a16z Podcast - a16z Podcast: The Movement of Money

Episode Date: December 31, 2016

As companies expand out from the internet into the rest of the economy — the proverbial bits to atoms — “the business models are becoming more complicated, more interesting, more payment based�...�, observes Patrick Collison, CEO and co-founder of payments platform Stripe, which enables apps/websites to programmatically move money around. But as such companies become “the operating platform for commerce”, we also have an interesting paradigm where people, not governments, are controlling the commerce supply — so “It’s not the money supply. It’s the commerce supply,” argues a16z general partner Alex Rampell. This is especially true as payments become easier, as trust and payments become interwoven, and as online, peer-to-peer marketplaces address information asymmetry. So what does this all mean for advertising as a business model, for trading goods and services directly, or for the future of stores? What does it mean for liquidity, for interest rates as a lever for the economy, and for …the end of cash? And finally, when legacy and emerging non-software businesses are increasingly networked and run on “technologically enabled rails”, what does that mean for geopolitical risk? Collison and Rampell discuss all this and more on this episode of the a16z Podcast, a hallway-style riff on all sorts of money matters. The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

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Starting point is 00:00:00 The content here is for informational purposes only, should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. Hi, everyone. Welcome to the A6 and Z podcast. I'm Sonal. I'm here today with our general partner and fintech expert, Alex Rampell. And our guest is Patrick Collison, who is the CEO and co-founder of Stripe. which is a payments platform built to enable developers and other people creating apps or websites to programmatically move money around. They are part of a larger wave of companies in the so-called API economy, where application programming interfaces become the primary sort of storefront for business. In this episode, however, we riff, hallway style, in a conversation recorded a while ago, on everything from why marketplace businesses matter,
Starting point is 00:00:52 to what happens when non-software businesses and our economy are increasingly run on, quote, technologically enabled rails, to leading and lagging, indicators of the end of cash to liquidity, geopolitics, and trust, and more. Welcome, guys. Thank you. Thanks, having me. I increasingly think about Stripe as being the operating system for commerce. What do you think about the future? I mean, what, that's a little bit too broad. Starting with easy questions. Starting with the easy questions. But how do you think about where do you go now? If you have 99% of all startups using you, what do you do next? The way we think about it is that as sort of a corollary of softwareing the world is that the
Starting point is 00:01:30 economy is sort of increasingly coming to run on technologically enabled rails. And it's not necessarily the case. It's all kinds of commerce or every part of the economy is going to become orchestrated by specifically a technology company, but it is going to be sort of significantly technology enables. There's almost certainly some part of the supply chain or the process or the part of the service that's going to be substantially changed by software. Why does the money part matter so much? Why is pizza business being built on technological programmable money rail so important? Right. Wouldn't you just hand cash over when they deliver? Good question. So I think broadly speaking, the first generation of internet companies were largely able to rely on advertising of their business model, right?
Starting point is 00:02:07 It was sort of a very basic kind of monetization of the attention. And so that's what you see in Yahoo and Google and Facebook and so forth. And I think in some sense we thought that advertising was the default business model for technology companies, but actually it's just kind of an operation in the long scheme of things because the default business model of the economy is you pay for things. It's the whole premise of advertising. It's that, like, ultimately, if nobody was paying for the thing, then there would be no advertising. I mean, everything is kind of upstream from that end payment. Absolutely. And to be clear, I think advertising will remain not only a large, but even sort of an increasingly large industry, but in the scheme of things, it'll be a small fraction of the economy.
Starting point is 00:02:42 You have a credit card, and somehow that needs to become money in your bank account, you need some kind of rails to do that. Increasingly what you're seeing is people do interesting things with the business models, that they don't just need something to turn a credit card number into money in the bank account, but they need sort of ancillary functionality around it, right? And so very obvious and kind of striking and indeed fast-growing example are all these mobile marketplaces where it's not merely about accepting the payment, but it's also about sort of coordinating this network of sellers
Starting point is 00:03:09 and figuring out how to get the money to them and handling the identity verification and the tax that goes alongside that. And then figuring out how do you do that in multiple countries because companies increasingly early go and address global markets. And then, you know, you're up and running, paying them And you need to figure out, well, how do we get them the money faster? We worked with Lyft back a couple months ago to Rolls Express Pay, where rather than just kind of sending money to their drivers via a bank transfer, they can send it instantaneously to their drivers kind of directly over debit card rails. And now almost half of their drivers are using that.
Starting point is 00:03:42 Like, in the blink of an eye, they shifted from these bank account rails to getting paid instantly because that's much more attractive. So it's like getting cash handed in your hand, but electronically. Right. So I think that the general pattern here is that as these companies expand out. from the internet into the rest of the economy, the proverbial kind of bits to atoms, the business models are becoming more complicated, more interesting, more payment-based. When we first, but I think it was probably five years ago, I remember we met at the Starbucks in Palo Alto on a Saturday or a Sunday. And I asked you, you know, who will your customers
Starting point is 00:04:12 be because it's going to be really hard to get Walmart to switch the require and all of this? And I remember exactly what you said. They do not exist yet. A lot of my customers do not exist yet. It was actually around the same time I wrote a tech brunch article, and I coined this term O to O to O, online to offline. Which, by the way, is very popular in China. I've heard. And what's really interesting is when you think about mobile, the idea of paying for something actually electronically without ever really exchanging a physical payment, you know, tender type of any way, shape, or form, that's become very mainstream now. This is really interesting, but just concretely, what does it mean for me as a person trying to pay and transact in these marketplaces?
Starting point is 00:04:47 Like, what are some of the things that, you know, payments can help me with next? Well, I've always thought there are two main problems with payments. The first is the pajama problem where you're upstairs in your pajamas. It's even worse now because now you have a mobile phone that's with you 24-7. And your payment method is actually downstairs. Oh, this has to me all the time. This actually really happens to me all the time. Yeah.
Starting point is 00:05:07 You know the stat that 94% of people use their phones while they're on the toilet and the other 6% are lying, right? So, you know. So gross. People have their phones with them all the time. The pajama problem is a real one because it actually means that commerce doesn't happen because I don't have my payment instrument or I don't have my payment type stored within an app or within a retailer or something like that. The other problem I call it the Costco problem where if you go to Costco 2 p.m. on a Saturday, the problem is actually it's not paying. That's like you just dip your card or swipe your card. That's very easy. The problem is finding out.
Starting point is 00:05:35 And then it takes like five extra minutes. Well, it's gotten down. It's gotten better. The problem is actually waiting in line to pay. Oh, this is also so true. That's the problem. And literally it can take half an hour. and the reason why you abandon is not because you don't have your payment instrument, it's right in your pocket.
Starting point is 00:05:50 It's completely different than the pajama problem. The reason why you don't pay is because you don't want to wait in line for half an hour and you have to go somewhere. So you just run out at Costco without paying? Yeah. No, no, you just abandoned ship. I mean, I've actually seen this. You see carts that are fully stacked with items. Why would people leave once they did that?
Starting point is 00:06:05 You're right. You see the line. You're like, what the hell am I doing? Every time I go to Phil's coffee, I use order ahead, and you're actually solving the Costco problem for me. There's like a basic question of should we have to go to stuff? stores and in which cases do we have to go to stores or in which cases is the thing going to come to me in that. Right. It's almost like a relic of the past limitations. Like we might have new things possible now. Absolutely. And like what does it mean to transact with Costco? And just how anachronistic
Starting point is 00:06:33 is the whole notion of a single store going to look in 50 years. Maybe you go. Maybe it already knows what you're going to order. Maybe you have already ordered. You've, you know, you've a profile set up various versions like this. And so I think there's actually, it was a rigid binary distinction before between you phone someone and they deliver it or you go to a store and you queue for essentially unbounded amount of time and now various other points along that continuum are possible. And I think we are seeing far more of those crop up on a monthly basis. It's a whole new ecosystem. Or seeing a lot of the large companies, they may not be software companies at the core of their DNA, but they generally are customer experience companies at the core of the DNA, because if they
Starting point is 00:07:16 weren't, they probably haven't survived until now. And so we found they're very attuned to just what makes this better for the customer. Those companies come to us and say, hey, we want to enable this too. We know that this isn't necessarily easy given our existing model, our supply chain dynamics, and so on. but it's very clear to us that it is substantially suboptimal to be queuing in line. Do you have any interesting numbers to share about, and how do they sort of reflect on, like, what's happening? I think the big trend is this shift of technology fracking into other industries.
Starting point is 00:07:51 Oh, interesting. And fracking in the oil industry sense, like breaking rock, literally. Yes, that's perhaps overly dramatic. But I think it gets at the idea of sort of this expansion out into the places where kind of technology has not traditionally been deployed. I went to get a cup of coffee, right? And you don't think of a cup of coffee as being something intrinsically a technological problem at heart. And yet, because there's a long line, it fills in Palo Alto, I use the order ahead app to go into order my coffee so I could just walk in, pick it up and kind of proceed here. We're then seeing that our data is this happened so broadly and in so many sectors and kind of parts of the economy that people really don't traditionally expect. We're all sort of familiar with the most prominent examples in the form of the ride sharing and the burgeoning number of, meal delivery companies and so forth, you know, the problem of pest control is being turned into a marketplace problem or the problem of child care. All these things that kind of when you zoom out involve a significant coordination problem or sort of information asymmetry
Starting point is 00:08:49 where reputation systems can sort of be brought to bear to make the service better. So we're seeing a huge amount of that sort of substitution happen or kind of that, again, deep technological suffusion. And I think a lot of that, it's both leading and lagging indicators of the end of cash. that people got comfortable experimenting with credit with plastic, I mean, back in the 40s and the 50s and so on and so forth, that enabled a lot of these early marketplaces to develop and the fact that more of these marketplaces exist that do not take cash because it's not practical, has actually yielded. It just becomes this virtuous cycle. I was actually talking to somebody who asked me, why in the world do so many bonds now, government bonds have negative
Starting point is 00:09:28 yield? And I was trying to explain it to them. Maybe like, why not just take out cash? It's like, okay, well, let's just say that you want to actually take paper currency. Because in both cases, like, with negative yielding debt, you have inflationary pressure. I mean, unless it's a deflationary economy that happens in Japan and whatnot. You're going to lose money to inflation, but you're also going to lose money to that negative yield. If you get paper currency, while you have to store it, you have to insure it, you can't just put that in a bank account because then you're a creditor of the bank. Absolutely. So, like, this is another reason, like, a number of countries have actually enabled not just a thought experiment, but like real thinking of if you want to have, if you want to spur the account,
Starting point is 00:10:02 economy, either with helicopter money, or maybe you say, okay, unless you spend the money in your bank account, it will become less money every month. That's a way of spurring the economy. Well, if you have cash and you can put it in a vault and you actually trust the protection of that vault, then that actually interrupts this whole monetary policy that the government want to actually engage in. So, you know, there's a legitimate case that cash, like a lot of people want cash to go away. Like the people that want cash to stay are the drug dealers and the people that are the members of the underground economy. governments, like, they used to control the money supply very, very strictly. They're the only ones that can print the cash in every sense of the word,
Starting point is 00:10:36 both like real cash and like, you know, QE2 kind of cash. But then you also have this very interesting paradigm right now of the people that are controlling the commerce supply are not the government. I mean, it's actually people like you. They're more so than a government. Well, I think there's kind of a fascinating natural experiment transpiring here. I think it's going to be very interesting to see what that elasticity looks like as you proceed past, how negative can interest rates get, right?
Starting point is 00:11:02 And then, of course, macroeconomic significance, but I mean, I think there's sort of multiple different ways in which blockchain technology could be interesting, but obviously as kind of an outlet such that this transport level substitution from like physical cash to digital money, that that does not necessarily lose some of the bearer properties of cash so that as we see kind of macroeconomic policy change, that the options you have as someone just like holding money
Starting point is 00:11:26 don't substantially diminish. Having said that, you know, the thing that I've been thinking a lot about of late, and that I really don't have an answer to is the nature of interest rates themselves as a driver of investment and as a lever for the economy overall. The basic syllogism of, you know, interest rates and post-World War II economic policy has been that because most innovation and most projects and most wealth creation is substantially capital constrained that by lowering interest rates, you drive more of it to happen and more things get built. or railway lines are laid down or whatever the case is.
Starting point is 00:12:04 And that as more of the new wealth that we create comes to be bound by people or the capital kind of in the human capital, sort of in terms of education or their geographic placement and so on. Like why aren't we developing ideas or new things twice as fast as we are? I mean, I think it's less that we don't have enough capital. It's more that we don't have the right people or the right people in the right places and so on to kind of just circle back to your original point where it's less about interest rates themselves,
Starting point is 00:12:33 I think being the primary lever here. The thing I was wondering about under the drive over is are house prices the new interest rates because that determines to a large degree where people can be and who can work together and what ideas they can work on and so forth or the combination of house prices and immigration policy. Yeah, there's a lot tied up in here about that money as a proxy for movement. But I want to go back to an idea that both of you kind of alluded to about how we now have this ability to essentially turn things into marketplaces in ways that they weren't before. Yes. And Alex, you talked about how these things are now happening outside of centralized
Starting point is 00:13:08 government control. I'm still not clear on why that really matters. I think it would be a very, very bad idea in the United States of America to grow no food in the United States, even if, you know, just efficient markets and lower cost of labor elsewhere, but you have this kind of stochastic negative externality. If suddenly we can no longer trade, I mean, free trade is great until it doesn't exist or until you have conflicts that emerge, which potentially do. This is geopolitical risk. If you have all of your food grown elsewhere, that could be a very bad idea. And likewise, centralized routing in another country, even if the country is actually temporarily friendly. And these kinds of things, they just weren't relevant before because you didn't
Starting point is 00:13:49 have this idea of centralized routing taking place in one country versus another country. And it's not just payments, it's everything. I mean, you see this with Crimea, where Putin and X's Crimea, part of the sanctions that the United States government passed to kind of penalize Putin is to say that transactions can no longer happen in Crimea that are centrally routed in San Francisco or New York. And that could have never happened 20 years ago. Because, again, it's not the money supply. It's not M1, M2, M3. It's the commerce supply. You know, when somebody mentions stochastic negative externalities that we've gotten to the good part of the podcast. We're not using it as a headline. I don't care what you guys say. That is not happening on my watch. You know, I don't think this is a big issue in, well, in human systems in general, right, in that the centralization sort of afforded by technology and the kind of standardization and the interdependence and the connectivity, I mean, there were no rolling blackouts in the northeast back before the invention of the electric grid. There was never like a coupled coordinated failure. All the lights did not go out in every town in the northeast.
Starting point is 00:14:52 There was no place for things to cascade to when they fell before. They would just be contained. at the first level. Yes, yes. And so I think that negatively skewed risks and do just start to become more concerning. There's obvious kind of economies of scale and benefits connecting all these systems together and instead of building things that spend the globe. Complex systems have surprising emergent behavior. Exactly. And you can't read the cause and effect any longer. You can't even figure out the ideology of where something happened. Precisely that. Yeah. A good example of that is we have the quote unquote kind of system of the global economy and then some surprising kind of action happens in it, like Russia invades Crimea,
Starting point is 00:15:28 which is really not something that had been anticipated. It's not like an obvious consequence of the system. Right. You've kind of the particular coupling of domestic policy and foreign policy and monetary policy and so on. I mean, the EU is a good example of this, of how with the Euro giving up some into your control over fiscal and more monetary policy, like it also affects your domestic policy. But I think it's actually more a property of just like our general global connectivity than it is kind of something unique to the economy itself. But it's totally something that keeps me awake at night. Well, not literally, I guess. But you think about it before you go to sleep. Yeah, yeah. In that I think there's a good chance
Starting point is 00:16:06 that some of the things that we see happen over the course of our lives will, in some sense, be problems of this general class of just surprising outcomes from our increasingly complex systems. Ben Horowitz made a comment a couple days ago. There's no local search engine just for the Wyoming market. There's no concept of building a local technology company because it doesn't make any sense. And as you actually, as the world is flat in terms of distribution of technology, you have these little cliques that have self-interest that might emerge. I think the EU has been, it creates robustness. It also sometimes is regulatory capture. I think the EU is very jealous that Google's not a European company. I think they're jealous that Apple's not a Europe. Like Google is bad in Europe.
Starting point is 00:16:46 In my personal opinion, I don't think they're nearly the monopolist that Microsoft was like in the late 90s. But there is a certain sense of jealousy. They almost do operate a de facto monopoly in terms of people searching for things. But the thing that technology has taught us is that a monopoly business in technology, that's not a 50-year monopoly. And I just want to make the point, too, that people often forget when they talk about anything anti-competitive is that if it benefits consumers, as long as consumers get something out of it, that's not anti-consumer interest. Free market forces are the best way of actually spurring innovation. I think the way that they become anti-consumer is they become lazy, and they become lazy because they don't
Starting point is 00:17:20 have sufficient competition, and they don't necessarily have sufficient competition because they're being evil, to quote the Google phrase. Never attribute to malice, that which can be attributed to stupidity. There's a comment that I use a lot, which is, you know, the battle between every startup and incumbent is whether the startup gets the distribution before the incumbent gets the innovation. And normally, the incumbent wins. They get the innovation. It might take them five years. I mean, I'm sure that there's some mobile bank startup that's going to have a much more beautiful app than Wells Fargo's, but Wells Fargo, within the next seven to ten years,
Starting point is 00:17:50 we'll come up with something as good, and they've got that distribution. But so far, what I'm hearing is when you guys are talking about marketplaces, that is essentially just intermediating existing things. We're not hearing about what's new and possible that hasn't been done in, like, say, physical world. And secondly, we're also not hearing about what the benefits are, what's possible on top of it. What you need is you need trust in a way of actually resolving trust and resolving payment. And that's what enables commerce. So there are a lot of things that now happen like well i'll give you an example the problem is that right now like if you want to go get a plumber to fix your toilet there's an asymmetry of information like what's wrong with my
Starting point is 00:18:25 toilet i don't know i don't know how to explain that canonically and then i don't know if the plumber's any good and if you think about what expedia did they they solved a much much easier problem is they rated hotels now every five-star hotel is not the same every three-star hotel is not the same but there's not really there's not really a lot of confusion between one-star hotel and five-star hotel, you can see the liquidity, you can see which rooms are available, you can handle payment, you can handle trust, you know, that the hotel will actually have a space when you show up there. The thing that a lot of these marketplaces are allowing is trust, payment, standards, and liquidity, because I can click a button and then boom, I have one unit
Starting point is 00:18:59 of plumber fixes my toilet. This goes to your point about the information asymmetry as well. I mean, information asymmetry is a huge one. That has nothing to do with payment, but like you need each one of those to come in. And sometimes this is an intractable problem, because if I say I want one unit of move from place A to place B, well, there's a lot of information asymmetry there. How do you reduce that to a skew? You can't reduce that to a skew. It's a hard, hard problem to solve, but you see it done vertical by vertical. You don't have any horizontal services marketplace despite the fact that Amazon is trying to do that. But like, I think you'll see hundreds of these that will each tackle different problems. And I think this can substantially
Starting point is 00:19:31 grow the economy because you're competing with nothing. Right. So this is kind of the bucket of things that are about why bringing technology to bear on non-technology problems is good. There's does that bucket? I think the world, broadly speaking, accepts that one. And then there's kind of the structural question, yeah, of sort of why our marketplace is good, what good does that produce for consumers? The core of the matter is how much inefficiency the rigid hierarchy of the non-marketplace solution introduces. Because so much of the world, if you kind of squinted it from one particular perspective is about solving an information problem.
Starting point is 00:20:10 I'm not even going to call it an asymmetry because asymmetry maybe sounds kind of it's overly diminutive. It's actually like an information chasm. There are so many people in the world with the talents and the ability and the kind of willingness to go into solving that hunger problem
Starting point is 00:20:25 in return for some degree of compensation, right? But because it's difficult to find those people, we have to all put them in the same place and we have to get all this, you know, food into this warehouse and all this stuff and then we kind of designated a restaurant. But in some view of the world, like a restaurant is to solve the information problem.
Starting point is 00:20:40 So you know which people to go to and when and how in order to sort of solve this particular problem you have. And so marketplaces are kind of an alternate cut on this where it's like, well, we can pursue much more peer-to-peer, much less centralized models. It's kind of in the same way that the Internet is about routing the information directly from entity to entity rather than having to go through the intermediary of the library.
Starting point is 00:21:02 It's also like a transaction is happening where before there was none. The economy becomes higher resolution. Right. Oh, that's an interesting. We have thinking about it. If you know, Dan Ariely, this behavioral economist. Of course, yeah.
Starting point is 00:21:11 He gives this example of, like, two universes that exist. Universe one, Locksmith comes, like, you're locked out at 2 a.m. He lets you in in one minute and charges you $400. And you are outraged. $400 for one minute? Like, what an a hole? Can't believe this leaves a, you know, you go leave a one-star review on Yelp and say, I'm never going to work with this person again.
Starting point is 00:21:27 Universe two, exact same situation. Locksmith shows up, works for eight hours to try to let you in. Goes back to his office at 10 a.m. drives back. Finally lets you in 12 hours. later, you are actually happy, you give him a tip. Wow, he worked for 12 hours. You're paying for incompetence. And this is the problem of the information chasm or the information asymmetry, which is when you create this objective, like you don't want to pay by time, that might be
Starting point is 00:21:48 okay when you actually have Google Maps routing you correctly, which it doesn't always do, but it's not okay when you're going to things that don't really have an objective measurement score like Fix My Toilet. Yes. And again, I think, you know, in the same way that there's a question about, do you think that the inefficient hierarchical solutions that we have to resort to today, are they somewhat less efficient or an order of magnitude less efficient than the optimally efficient networked versions that we can hopefully now create? I think in a similar way, there's the question of how problematic is it that in so many of these transactions and in so much of this work that we don't have a good feedback loop. We don't have good measurement and
Starting point is 00:22:24 kind of quantification, right? Part of what ended the great leap forward in China, you know, it wasn't sort of a technological innovation. It was a change in the coordination model where people got to farm their own plots. I want to ask one final question, which is, so why does money matter in these marketplaces? Is the only goal of money to reduce friction and to get people to transact? I mean, like, truly, it sounds like an obvious question, but why does the money movement matter? You had barter a long time ago, I would trade Patrick my five chickens for his one goat, and that's how we would deal with things. But the problem was it was very, very difficult to partition a goat, not so much a chicken.
Starting point is 00:22:59 perhaps because, you know, those are worth less than one goat. And then ultimately... I do pizza. It's quite easy to pay. That's true. So then we move to gold. I mean, we move to different forms of currency. Then eventually we move to fiat currency. And that's just, it's a lot more efficient.
Starting point is 00:23:13 I don't think it's actually necessary for it. I mean, people rely on this notion of liquid currency, whether it's digital or cash. That's how people trade goods and services. It's not barter. But I think ultimately, you know, it's trust, its standards, and perhaps standards is a variant of trust. liquidity is what actually makes a marketplace successful and why you have network effects take hold. But it's the trust that I know that something will actually happen, and therefore I'm willing to give up the payment, but they're also interconnected. I mean, knowing that I will get paid quickly and promptly, it just boggles my mind that eBay started as eBay without the PayPal part built in.
Starting point is 00:23:49 Oh, I know. That's crazy. They had their own bill payment thing that they developed later, which didn't really work, and that's why they bought PayPal. But it was all COD. I mean, I bought something on auction web. I think it was in 1996. and a lot of times you'd really rely on the kindness of strangers to pay you or like they would send you the money first and then you would ship the item and that just wasn't really sustainable. It just shows like how trust and payment are interwoven. Oh, that's interesting.
Starting point is 00:24:12 So payment is almost a proxy for trust. Yeah, because I mean, how much did eBay grow when, I mean, there are many reasons why they grew. The fact that people actually use the internet. More people use the internet in 2000 versus 1996. That's a good one. But the fact that payments actually became easier, payments and trust are commingled.
Starting point is 00:24:27 Why does money matter? Yeah, and beyond the existential question of it, like in the marketplace. Right. Economists literally debate this question and have been doing so for decades, and so I don't presume to be able to shine particularly novel light on it. I think that as a ledger and a scorekeeping mechanism for value created, again, to come back to our notion of incentive structures and information flow, that helps us keep track of value creation, it's not just a useful, but kind of a necessary tool. And whatever, we could spiral off into the philosophical depths here very easily. But I think there is something important where two sorts of economic systems we could have. We could have sort of a fundamentally distributive or redistributive or a portioning-oriented system, right?
Starting point is 00:25:13 Or we could have one more like money where it's inherently limitless, right? Just it is numbers. And I think that's in some way more optimistic in the sense that there's no cap on how much. can be created or accrued. There's a book that I take every opportunity I can find to recommend the beginning of infinity by David Deutsch. I haven't read that. I think it's really great.
Starting point is 00:25:37 Part of the book is elucidating different kinds of incipient infinities. Are we asymptotting to some limit or are we on the early part of the curve towards something more substantially unbounded? And so anyway, at least on the question of, if you look back a thousand years, many things exists and happen and are available to us and are possible that we're not previously. And I think we're still in the earlier side of that curve. And so, anyway, as a scorekeeping mechanism for our progress along that trajectory, I think money works pretty well.
Starting point is 00:26:08 There's two visions of the future of the internet. There's one where we've mostly invented the things kind of thus far and the story of the next 20 years is going to be that of the existing giants becoming bigger. And there's kind of an alternate perspective on us where it's kind of like the Jeff Bezos quote that it's still day one and the vast majority of the businesses that are going to be huge in 20 or 30 years are yet to be started. Right. In Carlotta Perez terms, it's like the deployment phase. We weren't around for a lot of the first chapter of the rise of the internet, but even in our lifetime, it really has been very noticeable just how much the rest of corporate America has woken
Starting point is 00:26:46 up to the fact that software-enabled experiences are going to eat the world. And non-software companies now really do get this. That's great to hear. Well, you guys, thank you for joining the A6 and Z podcast. Thank you very much. Thank you.

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