💡Andreessen Horowitz & Substack
Ideas from the founders of Andreessen Horowitz and Substack
Marc Andreessen and Ben Horowitz are the founders of Andreessen Horowitz. They were interviewed on The a16z Podcast.
How did you meet? [Ben]: Marc interviewed me at Netscape. I was interviewing for a product manager role. I had worked on Lotus Notes and Marc had a fascination with it. He had all kinds of questions for me.
Why did you decide to start LoudCloud? [Marc]: The dominant assumption at the time was the Internet was not going to work.😳 Turns out it did. And then people were fundamentally not prepared for the Internet to work. We saw a very specific set of people not being prepared. We were working at AOL at the time and saw the traffic AOL was able to send to websites. 50% of all Internet traffic at the time went through AOL. The websites couldn’t handle it. We asked what if there was a cloud that could run your content and handle the load? All these companies could get out of handling their tech and hand it over to the pros. This was in the middle of the dot com boom. It just seemed like an obvious opportunity.
Why start a venture capital firm in 2009? [Ben]: We were customers of venture capital and had a few observations. Marc made the point that most of the companies you’d admire were run their by their founder for a very long time. Thomas Watson at IBM. Dave and Bill at Hewlett-Packard. Bill Gates at Microsoft. Yet the conventional wisdom in venture was to replace the founder. 🤔
What have you understood about talent that other VCs did not? [Ben]: Mike Ovitz [founder of CAA] taught us that talent is a network. Specifically how to build that network. How does it work? How do you take a long view on the relationships with the talent? How do you build real relationships as opposed to transactional relationships? Build real long term relationships and you will have a network that is so powerful no one will ever be able to match it.
Founders are extreme: [Marc]: The kinds of people who start these companies are NOT normal. So we have to discover and partner with really extreme people.
What does retail look like in 15 years? [Marc]: Retail that turns into an experience will be here in 15 years. But the companies that buy a bunch of stuff, put it in a big building, and then make everyone drive to it...no. What customers want is to push a button and stuff appears.💡
Retailers that sell others people’s products are like an over levered bank:[Marc]: There is no retailer [of other people’s products] that can afford to lose 30% of revenue and stay in business. That is why you see these retailers go bankrupt all the time.
What is the potential of wearables? [Marc]: I think audio is on the rise. Apple hit a home run with air pods. I think it’s tremendously important. It’s a voice in your ear anytime you want. Audio will be titanically important.💯
Marc’s contrarian view on VR: VR will be 1000x bigger than AR. 1% of people on earth live in a place where there are so many interesting things to see. These are environments where AR would be better than VR. For most people the new environments we can create in VR are going to be much more interesting than the physical environments they currently live in. And there will be a lot more of them to choose from.🤔
Marc’s show recommendations for founders: Halt and Catch Fire [about the creation of the company Compaq] is the most accurate portrayal of what a tech startup is like. I tell founders to watch a show called Burn Notice. He had every conceivable skill for whatever circumstance he was in. I look at the main character and say that’s a good founder. There is no substitute for being good at a lot of things. Another show is Succession. It is inspiring for founders because it accurately shows the dysfunction at larger companies.
In 20 years will location and being in the Bay Area matter more or less? [Marc]: Both. Silicon Valley will become more central [people working in the same room] not less central. We are building the technologies that make it possible for companies to be distributed. More people outside of Silicon Valley will be working remotely.
Emergent behavior is incredibly important: The really successful platforms let the user surface the behaviors that the creators of the platform could have never thought of. For example most of the compelling ways in which people use Twitter have been invented by the users. [hashtags / retweets etc] A useful principle of product design is let the users innovate.💡
What is the last thing software will eat? [Marc]: I think it’s project selection. It’s this question of how do you organize a small group of people to do something new? How are they financed, how will they be run?
Book recommendations: [Ben] Genghis Khan and The Making of The Modern World. [Marc] Private Truths, Public Lies.📚
Chris Best is the founder of Substack. He was interviewed on Recode Media.
What is Substack: A platform for readers to pay writers directly. Paid email newsletters are a good way to reach people. You have a direct relationship. There is no algorithm in-between you and your audience.✊
Why build a business in the paid email space? A frustration with how much control we lack over our own attention. It used to be you would be bored and you’d spend money to find things to fill your time. In the age of social media that is flipped. Attention is now your last finite resource. Now you aspire to regain control of your time. Email is a way to gain control over what you pay attention to.💡
One of the people who inspired Chris to start Substack is Ben Thompson: Ben had been saying that more people should do paid newsletters. It is a really good model. That made me think 🤔 what if we just made having a paid email newsletter really easy?
Substack is riding a tailwind: People are starting to value their time more and more. Your time is worth something. At some point it is irrational if you don’t want to spend your money to use your time and attention better.💯
There are a lot of parallels between email and podcasts: They are both niche based. You choose what to subscribe to. The content is delivered to you.
A problem Substack solves: Paid models allow things to exist that wouldn’t otherwise exist in an ad supported model.🙏
More advantages of email: Email is an app you use all the time. It is an open channel to reach an audience that is not directly mediated by a 3rd party. It is a really good distribution channel.
Email is simultaneously a super powerful and underrated medium to reach people: Our numbers have told us that people really like to consume stuff in email as opposed to using email as a notification to link to a website.💯
A terrible place to be: Anytime the core of your business is based on the whim of a big company. An example is a media company building a business on top of Facebook.🤦♂️
Substack is perfectly aligned with their customers: We are focusing on building tools that help people make money when their content is good. Our business model is to take a cut of subscription revenue so we have every incentive to help readers love it.
Are there other mediums this works for? At some point someone is going to figure out how to do paid podcasting right. And that will be a massive industry. ♥️
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