00:00:00 · Erik Torenberg, David Senra
[00:00:00] S0: Scott Kupor was a16z's first employee. Sixteen years later, he left venture capital to help rethink how the federal government hires, rewards, and retains talent. In this episode, Founders host David Senra sits down with Scott to trace both sides of that that story. Scott takes us back to 2008 when Marc Andreessen and Ben Horowitz were starting a venture firm in the middle of the global financial crisis. His initial mandate was simple. They would invest, and Scott would figure out everything else required to build the firm. That meant everything from buying office furniture and making capital calls from his personal Gmail account to building the services organization that would become a defining part of a16z. Scott explains how Michael Ovitz and CAA influenced that model, why a16z deliberately broke with venture capital's aversion to marketing, and how early investments like Skype help accelerate the firm's growth. Today, Scott is applying a similar organizational lens to a very different institution, the federal government. As director of the Office of Personnel Management, he's focused on bringing in younger technical talent, rewarding high performers, removing tenure based barriers to advancement, and giving people more room to take what he calls permission risk. Because for Scott, whether you're building a venture firm or reforming government, the underlying question is surprisingly similar. Do you have the right people, the right objectives, and the right incentives to get them there? [00:01:25] S1: Tell me what was like starting a16z with Ben and Marc.
00:01:29 · Scott Kupor
[00:01:29] S2: It was interesting. So let me give you the backstory if I can. So we don't... We sold our last company to, Hewlett Packard. Right? So we sold it in 2007, and a bunch of us had basically indentured servitude to HP for, you know, twelve to eighteen months. And then the summer of 'eight... And remind you, right, you know your history, right? So in March of 'eight, basically, Bear Stearns disappears, right? So it's summer of 'eight, and Marc and Ben are like, Yeah, we're going to do this. They've doing angel investing for a long time. We threw our money, and they said, Look, it'd be a lot more fun if we institutionalized this and went out and raised money. We were literally having this conversation in summer of 'eight, and then September of 'eight, of course, Lehman goes bankrupt overnight, and so the world seems to be coming to an end. So I go home one day to my wife. I'm like, Good news. I'm going to quit my job at HP, which is probably the most stable job you have, and join these two guys. We were actually living in North Carolina at the time because we had a quieter business out there, and the Ben and Marc had asked me to go move out to run it, so I was already... I was not in California even anymore. It took me a long time. I hemmed it hot on it, and these guys joke to this day, which I don't know if it's true or they just like to razz me, is had I agreed to actually join them sooner that I would have been, you know, it would have been Andreessen Kupor Horowitz instead of Andreessen Horowitz. Now I don't know if that's true or not, but... So I... My official title was first employee, not actually co founder of the firm, but they started. So I finally, kind of Christmas... I still have these emails. I look back at them. Marc and Ben were like, Look, you've to get off the dime. You've to figure out what you're doing. And I finally said, Okay, I'm going go do this. But it took me a long time to figure it out. What was the job description?
00:03:00 · David Senra
[00:03:00] S1: Where did say, There was
00:03:01 · Scott Kupor
[00:03:01] S2: no job description. Part of the problem was that... Yeah. Was like, what are you doing? I was like, had no idea. So this was basically... So remember, it was just the two of them, and the job description was actually... Marc and Ben said, look. We're gonna invest, and you need to figure out everything else we needed to build a firm. And I didn't know what that was. So in the early days, it was literally like going to Costco to get... Buy furniture and make sure we had food in the office, and then, you know, doing things like opening bank accounts. And then we closed the first fund, and, the way the funds work is... Or you may know this, but for your listeners, is people... The investors sign up for what's called a commitment. They say, great. Like, I'm gonna commit $10,000,000 of a lighter fund, and then we call the capital as we go. So it's literally called a capital call. It's what you do when you decide to invest in a company, and you actually need the money so you can make the investment. So my very first, like, day on the job, they're like, great. We made an investment in this company. Can you please call Capital from our LPs to get the money? So I didn't even have an email yet, so I used my personal Gmail. So I send out this notice to, like, 50 different LPs. I'm like, great news. Like, wire me a million dollars, basically, because we need money for this thing. And I immediately get an email back from one of our LPs who I won't name, who's like, who the fuck are you? Why are you sending me this email? And then he s... He calls Marc and Ben. He's like, somebody's impersonating you guys. Like, somebody's literally trying to shake me down for money. So, you know, I finally realized I probably should actually get an a 16 z domain and set that up. So that was kind of the... That was the, impetus I needed to actually get an a16z domain to do stuff. But that's what it was. It was just like we were figuring out as we went. And these guys obviously, look, knew what they were doing because they were investing, and they knew what their primary job was. For me, it was... You know, the whole goal was like, how do we actually create a firm? And so, most of my initial days were hiring people, basically.
00:04:41 · Scott Kupor, David Senra
So, you know, basic stuff, like we had to hire finance people, for example, so that, like, I wasn't doing stupid things like capital calls for people from my Gmail account. But then we always had this theory, right, which has panned out, which was, how do we build a services component to the business, right? So, how do we basically create a system where we can take everything that, like, an entrepreneur might need and develop kind of concepts of, like, networks and relationships around that? So, talent networks, you know, business development networks, and so a lot of the early days was hiring people who were domain experts in those areas so that we could actually start to build this team, and, you know, we went from three of us to probably close to 100 in the first year, and today I think we have like 700 people or something in the firm, so it's been a... It's evolved over time for sure. [00:05:22] S1: Was Michael Ovitz around a16z at this time?
00:05:25 · Scott Kupor
[00:05:25] S2: He was, yeah. So Michael had been our board actually at Loud Cloud and AdsWizz, so that's how, obviously, Marc and Ben knew him, but that's also how I got to know him. And, he was very, very influential, as you probably know, and I'm sure Marc told the story just about the founding of the firm. And so he was very helpful, so I would call on him a lot and be like, Look, this is what we're thinking about doing, and he would kind of recount to me how they did things at CAA, but essentially what they did, which is what kind of, you know, a lot of what CAA was built on, was kind of disaggregate the job of what back then was the agent. Right? And then we basically did the same thing for what was the general partner job. Right? So in the old days, and we actually pitched this in our first LP meeting, we were basically trying to institutionalize John Doerr. And so for your listeners who may not remember John Doerr, he was, you know, one of the very, very famous founders of Kleiner Perkins. And you go to John, and he knew every salesperson, he knew every CFO, he knew every political stuff. So John was like this ultimate uber connector for entrepreneurs, and our basic idea was, look, could we basically institutionalize that and not have every GP have to learn all those things, but could we basically effectively disaggregate that from the GP job and hire professionals who could do talent networks, who could do political networks, who could do sales and marketing, all the other things that ultimately came to be the platform for a16z.