Even Harder Things with Ben Horowitz (Andreessen Horowitz) | Disrupt SF (Day 2)
12:20AM Sep 7, 2018
Let's just bring on our next guest. He really needs no introduction. I'm sure everyone here has heard of a16z, right? Yeah. Whoo! More excitement. Okay, cool. Well, then, let's bring him out from Andreessen Horowitz. Please welcome to the stage, Ben Horowitz, and your moderator, Matthew Panzarino.
Welcome Ben. Welcome. We've got a full room for you. It's only like 20% astroturfed.
All right. Let's see. Okay. So when is Andreessen Horowitz going to raise a mega fund?
Well, you know, there's a law that the SEC has about talking about funds that you haven't raised and like you're not allowed to do that.
Oh, right. Okay, just checking.
Yeah, no, I've got close friends that did a lot of time in prison. And I'm not answering that question.
Okay, fair enough. Fair enough.
Let's face it, let's place it in a more market centric viewpoint. So, you have SoftBank, obviously spending a ton of money. Got Sequoia, obviously has raised very large fund. How do you look at operating in that universe? Is it, does it feel different now than it did a couple years ago? Making deals?
I don't think so. I mean, like, you know, we mainly focus on early stage kinds of things. And that's a layer of capital that's a little bit more equivalent to the public markets. So, you know, people writing, you know, if you write a $500 million check, that's essentially an IPO or we used to call that an IPO.
So, you know, we sell into that and the more people to sell to the, the merrier in that sense. But, you know, it's very early in terms of what the impact of those funds is going to be.
Okay. And do you think it'll take you think it'll take a longer time scale than average simply because of the amount of money or do you think it'll be more rapid because the amount of money they're putting in.
SoftBank's pretty determined to deploy that money fast. I mean, it's impressive.
Those guys will. They are definitely, they're not shy about writing big checks.
Right. Seems to be the many bet strategy is absolutely the way they're going.
Do you have your, so the last fund that you folks closed was a bit ago. Do you view that like the or the current the current cadre of funds that you have, are you comfortable there? Or does it feel like do you feel like you have enough capital to deploy right now for a while?
Yeah, I mean, you know, we've we've been around I think, nine years now and we've raised over a billion dollars. So that's a lot of money. There's plenty to invest.
Let's talk about the crypto fund. So the crypto fund, obviously, you know founded to invest in crypto in various bets there. Is there enough real stuff out there to look at?
Oh, yeah, I mean, I think that, you know, this is there's probably more developer activity in crypto than anything that we've seen since the internet. And I think the right way to think about it is, it's a new computing platform. So once every decade or two, a new computing platform comes along, so we had the, you know, mainframes and PCs and smartphones. And the thing that's deceptive about it is, when the new platform at the time is generally worse, in most ways than the old platform, but has some new capabilities. So if you go back to the smartphone, like now, it's like, oh, yeah, the smartphone. But then, you know, the people who are used to the PC were like, wow, that is a really small computer that's not too powerful, with a teeny tiny screen. How am I going to put my big old spreadsheet on that like little ass computer.
And you know, that was true, but the smartphone also had a camera and a GPS built in so now you could build you didn't have to just build a spreadsheet you could build Instagram you could build Lyft, you could build new kinds of things. And with crypto, it's very similar in that it's worse in most ways than the old computing platform. And that it's slow. It's really complex. It's lacking a lot of features. But it has one feature that has never existed before. And that's trust. And trust is super powerful. It comes from the mathematical and game theoretic properties of the platform. And that means that you don't have to trust the government, or Twitter and Facebook, or the other people, even on the network. You just have to trust math. And that opens a very interesting world for developers because you can build new applications like money. Which nobody's ever been able to program money before, but now you can.
You can program law in contracts and you don't have to worry about corrupt lawyer you have to trust a lawyer. You don't have to trust the judge. You can program digital property. So you can build art that only one person owns. And you don't have to trust a broker or somebody who might be faking it. You don't have to trust the platform. If you're a developer, you know, a lot of people build things on the last set of platforms, you know, Twitter and Facebook. And, you know, that didn't work out that well, because when that company changed their mind, about what they want it to be, then all the developers lost. But in crypto world, you don't have to do that. You just trust the math. And that's a that's a really transformational idea. And so, you know, there are just a crazy number of ideas coming out and projects and so forth. So, it's one of the things we pay a lot of attention to.
And are you focused a lot on that authentication and ID layer of of blockchain or is does the currency aspect of it attract you or is it a bit of both?
Well yeah, I mean, I think that so there there's kind of store value and that Bitcoin is obviously the the great kind of leader in store value. And I think that that's a relatively, it's very valuable, but it's probably less interesting from a technology standpoint than kind of the other side, which are, you know, kind of crypto networks, and things like Ethereum which is the world's computer and so forth. That side is much more competitive.
And there you know, just a number of things coming out in that arena naming, storage, lending all these kinds of things where it's, you know, Bitcoin, other other than storing your money, there's not that much you're going to do with Bitcoin, but it's not really a platform that developers right to turn.
And do you think the industry at large is dependent upon that currency to sort of sell that this is a real thing or do you think it will just fall away as a real matter of concern?
Well so the currency is kind of fundamental to the layer one blockchains and that that's how you reward the miners. And without the miners you don't have security and trust. So you have to have current there's a blockchain without cryptocurrency that you know that doesn't make sense at least in a public context.
So, you know, yes, that's got to succeed. But I think, you know, like, we're not that worried about it succeeding or not, it's going to bubble up and down and people are going to be into it and not into it and so forth. But that's how the internet went. That's how these things go. You know, people get very excited when they get, you know, super scared.
How do you tell like a BS company in the crypto space versus something that's real?
You know, it's funny, you know, we somebody at the office said the other day, they're like, well, not. All ICOs are bad but all bad companies have an ICO. And I think that's right you know really reminds me of the dotcom era.
When in those of you are old enough, probably remember this. You know every old weird bad company like renamed themselves. com. So you have like Woolworth. com Sears and Roebuck. com whatever. And then now they're an internet company. And their price goes up and everybody goes, Oh, that's idiotic. That whole thing is stupid. The internet is stupid. I'm not investing any money on that. And it turned out like the dumb thing wasn't to invest in the scam the dumb thing was to like give up on the internet because there were some stupid people in it. And so that's that that I think is a big lesson from that era.
I think it's probably applicable to a lot of a lot of ICOs now.
No doubt, no doubt, okay, and every entrepreneur is desperate. It's like right some investors as well you should do an ICO
Quick cash right yeah.
Let's talk about the cultural leadership and yes so what's the what's the basic premise just from well have you expanded from the horse's mouth?
Yeah, so look, you know, when I got into the industry there weren't consumer companies in technology, the technology, you know, we've made whatever storage or management systems or databases and we tell them to companies or technology companies, you know, wanting to do some productivity thing or to the government.
But then, you know, when the internet came in, and there were some exceptions, like Atari or like games, but it's very niche II but when the internet came along, and then the smartphone then you start to get things like Facebook and Lyft and Uber and Instagram and Airbnb and all these consumer products and you know, in a software is eating the world, then everything going to consumers starts to become a technology company. But consumers are very different than businesses when you think about sales and marketing in that consumers are moved by culture and so you really need people who are great at moving culture to be successful in that arena.
And you know, it's one of the things that you know and I always look for who's good at what so you know, if you're looking for a lawyer, you of course I or somebody Jewish? Sorry, it's very racism. I'm Jewish Jewish joke.
But if you look at culture and like, who can move culture, it's really interesting in that all of the new musical art forms over the last hundred years, from jazz to blues, rock and roll to hip hop were all basically invented by the same race. So like, clearly there's something going on, like somehow in African American population, they understand culture better than anybody else. So, you know, we've always, you know, had an effort to try and connect that to our efforts
Because, like, we want to make money and so the cultural leadership fund is a way to for us to connect to the very top lead leaders in culture and basically have them invest in companies in our portfolio so that we can create a bridge between tech and culture and basically move both tech and culture forward and then it's got this nice feature in it where the money that we would normally you know in a fund keep for ourselves we donate back into getting more young African American people into tech so that you know we continue to win in the consumer arena so it's something that we're really excited about it's been great for me you know I got to get to meet so many really really interesting people in the field and you know when we're looking forward to it it's brand new so in Scott it in order for it to be high impact it's got to succeed but.
Right and and have you have you found yourself having to I mean, obviously there's a whole list of folks involved in it that you're using as a probably scouts and to a degree and then also sort of kind of leaders in that in their industry, various industries, but have you like investigated ways to open your funnel to make sure that you're finding the right entrepreneurs that would be perfect for the culture fund we had any judgments there?
Well, look, the idea with a culture fund is to take the leaders in culture, you know, people like Quincy Jones or Sean Puffy Combs or Kevin Durant, and have them be invested in the best companies that were invested in. So, you know, these are things, this is normal course of business for us, we find the best entrepreneurs, we connect them with the best cultural leaders and then, you know, from our entrepreneurial standpoint, they get exposed to something they wouldn't get exposed to. And from the cultural leaders standpoint, vice versa. So it's kind of building a network and a bridge between the two worlds. So it's not it's not really a separate effort in that sense.
I mean, certainly there's been a running thread through various conversations about larger tech companies that if they perhaps it had more of an investment in culture, or been more aware of various cultures outside of the engineering culture that had helped them that they would maybe have not made many mistakes or maybe maybe not as least not maybe.
It's 2020 hindsight.
Yeah yeah for sure like for instance will talk about so the the Facebook and Twitter hearings yesterday so they had there's large companies that have obviously made some decisions about their platforms they built them however they're building them and now you know sort of the the left is pissed at the right has a voice there that the right is is pissed that they don't have as much voice there do you think the platforms could have built themselves any better it could have anticipated this in some way.
Well, you know, it's funny because the whole way like if you read any of the kind of news on me, especially Facebook, you know, Facebook is a joke. It's not really anything. It's you know,
they don't have a competency, yo, like, it is never going to monetize. You know, at the IPO. Oh my god. It's like it's a joke. We told you as a joke. It's not going anywhere. Oh my god. God, it's taken over the world, it must be stopped immediately. Right? Like, that was the whole thing with no break in between.
And so for them to anticipate that they were going to be like, that's important as fast, you think is more difficult than people think it would be kind of thinking of it retrospectively, but they are in a really, I can't imagine being at a tighter squeeze from a political standpoint, in that you have if you're on the left, you hate nothing more than the platform that got Donald Trump elected and the platform that owns his Twitter account, right? Like Like, what could you hate more than that,
And then kind of due to that pressure, what's happened is both Facebook and Twitter have taken to evaluating the content on their platforms and because most of their employees are on the left most of the people they banned or on the right and so now the republicans are equally as mad at them as Democrats and said like that just nobody goes likes it. Nobody likes you. That's it. That's a really tough spot to be. I don't think either of them really deserved to get into that position. I think that was just like it's a weird circumstance of if Trump had won the election probably none of this would have happened.
Wouldn't have come to a head maybe.
I don't think it would have come to a head now what is still been the same issues but they might have had enough time for you know, eventually AI will be able to like you'll be able to have a policy that's consistently implemented by technology that's not possible today you know, when it comes to sentiment
You think they will be able to take their way out of it eventually.
Well they you know, depending what happens right you know, with with the these hearings and the government so forth. But, you know, it really is one of these things where I don't think that, you know, I can criticize them and say, Well, yeah, so, if they had built their company the right way, and this and that, and the other it would have never come to this and there's a lot of people even there are people who used to work at Facebook.
Saying that I'm like, you worked at Facebook? Why don't you say something man? Like, come on, like, you know, so it's not so easy. It's not as easy as it looks, I guess I would just say, and like, you know, maybe they could have done something different. But I think it was really hard to anticipate exactly what happened is just like a very well, I'll give you a short example of this. So one of the things the thing that really triggered it was a Cambridge analytical scandal. Well, running up, right, in the old days. And Facebook, the big criticism was, they were walled garden and, you know, they needed to open themselves up so Google could search them and all this stuff, and they were closing the internet. And so they made this API that let everybody access the friend graph right, well, that's the thing that they did that let Cambridge Analytica get the data so you know, they were really damned if they did damned if they don't and so you know, and that's not to excuse everything but you can understand how it happened earliest icon having watch all that
The post mortem anyway is easy to decipher.
What do you think? The the. So here's, here's one. So it leads it. So what do you think the most effective way to increase the diversity of founders being invested in is obviously the culture fund is one attempt. But what do you think for? And this is not just an a16z specific question, but what do you think the most effective way to find the most diverse founders is?
Well, like, you know, I think you're, you're looking for great founders. And, you know, one of the things I think a lot of times people think of diversity backwards in, you know, people go, Well, you need to do unconscious bias training. And then you look at the studies on that, and you say, Well, that doesn't work that well. And you go, Whoa, why? And it's like, well, it's like, Don't think of an elephant and you don't think of an elephant don't think, of course. Well, let's see here and think of an elephant and that's what a lot of this anti bias training glad you
I think to some extent, you need more pro bias training. Everybody's going, like where you going with this, Ben
But what I mean by that is, look, there are groups that get credit advanced credit for who they are like if you're Chinese people assume that you're good at math, even if you suck at math, like a lot of people hiring will go like I think he's probably good at math. He's Chinese. And so that's like a pro bias. But it's fine because you know, there are a lot of people who are Chinese am good at math. So like that works. And that kind of works as a bias to promise you don't know those biases for all the groups and so I think really understanding and being able to see the talent and know the talent that you're looking at and understand if somebody comes from a different culture, different background that they've got, they may have talent that looks different than the talent that you're used to looking at. This is one of the things you know in the cultural leadership friends like the ability to move culture that's a real talent.
Like not, it's something I can't do. It's something that a lot of people can't do. But it's a real thing that's worth real money at very large scale. And so if you can't see that, then you can invest in that. And so a lot of it is learning how to see the talent, even if it doesn't look like you, even if it's not the same gender as you, even if it's not the same races you and you know, I think that's a lot of the way you have to do it. Because these investments like it's great to invest in somebody who's not like you, but if they don't succeed, and it doesn't work, then it's not sustainable. So you have to find the best talent doing the best things and, you know, that's how you win on that front. And that's how I am like, you have to win for it to for it to live on for it to grow.
Mm hmm. Yeah. Positive sort of reinforcement on that on that front.
Yeah. Are you when you open your first office in China?
Yeah, yeah. No. So where we are not planning to open an office in China currently not to say that, like China is amazing. And in fact, like, if you read the article peak Silicon Valley and the economist, well, it's really saying like in the data, like, forget it, if you take all the words out of the article, and you just look at the data with the data says, China's really important.
So that's so not so much that Silicon Valley is less important or winning, but that other places arising or is
Silicon Valley looks exactly the kind of very much the same as it always did, relative to everything else in the world other than China, okay, which is all of a sudden becomes super important.
So you're seeing like, like the momentum and talent there is, is on more
Like the number of giant important companies like Alibaba and Tencent jd.com that got built there. I mean, it's, you know that that's what's going to like that. That's what's going on. It's it's a real, real important phenomena.
Cool, excellent. Well, thank you, sir. Appreciate it. Thank you. Thank you all very much.
Okay. Thank you.