a16z Podcast | Ben and Marc Explain (Practically) Everything – Part 1

1. 0:00 – 3:07

   The Software Eats the World Thesis

   1. SPSpeaker0:00

      Welcome to the a16z Podcast. I'm Michael Copeland, and, uh, we have with us today both A and Z, Marc Andreessen and Ben Horowitz. Welcome, guys.

   2. MAMarc Andreessen0:10

      Hey.

   3. BHBen Horowitz0:11

      All right. Thank you, Michael.

   4. SPSpeaker0:12

      Uh, so right about now, it's been five years since the firm was founded, since you guys founded the firm. And, um, we thought it was a good time, not to look back, but to sort of take stock and talk about some tech trends that you're seeing now and then spin things forward. Um, so one of the pillars, um, that this firm really rests itself on is software eats the world. And Marc, just to refresh us, we sort of use it as shorthand around here, but what is the thesis? Uh, explain a little bit, and then let's get into where we are in that thesis.

   5. MAMarc Andreessen0:45

      Yeah. So the thesis is that, you know, the computer itself is only about seventy-five years old, right? The computer was originally invented to crack codes during World War II, um, and then, you know, got adopted by governments, uh, and big businesses in the '60s and '70s. And then the PC arrived, and then sort of, you know, rich people in the developed world, U.S., Europe, were able to get PCs in the '80s and '90s. You know, leading up to basically about five years ago, you lived in a world in which maybe a billion, billion, billion and a half people had, had PCs. Um, and then some of those PCs were on the internet, and then at some point, all those, all those PCs finally got on the internet. Um, and that's all fine and good, but that sort of meant that most people in the world didn't have access to computers, and most of the people in the world weren't on the internet up until a couple- up until a few years ago. Um, and then, you know, starting in 2007, with the iPhone, the smartphone comes out, and the smartphone finally packages computers in a form where everybody on the planet can have one. Um, and this is a thing I've been talking a lot about that people occasionally get angry about 'cause they, they think it won't possibly come true. But I'm convinced it's gonna come true, which is I think everybody on the planet by the end of the decade is gonna have a smartphone. Um, effectively everybody, almost everybody. Um, including in places where it's still hard to get electricity or water, um, people are gonna have smartphones. Um, in fact, the big thing this year is the rise of the thirty-five dollar smartphone, uh, in countries like India and Pakistan that are just exploding in, in just giant volume. Um, so I think we're gonna live in a world by the end of the decade in which there's five, six, seven billion smartphones in people's hands, which means five, six, seven billion people in the world connected to the internet with kind of what we would consider modern tools and technologies and, uh, and, uh, and access. Um, and so that's a world we've never lived in, right? That's a world where everybody's connected. That's a world where everybody has access to, to the kind of technology that we take for granted today. Um, and so in that world, you can start to think... I think you can, you can think sort of very profound thoughts about like, okay, so, like, what happens in many different fields and businesses and industries as a consequence of that? So what happens in the media business, as an example, when everybody has the ability to consume, you know, news online? What happens in the, you know, TV business when everybody has the ability to get video streamed straight to their cell phone? Um, what happens to retail when everybody can engage in e-commerce? Uh, what happens to education, uh, when everybody can take classes online through, through their smartphone? Um, and so I think it's basically, you know, now, the next five years is basically prime time to think about every business, every industry, every field and say, "Well, how can we reinvent it now knowing that basically software, software can basically, uh, play such an important role in everything?"

2. 3:07 – 5:48

   Healthcare, Education, Government and Baumol's Cost Disease

   1. SPSpeaker3:07

      So where are we, and what, what are you guys seeing in terms of the verticals that are, are being eaten? And then I wanna get at what it's like to be eaten too.

   2. MAMarc Andreessen3:14

      Sure.

   3. SPSpeaker3:15

      But, um, what are the verticals that sort of... Fallen is the wrong word, but fell first as software eats the world and, and what comes next?

   4. MAMarc Andreessen3:22

      Well, I think it's, it's, uh, it's, it's built... I would, I would characterize it as, uh, as, as building. We're, uh, we, we, we tend to be glass, uh, glass half, uh, half full people, and we think there's huge opportunities that kind of flow from this. Um, so, you know, media's been an obvious one. Um, uh, financial services, uh, software is, uh, you know, uh, taking over at a very, a very fast pace. Um, and then, uh, retail e-commerce, you know, has been a profound, uh, revolution over the last ten years, and that, that will continue. Um, I think the three big ones that we think a, a lot about for the next, you know, five or ten years, um, are... And they're really, really big, you know, domains, and so these, these are long-term projects, but, uh, healthcare, uh, education, and then ultimately government.

   5. SPSpeaker3:58

      So those three that you mentioned have been the most intractable, it seems.

   6. MAMarc Andreessen4:02

      Right.

   7. SPSpeaker4:02

      And we've been promised there's, you know, d- you know, electronic medical records. Um, you know, Obama's got a great website, but, but that's not software eating government.

   8. MAMarc Andreessen4:11

      Yeah.

   9. SPSpeaker4:11

      Like, why now, and what makes it different?

   10. MAMarc Andreessen4:15

       Well, why now? Because you can. Uh, because it's possible. Because it can be done. Um, because everybody's gonna have a smartphone. Because everybody's gonna have to be online. These are very, very big fields, very big entrenched interests, lots of regulation. Like, there's nothing easy about it. But because they're so big also makes them so important, right? So I'll just give you my perspective, which is healthcare and education, like one of the things you always look at is you're like, well, healthcare and education is something that you want everybody on the planet to have access to.

   11. SPSpeaker4:37

       Right.

   12. MAMarc Andreessen4:38

       Um, but at the same time, if you just, if you, if you try to do that with sort of conventional ways of delivering those services, you'll bankrupt everything, right? You look at the U.S. fiscal situation over the next fifty years, and you look at this massive debt, and a very large amount of it is geared towards healthcare, uh, paying for people's healthcare. And a lot of it then is geared towards education and this huge crisis we have around things like student loan, uh, debt. And so, uh, software or, uh, healthcare and education suffer from something that economists call Baumol's cost disease, um, after an economist named, uh, Baumol. Um, and the cost disease basically is technology steadily drives down prices, uh, in sectors, uh, like media and in, uh, financial services. Um, but technology is not yet driving down costs, uh, in healthcare and education, but it should. Um, and so if you can bring revolutionary technology into those fields, you can basically break the back of the so-called cost disease, and then you can bring the same kind of cost reduction you see in other fields into those fields, which then means you can really open up access. And that's the critical thing is we need to get every kid on the planet access to what we consider today to be a top-end Ivy League education. We need to get every person on the planet to have access to what we would consider to be a modern healthcare, uh, uh, capability. The only way to do that is to apply technology. O-otherwise, we'll-- you, you, you do bankrupt the planet trying to do it, uh, with the, with the current techniques.

3. 5:48 – 10:14

   Job Transitions and the Social Safety Net

   1. SPSpeaker5:48

      Ben, um, I wanna bring you into the conversation. Uh, software eats the world is great if you're sort of on the, on the side of the coding keyboard where you're out there and you feel empowered to go after healthcare or government, government or whatever else it is. But what if you are on the other side and you're sort of being eaten? Um, how do we, how do you sort of view that, and, and then how do we bring those folks along?

   2. BHBen Horowitz6:12

      Well, I think in the first place, um, uh, a kind of misunderstanding of it is that those jobs get eaten and there are just fewer jobs. So I think kind of the history of the country and the history of the world has been, um, the jobs 50 years from now are not gonna be the same jobs that we're doing today. Although we had a very long time when most of the jobs were farming. Um, and thankfully, most of the jobs are no longer farming-

   3. SPSpeaker6:36

      [laughs]

   4. BHBen Horowitz6:36

      ... 'cause that farming is hard work.

   5. SPSpeaker6:38

      Yes.

   6. BHBen Horowitz6:38

      Um, [clears throat] but, you know, most of the jobs today aren't jobs that were around before. I mean, there were all kinds of jobs like, for example, delivering ice was a big job. Uh, making vinyl records used to be an important job. There were a lot of jobs, uh, that are no longer here. So the challenge isn't kind of the absolute number of jobs as, but rather the transition from one kind of, you know, one set of jobs to another. Um, and this is where, uh, I think I would just come, you know, add to what Marc is saying that, like, it's really important to apply technology to bring down the cost of things so that you can make policy decisions, um, to create a kind of both safety net and education system that enables people to not, like, starve to death or hit the streets or become homeless or, uh, really lose their dignity, um, in the meanwhile, but then also c- be in position where they can go be productive again as quickly as possible. Uh, and that kind of thing, uh, is not really affordable if all the money is going to, uh, technology-unenabled education and healthcare.

   7. SPSpeaker7:45

      Right.

   8. BHBen Horowitz7:45

      And so they kind of go together. I think that, um, if software doesn't eat the things that the government pays for, then we run into trouble. And, and you could imagine, uh, you know, completely government-funded awesome education, um, enabled by things like Oculus where you could put kids from anywhere in the very best classrooms in the world as, uh, though they were actually there, um. [clears throat]

   9. SPSpeaker8:07

      And Oculus, to, to be clear, uh, virtual reality goggles that allow you, would allow you to do what?

   10. BHBen Horowitz8:13

       Well, basically, uh, enter a virtual classroom, um, with virtual other kids and virtual teacher, uh, which, you know, might not sound that great if you're at Harvard, but it sounds awfully good if you're in an inner-city school, um, that's very dangerous to go to with, uh, teachers that may be, um, no longer that interested in teaching for all kinds of reasons. And so by applying technology to the things that cost most, you can both improve the services and reduce the cost a lot, which also frees up money for things like a really robust social safety net, which basically gets you... And you, you ought to be in, you know, 2014, we ought to be at the point where everybody can get kind of basic shelter, transportation, education, um, and other services without, uh, bankrupting the country.

   11. SPSpeaker9:03

       Does that social safety net come from private industry via taxes? I mean, is it government-run? How, who, who pays for it?

   12. BHBen Horowitz9:11

       Yeah, so I think the social safety net, um, ideally would be, w- would, the money would come from the government and would come from taxes. Uh, and I think it would be smart, you know, as a taxpayer, I'd say smart to do that. Uh, but it only works if th- if there's real technology behind it because otherwise it j- Uh, right now we can't even afford, um, kind of healthcare. [laughs] And so, um, without the application of technology, we're, we're, we're in this kind of halfway point where software is eating lots of jobs or transitioning lots of jobs. Um, but yet the big government services have not yet been transformed.

   13. SPSpeaker9:48

       I see. Um, uh, we talk about this transition point. Um, Marc, you mentioned, you know, billions of cell phones in people's hands soon, or smartphones I should say.

   14. MAMarc Andreessen9:56

       Mm-hmm.

   15. SPSpeaker9:57

       Computers essentially in people's hands. What is our evidence that we're at this transition point? And, and I wanna talk a little bit kind of about accelerating innovation and kind of in your careers w- how now looks different than maybe it did in the mid, late '90s or early 2000s even.

4. 10:14 – 12:26

   Then and Now: Market Expansion Since Netscape

   1. MAMarc Andreessen10:14

      Yeah, I mean, well, things look really, really different. So there's sort of this kind of running, you know, sort of this running thing in the, in the valley that, like, it's another bubble. Um, and people have been kind of say, you know, calling another bubble now. This is year 10 of people calling a new bubble. It started in 2005, so, um, maybe at some point they'll be right. But, um, sort of this thing of like is this, is this the '90s all over again? The thing that has changed so much is the industry. The industry and the world are so much further along than they were in the '90s. And so we, we built Net- Netscape, the company we were at in the '90s. We built Netscape. We had at one point over 90%, you know, market share for all people on the internet using our, using our browser, and it turned out there were 50 million people on the internet. Like it turned-

   2. SPSpeaker10:47

      Right

   3. MAMarc Andreessen10:48

      ... 50 million people around the world were on the internet. Uh, by the way, 25 million of them were on AOL. Um, and so to say that they were on the internet would be a slightly generous statement.

   4. SPSpeaker10:55

      [laughs]

   5. MAMarc Andreessen10:56

      Um, the other, uh, 25 million were directly o- online, but that was it. You, if you had 90, you'd, you could have 90% market share, and you'd have less than 50 million users, and that was it. Like, and that was all that, that was all that we could do. And by the way, those 50 million people were all coming in, for the most part, over dial-up.

   6. SPSpeaker11:09

      Right.

   7. MAMarc Andreessen11:10

      Um, and so they were coming in very slow. They were on, you know, these... Th- I mean, they were on PCs that today if you saw these PCs in a sh- Like, they're now making TV shows like Halt and Catch Fire. They're making now TV shows in which, like, the period in which you had, like, these old PCs, like, was, like, they now look retro. Like it's-

   8. SPSpeaker11:23

      Right

   9. MAMarc Andreessen11:24

      ... like times have changed in a freaking hurry. Um, and so the world was just a, the technology world was a much smaller place, and the, the number of people who had access to technology was just a much smaller place. Fast-forward to today, you know, more than two billion people online, rising very fast. So, you know, market expansion, you know, we think about things in terms of market sizes, market, market expansion on the order of 40, 50, 60 fold, uh, over the course of 15 years, which is just absolutely amazing, which is why you have these companies like Google and Facebook now that have more than a billion users.

   10. SPSpeaker11:51

       Right.

   11. MAMarc Andreessen11:52

       Like, I like to, I work with, you know, work at, I work with, uh, Mark Zuckerberg at Facebook, and I like to tease him of, like, what a special position Facebook is in because how, you know, Facebook passed a billion users, you know, I don't know, a year or two ago. And, and it's like, well, how many, how many businesses or human organizations or institutions in history have ever had a billion anything? And it's like you're basically, it's basically the Catholic Church and the Coca-Cola Company, and that's basically about it.

   12. SPSpeaker12:12

       Right.

   13. MAMarc Andreessen12:12

       And then, like, Google and Facebook are, like, number two and three, you know, three and four, and then, like, WhatsApp is gonna do it, and then there's gonna be a whole bunch of others. Um, and iPh- you know, iPhone is gonna do it, and Android is gonna do it. Um, and so the world has really opened up and expanded very fast.

5. 12:26 – 14:00

   How the Firm Keeps Up with Many Technologies

   1. SPSpeaker12:26

      We invest in all kinds of things here, software-based mostly, but drones, Bitcoin, three-D, you know, virtual reality, Oculus. How do you guys keep up? If, you know, sort of things are different and the pace is different, um, how do you guys personally keep up? And then how should the rest of us think about keeping up, if even that's the right thing to think about?

   2. BHBen Horowitz12:47

      Well, I think it, it's like a lot of things that are extremely complex. Um, if you don't have kind of s- uh, some kind of unification understanding of what's going on, then, then it does get very complicated. But, uh, one of the things, one of the tenets when we started the firm was, um, we were only gonna invest in things that we understood. Um, and that meant things that were software was a core intellectual property. And if you look at what's happening across all of those things, um, there are different manifestations of software becoming, uh, kind of more powerful, uh, a more powerful force in the world due to all the things that kinda Marc talked about, the improvement in the underlying platforms, the improvement in the programming languages, um, and the connectivity and all these things. And so whether it's software eating money, um, or software eating entertainment, uh, it's all kind of comes from the core root phenomenon. And so these things are relatively easy to understand quickly. Now, some of them, you know, the, the details of every one of them is complex. Um, but you know, it is... The nice thing is it's our favorite thing to do in the world, so like-

   3. SPSpeaker13:58

      Right

   4. BHBen Horowitz13:58

      ... it's a great job in that way.

6. 14:00 – 16:32

   Software Moves into the Physical World

   1. SPSpeaker14:00

      We've talked about sort of software eating what one could imagine are sort of mostly software-based or digital-based, um, industries. It's moving into the physical world. Um, where do you see that most starkly, and, and does it look different as software eats, you know, manufacturing, robotics, et cetera?

   2. MAMarc Andreessen14:19

      Yeah, so yes. So basically, I think the key assumption, the key assumption I make is basically every physical thing is going to become smart over the next, you know, ten or twenty years. This one's gonna take time, but it, it, it will happen. Um, so basically every physical thing, whether it's a toy or a light bulb or a doorknob or, like, you know, a building or, uh, you know, your desk or whatever, you know, take your pick of, your car, um, they're all gonna become smart. And by smart, I mean they're all gonna have chips, um, built into them, and then they're all, everything is, everything's gonna have a chip in it. Um, everything is gonna be on the internet. Everything's gonna be connected. Um, everything is gonna have data. Um, everything is gonna be responsive, uh, you know, to human beings. Um, and by the way, I mean, like, everything. Like, one of the most, it, it, a, a very exciting trend that we're not yet invested in, but I'm very excited about is, um, like, I think, I'm convinced in the future pills are all gonna have chips in them. Um, so for example, med... Like, every pill you take is gonna have a biodegradable chip in it.

   3. SPSpeaker15:05

      But, like, we've been talking about smart refrigerators for a long time. Why do I mi- want my refrigerator to be smart?

   4. MAMarc Andreessen15:11

      Um, because you want your refrigerator to know, for example, when the food in it has spoiled so that you don't get, like, salmonella. Like, I'm, you know, very fundamental. Like, you might like to know, you might like to know you're at the grocery store. You might like to know, like, what you've actually got, like, what you actually need to reorder. Um, and it's just been, you know, it's the, the, the nature, the, the, the criticism of this stuff is always so interesting because basically, you know, these products come out, and they're basically experiments. Um, and so people basically try different kinds of things, and, you know, some of them work and some of them don't. And then there's always this kind of criticism of, like, "Oh, the designers of these products, like, didn't think everything through," as if there's some, like, magic process where you could send a bunch of geniuses off to a, like, remote island, and they could, like, design everything perfectly and then build it right the first time.

   5. SPSpeaker15:47

      Right. [laughs]

   6. MAMarc Andreessen15:48

      Um, but, like, that never happens. What ends up happening are tons and tons and tons and tons of experiments, right? Out of which you finally then get the things that are gonna go broad. Um, and so people experimented with how to bring computers to consumers for ten years before, you know, the IBM PC went broad. People experimented. You know, smartphones, the smartphone concept is not new. It goes back to nineteen ninety-seven. Um, it took ten years to get, you know, to the i-, to the iPhone, to the, to the actual product people want. The internet, the internet was in existence for thirty years before we, we, we made the web browser, um, and finally figured out how to make the internet accessible to everybody. So, so that's why I say this, this part of it, this sort of internet of, internet of things concept or kind of making the real world smart is a long-term thing. It doesn't just instantaneously happen. Um, but it will happen, um, and it will happen through the kind of process of experimentation that we see happening right now.

7. 16:32 – 20:00

   The Changing Venture Capital Landscape

   1. SPSpeaker16:32

      Let's switch gears a little bit. You guys started the firm now five years ago, um, in the teeth of the worst recession in, you know, since the Depression. Is that fair to say?

   2. MAMarc Andreessen16:43

      Well, the worst, uh, it was the worst economic crisis for venture capital in forty years-

   3. SPSpeaker16:46

      Right

   4. MAMarc Andreessen16:46

      ... is what everybody told us.

   5. SPSpeaker16:48

      So-

   6. BHBen Horowitz16:48

      Yeah, that's what they said. [laughs]

   7. MAMarc Andreessen16:50

      [laughs]

   8. SPSpeaker16:51

      So it seemed like a good idea at the time, um, and turns out it was. But the venture capital industry has been shrinking, you know, ever since. Um, so describe for us where we are in the VC industry, and then I wanna get at how building companies and, and venture capital relate to each other today and as you see it going forward.

   9. BHBen Horowitz17:12

      Yes. So the, the shrinking in the number of firms has really been a, a wonderful thing and, and very healthy for both the industry and very good for entrepreneurs. So one of the aspects of venture capital that bothered us a great deal when we started the firm was that it was a, an industry that really was in the dark. And what I mean by in the dark, it was completely invisible to kind of what was going on, what was behind these firms and so forth. And like anything that's in the dark, um, it tends, you know, that's where, like, the nasty business happens in terms of, uh, you know, things, everything from, you know, kind of bad things growing in it to ethics and everything.

   10. SPSpeaker17:52

       Right.

   11. BHBen Horowitz17:52

       Whereas things in the sunlight, um, that's when everybody behaves and is at their best. And I mean, it was just the nature of how it evolved and so forth, and it, it kind of stayed. It was a kind of shadowy, a ral-relatively shadowy industry. And as a result, it was very difficult for an entrepreneur to figure out what was what, um, you know, at, at a very basic level. And so there were, like, these phenomenal firms like Sequoia or, uh, Benchmark or Greylock, um, but for an entrepreneur to really understand the nuances between, uh, the ones that were, uh, really great to work with or just people who, like, simply had money and had no idea how a startup should get built was- Really impossible to tell. And I think, you know, one of the kind of, uh, contributions that we made was just the way we went about things, you know, partly because it was counterprogramming, is we put a lot of light on it.

   12. SPSpeaker18:43

       Mm-hmm.

   13. BHBen Horowitz18:43

       And that also combined with what, uh, was going on with social networking and was going on the, with the internet and going on with, uh, a real entrepreneurial community kind of made entrepreneurs really aware of what they should expect and what they should want from a venture capital firm. And, you know, most venture capital firms, as you would expect, just didn't stand that test. Then at the same time, uh, a kind of new tier of venture capital emerged, uh, angel investing or seed investing, and this enabled for the experimental things where you really just needed capital and maybe a little bit of advice, um, there was a whole new kind of functionality at that layer. So, um, you kind of had the landscape bifurcate into seed investing, where you need a little money and a little help-

   14. SPSpeaker19:28

       Right

   15. BHBen Horowitz19:28

       ... or venture capital investing, where you need a lot of money and a lot of help, and the whole kind of middle, like we don't know how to help, and we don't have that much money, like that big set of hundreds of venture capital firms became no longer interesting. And so, uh, the result of the landscape, I think, is it's w- way better time to be an entrepreneur now raising money than it's ever been before. Um, it's, it's easier to raise money in small amounts, and then if you raise, uh, money in large amounts, you get likely a much better investor than you would have got in the past.

8. 20:00 – 21:20

   Cheaper to Start, More Expensive to Grow

   1. SPSpeaker20:00

      We're seeing large rounds raised, but I, I wanna have you guys answer the question of, you know, why do... If I can, myself and three of my friends and virtually no money and just a credit card and Amazon Web Services, if I can build a company and, um, start on my way, why do I need, though, then traditional venture capital even at the high end, like the, the big money? Why is that still necessary?

   2. MAMarc Andreessen20:25

      Cheaper to start, more expensive to grow. Um, so what's that-- It goes back to what we were talking about before. So the market, market sizes are much larger. Um, so the, the, the prize is bigger. Um, the market is larger, and it takes more money to be able to build a company in the market. And so yeah, you can start a lot of these companies with a, you know, with three laptops and, you know, three lattes a day, and you're off to the races.

   3. SPSpeaker20:42

      Right.

   4. MAMarc Andreessen20:42

      Three kids, you know, uh, living on ramen noodles. Um, but at some point, you need to build the company, and you need to build the company that is then going to go take the market. Um, and the market is big, and the market is global. Um, and you're going to need a company around that. You're gonna need a sales force. You're gonna need marketing. You're gonna need a, a big development organization. You're gonna need customer service, customer support. You're gonna have a big recruiting, uh, campaign. You're gonna need partnerships. You're gonna need expansion capital. Um, all these things kick in. And so these companies almost never, I mean, almost never stay small. Um, it, it, you, it's extremely rare, um, that you see any kind of company that does anything big in tech that doesn't end up raising-- doesn't end up, number one, raising money, and then number two, if you're gonna raise money, raising money from venture capital.

9. 21:20 – 25:23

   Global Innovation and Many Silicon Valleys

   1. SPSpeaker21:20

      You mentioned global, and, and I understand global markets. Venture capital has done very poorly as a global, um, you know, enterprise. Is that gonna change? Do you see that changing at all?

   2. BHBen Horowitz21:33

      Well, I think it will change, but not in the way a lot of people are expecting. And to some extent, it is changing already in the sense that, um, some really large companies are coming out of China right now, like really big. Alibaba is a monster, um, in a good way. Uh, so, um, it will change. I think that people expect, uh, kind of sort of expected that, "Oh, well, if we just focus on building software companies like Silicon Valley, we can be like Silicon Valley," and that's been, uh, largely a mistake in that you can apply, you know, policy and tax breaks and even have a good university, but Silicon Valley is a network effect, and if you're competing with a Silicon Valley company without the level of engineering talent, without the level of executive talent, it's still rather hard. Um, Marc had a really good, uh, I can't remember, I think it was a series of tweets rather than a post.

   3. SPSpeaker22:26

      [laughs]

   4. BHBen Horowitz22:27

      Um, but a really good series of tweets, which just said like there should be 50 Silicon Valleys, not one. Or actually, that was an article. Um, 50 Silicon Valleys, not one, uh, but they should not be Silicon Valleys. They should be things that are doing other areas of technology, other areas of innovation, and some of that can be facilitated rather than kind of, uh, tax-free zones, more like, uh, regulatory-free zones, where things that are very difficult to build here, uh, can be built elsewhere. And the world will certainly be a better place, uh, if there are, you know, lots of new companies coming from lots of places all over the globe. And, uh, and I think that Silicon Valley set such a great example of what's possible that, um, that's gonna happen.

   5. SPSpeaker23:09

      Do you-- I mean, do you see evidence a-already, Marc, of, of those kind of zones and, and Silicon Valleys, as it were?

   6. MAMarc Andreessen23:15

      Yeah. So there's, there's two kind of ways to come at it. One is on the zone side. So there is actually a long history of this sort of concept of a special economic zone, um, in actually countries like, uh, Hong Kong, you know, at one point, and actually China is a very aggressive user of special economic zones. Actually, also the Prime Minister of Japan, uh, Abe, is now proposing special econo-economic zones in Japan to be able to, to, to restart growth. Um, and so, you know, you certainly have like a long history with that kind of approach. Um, and then you have examples today where that kind of thing is playing out. And so, uh, one very interesting example is, uh, uh, South Kor- South Korea has, uh, sort of famously been, uh, much more liberal in terms of, uh, uh, uh, legalizing, uh, new, uh, stem cell-based, uh, uh-

   7. SPSpeaker23:52

      Right

   8. MAMarc Andreessen23:52

      ... yeah, health, uh, projects, uh, and, you know, which look-- Stem cell research for regenerative medicine looks incredibly exciting, and it looks like we might be able to grow new organs and do all kinds of things. That research has historically been difficult to do in the US for regulatory reasons. Um, and so you, you see more examples of that. But I'll tell you, the other thing you see is just an explosion of, uh, entrepreneurial energy and enthusiasm all over the world. Um, you just see, and, you know, we see it all over the pl- you see it all over the place. You see it all throughout the US, in like 20 cities in the US now. You see it, and then you see it all over the world. Um, the most vivid example, um, is a good friend of mine, Chris Schroeder, wrote an entire book over the last three years called "Startups Rising," which is a story of high-tech entrepreneurship in the Middle East. And he, he basically, he traveled all through, you know, Jordan and Syria and Egypt and all these countries, going through all these dramatic changes. And in every single country, he found high-tech entrepreneurs and startups, um, you know, building unbelievable new companies and products. And Most significantly, he actually just got one of those, like, 15 visas a year, uh, for business travelers to Iran. Uh, and so he just, uh, went to Iran, uh, after he wrote the book, and he just came back. And it turns out in Tehran there's a thriving sort of underground high-tech startup scene.

   9. SPSpeaker24:55

      Wow, cool.

   10. MAMarc Andreessen24:55

       Um, and there's all these entrepreneurs that wanna start all these online businesses. And if you wanna meet, you know, a twenty-two-year-old who's incredibly frustrated by the fact that his entire country has been embargoed, um, it is in the Tehran high-tech scene. And so e-even in countries where you're, you, where you, you sort of the most concerned from a geopolitical standpoint, there's enormous energy, and often youth energy, uh, towards building these kinds of businesses.

   11. SPSpeaker25:15

       And as a firm, do you, do you need to tap into that directly or indirectly, or is there a-- how do you plan on that going forward if, if you do at all?

10. 25:23 – 27:35

    The Firm's Focus and Funding Platforms for Global Entrepreneurship

    1. BHBen Horowitz25:23

       Yeah. So one thing about investing is it's important to keep in mind that you don't wanna try to do every opportunity. Um, you know, every firm doesn't have to be in every deal. And if you try to... Unlike kind of running, like, say, an enterprise software company where you absolutely do want to have, get every customer, um, in investing, you want to stick to the things that you're best suited to do, um, where you're the ver-very best firm possible. And for us, um, you know, that's primarily software-based things and primarily Silicon Valley, just because this is what we know. We understand the culture, we understand the technology, and, you know, look, different cultures are different. [chuckles] The world, the, the world, uh, may be getting flatter, um, but it's certainly not flat in terms of culture and in terms of motivation, in terms of what stock options mean, and the difference between beer-drinking countries and wine-drinking countries. And you have to know all these things to, uh, invest effectively globally. So it's not... You know, we, we can have a very good business investing in Silicon Valley, um, and then, y-you know, whether we expand that or where we expand that, I think is TBD, but it's not, uh, critical for survival in the way it would be if we were, say, a software company.

    2. MAMarc Andreessen26:36

       The thing I'd say is a lot of our companies actually bear directly on this, right? And so companies like Facebook and Twitter as platforms for global communication. You know, entrepreneurs are communicating on Facebook and Twitter every single day-

    3. SPSpeaker26:45

       Right

    4. MAMarc Andreessen26:45

       ...um, in incredibly beneficial ways. Um, or, um, you know, as another example is a startup that we've, uh, seed funded called Teleport, um, that's making it, you know, much easier for engineers to consider relocating, like where to locate a new company, uh, or how to get talent to be able to move to a new location. Um, and so, or, you know, for that matter, Airbnb, um, which makes it... Or, you know, Lyft, which make it much easier for people to travel and be able to ha- you know, temporarily live in other places as they kinda, you know, go around to where the different opportunities are. Um, and so we view our-- One of the things we view ourselves as doing is funding the platform companies that are kind of building this world in which there's gonna be a lot more entrepreneurship.

    5. SPSpeaker27:18

       That's part one of the "Ben and Marc" podcast. Check out part two, uh, where the discussion enters the realm of disruption theory and how that helps the firm decide what not to invest in, as well as how large companies innovate and what Ben and Marc wish they had been told as young entrepreneurs, and more.

Episode duration: 27:37