Ben Horowitz on TBPN: Three Decades with Marc and Building for the Long Game

We got a lot of criticism from other funds going like, that's crazy, you know, no billion dollar fund has ever returned money. If you look at AI, the technology is like working and getting to the world right now. With everybody talking about a bubble, I was like, oh great, we're not in a bubble. Because it's when nobody believes it's a bubble that it becomes a bubble. The tech industry itself used to just not be that big. And now the tech industry is all industry. Following the announcement of A16Z's new fund, Ben Horowitz joined TBPN to discuss how Andreessen Horowitz has evolved his venture firm structure as technology expands across every sector of the economy. Drawing on decades of operating and investing experience, Ben reflects on why entrepreneurship remains difficult at any scale, how long-term partnerships influence decision-making inside a venture firm, and why specialization and independence have become central to A16Z's model. He explains how the firm evaluates new markets, adapts to faster technology cycles, and stays close to founders while operating at scale. The conversation also covers Ben's perspective on AI as a generational platform shift, how it's changing company formation and investor judgment, how to think about market size and fund scale, and what founders should understand about navigating media attention and public discourse while building durable, long-term companies. Let's get into it. We have Ben Horowitz, the founder of Andrews Horowitz, the Horowitz in Andrews Horowitz. Ben, how are you doing? Welcome to the show. Good. How are you guys? We're fantastic. Massive news today. Congratulations, obviously. We'll get into the fun structure. I'm sure we'll have a bunch of questions there. I wanted to kick it off with a reflection on your book, The Hard Thing About Hard Things. What is the one piece of advice that you think has aged particularly well from that? What has never changed? And then maybe you could take me through some things that might have changed in this era, bigger companies, AI. What do you go back to and what do you maybe think needs an update? Yeah, well, I think it's still really hard to be an entrepreneur. and one of my favorite quotes in the book is something Mark said to me when things were extremely bad. He said, one day we'll look back on this, chuckle nervously and change the subject. I think someone has to see those late two days. Yeah. The only thing he would always say is things get darkest before they go completely black. Yeah, I mean, it's underrated how long you two have been in partnership beyond just this firm. You've worked together for so long. 30 years. 30 years. What a run. An overnight success. A true overnight success, if there ever was one. How do you two like to work together now? How is the day-to-day working at the firm? Yeah, I mean, I think that it works pretty well. I mean, we have pretty different roles. So I run the firm. And then, you know, Mark is kind of, in a lot of ways, the face of the firm. And he also, you know, he gets very deep on specific things. So policy, AI are kind of the two things that he's like super focused on right now. And, you know, he has many, many ideas about, you know, running the firm and I have many ideas about things. he does. And so, you know, it's very collaborative, I would just say. And, you know, we argue all the time about everything. That's great. As any good partner does. Sometimes he's right, sometimes I'm right. Yeah. Well, how is the structure of running the firm? How is the structure of the firm changing in this era? Obviously, the numbers are bigger, but on the fundraising side, but maybe not on the team side. What's changing? Is there anything that you've felt like this technology shift requires different management of the firm. Yeah, no, for sure. I think that what's happened is we have such a powerful new technology platform that the number of really important companies that will be created out of it has just multiplied. And the tech industry itself used to just not be that big. And now the tech industry is all industry. and that change is 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 sub-markets. So infrastructure, applications, crypto, early stage stuff, 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. And that enables us to both kind of cover the whole market in a very, very serious way, but also be nimble and not have, I mean, you don't want 20 people in a room talking about a deal. You're not going to get to the truth like that. In my management experience, it turns out you can't have a conversation with funny people. You can have a presentation. How do you think about empowering the firm or the sub teams to become subject matter experts and actually investigate and prosecute deal theses in entirely new markets where no one in the firm might have ever done an oil and gas deal or a solar deal or some bio thing that entirely new And you have a team but there new markets forming and new markets coming online as potential transformation targets for technology. How are you keeping the firm sharp on every corner of the global economy? Yeah, so a lot of times, you know, there are super experimental things that we'll look at, but we don't necessarily kind of build the organization around yet. And then, you know, but once we commit the flag, then that, you know, our big commitment would be, okay, we'll create a fund around it. So, you know, we did that with crypto. We made the Coinbase investment before we had the crypto fund, but then we, as we got into it, we said, well, like this is going to be a larger market and it's super different than everything we're doing. So we need to commit around that. More recently, with AI, the way you build AI companies, the nature of the AI founder is just so different than everything that we've seen before that we ended up bringing in a lot of expertise from the outside. We kind of reoriented everybody on the inside. We actually had a huge amount of training materials and basically exams to make sure that everybody who was working on that was what we call AI native and understood all aspects of it before getting into it. Just because these things do tend to be different. And this is why you see a lot of people age out of venture capital and then a lot of firms be not what they once were. They were very important in 2015, but they didn't necessarily make the transition. and they didn't bring in the right kind of talent. Yeah. As when you're managing the firm, how do you think about the dividing lines and the walls between different funds? We've seen just with the neoclouds, a lot of those folks started as crypto companies. Then they became AI companies. But they're building things at such massive scale, I wouldn't be as surprised to see them in an American dynamism portfolio because they're sort of re-industrializing. So are you the person that the firm, that one of the subdivision leaders comes to to say, hey, I want this in my fund. How does that work? Yeah, so there's not that much conflict in that. You know, the categories are pretty clear. There are, you know, it happens occasionally where they bump into each other. But, you know, for the most part, it's like, what are you really trying to do? And then the entrepreneur will gravitate towards one of the funds based on what they're trying to do. Like, we want to sell things to the government. Okay, that's likely going to go into American dynamism. Whereas, like, okay, we've got, you know, eight PhDs in AI. That's almost certainly going to end up in infrastructure. Yeah. You know, kind of model world and that kind of thing. Yeah. And so, you know, it's really matching. The funds are, you think about markets of entrepreneurs and the funds are designed to address that market of entrepreneurs. And those tend to be fairly distinct. Now, sometimes people will try to game us and I get rejected by one part and then they'll go to it. We have very, very, very good comprehensive data on everything we've seen. We've got extremely good systems so we catch those people. When did you realize a $15 billion fund was possible? Did you imagine this kind of scale was possible from inception? Or was it a, did you build that? Yeah, no, our first fund was $300 million. So we definitely weren't thinking about it then. We thought $300 million was a lot. And people thought we were raising too big a fund in 2009. But now, like, what we've done is we've kind of looked at the markets and said, okay, you know, how big is this market? and then what kind of fund do we need to kind of win in that market and generate a large return. And yeah, we tend to have a relatively optimistic view of the future. I think there are some cynical VCs out there. When I was the boy, family racing burnt this high. She's like, play the game on the field. Yeah, we like to look forward and not look backwards. And so as a result, I think we have done a good job of getting ahead of the game. When we raised Fund 3, which was a billion dollars, we got a lot of criticism from other funds going like, that's crazy, no billion dollar fund has ever returned money. Yardy, yardy, yardy, yardy. And we're like, well, okay, but the world didn't look like this and software's eating the world and things are getting bigger and we think that we can deploy a billion dollars. And that fund had Coinbase and Databricks and Lyft and DigitalOcean and GitHub and like a lot of big outcomes. And if we didn't have that much money, it'd be a problem. Yeah. On that note of optimism and understanding the scale of the internet as it eats the entire world, how did you process the bubble talk that took place in the back half of 2025? Well, you know, I was a CEO during another bubble. Yeah. So I know a lot about bubbles. Look, I think that, so there's a couple of things that I learned from the bubble that we were in. One was- Sorry, sorry. We keep a bubble gun handy. Yeah, look, you know, one of the things, if you look back at that bubble, there were a lot of things that were present then that are definitely not present now So like probably the biggest being the internet Everybody knew the internet was going to be giant But at the time that everybody was investing all the money, the internet was very, very small. So, if you go back to 1996, at Netscape, we had 90% browser share and, you know, we had $50 million in revenue. So the entire, or we had 50 million users, sorry, 50 million users. So the entire number of people on the internet was 55 million. So you're funding these companies and giving them a $10 billion valuation selling into a market of 55 million people. And then half of those were on dial-up, so it was limited in what you could do. And so those valuations were running way, way, way ahead of the technology is kind of what caused the bubble. If you look at AI, the technology is working and getting to the world right now. How many people are on ChatGPT? How is that business going? It had, I think, zero revenue in November of 2022. I don't know what the current number is, but it's probably between $15 and $20 billion. We've never seen that before. The things that were bubblicious in 1999 99 aren't quite the same. But to me, the biggest thing that I learned was right before the bubble burst, nobody thought it was a bubble. Warren Buffett, who had never invested in any tech in early 2000s, started investing in tech. So everybody capitulated and agreed prices would never go down. That's what you need to get to a bubble. It's a psychological phenomenon, not a financial phenomenon. And so, you know, right now with everybody talking about a bubble, I was 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 the financial crisis, by the way. If you look at the price, you know, the kind of interest you pay on like home loan debt in 2007, it was the lowest in history. Yeah. Right before it all came crashing. It should have been the highest. Right before everybody defaulted. Yeah. It was the lowest in history, and that's because it was a bubble, because everybody believed, hey, they're not building any more land anymore. That's what's going on. Once you get into that kind of psychological convergence, that's when you really get into a really crazy bubble. Now look, in venture capital, everything is always priced at either half or double what it's worth. That's the steady state. Are there going to be things that are priced way too high? Speaking of land, how are you processing the move out of California, the news in California of the wealth taxes? A lot of folks are saying, you know, California might shoot themselves in the foot, kill the golden goose. How have you been processing the news? Yeah, I mean, so it's very kind of like an interesting kind of view of the world, I think, that the groups in California have been kind of pushing this idea. So, you know, I go all over the world. I've met, like, in the last year, you know, the president of Mexico, the president of El Salvador, you know, the crown prince of Saudi Arabia. So I'm always with world leaders, or I've spent a lot of time with them, and they always want to know, how do we create Silicon Valley here? We want a golden goose. We like your golden goose, we want one. It's pretty remarkable that we've repeatedly created companies with larger kind of GDP than most countries. Routinely, we've done that. And so rather than asking, how did we do that? It's like, well, how can we rearrange it and run an experiment and see if it destroys it or not? And so I think that's probably the weirdest part of it for me that people would think about it that way. If you start confiscating wealth and taxing unrealized capital gains for people who aren't liquid. So we actually saw this in Norway. So Norway has an unrealized capital gains tax. And Norway's got a lot of extremely smart people, great entrepreneurs, but they all left. And when you talk to entrepreneurs in Norway, they're like, well, I literally can't pay the tax because the company got marked up, whatever, a billion, $2 billion. And I own a lot of it. and I can't get that money out. It's a private company. And so I'm stuck. So I have to leave the country. And there are no entrepreneurs. There is basically no tech entrepreneurs in Norway now. And if you wanted to get, it's been so hard to break the Silicon Valley network effect, but this is the best strategy I've seen. If you wanted to break the California tech ecosystem. How are you processing? It feels like today we have this incredible optimism within the technology industry, this incredible excitement, and then outside of the technology, your neighbor or somebody nearby feels like there's real tension and kind of fear from broader society about the work that is being done within the technology industry. And you see interviews that AI leaders will give where they'll say, we're summoning the demon, or they'll say, not the most optimistic storyteller. The world will end, but we're going to create some great companies. So I think people like this, these interviews and these quotes spread so quickly. A lot of people have heard them And the question from the broader populace is like hey do we need to do this What the optimistic vision Yeah or can we stop right And obviously technology is proven to be somewhat inevitable relentless Yeah, yeah, yeah. So I think the good news is it speaks to the importance of the moment. So this is on the order of the microprocessor, the steam engine, or electricity, or something like that. And those things all turned out to be really good for humanity. Was there that much with electricity? Was there the level of fear? Oh, yeah. Because there was people that would go, and obviously I know the stories of people that would like, their job was to light the lamps, right? Oh, yeah. If you go back and read about the beginning of electricity, it's wild. Well, they made a law when automobiles first came out, there was a law in the United States that said, if you're driving your car and you see a horse, you have to stop the car, disassemble it, and wait for the horse to pass. Disassemble your car. Like it was that level, that was the regulatory idea. 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 like people would never be able to have a conversation again because they'd be just checking the time always. and so these technologies generate a lot of fear but I think that the good news on it is 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 and one of our bigger problems I think is there are people in the industry going for regulatory capture who kind of feed into the fear and then look there are also people who have just moving so fast it has actually freaked them out who are working on it. How do you advise portfolio founders or even people at the firm around processing noise? I think historically there wasn't this constant chatter. We have X now, which is a constant stream of consciousness from millions of people that are sharing their opinion. and it's, you know, I know a lot of entrepreneurs that, you know, one day everybody's saying that they're the greatest thing ever and then the next day, you know, people start to criticize and how do you kind of like, what guidance do you give there? Yeah, well, I think that like the world of media changed and I think it's tricky for people in companies to process because if you grew up in marketing or in old media, your whole concept of the laws of physics is different. So in 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 host cut you off or whatever. Yeah, you guys watch CNN from time to time. And so in that world, the way you would think about media is just like, let's make sure we don't say the wrong thing. Let's spend hours and hours crafting the message and so forth. In 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. Just keep going. and that I think it's I found it very very difficult to reorient somebody who has spent a career in old media world kind of thinking in a new media way and so the biggest thing that like I really talked to our CEOs about is like you've got to approach the you have to approach new media with new media thinking new media people that kind of thing and And it really, it's a remarkably opposite world. It's like, you know, it's like you're landing on Mars and you're like, well, what the fuck happened to gravity? Different. And you can't even say, well, no, gravity is different here because it's like, no, no, gravity just is. Like I can't deal with the fact that that's just the truth. Yeah. Well, we would love to keep talking about media. Yeah. There's very few things that we enjoyed. We should ring the gong. But we know you have a late, you got late fees if you're late to meeting. So this gong is for the whole A16Z team. Congratulations. And we won't keep you any longer, but come back on again soon and congratulations. Thank you so much for taking the time. Great to see you guys. We'll talk to you soon. Goodbye. 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. This podcast has been produced by a third party and may include paid promotional advertisements, other company references and individuals unaffiliated with A16Z. Such advertisements, companies and individuals are not endorsed by AH Capital Management LLC, A16Z or any of its affiliates. Information is from sources deemed reliable on the date of publication, but A16Z does not guarantee its accuracy. Thank you.