A16z's Evolving Structure and Strategy for Generational Technology Shifts

Key Quotes

"And that change has kind of what really changed the architecture of the firm. So originally, we looked like every other venture firm. We were a team of venture investors. We were a little different in that we had a more elaborate platform. But now what we've done is we've kind of subdivided the technology market into all of its submarkets. So infrastructure, applications, crypto, early stage, bio, these kinds of things, American dynamism. And each of those teams basically looks like the original Andreessen Horowitz, but they're independent of each other."

Ben Horowitz explains that Andreessen Horowitz has restructured its firm by dividing the technology market into specialized submarkets. Each submarket is managed by an independent team that operates like the original firm, allowing for comprehensive market coverage and agility. This architectural change was driven by the expansion of technology into all sectors of the economy.

"And so, you know, right now, with everybody talking about a bubble, it's like, 'Oh great, we're not in a bubble,' because it's when nobody believes it's a bubble that it becomes a bubble. Same with a financial crisis, by the way. If you look at the price, you know, the kind of interest you pay on home loan debt in 2007, it was the lowest in history right before it all came crashing."

Ben Horowitz suggests that widespread discussion about a market bubble is a sign that a true bubble is not yet present. He draws a parallel to the 2007 financial crisis, where historically low interest rates preceded the crash, indicating that the market's psychological state, rather than just financial metrics, is a key indicator of a bubble. Horowitz believes that when people stop believing a bubble can exist, that is when it truly forms.

"And so, I think that's probably the weirdest part of it for me that people think about it that way. Like, I mean, like, if you start confiscating wealth and taxing unrealized capital gains for people who aren't, like, would, like, so, so actually saw this in Norway. So Norway has an unrealized capital gains tax, and in Norway's got like a lot of extremely smart people, great entrepreneurs, but they all left."

Ben Horowitz expresses bewilderment at the approach of some groups in California regarding wealth taxes and taxing unrealized capital gains. He cites Norway as an example where such policies led to the departure of smart entrepreneurs, as they could not pay taxes on gains that were not yet liquid. Horowitz argues this strategy is counterproductive to fostering a thriving tech ecosystem.

"So, yeah, I mean, I think, by the way, watches were the same. You know, when watches came out, there was like huge fear that people would never be able to have a conversation again because they'd be just checking, checking the time always. And so, you know, these technologies generate a lot of fear, but I think that, you know, this one is on it is, you know, this one is really important. I think that the impact into the well-being of humanity is going to be bigger than certainly anything in my lifetime."

Ben Horowitz contextualizes the fear surrounding AI by comparing it to historical anxieties about new technologies like electricity and watches. He notes that while these technologies initially generated significant fear, they ultimately proved beneficial to humanity. Horowitz believes AI is a similarly important and impactful technology, with the potential for a profound positive impact on human well-being.

"So in the old world, you were always thinking defensively because there were very few channels to get your message out. The format was very tight. You could get a quote in here, or you could get a few sentences before the house cut you off or whatever. You know, the new world, it's wide open. There's media everywhere. The formats are whatever you want it to be. And so the right kind of way to think about it is you have to be interesting and don't worry about making a mistake because you can just come back tomorrow and flood the zone."

Ben Horowitz contrasts old media and new media strategies for communication. He explains that in the past, with limited channels and formats, the focus was on defensive messaging to avoid errors. In the current media landscape, which is wide open and abundant, Horowitz advises being interesting and not overly concerned about mistakes, as one can continuously engage and "flood the zone" with new content.