The Exchanges

Q And there's a lot of the opposite side out there right now. So maybe to start, could you tell us what the American dynamism thesis means to you and to Andreessen?

A Sure. So the most simple definition is it's companies that support the national interest. So it's everything from companies that sell directly to government, like aerospace and defense, these classic industrial sectors that have been supporting government since the, you know, mid-twentieth century, but then also things that every citizen cares about and takes part of. So education, housing, transportation, infrastructure, these really big categories that we, when we look back through kind of the history of technology, There's been so much technological innovation, but at the same time, the last 30 years of software really hasn't touched a lot of these physical spaces. And so what we noticed through our portfolio is that some of the most important companies, some of the largest companies actually fall into this category that's outside of consumer technology and it's outside of enterprise technology. It's outside of these categories that sort of venture capital has found themselves sort of creating, but these become big companies that affect most people in the country. So the kind of broadest definition is these are companies that support the national interest. Oftentimes they sell to government. Sometimes they compete with government. Other times they're just heavily regulated by government, but they touch everyone. And so we're excited to build a practice around this thesis, bu…

AI assessment note: “the most simple definition is it's companies that support the national interest.”

Q firm, these vertical practices now, which has been done in venture before, but not nearly to the degree that you all are doing it now. How did this vertical kind of originate? Did it start with Mark's, uh, time to build blog post, uh, you know, at the beginning of COVID, like, what does it look like within the firm of like, Hey, I think we should create a vertical.

A Yeah, it certainly starts with its time to build. I mean, that was, I think, the impetus for everyone realizing that the story of Silicon Valley pre-COVID is very different than the story that is about to come. But I think we all very much believe that, that the world fundamentally changed. Anyone who doesn't believe that from a historical context or a technology context isn't paying attention. The world fundamentally changed with COVID, and we'll be reaping those, both the positive aspects of it and the negative aspects of it for generations to come. So I think there was that understanding, but then I also think one of the observations that I had is that Silicon Valley is very good at understanding kind of consumer businesses. They're very good at understanding how to make businesses more efficient, but Silicon Valley has never touched government. The kind of narrative around how Silicon Valley works with government has always been like, try to stay as far away as possible.

AI assessment note: “Yeah, it certainly starts with its time to build.”

Q I love that. Well, Katherine, as we wind to a close here, any parting thoughts or anything you want to leave listeners with?

A Going back to your original question of like, as a venture firm, how do you create a new practice? I think if we do our jobs right and we invest in the companies that we're intending to invest in and we tell the story, right? I think every venture capital firm will have an American dynamism practice. And while like selfishly as an investor, like I don't necessarily want that, but as an American, I want that. I want every firm to say, actually, this is the best place to be investing. Can't believe we weren't looking at it and the just extraordinary opportunity. And it's not impact investing. It's not ESG. It's not just like, oh, well, we're going to see incremental returns. Like it is going to be the source of American innovation and it is a great place for the top venture firms to be investing. And so I think if we do our jobs right, we will see this new category and it'll be just like enterprise. It'll be just like consumer. And I'm excited for that to happen, truly. And I think that's sort of the story of the next 1020 years of Silicon Valley.

AI assessment note: “I think every venture capital firm will have an American dynamism practice.”

Q that we can talk about later, but let's say in the late nineties, it's a lot of like bureaucrats, process people, people who want to polish something for Seven years to accomplish what used to take one because we now have all this process in place. Do you think Silicon Valley has so much infrastructure now that it is attracting the nineties NASA people instead of the sixties NASA people?

A Maybe three weeks ago, we could have had that conversation or three months ago, we could have had that conversation a bit a little more worried about it. I do think markets are self-correcting in that respect. So you can talk to people who've been through downturns before. I haven't. I mean, I'm not someone who was working in Silicon Valley in 2001, but like you have some partners who were. Yes. Yeah. These sort of natural corrections that happen, tourists often leave and sort of people realize that they have to think differently. There's, you know, the kind of famous Ben Horowitz, peacetime CEO versus wartime CEO. There's sort of like Peace time in Silicon Valley versus wartime in Silicon Valley. And I do think there is sort of this question of, are we entering that now? And that leads to a lot of innovation, especially for early stage companies. I mean, the companies that are built, historically companies that have been built in downturns become tremendous successes because they sort of have to rethink the playbook. I mean, you could make the argument that a lot of people are going to have to be going through that and that the most innovative thinkers will win coming up through what we're seeing.

AI assessment note: “I do think markets are self-correcting in that respect. So you can talk to people”

Q path for that company was Book a one-way ticket to SFO and stay on the peninsula as long as you need driving up and down Sand Hill meeting with firms, you know, until you get a term sheet. What's the path now as an example? Like, how did you meet them? How did they present? How does the relationship happen? How do board meetings happen? What does it look like?

A I'll share the story of how I met Hadrian, which was my first investment since being at Andreessen Horowitz, and sort of how that relationship blossomed, because that's another Los Angeles-based company, typically not a place where VCs spent much time, but of course, with the emergence of the just extraordinary new space movement, there's a lot of people spending a lot more time for different reasons in Los Angeles, and I know my partners are certainly spending time there in games and other areas, too. But Hadrian's a company where it was our first formal investment out of the American Dynamism practice, and it's A company that is building automated machine shops for aerospace and defense manufacturing. So talk about a sector that technology just did not go to. We just mentioned the private equity world and it's like private equity had been buying up machine shops for a long time, seeing that as a great place to do roll-ups and to cut people. But in terms of like building jobs and creating new machine shops to actually service the needs of these large aerospace companies, That was not something that Silicon Valley was interested in or that technologists were really interested in. And the origin story of that company, the founder, Chris Power, is this extraordinary founder who moved from Australia a few years ago, was very devoted to this idea that he wanted to do something in m…

AI assessment note: “I'll share the story of how I met Hadrian, which was my first investment”

Q talk about what I think is probably now another huge megatrend to come for the decades ahead, the exporting of Silicon Valley to the rest of the country and the rest of the world. You've been talking about it. You're there in Miami. You're not, you know, here in California anymore or Seattle or the West Coast. How has your personal experience been over the past two years with that?

A This is a core part of the American dynamism thesis. Maybe talking through a couple of companies that explain this trend will make it clear because I think we, you know, we've talked about kind of your atypical founder, someone who came from different industries who felt like they weren't able to build a company, you know, that's happened. And a lot of those people felt like they were forced to move to Silicon Valley or, or maybe in some cases, New York. What I'm now seeing and what we're seeing in our own portfolio is that those people can build from anywhere and what that means for the country. It is an extraordinary thing that Silicon Valley could be exported to the rest of the country. I mean, that will be game changing when you think of just post-war, how there was sort of this myth that if you were someone who was high achieving, someone who wanted to have a career, you had to go to certain universities, you had to leave your state, and then you had to go to one of a handful of cities. And the impact that has had on the country has been very detrimental, that there is brain drain from certain states That has benefited places like San Francisco and New York. And if we're telling the story, 50 years from now, and we're looking back on what happened, the thing that will come out of COVID is that people have now said, I do not need to be in San Francisco. I can be anywhere in…

AI assessment note: “This is a core part of the American dynamism thesis.”