The market is so big and it's growing so fast. Even companies that seem like they're competing end up in totally different places just because so much white space is being created. But they're all competing like totally different companies, and spaces are competing with the same talent. This is the first time I can remember where the actual talent competition is like way more fierce.
Martin, I'm really excited to be doing this here with you today. Thanks for making time for it.
And one of the things I was just chatting with you and laughing about on my way in, there were like many other podcasts going. There's like one before and after us, and I talked about this with Mark about how podcasts are like this future thing of media. And basically my question for you is sort of like, as somebody who's been on the inside of a firm that's dominated this, you do a lot of it yourself. Like, what's your experience about the importance of media for venture capital?
So, I think it's probably important to recognize that it's never been a thing, really. Like, if you look at a lot of historically good investors, they weren't very public. Like, think about the greats like Muriel Siebert, Ping Li, Doug Leone, Ben Horowitz, Mike Volpi, like they're just not very public. And so, historically, there's been no correlation between public or not.
I think a couple of things have changed in that time. One of them is the traditional media just turned on tech and it hates tech, right? And so in the past, you know, when I was a founder, to get a lukewarm to positive article was pretty straightforward. And the VCs would help with that. Like, you know, they would know a few reporters. It was very easy. But now it's actually very dangerous because like you go talk to them and like who knows what they're going to say. And so in a way, like if you want to help a portfolio, you do want to build a bit of a platform, you do have to go direct. So I think that's one thing that's changed.
The second thing is, so if you're traditionally an enterprise, take from the enterprise standpoint, like marketing has been something that you build brick by brick, right? And it's like you put content out there and people read it and like it's durable over time. And so you get this kind of compendium and you build a brand over time. And it feels we're in an era now where it just becomes so episodic that if you don't understand like the current zeitgeist, you just can't even get a voice at all. And by episodic, I mean like today GPT-5 launched, right? It was massive. Like if you didn't know that that was going to happen, you would have been drowned out. And if you did know, you could draft on it. And so it just feels like for some launches they go, they're a big deal and then they just disappear forever. So just so much of the nature of how we consume and think about content has changed.
And so I do think that venture capitalists, one, they need to, like if they have a message they want to get out, they kind of have to go direct because I mean if it's your own platform, it doesn't hate you. That's one. But then also to help your portfolio company, I think you need to build an in-house capability so like they can know how to most effectively message. And you can't really borrow a page from traditional marketing. And this is from someone that's come very much from the age of traditional marketing. It's just different.
Yeah. I mean, one of the things that I've been very surprised by is, you know, there's always room for like another podcast or something like that. Like people consume a lot of this stuff and I think people in tech find it sort of like a halfway between working and like watching Netflix where it's like I'm passively learning but it's like low stress and people would rather consume a good podcast than like a new Netflix show.
Yeah, for sure. And I'll also say like there's always a concern that there's too much content but that concern has been around forever. There's always been too many books to read. There's always been too much like, you know, TV to watch. There's always been too many web pages to read, etc. So it's always been an ordered list that starts with the most important and goes to infinity. So the question has always been, how do you be in like the top 10 or the top 20? And that changes all of the time. I do think you're right. I think people like to consume things that they can consume casually that is relevant to their interest. And so it's actually a great time now that you can actually be in that top 10 for the set of people that you care about.
Totally. So, I want to talk about your time at Andreessen and like what's evolved, which has obviously been like a lot. Can you sort of give the picture of what it was like when you joined?
When do you want to start? When I joined as a founder or when I actually joined as a GP?
Maybe when you joined as a GP, but then let's connect it back to when you...
Okay. So, when I joined, it was 2016. So, I've been here almost 10 years.
Isn't that wild? So I think I was the ninth general partner. I think the firm had 75 people. Not only were we all generalists, like, you know, you could do whatever you want. That was kind of part of the pitch. You know, you kind of do whatever you want, but like most of us had done some pretty serious time operating. Like my journey of my startup was about 10 years, let's call it.
And so many of us, like we were so tired of the space we came from, we did something totally different, you know. And so it was very, very different than that. So generalists, few people in the firm, and then actually the investing team alone, you really had GPs. And we were all the same, and then you had relatively junior partners that couldn't write checks that actually would bounce between the GPs, like so there's no alignment at all. So it was a very, very different structure.
So I guess one of the things that's interesting then over the evolution is that, you know, it started in this generalist version and now you're running a distinct platform and the way the firm is shaped is there's a ton of autonomy. You know, Mark was talking about this on the podcast where basically part of the idea was like we can recruit these amazing GPs because they get huge autonomy but we're going to have specialist, you know, sort of leaders for things. And so I guess what has that change meant for you? What's it been like to go from generalist to specialist, I guess?
Yeah. So I think it's important to maybe talk about why a change is necessary. So the historical context is interesting. I think there's two things that are important. One of them is the model of venture came out when like tech was like a non-market. It was like this total speculative stuff. And when you meant tech, you meant everything from like bio to software. Everybody was a generalist. Often it was just kind of, it wasn't like really a profession. It was like, you know, if you wanted to play money, you do it. And so, you know, they made decisions that made sense at the time, but that no longer makes sense. So, for example, it's a historical quirk why, you know, venture capital uses like the same model that you'd use for like a dentist office or something, like a partnership where everybody's equal, right? Like that makes sense for a small service organization, but you can never scale that. And so there's all these decisions that were made when the market was much smaller that as AUM grows and as the market grows, like there's many more companies you could deploy in, now you'd have to restructure the firm.
And so kind of our view is like we definitely want to scale, we definitely thought we had the best platform for founders. And also the markets were so large you didn't have to be a generalist. Like in 1980, if you did, you know, enterprise infrastructure software, how many companies could you invest in?
Two or something like this. Now, you know, someone can have an entire career investing in databases alone, right? And so, as the market grows, clearly you have to specialize. And so, when I joined, we were all generalists often that hated our own disciplines because, you know, we'd kind of been through it.
Can I ask you a question? Do you have to become a specialist as the market grows or as the firm grows? In other words, is the specialization choice downstream from growing the firm or do you think it's downstream from the market growing?
I think it's ultimately the function of the market and I'll describe why. So if you believe that the stuff is competitive, right, which I do, then you need to end up with a product that is competitive. And because it's adaptively competitive, like let's say you've got two firms that are competing, you're always going to be looking at like what the weakness of the other one is.
And so like for example, if a certain firm can't do seed, then of course, you know, you'll want to do seed. If they can't do large checks, they want to do large checks. What happens is everybody ends up getting as many products as they can so that they don't have any weaknesses, which will naturally happen. Now, you can only do that if the market is large enough. And so now you have a high AUM, right? You've got a lot of products. I've got a growth fund. I've got a seed fund. I've got a venture fund. And then you have to ask the question of how do you scale that? And like venture was not built to scale. And I think this is why we've seen the industry go this way, which is the market has increased a lot. You know, funds want to be competitive. In order to be competitive they have to find out kind of like what products that they offer that are actually competitive. This drives to higher AUM and as a result, you know, you have the specialization.
But there's also kind of this internal thing which is assuming that you want to scale AUM independent of the market, you have to solve this problem because you just can't scale like a consensus of generalists. Like it's just not something you can do.
Like the people issues on the inside. You just can't get through good decisions that way. You mean...
Well, I just think conflicts, well there's many, many issues, right? Like but one of them is you wouldn't ever have a structured approach to tackling a market. So you can never know that you've got good coverage because maybe everybody wakes up in the morning and decides they all like the same thing. And so I just don't think you can actually even from a numbers game scale it because you're not carving it up enough where you actually know that you got like a uniform focus. You don't know if you are hiring people that can cover certain areas. I actually just think even just from a strict number standpoint it doesn't work.
How valuable is the specialist thing when you're in these competitive situations? Like I imagine that a lot of the times when you're competing to win a deal, it's, you know, up against a firm or a partner that is like more or less generalist I would think. And I'm curious how that plays out sort of in the day-to-day.
So it's hard to answer how much it helps in a competitive situation. I think my experience is it's a lot more powerful that founders know that I've been a founder. And I know this is like such a cliche thing to say but I do feel that resonates much more than like I got a PhD in computer science or I know infrastructure, right?
The reality is most founders know a lot more than I do about whatever their area is even if I've got a high level thing. So I think in the competitive situation it's not hugely, but what I think it is very helpful for is like I am primarily a Series A investor and at Series A you have to have some thesis on how the tech hits product and how the product hits the market and unless you've been very close to both of these things that's a hard thing to do. Now if I was a growth investor it wouldn't matter. I just look at numbers but like for where I am I think you kind of have to understand.
Yeah. An interesting offshoot question from that is, you know, when we were talking earlier about how important is media, you're like it seems really important but, you know, there's a lot of great examples of investors who are all over media and social media, there's a bunch of examples of phenomenal investors who you never hear about if you go on the internet.
Yeah. I literally don't know if they're correlated at all. Most of the best investors I have known in the last 20 years had no media presence and they had no interest in it.
Totally. And then I'm wondering, I think, you know, around being a former founder, like as I'm just like thinking through names I can think of like a lot of examples of both. I definitely think founders appreciate it and I'm, you know, speaking as somebody who's a former founder I think that's a nice thing but like it also, I wonder if that's also an uncorrelated thing or do you think that has more of a correlation somehow?
Okay. So I'm just going to guess. I would guess that founders really appreciate reach and so I don't think a founder is like, 'Martin, I saw you on that podcast, you seem smart,' because everybody sounds pretty smart on podcasts and articulate and whatever. I do think a founder will be like, 'Hey, listen, like when you really believe in something, boy, like you talked a lot about it, you know, I will have the opportunity to talk about it, you know, you will help me kind of break through the bootstrap problem of zeitgeist understanding and brand.' And so I do think having a platform matters more and more and again a lot of this is just because the media has turned on tech so heavily.
Totally. Like there just aren't a lot of options.
Again, I mean, I think sometimes we in VC kind of overweight our importance in these things. Most companies with great brands did not do it through a VC firm.
Right. And like it's not like, you know, we somehow can single-handedly make great brands, but we are an accelerant. We are a platform. You know, and there is actually a lot of signaling as a result of alignment with a good firm. So, I think all of that matters.
Yeah, I do think that there's this question of like are the top VCs getting to do the great deals because they were the top VC or are they in some sense helping make them? And my own instinct is that for the most part it's the former and like, you know, companies are just almost exclusively made by the founders.
I totally agree 100%. I think the primary reason to create a distribution channel as a VC is so the portfolio can get out there and reach people. This is very hard what we're doing. Not because like whatever, Martin needs to be famous or Martin needs a brand, like that doesn't really matter. That never comes up in like a closing situation. I mean, I've done so many deals, right? That's never been a thing. But I do feel that a number of our companies, you know, once they're ready to launch, you know, we can provide a benefit. And so I think that is ultimately the benefit to the portfolio. But I've never seen a company win or lose by marketing. Right. So I just don't think that that's the high order.
Totally.
Okay, I want to jump over and talk about AI a little bit and in particular I'm interested in talking about like infrastructure because it's something I know relatively little about and so I want to learn from you about like first of all like what is it if you could put some like broad, you know, a broad fence around what the term is.
Yeah. So I do computer science infrastructure. So I'm like a computer science maximalist. I think it's like the meta discipline that you can solve other disciplines with, right? Like we solve grand unified field theory and physics goes away and then we just go on to biology type thing, right? So I do computer science, so infrastructure is the stuff used to build the apps. So you sell to technical buyers, people that use computer science to solve business problems. So like if the company sells to marketers, that's not infrastructure, but it is developers, database administrators, networking, that's infrastructure. And so like depending on how you count this is a multi-trillion dollar industry, but like the important thing is like the actual buying and use behavior is a very technical thing. So that's our definition of infrastructure.
Okay. So when you're looking...
Like compute, network, storage, databases, now models like that, dev tools, that type of stuff.
And it seems to me from, you know, just my viewpoint is that when these new paradigms come, cloud, mobile, you know, AI, it seems like that's like a very good moment for, you know, infrastructure because the board's shuffling a lot and new infrastructure is being laid. And so when you're looking at it, is there any broad way that you think about, you know, will this continue to exist over time? Will the models or, you know, whatever AWS in the past, will they do it? Will there be, you know, a need for somebody third party? Like how do you even start to think about what will play out over time just like at a structural level in infrastructure?
So can I say something that's probably, that may not be true but I feel very strongly? This is like a total inflammatory opinion that's self-serving that may not be true. So but it's an observation. Here's my observation. In software the true differentiation is technical, right? You know, now there's of course brand stuff and business stuff, but like, you know, if you have two products like it comes down to a technical problem and that almost always comes from the actual infrastructure that the software is built on, right? So if I built like two, let's say, dog walking apps, the fact that like it's got three or four features, like, you know, that's a very light differentiation, but like one being super fast, one being super slow, that's like an infrastructure thing.
So the companies that provide infrastructure, I think ultimately they are the source of value, they are the source of differentiation. And so while there are fewer infrastructure companies, my bet, and this is my inflammatory opinion, is that they just have better multiples and they're more durable because they service everything above it, but they're the thing that provides it. And actually Sarah Wang, who is an investor on the growth team, and I did a, you know, kind of relatively loosey-goosey public market analysis. We're like, what are the multiples of companies that are infrastructure versus apps? They just have higher multiples for this reason.
Does that make sense?
So my view is the infrastructure is where the value is. Every time you have a platform shift, you'll get a new set of infrastructure companies and then a bunch of apps get built on top of those, but like the value is going to accrue largely to the infrastructure because that's where the differentiation ends up happening. So you don't need to have a platform shift necessarily in order for you to have, you know, like important infrastructures with good multiples. Like I just think it's a durable part of any sort of application. But then the question is what happens when it matures like the clouds do and becomes an oligopoly and then no longer can private investors invest on it.
But every time we've seen that happen, you see a layer of infrastructure evolve on top of it.
So let me say it this way. So the way I view the world is you've got a bunch of app developers who are non-technical and they want to develop apps to solve all sorts of like consumer problems and business problems and whatever. So their goal is to build an app for a non-technical user. So why would they kind of invest heavily in technology? So they will pick up whatever is easiest to use technically.
And so, you know, the companies that fill that need are the ones that provide a lot of the value and the true differentiation.
Does this make sense? And so I always think that will always be something that you can make it faster, you can make it easier, you can make it more reliable. It'll always be kind of the bedrock that apps get built on and, you know, until like people stop wanting to produce apps, like you'll always need to produce it, and this is totally independent of like macro shifts or platform shifts.
How do you think about if or when the big players are going to decide to like enter those markets and like how that might impact things, you know, like in cloud, like whether or not AWS was going to offer something directly, now whether like, you know, OpenAI or Anthropic is going to offer something directly, or are you like, if I'm investing at the Series A or B, that's not that important, you just have to think about great entrepreneur, big market, and that's okay.
Yeah, I mean, I worked at VMware for four years. We were the big incumbent and so like we're always worried about the shadow that is cast by these incumbents but the reality is like it's not nearly as strong as everybody's worried about and it's very hard for these big companies to execute. And so, you know, re:Invent is like the AWS conference. And I swear being an infrastructure investor for so long, every time they have re:Invent, I have to play therapist to all the founders. They call them like, 'Oh, they're entering our market, they're entering our space, like they're doing all this competitive stuff, etc.' And I still today can't really think of a company that has put out of business even though it entered the market.
And the reality is they kind of compete with everybody. And so I mean if the market will bear an independent company, then that requires your own salesforce, your own focus on customers, your own support, your own technical differentiation, right? And like no big company can like build a small company and a big company because they have too many centralized services. And if the market won't bear an independent company, there's no company to build anyways. And so my view is as long as the market is continuing to expand, which software is continuing to expand, if you enter an area that's viable, as it expands you will fill that expanse. And if that doesn't work then the market is either not big enough or it isn't expanding fast enough. And I just feel like if you take the historical view this is the case.
I strongly agree with that.
When you think about like markets in AI right now and like how things are evolving, one of the things I thought was really interesting from talking to Mark was like basically as, you know, you all sort of ambitiously grow the firm, one of the biggest issues is companies running into each other in this like conflict dynamic. And obviously you're becoming prominent within an area to a degree where you're going to just, I would imagine, just companies as they grow, they grow into each other.
And what's your experience?
It's such a complicated problem because you can try and do everything right and still end up with conflict. So it's actually pretty good to categorize the conflicts. And so perhaps the most common conflict is two companies that you've invested in, one pivots into the other one.
Right. And this one it's basically impossible to do anything because companies have to figure out the right business. You're on the board or not and you don't control it and they do that one. So that one I feel like no investor can, you know, there's nothing an investor could do.
There's another more pernicious type of conflict of existing portfolio companies. I'll get to the net new companies soon, which we're seeing a lot now, which is imagine you have a tech revolution like AI and you have a set of old companies doing things the old way and you have a set of new companies doing the new thing. And the old company wants to pivot to using AI to do what they did before, but the reality is the old way is not the AI way, they're not AI native, right? And so now there's this question where it's like, well, when we invested in this company it was doing X, whatever it is, and now it wants to do X with AI, but the reality is the AI way of doing it is entirely different and they've got no chance.
And so then you have, you know, the dilemma of going to the founder and saying, 'Listen, we're investing in one of the new space, but it's AI and you're not AI.' Which of course that's not going to work. Or you just don't do the deal. I run into this one a lot. We've got a very large portfolio and to date we've just been like, 'Hey, listen, like we're going to back the portfolio companies that we have.' Actually just happened last week. The founder called me says, 'You can't invest in this. This is the space we're going into.' They haven't even done it yet and we try to do the right thing. So that one is I think the toughest one for all investors today just because like you never want to kind of bet against your own portfolio but like the reality of them being actually competitive is very low.
I think the most, and then there's one more which is kind of like this fund stage thing which is like we've got a growth fund, they do their own thing. We've got like an early stage, they do their own thing and like sometimes the communication isn't always perfect and you can kind of end up in like, you know, conflicts that way.
The one that we simply do not do is, you know, and I always have this talk track. You've probably heard me say it, and I borrow it from Chris Dixon, but it's very, very effective where you basically say for any company that I'm an investor in, if I'm talking to another company that looks similar, I'll ask the founder. I'm like, listen, is this your mortal enemy? You only get one. You don't get 21. You only get one, but if this is your mortal enemy, we'll do everything together to kill it, and we won't invest in that. But like, you have to name your mortal enemy, and you can't keep changing it. And I think at least that gives them the power to decide who it is, but not kind of hamstring investment efforts.
Totally. That makes sense. I mean, it's also funny because I think a lot of times, you know, two companies that look the same but are serving very different segments of the market, those are actually, they might sound like competitors, but they're actually never going to bump into each other versus two companies offering, you know, different products to the same customer are much more likely to bump into each other.
Well, in AI, it's even crazier than that, which is the market is so big and it's growing so fast, even companies that seem like they're competing end up in totally different places just because so much white space is being created, but they're all competing like totally different companies and spaces are competing for the same talent. So, the first time I can remember where the actual talent competition is like way more fierce than the market.
Well, actually what's funny about that is I've heard of people getting upset with their investors because they're like, I know this company has nothing to do with it, but we were interested in that candidate and one of your partners sold that candidate on one of their...
It's very real. And what's interesting is like you often don't even know, right? Like, you know, like they'll say, 'Oh, I'm talking to a healthcare company,' you know, or whatever.
And you're like, what's... I guess what's tough, but I guess is also like a blessing overall is I think there's a lot more good ideas than there are talented people to work on those ideas and I think one of the hardest things right now is like clustering talent densely enough behind a good idea.
Yeah, it's also this happens when there's these large infrastructure buildouts. This happened with the cloud too, which is there are these moments in time where to build the system you have to have experience with the system at scale.
