Marc Andreessen on Software program, Immortality, and Bitcoin

Marc Andreessen: Yeah. So, that piece–that was in 2011. That had a few messages in it. There was an express message and an implicit message. The implicit message was–if you bear in mind the time, 2011 was nonetheless throughout the very darkish days of the financial crash after the worldwide monetary disaster in 2008. So, in 2011, there was an virtually complete pervasive sense of tech pessimism. And, there was a way that mainly tech was over, and that this was one other 2000-style crash, and that these corporations had been by no means going to return again, and enterprise capital was lifeless. Apple on the time was buying and selling at a P/E [price/earnings ratio] of, like, six. You realize, like, I used to say Apple was buying and selling like a metal mill that was within the course of going out of enterprise, as had been all the opposite actually type of good tech corporations. And so, there was simply this pervasive sense of doom and gloom.

And so, one is: I simply needed to place a stake within the floor that truly no, tech isn’t lifeless. And, the truth is, tech isn’t going anyplace. And, the truth is, there’s truly a giant tech growth coming, which is what occurred.

That follows the express thesis of the piece, which is: Now we have hit crucial mass in our period with this type of very magical expertise known as software program. I name it a magical expertise. It is fairly actually like alchemy. I examine it to–you know, Isaac Newton spent 20 years attempting to develop the so-called thinker’s stone to have the ability to transmute lead into gold and he by no means succeeded at that.

However, now now we have this simply unbelievable expertise the place you’ll be able to sit at a keyboard, you’ll be able to sort in letters and numbers on a keyboard, you’ll be able to press Enter, after which issues change in the actual world. Proper? The actual world reorganizes itself in response to what some coder has typed right into a software program.

And, there’s apparent examples of this that occurred. It was taking place at the moment with providers like Lyft and Uber. Proper? The coders at Lyft and Uber sort in incantations into the keyboard; they press enter; and impulsively 1,000,000 vehicles and riders are going completely different locations. There is a thousand different examples of this.

And so, software–I type of level out within the piece–software is type of a magical expertise in financial phrases for transmuting labor into capital. It is a magical expertise for transmuting digital into bodily. It is a magical expertise for transmuting human creativity into motion in the actual world. And, then the truth is, a world of mainly ubiquitous computer systems, all people having a pc of their pocket as a result of smartphone, which was hitting crucial mass proper round that point, meant that mainly this magical expertise was going to comb throughout mainly each area of human exercise and be transformative.

And, I might argue that the final decade has confirmed that. And, then I might additionally add the method continues to be simply getting began.

Marc Andreessen: They’d two advertising and marketing pitches. One advertising and marketing pitch was 1,000 songs in your pocket and the opposite advertising and marketing pitch, the advert marketing campaign was known as Rip, Combine, and Burn.

Marc Andreessen: Proper? Which meant you may rip your music: You may pull your music off of the bodily compact dialogue [CD] and you may transmute it into a combination. You may transmute it into software program and reorganize it in bits after which burn it onto, on the time, a writeable CD. Or you may add it onto your iPod.

Marc Andreessen: Yeah. That is the massive critique that I might degree in opposition to ourselves. The massive critique I might degree in opposition to ourselves–which is, you realize, Silicon Valley, the tech business, enterprise capital, startup founders–the massive critique I might degree in opposition to ourselves is: The entire sectors of the economic system that you simply appropriately point out, those which might be being remodeled by software program, they’re all small. Proper? Should you have a look at a pie chart of gross home product, they’re all small.

After which, the truth is, what expertise does–technology does one thing very fascinating: Know-how drives down costs. Proper? So, expertise is deflationary within the sectors that it hits.

And so, these sectors, in lots of circumstances there’s one thing of an impact the place you drop the worth, you enhance demand, you enhance market dimension. However by and huge, what’s taking place is these sectors are shrinking in dimension. Proper?

And, you realize, the music business has been via this extreme type of deflation. In actual fact, newspapers–you talked about newspaper income has been approach down.

So, there’s been this impact the place mainly income in these sectors has shrunk. And so, these sectors are mainly small and shrinking.

Then again, you have got these different sectors. And by the way in which, simply the time period I take advantage of to attempt to maintain these straight is type of the quick sectors are the small ones which have expertise affecting them very instantly after which are shrinking. And, I name them the quick sectors as a result of they’re sectors experiencing speedy productiveness development. Proper? And so, that is the primary set.

Then you definately’ve bought these different sectors. You talked about healthcare, training. I might additionally add housing. I might additionally add law–law administration forms. And, then I might additionally add authorities.

And so, to me these are the massive 5 that I take into consideration rather a lot.

I name these the gradual sectors. And, the rationale these are the gradual sectors is–first of all, they’re very massive. They’re the lion’s share of GDP [Gross Domestic Product] when you have a look at the pie chart.

After which, to your level: they are not being affected by expertise to the identical extent. In actual fact, arguably, when you go into the main points, most likely what you’d discover is at the very least a few of them are literally experiencing unfavorable productiveness development. Proper? And, you’ll be able to see that by simply administrative bloat. Proper? You see this in increased ed, proper? The variety of directors has, like, ballooned out massively within the final 30 years whereas the variety of professors truly hasn’t modified very a lot.

The identical factor is going on in healthcare. Proper? We’re type of drowning in administrative prices.

And so, this so-called gradual sector, gradual productiveness development, gradual adoption of recent expertise, most likely unfavorable productiveness development, after which as a consequence of all of that, rising costs. Proper? And so, all of these sectors have the characteristic–housing costs maintain rising, healthcare costs maintain rising. Healthcare, you realize effectively, however healthcare now’s a fifth of the American economy–right?–and nonetheless rising. After which, after all, training. The worth of a four-year non-public school diploma in the US goes to achieve 1,000,000 {dollars}. And, it should attain 1,000,000 {dollars} in, like, the time horizon of these of us who’ve younger children.

And so, it is this story of two cities. There is a lengthy dialogue available, after all. And there is total fields of research round mainly what’s flawed with these gradual sectors.

And, there’s a number of facets of regulatory seize and authorities entanglement and cartels and monopolies and oblique fee and so forth and so forth. However, there’s additionally only a actually massive expertise issue, which is: these sectors aren’t absorbing expertise very quick.

One of many massive alternatives in my world is to go after these sectors. Is to inject new expertise into these sectors in the identical approach that we have injected new expertise into media, leisure, retail, and so forth.

Optimistically, what I might say is there’s a chance to mainly crack the worth curve. There’s a chance to take these sectors and switch them from gradual sectors into quick sectors. If we do this, we should always be capable of crack the worth curve. Proper? We must always be capable of over time–you know, tilt the worth curves within the different direction–which I believe could be overwhelmingly a constructive factor for all of us. However, boy, there’s numerous work concerned to try this.

Marc Andreessen: Yeah. Effectively, there’s this–I at all times level on the market’s this wonderful factor in antitrust law–antitrust cases–where, mainly, regardless of how an organization costs its merchandise, it is in bother. Proper? Excessive costs are gouging. Low costs are predatory. And, the identical costs are collusion. Proper? And, all three are unlawful.

A really comparable factor occurs, truly, in these sectors. Like, healthcare, you talked about, which mainly is: If you consider what are individuals mad about? Individuals are mad about, for example–like, each reporter, each newspaper journalist on the planet is admittedly mad concerning the collapse of pricing and, you realize, data. They’re actually mad concerning the quickly falling–basically the collapse of the pricing of the media business. They’re very offended at tax–

So, there you have got a constituency that actually hates falling costs and really a lot needs that costs would rise.

On the opposite side–on the healthcare facet, proper?–that identical particular person goes to their physician and experiences spiraling healthcare costs and is admittedly mad that the costs are rising. And, very a lot needs that one thing would occur that will appropriate these value curves and trigger these costs to fall. After all, the physician is within the actual reverse state of affairs. She or he loves the rising healthcare costs, or very a lot would love the knowledge to proceed to get cheaper.

So, there is–this is mainly the way in which that I decode numerous the type of anti-tech type of sentiment that you simply see operating round within the final decade, which is: One set of individuals are actually mad at us for the impact that we’re having on the quick sectors and one other set of individuals are actually mad at us for the impact that we’re not having on the gradual sectors.

Marc Andreessen: Now, I occur to know the place I believe the world ought to go, but it surely will be the case that as this stuff–this is now main league stuff, proper? We’re not speaking simply, you realize, video video games or no matter, anymore. We’re speaking about your complete economic system.

And so, type of, these results and folks’s perceptions of these items and the different–to your point–the completely different constituencies, the completely different stress teams, the completely different business teams, their views, the political capture–like, all that stuff is changing into very major.

And, by the way in which, we see that in our corporations. We simply have increasingly corporations on a regular basis which might be getting embroiled or injecting themselves into regulatory and political affairs that will’ve been inconceivable even 10 years in the past.

Marc Andreessen: I believe it’s–you know–I believe you are proper. I would add to that, it is a fear-driven, comfort-driven factor. There’s an ideal instance, which is, proper?–surveys, polling exhibits on a regular basis individuals completely hate Congress. Proper? Congress could have a ten% approval ranking and folks love their Congressmen. Incumbent reelection is, like, 90%.

My interpretation of healthcare is mainly individuals hate the healthcare system, however they love their physician. And, that is an emotional response. Proper? It is an emotional response on each sides–which is: you hate the healthcare system as a result of it feels massive and scary and bureaucratic and prefer it’s numerous instances out to kill you. You’re keen on your physician as a result of she or he is the one that’s attempting to save lots of your life. So, there’s that.

The macro–the type of the macro-observation that I might make is that I believe when you chart–and possibly we may put up on your listeners however Mark Perry has this chart he retains up to date that he calls the Chart of the Century which exhibits the worth curves–right?–of these completely different sectors. And, it type of famously exhibits healthcare, training, housing, these spiraling costs mainly straight to the moon in crimson after which these falling costs within the quick sectors in blue. And, when you simply, you realize, you simply chart that out, proper, mainly what you see is–you know, going to the very foundation of this dialog, what you see mainly is–the three markers of what at the very least in the US we name the American Dream, which is to say, a viable, cheap, aspirational middle-class lifestyle–the three markers have and at all times have been: You personal a home, you have got nice medical care, and you’ve got nice training on your children.

And, you probably have these three issues, you obtain the American dream and you’re a profitable, you realize, supplier for your loved ones. You are capable of present your children with a greater life than you have got.

And that is kind of–you know, that is the foundational facet of life in a type of center class, type of bourgeois type of world. And, different international locations have their very own articulation of it, but it surely’s these three issues over and over.

And, what we have achieved, collectively, proper? is, you realize, by having these be the three sectors which have these simply extremely quickly spiraling upward costs, what we have achieved and what we’re doing is pricing the American dream and its equal in different international locations out of the attain of lots of people.

And, it is similar to fundamental logic: That is like, okay, what would occur? Should you ran an experiment on politics, and you probably did that on objective and also you had been attempting to see what political response you’d generate, the response could be populism.

And, by the way in which, the response could be left-wing populism within the type of people that would need the federal government to step in and repair this. And, then the response could be right-wing populism by individuals who would wish to overthrow the present system and have a special strategy.

And naturally, in our politics, that is precisely what we see.

And so, with my financial hat on, it is like: Oh, that is simply straight apparent trigger and impact. That is societal self-harm. You realize: We must always not do that.

Marc Andreessen: Yeah. And, the truth is, once you look at–I will simply make another level on this as a result of our corporations reside this daily. While you have a look at how the federal government tries to assist in these three sectors, proper, what you see mainly is identical sample in every of the three sectors. And, it has two elements. And, the 2 elements are restriction of provide and subsidies of demand.

Marc Andreessen: Proper. And, the restriction of supply–the restriction of supply–takes the shape mainly of regulatory seize after which monopolies and cartels. Proper?

You possibly can simply take training for instance. Training could be very easy on this. Ok-12 [Kindergarten through 12th grade] in the US is a authorities monopoly. After which the college system is a cartel. And, we all know the college system in the US is a cartel as a result of entry to federal funding for a university or college is managed by what’s known as accreditation. And, the accreditation businesses are run by the present universities. Proper? And so, it is a self-governing cartel–

Marc Andreessen: And, lo and behold–

Marc Andreessen: Hospitals. Identical factor.

Marc Andreessen: After all, skilled associations. New medical doctors, new nurses. Proper.

So, one concept of [inaudible 00:20:45] healthcare is there are nurses, there are additionally nurse practitioners. Perhaps we should always have much more nurse practitioners. The nursing unions go–so yeah.

So, you see this, mainly, this restriction of provide. This, both instantly government-directed restriction of provide, or government-enabled and supported. The federal government makes Federal Pupil lending obtainable to the accredited schools and universities and to not the others regardless that these aren’t authorities businesses. And, regardless that the accreditation bureau, the forms itself, isn’t a authorities company. It is type of a de facto extension of the federal government.

So, you simply see this restriction of provide factor over and over.

And, then to your level, the subsidization of demand. You might have, you realize, trillions of {dollars} of subsidies into residential mortgages and home purchases within the final 60 years. You might have trillions of {dollars} into scholar mortgage funding and every kind of different subsidies for universities. And, you have got many trillions of {dollars} in subsidies into healthcare, via Medicare and all these different authorities methods.

And so, once more, it goes back–it’s like Micro/Econ 101, proper?

Marc Andreessen: Take a market: You prohibit provide, you subsidize demand, you get costs to the moon.

Marc Andreessen: California, we’re now offering shopper gasoline subsidies. The California authorities despatched out–it’s truly a great–this is such an ideal instance. So, the California authorities despatched out $400 gasoline playing cards as a result of gasoline is getting costly. So, they despatched out $400 per automobile that you simply personal. And, so, to start with, it was nice for me. Like, I personal two vehicles: I bought $800 bucks.

Marc Andreessen: I really want it.

Marc Andreessen: I am not the obvious recipient of presidency help. And but I bought it. So, congratulations to me.

And, then, you realize, by the way in which, my neighbors–right?–who personal one automobile or personal zero vehicles, as a result of they’re, you realize, environmentally accountable and so they bike on a regular basis, they bought zero subsidies.

And, then, after all, the twist is, California does the whole lot it could actually to stop new drilling of energy–right?–new oil and gasoline extraction.

And so, as soon as once more, it is a case research: prohibit provide, subsidize demand, and be absolutely–every single time–completely stunned by the end result. Proper? We’re like goldfish on this challenge. Like, we’re shocked each single time costs rise.

And so, anyway that is what we’re attempting to do.