Marc Andreessen on Evaluating Founders and AI's Consumer Surplus

**Marc Andreessen** (0:00)
I'm competing with myself. Life just gets a lot simpler if you just assume everything is your own fault. Everybody's kind of feeling tense and nervous and anxious and fearful and so forth. But everybody's pretending they're not feeling that way. I think every time we passed on a promising venture company over price, I think it's been a mistake. There's nothing that we're missing today that we could solve by going public. The tech industry is more centralized in Silicon Valley than it has been in its entire existence. This entire labor displacement thing is 100 percent incorrect. It's completely wrong. Essentially, every large company is overstaffed. I think a lot of them are overstaffed by 75 percent.

**SPEAKER_2** (0:34)
Venture capital has a counterintuitive problem. Experience can make you worse at the job. The investor who lost money in a category five years ago carries that scar into every new meeting, even when the next great company shows up in the same space. Marc Andreessen calls this the scalded stove phenomenon and argues that the mistake of omission, passing on the next Google, far outweighs the mistake of commission. The conversation spans what separates great founders from credentialed ones, why AI is re-concentrating the tech industry in a 20-mile radius of Silicon Valley, and how something close to 99% of AI's economic value will accrue not to the companies building it, but to the billions of people using it. In this episode, originally airing on The Twenty Minute VC, Harry Stebbings speaks with Marc Andreessen. Co-founder of A16Z.

**Harry Stebbings** (1:29)
I started 20 VC as an 18-year-old in a bedroom in London with no money, and I didn't know a single VC. I wrote down the names of three great investors at the time who I dreamed of having on the show. One of those names was Marc Andreessen. It has taken me 10 years. It has taken me 3,000 shows. But finally today, I'm so proud to have Marc Andreessen on the show, the man who has built one of the greatest firms of our time. They manage over 90 billion dollars and have invested in some of the most generational companies. This was a very special one for me and I hope you enjoy the episode. You have now arrived at your destination. Marc, you probably don't know this, but I started this show when I was 18 years old and you were one of three names that I wanted to have on the show back in 2015 I have to admit I've ticked off the other two.
I'm a bit worried that I'm going to have to stop after doing this show, but I'm so touched that you agreed to join me, so thank you for joining me.

**Marc Andreessen** (2:29)
Good. I'm thrilled to be here.

**Harry Stebbings** (2:30)
Now, I was running listening to every show that you've done before, and you recently said that you don't introspect. Introspection is potentially overrated. I really struggled with this because I thought we learned from mistakes and I valued experience in that way. Can you help me understand the lack of value placed on introspection, and do we not learn from mistakes?

**Marc Andreessen** (2:51)
We do learn from mistakes, but the problem is learning from mistakes, sometimes is good and sometimes is bad. If you just talk business for a moment, like in the venture mindset, this is a very big problem. There's a founder version of the mistake, there's a venture version of the mistake. The founder version of the mistake is, if a founder starts a company in a category and the founder doesn't work, the founder is then emotionally angry at that category for the rest of his life, and will not acknowledge when there's something that's going to work in that category. I've just seen that over and over and over again.
That's fine, because most founders go on to do other things, and that's fine and good, and it generally doesn't damage them from a business standpoint. In venture, the same thing happens. If you invest in a category, or if you invest in a kind of company, or you invest in a kind of founder, then it doesn't go well. It's extremely easy to learn from the mistake, and to basically say, all right, I touched that hot stove, I'm never doing it again. Then you can tell me what happens next, which is the next thing shows up in pattern matches, and it's the thing that you should invest in, and you have the chance to invest in, but you touched the scalded stove, and you know you're learning from your mistakes. You're doing the responsible thing, and so you don't do it. I think there's something that's particularly pernicious about learning from your mistakes in venture capital. Then I think that's also somewhat true about life. You get married multiple times as they say, it's the triumph of hope over experience. I think probably you want hope to triumph over experience in that domain, and I think there's a lot of other domains of life in which that's probably true.