Learn. Share. Evolve…

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0:00:23 Hi, everyone. Welcome to the A6NZ podcast. I’m Sonal. So this week, to continue our
0:00:28 10-year anniversary series since the founding of A6NZ, we’re actually resurfacing some
0:00:32 of our previous episodes featuring founders Mark Andresen and Ben Horwitz. If you haven’t
0:00:36 heard our latest episode with Stuart Butterfield turning the tables as the entrepreneur interviewing
0:00:43 them, please do check that out and other episodes in this series on our website at a6nz.com/10.
0:00:49 But this episode was recorded at our annual Innovation Summit in 2017 and features writer
0:00:53 Stephen B. Johnson interviewing them about everything from their relationship to creative
0:00:54 inspirations.
0:01:01 All right. I’m delighted and honored to be here with you. And we’ve got a lot to cover.
0:01:04 And what the kind of architecture for this conversation is, in a sense, we’re going to
0:01:09 kind of zoom out. We’re going to start on a more personal level and broaden out to think
0:01:13 a little bit about tech cultures inside a given organization, and then start thinking a little
0:01:18 bit more about broader social trends coming out of technology and looking into the future
0:01:21 a little bit. But I wanted to start with something actually just listening to your conversation
0:01:25 with JJ, who I don’t know at all, but I’m going to call JJ. He was talking about that
0:01:31 first kind of literally magical moment going and seeing Universal Studios and then getting
0:01:35 into magic and how that was so transformative as an eight-year-old. And it occurred to me,
0:01:39 do you guys have a memory of something like that with tech at any point where you really
0:01:44 saw something? For me, it was late. It was hypercard, sophomore year in college, where
0:01:49 I was just like, oh, there is this whole possibility that I hadn’t imagined could happen on a screen.
0:01:53 Do you have similar stories? It’s funny. This is an embarrassing question because I’m sitting
0:01:59 next to Mark, but one of the ones I remember most vividly was seeing Mosaic because for
0:02:04 years in tech, there were all these ideas about like if you were in computer science
0:02:10 about what was possible from all the things that you ought to be able to do, but you could
0:02:15 never actually quite get them to work. And hypercard was like that in that way, but Mosaic
0:02:19 was really it. It was all there on it. And when you downloaded it, you were like, oh,
0:02:25 my God, the whole world is like right there. I can reach the world. That’s the most craziest
0:02:29 thing ever. But I hate to say that with him sitting here because I go right to his head.
0:02:33 Well, it was a really striking point because up until, certainly for me, and I think for
0:02:38 a lot of people, there was discussion about hypertext that had been circulating through
0:02:43 different subcultures. But I would say probably 80% of the preceded received at that point
0:02:48 was strangely enough about hypertext fiction. It was people who were writing these nonlinear
0:02:54 stories. And when you saw Mosaic for the first time, you’re like, oh, this isn’t some obscure
0:02:58 avant-garde postmodern literary device. This is the future of media.
0:03:01 I have a much better answer than that. So I actually just mentioned on stage, but like
0:03:05 the early PCs really were the mystery box, the magic box and that really, that just,
0:03:08 you know, the flesh and cursor had me from go. So that sense of potential was a really
0:03:14 big deal. The other, I swear to God that this is true. Knight Rider, who remembers Knight
0:03:16 Rider, Knight Rider. There we go. Knight Rider outstanding.
0:03:17 You’re talking about kids?
0:03:22 Kids. Holy shit. So I was, I forget, I was, it was 82. So yeah, I was 10, right? And so
0:03:25 this shows on, and I don’t know, it’s this guy in the leather jacket. And I don’t know,
0:03:29 he seems cool, whatever. But they did this very clever thing, the mystery box thing.
0:03:31 And then there was no internet, no, nothing couldn’t find anything. You just saw a few
0:03:36 commercials. They did not tell you that the car was like that special. And if you go back
0:03:41 and watch the pilot, it’s like 45 minutes in. And like, it’s the whole thing has happened.
0:03:44 He’s been shot in the face. He’s had reconstructive surgery. He’s got the new name. He’s got
0:03:49 the mission. He’s got the car. He’s driving along 45 minutes in the car talks. And like,
0:03:52 I think I fell out of the couch. Like, I think I just like literally, I was like, the car
0:03:56 is talking. Right. And then I started to remember what that felt like. And then I have to remember
0:04:00 the screens, like the dash on that thing, right? It was like being in the space shuttle.
0:04:03 And to this day, when I get in a car, that, you know, the modern cars are like that, right?
0:04:06 They’ve got up to and excluding the fact that they talk to you now. But you know, they got
0:04:08 all the screens in the distance of that and the dash and the tuzzling, the whole thing.
0:04:14 It’s still, I always still feel like I’m getting behind the dash of kit. That is the best answer.
0:04:20 So there’s a great thing about your, the relationship that you guys have, it’s a long enduring one,
0:04:24 incredibly productive one. There’s a line in the hard thing about hard things in your book,
0:04:28 not to embarrass you, Mark, but I just wanted to quote it here. This is, you’re talking
0:04:34 about the relationship. And what you said is, even after 18 years, he upsets me almost
0:04:41 every day by finding something wrong in my thinking. And I do the same for him. It works.
0:04:48 So first off, is that true? But more than that, are you guys, is there something predictably
0:04:52 wrong? Are you guys wrong? And are you finding yourselves correcting each other in ways that
0:04:57 are kind of, are there patterns to the way in which you disagree? Do you tend to err
0:05:01 on the side, this side, where Mark errors on another side?
0:05:06 You know, I think it’s, you know, we’re close enough in personality, but different enough
0:05:11 kind of in skills that we often see things from different angles. And then a lot of it
0:05:16 is Mark himself, which is like, Mark always likes to take the other side of the argument,
0:05:21 whatever side, like he just enjoys taking the other side. That’s his thing. And so, you
0:05:26 know, it just kind of goes that way. I think that the real key to it is that we somehow
0:05:33 got to a level of trust where we can really go at it in a way that would, for most people,
0:05:38 you just go like, if you like, you can’t talk to me that way. Like how, you know, like so
0:05:42 disrespectful, like you’re stepping on me, you’re asking me these questions that hurt
0:05:47 my feelings. But you know, for us, you know, it has still like, you know, sometimes like,
0:05:51 get close to that, but not, not all the way.
0:05:54 I think the big thing is the thing I decided at a certain point, because we get asked a
0:05:58 version of this question by the founding teams that we work with, or if we bring a CEO into
0:06:01 a company, help a founder, bring in a CEO, and they’re going to have a partnership that
0:06:03 hopefully works something like this, you know, get kind of asked kind of, how do you make
0:06:07 it work? Because it is so easy for the conflict, for the emotion to, to drive people apart.
0:06:12 And so the way I think about it is, it’s more important to me that we have the successful
0:06:17 partnership than it is that I’m right on any particular issue. And I’m proud to say that
0:06:21 Ben, of course, is the exact opposite. It’s far more important for him to be right than
0:06:27 absolutely. And so it meshes perfectly right hand and glove. I’m joking. That was a joke.
0:06:29 And so we both will argue it all the way up, but each of us will defer to the other. At
0:06:32 the end of it, if it’s an argument, it’s over which one, which of us is going to defer to
0:06:37 the other one, with each of us volunteering to do it, say most of the time.
0:06:42 And that’s really like, sometimes the argument will not resolve, but we’ll kind of know
0:06:48 who knows more about that thing. And we’ll yield in that way. And that’s been super productive.
0:06:53 And there are ongoing disputes about where the technology world is heading. Are there
0:06:57 kind of senses like, oh, no, you think this thing is going to be huge, but this is the
0:06:59 old argument we’ve been having for five years. It’s never going to happen.
0:07:02 Well, we both believe a lot and disagree and commit, right? And so it’s important. Like
0:07:05 as an example, one version of the question you asked is like, what if we’re arguing about
0:07:08 some startup we funded? And whether it’s, you know, we’re going to have some argument
0:07:11 about like that was a mistake or not or whatever. Like we basically, I don’t think ever have
0:07:15 those arguments. And the reason is because we may argue whether, and this is true of
0:07:18 our partnership or broadly, we may argue about whether to make the investment, but once we
0:07:21 make it, we’re in. And then at that point, it’s important that it’s the dynamic sort
0:07:25 of implicit promise in the team and including between the two of us as we’re all in this,
0:07:29 we’ve all committed. And I think that’s really critically important because that’s how you
0:07:32 maintain, that’s how you don’t have, I told you so.
0:07:35 And backbiting and talking about people when they’re not in the room and that kind of thing.
0:07:36 That’s just bad.
0:07:40 Do you all have a, I’m actually in the middle of writing a book about long-term, complex
0:07:46 decision-making. So I have my own kind of bias in this question. But do you have, when
0:07:48 you’re confronting a decision to say, for instance, like should we fund this company
0:07:52 or should we follow in this round or other life decisions, do you find that you have
0:07:59 a process for that decision-making act that you go through and think about as a series
0:08:04 of stages? Or is it something that’s more fluid and conversational and intuitive?
0:08:09 Yeah. So it’s interesting. This business is different than our last. So running a company,
0:08:16 you try to be more structured in how you do this. In some ways, in that speed is really
0:08:22 important. So if you’re running a company, your output is decisions and you rate it
0:08:27 on quality and speed. And if you have to make the trade, which you always have to, you generally
0:08:32 go towards speed because you have a lot of decisions to make. And if you don’t make them
0:08:39 fast, then you freeze the entire organization. In our new business, basically quality is everything.
0:08:45 And so we’ll go around the horn 50,000 times if we have to to make sure that we’ve explored
0:08:51 every corner and every crevice of the discussion and we’ve not missed something. So I would
0:08:57 say in some ways, we have a lot of a framework in our minds about how we think of investments
0:09:03 and deals and so forth. But we’re willing to go in many loops where we would never do
0:09:04 that in a company.
0:09:08 One of the things that I love investigating and talking to people about is their kind
0:09:13 of creative workflow and where they find inspiration. There’s a lot of research out there that some
0:09:16 of which that I’ve done and other people have done about the importance of kind of diversity
0:09:22 of influences in your kind of worldview, leading to more creative thinking. So I’m just curious
0:09:27 about your kind of daily information diet in a sense, beyond the kind of the routine
0:09:32 of the meetings that you have with the founders and the pitch meetings and so on. Where do
0:09:36 you find that kind of outside influence in new ideas?
0:09:41 So we sort of cheat in a sense, which is we have, we see 2000 inbound startups a year.
0:09:44 These are by definition and 2000 are the smartest people in the world in all the domains that
0:09:48 they’re operating in. And so, I mean, honestly, after that, it’s just, it’s hard to pick up
0:09:52 like a magazine and open it with any level of enthusiasm because it’s like, you know,
0:09:54 you kind of have this, you know, you’re kind of seeing the stuff months or years before
0:09:58 it shows up in the press. And so that’s part of it. Personally, I’ve been running this
0:10:02 year a big experiment and I’ve always been a big reader and sort of information on the
0:10:05 board. And it just, you know, I’ve always tried to kind of balance short term, long term,
0:10:09 you know, different kinds of different time horizons of material, different kinds of material.
0:10:12 So I’ve been running a big experiment this year, which is I’ve been trying to do a bar
0:10:17 bell. I’ve been trying to polarize it. And so I’ve stopped completely reading newspapers,
0:10:22 magazines, basically anything that has a time horizon, basically greater than let’s say
0:10:26 five minutes to, you know, anything basically between five minutes and five years, which
0:10:30 is to say I basically only read social media on the one hand and then only books on the
0:10:34 other hand, right? And just polarize it and gap it way out. So what’s interesting about
0:10:38 that is of course, being on social media like that process, you know, necessarily you end
0:10:42 up consuming a lot of news and that a lot of what’s there notwithstanding the false
0:10:46 reports of the death of the web, a lot of what social media is, is links to things that
0:10:49 are interesting, right? People who you’re following are interested in. And so, you know, I do
0:10:52 end up reading basically everything. But one of the experiments was, does it matter? Like
0:10:55 if you don’t see the homepage of the newspaper, do you miss things? And it turns out if you
0:10:58 follow the right people, you really don’t, because they surface all the interesting
0:11:01 stuff anyway. And you get to see a lot of stuff that you wouldn’t necessarily see looking
0:11:04 at the homepage. But the other side, honestly, and you know, you’re accomplished book author,
0:11:08 the other side of it is just books, you know, books that probably become the great underestimated
0:11:12 source of information relevant to our daily lives that just gets, you know, as there is
0:11:17 just such a surplus of kind of near term information and consumption. And let’s just say, as the
0:11:21 real world is getting continuously more interesting in real time, you can spend all day long just
0:11:24 following the ins and outs of what’s happening in the political scene or what’s happening
0:11:26 in the sports scene or what’s happening in, you know, the business world or whatever.
0:11:29 And so you can really get, you know, let’s talk about myself, I can get really trapped
0:11:33 in the present. And so the ability to at least have some time to be able to go back and be
0:11:37 able to read things that were written five or 10 or 50 or 100 years ago, that have stood
0:11:40 the test of time in the form of books has been I think is very valuable.
0:11:43 It has been very interesting. I mean, the book business is actually quite healthy and
0:11:47 people are reading, you know, reading print books, there’s a kind of return to print books.
0:11:51 And it does feel as if I think one of the things you don’t realize until you write them,
0:11:54 particularly with nonfiction books, but it’s true fiction as well that when you meet someone
0:12:00 who’s read one of your books, they have been living inside your mind for 12 hours, 20 hours,
0:12:05 depending how long the book is. And so it is still an unrivaled way to get complicated
0:12:09 ideas into other people’s minds. And so it’s been, I think a sign of health in the culture
0:12:13 of that books are actually thriving in the midst of all this kind of minute by minute
0:12:14 social media.
0:12:16 And also, by the way, as you well know, like audio books, right, I think there’s a renaissance
0:12:21 in audio books, which is just having the smartphone and now the wireless, you know, ear pods makes
0:12:26 it so much more convenient for your content, long form audio content. And podcasts, obviously
0:12:29 are a big part of that. But audio books in the course is drive time and wait time and
0:12:32 this time and, you know, morning time and so forth completely fit into my life in a
0:12:34 way that books didn’t use to.
0:12:38 I also wanted to ask you, Ben, about music, can you talk a little bit about that in terms
0:12:40 of your own kind of creative view of the world?
0:12:44 Yes. Well, it’s interesting and it’s very specific to hip hop for me and hip hop is an
0:12:49 unusual music form in that it’s a very kind of capitalistic form of music, which is completely
0:12:55 kind of unheard of in popular music. And that the main theme of hip hop, if you go through
0:12:59 all the great rappers is like, how do you build something out of nothing? You know, how do
0:13:03 you compete these kinds of things as opposed to R&B, which was maybe love songs and like
0:13:09 rock and roll, which is more communist. But it’s perfect. It’s a perfect analog to entrepreneurship.
0:13:13 It’s kind of the exact kind of motivational soundtrack for entrepreneurs. And that’s really
0:13:19 how I started with it, because any theme I wanted to write about, like it was a great
0:13:26 way to find inspiration. But it led to, if you say I made a contribution to the management
0:13:33 literature, it actually came out of rap music in that the big thing that was different in
0:13:38 my book was that the logic of management is not very complicated. Then you can understand
0:13:44 all the management theory. It’s just not that hard. But the emotional, psychological complexity
0:13:49 of doing it is incredibly difficult. And you know, we see tremendous fallout from brilliant,
0:13:55 brilliant people who can never get over that. And so the big challenge for me was like,
0:14:01 how do you communicate the emotional part of the lesson? And hip hop is great for that
0:14:06 because it carries the emotion. And it’s all about kind of the capitalism. So I wrote
0:14:12 a post, how do you handle politics in a company? And I went through all the things that cause
0:14:16 politics and the subtle things, like how somebody asking for a raise can do it and how you deal
0:14:22 with that technique and so forth. But a lot of it is the attitude of the manager. And
0:14:27 so the rap quote that I used was Rick Ross, who do you think you’re fucking with? I’m
0:14:33 the fucking boss. And like, once you get that, then you know how to do it. That’s great.
0:14:39 Okay, so let’s zoom out a little bit now. You were asking JJ Abrams about LA as the
0:14:43 kind of epicenter of the movie business. So with all the changes that we’ve seen in the
0:14:50 tech sector and all the volatility, the one constant really for half a century has been
0:14:55 that the Bay Area and Silicon Valley have been the epicenter of the technology world
0:15:00 really without any near arrival, probably for 50 years, I think it’d probably be fair
0:15:03 to say, despite the fact that it has gone through all these different revolutions and
0:15:08 you had big computers and then personal computers and then the web and then social media. So
0:15:13 really two questions I think, why, why they are, like what was it about that particular
0:15:18 configuration that rooted tech in that world? And do you think we’re going to look back
0:15:21 in 30 or 40 years and it’s going to have the same concentration?
0:15:25 Yeah. So the why, so the why is I think it’s history, right? And so just the fact that
0:15:28 it’s been a network effect, right? It’s been a snowball rolling down the hill, picking
0:15:32 up momentum now for 56, actually turns out 50, 60, 70, 80 years. A lot of ways it goes
0:15:37 back to the 1920s, 1930s, the early defense contractors. Steve Blank has a whole series
0:15:41 of videos called the secret history of Silicon Valley. He traces it all the way back almost
0:15:42 a hundred years.
0:15:43 Fantastic.
0:15:46 Fantastic shares. And the point of it is, it’s just, it’s this kind of network effect
0:15:49 that’s just kept rolling, right? And so it’s been this place where it’s just like, it’s
0:15:53 the place where the next really smart engineer programmer or, you know, equivalently salesperson,
0:15:58 marketing person, west door contact, whoever they are, finance person on the margin, right,
0:16:01 is more tempted to move to the valley than many other places, which isn’t to say that
0:16:04 there aren’t many capable people all over the world. It’s just on the margin. Many of
0:16:07 the ones who are super ambitious end up at the valley. And of course, I’m an example
0:16:10 of that. And as a consequence, right, it’s a story of imports, right? And so another
0:16:14 thing just to read, I’m sure if people are interested, Tom Wolf, the great novelist,
0:16:18 journalist wrote a piece in the 80s in Esquire about literally Bob Noyce, who was the original
0:16:22 CEO of Intel, one of the fathers of Silicon Valley and literally grew up in Iowa, grew
0:16:26 up in the Midwest and was the Silicon Valley import. And actually Wolf ascribes a lot of
0:16:31 modern Valley culture to literally Bob Noyce importing, interestingly, Midwestern culture,
0:16:35 right, including, by the way, egalitarianism, right. So the whole open floor plan thing,
0:16:39 stock option ownership, everybody owns a share in the company. He traces that actually back
0:16:43 to Midwestern culture. And so it just got established and it developed this ethic and
0:16:46 it’s probably not an accident that it’s the frontier, right? It’s probably not an accident
0:16:49 that this sort of gold rush happened, right? It’s just kind of this frontier out the mentality
0:16:53 has continued. So that’s the good news, right? The bad news is, as I discussed with JJ, like
0:16:56 it’s just number one, we’re just bursting at the seams, like it’s just become a hard
0:16:58 place to do business. And the number two is there’s great people all over the world and
0:17:02 like why on earth? So the joke in the valley is, you know, help wanted, right? Software
0:17:06 company puts up Silicon Valley, software company puts up a help wanted out on the internet
0:17:09 or whatever and says, you know, help wanted, you know, software engineer to work on new
0:17:14 collaboration software tool, online collaboration software tool that will enable people to work
0:17:19 together independent of geography all over the world. So in real time, PS must relocate
0:17:22 to San Francisco to apply. And so it’s this weird incongruity, which is we’re building
0:17:26 the technologies that in theory should let this stuff spread. And yet for some reason
0:17:30 in the last 10, 20 years, it’s actually been concentrating more and more. And so I’ve come
0:17:33 to believe it’s a maybe this is obvious to some people, but I would come to believe it’s
0:17:38 a human dynamics question. It’s a psychology, sociology question, not a technology question
0:17:42 in a lot of ways, which is just like how do people best work together, right? And it just
0:17:46 so happens that at least for the form of traditional companies, which you just see over and over
0:17:50 again is just when you can get everybody in the same room physically in the same room,
0:17:53 right, with the level of, say, fidelity of communication interaction where we’re sitting,
0:17:57 you know, it’s why, by the way, it’s why we’re all physically here. And there are a few successful
0:18:00 distributed companies, but there really aren’t very many as a consequence of that. And so
0:18:05 my hope is that we’re going to get there in the next, you know, let’s say 10 or 20 years,
0:18:09 my hope is that we’re going to get telepresence, right, in the form of video conferencing and
0:18:14 telepresence robots and VR and AR and all these things to collaboration software and
0:18:17 work group software and Slack and GitHub and all these amazing technologies are building
0:18:20 for collaboration. My hope is we’re going to get it to the point where it’s just going
0:18:23 to be obvious that we don’t all have to be in the same place. If that happens, you could
0:18:27 say it’s quote bad for the Valley in the sense of like maybe Silicon Valley is not central
0:18:31 anymore, but it would be so good for the world for that to be the case and we would all benefit
0:18:34 so much from that. I think it’s a very worthwhile thing to pursue and something I’m very fired
0:18:35 up about.
0:18:39 How much do you think, just to go back to the point about noise in the early days of
0:18:43 Silicon Valley and the history of it, to have written about this a little bit as well, how
0:18:51 much do you think that the participatory option granting culture, which is very different,
0:18:54 there were very few kind of East Coast firms that were doing that. So you had much more
0:19:00 traditional kind of top down equity systems in those corporate entities. How much do you
0:19:03 think that is part of the success of Silicon Valley? This is something I think that would
0:19:06 be interesting to go back and look at just economically.
0:19:10 So I think it ends up being very important because of the nature of technology companies.
0:19:18 So if you look at, there are other kinds of companies where the people are much more interchangeable
0:19:23 and this kind of gets into why the network effect is so important and so forth. And in
0:19:29 like a tech company, there’s lots of people who are extremely valuable and that innovation
0:19:36 as a way to get them their kind of proper compensation for their contribution, the great
0:19:39 conversation with Mark and Charles Koch, where he talked about like, you have to be
0:19:43 rewarded for what you contribute to others. And that really is key to any business and
0:19:47 any incentive system. And particularly in technology, because there are so many people
0:19:53 in the company who are so valuable and so fundamentally critical to the company’s success,
0:19:58 it really is one of a very few kinds of compensation systems that would work. And certainly, you
0:20:02 know, a lot of the systems on the East Coast would never work for tech companies to be
0:20:03 kind of world-class competitive.
0:20:11 So it’s been six years since Mark, you wrote the software eats the world essay. I went
0:20:15 back and looked at it and reread it. It was a great piece. It reminded me of, I’m sure
0:20:18 a lot of people have seen this. There was a great thing that was circulating on social
0:20:24 media a couple of years ago. It was an old kind of single page flyer for Radio Shack from
0:20:29 like 1988 or something like that. It was a list of like 30 products that Radio Shack sold.
0:20:36 And the answer machine was, you know, a VCR, an alarm clock, like a TRS 80 kind of descendant,
0:20:39 you know, a game console, something like that. And literally without exception, every single
0:20:43 one of them is now an app on your phone, right? The whole thing had gotten swallowed up by
0:20:48 software, which is of course a measuring productivity problem because all those things
0:20:55 in aggregate cost $30,000 in 1988. And now they’re free on a phone that costs $600, which
0:20:57 is actually progress, but doesn’t sometimes look like it.
0:21:03 So obviously I think that that was a very prescient forecast to make. Has anything kind
0:21:08 of surprised you six years later looking back on it? I mean, in it, you say the next big
0:21:12 stages are health and education. And I’m wondering, you know, particularly on those fronts, has
0:21:14 it lived up to the kind of promise you saw back then?
0:21:16 Yeah, they’re sort of the overall concept of software eats the world. But then there
0:21:20 was a specific framework that I proposed in the piece, which is sort of a weak form of
0:21:23 semi strong form and a strong form of this hypothesis, right? And so the weak form was
0:21:28 every product that can write every physical product will become a software product, right?
0:21:31 And that’s that’s exactly your radar check example. Things go from being physical products
0:21:37 to being apps. The second sort of semi strong version of that was therefore any company
0:21:41 that makes a product that can be turned into software will itself therefore have to become
0:21:44 a software company. Right. And in fact, I was thinking you could you could see this thing
0:21:47 for example, playing out right now in the car industry, right, where all the car companies
0:21:50 are spinning up software efforts, they’re buying software companies are spinning up
0:21:53 software and as fast as they possibly can because they see what’s coming with autonomy
0:21:58 and all these other software advances. And then the strong and sort of audacious slash
0:22:03 ambitious slash arrogant hubristic version of the thesis is in any industry as a result
0:22:07 of this dynamic in the long run, the winning company in the industry will be the best software
0:22:12 company, right, which is a provocative statement, right? Because in a lot of these industries,
0:22:16 and again, cars are a great example. You have incumbents who are really good at making cars
0:22:18 trying to become great software companies. And then you have great software companies
0:22:22 that have no idea how to build a car, right, who are going to start who are going to start
0:22:25 making cars, right? And then you’re going to have basically, right, this giant collision
0:22:29 between companies coming from two totally different backgrounds. And so I think that
0:22:34 you’re seeing lots of that first stage that week stage, lots of products transitioning,
0:22:37 you’re seeing lots of companies becoming software companies. I think we’re just entering in a
0:22:41 lot of industries were entering that Thursday’s where there’s this very interesting structural
0:22:44 battle that’s forming up. The other thing I says, yeah, I think you exactly nailed it
0:22:48 with healthcare and education, right, which is there are these giant sectors of the economy
0:22:53 in which not only is there no productivity growth, like overall in both healthcare and
0:22:57 education, there is no measured growth, there is no measured results in the application of
0:23:01 technology in those fields. And in fact, probably it’s negative productivity growth, right?
0:23:04 Like the typical university has been going backwards in productivity, right? You just
0:23:07 look at the charts, the number of administrators that they hire, right, per student is just
0:23:13 skyrocketing and that is literally negative technological productivity. And so those industries
0:23:18 are extremely enticing to Silicon Valley, because they’re so big, they’re gigantic.
0:23:22 Healthcare, healthcare is a sixth of the American economy, right? And left unchecked, it will
0:23:26 become a fourth and then a third and then a half and then two thirds and then three quarters.
0:23:30 Like it’s just left unchecked, it’s just going to keep growing. And so it’s so much money.
0:23:35 It’s so big. It’s so important. It’s very enticing. And the incumbent structure of there’s many
0:23:38 smart companies in that industry, but the incumbent structure of how the industry works
0:23:42 is just, is wired to go the wrong direction. And so there’s this huge opportunity to insert
0:23:46 into it, which obviously we’re going after hard, but that’s still like super early.
0:23:47 Yeah.
0:23:51 And education, what, Ben, do you have thoughts on that front? I mean, there’s this interesting
0:23:57 point we’re at where there seems to be a growing backlash to the presence of screens, particularly
0:24:02 in younger kids’ school classrooms that it hasn’t lived up to the potential. And maybe
0:24:06 the kids already have too much software in their lives as it is.
0:24:13 So, you know, it’s funny, or it’s not funny. It’s sad that we’ve not applied technology
0:24:19 that well. And a lot of it has to do with the kind of structure of the kind of political
0:24:22 regulatory structure of schools. And we have a company, Udacity, that’s worked hard on
0:24:27 this. And their final conclusion was to kind of run outside of the school system, but it’s
0:24:32 very powerful. I’ll tell you a quick story about that. But, you know, obviously, very
0:24:37 obviously, if you could have like, any teacher or the best teacher in the world teaching a
0:24:44 math class, if students have to study and then be tested, like, when do you take a test outside
0:24:49 of school, like, ever in life? Like, what the hell skill is that does this create like tremendous
0:24:53 anxiety and like give people complexes. But you ought to, with technology, you ought to
0:24:57 be able to measure how people are learning every step of the way, give them harder problems,
0:25:02 if they’re going very fast, or get them help if they’re going slow. And there’s a lot of
0:25:07 things that ought to be able to be done. But then I think the more kind of pressing thing,
0:25:13 and the thing that Udacity really addresses is the four year education, general education,
0:25:18 doesn’t work that well in the modern economy because people are switching careers very,
0:25:23 very often every, you know, two, three years sometimes. And, you know, like four years,
0:25:26 and then you never go back to school for the rest of your life doesn’t make any sense at
0:25:31 all because people need to get retrained jobs get displaced. And so what Udacity has come
0:25:36 up with is this thing, the nano degree, which is two months, three months, you can learn
0:25:42 to program an Android phone or build a self driving car, or learn to do technical marketing.
0:25:47 And those degrees are connected right to the job market. So you can roll right in with
0:25:53 a skill and a certificate that says you understand the material and you’re ready to work. And
0:25:58 that is a great innovation and something that we’re really excited about. And just quick
0:26:03 story on that. So one of the huge problems we have in this country is prison and the
0:26:08 need for prison reform because we’ve got, you know, 75% recidivism rate where people
0:26:12 who go to jail and come out, go back to jail. And the reason they go back to jail, they
0:26:16 can’t get jobs. And the reason they can’t get jobs is because two things. One is we’ve
0:26:23 outlawed college in prison and then two, once they come out, their record follows them wherever
0:26:30 they go. So, you know, I’ve got a friend who came out of jail and I said, go to Udacity.
0:26:35 He goes to Udacity and he’s coming up on his technical marketing degree and he’s already
0:26:38 got job offers. And it’s like, that’s what we need.
0:26:43 Yeah. And I think it’s almost as if school, particularly high school, and I have two kids
0:26:47 in high school, so I think about this a lot, it’s kind of trapped in this middle zone that
0:26:50 doesn’t really work in a sense. It’s much more effective to have those kind of nano
0:26:55 skills, right, where you can actually kind of apply them or the skills should be broader,
0:26:59 right? I mean, when you read through, again, a book like the hard thing about hard things,
0:27:04 I just think about how there are so many skills in there that no one ever thought to teach
0:27:08 me in high school, right? I mean, the skills about decision making skills about kind of
0:27:11 emotional intelligence, dealing with, you know, difficult decisions. My kid actually
0:27:15 in his high school, to its credit, is doing a kind of design thinking class. And they’re
0:27:20 basically learning how to brainstorm ideas, interview a customer, think about different
0:27:24 possibilities, do mock-ups. And it was like, this should be the default. This should not
0:27:27 be an elective. This should be the thing you learn. And then if you want to go off and
0:27:33 do advanced chemistry or do advanced calculus, that’s fine. But those types of skills that
0:27:36 are just, everyone is going to have to know on some level, but it’s very rare to encounter
0:27:38 that. We’ve got a very dated curriculum. There’s
0:27:42 no question. I ran on the board of trustees at Columbia. And there are certainly people
0:27:47 who are going to go to like an elite school and become a scholar or a PhD. And I think
0:27:51 the system works reasonably well for them. But for, you know, the kind of bulk of the
0:27:57 population who goes to college to get into the workforce, it’s really difficult. It’s
0:27:59 exactly, as you say, it’s kind of neither here nor there.
0:28:04 Let’s talk a little bit then, kind of segueing a little bit to the job and automation question
0:28:09 anyway. In general, I think we all agree that there has been this growing and now kind of
0:28:16 reaching Crescendo backlash against big tech and the tech sector that the last year has
0:28:20 particularly brought to the fore. And I feel it very strongly going back because I live
0:28:24 part of the time in Bay Area and part of the time in New York, when I’m back in New York,
0:28:29 you know, nine out of 10 kind of opinion like pieces written in these media are negative
0:28:30 pieces.
0:28:31 It’s only nine out of 10.
0:28:34 I mean, so I want to get into some of the specifics about why that is happening, how
0:28:39 you guys feel about it. But how much in general do you and how much recently have you found,
0:28:42 do you find yourselves taking that seriously and how much do you feel that people just
0:28:44 don’t understand what’s going on here?
0:28:45 We might give two different answers.
0:28:50 Yeah. So I would first say there’s a huge difference between what gets written in opinion
0:28:56 pieces and the actual opinions of the public. So if you look at approval ratings of tech,
0:29:01 they’re incredibly high. Like they’re the highest of any industry. And like Amazon’s
0:29:05 approval raising, which is one of the biggest targets is like 80. Whereas Congress is like
0:29:10 20 and the press is like 20. And so like the guys at 20 are saying the guys at 80 need
0:29:14 to be stopped because everybody hates them. So there is that dynamic. And I think it’s
0:29:15 very real.
0:29:19 This is the concept of false consciousness, right? So literally the whole problem with
0:29:22 the communist revolution was the business weren’t signed up for it. And so the intellectual
0:29:24 leaders were like, well, but we got to take down the capitalist.
0:29:29 The other thing is, I think there’s something else going on that this is a side effect of.
0:29:34 And I think it’s the rise in the last several years. And in particular, after the 2008 crisis,
0:29:38 credit crisis crash, I actually think was the catalyst for a lot of this. It’s the rise
0:29:42 of zero sum thinking in both economics and in politics. Let’s say zero sum as opposed
0:29:46 to positive sum, right, which is this is sort of game theory, right? Zero sum game is I
0:29:50 win, you lose. And by the way, if I’m winning, it must mean that you’re losing because it’s
0:29:53 zero sum. It’s only a question of how we slice up the pie, right? Whereas positive sum is
0:29:57 we can all win together. It’s actually a great book called finite and infinite games that
0:30:01 actually goes through. If you go back historically, basically, economist philosophers and so forth
0:30:06 thought the politics and economics were zero sum. And there were huge battles over resources.
0:30:09 And this was colonization, all these other horrible things that happened over years were
0:30:13 fought through mercantilism, trade wars, right? All these things were fought based on zero
0:30:16 sum. And about, you know, 300 years ago, Adam Smith and a whole bunch of other really smart
0:30:20 thinkers figured out, no, you can actually gain from trade and you can actually interact
0:30:24 with more people and it’s good for everybody. And politics can be positive some just because
0:30:27 I’m doing well might mean that you’re also going to do well because again, we’re able
0:30:30 to culturally trade, we’re able to educate each other, we’re able to, you know, contribute
0:30:33 each other’s thoughts, and we’re all able to succeed. And so in the wake of the credit
0:30:36 crisis, I think zero sum thinking kind of came snapping back. And what’s interesting
0:30:40 is you see that on both the political left and on the right, right? For the anti attack,
0:30:42 the bloodite sometimes to come out of the left and Marx actually was shot through with
0:30:45 with leadism, like that’s one of the things he didn’t understand was the positive sum nature
0:30:49 of productivity growth. And anyway, so you get that on the left, you also get it on
0:30:53 the right, right? And you get it on the right, you get in the form of populism, right, which
0:30:59 in the form of opposition to trade and opposition to immigration, right? And so I just think
0:31:02 as a culture as an economy as a country right now, if you think that the formulation is
0:31:08 zero sum, you will then do things that will cause it to get worse. For example, on the
0:31:11 right, you’ll want trade barriers, right? And so you’ll want to cut trade under the
0:31:14 theory that that will make your people better. In reality, cutting international trade makes
0:31:19 your people worse. You’re dividing up a smaller pie. Yeah, you’re shrinking the economy for
0:31:21 everybody for no reason other than that you’re just mad at other people because you think
0:31:24 it’s their fault that you’re not doing well. And so it’s zero some thinking. And then on
0:31:28 the left right now, it’s this anti tech sentiment where like if those tech people are doing well,
0:31:31 then somebody else must be suffering, somebody else must be eating it. And it’s just it’s
0:31:35 the same sort of extremely reductionist thinking. And of course, the risk is as that sentiment
0:31:39 builds that at least a policies that actually impair the ability to be able to make progress,
0:31:43 make progress in the economy, make progress with productivity growth, make progress with
0:31:46 job creation, make progress with wage creation. And so there’s a pretty big risk that this
0:31:50 is all gonna go pretty seriously sideways for the wrong reason. Right. Let’s take the
0:31:55 tech backlash argument from a slightly more maybe sympathetic level, which is critiques
0:32:01 that have come from within the tech sector that the original vision of the web that inspired
0:32:07 so much of us, which was going to be this decentralized platform that was going to distribute
0:32:11 the kind of power of self publishing and voice to far more people. And it was going to kind
0:32:17 of topple this big, heavy, top heavy mass media model. That’s what inspired a lot of people
0:32:21 to get involved in it in the first place. At the end of that process, we’ve ended up
0:32:26 with, you know, four or five companies that in terms of their command over people’s attention
0:32:31 probably are the most powerful companies that have ever been on this planet and also some
0:32:37 of the greatest concentrations of wealth. So inside the tech sector, people say, re decentralized
0:32:41 the web and then we need to look at technologies that will enable us to have, you know, a more
0:32:46 even distribution in terms of the companies in terms of people’s attention and so on.
0:32:49 And blockchain is part of that. There’s some argument that people have been making along
0:32:54 those lines. How sympathetic are you to that side of the case, which does align with some
0:32:58 of the critiques that big tech is too big that are coming from people outside the tech
0:33:02 sector? Yeah. So there’s a technical argument for a decentralization. And then there’s
0:33:08 the kind of other thing that you’re getting at, which is should there be some like policy
0:33:14 answer to the big tech companies? And I think that, you know, you have to be very careful
0:33:19 there and look at specifically what’s going on. Well, are they kind of harming? Are they
0:33:26 suppressing innovation? So do people like us no longer want to fund anything because,
0:33:30 you know, Facebook or Amazon will wipe it out. And if you look at the numbers, there’s
0:33:35 probably more startups than there have ever been. And what we’re seeing and what we’re
0:33:41 funding is like super interesting. And, you know, for the most part, isn’t existentially
0:33:47 threatened all the time by those companies. Once you introduce policy, the potential side
0:33:54 effects are, you know, really scary, cronyism, corruption, the people who have the best relationship
0:33:58 get the best deal and these kinds of things. And that has knock on effects that are very
0:34:02 difficult. And, you know, if you compare it to the early nineties, when Microsoft was
0:34:07 super strong, that was really actually a far bigger suppression of innovation. There was
0:34:12 way less venture capital. There were far fewer companies being created. But like the technology
0:34:16 took care of it over time. And I think technology is changing at a faster rate now than it was
0:34:20 then. And there’s blockchain and there’s quantum computing. And there’s many technologies
0:34:25 on the horizon that could rejigger the playing field, you know, without a policy intervention.
0:34:30 Another question about the blockchain possibilities, you know, I’ve been really enjoying reading
0:34:36 Chris Dixon writing about this over the last year or two. And there is really an interesting
0:34:44 new way of incentivizing and compensating people both inside a technical organization associated
0:34:49 with an open protocol, early users of the service where all of those people are participating
0:34:54 in the value that’s created with it. And thinking back to the early stock option participation
0:34:58 of noise, you know, I wonder whether this, this suggests maybe that there’s a new model
0:35:03 here that might be as revolutionary as those kind of option plans were.
0:35:06 So the good news is the tech industry has had two models for making forward progress.
0:35:10 One has been what you might call pure capitalism, which is corporations, right, which is sort
0:35:14 of C corporations, employees, stock options, all the things we can take companies public
0:35:17 with that traditional structure. And then there’s been this other structure all the
0:35:21 way over on the ideological spectrum, right, which is open source, right, which is basically
0:35:24 the tribe, right, of developers that are interested in having something happen, coming together,
0:35:28 by the way, geographically distributed all over the world in a lot of cases, right, and
0:35:31 great examples, Linux and the web itself is an example of this and so forth. Actually,
0:35:36 the Internet, TCPIP was an example of this, right, or the new project MIT was an example
0:35:40 of this and people, technical people coming together and volunteering, right, literally
0:35:43 with metaphors like barn raising, right, it’s just like come together and make sort of breathe
0:35:47 life into these projects without a financial incentive and generally without, you know,
0:35:51 at least direct financial rewards. So sort of polar opposite of corporations you can
0:35:58 get. Blockchain is the first new third thing in, I don’t know, probably 40 years, right,
0:36:01 free software open source is like 40 years old. It’s the first new structure in 40 years
0:36:05 and it’s an interesting one because it’s a hybrid. It’s got the, it’s your point, it
0:36:08 has the decentralization of open source, right. These are protocols. These are things
0:36:12 that run Internet wide. These are things that are not necessarily developed by a team of,
0:36:15 you know, 100 people in a building in the Bay Area. They have that kind of open source
0:36:20 characteristic to them and they are decentralized. Like their protocols are inherently decentralized,
0:36:25 but they’ve got capitalism wired in. They’ve got money wired in, right, right, into the
0:36:29 protocol, right, in a way where there is a direct reward and incentive for the people
0:36:34 who actually create the thing. There’s a reward and incentive for the people who use the thing.
0:36:37 And then there was a reward and incentive for the so-called miners, the people who actually
0:36:40 run all the computers all over the Internet that make these things work. And it’s just
0:36:44 been so fascinating to watch because this is one of those kind of moments where people
0:36:47 walk up to this idea. And if they walk up to it from the right, they’re like, what on
0:36:52 earth is this decentralized hippy, like what on earth are you people doing? If they walk
0:36:55 up from the left, they’re like, Oh my God, it’s got money in it. It must be evil, right.
0:36:58 It’s sort of this weird, you got to kind of wrap your head around it. And so what we see
0:37:01 is like, it is fundamentally a third model for innovation. And I will also say this,
0:37:06 the thing that we see that I think maybe other people are missing, many of the smartest programmers
0:37:13 and mathematicians and economists and theorists and systems builders in the world and photographers
0:37:17 in the world are obsessed with this, like they’re just magnetically drawn to it, not
0:37:20 because of the money or this or that or the hype or whatever, because of the technical
0:37:23 innovations that are underneath this that are making this possible and what can come
0:37:26 out of this. And we just think like that’s the most positive sign you can possibly see.
0:37:30 We just have about five minutes left. So I want to just cover a couple of other giant
0:37:36 topics, artificial intelligence and the superintelligence debate. Can we solve that in about two minutes?
0:37:41 Can you give me, is this a legitimate concern? Is it appropriate to be worrying about the
0:37:47 threat from superintelligence now? Of the really scary things in technology. I would
0:37:51 have that one pretty low on my list. I mean, I think that one, like, I think it’s a little
0:37:56 bit of a miss, you know, intelligence is a funny word, right? Like, what is intelligence?
0:38:01 And it’s not one dimensional. And there are a lot of things that we have considered intelligence,
0:38:05 like doing hard math problems. Computers are already more intelligent, like playing chess.
0:38:09 Computers are already more intelligent. But there’s a lot of dimensions of intelligence
0:38:15 that computers are nowhere on. And AI, nobody is demonstrating anything in AI that says
0:38:20 like it’s going to get comprehensively more intelligent and certainly nothing along the
0:38:26 lines of free will yet. So yeah, maybe, maybe it’ll happen. But of all the things, it’s
0:38:30 a very theoretical. So I think it’s a little overblown. I do think also that there’s a
0:38:34 motivation of technologists to, it’s a very kind of, it makes you seem very intelligent
0:38:38 when you can talk about the robots taking over the world. So it’s a great thing to talk
0:38:42 about. The thing that drives you bananas is it’s the freaking physicists. And it’s like,
0:38:47 I’m a computer scientist. I don’t have like crazy conspiracy theories about black holes.
0:38:51 You know, I guess I could, you know, like in theory, a black hole could open up here in
0:38:55 this room and swallow us all. Like, I don’t have crazy theories about dark matter. Like
0:38:57 I’m not worried there’s dark matter in the glass. I’m not going to go around telling
0:39:00 everybody it’s going to, it’s just like, I don’t know why.
0:39:04 Yeah, it’s hard to find an AI expert who goes, Oh, yeah, this is a big problem.
0:39:07 Well, in fact, in the AI experts, of course, tend to be worried about the opposite, which
0:39:09 is they’re like, Oh, shit, expectations are getting set.
0:39:12 Like, we’re never going to build that. We’re never going to build the robot apocalypse.
0:39:16 I’m still trying to get the thing to play Mario Brothers, right? Like, oh.
0:39:21 Okay. So last question, I’d love to hear what you think, looking forward to the next
0:39:27 kind of 20 years, what’s the thing that you’re most curious to see how it turns out, right?
0:39:30 Where you think maybe it’s going this way, but you really are just dying to fast forward
0:39:33 20 years and be like, Ah, that’s what happened with that. Like, what’s the biggest kind of
0:39:36 question mark that you have over the next, say, two decades?
0:39:41 So the thing that makes my brain melt is this, now that we can program biology, so that kind
0:39:48 of, or we’re getting to the point where we can program biology, you know, the first step
0:39:53 is, you know, your one kind of dimension of that is, you know, solving disease, you know,
0:39:59 in a much, much better way, you know, another aspect of it is creating better humans. And
0:40:04 I’m very fascinated to see how that comes out and what it ends up meaning. And, you know,
0:40:09 whether it goes horribly wrong or incredibly right, and what does that even mean better
0:40:15 humans and how will, like, are humans even suited to, like, figure that out. So that,
0:40:18 from a curiosity standpoint, I would say that for me is probably it.
0:40:23 Yeah, yeah. The thing I think a lot about is, so through all of recorded history, and this
0:40:26 is why I just think that a lot of the tech credit assistants are just misguided, through
0:40:31 all of recorded history, most people have not been, I would say, most people have not been
0:40:35 plugged into what we would consider to be modern systems, right? So most people have
0:40:38 not been literate. Most people have not been healthy. Most people have not been fed well
0:40:42 enough to be able to reach full health maturity. Most people have not been educated and still
0:40:47 aren’t right to the level that we could consider modern. Most people don’t have access to economic
0:40:51 opportunity that we would consider to be, you know, modern jobs. Most people don’t have
0:40:55 access to what we consider to be high quality healthcare. Most people don’t have access to
0:40:58 high quality housing, transportation, you just go right down the list of all these things
0:41:01 that we’ve been lucky enough in this country to enjoy, you know, large percentage of the
0:41:05 population for a long time. Most people in the world have not had access to those things.
0:41:10 And I know that the existing systems, existing education system, the existing healthcare system,
0:41:15 the existing transportation system has had, you know, 50, 100, 200, 500 years to get to
0:41:18 the 7 billion people on the planet. It’s only gotten to every one of those systems has only
0:41:22 gotten a fraction of the people. And now we finally have the way to get right to everybody.
0:41:27 We get we’re at the point where 3 billion smartphones on its way to 6, 7 billion on the planet, we’re
0:41:30 going to be able to connect everybody. We’re going to be able to get over time, we’re going
0:41:32 to be able to get everybody all the things that I went through, right, starting by the
0:41:36 way with education, right, as sort of a foundational one. And so what is it going to mean for the
0:41:41 planet when everybody around the planet all of a sudden starts to, I would say, become
0:41:45 part of the systems that we know and understand. And we literally have 10, 20 times the number
0:41:48 of people around the planet who are contributing in all these different areas. And I just don’t
0:41:52 understand how people can be possibly pessimistic about the future knowing that that’s the potential.
0:41:54 And I think we’re going to see that. And I think our kids are going to see that. And
0:41:59 I think that’s very exciting. Yeah, that is. Okay, so we covered Knight Rider, Karl Marx
0:42:03 and universal education for the planet. I think we’ve done our job. Thank you guys. That
0:42:07 was great. Thank you. Thank you, everybody. Thank you. Thank you.
0:42:10 (audience applauding)