Tech Brew Ride Home - Google Talk (Dec. 2018)

Episode Date: July 1, 2022

While I'm away briefly for vacation, here's a talk I gave at Google in December 2018 around the time my book came out. Just a condensed dose of my entire thesis of the technology industry's history from 1994-2006. Nothing much new if you've read my book, but if you want the cliff's notes version, here it is. Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Hi, I'm Jimmy. I won't waste too much of your time by being up here. I'm just here to introduce Brian,

host of Tech Memes Ride Home Podcast. Recently wrote a book called How the Internet Happened from Netscape to the iPhone. Brian's got a history of working in the tech industry and startups. He'll talk more about that, but essentially amassed a whole lot of knowledge about the history of the internet and wrote this book in his own words,

because no one else had. And we'll share a lot of interesting things that he learned along the way with us. I'll also just note that there are books for sale as usual with these things at the subsidized price for Googlers. So feel free to pick one up on your way out. And with that, Brian McCullough. Thank you, Jimmy. I'm going to stand up here so I can quote from the book once or twice. Thank you all for coming, and thanks Google for having me come. As Jimmy said, I'm actually not a historian or a writer. This is

my first book. I'm a three-time web founder. Actually, funny enough, I've said this on many of my podcasts. My first company, I found it in 99, I've said many times, was 100% built on AdWords back in the day when it was still useful and not filled with spam. But in my memory, the day that y'all opened it up for the self-serve thing is the day that I got on AdWords. And, God, I can remember paying $0.8 a click for the keyword resume and things like that. It was nutty times. But so the reason that I did this book, my second startup was 2002, my third, 2005,

it just sort of bothered me that there's excellent books, of course, about the history of the ARPANET and things like that. But the actual internet going mainstream and entering normal people's lives, no one had done. And I just got tired of no one writing that book. So like any other startup I've done, I was like, well, someone's going to do that.

Why not me? It's the dumb startup mentality. So the reason I give you that background is it's also sort of my career. It's what I lived. So I thought it would be easy to do. And so what I want to do in this talk is tell you some of the fun things that I learned in doing the research. It was five years of writing, essentially.

And I did actual go to the library and find defunct magazines and things like real research. Also, by the way, it also, because I'm a web guy and I'm used to instant gratification, over the course of the writing, I launched the Internet History podcast, which there's almost 200 episodes now, which was me doing interviews for primary sources. I just had just this week, Ken Norton of GV. Last month we had Matt Cuts. I've had Charlie Ayers on. So there's plenty of Googlers that have been on the show if you want to check that out.

The reason I give you that background is, like I said, I just want to go through and sort of chronologically and tell you some of the things that even though I thought I knew all this stuff because I lived it, that were sort of surprising to me. What has been surprising to me as I do media hits for this book is they almost can't help themselves. The first question, especially on radio, is always, I thought Al Gore invented the Internet. So I have come up, fortunately, it's in the book. I have a pat answer for that. In 1992, or actually 1991, there was a bill passed called the High Performance Computing Act, which was colloquially known as the Gore bill, and it funded a bunch of supercomputer facilities around the country, one of which was the NCSA, which is where a mosaic, the Mosaic web browser, came out of,

which was where Mark Andresen was going to school, which is where all the mosaic kids that would later found Netscape, all went to school. And so, as I say in the book, essentially when they were being paid $6 an hour to code in the basement of the NCSA at the University of Illinois, they were being paid by Al Gore's Gore bill. So it's not exactly apples to apples,

but in a way you could say that played a major role in the internet going mainstream, because as I make the argument in the book, Netscape was the first true.com or web company, as we would think of it today. So let's begin there, actually, because there's a million reasons why I think Netscape was the big bang for the modern era,

as I call it in the book. Not the least of which is the culture. When I started researching, the reason that I threw it up as a podcast is I worked my way through the entire, entire Mosaic Engineering team that went out to California to found Netscape. Sands Mark Andreessen, who even though we talk on Twitter, refuses to come on the show. But the thing that I found fascinating was this idea of startup culture

and how a lot of it was born by the media attention that Netscape got when it IPOed in 1995, which we'll get to in a second. to a person, all of the Mosaic slash Netscape engineers, almost unbidden by me, wanted to make the point that they're like this sort of, you know, work hard, sleep under your desk, party hard sort of startup culture. They're like, we didn't do that. The media did that to us. They really were the original Mosaic 6 that went out to found Netscape with Mark Andreessen and Jim Clark. These were literal corn-fed Midwesterners, fresh out of college, 22, 23, 24. And so as Alex Tatek told me in the book, and I'm quoting him, we were working around

the clock because that's what you used to do before. Four years later, five years later, the entire valley would be living the same lifestyle, but those people actually have lives. We really didn't have any lives outside of the office, so of course we were going to be at the office all the time. I mean, I had no furniture. Why should I ever go home? Lou Montoulli, who some of you might know,

said, the press just take what they think is interesting, juicy, and fascinating out of their limited time, and they publicize that, especially post-netcape in 98-99. Every startup was trying to do the things that they read about in the magazines that they read about us. I would catch four or five hours of sleep at the office, wake up, do another 20,

go home, blah, blah, blah, blah, blah. But I wouldn't recommend doing that for your average startup. Unfortunately, a lot of startup people think that that's the way it should be done because of all the publicity that we had. Another point that I make in the book is that Netscape was the Big Bang because the rock star entrepreneur universe that we live in, if you were around in the 80s and the early 90s, that wasn't a thing. Kids grew up to want to be rock stars and sports heroes, and maybe if you were super ambitious,

you went to Wall Street. But the idea that you would start a company that was not in the zeitgeist. And the fact that Netscape had this famous IPO in 1995 that made, I actually remember clearly it made the nightly news and things like that. The idea that there was a new company, that there was a company that had been around for 18 months, that had no profits that was worth $2 billion on the day of its IPO, I've interviewed Wall Street people. their minds at the time too. So I devote the entire first chapter to telling the Netscape story because of some of the things, the groundwork that it laid for this era that we've been living in ever since, essentially the last 25 years. Back to their sort of work-hard, play-hard culture. The other thing that Netscape did, and this is obvious when you state it, but think

of how conceptually what a leap this was, these were the first guys to have a product where you would distribute it on the internet. Like literally, before them, you would still put software in boxes, shrink-wrap it and put it on a shelf, right? So this concept of doing versions that you get feedback from your users and you put out a dot whatever release, two weeks later, another release. So one of the reasons, obviously, that we now live in this 24-7 product cycle is because they were the first people to jump on that sort of a distribution mechanism as a way to do software products. But also because, like everyone else at the time, this is 1995, they were out racing Bill Gates. And so another thing that I was surprised when I did the research, because, again,

most of my career was spent in the aughts and God bless them, no offense, Microsoft, but they've been in a sort of lost decade in the 2000s. It was a surprising reminder to me how much everything in the 90s, what everyone was doing was in relation to what Microsoft might do or try to stand it. Googlers have told me on the Internet History podcast, you know, when Edwards finally took off and were making buttloads of money, It was a thing. Don't tell anybody.

Don't let the word get out until we're far enough along that Gates can't catch us, essentially. So that was surprising to me how much in the first few chapters Microsoft constantly comes up. I go into in-depth how Bill Gates got Internet religion. I talked to a bunch of Microsoft people. It was really very much a generational thing. It was the guys at Microsoft in their late 20s and early 30s who had used the internet in college. Not that Bill Gates hadn't.

In fact, he and Paul Allen had, you know, when they were writing their first software products, were using because they were opposite sides of the country, so they were FTPing back together. It was more generational in the sense that a guy like Gates, born in 55, baby boomer, as much as he was, he loved computers, he really didn't believe that,

computers were mainstream enough. If you guys remember things like web TV and stuff like that that they did, and if you remember a term like the information superhighway, which people think, well, that was the Internet. No, they had a vision that they were going to deliver. Once broadband became ubiquitous, which Gates figured would happen after the year 2000, which he was 100% right,

then they would deliver this curated Microsoft safe for the masses, interconnected computing product via the TV. Because the TV was the one thing. until 1998 or 99, don't quote me on that, that computers penetrated 50% of U.S. households. So again, if you're Bill Gates in 94-95, you're not worried about the internet because it's not going to ever be mainstream. It's not good enough because it's not broadband, you can't do movies and things like that. The thing that he missed was that it was good enough and people were excited about it and

we're willing to put up with it takes two minutes to download a JPEG or something like that. So I want to give credit to the people like Brad Silverberg and Slivka, I can't remember his first name, the younger guys that had to do sort of the generational push to the older people at Microsoft to say like, this is really happening and we got to jump on board. Another reason that I did this book is, you know, I still dabble in a little bit of angel investing and things like that. And when I meet with, you know, young people, young founders, 26, 27, and they say, oh, you remember the dot com. You were there for the dot com era. What was that like?

Or when I've done episodes on AOL when I get emails and tweets saying, thank you, I never really understood what AOL's business model even was, which I was. which I get if the internet's just always been in the ether. AOL was always pejoratively called the training wheels for the internet. But I argue in the book, that was incredibly valuable. Somebody needed to be the training wheels. This book is very much about how the internet went mainstream to people like our parents. And many, many Americans, at some point, something like 70% of, of all internet traffic in the US was going through AOL's pipes,

so many people got their first taste of not only the web and the internet, but computing and like living online, learning what it means to have an online persona and a screen name. And you can, that can mean going in the chat rooms and talking sexy chat and stuff like that, but also, you know, finding those little areas of the internet where your interests are, where your people are, your thing. So, the, I spent a long time talking about AOL, giving them credit. I interviewed Jan Brandt, who was the marketing guru behind.

If you were alive then, there was a time when you couldn't open a magazine. You couldn't, they put them on sports stadiums, they put them in Omaha stakes. You couldn't go anywhere without getting a free AOL disc, originally discs and eventually CD-ROMs. Her brilliant insight was, again, this is 95, 96, computers are only in 30, 40% of households. She had the choice of, this is a product that no one understands any either. I have to spend all of my marketing time educating people on what it means to go online and what you can do and why you would even want to do it. She told me that they would have, what do you call it, they're behind the mirror and they're having consumers. Right, focus groups and things like that.

And people would sit in front of a computer, take the mouse and put it on the floor because they think it's like a sewing machine pedal and things like that. So her insight is, forget that. I just need them to try it. That's it. So if I can just get these disks

so that they're cluttering, they're collecting in corners like tumbleweeds, if I can just get somebody to put this in their computer one time, I don't have to educate them. They'll figure out what is useful to them about this product. So it's gone down in history as one of the greatest marketing campaigns of all time. When she started that campaign, I think AOL had less than 400,000 subscribers.

Obviously at its height it had 30 million, so all credit to Jan Brandt. I also give a lot of credit to Yahoo for being what I call the first great web company, the first great company that couldn't have existed without the internet. Because you can argue that Netscape with a web browser, That's still a software product. But Yahoo, even though it wasn't technically a search engine, it was a human curated directory. But they essentially did search for most people

at the very beginning. I look at Amazon. The thing that I found fascinating about Amazon is that so many of the stories that I'm telling in this book are about the leaders that go. go first, get all the arrows in their back, and then someone comes behind them. You know, it's first there was six degrees, then there was Friendsster, then there was MySpace, and then Facebook, blah, blah, blah.

It's the only major example that I can think of of any category in the modern tech era where the major leader that came out first is still the undisputed 800-pound gorilla in its space. And obviously they were not, Amazon was not the first people to do e-com. online, they weren't even the first people to sell books online. But the fact that they were the first people to popularize e-commerce and that they're still the ones that are killing it today is that's the thing that's the most amazing, if you look at it from a certain perspective. And again, I mentioned, you know, I went to the library to look up old issues of Forbes and Fortune, but also things like industry standard and magazines that haven't existed for.

for 20 years. It was amazing to me how late you would still get articles about, are we ever going to be able to convince consumers to buy online? Are we ever going to be able to convince consumers to put their credit cards online? I'm talking about as late as Christmas of 98. Christmas of 99 was really kind of thought of as like, well, this is finally when Americans have accepted e-commerce in a major way,

which we'll get to the dot-com companies in a second. But before I get there, I want to spare a word for eBay. Because eBay was another company. We don't think of eBay. Again, God bless them as like a major player in tech today. But think of three major things that eBay did where I can't imagine the world if they hadn't pioneered these things. Number one, they taught Americans to trust strangers. And like I just said, people were like, are we ever going to get convinced people to

put their credit cards online, or would be ever going to convince them that they can buy and sell from a company. Well, eBay convinced people you could buy and sell from somebody in South Dakota that you would never meet, never even know their name, and you could expect a reasonable chance that you could do a successful transaction with them. And because eBay had that, you know, anybody has a hobby. Everyone has some sort of hobby that eBay could serve, right? So eBay, again, like AOL was a lot of normal people's on-tebrose.

onto not just surfing websites, but being active on the web. So that's number one. Number two, how were they able to do this, that five-star rating system? eBay invented the idea of online reputation systems that things like Uber, Airbnb, Yelp, all these sorts of things. We live in the tyranny of the five-star rating now, right? And there are good and very bad things about that. And it was never perfect even when they created it,

but the fact that they created the system that allowed people to have a reasonable level of trust of strangers, that your reputation followed you around. That was one of the reasons why eBay won is because once you invested, it's the network effect. Once you invest, if you're a buyer or a seller, and have a good reputation on eBay, Amazon, Yahoo, tons of people came at them. in the auction market, but so many people had invested so much in building this reputation on eBay that they weren't going to go anywhere else. And then the third thing would be, I'm blanking on it right, reputation.

Oh, you know, and this is dead obvious when I say it, but again, put yourself back in 1998. They didn't own anything. They didn't even take possession of the goods. So now, when we think of any platform business, especially social media, all of the value is in what the users are doing. There's a story that's in the book that newspaper chains came to kick the tires at eBay at some point, which for whatever anyone says, the newspaper industry was not stupid. They could see that their cash cow of classified ads was at risk via the internet.

So all the chains came and wanted to either partner with eBay or or buy them out. And one of the newspaper executives takes Pierre and Jeff Scholar side, and he says, they really want to do this deal, but they know that there's no way they can sell it to the C-suite because you don't have any factories. You don't have any trucks. So the C-suite is going to be like, what are we buying,

despite the fact that our sales are going up 1,000% a month or whatever it was at the time. So that's the third one. this idea that you can build a business that has no tangible assets other than your users and whatever activity they do on your platform. So, eBay deserves more credit for being a pioneer that's created our modern world. I fought hard to keep a lot of stuff about the dot-com bubble in the book because not only is it just friggin' fascinating,

But I think, you know, coming from the tech industry, it's sort of like I say in the book, like my grandparents live through the Great Depression, so anytime anything got too good, they were always convinced that a depression was around the corner. And I feel like in tech, any time all of a sudden there's a big IPO or, you know, VC investing goes up by whatever, whatever, everyone's like, there's another bubble, there's another bubble. I did a ton of research, and I hope it's a lot of research. and I hope if you read the book, the dot-com bubble, for a lot of structural reasons,

is something that we're not likely to ever see again. It came at the end of the longest bull market in history. The baby boomers were in their peak retirement savings years. There was a ton of money that had to go somewhere. The journalist Maggie Mayhar says in the book, if the dot-com companies hadn't come along, someone would have had to invent them because Wall Street needed to invest in something.

There will, I mean, there's always going to be bubbles in any new industry or new tech and things like that. But this idea that, you know, in 98, 99, all, you know, CNBC was on every TV and everybody was invested in, you know, among the million fantastic stories, the idea that KTEL, who marketed those top 40 hits or whatever, It was a music label, essentially. In late 98 or early 99, all they did was sent out a press release that said that they were going to create a website. And in 24 hours, the stock went from like $4 to $32. There's so many stories like that in this book. Pixelon was a company that raised $20 million in VC and blew all of it on their launch party in Las Vegas.

They had the Who play. They had the Dixie Chicks play. It turned out that actually the founder was a legit scammer. He was under an alias. The FBI eventually came and arrested him, blah, blah, blah. But as I also point out in the book, it was this weird time where I actually don't have the page, so I'm going to try to do this somewhat from memory.

But in, I think it was January of 98, if you had invested $1,000 in Amazon and $1,000 in Yahoo, by the end of 98, that $2,000 investment would be worth something like $78,000. Now, these are not tiny stocks that no one had ever heard of. These are companies that are on CNBC every day or whatever. So there's this time period where you can just pick any company. And if you get in at the right time, you can 30x, 100x, like, Some of the best, the best investment of the time was eBay.

If you invested in eBay's IPO, I think you did something like 10,000%. And by the way, eBay went down a little bit after the bubble burst, but it actually continued to go up after the bubble. So if you want to go back in a time machine and do your best.com era investment, it's eBay again. The dot-com bubble is funny in the sense that it was obviously. the greater fools thing. People, everyone knew it was a bubble.

You're just trying to write it as far as you can and hopefully get out before the people behind you get out. And towards the end, you know, you just had to have a pulse and a business plan written on a napkin. Again, there's a story in here about one of the VC firms where they shared their numbers and like in 96, they would get 400 business plans a year

by 98, it's. 2000, by 2000, it's something like 15,000 business plans. And there's a quote in there from one of the entrepreneurs that says, yeah, you just showed up and you just said you were an internet company and they would just hand you money. So there was a lot of garbage and that's the reason why the bubble burst. However, and I'm not the first person to point this out, how many of the ideas that were crazy in the dot-com bubble have come true today, one of the most famous, the most famous, the most famous famous ones was web van, which is grocery delivery.

Well, you know, go down the list from Instacart to Amazon to whatever. We all remember Pets.com because of the sock puppet. But they were also famous for, you know, famously dog food is a 40-pound bag. They were doing free shipping. Again, the statistics are there in the book, but they were essentially losing not only money on every order they shipped. They were losing $2 for every dollar they brought in. But again, that's something that has been fixed.

You can go buy dog food online now, and people have figured this stuff out. The logistics have gotten better. Myspace.com was a company that I p-oed. It's not the Myspace you're thinking of. It was literally, you would put a widget on your desktop and you could put files in there. It was cloud storage.

So there were, there's tons of examples of this. that it was just too soon, the infrastructure wasn't there, but they're good ideas. And so that's one of the reasons why I think doing a book like this is valuable. Like everybody in tech wants someone to come up and tell them, well, where are we going next? What's next or what?

How much can you learn by looking back at the things that were either dumb ideas, and are always going to be dumb ideas, and learn that lesson, or that were a dumb idea in a different time, but didn't work for reasons that now would work? And one of the things about the dot-com bubble that we'll talk about Google here in a second, that the people that came after the bubble took advantage of was they laid this entire infrastructure of fiber. There was a bubble that no one remembers concurrent with the dot-com bubble, things like Global Crossing and Enron and all this stuff.

They laid all of this fiber all around the world so that when Google comes along and there's like 90% unused fiber around the world, Google's able to pick it up on the cheap. So the dot-com bubble has to be remembered as A, the lessons of the ideas that were too soon, but maybe can work later, but then also the infrastructure that created the circumstances that allowed the resurrection and Web 2.0 that Google was very much a part of. We debated how much I should talk about Google at Google because I don't know how much you guys know about Google. Actually, the better part of two chapters

about the Google story, you know, cute stuff about Larry and Sergey meeting each other in college, which you probably have heard these stories, and they didn't like each other at first because they're both the smartest guys in the room. And so there was a little bit of friction, but like the frisson of like, well, I'm gonna want up this guy. I'm gonna want up one up.

You probably know some of that stuff. The thing that I, liked to focus on was obviously fixing search, how would the web and the internet function had they not done that? That's Google's miracle number one. Google's business miracle number two is obviously AdWords AdSense creating the greatest advertising engine devised by man. But y'all didn't invent that. A company called go-to.com did. And go to a go to was a bubble era company, came out of an incubator, and it was a straight pay-for-position search engine.

Actually got a lot of success. It went on to power the paid search for Yahoo and AOL and others as Overture. They changed the name to Overture. And again, I actually used GoTo at the time before Edwards came along. But why did I switch to AdWords? Because like Google tends to do, even if they don't

think of the idea first, Googlers tend to think they can always do it better. And they did because instead of a straight pay for position, when AdWords launches, it has the quality scores and things like that. So as I point out in the book, there's almost no example of this that I can think of in even any other industry. It was a win-win-win for everybody because they did the testing and the users actually preferred the ads because because of the quality score they were useful. You know, you do the A-B testing and you put the ads there and there's actually people are happier and do more clicking. Advertisers like me at the time are paying less because if my ad is more relevant, it goes to the top, but I'm still

paying what I'm bidding. And Google's happier because, again, even if someone's willing to a dollar a click and I'm only willing to pay a nickel a click but I over a hundred searches I get clicked on 21 times and that dollar bid only gets clicked on once Google makes more money win win win I like it's a miraculous market that that's the second miracle that I give Google credit for the another company or story that I thought I knew that then actually doing it I realized what the real story was was Napster so if you remember Napster you think music piracy a bunch of college kids that just you know broadband is becoming ubiquitous and so this is

the first time that media has to deal with piracy in a major way I talked to a bunch of the Napster guys and it's so funny that most of the to this day still cling to this and if you read their quotes they were right. They said at the time they say to this day, we knew this was the better distribution method. That again, why do you put something in a box, shrink wrap it and put it on a shelf? And they were talking about things like Spotify, like Netflix for a slightly different model. In 1999, Sean Parker is on MTV talking about what we think it'll be a subscription. you're going to be able to get it on your phone or your computer,

whatever the device of the future is, he has a quote. They were right about that. But what I realized the true story of Napster was, is we live now in a world of unlimited selection and instant gratification. If I tell you about a song, a movie, a book, a TV show, hey, this is cool, you should check it out. You expect that in 10 seconds you can try it out. Unlimited selection, instant gratification.

They were screaming this in 1999, 2000. This is what the consumer wants. And actually, if you give it to them, they'll pay for it. And it's true. Spotify have, I think, it's approaching 90 million paying subscribers now. Netflix is approaching 200 or 250 million paying subscribers worldwide. It's... selection part of that equation.

Instagratification is probably what makes people pay. But I don't think that we appreciate the unlimited selection part of that. I remember the first time I came to New York in 1998, the thing that I wanted to do more than anything was go to Tower Records because I knew that they would have CDs that I couldn't get back in Florida, right? And you know, you can talk about the good and the bad of that, of, you know, the idea of discovery and serendipity is maybe lost when you can get anything you want as soon as you want it. But I think that Napster deserves to be thought of not just as a story of piracy,

but as essentially laying the template for media in the digital age, even though they didn't get there because of Sean Parker's unfortunate emails that got brought up in discovery in the trial. Let's see, for the purposes of time, what else do I want to talk about? The Web 2.0 era to bring Google back into this, because again, I was there, and I was doing companies at the time. It's sort of like you have to be in a zeitgeist to just, like, know. Like in 2004-2005, you could feel that there was stuff happening again. Google's IPO was a big part of that.

I'll never forget people just being like when we all found out that Google was making the amount of money it was making, it was like, holy yes. Because y'all really did make the internet make money at scale for the first time. No one had. This is at a time in 2003 when Amazon's like a $5 stock and people are thinking they might go under.

Basically no one in the Web 2.0 era had proven that they could make money. Yahoo, AOL, they all kind of rode the bubble, but they weren't sustainable businesses. So your guys' IPO in 2004 is a big part of that. But then I remember Flickr for the first time, delicious, and, you know, reading TechCrunch. And you would, when TechCrunch first came out, you would read it every day, not because they were doing these journalistic stories about the tech industry. because Mike was just posting new startups every single day. And he would literally email Mike and be like, hey, Mike, I'm doing this.

And he would write a post about it. It was just this weirdly magical time when you would read a blog post and find out about something like Flickr. And then dig a little deeper and find out about things like taxonomy and tagging. And it was this thousand flowers blooming sort of period where, which I want to point out, and I said this last week on a radio thing. Why did that happen? We kind of have to credit the Microsoft antitrust trial. Why was Google able to flourish?

Why did Amazon not swoop in and buy, or why did Microsoft not swoop in and buy Amazon in 1998 or whatever? Why were all these companies like Google, like Facebook, like, you know, name any, because there was not this rapacious 800-pound gorilla that is willing to come in and cherry pick all of the most promising crop of startups. I'm not here to talk about things like regulating tech and antitrust and things like that, but the aughts are an entire decade where companies can come up and there's not this oligopoly at the top that's going to share crop everybody off

and Borg-like absorb them. And there was this whole flowering of all of the companies that we're now very familiar with today. So something to think about that if you're if you have a period of time where you're allowing companies to innovate and to find their product market fit without being absorbed by the Borg right away, a lot of good things can happen. The Facebook chapter, I essentially wanted to sort of write the anti-movie because everybody knows the movie and while the movie was not inaccurate there's obviously some sarkening going on there and changes made for entertainment value I kind of

focused more on this idea of this modern startup a startup like we think of it today a kid in a dorm room has a great idea again in the wake of the bubble bursting I think it was the dig guys or something there's a quote in there about how, I think dig.com, if you remember that, they launched for $10,000. And within six months, they're getting more traffic than the New York Times. It's because, again, the infrastructure had been laid. We now have things, you know, if you start a startup now, there's all these open source tools, you just pull off the shelf.

Google had the advantage of after the bubble bursts, everybody's out of work. So Google's the only game in town for picking off the best talent. But in the Facebook story, I more wanted to tell because it's fascinating, and there's a lot of Sean Parker quotes that illustrate this, how much it was a lark, and for how long it was a lark. Even after they go out to California, even after they don't go back to Harvard. Zuckerberg wanted to do a thing called Wirehog, which was like a Napster 2.0 sort of thing. And again, this is from Sean Parker speaking, so take this with a grain of salt. But he essentially has to take Zuckerberg aside and say, forget Napster. I know that that was the coolest thing that ever happened when you were 19, but you've got something here.

This is the thing. Facebook is the thing. So I was fascinated by how much, and there's the famous stories about, you know, showing up to VC meetings in pajamas, and I'm the CEO bitch, how much it was kids playing adult for how long it was. Insert your thoughts about what that did to the culture of the company here. But I'm also fascinated by, you know, famously another Harvard dropout was Bill Gates. And Bill Gates is a genius in a lot of ways. But the argument that I make in the book is the interesting entrepreneurs are the entrepreneurs that were not born to be

entrepreneurs, but they stumble on an idea that's genius, and then they make themselves into the person that can bring that idea to life. I think that Bill Gates was a person like that. If you read biographies of Gates, he was an en font terribla of the tech industry, stories of strippers and things like that back in the early 80s and things like that. He evolved into a person that could create the most valuable company in the world. The Facebook story is a lot about Zuckerberg turning down a billion dollars from Yahoo. Viacom wants to come in. They want to turn it into MTV. When MySpace gets bought for $700 million, everyone's like, wow, maybe that's the price we should.

So what I was interested in in the Facebook story was that evolution of Zuckerberg and the evolution of the idea into believing that this is a product what other product is before Facebook was your potential addressable market every human being on the planet maybe Coca-Cola

you know I think that realizing that and then being able to execute on that is the thing that fascinates me about the Facebook and Zuckerberg story to wind up here and again to come back to

the notion of too soon I do tell the story of the proto-social companies. Six degrees was founded in 1997, and it's essentially a social network as we know it today. Want to know one of the reasons why it didn't work? There weren't digital cameras. There's a quote in here about how they're having board meetings, and how can we convince people to get photos and print them out and then fax them to us so that we can have profile pictures.

When you think of an idea, why does an idea not work? Why is it too soon? Because the technology wasn't ubiquitous to have profile pictures. Friendster didn't work because famously they didn't engineer it well enough. I had him on the podcast and he'll straight up admit that, yeah, the ability to engineer something at that scale, again, people like Google and Facebook deserve credit for putting that sort of stuff together. And then why did Facebook beat MySpace? I go into that as well. I go into forever.

I can remember hearing that mobile is going to be the next big thing. You're going to get the Internet on your phone. And I, like everyone else, so it's like, well, why? If I want to get on the Internet, I'll sit down and do it. So Palm and the Newton and Blackberry, I tell those stories. And I'm going to end with this, like I end with the book. what I realized in writing the conclusion of the book, because I knew I wanted to end

with the iPhone and with Steve making that demo on stage, and it's three things. Are you getting it? It's not this, this, this. It's one device. I think that the reason that mobile didn't take off for so many years when you could have had a phone that would get you the internet in 2000, 2002. For all the various reasons, Wi-Fi,

4G, broadband wasn't built out, all these different reasons. The real reason is because there wasn't anything for normal people to do with it. The iPhone comes out in 2007. Six months later, Facebook opens registration to everybody. When the App Store is launched in 2008, one of the first 20 partner apps is Facebook. So, mobile didn't take off because there wasn't anything for normal people to do with it. And then all of a sudden there's this one device that is not only the perfect device for consumption of social stuff,

it's the perfect tool for creating social content. So maybe you had to have Facebook go mainstream for the iPhone and smartphones to go mainstream, and vice versa. Because would my mom care about Facebook if she couldn't pick up her phone and check it 30 times a day? And she couldn't take pictures and share stuff herself. So I think getting to this theme of too soon or having the perfect timing, I think that the reason that the modern world is mobile and social today is because the iPhone and Facebook opening registration happened within 18 months of each other

and the two complimented each other perfectly and that's the modern world we now live it. And I think I'm right on time so if anybody has questions I'd be happy to take questions for a few minutes. Thank you guys. Don't be shy.

Hi, thanks for coming. Do you have any examples of things you discovered researching that the world wasn't ready for yet but that you think the world now is ready for it that we don't have yet? Isn't it funny VR and AR? This is not really going to answer your question. But I remember in the 90s that VR was the next big thing.

And, you know, Jaron and everybody, some of the same people were telling you that are telling you that today. I, maybe I'm thinking of this as my answer because I was just talking about the mobile stuff. Is like, when are we going to get what I just said is, you know, people sometimes, call it a killer app, but for things like VR and AR. We're not just, it's the vis-calc for PCs or whatever, but it's the thing that it's like, oh yeah, that's why I would buy this device. So in a way, I'm answering your question by saying,

isn't that where we are now for VR and AR, except it's just not happening? And I'm not a skeptic or a pessimist on this. I'm actually genuinely, at this point, confused. but something that is the right time for now. All of the dot-com companies, like I said, have basically borne fruit in 2.0. You know what? I don't have a good answer for that one.

Well, that's okay. If that was a great, I'm sure someone would probably have done it already. No, no, no. No, that's not how that works? No. And when you think the famous story about Google is, is, you know, who needed another search engine? There was Alta Vista, there was Yahoo,

there was Excite or whatever. There was, that was the dumbest startup idea in the world, except for one little thing is that it worked. So even if the market is saturated, even if everyone's like, well, we've tried that a thousand times and it doesn't work. But if yours does, then it doesn't matter. Yeah.

Thanks. Yep. You can line up, too, if you want. So one thing about the internet was that until pretty recently, the majority of the world was still not using it. And so you could come up with this crazy new idea, and there was all this room for growth, right? But we're slowly getting to the point where we're like hitting that saturation,

right? The growth of the internet is starting to slow down in terms of penetration worldwide. Do you think that once, once the internet, we get to the point where most people who can afford to have any kind of connection have one, that there's still going to be room to have these crazy new ideas, or will we end up in this sort of mature internet market where it's like everything else again? I would argue you're going to get better companies because what you're describing is the low-hanging fruit has already been eaten.

So all you had to do even five or eight years ago was just come up with a chat app that did something slightly differently. And then in 18 months you have a billion users, right? Okay, maybe that market's saturated now. So how are you going to build the next great chat platform, communications, whatever, you've got to do it better? As opposed to just you're the first one in this virgin market, and just because you planted your flag first, you get to reap all the rewards.

So right, that is over, perhaps. I mean, I would argue that around the edges because, you know, we're still a far away from 100% penetration on a lot of key details. But even if we are, then all that means is you're going to have to differentiate by doing something truly different as opposed to just being the first one to show up. So I would argue that from a consumer side of it, it's going to be better because you're going to get more interesting ideas and more interesting companies. Is it going to be harder from a founder?

Is it going to be a harder slog? Is it going to be harder to differentiate? Yeah. But guess what? Then do the work and you'll reap the rewards. So. Hey, so I'm curious if in your research you found anything about how changing notions of privacy have affected the course of the internet because I was thinking about how you mentioned

I'm getting over this hurdle if I shouldn't put my credit card information on the internet. And I certainly remember, don't put your real name on the internet. Don't meet people who you haven't met in real life on the internet, which have kind of all. which have kind of all washed away. Or even as late as 2006 or whatever articles of like, don't make your Facebook private. Don't put anything up. No one will hire you.

Versus now today, would you hire anyone that didn't have a social media presence? They'd be like, that's a little weird. Go on, sorry. Yeah, well, so that's the other thing. Now it's almost like there's a reversal of that trend where, debatable to what point, but kind of the general internet user is becoming more conscious of privacy again?

Yeah. It's almost like we're through the looking glass, right? Again, when I'm in the library looking at articles from 99, 2000, like double-click would do things that would make the front page of the New York Times that if I can't remember the details right now, but if I described it to you, you'd be like, they did that and it caused a privacy uproar or whatever. I'm actually formulating a theory about this, which is that because the bubble happened and people thought that the Internet was a fad that was over, people stopped paying attention. and so when these companies started to make money again and they were doing things that were data sucking and things that annoy us now today, it's just no one was paying attention.

And then when people start to use their products, especially the social products, it just seemed fun and good and whatever. And so it was just this period of about a decade where no one was paying attention and all the products on first glance just seemed to be, net good. So it's sort of like the Fox got away with raiding the henhouse for a while.

Yes, people are coming around to paying attention to this stuff again. And so from people being super, super almost too excessively worried about privacy, to not paying attention at all, to now waking up to this, you know, there's nothing you can hide and I have no control over any of my data. I think we're through the looking glass on that. And to your previous questions, like, I think that the way to differentiate, especially if we're entering an era where there's going to be greater regulations and things like that, one way to differentiate is really going to be like, you can trust us. You know, the famous don't be evil motto was primarily aimed at Microsoft. Hey, don't go work for Microsoft work for us.

We're not like those idiots. But it was also people generally believe in Google as a force for good and organizing the world's information and things like that. So I think that a startup that could brand itself, not just for branding purposes, but as a legitimate, we care about you first and our products separate, second, and making money third, that I think that you could stand

out in the current environment. And as, because I don't see the backlash ebbing away anytime soon. Like, I think that leaning in that direction is something that could be pretty powerful right now. Interesting. Thanks. Hey, I'm curious, if you have any thoughts on this assistant thing and where you think it's going to go. So I've got to change the way we use the internet. Yeah, that's interesting. As mentioned earlier, I do the Daily TechMean podcast also.

And I almost did a segment last week about someone wrote a piece of, about what are the assistants doing right now that are functionally better than another input mechanism? Aside from, hey, Google, play this song. Now, I know the argument can be made well, hey, Google, buy this for me, or hey, but we're still at this point where functionally, for a lot of things, even if you get the latency and things like that

and the ability to recognize normal speech and things like that. Even if you guys fix all that, which you're working on, there's still not anything yet. Again, it's the whole idea of a killer app, where it's like, well, I will speak this to an assistant because it's functionally better than sitting down at a keyboard or using a mouse or tapping. I haven't seen that yet.

And I have yet to be convinced that there's an entire class of computing that in the long term, Because we've been able to dictate speech to text to our computers. How many of you actually, when you write emails, do it over dictation? You could. You've been able to do that for a decade now,

but you don't. So I don't actually remember what your question is. But I'm still skeptical about, convince me that there is a class of computing that that's actually the better input paradigm for. I'm willing to be convinced. It touches a little bit on the question about internet saturation, and just the fact that there's a lot of big companies now compared to 10 years ago.

A lot of this market seem like they have really strong network effects. So how do you see things potentially playing out there? You know that even five years ago, I think right now today, even after the recent stock market stuff. Eight of the top ten companies in the world by market cap are tech companies. And each and every one of them, you can point to certain network effects in them. Five years ago, even, there was only one. It was either you guys or Microsoft. I can't remember in the top ten. One of the things that concerns me is that it is an oligopoly and a consolidation at the top. It gets back to that Microsoft thing about there was a decade where there was no one to come in and scoop up the

innovators. But I also wonder about that in the sense that because there are so many, there's not a network effect for everything and there are certain companies, the Fangs, among them, that have these network effects in certain markets that are functionally Buffett's moats. And so this is not really answering your question again. But is it going to be chipping away at those moats? Because we know that an innovator can come around and eat someone's lunch from below at any time. But if you have these five or six overlapping strong network effect markets that are essentially

killed, then is innovation going to have to go around that into other markets? But then is the only playbook that we know how to do is to work with network effects and build platforms and choke off everybody else. I actually, here, I've got an answer for you. I don't think that this current state of affairs can last very long. Not only because inevitably there will be innovators coming up from

below, but I think you guys, the big guys, are going to start chipping away at each other in various ways that are going to weaken some players and whatever. And if you do get some sort of like a period of five to ten years of heavy battle, on things

like assistants and smart speakers, which everybody seems to want to play in that field, then just if everybody's shooting guns at each other, you know, reservoir dog style, no one notices the guy that's coming in the room on the other side. So here's a related follow-on question. It seems like we've gone from a world where things were, for a while, very federated, like emails very federated program or protocol, anybody can do that to a whole lot of silos. Like you have more inboxes now than you used to. do you see that sort of thing reversing like if not just like someone comes in and and

takes over one of these things and becomes possibly because you know look strong network effect what is Facebook you could already for 25 years dial up your own web page you could share your photos you could do daily updates and things like that all that any any of these guys have done have just made it easier to make a web page my mom didn't have to know how to code. And I'm talking beyond things like, you know, Weebly and things like that. I'm talking about literally all they did is make it simpler

to communicate digitally online. So just go simpler beyond that and beyond that. I think that if you extrapolate beyond, you can go beyond the silos. Like I can see a world, like, Twitter, should be thought of as a web utility, not as a company, right? Yeah, that's the people that lost in Twitter. Exactly.

So I can see that one route of innovation is to just continue to simplify, and you can simplify your way out of the silos into what it would functionally be sort of an open source sort of environment, where messages can't be owned. Like it is kind of, think of it from that sort of weird, look at it from another angle, Why are messages in silos? There's no functional reason. It's text. It's just text because all your friends are on this network,

so you're on that network or whatever. You know, there used to be, you couldn't, if you were on AIM, you couldn't talk to someone on MSN chat and things like that. I think that, and I hope this is true, I think that the web tends to bend towards open, and we might, 10 years from now, look back at this period as an aberration, simply because information does want to be free,

and there's not really any reason why things like text or pictures have to be siloed other than those network effects. Thanks. I think we should wrap up. All right. Thanks, everybody, for coming. Appreciate it.