Inside Marc Andreessen & Ben Horowitz’s Multi-Family Office

**Molly O'Shea** (0:00)
Is it true this is the multi-family office of Marc and Ben?

**Michel Del Buono** (0:03)
It's a multi-family office for the principals here and a number of founders, the many, in fact, back by the company.

**Molly O'Shea** (0:09)
SpaceX is rumored and reported, too, to have merely a $2 trillion IPO incoming. How do you prepare early employees and founders for these large liquidity events?

**Michel Del Buono** (0:22)
It'll be an interesting test of the markets, if they can sort of, I mean, that would be the largest IPO ever, for the markets to digest that. It'll be really interesting to watch. Most of the independent firms have spun out of banks. Banks themselves don't train people to be professional investors. These people are trained to be service providers. They're trained to be responsive, helpful. But actual investment acumen, when you're at a large bank, sits in a separate group. You're rewarded as a wealth manager by how much you grow your book of business. You're never trained to be an investment person, per se. So I'll see someone with their very, very first liquidity. They take it, and instead of doing something a little bit safe, in case there's a rainy day, they turn around, and you go put in a bunch of very early stage startups. You just sort of sit there, and you're like, listen, if you're going to do venture, at least try to do it in a systematic way. Do not take 80% of what you just got, and hand it to your three friends. Almost always this ends in two.

**Molly O'Shea** (1:24)
Michel, welcome to Sourcery.

**Michel Del Buono** (1:26)
Thank you.

**Molly O'Shea** (1:26)
I think this is one of your first podcasts in a very long time.

**Michel Del Buono** (1:31)
Yep, first modern podcast.

**Molly O'Shea** (1:34)
First modern podcast. And so you're the CIO of A16 Perennial. Is it true this is the family office or multifamily office of Marc and Ben?

**Michel Del Buono** (1:45)
It's a multifamily office for the principals here and a number of founders, not necessarily been backed by the company, but many, in fact, backed by the company.

**Molly O'Shea** (1:54)
So what's the structure of Perennial?

**Michel Del Buono** (1:56)
Okay, so I think the reason why we built Perennial or why we're building Perennial, it's about four years in now, was a reflection on what's happening in the wealth management industry. I think for starters, the principals here, Marc and Ben included, had been served by more traditional wealth management firms. And they looked to the LPs of A16Z and saw the big sovereign wealth funds, the big pensions, have very high-end professional investment teams come. And then they'd look at the wealth management side, how they were being served personally. And frankly, I think most folks would agree, they felt sort of underwhelmed with the quality of the investment advice and the investment acumen. Not the whole service provision and everything, but specifically on the investment front. I think that was one issue. Another issue or another point, obviously, is to build a community around A16Z. A16Z is all about its community. And so, this is another way to help founders in a different dimension of their personal life, right? So, if you can take that burden off their hands, ostensibly, they can focus even more on the business.
So, it becomes much more of a lengthier relationship with the founders, because, obviously, you start when you invest with them in their startup. But even post liquidity, instead of having sort of an artificial endpoint of your relationship with them, you can continue helping them think about life after liquidity event, right? In terms of philanthropy, asset management, legacy, all those kinds of things.

**Molly O'Shea** (3:37)
I want to get more into the Perennial strategy and structure, but I think before that, it would be great to just dive even deeper into the state of wealth management today. What have been the biggest problems drilling down further into the issues that you've seen? How wealth is managed, maybe the different types of wealth over time, but structurally, like, what are the biggest problems there?

**Michel Del Buono** (3:58)
It's very interesting. So they're basically, there are two approaches you can use to have your wealth managed if you're a wealthy individual. One is you can go to the traditional RIA or wealth management channel, and I'll talk about that in a second. The other one is you can go to traditional asset managers, I think, you know, the large asset management firms, you know, of hedge funds, PE shops, it's like that. And both of those approaches, I think, have their own sort of problems when you're dealing with an individual that has an institutional amount of wealth or will and are taxable. These two, the confluence of these two effects means that the sort of the two standard approaches I just described aren't really great. So, wealth management, traditional wealth management, most of these firms, the independent firms have spun out of banks and the banks themselves don't train people to be professional investors, right? These people are trained to be service providers. They're trained to be responsive. They're trained to be helpful. But actual investment acumen when you're at a large bank sits in a separate group. And you're rewarded as a wealth manager by how much you grow your book of business.