Marc Andreessen joined Quartz for a discussion with editor-in-chief Kevin Delaney on Dec. 12 in New York City. The tech pioneer who built the first graphical web browser, Mosaic, and launched an up-and-down career as an entrepreneur and investor, had plenty of interesting things to say about the state of Silicon Valley, the future of the economy, and the power of two billion people taking photos.
“One of my working theories right now is basically every single idea from the dotcom era was correct.” The dotcom era? That period of irrational exuberance that led to most of those who dabbled in it losing their shirts? Maybe it’s because he had the misfortune to enter markets too early. Andreessen founded Loudcloud, a service which broke ground in the world of distributed computing, then changed strategies and sold itself to HP when that business went bust. But a few years later, and Andreessen would have been Amazon Web Services. “In this business, being early is the same as being wrong, as I’ve discovered multiple times,” he says. That should send investors scrambling back to the absurd IPO prospectuses of 1998 for ideas whose time has now come.
“The idea of the middle class itself is a myth.” Andreessen argued that the middle class is an “artifact” of America’s post-World-War-II role as the last standing industrial power—that the term describes people with a high-school education earning college-level wages, who after the war worked in the firms that built modern America’s industrial base. That view might surprise all the war veterans who got college educations thanks to the GI Bill. “That experiment has been run and it was a catastrophic failure,” he says, arguing that Americans today without college degrees or an engineering background are doomed to a future of shoe sales. Maybe his idea of “middle class” is a bit strange, but on one thing we can agree: If you do get that college degree, you might want to consider computer languages over English degrees.
“We have this idea of net neutrality… the consequence of this, left unchecked, is that the mobile data networks are going to run out of capacity… in 2016 or 2017, and then that’s it.” Opposing net neutrality—the idea that bandwidth should always be free to whichever sender wants to use it—is to Silicon Valley what witchcraft was to 17th-century Salem. The consensus among techies is that forcing companies (such as Netflix or Google) to pay more for the vast amount of traffic they generate, rather than charging their users for the bandwidth, would stifle innovation.
But Andreessen thinks that at least when it comes to mobile broadband, net neutrality is having disastrous consequences for supply. He says developers don’t keep track of how much bandwidth the products they make use, nor have any incentive to reduce it. “I should probably be paying $500 a month, I’m an intensive user of this stuff,” he adds. Technological solutions to the bandwidth problem include freeing up more of it, but “the government has licensed out most of the interesting bandwidth to companies that long since forgot they were supposed to pay for it… 50 years of telecommunications regulation is coming back to bite us in the butt and it’s a big problem.”
“I’m not saying we should have sweatshops in the US and I’m not saying we should have no environmental regulations, but it is harder to do business in most states in the US than it is to do business in a lot of places around the world.” Asked whether “insourcing”—moving manufacturing back from low-cost countries like China to the US (witness Apple’s recent announcement that it will be making a modest investment in US manufacturing)—is a real trend, Andreessen said that it could be, but the question is whether Americans simply are willing to pay even a slight price premium for goods made in the USA. Advanced regulations, lower wages and large-scale immigration could solve the problem, but both are politically impossible. Take immigration, Andreessen says: While plenty of immigrants would come to America to work for more than Chinese factories pay, but less than America’s minimum wage, such a plan could never be enacted.
“I don’t think companies have to justify their stock prices.” Andreessen says if Facebook returns to its IPO price, it won’t be because it made better arguments about why investors should purchase its equity. “I come from the school of [Silicon Valley venture capitalist and Kleiner Perkins partner] John Doerr on this one. If Netscape stock went up or down 10% one day, I said to John, why did our stock do that? And he said, ‘Oh, there were more buyers than sellers.’” (Andreessen is on Facebook’s board.)
“We’ve never had the ability in our industry to reach five billion people with a computer and now we have the ability to do that.” Two billion Android handsets will be activated in the next year, and the scale of global computing is going to open up huge opportunities, not just in the tech business, but for people to push back against repressive governments and price-gouging merchants. “The smartphone revolution is really hitting its stride now,” Andreessen says.
“AirBnB is gonna eat real estate.” Not just hotels, not just vacation rentals, not just sublets: Andreessen predicts that the online rental platform will do to real estate what eBay and other online sellers did for goods. And then it will eat the travel industry’s lunch too. (Caveat: He’s an investor).
“If Google Glass works—I want the contact lens version as soon as I can possibly get it—I don’t care if it’s a microwave beam powering the thing that gives me eye cancer, I’ll take it.” Responding to a question about the next big hardware platform, Andreessen said that he thought there were about 20 years of innovation in apps left in smartphones and tablets. But he’s excited about Google’s augmented-reality platform, Project Glass.
Currently, Google Glass consists of a display perched on an eyeglasses frame, but eventually that display could be embedded in contact lenses (someone has already built an early screen-on-a-lens prototype). Powering them could be a problem, however—where do you put the battery?—so one solution could be to beam microwaves at the lenses. Continuous exposure to that level of microwave radiation might be bad for you, however, but Andreessen doesn’t care. “I don’t care if you can flash-fry an egg in between the battery and the eye, I can’t wait.”