Marc Andreessen Live at Our Investment Conference: AI, Disruption, US vs. Europe, and Making Money

We talked about how to make money, who is going to win the AI race, what's happening between the US and China, and so on. Now, normally, these podcasts, you can run at one and a half times speed, not with Mark Andreessen, he is already going max speed. Tune in.

Our next guest is a real legend, Mark Andreessen, probably the best venture capitalist the world has ever.

Hi, Mark, good to see you again. Hello, good morning. How's everybody? We are really.

So in our business,

And tech and venture capital can only be a small part of that answer, but hopefully we.

And every time there's a platform shift, there's an opportunity to reinvent the industry and reinvent basically the entire ecosystem and all the different ways that people use technology and create an entirely new generation of companies. And so we certainly believe that AI is a new platform shift. We believe that AI is one of the really big platform shifts. We think the possibility exists that this is on par with microprocessor. And so we think there's an opportunity to take a very broad perspective here and invest in many different, both core technologies and also use cases of AI.

Where is the kind of fight going on just now?

Essentially, what happened was the breakthrough moment was in 2022 and it was the chat GPT moment. And so it was actually 79 years into the technology. But it was a breakthrough moment. and then it was a breakthrough moment if it went basically from not working to working incredibly well in one step. And the technology is not perfect yet.

There's still a lot of work to be done. But fundamentally, these products are just incredible already in what they can do. And they're far better out of the gate than the microprocessor was or the internet was. And so it's this kind of rare situation where you have this dramatic leap in functionality happening extremely quickly. As a result of that, basically every part of the tech ecosystem is trying to react, trying to figure out how to incorporate AI, or trying to build on AI, or trying to basically compensate, figure out how to compensate for weaknesses in AI.

Every single sector of the tech industry is reacting right now. There is a massive chip shortage. This is the biggest supply demand imbalance in chips that we've ever seen as an industry. And so there's a massive fight happening there. There's a massive wave of data center innovation, development.

There's actually power. A lot of people are now trying to figure out how to power and cool these giant data centers. There's actually a resurgence of interest in nuclear power around these data centers. And then there are basically fights happening up and down the software stack. The fight that gets probably the most publicity at the moment is the fight between the software companies building the so-called foundation models.

And so there's sort of a big fight between a view of the world in which there will be a few big models that basically win everything, and then an alternate view of the world in which this is more like the microprocessor, and there will actually be many thousands of different models running on billions of devices of many different shapes, sizes, descriptions, customized in various ways. And actually, that latter thesis is the thesis we're investing against very aggressively.

You said last year that we should

And so this is sort of an inward-looking kind of domestic policy viewpoint, and people have all these fears. around AI. There's a completely different conversation, which is the geopolitical conversation, and that's the conversation of basically geopolitical competition with China. And of course, the minute you get in that conversation, it becomes very clear that we need to win. And specifically, the reason we need to win is we need to win the AI race with China, in sort of a very analogous way that we won the sort of technology race with the Soviet Union in the previous century, which is, we have two basically dominant mindsets, regimes of Western democracy and Chinese communism, that both have aspirations to transform the world.

Both of those are supported by major nation states, both of those are supported by major militaries, both of those are supported by major economies, and both of those are supported by major tech industries. And if you look at the precedent of the Cold War with the Soviet Union, the reason the West won was because of sort of a triangle of technological superiority, economic superiority, and then national security, military, intelligence superiority. But we decided we wanted to win, and we won. And, by the way, our victory ended up actually being great for the people of Russia. It was actually really great for the Soviet Union to fall, and people in Russia are much better off today.

And so I think this is very straightforward. We need to win. We need to win by being better technologically, better economically, and better militarily. AI has been identified as the core technology for the future of the nation state by both US military planners, by the Pentagon, as well as by the Chinese planners. And so it will be one of the main areas in which the two hemispheres compete, and I think it's.

Those concepts are kind of antithetical to our systems. And so we're very robust and dynamic in general, but we're very messy. The Chinese have both the advantages and the disadvantages of a centralized system, much like the Soviet Union did. They have a command and control system where the Communist Party owns and controls everything, and they can direct their private companies to do whatever they want, which they're doing right now with sort of increasing force. And then they have all the disadvantages of a centralized system, which is they have a command system.

They're actually in the process of trying to crush their entrepreneurial system right now. They're trying to basically drive their entrepreneurs out of, in many cases, out of business, in many cases, out of the country. And so it's just like the Cold War with the Soviet Union. It's an asymmetric situation. Each side brings strengths and weaknesses.

And then I would say, each side is tempted to embrace the model of the other side to try to get the advantages. So the Chinese have kind of this fake entrepreneurial system that they kind of try to foster. And then we have this sort of not very effective central planning function in DC and in Brussels. that doesn't work very well. And at least I would argue we should lean into the strengths of our system and try to benefit from the fact that we should have a much more dynamic economy.

We should have much more.

and EU, I mean, we're, you know, we are the result of the Industrial Revolution, right? We're a result of the first Industrial Revolution. with things like steam power. We're the result of the second Industrial Revolution, you know, with things like electricity. We're the result of the computer age.

You know, the West, represented by the U.

S. and Europe, is where, you know, most of these technologies. over the last, you know, 300 years were developed. And historically, our society's benefited enormously by this. You know, we have the highest standards of living.

You know, our children over time, have, you know, have done the best and generally it's been a very, you know, synergistic, positive process. You know, in the last 50 years, I think, both the American society and EU society has sort of lost faith in the idea of technological progress and lost faith, frankly, in the idea of economic progress and, you know, decided to become, let's say, I don't know, much more, you know, cautious, much more risk-averse, much more, you know, sort of unwilling to think of change as a positive and exciting thing. And, you know, you actually see that, I would say, in America right now, you know, the relationship between industry and the government is at a 50-year low. It's, you know, actually quite a large amount of hostility between government and industry. And the same is certainly true in Europe.

And so, again, you know, our view is like, look, you know, we need technology. We need technology. We need innovation. We need markets. We need these things to function.

Why? Because we need growth. You know, we want our societies to be growth societies. We want people to think that there's opportunity. We want people to be able to think in positive some terms.

You know, we don't want people to think in terms of, like, for me to get something, I have to take it away from somebody else. We want to, you know, think about our society as societies that can grow and flourish, where our children will do better than we do. And so American dynamism is sort of a very direct investment program that we have, you know, focused on injecting a lot more technological energy into a lot of the sectors of the economy that the government's very involved in. And certainly defense and intelligence are a big part of that, but also energy and law and education and healthcare are also big parts. And all of these sectors, you know, frankly, they just, I think they're really suffering from a lack of technological change and innovation,

I think, if you did a rank order today, I think it's one out of 50.

. And so, you know, Europe has really fallen off. And I guess the way I would describe it is, it seems, at least from the outside, it seems to be almost entirely choice, which is, it seems like it's been a choice to sort of prioritize regulation and risk aversion and the precautionary principle over, you know, over innovation. You know, the most acute version of that, obviously, is the energy sector, you know, with a sort of sort of voluntary standout of energy development, which, you know, I think, has led, you know, real geopolitical stresses with respect to Russia. And so, you know, I think it's been a choice.

I think the political leadership class in Europe has decided that they want this. The voters so far have supported them in wanting it. You know, it has consequences. I think the consequences are becoming clearer. I think, you know, fundamentally, it's a choice at a societal level.

And, you know, the voters will either step up or they won't, and the leaders will either step up or they won't. But I think the results of the current approach,

As a firm, we don't have our own foreign policy. We have basically the foreign policy of the U.S. State Department. And so, we're, you know, we're sort of in complete lockstep with our government. You know, all of our programs that involve anything involving national security will be based, you know, on the U.S.

government's view of friends and allies. You know, I would say this, you know, this was a controversial position basically up until Russia's invasion of Ukraine. And so, up until Russia's invasion of Ukraine, basically, there was a prevailing ethos in Silicon Valley that national security is somehow bad or undesirable, or the tech companies should not want to, you know, be involved in it. And there was this famous incident where Google had this program with the U.S. Department of Defense that their, you know, their employees basically rioted on campus and forced them to cancel.

At the same time that Google actually had, you know, an AI lab in Beijing. that, by definition, is, you know, anything in China sort of connected to their security state. And so, you know, there was a fair amount of, I would think, internal dissension division in Silicon Valley in terms of what the right role is, you know, between the Valley and the U.S. government. Basically, what we've observed is that the minute Russia invaded Ukraine, it was, you know, it was obviously a catastrophe for Ukraine and a terrible thing.

And I wish it hadn't happened, but it caused sort of an instant sort of re, I don't know, like a depolarization of this issue, certainly in the U.

S. and in the Valley, where all of a sudden people who historically had been very averse to tech involvement in defense all of a sudden became very in favor of it. And, you know, the most vivid example, there was this company, Anduril. that was a very politically controversial company, you know, our new defense contractor, you know, building all these automated defense systems. It was a very controversial company in the Valley, basically right up to the day Russia invaded Ukraine.

And ever since, everybody loves it, you know, which the founder of that company points out, you know, there's some, you know, some irony to that, because the company is doing the same things. But, you know, I think the Russian invasion of Ukraine really highlighted for a lot of people, including a lot of people on the political left in the U.S., that actually national security really matters. And there are actually bad people in the world, and there are, you know, going to be invasions, and there are going to be bad things that happen. And the Western democracies need to be able to respond and need to be able to be state-of-the-art, being able to cope with these situations. And then, of course, the, you know, the attack in Israel, you know, is a sort of a second, again, another terrible thing, but a second kind of factor that has caused people to say, okay, we need to make sure that Western democracies are actually armed up.

Yeah, yeah. Mark, finishing off on a completely.

There are a small number of people who are starting the kinds of companies and trying to build the kinds of industries that are going to be able to deliver growth. And so, you know, and generally speaking, you know, Western investors are quite supportive of this. And so, you know, venture capital is quite well-funded. But, you know, I think, focusing in on specifically the places and the people who are going to be able to generate growth. And then, quite frankly, the other thing is, you know, it's very helpful when these investors also weigh in more broadly than just with money and also weigh in with their influence and, you know, with their level of authority and their level of, you know, persuasive capability and so forth in their societies.

You know, the growth is something that we should be aspiring for. And that is actually good, not just from an investment.

Thank you very much.