The a16z Show - How the Internet Happened

Episode Date: March 10, 2022

In his book (and podcast), Brian McCullough chronicles the history and evolution of the internet -- from college kids in a basement and the dot-com boom, to the applications built on top of it and the entrepreneurs behind them.General partner Chris Dixon chats with McCullough about How the Internet Happened -- and more broadly, about how tech adoption and innovation happens. They discuss lessons learned, how innovation doesn’t happen in a straight line, and what the past can tell us about the next phase of the internet and technology. Stay Updated:Find a16z on YouTube: YouTubeFind a16z on XFind a16z on LinkedInListen to the a16z Show on SpotifyListen to the a16z Show on Apple PodcastsFollow our host: https://twitter.com/eriktorenberg Please note that 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. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

With Web3 gathering more momentum than ever before across the entire tech ecosystem, what can we learn from the recent past of tech adoption? In this episode from December 2018, author and podcaster Brian McCullough talks with A16Z general partner Chris Dixon about the origins of the internet based on Brian's book, How the Internet Happened, from NEPSgate to the iPhone, which covers the beginning of the internet era, now known as Web 1.0, through the dot-com boom and bust, the beginning of Web 2.0, and the advent of mobile with the iPhone. They discuss lessons learned, how innovation doesn't always happen in a straight line, and what the past can tell us about the next phase of the internet technology and the future.

Hi, this is Chris Dixon. This is A66D podcast. And today we have Brian McCullough, the author of the recent awesome book which I just read called How the Internet Happened from Netscape to the iPhone. Thanks for being here, Brian. Thanks for having me, Chris. So I thought it was a really fun book. I guess I had lived through some of it and knew some firsthand and had heard a lot of the stories from some of the principles or sort of secondhand. I'll say first I really liked a book because as far as everything I knew, which I'd say maybe more than half of it or something from first or second hand, it was very accurate. And so I just appreciate that.

I appreciate you saying that. And then number two is really entertaining. It was a great read. I highly recommend reading it. But then the third thing is, you know, I think it's a great resource, especially for younger people who are interested in technology or I guess in some ways everyone might be interested in the internet these days, right? Even if they're not in the technology industry, they probably should be interested in the internet. I just think it's a great resource to have, you know, kind of this,

but may become the canonical kind of history of the internet for that period. The thesis was two-part. I'm thinking of non-tech people. What has been more influential, disruptive, technology has infiltrated every facet of our life. More clear than ever in the last few years. I feel like anybody would want to know who did this. why did they do it how would you like it or not

right right right so I was thinking number one of my parents and here's how you got a supercomputer in your pocket all that stuff but number two as we were talking about off air about 10 years ago you know I'm 40 now so I started to when I meet with young entrepreneurs and things like that they'd start to say things like oh wow you were around

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

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

When you go into the dot-com era stuff in those chapters, you're seeing all the things like grocery delivery, like cloud computing, cloud storage and things like that, that were always good ideas, but seemed like the most boneheaded wrong ideas at the time because it was just too soon. Yeah. So there's so many lessons all throughout the book of not just why did this thing work and that thing didn't, but why did that thing not work then?

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

It was funny because I actually wrote a blog post about this. It's somewhere where it's almost like all of the companies that are sort of the hot companies today in technology were these quote unquote bad ideas. Right. Which I think the lesson is, I think Mark Andreessen said this, like there are no bad ideas or just ideas that are too early. Right. And you saw it all happen in that kind of primordial soup of the 90s. And so that's also there's a built-in fun narrative there, which is you have the web going mainstream. and so you have this sort of like Cambrian explosion of technology and companies,

and then the asteroid hits and the dinosaurs are dead, and then the rebirth. So like seeing that, like, so maybe that is the more important lesson than individual ideas that don't work, but being in an industry that is prone to occasionally on a cycle, everything's going to blow up. And so how do you and your company and your idea survive that sort of a cycle? It's hard to describe to people who didn't live through it, how the Internet looked, 2001 to let's say four like pre-Go IPO I guess and you talk about it in the book before people realized like it was

clear people like it was an important thing people would use it you know although nothing like today you didn't have smartphones and everything it would be more like the thing you go home you check your email like it's this nice way to send pictures to your family so it's clearly like a useful thing to have wanted for but the assumption was it's one of these things like the airline industry or something that'll just never make

money right it was a cool thing cool tool we're using it but man was that a bad idea from a business perspective and that was the sentiment and then Google I remember Google's sort of, you know, their IPO and then Ubuntu or other sort of... Do you remember the first time you heard how much money Google was making? Because I remember so many people's reaction to that because that was the thing is that everyone had been conditioned to think that while the internet was fun, it was probably a niche

and you were never going to be able to build a truly great company on top of it. And then all of a sudden, because I kept it secret for so long, I remember people's reactions just their jaws dropping. And I think as I recall, I joined the industry and there were sort of all these other kind of green shoes. You saw, you know, you were in the industry, you sort of see, wait, that point. person, you know, there's supposed to be a terrible thing and they're making two couple hundred million.

Yeah, so, yeah, they're absolutely like flicker and delicious and there were all these cool products, but also there were Zappos and PayPal and a bunch of other companies were actually still kind of going, and they weren't Google, but they were, you know, they were real businesses. So anyways, let's go through some of the chapters of the book. So I think what particularly interesting thing is in the early stage of the internet, there was this kind of, I think one thing people don't realize today is the kind of bottom-up decentralized architecture of the web. There was an alternative to it known as the information super-hot.

highway being pushed by companies like i believe you know better comcast disney microsoft well they were all planning to get together and make you know there there was a million plans a million meetings and i say in the book you know bill gates took meetings with all in sundry from barry dealer to whoever so the point being though that there were plenty of people who just didn't believe in internet and then among the people that i don't think that's it i don't think that's it i don't think anybody even the people that eventually became internet true believers thought that it was good enough. That's, I think, the lesson...

Okay, okay, sorry. But I guess, let me rephrase it. I think there was some camp of people that just weren't excited by the idea of networking computers. Right, sure. Then of the people that wanted to network computers globally, there were people that thought the best way to do

it would be in this kind of centralized way with, you know, putting a big box by your TV with a big fat pipe and, you know, and sort of a TV kind of top-down experience controlled by Comcast, Disney, Microsoft. And then there was sort of this really kind of unlikely alternative, which was this at the time pretty crappy experience

in Mosaic and you know, homebrew websites and Yahoo and you talk about this, you know, in a book. But like, and I think, I don't know, I think that was sort of the, at least let's say, 93 or 4, probably still the underdog. Yeah, the, you know, that, right, that approach.

And the fact that versus AOL and all these other companies, you know, and the fact that ended up winning, like, what's the lesson there? It's a very interesting story. The lesson, we're almost saying it, it's obvious. The lesson is sometimes, just good enough technology is good enough. So, like, again, Bill Gates and Barry Diller, all of them, they weren't wrong. They believed that broadband was going to become...

So they were trying for perfect too early and just good enough was better? They knew it was going to come 2002. They weren't wrong. That's the date that Barbin started to penetrate and things like that. So they thought they had time was the key essence. And they thought that, okay, we'll all play nicely together. We'll all take our piece of the pie or whatever. So it's classically out of nowhere from the bottom up, like you're saying, it was almost

like the PC too. because it's hobbyists that want to do this thing. So people see the early web and, you know, pictures are enough. Little postage size videos are enough to do cool things at the beginning. Now, then you have the crazy people that come on top of that and say, can I do commerce on top of this? Can I build an actual business on top of this? But what you need first is you need the technology to be good enough to excite a sort of like enough people to accept the limitations of the good enough technology. And then if you reach a critical mass there, then you can at least build businesses off those early adopters. But I would also, maybe I'm promoting my own view of the world here

too much, but I would also argue it's very important that the people that are excited in the beginning are also people who are able to build websites or build code or write client or do whatever. Like the fact that a lot of them were software developers or computer enthusiasts, right? And like the same with the early PC. You didn't just want people to use it. You want people to write spreadsheets and work processors and do all that stuff. And so for that, we have to credit Berners Lee, of course, because not only does the web bring sexiness to the internet, the internet had been around by 25, 30 years at that point, but the pictures and the things and the cat videos, like, that gets normal people involved. But Berners Lee and HTML is so dead simple that you have to

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

in the Mosaic browser because it's easy to use because you can get it on Windows and they say, I want to create a cool thing like what I just saw. And so it's easier for them to go off and create that cool thing. It's right.

You need both sides of it. Yeah, yeah. I see. So you need sort of the one side that kind of inspires people and gets them fired up on the other side that lets them then go... The obvious analogy to think of today

is like VR is still... Yeah. It's not only can you not get mainstream people to adopt it, but it's still relatively difficult. You have to be super sophisticated to create decent VR experiences. Yeah, makes sense. Okay, so there's that. So to me, that beginning part was really interesting, the sort of top-down, bottom-up battle. And in fact, I think you had in the book, I'd seen this before, but Bill Gates's first version of the road ahead, which came out in what, your 95 or something?

94-ish. 94-ish. It barely had the web in it, and then they actually revised a version. suddenly had 150. But it did have information super high. It did talk about networking. And so that's the only thing. I'm not calling Bill Gates stupid at all in the book.

He had the vision. He just bet on the wrong horse because he thought that it was too nerdy for normal people to adopt. Interesting. And then you talk about a bunch of interesting. Obviously, sort of the iconic companies, I guess, Netscape, Yahoo, Google, eBay,

Amazon. eBay is an interesting one because I think of the, you know, well, they're all interesting, but obviously Google and Amazon are wildly powerful companies today. Yahoo, of course, had its sort of fall and was kind of replaced by Google. I think eBay is interesting because they're still an important company, they're big company, but we don't think of them as, they're not sort of GAFA, they're not the four big ones. But from a product point of view, I think you argue they in some ways could be the most influential Internet company

and in some ways the truest Internet company. And I was surprised that I discovered that in writing the chapter. I knew I was going to write about eBay. So there's three things that they do. that I argue are super influential and they deserve more credit for laying the groundwork for this. Number one, they teach normal people to trust faceless strangers from across the country online, right?

When I was doing the library research for this, as late as like the Christmas of 98 and 99, people are wondering if e-commerce is ever going to take off because they can't convince enough people to put their credit cards online. We're going to completely through the looking at last world now in terms of that sort of stuff. But so the fact that eBay trained normal people

that you can trust faceless masses, we should not underestimate the people that were the training wheels for the modern digital era. And so just doing something like that is key. The second thing that is key is that, like I said, these are masses that are self-organizing. And so, like, we live in the tyranny of the five-star rating system. How would Uber, Airbnb, go down the list, they created or they proved that a non-hierarchical sort of self-organized reputation system could function online, maybe not perfectly, but well. enough to achieve scale to be good enough most of the

time. Did eBay invent that or popular there must have been a concept in like back from like the Usenet or something I'm sure of course they did not invent it but the story is is that they certainly popular I said they certainly made a mainstream. Pierre Mediard did not want to have to settle the disputes between users so he just created a system out

of laziness that was like all right you can accrue reputation and if you don't defend that reputation it's going to harm you and so that was actually one of the key reasons that they because Amazon came after them, Yahoo! Auctions came. People, once they invested in that reputation system enough, they're not going to

go to the other platform, right? So trust people on the internet, the rating system. And then the third one is just the fact that, and I do argue this, maybe around the edges, there are others, but they were the first company to succeed at our business model is just whatever our users are

doing on our platform. And I tell the story in the book that, like, Jess Scholl is, the newspapers were not dumb, no matter what anyone says, they were kicking the tires, they knew that this a threat to their classified ads business. But one of the guys says to Jeff, my C-suite's not going to sign off on buying you because you don't own anything.

You don't own trucks. You don't own factories. And that's common throughout the digital era. But also, they couldn't wrap their minds around the fact that, like, you're not even taking possession of the goods. All you're doing is letting people interact. Yeah, yeah. Right. And so, again, where would social media be?

Some of the most powerful, valuable companies in the world don't own anything. That's precisely why they're so valuable, because it turns out that's a very profitable thing. You don't have to deal with all the, right, the in-meas. inventory and everything else. It's funny. You still see that on like Twitter. People are like, you know, how could Uber be more valuable than, I don't know what hurts or something? They don't own things. And it's like, well, that's such a good feature, not a bug from a P&L perspective. That's interesting. So, Napster, that was one I learned a little bit more. I mean, I knew this

public story, but I never really knew the story of story. I discovered what that was about while doing it because, and we all think, Napster, it's about piracy. It's about disruption of a media industry that can't get with the times quick enough and was, dug their heels in stubbornly. But no. And I got this by interviewing some of the Napster guys where they're making their case. And then when you do the research,

you see their quotes from 1998-99. They're screaming this from the rooftops. The story of Napster is, today we live in a world for media of unlimited selection and instant gratification. If I tell you about a TV show, a movie book, whatever, we just did that with our phones.

You expect to be able to pull it up in five seconds and at least sample it or probably consume it, right? That's what they had. And had they been able to convince anyone of that in 1999, it would be a completely different media landscape. And the only problem that they had is, you know, don't pick a fight with an industry that has literal mob ties going back to its very founding days. That's the interesting thing is it's sort of a three-act. To me, it's a three-act's play, right? So the first act is Napster does this, and everyone says they're instigating piracy.

And the second act is, okay, we shut them down. We got rid of the pirates. And the third act is, it turns out, in a way, they were right all along. it wasn't about getting things for free. It was about the convenience. And Steve Jobs said the same thing. But, like, in the end, it turns out, like, today that there's like a very little, you know, I mean, there's music piracy and there's movie piracy and there's video game piracy.

But for the most part... If you make it simple enough and have a reasonable price... That's right. That's right. So it turns out we now know that their value proposition actually was, as they claimed, a great deal of it was about convenience and not about stealing. 100%. Yeah.

And so, you know, the direct analogy is Spotify, right? You could have had a Spotify in 1999 or 2000 at the very least. This is, again, classic disruption stuff. You can't convince an industry at the height. 1999, I think, is the height, and they're doing $20 billion because of the CD format. And all that classic stuff. But at the same time, you know, there's other reasons why NAPSR didn't work out. They couldn't attract the best talent.

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

right? And then, you know, if that model had been proven, who's to say that they wouldn't have been the ones to go, because it's the next obvious thing to video streaming and things like that? So, you know, Netflix had the road open to them because there was no. no one else doing it, but like there could have been a player already there that had proven success through this model and would obviously have gone into video. And that then, when YouTube and Netflix came along, the movie and TV folks industries had seen what happened to the music industry and were savvier this time, right? Instead of just

just sort of saying, let's just fight it tooth and nail, maybe we can make it work for us. Number one, they trust Google to have the math to at least take down the piracy enough. Number two, Google had a... already proven AdWords and was making, you know, billions of dollars a year at these little contextual ads. And so Google can come to the table with them from day one once they own YouTube and say, hey, there's money here. Do you want a piece of this? So as opposed to Napser, which didn't have that built out. So they're begging the record companies to come to their platform that they're going to build. They haven't done it yet. But they don't have in place

any monetization. So from day one, once YouTube is under Google's wing, Google has at least something. It wasn't what they wanted. It wasn't going to replace their existing business models, but something was better than nothing. Yeah. So it's like by Google a little bit. So I think to me there's many remarkable things about Google, but perhaps what the most remarkable is the business model, which kind of, in like the most serendipitous like confluence events in history, right? You create the most popular. I mean, you sort of think what one, I mean, they were brilliant, of course, and invented all those amazing stuff.

But they build this incredibly valuable search engine. I mean, incredibly effective and useful. You know, the web, of course, explodes in use. value and broadband and smartphones and all that. But then this company called GoTo, GoTo originally, and an overture for sort of completely a little bit orthogonal reasons, invents the greatest business model of all time, which happens to tuck perfectly into Google's model. I just gave a talk a couple weeks ago at Google. It posted recently. And I said to them, I was like, I don't know how to say this here, but obviously you guys, your first miracle was you solved search. God bless. How can we function

today without that? Your number two miracle is that you created the greatest advertising machine ever devised by humanity. But actually, you didn't create, you kind of stole it. They didn't steal it. Somebody else, somebody else invented it. Because they actually made it functionally better.

You know, that's the Google story. There's no problem that they don't think that they can do better. The quality score stuff. Right, exactly. Yeah. Right. And they had, they had great,

like GoTo2 didn't ever have great organic results. They just had results. It was just a pure option. GoTo was a pure pay-for-play thing. It was like for people today. It's like just the SEM without the SEO. Exactly. It's just the right rail without the left.

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

because if the organic results are good, yeah, maybe these paid results also might have some benefit, you know, for certain use cases. So people actually searched more once they put the ads up. So it's the perfect three-sided market where it's win, win, win. Well, the other fascinating thing right is all of the pressure at the time was around. So everyone thought the only possible business funnel for search was like, sort of the portal model, which was to have, you know, banner ads. And so surrounded by celebrity news and all sorts of stuff.

It's the classic eyeballs attention. Yeah, yeah. And so there was all these famous stories. I think it was, was it excite with George Bell or something where they were, you know, and I'm not taking, I'm not criticizing these executives at all because, like, that was the business model at the time. But the whole thing was I don't want a search engine that's too good that gets them off my site because that destroyed is my business model.

So, like the other brilliant thing that Larry and Sergey did, right, beyond everything else, was stick to their principles with kind of critical. easily, right, with no business model at all in sight. And as I point out in the book, and we're going to go against the entire industry, and we're going to just bet that a business model will come along that's going to work, even though everyone says it's not going to. Their investors have said publicly that we were starting to get a little itchy. Like, are you guys ever going to... Well, they had this whole real... This is what sounds crazy today, but they had a real effort to do... They were going to sell Google Boxes, which were this enterprise search,

because everyone knew consumer had no business model. And there's like, I remember there's a great business we guard over from like 2000. Like, you know, awesome search engine. How will they ever make money? You know, they're one of these like pipe dream Silicon Valley things. And they literally, it was like a little sell a box. It's $100,000. You put it in your data center. It collects your corporate documents.

I think they were still manufacturing those as recently as two years ago, by the way. Is that right? I think they only recently shut that business down. They probably felt bad because someone bought them and you felt to support it. I don't know. Anyways. So that's an amazing story. I don't know.

You tell me, like what other, I mean, there's a whole bunch of great stories in there. Yeah. I mean, I fought hard, as we said, to preserve the stories of the dot-com bubble because I think for our industry, it's key to remember. So, like, you imagine the bad side of the bubble? The bad side. Let's talk about that. Sure.

You were talking about just the froth and the bad companies and the whole kind of hysteria. Yeah. And so part of it is excusable by the fact that, you know, any new technology is a lot of entrepreneurs feeling around in the dark to see what actually works. Yeah. But this was more so than most because no one knows anything. No one knows if you can successfully do commerce on the, on the internet at the beginning. No one knows like...

I think of it is like you're searching on more degrees of freedom than normally. Normally you're looking for like what's a good product. Here you're just trying to figure out what's a good product, what's a good business model, what's a good... Like, just so much was unknown, right? When you invent the internal combustion engine, you have a pretty good idea, you're eventually going to move people and... That's right, that's right, okay. But no one even knows, it's like that analogy of the elephant. Like you're looking at the elephant, somebody sees a tail, somebody sees a toe.

Like, no one really knows what they're looking at. So I don't, a lot of the fun excess and things like that, I don't blame the people involved at all because no one knew. And anybody that tells you from that time, oh, well, we were successful because we, no, come on. It was just random chance in a lot of cases. Proven out by the fact that the vast majority of them were e-commerce plays, right? I think the way you described in your book is, so you sort of have, I don't remember the years exactly, but like 95-ish, you have some like high-quality companies, 96, it's more of that. at some point, maybe 99, you get cynical. At some point, you do get the sort of the hucksters and the cynicism and just like pure, you know, business plans, IPO.

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

But also then, you know, it's not just the VCs because Wall Street had so much and not just Wall Street itself. But like, as I point out in the book, like this is historically, these are the big. Baby boomers reaching their peak earning years, and that money had to go somewhere. So almost independence of the internet, you would have had some. Right. You would have had some. It was a ripe era for some kind of. Maggie Mayhar, the journalist from Barron's in the book, I quote her, she said something like, yeah, someone would have had to invent this.

It was the froth on the cappuccino of the, the longest bull market in history, going back to 82. So, yeah, let's talk about that kind of the frothy sort of craziness there, right? So many times in this book, so many of the ideas that seemed dumb at the time prove out later because they were just too soon. There was a startup, I think they might have been public in the late 90s, called Myspace. But it wasn't the social network MySpace. It was literally you would put a widget on your desk. It was Dropbox. Right.

Store your files in the cloud, right? But, you know, this is in the era of dial-up. Wi-Fi doesn't have. There were so many things. one of the most notorious dot-com era flameouts is webvan, which is grocery delivery, right? The story of the Pets.com and all of there were four to five major pets, e-commerce plays, and they couldn't find ways to economically ship dog food.

Now, again, that's a classic story, but obviously that's a problem that's been solved now. So in a way, this is always true, again, in tech, but any technology. There are ideas that will always be bad ideas, and then there are ideas that are only bad ideas because of certain, the technology is not there yet, the market's not there yet, the public's not there yet.

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

Frankly, things like the on-demand, delivery stuff because there was Cosmo here in New York City. Oh, so you're saying the, okay, I think there's very same people. You're saying just trying the same ideas. Well, I mean, I'd have to think about a bit, but there are, Mark being a perfect example, you know, but the idea that you wouldn't hunker down and wait on your idea to, no one knew at the time you needed smartphones to get the on-demand delivery piece of the puzzle to work. But it's not like people hunkered down and waited.

A lot of the people went in different directions, the people that were successful, like a lot of the people that founded PayPal, you know, came from other dot-com stuff that they either flipped and sold or IPOed or whatever. But then they didn't keep going with those original either e-commerce players or whatever it was that they did. Like what was Zip2? It was like a directory or something like that. They went in a different direction. So like I wanted to track like that sort of development on the specific personal story level too. Where do you think, so maybe just switching gears here a little bit, but like do you, where do you think we are when you write that, you must have thought a lot about this, I assume, when you wrote about that era, and then you can imagine

a follow-up book from 2007 to the day, which I kind of call a smartphone era, I assume. Where do you think we are now? Like, do you think this is the internet, and now, I mean, obviously it'll get better and improve, but like that was sort of it in the same way that, like, well, you wrote a book about the automobile industry, right? You write about, you sort of, the equivalent of your book would be covering, I don't know, what, 1901 to 1915 or something, right? And then after that, okay, you get more makes and models and they get faster and this and that, but fundamentally, you know, or I don't know, maybe not. Maybe in the automobile, and she could argue that stage two was about building suburbs and

trucking companies and, you know, so that would be sort of the history. Like, where are we? I always think about this. I don't know the answer. If I'm being honest. Where are we in a hundred-year story. If I'm being honest, where we are right now today, my original answer was going to be almost what you're saying is that we're sort of in a lull, okay?

So I said, like, you know, the original dot-com era is this Cambrian explosion that tended to have sort of a flavor towards commerce. and then in the Web 2.0 era, you have this more, here comes everybody sort of thing, where the web and technology itself becomes more bidirectional, where people aren't just passively consumers. This is Web 2.0. I think that's Clay Shirky's phrase,

which is sort of this idea of Wikipedia and Facebook, whatever, of just sort of this bidirectional. By just turning the knob a little bit, that shades into social. Yeah, yeah. And then when mobile is essentially a rise at the same time that social goes mainstream, and it is seredipitously the perfect consumption and crucially creation device for social, right? So would social have got as far as it had had the iPhone not arrived at the exact same moment?

It's within the same 18-month period that Facebook opens open registration and the iPhone is released and things like that. But I think that that's a crucial thing to remember is that it's not just the perfect consumption device. It's the key device for actually creating all that social stuff. Back to your original question. I actually think we're in a law right now, if I'm being honest. That remember what it was like, you know, as late as even 2012, where it was like every couple of days you'd be like, what's this new thing now? Do I have to be on this? Do I have to try this? Do I need this gadget or whatever?

And, you know, aside from all of the other, you know, things about tech right now and people maybe feeling bad about the tech industry generally, I also think that what's not helped is that there hasn't been that new wow factor. And I don't know what that is. Are we in a lull or is the internet like TV and now we have CBS, NBC and ABC? Is that a symptom of matured? And then it's just, yeah. Or is it, I guess, so I agree we're in a lull now. But I, and I personally, I'll just say, my own bias would be it's a lull and it will un-lull or whatever.

But another argument, you know, I think if you've read a Tim Wooves book, I think it's called Master Switch. Master Switch, yeah. It's really good book. But he basically argues this is just sort of all. forms of media, you get mature, you have four big incumbents, and then you have the government either breaks them up or doesn't. Like, is that where we are? I think so for at least the existing players. But I think the other thing where we are right now is... Or is software technology

have a different dynamic. I guess that's what I'm, you know, I'm getting sort of, I'm sort of hinting at my view, which is I think software is a little different than hardware in that way. Because this is more what I, on my daily podcast that I've been talking about a lot lately, is that another symptom of what we have right now is that there was a lot of low-hanging fruit picked. Like, when mobile takes off, you can be a 16-person team, code up a new, a slightly different chat app, and have a billion users. So we were in this great period of a decade, the better part of a decade, where everybody can chase a billion users, right? Well, most of those categories have been filled. I mean, arguably anyone could come around

tomorrow and do something slightly differently and take over anybody's place in any of these things. But because all anyone was chasing was scale, all that mattered was getting to that scale. And I think that what we're waiting for now is that it is sort of like the market where it was just the Model T and you could only get it in black and there was only. What we need to see this next generation develop is that it's about not just the quantity or not about the scale, it's about the quality. Like the way that you'll differentiate and become the new Instagram and become the new, what I'm using most. chat apps right now as the example, but is to provide a qualitatively better experience. And I actually think that that will create more interesting startups because it's not just you show up here, plant your flag in this market, and reach a billion users.

If you're going to reach a billion users now, you have to offer something qualitatively different than what other people are doing. Yeah, I guess the question I have is, so I think the historical pattern in tech has been sort of this interaction between what's called infrastructure, as people call platforms, but it's like infrastructure and applications, right? So infrastructure in my mind is computers, the internet, right? It's sort of, you know, broadband, smartphones, applications are the word processor, mosaic, eBay, you know, websites, Instagram, things like that, right?

And I think, you know, you mentioned a low-hanging fruit. What happened right there was the iPhone was this major new unlock kind of for a new wave of infrastructure, right? So then, and then people suddenly have this, you're holding this thing in your hand, you've got a camera, you've got this awesome screen, what am I going to do with it? You're sitting there looking for apps. You don't have that many on your screen. You know, now it's saturated, right?

And so then, and I think the history has been that the lull is due to the fact that now, you know, the iPhone is 2007, the App Store 2008. So we're 10 years into this cycle, right? And so it's sort of people have entrepreneurs have picked off all the low-hanging applications. And but then, but then either we're at the end of history or something new comes along. I don't know, you know, we have all these candidates and maybe it's a new kind of device. Maybe it's car, maybe it's VR. Maybe it's blockchain. Maybe it's machine learning stuff.

Maybe it's whatever. I don't know what it is. And that thing then creates a new piece of infrastructure that unlocks 10 years of innovation. Or we're at the end of history. We're not at the end of history because what I think another thing, and I'm not blaming entrepreneurs for this, but people are still doing the same playbook that people have been doing since 2004, since the first time that you could achieve a billion users with a product, right? And so what I'm saying is what maybe we're also waiting on is for that next generation to come up behind and be like, well, we're doing it this way because this is the way it makes sense to us, as opposed to maybe especially these last couple years, people are still trying to hit from the same playbook.

And that's not what happened. Okay, so you're saying less a new piece of infrastructure and more just a new kind of cultural shift. And I'll tell you why. Because think about it. Like when we were talking about when the dot-com bubble bursts and like, well, people think it's a fad and this is over. But the people that still believed it, people were still using it, they were still using it to do cool stuff, right? And so they weren't trying to, it's not like everyone, because they had the example of the whole dot-com thing blowing up. So they weren't going to do that playbook.

That playbook was dead and over. So they were freed to go off and do crazy ideas, right? So it's almost like we're being held back by the fact that we have been so successful in tech. and tech has taken over the world. And so people are trying to follow that model that has been so successful for everybody else. It would almost be useful if we had a couple blowups so that people would be freed up to think differently. And also, crucially, be brave enough. Because, again, when Flickr gets started, like, it's no other, like, this is cool.

Like, I want to find all photos of the Grand Canyon, and users will do this for us with taxonomies and tagging. And then we'll find the business model later, whereas everybody, is still, again, trying to play from that Instagram and get to a billion users and get to scale playbook. I think what probably will happen is you sort of have these archetype companies come up who show a new playbook, right? So you mentioned Flickr and Delicious and those things in the kind of Web 2 era. And we were talking earlier about eBay,

they kind of paved the way for a lot of that stuff. I think there's been a, like right now, at least what I'm seeing in the industry, is there's a lot of stuff happening on in enterprise software. So if you kind of think about, I mean, one way to interpret the current internet, like era of the internet is actually a corporate slash enterprise era, right? And I'll admit my bias is towards consumers. No, and I'll say, so just, and mine is too, but I work at a firm that does both, and I see this stuff happening.

If you just think about your typical experience of a corporate worker in 2018, you go to the office and maybe you're using Windows 95 and, you know, some archaic, I don't know what, ERP software and a bunch of other stuff. And then you go home and you're using this like, you know, retina iPad and Gmail and Facebook. It's a very, you know, it's like a little like a time travel experience, right? Like the software, the work feels like 10 years ago. So one interpretation I think is what happening right now is we're just upgrading all that stuff. And that's quote unquote SaaS and all these other kinds of things going on.

And there's a lot of successful companies there. Can I pose a question that literally I'm posing this to you? Because I wonder if structurally this is another thing. When you had Web 2.0 flower, Microsoft had already had the antitrust thing, so they're not going to buy anybody, right? The dot-com bubble had happened, so it had cleared the slate. So there was this decade-long period for the Facebooks and everybody to surface, and no one's going to take them out. So I'm almost asking you, like... I mean, there was Yahoo who was trying a little bit, yeah. A little bit, but not in the way that Microsoft could have... Microsoft could still have bought Amazon when it was a $5 stock. So maybe are we structurally in a situation where the danger is that because the big players at the top are so big, and all they do is every time there's a new crop coming through, they just pick them up, incorporate them, and turn them into a feature of their existing products. Instagram, Story, Snapchat would be the most.

Exactly. So they didn't even have to buy them in that case, right? They just, that's the counterargument is the distribution on the consumer side. So if we're in a law. is so strong that even if you have that great idea. Now, there are also, but there are limits to this, right? Like, there's only so many times Facebook can add, keep adding features to Instagram without, you know, without like the thing becoming, you know, but what I'm saying is is that like, so then

if Flickr comes around today, that would just be, you know, it's the most obvious example, tagging photos. But that would just be something that would be immediately scooped up and incorporated into someone's existing product. So like, are we in a law because we almost got lucky 15 years ago that we had this period where everyone could rise up and no one kneecaps them. I think it's definitely had it. I mean, I just think it had it. Like look at Snapchat's a great example, right? That was, I mean, you know, they really invented sort of a new media type, right?

I mean, that type of, you know, whatever, the vertical, the vertical short video with stuff. It's a brand new idea. And just the way that the ephemeral messaging and all, you know, it's probably on par with things like Flickr and sort of their new novelty. And then, you know, and they're still very successful company and they're publicly traded and, you know, but I think their growth, most people would agree, was severely limited by the fact that all of the ideas propagated so quickly. And particularly companies like Facebook have gotten very good at execution and leveraging their massive distribution, right? And like Amazon, too. Like you have some great new, you know, Etsy comes along and then Amazon launches, I don't know how well it's done,

but Amazon homemade or whatever, you know, Instagram comes along and they launch it, you know, and they just take advantage of their scale and Amazon Prime and just all these other things. And I'm also almost saying it at the level of like if you, if you're a company that can has the luxury of staying independent, then you have to find, if you have one good feature idea or one good product idea, but it's not actually a good business, you have to bust your butt to make that happen. Versus if you're in an environment where you have one good feature and someone's going to acquire you just to add that feature to their set, then you don't have to do the work of actually

evolving that feature before it can become a good business. My partner, Alex Rampel, I'm going to butcher the phrase, but it's something like startups, to find distribution for their innovation faster than the incumbents attach innovation to their distribution or something like that. So it's sort of a race. And he always uses like TiVo as an example, like great idea. Yeah. But you're competing against Comcast.

Right. And like, you know, of course it'll take Comcast five years to add this feature because they're not very good at adding new features, but they're Comcast. And they've got whatever X, tens of millions of households and eventually they add the TiVo feature. And you know what I mean? Or can TiVo leverage that? Or like Netflix is probably the one of the most interesting ones today, right? because it's, you know, a lot of people would have bet against that.

People did bet against it. The idea that they would be able to add on, you know, get to 200 million people before the people with 200 million people would figure out that, like, people want always on streaming and everything else, right? I sort of think of it as like the enterprise consumer thing. That said, there's always new interesting stuff popping up. And I think there's always just kind of search on the periphery. I personally, where I enjoy spending my time is on the periphery, on the, you know, virtual reality and crypto. and all these other kinds of things.

Like, there's always these periphery things, and those, I think sometimes, you know, especially if you get a lot of developers fired up, can surprise you in the rate at which they improve. And I think at some point, I don't know when it'll be, but I think at some point there will be kind of a new set of infrastructure that unlocks new capabilities, and then we go back to that kind of low-hanging fruit mode you described.

One of the key things to look for and go back to the PC era, the Homebrew Computer Club, go back to when the Internet gets started and people are just doing it because they want to make cool websites. go back to win the dot com. Always look for the people that are doing this even though they don't think there's a reasonable expectation they'll get paid for it.

But they're so passionate about it. The PC industry was literally created by hobbyists. And so you should be looking in those spaces today even as weird as those spaces might look right now. And even think of things like e-sports and things like that that obviously are becoming very successful spaces right now. But that's where you need to look is where on the developer's side, but even literally on the hobbyist side, where are the people doing these things so passionately

that it doesn't even occur to them? It could be a business or an industry. Like, that's where the next industry is. Yeah, I like to think of it as, as one, I was, I had one time I was thinking about this, like, why is it that so many interesting tech things come from hobbies? And one model, this is one model I'd propose, which is think about the things in life that operate on a two to three year time horizon versus the things that operate on a 10-year. So most businesses, you go to your work, nine to five and almost every normal business maybe a few outliers here and there they operate on sort of they manage to a you know quarterly or yearly cycle right and maybe they'll invest in sort of two to three year thing or something who in the world invests at a 10 year cycle right i would say it's

maybe academics maybe like things like DARPA yeah government yeah government and then it's and then hobbyists frankly right because the hobbyists don't care if they're doing it for love they're doing it you know because it's just cool right you see like people in and whatever the homebrew computer club, they weren't thinking of what's the ROI on this for the next two years. They just wanted to program a machine of their own. Yeah, that's it. Yeah. But in some ways, I think there's, so I would argue there's a deeper truth to the hobbyist thing. It's not just, I mean, it's what you said. There's the passion. There's the smart people. But it's also there, there are people that are investing on a longer time horizon. And that's a very, that's a very

important, it's sort of a rare thing. I think in generally, in the way capital, sort of most corporations are designed today. They just simply aren't designed to operate at that time scale, right that gets back to my theory of why we're in a lull is that again people are are doing the same playbook and like you need to you need that generation to come it could just be a generation it could be a generation like we need that turnover of people who see things in a different way exactly exactly just maybe maybe they have to sometimes sort of forget at least recent history and sort of you know not or not be acculturated into a certain way of thinking of what and again that almost makes me think that it was so it's so beneficial to have

a cleansing, a calling of the herd sometimes to blow up the old models and blow up literally the old incumbents because then that's the only way that people, like, what we're talking about is people that are crazy enough to be like, well, we're going to do it this way. And then, well, but that turns out to be the way that works in this new era. And so it's harder now because it has been so successful that you have a framework where, like it almost looks dumb to do things any other way right now and there's no incentive to do it yeah so like last question i guess what were um were there a couple things that you you obviously know a lot about the history of technology or new i assume already you know before the writing the book

what were some of the most surprising things you learned writing the book or most interesting things how much it always is um people feeling around in the dark faking it until they make it you know and again the So you didn't So that was I mean If you're an entrepreneur

You know that that's the truth always And so that even though the book Becomes the story of these were the guys That were successful Like I was always looking for the thing Like you know I see like what's the secret What did they do that was

My theory is that Because we know Bezos is so analytical Right Yeah So He just had it all mapped out And we know all the No no no

We know the reason that He started with books He did all the He did all the Okay this is our But he was proving it to himself. He did not necessarily believe himself that commerce was better in a virtual environment. But once he proved it, so like running, starting with books and running Amazon was almost

like this test that he was running to himself. And then because we see as soon as books proves it, then that's when pedal to the metal get big fast. So even in the case of arguably the most successful entrepreneur of this generation, I think he did not, you know, quit Wall Street, get in the car, no matter what he says, there's the hagiography on that or whatever. And he knew from day one, I'm going to have it an everything store. I think he thought there could be an everything store, but he was running the test. And then once he proved it to himself, then he went whole hog. And then, you know, other things like, again, with like social media and things like this, Like, who, how long did all of us think, okay, this is a great thing, but is there a great business here behind this? Do you know what I mean? So like, it's almost the feeling around in the dark, even when you got a provably great idea, like fitting that to a provably great business model, you know? So it's, I think it didn't, maybe it didn't surprise me that, but I want people to see that in the book. That it's, it's not just a story of like, these are the geniuses that won. Like, why are.

did they win and guess what in almost every single case you know a whole Facebook chapter is about Zuckerberg almost it's requiring people to tell him no you've got the great idea here run with this a wire hog even even like when Facebook was

sort of taking off right he had wirehog which was totally separate kind of like they're already out in California and and Sean Parker at least this is Parker's telling so you know granted that but he's got to convince Mark you have this great idea here believe in this, you know. So being an entrepreneur myself, I wanted to not bust the myths on that,

but show that, like, we'll always come behind 20 years later and say that we were geniuses and we saw it all along, but that's not the reality on the ground. So. All right, awesome. Well, thank you for being here and everyone listening. You should read the book. It's a great book. Thanks. Thank you so much.