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Marc Andreessen's essay on building things overlooks a key point, according to former presidential candidate Andrew Yang: 'Our biggest problems generally don't have market-based solutions'

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Andrew Yang

  • Marc Andreessen wrote an essay arguing that America's failed response to the coronavirus pandemic is due to the country's "widespread inability to build."
  • According to Andrew Yang, the former presidential candidate, Andreessen's essay misses a key explanation for why people don't build solutions for problems like housing, education, and healthcare.
  • Venture capital rewards people for building solutions for large market opportunities to maximize profits, says Yang.
  • "His broad set of points is correct — we have to start building things, solve the real problems and develop our capacity to deliver in times of crisis," Yang told Business Insider on Andreessen's essay. "The problem really lies in what incentives exist for different kinds of solutions."
  • Visit Business Insider's homepage for more stories.

Tech investor Marc Andreessen posted an essay over the weekend, saying that the only way to make us battle-ready for an event on the magnitude of the coronavirus pandemic is to build things in this country. It was effectively a call to arms to revolutionize industries.

"There are always outstanding people in even the most broken systems," Andreessen wrote. "We need to get all the talent we can on the biggest problems we have, and on building the answers to those problems," from housing to education to healthcare.

But Andreessen's missive ignores a key explanation on why people don't build in this country, according to Andrew Yang, an entrepreneur and former 2020 Democratic presidential candidate.

Yang reasons that there aren't financial incentives in place for builders.

"His broad set of points is correct — we have to start building things, solve the real problems and develop our capacity to deliver in times of crisis," Yang told Business Insider on Monday. "The problem really lies in what incentives exist for different kinds of solutions."

"If I developed an app that made things more convenient for urban professionals, then there have been powerful incentives in place to get me the money I need," Yang said. "But if I was developing emergency ventilators that would only be useful in a pandemic the incentives were absent unless the government was the buyer. It's a similar problem with climate change, the automation of labor, and many aspects of education and healthcare. Our biggest problems generally don't have market-based solutions and the true solutions often aren't aligned with profit maximizing activities the way they are currently defined." [bolded for emphasis]

In other words, the people who are likely to start companies are trained on finding large market opportunities because they present better returns for their investors. They may have an easier time raising funds, although market size is just one factor a VC considers.

The kinds of things that Andreessen wants to see built, like houses, schools, and hospitals, don't necessarily represent large market opportunities.

The next generation of entrepreneurs may need to look beyond Silicon Valley for funding, according to Yang. The money is more likely to come from government or philanthropy, he said.

In the months since Yang ended his run for president, he started a nonprofit, Humanity Forward, as a way to move forward with some of the ideas from his campaign like universal basic income.

The entrepreneur said he "would be thrilled if VCs were to set up these kinds of incentives but they generally are not designed for it." They raise money from their investors, like university endowments and family wealth offices, on the promise of outsize returns.

Yang said, "A related problem is that the time frame on many of these problems is more than most investors can tolerate so you need long-term, patient capital."

"But if VCs were to invest in these solutions it would be great," Yang told Business Insider. He thinks venture capitalists are more likely to invest out of their personal wealth because their own investors, or limited partners, "wouldn't want their funds tied up."

He's not holding his breath.

SEE ALSO: 8 books that legendary tech investor Marc Andreessen thinks everyone should read during the pandemic

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NOW WATCH: Ingenious ways companies around the world are transforming objects into ventilators


Mark Zuckerberg and Marc Andreessen reportedly sparred last year over Facebook's response to its FTC settlement of the Cambridge Analytica scandal (FB)

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Mark Zuckerberg and Marc Andreessen

  • Marc Andreessen reportedly sparred with Mark Zuckerberg over Facebook's response to its settlement with the FTC over the Cambridge Analytica scandal, The Wall Street Journal reported Tuesday.
  • Andreessen expressed concern about whether Facebook could or would be able to adhere to the terms of the agreement and considered leaving the board, according to The Wall Street Journal.
  • Facebook's board has seen massive turnover in the past year as Zuckerberg has sought to consolidate his power.  
  • The Wall Street Journal reported that many have left amid frustration that Zuckerberg has not been listening to dissenting voices on the board as Facebook tries to repair its public image.
  • Visit Business Insider's homepage for more stories.

Facebook CEO Mark Zuckerberg and board member Marc Andreessen were "at each other's throats" over the company's response to its settlement with the Federal Trade Commission regarding the Cambridge Analytica scandal, The Wall Street Journal reported Tuesday.

In July 2019, the FTC slammed Facebook with a $5 billion fine along with a sweeping set of new regulations that would be imposed on the company, closing the book on its investigation into claims that Facebook mishandled millions of users' data.

Andreessen, who has served on Facebook's board since 2008, had expressed frustration to several people about the company's willingness and ability to comply with the complicated terms of the agreement, and considered leaving the board, the people said.

A spokesperson for Andreessen Horowitz declined to comment for this story, while Facebook did not immediately respond to a request for comment.

The Wall Street Journal also reported that several other longtime board members had grown frustrated that their views were being dismissed even as Facebook navigated thorny regulatory issues and scrutiny from lawmakers.

Kenneth Chenault and Jeffrey Zients led a group of dissenting board directors who met independently of other members; Erskine Bowles felt sidelined on political issues, his area of expertise; and Susan Desmond-Hellmann privately said to some that Facebook executives weren't listening to the board's advice, according to The Wall Street Journal.

In recent months, Facebook's board has undergone significant changes. In March, Facebook announced that Chenault and Zients would both be stepping down while adding three new members. Desmond-Hellmann left in October 2019, and Bowles and Netflix CEO Reed Hastings left in April 2019 as Facebook added Peggy Alford, a former executive at the Zuckerberg Chan Initiative. Dropbox CEO Drew Houston, a longtime friend of Zuckerberg's, also joined in February.

As a result, just four of the directors on Facebook's board at the start of 2019 — Zuckerberg, Andreessen, COO Sheryl Sandberg, and investor Peter Thiel — will remain pending the company's annual shareholder meeting in May. The moves were part of a campaign by Zuckerberg to further consolidate control over the company, sources told The Wall Street Journal.

SEE ALSO: Tomorrow Health wants to upend a $55 billion market by reinventing how Americans shop for medical equipment

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Facebook board member Marc Andreessen wants entrepreneurs to 'build' their way out of the pandemic. Mark Zuckerberg has taken this message to heart. (FB)

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facebook ceo mark zuckerberg

  • Facebook CEO Mark Zuckerberg is hard at work building the future.
  • His company is in a strong position despite the pandemic, and his rhetoric signals that it is continuing to be ambitious in its plans.
  • From shopping services in India to products that make working from home easier, the 35-year-old CEO wants to build tools and technology that make Facebook even more ubiquitous.
  • His comments align with a recent essay by famed Silicon Valley investor and Facebook board member Marc Andreessen.
  • Andreessen urged Americans to build aggressively to revitalize American society and the economy in the aftermath of coronavirus.
  • Click here to get BI Prime's weekly 'Trending' tech newsletter in your email inbox.

Legendary Silicon Valley investor Marc Andreessen has a message for entrepreneurs amid the pandemic: Get building.

In a blog post published in mid-April, the Netscape cofounder-turned-venture capital investor and Facebook board member called on Americans to focus their efforts on building new companies and new initiatives to revitalize the America's economy and society in the aftermath of coronavirus. 

It sounds like no-one has taken this message more to heart that Mark Zuckerberg.

On a call with analysts on Wednesday after announcing Facebook's first-quarter earnings, the Facebook CEO emphasised again and again and again how focused Facebook is on "building" right now.

  • "I've always believed that in times of economic downturn the right thing to do is keep investing in building the future," he said early on. "First, when the world changes quickly, people have new needs and that means there are more new things to build."
  • "We're planning to hire at least 10,000 more people in product and engineering roles this year so we can continue building and making progress," he added later.
  • He went on: "Our financial position has allowed us to continue investing in building products and making investments ... even when the underlying economic conditions are challenging"
  • And again: "I think it's important that rather than slamming on the brakes now, as I think a lot of companies may, that it's important to keep on building and keep on investing and building for the new needs that people have."
  • And once more: "I think you really want to maintain high margins so that way when we go through periods like this, you can make sure that we remain stable and healthy and able to keep on building the things that are important for the long term."

All told, the 35-year-old billionaire chief executive mentioned building 17 times during the space of the hour-long call.

Zuckerberg's rhetoric underscores just how strong a position Facebook is in right now. While most companies are focused on just trying to stay afloat — or actively laying off workers and cutting salaries — Facebook is is ably pivoting to the crisis. It is still making billions in profit, its revenues aren't shrinking, and its workforce can be productive remotely. 

The focuses of Zuckerberg's drive to build are multitudinous: Ecommerce tools in Instagram, partnerships in India, tools for people stuck at home, video presence software, monetization features in WhatsApp, private social networks, group video chats, and more! Zuckerberg wants to build it all. 

All this construction will cost money. And Zuckerberg warned that profit margins may decline in the short term, but stressed that Facebook is committed to maintaining high margins over the long term. 

Over the coming years, the pandemic even looks likely to benefit Facebook's business— accelerating shifts to digital that benefit the company and helping revive its reputation after years of bruising scandals.

(And Zuckerberg's statements could also be read as a subtle show of unity for Andreessen, following an exhaustive investigation by The Wall Street Journal about upheaval in Facebook's board that reported that at one point Andreessen and Zuckerberg were "at each other's throats" about disagreements on the FTC settlement Facebook faced over privacy issues.)

"Our nation and our civilization were built on production, on building,"Andreessen wrote in his essay earlier this month. "Our forefathers and foremothers built roads and trains, farms and factories, then the computer, the microchip, the smartphone, and uncounted thousands of other things that we now take for granted, that are all around us, that define our lives and provide for our well-being. There is only one way to honor their legacy and to create the future we want for our own children and grandchildren, and that's to build."

Zuckerberg is now hard at work trying to build the future he wants — and because of Facebook's strength, he's in a good position to succeed.

Do you work at Facebook? Contact Business Insider reporter Rob Price via encrypted messaging app Signal (+1 650-636-6268), encrypted email (robaeprice@protonmail.com), standard email (rprice@businessinsider.com), Telegram/Wickr/WeChat (robaeprice), or Twitter DM (@robaeprice). We can keep sources anonymous. Use a non-work device to reach out. PR pitches by standard email only, please.

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Facebook lost a director to Warren Buffett's Berkshire Hathaway in March. Here are the social network's 9 board members.

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Mark Zuckerberg and Sheryl Sandberg

  • Facebook's board lost former American Express CEO Kenneth Chenault to Warren Buffett's Berkshire Hathaway in March.
  • Chenault said it was a "once-in-a-lifetime opportunity" to work with Buffett and Berkshire's other bosses.
  • Facebook has lost other directors in the past 18 months including the head of Netflix, the ex-CEO of the Bill and Melinda Gates Foundation, and a former White House chief of staff.
  • The board, however, still boasts Mark Zuckerberg, Sheryl Sandberg, Peter Thiel, and Marc Andreessen.
  • Visit Business Insider's homepage for more stories.

Facebook's board lost Kenneth Chenault, the head of General Catalyst and former American Express CEO, to Warren Buffett's Berkshire Hathaway earlier this year.

"I am stepping down from the board because I have a once-in-a-lifetime opportunity to work more closely with my friend Warren Buffett, the Berkshire Hathaway board and the management team," Chenault said in a March 13 statement.

The social network has replaced severalother directors in the past 18 months: Netflix CEO Reed Hastings; Dr. Susan Desmond-Hellmann, former CEO of the Bill and Melinda Gates Foundation; Erskine Bowles, who served as White House chief of staff under President Bill Clinton; and Jeffrey Zients, CEO of Cranemere and an economic adviser to Barack Obama during his presidency.

Facebook's board still boasts CEO Mark Zuckerberg, operating chief Sheryl Sandberg, billionaire investor Peter Thiel, and venture capitalist Marc Andreessen.

Here are its nine directors:

Mark Zuckerberg

Age: 36

Notable past and present roles: Facebook cofounder, CEO, and director (2004 - present); Facebook chairman (2012 - present); Chan Zuckerberg Initiative co-CEO (2015 - present)

Source:Facebook, Chan Zuckerberg Initiative



Sheryl Sandberg

Age: 50

Notable past and present roles: Facebook chief operating officer (2008 - present); Facebook director (2012 - present); founder of LeanIn.Org (2013 - present); Google vice president of global online sales and operations (2001 - 2008); US Treasury chief of staff (1984 - 1991)

Source:Facebook, LinkedIn



Peter Thiel

Age: 52

Notable past and present roles: Facebook director (2005 - present); Founders Fund partner (2005 - present); PayPal CEO, chairman, and president (2000 - 2002)

Source:Facebook



Marc Andreessen

Age: 48

Notable past and present roles: Facebook director (2008 - present); Andreessen Horowitz general partner (2009 - present); eBay director (2008 - 2014); Hewlett-Packard director (2009 - 2015)

Source:Facebook



Peggy Alford

Age: 48

Notable past and present roles: Facebook director (2019 - present); Paypal executive vice president of global sales (March 2020 - present); Chan Zuckerberg Initiative CFO (2017 - 2019); Paypal vice president and other senior positions (2011 - 2017)

Source:Facebook



Drew Houston

Age: 37

Notable past and present roles: Facebook director (February 2020 - present); Dropbox cofounder, CEO, and chairman (2007 - present); 

Source:Facebook



Nancy Killefer

Age: 66

Notable past and present roles: Facebook director (March 2020 - present); McKinsey & Company senior partner (1992 - 2013); US Treasury CFO and COO (1997 - 2000); Cardinal Health director (2015 - present); Avon Products director (2013-2020)

Source:Facebook



Robert Kimmitt

Age: 72

Notable past and present roles: Facebook lead independent director (2020 - present); Wilmer Cutler Pickering Hale and Dorr senior international counsel (2009 - present); US Treasury deputy secretary (2005 - 2009); Time Warner executive vice president of global public policy (2001 - 2005); Lehman Brothers managing director (1993 - 1997); US ambassador to Germany (1991 - 1993)

Source:Facebook



Tracey Travis

Age: 57

Notable past and present roles: Facebook director (March 2020 - present); Estée Lauder executive vice president and CFO (2012 - present); Ralph Lauren senior vice president and CFO (2005 - 2012); Limited Brands senior vice president (2002 - 2004)

Source:Facebook



Legendary venture capitalist Marc Andreessen schedules every part of his day, including when he sleeps, to avoid becoming a burned-out micromanager

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Marc Andreessen

"Software is eating the world,'' was the famous quote of noted entrepreneur Marc Andreessen; but software was also eating up his days in his earlier career as a startup founder and tech investor. Now he's learning to wrestle those days back into a sustainable lifestyle under his control.

The legendary venture capitalist and Netscape founder used to leave his days wide open and work on whatever needed his attention most while he was building his company and later his venture firm Andreessen Horowitz. But in a conversation with angel investor Sriram Krishnan for Krishnan's newsletter The Observer on June 13, Andreessen said that he quickly burned out and had to adjust his approach to work.

"The big thing is I've basically done a complete 180 degrees off of the model that I had from 13-14 years ago," Andreessen told Krishnan.

That model propelled one of Silicon Valley's preeminent thinkers, founders, and investors. Arguably few others have had as much influence on Silicon Valley and the technology industry writ large as Andreessen. But in the end, he had to create a regimented agenda for his daily tasks and projects to maintain a semblance of work-life balance.

"When I was younger, I didn't really have the concept of turning off," Andreessen said. "But there comes a time, a little bit with age, when your body rebels. And obviously, if you have a family, that's not great with a system where you're just always working."

Now Andreessen's program looks more along the lines of what outsiders might expect. He said he lives Monday through Friday on a highly regimented, impeccably documented schedule on his calendar. He intentionally schedules time for sleep, workouts, and even free time between meetings to ensure he isn't sitting in meetings all day long.

"Free time is critical because that's the release valve," Andreessen said. "You can work full tilt for a long time as long as you know you have actual time for yourself coming up. I find if you don't schedule enough free time, you get resentful of your own calendar."

Although Andreessen schedules his time relentlessly and sticks to it, he said he finds building in that free time provides a buffer that can allow him to deal with crises and think critically about big issues facing his portfolio companies or his firm. Executives who are similarly scheduled, but with back-to-back meetings instead, tend to lack that flexibility and can easily slip into bad habits, he said.

"Then the other thing you've probably seen is the managers who are regimented to that degree end up being micro managers," Andreessen said. "The extreme form - and I've worked with a couple of people like this - end up having a long line outside their office. The lines will stretch waaaay down the hallway with people waiting to get in and see them. It's demoralizing to work in an organization like that because basically, whatever that is, it's the opposite of delegation."

As a cofounder of a reasonably sized venture firm, Andreessen doesn't have to oversee large teams or worry about many other schedules outside his own. That helps him delegate when needed, but his task list is manageable enough that he and his assistant, Arsho Avetian, are able to handle most of it through a text-based check-in system, he said.

He adheres to a project management strategy pioneered at Apple that relies on a designated "directly responsible individual," or DRI. That individual is essentially the project manager, but the responsibilities could be narrower or wider in scope depending on the project at hand. If Andreessen is the DRI of any particular project, he said it goes on his calendar because "if it doesn't go on the calendar, it is not getting done." 

But if he's not the DRI, he adds it to a list of projects to track separately so he feels he is up to date on its progress. By checking and updating the text list weekly, he makes sure nothing falls through the cracks.

"As an example, you could have a company raising money or going through a big transaction," Andreessen said. "I don't want to hound the entrepreneur or the CEO every day necessarily but at least want to stay up-to-date on a frequent basis, right? I never want these things to just go dark where you're going 'Whatever happened to that?'"

SEE ALSO: This early-stage VC says startups should resist "toxic'' terms offered by venture investors, even if they have to give up a splashy high valuation in a funding deal

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'The clinical person is going to just slaughter the emotional person.' This is why legendary VC Marc Andreessen doesn't think investing should feel like gambling.

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marc andreessen

  • On June 13, legendary venture capitalist Marc Andreessen told angel investor Sriram Krishnan about his approach to building a firm and evaluating potential investments, for Krishnan's newsletter, The Observer Effect.
  • Andreessen said that he doesn't have the gambling gene in that he doesn't feel a dopamine rush when he gambles and wins.
  • Although many people outside venture capital have compared the practice to gambling, Andreessen said it's actually those who are detached from the emotional aspects of it that perform the best.
  • He likened his industry to poker players who make increasingly large bets on mundane outcomes, like how many blue cars show up in a parking lot, to emotionally distance themselves and gain an edge on the competition.
  • Click here for more BI Prime stories.

Venture capital is regularly compared to gambling because of its incredibly high stakes and the essentially unknown outcomes years down the line. Wall Street financiers and hedge fund managers trade quickly on publicly available knowledge. Venture capitalists go with their gut.

But one of venture capital's most prominent figures disagrees. His trade might be compared to gambling, sure, but there's a lot more to it than outsiders think.

On June 13, Marc Andreessen told angel investor Sriram Krishnan about his approach to building a firm and evaluating potential investments for Krishnan's newsletter, The Observer Effect. In that conversation, Andreessen said that he doesn't feel elated when he wins at the poker table or in the boardroom, a process that has helped him methodically approach all his investment decisions.

"Honestly, this also goes a little bit to my psychology — I actually don't have the gambling gene," Andreessen said. "I get no rush from the bet or the result. I sit down for one of those and nothing happens. My pulse chemistry is just flat. And then the mathematical part of my brain is like, well, the expected return for this exercise is negative, what the f--- am I doing? And so it becomes unfun in the first 10 seconds and then I just walk away."

Naturally, Andreessen's psychology has seeped into the culture at his firm, Andreessen Horowitz. He admitted that the team doesn't necessarily celebrate their "wins" as often as they should, but it's part of a process of objectively measuring the firm's success on the typical 10-year cycle within which most venture firms operate. 

"It's really hard to get good metaphors but it's poker, right? It's really, really, really hard to be a good poker player," Andreessen said. "And if you're kicking yourself every time you have a bad hand, the bad habits just simply happen. You just need to be able to have a system that lets you think through the process."

Andreessen's system, then, could be compared to professional poker players, although more in theory than in practice. He said that many professional poker players gamble by night, but during the day they make increasingly large bets on mundane outcomes to help soften the emotional effect of the dopamine rush most people naturally have when gambling.

"It's literally a side bet of sitting in a diner and betting on whether there are going to be more red cars than blue cars passing by," Andreessen said. "What they're doing is 'steeling' their own psychology to be able to pull the trigger on bets like that with a purely mathematical lens and with no emotion whatsoever. They're trying to steel themselves to be able to be completely clinical."

That's similar to how Andreessen sees investing, he said. It's all a set of probabilistic outcomes, and so his success or failure is nothing more than a mathematical equation that needs to be solved. 

"What they then hope for that night when they sit across the table from someone is to hope they're dealing with somebody who's super emotional. Because the clinical person is going to just slaughter the emotional person," Andreessen said.

SEE ALSO: Two CFOs from Brex and Rippling advise these financial moves for startups reopening after a shutdown. One tip: Make the office desk a perk, and work-from-home the staffers' norm

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Marc Andreessen wrote his famous 'Build' essay in one night 'fueled by rage' over PPE shortages. He wants entrepreneurs to tackle education and housing next

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Marc Andreessen is one of Silicon Valley's most notable thought leaders. Outside his success in backing major tech giants like Facebook and LinkedIn early on, the lauded venture capitalist also commands a following for his often unique perspectives on where the technology industry is heading. 

So when he told entrepreneurs it was time to build, in a now-famous essay in March, the entire Valley listened.

That essay, called"It's Time to Build," blamed America's lackluster response to the coronavirus pandemic on an inability to build for itself, and instead relying on outsourced production for necessary items like personal protective equipment. The lethal coronavirus was, at the time, mostly sweeping through US cities on the East and West coasts.

In a June 13 conversation reported in angel investor Sriram Krishnan's newsletter The Observer Effect, Andreessen revealed that the post was written in a single night as a direct response to an article he read in the Wall Street Journal that painted a dire picture of the havoc the pandemic was wreaking on population centers such as New York City.

"I decided I couldn't take anymore," Andreessen said. "I just snapped. I literally just sat down and pounded out that essay over the next four hours, fueled by rage."

Part of Andreessen's call to arms was for entrepreneurs to rebuild and reimagine elements of American society that were failing by many measures. Top of mind in March was public health and healthcare writ large, and the article that sparked his rage covered the need for local members of the public to donate spare rain ponchos to doctors as medical gowns of last resort.

Months later, the pandemic has revealed other structurally unsound parts of American society that are in need of a rebuild, Andreessen said. Particularly of concern, and therefore rife with opportunity, are housing and education.

"It's kind of the holy trinity of our modern dilemma," Andreessen said. "It's health care, it's education, and it's housing. It's the big three."

Although Andreessen's markets-first approach to systemic change has been criticized by politicians like former presidential candidate Andrew Yang, he reiterated in his conversation with Krishnan that market forces, namely increased building and competition, could help bring down the exorbitant costs of housing, healthcare, and secondary education. He said that his blog post had a positive reception on both sides of the political aisle, with praise coming from Republican Rep. Kevin McCarthy of California but also progressive Rep. Alexandria Ocasio-Cortez's former chief of staff Saikat Chakrabarti.

"Look, there are definitely a lot of conversations to be had about, like free market versus government versus this or that," Andreessen said. "But both sides know that something's wrong, they can feel it."

SEE ALSO: Legendary venture capitalist Marc Andreessen schedules every part of his day, including when he sleeps, to avoid becoming a burned-out micromanager

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Facebook hides the branded hoodies as 2021 brings the first cataclysm of Marc Andreessen's tech prophecy

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Summary List Placement

Good day, and welcome to this Wednesday's edition of the Insider Tech newsletter, where we break down the biggest news in tech.

Did someone forward this newsletter to you? Get Insider Tech straight in your inbox by subscribing here.

Soundtrack: For maximum enjoyment of this newsletter, we recommend A Tribe Called Quest's "Midnight."


This week: Facebook hides the hoodies as 2021 brings the first cataclysm of Marc Andreessen's tech prophecy

Mark Zuckerberg and Marc Andreessen

Facebook warning its employees not to wear company-branded clothing, first reported by The Information, tells you everything you need to know about the state of tech right now. 

The dream of working for Facebook — and of signalling your elite status through a snazzy company hoodie — is now a dangerous liability; something to be concealed. The immediate reason is the moves by Facebook, Twitter, and other Big Tech companies to ban Donald Trump and to snuff out Parler, the social network favored by conservatives and the far-right. Trump loyalists are not happy, and Facebook is appropriately taking steps to protect its employees from misguided individuals.

A couple things comes to mind here:

1. This is a completely different level than the tech backlash of blockaded Google shuttles and shareholder meeting protests we've seen over the past decade.

2. This was probably inevitable. 

Facebook board member Marc Andreessen declared back in 2011 that software is "eating the world." And it appears he was right. Digital technology has overtaken everything, opening up exciting new experiences, new markets, and improvements in quality of life — as well as rendering long-established business models and established rules obsolete. 

We know this will cause huge disruptions in labor markets, as automation decimates jobs and causes the extinction of entire professions.

But what's become clear in the initial days of 2021 is that the first major cataclysm of Andreessen's prophecy will not involve jobs, but rather, the idea of free speech. 

This is a much bigger issue than anything that can be resolved through changes to Section 230, or antitrust litigation. The very notion of speech is undergoing a tech-driven paradigm shift, and figuring out the right rules and principles for the new reality is going to be a process.

Will this take one year to play out? Five years? Longer?

It's impossible to say. But however long it takes, tech companies are certain to be in center of the storm. And Facebook employees will have to keep hiding their hoodies.


CES, the show must go on

Empty Plane coronavirus pandemic airplane

With all the dramatic news unfolding, you may not have noticed that Tuesday was the first day of CES, the annual consumer electronics tradeshow where a menagerie of new gadgets and doodads bask in the spotlight. 

Instead of hosting 150,000 visitors in Las Vegas, CES is doing things virtually this year. Insider is covering the show with updates on all the latest news and speeches here.

It's an unusual time for a tech show, not just because everything is happening online. The number of smartphones sold declined by nearly 9% in 2020, according to Digitimes, while the long-stagnant PC market increased by 11%— the strongest growth since 2010, per Canalys. Strange times indeed.

So what kind of gadgets are coming this year? They'll be plenty of giant flat screen TVs, connected fitness devices and work-from-home technology. But in a sign of the times, the real stars of this year's show could be smart masks and disinfecting robots.


Snapshot: How badly do you want this job?

Tech companies are famous for job interviews that include tough, "brain  teaser" questions. But one cybersecurity startup has come up with a more hands-on way to test the mettle of job applicants: an encrypted hard-drive that must be cracked.

Job applicants to Red Balloon Security receive a box in the mail with the hard drive and instructions. The drive contains 0.1337 bitcoin, or about $4,400. Crack the hard drive and you're instructed to use the bitcoin to purchase a ticket to New York City for a meeting.

Red Balloon hacker test

According to Red Balloon CEO and founder Ang Cui, the solve rate for the hacker test is around 1%. And the company regularly changes parts of the test to make sure no one shares the work online.

"If I send out 150 to 200 pounds of hard drives, I will typically get back one human team member," Cui said. "It's a worthy investment."


Recommended Readings:

EXCLUSIVE: GitHub is facing employee backlash after the firing of a Jewish employee who suggested 'Nazis are about' on the day of the US Capitol siege

Inside the spiraling culture of mistrust between Google and its employees, and how the first big tech union plans to keep Alphabet management in check

Biden's pick of Rhode Island Governor Gina Raimondo for Secretary of Commerce could be good news for Salesforce and other software companies, analysts say

See the pitch deck that landed startup Lacework $525 million in the largest investment round for a cybersecurity company in the last year


Not necessarily in tech:

How infighting and egos almost destroyed JCPenney's shot at coming out of bankruptcy alive


Thanks for reading, and if you like this newsletter, tell your friends and colleagues they can sign up here to receive it.

And as always, please reach out with rants, raves, and tips at aoreskovic@businessinsider.com

— Alexei

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Marc Andreessen is blocking journalists from hearing him on Clubhouse, and experts say he's within his rights

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Summary List Placement

For an hour or so on Monday night, it seemed like all of Silicon Valley was in the same room. They were on Clubhouse, eavesdropping on Marc Andreessen and Ben Horowitz share their career war stories and advice for startup founders.

But not everyone was allowed to enter the room.

Andreessen is well-known for blocking reporters from following him on social media. His list of blocked journalists is long and includes Kate Clark, a startup and venture capital reporter at The Information, TechMeme founder Gabe Rivera, media reporter Kerry Flynn, and tech reporters at Insider. Some journalists have joked that being blocked from seeing Andreessen's tweets is like a rite of passage.

Now it seems the early Facebook investor is preventing journalists from following him on the new rising star of the social media world, Clubhouse, the invite-only audio app.

Jessica Lessin, editor-in-chief of The Information, noticed all the reporters blocked by Andreessen when the investor spoke to Elon Musk on Clubhouse, and some said they couldn't get into the room because they were blocked, although it may be because those rooms hit capacity at 5,000 users. The conversation spilled over into livestreams on YouTube.

"To be clear, there are legitimate reasons to block people. Harassment, etc. blocking people from your friend's conversation because they report on facts for a living is not one in my opinion," Lessin tweeted in January.

Taylor Lorenz, a technology and internet culture reporter at The New York Times, has also been pointing out how Andreessen targets journalists with his blocking power.

Reporters say the downside of being blocked on Twitter is minimal. It prevents them from seeing one person's tweets.

But on Clubhouse, being blocked has ripple effects, according to Lorenz. "A block on Clubhouse from a large user can prevent you from participating in large swaths of public rooms on the app,"she tweeted earlier this month.

In her weekly column, Lessin said she worries that a lack of accountability on apps like Clubhouse means that powerful people can talk to the masses "while no one has the ability to challenge what they are saying."

Clubhouse is fast-becoming the tech industry's internet water cooler, a destination for investors and founders to talk about their work and the news. It was only a matter of time before some of their conversations leaked into the mainstream media, as the number of users listening in exploded to two million, including thousands of journalists.

The app's terms of service prevent users from recording, transcribing, or sharing information they hear in Clubhouse without first getting permission from everyone in the room, meaning it intends for people to listen only.

Read more:The unofficial story of how Clubhouse founders Paul Davison and Rohan Seth failed their way to a $1 billion app

When a person blocks a user on Clubhouse, that user is prevented from listening to or participating in any conversation, or "room," where the person is speaking. They can still access the room if they're both just listeners.

Experts say Andreessen has every legal right to block anyone from following him on Clubhouse, even journalists.

"Andreessen can block whomever we wants for whatever reason he wants — he's not a state actor," Rebecca Jeschke, media relations director of the Electronic Frontier Foundation, a civil liberties group, told Insider in an email.

The same rules do not apply to government officials. In 2019, a federal court ruled that President Donald Trump was not allowed to block people on Twitter because he uses the social media app to conduct government business. 

"The government and 'state actors' like presidents have First Amendment obligations that venture capitalists don't have," Daphne Keller, director of the Program on Platform Regulation at Stanford's Cyber Policy Center, said.

Clubhouse is a private company, and it can choose to offer a service that's available to everyone or by invitation only, Keller said. And the app's settings let users decide whether they want to make their conversation public or private.

"While I can see how this is annoying to journalists, they don't have a right to participate in that conversation, which in any case was only ever 'public' in the limited sense of being voluntarily shared by the participants," Keller said.

Read more:Legendary VCs Marc Andreessen and Ben Horowitz are now hosting a show on Clubhouse

Paul Davison, who started Clubhouse with Rohan Seth, has said the blocking feature was designed to protect the interest of the app's users, who are called "creators." He spoke with Bloomberg host Emily Chang and said:

"The reality is there are times when you're dealing with live group-audio where the wishes of the creator and anyone who started the room can be at odds with the wishes of the listener or the would-be listener," Davison said.

From the start, he said the founders decided that "if there ever was that tension we would prioritize the creator."

A spokesperson for Andreessen Horowitz declined to comment for this story.

Are you a Clubhouse insider with insight to share? Contact Melia Russell via email at mrussell@insider.com or on Signal at (603) 913-3085. Open DMs on Twitter @meliarobin.

SEE ALSO: The unofficial story of how Clubhouse founders Paul Davison and Rohan Seth failed their way to a $1 billion app

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Marc Andreessen says he found the 'silver bullet' for weight loss and has been using the drug for 40 days without side effects

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Marc Andreessen is trying to eat right in lockdown, just like millions of people around the world. The tech investor says he reads dietary guidance from experts — vegetables, good; vegetable oil, maybe bad — but it's hard keep up.

"I'm trying to do my best, but then I'm hungry all the time. You know, it's like, f---. I got to concentrate on my work, and I want to spend time with my kids, and I don't want to be hungry all the time," Andreessen said on a podcast.

Now the 6-foot-5 venture capitalist says he's found a "miracle drug" and sees it as a cure for the obesity epidemic.

On the "Lindy Talk" podcast earlier this month, Andreessen told host Paul Skallas he had been taking a version of semaglutide, a drug used to treat Type 2 diabetes, for about 40 days and that it stopped his hunger pangs.

The drug semaglutide was found in one recent study to help people with obesity lose more weight than any other medicine on the market, though it's approved by regulators for use in adults with Type 2 diabetes only.

"I've been taking this now for like 40 days, and I got to tell you, it's freaking amazing," Andreessen said on the podcast. "It's just like absolutely amazing. It just completely changes your relationship with food. You're just not hungry."

Andreessen said he was taking a brand-name version called Rybelsus, which is manufactured by Novo Nordisk and not the brand used in the study. He now gets hungry only every six to eight hours and eats about one-third of the food he would have eaten before, he said.

"Then you're full, and you're just fine. You're not jumpy. Your sleep isn't disrupted. You're not irritable. You're not even thinking about food," Andreessen said.

The drug helps curb appetite, but it can have side effects

Semaglutide can be taken orally or by injection, according to Novo Nordisk, and it works by increasing the production of insulin, a hormone produced by the pancreas that helps regulate blood sugar. Research has shown it also reduces cravings and appetite, which helps people lose weight and body fat by eating less.

The most common side effects of the drug are temporary and usually mild cases of nausea and diarrhea. About 75% of people in studies said they experienced these symptoms while taking the drug for weight loss.

Dr. Scott Butsch, the director of obesity medicine at the Cleveland Clinic, previously told Insider the side effects of semaglutide were no riskier than those of other medications for chronic illnesses like hypertension and high cholesterol. 

People who stop taking the drug regain weight, studies show

On the podcast, Andreessen did not say if he'd lost weight using semaglutide, and a spokesperson for the firm declined to comment on his use. If he has lost weight, he will probably need to continue taking the drug to keep it off, according to studies.

Research suggests people can lose a significant amount of weight using semaglutide, in combination with a healthy diet and exercise. But those benefits last only as long as they stay on the medication.

In a recent study of once-a-week injections of semaglutide, patients lost about 10% of their body weight in 20 weeks on average. They regained nearly all of it once they switched to a placebo. Another group in the study continued taking semaglutide and lost another 8% of their body weight over 48 weeks, a dramatic difference between the groups.

Andreessen: 'This might finally be the silver bullet'

Marc Andreessen Mark Zuckerberg

The prescription medication doesn't come cheap.

At the time the drug was approved for diabetes treatment, BioPharma Dive reported it cost $772 for a 30-day supply, or about $9,400 a year. The online pharmaceutical database Drugs.com says it costs $812 to $862 per 30-day supply.

Because semaglutide is labeled for use to treat Type 2 diabetes only, it is not available to the general public wishing to use it as an appetite suppressant.

That may one day change. On the "JAMA Clinical Review"podcast this week, Dr. Tom Wadden, an obesity and weight-loss researcher and an investigator on the recent studies of semaglutide, said physicians may someday prescribe semaglutide to their patients before they recommend a gastric bypass or other weight-loss surgeries.

Based on his experience, Andreessen said he expected the drug to have "dramatic uptake" when that day comes.

"I mean, we'll see. It's early, but this might finally be the silver bullet for this raging epidemic of metabolic disease that's increasingly taking over our society and our healthcare system," Andreessen said.

Are you a biohacking insider with insight to share? Contact Melia Russell via email at mrussell@insider.com or on Signal at (603) 913-3085. Open DMs on Twitter @meliarobin.

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Marc Andreessen's strange and infamous 'satire' interview was an 'experiment,' insider says

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A screenshot of an interview Marc Andreessen gave to Fisted by Foucault, a Substack newsletter.

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Last month, the author of a Substack newsletter called Fisted by Foucault landed a tech reporter's dream interview: Marc Andreessen, one of the most closely watched and powerful figures in the history of the internet.

The interview was widely shared across social media and online for two reasons: Andreessen doesn't give many press interviews, and people couldn't figure out if this one was was real or not. The venture-capital firm that bears his name has a reputation for evading the media.

But turns out, the interview and its format were an "experiment," Insider has learned.

The interview had readers confused because it used the derogative r----- and made a sexually explicit joke about a tech reporter at The New York Times, who says she's become the target of online harassment over the past year. On Twitter, some people said the interview had to be fake, because they didn't believe Andreessen would condone it.

The interviewer's real name is unknown, but they write their newsletter under the nom de plume, Niccolo Soldo.

Taylor Lorenz, The New York Times reporter, tells Insider she asked Margit Wennmachers, the head of marketing at Andreessen Horowitz, if the interview was satire. Wennmachers wrote back, "yes," which Lorenz took to mean the interview was not real.

Insider asked Wennmachers to clarify.

"The Niccolo Soldo thing was somewhat entertaining," she said on the phone. "He has a very specific format."

Soldo's introduction and questions are often laced with sarcasm or humor, while the subject's responses are candid.

"I find it fascinating as a format," Wennmachers said. "And so it was an experiment. And what is interesting to me about the experiment is that it absolutely is working for him," meaning Soldo.

The interview had more unique page views than any of his other posts, Soldo wrote in a subsequent newsletter. The author of Fisted by Foucault could not be reached for comment.

The interview also created a lot of attention for Andreessen. It got passed around more than the investor's pandemic essay, titled "It's Time to Build," Wennmachers said. In that essay, Andreessen wrote that the public health crisis had revealed cracks in society's foundation, and he called on entrepreneurs to rebuild housing, healthcare, and education.

"I did pitch it to media outlets, and no one would run it. So there's that. That was confirmation to me, it's like, no, we gotta do our own thing," Wennmachers said, referring to the firm's media strategy and its new website, Future.

The website aims to tell interesting stories about and for the tech industry, written by the firm's own partners and staff writers, as well as outside contributors. It's been in development for about a year, Wennmachers said.

Lorenz said the firm's so-called experiment with the newsletter-interview was a "misogynistic attack" on her. Soldo wrote that just the thought of Andreessen using the derogative r----- would give Lorenz "spasms of orgasmic delight."

That was in reference to an incident earlier this year when Lorenz wrote on Twitter that Andreessen used the word in a discussion on Clubhouse about the GameStop trading mania. But it was his partner, Ben Horowitz, who used the slur and only in reference to Reddit users participating in the short squeeze, who sometimes refer to themselves that way.

Lorenz quickly deleted the tweet and apologized.

She told Insider she disagrees with labeling the Andreessen interview as satire because his responses were real.

"Trolls and bad faith actors have long attempted to launder sexist, racist, and bigoted commentary as 'ironic' when faced with scrutiny," she said. "I deal with sexist harassment from these people's fans every day and it is never ironic."

Are you a venture-capital insider with insight to share? Contact Melia Russell via email at mrussell@insider.com or on Signal at (603) 913-3085. Open DMs on Twitter @meliarobin.

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Legendary VC Marc Andreessen's advice to 23-year-olds: 'Don't follow your passion'

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Marc Andreessen —  Entrepreneur Marc Andreessen speaks onstage during TechCrunch Disrupt SF 2016 at Pier 48 on September 13, 2016 in San Francisco, California.

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Marc Andreessen is one of the biggest and most successful names in tech.

He helped shape the early internet and cofounded Netscape as well as several other startups.

Through the venture capital firm he launched with Ben Horowitz, Andreessen Horowitz, he has backed a dizzying array of tech companies from Twitter and Facebook to Roblox and Clubhouse.

In a recent interview with Noah Smith, Andreessen was asked what his best advice would be to a smart 23-year-old American today.

"Don't follow your passion," he said. "Your passion is likely more dumb and useless than anything else. Your passion should be your hobby, not your work. Do it in your spare time."

The legendary VC added that young people should look for jobs in the most vibrant areas of the economy and make themselves increasingly valuable to the customers and colleagues they work with.

"It can sometimes feel that all the exciting things have already happened, that the frontier is closed, that we're at the end of technological history and there's nothing left to do but maintain what already exists," he continued. "In fact, the opposite is true."

In the early days of the COVID-19 pandemic, Andreessen wrote a widely circulated essay in which he denounced the lack of imagination and initiative that left the world vulnerable to the catastrophe.

As the world emerges from the worst of the disruption, Andreessen says there's endless opportunity to shape a better future for people.

"We're surrounding by rotting incumbents that will all need to be replaced by new technologies," he told Smith. "Let's get on it."

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Marc Andreessen, internet pioneer, says passion is 'dumb and useless.' Instead, young people should find a hot industry and find ways to contribute.

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Marc Andreessen, the former vice president of technology at Mosaic, and Jim Clark, then chairman of Mosiac and the company's founder, pose for a photo at the Monaco Yacht Show on October 27, 1994.

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Just in time for graduation season, Marc Andreessen is sharing his career advice for twenty-somethings.

"Don't follow your passion. Seriously. Don't follow your passion. Your passion is likely more dumb and useless than anything else. Your passion should be your hobby, not your work. Do it in your spare time," Andreessen wrote. 

In a Q&A interview with Bloomberg opinion writer Noah Smith for his Substack newsletter, the famed venture capitalist told young people to set aside their passions and find opportunities to work in fast-growing sectors.

"Find the hottest, most vibrant part of the economy you can and figure out how you can contribute best and most," Andreessen, a cofounder of the esteemed venture-capital firm Andreessen Horowitz, wrote in response to Smith's questions.

His advice is peculiar considering that Andreessen got rich and famous by following his own passion. At age 22, he prototyped one of the first web browsers while working on his computer science degree. After graduation, Andreessen took a job in Silicon Valley, where he met Jim Clark and they set out to bring the internet to the masses.

Now, Andreessen is using his fortunes to back the next generation of entrepreneurs, encouraging them to fight back the feeling that "all the exciting things have already happened" and "there's nothing left to do but maintain what already exists."

"This is just a failure of imagination. In fact, the opposite is true," he said. "We're surrounding by rotting incumbents that will all need to be replaced by new technologies. Let's get on it."

In other words, it's time to build.

Are you a startups insider with insight to share? Contact Melia Russell via email at mrussell@insider.com or on Signal at (603) 913-3085. Open DMs on Twitter @meliarobin.

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Marc Andreessen's last three interviews were a curious choice for one of the most powerful men in Silicon Valley

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Marc Andreessen scratches his head during a live interview with the Atlantic.

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Even as the venture capital firm that bears his name promotes its own tech publication, Marc Andreessen has suddenly done a spate of sometimes controversial interviews with others.

In recent months, he's talked to Paul Skallas, a technology lawyer whose "Lindy Talk" podcast and newsletter advocate a throwback lifestyle; Bloomberg opinion columnist Noah Smith; and an anonymous newsletter writer on Substack. That post got passed around because it used derogatory language and made fun of a New York Times tech reporter.

The spree is notable because Andreessen rarely does interviews, even though he's often lurking on Clubhouse, the audio-chat app that his venture firm has plugged hundreds of millions of dollars into.

The media blitz could reveal another side of his firm's much-talked-about marketing strategy.

"I'm sure Marc is being very deliberate in his choices," Benedict Evans, an analyst and former partner at Andreessen Horowitz, told Insider in an email. He later added, "And I'm sure he does whatever he wants."

The interviews do have a few things in common.

Two of them were by written communication where the writer sent questions to Andreessen and published his replies as written. He's not paraphrased or quoted out of context. He's also not subject to follow-up questions. And the interviewer cannot know if the answers were first combed through by Andreessen's formidable PR team.

Some people wondered if the anonymous Substack writer, using the pseudonym Niccolo Soldo, made the whole thing up. An insider, however, did tell Insider that Andreessen participated in the partly satirical interview as an "experiment."

"I think he likes to screw around with people's heads," said another former insider at Andreessen Horowitz, who spoke on a condition of anonymity. "It's not dissimilar to his seemingly random blocking and unblocking people on Twitter. It keeps people off balance, and I think he delights in that play. Just because he can, and people chatter about it."

The interviewers are curious choices, too. Skallas even opened by asking Andreessen how he heard of him. "I'm pretty underground," Skallas said. Turns out, the investor stumbled on Skallas on Twitter.

Like Skallas, Smith is an open admirer. "Marc has been a sort of hero of mine ever since I was a teenager," Smith wrote at the top of his interview.

Andreessen's choices have been noticed.

"It would be nice if Marc would deign to be interviewed by someone who challenges all these brain cells rather than pets them,"tweeted prominent tech journalist Kara Swisher.

Yet, Substack is backed by Andreessen Horowitz and the interviews may serve to boost its credibility as it tries to convince journalists to leave their newsroom jobs to start newsletters.

They also underscore the venture firm's new strategy of "going direct" to readers, meaning avoiding journalists. "No editors, no clickbait, no distortion," described a communications professional who asked not to be named to protect industry relationships.

"Once you're in a stratosphere of your own, extreme discernment of media opportunities can become an alluring strategy," said Beck Bamberger, founder of PR firm BAM Communications who often represents VCs. She puts Andreessen in the same category as Beyonce and tennis champion Naomi Osaka,"super-stars who decisively shun the media."

"And yet, the credibility, mystic, and fame of both women is ever more growing. Perhaps this is the playbook Andreessen is seeking to emulate," she said.

Andreessen Horowitz did not respond to a request for comment.

Are you an Andreessen Horowitz insider with insight to share? Contact Melia Russell via email at mrussell@insider.com or on Signal at (603) 913-3085. Open DMs on Twitter @meliarobin.

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Andreessen Horowitz raises $2.2 billion for its largest ever cryptocurrency fund

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Andreessen Horowitz (a16z) announced Thursday it is launching a $2.2 billion crypto fund to deploy more capital across blockchain and digital asset projects.

The fund, called "Crypto Fund III," is a16z's third and largest crypto venture fund.

"The size of this fund speaks to the size of the opportunity before us: crypto is not only the future of finance but, as with the internet in the early days, is poised to transform all aspects of our lives," Katie Haun and Chris Dixon, partners who will co-lead the fund, said in a blog post.

The Financial Times reported in April that the venture capital firm would be raising $1 billion for a crypto fund. After that news, several VCs told Insider that firms have been scrambling to get into crypto deals. 

A16z's first crypto-focused fund in 2018 ushered in $300 million of LP commitments.  Its second fund, which closed in April 2020, brought in about $515 million. 

One of the firm's first forays into crypto was a 2013 investment in Coinbase. This April, A16z exited Coinbase upon the cryptocurrency exchange's public debut. According to estimates, the venture capital fund made so much money on Coinbase it may have banked enough to repay its last two funds totaling $4.5 billion.

A16z is also adding a swath of new hires to the crypto team. Among them is Bill Hinman, former director of the SEC division of corporation finance, and Brent McIntosh, former Under Secretary of the Treasury for International Affairs. 






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Silicon Valley is falling in love with ads again and tech CEOs are acting weirdly

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Hello, and welcome to this week's edition of the Insider Tech newsletter, where we break down the biggest news in tech, including:

Did someone forward this newsletter to you? Sign up here.


This week: Silicon Valley is falling in love with ads ... again

Tobias Lütke shopify

The great reopening is here, and with it, the opening of the purse strings for corporate marketing dollars. 

That's good news for tech companies whose business models rely on digital advertising, like Google and Facebook. But there's a growing number of other tech companies you might not think of as advertising businesses who are looking to get in on the action. 

Shopify, the $182 billion Canadian ecommerce powerhouse, is readying a new tool to let merchants tap into its data so they can target ads to potential customers on Facebook and Google, Insider reported.

  • The tool, called Shopify Audiences, could be a first step in a broader push into advertising by Shopify that could ultimately involve selling ads on its own platform. 

And Instacart, the grocery delivery startup poised for an IPO, has been quietly building an ad business that Insider's Tom Dotan reported is on track to generate $1 billion by 2022. 

The rush to bolt on advertising business may seem counterintuitive given the well-publicized privacy changes on iPhones that make it tougher for app makers to track users and target ads at them. But those restrictions apply to the data that apps collect by tracking users on iPhones. Platforms with their own audiences can treat their data however they want. In fact, with Apple's clampdown, the demand for data from the likes of Shopify seems likely to only become more valuable.

If you're into ads, make sure to sign up for Insider Advertising, the newsletter that brings together our best scoops and reporting on the media and advertising industry. 


The summer of tech mogul weirdness

mark zuckerberg facebook

It's tough to say exactly what's driving the trend, but the captains of the tech industry have been acting ... differently, of late. Maybe it's the result of 16 months in lockdown, or maybe it's something in the Silicon Valley water. Whatever the cause, consider these recent incidents:

Who knows what to expect next as the summer heats up.


Snapshot: The $28 million chair

It looks like the kind of thing a sadistic dentist might try to strap you into, but this curious reclining chair and wraparound headrest is actually a coveted seat on Jeff Bezos' spacecraft — the Blue Origin New Shepard— scheduled for takeoff in T minus 24 days

blue origin new shepard crew capsule seat

There are six of these seats in the rocket's capsule, but only four will be filled on the first ride: One for Bezos, one for his brother Mark, and two for a pair of unidentified passengers, one of whom ponied up $28 million for the privilege of the ride. 

The seats are positioned next to giant windows so the passengers can relax and enjoy the celestial views. But the ride will be bumpy— the seats are designed to absorb some of the impact as the capsule soars more than 62 miles above sea level, with a force three times stronger than gravity that will pin the passengers to their chairs, and then plummets back down to Earth for a landing in the Texas desert.

One thing missing from the picture is a bucket, which might come in handy since first-time fliers apparently often throw-up during launch or landing. 


Quote of the week:

Ashish Toshniwal is the founder and CEO of Y Media Labs, a global digital product and design agency.

"Almost no company has the resources to combat every social issue, and while making firm stances on social issues is great, creating real change requires diving deeply into a single issue, becoming educated, and taking concrete steps to combat the problem." 

— Ashish Toshniwal, Founder and CEO of Y Media Labs, describing how his company approached the challenge of effectively using its resources to drive social change. 


You're invited: Join us Tuesday at 12 p.m ET for a virtual event presented by PwC, spotlighting the biggest trends CEOs will focus on in the next 12 months. Register here.


Recommended readings:

Amazon pays struggling employees as much as $30,000 to leave and never work at the company again, leaked documents show

Augmented reality is waiting for its 2007 iPhone moment, according to the lead investor in the AR startup bought by Snap for $500 million 

Leaked memo: Google is spinning up a new internal group focused on machine learning in a push to make 'substantial gains' in AI

We read all 323 pages of 23andMe's SPAC filing. Here are the 5 biggest obstacles it faces after its public debut.

These 10 AI startups raised the biggest Series A and B rounds of the last 2 years and are poised to boom

Andreessen Horowitz partner Martin Casado says the cost of cloud computing is a $100 billion drag on the biggest software companies, sparking a huge debate across the industry

The head of Toyota's VC arm has $300 million to spend on startups. Here's what he's looking for before he offers terms.


Not necessarily in tech:

Insider investigation reveals officials helped sell access to California public schools to Chinese elite


Thanks for reading, and if you like this newsletter, tell your friends and colleagues they can sign up here to receive it.

— Alexei

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Legendary tech VC Marc Andreessen says Warren Buffett's philosophy of putting all your eggs in one basket is the best investment advice

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The best investment advice Marc Andreessen has ever heard is from Warren Buffett, the tech legend and venture capitalist told Bloomberg's David Rubenstein in a recent interview

Berkshire Hathaway CEO Buffett, who has a net worth of about $101 billion, is famous for the strategies he has used to become one of the most successful investors of our time. One that's often quoted is this: "Keep all your eggs in one basket, but watch that basket closely." 

Andreessen thinks that is sound advice for investors. "Really know what you're doing," he said. "Really deeply understand the nature of what you're investing in."

The tech VC played a key role in creating the web browser Mosaic. Since co-founding Andreessen Horowitz, he has backed a string of tech companies, from social-media stalwarts Twitter and Facebook to audio-only chat app Clubhouse.

Buffett's approach, known as value investing, is the opposite of speculative get-rich-quick investments such as cryptocurrencies. His strategy requires investors to dive into not just the latest news, but focus on a company's fundamentals when deciding where to allocate their money. 

The billionaire investor has slammed bitcoin as a worthless delusion, called it "rat poison," and predicted digital assets will have a bad ending. But Andreessen doesn't share that view of cryptocurrencies, saying that he takes them "very seriously."

"Money is one application. There are many other applications, many other things that people are going to be able to do with this technology," he said.

Andreessen also recommended putting money into an S&P 500 Index Fund, which is said to offer good returns over time. "Don't get fancy," he warned.

For those aspiring to become successful venture capitalists, Andreessen thinks understanding people, technology, and markets in combination is key. "It's quite literally a liberal art," he said.

Read More: Founders of a VC firm in Crypto Valley lay out their 'picks and shovels' blockchain investing thesis — and 3 little-known startups to watch as the Swiss region becomes home to 11 crypto unicorns

 

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These are the 10 most respected people that built Silicon Valley's foundation

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Vinod Khosla

Vinod Khosla is the founder of Khosla Ventures, the famous VC firm that has backed Silicon Valley darlings like Square, Instacart and DoorDash.

Prior to Khosla Ventures, he cofounded Sun Microsystems, a technology company that was famously acquired by Oracle for $7.4 billion in a deal announced in 2009.

Khosla also spent nearly two decades at venture capital firm Kleiner Perkins before launching his own namesake firm.

Khosla grew up in an Indian army household and graduated from the Indian Institute of Technology (IIT) in New Delhi with a degree in electrical engineering. He came to the US to pursue a master's degree in biomedical engineering from Carnegie Mellon, and later got an MBA from Stanford University. 

 

 



John Doerr

John Doerr is chairman of Kleiner Perkins, the legendary VC firm that invested early in tech giants like Google and Amazon, and newer industry disruptors like DoorDash and Slack. Of all his investments, Doerr is probably best known for co-investing in Google in 1999.

Doerr arrived in Silicon Valley in 1975 without a job or a place to live, he wrote on his firm's website. 

"I tried to get an internship with a VC firm. And well, they all turned me down," he wrote. "One of them told me about Intel, a new chip company. So I cold-called and landed a job there just as they invented the 8-bit microchip." 

Outside of Kleiner Perkins, Doerr works with social entrepreneurs for change in public education, the climate crisis, and global poverty. He also serves on the board of the Obama Foundation and ONE.org. In 2018, he authored "Measure What Matters," a handbook for setting and achieving audacious goals.



Aileen Lee

After 13 years at Kleiner Perkins, Aileen Lee left in 2012 to pave her own way in the VC industry with her firm, Cowboy Ventures, one of the first female-led venture capital firms in Silicon Valley.

Cowboy Ventures' very first check was to Dollar Shave Club, which sold for a reported $1 billion to Unilever in 2016. Her other notable investments include Bloom Energy and Rent the Runway.

She's also co-founder of All Raise, a nonprofit focused on accelerating the success of female founders and investors.

In a 2013 blog post, Lee famously coined the term "unicorn" to describe private companies worth $1 billion or more.



Reid Hoffman

Reid Hoffman is a classic entrepreneur-turned-investor. He is best known as cofounder of LinkedIn, the professional networking site he sold to Microsoft in 2016 for $26.2 billion.

He was also a member of the so-called "PayPal Mafia," as one of its first employees working with Peter Thiel and Elon Musk to create the payment company.

Hoffman joined Greylock in 2009 to focus on early-stage investing. He is an investor in Airbnb  and is also on the board of the electric air-taxi startup Joby Aviation. Joby is preparing to go public via a merger with a SPAC that Hoffman set up with Zynga founder Mark Pincus.

 



Michael Moritz

As a partner at Sequoia Capital, Moritz has invested in companies such as Google, LinkedIn and PayPal. 

Moritz came to the US in 1976 "without actually knowing anyone,"  according to the firm's website. He eventually got his start as a journalist, working as a correspondent for Time Magazine in the San Franciso bureau.  He also wrote an early biography of Apple cofounder Steve Jobs called "The Little Kingdom." 

Although he stepped back from day-to-day operations at Sequoia in 2012 due to a medical condition, Mortiz continues to invest. In February, Mortiz and John Doerr co-lead an investment in Watershed, a software startup founded by three former Stripe employees. It was the first time the two VCs had co-lead an investment since Google in 1999.



Bill Gurley

Bill Gurley is a general partner at Benchmark Capital. Prior to Benchmark, he was a partner with Hummer Winblad Venture Partners, a software and web-focused VC firm based in San Francisco. Earlier in his career, Gurley was a Wall Street research analyst covering companies like Dell, Microsoft and Amazon.

He is best known for taking a bet on Uber in 2011 with an $11 million investment. Gurley was also on Uber's board until June 2017. His other key investments include GrubHub, Nextdoor, OpenTable, Stitch Fix, and Zillow.

In April 2020, The Wall Street Journal reported that Gurley was taking a step back from Benchmark since he was not investing from the firm's latest fund. He joined Benchmark in 1999.

 



Paul Graham

Paul Graham is best known for starting Y Combinator in 2005 with Jessica Livingston, Robert Morris, and Trevor Blackwell. Since then, YC has funded over 3,000 startups, including Airbnb, Dropbox, Stripe and Reddit.

Graham started as an entrepreneur, founding a company called Viaweb, which was acquired by Yahoo in 1998 for $49 million. He is also well known for his essays on paulgraham.com like "The Hardest Lesson for Startups to Learn" and "How to Make Wealth."

 



Peter Thiel

Peter Thiel is an entrepreneur and investor known for cofounding PayPal and leading the company as CEO. He also made the first outside investment in Facebook, where he still serves as a board director.

In recent years, Thiel cofounded data software company Palantir, which went public in September 2020.

As an investor, Thiel took early bets on LinkedIn, Yelp, and dozens of startups, many run by former colleagues who have been dubbed the "PayPal Mafia." 

In 2005, Thiel reunited with some of the members of the PayPal mafia to start the venture capital firm Founders Fund, making key investments in companies such as SpaceX and Airbnb. 

He is also the author of  "Zero to One: Notes on Startups, or How to Build the Future."



Marc Andreessen

Marc Andreessen is a cofounder and general partner at Andreessen Horowitz, commonly referred to as a16z.

Earlier in his career, Andreessen was an entrepreneur and co-created the highly influential Mosaic internet browser and co-founded Netscape, which was later sold to AOL for $4.2 billion. He also co-founded Loudcloud, which later became Opsware and was sold to Hewlett-Packard for $1.6 billion.

He currently serves on the board of a handful of a16z's portfolio companies including Applied Intuition, Carta, Dialpad, Honor, OpenGov, and Samsara. He is also on the board of Facebook.



Mary Meeker

Mary Meeker is a general partner of Bond Capital, a venture capital firm she founded in 2019. She was previously a general partner at Kleiner Perkins, where she was responsible for writing the widely read Internet Trends report. Her investments include Instacart, Spotify, Square, Airbnb, and Facebook. 

Before joining Kleiner Perkins in 2010, Meeker was managing director at Morgan Stanley, leading the firm's global technology research practice which included coverage of Google, Amazon, Microsoft and Apple. 



Marc Andreessen quoted Warren Buffett this week. The legendary venture capitalist blasted the investor's bitcoin views in 2014.

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Marc Andreessen revealed in a recent Bloomberg interview that his favorite piece of investing advice is: "Put all of your eggs in one basket and watch that basket closely." The legendary venture capitalist attributed that quote to Warren Buffett (it appears to date back to Andrew Carnegie in 1885), which is striking as Andreessen has blasted the Berkshire Hathaway CEO in the past, and Buffett doesn't exactly follow that mantra.

Buffett warned investors to avoid bitcoin in 2014, labeling it a "mirage" and describing the idea that it's inherently valuable as "just a joke." He compared the cryptocurrency to a check or money order, dismissing it as just another method of transmitting money.

Andreessen, the cofounder of Andreessen Horowitz, shrugged off Buffett's bitcoin critique as ignorant at a CoinSummit event that year. "The historical track record of old white men who don't understand technology crapping on new technology is at 100%," he said, according to his interviewer.

The venture capitalist elaborated on Twitter shortly afterward. He described Buffett as a "personal hero" of his and a "world-class expert in many areas,"CNBC reported, but he didn't value the Berkshire chief's uninformed opinion of bitcoin. 

"I know nothing about railroads," he added, likely referring to Berkshire's ownership of the BNSF Railway. "Correspondingly have no view."

Andreessen and Buffett both make concentrated wagers on businesses they like, whether it's a high-flying technology company like Facebook or Airbnb in the VC's case, or the likes of Geico and Bank of America for Buffett.

Although Buffett keeps more than 99% of his fortune in Berkshire stock, and 5 stocks make up 75% of his portfolio's value, he rejected the idea that he bets the farm on a single company during Berkshire's shareholder meeting in 2005.

"When we own Berkshire, we don't think of all our eggs being in one basket, because we have a lot of good businesses," Buffett said, underscoring the fact that Berkshire has scores of subsidiaries including See's Candies and PacifiCorp.

Still, Buffett would undoubtedly agree with Andreessen's recent recommendation of a S&P 500 index fund over something "fancy." Buffett has encouraged the vast majority of people to invest in tracker funds for years, and instructed that 90% of his estate be invested in a S&P 500 index fund for his wife upon his death.

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Silicon Valley is falling apart — force feeding us lazy and derivative tech

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In the year 2021, it's almost impossible not to be a techno-pessimist.

Silicon Valley's promises of revolutionary technological advancement just a decade ago have gone unfulfilled. No self-driving cars, just more expensive cabs. Sure, we got next-day delivery with Amazon Prime, but at the expense of our local corner store. The promise of instant connection with anyone in the world has only brought us closer to those who would do us harm. Our screen time gives us anxiety, and our eyes are getting tired.

The problem is that the way we build technology is fundamentally broken. In the old days, the government, academic researchers, and private enterprise worked symbiotically to create exciting new technology, such as Ethernet and computer operating systems. But the way we make technology has become siloed, both intellectually and financially. Researchers chase knowledge, and private enterprise chases profit. Neither collaborates to find innovative ways to solve real-world problems. And when innovation does happen, entrepreneurs live in fear their work will enter the "kill zone," where they will be clobbered or cloned by monopolistic tech giants such as Facebook, Amazon, and Google.

The result is a Silicon Valley that has become lazy and derivative, leaning almost entirely on its greatest hits. Venture capitalists give money only to startups that jump on the hottest trend, and entrepreneurs in turn are stuck trying to iterate on those trends, rather than innovating. A lot of people are running hard and fast at the same unoriginal ideas. Tech stars may talk about changing the world, but tech has always been about making money. Deep in the Valley's DNA is the soul of a '49er — a gold-rush prospector heading West for riches, digging as close as possible to the spot where someone else struck gold.

It's coming from inside the house

Our basic internet infrastructure may have held together during the coronavirus pandemic, but not even the titans of tech have been satisfied with what Silicon Valley provided us over the past year. In an April 2020 essay to everyone in particular, the venture capitalist Marc Andreessen, who cofounded the storied firm Andreessen Horowitz, wondered where all our stuff was— all the useful technology that could have helped get us through the COVID-19 calamity.

Where, he wondered, were the cities of the future? Why didn't we have the capacity to scale up the manufacturing of medical supplies? Or to create more affordable housing? Or delivery drones and supersonic aircraft?

Why, he asked, haven't we been building?

marc andreessen facebook netscape 3

It's a good question. Set aside, for the moment, that Andreessen is the man who, a decade ago, cheered that software would eat the world. Or that his latest successful ventures have all surrounded cryptocurrency — a technology that has no use case aside from speculation and crime. His sentiment is correct, and we can see it in the numbers. American productivity has ground to a halt. During the most recent tech boom, from the late 1990s to the early 2000s, annual productivity growth — a measure of how much a worker can produce an hour — hovered at about 2.5%. Since 2007, according to the Bureau of Labor Statistics, it has averaged only 1.5%. For all its success on the stock market, Silicon Valley has not been the innovation engine that we hoped it would, or that it promised.

Publicly, Silicon Valley will tell you everything is working as it should. Services like Facebook, they point out, are free, so their benefits aren't reflected in the productivity numbers. In a recent CNBC interview, the Founders Fund general partner Keith Rabois said the movement in Washington to break up Big Tech was nothing but a political fabrication. Everyone outside the nation's capital, he insisted, loves tech just the way it is.

But privately, tech leaders acknowledge something is wrong. The incentives surrounding who gets money for which idea are askew, and funding is being allocated in ways that actually stifle innovation. Some entrepreneurs acknowledge Silicon Valley's promise to save the world was always part manipulation — a way to get employees to buy in to long hours and to get consumers to overlook growing monopolization. Others will tell you the worst thing to happen to tech entrepreneurship was to become the toast of elite business schools, to be glamorized as a way to get rich, to be turned into a Hollywood production written by Aaron Sorkin.

One veteran entrepreneur told me venture capitalists didn't get docked for failing to invest in innovative, useful technology — but they would for not hitting a hype cycle. VCs that ride the latest hype cycle are more likely to get markups — follow-up investments from other VCs, at higher prices — and markups get them more cash in their funds. The Silicon Valley hoodies may not love Wall Street suits, but they do love Wall Street money, and Wall Street has never met a hype cycle it didn't love.

That means startups outside the sectors that produce hype cycles are starved for cash. According to PwC, 83% of all venture-capital investments from 1995 to 2019 went to startups dealing in life sciences or in information and communication technologies. That leaves crucial sectors, like energy, out of the mix.

Thanks to this perverse incentive structure, a lot of entrepreneurs invent (or reinvent) with an eye toward the exits. And right now those exit options are getting acquired (if a company has managed to avoid entering the kill zone, where bigger tech companies either clone or kill their product) or going public into our current super-bubbly stock market.

Before it went public, Facebook attempted to acquire Snap for $3 billion. When that didn't work it simply cloned its features. Google bought the rival navigation service Waze and then slowly started integrating its navigation features into Google Maps. Going public has never been easier for tech companies now that the stock market is in the throes of a SPAC — special-purpose acquisition company — boom. Companies that go public through a SPAC are required to offer forward-looking projections to investors, not the detailed prospectus required for an initial public offering. That works out just fine for the SPAC sponsors who collect richer fees than IPO underwriters, but it ends up rushing companies that are nowhere near ready for a public debut.

evan spiegel mark zuckerberg snap facebook

It's expensive to be this cheap

To blame Silicon Valley alone for the lack of game-changing innovation would be a mistake. America's great technological innovations of the past century were in large part born of a marriage between the public and private sectors — and the government side of that equation isn't holding up its end of the bargain either.

After World War II, Washington embraced a simple insight — that basic scientific research opened the door to the discoveries that would propel us toward the future. To promote innovation, Congress created the National Science Foundation, which directed public funds to universities and private labs, along with the Defense Department.

Those private labs included Bell Labs, which produced innovations like the transistor, the laser, and all sorts of programming languages, and Xerox's Palo Alto Research Center, which developed the computer interface as we know it and inspired a young Steve Jobs. The public funding helped sustain in-house research teams at corporations and created a direct line of communication between those asking questions about how to advance science and those asking questions about how to advance commerce.

Corporations also innovated in-house because they were scared of running afoul of the government if they simply plucked off other products from competitors. As a 2019 working paper by economists at Duke University and the University of East Anglia put it, antitrust enforcement — i.e., government crackdowns on mergers and anticompetitive copying — "convinced managers that buying other firms would be a costlier way to grow than by introducing new products derived from in-house research."

Antitrust scrutiny also forced companies to open their technology to the rest of the world. In 1969, the government sued IBM over claims it illegally maintained a monopoly on general-purpose computing. The case lasted 13 years, six of them in trial, before the Reagan administration — no friend of antitrust enforcement — dropped the case. But the scrutiny forced IBM to stop tying together its hardware and its software, a move that helped launch the independent software industry. Later antitrust moves also helped spur innovation, such as the case against Microsoft in the 1990s that cleared the way for rival web browsers and, ultimately, Google.

This successful system of innovation changed because the way Americans thought about the economy changed. In the 1980s, private industry, the government, and scholars decided the market, free of government assistance and regulation, could take care of innovation on its own. At the same time, Wall Street grew tired of big corporate research-and-development teams and encouraged CEOs to cut costs by going outside their companies to find innovation. About the same time, the government stopped pursuing any meaningful antitrust enforcement, and legal thought turned against marketplace interventions meant to drive competition.

But it turned out that the pro-market forces were wrong. Instead of driving more groundbreaking tech, the hands-off approach proved to be a disaster. In 1971, Fortune 500 companies won 41% of the R&D 100 Awards, the most prestigious honor for innovative technology. By 2006, that number had declined to just 6%.

At the same time, the Duke-University of East Anglia researchers found, corporate research dried up. From 1980 to 2006, the average company's publication of scientific research declined by 20% a decade. Most of the research came from just two firms: Microsoft and Google. Even publication at a tech giant like Apple declined relative to its sales, as major corporations began leaving R&D to the universities.

The result was a communication breakdown that made it harder to innovate. "Although specialization means universities and firms can become better at producing research and developing products respectively," the researchers wrote, "this division of innovative labor has made it more challenging for innovative research to turn into useful products."

It isn't just private enterprise that has bailed out of scientific research. According to the MIT economist John van Reenen, federal spending on R&D in 1964 was about 2% of economic output. Today it hovers at about 0.7%. "In today's dollars," he wrote, "the United States spends roughly $240 billion less per year on R&D than it did at its peak."

Research is just like any other commodity: The less you pay for, the less you get. Even a slight increase in R&D would be a game changer for American technology. "Increasing R&D investment by $100 billion," van Reenen concluded, "would represent one-half of 1% of GDP and would be transformative for the future of US innovation."

This 20-foot wide metal lens antenna which emits radio waves in a desired direction in a beam only one-tenth of a degree wide is one of the newest research developments of the Bell Telephone Laboratories, shown April 5, 1946, in Holmdel, N.J.

Back to the future

It would be nearly impossible for America to rebuild the corporate R&D juggernaut it had 40 years ago. But we can and must accept that the way the government and industries allocate money needs serious adjusting. If we can change the way we finance and build tech, perhaps we can once again create a truly novel innovation ecosystem.

Surprisingly, there is bipartisan awareness in Washington of the need for reform. Republicans and Democrats want to rein in the power of Big Tech, and that means opening the playing field to would-be rivals. It means stopping Apple and Google from using the information they collect from third-party apps to undercut their own clients. It means getting Amazon to stop treating its third-party selling "partners" like what they're actually called in-house — "internal competitors." It means getting rid of the kill zone.

Six pieces of legislation moving through Congress are designed to address such antitrust concerns. The leader of the movement, Rep. David Cicilline of Rhode Island, said he divided the reforms into six bills to make it harder for Silicon Valley's lobbyists to fight them. So far, it's worked. In June, all six bills passed through a marathon Judiciary Committee markup.

The battle has forged odd divides, even by Washington standards. It has pitted California Democrats against one another and has put the archconservative Rep. Matt Gaetz of Florida on the same side as the progressive Rep. Pramila Jayapal of Washington state. The cross-party fault lines make it almost impossible to predict how the legislation will shake out.

What is certain, though, is that the White House supports the effort. In another surprise, the Biden administration put the legal scholar Lina Khan forward as its nominee for the head of the Federal Trade Commission, which enforces antitrust laws. During her confirmation hearing, the lions once again laid down with the lambs, as eight of the committee's 12 Republicans voted with Democrats in support of her nomination.

now-FTC chair lina khan speaks during a meeting in April

Khan is something of a wunderkind. She is known in academic and policy circles for writing the definitive research paper explaining how Amazon used anticompetitive behavior to ensure its dominance. Both Amazon and Facebook argue that Khan is biased and should recuse herself from any FTC decision regarding their businesses.

They are scared, and they should be. During her first open committee meeting, she and her fellow Democrats on the FTC rescinded an Obama-era rule discouraging the commission from taking action against monopolistic behavior. Khan argued that the FTC needed more flexibility to regulate the peculiarities of our modern tech industry, so the committee untied its own hands.

Boogeymen get attention, so all-things "Lina"— yes, she's achieved first-name status among the haters — have been covered breathlessly on the business channels by distressed infotainment analysts, who are worried poor Jeff Bezos and his little trading post Amazon are being bullied by the government.

But the government isn't just showing a willingness to enforce the rules of the game; it's also showing a renewed willingness to get back in and play the game. The Senate recently passed the US Innovation and Competition Act, a $250 billion measure meant to fund tech research in an effort to counter China. With support from the White House, the bill has passed the Senate and is awaiting passage in the House — where a push from Democrats is likely to turn it into law. If that happens, it will help to revive the public side of America's innovation engine.

In his April 2020 essay, Marc Andreessen said the reason we didn't have all the nice things we deserved, like high-speed trains or hyperloops, was that we didn't want them. But that's not it. It's because we don't correctly value the innovation that created them. We want the product without the pain. We want something for nothing. Nice things are expensive, and we have not prioritized a funding mechanism that is willing to do the heavy lifting. We have not correctly valued the damage of underinvesting.

Technological advancement is worth more than Silicon Valley's incentive structure is willing to pay for it. It always has been. The rewards don't come fast enough in research — not fast enough to guarantee returns — so we need to rethink how innovation really happens if we want to reinvigorate it. It doesn't come from the lone college dropout, prospecting through science to find the golden discovery that will lead to riches. Invention is an ecosystem, one that requires support from society. It's not enough to want it. We have to want it enough to pay for it.

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