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Large corporations are too slow and bureaucratic for AI transformation, but every startup must and can reorganize around agents.

Tan uses an anecdote about needing a baseball bat to get a bug fixed at Microsoft to illustrate corporate bureaucracy, arguing that while large organizations can't adapt, startups must reorganize around AI agents to be competitive. ✦ AI generated

Garry Tan · a16z Podcast · 2026-08-12 · original ↗

starts at this moment · 34:18

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Talk a little bit about loops.

We needed integration for instance from the Windows team... they wouldn't reply to our emails. They wouldn't fix our bugs. They wouldn't even like mark it as won't fix. They just ignored us. And we had to go over there with a baseball bat... what kind of bureaucratic hell is it where like two perfectly smart people who are making like good tech money, are put into a situation where like there's a fiefdom over here. It's like probably an org like Microsoft can't. But like a startup can. And every startup must.

verbatim transcript · starts at 34:18

Transcript · around this moment

33:58>> Yeah. >> And the other days you're touching grass. And I think the time that you do spend is just so much less burdened by this stuff >> that you always felt like you had to wade through. >> Yeah, that's right. I mean, if you look at the typical Mag 7 day-to-day, it's insane. Like I remember when I was 22 working on Windows Mobile. Uh we're working on

34:18you know, these crazy devices that were like years before the iPhone. And um we needed integration for instance from the Windows team, which was like, you know, on the other side of the highway in Redmond. >> Right. >> And then I remember, you know, me and my sort of PM mentor, uh we had to go over to the to the Windows team and like they wouldn't reply to our emails. They wouldn't fix

34:40our bugs. They wouldn't even like mark it as won't fix. They just ignored us. And we had to go over there with a baseball bat. Like I don't know why he brought one. Like it wasn't like he was going to like rough anyone up. It was just like this vague threat or something. It was actually hilarious and I think about that all the time. It's like what

34:58kind of like bureau cratic hell is it where like two perfectly smart people who are making like good tech money, >> Yeah. >> you know, are put into a situation where like there's a fiefdom over here. Like literally there's like seven levels between us and that person. >> Yes. >> And this person doesn't even know that we spent like four hours trying to get like a P3 bug fix that was like a

35:25blocker for a thousand of our users or something. It's like >> And how much humanity is just wasted? >> Yeah. >> How many 2:00 a.m. sort of anxious wake-ups were there >> Yeah. >> because somebody wanted to not have a hard conversation. Like it's, you know, it's it's a really it's a waste of the way we should be spending our time in working. >> Yeah. >> And that's a profound version of like

35:43the seven plus or minus two. Like I don't think that like the, you know, product unit manager or whatever the heck their, you know, their title was. Like I don't think that they wanted us to waste our time like that. I think it's just that, you know, your day like you just don't have enough hours in the day and we're like incredibly limited human beings, but you

36:03know, I yeah, it's funny. Like I think that you know, I think about my time at Microsoft and it's like I remember getting an iPod and like doing competitive research for like Windows Mobile versus the iPod. I can imagine today at Microsoft you can imagine a markdown file and a skill >> Yeah. >> that is run on a cron. >> Yes. >> And it's like how are how are all the

36:26people working on this team? Like, are they blocked? Who are they blocked by? What are the external dependencies? Like suddenly there is a graph, there's a loop, and then suddenly like, you know, the products can actually just move that like, you could release something in a day or two that would have taken like 6 months. It's incredible. And if you could like multiply that out across like, the thing is like probably an org

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