David Senra
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?
00:21:56 · Scott Kupor
[00:21:56] S1: How did I did, yeah. So I remember when I first came, I was like, you know, what do you want me to do? 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 kind of hurt. I was like, okay, well, why can't I also invest, right? When 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, 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, 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 like operating functions reported to me, 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 healthcare 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 gonna have smaller investing teams that are gonna be domain specific. So we're gonna have a crypto fund that Chris Dixon runs, and we're gonna have an American dynamism fund that David Ulevitch runs, and we're gonna have AI infrastructure that this guy Martin runs, and and on and on. And then we said, look, in order to do that right, the needs of the entrepreneurs are different.
00:23:43 · Scott Kupor
So all of these like ancillary operating services we built, they all also need to feather in into these different verticals that we can do the things that are appropriate for the entrepreneurs. So like what a gaming entrepreneur needs in terms of business development support is totally different than what a life sciences entrepreneur needs. And so we went through this process of basically, you know, disaggregating everything into these structures and we just kept a few things centralized that made sense like, so legal and finance, core compliance functions. Look, you don't necessarily want people doing those separately on their own. Let's keep those centralized, you know, investor relations, right, from an LPs perspective, their views look like, I want to interact with Andreessen Horowitz as a firm. I don't wanna have to like build completely independent relationships. So we kept keeping it centralized. And so what that did for me, which admittedly I will say, and you know, Marc and Ben know this, I fought initially because when you go from owning everything, right? You go from owning everything, you're like, wait a second, I've all of sudden feel like my domain got a lot smaller. In fact, actually, I heard him talk about this on a podcast. He said exactly what I felt, which is true is like, anytime you do a reorg in a company, you know, you always get a lot of hurt feelings, right? Because by definition, somebody in a reorg has fewer things than they used to have, basically, that's just the nature of it. And it took me a while before again, this was another one where my ego got hurt. Was like, wait a second, like I thought I was doing a pretty damn good job like managing these things. And Marc Andreessen to their credit, like look, we're not saying you're not doing a good job, we're saying like the needs of the business have changed, the needs of the business demand that we do this and so let's go find other ways in which you can add value to the business. And so that was kind of when I finally got an opportunity to start doing some investing and what I recognized again was, look, I can't do early stage tech investing because I'm just not a domain expert and so we started a later stage fund, we call it later stage venture for lack of a more creative word.