Continuing Conversation... Marc Andreessen on Venture Capital and the Digital Future

EconTalk Extra
by Amy Willis
Marc Andreessen on Venture Cap... Marc Andreessen Postmortem...

This week, Roberts spoke with famed tech entrepreneur and venture capitalist Marc Andreessen about what the future of technology holds.

Share your reactions to the prompts below in the comments, and please encourage those you know to do the same. We love to hear from you.

Continue Reading:

Check Your Understanding:

1. Andreessen suggests a two-by-two matrix might be employed to evaluate potential venture capital investment. What is included in this matrix, and what does it suggest about the best sorts of start-ups to invest in?

Going Deeper:

2. Why is Andreessen optimistic about the future of journalism? To what extent do you share in his outlook?

3. Andreessen is incredibly optimistic about the potential of bitcoin to change our lives. What is Andreessen's argument? Do you find it plausible?

Extra Credit:

4. In this 2011 episode, Tyler Cowen spoke with Roberts about why we should expect a natural slow-down in the rate of innovation- a Great Stagnation. This is in marked comparison to the optimism Andreessen exhibits in this week's episode. Why does Cowen think we've reached a "technological plateau," and why does he believe the benefits of information technology are limited to the few? Describe how you think Andreessen would reply to Cowen's thesis.

Comments and Sharing

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COMMENTS (6 to date)
Fred Kavanaugh writes:

On the question of the Bitcoin, there are two separate attributes - Bitcoin as a currency (which is a very dubious proposition) and Bitcoin as a prototype of a verification protocol and that is very very interesting. If Bitcoin fails miserably as a currency (which I think is highly probable), that will have no effect on the robust verification methods that under-gird it. The best physical analogy would be a super-efficient electric battery attached to badly designed refrigerator. The refrigerator may not sell very well, but alot of people will want to use the battery.

Matt Harmon writes:

Andreessen sees competition in the journalism sector as weeding out the unsuccessful business models. When you put that together with the increased access of the consumer base, it is possible for the remaining outlets to profit and provide a high quality of reporting. I agree with his outlook that the huge consumer base, and near unlimited access via the internet, will allow certain news outlets to flourish. Subscription services will have to grow to fund foreign correspondence work and deep investigative journalism projects. Ads won't provide enough revenue to back those investments. Meanwhile, a lot of low quality, cheap journalism (i.e. Buzzfeed lists) will continue to flourish on the back of ad revenue. It costs very little for me to sit at a cubicle and think up "Twelve signs you went to private school in the 1990s.". Hence, ad revenue will continue to encourage banal journalism while higher quality work will survive through paying subscribers.

Kate Joyner writes:

On question #1 on the 2X2, it seemed to me that Andreessen was typifying the kinds of investments where the real returns are made, useful for retrospection,but not for the purposes of a decision path at the time of the investment decision. So Google was high on 'success' and low on 'consensus,' but we can't use that criteria to evaluate a current 'Googlish' prospect. Sometimes crazy is just crazy.

Did I misunderstand?


Adam writes:

Interesting interview, especially in recalling the ancient internet days of the 90s. One thing though: the broadband victory over dial-up wasn't at all certain in 2000 when AOL merged with Time Warner.

TCI communications started provided the first local broadband service in 1995 in East Lansing, MI. I happened to live there at the time and was one of the first customers. I loved it, but those TCI service guys were out in my neighborhood on a weekly basis, trying to make the little network work.

TCI went national with @Home service a few years latter, but still had costly service problems. AT&T bought TCI cable and internet services in 1998. AT&T tried to make it a profit center for years, but never could.

AT&T sold its cable and internet operations to Comcast in 2001. Comcast somehow got the technical, management and marketing issues straightened out.

Comcast straightened out the technical, management and marketing issues the AT&T has botched. The speed and good service offered by Comcast internet led to an exodus from AOL. In 2002, the stock of AOL-Time Warner crashed after a series of bad quarterly earnings results.

Upshot: Broadband service had been around since 1995. It service was fast but quirky both technically and in terms of customer service. AT&T just didn't know what to do with it.

The big surprise: Comcast made it work, and the surprise crushed the prospects of AOL-Time Warner.

Dr. Duru writes:

I will give the extra credit a try. If I remember correctly, Cowen assumed that the superstar economy would continue unabated, generating greater divergence between the top talents and the rest of us. I think he also surmised that all the really big inventions had already occurred for now. He saw the internet as a very efficient innovation that requires a lot less people per unit of economic output. Thus, it will take some brand new, big breakthrough to generate the next phase of growth. At least Cowen did not believe we are stuck in stagnation forever.

Andreessen is much more optimistic and that I think comes from him being an entrepreneur. He sees opportunity everywhere. He LOOKS for opportunity. So, instead of the internet just creating firms that need to employ few people to create high-value products, he sees billions of people all connected to the internet and EACH doing something of value that will benefit another group of people.

I think Cowen is overly focused on institutional catalysts and Andreessen is fascinated by the potential and possibility of individuals. In other words, in Andreessen's world, the internet, smartphones in particular, have democratized innovation itself. And in THAT world, a LOT is possible, much of it we simply cannot foresee or predict sitting where we are now.

Mark Enriquez writes:

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