Highlights from Mckinsey interview w/ Marc Andreessen

The interview was so good I had to post it here...

It's been a long time. And a lot of stuff has happened, stuff about which I'm short on time to write about now. I've been toiling with the idea of making shorter posts or even just sharing interesting stuff I've read. This article is a go I'm giving this lighter mode.

This Marc Andreessen interview was one of the most insight-packed pieces of content I've read in a while. Read it here. Some of my highlights (formatted by myself) below.

I.

The second part of my answer has to do with what happens at a time like right now, when there’s a market downdraft. The minute tech stocks get hit, a lot of big companies basically say, “Oh, thank God, we don’t have to take this stuff as seriously.” This happened in a huge way after 2000. One of the reasons why Amazon took off is because all of the traditional retailers, after 2000, said, “Oh, thank God, we don’t have to worry about this e-commerce thing anymore.” And they just left the field. Borders famously outsourced their online business to Amazon, which, in retrospect, was maybe not the best idea.

This is already happening in this stock down-draft. So, Netflix stock is down 70 percent, 75 percent, 80 percent, whatever. And whereas before, you had all these stories talking about how Netflix was this permanent new, dominant Hollywood force, even a possible monopoly, now you get all these stories saying, “The Netflix model is broken, it’ll never recover,” with big, classic media companies saying, “Oh, thank God, this streaming thing is not going to be ‘the thing’ after all.”

Big companies tend to come in and out of tech this way, and it disadvantages them over time. They still have such a sense of palpable relief when they think that they don’t have to do this stuff anymore. Which goes to show that no matter what they say, they still aren’t technology companies first and foremost.

II.

The core thing that we [at A16Z] do is track talent flows [in order to predict big market/technology/etc inflection points]. And the thing that we know for sure is that the smartest people in the world, the smartest kids graduating from college, and the smartest industry professionals are flooding into those three sectors [AI, biotech and Crypto/Web3]. There’s an incredible wave of talent in the form of top-end engineers, scientists, executives, and founders flooding into those three sectors. In our world, that’s not completely predictive, but that’s as predictive as you can get.

…

The other set of people we focus on are the really good entrepreneurs. And yes, entrepreneurs respond to fads like anybody else. But when really good entrepreneurs pair with really good engineers, they start companies, they build products, and they tend to make what they’re working on a lot better. So they too are predictive.

IV.

There’s a finite number of super-smart engineers who know what to build. These people go to the companies that take them the most seriously. They go to companies where they think leadership really understands what they do and understands how to build a first-class technology development culture. They go the places where they think they’ll be appropriately rewarded but also where they’ll be taken seriously, listened to, and respected. And they want to be in a place where people like themselves form a critical mass.

The problem that big, classic Fortune 500 companies have is the same problem they had 20 years ago. I thought the problem would shrink over time, but I’m not sure it has. That problem is that the true technologists inside so many big companies are not the primary people at the company. They’re not treated as first-class citizens.

Just look at the org chart. For so long, companies put their technology people in the IT department. The IT department was so famously segregated and isolated that there are entire TV shows, like the great British comedy The IT Crowd, built around the idea of the nerds in the back room. Then, about 20 years ago, big companies got the message that maybe all their technologists should not be in the IT department. So they created what’s typically known as the digital division, typically led by a vice president of digital. The good news is that the programmers run the digital division and are taken seriously there. But it’s still a division. It’s still a unit. That’s a problem.

I’ll give you an example: at Tesla, the engineers working on self-driving cars are the most important people at Tesla. Elon talks about them all the time, he talks to them all the time, and they’re basically the leaders in the company. The people working on that stuff at traditional auto OEMs are not. Maybe they should be, but they’re not. They’re still in this kind of “back room” thing. The people who have led the business for 40 years are the same kind of people who are now in charge.

V.

Q: What do you say to these big companies, Marc? If you were to tell them how to digitally transform, what would you tell them?

Marc Andreessen: Find the smartest technologist in the company and make them CEO.

VI:

… the best technology doesn’t always win. There are all these case studies in business school: Betamax versus VHS, the Qwerty keyboard versus the Dvorak keyboard, Microsoft DOS versus Apple Macintosh, and so on. Example after example of, the best technology doesn’t always win. And sometimes that is true. But a lot of companies and a lot of MBAs take that to mean, “We don’t actually have to be good at technology. We can still win. We can market our way through.”

So, maybe the best product doesn’t always win. But really good tech companies build really good stuff. To compete with them you have to be in the game. You need the world’s best engineers. You have to have a world-leading technology culture to attract them. You need people who really know what they’re talking about to make really good decisions around this stuff. So, at some point, yes, you need to put the technologist in charge. But these companies will not do it. They are no closer to doing so than they were 20 years ago. We’re in some cycle of madness where they keep doing the same thing and expecting different results.

Let me know what you think of this format.

Cheers,

Kiko