As a product manager at Google, Apple, and Wildfire, I’d at times spot a new breed of hacker in the wild. They lurked in the most sensitive areas of the business. They hunted for ways to manipulate, bend, and break our systems. I took to calling them Enterprise Hackers. If you’re smart, or just lucky, they are already inside your company – and they might just save your bacon.
Marc Andreessen sat down with Fortune Managing Editor Andy Serwer to discuss the future of jobs, education and your favorite ride. What follows is an edited version of the conversation.
Andy Serwer: We all understand that the Internet revolution is inevitable at this point, but it’s also kind of controversial. There are scads of new jobs at Facebook and Twitter and other places, but what about the ones that are destroyed by the inroads of technology into every industry? Are you actually creating more than you’re destroying?
Marc Andreessen: Jobs are critically important, but looking at economic change through the impact on jobs has always been a difficult way to think about economic progress. Let’s take a historical example. Once upon a time, 100 percent of the United States effectively was in agriculture, right? Now it’s down to 3 percent. Productivity in agriculture has exploded. Output has never been higher. The same thing happened in manufacturing 150 years ago or so. It would have been very easy to say, “Stop economic progress because what are all the farmers going to do if they can’t farm?” And of course we didn’t stop the progress of mechanization and manufacturing, and our answer instead was the creation of new industries.
On our last platform safari, we explored how incentives designed to prevent lion hunting in Kenya are surprisingly akin to policies designed to encourage free shipping on eBay. From the king of the jungle and the flow of packages, we turn to the dog of the savanna – the African wild dog – the unfortunate victim of the tradeoffs involved in ecosystem management.
It ain’t what you know, it’s what you feel
Don’t worry about being right, just be for real
—Parliament, “Ride On”
Today we are announcing Shana Fisher as a new board partner at Andreessen Horowitz. Although she keeps a low profile, people in high tech investing know all about Shana. They know about her because she is so good at what she does. As an early stage investor, she has invested in a broad set of outstanding companies including MakerBot, Pinterest, Vine, FiftyThree, Refinery29 and Stripe. In addition, she is our kind of investor—one who combines the street smarts of how to build companies with the book smarts of how to invest in them.
In March 2012, I left the suburban enclaves of San Jose and went on safari to Kenya. Early in the trip I toured the Ngorongoro crater, filled with African lions, rhinos, hippos and giraffes.
But my favorites were the monkeys. I loved Curious George as a boy. Seeing George’s real cousins, I asked our tour guide, “Can I give a banana to the monkey?” I had become the real-life Man with the Yellow Hat.
The tour guide responded with an immediate and stern refusal, “Absolutely not.”
He explained with a calm voice, “If you give a banana to a monkey you will destroy our ecosystem. You will teach monkeys to beg, and not forage, for food. You will pose danger to your fellow safari goers who might not have bananas to offer. And your action will cause other actions, for the plants, the wolves, the trees and everything else. You must not give a banana to the monkey.”
As much as we depend on our gadgets and their accompanying software to do more of our daily tasks—from meeting reminders to crunching stats for our favorite sports players—human intelligence is far from obsolete. On the contrary, MIT computer science professor Rob Miller believes there will always be a gap between what humans understand and what computers can do.
As Americans, we love efficiency. In huge numbers, and with our wallets wide open, we rush toward anything that drives lower cost, highly liquid markets. Think about it. McDonald's, Amazon and Costco dominate their industries with some combination of huge choice, overall lower prices and massive volume.
At scale, efficient markets can be great. Consumers get more for less, and producers profit from the combination of high volume at low cost. And efficiency begets even more efficiency – producers re-invest their profits to develop new products and to continue to lower production costs while consumer choice expands.
But sometimes the drive for efficiency goes too far.
I’ve had Amazon on my mind lately, part of which is due to my reading Brad Stone’s very interesting book, The Everything Store: Jeff Bezos and the Age of Amazon. I’ve described in earlier blog posts how Amazon is a brutal competitor for brick and mortar merchants due to their large and growing cost advantages and a maniacal commitment (at least most of the time) to having the lowest prices anywhere. (You can read more about it here.) These same drivers also make Amazon a heavyweight competitor for e-commerce companies as well.
In 2003, Kurt Dresner showed up late to a meeting he had with his advisor, Peter Stone, the director of the Learning Agents Research Group at the University of Texas at Austin. Dresner had been sitting idly at a red light waiting for the light to turn. No cars came through. He could have crossed the road safely and been punctual. It was a complete waste of time. “I can do better,” Stone remembers the tardy Dresner saying.
Langston Hughes, F. Scott Fitzgerald, Mos Def and DarkStar, those are the poets, authors and artists that swirl through the curly-haired head of Jeremy Dean. Dean is a self-described “humble school teacher,” and the education czar at online annotation site Rap Genius. For all his self-effacing talk, Dean has wildly ambitious plans that range from changing how every teacher gets students engrossed in literature, to championing a new kind of style guide more suited to our digital future than our Strunk and White past.
With all the recent innovations in flash storage design, you’d think we’d have a smooth path toward supporting storage requirements for new hyper-scale data centers and cloud computing. However, nothing could be further from the truth! Existing storage architectures, despite taking advantage of flash, are doomed in the hyper-scale world. Simply put, storage has not evolved in 30 years, resulting in a huge disconnect between the requirements of the new data center and the capability of existing storage systems.
One of the holy grails in the storage market has been to deliver a piece of software that could eliminate the need for an external storage array. The software would provide all the capabilities of an enterprise-class storage device, install on commodity servers alongside applications, eliminate the need for a storage network, and provide shared storage semantics, high availability, and scale-out. With Maxta, the search for such a holy grail ends here.
Silicon Valley is supposed to be ahead of the curve. It’s where entrepreneurs, investors and the world at-large look for mind-blowing innovation – the next wave of companies and technologies that will reshape everything. But according to Chris Schroeder, a long-time entrepreneur and author of Startup Rising, Silicon Valley is woefully behind the curve in recognizing one very bright hotspot of tech innovation: The Middle East.
In much of the world’s urban areas, it can seem like there are more cars than people. In the U.S., there are nearly 800 cars per 1,000 people. With that comes increasing congestion, pollution, and resource consumption. Yet, surprisingly, the utilization of vehicles is at an all-time low—to put it simply, the more vehicles there are, the harder it is to keep them all in use. That’s a lot of waste.
Web products have followed a steady evolutionary path from the compound to the atomic. Today's popular social sites are spin outs of behaviors that emerged from blogs and forums, the primordial soup of the early social web. Before there was Twitter, people were doing something similar to tweeting on so-called link blogs or micro blogs. Tumblr was a direct descendent of a particular strain of blogs known as tumble blogs.
The successful products took big meals and converted them to snacks. The Internet likes snacks-- simple, focused products that capture an atomic behavior and become compound only by linking in and out to other services.
War is Peace. Freedom is Slavery. Ignorance is Strength.
In his novel 1984, George Orwell forecasted a dystopian society 36 years in the future, in which an all-powerful state uses advanced technology to exert totalitarian control over the thoughts, words and actions of its citizens. Ubiquitous two-way "telescreens" watch the individual's every move and emit an engless stream of sinister propaganda. Big Brother is watching you. The Ministry of Truth is the only source of information. The Thought Police control what you think. As citizen Winston Smith learns to his cost, resistance is futile.
The allegations that the NSA has apparently been collecting the cellphone and Internet records of everyone in the United States (if not the world) has catalyzed fears that Orwell's terrifying future may finally be materializing twenty-nine years late. Sales of 1984 are up 9,500%. Was Orwell right? Is technology in the hands of the state enabling our subjugation as he predicted?
"Online is clearly taking share from brick and mortar...this is likely to continue"
—International Council of Shopping Centers
America has too many malls.
I've recently blogged that many traditional brick-and-mortar retailers are being threatened with "economic destruction" by their advantage online competition. In an interview with Bloomberg TC, anchorwoman Nicole Lapin asked about the implications of this dynamic on retail teal estate. I said I hadn't studied it, but I thought the ramifications would be very big and very negative (I believe the phrase "apocalyptic" was used).
It seems like there has been a veritable explosion of companies that are leveraging technology to build "people marketplaces" that provision various services. On one side of these marketplaces, consumers are afforded a new channel to procure needed services. On the other side, individuals are empowered to earn money performing the services.
These marketplaces come in two general flavors. There are horizontal platforms like Zaarly, TaskRabbit, Gigwalk and Fiverr that let consumers find providers of a wide variety of services. And there are vertical platforms that focus exclusively on one service vertical such as Lyft and SideCar for hopping a ride, Homejoy for house cleaning, Instacart for grocery deliveries and DogVacay for boarding your dog.
If I knew what I knew in the past
I would have been blacked out on your a**
—Kanye West, Black Skinhead
Because I am a prominent advocate for founders running their own companies, whenever a founder fails to scale or gets replaced by a professional CEO, people send me lot of emails. What happened, Ben? I thought founders were supposed to be better? Are you going to update your "Why We Prefer Founding CEOs" post?
In repsonse to all of these emails: No, I am not going to rewrite that post, but I will write this post. There are three main reasons why founders fail to run the companies they created:
Ben Milne has a special relationship with transaction fees.
An entrepreneur with a design and manufacturing business in Iowa, Ben found himslef obsessed with one simple notion: transaction fees were eating into his profit margins. If you consider money as data, there had to be a better way with so much money sloshing around in the system when the marginal cost of actually transferring the money is practically zero. So why did it cost him $55,000 a year to access it? Why then did he have to wait seven days to get paid?
The pop culture view of startups is that they're all about coming up with a great product idea. After the eureka moment, the outcome is preordained. This neglects the years of toil that entrepreneurs endure, and also the fact that the vast majority of startups change over time, often dramatically.
In response to this pop culture misconception, it has become popular in the startup community to say things like "execution is everything" and "ideas don't matter".
But the reality is that ideas do matter, just not in the narrow sense in which startup ideas are popularly defined. Good startup ideas are well developed, multi-year plans that contemplate many possible paths according to how the world changes.
The venture industry is awash with talk of the “Series A Crunch”, where it’s getting progressively more challenging for seed companies to land follow-on financing. In my short two-year tenure as a full-time investor, I’ve seen this crunch hit very hard at a number of quality early-stage consumer companies.
Why is this happening? A number of factors are coming together to create this crunch: