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Hi and welcome to the A16Z podcast.

I'm Amelia.

Gross Margins, basically a company's revenue

for products and services, minus the cost spent

to deliver that revenue, are one of the most important

financial metrics in any startup.

But figuring out what does and doesn't go into margins,

the ideal ratio for a growing business

and how this ratio changes from early to later stages

of a startup is not as simple as it may sound.

So A16Z general partners, Martine Kasato, who invests in early stage enterprise startups,

and David George, who leads our growth fund,

along with Sarah Wang on the growth investing team,

share why margins matter from their vantage points,

as well as how modern software business models

and technology shifts are changing the way we think about

them. We also briefly touch on how margins can impact valuations. But we begin with why gross margins

matter at all, especially as companies mature.

The first voice we'll hear is David's.

To us, a later stage company is one that has found the all elusive product market fit and the risk that we believe that we're assessing

...