The firm's thesis focuses on a rare founder type: a technical expert who also deeply understands how new technologies shift human behavior. This avoids the common pitfall of building technology in search of a problem, leading to products with innate market pull.

The founder identified his unique advantage: established tax law partners were too career-invested to risk a startup, while pure tech founders lacked the deep domain knowledge. His position as a law professor provided the necessary expertise and a career structure (a sabbatical) that de-risked the initial leap into entrepreneurship.

A16z's foundational belief is that founders, not hired "professional CEOs," should lead their companies long-term. The firm is structured as a network of specialists to provide founders with the knowledge and connections they lack, enabling them to grow into the CEO role and succeed.

The ideal founder archetype starts with deep technical expertise and product sense. They then develop exceptional business and commercial acumen over time, a rarer and more powerful combination than a non-technical founder learning the product.

Don't start a company in a space you're indifferent to and ignorant of. Your founding idea must be anchored in either deep domain expertise ("what you know") or a genuine, intense passion for the problem ("what you care about"). Lacking both is playing on "extra hard mode."

The venture capital industry was transformed by two parallel forces post-financial crisis. Crossover funds brought a hedge fund-style intensity and speed, while founder-led firms like a16z brought an entrepreneurial metabolism. This dual injection of urgency permanently changed the pace and nature of venture investing.

VCs with operational backgrounds value execution over credentials. They screen for founders who show an instinct to act and build immediately, such as launching a splash page to test demand, before raising capital. This "dirt under the fingernails" is a stronger signal than pedigree.

A smaller fund size enables investments in seemingly niche but potentially lucrative sectors, such as software for dental labs. A larger fund would have to pass on such a deal, not because the founder is weak, but because the potential exit isn't large enough to satisfy their fund return model.

While technical founders excel at finding an initial AI product wedge, domain-expert founders may be better positioned for long-term success. Their deep industry knowledge provides an intuitive roadmap for the company's "second act": expanding the product, aligning ecosystem incentives, and building defensibility beyond the initial tool.