00:16:07 · David Senra, Scott Kupor
[00:16:07] S1: RIP good good times? [00:16:08] S2: RIP good times. Right? It's literally like the world's coming to an end. We're all gonna die. Sounds a little bit like today, actually. One will ever raise any money, like, all your money under under your mattress. And so, like, we were this shiny gold, you know, like, object in 2009 when everyone else was hunkered down and worried about their portfolio companies. So we had this enormous advantage, which is we put a shingle out and we say, Hey, like, we're open for business. And every other venture firm, and rightly so, I understand it. Like, they had these enormous amount of portfolio companies that they were very worried about whether they would survive or not. So so much of, like, all that early momentum accrued to our benefit, which enabled us then to go raise the second fund, which gave us the funding to build out the services strategy, and that really kinda compounded in a way that I I don't think we expected. Now Marc and Ben may tell the story differently, which is they always knew they always knew it would be a success. And and I'm certain, I believe that, right? I mean, guys are
00:16:56 · David Senra, Scott Kupor
[00:16:56] S1: entrepreneurs Obviously, for entrepreneurs are being self confident, and they don't wake up thinking they're going to lose, but they're always surprised. There's no fucking way, if you build something that they're confident they're going to succeed, but they can never predict the degree to which they do succeed. It's funny that you say that they might tell the story differently, because one thing I love talking about Marc, and it's obvious if you watched the episode of him and I did together, is the amount of business history that's in that guy's head. [00:17:21] S2: It's a wiggle. [00:17:21] S1: It's like I'm just constantly prompting, and it's like, I don't tell people, you know this, we don't know [00:17:25] S2: what we're [00:17:25] S1: gonna talk about before we talk about this, not a list of questions. I surely didn't say anything to him, other than we're both psychopathically obsessed with business history, entrepreneurs, all that sort stuff, impossible not to have an interesting conversation. But I'm like, Damn it, I should get Marc on it. I want him to... Instead of telling the history of other businesses, I should get the history of a16z from him, like, why you're speaking.
00:17:42 · Scott Kupor
[00:17:42] S2: It's amazing. And look, as you know, look, the guy is encyclopedic on so many things, but that's the other thing, by the way, that he and Ben both were really, really smart about, which was... And and I I know he talked about this on your show, but just double down on it. This concept of marketing generally in the venture business. Right? So it was it was considered verboten to market in the venture capital business. I don't know why that was, and it was... I don't know. Was probably just, I think it's mostly historical reason, which was you didn't need to market because there was... In the old days, capital was scarce. Right? So the source... The derivation of power for venture capital firms in late sixties, early seventies, until probably close to 2 thousands was money was scarce. The VCs had the money. And so, therefore, if you'd look at the balance of power, the VCs were up here and the entrepreneurs were down here. And that was sufficient. Right? And and a lot of great firms, and many of which still exist today, were incredible in that era. Right? That's, you know, obviously, Sequoia, you know, has been and continues to be incredible. But all the existing firms that you see there at the top of the game, Sequoia, Accel, Greylock, even Benchmark, right, which was a spinout of Merrill Pickard, all these guys lived in that era, right, where nobody marketed, I believe, just in part because they didn't have to market. Like, you went to them because they had the money, you needed the money. That was what the marketing was. When we came along board, look, we didn't know anything, and we didn't know anybody. And so part of, like, what Marc and Ben rightly said was, just like we came out of the enterprise software business, and we know in the enterprise software business, just because you have a good product, nobody gives a shit if you don't actually tell them what it is. And so, they're like, Look, we got to go tell people who we are, what we stand for. And so, we did. We told the story, which is, Look, we're going to do things differently. We're going to build this whole services part of our business, and we're gonna market on that basis because what we didn't have to market on was we didn't have the, like, the long history of a track record in the business. Right?
00:19:24 · Scott Kupor, David Senra
So to this day, right, if you go to Sequoia, who's an amazing, you know, player in the space, you if you go to their conference rooms, you'll see Cisco in the... You know, a poster of Cisco and Apple and, you know, Google and all these other things. Like, we had none of that. Right? We had... Marc and Ben had done their own, you know, angel investing, and, of course, the two of them had had success as entrepreneurs, but, like, we couldn't compete against that. So, what they rightly did was they said, Look, if we can't compete on what people are competing on today, we have to change the rules of the road and go compete on something else. And so, they created this category was, okay, the new venture capital firm is going to be not just capital, it's but going be capital plus plus, right? It's going to be plus this whole network of people whose job it is to help the entrepreneur. It's in servicing the entrepreneur. That's exactly right. So that was a huge major, major difference that they did, which also played out really well. We got a lot of shit from all the other VCs on Sand Hill. They're like, look. It's, you know, for Bowton to market and all this other stuff. We would... I I remember because I was talking about all of our LPs every day, and they're like, oh, so and so, you know, we heard we heard this from, you know, one of your competitors, and it was always, look. These guys talk a big game, and they, you know, tell people stuff before they've done it. And we're like, you know, we're [00:20:31] S1: doing Sounds like an entrepreneur to me.
00:20:31 · David Senra, Scott Kupor
[00:20:31] S1: doing Sounds like an entrepreneur to me. [00:20:32] S2: Yeah. We're doing exactly what any entrepreneur would do, which is, like, we were trying to create a category. You have to tell the category. You have to actually tell your narrative. And and look, had to deliver on it at the end of the day, which we did. It was just such a unique way to approach the business, not just the foundations of the business model, but the idea that we were gonna actually create a marketing strategy around that that, enabled the firm to grow at a pace that I don't think anybody's ever anticipated. [00:20:54] S1: So it sounds like at the beginning you were much more operational. Yes. As your tenure continues, did you switch over to investing, you always were operations? How did
00:21:02 · Scott Kupor
[00:21:02] S2: I you did, yeah. So I remember when I first came, I was like, you know, what do you want me to And they're like, well, we're gonna invest, and you're gonna do everything else. And I have to admit, like, you know, my ego for a little while was kinda hurt. I was like, okay. Well, why can't I why can't I also invest? Right? What I came to realize, particularly what they were... At the time they were doing early stage investing was, I'm not a deep technologist like these guys are, and so much of that game, I believe, is your ability to actually understand the technology at a way more granular level. So we sit in pitches all day long. And if you don't understand databases, for example, you can hear 10 pitches about database companies, and unless you have that depth of knowledge, the honest answer is you have no fucking clue, like, which one is the right one to invest in. And so, I ultimately assuaged my ego by saying, okay, look, like, that's not my strength, basically, and so I need to focus on the stuff that I think I can do. What happened over time was we changed the nature of the firm. This is another thing that I heard Ben talking about this on another podcast not too long ago, which was we started with a centralized firm, right? So everything reported to me, we grew that for about ten years till about 500 people or something. So all of those operating functions reported to me, even like the investors essentially reported to me. Marc Andreessen didn't really have any direct reports. What they realized over time, which was brilliant, was you can't scale a venture firm in that fashion. So there were two reasons. One was they said, look, like, we can't have 20 people sitting around when we're doing software in the world, and we've got crypto and health care and bio and, you know, American Dynamism and all these other things going on. You have to specialize. And so we started a process ten years into the firm where we basically decentralized the firm. And we said, look, like, we're going to have smaller investing teams that are going to be domain specific. So we're going to have a crypto fund that Chris Dixon runs, and we're going to have an American dynamism fund that David runs, and we're gonna have AI infrastructure that this guy, Martin, runs, and and on and on. And then we said, look.