← David Senra
David Senra
Marc Andreessen, co-founder of a16z & Netscape
01:49:40
Marc Andreessen is the co-founder and general partner of Andreessen Horowitz (a16z), one of the most influential venture capital firms in the world.
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- [00:02]
Host
I wasn't expecting to start here. I wanted to talk about why you were consuming so much caffeine that you noticed that your heart was skipping a beat.
- [00:10]
Marc Andreessen
So I love caffeine. So for a very long time, I always said that the ultimate day, like the perfect day, was 12 hours of caffeine followed by four hours of alcohol. That's just like the ultimate. I did cut out. At least for now, I've cut out the four hours of alcohol. But caffeine is just one of nature's most marvelous things. But it turns out you can't overdo it. And so, yeah, a while ago, I was drinking so much coffee at work that I was sitting in a meeting a couple years ago, and I started to feel just a little bit. Something felt off, and I just took my pulse and I realized I was skipping about every tenth heartbeat. So I had like an existential crisis. Cause I'm like, all right, I need to call 911. It's just like, am I about to have a heart attack? Am I about to die? And so I go under the table and I Google and I'm like, is this a problem? And before Dr. Google said, no, it's okay, it's fine. You just might want to cut back a little bit on the caffeine.
- [00:57]
Host
You said something that I love and I never hear other entrepreneurs talk about, but I think it's super important that you don't have any levels of introspection.
- [01:04]
Marc Andreessen
Yes. Zero. As little as possible.
- [01:05]
Host
Why?
- [01:06]
Marc Andreessen
Move forward, Go. Yeah, I don't know. I've just. I've found people who dwell on the past, get stuck in the past. It's just, it's a real problem. And it's a. It's a problem at work and it's a problem at home.
- [01:15]
Host
So I've read, obviously 400 and I think now, 10 biographies of history's case entrepreneurs. And that was one of the most surprising things. Like, what's the most surprising thing that
- [01:21]
Marc Andreessen
you've learned from this?
- [01:22]
Host
They're like, oh, they have little or zero introspection. Like, Sam Walton didn't wake up thinking about his internal self. He just woke up. He's like, I like building Walmart. I'm going to keep building Walmart. I'm going to make more Walmarts. And just kept doing it over and over again.
- [01:32]
Marc Andreessen
And you probably know if you go back 400 years ago, it never would have occurred to anybody to be introspective. The whole idea of, I mean, just all of the modern conceptions around introspection and therapy and all the things that kind of result from that are kind of manufactured in the 1910s, 1920s.
- [01:45]
Host
Say more about that.
- [01:45]
Marc Andreessen
Great men of history didn't sit around doing this stuff at any prior point. Right. It's all a new construction. First Western civilization had to kind of invent the concept of the individual, which was like a new concept several hundred years ago. And then for a long time it was all right, the individual runs and does all these things and builds things and builds empires and builds companies and builds technology and does all these things. And then kind of this kind of guilt based whammy kind of showed up from Europe, a lot of it from Vienna, 1910s, 1920s, Freud and that entire movement and kind of turned all that inward and basically said, okay, now we need to basically second guess the individual. We need to criticize the individual. The individual needs to self criticize. Criticize. Right. The individual needs to feel guilt, needs to look back where it needs to dwell on the past. It never resonated with me.
- [02:33]
Host
Do you find a lot of the greatest founders that you've spent time with and backed and partnered with or have low introspection?
- [02:39]
Marc Andreessen
Yeah, generally. Although in fairness the introspection is probably linked to the personality trait of neuroticism. So a lot of the best founders are, I think 0% neuroticism. They just don't get emotionally phased by things that happen, which is a superpower when you're an entrepreneur. But having said that, some of the great entrepreneurs are effect very neurotic. Like that's also the case. It's not a. Maybe it's a nice to have to be low neuroticism, but not necessary. And so there are some that kind of get wrapped around the axle on kind of personal issues, as you know, these days. Sometimes that then kind of turns into use of psychedelics, different kinds and hallucinogenic drugs. And that's like one very interesting kind of trajectory for kind of the culture of the country, culture of the world. And we'll see where that goes.
- [03:25]
Host
So we've recorded, I don't know, like a dozen of these so far. Most of them with some of the greatest founders living for the show. I can't believe how many times on almost every episode psychedelics pops up and they're like, you should try them. Like, I'm not doing any drugs, just to be clear.
- [03:37]
Marc Andreessen
I'm not, I've never have, I'm never going to. Like, I have horror. I have, you know, the problem is I already have like tons of horror. Stories from people I know or know of that, you know, kind of came out the other side like. Well, I actually. I had a. My deepest conversation. This was actually. Was actually with Huberman. And, you know, and I was describing this phenomenon where we see it in Silicon Valley where, you know, kind of these guys get under pressure and, you know, they kind of feel anxious or whatever, and they decide to, you know, somebody tells them it's psychedelics and they try it and. And they kind of come out the other end as a changed person, and they kind of come out, like, much more at peace. But then they also tend to quit their companies. They move to Indonesia and become a surface director. It's just like, peace out, right? They're just done. There's been a whole bunch of examples of this. And I was complaining to Huberman about this, and in true Huberman, kind of wise Yoda style, he's like, well, how do you know they're not happier? Maybe that was the positive outcome. Maybe the thing that was driving them to be a great entrepreneur was a fundamental level of insecurity and kind of this kind of unsatisfied, kind of neurotic impulse. And now they're just satisfied. Now they're just whatever the serotonin levels or whatever have been recalibrated, that they're just kind of satisfied sitting on the beach and being a surf instructor. And maybe they're better off. And I'm like, yeah, but their company is failing. And so anyway. Yeah, so there's a possibility that there's a better version of you or me on the other side of Ayahuasca, but I'm not willing to find out.
- [04:53]
Host
I'm not either. Daniel Ek has the greatest way to put this. He thinks the best entrepreneurs are not optimizing for happiness, they're optimizing for impact.
- [05:00]
Marc Andreessen
I think that's true. I think that's true. I think it's certainly true for Daniel, who's kind of a great case study of that. Having said that, kind of wonder is that, well, intrinsic versus extrinsic motivations. Impact strikes me a little bit as an extrinsic motivation. It's like impact, money, fame. And by the way, I think extrinsic motivations are fantastic, and I think they can be very motivating. The people who kind of get the great rewards for building great things deserve them. But at least what I found is it's the intrinsic motivations that actually get people up in the morning, and there's where you're dangerously close to straying into introspection. But it's like, okay, what is the thing that causes somebody who's now extremely materially wealthy, extremely successful, you know, to get up in the morning and continue to, you know, kind of punch away at the world? I think those. Those tend to be interior.
- [05:42]
Host
What's that for you?
- [05:43]
Marc Andreessen
Oh, I mean, that would require introspection. I'll let other people speculate.
- [05:49]
Host
No, you have to.
- [05:49]
Marc Andreessen
It's a lot more fun to speculate about other people's. Other people's.
- [05:53]
Host
But I am curious about you because, like, you have. You have a series of quotes that I absolutely love. I save on my phone. I reread from time to time. One of them I'll butcher. But it's just like, you know, the world is way more malleable than you think. And if you just pursue something with a lot of maximum effort, drive, and energy, the world will recalibrate around you easier than you. And I actually reread that this morning before I came over here, and I was like, what is that for, Mark? Like, today, like, what are you waking up trying to change in the world?
- [06:17]
Marc Andreessen
Yeah, there's a lot that we're actually trying to do. I'm suspicious that that's my actual underlying motivation just because, like I said, I don't think external impact is enough to keep people going. Or at least I've seen way too many people who had a high level of external impact, and then at some point they just stop. Okay, well, here's the problem with external impact. It's like, okay, it's four in the morning, you're staring at the ceiling. Like, is that enough? External impact is stuff that's happening to other people. Right. But it's like all. What is it about you? The story I like to tell myself is that I'm competing with myself. The story I like to tell myself is I'm getting up in the morning because I'm trying to become a better version of myself. I'm trying to become smarter and better informed and reach better conclusions and be better at what I do and continue to expand my skills. But again, to actually analyze that properly require a level of therapy that I'm not willing to engage in. So, anyway, so, yes, the much more comfortable conversation is the, yeah, what are you trying to do in the world? Which I would love to talk about.
- [07:14]
Host
I have almost no introspection either, so I understand that. All right, so tell me what you're trying to do in the world then.
- [07:18]
Marc Andreessen
Yeah, I mean, look, we have had this. It's actually fairly Amazing that it's become a controversial kind of thing. But we just have this fundamental view that technology is unbalanced, an enormously powerful force in the world. And basically that the big problem with the world is that there's not enough technology, there's not enough information, there's not enough intelligence. And we have this opportunity. We have these special sets of technologies that let us fundamentally improve things. And then there's this very special kind of personality type of the entrepreneur who's able to build the product and then able to build a company and build a phenomenon and really make an impact on things. And so when I look at the world, I'm just like, okay, this is just like, this is a very. The world we live in is just a very primitive and crude place as compared to what it should be and what it could be. And so the whole thing that we've been trying to do for 17 years at our firm is build kind of the ideal partner to the founders that are trying to do that based on our own experiences of having been founders that were trying to do that. Overall, the world, especially the Western world, it's just stagnant. The overall kind of theme of things is just everything is stagnant. And we could talk a lot about that, but every once in a while, you have somebody who comes along. It's just like, all right. No, I actually have an idea of how to make things fundamentally better. And I have a way to build a business around that and build a company, build an empire around that. And those people include ourselves in this. But those of us that are trying to do that, we're like a rope movement basically against stagnation. But without us, there's nothing but stagnation. But it's actually really funny. There's always this kind of criticism that you get from whatever the. The corporate press or kind of outside critics, which is like, oh, you know, you VCs are finding the wrong things, or you entrepreneurs are building the wrong things. It's like, well, nobody, like, licensed us to do any of this. Like, we didn't, like, apply for a permit, right? Like, get, like, judged by somebody ahead of time and told, yes, you get to do this, and you don't get to do this. Like, many people could be trying to do this. Anybody can do this. Anybody can. Anybody can start, build a product, start a company. You know, start even trying to be a vc. These are all completely open fields. And it's just. It's shocking to me how few people actually give it a shot. And, you know, and you know, but the fate of the world over the next 1500 years is riding on the people who actually want to give it a shot.
- [09:23]
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- [10:28]
Host
so when you started the firm 17 years ago, was your thesis exactly the same as it is today?
- [10:33]
Marc Andreessen
I'd say the core thesis is the same. The specifics have changed enormously. We can talk about both parts of that. But yeah, the core thesis was kind of the startup, the entrepreneur, the founder is going to be the core engine of progress in the world. And I think that's more true than ever. In fact, when we started, it was still controversial. The idea that a founder would run their own company.
- [10:53]
Host
Even in 2008, 2009.
- [10:55]
Marc Andreessen
Yeah, it was still very. Well, it was very controversial. In fact, they were high profile companies at the time that were getting heavily criticized for basically having these little kids running around running these companies.
- [11:03]
Host
Okay, so you have this encyclopedic knowledge of the history of Silicon Valley in your head. I probably read, I don't know, 30 to 40 books on it. So I have some level. But not that you do. I remember reading a book on Nolan Bushnell, front of Atari. He was like 27 at the time and it was excessively rare. It talks about that in his stories. It's like excessively rare for him not to be replaced. Once Atari started growing with an older CEO, were there other examples before him?
- [11:29]
Marc Andreessen
Well, so Christopher Columbus, Alexander the Great. Right. So throughout history, most of The Thomas Jefferson. Throughout history, most of the great things that have been built have been built by this kind of super charismatic founder type, will to power founder type who basically built and run something to. Hold on, Henry Ford, hold on.
- [11:49]
Host
I love that you went here because you don't remember this, but we had dinner in Miami with Jared Kushner like a year ago or something, and me and you would wrestle because I was so excited to talk to you and I was trying to get out of you. Like, you know, because I think about history, space entrepreneurs all day. Like, this is why I do it seven days a week. Like, who are these entrepreneurs from history that you like? You start naming country founders.
- [12:09]
Marc Andreessen
Exactly. There's this, like, recency bias, right? Which is like, the world that we live in today is the normal state of the world. And like, everything that happened in the past is, like, weird and different. And those people were like, dumber than we are and, like, all screwed up. And it's like, well, maybe, or maybe the world worked a certain way for thousands of years and we're in the weird time. Like, maybe we're in a time that's just like, really unusual from a historical standpoint. And I think this is one of those dimensions in which that's true. It just. It never would have occurred to anybody 100, 200, 300 years ago that if somebody was going to start something, that they weren't going to be the person who ran it. Like, obviously, it was just obviously the case. The book that I always recommend on this topic is called the Machiavellians, which is a sort of famous book from the 1940s by this guy, James Byrne, who's one of the great geniuses of the the 20th century. And the way he describes it basically is he said there have been two fundamental modes of business organization over the course of basically the history of capitalism. There's what he calls bourgeois capitalism, which basically is like, founder runs the company name on the door. The classic archetype for bourgeois capitalism was Henry ford in the 1920s, and today it's Elon Musk. It's just like, that's you. And by the way, in the old days it was Ford Motor Company. It's not Musk Motor Company, but everybody knows Tesla and SpaceX. These are Elon Musk. And again, that maps to this historical thing, which is that's also how countries ran, and that's also how cities ran and all these things. Religions, by the way, basically everything founders led the way. That's the historical norm. And then what he Basically says in this book is he goes through and he says there's this new basically model that basically is an artifact again, it's an artifact of this weird period of time between the 1880s and 1920s where the modern world as we know it today formed. And he said there was a new philosophy of leadership and management which is called, called managerialism. Sort of the rise of the concept of a manager, and specifically a manager as contrasted to a leader. And so therefore the manager, therefore the idea of a management school, therefore Harvard and Stanford business schools, therefore the idea of the manager who replaces the founder running a company. Therefore the idea of management as a skill set that can be used to run many different kinds of businesses. In the 70s, this then turned into the conglomerate, which was the idea that it doesn't matter what the company does. If you have a good manager, the company should do 30 different things. And so managerialism is this idea that you have this kind of interchangeable management skill and that that can basically run anything. And actually what Burnham says is, he says, look, people are going to try to draw a value judgment on this and they're going to try to say this is better or worse than the old name on the door model. But he said the reality of the modern world is everything is big. Like for the electrical power grid to get big, or the road network to get big, or the car industry to get big, large scale systems need to be run by people who are training how to run large scale systems. And so he said, you may or may not. And same thing with countries. Large scale countries are going to be run by people who are good at running large scale things. And the founding personality type is not the manager personality type. Those are different. And so there's going to be a handoff when things get big and complicated. And so that's the model that Nolan Bushnell talks about, and that's the model that dominated the Silicon Valley for 50 years. The problem with his argument is that assumes the managers are going to do a good job, right? And I think if there's like one dominant theme that we're seeing in the last 30 years in the west, for sure, it's like managers generally writ large, are not doing a great job. Or another way to put it is the managers maybe are good at managing something that's going to be status quo for a long time. Like if it doesn't change, maybe they can run the banks for a long time or they can run the power company for a long time or the car company. And as long as the Car is the car is the car or soup. Soup is soup is soup. It kind of doesn't matter. But the minute things change, the manager personality type, because it's not the founder personality type, it doesn't know how to deal with change. Not everything is changing. A lot of things aren't changing. But for the things that are changing, they're changing really, really quickly. I mean, SpaceX is like the classic example of this. Imagine being a professionally trained manager, trained at a top management school, working for a rocket launch company, competing with SpaceX. And the assumption of the entire rocket industry for the last hundred years has been the rockets are used once and then that's it. And the economics of launch are dominated by having to build a new rocket every time. And then this crazy guy in California comes up with this thing where the rockets land on their butt and you can't replicate it. Okay, your management skill, what good are your management skills at that point? And I think there's a whole bunch of interesting areas of human activity where, like, that shift is happening. And so I think this is where Burnham's thesis collapses, where it's just like, okay, the managers actually can't do it. Yes, there's a need to run things at scale, but no, the managers actually can't do it because they can't adapt
- [16:21]
Host
and the founder can just learn how to run things at scale.
- [16:22]
Marc Andreessen
Well, that's the theory and that's a big part of our theories. Yeah, the founders can actually learn how to do this. And, you know, look, they're, you know, this is still a controversial topic. This, you know, this still comes up like this.
- [16:31]
Host
Is it controversial?
- [16:32]
Marc Andreessen
Well, it is, because founders aren't necessarily. Especially founders on day one are not good at doing this. Like, okay, so, so in tech. Let's just talk about tech. Specifically in tech, the founder tends to have been in a lab, literally or metaphorically, for 20 years before they start their company. They've been probably working by themselves or with a small team. They've been building technology, they haven't been running things, they haven't been managing large organizations, they haven't been running public companies. And so there is a missing skill set. And on day one, they don't know how to do that. And so they do need to be willing to learn how to do that. And then, by the way, they do need to be capable of doing that, because some of them can and some of them can't. But yeah, so this maybe is like the core thesis behind our firm, which is you're much more likely to build something important in the 21st century, if you start with the founder and train them on management, than you are to start with the manager and try to train them on being a founder, on creating new things. And I think that this trend is intensifying because what's happening is all the old edifices, all the old incumbent institutions of the last 100 years that are run by managers, they're all at some state of fundamental collapse, like the. They're all collapsing in trust and credibility because they can't adapt. And so this issue is becoming more and more acute, which is the system that we thought was necessary and sufficient actually just does not work. And if anything good is going to happen, it's going to have to be somebody. It's going to have to be Henry Ford, Elon Musk type who actually does it.
- [17:49]
Host
You think it's in a vast minority of people agree with you.
- [17:53]
Marc Andreessen
Look, it's becoming more common. I mean, when you get an Elon Musk and Steve Jobs, when you get these kind of archetypal examples of it, it's a lot easier to sell it. You know, Mark Barr Zuckerberg we were talking about earlier, like, you know, he's now a great case study of this, right? He had, you know, when Mark started Facebook, he has never. He had never had a job before. Okay? Not only had he not managed people, he had not worked for anybody, right? So, like, he had. He started with zero. And his. His learning curve, which, by the way, was happened fully in the public eye, right? His learning curve was vertical. And by the way, it's still vertical. Like, he spends, like, an enormous amount of time learning how to become better at running, running, running these things at large scale. He's still the founder and he's still the innovator, and he's still like a fountain of ideas on what to do. So he's that double. He's like the classic example of a double thread. And then what happens is other founders look at that and they're like, oh, I could do that. Right?
- [18:39]
Host
Which is exactly what Steve Jobs said when he saw Nolan Bush now.
- [18:42]
Marc Andreessen
Exactly.
- [18:42]
Host
I can run my company.
- [18:43]
Marc Andreessen
I can do that. Yeah, exactly. And by the way, it's amazing how fast this stuff shifted because Steve famously had this short period of time where he worked for Hewlett Packard, and I think. I don't know if it's true. The legend is that Jobs pitched his manager at Hewlett Packard.
- [18:55]
Host
No, Wozniak pitched him.
- [18:56]
Marc Andreessen
Was it Wozniak? Wozniak pitched There was some other story where Jobs went into some meeting with some manager trying to pitch the thing, and the line from the manager was, absolutely not. This is the dumbest thing I've ever heard. Get your feet off my desk and get out of here. Right. You can just imagine Steve with his. You know, and they had to be
- [19:10]
Host
bare feet at that time. My favorite Apple lore is that the first sale in Apple, in Apple's history was made barefoot. When he walked into the bike shop, he was barefoot.
- [19:22]
Marc Andreessen
What's amazing about that is, you know. Yeah. So wasn't that for sure, Murphy. Hewlett Packard. Everything I'm describing was Hewlett Packard in the 1950s and 1960s and 1940s. That was also Dave Packard and Bill Hewlett were that founder type. And Dave Packard and Bill Hewlett ran their company for. Between the two of them for, like, 50 years.
- [19:37]
Host
Do you think that's.
- [19:38]
Marc Andreessen
And by the way, Silicon Valley was built in large part on hp. HP was the original Silicon Valley company.
- [19:42]
Host
Okay, that's the next question.
- [19:44]
Marc Andreessen
Run by its founders for 50 years. And yet people concluded the founders shouldn't run the companies. Right. And so it's like. It's one of those things where it's like. It's kind of so obvious. It was staring everybody in the face. And so people had to construct kind of elaborate, you know, basically, you know, these. These elaborate kind of lattices of, like, you know, theories to basically get around the fundamental fact that you need somebody who knows what to do actually running the.
- [20:01]
Host
Do you think HP might have been the most influential company in Silicon Valley history?
- [20:05]
Marc Andreessen
It was, for sure the most influential company from 1940 to 1980. And then probably after that, Intel.
- [20:12]
Host
Well, you go to the founders of intel and you read biographies of them, and they talk about modeling off of hp.
- [20:18]
Marc Andreessen
Yeah, that's right. That's right. Yeah, that's right.
- [20:19]
Host
And then how many founders modeled off of Bob Noyce and Intel after the fact, including Steve Jobs, who would go to Bob Noyce's house for dinner.
- [20:26]
Marc Andreessen
Yeah, that's right. By the way, that's another great example, because Bob Noyce, at least, you know, if you look at photos of Bob Noyce, you're like, wow, this guy's like a pillar of society. Like, he's, you know, he's very well dressed, and he's kind of very adult, and he's very like, you know, he's famously the leader of the Traitorous Eight, you know, the group that left Shockley to start Fairchild and then left Fairchild to start intel to start Intel. And so Bob Noyce was 100% the Steve Jobs of his time. Just in the short sleeve white dress shirt and the skinny black tie. But it was again, it's like the exact same thing. And so unfortunately, I never met Bob Noyce, but I could easily imagine Bob Noyce and Steve Jobs sitting down and being able to talk for three hours and completely understanding each other, despite the fact that the look and feel is like completely.
- [21:03]
Host
He was almost like a disciplinarian to Steve because Steve was wild and reckless. I was also wild and reckless. You need to mature. And I think Bob's wife maybe went to work at Apple early on too. So he talked about this in his biography. There's a few great biographies of Bob Noyce. But he said that the reason he spent so much time after he's really successful spending time with young entrepreneurs. He said it was restocking the stream
- [21:24]
Marc Andreessen
in which he fished from. Amazing.
- [21:26]
Host
He thought it was really important. And he's like, I learned from all the guys before me. I need to take that knowledge I've built up over multiple decades and push
- [21:32]
Marc Andreessen
it down the generation.
- [21:33]
Host
I want to go back to starting the firm.
- [21:34]
Marc Andreessen
Though.
- [21:34]
Host
This is interesting, what was occurring in your life either at that time or before that, that you had this observation that this had to be done.
- [21:41]
Marc Andreessen
Oh, so we've got all these elaborate theories. The practical reality of it was my partner Ben and I had become very active angel investors. And I'd been an angel investor since the mid-90s. But then Ben and I started doing it kind of as a real thing, putting significant time into it, probably starting in 2003. Well, I did it kind of throughout the early 2000s, but 2003, 2004, it's hard to remember now, but if you go back to 2003, 2004, there weren't thousands of angel investors, there were eight. It was like Ryan Conway and a handful of people. And then Ben and I were running around doing it. And this was very significant in the evolution of the venture capital industry because this was the point at which the traditional VCs got disintermediated by Angelus and seed investors who kind of inserted in before the VCS arrived, which was this fundamental change that changed the whole industry. But we were part of that. But as a consequence, we were investing in all these new companies basically at the point of formation. We were basically playing amateur early stage vc and we're getting. And we were always like, we're not going on the board. Like, you know, you're going to raise money for a real venture firm later. They're going to go on your board and whatever and work with you. And what we just found over and over and over and over again was we ended up getting pulled into these companies either because there were issues that just like the other people that they were, you know, working with, or they're, you know, they either hadn't raised venture yet or the vcs that they'd raised from couldn't help them with. And so we just got pulled in. And the reason was we had been running companies at that point for, you know, whatever, 20 years, years. And so we at least had some idea of what we were doing. And then the other is we kept getting brought into conflict resolution between the founders and the VCs because especially because again, much more common at that time, especially if the VC's fundamental point of view is the founder's not going to run the company and we need to replace you with a professional manager as fast as possible. The founders are not necessarily going to like that, and they might resist that. And by the way, even if they're on board with that idea, they might not like the person who the founder, who the VC wants to bring in. And so we kept ending up in these kind of basically as arbitrators in this sort of. In theory, we were kind of trusted intermediaries because we knew the founders, we knew the VCs, and we could kind of help bridge between that. But literally what happened was after a while, we were like spending like eight hours a day just doing this. And we're like, all right. It's like weird. It's like you're writing $100,000 check and you're spending all this time doing it, and then to basically arbitrate it to somebody who wrote a $10 million check, and it's just like, all right, we should probably just write the $10 million check. And so I always think, like the best the founders, one of my theories of the great founders is they tend to be able to operate at kind of the strategic conceptual level and then the practical level at the same time. And so we had a whole theory I could take you through for the evolution of the venture business. Yeah. But underneath that was just this actual. The lived experience of what was actually happening on the ground. The big theory of the firm that we had at that time was linked to this idea of. Was linked to this idea of founders running the show, but it was also a structural observation of what was happening in the venture industry, which was basically what we did was in line with your philosophy. We went back and we studied a lot of other businesses that have similarities to the venture business. And so we studied private equity, venture capital, sorry, private equity, hedge funds, investment banks, law firms, management consulting firms, ad agencies, accounting firms. Basically anything where the product is fundamentally a relationship, you know, a knowledge work, you know, kind of relationship as compared to something that gets. That gets manufactured. And what we observed is basically an example Hollywood talent agencies actually is the one we've probably talked publicly about the most. And so that was a great case study. The old story.
- [24:58]
Host
He was in this studio a few months ago.
- [25:00]
Marc Andreessen
Fantastic. And so. And he actually. And by the way, he gave us, you know, we make a point of crediting, like he gave us a lot of this theory. So a lot of this comes from him. But. Well, actually, I'll tell it through his. Through his. His experience. So when he started his agency in. Was it 80, whatever? No, 75. 75.
- [25:17]
Host
In the 70s.
- [25:17]
Marc Andreessen
In the 70s, like in the mid-70s. It was actually very similar. It was. Structurally, it was very similar to when we started a 16Z in 2009, which was. The configuration of the industry at that point was basically a bunch of essentially service firms, a bunch of talent agencies, none of which were at very high scale. And then each of them was basically a tribe of basically solo operators. And so the concept in Hollywood was you had an agent and that was your guy, and that agent knew whoever that agent knew and had whatever relationships that agent had. But the other agents at your agency were not available to you. And there was no collective benefit to the fact that you were at an agency that had not just your guy, but like 100 other guys. There was no collective payoff to that. They ran that in that way for a very specific reason, which was this kind of this eat what you kill professional services mentality, where everybody should have to go build their own book of business, but you end up, you're just dealing with a guy as opposed to a firm. There's no firm, there's no collective thing. And that was basically the condition of venture capital in 2009, which is at this point, we knew all the VCs really well, and we had raised venture, and we had worked with all these other companies that had raised venture. And basically all of the legacy venture firms at that point, they were all like that. They were all just tribes of lone wolves. And then the thing that we knew that was not publicly known was, generally speaking, inside the firms, they didn't even like each other.
- [26:31]
Host
Oh, I hear stories like this all the time.
- [26:35]
Marc Andreessen
And so it's like, whatever. There's Joe and Mary who are partners at a venture firm and you're working with Joe and Mary has a key connection that you need access to. And so he asked Joe, can Mary introduce me to so and so. And what you don't know is they're having like a brutal fight. They're like trying to destroy each other because they're fundamentally economics, they're going for a greater slice of the profit pool. And so they're really going at it. And so we saw example after example a venture firm that was basically either two things actually. One is either melting down due to just internal strife and conflict, or by the way, the other was generational succession. The other issue is a lot of the dominant venture firms in 2009 had been around for 30 or 40 years and they were now on their third generation of partners, going to their fourth generation of partners. And again, it's the same thing. They had been founded by Dynamos. And then the later generation people were not like that. So we basically said, oh, this is where the Ovus thing comes in. As we said, look, that's not going to last. And so our theory of it was what we call death of the middle. Or we sometimes the negative way to frame it is death of the metal. The positive way is the barbell, which is what's happened in all these other industries, which is basically the industry gets stretched apart like taps. And what you get is you get this barbell thing and on one side of the barbell you get early stage angel seed investor who are really like first money and staying very light on their feet, writing a relatively small check, but being involved in companies extremely early on, taking a lot of risk. And then on the other side you get basically scaled platforms so you get large scale enterprises that have a lot of throwaway, a lot of access, very big networks and then access to a lot of money. The other comparison we always make is to retail shopping, which is there used to be department stores, stores like Sears and JCPenney, which basically were the brand promise was pretty good selection of products and pretty good prices. And then now those are dead and what you have instead are boutiques like the Gucci store or the Apple store. And then you've got this super scale e commerce companies like Walmart and Amazon. We were to the point where it's just like there's no reason ever go to a department store because it's got less selection than Walmart and Amazon, but it doesn't have the quality tier and the special experience of a gushier.
- [28:30]
Host
But you had that thought in mind when you started ASX 100%.
- [28:33]
Marc Andreessen
Yeah, exactly. Yeah. It was a conceptual leap for venture capital at the time. But the exact same thing had happened to private equity. The exact same thing had happened in hedge funds. The exact same thing had happened in investment.
- [28:41]
Host
And you knew that by what? Just reading.
- [28:43]
Marc Andreessen
So, like investment Investment banks is a classic example. So if you read about the sort of the original investment banks in the US between like 1880 and 1920, they were all like boutique venture capital firms. In the 1970s, 1980s in the US it was like 20 guys.
- [28:56]
Host
And these are more like merchant bankers.
- [28:58]
Marc Andreessen
Yeah, well. And so the classic stories, which I love so much, so JP Morgan's one of my kind of favorite historical figures, and J.P. morgan was an example of that. The J.P. morgan Investment bank was like this. Basically this. It was very important, but it was like this tiny little operation. It was fit in a single office. It was, I don't know, probably 20 principals and some office staff or something. It was not large. And actually the hidden secret to J.P. morgan was he was the son. The father was Junius Morgan.
- [29:26]
Host
Okay, I literally, when you were talking, I was like, wait, I was shocking that you would say pick him, because I actually found his father more formidable individual than him.
- [29:33]
Marc Andreessen
He was. So he was. Which is almost always the case of any famous public figure, as the father is almost always a more interesting story, which a lot of examples of that. But however. Yeah, so Junius Morgan and then JP Morgan has filled a specific economic role that's gotten lost in history, which is basically the Junius Morgan bank was in London, the JP Morgan bank was in New York. And what the Morgan family was doing was they were funneling money from the old slow growth economy of Europe into the new high growth economy, the economy of the US but again, it was exactly your point. Like it was this little boutique family operation. The other great thing about that area of history is they were all bifurcated by religion. There were the Protestant investment banks and there were the Jewish investment banks. And they did not mix.
- [30:15]
Host
No, not at all.
- [30:16]
Marc Andreessen
Completely different worlds. And As a consequence, JP Morgan was the Protestant banks like JPMorgan were able to find the railroads, which were considered the real businesses at the time. But then all the disreputable stuff like movie companies and department stores, those are all the Jewish investment banks, by the way, almost entirely Jewish founders. And JP Morgan is the big survivor of that today in the form of JP Morgan Chase and then, and then on the Jewish side it's Goldman Sachs is the great survivor. But again if you go back, so that's.
- [30:43]
Host
You consider that the barbell in investment banking. You have the JP Morgan kind of like family partnership and then you have the complete scale of Goldman Sachs.
- [30:51]
Marc Andreessen
And so what happened was JP Morgan and Goldman Sachs started out 100 years ago. They were on the one side of the 100 years ago. They were actually in the middle. They were kind of again this sort of. They were boutiques but they were like of their time. They were like today you call them like mid market, sometimes called bulge bracket kind of thing as opposed to just like a solo operator or something. Actually the way JFK's father got started was he literally hung out a shingle in the 1920s, which is Joseph P. Kennedy, banker, private banker. And he just did deals and he was like an angel investor at the time. And then you had the big commercial banks, but the big commercial banks had no interest in issuing loans to these speculative crazy entrepreneurs. And so, so in that time JP Morgan and Goldman Sachs and Kuhn Loeb and Drexel and all these other kind of mid market banks, Morgan Stanley, the banks that became Morgan Stanley were kind of these mid things. Now what's happened sitting here 100 years later, those are now the scale players. The ones who didn't scale are kind of long forgotten. Having said that, there's one firm that survives in the old model and that's Allan Co. And there are other boutique investment banks today, But Allen Co. Was founded in the 1920s and is uniquely the one that survived in the original model of boutique deliberately being a boutique investment investment bank. And it stayed that way for 100 years. And so one way to think about it is that today that's the barbell in banking, which is Allen Company on the one side and then JP Morgan and Goldman Sachs on the other side.
- [32:05]
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- [33:16]
Host
So are you reading about this while you're founding the firm before you're founding the firm Room.
- [33:22]
Marc Andreessen
Ben and I spent about a year and a half planning the firm. And part of it was he was in, we call industrial servitude. He was working for Hewlett Packard after we sold our company to hp. So he was running a big part of HP at the time. And so we couldn't literally start a new full time thing until he got free of that. So we had a year and a half to kind of study and think and work.
- [33:39]
Host
And because you had this period from 2003 or 2002, when you're doing angel investing a lot till you start your company six, seven years later, you're observing all of the weaknesses in the model and that's where you have, hey, why don't we take the caa? I think Ovitz calls it like the Phalanx, where it's like if you have one agent at caa, you have all of us and they would like roll deep. I think he says in his book, like they, oh, my agent's coming to the premiere. No, it's like 20 agents are coming and I think they redressed in like the same kind of suit maker. And like they were intentionally trying to intimidate like their competition.
- [34:10]
Marc Andreessen
Armani suits. Sulka Shirts was a shirt maker in Beverly Hills and sober, you know, all sober colors, white shirts, shirts. And then I think he had a bulk purchase deal, I think with the local Jaguar dealer. And the legend at least has it, is that the license plates all said CAA1, CAA2 CAA3. And so you'd go to a premiere and there would be like 20 jags lined up and then 20 guys in identical suits coming out. And yeah, this is the exact thing. It's just like now that's the Hollywood version. But just imagine the psychological impact of that if you're just like an old school agent. This is sort of. Michael's a very dear friend. He became very controversial over the years. And the reason he became so controversial, I think is just because he smoked his competition so severely. Like he pounded them so hard, there was no response. You're just a guy working for an old agency and you've got your clients and these 20 CA are showing up and like, it's just, yeah, it's this force and the clients. If you talk to him, by the way, you know, a lot of his clients are, you know, still, still active today, you know, from, from the period. If you talk to them, it's just like, yeah, it's just a no brainer, brainer. It's like, do you want to work with a guy or do you want to work with a firm? It's just obvious he has, I don't know if he told you all these stories. Can you tell me about his morning schedule thing?
- [35:16]
Host
The getting on the bike, doing the.
- [35:18]
Marc Andreessen
No, no. For the firm. For the firm. No, no, no. So this is again, something that's specific to Hollywood, but it's a great example of that. Okay, so the agency business at the time he started CA, the agency business is like 90 years old or something, right? It started out doing vaudeville bookings and music halls. And it had been around for like decades. And so the people involved in it had had decades to think about like the best way to do it. And they had arrived at a set of practices. And one of the practices, I think I'm getting this right. One of the practices was at every agency they would have their staff meeting in the morning at 9am and they would basically share, you know, whatever information is going to get shared in the agency would get shared at that point. And oh, you know, this studio head wants a script to do, he wants to do a crime thriller and here's the script and whatever. And then, you know, this is like the point where there would be minimal, whatever minimal handoff existed to the other agency. And so this is where everybody would kind of get updated. And so the staff meeting would go from like 9am to 10am and then at 10am they start calling their clients and they'd be like, oh, you know, we heard there's a, you know, whatever. There's going to be a casting call for, you know, this great new role for this professional thief or whatever. And you should consider doing that. And so of course Michael's like, all right, well we'll have our staff meeting at 7am we'll be done at 8. Between 8 and 9 we'll call all the clients. By the way, we won't just call our clients we'll call their clients, right? And so imagine you're whatever, Paul Newman, and you've got some agent you've been working with for 20 years, and he calls you at your agent, calls you at 11 o' clock and is like, I've got this great role. And you say, oh, the guys at CA called me about that three hours ago. And your agent's like, they don't represent you. And Paul's like, yeah, isn't it great? Isn't that fantastic? And so you just, again, you just like, you rinse and repeat that a thousand times. And it's just to the client, it's just like completely obvious what to do. And so, yeah, so the reason I go through this, the moral of the story is again, it's sort of this idea, incumbency, you know, incumbency, status quo. Like, you just end up. You end up. You end up in any business, you just end up with all these embedded assumptions generally. And then, you know, 90 years later, right, so the founders of the agency were 90 years ago. They weren't involved anymore. So the people who were running competitive agencies were managers. Same thing. Managers, not founders. But the thing a manager never does unless they're under duress is reconsider fundamental assumptions. They hate that. The whole point of running something big is you don't have to do that. You get to run the big thing at scale. You don't have to go in and reinvent it from scratch. That sounds like a nightmare. But anyway, as a consequence of that, you end up with all these embedded assumptions that are basically just unspoken. Nobody's questioning. Questioning is not happening. And if you take the time, you can kind of go in and go back. You know, first principles, you can kind of go in and you can say, okay, well, how do they arrive at that? And what we found in just industry, I mean, this is what our founders do every day. It's just an industry after industry after industry. There's all these embedded assumptions that made sense in 1970 or 1930 or 1880 that just don't make sense anymore.
- [37:54]
Host
I love that you do that. I always say it's like not what you do, it's how you do it. And if the idea that you could take, I'm like, I'm not running a talent agency. But there's so many of these principles that I could apply to venture capital and your blog archive, which I absolutely love. And I told you I've read like multiple things times. I did episodes on it. You would give advice to young people. It's like, my advice is go work in an industry that's still. The founders of that industry are still working. When I read Ovitz's book, the way I would summarize his approach, because he is in this big, stodgy, slow moving, very bureaucratic organization. It's like, oh, mediocrity is always invisible until passion shows up and exposes it.
- [38:28]
Marc Andreessen
Oh, interesting. Yes. Right.
- [38:30]
Host
And that's what he did.
- [38:30]
Marc Andreessen
Yeah, that's right.
- [38:31]
Host
He's just like, there's so many things that you guys could be doing better here. I can't do it in the. And I remember correctly, he took some of these ideas to his boss.
- [38:37]
Marc Andreessen
Oh, yeah, yeah, yeah, yeah.
- [38:38]
Host
Because that guy was his mentor. I can't remember his name.
- [38:40]
Marc Andreessen
He famously worked for the CEO of William Morris. Yeah, yeah. Which was the biggest of the talent agencies at the time.
- [38:44]
Host
So were you and Ben essentially just designing what you wish you had when you were founders?
- [38:48]
Marc Andreessen
Yeah, that's right. And again, that may be a cheat code, but yeah, if you've been the customer, obviously this all becomes a lot more obvious.
- [38:55]
Host
I don't know if you want to answer this question or not, but in Warren Buffett shareholder Waters, he has this great line where it's like really important to pick to play against weak competition. Did you feel that, that there was going to be like that point in time in venture capital history that you were going to be playing against weak or weaker competition?
- [39:11]
Marc Andreessen
I would say not exactly. We didn't view them as weak. We viewed them as basically, we viewed them as running on a status quo set of ideas. And to be clear, part of why we think about this, we had raised money from, at the time, in the time, what were probably the two best venture venture firms, so client Perkins in the 90s, and I work with John Doerr very closely for five years in Netscape and then Cloudcloud. We raised money from Benchmark when they were like king of the hill and Andy Ratcliffe, who was one of the founders of the firm and as a legendary, legendary, brilliant vc. And so we had worked with. We just had accident of history. We had worked with two of the whatever, top five or whatever people in the field for a long time. And they were and are, by the way, brilliant at running on the model that existed. John was brilliant at that. Andy's brilliant at that. They're still brilliant today. It was less a competition of, oh, these people are soft or these people aren't smart or anything. It was none of that. It was, no, they're really good at executing against this particular playbook. And by the way, that's why it's okay, if we're going to do this, we need to be playing by a different playbook.
- [40:08]
Host
There is no such thing as scaled venture capital.
- [40:10]
Marc Andreessen
At the time, no. At the time, no. Because the firms all hit this. They all hit this limit. They all fundamentally hit this limit. They all hit this limit where they just could. The idea of a partnership of equals or even a hierarchical partnership, it just breaks at some point because there's just too much internal dissension. It is too hard to coordinate. And then everybody's fighting for slices of what was viewed at the time to be a fixed size pipeline high. And so none of the other firms could. Structurally, there was just no way to get to scale.
- [40:37]
Host
Where else did you take ideas from besides the agent business in Hollywood and the merchant bank investment banking industry?
- [40:43]
Marc Andreessen
I mean it was just very obvious that it happened in private equity. This was the time when it was actually really. This was around the time when KKR and firms like it were hitting their stride with they're actually building a lot of operational capabilities in house. They were actually building their own actually investment banks in house. One of the things we've never done but has always been on the ideal list is to actually just have an in house bank. And KKR had actually done that. Just build a captive bank. And so they had done a bunch of things like that. And so we saw it happening, which is the mid tier private equity firms were collapsing and you either needed a solo, very light on your feet, kind of solo operator on the one side doing small deals, or you needed to have a scale platform like kkr. It happened in hedge funds. It happened in. But I mean it had long actually actually the TV show Mad Men. Mad Men tells the structural story of this happening in the advertising field in the 60s and 70s. And I will ruthlessly spoil Mad Men because it's been off the air for like 20 years at this point. But a big part of the arc of Mad Men is those guys are working. Sterling Cooper is a classic mid market ad agency. And then whatever the third season they sell it to McCann, which was the scale player at the the time. And they show you all the pros and they clearly talked to people who had been through this because they showed you all the pros and cons of working for McCann because McCann's this giant machine. And so Don Draper's used to like making all the creative decisions and now he's just in this conference room arguing with people until he just, like, gets up and walks out. But then Don Draper and Roger Sterling start their own startup. They start Sterling Cooper Draper Price. That's the second one, which starts out as a true startup, as a true boutique startup. And then they have this whatever, year and a half, just, just fucking hell. They can't get anywhere. They can't get clients because they're too small. They're subscale. And then I think in the end, I forget it's been too long, but I think in the end, I think they end up selling it. No, no, no, no, no, no. Sorry, I got it wrong. They sell the first one to the British ad agency, that just completely destroys it. And then they sell the second one in the can, so they actually show that process happening twice. And so again, if you go back to history, that is what happened in the ad agencies basically between the 40s and the 70s. Basically, television catalyzed that, like when television emerged, advertising became a much bigger deal than it had been before. And it just. It had to be professionalized in a different way. The other thing that happened is, of course, the external environment changes, right? So everything we just talked about just has to do with the internal mechanics of how these things run. But the other thing that happens is the external environment changes, right? And so part of what I think, what Michael would say, I think you would agree with this. Part of what made CAA possible is at one point, basically, Hollywood was just movies. And then there was like whatever, a low risk kind of TV division. And by the 70s and 80s, Hollywood was becoming much bigger than just movies, right? It was movies and TV and advertising and music and so sports and politics and culture and all kinds of things in fairness to our competitors. Silicon Valley, between, call it 1950 to 2010, was primarily just in the tools business. Primarily the companies that, starting with Hewlett Packard, the companies that we all back and built, were basically just building tools. And you'd build a tool like an operating system or a disk drive or something, and you'd sell it to people and they'd figure out what to do with. Was right around the time we started our firm that the Valley was going from being primarily tools business businesses to actually building directly competitive companies in incumbent industries. And so Airbnb going directly into the hospitality industry. So alternate universe, Airbnb is just boutique booking hotel software for running Airbnbs. It's a tiny little boutique business building basically a little spreadsheet software, but no Airbnb. Brian Chesky decided brilliantly, we're just going to go into the hospitality business and compete with hotels directly. Uber and Lyft in the old world were just taxi dispatch software. In the new world, they're full transportation providers. Tesla in the old world would have just been software for self driving cars. Tesla in the new world builds the entire car. By the way, Facebook, same thing. Prior to Facebook, if you built online ad software, you were selling it to the media companies. Mark's like, no, we're just going to beat the media company. We're just going to build the entire thing. And so this was the other thing that happened was for us was that that was right around the pivot point when the Valley's ambitions went from just building tools to go in directly into incumbent industries. And then this goes back to the scale thing. It's like, okay, why do you need to scale? A venture firm was because the companies need to scale. And then of course, AI now makes that crystal clear because the winning AI companies are raising billions, tens of billions, in some cases hundreds of billions of dollars. The old world of 10 million or $30 million or $50 million checks, where VCs tap out is just not a relevant thing anymore.
- [44:59]
Host
But did you know the scale was changing at the time you founded the firm?
- [45:01]
Marc Andreessen
We had a pretty good idea. So I've been involved in Facebook basically informally since inception and then formally on the board since 2007. And so I saw the. When that thing hit the knee in the curve, it was just very clear to us. It was just like very clear that we didn't know how big it was going to get, but it was going to get much, much bigger than the Internet 1.0 companies had gotten. And so there was that. What else? It was also around the time Apple was directly entering the cell phone market, which was another great example of this. Silicon Valley didn't used to make cell phones. The original cell phones weren't made by Silicon Valley. They were made by these giant industrial companies like Sony and Nokia and what, whatever in Motorola in Illinois or whatever. And then Silicon Valley would make the chips that go into them or the software. And of course Steve was like, yeah, no, screw that, we're just going to make the phone, right? There were these signals that it was happening. And then the other thing was just the Internet itself was maturing, right? And so at that point, the consumer Internet was 15 years in and we had seen every part of that. And so I forget what the number was, but that was probably around the time the global Internet penetration was crossing a billion users on its way to 5 billion billion yeah, you have a
- [46:00]
Host
very interesting lived experience where like you were there at the very beginning of the Internet. One thing that I'm fascinated by and that this actually was going to be the first question for you, because I've never heard you speak about this, at least on a podcast. But your partnership and relationship with Jim Clark, you were what, 20 when you met him? How old were you?
- [46:19]
Marc Andreessen
I was old fashioned. I actually graduated from college. I got my degree. It's a very stone age concept these days. So that was in 1990. 94. So I was probably 22. 22.
- [46:29]
Host
So there's this great book. I don't even think you like the book. Written by Michael Lewis. Silicon Valley Story.
- [46:33]
Marc Andreessen
I've skipped it.
- [46:34]
Host
I've read it twice. Just because I don't know if anything's in there is true. But the portrait he paints of this very eccentric character is just wildly entertaining to me. But what's shocking to me is when you talk to young founders, I'm like, this guy started three. I think it was the first person in history just to found three separate billion dollar technology companies.
- [46:52]
Marc Andreessen
I think that's right.
- [46:52]
Host
And almost no one knows who he is. Can you just talk about how you met him, what it was like working with him?
- [46:57]
Marc Andreessen
I knew exactly who he was. And the reason was because his company, Silicon Graphics, his first company, they were the company in the valley between like call it 1980, call it, yeah, 87 to 94 or something. They were like whatever Google or OpenAI or whatever comp you want to make. Like they were like the company. And by that I mean like they were the company where the smartest people in the industry all wanted to work there. They built the products that were like the coolest products you could possibly imagine. They had this incredibly young and vibrant and dynamic culture. And then they hit this cultural moment that was just incredible. Incredible In I think 92, which was the turning point in the movie business when computer graphics really kicked in. And the two movies back to back were Jurassic park and Terminator 2.
- [47:34]
Host
Run on the machines they made.
- [47:35]
Marc Andreessen
We built on the machines they technology they made. Technology Jim invented was the technology that made that possible. And those movies, those are still two of the great all time movies. But at the time, I still remember the chills that you get seeing dinosaurs on screen. It's just like this is. And then there's this company that builds the machine machines that do this. By the way, the Silicon Graphics computers are actually in the movie. There's a scene in Jurassic park where the kids are navigating through Unix.
- [47:58]
Host
Yeah.
- [47:58]
Marc Andreessen
And it was actually the. It was actually the 3D software. Those were actually the Silicraft computers. And so that was like this moment where they were just like. They're just like the absolute IT company of all time. But by the way, their legacy lives on in Nvidia. Nvidia is Silicon Cross Graphics, basically, with one. It's like the trader or say thing. It had to be a new company for reasons we could describe, to do the GPUs instead of the workstations and servers. Nvidia fundamentally is based on Jim's ideas. That's where that stuff all comes from. And so he was already legendary. And again, he was one of these. He was the full deal. He was legendary as a innovator in technology because he's a PhD in computer science. And he himself invented the original. Forget what they call it. I think it was the Reality Engine engine, the original interactive 3D graphics on a chip thing was actually him. I think it was like his PhD thesis. And then he started the company and then he ran the company. And then, by the way. And then the VCs brought in professional manager. And by the way. And the reason we know about Nvidia today and not SGI is because of this founder manager issue, which we could talk about.
- [49:04]
Host
No, let's talk about that real quick.
- [49:05]
Marc Andreessen
Yeah, yeah, yeah.
- [49:05]
Host
Because I don't remember this part of the story.
- [49:07]
Marc Andreessen
Yeah, yeah. So now, by the way, there's two sides of the story and I wasn't there. And so I just reflexively side with Jim Clark. But I'll try to at least represent both sides of the story. So Jim, I don't even remember what's in the Lewis book, but Jim's like a true. Jim's like a true. He's like an Elon. He's like a true Elon, Steve Jobs level guy. And so, like, incredibly creative, incredibly bright, incredibly charismatic. But like, he's volatile. Like, he's exciting. He's exciting. It's like being around him is just like incredibly exciting. There's always something new. He always has new ideas. And again, that was in that time where it's just like, okay, that's the personality type that clearly can't run the company. And so the VCs brought in a guy out of Hewlett Packard who had been trained in Hewlett Packard. Because at the time, what happened is he wanted to hire a professional CEO. He went and hired a general manager out of either Hewlett Packard or IBM or the two Training grounds for this guy. So they brought in a really, really sharp guy who by, I don't really know. I think I met him once. I don't really know. By all accounts, he was like very. He was like a very good example of this kind of HP general manager type who became. Became a CEO. He took over the company. And by the way, in his defense, under him, the company scaled enormously. I forget when he took it over, but it was 87 or 88 or something. And then by the time I got to the Valley 94, this company had become huge. And whoever's running the company gets at least some credit for that. But anyway, they got in this classic fight. They got in this classic fight. And the classic fight was the same story every time. The founders were like, founder's talking CEO. And the founder's like, to the CEO of like, we need to do things completely different. And the CEOs like, no, like, what we're doing is working. Like, stop fucking with. Stop fucking with thing. It's working. And the founder's like, no, it's working now, but it's not going to work in the future. And the manager and the CEOs like, well, then we'll deal with it in the future. And the founder's like, you can't wait to deal with it in the future because by the time the future arrives, it's going to be too late. And the manager is like, why are you in my pants? I'm like making you all this money. The company's super successful. Like, get out the of shorts, right? And you get in this, you see this. And that was exactly the deadlock that they got into. And Jim Clark basically made two predictions as the founder of Silicon Graphics. So Silicon Graphics at the time was selling their computers, basically started list price at like $50,000 for a desktop workstation and then scaled up into the millions. And Jim was like, look, two things are going to happen. It's amazing that he. And he figured this out by like 1991 or something. He said, two things are going to happen. He said, number one, everything that we sell today for $50,000 is going to go on a chip and that's going to go on a card, and it's going to go on a PC and it's cost 300 bucks. And either we're the company that's going to make that or we're going to get destroyed, right? Which, by the way, is what happened. That's Nvidia. That's what actually happened, right? So he was completely Correct about that. The other thing that he had was he's like, look, this idea of standalone computers is not going to be the thing. These computers are all going to get networked together and the network is going to become the important thing. At the time there were different terms. People were using terms like information superhighway or video on demand or 500 channels. You had all these kind of concepts kind of coalescing around what became the Internet. And even before the Internet kind of became a mainstream thing, Jim was just like, look, it's just inevitable that this is all going to become connected. And then the function of a computer is no longer going to be mainly what just the computer does. It's going to be the fact that it can talk to all the other computers. And we need to do that. And to do that, he actually went to Japan. He actually got this incredible deal. Nintendo then and now was like this giant video game company. So he actually had this deal with Nintendo where number one is he actually. And Silicon Graphics actually did this. Actually built the original 3D graphics graphics chip for a consumer game player, the Nintendo 64. So he did that deal and then he went to Time Warner, which at the time was this very important media company doing all kinds of things. And he struck a deal with them to do what was called interactive tv, which was basically pre Internet. Basically it was like Netflix before Netflix in 1991. Right. Amazing foresight. Just amazing foresight. But again, he and the CEO got in this conflict and the CEOs like, look, we just can't. We have to focus on the thing that we're doing. We're not going to do these things. And so Jim did the classic founder thing and he left. And when I met him, basically that was the state that he was in, which was okay, like, you know, I, Jim am like in the prime of my life. I know I have all these ideas. I don't know exactly what to do with my next company, but I know it should be a software company, not a hardware company. I know it needs to be a company that is able to anticipate these changes that are happening in the world. And I know that Silicon. And he was very sad about this. Silicon Graphics is not the company that's going to be able to do these things. And so I have to build the new company that's to going to do it.
- [53:21]
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- [54:21]
Host
more about what it was like working with them. But there was a very astute observation you made in your blog archive because you were trying to, you know, essentially this post was trying to educate founders. Just like recruiting is the most important thing you're doing at the very beginning of the company, maybe forever. And you're underestimating how difficult it is. And you tell the story of Jim Clark in the blog archive, you're like, this guy was a legend. He was like most famous person, best entrepreneur. And he's like, he tried to recruit all these other people and like, I don't know, there's like a hundred people and you're like you were one of one of two or three that actually followed through and took the chance and jumped and started working with him.
- [54:55]
Marc Andreessen
Yeah. And this again, this is like, I don't know, Zuckerberg or Sergey Brin or Elon or whatever decides to start a company. Like that was his candle power wattage in the community at that time. And so yeah, you would think that the obvious thing, people would just like say, you know, Jim Clark wants to start a company with you. You know, just the obvious thing is you just say yes, like it was not happening. And so I don't know if I told the story, but the crystallized memory is dinner of 12 of us at this famous Italian restaurant in Palo Alto called El Fornayo. That's where a lot of these companies were formed. It was Jim's favorite restaurant at the time. So Jim had like a dozen of us, us being people who were like in existing companies, who were like basically technical people who he knew well. This is the thing. He was constrained. He had a non solicit agreement with so and graphics and so he couldn't just rip people out. And he didn't want to violate that. And so he needed to basically reach out to the technical community and find new collaborators. So there were like a dozen of us in there. And I remember that dinner very precisely for two reasons. Number one is I was the only one of the dozen to say yes. And then the other was, it's the first time in my life I drank red wine and I didn't know what to make of it. And so I kept sipping it, trying to figure out if I liked it or not. And I didn't realize that I was getting completely hammered because I had no idea how to calibrate red wine. And so the true version of the story is I leave the dinner and I'm like, wow, this is amazing. I'm going to say yes to this. We're going to do this. And I go to my car in the parking garage in Palo Alto across the street and my brand new car, my first new car I've ever owned, my brand new car, and I got it and I pull it out and I ripped the entire front end of the car off. It's like just screaming metal. So, like the whole friend of my car is just like hanging on the ground and I'm like, oh, fuck me. So anyway, I parked the car, get out of the car, walk home.
- [56:37]
Host
No Uber this time.
- [56:38]
Marc Andreessen
No uber. You know, three mile walk at, you know, whatever, 11 o' clock at night with, you know, six bottles of red wine.
- [56:45]
Host
And you're what, 22?
- [56:46]
Marc Andreessen
No problem. 22, yeah, exactly, 22. I'm like, I think I probably won't mention this to Jim.
- [56:53]
Host
I don't know, there's some wild stories in that book. He might have admired you even more.
- [56:56]
Marc Andreessen
He might have. Yes, yes, yes.
- [56:58]
Host
How many founders of the company is this you and him?
- [57:01]
Marc Andreessen
So originally. Yeah, originally it was him and me. Yeah. We started the company and we had a long. It was again, one of these things where we had long conversations about, like, what to do. Well, okay, so then the problem that he had was there was the idea of doing the graphics chip. But like. And again, that's what Nvidia did. But Nvidia was essentially a spinoff of sgi. But like, at that time, starting a new chip company from scratch would have been tough and he didn't want to compete with SGI doing that. And then, and then the interactive. What do you call the interactive. It's lost to history, but this interactive television street, like, it wasn't time for that yet. It wasn't actually, actually time for Netflix. Yeah. And so it was going to be cost prohibitive. Time Warner had rolled out this interactive television thing in Orlando, Florida to 500 people.
- [57:38]
Host
Yeah, and Microsoft was involved.
- [57:40]
Marc Andreessen
They were doing a ton at Oracle at the time. Like all the big companies were.
- [57:43]
Host
It's all these Bill Gates biofeed.
- [57:44]
Marc Andreessen
Yeah, exactly. He talks about that a lot. But the capex per house was like $50,000 or something because you had to have a Silicon Graphics workstation in the house and it just wasn't going to work. And so he couldn't figure that out. And then we cycled through a whole bunch of ideas. He actually went back to Nintendo and we almost pulled the trigger on basically building what today you'd call like Xbox Live or what is it called? PlayStation Network or Xbox Live, like an online gaming service for the Nintendo 64 in 1994, which might have been a good idea. We thought it was too early. We almost did that. And then what happened literally was the Internet. You know, I had worked on the Internet in college and then, and then, you know, this is, you know, fortunately only a few months later. But the Internet just kept growing. Like it just. Hold on, Mark.
- [58:24]
Host
Yes, you had worked on the Internet. That's a little bit modest.
- [58:27]
Marc Andreessen
Yeah, well, I think a lot of
- [58:29]
Host
people listening to this will know, but you should probably explain how you're working on the Internet.
- [58:33]
Marc Andreessen
So at the time it was not. So this is part of the story. At the time it was not that big of a deal. It's not nearly that much big of a deal at the time as it's viewed now. So the Internet, I've told the story many times, so I won't go into huge detail. But yeah, so a group of us at Illinois did this thing called Mosaic, which was the first, as I said, the first widely used web browser. And the first one was graphics.
- [58:50]
Host
Explain what was different about what you made compared to what it existed before.
- [58:54]
Marc Andreessen
Yeah, so like previous web browsers were like text based. So there was like this nascent concept of the web, but it was like it was like text based terminals. And then it didn't have graphics. It wasn't point and click. You know, it didn't work in the way that you would like the spec software to work. And then by the way, it didn't also have like, you know, no scripting language, no security, you know, none of the actual capabilities that like make, make the browser a useful thing. And so there was this like nascent idea, but it, but it needed to get built into a full thing. And so we built the original kind of full. Full thing, full browser at Illinois. And then we also built the first kind of mainstream web server, like the first web server, again, that kind of had everything that people needed. This had been a project at college, and then this was a. And again, at the time, the Internet was not viewed as a consumer phenomenon.
- [59:38]
Host
Wasn't it illegal to commercialize? Steve Case of AOL tells a story that he had to like, lobby and get a law changed.
- [59:43]
Marc Andreessen
Yeah, that's right.
- [59:44]
Host
What was the details there?
- [59:46]
Marc Andreessen
So the Internet as we know it today in the 1980s was called the NSF net. NSF stands for National Science foundation, which is. Is a branch of the US Government that funds research. And the National Science foundation funded the Internet. The reason I was able to do the work I was able to do at Illinois is because the NSF had actually dumped a ton of money into four universities around the country to build what were called the supercomputer centers. And then those were also the main hubs for the NSF Net. And the function of the NSF Net was fundamentally to connect the supercomputers to all the people who were going to use them. And so it was this government research, academic program. And it was very exciting in the technical field. But there was no conception that ordinary people are ever going to use any of this. It was just nobody ever thought that this was the thing that normies were going to use. And so nsf, it's taxpayer funding. So the government at least is not supposed to be funding businesses directly, although sometimes they do. But there was formal legal restrictions on funding things with commercial applications. And so what there was is there was something called the aup, the Acceptable Use of Policy. And the Acceptable Use Policy said that basically the Internet, the nsfnet turned Internet, was for academic and research use, and commercial activities were strictly prohibited. Like literally not allowed. And again, it's just like, oh, as a taxpayer, that makes total sense. I'm glad my tax money's not going to fund something like that. But as a user, you're just like, all right, that's nuts. That's clearly crazy. And if you took the conceptual leap to say, no, this is going to escape the lab and this is going to be something than normal people are going to use, then it just became obvious that it would have to have commercial activities. Yeah. And then AOL was one of the early pre Internet online services that wanted to connect to the Internet. I think they famously connected to the Internet in 1993. Do you know about the concept of Eternal September?
- [61:31]
Host
No.
- [61:31]
Marc Andreessen
Oh, okay. So there are two Internets. There are two Internets. There is the Internet that existed before 1993 and the Internet that existed after 1993. People who were on the Internet before 1993 often describe it in utopian terms because it literally was like you take the whatever million smartest people in the world and you put them on a network together with no commercial activity, no advertising, no nothing, just the million smartest people in the world and you just let them talk to each other. And it's just like, amazing. It was amazing. The old messaging system was called Usenet. And the discussions on Usenet were just absolutely spectacular. It was just like this. It was amazing. It was the most pure, clean, intellectual, vibrant, vibrant space since, like, I don't know, Athens in 500 BC. It was just like this amazing phenomenon. And then AOL connected. AOL. AOL had whatever million or 2 million people at that point. They connected. They connected all the AOL users, which were just normal people, to the Internet. September 1993. And so it became eternal September, which is, that's the day that the Internet changed. And by the way, I'm pro that. I'm glad that happened. But like, the pro and the con of that is that took the Internet from this like, ivory tower kind of thing to this basically mainstream consumer, ordinary people thing, which of course is just a fundamentally different thing, obviously. Right. The concept of eternal September literally was like when every new wave of college graduates graduated and got their first job and then went online. So September is when. September is when the new crop of Internet users showed up for a long time. So the September effect didn't just happen once. It happened over and over and over and over and over and over again. And every cycle of Internet user would basically be like, oh, my God, this is great, but like, it's all going to get ruined in September. Yeah, Right. And so the Internet that we live in today is the result of they could only see us now the 30th of September. Right. But yeah, and by the way, there was controversy. There was controversy at the time about whether the Internet, whether the acceptable use policy should be revoked. There was controversy over whether normal people should be on it or not. There was controversy over whether the kind of content normal people wanted to be on it should be allowed to be on it. There was controversy about whether there should be like, there was controversy. We got quite a bit of flack at the time for putting images into web pages under the theory that that would like, fundamentally make everything worse because you'd have like, normie content that would be bad. And then, you know, like e commerce, by the way, advertising. I remember, I remember when there was actually a moment, there was a guy, there was a guy, there's a guy named Sanford Wallace. And he became known as Spanford, Spanford Wallace. And he was literally. He sent out the first, first spam message on the Internet in 1992. And it was literally the first Internet ad. And it was a spam for, I don't know, whatever, legal services or something. And he just drops it on the Usenet. And it was like a thermonuclear explosion because it was like, get this commercialized crap out of my newsfeed. So all of these things were hotly controversial. I was generally on the other side of all these arguments because I was like, look, this thing is great. Obviously everybody should have access to, to this. Obviously we need to connect everybody to this. Obviously to do that, these need to be businesses, there needs to be commerce, there needs to be advertising. Like all these things obviously need to happen.
- [64:31]
Host
So is that the discussions you and Jim were having where you're like, okay, we're going to start an actual company around this?
- [64:36]
Marc Andreessen
So, yeah, so that's how we got to the conversation Jim and I had, which was basically like, okay, because that was right at the pivot points. It was like in early 94. So this is like the AUP had just been revoked and it was just. And AOL had just done the first of September and it was. The whole thing was just about to tip. And I knew that, I knew that because I was tech support for the browser personally. Explain that. Just me. Well, so Mosaic at the time was the browser everybody used. And so if you use Mosaic, there was a, you know, submit a bug report or whatever. You have a question, submit it here. And that went to an email box. And that email box was me. And so I became tech support for the Internet for like, you know, out of three years and got all the emails.
- [65:19]
Host
How many emails were you getting?
- [65:20]
Marc Andreessen
Well, there are actually two. That was one email box and the other email box was. Mosaic was actually created under by. It was also funded by the National Science Foundation. So it was actually not the original license that couldn't be used for commercial use. It was for academic and research and individual use. And so we had this thing, we did a deliberately ambiguous license and we said, if you want to use the browser commercially, you need to email us to arrange terms. Now, we had no concept at all of what those terms would be, but we just said, we need to create this Incoming flow. So I was getting bombarded with tech support requests. And by the way, tech support for the Internet means your tech support for everything. So it's like the old PCs had CD ROM trays. You press the button, the CD ROM tray comes out, you put the disk in the thing. The problem is a lot of people thought that those were cup holders. So you press the button, the cup holder comes out, you put your cup of coffee down, and then 10 seconds later, the cup holder retracts back into the PC, spills your coffee all over the place. You're like, how the fuck do I keep the cup holder out? Right? It's like, man, let me email Mark. Yeah, let me email Mark. You know, it's like, sir, that's the CD ROM drive. So there was a lot of that. One of the funnier things you can always do in politics, they call this focus groups, but user testing. You see this over and over at tech companies. Take whatever amazing new thing you have and just put it in a room with like normal people and let them try use it. And you just like, learn so much about how much of a bubble that you're in about the kind of things that you're familiar with that like, normal people are just like, I don't know what the hell any of this stuff is. So there was a lot of that. But then I had this other email box which was all the commercial licensing requests. And so I saw the consumer takeoff on the one side. And then I basically. I think that. And then the commercial request hit like 400 messages of people wanting to pay money for this thing. And so I basically took those to Jim and I was like, there's a business. Yeah, this is going to happen. And then we actually went to my. Under. My old boss and I at NCSA actually had gone to. We actually went to Washington in 93 to try to get NSF funding to staff a support desk so that it wasn't me answering all the emails. And the National Science foundation people were very nice and they were like, yes, the National Science foundation is not in the business of funding customer support desk for your software. And so I still have the denied NSF grant that would have kept the whole thing an academic project. But, yeah, so, like, yeah, at that point it was like, at least to Jim and me, it was just obvious that that was going to be business. By the way, again, very controversial. The original press coverage on Netscape for the first year was that these people will never make money. This is ridiculous. Like, everybody knows the Internet's free. Like everybody knows that none of this is going to work. So even what did you think? The business model though even then it
- [67:53]
Host
was controversial, was just literally licensing it.
- [67:55]
Marc Andreessen
It was a combination of things. So it was definitely software licensing. And we did this thing up front where the browser was free, but the server was. Software costs money. And then we out of the gate started building all these, we call it applications, server side applications. So we built the first publishing system. We built the first publishing system for running a newspaper or magazine online content management system. We built the first E commerce system for selling. This is pre Amazon. So we built the first e commerce system for selling things online. So we built and sold a lot of that software and then we owned the main website that the browser had as its default homepage. And so we built the original Internet advertising business was, was basically so Netscape was the largest Internet advertising company until I think 97.
- [68:33]
Host
That's incredible.
- [68:33]
Marc Andreessen
I didn't know that Yahoo passed us. Yeah. And so yeah, so we, we invented people at the firm, invented at the company, invented. I, I, I don't know if we, I don't know exactly who gets credit but like the original ad formats, you know, were right around that time and a lot of them rolled out on, on our site, you know, first. And so it was, it was literally, it was advertising pre Yahoo. It was, it was E commerce pre Amazon. It was, yeah, content pre, you know, we literally sold, I mean we put the Wall Street Journal online. It was our, you know, that was our software that did that and a lot of other newspapers, magazines, all that stuff. And so yeah, it was a lot of that. And then it was the web operation. And again it was, again it all looks obvious in retrospect, but again it was like, okay, when we started this, I don't know what the total number was in. So we started the company in April 94. There couldn't have been more than 2 million people total online, right? And then almost everybody was coming in over dial up. This is like pre broadband, right? So everybody's coming in at like 14.4 kilobits modems. And we're hoping that people are going to upgrade to 56 kilobit modems. That, that would be super helpful. Computers at that time did not come with TCPIP installed. So to get your PC actually on the Internet you needed to buy a TCP IP stack. Try explaining to a normal human being what a TCPIP stack is. It makes no sense at all.
- [69:43]
Host
They're going to ask if they could put it next to Their cup holder.
- [69:45]
Marc Andreessen
Exactly. It was just like talking to Martians, talking to us as talking to Martians. And then monitors were, you know, like three feet deep and just like bathing you in radiation. You know, just kind of hoping that the radiation stays up here and, you know, everywhere else. In retrospect, it was. It was like super early, and it was all very. And then again, it was just like, okay, E commerce. Like, are people going to buy things online? It's like, I don't know, maybe. But like the press at that time, it was just like wall to wall. Like, if you put your credit card number online, like, hackers are going to steal it.
- [70:10]
Host
I was going to say, if you read any books around this time, they're like, there's no way in hell anybody's ever going to put their credit card on Internet.
- [70:15]
Marc Andreessen
By the way, the other thing you would never, ever, ever, ever do is put your real name online because it would be immediate identity theft. Your life would be ruined. So you would never, ever do that. By the way, the other thing was right in the beginning, you had all the panic around kids. This is going to destroy children. This is a huge risk to children. So you had all that panic. And then there was the beginning of the calls for censorship. There's clearly all this stuff that you have to take down. New York Times kept running stories talking about how the whole thing was fake anyway. They kept saying that all the numbers were made up and there actually wasn't anybody online. It was a tiny little user base and we were all like, inflating the numbers of committing fraud. And so it was just this. It was just this. In retrospect, it's all, like, quaint and cute and sweet. But it was like the. It was the precursor. It was all the moral panics around technology took. You could see nascent versions of them back then.
- [70:58]
Host
You pick up on something that. Because me and you've read a bunch of the same books where it's like humans reaction to something new, it's just consistent throughout history. And so I heard a podcast with you. I thought I was the only one that would tell the story in private about Bicycle Face.
- [71:09]
Marc Andreessen
Bicycle face. Face, exactly.
- [71:13]
Host
Do you want to say what bicycle face is?
- [71:14]
Marc Andreessen
Bicycle face. Bicycle face. Bicycle face. Yes. So it basically turns out every new technology is greeted with what they call a moral panic. Right? So. And a moral panic basically is whatever this new technology is or this new form of media is, it's going to ruin everything. It's going to ruin everything. It's going to ruin specifically it's going to ruin society, it's going to ruin morality, and then especially it's going to ruin the children and then back those bicycles. Pre feminism. So it also was. It's also going to ruin. Ruin the women. Very specifically, it's going to ruin the women, which clearly cannot be, because women clearly in 1880 cannot be trusted to use a bicycle without getting into real trouble. I'll explain why. So this is this persistent theme and basically you go all the way back and this is like, you know, this is like this famous thing where Plato and Socrates thought that like, you know, basically that they thought that written language was a big mistake, that all information transmission should be oral. And they had this, you know, whole thing back in 500 B.C. and then it was just like every. You just have to like, imagine. I always like to hypothesize, like, you know, the first guy who brought fire, you know, it's like, down from the
- [72:08]
Host
mouth, probably killed him.
- [72:09]
Marc Andreessen
Yeah, they're like, what the fuck, right? Exactly. Like, you know, this thing is horrible. This thing could burn down the village. Like, this is awful. This is going to destroy everything. And so it's just been this consistent thing. And there's this great website called Pessimist Archive where these guys who go back and they find all these newspaper articles that are contemporaneous to these things, but it's everything. And, you know, so when I was a kid, it's like heavy metal music, Dungeons and Dragons, you know, like all this stuff was awful. I remember the moral panic around the Walkman, the very first, first portable cassette player with the headphones, because it was going to destroy society because everybody's going to just be listening to their own music. I remember the moral panic around the calculator was going to destroy education because kids were not going to learn how to do math anymore. And then you go back and it's like in the 50s, it was comic books and it was rock and roll music. Obviously it was going to ruin everything. In the 20s, by the way, jazz music was going to ruin everything. Playing cards were going to ruin everything. What else? Novels, paperback novels. Kids were going to sit around and just read novels all day instead of doing anything, work. So it's just over and over and over again. It's this constant story. So the bicycle one is the great one. So the bicycle rolls out in 1870, 1880. And so the US still at that point was thinly populated from today, but the west had been settled. And so you had all these little towns and villages scattered all over the place. But to get from one town to the next was like 5, 10, 15 miles. And so people didn't generally walk that. And so the bicycle comes out. All of a sudden it's easy to go five miles into the next town. And then young people discover the bicycle and they discover that there are young people who they didn't grow up with who are in the next town over and they're like, you know, they head off to do it. And so the specific. To do it? Well, to do it, yes, to do everything. To do whatever it is the young people do. They're going to. They're going to head to the. Yeah, look, it's just the nature. If you've known the same group of people since you were two, like, you're going to want. Yeah.
- [73:51]
Host
What's over that hill?
- [73:52]
Marc Andreessen
What's over that hill? Yes, exactly. Right. I grew up in a small town. I can identify with that. And so. And then specifically at that point, young men, obviously, but specifically young women started to do the bicycle. And this is a big threat. And so if you're like a guy in a town and all the attractive young women are heading over the hill to the next hill on this bicycle thing, that's a big problem. And so the press at the time created this thing called bicycle face. And the idea of bicycle face was. It was part of the moral lecture that was given to young women in the press at the time, which was basically, young women should not use bicycles because if you go on a bicycle, you have to exert yourself. And if you exert yourself on the bicycle, you're going to end up making, know, an exertion, you know, exertion phase. But the thing was, if you did that too much, your face would freeze. In a bicycle face.
- [74:35]
Host
They literally thought it would stay that way.
- [74:37]
Marc Andreessen
It would stay that way permanently, and then you would never find a husband. Right. And so. So, yeah, so that was that moral panic. Yeah. And so these, these things just like rip through every. I mean, it's just, it's what's incredible. Music is always a great one because it's like, you know, I don't know, it's over now. But like in the, in the, in the 90s, 2000s, you know, it was all this moral panic. Right.
- [74:55]
Host
Hip hop dude, Jimmy Iine, who's your neighbor?
- [74:58]
Marc Andreessen
Yeah.
- [74:58]
Host
He was in here two weeks ago and he had to deal with. They called him a.
- [75:02]
Marc Andreessen
Yes.
- [75:02]
Host
Like a chemical gas or mustard gas. Like, they compared him to literally like what he's doing is the same as Genocide.
- [75:09]
Marc Andreessen
Yes.
- [75:09]
Host
Because he's funding hip hop music and white kids are starting to listen to hip hop music.
- [75:13]
Marc Andreessen
Hip hop music in the late 80s,
- [75:14]
Host
early 90s, like congressional hearings on this, like the media behind him. He was, he was pushed out of a conglomerate. This wasn't a joke.
- [75:23]
Marc Andreessen
Yes, that's right. That's right. And it's actually funny because, like, I'm not in the music business, but like hip hop has become so normalized that today it would just never even occur to you. It just like feels like hip hop is kind of, you know, is a cultural phenomenon, is even kind of fading today. But yeah, no, that was super intense at the time. And then rock and roll, that was like super intense in the 50s and 60s. And then the amazing thing is Elvis
- [75:41]
Host
Presley, they wouldn't shoot him.
- [75:43]
Marc Andreessen
That's right.
- [75:43]
Host
Because he would shake his hip. So they're like, no, no, he can't. It's waist up on TV from now on.
- [75:47]
Marc Andreessen
That's right. But here's the one, here's the one. I love jazz. They said all the same things about jazz, jazz in the 1920s and 1930s, it was jazz music that's corrupting. And it was the exact same thing. It's because kids are going to get together and they're going to dance to jazz and then who knows what happens? And then it was like, there's a jazz musician that's like smoking pot and that means all the kids are going to start smoking. It was just so it's the same story over and over and over and over again. And I'll just say, by the way, in fairness, it's not that society doesn't change. Many of the technologies that we just described did cause society to change. Things are different pre and post. The bicycle, they're different pre and post. The car, they're different pre and post the creation of modern culture, rock and roll or whatever. But again, this idea of the moral panic, this idea of just outright panic, end of the world is just like this repeated over and over and over again thing. And then what's happened is just. This is the obvious way to sell newspapers. This is the meta story of the press, which is just like whatever's happening is horrible and awful and it's going to kill everything thing, you know? You know, be sure, be sure to buy our newspaper tomorrow.
- [76:48]
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- [77:09]
Marc Andreessen
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- [78:13]
Host
go back to Jim Clark real quick. Is there anything that you learned because Jim Clark was what like two deck, probably 20 years older than you.
- [78:19]
Marc Andreessen
Yes, about that, probably.
- [78:20]
Host
So like is there anything that you learned working? What a fucking education. You had to be able to work with that guy in your early 20s.
- [78:26]
Marc Andreessen
Yeah, that's right.
- [78:26]
Host
So is there anything that you learned, learned by working with him back then that you still use today?
- [78:33]
Marc Andreessen
I mean, yeah, a lot. You know, he's just said it was very formative for me, so a lot of it. But yeah, I mean you mentioned the sort of quote earlier about the world is a malleable place. Like Jim was like the ultra version of that. And so yeah, he would just like yeah, when he had an idea and he was right, his ideas were correct almost all the time. He would just like pound the world into adopting them and to believe in them. Like he was. You know, the idea of being like a complete force nature.
- [78:56]
Host
One thing that was malleable was himself. He has this great quote in that book where he calls himself a self described loser at 38 years old. The guy had two PhDs, he was a professor, but I think he'd been on his second or third divorce and he just snapped one day and he's just like, I woke up one day with the undeniable urge to achieve something and that's when he goes from academic to founder and just rips off company after company for a few decades. I was like, oh, he realized that he is malleable too. He just reinvented himself over and over and over over again.
- [79:24]
Marc Andreessen
And of course he does that not just by like starting a company, but like inventing interaction, computer graphics and like completely changing the field, you know, indirectly, like completely changing Hollywood.
- [79:33]
Host
Was there anything about recruiting or managing or any other way that he ran his company?
- [79:36]
Marc Andreessen
No. So my two mentors at that time, actually they were. They were in some ways polar opposite. They always got along, but they were kind of polar opposites. They were both Jim. So Jim Clark and Jim Barksdale. So the Jim Clark side of my personality is like the like will to power. Like I'm just going to bludgeon the world into doing what I want, you know, and just. And then the idea of just like know, try to be a fountain of creativity. Like, just like there are many, there are many new ideas out there and like you, you just, you need, you need to go find them. And then, you know, I want to say also put this like a sense of professional dissatisfaction. Like, okay, like what? Whatever. Look, this is the other part of the story. Like a lot of founders would have had a success like selling, selling graphics, and that would have been it. And they would have spent the next, whatever, whether they were totally happy with how it turned out or not. Like, they would have spent 30 years just coasting on that, right? And having a great time and taking credit for it and the whole thing. Thing. But Jim was always, at least in that part of his life, dissatisfied in the productive, positive sense of like, okay, no, there's something better, there's something bigger, there's something new that we should do. So there's that side of it. And then Jim Barksdale was the other. Who I just literally was with yesterday in Jackson, Mississippi. Jim Barksdale's the other side, which was Jim Barksdale's, like the manager of managers. So Clark is like the ultimate example of that bourgeois capitalist thing I mentioned. So the Henry Ford, Elon Musk type. And then Jim Barstow is like the ultimate example of the super manager. And Jim had run big parts of IBM and AT&T and Federal Express and came into run Netscape. And what was interesting was that's kind of where I got a lot of this from and a lot of my skills from is I got trained by both of those guys and then kind of both of those guys at the same time and then was able to very clearly observe one is just the difference between those mentalities. But then the other is, of course, how those concepts converge. Right. Because just the fountain of creativity, you can't build anything big just with that. Just the management. You do it in new things.
- [81:22]
Host
Who's a great example of that from history? Would it be like Nikola Tesla found a creativity.
- [81:26]
Marc Andreessen
Oh, that's right, yeah.
- [81:27]
Host
He needed like a George Westinghouse to commercialize his ideas.
- [81:30]
Marc Andreessen
Well, so Tesla versus Edison. Yeah, so Tesla versus. So Tesla versus Edison. So I'm an. I'm an Edison guy thing. So Elon's a Tesla guy. Tesla guy, obviously. But Elon, of course, himself has now become like a really outstanding, I mean, obviously become an outstanding manager, like in his own way. In fact, to the point where I think he's actually inventing an entirely new school of management, which we could talk about.
- [81:49]
Host
But, like, let's go there next.
- [81:51]
Marc Andreessen
He's maybe the greatest manager of our era, despite the fact that nobody thinks of him that way. So I actually think Elon's more like Edison than he is like Tesla. There was a big war and it was kind of this thing because everything kind of turns into these little morality plays. And so kind of the basic story of Tesla and Edison was Tesla had all these ideas, but couldn't commercialize them, couldn't turn them into companies ultimately. Couldn't figure out how to make money on them, couldn't build big companies kind of based on them. And then Edison, basically, at least the way the legend goes, is he was more this grinder, he was less incandescently brilliant, and he was more of a grinder. And he's just like, we're just going to try a thousand things. When they invented the filament for the light bulb, they just tried a thousand different combinations of things to get to the filament and sort of this brute force approach. But then he built General Electric, he built the National Electric grid, he built these giant companies, and then funded by JPMorgan. There you go. As a venture capitalist in his spare time. Yes, exactly 100%. And then Edison also invented the movie projector, and then literally spent years trying to enforce his pat. Right. And say phonograph. And the photograph. And the photograph.
- [82:58]
Host
You tell the story. And I knew, because I read the book, too, we should tell people what he thought the phonograph was going to be used for.
- [83:04]
Marc Andreessen
So this is a bit of a digression, but it gets the personality type. So one of the things that people look for is it's like, oh, what are the consequences of a new technology going to be, oh, let's go ask the people who invent them because obviously they know. And so this is what happens when like these, when the AI guy, for example, the AI guys get, you know, the pioneers of AI get interviewed in the press. It's like, oh, tell us the future of AI. And it's like you get like, the one I'll pick on is just Jeffrey Hinton who's an actual self declared socialist. He's an actual capital S socialist. And people ask him what's the future of AI and of course he says it's going to be rampant unemployment and we need to give UBI to everybody. It's like, what a coincidence. The answer for the socialist is communism. What an amazing coincidence. But people think because he's one of the inventors of AI that he must be the guy who knows. And so the story I always tell is the Edison story. Thomas Edison was a very proper WASP. He was like a WASP. He was a WASPy personality type of that era. Extremely proper gentleman, always like impeccably dressed, very, you know, kind of very ethical, you know, upstanding, you know, kind of citizen of that time. And very religious, very religiously devout. And so for him it was just obvious that the application of the record player was that everybody would buy a record player and then everybody would buy a cat, a library of discs. That would be the great sermons, religious sermons for all the great preachers of the time. And then you get home at night after a long day of work and you turn on the record player and you would listen to a sermon with your adoring wife and kids getting gathered around you. And of course the record player drops and immediately of course it's music. It's just obviously music and it's like ragtime and you swim, then it's jazz. And Edison's just completely horrified.
- [84:30]
Host
He didn't know that if you put the phonograph in the window and you play good music, then you have all
- [84:34]
Marc Andreessen
these girls on bicycles coming over the with bicycle fists. Exactly, exactly. And so this is what I always tell, this is always my thing. It's like if Edison didn't know what the phonograph was going to get used to for the idea that, I don't know, whatever Joe AI entrepreneur is going to be able to forecast the economic implications, no, that's not going to happen. And in fact the people who invent the technology are often the least qualified people to understand the long term implications because they're too buried in the specifics of the here and now. And then all these Other questions. These are all big cultural, social, economic questions. By the way, I don't know if there's anybody that can predict big cultural or economic or social trends, but it's certainly not somebody who's been in the lab for 20, 20 years, including myself.
- [85:12]
Host
So how this started, you think you greatly benefited from the two gyms, essentially, like being polar opposites, basically, and showing
- [85:18]
Marc Andreessen
you, but also working very closely together.
- [85:20]
Host
Did they get along?
- [85:21]
Marc Andreessen
I don't know if I've told this story publicly, so I should tell this story. So they got along great, became very good friends. They both did great and they're both very responsible for certainly everything that Netscape did and everything that I've done. But it's different disciplines, different worldviews. So there's an oil and a water kind of aspect to that. And so, so, you know, Clark ran, Clark ran the company for the first like nine months, which at the time felt like, you know, just like this was Internet time. It felt like much longer, but it was like this highly compressed nine month period. And you know, and it was like we were like doing, we were all these new things. We were doing all these new things. Like the company was just doing like 100 new things. It was amazing. But like we. Nothing was being systematized, right? It was not, it was not going to by default. It was not going to turn into like a large, a large company without the management part. And so Barstow comes in and he basically is like, wow, this inventionness is great, but we need to like actually start to have some systems and schedules and processes and actually run this thing like a business. And as founders do, Clark originally found that a little bit frustrating because it's like whatever is the latest idea is not the thing that we're just going to turn the entire company to pursue. And this is when Clark was still coming to Jim's Barksdale staff meetings. And so Clark, he had a negative reaction to Barksdale saying, no, we're not going to do this new thing. We're going to keep doing the thing that's already working. You know, one of those moments. And Barksdale's like, you know, can I talk to you outside? And so, you know, they went back and I heard the story from both of them later. And you know, Clark's like, you know, look, this is the whole reason we're here is because we do these new things. And you know, if we don't do these new things, we're going to destroy the company. And Barksdale looks right at him and says, jim, I hear you. This is as serious as dick cancer. What? The deep Mississippi draw, right? And Clark stares him right in the the face. And first, stop laughing. And they got along great ever since they loved each other ever since first up, basically saying, look, we're not going to make these decisions in a state of kind of superheated passion. We're not going to do that. We need to have the full version of this conversation. But we're going to have it in this longer and maybe more dispassionate way. But it was to puncture the stress of the moment. And so I will say I have used that one a few times.
- [87:28]
Host
But I could see Clark, and Clark
- [87:30]
Marc Andreessen
thought it was hysterical. Nobody had ever talked to him that way before.
- [87:34]
Host
But I could see Clark like, oh, no, here we go. This is a replay of what happened at Silicon Graphics, though I think probably
- [87:39]
Marc Andreessen
he was probably afraid of that to a certain extent. But, yeah, yeah. And then I would say, yeah, I don't want to say anything negative about the SGI guy, but yeah, I mean, Clark, like I said, Clark was just like. Barstow was just like, was the manager of managers. He was like, so advanced on this. That story notwithstanding, Barstow never took the position of like, no, it's time for the new, new ideas to stop. But it was always like, okay, we need to thread the new ideas into a business which is kind of the hybrid of the two.
- [88:05]
Host
So I just had this thought while sitting here listening to you speak. Is there something about your partnership with Ben where he's more Barksdale, you're more Clark?
- [88:14]
Marc Andreessen
Yeah. Although we do mix it up a little bit more because he does have his own edge. But, yeah, there is some of that. So, for example, our friend, he runs the firm. And then, yeah, I tend to come up with. He comes up with lots of new ideas, but I do tend to come up with up with new ideas. And then we do have this kind of discussion frequently.
- [88:32]
Host
So if I was to follow you around without you knowing with a camera, what would your day look like then? Are you just like a fountain of ideas, or you're like this uncontrolled energy, like a Jim Clark back in the day?
- [88:42]
Marc Andreessen
But I've got both. This is the thing, because they both train me. I've got both parts of it.
- [88:46]
Host
So you're not as controllable or unmanageable as.
- [88:49]
Marc Andreessen
Yeah, I believe Ben would tell you. I mean, look, Ben's been working with me now for 30 years. And so I think if this is a real issue, I think our partnership would not have lasted. But I think he would say that I have a pretty strong internal edit function.
- [88:59]
Host
I want to see unedited.
- [89:00]
Marc Andreessen
Well, unedited is really fun. Unedited is very enjoyable. It is very disruptive. And so yeah, it has to be calibrated.
- [89:11]
Host
When do you show the unedited side?
- [89:14]
Marc Andreessen
I don't tend to do it in the spur. The again, this is the thing. And Elon threads this incredibly well. Just incredibly well. As does Zuckerberg. Is like it is this thing. And again, this goes back to like the Addison Tesla thing. When you're responsible for. When you're responsible for an organization, when you're responsible for a team of people, that's more than five or 10. If you're going to have an organization, it's like 100 or 1,000 or 10,000 or 100,000 people. You can't change the plan every day. You just can't. You'll burn everybody out. You'll destroy everybody. There'll just be mass confusion. People will quit. It's just going to be. You can't do that. There has to be some calibrated middle ground. There are a handful of examples of great business successes where it's like one or two or three people, right? And so maybe it's like Bitcoin and Minecraft and WhatsApp and Instagram and then I start running out of examples. But like AI, there will probably be more. There will probably be more like single person companies from here on out. Or by the way, artists. An artist and novelist. Let me say this is the difference between like a novelist and a movie maker. A novelist, you can put whatever the fuck you want in your novel, but if you're a director of a movie, you can't change the entire plot on Tuesday while you're shooting the movie, or you're like there's 300 people who are relying on you to complete a movie. So anyway, so the point being it's in tech, if you're going to have an organization, or by the way, in anything in any field of activity, if you're going to have an organization, you do need to have some calibration, titration process. Change does need to happen, but it needs to happen in a measured way. And so you can't just blow it up every, every day. And so yeah, so either what you need in that case to get kind of the holy grail of the large scale organization that's still innovating, either you need two people involved who are able to balance each other. And by the Way you could say this is like Steve Jobs and Tim Cook would be a canonical example. Or by the way, early on Zuckerberg and Charles Hamburg, early on Bill Gates and Steve Ballmer. So you can have that kind of configuration. Or every once in a while you can get that in a single person, which is very rare. But Jensen Wang would be a single person, example, example of that. So every now and then you get that. And so I would say Ben and I have like a version of the yin and yang kind of aspect to it. But like I said, he's very creative on his own. And I have this, because I have the Barksdale training, I have this additional level of sort of, most of the time, sort of self governance. Like, I get it. Like I'm not. So my big thing is like, look, if I'm going to walk in and I'm going to like throw a fit and I'm going to like, we have to change everything tomorrow. And Ben's going to be like, fuck you, this fucking sucks. I'm out. Like, that leaves nowhere good. Right? So that can't be the thing. And so I, I do do a lot of self editing.
- [91:45]
Host
You just said something I think you said you believe Elon is inventing a
- [91:48]
Sponsor/Ad Reader
new way to manage.
- [91:49]
Marc Andreessen
I think he may have figured out the best way to reconcile the two, the fountain of ideas with the systematic builder. I think he might have figured out a fundamental. I don't know if it's a new way to do it, but I think he might have cracked the code on how to do that for the next 100 years or something.
- [92:00]
Host
So break down what you've observed with the way that Elon's managing.
- [92:03]
Marc Andreessen
Yeah. Should I just start by saying, look, Elon's method has been described by people before. And I should say I work with him, but from the outside. So I've not worked in one of his companies, so I have one layer of indirection. But I work with him quite a bit now and I study him very carefully. It's this extreme focus on substance. It's this extreme focus on getting to the truth. So one of the things you notice in any organization with multiple layers is that basically there's compounding lies. And I got this lesson early because I worked for IBM at the point of their kind of maximum size and importance in the world.
- [92:31]
Host
Can you explain? I don't think people understand just how big and powerful and almost monopolistic IBM was.
- [92:38]
Marc Andreessen
Yeah. So I worked for IBM at the very height of their power right before they fell. It was My first job and when I was in college and they were in the mid-80s, they were 80% of the market capitalization of the entire tech industry. Right. There's nothing even close to that. There's nothing even close. Right. So this is like Google times 10 or something. It's just like Apple times 10. It's just like, it's a level of scale and importance that just nobody had. And by the way, the TV show actually, that does a great job. But this is Halt and Catch Fire in the first season has this thing, this point where these guys are basically inventing the PC effectively. And it's the point where IBM shows up and it gives you a sense of. It's like the CA story you told earlier. It's like the phalanx. It's like 20 people in blue suits who are just here to completely crush you. It was just this overpowering kind of thing. And they invented all kinds of stuff and the industry wouldn't exist today without them. And they were an incredible company for a very long time. And the whole thing, by the way, run by their founder for. For 30 years. Run by the founder's son for 30 years, this incredible company. But then they're not that anymore. But they're still a big and important company today. Whatever. 1940, 80 years later, it's like, how many companies survive in tech? 80 years. My favorite IBM story is Thomas Watson Sr. Had been convicted of antitrust crimes before he started IBM. Is this the cash register? The cash register. And so he had previously run a company called NCR National Cash Register. And he had been convicted by the federal government of monopolizing the cash register business before he even started IBM. And then at IBM he monopolized the mainframe business. And then they convicted him again. He's a double dipper. He got very used to being an antitrust court. So he was incredible. By the way, there's a Kevin Meaney, old school tech reporter, wrote a book biography of Thomas Watson Sr.
- [94:22]
Host
Which you figure the machine and the man or the man and the machine. Right.
- [94:25]
Marc Andreessen
Of it's one. I'm not sure if it's that one, but it's one of those. I think it might be that one. Yeah. And he actually went back and this is like, you know, this is like we're talking about like 1940s, 1950s, 1960s. And he went back and he got them at that time they had a secretary transcribing in real time all of the executive staff meetings every Monday morning. And he went back and actually got the Archives of the transcripts of the executive staff meetings. And it's just literally Thomas Watson's just like cursing everybody out and just like, just like a complete tyrannical psychopath, just like screaming at people, people. And it's all in the records. And so it's like, you know, so how much of this stuff ever changes? You know, it's like, you know, whatever, I don't know, whatever Elon gets accused of or whatever Steve Jobs, it's like, oh, no, that guy was. Whatever it is, it's a pale version of what that guy was doing. But anyway, the point being is like, IBM. So by the time I got involved in IBM was like six years later, you know, yeah, six, 50 years later after that. And so they were kind of peaking in their power. But what happened was, I remember this because I was there, intern, and I was trying to figure out whether I should, I should worked. She worked there after college. And they had a. Their intranet was a mainframe app. And one of the functions was the org chart. And I calculated there were 12 layers of management between me and the CEO, which meant the following. It meant that my boss's boss's boss's boss's boss had a boss, boss, boss, boss before it got to the CEO. And then really what happened? The story of the thing, really what happened was, and I saw this happen, I saw this happen. I was up close. What I saw happened was each layer of management was lying to the one above it because each layer wants to look good and wants to whatever, put a little spin on the ball. And if one layer lies to the next layer above it, maybe that's okay. But when that happens two or three times, the lies compound, that happens six times, the lies really compound. If that happens 12 times, the CEO has no idea what's happening, absolutely no clue what's going on in the company. Which was the state of play that IBM had. They actually had a term. It was actually a term, they had a whole vocabulary. I mean, this company was like a nation estate at the time. You could live your whole life in Austin, Texas and never meet anybody who didn't work for IBM. It was just incredible thing. They had this concept called the big gray cloud. And it was literally the cloud of men in gray business suits who followed the CEO around and prevented him from ever talking to anybody who was ever actually doing the work. And so when he would come to visit, it was like a state visit. It was like a visit from the king. And it was like the king and the traveling court. And so it was completely impervious bubble to get information through. Through. But I tell that story because that's the polar opposite of the Elon approach. And by the way, being the CEO of IBM in 1989 was a great way to live because it's just like, wow, everybody's bringing me good news all the time. I wake up in the morning and everything is great and I'm famous and I am rich and I am successful and I've got a chauffeur and I've got a jet and I've got these 80 guys in gray suits who are taking care of everything for me. And I don't have to ever talk to engineers and this great until it's like the turkey on Thanksgiving until things change and there's a problem and then you have no idea what to do about it, which is what happened to them. The Elon approach is the polar opposite of that. And the polar opposite of the approach is literally like, I'm only going to talk to engineers. And so when there's an issue, I am going to go straight to the source of truth. And the source of truth is the engineer who actually knows what's going on. And so what Elon, and I've seen him do this, what he literally does is he goes to whatever when there's an issue. One of his companies, he goes to whatever is the engineer who's working on that problem and he sits down the engineer and they solve that problem. And I can just tell you the number of CEOs in tech, even the great ones who do that. Almost nobody ever does that. Why does nobody ever do that? Well, first of all, it's just a giant pain in the ass because your life consists of having to actually solve all these problems. The whole point of being big and powerful and successful is you pay people to do that. And now you're doing it and you're in there at two in the morning doing it. This sucks. And so most people won't do it. And then the other is that means the CEO of the company has to have the skillset to be able to it do do that. So the CEO has to not just be a great CEO, they also have to be like a great technical technologist. Not just that they have memories of having been a programmer at one point or whatever, a chip designer, but where they can actually sit down with the chip designer on Thursday night at 2am in Austin and they can actually figure out what's wrong in the chip. And Elon has that ability and he's encyclopedic on every area of technology and is able to go hands on with rocket designers and AI designers and everything in between. And almost no CEO has that. And so, but that's literally what he does. And then, and then the way that he thinks, the way that he thinks about it I think is basically, you know, he runs whatever six, six companies wants or something. And it's like basically any given week, in any given week, he thinks about everything as a production, basic production line, you know, sort of production process. It's like he's actually like an old school industrialist. So everything's like a production process. And then any given week there's, there's, in any production process, there's always a bottleneck. So there's always, there's always the thing that is slowing down the process the most. And that's always one thing. So what he does for each of his companies is he identifies what he charts. He literally maps out the production process. He literally has these monitors where he has the whole thing laid out. And then he basically says, okay, this is the issue that's holding up production this week. And then he goes and he works and that's the thing that he goes to work with the engineer on, is he goes to fix that bottleneck. And he does that every week for every company. And so think about what that this is why Tesla is smoking has been so much dramatically performed. The rest of the auto industry is because Tesla, he's fixing the critical production bottleneck at Tesla 52 times a year himself. I can tell you what the CEO of the legacy automakers are doing. They're not doing that. That is not what's happening. In contrast, a normal company, it might take six months to solve these problems. And Elon's fixing it right now, tomorrow, let's go fix it right now. And so he just runs this loop over and over again. He's absolutely indefatigable. I offered. He famously, for a while he had sold all of his houses and he was literally cough surfing. You know, it's one of the most successful people on the planet. And so I have a vacation house. And I offered him, I said, if you want to take a week and use the vacation house and whatever, take the kids, feel free. And he sat back five minutes later, it's like, whatever, 11 o' clock at night, forward response. I don't take vacations. Which again, it's like there's no CEO like this. The whole point of being a CEO is you get to go jet around. And so anyway, so he's doing that and then he turns this into a routine. And so when he does a day, a week at each of his companies, and he'll basically do like all day, he'll do like a 12, 14 hour stretch where he'll do design reviews. But the way that he does it, he does with five minutes per engineer, right? And so he does 60 divided by five. It's been way too long in this podcast. How much is that? 12. He can do 12 design reviews an hour and then he does 10 hours a day. So Elon will do 120 design reviews in the course of a day.
- [100:52]
Host
Are these one on one?
- [100:53]
Marc Andreessen
I have not actually sat on these. I suspect there are other people around, including people work for him. And probably, probably some of the leaders of the companies are involved in different ways. But it literally is the thing I noticed. It's literally a rotating cap. It's the point engineer on each of the important things coming in and presenting for five minutes. And then the question is, if it's going great, that's great. If it's not going, what's the problem? And then how does that problem rank? Is that the production bottleneck? And if it is the production bottleneck, then that's the thing that he then fixes. And then that's when he's there from whatever, 8 o' clock till 2am Working with that engineer to fix that problem. One way to think about this is the velocity. In military affairs, it's called maneuver warfare. Right? So just the speed at which he operates is just the cycle time is just so much faster than anybody running in a traditional method. It's hard to even compare the different. It's like four hours versus six months. It's just this incredible, incredible gap. And then the other part of it is somebody I know once went to work for SpaceX and they asked what it was like and he said it's like being dropped into a zone of shocking competence. Everybody is ultra competent. And the reason everybody's ultra competent is because, number one, if they're not, Elon sniffs it out and fires them. But he knows because he's talking to the people actually doing the work at this point in his having done this for whatever 25 years, he can sniff this out really quickly now and then. The other is the best engineers in the world want to work for him because he's the one CEO like this who's able to work with them as a peer on whatever the technology is. And as an engineer, you're just like, what would Be better as an engineer than being able to design a rocket engine with Elon Musk as your engineering partner. And so he just has this incredible positive selection where the smartest people in the world want to work for him, and then anybody who can't cut it gets fired. The world sees this as, like, raw equipment progression, but it's beyond that. It's a very systematic way of optimizing these companies to be able to take on these profound challenges and then being able to actually solve all the problems and do these things and at a speed that is just completely unmanaged. The challenge of all of this is like, okay, that all works great if you've got Elon. Right? And so one of my concepts is, I think we need a metric for founders in Silicon Valley called the millet Elon. Right. And so how many millit. Elons are you? Right? Are you 10 miles elons? That would be great. Are you 100 million elons? You know, that's 10% of an elon. Like, that'd be fantastic, you know, you know, 500 million elons. Like, I'm going to give you all the money. Right? Most people are like 1 milli Elon or 0.1 milli Elon. The question that falls out of this, which is a question that, you know, bedevils us, is like, okay, like, you know, you can't. Can't clone. You can't bottle the essence. So what out of that can be transplanted to, like, normal human beings?
- [103:28]
Host
And how much of it is predictable or knowable when he's much younger? Because, like, the. The famous example of this and is Michael Moritz, Pat Singh made all his money in PayPal with Elon. Obviously, there was contention there. He got kicked out and everything else. But then Elon pitched him Tesla and he passed because he's like, there's no way that you're ever going to surpass Toyota. And then Moritz, to his credit, was just like, I drastically underestimated the guy's determination and painful tolerance, I think is the term he used.
- [103:57]
Marc Andreessen
I wasn't there for that. So I don't know about that. I will say the idea of having been a software entrepreneur building a car company. Okay, building a. When Tesla started building, there had been no new successful car companies in the United States for like, a hundred years. For like a hundred years. Yeah.
- [104:12]
Host
There was like 2,000 of them in 1905. Founded from like, 1900 to 1910. And three that survived.
- [104:18]
Marc Andreessen
That's right. And the previous real attempt to start a car company in the US Before Tesla in the preceding decades was. Was Tucker or Tucker Automotive. Yeah, yeah, Tucker, which was such a disaster that they made a movie called Tucker, which is about what a disaster it was. And so, like, obviously you don't do that. Obviously. This is insane. And for a software guy to do this is insane. And oh, by the way, this is only one of the things he's doing. He also has the rocket company.
- [104:41]
Host
Yeah.
- [104:42]
Marc Andreessen
Which is also insane. Right. And so, yeah, so it's like the. And I wouldn't like, by the way. I didn't see it and I didn't. I was, you know, I'm a software guy and I just, I was. I don't know, whatever. He's going to go. I guess he's going to go do cars. I don't know anything about cars. So it's not like I saw it, but I'm just saying, like, the level of incredulity that he was greeted with at the time was, I think, almost uniform. And there's that famous photo, the most famous Elon photo, I think, or the most powerful one is the one where he's young, Elon, probably 2005 or whatever,
- [105:06]
Host
and he's in the shorts and the polo and he's crouched down and there's nothing but the explosion remains of the third rocket, the second or third rocket, the one he had been funding personally, like.
- [105:18]
Marc Andreessen
Yes.
- [105:18]
Host
Did you ever read Eric Berger's book Liftoff?
- [105:20]
Marc Andreessen
No, I didn't.
- [105:21]
Host
Oh, you got to read it. I'm surprised you haven't. It's the, it's only. Only focuses. I like these company histories that focus on like the first, like six years and it just stops. It's the first six years history of SpaceX.
- [105:32]
Marc Andreessen
And it's.
- [105:32]
Host
There's nothing good in the book. It's just reading one failure after another after another, one catastrophe after another after another. It's a good read.
- [105:40]
Marc Andreessen
When my kid was 5, he loves rockets and so his favorite rocket video was the compilation of all the SpaceX rocket science explosions.
- [105:46]
Host
Elon talks about this, that before his friends, when, after he sold them to. He had. I think he had like 180. I think the story tells like 180 million after taxes. He's like, I'm going to do this rocket company. One of his, I think D. Rossi or I forgot the friend sat him down and they made him watch all the rocket. There was a compilation, this is probably pre YouTube of just rockets blowing up over and over again. Like, no, you're literally going to light your fortune on fire. It's going to explode in the sky.
- [106:11]
Marc Andreessen
Yeah, exactly, exactly. So I mean, obviously it's working, right? So his method obviously is working and it's obviously working like far better than, I mean it's certainly working far better than anybody else's method in cars and certainly working better than anybody else's method in rockets and then in a bunch of other areas also. So it's clearly working. And so it's like, okay. And then he just draws because of just who he is and what he's doing and how he does it. He draws so much heat. There's just so much. The environment is just full of criticism and attacks, just nonstop stop. And we all kind of get sucked into these narratives. But I think the key thing is just for me it's just like, okay, there is a method there that he has been working on and refining for coming on 30 years that has worked better than any other method. Like I said, I don't know how many people can do it. Maybe there's just a fundamental limitation which is you can do it if you're Elon and you can't do it if you're somebody else. Or maybe you need to be above 30 milans but not below or something like that. Maybe there's some threshold where you break through on this. But it is clearly the best method. Like it clearly is generating the best results. And then again, conceptually I like it because again, it's this bridging of the founder mentality with the manager mentality because he's not just doing. These are not just one offs, he's scaling. Everything is scaling. What is it? Starlink just hit. What was the number? StarLink just hit 10. Was it 10 million subscribers?
- [107:26]
Host
I'm one of them.
- [107:26]
Marc Andreessen
Something like that. Yeah, exactly right. You probably have read about Iridium and to. No. Oh, okay, okay. So Elon's not the first guy who said we're going to do satellite based Internet access. There was Bill Gates, Craig McCaw. So Microsoft was on top of the world and Craig McCaw basically built cellular telephony in the US built what's now AT&T mobile. Those guys teamed up in the early 90s and did this thing called Teledesic where they put up satellite based voice and then it was going to be Internet access. Complete catastrophe, total bankruptcy, complete disaster. And then Motorola, which used to make all the cell phones in the US had another one system that actually still up called Iridium. And again, it's just like this classic business school case study of just complete disaster, capital destruction and so Elon's like, I know I'm going to do number three of those with Starlink as a side project at the rocket ship company, right? Because he's like, in retrospect, it's total genius because he's like, we're going to be putting up, if the rockets are reusable, we're going to be launching them all the time. And then the question becomes, what's going happen to go in the rockets? And he's like, I could wait for the customers to come to me with more stuff to put in the rockets or I could just put up my own satellites. What would be the satellite to put up? Oh, it would be consumer grade, consumer priced, Internet access. And it's just like, okay, anybody who knew anything about the history of FLAG satellites knew that that was like the great, that's the new craziest idea in the world. And of course it's like this giant success. It's like the side project. There's clearly method. It clearly incorporates invention, it clearly incorporates scale. It does a brilliant job of both of those. It's clearly in part the Henry Ford, whatever, Alexander the Great method, clearly. But there's also like real scale and heft to it. SpaceX now is building, you know, they've got their own city like, you know, down in Texas, right. And so it's a formula that captures both sides of it and it may be like the least studied and understood thing I know of in the world right now.
- [109:10]
Host
It's incredible. Mark, we're running out of time. When I started the show, you were at the top of my list for one of the guests. I want to talk to you. Thank you so much for doing this. I hope you come back in a few months because there's a million other things we need about to talk, talk about.
- [109:20]
Marc Andreessen
Good. Awesome, Fantastic. Thank you.
- [109:21]
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I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through founders.