00:16:04 · Scott Kupor, David Senra
So we had these like very quick early wins, which basically, you know, potentially could have gone the other way, but they didn't, they went in our favor and they basically just dramatically accelerated the progress. And key to our business model, right, to do the Michael Ovitz business model, we had to have enough of a fee stream to be able to hire all these other non investing Yeah. People, And you know, Marc talked about this before, but like, you know, what Marc and Ben did, they were very magnanimous. The two of them didn't take, they took no salary right at the beginning of the company because they wanted to basically take, you know, as much of the fees as they could to give it to me to go hire other people, you know, to build this thing out. But, you know, we needed another, you know, in order to kind of continue that build out, the second fund gave us, you know, a, you know, stacking fee stream that allows us then to say, okay, now we can actually double down on the strategy. So it was one of these things where like, you know, we had early success. It was also 2009, right? So again, middle of the global financial crisis, you know, you know this, but like, you know, the Sequoia guys put out this, you know, RIP presentation. Have you seen it? [00:17:01] S0: Was RIP good times? RIP good
00:17:01 · David Senra, Scott Kupor
[00:17:01] S0: Was RIP good times? RIP good [00:17:03] S1: 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, now that I'm saying it. No one will ever raise any money, like put 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 have 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 kind of compounded in a way that I don't think we expected. Marc and Ben may tell the story differently, which is they always knew they always knew it would be a success. And I'm certain, I believe that, right? I mean, guys are
00:17:50 · David Senra, Scott Kupor
[00:17:50] S0: entrepreneurs Obviously for they're entrepreneurs make self confident and they don't wake up thinking they're gonna lose, but they're always surprised. There's no fucking way if you build something that they're confident they're gonna succeed, but they can never predict a degree to which they do succeed. It's funny that you say that they would tell us, they might tell the story differently because one thing I love talking about Marc and it's obvious on that, if you watched the episode of him and I did together, is the amount of business history that's in that guy's head. It's unbelievable. It's like, I just like constantly prompting. And it's like, I don't tell people, you know this, like, we don't know what we're gonna talk about before we talk about this [00:18:21] S1: on a [00:18:21] S0: list of questions. I surely didn't say anything to him other than we're both psychopathically obsessed with business history, entrepreneurs, all sorts of stuff. Impossible not to have an interesting conversation. But I'm like, damn it, I should get Marc on. I want him to, like, instead of telling the history of other businesses, I should get the history of A16Z from him. Like why you're speaking.
00:18:37 · Scott Kupor
[00:18:37] S1: It's amazing. Yeah. And look, as you know, look, the guy is encyclopedic on so many things, but that's the... And 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, it 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 like late seven... Know, late sixties, early seventies until, like, probably, like, close to 2 thousands was money was scarce. The VCs had the money. And so therefore, if you 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, like Sequoia, Excel, 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 like 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, right? 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 do things differently. We're going to build this whole services part of our business. And we're going to 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?
00:20:18 · Scott Kupor, David Senra
So to this day, right, if you go to Sequoia, who's an amazing, you know, player in the space, 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, but it's 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 [00:20:56] S0: service of the entrepreneur.
00:20:56 · David Senra, Scott Kupor
[00:20:56] S0: service of the entrepreneur. [00:20:57] S1: That's exactly right. And so that was a huge major, major difference, you know, that they did, which also played out really well. And we got a lot of shit from all the other VCs on Sand Hill. They're like, look at, you know, for boating to market and all this other stuff. We would, I remember, because I was talking to all of our LPs every day and they're like, oh, so and so, you know, 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 doing Sounds like an entrepreneur to me. 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. Look, we 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 foundations of the business model, but the idea that we were going to actually create a marketing strategy around that, that, you know, enabled, you know, the firm to kind of grow at a pace that I don't think anybody's ever anticipated. [00:21:48] S0: So it sounds like at the beginning you were much more operational. Yes. As your tenure continues, did you switch over to investing or you always were operations?