Why companies are becoming a series of loops | Anish Acharya (a16z)

00:51:07 · Anish Acharya, Lenny RachitskyPlay from here

[00:51:07] S1: So well said. Yeah, it's building as an activity rather than an outcome, right? [00:51:13] S0: Which I think a lot of people feel bad. "I shipped all these things, but no one's using it. I never use it." And I think that the key here is that's actually okay, that's totally fine. [00:51:21] S1: Oh, man. And it happens in every other domain. I make a DJ set and three people listen to it, and I listen to it 100 times, and it's very fulfilling. It doesn't matter. [00:51:31] S0: We're going to talk about your DJ stuff later. [00:51:31] S1: Okay. Okay. [00:51:35] S0: Okay, let's come back to consumer stuff. So, you focus on consumer at a16z. What's happening in consumer these days? What's the landscape? What are you excited about?

00:51:45 · Anish AcharyaPlay from here

[00:51:45] S1: So, I think there's three big areas. We're very early, as we kind of discussed. The labs have done a good job, but there aren't as many sort of independent mass market consumer products. Coding agents are awesome and I think a total lightning bolt. I think it's easy to say most people don't want to make code, but the big change in my thinking is that coding agents are a way to interact with the world generally. And you've seen a lot of this on X, people use Claude Code to edit videos, or Codex to create a game that they play with their kid on an airplane ride. It's sort of this general problem solving tool that consumers can use in very unique ways. And probably the best example company we've invested in is Wabi, where it's sort of a platform for many apps. People can create them, consume them, share them. So, coding agents is one big area I think that's important. Personal agents, we had this incredible moment around OpenClaw, but guess what? OpenClaw is a dev thing. And Hermes, of course, and Moltbook, all of that is now getting distilled into mass market consumer and enterprise agents that people understand, which is what we discussed previously. And then the last is, I'm going to call it entertainment, though that doesn't fully do it justice. I think that it's a lot of creative tools. Suno has done such an amazing job. It's companionship products, all that. That entire area is uncomfortable to talk about so I think it's under discussed, but there's some huge fast-growing products there. So, I think those are the three big areas that we're watching right now.

00:53:13 · Lenny Rachitsky, Anish AcharyaPlay from here

[00:53:13] S0: That's really interesting. Just thinking of these three buckets, coding agents, AI assistance, OpenClaw but much simpler and easier and more reliable. Sounds like basically the three described there that you're excited about are Instinct, Grok Bot, and ChatGPT Work. [00:53:30] S1: That's right. [00:53:31] S0: And then, Wabi I guess would fit in that first one. It's like a personal coding agent that can build whatever you want for you. [00:53:36] S1: Yes. Yeah, that's exactly right. Yeah. [00:53:38] S0: And then entertainment is the third bucket, like AI girlfriends and that kind of stuff. Yeah, those companies, it's crazy. You guys put out these market maps and five of them are these different companions. [00:53:47] S1: That's right. Though actually, to be accurate, it's more boyfriends than girlfriends actually. The majority of people using companion products are women that are in their 40s and 50s actually. [00:53:58] S0: Interesting. Okay, cool. So, those are the three areas you think the biggest opportunities will come from. And it's interesting that they connect to this idea of loop, I don't know, make me happier. Yeah, they're just kind of like the jobs to be done for humans. Make me happy, make me healthier, make me live longer, that kind of stuff. [00:54:18] S1: Yes. Yes. Give me a channel for my ambition, a channel for my fulfillment, and then a thing to do when I'm not doing everything else.

00:54:18 · Anish Acharya, Lenny RachitskyPlay from here

[00:54:18] S1: Yes. Yes. Give me a channel for my ambition, a channel for my fulfillment, and then a thing to do when I'm not doing everything else. [00:54:27] S0: That makes sense. Okay. The other question I have for you along these lines is there's so many companies and so many startups, so many products everyone's launching. The speed at which companies and products are shipped is 1,000X-ing. How do you think about durability and moats when you look at a startup? Because a lot of founders get that question. Everyone's getting that question. "How am I not a rapper?" What are signs that tell you this might be a durable thing?

00:54:54 · Anish AcharyaPlay from here

[00:54:54] S1: Well, I think there's two important ideas. One is something that Jesse from Decagon said, which I love, and that is that moats are most often discovered, not designed. I think it's really easy, I've done this as a founder, to get in your own head about, "Hey, I need a business plan that survives scrutiny from MBAs and VCs. I've got to have some really sophisticated idea of what my moat will be." And for that team, they just started shipping and it developed over time. Another great example of this is Cursor. They were criticized a lot for not having a moat, but it turned out that initially being a high NPS DAU product was really good. And over time they captured all the reasoning traces, they trained their own models, the Composer 1 2 models, and so on and so forth. We know how that story plays out. So moats can be discovered, they don't have to be designed is one. And then, I think the other is that we seem to have forgotten that the classic moats, none of the classic moats are based on how hard it is to make the software. We're not building self-driving cars, most of us aren't. So it's network effects, it's scaled advantages, it's brand effects, proprietary sort of data or what was historically called a cornered resource. Every moat from five years ago generally is still a good moat. We just need founders that have ambition in those directions. We need more multiplayer products, we need consumer social, we need products that get dramatically better the more you use them like Town, so on and so forth.

00:56:15 · Lenny Rachitsky, Anish AcharyaPlay from here

[00:56:15] S0: So, still read Hamilton Helmer and all that stuff still applies? [00:56:20] S1: Yes. Love his book. [00:56:22] S0: Yeah, he's been on the podcast. [00:56:23] S1: What? [00:56:23] S0: Yeah. [00:56:23] S1: I got to watch that. Yeah. [00:56:23] S0: It was recent. [00:56:25] S1: I feel like there's only five real business books in the world, every other one is in the business of selling business books and they're fake, and his is on my list of five. [00:56:34] S0: Are there any other on this list that come to mind real quick while we're on the topic? [00:56:37] S1: Oh, I mean, the two that are so obvious are High Output Management, which is like that is as good as it ever was. And then Ben's book. Hard Things is, it was the first emotionally honest book about business that was ever written, and that's why founders love it. That's why I love it, because you read it and you're like, "Wow, I'm not the only one that's anxious and feels like a failure, and can't tell anyone what I'm going through." Ben went through it too. [00:57:01] S0: Two of the most mentioned books on this podcast, turns out. [00:57:04] S1: I'm not surprised. [00:57:05] S0: So on this moat idea, so say you're a founder and you're putting a pitch together, trying to pitch you or other VCs, what's the best way to talk about a moat? Can you just say, "We're going to discover it. We're not sure. Nobody really knows yet"?