America must love Little Tech too if it wants to stay on top, say Marc Andreessen and Ben Horowitz

Venture capitalists Marc Andreessen and Ben Horowitz of A16z say the US is threatening to derail startups at a time when it needs them most.

• Can America hold onto the power it accrued in the 20th century?
• Marc Andreessen and Ben Horowitz would like to think startups can play a key role in that process.
• However, they worry startups face forces that could ruin them — and America's global leadership.

Marc Andreessen and Ben Horowitz have been fretting about 21st-century America.

Less than 24 hours after commemorating American independence on July 4, the investor duo in charge of venture capital firm A16z published a very Silicon Valley spiel on how the US can retain the power it accrued in the 20th century.

They call it the "Little Tech Agenda."

Simply, the agenda is about "Little Tech" startups, as opposed to Big Tech companies such as Apple, Google, and Meta. The opportunities that Little Tech presents — and the threats it faces — must be fully understood if America wants to stay on top, the investors argue.

It's very worth noting that both Andreessen and Horowitz are hugely incentivized as VCs to draw attention to startups. In April, their firm said it raised $7.2 billion to spearhead investments into startups leading several areas, including "American Dynamism" — a catch-all term for founders leading companies that "support the national interest." Think aerospace, defense, education, housing, manufacturing.

That said, the Silicon Valley veterans are ready to make their case for why concern for the future of startups extends to concern for the future of America itself.

The Little Tech Agenda, explained

Andreessen and Horowitz have a simple explanation for their new agenda: They want America to recreate the successes that gave it unassailable leadership in the 20th century.

But they're not sure current circumstances will allow for that to happen.

In the blog published on Friday, they wrote how America enjoyed unipolar power over the global order in the 1900s thanks to the second Industrial Revolution, the spread of computers, a championing of a free market system, and sheer military might.

That said, they are aware of a growing chorus of voices that think such successes will be hard to come by again. "Naysayers say America's best days are behind us, that the 21st century will see America play a diminished role," they wrote. "We disagree."

As VCs, their disagreement is rooted in a belief that startups have a vital role to play in ensuring America's continued role as the world's chief nation-state. The spirit that produced Ford, Lockheed Martin, and SpaceX is the spirit needed for future prosperity, their argument goes.

However, they think startup spirit is being wrecked by the very people who need it to ensure continued power.

Andreessen and Horowitz argue that "there is no reason the 21st century cannot be a Second American Century" if the political machinery in Washington DC stops getting in the way of startups reaching their full potential.

As they put it, the US government is "now far more hostile to new startups than it used to be," with regulatory agencies being "greenlit to use brute force investigations, prosecutions, intimidation, and threats" to hobble growing industries such as artificial intelligence.

They also claimed that regulators are getting in the way of market activities such as takeovers, and proposing new tax regimes targeting "unrealized capital gains" that would "absolutely kill both startups and the venture capital industry that funds them."

Now, it's worth asking the extent to which vocalizing such concerns is really about America keeping the hot seat on the global stage until 2100 rather than helping VCs further line their pockets.

'Regulatory capture'

The technology sector's tilt toward generative AI since the launch of ChatGPT, for instance, has thus far massively favored Big Tech over VCs and startups. Silicon Valley heavyweights leading the Nasdaq have earned a far larger share of the financial reward from AI than their startup counterparts.

That's partly because Big Tech firms have had an easier time securing the vast amounts of capital and computing power needed to power the intensive large language models driving up AI costs.

Andreessen and Horowitz also argue that Big Tech's advantage has been helped by "regulatory capture" that has served to "protect and entrench their positions."

The end result, they say, is "stagnation and then decline." They'll now hope others share the view that America's future depends massively on bootstrapped founders with a dream.