The Exchanges

Q So they're spiritually close to you, but they're much earlier and they dominate kind of like a company creation, whereas you, you do a lot of seed of course too, but you played all stages. Have you thought about going after that space like pretty hardcore? How have you thought about where you situate in the ecosystem?

A Yeah, you know, it's funny because, uh, we, Paul and, and us started, you know, around the same time. He started a little earlier. Um, and you know, we talked to him quite a bit during that phase when he was running Y Combinator out of his house with Jessica. Um, and you, you know, I have to say we, we never really Thought about kind of being Y Combinator. And I think like a lot of it has to do, you know, my philosophy of business is you have to start with, okay, what can you contribute that's going to be important in the world that nobody can do better than you? And, you know, for us, a big thing that we had done is we had scaled companies built into very large size. That wasn't really kind of Paul's experience. Um, but he had thought super deeply about like the very Initial kind of part of it. Um, so I think that was the right thing for him to do. And we did the right thing for us to do. And I think the world was better with us doing our thing and him doing his thing, but like, he's got a great business.

AI assessment note: “we never really Thought about kind of being Y Combinator.”

Q And is this something the U S had internalized in 2009? Is that, is that why you called the firm injuries and Horowitz when any, every other firm was going?

A No, no, that was a different thing. Um, so what happened then? So when we were raising the money, uh, and it was, you have to remember it's 2009. So it was a difficult year to raise venture capital. Um, in fact, I think there were only two new funds raised that year. There was SARS and, uh, Khosla. Um, so the, the biggest, the number one objection we got on the fund was, You guys are very successful entrepreneurs. What's going to stop you from going out and quitting doing this and just starting a company? And then we're going to be left holding the bag and nobody's going to be investing or watching our money. Um, and we had no plan to do that. So, uh, we got the idea. Well, one easy way around that is just name the firm after ourselves. Then they'll know that we're going to be tied to it forever. Uh, and we did that, and then, um, I had the idea that since nobody could spell Andreessen Horowitz, we should, uh, have this A-sixteenth thing, and that, that was the name of the firm, and of course, immediately, uh, all the competitors, uh, said that we were egomaniacs and, like, narcissistically insane because we named the firm after ourselves, which we, we just ignored. Like, what, what couldn't we do? You know, maybe they have a point.

AI assessment note: “No, no, that was a different thing. Um, so what happened then?”

Q know, the right people to hate you that galvanizes the people to love you. The, um, what about building, uh, the right marketing and media team in the age of new media? What have you guys learned, or what advice do you have for, for CEOs in terms of making sure you get the right, the right personnel, or what, what's the principle do you think about building that team?

A Well, the first principle is if you're trained in old media, it's very, very, very hard to do new media. Um, so you have to be a very exceptional person to make that transition because It's like, if you spent 10 years doing old media, there are laws of physics, there are rules of the game, there's things that you do every single time, in terms of, you know, like, you know, from vetting reporters to, uh, rude Q&As to this and that, like, everything about it is opposite world. And so, there are very few people who can go, okay, I'm getting out of opposite world, and I'm going into a new media world. So, you just have to be careful about, for the new media side of what you're doing, to hire too much experience in not new media. Uh, it looks like marketing, but it's not the same. Uh, it's a completely new skill set, so I, I, I would say, like, that's, that's probably the thing that I'd worry about the most. Um, and then, you know, like with Eric, what we looked for when we brought you on, for example, is The best thing on new media is have you done it? Have you kind of built some brand on something and some audience? Do you know how to build an audience? Um, because that's the core, core thing. Uh, and if you can't do that, then, you know, it doesn't matter if you've got this skill and that skill and the other skill you've got, you, you have to be able to deliver it end to end.

AI assessment note: “the first principle is if you're trained in old media, it's very, very, very hard”

Q We had Jared at the fireside last night with Jared Leto. He was talking about how Many people in Hollywood are, are really scared or against this, um, with what's happening here. Is, is, what do you see in, you know, when you talk to the Dr. J's, the Nas, the Kanye's, are they excited? Are they using it? Are they,

A Yeah, no, I, so everybody, uh, who I speak to, there are definitely people who are scared in music, but, like, there are a lot of people who are very, very interested in it, and particularly the hip-hop guys are interested because, um, it's almost like a replay of what they did, right? They just took other music, and they kind of built new music out of it, and I think that, you know, AI is, uh, A fantastic creative tool for them. It, like, way opens up the palette, and then for, you know, a lot of what hip-hop is, is it's, um, kind of telling a very specific story of a specific time and place, which, um, having intimate knowledge and being trained just on that thing is, is actually an advantage as opposed to being, like, a generally smart, uh, music model.

AI assessment note: “there are a lot of people who are very, very interested in it”

Q And why is it? Because once people are investors, they don't want to operate anymore.

A Um, no, I think that investors. Generally, if you're good at investing, you're not necessarily good at like organizational dynamics, conflict resolution, um, you know, like, just like the deep psychology of like all the weird shit and then, you know, how politics get created. There's just like all this. There's the detailed work and being an operator or being a CEO is So vast, and it's not as intellectually stimulating. It's not something you can ever go talk to somebody at a cocktail party about. And so like you're an investor, you get like, oh, everybody thinks I'm so smart. And you know, because you know everything, you see all the companies and so forth. And that's a good feeling. And then being CEO is often a bad feeling. And so it's really hard to go to a good feeling to a bad feeling, I would just say.

AI assessment note: “it's really hard to go to a good feeling to a bad feeling”

Q One thing we've talked about off camera is that one thing that enables you to take such big swings or make these changes when the market changes is your unique approach to, um, sort of governance or control. Why don't you talk about that relative to other venture firms?

A Yeah, it's interesting. It's, it's kind of a, a concept that we got from a couple of people. One was Herb Allen, who, who, you know, I think, and then, and they both kind of gave us the same idea, which, so traditionally in venture capital, I think it looks a little like a law firm or, you know, kind of a lot of these partnership structures where you have shared economics and shared control. And, like, from a partner standpoint, there's a lot, you know, that makes a lot of sense in a lot of ways. We have a different structure where we're shared economics, but We've kind of centralized control, um, and that enables us by not having shared control, we can change the structure of the, of the firm very easily. And if you want to grow, like so, you know, if you want to go, you know, in an integrated way, like you could have, oh, that's the Chinese subsidiary or whatever, and that's a whole nother entity, and we talk to them, you know, once every six months. That's, that's not what I'm talking about. But if you want to grow in an integrated way with a kind of single culture, single offering, um, then you have to be able to change the organizational structure, you know, as you get bigger. Um, so like the structure that you had at 50 people, it's just not going to work at 500, and that's for any organization. Um, but in order to do that, somebody's got to be able to make that decision …

AI assessment note: “We have a different structure where we're shared economics, but We've kind of centralized control”

Q beyond venture, right? Um, different firm, you know, some firms get into, um, sort of more public investing, get into wealth management. They get into other products that serve, you know, kind of adjacent, um, customers or serve their customers in adjacent ways. How do you think about, um, what makes sense to get into versus what doesn't make sense to get into given that your brand enables these opportunities?

A Yeah, so our, the, the way to think about, like, what we'll, we've done so far and what we'll do in the future is the customer is the founder for us, so we start with the founder, and the, you know, the initial promise is, you know, we're gonna help you raise money, we're gonna help you develop into a CEO, we're gonna build you a network that's as good as Bob Iger's, we're gonna, like, help you, train you into the job, um, And we're going to support you in every way that we can, you know, through our financial network to help you kind of build this company. Um, and you know, in our view, we'd like to extend that through the founders entire life from the time they found the company to the time they become a philanthropist. Um, and so anything in that realm, we feel like is, you know, kind of things that we ought to at least consider doing. Um, and you know, which ones we do in which order we'll see, you know, Depending on, you know, where the gaps in the market are and what makes sense for us.

AI assessment note: “anything in that realm, we feel like is, you know, kind of things”

Q One thing we've talked about off camera is that one thing that enables you to take such big swings or make these changes when the market changes is your unique approach to, um, sort of governance or control. Why don't you talk about that relative to other venture firms?

A Yeah, it's interesting. It's, it's kind of a, a concept that we got from a couple of people. One was Herb Allen, who, who, you know, I think, and then, and they both kind of gave us the same idea, which, so traditionally in venture capital, I think it looks a little like a law firm or, you know, kind of a lot of these partnership structures where you have shared economics and shared control. And, like, from a partner standpoint, there's a lot, you know, that makes a lot of sense in a lot of ways. We have a different structure where we're shared economics, but We've kind of centralized control, um, and that enables us by not having shared control, we can change the structure of the, of the firm very easily. And if you want to grow, like so, you know, if you want to go, you know, in an integrated way, like you could have, oh, that's the Chinese subsidiary or whatever, and that's a whole nother entity, and we talk to them, you know, once every six months. That's, that's not what I'm talking about. But if you want to grow in an integrated way with a kind of single culture, single offering, um, then you have to be able to change the organizational structure, you know, as you get bigger. Um, so like the structure that you had at 50 people, it's just not going to work at 500, and that's for any organization. Um, but in order to do that, somebody's got to be able to make that decision …

AI assessment note: “We have a different structure where we're shared economics, but We've kind of centralized control”

Q Yeah. Real estate hasn't had a ton of, uh, tech innovation. Like, what exactly is, is happening here? What's really interesting? What's the opportunity?

A Well, there's so many, there's so many things in the architecture, but it kind of starts with like, how do you model what's going on? And there's all sorts of components that basically, uh, in a normal real estate world get completely ignored. So, you know, you really, as a customer, um, care about everything from your neighbors to The building, to your furniture, to how you get your mail, um, to how the parking lot works, to how security works, and you not only care about it, but you really don't want a system keeping your information about you. You'd like that to be on your phone, um, and the system to be able to query it, but not store it so it doesn't get stolen and these kinds of things. Um, and then if you had that, Then you'd be comfortable with a lot more about yourself, uh, kind of accessible, and then you can publish what you want to publish, you know, and the way that, um, the company's already taken advantage of that is incredible. So for example, let's say I'm a yoga instructor. Maybe I want everybody in my building to know that. Um, and maybe, uh, you know, they really want to know that I can do that because Wouldn't it be great to take yoga lessons without leaving my apartment building? Um, and so what's happened already in flow is not only has the commerce between residents, accountants, yoga instructors, personal trainers, you know, everything you can think of,…

AI assessment note: “what's happened already in flow is not only has the commerce between residents”

Q about a bit of the history and, and where we've been, uh, not just over the firm, but also of the, of the asset class in general and do a little bit of looking back. So, so maybe we can start with, uh, tell us about the conversations that led you guys to start Injuries and Horowitz. When, when did you know that, Hey, you guys had to do this?

A Well, it's actually, I think it was a conversation on AOL instant messenger if I recall it correctly. Uh, and you know, we were kind of talking about, so We had, uh, sold, um, Opsware to HP and, uh, kind of had been out of it for a little while. We, um, had started doing some like angel investing and that kind of stuff. We had a angel fund called Horowitz Andreessen. Um, that's not even a joke too. Uh, and, you know, so we were, uh, we were doing that and. We're talking about like, you know, what might each one of us do next? And as I recall it, and Mark might recall it differently. Um, he said, you know, uh, venture capital is so underwhelming in that it, you know, it's a great product for investors, uh, for LPs, but it's a kind of very mediocre product for entrepreneurs because Like we, you know, you get almost nothing. You get like some money and then a smart person, uh, But you know, that smart person doesn't know, like, you know, they, they, they see you once a quarter, they don't know much about what you're doing. So they're, they, their value kind of diminishes to zero in about three or four months. And, uh, we thought, you know, it's so hard to build a company. Somebody ought to be able to do something better than that. And I said to Mark, I was like, uh, you know, we could start a firm and we could call it Ben Mark, you know, which was a, Pun on benchmark.

AI assessment note: “I think it was a conversation on AOL instant messenger if I recall it correctly”

Q When did you guys realize that you were entering the pan? Like, when did you realize, Hey, this is really working? Like what, what was sort of the biggest inflection point in ACEs history of, of, of when you guys felt you reached that point?

A So like very early on, um, we realized we could win what we thought were Very high quality, a rounds, um, from like our, from top tier VCs. Uh, and as soon as we could do that, we were like, Oh, we could be top tier. We could definitely be top tier. We thought, you know, in our original, like kind of, um, world domination plan, we thought, you know, that was gonna take 10 years or whatever, but it happened really early on, like right in fund one. Um, and by the time we got to fund three, it, it, it was in full effect. Uh, so. It just happened much faster now, like we're in a whole another world now than we were then. Um, but we knew it was, it seemed like as soon as we could be, you know, in those days, Kleiner or Benchmark or Sequoia in a deal, um, that, that was a very clear indication that, that we could be top tier.

AI assessment note: “happened really early on, like right in fund one”

Q The reality is it's permeating everywhere. And the question I have for us is that we are founded on this thesis that software is eating the world. That's our premise. And yet we've seemed to have been making a lot of hard investments. You know, if you count things like Soylent, Oculus, Nutribox. So are we changing our thesis about hardware as a result of this software eating the world?

A No, I don't think so. I mean, I think that, uh, what we see with the companies that you've named are interesting. So Oculus, I think we would all agree that the software component of Oculus is both more complex, has many more people working on it, and is kind of the core of the investment. Sometimes if you have a breakthrough technology, then you require new hardware to actually support it, and that's the case there. And I think that Soylent and NutriBox, both of them apply computer science techniques. Um, and information technology to get people to optimal health, and that's, uh, what we're doing there. So I think we're big, big believers that, you know, in the last hundred years, the great breakthroughs in knowledge have been, uh, the, the breakthroughs of people like Alan Turing and Claude Shannon, who gave us a new model of the world, uh, and how to understand it. And companies that build on that fundamental knowledge breakthrough are what we're about, and will continue to be about that.

AI assessment note: “No, I don't think so.”

Q So whatever you're optimizing for basically as a founder?

A Well, yes. What do you want the incentive to own the company to be? Like, How much do people have to care about the actual company themselves? If we're just talking pure compensation, then I think cash is actually a better vehicle than stock, because one, like, stock is variant, and you may not get paid not because you can't invest, but because the thing goes to zero. And is that really your fault as an employee? Probably not. It's probably the CEO. It's probably the founder's fault if the thing goes to zero, not your fault. So, like, why are you penalized on that? And so that kind of gets into, like, Are we really doing the right thing by paying everybody with large upfront option packages, or should we have more cash upfront, more ownership backend loaded for the people who are like, well, forget mobility, whatever. This is my mission to build this thing. Should those be the people who are owning it?

AI assessment note: “Well, yes. What do you want the incentive to own the company to be?”

Q You mean like when you don't meet your numbers, for example?

A Yes. You go in, you, you have five deals, and you lose five deals, you get fired. Like, that's, that's the way it is. That doesn't happen, you know, when you lose in other jobs that regularly or that guaranteed. So it's a different level of Competitiveness. And I think that, you know, one, one thing I always, uh, ask my CEOs is like, well, you know, do you have any engineers who love programming and, you know, just really love their jobs to the extent that they might actually do like a project in their own time, you know, do something for fun programming. And almost all of them say, oh yeah, definitely. And, you know, I'll, I'll guarantee you they don't have any salespeople that sell software in their spare time for free and for fun. It's a, it's about the competition. It's about winning. And so if you don't embrace that and, you know, make a scorecard of it and recognize it and reward it, then there is nothing. Like, so it has to be there.

AI assessment note: “Yes. You go in, you, you have five deals, and you lose five deals”

Q You know, a lot of people in venture are retiring, right? Um, you guys have been doing this for a long time. You've been astronomically, astronomically successful. How do you think about building a multi-generational firm beyond injuries and Horowitz? Uh, how do we think about succession planning at the firm?

A Yes, I think succession planning is kind of like a tactic, um, and look, we've already done succession, I, so the original Infra investor in the firm was me, um, and I made some good investments, you know, like Okta and, uh, Databricks, and also a company called Nicira, and the founder of Nicira is Martin Casado, and Martin Casado has succeeded me as the kind of head of Infra, um, and he's, by the way, better head of Infra than I was, so, That's an upgrade. So we, we've done some succession already. I, I think the bigger thing is, and you, you know, like, in, in some extent, you know, Mark and I are, like, very big fans of, of the United States, um, and, you know, America, and we think about that, when we think about the long term, like, how did that work, um, it kind of starts with this, this idea, and it's in the Declaration of Independence, that, um, We hold these truths to be self-evident. Uh, what does that mean? It means that there's some things that are above any of the people. There's some things that are self-evident, you know, whether they come from God or however you think about it, there's some things that are the principles that govern the country and govern the place. Um, and when, you know, we think about the firm, it's this combination of the culture we have and the things that we've learned. So, you know, you heard Chris talk about, um, How he thinks about inve…

AI assessment note: “Martin Casado has succeeded me as the kind of head of Infra”

Q To put that in, why can't utilities and hyperscalers just build faster?

A Oh, there's so many things. Well, there's, first of all, right now, you need humans to build them, so there's just like the regular construction, but much more than that, you need permits, um, you need access to power, uh, that you can plug in, so you're either, you're doing a combination of, you've got to get access to power, which is a massive kind of regulatory Bidding. Struggle. There's very limited kind of amounts and things you can tap into in terms of Nash, natural gas, power grids, what have you. Um, but then you also have to build your own power. And guess what? We've got shortages of transformers and turbines and everything that goes into that. So. It's just, you know, like you've got to get all that stuff. It's not, this is not a software problem. It's not just like a bunch of engineers. Can't you like work? Weekends and that type of stuff like this, not that that works anyway, but, uh, it, there are real bottlenecks in this, and these, these lead times are not that easy to compress, and look, we have the best minds in the world trying to figure out how to compress them, uh, but I, it's not easy. It's not easy, and the demand is not slowing down, so we're already behind. The demand is growing. You know, 10 X a year right now, and, you know, the supply just can't grow that fast.

AI assessment note: “you need permits, um, you need access to power... shortages of transformers and turbines”

Q Well, on that note, what do you say to people who say, hey, we weren't advocating for defund the police. We were saying redirect that money to, you know, group therapy or sort of, you know, mental health, you know, or other services that are more preventive. What would you say to that argument?

A It's just like a misunderstanding of incentives, I think, right? Like incentives drive culture. If you get rid of law enforcement, then Look, we don't have a strong enough, consistent, and we're a heterogeneous society, uh, ethical kind of structure to make people go, okay, like, you know, robbing somebody is bad, or, or for sure, like, selling drugs is bad, or bookmaking, or, or whatever the crime is. Like, a lot of people don't even know that's a crime, um, you know, until they're much older, and so forth. So, like, it's not viable to You know, stop crime with a big incentive. Like, yeah, you can go talk to somebody as a social worker and say, hey, you shouldn't do that, but, like, if they go, well, look, I have a very strong cash incentive to do it.

AI assessment note: “It's just like a misunderstanding of incentives, I think”

Q When Gavin was up here with DG, he said, ChatGPT was a Pearl Harbor moment for Google, the moment when the giant wakes up. When, when we look at history and, and platform shifts, what determine whether the incumbent actually wins the next wave versus, versus new entrance, or how should we think about that in, in AM?

A Well, you know, reacting to it is important, um, but that doesn't mean, like I, It's a Pearl Harbor moment, I think, ah, Google got their head out of their ass, that was the sound of it. So, you know, they're not gonna get completely run over, but, Nonetheless, like, I, I don't think OpenAI is going away, so like, they, they definitely let that happen. Um, yeah, some of it to speed, and then just look, it's execution over a long period of time, and, ah, you know, some of these very large companies to varying degrees have lost their ability to execute, and so if you're talking about a brand new platform, and you're talking about, you know, kind of building for a long time, it's like, you know, Microsoft Got caught with their pants down on Google. Um, Microsoft's still, like, very strong, but they missed that whole opportunity. They also missed the opportunity, you know, Apple was nothing, and Microsoft fully believed that they were gonna own mobile computing. They completely missed that one, but they were still so big from their Windows monopoly, they could build into other things. So, you know, I think generally the new companies have won the new markets, uh, and That doesn't mean the big company, the biggest companies, the biggest monopolies from the prior generation just last a long time, is the way I would look at it.

AI assessment note: “I think generally the new companies have won the new markets”

Q When did you guys realize that you were entering the pan? Like, when did you realize, Hey, this is really working? Like what, what was sort of the biggest inflection point in ACEs history of, of, of when you guys felt you reached that point?

A So like very early on, um, we realized we could win what we thought were Very high quality, a rounds, um, from like our, from top tier VCs. Uh, and as soon as we could do that, we were like, Oh, we could be top tier. We could definitely be top tier. We thought, you know, in our original, like kind of, um, world domination plan, we thought, you know, that was gonna take 10 years or whatever, but it happened really early on, like right in fund one. Um, and by the time we got to fund three, it, it, it was in full effect. Uh, so. It just happened much faster now, like we're in a whole another world now than we were then. Um, but we knew it was, it seemed like as soon as we could be, you know, in those days, Kleiner or Benchmark or Sequoia in a deal, um, that, that was a very clear indication that, that we could be top tier.

AI assessment note: “happened really early on, like right in fund one”

Q nuances of how to approach the solution. And it sounds like we don't actually have A specific solution in mind. What we're really saying is it really depends on what you're optimizing for as a founder. So what are some of the broader principles and mindsets that we should then bring to this discussion if you are a founder trying to figure out the right way to go about this?

A Different companies are different. And so you have to start with, okay, what do I want? And then what does what I do incent Everybody who's applying for a job. Everybody who has a job. And then, you know, whether or not they should leave that job. And then who do I want to own the company at the end of the day? I mean, I don't know what the best answer is. And it's different, you know, depending on, you know, your ability to raise cash and other things as well. So, you know, it really probably needs to not be one size fits all. I think that if every company had a different scheme, You do get into a weird thing for potential employees and recruiting, so I think we might do a disservice to the industry by doing that, but there might need to be, say, four or five standard flavors depending on, you know, how you think about your company, what kinds of employees you have, and we already do have very big differences in, in that if you're a consumer internet company like WhatsApp, that's going to be very different than if you're like a very complex hardware company like Tesla. Like, your, your ownership in Tesla as an employee is just going to be a different thing than it is going to be in WhatsApp.

AI assessment note: “you have to start with, okay, what do I want? And then what does what I do incent”

Q As you're coaching entrepreneurs and the entrepreneurs in this room, what else feels different about this era or other advice that you find yourself to spend, whether it's around sort of the talent wars that are going on or other aspects that feel unique to this era, what other advice do you want to be leaving our entrepreneurs with?

A That's unique to this era. Well, like, I, I actually think you said the right thing, which is, this is a unique era, and so trying to learn the organizational design lessons of the past, or trying to learn, um, kind of too much from the last generation is, can be deceptive, because things really are different. Like, the way these, you know, the way your companies are getting built is, Is quite different in, in many aspects. Uh, and, you know, the types of, you know, what the, just like our observer observation on like PhD AI researchers is just very different than like a traditional, um, engineer, full stack engineer or something like that. So, you know, I, I think you do have to think through a lot of things from first principles, uh, because it is different. And like, you know, observing from the outside, it's really different.

AI assessment note: “you do have to think through a lot of things from first principles”

Q How do you think about it for, for your firm?

A Yeah, so we're a little different in that we are organized in such a way where, ah, it's not, like, Mark and I can have, like, very significant contributions without picking the investments, um, because, you know, we have, I would just say, more scale and more job functions, ah, at Andreessen Horowitz because we're kind of, A product first, and then a team of investors second, whereas every other firm I think is the opposite. Product meaning, uh, the product to entrepreneurs. So like, what are we offering is where we start. Um, and then the team of investors, um, is kind of goes with that as opposed to we're a team of investors and then like, well, uh, figure out what our product is as we go. Um, so it's very kind of different orientation.

AI assessment note: “we're kind of, A product first, and then a team of investors second”

Q uh, was a journalist and a, and a political writer as well. You know, I've, I've seen you as mostly focused on, on, uh, technology and, and, and business, but when, when did you start to realize that things were, were changing in the media or that we were sort of entering a hyper-partisan era or what were kind of your sort of inflection points in thinking about these topics?

A A big thing that had an effect on me was actually, uh, my father's, the beginning of his conversion from the left to the right, so he was, uh, the editor of, the editor-in-chief of Ramparts Magazine, which was the kind of the magazine of the new left back in the seventies. Um, you know, he dropped out of, uh, politics for quite a while, um, I think about eight years, uh, And then, you know, he, he was a journalist during that time. And one of the things that happened that was, uh, kind of, you know, to Mark's point about, um, the trusted experts and the authorities, uh, and the institutions was he got tipped by a very good reporter from the San Francisco Chronicle by the name of Randy Schultz about this, um, uh, potential, uh, pandemic. Um, in the, in 1981, and that was starting in San Francisco, uh, where kind of gay men were kind of getting this very deadly disease, um, and, uh, you know, and, but Randy couldn't write the story about it because there was so much pressure from the institutions to not make it a gay disease, but the, the kind of right, Public policy at the time was to close particularly the bathhouses. So they had these things that were at bathhouses in San Francisco where, you know, gay men would kind of hook up and that kind of thing. Uh, and so they all knew about this disease. There were only about a hundred cases. I think at the time it was a very small num…

AI assessment note: “A big thing that had an effect on me was actually, uh, my father's”

Q Yeah. Real estate hasn't had a ton of, uh, tech innovation. Like, what exactly is, is happening here? What's really interesting? What's the opportunity?

A Well, there's so many, there's so many things in the architecture, but it kind of starts with like, how do you model what's going on? And there's all sorts of components that basically, uh, in a normal real estate world get completely ignored. So, you know, you really, as a customer, um, care about everything from your neighbors to The building, to your furniture, to how you get your mail, um, to how the parking lot works, to how security works, and you not only care about it, but you really don't want a system keeping your information about you. You'd like that to be on your phone, um, and the system to be able to query it, but not store it so it doesn't get stolen and these kinds of things. Um, and then if you had that, Then you'd be comfortable with a lot more about yourself, uh, kind of accessible, and then you can publish what you want to publish, you know, and the way that, um, the company's already taken advantage of that is incredible. So for example, let's say I'm a yoga instructor. Maybe I want everybody in my building to know that. Um, and maybe, uh, you know, they really want to know that I can do that because Wouldn't it be great to take yoga lessons without leaving my apartment building? Um, and so what's happened already in flow is not only has the commerce between residents, accountants, yoga instructors, personal trainers, you know, everything you can think of,…

AI assessment note: “single platform where that knows everything about its citizens while keeping things private”

Q of people who commit all the crimes, right? Yep. And so, what do we do with that percentage of people? Maybe, you know, people talk about criminal justice reform. Sometimes they talk about basically not putting, you know, criminals in prison, um, and, and letting them free. Um, I guess, what is the steel man of, like, how do we solve for this? What do we do to address this?

A Well, look, I, I think that, one, if you're getting the, so there's a, the separate conversation of prison reform and, like, the way the prison system works and the incentives in it in the United States has a lot of issues. Uh, you know, principally, um, that it's not, we've gone completely away from rehabilitation and this, some of this comes from time-based sentencing and other things. And so, our recidivism rate is over 70% in the United States, and countries that do, like, a better job, it can be, you know, much below 40%. So we are throwing away, like, there's certain people who are psychopaths, and we're never gonna reform them. Um, but there's a big, most people in prison, you know, I've had this conversation with my friend Shaka Senghor, who's in prison for 20 years, most people in prison are actually betas. So there are people whose idiot friend had the idea to go rob the local drug dealer or whatever, and, you know, and then they get caught up, and then they're in prison. Now the problem is, those people who could be productive citizens, once they get to prison, become trained to be much harder criminals. And so, you know, that's something that we definitely, uh, We, we, one, it'd be a huge cost savings for the country. Two, it would be, you know, much better for society, um, and much better for people who get arrested. But, like that, I, I would just say that's an in…

AI assessment note: “we've gone completely away from rehabilitation and this, some of this comes from time-based sentencing”

Q So if the clean energy craze happened again, you know, if you guys were around during that time, do you think you would have bet big there and just said, hey, we're 10 years earlier?

A Well, that one is a little different in that that was like a politically motivated market, which is a different kind of a thing. I mean, I think so. We're big believers in software, and if there's like a massive software breakthrough, That has new applications or new models or, or, or these kinds of things, and we'd certainly be on, on that. Anything like AI or, or crypto or, or, you know, or like, you know, what's going on in games. Like, we'd bet that every time. Um, I think climate, uh, it was a little difference. It wasn't software. It was material sciences, which, uh, has a different, uh, market dynamic. Um, so it's kind of like, uh, Like, there eventually became a small number of auto companies. Um, there never eventually became a small number of software companies, despite what Larry Ellison and all those guys said, that there were only going to be three software companies and all that thing. Because it's kind of like, it'd be like there's only going to be three novelists. It's a creative art form. It's got a very big design space. And so, um, you know, we think there, you know, if there is like a big change in how you can write software, which AI is probably the biggest change we've ever had, Um, that's gonna, yes, that's gonna produce things, and we bet that all day, all the time, every day. And I think, like, that's also the kind of value of being able to evolve the f…

AI assessment note: “I think climate, uh, it was a little difference. It wasn't software.”

Q Fund One, which is what, six, seven years ago? Yeah, seven years ago. A lot's changed in seven years, and I've actually heard you argue, Mark, that things have accelerated in that time period, more so than previous decades before. So what do you guys think are the biggest shifts now that are important to us in this newest fund, and what changed in that period, like the biggest things?

A So in Fund One, uh, when we started, we thought that Our timing was really good despite the fact that, uh, I think the world thought our timing was really bad and starting a new venture capital fund, and the reason why we thought that was that there were three gigantic new platforms hitting all at the same time, which was kind of unprecedented in the history of technology. One was mobile, the second was social, and the third was cloud, and that really proved out through the course of the early history that the applications on top of those, particularly Mobile and, uh, cloud were just spectacular, and I think we're coming a little bit to the end of the first phase of the, you know, some of the obvious applications that could be built on those things, and we're moving into, to some new areas.

AI assessment note: “we're coming a little bit to the end of the first phase”

Q Well, on that note, what do you say to people who say, hey, we weren't advocating for defund the police. We were saying redirect that money to, you know, group therapy or sort of, you know, mental health, you know, or other services that are more preventive. What would you say to that argument?

A It's just like a misunderstanding of incentives, I think, right? Like incentives drive culture. If you get rid of law enforcement, then Look, we don't have a strong enough, consistent, and we're a heterogeneous society, uh, ethical kind of structure to make people go, okay, like, you know, robbing somebody is bad, or, or for sure, like, selling drugs is bad, or bookmaking, or, or whatever the crime is. Like, a lot of people don't even know that's a crime, um, you know, until they're much older, and so forth. So, like, it's not viable to You know, stop crime with a big incentive. Like, yeah, you can go talk to somebody as a social worker and say, hey, you shouldn't do that, but, like, if they go, well, look, I have a very strong cash incentive to do it.

AI assessment note: “yeah, you can go talk to somebody as a social worker”

Q As you're coaching entrepreneurs and the entrepreneurs in this room, what else feels different about this era or other advice that you find yourself to spend, whether it's around sort of the talent wars that are going on or other aspects that feel unique to this era, what other advice do you want to be leaving our entrepreneurs with?

A That's unique to this era. Well, like, I, I actually think you said the right thing, which is, this is a unique era, and so trying to learn the organizational design lessons of the past, or trying to learn, um, kind of too much from the last generation is, can be deceptive, because things really are different. Like, the way these, you know, the way your companies are getting built is, Is quite different in, in many aspects. Uh, and, you know, the types of, you know, what the, just like our observer observation on like PhD AI researchers is just very different than like a traditional, um, engineer, full stack engineer or something like that. So, you know, I, I think you do have to think through a lot of things from first principles, uh, because it is different. And like, you know, observing from the outside, it's really different.

AI assessment note: “trying to learn the organizational design lessons of the past... can be deceptive”

Q Ben, we're talking to engineers all the time who are pursuing AI ideas, who are pursuing crypto ideas. There hasn't been that many amazing real estate opportunities for, you know, the most brilliant technical minds to sink their teeth into. Why is this an opportunity?

A You know, like as an engineer, you want to build things that really impact people's lives and make their lives better. I mean, there, there's many, many things that you can do that, um, have small impact or questionable impact, but this is something where, you know, you're building an environment where For young people, um, you know, we did, as Mark kind of alluded to, you know, it's been much worse than what their parents' opportunity was, and even what their parents' opportunity was, um, which is a new phenomenon, um, and this is a chance to make it much better, um, much better than how their parents lived, and, you know, there, there's not more meaningful work than that, and then it's a, it's an extremely Complex technological problem. Uh, you know, particularly, um, kind of coming out of legacy world and all these, you have to basically start from complete first principles because you're starting with who's living there. Um, and the software has to be oriented around them, not buildings or apartments or, you know, a bill, uh, Those are, those are features of the person, not vice versa.

AI assessment note: “it's an extremely Complex technological problem. Uh, you know, particularly, um, kind of coming out of legacy”