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Interview with A16Z Marc Andreessen: Encryption promises to change the way the world works

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In this article, the authors ask Mark ten questions about technology and the future, ranging from automation, American institutions, social media, the crypto world, the future of the venture capital industry, and more.

Interview with Marc Andreessen: Encryption promises to change the way the world works

Originally written by Noah Smith, Bloomberg writer

Wang Eryu, Carbon Chain Value

Marc Andreessen is credited as an Internet pioneer who helped write Mosaic, the first widely used graphic Web browser. He co-founded Netscape and several other companies. He is still active on the front lines of the tech industry and co-founded Andreessen Horowitz (A16Z), one of the largest venture capital firms in the world today.

The author of the interview is an old friend of Anderson's who has spoken with him regularly and is deeply inspired by him. In this article, the authors ask Mark ten questions about technology and the future, ranging from automation, American institutions, social media, the crypto world, the future of the venture capital industry, and more. Here are his answers.

qLast year, in your widely read article "Time to Build Up", you said that the epidemic has exposed deep problems in many American institutions and that we need to build up to get rid of these stubborn problems. What do you think should be our priorities in the public and private sectors? Who should take up the responsibility?

aSince that article was published, our lives have been dominated by three major events: the pandemic disaster; Systemic failure and chronic collapse of almost all the world's public sectors; The success of the private sector, particularly the US technology industry, has helped us respond better to the epidemic, and it has done so against a backdrop of public sector repression.

When it comes to building, we can consider the three components of the American Dream, the three hallmarks of middle-class success: housing, education and health care. These days, all three things seem increasingly out of reach to the average person. This not only affects people's lives and the functioning of the economy, but also seriously pollutes our political environment.

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

q: Are you still bullish on the future of technology from a short-term perspective? What are the most exciting technological developments?

a: I'm very optimistic about the future of technology, especially in the area of software innovation. Ten years ago, I wrote Software Eating the World. Software is still eating the world today, and will be for decades to come. It's great, and here's why.

First of all, software has been criticized for not being a real world entity, for not being a house, for not being a school, for not being a hospital. This criticism misses a key point. Software is the lever of the real world.

Without someone writing the code, there will be no Lyft, no new real transportation system that coordinates passengers and drivers. Without someone writing the code, there would be no Airbnb, no new real estate system for coordinating hosts and tenants. No one writes code, and there will be no self-driving cars, self-driving planes, or wristbands that can tell if we're sick.

Software is modern alchemy. It turns bytes into physical action. It's the closest thing our time has to magic. We should embrace software harder. The real world that software touches is better, cheaper, more efficient and more adaptable. Housing, education and health care, where software has yet to reach, could have the same effect.

q: You have recently invested in at least two new social media companies Clubhouse and Substack. Why now? What was wrong with social media in the past? How will the new network improve?

a: The point is not that there's anything missing in existing social media, but that communication is so important, so the backbone of almost everything going on in the world, that it's important to see how we can improve our ability to communicate, how we can open up new ways of communicating, collaborating, and coordinating.

Clubhouse is a new age and global Athens Plaza. People from all over the world come together to talk about everything in small groups and by talking. In this largely text-based world, people cherish the chance to speak online. This is no different on this app than it was at a bonfire 5,000 years ago.

Substack built a pay-for-knowledge business model that had been missing from the Internet for 30 years. It is not a new way of communicating, but rather a collection of the original ways of communicating on the Internet: long articles, IETF solicitation, newsgroup posts, mass emails, blog posts, etc. This model of paying for knowledge will make a huge difference. It will reverse the tendency of traditional communication to make people stupid and make people smart again.

q: How will software eat the world in the next decade? Will AI-driven automation replace all business models? Will traditional companies filling the software gap struggle to compete with software companies in traditional markets?

aMy "software eats the world" theory in business has three phases.

1. The shift from non-software to (full or primary) software. CDs become MP3s, which in turn become streaming media. Alarm clocks have gone from a physical tool on your bedside table to an app on your phone. Cars go from curved metal and glass to software wrapped in curved metal and glass.

2. The manufacturers of these products shifted from manufacturing, media, or financial services companies to (fully or primarily) software companies, with core competence becoming the creation and running of software.

3. As software redefines the product, the competitive landscape shifts and the best software wins, which means the best software companies win. It can be a mature company or a startup.

A mature company has the advantage of having a ready-made customer base and brand. A software startup has the advantage of being software first and not having to adapt to an old culture that is full of obstacles. The winners and losers depend on whether a mature company learns to innovate first or a startup finds customers first.

Cultural change is difficult and I am increasingly sceptical that most traditional companies will be able to adapt. Many times, it's easier to start a new company than to reinvent an old one. I thought the situation would gradually improve and the world would adapt to software, but now the problem has only increased. The percentage of senior executives at traditional companies with computer science degrees is much lower than at start-ups, creating a huge gap in software knowledge and skills.

As for AI, as an engineer, I take a less romantic view. AI/ machine learning is a powerful technology that has seen explosive growth in innovation over the last decade and is now increasingly being applied to the real world as well. But it's still just software, it's math, it's numbers; The machine is not self-aware, Skynet doesn't exist yet, and the computer does what we tell it to do. AI/ML is still a human tool, not a human replacement.

I suspect that the term "artificial intelligence" itself is problematic. It might be better called "enhanced intelligence". Enhance intelligence to make machines a better thinking partner for humans. The concept is also clearer from the point of view of technological and economic impact. Instead of a dystopian scenario in which everyone loses their jobs, a world of increasingly universal access to enhanced intelligence will witness a boom in productivity growth, economic growth, job growth, and wage growth. This is also supported by pre-epidemic trends, where hundreds of years of mechanization and computerization, instead of increasing unemployment, have brought the unemployment rate for low-skilled workers in the United States to a record low, and I believe this trend will continue post-epidemic.

q: I think after the epidemic, we will usher in a more distributed production system. Do you agree with that? Do you think that telecommuting will become more common and that operations will be more decentralized between different businesses?

a: I agree.

First, epidemics are the best cover for reform. In the past, CEOs wanted to push through changes to improve efficiency and effectiveness -- from basic staffing and restructuring to changing geographic footprints and exiting old lines of business -- but they had a hard time pushing through changes that would disrupt the business as usual. Now that regular business has been disrupted, it's better to do everything you want.

Second, telecommuting has a huge positive impact. Almost every CEO I spoke to marveled at the benefits of telecommuting. If telecommuting works in the difficult context of an epidemic, it will only be more effective in the aftermath. Firms will also be able to recruit the most promising workers from anywhere, regardless of geography. Today, companies of all sizes are rethinking their geographic footprint, rethinking where to open offices, where to hire, how office space is laid out -- or whether to have office space at all.

Combine these factors and the next five years are expected to bring a big increase in productivity. That's the key premise of whether we'll ever see the Roaring '20s. I can't say for sure, but it's probably true.

Third, the way people live and work will also change dramatically. People will rethink what careers to pursue, what employers to seek, where to live and how to live. The biggest change is the decoupling of where to work and where to live. In addition, I think people will choose more diverse lifestyles, such as forming new types of community for the good.

Taken together, the United States and the world are poised to unleash enormous potential for economic growth. More people will find better jobs, more spending power will create more demand, and more new industries and businesses will be created, leading to more job growth and wage growth... I don't want to leave the good news to the bad, but the positive seems to have been underestimated.

q: Your interest in crypto has grown in recent years. Is there something interesting in crypto that hasn't been actively discussed?

a: Encryption is a classic blind man and elephant problem because there are so many principles of operation, so many potential implications, you can interpret it in so many different ways, you can grab one part and give a point you want to make. Many have seized on the monetary part, for example, either to glorify it as an entirely new monetary system that would liberate humanity from the nation state, or to see it as a threat to economic stability and the government's ability to tax. These ideas are all interesting, but I think they all miss the more fundamental fact that encryption has the potential to architecturally change technology, and thus the way the world works.

This shift at the architectural level is known as distributed consensus, through which many mistrustful participants in the network can create consensus and trust. It's something that has never been done on the Internet before, and it's finally here, but I think it's going to take another 30 years to do all the things we can do. Money is the simplest way to use it, but we shouldn't stop there. In theory, we can build internet-native contracts, loans, insurance, ownership of real assets, unique digital goods (NFT), online company structures (DAOs), and so on.

Consider also the impact of encryption technology on incentives. In the past, human collaboration online relied either on real-world corporate norms (a company with a website) or on open-source projects such as Linux that had no direct link to money. With encryption, you can create thousands of new incentive systems that encourage online collaboration, where participants get a direct payoff without even having a real company. For all the credit that open-source software deserves, more people will be more willing to contribute in return for money, which will open the door to all sorts of ventures and make it easier. But we still need 30 years to sort out all the implications of a civilization-level shift in how we work and how we are paid, and I don't think that's a dream.

Finally, Peter Thiel has an overarching argument, which is that AI is sort of a left-wing idea, with centralized machines making top-down decisions; Encryption, on the other hand, is a right-wing idea, with lots of distributed agents, humans and robots making bottom-up decisions. There is some truth to this view. Historically, the tech industry has been dominated by left-wing politics, as well as all creative fields, which is why today's tech giants are intimately linked to the Democratic Party. Cryptography promises to give rise to a whole new class of technology, a starkly-right-wing technology that is more decentralised, more entrepreneurial and more about free, voluntary trading. If you believe, as I do, that the world needs more technology, you will also agree that this is a very powerful idea, and that what is possible in the technological world is going to grow by leaps and bounds.

q: A16Z has done some innovative exploration in the aspect of venture capital. What do you think is going to change about VCs, are they going to be more like private equity firms, or are they going to be more like banks? Or will a new business model emerge?

a: There is an ancient side to venture capital. Tyler Cowen uses the term "project evaluation," which is the process of sorting through many possible people and creative alignments to pick promising projects, and putting money and effort into creating something new or important for the world. The same "project appraisal" model has been used for hundreds of years for all manner of large-scale ventures, from whaling ships to colonial settlements to music/film/television projects to the world's largest private equity deal.

There is, of course, a new side to venture capital, where we fund the world's most cutting-edge ideas and projects and support entirely new concepts of technology enablement. Founders we fund often break the rules and put new models in front of people that were previously thought impossible. Many of the cutting edge crypto ideas mentioned above, many of which are organized in a very different way from the classic joint-stock corporation.

The VC firms themselves are caught in this vortex of old and new, and of course there is the potential for significant change. But for now, at least, it is all about sorting and sifting through all the potential projects and making big bets.

The question I'm increasingly concerned about is whether VC firms can break out of the "little boy/big boy" model of tech financing and scaling. The "little boy" is the Silicon Valley ecosystem that helps new companies take their first steps; The "big boys" are the stock markets, investment banks and hedge funds in New York and Wall Street that help companies scale before and after going public. Now, maybe it is time for silicon valley (at the same time as a geographical location, network, and a state of mind) play a more important role in the economy, we can help our company bigger and stronger, never give them to the other shore (literally meaning and metaphor meaning) professionals, after all, they may not be as we understand and attach great importance to these companies. Just wait and see...

q: The '90s were an important period for the Internet, and you were a role model. Looking back on that period, do you think the tech guy's dream came true? Or has it hit hard reality? How should we commemorate that time, and which ideals should be upheld?

a: Yes! Dreams come true, everything comes true. We are now toads that eat the flesh of swans. What are we going to do with this bloody swan meat?

Think about what we've accomplished. Five billion people now have internet-connected supercomputers in their pockets. Anyone can create a website, publish anything they want, communicate with anyone or everyone, and access almost any information that has ever existed. Almost 100 percent of people live, work, study and love online. Every aspect of the '90s vision has become a living reality.

But, but. As Polaroid founder Edwin Land said, "I'm not saying you're all going to be happy. You're going to be unhappy, but your unhappiness is going to be in some new, exciting and important form."

Why isn't everyone happy? Perhaps because the tech industry has gone from being a building tool for people to pick and use (operating systems, databases, routers, word processors, and browsers) to being at the center of almost every major social and political debate and planetary conflict almost at once.

For example, we might have gone from pirates to marines. One might dream of some small, young, unruly pirate, but no one likes a navy that acts like a pirate. Today's tech industry is like such a navy.

Conversely, having a pirate-free navy is not necessarily a good thing. It creates a set of global orthodoxy and norms that stifles new ideas and activities and leads to the death of creativity. It is this game that has created opportunity and demand for a new generation of pirates.

In his argument, Machiavelli emphasized the need for a nation to return to its well, to its original ideals, in order to find the source of renewal in a bleak future. The same principle applies to businesses and industries. We should go back to the founding philosophy of the tech industry: John Perry Barlow's Declaration of the Independence of Cyberspace in the 1990s and Tim May's Cyphernomicon, of course. But there were also Doug Engelbart and Ted Nelson in the 1950s and 1960s, David Sarnoff and Philo Farnsworth in the 1920s, Edison and Tesla in the 1890s, Even Leonardo da Vinci in the 15th / 16th century. I think we should look back at all these unrealized or half-realized ideas of The Times and find a place where we haven't lost ourselves, where we haven't become aware.

q: What advice would you give to an intelligent 23-year-old American (career advice, etc.)?

aDon't follow your passion. I mean it. Your enthusiasm may be foolish and useless. Passion should be your hobby. It should be something you do in your free time, not your job. Instead, look for opportunities to make a contribution at work. Find the hottest, most dynamic areas of the economy and figure out how you can make your best and biggest contribution. Be as valuable as you can to those around you, to your customers, to your colleagues, and strive to grow.

Sometimes we feel that all the excitement is over, that the borders have closed, that we are at the end of technological history and that there is nothing to do but maintain the status quo. It's just a lack of imagination. Quite the opposite is true. We are surrounded by decaying traditional businesses that need to be replaced by new technologies. Let's cut the crap and pick up the gun.