The a16z Show - Why Technology Still Matters with Marc Andreessen

Episode Date: November 9, 2022

With much coverage of technology lined with pessimism, the a16z Podcast returns to highlight the bright side of technology, alongside the founders building it. But before featuring the solutions in progress, we wanted to explore why building the future is still so important.And who better to traverse this ground than a16z’s own cofounder Marc Andreessen, who has built and invested in the future time and time again, especially when it wasn't the obvious thing to do.Together with Marc, this episode explores technology through the lens of history – including the three stages of human psychology as we encounter new technologies, how that process often manifests in regulation, when to change your mind, the Cambrian explosion of opportunity coming from distributed work, the importance of founder-led companies, and perhaps most importantly, we examine why there's still much reason for optimism.Timestamps: 00:00 - Welcome back!02:19 - The importance of tech today05:25 - Historical negativity toward technology9:40 - The invention of the bicycle13:16 - Innovation vs status in society20:45 - Automobile moral panic and red flag laws24:52 - Balaji’s arc on social networking27:44 - Surfacing signal from noise34:06 - The role of timing in innovation37:39 - Today’s major unlocks44:59 - Remote work and society reshuffling49:49 - Changing your mind54:06 - Retaining a lens of optimism1:04:25 - What Marc’s excited about1:08:41 - Bourgeois vs managerial capitalism1:17:32 - Reform vs starting anew Resources:Marc on Twitter: https://twitter.com/pmarcaPessimist’s Archive: https://pessimistsarchive.org/ Stay Updated: Find us on Twitter: https://twitter.com/a16zFind us on LinkedIn: https://www.linkedin.com/company/a16zSubscribe on your favorite podcast app: https://a16z.com/podcastsFollow our host: https://twitter.com/stephsmithioPlease 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. For more details please see a16z.com/disclosures. 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.

If a lot of smart people are working on something, it's like virtually guaranteed that it's going to happen. It's just a question of when. Hello, everyone. The A16C podcast is back. And this is your new host, Seth Smith. I'm so excited to explore the world of technology with you through the lens of the builders shaping it. And if you've been listening to the pod for a while, I hope you'll stick with me as I take the reins from Sonal, who, by the way, is doing really wonderful work at our sister podcast, Web 3 with A16C.

Okay, on to the content. Today we have a very special kickoff episode to start our launch series where we wanted to explore the age-old question. Why is building the next generation of technologies still so important? And perhaps even more important, who is going to build this next generation of technology and what needs to be done to enable those founders and builders? And I'm a little biased, but who better to traverse this ground than A16C's co-founder and general partner, Mark Andreson, someone who is not only built but also invested in the future time and time again, especially when it was not the obvious thing. to do. So today, together with Mark, we explore technology through the lens of history, including the three stages of human psychology as we encounter these new technologies. We also talk about how that process often ends in regulation, and we include a couple

examples of that, which, by the way, if you've never heard of red flag laws, you'll want to listen in. We also talk about when to change your mind, the Cambrian explosion of opportunity coming from distributed work, the importance of founder-led companies, and so much more. And of course, we'll end the episode by examining why there's still so much reason for for optimism. And hopefully this episode will also get you excited about what's to come with the A16C podcast, as we do have a lot more coming. That includes coverage of major trends like AI, space, carbon removal, and you'll soon hear from legends like Neil Stevenson, Bolligiegse from your Boston, and even Steve Wozniak, who shared with us his latest venture, privateer. By the way, that

episode is already live in the feed if you want to give it a listen. All right, let's dive in. The content here is for informational purposes only, should not be taken as legal business tax or investment advice or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, we see A16Z.com slash disclosures. This is the first episode of our launch series. And in the launch series, we're going to cover several technologies and we're going to cover them with their founders and dive really deeply into how these technologies may shape our collective future. But before we do that, we're going to address an important question. And it may sound simple, but we need to ask,

why these technologies even matter in the first place. Why is it so essential today that we continue to build? And today we have Mark and Dresen talking to us about this very important topic and who better than someone who has built the future and invested in the future many times over, especially when it wasn't the easy thing to do. So Mark, why don't we start there? And why don't we start by attacking this question with the lens of history? So how maybe do people view the importance of technology today? And how is that changed maybe relative to how they live? viewed it in the past. Yeah, so thanks. That's a great way to start. And, you know, so many of the discussions about today's technologies take place in this, you know, kind of a historical frame where

it's as if there had never been any new technologies that past. Or that there were new technologies in the past, but those were all the good ones. And today we just have the bad ones or something like that. And so the key question to kind of start out asking on all these topics is basically like, why is there something and not just nothing? By which I mean basically like, what was life like before technology, right? Like, what was life like in, like, it's natural state before we had all these wonderful technologies, before we had steam power,

before we had, you know, tractors, before we had telephones and so forth. And, you know, there's, you know, a lot of historians have talked about this. But, you know, the answer is life was what was known at the time. You know, Thomas Hobbes famously said it was nasty, brutish and short. Right. And so you'll read these fantasies from time to time

about how people kind of been, you know, older periods, more historical periods, like somehow they were living in the state of grace of nature and kind of everything was wonderful. And they were just kind of hanging out and having a good time. And basically, like, those are all just fantasies. In reality, basically, everybody was miserable all the time. Everybody was poor. Everybody was subsistence farming just to make enough, you know, be able to harvest enough food to be able to eat that

day or to be able to hunt enough meat to be able to eat that day. And for the most part, people died young. They died sick. They never got anywhere. They never did anything. Basically, like, all of recorded civilization is basically only over the course of the last 4,000 years for the many millions of years of humanity before that. Like, there's basically me nothing and, you know, basically because like people had no time to do anything other than just try to grow enough food to eat. Okay, so basically it's like what happened to cause life no longer being asked your British and short, you know, what happened to cause basically the reality of human existence to go from what it used to be to what it is today. And, you know, it's not

perfect today, but it's a lot better than it was. And of course, the answer is technology. And in fact, technology is the only answer to that question, right? There's no other answer, right? It's not like people got smarter. It's not like people got, you know, I don't know, you know, DNA is the same. Human beings haven't changed. It's basically only through technology that things have gotten better. And the way to kind of think about that is what is technology. Technology is tools, right? Technology basically has applied human ingenuity in building tools.

And then those tools basically give human beings leverage on the world. That leverage shows up in many forms. It shows up in forms, you know, for sure, in some cases that are bad. It also shows up, of course, in the far many cases that are also are very good. So I agree with you that progress continues. and if you look at all the important markers, we are doing better, and that has been true for a very long time. Why is it then that people seem to have this view of where we are today in history

in terms of things being so bad? Yeah, so, you know, obviously that's a complicated question. The technology part of it, I think, is very clear, though, which is, you know, and again, you kind of think about this historically. So let's start with the story of, like, one of the very original technologies that basically human beings kind of discovered and mastered, which was fire, quite literally fire. Obviously, today you take fire for granted,

you just assume it's something that's always been with us, but fire as a tool, fire as a technology, was something that at some point, you know, kind of really human beings had to figure out how to master and how to take control of. And just to give you a sense of what a big deal it was to actually master the technology of fire when that happened. One of the sort of core fundamental kind of myths of human existence

is the myth of Prometheus, the god Prometheus. And the god Prometheus famously is the, you know, And the way the myth goes, you know, Prometheus delivering fire to humanity, basically delivered fire as a tool. And Prometheus was not beloved as a consequence of delivering fire to people. But Prometheus was condemned. Specifically, he was in the myth. He was chained to a rock and for all eternity. And according to the myth, every day a bird comes along and pecks out his liver very painfully.

And then he, according to the myth, he was generous every night. And then the next day the bird tortures him again. And, you know, this has been happening forever. So, like, the fact that there's that myth with that outcome assigned to the introduction of fire as a technology to human existence. Right. And, of course, one assumes the myth's not literally true, but it's symbolic, right, which is basically a symbolic of the fact that humanity basically experienced the rise of fire of technology and said, like, wow, this was a big deal and maybe not entirely positive. And then, of course, that makes sense because if you think about how fire was used as a technology, obviously fire was used for good, right, which is like fire made it possible to cook, cook meat, right? Fire made it possible to, you know, to basically defend the campsite against, like, wolves in the middle of the night.

It made it possible to keep people war, you could keep your baby from freezing to death. Fire is like miracle technology. Of course, fire also got used in warfare, right? And, you know, even up to the modern day, like, what's the kind of state of Europe weapon of our times? It's the nuclear bomb, of course. What does that bring? It brings fire. And so, you know, look, it is a double-edged sword. Like, would we want to live in the modern world without fire? because it has both the downsides as well as the upsides we would. But like, both of those are present. And basically, my interpretation, if you kind of go through the history of new technologies, basically for every important new technology,

there's always this argument, basically. There's always this argument of like, okay, in theory, there are all these things that we can do with the new technology that are very positive. In fact, probably there are things the new technology will make possible that we can't even think of today. And that's been a very common pattern, by the way,

which is people actually have a very hard time anticipating the upside from new technologies. But the same argument basically always applies with fire, which is basically like, well, what about the potential downsides? And then, you know, it would say human beings are kind of psychologically wired to the downside, like we're wired to basically detect and try to evade threats. And so there's basically always this impulse to say, okay, you know, this is the technology that's going to ruin everything. And if you go through basically the history of every new technology, like that, you know, that argument

applied repeatedly. I give you a couple examples. So one is outdoor lighting. Electric lighting actually was first implemented outdoors because they didn't know how to do it indoors because get burning places down. It took a while to get it to be safe. But the first electric lighting was rolled out in big cities in Paris and London. I forget what it was, like something like 200 years ago now. And, you know, big deal. Like outdoor lighting all of a sudden the city is walkable and livable and safer right after dark.

This is a pretty big deal. And the contemporary accounts are basically, I mean, one was the sense of wonderment that this was now, you know, basically that life could now be basically lit 24 hours. But then there were also all of these kind of stories of like this is going to like completely destroy civilization. This is, I guess, the natural order of things. You know, this is going to completely, you know, people aren't going to be able to sleep anymore. You know, all kinds of things, all kinds of illicit, you know, social activities are going to happen at night, right? In the past, everybody just had to go to bed at night. Now they're going to be out of the streets at three in the morning doing all kinds of bad things.

By the way, there are, in every major city, there are criminals out of the street at three in the morning doing bad things. Like, it's not like the downside was completely wrong. It's just that obviously that the tradeoff was worth it. My favorite story on this is the invention of the bicycle. And this one is really great because. There's this Netflix documentary called The Social Pilemma that's kind of condemned social media as this kind of unique threat to civilization. And one of the things that one of the guys in that movie says is he's like, you know, social media is the first technology like this that's had these negative consequences. He's like nobody, nobody ever complained about the invention of the bicycle.

And it actually turns out that's not true. He just didn't do enough reading. Like it turns out people actually complained a lot about the invention of the bicycle. And this story, I think, is sort of very symbolic. So the bicycle is a big deal. So the bicycle rolled out as a consumer product. about 150 years ago. They kind of got it working in manufacture to the point

where it got cheap enough where kind of normal people could buy it. And so the bicycle starts to roll out kind of across the American countryside. And basically there's this immediate moral panic about the bicycle. And this is chronicled in the media at the time. If you read the Twitter account, Pessimus Spark,

which maybe we can link to, he goes back and reconstruct the moral panic around the bicycle. And basically the argument against the bicycle at the time was the bicycle is the first transportation technology that young unmarried women in towns and villages across the U.S. could actually afford to be able to buy in use, right? Cars didn't exist yet, like, you know, whatever, horses and wagons are too expensive. They couldn't get access to them, whatever.

Walking took too long. All of a sudden, like, young unmarried women have the bicycle, which means young unmarried women can go from, like, one town to the next town, which means all of a sudden young and married women can meet, you know, boys and men, not just in the current town, but in the other town. And so obviously, to the kind of established social order of the time, like this would say profound threat, right, to kind of how things worked. The assumption was you're a young and married woman in town. You marry one of the men, right, in that town. All of a sudden, your world opens up.

And so the media at the time created completely, like, got a whole cloth. They created a new medical condition called bicycle face. And the idea of bicycle face was your young woman, you're on the bicycle, you're pedaling to get to the next town. And, you know, pedaling takes exertion. And so you're going to have, like, your face is going to contort, you know, because of the exertion, and you're going to be, like, you know, pedaling along like this.

And bicycle face was the idea that your face is going to freeze into that contorted position. And then, you know, then you would never be able to get married, right? Now, fortunately, it turned out bicycle face was not actually a real thing. It turned out civilization survived the introduction of the bicycle. But basically, like, there's just this, there's this constant blowback, right? And then basically what you find, and we'll probably talk about this in some length, but basically what you find is the blowback is nominally a response to the dangers of the

technology. What the blowback actually is in almost every case, what the blowback actually is, it's basically a fear, a statement, an assertion, a realization that the introduction of the new technology is going to change the society, right? And then in particular, status and power within the society, right? Who's in charge? Who's in power? Who makes decisions? Who has status? Who gets money? All of a sudden, the ordering of society is up for grabs. And that's why you get this just like, you know, spectacular freak out when these things show up. Yeah, I'm glad you brought up Pess in this Archive, because if people are curious, we'll bring it up on the screen. But basically, anything that you can

think of as a prior technology, or maybe even things that you take for granted as not technologies, just things embedded in our lives, had this blowback. You mentioned the bicycle, but it's also the radio, trains, teddy bears, jazz music. I don't know if people would view teddy bears as technology, but the point is anything that becomes embedded in society that, as you're alluding to, can impact society at scale, people start to get afraid of because they start going through all of these scenarios and thinking, oh, who is this going to impact? It's going to impact my job. Is this going to impact the types of people I can interact with. It's going to impact the power I have in society. So, Mark, why don't we dive into that? How do you see technology and its implementation,

or really as it's starting to be implemented within society? How do people react? And what specifically about the power within society is being upended? Yeah, so there's this incredible book. It's very short, very good, actually written 50 years ago by a professor at MIT at the time. And it's named Elting Morrison. And it was great about this book is it was written before the internet and even before personal computers. And so it's got this kind of timeless kind of quality to it. And the title of the book is called Man, Machines in Modern Times. It's this topic. It's basically, okay, what exactly is the process by which you do technology enter society and then how does society react?

Basically, how does the powers that be or the status quo of society react? And Morrison tells this amazing story. He kind of hangs the whole thing on this sort of very amazing story from about 120 years ago now, maybe 130 years ago, around this guy named Sims. And this guy named Sims at the time worked in the area of naval warfare, right? So, you know, big, big, big, you know, battleships, seafaring battleships, you know, firing on each other, firing on land targets and so forth. And, of course, you know, the world 120, 100, 130 years ago, we didn't really have airplanes, you know, sort of military airplanes yet. And so sea warfare, naval warfare was warfare. Like, it was how invasions happened and it was, you know, and how countries got defended.

So this was kind of the core aspect of military technology at the time. And so Sims basically worked on basically guns, like big, big, big, guns on big military ships. And then in particular, how do you aim big guns on big military ships? And the way the story goes is basically before Sims, guns were fixed in position on a ship, right? So you'd have a big ship, you'd have, you know, some, I'll see in some movies, you'd have the guns sticking out the side of the ship. And then basically what would happen is, and the gun is in like a fixed position, right? Because it's, you know, lash of the deck, so it doesn't roll around. And so what happens is, you know, the sea is moving, right? And so the ship is

kind of going back and forth like this in the water, which means the gun is going back and forth like this, which means that basically in naval battles up until Sims, you know, the accuracy rate of guns being fired off these ships was like at best 10%. And, you know, maybe, you know, quite often below that. They would just miss most of the time. And why did they miss most of the time? Because the gunner would be like, you know, the gunnery officer would get a fix on the position that he would go to order to fire. But by that point, right, the ocean had moved, the ship had moved. And then he no longer had a lock and then the thing would fire and the cannibal would miss the other ship. And so, you know, a lot of naval battles up until that point where these ships kind of sitting side firing at each other missing all the time, right? And so Sim said, well, you know, gee, like there has to be a better way to do this. And basically what he designed was a mechanical mechanism that automatically basically worked in opposition, right, counterbalance to the role of the ship. And so if the ship is, you know, if the ship basically is going down, right, the mechanism for the gun would automatically correct. And so the gunnery officer could basically get a fix. And then as long as the ship stayed in the same position,

as it rolled around, you know, the sort of lock on the target would stay intact, and all of a sudden the accuracy rate shoots up for like 90%. Right. And so what's so great about this example is it's like the most obvious thing in the world, which is this like obviously every country in the world would instantly adopt this, every military would adopt this, every ship would instantly be retrofitted to do this. Right. This is like the most obvious slam dunk thing you could do. It's a huge advance in warfare. You couldn't imagine living about it. That's what you would assume. And of course, that's not what happened at all. What happened basically was Sims took, it took Sims like a full 25

years to basically convince the American and British Navy's to adopt this technology. It was like a full generational shift. And the book goes through kind of in detail, basically, what happened. Sturgos-Sim ultimately had to actually appealed directly to President Teddy Roosevelt at the time. The entire military command structure of that era basically just told him to basically F off. You know, we don't want your newfangled thing. We're going to keep doing things the old way.

And he ultimately appealed to Teddy Roosevelt. Roosevelt actually ordered the Navy to look at it. And then they later ended up adopting it. And so Morrison basically says, well, okay, like, It's like the ultimate example. Like if they wouldn't adopt even that technology, like, okay, this must be like some very primal kind of counterforce that's happening. And his thesis was it basically is the following, which is every new technology is a reordering

of the power and the status in society. And then specifically in the form of this gun, right, it was basically like the entire training, basically methods, all of the officer promotion methods, like the entire social hierarchy of naval vessels and how gunnery officers were trained and how guns. guns were, you know, built and manufactured and crewed and managed and how military doctrine worked, right, and all the different things about how you make decisions, you know, about this. Like, it was all based on the old model. And basically, like, that skill set became obsolete when this gun came out.

And so those people became obsolete, or at least they worried they'd become obsolete. This new breed of kind of, you know, more advanced innovative engineering, you know, kind of mentality came in and it was a profound threat. And by the way, that's what happened, which is you ultimately had a generational turnover of all of the staff and officers involved in naval gunry. And so Morrison basically derives, he goes through this example, then he derives basically this three-part process that he says applies to any new technology, basically as it is greeted and fought by the status quo, by the powers it be.

And he says basically it's a three-step process. So step one is just to completely ignore it. Like so just pretend it doesn't exist, refuse to acknowledge it. Don't talk about it. Don't even engage in conversations. Like, we're just not going to do this. At some point, though, at some point these things become too obvious and they have to engage. She said step two is rational counter argument, right?

And rational counter argument is this can't possibly work because, you know, it's going to be too expensive. It's not going to be fast enough. It's not going to scale. People don't know how to use it, right? All the different kind of rational arguments that you can come up with to oppose something. And then ultimately, when those don't work anymore, because people, you know, people are still watching this and being like, okay, this still seems like a good idea. Then he says stage three, he says stage three is when the name calling begins, right? And so stage three is basically just like a full out power status.

this political fight, where all of a sudden, basically, it's like, okay, these are, you know, these people who are bringing to the student technology, they're bad people, they have bad morals, they have bad intent, they're going to ruin everything, right? And if you think about it, it's so funny because it's like basically the internet followed this exact trajectory. Like, you know, crypto, cryptocurrency, blockchain, web three is following this exact same trajectory. Social networking follows this exact same trajectory. Like, I've now seen this pattern, you know, out of 50 times in the last 30 years. And it keeps playing out the same way. nobody learns anything, right?

And this is literally what happens with every new technology. And I become convinced that's basically how this unfold. Yeah, I think something that reminded me of is something Bologi said recently, which he was reflecting on people's response to social and how it's impacted society over time. And he noted that maybe 10 or 20 years ago, social was seen as like these silly apps being created and like who wants to focus on this and, you know, why are we directing smart attention into these types of fields? And then now he's saying or noting that people are framing it as a threat to democracy. So it's kind of interesting that people go from one angle or one perception.

And then because technology in particular tends to be this force that's very, very hard to stop, it then turns into something much different. And the same people who framed it as a silly app are now framing it as a threat to democracy. And to your point, this isn't new, right? We had the same kind of dynamics happening with the bicycle. Or actually, I think it would actually be fun for us to go into these red, flag laws that you told me about quickly and we'll return to to the framing that you brought up. But could you speak a little bit more to the red flag laws that were implemented when cars were

coming to be? Yeah. And I'd like to come back to biology's thing on social, by the way, because I'll interpret it a little bit differently. I'll put it into the Sims framework. But yeah, so cars. So this is another great one. So cars, it's like, okay, like, we all live with cars. We all can't live without cars.

Like, you know, there's still huge fights about how, you know, cars should be used in our society. but like there's cars everywhere. Like our society doesn't function about cars. We just kind of take them totally for granted. By the way, we take them so for granted that we just like repeatedly bail out the big car companies, right? Like at this point, like the taxpayers have kept them in business for a long time. And so, you know, the car, and so then you're just like, okay, the car must have been this obvious thing. Like, of course you want the car.

Who could have fought the car at least for any kind of valid reason? And so again, to your point, like it turns out actually the cars were actually a profound threat to the sort of social order of that time. of the era. This is like going back 100, 120 years. And it was basically this exact same kind of process played out with the car. And so the thing you mentioned, basically, the thing that happened at the peak of kind of the anti-car hysteria at the time, the moral panic around cars was basically, it's basically what happened was cars were a threat to basically, they were the threat to like the ordering of like everything from how cities were laid out. They were going to upend, you know, the ability to have like modern transportation, modern shipping.

They were going to upend everything from the role of local merchants. They were going to upend, you know, there was an entire industry of blacksmiths, you know, the horse, was like central to a lot of economies. A lot of people made their living off of dealing with horses. There were people who were like trained carriage drivers who all of a sudden were out of jobs. And so there was this like all of a sudden this huge backlash. And so what happened was a bunch of sort of state municipal level areas, both in the U.S., like in Iran, Pennsylvania at the time and then also in the UK implemented their legislatures implemented at the time, what became known as the red flag laws.

So the red flag law works as follows, which is, okay, Mr. Car owner, you've got your fancy new car. Congratulations. You know, you're very proud of yourself. You're probably a pretty, you know, well-off person in the community. People probably generally are probably jealous of you to start with. You've got this fancy new automobile. And by the way, in those days, like, cars broke down all the time. And so when you would take your car out for a ride, you'd have like, you'd be driving the car and then you'd often like have to bring a mechanic with you, right, to basically fix the car when it broke. They were still getting everything to work. And so you and your mechanic or whatever, your family, you'd be out, you know, motoring along in your car on whatever dirt road. And

the law was that you had to employ another guy, you had to employ a guy to walk, you know, 50 feet in front of the car carrying big red flags. Right. Okay. So picture this. You're driving along. You're out for a nice Sunday drive. You got your kids, whatever. You got your mechanic.

You're going along. You know, cars in those days didn't go very fast, but they did go faster than you could walk. And so you're driving along at whatever, 10, 20 miles an hour. But according to the law, you have to have a guy in front of you on foot, like out in advance. And he's got these big red flags. And you have to follow this guy because he has to stay in front of you. And so you can only motor along at whatever the three or four miles an hour that this guy can walk. And this guy's like waving the red flags.

Why is this guy waving the red flags to warn everybody that a car is coming? Right. Why was the explanation that he needs to warn people that a car is coming? Well, because the car might scare the horses. Right. So like, you know, if the car comes along, it's making noise. It scares the horses, you know, the horses that are most of us on the road at that time. They freak out or, you know, bystandard's freak out.

People get hurt. Like, this would be really bad. And so, so literally, it's like, okay, that was how the car got rolled out. The most advanced form of this law that I've been able to find, went a step further. It said, basically, if you're driving along and you actually see a horse coming at you, you see somebody on a horse coming at you in the direction, you have to pull over to the side of the road.

You have to disassemble the car. You have to take it apart, right? You and your mechanic would take the car apart, and you have to hide the parts of the car. so that the horse can't see them, right? Because the horse might get scared, right? Get scared by the appearance of the car. And then when the horse goes by,

you can then reassemble your car, right, and keep going. Right? And of course, you look back today and you're just like, okay, this is like incredibly comical, like how could they ever do this? And then, of course, you exactly your point, like social networking, you think of exactly the technologies today,

and you're like, oh, yeah, you know, they're putting in place laws that, you know, 100 years from now, you know, the laws that are being put in place now on a lot of modern technology topics are going to look just as silly a red flag laws. But since nobody ever learns anything, you know, history will.

history will repeat. Let me just hit real quick, the biology point on social networking. So this is a really interesting one because he described the overall arc, or you described him as saying the overall art was from this harmless, you know, who cares what your cat had for breakfast? Kind of these are silly trivial things too. This is like the fundamental threat to democracy. It was actually a three-step process, right? It was step one was ignore, right? Step two in the case of social networking, actually we went through the whole argument, but there was this other step, maybe call it step two and a half, which basically is like, this is the best thing ever for democracy. And you may remember around 10 years ago around 2012 basically two things happened one was Obama got reelected

and at the time this was like referred to us like the first Facebook election it was when Facebook kind of had gone really mainstream and so like there were magazine covers newspaper stories talking about literally the story was Facebook saves democracy right and it was literally Facebook saves democracy big data saves democracy all of a sudden like you know politicians can get their messages their voters you know the correct can get elected you know this like the most wonderful thing for democracy ever by the way that was also during the Arab Spring right and social networking of course got a lot of credit for the at the time the democratic revolutions of the you know of the of the Arab Spring and so there was this like overwhelming sensation like when social networking executives you know in 10 years ago would go to Washington or Davos or Aspen or any of these places with fancy people with important titles like they just get lavish with praise about how wonderful this new technology is for democracy debaulogy's 20 10 years later in the story has done a complete 180 right now it's the absolute worst fundamental possible threat you could have after democracy because, of course, it turns out not just one side can win elections.

It turns out the other side can too. And it turns out the other side also uses social networking around ads on social networking. And to your point, basically, what's happened is if you track the people involved, the exact same people have held every single position, right? So the exact same experts, professors, you know, pundits, commentators, analysts, think tank people, magazine publishers, political activists, the exact same people have held every single one of these viewpoints all the way through this with no attempt at any point to reconcile their previous points of view. And so, you know, Elton Morrison, I think is no longer with us, but he

is smiling down from heaven saying, yep, that's exactly what I predicted would happen. Yeah, I mean, it is fascinating to look at history because you can see these things repeating. And I think this three-step process is something that people should, you know, apply to technologies of today and ask, like, where is that technology or the way the people are reacting to this technology? where are we in that cycle? And then I think another fascinating thing for people to spend time with is this idea of the way that we view red flag laws today, what will we view or what will people view in 100 years the same way, right? Like what are the laws that we're applying to social or AI or robotics or space? That regulation has its importance, but what laws are we implementing today that will seem just as outlandish as someone literally walking in front of a car to make sure that we don't scare horses? So I would encourage people to think about that. But, Mark, I want to ask you because you have had a track record of being early and right. And that's a combination that not many people can say about themselves. And I think it's important, again, taking this framing of people throughout history, being scared, always looking at things from this pessimistic lens,

how have you been able to kind of see through that noise? Like what are you paying attention to when you are introduced in new technology? It's really, really easy to say, well, these are all the ways that this technology can go wrong. It's not that easy to say, oh, I see this light of how this could go right. So how have you been able to mold that more optimistic lens on technology? And how have you also maintained that over time? Because I think that's an equally hard problem to solve. Yeah. So I start by saying, like, I have the same instincts as everybody else. Right. So when I read the Sims book, I was like, yep, that's also describing me. So I have the same, you know, same instinct. It's like somebody brings something forward.

And by the way, like, right, new technologies in the earliest stages, like they're really half-baked. You know, there's sort of this concept that the same Taleb talks about about tinkering. It's usually somebody in a garage or a metaphorical garage, a dorm room or something, or a computer lab somewhere who's basically working on something. It doesn't quite work. You have to like really squint to see why this would ever be something that a normal person could ever even understand, much less use, much less get value out of. And so, you know, especially if you're early, you know, if you're doing like early stage

investing, like we are kind of early adoption and your technology, it's like you do see these things when they're early and they're just not, they're just not ready yet. And so you have to, you basically, the natural impulse is very clear, which is the step one of the sim cycle, which is basically just ignore. So I have the same instincts as everybody else. I think basically what happened to me is basically this whole cycle kind of got beaten into me, which is basically like a very large number of times over the last 30 years now when I have had that reaction and that it turns out that whatever the new technology was turns out to be a really big deal.

You know, if you go through that loop enough times, like at some point, I don't know, it's like the 10th time or the 15th time or something. Like at some point you're just like, okay, like I need to stop. you know, at some point you realize that basically the cycle is a form of self-harm. Like, if you want to be a leading edge of new technology, you basically have to break out of this cycle. You have to basically stop holding yourself back. Now, there's a couple of nuances to that, right? So one is you do have to squint. Like, you do have to look at a new unformed thing, right?

And this goes through the step two of the sim cycle that basically like rationally, like, has all these problems. Right. And, you know, again, these problems, usually in our era, these problems are like, it's too slow, it doesn't scale, it's too expensive. you know, whatever, it's too confusing, but it doesn't, whatever, work with existing systems, like whatever it is. Or it's like a network effect thing, but nobody's using it yet, so it's got the cold start problem. And so you've got this list of reasons why these new things can't work. And you basically have to be willing to squint and kind of look through that and say, okay, basically like, you know, what if those things all get fixed, right? And basically the way

that the tech industry works is very helpful in this. If you spend a lot of time with engineers, what you notice basically is that list of kind of rational reasons why something can't work. that list is also the same list of all of the technology and business opportunities with that technology, right? So I always saw that it's the punch list of all the things for founders to do. So as you're a good example, Crypto Web 3 has been going through this for the last 10 years, right? Which is, you know, CryptoWeb3, Bitcoin was was greeted early on. Ethereum was greeted early on as like this can't possibly work, all these different reasons. And basically, you know, incredible engineers and entrepreneurs in the CryptoWeb3 space,

now we're basically fixing all of those things. By the way, today's actually a great day to bring that up, right? because today's the day the sort of Ethereum merged, what they called the merge just took place. And so Ethereum actually just today switch from the old method of proof of work to the new method of proof of state. One of the old arguments against crypto, including Ethereum, was basically the proof of work birds all this energy, like that necessarily. Proof of stake doesn't have that problem. And so quite literally, the Ethereum developer community has basically taken one of those rational objections, like, completely off the table. And that's just like a great example of how these things actually do come to work.

Here's the other thing. And this is also an important one. like you're not always right. Like, this way. Just because every successful new technology is greeted initially as a joke, right, does not mean that every new technology that's greeted as a joke is going to be successful. Right. And so you're not always right.

Like sometimes you bet on an early, you know, we do this all the time, right, in venture capital, you bet on an early stage technology. And it actually doesn't work. It actually doesn't happen. It doesn't take. It doesn't become real. Right. I'm not even talking about like, I'm not even talking about like, I'm even talking.

about fraud. I'm just talking about like, we thought we had the idea, we thought we had the right people working on it. You know, it just, they just couldn't get the thing to work or they just couldn't get the thing to work at the price point that the market needed. Or by the way, a lot of the times it's just it was 10 or 20 or 30 years too early, right? So virtual reality is a good example of this. Like I remember when there was the first VR wave, I actually worked on a bit when I was in college in the late 80s. Like there was this big thing around virtual reality at the time. And it just turned out that like you just could build VR headsets that work properly 25 years ago, 30 years ago, the technology wasn't ready yet, and of course,

today you can. So a lot of the times it's just being early, but of course, being 30 years early, it's the same as being wrong. It doesn't help you anyone, everything you're working on fails, and then you can't have to wait 30 years. And so you have to be willing, you know, if you're going to kind of think in these terms, you have to be willing to be open to the idea that you're only going to be right part of the time, right? And you have to be willing to take the chances anyway. This is kind of the way I think about it is. The way I think about it, like for our firm is, for every new technology that we're exposed to, right? It's like, okay, does it pass like the basic sniff test of like, okay, if this worked, would it be a big deal?

Right? And then it's like, are there really smart people working on getting it to work? And basically, if it passes those two sniff tests, then we should probably be betting on it today because we will be wrong some of the time, right? But we will also be right early some of the time. And then the way venture capital works, startups work is you can say in theory make more money off the winners than you lose other things that don't work. So you have to kind of be willing to kind of tilt into the risk. by the way, some people shouldn't do this, right? Like, you know, there are people for whom, you know, ever being exposed to failure is just like too psychologically damaging to them

or there's like large companies, you know, that maybe shouldn't necessarily completely reinvent their entire business on the basis of a new and proven startup technology or something. But like, so this is like a time and place thing for some people or not for other people. But for those of us who want to be on the leading edge of new technologies, we have to be very open-minded. It's also a function of venture capital, right?

The business or the industry that you're in naturally requires some level of risk. so that you get the reward at the end of the table. But on that note of timing, I wanted to ask you about this because, of course, there are examples of specific companies. Like, I'll just use a simple one, segue. Segway didn't work out. A bunch of people thought it would.

Okay, so that was truly something that, you know, we probably won't see in the future. But when we're talking about larger industries, you use VR as an example, are there really examples of technologies that a bunch of extremely talented people are working on? again, really foundational technologies, whether it's AI or crypto, insert other foundational technology here, that eventually doesn't work out. And I'm asking you this because actually

several of us on the editorial team were trying to think of an example. And as someone who has been investing in technology for so long, I was wondering if there has been a case where so many people have been wrong. Well, the big probably famous example was alchemy, which is a term people that it's a L, C, H, E, M. So alchemy was the technology to transmute lead into gold. And there was this concept that you'd be able to build some form of machine or discover some material that they actually, and this is like 300 years ago now, they actually have this term they called the Philosopher Stone. And basically all these smart people try to figure out how to basically adventure discover the philosopher's stone. By the way,

talk about smart people. Isaac Newton spent 20 years trying to figure this out, right? So, like maybe the smartest human being in history of the planet spent 20 years on this. So at the time, you know, they were serious. And the dream, of course, was, you know, transmuting led into gold. Why do they want to do that? Of course, lead is plentiful and worthless and gold is scarce and incredibly valuable. And so, you know, they were searching for kind of the magic formula for how to basically essentially create wealth, you know, basically kind of turbocharged economy, kind of make society better in one step.

And they never figured it out. By the way, it's an interesting question. If you happen to know any material scientists, I don't think there are any active research programs today on literally turning lead into gold, but it would be an interesting question for any material scientists, you know. Oh, there is actually an example of this. They are now synthetic diamonds, right? And so there's now technology for actually turning carbon into diamonds.

And so, you know, one could argue we didn't get gold out the other end, but maybe they got the diamond part to work. But I cite that example because, like, you know, that was like 300 years ago. And, you know, it wasn't, you look back now and it's like that wasn't really science as we understand it. Even for Newton at that point, it was kind of, there was like a lot of religion involved. And they were still, you know, figuring some really basic thing. I mean, this is when Newton was still working on his like three laws of like how the universe works. And so they were still trying to get the basics figured out. You know, look, more recently, you know, look, there's a lot of things people talk about today that aren't working yet.

And, you know, we could have a very long discussion about those. Obviously, we can't see the future. You mentioned Segway as an example. Like, I would guess that that comes back. You know, I would guess that there will come a time when people will realize that that actually was a really good idea. Oh, actually, spend a second on Segway, right? So the theory of Segway, actually, it was a two-part theory. Part one was the device itself.

And, you know, it got the backlash right up front for a variety of reasons. and it's just like the car did. And so it became kind of this running joke. And if you like the very funny TV show, arrest of development, they take the goofiest, you know, kind of biggest asshole character in the show,

they put them on a segue. So it became kind of this running joke at the time. But the device itself was only, it was only part one of the theory. Part two of the theory was that cities would get redesigned around the device, right? And so the theory basically was, like,

why are cities laid out the way they are? Cities are laid out the way they are because of the car, right? I'll give you an example. Like, there are, I think the number is there are something on the order of two billion, parking spots in the United States. Right?

So there's like mass in the total amount of for parking lots. It's something like there's the parking lots. I think if you put them all together in the U.S. is something like they cover the entire state of Connecticut. Right. It's just this like massive amount of space devoted to basically roads and then parking, you know, for cars. And then plus there's all the issues.

There's all the safety issues of cars. There's all the pollution issues of cars. You know, there's all the noise issues and so forth and so on. So basically with the segue guys at the time thought was really what should happen is city should get redesigned. City should get redesigned assuming that there are no cars. but you know, you don't just want people walking around. You want people to be able to move faster than that.

You probably don't want to bring horses back. They have other issues. And so if you redesign a city from scratch, you could basically design it with sidewalks and paths, and then you could have like lots of different Segway powered style, right, things, including like, you know, single passenger ones, but also maybe, you know, little, you know, cards, four people, six people. You could have cargo devices and so forth.

And so, you know, it may be that just what hasn't happened yet is nobody's actually trying to build that city, right? maybe there just needs to be a new kind of city. And by the way, maybe at some point somebody will do that and all of a sudden, it'll be like, wow, those Segway guys, whatever, 40 years ago, we're actually under the right thing. And so if a lot of smart people are working on something, it's like virtually guaranteed that it's going to happen.

It's just a question of when. And like I said, the when might be 40 years out. And so it might not be those people who get the benefit or who kind of harvest the gains from doing the new thing. But like it ultimately will happen. And if you go back across many, this is something we can spend a lot of time on, But if you go back across a lot of historical technologies, you know, it took like 50 years to get the TV to work. There were optical telegraph systems 50 years before the telegraph systems that we became familiar with.

They had like optical telegraph systems working in Paris in like the 1820s, 1830s. The fax machine was invented in the 1870s. It wasn't commercialized until the 1970s. It took 100 years, right? The computer, you know, the computer took like 50 years to get into consumer form. and another 20 years after that to get into your pocket. Right. And so the history here is these things often just do take a long amount of time.

And my conclusion from that is basically it's all going to happen. It's just this sort of massive question of timing. Yeah. And on this idea of timing, sometimes all it takes is a change in regulation, a change in another technology becoming mass market that allows, you know, a follow-on effect. Something that I've heard you talk about before are kind of like these unlocks that happen throughout history that, again, have follow-on effects. And one of them that you've mentioned from way back is the ability for people to own land

and how those incentives really spurred a wave of innovation because people had the incentive to build on top. Are there other unlocks that you're paying attention to today that you've noticed, let's say in the last five or so years? It could be COVID that allowed a bunch of people to work online and that's the next industrial revolution. Are there things that you think are really, really meaningful from the last, again, let's say, a couple years? Yeah, so the big one is sort of the post-COVID world. So the big one is kind of, you know, the rise of kind of remote work, ritual work. And the reason I say that's the big one is because it seems relatively straightforward. Well, you know, like you and I are recording this, we're in different locations, we're coming in

across webcams. So it seems like it's just like a new way to work. But it's actually deeper than that for the following reason, which is basically the economic role of cities for basically all of recorded human history, again, going back 4,000 years. The role of cities basically is what economists, they call it agglomeration. So the role of cities, is to basically get a critical mass of people in a single place where those people are able to come together and basically do things that are greater than those people could do as individuals, right?

And that ultimately led to the creation of companies and led to the creation of like, you know, all the technology and science and all these other things happened kind of consequence of culture. Culture came out of cities. Like almost everything today that we would consider to be kind of good about kind of human existence

kind of came out of the fact that people gathered in cities. Like all the invention basically takes place in cities. And so the role of the city was basically, okay, you want to basically attract the sort of smartest, most ambitious, most innovative, most creative people anywhere in society, no matter where they grow up, whether it's in like a small town or on a farm or, you know, by the way, in another country, whatever. And you want to basically bring them to a city. The economists also have this term they call superstar cities, right? And these are the cities that basically

turn out to be like round zero for like a, you know, a fundamentally kind of revolutionary kind of thing, right, and become kind of a permanent hub. And so historically, the San Francisco Bay Area has been the superstar city of technology, right? The way that works is if you're a young, ambitious technologists, you want to go to the San Francisco Bay Area. You want to be a small fish in a big pond because you want to be around all the other smart people because the collective effect is going to be so powerful. Los Angeles is a superstar city for film and television. New York is a superstar city for finance and for fashion and arts and all kinds of things. London, Paris, these big cities have played this kind of outsized role in economic history.

But they've all been based on this idea that you have to get all the smart people together in one geographic place so that they can actually meet each other and talk to each other and work together and do projects together, bounce ideas off each other, challenge each other. Again, this is like a 4,000 year history of how progress has happened. All of a sudden, for the first time in 4,000 years, we now have both the technology in the form of the internet and Zoom and webcams and remote work and collaboration tools and all these amazing technologies we have now. And we now have this like sudden proof, right, that during the very, you know, kind of

bad, unpleasant, dangerous COVID lockdowns, it turns out basically the companies were basically able to just keep running. Any company with knowledge work was able to just keep running all the way through COVID to a level of success that like nobody envisioned was even possible before COVID. And so now, of course, you got this massive societal changes underway. And by the way, I think the societal changes from COVID are just starting. You've got this massive societal change underway where all of a sudden people can say like, wow, I don't have to be in the San Francisco Bay Area or in New York City or in Paris or wherever it is in order to be part of the computer industry or the music industry or the movie industry or, you know, finance or like

whatever it is. By the way, my kids are not going to have to be there, right? So even if I'm raising kids and I'm worried about their future, like they don't necessarily have to be there. So all of a sudden, like the potential to fundamentally disconnect where people live from where people work has basically been open. And then of course, if you can separate the where, you can also separate the how, right? And so what kind of community, right, would be the best, for example, for kids to grow up in are the communities that we built in the last hundred years where it's been assumed that you have to kind of be part of these, you know, specific locations to fully participate in economic life, are these the actual kinds of communities

you want to raise kids in or is there actually a completely different kind of community you would build if you didn't have to be in a specific place to be able to have great jobs? We all probably know people like this. Like a lot of people are fundamentally reexamining like what do they want to do their lives? Like do they want to work in the industry they were working at before? Do they want to work at the employer they were working at before, right? Do they want to move to another country? Like they're completely rethinking, right?

How many kids do they want to have? like whether they want to have kids, like all these things, you know, do they want to get reconnected back to the extended families that they were forced to move away from? All of these fundamental questions are being asked. And this, I think, I think 50 years for now, I think we'll look back and it'll be like basically the internet and then this where basically the two big things that happen. Yeah, I have to agree with you. I've been working remotely for probably seven years now. So a little bit before COVID. But something that I'm finding fascinating is this idea of remote work, in my opinion, being a technical,

or at least there's technologies that enable it. And similar to many other technologies, as we've talked about throughout this conversation, there is a substantial backlash. And also, you know, I have to give credit to the people who are pushing back on remote work because there are things to be fixed, just like we talked about. Every technology has problems to fix, and those are business opportunities. But I want to hear from you from the perspective that you mentioned before of this power balance being messed with with every new technology. And as more people start to work remotely and reconsider all of this, how would you frame the pushback of remote work with this idea of a power shift or society reshuffling? Yeah, so this really comes up. I mean, there's a whole bunch of

angles on this, but like the one that's the one that I hear about all the time right now is when I talk to big company CEOs, right? So you talk to CEOs of like big banks or big software companies, right, big whatever, you know, companies. You know, this basically is the conversation, right? Because what happened is basically, if you're the CEO of a big company today, you came up in an environment where everybody was in physical proximity, right? The whole way that you came up, the whole way that you played politics and got yourself in position and got yourself exposed to the important people and got promoted and like all this stuff, you know, didn't work with your teams, right? The way that you did deals, the way that you had relationships with other people

in the industry, you dealt with customers. It was all based on in person proximity, right? And which meant either in the office or by the way, it meant on the road, right, business travel. And that's true, basically, of like the entire management hierarchy of like every existing big company. Like, they're all like that. Right. And so all of a sudden, now you have the, this incredible kind of phase shift happening. And so now it's like, okay, like a whole bunch of questions open up. Like, how does the company organize? You know, what is the balance between person and remote?

What are the implications of that for the org chart, right? You know, job roles change. Geographically, where should companies be located, right? I'll give you an example. I talked to the head of one big company that has, based in Manhattan. They've got about 20% of their employees are these super advanced knowledge workers, about 80% are kind of back office, white collar clerical workers. You know, that CEO's like, look, like the 80%

clearly don't need to be in Manhattan anymore. Like we can put them in like South Dakota. You know, we can pay them like half as much. Their standard of life will be twice as high. You know, they'll be a lot happier. And, you know, we can do that. Right. Now, he says, I think we still need to keep the 20% of the creatives together. But like, by the way, the creatives get a vote too. And if they decide to leave the in-person job and go remote and work for another, you know, company that industry that's willing to hire remotely, like, they have the ability to do that. So, like, a lot of these companies, I think are going to, like, really dramatically restructure over the course of the next five years, a lot of these CEOs, basically, the big company CEOs are like, well, we could never

go full remote. Like, that's impossible. We can't do it. You go talk to startup CEOs, and they're like, well, maybe we can. Right. And so here, I'll talk our book for a second. I'll kind of, you know, I'll get as close as I can to kind of saying that we might have something figured out. Look, it may be that the remote work revolution is just really bad for big companies. Right. It just may be that it takes existing systems and models for how big companies operate and it basically breaks them. And it may be that remote work is the kind of thing that you need to build a new company to be able to know how to do properly, right? Because you need to kind of build a culture from scratch. You need to build systems from scratch. You need to build processes from scratch.

You need to build, it may just be remote companies just need to get built differently. And it might actually not be possible to reconstruct a big old company that's done things, things one way and just restructure it so that they can do things a completely different way. And so, you know, this may accelerate the process of turnover where some big companies go away faster and some new companies get much bigger faster. Like, that's a possibility. or, by the way, you know, maybe I'm full of it, right? And maybe the opposite is true. Like, maybe it turns out remote work just isn't good enough.

Or maybe it turns out we actually don't have remote. Maybe we don't have the technologies yet, right? Maybe we need holographs, right? Maybe we need, you know, big teleconferencing rooms. Maybe we need, I'll give you an example. Maybe every company in a certain size should own, like literally its own hotel resort. Right. And so maybe what happens is basically like every team should be basically in residence that are really cool.

hotel, a resort location for like, you know, a month in the spring and a month in the fall in a resort. And maybe the company should just be running their teams through that. And unless they do that kind of thing to be able to have critical mass of bonding, like maybe it just won't work. And like maybe that's a new kind of real estate development that has to happen, you know, to be able to have basically sort of think about this sort of corporate resorts. In other words, to be an attractive enough place to come where you're willing to actually be away from home for a month. Maybe you can even bring your family with you, right, but everybody gets to work together. Like that, you know, those don't exist today. And I'm just speculating. But like,

Like maybe there are things like that that we have yet to figure out. I just have like a very strong sense that on the other side of this, the world's going to work very differently. I do too. And what you're saying reminds me of something that when I had a chat with Neil Stevenson, we talked about, which is when electricity was invented, it was very easy to think, okay, electricity can be applied to lighting. Okay, that makes sense.

People can see that line. But the example he gave was electric guitars. Not many people when electricity was first being invented could think, oh, okay, well, we're going to have electric guitars from this. And I think when you have these really foundational shifts like remote work, it's very hard to think about those second, third, order effects, but you do know they're going to happen. You just don't always know exactly how they're going to manifest. But I wanted to ask you quickly, because A16 has moved to the cloud recently, was there an aha moment, or was there a specific thing that got you to change your mind? Or were you

always kind of, you know, coming around to this idea? Because a lot of people say, strong opinions weekly held. But not many people actually operate that way. And so I think it was interesting to see A16Z actually make a shift of previously being in the office to moving to the cloud. So was there something that kind of unlocked that? Yeah. So I was very, people who know me will confirm this, I was very anti-remote work basically before COVID. I was probably pretty far on the end of like the spectrum of people thinking about this and not being open-minded on it. And that was true of us as a firm, right? And so we historically ran as a firm. We ran actually a single office. We had a single office, excuse me in Menlo Park.

We actually even refused to open an office in San Francisco for 10 years because we wanted like critical mass in the office. And by the way, people who actually worked or visited our office kind of between, call it 2010 and 2020, they will tell you like it was a high activity. It was a really cool place. There was always all this amazing stuff happening and all these amazing people walking around and like it, you know, we wanted that kind of hot house environment and we got it.

But that meant everybody like had to be in the office. And then the other thing I always maintain it was I was like, look like there's this theory of remote work, but like it hasn't yet worked for any company. at any level of scale. Like the only companies that have made it work are very small. And then I said, look, just look at the data, right? And what the data basically says is the superstar city thing I mentioned is basically in full effect. And what the data basically said was venture capital, you know, the funding for technology was actually concentrating more and more into the Bay Area, right, between 2010 and 2020. If you look at just like the money was

flowing more and more into the single place, the people were flowing more and more into the single place. I mean, to be clear, like the Valley is a place was bursting at the scene. and housing became crazily expensive and transit to disaster. Our politicians hate us. There's all these issues. But this hot house environment, this agglomeration, hot house kind of thing, was real, right? And it's the thing that traditionally made the Valley so special. And it's why this was always sort of the hub for, you know, this has been the hub for 40 years

where almost all the great breakthroughs and technology have been happening. And so I was very much kind of on that page. So for me, it was literally going through COVID, right? And again, we were looking at this a couple different levels. We were looking at this level of like house. firm going to operate, you know, under lockdown. We were also thinking about, like, how are our companies going to operate under lockdown? And then we were also thinking about, okay, how is the industry as a whole, right, going to operate under lockdown? Like, for example, like, how will

new companies get started? If a new company starts under conditions of lockdown, like, how will that actually happen? And then basically, we, you know, on a completely involuntary footing, we basically ran this experiment for two years. And by the way, we did, one of the things we did, we did surveys the entire time. So we did, we did repeated sampling of the different constituencies and kind of ask, you know, to try to get a data kind of handle on what was happening. And so it was really interesting because it's like six months in, like people are like super nervous? And it's like, are these companies even going to continue working? And then it's like 12 months in, people are like, well, actually, it turns out remote work, at least for now,

works just as well. And if anything, maybe even better, because people don't have anything else to do. So they're actually working more. Right. So the new problem is burnout. You know, 18 months later, it was, well, you know, actually we're going to start hiring remote people. Now that we can do remote work, we can now hire people who don't live, you know, near the campus. So we can hire more broadly, right, and so forth. And so you can actually see in the data, you could actually see basically the sort of beliefs moving. And then basically what Ben and I decided with our colleagues at the firm basically is like,

look, the firm is built to live in the future. The firm is built to fund the best new companies and work with the best new entrepreneurs building the future. We want to be the leading edge of the industry. This is such a big change for the industry that we have to live it. It doesn't make any sense to try to maintain the old model where we're basically funding the new model, like we have to live the new model. I think it's going very well.

Having said that, we're still figuring it out, right? And so, sure, you're experiencing this, it's like, we're still figuring out. Like, for example, at our firm, we put a big premium on having off-sights. Like, we now take off-sides really seriously. We really take getting people together on a regular basis very seriously. We have, like, whole teams inside our firm now that are devoted just, like, orchestrating all that and making all those happen. But, you know, do we have the right balance of, like, remote versus off-site?

Do we need to have, you know, people have more sub-time? Do we have the right tools? And since it's in place, are we running the firm, you know, do we have the right management practices? And so, you know, we're certainly still figuring. it out, but we're definitely on that path. And like we talked about, that comes with time. But the reason I asked you how you made that shift or almost in some way changed your opinion as you got new data is because I wonder how perhaps we might be able to do that within the framing of how people view

innovation and technology. Kind of returning to what we talked about at the very beginning of this conversation, it does feel like there is this perception of technology. Of course, not everyone holds it, that, you know, we're in a bad place or again, the world's getting worse, or insert negative thing about our current state of affairs. And I think it's really inspiring at at least at A16Z to see that people do hold this very optimistic view. And I wonder what you think maybe we can do as a collective, as a society to maybe orient more around this more positive view of technology. Because from my understanding, and I'd actually love for you to go into this history, it doesn't sound like this was always the case that technology, I mean, specific technologies were viewed quite negatively, but

a sense around innovation, I think, has been different in the past. Is that right? Yeah, so that's a good point. So technologies have always kind of gone through this cycle. And I would go so far as to say, like, the technology adoption cycle, resistance cycle, like I'm not sure it's actually going to change. Douglas Adams, the science fiction author Douglas Adams, who wrote The Hitchhiker's Guide to the Galaxy, had another take on this. It's sort of both very funny, very serious, right? So he said basically it's like, any technology that existed before you were like 15 years old is just like the natural order of things. any technology that gets invented between the time when you're like 15 and 35 is like new and

exciting and cool and cutting edge and like maybe you can make a career in it and then any new technology that arrives after the age of 35 is unholy and against you know against the natural order right and it's going to bring doom to civilization you know another way to kind of putting the put in the sim cycle so so like the most kind of I don't know the most negative thing you could say or something would be like there's just this like permanent generational psychological thing this cycle where another famous quote, I think it's the great physicist Max Planck once said, science advances one funeral at a time, meaning that in science you need like the old senior scientists

who have like one paradigm to quite literally die off so that the young scientists of the new paradigm can actually like take over. You know, that sort of pessimistic view would be like this is just so deeply baked into the mentality of how people operate psychologically that it's just like the permanent state of affairs. By the way, like, I don't know if that's optimal for society. I will tell you that state of affairs is very good for entrepreneurs, right? because if more people in positions of power were more open in new technologies,

right, the opportunity, especially for the young entrepreneur with a breakthrough idea, would actually diminish, right, because the big old companies would already be doing all the new things. And so it may be, like, one response to me would be like, Mark, shut up, like, stop talking to people about this, because we actually want everybody in position of power to just assume that all new technologies are stupid and evil, because we want all the opportunity to be available to all the kids who are starting all the new companies. So, yeah, so that's one side of things. And then, yeah, what you mentioned, so this broader societal thing, so then there's this broader societal thing is happening, which is basically this sort of societies, different societies have sort of different ethics and belief systems around, even just like the fundamental idea of progress. Right. And so I won't pick on, I won't name names, but let's just say there are certain societies in global history that, you know, at different points in time have decided, like we're just not going to do new things.

Like, we're not going to talk to outside people. We're not going to adopt new technologies. I mean, there are societies. on planet, you know, I mean, North Korea. You know, there are societies like that today. Well, another example, you know, the Amish, like have an entire religion and belief system right around the fact that they don't adopt new technologies. By the way, like, I'm a free markets, free minds guy. I think people should live how they want. If they want to live that way, I think that's fine.

It's a choice. You can choose, right, to not, like, think progress is a good thing, to not think that new technology should be adopted. I would argue in the fullness of time, you know, it's hard to have your quality of life be at the same level as if you're more open in new technologies. But like, you know, societies do decide that they don't want new technologies. If you kind of look historically at the U.S. and more broadly, kind of the West, you do basically see this pattern where there was a lot of resistance to new ideas, you know, call it from the end of the Roman Empire through to basically the Renaissance

since the so-called Dark Ages, right? So there was like a whatever, 1,200-year stretch or something where not much happened. And then basically, you know, over the last 500 years, like in the West, there's sort of this ethos of progress that kind of emerged. And, you know, since the total enlightenment and the scientific revolution and the industrial revolution, right, and so forth. And the rise of Protestantism, which was very important because it meant that people could seek out the answers to life's mysteries on their own, right? And then the rise of what was called natural philosophy that became science. And so there was sort of this system that was developed to basically go uncover basically scientific truths and then build new technologies and that

basically builds, you know, what we consider to be like a modern capitalist economy on top of that. If you asked people in 1880 or 1900 or 1920 or even 1960, if you ask most people that they thought that that whole set of things was a good idea, most people would have said yes. This is sort of the era known as modernity, right? So this was like basically this is the era of like, you know, we want progress in civilization. We want higher standards of living. We want to be able to look back and say like, yes, we like we advance civilization as compared to what our forefathers had. And if you read like books written in those eras, They take great pride in all the progress that's been made.

In the West, in the last 50 years, that's kind of gone sideways. There's an ethos in the West that kind of started in the 60s and extends into our era, which basically says, well, maybe, you know, a lot of this stuff is not so good. Maybe it's like bad for the environment. Maybe it's bad for, you know, whatever, whatever. Like there's a whole bunch of different arguments like this. And like maybe we've had enough progress. Maybe we've had enough science.

Maybe we've had enough technology. The sort of classic example of this is like nuclear power, right? Like, you know, we invented a way to basically have a limited clean energy. and then we just decided we don't want it. If you told people in 1910 that they could have nuclear power, like there would be like 10,000 nuclear plants like in the United States running today. But you tell people in 1975 or 1998 or whatever, 2022, they can have nuclear power. And they're like, yeah, let's not have any of that.

And so I think there has been this sort of negative cultural shift. Tyler Cohen calls this the complacency. Ross dot that calls this decadence. There's been this kind of shift to like, eh, things are good enough. we don't need more of this. Or the more extreme form, which is like, all progress is bad, like all these new technology. Like, they're just flat out bad. It's all bad.

It's all stop. You know, kind of the Unabomber kind of argument, right? Yeah, but people weren't born with that mentality, right? Like, people weren't born with progress is bad, right? They've learned that. And I do wonder, is it just because things have been so good, right? Like, that we've done so well. You mentioned specifically this mentality within the West that people no longer have something to strive for,

even though they certainly do. But is that just a reality that things have gone so well that people have obtained this mentality? Yeah. So that's a theory. That's a theory some people are calling that. It's about upper income trap. So basically it's like the theory basically is, yeah, once people hit like an upper middle class standard of living where they've kind of like, you know, they got a house, they got a car, you know, they got whatever. They got, you know, a hospital nearby.

And like they got, you know, Netflix. Like whatever, you know, good restaurants nearby, whatever. Like at some point, they're just like, yeah, like it's fine. You know, it's good enough. anything beyond this is probably excessive. You know, some people are joking right now that this explains what's called the Fermi paradox. So the Fermi paradox is this question of like,

why do we not know of other civilizations in the galaxy? Like, why do we not know of any like the alien civilizations? Like there's, you know, billions and billions of planets like throughout the universe and like we should be able to like pick up signals and we should be able to get like TV broadcasts or whatever for the civilizations, traveling across space and like basically why is it still after all this time with all these radio telescopes? It's just still, you know, humanity on planet Earth.

And so this argument basically goes, It's basically the same thing. It's just like, yeah, other species of aliens develop the same level of upper middle class lifestyle that we have. And then they all just kind of shrugged and said, eh, you know, well, you know, look, you know, here we sit. Like, so mankind, you know, we went to the moon. Like, we went to the freaking moon. We went to the moon a lot. We went to the moon a bunch of times.

I think the last time we went to the moon, I think the last time humanity went to the moon was in like 1972 or 73. Right? And so. I'm pretty sure that's 1970. 1970. So it's been 50 years since we went to the moon. And like our answer to that is, eh, right? And like, you know, Elon comes out and he's like, let's go to Mars.

And everybody's like, wow, you know, I guess we could. Like nobody ever really, you know, nobody suggests, you know, like in 172, it was like the obvious next step is of course you go to Mars, right? Because first you go to the moon, then you go to Mars, right? Then you go to Jupiter, right? And then at some point, you're going other places. Like you're going to other solar systems. Like, of course, this is like the arc that you want to be on. And, you know, we in our advanced era just decided, yeah, like, let's not do it. So, yeah, I think there's something to that. You know, this, this gets into theories of social change and societal forces, political forces, religious forces. I mean, I've got theories for hours on kind of how we got here and what the problem is. But it, I would say it very rapidly gets political. It's hard to talk about kind of societal structure without getting into politics. And so I try not to get kind of too kind of kind of, you kind of, you kind of, you kind of, you kind of, you kind of,

fully say what I think on some of these topics, but it is just this like prevailing ethos. Like one way to think about it is, you think about socially, it's like there are three errors in human existence. There was like pre-modern, which was basically like caves all the way up through like kings. Right. And then there was modern, which is like science, technology, democracy, you know, capitalism and that in progress. And then now you could argue like we're in this postmodern phase where we're just going to like sit around and argue all the time instead of actually doing anything. You know, neat.

Maybe, like, I would like to believe that this is not, you know, I would like to believe Netflix and Shell is not the terminal point of humanity. Well, I think this picture that you're painting of a bunch of other alien species getting so complacent that they just decided never to venture out. Or maybe they discovered VR or just went into their screens the way that a lot of people are going today. But I want to just quickly ask you about what you're excited about because you are someone amongst, they're still. is a large cohort of people who are excited to go to Mars or to take things further than we ever have before. So I think that's exciting. And I think many people take inspiration from that. So within that dimension, like, what are you excited about? We already talked about this, like, kind of next industrial revolution through remote work. But are there other things where

you're like, wow, this is really game-changing and this is really exciting. And I'm glad that us as a society have smart people working on this. Yeah, there's a bunch of things. I mean, there's a bunch of like specific technologies. And so, I mean, the easy ones to bring up kind of off the cuff. It's, you know, AI, like, it's just, like, it's amazing what's happening with machine learning right now. And then biotech, like, the genomic revolution is, like, a really big deal. And there's all kinds of questions. I mean, we're just seeing mind-blowing concepts now on that front.

I won't reveal it. But we saw one the other day where, like, I literally had to stop in my tracks. My jaw hit the floor. I had to spend, like, the next hour just, like, processing what I just seen. It's one of those literally, like, this could change everything moments. So biotech's going through a lot of really kind of profound change. And then crypto web three, you know, we've talked about it like before as a firm, but like is, I think, you know, very profound. And there's a bunch of others. Those are like three big ones, but like there's a whole bunch of other spaces that are like that.

You know, actually space, you know, yeah, Elon, God bless him. It's like re-advigorated, you know, the whole idea of space. He's, what do you do? The other day he tweeted is like, he said the other day on Twitter, he said, they have not yet discovered an upper limit on how many launches they can do with the same rocket. And it's like, like, like, rockets went from like disposable, which is like one and done, right? all the way to like he's not sure, you know, he just doesn't know. It's like, they go 50 times, 500 times, 5,000 times, you know, we'll see. And so like, you know, really, really revolutionary things happening on that front, which is exciting. You know, a couple other big things I would highlight. So one is just like the long-term kind of implications of the internet, I think, are still in the early stages. And one that's in the background, but it's like really important and relevant

to everything we've been discussing is that like most people and most of history have not had access to the leading edge, right? You know, most people throughout human history who have been like super smart and super curious and super ambitious and willing to work hard. Most of them have not ever gotten to one of these cities that I was talking about. Most of them never worked in an advanced field. Most of them were doing subsistence farming or they were working in other kinds of whatever. They were doing whatever was the local thing to do. They never got an opportunity.

You know, most even if it's just like music, most of the people who could have composed great music never got the chance to. They never got the training. They never had access to the culture. They never had the ability to produce music. Like they just couldn't do it. And you could say that's true of everything from music to art, to books, to science, like every field of human activity. And, you know, the internet really is like the great equalizer leveler opportunity machine,

right, for basically anybody in the planet who's curious with an internet connection to be able to learn and explore and start to create and start to join and meet like-minded people. So there's a collective effect. Like in my optimistic moments, I kind of think of it as like humanity as sort of a group organism, like a through global society, like is actually just waking up for the first time as a consequence of being, you know, all connected online. And of course, there's good aspects of that and maybe bad aspects of that. But it is sort of this fundamental thing that's happening.

And so, you know, hopefully we will discover that there are, I don't know what the number is, but 10 or 100 or 1,000 or 10,000 or a million more people around the world who could be doing really original creative work, who just never had the chance in prior generations. And all of a sudden, you know, you imagine things progressing much faster as a result of that. Yeah. I think even another aspect of that is more people who are coming online, you are having them get access to remote work. and another second order effect of that is that remote tends to be more asynchronous.

So certain people don't always benefit from the nine to five as an example. And I saw this infographic today of just like the schedules of all these luminaries from back in the day who had created wonderful things. And they were all over the place. So let's just, again, one example of as more people get access to this information, as more people have access to different types of schedules or different types of companies or people facilitated through the internet, I think we're going to be really surprised by what comes out of that.

That's right. One thing I really want to ask you about is how society values certain things. And I've heard you talk about this to an extent before, but society will fluctuate throughout time and different people within that society will value different things. But society as a whole does seem to find virtue in certain things at certain times. So for example, you mentioned before in history, maybe entrepreneurs were valued more. So as people built things, society rewarded that type of achievement. How do you view that changing today?

What do you think society is valuing today? And perhaps, if you're willing to share, what do you wish society valued more? So basically there's this theory, the Scott James Burnham articulated this theory back in the 1990s that I think applies. He called at the time he called the managerial revolution. So basically what he said was there are basically two phases to capitalism. There was basically what he called the phase of bourgeois capitalism, which is sort of famously the sort of phase that, you know, the robber barons and then, you know,

the phase that the communists hated and like all, you know, there's a way. the rise of bourgeois culture. And this is that, you know, the bourgeois capitalism era was the era of like Henry Ford and Thomas Edison and Andrew Carnegie and and J.P. Morgan and all of these kind of the conning Henry Ford, all these kind of business builders who built the companies often named the companies after themselves, often ran the companies their entire lives, kind of drove the companies through kind of sheer force and personal kind of animal magnetism and force. And then he said, basically, there's an evolution that takes place. And it kind of started in the 30s and 40s and extends into our period.

And he called that the era of managerial capitalism, or just more generally, he called it managerialism. And basically the idea there is it's sort of the second phase of capitalism. And it's basically the phase at which you can no longer just have a guy. You know, you can no longer just have a Henry Ford or whatever who's just got a car company called Ford. And he just like orders everybody around and tells everybody what to do. Like basically modern business, modern technology, right? Modern society. It's too complicated for that.

And so you're not, basically, the model of capitalism goes from basically sole proprietorships in the bourgeois era, right, to basically what you'd consider to be like the modern multinational Delaware C corporation with like a board of directors and an executive management team and a CEO and the CEO is probably not the founder. In fact, the CEO is probably trained at a business school. Like Henry Ford never went to business school, right? But, you know, Jim Farley was running, I haven't checked, but I'm sure Jim Farley was running for it today. I'm sure that he did. Right. So like all of a sudden, it's basically like you said, you the rise is sort of the managerial class. The rise of basically these people who are sort of technocratic experts who would never start their own thing. Like they would never invent the car or they would never start the car company. But they are necessary to run the large scale industrial organization that is like a modern, you know, giant car company or a modern giant electrical grid or a modern giant or a modern giant whatever, you name it, chip company, like whatever it is.

And it's a little bit if you think about it. It's a little bit of like basically founder-led companies to basically quote-unquote professional CEO-led companies. You know, it's basically top-down kind of dictatorial management versus kind of bottoms up assesses management. It's basically the principal running the company, right? With his like, often with his name on the line, his entire net worth is in the company and like his name is on the line to what, you know, you refer to as the principal agent problem,

which is, okay, these companies are run by people, but like, you know, are these people really going to be with the company for the next 30 years? You know, they get paid annually. Are there incentives more annual as opposed to long term? And what Bernie basically said was this is an inevitable process to go from bourgeois capitalism to managerial capitalism. It's inevitable because of scale and complexity, right? Henry Ford today could not run for a motor company.

Like it's too big and complicated. You need a different skill set. But he said, look, it is a very different, it is a very big social, cultural change. And it's a change basically from valuing a sort of individual aggression, individual merit, individual achievement, individual accomplishment, individual force of will, right, to a much more collective, right, way of operating, right? Groups, groups operating at sort of consensus collaborative form. You know, people having to come to agreement on things, committees, bureaucracy.

Right. And he basically said it sort of, you know, stage one, stage two. The way I view kind of what we do, like in venture capital, what we do is we basically are, we're basically the throwback. So the startups that we fund are being funded. We fund startups that fit that old model. Like we're trying to find the next generation of Henry Ford's, right? and Andrew Carnegie's and so forth and, you know, Leela Stanford, you know, the railroad guy who, you know, ultimately funded Stanford University.

It was a rubber baron in the 1880s. We're trying to basically go find those sort of modern bourgeois capitalists who are kind of throwbacks to the old model. Why are we doing that? Because like that's the only way to do something new, right? That was the model for doing new things. All these things used to be new. Like if you want to do anything new today, that is the model. You do need to bring back this model of bourgeois capitalism.

And then basically we work with our companies to try to basically keep those. from basically just turning into sort of this board-like managerial capitalism kind of outcome on the other side, becoming just like every other big company, which, by the way, many of them kind of follow that path, and many of them just become like big companies, just like all the rest of the big companies end up being run by professional CEOs. That's just kind of... Well, I was going to quickly ask, how do you stop that? I don't know that you do. Well, so Burnham would say that you don't.

Like, Burnham would say that it's inevitable process, basically, it's like, what Burnham would say, if he was talking to me, is like, okay, look, smart guy, you're just going to keep repeating history, because you're going to start these companies, you're going to have a Henry Ford, kind of character in charge of them. At some point, they're going to reach a level of scale and complexity where, like, one guy just can't, like, run everything. And you're going to need to bring in the experts, right, the experts, the technically trained experts, the managers, right? The people with like business school degrees, the people with like, you know, the people who have grown up, basically getting trained to run large scale systems. And, you know, these companies are naturally going

to evolve kind of in that direction. I go, okay, so there's all that. And then, and then Brennan made the following point is he said, look, the transition from bourgeois capitalism to managerial capitalism is not just happening in business. It's happening everywhere else in life. It's happening everywhere else in our society. So for example, it's also happening in the government, right? And so the government, right? Just take the U.S. federal government as an example. Like, there's basically been three different forms of federal government in the last hundred years. There was sort of the pre-FDR era in which the federal government was just basically small and basically not very relevant. And then there was the FDR era where he basically appointed

himself king. Like he made himself basically, essentially the Henry Ford of the government or something. And then he basically just told everybody what to do. And that was, you know, the New Deal and World War II and like all this stuff and serving four terms and sort of this model of the imperial presidency. And then there's sort of the model of the government we have today, which is just basically bureaucrats, it's politicians and bureaucrats as far as the I can see. Well, that's not how these, it's not structurally how anything is supposed to be running anymore. You're not supposed to just have a guy who just tells people what to do. You're supposed to have process. You're supposed to have managers. You're supposed to have experts, right?

You're supposed to have professors. You're supposed to have think tanks. You're supposed to have the press. Everybody's supposed to weigh in. You're supposed to have this big conversation. Everybody's supposed to get along. Everything has to be negotiated. Right.

And so basically what Bernie would say is like the entire society transition from kind of individualistic to basically collectivist or let's call it bureaucratic or as he would call it managerial. And like basically that's happened to basically all of society. Right. And this is kind of the experience that you have is that if you think about this as an individual, this is the kind of experience that you have because like everywhere you go in life now, You're like dealing with some bureaucracy, right?

It's like you've got a problem with your cable internet hookup. You're going to talk to the cable company's bureaucracy. Like you can't call the CEO of the cable company. And by the way, if you did, he can't do anything. Like it's going to be somebody deep in the balls of the organization that's going to get your internet to work. You know, you need to get your driver's license renewed. You can go to the DMV. Right.

It's just like everything you do, you know, you go out to eat and like the place where you go out to eat, it's like one of 3,000 restaurants that that company manages that are all identical. right. Everything you do, mass manufacturing, everything you buy, right, has been manufactured by a company that's manufacturing for scale. All of your entertainment, you watch a movie. It's the same movie, 100 million other people are watching. You know, it's like, you know, the actors don't come to your house anymore and, like, act out of play. You're watching a mass produced production, you know, built by this giant bureaucracy in Hollywood. And you're like, wow, this movie, it seems like I've seen this movie like 80 times before. You know, why aren't they making like more creative movies? Well, it's because movie making is a machine now, right? It's a, you know, movies cost $300 million. And there's like a whole process and the whole bureaucracy for making these things. And so what Brunham would say basically is the whole country, the whole society has evolved into this kind of bureaucratic managerialism. And, you know, in other words for that is just stagnation, right? It's just like the whole system is on autopilot. Like the whole society is an autopilot, the government's an autopilot.

It's all an autopilot. And then, you know, every once in a while, you get an Elon must, right? Or, you know, you get the kinds of founders that we deal with. And they kind of step forward. They say, well, actually, I have a different idea. and then they have the temerity to, you know, build a new piece of software or to start a new kind of company or to propose some other creative idea. And so anyway, you see kind of all these kind of, you know, perturbations in the force where these kind of creative individuals pop up. And then, you know, society freaks out and everybody's got an opinion on the whole thing.

But if there is to be progress, right, if there are to be new ideas in the world, new concepts, new forms of art, new forms of culture, new ideas. By the way, new forms of politics, right? By the way, new ways to think about how you raise kids, you know, basically anything new, it's going to be. to come from some unusual individual basically stepping up and saying, I think that this system is wrong. And so that's kind of the fundamental battle that we'll probably spend the rest of our, you know, probably spend the next thousand years of our civilization trying to basically balance between. Yeah, I mean, I can see the example with a company, right? These companies stagnate and then new startups come and replace them. And that's something we've seen over and over and over.

It also happens at the individual level, right? You see celebrities become popular and then they just go and do the same movie over and over and over because they're trying to retain their following. and then people move on to the next new thing. Something that we talked to Balogy about because he came on to talk about the network state is the need for this kind of revolution or innovation at the government level or the state level. I'm just interested in your perspective on that because we have seen it at the individual level, the company level, but we are seeing stagnation at that higher government level. So are you also thinking that we're going to see some of these smaller nations or completely new nations

come up as we see the stagnation in the Western world? Yeah, so there's this great word that gets used, reform, right? Reform is one of those words where my ears always perk up when I see the word because I kind of know the game is being played. And so I'll give you an example. I have all these friends who are very into this thing. They call it education reform, right? And so they're philanthropists, you know, they've been successful, they've got money, and they've got a foundation now and they want to like make the world better.

And so what do they do? They look around. They're like, what are the big problems in the world? And they inevitably, a lot of times they end up looking at public education. And they're just like, wow, like public education is like this huge force in our society and all these kids, you know, legally, you like have to send your kids to basically, you know, most people legally are required to send their kid to a public school. And it's like, wow, like the outcome seemed like really bad. And we keep injecting more money into these schools and yet the results don't get better. And then by the way, there's all these problems. And there's all this like, you know, child abuse, you know, that takes place. And there's all this, you know, these like teacher sex scandals. And then there's all these controversies over the curriculum and like are kids being taught the right things. And. And. And. And. And. And. it's just like, wow, this thing just seems like a giant mess. And so therefore, we need education reform, right? We need to, like, go into the bureaucracy and we need to retool it. We need to improve it. We need to make it better. We need to reengineer it. And basically,

the story is kind of always the same, which is they go in, they do all this work, you spend all this money, and then basically nothing changes. There have been many famous cases of this. I won't pick on people. I will say the Gates Foundation has done a lot of work in this area. And they actually, to their credit, they actually came out with a public report about four years ago where they did this retrospective of, they did a retrospective of the last 50 years of education reform efforts and all of the different work that has been done, all the different ideas that people have had to make schools better. And they did this big report. And basically the result of the report was nothing has worked. Like, nothing has worked for 50 years. Like, there has not been a new idea in 50 years

that has been like tried in large-scale education that's had any impact at all. Basically, the whole effort's just been like a complete, a complete zero. And I've become convinced that's basically universally true, which is basically things don't get reformed. If you have a problem with XYZ existing institution, existing system for the reasons we discussed earlier. Like, it's just, it's not going to get better. It's not going to get reformed. You can go spend an arbitrary amount of time and money trying to reform it and improve it. It's not going to happen.

Why is it not going to happen? Because it doesn't, you know, it doesn't have to happen. The people running it don't want it to happen. This is a so-called principal agent problem, the people in charge aren't actually responsible for it. You know, there's the incentives problem, especially when you deal with law of bureaucracies, people are much more focused on not getting fired than they are on improving anything. And so they'll basically, a lot of presidents encounter this, right?

A lot of presidents come into the White House, right, for the first time. And they're like, wow, I have all these ideas on how to make the government better. They issue all these orders. And then the bureaucracy just ignores them, right? Because the federal government employees, like, what do they know? They know the president's come and go, right? Like, the president's going to be gone in four years or worst case, eight years. Nobody's even going to remember what that guy tried to do.

Right. And so all they just, like, they just weighed out the politicians, right? And then nothing changes. And so anyway, so by default, it's like stagnation as far as the I can see. I've reached the conclusion. This is kind of how I spend my time. And this is why I continue to do what I do. And I think I'll basically do it forever is I really no longer believe in the concept of

institutional reform. Like I think fundamentally it doesn't happen or it's so rare as to like be basically something that you can't ever count on. I think basically progress happens by starting new things. And so like if you want to like reform the school system, the thing you need to do is build new schools, right? From scratch, like built the correct way. if you want to have like a new car company, if you're Elon Musk and you want to have a car company,

you don't spend your time trying to go get whatever existing car company to build a better car. You just like start the car company. And then our friend Bollogy extends it one step further, which is like, okay, you don't try to reform the country. You just start a new country. Now, the obvious problem, the challenge, right, is there was an era of human history where people were starting new countries, like all the countries that we have today are countries at some point that somebody started. Unfortunately, in the modern era, the real estate on the planet's kind of been divided up. in the world's not really that amenable to, you know, changing, you know,

which country controls which territory through conquest. Like that's kind of frowned upon these days. And so, you know, starting a new country in the modern era is probably not a process of like going and staking out a bunch of land and then like declaring yourself in new kingdom and then, you know, it's lending a bunch of new whatever your own legal system. It's probably something else. And of course, Balogu's book kind of explores the something else with this idea of the network state. So, you know, as usually, like biology pushes it to a level that, you know, probably beyond where I would.

But I think, look, I think everything he says, everything, like his situational analysis, I think for sure is 100% correct. Overall, you could say, like, this is a very depressing analysis of the state of affairs and, like, this basically means the world is going to stagnate or how much it's going to happen. And there's a lot to that. There is always this concept of arbitrage, which is like if most of the world is not doing new things, then the person who can do something new has an outsized opportunity. And this is the thing that kind of gets me up every morning, which is like, okay, because most of the world will not change, because most existing companies won't change. because most existing bureaucracies won't change, systems won't change, people won't change. Because of that, the person who has the genuinely new idea, who's willing to put themselves in the line and try to build something new, has a really big outsized opportunity. Because if they succeed, right, they'll get all the benefit. They'll get all the gains.

Like, they'll all of a sudden be the person who's like building and running everything, right? Because it's not going to be the status quo that's going to adapt. Right. So therefore, like, all opportunity in the world is still basically available to all of these, you know, kind of disruptive new entrants. And so basically the more the sort of older world stagnates, the bigger the opportunity on the entrepreneurial side. And honestly, like, I think that's what keeps us in business basically in perpetuity is the model of kind of entrepreneurial capitalism or more generally just entrepreneurialism that, you know, having new ideas and putting them in the world. Like that model is the only source of progress. Yeah. I love the way you put it of not counting on the status quo to innovate. I think that by nature allows the really intelligent, the really creative, the really innovative people to have an opportunity. because if we use companies as an example, if smart companies that became big stayed smart,

then we wouldn't have opportunity for new smart people to innovate, right? There wouldn't be room. So I think that's a wonderful place to end because I think throughout this conversation, you've highlighted so many opportunities for people to get involved and for new businesses to be built. And I think most importantly, as we started off this conversation, you've really highlighted why it's still important, as the way that sounds, it's still so important for us to build because things do stagnate and there is so much more to be built. So thanks, Mark. Thank you so much for talking to us today. Thank you, stuff. Thanks for listening to the A16Z podcast. If you like this episode, don't forget to subscribe,

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