The Inside Story of Growth Investing at a16z

0:00:05 We’re constantly asking how could this investment be worth 10x plus and we focus probably more of our
0:00:09 effort on that than around the downside. We turned it down based on price when I was at GA. They
0:00:15 figured out a huge market hiding in plain sight, a sales model that totally worked, fast product
0:00:20 velocity, all the things that we look for, big markets where they’re the leader, business model
0:00:25 that was exceptional at scale, long room to run, so that’s a very painful one. The benefit of a
0:00:29 single trigger puller model as opposed to committee decision making is it’s the ultimate measure of
0:00:35 conviction. So if that individual has conviction and gets feedback from the partnership and maybe
0:00:39 the feedback is constructive or negative and still wants to make the investment, that’s conviction.
0:00:46 Today, we’re replaying a conversation from 20BC with Harry Stebbings featuring A16Z general partner
0:00:50 David George from our growth team. David shares how he thinks about breakout growth investing,
0:00:56 why edge comes from non-consensive views on market size, how to underwrite upside in competitive markets,
0:01:01 and what separates pull companies from push companies. He also dives into unit economics,
0:01:05 deciding when to double down, and how single trigger decision making shapes investment conviction.
0:01:11 They round out the conversation with SPACs, the rise of crossover investors, and how David manages
0:01:14 pressure and competition over the long arc of an investing career.
0:01:21 Welcome back to 20BC with me, Harry Stebbings, and what an episode we have in store for you
0:01:24 today. I just love doing this one. It’s one where the chat really completely went off-piste,
0:01:28 and we didn’t stick to the schedule at all, but always a sign of a great conversation. So I’m
0:01:32 thrilled to welcome David George, general partner at Andreessen Horrors, where he leads their growth
0:01:37 investing practice. Since joining in 2019, David has invested in the likes of Clubhouse,
0:01:44 Coinbase, Databricks, Figma, Instacart, Robinhood, and TripActions, to name a few. David also sits on the board
0:01:49 of Current, Greenlight, and WorkRise. And prior to Andreessen, David spent seven years growth
0:01:55 investing at General Atlantic, where he invested in the likes of Airbnb, CrowdStrike, Opendoor, Slack,
0:01:59 and Uber. Again, just naming a few. I’d also want to say a huge thank you to Ariel at TripActions,
0:02:03 and Ali at Databricks in particular. Some amazing questions and suggestions from them,
0:02:08 and I so appreciated that. But without further ado, I’m now so excited to hand over to David George,
0:02:10 general partner at Andreessen Horrors.
0:02:14 Three, two, one, zero.
0:02:18 You have now arrived at your destination.
0:02:23 David, it’s such a joy to have you on the show today, my friend. I do want to start by saying a
0:02:26 huge thank you to Angela Strange on your team and Ali at Databricks for some brilliant
0:02:29 questions and suggestions, but thank you so much for joining me today, David.
0:02:33 Hey, thanks for having me, Harry. I’ve listened to Pod a bunch and love what you’ve done with it.
0:02:37 Well, thank you so much. I still can’t believe I actually get paid to talk to people like you,
0:02:41 so it’s a pretty crazy life. But I do want to start with some context. So tell me,
0:02:45 how did you make your way into the world of venture and come to be leading Andreessen’s growth
0:02:45 fund today?
0:02:50 Yeah. So look, I grew up in Kentucky, very far away from the world of finance and technology.
0:02:55 I was very fortunate. I had an awesome upbringing. My parents, I had an older brother. Went to college
0:03:00 at Notre Dame thinking I was going to be a lawyer. Thankfully, I went into the finance industry out of
0:03:05 school instead. Eventually, I moved to San Francisco in 2008, where I started to first encounter the world
0:03:10 of tech. And I joined General Atlantic about 10 years ago. At GA, I had the chance to invest in
0:03:15 some amazing companies. Spent about seven years there. Companies like CrowdStrike, Uber, Airbnb,
0:03:20 Opendoor, Slack, and then some others that are a little bit lesser known, but really awesome
0:03:25 companies like Benavity and Seismic. I came over to A16Z to start and run our new growth fund about
0:03:29 two and a half years ago. Initially got to know some of the folks at the firm just from some
0:03:33 overlapping investments that we had. So I think I knew Alex Rampell the best because we’re an open
0:03:39 door. And fast forward to now, we’re investing, had the chance to build a great team inside the firm
0:03:42 and work with some awesome founders and companies here as well.
0:03:46 I mean, it’s been an incredible time since joining Andreessen. Do you have to touch on the GA time
0:03:51 there? Because GA is such a prominent kind of figure in the industry, but it’s also a very different one.
0:03:56 So I have to ask, what were your biggest takeaways from your time with GA and how do you think it
0:03:57 impacted your mentality?
0:04:02 Yeah, look, GA is an amazing place. I’m really grateful to the team there. One of the foundational
0:04:06 frameworks that I developed coming out of it was what makes a breakout or successful growth investment
0:04:12 or sort of pattern recognition of what I look for. In almost all cases for me, that has come down to
0:04:19 a great founder and then a theory on busting through consensus view on total addressable market or
0:04:24 TAM. The consequence of that is a company that grows faster, you know, faster and or longer than
0:04:29 expected. So, you know, take my time here, take Roblox. The prevailing view when we invested was,
0:04:34 hey, it’s just a kid’s game. Well, you know, we felt that they had a shot and still do at being
0:04:38 something much bigger, a co-experienced platform, something that’s much broader than games,
0:04:39 much bigger than kids.
0:04:45 One counterintuitive observation from my time at GA and my pattern recognition coming out of it is,
0:04:50 you know, exceptional business models are just table stakes in growth investing. They’re not
0:04:54 actually, in my experience, what gives you edge in making great growth investments. So, you know,
0:04:59 we don’t take risk on investing in anything but high quality business models. But in my opinion,
0:05:03 this is not where you generate outsized returns. You can make mistakes here, but it rarely surprises
0:05:09 to the upside. So despite that, I feel like it’s where 90% of growth investors spend 90% of their time.
0:05:14 So, you know, coming back to the TAM point, total addressable market point, I can give you a couple
0:05:18 more examples on, you know, forming non-consensus views and things that made successful investments
0:05:24 for me. One of the flavors of this is the consensus view of total addressable market lags what’s actually
0:05:29 happening in the market. You know, when I was at GA, the consensus defined the market wrong at Uptain
0:05:35 Emmits. There would be way more applications than historically. And, you know, the view of the software
0:05:41 to support that just lag. So you could see it actually by looking at individual forward thinking
0:05:46 companies, but not from looking at market research reports. You know, one of the more recent examples
0:05:52 is Figma, which were investors in from A16Z. The simplistic way to look at their market is software
0:05:57 for designers. But the historical definition of design and designers is actually pretty dated.
0:06:03 Our view was that all front end engineers in the future will engage in design. And this is 10x plus
0:06:07 bigger in terms of market opportunity than just defining what they do in the design space. So,
0:06:13 you know, in both cases, it was a refined view of the addressable market that led to a conclusion
0:06:17 that in the future that that will be much bigger than folks recognize today.
0:06:22 I have to unpack a couple of elements here before we move on. I just want to dive in and touch base
0:06:26 here. It’s like you mentioned the element on business model. And I do want to touch on that because,
0:06:31 you know, when you look at some companies, say a DoorDash of the world, it takes a while for the beauty
0:06:38 mature into what it is. So how do you think about having the mental plasticity to see what the
0:06:43 business model can be versus what it is today when investing in growth?
0:06:49 Yeah, look, DoorDash is a great example of this. You just led me right into a discussion of mistakes
0:06:54 that I’ve made in the past, which could be like a 90 minute VC episode. But, you know, DoorDash is a
0:06:58 great example of this. I missed a lot in DoorDash, not just the unit economics, you know, the power of the
0:07:02 market size, the localized network effects. But I would say the big piece on the unit economics for
0:07:08 DoorDash is you could see early signs of it in performance of really mature markets that they
0:07:14 were in. And you could see the localized network effects in action. So specifically in the South
0:07:19 Bay suburbs, in the Bay Area, unit economics were very good. And they ran some experiments at the
0:07:23 time that we were looking that demonstrated that they could actually get the unit economics much
0:07:30 higher. The power of their market position allowed them to maintain strong unit economics on the
0:07:34 restaurant side. And then they did some really innovative stuff, you know, which there were ideas
0:07:40 around this, but it was early to see it on building consumer stickiness like loyalty programming. So you
0:07:44 put all that together and at the growth stage, you could see this had the potential to have really
0:07:49 good unit economics, even though, you know, the trailing data around it didn’t show it.
0:07:54 You mentioned unit economics quite a lot there. My challenge is like, when do they become important?
0:07:57 I’m using this session as an advice and a learning moment for me, but it’s like, you know,
0:08:03 but at the early stage, sure, your tax may be super low, but you’ve got the most aligned customer
0:08:07 base that you’re marketing towards, and they will generally get a lot more expensive over time as
0:08:12 you saturate that audience. But then also brand and word of mouth can come into play and they can
0:08:18 reduce. So I guess my question is like, when do unit economics become central? And how central are
0:08:23 they? Yeah, look, at the growth stage, they’re very important. The thing that we look for in unit
0:08:29 economics is, you know, where are they now? And then as you scale up much larger, do you have a
0:08:35 theory on why they’re not going to get worse, and hopefully that they get better. And so they’re very
0:08:40 important at the growth stage. Again, though I go back to the point of like, what’s driven, you know,
0:08:46 outsized returns for me, the unit economics end up being sort of table stakes, right? Like you can get
0:08:51 it wrong to the downside. It’s very rare that the company ends up with, you know, unit economics that
0:08:57 are much greater than what you expected. It’s much more common that, hey, the growth of the company just
0:09:01 exceeded all expectations. So, you know, at growth stage, when we invest, we look very closely at them.
0:09:05 The challenge that I have, and sorry, we did have a schedule, I’m just completely, you know,
0:09:09 going off schedule. The challenge is like with the unit econ is like, when you have the proliferation of
0:09:14 capital that we have into the markets, and suddenly founders have these budgets, which are just eye
0:09:20 watering. Salone has raised a billion dollars, I mean, a billion dollar raise, like their need to be
0:09:26 worried about CAC optimization or unit economic efficiency. It’s just less because they’ve got a
0:09:31 billion dollars in some cases. How do you think about and advise founders on how close they should pay
0:09:35 attention to unit econ when they have this proliferation and capital support?
0:09:41 Yeah, look, I think it’s a great question. And it’s a function of market conditions,
0:09:45 competitive environment. So, you know, there are instances where I’ll tell founders that it would
0:09:50 make sense to relax their criteria and maybe spend a little bit more in the name of growth if it’s a
0:09:55 hyper-competitive market and it ends up being a super sticky customer base over time. But you mentioned
0:09:59 Salone as another company a little bit. They’re in an incredible market position. I think their business
0:10:05 model is fantastic. I would view their future as very elevated levels of high growth and
0:10:10 you know, there’s not some looming intense competitive threat that makes them think that
0:10:15 they should aggressively go burn a bunch of cash just to grow faster. In our universe, in each of
0:10:18 those sectors, that makes it sort of the right size for us.
0:10:23 I think one for me that I always find striking is that capital concentration on a per company basis.
0:10:28 How do you think about bluntly how to get as much cash into the winners as possible? And what does
0:10:34 that reinvestment decision making look like for like, do we really fucking double down? Or do we let the
0:10:37 capital markets support it and we play a nice role?
0:10:42 You know, we’ve invested multiple times in many of our companies. So Coinbase, we invested three times,
0:10:47 Roblox twice, Databricks three times, Stripe four times, TripActions four times. Every time we assess
0:10:51 one of those new investments, we do it with fresh eyes. And so we call it re-underwriting.
0:10:55 We mentioned the upside there and the multiple expectation or multiple desire. You know,
0:11:01 the bunting, the challenges, there’s so much cash. The prices are so high. It’s just much harder to do
0:11:05 those multiples with the entry prices that we’re paying. I had Layla from Capital G on the show.
0:11:12 She said the prices are 2x what they were a couple of years ago on average entry price for her. I’m
0:11:17 interested, like, how do you think about your own price sensitivity today, given where we are today?
0:11:23 Yeah, look, this is a fantastic question. I wrote a piece about this called When Entry Multiples Don’t
0:11:26 Matter. Talking a little bit, it touched on this and other things. I’ll just talk to you about our process
0:11:32 and then I can address the valuation points. So we first start, we assess the company, we assess the
0:11:38 market, we assess, you know, founder, all independent evaluation. And so if those check out, then we spend
0:11:44 a lot of time on valuation and scenarios and making sure that we see our way to target return. So the
0:11:47 best thing that we can do is invest in great companies that are growing very fast because those
0:11:51 afford you more degrees of freedom on valuation. And, you know, I talked about the upside scenarios,
0:11:56 like they’re the ones that are more likely to deliver upside scenarios. So one of the frameworks
0:12:01 that we use and talk about a lot, and it’s, you know, this is relevant for valuation because it speaks
0:12:07 to the flavor of companies that we tend to match make with is, you know, we look for what we call
0:12:12 Glengarry Glen Ross market structures. So, you know, the famous movie, this is like independent
0:12:16 evaluation. So what that means is there’s a scenario. Have you seen the movie?
0:12:19 I haven’t. So explain it for me.
0:12:24 Okay. All right. It’s sort of like a boiler room sales old school movie. So there’s a scene where
0:12:30 Alec Baldwin is presenting to his team their monthly sales competition. It’s his famous line where he
0:12:35 says, okay, here’s the prizes. First place gets a Cadillac. Second place gets a set of steak knives
0:12:42 and third place gets fired. And so we actually think most many or most tech markets play out in market
0:12:46 cap in a similar way where the leader captures the vast majority of the market cap creation.
0:12:50 You know, if you’re not the leader, it’s going to be a challenge situation. So we look for those kinds
0:12:55 of market structures. You know, this is very well known and well covered in, you know, consumer land
0:12:59 companies like Google and Facebook that have clear network effects. But surprisingly, you can see it
0:13:04 actually in a lot of industries that don’t have network effects, but play out in similar ways. So in
0:13:08 B2B, you know, Salesforce, Workday, ServiceNow, they command almost all the market cap in their
0:13:13 respective markets. So the way we approach the valuation question is, you know, if we can get
0:13:19 that point right and the company wants to work with us, you know, more often than not, we can reach an
0:13:23 agreement on valuation. Now, you know, the biggest point is, you know, in a market where valuations
0:13:28 are higher than they used to be, you have to think long term. So we think in five to seven year terms
0:13:34 and try not to worry if we’re off by a year or two on the valuation. Like that’s a risk that I’m willing
0:13:38 to take. If we underwrite something five years and it takes us seven years, I’m okay with that.
0:13:43 The last piece is just tech markets are bigger than ever and there’s going to be a lot of market
0:13:47 cap creation. And so if we’re long term oriented enough, you know, we should be okay. You know,
0:13:50 tech’s about a quarter of US market cap and that’s just going to grow fast.
0:13:54 Can I ask one? There’s always a case where everyone’s turned down a company based on price.
0:13:57 What company have you turned down based on price that keeps you up at night?
0:14:05 Oh my goodness. The most painful one is probably Qualtrics, which I mean, look, it’s killer founders
0:14:09 and yeah, I remain friends with the guys. We turned it down based on price when I was at GA.
0:14:15 They figured out a huge market hiding in plain sight, a sales model that totally worked, fast
0:14:20 product velocity, all the things that we look for, big markets where they’re the leader, business
0:14:24 model that was exceptional at scale, long room to run. So that’s a very painful one.
0:14:27 I do love Ryan. Just never played golf with him. He’s an absolute fiend.
0:14:31 I do have to ask, like, you know, you said there about kind of entry price no longer mattering
0:14:35 with that brilliantly kind of provocative title. I was taught, you know, I’m from the old school
0:14:41 of venture. Temporal diversification mattered too. And that was a core part of any portfolio
0:14:46 today with deployment cycles. It doesn’t seem to matter either. Do you think temporal diversification
0:14:50 matters today? Or do you think it’s about adjusting to the game on the field and being in the moment?
0:14:54 Look, I think it’s more about adjusting to the game on the field and being in the moment.
0:14:58 And then we don’t invest in hundreds of companies. And so our goal is not to be an index fund
0:15:03 of the overall tech market. Like we just need to continue to outperform and do our best. And if
0:15:08 we can see the path and get confident about the path to achieving our target returns, that’s
0:15:13 okay. Reserves are one way that you achieve temporal diversification. If you have more of
0:15:17 your fund in reserves, you know, that stretches the deployment cycle of your fund over, you know,
0:15:21 five years instead of two years or whatever the number is that naturally provides some temporal
0:15:26 diversification. I have to ask, man, we mentioned the price changes and the increasing price we’ve
0:15:32 seen over the last, especially a year, but last few years. You know, we’ve seen P hedge funds,
0:15:38 crossover funds. I mean, everyone and their mother investing in late stage and pre IPO. I’ve got to
0:15:43 ask, man, when you look at it, how do you think about this massive proliferation of capital at the late
0:15:50 stage, especially with players who seem to be playing a different game in terms of return expectations,
0:15:56 willingness to pay two X what we pay? How do you think about this new landscape and how you win in
0:16:00 it? Yeah, it’s like, it’s a great question. First, I think there’s a little bit of a misperception in
0:16:05 the market about some of those firms who have been more aggressive recently. Their returns are pretty
0:16:10 good. They’ve done a good job. I think a couple of things that we’ve done to adjust. So one diligence
0:16:17 processes and fundraisers, you know, they’ve gotten faster to put it lightly. What that causes is it makes
0:16:22 investors narrow the focus area of what they can cover in diligence. You have to have a prepared
0:16:26 mind coming into things and you have to be really smart about where you spend your time. So, you know,
0:16:31 we always focus on the three or four things. You know, I talked about business model being sort of a table
0:16:36 stakes exercise for us, you know, so that’s typically, you know, one, maybe two of those things. But, you know,
0:16:42 the real decision making process will come around that view of future growth. So we have to be prepared
0:16:48 to make those judgments faster and assess those questions quicker. It used to, I remember when I
0:16:52 started at GA, it would be like, okay, a company’s raising money and, you know, let’s take two months
0:16:57 and you turn over every single piece of minutia for a company. Like that’s, it’s probably more efficient
0:17:02 and better overall for the market that that’s not the way it’s done anymore because it’s just inefficient
0:17:07 all around. You know, on the competitive point, I think of us as playing the end game, like relative to
0:17:12 some of the newer players. So we move fast, we pay fair market prices, you know, we can write very
0:17:17 large checks and follow on into companies, you know, many times over the years. That’s, that’s all
0:17:21 what some of the newer players are known for. But because of the way that Mark and Ben have built the
0:17:28 firm, we can also do a lot to help founders as a scale. And that is relevant, whether the company is
0:17:34 at series A or the series D in the growth phase. So, you know, we tend to matchmake with the
0:17:38 companies who see us as being able to deliver more than just dollars.
0:17:42 Can I ask you, you mentioned Mark and Ben there. In terms of like investment decision making,
0:17:44 how does that look like for you?
0:17:49 Yeah, it’s a little more on the informal side. We have a single trigger puller model though. We have
0:17:52 discussions and deep, robust discussions about investment decisions, but it’s ultimately the
0:17:58 call of the GP who’s sponsoring the investment. I serve as a generalized specialist. I heard Paul
0:18:03 Enright use this term recently. It works for us. And what that means in this case is I sit
0:18:08 across all the industry groups. So, you know, we can measure the relative excitement of a B2B
0:18:13 software company versus a bio company or crypto opportunity or consumer. And this is really
0:18:18 helpful in sort of measuring relative excitement and attractiveness. So the other piece on investment
0:18:22 decision making, and it goes back to the matchmaking point is, you know, we try and prioritize companies
0:18:26 where there’s still some degree of company building that takes place. So we can help companies given
0:18:31 what Mark and Ben have built. And a big part of our decision making process is we have the luxury of
0:18:37 partnering with our early stage GPs and deal partners across the firm. So we feel like we’ll
0:18:42 have unique insights into big trends or themes early from being a part of the early stage business.
0:18:45 You mentioned the single trigger element there. I’m really interested because, you know, at the end of
0:18:51 the day, you’ve just got to have the courage to pull the trigger and go. And it’s a big courageous
0:18:58 moment to write that check and put your name to it. I guess, how did you approach that? How did you
0:19:02 mentally get over that with your first? And would you have any advice? I remember with mine,
0:19:06 I was shitting myself and mine was for a million dollars, not for a hundred billion dollars.
0:19:09 Well, it’s better to be honest. I mean,
0:19:13 Yeah, look, it’s better to be honest, man. Look, I totally agree. And like the first time I did that,
0:19:17 I still remember, I mean, it’s not, it was not a single, single trigger puller model at GA,
0:19:21 but I remember my first investment there and I was panicked. Like, am I making the right decision
0:19:25 here? I don’t know. I’ve grown to get comfortable with it over time. I think the benefit
0:19:29 of the single trigger, and this may be obvious, but the benefit of the single trigger puller model
0:19:34 as opposed to committee decision-making is it’s the ultimate measure of conviction. So if that
0:19:39 individual has conviction and gets feedback from the partnership, and maybe the feedback is
0:19:44 constructive or negative and still wants to make the investment, that’s conviction, right? And if
0:19:48 there’s a committee model, sometimes, you know, one of the negative things that happens is they’re
0:19:52 selling. And so, because often a committee will look to the person and try and measure or gauge
0:19:58 conviction. And so they’re selling. And so my experience, I think it leads to less intellectually
0:20:03 honest conversations and open conversations because, you know, there’s some element of convincing
0:20:09 that needs to happen as opposed to personal conviction building by challenging and, you know,
0:20:12 asking questions and exposing concerns and getting feedback on those.
0:20:16 This is a tough one. But do you think there is internal politics? I mean, there is at most
0:20:19 firms. But do you think there is internal politics in Andreessen? And do you think there’s anything
0:20:23 that you or one can do to maybe prevent or minimize them?
0:20:28 It’s going to sound like I’m bullshitting because it’s like the politics are pretty… Look,
0:20:33 if you’re a single trigger puller model, lots of the politics come from shit like that.
0:20:37 Trying to convince people, trying to advocate your own ideas, trying to shit on other people’s
0:20:41 ideas because, you know, maybe there’s a deal that gets done instead of yours.
0:20:44 Why would that introduce politics if it’s single trigger? Because it’s like,
0:20:48 I’d like this deal and I have conviction. So see you later. Rather than like,
0:20:52 I have to get you on side. I’ll vote for your deal if you vote for my deal.
0:20:55 Yeah, no, that’s what I’m saying. I’m saying the same thing. I’m saying the single trigger
0:20:57 puller model eliminates the politics, right?
0:21:01 Right. Yeah. And then the other thing that causes politics internally is like promotions
0:21:06 path for people. And I think part of the benefit of the way that just the background
0:21:11 of most of my partners being founders of companies is they’ve actually run companies.
0:21:14 Like this is a typically a problem with investment firms. It’s like superstar investors end up running
0:21:18 the firm. Whereas, you know, we, our firm is run by people who have run companies.
0:21:22 Yeah, I do totally agree with you and see that. And one of many reasons I work alone. Well,
0:21:25 that and you know, no one likes me. But other than that, it’s totally cool.
0:21:27 Everybody loves you, man.
0:21:30 I was fishing. I total fishing.
0:21:32 I stepped right into it.
0:21:35 Anyway, I do want to ask as well, like final couple, but it’s like, you know,
0:21:40 everyone’s got a spat now. I’ve been tempted by 20 BC SPAC. I think that’s so cool. But anyway,
0:21:46 everyone’s got a SPAC. How do you think about like the rise of SPACs, the SPAC market, whether
0:21:48 it’s good, bad, an opportunity?
0:21:56 Look, I think SPACs are great for the company side. They provide another form of liquidity and
0:22:00 getting public for companies. I counsel, I’ve talked to some of my company’s founders about,
0:22:04 you know, going down the SPAC route. And the thing that I say to them always is it’s a totally fine
0:22:08 path to go down as long as it’s not seen as a milestone and you’re just ready to be a public
0:22:12 company and, you know, after you’re done with it. So it’s good from the company side. I think
0:22:19 on the issuer side, it’s valuable to the market if there’s some uniqueness that comes along with it.
0:22:23 So, you know, if there’s a value proposition that’s unique, great. It will be appealing to
0:22:28 the right founders. If it’s just a financial vehicle, I think the proliferation of so many
0:22:32 SPACs will make it a little more challenging to generate really attractive returns in that market.
0:22:37 Final one, you mentioned some of your companies. I spoke to some of your companies before the show
0:22:44 and one, Ali, who I love, by the way. But Ali said to me, you got to ask this guy. He’s been
0:22:50 super successful and he’s achieved so much. What drives you today? And how do you think about your
0:22:51 relationship with money?
0:22:56 On a plane last night and I was texting with Ali about something similar. It’s not money is not what
0:22:59 drives me. I love learning new things every day. I get the chance to work with the best founders in
0:23:03 the world, building awesome companies just like you. You know, I love my job. I work all the time.
0:23:09 I do have a deep fear personally and paranoia of failure and I’m extremely competitive. And so
0:23:16 returns and generating returns are one element of the scoreboard for me. Like, and I love that
0:23:20 competition and I want to be the best. There’s a mission, you know, mission side of our business
0:23:24 too, which is generating great returns for our limited partners. So these, you know, universities,
0:23:28 nonprofits, it’s the same as you. They’ve entrusted us with their investments and I want to make sure
0:23:33 I work as hard as I can to give them the best outcomes in the market so that they can use those
0:23:34 dollars to good calls.
0:23:39 How do you prevent that fear paralyzing you? Because I too, I have this kind of relationship
0:23:39 with fear.
0:23:45 The way I channel my fear, I channel it into working harder. So if I have a fear at any moment
0:23:50 that I, you know, I’m not doing the right things or like the way I try and compensate for that is
0:23:54 I dive in, I work harder, I do something different, I reach in. And the beauty of our business,
0:23:57 you know, same as yours is there’s an endless amount of work that you can do. You can always
0:24:01 get smarter about a company. You can always get smarter about a trend or a theme. You can always
0:24:04 try and form a differentiated point of view on something. You can reach out to people who you
0:24:10 learned from. There’s just an endless way that you can, you know, expend work time. And so when I feel
0:24:15 like I’m not doing well or failing, I tend to, you know, go deeper into that stuff.
0:24:19 I do want to move into my favorite though, David, which is a quick fire round. So I say a short
0:24:22 statement and then you give me your immediate thoughts. Does that sound okay?
0:24:23 Let’s do it.
0:24:25 Okay. So what’s the favorite book and why, David?
0:24:28 Okay. I’m going to give you two. One is like a business book that I think is the most important
0:24:33 one, which is for the business that I’m in, which is Increasing Returns to Scale by Brian Arthur.
0:24:36 The second one is my fun favorite book is Count of Monte Cristo.
0:24:39 Tell me, have you read Seven Powers by Hamilton Helmer?
0:24:42 I have not, but it is downloaded on my Kindle.
0:24:49 Honestly, what we do, it is amazing. Tell me, what lie do rich people tell themselves most of?
0:24:54 I think it’s overemphasizing their own work and underplaying the role of luck and some
0:24:58 circumstances and other people who contribute to their success. It’s like form of like just world
0:24:58 fallacy.
0:25:01 What is the single biggest challenge of your role with Andreessen today?
0:25:06 It’s constantly evolving to changes in the competitive market. So I mentioned this earlier,
0:25:10 Mark and Ben turned the industry on its head 12 years ago and people are constantly trying to
0:25:14 figure out the next thing to turn on its head. So our strategy and how we work with companies
0:25:18 always has to change with that. What do you know now that you wish you’d known when you started at
0:25:20 Andreessen a couple of years ago?
0:25:24 I mean, Andreessen is still pretty fresh for me. I wish I had known earlier in my career and growth
0:25:30 to spend more time thinking about what can go right as opposed to modeling or trying to predict
0:25:31 what may go wrong.
0:25:35 This is a tough one. What advice do you often give that you find hard to follow yourself?
0:25:39 It goes a little bit back to our fear point, but there are going to be ups and downs over the life
0:25:43 of an investment in a partnership with a founder. Don’t get too high from the highs. Don’t get too
0:25:47 low from the lows. It’s one thing on the investing side. And the same could be said for building a
0:25:51 company, but probably times a hundred in magnitude.
0:25:55 Final one, David. What’s the most recent publicly announced investment? And why did you say yes and
0:25:56 get so excited?
0:26:01 So it was Loom. So the frameworks that I love is I try and invest in companies that are pull
0:26:05 companies, not push companies. What that means is the market is pulling their product from them as
0:26:10 opposed to they’re trying to push their product out to the market. So they’re an asynchronous video
0:26:15 company. It’s viral. It’s spreading organically. It’s growing 10x year over year at scale. You know,
0:26:20 they’re building enterprise top-down sales onto bottom-up traction and run by founders who are
0:26:24 passionate. They’re domain experts. They know the product. They’re building a brand and they’re
0:26:24 building a great business.
0:26:30 I’ve got to ask this one final question. With pull and push businesses, often it’s pull in the
0:26:35 beginning and then it goes to push. Do you get worried when it goes to push? And how do you
0:26:37 determine how long you have to run on the pull?
0:26:43 Yeah, this goes into the market work that we do. I think you can form a pretty sophisticated point of
0:26:49 view on this. Like one, if it’s something that’s very unique and they are the market leader, the pull
0:26:55 will probably last much longer. Secondly, as part of our diligence, like we talk to non-customers
0:26:59 probably more than we talk to customers of companies. And you can get a pretty good sense
0:27:03 for how they’re going to behave in the future based on those conversations to try and predict
0:27:07 it. And then back to my table stakes, business model comment, you know, you just got to make
0:27:10 sure that as pushing that comes along with the pulling, that the economics of that are going to
0:27:15 make sense. David, listen, I’ve absolutely loved this discussion. Thank you so much for putting up
0:27:19 with my completely wayward questions, but it was amazing and I so appreciate it.
0:27:20 Thanks for having me, man.
0:27:25 I mean, if you couldn’t tell, I absolutely love that discussion. I want to say a huge
0:27:29 thank you to David for being so patient with my completely off schedule questions. He was
0:27:33 just fantastic there. And as I said, just loved it. Shows like that made me really appreciate
0:27:38 what I do. As always, I so, so appreciate your support and I can’t wait to bring you a fantastic
0:27:39 episode this coming Thursday.
0:27:47 Thanks for listening to this episode of the A16Z podcast. If you liked this episode, be sure to
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