For years, the financial analysis of big tech companies has aimed to explain their success through well-known metrics: revenue growth, gross margin, market size, market share, multiples, recurrence, commercial efficiency, or international expansion capacity. All of these are important. But David George’s new essay, head of growth investing at Andreessen Horowitz, proposes a less comfortable idea for traditional investors: in exceptional tech companies, the key asset isn’t just the business itself. It’s the founder.
George’s thesis, published by a16z under the title Late Stage Venture Is About Late Stage Founders, argues that growth-stage venture has established itself as a distinct asset class, but many interpret it incorrectly. It’s not just about larger funding rounds, companies taking longer to go public, or increasingly high private valuations. The real key lies in a very specific type of founder capable of continuing to allocate capital attractively for much longer than the market usually expects.
The accompanying chart speaks volumes. The concentration of the S&P 500 in its top ten companies has radically changed: from $251 billion in 1985 to $19.4 trillion in 2025, according to data attributed to Bloomberg, S&P, and J.P. Morgan Asset Management. IBM, Exxon, GE, or AT&T defined another era. Today, the weight is concentrated in Apple, Nvidia, Microsoft, Amazon, Alphabet, Meta, Tesla, and Broadcom, with J.P. Morgan and Berkshire Hathaway as notable exceptions not purely tech.
Thesis: Alpha is in the founder’s decision-making
The core idea is that technology delivers increasing returns at scale, but it doesn’t capture them on its own. Someone must decide when to follow industry best practices and when to do the exact opposite. George cites decisions such as Databricks’ adoption of the lakehouse model, Facebook’s acquisition of Instagram, or Stripe’s ongoing expansion as examples of tough choices to justify from a conventional perspective.
The point isn’t that all founders are right just by virtue of being founders. That would be a dangerous oversimplification. The thesis is narrower: some exceptional founders have an observational position that no external analyst, independent advisor, or hired executive can fully replicate. They see certain changes earlier, interpret weak signals from product, customer, or technology more effectively, and can move capital with a conviction that consensus rarely permits.
| Traditional View | a16z View |
|---|---|
| The company is the asset | The exceptional founder is a central part of the asset |
| Growth should normalize | Some founders expand the market for years |
| Going public disciplines | The public market can push toward consensus |
| The professional CEO reduces risk | |
| The terminal value should be reasonable | The ceiling can be misestimated for a long time |
This perspective helps explain why many tech companies remain private longer. It’s not always due to fear of transparency or quarterly results. It can also be a way to protect non-consensual decisions. The public market demands constant explanations. Analysts seek predictability. Shareholders push for “reasonable” capital allocation. The exceptional founder, by definition, sometimes needs to do things that seem unreasonable at the moment.
The mistake of underestimating compound growth
George highlights a bias that persists even among sophisticated investors: it’s hard to imagine a company growing at very high rates over long periods. At some point, instinct pushes for normalization. A credible terminal value is needed in the spreadsheet. The human mind seeks moderation.
The problem is that some tech companies have repeatedly shattered these expectations. Apple is the most visible example. So are Visa, Microsoft, Amazon, and Nvidia at different moments. No conservative model comfortably predicted that these companies could sustain such a strong combination of growth, margin expansion, reinvestment, and market dominance for years.
| Company | What the market tended to underestimate |
|---|---|
| Apple | Ability to expand hardware, services, and ecosystem |
| Amazon | Conversion of internal infrastructure into AWS |
| Microsoft | Cloud reinvention and AI exposure |
| Nvidia | Shift from graphics GPUs to AI infrastructure |
| Meta | Advertising scale and Instagram acquisition |
| Tesla | Valuation linked to software, energy, and industrial narrative |
| Stripe | Expansion of online payments market |
| Databricks | New data architecture and enterprise AI |
The current concentration of the S&P 500 in major tech companies reinforces this argument. The firms dominating the index are not just good products; they are platforms capable of reinvesting, expanding markets, and capturing successive technological waves. In many cases, this strategic continuity was driven by founders or leaders with significant control over company direction.
The uncomfortable part: not all founders are Steve Jobs, Jensen Huang, or Zuckerberg
The a16z thesis is compelling, but it should be read carefully. The founder as an asset can explain some of the greatest successes in tech history. It can also justify excessive valuations, opaque control structures, and tolerance of poor decisions over too long a period.
For every founder capable of expanding a market over two decades, many others destroy capital, fall in love with their own narrative, or resist professionalizing an organization they can no longer manage. The market tends to remember winners and forget survivors, due to selection bias. This is especially risky in venture capital, where a few investments drive most returns.
| Founder’s Advantage | Associated Risk |
|---|---|
| Unique product vision | Overconfidence |
| Decisiveness | Lack of checks and balances |
| Deep customer knowledge | Bias toward personal intuition |
| Long-term ambition | Disregard for financial discipline |
| Ability to attract talent | Overly personal company culture |
| Strategic control | Weak corporate governance |
| Resistance to consensus | Neglect of negative signals |
The key question for investors isn’t whether the founder should stay involved. It’s what kind of founder they have in front of them. There’s a huge difference between protecting an exceptional vision and shielding poor management. The founder as an asset class only works when there’s true capacity for capital allocation, rapid learning, adaptation, and execution.
Why this thesis fits the AI era
The argument gains strength in the age of artificial intelligence. AI is expanding the set of opportunities available to tech companies: software automation, agents, new interface models, data infrastructure, computing, robotics, biotechnology, defense, education, healthcare, or financial services. Technology changes so rapidly that the consensus often arrives too late.
In this environment, a founder capable of spotting an obvious opportunity before the market can generate a huge advantage. AI not only improves existing products but also allows rethinking costs, distribution, support, software development, sales, analytics, design, customer service, and operations. Companies that leverage this early can grow in markets that others still see as too small or immature.
However, AI will also make it harder to distinguish vision from narrative. Some founders will introduce truly transformative AI-powered products, while others will merely rebrand. Growth capital will seek the former, but inevitably will also fund many of the latter.
The lesson for Europe and Spain
In Europe, there’s often a lot of talk about capital, regulation, talent, and market fragmentation. All of that is important. But the a16z thesis introduces another element: the need to let ambitious founders grow without forcing them into traditional corporate structures too early.
Europe has good startups, talented engineers, and strong universities, but often pushes companies toward early sales, reasonable exits, or premature professionalization. Sometimes that makes sense; other times it kills the possibility of building global companies.
The key is not to blindly copy Silicon Valley’s model but to develop governance, financial sustainability, and responsibility. At the same time, Europe should accept that some companies require founder control, patient investment, and room for decisions that don’t fit into overly conservative committees.
The founder doesn’t replace analysis—it complicates it
The idea that “founders are an asset class” shouldn’t be seen as an invitation to invest based on charisma. It’s quite the opposite: it demands a better analysis of the individual making capital allocation decisions.
An exceptional founder isn’t just someone with an appealing story. It’s someone who knows how to change their mind, hire better than themselves, maintain speed without breaking the organization, listen to data without always obeying consensus, understand their market, and decide where to reinvest once the business is running well.
Growth investors don’t just buy growth; they buy the capacity for that growth to find new surfaces to unfold. And that capacity, in the best tech companies, is usually highly linked to the founder.
David George’s essay isn’t a universal rule. Not all founders need to stay forever. Not every company created by its founder deserves a premium. Not every private valuation is justified by the long-term outlook. But his thesis explains why the market has repeatedly underestimated some exceptional tech companies.
When a company combines technology, scale, capital, distribution, and a founder capable of continuously uncovering non-obvious opportunities, its potential can be much greater than a spreadsheet suggests. That’s the uncomfortable lesson for Wall Street—and perhaps for any investor still assuming tech growth can be modeled like a mature industry.
Frequently Asked Questions
What does David George defend in the a16z essay?
He argues that growth-stage venture isn’t just about bigger funding rounds or longer private periods, but about exceptional founders capable of continuing to allocate capital and expand opportunities over years.
Why does a16z say founders are an asset class?
Because, in top tech companies, alpha comes from non-consensual decisions made by founders with a privileged position on product, market, and technology.
What’s the risk of this thesis?
It can justify excessive valuations or weak control structures if an exceptional founder is confused with a charismatic one. Not all founders generate alpha.
Why is this relevant in the AI era?
Because AI is expanding the set of opportunities to create new products, cut costs, and reinvent markets. Founders who spot these changes early can capture significant value.
Sources:
- Andreessen Horowitz, “Late Stage Venture Is About Late Stage Founders,” David George.
- a16z chart based on Bloomberg, S&P, and J.P. Morgan Asset Management data.
- a16z Growth, materials on growth-stage investing.
