a16z Podcast - a16z Podcast: How the Internet Happened

Episode Date: December 24, 2018

In his book (and podcast), Brian McCullough chronicles the history and evolution of the internet -- from college kids in a basement and the dot-com boom, to the applications built on top of it and the entrepreneurs behind them. General partner Chris Dixon chats with McCullough about How the Internet Happened -- and more broadly, about how tech adoption and innovation happens. The content provided here is for informational purposes only, and does not constitute an offer or solicitation to purchase any investment solution or a recommendation to buy or sell a security; nor it is to be taken as legal, business, investment, or tax advice. In fact, none of the information in this or other content on a16zcrypto.com should be relied on in any manner as advice. Please see https://a16zcrypto.com/disclosures/ for further information.

Hi, this is Chris Dixon. This is the A60Z podcast, and today we have Brian McCullough, the author of the recent awesome book, which I just read, called How the Internet Happened from Netscape to the iPhone. Thanks for being here, Brian. Thanks for having me, Chris. So I thought it was a really fun book. I guess I had lived through some of it and knew some firsthand

and had heard a lot of the stories from some of the principles or sort of secondhand. I'll say, first I really liked a book because as far as everything I knew, which I'd say maybe more than half of it or something from first or second hand, it was very accurate. And so I just appreciate that. No, I appreciate you saying that. And then number two is really entertaining. It was a great read.

I highly recommend reading it. But then the third thing is, you know, I think it's a great resource, especially for younger people who are interested in technology or I guess, you know, in some ways everyone might be interested in the Internet these days, right? Even if they're not in the technology industry, they probably should be interested in the Internet. I just think it's a great resource to have, you know, kind of this, but may become the canonical kind of history of the Internet for that period. The thesis was two part. I'm thinking of non-tech people. Yeah. What has been more influential, disruptive, technology has infiltrated every facet of our life.

More clear than ever in the last few years. I feel like anybody would want to know who did this. Why did they do it? How would you like it or not? Right, right, right. So I was thinking number one of my parents and here's how you got a supercomputer in your pocket, all that stuff. But number two, as we were talking about off air, about 10 years ago, you know, I'm 40 now. So I started to, when I meet with young entrepreneurs and things like that, they'd start to say,

things like, oh, wow, you were around for the dot-com stuff? What was that like? So now 10 years on, if you're 26, you know, the internet has just always been in the ether all around. So if you're a young entrepreneur entering tech today, I wanted, here is your industry. And not going all the way back to even the PC era. No. The modern era of web-based startups, especially the modern startups.

So the book cover is sort of Nescape, so 93-ish to, I think 2007. I end with the announcement of the first iPhone, yeah. And that's important, I think, even if you aren't someone who's interested in history per se or whatever, like if you want to understand, I mean, I think I would argue, and I assume you would agree that if you want to sort of try to predict the future of your industry, you should know where it came from, right? And that gives you a good, you know, gives you pattern recognition. Pattern recognition, but also why forget the lessons of the mistakes? Yeah, learn from the mistakes, yeah. Why forget the things that failed? When you go into the dot-com era stuff in those chapters, you're seeing all the things like grocery delivery,

like cloud computing, cloud storage and things like that, that were always good ideas, but seemed like the most boneheaded wrong ideas at the time because it was just too soon. So there's so many lessons all throughout the book of not just why did this thing work and that thing didn't, but why did that thing not work then and does it work in other contexts

and learning those patterns, I think, are the most fun. I have this, I always forget the name of it. It's on eBay, but it's a card game from like 2005. I think it was like dot bomb or something. But it's, and it was a joke. At the time, it was, of course, the internet had sort of become a joke. And it was, the cards were each all the, it was bad idea cards. And it was like internet grocery delivery, internet money.

It was funny, because I actually wrote a blog post about this. It's not somewhere where it's almost like all of the companies that are sort of the hot companies today in technology were these quote-unquote bad ideas. Right. Which I think the lesson is, I think Mark Andreessen said this, like, there are no bad ideas. They're just ideas that are too early. Right. Right. I mean, and you saw it all happen in that kind of primordial.

soup of the 90s. And so that's also, there's a built-in fun narrative there, which is you have the web going mainstream, and so you have this sort of like Cambrian explosion of technology and companies, and then the asteroid hits and the dinosaurs are dead, and then the rebirth. So like seeing that, like, so maybe that is the more important lesson than individual ideas that don't work, but being in an industry that is prone to occasionally on a cycle, everything's going to blow up. And so how do you and your company and your idea survive that sort of a cycle?

It's hard to describe to people who didn't live through it, how the internet looked 2001 to, let's say, four, like, pre-Go IPO, I guess. And you talk about that in the book before people realized. And it was clear people, like, it was an important thing. People would use it, you know, although nothing like today, you didn't have smartphones and everything. It would be more like the thing. You go home, you check your email. Like, it's this nice way to send pictures to your family. So it's clearly like a useful thing to 100104, but the assumption was it's one of these things like the airline

industry or something that'll just never make money, right? It was a cool thing, cool tool, we're using it, but man, was that a bad idea from a business perspective? And that was the sentiment. And then Google, I remember Google's sort of, you know, their IPO and then Ubuntu or other. Do you remember the first time you heard how much money Google was making? Because I remember so many people's reaction to that because that was the thing is that everyone had been conditioned to think that while the internet was fun, it was probably a niche and you were never going to be able to build a truly great company on top of it. And then all the sudden, because they kept it secret for so long, I remember people's reactions, just their jaws dropping.

And I think, as I recall, I joined the industry, and there were sort of all these other kind of green shoes. You saw, you know, if you were in the industry, you start to see, wait, that person, you know, there's supposed to be a terrible thing, and they're making two couple hundred million. Yeah, they're absolutely like flicker and delicious. And there were all these cool products,

but also there were Zappos and PayPal and a bunch of other companies were actually still kind of going, and they weren't Google, but they were, you know, they were real businesses. So anyways, let's go through some of the chapters of the book. So I think what particularly interesting thing is in the early stage of the Internet,

there was this kind of, I think one thing people don't realize today is the kind of bottom-up decentralized architecture of the web. There was an alternative to it, known as the Information Super Highway, being pushed by companies like, I believe, you know better, Comcast, Disney, Microsoft. Well, they were all planning to get together and make, you know, there was a million plans, a million meetings, and I say in the book, you know, Bill Gates took meetings with all in sundry from Barry Diller to whoever. So the point being, though, that there were plenty of people who just didn't believe in

internet. And then among the people that did, I don't think that's it. I don't think that's it. Okay. I don't think anybody, even the people that eventually became internet true believers, thought that it was good enough. That's, I think, the lesson. Okay, okay, sorry. So, but I guess, let me, let me rephrase it. I think there was some camp of people that just weren't excited by the idea of networking computers. Right. Then there, of the people that wanted to network computers globally, there were people that thought the best way to do it would be in this kind of centralized way with putting a big box by your TV with a big fat pipe and you know and sort of a TV kind of

top down experience controlled by Comcast Disney Microsoft and then there was sort of this really kind of unlikely alternative which was this at the time pretty crappy experience in Mosaic and you know homebrew websites and Yahoo and you talk about this you know in book but like and I think I don't know I think that was sort of the at least let's say 93 or 4 probably still the underdog that approach and the fact that versus AOL and all these other companies and the fact that that ended up winning like what's the lesson there it's a very interesting

story the lesson we're almost saying it it's obvious the lesson is sometimes just good enough technology is good enough so like again Bill Gates and Barry Diller all them they weren't wrong they believed that broadband was going to become so they were trying for perfect too early and just good enough was better they knew it was going to come 2002 they weren't wrong that's the date that barbends start to penetrate and things like that. So they thought they had time was the key essence. And they thought that, okay, we'll all play nicely together. We'll all take our piece of the pie or whatever. So it's classically out of nowhere from the bottom up, like you're saying, it was almost like the PC too, because it's hobbyists that want to do this thing. So people see the early web and, you know, pictures are enough. Little postage size videos are enough to do cool things at the beginning.

Now, then you have the crazy people that come on top of that and say, can I do? do commerce on top of this? Can I build an actual business on top of this? But what you need first is you need the technology to be good enough to excite a sort of like enough people to accept the limitations of the good enough technology. And then if you reach a critical mass there, then you can at least build businesses off those early adopters. But I would also, maybe I'm promoting my own view of the world here too much, but I would also argue it's very important that the people that are excited in the beginning are also people who are able to build websites or build code or write client or do whatever.

Like the fact that a lot of them were software developers or computer enthusiasts, right? And like the same with the early PC. Like you didn't just want people to use it. You want people to write spreadsheets and we're processors and do all that stuff. And so for that we have to credit Berners Lee, of course, because not only does the web bring sexiness to the internet, the internet had been around by 25, 30 years at that point, but the pictures and the things and the cat videos, like that gets normal people involved. But Berners Lee and HTML is so dead simple that you have to.

to only be minimally sophisticated to be able to develop for it, right? And so we have to give them credit. Him and then also the academics and other people who made DNS, for example, like the fact that it was permissionless. The fact that a hobbyist and a university could be on sort of level playing field with Disney on the web, right? And like put up a website. So it's that sort of chicken and egg thing where people see the web for the first time

in the Mosaic browser because it's easy to use because you can get it on Windows. And they say, I want to create a cool thing like what I just saw. And so it's easier for them to go off and create that cool thing. Right. You need both sides of it. Yeah, yeah, I see. So you need sort of the one side that kind of inspires people and gets them fired up on the other side that lets them then go. The obvious analogy to think of today is like VR is still, it's not only can you not get mainstream people to adopt it, but it's still relatively difficult.

You have to be super sophisticated to create decent VR experiences. Yeah, makes sense. Okay, so there's that. So to me, that beginning part was really interesting, the sort of top-down bottom. up battle. And in fact, like, I think you had in the book, I'd seen this before, but Bill Gates' first version of his, the road ahead, which came out in, what, you know, 95 or something?

94-ish. It barely had the web in it, and then they actually revised a version. Suddenly had 150 seconds. But it did have information super high. It did talk about networking. Right, right. And so that's the only thing. I'm not calling Bill Gates stupid at all in the book. He had the vision. He just bet on the wrong horse because he

thought that it was too nerdy for normal people to adopt. Interesting. And then you talk about a bunch of interesting, obviously the kind of the iconic companies, I guess, NetScape, Yahoo, Google, Google, eBay, Amazon. eBay is an interesting one because I think of the, you know, well, they're all interesting, but obviously Google and Amazon are wildly powerful companies today. Yahoo, of course, had it sort of fall and was kind of replaced by Google. I think eBay is interesting because, you know, they're still an important company, they're big company. But we don't think of them as, or they're not sort of GAFA, they're not the four big ones. But from a product point of view, I think you argue, in some ways, could be the most influential Internet company and in some ways the truest Internet company.

And I was surprised that I discovered that in writing the chapter. I knew I was going to write about eBay. So there's three things that they do that I argue are super influential and they deserve more credit for laying the groundwork for this. Number one, they teach normal people to trust faceless strangers from across the country online. When I was doing the library research for this, as late as like the Christmas of 98 and 99, people are wondering if e-commerce is ever going to take off because they can't convince enough people to put their credit cards online.

We're going to completely through the looking at last world now in terms of that sort of stuff. But so the fact that eBay trained normal people that you can trust faceless masses, we should not underestimate the people that were the training wheels for the modern digital era. And so just doing something like that is key. The second thing that is key is that, like I said,

these are masses that are self-organizing. And so we live in the tyranny of the, the five-star rating system. How would Uber, Airbnb, go down the list, they created, or they proved that a non-hierarchical sort of self-organized reputation system could function online, maybe not perfectly, but well enough to achieve scale to be good enough most of the time. Did eBay invent that or popular? There must have been a concept in, like, look back from like the Usenet or something days.

I'm sure, of course, they did not invent it. But the story is that they certainly popular, I said. They certainly made a mainstream. Right. Pyramidiar did not want to have to settle the disputes between users. So he just created a system out of laziness that it was like, all right, you can accrue reputation, and if you don't defend that reputation, it's going to harm you. And so that was actually one of the key reasons that they, because Amazon came after them, Yahoo, auctions came, you know, people, once they invested in that reputation system enough,

they're not going to go to the other platform, right? So there's people on the internet, the rating system. And then the third one is just the fact that, and I do argue this, maybe around the edges. There are others. But they were the first company to succeed at our business model is just whatever our users are doing on our platform. And I tell the story in the book that, like, Jess Scholl is, the newspapers were not dumb no matter what anyone says. They were kicking the tires. They knew that this was a threat to their classified ads business. But one of the guys says to Jeff, my C-suite's not going to sign off on buying you because you don't own

anything. You don't own trucks. You don't own factories. And that's common throughout the digital era. But also, they couldn't wrap their minds around the fact that, like, you're not even taking possession of the goods. All you're doing is letting people interact. And so, again, where would social media be some of the most powerful valuable companies in the world don't own anything? That's precisely why they're so valuable, because

it turns out that's a very profitable thing. You don't have to deal with all of the inventory and everything else. It's funny, you still see that on Twitter. People are like, you know, how could it be more valuable than, I don't know what hurts or something? They don't own things. And it's like, well, that's such a feature, not a bug. Right. From a P&L perspective,

that's interesting. So, I guess some other interesting ones, so Napster. That was why I learned a little bit more. I mean, I knew this public story, but I never really knew the startup story. That's another one where I discovered what that was about while doing it, because we all think, Napster, it's about piracy, it's about disruption of a media industry that can't get with the times quick enough and was dug their heels in stubbornly. But no.

And I got this by interviewing some of the Napster guys where they're making their case. And then when you do the research, you see their quotes from 1998, 99. They're screaming this from the rooftops. The story of Napster is today. we live in a world for media of unlimited selection and instant gratification. If I tell you about a TV show, movie, book, whatever, we just did that with our phones. You know, you expect to be able to pull it up in five seconds and at least sample it or probably consume it, right? That's what they had. And had they been able to convince anyone of that in 1999, it would be a completely different

media landscape. And the only problem that they had is, you know, don't pick a fight with an industry that has literal mob ties going back to its very founding days. That's the interesting thing is it's sort of a three-act. To me, it's a three-acts play, right? So the first act is Napster does this, and everyone says they're instigating piracy. And the second act is, okay, we shut them down, we got rid of the pirates. And the third act is, it turns out, in a way, they were right all along. It wasn't about getting things for free.

It was about the convenience. And Steve Jobs said the same thing. But, like, in the end, it turns out, like, today that there's like a very little, you know, I mean, there's music piracy and there's movie piracy and there's video game piracy. but for the most part. If you make it simple enough and have a reasonable price. That's right. That's right.

So it turns out we now know that their value proposition actually was, as they claimed, a great deal of it was about convenience and not about stealing. 100%. And so, you know, the direct analogy is Spotify, right? You could have had a Spotify in 1999 or 2000 at the very least. This is, again, classic disruption stuff. You can't convince an industry at the height. You know, 1999, I think is the height in there doing $20 billion because of the CD,

format and all that classic stuff. But at the same time, you know, there's other reasons why Napster didn't work out. They couldn't attract the best talent and the legal stuff happened from day one. Didn't they also get displaced by like Nutella and all these other? Or more like or what was it, Kazah? Yeah, but like let's say that the record companies had been willing to at least play ball a little bit and do tests with them as a platform, right? Think of the counterfactual there. Where would, if Apple launches the iPod, how does that eventually gain traction other than being something that then if Napster is popularized is just an accessory

to Napster, right? And then, you know, if that model had been proven, who's to say that they wouldn't have been the ones to go, because it's the next obvious thing, to video streaming and things like that? So, you know, Netflix had the road open to them because there was no one else doing it, but like there could have been

a player already there that had proven success through this model and would obviously have gone into video. And that then, when YouTube and Netflix came along, the movie and TV folks industries had seen what happened to the music industry and were savvier this time, right? Instead of just sort of saying let's just fight it tooth and nail, maybe we can make it work for us. Number one, they trust Google to have the math to at least take down the piracy enough.

Number two, Google had already proven AdWords and was making billions of dollars a year at these little contextual ads. And so Google can come to the table with them from day one once they own YouTube and say, hey, there's money here. Do you want a piece of this? So as opposed to NAPSR, which didn't have that built out, so they're begging the record companies to come to their platform that they're going to build. They haven't done it yet. But they don't have in place any monetization. So from day one, once YouTube is under Google's wing, Google has at least something.

It wasn't what they wanted. It wasn't going to replace their existing business models, but something was better than nothing. Yeah. So it's like by Google a little bit. So I think to me there's many remarkable things about Google, but perhaps what the most remarkable is the business model, which kind of, in like, the most serendipitous, like, confluence events in history, right? You create the most popular.

I mean, you sort of think what went, I mean, they were brilliant, of course, and invented all these amazing stuff. But they build this incredibly valuable search engine. I mean, incredibly effective and useful. You know, the web, of course, explodes in use in value and broadband and smartphones and all that. But then this company called GoTo, Go To originally, and then Overture, for sort of completely a little bit orthogonal reasons, invents the greatest business model of all time.

which happens to tuck perfectly into Google's model. I just gave a talk a couple weeks ago at Google. It posted recently. And I said to them, I was like, I don't know how to say this here, but obviously you guys, your first miracle was you solved search. God bless. How can we function today without that? Your number two miracle is that you created the greatest advertising machine ever devised by humanity.

But actually, you didn't create it. You kind of stole it. They didn't steal it. Somebody else invented it. Because they actually made it functionally better. You know, that's the Google story. There's no problem that they don't think that they can do better. The quality score stuff.

Right, exactly. Yeah. And they had great, like GoTo2 didn't ever have great organic results. They just had it was all, it was just a pure option. GoTo was a pure pay for play thing. It was like for people today, it's like just the SEM without the SEO. Exactly. It's just the right rail without the left.

And then like that original model, because again, I built one of my first companies purely on AdWords. So imagine this perfect three-sided market where as an advertiser, I'm paying less per click. if my ad is more relevant. Because I remember, like, I used to be paying $2 or whatever over on GoTo, and all of a sudden I'm paying 30 cents a click because my ad is better. And as it gets better, it goes down. The Google's making more money because they know that someone might be bidding a dollar but only be clicked on a certain amount of times.

If you bid five cents but get clicked on 30 times, we make more money. And they did that actual AB testing where it's like the users actually preferred the ads because if the organic results are good, yeah, maybe these paid. results also might have some benefit, you know, for certain use cases. So people actually searched more once they put the ads up. So it's the perfect three-sided market where it's win, win, win. Well, the other fascinating thing, right, is all of the pressure at the time was around. So that everyone thought the only possible business model for search was sort of the portal model, which was to have, you know, banner ads. And so surrounded by celebrity news and also

it's the classic eyeballs attention. Yeah. And so there was all these famous stories. I think it was, was it excite with George Bell or something where they were, you know, and I'm not taking, I don't, I'm not criticizing these executives at all because that was the business model the time, but the whole thing was I don't want a search engine that's too good that gets them off my site because that destroys my business model. So like the other brilliant thing that Larry and Sergey did, right, beyond everything else, was stick to their principles with kind of crazily, right, with no business model at all in sight. And as I point out in the book, and we're going to go against the entire industry and we're going to just bet that a business model

will come along that's going to work. Everyone says it's not going to. Their investors have said publicly that we were starting to get. a little itchy. Like, are you guys ever going to... Well, they had this whole real... This sounds crazy today, but they had a real effort to do... They were going to sell Google boxes, which were this enterprise search, because everyone knew consumer had no business model. And there's like, I remember there's a great business we guard it from like 2000.

Like, you know, awesome search engine. How will they ever make money? You know, another one of these like pipe dream Silicon Valley things. And they literally, it was like a little sell box. It's $100,000. You put it in your data center. It collects your corporate documents. I think they were still manufacturing those as recently as two years ago, by the way. Is that right?

I think they only recently shut that. business down. They probably felt bad because someone bought them and you felt like to support it. I don't know. Anyways.

So that's an amazing story. I don't know. You tell me, like what other, I mean, there's a whole bunch of great stories. Yeah,

I mean, I fought hard, as we said, to preserve the stories of the dot-com bubble because I think for our industry, it's key to remember. So like the bad,

you mean the bad side of the bubble. The bad side. Let's talk about that. Sure. You were talking about just the froth and the bad companies and the whole kind of hysteria and the stock market.

And so, part of it is excusable by the fact that any new technology is a lot of entrepreneurs feeling around in the dark to see what actually works. But this was more so than most because no one knows anything. No one knows if you can successfully do commerce on the on the internet at the beginning. No one knows. I think of it is like you're searching on more degrees of freedom than normally. Normally you're looking for like what's a good product. Here you're just trying to figure out what's a good product. What's a good business model? Like it just so much was unknown. When you invent the internal combustion engine, you have a pretty good idea. You're

eventually going to move people and goods on it. But no one even knows, it's like that analogy of the elephant, like you're looking at the elephant, somebody sees a tail, somebody sees a toe. Like no one really knows what they're looking at. And so I don't, a lot of the fun excess and things like that, I don't blame the people involved at all because no one knew. And anybody that tells you from that time, oh, well, we were successful because we, no, come on. It was just random chance in a lot of cases. Proven out by the fact that the vast majority of the, of them were e-commerce plays, right? I think the way you described in your book is,

so you sort of have, I don't remember the years exactly, but like 95-ish, you have some like high-quality companies, 96, it's more of that. At some point, maybe 99, you did get, you get cynical. At some point you do get the sort of the hucksters and the cynicism and just like pure, you know, business plans, IPO. So I think there's like,

so there's the great companies that survived, there's the really well-intentioned, good ideas that just didn't happen to make it. And then at some point there is this sort of cynical huckster layer on top. Because there's the quotes from the VCs in there, number one, where they're like, we don't have to back a successful company because all we got to do is get it out the door and get it public, right? And the way capitalism works is like maybe they're VC, I assume there were VCs who were really trying hard to find companies that would really work long term. But eventually if they just, if their neighbor is doing the cynical strategy and winning, the, you know, the system will reward that.

The greater fool, like, can I, can I get out while the getting's good before those guys get out while the getting's good? But also then, you know, it's not just the VCs, because Wall Street had so much, and not just Wall Street itself, but like, as I point out in the book, like, this is historically, these are the baby boomers reaching their peak earning years, and they're going to, that money had to go somewhere. So almost independent of the internet, you would have had some, you would have had some. It was a ripe era for some kind of. Maggie Mayhar, the journalist from Barron's in the book, I quote her, she said something like, yeah, if someone would have had to invent this. It was the froth on the cappuccino of the, the longest bull market in history, going back to 82. So, yeah, let's talk about that's more about the frothy sort of craziness there, right? So many times in this book, so many of the ideas that seemed dumb at the time prove out later because they were just too soon.

There was a startup, I think they might have been public in the late 90s, called Myspace, but it wasn't the social network MySpace. It was literally, you would put a widget on your desk. It was Dropbox. Right. Store your files in the cloud, right? But, you know, this is in the era of dial-up. Wi-Fi doesn't have... There were so many things.

One of the most notorious dot-com-era flameouts is webvan, which is grocery delivery, right? The story of the Pets.com and all of... There were four to five major pets, e-commerce plays, and they couldn't find ways to economically ship dog food. Now, again, that's a classic... story, but obviously that's a problem that's been solved now. So in a way, this is always true, again, in tech, but any technology, like, there are ideas

that will always be bad ideas, and then there are ideas that are only bad ideas because of certain, the technology's not there yet, the market's not there yet, the public's not there yet. So there's a lot of those stories in the book, and I wanted to preserve that. I wanted to also show even ideas or people that swing and miss in certain areas, why do they come back. What are the lessons that, because it's not like, well, boy, I, what are some good examples there? Frankly,

things like the on-demand delivery stuff. Because there was Cosmo here in New York City. Okay, I thought you meant there's the very same people. You're saying just trying the same ideas. Well, I mean, I'd have to think about a bit, but there are Mark being a perfect example, you know. But the idea that you

wouldn't hunker down and wait on your idea to, no one knew at the time you needed smartphones to get the on-demand delivery piece of the puzzle to work. But it's not like people hunkered down and waited. A lot of the people went in different directions. The people that were

successful, like a lot of the people that founded PayPal, you know, came from other dot-com stuff that they either flipped and sold or IPOed or whatever. But then they didn't keep going with those original either e-commerce players or whatever it was that they did. Like, what was Zip 2?

It was like a directory or something like that. They went in a different direction. So like I wanted to track like that sort of development on the specific personal story level, too. Where do you think, so maybe just switching gears here a little bit, but like, where do you think we are, when you write that, you must have thought a lot about this, I assume when you wrote the book. So you wrote about that era, and then you can imagine a follow-up book from like 2007 to

today, which I kind of call a smartphone era, I assume. Where do you think we are now? Like, do you think this is the Internet and now, I mean, obviously it'll get better and improved, but like that was sort of it in the same way that, like, well, you wrote a book about the automobile industry, right? You write about, the equivalent of your book would be covering, I don't know, what, 1901 to 1915 or something, right? And then after that, okay, you get more makes and models and they get faster and this and that. But fundamentally, you know, or I don't know, maybe not.

Maybe in the automobile industry you could argue that stage two was about building suburbs and trucking companies. So that would be sort of the history. Like, where are we? I always think about this. I don't know the answer. If I'm being honest. Where are we in a hundred year story. If I'm being honest, where we are right now today, my original answer was going to be almost what you're saying is that we're sort of in a law.

Okay. So I said, like, you know, the original dot-com era is this Cambrian explosion that tended to have sort of a flavor towards commerce. And then in the Web 2.0 era, you have this more, here comes everybody sort of thing, where the web and technology itself becomes more bidirectional, where people aren't just passively consumers. This is web 2.0. I think that's Clay Shirky's phrase, which is sort of this idea of Wikipedia and Facebook, whatever, of just sort of this bidirectional. But I mean, by just turning the knob a little bit, that shades. into social, right? And then when mobile, mobile is essentially arrives at the same time that social goes mainstream, and it is serendipitously the perfect consumption and crucially creation device for social, right? So would social have got as far as it had, had the iPhone not arrived at the exact same moment? It's within the same 18-month period that Facebook opens

open registration and the iPhone is released and things like that. But I think that's a crucial thing to remember is that it's not just the perfect consumption device, it's the key device for actually creating all that social stuff. Back to your original question. I actually think we're in a law right now, if I'm being honest. That remember what it was like

as late as, even 2012, where it was like every couple of days, you'd be like, what's this new thing now? Do I have to be on this? Do I have to try this? Do I need this gadget or whatever? And you know, aside from all of the other, you know, things about tech right now and people maybe feeling bad about the tech

industry generally. I also think that what's not helped is that there hasn't been that new wow factor. And I don't know what that is. Are we in a lull or is the internet like TV and now we have CBS, NBC and ABC. Is that a symptom of maturity? And then it's just, yeah, or is it, I guess, so I agree we're in a wall now. But I, and I personally, I'll just say, my own bias, it's a lull and it will And it will un-lull or whatever. But another argument, you know, I think if you've read a Tim Wooves book, I think it's called Master Switch. It's a really good book.

But he basically argues this is just sort of all forms of media. You get mature. You have four big incumbents. And then the government either breaks them up or doesn't. Like, is that where we are? I think so for at least the existing players. But I think the other thing where we are right now is... Or is software technology have a different dynamic.

I guess that's what I'm, you know... I'm going to get sort of, I'm sort of hinting at my... view, which is, I think software is a little different than hardware in that way. Because this is more what I, on my daily podcast that I've been talking about a lot lately, is that another symptom of what we have right now is that there was a lot of low-hanging fruit picked. Like, when mobile takes off, you can be a 16-person team, code up a new, slightly different chat app, and have a billion users.

So we were in this great period of a decade, the better part of a decade, where everybody can chase a billion users, right? Well, most of those categories have been filled. I mean, arguably anyone could come around tomorrow and do something slightly differently and take over anybody's place in any of these things. But because all anyone was chasing was scale, all that mattered was getting to that scale. And I think that what we're waiting for now is that it is sort of like the market where it was just the Model T and you could only get it in black. And there was only, what we need to see this next generation develop is that it's a not just the quantity or not about the scale. It's about the quality. The way that you'll differentiate and become the new Instagram and become the new, what I'm using mostly chat apps right now as the example, but is to provide a qualitatively better experience. And I actually think that that will create more interesting startups because it's not just you show up here, plant your flag in this market, and reach a billion users. If you're going to reach a billion

users now, you have to offer something qualitatively different than what other people are doing. Yeah, I guess the question I have is, so I think the historical pattern in tech has been sort of this interaction between what's called infrastructures, people call platforms, but infrastructure and applications, right? So infrastructure in my mind is computers, the internet, right? It's sort of broadband, smartphones, applications are the word processor, mosaic, eBay, you know, websites, Instagram, things like that, right? And I think, you know, you mentioned a low-hanging fruit. What happened right there was the iPhone was this major new online. kind of for a new wave of infrastructure, right? So then, and then, and people suddenly have this.

You're holding this thing in your hand. You got a camera. You've got this awesome screen. What am I going to do with it? You're sitting there looking for apps. You don't have that many on your screen. You know, now it's saturated, right? And so then, and I think the history has been that the lull is due to the fact that now, you know,

the iPhone is 2007, the App Store 2008, so we're 10 years into this cycle, right? And so it's sort of people have entrepreneurs have picked off all the low-hanging applications. But then, but then, either we're at the end of history or something new comes along. I don't know, you know, we have all these candidates, and maybe it's a new kind of device, maybe it's car, maybe it's VR, maybe it's blockchain, maybe it's machine learning stuff, maybe it's whatever, I don't know what it is. And that thing then creates a new piece of infrastructure that unlocks 10 years of innovation, or we're at the end of history.

We're not at the end of history because what I think, another thing, and I'm not blaming entrepreneurs for this, but people are still doing. doing the same playbook that people have been doing since 2004, since the first time that you could achieve a billion users with a product, right? And so what I'm saying is what maybe we're also waiting on is for that next generation to come up behind and be like, well, we're doing it this way because this is the way it makes sense to us, as opposed to maybe especially these last couple years, people are still trying to hit from the same playbook. And that's not what happened. So you're saying less a new piece of infrastructure and more just a new kind of cultural shift.

And I'll tell you why. Because think about it. Like when we were talking about when the dot-com bubble bursts and like, well, people think it's a fad and this is over. But the people that still believed it, people were still using it, they were still using it to do cool stuff, right? And so they weren't trying to, it's not like everyone, because they had the example of the whole dot-com thing blowing up. So they weren't going to do that playbook. That playbook was dead and over. so they were freed to go off and do crazy ideas, right?

So it's almost like we're being held back by the fact that we have been so successful in tech and tech has taken over the world and so people are trying to follow that model that has been so successful for everybody else. It would almost be useful if we had a couple blowups so that people would be freed up to think differently and also, crucially, be brave enough

because, again, when Flickr gets started, like, this is cool. I want to find all photos of the Grand Canyon, and users will do this for us with taxonomies and tagging, and then we'll find the business model later, whereas everybody is still, again, trying to play from that Instagram and get to a billion users and get to scale playbook.

I think what probably will happen is you sort of have these archetype companies come up who show a new playbook, right? So you mentioned Flickr and Delicious and those things in the kind of Web 2 era. and we were talking earlier about eBay that kind of paved the way for a lot of that stuff I think there's been a, like right now at least what I'm seeing in the industry

is there's a lot of stuff happening in enterprise software so if you kind of think about one way to interpret the current internet like era of the internet is actually a corporate slash enterprise era right and I'll admit my bias is towards consumers

no and I'll say so just and mine is too but I work at a firm that does both and I see this stuff happening If you just think about your typical experience of a corporate worker in 2018, you go to the office and maybe you're using Windows 95 and some archaic, I don't know what, ERP software and a bunch of other stuff. And then you go home and you're using this like retina iPad and Gmail and Facebook. It's a very, you know, it's like a little like a time travel experience, right?

The software, the work feels like 10 years ago. So one interpretation I think is what happening right now is we're just upgrading all that stuff. And that's quote-unquote SaaS and all these other kinds of things going on. And there's a lot of successful companies there. Can I pose a question that literally I'm posing this to you? Because I wonder if structurally this is another thing. When you had Web 2.0 flower, Microsoft had already had the antitrust thing, so they're not going to buy anybody, right?

The dot-com bubble had happened, so it had cleared the slate. So there was this decade-long period for the Facebooks and everybody to surface, and no one's going to take them out. So I'm almost asking you, like... I mean, there was Yahoo who was trying a little bit, yeah. A little bit, but not in the way that Microsoft could have, Microsoft could still have bought Amazon when it was a $5 stock, you know. So maybe are we structurally in a situation where the danger is,

is that because the big players at the top are so big, and all they do is every time there's a new crop coming through, they just pick them up, incorporate them, and turn them into a feature of their existing products. Instagram, Story, Snapchat would be the most. Exactly. So they didn't even have to buy them in that case, right? They just, that's the counter argument is the distribute, on the consumer side.

So if we're in a law. The distribution is so strong that even if you have that great idea. Now, now they're also, but there are limits to this, right? Like there's only so many times Facebook can add, keep adding features to Instagram without, you know, without like the thing becoming, you know. But what I'm saying is is that like, so then if Flickr comes around today, that would just be, you know, it's the most obvious example tagging photos. But that would just be something that would be immediately scooped up and incorporated into someone's existing product. So like, are we in a lot? because we almost got lucky 15 years ago

that we had this period where everyone could rise up and no one kneecaps them. I think it had it. I mean, I just think it had it. Like, look at Snapchat's a great example, right? That was, I mean, you know, they really invented sort of a new media type, right? I mean, that type of, you know, whatever,

the vertical short video with stuff. It's a brand new idea. And just the way that the ephemeral messaging and it's probably on par with things like Flickr and sort of their novelty. And then, you know, and they're still a very successful company and they're publicly traded

but I think their growth most people would agree was severely limited by the fact that all of the ideas propagated so quickly and particularly companies like Facebook have gotten very good at execution and leveraging

their massive distribution right and Amazon too like you have some great new Etsy comes along and then Amazon launches I don't know how well it's done but Amazon homemade or whatever Instagram comes along and they launch it

you know so they're and they just take advantage of their scale and Amazon Prime and just all these other things and I'm also almost saying it at the level of like if you if you're a company that can has the luxury of staying independent then you have to find if you have one good feature idea or one good product idea but it's not an actually a good business you have to bust your butt to make that happen versus if you're

in an environment where you have one good feature and someone's going to acquire you just to add that feature to their set then you don't have to do the work of actually evolving that feature before it can become a good business. My partner Alex Rampels, I'm going to butcher the phrase, but it's something like startups try to find distribution for their innovation faster than the incumbents attach innovation to their distribution or something like that. So it's sort of a race, and he always uses like TiVo as an example.

Like great idea, but you're competing against Comcast. And, of course, it'll take Comcast five years to add this feature because they're not very good at adding new features, but they're Comcast. And they've got whatever X tens of millions of households and eventually they add the TiVo feature. You know what I mean? Or can T-Vo leverage that?

Or like Netflix is probably the one of the most interesting ones today, right? Because it's, you know, a lot of people would have bet against that. A lot of people did bet against it. The idea that they would be able to add on, you know, get to 200 million people before the people with 200 million people would figure out that like people want always on streaming and everything else, right? I sort of think of it as like the enterprise consumer thing. That said, there's always new interesting stuff popping up. And I think there's always this kind of search on the periphery.

Personally, I enjoy spending my time is on the periphery, on the virtual reality and crypto and all these other kinds of things. There's always periphery things, and those, I think sometimes, especially if you get a lot of developers fired up, can surprise you in the rate at which they improve. And I think at some point, I don't know when it'll be,

but I think at some point there will be kind of a new set of infrastructure that unlocks new capabilities, and then we go back to that kind of low-hanging fruit mode you described. One of the key things to look for and go back to the PC era, the Homebrew Computer Club, go back to when the internet gets started

and people are just doing it because they want to make cool websites. Go back to when the dot-com. Always look for the people that are doing this even though they don't think there's a reasonable expectation they'll get paid for it. But they're so passionate about it. The PC industry was literally created by hobbyists. And so you should be looking in those spaces today

even as weird as those spaces might look right now. And even think of things like e-sports and things like that. obviously are becoming very successful spaces right now. But that's where you need to look is where, on the developer's side, but even literally on the hobbyist side, where are the people doing these things so passionately that it doesn't even occur to them. It could be a business or an industry.

That's where the next industry is. Yeah, I like to think of it as, as one, I was, I had one time I was thinking about this, like, why is it that so many interesting tech things come from hobbies? And one model, this is one model I'd propose, which is think about the things in life, that operate on a two to three year time horizon versus the things operate on a 10-year.

So most businesses, you go to your work 9 to 5, and almost every normal business, maybe a few outliers here and there, they operate on sort of they manage to a, you know, quarterly or yearly cycle, right? And maybe they'll invest in sort of two to three-year things or something. Who in the world invests at a 10-year cycle, right?

I would say it's maybe academics, maybe like things like DARPA, right? Yeah, government. And then hobbyists, frankly, right? Because the hobbyists don't care. If they're doing it for love, they're doing it, you know, because it's just cool, right? The PC, like people in whatever, the Homebrew Computer Club, they weren't thinking, oh, what's the ROI on this for the next two years? They just wanted to program a machine of their own.

Yeah, that's it. Yeah. But in some ways, I think there's, so I would argue there's a deeper truth to the hobbyist thing. It's not just, I mean, it's what you said. There's the passion. There's the smart people. But it's also there are people that are investing on a longer time horizon. And that's a very important, it's sort of a rare thing.

I think in generally in the way capital, sort of most, corporations are designed today. They just simply aren't designed to operate at that time scale, right? That gets back to my theory of why we're in a lull is that, again, people are doing the same playbook. And, like, you need to, you need that generation to come. It could just be a generational thing. It could be a generational thing.

Like, we need that turnover of people who see things in a different way. Exactly, exactly. And just maybe they have to sometimes sort of forget, at least recent history and sort of, you know, not, or not be acculturated into a certain way of thinking of what. And again, that almost makes me think that it was so, it's so beneficial to have a cleansing, a calling of the herd sometimes to blow up the old models and blow up literally the old incumbents, because then that's the only way that people, like, what we're talking about is people that are crazy enough to be like, well, we're going to do it this way. And then, well, but that turns out to be the way that works in this new era. And so it's harder now because it has been so successful that you have a framework where, It almost looks dumb to do things any other way right now.

And there's no incentive to do it. So last question, I guess. What were there a couple things that you obviously know a lot about the history of technology. I assume already before writing the book. What were some of the most surprising things you learned writing the book or most interesting things? How much it always is people feeling around in the dark, faking it until they make it. you know um and again the so you didn't so that was so i mean so if you're an entrepreneur you know that that's the truth always and so that even though the book becomes the story of these were

the guys that were successful like i was always looking for the thing like you know i see like what's the secret what did they do that was my theory is that because we know bezos is so analytical right yeah so he just had it all mapped out and we know all the no no no we know the we know the reason that he started with books he did all the he he did all the okay this is our but he was proving it to himself. He did not necessarily believe himself that commerce was better in a virtual environment.

But once he proved it, so like running, starting with books and running Amazon was almost like this test that he was running to himself. And then, because we see, as soon as books proves it, then that's when pedal to the metal, get big fast. So even in the case of arguably the most successful entrepreneur of this generation. I think

he did not quit Wall Street, get in the car no matter what he says. There's the hagiography on that or whatever. And he knew from day one I'm going to have it in everything store. I think he thought there could be an everything store but he was running the test. And then once he proved

it to himself, then he went whole hog. And then other things like again with social media and things like this Like, who, how long did all of us think, okay, this is a great thing, but is there a great business here behind this? Do you know what I mean? So like, it's almost the feeling around in the dark, even when you got a provably great idea, like fitting that to a provably great business model, you know? So it's, I think it didn't, maybe it didn't surprise me that, but I want people to see that in the book. That it's, it's not just a story of like, these are the geniuses that won. Like, why are. did they win? And guess what? In almost every single case, you know, the whole Facebook chapter is about Zuckerberg almost

it's requiring people to tell him, no, you've got the great idea here. Run with this. Yeah, he was doing a wirehog. Even like when Facebook was sort of taking off, right, he had wirehog, which was just totally separate kind of like they're already out in California and

Sean Parker, at least, this is Parker's telling, so you know, granted that. But he's got to convince, Mark, you have this great idea here. in this. So being an entrepreneur myself, I wanted to not bust the myths on that, but show that, like, we'll always come behind 20 years later and say that we were geniuses and we saw it all along, but that's not the reality on the ground. All right, awesome. Well, thank you for being here and everyone listening. You should read the book. It's a great book. Thanks.

Thank you so much.