Jan 2, 2019 · 43m · a16z
a16z Podcast | What Makes the Valley Work
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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 a16z Podcast, venture capitalist Mark Andreessen discusses the evolution of Silicon Valley, the strategic philosophy behind founder-led companies, and how Andreessen Horowitz identifies, invests in, and supports high-growth technology startups.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 1.1 Guest teaching 3.7 Guest disagreement 1.8 The host pushing back 0.1
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 41:00 Rejecting the 'Fail Fast' Fetish
Andreessen sharply criticizes founders who treat failing fast as a goal rather than a tactic, emphasizing that failure is not the objective and rejecting the popular misinterpretation of Lean Startup principles.
Hardest push from the host ▶ 21:50 Playful Counter on Lyft's ClarithDon Faul playfully interrupts Andreessen's complex explanation of Lyft's underlying network complexity by deadpanning that the entire value proposition was totally clear to him the very first time he used it.
Biggest teaching moment ▶ 23:30 Exposing the Google Sales Force RealityAndreessen dismantles a widespread Silicon Valley myth that Google succeeded purely on self-service software, correcting the common assumption that Google had zero sales reps by pointing out they actually employed 10,000.
The host holds their own ▶ 21:50 Host Reclaims Direct Practical ExperienceDon Faul lightheartedly asserts his own intuitive grasp as a user against Andreessen's elaborate theoretical setup regarding ride-sharing software mechanics.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Transition from Entrepreneur to Venture Investor | 1 | 2 | 1 | 0 | Host Don Faul opens with an appreciative welcome and a standard question on transitioning from founder to investor. Marc Andreessen responds with humility and humor, explaining how making mistakes as an operator led to starting a firm focused on supporting founders. | |
| Evolution of Tech Companies and the Founder-CEO Model | 1 | 4 | 2 | 0 | Don Faul asks about the evolution of tech company leadership models. Andreessen delivers a detailed historical overview comparing the 1990s professional CEO playbook with modern founder-led companies like Google and Facebook. | |
| Finding and Integrating the Ideal Operational Partner | 1 | 3 | 1 | 0 | Don Faul asks what Andreessen looks for when pairing a technical founder with an operational partner. Andreessen breaks down operational skills, cultural integration, and high-trust dynamics using Sheryl Sandberg's onboarding at Facebook as an example. | |
| Investment Philosophy and Navigating the Idea Maze | 2 | 4 | 2 | 0 | Don Faul prompts a discussion on investment philosophy regarding team versus idea. Andreessen details his methodology for testing founders through the 'idea maze' and pushing them during pitches to see if they hold their ground. | |
| Global Smartphone Ubiquity and Software Eating the World | 2 | 3 | 1 | 0 | Don Faul asks about forward-looking trends following their visit to Google X. Andreessen elaborates on global smartphone ubiquity, 'Software Eats the World', and software-driven transportation like Lyft and Uber. | |
| Silicon Valley's Ecosystem and the Reality of Scaling Companies | 2 | 5 | 3 | 1 | Don Faul asks about Silicon Valley's unique culture and areas for improvement. Andreessen strongly dismantles common startup myths, such as the idea that giant tech companies like Google don't need large sales forces or HR departments. | |
| Five-Year Retrospective and Strategic Vision for Andreessen Horowitz | 1 | 3 | 1 | 0 | Don Faul asks for a five-year retrospective and future outlook for Andreessen Horowitz. Andreessen explains the long timeline of venture returns and his firm's philosophy of aiming for grand slams rather than safe singles. | |
| Audience Q&A: Strategy Behind Venture Capital Fund Sizing | 0 | 4 | 1 | 0 | An audience member asks about how venture capital firms determine fund sizing. Andreessen breaks down fee structures, GP economics, and balancing capital deployment against market opportunities. | |
| Audience Q&A: Shifting Economic Assumptions and Big Data VC | 0 | 4 | 2 | 0 | An audience member asks about shifting economic assumptions since 2009 and future operational experiments. Andreessen discusses starting the fund at the bottom of the financial crisis and exploring big data approaches to deal sourcing. | |
| Audience Q&A: Lean Startup Philosophy vs. True Determination | 1 | 5 | 4 | 0 | An audience member asks about typical investment amounts compared to the Lean Startup movement. Andreessen offers a sharp critique of founders who misinterpret 'fail fast' tactics as an excuse to avoid real long-term commitment. |
Statements from this episode (23)
Andreessen: a16z has no GPs who were former professional VCs
“Our entire firm actually consists of people who were operators our eight general partners were all founders or CEOs or both and ran companies. We actually don't have, the one thing we don't have in our firm are any former professional venture capitalists.”
Andreessen: Single-product tech companies never become big, enduring businesses
“And if you're just going to do a single product and then sell the company, you're never going to build a big, valuable, enduring company.”
Andreessen: Mark Zuckerberg had zero work experience before Facebook CEO role
“Like, Mark Zuckerberg did not have a job before he started Facebook. Like, his first job in the world was CEO of Facebook, right? Like, didn't work over the summer at McDonald's, like, nothing. Like, no experience, no nothing.”
Andreessen: Supporting founder-CEOs became a16z's investment template in 2009
“And so we started in 2009, and basically decided that was going to be our template.”
Andreessen: Executive teams work better when product innovators stay CEOs
“And we find that the team, you know, generally works better if the product innovator is the CEO of the company.”
Andreessen nicknamed Sheryl Sandberg 'T-Rex' during her early Facebook days
“My nickname for Cheryl at the time was T-Rex because, you know, having met, you know, it's like, talk about strong personalities, like.”
Andreessen: Sheryl Sandberg met every Facebook employee in week one
“Cheryl comes into, this is actually a true story, Cheryl comes into Facebook, and the first week she goes around and introduces herself to every single employee.”
Andreessen: 90% or more of VC success depends on founders
“I think that 90% of it, and maybe we're fooling ourselves even with that, maybe it's 99% of it is people.”
Andreessen: Investor market opinions matter far less than founder depth
“Odds are, what we found is, odds are if you find those things, it almost doesn't matter. Like, I don't know that what we think about the market or the product or the technology actually matters that much because we're, we have the opportunity to place a bet on…”
Andreessen: Every person globally will own a smartphone by decade's end
“So the big thing happening in the world right now is the smartphone, and the significance of the smartphone is, for the first time in human history, we're going to get a computer in everybody's hands, and by everybody, I mean everybody on the planet and by eve…”
Andreessen: The average car is in motion only 4% of the time
“The typical car is in motion four percent of the time. Some shockingly low number. Utilize four percent of the day. And then the typical car on the road has 1.2 passengers, right?”
Andreessen: Ridesharing markets will far surpass the legacy taxi industry
“And then as a consequence, by the way, as a business, businesses like Lyft and Uber have the potential to be far larger than anybody anticipated and far larger than the taxi market ever was because they're unlocking behaviors that were never possible without, …”
a16z targeting education, healthcare, and financial services for investment
“The big ones that we're working on right now that we've done some work in that we want to do more in are education, health care, and financial services. And those are the three really big ones that we think are up next.”
Andreessen: Future top tech companies will almost certainly be new startups
“The expectation of Detroit is that 50 years from now the three big car companies will be Ford, GM, and Chrysler, right? The expectation of Silicon Valley is the opposite. Like we don't know who the big three tech companies are going to be, but they're almost c…”
Andreessen Horowitz promised LPs a high-risk, home-run investment model
“We told our investors when we raised our first fund, we said, look, we're not in this to hit singles and doubles. We're in this, we're either going to give you know, grand slams or strikeouts.”
Andreessen: Most VCs pocket management fees for vineyards and yachts
“Most firms, the general partners put in their pocket, take it home and buy vineyards and yachts. In our case, it pays for all this.”
Andreessen: a16z Will Not Discount Percentage Fees to Raise Larger Funds
“So we would not, for example, raise twice as much money for lower percentage fees because that would be the wrong long-term trade-off.”
Andreessen: Post-2009 tech growth represents real value, not a 1999-style bubble
“We think it's all for real. I mean, now, the other possibility of course is that I'm full of it and this is all like just a bunch of hot air and that like, you know, it, it's entirely possible this is 1999 all over again, and you're going to remember this meet…”
Andreessen: Venture capital remains completely unaffected by big data
“Venture capital has not been affected at all by this approach, you know, big data approach.”
Andreessen Horowitz has a dedicated team testing big data startup sourcing
“So we're, we have a team on it. We're playing with it. We're trying to figure it out.”
Andreessen recommends 'Lean Startup', 'Hard Thing About Hard Things', 'Zero to One'
“The Lean Startup book by Eric Reese is very, very good and that book should be read front to back. Second is, ah, Ben Horowitz's book, The Hard Thing About Hard Things, I can't recommend too highly. And the third is Peter Thiel just wrote a book called Zero to…”
Andreessen: Ben Silbermann said 'Lean Startup' methodology would have killed Pinterest
“Pinterest is like a great, in fact, Ben Subberman is actually on the record as saying, had I read the Lean Startup book, I never would have done Pinterest, because it took us four years to figure it, If we had, if he had known about the Lean Startup thing, he …”
Andreessen: Massive startup success requires long-term commitment, not perpetual pivoting
“I think the really big success has only come from serious long-term commitment. So it has a role early on, but at some point you, at some point the founder and the company have to commit to something. And have to really slog it out.”