a16z's New Year Perspective: When the supply side undergoes a leap, we need a completely new thinking framework

This article is sourced from: Sense AI

“If there is a fundamental breakthrough on the supply side, market size analysis becomes invalid.”

In mid-January 2026, shortly after a16z announced raising over $15 billion for a new fund, Marc Andreessen and Ben Horowitz engaged in an in-depth conversation about AI, media, and the future in Silicon Valley. This was not a routine interview but a systematic discussion centered around the “Supply-Side Revolution.”

Their core judgment is: true innovation does not come from optimizing existing demand but from creating unprecedented supply that forces new demand to emerge. From Elon Musk’s restructuring of Twitter to AI reshaping all market boundaries, this logic runs throughout. The result is not 10% growth but opportunities that are 10 times, 100 times, or even 1000 times larger. This article is based on content from the official a16z podcast “The Ben & Marc Show,” organized and expanded.

Speaker Profiles

1. Marc Andreessen: Co-founder of a16z. At age 22, created the popular graphical browser Mosaic, then co-founded Netscape, igniting the first wave of the internet revolution. Portfolio includes Facebook, Twitter, GitHub, and more.

2. Ben Horowitz: Co-founder of a16z. Former product lead at Netscape, later founded Opsware and served as CEO, leading the company through IPO and successful sale. Authored The Hard Thing About Hard Things and What You Do Is Who You Are, regarded as one of Silicon Valley’s most respected “entrepreneurial mentors.”

3. Packy McCormick: Author of the tech business analysis blog Not Boring, known for in-depth, optimistic, and insightful articles.

4. Erik Torenberg: General partner at a16z, founder of the tech media network Turpentine, host of The Ben & Marc Show.

Media Liberation: From “Controlled” to “Free”

Ben Horowitz: Packy, you mentioned in your article the 2015 New Yorker piece that called that the last golden age of media’s honesty with you. I think no one is better than Marc at summarizing what has happened in the media industry over the past decade.

Packy McCormick: I want to ask Marc, to what extent do you think this shift in the trend was caused by you and a few others openly opposing, pulling the entire public opinion environment back to its current somewhat “out of control,” or “liberated” state?

Marc Andreessen: I’d describe today’s information environment with three words: “neutral” (not controlled), pejorative “anarchy,” and positive “liberation.” We are indeed moving toward a more open world, but I don’t want to portray myself as some moral hero.

This story starts in 1993. At that time, I refused to add censorship features to the Mosaic browser. If I had, today’s world might look very different—more dystopian. Later, from 2007, I sat on Facebook’s board for over a decade, experiencing the company’s rollercoaster decade firsthand. But the real turning points were two things. First, Elon’s acquisition of Twitter—that changed everything. Second, I must give a big thumbs-up to Substack. As one of their earliest and largest external investors, we are proud of them. Under immense pressure, they held firm on free speech, standing on principles.

Ben Horowitz: Exactly. They were really attacked by various “anti-free speech” forces at the time.

Marc Andreessen: Yes, but they held firm. Elon publicly and visibly challenged censors. As a small company, Substack had to fight tougher behind the scenes to preserve the integrity of their platform.

Supply First, Market Size Analysis Fails — Substack’s Investment Logic

Packy McCormick: Just to talk about your investment in Substack. I also use Substack, but still think it was a crazy investment. Did you invest purely for business returns, or did you see it as beneficial for the future?

Marc Andreessen: We don’t invest out of sentiment; our goal is always returns. At that time, we believed—and today believe even more—that Substack has the potential to become a foundational industry player. We fell in love with the founders—they are very likable people. I experienced the early internet, especially the golden age of blogs, which was a very special period. Blogs created a lot of intellectual content that wouldn’t have existed otherwise, but there were issues—one being that bloggers struggled to make money.

We invested in Substack because we deeply believe it’s a “supply-driven market.” In an era flooded with free content online, the question seemed to be, “Will people really pay for content?” But we saw the other side: if you can enable creators to monetize, you will create authors and content that don’t exist today, which will generate new, currently unseen demand.

This is essentially a gamble: betting on a whole generation of high-quality content that hasn’t emerged due to lack of monetization mechanisms. Just like no one demanded a Macintosh or iPhone before their invention, demand doesn’t appear until supply-side products are available. When brands shift from The New York Times or The Wall Street Journal to individual creators, Substack acts as a huge catalyst, creating the so-called “non-fungible writers.”

Ben Horowitz: One of Substack’s founders, Hish, told us many writers are trapped in traditional media organizations. I asked, “Are they truly trapped, or did they build their own prisons?” He assured me that as long as there’s an independent path, many will happily break free and write from different perspectives.

When supply shifts, market size analysis becomes invalid

Packy McCormick: Ben, I really liked the email you sent to Databricks founder Ali, saying he underestimated his business, which could be 10 times bigger than Oracle. What’s the basis of this “10 times” judgment?

Ben Horowitz: It’s simple. For example, compare local software like PeopleSoft with cloud software like Workday—the cloud version is about 10 times larger. Oracle can be seen as a local version of Databricks. Back then, AI wasn’t as hot as it is now, and the emergence of AI accelerated my prediction. What I was doing was a psychological game: Ali was very cautious, and I had to tap into his specific mindset to steer the company’s trajectory correctly.

Marc Andreessen: I believe Substack’s value could be 1,000 times that of the existing content industry. The potential demand for high-quality, in-depth content is enormous; the problem isn’t lack of demand but lack of supply.

Marc Andreessen: I’ve heard people complain about TV since I was young, calling it a wasteland of nonsense. Today, people are again in a “moral panic” over short videos and TikTok, saying everyone just wants to watch cats play piano. By the way, I love cat videos—AI-generated cat videos are my current favorite. But the reality is, this is a classic “barbell market.” One end is massive amounts of time-wasting filler, and the other is an enormous unmet demand for high-quality content across every field. The success of long-form podcasts is the best proof. The existing media structure is designed for a centralized world, but today we need new structures, which is why we are optimistic about Substack.

Marc Andreessen: This leads to the core of our investment philosophy: When there is a fundamental breakthrough on the supply side—like the emergence of AI with unprecedented capabilities—you cannot simply frame it with existing market size analysis. Traditional “market sizing” becomes invalid at that moment. From a venture capital perspective, the classic investment triangle is team, product, and market. If you invest heavily in a small market, the outcome is still small. But this preconception is based on current market dynamics. If the supply side experiences a fundamental breakthrough—an entirely new capability—you cannot accurately model the market size.

Marc Andreessen: A classic mistake we’ve made is thinking Uber’s market was just the taxi market, or GPU’s market was just gamers. The truth is, when supply undergoes a qualitative change, it creates new markets that are 10, 100, or even 1000 times larger than the original, and this will be the dominant trend for the next 30 years.

Ben Horowitz: We believe we are reinventing computing, and this new kind of computer is far more powerful than those of the past 50 years. Inside our company, we say every day: there’s no problem AI can’t solve. The way humans do everything will be reshaped. We recently raised over $15 billion, but that’s just the beginning because there’s so much to build.

Marc Andreessen: I often have these “epiphany experiences” about AI. When I think about a complex problem, I suddenly realize, why not just ask AI? It will give me 18 steps, and even question me in return, digging into my ideas. Old computers just stare at you blankly.

From Inventor to CEO: The “Slingshot” You Need

Packy McCormick: In the AI era, products seem to achieve success faster. In this context, are the platforms like market and policy support from a16z more meaningful?

Ben Horowitz: We’ve been thinking about how to help founders not only succeed but also build companies the way they want. One key is helping them transition from “inventor” to qualified “CEO.”

Ben Horowitz: It’s essentially a “confidence game.” When an inventor doesn’t know how to manage an organization, they get all kinds of advice, and their confidence can spiral downward. The entire purpose of our firm is to put founders into a positive feedback loop of confidence. When you can connect with top CEOs, recruit top engineers, or find key government figures, your confidence builds. With confidence, decision-making speeds up, and company-building becomes more effective. The whole company is designed to help inventors become CEOs and run their own companies, connecting with anyone through our network.

Marc Andreessen: I’d add that these super-genius founders often spend 10 to 20 years in labs staring at screens. They understand the world but haven’t yet acted on it. There’s a misconception that as long as the product is good enough, the world will naturally adopt it. But the real world is vast and chaotic, and not always friendly to new ideas.

Marc Andreessen: There are 8 billion people in the world, and their opinions don’t necessarily align with yours. Many have real “voting rights” over your product and company. The real world may not be friendly to new ideas and might even want to reject them. Building a company around a product and founder is an art and science.

Marc Andreessen: Our job is to help founders get through tough times. As inventors, you need a “power boost.” We want startups to leverage our brand, connections, and expertise to become extremely powerful quickly. The purpose of building this leading venture brand is to enable our portfolio companies, at critical moments, to “slingshot” using our influence in the world.

Reputation Compound, Invisible Moat

Packy McCormick: You never publicly attack other technologies, founders, or companies. How do you manage that?

Ben Horowitz: That principle is written in our culture manual, signed by everyone who joins. Our core is: we are builders of dreams, not dream killers. Anyone trying to push the world forward, regardless of their methods, we support. We always bet on the future.

Packy McCormick: If you had to choose one thing to compound over time, what would it be?

Ben Horowitz: Reputation. We’ve discussed this since day one. Sometimes it requires huge investments with slow results, but it’s our core competitive advantage. We want everyone in the tech world to see us as the best partners.

Marc Andreessen: And this reputation transfers to the companies we invest in. When a company accepts our investment, they can leverage our reputation to attract customers, recruit talent, secure follow-on funding, and deal with regulators.

Ben Horowitz: Maintaining reputation requires vigilance. A rude employee’s misbehavior can take 5 to 10 correct actions to fix. But once established, reputation is the strongest force. We took six months to raise our first fund ($300 million), holding countless meetings. This time, raising over $15 billion, Marc and I each did an AMA, and that was it. That’s the power of reputation.

Packy McCormick: When facing attacks, do you enjoy it?

Ben Horowitz: Sometimes it’s emotional because you understand the intentions of these builders. Many attacks are personal smears. Now, everyone thinks Marc is Jewish, so they can attack him more.

Marc Andreessen: I’ve been called “Andy Horowitz” in some political circles because people think Andreessen sounds like a Jewish name.

Zoomers Will Save the World

Packy McCormick: Marc, you once said venture capital might be the last job in the world. If that vision is true, what will a16z look like in a century?

Marc Andreessen: I think I was taken out of context. I was talking about a recurring historical pattern: a dreamer operating in a field with asymmetric returns (high risk, high reward). Traditional banks or big companies don’t fund such projects.

But if you can build a portfolio of these dreams, the expected value becomes very high. Imagine Columbus’s funding pitch: I have a 60% chance of not returning, and my initial idea was completely wrong. Betting on uncertain outcomes has always existed in history and will only become more important.

Ben Horowitz: Exactly. There’s an old saying in software development—the “man-month myth”—that adding more people slows down progress. But now, it’s different; you can solve problems by pouring money in. Elon’s huge investments in foundational models to accelerate progress are unprecedented.

Packy McCormick: If you were to train an AI to find the next “Columbus,” what traits would you look for?

Ben Horowitz: First, independent thinking. They don’t follow the crowd and have original ideas. Second, some personal charisma that makes others want to follow. Beyond that, great entrepreneurs are very different from each other.

Packy McCormick: Lastly, what are you most excited about for the future?

Ben Horowitz: It’s like the invention of the steam engine or electricity—we’re entering a better world. All those trivial things that consume our lives will no longer be necessary, and quality of life will improve.

Marc Andreessen: I’m wildly enthusiastic about Zoomers. They are the “AI natives,” inheritors of the strange period from 2015 to 2024, and they no longer tolerate these old ways. They have no moral guilt and don’t feel they need to apologize for wanting success. They’ve watched thousands of hours of tech videos online, more than previous generations of founders, and understand the space better. They are motivated and uncompromising. I’m willing to spend 100% of my time on Zoomers.