Andreessen, Horowitz, Cowen

Supported by Greenhaven Road Capital, finding value off the beaten path.

At the end of each year, the venture capital firm a16z drops a slew of podcast episodes and from 2018 we’ll focus on the conversation between Tyler Cowen, Ben Horowitz, and Marc Andreessen.

At the start, Cowen asked about their history as a couple, from Netscape to Loudcloud and Marc said they started Loudcloud in 1999 because “It turns out the internet worked and it was a big deal and people were unprepared for it.”

When AOL linked to a website that website was often unprepared deluge. This was when AOL handled nearly half of all internet traffic. After selling to HP the duo vested then invested in a venture capital firm. Horowitz said, “It was one of those ideas that came out of our experiences, we were customers of venture capital.”

The duo started a16z and started looking for weird people. “The kinds of people who start these companies,” said Andreessen, “are not normal.” He told Tim Ferriss, “These things look like cult and fringe activities until they break mainstream.” He told Barry Ritholtz, “It was beyond not obvious, it was considered ridiculous. It was well-known in 1992 that the internet was for academics and nerds.”

There is something about entrepreneurs…

Entrepreneurship is prosocial deviancy. We see this in Yvon Chouinard, Barbara Corcoran, Ken Grossman, and Katrina Lake among others. Each attempts a new future.

Cowen asks about blockchain and Horowitz said, “When asked ‘What’s the killer app?’ No one ever gets it right.” Some say that YouTube embeds and broadband were the internet’s killer apps. Some people say it was email. On mobile some say it was messaging, others GPS, others social.

The real killer app said Fred Wilson, is “the native thing that needs to happen.” Andrew Ng noted that malls with websites weren’t Amazon.com. Michael Smith studied why Netflix wasn’t just another production house. The same is true for blockchain.

“If you think about the smartphone it was much worse than the PC,” said Horowitz, “It had a tiny screen, it was far less powerful, etc, etc. But it had a couple of properties that weren’t in a PC. It had a GPS and it had a camera, so you could now build things like Lyft and Instagram.”

We’ve looked at Instagram’s start and it’s one a blockchain company could copy; create a native app by listening to customers as early as you can. The early social networks like Instagram and Twitter were not good, but they were the best thing at the time. Blockchain applications don’t need to be perfect, just good enough with continuous improvements.

There’s a fair bit about culture too but it’s an important idea that’s still hard to articulate. Maybe part of the reason culture is nebulous is that culture changes from company to company.

a16z has a cultural leadership fund where “We’re trying to apply culture to the venture capital model,” said Horowitz, who has a lot of thoughts on culture.

Current book suggestions.

Horowitz said, “One of the most interesting books I’ve read lately is Genghis Kahn and the Making of the Modern World. It turns out to be unexpectedly the most interesting book on the topic of how you think about inclusion that I ever read.”

Andreessen said, “Private Truths, Public Lies… (Timur Kuran) basically models where revolutions come from, it’s like an explanation for the fall of the Berlin Wall, an explanation for political revolution and it so happens to be highly relevant for both the left and right in the United States right now.”

 

Thanks for reading.

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