Interview with a16z Mark Anderson: Crypto Promises to Change the Way the World Works

Ten questions about technology and the future of automation, U.S. institutions, social media, the crypto world, and the future of the venture capital industry

Mark Anderson is an Internet pioneer who helped write the first widely used graphical Web browser, Mosaic, and thus claims to be one of the inventors of the Internet. He co-founded Netscape and several other companies. He is still active on the front lines of the technology industry and co-founded the venture capital firm Andreessen Horowitz (A16Z), which is one of the largest venture capital firms today.

The author of the interview is a long-time friend of Andreessen’s and has often interacted with and been inspired by him. In this article, the author asks Mark ten questions about technology and the future, covering automation, U.S. institutions, social media, the crypto world, the future of the venture capital industry, and more. Here are his answers.

Q: Last year, in your widely circulated article “It’s Time to Build,” you mentioned that the epidemic exposed deep problems in many U.S. institutions and that we need to build big to get rid of those persistent problems. What do you think we should prioritize building in the public and private sectors? Who should take on that responsibility?

A: Since that article was published, our lives have been dominated by three major events: the epidemic disaster; the systemic failure and chronic collapse of virtually every public sector in the world; and the great success of the private sector (especially the U.S. tech industry) in helping us better respond to the epidemic, and doing so against a backdrop of much public sector suppression.

Speaking of building, we can consider three major components of the American dream and three markers of success for the middle class: housing, education, and health care. Today, these three things seem increasingly out of reach for the average person. Not only has this affected people’s lives and the functioning of the economy, it has also seriously polluted our political environment.

Technological advances have lowered the prices of most products and services, but have failed to curb the rising costs of housing, education, and health care. In the next decade, we should break or even reverse this trend with new technologies, businesses and industries that make housing, education and health care more accessible to ordinary people. My venture capital firm is backing startups in all of these areas.

Interview with a16z Mark Anderson: Crypto Promises to Change the Way the World Works

Q: From a short-term perspective, are you still bullish on the future of technology? What are some of the most exciting tech developments?

A: I’m very optimistic about the future of technology, especially in the area of software innovation. Ten years ago, I wrote the article “Software Eats the World,” and it’s a great thing that software is still eating the world today and will continue to do so for decades to come, for several reasons.

First, some people criticize software by saying that it is not a real-world entity, that it is not a house, not a school, not a hospital. This criticism misses a key point. Software is the leverage of the real world.

Without people writing code, there would be no Lyft, no new kind of real transportation system that coordinates passengers and drivers. Without someone writing code, there would be no AirBNB, no new real-world real estate system that coordinates landlords and tenants. Without someone writing code, there would be no self-driving cars, self-driving planes, or bracelets that can tell if we’re sick.

Software is the modern alchemy that transforms bytes into physical actions; it is the closest thing to magic in our time. We should embrace software harder. But wherever software touches the real world, it becomes better, less expensive, more efficient, and more adaptable. The same will be true for housing, education and health care, which software has not yet touched.

Q: You’ve recently invested in at least two new social media companies, Clubhouse and Substack. why now? What did social media lack in the past? What will the new network do to improve it?

A: The point is not what is lacking in the existing social media, but that this communication thing is critical and is the backbone of almost all progress in the world, so it is important to improve our ability to communicate and open up new ways of communicating, collaborating and coordinating.

Clubhouse is the Athens Square for the new age and the global. People from all over the world come together to talk about all topics in a group format and by speaking. In a world that is largely based on text-based technology, people value the opportunity to be able to speak online. This is no different on this app than it was around a campfire 5,000 years ago.

Substack has created a pay-for-knowledge business model that has been missing from the Internet for 30 years. Instead of a new way to communicate, it brings together all sorts of primitive Internet communication methods: long articles, IETF solicitations, newsgroup postings, group emails, blog posts, etc. This pay-for-knowledge model will make a huge difference; it will reverse the trend of traditional communication methods that make people stupid and make them smart again.

Q: How will software consume the world in the next decade, and will AI-driven automation replace all business models? Will it be difficult for traditional companies filling the software gap to compete with software companies dabbling in traditional markets?

A: My theory of “software eating the world” is divided into three phases in business.

CDs become MP3s, which in turn become streaming media. Alarm clocks go from physical tools on the bedside table to apps on the phone. Cars go from bent metal and glass to software encased in bent metal and glass.

  1. The manufacturers of these products change from manufacturing, media or financial services companies to (fully or primarily) software companies, with core competencies becoming creating and running software.
  2. The competitive landscape of the industry changes as software redefines the product, and the best software will win, which means the best software company will win. It can be an established company or a startup.

Established companies have the advantage of an existing customer base and brand, while software startups have the advantage of being software first and not having to adapt to an old culture full of constraints. The winner depends on whether the mature company learns to innovate first, or the startup finds customers first.

The culture shift is so difficult that I am increasingly skeptical that most traditional companies will be able to adapt to the new situation. Often, it is easier to start a new company than to transform an old one. I had thought that this situation would gradually improve and the world would adapt to software, but now I see that the problem has instead increased. The percentage of traditional business executives with computer science degrees is much lower than that of startups, creating a huge software knowledge and skills divide.

As for AI, as an engineer, my view is less romantic. AI/machine learning is a powerful technology that has witnessed explosive growth in innovation for a decade and is now increasingly being applied in the real world. But it’s still just software, it’s math, it’s numbers; the machine hasn’t developed self-awareness, the Skynet doesn’t exist yet, the computer still has to do what we tell it to do. ai/ml is still a tool for humans, not a replacement for them.

I suspect that the term ‘artificial intelligence’ itself is problematic; perhaps it should be better called ‘augmented intelligence’. Augmented intelligence allows machines to become better thinking partners for humans. The concept is also clearer in terms of its technological and economic impact. There will be no anti-utopian scenario in which everyone loses their jobs in a world where augmented intelligence is becoming more prevalent; on the contrary, we will have the glory of productivity growth, economic growth, job growth and wage growth. This is supported by the pre-epidemic trend, where centuries of mechanization and computerization, rather than increasing unemployment, brought the unemployment rate for low-skilled workers in the U.S. to an all-time low, and I believe this trend will continue after the epidemic.

Q: I think we’re going to have a more distributed production system after the epidemic. Do you agree with that? Do you think telecommuting will be more common and operations will be more decentralized between different companies?

A: I agree.

First of all, epidemics are the best tool to cover reforms. In the past, CEOs wanted to push for all sorts of changes (from basic staffing and restructuring, to changing geographic footprints, exiting obsolete lines of business, etc.) to improve efficiency and effectiveness, but it was difficult to move forward because the changes would disrupt regular operations. Now that regular business has been disrupted, it’s better to just do everything you want to do.

Second, telecommuting has brought a huge positive impact. Almost all the CEOs I talked to marveled at the effectiveness of telecommuting. Since telecommuting worked in the difficult context of the epidemic, it will only be more effective after the epidemic is over. Companies will also be able to recruit the most promising employees from anywhere, free of geographical constraints. Today, companies of all shapes and sizes are adjusting their geographic footprint, rethinking where they should open branches, where they should hire, how they should lay out their office space, or whether they want more office space.

Combine these factors and the next five years promise to see significant productivity growth. This is a key prerequisite for us to witness the ‘Roaring 20s’. I dare not say for sure, but it is very likely to come true.

Third, the way people live and work will also change dramatically. People will rethink what kind of career to pursue, what kind of employer to look for, where to live and how to live. The biggest change is the decoupling of where you work and where you live. Beyond that, I think people will choose more diverse lifestyles, such as forming new types of co-beneficial communities.

In summary, the U.S. and the world are expected to unleash tremendous economic growth potential. More people will be able to find better jobs, more spending power will create more demand, and more new industries and businesses will be created, leading to more job growth and wage growth …… I don’t want to report the good news, but the positive side seems to be underestimated.

Q: Your interest in the crypto space has grown in recent years. Is there anything interesting in the crypto space that is not already being actively discussed in the community?

A: Crypto is a classic blind-man’s-eye type of problem because there are so many operating principles, so many potential implications, and you can explain it in so many different ways that you can grab a partial and give the point you want to make. For example, many people have seized on the monetary part and either glorified it as a whole new monetary system that would liberate humanity from the nation-state, or they see it as a threat to economic stability and the ability of governments to tax. These are all interesting points of view, but I think they all miss the more fundamental fact that crypto promises to change the way technology, and therefore the world, works on an architectural level.

That architectural-level shift is distributed consensus, by which many untrusting participants in a network can create consensus and trust. This is something that has never existed on the Internet, and now it’s finally here, but it will take 30 years, I think, to accomplish all the things we can do. Currency is the easiest way to apply it, but we shouldn’t limit ourselves to that and draw a blank. Theoretically, we could build out internet-native contracts, loans, insurance, real asset ownership, unique digital goods (NFT), online company structures (DAO), etc.

It is also possible to think about the impact of crypto at the incentive level. In the past, human collaboration online either relied on real-world corporate norms (a company with a website) or on open source projects like Linux that were not directly related to money. With crypto, you can create thousands of new incentive systems that encourage online collaboration, where participants are directly rewarded and don’t even need a real company to exist. While open source software gets all the credit, with monetary rewards, more people will be more willing to contribute more, which will open the door to a wide variety of endeavors while simplifying the difficulty. Still, we need 30 years to sort out all the implications and drive a shift in the way people work and are paid at a civilizational level, and I don’t think that’s a fool’s errand.

Finally, Peter Thiel (a well-known investor) has a big picture assertion that AI is in a sense a left-wing idea, with top-down decisions made by centralized machines, while crypto is a right-wing idea, with bottom-up decisions made by a multitude of distributed agents, humans and robots. This view is not without merit. Historically, the tech industry has been dominated by left-wing politics, as have all creative fields, and because of this, today’s tech giants and the Democratic Party are inextricably linked. Crypto promises to give rise to a whole new category of technology, a nakedly right-wing technology with more emphasis on decentralization, more in tune with entrepreneurship, and more emphasis on free and voluntary transactions. If you believe, as I do, that the world needs more technology, you’ll agree that this is a very powerful idea, and that the possibilities of the tech world will grow by leaps and bounds as a result.

Q: A16Z has done some innovative exploration in venture capital. How do you think venture capital firms will change, will they become more like private equity firms, or more like banks? Or will there be any new business models?

A: Venture capital actually has a very old-fashioned aspect to it. Tyler Cowen uses the term “project evaluation,” which is a process of sorting through many possible configurations of people and ideas in order to select promising projects from which to invest money and effort to create something new or important for the world. The same ‘project evaluation’ model has been applied over the centuries to all sorts of large-scale ventures, including whaling ships, colonial settlements, music/movie/TV projects, and the world’s largest private equity deals, to name a few.

Of course, there is a new side to venture capital, as we fund the world’s most cutting-edge ideas and projects, supporting technology-enhanced new concepts. The founders we fund often break the rules and put new models in front of people that were previously thought to be impossible. This includes many of the cutting-edge crypto ideas mentioned above, many of which take on a very different organizational form than the classic joint stock company.

The venture capital firm itself is placed in the middle of this vortex of the new and the old, and there is certainly the potential for significant change. But the essential work, at least for now, is still sorting and screening all potential projects and making big bets.

My growing concern now is whether venture capital firms can break the “little boy/big boy” model of tech funding and scaling. The “little boys” are the Silicon Valley ecosystem that helps new companies take their first steps, and the “big boys” are the New York and Wall Street stock markets, investment banks and hedge funds that help companies scale up before and after they go public. It may be time for Silicon Valley (simultaneously as a geographic location, a network of people and a state of mind) to play a bigger role in the economy, where we can single-handedly help our companies get bigger and stronger, never leaving them in the hands of professionals on the other side (literally and metaphorically) who, after all, may not understand and value these companies as much as we do. We’ll see what happens. ……

Q: The 1990s was an important period for the Internet, and you were a benchmark figure at the time. Looking back on that period, do you think the dreams of the technicians came true? Or did they hit a hard reality? How should we commemorate that era and what ideas should be held on to?

A: It came true! Dreams come true and everything is as it should be. We are now the toad that got the swan’s meat. What are we going to do with the damn swan’s meat?

Think about what we’ve achieved. There are now five billion people with network-capable supercomputers in their pockets. Everyone can create websites, post everything they want to post, and also communicate with anyone or everyone and access almost everything that has ever existed. People live, work, learn and love online almost 100% of the time. every aspect of the vision of the 90s has become a living reality.

But, however. As Polaroid founder Edwin Land said, “I’m not saying you’ll all be happy. You will be unhappy, but your unhappiness will manifest itself in some new, exciting and significant form.

Why isn’t everyone happy? Probably because the technology industry has almost instantly gone from being a building block for people to pick and choose and use (operating systems, databases, routers, word processors and browsers) to being at the center of almost every major social and political debate and planetary strife.

To use an analogy, we may have gone from pirates to a navy. One would long for some modestly sized young and unruly pirate, but no one likes a navy that acts like a pirate. Today’s technology industry is like such a navy.

Conversely, a navy without pirates is not necessarily a good thing, which will give rise to a set of global orthodoxy and norms, suppressing new ideas and activities, leading to the demise of creativity. It is this game that creates the opportunity and demand for a new generation of pirates.

In his treatise, Machiavelli emphasized the need for a nation to return to the well, to its most original ideas, in order to find a source of renewal in the bleak afterlife. The same principle applies to businesses and industries. We should retrace the founding ideas of the technology industry: John Perry Barlow’s Declaration of the Independence of Cyberspace and Tim May’s Cyphernomicon in the 1990s, of course. But beyond that, it also includes Doug Engelbart and Ted Nelson in the 1950s/60s, David Sarnoff and Philo Farnsworth in the 1920s, Edison and Tesla in the 1890s, and even Leonardo da Vinci in the 15th/16th century. I think we should look back at the unrealized or not fully realized ideas of all these eras and find a niche that we have not yet lost, nor yet realized.

Q: What advice (workplace advice, etc.) do you have for a smart 23-year-old American?

A: Don’t follow your passion. I mean it. I’m afraid your enthusiasm is foolish and useless. Passion should be your hobby, something you do in your spare time, not your job.

Instead, look for opportunities to make a contribution at work. Find the hottest, most dynamic areas of the economy and figure out how you can make the best and biggest contribution. Try to highlight your value to the people around you, to your clients and colleagues, and try to steamroller your way to the top.

Sometimes we feel like all the excitement is over, the boundaries have closed, we’ve come to the end of technology history, and there’s nothing to do but maintain the status quo. That’s just a lack of imagination. The truth is just the opposite. We are surrounded by decaying legacy businesses that desperately need to be replaced by new technology. Let’s cut the crap and bring the guns to bear.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/interview-with-a16z-mark-anderson-crypto-promises-to-change-the-way-the-world-works/
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