The Exchanges

Q I'm really, yeah, I mean, I think that's like a good thread to pull on because A-sixt Z is a marketing media machine. Mark has talked about this on plenty of podcasts. We see it with Eric and all the podcasts that are coming out. I can't keep up with them. Uh, but it's phenomenal. So how does this marketing machine that help with deal flow and helping these companies?

A Yeah. So, I mean, you alluded to how, how it started. Uh, I give a lot of credit to Margit, Grace, Maya, the marketing team of the early days who built the brand, uh, before we deserved to have one. We didn't have the returns. We didn't have the portfolio companies. And then as Mark has alluded to, that gave us, um, you know, the ability to, you know, win deals, um, support our portfolio. It gave us Power in the market. Strong venture capitalists have power that they can lend to their portfolio companies, uh, to enable them in times that they otherwise couldn't. So that's with hiring executives, uh, corporate partners, customers, the like. Fast forward to today. I mean, you talk about Eric and his ninjas on the new media team. We can go to an early stage founder and almost guarantee That their launch is going to go viral. Um, that is a differentiated offering. So, um, if you look across the operating platforms, we strive for that differentiation. It helps us upfront with deal flow because people hear about it. It helps us with winning because they reference it. And then once they're in the portfolio, we think it helps deliver outsized returns.

AI assessment note: “It helps us upfront with deal flow because people hear about it.”

Q What is the most underrated company you've invested in?

A The most underappreciated company in America right now is Flock Safety. Uh, Garrett Langley should be a national hero. They got a lot of positive press attention in December around the Brown and MIT case. Their camera helped solve and find, you know, the, the criminal. When we look at it though, that's just like a normal day in Flock's life. Flock solves over 2800 cases every day. That's 15% of reported crime in America. And so, like, there's a lot of, oh, like, is tech doing good in the world? AI, is it good for humanity? Like, Flock is an incredible example, like, one I'm so proud, proud of, and like, we need Flock. If we want to eliminate crime in America, We need to deter criminals from doing bad things, right? Like we don't want bad guys to think they can get away with it. 50% of murders are unsolved in America. We need flock to be deployed and eliminate all crime.

AI assessment note: “The most underappreciated company in America right now is Flock Safety.”

Q How did Andreessen originally invest into 11 and then how did you Come in with the growth fund. What was the process?

A Yeah, it's a great representation of what we were talking about before. Um, Jennifer, Brian, and Justine on our early stage team, uh, got to know Maddie, swooped in, um, led the Series A, um, involved a, you know, flight over to London to get the, you know, term she had signed, all those fun, fun things. Um, but they maintained a really special relationship with Maddie, um, We led or co-led the A, B, and C. Um, the A and B, our early stage team did, uh, we co-led the, the C last year and our big participants in this round. Um, it's one where we got to know Maddie, uh, through the B, um, stayed close to him throughout the year, watched his progress, tried to be helpful. We engaged our operating team a lot there too. Um, our, like, revenue operations team plugged in. This is a company that has, like, Grown in record time. And what, what's unique about it relative to a lot of companies is they have this like beautiful organic consumer business that like people look at 11 Labs and they're like, oh, how many like consumers, prosumers, influencers are going to use this? Like it's going to run out of, uh, room on the consumer side. It continues to like hum. It's amazing and, and highly organic. The enterprise business Like has also been beautiful, and it's like very rare to have like a great consumer business and a great enterprise business. Fast forward to today, the enterprise busin…

AI assessment note: “Jennifer, Brian, and Justine on our early stage team... led the Series A”

Q Why did you choose Kalshi over Polymarket? Did you look at Polymarket too?

A I, uh, am familiar with both companies. It would be hard to study the space and not be. When you look at Kalshi, um, and their origins with Tarek and Luana, it's hard to find two more resilient founders. They were getting punched in the face for four years and told no. And they took the Difficult, but let's say more responsible path towards getting licenses, being the first CFTC regulated prediction market. And as like, we reflect on why that was important to us. Like, I think a lot of what we saw in them stem from our investment in Coinbase and them taking a regulatory first approach. Um, taking a regulatory first approach builds trust with consumers, regulators, partners. And so, if you fast forward for Kalshi's journey, They have the most consumers and users today. That wasn't always the case, and I can talk about that in a minute. Um, they were first to get regulatory approval. They have Robinhood and Coinbase as partners, CNN, CNBC as partners. These are like real mature organizations that are entrusting Kalshi. You can't get those types of relationships unless you play by the rules. When we made our investment, uh, Calci was number two in reported volume, um, and, uh, you know, we, we take great pride in backing market leaders, and so when someone's in a number two position, we have to have a really strong thesis. A lot of that stems to what I just said about Tarek and Lu…

AI assessment note: “they took the Difficult, but let's say more responsible path towards getting licenses”

Q From a deal perspective, I want to unpack the process. How do you underwrite a company like this? Do you look at Tesla? Yeah.

A So, um, this is one where you have to think about a variety of scenarios off into the future. Um, and so to make it simple, I, I would frame it as there are three like base scenarios. The first is Waymo stays the only game in town. I certainly like hope that is the case. Um, Their dominant market share of a, a market that grows quite significantly. The, the second case is the market still grows significantly because, uh, it's such a great value proposition, self-driving. However, there are multiple players, um, that might be a Tesla. It could be a Zoox. It could be a Wave. Um, there are Chinese players as well. Um, but because of the technical challenge, I think it's a productive oligopoly. And then the third scenario is where things don't work out as well for Waymo and, you know, maybe, uh, there's impairment, maybe, uh, one of those other providers has an advantage over them in the fullness of time. I think the most likely scenario of those is that it is a productive oligopoly, that there are many players, but we expect Waymo to be, you know, a, a meaningful, uh, share of that overall market.

AI assessment note: “there are three like base scenarios. The first is Waymo stays the only game”

Q When you're evaluating these companies, what are the through lines you're looking through them, and then what are the metrics, the tangible numbers and kinds of slopes you're looking for?

A Yeah, I mean, look, each company is bespoke and, like, we, uh, don't bring the same lens cookie cutter to every company. Um, we are snobs around growth. We, um, you know, I, I mentioned earlier, like, our portfolio is growing, you know, on average over a hundred percent. Um, if you're an early growth company, um, you have to be growing, you know, several hundred I think part of like the through line of that is, um, we want to be invested in these companies time after time, round after round. There are many companies across our first four funds that we invest in all of them. If you're growing like 60%, um, at moderate scale, the likelihood that we're going to invest many times over time just isn't that great. And so we, we tend to be pretty snobbish about growth. Um, we think a lot about end state margin. So, like, I talked about gross margins earlier. Like, we can be, give you a bit of a pass today if your margins are lower, if we believe there's, like, a believable path to higher margins. And ultimately, like, we're thinking about, like, what can free cash flow margins be at scale? Um, that doesn't mean it needs to hit that in five years or necessarily even 10. Um, but we need to see the through line thereafter to make sense of things. Um, as we're, like, assessing each of these metrics, I think, like, retention is a really key one. Um, if you have, like, high gross retention,…

AI assessment note: “we are snobs around growth. We... our portfolio is growing, you know, on average over a hundred percent.”