Like yay what a little more brains on him I write takes like I'm citizen, can on him I get paid on my dividends stay on me I get paid every time that y'all hate on me Yeah I make my own beats, bright shrewt Yeah my music on fleek I'm the maestro
Every syllable right like a high-cool I'm unkillable doomed if you try to I'm addicted to rhymes and I sigh too I could quit anytime I decide too When I question my cloud my authority I believe in no doubt like to funny The track you just heard is an excerpt from my brand new album Amore Fatis
You may remember the music videos I put out last year, Blast for me, Straight A's and Forward This new album features all three of those singles plus seven brand new songs Now I put my all into this project and it's a real representation of my passion for music
So if you want to listen to the whole thing click in the description or search cold X-man on Spotify, Apple Music or wherever you listen to music Now back to the podcast Welcome to another episode of Conversations With Coleman My guest today is Marc Andreessen Marc is an entrepreneur, venture capital investor and software engineer He co-founded Mosaic which was the first widely used internet browser as well as Netscape He also co-founded Opsware and Ning
He's on the board of Metta and his most important achievement is that he's the first billionaire to ever appear on this podcast Marc and I talk about venture capital as a whole and why it is that VC firms on average fail to outperform the stock market
We talk about the role of hierarchy in companies and the possibility of having a truly flat structure where every employees of equal rank We talk about George Orwell's book homage to Catalonia We talk about why corporations go woke and why Marc resists that trend
We talk about the maladaptive qualities that have helped him succeed in the VC world And we talk about his long-term vision for his VC firm Andreessen Horowitz This conversation was recorded live in front of an audience at a conference that Marc and his partner Ben put on
And unfortunately the recorded audio and video turned out to be really subpar So your listening experience won't be what you're used to on this podcast for this one episode But the conversation itself was very interesting so I encourage you to bear with it So without further ado, Marc and Dresan
Marc, thank you so much for doing this episode of Conversations with Coleman Great And obviously here you need no introduction but you may also need no introduction just in general I saw on Twitter the other day someone from San Francisco tweeted I just want to meet a girl in San Francisco who doesn't know who Marc and Dresan is I mean it's a real problem for young men all through the Bay Area I mean I don't, I mean I wish him luck, I mean that sounds like a real challenge
Girls are actually putting in their tender bios, I do not know who Marc and Dresan is I mean you just kept trust of him on Twitter Right, yeah that's right So the first question I want to ask you is about the VC landscape Well the Kauffman Foundation released a report recently saying that the average VC fund does not do better than index funds One looked at over the past 20 years Is that something you agree with and if so why does Dresan Horowitz stand out?
What is it, what is the special sauce that makes you the elite of the VC world? So I would say that part of the statement from the analysis is correct So the average venture fund is terrible, so the average venture fund is terrible It will return less than stock market returns with much higher levels of volatility Which is a very bad combination
That's what you don't want, it's the quadrant that you don't want when you're investing Well the reason for that is sort of venture capital is perpetually overfunded And we know venture capital is perpetually overfunded because we see the result in the returns
Which you basically see as venture capital is an asset class It's like there's like 10% of venture capital firms that make money make better than market returns And higher enough returns to compensate for the higher volatility and then there's like 90% of venture that is just a bad investment
And so venture capital is basically permanently overfunded It's been overfunded like this for at least 50 years It shows no sign, it shows no sign of not continuing to be overfunded arguably It's even more overfunded now that it's than it's ever been You know there's lots of theories for that
You know one theory is just as somebody said it's the triumph of hope over experience So it's a real thing called the sixth marriage effect Right, like you know it's like okay, you know maybe you know maybe maybe you know all the other venture funds invest in
Or bad maybe this one will be good and then but I think there's there's a deeper problem which and this is sort of the problem that is very hard for people to talk about Very frustrating sort of think about but I think is sort of the big dominant thing about venture capital today
And a lot of ways the world economy today which is basically think about it as sort of western economic development over the preceding 200 years And then more recently eastern economic development has generated many trillions of dollars of capital From the first industrial revolution second industrial revolution now the computer revolution huge massive capital that that capital has you know
Pulled into what are basically giant pension funds right so in these are giant like national sovereign wealth funds and these giant endowments and and these giant Giant company pension funds and so forth all of this money is expected to be invested to pay for the retirement of all of the people in modern society who are who are aging and are all of these all of our
Societies now are aging quite rapidly that capital needs to generate a return it needs to generate you know a 7% plus reliable and return to be able to pay for the retirement of basically this giant wave of old people Getting all of our societies and there's just like way more money that needs to be invested that needs to generate that return Then there are investable opportunities to actually productively invest that money right and so that directly translates into
Why the average venture capital firm is not very good is because just there's just a shortage There are shortage of literally good things to invest in but that's the shortage the shortage is the number of great entrepreneurs
Never a great business ideas and that's what drags their turns down and I think that mismatch between the available capital to invest in new ideas And the actual number of new ideas and people who can execute them I think that mismatch is like wilds wildly right wide and scope
I think it's bigger than ever. I think it continues to broaden out and I think it's sort of the fact that this underneath what the way a lot of people kind of think that you know If they think modern society is stagnating or science of technology or delivering I think that's the core thing underneath all of it
They're just art. What is creating that short age of entrepreneurs and so this is the big question and I sort of call this the puzzle of the missing Elon's right so like okay so there's Elon Musk So there's Elon Musk and like he does the rockets and he does the cars and he you know now he's doing you know he was the seed funder originally behind open AI
Which is doing AI you know a lot of these AI breakthroughs and he's doing neural ink and he's doing you know he's doing all these things and it's like okay like you know There's one Elon there's you know there's a bunch of other people who you kind of put in that category
There's a bunch of other people you kind of put maybe a category kind of a tear right below that you know but like it's like you know You can make a list of those people right like it you can make a list and you can probably put it on one sheet of paper Why aren't there 10 times more of those people 100 times more a thousand times more a 10,000 times more you know Why aren't they first you know cars I mean to build a new car company in America and you know the 19 you know two in the 2000s
It's like this radical crazy idea that a lot of people you know Everybody basically thought would fail same thing on rockets and yet he did both at the same time and so clearly it is possible To do bigger things than we're doing and to do a lot more of them you know
I look like you know you can pass the blame a lot on this one you know including I'm sure you can blame B.C. for a lot of it But I'm just telling you like I mean we we seek these people out and this is our job like we're self-interested you know
Sort of a capitalist we're seeking these people out we're trying to find them where the more you know Then you get into all these really interesting questions about well you know are they are they you know are they are they born that way like are they where they trained you know
How much of it is you know inherent capability how much of it is you know choices along the way how much I mean I can imagine two explanations One is there's regulation and red tape but raises a cost of every new idea and this is something I've heard not only from big business owners
From small but but small business owners. I have a friend that owns a restaurant in Greenwich Village that he inherited from his father And he said looked at the landscape of regulation over the past 50 years And he said I can't imagine starting such a business today right but then there's also is it that our society values Entrepreneurship less than it used to is it that Entrepreneurship is seen as not as high status a path as as it used to be seen as well
So yeah I said I think you know under both of those factors is sort of this question do we want change Well you know do we want to be in a society that is dynamic do we want to be in a society that's changing rapidly Do we want the disruption that change creates you know do we want existing systems of living and sort of structure And hierarchy and patterns of who has power and who gets to make decisions do we want that kind of arbitrarily overturned
I mean I can tell you like the CEOs of all the other car companies very much do not want Elon to like they would very much prefer he not exist They would very much prefer that company fail you know it's much better for the consumer right and for the world at large that company has exceeded
You know he's really he's really caused them a huge problem and that's a micro example of you know that question sort of exists at every level of society You know and you know here you kind of get into this you know sort of question like you know basically the future shape of society And then you know to the extent that you think we're becoming more risk averse as a society or less prone to support you know disruption or change
You know it you know it's like is decline a choice right you know did we decide that was that decided for us you know was there ever really a conversation about it By the way is it even any sort of directed process or is it just a side effect of sort of bad incentives sort of bad micro incentives all in the way I mean there's lots of interesting questions in there it does need to be trending in that direction
I just I find that where you started just very interesting on this because if you just look at the money flows and you look at the returns It's just it's like statistical evidence for what is this sort of long run SAG in you know basically dynamism contra you know the amount of money that's actually available to invest
By the way there's an optimistic interpretation of this which is the money's out there like so here's okay here's an amazing thing if you just if a space alien arrived you know if this guy comes from Mars And basically says well you guys have all these of all these problems but you have all this money right so there's these trillions of dollars of capital sitting there like desperately needs a better return
You've had only really big problems where if you could solve them you could build these really big businesses around them like isn't this just like a trivially easy thing to solve You just get the money connected to the people they build the thing that solve the problem it's self-entastic
And you basically say like what's wrong with you people you need to have a good point So I looked at your book recommendation list that you put out recently and one of the books recommended was George Orwell's homage to Catalonia Which is his memoir account of his time in the Spanish Civil War fighting with the anarchists and that was interesting to me because one thing he points out is that you know with the army the anarchist army there was no hierarchy
He points out that you know he's fully aware that in an army it would seem like the perfect situation for a chain of command right and just yes sir and that's how you get things done Which is very much what what your partner Ben Horowitz was saying a VC firm needs to be and yet he found that in this particular instinct instance there was a subculture of a flat horizontal structure which actually sort of worked well
At least he had a nuanced view on on whether it worked well but it was not merely a disaster as one would expect on his account So I guess that leaves me to the question do I assume that you agree with Ben on that the VC firm has to be a chain of command like a one node of decision making Do you see any successful examples of flattening the hierarchy?
So we'll come back to the venture thing because I think it's an interesting question I mean the obvious but I'd love to talk about Orwell for a little bit first so the obvious question is you know did the anarchist win And I was really alert for those of you who haven't read the book in the prior in the phrase in the you know 90 years since it came out the anarchist loft they lost quite badly
They actually left actually specifically they lost quite they lost twice they they'll help you know the left overall lost that war the right one But even within the left a big part of the theme of that book is actually the competition among the left wing forces and it actually became a three way civil war within the left Which was the anarchist versus the socialist versus the communists and again spoiler alert the communist one
Because they were being basically funded supported by Stalin who was famously not a fan of flat he was quite found in centralised centralised control So more seriously I mean like this is this is like an endlessly fascinating question around the structure of society
And by the way the structure of creativity and you know do what extend its hierarchy and centralised decision making an impediment to sort of creative freedom creative expression Or to you know to what extent is lack of hierarchy and impediment to actually executing and getting things done There's another essay there's another writer unrelated to or well from the 1960s who wrote this thing and it's called the tyranny of structuralistness
And it's this it's this fascinating thing. It's actually very or well like kind of thing and it's this woman named Joe Freeman And she at the time this is the 60s 70s and at the time it was like a suit There was like the super vibrant call it like radical lesbian feminist collective thing movement kind of underway sort of people trying to basically women trying to create these kind of radical
Female only kind of radical you know kind of spate literally spaces including including communities basically like communes She was one of these people so she signed up for basically this radical lesbian feminist commune which was going to you know over through the patriarchy
Over through all of hierarchy right be a full be a full cooperative And of course everybody knows where you know men are like hierarchical but like women when they're together they just all get along Everything is very very peaceful and everybody cooperates And so they did this they ran as you know they they had many others ran this experiment And so anyway she wrote this essay coming out the other side called the tyranny of structuralistness
And basically what she said is is what you observe for example in companies that run this experiment where they tried was sometimes called holocracy where they they have this sort of flat flat structure And she basically says what you she called the tyranny of structuralistness like what you get is not democracy what you get is tyranny Right and so it which is basically a hierarchy forms like a hierarchy naturally forms
But it forms in like a weird unnatural and unspoken way and she says the way that it forms actually is it starts with clicks Right and so you basically like within the so-called flat structure you start to have a license form Those licenses start to fight with each other they start to basically graph her power and before you know it you actually have a power hierarchy It's just a very deeply you know dishonest you know it's undeclared right so it's dishonest right it's manipulative
It's cynical it's deceptive everybody's lying right oh I don't have any power but by the way if you you know say you're do the wrong thing like you're out of the community You know kind of thing and so basically her argument was the only thing worse than formal hierarchy is informal hierarchy and I do feel like that's a lesson we kind of learn over and over again
And in there like I said we've had companies that have gone through this you know where they kind of think that could have everybody voted these things I mean we're what the state of California we go through this we you know we actually you know there's this classic debate in the construction of government right democratic government
Which is our your democracy or are you a representative democracy with a hierarchy right which basically has an all a hierarchy And you know in California we run both experiments you know we have we have the you know we have the legislature in the governor Which is hierarchy but we also have this referendum process right where we have literally direct democracy and I think most people who observe that are horrified by the results
So anyway it turns out and then just back to homage to Catalonia for a moment the most fascinating part of the or another fascinating part of that book is he actually describes to your point he actually describes There was an anarchist society according his description in Spain sort of in the beginning of that period and it was like a couple years long
It was what the chas for those of you from Seattle is what the chas was trying to replicate and he he talks about how every elite and rich person sort of pretended to be poor They started dressing like the poor very quickly when there was this moment like there was this moment It's a little bit like what would happen if like you know a group of people crash line into desert island It's like there's this moment where everybody's in it together it was what he talks about the book
There was this moment in Spain where there was these anarchist communities where it literally was everybody was like very fired up and passionate to finally have a community that was going to reflect kind of true justice and true egalitarianism and true democracy And there was this moment where it worked and if you were hungry someone would give you food and if you were called somebody would give you clothes and if you didn't have a place to sleep
You know sort of and it was this like he the way he describes it is it's this magic moment and of course one of the things that made us a magic is it and it was very short Right it was very short lived it ended very quickly and so I think you can get these moments and by the way you see this in companies sometimes early on
Where there'll be a handful of people you know often just the founders of a company who are actually really cooperating and they're really running a kind of a pure structure You know if look families run run run like this right families are kind of inherently socialist kind of in this way
It's just like it works for a small number of people for a certain amount of time and then at some point you know human nature being what it is Animal nature being what it is you're going to get a hierarchy it's just a question of whether you have a good one or a bad one So a few months ago there was a paper released by two academics called why do companies go woe and Sometimes when when I speak about wokeness recently people ask me to define it right so well there's two things we know about
Walkness one is it doesn't exist yeah and the other is it's really good. That's right. It doesn't exist but we should want it to exist definitely yes 100% so I mean how these are I would define wokeness tell me if you agree I think it's it's a belief system which takes all of the foundation
Foundational ideas and systems of Western society. We're talking markets the rule of law Maritocracy free speech and says all of these things are are are actually built to benefit straight white men and to harm minorities and women and LGBTQ etc
And so they need to be destroyed and anyone who is you know who disagrees with this needs to be treated like a religious heretic like you know Old school Christianity or fundamentalist Islam would treat an atheist right so that's that's the package of beliefs believes I call
Wokeness now you and many others have observed that many major corporations which historically would be the last people to embrace a Revolutionary ideology right we're talking about the corporations that get criticized for one running Sweat shops with child labor are turning around and speaking all of all of the shibboleths of this Ideology and the question is why is it because it's actually profitable in which case you know it just makes perfect sense
Is it because the decision makers at the firm are true believers in this ideology or is it that there is some fear involved Where it's sort of like paying the mob to do business except the mob is your own employees right so what do you make of this why do companies go
Woke yeah so there's a big underlying we can talk about the kind of underlying movement that got us here but I look I think there's Three basic theories I guess at least that I would see there's sort of what you might call this very cynical theory And the cynical theory and a lot of people on the left believe this theory the cynical theory basically Well the full cynical theory basically is like basically we call it radical egalitarian social revolution used to be an
Economic phenomenon right so so you know Marxism flowing into sort of socialism communism into the 20th century You know it used to be the key struggle the axis of oppression and sort of left wing egalitarian thought was Economic class right and in that structure of course you know the bourgeoisie of the proletariat the bourgeoisie The bosses were oppressing the workers you know and then therefore the labor movement and therefore the need for communist revolution and kind of all the
Rest of it and so the cynical explanation for companies going woke as companies and the capitalist class and the evil you know the evil Capitalists and bourgeois you know kind of powers of society you know that was definitely bad for them Slash us right which is because you know that's we get our heads on pikes at the other end of that revolution And so if you could kind of magically transform that energy from an economic class based struggle into an identity race and gender based
And then all of a sudden like the capitalists are off the hook right and then the capitalists can take up the banner of like racial and gender you know equality Without like personal threat to themselves right and then this is what sometimes call is sometimes in left wing political thought It's called like the racial realignment or the racial turn is sort of this turn basically is the 1960s when this happened when sort of the main vector of
Left wing radicalism went from economic oriented to to identity oriented and so that and so the full cynical view is yeah like it's great like for the Eminem Eminem Mars company they can sell woke M&Ms with rainbow you know it's great like it's all good AP Morgan you know Jamie Diving can be all am you know deal like it's it's great It's good because as the cynical view as long as the oppression axis is on race and gender and not on economic
It doesn't affect our bottom line it doesn't affect the bottom line and in fact you could argue some companies would argue some people Would argue that it's actually good for the bottom line right because it's like okay now we have a new marketing hook right so the cynical
View would be like one of the gene one of the perverse geniuses of American capitalism is being able to absorb political dissent and then resell it right to To to to the consumer market is a luxury good right right and so like and you know there's I mean you know fashion houses
You know fashion houses will happen you know they're all during you know 2020 2021 you know High high-cuture fashion houses would sell you $500 BLM T-shirts all day long like what a great idea like how great is that I mean one of The strangest manifestations of this for me was during 2020 you had basically you had a black man from the hood poor Murdered and you had all these you know rich people saying put me on a board in response to that now that would make no sense
Except for the fact that I happened to have the same skin color as that guy right that so and yet people viewed this as a Digitimate response right companies viewed putting more black people on on your board as a legit response to a problem that is totally Different in character right a problem of police interaction with someone in a high crime community and this is how I View race as something that just warps people's moral sensors right they start believing that things that
That X addresses Y when X match a very little connection to Y outside of the superficial element of skin color so that was I say lead to theory number two and theory number two is that the capitalist class that has embraced you know the What the sort of management class is it's in embrace focus of the basically their true believers right they like they Full on believe they believe exactly what you just said they play 100% full on believe it when you know Jamie
Diamonds kneeling at the bank branch would be like he fully believes it when he's putting what are you know when when people are running boards it's like it's Exactly that like they're fully embracing in some cases like the most radical views of like racial essentialism and they fully
Believe it and they fully believe that it's like their job as leaders in society you know in powerful positions to be able to basically Basically enable the revolution the necessary revolution to progress and and look there's a very simple reason to believe that which is most People just say what they think I mean most people just say what they think I mean most people have a hard time lying or in a
Sustained period of time and if you just listen to what people say a lot of the time they just tell you what they think and this is what they're telling us they think and you know if you deal with a lot of these people a lot of the More in fact true believers and then there's the third explanation that you alluded to in the beginning which is fear right and some of that is fear of yeah getting roasted getting
Castles getting fired keep purged never working again having your employees turn on you right and then there's the actual like the other kind of fear which is actually legal right in Fear which is we do have this we do have a giant legal apparatus which is very interested in all of these questions and you know has this very Interesting standard of disparate impact right where if you have you know if you have imbalances by by identity groups on the other side of a higher
Motion process it is sufficient to convict somebody on civil rights you know legal violations and potentially you know destroy companies destroy Destroy careers and you know that was put in place very deliberately you know over the last 50 years and that that is a kind of a big dominant legal regime that
Every company deals with today and so that's the third explanation what how to calculate which of these three you know what what the pie chart is yeah that I don't know so Given everything you just said much of which is controversial you know some people would expect to look at Andrius in the
Horowitz and just see a bunch of white guys investing in a bunch of white guys that's actually not the case here actually one of the more racially diverse Funds out there so you know I guess my question is how do you manage to speak your mind on these sort of critiques of racial essentialism and
Woke capitalism while also you know actually achieving this substantive result that many of those ideas claim to want which is we don't Want we don't want the American elite to look like it did in the 1950s right so how do you how do you balance that as it yeah so My partner Ben you know I think it's it's get's almost all the credit for this and so I'm mostly just going to kind of echo you know kind of things
That he says and and does in the firm but I mean just we just we just get kind of the old-fashioned view which is you should value people's individuals and you should value them for the strengths of who they are as individuals and every Individual brings a mix by the way every individual brings a mix of strengths and weaknesses to the table you know including me and so and and what we do
With the firm as we basically try to say we're look we're not you know we try to help people you know maybe maybe improve their weaknesses a bit but like mostly we're doing is we're looking for people with very strong strengths And then we're looking for basically identify the distinctive strength of each individual right and then and then add it to the add it to the collective group effort and so you know look it's you could argue maybe we have the easy version the problem
This adventure firm. It's not a big operating company. You know we don't have 50,000 or 500,000 employees we have 500 and so maybe it's a more kind of tractable you know domain domain to do this in we get to very carefully Cherry pick you know we bring it to the firm you know generally speaking people want to work in this kind of environment so we have a lot of applicants for positions we have a lot of time we run a very long
Scales we have a long time to you know develop talent don't you know go try to find the right people and try to bring them in and so but I mean that's that's basically what we try to do you Know I guess I guess I said look there's a there's a market check like we view we really view ourselves as subject to a market check I can tell you this like start up companies
Do not succeed or fail based on their political views like there are any of these is just start of succeed or failure of succeed or fail if they build something people want right like the customer decides Whether our company succeed or fail and then the customers by extension of our companies decided whether we succeed or fail so it all has to be subject to a market test right or it doesn't work.
You know look another thing that we think about a lot about and and we're actually going to be what we're going to be doing more on this in the next few years so we're very excited about which is look tech used to be tech used to be I was almost
A just tech like tech used to be literally like a pixel shovels tools business like tech literally was for for like 50 years was a business of you know you Make computers and routers and switches and databases and kind of all of these esoteric you know technical kind of products and then you know
You're probably you're primarily selling them to other technical people are you selling them to these big companies you know tech in the last 20 years has Broadened out to be a broad based cultural phenomenon right and you know tech is becoming pervasive and basically every area of culture every Every area of creativity right sort of every area of the human experience you know which by the way which is why people are so mad about it right because it's it's having such an
Such a such a broader effect that it then it used to have but as a consequence like tech is intersecting into fields where you have you know very different Populations who are very dominant in those fields and so you have a much broader kind of base of both of domains you're operating in and then forms of talent specialized skills expertise
Right that all of a sudden irrelevant right so cultural fluency is very relevant ability to basically you know communicate with very many very different kinds of people different kinds of markets right You know to kind of intersect with different kinds of cultural change and so I think that's also helpful I think that's also helpful in just thinking much more broadly about talent and I think that's something we're also trying to take advantage of
Okay, so let's talk about Twitter and the culture wars a little bit so for someone like me I weigh in on culture war issues on my podcast I write about them I tweet about them and as rough as that can sometimes be I view it if I really care about the issue as a good use of my time
So for someone like you and for Elon you're talking just so I'm going yeah, you guys are you know every hour that you spend you know you are dealing with investing and creating the technologies that are going to determine the future of civilization for the next several hundred maybe thousands of years
And so it would seem as an outsider the opportunity cost for you of you know spending the marginal hour on the next Twitter culture war issue might be very high right Your time might be better spent identifying the next entrepreneur developing the next miracle technology etc. And I know even to a greater extent many have viewed Elon's participation on Twitter as a huge opportunity cost for him given that he could be doing just you know neural ink, space, text, etc.
How do you view your choice to spend some portion of your own time weighing in on culture war issues and Twitter and the shit storm of debate that we call a national discourse?
Well first would you like a job is under your head of communications or possibly in house executive coach I partner clapping in the audience so first I guess maybe we can talk about it as let's let's let's separate Elon I think Elon and I think are quite a bit different in a lot of ways and so I don't want to speak for Elon but I maybe describe maybe a little bit about he thinks about this but it's a little it's a little bit different he's doing a different set of things.
So the way I think about it is I'm genuinely not trying to I'm trying very hard I don't know if I succeed I'm trying hard like we as a firm prioritized like we're not trying to pick political fights for not trying to pick culture fights for not trying to like get into these things.
In fact we very explicitly have a value inside the firm and how we operate where we're we're a big tech environment internally we have people with lots of different views and lots of issues if it's not relevant to the business and building a great firm and working with our companies and our founders like we don't we don't like our firm doesn't take positions on lot.
There's this example like our firm doesn't sign open letters our firm doesn't take positions on lots of public issues social issues that have become kind of very popular to take positions on so we're and then we try to not have that happen inside the firm so we're at least I'm trying to keep keep my own impulses contained.
Having said that we we as a firm and I do have strong points of view and it is key to how we function in our values like we have very strong points of view about what it means to what what technology means in society what companies mean in society what capitalism means in society by the way how companies should get built right how companies should get run like what it means to have an effective company versus a dysfunctional company right so so so the actual mechanics of what we do and what our founders do like that that that stuff is relevant and they're and they're I go through that because there are sort of quote of culture or issues that.
We just talked about one like there's a branch of sort of cultural activism that says there should not be hierarchy there should be flat flatness for in the name of equality or egalitarianism and there's a there is literally corporate management style called.
Hello, which basically says company should be flat with no managers and every once in a while we have a company that decides that might be good idea to try and we do a desire responsibility to explain to them you know basically like white problems the things that are going to happen is the dysfunction is going to happen as a result I send them the essay that I told you about they don't read it they run the experiment they end up all you know in all states of you know confusion and chaos then we come in and try to help them you know kind of untangle it but you know that like that that matters like that matters directly and so we're we're going to have a point of view on that so so I think to the extent that we're taking strong points of view on that.
The extent that we're taking strong points of view on the role of technology society how companies get constructed what corporate culture means that it's actually integral to what we do I mean as you know like these these questions and issues that become central questions and issues in our society and so so they're going to be controversial.
I mean I don't want to speak for Ilan I would say I think he has decided to engage I would say I would say more directly and he's he's very the good thing with Ilan as he says exactly what he thinks he says it in public but I can tell you know I get to talk to Ilan a lot now so we're working together because we're involved in the twitter but you know looking at everything he tells me in private he's either already said in public or he's about to say in public right so we'll be talking about something and you know done about you know he'll say something I'm going to be like wow that's that was like a bold statement and then he'll tweet it five minutes later right like it's not it's not they're not going to talk about it.
There's no hidden agenda. Like it's all, well this goes back to his whole thing, right? To everybody's like, you know, companies all have secret plans. And so when he first started Tesla, he unveiled Tesla's secret plan, right? And the secret plan was, what is the logic behind it? Is everyone else doing it wrong? Because the common wisdom would be, there should be some distance between what you reveal publicly and what you plan privately. So what's the meta strategy behind that?
Well, I don't want to speak for him. I'm going to impute what I observe, which is just, I mean, I guess, he is a force of nature. He is a force of nature who is able to attract, you know, enormous resources to be able to accomplish huge things. He's able to attract, you know, enormous amounts of talent, like incredibly bright people working for him, and really working incredibly hard, you know, on these huge missions.
And then he's able to attract enormous amounts of capital and enormous amounts of, you know, attention and support. I mean, look, he built the most amazing thing about Tesla in a lot of way. I mean, like the cars are amazing and the self driving is amazing. But maybe the most amazing thing is, he built the most valuable car company in the planet. He didn't spend a dollar on marketing, right? Like he's not, Tesla has never run an ad.
Right? Every other car company is like shoveling money out the doors, just desperately trying to sell their cars. Nobody really wants to buy. Like Elon's like, yeah, I've got the car. I've got my Twitter account. Right? He famously fired, you know, he famously fired his PR staff, right? He was like five years ago now. He fired his PR team. And he's like, yeah, no, look, now on. It's just me and my Twitter account.
There's this great email that came out during one of the lawsuits around all the, all of his stuff. And it's this great email for, you know, his board is like on him. It's like, you should stop, oh, this tweeting is causing us all these problems. You know, you should stop doing this. And they have this long discussion email. And then he finally says at the end, he's like, look, all I can tell you is, I'm going to tweet whatever I think. And I'm going to let the chips fall where they may, right?
And so it's this thing. And then as a consequence, there is this method of leadership, which I think he embraces, which is there's this thing you observe when you're running a company, which is this very often the case that people in the company take the things that are set outside the company more seriously than the things that are set inside the company.
And so at least some CEOs have had the experience that they can get up in front of their employees and they can give a big speech about the vision of the company or whatever. A week later, like the employees have forgotten it. But like, if it's like headline news and a major newspaper, like it's burned into their brains and they're like, ah, now I understand. So nobody at any of Elon's companies is confused about what the mission is.
And so like, he's very, you know, this is when I argue with Elon's critics, I always say, like, look, like, whatever you think of him, like he's totally honest. Like, he's completely honest. He's completely transparent. He says exactly what he thinks. There's no secret anything in there anywhere. And like, you should like that. Like, even if you're a critic of Elon, you should like that.
Like, even if you're a critic of Elon, you should like that, right? And of course, it's just like people hate actually knowing the truth. Right. They really, really don't like it. And so I think, perversely, even his enemies would rather like not know. So let's pivot a little bit in time. Which of course makes Twitter the perfect company for him to run. Because he, I mean, he's the paradigm addict user. Yeah. Well, this is what's so amazing.
And one of the reasons we got involved in his deal is like, he is the ultimate Twitter power user, super user. So maybe he understands the psychology of his consumers better than, I can credibly, like just incredible, you know, for whatever puts other puts or takes people have. Like he gets, he gets all of that, like incredibly well. And there's a lot, look, not everybody obviously can do what Elon does. But I think there's a lot to learn.
What he does is so different than any of the traditional corporate communications marketing playbook. And the results are so vividly just like completely outstanding and like amazing. Like, there are lessons to be learned in there that I think a lot of, including me. I think a lot of us, we talked about this in the firm all the time. I don't even think I process my way through this. I don't even know what conclusions to draw. But it's, but it's very striking.
Okay, so with our limited time, let's just pivot to another topic that's big right now, which is AI and specifically generative AI's, ChatGPT, Dolly to mid-journey, the whole, the whole, music LM, which is more in its infancy. But the whole landscape of AI's that are generating to an extent creative work and encroaching on the part of ourselves that we thought was most human, which is our creativity and our ability to create art and poetry and so forth.
People expected truckers to be put out of work sooner than graphic designers, certainly, but it looks like the opposite may be true. What do you see happening in the next, say, five years with regard to these generative AI's, are they going to displace Google? Where are you looking to see the most kind of advances in this area? Yeah, the thing that's so remarkable what's happening now is if you talk to the leading experts in the field, they will tell you they are shocked.
Like, they were not, at least many of them were not, including people who were deeply interested. They were not expecting what has just happened to happen. And so it feels like one of those really rare Eureka moments that you kind of read about, like, you know, when, like, they figured out how to split the atom or something, where it's just like, oh my god, you know, we thought maybe someday we'd be able to do this kind of thing and all of a sudden it's working and now we know how to do it.
Right? And then, of course, the next thing that's happening is, it's putting the atom, at least you need a plutonium to do it. Like, with AI, like, this is a general purpose technology. Now that we know how to do this, a lot of people are going to know how to do this. It's just software. And so a lot of people are going to figure out how to do this in a lot of different ways, apply it in lots of different ways. And by the way, the start of Peruch has begun, right?
So now there's all of a sudden there's this massive ramp up of AI startups, you know, that for example that we're seeing. And so it's one of those moments where it's just like, oh my god, like, we now have a capability, this thing that we can do, that's like, you know, potentially very powerful across many domains of human activity, you know, that we never imagined it would work. You know, it's expressing itself in many different ways.
You know, the art, actually the art hit, the art thing actually hit kind of first, right? The sort of dolly and mid-Jerny stuff hit. And then, and then chat GPT came out and that kind of is catalyzed the text side of this. I think the art stuff is fantastic. I think the text stuff is the biggest thing that's happening.
And the reason it's the biggest thing that's happening is it actually goes to the nature of text in culture and society, which is it just turns out like we communicate, most important things that we communicate. And we communicate many important things through art, visual art, musical art, and so forth. But we communicate like science and medicine, right? And mathematics and software code and law are all communicated in text, right?
And so if you have a computer that is really good at processing text and creating new text, all of a sudden it is just like, if it's good at that, it's therefore really good at writing software code. It's also therefore really good at basically doing law. It's also very good at doing medical diagnosis. By the way, it's very good at doing like dinner recipes. It's very good at doing vacation planning, right? Like it's very good at doing therapy.
Like just because it's text, like all of a sudden it's good at all of those things. And that's basically the common pattern. It's really good at writing newspaper articles, like out of nowhere, right? And so we have this magic basically text manipulation machine. You know, on the one hand you can say, look, it's just text, like how threatening can it be, right? It's just text. It's just basically like the simplest explanation for what chat GPT does.
It's just like a very fancy auto complete, right? Like a normal auto completing, like your word processor auto completes a word. Chat GPT today will auto complete the entire page, right? The next future versions of this will auto complete a chapter. There will be a version of this little auto complete a book. Like there will come a time when you'll decide to write a book. And you'll type out the first three or four sentences.
And it will auto complete the rest of the book for you and say, okay, like here's a draft, right? And then by the way, it was the author can look at it and you can say, well, what do I want from this? And you know, what I want to do. And by the way, you can change the prompt upfront. You can say, well, I want it to be funnier. I want it to be darker. I want it to be whatever. I want more historical references. And it's like, it's like a puppy, right?
It'll just say, like, oh, great. I'll give you a draft of that book. And so on the one hand, it's just like, it's just this text auto complete kind of puppy thing that just like wants to make you happy by auto completing everything you say. On the other hand, it all of a sudden it's relevant to all these domains. And it's really good. And so it's going to be, it's going to be a big deal.
So like when GPS technology came out, some people found themselves just getting worse at knowing where to go, right? People used to have this set of skills, a bear right at the second, you know, and just quickly picking up on. And then you didn't need, you didn't need that anymore. I mean, with chat, GPD, and that seems innocent, right? But I find as a writer that I think much better when I've written about something.
So not needing to write about something seems like it could come with an actual cognitive cost, which is that our thoughts degrade in quality. And so is that something you would worry about? So you may know this is the Socrates argument against against writing. So Socrates famously pretty smart guy at the time, about 525 hundred years ago. He was a guest written language. And this is when they were figuring out written language and he was a guest written language.
And he said, this is a bad idea. We should not be writing these things down. The reason we should not be writing these things down is he was actually the same argument you just made, but he was making about oral communication.
He said, look, he said at that time, and in Greece at that time, and sort of Western culture at that time, you know, 25 hundred years ago, he said, look, the way that we process information and conceive ideas and communicate to generate principles of how to live and communicate those to, you know, later, you know, later, later generations.
The way that we do that is through oral retelling of stories, right? And he said, basically, if you write down these stories, you're basically going to kill their spirit, right? Because when you tell a story, it's like an, like when you tell a story verbally, right? It's an engaged two-way process. The listener is actively involved. By the way, there's then communication around the story, right? You can actually argue about it, right?
So he said, basically, oral communication stories are alive. And then he said, basically, if you write them down, you flatten them out, you make them linear, you make them permanent. There's no more, they're not dynamic anymore. Right? There's no more evolution. Like, culture's going to stall out.
And so it's actually interesting. And like, he was like, yeah, this writing thing is a bad idea. You know, everybody's now going to take that exact same idea. They're going to apply it to what follows writing. So anyway, we did okay. By the way, maybe Secret users write. Like, we actually don't know what was lost. Right. I mean, people do that and make that argument. You know, like in the epic of Homer, people just memorize that, right?
You could just say the whole thing top to bottom. And now, very few of us have that kind of a skill set. That was a great thing. So there's another great example, which is, yeah, it's like, look, if you have to memorize it. And if it's written, you don't have to remember like the whole thing of written text is it's like a memory augment, right? Like, and so you to human memory. And so you don't have to memorize it. Right. Exactly. If you don't memorize it, how can you know it? Right.
And now that's just such an alien right concept for most of us that we never have been occurred to us to make that argument. And again, it's not to say that he was wrong. Like, he very well might have been right. And we just didn't get to see the counter-facial play out. Look, having said that, we found writing to be incredibly useful. Right. Like writing without writing, we would have never gotten the enlightenment.
We never would have gotten scientific the scientific method. Right. We never would have gotten technological development. We never would have gotten financial markets. We never would have gotten modern government. We never would have gotten modern law. Like, those all flowed like straight out of writing. Right. And so I and I think most of us probably would not want to take the risk of the trade off of getting rid of all of those things to go.
We discover what happens if we're all still memorizing Homer. Right. So I think there's a little bit of this is one of those. Like, this is one of those transformations where we have to think about it. The way that I think about it, like in the works that I do, including like writing works that I do, the way I think about it is actually the temptation is to basically have this be a competitive dynamic where it's like writing to the machine is going to write or the human is going to write.
And by the way, there is a fun thing you can do on this. I've been doing this now occasionally with some people who I think will not get overly offended, which is this like read of story in the newspaper. Right. Or an op-ed piece. And you just take the title of it and you paste it into chat GPT and you just have it right to think. And then you do the compare and contrast of like which one is better.
What percent has been better for it's an item? Well, it depends on your criteria. Well, here would be the other one is can you even tell, right? Like, you know, can you even like a turning test kind of thing? Can you even tell which one is better? I mean, you know, look for short from for sort of classic journalism or op-eds. Like this thing is pretty good. So so there's an actual competitive dynamic. And people are going to get, you know, kind of worked up about that.
I think the more sophisticated view. And I think the one that I would suspect that you will have in the one that I would try to have is no, this is an augment. Like, this is a partner.
And this is already happening in software coding. So the first big sort of realization of this idea was this thing, sort of derived from OpenAI that Microsoft built called co pilot, which works with their software coding system. And the idea basically is, you know, you're writing software code, which is kind of analogous to writing an essay or writing a model.
And then you've got this other thing you have this other pain on the side of the screen that's called co pilot and it's basically like a helpful assistant making sense. So like my default basically it's just making suggestions. It's like, oh, I see you started to write this code. Are you trying to do a whatever sort or display this kind of UI or whatever.
If so, here's code that you can just use or you can just ask co pilot a question, right. You can say, well, I'm stuck at this point, you know, basically tell me how to do this thing in code or I'm stuck in this. For example, I'm writing an essay. I need I need a historical reference. Give me 10 example historical references to correlate to, you know, this idea.
And it gives you those and you pick you pick the one you want. And in fact, you might even say, oh, I didn't even know about that third one. Can you tell me more about it? Right. Instead of having to go to the library or to Google or what it just like tells you, you know, just explains it to you.
And so it's basically like, I think it's the best tool that I mean, I think writers of the future are going to use this all the time because the idea, the idea of not using this would be like cutting off your arm. Like it just like, why would you do that? And in fact, the whole idea of artificial intelligence is maybe a bad term, like it may be the wrong term. It may be a better term might be augments and intelligence.
Or basically like instead of human versus machine, it's human sub you know, symbiotic relationship with machine. So I agree there's definitely going to be loss of symbiosis and augmentation, but there, I think there are going to be some domains where it is zero sum. So if Andreessen Horowitz wants a new logo, you know, how much money do you want to spend on a graphic designer?
How long are they going to take to generate 50 options as opposed to the next generation of Bollywood mid-journey, which you and Ben could just sit down and play with prompts for 10 minutes and get hundreds of options, right? I mean, that would seem possibly to put certain people out of work. Do you think that there will be any level of zero sumness in certain domains?
Yeah, there is. Well, look, the Luddites had a point, right? So this argument goes back to the so-called Luddites, which were an actual movement. There were actually people called Luddites at one point. And what they were mad about was they were mad about automated spinning machines for textiles, right? As opposed to weaving by hand because there were hand weaving that took place that all of a sudden wasn't necessary.
They legendarily they smashed the machines in the hopes that that would stop progress, which it turned out it didn't because people just built more machines. So this is an old debate. And look, it is true. Like, you know, people don't, you know, there used to be lots of people hand weaving wool and that just doesn't happen anymore.
So, you know, so there is that there used to be a lot of blacksmiths who would put shoes on horses, right? And now that doesn't, you know, those jobs, there's many fewer blacksmiths jobs today as a consequence of the car. So that's definitely true. That will happen. Like, if the job is to hand design, you know, many logos, you know, basically on demand. Like, yeah, that's going to change.
What's going to happen though, and this is there are many prior examples of this, including and clothing and blacksmiths we'll talk about. But what happens is the job new jobs get created. So new jobs get created that are higher level jobs, right? And so all of a sudden you have a, you have a kind of designer, all of a sudden, who's basically a designer on steroids or designing were superpowers.
And they're not just designing their logo, like they're thinking, like basically holistically about the entire design process about designing, you know, designing company, the culture of the relationship with the customers. And this is what the top designers actually do, by the way, they're not just writing logos, they're actually thinking very creatively about the whole design experience.
By the way, we have designers at our firm, among other things, they designed this conference, right? And so everything that you see walking around and how it all works like that was all designed. And just the fact that the logo on this thing was designed by a machine, that's just such a small part of that larger job, right? Now it becomes much more possible. The other thing that's going to happen is handcrafted human experiences are going to rise in value when they're very high quality, right?
And so the most valuable logo in the world is going to be the one where somebody can say, oh no, that one wasn't designed by a machine. That one was actually hand drawn, right? The same way that the best art in the world is the most valuable painting in the world is not painted by a computer who's really good at painting as a human being. The best shoes you can buy are handmade. The best cashmere sweater you can buy is handmade.
By the way, there are still box myths because super rich people still like horses. And they pay their box myths and people will take care of the horses like a lot of money. There will be this kind of recalibration in a lot of these fields. Healthcare is an obvious example. So medical diagnosis, the machines are already as good as doctors as medical diagnosis.
They're going to be better very quickly here. They're going to be much better very quickly. But medical diagnosis, if you have a good doctorate, the actual diagnosis is a very small part of what that doctor does for you. And so the doctor of the future will have the machine to the diagnosis so that the doctor can spend more time with the person.
So this is more of a personal productivity question. You are an incredibly productive person who absorbs just an amount of information that a typical person would find dizzying. I'm curious what aspect of your personality, what trait that you have, which is actually maybe maladaptive for happiness is most useful in your career.
Oh, stubbornness. Yeah, good old fashioned midwestern farming. There's no joke. There's no joke. Oh, midwest farming joke. Farmer wins a million dollars in the lottery. You know, big news in the small town. The TV camera crew shows up the interview. I'm on his, you know, front porch. You know, he's been farming his whole life.
And he's like, you know, they're like, what are you going to do with the money? You want us money? What are you going to do? He's like, well, I'm going to keep farming until it's all gone. Yeah. So just I just think, yeah, maybe just raw. Yeah, just raw.
How does that stubbornness show up on a day to day level? I just hate giving up. And so this has become actually up on an investment on a company on a kind of anything. This comes across. So there's, there's, you've been out of your argument with your wife.
Slightly more evolved level of wisdom. When it comes to her father gave me an early talking to you that helped me zero in on that one. But it's actually a big debate. Installing a value. There's this. There's this. You know, in the startup world, like some startups work, some startups don't.
And so there's this endless debate about like basically when to quit, right? And then there's this idea of the so called lean startup. The idea of lean startup is you run an experiment. And if it doesn't work, you basically just like stop and you figure out a different idea.
And you know, we used to call that fucking up. Now we have this fancy. We're pivoting. And and then that, at least there's this culture in the valley in tech, which is so called fail fast. Right. You're kind of proud of yourself for failing fast.
Google incarnated this into their Google X program or they they they have this when they when a Google X project fails, they have a big party celebrate its failure under the theory that it's better to like if it's not going to work to chop it off and work on something else as opposed to just being stubborn forever.
I've never been able to do. I mean, I could see a downside to that because if you know you could just fail fast, you will approach the problem in a subtly different way than if you feel you have everything invested in it, right? Yes. And sometimes things just take a long time, right?
Like sometimes things take a long time. So I was giving an interesting kind of fact in about how our world works, which is and we this is true across venture. So that we've talked of many other VCs and they'll validate this. A venture firm cannot predict the order of returns like the order of companies from successor failure, which companies will succeed, which companies will fail within a fund, which is invested over a two or three or a period.
So they make the order of returns the successor failure, the companies within that fund in the first five years, right? And so and there are many there are many companies, there are many cases where companies come out of the gate really strong and then something happens, something goes wrong and then they turn out to be very disappointing.
There are many other cases where they start out very slow and they may have years of development. I mean Patrick talked a little bit about this, you know, sometimes these biotech things can take like 20 years.
And so you can have this thing where they take a long time and then at some point they catch and they really go. And I, you know, if you look at the data on that, it's just like, yeah, there's there's a mix there. It's hard to figure out whether one, you know, one of those leads to better outcomes in the other.
Sometimes things just take time. I will say one of the really things I'm really gratified about with our firm is that I would have thought starting the firm. The fail fast thing had gotten so endemic to the valley when we started the firm in 2009. I was worried that like we'd have too many founders giving up too quickly. Like if anything, we've had the opposite problem, which which I really appreciate, which is most our founders like really genuinely don't want to quit.
And that can lead to difficult conversations of their own because there is a time when you have to draw the conclusion that it's just not working. But we've generally speaking, I think our founders like we've had far more than have just said, no, I'm not giving up. And that's been a very pleasant surprise given the cultural norms, you know, how they were evolving.
Okay, so last question. If you look at the next, you know, 20 years, let's say, what is your vision for your firm? Is your vision simply to maximize returns by whatever means necessary? Or do you have a mission that transcends the mere maximization of returns? And if so, what is that? Yeah.
So basically, like if you just look at the whole sweep of economic history, there's basically only two ways that economies grow and standards are living improved. There's only two ways in which human life gets better off. One is natural resources extraction, pulling stuff out of the ground. And then the other is technology. And those are basically the only two things you can do. Like everything else is just like a rounding error on those things.
And technology broadly defined technology being basically applying human ingenuity to develop new solutions to problems, right? Typically involving technical means, right? Some sort of, you know, application of the scientific method, application of technological innovation. Literally creating a new idea or formula or recipe, right? To be able to do things. So when some people say a third ways, you know, expanding the circle of human rights and justice and equality and so forth.
Oh, that's great. It's just like to translate that into that's great to translate that into economic gains to translate that into something that is going to cause an increase in the material standard of living.
Right? Then it requires application of effort. Ideally, what I would say is those are the same thing. Ideally, you're expanding the pool of basically say free people. People are able to fully express themselves, people who are fully able to participate in everything from education to business, everything else.
Ideally, you're then getting a lot more people who can contribute to the process of economic and technological development. Ideally, those are the same thing. And by the way, that is the story. Like a lot of the last 100 years like that, you know, that has 200 years. That has in fact happened. And it's still happening.
Yeah. So like technology is the lever. Like technology is quite literally the lever that we have to make the world better in like important and mature ways. Does it do everything? No, you know, does it solve spiritual crises? No, not really. Like does it, you know, does it create spiritual crisis?
It does it quite possibly, right? Or at the very least, you know, maybe it makes old spiritual crises outmoded. Maybe it creates new ones. Right. So I'm not a believer. I'm not a believer in what Thomas Solow called that. But it's the what was the what he called the unbounded vision, the unconstrained vision. Like I'm not. I'm not a utopian. Right. I'm not. I'm not a believer in the unconstrained vision.
I'm not a believer that we achieve utopian, you know, utopia, perfection on earth. But you know, we can make things better. Right. And we can and we can raise standards of living and we can improve medical outcomes and we can improve, you know, we can we can provide many, many, many, many more people around the world access entrepreneurship and the ability to create companies and be able to create products, be able to make money, be able to provide for their families. And you know, that remains a very pressing global challenge. Right. Like the way I think about it is like most people in the world, like we all sitting here today. And most of the people listening to this live probably pretty comfortable upper middle
class, you know, you know, sort of Western lifestyles. And then the percentage of people in the world who live a comfortable upper middle class American lifestyle, 1%, 2%, right. And so like most people are not able to participate fully. And what we would consider to be sort of a fully, you know, basically like a fully modern economy and then all of the benefits that kind of flow out of that. And I have the corresponding level of wealth and and material success to be able to provide for their families, right, to be able to have, you know, kids who then do even better than they do. And so, you know, these are just these we just have lots and lots of these these things in the way.
The way to go after these things or at least the way we can contribute, right. So it's to basically harness capitalism to do that. All right, Mark and Jason. Thank you so much for coming on my show. Thanks for listening to this episode of conversations with Coleman. If you enjoyed it, be sure to follow me on social media and subscribe to my podcast to stay up to date on all my latest content.
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