Marc Andreessen Interview (Full Episode) | The Tim Ferriss Show (Podcast) | Transcription

Transcription for the video titled "Marc Andreessen Interview (Full Episode) | The Tim Ferriss Show (Podcast)".

1970-01-01T06:29:27.000Z

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Introduction

Intro (00:00)

"Optimal minimal." "I did this altitude I can run flat out for a half mile before my hands start shaking." "Can I also do a personal question?" "Now what is it?" "I'm a cybernetic organism living tissue over a metal anthoscour." "My 10 Ferris Show." This episode is brought to you by Audible, which I have used for years. I love audiobooks and I have two to recommend right off the bat. Number one is perhaps my favorite audiobook of all time and that is The Graveyard Book by Neil Gaiman. The only audiobook I've wanted to immediately listen to a second time as soon as I've finished. It's amazing, you will thank me, The Graveyard Book. The second is Vagabonding by Rolf Potts, which had a huge impact on my life and formed the basis for a lot of what became the four-hour work week. So, all you need to do to get your free 30-day trial is go to audible.com/tim and you can choose one of those two books, The Graveyard Book, Vagabonding or more than 180,000 audio programs. So, that could be a book, that could be a magazine, that could be a newspaper, it could be a class, it's that easy. Go to audible.com/tim, that's audible.com/tim and grab a book. Enjoy. This episode is brought to you by 99 Designs. 99 Designs is a great partner for creating and growing your business. It's a one-stop shop for all of your graphic design needs, whether that's a logo, website, business card or anything else. I use 99 Designs to get book cover prototypes for the four-hour body, which went on to become a number one New York Times bestseller and I also use them for banner ads, illustrations and other things. 99 Designs, designers around the world compete to create the best design for you. You give feedback and then pick your favorite. You end up happy or you get your money back. It's very simple. You can check out a few of my own designs and those of yours, meaning Tim Ferris Show listeners, at 99designs.com/tim. And right now, my listeners, you guys will get a free $99 upgrade on your first design. That's 99designs.com/tim. Check it out. Hello, my friend, Lady L'Magois. This is Tim Ferris and welcome to another episode of the Tim Ferris Show. I'm very excited about this one, folks. I've wanted to do it for a long time. It took about a year, year and a half to set up. And of course, every episode is my job to try to deconstruct world-class performers, to tease out the perspectives, habits, routines, favorite books, et cetera, that make them as good at what they do as they are. This episode, we have Mark Andreessen at P. Marka, P-M-A-R-C-A on Twitter. He has a legendary figure here in Silicon Valley and indeed worldwide. Even in the epicenter of tech, it's hard to find a more fascinating icon. Mark co-created the highly influential Mosaic Internet browser, the first widely used graphical web browser. He also co-founded Netscape, which later sold AOL for $4.2 billion with a B, and then co-founded the Loud Cloud, which sold as Opsware to Hewlett Packard for $1.6 billion. He is considered one of the founding fathers of the modern Internet. This all makes him one of the few humans ever to create software categories used by more than a billion people, also one of the few who's established multiple billion-dollar companies. He's now a co-founder and general partner of the venture capital firm, Andreessen Horwitz, where he has quickly become one of the most influential and dominant tech investors in the world. Now, I want to try to keep this short, but it's hard. I think you'll enjoy at least what I'm about to read. We refer to an email in this conversation. Our conversation took place at the Sandhill Road offices of Andreessen Horwitz. We refer to an email from Mark to Ben Horwitz and exchange. This is how it reads, because we don't dig into it in the interview. This is page 13 in the hard thing about hard things by Ben Horwitz, which is a great book. Two Mark Andreessen. This is after a media interview where Ben felt that Mark disclosed the company's strategy prematurely. Two Mark Andreessen from Ben Horwitz, subject, launch. I guess we're not going to wait until the fifth to launch the strategy, period, signed Ben. Within 15 minutes, I, this is Ben, received the following reply. Two, Ben Horwitz, CC, bunch of folks from Mark Andreessen, subject, launch. Apparently, you do not understand how serious the situation is. We are getting killed, killed, killed out there. Our current product is radically worse than the competition. We've had nothing to say for months. As a result, we've lost over $3 billion in market capitalization. We are now in danger of losing the entire company and it's all server products management's fault. Next time, do the fucking interview yourself. Fuck you, comma, Mark. We get into some really fun stuff in this interview that I don't think Mark has discussed in many places. We talk about his epic debate versus Peter Thiel. We talk about all of the usual questions, favorite book cities, gifted to other people, favorite documentaries, movies, morning rituals, what do you put on a billboard, etc. We talk about rules for investing, what he does in partner meetings to make people defend ideas or propose ideas. We talk about AI. We talk about the future of Bitcoin, drones, who to watch. We talk about what he would teach in a ninth or tenth grade class, advice to his younger self, what he misses about the mid-90s internet and how he might recreate it, how he thinks about or handles FOMO. It goes on and on. We really had an extremely detailed and rich conversation and I hope you enjoy it. And please do say hi to Mark. He's very active on Twitter @pmarka, P-M-A-R-C-A. Without further ado, please enjoy. Mark, welcome to the show. Thanks, Tim. I am so thrilled to be here. I've been hoping to make this happen for quite some time and I figure we'll just jump into it. The first question is strong opinions loosely held. You're associated with that expression. Can you explain what that means? Yeah. It's kind of a mentality.


Discussion On Venture Capital And Entrepreneurship

What does the expression strong opinions, loosely held mean to you (06:22)

It's a mentality around how to start a company for sure and it's a mentality of how to invest for sure. I think it's a mentality that's probably helpful in a lot of other areas of life. I've drawn a paradox. I've drawn to a philosophical term. It's like thesis, antithesis, synthesis kind of thing. Because a lot of people in the valley have very strong theories and then the problem is they carry them too far because there's countervailing theories. You get in the end kind of thing. So strong views is very important. Most people go through life and basically never develop strong views on things or specifically go along and basically buy into the consensus. One of the things I think you want to look for is both a founder and as an investor as you want to look for things that are out of consensus. Something very much opposed to the conventional wisdom. Which sounds easy, hard to do, but you want to try to do it. If you're going to start a company around that, if you're going to invest in that, you better have strong conviction because you're making a very big bet of time or money or both. The problem is, okay, it's a strong view. Great. What happens when the world changes? What happens when something else happens? Basically, the way the world works kind of in business and investing in other places is just when you think you have everything figured out that everything changes. The system evolves and things happen. So what do you do when the world changes? They're what you just see everywhere I think in the world and everywhere in business, ever investing are people just hate changing their minds. People just like people get, you see politics all the time as well. People just get locked into a point of view on things and then you get this all this, you know, these biases like confirmation bias where people feel like they have to. That's the thing in politics where flip-flopping is viewed as bad. So taking as an example, politician who flip-flops is viewed as bad and sort of weak and probably evil. Actually it's interesting, if you talk to the world's best hedge fund managers, they're the exact opposite. They love changing their mind. Like I'm one of the few people who will openly admit I love spending time with hedge fund managers. I think they're awesome. I feel the same way. They're fantastic people and they are the most open-minded people I know and they love when you tell them that they're wrong. They get all excited. They're isolated and they're like, "Oh, why? Why do you think that?" And they're genuinely interested because if you're right and they're wrong, they will change their minds and they will, you know, their hedge fund managers literally reverse the trade. They'll, they're long on a company, they'll flip around and go short on it. They're totally fine with that. And that's how it works. So what I carry away from that is it's the weekly held part, which is convicted, convicted, convicted, new facts change.


Fail Fast / Determine (08:48)

But it's a paradox, right? Or it's attention because those are, those are anti-thet, you know, it's determination coupled with flexibility like they're antithetical. What you see in the startup world is sort of these two kinds of advice then that express this. And there are people who with a straight face will give both of these forms of advice without ever acknowledging that they're in conflict, right? One of which is fail fast, right? You know, you want to fail fast. Like it's going to be great to fail. You want to discover what's wrong, you want to fail and do something different. And then the other is you have to be determined and you can't give up. Okay. Like how do you possibly reconcile those? And my view of that is that's where you get to strong views weekly held. So how do you advise in that particular example, for instance, or assess which tact founders or a company should take potentially? Because you look at some examples, let's just say Uber or something like that, where the model as it began is very much similar to where it is now. Then you have other companies, let's say like a Twitter or others where they pivot into a goldmine effectively. And then I mean, then obviously other things have to be later on top of that to make it successful long term. But having been in the valley now myself for 15, 16 years, you see a lot of people who change their mind almost too frequently with in consequential facts, perhaps. How do you think about advising a company that's struggling as to whether they should stay the course or pivot as they would say? Yeah. So we have, we see both cases, we see both cases, both failure cases, we see companies that are just, they're almost, it's fail fast thing is frankly completely out of hand. And I'm old fashioned or I come from people like to succeed. Like it's like, great. I like to say like we, before this word pivot, like we didn't have it, like when I was a founder, when I first started out, we didn't have the word pivot, right? We didn't, we didn't have a fancy word for it. We just called it a fuck up. Right. I'm old fashioned on this, like I like to succeed. I think succeeding should be the goal of not failing and certainly not failing fast or slower than the other form of failing. So, so I get really kind of cranked up about this, but, but we do see companies that literally every time we meet, every time we meet them, they pivoted, like, and so every time I meet them, they're off to something new and, and there's, it's, it's like, I don't just like watching a rabbit go through a maze or something. They're just never going, they're never going to converge in anything because they're never going to put the time into, into actually figuring it out and getting it right. But then you, you do see the other case and this is what the, where the fail fast thing came from is you just see either case, you see people who just absolutely are determined that we'll just pound their head against the same wall for years and years and years and years. And it's, and a certain, and you admire them for the determination and then at a certain point it just becomes an option. Right. And then you're just, at some point it becomes self destructiveness. It becomes Don Quixote. You're just tilting against windmills, you know, kind of arbitrarily. And so those are polls. We do see behavior at the polls. You know, the question you're asking is, of course, the key question, which is like, okay, what's, what's in the middle? How do you know? And frankly, I, I don't think there's an answer to that. I think that's, or the answer is judgment. I think, I think that's the test. Basically there's, I think there's a couple key tests for, for founders or for that matter for investors and these kinds of decisions. I think that's one of the really core tests is, you know, do you have fundamentally have the judgment to be able to make that call? Knowing by the way that either, either way could be a big mistake. Like, you know, nobody's going to tell you, you're not going to get any confirmation from anybody that, oh, yeah, you made the right call. Like that you're not, you're not going to realize that. Like if you change and then succeed, it's all great. But by the way, you might have succeeded at the old thing even better. If you change and fail, you know, you'll never know whether the old thing would have worked. Like, you know, the counterfactual, like, you know, science, I call it the counterfactual. You never know the counterfactual. The way my brain is what I'm always thinking in terms of the counterfactuals. I'm always thinking in terms of the way things could have been, right? The world evolved in a certain way, kind of as a consequence of people making all these decisions on the fly. People could have very easily made a different set of decisions. The world could have ended up in a very different place. And so the idea that you're ever going to know the consequence of your decision, I think, is probably a fallacy or what the alternative would have been. Right. And so I just think you basically have to fall back on judgment and you have to fall back on some sense of the intangibles. And when you're looking to say stress test ideas, and if we look at it in, say, the case of a partner meeting here, so you mentioned hedge fund managers and I've read a profile of Ray Dalio at one point.


Strong Non-Consensursive Ideas > Hiot to Death (12:40)

This is Bridgewater Capital. And they talked about his meetings and how they stress test ideas and how people need to defend ideas. How does a good partner meeting go? If someone say proposes, I was going to say a trade, an investment. That is a substantial investment. What then happens from that point to a yes or a no decision? So we don't get to hedge fund manager can reverse himself. Hedge fund manager, bad trade. The next day he can turn around and take the opposite trade. We don't get to do that. So when we invest, it's knowing that we're in for 10 plus years, basically, as our assumption. And by the way, when we make an investment decision, it's a commitment of dollars. It's also a commitment of somebody's time. And by the way, the organization's time and bandwidth. And there's only so much of that. And then the other thing we have in venture is when we make a decision, we then become committed to that company in that category. And so we can't invest in their competitors, including by the way, their competitors don't even exist yet. Right? And so for example, the investors in Friendster were more likely than not completely, not only maybe unwilling, but also unable to invest in Facebook when it came along because they were conflicted because the founder of Friendster would have said, you know, you can't invest in a competitive company. And so so our decisions are big decisions and they have serious consequences for the future of the firm. So on the one hand, it's very important to us to have a full discussion and get all the facts on the table and really kind of bet these things out. On the other hand, we're trying to preserve the contrarianism of kind of the core of what we do, the strong, non-consensus views.


Their theory on venture capital success. (14:20)

We're trying to be able to invest in the things that really are unusual and odd that other people are taking seriously. And one of our theories about venture capital is that so everybody thinks like investing, it's like you either make a good investment or a bad investment. I actually think that's not the big issue. I think the issue, at least in venture capital, is whether you make a good investment or a great investment. And I think good is the enemy of great. We see many companies that are just fine and that are, you know, yep, you know, founders are good and the market seems good and the product seems good. The customer's kind of like it and they got a little revenue and it's kind of all fine. But those companies tend to never go anywhere. And then every once in a while, we'll see these companies that just have some extremely strong strength, some extremely kind of, you know, special, wonderful thing going on that by the way may have all kinds of problems and issues, but there's something at the core of what it is that's really special and magical. And those are the ones that we want to do. We're trying to do is basically stock our portfolio with just investments like that. And so to capture that, you can't have, you know, it'd be very easy in a conversation about the weaknesses of something to beat the idea to death and you never invest. And so the rule that we have, and then you would only invest in the consensus ones. You'd only invest in the very good ones as opposed to the great ones. And then you would fail as a firm. So, so we have to kind of, we have to do, again, both things at the same time, we have to try really hard to encourage the strong non-consensus thinking, but also have the full discussion to make sure that we really stress test that thinking. So the way we do it is basically each of our GPs has the ability to pull the trigger on a deal without a vote or without consensus. And we say as if the person closest to the deal has a very strong degree of positive, you know, commitment, enthusiasm about it, then we should do that investment, even if everybody else in the room thinks this is the stupidest thing they've ever heard of. However, you don't get to just go do that yourself completely on your own without stress testing your own thinking. And so it's the responsibility of everybody else in the room to stress test the thinking.


Stress testing deals using a red team. (16:05)

And if necessary, we actually create a red team, right? We'll actually formally create sort of the countervailing force and we'll designate some set of people to counter argue the other side. It's like a debate team. Yeah, basically, right. And then the way that we try to, you know, and this is fraught with like there's all kinds of ways this can go wrong because like what if I bring in a deal or what if Ben brings in a deal or what, you know, versus the new person bringing a deal or whatever. And so what Ben and I try to do is we do this to each other, right? And so whenever he brings in a deal, like I just beat the shit on it. Right. Just like, yeah, yeah, yeah. And I think it's the best idea I've ever heard of and I'll just like trash the crap out of it, right? And try to get everybody else to pile on. And then at the end of it, if he's still pounding the table saying, no, no, this is the thing, then we all say, okay, we're all, you know, we're all in, we're all behind you, right? And then it's a, it's a, it's a, it's a disagree and commit, you know, kind of culture. By the way, he does the same thing to me. Right. And so we, we basically, it's a torture test. What are some of the keys to fighting well in, I think it seems key to many different types of relationships, personal business or otherwise, the ability to sort of conflict resolve or just fight well and then make up. So it seems like you and Ben have, not my words, but like fought like cats and dogs. But you always kind of get over it. We prefer old married couple. Old married couple. There is a story I don't know if it's accurate about Netscape early days, something related to an interview with a journalist. Do you know the story I'm talking about? It's in Ben's book. Okay. So, right. That's, okay, here we go. Including the email you're about to reference. All right. So could you, could you, could you describe this for people who are unfamiliar? I really think you that for that, you got to read, you got to read Ben's book. Let's just say we started out our relationship with vigorous disagreement. Everybody's continued that to this day. And, but how do you, this is a family podcast. I don't want to use it. Oh, it's not a family podcast. If you want all the bad word, Ben's book, the hard thing about hard things. It's in the book. And I'll put it in the show notes.


How Ben Horowitz became Marc's high-profile partner at A16Z. (18:00)

How do you, I mean, you guys got off to a very aggressive start. How did you identify that Ben was someone worth having those types of disputes with, but there was value in what he brought to the table as opposed to just another person that you were butting heads with who is not worth keeping at the table. So honestly, there were, there were three things. So one is he would, he would talk back to me. So he would like argue right back at me. He wouldn't just go into the field position. He would just roll over like he would argue right back. And a lot of, a lot of what you see this, and if you just observe a lot of companies over time or investment firms or whatever, you know, everything, you know, there's, there's a temptation, everything must have become a hierarchy. And then the people always don't, the trepidation is about speaking truth to power. And a lot of what I've always found the really sort of wise and smart leaders are trying to do is they're trying to actually find the people in the organization who will actually talk back. It's actually, you know, it's one of the ways to really get ahead, you know, it's like there's certain organizations where the way to get ahead is to talk back to the leadership. That's how you get noticed. By the way, there are other organizations where that doesn't work at all. And I would recommend getting out of those as fast as possible. We try to be at least Ben and I want this organization to be one where people will actually speak truth to power and argue back at us just like anybody else. And so, which is why he and I argue so much is because we want to set the, set the model and set the precedent. So that was one is he would talk back to me too, as he was often, if not always right. And I wouldn't say always just because nobody is, but like he was very smart and very clear thinking. And then the third thing is I saw something early in him that he was just amazing working with people, which is not something I think has ever been necessarily true of me. But he was just like watching him in front of a group of people was just routinely magical. In terms of how he could get people, how he could communicate with people in a very clear way, how he could be very fact based, but he could really make people feel kind of in a really fundamental way. And so that combination made it clear that he was somebody very special.


Further reading High Output Management. (19:53)

So we mentioned Ben's book, which is one of a handful of books that many, many of the best operators, founders, I know in Silicon Valley routinely reference. There are a handful that come to mind, aside from that, four steps to the epiphany, I guess would be one. This one here that was right in the lobby of your office, high output management with the new forward by Ben Horowitz is another, which went out of print and then came back into print because it became a bit of a cult classic in here in Silicon Valley. Are there any books that you would prescribe to say it would be entrepreneur coming out of college just to give them and to increase the likelihood of them succeeding? Are there any other books that come to mind? Yeah. So high output management, it's one of Andy Gross books. It's the best book on management ever written. He wrote another book called Only the Paranoid Survive, which is one of my favorite topics. And so that is also a very good book. We recommend Ben's book is good. I think Peter Thiel's book is self recommending and it's an excellent book, zero to one. And then there's a bunch of others. There's a bunch of others that are good. Really though, I think or I got a lot of my education from was history, reading history. And so I would go back and read rather than reading a lot more about the contemporaries, I would go back and read about Edison. I would go back and read about Ford, Rockefeller, JP Morgan. I just for item, maybe it's just me, but I find the period of kind of call it 1870 to 1920, 1930 really interesting. Because you guys are the arrival of many of the technologies that kind of built the world that we live in today. Disruptive period. Yeah. I was fine. History is where I didn't really study history in college or anything. But if in history is this weird thing where the way that you're taught history in school, in high school, it's all these legendary people and they're all Olympians, the founding fathers and these great generals or whatever. And it's like they've got the names, you've got the dates and they did these amazing things. And they're kind of these great, they feel like unrelatable. You couldn't possibly, at least where I come from, even think that you could have ever had anything in common with these people. It was just like a non, it was not something that ever occurred to anybody. They're like the pantheon of kind of the legendary people who have lived. And I just found like the really well written biographies that get you inside the heads of what it was like to be Walt Disney at age 20, right? Or what it was like to be, I don't know Carnegie or Mellon or Ford or what it was like to be, for that matter, William Randolph Hearster. These people we've all heard of. Like, the really good photographers are really good at getting inside the head of what it was like to be them then before they became the people who ultimately made it into the history books. And honestly, a lot of things have changed, but a lot of things haven't changed. People haven't changed a bit. And so you always find like in those histories, you can always kind of see, okay, that personality type, like, yep, I know 13 people like that. And so I find that there's actually a lot more to template against and a lot more to kind of think about than people kind of give history credit for. Oh, definitely.


The long-running American art project that is Peanuts. (22:49)

I mean, I had Cyrus the great recommend to me. I guess it's Xenophon. And people don't change. I mean, you see the same archetypes. You're like, oh, that's Bob, Michael, or he does the same thing. And the biography mentioned, made me think of Walter Isaacson's book on Ben Franklin, who was always sort of untouchable in my mind. But it included all of his foibles and challenges and self-doubt. And it really humanized it in a way that actually made me aspire to do bigger things. If you wanted to get someone hooked on biographies, is there any particular book you would recommend? Oh, there's a bunch. The Walt Disney biography. I'll just mention it because it's a great one of our founders, Brian Chesky, the founder of Airbnb, has sort of Walt Disney is his hero. And so he's gotten me even more deeply to that. So author Neil Gabler, who's written the best biography on Walt Disney. And it's a phenomenal book. I actually like another one I really like coming out of kind of left field, but there's Charles Schultz is the creator of Peanuts. The Schultz biography is amazing. And basically the case that he makes is that he basically makes the case, biography makes the case that Peanuts was the longest continuous work of American art ever made. It was a 60 year art project with deep foundations in American history and psychology and philosophy. And through and sort of a reflection of the life, you know, of the person who made it. And of course, it was also a great Peanuts is a great entrepreneurial accomplishment because you know, it's this very personal thing, but at the same time it became this gigantic business success. So I think that one is great. The Wizard of Menlo Park is a great biography of Edison. And Edison is very much Edison is kind of proto Silicon Valley in a lot of ways. And I think he's really interesting to his record of sustained innovation in many, many different areas and how he then went out to try to commercialize things. Goodness is we are much better at the commercialization part now than people were in those days. We know how to build the company is much better now, but the pace, you know, he would just routinely invent things like the phonograph, like just, it's just obvious, right? To him. Yeah. And so and he did that, you know, for decades he was a fountain of innovation and it's a very inspiring story. The Netscape story, we touched on it very briefly and there are many places people can read about that.


What did Marc miss about the mid-90's Internet? (25:00)

So I don't want to take up too much time. But on a related note, I wanted to ask, is there anything you miss about mid 90s internet? Oh, yes. And what would it be? Yeah. So when I got to the Valley in 1993, 1994, I thought I had missed the whole thing. Because I thought the PC, I had studied the history and I used all this stuff. And I thought, you know, the PC, I knew Apple and Microsoft up in Seattle, but Intel down here and then all these great, you know, the big software companies at the time, you know, novela, lotus, all these companies, the game, you know, EA, the gaming companies, I think the great PC companies have gotten built in the 70s and 80s, right? And by the time 90s arrived, like it was the PC was done. Like it was, it was finished and like you could go buy one and it was great, but like it was done. And in fact, the overwhelming mood in the Valley when I arrived was that it was done. Like the PC was done. And by the way, the Valley was probably done because there was nothing else to do. And then there was this moment where I and, you know, various people and then more people and then more people, for whatever reason, it was kind of like, we really wrapped our heads around the implication of the internet, which today seems obvious, but at the time was a very contrarian. When I got to Silicon Valley, if you had said the internet will become a mainstream consumer medium that 3 billion people are going to use worldwide for all forms of human activity, you would have been left out like you would have been institutionalized. Like here, like people would have laughed at you. And so as we figured that out, then what happened was it was like, okay, new frontier, right? It was part of that goes back to the kind of history thing. Like, you know, for a long time, the development of like, you know, the United States, the new frontier was whatever was further west, right? And then eventually they got all the way to California and then they have the gold rush and like, and then there was famous thing, you know, famous kind of theme in American history is the closing of the frontier. Like there's a theme of like every Western, right? Every revisionist Western that gets made is like there's no frontier. You know, the radicals can't go any further west. They just build around in the ocean. So instead of what we have, we have kind of virtual frontiers. We have intellectual frontiers, right? Or we have creative frontiers or we have entrepreneurial frontiers, technological frontiers. And so the internet kind of represented the opening of a new frontier. And once we recognize that, it was like, ah, ha, brand new. And then at that point, and that was where all the enthusiasm came from, because it was that point of like, okay, if that's going to happen, then, you know, what do we have to do? And at that point, right, the list becomes very exciting. Like, we have to do e-commerce. We have to do online publishing. We have to do transactions. We have to do social networking. We have to do auctions. We have to do, right? All of the big franchise companies that came out of, you know, the next, you know, 10, 15, we have to do search, right? All the idea is kind of immediately materialized.


What is the new entrepreneurial frontier? (27:39)

And then people, we don't, is off to the racism. Is there anything comparable right now for you? So I think in my view, there always is. The thing is these things look like cults and fringe activities until they break mainstream. And so for me, it's not, I mean, so like, for example, the mobile rush in the last 10, you know, basically since the release of the iPhone, the mobile rush qualified for this, the social networking rush kind of post Facebook qualified for this. Those are kind of known and well understood. And it's just straight entrepreneurial opportunities, probably, you know, generally kind of reaching some level of saturation, right? Slight digression. We don't foreclose the possibility that there will be another mobile killer app or another social killer app, but it's getting harder and harder and harder because more and more people have figured out that you can do these things. And then the winners have now got very established, right? One of the ways we think about it is to have a, you know, sort of, you know, first you have Facebook and then you have Twitter and then you have Instagram and now you have Snapchat and those all became big winners. Okay. Now, what would it take to make the fifth one? Well, it's got a, there's only so many icons on the home screen of the phone, right? The fifth one has to knock something off, has to knock one of the other ones off. And so it's become, is these markets saturated because more of a zero sum game or even smartphones, you know, smart smartphone, smartphones, a giant industry, but like unit volumes globally are now expanding at like single digit percentages. And so the smartphone industry is becoming one that's mostly people competing directly with each other, not, not creating new things. And so we would say like those opportunities, those businesses are gigantic and those companies will get much bigger, but there's not as much entrepreneurial opportunity. The opportunity is more likely to be in the areas that people think are called in fringe. What would be some examples? We call this what we call our test on this. What do the nerds do on nights and weekends? Right. Their day job, like the day job is I work at Oracle, I work at, you know, I work at Salesforce.com or Adobe or Apple or Intelli, one of these companies or I'm or not or I'm just, I work in insurance company or I work at a bank or whatever, or I'm a student. Whatever, that's fine. They go do whatever they need to do to make a living. It's the question is like, what's the hobby? What's the thing at night or on the weekends? So then things get really interesting, right? So then you look at like things like cryptocurrency, Bitcoin, you look at things like a lot of the new advances. There's a whole, the whole area of kind of health hacking, you know, quantified self is a very interesting new area. There's food, you know, there's kind of, you've actually been part of the catalyst for this, but there's this whole kind of area of like scientific food and food hacking that's emerging. There is a revolution actually happening, I think in robotics, because robotics, robotics has finally become something tractable where people can do it at home. There's AI, deep learning is right on the tipping point. You can now down as a hobbyist, you can now download this thing called TensorFlow from Google, TensorFlow. TensorFlow and which is a deep learning framework. It's a framework for doing is it's in the field of AI. It's a for how computers can kind of deal with the real world and do things like self-driving cars or, you know, self-flying drones or all these things. This is technology. So five years ago, it didn't really work. Two years ago, you would have had to have been an employee at one of three or four big companies to have access this technology. And then Google just opened sourced it. And so now anybody in the world can download it, run it on their own computer. So all of a sudden, like AI is like a tractable thing that you can just have on your own laptop and you can build, you can build new things on top of you can build, you want to build a bot, you can build a bot, you want to build a self-driving car. We backed a founder, we backed a founder who'd literally built himself his own self-driving car. I read about it. Right, George. And by the way, you should interview. But like literally, like one guy can now build a self-driving car. Right. Ten years ago, this is like a DARPA funded like grand challenge, like research project. Five years ago, this is a, you know, team of a thousand at Google and now it's George. Right. And so that's an example of the kind of thing where it just looks like it's going to tip. And then, you know, there's one George today, there'll be a thousand George's tomorrow.


Elon's opinion on people scared of AI (31:15)

Do you think the dangers of AI that some people talk about are overblown? Completely. 100%. Yes. Can you elaborate? All of the many things I worry about, the machines rising up and killing us. Luddite fallacy. It's not actually, it's very, it's related. It's related to the Luddite fallacy. It's sharply related. It's the, it's the, it's the, it's the Permethian fallacy. There's something deep seated in human psychology where we are always going to invent the thing that's going to kill us. And at one point, or we're going to, we're going to unlock, fundamentally, we're going to unlock the power of the gods. Right. It goes back to the Permethian myth. It's like the, it's, it's like, almost like the concept of original sin. It's like fire. The big, the big moral of the Permethian myth was like fire, fire is the thing that enabled human civilization is also the thing that's going to burn everything down and kill us all. Right. And so this is very deeply embedded in our, in our psychology, Frankenstein. Um, Frankenstein, the subtitle of Frankenstein of the novel, the subtitle was the modern Prometheus. Right. It was directly, Frankenstein was a reinterpret, reinterpretation of the Permethian myth. Except in this case, it was literally the monster that was stitched together and then brought back to life through an unholy, literally unholy science. And then there was, um, uh, there's even religious versions of it in, in, in, in Jewish literature. There's a concept with the Gollum, um, which is the, the, the, the creature made out of mud that the, that rise, rise up out of it. That's really like the goddess of Warsaw or something to kill all the enemies and then come back and then it kills, kills all the people who created it. Right. So this is very kind of core. John Henry, uh, it's the steel driving man, right? John Henry is the famous, it's a, there's a song or the, the sort of, uh, story about the railroad worker and there's the machine that can like, uh, can, um, can hammer in the railroad spikes faster than a human can. And John Henry, it's famous showdown between him and the machine. And of course he wins and then drops dead of a heart attack. Right. And it's critical in the myth that he drops out of a heart attack, right? Cause technology has to get its revenge. And so it's just that projected forward. And the reason I'm so confident on this is because it's just every single era of technological advance. This has always been the response. There's always been this line of thinking. And then it turns out it's a tool. It's a technology. It's a tool. It's something that helps us do things in a better way. It's overwhelmingly to the benefit of mankind and then we wonder why everybody got so worked up over it. So if we, if we put aside the existential threat piece, you know, the summoning of the demon conversations, we put that aside entirely.


The real job displacement numbers (33:19)

How would you answer someone who, who worries about job displacement of AI? And because there are some really, I think reasonably smart people who, uh, are, are very fearful of what will happen to society when people are massively displaced. How, how would you encourage them to think about that? Yeah. So let's crystallize the concern. So the world economic forum came out with this, this thing last year that kind of made, freaked a lot of people out. And they said there'd be five million jobs destroyed in the next, uh, by 2020, um, by AI. Right. Um, so let's, let's run the numbers on that. So that sounds like a lot of jobs. Like that's a lot of people. That sounds like a lot of jobs. Um, so then you look at the American economy just this year, 2016, and we don't quite have to say, I think working yet. So we can't blame what I'm about to say on AI. Um, this year, the American economy will destroy 21 million jobs and create about 24 and a half million jobs for a net ad of about three and a half million jobs is, but is about the pace run. And that's this year. Right. And so we will destroy in the next three months, um, we will destroy more jobs than the world economic forum project will be destroyed by AI over the next five years. Why don't people know this? Why is this not obvious? Because whenever you read news stories about job growth, it's always the numbers quoted are always net numbers. So last month, 200,000 jobs, 230, 250,000 jobs got created. And so those are net jobs. Nobody ever reports the gross numbers. The gross numbers are, you know, go back numbers. We destroyed more than five million jobs a quarter and we create more than six million jobs a quarter, basically quarter and quarter out. And so one is people just dramatically underestimate the size and complexity and churn in the American economy as it currently exists.


Technology And Economy Evolution

Rapid technological and economic evolution. (34:59)

Uh, another example would be there's about, it turns out there's about five million people who drive professionally in the US. And so one of the questions with like self driving cars, right, is where this, what's going to happen with the truck drivers and the tax drivers and everything, anything else. Again, five million jobs we can redeploy. We redeploy every quarter. We redeploy five million people. Like this is not in the scope and scheme of the American economy. Uh, it's, it's a totally doable thing. The other thing that people don't appreciate and understand, I find mindblowing, which is would you, would you guess based on everything that people say, would you guess at the rate of job creation and disruption in the American economy is rising over time or falling over time? Oh, this seems like a test and bound fail. Uh, I don't have an informed opinion. Well, you would, you would, I think most people would guess that it's rising. Right. The view would be technologies having ever greater impact, right? And so, and it changed feels like it's accelerating, right? It's the big theme in the political seasons. It feels like the world's kind of getting away from us. Technology's getting away from us. Trade's getting away from us. You know, something is, you know, basically dramatic changes are happening that are historically unprecedented, right? It's kind of the feeling. So almost everybody believe if you do a poll and it's almost everybody. It's definitely the perception being created. Right. Almost everybody believes that change is increasing change, change, et cetera. It actually turns out in the American economy, the reverse is happening. Um, the rate of both job destruction and creation are falling and have been falling for decades have been falling over the last 50 years. They're not dramatic lies down, but they're basically very slow lines down. So basically what's been happening is in, in, in fact, um, every year, the American economy gets less dynamic, right? And, and you might say, oh, that's good because that means that you'll have stability. That means people won't have to change jobs, all that stuff. I would argue that's bad because what that means is we're not creating enough opportunity, right? And if we're thinking about the future, I think we want to think about opportunity. We want to think about what we're going to be able to do in the future. And we want to think about what our kids are going to be able to do in the future. Right. What will be the new, the new fields, the new sciences, the new forms of art, the new industries, the new businesses, the new companies, the new jobs that will get created, right? Every job that we all have and everybody listening to this podcast has got created as a consequence of the process of change, right? Which is very, has been very positive to literally everybody on planet Earth. Like this is these have been very, very positive changes in terms of increase in human welfare and opportunity. And so the idea of living in a world where change is becoming less rapid, which is what's actually happening to me. To me, that would be the problem. Like we should, we should want more change. We should want more change because we should want more advances, because we should want more opportunity to get created. We should want more products and services in our lives. We should want more industries created. We should want, you know, more medical advances. We should want more advances in art and science and every other field of human activity. And basically the way I read it is we have to fight to get that as opposed to what everybody thinks, which is we have to fight to prevent that. What's the smartest way to fight to get that? If you were willing to go into politics, I'm willing. This is this is when you run for office, when you run for office, I will help you put your platform together. Short of that, I think the thing to do, I mean, I think that the valley of you, and I guess my view is, you know, do what you can to directly contribute to it, right? And so do what you can do what you can to either either try to create the new things, try to create the new products, create the new, the new, again, art, science, technology products, what consumer goods create new things, create businesses around those things, right? Create companies or for that matter, by the way, nonprofits like create organizations or models that can let things scale so that they can touch more people. And then, you know, a big part of our role is, is, is, is fund them, fund them and support them and help and help enable them and train them and get them up and running. You mentioned, for instance, when you first got to the valley, there was a feeling on the part of many people that it's done.


Peter answers a reader question about evaluating breakneck technology. (38:25)

PCs are finished. You missed the book, kid. Now in the venture capital world, there is a term used fairly often FOMO, fear of missing out. How do you think about or handle FOMO yourself? Yeah, mostly we just fall right for it. Probably just total suckers for it. So the way we describe it. So, so what from fear missing out, we're just here missing out comes from it. It's like, it's clear invisible signs that something is happening. You're not a part of, right? And so it's not FOMO of something that hasn't happened yet. It's FOMO of something that's clearly obviously happening. So, which, which for those people not in the tech investment world comes in, in a concrete form, just as it is, it may be Monday, an example, like an email from a founder, Hey, we'd love to squeeze you in. We're over committed. So and so and so and so is in. Can you get us docs by tomorrow? If you're interested, blah, right? I mean, there's a lot of sort of cold cortisol driven emergencies, some of which may be real, many of which are illusions. Yeah. And so the thing is, so I guess there's kind of, there's kind of, you know, there's kind of a couple of ways to handle it. One is you just like, one of these, you view that as a sign of success. Like you view that as like what it appears to be, which is like, okay, the train is leaving the station and do I want to be on the train or not? That strikes everybody as like, so clearly wrong, like that must be wrong. Like that, that must be just foolish behavior, which is why it's been encapsulated into this term called FOMO. It's kind of designed, you know, designed to sound scary. Like that, that must be a stupid thing. You know, a lot of people will at least say that what they try to do then is kind of take the cynical kind of counter, you know, theory, which is like, okay, then by definition, those are probably bad ideas because you're probably getting played, or you're probably a sucker kind of, you know, along for the latest scam. And so, or the opportunities pastor, if it was a good opportunity, why would you be asked to participate in it?


High beta, hot, and cold (40:08)

And then you go to the other side, the other, the other cynical side of the poll, which is like, okay, now I'm, I'm, I'm not, I'm not, and there are certain VCs who do this, by the way, I'm not ever going to invest in anything hot because it's going to have that characteristic. So I'm going to, I'm only going to invest in things that aren't hot. The uncrouted trade. Yeah. Yeah. The thing that nobody else is interested in, right? And so, you know, sort of, it's, it's for old companies, we call that value investing, you know, for new companies, we just call that, you know, cold sectors. It's just an area in which nobody is interested. And, and so, and, you know, by the way, like, I don't think that that's, I don't think in any way that's a dumb conclusion and there are investors who do that and it works very well for them. My personal preference, what I try to get us to do around here is to just eliminate this as a variable altogether and literally just like not think about it. And so like, if it's urgent and we have to invest tomorrow and then if it's, you know, they may or may not ever be able to raise money in five years, but what I try to get us to do is just ignore that part entirely. Basically just take that out for, on both sides, both the hot and the cold, just take it all out and then, and then try to get to the, try to get to the actual thing, right? Try to get to the yet. So what, what is it really, this specific company, right? Doing this specific thing with a specific technology, the specific people at the specific time, what is that thing? And let's make our own evaluation of that thing independent of whether it's hot or cold. And then if it makes sense, we'll invest in if it doesn't, we don't, but we won't factor in whether it's hot or cold. Now, the challenge, we've actually, we've, we've, we've worked on this over time, roughly on average, the things that are hot are priced somewhere between two to four x higher than the things that are cold. At the extreme, from cold is cold, the hottest hot is about four x, right? And so in investing terms, if it's super hot, it's, could be 40 per year, if it's super cold, it's 10 pre and for the same quality, right? For the same fundamental quality level. And a big part of our answer is, okay, fine. Like it's fine. If we're going to invest, we'll invest on market terms. If the market terms are 10, because it's cold, we'll invest there. If the market terms are 40, because it's hot, we'll invest there. But we've made our own decision about whether to invest. So we just try to strip it away. Got it. Very fine way. Easy to say. Easy to say hard to do. Yeah.


Another type of investor that Andrew admires (42:15)

Are there any particular investors outside of venture capital who impress you? Yeah. So I spend most of them, when I study other investors, I either study the people we study the people we compete with and collaborate with very closely. I also, I particularly study the value investors on the completely other side of the spectrum. And it's a fascinating, and I've gotten to know some of them directly, it's a fascinating kind of thing, sort of Warren Buffett is the archetype, but also there's now, you know, it's a lot of famous value investors, Seth Klarman and a bunch of others that have kind of written books and kind of built up the sound. Yeah. Yeah. This whole kind of theory of value investing that goes back to Ben Graham in the 1920s, 1930s. And so there's this whole world of value investing. And on the one hand, there's no overlap between the worlds, because I like to say like, basically, anything Warren Buffett's worth willing to invest in, we run screaming in the other direction and vice versa. Right. And that says it should be. But basically, everything he invested like Heinz ketchup, right? And the reason he invests in Heinz ketchup is because people have been eating Heinz ketchup on hamburgers for 100 years. And therefore, the best guess would be that they're going to continue to eat Heinz ketchup for the next 100 years. We weren't screaming from that because like, you're not going to listen to C's candy? No, no, we like, no, absolutely not. Furthermore, I'll, you know, every time I hear a story like C's candy, I want to go find the new, like scientific, you know, superfood candy company that's going to blow their mind out of the water, right? So like, we're wired completely opposite in that sense. Basically, he's betting against change. We're betting for change. And that's a very, very big, like when he makes a mistake, it's because something changes that he didn't expect. When we make a mistake, it's because something doesn't change, right? That we thought would. And so, so they could not be more different in that way. But what both schools have in common is an orientation towards, I would say, original thinking of really being able to kind of going back to the previous conversation, really to really view things as they are as opposed to what everybody says about them or the way they're believed to be. Like the value investors are always talking about getting the core of the truth of what's actually happening in the business. And then the other is long term. It's the only other place, value investor value investing is the only other place in the market anymore where you can find long term investors. Like Buffett will actually invest in a company and he will hold it for 40 years. And that does not happen elsewhere in the market. It's only the deep value guys who will do that.


If Andrew wasn't funding other people's ideas, what would he teach? (44:24)

It's funny that at the extremes, they have that in common. Yeah, that's right. If you were talking about creating opportunity, if you decided to close the chapter on your career as a venture capitalist, a funder of ideas, a catalyst, and you had to teach a class, so let's just say ninth grade or freshman year in college. 50 students, what would you teach? I would be highly inclined towards teaching people how to build things. There's a book I've actually never read, but I love the title. What's the title? It's called Smart People Should Build Things. I do like the title. I almost don't even want to read the book because after that title, almost everything, almost anything it says is going to be a let down, but the title is absolutely brilliant. It's one of my two favorite titles. What's the second? It's like a one with Steve Martin. I have read this one. Steve Martin's autobiography is a fantastic book. Oh, my life's standing up. I'm not standing up. I'm actually sorry. It's not the title of the book. It's called my life standing up as a title, but the main lesson of the book, he says the key to success is, quote, be so good they can't ignore you. I think it's just, I basically, if you just have those two principles, Smart People Should Make Things and be so good they can't ignore you. Like, that's a pretty good way to orient. The autobiography is amazing. Also, just a side note. Listen to the audiobook. Steve Martin, audio, but yeah, it's a career. I mean, he's a comedy genius, but more than that, the level, it's like the Schultz thing. It's like the level of thoughtfulness that he put into how he constructed his career. Like nothing about his career as an accident, which I thought was as fast. Anyway, so I think it would be how to make things. And by the way, I don't necessarily even just mean new software and new computer programs, but how to make things more broadly. And so, how to make, you know, again, it goes back to how to make, you know, how to make new art, how to make new science, how to make new technology, how to make a new company. How would you teach that? I think projects. I think hands-on projects.


Any entrepreneur or scientist can learn to code. (46:09)

So you'd have, say, an art assignment. You would have a science/engineering assignment of some type. Yeah. Yeah. You'd have an objective. You'd be trying to construct something. It actually turns out one of the reasons why computer science has advanced so fast in the last 30 years is because people can make new things on computers without anybody's permission. And so it was a self-reload of that. But, you know, people can also write books without anybody's permission. And they can also write music without anybody's permission. And they can also start companies mostly without anybody's permission in most industries. And so it's basically just anywhere where you can actually, where you can actually yourself create something new, make something new. And then I find, you know, I'm actually a little, I'm very a little bit from folks like Elon Musk on this. Like, I find making something new that for sure there's part of it, but everybody wants to say is it's creativity. And so therefore, it's like you want to do something new, have an original idea. But again, that makes people feel like it's an unattainable thing. It's like how am I possibly going to come up with a new idea in a field and where people have been working in it for 100 or 200 years? Like, it just seems implausible. So I also find, and I think the great artists and the great scientists and the great business people often have this in common, it just goes back to history, which is okay, for whatever's you're going to make, learn about how things got made in the past and get inside the heads of the people who made things in the past and what they were actually like. And then realize that they're actually, they're not that different than you. Like at the time they got started, they kind of just like you. Steve Jobs had a great, he said one of his, I think in his famous commencement speech, he said everything in the world around you was made by somebody who's no smarter than you are. So there's nothing stopping any of the rest of us from doing the same thing.


Cryptocurrency And Success Mindset

Autonomous Drones. (47:44)

And so I think that would probably be what I would try to do. Maybe a boring left turn, but I'm interested to ask, and that is, what are the companies or who are the people you're watching most closely in AI drones and cryptocurrency? Yeah, so I'm very proud of we have a bunch of, we have a bunch of companies that we put our, like to say, we're conflict of interest or put your money where your mouth is, we have both. We have lived up to both principles. So we have two drone companies that I think are spectacular. So Airware was our first drone investment, commercial drones, which turns out is going to be just a giant market in industries oil and gas and insurance and all kinds of implications. But the one that people are going to see, I think in their day-to-day lives is going to be more the other one, which is called Skydiel, which is the company we back doing autonomous consumer drones. And this is going to be a very big advance on what you can do at the kind of hobbyist level. What does an autonomous consumer drone do? Well, whatever you tell it. Got it. Okay. So they haven't really, they haven't rolled out the product yet, so I don't want to spoil too much of the surprise. But it's basically, it's a drone that can fully fly itself. There's no, it doesn't require remote control. And so it can be given assignments and it will go carry out those assignments. And it can fly through, it can fly through tree branches, it can fly through power lines, it can fly through underground parking garages without any collisions. It can just, it can pilot itself, which is if you've tried flying any of the current drones, they don't work that way. Hard to do. Yes. It's exercising how quickly you crash it. And so like that, that technology is about to tip and become very widely usable. And so that's very exciting. So there's that. I'm sorry to interrupt the commercial drones for insurance. Yeah. So for instance, so be an example. Yeah, residential insurance, residential insurance, you get an insurance inspector, your new construction, your remodeling or building a new house, and there's, you know, you're going to get the insurance companies going to insure it. They do an inspection. The inspection involves, you know, a person climbing up on the roof and hopefully not falling off, right? And taking a bunch of notes on a clipboard and writing up a bunch of stuff. And like, it's actually turns out to be a pretty, like, it's a fairly dangerous job. Or another example, cell tower inspection. There's all these cell towers or, I don't know, 30,000 or something, cell towers in the US. The only thing they inspected, inspection literally is a dude on cables, right? And some of these are big towers. And then you get to like oil and gas. Like you get to a drilling rig. You got to inspect that thing. Okay. You know, try climbing up to the top of an oil and gas rig. Right. Like, these are very, these are, these are dangerous things. Lethal professions. Right. These are, these are, yeah. And so if you could, but what if you could, what if you could just fly the drone? Like, what if you could literally do the entire thing by hair? Right. What if the inspector just rolled up to the house and just took the drone out of the backseat and just launched up in the air and the drone flies a pattern above the house, takes comprehensive 2D photographs of everything and then creates a 3D representation from the 2D photographs, which you can now do and then does all the recognition, elevations, everything, materials, figures everything out. And then the guys, literally the, you know, the inspectors, like, sitting in the driveway in the car, you know, what they were conditioning on, like, in no danger. Same thing sound. Yeah. Yeah. And so that kind of thing. There's another, I'll give you another, this, nobody's doing this yet, but somebody's going to. So if you're, if you're a cop, if you're a cop on the beat, two in the morning, you get a call that there's a convenience store and somebody's broken in a convenience store, you have to go do the check. The check involves going and saying whether the, you know, the lights and all this stuff and broken glass, but you also have to check the roof. And checking the roof is actually a very important thing, because if there's a bad guy and they saw the cops coming, they might have climbed up on the roof and they might have a gun and they might shoot at you. And so you got to go clear the roof. And so what do you do? You get your flashlight and your gun and you climb the ladder and you poke your head up and you hope that nobody's on the roof. Hope no one plays whack them all with your head with a revolver. Yes, exactly. Right. And so what would be that? What would be what could we do to help that? What, how about, how about every, every police car have a drone in the backseat and you just, you get to the thing and from a safe distance, you launch the drone and the drone does an infrared camera sweep, right, of the roof, right before you even walk up to the thing, right? And by the way, like, if there's a bad guy on the roof, like, what if the drone recognizes like, okay, there's a person on the roof and what if the drone locks onto that person and then just basically follows that person wherever they go. And they wrap it, you know, they run, they run for it. And the drone is like right there 10 feet above following them the entire time, right? So all of a sudden, like, just the job of beat hop becomes a lot safer. And so in this, by the way, even goes back to the question you asked, which is like, is an AI, is an AI a threat? And it's like, no, no, like, this is the case, the way those drones are going to work is with those are the power by AI. Yeah. This is all based on deep learning. This is this new technology. This new AI, it's the same technology, by the way, that was just used in that go in the in the famous now go thing where the Google AI beat the human player has to be in. It's the same technology and it's just going to use for it's going to use for drones. And it's going to be these are going to be things in our lives that we are just going to be able to rely on to be able to make our lives safer and better. And we're just going to take them completely for granted. And we're going to work in combination with them. And we're going to be really glad we have them. And we're going to be completely unwilling to go back to a world where we didn't have them. And it's just going to be obvious. It's just we have to get it. We have to get this stuff in people's hands before they can they can really I think really fully see it.


What most people do not understand about cryptocurrency. (52:44)

What do most people not understand about cryptocurrency? I think it's just such a well, so a couple things. So this will not come as a surprise to you. I thought I understood it and I really didn't. Money gets people really cranked up. It does. The entire concept of money is probably the single I don't know, maybe after God, it's like the single most emotionally loaded concept that we have in humanity like money just because money makes people mad under any circumstances on any topic related to money. And it's just because I think it's just because it's such something that we all rely on and it's something that we always think is being like there's always this sense of fairness. And so money gets people really cranked up. And so I think that there's sort of the idea of cryptocurrency and blockchain and this kind of new idea of distributed trust in the internet. And then there is this application of that technology, which is a very fundamental application, which is a new kind of money. I think most people are unable to just simply objectively, dispassionately, look at the mechanics of how it works without almost getting preemptively upset, like just angry. Like, how dare the nerds come up with some new form of money? Like this has got to be like there's got to be something wrong with this, right? And I will now attempt to find the 30 possible things that could be wrong with this until I find one that basically proves that this can't possibly work because obviously it violates the laws of nature and governments and whatever, whatever. And like somehow I'm going to come out on the wrong side of this. Like people just get by the way, I'm not even just talking about like regular people. I'm almost talking like bank CEOs, just are furious. Like you bring up Bitcoin and they're just like, it just get really upset. And I'm like, you know, did you get upset about your new toaster? Like it's just a technology, like it's just a thing. And you can study it and you can learn about it and you can think about it. And then you'll either conclude it's good or not, but like it's not going to bite you, like it's just a thing. Right. And so like the way I look at it, it goes back to like it's just a thing. It's just it we now have this idea of cryptocurrency. It's a fundamentally new and very important idea. We now have this ability to have this new kind of currency based on top, you know, everybody's had 18,000 theories why it's not possibly going to work. Bitcoin is still working today exactly the same as it worked last year and the year before that year before that system is complete by all the noise and all the stuff and all the crashes and this and that and the other thing like it just continues to work. It just is like it's becoming like, error water. It just is like it or hated. It just is. And so anyway, we're still very excited. We're very excited and we're actually we're going to continue to make new investments against it. Are there of your current investments or non investments, so there are particular companies that you think are breaking new ground or doing interesting things in crypto?


Marc's investments or non investments in cryptocurrency. (55:05)

Yeah. So well, so I mean, Coinbase is our sort of our big bet that most people have as a company, most people have heard of. It's kind of the easiest way to buy and sell Bitcoin and they have a whole bunch of stuff they're doing. And then we have this company, 21, which a really brilliant founder, biology Srinivasan, who was a as she was a partner here. Very, very, very smart guy. And he has the highest output per minute of new ideas of anybody I've ever met in my life. And by the way, I mean, output per minute. Oh, I've been in a few dinners with him and it's hilarious to just watch the outpouring after especially after one or two glasses of wine. It's astonishing. He's like an Edison kind of character is just literally thousands of ideas. And then it's whatever percentage of the ideas that he can personally get to. And then he'll give the other ideas to everybody else and then wonder why they're not pursuing them, which is often a good question. And then the next time you meet him, he'll have a thousand new ideas. And so his company, people can read about it if they want, but it's done a bunch of interesting things. He has a whole additional set of ideas he's pursuing now. I had a long, I went to this thing up north and I drove back and I was on the phone with him for two hours, you know, in the middle of the night driving in on the freeway, biology in my ear, you know, idea number 38. I was like, this could be worse use of time.


Advice to Mark in his 20's. (56:25)

You know, that's good. That's good food for thought. On food for thought, what advice would you give to Mark the 20 something at Netscape? And you can pick the time. You know, I've never even thought, I've never for a moment even thought about that. I don't do so the thing I don't I don't do replays well. You go to this history, like I don't do replays well. And I like the question I'll never answer is what would you do? What would you have done differently had you known X? And I never ever play that game because it's there you never you didn't know X. Right. And so, you were every red does at the Elvis Cole novels, the great the crime novelist Michael craze. This is a book is novel Elvis Cole is this kind of postmodern LA private detective, the great novels and he's got this partner Joe Pike, it's my favorite fictional character, maybe of all time Joe Pike, Joe Pike, who's a former Marine force recon guy, so it's a lot like your friend Jacko. And in the novels, Joe Pike has a he's he always wears the same outfit every day, whereas jeans he wears a sweatshirt with a sleeves cut off and aviator mirror aviator sunglasses. Love them already. And and he's got bright red arrows tattooed on his deltoids pointing forward. And basically his entire thing is forward. So that's that's like feel we don't stop we don't slow down we don't revisit that you know past decisions. We don't we don't second guess. And so yeah, I actually honestly that question I have no idea how to answer.


Who comes to mind when Mark hears the word 'successful'? (57:57)

I think you just did. Okay. Onward. When you think of the word successful, who's the first person who comes to mind and why? Oh, that's a great example. That's a great that's a great question. I mean, honestly, my father-in-law for one, who's a whole could be the subject of a whole podcast. Can you give us a taste of why that is? He's an amazing guy. John, John Ariaga. He is one of the small handful of people who basically built Silicon Valley. And so he he has an amazing life story. But just to do the short version is he went to Stanford. He went to Stanford on a basketball scholarship in the 1950s. You're a very very very poor part of the country went to get a basketball scholarship studied. Got a bachelor's in geography from Stanford. You may have not ever in your life met a lot of people who have a bachelor's degree in geography. I have not. They abolished the major of the year. His degree abolished. That's a strong word. He became a real estate broker, a commercial real estate broker in like 1958, when the Valley was all orchards. Within two years, he was making 10 times more money buying and developing properties as he was as a broker. And his boss fired him because he was making all the other brokers feel bad. So he starting on making it's basically continuously from 1960 to today. He's been one of the biggest developers in Silicon Valley. Uniquely, by the way, as far as I can tell uniquely, I've never met anybody else. After the first few years, he basically he has not used debt on a project, I think in almost 50 years. So he's a real estate developer who does an entirely. It's extremely uncommon. Entirely on equity. And basically, it was he and there's a small handful of him and his contemporaries who basically built literally, literally built the Valley. And so yeah, no, when I want to, yeah, he's great. He's fantastic. I really love him. He's fantastic. He, he wants to let me down. He's like, okay, he's like, you know, he's like, this tech stuff. I understand. Like you guys think it's a big deal. It's fine. You get you should go do it for now. He's just like, I just want you to know the real money's in real estate. Does have a lot of street cred. And I said, yes, sir.


Does Mark have a morning routine? (01:00:02)

Do you have any particular morning rituals? Of center important to you sleep in as long as sleep in as long as possible. When do you usually wake up? Trying not to blow through any red lights on the other work. When you usually wake up. Oh, it 45 minutes before I have my first meeting. It's yeah, no, it's I do I do the what do they call the hot docking hot docking. It's like the controlled crash into the office. It's not yeah. No, it's a you read these three. Yes, the whole 14 things successful people do in the morning. Like I can't even imagine. Do you drink coffee? Yes, you do. Yeah, I was an emphatic. Yes, if it has caffeine in it, I drink it. I really think now the perfect day is caffeine for 10 hours alcohol for four. Like I think it balances everything out really well. Sounds a lot like my day. I'm not shy for a second about this little valley speedball. Yeah, that's right.


Personal Habits And Recommendations

Favorite documentaries or movies? (01:00:54)

Do you have any favorite documentaries or movies? Lots of favorite movies. I don't know where to start. What have you seen? Actually, you know, in the last 20 years in the last 10 years, really, you know, it's TV even more of the movies. Okay, what any favorites? Well, the whole way trying to sell a Mr. Robot, which I just think is absolutely genius. If you can never go out of it, you should get him sometime. The guy he's great. Sam, I never met him. You're probably right about him. Yeah, so he's he's directing. He's written and he's personally directing all 10 episodes of the new season. So it's going to be I think he's that he's he would be he would win. He actually made a movie, but like he's he's definitely going to win Oscars or whatever it is people win. And then halt and catch fire. I'm not familiar with that. Halt and catch fire is extraordinary. It's a very it's the best fictional portrayal of what a tech startup is actually like. Halt and catch. Halt and catch fire. So there was a it's a it's a the title is there's there was a mythic IBM mainframe days. There was a mythical instruction that is sort of a sort of an urban legend that there was a specific piece of code that you could write that would cause the computer to stop and then catch on fire. It's like the mission of Boswell command. Yeah, I don't think it was ever really verified for sure whether or not it existed, but it kind of became this mythical thing. And so it's it's the story actually it's loosely the story of the the birth of the PC and it particularly it's sort of based on how the company compact got built in Houston. It's it's it's set in Texas. But it's basically the birth of a new computer company. But it's a very and it's it's funny because the reviews. The reviews are funny. So it's a historical piece. It's very serious very serious drama. So you know it gets compared to mad men and shows like that. I set you know set in the office and the personal lives of everybody. And so and it's funny because the critics reviewed it and they said I don't you know it all seems like it all seems super heated like it's all too like the melodramas too exaggerated of like all the stuff that happens and everybody I know in the valley has seen is like no that's actually what it's like. That's actually 100% what it's like. And like I knew that guy and I saw that thing happen and I saw that person blow up that way. It's like Ben's book. Same. Yeah, exactly. Yeah. Yeah, that's what it's actually it's what it's what it's what so they they really caught the it's fictionalized but they really for anybody really wants to know what it's actually like to go through one of these things that that that shows tremendous. And then of course Silicon Valley. Yeah. Do you have a favorite scene or episode? So I've actually still only seen the first season. I'm not current. I'm starting to actually become culturally irrelevant because I can't I don't get any of the new references at all. You'll survive. You seem to be doing just fine. I have to binge. The the sesame seed scene in the first episode the first season was probably the highlight that the let's just say loosely based on Peter Thiel scene. Yeah, loosely or not. Right. Exactly. Or not. Or maybe very precisely, very accurately.


Most impactful purchases under $100? (01:03:41)

You know, who knows. If you could have one billboard anywhere with anything on it, what would you put on it that could not be an advertisement for your portfolio companies outside of the trip tower? Okay. What would you put on it though? If you wanted to convey a short message to as many people as possible. Oh, I've got one. All right. Maybe this is a little maybe a small scale for what you're looking for. But I've got one. I've actually thought about hiring a sky writer to do this one. Well, let's do it. But okay, right in the heart of San Francisco billboard, just two words on it. Raise prices. Raise prices. Yes. Can you explain? The number one thing, just the theme and we just see it everywhere, the number one theme of our companies have when they get really struggling is they are not charging enough for their product. It has become absolutely conventional wisdom in Silicon Valley that the way to succeed is to price your product as low as possible. And then under the theory that if it's low priced, everybody can buy it. And that's how you get to volume. And we just see over and over and over again people failing with that because they because they get into the problem and call too hungry to eat. They don't charge enough for their product to be able to afford the sales marketing required to actually get anybody to buy it. And so they can't hire the sales rep. They can't afford to hire the sales rep to go sell the product. They can't afford to buy the whatever TV commercial, whatever it is. They can't afford. They cannot afford to go acquire the customers. 200 to eat. They're 200 to eat. And then they sit there, they don't sell anything. And then they don't sell anything and they get nervous and upset and then they cut the prices. And then it's a risk to the bottom. Which just makes the problem worse. Yeah. And so probably the single number one thing we try to get our companies to do is like raise prices. Raise prices. Yes. So last, and by the way, yeah, you know, it's like, okay, like is your product any good if people won't pay more for it? Exactly. It's like good litmus test. Good litmus test, right? Last two questions. What have you changed your mind about in the last few years? It's a good question. So one is we started, I'll just give you a very practical one. We started on, we started out, we didn't do any healthcare related stuff here, investments here. And we've now done a complete almost complete 180 on that. And we're now very deep in health because we think a bunch of really interesting things are happening. And that was a response to like the hedge fund thing I was telling, like that was a response. We just basically had very smart founders coming through here, basically telling us we were dumb. Like, and by the way, they were right. Like we just hadn't figured it out yet. And so we got serious about it a couple years ago. And we have this guy, Vijay Pandey from the former Stanford professor running this program enough for us. And it's extraordinary what's happening at the kind of intersection of healthcare and computer science. So there's a lot that's happening there. The thing that I'm probably think about the most that I am still trying to work out in my own head is that a combination of Peter Thiel, Larry Page, and Elon Musk in different ways have provoked a fundamental conversation in the valley around kind of the sort of moonshots, the big challenges. And so, Elon, why can't we build self-driving cars? Why can't we have new kinds of rocket ships? Why can't we go to Mars? Why can't we cure cancer? Why can't we do nuclear fusion? Long list of things that are like big things. We talked about earlier a little bit like Silicon Valley has always viewed itself a little bit in the tools business, or a lot in the tools business. Silicon Valley has been getting more and more assertive entering more and more industries directly. So like Uber, Lyft entering directly in transportation, Airbnb entering directly in a real estate, FinTech companies entering directly into banking. So our companies are getting more assertive at going into markets that previously they may not, other founders may not have been willing to go into in the past. And then Larry, Elon, and Peter basically all say in different ways, like we're still not doing enough. There are these much bigger things to be done. And why are we waiting for either governments to do them or for large industrial companies like GE to do them or for research universities to figure them out? Like why can't we do these things? And there's one school of thought that says they're simply too hard. They're simply too hard. They're too daunting. They're too expensive. They're too different. They don't have more's law on their side. Like there's a reason we haven't been doing them is because they're too difficult. And then there's another school of thought that says, that's just being a wimp. And you should go try to do all these things, because if we're not going to do it, really who is. And then I'm trying to find is there something in the middle? What are the shades of gray? What's the line? What's the line where Tesla made sense? But Tesla that flies didn't make sense. And there's a line in there somewhere, I think. Or maybe Peter's right. And maybe there is an align. And maybe the next Tesla should be one that flies. And so to me, that's the provocative thing. It's a question about stretching the limits. How far? Icarus myth. How far can we stretch the limits of what we can do before our wings melt? And it strikes me also that you mentioned Peter. So we wanted flying cars and we got 140 characters. There were a lot of questions from fans asking how would he suggest people entrepreneurs or be encouraged to say solve the big problems versus making social media networks, etc. And I think you made a point actually in a debate with Peter at one point, maybe it was at the milk conference could have been elsewhere that Twitter and I would agree with you as one example, 140 characters has been world changing in a lot of ways.


Twitter's Impacts and Innovations (01:08:52)

I mean, you look at political activism, you look at many different examples when you have adoption that is that wide, that global free with the emergent properties are just unpredictable. I mean, you get some incredible use cases. Including political revolutions. Exactly. Right. Yeah. Last question. Oh, sorry. Sorry. So that was it was a debate at the milk conference, which is one of my one of my shining moments is I prepared for weeks for that debate. Yeah. Knowing Peter wasn't going to prepare at all. I bring that up because I think I was actually able to go toe to toe with him. But I had to sandbag him to do it. He was absolutely shocked that I had prepared for it. I enjoyed the I really enjoyed the conversation. I was one of my grown my great debating moments is I could almost keep up with Peter. So it's actually funny his whole thing, his whole slogan that the slogan of his firm, which is as you said, we were promised flying cars instead of we got 140 characters. It's actually interesting. He will immediately concede that both of those are actually not the point. So he first of all, he immediately concedes that flying cars probably don't make sense. And then he immediately concedes that Twitter probably is more important than like just being dismissed like that. And so he will he basically he just basically says the slogan is just to provoke provoke the conversation. But to your point, it does provoke the conversation. And I actually think you're I think you're right. I think it provokes a conversation from both sides, which is, okay, why don't we have the other big it? Maybe flying cars are not, but why don't we have nuclear fusion? Why don't we have like all these other things? Why don't we have supersonic flight? Right. Like we have the Concord. Now we don't even have the Concord. Like seriously, it takes nine hours to get to London. Like really? Right. I mean, I think that's it's a very relevant question. And then but I also think it provokes the thing on the other side, which is I think the computer stuff, communication stuff, like Twitter and all these other things. If I'm Peter flatly says the iPhone doesn't count as innovation, and I just think that's I think that's too far. Right. I think it it I phone absolutely counts as innovation. I think it's one of the most important products ever developed. I think the impact on the world is absolutely enormous and growing. And so I think there's there's a there's a tendency to write off the stuff that built the valley. And I don't think I don't agree with that. I think there's a lot more to do in the core of what we do. The last question is, do you have any any ask or request of my audience people listening anything you'd like them to consider ponder do?


A request for the audience (01:11:05)

So first of all, they should all for sure work for our companies. And so please come to our website, a 16 Z dot com. We have jobs. We have job listings. We'd like to get everybody in our orbit. Anybody smart enough to listen to your podcast? We definitely want to work for our companies. And then, you know, I would say, you know, I would say build new things. And then if it's something that needs if it's a you know, for the business that's promising that needs money, you know, we're open for we're open for business. Mark, any last places you'd like people to check you out online? Where can they say hello?


Connecting Online

Where to find Pmarca online (01:11:33)

Oh, Twitter, Twitter's good. Twitter's good. Twitter @pmarka. @pmarka, P-M-A-R. Is that from your Unix handle way back in the day? It's an old, old joke. It's a boss one time who is so important that he had both his real, he had his public email address and he has P with his name behind it, which is his private email address. So we thought that was a little bit too much. And so we all gave ourselves P. But nobody knew who we were. And then it stuck. Perfect. Well, everybody say check out the Android and Horror Awards website. I'll put that in the show notes as well. You should also check out their podcast, which I've greatly enjoyed. You can start with, I mean, one that I really enjoyed was the sort of deconstructing Amazon episode. And thank you so much for the time, Mark. This has been a blast. I really appreciate it. Thanks, Jim. And to everyone listening, you can find all the links and everything else in the show notes, which you can find at 4hourquake.com/podcast. And until next time, thank you for listening. This episode is brought to you by 99 Designs. 99 Designs is a great partner for creating and growing your business. It's a one stop shop for all of your graphic design needs, whether that's a logo, website, business card, or anything else. I use 99 Designs to get book cover prototypes for the 4-hour body, which went on to become a number one New York Times bestseller. I also use them for banner ads, illustrations, and other things. With 99 Designs, designers around the world compete to create the best design for you. You give feedback and then pick your favorite. You end up happy or you get your money back. It's very simple. You can check out a few of my own designs and those of yours, meaning Tim Ferris Show listeners, at 99designs.com/Tim. And right now, my listeners, you guys will get a free $99 upgrade on your first design. That's 99designs.com/Tim. Check it out. This episode is brought to you by Audible, which I've used for years. I love audiobooks, and I have two to recommend right off the bat. Number one is perhaps my favorite audiobook of all time, and that is The Graveyard Book by Neil Gaiman. The only audiobook I've wanted to immediately listen to a second time as soon as I've finished. It's amazing. You will thank me. The Graveyard Book. The second is Vagabonding by Rolf Potts, which had a huge impact on my life and formed the basis for a lot of what became the Fwara Work Week. So, all you need to do to get your free 30-day trial is go to audible.com/Tim. And you can choose one of those two books, The Graveyard Book, Vagabonding, or more than 180,000 audio programs. So that could be a book, that could be a magazine, that could be a newspaper, it could be a class. It's that easy. Go to audible.com/Tim. That's audible.com/Tim, and grab a book. Enjoy.


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