Andreessen Horowitz Part I
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What do you think about playing the full? Who got the truth song at the end?

At the end, I like that.

Yeah, it's so good.

Who got the truth? Who got the easy? You waz you waz you who get to know easy?

You see, see me down. Say story on move. Welcome to season nine.

episode one of acquired the podcast about great technology companies and the stories and playbooks behind them. I'm been gilbert and I am the cofounder and managing director of seattle based pioneer square labs in our venture fund, psl ventures.

And i'm David rose bell and I am an Angel investor based in serenity go.

And we are your hosts. Well, listeners, David. I decided to open this season with the complete story of the firm that totally up ended the entire venture capital ecosystem a decade ago and reason horowitz. But as we started researching, of course, that meant telling the journeys of Anderson and horowitz themselves before found in the firm, which, of course, means telling the history of the web browser, the creation of mosaic c, the founding and eventually IPO of netscape, which was the first real internet tech start up, and of course, the tumut, a story of loud cloud and ops, where.

and so much more than that, that you don't even know. Bin, this is great.

This the first time i've literally not open your notes at all, like Normally we don't trade notes but I have no idea what you've prepared and listener is the um impetus for that is that this was going to be a one part episode until last night when they'd texted me and said, how about we do a two partner? So there are early things about mark and ben that I did zero research on and I am excited to learn from David along with you all today.

Unlike the old, the legendary chicago cub, short stop any banks, let's play two. Well, i'm really .

pumped to do this one as a two partner. I think the history of Martin ban is really important to understand the world views of both of them and how they were shaped by IT. And I think for all of us working in the startup ecosystem that was so shaped by the two thousand and nine creation of the firm and recent horror Z, I think it's paramount to understand the things that shaped them because they have shaped us all. And I don't know. I'm i'm really excited because I feel like my investor psychology has already changed since starting the research in to market.

but totally can wait to dive in.

Yeah well, listeners, two things to be aware of, if you like the show. One is our slack. There is awesome discussion that takes place on not just our episodes, but also the tech news.

The day going on there, there are now eight thousand strong. So you can come and join us at acquired dot F, M, slash, slack. And two is the limited partner program.

And this is where we drop subscriber only ent like our library of over fifty interviews and deep dives on company building topics like venture capital fundamentals. And you'll also get access to our L P zoo m calls with David night. So you can click the link in the show notes or go to acquired data m slash LPL. Okay, listeners, now is a great time to tell you about long time friend of the show service now.

yes, as you know, service now is the A I platform for business transformation, and they have some new news to share. Service now is introducing A I agents. So only the service now platform puts A I agents to work across every corner .

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Yep, so learn how you can put A I agents to work for your people by clicking the link in the shower notes or going to service now dcom ash A I dash agents. Will David take us in and listeners, you know, Normally this is where I would warn you that this show is not investment advice. Steve and I may have investments in the companies we discuss, and the show is for information and entertainment purposes only. But this episode, all this stuff pretty old, like, good luck investing in any of this defunct technology.

Where can we talking about a lot of dead companies on this episode? Next time we will be talking about a lot of live companies. One disclosure before we jump in here.

I think this is the first time at least have done this on this show. I have a new investing vehicle that i'm not quite ready to talk about just yet, but i'm doing IT with my body net manning, who's the C. O, O of cattle, and should tell everybody that a couple of the GPS at everything horridness are L, P.

S. In that vehicle. I don't think IT has affected my telling of the history, but everybody should just know that going again.

Congratulations.

David. thanks. Super excited. Can't wait to talk more about that soon. All right. So we start history in facts in nineteen sixty six in london, england, not what you expected was IT in. So this is not mark, no, not mark that we're talking about here. We are talking about then who was born in one hundred and sixty six in london, england.

Hi, I did not know that .

he was the sixties. The counter culture is in full swing in london you've got the mad in the rockers, the who, the rolling stones, all that and bends family that he is born into. Young family is living in london at the time, their american experts, the husband of band's father, had come till london to work for bertrand Russell, the philosopher, philosopher, polymath, legia mathematical.

Oh, wow. So the family are, you had either one or two children. I'm not sure if that is the second child or third child, but nonetheless, in one thousand nine hundred and sixty six, Benjamin Abraham horowitz is born, of course, would grow to become the ben horwitz.

So usually the show on most episodes, we were just kind of like stop there with the family, like a this is there, like millions that our protagonists were born into. We can now move on the people themselves. This time we going to spend a little more time on ben's family.

His momma's name is a lisa, then horowitz, and now crowd theme. And his dad is David, David horowitz. Now that name may not mean much to probably most people listening, but some of you listening are saying, wait, David horwitz, that David horowitz that .

have no idea what you're talking about yeah well.

so David was and is a radical political activist and very much a large and still part of american history, even though I think most people these days are not aware. reit. So at this time, the reason he was in london is he was one of the leading Young intellectual radical that was championing the new left at the time in the counter culture.

And they were in london. He was working with bertin Russell, protesting the vietnam war and advocating for, like, world peace and word by nuclear disarmament. Oh, so he was working with not only Russell, but jump start Simond r. James baldwin, ally mico, he is in the middle of everything happening in the sixties. So this continues for a couple years. And then in one thousand nine hundred and sixty eight, David gets an opportunity he can't refuse, which is to move back to amErica and become the co editor of the magazine ramparts, which was like one of the leading publications of the hypes in the counter culture they originally published. Check with our diaries is crazy and rain parts was based in berkely, california, which is how ban horror, a sense of growing up in brickley, california.

It's funny. Knew band grew up in berkeley, and I just didn't make the connection that like any time you hear that someone was in berkely in the late sixties, you should ask the question, like what what what are they doing in the countercultural movement? Like what role were they playing and how do they end up there rather than just being like the way you want today, which is like just a little bit of a hippy dep town. But you know, it's part of the area is part of technology.

Nice suber. We get the college campus there Better. Winter six co IT has a little different back in the day. okay.

So speaking of different, we know David, sort of arty part of the counter culture when they get back to berkely cut this. He intersex with huey newton, the leader of the black panthers, and becomes very close with him and with the pandas. And when I say very close, I mean like very close.

So he write about them and ramparts all the time helps spring them. The national prominence, the whole family, including, of course, Young ban, would go to the black panther church every sunday in oakland, the sun of man temple, wow. crazy.

And you know, this is like a little bit certainly outside the scope of required. But just to paint the picture of, like where then came from the black panther party, like you fear not american from the U. S.

And study american history like IT was one of the most powerful forces for black and civil rights. America's history and the whole family is right in the middle of IT. But unlike mart litho king in the civil rights movement, the pandas did not advocate for non violence. Shall we say less .

about the civil disobedience, more about the disobedience.

more about the disobedience? I didn't know this, but that was actually originally founded as a black panther party for self defense. Oh, wow.

And the whole purpose of IT was to resist police brutality against black people in oakland. That was the origin of the black panthers. Wow, I mean, this was like a wild times.

So in one thousand nine hundred and sixty nine, F, B, I, director J. J. Hover describe the black panthers as the greatest threat to the internal security of america.

That's how a while so barely great, the middle of including Young bend the party, hers kidnapping, like everything. So then in one thousand nine hundred and seventy four, when then is eight, an incident happens with changes, things dramatically, very dramatically. So the panthers needed help with their book keeping.

And so hue turns to David, who sit writing this organization and parts, hey, can you help me like when you book me me? Now, if only they had pilot like history would have taken a very, a very different course. So David introduced to some to and parts spokesman woman named Betty van patter.

The painter spring her on. Six months later, Betty disappears, and a few weeks after that, her body washes up a shore across the bay and seven and csco h wild. So the crime was never solved.

No one was ever charged. But David and many, many others believe that he found out too much, and paths had ordered her killed. wow.

So you later then, of course, would write the hard thing about hard things. And, uh, you know, live, there are all this crazy technology of each. He was eight, and his family went through this wow, you know, a busted IPO doesn't seem so hard after stuff like this.

So anyway, we will move on and get to a mark and nescafe and loud cloud and increases and hoots now. But yeah, it's crazy. And for David, he does a complete one.

Eighty ends up becoming an arch conservatives st. He was one of the primary strategists behind trumps political strategy for a defeating Hillary in eighteen, jeff sessions and Stephen Miller, where I like proteges of his H. I had no David horrow.

Freedom center is one of the biggest funder ers of trump playing political ideology in america. And crazy enough, they still talk, and they currently still agree. relationship.

There is a wonderful new york times piece that will linked to in the shown. So I recommend everybody to read about all of this that came out a few years ago by David straight field about IT. But yeah, this family .

history is just wild. That's fascinating. And it's so cool that family bonds can. And not just political beliefs, but like deeply seated ideological beliefs about the way .

the world should be totally and yeah that out of all of this fifty years later comes in interest and herods. Ah okay, so back to back obviously held like soaks all this in that has a huge influence on him, but he also wants to blaze his own path and get out of his dad shadow. And he gets turned on to this other revolution that is happening in the the area in the seventies, which is the computer revolution.

He ends up going to columbia in new york for undergrad and studying computer science. There probably wanted to get sort of away from everything happening in the the family life at that point in time. He then goes to U, C, L, A afterwards and get some masters in computer science. And while he's there, he turns at the legendary silicon graphics.

otherwise known as S. G, I, bled by jim Clark. Jim Clark, k, who will come up later, many times.

Oh, is devoting and to come up in the story. And S. D. I is just legendary.

I don't think we ve talked about them as much on acquired, but they were you right, a longside until and microsoft and apple, one of the big early computing companies in silicon valley, the current google campus, was originally, yeah, that's crazy. The S. D. I. campus.

wild. They did the .

not this graphics computing, but three d graphical computing. So they did the effects for tones of hollywood movies like terminator, jassim park, the n. Sixty four and ten video game council, which is going to come back up later in the S.

G. I, made that they made the processors for the six four. really? yes. So if you played mario cart back in the day, you have S, D.

I think, okay, the thing that I know that we're going to talk about later, about six, four coming back up makes way more sense having the S, D, I background and S, D, I making the trip for that now. So is there any ties between lucas film? N. S. G, I?

Oh.

that's a good question. The university of utah folks that ultimately became industrial light magic.

So jim Clark was one of those .

youtube folks along with, of course, no bushel. And alan K.

I think that's right. I think that's great. I don't know if there any directives between lucas film and S D I, although i'm sure they were using S T S hardware for the effects. I M had industrial late magic .

that was IT was a alan k went to the university of utah and graduated with his masters in sixty eighth, or would have been that same time as no invention.

all the stuff going on. So later, or now in the very early nineties, Young ben coming out of school, coming out of his message program, he joins S. G. I. He doesn't say no long now after of that a year he leaves and he joins to start up that's coming out of S G I and that start of kind of fails but his first start up experience and then he moves on and he joins lotus.

Ah yes, what should have been the way that we all processed words and numbers but alas, microsoft crush them.

Yeah that lotus one, two, three, I think yep.

And and lotus notes.

lotus notes, yep. So it's while then is at lotus that he hears about this new exciting paradise development, new piece of software coming out of not silicon valley, but the middle, the country, the midwest, the heartland of america. Eleni, we are talking about mosaic. C, the mosaic web brozak.

The N, C, S, A. Mosaic.

and did .

wasn't originally exmoor. Ic, oh.

I don't know that. Yeah, I was .

originally released as a sort of prototype piece of software, originally only for unique systems, and used the x window system. And there was sort of a common thing to do. Note IT within x in the name of the piece software 啊。

Well, well, we're going to get into the name more in a minute here but then here's about music and of course it's celebrity wunderkind Young brush founder I guess question mark mark and Jason so who was market and Jason a man who needs no reduction but his background was, let's to say, pretty different than the um millia that ban was growing up in so he was born in seder follows IOS which is not a super, super small town but he was raised in new lisbon, wisconsin. Do you know what the population of new libin, wisconsin is today?

Then ten thousand.

two thousand, five hundred and fifty four people. Well, wow. So mark's father, love, was a sales manager for a seed company called the pioneer hybrid international seed company.

And his mother, pat, worked in customer service at land's end. I think land's end, I think they would go on to become a sizable customer of loud cloud, but that is in the future to come. So mark, you know, he talks about this all the time.

This, if you've heard mark talk about his background, he could not wait to get out of the small town in the midwest and computers in the internet where the vehicle he was going to do IT. He says of his family, rarely, rarely ks about the one quote I is able to find. As he says, they are scanavius hard core, very self denying people who go through life never expecting to be happy.

wow. yeah. wow. And is worth pointing out to that.

Like when you say this non traditional background, you eluted to him as this wonder kid. And that was just not true yet at this point in history. And we have brian mccolo from the net history podcast.

Thank for this image, like the first ten episodes of that podcast to prep for this. But he brings up the point that mark was like an hourly worker at N. C. S. A. Oh yeah.

he's been paid six.

twenty five an r yeah. Like, no one recognizes his genius yet. And the innovation of creating mosaics, of actually mobilizing people to work on this thing was like, hey, we have a lot of fellow resource here. We have some smart people. I have no authority, but i'm gna rangle the troops to try and do this with me well.

And I think if there is one thing that Young mark and dyson and now older mark Andray son is very good at IT is uh putting himself in the right environment to meet the right people and two succeed. So you were referred to the university of annoyed where you would end up going to college. He was very intentional about deciding that he decided that he wanted to go to school eight to study computer science.

And so he wanted to go to score the great C S. Program that his family could afford. And b. He also wanted a place where he would have the opportunity not just to study C, S, but to actually like work while is in school on like cool stuff that's going on. And of course, urban ish champagne had not just create C S.

School, but what we were referred to a few times now, the national center for supercomputing applications was attached to IT, the N C S. A. So mark, when he gets to l.

Noi, he immediately starts in turning, doing like work study at the N C. A. And while he say, so, how do you like? How does this kid is your regard to know who like he's not yet market and rison.

How does he end up coming up with mosaic? So what is IT in T. S.

A? They're interfacing with all of the other supercomputing centers around the world, including academic research, particle accelerators, particularly with cern over in switzerland, the particle accelerator, which is where t burners lee is. And that's where tiberias league comes up with the set standards like HTTP.

All that stuff there. He dogs the worldwide web and all the way across the world in the country, way across the world in this kid working there, mark and rison. He hears about that is like, oh, well, that sounds very interesting totally.

It's cool thinking about how this came to be because you get temperatures near there on one of the few next work stations like the next cube that actually shipped and was actually used by people is a crazy expensive thing that only went to people working in academia. Of course, this is sort of Steve jobs company before returning to apple.

And IT says so much about tim and the environment in which the internet in the worldwide web was sort of started, that IT was on a next machine because you came out of this rigorous academia corner of the world, which is freely so different that a lot of the start up innovation that is happening today. I mean, a lot of that is like the frontier tech stuff comes out of academic labs. But I think we often forget, especially with how sort of counter cultural a lot of, uh, new things on the internet have become.

that IT started in a very, a very closed way. The original intention behind all these set of protocols in the world by web, like IT, was supposed to be just for universities .

and research .

so they can share research notes. yeah. And IT was very controversial. What mark was doing because people didn't want to let the relief in. They thought that would delete the quality of like this is just to be appear thing about like conducting research.

I got this great quote from mark so that he gave us an interview in two thousand three that's talking about on starting those. He says, but the internet community back then, and the key technical people didn't want the internet to become easy to use or graphical, because that would pollute the environment. Only smart people can use the internet was the theory.

So we needed to keep IT hard to use. We fundamentally disagreed with that. Be easy to use and graphical so you should be on the .

point and click totally so great. I'd like it's really just because I like he doesn't give a crap. He's getting paid six twenty five an hour over IT say so he's like, well, it's that can happen.

You all just code this thing up he convinces, uh, eric ina, who's a full time employee there, to work with them and code up a easy to use graphical broza to sort of open this up to everybody. So fire me. If IT doesn't work, who cares? totally. And this is the first playbook .

theme that I want to pull forward. And listeners are trying to set a little new today in our spurs. More of the playbook throughout the story.

But this is the very first time mark runs the playback of there's something right now is only for some small close group of people that in an inaccessible way. I think there's something very interesting to be done by opening up to the masses. And of course, there's no business model behind this yet.

It's it's just lets let everyone use the internet and let's make that possible and what you think about h and recent horror is all these years later, funding things like clubhouse and investing in social media platforms like twitter, like marketed very early or help coin base. Absolutely IT is very much this. Let's take something very esoteric c and make IT very available to everyone, and then we will figure IT out later. Uh, this is the very first time he runs that .

playbook totally. And the other sort of counter intuitive thing, or are going against the grain element of building a mass market browser for the web, was that this wasn't not how most people the internet was gona go at the time. At the time.

This is you in the early nineties, people are talking about the information superhighway. And and actually, S, G, I was a big part of this. S G I was working with the cable companies to build like these internet enabled set top boxes to right where everyone thought .

I was going to be tvs.

IT was going to be tvs. And even worse, IT was gonna. The cable companies and the government in like private public partnership that owned all these pipes, could you imagine? And that they were gna control the stuff that was gonna on there, and americans were going to access IT through their televisions.

This was a big platform with the clinical istra's when they were campaigning for the ninety four election was that we are going to be a big part of the information superhighway from the federal government. And it's fascinating to like zum out a little bit IT makes sense that you have these like big screens and you have fat band with the table and perfect, not choppy, uh, high finality audio and video to tvs.

And then you look over this internet thing, which is only a thing for academic institutions. There's like forty nodes. There's something at all. There's forty servers period on the whole internet. And all I can do is send text back and forth like, no, you're not going to bet on that platform to be the way that this ends up coming to market.

Yeah totally. Now to be fair to the soon to be clinton administration and in particular to algar, who h will become vice president gore in the nineteen and ninety one gore bill, which is allocating funding for all these various internet projects that are being built out in america. They actually specifically allow cate funding to the most aac project at the N.

C. So this is how they get the resources to pay mark, six, twenty five hours away for all the hours that he had. Erica got to work on coding this thing up.

See your time. Me algar did an internet.

He did sort of, I guess he was kind of like the B. C, who funded the internet. wow.

Algar was mark and rics VC. You heard of here first.

You heard to hear first. So they do this. They create music.

And in one hundred and ninety three, they open IT up for anyone to download and use for free. But importantly, this gonna come up again later. They do not open source the code.

So the N C S A routines, the code behind music, it's not free, available and open source. But anybody can download IT and use IT. And of course, people go nuts and do.

In one thousand nine hundred eighty four, wired would write the second phase of the revolution has begun. Don't look now. But protege, A, O, L and computer serve all are suddenly, and moza c is well on its way to becoming the world's standard interface.

Those were all these world gardens. I mean, a, well, everyone should remember, A, L was not the internet IT was A L keywords. IT was paid to play IT was you could only publish the content on A L L if you did a deal with A O L, which is, of course, how they had this incredible revenues that they were reporting.

And everyone thought this was the most believable company ever. But the internet was fundamentally something different. The worldwide web was something completely different. That was open is probably not the right word yet, but used standard protocols. And so when you mention that I grew like crazy, I grab some stats on that in february of ninety three when they released the first version. And this is like super prototypes.

There's some great comments from mark and rein out on the N C S A X moc live when they released a viral point five in january of ninety three that say things like i'm looking more for feedback on design and functionality than bug reports right now. Don't take the current code too seriously. New releases will probably come out every seven to fourteen days. Until one point now arrives, the book of the program will be rewritten in sea plus plus anyway. So there's like disclosure all over the mAiling list that he's distributed in this thing out too.

But the state are crazy. It's like that early a theory um totally.

So the next month, there's twelve users in february of ninety three. Within three to four weeks, there's a thousand. And by spring, so like you got january, is that list of february is twelve users.

A months later, it's a thousand by spring. So two months later after that, I had ten thousand users. And then nine months later, in early ninety four, IT has a million users. So like the very first thing that our kindness and shipped had insane growth and perfect product market fit right out the gate.

Those were still pretty good numbers today.

sure. how? absolutely.

And this is in an era when people maybe have a dial up connection, probably people have pcs, but like, not that many people.

oh yeah, the time of the internet was super small. Like if you had a lion, people by early ninety four using your software on the internet, I I don't know what percent of internet users that is, but it's meaningful.

You had like ten percent of all internet uses.

Totally IT was the killer APP for the interview.

So this is footy, right? We're talking about one thousand nine hundred ninety three. This is also Marks senior year at all.

And I, so he graduates in spring of ninety three, probably when muz is at the like, I don't know ten thousand, twenty thousand is user adoption curve. He doesn't think that this is gonna be a thing. He's like this is like a cool thing.

I did direct my as a internship p during my ya college years. I want to move out to silicon valley, move out to california and get a job. Now i'd like a real computer company.

And famously, he talks about this. He felt like, K, R, I missed. He felt like silicon valley had happened. absolutely.

I got the quote from this too, so marked to a great interview on the tim fairest show a few years ago. And he says, when I got to the valley in n ninety three and ninety four, I thought I had missed the whole thing. The great PC companies have gotten built during the seventies and eighties.

And by the time the nineties arrived, PC was done. IT was finished. He could go buy one, and IT was great, but IT was done.

People in the valley thought there was nothing else left to do. And then there was this moment where I and various people wrapped our heads around the implication of the internet, which today seems obvious. But at the time I was very contrarian. If you said the internet would become a mainstream consumer medium that three billion people are going to use worldwide for all forms of human activity, you would have been laughed at, you would have been institutionalize ed.

spoken only as mark and dress and can to insert a playbook game here. I mean, this is always true. There is like no moment in silicon valley writ large in tech where this is not true.

And I remember graduating from gsp and twenty and forty and commiserating with all my friends being like we missed IT. It's over. Like the valuations are so high, it's crazy.

I felt like this after shipping apps to the APP store. And now and then I was five or six hit, and suddenly there were a million apps, and I was like, shoot, it's over at meanwhile, machine learning had yet to arrive. Crp du had yet to arrive.

There is actually a really pretty great Michael rat. Squair has a wonderful saying of this. I'd perms, I don't know that this is actually like publicly written anywhere, but that this is the biggest lesson that he took from scores.

Cisco investment, which he was like looking at the returns on cisco, was like, how are we're ever going to top this? This is the top will never do Better. I think you're talking about down about how about IT and down, like it's always gonna bigger. Like as long as more as law continues, then just like the number and scale of industries is that computing and technology can address is always gonna grow as long as that is happening. So the next generation is always gna be an order magnetic bigger than this generation that is played out time and time and time again.

And of course, mos law technically didn't continue. But like the number, of course, for the same Price that you can put on a single system on a chip as sort of follow the same trajectory as more as law. So even when we hit the upper limit on certain things in physics, the industry seems to figure out a way to continue to have the spirit of more law.

And there is sort of Price and power of compute continues such death. And this is another and recent thing. But at some point, the harder limitations go away and compute becomes free. And then it's really all about with an infinite and free resource of compute, what can you do with software?

Yep, so okay, back to mark. He can't even get a job at like a big respected to P C. Or software company.

He moves out to follow auto and he gets a job at enterprise integration technologies, which I think was a tech like implementation consulting firm like doing like peoplesoft installations for companies swe. You can imagine mark Andersons fit with the environment like this. So of course, but as this is happening, this is when mosaic is rocket up adoption curve. So he kind a, it's this weird thing where he's this kid at a school, we're going to no name job, but he's kind of a celebrity .

and he's gotten kind of shoved out and there's two sides of the story. I think the folks at n. Csa would say that music was an official project.

Mark says they sort of self organized. IT became very clear to him that the sort of bureaucratic leadership at the n. Csa was going to sort to take the lead on this and start doing the present reviews.

And they did own the license to the source code. And so they, you know, he was an employee, and IT became N, C, S, S. Thing, not mark in recent thing.

Yep, whole boy is like going to come back. So enter jim Clark, of course, jim Clark, founder of silicon graphic si, utah, you know, mafia love. Now he had just left sti.

You had been filling with the board and he's out. He's looking for his next thing, but he has a non solicit from S. T.

I, so he can take any of his people with him. But he knows he wants to start a new thing. He's got a chip on his shoulder eries like, I got another act.

I want to prove all these people wrong. He needs to go find new blood. He hears about moc. He tries IT out is like, oh, this is amazing. This is the future.

I got to look up this mark and reason guy who is there on the about page, just like music by market and reason. So he calls him up. He is called gloster and they get together. They have breakfast.

Ah I think mark would famously say this is like the one and only time he got up at seven am IT is twice so here's how is down they have breakfast and James is like, mark, you should commercialize this thing that you doing with was like you got to get to this job and I think we should do IT together and Marks like, I don't know you are really enjoying this consulting life of doing software implementations people's time like, hello, let me get out here. Let's go do this no, that's not how I went down at all. Uh, you probably ly know this been from the research, but you would think that that would be the now, in retrospect, obvious thing.

No, jim does take a shine to mark and h, he's like, okay, great. I want you on my team, on this new team i'm assembling. I want some Young blood, but the idea I have is this and sixty four nando cattle that we've been working with A N tando over its silent graphics.

This is gone to be the perfect information super highway node into living rooms. This is how we're going to win the internet. We're going to build an online service for the end sixty four council.

IT makes sense. I mean, given the background, given the the hype that was going on around and sixty or at the time, I see why that was the belief.

I mean, I remember being a twelve year old like reading every single gaming magazine that would come out. Just trying to get details on the sixty four I got my on launch today. I would to convince my parents to pay any amount of money for a online service for that council.

which is so interesting that this was what they conceived of instead of the browser, because this would go on to become a huge business. You look at x box life, three, four decades later, this becomes an enormous opportunity. But at the time, this would have been absolutely the wrong move. And there's another player c theme. Mark has a quote that is, if they had shipped a year earlier referring to the and sixty four, we probably would have done that instead of netscape.

Yeah so this is the history turns on a knife point. The council gets delayed for a year and because that they're never able to reach a deal with intendo. And it's unclear that any things gonna en. Meanwhile, they're both itching to get a company going.

So they have a kind of brainstorming session where they are thinking of other ideas for a stuff to do and eventually markets like, well, do you know this music thing like I did build that and uh, all my buddies that I kind of did IT with back in illinoi, they're about to graduate to or they only have graduated. We can just go higher all of them and recreated and commercialize IT. And jim like a, okay, fine, let's do IT. So they incorporate and they start the world and go on to be history, making mosaic communications corporation to commercialize mosaic.

I love that they were like that. Just use the same name, will name our company is like, even though that's a thing that owned by the lab at the university.

yep. So obviously, N C, S, A was none too happy with this. They threaten, lawsuit, sell back, and before eventually they change the name to nets, cape communications.

And that is how IT comes to be, was actually great sense. Who is the first P. M that they hired? Great sense of coastal. Great sense of costata previously of sutter hill. No awesome.

And greg sans little sister Emily was uh at princeton with mean Jenny and was I think he was soluti an of Jenny class uh, one of the absolute like top five most brilliant people i've ever met in my life. So they change the name of the company to netscape. But the internal code.

I was going to ask you if you knew this, yes.

yes. The internal code name that they use and they continue to refer to the actual razer code itself is mazzola, which stands for mosaic killer. It's so good. It's so good. It's so good. So if you are wondering where mozilla came from the asset, so as we're gonna in Clark at this point time, his network for mesty eyes, he would say around like fifteen and million or so he puts in four million bucks. He finances the whole thing himself here and all these people.

great people like greg, which by the way, his nett ork was fifteen million from A R I. Not because that was a little company, but because he had to take on a colossal amount of financing on various nous terms in order to make that .

company totally. Yes, that he would walk away with fifteen million from S. G. I. After decades.

and fifty million at a chip on his shoulder.

a huge tip on a shelter. So he's wary of all these VC that finance S G I. I think na was the big VC behind them and took so much the equity.

So he puts in four million, but then he's worried of alec. Well, this is really get a lot of us starting to take off. We're going to need more capital.

I don't never enough to finance IT myself. I guess I will bring on some of service. He goes and talks to body, but enter kiner perkins and john door.

Here's about the deal. And outbids N. A. Invest five million dollars in the flagged netscape communications corporation for twenty five percent of the company.

So twenty post here. Wow, times are different back then. So not too long back to that then. Our earth, while steeped in happy berry, true bar counter culture.

DNA friend ben, he's overworking at lotus at the time, and he had heard about was a, of course, been using anything. This is the future. He hears about all this, go on on nescafe when he's like, I gotta get IT in there.

I got ta make IT happen. So he has a friend, get him a connection, he goes the interviews and he gets a job and he gets put in charge of the enterprise web server product line at netscape. And this is because there aren't .

web servers yet, right? What's the point of having a browser to load web pages if there's no software that consist on servers that can create web pages?

exactly. So this is gonna become like really big. But at the time, I don't know how I was feeling, whether he is excited about this or not, but was kind like, okay, I mean, like this is how we're gonna like, make money.

We're going to sell licenses for the server business so that companies can create websites and have commercial websites. But the big sexy thing is this browser that is getting millions of people using IT. So kind of this part of the company that was like yeah like necessary. This is how we're going to make money.

And IT is a beautiful time test to business model like give a way the consumer thing for free, get as many people on that as you possibly can. It's actually kind of the first real example of aggregation theory.

Netscape ends up becoming powerful in the ecosystem because they're able to get all of the internet users using IT and thus then a sort of apply pressure to businesses that if you want to create great websites, you can do so when we promised only compatible with netscape, the browse that everyone uses. So you should buy these tools from us. IT makes a lot of sense.

yeah. And really, I think only came about because of the history of mosaic being part of C. S. A.

Like if I don't know some company like microsoft to say or to otherwise, i've gone out and created a new piece of software with word or excel or powerpoint that they ought consumer licenses. Yeah, natural thing you do. Put them in a box, put IT on A C, D.

Trink rapid. You get IT in the P, U. S. A. And you sell that sucker for fifty hundred books to every consumer that walked in the door, not the route that the brothers took to its great advantage.

which is fascinating, because that affected everything. Hands fourth, i've never paid for a web browser. You can make an argument. People are paying for brave in different ways or serve. People pay for specialized browsers, but like it's set the trend that you do not pay to get access to the web.

Yeah, totally. So famously, people at next cape would talk about how we invented internet time. And that IT was this parallel universe that was accelerating faster than the reality time by August nineteen ninety five. So we're just sixteen months after the company .

starts in April ninety four.

In April ninety four, netscape has an eighty percent market share of web browsers in the world. And they decide, jim clare pushes them, that they're gonna public and .

they've successful ly killed mosaic at this point, right? Eighty percent just I don't know, twelve months ago, the other thing that market in the recently created had close to one hundred percent of the market shirt.

which is wild, right? Well, IT turns out they haven't totally killed mother.

okay. So sixteen months you're talking from founding to IPO, like any good tech company, you know right?

active. So you know the bankers morning standing in, Frank quit on and mary meeker on the analyst taking in public.

just absolute killers.

killer super starting.

franquet rone of the amazon IPO, mary meeker of bond capital, and famously, the kinder perkins is stayed to the internet jump.

The people who .

would go on to do unbelievable things took this company public totally.

so they're not quite sure how to Price. I mean, nothing like this has never happened before. So they decide their supposed to Price at fourteen dollars to share, which into the exact math. But that would be roughly like, I don't know, five, six hundred million dollar market cap, shall we say?

So like astronomical at the time, I mean, twelve months ago, this was like a twenty post, uh, series a, the liner did so they think in fourteen dollars to share than I before. Clark, remember he's like he's pretty salty from what he walked away with. S. T. I.

He pushes them to up the IPO Price, what they end up pricing at the next four d twenty eight dollars a share the next day the stock doesn't open because there is so much buz about this company like obviously the institutional demand is you know hi um and famously, institutional investors were kicking themselves for having missed out on microsoft a decade earlier and how big that became. And so the hyper like this can be the next platform. This can be the next microsoft.

But me know what health. We've got millions of people like mom and pops and kids using this thing on their home pcs. They all hear, you know, in the news that lets keep us going public.

They're using, lets give, they want retail wants IT honi. P. O. So famously.

tell me, be a part.

This is like the origin of the pop, the IPO pop, uh, at least the extreme IPO pop. So famously, Charles swap the broker. They had to change their phone systems leading up to the IPO.

Remember, there's no like internet brokers at this point. You can place orders online even to your netscape. So they change their phone system that when you called your broker at Charles swap, you get a message in the couple days leading up to the next sky.

P, O, that's welcome to turn swap if you're interested in the neck by present one, one, one. Oh, my good is so there is so much demand. IT takes hours to open up the stack on the day the I.

P. O. IT opens at seventy five, five dollars to share. wow. Remember the bankers were like, I don't know that we can go to twenty eight the night before .

they thought they were going to at fourteen. The bankers reluctantly ipod at twenty eight. And then the first retail trade happens at seventy five.

seventy five. Yep, IT falls a little bit during the day, but IT closes at fifty eight dollars a share, giving the company a three billion dollar market cap.

Just insane.

totally insane. I think microsoft is about ten billion at this point time, I remember.

And it's worth saying, if you thinks one, this absolutely kicked off the dot com bubble. This was the moment that IT started. And there were a couple of internet ipos before this.

But this is the one that blew the doors wide open, made valuations not matter, and created four Young and half years of absolute madness from this point forward. But lets keep had an unbelievable growth trajectory, not just in users, but in revenue, like in the band horror, its corner of the business. Revenues were doubling every quarter, which means they were sixteen xing revenue year over year.

Well, they don't get around for five quarters.

sure. But at sixteen run rate on revenue, they did 4 million .

in revenue in the first six months of nineteen ninety five alone， which like you know, for a company that entered one thousand hundred and ninety five being what eight, nine months old and then was doing you know what call IT run rate, fifty, sixty million revenue in the first full year of existence. That is very impressive.

Yeah for sure. The other thing that's worth mentioning here is that IT was unusual for companies at this point in time to IPO without being profitable. And so people were sort of like bankers were making this exception of like, well, this one's going to be hard even though the companies is not profitable wherever you look around. And it's absolutely the minority of the time that the company is profitable before the public is willing to take on the risk of continuing to finance that company. So so just funny how how much things have changed.

I mean, IT really the net cape. I P O, this was like a cultural moment, tech for the world, for finance, for everything.

Funny story. This was only six days before the launch of windows ninety five. So this is the most like, interesting month ever in the tech industry to this point.

And if there is, I mean, this must have been in the risk factors of the IPO perspectives. I didn't look IT up, but if there is one bar narrative on the nescafe I P O, it's microsoft. Like everybody knows, microsoft.

They control windows. They control the Operating system of ninety five percent of the install base of pcs in america. Know in the world at that point time what are they gonna? But nobody pays you my attention and favour.

Sly shut out to brian glover, finding this and calling IT out around the IPO. And dason gives an interview, but gives an interview and says famously that asked what he is worried about, microsoft, Peter, and he says, i've not worried about IT. Net game can become a company that will turn windows into equal mundane e collection of not entirely debugged device drivers.

Well, pride comes before the flowers. We all know, obviously know this is microsoft in the nineties, which is like absolute killers, prd, O J, D O J, which happens because of all this. So in may of that year, you know, bill gates saw this happening.

He saw an escape. He saw where the sues going to go in. In may of ninety five, he had written the internal internet title with memo.

And for anybody who hasn't read, that is just worth reading in its entirety to understand. One, the genius of bill gates. But two, to understand the context of that time. Even bill gates, like even microsoft, who was so steeped in this stuff, their strategy was the information superhighway. They were long all this stuff, interactive, T, V.

But they, just like most other people, did not predict that this low end disruption of the internet, based on text being sent over HTTP and wu images in line that mark and recent managed to get into the browser. Two, that that actually was going to be the thing. And it's not until early ninety five when he pends that memo, where IT becomes obvious to even the smartest, most well position people in the whole tech industry to react to this.

But once he realizes and writes that memo, all boys that ever game on guns out. So is this is strategic priority, like number one of the company organ, a competition and are going to win.

So turns out they actually have the perfect strategy to kill netscape already in progress within microsoft, which is that back in ninety, eighty four time is red and famous microsoft employ and then would go on to be founder of control labs, which facebook quite couple years ago. He had actually lice who's playing around with know. He thought browsers were interesting.

This was gonna a thing he had licensed for microsoft, some code for a razer from a little company called spyglass ink. What happened to be located in aloe, in urban a champagne? Why was IT located in urban a champagne? Because IT was the commercial entity started by the university to spin out and commercialized the IP.

They developed the N. C, S. A, including the music. My brother. So microsoft got a license to the mosaic web brows er like well, hm, we've got this license.

We can use IT and and the terms of the license actually that we pay spyglass you a portion of the revenues that we make from distributing this thing. What what if we just build IT in the windows and we give IT everybody for free? Oh my god, it's stone cold killers. There actually ends up being a big lawsuit about this by glass sues microsoft is like k you're giving IT this away to like hundreds of millions of people and you're not paying as anything because you not charging .

for IT and classic microsoft legally. They're like, hey, look, we safely negotiated an agreement with you. And you know, sorry for that. You anticipate the way that would go on to distribute this thing.

Famously, they run this playback and done the same thing with dos OK.

This is worth a quick cy bark because this is absolutely unbelievable. And as part of the reason, microsoft got sued, but microsoft had a deal in place where in order to use dos at all, to license dos from them, if you're A O E M, you know, making computers, you had to pay them whether or not you chose to use dos as the Operating system on that PC IT was a per CPU shipped license.

So wow, if you're A P C manufacturer, in order to get access to dos, microsoft like sure will license to you. But we're not trying the amount of money that you O S to the amount of computers with windows on IT at the the amount of CPU you ship period. So then of course, the incense of there is for the O E M to say, well, we're ve got to make the most of this license and we getting charged for anyway. They put windows on everything they ship. And that is how microsoft became the dominant platform with dos, where then every application became written on top of dos because every CPU had dos on IT.

yeah. And famously, microsoft did not develop us. They did a very similar deal.

They licensed p from another seattle company. Another story for another day. God, they were killers. So the net of IT is, even after the loss, you, they pay a grand total, microsoft does, of eight million dollars to spy glass, which go back to the universe.

Will I, the ncs A N N I get eight million dollars for a music which becomes internet? That's right. Music which, you know, mark and Jason and ina wrote at N C S A, the I P stays at N C A N L N O. I span out in the spyglass license for microsoft that is internet explored.

And for anyone who is thinking, jez, how do I international explore a launch so quickly after microsoft needed to catch up and create a browser? This is how I did IT.

yeah. So people know that this happening. And let's get notes. All this is going on.

Meanwhile, lets cape at this point is held. Joining before the the IPO was uh a new CEO jim bark stale. They brought in sort of a professional CEO Operator.

He was the former CEO effete x he came actually from macos eller and A T N T. Before that. They have this sort of grizzled industry veteran at this point because even jim Clark, for all of his executive veness from S.

G. I, for the IPO netscape, actually did want this sort of like robust professional public C. O.

So everybody knows this is going on, but nets cape, thanks. And the market thinks that, okay, you know, microsoft, now they've got this internet exporter thing. They're lice music.

They're going to run the office playbook here. They're going to sell this P. U. S. And then as he said, been two weeks after the nescafe IPO they launch.

When does ninety five? And not fully bundled in them, but they say that there's the uh, windows ninety five plus pack. An internet c explored is bungled into IT for free. And of course, this would eventually, very quickly, internet explored would just be bundled for free directly into every copy of windows ninety five and then windows X P, all the sun. Netscape is now forced to compete with free and buddle brutal at every Operating system.

basically on the planet. Absolutely brutal.

totally brutal. So now this little division that ben horror is running, the enterprise server division, that becomes hugely more important. This is the only part of the company where they can even like conceivably compete against microsoft. And this becomes like major strategic initiative at night scape. We're onna focus on selling enterprise server products.

And of course, the enterprise service products have to produce one pages that are compatible with an explored because that's now what .

everybody is using. IT sucks. Uh, so so brutal, so famously, they start scrambling. But in the team start scrambling, they're gonna make the product way Better. The microsoft server product, the working on a bunch of new features, they line up a big announcement event in new york city for march of nineteen ninety. Sex, uh, about the new version of the product.

And famously, two weeks before the event, mark ends up giving an interview to computer reseller news of all publications where he just reveals the whole thing and then sends an email to mark and the email says one line I guess we're not going to wait until the fifth to launch the strategy marker response. The email was just from then, just to mark mark response, copies in jim clare, copies in jim mark ste. And says, quote, apparently you do not understand how serious the situation is.

We are getting killed, killed, killed out there. Our current product is radical, worse than the competition, competition being microsoft. We've had nothing to say for months.

As a result, we've lost over three billion in market capitalization. We are now in danger of losing the entire company and its all server product management fault. Next time, do the epic interview yourself. F, U. mark.

Are reading this email is like in print. Of course, we're being family friendly here on the but just seeing like if you come up, mark, I just can't imagine that you all that way.

Here's the best part. That email was written the very same day that the time magazine cover came out market in on the cover of time magazine barefoot on a throne as the throat of the next due silicon valley king. Wow, mark would later say about this whole escapee quote, this is why I should not run a company.

Yeah, no kidding, no kidding. Maybe should be a venture capitalist instead. Oh boy. Well.

that actually a good question in mark's entire career, including the loud cloud story that we're going to go to tell later. Has mark ever been the of the company?

I don't know whether he, the C E O evening.

he was the C E O of thing here, right?

Okay, so what I will .

get to that. But it's very interesting that all the biggest successes, he was either effectively the co founding C T O or a board member or the venture capitalist behind IT and you know not the C E O of uh any of the most successful stuff he's done.

Well this is gonna the great I don't want to say like it's not a alive, but the sort of um postering uh from one of the key elements of the beginning of entries and horror ds, which is their model that you know all the general partners here need to have been CEO. Lt, like how of the first like five or six general partners have never been six.

right? There is a lot of credibility behind that. They were strong Operational leaders, executives.

But yeah, jeff Jordan LED the paypal acquisition of land paypal within ebay. He is not the C E. O of you.

I like right? I would take him on my board. Yeah, that's funy. Well.

I think this a good point before we get into like the ninety six ninety seven and nine eight continuation of the browser wars, what happens to the scape? And i'll leave IT there for the moment.

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I will, David. So we're in the browser wars. Microsoft just blue nescafe out of the water. What's going on for the scape now?

Uh, such a tragedy. I mean, that year of the IPO in one thousand nine hundred ninety five, this is that thing like this, actually a really great company. IT did eighty five million in revenue, let's give that in one thousand hundred and ninety five.

And then nineteen ninety six I did three hundred and forty six million in red and then five thirty four the next year in one thousand nine hundred ninety seven. Like people like love to dancer on this. Now as like mania you know IPO mania unprofitable ba ba ba take ba ball IT was for real.

But the stock once microsoft strategy, bundling strategy became obvious here in december and ninety five, I think, which is when they announce that there was going to be a bundled into all copies windows ninety five going forward. The stock had peaked then at one hundred and seventy one dollars a share, which is not even hugely up from where the IPO was. But I never got above that.

I was just straight downhill from there, unfortunately. And then in one thousand nine hundred and ninety nine, finally, uh famously nets cape sells itself to A O L for four point to billion dollars but it's an all stock deal with A O L yx and h that's p time Warner merger so who knows by the time shareholder is actually ultimately got liquid on that, what they were able to get out. So market and reason part of the sale become C T O of A O L. I love this. You can imagine how well that's gonna.

The funny thing is like he's not actually responsible for any data day Operations. He's kind of like chief futurist at A O L. I think his role is forward looking technologies or something like that.

He only lasts until like september of ninety nine when they like right ahead of of the time Warner deal. He's like, I am, I want no part of this. And before that.

yeah oh, wow. I didn't realize he didn't even stay a year. no.

So I wonder, be four fired, some earn out of? Or maybe he was just like, the stock is gonna worthless soon. Anyway, i'm out.

Well, so then, though, this is gonna come very interesting, actually, this deal becomes huge for the next chapter, and ultimately for entries. And horowitz, the farm. So ban becomes the VP of A L E. Commerce division. And what he ends up doing is human.

And pretty much the whole old server team from nescafe, what he figures out that they ultimately a test with doing is that all of the brands that are selling try to sell on A O L within the A O L word world garden. You know, this is nike, this is L L B, this is lands. And like we're talking about you, all these retailers and C, P T companies, they want to sell, but they're not internet companies.

They don't have like e commerce apps and servers and all the infrastructure that they need to make this happen, so can help them. But they gotta go stand up like serfs and data centres for all of these customers. And that's what dance team ends up doing. And quickly he realizes, like, there's actually an opportunity here, like a well, is gona do this for their partners selling on A O, L.

which again is not the internet, is at least is not the web.

is not the web. Here is the internet, but not the web. The web is now I know that this is where the the whole market isn't is going to be in the future. These companies, nike, eeta, they're gonna need to help doing the same thing for their web applications. Why don't we go start a company where we can Operate this infrastructure for all these companies that are not technology companies and then they can just post their websites in their web applications on our infrastructure. It's kind of like a cloud, like a cloud of internet infrastructure that you can just deploy your applications too.

You can dynamically spin up and spin down these like virtual machines, David. So not even like owning your own server, but like having virtualization across multiple servers that scale elastically as you need them.

Yeah, I think this kind of a big idea.

Wow IT in ninety nine, that feels little another time.

maybe a little of their time. But they like the idea so much that they move back to so looking valley. They leave dc, where L L was bed X.

I don't know they ever move there if they and so they can value, but they leave a well and they start the company they call IT. They really want to embrace this cloud concept that they are pondering. They call IT loud cloud.

Yeah, I can't wait to get into this. I do want to close the loop on a couple of netscape things though, before we move into loud cloud chapter.

So I was wondering, first of all, why did A L buy netscape? Like if they're getting erect by microsoft, why are they giving four point two billion dollars of their stock? Is IT a because they knew their sock was widely overvalued and let's say it's ten ex overvalued and what's four hundred million dollars of actual value to go and pick this company up, which what we now know about the way that they were motivated to do the time Warner deal, to basically do a stocks swap for a company whose stock they felt actually had real intrinsic value, IT makes a lot of sense that they would wildly overpay for this sort of soda to function netscape, even if all they got was the people and some technology.

So that's one explanation. The other would be basically to get a bargaining chip against microsoft, in case 也 became relevant for them to try and be less dependent on I， E. To have a browser of their own that they could bundle in a distribute.

There are other people who believe that A O L was interested in net center, which is basically netscape web properties, which drew a lot of the traffic sort of the like M S, N play, that microsoft had to be the destination website. So that sort of the reasons why A L L could have been willing to part with four point two billion dollars of their stock to do this. Now if you trace IT all the way through to today, I really have been trying to figure out all what happened to like the netscape brand and what happened the netscape I P.

Well, the brand is an easy one to trace that stayed with a well until they ultimately were bought by verizon. So the big red checkmark, verizon owns the netscape brand today. But somewhere along the line, the brand actually got separated from the technology, the bungle of all the the lecture al property and everything that netscape was, which did need a new name because I could use the netscape name.

Any work is that brand was on various on. So that got renamed new aora corporation. Which A L, L sold to microsoft, who then in turn sold them again to wait for a David to facebook? yes. Oh.

I guess i've so glad you found this. So this .

is from jami's of winky or J W Z, who was an early employee onder. I think that many credit him with being a founder of nets. Cape is great blog and crazy sort of bar and concert venue.

And servant csco called the DNA lunch, he write. The former netscape company is currently a not on Operating subsidy of facebook, still known as the new era corporation. The nets cape brand remained with a, well.

wow.

how crazy is that?

That's so crazy. I'm so glad you post us because there's another thing we gotta talk about coming out of the net. Cape marilla mozilla horse. yes. So I didn't realize this actually happened before the A O L acquisition.

They open source in nineteen ninety eight, I believe. But yeah, you're right. Before A O L, they open sourced all the browser or code ironically, like it's so interesting that mozilla, the code name of the mosaic killer, ended up becoming the name of the foundation who ended up stewarding the open source code project, which of course then created firefox.

So out of the ashes of the sort of, uh, duplicated without ever looking at the code, netscape, which can came from mosaic, you then have mozilla, and they did name the browser mozilla for a while, and how to separate browser called mozilla, which was compiled from similar source code. And then firefox, which was a whole new thing, right? There was some code in common with the original netscape.

This was very different. Firefox one at first launch. I remember this had the search bar in brother, which was a concept they borrowed from Opera. But that was not in nets, correct? You know.

I was in the top right. IT wasn't the omi bar that chrome pioneer. IT was sort of that separate search window. But IT makes sense to me now, knowing all this lindy age, why user agents have always been such a mess. This is gonna take me.

But if you've ever written raw HTML code and needed to do a user agent check, because you need to figure out if it's I, E, and you need to account for some three stupid pixel offset that they have that should actually be in there. But the rendering engine socks because license from whatever, almost a thing that's actually that's an unfair criticism. The real reason why IT sucks is because they had such dominant market share that microsoft can do whatever they want, A D V from back and just say everyone's using our stuff anyway.

So who cares what the worldwide d web consortium says that should do? The truth is what we say IT is. So anyway, if you ever do these user agent checks on the strings, IT has, like every browser name under the sun listed.

So if you're doing like a string search, you're looking and you're like, what is this? Mozilla slash, firefox slash and netscape slash? Ba ba ba.

And it's because IT all freaking comes from the same original branch and all these different browsers are competing against each other. But there's kind of only two major linieres there is the mosaic lineage. And then all those engineers left.

And without looking back to the old code, they wrote new code called mozilla. And everything is basically either from mosaic or mozilla. And there's been different stuff over the years with web kid and whatever other. I don't know where Opera is arrive from, but it's amazing how much of the browser market, sure over time, really just comes from .

those to yeah and at all still funds through today yet, which is crazy yeah it's so hard to actually have the right excuse now to be able to tell this whole story. On acquired, I can I always felt like mets' pe with a that was a point in acquired life where we would have done a whole episode on the scape. But now is like, I don't know that we can do. And this is the perfect vehicle. I'm so glad to do IT totally well.

Thank god, from the lessons of netscape and loud cloud. What about to go into became the the ashes upon which the phoenix of a landscape changing venture firm would come from. So we the excuse .

the firefox of venture firms, shall we say?

I mean, honestly though, after the financial crash, when all the funding like is not crazy to call IT a firefox or a phoenix or whatever in founding a venture firm in two thousand and nine and the playing capital way they did, I I jumped ahead.

I know we'll get there. absolutely. If you want to be a really nerdy, you can call IT the thunderbird of a thunderbird.

I don't was, yeah uh, okay. So back to the story. Ben and his server team, they've realized this market opportunity theyve got this idea for a cloud computing, cloud infrastructure.

So he hooks up with two of his court team, tim house and security. They leave A O, L. They go back. Still valued like we're doing this and it's still one thousand nine ninety nine. The bubble is still quite inflated at this point and there is a lot .

of hype and everyone's drunk escape IPO ed with great revenues and great growth. But now everyone's just drunk.

yes. So immediately they want to get mark involved, of course, like who wouldn't want mark and dress involved in something like this? Mark totally gets IT his, yep, this is a big idea.

And actually this is a facing at the press briefing for the launch of lab cloud. Mark would be there, and he would use, and trying to describe what this concept is, this cloud inflections concept. He would use the very same electricity metaphor that basis would then use, eight years later, the river A W S. At the Y, C. event.

And what is the metaphor?

So BIOS is a analogy that he used was german beer. Distil is used to produce their own electricity to match the hops and everything and do what they are doing, the the salaries. And then they hooked up to the grid and just use electricity from the grid.

And the innovation, they realized that the electricity doesn't make the beer taste any Better. There is no reason why they should create the electricity. And the whole idea of cloud infrastructure is the same thing.

Renting your infrastructure from loud cloud or amazon or as google doesn't make your beer taste any Better if you're an application provider. Mark was the first one to use this, so of course they want to get them involved. But remember, mark has learned at this point that he shouldn't run companies, although I guess he made that mistake with me later.

Mark says, I don't want to be an active cofounder, but i'll be chairman and all invest six million dollars. So I guess he was able to get enough money out of the A, O, L, stuck that he can invest six million dollars. They go out to raise benin team, go out to raise venture money on top of this, and they meet and iraq live at benchmark capital, who they just love.

And then in hard thing about hard things, quiz quote that he has describing andy says, if I had to describe andy with one word, IT would be gentleman. And the relationship between him and ben and mark is deepen, continues to be deep to this day. And andy, of course, was benchMarks infrastructure guy.

He started as a telecom investor. So this is completely in his wheel house, and he gets IT. So now this is where things get a little monkey.

And no doubt this scene is one of the major seeds of interest in horror. And the firms whole philosophy and IT would get so right here. So I don't know exactly how I went down.

I don't think getting fit is ever given the whole story, but this is as best as we can reconstruct IT. So what what does this have the protected onus on for A A cuba one day? You so obviously this was a super hot deal.

And yeah, that scape had failed. Couldn't quote, but you know, like he had been. Everybody was drunk at this point time.

Somehow, I believe that andy and benchmark agreed to do the deal without a full partner meeting, and they agree to do IT for a very high Price, even at the time, which was a forty five million dollar free money evaluation. And benchmark is gone to invest fifteen million in the company. It's big check for them.

Are they even doing there four hundred million dollars funds at this point play around that?

no. And I think this was before their billion dollar fund, which famously they said they'll never repeat. I think their funds were like maybe two hundred and fifty, three hundred million at this point in time.

So big check, big valuation, brand new company and no partner meeting, at least as far as I can tell. So the deals going down and the benchmark partnership though doesn't like that. Mark is investing so much personally, he's not a actively involved code there.

He's investing six million bucks. And here's the thing, the Price of the deal is based on a primary evaluation because venture deals, you know, until the last five, six, seven years, they all used to be placed on a free money valuation. Now the problem with a prime evaluation.

nobody knows what they actually own until you specify exactly how .

much is being raised. So if more money gets raised, then you're gna own less of the company because the post money valuation goes up based on the amount of money raised. The benchmark is running the huge check. They want to get fifteen divided by sixty. They want to be the .

elderly money into the rap. Well, then they should specify the post, David.

they should specify the post. But people didn't do that back in the day. So here's mark coming in now.

He's pumped in the valuation up by six million box and his confident. So they tried to cut mark out of the around. Oh, yes. So that was a wrong move. Number one, you don't really want to cross market injuries .

even if we just stop the episode there and say, let's look at this from a single turn game versus multi turn or international game. Massive, massive. That idea for benchmark to contribute to create entries and horrow in the future. sure. IT could have been the most valuable thing to do for this deal in that moment, but for the next twenty, fifty, one hundred years, IT would be great for bench market if angers and horror .

ds didn't exist. Not only if entry and horror didn't exist, but if benchmark were like part of the benchmark family totally.

that's an even Better point.

Oh my god. Oh my god. yeah.

Creating A A little bit of a friction point here, assuming that, that is any factor contributing to going out to create their own venture firm.

Well, that wasn't the only part. So IT gets worse. So supposedly after the deal is done, enclosed mark, of course, is like, F, U, i'm gonna put my six million boxes and you think you're gna come between me.

And then like we've been through this. So would be like you would be like benchmark trying to come between you and me. Like that's like gona happen, right? So mark invest the six million box is to sixty six million post money evaluation. Benchmark only gets like twenty two point seven percent watership after the deals done, remember.

And I think this is why I think they didn't present the whole partnership before the deal is done because ban and mark and the whole leadership team of loud cloud of this new company, they come in to meet the full benchmark partnership. I think they only really knew andy at this point. They come in exposed to be like slap on the back yet to no year low.

Gua, this is great. You are VC firm. Hey, I was weird with mark, but like, we will get over IT, right? So supposedly in this meeting, David burn, who was then one of the GPS at benchmark and he had been a very successful executive recruit before joining benchmark, is a GPT ban, is presenting the whole management teams there.

And he says, to ban in front, everyone hates to stop. When you are you going to get a real C E O and ben is like a what do you mean like he knows what David means here, but like he's trying to like, hey, like is a friendly meeting. Like let's not break up the navy .

a and in front of the management team.

in front of the managment team.

And mark like that just pulls out the rug underneath his ability to lead these people to do that.

Yeah so apparently then burn just like doubles down again and keeps attacking then and it's like you're not qualified to lead this company like how you going to take this thing public. You all of this stuff, which also is ridiculous because of course that is qualified, delete this company even if if you weren't, why on earth would you say this?

He was doubling revenue or over quarter at netscape in his division. I mean and on top of all that, mark in recent through six million. And so I mean, he kindly needs you. IT doesn't really need you. And you've already committed like just do the value creating activity of giving the leadership team the confidence in their leader at this point.

totally. So this creates, as you can imagine, an intense dislike between ban and mark and all of the benchmark partnership. Accept for andy because, you know I guess nobody else really like stepped up to defend them here.

So we will later in part to get to the amazing profile that tad friend did in the new yorker of mark Anderson in twenty and fifteen. But twenty fifteen of sixteen years later, there are these great quotes in there. Ben says about the whole philosophy of Anderson.

He, we were always the anti benchmark. Our design was not to do what they did, and he started about this. And then mark is about bill early, of course, the you know, most visible benchmark partner at the time.

I can't stand him if you've seen sign field. Bill girly is my newman? Just no. wow.

This is something that you definitely have to know about, Andrew. And horror is, especially in the early days about when they were starting, they were loud about being different, like they wanted to position themselves as in every way we possibly can. We are the opposite of your classic venture capital firm personified by benchmark.

which is totally we're going to get into this in part two, but is so great because that is the exact in playbook the benchmark took against client's perkins when they started.

It's fascinating. It's such a .

good strategy. And who was the architecture that strategy and direct live and who is the one benchmark partner that they love and directly live? And andy with then retire from benched Spark not long after.

And the ties here end up actually running deep, like eric Fisherman, who was exec, would go on to become fantastic partner at benchmark.

What here's the funny thing about all of IT like this is so great, it's such drama. And I really do think that this experience was a big part of what planted the seed for benchmark to start, Andrews and horowitz. But all of this drama is just great for everybody.

It's great for Andrea, is great for benchmark. No press is bad press. And the more that people are talking about and writing about this as entries and horowitz is getting off the ground, the more IT just increase this, the statue of the firms.

Well, in the twenty fifteen piece you're talking about is literally called tomorrow's advanced man about mark and reason that's someone you mentioning, right? Yep, that is the puff piece of puff pieces like it's a great lidl piece but it's like, hey, you're the best futurist in the world. Say whatever you want. And so having a platform to be able to kind of do any of this stuff, mark takes full vantage.

Oh, totally, it's so smart. All of this drama around the funding asset, no less. People are still jazz about loud cloud. Two months after the series a, there is another forty five million dollars wired runs on article calling cloud, cloud market country since second coming, but then the clock starts to run out.

It's also crazy that like the press can get enough of mark injuries and bend horo IT is run the company, but mark is like this internet king narrative that everyone just wants to keep perpetuating, which is true in many ways. But just interesting that he was the CEO of neither the companies I mean.

yes, but he was on the cover of time magazine on a throne so ah okay. So here's the thing though about loud club, which is very, very different than nescafe. It's not a software company, it's an infrastructure company. And the thing about the infrastructure company, about what they are doing is that if you want to grow, if you want to take on more customers, you got to go least some more .

data centres and you .

ve got to .

go buy more series .

and inpex. So as they are raising all this money, they're investing forward in all these capex. They're getting orders in like, you know, pet stock com is I go yeah thrilled to get some of the simple structure.

So then in early two thousand, of course, in march two thousand, the bubble starts to deflate. A lot of these orders start vaporizing, but there's still they have forward contracts to buy all the cap acs, so they need money even though they just raise sixty five million dollars. They go around.

This is such a great moment. They are trying to raise money from everyone and all the V, C, R spot. Uh, what's going on? So they're literally traveling around the world.

They go to soft c. They go, I don't know, they actually fly to japan to meet with banking. The U.

S. No idea. Meet with masa. This is great. So bill cambell, the coach legende coaches, by this point time on the board of love cloud and msa back channels to build. And this is a hard thing about hard things bends like pill, how to go, how to go with with most of and feels like, honestly, he thought you were smoking crack.

So you know, it's bad even when he's like, this is crazy so eventually they do raise a series c of one hundred and twenty million dollars at a seven hundred post. But it's like by the skin of their teeth, this is in in mid two thousand. They still burn through all of that quickly and are once again on the brink by the beginning of two thousand.

One, the only crazy last ditch potential financing option available to them is to try and go public because weirdly, there were still some like believers in the public markets even though all the pcs and private investors at this point, we're like o, we don't want to be funding any of these money burning companies. So in march of two thousand one, they actually go public at six dollars a share. And the wall street journal runs a piece leading up to the IPO where they have, it's called the IPO from hell.

I think that might have been either referencing the piece, the title, the piece. Everybody is calling this the IPO from health. They have a quote from dick RAM lic at N.

A. Saying, this is what we call a hail mary deal. You throw IT up in the air and you hope .

for the best. Oh my god.

wall, you know, that's not good. Immediately after the IPO, which they do get done, they lower their guidance.

Great thing to be doing in your first quarter as a .

public company. The stock drops by two thirds to two dollars. Chair and gold man and Morgan Stanley had booked around the IPO.

They drop research coverage on the company. no. But even like one quarter is dub amazing.

So what's the logic there? It's just expensive to have analysts covering your company and they're like, look, we just don't believe in the company anymore even though we undervote IT. So we're gone to stop paying analysts to do this work.

That's a good question. I could be that or I wonder if it's more that. Look, hey, if we were to covered this company, we would say you should not invest in this company.

I used to sell and we don't really want to do that because we were just the book runners on the IPO. So probably easier to just drop coverage. Yeah well, and the logic of why the drop in guidance is like.

look, all the companies that we thought we're gonna customers are going out of business. So like we are a big business, foreign investors that is going away.

Yes, the golda is drawing up. People are not gonna to buy levies. And at this point time.

no one is moving to california.

It's unclear yet that levis are going to become a fashion statement, which of course, they do, metaphorically speaking.

David, you're like three levels deep here. Take me back to storytelling exactly OK.

So by two thousand, two like it's clear that they are running into a brick wall, then managed to engineer deal to offload the entire infrastructure business to E D S, rosario's electronic data systems company.

which that we need to do a company profile on at some point. That's like a fascinating one. Oh.

totally, totally. As they sell basically entire business for sixty three and a half million dollars, they lay off almost everybody at the company.

That's one tenth of what they last raised at or no when they went public for more than that for more than seven hundred million.

I think IT was actually about flat OK when they went public.

So ten cents on the dollar is what they're liquidate the server business for totally.

But they wanna give up, they decide, hey, you know, we've got this tool that we've built internally to help us provision the servers that were wrapped in our data centers. We might be able to sell that as software. It's pretty good.

And E, D, S is actually really interested in this. They want to own the infrastructure business because that's part of their business. But they are like, yeah I mean, if you can deliver that as a software product, we will resign up and will be a twenty million dollar a year. Customer for you for the server automation product.

which that's twenty million dollars that loud clouds like, great. We can use that to .

make payroll. And so they do this. They lay off we know most of the company and they restart as this software firm doing data center server automation. There's only one problem, the tool that they belt, which is so great IT, has no ui and IT is called the driver and is entirely empty. Med.

let's just one problem.

This is my problem, is not exactly something you can really like deliver to adds or any customer. When this happens, the stock craters to thirty five cents, which is a twenty eight million dollar market cap. Remember, you've got sixty three and a half million in the bank and a solid twenty million dollar a year customer contract.

Wow, talk about trading below books value.

The street is valuing them at half of the cash on the the books. But ban is undeterred. Red, and this is the mosely, what he writes about, and hard thing about hard things.

They go to work and they rebuild the company back up. They claw their way all the way back over, really not that long, a period of time to five years later. They sell the company to hp for fourteen dollars and twenty five cents a year, or one point six million dollars close to .

two x what they went public for totally.

So like this is a win, then, would write later about this if i'd learned anything. IT was that conventional wisdom had nothing to do with the truth, and that the efficient market hypothesis was deceptive. How else could one explain obs, where, which is what, they change the name of the company to trading and half the cash we had in the bank when we had a twenty million dollar year contract and fifty of the smartest engineers in the world.

No markets weren't efficient at finding the truth. They were just very efficient at converging on a conclusion, often the wrong conclusion. And this experience, I think, would totally inform really what I think was kind of the founding.

This is of entries and horowitz, which was there is no bubble and the internet is gone to keep getting bigger. And you'll think we're crazy for paying these Prices for these companies. But like, we're not crazy.

Yeah and what you're looting to there for folks, I don't know, Andrew. And horror is early sort of reputation is these guys started a brand new venture firm. They raised too much money because in two thousand and nine and three hundred million dollar fund was big and they'd just giving startups these crazy valuations and overpaying and blowing everybody else out of the water. And David, your exactly rates a the efficient market hypothesis is wrong and also that any crash we're in is a local minimum. So all that matters is can you get through this localized crash and continue to ride the sort of intrinsic value wave that is the internet and software taking over everything totally.

And it's not easy, right? Literally, the title, the book have been rights about. This is the hard thing about hard things.

which is so good.

so good, such a good title. It's like they had good marketing people there or .

something oh I mean and to your point about IT not being easy, like ben gets asked in interviews, you know how to get through that when you had to lay off half the company and then get the other have to recommit to basically starting a new startup with you and his answer is a lot of crying by me. Yeah, it's brutal.

But I think the lesson to be learned from this, and I totally, totally resonates for me, is if you're in a technology market and you find yourself early to the market like they did with you, don't cloud .

and realization A W S by seven years.

By seven years, it's not good to be in that situation. But if you can just hang on and stay alive until the market can catch up with you, these markets will grow and you can become a big, big player, even if everybody's already written you off.

Can you stay alive long enough to become lucky?

Yeah, obviously Better to be lucky up front. But if you're not like, wait for, like to come to you anyway. So there's one more other fun little part of the loud cloud obser journey.

One other character that's gonna become very important later in part two, which is one of their other board members. So the board of loud cloud pretty awesome. Mark Anderson and eric live, bill cambell, the coach, obviously ban and the other independent board member who they had, do you know her? That is fan.

No.

Michael of its.

oh, that's how they met.

Michael of its, that's how they met. Michael ovitz, of course, were talking about super hollywood agent, founder of creative artist agency, Michael of its later earth, while C O O and president of disney under ison. Er briefly, briefly, briefly. So after is the whole disney debacle le he was like, you know, looking for stuff to keep him entertained and wanted to invest in, you know, that then hot internet area. And so he gets introduced to benchmark and ends up joining the board of loud cloud is not wild.

wild. So that's how you know mark and ben get infected with the idea of creating the C A A, A venture.

a venture totally. It's so funny how, like you, we've painted hopefully the picture on this episode of all the life experience is leading into nescafe, leading into loud cloud, leading into that moment with benchmark and then of its joining like it's all IT, all gets expressed in Andrewes and hits wow.

There's one more principle that you touched on earlier that I want to tie a little bit of a bow on that's a founding principal, the company when ben horwitz is getting dressed down in the partner meeting at benchmark and they ask him, know, when are you gona hire professional C. E O? This becomes a major tenant of endorses and horror ds.

About technical founders being C E. O and being armed with the resources that they need and the ability to, even before they would otherwise acquire those skills, sort of have a leap on being a professional. C E, O.

And there's this two thousand three interview. I I love reading things from two thousand three about mark and ben because it's a really, really interesting perspective where it's post next game, post loud cloud, post crash. But they're just an Angel investors. It's six years before they start injuries. And horowitz and one of the questions in this great Q N A that will linked to in the shown notes, as should they founding technologist, run a mature company and Marks answer, you know, is a brilliant person because these long philosophical answers to every other question, this one, he just dancers, absolutely.

It's so great. This is so brilliant. We'll talk about this much more in in the next episode. But what's so smart about this and so dumb about the rest of the ventures, capital industry until and recent changed the game, which is like, let's put aside what's right wrong or what you believe.

I don't believe IT was so dumb to preach and practice anything else except that founder should run the companies. They start because if you say anything else, who are you alienating? You're alienating founders, right? Like so if you want to win deals, why on earth would you say anything other than I support my founders and i'm loyal to them to the end?

Yeah, just wild.

just wild.

Okay, have. So take us forward. They sell the obser business to hp. What's going on after that?

So we've related to ng a couple times along the way, mark had started ng.

What year is this? What year is the ops wear sale? We did the episode with Michelle fester.

Yeah.

that was so great. He was at hp and bought the company .

way back in early acquired history. So I want to say that was two thousand five. I think I actually don't ever down when mark started in IT was two thousand seven when after I result to H P. okay. So mark was gone along with name and and name was sort of away for any community to launch their own social network, I guess, kind of in a way like what we have with our slack.

It's like White .

label facebook yeah once again ahead of its time. Mark, I think, was not super thrilled with how that was going. So he ended up stepping back full time brought in right after the acquisition dos, where acquisition brought in Jason rosen doll from ops wear, who had been a nescafe guy before that to come in, in run ng.

And mark, step back to just being a chairman. So remember, now were in two thousand and seven, or now in the hay day of web two point o, which is so funny. Like any other point time, if we hadn't had the tech bubble and the crash and everything everybody lived through here, the rest of the market would have been gaga over, facebook linked in and singer shutterfly and what would store butter fields first.

flicker.

flicker and everything that was going on. IT was so exciting in the valley, but because everybody still had the hangover from we have one out to valuations were miniscule for these company is well in in two thousand .

and two thousand and one and two thousand two. Even in two thousand, three venture firms weren't raising new funds. So everyone's preciously holding on to the last fun. They raise parcel out each dollar to their own portfolios, trying to make sure they're only investing if it's no the very next to ahoo and uh using their bullets very carefully. And so you know when facebook comes along in two thousand four, it's like one of the only sort of obvious ones that's growing like absolute crazy and kind of kicks off the next generation of, okay, like we're going to start in a venture capitalists are going to start raising big funds again and can come out of the tech bubble screaming.

but even that takes a long time. And ironically, it's mark and ben, you know, arguably people who got hammed hardest by the dot com crash, who recognize like, oh, oh no, this is the time to put capital to work and embrace everything that's going on. So they started Angel investing together.

right? This is the error of super Angel. If you think back to the sort of runway and dave mcclure era, and there is the famous have been thirty eight scandal, but Martin ban are the super Angels that are individually investing tens of millions of dollars in startups.

It's easy to forget now, but they were like the prototype super Angels. Easy to forget now because now of course there are venture firm and of course.

mark made like a hundred and fifty million box on the ops where sale from. I think it's about right because he owned about ten percent of ops where at the sale of hp bent on five point five percent. So they've got cash to invest and their dedicated to helping to build the next generation .

of startups yeah and not only that, this is where the piece is started to come together. They also embrace as users, web two doto and what's a big part of web two dato. Bloggs blogging uh the p market a blog and vents blog. This is where IT all starts .

was so good and that's before I mean, mark obviously became a prolific twitter twitter like a hundred times a day until in two and sixteen he stopped and will cover all that the next epsom but like very much embracing the idea that like i'm going to be allowed on the internet, I am going to share my thoughts with the world and very early .

to blogging yeah so through all this, they end up into investing in companies like twitter, of course, like singer facebook.

linked in, like linked in. And mark is still on the board of facebook and still keeps up with mark zuck burg.

I hope so. So the facebook story is super interesting when and here is the firm with launch, they launch with a big peace in CNN money, and that is quoted in the peace. And he says, I moved to silicon valley in two thousand four, and I was introduced to mark and jesson by Peter til.

In two thousand five, mark became a sounding board about management and how to build a strong technology company. He has strong views on that, and they help shape mine. Mark hopes in on important things is very liberating.

He has helped to me not worry so much about the unsupportable things. So what is talking about here? So member, the yahoo situation where that turned .

down the billion dollar offer.

when suck goes environs in the bathroom, turning down the billion dollar yahoo offer, literally everybody around the table is telling, like cell, super sely, all the VC, everybody involved with the company, all the rest of management team are like we got to to take this offer. Member, it's web to to, to, you know, flick or soda hoo for what? Thirty million?

Something like that.

something like that. The idea that there could be a billion dollar outcome now post bubbles is crazy. Apparently, the only one of the advisers who told mark not to sell was mark and reason, 哇哦， Anderson has good about this.

He says every single person involved facebook wanted mark to take the ahoo offer. The psychological pressure they put on this twenty two year old was in mark. And I really bonded in that period because I told him, don't sell, don't sell, don't sell. And that because of that is why. And dressed and end up joining the facebook board in two thousand eight as well as the ebay board .

in two thousand eight. Yeah, that's a .

fascinating one. Oh, that'll come up next time for sure.

And he stayed on the H. P. Board, by the way, after the loud cloud obser dial until 11点， like he was a long time mag forward member. Two.

oh yeah. So it's pretty crazy. Like they built up this like violently, found their friendly, don't sell, build big companies. We're gonna finance. You technical .

confounders stay as C E.

O forever. yeah. We love technical cofounder ers. We are willing just the two of us to finance forty five different companies.

including dig dot com, Angel list, four square linked in a lot of very meaningful companies of that era. High hit rate. I mean.

they're like the most active venture capitalists in silicon valley at this point. This is once a quais ring, the rp at times memo, and they're not even metric fallest. So this is the best.

This is the best. I think this is my favorite part of the whole. So one day then is still at H P, he becomes A V P of, you know, something rather at H P.

Gin is clearly this is going to be just like the A O L situation. He's going to stay there a year and then move on to the next thing he gets called from doug leoni. S koa, oh, interesting.

This is so classic.

such a classic duck story. I love IT. Dug says, I want to know how you did IT eventually did what? And, uh, doug says, uh, maybe not quite these words, but but maybe actually these words, knowing doug, I won't know how you took a dog of a company and turn them into a billion dollar outcome.

I've never seen this happen before, and I want to learn how you did IT. Uh, so good, great. Because, a, it's so dog, what a learning machine. B, is so great, because it's obvious what is .

happening here. Oh, he's trying to get band to come to zoia.

He's totally trying to get them to come to square. A, uh, so great, so great.

Do you think they wanted to recruit as a partner or as like a person to come fund next?

I'm sure they would have been happy with either, but i'm assuming probably as a partner I bet they were trying to run the the same playbook they did with Alfred uh which uh when Alfred joints code after apples, the original idea. And 但 valente says this in the stand for G S B talk that we always recommend when he holds up alert resume， he says, yeah, Alfred, here is a partner at seca for now and but he'll start more companies and we can't wait for him to start companies and spend them out. Obviously, that doesn't happen with offered, but i'm sure they just want to they want ban and and presumably mark as well to just come be part of square.

Man, we don't do this section on episodes anymore. But in the spirit of what would have happened otherwise, you think about if ben had accepted an offer to go be a partner at sqa and if benchmark had made the cardinal mistake of causing the executive team to potentially lose faith in their C E. O right there in the door room, how things could have been different, the valley totally well.

the funny thing I was thinking about through all this is, uh, obviously as we've alerted to interest in hora is is gonna ter position against benchmark when they launch. Nobody ever counter positions against skoal. I think it's just kids like how quit you.

They're so good. Yeah that reminds me of the the quote from the wire, you come at the king, you best not miss. I don't really want to make a road squair. I wouldn't publicly counter position against them.

I was taking the exact same thing. So great, so great. So then takes this call.

I don't know the exact time. And here so I am about hypothesizing and dramatizing perfect. But with that IT, he takes the call.

He knows what dug is up to. He hangs up with dug and he shoots mark, an instant message, we have to start of venture capital firm. And mark replies, I was thinking the same thing, bm, and that, our friends, is where we're going to leave part one.

Woo, that is a perfect, perfect pod. I feel like I now have a really robust understanding about the like frame of mind there in going in to starting injuries and her, the firm. The question is, when they are texting, is this before or whether they are on I M, is this before the financial crisis?

I am imagining this is some time in two thousand and eight.

yeah, which is fascinating because then between the time where they have the idea to do this and when they actually launched the firm, there is a global recession and bank financial crisis that they have the fundraising in three wild.

totally. Well.

I think we did a lot of great sort of playbook themes during the episode and not anyone in your highlight here.

Yeah, there is actually one and will get into this more next time. But it's pretty courageous to do you choose .

that word carefully.

I did not, I did not. Okay, I came to mind is pretty crazy what they do here, right? Like, I mean, okay, it's not courageous in that they have a lot of money.

They never need to work again. It's Better. It's Better. But to turn down doug leoni to say we have a lot of money, but we're going to deploy this money and put IT at risk while all the rest of the world thinks everything is falling apart. I think it's easy to look back now and be like, oh, you guys of interest in hitters, nineteen billion dollars in capital under management and is this massive, enormous two hundred plus person firm with all of these fans and like, yeah ah yeah you guys are money manager is like, that is not how IT started by any thread to the imagination yeah such .

a good point and we're going into the next episode. But from everything that I can sort to hear, that still the way that mark van act today, that there by no means sort of like enjoying the sixty billion under management lifestyle. I think they're very much thinking about what is the next, not just generation, but like what is the next epoch of and recent horror?

Ds, the firm look like like what are we beyond and the adventure capital firm, what is the sort of yeah what will this institution be in the future and the way that you choose courage carefully. I chose future carefully. And we're going to talk about both those in the next episode.

I love IT. I love IT.

I've got a few just to bring you back. I mean, the timing, luck and right place, right time is so strong here, I mean, especially in the end, sixty four slipping one year. Part of the story like nescafe wouldn't have existed if, and fifty four had shipped on time. And as crucial as IT is to be brilliant, you have to be brilliant in the right place at the right time and get lucky also.

And I think that we've seen that people always talk about Steve jobs and bill gates being born at the right time in the right place to be able to start apple and microsoft, kind of the same thing with mark being around right for the start of the internet and being able to really jump on the emerging web and create each part of IT. I also think a big playback theme is knowing what good feels like because you've experienced IT yourself in launching mosaic and getting a million users in the first year on a very decent web for mark's whole rest of his career. That's the bar. I think if you've never experience something like that visually, where you've Operated, were founded or worked at a high level at a company that was undergoing that because you don't know what the bench markets is, you don't quite know what you're chasing. And I think that meaningfully shaped all of his future experiences and bends experiences and and dacent horvitz is experiences when they knew what true product market fit and crazy growth felt like from the very first experience.

Um i've got want to really want to add on to that. So yeah totally. G yes, everything you said and what makes a really powerful is the contrast like they also know what total failure looks like.

And I think you see a lot people think like what you said, knowing the benchmark, knowing success. That's what you need. I think you need both because if you only know success, you don't know the difference between success and failure, and you don't really know what made for success and what was skill and what was luck. But I think what's really unique here in this story is they have absolutely have both like higher to the highs, lowest to the lows. And I think that can really help one triangulate on where you are in any given point, time and why.

Totally agree. I get a great point. While listeners, we are gonna hold on grading until the end of our next episode will have that conversation about actually the firm entries and horwitz, rather than trying to grade something, market events passed and David do won't do some car bouts before .

we bring him home. Yeah, let's do IT. I've got a fun one that is tender related to least the end sixty four aspect of the episode. I've just been on such a late gaming and classic gaming kit lately.

I don't know that maybe it's like everybody you hit your mid thirties and then you just get the stage c for the era when you were. So my car boat is my new favorite, padgett. Besides the quiet, of course, the resonant arc youtube channel and podcast, these guys are so great, they take they what they call themselves, they call them a selves a video game story books club.

So they take old classic video games like R P S, like from this era. Ah so they did final fan to see eight. They're now doing zero two years.

They didn't near the first near game, uh, which is more modern in the interview. And then they do like a bookshop. They do play through.

So they're we're going to play not not a stream, but like we're gonna play from the beginning of the game to x point. And let's all get to we will go play, you audience, go play. And then we're going to do a podcast. We're going to a three hour podcast at each checkpoint, where we're going to dissect the story, the development, who was the debt team, how did this project come together? What is the context behind .

all of this is a clever structure.

It's really, really clever. I really like IT. So IT ends up for all these games like being ten, fifty and twenty hours or at the paths time, but it's so cool. IT is a really innovative format.

And you know, you're talking to people who are willing to dedicate ten hours of podcast time to a single podcast like a burger hath atul ity.

So exactly.

Couldn't found a Better .

place to recommend IT a podcast .

after my known heart. I love IT. Why a little bit more of like more serious one, a serious it's uh, non infection book called the elephant in the brain and IT is a psychology book that was originally going to be this person's academic paper and then they decided i'm just going to get together with my friend and actually write IT is a book instead and reach a much broader audience.

And just like published as a consumer facing book, and IT is a really interesting book, one of the main thesis is we humans are animals. And so why do we sort of try and go around pretending that we're not and trying to do things that are socially acceptable when they're sort of an elephant in the brain, that we are animals and we are subject to these very based desires that come from evolution. And it's not saying act on those, but every chapter sort of points out a different and very observer able, basic animalistic thing that exists in our brain.

The thing that I took away from IT was, once you can be more mindful of the way in which your brain is not acting logically or appropriately, as you should present in society, as IT says, it's acceptable to just like being aware of the way that your brain is working and why working in that way, so that you can then apply your higher functions on top of IT is very interesting. And I highly recommend them for anybody who is interested in psychology, capitalism, how to fund, raise for non profits, how to lead, how to organization, build, all of this stuff is sort of tied in there. And they they basically take any thing that seems like people are doing altruistically, or purely for whatever reason. And they find the animalistic desires that underpin that, and then find the data to support why that is often happening, especially if you are interested in going into politics.

It's a phenomenal read. I love you.

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Yeah, fanta is the perfect example of the quote that we talk about all the time here and acquired jeff basis, this idea that the company should only focus on what actually makes your beer taste Better. I E spend your time and resources only on what's actually gona move the needle figure product and your customers and outsource everything else that doesn't. Every company needs compliance and trust with their vendors and customers. IT plays a major role in enabling revenue because customers and partners demand IT. But yet IT add zero flavor to your actual product that IT .

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Head on over to vantage outcome ssh required and just tell them that then and David sent you and thanks to friend of the show, Christina anta CEO all acquired listening ers get a thousand dollars of free credit vented alcoa slash acquired all right. Well, listeners, thank you for joining us on part one of this journey. And if you want to join us and talk about all things, acquire all things tech with a great community, really thought for respectful, good, hybrid discussion, join us.

Acquire data, F, M, slash, slack. As always, if you want to be a deeper part of what we do on the show, you can become an L P at acquire data. M slash L P. Do you anything else you want to say?

Pop, per season nine, we are under way.

I know me too, and I think this next episode is gonna really fun injuries. And Harris has played such a seminal role in the development of the tech ecosystem of the last twelve years that it's so walk down like kind of my whole adult life and career to walk through from two thousand and the day so i'm excited to do.

yeah, should we start recording right now? Just run back. Let's play to.

No, I need a break. Listeners will see in time.

Ll, next time. And until then, Young spielberg, mike Taylor, take us out.

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