The average startup is two or three people, operating from the kitchen table
a16z's Speedrun backs "little tech": teams of two or three on average, operating from the kitchen table, with no lobbyists and no time to take part in the rules discussion — and they are exactly the ones most easily hurt by rules not meant for them.
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Two or three people on average, operating from the kitchen table
Andrew Chen says what Speedrun backs is "little tech" — teams of two to three people on average, who are not running their companies from an office or a co-working space, but from the kitchen table. This is the real source of a lot of American industrial success. On the upper bound: once a team goes past three, four, five people, you have to think about equity getting split too thin, and some people need to actually draw a salary, so you rarely see teams larger than that.
— Andrew ChenNot waiting for founders to show up, but helping build the company
Andrew Chen says that in his first few years at a16z he did Series A and Series B, writing $10 million, $15 million, $20 million checks, when companies already had customers, metrics and a team. But what excites him about Speedrun is this: rather than waiting for founders to show up at a16z's door, you help create the company. The last Speedrun cohort had 70 companies, and roughly a dozen of their founders still had full-time jobs at the time — they had to hand back their laptops and badges, and in some cases couldn't be funded yet because they hadn't even registered a company.
— Andrew ChenCo-founders live together 24-7 and do only two things
Andrew Chen describes the daily life of a Speedrun company: two founders fly in to San Francisco from Austin, Chicago and elsewhere, and during the program usually room with their co-founder, together 24-7. The housing isn't fancy, generally near the a16z office, reachable on foot, by Uber or by Waymo. The only thing they should be spending time on is figuring out whether this business can work — build the product, sell the product, and do it in a very short amount of time. Usually one more business-minded co-founder handles meeting customers and negotiating deals, while one more technical and product-minded co-founder leans heavily on AI coding.
— Andrew ChenHalf the companies just die; all the money is made in the top tenth
Andrew Chen says that in the venture capital industry, the colloquial description is that about half of companies can't make it at all and simply die; of the remaining five to ten, two or three make a little money; all the money is made by the one company in the top tenth that hits a home run. This math has been remarkably consistent for decades. As for the ones that die, he thinks a lot of good things happen: a16z will back those founders again — just last week it funded a founder's idea that was better than the first one; others need to recharge, rebuild their finances, focus on their health, and then get hired by other teams, and two or three years later come out with a new idea and start again.
— Andrew ChenFounders see regulation as friction, not an incremental burden
Matt Perault mentions that a16z wrote a piece called Greens from a Garage, about the regulatory landscape two people face when building the next great tool in a garage. He says policy teams often count only the "incremental burden" — what happens if you pass one new law; but the real picture is the stacking of all regulations: California's SB 53, the data provenance requirements from the last session, the privacy law passed a few years ago — all of it applies from the moment you start building the tool. Andrew Chen says that for founders these obstacles are just added friction, and that many of these laws and paperwork are designed for companies far larger than theirs, companies that have legal teams and expert teams to handle compliance.
— Andrew ChenThey have no lobbyists and no time to shower
Andrew Chen says many founders simply have no time to participate: they have no lobbyists, they don't take part in the political process, and in many ways they are unrepresented, because they just don't have the time — they may not even have time to shower or eat a proper dinner, let alone do anything beyond daily survival. Matt Perault adds that this creates a compounding effect: a16z shows up to represent little tech, but it isn't itself a founder, and people will say they'd rather talk to a startup; but startups are in the middle of 100-hour work weeks and are not going to drive to Sacramento, fly to Washington or fly to Brussels. The result is that what policymakers hear is a skewed perspective: they don't hear little tech, but they hear a lot from big tech and from disrupted industries.
— Andrew ChenA company can choose where to put down roots, and that's one of the most important choices
Andrew Chen says these teams are small and at the starting point, so they can choose where to start their company. When he moved to the Bay Area in 2007, the world still revolved around Palo Alto, Mountain View and the Peninsula; later the center of the startup ecosystem shifted as a whole from the Peninsula to downtown San Francisco, and later still New York became a huge startup hub, with major VCs also opening offices in London and across Europe. If from day one you know that building an AI company will come with a pile of extra rules, a two-or-three-person startup is very mobile and can pick its spot. He cites one figure: close to 50% of venture-backed startups are founded by first-generation immigrants. The Bay Area has benefited from this, but that isn't guaranteed to last forever.
— Andrew ChenWhether to have startups is a choice every state and city makes
Asked what he would say to policymakers, Andrew Chen gives three points. First, whether every state and every city wants startups is a choice; if they do, they have to do the things that let startups grow, and not just for founders but for angel investors, employees and everyone around them. Second, many policymakers haven't really talked to little tech, and that takes a bit more time, but they need to figure out what obstacles can be removed for these companies — and those obstacles are dynamic: software companies, AI-native companies, hardware companies and robotics companies all say different things, and this year there are clearly more robotics companies than in past years, with different needs around supply chains, real estate and so on. Third, a16z can help open the door to that conversation.
— Andrew ChenIn their own words · checked verbatim
Yeah, this is truly little tech, you know. When we talk about little tech, this is it. I think the average team is two to three people. They are running their companies not in their office, not in a co-working space. They're running it at the kitchen table.
Andrew Chen4:28
For us, one of the really magical things, something that I take a lot of just personal pride and excitement in, is the idea that we are not just waiting for entrepreneurs to show up at our doorstep at A16Z. But we're actually helping create the companies in the first place.
Andrew Chen7:39
Then you'll have another, you know, if that's if that's like five and 10 companies, you'll have another, you know, two or three where you make a little money and then all all all the money is made in that. kind of top decile, you know, the one out of 10 that really where you get the grand slam.
Andrew Chen14:55
They don't, like, these guys, like, don't have, you know, they don't have lobbyists. They don't have, you know, they're not involved in the political process. They're not really represented in all these ways because, frankly, they just don't have time.
Andrew Chen22:18
Well, and and and their timeline, a startup, a two person startups timeline, not only is it not a year, like you may not know if you have a company in a year. Right. It may not even be six months. It may not even be three months.
Andrew Chen23:19
I think I think there's some interesting stats about how nearly 50 percent of venture backed startups are first generation immigrants, for example, you know, people who who relocate in order to do it.
Andrew Chen26:27
I think the first is to just have them understand that it's a choice whether or not each state or each city wants to have startups or not. If you want to have startups, you have to do things to make it conducive to having startups.
Andrew Chen32:48
Figures
| Speedrun program length | 12 weeks | 2:16 |
| Speedrun average team size | 2-3 people | 4:28 |
| Number of companies in the last Speedrun cohort | 70 | 7:39 |
| Companies in the last cohort whose founders still had full-time jobs | about a dozen | 7:39 |
| Share of venture-backed startups founded by first-generation immigrants | close to 50% | 26:27 |
| Attendees at Tech Week policy-related events | 4000 | 30:38 |
| People from government at Tech Week policy events | over 1000 | 30:38 |
| Policy professionals at Tech Week policy events | over 1000 | 30:38 |
Glossary
- little tech
- Andrew Chen's term for early-stage startups averaging two or three people, operating from the kitchen table.
- Speedrun
- a16z's program for the earliest-stage startups, investing up to $1 million over 12 weeks.
- power law
- The pattern in which venture returns concentrate in a very small number of top companies; Andrew Chen says it has been remarkably consistent for decades.
- Greens from a Garage
- An a16z article about the stacked regulatory landscape two people face when building a tool in a garage.
How to listen
Suited to early-stage investors, founders currently at the two-or-three-person stage, and anyone interested in how tech regulation affects where startups choose to locate.
The host's thanks and disclaimer in the last two minutes can be skipped.