Ben Horowitz on Raising a New Fund and How Venture Firms Scale
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
In this feed drop from Uncapped, Jack Altman sits down with a16z co-founder Ben Horowitz to unpack the founding philosophy behind Andreessen Horowitz and their 30-year partnership with Marc Andreessen. (00:08) Ben explains how they built their firm on the idea that venture capital was "disappointing as a product for entrepreneurs" and that a better model would provide real networks, operating experience, and comprehensive founder support. The conversation explores how they've scaled their venture firm to 600 people while maintaining their edge, their approach to managing high-powered VCs, and the difference between "heat-seeking" investing versus conviction-driven company building in sectors like AI and crypto.
- Main themes: The evolution of venture capital as a product for entrepreneurs, scaling venture firms without losing effectiveness, and the future of media and brand building in the direct-to-consumer era.
Speakers
Ben Horowitz
Ben Horowitz is co-founder and managing partner of Andreessen Horowitz (a16z), one of the most prominent venture capital firms in Silicon Valley. He has been working with Marc Andreessen for 30 years, including co-founding companies and building a16z into a firm with over 600 employees. Ben is also an accomplished author, having written "The Hard Thing About Hard Things," and brings extensive operating experience as a former entrepreneur and CEO to his venture capital work.
Jack Altman
Jack Altman is the host of Uncapped and a prominent figure in the venture capital and startup ecosystem. Based on the show notes, he has previously engaged with other leading venture capitalists and brings deep industry knowledge to his conversations about firm building, investing strategies, and the evolution of the venture capital industry.
Key Takeaways
Focus on Entrepreneur Strengths Over Weaknesses
Ben emphasizes that great venture investing requires evaluating entrepreneurs based on the magnitude of their strengths rather than ruling them out for their weaknesses. (15:36) The key question should be: "Is this literally the best person in the world at doing this thing?" rather than focusing on gaps in monetization models or go-to-market strategies. This approach helps identify truly world-class talent that can be supported through other means, rather than passing on exceptional founders due to correctable deficiencies. The psychological shift from finding what's wrong to identifying what's exceptional is crucial for venture success, as Ben notes "there's something wrong with everybody" but not everyone has world-class capabilities.
Venture Capital Can and Should Scale
Contrary to traditional VC wisdom, Ben argues that venture capital can scale effectively if structured properly. (21:15) The key insight is that the market for technology companies has expanded dramatically - from 15 companies reaching $100M revenue annually to 150-200 companies. This expansion, driven by software eating the world, creates opportunity for larger venture firms to address a bigger market. However, scaling requires avoiding shared control structures and maintaining small, cohesive investment teams (no more than 5 GPs per fund) that operate like independent small VCs with platform support.
Winning Deals Matters More Than Picking
Ben reveals that "winning deals is a much bigger percentage of the equation than picking the right deals" in generating venture returns. (49:48) Even with average picking ability, being able to consistently win competitive deals will outperform superior pickers who can't close. This creates a self-fulfilling cycle where the ability to win attracts the best investors, who want their top ideas to actually result in investments. The insight challenges the traditional VC narrative that emphasizes pattern recognition and picking ability over operational excellence in deal execution.
Board Governance Provides Essential Legal Protection
Ben strongly advocates for proper board governance, explaining that boards provide crucial legal protection for CEOs making material decisions. (28:30) Running material decisions through the board protects founders from personal lawsuits and potential jail time under securities laws. Simple decisions like equity grants require board approval to maintain fiduciary protection. Beyond legal protection, boards create valuable external pressure and rhythm that helps companies stay on track, with even Y Combinator finding that companies with boards performed significantly better than those without.
Media Strategy Must Adapt to Direct-to-Consumer Physics
Ben describes how media and brand building has fundamentally shifted from indirect (press-mediated) to direct communication channels. (37:18) The old world had fixed channels, formats, and company-focused brands, while the new world offers unlimited channels, unlimited formats, and people-focused brands. Success requires abandoning talking points and risk-averse messaging in favor of authentic, flood-the-zone content strategies. The cultural shift requires thinking about what you should say rather than what you shouldn't say, making it difficult for traditional firms to simply copy successful media strategies.
Statistics & Facts
- Andreessen Horowitz has grown to 600 employees over 16 years of operation. (05:08) This scale is relatively small compared to other organizations Ben has run, yet represents significant growth in the venture capital industry where most firms remain much smaller.
- The technology market has expanded from 15 companies reaching $100M revenue annually to 150-200 companies. (22:07) This 10x expansion, driven by "software eating the world," fundamentally changed the addressable market for venture capital and justified larger firm sizes.
- Ben maintains 25 one-on-one meetings with entrepreneurs every month across the portfolio. (05:49) This represents significant hands-on engagement despite running a 600-person organization, with management comprising only about a third of his time.
