AI transcript
The content here is for informational purposes only,
should not be taken as legal business tax
or investment advice,
or be used to evaluate any investment or security
and is not directed at any investors
or potential investors in any A16Z fund.
For more details, please see a16z.com/disclosures.
– Hi everyone, welcome to the A6NZ podcast, I’m Sonal.
So this week to continue our 10-year anniversary series
since the founding of A6NZ,
we’re actually resurfacing some of our previous episodes
featuring founders Mark Andreessen and Ben Horwitz.
If you haven’t heard our latest episode
with Stuart Butterfield turning the tables
as the entrepreneur interviewing them,
please do check that out and other episodes in this series
that we’ve been running all week
on our website at a6nz.com/10.
But this episode was actually recorded in 2014
on the five-year anniversary of the firm
and features Michael Copeland interviewing Ben and Mark
about disruption theory,
as well as key traits of entrepreneurs.
– Disruption theory has been in the news of late
as it relates to Clayton Christiansen,
you know, the master of this.
And I just wanna ask you guys not so much
about the criticism of him,
but from where you set that theory
and his thinking kind of galvanized itself into a book
in 1997, you know, do you build companies differently today?
Does, do those theories still hold water or what’s changed?
– Yeah, so I think his book was actually quite brilliant.
It’s funny that it’s coming under criticism now
after he’s been proving like completely right
and the general idea that he had.
It’s kind of, it actually reminds me of the creationist attacks
on evolution where like, yes, from a,
it’s like intellectualism at its worst, right?
It’s like, oh, here’s something wrong
with Darwin’s original theory.
And it’s like, okay, now we’ve based all of biology on it.
We’ve made tremendous progress.
Like how about that?
And this is kind of like, you know,
I don’t believe in electricity, you know?
And you know, this is kind of the kind of business version
of that where, you know, he developed the theory,
all of us in high tech.
And it was an amazing business book at the time
because it explained a phenomenon that, you know,
and now is kind of obvious,
but in 1997 was tricky, which is why does there,
really why do there need to be new companies?
– Right.
– And what’s happened when we just got through talking about
like there’s an explosion of new companies
and these companies aren’t trivial,
they’re becoming very, very important company,
you know, companies like Google and Facebook and so forth.
And so he’s kind of been proven right.
And then not only has he been proven right
on kind of the large level,
but the mechanics that prevent the kind of incumbents
from innovating at the same rate as the new company
are still completely in effect.
And we, you know, use his models all the time
in our thinking and our analysis.
And no doubt there are probably some minor problems
with examples he’s used or like the way he worded it
or what have you, but like basically he was right.
– Yeah, I would also say two things.
Let’s say one is we actually use this theory basically
to tell us what not to invest in.
– Yes, right.
– As well as what to invest in.
– So how so?
– Well, so for example, we have this basically
this theory that basically it’s very, very dangerous.
So one of the great things about our industry
about venture capital is you get to do these things
that basically disrupt sort of the big
establishing incumbent companies.
Conversely, a very dangerous thing to do is to attack
companies that we, our internal term is the new incumbents.
And so it’s one thing to like go attack, you know,
a tech company that’s been in business for 50 years
that’s on its six C or something like that.
It’s another thing to go attack Google
being run by Larry Page.
– Right.
– Because Google being, you know, Larry Page
is like fully aware of the theory of disruption
and in full command of his company.
And if you like, he sees a disruptive threat coming.
He is quite capable of doing the things to head it off
that a, you know, fourth generation professional CEO
might not be able to do.
So anyway, so that was one thing I want to say.
The other thing I want to say is disruption.
It’s a, I agree with Ben.
It’s funny that this is a topic now,
but since it is, it’s worth talking about
which is the term disruption by its very nature,
the term itself has negative connotations, right?
It’s disruption seems like
it’s one step away from destruction.
And so it gets, it’s got this kind of,
you see it in this kind of popular kind of conception
that there’s something bad about it.
The actual way that Christensen used the term
was actually in a very sort of applied way
in a very specific circumstance in business.
And, and actually in a very positive way,
which is basically he described as a way
that progress happens, right?
So progress doesn’t happen by basically old companies
like deciding to do new things.
Company, progress happens
because new companies decided to do new things.
And then disruption is the process
by which the new things are able to take over
from the old things.
If you decide you don’t like disruption,
what you’re basically saying is you don’t like new things,
right?
It’s basically to be against disruption
is to basically be pro the status quo.
And pro the status quo means the way,
however the world is today,
like that’s it, like that’s all we’re gonna have.
Like the way things work today,
this is as good as it’s ever gonna get.
The disruption argument is no, no, no, no, no, no,
things can become much better.
Products can become much better.
Businesses can become much better.
Opportunities for people can become much better.
And so it’s a, it’s a negatively connotated term
that has very positive implications.
And I think that that’s really at least in the last couple
of years that’s been lost in a lot of the commentary.
– You mentioned Google and one of the things
that we’ve seen, you know,
through the technology industry’s history
is that it’s very, very hard to disrupt yourself
and kind of make a transition from one thing to another.
IBM, maybe the only company that’s done it.
Google, you know, they’re trying everything.
You know, and Facebook is trying everything.
And do these companies somehow change the rules?
Or is it the same rules applying and, you know,
disruption theory catches up with them in 50 years maybe.
– So I think you’re, I think kind of have to break
that back apart and go back to what Mark said.
I think that people often think of big companies
can’t innovate, little companies can,
but the real truth is new companies can innovate
and companies that are so old that the original inventors
are gone, have a lot of trouble doing it.
And so if you go back to HP or IBM
or any of these companies, when the founder,
when Thomas Watson was running the company,
when Dave Packard was running the company,
they didn’t have any trouble doing new things.
And they did a phenomenal, I mean, HP in particular
did like a crazy number of new things,
just amazing and in retrospect, really phenomenal.
And if Mark Zuckerberg’s running the company
or Larry Page is running the company,
you know, that’s not an old company.
That’s a new company.
And as innovators, they, you know, we believe
and this gets back to why we don’t attack them
because they’ll attack right back and very effectively.
You know, they’re going to be able to do new things.
And like sometimes that will mean
bringing in new talent through acquisition
or new technologies through acquisition,
but they’re going to be able to think about the problem
through a lens that is not the business they’re in.
And that’s kind of, this is the amazing thing
that Clayton Christiansen laid out was that, you know,
if you’re like, if you’re an old company
run by professional managers,
you’re really good at studying
and optimizing the business you’re in.
And so if there’s a new business that comes along
that doesn’t, is inconsistent with that, you get stuck.
But if you’re Mark Zuckerberg
who created a business from nothing,
then you have a very different view of the world.
And it’s not like, okay, how do I optimize the business
that I’m in?
It’s like, well, how do I get another business
that’s like Facebook?
That’s more the way you think about it.
– The other thing is the fact that Christiansen
was able to articulate this in a theory
that’s so clear and put in the book is,
I think that like the best professional CEOs
in the tech industry today, like now understand this
in a way that maybe their predecessors
10 or 20 years ago didn’t understand it.
So I’ll just give you two examples
of people I work with, John Donahoe at eBay.
Like when mobile came along, you know,
sort of classical professional CEOs,
when mobile comes along, you know, would look at it
and say, well, I’ve got this great business on the web.
If I move to mobile, it may or may not work as well.
And so maybe I don’t want to try to make the move.
Maybe I want to stay on the web and reinforce the web
and like not take the risk of quote disrupting myself
by making the jump to mobile.
But since John understands disruption theory
and it’s been like articulated and explained
in a way that makes sense, you know,
he was able to be based on a phenomenally successful job.
He went full throttle into mobile
and they made the jump and they’ve done it very well.
Meg Whitby doing the same thing with this.
I just, one example is this project Moonshot
which is these cartridge based servers.
– At HP, right?
– At HP that are a direct attack
on the existing blade server business.
And the blade server business at HP
is a very, very big and profitable business.
And HP is basically self disrupting
with this new kind of cartridge based server.
And so again, and when you have the discussion,
you know, HP board meeting and you have the discussion,
you’re like, okay, why are we taking the risk
of damaging this big existing profitable business
by doing this new thing?
The answer is because it’s the right thing to do
according to disruption theory.
Like it is, like there is a logical framework.
And again, think about what’s happening
which is something new is happening.
Progress is happening, right?
This is now the reason and the motivation
and the explanation and the justification
to be able to make progress.
So it’s an incredibly powerful positive thing.
– Let’s get to entrepreneurs and entrepreneurship.
You guys founded the firm.
In part, I’ve been told because you wished
you’d been told or helped in certain ways.
What’s one thing both of you wish you knew
or someone had told you as entrepreneurs?
– Well, that presumes we would have listened.
You know, there’s just so much that we did not know
going through it the first time.
And one of the great things
about the entrepreneurial experience
is it’s just an amazing learning curve
about everything from markets to organizational structures
to compensation to everything.
But probably one of the most challenging things
to learn while you’re out there
is kind of how macroeconomics impact markets
and particularly how they,
how private funding can change very, very rapidly.
You know, when we were, you know, particularly,
and this wasn’t as a harsh lesson at Netscape,
but at Opsware and LoudCloud,
it was like incredibly difficult for us
to go from the funding environment
where basically had the highest multiples
in the history of anything
to there was no money available, period.
I mean, like that was,
it was the most dramatic fall imaginable
from the highest of highs to the lowest of lows.
And, you know, to have the NASDAQ fall over 80%
and that not being, you know, that’s NASDAQ,
that’s not tech, tech fell 95%.
It’s just like not something you could even imagine
or get your head around.
So I wish, you know, like I wish we would have known that.
I wish, I don’t know if we would have believed anybody
if they had told us that,
but that would have probably made it a little less painful
if we had any idea how bad it could be.
– It would have made a worse book.
I’ll tell you that, that you wrote, but still.
– Yeah, yeah.
– On the other side of the table,
what do you want more or less from entrepreneurs,
more of or less of from entrepreneurs?
– Yeah, well, you know, it’s very different
across different businesses,
but like the one thing
that would probably be nice if there was less of
that’s pretty consistent is it’d be nice
if it wasn’t so important to entrepreneurs
what their peers valuations were.
Like that, that is probably the most meaningless thing
to focus your mind on as an entrepreneur imaginable.
It’s just like irrelevant.
– You don’t have anything else to base your value on, do you?
– No, no, no, that’s, you go ahead.
– Yeah, so it’s not actually,
you know, your company is your company,
their company is their company.
You’re looking at the price they got,
not any of the business metrics that they have
or like how the company is going.
So you’re not actually basing your valuation
on anything in that sense.
And there’s better data to be gotten for sure.
Like, you know, we have better data.
We can talk to them about all the kind of valuations
based on actual revenue and so forth,
as opposed to the person they went to school with
or the person they worked at their last company with.
And, but people get very wrapped around the axle on that
because there’s, you know, it’s kind of the thing
that Peter Thiel talks about,
whereas competition is actually like really destructive.
And that’s like the worst kind of competition
’cause it’s competition that’s irrelevant
to anything in life other than, you know,
you can go tell your friend what valuation you got.
And I think that it causes bad, you know,
errors in judgment and delays in decisions
that need to be made quickly and things like that.
So, you know, it’s just,
it’s one of those things where humanity gets a better view.
And I wouldn’t like, less of that would be good.
– Mark, any, anything you would offer on that?
– Well, the thing that the great entrepreneurs
all have in common, we talk about this a lot,
but you just see it every day is the great entrepreneurs
all have amazing courage.
And so I would say we’re blessed
in that the entrepreneurs we work,
and we select for it.
I mean, we try very hard to select for it,
but the entrepreneurs we work with that are amazing.
One of the things they all have in common
is they’re incredibly courageous,
but which I mean, they don’t give up.
They don’t, they don’t quit.
Like they don’t, they don’t quit.
They don’t flinch.
They don’t get demoralized.
They don’t get, I mean, well, actually,
they may get demoralized or depressed,
but they show up to work the next day
and they work their way out of whatever problem they’re in.
And they just keep pounding and pounding
and pounding and pounding.
And I think there’s a little bit too much
in the Valley right now of the pivot
and the lean start, you know, the lean startup
and the, you know, the everything’s an experiment
and minimum viable product and failure is good
and kind of all of these excuses to be able to give up
when things aren’t going well.
And I think that the great entrepreneurs through history
have always been the opposite kind of personality
and all that they’ve always been.
“I’m gonna make this thing work
hell or high water no matter what.
I am going to knock my way, you know, headfirst
through any, you know, barrier that I run into.
I don’t care what people say about me.
I don’t care what kinds of problems I have.
I’m gonna figure this out and I’m not gonna give up.”
And so I would just say we love working with people
who have that personality type
and you can never have enough of them.
– Elon Musk comes to mind.
I mean, cars and space.
– Yeah, so to start, think about this,
to start a new electric car company.
And by the way, think about the last car company
started in the United States.
They literally made a movie about the catastrophe
that resulted, which is this movie, Tucker.
And so if you want like a story of like a horrible business.
– Which went better than DeLorean.
– Yes, well, actually, yeah, DeLorean.
Well, he had the added,
he had the cocaine smuggling business on the side,
which helped cover the, to free the expenses.
But, you know, car companies,
like all the car companies in the US that are successful
are like, you know, from the 1910s and 1920s.
And so to start a new car company
in the electric car category,
when all the electric cars had failed,
simultaneously to start the first new private rocketry company
in the United States in probably 40 years
to go straight up against the big boys,
to do those at the same time.
And then to go through the 2008 crash.
And he has actually recently opened up on this of like,
he almost lost both companies in 2008.
Like they’ve almost both vaporized.
And then a gut through both of those
and have both come out the other side,
like just like an excreaming successes is just a,
it’s a spectacular performance.
And a huge part of it is he didn’t give up.
– Ben, let’s touch on your book a little bit.
The hard thing about hard things.
One thing it got great reception,
but you’re like, well, yeah, that sounds good for you, Ben,
but that was your story.
How can I embrace that and make that my story?
But, you know, was there anything in the response
that you wish people had pushed you harder on?
– Well, the things that people pushed me on
actually annoyed me.
So I, it’s hard to say that I wish about that.
I mean, I think that to your point though,
it was my story and the reason for that,
I mean, there was a really specific reason for that,
which is building these companies
tends to be very dynamic and very situational.
And so a very frustrating thing
about management and advice in general,
and particularly, you know, both in books
and then things that you often get from board members
or kind of pattern matchers as it were,
is that they’re giving you advice
and it’s based on something.
And that advice and what it’s based on
may or may not be relevant to you.
And if you don’t know what it is,
it’s very difficult to interpret it.
And I always found that, you know,
management books would give like guidance
and you’d be like, well, okay,
is that what I should be doing?
But I have no idea where it came from.
And so it’s hard to say.
So a lot of putting my story in was just to say,
look, this is why I’m telling you this.
And like, if your situation is completely different
than this, then that might be the part of the book
that you ignore or like, at least,
or maybe you can map it on to what you’re doing.
But I think that without knowing
why somebody is telling you something,
it’s pretty difficult to get value out of it.
– And on the topic of the entrepreneurial journey,
we have to go see a pitch.
– All right, that’s what you guys get paid to do.
So Ben and Mark, thanks so much.
We will do this.
Well, it won’t do it in five years.
We’ll do it much sooner than that.
Thank you very much.
– Okay, thanks, Michael. – Thanks, Michael.
should not be taken as legal business tax
or investment advice,
or be used to evaluate any investment or security
and is not directed at any investors
or potential investors in any A16Z fund.
For more details, please see a16z.com/disclosures.
– Hi everyone, welcome to the A6NZ podcast, I’m Sonal.
So this week to continue our 10-year anniversary series
since the founding of A6NZ,
we’re actually resurfacing some of our previous episodes
featuring founders Mark Andreessen and Ben Horwitz.
If you haven’t heard our latest episode
with Stuart Butterfield turning the tables
as the entrepreneur interviewing them,
please do check that out and other episodes in this series
that we’ve been running all week
on our website at a6nz.com/10.
But this episode was actually recorded in 2014
on the five-year anniversary of the firm
and features Michael Copeland interviewing Ben and Mark
about disruption theory,
as well as key traits of entrepreneurs.
– Disruption theory has been in the news of late
as it relates to Clayton Christiansen,
you know, the master of this.
And I just wanna ask you guys not so much
about the criticism of him,
but from where you set that theory
and his thinking kind of galvanized itself into a book
in 1997, you know, do you build companies differently today?
Does, do those theories still hold water or what’s changed?
– Yeah, so I think his book was actually quite brilliant.
It’s funny that it’s coming under criticism now
after he’s been proving like completely right
and the general idea that he had.
It’s kind of, it actually reminds me of the creationist attacks
on evolution where like, yes, from a,
it’s like intellectualism at its worst, right?
It’s like, oh, here’s something wrong
with Darwin’s original theory.
And it’s like, okay, now we’ve based all of biology on it.
We’ve made tremendous progress.
Like how about that?
And this is kind of like, you know,
I don’t believe in electricity, you know?
And you know, this is kind of the kind of business version
of that where, you know, he developed the theory,
all of us in high tech.
And it was an amazing business book at the time
because it explained a phenomenon that, you know,
and now is kind of obvious,
but in 1997 was tricky, which is why does there,
really why do there need to be new companies?
– Right.
– And what’s happened when we just got through talking about
like there’s an explosion of new companies
and these companies aren’t trivial,
they’re becoming very, very important company,
you know, companies like Google and Facebook and so forth.
And so he’s kind of been proven right.
And then not only has he been proven right
on kind of the large level,
but the mechanics that prevent the kind of incumbents
from innovating at the same rate as the new company
are still completely in effect.
And we, you know, use his models all the time
in our thinking and our analysis.
And no doubt there are probably some minor problems
with examples he’s used or like the way he worded it
or what have you, but like basically he was right.
– Yeah, I would also say two things.
Let’s say one is we actually use this theory basically
to tell us what not to invest in.
– Yes, right.
– As well as what to invest in.
– So how so?
– Well, so for example, we have this basically
this theory that basically it’s very, very dangerous.
So one of the great things about our industry
about venture capital is you get to do these things
that basically disrupt sort of the big
establishing incumbent companies.
Conversely, a very dangerous thing to do is to attack
companies that we, our internal term is the new incumbents.
And so it’s one thing to like go attack, you know,
a tech company that’s been in business for 50 years
that’s on its six C or something like that.
It’s another thing to go attack Google
being run by Larry Page.
– Right.
– Because Google being, you know, Larry Page
is like fully aware of the theory of disruption
and in full command of his company.
And if you like, he sees a disruptive threat coming.
He is quite capable of doing the things to head it off
that a, you know, fourth generation professional CEO
might not be able to do.
So anyway, so that was one thing I want to say.
The other thing I want to say is disruption.
It’s a, I agree with Ben.
It’s funny that this is a topic now,
but since it is, it’s worth talking about
which is the term disruption by its very nature,
the term itself has negative connotations, right?
It’s disruption seems like
it’s one step away from destruction.
And so it gets, it’s got this kind of,
you see it in this kind of popular kind of conception
that there’s something bad about it.
The actual way that Christensen used the term
was actually in a very sort of applied way
in a very specific circumstance in business.
And, and actually in a very positive way,
which is basically he described as a way
that progress happens, right?
So progress doesn’t happen by basically old companies
like deciding to do new things.
Company, progress happens
because new companies decided to do new things.
And then disruption is the process
by which the new things are able to take over
from the old things.
If you decide you don’t like disruption,
what you’re basically saying is you don’t like new things,
right?
It’s basically to be against disruption
is to basically be pro the status quo.
And pro the status quo means the way,
however the world is today,
like that’s it, like that’s all we’re gonna have.
Like the way things work today,
this is as good as it’s ever gonna get.
The disruption argument is no, no, no, no, no, no,
things can become much better.
Products can become much better.
Businesses can become much better.
Opportunities for people can become much better.
And so it’s a, it’s a negatively connotated term
that has very positive implications.
And I think that that’s really at least in the last couple
of years that’s been lost in a lot of the commentary.
– You mentioned Google and one of the things
that we’ve seen, you know,
through the technology industry’s history
is that it’s very, very hard to disrupt yourself
and kind of make a transition from one thing to another.
IBM, maybe the only company that’s done it.
Google, you know, they’re trying everything.
You know, and Facebook is trying everything.
And do these companies somehow change the rules?
Or is it the same rules applying and, you know,
disruption theory catches up with them in 50 years maybe.
– So I think you’re, I think kind of have to break
that back apart and go back to what Mark said.
I think that people often think of big companies
can’t innovate, little companies can,
but the real truth is new companies can innovate
and companies that are so old that the original inventors
are gone, have a lot of trouble doing it.
And so if you go back to HP or IBM
or any of these companies, when the founder,
when Thomas Watson was running the company,
when Dave Packard was running the company,
they didn’t have any trouble doing new things.
And they did a phenomenal, I mean, HP in particular
did like a crazy number of new things,
just amazing and in retrospect, really phenomenal.
And if Mark Zuckerberg’s running the company
or Larry Page is running the company,
you know, that’s not an old company.
That’s a new company.
And as innovators, they, you know, we believe
and this gets back to why we don’t attack them
because they’ll attack right back and very effectively.
You know, they’re going to be able to do new things.
And like sometimes that will mean
bringing in new talent through acquisition
or new technologies through acquisition,
but they’re going to be able to think about the problem
through a lens that is not the business they’re in.
And that’s kind of, this is the amazing thing
that Clayton Christiansen laid out was that, you know,
if you’re like, if you’re an old company
run by professional managers,
you’re really good at studying
and optimizing the business you’re in.
And so if there’s a new business that comes along
that doesn’t, is inconsistent with that, you get stuck.
But if you’re Mark Zuckerberg
who created a business from nothing,
then you have a very different view of the world.
And it’s not like, okay, how do I optimize the business
that I’m in?
It’s like, well, how do I get another business
that’s like Facebook?
That’s more the way you think about it.
– The other thing is the fact that Christiansen
was able to articulate this in a theory
that’s so clear and put in the book is,
I think that like the best professional CEOs
in the tech industry today, like now understand this
in a way that maybe their predecessors
10 or 20 years ago didn’t understand it.
So I’ll just give you two examples
of people I work with, John Donahoe at eBay.
Like when mobile came along, you know,
sort of classical professional CEOs,
when mobile comes along, you know, would look at it
and say, well, I’ve got this great business on the web.
If I move to mobile, it may or may not work as well.
And so maybe I don’t want to try to make the move.
Maybe I want to stay on the web and reinforce the web
and like not take the risk of quote disrupting myself
by making the jump to mobile.
But since John understands disruption theory
and it’s been like articulated and explained
in a way that makes sense, you know,
he was able to be based on a phenomenally successful job.
He went full throttle into mobile
and they made the jump and they’ve done it very well.
Meg Whitby doing the same thing with this.
I just, one example is this project Moonshot
which is these cartridge based servers.
– At HP, right?
– At HP that are a direct attack
on the existing blade server business.
And the blade server business at HP
is a very, very big and profitable business.
And HP is basically self disrupting
with this new kind of cartridge based server.
And so again, and when you have the discussion,
you know, HP board meeting and you have the discussion,
you’re like, okay, why are we taking the risk
of damaging this big existing profitable business
by doing this new thing?
The answer is because it’s the right thing to do
according to disruption theory.
Like it is, like there is a logical framework.
And again, think about what’s happening
which is something new is happening.
Progress is happening, right?
This is now the reason and the motivation
and the explanation and the justification
to be able to make progress.
So it’s an incredibly powerful positive thing.
– Let’s get to entrepreneurs and entrepreneurship.
You guys founded the firm.
In part, I’ve been told because you wished
you’d been told or helped in certain ways.
What’s one thing both of you wish you knew
or someone had told you as entrepreneurs?
– Well, that presumes we would have listened.
You know, there’s just so much that we did not know
going through it the first time.
And one of the great things
about the entrepreneurial experience
is it’s just an amazing learning curve
about everything from markets to organizational structures
to compensation to everything.
But probably one of the most challenging things
to learn while you’re out there
is kind of how macroeconomics impact markets
and particularly how they,
how private funding can change very, very rapidly.
You know, when we were, you know, particularly,
and this wasn’t as a harsh lesson at Netscape,
but at Opsware and LoudCloud,
it was like incredibly difficult for us
to go from the funding environment
where basically had the highest multiples
in the history of anything
to there was no money available, period.
I mean, like that was,
it was the most dramatic fall imaginable
from the highest of highs to the lowest of lows.
And, you know, to have the NASDAQ fall over 80%
and that not being, you know, that’s NASDAQ,
that’s not tech, tech fell 95%.
It’s just like not something you could even imagine
or get your head around.
So I wish, you know, like I wish we would have known that.
I wish, I don’t know if we would have believed anybody
if they had told us that,
but that would have probably made it a little less painful
if we had any idea how bad it could be.
– It would have made a worse book.
I’ll tell you that, that you wrote, but still.
– Yeah, yeah.
– On the other side of the table,
what do you want more or less from entrepreneurs,
more of or less of from entrepreneurs?
– Yeah, well, you know, it’s very different
across different businesses,
but like the one thing
that would probably be nice if there was less of
that’s pretty consistent is it’d be nice
if it wasn’t so important to entrepreneurs
what their peers valuations were.
Like that, that is probably the most meaningless thing
to focus your mind on as an entrepreneur imaginable.
It’s just like irrelevant.
– You don’t have anything else to base your value on, do you?
– No, no, no, that’s, you go ahead.
– Yeah, so it’s not actually,
you know, your company is your company,
their company is their company.
You’re looking at the price they got,
not any of the business metrics that they have
or like how the company is going.
So you’re not actually basing your valuation
on anything in that sense.
And there’s better data to be gotten for sure.
Like, you know, we have better data.
We can talk to them about all the kind of valuations
based on actual revenue and so forth,
as opposed to the person they went to school with
or the person they worked at their last company with.
And, but people get very wrapped around the axle on that
because there’s, you know, it’s kind of the thing
that Peter Thiel talks about,
whereas competition is actually like really destructive.
And that’s like the worst kind of competition
’cause it’s competition that’s irrelevant
to anything in life other than, you know,
you can go tell your friend what valuation you got.
And I think that it causes bad, you know,
errors in judgment and delays in decisions
that need to be made quickly and things like that.
So, you know, it’s just,
it’s one of those things where humanity gets a better view.
And I wouldn’t like, less of that would be good.
– Mark, any, anything you would offer on that?
– Well, the thing that the great entrepreneurs
all have in common, we talk about this a lot,
but you just see it every day is the great entrepreneurs
all have amazing courage.
And so I would say we’re blessed
in that the entrepreneurs we work,
and we select for it.
I mean, we try very hard to select for it,
but the entrepreneurs we work with that are amazing.
One of the things they all have in common
is they’re incredibly courageous,
but which I mean, they don’t give up.
They don’t, they don’t quit.
Like they don’t, they don’t quit.
They don’t flinch.
They don’t get demoralized.
They don’t get, I mean, well, actually,
they may get demoralized or depressed,
but they show up to work the next day
and they work their way out of whatever problem they’re in.
And they just keep pounding and pounding
and pounding and pounding.
And I think there’s a little bit too much
in the Valley right now of the pivot
and the lean start, you know, the lean startup
and the, you know, the everything’s an experiment
and minimum viable product and failure is good
and kind of all of these excuses to be able to give up
when things aren’t going well.
And I think that the great entrepreneurs through history
have always been the opposite kind of personality
and all that they’ve always been.
“I’m gonna make this thing work
hell or high water no matter what.
I am going to knock my way, you know, headfirst
through any, you know, barrier that I run into.
I don’t care what people say about me.
I don’t care what kinds of problems I have.
I’m gonna figure this out and I’m not gonna give up.”
And so I would just say we love working with people
who have that personality type
and you can never have enough of them.
– Elon Musk comes to mind.
I mean, cars and space.
– Yeah, so to start, think about this,
to start a new electric car company.
And by the way, think about the last car company
started in the United States.
They literally made a movie about the catastrophe
that resulted, which is this movie, Tucker.
And so if you want like a story of like a horrible business.
– Which went better than DeLorean.
– Yes, well, actually, yeah, DeLorean.
Well, he had the added,
he had the cocaine smuggling business on the side,
which helped cover the, to free the expenses.
But, you know, car companies,
like all the car companies in the US that are successful
are like, you know, from the 1910s and 1920s.
And so to start a new car company
in the electric car category,
when all the electric cars had failed,
simultaneously to start the first new private rocketry company
in the United States in probably 40 years
to go straight up against the big boys,
to do those at the same time.
And then to go through the 2008 crash.
And he has actually recently opened up on this of like,
he almost lost both companies in 2008.
Like they’ve almost both vaporized.
And then a gut through both of those
and have both come out the other side,
like just like an excreaming successes is just a,
it’s a spectacular performance.
And a huge part of it is he didn’t give up.
– Ben, let’s touch on your book a little bit.
The hard thing about hard things.
One thing it got great reception,
but you’re like, well, yeah, that sounds good for you, Ben,
but that was your story.
How can I embrace that and make that my story?
But, you know, was there anything in the response
that you wish people had pushed you harder on?
– Well, the things that people pushed me on
actually annoyed me.
So I, it’s hard to say that I wish about that.
I mean, I think that to your point though,
it was my story and the reason for that,
I mean, there was a really specific reason for that,
which is building these companies
tends to be very dynamic and very situational.
And so a very frustrating thing
about management and advice in general,
and particularly, you know, both in books
and then things that you often get from board members
or kind of pattern matchers as it were,
is that they’re giving you advice
and it’s based on something.
And that advice and what it’s based on
may or may not be relevant to you.
And if you don’t know what it is,
it’s very difficult to interpret it.
And I always found that, you know,
management books would give like guidance
and you’d be like, well, okay,
is that what I should be doing?
But I have no idea where it came from.
And so it’s hard to say.
So a lot of putting my story in was just to say,
look, this is why I’m telling you this.
And like, if your situation is completely different
than this, then that might be the part of the book
that you ignore or like, at least,
or maybe you can map it on to what you’re doing.
But I think that without knowing
why somebody is telling you something,
it’s pretty difficult to get value out of it.
– And on the topic of the entrepreneurial journey,
we have to go see a pitch.
– All right, that’s what you guys get paid to do.
So Ben and Mark, thanks so much.
We will do this.
Well, it won’t do it in five years.
We’ll do it much sooner than that.
Thank you very much.
– Okay, thanks, Michael. – Thanks, Michael.
with Marc Andreessen (@pmarca), Ben Horowitz (@bhorowitz), and Michael Copeland
Continuing our 10-year anniversary series since the founding of Andreessen Horowitz (aka ”a16z”), we’re resurfacing some of our previous episodes featuring Andreessen Horowitz founders Marc Andreessen and Ben Horowitz.
This episode was actually recorded in 2014, on the 5-year anniversary of the firm, and features Michael Copeland interviewing Ben and Marc about disruption theory, as well as key traits of entrepreneurs.
You can find other episodes in this series at a16z.com/10.
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