00:00hi this is Chris Dixon this is a 60 G
00:02podcast and today we have Brian
00:04McCullough the author of the recent
00:06awesome book which I just read called
00:08how the internet happened from Netscape
00:11thanks for being here Brian thanks for
00:12having Chris so I thought was a really
00:13fun book I guess I had lived through
00:15some of it and knew some firsthand and
00:17had heard a lot of the stories from
00:19somebody to be some of the principles or
00:20sort of secondhand I'll say first I
00:22really liked the book as far as
00:23everything I knew which I'd say maybe
00:25more than half of it or something from
00:27first secondhand it was very accurate
00:28and so I just created that I appreciate
00:32you saying that and then number two is
00:33really entertaining it was a great read
00:35I highly recommend reading it but then
00:36the third thing is you know I think it's
00:38a great resource especially for younger
00:39people who are interesting technology or
00:41I guess you know some ways everyone
00:43might be interested in Internet these
00:45days right even if they're not in the
00:46technology industry they probably should
00:47be interesting the internet I use think
00:48it's a great resource to have you know
00:50kind of this but may become the
00:51canonical kind of history of the
00:53internet for that period so the thesis
00:55was two-part I'm thinking of non tech
00:58yeah what has been more influential
01:01disruptive technology has infiltrated
01:03every facet of our life more clear than
01:05ever in the last few years I feel like
01:07anybody would want to know who did this
01:10yeah why did they do it
01:13so I was thinking number one of my
01:16parents and here's how you got a
01:17supercomputer in your pocket all that
01:18stuff but number two as we were talking
01:20about off air about 10 years ago you
01:22know I'm 40 now so I started to when I
01:25meet with young entrepreneurs and things
01:27like that they'd start to say things
01:29like oh wow you were around for the
01:30dot-com stuff what was that like yeah so
01:32now 10 years on if you're 26 you know
01:35the Internet has just always been in the
01:36ether all around so if you're a young
01:38entrepreneur entering tech today I
01:42wanted here is your industry yeah and
01:44not going all the way back to even the
01:46PC era no yeah the modern era of
01:49web-based startups a book sort of
01:52Netscape so 93 ish to I think 2007 I and
01:56with the announcement of the first
01:58iPhone yeah and and that's important I
02:00think even if you aren't someone who's
02:02interested in history per se or whatever
02:03like if you want to understand I think I
02:06would argue I assume you would agree
02:07that if you want to sort of try to print
02:09the future of your industry you should
02:10know where it came from right and they
02:12that gives you a good you know gives you
02:14pattern recognition pattern recognition
02:16but also why forget the lessons of the
02:19mistakes yeah learn from the mistakes
02:21you know why forget the things that
02:23failed when you go into the dot-com era
02:25stuff in those chapters you're seeing
02:26all the things like grocery delivery
02:28like cloud computing cloud storage and
02:31things like that that were always good
02:33ideas but seemed like the most
02:35boneheaded wrong ideas at the time
02:36because it was just too soon yeah so
02:39there's so many lessons all throughout
02:41the book of not just why did this thing
02:44work and that thing didn't but why did
02:46that thing that work then and does it
02:49work in other contexts and learning
02:51those patterns I think are the most I
02:52have this chemistry at the name of it I
02:53got it on eBay but it's a card game from
02:56like 2005 I think it was like bomb or
02:58something but it's it was a joke at the
03:00time it was course it had sort of become
03:02a joke and and it was the cards were
03:04each all of it was bad idea cards and it
03:06was like internet grocery delivery
03:08internet money it was funny because I
03:10actually wrote a blog post about this
03:11it's somewhere where it's almost like
03:13all of the companies that are sort of
03:15hot companies today in technology were
03:18these quote unquote bad ideas right
03:20which I think the lesson is hey Marc
03:23Andreessen said this like there are no
03:24bad ideas or just ideas that are too
03:25early right right I mean and you saw it
03:27all happen in that kind of primordial
03:29soup of kind ease and so that that's
03:30also there's a built-in fun narrative
03:33there which is you have the web going
03:35mainstream and so you have this sort of
03:37like Cambrian explosion of technology
03:40and companies and then the asteroid hits
03:41and the dinosaurs are dead and then the
03:44rebirth so like seeing that like so
03:46maybe that is the more important lesson
03:48than individual ideas that don't work
03:50but being in an industry that is prone
03:52to occasionally on the cycle
03:54everything's gonna blow up and so how do
03:57you and your company and your idea
03:59survive that sort of a size it's hard to
04:01describe to people who didn't live
04:03through it how the internet looked 2001
04:06to let's say for like pre-google IPO I
04:08guess and you talk about in the book
04:09before people realized like and it was
04:11you know was clear people like it was an
04:13important thing people would use it you
04:15know although nothing like today you
04:16didn't have smartphones and everything
04:17it would be more like this thing you go
04:18home you check your email like it's this
04:20nice way to send pictures to your family
04:21so it's clearly like a useful thing
04:23doesn't work but it but the assumption
04:25these things like the airline industry
04:26or something that'll just never make
04:27money right it was a cool thing cool
04:29tool we're using it but man was that a
04:32bad idea from a business perspective
04:33right there that was the sentiment and
04:35then Google I remember Google's sort of
04:36you know their IPO and then a bunch of
04:38others remember the first time you heard
04:40how much money Google was making because
04:42I remember so many people's reaction to
04:44that because that was the thing is that
04:45everyone had been conditioned to think
04:47that while the internet was fun it was
04:49probably a niche and you were never
04:50going to be able to build a truly great
04:52company on top of it and then all the
04:54sudden cuz they kept it secret for so
04:56I remember people's reactions to just
04:58their jaws dropping and I think as I
05:00recall I joined the industry and they
05:02were sort of all these other kind of
05:03green shoes you saw you know you if you
05:04were in the industry sort of wait that
05:05person yeah yeah there's suppose to be a
05:07terrible thing and they're making
05:09absolutely Flickr and delicious and
05:12they're always cool products but also
05:13there were Zappos and PayPal and a bunch
05:16of other companies we're actually still
05:17kind of going in there weren't Google
05:18but they were you know they were real
05:19businesses cos let's go through some of
05:21the chapters of the book so I think one
05:23particular interesting is in the early
05:24stage of the internet there was this
05:26kind of I think one thing people don't
05:27realize today is the kind of bottom-up
05:30decentralized architecture of the web
05:32there was an alternative to it
05:34known as the information superhighway
05:35being pushed by companies like I believe
05:38you know better Comcast Disney Microsoft
05:40well they were all planning to get
05:43together and make you know there was a
05:45million plans a million meetings and I
05:47say in the book you know Bill Gates took
05:49meetings with all and sundry from Barry
05:51Diller to whoever so the point being
05:52though that there were plenty people who
05:53just didn't believe in Internet and then
05:54among the people that it I don't think
05:56that's it okay I don't think anybody
05:58even the people that eventually became
06:01Internet true believers thought that it
06:02was good enough that's I think the less
06:05okay sorry so I guess let me rephrase it
06:07I think there was some camping people
06:09that just weren't excited by the idea of
06:10networking computer so John then there
06:13of the people that wanted to network
06:14computers globally there were people
06:16that thought the best way to do it would
06:17be in this kind of centralized way with
06:20a you know putting a big box by your TV
06:23buddy with a big fat pipe and you know
06:26and sort of a TV kind of top-down
06:28experience controlled by Comcast Disney
06:30Microsoft and then there was sort of
06:31this really kind of unlikely alternative
06:33which was this at the time pretty crappy
06:35experience in mosaic
06:37and you know homebrew websites and yahoo
06:40and you talk about this you know look
06:42but like and I think I don't know I
06:44think that was sort of the at least
06:45let's say nineteen ninety three or four
06:47probably still the underdog yeah the
06:49Saturday you know the right that
06:51approach and the fact that versus AOL
06:54and and all these other company know and
06:55the fact that end up winning like what's
06:57the lesson there it's very interesting
06:58the lesson we're almost saying it it's
07:00obvious the lesson is sometimes just
07:03good enough technology yeah is good
07:05enough so like again Bill Gates and
07:08Barry Diller all them they weren't wrong
07:09they believed that yeah broadband was
07:11gonna become so they were trying for
07:12perfect too early and rank and just good
07:15enough was baby knew it was gonna come
07:162002 they weren't wrong that's the date
07:18that barbed ends start to penetrate in
07:19things like that so they thought they
07:20had time was the key essence and they
07:23thought that okay we'll all play nicely
07:25together we'll all take our piece of the
07:26pie or whatever so it's classically out
07:28of nowhere from the bottom up like
07:30you're saying it was almost like the PC
07:31to because its hobbyists that want to do
07:34this thing so people see the early web
07:36and you know pictures are enough little
07:39postage sized videos are enough to do
07:42cool things at the beginning now then
07:45you have the crazy people that come on
07:47top of that and say can I do commerce on
07:49top of this can I build an actual
07:51business on top of this but what you
07:53need first is you need the technology to
07:55be good enough to excite a sort of like
07:58enough people to accept the limitations
08:01of the good enough technology and then
08:03if you reach a critical mass of there
08:05then you can at least build businesses
08:07off those early attack but I would also
08:09maybe I'm promoting my own view the
08:11world here too much but I would also get
08:12very important that the people that are
08:13excited in the beginning and they're
08:15also people like who are able to build
08:16website yeah and or build code or write
08:18client or do whatever like the fact a
08:20lot of them are software developers
08:21they're like the same with the early PC
08:24like you didn't just want people to use
08:25it you want people to write spreadsheets
08:27and we're processors and do all that
08:28stuff so for that we have to credit
08:29berners-lee of course because not only
08:31does the web bring sexiness to the
08:34Internet the internet had been around by
08:352530 years at that point but the
08:37pictures and the things and the cat
08:39videos like that gets normal people
08:41involved but berners-lee and hTML is so
08:44dead simple that you have to only be
08:45minimally sophisticated to be able to
08:49develop for it right so we have to give
08:51them credit him in and also the
08:53academics and other people who made dns
08:55for example like the fact that we
08:56permissionless the fact that a hobbyist
08:58and a university could be on sort of
09:00level playing field with Disney on the
09:02web right and like put up a website and
09:04so it's that sort of chicken and egg
09:06thing where people see the web for the
09:08first time in the mosaic browser because
09:09it's easy to use cuz you can get it on
09:10Windows and they say I want to create a
09:12cool thing like what I just saw and so
09:14it's easy for them to go off and create
09:16that cool thing it's right you need both
09:18sides yeah yeah I see so you need sort
09:19of the one side that kind of inspires
09:21people right and gets them fired up and
09:23you know the other side that lets them
09:24then go the obvious analogy to think of
09:26today is like VR is still yeah it's not
09:29only can you not get mainstream people
09:32to adopt it but it's still relatively
09:34difficult and you have to be super
09:35sophisticated to create yeah decent VR
09:38experiences yeah make sense okay so
09:40there's that so to me that that
09:42beginning part was really interesting
09:43the sort of top-down bottom-up battle
09:44and in fact like I think you had in the
09:46book I'd seen this before but Bill Gates
09:48his first version of his road ahead
09:50which came out in whether you 95 or
09:52something 94 ish 90 Forest didn't it
09:54barely had the web in it and then they
09:56actually revised a version suddenly had
09:59a hundred-fifty but it did have
10:00information superhighway right and so
10:03that's that's the only thing I'm not
10:04calling Bill Gates stupid at all of he
10:06had the vision he just bet on the wrong
10:09horse because he thought that it was too
10:11nerdy for normal people to adopt
10:13interesting and then you talk about a
10:15bunch of and she's obviously a sort of
10:16the canonical on it company is I guess
10:18Netscape Yahoo Google yeah yeah Amazon
10:22eBay is an interesting one because I
10:25think of the you know well they're all
10:27interesting but obviously Google and
10:29Amazon are wildly powerful companies
10:31today you know yahoo of course had it
10:33sort of fall and was kind of replaced by
10:34google I think eBay is interesting
10:36because you know there's still an
10:37important company there big company but
10:39we don't think of them as or they're not
10:40sort of Gaffa they're not the four big
10:42ones but from a product point of view I
10:44think you argue they in are some ways
10:46could be the most influential Internet
10:47company and in some ways the truest
10:49Internet and I was surprised that I
10:50discovered that in writing the chapter I
10:53knew I was gonna write about eBay but so
10:55there's three things that they do that I
10:57are you are super influential and they
11:00deserve more credit for
11:01the groundwork for this number one they
11:03teach normal people to trust faceless
11:05strangers from across the country online
11:07right when I was doing the library
11:09research for this as late as like the
11:10Christmas of 98 and 99 people are
11:13wondering if ecommerce is ever going to
11:15take off because they can't convince
11:16enough people to put their credit cards
11:17online yeah we're gonna completely
11:19through the looking-glass world how it
11:20terms of that service no but so the fact
11:22that I bei trained normal people that
11:24you can trust faceless masses we should
11:28not underestimate the people that were
11:30the training wheels for the modern
11:31digital era and so just doing something
11:33like that is key the second thing that
11:34is key is that like I said these are
11:37masses that are self-organizing yeah and
11:39so like we live in the tyranny of the
11:42five star rating system how would you
11:45BER Airbnb go down the list
11:47they created or they proved that a
11:50non-hierarchical sort of self-organized
11:53reputation system could function online
11:55maybe not perfectly but well enough to
11:58achieve scale to be good enough most of
12:01the time did he invent that or popular
12:03there must have been a concept and I'm
12:05sure a person like the user but the
12:08story is is that they certainly
12:10popularized it they certainly made it
12:11means great pyramid er did not want to
12:13have to settle the disputes between
12:14losers so he just created a system out
12:17of laziness it was like alright you can
12:19accrue reputation and if you don't
12:22defend that reputation it's gonna harm
12:24you and so that was actually one of the
12:25key reasons that they cuz Amazon came
12:27after them Yahoo auctions came you know
12:29people once they invested in that
12:31reputation system enough they're not
12:33gonna go to the other platform right so
12:35there's people in internet and then the
12:38third one is just the fact that and I do
12:40argue this may be around the edges there
12:42are others but they were the first
12:43company to succeed at our business model
12:47is just whatever our users are doing on
12:49our platform and I tell the story in the
12:51book that like just goal is the
12:53newspapers were not dumb no matter what
12:55anyone says they were kicking the tires
12:56they knew that this was a threat to
12:57their classified ads business but one of
13:00the guy says to Jeff my c-suites not
13:02gonna sign off on buying you because you
13:03don't own anything you don't own trucks
13:05you don't own factories and that's
13:06common throughout the digital era but
13:07also they couldn't wrap their minds
13:09around the fact that like you're not
13:10even taking possession of the goods all
13:12you're doing is letting people interact
13:15right and so again we're with social
13:17media be some of the most powerful
13:19valuable companies in the world don't
13:21own anything mr. sexy weather so
13:22valuable because that it turns out
13:24that's a very profitable exactly right
13:27the inventory and everything else it's
13:28funny you still see that on like Twitter
13:29people are like you know how could it be
13:31more valuable than I don't know what
13:33hurts or something they don't own things
13:34and it's like blitz net that's actually
13:36a feature not a bug from right from a
13:37hit from PNL perspective that's
13:39interesting so I guess some other and
13:41she wants a Napster that was a little
13:43bit more I mean I knew this public story
13:45I discovered what that was about while
13:49doing it because we all think Napster is
13:51about piracy it's about disruption of a
13:54media industry that that can't get with
13:55the times quick enough and was dug their
13:57heels and stubbornly but no and I got
14:00this by interviewing some of the Napster
14:02guys where they're making their case and
14:04then when you do the research you see
14:05their quotes from 1998-99 they're
14:07screaming this from the rooftops the
14:08story at Napster is today we live in a
14:12world for media of unlimited selection
14:14and instant gratification if I tell you
14:16about a TV show a movie book whatever we
14:17just did that with our phones right you
14:18know you expect to be able to pull it up
14:20in five seconds and at least sample it
14:22or probably consume it right they that's
14:26what they had yeah and had they been
14:28able to convince anyone of that in 1999
14:31it would be a completely different media
14:33landscape and the only problem that they
14:36had is you know don't pick a fight with
14:37an industry that has literal mob
14:39he's going back to its very founding
14:41days that same thing is it's sort of a
14:43three-act to me it's a three acts play
14:45right so the first act is Napster does
14:46this and everyone says they're
14:48instigating piracy and the second act is
14:50okay we shut him down we got rid of the
14:52Pirates and the third act is it turns
14:54out in a way they were right all along
14:55it wasn't about getting things for free
14:57without the convenience and Steve Jobs
14:59said the same thing but like right in
15:00the end it turns out like today that
15:02there's like a very little you know I
15:04mean there's music piracy and there's
15:06movie piracy in this video game piracy
15:07but for the most part if you make it
15:08simple enough and that's a reasonable
15:10price right that's right so it turns out
15:12we now know that their value proposition
15:13actually was as they claimed right a
15:16great a great deal of it was about
15:18convenience and not about 100 percent
15:20yeah and so you know the direct analogy
15:23is Spotify right you could have had a
15:25Spotify in 1999 or two
15:27at the very least this is again classic
15:29disruption stuff you can't convince an
15:32industry at the height yeah you know
15:341999 I think is the height and they're
15:35doing 20 billion dollars because of the
15:37CD format and that's all that classic
15:39stuff but at the same time you know
15:41there's other reasons why Napster didn't
15:42work out they couldn't attract the best
15:43talent and the legal stuff happened from
15:46day one but didn't they also get
15:48displace by like Nutella and all these
15:49are more like or what was the Khazar and
15:51yeah but like let's say that the record
15:53companies had been willing to at least
15:55play ball a little bit and do tests with
15:57them yeah as a platform right think of
15:59the counterfactual there where would if
16:01Apple launches the iPod how does that
16:03eventually gain traction
16:05other than being something that then if
16:07Napster is popularized is just you know
16:09an accessory to Napster right and then
16:12you know if that model had been proven
16:14who's to say that they wouldn't have
16:16been the ones to go because it's to the
16:18next obvious thing to video streaming
16:19and things like that so you know Netflix
16:22had the road open to them because there
16:24was no one else doing it but like there
16:25could have been a player already there
16:27that had proven success through this
16:29model and would obviously have gone into
16:31video and that then when when YouTube
16:34and Netflix came along the movie and TV
16:37folks industries had seen what happened
16:39to the music industry and we're savvy er
16:42this time right and Steph was just sort
16:44of saying let's just fight it tooth and
16:45nail maybe we can make it work for us
16:47number one they trust Google to have the
16:49math to act least take down the piracy
16:52number two Google had already proven
16:55Adwords and was making you know billions
16:57of dollars a year at these little
16:58contextual ads and so Google can come to
17:01the table with them from day one once
17:03they own YouTube and say hey there's
17:05money here do you want a piece of this
17:07so as opposed to Napster which didn't
17:09have that built out so they're they're
17:10begging the record companies to come to
17:12their platform that they're gonna build
17:13they haven't done it yet but they don't
17:15have in place any monetization so from
17:19once YouTube is under Google's wing
17:21Google has at least something it wasn't
17:23what they wanted it wasn't gonna replace
17:25their existing business models but
17:26something was better than nothing yeah
17:28so it's like Google a little bit so I
17:29think to me there's many remarkable
17:31things about Google but perhaps what the
17:32most remarkable is the business model
17:34which kind of in like the most
17:36serendipitous confluence events in
17:41create the most popular you think what
17:43one I mean they're brilliant of course
17:44and and invented all this amazing stuff
17:45but they build this incredibly valuable
17:48search engine I mean incredibly
17:49effective and useful you know the web of
17:52course explodes and use in value and
17:53broadband and smartphones and all that
17:55but then this company called overture go
17:58to originally an overture for sort of
18:00completely a little bit of orthogonal
18:02reasons invents the greatest business
18:03model of all time which happens to talk
18:05perfectly into Google's my I just gave a
18:07talk a couple weeks ago at Google yeah
18:10it posted recently and I said to them I
18:12was like I don't know how to say this
18:14here but obviously you guys your first
18:16miracle was you solve search god bless
18:17how good a function today without that
18:19you're number two miracle is that you
18:21created the greatest advertising machine
18:23ever devised by humanity but actually
18:26you didn't create you kind of stole it
18:28yeah they didn't steal it somebody else
18:30because they actually made it
18:33functionally better yeah you know that's
18:35the Google story there's no problem that
18:37they don't think that they can do by the
18:38Quality Score stuff right exactly yeah
18:40right so and they had it they had great
18:42like go to did never have great organic
18:43results they just resolved it was just a
18:45code sure pay-for-play thing it was like
18:48for people today it's like just the SEM
18:49without the SEO exactly it's just the
18:51right rail without the left and then
18:53like that that original model because
18:55again I built one of my first companies
18:57man too early on Adwords so imagine this
19:00perfect three-sided market were as an
19:01advertiser I'm paying less per click if
19:04my ad is more relevant because I
19:06remember like I used to be paying two
19:08dollars or whatever over on go to and
19:09all the sudden I'm paying thirty percent
19:11so click because my ad is better and as
19:13it gets better it goes down the Google's
19:15making more money because they know that
19:17someone might be bidding a dollar but
19:19only be clicked on a certain amount of
19:20times if you bid five cents but get
19:22clicked on thirty times we make more
19:23money and they did those they did that
19:26actual a be testing where it's like the
19:28users actually preferred the ads because
19:30if the organic results are good yeah
19:33maybe these paid results also might have
19:35some benefit you know for certain use
19:38cases so people actually searched more
19:40once they put the ads up so it's the
19:42perfect three cent market where it's
19:43win-win-win well the other so it's
19:45fascinating right is all of the pressure
19:46at the time was around so that everyone
19:48thought the only possible business model
19:50for search was sort of the portal model
19:52you know banner ad and surrounded by
19:54celebrity news and also it's the classic
19:56eyeballs attention yeah and so and so
19:58there was all these famous stories I
19:59think it was was an excitement or spell
20:01or something like that where you know
20:03and I'm not taking I don't not
20:05criticizing these executives at all
20:06because like that was the business model
20:08time but they know the thing was I don't
20:09want a search engine that's too good
20:10they get him off my site because that
20:12destroys my business model so like the
20:14other brilliant thing that Larry and
20:15Sergey did right beyond everything else
20:16was stick to their principles with kind
20:20of crazily right with no business model
20:22at all in sight as I point out and I'm
20:24going to go against the entire industry
20:26and we're gonna just bet that a business
20:27model will come along that's going to
20:29work yeah everyone says it's not going
20:30to their investors have said publicly
20:32that we were starting to get a little
20:34itchy like like are you guys ever gonna
20:37they had this whole real crazy today but
20:39they had a real effort to do they were
20:40gonna sell Google box right for this
20:42enterprise surge because everyone knew
20:44consumer had no business model right and
20:45there's like birds there's a great
20:48business we got openly 2000 like you
20:49know awesome search engine how will they
20:51ever make money you know he's like pipe
20:52dream Silicon Valley things and they
20:54literally it was like a little cell box
20:56it's a hundred thousand dollars you put
20:57in your data center it collects your
20:58corporate document or still
20:59manufacturing those as recently as two
21:01years ago is that right I think they
21:03only recently shut that business day
21:04probably feel bad because I bought them
21:06and you have to support it I don't know
21:07how many ways so that's an amazing story
21:10I don't know what you tell me you like
21:13what other I mean there's a whole bunch
21:14of great stories and I yeah I mean I I
21:16fought hard as we said to preserve the
21:19stories of the dot-com bubble because I
21:20think for our industry it's key to
21:23remember so like the bat you mean the
21:25bad side of the bubble let's talk about
21:27that so sure you talk about just the
21:28froth and the bad companies and that the
21:31whole kind of hysteria yeah and and so
21:34part of it is excusable by the fact that
21:36you know any any new technology is a lot
21:39of entrepreneurs feeling around in the
21:40dark to see what actually works yeah but
21:43this was more so than most because no
21:44one knows anything no one knows if you
21:46can successfully do commerce on the on
21:49the Internet at the beginning no one
21:50knows like I think if it is like you're
21:52so you're so you're searching on more
21:54degrees of freedom than normally
21:55normally you're looking for like what's
21:56good here you're just trying to figure
21:57what's a good product what's a good
21:59which is model what's it like it just so
22:00much was unknown you invent the internal
22:02combustion engine you have a
22:03good idea you're eventually gonna move
22:04people and goods right but no one even
22:08knows it's like that that analogy of the
22:10elephant like you're looking at the
22:11somebody sees a tail somebody sees a
22:13toad like no one really knows what
22:15they're looking at him so I don't a lot
22:18of the fun excess and things like that
22:20I don't blame the people involved at all
22:22because no one knew and anybody that
22:24tells you from that time oh well we were
22:26successful because we up no come on it
22:28was just random chance in a lot of cases
22:31proven out by the fact that the vast
22:33majority of them were ecommerce plays
22:35right I think the way you described in
22:36your book is so you sort of have I don't
22:38remember the years exactly but like 95
22:40ish you have some like high quality
22:42companies 96 it's more of that at some
22:44point maybe 90 98 is you get cynical at
22:47some point you do get the sort of the
22:49hucksters and the cynicism and just like
22:51pure you know this plans IPO and so I
22:54think I think there's like there's the
22:57great companies that survived there's
22:59the really well-intentioned good ideas
23:01that just didn't happen to make it and
23:02then at some point there is this sort of
23:04cynical because the VC's in their number
23:07one where they're like we don't have to
23:08back a successful you know because all
23:10we got to do is get it out the door and
23:11get it public right well and the way
23:13capitalism works is like maybe they're
23:15VC I assume there were VCS who were
23:17really trying hard to find companies
23:19that would really work long-term but
23:21eventually if they just if their
23:22neighbor is doing the cynical strategy
23:23on winning the you know greater fool
23:27like can I can I get out while the
23:30getting's good before those guys get out
23:31while the getting's good but also then
23:33you know it's not just the VCS because
23:35Wall Street had so much and not just
23:37Wall Street itself but like as I point
23:39out in the book like this is
23:40historically these are the baby boomers
23:43reaching their peak earning years and
23:45they're gonna that money had to go
23:47somewhere so almost independent of the
23:49internet you would have had some right
23:51you would have had some it was it was it
23:52was ripe you're a first Maggie may hire
23:54the journalist from Barron's in the book
23:56I quote her she said something like yeah
23:59if someone would have had to invent this
24:00it was the froth on the cappuccino of
24:02the the longest bull market in history
24:04yeah yeah well back to 82 so yeah well
24:06the sucker gets more about the say that
24:08kind of the frothy sort of craziness
24:10there right so many times in this book
24:12so many of the ideas that seemed dumb at
24:16prove out later because they were just
24:18too soon there was a startup I think
24:20they might have been public in the late
24:2390s called myspace but it wasn't the
24:26social network MySpace it was literally
24:28you would put on your desk okay
24:31store your files in the cloud right but
24:33you know this is in the area of dial-up
24:36Wi-Fi doesn't have there were so many
24:38things one of the most notorious calm
24:42era flameouts is Webvan which is grossly
24:45delivery right the story of the the pets
24:48calm and all of there was there were
24:50four to five major pets ecommerce plays
24:53and they couldn't find ways to
24:55economically ship dog food now again
24:59that's a classic story but obviously
25:02that's a problem that's been solved now
25:03so in a way this is always true again in
25:07tech but any technology like there are
25:09ideas that'll always be bad ideas and
25:10then there are ideas that are only bad
25:12ideas because of certain the
25:15technology's not there yet the markets
25:16not there yet the public's not there yet
25:18so there's a lot of those stories in the
25:20book and I wanted to preserve that I
25:22wanted to also show even ideas or people
25:26that swing and miss in certain eras why
25:28do they come back what are the lessons
25:29that cuz it's not like well yeah boy
25:33what are some good examples are frankly
25:35things like the on-demand delivery stuff
25:38so because there was Cosmo here in the
25:40other using the car okay I theta this
25:41very same people who saying just trying
25:43this well I mean I'd have to think about
25:45it but there are Park being a perfect
25:47example you know but the idea that you
25:50wouldn't hunker down and wait on your
25:53idea to no one knew at the time you
25:55needed smartphones to get the on-demand
25:57delivery a piece of the puzzle to work
25:59but it's not like people hunkered down
26:01and waited a lot of the people went into
26:04in different directions the people that
26:05were successful like the a lot of the
26:07people that founded PayPal you know came
26:10from other dot-com stuff that they
26:12either flipped and sold or IPO or
26:14whatever but then they didn't keep going
26:16with those original either ecommerce
26:19players or whatever it wasn't that they
26:20did like what was zip - it was like a
26:22directory or something like that they
26:24went in a different direction so like I
26:26wanted to track like that sort of
26:28development on the specific
26:29personal story level to where do you
26:31think so news switching gears here a
26:33little bit but like do you where do you
26:35think we are when you write that you
26:36must have thought a lot about this I
26:37assume when you're at the book like so
26:38you read about that era and then you can
26:40imagine a follow-up book from 2007
26:43called a smartphone your eyes right zoom
26:46where do you think we are now like do
26:48you think this is the internet and now I
26:50mean obviously it'll get better and
26:51improved but like that was sort of it in
26:53the same way that like well you wrote a
26:54book about the automobile industry right
26:56you'd write about you sort of the
26:57equivalent of your book would be
26:58covering I don't know what 1901 right
27:001915 or something right yeah then after
27:02that okay you get more makes and models
27:04than they get faster and this and that
27:06but fundamentally right I don't know
27:08maybe not maybe in the automobile and so
27:10you could argue that stage two was about
27:11building suburbs and trucking companies
27:13and you know so that would be sort of
27:14still history where are we I just I
27:16always think about this I don't know the
27:17answer where are we in a hundred years
27:19story if I'm being honest where we are
27:21right now today my original answer was
27:23gonna be almost what you're saying is
27:24that we're sort of in a law okay so I
27:26said like you know the original khamir
27:29is this Cambrian explosion that tended
27:31to have sort of a flavor towards
27:33Commerce and then in the web 2.0 era you
27:36have this more here comes everybody's
27:39sort of thing where the web and and and
27:41technology itself becomes more
27:43bi-directional where people aren't just
27:45passively consumed points Clay Shirky
27:48phrase which is sort of this idea of
27:50like Wikipedia and Facebook whatever
27:51just sort of this by direction but just
27:53by just turning the knob a little bit
27:55that shades into social right I am and
27:57then when mobile mobile is essentially
27:59arise at the same time that social goes
28:02mainstream and it is serendipitously the
28:05perfect consumption and crucially
28:07creation device for social right so
28:10would social have got as far as it had
28:12had the iPhone not arrived at the exact
28:15same moment it's within the same 18
28:17month period that Facebook opens open
28:19registration and the iPhone is released
28:21and things like that but I think that
28:22that's a crucial thing to remember is
28:24that it's not just the perfect
28:25consumption device it's the key device
28:28for actually creating all that social
28:30stuff back to your original question I
28:32actually think we're in a law right now
28:34if I'm being honest yeah that remember
28:36what it was like you know as late as
28:38even 2012 where it was like every couple
28:41of days you'd be like what's this new
28:43do I have to be on this do I have to try
28:46this do I need this gadget or whatever
28:48and you know aside from all of the other
28:51you know things about tech right now and
28:54people may be feeling bad about the tech
28:56industry generally I also think that
28:58what's not helped is that there hasn't
29:00been that new wow factor and and I don't
29:03know what that is are we in a lull or is
29:06the internet like TV and now we have CBS
29:09NBC name is that a symptom of maturity
29:12and then it's just yeah or is it I guess
29:14so I agree we're in a wall now but I and
29:17I personally able to say I'm my own bias
29:19be it's a law and it will general or
29:22whatever right but another argument you
29:24know I think if you read a two moves
29:26book mass spectacle master switch it's
29:29really good book he but he basically
29:31argues is just sort of the all all forms
29:33of media get mature you have four big
29:35incumbents and then you've got the
29:36government either breaks them up or
29:37doesn't like is that is that where we
29:39are or I think so for at least the
29:41existing players but I think the other
29:42thing where we are right now is software
29:45technology have a different dynamic I
29:47guess that's what I'm you know what I'm
29:49getting get sort of I'm sort of hinting
29:50at my view which is I think software is
29:52a little different than we you know in
29:53that way bit because this is more what I
29:54on my daily podcast that I've been
29:56talking about a lot lately is that
29:58another symptom of what we have right
30:00now is that there was a lot of low
30:02hanging fruit picked like when mobile
30:05takes off you can be a 16 person team
30:08code up a new better at slightly
30:10different chat chat app and have a
30:12billion users so we were in this great
30:15period of a decade the better part of a
30:17decade where everybody can chase a
30:19billion users right well most of those
30:22categories have been filled I mean
30:23arguably anyone could come around
30:24tomorrow and do something slightly
30:26differently and and take over anybody's
30:29place in any of these but because all
30:32anyone was chasing was scale all that
30:35mattered was getting to that scale and I
30:38think that what we're waiting for now is
30:40that it is sort of like the market where
30:42it was just the Model T and you could
30:43only get it in black and there was only
30:45what we need to see this next generation
30:47develop is that it's it's about not just
30:51the quantity or not about the scale it's
30:53about the quality like the way that
30:55you'll differentiate and become the new
30:57and become the new what I'm using mostly
31:00chat apps right now as the example but
31:02is to provide a qualitatively better
31:04experience and I actually think that
31:06that will create more interesting
31:08startups because it's not just you show
31:10up here plant your flag in this market
31:12and reach a billion users if you're
31:14gonna reach a billion users now you have
31:15to offer something qualitatively
31:17different than what other people are
31:18doing yeah I guess the question I have
31:20is so that I think the historical
31:22pattern in tech has been sort of this
31:24interaction between what's called
31:26infrastructures we call platform does
31:27anybody infrastructure in applications
31:29yeah it's an infrastructure in my mind
31:31is computers the internet right it's
31:33sort of you know broadband smartphones
31:35applications are the word processor
31:40you know websites Instagram things like
31:43that right and I think you know you
31:45mentioned a low hanging fruit what
31:46happened right there was the iPhone was
31:47this major new unlock kind of for a new
31:50wave of infrastructure right so then and
31:52then and people something have this
31:53you're holding in your hand you got a
31:54camera you've got this awesome screen
31:56what am I gonna do with it you're
31:57sitting there looking for apps you don't
31:59have that many on your screen you know
32:00it's saturated right and so then and I
32:02think the history has been that you the
32:05the loll is due to the fact that now you
32:08know the iPhone is 2007 the App Store
32:092008 or ten years into this cycle right
32:12and so it's sort of people have
32:14entrepreneurs have picked off all the
32:16low-hanging applications and but then
32:18but then either we're at the end of
32:19history or something new comes along I
32:21don't know you know we have all these
32:22candidates and maybe it's a new kind of
32:24device maybe it's car they BTR maybe
32:26it's blockchain maybe it's machine
32:28learning stuff maybe it's whatever I
32:30don't know what it is and and that thing
32:33then creates a new piece of
32:35infrastructure that unlocks ten years of
32:38innovation or worth the end of history
32:39we're not at the end of history because
32:41what I think another thing and I'm not
32:43blaming entrepreneurs for this but
32:46people are still doing the same playbook
32:48that people have been doing since 2004
32:51since the first time that you could
32:52achieve a billion users with a product
32:55right and so what what I'm saying is is
32:58what maybe we're also waiting on is for
33:01that next generation to come up behind
33:04and be like well we're doing it this way
33:06because this is the way it makes sense
33:08to us as opposed to maybe
33:11especially these last couple years
33:12people are still trying to hit from the
33:14same playbook and that's not what
33:16happened because you saying less a new
33:18piece of infrastructure and more just a
33:20new kind of cultural shift and I'll tell
33:22you why because think about it like when
33:23we were talking about when the.com
33:24bubble bursts and like well people think
33:26it's a fad and this is over but the
33:28people that still believe that they
33:29people were still using it they were
33:31still using it to do cool stuff right
33:33and so they weren't trying to it's not
33:36like everyone because they had the
33:38example of the whole calm thing blowing
33:40up so they weren't gonna do that
33:42playbook that PlayBook was dead and over
33:44so they were freed to go off and do
33:47crazy ideas right so it's almost like
33:49we're being held back by the fact that
33:51we have been so successful in tech and
33:53tech has taken over the world and so
33:56people are trying to follow that model
33:59that has been so successful for
34:00everybody else it would almost be useful
34:02if we had a couple blow ups so that
34:05people would be freed up to think
34:06differently and also crucially be brave
34:09enough because again when Flickr gets
34:11started like it's no other it like this
34:13is cool like I can I want to find all
34:15photos of the Grand Canyon and users
34:17will do this for us with taxonomy z' and
34:19tagging and like so like and then we'll
34:21find the business model later whereas
34:22everybody is still again trying to play
34:24from that Instagram and get to a billion
34:27users and get to scale playbook I think
34:30what probably will happen is some some
34:33you sort of have these archetype
34:35companies come up who show a new
34:37playbook right so then you mentioned
34:38Flickr and those and delicious and those
34:40things in the kind of web to Euro and we
34:43were talking earlier about eBay they
34:44kind of paved the way for a lot of that
34:45stuff I think there's finish like right
34:48now at least what I'm seeing in the
34:49industry is there's a lot of stuff
34:51happening on in enterprise software so
34:54if you kind of think about one way to
34:56interpret the current internet like ear
34:58of the Internet is it's actually a
35:00corporate slash enterprise of your right
35:03my biases towards consumers so I'll say
35:06so just an ad that I - - but I but I
35:08work at a firm does both and I seem to
35:10see this stuff happening I'm the you
35:13know if you just think about your
35:13typical experience of a corporate worker
35:15in 2018 you go to the office and maybe
35:19you're using Windows 95 and you know
35:23know what energy RP software bunch of
35:26other stuff and then you go home and
35:27you're using this like you know retina
35:29iPad and Gmail and Facebook it's it's a
35:32very you know it's like a little like a
35:34time travel experience right like you
35:35know the software the work feels like 10
35:37years ago so I want interpretation I
35:39think is what happening right now is
35:40we're just upgrading all that stuff and
35:41that's how that's quote unquote SAS and
35:43all these other kinds of things going on
35:44and it is a lot of successful companies
35:45there can I pose a question that
35:47literally I'm posing this to you because
35:49I wonder if structurally this is another
35:51thing when you had web 2.0 flour
35:54Microsoft had already had the antitrust
35:56thing so they're not gonna buy anybody
35:58right the dot-com bubble had happened so
36:01it had cleared the slate so there was
36:03this decade-long period for the
36:05Facebook's and everybody to surface and
36:07no one's gonna take them out so I'm
36:09almost asking you like mean there's
36:10Yahoo's drawing a little but yeah a
36:12little bit but not in not in the way
36:14that Microsoft could have Microsoft
36:16could still have bought Amazon when it
36:18was a $5 stock and like that
36:20so maybe are we structurally in a
36:23situation where the danger is is that
36:25because the big players at the top are
36:28so big and all they do is every time
36:30there's a new crop coming through they
36:33just pick them up incorporate them and
36:35turn them into a feature of their
36:36existing products Instagram story
36:38snapchat would be the most they didn't
36:39have to buy them in that case right they
36:40just that's that's the counter even is
36:42the distribute on the consumer side so
36:44if we're a distribution is so strong
36:46that even let you have that great idea
36:48now now they're also but there are
36:49limits of this right like there's only
36:50so many times Facebook can add keep
36:51adding features to without like the
36:54thing becoming you know that like so
36:57then if Flickr comes around today that
37:00would just be you know it's the most
37:01obvious example tagging photos but that
37:03would just be something that would be
37:04immediately scooped up and incorporated
37:06into someone's existing product so like
37:08are we in the law because we almost got
37:10lucky 15 years ago that we had this
37:12period where everyone could rise up and
37:14no one knee caps them I mean I think
37:18that like look at snap stamp that's a
37:19good example right that was I mean you
37:22know they really invented sort of a new
37:24media type right I mean that type of you
37:26know whatever the vertical the vertical
37:28short video with stuff like it's a brand
37:30new idea and just the way that the
37:31ephemeral messaging and all you know
37:33it's probably on par with things like
37:35Flickr and sort of there
37:36novelty and then you know and they're
37:38still very successful company and
37:39they're publicly traded and you know but
37:41I think their growth most people would
37:42agree was severely limited by the fact
37:44that all the ideas propagated so quickly
37:46and particularly companies like Facebook
37:48have gotten very good at execution and
37:51leveraging their massive distribution
37:53right well and am looking Amazon to like
37:54you have some great new you know Etsy
37:56comes along and then Amazon launches a
37:58well some but Amazon homemade or
38:01whatever you know in cigar comes along
38:02and they launch it you know so there and
38:03they just take a measure their scale and
38:04Amazon Prime and just all these other
38:06things and I'm also almost saying it at
38:08the level of like if you if you're a
38:10company that can has the luxury of
38:12staying independent then you have to
38:15find if you have one good feature idea
38:17or one good product idea but it's not an
38:20actually a good business you have to
38:21bust your butt to make that happen
38:23versus if you're in an environment where
38:25you have one good feature and someone's
38:28gonna acquire you just to add that
38:29feature to their set then you don't have
38:32to do the work of actually evolving that
38:35feature before it can be kind of a good
38:36business my partner Alex crimp else I'm
38:39gonna butcher the phrase but it's
38:40something like startups try to find
38:41distribution for their innovation faster
38:44than the incumbents attach innovation to
38:46their district right or something
38:47something like that right so it sort of
38:48a race but any OS uses like TiVo is an
38:50example like great idea yeah but you're
38:52competing is Comcast right and like you
38:54know it of course it'll take Comcast
38:55five years to add this feature because
38:57there's not very good at adding new
38:59features but their Comcast and they've
39:00got whatever X hun tens of millions of
39:02households and eventually they add the
39:04TiVo feature and you know what I mean or
39:06can TiVo leverage that or like Netflix
39:08is probably the one of the most
39:09interesting ones today right because
39:10it's you know a lot of people would have
39:13bet against that people did been against
39:15it the idea that they would be able to
39:16add on you know get to 200 million
39:19people before the people with 200
39:22million people would figure out that
39:23like people want I always on stream and
39:25everything else right I sort of think of
39:27it as like hey the enterprise consumer
39:28think that said there's always new
39:29interesting stuff popping up and and I
39:32think there's always this kind of search
39:33on the periphery I personally out where
39:35I enjoy spending my time is on the
39:36periphery on the you know virtual
39:39reality and crypto and all these other
39:40kinds of things like there's always
39:41these peripherals and those I think
39:44sometimes you know especially if you get
39:46a lot of developers fired up it can
39:48surprise you in the raid
39:49which they improve and I think at some
39:51point I don't know when it'll be but I
39:52think at some point there will be kind
39:54of a new set of infrastructure that
39:57unlocks new capabilities and then we go
39:59back to that kind of low-hanging fruit
40:00mode you describe one of the key things
40:02to look for and go back to the PC era of
40:05the homebrew Computer Club yeah go back
40:06to when the internet gets started and
40:08people are just doing it because they
40:09want to make cool websites go back to
40:10when the dot-com always look for the
40:12people that are doing this even though
40:15they don't think there there's a
40:16reasonable expectation okay like but
40:19they're so passionate about it like the
40:21the PC industry was literally created by
40:23hobbyists and so like you should be
40:26looking in those spaces today even as
40:28weird as those spaces might look right
40:30now and you know even think of things
40:32like eSports and things like that that
40:33obviously are becoming very successful
40:36spaces right now but like that's where
40:37you need to look is where you on the
40:40developer side but even literally on the
40:41hobbyist side where are the people doing
40:43these things so passionately that they
40:46know it doesn't even occur to them it
40:47could be a business or an industry like
40:48that's where the next day I like to
40:49think of it as as when one I I was I had
40:53one time I was thinking about this like
40:55why is it that so many interesting tech
40:56things come from hobbies and at one
40:59model is just one model I'd propose
41:00which is think about the things in life
41:03that operate on a two to three year time
41:06horizon versus the things that operate
41:07on tenure okay so most businesses you go
41:10to your work 9:00 to 5:00 and almost
41:11every normal business maybe a few
41:13outliers here and there they operate on
41:15sort of they managed to you know
41:17quarterly or yearly cycle right and
41:19maybe they'll invest into two to three
41:21year things or something
41:22who in the world invests at a ten year
41:24cycle right I would say it's maybe
41:25academics maybe like things like DARPA
41:28government and then it's an hobbyist
41:31frankly right cuz the hobbyist don't
41:32care if they're doing it for love
41:33they're doing it you know cuz it's just
41:35cool right right you see like people and
41:36whatever the homebrew Computer Club they
41:39weren't thinking of what's the ROI on
41:40this for the next two years program a
41:42machine of their own that's it yeah but
41:44in some ways I think there's so I would
41:46argue there's a deeper truth to the
41:47hobbyist thing it's not just I mean
41:49there's what's what you said there's the
41:50passion there's a smart people but it's
41:52also they're they're people that are
41:54investing on a longer time horizon and
41:55that's a very that's a very important
41:57it's it's sort of a rare thing I think
41:59in generally in the way
42:01Capital sort of most corporations are
42:03designed today they just simply aren't
42:05designed to operate at that time scale
42:07right that gets back to my theory of why
42:09we're in a loll is that again people are
42:12doing the same playbook and like you
42:15need to you need to that generation to
42:17come it could just be a generation a
42:19generation like we need that turnover of
42:21people who see things in a different way
42:23exactly exactly just maybe and maybe
42:24they have to sometimes sort of forget at
42:26least recent history and sort of you
42:28know not or not be acculturated into a
42:30certain way of thinking of what and
42:32again that almost makes me think that it
42:34was so it's so beneficial to have a
42:37cleansing a calling of the herd
42:39sometimes to to blow up the old models
42:44and blow up literally the old incumbents
42:46because then that's the only way that
42:48people like what we're talking about is
42:50people that are crazy enough to be like
42:51well we're gonna do it this way yeah and
42:53then well but that turns out to be the
42:55way that works in this new era and so
42:57it's harder now because it has been so
43:00successful that you have a framework
43:01where like it almost looks dumb to do
43:05things any other way right now and
43:07there's no incentive to do it yeah so
43:09like last question I guess what we're
43:11were there a couple things that you you
43:14you obviously know a lot about the
43:15history of Technology or do I assume
43:17already you know before the write in the
43:19book what were some of the most
43:21surprising things you learned writing
43:23the book or most interesting things how
43:24much it always is people feeling around
43:28in the dark faking it until they make it
43:30you know and again you didn't so that
43:33was I mean so if you're an entrepreneur
43:36you know that that's the truth always
43:37and so that even though the book becomes
43:39the story of these were the guys that
43:42like I was always looking for the thing
43:44like you know I'd see like what's the
43:47secret what did they do that was my
43:48theory is that because we know Bezos is
43:51so analytical right yeah so what had it
43:53all mapped and we know all that no no we
43:55know the reason that he started with
43:57books he did all the ant he did all the
43:59okay this is our but he was proving it
44:02he did not necessarily believe himself
44:05that the Commerce was better in a
44:09virtual environment but once he proved
44:12it so like run starting with
44:14and running Amazon was almost like this
44:16test that he was running to himself and
44:20then because we see as soon as books
44:22proves it then that's when
44:24pedal-to-the-metal get big fast so even
44:27in the case of arguably the most
44:29successful entrepreneur of this
44:31generation I think he did not you know
44:34quit Wall Street get in the car no
44:36matter what he says there's the hey
44:38geography on that around and he knew
44:40from day one I've gotta have it in
44:41everything store I think he thought
44:43there could be in everything store but
44:45he was running the test mhm and then
44:47once he proved it to himself then he
44:50went whole hog and then you know other
44:53things like again with like social media
44:56things like this like who
44:57how long did all of us think okay this
45:00is a great thing but is there a great
45:02business here behind this do you know
45:03what I mean so like it's almost the
45:05feeling around the dark even when you've
45:07got a provably great idea yeah like
45:10fitting that to a provably great
45:12business MA you know so it's it's I
45:15think it didn't maybe it didn't surprise
45:17me that but I I want people to see that
45:20in the book that it's it's not at just a
45:23story of like these are the geniuses
45:24that one like why did they win and guess
45:28what in almost every single case you
45:29know the whole Facebook chapter is about
45:31Zuckerberg almost it's requiring people
45:34to tell him know you've got the great
45:36idea here running a wire even even like
45:41when my facebook was sort of taking off
45:43yeah but he had wire hog which was just
45:44total separate yes like they're already
45:46out in California and and Sean Parker at
45:50least this is Parker's telling so you
45:51know get great at that but he's got to
45:53convince mark you have this great idea
45:55here believe in this you know so being
45:59an entrepreneur myself I wanted to not
46:02bust the myths on that but show that
46:04like will always come behind 20 years
46:07later and say that we were geniuses and
46:08we saw it all along but that's not the
46:10reality on the ground so alright awesome
46:12thank you for being here and everyone
46:14listening should read the books great
46:15book thanks thanks so much
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