Stanford CS153 Frontier Systems | Ben Horowitz from a16z on Venture Capital Systems, Network Effects

Questions asked by interviewer Anjej Midha:

• What was the system that Ben Horowitz and a16z founders that allowed capital to get the frontier, and how did you scale?

Other than providing startups with money, VCs didn't really do much for startups in 2009. That was the first things wrong. Ben also believed that there would be more companies to get to $100million in revenue than the rest of the VCs...200 compared to the rest of the market just thinking 15 would. "Software was going to eat the world."

He scaled the company by outlining hardcore values and centralizing control. If everyone has a vote it can stagnate growth. Redistribution of power will always leave people upset, so the best thing to do is to have a leader who has final say on decisions. Create an official almanac that your company follows. Share economics, centralize control. Allows for restructuring whenever needed.

• What is the optimal construct of a truth-seeking conversation when evaluating complex technology?

Small conversations are the ones that are high-fidelity, not large room presentations. Good chemistry among people you are evaluating with is important.

• "what did you find was the most effective way to realign them or get them to revisit those assumptions in order or update those priors in a way that was aligned with your mission".

• "...can you talk about why was it novel why were people resistant to it and what were the insights that then led to the architecture of the firm being a network effectdriven firm".

• How did you successfully bootstrap your firm's network effect when you started from behind?

Network effects operate function as N^2 where every node or relationship you add in a group increases the value by a N^2 amount. Instead of paying themselves, they spent money on building this network and hired people to grow it.

• "Is that am I am I being overly facitious or is that true and and what were the immune responses like that that you were experiencing and how did you deal with them".

• "What's going through your mind right now".

• "...what does that mean for folks here who don't have necessarily access to the most capital may not have access to a ton of compute either What would you say is and but want to make a difference to the frontier right".

• "could you talk a little bit about what do you think is the shape of good ideas today that that's emerging in your mind".

• "...how how would you go about bootstrapping that problem".

• "How you resolve these two" (referring to the tension between starting narrow vs. doing something big).

• "why is that you know what do you think is 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".

• "but what happens if you you started by standardizing on some set of beliefs set of actions Yeah And then the world changes right 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".

• "could you say more what do you mean by that".

• "what prior do you feel like you now have to update so that you know given that you you felt like Yale at that time needed to update their prior faster today what do you feel is like the biggest assumption that you've changed about the venture capital industry um that maybe was a strong belief you held you know 10 years ago".

• "What are the things that you've had to say no to because you're like 'Well that's just not that that could be an interesting opportunity It might have even helped an entrepreneur out but that's just not in our mission That's not that's not us.'".

• "why'd you invest if you couldn't make sense of it why'd you invest".

• "What do you think it's going to take for the markets to realize that".

Questions asked by the Students/Audience (read by the host from a Discord channel):

• "First question the question is if I was a college student where would I uh put my energy and effort and what do I think about encouraging people to drop out of college".

• "how do I think uh being in a rap group in college kind of affected me and then can I rap for us now".

• "so the question is about Clue and uh you know what do I think about it now and in terms of momentum and this and that and the other".

• "question is you know given the SAS apocalypse and given that we have a long time horizon how do you think about like how can you invest in anything because anthropic is just going to oneshot it all".

• "What start advice is super overrated today".