What are the key takeaways from this Odd Lots episode?

Key insights include: **Private market scale:** Private tech companies now represent $5 trillion in market cap — 40% of the S&P 500 excluding the Mag Seven. The sector grew 10x in ten years while the number of public companies was cut in half. The 10 largest private companies alone account for 40% of that total private market cap.; **Value creation shift:** In IPOs from ten years ago, 88% of total market cap creation happened in public markets, with only 12% in private markets. That ratio has inverted: recent IPOs show 55% of value creation now occurs while companies remain private, making late-stage private funds the primary vehicle for capturing growth.; **Employee liquidity mechanics:** Private companies run tender offers — typically twice yearly — allowing employees to sell roughly 25% of vested shares at a set price. SpaceX pioneered this model. While not identical to public RSU quarterly deposits, it provides sufficient liquidity to compete for talent against cash-rich public tech companies offering automatic stock distributions.

What did David George discuss on Odd Lots?

David George, head of Andreessen Horowitz's $7B growth fund, explains how private markets have accumulated $5 trillion in tech market cap — nearly 25% of the S&P 500 — why elite companies like Stripe, SpaceX, and OpenAI delay IPOs, and how value creation has fundamentally shifted away from public markets. Key topics include: **Private market scale:** Private tech companies now represent $5 trillion in market cap — 40% of the S&P 500 excluding the Mag Seven. The sector grew 10x in ten years while the number of public companies was cut in half. The 10 largest private companies alone account for 40% of that total private market cap.; **Value creation shift:** In IPOs from ten years ago, 88% of total market cap creation happened in public markets, with only 12% in private markets. That ratio has inverted: recent IPOs show 55% of value creation now occurs while companies remain private, making late-stage private funds the primary vehicle for capturing growth..

How long is this episode of Odd Lots?

This episode is 48 minutes long. SignalCast provides an AI-generated summary so you can get the key insights in about 3 minutes.

Odd Lots

A16Z's David George on How Private and Public Markets Fused Into One

February 20, 2026

48 min episode · 2 min read

David George

Episode

48 min

Read time

2 min

Topics

Investing, Startups, Fundraising & VC

AI-Generated Summary

Published Feb 20, 2026

Key Takeaways

✓Private market scale: Private tech companies now represent $5 trillion in market cap — 40% of the S&P 500 excluding the Mag Seven. The sector grew 10x in ten years while the number of public companies was cut in half. The 10 largest private companies alone account for 40% of that total private market cap.
✓Value creation shift: In IPOs from ten years ago, 88% of total market cap creation happened in public markets, with only 12% in private markets. That ratio has inverted: recent IPOs show 55% of value creation now occurs while companies remain private, making late-stage private funds the primary vehicle for capturing growth.
✓Employee liquidity mechanics: Private companies run tender offers — typically twice yearly — allowing employees to sell roughly 25% of vested shares at a set price. SpaceX pioneered this model. While not identical to public RSU quarterly deposits, it provides sufficient liquidity to compete for talent against cash-rich public tech companies offering automatic stock distributions.
✓AI software displacement: OpenAI and Anthropic combined will add more revenue in 2026 than the entire legacy software market — SAP, Salesforce, Workday, ServiceNow, and others combined. Net dollar retention across incumbent SaaS vendors has declined steadily since 2021, signaling growth is migrating to AI vendors even without mass customer churn from existing platforms.
✓Outcome-based pricing as the decisive shift: The business model transition from seat-based SaaS subscriptions toward outcome-based pricing — paying only for verified results — structurally favors AI-native startups over incumbents. Customer support is the first sector where this is measurable. When buyers shift to outcome purchasing at scale, legacy vendors face a compounding competitive disadvantage beyond just product gaps.

What It Covers

David George, head of Andreessen Horowitz's $7B growth fund, explains how private markets have accumulated $5 trillion in tech market cap — nearly 25% of the S&P 500 — why elite companies like Stripe, SpaceX, and OpenAI delay IPOs, and how value creation has fundamentally shifted away from public markets.

Key Questions Answered

•Private market scale: Private tech companies now represent $5 trillion in market cap — 40% of the S&P 500 excluding the Mag Seven. The sector grew 10x in ten years while the number of public companies was cut in half. The 10 largest private companies alone account for 40% of that total private market cap.
•Value creation shift: In IPOs from ten years ago, 88% of total market cap creation happened in public markets, with only 12% in private markets. That ratio has inverted: recent IPOs show 55% of value creation now occurs while companies remain private, making late-stage private funds the primary vehicle for capturing growth.
•Employee liquidity mechanics: Private companies run tender offers — typically twice yearly — allowing employees to sell roughly 25% of vested shares at a set price. SpaceX pioneered this model. While not identical to public RSU quarterly deposits, it provides sufficient liquidity to compete for talent against cash-rich public tech companies offering automatic stock distributions.
•AI software displacement: OpenAI and Anthropic combined will add more revenue in 2026 than the entire legacy software market — SAP, Salesforce, Workday, ServiceNow, and others combined. Net dollar retention across incumbent SaaS vendors has declined steadily since 2021, signaling growth is migrating to AI vendors even without mass customer churn from existing platforms.
•Outcome-based pricing as the decisive shift: The business model transition from seat-based SaaS subscriptions toward outcome-based pricing — paying only for verified results — structurally favors AI-native startups over incumbents. Customer support is the first sector where this is measurable. When buyers shift to outcome purchasing at scale, legacy vendors face a compounding competitive disadvantage beyond just product gaps.

Notable Moment

George reveals that a16z is invested in companies representing approximately two-thirds of all AI revenue across private markets. He argues that unlike the fiber-optic overbuild of the early internet era, no GPUs sit idle — every unit deployed gets utilized immediately, suggesting current infrastructure spending has genuine demand support.

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Episode Transcript

UKG. Their HR, pay, and workforce management tools help business leaders empower their people. Because when work works, everything works. Learn more at ukg.com/work. Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools, and customer support that actually helps. Go to public.com/market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com/market. Ad paid for by Public Holdings, brokered services by Public Investing member FINRA SIPC, advisory services by Public Advisors, SEC registered adviser, crypto services by Zero Hash. All investing involves risk of loss. See complete disclosures at public.com/disclosures. Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. Manage all your business finances from banking to payments to credit cards all in one place with Chase's digital tools, plus access online resources designed to help your business thrive. Learn more at chase.com/business. Chase for business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank, NA, member FDIC. Copyright 2026. JPMorgan Chase and Company. Bloomberg Audio Studios. Podcasts, radio, news. Hello, and welcome to another episode of the Odd Lots podcast. I'm Jill Weisenthal. And I'm Tracy Alloway. Tracy, it feels like 2026 could be a big year for some mega IPOs that have been private for a while. There's talk about a SpaceX IPO, possibly, maybe some of the big AI labs, like, some pretty massive companies that might be, hitting the market soon. Someone recently gave me a Facebook IPO hat from JPMorgan Oh, that was when they worked on it. Like, I'm very proud. I need to start wearing it around the office. Yeah. I remember. Was, like, that was a mega IPO. Was a mega IPO. At the time, and there was so much hype about it and then, like, technical difficulties and so many people eager to get in on that one. It's so many funny people called that a flop, I guess, because the technical difficulties and it didn't do that great for a little bit. That would have been a great time to buy it. Yeah. And Seriously. The interesting thing about the, market or one of the interesting market is you have these companies that are gonna IPO when they're already gigantic. So, like, people point out that in earlier eras, they might have IPO ed when they're, like, billion …

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