Venture Capitalist Ben Horowitz & Marc Andreessen One-on-one Conversation | Clubhouse Discussion

Yeah, Ben, do you remember? We invested in a company called Masira early on, like 2009, 2010. And then you remember, we shouldn't name him, but we had a meeting with the CTO of one of the really big networking companies at the time. He literally said it was against the laws of physics, it was impossible. They had already studied it at length at this very large, important networking company, and you could not have a central control plane in the way that this company proposed to do. And of course, now NSX inside of VMware is like a two billion dollar a year revenue company.

So the twist that I want, there's a couple twists that I wanted to put on this, aspects of this very important question that I wanted to get a little deeper into. For those of you who think about these things, some of you will have at least read Peter Thiel's famous book Zero to One. He talks a lot about what he calls the secret, which is this idea of the rare knowledge that other people don't use. And then he has this famous question that he asks at dinner parties: what is the thing that you know that nobody else knows? Or he asks a related question: what do you believe that nobody else believes? And of course, what's interesting is that those are not necessarily the same thing. And then on top of that, there's this question of whether the rare knowledge is something that is actually not known, like a piece of information that is invisible. For example, rare knowledge of a chemical formula that has been invented in a lab and only the people who work there know it exists and what it is. Or the formula for KFC seasoning, 11 herbs and spices, we do not know what they are. So there's literally rare knowledge that you can't get to. And then there's this other kind of rare knowledge, which goes to the second version of Peter's question: what do you believe that nobody else believes? This is the rare knowledge of something that is actually a fact that is completely in public view, something that anybody can walk up to, learn about, read on the internet, read an academic paper about, but people just simply don't believe it. They just don't buy it. They found some reason to rule it out, often a ridiculous one. So the question I always think about is, how much of the rare knowledge in the world is literally the 11 herbs and spices that you can't go find out, versus how much of it is the thing that's there in plain sight that everybody's just making fun of?

Yeah, and in fact, if you think about it, Airbnb was kind of in the Bible. Joseph and Mary stayed in the manger, and that worked out pretty well for them. Every little kid in Western culture knows that story because it's right there with Christmas. It's universally known. And yet, whenever you started this idea of people staying in each other's houses, it was just horrifying. So it was quite literally in plain sight.

Yeah, and then this goes to the second question, which was how can I develop a view for the future? The way I think about this is there are basically two ways to develop a view for the future that flow right out of what we just talked about. One is trying to come up with ideas that nobody else has had, a unique viewpoint of literally new ideas. And of course, that's hard. A small number of people can do that; most of us can't. The other way is to quite literally believe things that other people aren't willing to believe, or equivalently, take seriously things that other people aren't willing to take seriously. And I think that's probably the most underrated approach for people who really want to have an open mind and a view of the future that actually gives them an advantage.

Yeah, and then the other thing that happens is revisionist history. We've got the next question about history, but all history is revisionist. Generally, when a new idea actually wins and becomes conventional wisdom, history gets rewritten so that everybody knew it was obvious the whole time. Both obvious and inevitable. But if you were there at the time or you get the true history, you realize that was not the case. The history just gets written by people who are basically covering for their own mistakes. One of the most shocking pieces of technology history to me is the internet. Everybody talks about it like it was always going to be the internet, but even after Netscape started and was pretty far along, got venture funding, and we had invented the browser, the conventional wisdom was that it was absolutely not going to be the internet. It was going to be the information superhighway. The internet was insecure, it was an academic network, and there were just a bunch of weirdos on it. And now nobody would admit to that. My favorite part is Bill Gates when he wrote The Road Ahead. In the first edition, he didn't even mention the internet. He wrote a book about the future in 1995 that did not mention the internet, not once. And then he revised it and swapped the internet in everywhere he had information superhighway. The ultimate revisionist history.

Which by the way, is that domain still available? That would be a good email address. But I remember thinking, okay, I guess the good news is he's noticed the internet. The bad news is they take it so unseriously that they can't even be bothered to fake a real email address. I just thought, okay, I guess I should go back to writing code.

Okay, so on that note, the next question. Michael and Angelico ask, I notice a lot of the best VCs are well versed in history. Where do you find high quality historical content? I'll start on this one. Ben, see what you think. People who have followed me or read my stuff, listening to these Clubhouses, probably hear me cite history a fair amount. It's something I like to read about. When I'm trying to understand something new, the first thing I try to do is go back and find all the historical precedents. I think there's a lot to learn from history. Having said that, history is really tricky. Serious history is hard to find. Most history is written after the fact, as if what unfolded was both obvious and inevitable. Most history is written by the winners, wedged into an artificially simplified narrative. When you're living through current events, it's flying all over the place, all kinds of random crazy stuff is happening. Then later, history gets written as if the whole thing was much calmer, more logical, and inevitable, as though if one slightly different thing hadn't happened, you would have a completely different outcome. That's always the case when you're going forward in history.

For sure. The lens on this that I always find useful is, we judge people in the past. The corrective that I try to apply is the reverse: how would the people in the past judge us? Let's do it in two directions. The mental exercise is to try to get a really accurate reading of what it was like to be in that prior time and place. If we were there, with the education, culture, and morality those people had, and we had the ability to look forward in a crystal ball and see us in 2021 and all the stuff we're doing, would we be judged well? Would they say, wow, you guys have really advanced, you're a much better version of what we were? Or would they say, oh my god, look at what you've lost, look at the things you can no longer do, look at the pathologies of your time that you can't even see because you lack the outside reference point? More and more, I'm interested in this puzzle.

Yeah, and then the thing that makes this important in our time is not just how to understand history, but also that our successors are going to judge us from the future. What's going to be the thing? Maybe having employees is the worst thing in the world in the future. Most people who are vegetarian or vegan will tell you the single most likely thing people will be judged for is being genocidal maniacs. Like, my god, you ate animals. And maybe after that, it'll be, my god, you ate vegetables, like you didn't eat some chemically created thing that would be much better for living things. Vegetables exhibit various kinds of reactions to being harvested. Broccoli definitely has feelings. So this is the other thing. There's a great book by Chuck Klosterman called But What If We're Wrong? It's about this idea: our great-great-great-grandchildren, 100 or 200 years from now, looking back at our time. We naturally assume we have everything figured out, the right morality, the right politics, the right conclusions on proper behavior. But we are going to get judged in the same way we judge Christopher Columbus, from a completely different outlook. The odds that we're the first generation not to be judged harshly by our descendants is very close to zero. Every other generation got judged that way. So what I take from that is the incredible need for epistemic and moral humility in our time. Our ability to have any sense of whether we are truly correct in all our presumptions is just not that great. Maybe we shouldn't have quite so much confidence that we have everything all figured out.

So anyway, back to the history topic. That's the lens I try to put on it. To bring this back to something more practical, the mission to find historical material worth reading is basically either source material—material from people who were there at the time. From that, you get a real sense of what it was actually like then. For example, if you read contemporaneous accounts from people working in the car industry at its inception, they don't know what happened in the future. If they're writing in 1910, they don't know how the whole thing will unfold. They're in the midst of all the details of getting the car to work and building car companies. You get a sense of the level of complexity involved, which gets sanded away in most histories. For history written later, look for historians and writers who are scrupulously honest, non-self-absorbed, non-political, non-moralistic, not willing to judge. They make the most honest possible pass at accurately representing what happened, as compared to interpreting after the fact. From that standpoint, I'm having a harder and harder time reading histories written after about 1960. I find them so infected by the politics of the last 60 or 70 years, which have been so potent in our culture. More and more, I'm finding older histories written before 1960 have their own issues, biases, and problems, but at least they're not our problems. You can see them easier because they're not built into your brain.

Yeah, that was a very useful perspective for sure. All right, let's see. Next question, changing topics. Gregory Keyes asks, is John Maynard Keynes' 15-hour work week becoming more likely due to automation? Let me provide the context. John Maynard Keynes was one of the leading economists of the 20th century, very important, especially in the first half of the 20th century, involved in policy in the West around economics through the Great Depression. He wrote a famous essay called Economic Prospects for Our Grandchildren. This was right in the teeth of the Great Depression, a very dark time in the 1930s. He wrote this piece trying to peer ahead 60 or 70 years and say where the economy is going. It's actually quite an optimistic piece. He was quite confident the economy would heal. He said it's highly likely that our grandchildren will have somewhere between four to eight times the standard of living that we do. That turned out to be right, at least in the West. One of the things he does in there is he says, because our grandchildren will have a higher level of technology, the economy will advance, people will be better off, products will be cheaper, there will be more automation. Therefore, the goods and services that those in 1932 believed to be important for a good life will be a lot cheaper as a percentage of income. So people 60 or 70 years from now may no longer choose to work 40 or 50 or 60 hour weeks; instead, they may choose to work 15 hour weeks. He actually predicted that most people would work 15 hour weeks. He basically said there's a core set of things people flat out need: housing, clothing, food, medicine. And then he makes a mistake. He said there are all these things people think they need but are actually wants, discretionary stuff. That's all the stuff that will cause people in the future to work more than 15 hours a week, and maybe people will choose to make that trade-off. Milton Friedman later counter-argued, saying that whole framing is wrong. He described it as human wants and needs are infinite. He made an observation of human nature: humans are never satisfied. You could view this as critique or praise, but he basically said humans are on what's called the hedonic treadmill. There are always things we want that we don't have.

It's the nature of basically human existence, but that's the case. And so therefore, there's never any shortage of lesser needs, by the way. Therefore, there's never any shortage of jobs to be done or industries to be created, because there's always new things that people want. But because people always want things they don't have, therefore they will always basically work full work weeks, right, to be able to get those things. And then when they have those things, they'll develop a new set of wants and needs going forward. So anyway, so what do we think of that theory, you know, sitting here today in the 2020s? The Keynes would be very happy that people are discussing this almost 100 years later, I guess 90 years later. But sitting here in 2021, like how would we score the odds that the future will unfold the same or differently than the past in this regard?

Yes, this is going to say so. My assumption is that Friedman is generally right. My assumption, to your point, is that human wants and needs are in fact infinite. Wants become new needs, and then people just can't even imagine that somebody didn't need a teleportation machine or whatever the next thing in the future is going to be. By the way, when Friedman was asked about technological unemployment, one of the things he said was, 'Look, because there's infinite wants and needs, there's infinite jobs.' He said, 'Look at it this way: in the future, right now, it's kind of a luxury good to have a therapist. Most people don't have a therapist, most people can't afford a therapist. It's only rich people in cities looking for a therapist. But maybe 100 years from now, it'll just be taken as a given that everybody needs a therapist. Everybody just has a therapist, that's just a need that everybody has.' And he said in that case, you basically solve employment because half the people in the world are going to be therapists for the other half, and each other. The Sopranos had that therapist in Sopranos who would come in from time to time. So that's my default assumption. But yeah, I think you put your finger on the big counter-argument. The big counter-argument is not that that process will stop, it's that the outcomes will fork. And you actually see some data for this, and it's fairly disconcerting in the labor data. Basically, what you see is, at least in the US, the upper 20% of the socio-economic strata, the upper middle class, has been growing. But the upper middle class in the US basically works harder than ever. They're routinely pushing 60, 70, in some cases 80-hour work weeks. Of course, we tend to be in salary jobs as opposed to hourly jobs, and we have very aggressive expectations about our careers. And then the critique is, 'Well, of course these people are going to work incredibly hard because they have all the interesting jobs.' It's an incredibly interesting job to be a screenwriter, a computer programmer, or a venture capitalist. It's not quite as interesting to be in a lot of the more normal jobs. So you have this overwork happening at the high end. And very few people have sympathy for richer people who work harder. But if you don't like it, stop working. But it is a dynamic for that 20%. And then, to your point, there is this other thing on the other side. The Japanese actually have a term for it called 'hikikomori,' which I'm probably mispronouncing. It's what in the West gets referred to as NEET, which is 'Not in Employment, Education, or Training.' Basically, no job and furthermore does not want a job. The Japanese version is usually the teenager who becomes an adult and never leaves home, lives in the basement, plays video games, needs Cheetos, and smokes pot. There's a movie called 'A Failure to Launch.' And to your point, in a world with more social support, including UBI, legalized drugs, incredibly good video games, and increasingly good drugs, that's pretty rough. And by the way, really cheap packaged foods. The cost of calories has dropped enormously. You can get a lot of nutritious and non-nutritious food for not very much money. The McDonald's dollar menu is an amazing amount of calories for a dollar. How the hell can McDonald's have a dollar menu? If you look at US agriculture policy, the US agriculture industry produces twice as many calories as the entire US population needs every year because of subsidies. So there's no question that it's possible to survive in the US food-wise for not much money. So then you have this very interesting societal question: if you just have a category of people who are fundamentally not motivated, is that rational or irrational? A lot of work isn't fun, a lot of school isn't fun. There are things that are perfectly enjoyable at the moment. It's hard to say that some people are irrational if they pursue that other path. This very interesting societal phenomenon where you have this big fork is worrisome. Do you end up with social programs or incentives removing people's purpose and motivation in a way that's destructive? It's really an open question.

Yep, exactly. So okay, let's keep moving. Got about 20 minutes left. Okay, this one's a challenge. Nader Mirza asks, 'How will global geopolitical trends—and he cites US vs. China, developments within the US, EU, China, Russia, world climate, etc.—affect technology in the long run?' And then I think this may be a little tongue-in-cheek, or maybe not, maybe he's just optimistic: 'When will the US and China unite to save the world?' Which is clearly not happening right now. And then Ryan Pinsker asks a related question: 'Do you think globalism—and by this I think he means true globalism, up to and including world government, but even just world peace, world trade on a fully global basis—will ever be achieved, and if so, when?' Ben, these are obviously hot topics at our present moment. Why don't you start?

Yeah, so I think the lens I put on this is that there's been a long push for a long time. If you go back and read Hegel and a lot of his successors, including Marx and others, there's been this big push in the democratic West over the last 200 years, and in particular since World War I, towards globalism broadly. Over time, incrementally closer to various ideas of world government. In some cases, it quite literally is a push for world government. The idea is that in the long run, there should be a global state. There are various versions: the United Nations, the League of Nations which didn't work, then the UN, you could argue that's worked. NATO is the military version. The EU was a specific project in Europe after World War II to knit Europe into the equivalent of the United States over time. So there are overt pushes to try to get some sort of world government, and then there's the decentralized version, which has been the basis of US foreign policy for the last 50 years. Biden just gave a big speech at the UN reiterating this: you can have your country and your government as long as it basically conforms to our values, as long as it's democratic, oriented towards free trade, and inclusive. He double-underlined that US foreign policy now firmly includes women's rights and LGBT rights. The message is, if you don't like that, that's a problem. The EU has a similar position. So that's the decentralized version: we're going to have a moral and ethical code and governance structures, and you can either go along with that and be our friend, or not. For the last 50 years, that's been a pretty compelling pitch to a lot of countries. A lot of countries had tyrannies, so democracy was a big improvement. A lot of countries were closed to free trade and had low standards of living, so as they implemented free trade, standards of living improved. A lot of countries had horrible records on women's rights, and that's improving. So there's a lot to like about this model of progress. It all vectors you towards a global model of governance. The big question for the next 20 or 30 years is the force of that push towards global government versus the backlash. At what point do countries just say, 'Enough. We're not the US. We have our own views, our own culture. We're not on board with this.' Probably the single biggest recent news on this is China. China has issued a series of extremely interesting decrees. The two most amazing to me: one, they said kids in China below the age of 18 can only play video games three hours a week, only on Thursday, Friday, and Saturday nights from 8 to 9 PM. Very strict. They're basically saying kids in China are not going to just play video games all the time. That's a cultural statement we don't have in the US. The other one that's amazing from a Western perspective: they banned effeminate men from television. They banned the portrayal of men who don't have stereotypically masculine affect and style from Chinese television. That's inconceivable in the US. You can't even find an argument against it because the whole idea is inconceivable. So the Chinese regime is signaling, 'Enough is enough. We've let a lot of American movies, culture, and technology in. We're going to start drawing lines.' So there's the prospect of a very real cultural backlash against American values. I don't know how to forecast. It may be that the Western cultural steamroller is so intense it will roll over everything, and 30 years from now we'll have a world state in effect. Or the backlash could grow, and a lot of other countries will say, 'Pound sand, we're going to have our own culture and our way of doing things.'

Yeah, well, exactly your point. If you think in terms of US politics, the neoconservatives in the Bush era were a right-wing movement to reform world politics and morality along American conservative lines. And now there's the liberal left, progressive, woke lens in the Biden administration, spreading American left-wing politics and morality around the world. The thing they both have in common is the firm conviction that the US is in a position to dictate morality for the world. It's the religious right versus the religious left in that sense. They have that in common, but very different ideas of what that means in practice. So we're a little schizophrenic on those topics.

Yeah, exactly. So all right, let's close on a practical topic. It's been a very fun theoretical conversation. Let's close out on a practical topic. I'll bounce this one to you. Darpan asks, in the context of running a startup, how to know about things that you don't even know you need to know. For example, if an 18-year-old founder didn't know that they even needed to do marketing.

Yeah, that's what I was going to say. This is the problem. This is the tension. The way you learn is by talking or reading from people who already understand. But the problem is things do change. Another great example: there's an entire generation of tech sales leaders who would tell you that top-down sales is the only way. It's an article of faith in tech go-to-market that revenues can all come from big companies because they have all the money, and big companies need to be sold to, so you need a top-down sales force. But there are lots of new tech businesses now that have taken a very different approach with a different model, like product-led growth. There's a fine line between an 18-year-old founder who doesn't want to do top-down sales or marketing, so they do nothing and fail, versus the founder who says, 'There used to be an old way of doing it, but it's not the right way anymore. There's this new way that doesn't look like sales and marketing before. We're going to have a developer program as our go-to-market.' Some of those founders in the last 10 years have been very wrong and lost their companies, and some have been really right and built monster companies using entirely new techniques. So there is real tension on how much of this you can actually learn.

Good. All right, we are right at 6 o'clock, so we'll call it here. Ben, thank you. And to the entire audience and everybody who had questions, thank you. We will see you again very shortly.

Okay.