a16z Podcast - a16z Podcast: The Strategies and Tactics of Big

Episode Date: August 7, 2017

What happens when companies grow exponentially in a short amount of time -- to their organization, their product planning, their behavior towards change itself? In this "hallway conversation", a16z partners Steven Sinofsky and Benedict Evans discuss the business tactics and strategies behind four of the largest tech companies -- Google, Apple, Facebook, and Amazon -- and how they work from an org perspective.  From the outside, these giants can seem composed of disparate entities literally strewn around the globe; it can be hard (sometimes purposefully so) to understand or detect the strategy that knits them all together. But in fact each of these large companies have very specific approaches to organization and strategy, and what's good for Google isn't necessarily right for Amazon or Apple. Evans and Sinofsky discuss the rationale behind each company's org, looking at the tactics and strategies that are best for the underlying platform, how each thinks of its varied product entities, and how their organizations are all designed differently around their core capabilities and products. 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.

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. Welcome to the A16Z podcast. Today we have one of our hallway-style conversations between Benedict Evans and Steven Snofsky, and they'll be discussing big companies in their platforms. Google, Apple, Facebook, and Amazon. What makes them work, how their tactics and strategies differ, and how they've adapted to change over time. Good afternoon. This is Steven Sonski and Benedict here. We were having this hallway conversation about what is it that makes a big company unique and interesting to think about from an org perspective. The thing about big companies that we wanted to start with is, of course, is that they work. Like, they're not dysfunctional as of very nature. From the outside, everything might look mixed up or people might be complaining. But for the most,

part, like they got to be big. Yeah. So I thought the thing I thought was specifically interesting, just kind of looking at the tech world today at Google, Apple, Facebook, Amazon, as being together about 10 times the size in terms of the number of people that they were 10, 12 years ago. And how is it that they ballooned in this size and have 10 times of people that they used to have not that long ago? And yet continue, for all intents and purposes to work well, continue to create great products more or less. How do those companies run? And when you talk to people there, what you realize very quickly, is that they're actually run in radically different ways. From each other. From each other. And inside. Like, even across them inside,

they're quite different. Yeah. And that's sort of partly related to the product that they have. But it's also just kind of reflects kind of complete difference in philosophy. The interesting way to think about it is that obviously we think of Google, Apple, Facebook, Amazon as being platform companies. But when we say that, we're really thinking about the software and the network effect and the, and the chips and so on. Actually, just as important is a platform. form of the people and the organization of those people and how that can be deployed. Right. And of course, very old saying in technology and a lot of studies have gone into this notion that when companies make products, the product is a reflection of the organization.

And the flip side is, oh, don't ship the org chart. But the truth is that the org is as much a product of a company as the product. We should caveat this whole thing by saying that, you know, whatever we say about any of the given companies is both right and probably runs counter to any one person's experience. For me, the other thing that's super important is that even in the most well-run large organization, it's actually never like one company. It's not homogeneous. It's not self-consistent. It's not a monolithic thing, no matter what people say from the outside. It's fun to point to, and it's fun to try to draw an arrow from a product to that org chart or assign causal relationships. But it's just, it's not really,

really like that. There's always that complexity. You have to think about the internal dynamics of kind of chaos and entropy and personal politics and so on, as well as, like, the overall strategy. But there's also, like, another important distinction that each of these companies tend to have kind of a fundamental strategy, but they also have a bunch of things going on inside that are more like tactics that support that strategy. And the fun thing about looking at specifically Google, Apple, Facebook, Amazon is that generally

the stuff that are, you know, the stuff that's a strategy for one company is tactics for other companies. So, Apple's strategy is to have an operating system, and for Google, that's just a tactic. Google strategy is to do search. For Apple, that's just a tactic, and so on. And, you know, and Amazon has search and uses Google ads, but views it as a tactic to implement their store. What's tricky from the outside is that there are people who pay really close attention to only one element or one part of that strategy. And sometimes they think a big company is missing the boat because they're not all in on doing battle in that space. You know, like, Like, say Apple, I mean, say Google and hardware.

Like, people are like, are they going to do it, not do it? And it's a tactic for them. It's not a core part of the strategy. And that doesn't make it, that mean that they're making a mistake doing it. It means that they've made a decision about how they want to go about doing it. But a classic thing that drives me crazy people talking about Apple, thinking that the app store is like a primary revenue driver for Apple, when the whole purpose of the app store is to drive sales of a $700 iPhone every two years at a 50% grace margin.

Right. Well, if you think about like just your ICloud subscription. Like, if Apple really, really thought that that was the most important thing, would they bury it like five levels deep in the UI to upgrade? No, if it was the most important thing, every time you remove your phone from sleep, it would warn you that you need more storage, the way that using a product that storage is their primary business might. But there's also within that, actually, you can see that kind of there is a tactic and the strategy because a grand strategy might say, well, why are you charging it all? You should give it away for free. But then the tactic, you see, well, we can make some money doing this. quite often the things you read about that say companies are messed up come from people who aren't

happy with what's going on. They might not agree with the strategy. They might more likely just not agree with the implementation choices, the choice of product, the choice of code, the ord choice, the leadership choice, and that causes them to sort of tell a story. And you also get kind of it's the opposite of survivor bias. You get the post facto description of why it was obvious that this company was going to fail or why it was obvious his product was going to fail. And actually, if you go and look at now the kind of the descriptions of the genesis of the iPhone now, like, if the iPhone had failed, you could tell all of the same stories to show why it wasn't going to work. Right. Well, you would have said, like, oh, my God, they had the working thing with the iPod group. They didn't pick the iPod code. They really should have gone with the thing that was already in market and already working, and they made some big science project bet on porting this thing. And of course Apple was going to collapse.

Just look at the political conflicts that they had five years later. Well, obviously that meant that the iPhone was going to go down in flames. Well, you can always come up with these things in hindsight. The flip side is when you read this glowing positive story about how a company worked, the negative stories make it look like a company is Fight Club or like Twister in how it works. And then the positives make it look like this orchestrated ballet or symphony when, you know, oh, we had a small disagreement. So we had a meeting.

We resolved it by evaluating the alternatives and everybody agreed. and then we had tea, and it was wonderful. And then we wrote up the Harvard Business Review's case study. Yes. The one other thing I would say, too, is often when people look at these things, they're like looking for the one thing that they should do when they run their company, their org, and they look to these successes, the survivor bias of the companies. And it's really important to keep in mind that you can't really take one thing that a company

does and then extract from that, like, oh, this is how we're going to operate. And it's very much, I always, I wanted to do in the gratuitous Star Trek analogy, and it's from the episode of the original series Squire of Gothos. The episode is, as everybody knows, that the Squire of Gothos is out there and he's got some fancy radar sonar thing and he can see what Earth is like hundreds of years ago and he replicates it for the landing crew.

But all of a sudden, they taste some of the food and it doesn't taste right. And the reason it doesn't taste right is because his sensors don't pick up taste. So he could fake what it looks like, but he doesn't know what it really should be. And that's a lot about like, you know, well, you know, Amazon is famous for three-page memos.

That doesn't mean everybody should go write three-page memos and then you'll be a half a trillion dollar company. It doesn't quite follow. Apple is famous for secrecy. It doesn't mean you don't tell anybody anything and then you'll become the world's biggest consumer electronics company. Exactly. So what are some of the things that comes to your head when you want to try to understand what's really important to a company? For me, like you first want to know, are they focused on APIs or, you know, like features and experiences? Yeah. I mean, are they creating, I mean, what, well, this is the Marcosaurelius. thing. What is the thing in itself? And again, you can kind of get misled by this. So, you

know, people look at Facebook and Google and think they're advertising companies. And they're not. If Google is a company that's around handling vast amounts of data. And everything that Google then does is sort of an expression of that. Facebook is a product around connecting people and everything it does has to be around that. Whereas Apple is a company around creating a very specific kind of hardware company that has like a five-year product cycle. between like three years of planning and then two years of it being in the market. And so they need an organization structure that can handle that and deliver that kind of thing, which is very different from Facebook needing to be able to decide,

well, this thing isn't working, so we'll kill it and replace it with something else tomorrow. And then Amazon, I think, perhaps, is kind of most unique of these four companies, in that it's this sort of radically decentralized, almost atomized organization, that you have this underlying platform of logistics and e-commerce, but then everything else is like the one pizza team or the two-pica team. So it's like, makeup in France is three people. Shoes in Germany is too legal. In fact, geography is an interesting overlay on how they even approach that.

For me, like, those descriptions perfectly encapsulate this notion that the way that you're a $500 billion company is you have like a monstrous platform. And that used to be a really big word that Alfred Sloan created in thinking about Detroit and cars in the 50s and the 60s. That you have a car platform. You have a car platform and then you put different bodies on it and brands. Yeah, and you make an Oldsmobile and a Buick out of the same platform. You look at that platform and then you start to ask yourself, questions like, you know, how do they decide, are they focused on revenue or they focused on usage? Are they focused on enterprise customers or consumer companies? You know, there's a lot

that goes into using the platform that's based on internal notions. Like, are there requirements that you do things with the platform internally or not? And that's what drives the organization itself. You know, like Google is well known, and we'll start with Google. Like, they're well known for having this incredible environment that once you're, when you're an engineer at Google, you show up and you in a heartbeat can tap in to like this massive build process, this massive experimentation platform and all of this data. Google is a platform for handling hard problems at scale, for handling massive amounts of data at scale. And it's relatively agnostic about exactly what those problems are. It's quite relaxed about having like two or three different teams

trying to solve that problem in different parts of a company. And then things within that then become tactics. The real point is the data and the solving that problem for customers. Right. And fundamentally, from a platform of people point of view, Google, and this is where this subtlety and nuance really needs to be figured into this conversation, which is Google is not one organization. It's one type of culture around billions of scale and the billions, super hard problems. But they really are like an enterprise company focused on search. You know, like that's built in there. And they have a product cycle that looks like an enterprise company, a sales force that looks like an enterprise company. They treat change. to the product the way that an enterprise company would treat changes to the product. Yeah, and I mentioned the fallacy earlier of people thinking that the revenue from the App Store matters to Apple. There's an equivalent one which is people say Google doesn't make any money from Android. Well, this is not the point. That's not in any sense why Android exists.

It's a tactic to support those underlying platforms. And the companies will ebb and flow from a management perspective about how much experimentation in that regard they can financially support or maybe they need more resources in another place. And the fact that those connections are loose actually make those decisions easier because they don't, you know, so it's a smart management strategy to not goal everybody on everything. Because the minute you do that, then your linear equations are too hard to move people around because having flexibility is both good for the employees and good for the company. And so it is how you end up with like something that looks strategically not so smart, like multiple messaging clients. But from a tactic point of view, that's not a big deal. That's like having different marketing messages in France versus Germany.

Like, it's okay. I think that's an interesting way on messaging to go into Facebook. Yeah, yeah. There's quite a lot of similarity between Facebook and Google, very obviously, and their cloud companies. But also that they have, on one hand, the Enterprise Salesforce, of course, which was built by the same person. Yeah.

So it's, again, an enterprise company, and the Facebook core product kind of changes at the velocity of an enterprise product more than you think of as like a fast-paced, like constantly changing things. So you've got the enterprise sales. Salesforce, and then you've got the data thing with a much narrower focus. Right. It's not understand everything in any way to anybody. It's work out the right ways of connecting people.

And I've always kind of thought about Facebook as surfing user behavior, that it's very, very good at thinking about how people's behavior are changing and changing the product. And so Facebook has been like five different things over the length of its life. You know, there was a time when it was all about filling information on your home profile. You know, who goes to a Facebook profile there? And that's in a sense been directed by Facebook. Right. So the willingness, kind of the key there is to sense which way the wind is blowing and to move where users are going and where user behavior is going on top of that.

Like remember when all of a sudden photos became really important. And the idea was get people to post photos. And then all of a sudden there was this kind of like, oh, wait, in order to get something to surface in the feed, it had to have a photo. And then they decided video was important. But all within this same sort of very deliberate, very sort of mature view of pace of change and. He's counter to this notion of like that was the very early origin of move fast and break things. And then the other part, of course, from an organizational perspective is that it very much like a very large scale, mature company, they have other product lines, you know, between WhatsApp and Instagram, Oculus and so on that are run as very distinct entities and they don't overlay some grand strategy about what's going to go where and who's going to do what, when, and tie all the pieces together. Yeah, I mean, there's a fruitful analogy, I think, in looking at Facebook as being a bit like Microsoft Office.

There's stories in Facebook and the stories in Instagram and the stories in WhatsApp, just as like there was a charting tool in them. Because, of course, you should be able to do tables in a slide. And of course, you should be able to do tables in Word? Should they be exactly the same table tool? Well, maybe at some point we'll get around to integrating them. Is that our absolutely highest priority right now? No, not really. The key point is that that application follows the needs of its users and shapes what that particular product needs to be.

These are these things that if you overthink from the outside and, over-analyze, you get all, you bent out of shape that this doesn't all fit together in some neat puzzle because the products aren't clear. When do I use what's at versus this? It's like, who cares? And like, no person is making that choice. They're just using the one that they're going to use because of whatever network effect or whatever reason. And that's where, like, it's fascinating for me, because Facebook is, the usage model is aimed at consumers, they're not put under the sort of the industry analyst enterprise Gartner report over like, is this a charting tool or a numbers tool or a presentation graphics tool?

And then it can't have overlap and it needs to all fit strategically together. And that shows a real strength. I think it's a huge organizational strength in maturity that they not just permit that to happen, but their org is designed around making that an acceptable way to move forward. It's the same thing. It's like what's Mark Andreessen's phrase. is, you know, strong opinions look weekly held. Right.

Back to what we were saying earlier about Google, that, okay, there is a core capability that we're going to do, but we're kind of relaxed about having four different groups working on that in different ways, in different places. Because, you know, each of those will solve things in a different way, and it doesn't kind of matter that it doesn't all kind of tie up neatly in an org chart. The external view is that it needs to all fit together, and the internal view just, it just isn't a problem.

That's not a tactic. That's not the strategy. Right. And which is actually interesting because the internal external view definitely leads us to Apple, where for me, Apple has this very clear mode of working, which is they have a strategy and they have a plan and they're an execution monster

and they're just not going to share it with anybody. And that just drives people crazy. Yes. Like this notion of how can you know all of this and then just not have billboards on 101 telling us what the iPhone 11 is going to look like. Yeah, which of course they know now, more or less. And what's interesting to me about it

is that it gets back to our earlier conversations on Twitter about leaks and stuff. Like, people think that Apple is like, it's oppressive from the outside. It must be oppressive and you can't leak. And it's like, no, actually, if you talk to anybody about Apple, they're pretty chill about the whole thing because they actually know they have a plan and they know they have a strategy. And so they're not worried that it's all wrong. They have confidence in their management structure. The manager structure is appropriately translucent, I like to say, throughout the org.

And so people don't run around like leaking their things. And when there is a leak, often the people feel really, really bad as a team. They don't look to blame the person. The outside world wants to find the culprit. But internally, they're quite mature about the whole thing. But to the point, there's like there's a deterministic element here, which is, you know, Google and Facebook are producing stuff that gets deployed every hour. So that creates a certain kind of structure. Apple is producing something, you know, the iPhone 8 for the sake of org, for whatever the name is, is going to be announced in a month or so.

But that was being planned three years ago. And it's been baked in for basically at least a year now. They pretty much decided what the next one is going to be, and they're well into the one after that. And so that produces a requirement for an organization that looks very different, that's much more kind of systematic and methodical and structured, because stuff has to be decided now in 50 million of them are going to roll off in a ship in a year and a half. Yeah, and also we should point out that, like, there are projects going on at Google or Facebook to reinvent big parts of what we see. and those are going to take years to deploy. If Google wants to replace MapReduce with some new thing

or if they are going to roll out like the new way of doing machine learning internally, they'll work on that for the same amount of time that Apple works on a phone. Or a file system. Or a file system. It's just that they're not going to release it little bits at a time

and they're not going to do press releases at every milestone. We talked about the split inside Facebook and Google between like the enterprise sales, very crudely, the enterprise sales business and the stuff all around that that supports that. And there's the enterprise sales product, and then there's the consumer product, and then there's the stuff that sits all around this, kind of pushing it and supporting it. The thing at Apple is there is like the, as it might be, the Gant chart, to produce a specific products that are going to drop in a certain period of time. But there's also the platform there of the people and the operating, both the operating system and the chip, but the software people and the chip people, and the capability to point all of those people and say, we're going to solve that thing now. Yeah.

And so just as where Google could say, like, machine learning is a thing now, let's point that at photos and solve photos. In a fairly short order. Yeah. It was literally less than a year, I think, that that whole project lasted. But equally, you know, Apple has taken that team and pointed it at the echo and said, make an echo that's aptly. Again, this is this part of a platform. So they have the platform of the people that know how to work their platform of code and product. And what Apple is able to do is the bet that they've made is that we have a platform that's made up of a set of APIs, a Unix operating system kernel, these arm chips that have all of these sensors and capabilities.

And it turns out the thing that they do uniquely is they can take that platform and then take the 80% of it that they need for a watch or a speaker or a television set or whatever. And then what's unique about how they approach it is that they take the 20% that might not be viewed as super hard or super difficult to get done. And they actually spend a massive amount of time and energy to do the whole part of what it takes to be a watch. And I think that that's an interesting contrast, say, with Android, where they also had the platform, but they had a different approach, which was like, well, that's not necessarily the hard part. And the ecosystem will round it out and people will try different things. And so you get a different kind of product out of that. And that is what people think of as the end-to-end engineering of Apple, but it's also an org commitment that they make. Like, they tell the team and they get the team to go finish the whole of the product,

which is a unique way of doing it. Well, it's a specific culture, but it's also a capability. You have the chip people and you have the designers, and you have, you know, right down to the stores, you have an ability to create a certain kind of product, and you can take that ability and point it at things. Yeah. You can point it at a watch. You can point it at home speaker.

You can point it at TV. There's stuff that you pointed out that, you know, where you kind of try and work out what it would be. And, you know, clearly the Apple right now is kind of trying to work out what it would mean to do a car. Right. And that's what's so interesting about that is, is how, you know, that capability isn't universal. And so a huge part of the culture of a company is making sure that they choose the right thing to point it out. But, you know, back in the 60s, when Ford had the Mustang, you know, every Detroit company had a platform of four wheels and a high performance engine to make a car like that. But GM just could not figure out how to respond.

to the Mustang, and they were in a panic. And so figuring out, once you have the underpinnings, it's also a huge management task, and that's the discipline that I think that Tim Cook talks about is figuring out what to say no to, what to say yes to. I wrote a piece a couple of years ago, kind of comparing Google to the story about how a shark will bite something to see if it's a seal, and if it's not, it'll spit it out. So Google bites things to see if they fit Google. And so they tried healthcare, and it just didn't work, and they would have had to

have changed what Google was too much in order to make healthcare work. Which is super disciplined. And they tried radio, like over 10 years ago. They bought a radio advertising company, and they worked out that they could not make radio work without changing what Google was, so they didn't do it. And that's exactly the same as Apple saying no to a product, because it would have to make them not Apple in order to make that work. Each of these platforms have kind of, there are places where they're extremely good at giving that kind of product, and maybe the other companies in the set might be very bad at doing that, that, you know, the stuff that Apple would be really bad at making that thing, and Google would be really bad at making that thing. And part of the strength is actually knowing that and pulling back and saying, no, we're going to stay in our canal. And we have Amazon.

What's interesting is they might not worry too much if they're really good at it or not really good. They seem to be very brave about like, let's make phones, let's make readers, let's make speakers. Yeah. Let's do voice recognition. I think I'd see it as sort of the structure almost kind of at a right angle to that. So I think like kind of my sort of elevated description of Amazon is that you have two fundamental platforms. You have the physical logistics platform and the e-commerce platform. You could argue now they're adding.

a third in the form of prime, which is slightly different. And then everything else sits on top of that and is radically decentralized. So everything is a team. There's a team of like three people. So shoes in Germany is three people. And makeup in France is four people. And music players, well, pick a category. It's a small number of people and it's completely atomized.

And everyone has internal transparency as to their metrics. And the point of that is that you can kind of scale that almost indefinitely. If you want to add more categories, you don't need to add another direct report to Jeff Bezos. It's not a tree structure. And importantly, neither is Amazon itself. And especially, in fact, search has made this such an interesting thing because if you find everything by search, and this was the difference between Google and Yahoo was a hierarchy.

And you had to enter Yahoo from the top and then sort of navigate it. And once you do search, you don't need the top of the internet. And Amazon doesn't need the top. Like, they can sell you anything because you're just going to have to look for it and they have to get good at doing that. And so they can really scale what they offer, like fairly infinitely. And what's so fascinating about that is they're, they also, nothing has to be a huge success. Like, they can decide to do something or not do something and work on it for a while and then decide if that's delivering the customer satisfaction that they want or the ROI that they want or the connection to other products that they want.

And they're okay. Yeah. And that means, on the one hand, that they can scale almost indefinitely by country and by into new product categories. it raises the question, okay, are there product categories where that don't fit that commodity model? Well, and that's what everybody's asking about whole foods and groceries or, you know, sofas. Well, the question right now is fashion. Can you sell fashion? And the challenge is not, so to speak, can you create a nice web experience that would sell fashion?

Because clearly there are companies that are doing that. It's how would Amazon adjust that operating model? Because right now, there's like 3,000 teams in there who are selling different products. So now teams can start asking for their own UI? Right. Okay, how would that work? That would be an, that's kind of an interesting organizational challenge. Right. If the fashion people want to pioneer, like a virtual reality, try things on or, or even logistically, they want to, you know, that you, you know, they deliver it and then you have five hours to try it on, and then a car will come by and pick it up and take it if it doesn't fit. Like, they might want to do that, but that's a whole new logistics offering for them. Yes. Or it needs to be packed differently. And, and that's where like this notion of all, all four of these companies, Google, Facebook, Apple, and Amazon, the management is, is, is, is,

all about finding the products that really fit that they can make well. And of course, the risk is either that they pick something that they can't make well and they make it a really big bet, or they fail to be able to change that underlying platform when it really needs to change. And, you know, one of the more brilliant things that Facebook and Google both did was move to mobile. Yes. You know, and that's a huge platform shift. And they're now moving to machine learning. And so in a sense, they're rebuilding from a consumer, and this is from a consumer point of you almost don't notice it. Right.

They rebuild all of their stuff around machine learning. And now you get like specific, tangible things. Like now you can search inside photos or not. But very often, it's just like, you're okay, you're now your Google search. You're the same Google search you did five years ago. It's just now suddenly it's 15% better because of machine learning. You can't really see that. Like Amazon, you know, it always used to be people who are interested in this also bought

this. And most of that was sort of based on very straightforward query results of their purchase history. But now they are going to have the technology using machine learning to start offering recommendations that are based on a lot deeper insight based on these learning techniques. This was kind of the challenge of mobile was it completely changed operating environment. And so for Google and for Facebook, there was this real question. Like actually, our whole platform needs to be pointed on a completely different thing. And I think maybe there's like another strand here.

Three of these four companies are still run, effectively run by the founder. Each of them has seen the last 30 years of tech. And so they saw what happened to IBM. They saw what happened to Microsoft. They saw what happened to Yahoo and to AOL and to MySpace. And so they've sort of seen all of the lessons of what worked and what didn't work and what can happen to you. And they were all, you know, still super aggressive and quite young and, like, looking at that and are very determined to kind of take this platform and keep moving it. I can't really overstate that kind of observation because that was one of the things that I thought was most fascinating very early on with not,

just the YouTube acquisition, but the integration strategy of YouTube. Because historically, in the software industry, acquisitions were done and then assimilated as quickly as possible. And I remember watching YouTube and going, when are they going to be able to sign on with a Gmail account? It took them three or four years before you could do that. And then you watch Facebook and you watch how that they've dealt with WhatsApp and Instagram, and they've kept them at this arm's like. And that's like a very clear lesson from how to deal with what we today know. are disruptive technologies, a book that was just, you know, written in 1998, you know. I mean, you could argue that one of the problems with disruption is it doesn't work

if everyone's read the book. Right. On the other hand, what we're really saying is just like in the finance world, like there will be something, an event that happens. It's just that it won't be like they won't get disrupted by some technology paradigm shift. It'll be some other challenge that they face. Because I think that's something that you really need to internalize about these four companies is that they have built platforms, strategies, and organizations.

that understand how to deal with changes in technology in a way that past generation companies just had challenges with. The lesson is how flexible these companies are at sort of pointing themselves at a different problem. It's not actually the specific product that you're holding in your hand or the chip or the particular piece of software. It's the ability of that company to kind of pick itself up and point it somewhere else. I mean, we have this kind of story from the past of, you know, the Bill Gates' memo

about the internet and kind of Microsoft picked it up and pointed itself at something else. And this is like this big case study of, oh, my God, this is an amazing thing that happened? Like, how many times have Google and have Google and Facebook done that in the last 10 years? Yeah. In a sense, how many times even has Apple done that as they've maneuvered around, you know, we'll see they have a longer product cycle? How many times has Amazon reoriented itself around different things? It's like actually a sort of structural change of these companies being able to react to change differently.

I remember early, early on in 1995, you know, Jeff Bezos, like doing books and telling people locally in Seattle, like small dinners and stuff. Like, well, we're definitely only doing books because you had this very special. understanding of book distributors and how they would, you know, not have warehouses. Like, we're not going to do warehouses and we're definitely not going to do CDs and DVDs and movies. And then, you know, a year later, they're the largest DVD seller. They're starting to build giant warehouses. They're stocking the top 25 books. And he reinvented the company that he had. And that was a startup pivot. But then you think about how, like, we are never

going to deliver groceries. And now here we are. What we tried to do with this podcast was just wrap up a conversation we've had about just how these big companies work. And we see lots of things that are pretty interesting from an org perspective and a lot of lessons for how founders should think about, about how they organize, adapt to change, and also work with these companies. So this has been Steven Sinovsky, Bennett-Kevins, on the A16Z podcast. Thank you.