What It Takes to Build a Startup | Andrew Chen & Matt Perault
Andrew Chen discusses A16Z's Speedrun program, which invests in earliest-stage startups (typically 2-3 person teams working from kitchen tables) and explores how regulatory complexity and policy decisions impact where founders choose to build companies. Chen emphasizes that early-stage founders lack time and resources to engage with policymakers, creating a representation gap where "little tech" voices are absent from policy discussions.
Summary
Andrew Chen, general partner at A16Z and leader of the Speedrun program, explains the firm's strategy of investing in companies at their inception—often before they're even incorporated. The program invests up to $1 million in teams of 2-3 founders, typically those with full-time jobs who are just beginning to validate their ideas. During a 12-week program in San Francisco, these founders receive mentorship, access to A16Z's network, and weekly programming featuring successful founders and leaders. The typical founder day involves one co-founder focused on product/technology (increasingly using AI coding tools) while another handles business development and customer acquisition.
Cheng describes the realities of early-stage founding: teams work 100+ hour weeks, often as roommates in modest housing, with minimal financial compensation, and minimal time for anything beyond building product and finding customers. He notes that even within the venture ecosystem, the power law is stark—roughly half of companies fail entirely, a few return modest returns, and success concentrates in the top decile.
A critical theme is how regulatory burden affects these founders. Chen argues that early-stage founders perceive most regulations as friction that impedes their ability to prove their business model works. Founders lack lobbyists, legal teams, and most critically, time to participate in policy discussions. This creates a systemic representation problem: policymakers hear from large tech companies and disrupted industries but rarely from the 2-3 person teams that might become tomorrow's major employers. Chen notes that when policies are discussed as "all of industry agreeing," it typically means only large organizations have shown up to comment.
The location decision for startups has become strategically important. While historical factors like Bay Area density and investor proximity remain powerful, regulatory environments increasingly factor into where founders choose to build. Chen expresses concern about policies like wealth taxes potentially relocating investors and family offices, which could undermine Silicon Valley's ecosystem. He emphasizes that it's a choice for states and cities whether they want to attract startups—requiring intentional action on multiple fronts including cost of living, real estate availability, investor presence, and regulatory clarity.
Cheng describes A16Z's Tech Week program, which has grown to 4,000 attendees across multiple cities (San Francisco, LA, New York, Boston) with over 1,000 government and policy professionals attending. This represents an attempt to bridge the gap between policymakers and early-stage founders, though the fundamental challenge remains: founders are too busy building to travel to policy discussions, and policymakers often need to do more work to hear from little tech.
About this episode
a16z’s Matt Perault sits down with General Partner and Speedrun lead Andrew Chen on the a16z AI Policy Brief to explore what “Little Tech” actually looks like at the earliest stages, and why the realities of building a two- or three-person startup are often missing from policy debates. Andrew takes us inside Speedrun, where founders are often starting companies from kitchen tables, working with tiny teams, and trying to determine in a matter of months whether their idea can become a viable business. He explains why these founders rarely have the time or resources to engage with policymakers, even as regulation can have an outsized impact on whether and where they build. Matt and Andrew also discuss how regulatory burdens accumulate for young companies, why startups can choose where to put down roots, the role of ecosystems like Tech Week, and what policymakers can do to hear directly from the founders who may otherwise be absent from the conversation. This episode originally appeared on the a16z AI Policy Brief.
Key Insights
- Chen argues that early-stage founders perceive regulatory compliance as pure friction rather than protection, because these founders are simply trying to prove their business model works before worrying about scale.
- Chen claims that the venture ecosystem has a severe representation problem where policymakers hear from large tech companies and disrupted industries but almost never hear directly from the 2-3 person teams that might become major employers.
- Chen contends that it is an explicit choice for each state and city whether to have a startup ecosystem, requiring intentional action on multiple fronts (not just regulatory), and that this choice has meaningful economic consequences.
- Chen observes that founder mobility—the ability of early-stage teams to choose where to build—has historically benefited the Bay Area, but this advantage is not guaranteed to persist if regulatory or other conditions deteriorate.
- Chen notes that early-stage founders lack the financial capacity and time bandwidth to engage in policy advocacy, even on issues that directly affect their ability to operate, creating a structural disadvantage compared to well-resourced incumbents.
- Chen argues that many founders' failures are not due to poor execution but to external factors like market downturns, market timing misalignment, or co-founder circumstances beyond their control.
- Chen states that A16Z intentionally invests in founder talent over specific ideas because early-stage pivots are common and unpredictable, citing examples like Slack originating as a video game.
- Chen observes that different startup sectors (robotics, AI, deep tech manufacturing) have fundamentally different policy and infrastructure needs, requiring tailored rather than one-size-fits-all regulatory approaches.
Topics
Transcript
This is truly little tech. The average team is two to three people. They're running their companies not in their office, not in a coworking space. They're running it at the kitchen table. For these founders, they are so mission-focused, trying to survive as a business. They just don't have time to participate. They don't have lobbyists. They're not really represented. It's a choice whether or not each state or each city wants to have startups or not. What does it actually look like to build a startup from day one? In this episode, Matt Perrault sits down with A16Z general partner and speedrun lead Andrew Chen to talk about Littletech, the tiny teams at the very beginning of building…
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