American Dynamism: Andreessen Horowitz is Betting on the Future of American Innovation

Katherine Boyle, General Partner at Andreessen Horowitz, explains how the firm's American Dynamism practice is reshaping venture capital by investing in companies that serve the national interest and transform physical infrastructure.

Key Takeaways

• American Dynamism focuses on companies supporting national interest, including defense, education, housing, and transportation sectors traditionally untouched by Silicon Valley
• The practice emerged from recognizing that software innovation hadn't penetrated critical physical infrastructure despite 30 years of technological advancement
• COVID-19 accelerated the timing by demonstrating the urgent need for technological solutions in government and civic sectors
• Geographic decentralization allows founders to build significant companies outside traditional tech hubs while solving local community problems
• These companies typically go "deeper down the J-curve" requiring more patient capital but ultimately become holding companies with less competition
• The thesis represents a return to Silicon Valley's origins when defense spending and government partnerships drove innovation
• Foreign-born founders comprise roughly 50% of unicorn companies, demonstrating America's continued appeal as an innovation destination
• Success requires founders with domain expertise from sectors like education, defense, and manufacturing rather than traditional computer science backgrounds

Timeline Overview

00:00–15:00 — Introduction to American Dynamism practice at Andreessen Horowitz, defining companies that support national interest including aerospace, defense, education, housing, and transportation. Discussion of why venture capital historically avoided these sectors due to regulatory complexity and longer development cycles.

15:00–30:00 — Katherine's background transition from Washington Post journalist during pre-Bezos era to Silicon Valley venture capitalist. Cultural shock of moving from scarcity-minded Washington to abundance-focused tech ecosystem where people actually returned emails and shared knowledge freely.

30:00–45:00 — Exploration of timing factors making American Dynamism viable now, including COVID's demonstration of institutional inadequacy, broadened founder demographics beyond traditional engineering backgrounds, and the merging of culture and counterculture in entrepreneurship following "The Social Network" influence.

45:00–60:00 — Geographic decentralization trends enabling company building outside traditional hubs. Examples include Flock Safety in Atlanta solving crime through license plate reading technology, and Hadrian in Los Angeles building automated machine shops for aerospace manufacturing.

60:00–75:00 — Investment philosophy discussion covering why American innovation deserves support, the role of immigrant founders in driving entrepreneurship, and how the practice aims to create a new venture capital category that every firm will eventually need.

The American Dynamism Investment Thesis

• American Dynamism encompasses companies that support the national interest, spanning direct government contractors in aerospace and defense to heavily regulated sectors affecting every citizen like education, housing, and transportation. The practice emerged from recognizing a massive gap where three decades of software innovation largely bypassed critical physical infrastructure.
• These sectors represent the "last holdout" where software hasn't eaten the world, creating enormous opportunities for technological transformation. Unlike consumer or enterprise technology that operates in greenfield markets, American Dynamism companies tackle established industries with entrenched interests and regulatory complexity.
• The companies typically require patient capital and go "deeper down the J-curve" compared to traditional software businesses. They often don't look impressive at Series A but eventually become holding companies competing primarily against legacy incumbents rather than venture-backed peers.
• Geographic proximity to customers becomes crucial for these businesses. Hadrian builds automated machine shops in Los Angeles near aerospace customers, while Flock Safety developed crime-solving camera networks by starting in Atlanta neighborhoods and expanding to police departments nationwide.
• The practice recognizes that finite talent pools in specialized areas like aerospace and defense create natural barriers to competition. Companies that successfully navigate the initial complexity often face limited competitive pressure in their later stages.
• Success stories like SpaceX demonstrate the potential despite early skepticism. "For the first 10 years of SpaceX there was a lot of fear and a lot of worry that investors wouldn't necessarily see a return," Boyle notes, yet it became one of the most valuable private companies.

From Washington Post to Silicon Valley

• Katherine's journalism career at the Washington Post occurred during the industry's existential crisis from 2010 to early 2014, when the newspaper faced potential bankruptcy before Jeff Bezos acquired it. The newsroom culture included "cakings" - wheeling in cakes whenever colleagues were forced to take buyouts or leave.
• The transition stemmed from recognizing that every story she covered involved technology disrupting traditional institutions. Rather than continuing to write about technological transformation from the outside, she decided to become part of the movement by studying it firsthand at Stanford Graduate School of Business.
• Moving to Silicon Valley created profound culture shock compared to Washington's zero-sum, hierarchical environment. The tech ecosystem's positive-sum mentality meant people actually responded to emails and shared knowledge, driven by incentives to discover the next big opportunity rather than hoard information.
• Her editor's prescient advice proved transformative: "You were good but you could have been great," she said years later, explaining that recommending the departure wasn't about poor performance but recognizing someone young enough to build something entirely new.
• The style section background at the Washington Post provided unexpected preparation for venture capital. Both roles involve identifying emerging cultural movements and talking to "weirdos" creating new trends before they become mainstream.
• The experience of working in a dying industry provided valuable perspective on recognizing what institutional death looks like versus momentum and growth. "Starting your career off in a dying industry gives you a different perspective than if you start your career off in a company that is just filled with abundance."

The Perfect Storm: Why Now?

• COVID-19 served as the catalyzing moment by exposing the inadequacy of existing institutions, particularly in education where the country operated on "a 19th century model" when forced to shut down. The pandemic demonstrated that technology solutions for vast sectors of American life simply didn't exist when needed most.
• The founder demographic shift represents a fundamental change from the stereotypical computer science engineering background. New entrepreneurs include former teachers, defense procurement officers, and domain experts from sectors venture capital previously ignored.
• "The Social Network" movie, released in 2011, merged Silicon Valley's culture with mainstream counterculture by making entrepreneurship aspirational for young people. This cultural shift created a generation viewing startup founding as more impactful than traditional career paths like government internships.
• Marc Andreessen's "It's Time to Build" essay articulated what many already observed about silicon Valley's limited engagement with government and physical infrastructure. The piece provided intellectual framework for recognizing that software could and should transform these sectors.
• The abundance of venture capital during the bull market enabled talented individuals to pursue company building rather than traditional corporate careers. Young people chose founding companies over "delivering coffee to senators" when both paths offered similar entry-level impact potential.
• Historical precedent exists for this type of innovation cycle. Silicon Valley originally emerged from defense investment and Department of Defense partnerships, making the current American Dynamism practice a return to the region's foundational roots rather than a departure from them.

The Great Decentralization

• Geographic decentralization represents one of the most significant post-COVID transformations, enabling high-quality company building outside traditional tech hubs for the first time in decades. Founders can now build billion-dollar companies from Atlanta, Miami, Austin, or even smaller towns without relocating to San Francisco.
• Brain drain from second and third-tier cities historically concentrated talent in expensive coastal markets, but remote work infrastructure eliminated this requirement. The change benefits both founders who can remain in communities they understand and regions that retain their most ambitious residents.
• Flock Safety exemplifies this trend by solving Atlanta's crime problem through technology before expanding nationally. Founder Garrett Langley asked why eliminating crime remained difficult "in an era of software and cameras around the world" and built license plate reading networks that solved child kidnappings and dangerous crimes.
• The company started by selling cameras to homeowners associations rather than government, proving market demand organically before police departments began requesting the technology. This bottom-up adoption pattern demonstrates how local problem-solving can scale to national solutions.
• Miami represents the cultural shift toward celebrating success rather than apologizing for achievement. The city's large foreign-born population, particularly from countries that experienced economic collapse, creates "a culture of being proud of what you have earned" that contrasts with Silicon Valley's tendency toward modesty about wealth.
• Internet-based relationship building has become the primary mechanism for deal flow and community formation. "The idea that investors aren't going to find community online or founders aren't going to find their next hire online" ignores the reality that professional networks increasingly operate digitally rather than through physical proximity.

Portfolio Examples and Investment Philosophy

• Hadrian exemplifies the American Dynamism approach by building automated machine shops for aerospace and defense manufacturing in Los Angeles. Founder Chris Power initially attempted private equity acquisition of existing machine shops but discovered the approach was fundamentally flawed due to legacy infrastructure limitations.
• The company addresses a critical bottleneck where retiring baby boomer machinists lack successors, creating potential supply chain disruption for aerospace companies. Hadrian's solution involves building new facilities from scratch with automation while upskilling American workers for technically sophisticated manufacturing roles.
• The investment demonstrates how American Dynamism companies often lack direct competition because everyone in the ecosystem benefits from their success. "If they don't create this world of abundance in a lot of these categories we'll all suffer and particularly things like aerospace and defense will suffer."
• Anduril represents another portfolio success that initially faced skepticism in Silicon Valley for working with defense contractors. The Ukraine conflict vindicated the investment thesis by demonstrating the urgent need for modern defense technology: "People are now realizing actually like we need strong defense."
• Flock Safety's organic growth from neighborhood associations to police departments across 30 states illustrates how solving local problems can scale nationally. The company grew through word-of-mouth and news coverage rather than traditional sales and marketing approaches.
• These companies typically become "holding companies pretty quickly" due to limited talent pools in specialized areas like aerospace manufacturing. Unlike consumer or enterprise sectors with multiple competitors, American Dynamism companies often face primarily legacy incumbents rather than venture-backed rivals.

The Future of American Innovation

• The goal involves creating a new venture capital category that every major firm will eventually need rather than maintaining a unique competitive advantage. "As an American I want that I want every firm to say actually this is the best place to be investing can't believe we weren't looking at it."
• American entrepreneurship represents "the greatest experiment in human history" where immigrant founders comprise approximately 50% of unicorn companies. The country's appeal stems from enabling people who "have nothing to lose" to build transformative companies regardless of background or origin.
• The practice aims to democratize the Silicon Valley innovation model across the entire country rather than concentrating benefits in expensive coastal hubs. "I want to see that incentive alignment across the country so that it's not just this unique thing that's in northern california."
• Space technology serves as the template for how contrarian investments can become consensus within venture capital. The sector evolved from "deeply unconsensus in Silicon Valley to now pretty consensus" as results demonstrated the viability of the investment thesis.
• Small business creation through technology platforms represents a parallel trend enabling individual creators and entrepreneurs to build meaningful businesses without traditional institutional constraints. "Small tech is actually the thing that gets me excited" because it enables distributed entrepreneurship rather than just large company creation.

The American experiment continues through technology-enabled entrepreneurship that rejects existing institutional limitations in favor of building new solutions. The model works because "a country of misfits where people come to escape and build something new" provides the cultural foundation for the type of contrarian thinking required to transform established industries and solve national challenges through private sector innovation.