Martin Casado on Where the Value Is Going in AI

**Martin Casado** (0:00)
I think there's basically two paths that are meaningful to talk about. One of them is that the labs win everything, and then the other one is the labs don't win everything. And you can make very strong arguments on either side of that. What would have happened 10 years ago if I gave you a billion dollars? What would you do?

**Theo Jaffee** (0:12)
Hire a ton of people, get a room in a office. You would blow up.

**Martin Casado** (0:17)
The whole thing would be like a total mess, right? And so now we actually know what to do with that money. The history of humanity and the history of engineering efforts, we've never been able to have 20 people, I don't think, be able to productively use $2 billion. Like, what does that even mean? Put that much money to work with that small of a team and that small of a timeline, you can put capital into these things and tends to turn into usage. Let's say you put in $10 to do this. I don't know if you get $9 back on the other side of that. But what we've never been able to do in the history of this industry is put in $10 and get anything back. But now it really is $10 in and then some amount out pretty directly.

**Sophia Dew** (0:51)
AI isn't just changing what companies can build. It's changing the economics of building companies in the first place. Martin Casado joins Theo Jaffee and Sophia Dew on MTS to explain why AI has created something unusual. Small teams that can productively put enormous amounts of capital to work and turn that capital into capability, usage, and growth faster than we've seen in the previous technology cycles. They debate whether frontier labs ultimately eat the rest of the AI stack, where open source and applications fit in, and what model routing tells us about how the market could evolve.
Martin also explains why he's less interested in today's margins and modes than identifying the strategic control points of a new technology stack and what he calls the biggest wealth unlock he's seen in his career.

**Theo Jaffee** (1:40)
Hello everyone and welcome to MTS. Today we are joined by Martin Casado, who's a general partner at Andreessen Horowitz and leads the firm's infrastructure practice. In the last week, SpaceX closed its 60 billion acquisition cursor and Stripe agreed to acquire OpenRouter, two major a16z backed companies. So today we'll talk about what those deals tell us about where value is actually accruing in the age of AI. Martin, welcome to MTS.

**Martin Casado** (2:06)
Super happy to be here. Thanks for having me.

**Theo Jaffee** (2:08)
We're super excited to have you.

**Sophia Dew** (2:09)
Yeah, it's been, what an incredible week.

**Sophia Dew** (2:13)
One of the weeks of all time.

**Martin Casado** (2:14)
It's been pretty well, well yeah, 10 years in the making, but it all happened in a couple of days, yeah.

**Sophia Dew** (2:19)
Yeah, so I guess we could start with a little backstory. You got a master's and PhD in computer science and founded Nassirah when you were 30ish?

**Martin Casado** (2:29)
30ish, yeah.

**Sophia Dew** (2:30)
30ish, yeah.

**Martin Casado** (2:30)
Yeah, who's counting? Yeah, but 30ish, yeah, yeah.

**Sophia Dew** (2:33)
But these days, a lot of top founders, including the founders of Cursor, will drop out of college at like 20 in order to start companies. So which path do you think is better?

**Martin Casado** (2:43)
You know, listen, I actually took time off between undergrad and grad school, and I went and worked for a national lab.
I actually think it's probably a good idea to get on-the-ground experience so that it's not entirely academic. I mean, the one caveat I will say is a lot of the AI stuff is pretty deep research. I do think, like, you know, in one hand, you have this whole kind of outcry against higher education and it's kind of very in vogue not to do it. On the other hand, it's kind of never been more relevant, too. And so I think we're in a bit of a schizophrenic period, which suggests to me you should do exactly what you're feeling is right for you. I think both paths are totally legitimate.

**Sophia Dew** (3:20)
Yeah, I mean, there's a there's like a spectrum of Neo labs where on the one hand, you have like flapping airplanes where the co-founders are like 22 years old. And then on the other hand, you have Jeff Dean and Oriel Vinyls is new lab, which I'm forgetting the name is slipping my mind. But obviously, these are like incredibly senior people with like decades of experience. So like, how much does decades of experience matter?