@habits

Guests: Marc Andreessen, Chris Dixon

A16z – new $4.5B fund, largest crypto fund ever – venture investing, mostly early stage, 10+ year time horizon, open source, contribute to broader crypto community, doing a lot in policy, invest a lot in content and media, 72 people team and growing

cdixon = “Kendrick Lamar of mental models”

Internet’s original sin – it was illegal to have money on internet, do business online – US government was paying for it then, was a fed funded research project w/ taxpayer money
Ethos as non-commercial, open source, free software movement
Impossible to imagine Netscape, making money on internet
Internet built as zero-trust, lack of economic incentives created many problems such as spam, reliance on advertising

Netscape created javascript, cookies, SSL – core internet primitives
SSL was controversial, classified as munitions, government thought only terrorists would use encryption
Narrative battle then – information superhighway (eg, AOL, Disney) vs decentralized (eg, Netscape)

Encryption was used in warfare, but not in daily life
Invented SSL protocol to enable encryption
Govt still tries to ban encryption periodically, same fights

Many early actors do have bad intentions – but stopping them means you also stop the positive uses and limit the potential; it will create jobs; importance of privacy for sensitive data (health, finance)
If these technologies exist, you want them in your country so you can better regulate and observe them

Bull case for open systems:
Bill Joy, cofounder of Sun – “Joy’s law” – no matter how many smart people work for your company, there are more smart people who don’t
“Permissionless innovation” – internet was like this, PC, iPhone, crypto is like this
Generational component to this – kids see this as their opportunity; older people have status quo bias, their power is at risk
Doomed to fight these things over and over again

Cathedral vs Bazaar
Cathedral = Microsoft (hierarchical, centralized)
Bazaar = early PCs (open systems)
Encarta vs Wikipedia

Crypto picked up baton of open source software, open systems
Disadvantages is 2 step process – recruit developers first to build the software, which attracts the users

Early protocols were not human readable – binary code
Internet protocols (eg, SMTP, HTTP) – text based protocols, human read & write, easier to build on it, write your own protocols
Was meaningfully slower this way
Did this to drive demand for broadband and innovation on top

First laptops were 43 pounds and early reviews were scathing – the critics were right but didn’t see the future
When there’s a movement and attracting world’s smartest people – the critics’ list of problems becomes the precise opportunities

Internet – right answer is always to LIBERATE – ethos of freedom of speech, John Barlow’s declaration of independence of cyberspace
Web3 bringing trust to an untrusted network
Can imagine entire global economy running on blockchain

Net neutrality – Twitter originally described itself as free speech wing of free speech party
Lot of those advocates are now advocates for censorship – 180 turn
Ethos shift – all these companies are under intense pressure to censor and block

Crime wave in 1920s, 30s – car plus tommy guns – new thieves with new tech – created mass panic and lots of bank robberies, but then banks and police adapted. Society adapts
Full anarchy isn’t a good idea either – question of judgment by leaders and community

Mental model for software – as flexible and plastic as writing fiction – massive design space
Questions of whether capital can have too much influence over governance – it’s a problem that can be solved with more innovation and better design
Becomes question of political philosophy – Machiavelli said 3 forms of government, rule by one, rule by few, rule by many
Lots of direct democracy experiments fail – California propositions, Florentine direct democracy so catastrophic it led to anarchy
Historically most democracies have some level of representation / delegation
Full democracy may be unrealistic expectation
But different communities can make different tradeoffs

On internet as things are increasingly adopted, more embedding adds more friction points to governance process
Speed running history of finance, and now speed running history of governance

Blockchains are core tech – new kinds of computers, “computers that can make commitments”
Two other movements – money / defi, web3 (reinventing internet services owned by communities)

Web1 = democratized information – “read”
Web2 = democratized publishing – but controlled by small sets of companies – “read write”
Web3 = democratizing ownership – “read write own”

Networks’ hardest problem is cold start – tokens are powerful solution to this

Lot of people are uncomfortable with money – intellectuals in particular see ideas as superior to money
Another view – money as a tool, crystallized human effort – incentivize and measure value between people
We tried societies without money – Soviet Union is an example and it didn’t go well
Money is fundamental tool to build civilization

Key turning point for modern civilization is “clear title to land” – once you have that, you have motivation to improve it, build on it – then you can borrow against it, which is what makes R&D, business, modern economy possible – unlocking capital

Web 1.0 – closest to ownership is domain names – and was linchpin for how web stayed somewhat decentralized
Domain name isn’t a consumer product, which limited its potential
RSS didn’t succeed but there’s alternate future where RSS + crypto (value ownership) could have avoided lots of web2 problems of centralization and censorship

NFTs – way to connect culture and art to internet – history of art has always been a big deal, value is tied to provenance (is it real, did artist actually make it, who owned it before)
World has fraction of art we should have – funding art has always been a tough problem
Allowing artists to access global market of patrons
Bullish on global explosion of creativity

Jack Dorsey’s critique of web3 – “you don’t actually own web3, know what you’re getting into”
Jack believes in decentralization, differ on details (believes BlueSky can do it on Bitcoin instead of other blockchains)
Norm of a16z portfolio ownership is sub 5% – which is less than web2
Moxie critiques – new things re-centralizing like OpenSea – but OS doesn’t own those NFTs, they’re all on blockchains, more pressure on take rates and more competition

Processes of tech adoption
1. Ignore
2. Refute – list of criticisms
3. Name calling – people getting mad, realize it’s gonna be a thing, represents re-ordering of power and status; we’re entering this phase now

How many web3 critiques are just critiques of capitalism

Western culture has 800 year history of freedom of speech and expression – important to keep these

Early Bitcoin had a libertarian culture which skews right, which also gets confused in the debate with broader crypto and what crypto is like today

In long run, the truth wins
Internet is winning – fundamentally a good thing
People use it, buy into it, get value from it

Advice to young people
-look for place you can make contribution (don’t believe in follow your passion)
-focus on satisfaction over happiness (deep and enduring over temporary and fleeting)
-all of this stuff is about people, great teams – people who share a lot in common, sublimate themselves, work together
-hard work (work life balance isn’t as important when you’re young, there’s no substitute for hard work, great things require intense effort over long time)

New tech there’s a magical window
For mobile it was 2009-2011 (Snap, Instagram, Uber, Venmo, huge influx of builders, funding)
With web3 we’re in it now, magical few years, hence the massive fund to go all-in

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notes are unedited, any mis-reps are mine