Marc Andreessen at the Bloomberg Technology Conference


WHEN YOU ARE TRYING TO CREATE SOMETHING NEW?>>IT’S THE OPPORTUNITY TO ENVISION THE WORLD DIFFERENTLY THAN IT IS TODAY. YOU HAVE THIS FUNDAMENTAL ISSUE OF THE DIFFERENCE BETWEEN A HALLUCINATION AND A VISION IS THE OTHER PEOPLE CAN SEE THE VISION. YOU FIND YOURSELF OUT THERE WITH THE HALLUCINATION. YOU GET A CHANCE WITH A CLEAN SHEET OF A VIRTUE IMAGINE THE WORLD IN A DIFFERENT STATE. WHAT A LOT OF THE GREAT ROUNDERS HAVE IN COMMON IS THEY HAVE DEVELOPED WHAT THE WORLD TO BE LIKE AND I GET SO INTENSE ABOUT THAT THEY CAN’T UNDERSTAND WHY EVERYBODY DOESN’T GET IT. THEY DEVELOP A VIEW OF WHAT THE WORLD SHOULD BE LIKE AND IF THEY SEE IT, THEY SEE IT COMPREHENSIVELY. THE GOOD ONES BUILD UP A BATTLE PLAN TO BE ABLE TO BUILD A COMPANY AROUND THAT IDEA AND THIS IS WHERE A LOT OF THE VALLEY HASN’T CHANGED. WHAT’S THE GREAT EXECUTIVES AND ENGINEERS AND BE ABLE TO CATALYZE SOMETHING. IT IS ALMOST NEVER ONE PERSON AND IT’S ALMOST NEVER THE FOUNDERS. IT’S THE FIRST 20 PEOPLE AND THEN THE FIRST THOUSAND PEOPLE WHO BUILT IT. THE TEAM EITHER GELS OR IT DOESN’T. BUT WHEN IT DOES, MAGICAL THINGS HAPPEN. EMILY: TECHNOLOGY HAS CHANGED OR MEDICALLY. HAVE YOU MATURED AND CHANGED WHEN IT COMES TO YOUR APPROACH? MARK: I THINK THE LEVEL OF EFFORT REQUIRED TO KEEP AN OPEN MIND EPES GETTING HIGHER AND HIGHER. THERE IS THIS THING CALLED THE EVENT HORIZON. THAT’S THE POINT OF A BLACK HOLE WHERE YOU CAN’T GET OUT AGAIN FOR TOP WE ALL HAVE A PERSONAL EVENT HORIZON AND BECOME REACTIONARY AND REACH A POINT WHERE IT’S LIKE YOU HAD ME WITH THE PC, I GOT THE SMARTPHONE, I GOT THE ICE OWN, I GOT A’S BOOK, BUT THE SNAP CHAT THING IS JUST TOO FAR. I DON’T GET IT COME I DON’T UNDERSTAND IT AND THOSE CRAZY KIDS AND IT’S STUPID AND WHAT ARE PEOPLE THINKING? SUBSTITUTE ANYTHING ELSE THAT IS NEW. AND, BY THE WAY, ALL OF US — THIS IS A VERY OPEN CONVERSATION BECAUSE WE ALL DO IT. YOU CAN SEE IT AND YOU CAN SEE IT IN THE BODY LANGUAGE. IT’S LIKE YOU ARE GOING DOWN. YOU HAVE TO FORCE YOURSELF. YOU HAVE TO METHODICALLY FORCE YOURSELF NOT TO CLOSE DOWN AND IT IS SO HARD, ESPECIALLY HARD WHEN YOU THINK VCS DON’T HAVE THESE PROBLEMS. BUT THE THING IS, WE FUND ONE IN 100 OF THE NEW IDEAS THAT WE SEE THAT ARE LEGITIMATE QUALIFIED THINGS WILL STOP 99 OUT OF 100 TIMES, WE SAY NO. THE LEVEL OF CYNICISM YOU CAN BUILD UP WHEN YOU SAY NO ALL THE TIME CREATES A MENTAL FOG OF NEGATIVITY AND WHEN ONE DOES WALK IN, YOU HAVE TO SAY OK, THIS MIGHT ACTUALLY BE THE THING. AND THEY COME OUT OF LEFT FIELD. EVERYONE AFTER-THE-FACT NEW AIRBNB WAS GOING TO BE HUGE, BUT AT THE TIME, FOR EVERY BIG THING, MANY EXPERTS ARE ON RECORD SAYING THAT STUPID, SO YOU ARE CONSTANTLY UP AGAINST THIS WALL AND YOU HAVE TO KEEP TRYING TO PUNCH THROUGH IT. EMILY: YOU SCALED UP THE FIRM. HOW DO YOU MAINTAIN THE WALLY BARR OF YOUR INVESTMENT? MARK: ONE IS ABSOLUTE — YOU SPEND ALL DAY LONG TRYING TO WORK INTERNALLY WITH THE FIRM AND THE FOUNDERS TRYING TO BACK THE HIGHEST QUALITY TEAMS THAT YOU CAN GET BETTER. PROBABLY THE THING THAT HELPS IS YOU HAVE TO DO IT ON A RELATIVE BASIS. ONE OF THE ADVANTAGES YOU HAVE IS YOU GET TO SEE MANY TEAMS GOING AFTER THE SAME THING AND YOU GET TO DO THIS CROSS COMPARISON AND WORLD CLASS IS ALMOST NEVER EVERYTHING IN ONE COMPANY. THIS COMPANY IS GREAT AT SALES, THIS COMPANY IS GREAT AT MARKETING AND THEN YOU SPEND TIME CONVINCING EACH OF THEM THEY CAN LEARN FROM THE OTHERS. AND THERE IS A THING WHERE THE STRONGEST FOUNDERS ARE LEAST INTERESTED IN INPUT, SO WHEN YOU TELL THEM YOU ARE TERRIBLE AT MARKETING AND THERE’S ANOTHER COMPANY YOU SHOULD LEARN FROM AND THEN THEY SAY THAT OTHER COMPANIES. X SUCK AND YOU SAY YES, THAT’S WHY THEY ARE GOOD AT MARKETING. IT IS JUST CAJOLING PEOPLE INTO LEARNING. THE ROLE MODELS ARE THERE. THIS INDUSTRY HAS A HUGE NUMBER OF SPECTACULAR PEOPLE. YOU GET VERY SPREAD OUT BUT THEY ARE OUT THERE AND YOU CAN LEARN FROM WHAT THEY DO. EMILY: WHAT ARE SOME INVESTORS YOU HAVE MADE THAT WILL PROVE OTHER VCS WRONG? MARK: SILENT AS THE ONE I CAN’T STOP TALKING ABOUT STOP EMILY: WE HAVE THEM REPRESENTED AT OUR EVENING EVENT AND THERE WAS SOME GET THIS IS HIM. MARK: SILENT DRIVES PEOPLE CRAZY. YOU CAN GET UPSET ABOUT THEM — IT’S LIKE THE RORSCHACH TECH — RORSCHACH TEST FOR GETTING UPSET. YOU CAN SAY WHY DOES IT HAVE DIFFERENT FLAVORS, WHY OR LIKE THE NEW YORK TIMES DID, YOU CAN ASK THE SOMALIA AT THE FRENCH RESTAURANT — IT WAS A BARELY A HARD ONE TO PREDICT. IS YOU COME FACE TO FACE AND HAVE EXPERIENCED THE PROBLEM, IT’S AN AMAZING AND MAGICAL THING AND THE SCOPE AND VISION IS GIGANTIC. IT IS A FUNDAMENTAL TECHNOLOGY COMPANY DOING FUNDAMENTAL WORK, SO THAT’S REALLY FUN. EMILY: WHEN IT COMES TO AI, VR, DRONES, WHICH SECTOR IS THE MOST POTENTIAL FOR TRULY DISRUPTIVE INNOVATION? MARK: THE TWO THAT ARE MOVING THE FASTEST WITH THE SURE VELOCITY ARE A ALIVE AND BIOTECH . THERE’S A LOT HAPPENING AT THE INTERSECTION OF AI AND BIOTECH. THERE’S JUST BEEN A FUNDAMENTAL TECHNOLOGICAL BREAKTHROUGH IN THE LAST YEARS WITH DEEP LEARNING AND THE RISE OF SUPERFAST, SUPER CHEAP SHIPS AND THESE DATA SETS. PRODUCTS ARE BECOMING POSSIBLE THAT WERE JUST NOT POSSIBLE FIVE YEARS AGO. THE SCIENCE THERE IS MOVING VERY FAST AND THERE IS THIS INCREDIBLE FEEDBACK LOOP BETWEEN THE SCIENTIFIC COMMUNITY AND ITS MOVING INCREDIBLY FAST AND IS VERY EXCITING STOP THE OTHER IS BIOTECH, IT’S LESS A SINGLE THING. IT’S MORE A RESULT OF THE CONVERGENCE OF BIOLOGICAL SCIENCE AND COMPUTER SCIENCE. THAT HAS BEEN DEVELOPING FOR A DECADE BUT IS REALLY STARTING TO PAY OFF NOW. YOU HAVE A NEW GENERATION OF NEWLY MINTED PHD GRADUATES WHO ARE ALSO COMPUTER SCIENTISTS AND YOU HAVE NEW SCIENCES LIKE GENOMICS AND THE STUDIES OF THE BIOME AND ALL OF THESE BIG DATA SETS YOU ARE ABLE TO GATHER. THE INTERSECTION OF GIANT — OF BIOLOGY AND COMPUTER SCIENCE IS A MAGICAL PLACE. WE HAVE THIS BIO 2.0 FUND AND ALL OF OUR FIRST FOUR INVESTMENTS HAVE DEEP LEARNING AND AI AT THE CORE OF WHAT THEY DO AND IT’S ALL COMING TOGETHER AT THE SAME TIME. EMILY: HOW IS APPLE DOING ON AI WITH RESPECT TO AMAZON AND GOOGLE. MARK: I HAVE TO TAKE FACEBOOK OFF THE TABLE. BUT I THINK IT IS CLEAR THAT OF THE BIG COMPANIES, AMAZON HAS LAPPED EVERYBODY AT LEAST THIS YEAR AND THIS ACT OF AND ALEXA ARE FUNDAMENTAL BREAKTHROUGHS. IT IS FAIRLY SHOCKING EVEN FOR PEOPLE IN THE FIELD HOW WELL THEY ARE DOING AND THE CONSUMER RESPONSE TO GO FROM PEOPLE WHO ARE NOT US IS REALLY SPECTACULAR. I THINK AMAZON HAS SET A NEW BENCHMARK FOR WHAT IT MEANS TO HAVE AN INNER ACTIVE AI STOP THE OTHER BIG COMPANIES REALIZE THAT IN THERE’S GOING TO BE A CERTAIN AMOUNT OF CATCH UP HAPPENING STOP THE BIG THING IN THE AI WORLD PEOPLE ARE TALKING ABOUT IS OF THE BIG COMPANIES, APPLE IS THE ONE WHO HAS DECLARED THIS IDEOLOGICAL DECISION OF NOT COLLECTING CENTRALIZED DATA, SO THE OTHER BIG COMPANIES ARE BUILDING THESE GIANT DATABASES AND APPLE HAS DECLARED THEY WON’T DO THAT BECAUSE THEY HAVE THIS PRIVACY POSITION THEY HAVE TAKEN. THEY HAVE THIS NEW APPROACH THAT THEY TALKED ABOUT THIS WEEK AND IT LOOKS PROMISING, BUT THE QUESTION THE INDUSTRY’S WILL THAT BE ENOUGH TO KEEP UP WITH THE LEVEL OF INVESTMENT GOOGLE OR AMAZON IS MAKING WITH THE LEVEL OF DATA ACCESS THEY HAVE. AMONG THE GUERRILLAS, THAT’S THE BIG QUESTION. ONE OF THE REASONS I’M EXCITED ABOUT IS IF YOU HAD ASKED ME A YEAR AGO IS AI GOING TO BE SOMETHING BIG COMPANIES ARE STARTUPS DO, I WOULD PROBABLY SAY BIG COMPANIES BECAUSE THEIR VIEW WAS THERE WAS ONLY A SMALL NUMBER OF PEOPLE WHO UNDERSTAND AI SYSTEMS AND THEN YOU NEED THESE GIANT DATA SETS THAT ONLY THE BIG COMPANIES HAVE ACCESS TO. WHAT WE HAVE SEEN IN THE LAST SIX MONTHS IS A LUNCH OF NEW STARTUPS WHERE IT IS ONE WHERE TWO OR THREE EXPERTS, MANY OF WHOM ARE COMING OUT OF THE BIG COMPANIES AND MAY HAVE EITHER FIGURED OUT A WAY TO GET ACCESS TO DATA OR FIGURED OUT A WAY TO DO ADVANCED AI ON THE DATA SETS. EMILY: YOU MENTION THERE’S GOING TO BE A LOT MORE AND A DAY. WHAT ARE YOU TELLING COMPANIES ACED ON THE OVERALL ENVIRONMENT? THERE’S A PERCEPTION THAT YOU ARE COUNSELING COMPANIES NOT TO GO PUBLIC STOP MARK: IT’S HARDER TO BE A PUBLIC COMPANY TODAY THAN IT USED TO BE. I HAVE TALKED AT LENGTH ABOUT THIS. IT’S HARDER TO BE PUBLIC AND IT IS HARDER TO GO PUBLIC AND OBSERVATIONALLY, THERE’S A LOT MORE THAN THERE USED TO BE. ON THE OTHER HAND, WE BELIEVE THE PENDULUM HAS PROBABLY SWUNG TOO FAR IN AGAINST GOING PUBLIC AND THAT IS WHERE WE ARE AND SO WE’VE CREATED A TEAM IN OUR FIRM FOCUSED ON IPO PREPAREDNESS. WHAT IS THE PROCESS TO GET READY TO GO PUBLIC? WHAT IS REQUIRED TO GO PUBLIC? IT’S BUILDING A BOARD OF DIRECTORS, YOUR EXECUTIVE TEAM AND ALL THESE THINGS YOU HAVE TO DO TO GO PUBLIC WILL STOP EMILY: YOU ARE COUNSELING THEM ON IPO READINESS? MARK: THEN THEY HAVE THE DECISION. IF YOU GET READY TO GO PUBLIC, IT BECOMES AN OBVIOUS THING IF YOU WANT TO TAKE ADVANTAGE OF IT. BUT THE COMPANIES THAT DO THIS AND TAKE IT SERIOUSLY BECOME BETTER EVEN IF THEY DON’T GO PUBLIC AND BECOME BETTER AS STAND-ALONE BUSINESSES AND BECOME MORE ATTRACTIVE AS ACQUISITIONS. THAT’S A PROCESS OF MATURATION A LOT OF COMPANIES ARE GOING THROUGH RIGHT NOW. AND — SCARLET: YOU ARE WATCHING “WHAT’D YOU MISS?” FOR EQUITY INVESTORS COME A BIG DECISION IS COMING DOWN IN THE NEXT HOUR. THERE’S A LOT OF MONEY HERE AT STAKE. HSB SAYS $30 BILLION OF INFLOWS COULD COME IN. JOE: CHINA HAS IN TRYING TO GET EQUITIES INVOLVED IN THIS. THERE IS A HUGE DECISION COMING UP. SCARLET: IT’S DOWN TO 154 BILLION, DOWN 84% FROM THE PEAK OF LAST YEAR. A GREAT BALL OF MONEY MOVING FROM IRON ORE TO HOUSING. JOE: I’M LOOKING AT A CHART THAT LOOKS ALMOST IDENTICAL TO YOUR CHART, BUT THIS IS A CHART OF OUTSTANDING MARGIN DEBT AND YOU CAN SEE HOW SIMILAR IT IS. THAT SPEAKS TO THIS BIG BALL OF MONEY IDEA AND TO HOW MUCH THIS MARKET DEPENDS ON PEOPLE LEVERAGING INTO AND SPECULATING ON IT WILL STOP LAST WEEK, THERE WAS THIS WEEK IN THE MARGIN DEBT AND THAT HAS COME DOWN A LOT. THE QUESTION IS WHAT DO THEY DO TODAY AND HOW MUCH MONEY DOES THAT INSTANTLY BRING INTO THE MARKET THANKS TO PASSIVE INVESTORS FORCED TO TRACK THE INDEX? SCARLET: COMING UP, AMERICAN CONSUMERS WENT ON A SHOPPING SPREE WITH RETAIL SALES CLOSING WITH THEIR BEST BACK-TO-BACK GAIN SINCE 2014. WE DISCUSS WHAT THAT MEANS TO THE FED. AND JUST A REMINDER THAT IF YOU WANT TO WATCH THE REST OF EMILY CHANG’S CONVERSATION WITH MARK ANDREESSEN, YOU CAN GO TO LIVE GO. ♪ MARK: PRESIDENT OBAMA MET WITH HIS NATIONAL SECURITY COUNCIL. HE RECEIVED AN UPDATE ON THE US-LED CAMPAIGN AGAINST ISLAMIC STATE. THE PRESIDENT WAS BRIEFED ON THE INVESTIGATION INTO THE ORLANDO FLORIDA SHOOTINGS. PRESIDENT OBAMA: WE WORK TO SUCCEED 100% OF THE TIME. AN ATTACKER LIKE THE ONE WE SAW IN ORLANDO ONLY HAS TO SUCCEED ONCE. OUR EXTRA GARY PERSONNEL, OUR HOMELAND — OUR EXTRAORDINARY PERSONAL, OUR HOMELAND SECURITY HAVE STOP MANY ATTACKS AND SAVED MANY LIVES AND WE CAN DOUBT — WE CANNOT THANK THEM ENOUGH. THAT WE ARE SOBERED BY THE FACT THAT, DESPITE THE EXTRAORDINARY HARD WORK THOMAS SOMETHING LIKE ORLANDO CAN OCCUR. MARK: THE PRESIDENT WAS BRIEFED ON THE EFFORT TO PREVENT WHAT THE WHITE

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