um, you know, like, I, I, I love all these countries. I love all these people. Uh, I, I think it's absolutely, you know, the, the, every country in Europe, I think, has made, like, fundamental contributions to civilization. Um, I think the human capital in Europe is just, like, absolutely amazing. Uh, you'll, you'll hate what I'm about to say. Um, but, uh, I, one of my things in the firm is I say, we, we should back every single European founder who moves to the US. Like, we should just reflexively say yes.

AI assessment note: “we should back every single European founder who moves to the US.”