Jan 2, 2019 · 54m · a16z
a16z Podcast | Technological Trends, Capital, and Internet 'Disruption'
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of the a16z Podcast, host Sonal Chokshi brings together venture capitalists Fred Wilson and Chris Dixon to analyze long-term technology cycles, software plasticity, enterprise SaaS, and the disruptive potential of crypto and token economics.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 2.5% of the talking time here. How this is scored →
The host as informed peer 5.7 Guest teaching 3.0 Guest disagreement 1.3 The host pushing back 2.6
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 8:32 Disruption versus innovation framing debate
Fred asserts there is little innovation, prompting Chris to immediately intervene and demand a distinction between innovation and disruption.
Hardest push from the host ▶ 4:33 Challenging Carlota Perez's hardware frameworkChris directly challenges Fred's reliance on Carlota Perez's model, offering a counter-thesis that software plasticity creates fundamentally different dynamics than physical hardware revolutions.
Biggest teaching moment ▶ 34:46 Inside account of Twitter's API shutdownFred provides a firsthand insider account of Twitter's board discussions, educating Chris on how ad-based monetization forced the defense against third-party client acquisition.
The host holds their own ▶ 32:35 Theoretical presentation of platform S-curve lifecyclesChris articulates a fully fleshed-out economic framework explaining how network platforms inevitably turn from collaborative to extractive at the top of their S-curve.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Long-Term Technological Cycles & Perez Framework | 4 | 3 | 1 | 1 | Chris sets up the macro discussion on internet maturity, while Fred introduces Carlota Perez's 100-year technological revolution framework. The dynamic is exploratory and highly collaborative. | |
| Software Plasticity vs. Hardware Constraints | 6 | 2 | 1 | 4 | Chris pushes back on the strict applicability of Perez's framework by proposing that software plasticity differs fundamentally from physical hardware like cars and TVs. Fred embraces the thesis and adds the example of Tesla over-the-air updates. | |
| Innovation vs. Disruption and Platform Capture | 6 | 3 | 2 | 5 | Chris interrupts Fred's observation about a lack of innovation to clarify the distinction between innovation and Christensen disruption. Fred agrees and explains how incumbents entrench themselves via mobile and data capture. | |
| Crypto as a Business Model Disruption | 5 | 2 | 1 | 2 | Fred highlights crypto as a business model disruption rather than just a technological change. Chris complements this with nostalgic historical context regarding 1990s internet latency and broadband tipping points. | |
| Cloud Infrastructure Dynamics & Market Dominance | 5 | 3 | 2 | 3 | Fred asserts cloud infrastructure is largely a settled market among three tech titans. Chris probes on enterprise concierge models versus developer experience, contrasting Google, AWS, and Microsoft. | |
| Enterprise SaaS, Vertical Apps & Subtle Job Automation | 7 | 2 | 1 | 2 | Chris demonstrates strong domain expertise by detailing how SaaS creates subtle, incremental job automation rather than sci-fi robot replacements. Fred validates the point by noting enterprise SaaS remains the core driver of VC returns. | |
| Evolving Capital Markets & Token Alignment | 6 | 3 | 2 | 3 | Chris offers a detailed critique of accredited investor rules, contrasting non-technical wealthy investors with deep protocol developers. Fred supports this, arguing token models merge utility with investment. | |
| Platform Lifecycles & The Twitter API Case | 7 | 4 | 1 | 2 | Chris outlines his theoretical platform S-curve lifecycle model where mature platforms turn extractive against developer ecosystems. Fred validates this with insider historical details regarding Twitter's board decisions on its open API. | |
| Digital vs. Physical Worlds & NFT Digital Scarcity | 7 | 3 | 1 | 2 | Chris articulates a thesis on the linguistic bias favoring physical over digital worlds ('e-commerce', 'e-sports'). Fred connects this to non-fungible tokens enabling digital scarcity. | |
| Crypto Business Models for Creators | 5 | 4 | 2 | 3 | Chris explores NFT business models for creative industries. Fred cautions against simply porting physical scarcity concepts into digital mediums, advocating for crypto-native mechanisms like ongoing mining. | |
| Decentralized Autonomous Organizations & Staking | 5 | 4 | 1 | 2 | Chris brings up DAOs and autonomous smart contract code. Fred reframes projects like Numerai around the broader innovation of staking and financial skin-in-the-game. | |
| Crypto Infrastructure Bottlenecks & Future Outlook | 5 | 3 | 1 | 2 | Fred compares current crypto scalability bottlenecks to pre-broadband internet and pre-iPhone mobile standards. Chris reinforces the metaphor by describing crypto networks as a new abstraction layer for computing. |
Statements from this episode (30)
Fred Wilson: Internet tech is the primary 100-year technological revolution of this century
“Many of them last for kind of a century, right? Like automotive, or more broadly speaking, industrial or manufacturing based businesses were kind of the technological revolution of the 20th century, and even though internet and tech kind of emerged very powerf…”
Wilson: Software revolution will unlock 10x to 1000x more value than manufacturing
“Total economic value that will be unlocked with the software revolution should be at least one, maybe two, maybe three orders of magnitude bigger than what we saw with manufacturing, automotive, you know, for the reasons you describe.”
Dixon: Any human process can be encoded in software
“Any kind of human process can be encoded in software.”
Wilson: Big tech won't be significantly disrupted by AI
“I don't think that they were disrupted very much by the shift from web to mobile, and I don't think they're going to be disrupted very much by the adoption of AI power software.”
Wilson: Top 100 mobile apps mirror top 100 pre-iPhone websites
“If you look at the top hundred mobile apps, And you look at what the top hundred websites were before the iPhone came out, it's not a very different list, right?”
Fred Wilson: Crypto is uniquely disruptive due to token business models
“I think crypto is, is the one innovation out there that feels highly disruptive because it's a real change in business model. It's not just a technological change. It's a fundamental change in business model. You're not monetizing with ads. You're not monetizi…”
Fred Wilson: Business model shifts disrupt incumbents by making strengths weaknesses
“Everything changes when you change the business model. It's like all of a sudden, you know, your strengths become your weaknesses and that's what allows A lot of new entrants to come in.”
Fred Wilson: YouTube succeeded due to broadband tipping and social sharing
“I think the two big moves that That made YouTube successful, whereas all the people who tried YouTube before YouTube were broadband, that's like, 80 to 90% of it, and also social sharing.”
Wilson: YouTube sold to Google due to copyright fight costs
“Right, but that ultimately caused them to have to sell to Google. Because they concluded that they couldn't continue to play the game that way, which was the right way to play the game. As an independent company. They needed somebody who could fight the conten…”
Wilson: Cloud market will split to Amazon 60%, Google 30%, Microsoft 10%
“But I think it could be like Amazon has 60% of the market, Google has 30% of the market, and Microsoft has 10% of the market. I think it's gonna be a three player game in that business, and that's good.”
Wilson: 90% to 95% of USV portfolio companies run on AWS
“90% of the companies Maybe 95% of the companies we back are built on AWS.”
Chris Dixon: Less than 10% of corporate applications are SaaS-based
“The data I see is something, it's like sub 10% of corporate applications today are still, You know, it's unbelievably low, right?”
Chris Dixon: Created jobs are harder to envision than destroyed jobs
“They'll just be, it's just always harder to envision the jobs that are created than it is to envision the jobs that are destroyed.”
Wilson: Enterprise software markets are not winner-take-all like consumer
“They're also not winner take all markets, right? So the, it probably still a power law distribution in the outcomes, but maybe it's not as severe. Maybe it's not, maybe the winner's not 10 times bigger than number two, who's then 10 times bigger than number th…”
Chris Dixon: Early ICO buyers were almost entirely technical developers
“Almost all the people that participated in those things were technical people that were into crypto. I mean, the vast majority were.”
Fred Wilson: Crypto unifies being a product user and investor
“I reject that idea, and I think what's powerful about crypto is that they're the same thing, that using and investing are the same thing that they, and you don't have to be a user to be an investor, and you don't have to be an investor to be a user, but if you…”
Wilson: Web2 users deserve financial equity for building platform value
“It's just not right, particularly for a lot of these businesses where the user is the product. Right? Facebook users made Facebook. Twitter users made Twitter. You know, YouTube users made YouTube, right? It's just not right that the people who make the produc…”
Dixon: In tech, complements fight more viciously than direct substitutes
“Traditionally in economics, people think of substitutes as the competitors, right? So the hamburger and the hot dog are the competitors. Whereas in tech, actually the hot dog and the hot dog bun Are the ones that have the most vicious fights.”
Wilson: Twitter could have stayed open using a token business model
“If Bitcoin and tokens had existed in 2005 instead of 2009, I think it's very possible that Twitter could have adopted a token-based business model Left the protocol open.”
Wilson: Personal capital moved into crypto will never return to fiat
“Once my money gets into the crypto ecosystem, it's gonna stay in the crypto ecosystem. It might, you know, move like, I'm definitely gonna be playing around in all these networks and, you know, using them and staking and doing all this incredibly cool shit tha…”
Dixon: Fortnite made $300 million in a month on dance emotes
“Fortnite made three hundred million dollars last month on dance moves, right?”
Dixon: Digital goods will surpass physical goods in value in 10-20 years
“It's going to be obvious 10 to 20 years from now, especially as like the newer generation kind of grows up and just, of course, like, of course an emote is worth more than a, you know, offline equivalent or whatever.”
Dixon: eSports growth will relegate physical sports to a niche like horseback riding
“I think we're in this hockey stick right now with eSports. Like video games, it's just gonna be obvious that like, it's gonna seem, I mean, I think it's always great that people play physical sports, I'm not anti, but you know, it'll be like horseback riding, …”
Dixon: Video games will be the first industry to adopt NFTs
“I think games will be the first to adopt this stuff because they just tend to be very, kind of, fast cycle time experimental.”
Dixon: NFTs provide promising new business models across creative industries
“And so one of the really exciting things to me about NFTs is the idea that you can reintroduce digital scarcity and have Whatever, exclusive album art, exclusive, whatever. Maybe this is, to me, it seems like a very promising new business model, not just for g…”
Wilson: Porting offline models online was an early internet investing mistake
“When we first started investing in the internet in 94, 95, 96, what we were doing was dumb. We were just basically investing in things that had existed in the offline world that were getting moved onto the internet. Like, ok, so let's, let's invest in a, Let's…”
Wilson: Native crypto applications are 10x–100x better than tokenizing real-world assets
“That's why I don't love when entrepreneurs, founders come to us, And they're like, we're going to take mortgage-backed securities and put them on the blockchain, or we're going to take like, they're really interested, a lot of people are interested in taking t…”
Wilson: Crypto tokens will drive massive innovation in staking and governance
“I think that we're gonna see a lot of really innovative things being done with staking, because I think crypto tokens make staking super easy to do, and there are, like, I think Richard's idea is that if I can get data scientists to stake their models, to put …”
Wilson: USV avoids dApps, focuses on NFTs and crypto games
“That's why largely we're not investing in a lot of dApps. I mean, we are playing around with NFTs and games for all the reasons you raised.”
Dixon: Consumer gaming demand for GPUs catalyzed modern deep learning
“Games have driven GPUs. So like, just like the, that market is one where the gamers have been endlessly hungry for more polygons, and that created this kind of, you know, Nvidia and this whole industry around it. Which then had these interesting, you know, the…”