How AI Is Rewriting the Power Law of Venture Capital

We've looked at the data of 3,000 venture capital firms in The US. Only 20 have achieved consistent three x net returns over the last two decades. Right now, clearly, the power law is more extreme than it has been in the last ten to twenty years of technology investing. For the first time, you can take capital and throw it at a company, and it compounds their advantage. AI is attacking every facet of the GDP, transportation, labor, services, capital, coordination. There hasn't been a technology paradigm that hits on 30,000,000,000,000 in GDP at the same time. Elon has talked publicly about GrokBot on Sam's side. He's talked about Astra and some of the long running capabilities that are gonna come out soon. What do you think is gonna be the next $100,000,000,000,000 market cap company? It is possible that AI isn't just creating faster growing companies. It may be changing the power law itself. In this episode, a 16 z's Jim Ka and David George sit down with accolade partners, Adam Bergian, to unpack what that means for technology investing and portfolio construction. For most startups, too much capital can become a liability, but David argues that frontier AI is different. Dollars can be converted directly into compute, and compute can make the product better, reinforcing advantages of companies already at the frontier. They discuss why AI's addressable market could extend far beyond software, why Aram believes AI is becoming a core rather than satellite allocation, and why access, selection, and position sizing matter even more as the power law becomes more extreme. They also look at what comes next, from robotics and health care to energy, chips, and data centers, and why some of the biggest outcomes of the AI era may still be in categories that barely exist today. Welcome back to the a 16 z podcast. Something fundamental has changed in how value gets created. Power law used to be just a feature of a cottage industry in venture capital, and now it's systemic throughout. And particularly, the three frontier model companies, SpaceX, OpenAI, Anthropic, represent somewhere between 3.5 to $5,000,000,000,000 of potential enterprise value. And shockingly, before SpaceX went public, a lot of our LPs and also the broader institutional allocator community didn't have a lot of exposure to it. And so we'll talk about today why potentially portfolio construction and asset allocation may have changed, why power law is not just only in the venture capital industry, and then particularly where and how value actually compounds today. David George, around Verdian, thank you for joining me. Great to be here. Thanks for hanging out. Thank you for having me with you. Awesome. Awesome. Awesome. Okay. So DG, so if you add up every venture backed IPO for the last six years, all of them together, where does it go from here? Right now, clearly, the power law is more extreme than it has been in the last ten to twenty years of technology …