Invest Like the Best

Podcast Notes Key Takeaways

• Improvements in the highly regulated American Dynamism sectors like defense, housing, education, and healthcare will come from technological improvements, not policy improvements
  • These are the most regulated, most subsidized, and lowest-competition sectors
• American Dynamism is an initiative to repair and strengthen the relationship between Silicon Valley and Washington to solve issues facing all Americans 
• Washington has a zero-sum culture that operates on short time horizons, while Silicon Valley has a positive-sum culture that operates on long time horizons
• Authoritarianism gives Russia and China certain advantages over the U.S. because they can order their best technologists to build what the country needs, whereas the best technologists in the U.S. are left free to create better ad-optimizing tech for Snapchat 
• American Dynamism founders must be great storytellers;the technology is important, but the founder must be able to convince investors, customers, employees, and potential future employees that they are a paradigm-shifting company 
• The government must turn to other sources than its defense-industrial base to solve its shortcomings in software, the Department of Defense’s realization of this has marked a paradigm shift in Washington 
• The playbook for defense tech startups: Start competing for the smaller pockets of money that don’t touch the five defense primes (that receive 40% of the defense budget), and then move up the categories of spend and compete for contracts in areas that have been around for awhile 
• People opting out of a system oftentimes improves the underlying system
• COVID forced parents to adopt a new model of educating their children, and like remote work, many parents were pleasantly surprised by the efficacy of the home-schooling and micro-schooling method 
• If all you need for work is an internet connection, people will move to states that are more aligned with their values and preferred policies, thus placing positive pressure on states to improve 
• Prices in regulated, subsidized, low-competition industries like defense, healthcare, and education don’t come down because they don’t need to come down
• Investors must be mission-aligned with the company or they shouldn’t be working with them  

Read the full notes @ podcastnotes.org

My guest today is Katherine Boyle, a general partner at Andreessen Horowitz. Katherine started her career as a reporter for The Washington Post before moving into VC at General Catalyst. She now leads a practice at a16z called American Dynamism, investing in companies that are solving critical issues in areas like defense, housing, and education. In the past year, I've spoken to Marc Andreessen, Josh Wolfe, and a number of founders about this need to build societally important businesses so I was excited to explore the topic in even more detail today. Please enjoy my conversation with Katherine Boyle.

 

For the full show notes, transcript, and links to mentioned content, check out the episode page here.

 

The content here is for informational purposes only and should not be taken as legal, business, tax or investment advice, or be used to evaluate any investment or security and is not directed at any investors or potential investors in any a16z fund. For more details, please see a16z.com/disclosures.

 

-----

 

This episode is brought to you by Tegus. Tegus streamlines the investment research process so you can get up to speed and find answers to critical questions on companies faster and more efficiently. The Tegus platform surfaces the hard-to-get qualitative insights, gives instant access to critical public financial data through BamSEC, and helps you set up customized expert calls. It’s all done on a single, modern SaaS platform that offers 360-degree insight into any public or private company. As a listener, you can take Tegus for a free test drive by visiting tegus.co/patrick. And until 2023 every Tegus license comes with complimentary access to BamSec by Tegus.

 

-----

 

Today's episode is brought to you by Brex. Brex is the integrated financial platform trusted by the world's most innovative entrepreneurs and fastest-growing companies. With Brex, you can move money fast for instant impact with high-limit corporate cards, payments, venture debt, and spend management software all in one place. Ready to accelerate your business? Learn more at brex.com/best.

 

-----

 

Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes. 

 

Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.

 

Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.

 

Follow us on Twitter: @patrick_oshag | @JoinColossus

 

Show Notes

[00:02:42] - [First question] - The origin and overview of the term American Dynamism 

[00:05:01] - Why the shift to a move slow and make sure nothing breaks mentality

[00:07:31] - What about the American system today feels broken and stale 

[00:09:48] - Becoming a journalist at The Washington Post 

[00:11:35] - Describing the power landscape of media as it exists today  

[00:12:28] - Major categories of American Dynamism that matter most  

[00:14:29] - What matters more or less to her as an investor in  these categories 

[00:17:31] - Whether or not there’s anything fundamentally broken about our government

[00:19:36] - The Systems Bible; What excites her about aerospace and defense and what creates opportunity and demand in these sectors

[00:22:44] - Explanation of what it means when the factory is the product 

[00:23:47] - How much is flowing into aerospace and defense currently 

[00:26:01] - An overview of how lobbying works and who does it and why

[00:29:07] - Whether or not she considers these sectors from a bottom up perspective as in investor   

[00:30:32] - What other categories she feels pulled towards 

[00:33:09] - The biggest problems that currently exist in the K-12 school system 

[00:35:34] - Thoughts on how states are competing citizens and how it plays into American Dynamism

[00:37:34] - The role immigration will play in range of outcomes in these main categories 

[00:39:32] - Key takeaways about housing in light of American Dynamism  

[00:42:09] - Her interpretation of the chart that shows inflation in categories over time

[00:44:40] - How different the investing dynamics are in all of these categories and thoughts on valuation in this world 

[00:47:56] - Whether or not expected returns and risk profiles are different in this area 

[00:48:36] - The importance of effective a founder’s storytelling, knowledge and customer empathy

[00:49:55] - Overview of the anatomy of a great story  

[00:51:30] - The story she tells founders at this stage so establish a partnership 

[00:52:46] - The kindest thing that anyone has ever done for her