Is Non-Consensus Investing Overrated?
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 riveting venture capital debate, Andreessen Horowitz General Partner Martin Casado and Susa Ventures' Leo Polovitz dissect one of venture's most contentious questions: Is non-consensus investing overrated? Casado argues that early markets are surprisingly efficient (02:32), making it dangerous for founders to ignore consensus when raising follow-on capital. Polovitz counters that his best investments often struggled initially—taking a month to raise seed rounds (20:55)—before scaling dramatically. The conversation explores why most companies fail from "indigestion, not starvation" (13:25), how venture fund mechanics shape pricing decisions, and whether the market's growing efficiency means investors should stop looking for price arbitrage and focus purely on identifying winning companies.
Speakers
Martin Casado
General Partner at Andreessen Horowitz with over 10 years of investing experience and nearly 200 investments. Former Stanford PhD and founder/CTO of Nicira (acquired by VMware for $1.26 billion), where his business unit became 40% of VMware's growth and reached $2B run rate.
Leo Polovets
Venture Partner at Susa Ventures (now Humba Ventures) with 12-13 years in venture capital. His portfolio includes multiple unicorns like Robinhood and Flexport, with 10-12 unicorn investments total and a focus on pre-seed and seed stage companies.
Eric Newcomer (Host)
Host and creator of the podcast, covering venture capital and startup investing with deep industry connections. He facilitates high-level discussions between top-tier investors and has access to leading venture capitalists and industry data.
Key Takeaways
Build Consensus Awareness, Not Consensus Investing
Being "blinkered to how VCs view companies is actually quite dangerous" when you're dependent on follow-on capital. (02:00) Don't chase consensus investing, but understand consensus dynamics—it's like academic publishing where great research needs program committee buy-in to get accepted.
Most Companies Fail from Indigestion, Not Starvation
Companies that raise too much money too easily often ignore actual market feedback and develop bad practices. (13:25) The 2021 billion-dollar valuations cohort likely represents "one of the biggest wipeouts of capital" precisely because easy money led to poor discipline.
Focus on Unit Economics Over Market Size Fantasies
Avoid the "market TAM sloppiness" trap where infinite addressable markets justify any investment. (30:11) Even after $100 billion invested in autonomous vehicles, unit economics remain "on par with Uber"—making standalone venture-scale businesses nearly impossible.
Transition from Non-Consensus to Consensus is Critical
The best investments often start non-competitive but transition to hot rounds through milestone achievement. (21:36) Companies that can't make this transition struggle with follow-on funding, while those that do can see "20x or 50x" valuation jumps between rounds.
Price Shouldn't Override Company Quality
Don't look for "good deals with respect to other investors"—look for good companies regardless of price. (05:04) When markets are efficient and companies are strong, high prices reflect real value. Fighting the market on pricing often means missing the best opportunities.
Statistics & Facts
- Martin Casado has completed almost 200 investments either as a fund runner or being directly involved over his ten years as an investor. (01:41)
- Casado's company was acquired for $1.2 billion with less than $10 million in ARR, but within 3.5 years at VMware, the run rate reached $600 million and is now approximately $2 billion. (33:39)
- Andreessen Horowitz has four companies at the $100 billion valuation mark: Stripe, Databricks, Coinbase, and OpenAI. (39:49)
