Erik Torenberg on joining a16z: the firm's internal debate on AI defensibility and why they should have been more aggressive

respect the play. So, who knows? Is it 3D chess? Are they playing 4D chess? Who knows? Anyway, uh we got Eric Torrenberg from Andre and Horowitz in the studio. Welcome to the stream, Eric. How you doing? Third time. He's back. Three Pete. Three Pete champion and kicking off a record.

I have has eight Andre and partners ever been on one podcast? I don't think so. I said Nixon went to China, Torrenberg goes on TBPN. Yeah, look what happened. Look what happened. Uh you open the floodgates. Uh it's been fantastic. Uh how has the transition to Andre been?

We asked you when you joined uh what your plans were. Were you hitting the ground running? Are you ripping checks on day one? Uh you're a couple weeks in the gig. I expect some sizable checks to be written. What you got for me? I feel like TVPN is my uh you know, what did you get done this week? You know, makes time.

It's my third week, fourth week. And um no, it's it's been amazing. I mean, just the the scope of the firm. Uh almost 600 employees. I mean, I don't I think people fully appreciate all the uh the the amazing things that that are happening here.

I've been spending a lot of time in the different deal meetings at the different funds, just getting up to speed and how we operate, meeting the meeting the broader team, starting to build out this this media org. And um I feel like you know I talk to employees at OpenAI all all the time.

They're like we've got so many things cooking and I I feel like there's a little bit of that here too.

Just Ben and Mark are so entrepreneurial and and that leads onto the different vertical fund leads that you're going to hear you everyone's going to you're going to chat with today and people are going to hear from and um yeah it's just been incredible. Yeah. Is is Andre the biggest venture fund ever in history now?

I can't imagine there's a bigger one. I think if you count the original ships that went looking for whales harpooning, they probably had like something like a thousand spread across maybe a few ships.

Yeah, because I mean there's like this narrative in venture generally that like Andre's really big and no one's ever done it at this scale before and like maybe that's weird or different or good or bad or whatever.

But the other way to think about it is like think about the other major financial institutions that are huge much bigger sometimes an order of magnitude or two orders magnitude bigger and are they in founder mode or are they like 200year-old behemoths and all of a sudden when you frame it like that I become very bullish on the founder mode organization even though all there's obviously all these competitive dynamics and different strategies but it is very interesting to see a new financial institution we got this from when we were talking to David on the Um uh and uh it it was just very interesting to see that uh this is David Haber uh that that he he came from Goldman uh worked on firmwide strategy there.

Told us some of the history of how Goldman had developed all these pods. I was doing a deep dive on their uh their special situations group and how that spun up and spun out during the OA crisis and like it's such a storied firm but I don't think you can get there by maintaining some small size.

You have to become an institution.

That's exactly what what what what you've done and I think Mark's core insight, you know, self-resing the world and the sort of the implication behind that that the winners are going to get bigger and bigger and there's going to be more of them is just perfectly coincided with with the firm going super big and you need a lot of capital to to support that strategy and it's it's worked out tremendously.

Yeah. I mean yesterday we were talking about this weird dynamic where uh you would expect the power law to apply to startup outcomes and we've seen this from time and time again. is very obvious and it also just makes sense based on market dynamics, how you know power acrru etc.

But um venture capital funds also follow a power law and and and and you would imagine that also the size and scale of the firms might also follow a power law as there are increasing returns to scale.

So it's been interesting to see kind of that play out and in many ways the power law just keeps applying no matter what lens or frame you take there's like there's going to be a big outcome. Uh anyway, Jordy, anything else you want to run through? Can you break down LP day? Like what are what's actually going on today?

What are we zooming into? Uh break it down. The thing I'm trying to triangulate is what's what's the next coinage? You know, what's the next American? We got to break it here. That's the trillion That's the trillion dollar question.

Or or it'll drop as a big piece either in the Wall Street Journal or on a blog and then we'll we'll get you the same day to break it down. Yeah. Yeah. Um 100%.

And um you know today and tomorrow is going to be us presenting sort of you know one our our biggest portfolio companies or some of our best ones that you you'll you'll you have Alex tomorrow coming on the show from Worldcoin but then also the different leads of you know Jen who who runs uh LP day is is coming right after this and and also just our fundraising uh I believe over $40 billion um you know to to date um but then also the the heads of the different vertical funds 40 billion.

That's huge. That's the most deserving. That's the biggest size gong ever, I think. Uh maybe beaten out by Stargate. But uh but other than Stargate, you know, you're up there all in Jen, you know, sort of go deeper on it. But also just um David George who leads our growth fund which has done phenomenally well.

Um you know, Martin on the on the infra side, an who works uh AI AI under underneath him. Uh Du Dave Yulovich on the American Dynamism side.

Um, and and the LP day is really just us talking to our LPs about uh, you know, what what is the latest in terms of how we're doing, what what we believe, what's happening in the market, where we think things are going, and it's really giving them kind of an inside view, and we're going to release some of the the best talks.

Um, but and of course, you're going to hear from Mark Andre himself about uh, about where we are, where we're going. In terms of uh kind of like advice for founders, what is the role of an LP day in the life cycle of a startup CEO that becomes a fund driver?

I've seen some times where founders go to these LP days and then couple of months later there's a direct investment from one of the LPs. Is that part of the dynamic or is it really just an opportunity to kind of uh come and and share like the story of the business with the wider business and investment community?

No, 100%. So we have a very influential uh LP base. Jen will get more into specifics and it and it's we're more diversified than your average vent firm. So we have um LPs that um you know mo a lot of firms really focus on on endowments. We've got some incredible endowments as well.

Um but we also have a lot of other partners including big international partners and a lot of companies are looking for you know especially some of these uh AI companies uh you know will tell you about sort of the open source AI companies that he's worked with looking for these global global partners.

So, so yeah, you know, we have worldcoin, etc.

So, there are a bunch of companies that have international presence that are growing their international presence and want partnership from from from big players uh globally and some of them are here and yeah, we we're definitely looking to Yeah, I mean we saw that yesterday with Nvidia.

Jensen went to Saudi Arabia, announced some big deal, the stock popped. It might be the biggest company in the world.

is so back and you know Jensen gets invited to these things but if you're you know two years into your entrepreneurial journey you might not get a seat at the table but an LP day could be an opportunity to meet someone from that community correct yeah yeah no 100% Ben Haritz was was also there as reported which is why he's uh he's not joining TVPN today but more uh we'll give you the the the scoop there perhaps Jen but um but yeah no there's there's there's a lot going on in terms of uh international partnerships So expect to hear more from us on that front.

Yeah. Now I'm sure the fund is aligned on most of the strategies and kind of topics and hot takes, but there's probably a lot of internal debate as well around how the these future tech trends will play out, especially the things that haven't been codified or really decided.

Uh I are there any topics that you're hearing the partnership kind of go back and forth on or debate internally whether it's future of AI or how geopolitics plays out or anything re-industrialization different strategies what is keeping the partnership uh you know excited in uh in big partner meetings I'll give you a couple um so so one is more of a meta uh topic which is this idea of you know a lot of people say a lot of things about us and how much should we engage you know should we just focus on the work just just working with founders just just you know uh driving great returns for LPs or when do we correct the record when when do we step in versus hey it's not uh you know it's not worth our time you know there's this famous um this rap beef um yellow once called out Eminem or maybe it was MGK MGK called called Eminem and then Eminem was like oh man now I got to answer this fool I'm going to like build up his profile in responding to him and so sometimes is a little bit of that.

Um, you know, there's one example. Um, Eric Newcomer, who like Ben Smith, unclear if that's a real name or not. Um, if that's I don't want to dox him. Yeah, don't dox him. Don't dox him here. Don't dox. Yeah, we don't dox here. uh you know, Eric Newcomer who who is a friend of mine. He's a good guy.

But on on his podcast, he did say um uh or or certainly imply that he was one rumor that our crypto fund has made a lot of its money betting on speculative things and then selling off and that couldn't be further from the truth. Uh you know, uh we we are not a memecoin fund.

Uh you know, we hold mo most positions and so that's there was at least like one good company in that fund, right? Like am I thinking of Coinbase maybe? Like the biggest potential one. Yeah. That Chris Dixon got into it. Like the seed and the series A and the series B and the series Z like basically every single round.

Yeah. That turned out okay. Industry. That's that's an example of disinfo. There's a lot of disinfo out there. And so we we debate how much we should weigh in. Of course, me coming in, I'm like, no, let's let's correct the record a little bit.

Let's uh so that that's one on the on the highest level how the firm operates.

Um, in terms of where things are going, you know, I'm excited that you'll have both Martin and An uh today because in AI we have a big and David George, we have a big debate internally around uh defensibility and is it going to look like um you know previous platforms where if it's not state that's the moat because state can be exported it's it's context context is the moat and that you you chat with chat uh with chat GPT and it gets to know you better and and that's what's going to keep you um or is it uh is it brand um is Are these things just moving so fast?

You know, we hear all the time about people who are building cursor for X that uh that brand is what keeps people going even if if if if it's not context or or are they just not not as defensible as previous players?

But um you know the numbers don't lie and the the user growth and and the revenue growth is just astronomical. And as aggressive as we have been, we we talk internally like we should be being more aggressive. We should have been more aggressive.

There's winners in every category and it doesn't seem like they have dominant market share.

that that's a mistake that we've made historically is like thinking oh you know OpenAI won this so you know there's not going to be another uh you know big big provider and on either the model layer or or or the apps and so it seems like the market is expanding where where OpenAI continues to to do phenomenally well and also there's there's winners in across the stack and and room for more so um I'm sorry how has your mindset shifted being at a you know platform multi-stage fund now where you Historically, if you were investing, maybe you could do personal checks across different, you know, stages, but ultimately you were very early stage focused.

Is it is it has it been enjoyable being at at a, you know, such a scaled fund where you can realize like, oh, I didn't get into the series A of that company, but I want to meet the founder now, so and and really get to know them. So, we have an opportunity to be in the B or the C or the D, right?

like there's there's really no no sort of um cap on on when you guys can get involved and partner with the company. And that's a totally different mindset of of allow of being able to think like truly long term. Yeah. Well, and it's a bit of both, right?

Because on the angel side or seed side, you can it's easier to invest in in people who are doing the the same thing or or sort of, you know, YC is in, you know, god knows how many competitors um you know, companies that absolutely hate each other. I'm not going to mention names, but um again to get sense.

Um and uh you know bigger multi-stage firms just don't have that same luxury. So you you got to pick and you got to be right.

Um uh and also to to your your point, yeah, if you don't hit something in the A, you know, you know, we weren't the earliest backer of Andre, but we're the second biggest backer now because we just caught it at the at the right time and just backed it all the way um afterwards.

So even if you don't get in at the seed or the A um and I spend a lot of time with the growth team, there's big opportunity to to get involved. So that's uh that that's an encouraging sign. And just once like I didn't know what I didn't know.

It's kind of like I I used to live in Detroit and then I moved to San Francisco and I was like why do I live in Detroit? Why did I live in Detroit? And similarly like um just being at a at a place like this I didn't I didn't quite realize what I was missing. That's great. Well, let's kick it over to Jen.

I know we're running over time already. I'm sure we're going to be bumping up against stuff all all day long, but thank you so much for hopping on and kicking it off. Kick TVPN correspondent signing off. Thank you. Always great to see you, Eric. Great to see you. Uh yeah, keep these soundboard going.

Jen told us that she wants some soundboard. We'll hit it hard. She's the operating partner at uh Andre Horowitz and is responsible for fundraising. LP day is obviously a huge day for her. So, we will bring her in in a second. We'll ask her what's on the minds of the LPs