Ben Horowitz on Venture Capital and AI

27:16And look, that was the whole story with a venture capital firm. Now, did the world need another venture capital firm? Generically, no. Did it need a different kind of venture capital firm? Absolutely, it did. And so that's what we built. Now, I think that's kind of true for, I mean, if you look at OpenAI, they weren't the only ones trying to do AI, right? Like Google, it was assumed like Google was just going to own AI. It was panicking everybody, and that's why Elon, by the way, co-founded it with Sam. And Elon's still mad about what Sam did with it, but that's a different, longer story. But it was one of those things, well, we need an AI, we need an alternative.

28:01The world needs this alternative to Google, and that becomes a really, really good idea. So anything, and look, the world is changing so fast that the needs are going to, the new needs are going to multiply. There's going to be many, many, many things that need to be done. I mean, if you look at, I think, you know, kind of the old, nobody, the one thing that's interesting about the SaaSpocalypse is, it's definitely true that like the barrier to entry on like building software and user interfaces is getting much smaller. But by the same token, like, kind of the most boring thing in the world is to just, like, rebuild Salesforce.

28:42Like, you know, like, Salesforce at half the cost or a quarter of the cost isn't nearly as interesting as, like, what do you really want for your sales organization? Because it's not that. I mean, I don't think, you know. And then the question is, can you build it before they can? But do you really want your salespeople entering data in a crap user interface and then most of the things that they work on aren't captured in the system and this and that and the other? So going to the future, figuring out what, in a world of AI, what does that look like? One of the traps that students often fall into is, I call it the dorm room problem, right?

29:29which is you've got sort of direct visibility into problems that are in your kind of cone of, the light cone, so to speak, of your visibility, which is quite narrow when you're still a student, right? Yeah, and sometimes like when your friends are high in the dorm room and you have that conversation that sounds really good, it's not actually that good. You should at least sleep for one night. Yeah, I've seen a lot of those over the years. Yeah, make sure it sinks in and you still think it's a good idea. At least one night of sleep. Yeah, yeah, yeah. But, you know, just because you're a student in a dorm doesn't mean you don't want to have an impact on big problems and work on things that have an impact at scale, right?

30:11And sometimes these things are mission-critical things, healthcare, financial services, the economy, the excelling to enterprises. But these things are not directly in your sort of line of sight, right, when you're very young. and how would you advise folks to, in particular, to bring it back to these AI systems, you know, the context feedback loop we've talked about is quite critical, but getting access to those context feedback loops when they can make a huge difference is challenging when you're young in your career and you don't have a big network and so on. So how would you go about bootstrapping that problem?

30:40Yeah, like I think the main thing is to just solve a problem and what tends to happen is when you go to solve a problem, particularly if it's a hard problem, you find some other problem that's more important I mean, and this is well-known in scientific discovery, right? Like penicillin was like an accident. They weren't trying to solve that one. It just kind of rolled off of the side. And then, by the way, like Meta was an accident. Right. He was building Hot or Not. And, you know, he kind of stumbled into like this much bigger idea. And, you know, my friend Drew at Dropbox, you know, He was like literally tired of having USB where he'd have to move his presentation from one thing to another.

31:27He was just solving a problem for himself. So I think the best way to come on a good, a really important idea is to go try and solve something. Not necessarily build a company, just try and solve a problem. And then in that problem, if it's like a problem that you have, that means it's probably real. and then in solving it, you'll probably or you'll likely find something much bigger. And then that may like kind of force you to build the company. And those are the things that work the best that we've seen are these big things. I mean, it's really hard to, and even like Elon Musk didn't start his career trying to build Tesla, right?

32:06Like he was solving a much smaller problem. And, you know, that's generally how you build up to that. But I think trying to swallow the earth from the beginning with no experience doesn't usually work. It's good for your pitch deck, but it's not good for your company. I think Elon's first attempt was like a class of Yellow Pages competitors. Yeah, yeah, yeah, yeah. A little bit more mundane than that. Yeah, Yellow Pages and then PayPal and then, you know, Tesla and SpaceX. Well, so on that point, you know, the time horizon on which sometimes you find entrepreneurs sort of may have an impact on humanity is quite long, right?

32:47They bootstrap sort of the impact. I would say, or let me put this, one of the old ways we've seen the generation of entrepreneurs that belong to Elon's generation is that they feel like they have to start, you know, somewhat with a narrow scope. Yeah. And then bootstrap like bigger and bigger scope with every successive project. But just a few minutes earlier, you said, actually, you know, things are going through a lot of change. Yeah. You can have a lot of impact very quickly relative to incumbents who may have had to be a little bit more measured in their approaches. Right? Yeah. How do you resolve these two?

33:18I think it's, I think thinking of it like how big a thing that am I going to do is the wrong way to think about it. You have to start with like, what problem can I solve? and then you solve, if you can solve that problem, that's where to start. Like, you have to size it to you. Not everybody is the same. Like, different people have different capabilities. You become kind of your full, like, most effective self at a different age. Like, some people are really good when they're, by the way, like, Zuck is way different now than he was when he was 20 years old. Like, I know when he was 20 years old, like, he was, it's a miracle if he didn't have a network effect business like that when it worked at all.

34:02He just wasn't very good. You know, but he developed that like entirely over the year. And because he had that kind of business that had a vertical takeoff, he could develop into that. And like, so if he didn't have that, like he might have been better off, you know, finishing Harvard or whatever. That was just one of those things where he happened to solve a problem at that age that was important enough that it created a company. So I want to take it in a slightly different direction, or analogous, which is when Zuck, when Facebook was getting started, it had a very unique culture. Some good, some bad.

34:42Yes. And it's not always clear what is good and what's bad until much later. I think my friend Sean got in trouble with the law for that culture, but yeah. What, did he get in trouble for Napster? Wasn't that one culture earlier? No, he got in trouble at Facebook also. At Facebook as well, okay. So I know it's a different problem with the law at Facebook. I see. Yeah, he generally tends to get into trouble a lot. But, you know. He is a genius, though. Well, this is the thing, right? With genius, sort of where you often find outlier technical and or any kind of outlier capability, often you find one of the problems I'm discovering today, right, in the field is that you often have really talented teams try to start a new lab or a new company, and sometimes they fall apart.

35:26You just don't get very far. From the outside, you'd be like, oh, this is totally going to succeed. Star entrepreneur, lots of capital, great problem. And then like six months in to 12 months in, teams are just struggling a lot to make progress. And sometimes people leave. Why is that? What do you think it is about the right cultural initialization that sets apart teams that can do this and hit that takeoff versus stumble along? And how do you skip the painful parts? Yeah, so I think there's a few things. First of all, building a company is hard. And no matter what era or whatever, the press always makes it seem easy because they hate entrepreneurs, but it's not easy.

36:12It's always extremely hard, so some are going to fail. I just say that up front. But in terms of like the team and the dynamic and so forth, yeah, it's a combination of leadership and culture. And culture is a very kind of amorphous thing, but it ends up being very important. So basically the way to think about it is it's not like people think of culture as like, you know, corporate values or some bullshit. But it's not that. You know, it's not we have integrity. We have each other's backs. Or like some of these, like, whatever platitudes people say, it's like, how do we behave exactly? Like, what are the behaviors?

36:58The samurai have a great kind of line, which is, a culture is not a set of beliefs, it's a set of actions. And so what do we mean by behaviors? Well, like, do we come to the office or not? Do we go home at five or do we stay longer? If somebody asks me a question, do I get back to them instantly or in a week? All those kinds of things end up mattering. Do we believe the best idea wins or does it matter who was the founder? You know, all that stuff. you kind of have to agree on as a team, and like very specifically, not like just like some highfalutin idea, and then you have to live by it. And then if you have that, if you have a standard, if you have a cultural standard, then if somebody's not living up to that standard, then it's a simple thing.

38:03If you have no standard and people aren't living up to the way you want them to, then you're pissed. But then that just starts infighting. Then it gets political, right? Because it's like, well, why the fuck is he going home? Well, we never said he needed to be here. We never agreed on that. Like he, you know, has a date or whatever. Or like, you know, he's got a family. He's got to go home. Like we never said what that was. And then, you know, people stop liking each other. And then you hit the first hard issue. And it's like, you know, F it, I'm out. OpenAI is going to pay me a lot of money.

38:39screw you guys, screw you guys, I'm going home. I scart me on my side. But what happens if you started by standardizing on some set of beliefs, set of actions, and then the world changes? And what you thought was going to be the right standard six months ago, in a world where stuff changes so fast, needs to be updated. Yeah, yeah, like cultures can evolve, but you kind of have to evolve together. And you need a leader. You need, like having, this is why I hate the idea of like co-CEOs or like we're all equal or like we're going to run a communist organization. It doesn't actually work in a company because you need somebody who's going to break the tie.

39:24Okay, yeah, you want it to be that way. You want it to be that way. We're going this way. If you don't like it, get the fuck out. Like that's how you have to run an organization in order for it to succeed. and I think people are, you know, we culturally got away from that idea in Silicon Valley a little bit, you know, in the end of the fat-happy network effect era, but, like, it's back now, so. Could you say more? What do you mean by that? Well, you know, everybody wanted, like, a vote on what the company's values were and this and that, and, you know, and then, like, CEOs caved to that and that ended up not working well for any of those.

40:03Right, right. Companies are not democracies. They are cultures. Yeah, well, I think a dictatorship always beats a democracy in a competitive battle. And so, because it takes a long time to decide things in a democracy. Now, look, for a country, it's different. You know, there are things when you have to last several hundred years that, you know, So no matter how good the monarch is, if they die and a worse monarch comes into play, that could be an issue. Well, I'm going to push a little bit on this assumption that it's different for countries versus companies. Because something I've learned from you is the way you approach the most exciting, the businesses I look up to the most, especially the ones in the A16 portfolio, are often leaders who are thinking so long term.

40:52The way they talk about their impact on humanity is not that different from the timescale sometimes of political leaders. In fact, arguably some of the entrepreneurs are thinking longer term than political leaders these days. Well, it is longer term, but so like if you have a king, let's say you had a king running the United States. Right. If it's a great king who was not interested in their own like enrichment or their family or their friends and so forth. That works like... Who cared about the public benefit, basically. Who cares about the public benefit, I think, you know, that works better than our current system.

41:31The problem with it is, as soon as you get somebody who's not like that, that's just too much power. So you're better off decentralizing power so that the system is resistant to bad leadership. Like, I think a country has to be resilient to bad leadership in that, like, if a company goes away, like, okay, fine, whatever. Like, so, you know, the, well, Dave Packard and Bill Hewlett, you know, like, they're gone. They passed away. The new leaders weren't so good. Like, that's the end of the company. Fine, whatever. It's a company. They did their thing. They did their job. They fulfilled their mission.

42:12You know, a country has to persist beyond that. And so, like, I think we already see that, you know, here, be it like, you know, on the nation level, on the state level, on, you know, even on the city level, you can see like eventually you get politicians who just start giving stuff to their friends and then like everybody suffers. At least you can vote them out. At least you can do something. Whereas, you know, I think in a company, you want to be as efficient as possible while, you know, while the sun is shining. I know I could keep going forever, but we probably have a bunch of questions piling up.

42:49So I'm going to ask you one more question, then we're going to switch to students, yeah? Which is, you know, you talked about David Swenson, right? And he had some strong assumptions that then you felt, these were leaders of the previous generation that you felt just didn't get it? Well, I just think that, you know, not that he, like, by the way, Yale is still like an investor in us today. So I just think, like, you can't let your investor, by the way, including us, like, run your company. Because you're on the ground in real time seeing what's happening. They have knowledge of the past, and they have a light knowledge of what you're doing, but not full context.

43:35So they can be, like, it's an interesting conversation, but, you know, the investor can't run the company. And that's just the way it goes with him and us. Well, so my question for you is, what prior do you feel like you now have to update so that, you know, given that you felt like Yale at that time needed to update their price faster today, what do you feel is like the biggest assumption that you've changed about the venture capital industry that maybe was a strong belief you held, you know, 10 years ago? Well, I mean, like I said, I think, well, one, I mean, there's so many things that are changing, but, you know, and I talked about, like, you can throw money at the problem.

44:17That's a massive change. I think that, you know, the bottlenecks have moved. So, you know, we used to have a bottleneck on software engineers. I think, like, you know, we've got bottlenecks on, like, things like electricity now. So I think that changes how we think about investment. And then, you know, companies are so big in the private markets that they now require things that venture capital firms didn't, you know, previously provide. Like, so when you get up to, you know, a billion dollars in revenue, then you have to be like multi-country, multi-channel, multi-product. You know, these capabilities, most VCs just have never had.

45:02Right. But I think now we have to have them. And then I think the private capital markets don't have all the functions of the public markets. So that needs to be addressed. So there's a lot of things that are changing. This is technically not a new question. It's a follow-up to that, which is you said culture is a set of actions, right? Yes. By the way, this is on the wall at A16Z and I every day would go to the office in San Francisco and I'd rent one of these. We could all book our own offices and the one that was my favorite was in the back corner near closest to the bathroom because I could dash to the bathroom between meetings.

45:37But in that corner, it says, you know, from the Bushido, you know, culture's set of actions, not just beliefs. Yeah, I'm like, I tell people when they come in, like, I don't care what you think. I don't care how you feel. I don't care what's in your heart. I just care what you do. And like what you do matters. And that's the way you have to run an organization or like you get into this bullshit. So, I mean, that's my follow-up. A culture is often also what you don't do. What you say no to, right? Yeah. What are the things that you've had to say no to because you're like, well, that's just not, that could be an interesting opportunity.

46:08It might even help an entrepreneur out, but that's just not in our mission. That's not us. Yeah, well, so I'll just give you one example. So the biggest one that got proposed to me like 18 times was, well, with AI, AI is like, it's very much like when the spreadsheet happened, that kind of launched private equity, right? because all of a sudden you could go in and make all these big companies much more efficient by, like, having them adopt this new technology and AI even more so, right? You can go in and you can go into an old company and you can make it much more efficient with AI. And there's, like, many VCs who are kind of going with that idea.

46:51And for me, like, there's, I would say, two big reasons I didn't want to do it. One is it's culturally the opposite of venture capital. You don't like leverage buyouts, basically. Yeah, LBOs. So, like, look, venture capital is about investing in entrepreneurs with new ideas and focusing on how they can grow fast. Leverage buyouts are about, you know, entry price, making it more efficient, firing people. And I don't really want to grow it. I just want to make more money out of what it is. And so, like, if you're in the venture capital mindset, you're looking for the great entrepreneur to go build something amazing.

47:41If you're in the leverage buyout market, you're caring about, like, okay, I'm going to bring in a professional. I'm going to have them run this more efficiently and so forth. So it's the opposite motion. And so for me, I was like, well, I don't want to split the culture that way. Like, I think that's, you know, not going to be a good idea. And then the other thing is, like, I don't want to do that with my life. Like, I have the opportunity to fund, like, the greatest new ideas that are going to push humanity forward. I don't want to, like, you know, leverage buyout, seize candy, and fire all the old ladies who work there.

48:09Like, I'm not doing that with my life. I'm like, fuck that. You know, like, go to another VC if you want to do that stupid shit. Or like that. Like, I mean, it's not stupid. I think it's a good business. But it's not a business for me. So sometimes you're saying it's okay to impose bottlenecks on your own growth because that's just not what is fine. Yeah, you don't have to be in every business just because there's money there. Look, I believe in like you build a company to kind of do something larger than yourself and make the world a better place. And then if you do that, you will make money.

48:44But if you are in business just for making money, like that's not for me. Like, that's, there are a lot of people who think that way, like, and I'll let them do that. But, like, I think that great companies don't think like that to me. Like, companies that you would want to be part of, that I would want to be part of, don't work that way. And so, I'm not going to build that thing just because, like, oh, there's money over there. Let's go run to the money. We're going to switch to questions. So, the way it's going to work is they even bring their questions in Discord. All right. And they're all voting on each other's questions.

49:21And the top ones that get voted by each other, we'll go through them one by one. First question. The question is, if I was a college student, where would I put my energy and effort? And what do I think about encouraging people to drop out of college?

49:38So, like, I think that if I was in college now, I would put a tremendous amount of... I would view AI as like a very powerful tool set. So almost think of it like, I think the best analog is electricity. So like, okay, if you knew electricity was coming and you wanted to do something interesting in life and you were in the pre-electricity world, right? Like, you know, where like it's six o 'clock, we got to be at home because it's going to get dark. We're not going anywhere. Like that world. Sounds like San Francisco. Yeah. Well, yes. you know, so then, okay, this whole new world is coming. Let me really understand this technology.

50:23And then, like, what is interesting to me in the world? And that could be biology. It could be material science. It could be, you know, rocketry. It could be anything. But, like, you want to have those tools in your bag when you go do that. Or it could be, you know, like, by the way, it could be in the creative field. So, you know, people, I think, misunderstand what's about to happen in the creative world. But, like, somebody who used to be, like, who in my era would have been, like, a pretty good guitar player can now make a sci-fi motion picture, score it and everything by himself. And, like, the world is really, really different.

51:05So I would definitely kind of figure out what I'm interested in and then master this new tool set and kind of apply it together. I think that's probably the thing that's definitely going to work. In terms of dropping out of school, I think that this is very individual-based. So, look, you mature at different points in life. I think that I finished college myself, and that was good for me. Like, I think, you know, it was good for Zuck to drop out given the idea he had and given the kind of company he was able to build. And, you know, so I think that with career advice, let me just say this, that nobody can give you good career advice.

51:59They can give them good career advice. So I can give you good advice for me. I can't give you good advice for you. And particularly your friends are going to give you good advice for them, not for you. And so don't listen to your friends and, you know, figure out who you are and, you know, what the best path for you is, I would just say on that. Yeah, so by the way, so just on political donations, I also donated$5 million to the Kamala Harris campaign. Important fact. Yeah. Often not reported on. Just say, well, it is reported on on Twitter every time the MAGA people get mad at me. Look, on politics, are, let me kind of just tell you where that came from and how I'm thinking about it in general.

52:46Tech had like very little voice in Washington, D.C., and that had extremely severe negative consequences for tech. And specifically, so I can go through a few things in the Biden administration. One is they basically almost ended the crypto industry by enforcing things that weren't even in the law to shut down companies. And then they were like the same thing was happening with AI. So the last Biden administration executive order was to require for all sales of GPUs worldwide that any time you sold one, you'd first need government approval, U.S. government approval. So that would have basically taken us out of the AI race entirely.

53:33and the issue behind that was basically that we had no voice. Like the whole industry had no voice in Washington. So we kind of launched a very, very big effort to have a voice in Washington and I would say that it's worked very well. So we have much better AI policy, much better energy policy and much better crypto policy now than we did before we got involved. So I'd say I'm, like, very happy about that. And then all the kind of money and conversations have been about that. Look, I mean, the other thing is, like I said, I gave money to Kamala because I know her. I've known her for 15 years. She's been to my house 17 times.

54:21My wife sat next to her in church the whole time. So I knew her. So I knew I could talk to her. Biden, like, we never could get a meeting with Biden for the whole time he was in office. And if you speak to Tim Cook or Sundar Pichai or Dave Ricks who runs Eli Lilly, none of them got a meeting with him in four years. Now, we all know why now, but at the time we didn't know. And the result of that was, like, tech had no voice in Washington for those times. So, you know, it was a correction that we had to make. I'm not going to defend everything that Trump does or everything that Kamala would have done because, like, there's a lot wrong with both of them.

55:06And, like, I know them both. But there's a lot, like, the things that we needed to influence to kind of both make the country stronger and make the tech sector stronger, I think, worked out well. So I guess the answer is yes, I'm happy with that.

55:25Oh, here we go, man.

55:31That's a good question. So the question, to repeat the question for the podcast is, how do I think being in a rap group in college kind of affected me? And then can I rap for us now? So the story of that was, you know, I had a friend who got shot in the face and became blind. And so we started a—and he was very, very depressed. So I would send him rap music. And in those days, rap had just kind of gotten started. And that kind of cheered him up over time. So we started a rap group called The Blind and Deaf Crew, D-E-F. And we became a group, and I wrote some rhymes. So, like, one of the rhymes was, The blind, deaf crew, you know where fly.

56:19Three of us, but we got four eyes. Plus he got his eyes. All right. Thank you, Ben.

56:29There are so many very memorable and intriguing pitches. Well, one of the most memorable was actually Databricks because it was so bad. so the pitch was Jan Stoica who was a professor at Berkeley presented the company and the slides he made it was like going to like a computer science lecture that you couldn't understand in college that's what Dave Ricks pitch felt like so that was very memorable it was memorable because of that and then it was memorable because of what it turned into but there were so many If you couldn't make sense of it, why'd you invest? Well, the whole reason I had him coming to pitch is because Scott Shanker, who was another professor at Berkeley who I knew, had called me and said, Ben, I have the best distributed systems guy that we've seen in the last 10 years in academia.

57:28His name is Matej Zaharias. You know, do you want to meet him? And I knew as soon as he said that to me, I was going to invest in the company. Yeah, yeah. But that pitch kind of scared my partners. Thank God they didn't talk you out of it. Yeah, yeah, yeah. Yes, it's funny. So the question is about Cluelly and, you know, what do I think about it now in terms of momentum and this and that and the other. Look, I think that an easier way to think about it is we invest in founders. and, you know, you want founders who are original thinkers and have kind of breakthrough thinking on whatever it is they're working on.

58:15And I think those guys, you know, had a bunch of breakthrough ideas, including marketing. Like, I think, you know, they are kind of marketing geniuses in a sense in that, like, you know about them. They're not, you know, they're not the biggest company in the world, but they're the ones that you know about. There's something to that. So, you know, what it becomes from here and where it goes, we'll see. But like I always say, you know, these things are early and there's only one unforgivable sin in business, and that's running out of money. And until you've run out of money, like I don't count any of these companies out, by the way.

58:54Like I've seen, like Slack was in dire straits before he figured it out. You know, he had built a game on Flash called Glitch. And Steve Jobs outlawed Flash on the iPad, and it was an iPad game. And, like, that's how dead he was. You know, and he had, like,$6 million left. And he turned it into Slack. But that's Stuart Butterfield. You know, he's a great entrepreneur. So, like, companies go through changes and this and that. If you've, you know, like, if you're a special founder and you don't run out of cash, I'm still for that and would bet on that. The question is, you know, given the SaaS apocalypse and given that we have a long time horizon, how do you think about, like, how can you invest in anything because Xanthropic is just going to one-shot it all?

59:40This is the Wall Street view. By the way, anytime Wall Street thinks one thing and Silicon Valley thinks another thing, that arbitrage is worth a lot of money and Wall Street's always wrong. So I think there's actually a lot of opportunity now in that case. It's like, I think, you know, for some of these things are, you know, the whole moat is the code and the UI. And I think that's a difficult position to be in right now for sure. But there's a lot of companies, one, like most of the new companies, like nobody's coming in with like new SaaS companies at this point. Like people kind of know, like, okay, that's not that defensible.

1:00:27Like, you know, you can build it and so forth. So that's not the new idea. So then if you go to the old ones and you go, well, you know, are they all dead like Wall Street thinks? I think, you know, not really. So like I'll just give you one example of a company that I'm on the board of. So I'm on the board of a company called Nivan. And Nivan is like a software travel agency for businesses. So, you know, in a company, your biggest kind of variable expense is travel. So you need to have, like, very tight policies around it and so forth. And then to build a travel company, you actually need to have supply chain relationships with not every airline in the United States, but every airline in the world, every hotel in the world.

1:01:11And, like, if you scrape their websites and do that kind of thing, they literally cut you off. They send you a cease and desist and they sue you and, like, you're out of business instantly. So it's not that hard to build all those global supply chain relationships. And then you can't sell to any significant company that travels worldwide if you don't have all of them because, like, I need to be able to travel everywhere. And then you've got to, like, integrate with all their whatever they're doing for their, you know, credit other systems in their company. and then the channel to sell it, you're actually selling to somebody called the travel manager, which, by the way, like Anthropic is, like the chance that Anthropic would build a channel to sell to the travel manager, like there's gold bricks everywhere.

1:02:03They're not going to pick up a silver brick. Like they're just not going to do it. Like I can tell you, Ange can tell you, like that's the last fucking thing on their mind. In fact, they've got an open rec now to hire a travel manager at Anthropic to manage the Navon relationship. Nonetheless, Navon lost two-thirds of its value in the SaaSpocalypse, and it's, you know, accelerated revenue since then. It's, you know, I think, I mean, it's, I got to be careful because it's a public company and so forth. But, like, I think they'll be fine for a very long time. So, you know, it's just one of those things where, and there's a saying on Wall Street when the paddy wagon backs up to the House of Ill-Repute, which is, by the way, for those of you too young to know what that is, that's a whorehouse.

1:02:46Everybody goes to jail, you know, not just the people who are committing crimes. And so in the Saspocalypse, everybody's in jail, whether or not they should be in jail. So, like, just be aware. What do you think it's going to take for the markets to realize that not time? Like, so I think what's happened, so if you look at the Navant stock, it was at, like,$25. It went to$8. It's now at$15. dollars. If they put up two more quarters in a row, it'd probably be at$30. It's just like that kind of thing. It's just time. And education, I guess. Yeah. Yeah. Well, and you learn, Paul, so the way Wall Street works is, and Warren Buffett always says, you know, in the short term, it's a voting machine.

1:03:28In the long term, it's a weighing machine. Well, why is that? Well, the reason is it's a narrative. They buy the narrative. They don't buy the facts. They buy the narrative. So the story, if the story is, this is a victim of the SaaSpocalypse, barring any new results from that, that's going to be a winning story because it's like such a good story. And by the way, all the portfolio managers who own SaaS companies got fired. So like nobody wants to jump into that, you know, kind of thing if you got the new job. And so that story is going to hold for a while. But eventually when the quarters come in, the Wang machine will go, well, maybe that narrative wasn't right for that company because why are they making so much damn money if they're a victim of, you know, if Anthropics can one-shot them?

1:04:18Like, that doesn't make any sense. Don't the customers know the one-shot is coming? And so then the narrative will change and a new narrative will win. And then it becomes a Wang machine. And that's true for, by the way, every company. What strata advice is super overrated today? I don't know what advice. That's a good question. I'm not sure. Like, what kind of advice are you getting? What did I get? I mean, look, I think you have to pay much more attention. Like, I think the thing that is true is, like, you can't ignore AI. I remember kind of before the internet came, which I was also alive for.

1:05:01You know, there were a lot of tech companies and anyone that ignored the internet was just gone. Like, you can't ignore a change that big. Like, there's no way that something that worked before AI can ignore AI and survive. So, like, that part is true. And so, if you're starting a company and you're not... dealing with not only AI today, but what's likely to happen, you know, as the models get bigger and so forth, like, it's just not going to be a very interesting company. So that part of advice is very correct. I think the part of the advice that's wrong is there aren't going to be any employees and there's going to, you know, companies aren't going to hire people and it's just going to be AI bots running everything.

1:05:49Like, by the way, like, all the data kind of is going in the opposite direction of that. Like, even, like, software engineering jobs are growing, like, very fast, despite what Dario says. And by the way, they're growing very fast at Anthropic. So it's like, you know, at what point do you call, like, bullshit on that idea? So... I think sometimes things get taken out of context, right? Like, with the political donation question, like, what was missing context was that there are donations to both sides. I think one of the things that gets taken out of context with Dario is he's often saying, hey, during the transition, some types of jobs that are low-skilled will get, those will go away, and those people will then have to, you know, take new jobs.

1:06:30Yeah, so there will be a job, so Dario is very right on that, there will be a job change. So not the advice Dario gives, but how he gets written up. Exactly. It's the tweets. It's the tweets. The tweets are the problem. Yeah, so those tweets turn out to be, I would just say, like, very overblown and not kind of representative of what's likely going to happen. So, you know, don't... And in general, like, the doom and gloom, I just think that's overstated, you know, a lot on AI. By the way, the most dangerous thing, I think, on AI by far is that we kind of fail as a country. We get too scared. We overregulate.

1:07:15We do what Bernie Sanders recommends. And some of you are Bernie Sanders fans. but like we put a moratorium on data centers and then China wins. And like I think a world where, by the way, either China has like super intelligence and we don't or we have it and they don't is a much more dangerous world than having some kind of balance to the power. You know, concentrations of power historically have been the worst thing for humanity. and so I think that that would be the thing to be scared of. So I think the fear could cause actually a worse problem than what people fear. Well, here at AI Coachella, we are rational optimists.

1:07:59All right. So thank you for coming to AI Coachella, Ben. All right, thank you. Thanks for listening to this episode of the A16Z podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or review, and share it with your friends and family. For more episodes, go to YouTube, Apple Podcasts, and Spotify. Follow us on X at A16Z and subscribe to our Substack at a16z.substack.com. Thanks again for listening, and I'll see you in the next episode. This information is for educational purposes only and is not a recommendation to buy, hold, or sell any investment or financial product.

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