5 ms·

I'm quite sympathetic to a lot of what's in that blog post but... A16Z directly invests gobs of capital, and, indirectly, shapes the outlook of other VCs who f

by Fede_V 6y ago

I'm quite sympathetic to a lot of what's in that blog post but... A16Z directly invests gobs of capital, and, indirectly, shapes the outlook of other VCs who follow their investment decisions, and they plow way more money into software/bitcoin than physical companies. Why? Because they are really good at what they do, and they realize that building physical stuff is really hard, and they'd rather invest in areas that have better returns. I remember during the Theranos saga, Marc Andreessen kept defending Elizabeth Holmes over and over (he deleted most of those tweets unfortunately) - yet he was smart enough to not put any of his own or A16Z's money into Theranos. Words are cheap: let's see A16Z actually lead the way into investing in physical goods before we praise them too much.

chubot 6y ago
That's a valid criticism and something that ran through my mind when reading the article. But keep in mind that there's orders of magnitude difference in what they invest vs. the federal government. According to these 2 articles, it could be around THREE orders of magnitude -- ~4 billion in for them in 2014 vs. ~4 trillion for the federal government. https://en.wikipedia.org/wiki/Andreessen_Horowitz https://en.wikipedia.org/wiki/Andreessen_Horowitz https://www.cbo.gov/publication/53624 https://www.cbo.gov/publication/53624 One way to think about it is that they could plow 100% of their money into physical infrastructure, and come up with something like half an aircraft carrier ($8.5 billion according to this article): https://en.wikipedia.org/wiki/Nimitz-class_aircraft_carrier https://en.wikipedia.org/wiki/Nimitz-class_aircraft_carrier ----- Looking around a bit more, all of venture capital combined is something like $100 B / year. Which is less than 20% of what's spent by the military in a year, leaving aside all the other federal programs that could produce physical infrastructure. Apparently, all of VC is also less than half the interest that the federal govt pays on its debt... https://www.statista.com/statistics/277501/venture-capital-amount-invested-in-the-united-states-since-1995/ https://www.statista.com/statistics/277501/venture-capital-a...
- peterburkimsher 6y ago
  With so much money earmarked for the military, how absurd would it be to create a "health force" alongside the Space Force?
  - baq 6y ago
    I predict this will happen when the US realizes that health of its citizens is a matter of national security. If that doesn’t happen during this pandemic, then I don’t know what can make it see that simple fact except a war happening in the country. The name might be a bit different though: say, National Health Service.
    - jointpdf 6y ago
      Or maybe we could call it the US Public Health Service: https://en.m.wikipedia.org/wiki/United_States_Public_Health_Service https://en.m.wikipedia.org/wiki/United_States_Public_Health_...
  - ALittleLight 6y ago
    The US spends about 600 billion on the military and about a trillion on Medicare and health. https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/ https://www.nationalpriorities.org/budget-basics/federal-bud...
    - mattigames 6y ago
      That trillion in Medicare is due extremely overpriced supplies that in any other develop country would be exponentially cheaper.
    - 1cvmask 6y ago
      Depends on how it is counted. If the budget was counted like other countries the defense budget would be over 1.2 trillion per year: https://www.thenation.com/article/archive/tom-dispatch-america-defense-budget-bigger-than-you-think/ https://www.thenation.com/article/archive/tom-dispatch-ameri...
  - 6y ago
- subroutine 6y ago
  Both of you make excellent points. My only comment is that it seems like the government (or at least the current administration, despite its multitude of shortcomings) wants to revitalize the American manufacturing industry. They are just failing in their approach (e.g. tariffs & trade wars). I believe with some guidance from the private sector or simply a good pitch, the feds could be quite receptive to the idea of funding programs aimed at building-up next gen manufacturing in the U.S. (particularly if project proposals can be expressed in # of manufacturing jobs that would be created). As a side note, I haven't heard of "Elon Musk’s alien dreadnoughts — giant state of the art factories producing every conceivable kind of product, at the highest possible quality and lowest possible cost" but I share the enthusiasm for such gigafactories. Next gen factories should certainly bake-in flexibility. Machines that act more like 3D printers than injection mold-ers(?), and have the ability to switch from making, say, car parts to ventilators and N95 masks without a massive effort (or simply switch from making product A to product B depending on consumer demand trends). Lastly, just a thought, I'm sure VCs have been pitched hundreds of times on specific 'market disrupting' products from wearable tech, to drones, to personal jetpacks. But I wonder how many times they have been pitched an idea for funding company that could make all of these things, and aims to significantly lower the barriers to rapid prototyping of physical goods. meh?
  - tim333 6y ago
    Elon Musk’s "alien dreadnoughts" I think was just referring to future Tesla factories rather than every conceivable kind of product.
- 3xblah 6y ago
  As I read the parent comment, the point is not that Andreesen could singlehandedly make a difference with his investments. The point is that his words do not match his actions. His work is fostering an industry whose competitive advantage is not having to build anything tangible for the public's benefit and, in the case of companies like Facebook, not having to pay taxes on their profits.
  - friedman23 6y ago
    > His work is fostering an industry whose competitive advantage is not having to build anything tangible for the public's benefit His work doesn't foster this. Being able to sell a product that has nearly infinite margins will naturally be more profitable than the alternative. > not having to pay taxes on their profits. The government has enough tax revenue, how about they stop spending it on pointless wars and destruction.
    - simonh 6y ago
      Fine up until the last cheap shot. None of those conflicts were wanted or started by the US. Saddam invaded Kuwait, the Taliban enabled 9/11, Assad provoked a civil war in Syria. Disengaging always makes things worse. After the ‘Surge’ in Iraq the US tried to pull out and what happened? ISIS. The US pulled out of north Syria and our (talking broadly, I’m a Brit) allies the Kurds got massacred and thousands of ISIS prisoners got loose again. Walking away doesn’t work, we tried that with Afghanistan, just leaving it to the Taliban after the Soviets pulled out, and they came after us in New York anyway. It’s a small world whether we like it or not, and we’re in it together.
  - mattmanser 6y ago
    I always get a bit conflicted with Marc Andreessen stuff. Like this article starts out with a bold claim that's...wrong. Germany have done well. A western country has done well. Elephant in the room, massive 80 million person country, major western power, and the American claims no-one's done a good job because the US hasn't. And then he goes into talking about having pre-prepared therapies or a vaccine. Again, we already have to an extent. You can't make a vaccine before the virus exists, but you can have a way of rapidly making one. We do have pre-prepared vaccines, like this one: http://www.ox.ac.uk/news/2020-03-27-oxford-covid-19-vaccine-programme-opens-clinical-trial-recruitment http://www.ox.ac.uk/news/2020-03-27-oxford-covid-19-vaccine-... Perhaps, again, he's just talking about the US?
coffeemug 6y ago
I don't think "put your money where your mouth is" is a good argument. A16z can be subject to prisoner's dilemma of our collective cultural decline and simultaneously have genuine desire to get out of this predicament we're all in. He says it right there in the blog post-- the problem is desire. For example, someone is reliably making tons of money in China stamping cities into the ground and building thousands of miles of high speed rail. Why can't we? Doing these things is hard in a sense that we seem unable to get collective wherewithal to do it. It's not hard in a sense that a cure for cancer is. They can't invest in things nobody will let them build. Who in their right mind would invest in high speed rail from SF to LA knowing ex ante they'll deal with twenty years of regulatory quagmire for the project to eventually be killed by a thousand bureaucrats? (And I think the bureaucrats are the symptom, not the cause. If we wanted things built the bureaucrats would be out on the street in three months. The cause is cultural decline.)
- dmode 6y ago
  The high speed rail is nothing to do with bureaucrats (not sure what the term means anymore), but is delayed due the really difficult task of land acquisition, while maintaining property rights, and address thousands of lawsuits about communities objecting to various routes. It is easy to comment on the abstract, but I bet even Marc Andreseen won't be happy if a high speed rail runs in his backyard in Atherton
  - coffeemug 6y ago
    We used to be able to accomplish things like raising of Chicago[1] over 150 years ago but we can't move a few tiny communities in the middle of I-5 to build an infrastructure project of enormous economic value in 2020? I think that's case in point. [1] https://en.wikipedia.org/wiki/Raising_of_Chicago https://en.wikipedia.org/wiki/Raising_of_Chicago
    - dmode 6y ago
      You can view that as a negative. But you can also interpret this as a positive development, where people at grassroots are empowered to protect their own communities, and cannot be simply swept over.
bambax 6y ago
> Marc Andreessen kept defending Elizabeth Holmes over and over Did he really? That's so bad and tells a lot about that man. If you haven't, read "Bad blood". Fantastic book and great story about real journalism work against many establishment figures.
ankit219 6y ago
I don't know for sure, but there is always a chance that they realize the same thing now and put their money where their mouth is. This is something written with the benefit of hindsight, and could be the scenario that he might have the same insight now that we have and not had it like 5 years ago. (guessing based on the tone of the essay). The other thing is the difference in budgets. The numbers at which they invest might not be enough to scale a full fledged physical project. But I do hope they take a lead into this in the near future. Further, I would argue that even if he doesnt follow through on this, it is still a good and important essay in the context in a sense that there is every chance this can motivate others to take action. Given his reach and stature among the entrepreneurs, there is every chance it motivates you or me or someone else to take an action - the lack of which is quite apparent today. Call to actions work even when the people mobilizing others do not act on those. Of course, putting your money where your mouth is always a better scenario, but if that does not transpire here, this essay could still inspire others.
vgchh 6y ago
I think we are better off focusing on the message versus the messenger. I tend to think that there are good ideas in the post. Given our response to Covid19, the call to build in America is very timely and is not for one person/organization, but for the collective We.

by Fede_V 6y ago

chubot 6y ago

That's a valid criticism and something that ran through my mind when reading the article. But keep in mind that there's orders of magnitude difference in what they invest vs. the federal government. According to these 2 articles, it could be around THREE orders of magnitude -- ~4 billion in for them in 2014 vs. ~4 trillion for the federal government. https://en.wikipedia.org/wiki/Andreessen_Horowitz https://en.wikipedia.org/wiki/Andreessen_Horowitz https://www.cbo.gov/publication/53624 https://www.cbo.gov/publication/53624 One way to think about it is that they could plow 100% of their money into physical infrastructure, and come up with something like half an aircraft carrier ($8.5 billion according to this article): https://en.wikipedia.org/wiki/Nimitz-class_aircraft_carrier https://en.wikipedia.org/wiki/Nimitz-class_aircraft_carrier ----- Looking around a bit more, all of venture capital combined is something like $100 B / year. Which is less than 20% of what's spent by the military in a year, leaving aside all the other federal programs that could produce physical infrastructure. Apparently, all of VC is also less than half the interest that the federal govt pays on its debt... https://www.statista.com/statistics/277501/venture-capital-amount-invested-in-the-united-states-since-1995/ https://www.statista.com/statistics/277501/venture-capital-a...

peterburkimsher 6y ago
With so much money earmarked for the military, how absurd would it be to create a "health force" alongside the Space Force?
- baq 6y ago
  I predict this will happen when the US realizes that health of its citizens is a matter of national security. If that doesn’t happen during this pandemic, then I don’t know what can make it see that simple fact except a war happening in the country. The name might be a bit different though: say, National Health Service.
  - jointpdf 6y ago
    Or maybe we could call it the US Public Health Service: https://en.m.wikipedia.org/wiki/United_States_Public_Health_Service https://en.m.wikipedia.org/wiki/United_States_Public_Health_...
- ALittleLight 6y ago
  The US spends about 600 billion on the military and about a trillion on Medicare and health. https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/ https://www.nationalpriorities.org/budget-basics/federal-bud...
  - mattigames 6y ago
    That trillion in Medicare is due extremely overpriced supplies that in any other develop country would be exponentially cheaper.
  - 1cvmask 6y ago
    Depends on how it is counted. If the budget was counted like other countries the defense budget would be over 1.2 trillion per year: https://www.thenation.com/article/archive/tom-dispatch-america-defense-budget-bigger-than-you-think/ https://www.thenation.com/article/archive/tom-dispatch-ameri...
- 6y ago
subroutine 6y ago
Both of you make excellent points. My only comment is that it seems like the government (or at least the current administration, despite its multitude of shortcomings) wants to revitalize the American manufacturing industry. They are just failing in their approach (e.g. tariffs & trade wars). I believe with some guidance from the private sector or simply a good pitch, the feds could be quite receptive to the idea of funding programs aimed at building-up next gen manufacturing in the U.S. (particularly if project proposals can be expressed in # of manufacturing jobs that would be created). As a side note, I haven't heard of "Elon Musk’s alien dreadnoughts — giant state of the art factories producing every conceivable kind of product, at the highest possible quality and lowest possible cost" but I share the enthusiasm for such gigafactories. Next gen factories should certainly bake-in flexibility. Machines that act more like 3D printers than injection mold-ers(?), and have the ability to switch from making, say, car parts to ventilators and N95 masks without a massive effort (or simply switch from making product A to product B depending on consumer demand trends). Lastly, just a thought, I'm sure VCs have been pitched hundreds of times on specific 'market disrupting' products from wearable tech, to drones, to personal jetpacks. But I wonder how many times they have been pitched an idea for funding company that could make all of these things, and aims to significantly lower the barriers to rapid prototyping of physical goods. meh?
- tim333 6y ago
  Elon Musk’s "alien dreadnoughts" I think was just referring to future Tesla factories rather than every conceivable kind of product.
3xblah 6y ago
As I read the parent comment, the point is not that Andreesen could singlehandedly make a difference with his investments. The point is that his words do not match his actions. His work is fostering an industry whose competitive advantage is not having to build anything tangible for the public's benefit and, in the case of companies like Facebook, not having to pay taxes on their profits.
- friedman23 6y ago
  > His work is fostering an industry whose competitive advantage is not having to build anything tangible for the public's benefit His work doesn't foster this. Being able to sell a product that has nearly infinite margins will naturally be more profitable than the alternative. > not having to pay taxes on their profits. The government has enough tax revenue, how about they stop spending it on pointless wars and destruction.
  - simonh 6y ago
    Fine up until the last cheap shot. None of those conflicts were wanted or started by the US. Saddam invaded Kuwait, the Taliban enabled 9/11, Assad provoked a civil war in Syria. Disengaging always makes things worse. After the ‘Surge’ in Iraq the US tried to pull out and what happened? ISIS. The US pulled out of north Syria and our (talking broadly, I’m a Brit) allies the Kurds got massacred and thousands of ISIS prisoners got loose again. Walking away doesn’t work, we tried that with Afghanistan, just leaving it to the Taliban after the Soviets pulled out, and they came after us in New York anyway. It’s a small world whether we like it or not, and we’re in it together.
- mattmanser 6y ago
  I always get a bit conflicted with Marc Andreessen stuff. Like this article starts out with a bold claim that's...wrong. Germany have done well. A western country has done well. Elephant in the room, massive 80 million person country, major western power, and the American claims no-one's done a good job because the US hasn't. And then he goes into talking about having pre-prepared therapies or a vaccine. Again, we already have to an extent. You can't make a vaccine before the virus exists, but you can have a way of rapidly making one. We do have pre-prepared vaccines, like this one: http://www.ox.ac.uk/news/2020-03-27-oxford-covid-19-vaccine-programme-opens-clinical-trial-recruitment http://www.ox.ac.uk/news/2020-03-27-oxford-covid-19-vaccine-... Perhaps, again, he's just talking about the US?

coffeemug 6y ago

I don't think "put your money where your mouth is" is a good argument. A16z can be subject to prisoner's dilemma of our collective cultural decline and simultaneously have genuine desire to get out of this predicament we're all in. He says it right there in the blog post-- the problem is desire. For example, someone is reliably making tons of money in China stamping cities into the ground and building thousands of miles of high speed rail. Why can't we? Doing these things is hard in a sense that we seem unable to get collective wherewithal to do it. It's not hard in a sense that a cure for cancer is. They can't invest in things nobody will let them build. Who in their right mind would invest in high speed rail from SF to LA knowing ex ante they'll deal with twenty years of regulatory quagmire for the project to eventually be killed by a thousand bureaucrats? (And I think the bureaucrats are the symptom, not the cause. If we wanted things built the bureaucrats would be out on the street in three months. The cause is cultural decline.)

dmode 6y ago
The high speed rail is nothing to do with bureaucrats (not sure what the term means anymore), but is delayed due the really difficult task of land acquisition, while maintaining property rights, and address thousands of lawsuits about communities objecting to various routes. It is easy to comment on the abstract, but I bet even Marc Andreseen won't be happy if a high speed rail runs in his backyard in Atherton
- coffeemug 6y ago
  We used to be able to accomplish things like raising of Chicago[1] over 150 years ago but we can't move a few tiny communities in the middle of I-5 to build an infrastructure project of enormous economic value in 2020? I think that's case in point. [1] https://en.wikipedia.org/wiki/Raising_of_Chicago https://en.wikipedia.org/wiki/Raising_of_Chicago
  - dmode 6y ago
    You can view that as a negative. But you can also interpret this as a positive development, where people at grassroots are empowered to protect their own communities, and cannot be simply swept over.

bambax 6y ago

> Marc Andreessen kept defending Elizabeth Holmes over and over Did he really? That's so bad and tells a lot about that man. If you haven't, read "Bad blood". Fantastic book and great story about real journalism work against many establishment figures.

ankit219 6y ago

I don't know for sure, but there is always a chance that they realize the same thing now and put their money where their mouth is. This is something written with the benefit of hindsight, and could be the scenario that he might have the same insight now that we have and not had it like 5 years ago. (guessing based on the tone of the essay). The other thing is the difference in budgets. The numbers at which they invest might not be enough to scale a full fledged physical project. But I do hope they take a lead into this in the near future. Further, I would argue that even if he doesnt follow through on this, it is still a good and important essay in the context in a sense that there is every chance this can motivate others to take action. Given his reach and stature among the entrepreneurs, there is every chance it motivates you or me or someone else to take an action - the lack of which is quite apparent today. Call to actions work even when the people mobilizing others do not act on those. Of course, putting your money where your mouth is always a better scenario, but if that does not transpire here, this essay could still inspire others.

vgchh 6y ago

I think we are better off focusing on the message versus the messenger. I tend to think that there are good ideas in the post. Given our response to Covid19, the call to build in America is very timely and is not for one person/organization, but for the collective We.