Turpentine's newest VC podcast
Featuring our first interview with Ben Horowitz. Plus we just hit 1m downloads.
I interrupt our regularly scheduled weekly essay to share with you the update that Turpentine, the media company I co-founded, just launched one of our biggest shows yet: Turpentine VC, a podcast where founders/partners of top firms share how they built/run their firms, and where they think venture is going.
This show features industry titans like Ben Horowitz of a16z, Alfred Lin of Sequoia, Mamoon and Ilya of Kleiner Perkins, Sarah Tavel of Benchmark, and many more.
I’m thrilled to launch this show because there’s a lot of coverage on the “who” and the “how much” of Silicon Valley’s top VCs… but there’s very little on the “how” — how they create their investing and fund strategies, how they think about their edge with the best founders, and ultimately, how they build their businesses.
Ben Horowitz, one of the most influential and powerful venture capitalists of the last decade, joined me on the first episode for a rare talk about how he thinks about the business of building a16z and where the firm — and the future — is going.
Listen to the show on:
Some of my favorite takeaways from the episode:
On why Ben considers Paul Graham’s Y Combinator a16z’s closest “spiritual” analog:
“[a16z is] a little different in that we are organized in such a way where Marc and I can have very significant contributions without picking the investments. We have more scale and more job functions at Andreessen Horowitz because we're a product first, and then a team of investors second, whereas every other firm, I think, is the opposite. Product, meaning, the product to entrepreneurs.
‘What are we offering?’ is where we start. And then the team of investors kind of goes with that. As opposed to, we're a team of investors and then like we’ll figure out what our product is as we go. So it's a very different kind of orientation. [YC] is the closest analog to us, spiritually.”
On a16z’s unique approach to governance:
“It's a concept that we got from a couple of people: one was Herb Allen, and then the other was Marc's father-in-law. And they both gave us the same idea: traditionally in venture capital, it looks a little like a law firm… a lot of these partnership structures where you have shared economics and shared control.
From a partner standpoint, that makes a lot of sense in a lot of ways. We have a different structure where we're shared economics, but we've centralized control. By not having shared control. We can change the structure of the firm very easily.
And if you want to grow in an integrated way, with a kind of single culture, single offering, then you have to be able to change the organizational structure as you get bigger. The structure that you had at 50 people, it's just not gonna work at 500, and that's for any organization. But in order to do that, somebody's gotta be able to make that decision with no politicking, no arguing.
You have to be able to make those tough decisions to get to the structure that you need to be maximally effective. And that's just really hard to do… I don't know how you would do it with shared control.”
On why a16z is so big relative to other firms like Benchmark and USV:
“The market's just gotten bigger. So I think the way to think about it is, if you believe the market was fixed at 15 companies, then [staying diligent on fund size] is the exact right strategy, right? And you know, we don't believe that. I'm not allowed to talk about our fund returns, but if you look at our funds, I think our larger funds have at times like way outperformed our smaller funds.
And that's just kind of a function of… if there were 15 companies and now there's 150, then if you had a $400 million fund, then maybe you need a $4 billion fund to do the same deals, if you win the same percentage of them. That's just simple math. And I think that there are different beliefs. Benchmark believes what they believe. We believe what we believe.
And again, our mission isn't necessarily fund returns. We have a mission to help the best entrepreneurs in the world build the best companies that they can. We generally come at like the whole structure of what we do from that perspective. We could all get much higher salaries if we didn't organize the firm the way we did. But our mission isn't to maximize the number of money per partner. Our mission is to be the resource for building great technology companies.”
On spreadsheet VCs vs. people-first VCs:
“There's this kind of thing in venture capital that a lot of venture capitalists will say, “Spend all your time with your winners.” We don't believe in that at all.
If you look at a spreadsheet, that's the exact right thing, right? Because the three winners are gonna produce all the returns. But the way we look at it is: one, we're not so confident that we know who the winners are for a long time. The other thing is that, we have the philosophy of, look, we knew the job was dangerous when we took it. If you're going to take us as your partner, we're gonna be there till the bitter end. Having been very close to the bitter end myself, from time to time, you really do need support or at least somebody to talk to when you're in that situation.
Just from a competitive standpoint, our whole idea is that we sell on reputation. That's fundamentally important to our competitive advantage, is to have the best reputation. So all those things kind of cause us to behave differently. And if you're not into that, if you're into the spreadsheet view of venture capital, then like, you would hate that idea.”
On software as a creative artform:
“We're big believers in software. And if there's like a massive software breakthrough, that has new applications or new models we'd certainly be all on that. Anything like AI or crypto or what's going on in games, like we'd bet that every time.
There eventually became a small number of auto companies, right? There never eventually became a small number of software companies, despite what Larry Ellison and all those guys said, that there were only gonna be three software companies. Because it’d be like if there's only gonna be three novelists.
It's a creative art form. It's got a very big design space. And so, we think if there is a big change in how you can write software, which AI is probably the biggest change we've ever had, that's gonna produce things and we’d bet that all day.”
Our second episode, dropping next Tuesday, will feature Mamoon and Ilya of Kleiner Perkins, and it’s just as knowledge-dense about firm-building as this one is – albeit Kleiner Perkins has an entirely different strategy and perspective than a16z. Please subscribe to our show on your favorite podcast app or on YouTube.
ALSO: we just hit 1m downloads across our network. Having launched the network on June 1, I’m happy with early progress across our 8 shows. We're always on the hunt for new talent and partners. If you're interested in joining our aspiring media empire, email me at erik at turpentine dot co. Thank you for your support.