Ben Horowitz on AI Anxiety, Big Tech Transitions & The Future of Startups | a16z

1. 0:00 – 1:39

   Intro

   1. BHBen Horowitz0:00

      America's got to rebuild its entire infrastructure, like, right now. We don't have enough rare earth minerals. We don't have enough electricity. We don't have enough manufacturing capacity. Nvidia will make enough chips, but then we won't have enough memory. Almost everything is a bottleneck.

   2. ARAlex Rampell0:14

      The China graph is like this-

   3. BHBen Horowitz0:16

      Yeah

   4. ARAlex Rampell0:16

      ... and the US graph is like that. How do we make this seem less scary?

   5. BHBen Horowitz0:20

      The history of technology is things have always gotten better. Humans are kind of unbelievable in their ability to come up with new things that they need.

   6. ARAlex Rampell0:27

      Now, eight billion people that might have an idea in their head can get it out of their head.

   7. BHBen Horowitz0:31

      I do think what's gonna happen is...

   8. ARAlex Rampell0:39

      So you've been doing this for a long time. Um, and, uh, I thought maybe I'd start off... And it's funny, we actually didn't rehearse this at all because I thought that way it would be more, more real, right?

   9. BHBen Horowitz0:49

      [laughs] All right. All right. All right.

   10. ARAlex Rampell0:49

       More unique. But let's talk about, you know, you, you have this book where you talked about, you know, how hard it is to be a CEO and everything that you went through at Loudcloud and Opsware. Um, that was a giant shift where it's like the market kind of collapsed, the financial market collapsed.

   11. BHBen Horowitz1:02

       Yeah.

   12. ARAlex Rampell1:03

       Um, and you had to really pivot and just change the company. And what do you think... There, there are new age companies that are popping up right now, AI first. It's like they hopefully have their shit together. They're off to the races building something new. But like a, you know, a legacy company or fi- of five or ten years ago where there's this great opportunity but also great challenge, like, what does a five or ten-year-old CEO do? Where it's like they, they're pre-AI-

   13. BHBen Horowitz1:28

       Yeah. Hmm

   14. ARAlex Rampell1:29

       ... so they gotta, they gotta figure out what they do.

   15. BHBen Horowitz1:31

       So the financial markets hate them.

   16. ARAlex Rampell1:32

       Yes. Yes. So there's the financial markets hate you.

   17. BHBen Horowitz1:34

       Doesn't matter who you are.

   18. ARAlex Rampell1:35

       Yes.

   19. BHBen Horowitz1:35

       [laughs]

   20. ARAlex Rampell1:35

       So I don't know. May-maybe riff on that. I'd, I'd love to hear your thoughts.

2. 1:39 – 6:37

   The New Laws of Physics for Tech Companies

   1. BHBen Horowitz1:39

      Yeah. Yeah, well, I, I think the first thing you have to recognize, um, in a kind of huge dislocation like this is the... like some very basic axiomatic like laws of physics are different. And the two that are really different, uh, with AI compared to how companies have been built in kind of technology forever is, one, um, it used to be very well known that you cannot throw money at the problem. So for example, if I had a product and I was two years behind, I could not hire a thousand engineers and catch my competitor. Like, it's a mythical man month, nine women can't have a baby in a month. Everybody knows that. Um, it never works. No problem. That's no longer true. Um, you can throw money at the problem. If you have enough money, uh, and some good data, you can buy enough GPUs and solve basically anything in software. So, like, that's gone. Um, the second thing that we knew for sure [laughs] is like in software, you know, possession is nine-tenths of the law. So if you have the customer, you have multiple lock-ins. You have, like, the migration pain lock-in. You've got the data lock-in. You've got the user interface lock-in. Those are pretty much gone, right? So it's very easy to replicate the code. It's very easy to move the data, and then it's not even gonna be a human talking to your software. It's gonna be an AI, and, you know, AIs are really flexible on how they use user interfaces, so that mode is gone. So I think that's just like the first thing you have to recognize as a CEO that like, okay, that's going away. So then what is it? Uh, you know, where is your value? What are you delivering? And there... it turns out there are many things, [laughs] uh, that are of value. Um, but, like, if you're trying to get, like, good pricing through any of those things, you're gonna be under tremendous pressure. You know, your, your price has to be a function of some other value that's much more distinct that you provide.

   2. ARAlex Rampell3:55

      Got it. Um, and the other thing that's... we, we've talked about this a lot internally as a firm, is that once upon a time, like, you would just have maybe t- if you have a good product, you might have ten years to run with that product.

   3. BHBen Horowitz4:08

      Yeah. Mm-hmm.

   4. ARAlex Rampell4:08

      Maybe five years. And now it might be like five weeks. Well, we, we also talked about this, like in terms of going public. So companies are staying private a lot longer.

   5. BHBen Horowitz4:17

      Mm-hmm.

   6. ARAlex Rampell4:17

      Um, which probably is good. If you're going through an existential crisis, you'd much rather do that as a private company than a public company.

   7. BHBen Horowitz4:23

      Yeah.

   8. ARAlex Rampell4:23

      But also, the reason why the SaaSpocalypse is happening is because there are doubts on terminal value.

   9. BHBen Horowitz4:29

      Yeah. Yeah.

   10. ARAlex Rampell4:30

       Right? So everybody who starts a company, they're doing it because they want to create val- economic value.

   11. BHBen Horowitz4:36

       Yeah.

   12. ARAlex Rampell4:36

       They're capitalists.

   13. BHBen Horowitz4:36

       Yeah.

   14. ARAlex Rampell4:36

       They're trying to actually benefit from this, this equation financially. But if you wait too long, maybe your company is worth zero.

   15. BHBen Horowitz4:43

       Yeah.

   16. ARAlex Rampell4:43

       That's kind of scary.

   17. BHBen Horowitz4:44

       Yeah.

   18. ARAlex Rampell4:44

       And that, that was always a risk, but it would play out over decades.

   19. BHBen Horowitz4:48

       [laughs] Yeah, it's not as fast a risk. Yeah.

   20. ARAlex Rampell4:49

       So I guess what, what do you... I... if you were... I mean, Loudcloud's around today. You're the CEO. And again, d-bad, bad example. Sorry, sorry to give you-

   21. BHBen Horowitz4:57

       That'd be very scary.

   22. ARAlex Rampell4:58

       I know. I know.

   23. BHBen Horowitz4:58

       Although actually Loudcloud would be, like, awesome.

   24. ARAlex Rampell5:00

       Actually, data... Yeah, exactly.

   25. BHBen Horowitz5:01

       [laughs]

   26. ARAlex Rampell5:01

       You would, you would be very well positioned. But I guess, what is it that a CEO should do potentially differently? I mean, obviously, get the... like, move faster, cut faster, be more efficient, throw money at the... like, all these things that we've talked about, but it's like, shit, if I don't go public... If I go public and I get disrupted, then I have this terrible, uh, life of I'm gonna be a penny stock.

   27. BHBen Horowitz5:21

       Yeah.

   28. ARAlex Rampell5:22

       If I just wait, there's this chance that I get eviscerated, and this kind of like road killer success equation is kind of scary, right? I mean, it's always scary, but you would have a ti- you would have time, and now it feels like you don't.

   29. BHBen Horowitz5:34

       Yeah, I think you do have to be honest with yourself on, like, what it is you have really. And there, there are, like, there are companies that get thrown under the bus correctly and ones that don't. And then, like, if you take a lot of these ideas to their logical conclusion, then y- you know, nothing is worth anything 'cause there are no people at companies, and if there are no people, who's gonna buy your shitty software? So, like, you know, da, da, da, da. But, but, like, like, it is more, like, subtle and it-It just tends to take much longer than, uh, we think for some of these things to play out. So then the question is, are you getting stronger in that meanwhile or are you degenerating? So is what's happening, nobody's buying y- you know, like the money just shifted. The customers are buying other stuff. They're not buying yours. In that case, you have a huge problem. You probably have to, you know, cut deeply and pivot. On the other hand, look, there's companies that have been slaughtered, uh, in the valuation game,

3. 6:37 – 8:17

   Why Not Every Legacy SaaS Company Is Dead

   1. BHBen Horowitz6:37

      um, but are pretty strong. So I'm on the board of this company, Navan, right? Like and they're travel, so obviously the SaaSpocalypse, [chuckles] like they're dead. Like, no way you're doing travel. But then you look under the covers and you go, "Well, [chuckles] it actually is a little more complicated than that because, um, on travel, like you actually need explicit relationships to... Y- you know, if I'm providing your travel and you're any kind of company that's important at all, you need to travel globally. So now I need a relationship with every single airline in the world, every single hotel in the world, every, every train, every everything. You gotta deal with that. You've gotta kinda connect back to their budgeting systems and all these things. And then the second thing that's, like, nobody wants to do, including OpenAI or Anthropic, is sell to the damn travel manager. Like, nobody has a channel to the travel manager. [chuckles] It's just not something... Like, and you, you can't even imagine that being a good idea. You know, you wanna keep advancing, you wanna kind of do the things that Intuit is doing, where like, okay, like turn ourselves into more of an AI company, uh, and then, like, kind of hold the customer. And, and by the way, like the AI, [chuckles] like the agentic travel experience turns out to be much more complicated than one would think. Um, and you know, I don't know if it stays that way, but like that's the way it is today. Uh, so I think it's very company dependent. Like, I don't think it's all one thing. But I do think brave new world, and if you keep looking at it like the old world and it's got completely different laws of physics, you are definitely gonna die.

   2. ARAlex Rampell8:14

      Yeah. Um, well maybe

4. 8:17 – 10:30

   The Future of Venture Capital

   1. ARAlex Rampell8:17

      let's talk about venture capital.

   2. BHBen Horowitz8:18

      There's a lot of cope going on now too-

   3. ARAlex Rampell8:19

      Yeah, but-

   4. BHBen Horowitz8:20

      ... so like you gotta be careful with that.

   5. ARAlex Rampell8:21

      Well, that's the thing. It's like there are some things that really are features, and before it would take a long time to build a feature, so you might as well... You know, it's comparative advantage.

   6. BHBen Horowitz8:30

      Yeah.

   7. ARAlex Rampell8:30

      David Ricardo.

   8. BHBen Horowitz8:31

      Yeah.

   9. ARAlex Rampell8:32

      I could weld my own steel, I could grow my own food, but I'm just gonna not do that-

   10. BHBen Horowitz8:36

       Yeah. Mm

   11. ARAlex Rampell8:36

       ... because I can do things that actually produce more economic value for me. But now it's just becoming not that hard-

   12. BHBen Horowitz8:43

       Yeah

   13. ARAlex Rampell8:43

       ... to go create features, but features are not products are not companies. And we've always had this distinction. There's feature, product, company, but it's a little bit confusing figuring out which one is which right now, just because the ability to create a feature and create a product-

   14. BHBen Horowitz8:58

       Yeah

   15. ARAlex Rampell8:58

       ... and even get all the data... You know, you, you know my favorite saying, "The best companies have hostages, not customers." Like, even get some of the data out of the hostage company.

   16. BHBen Horowitz9:06

       Yeah.

   17. ARAlex Rampell9:06

       So it's like, it's just a... it's a very, very confusing world in terms of figuring out which one is which, which is, you know, kind of maybe a good segue to, to venture capital land-

   18. BHBen Horowitz9:15

       Yeah

   19. ARAlex Rampell9:15

       ... of how do you think... I mean, when you started this firm in two thousand and nine, uh, big financial crisis. Well, actually-

   20. BHBen Horowitz9:22

       Yeah

   21. ARAlex Rampell9:22

       ... very, very big financial crisis.

   22. BHBen Horowitz9:23

       Yeah.

   23. ARAlex Rampell9:23

       Global financial crisis going on. The biggest. Um, the world has changed a lot since then. I mean, how much of what's happening today kind of fits within the mental model of back then, and how much is kind of brave new world? Um, maybe, maybe riff on that a little bit.

   24. BHBen Horowitz9:39

       Yeah. So it's really different. So our first fund was three hundred million dollars, um, and we raised it from all the traditional kind of, uh, LPs, endowments, um, you know, charitable foundations, et cetera, fund of funds. You know, n- we just raised fifteen billion dollars for [chuckles] four of the seven funds, four of the seven funds, so, like, not even the whole complex. Um, and we, you know, we raised it from very, very different kinds of investors, so we... You know, like basically none of our LP base was international when we started, and we're at, like, thirty-five percent international money, and it's from all kinds of places, so... And, and just tech has gotten more... L- like, tech has gotten so much more important. I think

5. 10:30 – 14:27

   America's AI Infrastructure Bottleneck

   1. BHBen Horowitz10:30

      that, you know, we have to think in terms of the world, uh, in, in a way that we just didn't before. So for example, like with, you know, why, why'd you raise so much money? Um, which by the way, I'm kind of mad at myself 'cause I don't even think I articulated internally [chuckles] well enough 'cause we could've raised even more money. Uh-

   2. ARAlex Rampell10:50

      Next time. Don't worry.

   3. BHBen Horowitz10:51

      Yeah, yeah. We g- we had more money on the table. Uh, but the way I was thinking about it is, look, America's gotta rebuild its entire infrastructure, like, right now, um, because we don't have enough el- you know, we don't have enough rare earth minerals. We don't have enough electricity. We don't have enough manufacturing capacity. We don't have, uh... We have the wrong chips. Like, they take way too much damn power. They were built for games. You know, we don't have the v- we don't have enough anything, uh, kinda to be in this future world, and somebody's gotta fund it and, you know, so c- and clearly that's gonna take a lot of money. So, um, all that is brand new and, uh, I, I would say it's, like, fairly overwhelming in a sense, but it, like, it is really, really important. Like, we're pretty much out of electricity now in the United States. [chuckles] Like, n- not, not twelve months from now, like right now. Uh-

   4. ARAlex Rampell11:42

      The China graph is like this-

   5. BHBen Horowitz11:44

      Yeah

   6. ARAlex Rampell11:44

      ... and the US graph is like that.

   7. BHBen Horowitz11:46

      Yeah, and the demand for-

   8. ARAlex Rampell11:47

      It's not logarithmic. Yeah

   9. BHBen Horowitz11:47

      ... for these tokens is straight vertical. Um, but the ur- the ability to kind of build that capacity is absolutely not vertical. Um, so we need new every... I mean, like we need... We inv- [chuckles] vested in a transformer company, not like a, an AI transformer, like an actual power transformer company 'cause you need, you know, kind of better, easier to manufacture, uh, more, uh, uh-More efficient transformers. Um, and the transformer hasn't changed since really we invest-- you know, we invent electricity. So, like these kinds of things.

   10. ARAlex Rampell12:20

       Well, I guess how-- So there's an old saying, the cure for high prices is high prices.

   11. BHBen Horowitz12:24

       Yeah.

   12. SPSpeaker12:24

       Mm.

   13. ARAlex Rampell12:25

       But the problem is there's a lot of latency involved. So right now, uh, there are computers that show up with no RAM.

   14. BHBen Horowitz12:31

       [laughs]

   15. ARAlex Rampell12:32

       Like if you buy-- You go buy a server from Dell, they're like, "Sorry, we don't have any RAM to sell you," because all of that has been gobbled up because, yeah, they could build a new factory, or you and I could decide to go build a, a DRAM factory. That would take us five years.

   16. BHBen Horowitz12:44

       Yep.

   17. ARAlex Rampell12:44

       So how do you-- I mean, a-and we don't believe-

   18. BHBen Horowitz12:46

       Gotta start now. [laughs]

   19. ARAlex Rampell12:47

       Yeah, you gotta start now, but this is, this is actually, if you remember, which you obviously do, nineteen ninety-nine, it's like, well, we have to build more fiber, right? We have to build more capacity. But it's obviously very different because all the GPUs are hot. They're all lit right now.

   20. BHBen Horowitz13:01

       Yeah.

   21. ARAlex Rampell13:01

       And back then, most of the fiber was dark.

   22. BHBen Horowitz13:03

       Yes.

   23. ARAlex Rampell13:04

       Um, but how do you get-- Like-

   24. BHBen Horowitz13:05

       Yeah, well, there were bottl-bottlenecks. When we were building fiber, the bottlenecks were kind of in different places. So, y-uh, th- you know, we-- Like the servers weren't capable of putting like bits out even fast enough to do video, right? And like the software was really-- We didn't have load balancers, we didn't have application servers. We didn't have anything. And so you had all this fiber [laughs] and all this bandwidth, but like-

   25. ARAlex Rampell13:31

       Couldn't do anything

   26. BHBen Horowitz13:31

       ... you couldn't actually build the a-applications. And then most of the end users weren't-- It's a network too, so, you know, people weren't connected on the other end, so it, i-it just didn't work, and then we had the dot-com crash and all these things. So now, um, w-we're in a little different place 'cause almost everything is a bottleneck. I do think what's gonna happen is like we'll probably have enough chips long before we have enough electricity. So Nvidia will make enough chips, um, but then y-we won't have enough memory, and we won't have enough electricity.

   27. ARAlex Rampell14:03

       Mm.

   28. BHBen Horowitz14:03

       So we're, we're in that kind of situation now. So y-I think you really have to study where we are at each point in the supply chain and figure out how to alleviate those bottlenecks. And by the way, you know, God bless Elon, the Terrafab, [laughs] um, you know, that's the idea. He's gonna just go deal with all the bottlenecks himself, uh, which is how he does things, which is why we need him. [laughs]

   29. ARAlex Rampell14:26

       Indeed. Um,

6. 14:27 – 19:54

   AI + Crypto: Why They're More Connected Than You Think

   1. ARAlex Rampell14:27

      so I feel like you're an expert in three things, um, hip-hop, AI, and crypto.

   2. BHBen Horowitz14:31

      [laughs]

   3. ARAlex Rampell14:32

      And I don't know anything-

   4. SPSpeaker14:33

      Mm-hmm

   5. ARAlex Rampell14:33

      ... about hip-hop, but I, I, you know, I found your, your, uh... I-I-I've heard a lot from you. But let's talk about the other two.

   6. BHBen Horowitz14:38

      Yeah.

   7. ARAlex Rampell14:38

      In particular, uh, crypto and AI. Um, so I, I, I actually just wrote about this. I mean, you remember the origins of crypto was HashCash.

   8. BHBen Horowitz14:46

      Yeah.

   9. ARAlex Rampell14:46

      Um, and-

   10. BHBen Horowitz14:46

       Yeah, yeah. No, yeah, yeah. Yeah

   11. ARAlex Rampell14:47

       ... and the scariest thing right now from my perspective is that everybody with Claude or with ChatGPT can actually like go super deep and personalize a phone call, an email. Like, it seems like all communication is gonna be completely unusable.

   12. BHBen Horowitz15:02

       Yep.

   13. ARAlex Rampell15:02

       I don't know if you agree with me.

   14. BHBen Horowitz15:03

       I a hundred percent do, yeah.

   15. ARAlex Rampell15:04

       Because it's like normally I can just delete, delete. I get some email yesterday, "Dear Alan at Index Ventures." It's like, well, I'm not Alan, I don't work at Index Ventures.

   16. BHBen Horowitz15:12

       Uh-huh.

   17. ARAlex Rampell15:12

       Delete.

   18. BHBen Horowitz15:12

       Yeah.

   19. ARAlex Rampell15:12

       And I'm very grateful that this person messed up my name 'cause I can just delete that.

   20. BHBen Horowitz15:16

       Yeah.

   21. ARAlex Rampell15:17

       Whereas if I get a thousand emails, like the best way of thinking about an email inbox is it's a to-do list that has write access for the public.

   22. BHBen Horowitz15:23

       Yeah.

   23. ARAlex Rampell15:23

       Right?

   24. BHBen Horowitz15:23

       Yeah.

   25. ARAlex Rampell15:23

       It's like anybody can get in, and now anybody can personalize. Same thing for phone calls. Like, what do we do? Um, and then it seems like there's a lot behind crypto. That's, that's why I mentioned HashCash, because it was originally intended to stop spam.

   26. BHBen Horowitz15:36

       Yeah. Yeah.

   27. ARAlex Rampell15:37

       So do you think there's overlap between AI and crypto? Um, I know you do, so-

   28. BHBen Horowitz15:42

       Yeah

   29. ARAlex Rampell15:42

       ... tell, tell us about that.

   30. BHBen Horowitz15:44

       Yeah. So I, I, I do think it starts with the problems that, um, AI causes. And actually one of the, the first thing I woke up in the middle of the night one day and I was like, "Oh my God, somebody's gonna go on a Zoom. They're gonna... It's gonna be AI me, and they're gonna tell my finance team to wire like, you know, five hundred million dollars to Nigeria," [laughs] and, and that's gonna be a problem. So, y-you know, and then w-we're like, "Okay, everything's hardware root of access. Don't believe anything from me unless it's got my cryptographic key on it," all that kind of thing. So I, I knew these problems were coming. They're coming so fast now. Um, so I think there, there, there's kind of several categories of things. First is just are you a human or are you a bot? Like I, I, I think everybody is going to really, really wanna know that, be it social media, a dating app, um, [laughs] a Zoom call, uh, like, like anything you wanna know, am I talking to an actual human? Like, okay, can I prove that I'm a human being? Um, and then, you know, can I prove that I'm me? And then can I sign content-- Like how do I know it's true? Like there are-- there needs to be a distinction between, um... I get so many AI videos sent to me from my family that they think are not AI videos. [laughs] And they're like, "Did this really happen?" And I'm like, "No, you could actually ask Grok, and it's pretty good at that right now." But, um, but I think, y-you know, like Grok's getting to the point where it can barely figure it out. Uh, and I think at some point it won't be able to figure it out, or AI will not be able to tell what's an AI. Uh, so the only way is you're gonna have to have, um, you know, something, some cryptographically strong indication, a signed piece of content that says, "Okay, yeah, I made this," or, "This is like really a video of me, Marco Rubio, you know, giving a speech. This isn't something that somebody faked." Um, and then there nee- th- you know, there needs to be a source of that truth, and are you gonna... who are you gonna trust for the truth? Are you gonna trust Google? Are you gonna trust Meta? [laughs] Are you gonna trust the US government? I, I think you wanna trust the kinda mathematical game the-theoretic properties of the blockchain. So I think that's gonna be just a very, very important part of the infrastructure. And then you, you know, you get into like fraud. [laughs] Uh, and like what is-- how do you know somebody's a citizen to get them money? Everybody's talking about, "Well, let's do UBI." Well, great, um, but w- you know, when we did the stimulus program, we found out that the government is very bad at getting money to people. Um, I don't know, it's like depending onUh, the, the numbers you read, it's somewhere around four hundred and fifty billion dollars got stolen. Uh, so what you really need is everybody needs an address [chuckles] where you can send them money, and so I think that's a crypto problem. And then finally, how does an AI, you know, become an economic actor? Like, how do I make money as an AI? How does somebody send me money? Like, can I be a merchant, a credit card merchant, if I'm not a human? I don't think so. Like, I think that's actually kind of hard. Um, and, you know, and it's probably not the kind of right infrastructure anyway. And so you need a bearer instrument on the internet. You need internet money for these AIs to be economic actors, and I think that's very likely to be crypto. So, so I think it's a... there are many opportunities in the crypto space that have been generated by AI.
7. 19:54 – 24:06

   The Future of VC

   1. BHBen Horowitz19:54

      is kind of a relevant idea again.

   2. ARAlex Rampell19:56

      Yeah. No, totally. Um, so maybe we... Why don't we talk about where you think venture capital's going? And I mention this because, uh, Mark got some crap for saying, you know, all the jobs will go away except for one job of venture capital.

   3. BHBen Horowitz20:07

      [chuckles]

   4. ARAlex Rampell20:07

      Um, which, which was seen as a self-serving comment. But in his defense, I will say it's partially because it's a non-deterministic problem.

   5. BHBen Horowitz20:15

      Yeah.

   6. ARAlex Rampell20:16

      Right? It's like, all right, you're betting on an entrepreneur first and foremost, and you wanna know that this entrepreneur, as I like to say, can materialize labor, capital, and customers.

   7. BHBen Horowitz20:24

      Yeah.

   8. ARAlex Rampell20:24

      And you can't just like, you know, run an algorithm on... I mean, maybe you can-

   9. BHBen Horowitz20:27

      Yeah

   10. ARAlex Rampell20:27

       ... but there's just not a lot of data out there. It's very, very hard to do.

   11. BHBen Horowitz20:31

       Yeah.

   12. ARAlex Rampell20:31

       So that's the logic by which... And also just personal relationships in general will probably survive AI.

   13. BHBen Horowitz20:37

       Yeah.

   14. ARAlex Rampell20:37

       Like the data-

   15. BHBen Horowitz20:37

       But if, if, if there's a venture capitalist, then that kind of assumes there's an entrepreneur job, no?

   16. ARAlex Rampell20:42

       Yes, yes. That is true. It takes, it takes two to tango.

   17. BHBen Horowitz20:44

       [chuckles] I mean, it's kind of hard to be a venture capitalist without somebody on the other end of the transaction.

   18. ARAlex Rampell20:48

       You can be a bad venture capitalist with no... Yeah, if you're very bad-

   19. BHBen Horowitz20:49

       Yeah

   20. ARAlex Rampell20:49

       ... you could just raise money and never allocate it, I guess. But, um, but I guess what, what do you think the world of venture capital looks like kind of today? We've obviously done a lot of things internally as a firm to try to embrace AI, like very, very fully. But, you know, now, five years, ten years from now, just given what's potentially gonna happen to white collar work.

   21. BHBen Horowitz21:09

       Yeah, I, I... it's really tricky because, you know, you kinda go back to the last transition like this, which was kind of the transition to the Industrial Revolution. So, you know, kind of the venture capitalists of the railroads and the, um, automobiles and so forth, you know, ended up becoming JPMorgan Chase, Goldman Sachs, et cetera. So they, they ended up becoming banks. And, you know, some of the reason for that was just how, like, how fast that materialized. So I think in the '30s, like 20% of American workers worked for the auto industry, which is, like, spectacular, um, compared to what it is today. Uh, and so things in the Industrial Revolution kind of started out very much like we are today in venture capital, where there were, whatever, 300 auto companies and so forth, and then it consolidated very hard into, you know, in the US, the Big Three and so forth. And then the kind of venture capitalists went upstream with the companies. Uh, I think that's one scenario where like, okay, there's gonna be a small number of very gigantic companies, and they're gonna own everything and so forth. Um, there's another kind of future where it's like, okay, they got really big, and then we've kind of, we've kinda finally hit the asymptote on this intelligence idea, and, like, they're as smart as they're gonna be or whatever. And we're either going to, like, nationalize the big labs and, like, uh, like, they're utilities, they're electricity plus plus. Like F you if you're gonna think you're gonna collect all the money. Uh, and then everybody's just gonna build on this utility set of things, and then that's a very different venture capital world. Uh, so I, I, I would say, you know, the... I'll quote Yogi Berra, like, "The problem w-with, uh, the future..." Uh, you know, "The problem with predictions, they're very hard, especially about the future." [chuckles] Um, and I think this future is particularly hard because it's so dynamic, and it's really hard. And then, like, how does the electricity shortage play into... Does it make the big companies all-powerful 'cause they suck up all the electricity and nobody else can get it and nobody else can get any GPUs? Or does, like, that push all the computing out to the edge, and then the models just get really good and small, and everybody's like, "Well, I have enough in my phone, and what they're gonna charge me for their mega GPU farm is just outrageous, and I'm just gonna do that." Or, like... So, so there's many ways it could go. Uh, and, um, I don't know. [chuckles] I guess I, I don't know. But I, I could see venture capital being much bigger and much more exciting 'cause everybody in the world is an entrepreneur. Um, or I could see it being, like, more like what happened in the Industrial Revolution and, like, new companies are just harder.

8. 24:06 – 28:42

   AI and the History of Technological Change

   1. ARAlex Rampell24:06

      Yeah. Well, it, it's kind of a good... It's a good follow-up or a good parallel question, which is, like, how do we make this seem less scary?Because I don't know if you saw Bernie-

   2. BHBen Horowitz24:16

      It's a lot of change. You know, it is kind of-

   3. ARAlex Rampell24:17

      Well, but yes and no. I mean, 98% of Americans were farmers-

   4. BHBen Horowitz24:21

      It's pretty drastic, yeah

   5. ARAlex Rampell24:21

      ... in 1789.

   6. BHBen Horowitz24:22

      Yeah, yeah, yeah. Yeah.

   7. ARAlex Rampell24:23

      Um, I'm pretty sure they're not farmers right now. I mean, you made this interesting point where if you go to, like, a third or fourth world, if there is a such thing-

   8. BHBen Horowitz24:29

      Yeah

   9. ARAlex Rampell24:29

      ... country, everybody's an entrepreneur.

   10. BHBen Horowitz24:30

       Yeah.

   11. ARAlex Rampell24:31

       100%.

   12. BHBen Horowitz24:32

       Yeah.

   13. ARAlex Rampell24:32

       Like, the guy... Like, I sell bananas by buying them here and selling them there. Everybody's an entrepreneur.

   14. BHBen Horowitz24:36

       Yeah.

   15. ARAlex Rampell24:36

       There are no organized companies.

   16. BHBen Horowitz24:37

       Yeah.

   17. ARAlex Rampell24:38

       And the cool thing is that now eight billion people that might have an idea in their head can get it out of their head-

   18. BHBen Horowitz24:43

       Yeah

   19. ARAlex Rampell24:43

       ... and maybe it's a bad idea.

   20. BHBen Horowitz24:45

       Yeah.

   21. ARAlex Rampell24:45

       It probably is a bad idea, but there's no longer a gate for them. There's no capital gate.

   22. BHBen Horowitz24:50

       Yeah.

   23. ARAlex Rampell24:50

       There's no, like, idea... It's just like, boom. And it's not just for code. It's like, you know, I can write music.

   24. BHBen Horowitz24:55

       Yeah, yeah, yeah.

   25. ARAlex Rampell24:55

       Right? I can make a movie.

   26. BHBen Horowitz24:56

       Yeah. Yeah.

   27. ARAlex Rampell24:56

       Like, this is super exciting.

   28. BHBen Horowitz24:58

       Yeah.

   29. ARAlex Rampell24:58

       So that feels like a very, you know, we... If you're trying to make this not look dystopian, I don't know if you saw Bernie Sanders interviewing Claude.

   30. BHBen Horowitz25:05

       Yeah, yeah, yeah.

Episode duration: 28:49